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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 8-K

 

 

 

CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): July 19, 2026

 

 

 

Magnolia Oil & Gas Corporation
 (Exact name of registrant as specified in its charter)

 

Delaware

(State or other jurisdiction
of incorporation)

001-38083

(Commission
File Number)

 81-5365682
(I.R.S. Employer
Identification Number)

 

Nine Greenway Plaza, Suite 1300

Houston, Texas 77046

(Address of principal executive offices, including zip code) 

 

(713) 842-9050

Registrant’s telephone number, including area code

 

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

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

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

 

Emerging growth company ¨

 

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

 

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

 

Title of each class   Trading
Symbol(s)		   Name of each exchange on which
registered
Class A Common Stock, par value $0.0001 Per Share     MGY   New York Stock Exchange

 

 

 

 

 

 

Item 1.01. Entry Into a Material Definitive Agreement.

  

Purchase Agreement

 

On July 19, 2026, Magnolia Oil & Gas Corporation, a Delaware corporation (“Magnolia”), and Magnolia Oil & Gas Operating LLC, a Delaware limited liability company (“Buyer” and, together with Magnolia, the “Buyer Parties”), 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 “Acquired Interests”) of WildFire Intermediate Holdings, LLC (“Target”).

 

As consideration for the purchase of the Acquired Interests and the transactions contemplated by the Purchase Agreement (collectively, the “Acquisition”), the purchase price shall be comprised of (i) cash in the amount of $2,650 million (the “Cash Consideration”), subject to certain customary adjustments as set forth in the Purchase Agreement, and (ii) 32,203,000 shares of Magnolia’s Class A common stock (“common stock”), par value $0.0001 (the “Equity Consideration”), as well as the assumption of $600 million of the Target’s outstanding 7.500% Senior Notes due 2029.

 

The obligations of the parties to complete the Acquisition are subject to the satisfaction or waiver of customary closing conditions set forth in the Purchase Agreement, including the expiration or termination of all applicable waiting periods (“HSR Clearance”) imposed under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. In connection with and upon execution of the Purchase Agreement, Buyer deposited with an escrow agent a cash deposit equal to $200 million to assure the Buyer Parties’ and Seller’s performance of their respective obligations thereunder and therein, pursuant to an escrow agreement among the Buyer Parties, Seller, and the escrow agent.

 

The Purchase Agreement has been included with this Current Report on Form 8-K (this “Current Report”) to provide investors and security holders with information regarding the terms of the transactions contemplated therein. They are not intended to provide any other factual information about the Buyer Parties, Seller, Target or the Acquired Interests. The representations, warranties, covenants and agreements contained in the Purchase Agreement are solely for the benefit of the parties to the Purchase Agreement, may be subject to limitations agreed upon by the parties (including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Purchase Agreement instead of establishing these matters as facts) and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors and security holders. Magnolia security holders should not rely on the representations, warranties, covenants and agreements or any descriptions thereof as characterizations of the actual state of facts or condition of the Buyer Parties, Seller, Target or the Acquired Interests. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Purchase Agreement, which subsequent information may or may not be fully reflected in Magnolia’s public disclosures.

 

The foregoing descriptions of the Purchase Agreement and the transactions contemplated thereby are not complete and are qualified in their entirety by reference to the full text of the Purchase Agreement, a copy of which is filed herewith as Exhibit 2.1 and is incorporated herein by reference.

 

Registration Rights Agreement

 

Under the Purchase Agreement, Magnolia and Seller agreed to enter into a registration rights agreement, in substantially the form attached as Exhibit N to the Purchase Agreement in connection with the closing of the Acquisition (the “Registration Rights Agreement”). Pursuant to the terms of the Registration Rights Agreement, Magnolia will agree to 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 will agree to a 30-day lock-up period with respect to shares of common stock received in the Acquisition. Magnolia will also agree 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 does not purport to be complete and is subject to, and qualified in its entirety by the full text of the form of Registration Rights Agreement attached as Exhibit N to the Purchase Agreement, which is filed herewith as Exhibit 2.1 and is incorporated herein by reference.

 

Third Amended and Restated RBL Facility

 

On July 19, 2026, Buyer executed a third amendment and restatement of its senior secured reserve-based revolving credit facility (the “Amended and Restated RBL Facility”) in its entirety, which upon the satisfaction of customary conditions, including the execution and delivery of definitive documentation with respect to the Amended and Restated RBL Facility and the consummation of the Acquisition, will provide for, among other things, maximum commitments in an aggregate principal amount of $2.25 billion with a letter of credit facility with a $100.0 million sublimit and a swingline facility with a $50.0 million sublimit, with an initial borrowing base of $2.0 billion and borrowing capacity of $1.75 billion that are subject to adjustments to the extent oil and gas assets are excluded from the Acquisition, and extend the maturity date to the earlier of (x) the fifth anniversary of the effectiveness of the Amended and Restated RBL Facility and (y) the date that is 91 days prior to the stated maturity date of Target’s 7.50% Senior Notes due 2029 (or, to the extent earlier than the fifth anniversary of the effectiveness of the Amended and Restated RBL Facility, the date that is 91 days prior to the stated maturity date of any refinancing indebtedness in respect thereof that is permitted under the Amended and Restated RBL Facility) if the outstanding aggregate principal amount of such notes equals or exceeds $100.0 million on such date. The Amended and Restated RBL Facility is guaranteed by certain parent companies and subsidiaries of Buyer and is collateralized by certain of Buyer’s oil and natural gas properties and has a borrowing base subject to semi-annual redetermination.

 

Borrowings under the Amended and Restated RBL Facility bear interest, at Buyer’s option, at a rate per annum equal to either the term SOFR rate or the alternative base rate plus the applicable margin. Additionally, Buyer is required to pay a commitment fee quarterly in arrears in respect of unused commitments under the Amended and Restated RBL Facility. The applicable margin and the commitment fee rate are calculated, at Buyer’s option, based upon the utilization levels of the Amended and Restated RBL Facility as a percentage of unused lender commitments then in effect during non-investment grade periods or based upon the applicable credit rating of Buyer during investment grade periods.

 

The Amended and Restated RBL Facility contains certain affirmative and negative covenants customary for financings of this type, including compliance with a leverage ratio of less than 3.50 to 1.00 and a current ratio of greater than 1.00 to 1.00.

 

The foregoing summary of the Amended and Restated RBL Facility does not purport to be complete and is subject to, and qualified in its entirety by reference to the full text of the Amended and Restated RBL Facility, which is filed herewith as Exhibit 10.1.

 

Bridge Facility Commitment Letter

 

On July 19, 2026, Buyer entered into a commitment letter (the “Commitment Letter”) among Buyer and the lenders party thereto, pursuant to which the lenders have committed to provide an aggregate initial principal amount of up to $1.50 billion in senior unsecured loans under a senior 364-day unsecured bridge term loan facility (the “Bridge Facility”) subject to certain conditions. In the event that certain financing arrangements cannot be obtained at all or on terms satisfactory to Buyer, Buyer may borrow under the Bridge Facility, subject to the satisfaction of customary conditions, including the execution and delivery of definitive documentation with respect to the Bridge Facility in accordance with the terms set forth in the Commitment Letter and the consummation of the Acquisition.

 

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 Item 1.01 of this Current Report regarding the Third Amended and Restated RBL Facility is hereby incorporated by reference into this Item 2.03.

 

 

 

 

Item 3.02. Unregistered Sales of Equity Securities.

 

The information set forth in Item 1.01 of this Current Report regarding the Equity Consideration is hereby incorporated by reference into this Item 3.02. Any issuance of shares of common stock will be 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 July 20, 2026, Magnolia issued a press release announcing the entry into the Purchase Agreement. The full text of the press release is furnished as Exhibit 99.1 hereto and is incorporated herein by reference.

 

Also on July 20, 2026, as announced in the press release, Magnolia will be hosting an investor call beginning at 8:00 a.m. Eastern Time to discuss the Acquisition. A copy of the investor call presentation is furnished as Exhibit 99.2 to this Current Report and is incorporated herein by reference. The investor call webcast and presentation will be available both live and for subsequent replay via the Events & Presentations page of Magnolia’s website at https://www.magnoliaoilgas.com/investors/events-and-presentations. Information contained on or accessible from Magnolia’s website is not, and shall not be deemed to be, incorporated by reference into this Current Report.

 

The information furnished pursuant to this Item 7.01 (including Exhibit 99.1 and Exhibit 99.2) 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.

 

Forward-Looking Statements

 

This Current Report contains forward-looking statements within the meaning of the federal securities laws. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of Magnolia. These risks include, but are not limited to: the delay or failure to consummate the Acquisition with the Seller due to unsatisfied closing conditions, such as HSR Clearance delay, or other factors; the ultimate amount of Cash Consideration to be paid or Equity Consideration to be issued in the Acquisition due to purchase price adjustments; the risk that, if acquired, the business of the Target does not perform consistent with Magnolia’s expectations; and the other risks identified in Magnolia’s 2025 Annual Report on Form 10-K and its other filings with the Securities and Exchange Commission (the “SEC”). Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements. The forward-looking statements in this Current Report are made as of the date hereof, and Magnolia does not undertake any obligation to update the forward-looking statements as a result of new information, future events or otherwise.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit No.   Description
2.1*   Purchase and Sale Agreement, dated as of July 19, 2026 by and among Magnolia Oil & Gas Corporation and Magnolia Oil & Gas Operating LLC, as buyers, and WildFire Energy I LLC, as seller.
10.1*   Third Amended and Restated Credit Agreement, dated as of July 19, 2026, by and among Magnolia Oil & Gas Intermediate LLC, Magnolia Oil & Gas Operating LLC, the banks, financial institutions and other lending institutions party thereto, and Citibank, N.A., as Administrative Agent and Collateral Agent.
99.1   Press Release issued July 20, 2026.
99.2 Investor Presentation, dated July 20, 2026.
104 Cover Page Interactive Data File (formatted as inline XBRL)

 

* Certain of the schedules and exhibits to the agreement have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule or exhibit will be furnished to the SEC upon request.

 

 

 

 

SIGNATURES

 

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.

 

  MAGNOLIA OIL & GAS CORPORATION
   
Date: July 20, 2026
  By: /s/ Timothy D. Yang
  Name: Timothy D. Yang
  Title:   Executive Vice President, Chief Legal and Commercial Officer, Corporate Secretary and Land

 

 

 

 

Exhibit 2.1 

 

   

PURCHASE AND SALE AGREEMENT

 

by and AMONG

 

WildFire Energy I LLC,

 

as Seller,

 

MAGNOLIA OIL & GAS OPERATING LLC,

 

as Buyer,

 

AND

 

Magnolia Oil & Gas Corporation,

 

as parent

 

JULY 19, 2026


 

 

  

Table of Contents

 

Page

  

Article I DEFINITIONS AND INTERPRETATION 2

 

1.1.Defined Terms 2
1.2.References and Rules of Construction 2

 

Article II PURCHASE AND SALE 3

 

2.1.Purchase and Sale 3
2.2.Assets 3
2.3.Purchase Price; Deposit 5
2.4.Excluded Assets 7
2.5.Adjustments to Purchase Price 7
2.6.Preliminary Settlement Statement 10
2.7.Final Settlement Statement 11
2.8.Escrow Agreement 13
2.9.Allocated Values; Accounting 13
2.10.Purchase Price Allocation 14
2.11.Withholding 14
2.12.Closing Distribution 14
2.13.Distribution Cooperation 15

 

Article III REPRESENTATIONS AND WARRANTIES OF SELLER 15

 

3.1.Organization, Existence and Qualification 15
3.2.Authority, Approval and Enforceability 15
3.3.No Conflicts 16
3.4.Consents 16
3.5.Bankruptcy 16
3.6.Litigation 16
3.7.Ownership of Acquired Interests 17
3.8.Brokers’ Fees 17
3.9.Accredited Investor 17
3.10.Independent Evaluation 18

 

Article IV REPRESENTATIONS AND WARRANTIES OF SELLER REGARDING THE COMPANY GROUP 18

 

4.1.Organization, Existence and Qualification 18
4.2.No Conflicts 18
4.3.Bankruptcy 19
4.4.Litigation 19
4.5.Consents; Preferential Purchase Rights 20
4.6.Capitalization 20
4.7.Financial Statements 21
4.8.Absence of Changes 22
4.9.Material Contracts 22
4.10.No Violation of Laws 24

  

 

i

 

 

Table of Contents

(continued)

 

Page

 

4.11.Royalties and Working Interest Payments 25
4.12.Imbalances 25
4.13.Current Commitments 25
4.14.Taxes 25
4.15.Brokers’ Fees 27
4.16.Permits 27
4.17.Environmental Laws 27
4.18.Payments for Production 28
4.19.Payout Status 28
4.20.Bonds, Letters of Credit and Guarantees 28
4.21.Employment and Benefits 28
4.22.Insurance 30
4.23.Derivative Financial Instruments 31
4.24.Wells 31
4.25.Intellectual Property 31
4.26.IT Systems 32
4.27.Affiliate Transactions 32
4.28.Special Warranty of Title 32
4.29.Non-Consent Operations 32
4.30.Suspense Funds 33
4.31.Leases 33
4.32.Specified Matters 33
4.33.Casualty Losses 34
4.34.Ownership and Sufficiency of Assets 34
4.35.Unrelated Activities 34
4.36.Intentionally Omitted 34
4.37.Intentionally Omitted 34
4.38.Surface Use 35
4.39.Intentionally Omitted 35
4.40.Certain Transfers 35
4.41.Burleson Sand Mine; Pipeline System 35
4.42.Officers and Bank Accounts; Powers of Attorney 36
4.43.Energy Regulatory Status 36

 

Article V REPRESENTATIONS AND WARRANTIES OF BUYER PARTIES 37

 

5.1.Organization, Existence and Qualification 37
5.2.Authority, Approval and Enforceability 37
5.3.No Conflicts 37
5.4.Consents 38
5.5.Bankruptcy 38
5.6.Litigation 38
5.7.Regulatory 38
5.8.Financing 39
5.9.Independent Evaluation 41
5.10.Brokers’ Fees 41

  

ii

 

 

Table of Contents

(continued)

 

Page

 

5.11.Accredited Investor 41
5.12.Capitalization 41
5.13.Valid Issuance 42
5.14.SEC Documents; Financial Statements; No Liabilities 43
5.15.Internal Controls 44
5.16.Form S-3 44
5.17.Listing Exchange 44
5.18.No Stockholder Approval 45
5.19.No Material Adverse Effect 45
5.20.Investment Company Act 45

 

Article VI CERTAIN AGREEMENTS 45

 

6.1.Conduct of Business 45
6.2.Consents and Approvals 50
6.3.Record Retention 53
6.4.Bonds 53
6.5.Public Statements 54
6.6.Confidentiality 55
6.7.Employee Matters 56
6.8.Affiliate Services 58
6.9.Information Technology 58
6.10.Insurance Matters 58
6.11.Officers & Directors 59
6.12.R&W Insurance Policy 61
6.13.Derivative Financial Instruments 61
6.14.Use of Name and Seller’s Marks 62
6.15.Satisfaction of Conditions 62
6.16.Consents and Preferential Purchase Rights 63
6.17.Successor Operator 65
6.18.Seismic Licenses 65
6.19.Casualty and Condemnation Loss 66
6.20.Assignment 66
6.21.Escrow Matters 67
6.22.Financial Information 67
6.23.Listing 68
6.24.Buyer Financing 69
6.25.Cooperation with Financing 71
6.26.Conduct of Parent’s Business 74
6.27.Pre-Closing Reorganization 74
6.28.Wrong Pockets; General Reconciliation 75
6.29.Suspense Funds 75
6.30.Payout Records Integration 75

 

iii

 

 

Table of Contents

(continued)

 

Page

 

Article VII BUYER’S CONDITIONS TO CLOSING 75

 

7.1.Representations and Warranties 75
7.2.Performance 76
7.3.No Prohibition 76
7.4.Title and Environmental Defects 76
7.5.HSR Approval 76
7.6.Closing Deliverables 76
7.7.Pre-Closing Reorganization 76

 

Article VIII SELLER’S CONDITIONS TO CLOSING 77

 

8.1.Representations and Warranties 77
8.2.Performance 77
8.3.No Prohibition 77
8.4.Title and Environmental Defects 77
8.5.HSR Approval 77
8.6.Closing Deliverables 78

 

Article IX CLOSING 78

 

9.1.Date of Closing 78
9.2.Obligations of Seller at Closing 78
9.3.Obligations of Buyer at Closing 80

 

Article X ACCESS; DISCLAIMERS 81

 

10.1.Access 81
10.2.Disclaimers 83

 

Article XI TITLE MATTERS 85

 

11.1.Company Group’s Title 85
11.2.Notice of Title Defects; Defect Adjustments 86

 

Article XII ENVIRONMENTAL MATTERS 92

 

12.1.Notice of Environmental Defects 92
12.2.NORM, Asbestos, and Hazardous Substances 95

 

Article XIII NO SURVIVAL; RELEASE 96

 

13.1.Release 96
13.2.Survival; Sole and Exclusive Remedy 97

 

Article XIV TERMINATION, DEFAULT AND REMEDIES 98

 

14.1.Right of Termination 98
14.2.Effect of Termination 99
14.3.Return of Documentation 102

 

iv

 

 

Table of Contents

(continued)

 

Page

 

Article XV MISCELLANEOUS 102

 

15.1.Appendices, Exhibits and Schedules 102
15.2.Expenses 103
15.3.Tax Matters 103
15.4.Assignment 106
15.5.Notices 107
15.6.Further Assurances 108
15.7.Entire Agreement; Conflicts 108
15.8.Parties in Interest 109
15.9.Amendment 109
15.10.Waiver; Rights Cumulative 109
15.11.Governing Law; Jurisdiction; Waiver of Jury Trial 109
15.12.Severability 111
15.13.Counterparts 111
15.14.Specific Performance 111
15.15.Affiliate Liability 112
15.16.Time is of the Essence 112
15.17.Privileged Communications 113
15.18.Certain Waivers 113
15.19.Non-Compensatory Damages 114
15.20.Debt Financing Sources 114
15.21.Parent Guarantee 115

 

v

 

  

LIST OF ANNEXES, EXHIBITS AND SCHEDULES

 

Annex I —

Defined Terms

Exhibit A — Company Group Members
Exhibit B — Leases
Exhibit C — Wells
Exhibit D — Mineral Interests
Exhibit E — Surface Fee Properties
Exhibit F — Surface Rights
Exhibit G — Pipeline System
Exhibit H — Form of Assignment Agreement
Exhibit I — Form of Restrictive Covenant Agreement
Exhibit J — Form of Transition Services Agreement
Exhibit K — Form of Settlement Statement
Exhibit L — Pre-Closing Reorganization Documents
Exhibit M — Sample Effective Time Net Working Capital Calculation
Exhibit N — Form of Registration Rights Agreement
Exhibit O — Excluded Assets
Exhibit P — Form of Termination Agreement
     
Schedule ‎2.5(s)(i)(B) — Specified Hydrocarbon Receivables
Schedule ‎2.5(s)(i)(C) — Specified JIB Receivables
Schedule ‎2.9 — Allocated Values
Schedule ‎3.3 — No Conflicts
Schedule ‎‎3.6 — Litigation
Schedule ‎‎4.2 — No Conflicts
Schedule ‎‎4.5 — Consents; Preferential Purchase Rights
Schedule ‎‎4.6(a)  — Capitalization
Schedule ‎‎4.7(b) — Financial Statements
Schedule ‎4.7(c) — GAAP Liabilities
Schedule ‎‎4.7(d)  — Indebtedness
Schedule ‎‎4.8 — Absence of Changes
Schedule ‎4.9 — Material Contracts
Schedule ‎‎4.11 — Royalties; Suspense Funds
Schedule ‎‎4.12 — Imbalances
Schedule ‎‎4.13 — Current Commitments
Schedule ‎‎4.14 — Taxes
Schedule ‎4.16 — Permits
Schedule ‎‎4.17 — Environmental Laws
Schedule ‎‎4.18 — Payments for Production
Schedule ‎‎4.19 — Payout Status
Schedule ‎‎4.20 — Bonds, Letters of Credit and Guarantees
Schedule ‎‎4.21(a)  — Employment and Benefits
Schedule ‎4.21(d)  — Transaction Payments
Schedule ‎‎4.22 — Insurance

 

i

 

 

Schedule ‎‎4.23 — Derivative Financial Instruments
Schedule ‎4.24(b)  — Wells
Schedule ‎4.27 — Affiliate Transactions
Schedule ‎4.29 — Non-Consent Operations
Schedule ‎4.31(a) — Leases
Schedule ‎4.31(b) — Rental and Delay Rental Payment Leases
Schedule ‎‎4.32 — Specified Matters
Schedule ‎‎4.34 — Ownership and Sufficiency of Assets
Schedule ‎‎4.40 — Certain Transfers
Schedule ‎‎4.42 — Officers; Bank Accounts; Powers of Attorney
Schedule ‎5.3 — No Conflicts
Schedule ‎‎5.4 — Consents
Schedule ‎6.1 — Ordinary Course Development Plan
Schedule ‎‎6.4 — Bonds

Schedule 6.7(d)

Schedule ‎‎6.18(A)

—

—

Key Employees

Transferred Seismic Licenses

Schedule ‎‎6.18(B) — Excluded Seismic Licenses
Schedule 6.20 — Contributed Assets
Schedule ‎9.2(i) — Key Management Members
Schedule ‎15.3(e) — Tax Refunds
Schedule I-1 — Seller Knowledge Individuals
Schedule ‎1.1 — Permitted Encumbrances
Schedule PL — Permitted Leakage

 

ii

 

  

PURCHASE AND SALE AGREEMENT

 

This PURCHASE AND SALE AGREEMENT (this “Agreement”), dated as of July 19, 2026 (the “Execution Date”), is made and entered into by and among WildFire Energy I LLC, a Delaware limited liability company (“Seller”), Magnolia Oil & Gas Operating LLC, a Delaware limited liability company (“Buyer”), and Magnolia Oil & Gas Corporation, a Delaware corporation (“Parent” and together with Buyer, each a “Buyer Party” and collectively, the “Buyer Parties”). Each of Seller and the Buyer Parties is sometimes referred to individually in this Agreement as a “Party” and collectively as the “Parties.”

 

RECITALS

 

WHEREAS, as of the Execution Date, Seller owns one hundred percent (100%) of the issued and outstanding Equity Interests of WildFire Intermediate Holdings, LLC, a Delaware limited liability company (the “Company”, and one hundred percent (100%) of the issued and outstanding Equity Interests of the Company, the “Acquired Interests”);

 

WHEREAS, as of the Execution Date, the Company owns, directly or indirectly, one hundred percent (100%) of the issued and outstanding Equity Interests of each of the Subsidiaries listed on Exhibit A attached hereto (such Subsidiaries (other than the Excluded Subsidiaries), together with the Company, each a “Company Group Member” and collectively, the “Company Group”);

 

WHEREAS, prior to the Closing, Seller shall effect, or cause to be effected, a reorganization pursuant to which the Company will distribute, or will cause the applicable Company Group Member to distribute, one hundred percent (100%) of the issued and outstanding Equity Interests of each of the Excluded Subsidiaries held by the Company or the applicable Company Group Member to Seller or its designated Affiliate (other than any Company Group Member), such that, following such distribution, the Excluded Subsidiaries will be owned by Seller or its applicable Affiliate and the Company will cease to own (directly or indirectly) any Equity Interests in the Excluded Subsidiaries (the “Pre-Closing Reorganization”);

 

WHEREAS, simultaneously with the execution of this Agreement, each of the Key Management Members are entering into a Restrictive Covenant Agreement; and

 

WHEREAS, upon the terms and subject to the conditions of this Agreement, at the Closing, Seller desires to sell and assign, and Buyer desires to purchase and acquire, the Acquired Interests, in exchange for payment of the consideration specified in this Agreement.

 

NOW, THEREFORE, for and in consideration of the mutual promises, representations, warranties, covenants and agreements contained herein, the benefits to be derived by each Party hereunder, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound by the terms hereof, hereby undertake and agree as follows:

 

 

 

 

Article I
DEFINITIONS AND INTERPRETATION

 

1.1.            Defined Terms. Capitalized terms used herein shall have the meanings set forth in Annex I.

 

1.2.            References and Rules of Construction. The rules of construction set forth in this Section ‎‎1.2 shall apply to the interpretation of this Agreement. All references in this Agreement to Annexes, Exhibits, Schedules, Articles, Sections, subsections and other subdivisions refer to the corresponding Annexes, Exhibits, Schedules, Articles, Sections, subsections and other subdivisions of or to this Agreement unless expressly provided otherwise. Titles appearing at the beginning of any Articles, Sections, subsections and other subdivisions of this Agreement are for convenience only, do not constitute any part of this Agreement, and shall be disregarded in construing the language hereof. The words “this Agreement,” “herein,” “hereby,” “hereunder” and “hereof,” and words of similar import, refer to this Agreement as a whole and not to any particular Article, Section, subsection or other subdivision unless expressly so limited. The words “this Article,” “this Section,” and “this subsection,” and words of similar import, refer only to the Article, Section or subsection hereof in which such words occur. Wherever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limiting the foregoing in any respect.” Unless expressly provided to the contrary, the word “or”, “either” or “any” shall not be exclusive. As used herein, (a) “day” means calendar day and (b) “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if”. Unless expressly provided to the contrary, if a word or phrase is defined, its other grammatical forms have a corresponding meaning. The words “shall” and “will” have equal force and effect. All references to “$” or “dollars” shall be deemed references to United States Dollars. Each accounting term not defined herein will have the meaning given to it under GAAP as interpreted as of the Execution Date and, as applicable, as consistently applied in the oil and gas industry. Pronouns in masculine, feminine or neuter genders shall be construed to state and include any other gender, and words, terms and titles (including terms defined herein) in the singular form shall be construed to include the plural and vice versa, unless the context otherwise requires. Annexes, Exhibits and Schedules referred to herein are attached to this Agreement and by this reference incorporated herein for all purposes. Reference herein to any federal, state, local or foreign Law shall be deemed to also refer to all rules and regulations promulgated thereunder, unless the context requires otherwise, and reference herein to any agreement, instrument or Law means such agreement, instrument or Law as from time to time amended, modified or supplemented, including, in the case of agreements or instruments, by waiver or consent and, in the case of Laws, by succession of comparable successor Laws; provided, that any reference to any Law in this Agreement shall only be a reference to such Law as of the Execution Date. Any reference herein to any Contract or other agreement or instrument means such Contract or other agreement or instrument as from time to time amended, modified, or supplemented, including, in the case of agreements or instruments, by waiver or consent. If any period of days referred to in this Agreement shall end on a day that is not a Business Day, then the expiration of such period shall automatically be extended until the end of the first succeeding Business Day. References to a Person are also to its permitted successors and permitted assigns. References to a specific time shall refer to prevailing Houston, Texas time, unless otherwise indicated. The phrase “made available” or “provided to” or similar phrases in respect of documents being made available or provided to Buyer means that any of Buyer, its Affiliates or its Representatives has had the opportunity prior to the Execution Date to review such documents or materials at the offices of the Company Group or any of their respective Representatives or electronically by virtue of the electronic data rooms established by Seller or its Representatives in connection with the transactions contemplated hereby or any other physical or electronic means provided by Seller. Each Party acknowledges that it and its attorneys have been given an equal opportunity to negotiate the terms and conditions of this Agreement and that any rule of construction to the effect that ambiguities are to be resolved against the drafting Party or any similar rule operating against the drafter of an agreement shall not be applicable to the construction or interpretation of this Agreement. Notwithstanding anything to the contrary in this Agreement, for purposes of this Agreement, each representation and warranty is given independent effect so that if a particular representation or warranty proves to be incorrect or is breached, the fact that another representation or warranty concerning the same or similar subject matter is correct or is not breached, whether such other representation or warranty is more general or more specific, narrower or broader or otherwise, will not affect the incorrectness or breach of such particular representation or warranty.

 

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Article II
PURCHASE AND SALE

 

2.1.            Purchase and Sale. Upon the terms and subject to the conditions of this Agreement, at the Closing, Seller agrees to sell, assign, transfer and convey, and Buyer agrees to purchase, acquire and pay for, all of Seller’s right, title and interest in and to the Acquired Interests, free and clear of all Encumbrances, other than Corporate Encumbrances, in exchange for the consideration set forth in Section ‎‎2.3.

 

2.2.            Assets. As used in this Agreement, “Assets” shall (i) mean all assets and properties, wherever situated and of whatever kind and nature, whether real, personal (tangible or ‎intangible) or mixed, owned (including any fee interest) or leased (including any lessor or ‎leasehold interests), of the Company Group, and (ii) be deemed to include, effective as of the Effective Time and notwithstanding anything to the contrary in this Agreement, any Contributed Asset contributed to the Company Group in accordance with Section ‎6.20, in each case, including all of the right, title and interest of the Company Group in and to the following assets, less and except the Excluded Assets:

 

(a)            all oil and gas or other Hydrocarbon leases, subleases and other leases, overriding royalty interests, net profits interests, carried interests, reversionary interests or other similar interests, including those leases and interests set forth on Exhibit B, together with any and all other right, title and interest of the Company Group in and to the leasehold estates and other interests created thereby, and all other rights therein and the lands covered thereby or pooled or unitized therewith, subject to the terms, conditions, covenants and obligations set forth in such leases or interests or on Exhibit B, and all other interests of the Company Group of any kind or character in such leases (the “Leases”);

 

(b)            all oil, gas, water, injection and disposal and other wells, including the wells set forth on Exhibit C (the “Wells”) in each case, (1) located on any of the Leases, Lands, or on any of the Surface Rights and (2) whether producing, operating, plugged, permanently abandoned, shut-in or temporarily abandoned;

 

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(c)            all Hydrocarbons produced from or allocated to the Wells in storage or existing in pipelines, plants and tanks (including inventory and line fill) and upstream of the point of sale as of the Effective Time and all other Hydrocarbons produced from or allocated to the Wells at or after the Effective Time;

  

(d)            all rights and interests in, under or derived from all unitization and pooling agreements or orders (including forced or compulsory pooling orders) in effect with respect to any of the Leases or Wells and the units created thereby (the “Units”), together with the lands covered by any Leases, Fee Mineral Interests or Units and all tenements, hereditaments, and appurtenances arising out of or derived from any of the Leases or Units (collectively, the “Lands”);

 

(e)            all fee mineral interests and royalty interests, including those described on Exhibit D (the “Fee Mineral Interests” and together with the Leases, Wells, Units and Lands, the “Oil and Gas Properties”);

 

(f)            all fee surface interests, including those described on Exhibit E (“Surface Fee Properties”);

 

(g)            all Applicable Contracts and Derivative Financial Instruments and all rights thereunder;

 

(h)            all surface leases, surface rights, permits, licenses, servitudes, easements, surface and road use agreements, railroad crossing authorizations, ingress and egress agreements, water access agreements, water rights and rights-of-way, including those described on Exhibit F (together with the Surface Fee Properties, the “Surface Rights”);

 

(i)            except to the extent constituting the Pipeline System or a part of the Pipeline System, all structures, equipment, machinery, fixtures, tools, compressors, meters, tanks, pumps, platforms, pulling machines, boilers, buildings, field offices, water disposal facilities and other tangible personal property and improvements, and other personal, moveable and mixed property, operational and nonoperational, known or unknown (collectively, the “Personal Property”);

 

(j)            the Burleson Sand Mine;

 

(k)            the Pipeline System;

 

(l)            to the extent transferable, all non-proprietary tangible geophysical and other tangible seismic and related technical licenses, maps, data and information and all proprietary tangible geophysical and other tangible seismic and related technical licenses, maps, data and information;

 

(m)            all Imbalances relating to the Assets;

 

(n)            all (i) trade credits, accounts receivable, notes receivable, take-or-pay amounts receivable and other receivables and general intangibles; and (ii) liens and security interests in favor of any Company Group Member, whether choate or inchoate, under any Law or Contract;

 

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(o)            all rights, claims and causes of action (including warranty and similar claims, indemnity claims and defenses) of any Company Group Member;

  

(p)            originals (to the extent available or otherwise copies) of all of the files, records, information, data, interpretations, books and reports, whether written or electronically stored, in any Company Group Member’s possession or reasonable control (but excluding any files, records, information or data that are Excluded Records or that are related to or included in the Excluded Assets), including: (i) land, lease and title records (including abstracts of title, title opinions and title curative documents); (ii) contract files; (iii) operations, environmental, production and accounting records; (iv) seismic records and surveys, gravity maps, electric logs and other geological and geophysical data and records (including all mapping and other interpretations thereof); (v) production, facility and well records and data; (vi) books and records or documents relating to Taxes of the Company Group or related to the Assets; and (vii) the Organizational Documents of the Company Group (collectively, “Records”);

 

(q)            all rights, title and interests in the Equity Interests of each Company Group Member; and

 

(r)            all other assets and properties of every kind, nature, character and description (whether real, personal or mixed, whether tangible or intangible and wherever situated), including the goodwill related thereto, all Contracts and paper facilities and all of the Company Group’s bank accounts, receivables and Cash and Cash Equivalents, as well as all credits, rebates and refunds.

 

2.3.            Purchase Price; Deposit.

 

(a)            The aggregate consideration to be paid by Buyer for the Acquired Interests at the Closing shall be an aggregate amount equal to $4,061,515,600 (the “Purchase Price”), which amount shall consist of (i) $3,250,000,000 paid in immediately available funds as cash consideration by Buyer (the “Cash Purchase Price”); and (ii) the issuance by Parent to Seller of 32,203,000 shares of Parent Class A Common Stock which have a value of $811,515,600 (the “Equity Purchase Price”) based on the Reference Price; provided, that, the number of shares of Parent Class A Common Stock comprising the Equity Purchase Price at Closing shall be reduced if necessary such that the number of shares of Parent Class A Common Stock comprising the Equity Purchase Price at Closing does not exceed nineteen and ninety-nine tenths percent (19.99%) of all issued and outstanding shares of Parent Class A Common Stock as of immediately prior to Closing, in which case, the Cash Purchase Price shall be adjusted upwards by an amount corresponding to the amount by which the Equity Purchase Price is reduced as a result of the foregoing maximum percentage being reached.

 

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(b)            The Purchase Price shall be adjusted in accordance with the terms of this Agreement, including Section ‎‎2.5, Section ‎‎2.6 and Section ‎‎2.7 (the Purchase Price, as adjusted, the “Adjusted Purchase Price”).

 

(c)            Notwithstanding anything to the contrary contained herein, if, at any time on or after the Execution Date and prior to the Closing, (i) Parent makes (A) subdivision or split of any Parent Common Stock, (B) combination or reclassification of Parent Common Stock into a smaller number of shares of Parent Common Stock or (C) issuance of any Equity Interests by reclassification of Parent Common Stock (including any reclassification in connection with a merger, consolidation or business combination in which Parent or any acquiror, as applicable, is the surviving Person) or (ii) any merger, consolidation, combination or other transaction is consummated pursuant to which Parent Class A Common Stock, is converted to cash or other Equity Interests, then the Reference Price and the number of shares of Parent Class A Common Stock to be issued to Seller pursuant to this Agreement shall be equitably and proportionately adjusted to reflect such change to provide the same economic effect as contemplated by this Agreement prior to such action, including, for the avoidance of doubt, in the cases of clauses ‎2.3(c)(i)(B) and ‎2.3(c)(ii) to provide for the receipt by Seller (or its designee(s)), in lieu of any Parent Class A Common Stock, the same number of Equity Interests or the amount of cash received in exchange for each share of Parent Class A Common Stock in connection with any such transaction described in clauses ‎2.3(c)(i)(B) and ‎2.3(c)(ii) hereof. An adjustment made pursuant to the foregoing shall become effective immediately after the applicable effective date. Notwithstanding anything to the contrary contained herein, no certificates or scrip representing fractional shares of Parent Class A Common Stock shall be issued as part of the Equity Purchase Price, and such fractional share interests shall not entitle the owner thereof to vote or to any other rights of a stockholder of Parent. In lieu of the issuance of any such fractional share, at Closing, Buyer shall pay to Seller an amount in cash determined by multiplying (x) the Reference Price by (y) the fraction of a share (rounded to the nearest hundredth when expressed in decimal form) of Parent Class A Common Stock to which Seller or Seller’s designees would otherwise be entitled to receive pursuant hereto.

 

(d)            No later than 5:00 p.m. central time on the first Business Day after the Execution Date, Buyer shall deposit by wire transfer in immediately available funds with the Escrow Agent pursuant to the Escrow Agreement an amount equal to $200,000,000 (such amount, together with any interest or earnings thereon, the “Deposit”), to be held in escrow by the Escrow Agent in accordance with the terms of this Agreement and the Escrow Agreement; provided, that if the Deposit is not deposited in accordance with this Section 2.3(d), Seller may terminate this Agreement pursuant to Section 14.1(h). If the Closing occurs, (i) first, the portion of the Deposit equal to the Adjustment Escrow Amount shall be retained in escrow by the Escrow Agent at the Closing (in the Adjustment Escrow Account) and shall be disbursed by the Escrow Agent to Buyer or Seller, as applicable, in accordance with the terms of this Agreement and the Escrow Agreement, (ii) second, from the remaining balance of the Deposit (the “Remaining Deposit Amount”), the portion of such Remaining Deposit Amount equal to the Defect Escrow Amount (determined in accordance with Section ‎‎11.2(c)(ii)), if any (and, if the Defect Escrow Amount exceeds the Remaining Deposit Amount, then the entire Remaining Deposit Amount), shall be retained by the Escrow Agent at the Closing and shall be held by the Escrow Agent in the Defect Escrow Account and shall be disbursed by the Escrow Agent to Buyer or Seller, as applicable, in accordance with this Agreement and the Escrow Agreement and (iii) thereafter, any remaining balance of the Deposit, if any, shall be applied towards the Adjusted Purchase Price at Closing in accordance with Section ‎‎9.2(d) and Section ‎‎9.3(c). If this Agreement is terminated in accordance with ‎Article XIV before the Closing occurs, the Deposit shall be released to Seller or Buyer, as applicable, as provided in Section ‎‎14.2 of this Agreement.

 

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(e)            Notwithstanding anything to the contrary contained herein, in the event that, at any time on or after the Execution Date and prior to the Closing, Parent declares and pays any dividend or distribution on the Parent Class A Common Stock outside the ordinary course and inconsistent with past practice, which for the avoidance of doubt, excludes the quarterly dividends Parent pays to holders of Parent Class A Common Stock, the Cash Purchase Price shall be increased by an amount equal to (i) the per-share amount of such dividend or distribution, multiplied by (ii) the number of shares of Parent Class A Common Stock comprising the Equity Purchase Price as of the record date for such dividend or distribution (such increase, the “Special Dividend Adjustment Amount”). An adjustment made pursuant to the foregoing shall become effective immediately after the record date for such dividend or distribution. The Special Dividend Adjustment Amount shall be paid by Buyer to Seller at Closing as part of the Adjusted Purchase Price, and shall be reflected in the Preliminary Settlement Statement and the Final Settlement Statement.

  

2.4.            Excluded Assets. The Assets shall not include the Excluded Assets and, prior to the Closing, Seller shall cause the Excluded Assets to be assigned by the applicable Company Group Member to Seller or its designee without further liability to Buyer or any Company Group Member.

 

2.5.            Adjustments to Purchase Price. Notwithstanding anything to the contrary in this Agreement, all adjustments to the Purchase Price, whether at Closing or after Closing (whether positive or negative), shall be made in cash (increasing or decreasing the Cash Purchase Price). The Adjusted Purchase Price shall be an amount equal to the sum of (without duplication):

 

(a)            the Purchase Price;

 

(b)            plus the absolute value of the Effective Time Net Working Capital (if positive);

 

(c)            less the absolute value of the Effective Time Net Working Capital (if negative);

 

(d)            plus the aggregate amount of the Effective Time Cash;

 

(e)            less the aggregate amount of any Leakage;

 

(f)            plus the aggregate amount of Cash and Cash Equivalents contributed by Seller or its Affiliates to the Company Group between the Effective Time and the Closing;

 

(g)            less the Effective Time Indebtedness Adjustment;

 

(h)            less the aggregate amount of any Company Group Transaction Expenses;

 

(i)            less, if Seller makes the election under Section ‎‎11.2(d)(i) with respect to a Title Defect, the Title Defect Amount with respect to such Title Defect once the Title Defect Amount has been determined pursuant to Section ‎‎11.2 or agreed upon in writing by the Parties; provided, that any adjustment pursuant to this Section ‎‎2.5(i) shall be subject to Section ‎‎11.2(e) and Section ‎11.2(i);

 

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(j)            less, if Seller makes the election under Section ‎‎12.1(c)(i) with respect to an Environmental Defect, the Remediation Amount with respect to such Environmental Defect once the Remediation Amount has been determined as of or prior to the Closing pursuant to Section ‎‎12.1 or agreed upon in writing by the Parties; provided, that any adjustment pursuant to this Section ‎‎2.5(j) shall be subject to Section ‎‎12.1(e);

  

(k)            less, if Seller makes the election under Section ‎‎11.2(d)(iii) with respect to a Title Defect, the aggregate Allocated Values of the Assets excluded from the transactions contemplated hereby;

 

(l)             plus, an amount equal to the Agreed Adjustment Amount;

 

(m)           plus, a fixed overhead charge equal to $3,000,000 per month (prorated for any partial month) from the Effective Time through the Closing Date;

 

(n)            less, the amount of all Property Costs or other costs or expenses, including all prepaid costs and expenses, paid by any Company Group Member on or after the Effective Time, in each case, that are incurred in connection with the ownership or operation of the Excluded Assets, including those costs or expenses incurred or paid in connection with the disposition, transfer, dividend or distribution of the Excluded Assets to Seller or its designee on or after the Effective Time;

 

(o)           plus, all amounts received or paid to any Company Group Member and all unpaid proceeds, receivables and amounts earned, in each case, on or after the Effective Time in connection with the ownership or operation of the Excluded Assets and net of any applicable Customary Hydrocarbon Deductions;

 

(p)            plus, an amount equal to, to the extent that such amount was not remitted or paid to Seller prior to the Effective Time or included in Current Assets as of the Effective Time, the value of all merchantable Hydrocarbons from or attributable to the Assets in storage or existing in pipelines, plants and tanks and upstream of the point of sale as of the Effective Time, the value to be based upon the applicable Settlement Price as of the Effective Time, net of any applicable Customary Hydrocarbon Deductions;

 

(q)           plus, an amount equal to the Special Dividend Adjustment Amount, if any; and

 

(r)            plus or less any other adjustments to the Purchase Price provided for elsewhere in this Agreement or otherwise agreed upon in writing by Seller and Buyer.

 

(s)            Notwithstanding anything to the contrary in this Agreement, in determining the adjustments contemplated under Section ‎‎2.5(b) and Section ‎‎2.5(c), the following shall be taken into account to the extent not in express conflict with the definitions of Effective Time Net Working Capital, Current Assets and Current Liabilities; provided, the following shall in no way be construed as a limitation to the definition of any of Effective Time Net Working Capital, Current Assets and Current Liabilities.

 

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(i)            the following shall be deemed to constitute Current Assets of the Company Group (without duplication or limitation):

  

(A)            the amount of all pre-paid or deposited Property Costs and all other costs and expenses (other than Taxes) paid by or on behalf of the Company Group prior to the Effective Time that are attributable to the ownership of the Assets after the Effective Time that are not reimbursed or repaid to the Company Group prior to the Effective Time, including (1) bond and insurance premiums and deductibles paid or borne by or on behalf of the Company Group with respect to any period after the Effective Time (prorated as applicable, and, with respect to any insurance premiums pertaining to insurance policies that will not be retained by a Company Group Member after Closing, limited only to prepayments for the period between the Effective Time and Closing), (2) Royalties, (3) cash calls to Third Party operators, and (4) annual registration fees and well registration fees attributable to any period after the Effective Time (prorated as applicable), but in any event excluding (x) any Company Group Transaction Expenses, (y) amounts attributable to Excluded Assets, and (z) any amounts that would constitute “Leakage”;

 

(B)            all unpaid proceeds, receivables and amounts earned as of the Effective Time from the sale of Hydrocarbons or sand produced from or attributable to the Oil and Gas Properties or the Burleson Sand Mine, in each case, net of any applicable Customary Hydrocarbon Deductions, together with any other unpaid amounts or receivables earned by or owed to the Company Group, in each case, during any period before the Effective Time and set forth on Schedule ‎2.5(s)(i)(B);

 

(C)            if any Company Group Member is the operator under an operating agreement covering any of the Assets or assets then owned by the Company Group, an amount equal to the Property Costs and other costs and expenses paid before the Effective Time by such Company Group Member, Seller or any of its or their Affiliates on behalf of the other joint interest owners without reimbursement prior to the Effective Time (including through netting of revenues paid to such joint interest owners) that are attributable to periods after the Effective Time, in each case, only to the extent that such costs and expenses are permitted to be charged to such joint interest owners under the applicable joint operating agreement, unit operating agreement, pooling agreement, pooling order or production sharing agreement or similar Contract and are set forth on Schedule ‎2.5(s)(i)(C); and

 

(D)            with respect to any Imbalances where the Company Group is underproduced as to Hydrocarbons or has overdelivered Hydrocarbons, an amount equal to the aggregate amount owed by Third Parties to the Company Group for such Imbalances as of the Effective Time if the applicable Contract governing such Imbalance requires monthly cash balancing, or, if monthly cash balancing is not required under such applicable Contract, on the basis of the applicable Settlement Price; and

 

(ii)            the following shall be deemed to constitute Current Liabilities of the Company Group (without duplication or limitation):

 

(A)            the amount of all Property Costs payable by the Company Group that are unpaid as of the Effective Time or that become payable after the Effective Time with respect to operations on or relating to the Assets that are attributable to periods prior to the Effective Time; and

 

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(B)            with respect to any Imbalances where the Company Group is overproduced as to Hydrocarbons or has underdelivered Hydrocarbons, an amount equal to the aggregate amount owed by the Company Group to Third Parties for such Imbalances as of the Effective Time, if the applicable Contract governing such Imbalance requires monthly cash balancing, or, if monthly cash balancing is not required under such applicable Contract, on the basis of the applicable Settlement Price.

 

2.6.            Preliminary Settlement Statement. Not less than five (5) Business Days prior to the Closing, Seller shall prepare and submit to Buyer for review a draft settlement statement (the “Preliminary Settlement Statement”) in substantially the form attached hereto as Exhibit K, and attaching reasonable supporting schedules, working papers and all other relevant details in Seller’s possession to enable a review thereof by Buyer, that shall set forth Seller’s good faith estimate of the Adjusted Purchase Price, and shall include each adjustment amount contemplated by Section ‎‎2.5 in accordance with GAAP and made in accordance with this Agreement as of the date of preparation of such Preliminary Settlement Statement and the calculation of the adjustment amounts used to determine such aggregate Adjusted Purchase Price, together with the designation of Seller’s account for the wire transfers of funds as required by Section ‎‎2.3(a), Section ‎9.2(d) and Section ‎‎9.3(a). Within three (3) Business Days after Buyer’s receipt of the Preliminary Settlement Statement, Buyer may deliver to Seller a written report containing all changes that Buyer proposes in good faith to be made to the Preliminary Settlement Statement, together with the explanation therefor and the supporting documents thereof, if available. If Buyer elects to deliver a written report in accordance with the preceding sentence, the Parties shall in good faith attempt to agree in writing on the Preliminary Settlement Statement as soon as possible after Seller’s receipt of Buyer’s written report but in any event prior to the Closing. The Preliminary Settlement Statement, as agreed upon in writing by the Parties, will be used to adjust the Purchase Price at the Closing and to determine the Adjusted Purchase Price at the Closing; provided that if the Parties do not agree in writing upon any or all of the adjustments set forth in the Preliminary Settlement Statement, then, absent manifest error, the amount of such un-agreed adjustment or adjustments used to adjust the Purchase Price at the Closing shall be that amount set forth in the draft Preliminary Settlement Statement delivered by Seller to Buyer pursuant to this Section ‎‎2.6 (with such changes as have been mutually agreed to in good faith in writing by the Parties) but subject to any necessary adjustment pursuant to the proviso in Section ‎‎2.3(a); provided, further, the Title Defect Amounts and Remediation Amounts claimed in good faith by Buyer in any valid Title Defect Notice and Environmental Defect Notice (to the extent not cured or Remediated prior to the Closing) shall, subject to the other terms of this Agreement, as applicable, be used to determine the Defect Escrow Amount at the Closing. The Adjusted Purchase Price determined at Closing pursuant to this Section ‎‎2.6 shall be referred to as the “Closing Purchase Price”.

 

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2.7.            Final Settlement Statement.

 

(a)            On or before the date that is one hundred twenty (120) days after the Closing (the “Final Settlement Statement Deadline”), Buyer shall prepare in good faith a final settlement statement, in substantially the form attached hereto as Exhibit K, and attaching reasonable supporting schedules, working papers and all other relevant details in Buyer’s possession to enable a review thereof by Seller (the “Final Settlement Statement”), and deliver the Final Settlement Statement to Seller. The Final Settlement Statement shall include each adjustment amount contemplated by Section ‎‎2.5 and all final adjustments made to the Purchase Price and show the resulting final Adjusted Purchase Price. For clarity, adjustments to the Purchase Price relating to Disputed Title Matters or Disputed Environmental Matters shall be exclusively addressed pursuant to Section ‎‎11.2 and Section ‎‎12.1. If Buyer fails to timely deliver a Final Settlement Statement to Seller prior to the Final Settlement Statement Deadline in accordance with this Section ‎‎2.7(a), then Seller shall have the right to thereafter deliver a Final Settlement Statement to Buyer and Buyer will have the right to review and dispute such Final Settlement Statement in accordance with the terms of this Section ‎‎2.7(a) (i.e., as if references in this Section ‎‎2.7(a) to Seller were replaced with Buyer and references in this Section ‎‎2.7(a) to Buyer were replaced with Seller); provided, however that Buyer shall only have five (5) days after Buyer’s receipt of the Final Settlement Statement to deliver a Dispute Notice. Within thirty (30) days after Seller’s receipt of the Final Settlement Statement, Seller shall return to Buyer a written report containing any proposed changes by Seller to the Final Settlement Statement, an explanation of any such changes, the reasons therefor and the supporting documents thereof in Seller’s possession (the “Dispute Notice”), and any items or changes not so specified in the Dispute Notice shall be deemed waived, and Buyer’s determinations with respect to all such elements of the Final Settlement Statement that are not addressed specifically in the Dispute Notice shall prevail and shall be final, conclusive and binding on the Parties. If Seller fails to timely deliver a Dispute Notice to Buyer in accordance with this Section ‎‎2.7(a), the Final Settlement Statement as delivered by Buyer will be deemed to be correct and will be final, conclusive and binding on the Parties and not subject to further audit or arbitration. During the thirty (30)-day period after Seller’s receipt of the Final Settlement Statement, Buyer shall provide to Seller reasonable access upon reasonable prior notice during normal business hours to all relevant Records of the Company Group used in connection with the preparation of Buyer’s draft of the Final Settlement Statement and reasonable access to Buyer, the Company Group and Buyer’s Representatives who were responsible for the preparation of Buyer’s draft of the Final Settlement Statement, as is reasonably requested and required by Seller to assist Seller and its Representatives in their respective audit and review of such Final Settlement Statement and the determinations to be contained therein.

 

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(b)            Seller and Buyer shall use commercially reasonable efforts to work together in good faith to resolve any matters properly addressed in the Dispute Notice timely delivered by Seller in accordance with Section ‎‎2.7(a). If Seller and Buyer are unable to resolve in writing all of the matters addressed in the Dispute Notice within ten (10) Business Days after the receipt of the Dispute Notice by Buyer, either Party may, upon written notice to the other Party, submit any and all unresolved matters addressed in the Dispute Notice to be resolved in accordance with this Section ‎‎2.7(b). Within fifteen (15) Business Days of receipt of written notice that either Party intends to submit such unresolved matter in accordance with this Section ‎‎2.7(b), each of Buyer and Seller shall submit the Dispute Notice, the Final Settlement Statement, and a written document of thirty (30) pages or less (exclusive of exhibits, schedules or other attachments) summarizing its position (the “Initial Brief”) to a nationally-recognized independent accounting firm as selected by mutual written agreement of the Parties or, if the Parties are unable to mutually agree, to the Houston, Texas office of Ernst & Young or if Ernst & Young declines to act in such capacity, by another nationally recognized firm of independent accountants that does not have a material relationship with either Party and that is reasonably acceptable to the Parties (the “Accounting Expert”), with a simultaneous copy to the other Party. Within ten (10) Business Days of receipt of the opposing Party’s Initial Brief, each Party shall ‎submit to the Accounting Expert a reply brief of ten (10) pages or less (exclusive of exhibits, schedules, or ‎other attachments) (the “Reply Brief”), with a simultaneous copy to the other Party. To the extent any of ‎the issues to be decided include issue(s) of legal interpretation, the Parties shall work cooperatively and in good faith to appoint a mutually-acceptable arbitrator that possesses appropriate legal experience to decide only issues of legal ‎interpretation and to set a schedule to resolve such legal dispute prior to the Accounting Expert rendering a decision.‎ Neither Party may have any ex parte communications with the Accounting Expert concerning the Accounting Expert’s determination of the disputed matters; provided, however, that the Parties shall have the right to request a meeting or a call with the Accounting Expert after the Parties’ submissions of their respective Reply Briefs at which meeting or call both Buyer and Seller must be present. Within twenty (20) Business Days after receipt of the Reply Brief, or if the Parties have engaged an arbitrator to first resolve any issues of legal interpretation, then within twenty (20) Business Days after a decision resolving those legal issues, the Accounting Expert shall render a decision in accordance with the terms of this Agreement. The Accounting Expert shall agree in writing to keep strictly confidential the specifics and existence of any matters submitted as well as all proprietary records of the Parties, if any, reviewed by the Accounting Expert in the process of resolving such disputes. In determining the proper amount of any disputed item, the Accounting Expert shall not assign a value to any item greater than the highest value for such item claimed by either Seller or Buyer or less than the lowest value for such item claimed by either the Seller or Buyer, in each case, as set forth in the Final Settlement Statement or Dispute Notice, as applicable. The Accounting Expert shall act as an expert for the limited purpose of determining the specific dispute submitted by either Party, not an arbitrator, and may not award interest, damages or penalties. Except as provided for in the Tex. Civ. Prac. & Rem. Code §§ 171.088 and 171.091, which the Parties agree shall apply to any decision by the Accounting Expert, any decision rendered by the Accounting Expert pursuant hereto shall be final, conclusive and binding on Seller and Buyer and enforceable against any of the Parties in any court of competent jurisdiction. For the limited purposes of the enforcement of any decision rendered by the Accounting Expert under this Section ‎‎2.7, the Parties hereby irrevocably consent to the exclusive jurisdiction of the courts of the State of Texas, and specifically those located in Houston, Texas, and hereby further irrevocably waive any objection to the jurisdiction of such courts. The fees and expenses of the Accounting Expert shall be borne pro rata between Seller, on the one hand, and Buyer, on the other hand, based upon the percentage that the amount actually contested but not awarded to Seller or Buyer, respectively, bears to the aggregate amount actually contested by Seller and Buyer. For example, if Seller claims the appropriate adjustments are $100,000 more than the amount determined by Buyer, and Buyer contests only $50,000 of the amount claimed by Seller, and if the Accounting Expert ultimately resolves the dispute by awarding Seller $30,000 of the $50,000 contested, then the fees and expenses of the Accounting Expert will be allocated 60% (i.e., 30/50) to Buyer and 40% (i.e., 20/50) to Seller. Except as provided in the immediately preceding two sentences, all other costs and expenses incurred by the Parties in connection with resolving any dispute hereunder before the Accounting Expert shall be borne by the Party incurring such cost and expense.

  

(c)            The date upon which all adjustments and amounts in the Final Settlement Statement are agreed to (or deemed agreed to) by the Parties pursuant to this Section ‎‎2.7 or are otherwise fully and finally determined by the Accounting Expert as set forth in this Section ‎‎2.7 shall be referred to as the “Final Settlement Date” and the final aggregate Adjusted Purchase Price as determined accordingly shall be referred to as the “Final Purchase Price”.

 

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(d)            Any difference in the Closing Purchase Price and the Final Purchase Price, as applicable, shall be treated as an adjustment to the Purchase Price and paid as follows:

  

(i)            If the Final Purchase Price is greater than the Closing Purchase Price then, on or prior to five (5) Business Days following the Final Settlement Date, (x) Buyer shall pay the aggregate amount of such difference to Seller by wire transfer of immediately available funds to the account or accounts designated in writing by Seller, and (y) the Parties shall execute and issue a joint written instruction to the Escrow Agent, instructing the Escrow Agent to release the aggregate amount in the Adjustment Escrow Account to Seller.

 

(ii)            If the Final Purchase Price is less than the Closing Purchase Price (such amount, the “Shortfall Amount”) then, on or prior to five (5) Business Days following the Final Settlement Date, the Parties shall execute and issue a joint written instruction to the Escrow Agent, instructing the Escrow Agent to release an amount of cash from the Adjustment Escrow Account equal to the Shortfall Amount to Buyer and to release the remainder of the Adjustment Escrow Account to Seller, if any. For clarity, if the Shortfall Amount is in excess of the balance of the Adjustment Escrow Account, Buyer shall be entitled to receive the full balance of the Adjustment Escrow Account and Seller shall not have any further liability or obligation with respect to the Shortfall Amount.

 

2.8.            Escrow Agreement. Simultaneously with the execution of this Agreement, Seller and Buyer have executed, and have obtained execution by the Escrow Agent of, the Escrow Agreement in connection with the funding of the Deposit pursuant to Section ‎‎2.3(c). All disbursements by the Escrow Agent of the Deposit, the Adjustment Escrow Amount or the Defect Escrow Amount (if any) shall be made pursuant to joint written instructions executed by both Seller and Buyer or, in the absence of such joint written instructions, upon the satisfaction of all the conditions and requirements set forth in the Escrow Agreement relating to such disbursements in the absence of joint written instructions. The Parties shall each pay fifty percent (50%) of any fees or costs payable to the Escrow Agent.

 

2.9.            Allocated Values; Accounting.

 

(a)            Buyer and Seller agree that the Purchase Price shall be allocated among the Leases and Wells as set forth on Schedule ‎‎2.9 and the Burleson Sand Mine (the “Allocated Values”). Buyer and Seller agree that such allocation is reasonable and, subject to Section ‎‎2.10, shall not take any position inconsistent therewith. Seller, however, makes no representation or warranty as to the accuracy of such values.

 

(b)            The Parties acknowledge and agree that if there is a conflict between a determination, calculation or methodology set forth in the definitions contained in this Agreement, on the one hand, and those provided by GAAP, on the other hand, the determination, calculation, or methodology set forth in the definitions contained in this Agreement shall control to the extent that the matter is included in the definitions contained in this Agreement and the determination, calculation, or methodology in accordance with GAAP (applied using the same accounting methods, practices, principles, policies and procedures, classifications, judgments and valuation and estimation methodologies that were used in the preparation of the Financial Statements for the most recent fiscal year) shall otherwise control.

 

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2.10.            Purchase Price Allocation. The Parties agree and acknowledge that the sale and purchase of the Acquired Interests hereunder will be treated for U.S. federal Income Tax purposes as a sale and purchase of all of the underlying assets of the Company Group. The Parties agree that the Purchase Price (valuing the Parent Class A Common Stock based on the fair market value of such stock as of the Closing Date, and including any other amounts treated as purchase price for Tax purposes) will be allocated to the assets of the Company Group in accordance with the provisions of Section 1060 of the Code and the Treasury Regulations thereunder. After the Closing, Seller shall prepare an allocation of the Final Purchase Price (valuing the Parent Class A Common Stock based on the fair market value of such stock as of the Closing Date, and including any other amounts treated as purchase price for Tax purposes) among the six categories of assets specified in Part II of Internal Revenue Service Form 8594 (Asset Acquisition Statement under Section 1060) (the “Allocation”). Seller shall deliver the Allocation to Buyer for its approval no later than ninety (90) days following the determination of the Final Purchase Price in accordance with Section ‎2.7. If Buyer notifies Seller in writing that Buyer objects to one or more items reflected in the Allocation, Seller and Buyer shall negotiate in good faith to resolve such dispute. If Buyer and Seller mutually agree on a final Allocation within thirty (30) days following Seller’s receipt of any objections from Buyer, each Party shall, and shall cause each of its Affiliates to (i) report, act, and file all Tax Returns and other applicable Tax documents in all respects and for all purposes consistent with the Allocation and the foregoing treatment, and (ii) not take any position for Tax purposes (whether in audits, Tax Returns, or otherwise) that is inconsistent with the foregoing treatment‎; provided, however, that nothing in this Agreement will prevent a Party from settling any proposed ‎deficiency or adjustment by any Governmental Authority based upon or arising out of the allocation, and ‎no Party will be required to litigate before any Governmental Authority any proposed deficiency or ‎adjustment by any Governmental Authority challenging the allocation, as applicable. If Buyer and Seller cannot mutually agree on a final Allocation, each Party shall be entitled to determine its own Allocation, and file its IRS Form 8594 consistent therewith.

  

2.11.            Withholding. Buyer shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement such amounts as may be required to be withheld and paid over to the applicable Governmental Authority under applicable Law; provided, however, other than with respect to withholding Taxes owed as a result of the failure of Seller to deliver the form described in Section ‎‎9.2(c), Buyer shall use commercially reasonable efforts to (i) provide to Seller written notice of its intent to so deduct and withhold reasonably in advance of any such deduction or withholding and (ii) cooperate with Seller to minimize the amount of any applicable withholding to Seller to the extent permitted by applicable Law. To the extent that amounts are so deducted or withheld, such amounts shall be treated for all purposes of this Agreement as having been paid to Seller.

 

2.12.            Closing Distribution. Notwithstanding anything to the contrary in this Agreement, immediately prior to the Closing, Seller shall cause the Company Group to make the Closing Distribution to the Person(s) and account(s) designated by Seller in the Preliminary Settlement Statement. The amount of the Closing Distribution shall constitute Leakage and shall reduce the Adjusted Purchase Price in accordance with Section ‎‎2.5(e), in each case without duplication of any other adjustment to the Purchase Price under this Agreement.

 

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2.13.            Distribution Cooperation. In connection with Closing, if Seller effectuates or seeks to effectuate a distribution of all or part of the Equity Purchase Price to its direct or indirect members, partners, incentive interest holders or other equityholders (collectively, “Equityholders”), Parent will use its commercially reasonable efforts to assist Seller and such Equityholders to facilitate such distribution in the manner and to the Persons requested by Seller which for avoidance of doubt may include one or more distributions to be effected substantially concurrently with Closing or as soon as practicable thereafter, including using commercially reasonable efforts to deliver, or cause to be delivered, instruction letters, legal opinions and other documentation by Parent or its counsel to the Transfer Agent or otherwise as may be required or requested to effect such distribution of the Equity Purchase Price; provided, that, each of Parent, legal counsel and the Transfer Agent has received all information and documentation (including certifications of accredited investor status) from Seller and the applicable Equityholders that is reasonably necessary or requested to effectuate such distribution a reasonable period of time prior to such distribution; provided, further the requirements of this Section ‎2.13 are only applicable to the extent such distribution is not otherwise prohibited by the terms of the Registration Rights Agreement.

  

Article III
REPRESENTATIONS AND WARRANTIES OF SELLER

 

Subject to the provisions of this ‎‎Article III and the other terms and conditions of this Agreement and the exceptions and matters set forth on the Schedules attached to this Agreement, Seller hereby represents and warrants to Buyer as follows:

 

3.1.            Organization, Existence and Qualification. Seller is a limited liability company duly formed, validly existing and in good standing under the Laws of the State of Delaware. Seller has all requisite limited liability company power and authority to own, lease and operate its property (including the Acquired Interests) and to carry on its business as now conducted. Seller is duly licensed or qualified to do business as a foreign limited liability company in all jurisdictions (i) in which it carries on business or owns assets or (ii) where the actions to be performed by Seller hereunder make such qualification or licensing necessary and, in each case, such qualification or licensing is required by Law, except where the failure to be so qualified or licensed would not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect.

 

3.2.            Authority, Approval and Enforceability. Seller has full limited liability company power and authority to enter into, execute, deliver and perform this Agreement and the other Transaction Documents to which Seller is or will be a party and to consummate the transactions contemplated herein and therein. The execution, delivery and performance by Seller of this Agreement and the other Transaction Documents to which Seller is or will be a party have been duly and validly authorized and approved by all necessary limited liability company action on the part of Seller and no other limited liability company proceedings on the part of Seller are necessary to approve and authorize the execution, delivery and performance by Seller of this Agreement and the other Transaction Documents to which Seller is or will be a party and the consummation of the transactions contemplated hereby and thereby. This Agreement is, and each of the Transaction Documents to which Seller is or will be a party when executed and delivered by Seller will be, the valid and binding obligation of Seller and enforceable against Seller in accordance with their respective terms, subject to the effects of bankruptcy, insolvency, reorganization, moratorium and similar Laws, as well as to principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at Law).

 

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3.3.            No Conflicts. Except for Customary Post-Closing Consents or as disclosed on Schedule ‎‎3.3 or Schedule ‎‎4.2, the execution, delivery and performance by Seller of this Agreement and the other Transaction Documents to which Seller is or will be a party and the consummation of the transactions contemplated herein and therein by Seller will not (a) conflict with or result in a breach of any provisions of the Organizational Documents of any Company Group Member or Seller or any resolution adopted by Seller’s board of directors, managers or officers, (b) conflict with, result in a violation or default of (with or without due notice or lapse of time or both) or give rise to any right of termination, cancellation, acceleration or modification of any terms of, result in the termination or acceleration of the maturity of, or result in the loss of a material benefit or increase in any fee, liability, or obligation under any material Contract by which Seller or its assets are bound or give rise to the creation or imposition of any Encumbrance (other than Permitted Encumbrances) on or with respect to Seller or any of its assets or properties, (c) conflict with, violate or result in a default under any Order applicable to Seller, any of its Affiliates or its assets (including the Assets), (d) assuming HSR Approval has been received, conflict with or result in a violation of or default under any Law applicable to Seller, any of its Affiliates or its assets (including the Assets), or (e) contravene, conflict with or result in a violation of any of the terms or requirements of, or give any Governmental Authority the right to revoke, withdraw, suspend, cancel, terminate or modify, any material Governmental Authorization that relates to the Assets, except in the case of clauses ‎(b) through (e), where such conflict, default, Encumbrance, termination or violation would not reasonably be expected to prevent or materially delay the consummation of the transactions contemplated by this Agreement by Seller or materially impair the ability of Seller to perform its obligations hereunder or the other Transaction Documents to which Seller is, or will be, a party.

 

3.4.            Consents. Except as disclosed on Schedule ‎‎3.3, Schedule ‎‎4.2 or Schedule ‎4.5, and except for HSR Approval or Customary Post-Closing Consents, there are no Consents that Seller is required to obtain in connection with the execution and delivery of this Agreement and the Transaction Documents to which Seller is or will be party or the consummation of the transactions contemplated hereby or thereby by Seller, except where the failure to obtain such Consent would not reasonably be expected to prevent or materially delay the consummation by Seller of the transactions contemplated by this Agreement or the other Transaction Documents to which Seller is, or will be, a party.

 

3.5.            Bankruptcy. There are no bankruptcy, insolvency, reorganization or receivership proceedings pending against, being contemplated by or, to Seller’s Knowledge, threatened in writing against Seller. Seller is not entering into this Agreement with the actual intent to hinder, delay or defraud either present or future creditors.

 

3.6.            Litigation. Except as set forth on Schedule ‎‎3.6 or with respect to any Proceeding filed or threatened by any Governmental Authority after the Execution Date related to or arising out of Antitrust Laws, the execution and delivery by the Parties of this Agreement or the other Transaction Documents, or the consummation of the transactions contemplated hereunder or thereunder, there are no Proceedings pending or, to the Knowledge of Seller, threatened in writing by any Third Party or Governmental Authority against Seller or its Affiliates (other than the Company Group) (a) with respect to the Acquired Interests owned by Seller, (b) that challenge the validity or enforceability of the obligations of Seller under this Agreement or the obligations of Seller under the other Transaction Documents to which it is or will be a party, or (c) that seek to prevent, delay or otherwise would reasonably be expected to materially adversely affect the consummation by Seller of the transactions contemplated hereby or thereby. There exist no unsatisfied Orders of a Governmental Authority outstanding against Seller or any of its Affiliates (other than the Company Group) that would reasonably be expected to prevent or materially delay the consummation by Seller of the transactions contemplated by this Agreement.

 

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3.7.            Ownership of Acquired Interests. The Acquired Interests are owned of record and beneficially by Seller, free and clear of all Encumbrances, except for Corporate Encumbrances. At the Closing, the delivery by Seller to Buyer of the Assignment Agreement will vest Buyer with good and valid title to all of the Acquired Interests, free and clear of all Encumbrances, except for Corporate Encumbrances, and upon such delivery to Buyer, Buyer will be the sole and lawful owner, beneficially and of record, of all of such Acquired Interests, free and clear of all Encumbrances, except for Corporate Encumbrances. Without limiting the generality of the foregoing, the Acquired Interests are not subject to any voting trust, member agreement or voting agreement or other agreement, right, instrument or understanding with respect to any purchase, sale, issuance, transfer, repurchase, redemption or voting of any Acquired Interests, other than any transfer restrictions contained in the Company’s Organizational Documents existing as of the Execution Date or created by this Agreement.

 

3.8.            Brokers’ Fees. Seller has not incurred any Liability, contingent or otherwise, for brokers’ or finders’ fees relating to the transactions contemplated by this Agreement for which Buyer or any Affiliate of Buyer (including after the Closing, any Company Group Member) shall have any responsibility.

 

3.9.            Accredited Investor. Seller (and any Seller’s designee) is an “accredited investor,” as such term is defined in Regulation D of the Securities Act and will directly or indirectly acquire the Parent Class A Common Stock comprising part of the Equity Purchase Price issued to it at Closing for its own account and not with a view to a sale, transfer or distribution thereof in violation of the Securities Act, any state blue sky Laws or any other securities Laws. Seller has made, independently and without reliance on Buyer or any of its Affiliates or Buyer’s Representatives (except to the extent that Seller has relied on the Buyer Parties’ representations and warranties set forth in ‎Article V and the Buyer’s Certificate delivered pursuant to this Agreement), its own analysis of the Parent Class A Common Stock comprising the Equity Purchase Price and Seller has had reasonable and sufficient access to documents, other information and materials as it considers appropriate to make its evaluations. Seller understands that the aforesaid Parent Class A Common Stock comprising the Equity Purchase Price has not been registered under the Securities Act or under any state securities or blue sky Laws, and, as a result, is subject to substantial restrictions on transfer. Seller acknowledges that the aforesaid Parent Class A Common Stock comprising the Equity Purchase Price must be held indefinitely unless subsequently registered under the Securities Act and any applicable state securities or blue sky Laws, or sold or otherwise transferred pursuant to exemptions from registration under the Securities Act or such Laws.

 

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3.10.            Independent Evaluation. Seller is a sophisticated, experienced and knowledgeable investor. In entering into this Agreement, except to the extent that Seller has relied on the Buyer Parties’ representations and warranties set forth in ‎Article V and the Buyer’s Certificate delivered pursuant to this Agreement, Seller has relied solely upon Seller’s own expertise in legal, tax and other professional counsel concerning this transaction, the Parent Class A Common Stock comprising the Equity Purchase Price issued to Seller (or Seller’s designees) at Closing and the value thereof. Seller acknowledges and affirms that (a) it has completed such independent investigation, verification, analysis and evaluation of the Parent Class A Common Stock comprising the Equity Purchase Price issued to Seller (or Seller’s designees) at Closing as it has deemed necessary or appropriate to enter into this Agreement, and (b) at Closing, Seller shall have completed, or caused to be completed, its independent investigation, verification, analysis and evaluation of the Parent Class A Common Stock comprising the Equity Purchase Price issued to Seller (or Seller’s designees) at Closing as Seller has deemed necessary or appropriate to consummate the transaction.

  

Article IV
REPRESENTATIONS AND WARRANTIES OF SELLER REGARDING THE COMPANY GROUP

 

Subject to the provisions of this ‎‎Article IV and the other terms and conditions of this Agreement and the exceptions and matters set forth on the Schedules attached to this Agreement, Seller (on behalf of itself and the Company Group) hereby represents and warrants to Buyer as follows; provided, however, for purposes of clarification and avoidance of doubt, to the extent that any representation and warranty of Seller in this ‎Article IV relates to properties or assets of the Company Group that are operated by Buyer or any of its Affiliates as of the Execution Date, such representation and warranty is expressly limited to the Knowledge of Seller:

 

4.1.            Organization, Existence and Qualification. Each Company Group Member is a limited liability company duly formed, validly existing and in good standing under the Laws of the jurisdiction of its formation. Each Company Group Member has all requisite limited liability company power and authority to own and, if applicable, operate its property (including the Assets that are owned or operated by the Company Group) and to carry on its business as now conducted. Each Company Group Member is duly licensed or qualified to do business as a foreign limited liability company in all jurisdictions (a) in which it carries on business or owns assets and (b) where the actions to be performed by a Company Group Member hereunder make such qualification or licensing necessary, in each case, such qualification or licensing is required by Law, except where the failure to be so qualified or licensed would not reasonably be expected to have a Material Adverse Effect.

 

4.2.            No Conflicts. Except for Customary Post-Closing Consents or as disclosed on Schedule ‎‎3.3, Schedule ‎‎4.2 or Schedule ‎4.5, the execution, delivery and performance by Seller of this Agreement and the Transaction Documents to which Seller is or will be a party and the consummation of the transactions contemplated herein and therein by Seller will not (a) conflict with or result in a breach of any provisions of the Organizational Documents of any Company Group Member or any resolution adopted by a Company Group Member’s board of directors, managers or officers, (b) conflict with, result in a violation or default of (with or without due notice or lapse of time or both) or give rise to any right of termination, cancellation, acceleration or modification of any terms of, result in the termination or acceleration of the maturity of, or result in the loss of a material benefit or increase in any fee, liability, or obligation under any Material Contract or give rise to the creation or imposition of any Encumbrance (other than Permitted Encumbrances) on or with respect to the Company Group or any of its Assets, (c) conflict with, violate or result in a default under any Order applicable to the Company Group or the Assets, or (d) assuming HSR Approval has been received, conflict with or result in a violation of or default under any Law applicable to the Company Group or its assets (including the Assets), or (e) contravene, conflict with or result in a violation of any of the terms or requirements of, or give any Governmental Authority the right to revoke, withdraw, suspend, cancel, terminate or modify, any material Governmental Authorization that relates to the Assets, except in the case of clauses ‎(b) through (e), where such conflict, default, Encumbrance, termination or violation would not reasonably be expected to have a Material Adverse Effect.

 

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4.3.            Bankruptcy. There are no bankruptcy, insolvency, reorganization or receivership proceedings pending against, being contemplated by or, to Seller’s Knowledge, threatened in writing against any Company Group Member. No Company Group Member is entering into the transactions contemplated by this Agreement with the actual intent to hinder, delay or defraud either present or future creditors. Each Company Group Member is solvent and will not fail to remain solvent as a result of any of the transactions contemplated by this Agreement or any other Transaction Document.

 

4.4.            Litigation. Except as set forth on Schedule ‎‎4.4, (a) there are no pending Proceedings against any Company Group Member that relate to the Assets or to which the Assets operated by any Company Group Member, or to Seller’s Knowledge, operated by a Third Party are subject before any Governmental Authority and to Seller’s Knowledge, no such Proceeding relating to the Assets or to which the Assets are subject has been threatened in writing against any Company Group Member or the Assets, (b) there are no pending Proceedings against any Company Group Member or to which the Assets are subject before any Governmental Authority seeking to prevent the consummation of the transactions contemplated hereby or which is reasonably likely to materially impair or delay Seller’s ability to perform the obligations of Seller under this Agreement and to Seller’s Knowledge, no such Proceeding has been threatened against any Company Group Member or the Assets and (c) there are no Proceedings currently pending or, to Seller’s Knowledge, threatened in writing by or against any Third Party operator of the Assets that are materially adverse to the Company Group’s ownership or use of the Assets after the Effective Time. There exist no unsatisfied Orders which remain outstanding against any Company Group Member or the Assets operated by any Company Group Member, or to Seller’s Knowledge, operated by a Third Party (other than regulatory Orders in the Ordinary Course of Business or Orders that generally apply to the location in which any Company Group Member or the Assets are located or the industry in which any Company Group Member operates). Except as set forth on Schedule ‎‎4.4 or for any matter that has not been (and would not reasonably be expected to be) materially adverse to the Company Group’s ownership or use of the Assets, neither Seller nor any Company Group Member has received any written claim, written notice or other written statement claiming any material Liability, violation of any Law or any investigation (in each case) with respect to the ownership or operation of the Assets by the Company Group, which remains unresolved.

 

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4.5.            Consents; Preferential Purchase Rights. Except as disclosed on Schedule 3.3 or Schedule ‎‎4.5 and for HSR Approval, (a) other than Customary Post-Closing Consents, no Consent is required to be obtained by the Company Group for or in connection with the (i) execution and delivery of this Agreement by Seller and the Transaction Documents to which Seller or any Company Group Member is or will be a party, (ii) the contribution of any Contributed Asset in accordance with Section ‎6.20 or (iii) consummation of the transactions and performance of the terms and conditions contemplated hereby or thereby by Seller or any such Company Group Member and (b) except as set forth in the Organizational Documents of the Company Group Members, there are no preferential rights to purchase, right of first refusal, tag-along rights, drag-along rights or other similar rights or requirements with respect to the Assets or the Equity Interests of any Company Group Member that, in either case, are applicable to the transactions contemplated by this Agreement (each, a “Preferential Purchase Right”).

  

4.6.            Capitalization.

 

(a)            Schedule ‎‎4.6(a) sets forth, for each Company Group Member, a true, correct and complete list of the issued and outstanding Equity Interests of such Company Group Member, including the Acquired Interests, and the record and beneficial owners thereof, as of the Execution Date. Seller, directly or indirectly, owns all of the issued and outstanding Equity Interests of the Company Group Members, free and clear of all Encumbrances, other than Corporate Encumbrances. The Equity Interests of each Company Group Member have been duly authorized, are validly issued, and were not issued in violation of, and, except as set forth in the Organizational Documents of the Company Group Members as of the date hereof, are not subject to, any preemptive rights, rights of first refusal, rights of first offer, purchase options, call options or other similar rights of any Person. There are no Equity Interests issued or outstanding in any of the Company Group Members other than as set forth on Schedule ‎‎4.6(a). Except for the entities set forth on Schedule ‎‎4.6(a), no Company Group Member directly or indirectly owns, of record or beneficially, any Equity Interests in, or any interest convertible into, exercisable for the purchase of or exchangeable for any such Equity Interests, or is under any current or prospective obligation to form or make any loan, capital contribution or other investment in any other Person.

 

(b)            Except for this Agreement or as provided in the applicable Company Group Member’s Organizational Documents, there are no Contracts (including options, warrants, calls, puts and preemptive rights) obligating any Company Group Member to (i) issue, sell, pledge, dispose of or encumber any of the Equity Interests in any Company Group Member; (ii) redeem, purchase or acquire in any manner any of the Equity Interests in any Company Group Member (other than as set forth in the applicable Company Group Member’s Organizational Documents); or (iii) make any dividend or distribution of any kind with respect to any of the Equity Interests in any Company Group Member.

 

(c)            Other than the issued and outstanding Equity Interests of each Company Group Member set forth on Schedule ‎‎4.6(a), there are no outstanding or authorized Equity Interests of any Company Group Member, or rights for which the value is measured by reference to, Equity Interests of any Company Group Member, including any options, warrants, equity appreciation, phantom equity, profit participation or similar rights affecting the Equity Interests in any Company Group Member. Other than as set forth in the Organizational Documents of the applicable Company Group Member, there are no voting trusts, proxies or other member or similar agreements or understandings with respect to the voting of the Equity Interests in any Company Group Member.

 

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(d)            Seller has made available to Buyer true and complete copies of the Organizational Documents of each Company Group Member in effect as of the Execution Date.

 

(e)            No Company Group Member is an “investment company” or a company “controlled by” an entity required to register as an “investment company” within the meaning of the Investment Company Act of 1940.

 

4.7.            Financial Statements.

 

(a)            Seller has made available to Buyer true, correct and complete copies of the following financial statements: (i) an audited consolidated balance sheet of the Company Group and the related audited consolidated statements of operations and cash flows as of and for the twelve-month period ended December 31, 2024 and December 31, 2025, and (ii) an unaudited consolidated balance sheet of the Company Group and the related unaudited consolidated statements of operations and cash flows as of the period ended March 31, 2026 (the “Balance Sheet Date”) (collectively, the “Financial Statements”).

 

(b)            Except as set forth on Schedule ‎‎4.7(b), the Financial Statements (i) have been prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby, and (ii) present fairly, in all material respects, in accordance with the applicable requirements of GAAP, the consolidated financial position and operating results and cash flows of the Company Group as of, and for the periods ended on, the respective dates thereof, subject, however, in the case of the unaudited Financial Statements, to normal year-end adjustments and accruals and the absence of notes and other textual disclosures required by GAAP.

 

(c)            Except as set forth in the Financial Statements or on Schedule ‎‎4.7(c), no Company Group Member has any liability or obligation required by GAAP to be set forth in a balance sheet or in the notes thereto except liabilities or obligations that (i) have been incurred in connection with the transactions contemplated by this Agreement or are disclosed in this Agreement or in any of the Schedules, (ii) are accrued or reserved against in the Financial Statements, (iii) were incurred after the Balance Sheet Date in the Ordinary Course of Business, (iv) are included in the adjustments set forth in Section ‎‎2.5 or (v) which would not reasonably be expected to be material to the Company Group.

 

(d)            (i) Except as set forth on Schedule ‎‎4.7(d), no Company Group Member has any outstanding True Borrowed Money Indebtedness as of the Execution Date; and (ii) as of the date that is two (2) Business Days prior to the Execution Date, the aggregate outstanding amount of indebtedness of the Company Group of the type described in clauses (a), (b), and (g) (solely with respect to guarantees of indebtedness of the type described in clauses (a) or (b)), (solely to the extent relating to indebtedness of the type described in clauses (a) or (b)) of the definition of “Indebtedness for Borrowed Money” (such indebtedness, collectively, “True Borrowed Money Indebtedness”) was $667,000,000. No default or event of default (and no event that, with notice or lapse of time or both, would constitute a default or event of default) exists under the indenture governing the Senior Notes, and neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will (with or without notice or lapse of time) constitute a default under, or require any offer to repurchase, redeem, prepay or accelerate, the Senior Notes.

 

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4.8.            Absence of Changes. Except as set forth on Schedule ‎‎4.8, since the Balance Sheet Date, (a) the Company Group has not suffered a Material Adverse Effect and (b) the business of the Company Group has been operated and maintained substantially in the Ordinary Course of Business of the Company Group in all material respects. Except as set forth on Schedule ‎‎4.8 or as otherwise expressly required by this Agreement, since the Balance Sheet Date, the Company Group has not taken any action or failed to take any action that would otherwise require the consent of Buyer if taken or failed to be taken during the period between the Execution Date and the Closing Date pursuant to Section ‎‎6.1.

 

4.9.            Material Contracts.

 

(a)            Schedule ‎‎4.9 sets forth, as of the Execution Date, all Applicable Contracts to which any Company Group Member is a party or by which the Assets operated by any Company Group Member are bound and to Seller’s Knowledge, any other Applicable Contract by which the Assets operated by any Third Party are bound, in each case, of the type described below (other than purchase orders, collectively, the “Material Contracts”):

 

(i)             any Applicable Contract (other than joint operating agreements, unit operating agreements, pooling agreements or master services agreements entered in the Ordinary Course of Business or similar Contracts) that would reasonably be expected to result in aggregate payments by any Company Group Member of more than $250,000 during the remainder of the current or any subsequent calendar year or $500,000 in the aggregate over the term of such Contract (in each case, based solely on the terms thereof and current volumes, without regard to any expected increase in volumes or revenues);

 

(ii)            any Applicable Contract (other than joint operating agreements, unit operating agreements, pooling agreements or master services agreements entered in the Ordinary Course of Business or similar Contracts) that would reasonably be expected to result in aggregate revenue to any Company Group Member of more than $250,000 during the remainder of the current or any subsequent calendar year or $500,000 in the aggregate over the term of such Contract (in each case, based solely on the terms thereof and current volumes, without regard to any expected increase in volumes or revenues);

 

(iii)           any Contract for the purchase, sale, exchange, disposition, gathering, treatment, processing, storage, fractionation, disposal, compression, stabilization or transportation of Hydrocarbons, water, or sand produced from or attributable to the Company Group’s interest in the Assets that (A) is not cancelable by any Company Group Member without penalty or other material payment on not more than ninety (90) days’ prior written notice; (B) contains guaranteed minimum throughput, volumes delivery or output or other similar commitments, (C) contains acreage or leasehold dedications, volume dedications or similar requirements, (D) contains any calls on, or options to purchase, quantities of Hydrocarbon or sand or (E) contains take or pay, advance payments, prepayment or similar provisions requiring Hydrocarbons, sand or water to be gathered, stored, delivered, transported, disposed, stabilized, processed, treated, fractionated, compressed, transported, exchanged or sold without receiving full payment therefor;

 

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(iv)           any Applicable Contract that is an indenture, mortgage, loan, credit agreement, sale-leaseback, guaranty of any obligation, bond, letter of credit, or similar financial Contract providing for Indebtedness for Borrowed Money;

 

(v)            any Applicable Contract that constitutes a lease under which any Company Group Member is the lessor or the lessee of any real or personal property or fixtures (other than a Lease or Surface Right) which lease (A) cannot be terminated by the Company Group without penalty upon ninety (90) days’ or less notice and (B) involves an annual base rental of more than $500,000;

 

(vi)           any Applicable Contract that constitutes a farmout or farm-in agreement, participation agreement, exploration agreement, development agreement, trade exchange or swap agreement, joint operating agreement, data license agreement, seismic license agreement (excluding any tax partnership) or any similar Applicable Contract, in each case, that still has primary obligations outstanding;

 

(vii)          any Applicable Contract with any Affiliate of any Company Group Member (other than a contract or agreement solely between or among the Company Group Members) that will not be terminated prior to or at the Closing;

 

(viii)         any Seismic License;

 

(ix)            any Applicable Contract that contains a non-competition agreement that purports to restrict, limit or prohibit the manner in which, or the locations in which, the Company may conduct its business, including any Contract that: (A) contains or constitutes an existing area of mutual interest agreement or an agreement to enter into an area of mutual interest agreement in the future or (B) includes non-competition or non-solicitation restrictions (other than confidentiality agreements or non-disclosure agreements entered into in the Ordinary Course of Business); provided that a Contract shall not constitute a Material Contract pursuant to this subsection ‎(ix) solely because such Contract contains provisions providing for maintenance of uniform interests or because such Contract is a surface use agreement or similar Contract containing customary setback provisions;

 

(x)             [Intentionally Omitted]

 

(xi)            any Applicable Contract which is a collective bargaining agreement, or other similar Contract with any labor union, works council, similar labor organization or other employee representative (each a “Collective Bargaining Agreement”);

 

(xii)           any Applicable Contract constituting a partnership, joint venture or other similar Contract (including any Tax partnership agreement);

 

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(xiii)          any Applicable Contract guaranteeing any obligation of another Person (excluding any guarantees by one Company Group Member of the obligations of another Company Group Member);

 

(xiv)          any Applicable Contract for the use or sharing of drilling rigs or workover rigs or for completion or fracking services;

  

(xv)           any Applicable Contract for which the primary purpose is to provide for the indemnification of another Person;

 

(xvi)          any Applicable Contract that relates to the acquisition or disposition of any material asset during the three-year period prior to the Execution Date or with respect to which the Company Group has any material outstanding rights or obligations (excluding any indemnity obligations owed to or from the Company Group that customarily survive the closing of such transactions even if no claim is currently pending);

 

(xvii)         any Applicable Contract relating to the pending acquisition (by merger, purchase of equity or assets or otherwise) by any Company Group Member of any operating business or the capital stock of any other Person;

 

(xviii)       any stockholders, investors rights, registration rights or similar Contract; and

 

(xix)          any Applicable Contract that is a settlement or similar agreement with any Governmental Authority pursuant to which there will be any material outstanding obligation with respect to the Assets after the Execution Date.

 

(b)            Except as set forth on Schedule ‎‎4.9, (i) each Material Contract (including any Material Contract entered into after the Execution Date (subject to Section ‎‎6.1)) is a legal, valid and binding and enforceable obligation against the applicable Company Group Member, and to Seller’s Knowledge, each other party thereto, and is in full force and effect in accordance with its respective terms; (ii) there exists no material default under any Material Contract by the applicable Company Group Member or, to Seller’s Knowledge, by any other Person that is a party to such Material Contract, and no event, occurrence, condition or act has occurred that with notice or lapse of time or both, would constitute a material default under any Material Contract by the applicable Company Group Member or, to Seller’s Knowledge, any other Person that is a party to such Material Contract; (iii) no written notice to terminate a Material Contract (in whole or in part) has been delivered to or delivered by any Third Party with respect to any such Material Contract, nor, to the Knowledge of Seller, has any such termination been threatened in writing and (iv) Seller has provided to Buyer true, correct and complete copies of each Material Contract (including a written description of the material terms of all oral agreements or arrangements constituting a Material Contract) and any and all material amendments, modifications and supplements thereto.

 

4.10.            No Violation of Laws. Except as would not reasonably be expected to be material and adverse to the Company Group, no Company Group Member is in violation of or non-compliance with, nor has any Company Group Member been during the three-year period prior to the Execution Date in violation of or non-compliance with, any Laws with respect to its ownership and operation of the Assets. To the Knowledge of Seller, the Company Group has not received during the three-year period prior to the Execution Date written notice of any material violation of or non-compliance with any Laws, including with respect to its ownership or operation of the Assets or the operation of the Business.

 

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4.11.            Royalties and Working Interest Payments. Except for such items that are being held in suspense as set forth on Schedule ‎‎4.11, (a) each Company Group Member as to Assets operated by any Company Group Member, (b) to Seller’s Knowledge, each Company Group Member’s predecessor-in-interest to any Wells operated by such predecessors-in-interest, and (c) to Seller’s Knowledge, each Third Party operator of the Assets as to Assets operated by such Third Party operator, has properly and timely paid (or caused to be paid) in all material respects, all (i) Royalties and other burdens upon, measured by or payable out of Hydrocarbons or sand produced from or attributable to such Assets and (ii) other interest owners’ revenues or proceeds attributable to sales of Hydrocarbons or sand produced from or attributable to such Assets, in each case of (i) and (ii) in accordance with the applicable Leases and applicable Laws and, in each case of (i) and (ii) due as a result of such Company Group Member or its Affiliates’ ownership or operatorship of any Assets.

  

4.12.            Imbalances. Except as set forth on Schedule ‎‎4.12, there are no material Imbalances associated with the Assets as of the Effective Time.

 

4.13.            Current Commitments. Schedule ‎‎4.13 sets forth, as of the Execution Date, each authority for expenditures issued to conduct any operations or make any capital expenditures for an amount greater than $200,000 (net to any Company Group Member’s interest in the Assets) (collectively, the “AFEs”) relating to the Assets for which all of the activities anticipated in such AFEs have not been completed by the Execution Date.

 

4.14.            Taxes. Except as set forth on Schedule ‎‎4.14 and to the Knowledge of Seller with respect to any Assets operated by any Third Party:

 

(a)            All material Taxes required to be paid by or with respect to the Company Group or the Assets that have become due and payable have been duly and timely paid in full (whether or not shown as due and owing on any Tax Returns), and all material Tax Returns required to be filed by or with respect to any Company Group Member or the Assets have been duly and timely filed (taking into account any validly obtained extension of the due date for filing) and all such Tax Returns are true, correct and complete in all material respects.

 

(b)            There are no Encumbrances (other than Permitted Encumbrances) on any of the Assets of the Company Group attributable to any Taxes.

 

(c)            No audit, litigation or other proceeding with respect to material Taxes of or with respect to the Company Group or the Assets has been commenced or is pending or, to the Knowledge of Seller, threatened in writing, and neither Seller nor any Company Group Member has received written notice of any pending claim, deficiency, or proposed adjustment against it (which remains outstanding) from any applicable Governmental Authority for assessment of material Taxes of or with respect to the Company Group or the Assets and, to the Knowledge of Seller, no such claim has been threatened in writing.

 

(d)            None of the Assets is subject to any Tax partnership agreement or is otherwise treated, or required to be treated, as held in an arrangement requiring a partnership Tax Return to be filed under Subchapter K of Chapter 1 of Subtitle A of the Code.

 

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(e)            None of the Company Group Members is a party to, or otherwise bound by, or currently has any material liability pursuant to, any Tax allocation, sharing, indemnity, or other similar agreement, other than any commercial Contract entered into in the ordinary course of business containing customary Tax allocation or tax-gross up provisions and which does not relate primarily to Taxes.

 

(f)            None of the Company Group Members has in force, is otherwise subject to or has requested or has been requested to file (i) any waiver of any statute of limitations in respect of any material Taxes which is still in effect or (ii) an extension of the time for filing any material Tax Return that has not yet been filed (other than customary automatic extensions to file any Tax Returns obtained in the ordinary course of business consistent with past practice).

 

(g)            All material Taxes required to be deducted and withheld by or with respect to the Company Group or the Assets have been deducted or withheld and, to the extent required under applicable Law, have been timely paid to the proper Governmental Authority, and the Company Group has complied in all material respects with all Tax information reporting and record keeping requirements under all applicable Laws with respect thereto.

 

(h)            None of the Company Group Members has any material liability for the Taxes of any other Person (i) under Treasury Regulations Section 1.1502-6 (or any corresponding or similar provision of state or local Law), (ii) as a transferee or successor, (iii) by operation of Law, or (iv) otherwise.

 

(i)            None of the Company Group Members will be required to include any material item or income in, or exclude any material item or deduction from, taxable income for any taxable period (or any portion thereof) ending after the Effective Time as a result of (i) any installment sale or open transaction entered into prior to the Closing, (ii) any change in or use of an improper method of accounting prior to the Closing, (iii) any prepaid amount or deferred revenue received or accrued prior to the Closing, or (iv) any “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state or local Law) executed prior to the Closing.

 

(j)            None of the Company Group Members is or has been a party to any “listed transaction” as defined in Code Section 6707A(c)(2) and Treasury Regulations Section 1.6011-4(b)(2).

 

(k)            No unresolved claim has ever been made by a Governmental Authority in a jurisdiction where the Company Group does not file a Tax Return that the Company Group is or may be subject to taxation, or required to file such type of Tax Return, in that jurisdiction.

 

(l)            The Company Group Members are in material compliance with all applicable Laws relating to escheat or unclaimed or abandoned property and are not subject to, nor have received notice of, any audit or proceeding relating to any escheat or unclaimed or abandoned property obligations.

 

(m)           None of the Company Group Members have ever made a SALT Election.

 

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(n)           For U.S. federal income tax purposes, each Company Group Member is, and since formation has been, classified as an entity disregarded as separate from Seller.

  

4.15.            Brokers’ Fees. Except for fees included in Company Group Transaction Expenses, no broker, investment banker or other Person is entitled to any broker’s, finder’s or other similar fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of any Company Group Member and neither Seller nor any Company Group Member is a party to any agreement which would ‎give rise to any valid claim against Buyer or its Affiliates (including, following the Closing, ‎any Company Group Member), for any such fee or commission.

 

4.16.            Permits. Except as set forth on Schedule ‎‎4.16, each Company Group Member validly holds all material Governmental Authorizations required to be held by the applicable Company Group Member for the lawful conduct of the Business and the ownership, operatorship and use of the Assets by such Company Group Member (each, a “Material Permit”). All Material Permits are in full force and effect and the Company Group is in compliance, in all material respects, with each such Material Permit and no event has occurred or Proceeding is pending or, to the Knowledge of Seller, threatened in writing, to suspend, revoke, withdraw, adversely modify, terminate or materially limit any such Material Permit or that has had or would reasonably be expected to have a material impact on the ability of the Company Group to use such Material Permit or conduct its operations or that would result (after the giving of notice or lapse of time or both would permit) in the termination, revocation, suspension, withdrawal or restriction of any such Material Permit, or the imposition of any fine, penalty or other sanctions for violation of any requirements relating to any such Material Permits, in any material respect. None of Seller or its Affiliates has received written notice from any Governmental Authority alleging any violation of any such Material Permit by any Company Group Member that remains uncured.

 

4.17.            Environmental Laws. Except as set forth on Schedule ‎‎4.17:

 

(a)            the Company Group’s (and to Seller’s Knowledge, any Third Party operator’s) ownership and operation of the Assets is, and has been during the three-year period prior to the Execution Date, in material compliance with applicable Environmental Laws and Governmental Authorizations required thereunder;

 

(b)            none of the Company Group Members is the subject of any pending, or to Seller’s Knowledge, threatened Proceedings asserting, and there are no outstanding Orders related to, any actual or alleged non-compliance with or Liabilities under Environmental Laws;

 

(c)            none of the Assets operated by any Company Group Member nor any Company Group Member is subject to Environmental Liabilities that individually or in the aggregate reasonably would be expected to exceed $200,000, and with respect to the Assets operated by any Company Group Member and, to Seller’s Knowledge, operated by any Third Party, there has been no release of, exposure to or contamination by Hazardous Substance in violation of and that has given or would reasonably be expected to give rise to material Environmental Liabilities;

 

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(d)            during the three-year period prior to the Execution Date, the Company Group has not received from any Governmental Authority or other Person any written notice of material violation of, alleged material violation of, or material and adverse Liability under any Environmental Law with respect to its ownership or operation of the Assets other than notices with respect to matters that have been resolved to the satisfaction of any relevant Governmental Authority or for which the Company Group has no further material obligations outstanding; and

  

(e)            Seller and the Company Group Members used commercially reasonable efforts to provide to Buyer copies of all material third-party environmental audits, assessments and reports prepared during the three-year period prior to the Execution Date, that relate to the Assets or the ownership or operation thereof by the Company Group, that are in their possession or actual control, and regarding an Asset’s or a Company Group Member’s compliance with or Liabilities under Environmental Laws.

 

4.18.            Payments for Production. Except for Imbalances or as disclosed on Schedule ‎‎4.18, no Company Group Member is subject to ‎(a) any prepayment arrangement under any Applicable Contract for the sale of Hydrocarbons or sand ‎that contains a ‎‎“take or pay provision” or contains calls upon or options to purchase ‎Hydrocarbons or sand, in each case, ‎produced from or attributable to the Assets, (b) a production ‎payment with respect to the Assets ‎or (c) any other arrangement, other than gas balancing ‎arrangements, in each case, that ‎obligates such Company Group Member to deliver Hydrocarbons (or proceeds from the sale thereof) produced from or attributable to the Assets at some future time without receiving full payment therefor at or after the time of delivery.

 

4.19.            Payout Status. Schedule ‎‎4.19 sets forth a true and complete list of the status of any “payout” balance, as of the date set forth on such Schedule, for those Wells operated by a Company Group Member or its Affiliates and with respect to all Wells operated by any Third Party, to the extent such information has been received by any Company Group Member from Third Party operators prior to the Execution Date, in each case, that are subject to a reversion or other adjustment at some level of cost recovery or payout (or passage of time or other event other than termination of a Lease by its terms).

 

4.20.            Bonds, Letters of Credit and Guarantees. Schedule ‎‎4.20 sets forth a complete and accurate list of all material bonds, cash collateral, cash deposits, cash escrows, treasury securities, security bonds, surety bonds, performance bonds, letters of credit, guarantees and other forms of credit assurances or other Credit Support posted or entered into by any Company Group Member (or by Seller, any Affiliate of Seller, or any Sponsor Affiliated Party for the benefit of the Company Group) to any Governmental Authority or Contract counterparty or in connection with the ownership or operation of the Assets by the Company Group.

 

4.21.            Employment and Benefits.

 

(a)            Schedule ‎‎4.21(a) includes a true and complete list of each Benefit Plan and each PEO Plan. The Company Group Members do not sponsor, maintain or contribute to any Benefit Plan.

 

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(b)            Copies of the following materials have been made available to Buyer: (i) the most recent ‎determination or opinion letters from the IRS with respect to any of the Benefit Plans, or PEO Plans and (ii) the most recent summary plan descriptions, summaries of material modifications, with respect to any of the Benefit Plans or PEO Plans.‎

  

(c)            None of the Company Group Members, nor any of their ERISA Affiliates, contributes to nor has any obligation to contribute to or has any actual or contingent Liability with respect to, or has at any time within six (6) years prior to the Execution Date contributed to or had an obligation to contribute to or had any actual or contingent Liability with respect to, and no Benefit Plan is (A) a multiemployer plan within the meaning of Section 3(37) of ERISA or (B) a plan subject to Title IV of ERISA, Section 302 of ERISA or Section 412 of the Code. No Benefit Plan (x) is funded through a trust that is intended to be exempt from federal income taxation pursuant to Section 501(c)(9) of the Code or (y) is a multiple employer welfare arrangement (as defined in Section 3(40) of ERISA). Neither the Company Group nor any Benefit Plan provides or has any obligation to provide post-employment or post-termination health benefits, other than for a period that is not longer than the period required by Section 4980B of the Code or similar state Law.

 

(d)            Except as set forth in Schedule ‎‎4.21(d), neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, either alone or in combination with another event, would: (i) entitle any current or former employee or other individual service provider of any Company Group Member (or any dependent or beneficiary thereof) to any payment of compensation or benefits (whether in cash, property or the vesting of property), (ii) increase the amount of compensation or benefits due or payable to any such Person set forth in the preceding clause (i), (iii) accelerate the vesting, funding or time of payment of any compensation, equity award or other benefit, (iv) require a contribution by any Company Group Member to any Benefit Plan, (v) restrict the ability of any Company Group Member to merge, amend or terminate any Benefit Plan, (vi) result in the forgiveness of any employee or service provider loan or (vii) result in “excess parachute payments” within the meaning of Section 280G(b) of the Code.

 

(e)            Each Benefit Plan that is, in whole or in part, a “nonqualified deferred compensation plan” subject to Section 409A of the Code complies with, and has been maintained in form and operation in accordance in all material respects with the requirements of, Section 409A of the Code.

 

(f)            No Company Group Member has any current or contingent obligation to provide a gross-up, reimbursement, make-whole payment or other indemnity for any Taxes to any Person, including those imposed under Section 409A or Section 4999 of the Code.

 

(g)            No Company Group Member has any employees nor is any Company Group Member a party to an Applicable Contract that provides for the employment or engagement of any officer, employee or individual independent contractor. Seller has provided Buyer with a true, correct and complete list of: (i) all of the Business Employees (such list, the “Business Employee List”) as of the Execution Date and (ii) each individual who provides services to the Company (directly or indirectly through an entity of which such individual is a sole or primary owner) in the capacity of an independent contractor or consultant (each, a “Business Contractor”). Each Business Employee is a co-employee of the PEO pursuant to the PEO Plan and is on the PEO’s payroll.

 

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(h)            No Company Group Member is a party to, and no Business Employee is covered by, any Collective Bargaining Agreement, and to the Knowledge of Seller, none is being negotiated.

  

(i)            As of the Execution Date, there is no unfair labor practice, charge or grievance arising out of a Collective Bargaining Agreement or other material labor grievance or arbitration proceeding pending, or, to Seller’s Knowledge, threatened, against or affecting any Company Group Member, and there has been no such practice, charge, grievance or arbitration pending or, to the Knowledge of Seller, threatened in the past three (3) years.

 

(j)            There is no strike, work stoppage, walkout, slowdown, picket, handbilling or lockout or similar labor dispute pending, or, to Seller’s Knowledge, threatened, against or involving any Company Group Member, and there has been no such dispute pending or threatened in the past three (3) years. There are no pending, or to Seller’s Knowledge, threatened organizing activities with any labor union, works council, employee representative or other labor organization, and no such activities have occurred in the past three (3) years.

 

(k)            Each Company Group Member is, and for the past three (3) years has been, in material compliance with all applicable Laws pertaining to labor, employment and employment practices, including all Laws relating to terms and conditions of employment, labor relations, equal employment opportunities, fair employment practices, employment discrimination, harassment, retaliation, reasonable accommodation, disability rights or benefits, immigration (including the completion of Forms I-9 for all U.S. employees and the proper confirmation of employee visas), wages, hours, overtime compensation, recordkeeping, child labor, classification of employees and contractors, hiring, promotion and termination of employees, meal and break periods, workers’ compensation, leaves of absence, paid time off, mass layoffs and plant closings (including the WARN Act), occupational health and safety, restrictive covenants, pay transparency, employee trainings and notices, affirmative action, automated employment decision tools and other artificial intelligence and unemployment insurance.

 

(l)            Each Company Group Member has reasonably investigated all sexual harassment, or other harassment, discrimination, retaliation or policy violation allegations against current or former officers, directors, partners, executives, employees, contractors or agents of any Company Group Member that have been reported to any Company Group Member or of which Seller had Knowledge in the past three (3) years. With respect to each such allegation reasonably deemed to have merit, the applicable Company Group Member has taken prompt corrective action reasonably calculated to prevent further improper action, and does not expect any material Liability with respect to any such matters.

 

(m)            No former Business Employee has experienced an “employment loss” (as defined in the WARN Act) during the forty-five (45) day period prior to the Execution Date.

 

4.22.            Insurance. Set forth on Schedule ‎‎4.22 is a true and complete list of all material insurance policies and contracts of insurance in force as of the Execution Date with respect to the Assets and maintained by or on behalf of any Company Group Member. All such policies and contracts of insurance are in full force and effect, all premiums due thereon have been paid by the applicable Company Group Member and each Company Group Member, as applicable, is otherwise in compliance with the terms and provisions of its respective policies. Except as set forth on Schedule ‎‎4.22, no claim relating to the Assets is currently pending under such policies as of the Execution Date.

 

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4.23.            Derivative Financial Instruments. Schedule ‎‎4.23 sets forth the outstanding Derivative Financial Instruments of the Company Group as of the Execution Date.

 

4.24.            Wells.

 

(a)            There is no Well (i) in respect of which the Company Group or, to Seller’s Knowledge, any Third Party operator is obligated by any applicable Law or Contract to plug or abandon, are currently subject to exceptions to a requirement to plug or abandon issued by a Governmental Authority or that has received any Order or written notice from any Governmental Authority requiring that such Well be plugged and abandoned and for which such plugging and abandonment requirements have not been completed in all material respects; (ii) included in the Assets that are operated by a Company Group Member or its Affiliates or, to Seller’s Knowledge, any Third Party operator, that has been drilled and completed in a manner that is not within the limits permitted by all applicable Laws, Leases, Material Contracts and pooling or unit Orders or other instruments governing the Assets in all material respects; and (iii) that is operated by a Company Group Member or its Affiliates or, to Seller’s Knowledge, any other Well operated by a Third Party, that is subject to material penalties on allowables because of overproduction, underproduction or any other violation of applicable Laws or Governmental Authorization or any Order in all material respects that would prevent any such Well from being entitled to its full legal and regular allowable production.

 

(b)            Except as described on Schedule ‎‎4.24(b), other than Wells that have been plugged and abandoned in accordance with all applicable Laws in all material respects, there are no dry holes or shut in or otherwise inactive Wells included in the Assets operated by any Company Group Member or any of its Affiliates and, to Seller’s Knowledge, operated by any Third Party, that are located on the Lands that any Company Group Member is currently obligated by applicable Law, Contract or Lease to plug and abandon or that are currently subject to exceptions to a requirement ‎to plug or abandon issued by a Governmental Authority.

 

4.25.            Intellectual Property.

 

(a)            Each of the Company Group Members owns or has a valid license or right to use, as applicable, all Intellectual Property used or held for use in the conduct of the Business as currently conducted, free and clear of all Encumbrances (other than Permitted Encumbrances).

 

(b)            Neither Seller nor any Company Group Member has received written notice of or is infringing, misappropriating, diluting, or otherwise violating the Intellectual Property of any Third Party (including, without limitation, pursuant to any Applicable Contract) in any material respect. To Seller’s Knowledge, no Third Party is infringing, misappropriating, diluting or violating the Intellectual Property of any of the Company Group Members. No Company Group Member has received any written notice of any material default or any event that with notice or lapse of time, or both, would constitute a default under any material Intellectual Property license to which such Company Group Member is a party or by which it is bound and neither Seller nor any Company Group Member has received written notice challenging the use thereof.

 

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(c)            Each of the Company Group Members takes reasonable measures to protect the confidentiality of the material trade secrets and confidential information owned by the Company Group Members used in the Business and of any Third Parties who have licensed material trade secrets and confidential information to the Company Group Members for use in the Business.

 

4.26.            IT Systems. To the Knowledge of Seller, there is no, and during the three-year period prior to the Execution Date, there has been no material failure or other material substandard performance of any computer systems of the Company Group which has caused any material disruption to the Business. The Company Group has taken commercially reasonable actions to protect the integrity and security of the computer systems and the software information stored thereon from unauthorized use, access, or modification by Third Parties, and to the Knowledge of Seller, no such Third Party has obtained unauthorized access to such computer or software systems as of the Execution Date. During the three-year period prior to the Execution Date, to the Knowledge of Seller, there has been no actual or alleged security breach, or unauthorized use, access or intrusion, of any information technology system or any personal information, payment card information, confidential information, trade secret or any other such information collected, maintained or stored by or on behalf of the Company Group (or any loss, destruction, compromise or unauthorized disclosure thereof).

 

4.27.            Affiliate Transactions. Except for (a) any employment Contract with WildFire Energy, LLC, (b) any benefits under any Benefit Plan or PEO Plan, (c) the Organizational Documents of Seller and the Company Group Members or (d) as specifically disclosed on Schedule ‎‎4.27, there are no loans, Leases, commitments, guarantees, Contracts binding on any Company Group Member or the Assets, or other transactions or arrangements (oral or written) between Seller, any Affiliate of Seller (other than the Company Group Members) or any current or former director, officer, manager, employee, consultant or their immediate families or equity holder thereof, on the one hand, and any Company Group Member or any current or former director, officer, manager, employee, consultant or their immediate families or equity holder thereof, on the other hand (collectively, the “Affiliate Arrangements”). Except as set forth on Schedule ‎‎4.27, to the Seller’s Knowledge, there are no Sponsor Affiliate Arrangements with respect to any Company Group Member.

 

4.28.            Special Warranty of Title. Seller warrants Defensible Title to the Leases and Wells unto Buyer free and clear against every Person whomsoever lawfully claims the same or any part thereof by, through or under Seller and its Affiliates (including, prior to Closing, the Company Group Members), but not otherwise, subject, however, to the Permitted Encumbrances.

 

4.29.            Non-Consent Operations. Except as set forth in Schedule ‎‎4.29 and the payout balances set forth on Schedule ‎‎4.19, or as reflected in the before- and after-payout Working Interest and Net Revenue Interest set forth in the Exhibits attached to this Agreement, no operations are being conducted or have been conducted during the three-year period prior to the Execution Date with respect to the Assets as to which a Company Group Member has elected to be a non-consenting party under the terms of the applicable operating agreement and with respect to which the Company Group has not yet recovered its full participation.

 

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4.30.        Suspense Funds. Schedule ‎‎4.11 lists all Suspense Funds held by the Company Group, or by Seller or its Affiliates (other than any Company Group Member) on behalf of the Company Group, as of the date shown thereon. All Escheat Funds have, in all material respects, been timely escheated in the amount required to the applicable Governmental Authority as required by applicable Laws. To Seller’s Knowledge, all proceeds from the sale of Hydrocarbons or sand produced from the Assets due and owing to any Company Group Member are being received by the Company Group in a timely manner and are not being held in suspense.

 

4.31.        Leases.

 

(a)            Except as set forth on Schedule ‎‎4.31(a) and except as would not be material to the Company Group:

 

(i)             to Seller’s Knowledge, (i) each Lease is a valid and binding obligation of the Company Group Member party thereto and of each other party thereto, (ii) none of the Company Group or any other party to a Lease is in material breach or violation of any provision of, or in material default under, any such Lease, and (iii) no event has occurred that, with or without notice, lapse of time or both, would constitute such a material breach, violation or default;

 

(ii)            the Company Group has made payments of all rentals, delay rentals, option payments, extension payments, and similar payments with respect to the Leases that are due from the Company Group in all material respects;

 

(iii)           as of the Execution Date, to Seller’s Knowledge, no party to any material Lease has filed or threatened in writing to file, any action to terminate, cancel, rescind or procure judicial reformation of any Lease or alleging any unresolved default under any Lease that remains unresolved; and

 

(iv)           there is no Lease in its primary term that will expire within twelve (12) months after the Execution Date.

 

(b)            Schedule ‎4.31(b) sets forth a list of all Leases subject to payments of rentals, delay rentals, option payments, extension payments, and similar payments that the Company Group or its Affiliates have paid during the twelve (12) month period prior to the Execution Date.

 

4.32.        Specified Matters. Except as set forth on Schedule ‎‎4.32, there are no unpaid, unfulfilled or unsatisfied material Liabilities incurred by, suffered by or owing by the Company Group (or by Seller on behalf of the Company Group) or claimed by any Third Party caused by, arising out of or resulting from the following matters, to the extent attributable to the Company Group’s ownership, use or operation of any of the Assets:

 

(a)            any personal injury or death, or damage to properties of Third Parties, occurring on or with respect to the ownership or operation of any Assets prior to the Closing Date;

 

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(b)            any material administrative or civil fines or penalties or criminal sanctions imposed on the Company Group, to the extent resulting from any pre-Closing violation of applicable Law (including any Environmental Law) by any Company Group Member; or

 

(c)            any transportation or disposal, or the arrangement of any transportation or disposal, of Hazardous Substances from any Asset to a site that is not an Asset by or on behalf of any Company Group Member that is (or if known would be) in material violation of or that has given or would give rise to material Liability under applicable Environmental Law.

 

4.33.        Casualty Losses. There have been no Casualty Losses since the Balance Sheet Date with damages estimated to exceed $750,000 net to the interest of the Company Group with respect to any Assets operated by any Company Group Member or to Seller’s Knowledge, operated by a Third Party. As of the Execution Date, there is no pending or, to Seller’s Knowledge, threatened in writing Proceeding for Casualty Losses, condemnation or taking under right of eminent domain (whether permanent, temporary, whole or partial) with respect to any Asset or portion thereof operated by any Company Group Member or to Seller’s Knowledge, operated by a Third Party.

 

4.34.        Ownership and Sufficiency of Assets. Except as set forth in Schedule ‎‎4.34 and for the Excluded Assets, (a) no real property, right or interest material to the continued ownership and operation of the business of the Company Group or the Assets, as owned and conducted prior to the Execution Date by the Company Group, is currently held by (or is being retained by) Seller, any Affiliate of Seller (other than the Company Group) or any Sponsor Affiliated Party; (b) the Assets and other properties and assets owned or leased by the Company Group as of the Execution Date constitute and include all of the rights, assets, equipment, Contracts, data and records and other properties used or held for use by the Company Group in connection with the ownership and use of the Assets and the production and marketing of Hydrocarbons or sand therefrom by the Company Group and constitute all such rights, assets and properties necessary for the continued conduct by the Company Group of the Company Group’s business after the Closing, in all material respects in substantially the same manner as currently conducted, and constitute substantially the same assets which produced the results of operations reflected in the Financial Statements; and (c) the Assets do not constitute any rights, property or assets of the Seller’s, its Affiliates’ or any Sponsor Affiliated Party’s businesses as currently conducted. Except with respect to the Business Employees or as set forth on Schedule ‎4.34, no Excluded Subsidiary owns or holds any material asset, property, right or interest that is used or held for use in the ownership, operation or use of the Assets or the conduct of the business of the Company Group.

 

4.35.        Unrelated Activities. No Company Group Member has engaged in any material respect in any business other than the ownership, development, operation, maintenance, expansion, construction, commissioning and decommissioning of, and acquisition of, oil and gas properties and related assets (including the Burleson Sand Mine), gathering systems, pipelines and treatment and processing facilities, marketing of Hydrocarbons therefrom.

 

4.36.        Intentionally Omitted.

 

4.37.        Intentionally Omitted.

 

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4.38.        Surface Use. The Company Group has, and the Assets (including the Surface Rights) include, a legal right of access to, and to produce from, all of the Wells operated by any Company Group Member.  To Seller’s Knowledge, the Surface Rights (other than the Surface Fee Properties) used in and material to the operation of the Oil and Gas Properties by any Company Group Member as currently owned and operated are in full force and effect.

 

4.39.        Intentionally Omitted.

 

4.40.        Certain Transfers. With respect to any lands included in or burdened by the Oil and Gas Properties for which any Company Group Member owned any depths other than the Target Formation(s), during the twelve (12) month-period prior to the Execution Date, except for (i) any fee mineral interests that were subsequently leased back to such Company Group Member pursuant to a Lease set forth on Exhibit B, (ii) any overriding royalties, royalty interests, non-participating royalty interests, or other similar non-cost bearing interests as also correspondingly burden the Target Formations included in the Oil and Gas Properties, (iii) Permitted Encumbrances, (iv) contemporaneous transfers or sales of corresponding interests in the Target Formations, (v) any release of acreage or depth(s) pursuant to the express term of any Lease, and (vi) any matters set forth on Schedule ‎‎4.40, no Company Group Member has intentionally transferred or sold any material interests in such lands included in or burdened by the Oil and Gas Properties as to such depths or formations not included in the Target Formation(s).

 

4.41.        Burleson Sand Mine; Pipeline System.

 

(a)            The Company Group holds Good and Defensible Title to the Burleson Sand Mine and the Pipeline System, in each case, free and clear of all Encumbrances, except for Permitted Encumbrances, or as would not reasonably be expected to have a material and adverse effect on the ownership and operation by the Company Group of the Burleson Sand Mine or the Pipeline System, in each case, as currently owned and operated by the Company Group.

 

(b)            Except as would not reasonably be expected to have a material and adverse effect on the ownership and operation by the Company Group of the Burleson Sand Mine and the Pipeline System, in each case, as currently owned and operated by the Company Group, no part of the material assets comprising the Burleson Sand Mine or Pipeline System is located on lands that are not subject to a Surface Right or other agreement, easement or surface right held by an entity of the Company Group permitting the location of such assets on the lands covered by such Surface Right, other agreement, easement or surface right, and no member of the Company Group has received any written notice of default under any instrument creating an interest in any such Surface Right, agreement, easement or surface right that remains unresolved.

 

(c)            There is not, nor, to Seller’s Knowledge, has there been threatened in writing, any (i) material breach or event of default on the part any Company Group Member with respect to any Surface Right that is used or held for use in connection with, and that is material to the operation of, the Burleson Sand Mine or Pipeline System, (ii) to Seller’s Knowledge, material breach or event of default on the part of any other party to any such Surface Right or (iii) material breach or event that, with the giving of notice or lapse of time or both, would constitute such breach or event of default on the part of any Company Group Member with respect to any such Surface Right, or to Seller’s Knowledge on the part of any other party thereto.

 

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(d)            There are no material gaps (including any material gap arising as a result of any breach by any Company Group Member of the terms of any such Surface Right) in the Surface Rights for the Burleson Sand Mine or Pipeline System, in each case, that would materially prohibit or materially impair the ability of the Company Group to operate the Burleson Sand Mine or Pipeline System in the Ordinary Course of Business.

 

(e)            No Company Group Member has acquired any interest in the Burleson Sand Mine or the Pipeline System through the use or threatened use of eminent domain or condemnation.

 

(f)            As of the Execution Date, the Pipeline System and the Burleson Sand Mine is, in each case, in an operable state of repair adequate to maintain normal operations as currently conducted by the Company Group (or by Seller or its Affiliates on behalf of the Company Group) in all material respects, ordinary wear and tear excepted.

 

4.42.        Officers and Bank Accounts; Powers of Attorney. Schedule ‎‎4.42 lists (a) all of the officers, directors and managers of the Company Group, (b) all bank accounts, safety deposit boxes and lock boxes (designating each authorized signatory with respect thereto) of the Company Group, and (c) a complete list of all Persons holding powers of attorney issued by a member of the Company Group and, if applicable, a summary statement of the terms thereof that will remain in effect as of the Closing Date.

 

4.43.        Energy Regulatory Status.

 

(a)            Neither any Company Group Member nor Seller, nor any of their respective Assets or operations, is or has been subject to the jurisdiction of the Federal Energy Regulatory Commission (“FERC”) under (i) the Natural Gas Act (15 U.S.C. §§ 717 et seq), as a “natural gas company” or as a holder of any general or limited jurisdiction certificate of public convenience and necessity issued by FERC other than as a holder of a blanket sale for resale certificate issued by operation of Law or a blanket certificate issued to permit participation in capacity release transactions, (ii) the Natural Gas Policy Act of 1978 (15 U.S.C. Section 3301, et seq), (iii) the Interstate Commerce Act, or (iv) the Public Utility Holding Company Act of 2005 (42 U.S.C. §§ 16451 et seq), and the FERC’s implementing regulations under any of the foregoing. During the past three (3) years, none of the Company Group or Seller, have conducted their respective businesses nor operated their respective Assets in such a manner as to subject themselves, or any of their respective Assets or operations, to regulation by the FERC pursuant to the foregoing statutes or regulations other than with respect to any exceptions noted in the foregoing.

 

(b)            Neither any Company Group Member nor Seller, nor any of their respective Assets or operations, is or has been subject to (i) regulation as a public utility, gas utility, common carrier, or similarly designated entity subject to the jurisdiction of any Governmental Authority, in each case, in connection with any Asset or (ii) rate regulation by any Governmental Authority. None of the Assets or any interests therein were acquired through the use or threatened use of eminent domain or condemnation.

 

(c)            The Company Group has not received notice from FERC or any other Person asserting that any of the Assets are, should, or will be regulated by FERC under the Natural Gas Act, Natural Gas Policy Act of 1978, the Interstate Commerce Act, or the Public Utility Holding Company Act of 2005, subject to rate regulation by any Governmental Authority.

 

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Article V
REPRESENTATIONS AND WARRANTIES OF BUYER PARTIES

 

Except as disclosed in the Parent SEC Documents filed with or furnished to the SEC and publicly available prior to the Execution Date (excluding any risk factor disclosures contained under the heading “Risk Factors,” any disclosure of risks included in any “forward-looking statements” disclaimer or any other statements that are similarly non-specific or predictive or forward-looking in nature, in each case, other than any specific factual information contained therein), each of the Buyer Parties, jointly and severally, represents and warrants to Seller as follows:

 

5.1.          Organization, Existence and Qualification. Buyer is a limited liability company duly formed, validly existing and in good standing under the Laws of the State of Delaware and has all requisite company power and authority to own and operate its property and to carry on its business as now conducted. Parent is a corporation duly incorporated, validly existing and in good standing under the Laws of the State of Delaware and has all requisite corporate power and authority to own and operate its property and to carry on its business as now conducted. Each of the Buyer Parties is duly licensed or qualified to do business as a foreign entity in all jurisdictions in which (a) it carries on its business or owns assets or (b) where the actions to be performed by such Buyer Party make such qualifications or licensing necessary and, in each case, such qualification or licensing is required by Law, except where the failure to be so qualified or licensed would not reasonably be expected to have a Parent Material Adverse Effect.

 

5.2.          Authority, Approval and Enforceability. Each of the Buyer Parties has full corporate or limited liability company, as applicable, power and authority to enter into, deliver and perform this Agreement and the Transaction Documents to which it is or will be a party and the transactions contemplated herein and therein. The execution, delivery and performance by such Buyer Party of this Agreement and the Transaction Documents have been duly and validly authorized and approved by all necessary company action on the part of such Buyer Party. This Agreement is, and each of the Transaction Documents to which such Buyer Party is or will be a party when executed and delivered by such Buyer Party will be, the valid and binding obligations of such Buyer Party and enforceable against such Buyer Party in accordance with their respective terms, subject to the effects of bankruptcy, insolvency, reorganization, moratorium and similar Laws, as well as to principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at Law).

 

5.3.          No Conflicts. Except as disclosed on Schedule ‎‎5.3, the execution, delivery and performance by each of the Buyer Parties of this Agreement and the Transaction Documents to which such Buyer Party is or will be a party and the consummation of the transactions contemplated herein and therein by such Buyer Party will not (a) conflict with or result in a breach of any provisions of the Organizational Documents of such Buyer Party or any resolution adopted by such Buyer Party’s board of directors, managers or officers, (b) conflict with, result in a violation or default of (with or without due notice or lapse of time or both) or give rise to any right of termination, cancellation, acceleration or modification of any terms of, result in the termination or acceleration of the maturity of, or result in the loss of a material benefit or increase in any fee, liability, or obligation under any material Contract by which such Buyer Party or its assets are bound, (c) conflict with, violate or result in a default under any Order applicable to such Buyer Party or its assets, (d) assuming HSR Approval has been received, conflict with or result in a violation of or default under any Law applicable to such Buyer Party or its assets (including the Assets), except in the case of clauses ‎(b) through ‎(d), where such conflict, default, Encumbrance, termination or violation would not reasonably be expected, to prevent or materially delay the consummation of the transactions contemplated by this Agreement by the Buyer Parties or materially impair the ability of the Buyer Parties to perform their respective obligations hereunder or the other Transaction Documents to which such Buyer Party is, or will be, a party.

 

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5.4.          Consents. Except as disclosed on Schedule ‎‎5.4 and except for HSR Approval or Customary Post-Closing Consents, there are no consents or approvals that the Buyer Parties are required to obtain in connection with the execution and delivery of this Agreement and the Transaction Documents to which Buyer is or will be party or the consummation of the transactions contemplated hereby or thereby.

 

5.5.          Bankruptcy. There are no bankruptcy, insolvency, reorganization or receivership proceedings pending against, being contemplated by, or threatened against the Buyer Parties or their Affiliates. The Buyer Parties are not entering into the transactions contemplated by this Agreement with the actual intent to hinder, delay, or defraud either present or future creditors. At and immediately after the Closing, the Buyer Parties (a) will be solvent (in that both the fair value of its assets will not be less than the sum of its debts and the present fair saleable value of its assets will not be less than the amount required to pay its probable liability on its debts as they become absolute and matured), (b) will have adequate capital and liquidity with which to engage in their respective businesses and (c) will not have incurred and do not plan to incur debts beyond their respective ability to pay as they become absolute and matured.

 

5.6.          Litigation. Except with respect to any Proceeding filed or threatened by any Governmental Authority after the Execution Date related to or arising out of Antitrust Laws, the execution and delivery by the Parties of this Agreement or the other Transaction Documents, or the consummation of the transactions hereunder or thereunder, there are no Proceedings pending, or to the Buyer Parties’ knowledge, threatened in writing against the Buyer Parties or their respective Affiliates that (a) challenge the validity or enforceability of the obligations of the Buyer Parties under this Agreement or the obligations of the Buyer Parties under the other Transaction Documents to which they are or will be a party or (b) that seek to prevent, delay or otherwise would reasonably be expected to materially adversely affect the consummation by the Buyer Parties of the transactions contemplated hereby or thereby. There exist no unsatisfied Orders of a Governmental Authority outstanding against the Buyer Parties or their respective Affiliates that would reasonably be expected to prevent or materially delay the consummation by the Buyer Parties of the transactions contemplated by this Agreement.

 

5.7.          Regulatory. Buyer (and its applicable Affiliates including the Company Group) is or will be upon the Closing and thereafter shall continue to be qualified per applicable Law to directly or indirectly own and assume (or continue, as applicable) operatorship of the Assets in all jurisdictions where the Assets are located, and the consummation of the transactions contemplated by this Agreement and the Transaction Documents will not cause Buyer (and its applicable Affiliates including the Company Group) to be disqualified as such an owner or operator. To the extent required by any Law, Buyer has maintained or at Closing will have, and will hereafter or thereafter continue to maintain or cause the Company Group to continue to maintain, all lease bonds, area-wide bonds or any other surety bonds as may be required by, and in accordance with, all Laws governing the ownership and operation of the Assets and will file or will cause the Company Group to file any and all required reports necessary for such ownership and operation with all Governmental Authorities having jurisdiction over such ownership and operation.

 

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5.8.          Financing.

 

(a)            The Buyer Parties acknowledge and agree that Buyer obtaining financing is not a condition to any of their obligations under this Agreement. For the avoidance of doubt, if any financing, including the Debt Financing or any Alternative Financing is not obtained for any reason and the conditions set forth in ‎‎Article VII and ‎Article VIII are otherwise satisfied (or validly waived), the Buyer Parties shall continue to be obligated to consummate the transactions contemplated by this Agreement, subject to the terms of this Agreement, it being understood that notwithstanding anything to the contrary in this Agreement, none of Seller’s or its Affiliates’ performance under Section ‎6.25 shall be taken into account with respect to whether any condition set forth in Section ‎‎7.2 shall be deemed satisfied, except and only to the extent that Seller has willfully breached its obligations in Section ‎6.25.

 

(b)            As of the Execution Date, Buyer has received and delivered to Seller (x) an executed commitment letter in respect of a senior unsecured bridge term loan facility, dated as of the Execution Date (including all exhibits, schedules and annexes thereto and each fee letter executed in connection therewith, collectively, the “Bridge Commitment Letter”) pursuant to which the Debt Financing Sources party thereto have committed, subject to the terms and conditions set forth therein, to provide to Buyer the amount of debt financing set forth therein (the “Bridge Financing”) solely for the Funding Requirements, and (y) an executed Amended and Restated Credit Agreement in respect of the Existing Buyer RBL Credit Facility (including all exhibits, schedules and annexes thereto and each fee letter executed in connection therewith, the “A&R Buyer RBL Credit Facility”, and together with the Bridge Financing, the “Debt Financing”). A true, correct and complete copy of each of the Bridge Commitment Letter and the A&R Buyer RBL Credit Facility (in each case, redacted solely to remove any fees, economic terms and other commercially sensitive pricing information in customary fashion) has been provided to Seller. Buyer has fully paid any and all commitment fees or other fees required by the Bridge Commitment Letter and the A&R Buyer RBL Credit Facility to be paid on or before the Execution Date. Except as set forth in the Bridge Commitment Letter and the A&R Buyer RBL Credit Facility, there are no conditions precedent or other contingencies to the obligations of the parties thereto to fund the full amounts contemplated by the Debt Financing or any provisions that would be expected to reduce the aggregate amount of the Debt Financing set forth therein or the aggregate proceeds contemplated by the Bridge Commitment Letter and the A&R Buyer RBL Credit Facility.

 

(c)            The proceeds of the Debt Financing, together with Other Sources, will be, if funded at the Closing, sufficient for the satisfaction of all of Buyer’s obligations under this Agreement, including (A) paying the Adjusted Purchase Price at Closing and (B) paying all fees and expenses of Buyer and its Affiliates related to the transactions contemplated by this Agreement, including the Debt Financing (collectively, the “Funding Requirements”).

 

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(d)            Each of the Bridge Commitment Letter and the A&R Buyer RBL Credit Facility is a legal, valid and binding obligation of Buyer, and to the knowledge of Buyer, each other party thereto, and is in full force and effect, enforceable against Buyer and, to the knowledge of Buyer, the other parties thereto, and has not been amended, modified, withdrawn, terminated or rescinded in any respect, and does not contain any material misrepresentation by Buyer and no event has occurred which (with or without notice, lapse of time or both) would reasonably be expected to constitute a material breach thereunder on the part of Buyer, or to the knowledge of Buyer and as of the Execution Date, any other party thereto. Assuming the satisfaction of the conditions set forth in ‎Article VII and ‎Article VIII as of the date hereof, no event has occurred which (with or without notice, lapse of time or both) would reasonably be expected to constitute a failure to satisfy a condition precedent thereunder on the part of Buyer and, as of the date hereof, Buyer has no knowledge of any fact, occurrence or condition that would be expected to cause the financing commitments under the Bridge Commitment Letter and the A&R Buyer RBL Credit Facility to terminate or be ineffective or any term or condition of closing such commitments thereunder required to be satisfied by Buyer pursuant to the Bridge Commitment Letter not to be met. No amendment or modification to, or withdrawal, termination or rescission of, the Bridge Commitment Letter or the A&R Buyer RBL Credit Facility is currently contemplated by Buyer or any of its Affiliates or, to the knowledge of Buyer, any Debt Financing Source, and the commitments contained therein have not been withdrawn or rescinded in any respect. Assuming the satisfaction of the conditions precedent in ‎Article VII and ‎Article VIII, as of the Execution Date, to Buyer’s knowledge, there are no facts or circumstances that would reasonably be expected to result in any of the conditions to the Debt Financing not being satisfied on a timely basis or that would cause the full amount of the Debt Financing to not be available to Buyer on the date on which the Closing would be required to occur pursuant to Section ‎9.1.

 

(e)            Except for each fee letter referred to in the Bridge Commitment Letter (collectively, the “Fee Letter”) (a true, correct and complete copy of which Fee Letter has been provided to Seller; provided, that provisions contained in the Fee Letter relating to fees, economic terms (including economic “flex” terms) and other commercially sensitive pricing information may be redacted in customary fashion (it being understood that Buyer hereby acknowledges and agrees that none of which redacted provisions would adversely affect the availability of, impose additional or new conditions, or expand or modify any existing conditions, or impair the validity of, or prevent or materially delay the consummation of the Debt Financing at the Closing)), there are no side letters or other agreements to which Buyer is a party related to the funding of the Debt Financing other than as expressly set forth in the Bridge Commitment Letter and the A&R Buyer RBL Credit Facility that would impose any new conditions or expand the existing conditions to the Debt Financing Sources’ provision of the Debt Financing at the Closing or that would otherwise materially and adversely affect or delay the availability of the full amount of the Debt Financing at the Closing.

 

(f)            It is acknowledged and agreed that the Debt Financing may include Notes (as defined in the Bridge Commitment Letter) in lieu of the Bridge Loans (as defined in the Bridge Commitment Letter) and, as applicable, such Notes shall be deemed part of the Debt Financing for all purposes of this Agreement.

 

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5.9.          Independent Evaluation. Buyer is (a) sophisticated in the evaluation, purchase, ownership and operation of oil and gas properties and related facilities, (b) capable of evaluating, and hereby acknowledges that it has so evaluated, the merits and risks of the Company Group and the Assets, Buyer’s direct and indirect acquisition, ownership, and operation thereof, and its obligations hereunder, and (c) able to bear the economic risks associated with the Company Group and the Assets, Buyer’s direct and indirect acquisition, ownership, and operation thereof, and its obligations hereunder. In making its decision to enter into this Agreement and to consummate the transactions contemplated hereby, Buyer (i) except for the representations and warranties of Seller expressly set forth in Article III, ‎‎Article IV and in the Seller’s Certificate, has not relied upon any representations or warranties, express, statutory or implied, as to the Company Group or the Assets or prospects of the Company Group or the Assets and that Buyer has relied or shall rely solely on its own independent investigation and evaluation of the Company Group and the Assets and the advice of its own legal, tax, economic, environmental, engineering, geological and geophysical advisors and the express provisions of this Agreement and not on any comments, statements, projections or other materials made or given on behalf of Seller, any of its Affiliates (including the Company Group) or any other Seller Indemnified Party, and (ii) has satisfied or shall satisfy itself through the representations and warranties in Article III, ‎‎Article IV and in the Seller’s Certificate and the covenants and agreements set forth herein and its own due diligence as to the environmental and physical condition of and contractual arrangements and all other matters affecting the Company Group and the Assets. Buyer and its Representatives have had reasonable and sufficient access to documents, other information and materials as they consider necessary or appropriate to make their evaluations.

 

5.10.        Brokers’ Fees. None of the Buyer Parties nor their respective Affiliates has incurred any Liability, contingent or otherwise, for brokers’ or finders’ fees relating to the transactions contemplated by this Agreement for which Seller or its Affiliates shall have any responsibility.

 

5.11.        Accredited Investor. Buyer is an “accredited investor,” as such term is defined in Regulation D of the Securities Act and will directly or indirectly acquire the Equity Interests of the Company Group for its own account and not with a view to a sale, transfer or distribution thereof in violation of the Securities Act, any state blue sky Laws or any other securities Laws. Buyer understands that the aforesaid Equity Interests have not been registered under the Securities Act or under any state securities or blue sky Laws, and, as a result, are subject to substantial restrictions on transfer. Buyer acknowledges that the aforesaid Equity Interests must be held indefinitely unless subsequently registered under the Securities Act and any applicable state securities or blue sky Laws, or sold or otherwise transferred pursuant to exemptions from registration under the Securities Act or such Laws.

 

5.12.        Capitalization.

 

(a)            The authorized capital of Parent consists solely of (i) 1,300,000,000 shares of Parent Class A Common Stock, (ii) 225,000,000 shares of Parent Class B Common Stock, (iii) 20,000,000 shares of Parent Class F Common Stock and (iv) 1,000,000 shares of preferred stock, par value $0.0001 per share. As of July 16, 2026, the only issued and outstanding Equity Interests of Parent were 183,705,434 shares of Parent Class A Common Stock. Parent has, and at the Closing will have, sufficient authorized shares of Parent Class A Common Stock to enable it to issue the shares of Parent Class A Common Stock comprising the Equity Purchase Price. Parent is not in default or violation (and no event has occurred which, with notice or the lapse of time or both, would constitute a default or violation) of any term, condition or provision of any Organizational Document of Parent in any material respect.

 

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(b)            All of the issued and outstanding shares of Parent Common Stock are duly authorized and validly issued in accordance with the Organizational Documents of Parent, are fully paid and non-assessable and were not issued in violation of any preemptive or similar right.

 

(c)            Except as disclosed in the Parent SEC Documents, (i) there are no outstanding preemptive or other outstanding rights to subscribe or similar other rights with respect to the Equity Interests of Parent, (ii) there are no appreciation rights, redemption rights, repurchase rights, agreements, arrangements, calls, subscription agreements, rights of first offer, rights of first refusal, tag along rights, drag along rights, subscription rights, or commitments or other rights or Contracts of any kind or character relating to or entitling any Person to purchase or otherwise acquire any Equity Interests of Parent or requiring Parent to issue, transfer, convey, assign, redeem or otherwise acquire or sell any Equity Interests, (iii) there are no equity holder agreements, voting agreements, irrevocable proxies, voting trusts, partnerships or other similar agreements or other rights or Contracts relating to the voting of any of the Equity Interests of Parent and (iv) no Equity Interests of Parent are reserved for issuance. All outstanding shares of the Parent Common Stock have been issued and granted in compliance in all material respects with applicable securities Laws and other applicable Law. Neither Parent nor any Subsidiary of Parent has outstanding bonds, debentures, notes or other similar obligations, the holders of which have the right to vote (or which are convertible into or exercisable for shares or securities having the right to vote) with the holders of the Parent Common Stock on any matter. Other than its wholly owned Subsidiaries, Parent does not own or hold the right to acquire any stock, partnership interest or joint venture interest or other equity interest in any other corporation, organization or entity. As of the Execution Date, there are no declared or accumulated but unpaid dividends in respect of any shares of Parent Common Stock or other Equity Interests of Parent.

 

(d)            Except as disclosed in the Parent SEC Documents, as of the Execution Date, Parent is not party to any Contract that obligates it to (and does not otherwise have any obligation to) register for resale any Equity Interests of Parent.

 

5.13.         Valid Issuance. The shares of Parent Class A Common Stock comprising the Equity Purchase Price, when and if issued pursuant to the terms of this Agreement, will be duly authorized, validly issued, fully paid and non-assessable, and not subject to, or issued in violation of, any preemptive rights, rights of repurchase or forfeiture, purchase or call options, rights of first refusal, subscription rights, rights of participation, rights of maintenance or any similar rights, will have the rights, preferences and privileges specified in Parent’s Organizational Documents, and will be free of any Encumbrances, other than Encumbrances and restrictions on transfer (i) arising under any applicable federal and state securities Laws, (ii) arising pursuant to or otherwise set forth in the Organizational Documents of Parent or (iii) created or imposed by Seller or its Affiliates at or after the Closing. Assuming the accuracy of the representations and warranties of Seller set forth in ‎Article III, the Parent Class A Common Stock to be issued pursuant to this Agreement, when issued, will be issued in compliance with applicable securities Laws.

 

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5.14.        SEC Documents; Financial Statements; No Liabilities.

 

(a)            Parent has timely filed or furnished with the SEC all reports, schedules, forms, statements, and other documents (including exhibits and other information incorporated therein) required to be filed or furnished by it, including all amendments thereto, since December 31, 2024. All such documents, including all exhibits and schedules thereto, documents incorporated by reference therein (including any audited or unaudited financial statements and any notes thereto or schedules included therein (the “Parent Financial Statements”)), and that Parent may file after the Execution Date and prior to the Closing Date, are referred to herein as the “Required Parent SEC Documents,” and such Required Parent SEC Documents, together with any voluntarily filed forms, reports or other document filed by Parent with the SEC on or since December 31, 2024, including all exhibits and schedules thereto, documents incorporated by reference therein, are referred to herein as the “Parent SEC Documents.” The Required Parent SEC Documents, at the time filed or furnished, (i) complied in all material respects with the applicable requirements of the Exchange Act and the Securities Act, as applicable, and (ii) complied as to form in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto. The Parent SEC Documents, at the time filed or furnished (except to the extent corrected or superseded by a subsequent Parent SEC Document filed prior to the Execution Date), did not (A) in the case of any registration statement, 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, or (B) in the case of Parent SEC Documents other than registration statements, include any untrue statement of a 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 they were made, not misleading. The Parent Financial Statements were prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto or the omission of notes to the extent permitted by Regulation S-K promulgated under the Securities Act or, in the case of unaudited statements, as permitted by Form 10-Q of the SEC) and, in the case of interim financial statements, subject to normal year-end adjustments, and fairly present in all material respects in accordance with the applicable requirements of GAAP (subject, in the case of the unaudited statements, to normal year-end audit adjustments) the consolidated financial condition, results of operations, and cash flows of Parent and its Subsidiaries as of the dates and for the periods indicated therein.

 

(b)            Except as disclosed in the Parent SEC Documents filed or furnished prior to the Execution Date, there are no liabilities of or with respect to Parent that would be required by GAAP to be reserved, reflected or otherwise disclosed on a consolidated balance sheet of Parent other than (i) liabilities reserved, reflected or otherwise disclosed in the consolidated balance sheet of Parent as of December 31, 2025 (including the notes thereto) included in the Parent Financial Statements, (ii) liabilities incurred in the ordinary course of business since December 31, 2025 (none of which is a liability for breach of Contract, tort, violation of Law, infringement or misappropriation), (iii) fees and expenses incurred in connection with the transactions contemplated by this Agreement and the Transaction Documents or (iv) liabilities that would not be reasonably likely to have, individually or in the aggregate, a Parent Material Adverse Effect.

 

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5.15.        Internal Controls.

 

(a)            Parent has established and maintains disclosure controls and procedures (as defined in Rule 13a-15 under the Exchange Act and including, without limitation, controls and procedures designed to ensure that information required to be disclosed by Parent in the reports that it files or submits under the Exchange Act is accumulated and communicated to Parent’s management, including its principal executive and principal financial officers, or Persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure) as required by Rule 13a-15 of the Exchange Act, which such disclosure controls and procedures are designed to ensure that information required to be disclosed by Parent in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and Parent has carried out evaluations of the effectiveness of its disclosure controls and procedures as required by Rule 13a-15 of the Exchange Act and such disclosure controls and procedures were effective as of the end of Parent’s most recently completed fiscal quarter. Except as disclosed in the Parent SEC Documents, Parent has established and maintains a system of internal controls over financial reporting (as defined in Rule 13a-15 and 15d-15(f) under the Exchange Act) designed by, or under the supervision of, Parent’s principal executive and principal financial officers, or Persons performing similar functions, and effected by Parent’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and that includes those policies and procedures that: (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of Parent; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of Parent are being made only in accordance with authorizations of management and directors of Parent; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of Parent’s assets that could have a material effect on Parent’s financial statements.

 

(b)            Since December 31, 2024, Parent has not become aware of, or been advised by its independent auditors of, any material weakness in the design or operation of internal controls that has not been so disclosed in the Parent SEC Documents. Since December 31, 2024, (i) Parent has not been advised by its independent auditors of any material weakness in the design or operation of internal controls that could adversely affect Parent’s internal controls, and Buyer and Parent have no Knowledge of any fraud that involves management or other employees who have a significant role in Parent’s internal controls and, except as disclosed in the Parent SEC Documents, there have been no changes in internal controls or, to the knowledge of Parent, in other factors that could reasonably be expected to materially affect internal controls, including any corrective actions with regard to any material weakness.

 

5.16.        Form S-3. As of the Execution Date, Parent is eligible to register all of the Parent Class A Common Stock issued to Seller pursuant to the terms of this Agreement for resale by Seller under a Registration Statement on Form S-3 promulgated under the Securities Act.

 

5.17.        Listing Exchange. The Parent Class A Common Stock is registered under Section 12(b) of the Exchange Act and is listed on the NYSE. The issuance of the shares of Parent Class A Common Stock comprising the Equity Purchase Price does not contravene any NYSE rules and regulations. Parent has taken no action to terminate the registration of the Parent Class A Common Stock under the Exchange Act or delist the Parent Class A Common Stock from the NYSE.

 

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5.18.        No Stockholder Approval. The issuance and delivery by Parent of shares of Parent Class A Common Stock comprising the Equity Purchase Price does not require any vote or other approval of any holder of Parent Common Stock under applicable Law, the rules and regulations of the NYSE or the Organizational Documents of Parent.

 

5.19.        No Material Adverse Effect. Since the date of the Parent Financial Statements there has not occurred any Parent Material Adverse Effect.

 

5.20.        Investment Company Act. Neither Parent nor any of its Subsidiaries is, nor immediately after the Closing will be, registered or required to register as an investment company under the Investment Company Act of 1940, as amended.

 

Article VI
CERTAIN AGREEMENTS

 

6.1.          Conduct of Business.

 

(a)            From the Execution Date until the earlier of the Closing or termination of this Agreement in accordance with ‎Article XIV, except as (w) contemplated or otherwise provided by the terms of this Agreement or the other Transaction Documents, (x) described in or contemplated by Schedule ‎‎6.1 (the “Ordinary Course Development Plan”), (y) consented to or approved in writing by Buyer (in its sole discretion with respect to clauses ‎(ii) - ‎‎(v), ‎(vii), ‎(ix), ‎(xiii), ‎(xvi)-‎(xviii), and ‎(xx) and otherwise such consent not to be unreasonably withheld, conditioned or delayed) or (z) required by applicable Law or any existing Governmental Authorization or Contract in place as of the Execution Date and except for the operations covered by the AFEs and other capital commitments described on Schedule ‎‎4.13, Seller shall, and shall cause each Company Group Member to:

 

(i)             use commercially reasonable efforts to own (where applicable), operate (where applicable) and maintain its business and Assets (A) in the Ordinary Course of Business, (B) as would a reasonable and prudent operator and (C) in accordance with all applicable Laws, Applicable Contracts and Leases in all material respects;

 

(ii)            maintain its existence and not consolidate with any other Person;

 

(iii)           not make any material amendments or changes to its Organizational Documents or issue any additional Equity Interests in such Company Group Member;

 

(iv)           not adopt a plan of complete or partial liquidation or dissolution, file for bankruptcy, liquidate, dissolve, recapitalize, reorganize or otherwise wind up;

 

(v)            not purchase or redeem Equity Interests of any Person (including Equity Interests of the Company Group Members);

 

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(vi)           not enter into a Contract that, if entered into on or prior to the Execution Date, would be required to be listed on Schedule ‎‎4.9, or materially amend or change the terms of any Material Contract (excluding any Contracts as are reasonably necessary to conduct the operations set forth on Schedule ‎6.1 or otherwise in the Ordinary Course of Business);

 

(vii)          not hypothecate, affirmatively encumber, novate, trade, exchange, pledge, affirmatively relinquish, affirmatively abandon, transfer, sell or dispose of any portion of its Assets other than (A) the sale or disposal of Hydrocarbons or sand in the Ordinary Course of Business or (B) sales of equipment that is no longer necessary in connection with the maintenance, repair and operation of the Assets in the Ordinary Course of Business or for which replacement equipment of comparable or better value and utility is obtained;

 

(viii)         other than drawdowns in the Ordinary Course of Business made under the Credit Facility for the purpose of funding capital and operating expenses of the Company Group permitted under this Section ‎6.1, not (A) create, incur, guarantee, or assume any Indebtedness for Borrowed Money; (B) make any loans, advances, or capital contributions to, or investments in, any other Person; (C) mortgage or pledge any of the Assets or create or suffer to exist any Encumbrance thereupon (other than Permitted Encumbrances); (D) modify, in any material respects, the terms of any material Indebtedness for Borrowed Money of the Company Group, except for any such Indebtedness for Borrowed Money of the Company Group that will be repaid (or from which the Company Group will be released) at Closing; (E) cancel or compromise any material Liability owed to, or material claim of, the Company Group, except in the Ordinary Course of Business; or (F) make any loans, advances or capital contributions, other than loans, advances or capital contributions (x) to any of the Company Group or (y) to any employee in connection with travel, entertainment or related business expenses or other customary out-of-pocket expenses in the Ordinary Course of Business; provided that, the aggregate outstanding balance under the Credit Facility, together with any other Indebtedness for Borrowed Money incurred after the Effective Time shall not exceed $20,000,000 without the prior written consent of Buyer in its sole discretion;

 

(ix)            not voluntarily relinquish or resign its position as operator to anyone other than Buyer with respect to any of its Assets;

 

(x)            (A) other than inventory and other assets acquired in the Ordinary Course of Business (other than any Leases, Surface Rights, Governmental Authorizations and Contracts), not acquire properties or assets, including stock or other equity interests of another Person, with a value in excess of $750,000, whether through asset purchase, merger, consolidation, share exchange, business combination or otherwise and (B) not acquire by merging or consolidating with, or by purchasing a substantial portion of the assets of, or in any other manner, any business or business entity;

 

(xi)            use commercially reasonable efforts to maintain and not cancel (unless replaced with a comparable insurance policy) or materially reduce the amount of its existing insurance policies relating to the Assets in such amounts and with such deductibles as are currently maintained by the Company Group as of the Execution Date (provided, that Seller may not fail to maintain such policies solely as a result of pricing without first consulting Buyer);

 

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(xii)           not settle or compromise any Proceeding relating to its Assets, other than settlements or compromises that involve only the payment of monetary damages not in excess of $200,000 individually (excluding amounts to be paid under insurance policies);

 

(xiii)         not change or modify any material accounting policies of the Company, other than as required by GAAP or a change in applicable Law;

 

(xiv)         notify Buyer of (A) any material actions, claims, notices of violations, suits or Proceedings filed or received, or, to Seller’s Knowledge, threatened in writing against Seller or its Affiliates (other than frivolous or immaterial claims from Persons other than a Governmental Authority), that pertain to the Oil and Gas Properties, Burleson Sand Mine or the transactions contemplated by this Agreement, or any actual or threatened Casualty Loss, (B) any material release of Hazardous Substances at, on, under, in or from any of the Oil and Gas Properties or the Burleson Sand Mine of which Seller obtains Knowledge and that would reasonably be expected to result in any obligations for notification or reporting to a Governmental Authority or require material remediation by Seller or the Company Group under any Environmental Laws or (C) any material damage to or destruction of any Oil and Gas Properties or the Burleson Sand Mine to which Seller obtains Knowledge;

 

(xv)          use commercially reasonable efforts to keep Buyer reasonably apprised of any permitting, drilling, re-drilling, completion, shut-in, curtailment or other material field operations proposed or conducted with respect to any of the Oil and Gas Properties to the extent such operations are consistent with the development plan and budget set forth on Schedule ‎6.1, including to furnish Buyer with daily drilling, completion, flowback, re-frac, plugging and workover reports prepared in the Ordinary Course of Business with respect to such operations;

 

(xvi)         furnish Buyer on a weekly basis with copies of all drilling, completion and workover AFEs that the Company Group receives from or delivers to any Third Parties after the Execution Date which may (depending on applicable approvals) be binding on the Oil and Gas Properties after the Effective Time, in each case, in excess of $500,000, net to the Company Group’s Working Interest and in each case excluding to the extent related to Assets operated by Buyer and its Affiliates;

 

(xvii)        maintain the books of account and records relating to the Oil and Gas Properties and the Burleson Sand Mine in the Ordinary Course of Business, in accordance with its usual accounting practices;

 

(xviii)       not (A) adjust, split, combine or reclassify any Equity Interests or other ownership interest in any Company Group Member or amend the term of any Equity Interests or (B) issue, sell, pledge, transfer, dispose of or encumber, directly or indirectly, or authorize the issuance, sale, pledge, transfer, disposition or encumbrance of (x) any Equity Interests or any other ownership interest in any Company Group Member, (y) any Equity Interests convertible into or exchangeable or exercisable for any such Equity Interests or other ownership interest or (z) any rights, commitments, warrants or options to acquire or with respect to any such Equity Interests or other ownership interest or Equity Interests convertible or exchangeable into any such Equity Interests or other ownership interest;

 

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(xix)          not (A) make (other than tax elections made in connection with filing Tax Returns in the Ordinary Course of Business), change, or revoke any material Tax election, (B) change any Tax accounting period or any Tax accounting method, (C) file any amendment to a material Tax Return, (D) settle or compromise any Tax contest or surrender any right to claim a refund of Taxes, (E) file any Tax Return in a manner inconsistent with past practice, (F) consent to any extension or waiver of the limitations period applicable to any Tax proceeding or audit, (G) enter into any Tax allocation, sharing, indemnity or other similar agreement (other than any commercial Contract entered into in the Ordinary Course of Business containing customary Tax allocation or tax gross-up provisions and which does not relate primarily to Taxes), or (H) initiate any discussion with any Governmental Authority regarding any voluntary disclosure or similar matter involving Taxes;

 

(xx)           not release, relinquish or abandon any of the Oil and Gas Properties or the Burleson Sand Mine, except (A) as required by Law, Governmental Authorization or any applicable Contract, or (B) for the expiration of any Lease in accordance with its terms;

 

(xxi)          not (x) propose or agree to participate in any operation with respect to the Oil and Gas Properties anticipated to cost in excess of $500,000, net to the Company Group’s aggregate interest, without the prior written consent of Buyer or (y) not elect to non-consent of any operation proposed by a Third Party with respect to the Oil and Gas Properties anticipated to cost in excess of $500,000, net to the Company Group’s aggregate interest, in connection with the Oil and Gas Properties except as set forth in clause (B) below:

 

(A)            with respect to any AFE for an operation to be conducted in connection with the Oil and Gas Properties that is anticipated to cost in excess of $500,000 per operation, net to the Company Group’s aggregate interest, upon receipt of such AFE from Seller, Buyer shall review and respond, within five (5) days of its receipt thereof (unless an earlier response is required pursuant to the terms of the Contract governing such AFE and Seller includes in its written notice to Buyer such earlier response deadline, but in any event no less than two (2) Business Days), to Seller in writing with respect to whether it desires to consent or non-consent the operation covered by such AFE; provided that if Buyer does not timely respond with its election with respect to any such AFE within such period described above, then Buyer shall be deemed to have responded to approve such AFE;

 

(B)            if Buyer affirmatively elects to non-consent to any such operation proposed by a Third Party that is anticipated to cost in excess of $500,000, net to the Company Group’s aggregate interest, the Company Group shall not be entitled to consent to such operation and shall timely non-consent to such operation; and

 

(C)            if any such operation is proposed by Buyer or its Affiliates, the Company Group may elect to participate or non-consent as to such operation in its sole discretion;

 

(xxii)         not adopt any plan of merger, consolidation or reorganization, convert to another form of entity, or change its jurisdiction of organization, name or principal office;

 

(xxiii)        not (A) establish, adopt, amend or terminate any Benefit Plan with respect to the Company Group, (B) hire, promote or engage, or otherwise enter into any employment or consulting agreement or arrangement with, any current or former employee who provides services to the Company Group, including any Business Employee, or other individual service provider of any Company Group Member or (C) terminate any Business Employee or other individual service provider of the Company other than for cause, whose annualized compensation opportunities would exceed $150,000;

 

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(xxiv)        not (a) enter into, amend, extend, terminate, negotiate or modify any Collective Bargaining Agreement, or (b) recognize or certify any labor union, labor organization, works council or group of employees as the bargaining representative for any Business Employees or any employees of any Company Group Member;

 

(xxv)         not implement or announce any reductions in force, plant closings, or other actions that would trigger notice obligations under the WARN Act;

 

(xxvi)        in the event that the reasonably expected aggregate costs of any individual budget category by “Operational Type” (which “Operational Type” categories shall include (A) drill/complete/equip operations, (B) land work in preparation of drilling, (C) infrastructure work and (D) plugging and abandonment) set forth in the Ordinary Course Development Plan would reasonably be expected to result in the Company Group exceeding the budget for such “Operational Type” specified in the Ordinary Course Development Plan by more than ten percent (10%) in aggregate, the Company Group shall not propose, commit to or approve, or elect to participate in, any authorizations for any new capital expenditure pertaining to such “Operational Type” (whether proposed by a Third Party or otherwise) that individually is reasonably estimated to involve commitments in excess of $500,000 (net to the Company Group’s aggregate interest);

 

(xxvii)       not (A) amend, modify, supplement or waive any term of, or any right under, the indenture governing the Senior Notes, (B) take or omit to take any action that would, or would reasonably be expected to, result in a default or event of default under, or trigger any obligation to make an offer to repurchase, redeem or prepay, the Senior Notes, or (C) repay, prepay, redeem, retire, defease, purchase, acquire, or otherwise satisfy or discharge any principal amount of the Senior Notes, in whole or in part; and

 

(xxviii)      not commit to do (or not to do, as applicable) any of the foregoing.

 

(b)            Buyer’s approval of any action restricted by Section ‎‎6.1(a) shall be considered granted on the fifth (5th) day (unless a shorter time is reasonably required by the circumstances and such shorter time is specified in the request delivered to Buyer) after receipt by Buyer of such request for consent unless Buyer notifies Seller to the contrary prior to such date. Notwithstanding anything in the foregoing to the contrary, in the event of an emergency, a serious and imminent risk to life, property, or imminent substantial threat to environment, or in connection with any health conditions (including any epidemic, pandemic, or disease outbreak) or required by applicable Law, Seller or the Company Group may take such action as a prudent operator would take, and any such actions shall not be deemed to be a breach of the provisions of Section ‎‎6.1(a), and shall notify Buyer of such action as soon as reasonably practicable thereafter. Notwithstanding anything to the contrary herein, Seller shall provide, or will cause its Affiliates to provide, Buyer copies of any authorizations for expenditures with respect to the Assets promptly after (but in any event within five (5) Business Days of) receipt thereof by Seller, any Company Group Member, or their Affiliates. Notwithstanding the notice provisions in Section 15.5, all requests for approval of any action restricted by, or any notices required to be delivered pursuant to, this Section ‎6.1 by Seller to Buyer shall be delivered to the following individual, which such individual shall have full authority to grant or deny such requests for approval on behalf of Buyer:

 

Magnolia Oil & Gas Operating LLC
Nine Greenway Plaza, Suite 1300
Houston, Texas 77046
Attn: Denise Speer, Vice President, Land and Land Acquisitions
Email: [email protected]

 

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(c)            Buyer acknowledges the Company Group may own undivided interests in certain of the properties comprising the Assets, and Buyer agrees that the acts or omissions of the other Working Interest owners or operators who are not a Company Group Member shall not constitute a breach of the provisions of this Section ‎‎6.1 by Seller, and no action required by a vote of Working Interest owners shall constitute such a breach so long as Seller has caused the Company Group to vote its interests in a manner that complies with the provisions of this Section ‎‎6.1; provided, that, notwithstanding anything to the contrary in this Section ‎‎6.1, it is expressly agreed that Seller shall in no event have any ‎Liability to Buyer with respect to the breach or failure of any covenant of Seller set forth in this ‎Section ‎‎6.1 which arises from Seller’s or its Affiliate’s conduct of physical operation of the Oil and Gas Properties greater than that which it might ‎have as the operator to a non-operator under the AAPL 610 (1989 Revision) form Operating ‎Agreement to the extent the obligations under this Section ‎‎6.1 are also obligations thereunder.

 

6.2.         Consents and Approvals.

 

(a)            Subject to the terms and conditions of this Agreement and except as otherwise expressly provided in this Agreement, each of the Parties will use commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, and assist and cooperate with the other in doing, all things necessary, proper or advisable under applicable Law to consummate and make effective the transactions contemplated by this Agreement and the other Transaction Documents as promptly as practicable, including (i) preparing and filing as promptly as practicable with any Governmental Authority or other Third Party all documentation to effect all necessary, proper or advisable filings, notices, petitions, statements, registrations, submissions of information, applications and other documents and (ii) obtaining and maintaining all approvals, consents, registrations, permits, authorizations and other confirmations required to be obtained from any Governmental Authority or other Third Party that are necessary, proper or advisable to consummate and make effective the transactions contemplated by this Agreement and the other Transaction Documents (whether or not such approvals, consents, registrations, permits, authorizations and other confirmations are conditions to the consummation of the transactions contemplated by this Agreement and the other Transaction Documents).

 

(b)            In furtherance and not in limitation of the foregoing, if applicable, each of the Parties will make or cause its ultimate parent entity (as such term is defined in the HSR Act) to make such filings as may be required by the HSR Act with respect to the transactions contemplated by this Agreement and the other Transaction Documents as soon as reasonably practicable after the Execution Date, but in no event later than ten (10) Business Days after the Execution Date. Thereafter, the Parties will as promptly as practicable respond appropriately to any requests for additional information and documentary material from any Governmental Authority concerning such transactions. Without limiting the foregoing, the Parties will cooperate to have the applicable HSR Act waiting period expire on or before the Outside Date.

 

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(c)            Buyer shall not, and shall cause its Affiliates not to, enter into any merger, acquisition or similar transaction, or any agreement to effect any such transaction, or consummate or effect any such transaction, that would reasonably be expected to (i) impose any material delay in the obtaining of, or materially increase the risk of not obtaining, any necessary authorizations, approvals or consents as may be reasonably required in connection with the consummation of the transactions contemplated by this Agreement and the other Transaction Documents, including the expiration or termination of the applicable waiting period under the HSR Act; (ii) materially increase the risk of any Governmental Authority entering any Order, decree, judgment or injunction that enjoins, restrains, prevents or prohibits the consummation of the transactions contemplated by this Agreement and the other Transaction Documents; (iii) materially increase the risk of not being able to remove any such Order, decree, judgment or injunction on appeal or otherwise; or (iv) otherwise prevent or materially delay the consummation of the transactions contemplated by this Agreement and the other Transaction Documents. In furtherance of Section ‎6.2(a), if any administrative or judicial action, including any proceeding by a private party, is instituted (or threatened to be instituted) challenging the transactions contemplated hereby as violative of any Antitrust Laws, Buyer shall use reasonable best efforts to defend against, contest, oppose and resist, and have vacated, lifted, reversed or overturned any decree, judgment, injunction or other order, whether temporary, preliminary or permanent, that is in effect and that prohibits, prevents or restricts consummation of the transactions contemplated hereby; provided, however, that Buyer and its Affiliates shall not be required to, and shall not be required to cause their Affiliates to (and Seller shall not, and shall not agree to, without Buyer’s prior written consent) sell, divest, hold separate, license, relinquish, otherwise dispose of, or agree to any limitation on its freedom of action, ownership, or control with respect to any assets, businesses, properties, or interests in or of any Person, or agree or consent to any of the foregoing.

 

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(d)            Each of the Parties shall, or shall cause their respective counsel to, furnish the other Party with such necessary information and reasonable assistance and cooperation as the other Party may reasonably request in connection with obtaining the necessary authorizations, approvals or consents as may reasonably be required in connection with the consummation of the transactions contemplated by this Agreement and the other Transaction Documents, including with respect to the preparation of necessary filings or submissions. Each of the Parties shall, or shall cause their respective counsel to, supply to the other Party copies of all correspondence, filings or written communications by such Party or its Affiliates with any Governmental Authority or staff members thereof, with respect to the transactions contemplated by this Agreement and the other Transaction Documents (except their initial filings under the HSR Act); provided, that materials may be redacted to remove references concerning valuation, documents or information that reveal any Party’s negotiating objectives, strategies or purchase price expectations and documents or information covered by the attorney-client privilege or work product doctrine or other similar privilege or confidentiality concerns. To the extent not prohibited by such Governmental Authority, the Parties will (i) give each other reasonable advance notice of all meetings, discussions and communications with any Governmental Authority relating to obtaining the necessary authorizations, approvals or consents as may reasonably be required in connection with the consummation of the transactions contemplated by this Agreement and the other Transaction Documents, (ii) not participate independently in any such meeting, discussion or communication without first giving the other Party (or the other Party’s outside counsel), to the extent permitted by such Governmental Authority, an opportunity to attend and participate in such meeting, discussion or communication (which, at the request of either Buyer or Seller, will be limited to outside antitrust counsel only), (iii) give the other Party reasonable advance notice of all oral communications with any Governmental Authority relating to obtaining the necessary authorizations, approvals or consents as may reasonably be required in connection with the consummation of the transactions contemplated by this Agreement and the other Transaction Documents, (iv) if any Governmental Authority initiates an oral communication regarding obtaining the necessary authorizations, approvals or consents as may reasonably be required in connection with the consummation of the transactions contemplated by this Agreement and the other Transaction Documents, to the extent permitted by such Governmental Authority, provide an opportunity for the other Party to participate in such communication to the extent practicable and, if such Party cannot participate, promptly notify the other Party of the content and substance of such communication, (v) consult with each other prior to taking any material substantive position or in any written submission to, or in any meeting, discussion or communication with, any Governmental Authority relating to obtaining the necessary authorizations, approvals or consents as may reasonably be required in connection with the consummation of the transactions contemplated by this Agreement and the other Transaction Documents, and (vi) provide each other with a reasonable advance opportunity to review, discuss and comment upon, and consider in good faith (subject to appropriate redactions for confidentiality and attorney-client privilege concerns) the views of the other Party in connection with, all written communications (including any analyses, presentations, memoranda, briefs, arguments, opinions, proposals and other materials made or submitted by or on behalf of any Party relating to obtaining the necessary authorizations, approvals or consents as may reasonably be required in connection with the consummation of the transactions contemplated by this Agreement and the other Transaction Documents) with a Governmental Authority regarding obtaining the necessary authorizations, approvals or consents as may reasonably be required in connection with the consummation of the transactions contemplated by this Agreement and the other Transaction Documents; provided, however, that each Party will be solely responsible for the final content of any substantive oral or written communications of such Party with any applicable Governmental Authority. The Parties shall jointly determine all tactics and strategies relating to their compliance with this Section ‎‎6.2 and obtaining the termination or expiration of any applicable HSR Act waiting period, subject to each Party undertaking good faith consultations with and considering in good faith the views of the other Party into account. Notwithstanding any provision of this Section ‎‎6.2, no Party shall be required to provide the other Party with documents and information regarding the value of the transactions contemplated herein, or subject to the attorney-client privilege, work product doctrine or other similar privilege or confidentiality concerns absent entering into a mutually acceptable joint defense agreement.

 

(e)            Buyer shall pay all statutory filing fees associated with filings under the HSR Act, which such obligation, notwithstanding anything to the contrary herein, shall survive termination of this Agreement pursuant to ‎Article XIV.

 

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6.3.         Record Retention.

 

(a)            Seller and its Affiliates shall have the right to retain, at their sole cost and expense, to the extent not already included in the Excluded Assets, copies of (i) Records, and (ii) other books and records relating to the Company Group for legitimate business purposes as a Seller of the Acquired Interests from and after Closing, including Tax Returns or other information and documents (A) relating to Tax matters of the Company Group (including any other financial, accounting, work paper or supporting information or documents reasonably related to, and reasonably necessary in connection with, such Tax Returns or such Tax matters), in each case, relating to periods ending on or prior to the Closing Date, (B) relating to any information Seller may be required to disclose in compliance with applicable Law regarding the Business Employees, (C) as required by any legal or regulatory authority, including any applicable Law or regulatory request and (D)(1) as may be necessary for Seller and its Affiliates to perform their respective obligations pursuant to this Agreement and the other Transaction Documents, in each case subject to compliance in all material respects with applicable Laws, (2) all data room materials, and (3) all books and records prepared in connection with the transactions contemplated herein, including any books and records that may be relevant in connection with the defense of disputes arising under this Agreement or financial information and all other accounting books and records prepared or used in connection with the preparation of financial statements of any of the Company Group.

 

(b)            As soon as reasonably practicable after Closing, but in any event within thirty (30) days after the Closing, Seller shall deliver to Buyer originals (or copies if originals are not available) of all books and records of the Company Group or relating to the Assets (which may be delivered in electronic format, if originals are maintained in such format by Seller, in which case Seller shall deliver such electronic records within two (2) Business Days after the Closing) that are in the possession of Seller or any Affiliate of Seller; provided, however, that all employee files in the possession of Seller and its Affiliates shall be excluded from the records delivered to Buyer pursuant to this Section ‎‎6.3(a)(i).

 

(c)            From and after the Closing, Buyer will use its commercially reasonable efforts to retain, or to cause the Company Group to retain, all books, records and other documents pertaining to the Company Group, including the Business and the Assets, in existence on the Closing Date and to make the same available after the Closing Date for examination and copying by Seller or its Representatives, at Seller’s sole expense, upon reasonable notice during business hours to the extent not retained by Seller in accordance with Section ‎6.3(a)(i). Buyer agrees that no such books, records or documents will be destroyed by Buyer or its Affiliates (including the Company Group) until seven (7) years following the Closing and that thereafter no such books, records or documents will be destroyed without first advising Seller in writing and providing to Seller a reasonable opportunity to obtain possession or make copies thereof at Seller’s sole expense.

 

6.4.         Bonds. The Parties understand that none of the bonds, letters of credit, guaranties and similar instruments, if any, listed on Schedule ‎‎6.4 posted by Seller, its Affiliates (other than the Company Group) or any Sponsor Affiliated Party with Governmental Authorities or Third Parties relating to the Company Group or the Assets will be transferred to Buyer. On or prior to Closing, Buyer (with reasonable cooperation from Seller or its applicable Affiliate) shall obtain, or cause to be obtained in the name of Buyer, replacements for such bonds, letters of credit, guaranties and similar instruments listed on Schedule ‎‎6.4, to the extent such replacements are necessary to permit the cancellation of the bonds, letters of credit, guaranties and similar instruments posted by Seller, its Affiliates (other than the Company Group) or any Sponsor Affiliated Party or to consummate the transactions contemplated by this Agreement. From and after Closing, until and to the extent Buyer has not obtained, or caused to be obtained in the name of Buyer, replacements for any such bonds, letters of credit, guaranties and similar instruments, Buyer shall (a) indemnify the Seller Indemnified Parties against all Liabilities incurred by the Company Group under any such bonds, letters or credit, guaranties or similar instruments, as applicable, for which Buyer has not obtained replacements, or caused replacements to be obtained in the name of Buyer and (b) not amend, modify or renew any Contract then subject to, or guaranteed or otherwise supported by, any such obligation without the written consent of Seller.

 

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6.5.          Public Statements.

 

(a)            The Parties shall, to the extent reasonably possible, consult with each other prior to issuing any publication or press release of any nature with respect to this Agreement, the other Transaction Documents or the transactions contemplated herein and both Parties acknowledge and agree that no press release or other public announcement, or public statement or comment in response to any inquiry, or other disclosure that is reasonably expected to result in a press release or public announcement, relating to the subject matter of this Agreement (each such announcement, a “Public Announcement”) may be issued or made by either Party or its Affiliates, without the written approval of the other Party, which shall not be unreasonably withheld, conditioned or delayed (collectively, the “Public Announcement Restrictions”). Notwithstanding the foregoing, on and after the Execution Date, Buyer may make a Public Announcement regarding the existence of this Agreement, the contents of this Agreement, and the transactions contemplated by this Agreement without the prior written consent of Seller; provided, however, that Buyer delivers written notice to Seller at least forty-eight (48) hours prior to the issuing of such Public Announcement (which notice will include a draft thereof). Except to the extent required by applicable securities or other Laws or regulations or the applicable rules of any stock exchange or to the extent requested by a Governmental Authority (by oral questions, interrogatories, requests for information or documents in legal Proceedings or pursuant to a subpoena, civil investigative demand or other similar process) or in connection with a routine audit, Seller may make a Public Announcement regarding the existence of this Agreement, the contents of this Agreement, and the transactions contemplated by this Agreement without the prior written consent of Buyer only (a) after Buyer has issued a Public Announcement, and (b) if Seller delivers written notice to Buyer at least one (1) Business Day prior to the issuing of such Public Announcement (which notice will include a draft thereof); provided that in no event may a Public Announcement made by Seller disclose any facts or information not contained in Buyer’s Public Announcement or that are contradictory to Buyer’s Public Announcement unless Buyer’s statements are not true in any material respect. Further, the Public Announcement Restrictions will not restrict Public Announcements to the extent made (i) in order for either Party or any of its Affiliates to comply with applicable Laws or stock exchange rules or regulations and provided (A) it is limited to those disclosures that are required to so comply and (B) the disclosing Party provides the other Party with prior written notice of the disclosure and a reasonable opportunity to provide comments thereon or (ii) in connection with communications or presentations to investors of either Party or actual or potential financing sources. Notwithstanding the foregoing, this Section ‎6.5 shall not restrict either Party from making disclosures that are required pursuant to Contracts, Leases or Surface Rights, or from complying with any disclosure requirements of Governmental Authorities that are applicable to or triggered by the transfer of the Acquired Interests or the Assets or of the operation thereof or for purposes of clarification and avoidance of doubt, by the Parties to their respective Affiliates, accountants, legal counsel and other representatives as necessary in connection with the ordinary conduct of their respective businesses, provided that such Persons are, in each case, subject to an obligation of confidentiality with respect to such information. Except as required by applicable Laws or stock exchange rules or regulations, Buyer will not disclose a copy of this Agreement in any filings pursuant to such Laws or stock exchange rules or regulations. Notwithstanding any provision to the contrary contained in this Agreement, the provisions of this Section ‎6.5 will survive the termination of this Agreement pursuant to Article ‎XIV and the Closing.

 

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(b)            Subject to Section 6.5, except as required by applicable Law (including to the extent required by applicable securities or other Laws or regulations or the applicable rules of any stock exchange having jurisdiction over the Parties or their respective Affiliates) or to the extent requested by a Governmental Authority (by oral questions, interrogatories, requests for information or documents in legal Proceedings or pursuant to a subpoena, civil investigative demand or other similar process) or in connection with a routine audit, each Party agrees that it will keep confidential and will not use, disclose or divulge (except as permitted by this Agreement) the terms of this Agreement and the transactions contemplated hereby, unless such information is known, or until such information becomes known, to the public without wrongful disclosure by any receiving Party or its attorneys, accountants, consultants, other professionals, Affiliates, or partners, or such information is required, in a Party’s legal counsel’s written opinion, to be disclosed in legal or administrative proceedings; provided, however, that if a Party’s legal counsel determines that such disclosure is required, the receiving Party shall immediately (and, in any event, within five (5) Business Days) notify the disclosing Party in writing prior to disclosure so that the disclosing Party can seek a protective order or other reasonable protections to avoid unnecessary disclosure; and provided, further that the Parties may disclose such information (i) to their respective attorneys, accountants, consultants and other professionals to the extent necessary to obtain their services and (ii) to any Affiliate (including Warburg Pincus LLC or Kayne ‎Anderson Capital Advisors, L.P.) or direct or indirect equityholder, member or lender of Seller or Affiliate of Buyer, as applicable; provided that such Persons also agree to keep such information confidential and to protect such information as required by this Agreement.

 

6.6.         Confidentiality.

 

(a)            Buyer acknowledges that, pursuant to its right of access to the Records or the Assets in accordance with Section ‎10.1, Buyer and its Representatives (including Buyer’s environmental consulting or engineering firm) will become privy to confidential and other information of the Company Group. Buyer acknowledges and agrees that such information is Evaluation Material (as defined in the Confidentiality Agreement), and Buyer shall ensure that such Evaluation Material is held in accordance with the terms of the Confidentiality Agreement. The Parties hereby agree that the Confidentiality Agreement is hereby amended to extend the term of the confidentiality obligations therein until the later of (i) the term as set forth in the Confidentiality Agreement, and (ii) the nine (9) month anniversary of the date on which this Agreement is terminated; provided that if Closing should occur, the foregoing confidentiality restrictions on Buyer, including the Confidentiality Agreement shall terminate (except as to (i) such portion of the Assets that are not conveyed to Buyer pursuant to the provisions of this Agreement, (ii) the Excluded Assets and (iii) information related to interests and assets other than the Company Group and the Assets). Buyer further agrees that, notwithstanding termination of the Confidentiality Agreement, if the Closing does not occur then Buyer shall continue to maintain as confidential and shall not disclose to any Third Party the results of any Phase I environmental assessment or any other environmental assessment performed on the Assets under Section ‎10.1 except as expressly permitted by the Confidentiality Agreement. Notwithstanding any non-solicitation restrictions set forth in the Confidentiality Agreement, Buyer shall retain the right to (i) conduct interviews with employees of the Company Group and (ii) extend offers of employment to such employees for employment following the Closing in accordance with the terms of this Agreement.

 

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(b)            Subject to Section ‎6.5, except as required by applicable Law (including to the extent required by applicable securities or other Laws or regulations or the applicable rules of any stock exchange having jurisdiction over the Parties or their respective Affiliates) or to the extent requested by a Governmental Authority (by oral questions, interrogatories, requests for information or documents in legal Proceedings or pursuant to a subpoena, civil investigative demand or other similar process) or in connection with a routine audit, each Party agrees that it will keep confidential and will not use, disclose or divulge (except as permitted by this Agreement) the terms of this Agreement and the transactions contemplated hereby, unless such information is known, or until such information becomes known, to the public without wrongful disclosure by any receiving Party or its attorneys, accountants, consultants, other professionals, Affiliates, or partners, or such information is required, in a Party’s legal counsel’s written opinion, to be disclosed in legal or administrative proceedings; provided, however, that if a Party’s legal counsel determines that such disclosure is required, the receiving Party shall immediately (and, in any event, within five (5) Business Days) notify the disclosing Party in writing prior to disclosure so that the disclosing Party can seek a protective order or other reasonable protections to avoid unnecessary disclosure; and provided, further that the Parties may disclose such information (i) to their respective attorneys, accountants, consultants and other professionals to the extent necessary to obtain their services and (ii) to any Affiliate or member or lender of Seller or Affiliate of Buyer, as applicable; provided that such Persons also agree to keep such information confidential and to protect such information as required by this Agreement.

 

6.7.         Employee Matters.

 

(a)            Within one (1) Business Day after the Deposit has been funded in accordance with this Agreement, Seller will provide Buyer with (x) an updated Business Employee List with each Business Employee’s (a) job title, (b) annual base salary or hourly rate of pay, (c) classification as exempt or non-exempt under the Fair Labor Standards Act, (d) target bonus opportunity, (e) hire date and service date (if different), (f) leave status (including expected duration of any leave), (g) details of any visa or work permit; and (h) primary work location and (y) an updated list with respect to each Business Contractor, including his or her (a) services performed, (b) date of engagement and anticipated engagement end date and (c) compensation terms and total compensation earned in the past year. No later than (10) Business Days prior to the Closing Date, Seller shall provide Buyer with a revised Business Employee List, updated as of such date. From and after the Execution Date, Buyer and its Affiliates shall be provided a reasonable opportunity to meet with and interview any Business Employee upon reasonable prior notice and during normal business hours in connection with prospective employment with Buyer or an Affiliate of Buyer and offer employment on terms of employment consistent with Buyer’s practices and policies and in accordance with this Section 6.7 to any such Business Employee for employment commencing as of the Start Date or such other date as may be mutually agreed to in writing by Seller and Buyer. Buyer is responsible for scheduling any such meetings or interviews and Seller and its applicable Affiliates shall reasonably assist Buyer with respect to such scheduling; provided that a Representative of Seller or its Affiliates may be present for such meetings or interviews if requested by Seller. No later than two (2) Business Days prior to, as applicable, (i) the Closing or (ii) the delivery of a Termination Notice (as defined in the Transition Services Agreement) in respect of any Service Type (as defined in the Transition Services Agreement), Buyer shall provide Seller with a list of all Business Employees who have accepted offers of employment (“Employment Offers”) at such time with Buyer or its Affiliates. If an Employment Offer is accepted by the applicable Business Employee (each such Business Employee who accepts an Employment Offer, a “Hired Employee”), such Hired Employee’s employment with Buyer or its Affiliates (as applicable) will commence on the first Business Day after the expiration or termination of the term for the applicable “Services” (as such term is defined in the Transition Services Agreement) provided by such Hired Employee pursuant to the Transition Services Agreement (the “Start Date”). Buyer shall provide a list of all Hired Employees to Seller no later than fourteen (14) days prior to the termination of the Transition Services Agreement.  As of the applicable Start Date for each Hired Employee, such Hired Employee will cease to be employed by WildFire Energy, LLC and will assume employment with Buyer or its Affiliates (including, following the Start Date, the Company Group).

 

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(b)            Seller agrees to provide to Buyer, as of ten (10) days prior to the Closing, a list of any “employment losses” (as defined in the WARN Act) experienced or anticipated to be experienced by any current or former Business Employee during the ninety (90)-day period prior to the Closing. Such list shall include, with respect to each such Business Employee, the date of the employment loss and the applicable site of employment. Buyer and its Affiliates shall not, and shall cause the Company Group not to, take any action following the Closing Date that could result in WARN Act Liability without complying in all material respects with the WARN Act. Seller and its Affiliates (including WildFire Energy, LLC) shall have no WARN Act obligations or liabilities with respect to any Hired Employees after the applicable Start Date.

 

(c)            Without limiting the scope of this Section 6.7, Seller shall provide or cause to be provided to each Business Employee who is not a Hired Employee or a Key Employee, a severance payment in an amount equal to six (6) months’ worth of such Business Employee’s base salary or hourly wages, as applicable (the “Severance Payment”), subject to the applicable Business Employee’s (i) continuous employment with Seller or its Affiliates until the termination of all of the Services pursuant to the Transition Services Agreement and (ii) execution and non-revocation of a customary release of claims in favor of the Seller, Buyer and their respective Affiliates which Severance Payment shall be payable in a lump sum within sixty (60) days following such Business Employee’s termination of employment with Seller or its Affiliates. The Severance Payments shall be subject to all applicable deductions and withholdings and in no event shall exceed $9,000,000 in the aggregate. Within five (5) Business Days of the termination of the Transition Services Agreement, Seller shall provide Buyer with the aggregate amount of the anticipated Severance Payments and the expected timing of payment thereof. After all of the Severance Payments, as applicable, have been paid, Seller shall provide written notice thereof to Buyer and Buyer shall promptly (and in any event within thirty (30) days following such confirmation of the payment of all applicable Severance Payments by Seller or its Affiliates) reimburse Seller or its Affiliates for the aggregate amount of all such Severance Payments paid by Seller or its Affiliates.

 

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(d)            The Parties acknowledge and agree that Buyer shall be responsible for and shall pay each Hired Employee who is not a Key Employee a one-time retention bonus equal to four (4) months’ worth of such Hired Employee’s base salary or hourly wages, as applicable, subject to applicable deductions and withholdings, which such retention bonus shall be due and paid by Buyer to any such Hired Employee within thirty (30) days following the applicable Start Date with respect to such Hired Employee.

 

The provisions of this Section ‎‎6.7 are solely for the benefit of the Parties hereto and nothing in this Section ‎‎6.7, express or implied, shall confer upon any Business Employee, or representative or beneficiary thereof, any rights or remedies, including any right to employment or continued employment for any specified period, or compensation or benefits of any nature or kind whatsoever under this Agreement. Nothing in this Section ‎‎6.7, express or implied, shall be (i) deemed an amendment of any Benefit Plan or PEO Plan providing benefits to any Business Employee, or (ii) construed to prevent Buyer or any of its Affiliates from terminating or modifying to any extent or in any respect any employee benefit plan that Buyer or any of its Affiliates may establish or maintain.

 

6.8.         Affiliate Services. Except as specifically provided in the Transition Services Agreement, Seller and its Affiliates shall have no obligation to provide any services with respect to the Company Group or the Assets from and after the Closing and, unless otherwise agreed to in writing by Seller and Buyer, all Contracts between any Company Group Member, on the one hand, and Seller, any of Seller’s other Affiliates or any Sponsor Affiliated Party, on the other hand, shall be terminated effective as of the Closing Date.

 

6.9.         Information Technology. Prior to the Closing, Seller shall be entitled to erase any data solely to the extent constituting or relating to any Excluded Assets or other assets or properties and solely to the extent not related to the Assets or Business or necessary for the operation or use of the Assets, from any desktop, laptop, smart phone, tablet or other mobile computing device, network gear, data center gear and any other information technology equipment held by the Company Group and included in the Assets.

 

6.10.         Insurance Matters.

 

(a)            Buyer acknowledges and agrees that, from and after the Closing Date, (i) all insurance arrangements maintained by Seller or its Affiliates for the benefit of any Company Group Member (the “Seller Insurance Policies”) will be terminated as of Closing and no further property, business interruption or other Liabilities occurring after the Closing shall be covered under any such insurance arrangements, (ii) none of the properties or assets of the Company Group will be covered under Seller Insurance Policies following the Closing Date, and (iii) Buyer shall become solely responsible for procuring, maintaining and paying for all insurance policies with respect to post-Closing insurance coverage for the properties and assets of the Company Group.

 

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(b)            Subject to Section ‎‎6.19, Seller and its Affiliates shall be entitled to receive and retain any and all amounts paid to insured Persons pursuant to any Seller Insurance Policy in respect of any insurance claim relating to the conduct of the business of the Company Group prior to the Closing Date.

 

6.11.        Officers & Directors.

 

(a)            From and after the Closing, Buyer shall cause the Company Group to indemnify, defend and hold harmless each Person who is now, or has been at any time prior to the Execution Date or who becomes prior to the Closing, a manager, director, officer, employee or equityholder of Seller, the Company or any other Company Group Member (and their equityholders, officers, directors and employees), consultant, representative or agent of Seller or the Company Group (the “D&O Indemnified Parties”) against any and all Liabilities that are paid in settlement of or in connection with any threatened or actual claim, demand, action, cause of action, suit, motion, controversy, proceeding or investigation (each a “D&O Claim”) based in whole or in part on or arising in whole or in part out of the fact that such Person is or was a manager, director, officer, employee, equityholder, consultant, representative or agent of Seller, any Company Group Member or is or was serving at the request of Seller or the Company Group as a manager, director, officer, employee, controlling Person or agent of another corporation, partnership, limited liability company, joint venture, employee benefit plan, trust or other enterprise or by reason of anything done or not done by such Person in any such capacity whether pertaining to any act or omission occurring or existing prior to, at or after the Closing and whether asserted or claimed prior to, at or after the Closing (“D&O Indemnified Liabilities”), in each case as set forth in Organizational Documents as of the date hereof and Buyer shall cause the Company Group to pay expenses in advance of the final disposition of any such D&O Claim to each D&O Indemnified Party to the fullest extent set forth in the Organizational Documents as of the date hereof. Any D&O Indemnified Party claiming indemnification under this Section ‎‎6.11, upon learning of any such D&O Claim, shall notify Buyer (but the failure so to notify shall not relieve Buyer from any liability that it may have under this Section ‎‎6.11 except to the extent such failure materially prejudices Buyer’s position with respect to such D&O Claim). Buyer shall, and shall cause the Company to require any successor to the Company (whether by merger, purchase or otherwise) to be bound by the provisions of this Section ‎‎6.11.

 

(b)            For a period of six (6) years following the Closing, Buyer shall not, and shall not permit any Company Group Member to, amend, repeal or modify (in a manner adverse to the beneficiary thereof) any provision in the Organizational Documents of Buyer or such Company Group Member relating to exculpation, indemnification or advancement of expenses for any D&O Indemnified Party, it being the intent of the Parties that the D&O Indemnified Parties shall continue to be entitled to such exculpation and indemnification to the full extent of the Law.

 

(c)            At or prior to the Closing, Seller shall, or shall cause the Company to, obtain and fully pay for “tail” insurance policies with a claims period of at least six (6) years following the Closing with respect to D&O Claims and D&O Indemnified Liabilities, with at least the same coverage and amount and containing terms and conditions that are not less advantageous to the D&O Indemnified Parties as the Company Group’s existing policies with respect to claims arising out of or relating to events which occurred before or at the Closing Date (including in connection with the transactions contemplated by this Agreement) (the “D&O Tail Policy”). The cost of the D&O Tail Policy shall be borne by Buyer and any costs related thereto paid by Seller, if any, shall be reimbursed to Seller by Buyer at the Closing; provided, however, that Buyer shall not be required to pay a premium for the D&O Tail Policy in excess of three hundred percent (300%) of the annual premium currently paid by the Company Group for its existing directors’ and officers’ liability insurance coverage; and provided, further, however, that if the premium for such insurance coverage exceeds three hundred percent (300%) of such existing annual premium, then the Company Group shall obtain as much coverage as reasonably practicable for a cost not exceeding such amount.

 

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(d)            The provisions of this Section ‎‎6.11 (i) shall survive the Closing and are intended to be for the benefit of, and shall be enforceable by, each of the Persons identified in Section ‎‎6.11(a), their heirs and their personal representatives, (ii) shall be binding on all successors and assigns of Buyer and the Company Group and (iii) may not be terminated or amended in any manner adverse to such Persons without their prior written consent.

 

(e)            The Parties acknowledge that certain of the D&O Indemnified Parties might have certain rights to indemnification and advancement of expenses from certain of Seller or its Affiliates (the “Seller D&O Parties”) or other Persons (collectively, the “Other Indemnitors”) for facts, events and circumstances that would also give rise to indemnification and advancement of expenses from the Company (the “Buyer D&O Parties”). Notwithstanding the foregoing, following the Closing and subject to each D&O Indemnified Party first using commercially reasonable efforts to assert claims for such coverage under the D&O Tail Policy as is available under its terms (which efforts, for the avoidance of doubt, will not require the initiation of any Proceedings), the Parties acknowledge and agree that (i) the Buyer D&O Parties shall be the indemnitors of first resort (i.e., the Buyer D&O Parties’ obligations to provide indemnification and advancement of expenses are primary and any obligation of any Other Indemnitor to advance expenses or to provide indemnification for the same expenses or liabilities incurred by any D&O Indemnified Party shall be secondary to the Buyer D&O Parties) with regard to matters arising from the affairs of the Company Group, (ii) the Buyer D&O Parties shall be required to advance the full amount of expenses incurred by such D&O Indemnified Party in accordance with the applicable Organizational Documents of any Company Group Member as in effect as of the date hereof and to the extent permitted under applicable Law, and (iii) Buyer, for itself and on behalf of the other Buyer D&O Parties, irrevocably waives, relinquishes and releases the Other Indemnitors from any and all claims against the Other Indemnitors for contribution, subrogation or any other recovery of any kind in respect of any such advancement or payment made or required to be made by the Buyer D&O Parties. The Parties further agree that no advancement or payment by the Other Indemnitors on behalf of any D&O Indemnified Party with respect to any claim for which such D&O Indemnified Party has sought indemnification from Buyer or the Company Group shall affect the foregoing and the Other Indemnitors shall have a right of contribution or subrogation to the extent of such advancement or payment to all of the rights of recovery of such D&O Indemnified Party against Buyer and the Company Group. The Other Indemnitors are express third-party beneficiaries of the terms of this Section ‎‎6.11(e).

 

(f)            The provisions of this Section ‎‎6.11 are intended to be for the benefit of each D&O Indemnified Party, his or her heirs and his or her representatives.

 

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6.12.         R&W Insurance Policy. Buyer may obtain, at its sole election, a R&W Insurance Policy. Buyer shall cause the R&W Insurance Policy to at all times expressly provide that (i) the insurer(s) issuing the R&W Insurance Policy shall waive or otherwise not pursue any subrogation, contribution, or other rights in connection with this Agreement and the transactions contemplated hereby against Seller or any of its past, present or future Representatives (collectively with Seller, the “Seller Related Parties”), except against a Seller Related Party in the case of Fraud (as defined in this Agreement) by such Seller Related Party (the “Subrogation Waiver”), (ii) the Fraud of any Person(s) shall not be imputed to any other Person(s), (iii) the Seller Related Parties are express third-party beneficiaries of the foregoing Subrogation Waiver and each Seller Related Party may rely upon and enforce the Subrogation Waiver as express third-party beneficiaries of the Subrogation Waiver and (iv) the Subrogation Waiver and any other provision of the R&W Insurance Policy affecting such Subrogation Waiver shall not be amended, modified, or otherwise changed in a manner adverse to any Seller Related Party without the prior written consent of Seller. Buyer shall pay, or cause to be paid, any and all costs and expenses it incurs in obtaining the R&W Insurance Policy, including the total premium, underwriting costs, brokerage commission, taxes, and other similar fees and expenses of such policy, as such costs and expenses are due. The Parties acknowledge and agree that the obtaining of the R&W Insurance Policy is not a condition to the Closing, and Buyer shall remain obligated, subject only to the satisfaction or waiver of the conditions set forth in ‎‎Article VII and ‎‎Article VIII, to consummate the transactions contemplated by this Agreement. Buyer agrees that the absence of coverage under the R&W Insurance Policy or the failure of the R&W Insurance Policy to be in full force and effect for any reason shall not expand, alter, amend, change, or otherwise affect the liability of the Seller Indemnified Parties under this Agreement or otherwise.

 

6.13.         Derivative Financial Instruments. From and after the Execution Date, until the earlier of Closing and the termination of this Agreement, Seller shall not and shall cause the Company Group not to voluntarily terminate, unwind, amend or modify, or waive or transfer any right or obligation under, any of the outstanding Derivative Financial Instruments without the consent of Buyer. From and after the Execution Date, Seller shall not (and shall cause the Company Group not to) enter into any additional Derivative Financial Instruments with respect to the Assets. At Closing, to the extent required by counterparties to the Derivative Financial Instruments for the same to remain in effect, Seller and Buyer shall cause the Company Group to novate all of the Derivative Financial Instruments to Buyer or any of its Affiliates and Buyer and its Affiliates shall take all such actions as are reasonably necessary to enable such novations, including providing all documentation and credit support requested or required by the counterparties to such Derivative Financial Instruments and entering into all such documents necessary to effectuate such novations. Buyer shall promptly reimburse Seller for any fees paid by Seller to a counterparty to the Derivative Financial Instruments that were necessary to effect any novation of such Derivative Financial Instruments, provided Seller shall consult with Buyer regarding any such fees prior to agreeing to pay for such fees. For the avoidance of doubt, the novation of the Derivative Financial Instruments and any action taken by Seller or the Company Group in connection therewith shall not constitute a breach of Section ‎‎6.1.

 

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6.14.         Use of Name and Seller’s Marks.

 

(a)            ‎With respect to the phase-out of the use of the names, business names, ‎trade names, brand names, registered and unregistered trademarks, logos, service marks or any ‎other similar Intellectual Property (or any variation or derivative of such names, business names, ‎trade names, brand names, registered and unregistered trademarks, logos, service marks or any ‎other similar Intellectual Property confusingly similar thereto) of Seller or any of its Affiliates, ‎including the use of the name or trademarks of “WildFire” (collectively, the “Seller’s Marks”), ‎Buyer agrees as follows: (i) as soon as practicable following the Closing, but in no event later ‎than ten (10) Business Days after Closing, Buyer shall, and after the Closing shall cause the Company Group Members to, ‎change the name of each applicable Company Group Member to a name that does not include any of Seller’s Marks or ‎comprise any colorable imitations thereof and provide evidence of such name change to Seller; and (ii) as soon as practicable following the Closing, ‎but in no event later than ninety (90) days after Closing, Buyer shall, and after the Closing ‎shall cause the Company Group Members to, cease and permanently discontinue any and all uses of any of ‎Seller’s Marks and any colorable imitations thereof, and remove or cover all Seller’s Marks from ‎or on, or destroy, any publications, signage, corporate letterhead, invoices, stationery, business ‎cards, marketing materials, website content or other materials in the possession or under the ‎control of the Company Group or on the Assets bearing any of Seller’s Marks, and provide Seller with written ‎confirmation thereof.

 

(b)            In no event shall Buyer or any of its Affiliates (including, after Closing, the Company Group) use any of Seller’s Marks after Closing in any manner or for any purpose different from the use of such Seller’s Marks by the Company Group Members preceding the Closing, and none of them shall affix or include any of Seller’s Marks, or any colorable imitations thereof, on any publications, signage, corporate letterhead, invoices, stationery, business cards, marketing materials, website content or other materials that are created or produced after the Closing. Buyer, for itself and its Affiliates (including, after Closing, the Company Group Members), agrees that, after the Closing Date, Buyer and its Affiliates (including, after Closing, the Company Group) will not do business or represent themselves as having any affiliation or business relationship with Seller or any Affiliates of Seller, except pursuant to any separate agreement entered into, or assumed by, Buyer or its Affiliates on one hand, and Seller or its Affiliates, on the other hand.

 

(c)            Buyer expressly acknowledges and confirms that Seller is not transferring or assigning, and Buyer shall not receive, any right, title or interest in or to the Seller’s Marks, except the limited right to use for the sole purpose of permitting Buyer to complete the phase-out in strict compliance with this Section ‎‎6.14. Notwithstanding anything to the contrary herein or in the other Transaction Documents, prior to the Closing Date, Seller shall be permitted to cause the Company Group Members to assign and transfer to Seller or its Affiliates (other than the Company Group Members) any and all right, title and interest that the Company Group have or may have in or to the Seller’s Marks, including any goodwill therein. Furthermore, all use of Seller’s Marks hereunder during the phase-out period shall be at all times subject to the direction and control of Seller and any and all use thereof by Buyer or the Company Group hereunder shall inure to the exclusive benefit of Seller, and Buyer shall, and after the Closing shall cause the Company Group Members to, comply with Seller’s instructions and direction at all times.

 

6.15.         Satisfaction of Conditions. Between the Execution Date and the earlier of the Closing Date and the termination of this Agreement in accordance with ‎Article XIV, (a) Seller shall use commercially reasonable efforts to cause the conditions in ‎Article VII to be satisfied, and (b) Buyer shall use commercially reasonable efforts to cause the conditions in ‎Article VIII‎ to be satisfied; provided, however, that if Seller or Buyer, as applicable, is unable to satisfy such conditions after using such commercially reasonable efforts, such failure to satisfy shall not constitute a breach of this Section ‎‎6.15.

 

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6.16.        Consents and Preferential Purchase Rights.

 

(a)            No later than ten (10) Business Days after the Execution Date, Seller shall, and shall cause the Company Group Members, as applicable, to prepare and send ‎‎(i) written notices to the holder of any Consents that are set forth in Schedule ‎‎4.5 (excluding with respect to the Contracts set forth on Schedule 6.18, Part (B)) (or that are otherwise discovered after the ‎Execution Date by Seller or Buyer) ‎requesting Consent with respect to the transactions contemplated hereby and the consummation thereof and (ii) written notices to ‎the holders of any Preferential Purchase Rights that are set forth in Schedule ‎‎4.5 (or that are otherwise discovered after the Execution ‎Date by Seller or Buyer) in compliance ‎with the terms of such rights and requesting waivers of such rights. Prior to Closing, Seller shall use commercially reasonable efforts to obtain all such Consents and waivers of Preferential Purchase Rights, provided, that, except as set forth in Section 6.18(b), neither Seller nor any of its Affiliates shall be ‎required to make payments, incur any Liability or undertake obligations to or for the benefit of the holders of ‎such rights in order to obtain such Consents. If Buyer or Seller discovers any Consent or Preferential Purchase Right following the Execution Date that is not set forth in Schedule ‎‎4.5, Seller, within five (5) Business Days of the date Seller becomes aware of such Consent or Preferential Purchase Right, shall send to the holder of each such Consent or Preferential Purchase Right a notice in material compliance with the contractual provisions applicable to such Consent or Preferential Purchase Right. Seller shall provide Buyer with (A) a copy of each notice and all other materials delivered to any such holder pursuant to this Section ‎6.16 as soon as reasonably practicable after sending the same to such holder and (B) copies of any material written responses received from any such holder as soon as reasonably practicable after receiving the same.

 

(b)            Buyer shall, and after the Closing shall cause the Company Group to, reasonably cooperate with Seller in seeking to obtain such Consents and waivers of Preferential Purchase Rights and, to the extent (i) required to obtain the Consent of any counterparty, on or prior to Closing and (ii) reasonably requested by such counterparty to provide Consent to the transactions contemplated by this Agreement, Buyer shall (and if applicable, shall cause its Affiliates (including, after the Closing, the Company Group) to) provide any bonds, letters of credit, guarantees, credit support and any other assurances as to financial capability, resources, and creditworthiness; provided, that neither Buyer nor any of its Affiliates (including, after the Closing, the Company Group) shall otherwise be required to make payments, incur any material Liability or undertake obligations to or for the benefit of the holders of such rights in order to obtain such consents and waivers. Any Preferential Purchase Right must be exercised subject to all terms and conditions set forth in this Agreement. The consideration payable under this Agreement for any particular Asset for purposes of Preferential Purchase Right notices shall be the Allocated Value for such Asset.

 

(c)            In cases in which the Asset subject to a Specified Consent Requirement is a Contract and such Specified Consent Requirement has not been satisfied by Closing, (i) such Contract shall be conveyed by the Company Group pursuant to Section ‎‎2.4, (ii) Seller shall continue after Closing to use commercially reasonable efforts to satisfy the Specified Consent Requirement so that such Contract can be transferred to a Company Group Member upon receipt of the Specified Consent Requirement, (iii) the Contract shall be held by Seller for the benefit of the Company Group until the Specified Consent Requirement is satisfied or the Contract has terminated, and (iv) Buyer shall pay all amounts due thereunder, perform all obligations thereunder and indemnify Seller against any Liabilities incurred or suffered by Seller as a consequence of remaining a party to such Contract until the Specified Consent Requirement is satisfied or the Contract has terminated.

 

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(d)            In cases in which the Asset subject to such a Specified Consent Requirement is a Lease and such Specified Consent Requirement is not satisfied by Closing, the affected Lease and the Assets directly related to that Lease shall be conveyed by the Company Group pursuant to Section ‎‎2.4 and the Purchase Price shall be reduced by the Allocated Value of the Lease and directly related Assets. If an unsatisfied Specified Consent Requirement with respect to which an adjustment to the Purchase Price is made as provided in this Section ‎‎6.16 is subsequently satisfied prior to one hundred and eighty (180) days following the Closing, a separate closing shall be held within five (5) Business Days thereof at which (A) Seller shall convey the affected Lease and directly related Assets to a Company Group Member in accordance with this Agreement and (B) Buyer shall pay an amount equal to the Allocated Value of such Lease and related Assets to Seller. If such Specified Consent Requirement is not satisfied by such date, Seller shall have no further obligation to sell and convey such Lease and directly related Assets and Buyer shall have no further obligation to purchase, accept, and pay for such Lease, and the affected Lease and directly related Assets shall be Excluded Assets for all purposes.

 

(e)            If Seller fails to obtain any such Consent which is not a Specified Consent Requirement prior to Closing, the Asset (or portion thereof) subject to such un-obtained Consent shall nevertheless be included in the transactions contemplated by this Agreement as part of the Assets and Buyer shall have no claim against, and provided that Seller has complied with the terms of this Section ‎‎6.16 in all material respects, Seller shall not have any Liability to Buyer for, the failure to obtain any such Consent.

 

(f)            If any Preferential Purchase Right is exercised prior to Closing, Seller shall have the right to cause the Company Group to convey the affected Assets to the exercising party prior to or simultaneously with the Closing on the terms and conditions set out in the applicable Preferential Purchase Right provision and the Purchase Price shall be decreased by the Allocated Value of the affected Assets, and such affected Assets shall be Excluded Assets for all purposes. Seller shall retain the consideration paid by the Third Party and shall have no further obligation with respect to such affected Assets under this Agreement. Should (i) a Third Party fail to exercise or waive its Preferential Purchase Right to purchase as to any portion of the Assets prior to Closing, and (A) the time for exercise or waiver has not yet expired by Closing or (B) the validity of the exercise is being contested by Seller or Buyer, or (ii) a Third Party exercises its Preferential Purchase Right to purchase as to any portion of the Assets prior to the Closing, but such Assets are not conveyed prior to or simultaneously with the Closing, then, in each case, there shall be no adjustment to the Purchase Price on account thereof and, if Closing occurs, Buyer shall cause the Company Group to comply with the terms and provisions set out in the applicable Preferential Purchase Right provision and shall be entitled to the consideration paid by such Third Party.

 

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6.17.         Successor Operator. While Buyer acknowledges that it desires to directly or indirectly succeed the applicable Company Group Member or Affiliate of Seller as operator of those Assets or portions thereof that such Company Group Member or Affiliate of Seller may presently operate, Buyer acknowledges and agrees that Seller cannot and does not covenant or warrant that Buyer shall become the direct or indirect successor operator of such Assets, as the Assets or portions thereof may be subject to operating or other agreements that control the appointment of a successor operator. Without limiting the foregoing, Seller shall use commercially reasonable efforts to support Buyer’s or an Affiliate of Buyer’s efforts to be named as successor operator to the Assets which Seller or its Affiliates operates and designate or appoint, to the extent legally possible and permitted under applicable Law or any applicable operating agreement, Buyer or its Affiliate, as successor operator of such Assets, effective as of the Closing (at Buyer’s sole cost and expense). The Parties shall use commercially reasonable efforts to (i) promptly, following Closing, file and diligently pursue until receipt of any acknowledgement, consent or confirmation by Governmental Authorities, all appropriate forms, permit transfers and declarations or bonds with federal and state agencies relative to Buyer’s or any Company Group Member’s assumption of operatorship and (ii) at the Closing or, to the extent not capable of being completed at the Closing, as soon as reasonably practicable thereafter (and in any event within ten (10) Business Days after the Closing), Buyer shall, and shall cause its Affiliates (including the Company Group) to, cause the removal or replacement of Seller or any current officer or employee of Seller or any Company Group Member as agents of any Company Group Member on or under any permits issued by the Railroad Commission of Texas and deliver evidence of such removal or replacement to Seller, in form and substance reasonably acceptable to Seller.

 

6.18.         Seismic Licenses.

 

(a)            Buyer acknowledges that one or more Company Group Member holds the data and geophysical licenses and permits described on Schedule ‎‎6.18 (each a “Seismic License”). Pursuant to the terms of such Seismic Licenses, the consummation of the transactions contemplated hereunder may require the consent of the applicable licensor, or the payment of one or more transfer, assignment or change of control fees or payments unless the applicable Company Group Member cancels or terminates such Seismic License. Buyer further acknowledges and agrees that any consent to assignment, transfer or change of control is solely within the discretion of the licensor under the applicable Seismic License and Seller has no obligation or Liability in connection with any failure of a licensor to approve the transfer or assignment or change of control in connection with any Seismic License.

 

(b)            With respect to those Seismic Licenses described on the applicable Annex of Schedule ‎‎6.18, Part A, (a) Buyer shall pay to the applicable Third Party under such Seismic License any and all transfer, assignment or change of control fees or payments required under such Seismic Licenses in connection with the consummation of the transactions contemplated hereunder, (b) in no event shall such payment of fees or payments result in any downward reduction to the Purchase Price and (c) Buyer shall, and shall cause the Company Group to, after Closing, indemnify, defend and hold harmless each member of the Seller Releasing Group from any and all Liabilities arising out of the payment, mispayment or failure to pay such fees and payments.

 

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(c)            With respect to those Seismic Licenses described on the applicable Annex of Schedule ‎‎6.18, Part B, Seller shall cause the Company Group to, prior to or at the Closing, cancel and terminate such Seismic Licenses and destroy or return to the applicable counterparties under such Seismic Licenses any and all data, information and records required to be destroyed or returned under the terms thereof.

 

(d)            Notwithstanding anything herein to the contrary, Buyer may elect to have the Seismic Licenses listed on Schedule ‎‎6.18, Part A moved to Schedule ‎‎6.18, Part B at any time and for any reason upon written notice to Seller within ten (10) days after the Execution Date.

 

6.19.         Casualty and Condemnation Loss. If, after the Execution Date, but prior to the Closing Date, any portion of the Assets is damaged, destroyed, or made unavailable or unusable for the intended purpose by fire or other casualty or is taken in condemnation or under right of eminent domain (each a “Casualty Loss”), Seller shall notify Buyer in writing thereof and use commercially reasonable efforts to provide Buyer with such reasonably requested information with respect thereto, including allowing Buyer and its Representatives to visit and survey the damage resulting therefrom (as applicable) and Buyer shall nevertheless be required to proceed with consummating the transactions contemplated herein and (a) there shall be no reduction of the Purchase Price in respect of such Casualty Loss, and (b) upon Closing, Buyer and the Company Group shall be entitled to all rights of Seller or the Company Group to any insurance proceeds (whenever received) under insurance policies issued by Third Parties to Seller or its Affiliates (including the Company Group), to condemnation awards (whenever received) and to other claims against Third Parties with respect to the Casualty Loss and Seller shall, and shall cause its Affiliates to, enter into customary agreements pursuant to which Seller or its Affiliates, as applicable, will deliver to Buyer all sums paid to Seller or its Affiliates in respect of such Casualty Loss and neither Seller nor the Company Group shall assign, convey or ‎distribute any such proceeds to any ‎other Person.

 

6.20.         Assignment. At the time of and in connection with the termination of the Transition Services Agreement pursuant to and in accordance with its terms (or as otherwise mutually agreed in writing by the Parties), Seller shall use commercially reasonable efforts and shall cause its Affiliates, including WildFire Energy LLC, to use commercially reasonable efforts to contribute, assign, transfer and convey those certain assets and Contracts listed on Schedule 6.20 to Buyer or its designated Affiliates (including the Company Group) and for thirty (30) days after the termination of the Transition Services Agreement (or at such earlier time as may be mutually agreed in writing by Buyer and Seller), Seller shall reasonably cooperate with Buyer and use commercially reasonable efforts to assist Buyer to obtain any third party consents, authorizations, approvals, or waivers required in connection therewith; provided, however, that Seller shall not be required to incur any material out of pocket, third party costs or expenses in connection with such efforts. Buyer acknowledges and agrees that any consent to assignment, transfer or change of control is solely within the discretion of the counterparty under the applicable Contract included in the Contributed Assets and Seller has no obligation or Liability in connection with any failure of a counterparty to approve the transfer or assignment or change of control in connection therewith. Notwithstanding anything to the contrary herein, if, at any time during the period beginning on the Closing Date and ending on the date that Transition Services Agreement is terminated (or as otherwise mutually agreed in writing by the Parties), the Parties identify any other assets, properties, rights or interests that Seller (or its Affiliates) owns or holds (other than any Business Employee or any Excluded Asset) that is used or held for use in the ownership, operation or use of the Assets or the conduct of the business of the Company Group, or that would constitute an Asset if owned or held by a Company Group Member (including those certain assets and Contracts listed on Schedule 6.20, the “Contributed Assets”), for thirty (30) days after the termination of the Transition Services Agreement, Seller shall use commercially reasonable efforts to, or shall cause the applicable controlled Affiliate (including the applicable Excluded Subsidiary) to use commercially reasonable efforts to, contribute, assign, transfer and convey such Contributed Asset to Buyer or the applicable Company Group Member as soon as reasonably practicable, without any additional consideration. To the extent any such transfer cannot be effected at or prior to the Closing or at the time of the proposed transfer due to any required consent not having been obtained or any other legal or contractual impediment, for thirty (30) days after the termination of the Transition Services Agreement, Seller shall reasonably cooperate with Buyer and the Parties shall continue to use commercially reasonable efforts to obtain such consent and effect such transfer as soon as reasonably practicable thereafter and, pending such transfer, Seller (or its Affiliates) shall (and shall be deemed to) hold such Contributed Asset in trust for, and provide the benefits and burdens thereof to, Buyer or the applicable Company Group Member; provided that if Seller provides such benefits to Buyer, Buyer shall assume all Liabilities thereunder and shall indemnify, defend and hold harmless Seller, its Affiliates and its and their respective officers, directors, managers, employees and agents from and against any and all Liabilities asserted against or suffered by them relating to, resulting from, or arising out of such applicable Contributed Assets, in each case, until such time as such Contributed Assets, as applicable, have been assigned to Buyer.

 

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6.21.         Escrow Matters. Except as otherwise agreed by Buyer and Seller in writing, the Parties agree that the Escrow Agent shall report all interest or other income earned on any amounts held by the Escrow Agent (including, as applicable, the Deposit, the Adjustment Escrow Amount and Defect Escrow Amount (if any)) pursuant to the Escrow Agreement (“Escrow Earnings”) to the IRS, or any other applicable taxing authority, on IRS Form 1099 (or other appropriate form) as required by applicable Law, as follows: (i) with respect to the Escrow Earnings, to the extent earned prior to Closing, as income earned by Buyer whether or not such Escrow Earnings had been disbursed during such period, in accordance with Treasury Regulation Section 1.468B-7(c), and (ii) with respect to the Escrow Earnings, to the extent earned after the Closing, if any, attributable to the Defect Escrow Amount, if any, or Adjustment Escrow Amount, as income earned by Seller whether or not such Escrow Earnings had been disbursed during such period, in accordance with Proposed Treasury Regulation Section 1.468B-8(h)(2) (February 1, 1999), as such Proposed Treasury Regulations may be amended or modified, including upon the issuance of temporary or final regulations. The Parties shall cooperate in good faith to provide joint written instructions to the Escrow Agent that contain instructions consistent with this Section ‎‎6.21 (including, if needed, the date upon which such tax reporting change, in accordance with, and as referenced in, the immediately preceding sentence, is required to take effect). Neither Buyer nor Seller shall take any position for U.S. federal (or applicable state and local) income tax purposes that is inconsistent with the provisions of this Section ‎‎6.21.

 

6.22.         Financial Information.

 

(a)            From and after the Execution Date until the date that is six (6) months following the Closing Date (the “Records Period”), Seller agrees to use commercially reasonable efforts (i) to make available to Buyer and its Affiliates and their agents and representatives any and all Records to the extent in the Seller’s or its Affiliates’ possession or control and to which Seller and its Affiliates’ personnel have reasonable access, in each case as reasonably required by Parent, its Affiliates and their agents and representatives in order to prepare financial statements (including pro forma financial statements that comply with the rules and regulations of the SEC, including the requirements of Regulation S-X) or oil and gas reserves information in connection with a Debt Financing, Equity Financing or any required filing by the Parent or its Affiliates with the SEC, meeting the requirements of Regulation S-X under the Securities Act (the “Buyer Financial Statements”), and (ii) in connection with filings by Parent with the SEC under securities Laws applicable to Parent, or as otherwise reasonably requested by Buyer in connection with any registration of securities under the Securities Act or a Debt Financing or Equity Financing, to use commercially reasonable efforts to cooperate with Buyer and its Affiliates, including Parent, in connection with Parent’s preparation of the Buyer Financial Statements.

 

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(b)            During the Records Period, Seller shall use commercially reasonable efforts to cause its accountants, reserve engineers, counsel, agents and other Third Parties to reasonably cooperate with Buyer and its Representatives in connection with the preparation by Buyer of the Buyer Financial Statements or oil and gas reserves information that are required to be included in any filing by Buyer or its Affiliates with the SEC; provided, that Buyer shall be solely responsible for any costs or expenses associated therewith. If requested, Seller and its Affiliates shall use commercially reasonable efforts to execute and deliver to the external audit firm that audits the Buyer Financial Statements (the “Audit Firm”) such representation letters, in form and substance customary for representation letters provided to external audit firms by management of the company whose financial statements are the subject of an audit, as may be reasonably requested by the Audit Firm, with respect to the Buyer Financial Statements, including, as requested, representations regarding internal accounting controls and disclosure controls.

 

(c)            Notwithstanding anything to the contrary in this Section ‎6.22, in no event shall Seller or any of its Affiliates be required to bear any cost or expense or pay any fee in connection with this Section ‎6.22 and Buyer and its Affiliates, including Parent, shall be solely responsible for any costs or expenses associated therewith, including, for avoidance of doubt, any such costs and expenses associated with the storage, retrieval and maintenance of records for the foregoing purposes. Accordingly, notwithstanding anything to the contrary herein, Buyer shall promptly, upon written request by Seller, reimburse Seller for all reasonable and documented out-of-pocket costs and expenses (including reasonable and documented compensation or other fees of any contractor or advisor) incurred in connection with the cooperation of Seller contemplated by this Section ‎6.22. Notwithstanding anything to the contrary contained in this Agreement, Seller’s performance under this Section ‎6.22 shall not be taken into account with respect to whether any condition to Closing set forth in ‎Article VII shall have been satisfied, except and only to the extent that Seller has willfully breached its obligations in this Section ‎6.22.

 

6.23.         Listing. At the Closing, Parent shall issue the shares of Parent Class A Common Stock comprising the Equity Purchase Price in accordance with all applicable securities Laws and the rules and policies of the NYSE. Without limiting the generality of the foregoing, Parent shall, to the extent such notification is required by the requirements of the NYSE, notify the NYSE of the anticipated issuance and listing of the shares of Parent Class A Common Stock comprising the Equity Purchase Price, and use its reasonable best efforts to obtain official notice from the NYSE as promptly as practicable that Parent’s obligation to notify the NYSE has been completed on or prior to the Closing Date.

 

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6.24.        Buyer Financing.

 

(a)            Buyer shall use commercially reasonable efforts to take, or cause to be taken, all actions and do, or cause to be done, as promptly as reasonably practicable (giving effect to the timing of the Marketing Period), all things necessary to consummate the Debt Financing or consummate alternative financing transactions generating net cash proceeds sufficient, when taken together with Other Sources, to fund the Funding Requirements on or prior to the Closing Date. In furtherance of and not in limitation of the foregoing, Buyer shall use commercially reasonable efforts to:

 

(i)            satisfy, or cause to be satisfied, on a timely basis all conditions to Buyer obtaining the Debt Financing set forth in the Bridge Commitment Letter and the A&R Buyer RBL Credit Facility (including the payment of any fees required as a condition to the Debt Financing and the exercise of any economic “flex” provisions as provided in and pursuant to the terms of the Fee Letter);

 

(ii)            negotiate and enter into definitive agreements with respect to the Bridge Financing on the terms (unless otherwise acceptable to Buyer) and conditions contemplated by the Bridge Commitment Letter (including any related economic “flex” provisions) or on other terms (not related to conditionality) that are (A) reasonably acceptable to the applicable Debt Financing Sources and (B) in the aggregate not materially less favorable, taken as a whole, to Buyer, so that such agreements are in effect no later than the Closing Date (such definitive financing agreements entered into in respect of the Bridge Financing, together with the A&R Buyer RBL Credit Facility, the “Debt Documents”);

 

(iii)            maintain in effect the Bridge Commitment Letter, the A&R Buyer RBL Credit Facility and (from and when executed) the other Debt Documents through the consummation of the Closing;

 

(iv)            fully enforce its rights under the Bridge Commitment Letter, the A&R Buyer RBL Credit Facility and the other Debt Documents (to the extent necessary to fund the Funding Requirements at the Closing after giving effect to Other Sources of Buyer); and

 

(v)            in the event that all conditions precedent to the funding of the Debt Financing in the Bridge Commitment Letter and the A&R Buyer RBL Credit Facility have been satisfied or waived (or upon funding will be satisfied), consummate the Debt Financing at or prior to the time the Closing is required to occur (to the extent necessary to fund the Funding Requirements at the Closing after giving effect to Other Sources of Buyer).

 

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(b)            Buyer shall promptly notify Seller in writing (A) of any material breach or default (or any event or circumstance that, with or without notice, lapse of time or both, would reasonably be expected to result in a material breach or default) by any party to the Bridge Commitment Letter, the A&R Buyer RBL Credit Facility or any other Debt Document of which Buyer becomes aware, (B) if and when Buyer becomes aware that any portion of the Debt Financing contemplated by the Bridge Commitment Letter or the A&R Buyer RBL Credit Facility may not be available for the Funding Requirements, to the extent such unavailability would reasonably be expected to prevent, or materially delay, impede or impair the Closing, (C) of the receipt of any written notice or other written communication from any Person with respect to any (i) actual or potential material breach, default, termination or repudiation by any party to the Bridge Commitment Letter, the A&R Buyer RBL Credit Facility or any other Debt Document or (ii) material dispute or disagreement between or among any parties to the Bridge Commitment Letter, the A&R Buyer RBL Credit Facility or any other Debt Document (but excluding, for the avoidance of doubt, any ordinary course negotiations with respect to the terms of the Debt Financing or Debt Documents) and (D) of any expiration or termination of the Bridge Commitment Letter, the A&R Buyer RBL Credit Facility or any other Debt Document. Without limiting the foregoing, Buyer shall upon request keep Seller informed on a reasonably current basis in reasonable detail of material developments concerning the Debt Financing.

 

(c)            If any material portion of the Debt Financing becomes unavailable on the terms and conditions contemplated in the Bridge Commitment Letter or the A&R Buyer RBL Credit Facility (after taking into account economic “flex” terms), Buyer shall use reasonable best efforts to reasonably promptly arrange and obtain alternative financing for any such unavailable portion from the same or alternative sources (“Alternative Financing”), in an amount that is sufficient, when taken together with Other Sources and the available portion of the Debt Financing, to consummate the transactions contemplated by this Agreement and to pay the Funding Requirements and the provisions of this Section ‎6.24 shall be applicable to the Alternative Financing, and, for the purposes of this Section ‎6.24 and Section ‎6.25, all references to the Debt Financing shall be deemed to include such Alternative Financing and all references to the Bridge Commitment Letter, the A&R Buyer RBL Credit Facility or other Debt Documents shall include the applicable documents for the Alternative Financing. Buyer shall promptly provide a true, correct and complete copy of each Alternative Financing commitment and any related fee letter(s) to Seller (provided that such fee letter(s) may be redacted solely to remove any fees, economic terms and other commercially sensitive pricing information in customary fashion).

 

(d)            Buyer shall (1) comply in all material respects with the Bridge Commitment Letter, the A&R Buyer RBL Credit Facility and each Debt Document, and (2) not permit, without the prior written consent of Seller, any material amendment or modification to be made to, or any termination, rescission or withdrawal of, or any material waiver of any provision or remedy under, the Bridge Commitment Letter (including the Fee Letter), the A&R Buyer RBL Credit Facility or any other Debt Document, in each case, that (individually or in the aggregate with any other amendments, modifications or waivers) would reasonably be expected to (x) reduce the aggregate amount of the Debt Financing thereunder (including by changing the amount of fees to be paid or original issue discount thereof) to an amount less than the amount required for Buyer to consummate the transactions contemplated hereby at the Closing or (y) impose any new or additional condition, or otherwise amend, modify or expand any condition, to the receipt of any portion of the Debt Financing in a manner that would reasonably be expected to (i) delay or prevent the Closing Date or (ii) adversely impact the ability of Buyer to enforce its rights against any other party to the Bridge Commitment Letter, the A&R Buyer RBL Credit Facility or any other Debt Document or the ability of Buyer to consummate the transactions contemplated hereby at the Closing; provided, that notwithstanding anything to the contrary herein, no consent from Seller or any other party hereto shall be required for (1) any amendment, restatement, amendment and restatement, replacement, supplement, or other modification of, or waiver or consent under the Bridge Commitment Letter or the A&R Buyer RBL Credit Facility that is limited to adding lenders, lead arrangers, bookrunners, syndication agents, or similar entities that have not executed the Bridge Commitment Letter or the A&R Buyer RBL Credit Facility as of the date of this Agreement (including in replacement of a Debt Financing Source thereunder) or (2) implementation or exercise of any economic “flex” provision.

 

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(e)            The Buyer Parties shall jointly and severally indemnify, defend and hold harmless the Seller Indemnified Parties and each Company Group Member and their respective Representatives, from and against any and all Liabilities suffered or incurred by them in connection with Seller’s obligations under Section ‎6.25 and any information utilized in connection therewith or in connection with the Debt Financing or Equity Financing, other than with respect to any actions of Seller or the Company Group that constitute actual and intentional breach in the performance of its obligations under Section ‎6.25 as determined by a court of competent jurisdiction in a final and non-appealable judgment. Buyer shall promptly, within thirty (30) days of written request by Seller, reimburse Seller for all reasonable and documented out-of-pocket costs (including reasonable and documented attorneys’ fees, accountants’ fees, reserve engineers’ fees and ratings agencies’ fees) incurred by Seller or any Company Group Member in connection with the cooperation described in Section ‎6.25.

 

(f)            Seller agrees that: (i) Buyer and its Affiliates may initiate contact with and pursue and provide the information contemplated by Section ‎‎6.25(a) to Debt Financing Sources in connection with the Debt Financing and the transactions contemplated by this Agreement; and (ii) Buyer and its Affiliates may initiate contact with their lenders and provide the information contemplated by Section ‎‎6.25(a), in each case, in connection with the transactions contemplated hereunder and who are informed of the confidential nature of such information and who are subject to customary confidentiality obligations.

 

(g)            It is acknowledged and agreed that the Debt Financing may include Notes (as defined in the Bridge Commitment Letter) in lieu of the Bridge Loans (as defined in the Bridge Commitment Letter) and, as applicable, such Notes shall be deemed part of the Debt Financing for all purposes of this Agreement.

 

6.25.         Cooperation with Financing.

 

(a)            Prior to the Closing, Seller shall, and shall use commercially reasonable efforts to cause the Company Group and their respective Representatives with appropriate seniority and expertise to, provide reasonable cooperation to Buyer in connection with the Debt Financing or any equity financing contemplated by Buyer for purposes of consummating the transactions contemplated herein (the “Equity Financing”) as may be reasonably requested by Buyer with reasonable prior notice to Seller (provided, that, such requested cooperation does not (x) unreasonably interfere with the ongoing operations of Seller or the Company Group, (y) cause any material representation or warranty in this Agreement to be breached or (z) cause any material condition in this Agreement to fail to be satisfied, and provided further that the scope and nature of financial and other information to be provided by Seller and the Company Group is addressed exclusively in the following clause (iii)), including using commercially reasonable efforts to:

 

(i)            participate at reasonable times in a reasonable number of meetings, conference calls, drafting sessions and rating agency meetings and due diligence sessions to and with prospective Debt Financing Sources or ratings agencies, as applicable, including direct contact between senior management and other representatives of Seller and the Company Group, on one hand, and the actual and potential Debt Financing Sources or ratings agencies, as applicable, on the other hand; provided that no such meetings, conference calls, drafting sessions or other sessions shall be required to be in person;

 

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(ii)            cooperate with the due diligence efforts of Buyer and the Debt Financing Sources and any other prospective investors or lenders involved in the Debt Financing or Equity Financing;

 

(iii)            furnish (x) as promptly as reasonably practicable after the Execution Date, the Required Information, (y) other customary financial, reserves, and other pertinent information (including asset schedules, lease operating statements, production reports, title information, reserve reports and other similar information) regarding the Assets and the Company Group as shall exist and not already be publicly available to Buyer and be reasonably requested by Buyer for use in connection with any marketing of the Debt Financing or Equity Financing; provided that, for the avoidance of doubt, Seller and the Company Group shall not be required to provide, and Buyer shall be solely responsible for, (A) the preparation of pro forma financial statements (except for reasonable assistance as described in clause (iv) immediately below), (B) all marketing materials and other documents used in connection with any proposed Debt Financing or Equity Financing, and (C) any description of all or any component of the Debt Financing, including any such description to be included in any liquidity or capital resources disclosure or any “description of notes”; in each case, for the avoidance of doubt, other than any financial, reserve or other pertinent information reasonably necessary for Buyer to prepare such pro forma financial statements or descriptions, and (z) customary authorization letters to the Debt Financing Sources, authorizing the distribution of information to prospective lenders or investors and other financing sources;

 

(iv)            provide reasonable assistance with (and provide reasonably requested information for) Buyer’s preparation of (A) pro forma financial statements of the type necessary or reasonably requested to be included in any marketing materials in respect of (and customary for financing similar to) the Debt Financing or the Equity Financing and (B) customary materials for offering prospectuses, offering memoranda, bank information memoranda, marketing materials, rating agency presentations and similar documents;

 

(v)            reasonably cooperate to update any Required Information in order to endeavor to cause such Required Information to be Compliant;

 

(vi)            cause, and take all reasonably requested actions to permit (including delivering customary authorization and representation letters) the present and former, as applicable, independent accountants and reserve engineers for Seller and the Company Group to provide reasonable assistance to Buyer in connection with the Debt Financing or Equity Financing consistent with their customary practice (including using commercially reasonable efforts to cause such accountants and engineers, as applicable, to provide accountants’ and reserve engineers’ comfort letters and consents from such independent accountants and reserve engineers to the extent required by the Debt Financing or Equity Financing and participating in customary due diligence calls in connection therewith);

 

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(vii)       assist with Buyer’s preparation of one or more credit agreements, indentures, purchase agreements, pledge and security documents and other definitive documentation, in each case, as of or reasonably prior to the Closing and as may be reasonably required by Buyer; provided that none of Seller, the Company Group or any of their representatives shall be required to execute, deliver, or become bound by any credit agreement, indenture, guarantee, pledge, security document, or other financing instrument prior to the Closing;

 

(viii)      furnish Buyer and its lenders or other Debt Financing Sources promptly (and in any event at least five (5) Business Days prior to the Closing Date) with all documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation the USA PATRIOT Act and the requirements of 31. C.F.R. § 1010.230, and requested by the Debt Financing Sources in writing at least nine (9) Business Days prior to the Closing Date; and

 

(ix)         use commercially reasonable efforts to cause its and the Company Group’s logos to be available for use in connection with the Debt Financing or Equity Financing; provided, that such logos are used solely in a manner that is not intended, or reasonably likely, to harm or disparage Seller, the Company Group or the reputation or goodwill of Seller or the Company Group;

 

provided that, notwithstanding anything in this Agreement to the contrary, none of Seller, the Company Group or any of their respective directors, officers, managers, members, employees, stockholders, representatives or Affiliates shall (1) be required to bear any cost or expense or pay any commitment or other fees or reimburse any expenses in connection with the Debt Financing or Equity Financing for which it has not received prior reimbursement or is not otherwise indemnified by or on behalf of Buyer, (2) have any liability or obligation under any commitment letter, credit agreement, indenture, guarantee, or other document relating to the Debt Financing or Equity Financing, or any other financing document, (3) be required to take any action that will conflict with or violate any Laws or that could reasonably be expected to result in a violation or breach of, or default under, any Material Contract to which Seller or any Company Group Member is a party, (4) be required to (A) pass resolutions or consents, approve or authorize the execution of, or execute any document, agreement, certificate or instrument (other than customary authorization and representation letters) or take any other corporate action with respect to the Debt Financing or Equity Financing or (B) provide or cause its legal counsel to provide any legal opinions. Seller and the Company Group shall not be required to make any representation, warranty or certification with respect to the Debt Financing or Equity Financing (other than with respect to customary authorization and representation letters), (5) require Seller or any of its Affiliates to give to any other Person any indemnities in connection with the Debt Financing or Equity Financing that are effective prior to the Closing, (6) require Seller or any Company Group Member to enter into or approve any debt financing or any definitive agreement for the Debt Financing or Equity Financing that would be effective prior to the Closing (other than the customary authorization letters described above), or (7) unreasonably interfere with the ongoing business operations of Seller and the Company Group.

 

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(b)         The Parties acknowledge and agree that the provisions contained in this Section ‎6.25 and Section ‎6.22 represent the sole obligation of Seller and its Affiliates with respect to cooperation in connection with the arrangement of any financing (including the Debt Financing and Equity Financing) to be obtained by Buyer or any of its Affiliates with respect to the transactions contemplated by this Agreement, and no other provision of this Agreement (including the exhibits and schedules hereto) shall be deemed to expand or modify such obligations.

 

(c)         Notwithstanding anything to the contrary contained in this Agreement, in no event shall a breach of Seller’s obligations under this Section ‎6.25 be taken into account in determining whether the condition set forth in Section ‎7.2 has been satisfied (or whether Buyer has any right to terminate the Agreement pursuant to Section ‎14.1(b)) unless the Debt Financing has not been obtained because of a willful breach by Seller of its obligations under this Section ‎6.25.

 

6.26.         Conduct of Parent’s Business.  From the Execution Date until the earlier of the Closing or termination of this Agreement in accordance with ‎Article XIV, Parent shall not, except as (w) contemplated or otherwise provided by the terms of this Agreement or the other Transaction Documents, (x) consented to or approved in writing by Seller (which consent or approval shall not be unreasonably withheld, conditioned or delayed), or (y) required by applicable Law or any existing Governmental Authorization:

 

(a)         amend or adopt any change to any Organizational Documents of Parent if such amendment or change would reasonably be expected to adversely affect (i) the rights, preferences, privileges and terms of the Parent Class A Common Stock comprising the Equity Purchase Price or (ii) the consummation of the transactions contemplated by this Agreement;

 

(b)         issue any equity interests of Parent or equity interests convertible into equity interests of Parent other than any such issuance that would not reasonably be expected to (i) prevent or materially delay or materially impair the ability of Parent to secure the expiration or termination of the applicable waiting period under the HSR Act with respect to the transactions contemplated by this Agreement or (ii) cause a Parent Material Adverse Effect;

 

(c)         declare, issue, pay or make, or set a record date prior to the Closing with respect to, any non-cash dividend or non-cash distribution to holders of Parent Class A Common Stock;

 

(d)         adopt any plan or agreement of complete or partial liquidation, dissolution, restructuring, recapitalization, or other reorganization of Parent; or

 

(e)         agree or commit to do any of the foregoing.

 

6.27.         Pre-Closing Reorganization. Prior to the Closing, Seller shall, and shall cause its applicable Affiliates (including the applicable Company Group Members) to effectuate the Pre-Closing Reorganization in accordance with all applicable Laws and the Organizational Documents of the applicable Company Group Members and the Excluded Subsidiaries, and shall take all reasonable actions required to consummate the Pre-Closing Reorganization in accordance with the Pre-Closing Reorganization Documents. The Pre-Closing Reorganization shall be effected pursuant to and in accordance with the Pre-Closing Reorganization Documents. Seller shall keep Buyer reasonably informed of the status of the Pre-Closing Reorganization. At the Closing, Seller shall deliver to Buyer the evidence of the consummation of the Pre-Closing Reorganization required by Section ‎9.2.

 

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6.28.         Wrong Pockets; General Reconciliation. In the event that at any time after the Closing Date until the six-month anniversary of the Closing Date, if (a) Seller or any of its Affiliates (other than any Company Group Member) receives any payment or any asset (including any funds, payments and insurance proceeds) related to any Assets that is attributable to the period after the Effective Time, Seller agrees to remit (or cause to be remitted) any such payment within five (5) Business Days of receipt and Seller obtaining actual knowledge thereof, to Buyer or the applicable Company Group Member or transfer (or cause to be transferred) as soon as reasonably practicable such asset to Buyer or the applicable Company Group Member or (b) Buyer or any of its Affiliates (including any Company Group Member) receives (i) any payment or any asset (including any funds, payments and insurance proceeds) related to any Assets that is attributable to the period prior the Effective Time or (ii) any Excluded Asset then, in each case, Buyer agrees to remit (or cause to be remitted) any such payment within five (5) Business Days of Buyer or any of its Affiliates (including any Company Group Member) obtaining actual knowledge thereof to Seller (or its designee) or transfer (or cause to be transferred) such Excluded Asset to Seller (or its designee) as soon as reasonably practicable. From and after the Closing, Buyer shall, and shall cause its Affiliates (including the Company Group) to, use commercially reasonable efforts to promptly forward any communications received by Buyer or its Affiliates (including the Company Group) from Third Parties after the Closing which relate to the Excluded Assets, and Seller shall, and shall cause its Affiliates to, use commercially reasonable efforts to promptly forward any communications received by any of them from Third Parties after the Closing which relate to the Company Group or the Assets.

 

6.29.         Suspense Funds. Immediately after the Closing, Seller shall deliver to Buyer its Records pertaining to the Suspense Funds held by the Company Group, or by Seller or its Affiliates on behalf of the Company Group, together with all supporting details in its or their possession.

 

6.30.         Payout Records Integration. From the Execution Date until the date that is thirty (30) days after the Execution Date, Seller shall, and shall cause its applicable Affiliates to, provide Buyer and the Company Group with reasonable assistance and cooperation to provide further detail for any “payout” balances listed on Schedule ‎4.19, as reasonably requested by Buyer.

 

Article VII
BUYER’S CONDITIONS TO CLOSING

 

The obligations of Buyer to consummate the transactions provided for herein are subject to the fulfillment by Seller or waiver, to the extent permitted by applicable Law, in writing by Buyer (in Buyer’s sole discretion) on or prior to the Closing of each of the following conditions:

 

7.1.         Representations and Warranties. (a) Each of the Fundamental Representations of Seller shall be true and correct in all respects except for de minimis inaccuracies on and as of the Closing Date, with the same force and effect as though such Fundamental Representations had been made or given on and as of the Closing Date (other than representations and warranties that refer to a specified date, which need only be true and correct on and as of such specified date), and (b) all other representations and warranties of Seller in ‎Article III and ‎Article IV (without regard to materiality, Material Adverse Effect or similar qualifiers) shall be true and correct in all respects on and as of the Closing Date, with the same force and effect as though such representations and warranties had been made or given on and as of the Closing (other than representations and warranties that refer to a specified date, which need only be true and correct on and as of such specified date), except in the case of this clause (b) for all such breaches, if any, of such representations and warranties that individually or in the aggregate would not have a Material Adverse Effect.

 

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7.2.         Performance. Seller shall have performed or complied in all material respects with all obligations, agreements and covenants contained in this Agreement as to which performance or compliance by Seller is required prior to or at the Closing.

 

7.3.         No Prohibition. No Law or Order shall be in effect making the transactions contemplated by this Agreement illegal or otherwise enjoining, restraining, preventing or prohibiting consummation of such transactions.

 

7.4.         Title and Environmental Defects. The sum of (without duplication of any amounts) (a) all Title Defect Amounts for all actual Title Defects that are properly asserted by Buyer prior to the Claim Date pursuant to Section ‎11.2(a) (and as such Title Defect Amounts and Title Defects are agreed to by the Parties or determined pursuant to Section 14.2(f)), that individually exceed the Individual Title Defect Threshold (excluding any Title Defect Amounts with respect to any Assets excluded from the transactions contemplated by this Agreement in accordance with this Agreement or cured prior to Closing), plus (b) all Remediation Amounts for all actual Environmental Defects that are properly asserted by Buyer prior to the Claim Date pursuant to Section ‎12.1(a) (and as such Remediation Amounts and Environmental Defects are agreed to by the Parties or determined pursuant to Section 14.2(f)), that individually exceed the Individual Environmental Defect Threshold (excluding any Remediation Amounts with respect to any Assets Remediated prior to Closing), plus (c) the Allocated Value of all Assets excluded from the transactions contemplated by this Agreement on account of Title Defects pursuant to Section ‎‎11.2(d)(ii), plus (d) the losses resulting from all Casualty Losses arising between the Effective Time and Closing, plus (e) the Allocated Value of all Assets excluded from the transactions contemplated by this Agreement on account of unsatisfied Specified Consent Requirements pursuant to Section ‎‎6.16(d) or exercised Preferential Purchase Rights pursuant to Section ‎‎6.16(f) shall be in the aggregate less than fifteen percent (15%) of the Purchase Price.

 

7.5.         HSR Approval. HSR Approval shall have been duly obtained.

 

7.6.         Closing Deliverables. Seller shall have delivered (or be ready, willing and able to deliver at the Closing) to Buyer the documents and other items required to be delivered by Seller under Section ‎‎9.2.

 

7.7.         Pre-Closing Reorganization. The Pre-Closing Reorganization shall have been consummated in accordance with Section ‎6.27 and, after giving effect to the Pre-Closing Reorganization, the Excluded Subsidiaries shall have been distributed, transferred or otherwise removed from the Company Group.

 

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Buyer may not rely on the failure of any condition set forth in this ‎‎Article VII to be satisfied if such failure was caused solely by the failure of Buyer to perform any of its obligations under this Agreement.

 

Article VIII
SELLER’S CONDITIONS TO CLOSING

 

The obligations of Seller to consummate the transactions provided for herein are subject to the fulfillment by Buyer or waiver, to the extent permitted by applicable Law, in writing by Seller (in Seller’s sole discretion) on or prior to the Closing of each of the following conditions:

 

8.1.         Representations and Warranties. The representations and warranties of Buyer set forth in ‎‎Article V shall be true and correct in all material respects (without regard to materiality, material adverse effect or similar qualifiers) on and as of the Closing, with the same force and effect as though such representations and warranties had been made or given on and as of the Closing (other than representations and warranties that refer to a specified date, which need only be true and correct on and as of such specified date).

 

8.2.         Performance. Buyer shall have performed or complied in all material respects with all obligations, agreements and covenants contained in this Agreement as to which performance or compliance by Buyer is required prior to or at the Closing.

 

8.3.         No Prohibition. No Law or Order shall be in effect making the transactions contemplated by this Agreement illegal or otherwise enjoining, restraining, preventing or prohibiting consummation of such transactions.

 

8.4.         Title and Environmental Defects. The sum of (without duplication of any amounts) (a) all Title Defect Amounts for all actual Title Defects that are properly asserted by Buyer prior to the Claim Date pursuant to Section ‎11.2(a) (and as such Title Defect Amounts and Title Defects are agreed to by the Parties or determined pursuant to Section 14.2(f)), that individually exceed the Individual Title Defect Threshold (excluding any Title Defect Amounts with respect to any Assets excluded from the transactions contemplated by this Agreement in accordance with this Agreement or cured prior to Closing), plus (b) all Remediation Amounts for all actual Environmental Defects that are properly asserted by Buyer prior to the Claim Date pursuant to Section ‎12.1(a) (and as such Remediation Amounts and Environmental Defects are agreed to by the Parties or determined pursuant to Section 14.2(f)), that individually exceed the Individual Environmental Defect Threshold (excluding any Remediation Amounts with respect to any Assets Remediated prior to Closing), plus (c) the Allocated Value of all Assets excluded from the transactions contemplated by this Agreement on account of Title Defects pursuant to Section ‎‎11.2(d)(ii), plus (d) the losses resulting from all Casualty Losses arising between the Effective Time and Closing, plus (e) the Allocated Value of all Assets excluded from the transactions contemplated by this Agreement on account of unsatisfied Specified Consent Requirements pursuant to Section ‎‎6.16(d) shall be in the aggregate less than fifteen percent (15%) of the Purchase Price.

 

8.5.         HSR Approval. HSR Approval shall have been duly obtained.

 

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8.6.         Closing Deliverables. Buyer shall have delivered (or be ready, willing and able to deliver at the Closing) to Seller the documents and other items required to be delivered by Buyer under Section ‎‎9.3.

 

Seller may not rely on the failure of any condition set forth in this ‎‎Article VIII to be satisfied if such failure was caused solely by the failure of Seller to perform any of its obligations under this Agreement.

 

Article IX
CLOSING

 

9.1.         Date of Closing. Subject to the conditions stated in this Agreement, the sale by Seller and the purchase by Buyer of the Acquired Interests pursuant to this Agreement (the “Closing”) shall occur on September 10, 2026 (the “Target Closing Date”) by electronic transmission; provided that, if all conditions in ‎‎Article VII and ‎‎Article VIII to be satisfied at or prior to the Closing have not yet been satisfied or waived in writing by Buyer or Seller (as applicable) by the Target Closing Date, then the Closing shall occur within five (5) Business Days after such conditions have been satisfied or waived (other than those conditions that by their nature can only be satisfied at the Closing but subject to all conditions in ‎‎Article VII and ‎‎Article VIII having been satisfied or waived by the applicable Party, to the extent permitted by applicable Law, at the Closing), in accordance with this Agreement, subject to the rights of the Parties under ‎‎Article XIV; provided, however, that if the Marketing Period has not ended at the time of the satisfaction or due waiver of all such closing conditions on or after the Target Closing Date, the Closing shall occur on the earlier to occur of (a) a date before or during the Marketing Period specified by Buyer on not less than two (2) Business Days’ notice to Seller and (b) the second (2nd) Business Day immediately following the final day of the Marketing Period. The date on which the Closing actually occurs shall be the “Closing Date.” All actions to be taken and all documents and instruments to be executed and delivered at Closing shall be deemed to have been taken, executed, and delivered simultaneously and, except as permitted hereunder, no actions shall be deemed taken nor any document and instruments executed or delivered until all actions have been taken and all documents and instruments have been executed and delivered.

 

9.2.         Obligations of Seller at Closing. At the Closing, upon the terms and subject to the conditions of this Agreement, and subject to the simultaneous performance by Buyer of its obligations pursuant to Section ‎‎9.3, Seller shall deliver or cause to be delivered to Buyer (or such other Persons, as applicable) the following:

 

(a)            a counterpart of the Assignment Agreement, transferring the Acquired Interests to Buyer, duly executed by Seller;

 

(b)           a certificate, dated as of the Closing Date, certifying that the conditions set forth in Section ‎‎7.1 and Section ‎‎7.2 have been fulfilled and, if applicable, any exceptions to such conditions that have been waived in writing by Buyer, to the extent permitted by applicable Law, duly executed by an authorized officer of Seller (the “Seller’s Certificate”);

 

(c)            a duly completed and executed Internal Revenue Service Form W-9 (or applicable successor form) from Seller or its regarded parent with Seller’s name listed on line 2;

 

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(d)           a duly executed counterpart of a joint written instruction in compliance with the Escrow Agreement, instructing the Escrow Agent (i) to disburse the Deposit less (x) the Remaining Deposit Amount and (y) the Defect Escrow Amount (if any) to Seller to the account(s) designated by Seller in the Preliminary Settlement Statement and (ii) to convert a portion of the Deposit equal to (1) the Adjustment Escrow Amount to the Adjustment Escrow Account in accordance with Section ‎‎2.3(d)(i) and (2) the Defect Escrow Amount (if any, unless the Defect Escrow Amount is greater than the Remaining Deposit Amount, in which case, the Remaining Deposit Amount) to the Defect Escrow Account in accordance with Section ‎11.2(c)(ii) (the “Closing Instruction”);

 

(e)            written resignations or evidence of the removal of each individual who serves as an officer, manager, or director of a Company Group Member in his or her capacity as such, effective as of the Closing Date;

 

(f)            a counterpart to the Registration Rights Agreement, duly executed by Seller or its designee(s);

 

(g)           duly executed customary payoff letters (the “Payoff Letters”) (with drafts of such Payoff Letters delivered to Buyer at least three (3) Business Days in advance of the Closing Date) in form and substance reasonably satisfactory to Buyer, which shall reflect the amount necessary to satisfy in full the indebtedness under the Credit Facility and any other Indebtedness for Borrowed Money of the Company Group required or otherwise permitted to be repaid at the Closing (other than the Senior Notes) (the “Closing Date Repayment Indebtedness”) and shall provide that upon repayment in full of the amount specified in any such Payoff Letter: (x) all outstanding obligations of the Company Group arising under or related to the applicable Closing Date Repayment Indebtedness shall be repaid, discharged and extinguished in full; (y) all Encumbrances in connection therewith shall be released; and (z) either (i) the lenders (or agents therefor) shall file all necessary UCC and lien terminations or otherwise take all actions reasonably requested by Buyer to evidence and record such discharge and release as promptly as practicable following the Closing or (ii) the Company Group (or any of their designees) is expressly authorized to have any such documents filed on any such lenders’ (or agents’) behalf;

 

(h)           an assignment of the Excluded Assets (other than the Excluded Subsidiaries) from the applicable member of the Company Group to Seller (or its designated Affiliate) in a form reasonably acceptable to Buyer, duly executed by Seller (or its designated Affiliate) and the applicable Company Group Member;

 

(i)             to the extent not already delivered as of the Execution Date, counterparts of the Restrictive Covenant Agreements, duly executed by each Key Management Member;

 

(j)             a counterpart to the Transition Services Agreement, duly executed by Seller or its designee(s);

 

(k)            evidence of the consummation of the Pre-Closing Reorganization pursuant to Section ‎6.27 in accordance with the Pre-Closing Reorganization Documents; and

 

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(l)             evidence of the termination of the Intercompany Master Management Services Agreement, in substantially the form attached hereto as Exhibit P.

 

9.3.         Obligations of Buyer at Closing. At the Closing, upon the terms and subject to the conditions of this Agreement, and subject to the simultaneous performance by Seller of its obligations pursuant to Section ‎‎9.2, Buyer shall deliver or cause to be delivered to Seller (or such other Persons, as applicable) the following:

 

(a)            to the account(s) designated in the Preliminary Settlement Statement, by direct bank or wire transfer in immediately available funds, an amount equal to (i) the Adjusted Purchase Price less (ii) the sum of the Deposit (and, if applicable, the excess amount deposited with the Escrow Agent pursuant to the Escrow Agreement pursuant to clause ‎(c) below) (the “Closing Payment”);

 

(b)           to the account(s) designated by the respective payees in their respective Payoff Letters, by direct bank or wire transfer in immediately available funds, the amounts set forth in the Payoff Letters (which amounts shall in the aggregate equal to the Closing Date Repayment Indebtedness as set forth in the Payoff Letters);

 

(c)            (i) a duly executed counterpart of the Closing Instruction, and, (ii) if the Defect Escrow Amount is greater than the Remaining Deposit Amount, then, in addition to delivery of the Closing Instruction, Buyer shall deposit the amount by which the Defect Escrow Amount is greater than the Remaining Deposit Amount with the Escrow Agent pursuant to the Escrow Agreement by direct bank or wire transfer in immediately available funds;

 

(d)           the issuance by Parent to the Persons, and in the amounts allocated in writing by Seller at least two (2) Business Days prior to the Closing of an aggregate number of shares of Parent Class A Common Stock equal to the Equity Purchase Price, as allocated to the Persons and in the amounts designated by Seller in the Preliminary Settlement Statement, which shall be credited to such Person(s) in book entry form and shall contain the Transfer Legend on the books and records of the Transfer Agent;

 

(e)            if requested by Seller, an acknowledgement duly executed by the Transfer Agent stating (i) the Transfer Agent has been instructed by Parent to create a book-entry account for Seller and credit Seller’s account(s) with the number of shares of Parent Class A Common Stock set forth in Section ‎2.3(a), as allocated to the Persons and in the amounts designated by Seller in the Preliminary Settlement Statement, (ii) the Transfer Agent has been instructed by Parent and Seller to transfer all or a portion of such shares to Seller’s designated transferees, subject to compliance by Seller and such transferees with Section 2.13, and (iii) Parent has issued the number of shares of Parent Class A Common Stock set forth in Section ‎2.3(a), as allocated to the Persons and in the amounts designated by Seller in the Preliminary Settlement Statement;

 

(f)            a counterpart of the Assignment Agreement, duly executed by Buyer;

 

(g)           a certificate, dated as of the Closing Date, certifying that the conditions set forth in Section ‎‎8.1 and Section ‎‎8.2 have been fulfilled and, if applicable, any exceptions to such conditions that have been waived in writing by Seller, to the extent permitted by applicable Law, duly executed by an authorized officer of Buyer to Seller (the “Buyer’s Certificate”);

 

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(h)           evidence of replacement bonds, guaranties, and letters of credit pursuant to Section ‎‎6.4;

 

(i)            evidence of the removal or replacement of agents of Seller or the Company Group Members under permits of the Railroad Commission of Texas pursuant to Section ‎‎6.17; provided that to the extent not capable of being finalized at the Closing, Buyer shall provide all documentation required to effectuate such removal or replacement as soon as reasonably practicable after the Closing, in accordance with Section 6.17;

 

(j)             a counterpart to the Registration Rights Agreement, duly executed by Parent; and

 

(k)            a counterpart to the Transition Services Agreement, duly executed by Buyer or its designee.

 

Article X
ACCESS; DISCLAIMERS

 

10.1.         Access.

 

(a)            From and after the Execution Date and up to and including the Closing Date (or earlier termination of this Agreement pursuant to ‎Article XIV) but subject to the other provisions of this Section ‎‎10.1 and obtaining any required consents of Third Parties, including Third Party operators of the Assets (with respect to which consents Seller shall use commercially reasonable efforts to request, but shall not be obligated to incur any Liability, expend any monies or provide any consideration to obtain such consents), Seller shall afford to Buyer and its Representatives reasonable access, during normal business hours, to the Assets and all Records in the Company Group’s possession; provided, however, that Buyer shall have no right of access to, and Seller shall not have any obligation to provide to Buyer, any information the disclosure of which would be reasonably likely to result in a waiver of any legal privilege available to Seller or Company Group relating to such information. All investigations and due diligence conducted by Buyer or any of its Representatives shall be conducted at Buyer’s sole cost, risk and expense and any conclusions made from any examination done by Buyer or any of its Representative shall result from Buyer’s own independent review and judgment.

 

(b)           From and after the Execution Date and up to the Claim Date, and subject to obtaining any required consents of Third Parties, including Third Party operators of the Assets (with respect to which consents Seller shall use commercially reasonable efforts to request, but shall not be obligated to expend any monies), Buyer shall be entitled to conduct a Phase I environmental assessment or other visual assessment (including an environmental compliance review and other visual inspections, whether on land or by air, and with the use of drones using ordinary camera equipment that does not apply technologically enhanced means such as thermal, laser, light detection and ranging or FLIR cameras) (“Phase I Assessment”) with respect to the Assets, to be conducted by a reputable environmental consulting or engineering firm; provided that no environmental sampling or invasive activity or testing or operation of other equipment using technologically enhanced means such as thermal, laser, light detection and ranging or FLIR cameras (“Invasive Activities”) by Buyer or any of its Representatives may be performed without the prior written consent of Seller, which consent may be withheld in Seller’s sole discretion; provided further, that if Seller or any Third Party does not consent for Buyer to conduct any Phase I Assessment of any Asset, or if Seller or any applicable Third Party does not consent to Invasive Activities requested by Buyer or any of its Representatives at the Assets, then Buyer shall have the right to assert an Environmental Defect pursuant to Section ‎‎12.1 with respect to such Asset based on available information (including any unverified assumptions), and the lack of such Phase I Assessment or Invasive Activities, as applicable, shall not, in and of itself, invalidate any Environmental Defect Notice submitted in accordance with Section ‎‎12.1. Seller (or its designee) shall have the right to be present during any stage of the assessment. Buyer shall give Seller reasonable prior written notice before gaining physical access to or otherwise inspecting or surveying any of the Assets, whether to conduct a Phase I environmental assessment or otherwise, and shall coordinate any such access, inspections or surveys with Seller. Seller or its designees shall have the right to accompany Buyer and its Representatives whenever they are on-site of the Assets or otherwise inspecting or surveying the Assets.

 

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(c)            Buyer shall (and shall cause its Representatives to) coordinate its environmental assessments and inspections of the Assets with Seller and all Third Party operators to minimize any unreasonable interruption of the conduct of business by the Company Group or such Third Party operators. Buyer shall (and shall cause its Representative to) abide by the Company Group’s, and any Third Party operator’s, posted safety rules, regulations and operating policies while conducting its due diligence evaluation of the Assets, including any environmental or other inspection, survey or assessment of the Assets and, to the extent required by any Third Party operator, execute and deliver any required confidentiality, indemnity and release agreement of any such Third Party operator, in each case, before conducting Buyer’s assessment on such Asset in accordance with this Section ‎‎10.1. Buyer hereby defends, indemnifies and holds harmless each of THE COMPANY GROUP and the Seller Indemnified Parties from and against any and all Liabilities arising out of, resulting from or relating to any COSTS, EXPENSES, DAMAGES OR field visit, environmental assessment or other due diligence activity conducted by Buyer or any OF ITS RepresentativeS with respect to the COMPANY GROUP OR THE Assets PRIOR TO CLOSING, even if such COSTS, EXPENSES, DAMAGES AND Liabilities arise out of or result from or relate to, SOLELY OR IN PART, the sole, active, passive, concurrent or comparative negligence, strict liability or other fault or violation of Law of or by AN OPERATOR OF THE ASSETS OR a member of THE Seller Indemnified Parties or the Company GROUP, excepting (i) Liabilities TO THE EXTENT resulting FROM the gross negligence or willful misconduct of a member of THE Seller Indemnified Parties or the Company GROUP AND (II) LIABILITIES ATTRIBUTABLE TO ANY PREVIOUSLY EXISTING CONDITION OF THE ASSETS UNCOVERED OR DISCOVERED AND TO THE EXTENT NOT EXACERBATED BY BUYER OR ANY OF BUYER’S REPRESENTATIVES DURING THE COURSE OF ANY SUCH ACCESS TO OR INSPECTION OF THE ASSETS.

 

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(d)           Buyer agrees to provide Seller, prior to the Claim Date, copies of all final reports, assessments and sampling or test results prepared by Buyer or any of its Representatives that contain data collected or generated from Buyer’s and its Representatives’ due diligence with respect to the Assets. Seller shall not be deemed by its receipt of such documents or otherwise to have made any representation or warranty, expressed, implied or statutory as to the condition of the Assets or to the accuracy of said documents or the information contained therein.

 

(e)           As soon as reasonably practicable, but in any event promptly upon completion of Buyer’s due diligence, Buyer shall at its sole cost and expense and without any cost or expense to Seller, the Company Group or any of their respective Affiliates (i) repair all damage done to the Assets in connection with Buyer’s and its Representatives’ due diligence, (ii) restore the Assets to substantially the same condition as they were prior to commencement of Buyer’s and its Representatives’ due diligence and (iii) remove all equipment, tools and other property brought onto the Assets in connection with Buyer’s and its Representatives’ due diligence.

 

(f)            During all periods that Buyer or any of its Representatives are on the Assets or are in the Company Group’s or any of its Affiliates’ offices, Buyer shall maintain, at its sole cost and expense, policies of insurance of the types and in the amounts customary for the industry. Buyer shall cause all such insurance underwriters to waive subrogation against the Seller Indemnified Parties and the Company Group.

 

10.2.         Disclaimers.

 

(a)            EXCEPT AS AND TO THE LIMITED EXTENT EXPRESSLY REPRESENTED AND WARRANTED IN ‎ARTICLE ‎III OR ‎ARTICLE ‎IV OR THE SELLER’S CERTIFICATE AND SUBJECT TO AND WITHOUT LIMITATION OF ANY OF BUYER’S RIGHTS UNDER THE R&W INSURANCE POLICY OR FOR FRAUD, (I) NEITHER SELLER NOR ANY OTHER PERSON MAKES ANY REPRESENTATIONS OR WARRANTIES, EXPRESS, STATUTORY OR IMPLIED, (II) SELLER EXPRESSLY DISCLAIMS ALL LIABILITY AND RESPONSIBILITY FOR AND (III) BUYER IS NOT RELYING UPON, ANY REPRESENTATION, WARRANTY, STATEMENT OR INFORMATION MADE OR COMMUNICATED (ORALLY OR IN WRITING) TO BUYER OR ANY OF ITS AFFILIATES, OR ANY OF BUYER’S OR BUYER’S AFFILIATES’ RESPECTIVE EMPLOYEES, AGENTS, CONSULTANTS OR OTHER REPRESENTATIVES (INCLUDING, ANY OPINION, INFORMATION, PROJECTION OR ADVICE THAT MAY HAVE BEEN PROVIDED TO BUYER BY ANY EMPLOYEE, DIRECTOR, OFFICER, MANAGER, PARTNER, EQUITYHOLDER, AGENT, CONSULTANT, ADVISOR OR OTHER REPRESENTATIVE OF SELLER OR ANY OF ITS AFFILIATES (INCLUDING THE COMPANY GROUP)). BUYER ACKNOWLEDGES AND AGREES THAT NO SELLER INDEMNIFIED PARTY SHALL HAVE ANY LIABILITY OR RESPONSIBILITY FOR FAILING OR OMITTING TO DISCLOSE ANY CONDITION, AGREEMENT, DOCUMENT, DATA, INFORMATION OR OTHER MATERIALS RELATING TO THE ASSETS THAT IS NOT EXPRESSLY COVERED BY THE REPRESENTATIONS AND WARRANTIES IN THIS AGREEMENT.

 

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(b)           EXCEPT AS AND TO THE LIMITED EXTENT EXPRESSLY REPRESENTED AND WARRANTED IN ‎ARTICLE ‎III OR ‎ARTICLE ‎IV OR THE SELLER’S CERTIFICATE AND SUBJECT TO AND WITHOUT LIMITATION OF ANY OF BUYER’S RIGHTS UNDER THE R&W INSURANCE POLICY OR FOR FRAUD, AND WITHOUT LIMITING THE GENERALITY OF SECTION ‎‎10.2(a), (A) NEITHER SELLER NOR ANY OTHER PERSON MAKES ANY REPRESENTATIONS OR WARRANTIES, (B) SELLER EXPRESSLY DISCLAIMS ALL LIABILITY AND RESPONSIBILITY FOR AND (C) BUYER IS NOT RELYING UPON, ANY REPRESENTATION OR WARRANTY, EXPRESS, STATUTORY OR IMPLIED, AS TO (I) TITLE TO ANY OF THE ASSETS, (II) THE CONTENTS, CHARACTER OR NATURE OF ANY REPORT OF ANY PETROLEUM ENGINEERING CONSULTANT OR ANY ENGINEERING, GEOLOGICAL, GEOPHYSICAL OR SEISMIC DATA OR INTERPRETATION OR ANALYSIS RELATING TO THE ASSETS, (III) THE QUANTITY, QUALITY OR RECOVERABILITY OF HYDROCARBONS IN OR FROM THE ASSETS, (IV) ANY ESTIMATES OF THE VALUE OF THE ACQUIRED INTERESTS, THE ASSETS OR FUTURE REVENUES TO BE GENERATED BY THE ASSETS, (V) THE PRODUCTION OF OR ABILITY TO PRODUCE HYDROCARBONS FROM THE ASSETS, (VI) THE MAINTENANCE, REPAIR, CONDITION, QUALITY, SUITABILITY, DESIGN OR MARKETABILITY OF THE ASSETS, (VII) THE CONTENT, CHARACTER OR NATURE OF ANY INFORMATION MEMORANDUM, REPORTS, BROCHURES, CHARTS OR STATEMENTS PREPARED BY SELLER, THE COMPANY GROUP OR ANY OF THEIR RESPECTIVE AFFILIATES OR REPRESENTATIVES OR THIRD PARTIES WITH RESPECT TO THE COMPANY GROUP, THE ACQUIRED INTERESTS OR THE ASSETS (INCLUDING THE ACCURACY OR COMPLETENESS THEREOF), (VIII) ANY OTHER MATERIALS OR INFORMATION THAT MAY HAVE BEEN MADE AVAILABLE TO BUYER OR ITS AFFILIATES OR ITS OR THEIR RESPECTIVE EMPLOYEES, AGENTS, CONSULTANTS, ADVISORS OR OTHER REPRESENTATIVES IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR THE TRANSACTION DOCUMENTS (INCLUDING THE ACCURACY OR COMPLETENESS THEREOF) OR ANY DISCUSSION OR PRESENTATION RELATING THERETO (INCLUDING THE ACCURACY OR COMPLETENESS THEREOF), (IX) ANY IMPLIED OR EXPRESS WARRANTY OF FREEDOM FROM PATENT OR TRADEMARK INFRINGEMENT AND (X) THE EFFECTIVENESS OR SUCCESS OF ANY OPERATIONS OF THE COMPANY GROUP. EXCEPT AS AND TO THE LIMITED EXTENT EXPRESSLY REPRESENTED AND WARRANTED IN ‎ARTICLE ‎III OR ‎ARTICLE ‎IV OR THE SELLER’S CERTIFICATE AND SUBJECT TO AND WITHOUT LIMITATION OF ANY OF BUYER’S RIGHTS UNDER THE R&W INSURANCE POLICY OR FOR FRAUD, BUYER ACKNOWLEDGES AND AGREES THAT (X) NO SELLER INDEMNIFIED PARTY IS MAKING AND (Y) NO BUYER PARTY IS RELYING UPON ANY REPRESENTATION OR WARRANTY, EXPRESS, STATUTORY OR IMPLIED, OF MERCHANTABILITY, FREE FROM LATENT VICES OR DEFECTS, FITNESS FOR A PARTICULAR PURPOSE OR CONFORMITY TO MODELS OR SAMPLES OF MATERIALS OF ANY OF THE ASSETS, RIGHTS OF A BUYER UNDER APPROPRIATE STATUTES TO CLAIM DIMINUTION OF CONSIDERATION OR RETURN OF THE PURCHASE PRICE, IT BEING EXPRESSLY UNDERSTOOD AND AGREED BY THE PARTIES THAT BUYER SHALL BE DEEMED TO BE OBTAINING THE ACQUIRED INTERESTS, THE EQUITY INTERESTS IN THE OTHER COMPANY GROUP MEMBER AND THE ASSETS IN THEIR PRESENT STATUS, CONDITION AND STATE OF REPAIR, “AS IS” AND “WHERE IS” WITH ALL FAULTS OR DEFECTS (KNOWN OR UNKNOWN, LATENT, DISCOVERABLE OR UNDISCOVERABLE), AND THAT BUYER HAS MADE OR CAUSED TO BE MADE ALL SUCH INSPECTIONS AS BUYER DEEMS APPROPRIATE.

 

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(c)            OTHER THAN AS AND TO THE LIMITED EXTENT EXPRESSLY REPRESENTED AND WARRANTED IN SECTION ‎4.17 AND ‎SECTION ‎‎4.32 OR IN THE SELLER’S CERTIFICATE, AND SUBJECT TO AND WITHOUT LIMITATION OF ANY OF BUYER’S RIGHTS UNDER THE R&W INSURANCE POLICY OR FOR FRAUD (TO THE EXTENT RELATING TO THE REPRESENTATION AND WARRANTY IN SECTION ‎4.17 AND SECTION ‎‎4.32), AND WITHOUT LIMITING THE GENERALITY OF SECTION ‎‎10.2(a), BUYER ACKNOWLEDGES AND AGREES THAT (I) NO SELLER INDEMNIFIED PARTY IS MAKING AND (II) NO BUYER PARTY IS RELYING UPON ANY REPRESENTATION OR WARRANTY REGARDING ANY MATTER OR CIRCUMSTANCE RELATING TO ENVIRONMENTAL LAWS, THE RELEASE OF HAZARDOUS SUBSTANCES INTO THE ENVIRONMENT OR THE PROTECTION OF NATURAL RESOURCES OR THE ENVIRONMENT OR ANY OTHER ENVIRONMENTAL CONDITION OF THE ASSETS, AND NOTHING IN THIS AGREEMENT, THE TRANSACTION DOCUMENTS OR OTHERWISE SHALL BE CONSTRUED AS SUCH A REPRESENTATION OR WARRANTY, AND BUYER SHALL BE DEEMED TO BE TAKING THE ACQUIRED INTERESTS, THE EQUITY INTERESTS IN THE OTHER COMPANY GROUP MEMBER AND THE ASSETS “AS IS” AND “WHERE IS” WITH ALL FAULTS FOR PURPOSES OF THEIR ENVIRONMENTAL CONDITION AND THAT BUYER HAS MADE OR CAUSED TO BE MADE ALL SUCH ENVIRONMENTAL INSPECTIONS AS BUYER DEEMS APPROPRIATE.

 

(d)           SELLER AND BUYER AGREE THAT, TO THE EXTENT REQUIRED BY LAW TO BE EFFECTIVE, THE DISCLAIMERS OF CERTAIN REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS SECTION ‎‎10.2 ARE “CONSPICUOUS” DISCLAIMERS FOR ALL PURPOSES OF ANY LAW.

 

Article XI
TITLE MATTERS

 

11.1.         Company Group’s Title. Without limiting Buyer’s remedies for Title Defects set forth in this ‎‎Article XI and except for Seller’s representations and warranties contained in ‎‎Article III and ‎‎Article IV and in the Seller’s Certificate, Seller does not make (and Buyer waives) any warranty or representation, express, implied, statutory or otherwise with respect to the Company Group’s title to any of the Assets, and Buyer hereby acknowledges and agrees that Buyer’s sole and exclusive remedy (absent Fraud) for any defect of title, including any Title Defect, with respect to any of the Assets (i) before Closing, shall be as set forth in Section ‎‎11.2(d) or if applicable, Section ‎‎14.1(b) and (ii) after Closing, shall be pursuant to the R&W Insurance Policy.

 

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11.2.         Notice of Title Defects; Defect Adjustments.

 

(a)           Title Defect Notices. Buyer must deliver no later than 5:00 p.m. (Central Time) on September 2, 2026 (the “Claim Date”) claim notices to Seller meeting the requirements of this Section ‎11.2(a) (collectively, the “Title Defect Notices” and individually a “Title Defect Notice”) setting forth any matters that, in Buyer’s good faith opinion, constitute Title Defects and that Buyer intends to assert as a Title Defect pursuant to this Agreement. For all purposes of this Agreement and notwithstanding anything herein to the contrary (without limiting any rights of Buyer to recover under the R&W Insurance Policy), Buyer shall be deemed to have waived, and Seller shall have no Liability for, any Title Defect that Buyer fails to assert as a Title Defect by a properly delivered Title Defect Notice received by Seller on or before the Claim Date. To be effective, each Title Defect Notice shall be in writing and shall include (i) a description of the alleged Title Defect and the Lease or Well, or portion thereof, affected by such Title Defect (each a “Title Defect Property”), (ii) the Allocated Value of each Title Defect Property, (iii) supporting documents reasonably necessary for Seller to evaluate the existence of such alleged Title Defect and (iv) the amount by which Buyer in good faith believes the Allocated Value of each Title Defect Property is reduced by such alleged Title Defect and the computations upon which Buyer’s belief is based. To give Seller an opportunity to commence reviewing and curing Title Defects, Buyer agrees to give Seller, on a bi-weekly basis, prior to the Claim Date, written notice of any alleged Title Defects discovered by Buyer, which notice may be preliminary in nature and supplemented prior to the Claim Date; provided, that the failure to provide any such preliminary notice shall not be deemed a breach of any covenant and shall not affect or otherwise prejudice Buyer’s right to assert Title Defects at any time prior to the Claim Date and the remedies hereunder therefor. For the avoidance of doubt, any notice provided by Buyer to Seller that does not comply, in all material respects, with all of the requirements of this Section ‎11.2(a) shall not constitute a Title Defect Notice.

 

(b)           Title Benefit Notices. If Seller discovers any Title Benefit on or before the Claim Date, Seller may deliver a notice in writing (a “Title Benefit Notice”) including (i) a description of the alleged Title Benefit and the Lease or Well, or portion thereof, affected by such Title Benefit (each a “Title Benefit Property”), (ii) the Allocated Value of each Title Benefit Property, (iii) supporting documents reasonably necessary for Buyer to verify the existence of such alleged Title Benefit and (iv) the amount by which Seller reasonably believes the Allocated Value of each Title Benefit Property is increased by such alleged Title Benefit and the computations upon which Seller’s belief is based. Seller shall be deemed to have waived all Title Benefits for which a Title Benefit Notice has not been delivered on or before the end of the Claim Date.

 

(c)           Seller’s Right to Cure.

 

(i)            Seller shall have the right, but not the obligation, to attempt, at its sole cost, to cure at any time prior to expiration of the Cure Period any Title Defect asserted by Buyer in accordance with this Agreement. Buyer agrees to reasonably cooperate with Seller, including by giving Seller (or its designee) reasonable access during normal business hours to the Assets and all Records in Buyer’s or its Representatives’ possession or control to the extent necessary or convenient to facilitate Seller’s attempt to cure any Title Defect. An election by Seller to attempt to cure a Title Defect shall be without prejudice to its rights under Section ‎‎11.2(j) and shall not constitute an admission against interest or a waiver of Seller’s right to dispute the existence, nature or value of, or cost to cure, such Title Defect.

 

(ii)          At the Closing, Buyer shall deposit or cause to be deposited in the Defect Escrow Account in accordance with the terms of this Agreement an amount (the “Defect Escrow Amount”) equal to (without duplication) the sum of, subject to and after taking into account the limitations, thresholds and deductibles set forth in Section 11.2(i) and Section ‎‎12.1(e), and any Title Defect Amounts to which the Parties have finally determined:

 

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(A)         the aggregate amount of all Title Defect Amounts (as claimed in good faith by Buyer in its Title Defect Notices) for all Title Defects that Seller has elected to cure post-Closing pursuant to Section ‎‎11.2(d)(iii) or dispute pursuant to Section ‎‎11.2(d); plus

 

(B)          the aggregate amount of all Remediation Amounts (as claimed in good faith by Buyer in its Environmental Defect Notices) for all Environmental Defects that Seller has elected to dispute pursuant to Section ‎‎12.1(c); plus

 

(C)          the aggregate amount of (1) all Title Defect Amounts claimed in good faith by Buyer in its Title Defect Notices for Title Defects that Seller attempted to cure prior to Closing, but for which Buyer disputes the adequacy of such cure pursuant to Section ‎‎11.2(j), and (2) all Remediation Amounts claimed in good faith by Buyer in its Environmental Defect Notices for Environmental Defects that Seller attempted to cure prior to Closing, but for which Buyer disputes the adequacy of such cure pursuant to Section ‎‎12.1(f).

 

(iii)          Upon (x) cure of any Title Defect or Environmental Defect prior to the expiration of the Cure Period, (y) written agreement of the Parties, or (z) in the event that Seller and Buyer cannot agree as to the existence of any Title Defect or Environmental Defect or as to the Title Defect Amount or Remediation Amount attributable thereto, or as to whether such Title Defect or Environmental Defect has been cured and such unresolved matter has been submitted to the Title Arbitrator as a Disputed Title Matter pursuant to Section ‎‎11.2(j) or to the Environmental Arbitrator as a Disputed Environmental Matter pursuant to Section ‎‎12.1(f), as applicable, upon resolution of such Disputed Title Matter or Disputed Environmental Matter under the process delineated in Section ‎‎11.2(j) or Section ‎‎12.1(f), as applicable, then Seller or Buyer, as applicable, shall be entitled to receive a distribution from the Defect Escrow Amount in accordance with the resolution of said matter in accordance with this Agreement. For the avoidance of doubt, if any Title Defect or Environmental Defect is partially cured as determined under clause (x), (y) or (z), then the Title Defect Amount or Remediation Amount shall be adjusted to take into account such partial cure.

 

(d)           Remedies for Title Defects. Subject to Seller’s continuing right to dispute the existence of a Title Defect and the Title Defect Amount asserted with respect thereto, and subject to the right of Buyer to terminate this Agreement pursuant to Section ‎‎14.1(b), in the event that any Title Defect timely and effectively asserted by Buyer in accordance with Section ‎11.2(a) is not waived in writing by Buyer prior to Closing or cured prior to the expiration of the Cure Period, Seller shall, at Seller’s sole option and by delivery of a written notice to Buyer prior to the Closing, elect to:

 

(i)            subject to the Individual Title Defect Threshold and the Aggregate Deductible, reduce the Purchase Price by the Title Defect Amount for such Title Defect (other than in the case of Title Defect Amounts determined pursuant to Section ‎‎11.2(g)(ii), not to exceed the Allocated Value of the applicable Title Defect Property) determined pursuant to this Section ‎‎11.2;

 

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(ii)           in the event that the Title Defect Amount asserted by Buyer pursuant to Section ‎11.2(a) with respect to any Title Defect Property exceeds eighty-five percent (85%) of the Allocated Value for such Title Defect Property, receive (or have Seller’s designee receive) an assignment from the applicable Company Group Member of the entirety of such Title Defect Property together with all associated Assets, as Excluded Assets, in which event the Purchase Price shall be reduced by an amount equal to the Allocated Value of such Title Defect Property and such associated Assets;

 

(iii)          cure the alleged Title Defect pursuant to Section ‎‎11.2(c)(i); or

 

(iv)          if applicable, terminate this Agreement pursuant to Section ‎‎14.1(c).

 

If Seller fails to make any of the foregoing elections prior to the Closing, Seller will be deemed to have elected the remedy set forth in Section ‎‎11.2(d)(iii).

 

(e)            Remedies for Title Benefits. With respect to all Title Benefit Properties reported under Section ‎11.2(a) or Section ‎‎11.2(b)(i), the aggregate amount of all Title Benefit Amounts attributable to such Title Benefit Properties shall be used to offset Title Defect Amounts as provided in Section ‎11.2(i).

 

(f)             Exclusive Remedy. Absent Fraud, except for Buyer’s rights to terminate this Agreement prior to the Closing pursuant to Section ‎‎14.1(b) and Buyer’s remedies pursuant to the R&W Insurance Policy, the provisions set forth in Section ‎‎11.2(d) shall be the exclusive right and remedy of Buyer with respect to the Company Group’s failure to have Defensible Title with respect to any Asset or any other title matter.

 

(g)           Title Defect Amount. The amount by which the Allocated Value of a Title Defect Property is reduced as a result of the existence of a Title Defect shall be the “Title Defect Amount” for such Title Defect Property and shall be determined in accordance with the following methodology, terms and conditions (without duplication):

 

(i)            if Buyer and Seller agree in writing on the Title Defect Amount, then that amount shall be the Title Defect Amount;

 

(ii)           if the Title Defect is an Encumbrance that is undisputed and liquidated in amount, then the Title Defect Amount shall be the amount necessary to be paid to remove the Title Defect from the Title Defect Property;

 

(iii)          if the Title Defect solely represents a discrepancy between (A) the actual Net Revenue Interest of the Company Group for any Lease or Well set forth on Schedule ‎‎2.9, as to any Target Formation and (B) the Net Revenue Interest set forth on Schedule ‎‎2.9 as to the applicable Target Formation for such Lease or Well, as applicable, (and in either case the Working Interest is decreased proportionately), then the Title Defect Amount shall be the product of the Allocated Value of such Lease or Well as to such Target Formation multiplied by a fraction, the numerator of which is the absolute value of such Net Revenue Interest decrease and the denominator of which is the Net Revenue Interest stated on Schedule ‎‎2.9 for such Lease or Well as to the applicable Target Formation; provided that, if the Title Defect does not affect the applicable Lease or Well throughout its entire productive life, the Title Defect Amount determined pursuant to this Section ‎‎11.2(g)(iii) shall be reduced to take into account the applicable time period only;

 

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(iv)          if the Title Defect solely represents a discrepancy between (A) the Net Acres of the Company Group for any Lease as to any Target Formation and (B) the Net Acres stated therefor on Schedule ‎‎2.9 (and the Net Revenue Interest of the Company Group in such Target Formation of such Lease is unchanged), then the Title Defect Amount shall be the product of the Allocated Value of such Lease as to the applicable Target Formation multiplied by a fraction, the numerator of which is the absolute value of such discrepancy and the denominator of which is the Net Acres stated on Schedule ‎‎2.9 for such Lease as to such Target Formation; provided that, if the Title Defect does not affect the applicable Lease throughout its entire productive life, the Title Defect Amount determined pursuant to this Section ‎‎11.2(g)(iv) shall be reduced to take into account the applicable time period only;

 

(v)           if the Title Defect represents any matter other than described in clauses (i) through (iv) of this Section ‎‎11.2(g), or the Title Defect affects some but not all of the applicable Target Formation, then the Title Defect Amount shall be determined by taking into account the Allocated Value of the Title Defect Property as to the applicable Target Formation, the portion of the Title Defect Property affected by the Title Defect as to the applicable Target Formation, the legal effect of the Title Defect as to the applicable Target Formation, the potential economic effect of the Title Defect over the productive life of the Title Defect Property as to the applicable Target Formation, the values placed on such Title Defect by Seller and Buyer as to the applicable Target Formation and such other reasonable factors as are necessary to make a proper evaluation;

 

(vi)          the Title Defect Amount with respect to a Title Defect Property shall be determined without duplication or combination of any costs or losses included in another Title Defect Amount hereunder; and

 

(vii)         except for Title Defect Amounts determined pursuant to Section ‎‎11.2(g)(ii), the aggregate Title Defect Amounts attributable to the effects of all Title Defects upon any Title Defect Property shall not exceed the Allocated Value of such Title Defect Property.

   

(h)           Title Benefit Amount. The Title Benefit Amount resulting from a Title Benefit shall be determined in accordance with the following methodology, terms and conditions (without duplication):

 

(i)           if Buyer and Seller agree in writing on the Title Benefit Amount, then that amount shall be the Title Benefit Amount;

 

(ii)          if the Title Benefit solely represents a discrepancy between (A) the actual Net Revenue Interest of the Company Group for any Lease or Well, as to any Target Formation and (B) the Net Revenue Interest set forth on Schedule ‎‎2.9 as to the applicable Target Formation for such Lease or Well (and the Working Interest is increased proportionately), then the Title Benefit Amount shall be the product of the Allocated Value of such Lease or Well, as applicable, as to such Target Formation multiplied by a fraction, (1) the numerator of which is the positive value of such discrepancy and (2) the denominator of which is the Net Revenue Interest set forth for such Lease or Well on Schedule ‎‎2.9; provided that, if the Title Benefit does not affect the applicable Lease or Well throughout its entire productive life, the Title Benefit Amount determined pursuant to this Section ‎‎11.2(h)(ii) shall be reduced to take into account the applicable time period only;

 

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(iii)           if the Title Benefit solely results from (A) the Net Acres of the Company Group for any Lease as to any Target Formation being greater than (B) the Net Acres stated therefor on Schedule ‎‎2.9 as to such Target Formation (and the Net Revenue Interest of the Company Group in such Target Formation of such Lease is unchanged), then the Title Benefit Amount shall be the product of the Allocated Value of such Lease as to such Target Formation multiplied by a fraction, the numerator of which is the Net Acres increase and the denominator of which is the Net Acres stated on Schedule ‎‎2.9 for such Title Benefit Property as to such Target Formation; provided that, if the Title Benefit does not affect the applicable Lease throughout its entire productive life, the Title Benefit Amount determined pursuant to this Section ‎‎11.2(h)(iii) shall be reduced to take into account the applicable time period only; and

 

(iv)          if the Title Benefit represents any matter other than described in clauses ‎(i) or ‎(iii) of this Section ‎‎11.2(h), or if the Title Benefit affects some but not all of the applicable Target Formation, then the Title Benefit Amount shall be determined by taking into account the Allocated Value of such Title Benefit Property, the portion of such Title Benefit Property affected by such Title Benefit, the legal effect of the Title Benefit, the potential economic effect of the Title Benefit over the life of such Title Benefit Property, the values placed upon the Title Benefit by Buyer and Seller and such other reasonable factors as are necessary to make a proper evaluation.

 

(i)             Title Defect Threshold and Deductible. Notwithstanding anything to the contrary in this Agreement (i) in no event shall there be any adjustments to the Purchase Price or other remedies provided by Seller for any individual Title Defect for which the Title Defect Amount does not exceed (x) $400,000 with respect to any Title Defect Property which is a Lease or (y) $250,000 with respect to any Title Defect Property which is a Well (the “Individual Title Defect Threshold”); and (ii) in no event shall there be any adjustments to the Purchase Price or other remedies provided by Seller for any Title Defect that exceeds the Individual Title Defect Threshold unless (A) the amount of the sum of (1) the aggregate Title Defect Amounts of all such Title Defects that exceed the Individual Title Defect Threshold (but excluding any such Title Defects cured by Seller) less the aggregate Title Benefit Amounts of all Title Benefits to the extent such Title Benefit Amounts do not exceed such Title Defect Amounts, plus (2) the aggregate Remediation Amounts of all Environmental Defects that exceed the Individual Environmental Defect Threshold (but excluding any Environmental Defect cured by Seller), exceeds (B) the Aggregate Deductible, after which point Buyer shall be entitled to adjustments to the Purchase Price or other applicable remedies available hereunder, but only with respect to the amount by which the aggregate amount of such Title Defect Amounts and Remediation Amounts exceeds the Aggregate Deductible; provided that, a single Title Defect which affects more than one Title Defect Property shall be subject to a single application of the Individual Title Defect Threshold for purposes of determining whether the Title Defect Amount for any such Title Defect exceeds the Individual Title Defect Threshold. The aggregate Title Benefit Amounts shall only be applied as an offset to the aggregate Title Defect Amounts that exceed the Individual Title Defect Threshold and shall in no event increase the Purchase Price. For the avoidance of doubt, (x) if Seller or Seller’s designee retains any Title Defect Property pursuant to Section ‎‎11.2(d)(ii), the Title Defect Amount related to such Title Defect Property will not count towards the Aggregate Deductible and (y) if Seller cures any Title Defect in accordance with this Agreement, the Title Defect Amount (or applicable portion thereof) attributable to the affected Title Defect Property will not be counted towards the Aggregate Deductible. Notwithstanding anything to the contrary in ‎Article XI or ‎Article XII, if Seller timely elects to cure (or is deemed to have elected to cure) Title Defects in accordance with Section ‎‎11.2(c) and cures such Title Defects as provided herein after the Closing and prior to the expiration of the Cure Period, and the effect of such cure causes the Aggregate Deductible to not be exceeded, then, (I) the Parties acknowledge and agree that there will be no adjustments to the Purchase Price, or other remedies provided by Seller for any Title Defects or Environmental Defects, under ‎Article XI or ‎Article XII, except to the extent such amounts have been paid to Seller (including from the Defect Escrow Amount), Seller shall be reimbursed by Buyer for any downward adjustments to the Purchase Price under ‎Article XI or ‎Article XII attributable to any Title Defect Amounts or Remediation Amounts that were made at Closing (including, for purposes of clarity, for any amounts from the Defect Escrow Amount previously released to Buyer by the Escrow Agent), with such reimbursement to be reflected and accounted for in the Final Settlement Statement (or, if at such time, the final adjustments to the Purchase Price have already been determined in accordance with Section ‎‎2.7, then Buyer shall promptly pay to Seller in immediately available funds an amount equal to such reimbursement amount), and (II) all Title Defect Amounts and Remediation Amounts held in the Defect Escrow Account shall be thereafter released to Seller.

 

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(j)             Title Dispute Resolution. Seller and Buyer shall attempt to agree in writing on matters regarding (i) all Title Defects, Title Benefits, Title Defect Amounts and Title Benefit Amounts and (ii) the adequacy of any curative materials provided by Seller to cure an alleged Title Defect (collectively, the “Disputed Title Matters”) prior to the Closing (or, if Seller elects to attempt to cure pursuant to Section ‎‎11.2(c)(i), then prior to the end of the Cure Period). If Seller and Buyer are unable to agree in writing by the Closing (or by the end of the Cure Period if Seller elects to attempt to cure a Title Defect after the Closing), the Disputed Title Matters shall be exclusively and finally resolved by arbitration pursuant to this Section ‎‎11.2(j). There shall be a single arbitrator (the “Title Arbitrator”), who shall be a title attorney with at least ten (10) years’ experience in oil and gas title matters in the geographic region where the Assets are located. The Title Arbitrator shall be selected by mutual agreement of Buyer and Seller within fifteen (15) days after the Closing or the end of the Cure Period, as applicable, or absent such agreement, within three (3) Business Days of becoming aware that such agreement cannot be made as to the selection of the Title Arbitrator, by the Houston, Texas office of the AAA, and in either case, shall remain neutral and shall not have worked as an employee, contractor or outside counsel for any of the Parties or their Affiliates during the ten (10)-year period preceding the arbitration or have any financial interest in the dispute. Each of Buyer and Seller shall submit to the Title Arbitrator its proposed resolution of each Disputed Title Matter in writing. The proposed resolution of the Disputed Title Matter shall include the best offer of the submitting Party in a single monetary amount that such Party is willing to pay or accept (as applicable) to settle the Disputed Title Matter. The arbitration proceeding shall be held in Houston, Texas and shall be conducted in accordance with the Commercial Arbitration Rules of the AAA, to the extent such rules do not conflict with the terms of this Section ‎‎11.2(j). The Title Arbitrator’s determination shall be made within thirty (30) days after submission of the matters in dispute or any hearing (as the case may be) and shall be final and binding upon the Parties, without right of appeal. In making its determination, the Title Arbitrator shall be bound by the rules set forth in Section ‎‎11.2(g) and Section ‎‎11.2(h) and, subject to the foregoing, may consider such other matters as in the opinion of the Title Arbitrator are necessary or helpful to rendering an award; provided, however, with respect to each Disputed Title Matter, that the Title Arbitrator shall be limited to awarding only one or the other of the amounts proposed by the Parties for the Title Arbitrator’s resolution of such Disputed Title Matter. The Title Arbitrator shall act as an expert for the limited purpose of determining the specific Disputed Title Matter submitted by either Party and may not award damages, interest, penalties or any other sums to either Party with respect to any matter. The costs of the Title Arbitrator shall be borne pro rata between the Parties with each Party being responsible for such costs and expenses to the extent the Title Arbitrator has not selected such Party’s position on an aggregate dollar basis with respect to all amounts submitted for resolution by the Title Arbitrator. Within ten (10) days after the Title Arbitrator delivers his or her award, subject to Section ‎‎11.2(h)(iv), the Parties shall, after giving effect to the limitations provided in this Section ‎‎11.2 (without duplication), execute joint written instructions to the Escrow Agent instructing the Escrow Agent to deliver: (i) to Buyer, an amount equal to (1) the sum of the Title Defect Amounts associated with (x) those Title Defects which Seller elected (or was deemed to have elected) to cure pursuant to Section ‎‎11.2(d)(iii), which are not subject to an unresolved Disputed Title Matter and which are not cured as provided in Section ‎‎11.2(c)(i), and (y) any Disputed Title Matters determined in favor of Buyer pursuant to this Section ‎‎11.2(j), less (2) an amount of any offsetting Title Benefits which are Disputed Title Matters and are determined in favor of Seller pursuant to this Section ‎‎11.2(j), with such amount to be disbursed from the Defect Escrow Amount and (ii) to Seller, the remainder of the Defect Escrow Amount, after giving effect to Section ‎‎12.1(f) (without duplication). Nothing herein shall operate to cause the Closing to be delayed on account of any unresolved Disputed Title Matter arbitration conducted pursuant to this Section ‎‎11.2(j) and to the extent any adjustments are not agreed upon by the Parties in writing as of the Closing, the Purchase Price shall not be adjusted therefor at the Closing, and subsequent adjustments to the Purchase Price, if any, will be made following the agreement of the Parties or determination of the same pursuant to this Section ‎‎11.2 for any such Disputed Title Matter.

 

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Article XII
ENVIRONMENTAL MATTERS

 

12.1.         Notice of Environmental Defects.

 

(a)            Environmental Defects Notice. Buyer must deliver no later than 5:00 p.m. (Central Time) on the Claim Date claim notices to Seller meeting the requirements of this Section ‎‎12.1(a) (collectively the “Environmental Defect Notices” and individually an “Environmental Defect Notice”) setting forth any matters that, in Buyer’s good faith opinion, constitute Environmental Defects and that Buyer intends to assert as Environmental Defects pursuant to this Agreement. For all purposes of this Agreement and notwithstanding anything herein to the contrary (but without limiting any rights of Buyer to recover under the R&W Insurance Policy), Buyer shall be deemed to have waived, and Seller shall have no Liability for, any Environmental Defect that Buyer fails to assert as an Environmental Defect by a properly delivered Environmental Defect Notice received by Seller on or before the Claim Date. To be effective, each Environmental Defect Notice shall be in writing and shall include (i) a description of the alleged Environmental Defect and the Assets affected by such alleged Environmental Defect (including, but not limited to, and as applicable, reference to the Environmental Laws alleged to have been violated with respect to or that currently require Remediation of the alleged Environmental Defect), (ii)  supporting documents relied upon by Buyer and necessary for Seller to evaluate the existence of such alleged Environmental Defect and (iii) a calculation of the Remediation Amount that Buyer in good faith asserts is attributable to such alleged Environmental Defect and all material assumptions used by Buyer with respect to calculation of such Remediation Amount. To give Seller an opportunity to commence reviewing and curing Environmental Defects, Buyer agrees to give Seller, on bi-weekly basis, prior to the Claim Date, written notice of all alleged Environmental Defects discovered by Buyer during the preceding calendar week, which notice may be preliminary in nature and supplemented prior to the Claim Date; provided, that the failure to provide any such preliminary notice shall not be deemed a breach of any covenant and shall not affect or otherwise prejudice Buyer’s right to assert Environmental Defects at any time prior to the Claim Date and the remedies hereunder therefor. Notwithstanding anything to the contrary in this Agreement, Buyer may not assert as an Environmental Defect any matter disclosed in the Schedules to this Agreement or related or pertaining to an Asset operated by Buyer or its Affiliates. For the avoidance of doubt, any notice provided by Buyer to Seller that does not comply, in all material respects, with all of the requirements of this Section ‎12.1(a) shall not constitute an Environmental Defect Notice.

 

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(b)           Seller’s Right to Cure. Seller shall have the right, but not the obligation, to attempt, at its sole cost, to cure at any time prior to the expiration of the Cure Period any Environmental Defect asserted by Buyer in accordance with this Agreement. An election by Seller to attempt to cure an Environmental Defect shall be without prejudice to Seller’s rights under Section ‎‎12.1(f) and shall not constitute an admission against interest or a waiver of Seller’s right to dispute the existence, nature or value of, or cost to cure or Remediate, such Environmental Defect.

 

(c)           Remedies for Environmental Defects. Subject to Seller’s continuing right to dispute the existence of an Environmental Defect and the Remediation Amount asserted with respect thereto, and subject to the right of Buyer to terminate this Agreement prior to Closing pursuant to Section ‎‎14.1(b), in the event that any Environmental Defect timely and effectively asserted by Buyer in accordance with Section ‎‎12.1(a) is not waived in writing by Buyer or cured prior to the expiration of the Cure Period, Seller shall, at Seller’s sole option and by delivery of a written notice to Buyer prior to the Closing, elect to:

 

(i)            subject to the Individual Environmental Defect Threshold and the Aggregate Deductible, reduce the Purchase Price by the Remediation Amount for such Environmental Defect determined pursuant to this ‎Article XII; or

 

(ii)           if applicable, terminate this Agreement pursuant to Section ‎‎14.1(a).

 

If Seller fails to make any of the foregoing elections prior to the Closing, Seller will be deemed to have elected the remedy set forth in Section ‎‎12.1(c)(i).

 

(d)           Exclusive Remedy. Absent Fraud, except for Buyer’s rights to terminate this Agreement prior to the Closing pursuant to Section ‎‎14.1(b) and Buyer’s remedies pursuant to the R&W Insurance Policy, the provisions set forth in Section ‎‎12.1(c) shall be the exclusive right and remedy of Buyer with respect to any Environmental Defect affecting any Asset.

 

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(e)           Environmental Deductibles. Notwithstanding anything to the contrary in this Agreement, (i) in no event shall there be any adjustments to the Purchase Price or other remedies provided by Seller for any individual Environmental Defect for which the Remediation Amount does not exceed $200,000 (the “Individual Environmental Defect Threshold”); and (ii) in no event shall there be any adjustments to the Purchase Price or other remedies provided by Seller for any Environmental Defect for which the Remediation Amount exceeds the Individual Environmental Defect Threshold unless (A) the amount of the sum of (1) the aggregate Remediation Amounts of all such Environmental Defects that exceed the Individual Environmental Defect Threshold (but excluding any Environmental Defects cured by Seller), plus (2) the aggregate Title Defect Amounts of all Title Defects that exceed the Individual Title Defect Threshold (but excluding any Title Defects cured by Seller), less (3) the aggregate Title Benefit Amounts of all Title Benefits, exceeds (B) the Aggregate Deductible, after which point Buyer shall be entitled to adjustments to the Purchase Price or other applicable remedies available hereunder, but only with respect to the amount by which the aggregate amount of such Remediation Amounts and Title Defect Amounts exceeds the Aggregate Deductible. For the purposes of determining whether or not an Environmental Defect exceeds the Individual Environmental Defect Threshold, if an Environmental Defect constitutes a regulatory or permitting deficiency and not a physical condition (e.g., the failure to obtain the same kind of permits or prepare and file the same kind of plans or reports required under applicable Environmental Laws), then the Remediation Amount associated with each such Environmental Defect that is the same across multiple Assets may be aggregated for purposes of meeting the Individual Environmental Defect Threshold and the Aggregate Deductible. For the avoidance of doubt, if Seller Remediates any Environmental Defect in accordance with this Agreement, the Remediation Amount (or applicable portion thereof) attributable to the affected Asset will not be counted towards the Aggregate Deductible.

 

(f)            Environmental Dispute Resolution. Seller and Buyer shall attempt to agree in writing on matters regarding (i) all Environmental Defects and Remediation Amounts and (ii) the adequacy of any curative materials provided by Seller to cure an alleged Environmental Defect (collectively, the “Disputed Environmental Matters”) prior to the Closing. If Seller and Buyer are unable to agree in writing by the Closing, the Disputed Environmental Matters shall be exclusively and finally resolved by arbitration pursuant to this Section ‎‎12.1(f). There shall be a single arbitrator (the “Environmental Arbitrator”), who shall be a reputable environmental consultant or attorney with at least ten (10) years’ experience in oil and gas environmental matters in the region in which the Assets are located. The Environmental Arbitrator shall be selected by mutual agreement of Buyer and Seller within fifteen (15) days after the Closing, or absent such agreement, within three (3) Business Days of becoming aware that such agreement cannot be made as to the selection of the Environmental Arbitrator, by the Houston, Texas office of the AAA, and in either case, shall remain neutral and shall not have worked as an employee, contractor or outside counsel for any of the Parties or their Affiliates during the 10-year period preceding the arbitration or have any financial interest in the dispute. Each of Buyer and Seller shall submit to the Environmental Arbitrator its proposed resolution of each Disputed Environmental Matter in writing. The arbitration proceeding shall be held in Houston, Texas and shall be conducted in accordance with the Commercial Arbitration Rules of the AAA, to the extent such rules do not conflict with the terms of this Section ‎‎12.1(f). The Environmental Arbitrator’s determination shall be made within thirty (30) days after submission of the matters in dispute or any hearing (as the case may be) and shall be final and binding upon the Parties, without right of appeal. In making its determination, the Environmental Arbitrator shall be bound by the rules set forth in Section ‎‎12.1 and, subject to the foregoing, may consider such other matters as in the opinion of the Environmental Arbitrator are necessary or helpful to rendering an award; provided, however, with respect to each Disputed Environmental Matter, that the Environmental Arbitrator shall not award an amount greater than the amount proposed by Buyer or less than the amount proposed by Seller with respect to such Disputed Environmental Matter. The Environmental Arbitrator shall act as an expert for the limited purpose of determining the specific Disputed Environmental Matter submitted by either Party and may not award damages, interest, penalties or any other sums to either Party with respect to any matter. The costs of the Environmental Arbitrator shall be borne pro rata between the Parties with each Party being responsible for such costs and expenses to the extent the Environmental Arbitrator has not selected such Party’s position on an aggregate dollar basis with respect to all amounts submitted for resolution by the Environmental Arbitrator. Within ten (10) days after the Environmental Arbitrator delivers his or her award, subject to Section ‎‎12.1(e), the Parties shall, after giving effect to the limitations provided in Section ‎‎12.1 (without duplication), execute joint written instructions to the Escrow Agent instructing the Escrow Agent to deliver: (i) to Buyer, an amount equal to the sum of the Remediation Amounts associated with any Disputed Environmental Matters determined in favor of Buyer pursuant to this Section ‎‎12.1(f) and (ii) to Seller, the remainder of the Defect Escrow Amount, after giving effect to Section ‎‎11.2(j) (without duplication). Nothing herein shall operate to cause the Closing to be delayed on account of any unresolved Disputed Environmental Matter arbitration conducted pursuant to this Section ‎‎12.1(f), and to the extent any adjustments are not agreed upon by the Parties in writing as of the Closing, the Purchase Price shall not be adjusted therefor at the Closing, and subsequent adjustments to the Purchase Price, if any, will be made following the agreement of the Parties or determination of the same pursuant to this Section ‎‎12.1 for any such Disputed Environmental Matter.

 

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12.2.         NORM, Asbestos, and Hazardous Substances. Buyer acknowledges that (a) the Assets have been used for exploration, development and production of oil and gas and that there may be petroleum, produced water, or other Hazardous Substances located in, on or under the Assets or associated with the Assets; (b) equipment and sites included in the Assets may contain asbestos, NORM or other Hazardous Substances; (c) NORM may affix or attach itself to the inside of wells, materials and equipment as scale, or in other forms; (d) the wells, materials and equipment located on the Assets or included in the Assets may contain NORM, asbestos and other Hazardous Substances; (e) NORM containing material and other Hazardous Substances may have come in contact with various environmental media, including, water, soils or sediment; (f) special procedures may be required for the assessment, Remediation, removal, transportation, or disposal of environmental media, wastes, asbestos, NORM and other Hazardous Substances from the Assets; and (g) notwithstanding anything to the contrary, the presence of NORM that does not presently violate and require removal under Environmental Laws, or asbestos-containing materials that are non-friable cannot be claimed as an Environmental Defect, except to the extent such constitute a current violation of Environmental Law.

 

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Article XIII
NO SURVIVAL; RELEASE

 

13.1.         Release.

 

(a)           Effective as of the Closing, Seller, for itself and on behalf of its Affiliates (excluding the Company Group) and each of their respective equityholders, successors and assigns (the “Seller Releasing Group”) hereby fully and unconditionally releases, acquits and forever discharges the Buyer Parties and their Affiliates, including each Company Group Member, each of their respective direct and indirect equityholders and current and former Representatives in their capacity as such, and each of their respective successors and assigns (the “Buyer Released Parties”) from any and all manner of actions, causes of actions, claims, obligations, demands, damages, costs, expenses, compensation or other relief, whether known or unknown, suspected or unsuspected, direct or indirect, absolute, fixed, or contingent, whether accrued, potential, inchoate, liquidated, contingent, or actual, whether asserted or that might have been asserted, whether in Law or equity, of any kind (including, in each such case, any rights to contribution, cost recovery, indemnification or other recovery under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 or any other Environmental Law), that any member of the Seller Releasing Group now has or has ever had against each Company Group Member, in respect of or arising out of any matter, act, omission, cause or event relating to the ownership, operation, management, administration or use of the Company Group, the Acquired Interests or the Assets, the Excluded Assets, the Excluded Subsidiaries, the Pre-Closing Reorganization, or any intercompany accounts, arrangements, agreements, guarantees or transactions between or among any Excluded Subsidiary, on the one hand, and any Company Group Member, on the other hand, in each case, occurring or arising, directly or indirectly, contemporaneously with or before the Closing and whether or not relating to claims pending on, or asserted after, the Closing, and including (i) the Acquired Interests or (ii) the ownership, use or operation of any of the Assets or the Company Group prior to the Closing, in each case, WHETHER OR NOT THE LIABILITIES IN QUESTION AROSE OR RESULTED SOLELY OR IN PART FROM THE GROSS, SOLE, ACTIVE, PASSIVE, CONCURRENT OR COMPARATIVE NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT OR VIOLATION OF LAW OF OR BY ANY BUYER RELEASED PARTY; provided, however, the foregoing notwithstanding, the release and discharge provided for herein shall not release (i) the Buyer or any Company Group Member of their respective obligations or liabilities, if any, pursuant to this Agreement or the Transaction Documents, (ii) any rights to exculpation, indemnification and advancement of expenses now existing from each Company Group Member to any director, manager, officer or agent of such Person in accordance with Section 6.11, (iii) any rights of any member of the Seller Releasing Group in such Person’s capacity as a continuing employee, consultant or other service provider of any member of the Company Group from and after the Closing or (iv) any Person for Fraud. Seller hereby irrevocably covenants to refrain from, directly or indirectly (and shall cause each member of the Seller Releasing Group to refrain from), asserting any claim released pursuant to the foregoing provisions of this Section ‎‎13.1(a), or commencing, instituting or causing to be commenced, any proceeding of any kind against any of the released Persons set forth in the first sentence of this Section ‎‎13.1(a) in their capacity as such, with respect to any such claim. Seller hereby represents to Buyer that it has not assigned or transferred or purported to assign or transfer to any Person all or any part of, or any interest in, any such claim.

 

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(b)            Effective as of the Closing, Buyer, for itself and on behalf of its Affiliates (including the Company Group) and each of their respective equityholders, successors and assigns (the “Buyer Releasing Group”) hereby fully and unconditionally releases, acquits and forever discharges Seller and its Affiliates (including the Excluded Subsidiaries) and its and their direct and indirect equityholders and current and former Representatives in their respective capacities as such, and each of their respective successors and assigns (the “Seller Released Parties”) from any and all manner of actions, causes of actions, claims, obligations, demands, damages, costs, expenses, compensation or other relief, whether known or unknown, suspected or unsuspected, direct or indirect, absolute, fixed, or contingent, whether accrued, potential, inchoate, liquidated, contingent, or actual, whether asserted or that might have been asserted, whether in Law or equity, of any kind, that any member of the Buyer Releasing Group now has or has ever had against such Persons, in respect of or arising out of any matter, act, omission, cause or event relating to the ownership, operation, management, administration or use of the Company Group, the Acquired Interests, the Assets, the Excluded Subsidiaries or the Pre-Closing Reorganization in each case, occurring or arising, directly or indirectly, contemporaneously with or before the Closing and whether or not relating to claims pending on, or asserted after, the Closing, in each case, WHETHER OR NOT THE LIABILITIES IN QUESTION AROSE OR RESULTED SOLELY OR IN PART FROM THE GROSS, SOLE, ACTIVE, PASSIVE, CONCURRENT OR COMPARATIVE NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT OR VIOLATION OF LAW OF OR BY ANY SELLER RELEASED PARTY; provided, however, the foregoing notwithstanding, the release and discharge provided for herein shall not release (i) the Seller of its obligations or liabilities, if any, pursuant to this Agreement or the Transaction Documents, (ii) Seller or its Affiliates from any obligations, liabilities, claims, causes of action and Liabilities directly arising from or relating to the ownership, operation or business of any Excluded Assets or (iii) any Person for Fraud. Buyer hereby irrevocably covenants to refrain from, directly or indirectly (and shall cause each member of the Buyer Releasing Group to refrain from), asserting any claim released pursuant to the foregoing provisions of this Section ‎‎13.1(b), or commencing, instituting or causing to be commenced, any proceeding of any kind against any of the released Persons set forth in the first sentence of this Section ‎‎13.1(b), in their capacity as such, with respect to any such claim. Buyer hereby represents to Seller that it has not assigned or transferred or purported to assign or transfer to any Person all or any part of, or any interest in, any such claim.

 

(c)            For purposes of clarification and avoidance of doubt, notwithstanding any other provision of this Section 13.1, this Section 13.1 does not (i) waive or release any claim for breach or enforcement of the release in this Section 13.1, or (ii) waive or release any right or claim that may not be waived or released by applicable Law.

 

13.2.         Survival; Sole and Exclusive Remedy. Except in case of Fraud, none of the representations, warranties, covenants or agreements of Seller in this Agreement or in any instrument delivered pursuant to this Agreement shall survive the Closing and all rights, claims and causes of action (whether in Contract or in tort or otherwise, or whether at Law or in equity) with respect thereto shall terminate at the Closing. Notwithstanding the foregoing, if the Closing occurs, this Section 13.2 shall not limit any covenant or agreement of the Parties to the extent such covenant or agreement is required to be performed after the Closing, which covenants and agreements shall survive the Closing in accordance with their respective terms. Except in the case of (a) any covenant or agreement required to be performed after the Closing or (b) Fraud, Buyer’s sole and exclusive remedy following Closing shall be the R&W Insurance Policy and Buyer, on behalf of itself, its Affiliates and their respective Representatives, hereby fully, unconditionally and irrevocably waives (and discharges and releases the Seller Indemnified Parties and the Company Group, and their respective Representatives for) from any and all claims, demands, torts, liens, suits, actions, causes of action, debts, damages, obligations, liabilities and rights whatsoever, at law or in equity, whether known or unknown, suspected or unsuspected, now existing or which may hereafter accrue, directly or indirectly, arising out of or related to the transactions contemplated by this Agreement, the Company Group and/or their Business.

 

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Article XIV
TERMINATION, DEFAULT AND REMEDIES

 

14.1.         Right of Termination. This Agreement and the transactions contemplated herein may be terminated at any time prior to the Closing (by written notice from the terminating Party to the other Party) as follows:

 

(a)            by Seller by written notice to Buyer, if Buyer breaches any of its representations or warranties contained in this Agreement or breaches or fails to perform any of its covenants contained in this Agreement, which breach or failure to perform (i) would render a condition precedent to Seller’s or the Company’s obligations to consummate the transactions contemplated hereby set forth in ‎‎Article VIII not capable of being satisfied, and (ii) after the giving of written notice of such breach or failure to perform to Buyer by Seller, cannot be cured or has not been cured by the earlier of the Outside Date and ten (10) Business Days after the delivery of such notice; provided, however, that the right to terminate this Agreement under this Section ‎‎14.1(a) shall not be available to Seller if Seller or any Company Group Member is then in material breach of any of its representations or warranties, covenants or agreements contained in this Agreement, which breach or failure to perform would render a condition precedent to Buyer’s obligations to consummate the transactions contemplated hereby set forth in ‎‎Article VII not capable of being satisfied;

 

(b)            by Buyer by written notice to Seller, if Seller or the Company Group Members breach any of their respective representations or warranties contained in this Agreement or Seller or the Company Group Members breach or fail to perform any of their respective covenants contained in this Agreement, which breach or failure to perform (i) would render a condition precedent to Buyer’s obligations to consummate the transactions contemplated hereby set forth in ‎‎Article VII not capable of being satisfied, and (ii) after the giving of written notice of such breach or failure to perform to Seller by Buyer, cannot be cured or has not been cured by the earlier of the Outside Date and ten (10) Business Days after the delivery of such notice; provided, however, that the right to terminate this Agreement under this Section ‎‎14.1(b) shall not be available to Buyer if Buyer is then in material breach of any of its representations, warranties, covenants or agreements contained in this Agreement, which breach or failure to perform would render a condition precedent to Seller’s obligations to consummate the transactions contemplated hereby set forth in ‎‎Article VIII not capable of being satisfied;

 

(c)            by Seller by written notice to Buyer, if (i) all of the conditions to Closing set forth in ‎‎Article VII were satisfied or waived as of the date the Closing should have been consummated pursuant to the terms of this Agreement (other than those conditions that by their terms are to be satisfied at Closing and could have been satisfied or would have been waived assuming Closing would occur), (ii) Seller has notified Buyer that Seller and the Company Group Members are ready, willing and able to consummate the transactions contemplated by this Agreement, (iii) neither Seller nor any Company Group Member is then in material breach of any of its representations or warranties, covenants or agreements contained in this Agreement, which breach or failure to perform would render a condition precedent to the Buyer’s obligations to consummate the transactions contemplated hereby set forth in ‎‎Article VII not capable of being satisfied and (iv) Buyer fails to complete the Closing within two (2) Business Days after the delivery of such notification by Seller;

 

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(d)           by Buyer by written notice to Seller, if (i) all of the conditions to Closing set forth in ‎‎Article VIII were satisfied or waived as of the date the Closing should have been consummated pursuant to the terms of this Agreement (other than those conditions that by their terms are to be satisfied at Closing and could have been satisfied or would have been waived assuming Closing would occur), (ii) Buyer has notified Seller that Buyer is ready, willing and able to consummate the transactions contemplated by this Agreement, (iii) Buyer is not then in material breach of any of its representations, warranties, covenants or agreements contained in this Agreement, which breach or failure to perform would render a condition precedent to Seller’s obligations to consummate the transactions contemplated hereby set forth in ‎‎Article VIII not capable of being satisfied and (iv) Seller and the Company Group fail to complete the Closing within two (2) Business Days after the delivery of such notification by Buyer;

 

(e)            by Seller or Buyer if the Closing shall not have occurred on or before the Outside Date; provided that the right to terminate under this Section ‎‎14.1(e) shall not be available to a Party whose breach in any material respect of any of its obligations under this Agreement has been the primary cause of, or primarily resulted in, the failure of the Closing to have been consummated on or before the Outside Date; provided further that notwithstanding anything to the contrary in the foregoing proviso, in the event that Buyer has the right to take the actions contemplated in Section 14.2(c), if Buyer has not taken such actions at any time following the sixtieth (60th) day after the Outside Date, Seller shall have the right to terminate this Agreement unless, prior to Seller so terminating this Agreement, Buyer has commenced appropriate proceedings to enforce its rights of specific performance hereunder;

 

(f)            by Seller or Buyer if consummation of the transactions contemplated hereby is enjoined, restrained, prevented or otherwise prohibited or otherwise made illegal by the terms of a final, non-appealable Order of a Governmental Authority of competent jurisdiction; provided that the right to terminate under this Section ‎‎14.1(f) shall not be available to a Party if ‎any of the foregoing is primarily due to the failure of such Party to perform its obligations under this ‎Agreement;

 

(g)           by the mutual prior written consent of Seller and Buyer; or

 

(h)           by Seller if Buyer has not timely deposited the Deposit in accordance with Section 2.3(d).

 

14.2.         Effect of Termination.

 

(a)            If this Agreement is terminated pursuant to any provision of Section ‎‎14.1, then this Agreement shall forthwith become void, and the Parties shall have no Liability or obligation hereunder; provided that the provisions of Section ‎‎6.2(e), Section ‎‎6.5, Section ‎‎6.6, Section ‎6.22(c), Section ‎6.24(e), Section ‎‎10.1(c), Section ‎‎10.1(d), Section ‎‎10.1(e), this Section ‎‎14.2, Section ‎‎14.3, ‎Article I and ‎Article XV (other than Section ‎‎15.3 and Section ‎‎15.14, which shall terminate) and such of the defined terms set forth in Annex I to give context to such Sections shall, in each case, survive such termination. Upon the termination of this Agreement, Seller shall be free immediately to enjoy all rights of ownership of the Acquired Interests, the Company Group and the Assets and to sell, transfer, encumber or otherwise dispose of the same to any Person without any restriction under this Agreement.

 

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(b)           If (i) Seller has the right to terminate this Agreement pursuant to Section ‎‎14.1(a) or Section ‎‎14.1(c) or (ii) if Seller has the right to terminate this Agreement pursuant to Section ‎‎14.1(e), and at such time Seller could have terminated this Agreement pursuant to Section ‎‎14.1(a) (without regard to any cure periods contemplated therein) or Section ‎‎14.1(c), then, in each case, Seller shall have the right, as its sole and exclusive remedy against Buyer, to either (A) seek to enforce specific performance by Buyer of this Agreement, or (B) if Seller does not seek to enforce (or if Seller does not successfully obtain specific performance), then Seller shall be entitled to terminate this Agreement with respect to the obligations of Buyer, as applicable, and receive and retain the Deposit as liquidated damages, free of any claims by such Party or any other Person with respect thereto. The Parties agree that (x) Seller’s actual damages in the event of termination would be difficult to ascertain, (y) the Deposit constitutes the Parties’ good-faith estimate of the actual damages reasonably expected to result from such termination of this Agreement and (z) the liquidated damages are not a penalty. If Seller elects to terminate this Agreement pursuant to this Section ‎‎14.2(b) and receive the Deposit as liquidated damages, then within two (2) Business Days of Seller’s election, Buyer and Seller shall execute and deliver (or cause to be delivered) a joint written instruction to the Escrow Agent, instructing the Escrow Agent to distribute the full amount of the Deposit to the account designated by Seller. Seller’s receipt of the Deposit as liquidated damages is the sole and exclusive remedy of Seller, its Affiliates and its Representatives against Buyer or any of its Representatives, including any investment banker, financial advisor, Debt Financing Source, attorney, accountant or other advisor, agent, representative or affiliate for, and subject to this Section 14.2(b), in no such event will Seller seek to recover any other money damages or seek any other remedy based on a claim in Law or equity with respect to, any matter relating to or arising out of this Agreement, including (a) any loss suffered as a result of the failure of the consummation of the Closing and the transactions contemplated hereby, (b) the termination of this Agreement or (c) any liabilities or obligations arising under this Agreement. Upon payment to Seller of such Deposit as liquidated damages, none of Buyer or any of its Representatives, including any investment banker, financial advisor, Debt Financing Source, attorney, accountant or other advisor, agent, representative or affiliate shall have any further liability or obligation to Seller relating to or arising out of this Agreement or the transactions contemplated hereby.

 

(c)            If (i) Buyer has the right to terminate this Agreement pursuant to Section ‎‎14.1(b) or Section ‎‎14.1(d) or (ii) if Buyer has the right to terminate this Agreement pursuant to Section ‎‎14.1(e), and at such time Buyer could have terminated this Agreement pursuant to Section ‎‎14.1(b) or Section ‎‎14.1(d), then, in each such case, Buyer shall have the right, at its sole discretion and as the sole and exclusive remedy against Seller and the Company Group, to either (A) seek to enforce specific performance by Seller of this Agreement (in which event the Deposit will be applied as a credit against the Adjusted Purchase Price at Closing as set forth in Section ‎‎9.3(a)), or (B) if Buyer does not seek to enforce specific performance (or if Buyer does not successfully obtain specific performance), then Buyer shall be entitled to (1) terminate this Agreement, (2) receive the entirety of the Deposit pursuant to Section ‎‎14.2(d), and (3) be entitled to seek to recover its actual damages and out-of-pocket expenses incurred and paid in connection with this Agreement in an amount up to, but not to exceed, $30,000,000 in the aggregate as its sole and exclusive remedy against Seller. If Buyer elects to terminate this Agreement pursuant to this Section ‎‎14.2(c) and seek a return of the Deposit, then within two (2) Business Days of Buyer’s election, Buyer and Seller shall execute and deliver (or cause to be delivered) a joint written instruction to the Escrow Agent, instructing the Escrow Agent to distribute the full amount of the Deposit to Buyer. For the avoidance of doubt, under no circumstances shall Buyer be permitted or entitled to receive both a grant of specific performance and a return of the Deposit in connection with the termination of this Agreement.

 

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(d)           If this Agreement is terminated and Seller is not entitled to the Deposit pursuant to Section ‎‎14.2(b), then within two (2) Business Days of such termination, Buyer and Seller shall deliver a joint written instruction to the Escrow Agent, instructing the Escrow Agent to distribute the full amount of the Deposit to Buyer.

 

(e)            If this Agreement is terminated in accordance with the express terms of this ‎‎Article XIV, then subject to the foregoing provisions of this Section ‎‎14.2, Seller and the Company Group shall be free immediately to enjoy all rights of ownership of the Company Group and the Assets and to sell, transfer, encumber or otherwise dispose of the same to any Person without any restriction under this Agreement, provided, for the avoidance of doubt, that in the event that Buyer seeks to enforce specific performance in accordance with Section ‎‎14.2(c) above, Seller shall not be entitled to such action and will remain subject to its covenants under this Agreement, including Section ‎‎6.1, until such claim for specific performance is finally resolved.

 

(f)            If either Party notifies the other Party of its intention to terminate this Agreement in accordance with Section ‎14.1(e) for failure of the conditions set forth in Section ‎7.4 or Section ‎8.4, as applicable, then, unless the agreed upon Title Defect Amounts, Remediation Amounts and Title Benefit Amounts (together with the other amounts accounted for pursuant to Section ‎7.4 or Section ‎8.4, as applicable) are sufficient to cause a failure of the conditions set forth in Section ‎7.4 or Section ‎8.4, such other Party may (including on and after the Target Closing Date), prior to giving effect to such termination, elect by written notice (an “Arbitration Notice”) to submit all unresolved disputes with respect to any Title Defects, Title Benefits, Title Defect Amounts, Title Benefit Amounts, Environmental Defects or Remediation Amounts to expert arbitration in accordance with Section ‎11.2(j) and Section ‎12.1(f), as applicable; provided, further, that, in lieu of the timing provided in Section ‎11.2(j) and Section ‎12.1(f), as applicable, the Parties shall select a Title Arbitrator or Environmental Arbitrator, as applicable, within five (5) Business Days of the delivery of the Arbitration Notice, each Party shall submit such Party’s position to the Title Arbitrator or Environmental Arbitrator, as applicable, within ten (10) Business Days of the delivery of an Arbitration Notice and each Party shall instruct the Title Arbitrator or Environmental Arbitrator, as applicable, to deliver a determination of (A) the Remediation Amount(s) attributable to all disputed Environmental Defects, (B) the Title Defect Amount(s) attributable to all disputed Title Defects or (C) the Title Benefit Amount(s) attributable to all disputed Title Benefits, as applicable, within twenty (20) days of the delivery of the Arbitration Notice. For the avoidance of doubt, (1) if a Party elects to initiate arbitration in accordance with this Section ‎14.2(f), neither Party may terminate this Agreement pursuant to Section ‎14.1(e) for failure of the conditions set forth in Section ‎7.4 or Section ‎8.4, as applicable, until final resolution of such unresolved disputes by such arbitration(s) or the agreement of the Parties, (2) a Party’s initiation of arbitration in accordance with this Section ‎14.2(f), shall not prevent Buyer, prior to giving effect to Section ‎14.1(e), from electing to waive any asserted Title Defect or Environmental Defect, as applicable, and (3) nothing herein shall prevent Buyer from electing to waive or withdraw any asserted Title Defect or Environmental Defect at any time prior to termination of this Agreement. Any such determination pursuant to such arbitration(s) or the agreement of the Parties as to Title Defects, Title Benefits, Title Defect Amounts, Title Benefit Amounts, Environmental Defects or Remediation Amounts, as applicable, shall be final and binding on the Parties for all purposes of this Agreement.

 

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(g)           If a Party resorts to legal proceedings to enforce this Agreement, the prevailing Party in such proceedings shall be entitled to recover all costs incurred by such Party from the Party that is in breach or default, including reasonable attorneys’ fees, in addition to any other relief to which such Party may be entitled.

 

14.3.         Return of Documentation. Upon termination of this Agreement, Buyer shall promptly return to Seller all original (and destroy all copies of) title, engineering, geological and geophysical data, environmental assessments and reports, maps and other information furnished by Seller to Buyer or prepared by or on behalf of Buyer in connection with its due diligence investigation of the Company Group or the Assets, in each case in accordance with the Confidentiality Agreement, and an officer of Buyer shall certify same to Seller in writing.

 

Article XV
MISCELLANEOUS

 

15.1.         Appendices, Exhibits and Schedules.

 

(a)            All of the Annexes, Exhibits and Schedules referred to in this Agreement are hereby incorporated into this Agreement by reference and constitute a part of this Agreement. Each Party and its counsel has received a complete set of Annexes, Exhibits and Schedules prior to and as of the execution of this Agreement.

 

(b)           In no event shall disclosure of any matter, fact, occurrence, information or circumstance in the Exhibits or Schedules be deemed or interpreted to broaden the scope of the representations and warranties, obligations, covenants, conditions, indemnities or agreements contained in this Agreement, or to create any representation, warranty, obligation, covenant, condition, indemnity or agreement that is not contained in this Agreement. The inclusion of any matter, fact, occurrence, information or circumstance in the Exhibits or Schedules shall not be construed as an admission or acknowledgment or otherwise imply (i) that such matter, fact, occurrence, information or circumstance is required to be listed in the Exhibits or Schedules in order for any representation or warranty in this Agreement to be true and correct or (ii) that, with respect to any representation or warranty qualified by materiality (or similar qualifier), such matter, fact, occurrence, information or circumstance is, or may be, material.

 

(c)            Any exception, qualification or other disclosure set forth on the Exhibits or Schedules attached to this Agreement with respect to a particular representation, warranty, obligation, covenant, condition, or agreement contained in this Agreement shall be deemed to be an exception, qualification or other disclosure with respect to all other representations, warranties, obligations, covenants, conditions, and agreements contained in this Agreement to the extent any description of facts regarding the event, item or matter disclosed is adequate so as to make reasonably apparent on its face that such exception, qualification or disclosure is applicable to such other representations, warranties, obligations, covenants, conditions, and agreements whether or not such exception, qualification or disclosure is so numbered.

 

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(d)           Seller may, at its option, include in the Disclosure Schedules items that are not material or required by this Agreement and the inclusion of any information (including dollar amounts) in any Disclosure Schedule shall not be deemed to be an admission or acknowledgment by Seller that such information is required to be listed on such Disclosure Schedule or is material to or outside the ordinary course of the business of Seller or the Company Group. The information contained in this Agreement, the Exhibits and the Disclosure Schedules is disclosed solely for purposes of this Agreement, and no information contained in this Agreement, the Exhibits or the Disclosure Schedule shall be deemed to be an admission by any Party to any third Person of any matter whatsoever (including any violation of a legal requirement or breach of contract). In particular, if the Disclosure Schedules contain supplementary information not specifically required under this Agreement to be included in the Schedules, such additional matters are set forth solely for informational purposes and do not necessarily include other matters of a similar nature. In disclosing any matter, fact, occurrence, information or circumstance in the Schedules, no Party is waiving any attorney-client privilege associated with any such matter, fact, occurrence, information or circumstance, or any protection afforded by the “work product doctrine” with respect to any of the same. Any capitalized terms used in the Disclosure Schedule but not otherwise defined therein shall be defined as set forth in this Agreement.

 

15.2.         Expenses. Except as otherwise specifically provided in this Agreement, all fees, costs and expenses incurred by Buyer or Seller in negotiating or executing this Agreement and the Transaction Documents or in consummating the transactions contemplated hereby or thereby shall be paid by the Party incurring the same, including, legal, investment banking, and accounting fees, costs and expenses.

 

15.3.         Tax Matters.

 

(a)           All required documentary, filing and recording fees owed to a Governmental Authority in connection with the filing and recording of the assignments, conveyances or other instruments required to convey title to the Acquired Interests (or indirectly transfer title to the other Assets) to Buyer shall be borne by Buyer. All sales, use, transfer, stamp, documentary, registration or similar Taxes (“Transfer Taxes”), if any, incurred or imposed with respect to the indirect transfer of Assets or the direct transfer of the Acquired Interests, in each case, to Buyer pursuant to the transactions described in this Agreement shall be borne 50% on one hand by Buyer and 50% on the other hand by Seller. All Transfer Taxes incurred or imposed on or with respect to the Pre-Closing Reorganization, including the distribution or transfer of the Excluded Assets out of the Company Group shall be borne 100% by Seller. Buyer and Seller shall reasonably cooperate in good faith to minimize, to the extent permissible under applicable Law, the amount of any such fees, expenses and Taxes, and will reasonably assist and cooperate with each other in the preparation and filing of any related Tax Returns.

 

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(b)           For all purposes of this Agreement, Seller will be allocated all Pre-Effective Time Taxes and Buyer will be allocated all Post-Effective Time Taxes. For purposes of determining the amounts of any Pre-Effective Time Taxes and any Post-Effective Time Taxes: (i) Taxes that are directly attributable to the severance or production of Hydrocarbons (other than such Taxes that are Income Taxes or that are ad valorem, property or similar Taxes imposed on a periodic basis, or that are described in clause (v)) shall be allocated to the Tax period (or portion of any Straddle Period) in which the severance or production giving rise to such Taxes occurred; (ii) Taxes that are based upon or related to sales or receipts, or imposed on a transactional basis (other than such Taxes that are Income Taxes, that are ad valorem, property or similar Taxes imposed on a periodic basis, or that are described in clause (i) or (v)), shall be allocated to the Tax period (or portion of any Straddle Period) in which the transaction giving rise to such Taxes occurred; (iii) Taxes that are ad valorem, property or other similar Taxes imposed on a periodic basis pertaining to a Straddle Period shall be allocated between the portion of such Straddle Period ending immediately prior to the Effective Time and the portion of such Straddle Period beginning at the Effective Time by prorating each such Tax based on the number of days in the applicable Straddle Period that occur in the portion of such Straddle Period ending on the date before the date on which the Effective Time occurs, on the one hand, and the number of days in such Straddle Period that occur in the portion of such Straddle Period beginning on the date on which the Effective Time occurs, on the other hand, (iv) Taxes that are Income Taxes payable with respect to any Straddle Period shall be allocated between the portion of such Straddle Period ending immediately prior to the Effective Time and the portion of such Straddle Period beginning at the Effective Time by determining (x) the amount of such Taxes that would be payable if the Straddle Period ended on the date immediately preceding the date on which the Effective Time occurs, which amount shall be a Pre-Effective Time Tax and (y) the amount of such Taxes that would be payable if the Straddle Period began on the date on which the Effective Time occurs, which amount shall be a Post-Effective Time Tax, and (v) Post-Production Cost Sales Taxes shall be Pre-Effective Time Taxes. To the extent the actual amount of a Tax is not known at the time an adjustment is to be made with respect to such Tax pursuant to Section ‎‎2.4, Section ‎‎2.5 or Section ‎‎2.7, as applicable, the Parties shall utilize the most recent information available in estimating the amount of the Tax for purposes of such adjustment.

 

(c)            Each Party shall promptly notify the other in writing upon receiving notice of any audit, litigation or other proceeding relating to Taxes of the Company Group for any taxable period (or portion thereof) ending on or before the Closing Date with respect to any Flow-Through Taxes or prior to the Final Settlement Date, any Taxable period (or portion thereof) ending prior to the Effective Time with respect to other Taxes from which a proposed adjustment was made or threatened prior to the Closing and from which such matter may be settled by such Settlement Date (each, a “Tax Proceeding”). Subject to Section ‎15.3(d), Seller shall be entitled to control any Tax Proceedings that relate solely to Flow-Through Taxes for any tax period ending on or prior to the Closing Date and may result in any Taxes to Seller, whether under this Agreement or per applicable Law. Seller shall keep the Buyer reasonably informed regarding any material developments concerning such Tax Proceeding (including by providing copies of any written correspondence in connection therewith); (y) allow Buyer, at Buyer’s own cost and expense, to reasonably participate in such Tax Proceeding; and (z) not settle, compromise or take any material action in respect of any such Tax Proceeding without Buyer’s prior written consent (which consent ‎shall not be unreasonably withheld or delayed). Subject to Section ‎15.3(f), Buyer shall control each other Tax Proceeding. Buyer shall keep the Seller reasonably informed regarding any material developments concerning such Tax Proceeding (including by providing copies of any written correspondence in connection therewith); (y) allow Seller, at Seller’s own cost and expense, to reasonably participate in such Tax Proceeding; and (z) not settle, compromise or take any material action in respect of any such Tax Proceeding without Seller’s prior written consent (which consent ‎shall not be unreasonably withheld or delayed). For purposes of the computations of Taxes taken into account in the Final Purchase Price, including in relation to the Final Settlement Statement, no Tax assessment or other adjustments proposed or threatened by any Governmental Authority that arises after the Closing, any Tax Return (or amendment of any Tax Return) filed after the Closing (or information set forth thereon) or any voluntary disclosure proceeding commencing after the Closing Date relating to Taxes other than Flow-Through Taxes, in each case, shall be determinative; provided, however, that the foregoing limitation shall not apply to the extent such event, change, act, development, filing, claim, audit, proceeding or decision (or any amount of Tax or refund related thereto) was known by Seller to be pending or outstanding as of the Closing Date and becomes a liability or assessment or refund by the time of the Final Settlement Date.

 

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(d)            Each Party shall cooperate fully as and to the extent reasonably requested by the other Party, in connection with Section ‎15.3(h), the filing of Tax Returns and any Tax audit, litigation or other proceeding with respect to Taxes imposed on or with respect to the assets, operations or activities of any Company Group Member and the Assets. Such cooperation shall include the retention and (upon another Party’s request) the provision of records and information that are relevant to any such Tax Return or audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided under this Agreement.

 

(e)            The amount of any refunds of Taxes of any Company Group Member (whether in the form of cash received or a credit or offset actually realized against Taxes otherwise payable) for any Tax period (or portion thereof) ending before the Effective Time, which refund or repayment is set forth on Schedule ‎15.3(e) as of the Execution Date, shall be for the account of Seller if received prior to the Final Settlement Date. Buyer shall be entitled to all other refunds of Taxes of any Company Group Member. If either Party or their Affiliate (including, in the case of Buyer, any Company Group Member after the Closing) receives any such Tax refund prior to the Final Settlement Date to which the other Party is entitled pursuant to this clause (g) and that has not already been taken into account in determining the Purchase Price or the adjustments thereto, the receiving Party shall forward, or shall cause its Affiliates to forward, to the other Party the amount of such refund within thirty (30) days after such refund is received or credited against Taxes, net any out-of-pocket costs or expenses (including Taxes) incurred by the receiving Party or its Affiliates in procuring such refund.

 

(f)            Unless required by applicable Law, neither Buyer nor any of its Affiliates will: (i) make any election with respect to Flow-Through Taxes, including any election under Treasury Regulation Section 301.7701-3, that would have retroactive effect with respect to any Company Group Member on or prior to the Closing Date, (ii) amend or refile any Tax Return with respect to Flow-Through Taxes of any Company Group Member for a Tax period (or portion thereof) ending on the Closing Date, or (iii) initiate discussions with any Governmental Authority with respect to material Flow-Through Taxes of a Company Group Member or commence any voluntary disclosure proceeding in any state or local or non-U.S. jurisdiction with respect to any Flow-Through Taxes, in each case, for taxable period (or portion thereof) ending on or before the Closing Date, in each case without the consent of Seller (such consent not to be unreasonably withheld, conditioned or delayed); provided, however, that the foregoing limitation shall only apply to the extent such action would reasonably be expected to be economically borne by Seller, or its direct or indirect equityholders.

 

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(g)           Buyer and Seller agree that either Party may elect to treat the acquisition or sale of the Assets as an exchange of like-kind property under Section 1031 of the Code (a “1031 Exchange”). Subject to the provisions of this Section ‎15.3(g), each Party agrees to use commercially reasonable efforts to cooperate with the other Party in the completion of such a 1031 Exchange (including a 1031 Exchange subject to the procedures outlined in Treasury Regulations § 1.1031(k)-1 or Internal Revenue Service Revenue Procedure 2000-37). Seller or Buyer shall have the right at any time prior to Closing to assign all or a part of its rights under this Agreement to a qualified intermediary (as that term is defined in Treasury Regulations § 1.1031(k)-1(g)(4)(iii)) or an exchange accommodation titleholder (as that term is defined in Internal Revenue Service Revenue Procedure 2000-37) to affect a 1031 Exchange. Each Party acknowledges and agrees that neither an assignment of a Party’s rights under this Agreement nor any other actions taken by a Party or any other Person in connection with the 1031 Exchange shall release such Party from, or modify, any of its liabilities and obligations (including indemnity obligations to the other Party) under this Agreement, and no Party makes any representations as to any particular Tax treatment that may be afforded to any other Party by reason of such assignment or any other actions taken in connection with the 1031 Exchange. For the avoidance of doubt, no Party shall have the right to delay the Closing for purposes of its 1031 Exchange. The exchanging Party shall indemnify, defend, and hold harmless the accommodating Party from and against any and all claims, losses, costs, and expenses arising out of or in connection with any 1031 Exchange by such exchanging party. Furthermore, the accommodating Party shall not be required to execute any agreement that would reduce such Party’s rights or increase such Party’s obligations or Liabilities under this Agreement.

 

(h)           Seller shall (i) use commercially reasonable efforts to update the property tax rolls in Brazos County, Texas prior to Closing to (A) remove Wildhorse Resources II, LLC as the entity responsible for the payment of Taxes with respect to the Assets and (B) reflect a Company Group Member, as applicable, as the responsible entity, (ii) to the extent such actions are not completed prior to Closing, use commercially reasonable efforts to cooperate with Buyer after the Closing to so update such tax rolls and (iii) as soon as reasonably practicable, notify Buyer of and forward any written communications received by Seller or its Affiliates (including the Excluded Subsidiaries) from any Governmental Authorities after the Closing which relate to the Company Group or the Assets; provided, however, Seller’s and its Affiliates’ obligations under this Section 15.3(h) shall terminate on March 31, 2027.

 

15.4.         Assignment. This Agreement may not be assigned by either Party without prior written consent of the other Party; provided, that Buyer may assign this Agreement, any of the Equity Interests in any Company Group Member or the Assets to an Affiliate of Buyer, in each case, without the consent of Seller. In the event the non-assigning Party consents to any such assignment or if Buyer assigns this Agreement to an Affiliate hereunder, such assignment shall not relieve the assigning Party of any Liabilities hereunder, including Liabilities arising following such assignment. Any assignment or other transfer by Buyer or its successors and assigns of any of the Equity Interests in any Company Group Member or any of the Assets shall not relieve Buyer or its successors or assigns of any of their Liabilities (including indemnity obligations) hereunder. Any purported assignment of this Agreement by either Party in violation of this Section ‎‎15.4 shall be null and void, ab initio.

 

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15.5.         Notices. All notices and communications required or permitted to be given hereunder 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 shown below or at such other address as such Party shall have theretofore designated by written notice delivered to the Party giving such notice:

 

If to Seller:

 

  WildFire Energy I LLC
  920 Memorial City Way, Suite 1400
  Houston, Texas 77024
  Attention: Anthony F. Bahr
  Email: [email protected]

 

With a copy to (which shall not constitute notice):

   
  Troutman Pepper Locke LLP
  600 Travis St., Suite 2800
  Houston, TX 77002
  Attention: Kevin N. Peter
    Jennie Simmons
    Hunter Summerford
  Email: [email protected]
    [email protected]
    [email protected]

 

If to Buyer:

 

  Magnolia Oil & Gas Operating LLC
  Nine Greenway Plaza, Suite 1300
  Houston, Texas 77046
  Attention: Timothy D. Yang
  Email:  [email protected]

 

With a copy to (which shall not constitute notice):

   
  Magnolia Oil & Gas Operating LLC
  Nine Greenway Plaza, Suite 1300
  Houston, Texas 77046
  Attention: Jordan S. Benningfield
    Jacob Johnson
  Email: [email protected]
    [email protected]

 

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  Kirkland & Ellis LLP
  609 Main Street
  Houston, Texas 77002
  Attention: David Castro Jr., P.C.
    Kyle M. Watson, P.C.
    R.J. Malenfant
  Email: [email protected]
    [email protected]
    [email protected]

 

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 ‎‎15.5.

 

15.6.         Further Assurances. Subject to the terms and conditions of this Agreement, at any time or from time to time after the Closing, at either Party’s request and without further consideration, the other Party shall (and shall cause its Affiliates to) (a) take such other actions as such requesting Party may reasonably request, at such requesting Party’s expense, in order to effectuate the transactions contemplated by this Agreement; (b) furnish upon request to each other such further information; and (c) promptly execute, acknowledge and deliver such further instruments of assignment, transfer, conveyance, endorsement, direction, or authorization and other documents, in each case, as such requesting Party may reasonably request in order to effectuate the transactions contemplated by this Agreement or the other Transaction Documents; provided, however, that no such act or document shall increase a Party’s liabilities or obligations (or require any payments by Seller), or decrease its rights or benefits, under this Agreement or any other Transaction Document.

 

15.7.         Entire Agreement; Conflicts. THIS AGREEMENT, THE ANNEXES, EXHIBITS AND SCHEDULES HERETO, THE ESCROW AGREEMENT, THE CONFIDENTIALITY AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS COLLECTIVELY CONSTITUTE THE ENTIRE AGREEMENT AMONG THE PARTIES PERTAINING TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ALL PRIOR AGREEMENTS, UNDERSTANDINGS, NEGOTIATIONS AND DISCUSSIONS, WHETHER ORAL OR WRITTEN, OF THE PARTIES OR THEIR RESPECTIVE REPRESENTATIVES PERTAINING TO THE SUBJECT MATTER HEREOF. THERE ARE NO WARRANTIES, REPRESENTATIONS OR OTHER AGREEMENTS AMONG THE PARTIES RELATING TO THE SUBJECT MATTER HEREOF EXCEPT AS SPECIFICALLY SET FORTH IN THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS, AND NEITHER SELLER NOR BUYER SHALL BE BOUND BY OR LIABLE FOR ANY REPRESENTATION, PROMISE, INDUCEMENT OR STATEMENTS OF INTENTION NOT SO SET FORTH. IN THE EVENT OF A CONFLICT BETWEEN THE TERMS AND PROVISIONS OF THIS AGREEMENT AND THE TERMS AND PROVISIONS OF ANY OTHER TRANSACTION DOCUMENT OR SCHEDULE OR EXHIBIT HERETO, THE TERMS AND PROVISIONS OF THIS AGREEMENT SHALL GOVERN AND CONTROL; PROVIDED, HOWEVER, THAT THE INCLUSION IN ANY OF THE OTHER TRANSACTION DOCUMENTS OR SCHEDULES AND EXHIBITS HERETO OF TERMS AND PROVISIONS NOT ADDRESSED IN THIS AGREEMENT SHALL NOT BE DEEMED A CONFLICT, AND ALL SUCH ADDITIONAL PROVISIONS SHALL BE GIVEN FULL FORCE AND EFFECT, SUBJECT TO THE PROVISIONS OF THIS SECTION ‎‎15.7.

 

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15.8.         Parties in Interest. The terms and provisions of this Agreement shall be binding upon and inure to the benefit of Seller and Buyer and their respective successors and permitted assigns. Notwithstanding anything contained in this Agreement to the contrary, except for the D&O Indemnified Parties or the Nonparty Affiliates or as otherwise provided in Section ‎‎10.1(c) or Section ‎‎15.18, nothing in this Agreement, expressed or implied, is intended to confer on any Person (other than the Parties or their respective successors and permitted assigns or the Parties’ respective indemnified Parties) any rights, remedies, obligations or Liabilities under or by reason of this Agreement; provided that only a Party and its successors and assigns will have the right to enforce the provisions of this Agreement on its own behalf or on behalf of any of its Affiliates (but shall not be obligated to do so).

 

15.9.         Amendment. This Agreement may be amended or modified only by an instrument in writing executed by both Parties (or their permitted successors and assigns) and expressly identified as an amendment or modification; provided that the Debt Financing Source Provisions (and any other provision of this Agreement to the extent an amendment, supplement, waiver or other modification of such provision would modify the substance of the Debt Financing Source Provisions) may not be amended or modified in a manner that is adverse to the Debt Financing Sources without the prior written consent of the Debt Financing Sources.

 

15.10.       Waiver; Rights Cumulative. Any of the terms, covenants, agreements, representations, warranties or conditions hereof may be waived only by a written instrument executed by the Party waiving compliance. No course of dealing on the part of Seller or Buyer or their respective Representatives and no failure by Seller or Buyer to exercise any of its rights under this Agreement shall, in each case, operate as a waiver thereof or affect in any way the right of such Party at a later time to enforce the performance of such provision. No waiver by any Party of any condition, or any breach of any term, covenant, agreement, representation or warranty contained in this Agreement, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such condition or breach or a waiver of any other condition or of any breach of any other term, covenant, agreement, representation or warranty. The exercise or partial exercise of any right of Buyer or Seller shall not preclude the exercise of any other right.

 

15.11.       Governing Law; Jurisdiction; Waiver of Jury Trial.

 

(a)         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; PROVIDED, HOWEVER, THAT ANY MATTERS RELATED TO REAL PROPERTY SHALL BE GOVERNED BY THE LAWS OF THE STATE WHERE SUCH REAL PROPERTY IS LOCATED TO THE EXTENT MANDATORILY REQUIRED.

 

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(b)         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, THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS contemplated hereby or thereby 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, THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS contemplated hereby or thereby IN ANY COURT OR JURISDICTION OTHER THAN THE FORUM; PROVIDED, HOWEVER, THAT NOTHING IN THIS SECTION ‎‎15.11 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 ‎‎15.11 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.

 

(c)         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 ‎‎15.11(b).

 

(d)         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, THE TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, INCLUDING IN ANY PROCEEDING AGAINST ANY DEBT FINANCING SOURCE ARISING OUT OF OR RELATED TO THE DEBT FINANCING. 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 ‎‎15.11(d).

 

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15.12.       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.

 

15.13.       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.

 

15.14.       Specific Performance. Each Party hereby acknowledges and agrees that the rights of each Party to consummate the transactions contemplated hereby are special, unique and of extraordinary character and that, if any Party violates or fails or refuses to perform any covenant or agreement made by it herein, the non-breaching Party may be damaged irreparably and the remedies at Law for such violation, failure or refusal, including monetary damages, might be inadequate compensation for any Liabilities as a result thereof, and that any defense in any action for specific performance that a remedy at Law would be adequate is waived. If any Party violates or fails or refuses to perform any covenant or agreement made by such Party herein to be performed (including Seller’s or Buyer’s obligation to close the transaction completed by this Agreement), the non-breaching Party, subject to the terms hereof and in addition to any remedy at Law for damages or other relief permitted under this Agreement, may seek to (at any time prior to the valid termination of this Agreement pursuant to Article ‎‎XIV) institute and prosecute an action in any court of competent jurisdiction to enforce specific performance of such covenant or agreement or seek any other equitable relief, without the necessity of proving actual damages or posting of a bond. None of Seller, any Company Group Member, any of their respective Affiliates or any of their respective Representatives will be entitled to obtain, and none of Seller, any Company Group Member, any of their respective Affiliates or any of their respective Representatives will seek, specific performance or other equitable relief directly against any Debt Financing Source.

 

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15.15.       Affiliate Liability. All obligations and other Liabilities (whether in contract or in tort, in Law or in equity, granted by statute or otherwise) that may be based upon, in respect of, arise under, out or by reason of, be connected with, or relate in any manner to this Agreement, the Transaction Documents, or the negotiation, execution, or performance of this Agreement or the Transaction Documents (including any representation or warranty made in, in connection with, or as an inducement to, this Agreement or any Transaction Document), may be made only against (and are expressly limited to) the entities that are expressly identified as Parties in the preamble to this Agreement or any successor or permitted assign of any the Parties (“Contracting Parties”). Notwithstanding anything to the contrary in this Agreement, any Transaction Document or otherwise, and without limiting any rights of Buyer under the R&W Insurance Policy, no Person who is not a Contracting Party, including any former, current, or future director, officer, employee, incorporator, member, partner, manager, equityholder, Affiliate, agent, attorney, or other Representative of, and any financial advisor or lender to, any Contracting Party, or any director, officer, employee, incorporator, member, partner, manager, equityholder, Affiliate, agent, attorney, or other Representative of, and any financial advisor or lender to, any of the foregoing (collectively, the “Nonparty Affiliates”), shall have any liability (whether in contract or in tort, in Law or in equity, or granted by statute or otherwise) for any Liabilities arising under, out of, in connection with, or related in any manner to this Agreement or any of the Transaction Documents or based on, in respect of, or by reason of this Agreement or any of the Transaction Documents or the negotiation, execution, performance, or breach of this Agreement or any Transaction Document; and, to the maximum extent permitted by Law, each Contracting Party, on behalf of itself and all other Persons, hereby waives and releases all such Liabilities against any such Nonparty Affiliates. Without limiting the foregoing, to the maximum extent permitted by Law, each Contracting Party, on behalf of itself and all other Persons, hereby waives and releases any and all rights, claims, demands, or causes of action that may otherwise be available (including at Law or in equity, or granted by statute or otherwise) to avoid or disregard the entity form of a Contracting Party or otherwise impose liability of a Contracting Party on any Nonparty Affiliate, whether granted by statute or based on theories of equity, agency, control, instrumentality, alter ego, domination, sham, single business enterprise, piercing the corporate or other veil, distributions, unfairness, undercapitalization, or otherwise. Notwithstanding the foregoing in this Section ‎‎15.15, this Section ‎‎15.15 shall not affect any obligations or liabilities under Section ‎‎13.1. Notwithstanding anything to the contrary contained herein, none of Seller, any Company Group Member, any of their respective Affiliates or any of their respective Representatives shall have any rights or claims against any Debt Financing Source in connection with this Agreement, the Debt Financing or the transactions contemplated hereby or thereby, and no Debt Financing Source shall have any rights or claims against Seller, any Company Group Member, any of their respective Affiliates or any of their respective Representatives in connection with this Agreement, the Debt Financing or the transactions contemplated hereby or thereby, whether at Law or equity, in contract, in tort or otherwise; provided that, following consummation of the Closing, the foregoing will not limit the rights of the parties to the Debt Financing under any commitment letter related thereto. Each Nonparty Affiliate is expressly intended as a third-party beneficiary of this Section ‎‎15.15.

 

15.16.       Time is of the Essence. This Agreement contains a number of dates and times by which performance or exercise of rights is due and the Parties intend that each and every such date and time be the firm and final date and time, as agreed. Without limiting the foregoing, time is of the essence in this Agreement.

 

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15.17.      Privileged Communications. As to all communications among Troutman Pepper Locke LLP, Kirkland & Ellis LLP (for the avoidance of doubt, as the Seller or Company Group’s counsel and not as Buyer’s counsel), Seller, the Company Group or their respective Affiliates and Representatives that relate in any way to the transactions contemplated by this Agreement or the Transaction Documents (collectively, the “Privileged Communications”), the privilege and the expectation of client confidence belongs to Seller and may be controlled by Seller and shall not pass to or be claimed or waived by Buyer and its Subsidiaries or any of their respective Affiliates or Representatives. The Privileged Communications are the property of Seller. The Privileged Communications shall not be used by Buyer or the Company Group in any respect whatsoever for any purpose, including in connection with any dispute that relates in any way to this Agreement or the Transaction Documents or the transactions contemplated hereby or thereby. The Privileged Communications are Excluded Assets hereunder, and control over the Privileged Communications is hereby irrevocably assigned by Buyer, each Company Group Member or any of their respective Affiliates for all purposes to Seller effective as of the Closing and, except as may be required by applicable Law, shall not be waived, used or relied on, or attempted to be waived, used or relied on, without the express written approval of Seller. Notwithstanding the foregoing, in the event that a dispute arises between Buyer, the Company Group and a Third Party other than another Party or their equityholders or Affiliates after the Closing with respect to this Agreement, the Transaction Documents or the transactions contemplated herein or therein, Buyer shall and shall cause the Company Group (in each case, to the extent not prejudicial thereto) to assert the attorney-client privilege to prevent disclosure to such Third Party of any Privileged Communications if needed.

 

15.18.      Certain Waivers. Buyer agrees, on behalf of itself and its Subsidiaries (including, after the Closing, the Company Group) and their respective Representatives, that Troutman Pepper Locke LLP and Kirkland & Ellis LLP may serve as counsel to Seller and its Affiliates and their respective Representatives in connection with any matters related to this Agreement or any of the Transaction Documents and the transactions contemplated hereby or thereby, including any dispute arising out of or relating to this Agreement or any of the Transaction Documents and the transactions contemplated hereby or thereby, notwithstanding any representation by Troutman Pepper Locke LLP or Kirkland & Ellis LLP of Seller or the Company Group prior to the Closing or otherwise. Buyer, on behalf of itself and its subsidiaries (including, after the Closing, the Company Group) and their respective Representatives, hereby (a) consents to Troutman Pepper Locke LLP’s and Kirkland & Ellis LLP’s representation of Seller and its Affiliates and their respective Representatives in connection with any matters related to this Agreement or any of the Transaction Documents and the transactions contemplated hereby or thereby, and (b) waives any claim it has or may have that Troutman Pepper Locke LLP or Kirkland & Ellis LLP has a conflict of interest or is otherwise prohibited from engagement in such representation of Seller and its Affiliates and their respective Representatives, including any claims based on any representation by Troutman Pepper Locke LLP or Kirkland & Ellis LLP of Buyer, Seller or the Company Group prior to the Closing.

 

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15.19.       Non-Compensatory Damages. NEITHER PARTY NOR ITS AFFILIATES SHALL BE ENTITLED TO RECOVER FROM THE OTHER PARTY, AS APPLICABLE, OR THEIR RESPECTIVE AFFILIATES, ANY PUNITIVE OR EXEMPLARY DAMAGES ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, EXCEPT TO THE EXTENT ANY SUCH PARTY SUFFERS SUCH DAMAGES TO A THIRD PARTY, WHICH DAMAGES (INCLUDING COSTS OF DEFENSE AND REASONABLE ATTORNEYS’ FEES INCURRED IN CONNECTION WITH DEFENDING AGAINST SUCH DAMAGES) SHALL NOT BE EXCLUDED BY THIS PROVISION AS TO RECOVERY HEREUNDER. SUBJECT TO THE PRECEDING SENTENCE, BUYER, ON BEHALF OF BUYER AND ITS AFFILIATES, AND SELLER, ON BEHALF OF SELLER AND ITS AFFILIATES, EACH WAIVE ANY RIGHT TO RECOVER ANY PUNITIVE OR EXEMPLARY DAMAGES ARISING IN CONNECTION WITH OR WITH RESPECT TO THIS AGREEMENT, THE TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. NO DEBT FINANCING SOURCE SHALL BE SUBJECT TO ANY, NOR SHALL ANY DEBT FINANCING SOURCE BE LIABLE FOR ANY, INDIRECT, SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES (INCLUDING, WITHOUT LIMITATION, ANY LOSS OF PROFITS, BUSINESS OR ANTICIPATED SAVINGS) IN CONNECTION WITH THIS AGREEMENT, THE DEBT FINANCING OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR THE PERFORMANCE OF ANY SERVICES THEREUNDER.

 

15.20.      Debt Financing Sources. Notwithstanding anything to the contrary herein, each of the Parties on behalf of itself and each of its Affiliates (including each of Seller, each Company Group Member, each of their respective Affiliates and each of their respective Representatives) hereby:

 

(a)            agrees that, subject to Section 15.20(f), any legal action (whether in Law or in equity, whether in contract or in tort or otherwise), involving any Debt Financing Source, arising out of or relating to this Agreement, the Debt Financing or any of the transactions contemplated hereby or thereby or the performance of any services thereunder, shall be subject to the exclusive jurisdiction of any New York State court or federal court of the United States of America, in each case, sitting in New York County and any appellate court thereof (each such court, the “Subject Courts”) and each Party, including each of Seller, each Company Group Member, each of their respective Affiliates and each of their respective Representatives, irrevocably submits itself and its property with respect to any such legal action to the exclusive jurisdiction of such Subject Courts, agrees that a final judgment in any such action shall be conclusive and may be enforced in other jurisdiction by suit on the judgment or In any other manner provided by Law, and agrees that any such dispute shall be governed by, and construed in accordance with, the Laws of the State of New York, except as otherwise set forth in any commitment letter in respect of such Debt Financing with respect to (i) the interpretation of the definition of “Material Adverse Effect” (and whether or not a Material Adverse Effect has occurred), (ii) the determination of the accuracy of any “specified acquisition agreement representation” (as such term or similar term is defined in such commitment letter) and whether as a result of any inaccuracy thereof Buyer or any of its Affiliates has the right to terminate its or their obligations hereunder pursuant to ‎‎Article XIV or decline to consummate the Closing and (iii) the determination of whether the Closing has been consummated in all material respects in accordance with the terms hereof, which shall in each case be governed by and construed in accordance with the Laws of the State of Delaware, regardless of the Laws that might otherwise govern under applicable principles of conflicts of Law thereof;

 

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(b)            agrees not to bring or support or permit any of its Affiliates to bring or support any legal action (including any action, cause of action, claim, cross-claim or Third Party claim of any kind or description, whether in Law or in equity, whether in contract or in tort or otherwise), against any Debt Financing Source, and waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding, in any way arising out of or relating to this Agreement, the Debt Financing or any of the transactions contemplated hereby or thereby or the performance of any services thereunder in any forum other than any Subject Court;

 

(c)            irrevocably waives, to the fullest extent that it may effectively do so, the defense of an inconvenient forum to the maintenance of such legal action in any such Subject Court;

 

(d)            knowingly, intentionally and voluntarily waives to the fullest extent permitted by applicable Law trial by jury in any legal action brought against any Debt Financing Source in any way arising out of or relating to this Agreement, the Debt Financing or any of the transactions contemplated hereby or thereby or the performance of any services thereunder;

 

(e)            agrees that service of process, summons, notice or document by registered mail addressed to it at its address provided in Section 15.5 shall be effective service of process for any suit, action or proceeding brought in any such court; and

 

(f)            agrees that no Debt Financing Source will have any liability to Seller, any Company Group Member, any of their respective Affiliates or any of their respective Representatives or any successor or assign of any of the foregoing relating to or arising out of this Agreement, the Debt Financing or any of the transactions contemplated hereby or thereby or the performance of any services thereunder and that none of Seller, any Company Group Member, any of their respective Affiliates or any of their respective Representatives or successors or assigns of any of the foregoing shall bring or support any legal action (including any action, cause of action, claim, cross-claim or Third Party claim of any kind or description, whether in Law or in equity, whether in Contract or in tort or otherwise), against any Debt Financing Source relating to or in any way arising out of this Agreement, the Debt Financing or any of the transactions contemplated hereby or thereby or the performance of any services thereunder or for any claim based on, in respect of, or by reason of any oral or written representations made or alleged to have been made by any Debt Financing Source in connection herewith or with the Debt Financing. The Debt Financing Sources shall be express third-party beneficiaries of the Debt Financing Source Provisions, each of such Debt Financing Source Provisions shall expressly inure to the benefit of the Debt Financing Sources and the Debt Financing Sources shall be entitled to rely on and enforce the provisions of such Debt Financing Source Provisions.

 

15.21.      Parent Guarantee.

 

(a)            Parent hereby absolutely, irrevocably and unconditionally guarantees to Seller the due and punctual payment when due of all of Buyer’s payment obligations under this Agreement, through and including the Closing Date, including the payment of the Purchase Price in accordance with Section ‎2.3 (collectively, the “Buyer Obligations”). This guarantee is a guarantee of payment and performance and not merely of collection, and, subject to Section ‎15.21(b) and the other terms of this Section ‎15.21, a separate action or actions may be brought and prosecuted against Parent to enforce the Buyer Obligations, irrespective of whether any action is brought against Buyer or whether Buyer is joined in any such action. Parent’s liability under this Section ‎15.21 is in all respects subject to the limitations, and Parent is entitled to the benefit of the defenses and other protections, set forth in this Section ‎15.21.

 

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(b)            Notwithstanding anything to the contrary in this Agreement, (i) the maximum aggregate liability of Parent under this Section ‎15.21 shall not exceed the aggregate amount of the Buyer Obligations actually due and owing by Buyer to Seller (the “Guarantee Cap”), and in no event shall Parent be required to pay any amount under this guarantee in excess of the amount that Buyer is obligated to pay in respect of the Buyer Obligations; (ii) in no event shall Parent be liable for any consequential, indirect, special, incidental, exemplary or punitive damages, except, in each case, to the extent actually payable by Buyer to Seller in respect of a Buyer Obligation pursuant to the terms of this Agreement; and (iii) this guarantee, together with Seller’s rights against Buyer under this Agreement and Seller’s rights with respect to the Deposit in accordance with the terms hereof, constitute Seller’s sole and exclusive recourse against Parent and its Affiliates (other than Buyer) in respect of the Buyer Obligations and the transactions contemplated by this Agreement.

 

(c)            Parent reserves, and shall be entitled to assert against Seller, any and all defenses, counterclaims, rights of set-off and other rights (whether at Law or in equity) that Buyer may have against Seller under or in respect of this Agreement with respect to the payment or performance of any Buyer Obligation, other than defenses arising solely from (i) the bankruptcy, insolvency, dissolution or liquidation of Buyer or (ii) any lack of power, authority or due authorization of Buyer. Nothing in this Section ‎15.21 shall waive, limit or impair any such defense of Buyer, and Parent shall be entitled to assert any such defense as fully as Buyer could assert the same.

 

(d)            Subject to Section ‎15.21(b), Section ‎15.21(c) and Section ‎15.21(g), the obligations of Parent under this Section ‎15.21 are continuing and shall not be released, discharged or otherwise affected by: (i) any dissolution, insolvency, bankruptcy, reorganization or other similar proceeding affecting Buyer; (ii) any amendment, modification, waiver or restatement of this Agreement, in whole or in part; or (iii) any change in the corporate existence, structure or ownership of Buyer or Parent; provided, however, that no amendment, modification or waiver of this Agreement that increases or expands the Buyer Obligations shall increase or expand Parent’s obligations under this Section ‎15.21 without Parent’s prior written consent, and Parent’s liability shall in all events remain subject to the Guarantee Cap.

 

(e)            Parent hereby waives, for the benefit of Seller, (i) any right to require Seller to proceed first against, or exhaust any remedy against, Buyer or any other Person prior to proceeding against Parent, and (ii) presentment, demand for payment, protest, notice of dishonor and notice of acceptance of this guarantee; provided, that Parent does not waive, and expressly retains, the Guarantee Cap and the defenses, limitations and other protections preserved in Section ‎15.21(b), Section ‎15.21(c) and Section ‎15.21(g).

 

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(f)            Upon any payment by Parent under this guarantee, Parent shall be subrogated to all rights of Seller against Buyer in respect of the amounts so paid; provided, that Parent shall not enforce any such right of subrogation until all Buyer Obligations then due and owing to Seller have been paid in full.

 

(g)            This guarantee shall automatically terminate and be of no further force or effect, and Parent shall thereafter have no liability or obligation under this Section ‎15.21, upon the earlier to occur of (i) the payment and performance in full of the Buyer Obligations (including at the Closing) and (ii) the valid termination of this Agreement in accordance with ‎Article XIV, it being understood and agreed that, following any such termination of this Agreement, the rights and remedies of the Parties under Section 14.2, including with respect to the Deposit, shall govern in lieu of, and to the exclusion of, this guarantee. Any claim by Seller under this guarantee must be asserted in writing to Parent, specifying in reasonable detail the basis therefor, prior to such termination, failing which such claim shall be irrevocably and unconditionally waived.

 

[Signature Pages Follow]

 

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IN WITNESS WHEREOF, the undersigned have executed this Agreement effective as of the date first written above.

 

  SELLER:
   
  WILDFIRE ENERGY I LLC
   
  By:  /s/ Steve Habachy 
  Name: Steve Habachy 
  Title: President & Chief Operating Officer

 

Signature Page to
Purchase and Sale Agreement

 

 

 

  BUYER:
   
  Magnolia Oil & Gas Operating LLC
   
  By: /s/ Christopher G. Stavros 
  Name: Christopher G. Stavros 
  Title: President and Chief Executive Officer
   
  PARENT:
   
  Magnolia Oil & Gas Corporation
   
  By: /s/ Christopher G. Stavros 
  Name: Christopher G. Stavros 
  Title: President and Chief Executive Officer

 

Signature Page to
Purchase and Sale Agreement

 

 

 

DEFINED TERMS

 

“1031 Exchange” shall have the meaning set forth in Section ‎‎15.3(g).

 

“A&R Buyer RBL Credit Facility” shall have the meaning set forth in Section ‎‎5.8(b).

 

“AAA” shall mean the American Arbitration Association.

 

“Accounting Expert” shall have the meaning set forth in Section ‎‎2.7(b).

 

“Acquired Interests” shall have the meaning set forth in the recitals to this Agreement.

 

“Adjusted Purchase Price” shall have the meaning set forth in Section ‎‎2.3(b).

 

“Adjustment Escrow Account” shall mean the escrow account established by the Escrow Agent to hold the Adjustment Escrow Amount in accordance with the Escrow Agreement.

 

“Adjustment Escrow Amount” shall mean (a) as of the Closing Date, an amount in cash equal to $20,000,000; and (b) as of the applicable date of determination after the Closing Date, an amount in cash equal to the sum of (i) such amount described in subpart (a) of this definition, plus (ii) any and all interest and earnings accrued on the “Adjustment Escrow Amount” under the Escrow Agreement after the Closing Date, as of such date of determination, minus (iii) any and all disbursements and distributions of the Adjustment Escrow Amount made after Closing in accordance with this Agreement and the Escrow Agreement.

 

“AFEs” shall have the meaning set forth in Section ‎‎4.13.

 

“Affiliate” shall mean any Person that, directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, another Person; provided, however, (a) after the Closing, no Company Group Member shall, for purposes of this Agreement, constitute a current or former Affiliate of Seller or any of its Affiliates, and (b) except for purposes of Section 6.5, Section ‎‎6.8, Section ‎‎6.11, Section ‎6.12, Section 13.1, Article ‎XV and Section ‎‎15.17 and the definition of “Seller Indemnified Parties”, the term “Affiliate” shall exclude Warburg Pincus LLC and Kayne ‎Anderson Capital Advisors, L.P., and any of their respective equity holders and any private equity funds, portfolio companies, parallel investment entities or alternative investment entities owned, managed or Controlled by Warburg Pincus LLC or Kayne ‎Anderson Capital Advisors, L.P. (other than Seller, any Company Group Member or any of their respective Subsidiaries) (each such excluded Person, other than equity holders of Warburg Pincus LLC and Kayne ‎Anderson Capital Advisors, L.P., being a “Sponsor Affiliated Party”). 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. Each Company Group Member shall be an Affiliate of Seller prior to the Closing, and each Company Group Member shall be an Affiliate of Buyer from and after the Closing.

 

“Affiliate Arrangements” shall have the meaning set forth in Section ‎4.27.

 

“Aggregate Deductible” shall mean $100,000,000.

 

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“Agreed Adjustment Amount” shall mean $13,000,000.

 

“Agreement” shall have the meaning set forth in the introductory paragraph herein.

 

“Allocated Values” shall have the meaning set forth in Section ‎‎2.9(a).

 

“Allocation” shall have the meaning set forth in Section ‎‎2.10.

 

“Alternative Financing” shall have the meaning set forth in Section ‎‎6.24(c).

 

“Antitrust Laws” shall mean the HSR Act, the Sherman Antitrust Act, the Clayton Act, the Federal Trade Commission Act, and any other applicable Law designed to prohibit, restrict or regulate actions for the purpose or effect of monopolization or restraint of trade.

 

“Applicable Contracts” shall mean all Contracts to which any Company Group Member is a party or is bound or which is otherwise binding on any Company Group Member or their respective Assets, including: communitization agreements; area of mutual interest agreements; joint venture agreements; confidentiality agreements; farm-in and farmout agreements; bottom hole agreements; crude oil, condensate and natural gas purchase and sale, gathering, transportation and marketing agreements; hydrocarbon storage agreements; acreage contribution agreements; operating agreements; balancing agreements; pooling declarations or agreements; unitization agreements; processing agreements; saltwater disposal agreements; facilities or equipment leases; sand mining, purchase, sale or operational agreements, and other similar contracts and agreements, but exclusive of any master service agreements and Contracts relating to the Excluded Assets; provided that Applicable Contracts shall not include any Derivative Financial Instruments.

 

“Arbitration Notice” shall have the meaning set forth in Section 14.2(f).

 

“Assets” shall have the meaning set forth in Section ‎‎2.2.

 

“Assets” shall have the meaning set forth in Section ‎‎2.2.

 

“Assignment Agreement” shall mean the Membership Interest Assignment Agreement from Seller to Buyer, dated as of the Closing Date, pertaining to the Acquired Interests, substantially in the form attached to this Agreement as Exhibit H.

 

“Audit Firm” shall have the meaning set forth in Section ‎6.22(b).

 

“Austin Chalk Formation” shall mean the entire correlative interval from 6,805 feet to 7,588 feet as shown on the log of the Clayton Williams Energy, Inc. – Lehman OL Unit, Well No. 1 Pilot Hole (API No. 42-287-32574), located in the Samuel Gates Survey, A-10, Lee County, Texas.

 

“Balance Sheet Date” shall have the meaning set forth in Section 4.7(a).

 

“Benefit Plan” shall mean each “employee benefit plan” within the meaning of Section 3(3) of ERISA, and any bonus, deferred compensation, incentive compensation, stock ownership, stock purchase, stock option, phantom stock, vacation, severance, disability, death benefit, hospitalization or insurance plan sponsored or contributed to by directly or indirectly, Seller or its Affiliates (other than the Excluded Subsidiaries) for the benefit of the Business Employees; provided, however, that a PEO Plan shall not be considered ‎to be a Benefit Plan‎.

 

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“Bridge Commitment Letter” shall have the meaning set forth in Section ‎‎5.8(b).

 

“Bridge Financing” shall have the meaning set forth in Section ‎‎5.8(b).

 

‎“Burleson Sand Mine” shall mean that certain sand mine located in Burleson County, Texas and included in the Assets, including all tangible personal property, supplies, inventory, equipment, fixtures, and improvements located thereon or associated therewith.

 

“Business” shall mean the business and operations of the Company Group Members as ‎conducted as of the Execution Date.‎

 

“Business Contractor” shall have the meaning set forth in Section 4.21(g).

 

“Business Day” shall mean a day (other than a Saturday or Sunday) on which commercial banks in New York, New York or Houston, Texas are generally open for business.

 

“Business Employees” shall mean each of the employees of WildFire Energy, LLC.

 

“Business Employee List” shall have the meaning set forth in Section ‎4.21(g).

 

“Buyer” shall have the meaning set forth in the introductory paragraph herein.

 

“Buyer’s Certificate” shall have the meaning set forth in Section ‎‎9.3(g).

 

“Buyer D&O Parties” shall have the meaning set forth in Section ‎‎6.11(e).

 

“Buyer Financial Statements” shall have the meaning set forth in Section ‎‎6.22(a).

 

“Buyer Obligations” shall have the meaning set forth in Section 15.21(a).

 

“Buyer Parties” shall have the meaning set forth in the introductory paragraph herein.

 

“Buyer Releasing Group” shall have the meaning set forth in Section ‎13.1(b).

 

“Buyer Released Party” shall have the meaning set forth in Section ‎‎13.1(a).

 

“Cash and Cash Equivalents” shall mean (a) money, currency or a credit balance in a deposit account at a financial institution, net of checks outstanding as of the time of determination, (b) marketable securities or direct obligations issued or unconditionally guaranteed by the United States government or issued by any agency thereof and backed by the full faith and credit of the United States, (c) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof, (d) commercial paper issued by any bank or any bank holding company owning any bank, and (e) certificates of deposit or bankers’ acceptances issued by any commercial bank organized under the applicable Laws of the United States of America, in each case of clauses (b) through (e), only to the extent constituting cash equivalents in accordance with GAAP and consistent with the past practices of the Company Group; provided that, Cash and Cash Equivalents shall be calculated (x) net of Suspense Funds and any other restricted balances and any other amounts that are not freely and immediately usable, distributable or transferable (including security deposits, bond guarantees, collateral reserve accounts and amounts held in escrow or held by the applicable Company Group Member on behalf of Third Parties), and (y) net of outstanding outbound checks, drafts, draws, ACH debits and wire transfers but including overdrafts and including checks on hand, drafts and wires received or deposited but not yet credited, in each case, as of the applicable time of determination.

 

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“Cash Purchase Price” shall have the meaning set forth in Section ‎2.3(a).

 

“Casualty Loss” shall have the meaning set forth in Section ‎‎6.19.

 

“Chesapeake MPA” shall mean that certain Membership Purchase Agreement, dated January 17, 2023, by and among Chesapeake Energy Corporation, Brazos Valley Longhorn, LLC and Seller (including any amendments thereto).

 

“Claim Date” shall have the meaning set forth in Section ‎11.2(a).

 

“Closing” shall have the meaning set forth in Section ‎‎9.1.

 

“Closing Date” shall have the meaning set forth in Section ‎‎9.1.

 

“Closing Date Repayment Indebtedness” shall have the meaning set forth in Section ‎‎9.2(g).

 

“Closing Distribution” shall mean a distribution to be made by the Company Group at or immediately prior to the Closing to or for the benefit of Seller in an amount equal to all or substantially all of the Cash and Cash Equivalents of the Company Group as of the close of business two (2) Business Days prior to the Closing Date, excluding any reserves, as reasonably determined by Seller, to be retained by the Company Group, which will include at least an amount of Cash and Cash Equivalents that is needed to satisfy obligations of the Company Group reasonably expected to be paid (to avoid incurring any additional interest, expense, penalty or other loss to the Company Group) within ten (10) Business Days following the Closing.

 

“Closing Instruction” shall have the meaning set forth in Section ‎9.2(d).

 

“Closing Payment” shall have the meaning set forth in Section ‎‎9.3(a).

 

“Closing Purchase Price” shall have the meaning set forth in Section ‎‎2.6.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended.

 

“Collective Bargaining Agreement” shall have the meaning set forth in Section ‎‎4.9(a)(xi).

 

“Company” shall have the meaning set forth in the recitals.

 

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“Company Group” shall have the meaning set forth in the recitals.

 

“Company Group Member” shall have the meaning set forth in the recitals.

 

“Company Group Taxes” shall mean any Taxes imposed on or with respect to the members of the Company Group (or any proceeds thereof) or the Assets; provided, however, that Company Group Taxes shall not include any Transfer Taxes or any Flow-Through Taxes that are reflected on the Tax Returns of the owner(s) of the Company.

 

“Company Group Transaction Expenses” shall mean, without duplication, the aggregate amount of the following, in each case, (x) to the extent paid by any Company Group Member after the Effective Time and prior to the Closing, or (y) to the extent vested, earned, incurred or accrued, but remaining unpaid and the obligation of any Company Group Member, immediately prior to the Closing, or that become vested, earned, incurred or accrued as of the Closing and are the obligation of any Company Group Member: (a) all fees, costs and expenses (including investment banking fees, legal fees, accounting fees and other advisory fees, costs and expenses of third-party advisors, consultants, accountants, auditors and other representatives, and all brokers’, finders’ or similar fees), in connection with the preparation for, negotiating or consummation of the transactions contemplated by this Agreement and the other Transaction Documents (including any fees, costs or expenses incurred in connection with the marketing of the Company Group for sale and any sales process with any Person other than Buyer and its Affiliates); (b) all transaction, change in control, retention or stay bonuses, severance, incentive, phantom equity or deferred compensation payments or other similar payments or obligations to any current or former employee, officer, director or other individual service provider of any Company Group Member or any current or former Business Employee payable as a result of or in connection with the execution, delivery and performance of this Agreement or any other Transaction Document (for the avoidance of doubt, including double trigger payments that are triggered by the Closing in combination with any other event or condition), or the consummation of the transactions contemplated by this Agreement or any other Transaction Document (for the avoidance of doubt, including (1) double trigger payments that are triggered by the Closing in combination with any other event or condition and (2) the transaction payments set forth on Schedule 4.21(d) and any incentive equity awards, profits interests, cash incentive payments, or other equity or cash based incentive compensation payable to any current or former employee, officer, director, consultant, or other individual service provider of any Company Group Member or any current or former Business Employee, in each case solely to the extent such amounts remain an obligation of any Company Group Member, but excluding any retention bonuses contemplated by Section 6.7(d)), in each case, together with the employer portion of any applicable payroll, social security, unemployment or similar Taxes due with respect to any such payments (calculated as if all such amounts were paid on the Closing Date), but only to the extent paid or payable by any Company Group Member and not to the extent paid or payable by Seller or any of its Affiliates (other than any Company Group Member); and (c) any outstanding but unpaid severance, retention, deferred compensation, bonus, commission or incentive obligations, whether or not accrued, in respect of any current or former employee, officer, director or other individual service provider of any Company Group Member, in each case, together with the employer portion of any applicable payroll, social security, unemployment or similar Taxes due with respect to any such payments (calculated as if all such amounts were paid on the Closing Date) but only to the extent paid or payable by any Company Group Member and not to the extent paid or payable by Seller or any of its Affiliates (other than any Company Group Member); provided, however, that Company Group Transaction Expenses shall not include (i) any fees, costs or expenses initiated or otherwise incurred at the written request of Buyer, any of its Affiliates or Representatives, (ii) any fees, costs or expenses related to any financing activities of Buyer or its Affiliates in connection with the transactions contemplated hereby, including the Debt Financing or the Equity Financing, or (iii) any fees, costs and expenses that Buyer is expressly responsible for, or is expressly required to bear or reimburse Seller or any Company Group Member for pursuant to the express terms of this Agreement, including the costs, fees and expenses associated with filings under the HSR Act, related to the D&O Tail Policy contemplated by Section 6.11 or in connection with the R&W Insurance Policy.

 

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“Compliant” shall mean, with respect to the Required Information, that (a) such Required Information does not, taken as a whole, contain any untrue statement of material fact regarding the Company Group, or, taken as a whole, omit to state any material fact regarding the Company Group necessary to make such Required Information not materially misleading under the circumstances and in the form under which such Required Information has been provided to Buyer, (b) the independent auditors of the Company Group have consented to the use of their audit reports on the Financial Statements and have not withdrawn, or have not advised Seller or the Company Group in writing that they intend to withdraw, any audit opinion with respect to the audited financial statements contained in the Required Information (it being understood that the Required Information will be Compliant if such auditors have delivered an audit opinion with respect to such financial statements and the applicable Required Information has been amended), (c) such auditors shall not have publicly announced an intention to restate any financial statements contained in the Required Information nor has either Seller or any member of the Company Group determined that restatement of such Required Information is required or reasonably likely (it being understood that the Required Information will be Compliant if such restatement is completed and the applicable Required Information has been amended or such auditors have publicly announced that no restatement shall be required), (d) such Required Information may be relied upon as per Item 4.02 of Form 8-K under the Exchange Act and (f) such Required Information (i) would not be deemed stale or otherwise unusable (and shall remain so throughout the Marketing Period) under the rules of the SEC and (ii) is sufficient to permit the Company Group’s auditors to issue customary comfort letters to the Debt Financing Sources to the extent required as part of the Debt Financing, including as to customary negative assurances and change period, in order to consummate any offering of debt securities on any Business Day prior to the Closing (and such auditors have confirmed that they are prepared to issue a comfort letter subject to their completion of customary procedures, with it being understood that such issuance of the comfort letter shall not occur until the “pricing” of such debt securities).

 

“Confidentiality Agreement” shall mean that certain Confidentiality Agreement dated as of April 28, 2026 by and between Buyer and Seller, as amended by that certain Clean Team Addendum to Confidentiality Agreement, dated as of June 30, 2026, by and between Buyer and Seller.

 

“Consent” shall mean, other than any Preferential Purchase Right, any approval, consent, ratification, waiver or other authorization (including any Governmental Authorization) from any Person that is required to be obtained in connection with the execution or delivery of this Agreement or the consummation of transactions contemplated by this Agreement.

 

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“Contract” shall mean any contract, agreement or any other legally binding arrangement, but excluding, however, any Lease, Surface Right or other instrument creating or evidencing an interest in the Assets or any real or immovable property related to or used in connection with the operations of any Assets.

 

“Contracting Parties” shall have the meaning set forth in Section ‎‎15.15.

 

“Contributed Asset” shall have the meaning set forth in Section ‎6.20.

 

“Control” (including its derivatives and similar terms) shall mean the possession of, directly or indirectly, the power to direct or cause the direction of the management and policies of any such relevant Person by ownership of voting interest, by contract or otherwise.

 

“Corporate Encumbrances” shall mean, with respect to the Equity Interests of any Person, (a) any transfer restrictions imposed by Law, (b) any transfer restrictions contained in the Organizational Documents of such Person existing as of the Execution Date, (c) Encumbrances created by this Agreement, (d) Encumbrances arising by, through or under Buyer or any of its Affiliates, and (e) any Encumbrances to be released at the Closing.

 

“Credit Facility” shall mean that certain Amended and Restated Credit Agreement, dated as of March 20, 2023, by and among Seller, the Company and JPMorgan Chase Bank, N.A. as Administrative Agent, and Issuing Bank and a Swingline Lender (as the same has been amended, restated, supplemented or otherwise modified from time to time).

 

“Credit Support” shall mean any cash deposits, guarantees, letters of credit, treasury securities, surety bonds and other forms of credit assurances or credit support posted or entered into by Seller or its Affiliates with Governmental Authorities or any other Person with respect to the ownership or operation of the Assets or the Company Group.

 

“Cure Period” shall mean (a) with respect to Title Defects, the period ending one hundred twenty (120) days after the Closing Date and (b) with respect to Environmental Defects, the period ending at Closing.

 

“Current Assets” shall mean, with respect to the Company Group, the sum of all accounts receivables, inventories, prepaid expenses, and other current assets of the Company Group, on a consolidated basis, as determined on a basis consistent with the Company Group’s past practice and the preparation of the Financial Statements, as adjusted (a) to give effect to this Agreement and to the extent not inconsistent with the foregoing, in accordance with GAAP as applied in a manner consistent with the Company Group’s preparation of the Financial Statements, and (b) to exclude (i) any deferred Tax assets (excluding, for the avoidance of doubt, any Post-Effective Time Taxes that are prepaid by Seller before the Effective Time and that are applied to a taxable period or portion thereof beginning on or after the Effective Time), (ii) Effective Time Cash, (iii) any gains, losses or value associated with any of the Derivative Financial Instruments (excluding for purposes of clarification and avoidance of doubt, anything that has been settled or terminated), (iv) the Company Group’s entitlement of any merchantable Hydrocarbons in tanks or storage facilities (inventory, but excluding linefill or tank bottoms) produced from or credited to the Assets, in each case, on or as of the Effective Time, and (v) any Debt Issuance Costs.

 

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“Current Liabilities” shall mean, with respect to the Company Group, the sum of all accounts payable, accrued expenses and other current Liabilities of the Company Group, on a consolidated basis, as determined on a basis consistent with the Company Group’s past practice and the preparation of the Financial Statements, as adjusted (a) to give effect to this Agreement and, to the extent not inconsistent with the foregoing, in accordance with GAAP as applied in a manner consistent with the Company’s preparation of the Financial Statements, (b) to exclude (i) any deferred Tax liabilities and Post-Effective Time Taxes, (ii) any Indebtedness for Borrowed Money, (iii) Company Group Transaction Expenses, (iv) any gains, losses or value associated with any of the Derivative Financial Instruments (excluding for purposes of clarification and avoidance of doubt, anything that has been settled or terminated), (v) any Liability arising out of, or in connection with, any breach of any representation, warranty, covenant or agreement under this Agreement or any Transaction Document and (vi) any asset retirement obligations and any accruals, reserves or liabilities relating to the future plugging, abandonment, decommissioning, dismantlement, removal, restoration or remediation of any Wells, Leases or other Assets, whether classified as current or long-term any Liability released pursuant to Section ‎13.1 and (c) to include any unpaid Taxes attributable to the Pre-Closing Reorganization and any unpaid Pre-Effective Time Taxes.

 

“Customary Hydrocarbon Deductions” shall mean, with respect to Hydrocarbons, and without duplication, the actual amount of: (a) any amounts previously deducted by the applicable payor from the proceeds paid for such Hydrocarbons (if such proceeds have actually been paid to the applicable Company Group Member as of the date of determination) and (b) any express deductions included in determining the applicable Contract price (if any) for such Hydrocarbons as of the date of determination, insofar as such amounts have not been deducted in calculating the Settlement Price, including the amount of all (i) Royalties applicable to such Hydrocarbons (insofar as such amounts are not accounted for as Current Liabilities for purposes of determining Effective Time Net Working Capital), (ii) marketing, transportation fees and other post-production costs charged by Third Parties (other than Taxes) in respect of such Hydrocarbons in the ordinary course of business and (iii) gravity adjustments for which there is no payment to such Company Group Member in connection with the sale of such Hydrocarbons.

 

“Customary Post-Closing Consents” shall mean the consents and approvals from Governmental Authorities that customarily are obtained following the closing of transactions substantially similar to the transactions contemplated by this Agreement.

 

“D&O Claim” shall have the meaning set forth in Section ‎‎6.11(a).

 

“D&O Indemnified Liabilities” shall have the meaning set forth in Section ‎‎6.11(a).

 

“D&O Indemnified Parties” shall have the meaning set forth in Section ‎‎6.11(a).

 

“D&O Tail Policy” shall have the meaning set forth in Section ‎6.11(c).

 

“Debt Documents” shall have the meaning set forth in Section ‎‎6.24(a)(ii).

 

“Debt Financing” shall have the meaning set forth in Section ‎‎5.8(b).

 

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“Debt Financing Source” shall mean, in its capacity as such, any lender or similar debt financing source providing a commitment pursuant to the Bridge Commitment Letter, the A&R Buyer RBL Credit Facility or the Debt Documents (or any other commitment letter or definitive agreement in respect of any Alternative Financing) and their respective Affiliates, any arrangers under the Bridge Commitment Letter or the A&R Buyer RBL Credit Facility and including the parties to any commitment letters, engagement letters, joinder agreements, indentures or credit agreements entered pursuant thereto or relating thereto, and such arranger’s, lender’s or other debt financing source’s (and their respective Affiliates’) equityholders, members, employees, officers, directors, attorneys, agents, representatives or advisors and any successor or assign of any of the foregoing.

 

“Debt Financing Source Provisions” shall mean Section ‎‎14.2, Section ‎‎15.9 (to the extent it relates to amendments of Section ‎‎15.20), Section ‎‎15.11, Section 15.15, Section ‎‎15.16, Section 15.19 and Section ‎‎15.20.

 

“Debt Issuance Costs” shall mean any costs incurred by any Company Group Member in connection with the incurrence or issuance of any Indebtedness for Borrowed Money, including any fees, underwriting discounts, commissions and similar amounts that are deferred and amortized over the term of the related Indebtedness for Borrowed Money in accordance with GAAP.

 

“Defect Escrow Account” shall mean the escrow account established by the Escrow Agent to hold the Defect Escrow Amount in accordance with the Escrow Agreement.

 

“Defect Escrow Amount” shall have the meaning set forth in Section ‎‎11.2(c)(ii).

 

“Defensible Title” shall mean such record title or contractual or beneficial title evidenced by unrecorded instruments or elections made or delivered pursuant to joint operating agreements, pooling agreements or unitization agreements, as applicable, of the Company Group, in aggregate, to each Lease set forth on Schedule ‎‎2.9 and each Well set forth on Schedule ‎‎2.9 that as of the Effective Time and the Closing Date, and subject to and except for Permitted Encumbrances:

 

(a)            with respect to each Lease described on Schedule ‎‎2.9 (subject to any reservations, limitations or depth restrictions set forth on Schedule ‎‎2.9 for such Lease) and each Well described on Schedule ‎‎2.9, entitles the Company Group, in aggregate, to receive throughout the productive life of such Lease or such Well not less than the Net Revenue Interest set forth on Schedule ‎‎2.9 for such Lease or Well, as applicable, for all of the Target Formation for such Lease or such Well, as applicable, except for, solely with respect to such Well, (i) decreases in connection with those operations in which any Company Group Member or its successors or assigns may from and after the Execution Date elect‎, subject to Buyer’s rights hereunder,‎ to be a non-consenting party, (ii) ‎subject to Buyer’s rights hereunder,‎ decreases resulting from the establishment or amendment from and after the Execution Date of (A) pools or units (or the participating areas therein) or (B) allocations to horizontal laterals, (iii) decreases required to allow other Working Interest owners to make up past underproduction or pipelines to make up past under deliveries, and (iv) as otherwise set forth on Schedule ‎‎2.9;

 

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(b)            with respect to such Well described on Schedule ‎‎2.9, obligates the Company Group, in aggregate, to bear throughout the productive life of such Well the Working Interest not greater than the Working Interest set forth on Schedule ‎‎2.9 for all of the Target Formation for such Well, as applicable, except (i) increases to the extent that they are accompanied by a proportionate or greater increase in the Company Group’s corresponding Net Revenue Interest as to each such Target Formation, (ii) increases to the extent such increases result from contribution requirements from and after the Execution Date‎ with respect to defaulting co-owners under applicable operating agreements, unit agreements, communitization agreements, or pooling orders or Law, (iii) increases to the extent such increases result from co-owners electing from and after the Execution Date‎ under applicable operating agreements, unit agreements, communitization agreements, or pooling orders not to participate in an operation relating to a Well, (iv) ‎subject to Buyer’s rights hereunder,‎ increases resulting from the establishment or amendment from and after the Execution Date of (A) pools or units (or the participating areas therein) or (B) allocations to horizontal laterals, and (v) as otherwise set forth on Schedule ‎‎2.9;

 

(c)            with respect to each such Lease described on Schedule ‎‎2.9 (subject to any reservations, limitations or depth restrictions set forth on Schedule ‎‎2.9 for such Lease), entitles the Company Group, in aggregate, to not less than the number of Net Acres for such Lease set forth on Schedule ‎‎2.9 as to the applicable Target Formations set forth on Schedule ‎‎2.9; and

 

(d)            is free and clear of all Encumbrances, other than Permitted Encumbrances.

 

“Deposit” shall have the meaning set forth in Section ‎‎2.3(d)(i).

 

“Derivative Financial Instrument” shall mean any Contract to which any Company Group Member is a party with respect to any swap, forward, future or derivative transaction or option or similar hedge transaction.

 

“Disclosure Schedules” or “Schedules” shall mean the disclosure schedules prepared by Seller and attached to this Agreement.

 

“Dispute Notice” shall have the meaning set forth in Section ‎‎2.7(a).

 

“Disputed Environmental Matters” shall have the meaning set forth in Section ‎‎12.1(f).

 

“Disputed Title Matters” shall have the meaning set forth in Section ‎‎11.2(j).

 

“Eagle Ford Formation” shall mean the entire correlative interval from 8,624 feet to 8,966 feet as shown on the log of the Apache Corporation – W.H. Giesenschlag “C” Lease, Well No. 1 (API No. 42-051-31485), located in the John Cox Survey, A-15, Burleson County, Texas.

 

“Effective Time” shall mean 12:01 a.m. (Central Time) on June 1, 2026.

 

“Effective Time Cash” shall mean the net amount, calculated in accordance with GAAP as applied in a manner consistent with the Company Group’s preparation of the Financial Statements, of all Cash and Cash Equivalents of the Company Group as of the Effective Time.

 

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“Effective Time Indebtedness Adjustment” shall mean, without duplication, (a) the Effective Time Indebtedness Amount, plus (b) all prepayment premiums or penalties, make-whole amounts, or breakage costs or fees payable in connection with the retirement or discharge of any Indebtedness for Borrowed Money between the Effective Time and the Closing, but excluding, for the avoidance of doubt, any payments contemplated in (b) in connection with the Senior Notes. For the avoidance of doubt, the Effective Time Indebtedness Adjustment shall not include Debt Issuance Costs or any accrued interest or finance charges on any Indebtedness for Borrowed Money attributable to periods after the Effective Time.

 

“Effective Time Indebtedness Amount” shall mean the aggregate amount of Indebtedness for Borrowed Money as of the Effective Time; provided, that, the amount of the Senior Notes shall be determined without regard to any unamortized original issue discount, Debt Issuance Costs or any other reduction to, or adjustment of, the carrying value thereof under GAAP.

 

“Effective Time Net Working Capital” shall mean an amount in Dollars (expressed as a positive or negative number, as applicable), determined as of the Effective Time, equal to (A) the Current Assets minus (B) the Current Liabilities. Attached hereto as Exhibit M is an illustrative calculation of the Effective Time Net Working Capital as of the Balance Sheet Date.

 

“email” shall have the meaning set forth in Section ‎‎15.5.

 

“Employment Offers” shall have the meaning set forth in Section 6.7(a).

 

“Encumbrance” shall mean any lien (statutory or otherwise), claim, charge, option, right of way, servitude, easement, encroachment, right of offer or first refusal, zoning restriction, defect or irregularity of title, covenant, condition and restrictions agreement, mortgage, security interest, pledge, charge or other encumbrance of any kind in respect of such asset (other than, in the case of a security, any restriction on the transfer of such security arising solely under any applicable securities Law).

 

“Environmental Arbitrator” shall have the meaning set forth in Section ‎‎12.1(f).

 

“Environmental Defect” shall mean a condition, event or circumstance existing on or before the Closing Date that causes a Lease or Well or any other Asset not to be in compliance with or to require Remediation under any Environmental Laws; provided, however, that the following shall not constitute an Environmental Defect: (i) any matter to the extent disclosed on Schedule 4.17 as of the Execution Date, (ii) the presence of NORM, asbestos, or any asbestos containing materials, except to the extent constituting a current violation of Environmental Laws; (iii) good or desirable operating practices not required under Environmental Law; (iv) all Liabilities with respect to the required decommissioning, plugging and abandonment, and restoration of any Wells or Leases, and (v) occupational health and safety matters, except as related to exposure to Hazardous Substances.

 

“Environmental Defect Notice” shall have the meaning set forth in Section ‎‎12.1(a).

 

Annex I – Page 11

 

 

“Environmental Laws” shall mean, as the same have been amended as of or prior to the Closing, all Laws pertaining to prevention of pollution, protection of the environment (including natural resources) or human health or safety (to the extent relating to exposure to Hazardous Substances), remediation of contamination or restoration of environmental quality, including the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq., the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq.; the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq.; the Clean Air Act, 42 U.S.C. § 7401 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. § 5101 et seq.; the Toxic Substances Control Act, 15 U.S.C. §§ 2601 through 2629; the Oil Pollution Act, 33 U.S.C. § 2701 et seq.; the Emergency Planning and Community Right-to-Know Act, 42 U.S.C. § 11001 et seq.; and the Safe Drinking Water Act, 42 U.S.C. §§ 300f through 300j; and all analogous state and local Laws addressing pollution or protection of the environment and all regulations implementing the foregoing that are applicable to the operation and maintenance of the Assets.

 

“Environmental Liabilities” shall mean any and all environmental, corrective action and response costs (including costs of Remediation), damages, natural resource damages, settlements, consulting fees, expenses, penalties, fines, orphan share, prejudgment and post-judgment interest, court costs, attorneys’ fees and other Liabilities incurred or imposed (a) pursuant to any order, notice of responsibility, enforceable directive, injunction, judgment or similar enforcement action by any Governmental Authority or court of competent jurisdiction to the extent arising out of any violation of, liability or Remediation obligation arising under, any Environmental Laws or (b) pursuant to any claim or cause of action by a Governmental Authority or other Person for personal injury, property damage, damage to natural resources, Remediation or response costs to the extent arising out of any violation of, or any Remediation obligation arising under, any Environmental Laws.

 

“Equity Financing” shall have the meaning set forth in Section ‎‎6.25(a).

 

“Equityholders” shall have the meaning set forth in Section 2.13.

 

“Equity Interest” shall mean, with respect to any Person: (a) capital stock, membership interests, partnership interests, other equity interests and any other similar interests of such Person; (b) any security or other interest convertible into or exchangeable or exercisable for any of the foregoing; and (c) any right (contingent or otherwise) to acquire any of the foregoing.

 

“Equity Purchase Price” shall have the meaning set forth in Section ‎2.3(a).

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

 

“ERISA Affiliate” shall mean any trade or business (whether or not incorporated) that is part of the same controlled group, or under common control with, or part of an affiliated service group that includes any Company Group Member within the meaning of Section 414(b), (c), (m) or (o) of the Code.

 

“Escheat Funds” shall mean any and all funds held in suspense (including funds held in suspense for unleased interests and all penalties and interest accrued or required to be accrued on such funds under applicable Laws) that are attributable to the Assets or any interests pooled, unitized or communitized therewith that Seller or any of its Affiliates is obligated to escheat to any Governmental Authority prior to the Execution Date.

 

“Escrow Agent” shall mean Computershare Trust Company, N.A.

 

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“Escrow Agreement” shall mean that certain Escrow Agreement, dated as of the Execution Date, by and among Seller, Buyer and the Escrow Agent.

 

“Escrow Earnings” shall have the meaning set forth in Section ‎6.21.

 

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

 

“Excluded Assets” shall mean (a) the Excluded Subsidiaries and all books and records, documents and correspondence related to the Excluded Subsidiaries, including employee records, (b) documents prepared or received by any Company Group Member or any of its Affiliates with respect to (i) lists of prospective purchasers of any Company Group Member or Assets, (ii) bids submitted by prospective purchasers of any of the Acquired Interests, Seller or its Affiliates, any Company Group Member or any Assets, (iii) analyses by any Person of any bids submitted by any prospective purchaser, (iv) correspondence between any Company Group Member or any other Person and any of their respective Representatives, and any prospective purchaser other than Buyer and (v) correspondence between any Company Group Member or any other Person or any of their respective Representatives with respect to any of the bids, the prospective purchasers or the transactions contemplated by this Agreement, (c) the Privileged Communications (clauses (a) and (c), the “Excluded Records”), (d) any other assets, properties or items specifically listed on Exhibit O attached to this Agreement and (e) any assets that are expressly excluded from the transactions contemplated by this Agreement pursuant to the terms of this Agreement (clause (c) and this clause (e), the “Retained Assets”); provided, however, that, notwithstanding the foregoing, in no event shall the Excluded Assets include any asset, property, right or interest used or held for use in the ownership, operation or conduct of the business of the Company Group as conducted as of the Effective Time, other than the assets, properties or items specifically listed on Exhibit O.

 

“Excluded Records” shall have the meaning set forth in the definition of “Excluded Assets”.

 

“Excluded Subsidiary” shall mean each of WildHorse Resources II, LLC, WildFire Energy, LLC and WildFire Energy I Intermediate LLC and “Excluded Subsidiaries” shall meaning the foregoing, collectively.

 

“Execution Date” shall have the meaning set forth in the introductory paragraph herein.

 

“Existing Buyer RBL Credit Facility” shall mean that certain reserve-based credit facility, dated as of November 13, 2024, by and among Magnolia Oil & Gas Intermediate LLC, as holdings, Magnolia Oil & Gas Operating LLC, as borrower, the lenders party thereto and Citibank, N.A., as administrative agent (as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time).

 

“Fee Letter” shall have the meaning set forth in Section ‎‎5.8(e).

 

“FERC” shall have the meaning set forth in Section 4.43.

 

“Final Purchase Price” shall have the meaning set forth in Section ‎‎2.7(c).

 

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“Final Settlement Date” shall have the meaning set forth in Section ‎‎2.7(c).

 

“Final Settlement Statement” shall have the meaning set forth in Section ‎‎2.7(a).

 

“Final Settlement Statement Deadline” shall have the meaning set forth in Section ‎‎2.7(a).

 

“Financial Statements” shall have the meaning set forth in Section ‎4.7(a).

 

“Flow-Through Taxes” means any income Taxes determined on a flow-through basis (i.e., reported at the entity level but with respect to which the direct or indirect owners of the entity must report the income or taxable item or are otherwise required to pay a Tax and report on their respective Tax Returns).

 

“Forum” shall have the meaning set forth in Section ‎‎15.11(b).

 

“Fraud” shall mean, with respect to Seller, a materially false representation and warranty contained in ‎‎Article III and ‎‎Article IV intentionally made with Seller’s Knowledge that such representation and warranty is materially false as of the execution and delivery of this Agreement by Seller and with the deliberate intent to induce Buyer to enter into this Agreement or to act in reliance upon the false representation and warranty which causes Buyer, in justifiable reliance upon such false representation and warranty, to enter into or consummate this Agreement and to take action and suffer Liabilities by reason of such reliance. For the avoidance of doubt, “Fraud” does not include (x) constructive fraud, statutory fraud, equitable fraud, negligent misrepresentation or omission or promissory fraud or (y) any fraud based on constructive knowledge, negligent misrepresentation or recklessness.

 

“Fundamental Representations” shall mean the representations and warranties in Section ‎‎3.1 (“Organization, Existence and Qualification”), Section ‎‎3.2 (“Authority, Approval and Enforceability”), Section ‎‎3.3(a) (“No Conflicts”), Section ‎‎3.5 (“Bankruptcy”), Section ‎3.7 (“Ownership of Acquired Interests”), Section ‎‎3.8 (“Brokers’ Fees”), Section ‎‎4.1 (“Organization, Existence and Qualification”), Section ‎‎4.2(a) (“No Conflicts”), Section ‎‎4.3 (“Bankruptcy”), Section ‎4.6(a) – (c) (“Capitalization”) and Section ‎‎‎4.15 (“Brokers’ Fees”).

 

“Funding Requirements” shall have the meaning set forth in Section ‎‎5.8(c).

 

“GAAP” shall mean United States generally accepted accounting principles as in effect from time to time.

 

“Good and Defensible Title” shall mean, as to the Burleson Sand Mine, Pipeline System and the Surface Rights used or held for use in the ownership, operation or maintenance of Burleson Sand Mine, or Pipeline System, such record title or other interest that is free and clear of any Encumbrance (other than a Permitted Encumbrance) as is sufficient to enable the Company Group to own, operate and maintain the Burleson Sand Mine, or Pipeline System and conduct the Business of the Company Group with respect thereto in all material respects in the Ordinary Course of Business.

 

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“Governmental Authorization” shall mean any consent, approval, license, permit, certification, waiver, exemption or variance of or other authorization issued, granted, given or otherwise made available, to, by or with, any Governmental Authority or pursuant to any Law.

 

“Governmental Authority” shall mean any federal, state, local, municipal, tribal or other government; any governmental, regulatory or administrative agency, commission, body or other authority exercising or entitled to exercise any administrative, executive, judicial, legislative, regulatory or Tax authority or power, and any court, arbitrator or arbitral body (public or private) or governmental tribunal, including any tribal authority having or asserting jurisdiction.

 

“Guarantee Cap” shall have the meaning set forth in Section ‎15.21(b).

 

“Hazardous Substances” shall mean any pollutants, contaminants, materials, substances, wastes, constituents, compounds or chemicals classified, regulated, or defined as “toxic,” “hazardous,” a “hazardous waste,” “hazardous substance,” “extremely hazardous substances,” and including any Hydrocarbons, petroleum, waste oil or petroleum constituents or by-products, asbestos, radioactive substances and NORM, polychlorinated biphenyls, lead, and per- and polyfluoroalkyl substances in each case to the extent that they are regulated by, or may form the basis of Liability or are subject to standards of conduct under, any Environmental Laws.

 

“Hired Employee” shall have the meaning set forth in Section 6.7(a).

 

“HSR Act” shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

 

“HSR Approval” shall mean the expiration or early termination of the applicable waiting period under the HSR Act.

 

“Hydrocarbons” shall mean oil and gas and other hydrocarbons produced or processed in association therewith.

 

“Imbalances” shall mean (a) any imbalance at the wellhead between the amount of Hydrocarbons produced from a Well and allocable to the interests of the Company Group therein and the shares of production from the relevant Well that are actually taken by or delivered to or for the account of the Company Group and (b) any imbalance between the amount of Hydrocarbons nominated or scheduled for delivery by or to the Company Group under any Applicable Contracts relating to the purchase and sale, gathering, transportation, storage, treating, processing, or marketing of Hydrocarbons produced from the Assets and the amount of Hydrocarbons produced from the Assets actually delivered by or to the Company Group pursuant to any such Applicable Contracts.

 

“Income Taxes” shall mean (a) all Taxes based upon, measured by, or calculated with respect to (1) gross or ‎net income, gross or net receipts or profits, including franchise Taxes and any capital ‎gains, alternative minimum income, and other similar income Taxes, or (2) multiple bases (including corporate franchise, doing business or occupation Taxes) if one or more of the bases upon which such Tax may be based, measured by, or calculated with respect to, is described in clause (a)(1) above, and  (b) withholding Taxes measured with reference to or as a substitute for any Tax described in clause (a) above.

 

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“Indebtedness for Borrowed Money” shall mean, without duplication, for a particular Person, as of any particular time, all (a) indebtedness for borrowed money of the Company Group (including amounts outstanding under overdraft facilities) or indebtedness issued or incurred in substitution or exchange for indebtedness for borrowed money, including all principal, interest, premiums, fees (including arranging, administrative, late and default fees), expenses, costs of collection and penalties with respect thereto, whether short-term or long-term, and whether secured or unsecured, (b) indebtedness of the Company Group evidenced by any note, bond, debenture, mortgage or other debt instrument or debt security, (c) reimbursement and other obligations of the Company Group with respect to letters of credit, bankers’ acceptances, bank guarantees, surety bonds, performance bonds and letters of guaranty or similar instruments, to the extent drawn upon, (d) all obligations of the Company Group under any capital lease or other lease that is required to be classified and accounted for as a finance lease or capital lease under GAAP, (e) all obligations of the Company Group for the deferred purchase price of property or services (including any “earn-out” liabilities or similar contingent payment obligations associated with past acquisitions, calculated at the maximum amount payable in respect thereof), including any such liabilities arising under the Chesapeake MPA, other than trade payables incurred in the Ordinary Course of Business that are included in Current Liabilities and any lease bonus, shut-in royalties or similar payments, (f) all liabilities or obligations of the Company Group under conditional sale or other title retention agreements relating to property or assets purchased by the Company Group, (g) all guarantees by any Company Group Member of any indebtedness of the type described in clauses (a) through (f) of any other Person, whether direct or indirect, contingent or otherwise, or for which any Company Group Member may be liable or for which any assets of any Company Group Member may be subject to an Encumbrance (but excluding endorsements of checks and other similar instruments in the Ordinary Course of Business), (h) all accrued but unpaid interest, finance charges, redemption costs, breakage costs, prepayment premiums or penalties, make-whole payments, termination or consent costs and any other fees and expenses relating to any of the foregoing obligations and (i) declared but unpaid dividends or distributions; provided, that Indebtedness for Borrowed Money shall not include (i) any Company Group Transaction Expenses, (ii) accounts payable and accrued expenses that are included in Current Liabilities, (iii) any gains, losses or value associated with any of the Derivative Financial Instruments or (iv) any Credit Support provided by any Company Group Member.

 

“Individual Environmental Defect Threshold” shall have the meaning set forth in Section ‎‎12.1(e)(i).

 

“Individual Title Defect Threshold” shall have the meaning set forth in Section ‎‎11.2(i)(i).

 

“Initial Brief” shall have the meaning set forth in Section ‎‎2.7(b).

 

‎“Intellectual Property” shall mean all United States and foreign: (a) patents and patent ‎applications; (b) trademarks, service marks, logos, designs, trade names, trade dress, ‎domain names and corporate names and registrations and applications for registration thereof ‎‎(whether or not filed), including all goodwill associated therewith; (c) copyrights, whether registered ‎or unregistered, and registrations and applications for registration thereof (whether or not filed) ‎and other works of authorship, whether or not published; (d) trade secrets and other proprietary ‎information; and (e) the right to sue ‎and collect damages for any past, present, and future infringement, misappropriation, or other ‎violation of any of the foregoing.

 

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“Intercompany Master Management Services Agreement” shall mean that certain First Amended and Restated Master Management Services Agreement, dated May 2, 2024, by and among WildFire Energy LLC, Seller, WildFire Intermediate Holdings, LLC, WildFire Energy I Intermediate LLC, WildFire Energy Operating LLC, WildFire Madison LLC, Hawkwood Energy East Texas LLC, WildFire Energy Midstream LLC, Brazos Valley Longhorn, L.L.C., WildHorse Resources II, LLC, WHE AcqCo., LLC, Burleson Sand LLC, WHR Eagle Ford LLC, Esquisto Resources II, LLC, Petromax E&P Burleson, LLC, Burleson Water Resources, LLC, and OCIR Acquisition LLC.

 

“Interest Reduction” shall have the meaning set forth in the definition of Permitted Encumbrances.

 

“Invasive Activities” shall have the meaning set forth in Section ‎‎10.1(b).

 

“Key Employee” shall mean each individual identified on Schedule 6.7(d).

 

“Key Management Member” shall mean each individual identified on Schedule 9.2(i).

 

“Knowledge” shall mean with respect to Seller, all facts actually known by those individuals specified on Schedule I-1 after reasonable inquiry of such individual’s direct reports.

 

“Lands” shall have the meaning set forth in Section ‎2.2(d).

 

“Law” shall mean any statute, law, common law, act, rule, regulation, ordinance, order, code, ruling, writ, injunction, judgment, decree, award or other official act of or by any Governmental Authority.

 

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“Leakage” shall mean, without duplication, any of the following to the extent incurred, occurring or paid during the period after the Effective Time and calculated immediately prior to the Closing with respect to each Company Group Member (but in each case, excluding Permitted Leakage): (a) any payment of Cash and Cash Equivalents (howsoever characterized) made by any Company Group Member to or on behalf of or for the benefit of Seller, any other Affiliate of Seller (other than any Company Group Member) or any Sponsor Affiliated Party, including the Closing Distribution; (b) any transfer, sale, assignment or surrender of any non-cash asset (including any Equity Interests) by any Company Group Member to or for the benefit of Seller, any other Affiliate of Seller (other than any Company Group Member) or any Sponsor Affiliated Party, in which case the Leakage amount shall be the fair market value of such non-cash asset as of the date of such transfer, sale, assignment or surrender plus any costs, expenses or fees paid by any Company Group Member with respect thereto; (c) any dividend, interest on capital, advance or distribution (whether in cash or in kind) declared, paid or made (whether actual or deemed), or any return of capital (whether by reduction of capital or redemption, amortization or purchase of Equity Interests or quotas) or other payment made on any Equity Interests of any Company Group Member, by any Company Group Member to or on behalf of or for the benefit of Seller, any other Affiliate of Seller (other than any Company Group Member) or any Sponsor Affiliated Party; (d) any payments made or agreed to be made by any Company Group Member to Seller or any of its Affiliates (other than any Company Group Member) in respect of any share capital, loan capital or other Equity Interests of any Company Group Member being issued, redeemed, purchased or repaid, or any other return of capital or otherwise; (e) any liabilities assumed, indemnified, guaranteed, incurred or paid by any Company Group Member for the benefit of or on behalf of Seller, any other Affiliate of Seller (other than any Company Group Member) or any Sponsor Affiliated Party; (f) any waiver, forgiveness, release, deferral or discount by any Company Group Member of any amount owed to it by (or any right or any claim against) Seller, any Affiliate of Seller (other than any Company Group Member) or any Sponsor Affiliated Party; (g) the forgiveness, release, deferral, discount or waiver of any Indebtedness for Borrowed Money or of any claim or rights outstanding against any Person (other than any Company Group Member); (h) the out of pocket costs and expenses incurred after the Execution Date by any Company Group Member attributable to curing or Remediating any Title Defects or Environmental Defects, as applicable, asserted by Buyer pursuant to this Agreement (or Title Defects or Environmental Defects existing at or after the Effective Time that are cured by any Company Group Member prior to such assertion by Buyer pursuant to this Agreement) (excluding, however, any title curative work performed in the Ordinary Course of Business in furtherance of the Ordinary Course Development Plan as more specifically set forth on Schedule ‎6.1, which shall not constitute Leakage); (i) payments made or costs or expenses incurred after the Effective Time but prior to the Execution Date (including, if applicable, in connection with settling any Proceeding by any Third Party) in connection with the cure or attempt to cure any matter that would, if occurring after the Execution Date and prior to Closing, constitute a breach of this Agreement or any other Transaction Document, other than Property Costs or other costs or expenses incurred or paid in the Ordinary Course of Business (without regard or preparation for the entry into this Agreement); (j) any amount of general or administrative costs, overhead costs, management costs, fees or expenses or similar amounts that are paid or payable by any Company Group Member to Seller or any Affiliate of Seller (other than any Company Group Member), or to any Sponsor Affiliated Party, or that are charged or chargeable by Seller or any Affiliate of Seller (other than any Company Group Member) or by any Sponsor Affiliated Party (but without reduction for the fixed overhead amount payable in accordance with Section ‎2.5(l)); (k) the making of any gift or other gratuitous payment by any Company Group Member to any officer, director, manager, employee or Representative of Seller or any of its Affiliates (other than any Company Group); (l) any amounts paid or payable by any Company Group Member after the Effective Time to or for the benefit of any Third Party (including any holder of a Preferential Purchase Right) to obtain, secure or procure the consent, waiver or release of, or otherwise in respect of, any Preferential Purchase Right or other Consent required or sought in connection with the transactions contemplated by this Agreement or any other Transaction Document; (m) any Taxes paid or payable by any Company Group Member related to any of the foregoing; (n) any overhead charge paid or payable by Third Party working interest owners under the relevant operating agreement or unit agreement to Seller or any of its Affiliates (other than any Company Group Member) with respect to the Oil and Gas Properties that are operated by Seller or any of its Affiliates (other than any Company Group Member) for periods between the Effective Time and Closing; and (o) any agreement or arrangement entered into by any Company Group Member to give effect to any matter referred to in clauses (a) through (m) above; provided that, any Cash and Cash Equivalents, accounts receivable, intercompany receivables or other Current Assets distributed, transferred, surrendered or otherwise migrating to or with Seller, any other Affiliate of Seller (other than any Company Group Member) or any Sponsor Affiliated Party, whether in connection with the Pre-Closing Reorganization, the distribution or transfer of the Excluded Assets out of the Company Group or otherwise, shall constitute Leakage except to the extent otherwise taken into account as a downward adjustment to the Purchase Price.

 

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“Leases” shall have the meaning set forth in Section ‎‎2.2(a).

 

“Liabilities” shall mean any and all claims, assessments, obligations, causes of action, payments, charges, demands, judgments, assessments, liabilities, Taxes, losses, damages, sanctions, penalties, fines, deficiencies and costs and expenses, including any attorneys’ fees and disbursements, legal, accountant or other expenses incurred in connection therewith.

 

“Marketing Period” means the first period of ten (10) consecutive Business Days after the Execution Date and throughout which (a) Buyer shall have received the Required Information and the Required Information is Compliant, and (b) nothing has occurred and no condition exists that would reasonably be expected to cause any other condition set forth in ‎‎Article VIII to fail to be satisfied, assuming that the Closing Date were to be scheduled at any time during such ten (10) consecutive Business Day period. Notwithstanding anything to the contrary contained herein, the Marketing Period shall not commence and shall be deemed not to have commenced if, on or prior to the completion of such ten (10) consecutive Business Day period, (i) Seller or the Company Group indicates its intent to restate any financial statements or financial information included in the Required Information, in which case the Marketing Period shall be deemed not to commence unless and until such restatement has been completed and the applicable Required Information has been amended or Seller or the Company Group has announced that it has concluded that no restatement shall be required, and the requirements in clauses (a) and (b) above would be satisfied throughout and on the last day of such new ten (10) consecutive Business Day period or (ii) the Required Information is not Compliant throughout and on the last day of such ten (10) consecutive Business Day period (it being understood and agreed that to the extent prior to the end of the Marketing Period, Seller obtains knowledge that such Required Information is no longer Compliant, then Seller will promptly notify Buyer of such non-compliance and use commercially reasonable efforts to supplement the Required Information such that the Required Information (upon taking into account such supplementation) is Compliant).

 

“Material Adverse Effect” shall mean an event or circumstance that, individually or in the aggregate, results in, or would reasonably be expected to result in, a material adverse effect on the ownership, operation or value of the Company Group and the Assets taken as a whole and as currently operated as of the Execution Date or a material adverse effect on the ability of Seller to consummate the transactions contemplated by this Agreement and perform its material obligations hereunder; provided, however, that a Material Adverse Effect shall not include any of the following, and the effects of any of the following should be disregarded in determining a Material Adverse Effect: (a) entering into this Agreement or any Transaction Document or the announcement, pendency or the closing of the transactions contemplated by this Agreement or the Transaction Documents; (b) any action or omission of Seller or the Company Group taken in accordance with the terms of this Agreement or with the consent or request of Buyer; (c) changes in general market, economic, financial or political conditions (including changes in commodity prices, fuel supply or transportation markets or interest rates) in the area in which the Assets are located, the United States or anywhere in the world; (d) changes in conditions or developments generally applicable to the oil and gas industry in the area where the Assets are located, the United States or anywhere in the world; (e) acts of God, including hurricanes, earthquakes, storms or other naturally occurring events; (f) acts or failures to act of Governmental Authorities; (g)  the engagement by the United States in hostilities or the escalation thereof, whether or not pursuant to the declaration of a national emergency or war, or the occurrence or the escalation of any military or terrorist attack upon the United States, or any United States territories, possessions or diplomatic or consular offices or upon any United States military installation, equipment or personnel; (h) health conditions (including any epidemic, pandemic, or disease outbreak (including the COVID-19 virus)), including any worsening of such conditions; (i) matters that are cured or no longer exist by the earlier of the Closing and the termination of this Agreement; (j) a change in Laws or accounting rules (including GAAP) and any interpretations thereof from and after the Execution Date; (k) any reclassification or recalculation of reserves; (l) changes in the prices of Hydrocarbons; (m) declines in well performance; (n) any conditions or changes in financial or securities markets (including any disruption thereof) and any fluctuations in currency exchange rates or any decline in the price of any security or market index; (o) the failure of the Company Group to meet or achieve the results (including earnings, revenues, expenses or sales) set forth in any projection, forecast or budget (provided that the underlying cause of such failure may be taken into account when determining if a Material Adverse Effect has occurred); (p) the matters set forth on the Schedules attached hereto; (q) the termination, by any Business Employee, of its employment with any member of the Company Group; and (r) any adverse effect on the business of any Company Group Member that is cured before the earlier of (i) the Closing Date and (ii) the date on which this Agreement is terminated pursuant to ‎‎Article XIV, except in the case of foregoing clauses (d), (g), and (j), to the extent such event, change or circumstance has had a materially and disproportionately adverse impact on the Company Group and its assets compared to other participants engaged in the industry and region in which its assets are located.

 

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“Material Contracts” shall have the meaning set forth in Section 4.9(a).

 

“Material Permits” shall have the meaning set forth in Section ‎‎4.16.

 

“Net Acres” shall mean, as computed separately with respect to each Lease described on Exhibit B and with respect to each Target Formation in such Lease, (a) the number of gross acres of land covered by such Lease as to such Target Formation, multiplied by (b) the mineral interest (stated as a decimal) in Hydrocarbons covered by such Lease covering such Target Formation in such lands, multiplied by (c) the Company Group’s Working Interest in such Lease as to such Target Formation; provided, however, if items (b) and (c) vary as to different areas of, or depths under, the lands covered by such Lease, a separate calculation shall be performed with respect to each such area or depth.

 

“Net Revenue Interest” shall mean: with respect to any Leases and Well described on Schedule ‎‎2.9, the percentage interest (stated as a decimal) in and to all Hydrocarbons produced and saved or sold from or allocated to such Lease or Well, as applicable, as set forth on Schedule ‎‎2.9 (but limited to the applicable Target Formations and subject to any reservations, limitations or depth restrictions set forth on Schedule ‎‎2.9), as to the applicable Target Formation, after giving effect to all Royalties; provided, that if a Person’s “Net Revenue Interest” in any Lease differs as to any part or depth, then a separate calculation shall be made as to each such part or depth.

 

“Nonparty Affiliate” shall have the meaning set forth in Section ‎‎15.15.

 

“NYSE” means the New York Stock Exchange.

 

“NORM” shall mean naturally occurring radioactive material.

 

Annex I – Page 20

 

 

“Oil and Gas Properties” shall have the meaning set forth in Section 2.2(e).

 

“Order” shall mean any order, judgment, injunction, edict, decree, ruling, assessment, stipulation, pronouncement, determination, decision, opinion, verdict, sentence, subpoena, writ or award issued, made, entered, rendered, or otherwise put into effect by or under the authority of any court or other Governmental Authority or any arbitrator or arbitration panel.

 

“Ordinary Course Development Plan” shall have the meaning set forth in Section ‎‎6.1(a).

 

“Ordinary Course of Business” shall mean when used in reference to any Person, the ordinary course of business of such Person consistent with past customs and practices of such Person in the twelve (12) months immediately prior to the Execution Date.

 

“Organizational Documents” shall mean, with respect to any Person, the articles of incorporation, certificate of incorporation, certificate of formation, certificate of limited partnership, bylaws, limited liability company agreement, operating agreement, general partnership agreement, limited partnership agreement, stockholders’ agreement and all other similar documents, instruments or certificates executed, adopted or filed in connection with the creation, formation or organization of such Person, including any amendments thereto.

 

“Other Indemnitors” shall have the meaning set forth in Section ‎‎6.11(e).

 

“Other Sources” shall mean cash on hand at Buyer, financing available under the Existing Buyer RBL Credit Facility and any other financing source immediately available to Buyer to the extent funding is available thereunder on terms and conditions that are no less favorable to Buyer than the terms and conditions described in the Bridge Commitment Letter (taking into account any “flex” provisions) as of the Execution Date.

 

“Outside Date” shall mean the date which is thirty (30) days following the Target Closing Date; provided, that if, as of thirty (30) days after the Target Closing Date, all of the conditions to Closing set forth in ‎‎Article VII and ‎‎Article VIII are satisfied or waived (other than those conditions that are incapable of being satisfied until Closing) other than the condition to Closing set forth in Sections ‎‎7.5 and ‎‎8.5 (if applicable), then the Outside Date shall be extended automatically (and without the consent of the Parties) until the date that is one hundred and fifty (150) days following such initial Outside Date.

 

“Parent” shall have the meaning set forth in the introductory paragraph of this Agreement.

 

“Parent Class A Common Stock” shall mean Class A common stock, par value $0.0001 per share, of Parent.

 

“Parent Class B Common Stock” shall mean Class B common stock, par value $0.0001 per share, of Parent.

 

“Parent Class F Common Stock” shall mean Class F common stock, par value $0.0001 per share, of Parent.

 

Annex I – Page 21

 

 

“Parent Common Stock” shall mean, collectively, Parent Class A Common Stock, Parent Class B Common Stock and Parent Class F Common Stock.

 

“Parent Financial Statements” shall have the meaning set forth in Section ‎‎5.14(a).

 

“Parent Material Adverse Effect” means an event or circumstance that, individually or in the aggregate, results in a material adverse effect on the business, results of operations or financial condition of Parent and its Subsidiaries, taken as a whole and as currently operated as of the Execution Date, or a material adverse effect on the ability of the Buyer Parties to consummate the transactions contemplated by this Agreement and perform their material obligations hereunder; provided, however, that “Parent Material Adverse Effect” shall not include material adverse effects resulting from (a) entering into this Agreement or any Transaction Document or the announcement, pendency or the closing of the transactions contemplated by this Agreement or the Transaction Documents; (b) any action or omission of any Buyer Party taken in accordance with the terms of this Agreement or with the consent or request of Seller; (c) changes in general market, economic, financial or political conditions (including changes in commodity prices, fuel supply or transportation markets or interest rates) in the area in which the assets of the Buyer Parties or any of their Subsidiaries are located, the United States or anywhere in the world; (d) changes in conditions or developments generally applicable to the oil and gas industry in the area in which the assets of the Buyer Parties or any of their Subsidiaries are located, the United States or anywhere in the world; (e) acts of God, including hurricanes, earthquakes, storms or other naturally occurring events; (f) acts or failures to act of Governmental Authorities; (g)  the engagement by the United States in hostilities or the escalation thereof, whether or not pursuant to the declaration of a national emergency or war, or the occurrence or the escalation of any military or terrorist attack upon the United States, or any United States territories, possessions or diplomatic or consular offices or upon any United States military installation, equipment or personnel; (h) health conditions (including any epidemic, pandemic, or disease outbreak (including the COVID-19 virus)), including any worsening of such conditions; (i) matters that are cured or no longer exist by the earlier of the Closing and the termination of this Agreement; (j) a change in Laws or accounting rules (including GAAP) and any interpretations thereof from and after the Execution Date; (k) any reclassification or recalculation of reserves; (l) changes in the prices of Hydrocarbons; (m) declines in well performance; (n) any conditions or changes in financial or securities markets (including any disruption thereof) and any fluctuations in currency exchange rates or any decline in the price of any security or market index; (o) the failure of any Buyer Party to meet or achieve the results (including earnings, revenues, expenses or sales) set forth in any projection, forecast or budget (provided that the underlying cause of such failure may be taken into account when determining if a Material Adverse Effect has occurred); (p) the matters set forth on the Schedules attached hereto or disclosed in the Parent SEC Documents filed with or furnished to the SEC and publicly available prior to the Execution Date; and (q) any adverse effect on the business of any Buyer Party that is cured before the earlier of (i) the Closing Date and (ii) the date on which this Agreement is terminated pursuant to ‎‎Article XIV, except in the case of foregoing clauses (d), (g), and (j), to the extent such event, change or circumstance has had a materially and disproportionately adverse impact on the Buyer Parties and its assets compared to other participants engaged in the industry and region in which its assets are located.

 

“Parent SEC Documents” shall have the meaning set forth in Section ‎‎5.14(a).

 

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“Party” and “Parties” shall have the meaning set forth in the introductory paragraph herein.

 

“Payoff Letters” shall have the meaning set forth in Section ‎‎9.2(g).

 

“PEO” shall mean Insperity PEO Services, L.P.

 

“PEO Plan” shall mean any employee benefit plan, program or compensation arrangement that (i) would be classified as a Benefit Plan if it was not sponsored, maintained, contributed to, or required to be contributed to by the PEO or any affiliate of the PEO, and (ii) provides compensation or benefits to any current or former Business Employee or any beneficiary or dependent thereof.

 

“Permitted Encumbrances” shall mean:

 

(a)            the terms and conditions of all Leases, pooling agreements, unit agreements, Surface Rights, Contracts, Governmental Authorizations, and all Royalties if‎ the net cumulative effect of such Leases, pooling agreements, unit agreements, Surface Rights, Contracts, Governmental Authorizations, and Royalties does not operate to (i) reduce the Company Group’s Net Revenue Interest with respect to any Lease or Well described on Schedule ‎‎2.9 for any applicable Target Formation below the amount shown on Schedule ‎‎2.9 for such Lease or Well for such Target Formation, (ii) increase the Company Group’s Working Interest with respect to a Target Formation of any Lease described or Well described on Schedule ‎‎2.9 above the amount shown on Schedule ‎‎2.9 for such Lease or Well, as applicable, for such Target Formation (unless the Net Revenue Interest for such Lease or Well, as applicable, for the applicable Target Formation ‎is increased in the same or greater proportion as any such increase in Working Interest), or (iii) reduce the Company Group’s Net Acres with respect to a Target Formation of a Lease described on Schedule ‎‎2.9 to an amount less than the number of Net Acres set forth on Schedule ‎‎2.9 for such Lease for such Target Formation (each of clauses (i), (ii), and (iii), an “Interest Reduction”);

 

(b)            all Consents, except to the extent that any prior breach or such provision has actually resulted in an Interest Reduction, and Customary Post-Closing Consents;

 

(c)            liens for Taxes that are not yet delinquent or, if delinquent, that are being contested in good faith and are described on Schedule 1.1 and for which adequate reserves have been established on the financial statements of such Company Group Members in accordance with GAAP;

 

(d)            conventional rights of reassignment (that have not been triggered‎ as of the Execution Date and are not triggered prior to the Claim Date);

 

(e)            with respect to any interest in the Lands not covered by the Leases and acquired through compulsory pooling, failure of the records of any Governmental Authority to reflect the Company Group as the owner of an Asset;

 

(f)             such Title Defects as Buyer has waived in writing pursuant to the terms of this Agreement;

 

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(g)            all Laws and all rights reserved to or vested in any Governmental Authority, including required notices to and filings with any Governmental Authority (i) to control or regulate any Asset in any manner, (ii) by the terms of any right, power, franchise, grant, license or permit, or by any provision of Law, to terminate such right, power, franchise, grant, license or permit or to purchase, or recapture or to designate a purchaser of any of the Assets, (iii) to use such property in a manner which does not materially impair the use of such property for the purposes for which it is currently owned and operated, and (iv) to enforce any obligations or duties affecting the Assets to any Governmental Authority, with respect to any franchise, grant, license or permit; in each case, except to the extent that the same materially impairs the use or operation of the Assets as currently used and operated as of the Execution Date or has actually resulted in an Interest Reduction;

 

(h)            any interest in Surface Rights or other Assets held by any Company Group Member and any other Person as tenants in common or through common ownership, except to the extent that the same materially impairs the use or operation of the Assets as currently used and operated as of the Execution Date or results in an Interest Reduction;

 

(i)             easements, conditions, covenants, restrictions, servitudes, permits, rights-of-way, surface leases and other rights in or burdening the Assets for the purpose of operations (including the Surface Rights), facilities, roads, alleys, highways, railways, pipelines, transmission lines, transportation lines, distribution lines, power lines, telephone lines, removal of timber, grazing, logging operations, canals, ditches, reservoirs and other like purposes, or for the joint or common use of real estate, rights-of-way, facilities and equipment, that, in each case, do not materially impair the operation of the Assets as currently used and operated as of the Execution Date or result in an Interest Reduction;

 

(j)             landlords’, operators’, carriers’, warehousemen’s, repairmen’s, mechanics’, materialmen’s, or other statutory Encumbrances that are not yet delinquent or, if delinquent, that are being contested in good faith and are described in all material respects on Schedule 1.1;

 

(k)            any Encumbrance on or affecting the Assets which (A) is expressly waived by Buyer in writing at or prior to the Closing, or (B) secures any credit facility, loan agreement or letters of credit entered into by any Company Group Member or any of its Affiliates at or following the Closing;

 

(l)             liens created on the Assets under operating or similar agreements, Lease or by operation of Law in respect of obligations that are not yet due or, if delinquent, that are being contested in good faith and are described in all material respects on Schedule 1.1;

 

(m)           any Encumbrance affecting the Assets that is discharged in full by or on behalf of Seller at or prior to the Closing;

 

(n)            all Preferential Purchase Rights, and similar agreements pertaining to the transfer or assignment of the Assets, except to the extent that any prior breach or such provision has actually resulted in an Interest Reduction;

 

(o)            any Encumbrances created under deeds of trust, mortgages and similar instruments by the lessor under a Lease covering the lessor’s or landowner’s surface and mineral interests in the land covered thereby, only where (i) there is a subordination of such Encumbrance to the Lease or other Oil and Gas Properties or (ii) there is not, on or before the Claim Date, a foreclosure or other enforcement proceeding by the holder of such Encumbrance and to Seller’s Knowledge no such proceeding is threatened;

 

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(p)            zoning and planning ordinances and municipal regulations, except to the extent that the same materially impairs the use or operation of the Assets as currently used and operated as of the Execution Date or results in an Interest Reduction;

 

(q)            (i) defects arising out of lack of corporate or other entity authorization unless Buyer provides affirmative evidence that such corporate or other entity action was not authorized and could reasonably be expected to result in another Person’s superior claim of title to the relevant Asset; (ii) defects based on a gap in the Company Group’s chain of title in the applicable federal, state or county records, unless such gap is affirmatively shown to exist in such records by an abstract of title, title opinion or landman’s title chain which documents shall be included in a Title Defect Notice; (iii) defects based upon the failure to record any federal, state or tribal Leases (or assignments thereof), if any, in any applicable county records, provided, that the public records of the applicable Governmental Authority reflect the ‎applicable Company Group Member as the owner of such Lease‎; (iv) defects based on the failure to recite marital status in a document or omission of successors or heirship or estate proceedings‎ ‎unless Buyer provides affirmative evidence of an actual claim of superior title attributable to such ‎matter; (v)  defects that affect only which Person ‎(other than a Company Group Member)‎ has the right to receive Royalty payments (rather than the amount or the proper payment of such Royalty payment); provided that any resulting failure does not result in the termination of, or the present right of the proper royalty owner to terminate, the applicable Lease; (vi) defects based solely on: (A) lack of information in the Company Group’s files or similar records (or the absence of such files or records); or (B) references to an unrecorded document(s) to which the Company Group is not a party, if such document is not in the Company Group’s files, but solely to the extent that the Company Group is not relying on such information, documents, or instruments to vest title to the applicable Lease or Well; (vii) defects arising solely out of a lack of survey, overlapping survey, or lack of metes and bounds descriptions unless such survey or descriptions are required by Law; (viii) defects that have been cured by Laws of prescription, adverse possession or limitations; (ix) defects arising from any prior oil and gas lease relating to the lands covered by a Lease not being surrendered of record, unless Buyer provides affirmative evidence that such prior oil and gas lease is still in effect and could reasonably be expected to result in another Person’s actual and superior claim of title to the relevant lands, Lease or Well; (x) any defect arising from the failure of any non-‎participating royalty owners to ratify a unit, except to the extent that the same materially impairs the use or operation of the Assets as currently used and operated as of the Execution Date or results in an Interest Reduction;‎ (xi) defects arising from any change in Laws after the Execution Date; (xii) defects relating to lack of pooling or unitization clauses in any Lease or instrument, provided that the applicable Lease has not been pooled or unitized (or purported to be pooled ‎or ‎‎unitized) in violation of the express terms of such Lease; (xiii) any defects or irregularities in acknowledgements; (xiv) any defects arising from lack of an ‎affidavit of identity or the need for one if the relevant Person’s name is readily apparent; (xv) any ‎defects arising from a lack of power of attorney, unless Buyer provides affirmative evidence that such matter could reasonably be expected to result in another Person’s actual and superior claim of title; and (xvi) any Encumbrance, defect or loss of title resulting from any action of Seller or the Company Group to the extent requested in writing by Buyer;

 

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(r)            defects resulting from or based on a Permitted Gap in Production;

 

(s)           defects arising out of production payments that have expired of their own terms;

 

(t)            gas balancing and other production balancing obligations, and obligations to balance or furnish make-up Hydrocarbons under Hydrocarbon sales, gathering, processing or transportation contracts;

 

(u)           any Encumbrances created by Law or reserved in any Leases for royalties, bonus or rental, or created to secure compliance with the terms of such Leases, provided that, in each such case, the Company Group is then in compliance with the terms of such Leases in all material respects and the respective lessor has no cause or right to enforce or execute on such Encumbrances;

 

(v)           defects or loss of title affecting ownership interests in formations other than the Target Formations;

 

(w)          lack of a division order or an operating agreement covering any Lease or Well, except to the extent that the same results in an Interest Reduction;

 

(x)            failure to obtain waivers of maintenance of uniform interest, restriction on zone transfer, or similar provisions in operating agreements with respect to assignments in the applicable Company Group Member’s chain of title to the applicable Asset unless there is an outstanding and pending, unresolved claim or exercise of rights from a Third Party with respect to the failure to obtain such waiver;

 

(y)           all interests of the Company Group in an Asset that were acquired as the result of a non-consenting election by one or more Third ‎Parties which are subject to reversion upon the occurrence of one or more payout multiples as ‎‎defined by the applicable operating agreements, unit agreements or pooling orders, to the extent reflected on Schedule ‎‎2.9 by before and after payout Working Interests and Net Revenue Interests;

 

(z)            defects based on or arising out of the failure of any Person to enter into, be party to, or be bound by, pooling provisions, a pooling agreement, production sharing agreement, co-op agreement or other similar agreement with respect to any horizontal Well that crosses more than one Lease, Third Party lease, joint operating agreement contract area and/or unit, as applicable, (i) to the extent such Well has been permitted by an applicable Governmental Authority and (ii) to the extent the allocation of Hydrocarbons produced from such Well among Leases, Third Party leases, contract areas and/or units, as applicable, is based upon (1) the length of the “as drilled” horizontal wellbore open for production, (2) the total length of the horizontal wellbore, or (3) other methodology that is intended to reasonably attribute to each Lease, Third Party lease, contract area or unit its share of such production, provided Seller has not received a Third Party written claim, as to a Well contemplated by this clause (z) that is operated by the Company Group, disputing such allocation of Hydrocarbons;

 

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(aa)          defects arising out of the failure ‎to obtain any consent for the transfer or assignment of any Asset unless such consent constitutes or would have constituted a Specified Consent Requirement; and

 

(bb)         all other Encumbrances, Contracts, instruments, obligations, defects and irregularities affecting the Assets that do not individually or in the aggregate materially impair the use or operation of the Assets as currently used and operated as of the Execution Date or result in an Interest Reduction.

 

“Permitted Gap in Production” shall mean a gap in production, cessation of production or insufficient production, with respect to a Well, occurring more than five (5) years prior to the Execution Date or where one of the following applies, unless, in either case, Buyer provides affirmative evidence that lessors, other interest owners or any other Third Party under the applicable Lease, are contesting the validity of the applicable Lease due to such lack of production:

 

(a)            the Well(s) located on a Lease covering the Asset or lands pooled or unitized therewith have produced (in the aggregate) in paying quantities determined on an annual basis during the prior five (5) years preceding the Execution Date (or such shorter period of time since such Well(s) commenced production);

 

(b)            the lack of production is permitted under the terms of the applicable Lease covering such Asset (including because of force majeure or by operation of shut-in royalty or storage payment clauses) if Seller can establish that all necessary shut-in payments (if applicable) under the terms of the applicable Lease covering such Asset were properly tendered; or

 

(c)            the Well (together with any group of Wells) located on a Lease or lands pooled or unitized therewith have produced aggregate revenues in excess of the applicable well operator’s aggregate operating expenses for such Well or group of Wells for each twelve (12)-month period (taking into account any cessation of production that is permitted under the terms of the applicable Lease (including because of force majeure or by operation of shut-in royalty or storage payment clauses to the extent any such payments are actually paid)) during the five (5) years preceding the Execution Date (or such shorter period of time since such Well(s) commenced production).

 

“Permitted Leakage” shall mean any of the following payments or transactions made, or to be made, between Seller or any Company Group Member, on the one hand, and Affiliates of Seller or any Sponsor Affiliated Party, on the other hand: (a) the assignment or transfer of the Excluded Assets pursuant to Section ‎‎2.4 (excluding, for the avoidance of doubt, any Cash and Cash Equivalents, accounts receivable, intercompany receivables or other Current Assets, and any other amount or item that constitutes Leakage pursuant to the proviso to the definition of “Leakage”) or (b) the payments set forth on Schedule PL.

 

“Person” shall mean any individual, firm, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization, Governmental Authority or any other entity.

 

“Personal Property” shall have the meaning set forth in Section ‎‎2.2(i).

 

Annex I – Page 27

 

 

“Phase I Assessment” shall have the meaning set forth in Section ‎‎10.1(b).

 

‎“Pipeline System” shall mean the Hydrocarbon gathering or transportation systems existing as of the Execution Date and generally depicted on Exhibit G, together with all above-ground facilities or structures, valves, pipes, scrubbers, machinery, ‎gauges, meters, fittings, fixtures, units, tanks, traps, pig launchers, cathodic protection equipment ‎and radios related thereto, which are part of or included in the Assets or which are utilized as part of the Business.

 

“Post-Effective Time Period” shall mean, with respect to any Company Group Taxes, any Tax period beginning at or after the Effective Time.

 

“Post-Effective Time Taxes” shall mean all Company Group Taxes (other than any Taxes attributable to the Pre-Closing Reorganization) attributable to any Post-Effective Time Period and the portion of any Straddle Period beginning at the Effective Time determined in accordance with Section ‎‎15.3(b).

 

“Post-Production Cost Sales Taxes” means any sales, use or similar Taxes to the extent not paid by the producer that are imposed on or with respect to gathering, processing, transportation activities and similar post-production costs to the extent in connection with sales of Hydrocarbons produced in a Pre-Effective Time Period or the pre-Effective Time portion of any Straddle Period.

 

“Pre-Closing Reorganization” shall have the meaning set forth in the recitals.

 

“Pre-Closing Reorganization Documents” shall mean the Distribution, Contribution and Assignment Agreements attached hereto as Exhibit L.

 

“Pre-Effective Time Period” shall mean, with respect to any Company Group Taxes, any Tax period ending before the Effective Time.

 

“Pre-Effective Time Taxes” shall mean all Company Group Taxes attributable to any Pre-Effective Time Period and the portion of any Straddle Period ending immediately prior to the Effective Time determined in accordance with Section ‎‎15.3(b).

 

“Preferential Purchase Right” shall have the meaning set forth in Section ‎‎4.5.

 

“Preliminary Settlement Statement” shall have the meaning set forth in Section ‎‎2.6.

 

“Privileged Communications” shall have the meaning set forth in Section ‎‎15.17.

 

“Proceeding” shall mean any proceeding, action, arbitration, litigation, subpoena, charge, complaint, audit, investigation or suit commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Authority.

 

“Property Costs” shall mean all operating expenses (including costs of insurance, overhead, employees, rentals, shut-in payments, and title examination and curative actions and capital expenditures, and costs of drilling and completing wells, and costs of acquiring equipment) incurred in the ownership and operation of the Assets and overhead costs charged to the Assets under any applicable Contracts, but excluding (without limitation) (x) any amounts that constitute “Leakage” and (y) Taxes; provided, however, solely for purposes of Section ‎‎2.5(l) in all references in this definition to “Assets” shall be deemed to be references to the “Excluded Assets”.

 

Annex I – Page 28

 

 

“Public Announcement” shall have the meaning set forth in Section ‎6.5.

 

“Public Announcement Restrictions” shall have the meaning set forth in Section ‎6.5.

 

“Purchase Price” shall have the meaning set forth in Section ‎‎2.3(a).

 

“R&W Insurance Policy” shall mean a buyer-side representations and warranties insurance policy or policies obtained by Buyer or an Affiliate thereof in connection with this Agreement and the transactions contemplated hereby.

 

“Records” shall have the meaning set forth in Section 2.2(p).

 

“Records Period” shall have the meaning set forth in Section 6.22(a).

 

“Reference Price” means $25.20 per share of Parent Class A Common Stock.

 

“Registration Rights Agreement” shall mean the Registration Rights Agreement in substantially the form attached hereto as Exhibit N to be executed and delivered by Seller (or Seller’s designees) and Parent at the Closing.

 

“Remaining Deposit Amount” shall have the meaning set forth in Section ‎‎2.3(d)(ii).

 

“Remediation” including the correlative term “Remediate” shall mean the implementation and completion of any investigative, remedial, removal, response, monitoring, construction, repair, closure, disposal, encapsulation, restoration or other corrective actions (including any necessary filings or interactions with Governmental Authorities) required or reasonably necessary under Environmental Laws to address any non-compliance with or Liability under Environmental Laws.

 

“Remediation Amount” shall mean, with respect to an Environmental Defect, the cost (net to the Company Group’s interest prior to the consummation of the transactions contemplated by this Agreement) of the most cost-effective Remediation of such Environmental Defect (considered as a whole, taking into consideration any material impacts such response may have on the operations of the relevant Assets), including taking no action, and the implementation of risk reduction methods, to the extent appropriate and allowed pursuant to Environmental Laws. For the avoidance of doubt, the term “Remediation Amount” shall not include (a) amounts for any Remediation activities conducted and completed by Seller or the Company Group, (b) the costs or expenses of either Party’s or its respective Affiliate’s employees, (c) expenses for matters that are costs of doing business that would be incurred in the absence of any Environmental Defects (e.g., those costs that would ordinarily be incurred in the day-to-day operations of the Assets or in connection with ordinary course permit renewal or amendment activities in the absence of any Environmental Defect), (d) general and administrative or overhead costs and expenses of a Party or its respective Affiliates, (e) costs or expenses incurred in connection with Remediation that is designed to achieve standards that are more stringent than those required for similar facilities or that fails to reasonably take advantage of applicable risk reduction or risk assessment principles allowed under applicable Environmental Laws, or (f) any costs or expenses relating to the assessment, remediation, removal, abatement, transportation and disposal of any asbestos, asbestos containing materials or NORM, except to the extent such constitute a current violation of Environmental Laws.

 

Annex I – Page 29

 

 

“Reply Brief” shall have the meaning set forth in Section ‎‎2.7(b).

 

“Representatives” shall mean, with respect to a given Person, such Person’s Affiliates, and such Person’s and such Person’s Affiliates’ respective officers, directors, members and other direct and indirect owners, partners, managers, employees, agents, financial, legal and other advisors, financing sources, consultants, accountants, and other representatives.

 

“Required Information” shall mean (a) all information and data regarding the Company Group of the type and in the form required by and compliant in all material respects with Regulation S-X and Regulation S-K under the Securities Act for offerings of securities on a registration statement on Form S-1 or Form S-3 under the Securities Act and of the type and in the form customarily included in offering or syndication documents used to syndicate credit facilities or securities of the type to be included in a Debt Financing, including the Financial Statements, (b) a reserve report relating to the Company Group as of December 31, 2025 prepared or audited by an independent petroleum engineering firm, and (c) all other reasonably requested financial, operating and oil and gas reserve data and other information relating to the Company Group for periods or as of dates prior to the Closing (i) of the type and form reasonably and customarily included with respect to acquirees in the same business as the Company Group in the documents necessary to execute the Debt Financing, Equity Financing or any other Rule 144A offering of non-convertible debt securities or that would be reasonably necessary for any Debt Financing Sources, underwriters or initial purchasers to receive customary “comfort” (including “negative assurance” comfort) from independent accountants and independent reserve engineers and customary legal opinions in connection therewith or (ii) that is necessary for Buyer to prepare and file historical and pro forma financial statements required by the SEC (including, for the avoidance of doubt, those required to be included in the Current Report on Form 8-K to be filed in connection with the Closing and those required to be included in any registration statement or proxy statement).

 

“Required Parent SEC Documents” shall have the meaning set forth in Section ‎‎5.14(a).

 

“Restrictive Covenant Agreement” shall mean a Restrictive Covenant Agreement substantially in the form attached hereto as Exhibit I, to be executed as of the Execution Date, and expressly contingent upon and effective as of the Closing, between each Key Management Member, on the one hand, and Buyer (or, at Buyer’s election, the applicable Company Group Member), on the other hand.

 

“Retained Assets” shall have the meaning set forth in the definition of “Excluded Assets”.

 

“Royalties” shall mean any royalties, overriding royalties, non-participating royalties, production payments, carried interests, net profits interests, reversionary interests (excluding any Working Interest derived therefrom), back-in interests (excluding any Working Interest derived therefrom) and other burdens upon, measured by or payable out of production (excluding, for the avoidance of doubt, any Taxes).

 

Annex I – Page 30

 

 

“SALT Election” shall mean an election under applicable state or local income Tax Law made by, or with regard to, the Company Group pursuant to which the Company Group incurs or are otherwise liable for any state or local income Tax liability under applicable state or local income Tax Law that would have been borne (in whole or in part) by the direct or indirect equity owners of the Company Group had no such election been made (e.g., any “Specified Income Tax Payment” as defined by IRS Notice 2020-75).

 

“SEC” shall mean the United States Securities and Exchange Commission.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

“Seismic License” shall have the meaning set forth in Section ‎‎6.18(a).

 

“Seller” shall have the meaning set forth in the introductory paragraph of this Agreement.

 

“Seller D&O Parties” shall have the meaning set forth in Section ‎‎6.11(e).

 

“Seller Indemnified Parties” shall mean Seller and its Affiliates, and all of its and their respective equityholders, partners, members, directors, officers, managers, employees, agents and other Representatives.

 

“Seller Insurance Policies” shall have the meaning set forth in Section ‎‎6.10(a).

 

“Seller Related Parties” shall have the meaning set forth in Section ‎6.12.

 

“Seller Released Parties” shall have the meaning set forth in Section ‎‎13.1(a).

 

“Seller Releasing Group” shall have the meaning set forth in Section ‎‎13.1(a).

 

“Seller’s Certificate” shall have the meaning set forth in Section ‎‎9.2(b).

 

“Seller’s Marks” shall have the meaning set forth in Section ‎‎6.14(a).

 

“Senior Notes” shall mean the 7.500% Senior Notes due 2029 issued by WildFire Intermediate Holdings, LLC pursuant to that certain Indenture, dated as of September 26, 2024, among WildFire Intermediate Holdings, LLC and U.S. Bank Trust Company, National Association, as Trustee, governing the Senior Notes (as the same has been amended, restated, supplemented or otherwise modified from time to time).

 

“Severance Payment” has the meaning given to it in Section 6.7(d).

 

“Settlement Price” shall mean $108 per barrel.

 

“Shortfall Amount” shall have the meaning set forth in Section ‎‎2.7(d)(ii).

 

Annex I – Page 31

 

 

“Special Dividend Adjustment Amount” shall have the meaning set forth in Section 2.3(e).

 

“Specified Consent Requirement” shall mean any Consent with respect to which (a) (i) the applicable instrument expressly requires pursuant to its terms, Consent in connection with a direct or indirect change in control of any Company Group Member, or the transfer or assignment of the Acquired Interests to a Third Party, and such Consent does not contain language providing that such consent cannot be unreasonably withheld; or (ii) the applicable instrument expressly provides pursuant to its terms that a direct or indirect change of control of any Company Group Member, or the transfer or assignment of the Acquired Interests to a Third Party without obtaining such consent (A) is void or voidable, (B) triggers the payment of specified liquidated damages or (C) causes termination of the applicable Lease or Contract to which such Consent pertains or (b) is expressly denied in writing.

 

“Sponsor Affiliate Arrangements” shall mean any and all Contracts (excluding, for the avoidance of doubt, any Affiliate Arrangements) between (a) any Company Group Member, or that is otherwise binding on any Company Group Member or the Assets, on the one hand, and (b) any Sponsor Affiliated Party, provided, however, that any pooling agreement, joint operating agreement, division order, or production sharing agreement, in each case, to the extent the same is (i) on customary and arms’ length terms and (ii) not material to the Company Group taken as a whole, shall not constitute a “Sponsor Affiliate Arrangement” for purposes of this Agreement.

 

“Start Date” shall have the meaning set forth in Section 6.7(a).

 

“Straddle Period” shall mean any Tax period beginning before and ending after the Effective Time.

 

“Subject Courts” shall have the meaning set forth in Section ‎‎15.20(a).

 

“Subrogation Waiver” shall have the meaning set forth in Section ‎‎6.12.

 

“Subsidiary” or “Subsidiaries” shall mean, with respect to any Person, another Person in which such first Person owns, directly or indirectly, an amount of the voting securities, other voting ownership or voting partnership interests of which is sufficient to elect at least a majority of its board of directors or other governing body (or, if there are no such voting interests, fifty percent (50%) or more of the Equity Interests of such Person).

 

“Surface Rights” shall have the meaning set forth in Section ‎‎2.2(h).

 

“Suspense Funds” shall mean all Royalties and other amounts held or maintained (whether in cash or as an accounting liability or reserve balance) in suspense by any Company Group Member and its Affiliates that are held in suspense and are attributable to the Oil and Gas Properties or any interests pooled, unitized or communitized therewith that are payable to any Third Party (including (i) any such amounts attributable to other Working Interest owners’ interest in such assets, (ii) funds held in suspense for unleased interests, and (iii) all penalties and interest actually accrued or required to be accrued on such funds under applicable Laws).

 

“Target Closing Date” shall have the meaning set forth in Section ‎‎9.1.

 

Annex I – Page 32

 

 

“Target Formations” shall mean (a) with respect to each Lease described on Schedule ‎‎2.9, the Austin Chalk Formation, Eagle Ford Formation or Woodbine Formation, as the case may be, described on Schedule ‎‎2.9 with respect to such Lease and (b) with respect to each Well described on Schedule ‎‎2.9, the formation or formations being produced by such Well as of the Effective Time.

 

“Tax Proceeding” shall have the meaning set forth in Section ‎‎15.3(c).

 

“Tax Return” shall mean any return, declaration, report, claim for refund, information return or statement or other document relating to Taxes (including any estimated tax or report) filed or required to be filed with any Governmental Authority, including any schedule or attachment thereto and any amendment thereof.

 

“Taxes” shall mean (a) any taxes, assessments, levies, imposts and other governmental charges in the nature of a tax imposed by any Governmental Authority, including income, profits, gross receipts, capital gains, stamp, alternative or add-on minimum, ad valorem, real property, personal property, transfer, real property transfer, value added, service, sales, use, customs, duties, capital stock, franchise, excise, occupation, windfall profit, premium, license, payroll, employment, social security, unemployment, disability, environmental, withholding, severance, production, estimated or other tax, including any interest, penalty or addition thereto and (b) any liability in respect of the foregoing that arises as a result of any obligation to indemnify any other Person, by operation of Law, as a transferee or successor, by contract, or otherwise.

 

“Third Party” shall mean any Person other than a Party to this Agreement or an Affiliate of a Party to this Agreement.

 

“Title Arbitrator” shall have the meaning set forth in Section ‎‎11.2(j).

 

“Title Benefit” shall mean, with respect to any Lease or Well described on Schedule ‎‎2.9, any right, circumstance or condition that (a) entitles the Company Group, in aggregate, to receive a Net Revenue Interest with respect to any such Well as to any of the applicable Target Formation that is more than the Net Revenue Interest set forth on Schedule ‎‎2.9 for such Well, as to such applicable Target Formation, without causing a greater than proportionate increase in the Company Group’s Working Interest above that set forth on Schedule ‎‎2.9 for such Well; (b) obligates the Company Group, in aggregate, to bear the Working Interest with respect to any such Well as to any of the applicable Target Formation that is less than the Working Interest set forth on Schedule ‎‎2.9 for such Well as to such applicable Target Formation, except for decreases to the extent that they are accompanied by a proportional or greater decrease in the Company Group’s corresponding Net Revenue Interest as to such Target Formation, (c) with respect to such Lease as to any applicable Target Formation, entitles the Company Group, in aggregate, to more than the Net Acres set forth on Schedule ‎‎2.9 for such Lease as to such applicable Target Formation, or (d) with respect to such Lease as to any applicable Target Formation, obligates the Company Group, in aggregate, to bear less than the Royalties set forth on Schedule ‎‎2.9 for such Lease as to such applicable Target Formation.

 

“Title Benefit Amount” shall mean the amount by which the Allocated Value of a Title Benefit Property is increased as a result of the existence of a Title Benefit.

 

Annex I – Page 33

 

 

“Title Benefit Notice” shall have the meaning set forth in Section 11.2(b).

 

“Title Benefit Property” shall have the meaning set forth in Section ‎‎11.2(b)(i).

 

“Title Defect” shall mean any Encumbrance, defect or other matter (for the avoidance of doubt, other than Permitted Encumbrances) that causes the Company Group, in aggregate, not to have Defensible Title.

 

“Title Defect Amount” shall have the meaning set forth in Section ‎‎11.2(g).

 

“Title Defect Notice” shall have the meaning set forth in Section ‎11.2(a).

 

“Title Defect Property” shall have the meaning set forth in Section ‎11.2(a)‎.

 

“Transaction Documents” shall mean this Agreement, the Escrow Agreement, the Assignment Agreement, the Restrictive Covenant Agreements, the Registration Rights Agreement, the Transition Services Agreement, and each other agreement, document and instrument required to be executed or delivered in accordance with this Agreement.

 

“Transfer Agent” means Continental Stock Transfer & Trust Company, or any successor transfer agent of Parent.

 

“Transfer Legend” shall mean a restrictive legend, in substantially the following form, to be placed on the Parent Class A Common Stock comprising the Equity Purchase Price:

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY STATE SECURITIES LAW. SUCH SECURITIES MAY NOT BE TRANSFERRED UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO SUCH TRANSFER OR IN THE OPINION OF COUNSEL FOR THE COMPANY, SUCH TRANSFER MAY BE MADE PURSUANT TO RULE 144 OR REGISTRATION UNDER THE ACT IS OTHERWISE UNNECESSARY IN ORDER FOR SUCH TRANSFER TO COMPLY WITH THE ACT.

 

“Transfer Taxes” shall have the meaning set forth in Section ‎‎15.3(a).

 

“Transition Services Agreement” shall mean the Transition Services Agreement in substantially the form attached hereto as Exhibit J to be executed and delivered by Seller (or Seller’s designee) and Buyer (or Buyer’s designee).

 

“Treasury Regulations” shall mean the regulations promulgated by the United States Department of the Treasury pursuant to and in respect of provisions of the Code. All references herein to sections of the Treasury Regulations shall include any corresponding provision or provisions of succeeding, similar, substitute, proposed or final Treasury Regulations.

 

“True Borrowed Money Indebtedness” has the meaning set forth in Section ‎4.7(d).

 

“Units” shall have the meaning set forth in Section ‎2.2(d).

 

Annex I – Page 34

 

 

“WARN Act” shall mean the Worker Adjustment and Retraining Notification Act, 29 U.S.C. Section 2101 et. seq., the regulations and rules thereunder, and any similar federal, state, foreign or local Law.

 

“Wells” shall have the meaning set forth in Section ‎‎2.2(b).

 

“Woodbine Formation” shall mean the entire correlative interval from 8,510 feet to 9,200 feet as shown on the log of the Goldsmith Operating, LLC – A.Y. Goldsmith-Benge Lease, Well No. 2 (API No. 42-313-30388), located in the D. Toner Survey, A-219, Madison County, Texas.

 

“Working Interest” shall mean, with respect to any Lease or Well, the interest in and to such Lease or Well (but limited to the applicable Target Formations or depth restrictions set forth on Schedule ‎‎2.9 for such Lease or for such Well, as applicable) that is burdened with the obligation to bear and pay costs and expenses of maintenance, development and operations on or in connection with such Lease or Well (but limited to the applicable Target Formations or depth restrictions set forth on Schedule ‎‎2.9 for such Lease or for such Well, as applicable), but without regard to the effect of any Royalties; provided, that if a Person’s “Working Interest” in any Lease or Well differs as to any part or depth, then a separate calculation shall be made as to each such part or depth.

 

Annex I – Page 35

 

 

exhibit N

 

FORM OF

REGISTRATION RIGHTS AGREEMENT

 

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is dated as of [●], 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 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.

 

2

 

 

“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.

 

“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.

 

3

 

 

“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.

 

4

 

 

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.

 

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.

 

5

 

 

(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.

 

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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.

 

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.

 

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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.

 

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.

 

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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;

 

(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;

 

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(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;

 

(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.

 

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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.

 

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.

 

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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 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.

 

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;

 

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(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

 

(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;

 

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(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

 

(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.

 

(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.

 

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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.

 

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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.

 

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.

 

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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.

 

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).

 

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(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).

 

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.

 

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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.

 

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:                       
  Name:  
  Title:  

 

  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:
   
  [●]
   
  By:              
  Name:  
  Title:  

 

  Notice Information: [●]

 

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 [●], 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 10.1

 

Execution Version

 

THIRD AMENDED AND RESTATED CREDIT AGREEMENT

 

Dated as of July 19, 2026

 

among

 

MAGNOLIA OIL & GAS INTERMEDIATE LLC,
as Holdings

 

MAGNOLIA OIL & GAS OPERATING LLC
as the Borrower,

 

The Several Lenders
from Time to Time Parties Hereto,

 

CITIBANK, N.A.,
as Administrative Agent, Collateral Agent,
Swingline Lender, an Issuing Bank and a Lender,

 

and

 

CITIBANK, N.A., JPMORGAN CHASE BANK, N.A., WELLS FARGO BANK, N.A., BANK OF
AMERICA, N.A., CAPITAL ONE, NATIONAL ASSOCIATION,

KEYBANK NATIONAL ASSOCIATION,

MUFG BANK, LTD., PNC CAPITAL MARKETS LLC,

REGIONS BANK, THE BANK OF NOVA SCOTIA, HOUSTON BRANCH, TRUIST BANK, and
FIFTH THIRD BANK, N.A. AS SUCCESSOR BY MERGER TO COMERICA BANK, NATIONAL
ASSOCIATION
as Joint Lead Arrangers

 

CITIBANK, N.A., JPMORGAN CHASE BANK, N.A., and WELLS FARGO BANK, N.A.,

as Joint Bookrunners

 

 

 

 

TABLE OF CONTENTS

 

Page

 

ARTICLE 1
Definitions

 

Section 1.1 Defined Terms 2
Section 1.2 Other Interpretive Provisions 60
Section 1.3 Accounting Terms 61
Section 1.4 Rounding 61
Section 1.5 References to Agreements, Laws, Etc. 61
Section 1.6 Times of Day 61
Section 1.7 Timing of Payment or Performance 61
Section 1.8 Currency Equivalents Generally 62
Section 1.9 Classification of Loans and Borrowings 62
Section 1.10 Hedging Requirements Generally 62
Section 1.11 Certain Determinations 62
Section 1.12 Pro Forma and Other Calculations 63
Section 1.13 Rates 66
Section 1.14 Divisions 66

 

ARTICLE 2
Amount and Terms of Credit

 

Section 2.1 Commitments 66
Section 2.2 Minimum Amount of Each Borrowing; Maximum Number of Borrowings 68
Section 2.3 Notice of Borrowing 68
Section 2.4 Disbursement of Funds 69
Section 2.5 Repayment of Loans; Evidence of Debt 70
Section 2.6 Conversions and Continuations 70
Section 2.7 Pro Rata Borrowings 71
Section 2.8 Interest 71
Section 2.9 Interest Periods 72
Section 2.10 Increased Costs, Illegality, Etc. 73
Section 2.11 Compensation 74
Section 2.12 Change of Lending Office 75
Section 2.13 Notice of Certain Costs 75
Section 2.14 Borrowing Base 75
Section 2.15 Defaulting Lenders 79
Section 2.16 [Reserved] 81
Section 2.17 Extension Offers 81
Section 2.18 Benchmark Replacement Setting 83

 

ARTICLE 3
Letters of Credit

 

Section 3.1 Letters of Credit 84
Section 3.2 Letter of Credit Applications 85
Section 3.3 Letter of Credit Participations 86
Section 3.4 Agreement to Repay Letter of Credit Drawings 88

 

i

 

 

Section 3.5 New or Successor Issuing Bank 89
Section 3.6 Role of Issuing Bank 90
Section 3.7 Cash Collateral 90
Section 3.8 Applicability of ISP 91
Section 3.9 Conflict with Issuer Documents 91
Section 3.10 Letters of Credit Issued for Restricted Subsidiaries 91
Section 3.11 Increased Costs 91
Section 3.12 Independence 92

 

ARTICLE 4
Fees; Commitments

 

Section 4.1 Fees 92
Section 4.2 Voluntary Reduction of Commitments 93
Section 4.3 Mandatory Termination of Commitments 94
Section 4.4 Termination, Revision and Reduction of Commitments; Increase, Reduction and Termination of Aggregate Elected Commitment Amount 94

 

ARTICLE 5
Payments

 

Section 5.1 Voluntary Prepayments 97
Section 5.2 Mandatory Prepayments 98
Section 5.3 Method and Place of Payment 99
Section 5.4 Net Payments 100
Section 5.5 Computations of Interest and Fees 104
Section 5.6 Limit on Rate of Interest 104

 

ARTICLE 6
Conditions Precedent to Effectiveness and Initial Borrowing

 

Section 6.1 Conditions to the Initial Borrowing 104
Section 6.2 Certain Funds Provision 110
Section 6.3 Expiration Date 110

 

ARTICLE 7
Conditions Precedent to All Subsequent Credit Events

 

ARTICLE 8
Representations, Warranties and Agreements

 

Section 8.1 Corporate Status 111
Section 8.2 Corporate Power and Authority; Enforceability 112
Section 8.3 No Violation 112
Section 8.4 Litigation 112
Section 8.5 Margin Regulations 112
Section 8.6 Governmental Approvals 112
Section 8.7 Investment Company Act 112
Section 8.8 True and Complete Disclosure 112
Section 8.9 Tax Matters 113
Section 8.10 Compliance with ERISA 113

 

ii

 

 

Section 8.11 Subsidiaries 113
Section 8.12 Intellectual Property 114
Section 8.13 Environmental Laws 114
Section 8.14 Properties 114
Section 8.15 Solvency 115
Section 8.16 Accounts 115
Section 8.17 Gas Imbalances, Prepayments 115
Section 8.18 Marketing of Production 115
Section 8.19 Hedge Agreements 115
Section 8.20 PATRIOT Act; OFAC 115
Section 8.21 No Material Adverse Effect 116
Section 8.22 Well Bores 116
Section 8.23 Effective Date Financials 116
Section 8.24 Security Documents 116
Section 8.25 Affected Financial Institution 117
Section 8.26 . No Credit Party is an Affected Financial Institution 117

 

ARTICLE 9
Affirmative Covenants

 

Section 9.1 Information Covenants 117
Section 9.2 Books, Records and Inspections 121
Section 9.3 Maintenance of Insurance 122
Section 9.4 Payment of Taxes 122
Section 9.5 Consolidated Corporate Franchises 122
Section 9.6 Compliance with Statutes, Regulations, Etc. 122
Section 9.7 ERISA 122
Section 9.8 Maintenance of Properties 123
Section 9.9 Transactions with Affiliates 123
Section 9.10 End of Fiscal Years; Fiscal Quarters 126
Section 9.11 Additional Guarantors, Grantors and Collateral 126
Section 9.12 Use of Proceeds 128
Section 9.13 Further Assurances 128
Section 9.14 Reserve Reports 129
Section 9.15 Change in Business 130
Section 9.16 Title Information 130
Section 9.17 Holdings Covenant 131
Section 9.18 Accounts 132
Section 9.19 Post-Closing Obligations 133
Section 9.20 Anti-Corruption Laws, Anti-Money Laundering Laws, and Sanctions 133

 

ARTICLE 10
Negative Covenants

 

Section 10.1 Limitation on Indebtedness 133
Section 10.2 Limitation on Liens 138
Section 10.3 Limitation on Fundamental Changes 141
Section 10.4 Limitation on Sale of Assets 143
Section 10.5 Limitation on Investments 145
Section 10.6 Limitation on Restricted Payments 149
Section 10.7 Limitations on Debt Payments and Amendments 153

 

iii

 

 

Section 10.8 Negative Pledge Agreements 154
Section 10.9 Limitation on Subsidiary Distributions 156
Section 10.10 Hedge Agreements 157
Section 10.11 Financial Performance Covenants 158
Section 10.12 Amendments to Organizational Documents 158
Section 10.13 Foreign Operations 159

 

ARTICLE 11
Events of Default

 

Section 11.1 Payments 159
Section 11.2 Representations, Etc. 159
Section 11.3 Covenants 159
Section 11.4 Default Under Other Agreements 159
Section 11.5 Bankruptcy, Etc. 160
Section 11.6 ERISA 160
Section 11.7 Guarantee 161
Section 11.8 Security Documents 161
Section 11.9 Judgments 161
Section 11.10 Change of Control 161
Section 11.11 Application of Proceeds 161
Section 11.12 Equity Cure 162

 

ARTICLE 12
The Agents

 

Section 12.1 Appointment 164
Section 12.2 Delegation of Duties 165
Section 12.3 Exculpatory Provisions 165
Section 12.4 Reliance by Agents 165
Section 12.5 Notice of Default 166
Section 12.6 Non-Reliance on Administrative Agent, Collateral Agent and Other Lenders 166
Section 12.7 Indemnification 167
Section 12.8 Agents in Its Individual Capacities 167
Section 12.9 Successor Agents 168
Section 12.10 Withholding Tax 168
Section 12.11 Security Documents and Collateral Agent under Security Documents and Guarantee 169
Section 12.12 Right to Realize on Collateral and Enforce Guarantee 170
Section 12.13 Administrative Agent May File Proofs of Claim 170
Section 12.14 Erroneous Payments 171
Section 12.15 Certain ERISA Matters 174

 

ARTICLE 13
Miscellaneous

 

Section 13.1 Amendments, Waivers and Releases 175
Section 13.2 Notices 178
Section 13.3 No Waiver; Cumulative Remedies 179
Section 13.4 Survival of Representations and Warranties 179
Section 13.5 Payment of Expenses; Indemnification 179
Section 13.6 Successors and Assigns; Participations and Assignments 181

 

iv

 

 

Section 13.7 Replacements of Lenders under Certain Circumstances 186
Section 13.8 Adjustments; Set-off 187
Section 13.9 Counterparts 188
Section 13.10 Severability 188
Section 13.11 Integration 188
Section 13.12 GOVERNING LAW 188
Section 13.13 Submission to Jurisdiction; Waivers 188
Section 13.14 Acknowledgments 189
Section 13.15 WAIVERS OF JURY TRIAL 190
Section 13.16 Confidentiality 190
Section 13.17 Release of Collateral and Guarantee Obligations 191
Section 13.18 USA PATRIOT Act 192
Section 13.19 Payments Set Aside 192
Section 13.20 Reinstatement 192
Section 13.21 Disposition of Proceeds 192
Section 13.22 Collateral Matters; Hedge Agreements 193
Section 13.23 Agency of the Borrower for the Other Credit Parties 193
Section 13.24 Acknowledgement and Consent to Bail-In of Affected Financial Institutions 193
Section 13.25 Acknowledgment Regarding Any Supported QFCs 193
Section 13.26 California Privacy Rights Act 194
Section 13.27 Existing Credit Agreement 194

 

v

 

 

Exhibits and Schedules

 

Exhibit A Form of Reserve Report Certificate
Exhibit B Form of Notice of Borrowing
Exhibit C Form of Guarantee
Exhibit D Form of Mortgage/Deed of Trust
Exhibit E Form of Collateral Agreement
Exhibit F Form of Second Lien Intercreditor Agreement
Exhibit G Form of Assignment and Assumption
Exhibit H-1 Form of Promissory Note (Loan)
Exhibit H-2 Form of Promissory Note (Swingline Loan)
Exhibit I Form of Intercompany Note
Exhibit J Form of Solvency Certificate
Exhibit K-1 Form of Non-Bank Tax Certificate (Non-U.S. Non-Partnership Lenders)
Exhibit K-2 Form of Non-Bank Tax Certificate (Non-U.S. Partnership Participants)
Exhibit K-3 Form of Non-Bank Tax Certificate (Non-U.S. Non-Partnership Participants)
Exhibit K-4 Form of Non-Bank Tax Certificate (Non-U.S. Partnership Lenders)
Exhibit L Form of Elected Commitment Increase Certificate
Exhibit M Form of Additional Lender Certificate
   
Schedule 1.1(a) Commitments
Schedule 1.1(b) Excluded Equity Interests
Schedule 1.1(c) Effective Date Subsidiary Guarantors
Schedule 1.1(g) Effective Date Unrestricted Subsidiaries
Schedule 8.4 Litigation
Schedule 8.11 Subsidiaries
Schedule 8.14 Properties
Schedule 8.16 Accounts
Schedule 8.17 Effective Date Gas Imbalance
Schedule 8.18 Effective Date Marketing Agreements
Schedule 8.19 Effective Date Hedge Agreements
Schedule 9.9 Effective Date Affiliate Transactions
Schedule 9.19 Post-Closing Obligations
Schedule 10.1 Effective Date Indebtedness
Schedule 10.2(d) Effective Date Liens
Schedule 10.5(d) Effective Date Investments
Schedule 10.8 Effective Date Negative Pledge Agreements
Schedule 13.2 Notice Addresses

 

vi

 

 

THIRD AMENDED AND RESTATED CREDIT AGREEMENT, dated as of July 19, 2026, among Magnolia Oil & Gas Intermediate LLC, a Delaware limited liability company (“Holdings”), Magnolia Oil & Gas Operating LLC, a Delaware limited liability company (the “Borrower”), the banks, financial institutions and other lending institutions from time to time parties as lenders hereto (each a “Lender” and, collectively, the “Lenders”), Citibank, N.A., as Administrative Agent and Collateral Agent for the Lenders, as the Swingline Lender and an Issuing Bank, and each other Issuing Bank from time to time party hereto.

 

WHEREAS, Holdings and the Borrower are party to that certain Second Amended and Restated Credit Agreement, dated as of November 13, 2024, with banks, financial institutions and other lending institutions from time to time parties as lenders thereto and Citibank, N.A., as administrative agent and collateral agent (as amended, supplemented or otherwise modified from time to time prior to the Effective Date, the “Existing Credit Agreement”);

 

WHEREAS, the Borrower has advised the Administrative Agent and the Lenders that it intends to acquire WildFire Intermediate Holdings, LLC, a Delaware limited liability company (together with its Subsidiaries, collectively, “WildFire”, and the Oil and Gas Properties of WildFire to be indirectly acquired in connection with the acquisition of WildFire, the “Effective Date Acquired Assets”), pursuant to that certain Purchase and Sale Agreement, dated as of July 19, 2026, by and among WildFire Energy I LLC, a Delaware limited liability company, as the seller (the “Effective Date Acquisition Seller”), the Borrower, as the buyer (the “Effective Date Acquisition Buyer”), and Parent, as parent (such agreement, the “Effective Date Acquisition Agreement” and such acquisition, the “Effective Date Acquisition”);

 

WHEREAS, in connection with the closing of the Effective Date Acquisition, (a) Holdings and the Borrower desire to amend and restate the Existing Credit Agreement in its entirety and the Borrower has requested that from time to time prior to the Maturity Date the Lenders provide Loans to the Borrower subject to the Available Commitment, (b) the Borrower has requested that the Administrative Agent and the Lenders increase the Aggregate Elected Commitment Amount from $450,000,000 to $1,750,000,000, (c) the Borrower has requested that the Administrative Agent and the Lenders increase the Borrowing Base from $800,000,000 to $2,000,000,000, (d) the Borrower has requested that each Issuing Bank issue Letters of Credit (subject to the Available Commitment) at any time and from time to time prior to the L/C Maturity Date, in an aggregate Stated Amount at any time outstanding not to exceed $100,000,000 and (e) the Borrower has requested that the Swingline Lender extend credit in the form of Swingline Loans (subject to the Available Commitment) at any time and from time to time prior to the Swingline Maturity Date, in an aggregate principal amount at any time outstanding not in excess of $50,000,000, in each case upon the satisfaction of the conditions precedent set forth in Article 6 (or waived in accordance with Section 13.1);

 

WHEREAS, (a) the proceeds of the Loans will be used by the Borrower for financing the Effective Date Acquisition, refinancing, as applicable, amounts outstanding under the Existing Credit Agreement, the payment of Transaction Expenses, the acquisition, development and exploration of Oil and Gas Properties and for working capital and other general corporate purposes of the Borrower and its Subsidiaries (including, without limitation, Permitted Acquisitions, Investments and any other transaction permitted hereunder), (b) Swingline Loans and Letters of Credit will be used by the Borrower for general corporate purposes of the Borrower and its Subsidiaries and (c) Letters of Credit will be used by the Borrower to support deposits required under purchase agreements pursuant to which the Borrower or one or more Subsidiaries may acquire Oil and Gas Properties; and

 

WHEREAS, the Lenders, the Swingline Lender and the Issuing Banks are willing to make available to the Borrower such revolving credit, swingline and letter of credit facilities upon the terms and subject to the conditions set forth herein, and the parties hereto are willing to amend and restate the Existing Credit Agreement in its entirety as set forth herein.

 

 

 

 

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

 

ARTICLE 1
Definitions.

 

Section 1.1      Defined Terms.

 

As used herein, the following terms shall have the meanings specified below:

 

“ABR” shall mean for any day a fluctuating rate per annum equal to the highest of (a) the Federal Funds Effective Rate plus ½ of 1.0%, (b) the Prime Rate in effect on such day and (c) Adjusted Term SOFR for a one (1)-month tenor in effect on such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1.0%; provided, that if ABR shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement. Any change in the ABR due to a change in the Prime Rate, the Federal Funds Effective Rate or Adjusted Term SOFR shall take effect at the opening of business on the day specified in the public announcement of such change in the Prime Rate, the Federal Funds Effective Rate or such Adjusted Term SOFR, respectively.

 

“ABR Loan” shall mean each Loan bearing interest based on the ABR.

 

“ABR Term SOFR Determination Day” has the meaning specified in the definition of “Term SOFR”.

 

“Acceptable Commodity Hedge Agreements” shall mean Hedge Agreements in the form of puts, swaps, floors, collars or other types reasonably acceptable to the Administrative Agent entered into with Approved Counterparties in respect of Hydrocarbons for the purpose of reducing the Credit Parties’ commodity price risk in respect of crude oil, natural gas, natural gas liquids or other Hydrocarbons.

 

“Acquisition Consolidated Total Debt to EBITDAX Ratio” shall mean, as of any date of determination, the ratio of (a) Consolidated Total Debt calculated on a pro forma basis for the Consolidated Total Debt projected to be outstanding on the Effective Date after giving effect to the Transactions occurring on the Effective Date to (b) Specified EBITDAX.

 

“Additional Lender” has the meaning assigned to such term in Section 4.4(c)(i).

 

“Additional Lender Certificate” has the meaning assigned to such term in Section 4.4(c)(ii)(G).

 

“Adjusted Term SOFR” shall mean, for purposes of any calculation, the rate per annum equal to Term SOFR for such calculation; provided that if Adjusted Term SOFR as so determined shall ever be less than the Floor, then Adjusted Term SOFR shall be deemed to be the Floor.

 

“Adjusted Total Commitment” shall mean, at any time, the Total Commitment less the aggregate amount of Commitments of all Defaulting Lenders.

 

“Administrative Agent” shall mean Citibank, N.A., as the administrative agent for the Lenders under this Agreement and the other Credit Documents, or any successor administrative agent appointed in accordance with the provisions of Section 12.9.

 

2

 

 

“Administrative Agent’s Office” shall mean the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 13.2, or such other address or account as the Administrative Agent may from time to time notify in writing to the Borrower and the Lenders.

 

“Administrative Questionnaire” shall mean, for each Lender, an administrative questionnaire in a form approved by the Administrative Agent.

 

“Affected Financial Institution” shall mean (a) any EEA Financial Institution or (b) any UK Financial Institution.

 

“Affiliate” shall mean, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with such Person. A Person shall be deemed to control another Person if such Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such other Person, whether through the ownership of voting securities, by contract or otherwise. “Controlling” and “controlled” shall have meanings correlative thereto.

 

“Agent-Related Party” shall mean, with respect to any Agent, its Affiliates and the officers, directors, employees, agents, attorney-in-fact, partners, trustees and advisors of such Agent and of such Agent’s Affiliates.

 

“Agents” shall mean the Administrative Agent and the Collateral Agent.

 

“Aggregate Elected Commitment Amount” shall mean, at any time, an amount equal to the sum of the aggregate Elected Commitments, as the same may be increased, reduced or terminated pursuant to Section 4.4(c). The Aggregate Elected Commitment Amount as of the Effective Date is $1,750,000,000.

 

“Agreement” shall mean this Credit Agreement, as amended, restated, amended and restated, supplemented or otherwise modified from time to time.

 

“All-In Yield” shall mean, as to any Indebtedness, the yield thereof, whether in the form of interest rate, margin, original issue discount, upfront fees, a SOFR or ABR floor, or other fees paid ratably to all lenders of such Indebtedness, in each case, incurred or payable by the Credit Parties generally to all the lenders of such Indebtedness; provided that (a) original issue discount and upfront fees shall be equated to interest rate assuming a five (5)-year life to maturity (or, if less, the stated life to maturity at the time of its incurrence of the applicable Indebtedness), and (b) “All-In Yield” shall not include arrangement fees, structuring fees, commitment fees, underwriting fees, success fees, ticking fees, consent or amendment fees and any similar fees (regardless of whether shared with, or paid to, in whole or in part, any or all lenders) and any other fees not paid ratably to all lenders of such Indebtedness.

 

“Anti-Corruption Laws” shall mean all laws, rules and regulations of any jurisdiction applicable to any of the Credit Parties from time to time concerning or relating to bribery or corruption including, to the extent applicable to any of the Credit Parties from time to time, including the United Kingdom Bribery Act of 2010 (the “Bribery Act”) and the United State Foreign Corrupt Practices Act of 1977 (the “FCPA”).

 

“Anti-Money Laundering Laws” shall mean all laws, rules and regulations of any jurisdiction applicable to any Credit Party from time to time concerning or relating to money laundering.

 

“Applicable Margin” shall mean,

 

3

 

 

(a)            for any day during a non-Investment Grade Period, with respect to any ABR Loan or SOFR Loan, as the case may be, the rate per annum set forth in the grid below based upon the Utilization Percentage in effect on such day:

 

Utilization Grid
Utilization Percentage X is less than 25% X is greater than or equal to 25% and less than
50%		 X is greater than or equal to 50% and less than
75%		 X is greater than or equal to 75% and less than
90%		 X is greater than or equal to 90%
SOFR Loans 1.75% 2.00% 2.25% 2.50% 2.75%
ABR Loans 0.75% 1.00% 1.25% 1.50% 1.75%
Commitment Fee Rate 0.375% 0.375% 0.50% 0.50% 0.50%

 

(b)            for any day during an Investment Grade Period, with respect to any ABR Loan or SOFR Loan, as the case may be, the rate per annum set forth in the grid below based upon the Applicable Rating Level in effect on such day:

 

Applicable Rating Level Grid
Pricing Level 1 2 3 4 5
Applicable Rating Level Baa1 / BBB+ or higher Baa2 / BBB Baa3 / BBB- Ba1 / BB+ Ba2 / BB or lower
SOFR Loans 1.125% 1.25% 1.50% 1.75% 2.00%
ABR Loans 0.125% 0.25% 0.50% 0.75% 1.00%
Commitment Fee Rate 0.125% 0.15% 0.20% 0.25% 0.30%

 

Each change in the Commitment Fee Rate or Applicable Margin shall apply during the period commencing on the effective date of such change and ending on the date immediately preceding the effective date of the next such change. Notwithstanding anything herein to the contrary,

 

(a)            if only one of the Credit Rating Agencies shall have in effect an Applicable Rating Level, then the Pricing Level shall be determined by reference to the available Applicable Rating Level;

 

(b)            if two Credit Rating Agencies shall have in effect an Applicable Rating Level, and such Applicable Rating Levels differ by one level, then the Pricing Level for the higher of the two Applicable Rating Levels shall apply (with the Applicable Rating Level for Pricing Level 1 being the highest and the Applicable Rating Level for Pricing Level 5 being the lowest);

 

(c)            if two Credit Rating Agencies shall have in effect an Applicable Rating Level, and there is a split in Applicable Rating Levels of such Credit Rating Agencies of more than one level, then the Pricing Level that is one level above the lower of the two Applicable Rating Levels shall apply;

 

(d)            if three Credit Rating Agencies shall have in effect an Applicable Rating Level, and any two or three of the Applicable Rating Levels are the same, then the Pricing Level shall be determined by reference to such Applicable Rating Levels;

 

4

 

 

(e)            if three Credit Rating Agencies shall have in effect an Applicable Rating Level, each Applicable Rating Level is in a different Pricing Level and there is not a split in Applicable Rating Levels by more than two levels, the Pricing Level that is the middle of the other two Credit Rating Agencies shall apply; and

 

(f)            if three Credit Rating Agencies shall have in effect an Applicable Rating Level, clause (d) above is not applicable and there is a split in Applicable Rating Levels by more than two levels, the Pricing Level that is one level above the lowest of the three Applicable Rating Levels shall apply.

 

Each change in the Applicable Margin resulting from a publicly announced change in the Applicable Rating Level during an Investment Grade Period shall be effective during the period commencing on the date of the public announcement thereof and ending on the date immediately preceding the effective date of the next such change. If the rating system of any such Credit Rating Agency shall change, or if any such Credit Rating Agency shall cease to be in the business of rating corporate debt obligations, the Borrower and the Lenders shall negotiate in good faith to amend this definition to reflect such changed rating system or the unavailability of ratings from such Credit Rating Agencies or shall select a replacement Credit Rating Agency and, pending the effectiveness of any such amendment or replacement, for purposes of determining the Applicable Margin, the Applicable Rating Level of the affected Credit Rating Agency shall be deemed to be the Credit Rating of such Credit Rating Agency as most recently in effect prior to such change or cessation.

 

“Applicable Rating Level” shall mean the Credit Rating applicable on any day during an Investment Grade Period and as determined from one or more Credit Rating Agencies selected by the Borrower on such day.

 

“Approved Counterparty” shall mean (a) any Hedge Bank and (b) any Person (other than a Hedge Bank) whose long term senior unsecured debt rating is BBB+/Baa1 by S&P or Moody’s (or their equivalent) or higher at the time of entering into any Hedge Agreement (or whose obligations under such Hedge Agreement are guaranteed by an Affiliate of such Person meeting such rating standards) and whose Hedge Agreements remain unsecured and do not contain margin call rights.

 

“Approved Electronic Platform” shall mean IntraLinks™, DebtDomain, SyndTrak, ClearPar or any other electronic platform chosen by the Administrative Agent to be its electronic transmission system.

 

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

 

“Assignment and Assumption” shall mean an assignment and acceptance substantially in the form of Exhibit G or such other form as may be approved by the Administrative Agent.

 

“Attorney Costs” shall mean all reasonable and documented fees, expenses and disbursements of any law firm or other external legal counsel.

 

“Authorized Officer” shall mean as to any Person, the President, the Chief Executive Officer, the Chief Financial Officer, the Chief Operating Officer, the Chief Accounting Officer, the Controller, the Treasurer, the Assistant or Vice Treasurer, the Vice President-Finance, the General Counsel and any manager, managing member or general partner, in each case, of such Person, and any other senior officer designated as such in writing to the Administrative Agent by such Person. Any document delivered hereunder that is signed by an Authorized Officer shall be conclusively presumed to have been authorized by all necessary corporate, limited liability company, partnership and/or other action on the part of the Borrower or any other Credit Party and such Authorized Officer shall be conclusively presumed to have acted on behalf of such Person.

 

5

 

 

“Auto-Extension Letter of Credit” shall have the meaning provided in Section 3.2(b).

 

“Available Commitment” shall mean, at any time, (a) the Loan Limit at such time minus (b) the aggregate Total Exposures of all Lenders at such time.

 

“Available Tenor” shall mean, as of any date of determination and with respect to the then-current Benchmark, as applicable, (x) if such Benchmark is a term rate, any tenor for such Benchmark (or component thereof) that is or may be used for determining the length of an interest period pursuant to this Agreement or (y) otherwise, any payment period for interest calculated with reference to such Benchmark (or component thereof) that is or may be used for determining any frequency of making payments of interest calculated with reference to such Benchmark pursuant to this Agreement, in each case, as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period” and/or Section 2.9 pursuant to Section 2.18(d).

 

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

 

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

 

“Bank Price Deck” shall mean the Administrative Agent’s forward curve for each of oil, natural gas and other Hydrocarbons, as applicable, furnished to the Borrower by the Administrative Agent from time to time in accordance with the terms of this Agreement.

 

“Bankruptcy Code” shall have the meaning provided in Section 11.5.

 

“Basket” shall mean any amount, threshold, exception or value (including any Fixed Basket and Non-Fixed Basket) permitted or prescribed with respect to any Lien, Indebtedness, Disposition, Investment, Restricted Payment, transaction, action, judgment or amount under any provision in this Agreement or any other Credit Document.

 

“Benchmark” shall mean, initially, the Term SOFR Reference Rate; provided that if a Benchmark Transition Event has occurred with respect to the Term SOFR Reference Rate or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to Section 2.18(a).

 

“Benchmark Replacement” shall mean, with respect to any Benchmark Transition Event, the sum of: (a) the alternate benchmark rate that has been selected by the Administrative Agent and the Borrower giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement to the then-current Benchmark for Dollar-denominated syndicated credit facilities at such time and (b) the related Benchmark Replacement Adjustment; provided that, if such Benchmark Replacement as so determined would be less than the Floor, such Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Credit Documents.

 

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

 

“Benchmark Replacement Date” shall mean the earlier to occur of the following events with respect to the then-current Benchmark:

 

(a)            in the case of clause (a) or (b) of the definition of “Benchmark Transition Event,” the later of (i) the date of the public statement or publication of information referenced therein and (ii) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof); or

 

(b)            in the case of clause (c) of the definition of “Benchmark Transition Event,” the first date on which such Benchmark (or the published component used in the calculation thereof) has been determined and announced by the regulatory supervisor for the administrator of such Benchmark (or such component thereof) to be non-representative; provided that such non-representativeness will be determined by reference to the most recent statement or publication referenced in such clause (c) and even if any Available Tenor of such Benchmark (or such component thereof) continues to be provided on such date.

 

For the avoidance of doubt, the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (a) or (b) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).

 

“Benchmark Transition Event” shall mean the occurrence of one or more of the following events with respect to the then-current Benchmark:

 

(a)            a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely; provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);

 

(b)            a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Federal Reserve Board, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely; provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or

 

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(c)            a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are not, or as of a specified future date will not be, representative.

 

For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).

 

“Benchmark Transition Start Date” shall mean, in the case of a Benchmark Transition Event, the earlier of (a) the applicable Benchmark Replacement Date and (b) if such Benchmark Transition Event is a public statement or publication of information of a prospective event, the 90th day prior to the expected date of such event as of such public statement or publication of information (or if the expected date of such prospective event is fewer than 90 days after such statement or publication, the date of such statement or publication).

 

“Benchmark Unavailability Period” shall mean, the period (if any) (a) beginning at the time that a Benchmark Replacement Date has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Credit Document in accordance with Section 2.18 and (b) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Credit Document in accordance with Section 2.18.

 

“Beneficial Ownership Certification” shall mean a certification regarding beneficial ownership as required by the Beneficial Ownership Regulation.

 

“Beneficial Ownership Regulation” shall mean 31 C.F.R. § 1010.230.

 

“benefited Lender” shall have the meaning provided in Section 13.8(a).

 

“Board” shall mean the Board of Governors of the Federal Reserve System of the United States of America (or any successor).

 

“Board of Directors” shall mean, as to any Person, the board of directors or other governing body of such Person, or if such Person is owned or managed by a single entity, the board of directors or other governing body of such entity.

 

“Bookrunner” shall mean Citibank, N.A., JPMorgan Chase Bank, N.A., and Wells Fargo Bank, N.A., each in its capacity as a bookrunner in respect of the RBL Facility.

 

“Borrower” shall have the meaning provided in the introductory paragraph hereto.

 

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“Borrowing” shall mean the incurrence of one Type of Loan on a given date (or resulting from conversions on a given date) having, in the case of SOFR Loans, the same Interest Period (provided that ABR Loans incurred pursuant to Section 2.10(b) shall be considered part of any related Borrowing of SOFR Loans).

 

“Borrowing Base” shall mean, at any time, an amount equal to the amount determined in accordance with Section 2.14, as the same may be adjusted from time to time pursuant to the provisions thereof and/or pursuant to Section 9.16. As of the Effective Date, the Borrowing Base shall be deemed to be equal to $2,000,000,000.

 

“Borrowing Base Properties” shall mean the Oil and Gas Properties of the Credit Parties (other than Holdings) included in the Initial Reserve Report and thereafter in the Reserve Report most recently delivered pursuant to Section 9.14.

 

“Borrowing Base Reduction Debt” shall mean Permitted Additional Debt issued or incurred by a Credit Party in accordance with Section 10.1(p) (excluding $200,000,000 of additional Indebtedness issued or incurred under Section 10.1(p)).

 

“Borrowing Base Value” shall mean, with respect to any Oil and Gas Property of a Credit Party or any Hedge Agreement in respect of commodities: (x)  in the case of any Oil and Gas Property, the value attributed to such Oil and Gas Property in the Borrowing Base then in effect, as determined by the Administrative Agent in accordance with Section 2.14 or 5.2(b) and (y) in the case of any Hedge Agreement, the Swap PV.

 

“Bridge Facility” shall mean that certain senior 364-day unsecured bridge term loan facility described in the Bridge Facility Commitment Letter and in an aggregate principal amount not to exceed $1,500,000,000 less the sum of the gross proceeds received or funded into escrow on or prior to the date of the consummation of the Effective Date Acquisition from the sale and issuance of the Effective Date Acquisition Notes and the Effective Date Acquisition Shares; provided that, if any final definitive documentation with respect to such facility has been executed, “Bridge Facility” shall mean the facility described in such documentation.

 

“Bridge Facility Commitment Letter” shall mean that certain Commitment Letter, dated as of July 19, 2026, from JPMorgan Chase Bank, N.A., Citigroup Global Markets Inc., Wells Fargo Bank, N.A. and Wells Fargo Securities, LLC, collectively as commitment parties, to the Borrower.

 

“Business Day” shall mean any day excluding Saturday, Sunday and any other day on which banking institutions in New York City or Houston, Texas are authorized by law or other governmental actions to close.

 

“Capital Lease” shall mean, as applied to any Person, any lease of any property (whether real, personal or mixed) by that Person as lessee that, in conformity with GAAP, is, or is required to be, accounted for as a capital lease on the balance sheet of that Person; provided that any lease that would be characterized as an operating lease in accordance with GAAP on January 1, 2018 (whether or not such operating lease was in effect on such date) shall continue to be accounted for as an operating lease (and not as a Capital Lease) for purposes of this Agreement regardless of any change in GAAP following January 1, 2018, that would otherwise require such lease to be re-characterized (on a prospective or retroactive basis or otherwise) as a Capital Lease.

 

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“Cash Collateral” shall have the meaning provided in Section 3.7(c).

 

“Cash Collateralization” shall have a correlative meaning to the term “Cash Collateralize”.

 

“Cash Collateralize” shall have the meaning provided in Section 3.7(c).

 

“Cash Management Agreement” shall mean any agreement entered into from time to time by the Borrower or any of the Borrower’s Restricted Subsidiaries in connection with cash management services for collections, other Cash Management Services and for operating, payroll and trust accounts of such Person, including automatic clearing house services, controlled disbursement services, electronic funds transfer services, lockbox services, stop payment services and wire transfer services.

 

“Cash Management Bank” shall mean any Person that either (a) at the time it provides Cash Management Services, (b) on the Effective Date or (c) at any time after it has provided any Cash Management Services, is a Lender or an Agent or an Affiliate of a Lender or an Agent.

 

“Cash Management Obligations” shall mean obligations owed by the Borrower or any Restricted Subsidiary to any Cash Management Bank in connection with, or in respect of, any Cash Management Services.

 

“Cash Management Services” shall mean (a) commercial credit cards, merchant card services, purchase or debit cards, including non-card e-payables services, (b) treasury management services (including controlled disbursement, overdraft, automated clearing house fund transfer services, return items and interstate depository network services) and (c) any other demand deposit or operating account relationships or other cash management services, including any Cash Management Agreement.

 

“Casualty Event” shall mean, with respect to any Collateral, (a) any damage to, destruction of, or other casualty or loss involving, any property or asset or (b) any seizure, condemnation, confiscation or taking under the power of eminent domain of, or any requisition of title or use of, or relating to, or any similar event in respect of, any property or asset.

 

“Certain Funds Provision” shall have the meaning provided in Section 6.2.

 

“CFC” shall mean a “controlled foreign corporation” within the meaning of Section 957 of the Code.

 

“Change in Law” shall mean (a) the adoption of any law, treaty, order, policy, rule or regulation after the Effective Date, (b) any change in any law, treaty, order, policy, rule or regulation or in the interpretation, implementation or application thereof by any Governmental Authority after the Effective Date or (c) compliance by any Lender with any guideline, request, directive or order enacted or promulgated after the Effective Date by any central bank or other governmental or quasi-governmental authority (whether or not having the force of law); provided that notwithstanding anything herein to the contrary, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Basel Committee on Banking Regulations and Supervisory Practices (or any successor or similar authority) and all guidelines, requests, directives, orders, rules and regulations adopted, enacted or promulgated in connection therewith shall be deemed to have gone into effect after the Effective Date regardless of the date adopted, enacted or promulgated and shall be included as a Change in Law but solely for such costs that would have been included if they would have otherwise been imposed under clauses (a)(ii) and (c) of Section 2.10 or Section 3.11 and only to the extent a Lender is imposing applicable increased costs or costs in connection with capital adequacy requirements similar to those described in clauses (a)(ii) and (c) of Section 2.10 or Section 3.11 generally on other borrowers of comparable loans under United States reserve based credit facilities under credit agreements having similar reimbursement provisions.

 

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“Change of Control” shall mean and be deemed to have occurred if:

 

(a)            the Borrower shall cease to be a direct Wholly owned Subsidiary of Holdings (or any successor);

 

(b)            Holdings shall cease to be a direct Wholly owned Subsidiary of Opco Parent (or any successor);

 

(c)            Parent shall cease to (i) be the managing member of Opco Parent or (ii) have, in its capacity as the managing member of Opco Parent, the power to exercise control over and direct the management policies and decisions of Opco Parent;

 

(d)            any Person or Persons constituting a “group” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) (excluding (i) any employee benefit plan of such Person or “group” and its Subsidiaries and any Person acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan, (ii) one or more Permitted Holders, whether individually or as a group, (iii) any “group” which includes any one or more of the Permitted Holders (the Permitted Holders in such “group”, the “Group Members”) if such Group Members collectively are the record holders of Equity Interests representing more than fifty percent (50%) of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of Parent that are beneficially owned by such “group” in the aggregate or (iv) any corporation or other Person owned, directly or indirectly, by the holders of the issued and outstanding Equity Interests of Parent in substantially the same proportions as their ownership of such Equity Interests in Parent) shall become the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 of the Exchange Act), directly or indirectly, of Equity Interests representing more than forty percent (40%) of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of Parent and the percentage of the aggregate ordinary voting power so held is greater than the percentage of the aggregate ordinary voting power represented by the Equity Interests of Parent beneficially owned, directly or indirectly, in the aggregate by the Permitted Holders, unless the Permitted Holders have, at such time, the right or the ability by voting power, contract or otherwise to elect or designate for election at least a majority of the Board of Directors of Holdings or the Borrower; or

 

(e)            a “Change of Control” (as defined in the documentation governing the Senior Unsecured Notes, the Bridge Facility, the Senior WildFire Notes, any Permitted Additional Debt or any Permitted Refinancing Indebtedness incurred in respect thereof), in each case to the extent then constituting Material Indebtedness shall have occurred.

 

“Citi” shall mean Citigroup Global Markets Inc., Citibank, N.A., Citicorp USA, Inc., Citicorp North America, Inc. and/or any of their affiliates as any of them shall determine to be appropriate to provide the services contemplated herein. It is understood and agreed that Citibank, N.A., in its capacity as Administrative Agent and Collateral Agent for the Lenders, as the Swingline Lender, as an Issuing Bank and as a Lender, is entering into this Agreement for and on behalf of Citi.

 

“Class” shall mean (i) with respect to Commitments or Loans, those of such Commitments or Loans that have the same terms and conditions (without regard to differences in the Type of Loan, Interest Period, upfront fees, original issue discount or similar fees paid or payable in connection with such Commitments or Loans, or differences in tax treatment (e.g., “fungibility”)); provided that such Commitments or Loans may be designated in writing by the Administrative Agent, the Borrower and Lenders holding such Commitments or Loans as a separate Class from other Commitments or Loans that have the same terms and conditions and (ii) with respect to Lenders, those of such Lenders that have Commitments or Loans of a particular Class.

 

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“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

 

“Collateral” shall have the meaning provided for such term in each of the Security Documents and shall include any and all assets securing or intended to secure any or all of the Obligations; provided that with respect to any Mortgages, “Collateral”, as defined herein, shall include “Mortgaged Property” as defined therein.

 

“Collateral Agent” shall mean Citibank, N.A., as collateral agent under the Security Documents, or any successor collateral agent appointed in accordance with the provisions of Section 12.9.

 

“Collateral Agreement” shall mean the Third Amended and Restated Collateral Agreement, dated as of the Effective Date, by and among the Borrower, the other Grantors party thereto and the Collateral Agent, for the benefit of the Secured Parties, as amended, supplemented, restated or otherwise modified from time to time in accordance with its terms, substantially in the form of Exhibit E hereto.

 

“Collateral Coverage Minimum” shall mean that the Mortgaged Properties shall represent as of the Effective Date, at least 85% of the PV-9 of the Credit Parties’ total Proved Reserves included either in the Initial Reserve Report or in the most recent Reserve Report delivered pursuant to Section 9.14.

 

“Commitment” shall mean, (a) with respect to each Lender that is a Lender on the Effective Date, the amount set forth opposite such Lender’s name on Schedule 1.1(a) as such Lender’s “Commitment” and (b) in the case of any Lender that becomes a Lender after the Effective Date, the amount specified as such Lender’s “Commitment” in the Assignment and Assumption pursuant to which such Lender assumed a portion of the Total Commitment, in each case as the same may be changed from time to time pursuant to the terms of this Agreement. The aggregate amount of the Commitments as of the Effective Date is $2,250,000,000.

 

“Commitment Fee” shall have the meaning provided in Section 4.1(a).

 

“Commitment Fee Rate” shall mean, for any day, with respect to the Available Commitment on such day, the applicable rate per annum set forth next to the row heading “Commitment Fee Rate” in the definition of “Applicable Margin” and based upon the Utilization Percentage or Applicable Rating Level, as applicable, in effect on such day.

 

“Commitment Percentage” shall mean, at any time, for each Lender, the percentage obtained by dividing (a) such Lender’s Commitment at such time by (b) the amount of the Total Commitment at such time; provided that at any time when the Total Commitment shall have been terminated, each Lender’s Commitment Percentage shall be the percentage obtained by dividing (i) such Lender’s Total Exposure at such time by (ii) the aggregate Total Exposures of all Lenders at such time (with such Total Exposure, and the component thereof, calculated using any applicable Lender’s Commitment Percentage immediately prior to the termination of the Total Commitment).

 

“Commodity Account” shall mean any commodity account maintained by the Credit Parties. All funds in such Commodity Accounts (other than Excluded Accounts) shall be conclusively presumed to be Collateral and proceeds of Collateral and the Agents and the Lenders shall have no duty to inquire as to the source of the amounts on deposit in the Commodity Accounts.

 

“Commodity Exchange Act” shall mean the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.

 

“Confidential Information” shall have the meaning provided in Section 13.16.

 

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“Conforming Changes” shall mean, with respect to either the use or administration of Term SOFR or the use, administration, adoption or implementation of any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “ABR,” the definition of “Business Day,” the definition of “U.S. Government Securities Business Day,” the definition of “Interest Period” or any similar or analogous definition or Section 2.9 (or the addition of a concept of “interest period”), timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, the applicability and length of lookback periods, the applicability of Section 2.11 and other technical, administrative or operational matters) that the Administrative Agent (in consultation with the Borrower) decides may be appropriate to reflect the adoption and implementation of any such rate or to permit the use and administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent (in consultation with the Borrower) decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of any such rate exists, in such other manner of administration as the Administrative Agent decides is reasonably necessary in connection with the administration of this Agreement and the other Credit Documents).

 

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

 

“Consolidated Cash Balance” shall mean, at any time of determination, cash and cash equivalents held or owned by (either directly or indirectly), credited to the account of or that would otherwise be required to be reflected as an asset on the balance sheet of the Borrower and the Guarantors (other than Holdings); provided that the Consolidated Cash Balance shall exclude, without duplication, the sum of (a) cash or cash equivalents received from the issuance of Permitted Additional Debt or Permitted Refinancing Indebtedness thereof or other Indebtedness permitted to be incurred by this Agreement and the Credit Documents (other than the proceeds of any Loan) and used for any purpose permitted under this Agreement within five (5) Business Days from the date of receipt thereof, (b) any cash or cash equivalents constituting the proceeds of any issuance of Equity Interests of the Borrower or a contribution to the common equity capital of the Borrower and used for any purpose permitted under this Agreement within thirty (30) days from the date of receipt thereof, (c) any cash or cash equivalents set aside in Excluded Accounts, (d) any Cash Collateral which Cash Collateralizes the Letters of Credit Outstanding, (e) any cash or cash equivalents set aside in connection with Permitted Acquisitions and other permitted Investments and (i) constituting purchase price pledges and/or deposits made or held or (ii) used within five (5) Business Days, in each case, pursuant to a binding and enforceable purchase and sale agreement or similar binding and enforceable agreement with an unaffiliated third party containing customary provisions, including, without limitation, provisions regarding the payment and refunding of such deposits, (f) any cash or cash equivalents for which the Borrower or any applicable Guarantor has issued checks or initiated wires or ACH transfers (or in its respective good faith discretion, will issue checks, initiate wires or ACH transfers within five (5) Business Days), (g) any cash or cash equivalents set aside to pay royalty obligations, working interest/operator obligations, production payments, vendor payments, suspense payments, severance and ad valorem taxes, payroll, payroll taxes, other taxes, employee wage and benefits payments, and trust and fiduciary obligations or other similar obligations or payments of the Borrower or any applicable Guarantor to unaffiliated third parties, in each case, that the Borrower or the applicable Guarantor reasonably anticipates in good faith will become due and payable within 90 days and (h) any cash or cash equivalents in any escrow accounts or fiduciary or trust accounts that are used exclusively in the ordinary course of the Borrower or any applicable Guarantor’s business for plugging and abandonment, remediation, and similar obligations owed to unaffiliated third parties.

 

“Consolidated Current Assets” shall mean, as of any date of determination, without duplication, the sum of (a) all amounts that would, in conformity with GAAP, be set forth opposite the caption “total current assets” (or any like caption) on a consolidated balance sheet of the Borrower and its Restricted Subsidiaries at such date, plus (b) the Available Commitment as of such date, but excluding (i) all non-cash assets under ASC 815, (ii) the current portion of current and deferred income tax assets, and (iii) assets to the extent resulting from non-cash gains required under ASC 410, plus (c) to the extent not constituting current assets, any marketable securities, treasury bonds and bills, certificates of deposit, investments in money market funds and commercial paper of the Borrower and its Restricted Subsidiaries as of such date.

 

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“Consolidated Current Liabilities” shall mean, as of any date of determination, without duplication, the sum of all amounts that would, in conformity with GAAP, be set forth opposite the caption “total current liabilities” (or any like caption) on a consolidated balance sheet of the Borrower and its Restricted Subsidiaries on such date, but excluding, without duplication, (a) all non-cash obligations under ASC 815, (b) the current portion of current and deferred income tax liabilities or any amounts payable as tax distributions in accordance with Section 10.6(f)(i) or (ii), (c) the current portion of any Loans and other long-term liabilities (including, without limitation, Hedging Obligations), (d) liabilities resulting from the current maturity of the RBL Facility, the Senior Unsecured Notes, the Bridge Facility, the Senior WildFire Notes or other Indebtedness for borrowed money, (e) the current portion of interest, (f) liabilities in respect of unpaid earn-outs and accrued litigation settlement costs, (g) current liabilities consisting of deferred revenue, (h) any non-cash liabilities recorded in connection with stock-based or similar incentive-based compensation awards or arrangements, (i) liabilities to the extent resulting from non-cash losses or charges required under ASC 410 and (j) any non-cash liabilities recorded in connection with the assumption of gathering or firm transportation contracts under ASC 805.

 

“Consolidated Current Ratio” shall mean, as of any date of determination, the ratio of (a) Consolidated Current Assets to (b) Consolidated Current Liabilities; provided that the Consolidated Current Ratio shall be determined for the relevant Test Period on a Pro Forma Basis.

 

“Consolidated Depreciation, Depletion and Amortization Expense” shall mean, with respect to any Person for any period, the total amount of depreciation, depletion and amortization expense of such Person and its Restricted Subsidiaries, including the amortization of deferred financing fees, debt issuance costs, and commissions, fees and expenses and amortization of unrecognized prior service costs and actuarial gains and losses 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.

 

“Consolidated EBITDAX” shall mean, with respect to any Person for any period, the Consolidated Net Income of such Person and its Restricted Subsidiaries for such period:

 

(a)            increased (without duplication) by the following, in each case (other than in the case of clauses (a)(viii) and (a)(xiii)) to the extent deducted (and not added back) in determining Consolidated Net Income for such period:

 

(i)            provision for taxes based on income or profits or capital gains, including federal, state, franchise, excise, property and similar taxes and foreign withholding taxes (including (i) 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 (ii) the amount of distributions actually made to any Parent Entity in respect of such period in accordance with Section 10.6(f)(i) or (ii) and the net tax expense associated with any adjustments made pursuant to clauses (a) through (u) of the definition of Consolidated Net Income), plus

 

(ii)           Fixed Charges for such period (including (x) bank fees and other deferred financing fees and (y) costs of surety bonds in connection with financing activities), plus amounts excluded from Consolidated Interest Expense as set forth in clauses (i)(q) through (y) in the definition of Consolidated Interest Expense, plus

 

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(iii)          Consolidated Depreciation, Depletion and Amortization Expense for such period, plus

 

(iv)          any other non-cash charges, including any write-offs or write-downs 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, (1) the Borrower may determine not to add back such non-cash charge in the current period and (2) to the extent the Borrower does decide to add back such non-cash charge, the cash payment in respect thereof 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

 

(v)           the amount of any reductions in arriving at Net Income resulting from the application of Accounting Standards Codification Topic No. 810, Consolidation, plus

 

(vi)          the amount of management, monitoring, consulting, transaction, advisory and other fees (including termination fees) and indemnities and expenses paid or accrued in such period to the extent permitted under Section 9.9, plus

 

(vii)         [reserved], plus

 

(viii)        cash receipts (or any netting arrangements resulting in reduced cash expenditures) not representing Consolidated EBITDAX or Consolidated Net Income in any period to the extent non-cash gains relating to such income were deducted in the calculation of Consolidated EBITDAX pursuant to paragraph (b) below for any previous period and not added back, plus

 

(ix)           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 stockholders 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

 

(x)           any net loss from disposed, abandoned or discontinued operations (excluding held-for-sale discontinued operations until actually disposed of), plus

 

(xi)           [reserved], plus

 

(xii)          exploration expenses or costs (to the extent the Borrower adopts the successful efforts method of accounting), plus

 

(xiii)         adjustments consistent with Regulation S-X of the Securities Act, plus

 

(xiv)        [reserved]; plus

 

(xv)         the amount of any non-cash interest expense of non-wholly owned Subsidiaries attributable to minority Equity Interests of third parties; and

 

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(b)            decreased (without duplication) by the following, in each case to the extent included in determining Consolidated Net Income for such period:

 

(i)            non-cash gains increasing Consolidated Net Income for such period, excluding any non-cash gains that represent the reversal of an accrual or reserve for any anticipated cash charges in any prior period (other than any such accrual or reserve that has been added back to Consolidated Net Income in calculating Consolidated EBITDAX in accordance with this definition), plus

 

(ii)           any non-cash gains with respect to cash actually received in a prior period unless such cash did not increase Consolidated EBITDAX in such prior period, plus

 

(iii)          any net income from disposed, abandoned or discontinued operations (excluding held-for-sale discontinued operations until actually disposed of).

 

For any calculation of EBITDAX prior to the date when the financial statements for the fiscal quarter ended June 30, 2026 are required to be delivered pursuant to Section 9.1(b), EBITDAX (prior to giving effect to any Pro Forma Basis adjustments) shall be deemed to be Specified EBITDAX. For the avoidance of doubt, Consolidated EBITDAX shall be calculated, including pro forma adjustments, in accordance with Section 1.12.

 

“Consolidated Interest Expense” shall mean, with respect to any Person for any period, without duplication, the sum of:

 

(i)            consolidated interest expense of such Person and its Restricted Subsidiaries for such period, to the extent such expense was deducted (and not added back) in computing Consolidated Net Income (including (a) amortization of original issue discount resulting from the issuance of Indebtedness at less than par, (b) all commissions, discounts and other fees and charges owed with respect to letters of credit or bankers acceptances, (c) non-cash interest payments (but excluding any non-cash interest expense attributable to the movement in the mark to market valuation of obligations under Hedge Agreements or other derivative instruments pursuant to GAAP), (d) the interest component of obligations under Capital Leases, and (e) net payments, if any, made (less net payments, if any, received), pursuant to interest rate Hedge Agreements with respect to Indebtedness, and excluding (q) any prepayment premium or penalty, (r) annual agency fees paid to the administrative agents and collateral agents under any credit facilities or other debt instruments or document, (s) costs associated with Hedge Agreements and breakage costs in respect of Hedge Agreements related to interest rates, (t) any expense resulting from the discounting of any Indebtedness in connection with the application of recapitalization accounting or, if applicable, recapitalization or purchase accounting in connection with the Transactions or any acquisition (or purchase of assets), (u) penalties and interest relating to taxes and any other fees related to the Transactions or any acquisitions (or purchases of assets) after the Effective Date, (v) any “additional interest” with respect to any securities, (w) amortization or expensing of deferred financing fees, amendment and consent fees, debt issuance costs, commissions, fees and expenses, (x) any amortization or expensing of bridge, commitment and other financing fees and any other fees related to the Transactions or related to any acquisitions (or purchases of assets) after the Effective Date and (y) any accretion of accrued interest on discounted liabilities (other than Indebtedness except to the extent arising from the application of purchase or recapitalization accounting)); plus

 

(ii)           consolidated capitalized interest of such Person and its Restricted Subsidiaries for such period, whether paid or accrued; less

 

(iii)          interest income of such Person and its Restricted Subsidiaries for such period.

 

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For purposes of this definition, interest on obligations in respect of Capital Leases shall be deemed to accrue at an interest rate reasonably determined by such Person to be the rate of interest implicit in such obligations in accordance with GAAP.

 

“Consolidated Net Income” shall mean, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, and otherwise determined in accordance with GAAP; provided, however, that, without duplication:

 

(a)            any net after-tax effect of extraordinary, non-recurring or unusual gains, losses, charges or expenses or losses, charges or expenses relating to any strategic initiatives (including multi-year strategic initiatives), Transaction Expenses, restructuring costs and reserves, duplicative running costs, relocation costs, expenses related to any reconstruction, decommissioning, recommissioning or reconfiguration of fixed assets for alternative uses, Public Company Costs, facility consolidation and closing costs, severance costs and expenses, one-time compensation charges, costs relating to pre-opening, opening, closing and consolidation costs for facilities, signing, retention or completion bonuses, executive recruiting and retention costs, costs incurred in connection with any strategic initiatives, transition costs, costs 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 Effective Date (including integration costs), other business optimization expenses (including costs and expenses relating to business optimization programs, tax savings and optimization initiatives, and new systems design, retention charges, system establishment costs (including information technology systems) and implementation costs and project start-up costs), operating expenses attributable to the implementation of cost-savings initiatives, consulting fees and curtailments and modifications to pension and post-retirement employee benefit plans shall be excluded (other than workover, completion, plugging and abandonment and similar expenses); provided that the aggregate amount of restructuring costs and reserves and similar charges excluded pursuant to this clause (a) shall not exceed 25% of Consolidated Net Income for such period;

 

(b)            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, shall be excluded;

 

(c)            any net after-tax effect of gains or losses on disposal, abandonment (including asset retirement costs) or discontinuance of disposed, abandoned or discontinued operations, as applicable, shall be excluded; provided that any exclusion for the discontinuance of discontinued operations held for sale shall be at the option of the Borrower pending the consummation of such sale;

 

(d)            any net after-tax effect of gains or losses (less all fees, expenses and charges relating thereto) attributable to (i) asset dispositions or abandonments or the sale or other disposition of any Equity Interests of any Person other than in the ordinary course of business, as determined in good faith by the Borrower and (ii) the sale of Oil and Gas Properties (other than, for the avoidance of doubt, the sale of Hydrocarbons in the ordinary course of business), shall be excluded;

 

(e)            the Net Income for such period of any Person that is an Unrestricted Subsidiary shall be excluded; provided that 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 Permitted Investments (or to the extent converted into cash or Permitted Investments) to such Person or a Restricted Subsidiary thereof in respect of such period;

 

(f)            [reserved];

 

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(g)            effects of adjustments (including the effects of such adjustments pushed down to such Person and its Restricted Subsidiaries) in such Person’s consolidated financial statements pursuant to GAAP attributable to the application of recapitalization accounting or purchase accounting, as the case may be, in relation to the Transactions or any consummated acquisition, joint venture or similar investment permitted under this Agreement consummated prior to or after the Effective Date or the amortization or write-off or write-down of any amounts thereof, net of taxes, shall be excluded;

 

(h)            any net after-tax effect of income (loss) from the early extinguishment or conversion of (a) Indebtedness, (b) Hedge Agreements or (c) other derivative instruments shall be excluded;

 

(i)             any impairment charge or asset write-off or write-down in each case, pursuant to GAAP, and the amortization of intangibles arising pursuant to GAAP, and any impairment charges, asset write-offs or write-down, including ceiling test write-downs, on Oil and Gas Properties under GAAP or SEC guidelines shall be excluded;

 

(j)             (a) any equity based or non-cash compensation charge or expense, including any such charge or expense arising from grants of stock appreciation, equity incentive programs or similar rights, stock options, restricted stock or other rights to, and any cash charges associated with the rollover, acceleration or payout of, Equity Interests by management of such Person or of a Restricted Subsidiary or any Parent Entity, (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;

 

(k)            any fees, expenses or charges incurred during such period, or any amortization thereof for such period, in connection with any acquisition, Investment, Disposition or other transfer, incurrence or repayment of Indebtedness (including such fees, expenses or charges related to the syndication and incurrence of any securities or credit facilities), issuance of Equity Interests (including by any direct or indirect parent of the Borrower), recapitalization, refinancing transaction or amendment or modification of any debt instrument (including any amendment or other modification of any securities and any credit facilities) and including, in each case, the Transactions and any such other transaction whether consummated on, after or prior to the Effective Date and any such transaction undertaken but not completed, and any charges or non-recurring 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), shall be excluded;

 

(l)             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 Hedge Agreements shall be excluded;

 

(m)            accruals and reserves that are established or adjusted within twelve (12) months after the Effective Date that are so required to be established or adjusted as a result of the Transactions (or within twelve (12) months after the closing of any acquisition that are so required to be established as a result of such acquisition) in accordance with GAAP shall be excluded;

 

(n)            any expenses, charges or losses to the extent covered by insurance or indemnity and actually reimbursed, or, so long as such Person has made a determination that there exists reasonable evidence that such amount will in fact be reimbursed by the insurer or indemnifying party and only to the extent that such amount is in fact reimbursed within three hundred sixty-five (365) days of the date of such determination (net of any amount so added back in any prior period to the extent not so reimbursed within the applicable 365-day period), shall be excluded;

 

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(o)            [reserved];

 

(p)            any noncash compensation expense resulting from the application of Accounting Standards Codification Topic No. 718, Compensation-Stock Compensation or Accounting Standards Codification Topic No. 505-50, Equity-Based Payments to Non-Employees, shall be excluded;

 

(q)            non-cash gains, losses, income and expenses resulting from fair value accounting required by the applicable standard under GAAP and related interpretations shall be excluded;

 

(r)             (i) the non-cash portion of “straight-line” rent expense shall be excluded and (ii) the cash portion of “straight-line” rent expense which exceeds the amount expensed in respect of such rent expense shall be included;

 

(s)            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 of such period in accordance with Section 10.6(f)(i) or (ii) shall be included as an expense as though such amounts had been paid as income taxes directly by such Person for such period;

 

(t)             non-cash charges for deferred tax asset valuation allowances shall be excluded (except to the extent reversing a previously recognized increase to net income);

 

(u)            the following items shall be excluded:

 

(i)            any net unrealized gain or loss (after any offset) resulting in such period from Hedge Agreements and the application of Accounting Standards Codification Topic No. 815, Derivatives and Hedging;

 

(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) Hedge Agreements 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;

 

(iii)          any adjustments resulting from the application of Accounting Standards Codification Topic No. 460, Guarantees, or any comparable regulation; and

 

(iv)          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, notwithstanding anything to the contrary in the foregoing, Consolidated Net Income shall include the amount of proceeds received from business interruption insurance and reimbursements of any expenses and charges 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 Agreement.

 

“Consolidated Total Assets” shall mean the total assets of the Borrower and its Restricted Subsidiaries, determined on a consolidated basis in accordance with GAAP, as shown on the most recent consolidated balance sheet of the Borrower (and, in the case of any determination relating to any incurrence of Indebtedness or any Investment or other acquisition, on a Pro Forma Basis including any property or assets being acquired in connection therewith).

 

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“Consolidated Total Debt” shall mean, as of any date of determination, (a) the sum of (without duplication) the aggregate principal amount of Indebtedness of the Borrower and its Restricted Subsidiaries outstanding on such date, in an amount that would be reflected on a consolidated balance sheet (excluding the notes thereto) prepared as of such date on a consolidated basis in accordance with GAAP (but excluding the effects of any discounting of Indebtedness resulting from the application of recapitalization or purchase accounting in connection with the Transactions, any Permitted Acquisition, Investment or any other acquisition permitted hereunder), consisting only of Indebtedness for borrowed money, obligations in respect of Capital Leases, and debt obligations evidenced by bonds, notes, debentures, promissory notes or similar instruments (including, for the avoidance of doubt, deferred purchase price obligations that would be reflected as debt on a consolidated balance sheet (excluding the notes thereto) prepared as of such date on a consolidated basis in accordance with GAAP, to the extent such deferred purchase price obligations are then due and payable), and any obligations in respect of drawn letters of credit (which have not been reimbursed within two (2) Business Days after such amount is drawn); provided that Consolidated Total Debt shall not include Indebtedness in respect of obligations under Hedge Agreements (but shall include unpaid termination payments under Hedge Agreements) minus (b) (i) the aggregate amount of Unrestricted Cash on such date (up to a maximum equal to the greater of $150,000,000 and 10% of the Aggregate Elected Commitment Amount then in effect if any Loans are then outstanding) and (ii) to the extent included in such Indebtedness, undrawn (or if drawn, to the extent cash collateralized or not reimbursed within two (2) Business Days after such amount is drawn) letters of credit, bank guarantees and performance or similar bonds.

 

“Consolidated Total Debt to EBITDAX Ratio” shall mean, as of any date of determination, the ratio of (a) Consolidated Total Debt as of the last day of the most recent Test Period to (b) Consolidated EBITDAX of the Borrower for such Test Period (or prior to the date when the financial statements for the fiscal quarter ended June 30, 2026 are required to be delivered pursuant to Section 9.1(b), Specified EBITDAX); provided that the Consolidated Total Debt to EBITDAX Ratio shall be determined for the relevant Test Period on a Pro Forma Basis.

 

“Contractual Requirement” shall have the meaning provided in Section 8.3.

 

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

 

“Controlled Investment Affiliate” shall mean, as to any Person, any other Person, 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 Borrower and/or other companies.

 

“CPRA” shall mean the California Privacy Rights Act.

 

“Credit Documents” shall mean this Agreement, the Guarantee, the Security Documents, each Letter of Credit, the Fee Letter, any promissory notes issued by the Borrower under this Agreement, any Extension Amendment and any intercreditor agreement with respect to the RBL Facility entered into on or after the Effective Date to which the Collateral Agent is party.

 

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“Credit Event” shall mean and include the making (but not the conversion or continuation) of a Loan and the issuance, renewal or extension of a Letter of Credit.

 

“Credit Party” shall mean each of the Borrower and the Guarantors.

 

“Credit Rating” shall mean a rating as determined by a Credit Rating Agency of the Index Debt.

 

“Credit Rating Agency” shall mean Moody’s, S&P and any other nationally recognized credit rating agency that evaluates the financial condition of issuers of debt instruments and then assigns a rating that reflects its assessment of the issuer’s ability to make debt payments.

 

“Cure Amount” shall have the meaning provided in Section 11.12(a).

 

“Cure Deadline” shall have the meaning provided in Section 11.12(a).

 

“Cure Right” shall have the meaning provided in Section 11.12(a).

 

“Customary Intercreditor Agreement” shall mean any of (a) an intercreditor agreement substantially in the form of Exhibit F, together with any changes thereto which are reasonably acceptable to the Borrower and the Administrative Agent, (b) a customary intercreditor agreement in form and substance reasonably acceptable to the Administrative Agent and the Borrower, which agreement shall provide that the Liens on the Collateral securing such Indebtedness shall rank junior in priority to the Liens on the Collateral securing the Obligations under this Agreement, in each case with such modifications thereto as the Administrative Agent and/or the Collateral Agent and the Borrower may agree or (c) a customary intercreditor agreement in form and substance reasonably acceptable to the Administrative Agent and the Borrower, which agreement shall provide that the Liens on the Collateral securing such Indebtedness shall rank in equal priority to the Liens on the Collateral securing the Obligations under this Agreement (but without regard to the control of remedies), in each case with such modifications thereto as the Administrative Agent and/or the Collateral Agent and the Borrower may agree. Notwithstanding the foregoing, in the case of clause (c), such agreement shall be posted to the Lenders not less than three (3) Business Days before execution thereof and, if the Required Lenders shall not have objected in writing within three (3) Business Days after posting, then the Required Lenders shall be deemed to have agreed that the Administrative Agent’s and/or Collateral Agent’s entry into such intercreditor agreement is reasonable and to have consented to such intercreditor agreement and to the Administrative Agent’s and/or Collateral Agent’s execution thereof.

 

“Default” shall mean any event, act or condition that with notice or lapse of time, or both, would constitute an Event of Default.

 

“Default Rate” shall have the meaning provided in Section 2.8(c).

 

“Defaulting Lender” shall mean any Lender whose acts or failures to act, whether directly or indirectly, cause it to meet any part of the definition of “Lender Default”.

 

“Deposit Account” shall mean any checking or other demand deposit account maintained by the Credit Parties, including any “deposit accounts” under Article 9 of the UCC. All funds in such Deposit Accounts (other than Excluded Accounts) shall be conclusively presumed to be Collateral and proceeds of Collateral and the Administrative Agents and the Lenders shall have no duty to inquire as to the source of the amounts on deposit in the Deposit Accounts.

 

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“Disposition” shall have the meaning provided in Section 10.4. “Dispose”, “Disposed” or “Disposed of” shall have meanings correlative thereto.

 

“Disqualified Institution” shall mean any competitor of the Borrower and its Subsidiaries and any Affiliate of such competitor (other than their respective financial investors that are not operating companies and other than any Affiliate that is a bona fide diversified debt fund that invests in newly issued syndicated loans), identified in writing from time to time by the Borrower to the Administrative Agent (together with any Affiliates thereof that are reasonably identifiable on the basis of their names (other than any such competitors’ respective financial investors that are not operating companies and other than any Affiliate that is a bona fide diversified debt fund that invests in newly issued syndicated loans); provided that no updates to the Disqualified Institution list shall be deemed to retroactively disqualify any parties that have previously acquired an assignment or participation or entered into a trade for either of the foregoing in respect of the Loans from continuing to hold or vote such previously acquired assignments and participations on the terms set forth herein for Lenders that are not Disqualified Institutions. Supplements to the list of Disqualified Institutions shall not be effective until after at least one (1) Business Day following receipt thereof by the Administrative Agent from the Borrower, as applicable. The list of Disqualified Institutions shall be made available to any Lender upon request to the Administrative Agent, subject to customary confidentiality requirements.

 

“Disqualified Stock” shall mean any Equity Interest that, by its terms (or by the terms of any security or other Equity Interests into which it is convertible or for which it is exchangeable), or upon the happening of any event or condition (a) matures or is mandatorily redeemable (other than solely for Qualified Equity Interests), pursuant to a sinking fund obligation, scheduled redemption or otherwise (except as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior repayment in full of the Loans and all other Obligations (other than (i) contingent indemnification obligations as to which no claim has been asserted and (ii) Obligations under Secured Hedge Agreements and Secured Cash Management Agreements) and the termination of the Commitments and (to the extent not cash collateralized or backstopped in a manner reasonably acceptable to the Issuing Bank) outstanding Letters of Credit, (b) is redeemable at the option of the holder thereof (other than solely for Qualified Equity Interests and other than as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior repayment in full of the Loans and all other Obligations (other than (i) contingent indemnification obligations as to which no claim has been asserted and (ii) Obligations under Secured Hedge Agreements and Secured Cash Management Agreements) and the termination of the Commitments and (to the extent not cash collateralized or backstopped in a manner reasonably acceptable to the Issuing Bank) outstanding Letters of Credit, (c) provides for the scheduled payments of dividends in cash, or (d) is or becomes convertible into or exchangeable for Indebtedness or any other Equity Interests that would constitute Disqualified Stock, in the case of each of clauses (a), (b), (c) and (d), prior to the date that is ninety-one (91) days after the Latest Maturity Date at the time of issuance of such Equity Interests; provided, that if such Equity Interests are issued pursuant to any plan for the benefit of future, current or former employees, directors, officers, members of management or consultants (or their respective Controlled Investment Affiliates or Immediate Family Members) of the Borrower (or any direct or indirect parent thereof) or its Subsidiaries or by any such plan to such employees, directors, officers, members of management or consultants (or their respective Controlled Investment Affiliates or Immediate Family Members), such Equity Interests shall not constitute Disqualified Stock solely because they may be required to be repurchased by the Borrower or its Restricted Subsidiaries in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s, director’s, officer’s, management member’s or consultant’s termination, death or disability; provided, further, that any Equity Interests held by any future, current or former employee, director, officer, member of management or consultant (or their respective Controlled Investment Affiliates or Immediate Family Members) of the Borrower, any of its Restricted Subsidiaries, any of its direct or indirect parent companies or any other entity in which the Borrower or a Restricted Subsidiary has an Investment and is designated in good faith as an “affiliate” by the Board of Directors (or the compensation committee thereof), in each case pursuant to any stock subscription or shareholders’ agreement, management equity plan or stock option plan or any other management or employee benefit plan or agreement shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Borrower or its Restricted Subsidiaries in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s, director’s, officer’s, management member’s or consultant’s termination, death or disability.

 

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“Distressed Person” shall have the meaning provided in the definition of “Lender-Related Distress Event”.

 

“Documentation Precedent” shall have the meaning provided in Section 6.1(a).

 

“Dollars” and “$” shall mean dollars in lawful currency of the United States.

 

“Domestic Subsidiary” shall mean each Subsidiary of the Borrower that is organized under the laws of the United States or any state thereof, or the District of Columbia.

 

“Draw Limit” shall have the meaning provided in Section 2.14(h).

 

“Drawing” shall have the meaning provided in Section 3.4(b).

 

“EEA Financial Institution” shall mean (a) any institution established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.

 

“EEA Member Country” shall mean any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

 

“EEA Resolution Authority” shall mean any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

 

“Effective Date” shall mean the date on which the conditions specified in Article 6 are satisfied (or waived in accordance with Section 13.1).

 

“Effective Date Acquired Assets” shall have the meaning provided in the recitals to this Agreement.

 

“Effective Date Acquisition” shall have the meaning provided in the recitals to this Agreement.

 

“Effective Date Acquisition Agreement” shall have the meaning provided in the recitals to this Agreement.

 

“Effective Date Acquisition Buyer” shall have the meaning provided in the recitals to this Agreement.

 

“Effective Date Acquisition Notes” shall mean the senior unsecured notes referenced in clause (i) of the introductory paragraph of the Bridge Facility Commitment Letter that constitute Permitted Additional Debt.

 

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“Effective Date Acquisition Seller” shall have the meaning provided in the recitals to this Agreement.

 

“Effective Date Acquisition Shares” shall mean the shares of Class A common stock, par value $0.0001 per share, of Parent referenced in clause (i) of the introductory paragraph of the Bridge Facility Commitment Letter.

 

“Effective Date Financial Statements” shall have the meaning provided in Section 8.23(a).

 

“Elected Commitment” shall mean, as to each Lender, the amount set forth opposite such Lender’s name on Schedule 1.1(a) under the caption “Elected Commitment”, as the same may be increased, reduced or terminated from time to time in connection with an optional increase, reduction or termination of the Aggregate Elected Commitment Amount pursuant to Section 4.4(c).

 

“Elected Commitment Increase Certificate” shall have the meaning given to such term in Section 4.4(c)(ii)(F).

 

“Engineering Reports” shall have the meaning provided in Section 2.14(c)(i).

 

“Environmental Claims” shall mean any and all written actions, suits, orders, decrees, demands, demand letters, claims, liens, notices of noncompliance, violation or proceedings arising under or based upon any Environmental Law or any permit issued, or any approval given, under any such Environmental Law (hereinafter, “Claims”), including, without limitation, (i) any and all Claims by any Governmental Authority for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any applicable Environmental Law and (ii) any and all Claims by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief regarding the presence, release or threatened release of Hazardous Materials or arising from alleged injury or threat of injury to health or safety (to the extent relating to human exposure to Hazardous Materials), or the environment including, without limitation, ambient air, surface water, groundwater, land surface and subsurface strata and natural resources such as wetlands.

 

“Environmental Law” shall mean any applicable Federal, state, foreign or local statute, law, rule, regulation, ordinance, code and common law now or hereafter in effect and in each case as amended, and any binding judicial or administrative interpretation thereof, including any binding judicial or administrative order, consent decree or judgment, relating to the protection of the environment, including, without limitation, ambient air, surface water, groundwater, land surface and subsurface strata and natural resources such as wetlands, or human health or safety (to the extent relating to human exposure to Hazardous Materials).

 

“Equity Interests” of any person shall mean any and all shares, interests, rights to purchase or otherwise acquire, warrants, options, participations or other equivalents of or interests in (however designated) equity or ownership of such person, including any preferred stock, any limited or general partnership interest and any limited liability company membership interest, and any securities or other rights or interests convertible into or exchangeable for any of the foregoing, excluding any debt security that is convertible or exchangeable into any Equity Interests (provided that any instrument evidencing Indebtedness convertible or exchangeable into Equity Interests, whether or not such debt securities include any right of participation with Equity Interests, shall not be deemed to be Equity Interests unless and until such instrument is so converted or exchanged, except, solely for purposes of a pledge of Equity Interests in connection with this Agreement, to the extent such instrument could be treated as “stock” of a CFC for purposes of Treasury Regulation Section 1.956-2(c)(2)).

 

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“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.

 

“ERISA Affiliate” shall mean each person (as defined in Section 3(9) of ERISA) that together with the Borrower would be deemed to be a “single employer” within the meaning of Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414(m) of the Code.

 

“ERISA Event” shall mean (a) a Reportable Event with respect to a Plan; (b) a withdrawal by the Borrower or any ERISA Affiliate from a Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) the failure of the Borrower or any ERISA Affiliate to make by its due date a required installment under Section 430(j) of the Internal Revenue Code with respect to any Plan; (d) a failure to satisfy the minimum funding standard under Section 412 of the Code or Section 302 of ERISA, or the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard, in each case with respect to a Plan, whether or not waived, or a failure to make any required contribution to a Multiemployer Plan; (e) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is insolvent within the meaning of Title IV of ERISA or that is in endangered or critical status, within the meaning of Section 305 of ERISA; (f) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Section 4041 or 4041A of ERISA, respectively, or the commencement of proceedings by the PBGC to terminate a Plan; (g) the appointment of a trustee to administer, any Plan; (h) the imposition of any liability under Title IV of ERISA, including the imposition of a lien under Section 412 or 430(k) of the Code or Section 303 or 4068 of ERISA on any property (or rights to property, whether real or personal) of the Borrower or any ERISA Affiliate, but excluding PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate; (i) a determination that any Plan is, or is expected to be, in “at-risk” status (within the meaning of Section 303(i)(4)(A) of ERISA or Section 430(i)(4)(A) of the Code) or (j) the occurrence of a non-exempt prohibited transaction with respect to any Plan maintained or contributed to by any Borrower (within the meaning of Section 4975 of the Code or Section 406 of ERISA) which could result in material liability to the Borrower, except in each of (a) - (j) with respect to Foreign Plans.

 

“Erroneous Payment” has the meaning assigned to it in Section 12.14(a).

 

“Erroneous Payment Deficiency Assignment” has the meaning assigned to it in Section 12.14(d)(i).

 

“Erroneous Payment Impacted Class” has the meaning assigned to it in Section 12.14(d)(i).

 

“Erroneous Payment Return Deficiency” has the meaning assigned to it in Section 12.14(d)(i).

 

“Erroneous Payment Subrogation Rights” has the meaning assigned to it in Section 12.14(e).

 

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

 

“Euro” shall mean the lawful single currency unit of the Participating Member States.

 

“Event of Default” shall have the meaning provided in Article 11.

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.

 

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“Exchange Rate” shall mean on any day with respect to any currency (other than Dollars), the rate at which such currency may be exchanged into any other currency (including Dollars), as set forth at approximately 11:00 a.m. (London time) on such day on the applicable Bloomberg screen page for such currency. In the event that such rate does not appear on any applicable Bloomberg screen page, the Exchange Rate shall be determined by reference to such other publicly available service for displaying exchange rates as may be agreed by the Administrative Agent and the Borrower, or, in the absence of such agreement, such Exchange Rate shall instead be the arithmetic average of the spot rates of exchange of the Administrative Agent in the market where its foreign currency exchange operations in respect of such currency are then being conducted, at or about 11:00 a.m., local time, on such date for the purchase of the relevant currency for delivery two (2) Business Days later.

 

“Excluded Accounts” shall mean (a) Deposit Accounts constituting (and the balance of which consists solely of funds set aside in connection with) payroll accounts and accounts dedicated to the payment of accrued employee benefits, medical, dental and employee benefits claims to employees of any Credit Party or Restricted Subsidiary, (b) Deposit Accounts, Securities Accounts and Commodity Accounts containing cash or other property with a maximum average value of less than $7,500,000 individually; provided, that no Deposit Account, Securities Account or Commodity Accounts shall be an Excluded Account pursuant to this clause (b) if it has a value of more than $3,000,000 for a continuous period of sixty (60) days; provided, further, that the aggregate value of the Deposit Accounts, Securities Accounts and Commodity Accounts described in this clause (b) must be less than $30,000,000 at all times, (c) Deposit Accounts which are used solely as an escrow account or as a fiduciary or trust account or other account that is contractually obligated to be segregated from the other assets of the Credit Parties, in each case, for the benefit of unaffiliated third parties, (d) operator suspense accounts relating to oil and gas production to satisfy royalty obligations owed to third persons, (e) cash collateral accounts subject to clauses (d), (e) or (t) of the definition of “Permitted Liens”, and (f) “zero balance” accounts.

 

“Excluded Assets” shall have the meaning assigned to such term in the Collateral Agreement.

 

“Excluded Contribution Asset” shall mean any asset that is used or useful in, or Equity Interests of any Person engaged in, the Oil and Gas Business, in each case, received by the Borrower since the Effective Date from (a) the issuance or sale (other than to a Subsidiary of the Borrower or to any management equity plan or stock option plan or any other management or employee benefit plan or agreement of the Borrower) of its Qualified Equity Interests (or the Qualified Equity Interests of any direct or indirect parent of the Borrower to the extent contributed as common equity to the Borrower) and/or (b) contributions to its common equity, in each case, only to the extent designated as an Excluded Contribution Asset in a certificate of the Borrower delivered to the Administrative Agent within sixty (60) days after the date such capital contributions are made or the date such Qualified Equity Interests are sold, as the case may be; provided, that no Borrowing Base Properties shall constitute an Excluded Contribution Asset.

 

“Excluded Equity Interests” shall mean (a) any Equity Interests with respect to which, in the reasonable judgment of the Administrative Agent and the Borrower, the cost or other consequences of pledging such Equity Interests in favor of the Secured Parties under the Security Documents shall be excessive in view of the benefits to be obtained by the Secured Parties therefrom, (b) solely in the case of any pledge of Equity Interests of any Foreign Subsidiary or FSHCO (in each case, that is a direct Wholly owned Subsidiary of the Borrower or a Grantor) to secure the Obligations, any Equity Interest that is Voting Stock of such Foreign Subsidiary or FSHCO in excess of 65% of the Voting Stock of such Subsidiary, (c) any Equity Interests to the extent the pledge thereof would be prohibited by any Requirement of Law, (d) in the case of (i) any Equity Interests of any Subsidiary to the extent the pledge of such Equity Interests is prohibited by Contractual Requirements existing on the Effective Date or at the time such Subsidiary is acquired (provided that such Contractual Requirements have not been entered into in contemplation of such Subsidiary being acquired) or (ii) any Equity Interests of any Subsidiary that is not a Wholly owned Subsidiary at the time such Subsidiary becomes a Subsidiary, any Equity Interests of each such Subsidiary described in clause (i) or (ii) to the extent (A) that a pledge thereof to secure the Obligations is prohibited by any applicable Contractual Requirement (including, for the avoidance of doubt, applicable Organization Documents) (other than customary non-assignment provisions which are ineffective under the UCC or other applicable Requirements of Law), (B) any Contractual Requirement prohibits such a pledge without the consent of any other party; provided that this clause (B) shall not apply if (1) such other party is a Credit Party or a Wholly owned Subsidiary or (2) consent has been obtained to consummate such pledge (it being understood that the foregoing shall not be deemed to obligate the Borrower or any Subsidiary to obtain any such consent) and for so long as such Contractual Requirement or replacement or renewal thereof is in effect, or (C) a pledge thereof to secure the Obligations would give any other party (other than a Credit Party or a Wholly owned Subsidiary) to any Contractual Requirement governing such Equity Interests the right to terminate its obligations thereunder (other than customary non-assignment provisions that are ineffective under the UCC or other applicable Requirement of Law), (e) the Equity Interests of any Immaterial Subsidiary (unless a security interest in such Immaterial Subsidiary’s Equity Interests may be perfected by filing an “all assets” UCC financing statement) and any Unrestricted Subsidiary, (f) the Equity Interests of any Subsidiary of a Foreign Subsidiary or FSHCO, (g) any Equity Interests set forth on Schedule 1.1(b) which have been identified on or prior to the Effective Date in writing to the Administrative Agent by an Authorized Officer of the Borrower and agreed to by the Administrative Agent and (h) Margin Stock.

 

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“Excluded Subsidiary” shall mean (a) each Immaterial Subsidiary, for so long as any such Subsidiary constitutes an Immaterial Subsidiary pursuant to the terms hereof, (b) each Domestic Subsidiary that is not a Wholly owned Subsidiary (for so long as such Subsidiary remains a non-wholly owned Restricted Subsidiary); provided, that a Material Subsidiary may not be excluded pursuant to this clause (b) because it is not a Wholly owned Subsidiary, (c) each Domestic Subsidiary that is prohibited by any applicable Contractual Requirement (other than (x) with respect to any Wholly owned Subsidiary, the applicable Organization Documents and (y) customary non-assignment provisions that are ineffective under the UCC or other applicable Requirement of Law or any term, covenant, condition or provision that would be waived by the Borrower or its Affiliates) (not entered into in contemplation of such Subsidiary becoming a Restricted Subsidiary) or Requirement of Law from guaranteeing or granting Liens to secure the Obligations on the Effective Date or at the time such Subsidiary becomes a Restricted Subsidiary (and for so long as such restriction or any replacement or renewal thereof is in effect and was not entered into in contemplation of such Subsidiary becoming a Restricted Subsidiary) or that would require consent, approval, license or authorization of a Governmental Authority to guarantee or grant Liens to secure the Obligations on the Effective Date or at the time such Subsidiary becomes a Restricted Subsidiary (unless such consent, approval, license or authorization has been received), (d) any Foreign Subsidiary, (e) any Domestic Subsidiary that is (i) a FSHCO or (ii) owned directly or indirectly by a CFC or a FSHCO, (f) each other Domestic Subsidiary acquired pursuant to a Permitted Acquisition or other Investment permitted hereunder financed with Indebtedness of the type incurred pursuant to Section 10.1(k) and each Restricted Subsidiary thereof that guarantees such Indebtedness to the extent and so long as the financing documentation relating to such Permitted Acquisition to which such Restricted Subsidiary is a party prohibits such Restricted Subsidiary from guaranteeing or granting a Lien on any of its assets to secure the Obligations, (g) any other Domestic Subsidiary with respect to which, in the reasonable judgment of the Administrative Agent and the Borrower, the cost or other consequences of providing a Guarantee of or granting Liens to secure the Obligations shall be excessive in view of the benefits to be obtained by the Lenders therefrom and (h) each Unrestricted Subsidiary. No Excluded Subsidiary shall own Borrowing Base Properties.

 

“Excluded Swap Obligation” shall mean with respect to any Guarantor or Parent Entity Guarantor, any Hedging Obligation if, and to the extent that, and only for so long as, all or a portion of the guarantee of such Guarantor or Parent Entity Guarantor of, or the grant by such Guarantor or Parent Entity Guarantor (if applicable) of a security interest to secure, as applicable, such Hedging Obligation (or any guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) or any other applicable Requirement of Law.

 

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“Excluded Taxes” shall mean, any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (i) Taxes imposed on or measured by its net income (however denominated), branch profits Taxes and franchise Taxes imposed on it, in each case by a jurisdiction (including any political subdivision thereof) as a result of such Recipient being organized in, having its principal office in, or in the case of any Lender, having its applicable lending office in, such jurisdiction, or as a result of any other present or former connection with such jurisdiction (other than any such connection arising solely from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Credit Document, or sold or assigned an interest in any Loan or Credit Document), (ii) U.S. federal withholding Tax imposed on any payment by or on account of any obligation of any Credit Party hereunder or under any other Credit Document that is required to be imposed on amounts payable to or for the account of a Lender (including any Issuing Bank and any Swingline Lender) pursuant to laws in force at the time (a) such Lender acquires an interest in a Loan, Letter of Credit or Commitment, other than to the extent such Lender is an assignee pursuant to a request by the Borrower under Section 13.7, or (b) such Lender designates a new lending office, except, in each case, to the extent that such Lender (or its assignor, if any) was entitled, immediately prior to the designation of a new lending office (or assignment), to receive additional amounts or indemnification payments from any Credit Party with respect to such withholding Tax pursuant to Section 5.4, (iii) any Tax attributable to the Administrative Agent’s, any Lender’s or any other Recipient’s failure to comply with Section 5.4(d), (e), (h), (i), (l) or (m), and (iv) any Tax imposed under FATCA.

 

“Existing Class” shall mean a Class of Existing Commitments and related Existing Loans.

 

“Existing Commitment” shall mean, with respect to a Class of Commitments, the Commitments of such Class at the time a Loan Extension Request is made.

 

“Existing Credit Agreement” shall have the meaning provided in the recitals to this Agreement.

 

“Existing Loans” shall mean, with respect to a Class of Loans, the Loans of such Class at the time a Loan Extension Request is made.

 

“Expected Cure Amount” shall have the meaning provided in Section 11.12(a)(ii).

 

“Expiration Date” shall mean the earliest of (i) the termination of the Effective Date Acquisition Agreement in accordance with its terms, (ii) the consummation of the Effective Date Acquisition Agreement without the occurrence of the Effective Date, and (iii) 5:00 p.m. (New York City time) on the on the fifth Business Day (as defined in the Effective Date Acquisition Agreement as in effect on the date hereof) after October 13, 2026 (provided that such date shall be extended to March 12, 2027 automatically with no further action required solely in the event that the “Outside Date” (as defined in the Effective Date Acquisition Agreement as in effect on the date hereof) is extended in accordance with the definition thereof).

 

“Extended Class” shall mean a Class of Extended Commitments and related Extended Loans.

 

“Extended Commitments” shall mean, with respect to a Class of Commitments, all or the portion of such Class extended pursuant to Section 2.17, as applicable.

 

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“Extended Loans” shall mean, with respect to a Class of Loans, all or the portion of such Class of Loans extended pursuant to Section 2.17, as applicable.

 

“Extending Lender” shall have the meaning provided in Section 2.17(b).

 

“Extension Amendment” shall have the meaning provided in Section 2.17(c).

 

“Extension Election” shall have the meaning provided in Section 2.17(b).

 

“Extension Minimum Condition” shall mean a condition to consummating any extension of a minimum amount (to be determined and specified in the relevant Loan Extension Request, in the Borrower’s sole discretion) of any or all applicable Classes to be submitted for extension.

 

“Extension Series” shall have the meaning provided in Section 2.17(a).

 

“Facility” shall mean this Agreement and the Commitments and the extensions of credit made hereunder.

 

“Fair Market Value” shall mean, with respect to any asset or group of assets on any date of determination, the value of the consideration obtainable in a Disposition of such asset at such date of determination assuming a Disposition by a willing seller to a willing purchaser dealing at arm’s length and arranged in an orderly manner over a reasonable period of time having regard to the nature and characteristics of such asset, as determined by the Borrower in good faith.

 

“Farm-In Agreement” shall mean 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” shall mean a Farm-In Agreement, viewed from the standpoint of the party that transfers an ownership interest to another.

 

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

 

“Federal Funds Effective Rate” shall mean, for any day, the weighted average of the per annum rates on overnight federal funds transactions with members of the Federal Reserve System on such day, as published on the next succeeding Business Day by the Federal Reserve Bank of New York or, if such rate is not so published for any date that is a Business Day, the Federal Funds Effective Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal Funds brokers of recognized standing selected by it; provided, that if the Federal Funds Effective Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.

 

“Fee Letter” shall mean the Fee Letter, dated as of July 7, 2026, between the Borrower and Citi.

 

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“Financial Incurrence Test” shall have the meaning provided in Section 1.12(f).

 

“Financial Officer” of any Person shall mean the Chief Financial Officer, Chief Accounting Officer, principal accounting officer, Controller, Treasurer or Assistant Treasurer of such Person.

 

“Financial Performance Covenants” shall mean the covenants of the Borrower set forth in Section 10.11.

 

“Fixed Basket” shall have the meaning provided in Section 1.12(f).

 

“Fixed Charges” shall mean, with respect to any Person for any period, the sum of, without duplication:

 

(a)            Consolidated Interest Expense of such Person for such period; and

 

(b)            all cash dividends or other cash distributions paid (excluding items eliminated in consolidation) on any series of Disqualified Stock during such period.

 

“Floor” shall mean a rate of interest equal to 0.00% per annum.

 

“Foreign Plan” shall mean any employee benefit plan, program, policy, arrangement or agreement maintained or contributed to by the Borrower or any of its Subsidiaries with respect to employees employed outside the United States.

 

“Foreign Subsidiary” shall mean each Subsidiary of the Borrower that is not a Domestic Subsidiary.

 

“Fronting Fee” shall have the meaning provided in Section 4.1(c).

 

“FSHCO” shall mean any Domestic Subsidiary (including a disregarded entity for U.S. federal income tax purposes) that owns no material assets other than the Equity Interests and/or Indebtedness of one or more Foreign Subsidiaries that are CFCs (held directly or through Subsidiaries).

 

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

 

“GAAP” shall mean generally accepted accounting principles in the United States, as in effect from time to time; provided, however, that if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the Effective Date in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith.

 

“Governmental Authority” shall mean any nation, sovereign or government, any state, province, territory or other political subdivision thereof, and any entity or authority exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government, including a central bank or stock exchange (including any supra-national bodies such as the European Union or the European Central Bank).

 

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“Granting Lender” shall have the meaning provided in Section 13.6(g).

 

“Grantors” shall mean, except to the extent released therefrom in accordance with the terms hereof, Holdings and each Domestic Subsidiary listed on Schedule 1.1(c) that becomes a party to the Collateral Agreement on the Effective Date and each other Domestic Subsidiary (other than an Excluded Subsidiary (except to the extent provided below)) that becomes a party to the Collateral Agreement after the Effective Date pursuant to Section 9.11 or otherwise; provided that, for the avoidance of doubt, the Borrower in its sole discretion may cause any Restricted Subsidiary or other Person that is not required to be a Grantor hereunder or pursuant to the Security Documents to provide Collateral by causing such Restricted Subsidiary or other Person to execute a joinder to the Collateral Agreement and such Restricted Subsidiary or other Person shall be Grantor and Credit Party for all purposes hereunder except to the extent released from the Collateral Agreement in accordance with the terms hereof.

 

“Guarantee” shall mean, collectively, the guarantee made by any Guarantor in favor of the Collateral Agent for the benefit of the Secured Parties, substantially in the form of Exhibit C.

 

“Guarantee Obligations” shall mean, as to any Person, any obligation of such Person guaranteeing or intended to guarantee any Indebtedness of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including any obligation of such Person, whether or not contingent, (a) to purchase any such Indebtedness or any property constituting direct or indirect security therefor, (b) to advance or supply funds (i) for the purchase or payment of any such Indebtedness or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain financial condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness, (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such Indebtedness of the ability of the primary obligor to make payment of such Indebtedness or (d) otherwise to assure or hold harmless the owner of such Indebtedness against loss in respect thereof; provided, however, that the term “Guarantee Obligations” shall not include endorsements of instruments for deposit or collection in the ordinary course of business or customary and reasonable indemnity obligations in effect on the Effective Date or entered into in connection with any acquisition or Disposition of assets permitted under this Agreement (other than such obligations with respect to Indebtedness). The amount of any Guarantee Obligation shall be deemed to be an amount equal to the stated or determinable amount of the Indebtedness in respect of which such Guarantee Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith.

 

“Guarantors” shall mean Holdings and each Domestic Subsidiary listed on Schedule 1.1(c) that becomes a party to the Guarantee on the Effective Date (except to the extent released therefrom in accordance with the terms hereof) and each other Domestic Subsidiary (other than an Excluded Subsidiary (except to the extent provided below)) that becomes a party to the Guarantee after the Effective Date pursuant to Section 9.11 or otherwise; provided that, for the avoidance of doubt, the Borrower in its sole discretion may cause any Restricted Subsidiary or other Person that is not required to be a Guarantor hereunder or pursuant to the Security Documents to provide a guarantee by causing such Restricted Subsidiary or other Person to execute a guarantee and such Restricted Subsidiary shall be Guarantor and Credit Party for all purposes hereunder except to the extent released from such guarantee in accordance with the terms hereof. Notwithstanding the foregoing, the terms “Guarantor” and “Credit Party” shall not include any Parent Entity (other than Holdings) that guarantees the Obligations.

 

“Hazardous Materials” shall mean (a) any petroleum or petroleum products, natural gas or natural gas liquids, radioactive materials, friable asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, and radon gas and (b) any chemicals, materials or substances defined as or included in the definition of “hazardous substances”, “hazardous waste”, “hazardous materials”, “extremely hazardous waste”, “restricted hazardous waste”, “toxic substances”, “toxic pollutants”, “contaminants”, or “pollutants”, or words of similar import, under any applicable Environmental Law or that would otherwise reasonably be expected to result in liability under any applicable Environmental Law.

 

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“Hedge Agreements” shall mean (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, future contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, total return swap, credit spread transaction, repurchase transaction, reserve repurchase transaction, securities lending transaction, weather index transaction, spot contracts, fixed-price physical delivery contracts, whether or not exchange traded, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement. Notwithstanding the foregoing, agreements or obligations to physically sell any commodity at any index-based price shall not be considered Hedge Agreements.

 

“Hedge Bank” shall mean any Person (other than the Borrower or any of its Subsidiaries) that (x) at the time it enters into a Hedge Agreement is a Lender, Lead Arranger or Agent or an Affiliate of a Lender, Lead Arranger or Agent, (y) at any time after it enters into a Hedge Agreement it becomes a Lender, Lead Arranger or Agent or an Affiliate of a Lender, Lead Arranger or Agent, or (z) is a party to a Hedge Agreement on the Effective Date and on the Effective Date is a Lender, Lead Arranger or Agent or an Affiliate of a Lender, Lead Arranger or Agent.

 

“Hedging Obligations” shall mean, with respect to any Person, the obligations of such Person under Hedge Agreements.

 

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

 

“Holdings” shall have the meaning provided in the preamble to this Agreement.

 

“Holdings Parent” shall mean Magnolia Oil & Gas Holdings LLC, a Delaware limited liability company.

 

“Holdings Parent Guarantee” shall mean the Amended and Restated Guarantee Agreement, dated as of the Effective Date, by and between Holdings Parent and the Collateral Agent.

 

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

 

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

 

“Immaterial Subsidiary” shall mean any Subsidiary that is not a Material Subsidiary.

 

“Immediate Family Members” shall mean 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 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” of any Person shall mean the following, if and only to the extent (other than with respect to clause (g) below) the same would constitute indebtedness or a liability in accordance with GAAP, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments, (c) the deferred purchase price of assets or services that in accordance with GAAP would be required to be shown as a liability on the balance sheet of such Person (other than (i) any earn-out obligation until such obligation becomes a liability on the balance sheet of such Person in accordance with GAAP and (ii) obligations resulting under firm transportation contracts or take or pay contracts), (d) the face amount of all letters of credit issued for the account of such Person and, without duplication, all drafts drawn thereunder, (e) the principal component of all obligations in respect of Capital Leases of such Person, (f) net Hedging Obligations of such Person, (g) all indebtedness (excluding prepaid interest thereon) of any other Person secured by any Lien on any property owned by such Person, whether or not such Indebtedness has been assumed by such Person, (h) the amount of all obligations of such Person with respect to the redemption, repayment or other repurchase in respect of Disqualified Stock (excluding accrued dividends that have not increased the liquidation preference of such Disqualified Stock), (i) the undischarged balance of any production payment created by such Person or for the creation of which such Person directly or indirectly received payment and (j) without duplication, all Guarantee Obligations of such Person in respect of the items described in clauses (a) through (i) above; provided that Indebtedness shall not include (i) trade and other ordinary-course payables and accrued expenses, (ii) deferred or prepaid revenues, (iii) purchase price holdbacks in respect of a portion of the purchase price of an asset to satisfy warranty or other unperformed obligations of the respective seller, (iv) in the case of the Borrower and its Restricted Subsidiaries, (A) all intercompany Indebtedness having a term not exceeding three hundred sixty-four (364) days (inclusive of any roll-over or extensions of terms) and (B) intercompany liabilities in connection with the cash management, tax and accounting operations of the Borrower and the Restricted Subsidiaries, (v) [reserved], (vi) Production Payments and Reserve Sales, (vii) in-kind obligations relating to net oil, natural gas liquids or natural gas balancing positions arising in the ordinary course of business, (viii) any obligation in respect of a Farm-In Agreement or similar arrangement whereby such Person agrees to pay all or a share of the drilling, completion or other expenses of an exploratory or development well (which agreement may be subject to a maximum payment obligation, after which expenses are shared in accordance with the working or participation interest therein or in accordance with the agreement of the parties) or perform the drilling, completion or other operation on such well in exchange for an ownership interest in an oil or gas property, and (ix) any Guarantee Obligations incurred in the ordinary course of business to the extent not guaranteeing Indebtedness.

 

For purposes hereof, the amount of any net Hedging Obligations on any date shall be deemed to be the Swap Termination Value thereof as of such date. The amount of Indebtedness of any Person for purposes of clause (g) above shall be deemed to be equal to the lesser of (i) the aggregate unpaid amount of such Indebtedness and (ii) the Fair Market Value of the property encumbered thereby as determined by such Person in good faith.

 

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“Indemnified Liabilities” shall have the meaning provided in Section 13.5(b).

 

“Indemnified Taxes” shall mean all Taxes imposed on or with respect to any payment by or on account of any obligation of any Credit Party hereunder or under any other Credit Document other than (a) Excluded Taxes and (b) Other Taxes.

 

“Indemnitees” shall have the meaning provided in Section 13.5(b).

 

“Independent Assets or Operations” shall mean, with respect to any Parent Entity, that Parent Entity’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 Borrower and the Restricted Subsidiaries), determined in accordance with GAAP and as shown on the most recent balance sheet of such Parent Entity, is more than 3.0% of such Parent Entity’s corresponding consolidated amount.

 

“Index Debt” shall mean the senior, unsecured, long-term indebtedness for borrowed money of the Borrower that is not guaranteed by any other Person (other than a Subsidiary Guarantor of Borrower) or subject to any other credit enhancement.

 

“Industry Investment” shall mean Investments and/or expenditures made in the ordinary course of, and of a nature that is or shall have become customary in, the Oil and Gas Business as a means of actively engaging therein through agreements, transactions, interests or arrangements that permit one to share risks or costs, comply with regulatory requirements regarding local ownership or satisfy other objectives customarily achieved through the conduct of Oil and Gas Business jointly with third parties, including: (1) ownership interests (directly or through equity) in oil and gas properties or gathering, transportation, processing, or related systems and (2) Investments and/or expenditures in the form of or pursuant to operating agreements, processing agreements, Farm In Agreements, Farm Out Agreements, development agreements, area of mutual interest agreements, unitization agreements, pooling arrangements, joint bidding agreements, service contracts, joint venture agreements, partnership agreements (whether general or limited), and other similar agreements (including for limited liability companies) with third parties.

 

“Information” shall have the meaning provided in Section 8.8(a).

 

“Initial Loans” shall have the meaning provided in Section 2.1(a)(i).

 

“Initial Maturity Date” shall mean the earlier of (a) the fifth anniversary of the Effective Date, or, if such date is not a Business Day, the Business Day immediately following such anniversary and (b) the date that is 91 days prior to the stated maturity date of the Senior WildFire Notes (or, to the extent earlier than the fifth anniversary of the Effective Date, the date that is 91 days prior to the stated maturity date of any Permitted Refinancing Indebtedness of the Senior WildFire Notes) if the outstanding aggregate principal amount outstanding of the Senior WildFire Notes (or any such Permitted Refinancing Indebtedness thereof) equals or exceeds $100,000,000 on such date.

 

“Initial Reserve Report” shall mean the reserve engineer’s report evaluating the Proved Reserves of the Borrower and the Credit Parties (other than WildFire) and the Effective Date Acquired Assets constituting Proved Reserves prepared by Miller & Lents as of June 1, 2026, delivered to the Administrative Agent prior to the date hereof.

 

“Intercompany Note” shall mean a promissory note substantially in the form of Exhibit I.

 

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“Interest Period” shall mean, with respect to any Loan, the interest period applicable thereto, as determined pursuant to Section 2.9.

 

“Interim Redetermination” shall have the meaning provided in Section 2.14(b).

 

“Interim Redetermination Date” shall mean the date on which a Borrowing Base that has been redetermined pursuant to an Interim Redetermination becomes effective as provided in Section 2.14.

 

“Investment” shall have the meaning provided in Section 10.5.

 

“Investment Grade Election” shall mean a written notice delivered by the Borrower to the Administrative Agent of its election to enter into an Investment Grade Period, together with a certificate of an Authorized Officer of the Borrower confirming that as of such date, (a) the Borrower has an Investment Grade Rating from one or more Credit Rating Agencies and (b) no Default or Event of Default has occurred and is continuing.

 

“Investment Grade Period” shall mean any period commencing with the date on which the Borrower delivers an Investment Grade Election to the Administrative Agent (so long as the Borrower has an Investment Grade Rating at such time) and ending with the earlier to occur of (a) the date the Borrower elects in writing to the Administrative Agent to exit such Investment Grade Period and (b) the first date following the beginning of such Investment Grade Period on which the Borrower receives a rating below an Investment Grade Rating.

 

“Investment Grade Rating” shall mean a rating equal to or higher than Baa3 (or the equivalent) by Moody’s and BBB- (or the equivalent) by S&P, or an equivalent rating by any other Credit Rating Agency.

 

“IRS” shall have the meaning provided in Section 5.4(e)(i).

 

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

 

“Issuer Documents” shall mean, with respect to any Letter of Credit, the Letter of Credit Application, and any other document, agreement and instrument entered into by the applicable Issuing Bank and the Borrower (or any Restricted Subsidiary) or in favor of the applicable Issuing Bank and relating to such Letter of Credit.

 

“Issuing Bank” shall mean (a) Citibank, N.A. and any of its Affiliates and (b) if requested by the Borrower and reasonably acceptable to the Administrative Agent, any other Person who is a Lender at the time of such request and who accepts such appointment (it being understood that, if any such Person ceases to be a Lender hereunder, such Person will remain an Issuing Bank with respect to any Letter of Credit issued by such Person that remained outstanding as of the date such Person ceased to be a Lender). References herein and in the other Credit Documents to an Issuing Bank shall be deemed to refer to the Issuing Bank in respect of the applicable Letter of Credit or to all Issuing Banks, as the context requires. Any Lender may, from time to time, become an Issuing Bank under this Agreement with the protections and rights afforded to Issuing Banks hereunder by executing a joinder, in a form reasonably satisfactory to (and acknowledged and accepted by) the Administrative Agent and the Borrower, indicating such Lender’s “Maximum Letter of Credit Commitment” and upon the execution and delivery of any such joinder, such Lender shall be an Issuing Bank for all purposes hereof.

 

“Junior Debt” shall have the meaning provided in Section 10.7(a).

 

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“Junior Liens” shall mean Liens on the Collateral (other than Liens securing the Obligations) that are subordinated to the Liens granted under the Credit Documents pursuant to a Customary Intercreditor Agreement (it being understood that Junior Liens are not required to be pari passu with other Junior Liens, and that Indebtedness secured by Junior Liens may have Liens that are senior in priority to, or pari passu with, or junior in priority to, other Liens constituting Junior Liens).

 

“Last Borrowing Base Hedge Reduction” shall have the meaning provided in Section 2.14(f).

 

“Latest Maturity Date” shall mean, at any date of determination, the latest Maturity Date applicable to any Class of Commitments or Loans that is outstanding hereunder on such date of determination.

 

“L/C Borrowing” shall mean an extension of credit resulting from a drawing under any Letter of Credit which has not been reimbursed on the date when made or refinanced as a Borrowing. All L/C Borrowings shall be denominated in Dollars.

 

“L/C Maturity Date” shall mean the date that is five (5) Business Days prior to the Maturity Date.

 

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

 

“L/C Participant” shall have the meaning provided in Section 3.3(a).

 

“L/C Participation” shall have the meaning provided in Section 3.3(a).

 

“LCT Election” shall have the meaning provided in Section 1.12(i).

 

“LCT Test Date” shall have the meaning provided in Section 1.12(i).

 

“Lead Arranger” shall mean Citibank, N.A., JPMorgan Chase Bank, N.A., Wells Fargo Bank, N.A., Bank of America, N.A., Capital One, National Association, KeyBank National Association, MUFG Bank, Ltd., PNC Capital Markets LLC, Regions Bank, The Bank of Nova Scotia, Houston Branch, Truist Bank, and Fifth Third Bank, N.A. as successor by merger to Comerica Bank, each in its capacity as a lead arranger in respect of the RBL Facility.

 

“Lender” shall have the meaning provided in the preamble to this Agreement. Unless the context otherwise requires, the term “Lenders” includes the Swingline Lender. For avoidance of doubt, each Additional Lender shall be deemed a “Lender” for purposes of this Agreement and each other Credit Document.

 

“Lender Default” shall mean (i) the refusal or failure of any Lender to make available its portion of any incurrence of Loans or participations in Letters of Credit or Swingline Loans, which refusal or failure is not cured within two (2) Business Days after the date of such refusal or failure unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lender’s good faith determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied; (ii) the failure of any Lender to pay over to the Administrative Agent, any Issuing Bank, any Swingline Lender or any other Lender any other amount required to be paid by it hereunder within two (2) Business Days of the date when due, unless the subject of a good faith dispute; (iii) a Lender has notified the Borrower or the Administrative Agent that it does not intend or expect to comply with any of its funding obligations or has made a public statement to that effect with respect to its funding obligations under the RBL Facility (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s good faith determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (iv) the failure by a Lender to confirm in a manner reasonably satisfactory to the Administrative Agent that it will comply with its obligations under the RBL Facility, which failure is not cured after the date of such failure, (v) a Distressed Person has admitted in writing that it is insolvent or such Distressed Person becomes subject to a Lender-Related Distress Event or (vi) a Lender has, or has a direct or indirect parent company that has, become the subject of a Bail-In Action. Any determination by the Administrative Agent that a Lender Default has occurred under any one or more of clauses (i) through (vi) above shall be conclusive and binding absent manifest error, and the applicable Lender shall be deemed to be a Defaulting Lender upon delivery of written notice of such determination to the Borrower, each Issuing Bank, each Swingline Lender and each Lender.

 

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“Lender-Related Distress Event” shall mean, with respect to any Lender, that such Lender or any Person that directly or indirectly controls such Lender (each, a “Distressed Person”), as the case may be, is or becomes subject to a voluntary or involuntary case with respect to such Distressed Person under any debt relief law, or a custodian, conservator, receiver or similar official is appointed for such Distressed Person or any substantial part of such Distressed Person’s assets, or such Distressed Person or any Person that directly or indirectly controls such Distressed Person is subject to a forced liquidation, or such Distressed Person makes a general assignment for the benefit of creditors or is otherwise adjudicated as, or determined by any Governmental Authority having regulatory authority over such Distressed Person or its assets to be, insolvent or bankrupt; provided that a Lender-Related Distress Event shall not be deemed to have occurred solely by virtue of the ownership or acquisition of any Equity Interests in any Lender or any Person that directly or indirectly controls such Lender by a Governmental Authority or an instrumentality thereof so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender; provided, further, that the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official by a supervisory authority or regulator with respect to a Lender or any person that directly or indirectly controls such Lender under the Dutch Financial Supervision Act 2007 (as amended from time to time and including any successor legislation) shall not be deemed to be a Lender-Related Distress Event.

 

“Letter of Credit” shall have the meaning provided in Section 3.1.

 

“Letter of Credit Application” shall have the meaning provided in Section 3.2(a).

 

“Letter of Credit Commitment” shall mean the lesser of (a) $100,000,000, as the same may be reduced from time to time pursuant to Section 3.1 and (b) the Loan Limit.

 

“Letter of Credit Exposure” shall mean, with respect to any Lender, at any time, the sum of (a) the principal amount of any Unpaid Drawings in respect of which such Lender has made (or is required to have made) payments to the applicable Issuing Bank pursuant to Section 3.4(a) at such time and (b) such Lender’s Commitment Percentage of the Letters of Credit Outstanding at such time (excluding the portion thereof consisting of Unpaid Drawings in respect of which the Lenders have made (or are required to have made) payments to the applicable Issuing Bank pursuant to Section 3.4(a)) minus the amount of cash or deposit account balances held by the Administrative Agent to Cash Collateralize outstanding Letters of Credit and Unpaid Drawings under Section 3.7.

 

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“Letter of Credit Fee” shall have the meaning provided in Section 4.1(b).

 

“Letters of Credit Outstanding” shall mean, at any time, the sum of, without duplication, (a) the aggregate Stated Amount of all outstanding Letters of Credit and (b) the aggregate principal amount of all Unpaid Drawings in respect of all Letters of Credit.

 

“Leverage Ratio Covenant” shall mean the covenant of the Borrower set forth in Section 10.11(a).

 

“Lien” shall mean, with respect to any asset, (a) any mortgage, preferred mortgage, deed of trust, lien, notice of claim of lien, hypothecation, pledge, charge, security interest or similar encumbrance in or on such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset or (c) Production Payments and Reserve Sales and the like payable out of Oil and Gas Properties; provided that in no event shall an operating lease be deemed to be a Lien.

 

“Limited Condition Transaction” shall mean (1) any Investment or Permitted Acquisition whose consummation is not conditioned on the availability of, or on obtaining, third party financing whether by merger, amalgamation, consolidation or other business combination or the acquisition of Equity Interests or otherwise and which may include, for the avoidance of doubt, a transaction that may constitute a Change in Control, and any incurrence of Indebtedness or Liens in connection therewith, (2) any redemption, repurchase, defeasance, satisfaction and discharge or repayment of Indebtedness, Disqualified Capital Stock requiring irrevocable notice in advance of such redemption, repurchase, defeasance, satisfaction and discharge or repayment, (3) any Restricted Payment requiring irrevocable notice in advance thereof, (4) any Disposition, and (5) any combination of any of the foregoing.

 

“Liquidate” shall mean any Disposition, termination, unwind, novation (other than any novation with respect to which a Credit Party remains a party to the applicable Hedge Agreement), creation of offsetting positions or other monetization of a Hedge Agreement, including the Disposition of Equity Interests in a Subsidiary that is a party to a Hedge Agreement. “Liquidated” and “Liquidating” shall have meanings correlative thereto.

 

“Loan” shall mean any Initial Loan, Extended Loan or Swingline Loan made by any Lender hereunder.

 

“Loan Extension Request” shall have the meaning provided in Section 2.17(a).

 

“Loan Limit” shall mean, at any time, the least of (a) the Total Commitment at such time, (b) the Borrowing Base at such time (including as it may be reduced pursuant to Section 2.14(h)), (c) the Draw Limit and (d) the then-effective Aggregate Elected Commitment Amount.

 

“Loan Limit Deficiency” occurs if, at any time, the aggregate Total Exposure of all Lenders exceeds the Loan Limit then in effect. The amount of the Loan Limit Deficiency is the amount by which the aggregate Total Exposure of all Lenders exceeds the Loan Limit then in effect.

 

“Majority Lenders” shall mean, at any date, (a) Non-Defaulting Lenders having or holding a majority of the Adjusted Total Commitment at such date, or (b) if the Total Commitment has been terminated or for the purposes of acceleration pursuant to Article 11, Non-Defaulting Lenders having or holding more than 50.0% of the outstanding principal amount of the Loans, the Swingline Exposure and Letter of Credit Exposure (excluding the Loans, Swingline Exposure and Letter of Credit Exposure of Defaulting Lenders) in the aggregate at such date.

 

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“Mandatory Borrowing” shall have the meaning provided in Section 2.1(c).

 

“Margin Stock” shall have the meaning assigned to such terms in Regulation U.

 

“Material Adverse Effect” shall mean a circumstance or condition affecting the business, assets, operations, properties or financial condition of the Borrower and the Restricted Subsidiaries, taken as a whole, that, individually or in the aggregate, would materially adversely affect (a) the business, assets, operations, properties or financial condition of the Borrower and the other Credit Parties, taken as a whole, (b) the ability of the Borrower and the other Credit Parties, taken as a whole, to perform their payment obligations under the Credit Documents or (c) the rights and remedies of the Agents and the Lenders under the Credit Documents.

 

“Material Indebtedness” shall mean Indebtedness (other than Loans and Letters of Credit) of any one or more of the Borrower or any Restricted Subsidiary in an aggregate principal amount exceeding the greater of $100,000,000 and 5.0% of the Borrowing Base then in effect.

 

“Material Subsidiary” shall mean, at any date of determination, each Restricted Subsidiary of the Borrower (a) whose total assets (when combined with the assets of such Restricted Subsidiary’s Subsidiaries, after eliminating intercompany obligations and determined as if references to the Borrower and its Restricted Subsidiaries in the definition of “Consolidated Total Assets” were references to such Restricted Subsidiary and its Subsidiaries) at the last day of the Test Period were equal to or greater than 5.0% of Consolidated Total Assets at such date, (b) whose revenues (when combined with the revenues of such Subsidiary’s Subsidiaries, after eliminating intercompany obligations) during such Test Period were equal to or greater than 5.0% of the consolidated revenues of the Borrower and the Restricted Subsidiaries for such period, in each case determined in accordance with GAAP, (c) that owns Borrowing Base Properties or (d) that incurs, issues or Guarantees any Material Indebtedness; provided that if, at any time and from time to time after the Effective Date, Restricted Subsidiaries that are not Material Subsidiaries have, in the aggregate, (i) total assets (when combined with the assets of such Restricted Subsidiary’s Subsidiaries, after eliminating intercompany obligations and determined as if references to the Borrower and its Restricted Subsidiaries in the definition of “Consolidated Total Assets” were references to such Restricted Subsidiary and its Subsidiaries) at the last day of such Test Period equal to or greater than 10.0% of Consolidated Total Assets at such date or (ii) revenues (when combined with the revenues of such Subsidiary’s Subsidiaries, after eliminating intercompany obligations) during such Test Period equal to or greater than 10.0% of the consolidated revenues of the Borrower and the Restricted Subsidiaries for such period, in each case determined in accordance with GAAP, then the Borrower shall, on the date on which financial statements for such fiscal quarter are delivered pursuant to this Agreement, designate in writing to the Administrative Agent one or more of such Restricted Subsidiaries as “Material Subsidiaries”.

 

“Maturity Date” shall mean, as to the applicable Loan, the Initial Maturity Date, any maturity date related to any Extension Series of Extended Commitments, or the Swingline Maturity Date, as applicable.

 

“Maximum Letter of Credit Commitment” shall mean with respect to each Issuing Bank, the amount set forth opposite such Issuing Bank’s name in Schedule 1.1(a) hereto, as such schedule may be amended or modified from time to time by the Borrower, each Issuing Bank affected by such amendment or modification thereto and by the Administrative Agent.

 

“Minimum Borrowing Amount” shall mean, with respect to any Borrowing of Loans, $500,000 (or, if less, the entire remaining Commitments at the time of such Borrowing).

 

“Minority Investment” shall mean any Person (other than a Subsidiary) in which the Borrower or any Restricted Subsidiary owns Equity Interests.

 

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“Moody’s” shall mean Moody’s Investors Service, Inc. or any successor by merger or consolidation to its business.

 

“Mortgage” shall mean a mortgage or a deed of trust, deed to secure debt, trust deed, assignment of as-extracted collateral, fixture filing or other security document entered into by the owner of a Mortgaged Property and the Collateral Agent for the benefit of the Secured Parties in respect of that Mortgaged Property, substantially in the form of Exhibit D (with such changes thereto as may be necessary to account for local law matters) or otherwise in such form as agreed between the Borrower and the Collateral Agent.

 

“Mortgaged Property” shall mean the Oil and Gas Properties and other properties and assets that are subject to a Mortgage. However, notwithstanding any provision in this Agreement, any Mortgage, or any other Security Document to the contrary, in no event shall any Building (as defined in the applicable Flood Insurance Regulation) or Manufactured (Mobile) Home (as defined in the applicable Flood Insurance Regulation) be included in the definition of “Mortgaged Property” and no Building or Manufactured (Mobile) Home shall be encumbered by any Mortgage. As used herein, “Flood Insurance Regulations” shall mean (i) the National Flood Insurance Act of 1968 as now or hereafter in effect or any successor statute thereto, (ii) the Flood Disaster Protection Act of 1973 as now or hereafter in effect or any successor statue thereto, (iii) the National Flood Insurance Reform Act of 1994 (amending 42 USC 4001, et seq.), as the same may be amended or recodified from time to time, (iv) the Flood Insurance Reform Act of 2004 and (v) the Biggert Waters Flood Reform Act of 2012 and, in each case, any regulations promulgated thereunder.

 

“Multiemployer Plan” shall mean a Plan that is a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

 

“Necessary Cure Amount” shall have the meaning provided in Section 11.12(a)(ii).

 

“Net Income” shall mean, 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.

 

“New Borrowing Base Notice” shall have the meaning provided in Section 2.14(d).

 

“Non-Bank Tax Certificate” shall mean a certificate substantially in the form of Exhibit K-1, K-2, K-3 or K-4, as applicable.

 

“Non-Consenting Lender” shall have the meaning provided in Section 13.7(b).

 

“Non-Defaulting Lender” shall mean and include each Lender other than a Defaulting Lender.

 

“Non-Extension Notice Date” shall have the meaning provided in Section 3.2(b).

 

“Non-Fixed Basket” shall have the meaning provided in Section 1.12(f).

 

“Non-U.S. Lender” shall mean any Lender (a) that is not disregarded as separate from its owner for U.S. federal income tax purposes and that is not a “United States person” as defined by Section 7701(a)(30) of the Code or (b) that is disregarded as separate from its owner for U.S. federal income tax purposes and whose regarded owner is not a “United States person” as defined by Section 7701(a)(30) of the Code.

 

“Notice of Borrowing” shall mean a request of the Borrower in accordance with the terms of Section 2.3(a) and substantially in the form of Exhibit B or such other form as shall be approved by the Administrative Agent (acting reasonably).

 

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“Notice of Conversion or Continuation” shall have the meaning provided in Section 2.6(a).

  

“Obligations” shall mean all advances to, and debts, liabilities, obligations, covenants and duties of, any Credit Party arising under any Credit Document or otherwise with respect to any Loan or Letter of Credit or under any Secured Cash Management Agreement or Secured Hedge Agreement, in each case, entered into with the Borrower or any of its Restricted Subsidiaries, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Credit Party or any Affiliate thereof in any proceeding under any bankruptcy or insolvency law naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding. Without limiting the generality of the foregoing, the Obligations of the Credit Parties under the Credit Documents (and any of their Restricted Subsidiaries to the extent they have obligations under the Credit Documents) include the obligation (including Guarantee Obligations) to pay principal, interest, charges, expenses, fees, Attorney Costs, indemnities and other amounts payable by any Credit Party under any Credit Document and Erroneous Payment Subrogation Rights. Notwithstanding the foregoing, (a) Excluded Swap Obligations shall not constitute Obligations, (b) the obligations of the Borrower or any Restricted Subsidiary under any Secured Hedge Agreement and under any Secured Cash Management Agreement shall be secured and guaranteed pursuant to the Security Documents and the Guarantee only to the extent that, and for so long as, the other Obligations are so secured and guaranteed and (c) any release of Collateral or Guarantors effected in the manner permitted by this Agreement and the other Credit Documents shall not require the consent of the holders of Hedging Obligations under Secured Hedge Agreements or of the holders of Cash Management Obligations under Secured Cash Management Agreements.

 

“OFAC” shall mean the Office of Foreign Assets Control of the U.S. Treasury Department, and any successor thereto.

 

“Oil and Gas Business” shall mean:

 

(a)            the business of acquiring, exploring, exploiting, developing, producing, operating and disposing of interests in oil, natural gas, natural gas liquids, liquefied natural gas and other Hydrocarbons and mineral properties or products produced in association with any of the foregoing;

 

(b)            the business of gathering, marketing, distributing, treating, processing, storing, refining, selling and transporting of any production from such interests or properties and products produced in association therewith; and the marketing of oil, natural gas, other Hydrocarbons and minerals obtained from unrelated Persons; and

 

(c)            any business or activity relating to, arising from, or necessary, appropriate, incidental or ancillary to the activities described in the foregoing clauses (a) and (b) of this definition.

 

“Oil and Gas Properties” shall mean (a) Hydrocarbon Interests, (b) the properties now or hereafter pooled or unitized with Hydrocarbon Interests, (c) all presently existing or future unitization, pooling agreements and declarations of pooled units and the units created thereby (including all units created under orders, regulations and rules of any Governmental Authority) which may affect all or any portion of the Hydrocarbon Interests, (d) all operating agreements, contracts and other agreements, including production sharing contracts and agreements, which relate to any of the Hydrocarbon Interests or the production, sale, purchase, exchange or processing of Hydrocarbons from or attributable to such Hydrocarbon Interests, (e) all Hydrocarbons in and under and which may be produced and saved or attributable to the Hydrocarbon Interests, including all oil in tanks, and all rents, issues, profits, proceeds, products, revenues and other incomes from or attributable to the Hydrocarbon Interests, (f) all tenements, hereditaments, appurtenances and properties in any manner appertaining, belonging, affixed or incidental to the Hydrocarbon Interests and (g) all properties, rights, titles, interests and estates described or referred to above, including any and all property, real or personal, now owned or hereafter acquired and situated upon, used, held for use or useful in connection with the operating, working or development of any of such Hydrocarbon Interests or property (excluding drilling rigs, automotive equipment, rental equipment or other personal property which may be on such premises for the purpose of drilling a well or for other similar temporary uses) and including any and all oil wells, gas wells, injection wells or other wells, structures, fuel separators, liquid extraction plants, plant compressors, pumps, pumping units, field gathering systems, gas processing plants and pipeline systems and any related infrastructure to any thereof, tanks and tank batteries, fixtures, valves, fittings, machinery and parts, engines, boilers, meters, apparatus, equipment, appliances, tools, implements, cables, wires, towers, casing, tubing and rods, surface leases, rights-of-way, easements and servitudes together with all additions, substitutions, replacements, accessions and attachments to any and all of the foregoing.

 

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“Ongoing Hedges” shall have the meaning provided in Section 10.10(a).

 

“Opco Guarantee” shall mean the Third Amended and Restated Guarantee Agreement, dated as of the Effective Date, by and between Opco Parent and the Collateral Agent.

 

“Opco Parent” shall mean Magnolia Oil & Gas Parent LLC, a Delaware limited liability company.

 

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

 

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

 

“Other Taxes” shall mean any and all present or future stamp, registration, documentary, intangible, recording, filing or similar Taxes arising from any payment made hereunder or made under any other Credit Document or from the execution or delivery of, registration or enforcement of, consummation or administration of, or otherwise with respect to, this Agreement or any other Credit Document; provided that such term shall not include any of the foregoing Taxes (i) that result from an assignment, grant of a participation pursuant to Section 13.6(c) or transfer or assignment to or designation of a new lending office or other office for receiving payments under any Credit Document (“Assignment Taxes”) to the extent such Assignment Taxes are imposed as a result of a connection between the assignor/participating Lender and/or the assignee/Participant and the taxing jurisdiction (other than a connection arising solely from any Credit Documents or any transactions contemplated thereunder), except to the extent that any such action described in this proviso is requested or required by the Borrower pursuant to Section 13.7, or (ii) Excluded Taxes.

 

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“Overnight Rate” shall mean, for any day, the greater of (a) the Federal Funds Effective Rate and (b) an overnight rate determined by the Administrative Agent or the applicable Issuing Bank, as the case may be, in accordance with banking industry rules on interbank compensation.

 

“Parent” shall mean Magnolia Oil & Gas Corporation, a Delaware corporation.

 

“Parent Entity” shall mean any Person that is a direct or indirect parent company (which may be organized as a partnership) of Holdings and/or the Borrower, as applicable.

 

“Parent Entity Guarantor” shall mean (a) Parent in its capacity as guarantor under the Parent Guarantee, (b) Opco Parent in its capacity as guarantor under the Opco Guarantee and/or (c) Holdings Parent in its capacity as guarantor under the Holdings Parent Guarantee, as applicable.

 

“Parent Financial Statements” shall have the meaning provided in Section 8.23(a).

 

“Parent Guarantee” shall mean the Third Amended and Restated Guarantee Agreement, dated as of the Effective Date, by and between Parent and the Collateral Agent.

 

“Participant” shall have the meaning provided in Section 13.6(c)(i).

 

“Participant Register” shall have the meaning provided in Section 13.6(c)(ii).

 

“Participating Member States” shall mean, together, each member state of the European Union that adopts or has adopted the Euro as its lawful currency in accordance with legislation of the European Union relating to the Economic and Monetary Union (as amended or re-enacted from time to time).

 

“PATRIOT Act” shall have the meaning provided in Section 13.18.

 

“Payment in Full” shall mean the day the Total Commitment and each Letter of Credit have terminated (unless such Letters of Credit have been collateralized on terms and conditions reasonably satisfactory to each applicable Issuing Bank following the termination of the Total Commitment) and the Loans, the Swingline Loans and Unpaid Drawings, together with interest, fees and all other Obligations incurred hereunder (other than Hedging Obligations under Secured Hedge Agreements, Cash Management Obligations under Secured Cash Management Agreements or contingent indemnification obligations not then due and payable), are paid in full.

 

“Payment Recipient” shall have the meaning provided in Section 12.14(a).

 

“PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant to Section 4002 of ERISA, or any successor thereto.

 

“Periodic Term SOFR Determination Day” has the meaning specified in the definition of “Term SOFR”.

 

“Permitted Acquisition” shall mean the acquisition, by merger or otherwise, by the Borrower or any of the Restricted Subsidiaries of assets (including any assets constituting a business unit, line of business or division) or Equity Interests, so long as (a) if such acquisition involves the acquisition of Equity Interests of a Person that upon such acquisition would become a Subsidiary, such acquisition shall result in the issuer of such Equity Interests becoming a Restricted Subsidiary and a Guarantor; (b) such acquisition shall result in the Collateral Agent, for the benefit of the Secured Parties, being granted a security interest in any Equity Interests or any assets so acquired to the extent required by Section 9.11; (c) immediately after giving effect to such acquisition, no Event of Default pursuant to Section 11.1 or 11.5 shall have occurred and be continuing; and (d) immediately after giving effect to such acquisition, the Borrower and its Restricted Subsidiaries shall be in compliance with Section 9.15; provided that, notwithstanding anything herein to the contrary, the Effective Date Acquisition shall be a Permitted Acquisition.

 

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“Permitted Additional Debt” shall mean any unsecured senior, unsecured senior subordinated, Junior Lien or subordinated loans or notes issued by the Borrower or a Grantor, (a) the terms of which do not provide for any scheduled repayment, mandatory redemption or sinking fund obligation prior to the 91st day after the Latest Maturity Date as in effect on the date of determination (other than (i) customary offers to purchase upon a change of control, AHYDO payments, asset sale or casualty or condemnation event and customary acceleration rights after an event of default and (ii) Indebtedness incurred pursuant to a customary bridge facility if the Indebtedness pursuant to such customary bridge facility converts at maturity to Indebtedness which does not provide for any scheduled repayment, mandatory redemption or sinking fund obligation (except to the extent permitted pursuant to clause (i)) prior to the 91st day after the Latest Maturity Date as in effect on the date of determination), (b) if such Indebtedness is subordinated in right of payment to the Obligations, the terms of such Indebtedness provide for customary subordination of such Indebtedness to the Obligations, (c) no Subsidiary of the Borrower (other than a Guarantor) is an obligor under such Indebtedness, (d) that does not restrict, by its terms, the prepayment or repayment of the Obligations, (e) the covenants, events of default, guarantees and other terms of which (other than interest rate, fees, funding discounts and redemption or prepayment premiums reasonably determined by the Borrower to be “market” rates, fees, discounts and premiums at the time of issuance or incurrence of any such Indebtedness), taken as a whole, shall be customary for high yield debt securities and are determined by the Borrower to be not materially more restrictive on or materially less favorable to the Borrower and its Restricted Subsidiaries than the terms of this Agreement (as in effect at the time of such issuance or incurrence), taken as a whole, or if are determined by the Borrower to be materially more restrictive on or materially less favorable to the Borrower and its Restricted Subsidiaries than the terms of this Agreement (as in effect at the time of such issuance or incurrence), are automatically incorporated into this Agreement (with this Agreement being amended to incorporate such terms, mutatis mutandis, as if set forth fully herein, without any further action required on the part of any Person) and (f) shall not include any financial maintenance covenants.

 

“Permitted Holders” shall mean any of officers, directors, employees and other members of management of the Borrower (or any of its Parent Entities, including Parent) or any of its Restricted Subsidiaries who are or become holders of Equity Interests of the Borrower (or any Parent Entity, including Parent) (and their Controlled Investment Affiliates and Immediate Family Members); provided that for purposes of the definition of “Change of Control”, the Persons described above shall not constitute Permitted Holders at any time they hold voting power equal to or more than fifty percent (50%) of all Equity Interests collectively and beneficially of the Parent.

 

“Permitted Investments” shall mean:

 

(1)            Dollars;

 

(2)            (a) Euros, Yen, Canadian Dollars, Pound Sterling or any national currency of any Participating Member State of the EMU; or

 

(b)            in the case of any Foreign Subsidiary or any jurisdiction in which the Borrower or its Restricted Subsidiaries conducts business, such local currencies held by it from time to time in the ordinary course of business and not for speculation;

 

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(3)            securities issued or directly and fully and unconditionally guaranteed or insured by the United States government or any agency or instrumentality thereof the securities of which are unconditionally guaranteed as a full faith and credit obligation of such government with maturities of thirty-six (36) months or less from the date of acquisition;

 

(4)            certificates of deposit, time deposits and eurodollar time deposits with maturities of thirty-six (36) months or less from the date of acquisition, demand deposits, bankers’ acceptances with maturities not exceeding three (3) years and overnight bank deposits, in each case with any domestic or foreign commercial bank having capital and surplus of not less than $250,000,000 in the case of U.S. banks and $100,000,000 (or the Dollar equivalent as of the date of determination) in the case of non-U.S. banks (any such bank in the forgoing an “Approved Bank”);

 

(5)            repurchase obligations for underlying securities of the types described in clauses (3) and (4) above or clauses (7) and (8) below entered into with any financial institution or recognized securities dealer meeting the qualifications specified in clause (4) above;

 

(6)            commercial paper and variable or fixed rate notes issued by an Approved Bank (or by the parent company thereof) or any variable or fixed rate note issued by, or guaranteed by, a corporation by, a corporation (other than structured investment vehicles and other than corporations used in structured financing transactions) rated A-2 (or the equivalent thereof) or better rated at least P-2 by Moody’s or at least A-2 by S&P or P-2 (or the equivalent thereof) or better by Moody’s (or, if at any time neither Moody’s nor S&P shall be rating such obligations, an equivalent Credit Rating Agency) and in each case maturing within thirty-six (36) months after the date of acquisition thereof;

 

(7)            marketable short-term money market and similar liquid funds having a rating of at least P-2 (or the equivalent thereof) or A-2 (or the equivalent thereof) from either Moody’s or S&P, respectively (or, if at any time neither Moody’s nor S&P shall be rating such obligations, an equivalent Credit Rating Agency);

 

(8)            readily marketable direct obligations issued or fully guaranteed by (i) any state, commonwealth or territory of the United States or any political subdivision or taxing authority thereof or (ii) any foreign government or any political subdivision or public instrumentality thereof; provided, that each such readily marketable direct obligation shall have an Investment Grade Rating from either Moody’s or S&P or Moody’s (or the equivalent thereof) (or, if at any time neither Moody’s nor S&P or Moody’s (or the equivalent thereof) shall be rating such obligations, an equivalent rating from another Credit Rating Agency) with maturities of thirty-six (36) months or less from the date of acquisition;

 

(9)            Investments with average maturities of thirty-six (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 shall be rating such obligations, an equivalent Credit Rating Agency);

 

(10)            investment funds investing substantially all of their assets in securities of the types de-scribed in clauses (1) through (9) above; and

 

(11)            solely with respect to any captive insurance subsidiary, any Investment in connection with its provision of insurance, which Investment is permitted to be made in accordance with applicable law, rule, regulation or order or that is required or approved by any regulatory authority having jurisdiction over such captive insurance subsidiary or its business, as applicable.

 

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In the case of Investments by any Foreign Subsidiary or Investments made in a country outside the United States, Permitted Investments shall also include (i) investments of the type and maturity described in clauses (1) through (7) and clauses (8)(i) and (9) 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 (11) and in this paragraph.

 

Notwithstanding the foregoing, Permitted Investments shall include amounts denominated in currencies other than those set forth in clauses (1) and (2) above; provided that such amounts 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.

 

“Permitted Liens” shall mean:

 

(a)            Liens for Taxes, assessments or governmental charges or claims not yet overdue for a period of more than thirty (30) days or that are being contested in good faith and by appropriate proceedings for which appropriate reserves have been established to the extent required by and in accordance with GAAP (or in the case of any Foreign Subsidiary, the comparable accounting principles in the relevant jurisdiction), or for property taxes on property that the Borrower or one of its Subsidiaries has determined to abandon if the sole recourse for such tax, assessment, charge or claim is to such property;

 

(b)            Liens in respect of property or assets of the Borrower or any of the Restricted Subsidiaries imposed by law, such as landlords’, vendors’, suppliers’, carriers’, warehousemen’s, repairmen’s, construction contractors’, workers’ and mechanics’ Liens and other similar Liens arising in the ordinary course of business or incidental to the exploration, development, operation or maintenance of Oil and Gas Properties, in each case so long as such Liens arise in the ordinary course of business and do not individually or in the aggregate have a Material Adverse Effect;

 

(c)            Liens arising from judgments or decrees in circumstances not constituting an Event of Default under Section 11.9;

 

(d)            Liens incurred or pledges or deposits made in connection with workers’ compensation, unemployment insurance and other types of social security, old age pension, public liability obligations or similar legislation, and deposits securing liabilities to insurance carriers under insurance or self-insurance arrangements in respect of such obligations, or to secure (or secure the Liens securing) liability for reimbursement or indemnification obligations of (including obligations in respect of letters of credit or bank guarantees for the benefit of) insurance carriers providing property, casualty or liability insurance to the Borrower or any Subsidiary;

 

(e)            deposits and other Liens securing (or securing the bonds or similar instruments securing) the performance of tenders, statutory obligations, plugging and abandonment obligations, surety, stay, customs and appeal bonds, bids, leases, government contracts, trade contracts, performance and return-of-money bonds and other similar obligations (including letters of credit issued in lieu of such bonds or to support the issuance thereof) incurred in the ordinary course of business or in a manner consistent with past practice, including those incurred to secure health, safety and environmental obligations in the ordinary course of business, or otherwise constituting Investments permitted by Section 10.5;

 

(f)            ground leases, subleases, licenses or sublicenses in respect of real property on which facilities owned or leased by the Borrower or any of its Restricted Subsidiaries are located;

 

46 

 

 

(g)            easements, rights-of-way, restrictive covenants, licenses, restrictions (including zoning restrictions), title defects, exceptions, deficiencies or irregularities in title, encroachments, protrusions, servitudes, permits, conditions and covenants and other similar charges or encumbrances (including in any rights-of-way or other property of the Borrower or its Restricted Subsidiaries for the purpose of roads, pipelines, transmission lines, transportation lines, distribution lines for the removal of gas, oil or other minerals or timber, and other like purposes, or for joint or common use of real estate, rights of way, facilities and equipment) not interfering in any material respect with the business of the Borrower and its Restricted Subsidiaries, taken as a whole;

 

(h)            (i) any interest or title of a lessor, sublessor, licensor or sublicensor under any lease, liens reserved in oil, gas or other Hydrocarbons, minerals, leases for bonus, royalty or rental payments and for compliance with the terms of such lease and (ii) any interest or title of a lessor, sublessor, licensor or sublicensor or secured by a lessor’s, sublessor’s, licensor’s or sublicensor’s interest under any lease, sublease, license or sublicense entered into by the Borrower or any Restricted Subsidiary in the ordinary course of business or otherwise permitted by this Agreement;

 

(i)            Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;

 

(j)            Liens on goods or inventory the purchase, shipment or storage price of which is financed by a documentary letter of credit or bankers’ acceptance issued for the account of the Borrower or any of its Restricted Subsidiaries; provided that such Lien secures only the obligations of the Borrower or such Restricted Subsidiaries in respect of such letter of credit or bankers’ acceptance to the extent permitted under Section 10.1;

 

(k)            leases, licenses, subleases or sublicenses granted to others not interfering in any material respect with the business of the Borrower and its Restricted Subsidiaries, taken as a whole;

 

(l)            Liens arising from precautionary UCC financing statement or similar filings made in respect of operating leases entered into by the Borrower or any of its Restricted Subsidiaries;

 

(m)            Liens created in the ordinary course of business in favor of banks and other financial institutions over credit balances of any bank accounts, commodity trading accounts or other brokerage accounts of the Borrower and the Restricted Subsidiaries held at such banks or financial institutions, as the case may be, in the ordinary course of business;

 

(n)            Liens which arise in the ordinary course of business under operating agreements, joint venture agreements, oil and gas partnership agreements, oil and gas leases, Farm-Out Agreements, Farm-In Agreements, division orders, contracts for the sale, transportation or exchange of oil and natural gas, unitization and pooling declarations and agreements, area of mutual interest agreements, overriding royalty agreements, marketing agreements, processing agreements, net profits agreements, development agreements, gas balancing or deferred production agreements, injection, repressuring and recycling agreements, salt water or other disposal agreements, seismic or other geophysical permits or agreements, and other agreements that are usual or customary in the Oil and Gas Business and are for claims which are not delinquent or that are being contested in good faith and by appropriate proceedings for which appropriate reserves have been established to the extent required by and in accordance with GAAP; provided that any such Lien referred to in this clause does not materially impair the use of the property covered by such Lien for the purposes for which such property is held by the Borrower or any Restricted Subsidiary;

 

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(o)            Liens on pipelines and pipeline facilities that arise by operation of law or other like Liens arising by operation of law in the ordinary course of business and incident to the exploration, development, operation and maintenance of Oil and Gas Properties;

 

(p)            any zoning or similar law or right reserved to or vested in any Governmental Authority to control or regulate the use of any real property that does not materially interfere with the ordinary conduct of the business of the Borrower and its Restricted Subsidiaries, taken as a whole;

 

(q)            Liens on equipment of the Borrower or any Restricted Subsidiary granted in the ordinary course of business to the Borrower or such Restricted Subsidiary’s client at which such equipment is located;

 

(r)            security given to a public utility or any municipality or governmental authority when required by such utility or authority in connection with the operations of that Person in the ordinary course of business;

 

(s)            Liens on Equity Interests in joint ventures; provided that any such Lien is in favor of a creditor of such joint venture and such creditor is not an Affiliate of any partner to such joint venture; and

 

(t)            Liens on Permitted Investments that are earmarked to be used to satisfy or discharge Indebtedness; provided that (x) such Permitted Investments are deposited into an account from which payment is to be made, directly or indirectly, to the Person or Persons holding the Indebtedness that is to be satisfied or discharged, (y) such Liens extend solely to the account in which such Permitted Investments are deposited and are solely in favor of the Person or Persons holding the Indebtedness (or any agent or trustee for such Person or Persons) that is to be satisfied or discharged and (z) the satisfaction or discharge of such Indebtedness is permitted hereunder.

 

“Permitted Refinancing Indebtedness” shall mean, with respect to any Indebtedness (the “Refinanced Indebtedness”), any Indebtedness issued or incurred in exchange for, or the net proceeds of which are used to modify, extend, refinance, renew, replace or refund (collectively to “Refinance” or a “Refinancing” or “Refinanced”), such Refinanced Indebtedness (or previous refinancing thereof constituting Permitted Refinancing Indebtedness); provided that (I) the principal amount (or accreted value, if applicable) of any such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Refinanced Indebtedness outstanding immediately prior to such Refinancing except by an amount equal to the unpaid accrued interest and premium thereon and other amounts paid in connection with the defeasance or discharge of such Indebtedness plus other amounts paid (including any tender premium) and fees and expenses incurred in connection with such Refinancing plus an amount equal to any existing commitment unutilized and letters of credit undrawn thereunder, (II) if the Indebtedness being Refinanced is Indebtedness permitted by Section 10.1(c), 10.1(i) or 10.1(k), the direct and contingent obligors with respect to such Permitted Refinancing Indebtedness immediately prior to such Refinancing are not changed as a result of such Refinancing (except that a Credit Party may be added as an additional obligor), (III) other than with respect to a Refinancing in respect of Indebtedness permitted pursuant to Section 10.1(h), such Permitted Refinancing Indebtedness shall have a final maturity date equal to or later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Refinanced Indebtedness, (IV) if the Indebtedness being Refinanced is Indebtedness permitted by Sections 10.1(c), (i) or (k), the terms and conditions of any such Permitted Refinancing Indebtedness, taken as a whole, are not materially less favorable to the Lenders than the terms and conditions of the Refinanced Indebtedness being Refinanced (including, if applicable, as to collateral priority and subordination, but excluding as to interest rates, fees, floors, funding discounts and redemption or prepayment premiums) or are customary for similar Indebtedness in light of current market conditions; provided that a certificate of an Authorized Officer of the Borrower delivered to the Administrative Agent at least three (3) Business Days prior to the incurrence or issuance of such Indebtedness, together with a reasonably detailed description of the material terms and conditions of such Indebtedness or drafts of the documentation relating thereto, stating that the Borrower has determined in good faith that such terms and conditions satisfy the foregoing requirement shall be conclusive evidence that such terms and conditions satisfy the foregoing requirement, (V) if the Refinanced Indebtedness is subordinated in right of payment or security such Permitted Refinancing Indebtedness shall be subordinated on terms no less favorable to the Secured Parties and (VI) if the Refinanced Indebtedness constitutes Junior Debt, such Permitted Refinancing Indebtedness is not secured by any assets other than the Collateral. Notwithstanding the foregoing, (x) Permitted Refinancing Indebtedness in respect of Permitted Additional Debt must constitute Permitted Additional Debt, and (y) if the Refinanced Indebtedness constitutes Indebtedness permitted under Section 10.1(cc), the Permitted Refinancing Indebtedness in respect of such Indebtedness permitted under Section 10.1(cc) must be incurred under Section 10.1(p).

 

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“Person” shall mean any individual, partnership, joint venture, firm, corporation, limited liability company, association, trust or other enterprise or any Governmental Authority.

 

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

 

“Plan” shall mean any multiemployer or single-employer plan, as defined in Section 4001 of ERISA and subject to Title IV of ERISA, that is or was within any of the preceding six (6) plan years maintained for or contributed to by (or to which there is or was an obligation to contribute or to make payments to) the Borrower or an ERISA Affiliate.

 

“Preferred Stock” shall mean any Equity Interest with preferential rights of payment of dividends or upon liquidation, dissolution, or winding up.

 

“Prime Rate” shall mean the rate of interest per annum publicly announced from time to time by Citibank, N.A. as its prime rate in effect at its principal office in New York City (the Prime Rate not being intended to be the lowest rate of interest charged by Citibank, N.A. in connection with extensions of credit to debtors).

 

“Pro Forma Basis” shall mean, with respect to compliance with any test or covenant or calculation of any ratio hereunder, the determination or calculation of such test, covenant or ratio (including in connection with Specified Transactions) in accordance with Section 1.12.

 

“Proceeding” shall have the meaning provided in Section 12.7.

 

“Production Payments and Reserve Sales” shall mean the grant or transfer by the Borrower or any of its Restricted Subsidiaries 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.

 

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“Projections” shall mean financial estimates, forecasts and other forward-looking information prepared by or on behalf of the Borrower or any of its representatives and that have been made available to any Lenders or the Administrative Agent on or prior to the Effective Date in connection with the Transactions or the other transactions contemplated hereby.

 

“Proposed Acquisition” shall have the meaning provided in Section 10.10(a).

 

“Proposed Borrowing Base” shall have the meaning provided in Section 2.14(c)(i).

 

“Proposed Borrowing Base Notice” shall have the meaning provided in Section 2.14(c)(ii).

 

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

 

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

 

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

 

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

 

“Public Company Costs” shall mean costs relating to compliance with the Sarbanes-Oxley Act of 2002, as amended, and other expenses arising out of or incidental to being a public reporting company, including costs, fees and expenses (including legal, accounting and other professional fees) relating to compliance with provisions of the Securities Act and the Exchange Act, the rules of national securities exchange companies with listed equity securities, directors’ compensation, fees and expense reimbursement shareholder meetings and reports to shareholders, directors’ and officers’ insurance and other executive costs, legal and other professional fees, and listing fees.

 

“PV-9” shall mean, with respect to any Proved Reserves expected to be produced from any Borrowing Base Properties, the net present value, discounted at 9% per annum, of the future net revenues expected to accrue to the Borrower’s and the Credit Parties’ collective interests in such reserves during the remaining expected economic lives of such reserves, calculated in accordance with the most recent Bank Price Deck provided to the Borrower by the Administrative Agent pursuant to Section 2.14(i).

 

“Qualified Equity Interests” shall mean any Equity Interests of Holdings or the Borrower or any Parent Entity other than Disqualified Stock.

 

“RBL Facility” shall mean this Agreement and the Commitments and the extensions of credit made hereunder.

 

“Recipient” shall mean the Administrative Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of any Credit Party hereunder or under any other Credit Document.

 

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“Redetermination Date” shall mean, with respect to any Scheduled Redetermination or any Interim Redetermination, the date that the redetermined Borrowing Base related thereto becomes effective pursuant to Section 2.14(d).

 

“Refinance” shall have the meaning provided in the definition of “Permitted Refinancing Indebtedness.”

 

“Register” shall have the meaning provided in Section 13.6(b)(iv).

 

“Regulation T” shall mean Regulation T of the Board as from time to time in effect and any successor to all or a portion thereof establishing margin requirements.

 

“Regulation U” shall mean Regulation U of the Board as from time to time in effect and any successor to all or a portion thereof establishing margin requirements.

 

“Regulation X” shall mean Regulation X of the Board as from time to time in effect and any successor to all or a portion thereof establishing margin requirements.

 

“Reimbursement Date” shall have the meaning provided in Section 3.4(a).

 

“Related Indemnified Person” shall mean, with respect to an Indemnitee, (1) any controlling Person or controlled Affiliate of such Indemnitee, (2) the respective directors, officers, or employees of such Indemnitee or any of its controlling Persons or controlled Affiliates and (3) the respective agents and representatives of such Indemnitee or any of its controlling Persons or controlled Affiliates, in the case of this clause (3), acting at the instructions of such Indemnitee, controlling Person or such controlled Affiliate.

 

“Relevant Governmental Body” shall mean the Federal Reserve Board or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board or the Federal Reserve Bank of New York, or any successor thereto.

 

“Replaced Loans” shall have the meaning provided in Section 13.1(f).

 

“Replacement Loans” shall have the meaning provided in Section 13.1(f).

 

“Reportable Event” shall mean an event described in Section 4043(c) of ERISA and the regulations thereunder, other than any event as to which the thirty (30)-day notice period has been waived.

 

“Required Cash Collateral Amount” shall have the meaning provided in Section 3.7(c).

 

“Required Lenders” shall mean, at any date, (a) Non-Defaulting Lenders having or holding at least 66% of the Adjusted Total Commitment at such date or (b) if the Total Commitment has been terminated, Non-Defaulting Lenders having or holding at least 66% of the outstanding principal amount of the Loans, the Swingline Exposure and Letter of Credit Exposure (excluding the Loans, Swingline Exposure and Letter of Credit Exposure of Defaulting Lenders) in the aggregate at such date.

 

“Requirement of Law” shall mean, as to any Person, any law, treaty, rule, regulation, statute, order, ordinance, decree, judgment, consent decree, writ, injunction, settlement agreement or governmental requirement enacted, promulgated or imposed or entered into or agreed by any Governmental Authority, in each case applicable to or binding upon such Person or any of its property or assets or to which such Person or any of its property or assets is subject.

 

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“Reserve Report” shall mean the Initial Reserve Report and any other subsequent report, in form reasonably satisfactory to the Administrative Agent, setting forth, as of each June 30th or December 31st (or such other date in the event of certain Interim Redeterminations) the Proved Reserves and the Proved Developed Reserves attributable to the Borrowing Base Properties of the Borrower and the Credit Parties, together with a projection of the rate of production and future net revenues, operating expenses (including production taxes and ad valorem expenses) and capital expenditures with respect thereto as of such date, based upon the most recent Bank Price Deck provided to the Borrower by the Administrative Agent pursuant to Section 2.14(i); provided that in connection with any Interim Redeterminations of the Borrowing Base pursuant to the last sentence of Section 2.14(b), (i.e., as a result of the Borrower having acquired Oil and Gas Properties with Proved Reserves which are to be Borrowing Base Properties having a PV-9 (calculated at the time of acquisition) in excess of 5.0% of the Borrowing Base in effect immediately prior to such acquisition), the Borrower shall be required, for purposes of updating the Reserve Report, to set forth only such additional Proved Reserves and related information as are the subject of such acquisition. For the avoidance of doubt all Reserve Reports, including those delivered in connection with any redetermination, may be prepared internally by petroleum engineers that are employees of the Borrower, any Restricted Subsidiaries thereof, or any of each of their respective Affiliates (subject to any applicable audit requirement set forth in Section 9.14(a)).

 

“Reserve Report Certificate” shall mean a certificate of an Authorized Officer in substantially the form of Exhibit A certifying as to the matters set forth in Section 9.14(c).

 

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

 

“Restricted Payments” shall have the meaning provided in Section 10.6.

 

“Restricted Subsidiary” shall mean any Subsidiary of the Borrower other than an Unrestricted Subsidiary.

 

“S&P” shall mean S&P Global Ratings or any successor thereto.

 

“Sanctioned Country” shall mean at any time, a country, region or territory which is itself (or whose government is) the subject or target of any Sanctions (as of the Effective Date, the Crimea region of Ukraine, the so-called Donetsk People’s Republic, the so-called Luhansk People’s Republic, Cuba, Iran, North Korea, and the non-governmental controlled regions of the Zaporizhzhia and Kherson Regions of Ukraine).

 

“Sanctioned Person” shall mean, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by OFAC (including OFAC’s Specially Designated Nationals and Blocked Persons List), the U.S. Department of State, the United Nations Security Council, the European Union, any European member state, His Majesty’s Treasury of the United Kingdom, (b) any Person operating from, or organized or resident in, a Sanctioned Country, (c) any Person 50% or more owned or controlled (as such terms are defined in applicable Sanctions) by, or acting or purporting to act for or on behalf of, directly or indirectly, any such Person or Persons described in clauses (a) and (b), or (d) any Person otherwise a target of Sanctions.

 

“Sanctions” shall mean any and all applicable economic or financial sanctions, or trade embargoes imposed, administered or enforced from time to time by the U.S. government (including those administered by OFAC or the U.S. Department of State), the United Nations Security Council, the European Union or any European member state, or His Majesty’s Treasury of the United Kingdom.

 

“Scheduled Redetermination” shall have the meaning provided in Section 2.14(b).

 

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“Scheduled Redetermination Date” shall mean the date on which a Borrowing Base that has been redetermined pursuant to a Scheduled Redetermination becomes effective as provided in Section 2.14.

 

“SEC” shall mean the Securities and Exchange Commission or any successor thereto.

 

“Secured Cash Management Agreement” shall mean any agreement related to Cash Management Services by and between the Borrower or any of its Restricted Subsidiaries and any Cash Management Bank.

 

“Secured Hedge Agreement” shall mean any Hedge Agreement by and between the Borrower or any of its Restricted Subsidiaries and any Hedge Bank.

 

“Secured Parties” shall mean, collectively, the Administrative Agent, the Collateral Agent, each Issuing Bank, each Lender, each Hedge Bank that is party to any Secured Hedge Agreement, each Cash Management Bank that is a party to any Secured Cash Management Agreement and each sub-agent pursuant to Section 12.2 appointed by the Administrative Agent with respect to matters relating to the Credit Documents or by the Collateral Agent with respect to matters relating to any Security Document.

 

“Securities Account” shall mean any securities account maintained by the Credit Parties, including any “security accounts” under Article 9 of the UCC. All funds in such Securities Accounts (other than Excluded Accounts) shall be conclusively presumed to be Collateral and proceeds of Collateral and the Agents and the Lenders shall have no duty to inquire as to the source of the amounts on deposit in the Securities Accounts.

 

“Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

“Security Documents” shall mean, collectively, (a) the Collateral Agreement, (b) the Mortgages, (c) the Control Agreements and (d) each other security agreement or other instrument or document executed and delivered pursuant to Section 9.11 or 9.13 or pursuant to any other such Security Documents or otherwise to secure or perfect the security interest in any or all of the Obligations.

 

“Senior Unsecured Notes” shall mean $400,000,000 in aggregate principal amount of the Borrower’s Senior Notes due 2032, issued pursuant to the Senior Unsecured Notes Indenture.

 

“Senior Unsecured Notes Indenture” shall mean the Indenture, dated as of November 26, 2024, under which the Senior Unsecured Notes were issued, among, inter alia, the Borrower and the trustee named therein from time to time, as amended, restated, supplemented or otherwise modified from time to time.

 

“Senior WildFire Notes” shall mean $600,000,000 in aggregate principal amount of WildFire Issuer’s Senior Notes due 2029, issued pursuant to the Senior WildFire Notes Indenture.

 

“Senior WildFire Notes Indenture” shall mean the Indenture, dated as of September 26, 2024, under which the Senior WildFire Notes were issued, among, inter alia, WildFire Issuer and the trustee named therein from time to time, as amended, restated, supplemented or otherwise modified from time to time.

 

“Signing Date” shall have the meaning assigned to such term in the Effective Date Acquisition Agreement.

 

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“SOFR” shall mean a rate equal to the secured overnight financing rate as administered by the SOFR Administrator.

 

“SOFR Administrator” shall mean the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).

 

“SOFR Borrowing” shall mean, as to any Borrowing, the SOFR Loans comprising such Borrowing.

 

“SOFR Loan” shall mean a Loan that bears interest at a rate based on Adjusted Term SOFR, other than pursuant to clause (c) of the definition of “ABR”.

 

“Solvent” shall mean, with respect to any Person on any date of determination, that on such date (a) the fair value of the assets of such Person and its Subsidiaries, on a consolidated basis, exceeds their debts and liabilities, subordinated, contingent or otherwise, (b) the present fair saleable value of the property of such Person and its Subsidiaries, on a consolidated basis, is greater than the amount that will be required to pay the probable liability, on a consolidated basis, of their debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured, (c) such Person and its Subsidiaries, on a consolidated basis, are able to pay their debts and liabilities, subordinated, contingent or otherwise, as such liabilities become absolute and matured and (d) such Person and its Subsidiaries, on a consolidated basis, are not engaged in, and are not about to engage in, business for which they have unreasonably small capital. The amount of any contingent liability at any time shall be computed as the amount that would reasonably be expected to become an actual and matured liability.

 

“Specified EBITDAX” shall mean (prior to giving effect to any Pro Forma Basis adjustments) (a) prior to the date when the financial statements for the fiscal quarter ended June 30, 2026 are delivered pursuant to Section 9.1(b), $1,626,000,000.00 and (b) if financial statements for the fiscal quarter ended June 30, 2026 are available for the Borrower and WildFire as of the date of determination of Specified EBITDAX, Specified EBITDAX shall mean the Consolidated EBITDAX of such entities based on such financial statements calculated in a manner consistent with the determination of Specified EBITDAX under clause (a) of this definition.

 

“Specified Effective Date Acquisition Agreement Representations” shall have the meaning provided in Section 6.2.

 

“Specified Existing Commitment” shall mean any Existing Commitments belonging to a Specified Existing Commitment Class.

 

“Specified Existing Commitment Class” shall have the meaning provided in Section 2.17(a).

 

“Specified Representations” shall have the meaning provided in Section 6.2.

 

“Specified Transaction” shall mean (a) solely for the purposes of determining the applicable cash balance, any contribution of capital, including as a result of an equity issuance, to the Borrower, in each case, in connection with an acquisition or Investment, (b) any designation of operations or assets of the Borrower or a Restricted Subsidiary as discontinued operations (as defined under GAAP) (excluding held-for-sale discontinued operations until actually disposed of), (c) any Investment that results in a Person becoming a Restricted Subsidiary, (d) any designation of a Subsidiary as a Restricted Subsidiary or an Unrestricted Subsidiary in compliance with this Agreement, (e) any purchase or other acquisition of a business of any Person, of assets constituting a business unit, line of business or division of any Person or the purchase or acquisition of any material Oil and Gas Properties (as determined by the Borrower in good faith), (f) any Disposition (i) that results in a Restricted Subsidiary ceasing to be a Subsidiary of the Borrower or (ii) of a business, business unit, line of business or division of the Borrower or a Restricted Subsidiary or material Oil and Gas Properties (as determined by the Borrower in good faith) or (g) any Restricted Payment that by the terms of this Agreement requires a financial ratio to be calculated on a Pro Forma Basis.

 

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“SPV” shall have the meaning provided in Section 13.6(g).

 

“Stated Amount” of any Letter of Credit shall mean the maximum amount from time to time available to be drawn thereunder, determined without regard to whether any conditions to drawing could then be met.

 

“Subagent” shall have the meaning provided in Section 12.2.

 

“Subsidiary” shall mean, with respect to any Person: (1) any corporation, association, or other business entity (other than a partnership, joint venture, limited liability company or similar entity) of which more than 50.0% of the total voting power of shares of Equity Interests entitled (without regard to the occurrence of any contingency) to vote in the election of directors, members of management or trustees thereof 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 50.0% of the capital accounts, distribution rights, total equity and voting interests or general or limited partnership interests, as applicable, are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof whether in the form of membership, general, special or limited partnership or otherwise, and (b) such Person or any Restricted Subsidiary of such Person is a controlling general partner or otherwise controls such entity.

 

“Subsidiary Guarantor” shall mean each Subsidiary that is a Guarantor.

 

“Subsidiary Redesignation” shall have the meaning provided in the definition of “Unrestricted Subsidiary”.

 

“Successor Borrower” shall have the meaning provided in Section 10.3(a).

 

“Successor Holdings” shall have the meaning provided in Section 9.17(b).

 

“Supported QFC” shall have the meaning provided in Section 13.25.

 

“Swap” shall mean a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act.

 

“Swap PV” shall mean, with respect to any commodity Hedge Agreement, the present value, discounted at 9% per annum, of the future receipts expected to be paid to the Borrower or its Restricted Subsidiaries under such Hedge Agreement netted against the Administrative Agent’s then current Bank Price Deck; provided, that the “Swap PV” shall never be less than $0.00.

 

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

 

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“Swingline Commitment” shall mean the obligation of the Swingline Lender to make Swingline Loans pursuant to Section 2.1 in an aggregate principal amount at any one time outstanding not to exceed the lesser of (i) $50,000,000 and (ii) the Loan Limit.

 

“Swingline Exposure” shall mean at any time the aggregate principal amount at such time of all outstanding Swingline Loans. The Swingline Exposure of any Lender at any time shall equal its Commitment Percentage of the aggregate Swingline Exposure at such time.

 

“Swingline Lender” shall mean Citibank, N.A., in its capacity as the lender of Swingline Loans hereunder.

 

“Swingline Loan” shall have the meaning provided in Section 2.1(b).

 

“Swingline Maturity Date” shall mean, with respect to any Swingline Loan, the date that is five (5) Business Days prior to the Initial Maturity Date.

 

“Taxes” shall mean any and all present or future taxes, duties, levies, imposts, assessments, deductions, withholdings (including backup withholding) or other similar charges imposed by any Governmental Authority and any interest, fines, penalties or additions to tax with respect to the foregoing.

 

“Term SOFR” shall mean,

 

(a)            for any calculation with respect to a SOFR Loan, the Term SOFR Reference Rate for a tenor comparable to the applicable Interest Period on the day (such day, the “Periodic Term SOFR Determination Day”) that is two (2) U.S. Government Securities Business Days prior to the first day of such Interest Period, as such rate is published by the Term SOFR Administrator; provided, however, that if as of 5:00 p.m. (New York City time) on any Periodic Term SOFR Determination Day the Term SOFR Reference Rate for the applicable tenor has not been published by the Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Reference Rate has not occurred, then Term SOFR will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate for such tenor was published by the Term SOFR Administrator so long as such first preceding U.S. Government Securities Business Day is not more than three (3) U.S. Government Securities Business Days prior to such Periodic Term SOFR Determination Day, and

 

(b)            for any calculation with respect to an ABR Loan on any day, the Term SOFR Reference Rate for a tenor of one month on the day (such day, the “ABR Term SOFR Determination Day”) that is two (2) U.S. Government Securities Business Days prior to such day, as such rate is published by the Term SOFR Administrator; provided, however, that if as of 5:00 p.m. (New York City time) on any ABR Term SOFR Determination Day the Term SOFR Reference Rate for the applicable tenor has not been published by the Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Reference Rate has not occurred, then Term SOFR will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate for such tenor was published by the Term SOFR Administrator so long as such first preceding U.S. Government Securities Business Day is not more than three (3) U.S. Government Securities Business Days prior to such ABR Term SOFR Determination Day.

 

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“Term SOFR Administrator” shall mean CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by the Administrative Agent in its reasonable discretion).

 

“Term SOFR Reference Rate” shall mean the forward-looking term rate based on SOFR.

 

“Termination Date” shall mean the earlier to occur of (a) the Maturity Date and (b) the date on which the Total Commitment shall have terminated.

 

“Test Period” shall mean (subject to Section 1.12(a)), as of any date of determination, the four consecutive fiscal quarters of the Borrower then last ended and for which financial statements have been delivered to the Administrative Agent in accordance with clause (a) or (b) of Section 9.1; provided that, when used in connection with Specified EBITDAX, “Test Period” shall refer to the four consecutive fiscal quarters ending on June 30, 2026.

 

“Total Commitment” shall mean the sum of the Commitments of the Lenders.

 

“Total Exposure” shall mean, with respect to any Lender at any time, the sum of (a) the aggregate principal amount of the Loans of such Lender then outstanding, (b) such Lender’s Letter of Credit Exposure at such time and (c) such Lender’s Swingline Exposure at such time.

 

“Transaction Expenses” shall mean any fees, expenses, costs or charges incurred or paid by any Parent Entity, the Borrower or any Restricted Subsidiary in connection with the Transactions, whether prior to, on or after the Effective Date.

 

“Transactions” shall mean, collectively, (a) the funding, consummation of and performance in respect of the Effective Date Acquisition, (b) the entry into, transactions contemplated by and borrowings under this Agreement, (c) the entry into and transactions contemplated by the other Credit Documents, the Bridge Facility (and any Permitted Refinancing Indebtedness incurred in respect thereof) and any final definitive documentation with respect thereto, the Senior Unsecured Notes Indenture, the Senior Unsecured Notes, the Senior WildFire Notes Indenture, the Senior WildFire Notes and the Effective Date Acquisition Notes and any final definitive documentation with respect thereto, (d) the sale and issuance of the Effective Date Acquisition Shares and the entry into and transactions contemplated by any final definitive documentation with respect thereto and (e) the payment of the Transaction Expenses and transactions related or incidental to, or in connection with, such transactions.

 

“Transferee” shall have the meaning provided in Section 13.6(e).

 

“Type” shall mean, as to any Loan, its nature as an ABR Loan or a SOFR Loan.

 

“UCC” shall mean the Uniform Commercial Code of the State of New York or of any other state the laws of which are required to be applied in connection with the perfection of security interests in any Collateral.

 

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

 

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

 

“Unadjusted Benchmark Replacement” shall mean the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.

 

“Unfunded Current Liability” of any Plan shall mean the amount, if any, by which the Accumulated Benefit Obligation (as defined under Statement of Financial Accounting Standards No. 87 (“SFAS 87”)) under the Plan as of the close of its most recent plan year, determined in accordance with SFAS 87 as in effect on the date hereof, exceeds the Fair Market Value of the assets allocable thereto.

 

“Uniform Customs” shall mean, with respect to any Letter of Credit, the Uniform Customs and Practice for Documentary Credits as approved by the International Chamber of Commerce, commencing on July 1, 2007 (or such later version thereof as may be in effect at the time of issuance).

 

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

 

“United States Person” means any United States citizen, lawful permanent resident, entity organized under the laws of the United States or any jurisdiction within the United States, including any foreign branch of any such entity, or any Person in the United States.

 

“Unpaid Drawing” shall have the meaning provided in Section 3.4(a).

 

“Unrestricted Cash” shall mean cash or Permitted Investments of the Borrower or any of its Restricted Subsidiaries that would not appear as “restricted” on a consolidated balance sheet of the Borrower or any of its Restricted Subsidiaries.

 

“Unrestricted Subsidiary” shall mean (a) any Subsidiary set forth on Schedule 1.1(g), (b) any Subsidiary of the Borrower that is formed or acquired after the Effective Date if, at such time or promptly thereafter, the Borrower designates such Subsidiary as an “Unrestricted Subsidiary” in a written notice to the Administrative Agent, (c) any Restricted Subsidiary designated as an Unrestricted Subsidiary by the Borrower in a written notice to the Administrative Agent; provided that in the case of each of clauses (b) and (c), (i) such designation shall be deemed to be an Investment (or reduction in an outstanding Investment, in the case of a designation of an Unrestricted Subsidiary as a Restricted Subsidiary) on the date of such designation in an amount equal to the Fair Market Value of the Borrower’s investment therein on such date and such designation shall be permitted only to the extent such Investment is permitted under Section 10.5 on the date of such designation, (ii) in the case of clause (c), such designation shall be deemed to be a Disposition pursuant to which the provisions of Section 2.14(g) will apply to the extent contemplated thereby and (iii) no Event of Default would result from such designation immediately after giving effect thereto and (d) each Subsidiary of an Unrestricted Subsidiary. No Subsidiary may be designated as an Unrestricted Subsidiary if, after such designation, it would be a “Restricted Subsidiary” for the purpose of any Permitted Additional Debt, the Senior Unsecured Notes, the Bridge Facility, the Senior WildFire Notes or any Permitted Refinancing Indebtedness in respect of any of the foregoing, in each case, to the extent applicable. The Borrower may, by written notice to the Administrative Agent, re-designate any Unrestricted Subsidiary as a Restricted Subsidiary (each, a “Subsidiary Redesignation”), and thereafter, such Subsidiary shall no longer constitute an Unrestricted Subsidiary, but only if (A) to the extent such Subsidiary has outstanding Indebtedness on the date of such designation, immediately after giving effect to such designation, the Borrower shall be in compliance with the Leverage Ratio Covenant on a Pro Forma Basis and (B) no Event of Default would result from such Subsidiary Redesignation.

 

“Updated Schedules” has the meaning assigned to such term in Section 6.1(q).

 

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“U.S. Government Securities Business Day” shall mean any day except for (a) a Saturday, (b) a Sunday or (c) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.

 

“U.S. Lender” shall mean any Lender that is not a Non-U.S. Lender.

 

“Utilization Percentage” shall mean, as of any day, the fraction expressed as a percentage, the numerator of which is the aggregate Total Exposures of all Lenders on such day, and the denominator of which is the Aggregate Elected Commitment Amount in effect on such day.

 

“Volumetric Production Payments” shall mean production payment obligations recorded as deferred revenue in accordance with GAAP, together with all undertakings and obligations in connection therewith.

 

“Voting Stock” shall mean, with respect to any Person, such Person’s Equity Interests having the right to vote for the election of directors of such Person under ordinary circumstances.

 

“Weighted Average Life to Maturity” shall mean, when applied to any Indebtedness at any date, the number of years obtained by dividing: (i) the sum of the products obtained by multiplying (a) the amount of each then remaining scheduled installment, sinking fund, serial maturity or other required scheduled payments of principal, including payment at final scheduled maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (ii) the then outstanding principal amount of such Indebtedness; provided that the effects of any prepayments made on such Indebtedness shall be disregarded in making such calculation.

 

“Wholly owned Subsidiary” of any person shall mean a subsidiary of such person, all of the Equity Interests of which (other than directors’ qualifying shares or nominee or other similar shares required pursuant to applicable law) are owned by such person or another Wholly owned Subsidiary of such person.

 

“WildFire” shall have the meaning provided in the recitals to this Agreement.

 

“WildFire Audited Financial Statements” shall have the meaning provided in Section 8.23(a).

 

“WildFire Issuer” shall mean WildFire Energy I LLC, a Delaware limited liability company.

 

“WildFire Unaudited Financial Statements” shall have the meaning provided in Section 8.23(a).

 

“Working Capital” shall mean, as at any date of determination, the difference of consolidated current assets under GAAP of the Borrower and its consolidated Restricted Subsidiaries as of such date and consolidated current liabilities under GAAP of the Borrower and its consolidated Restricted Subsidiaries as of such date.

 

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

 

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Section 1.2              Other Interpretive Provisions. With reference to this Agreement and each other Credit Document, unless otherwise specified herein or in such other Credit Document:

 

(a)            The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.

 

(b)            The words “herein”, “hereto”, “hereof” and “hereunder” and words of similar import when used in any Credit Document shall refer to such Credit Document as a whole and not to any particular provision thereof.

 

(c)            Article, Section, Exhibit and Schedule references are to the Credit Document in which such reference appears.

 

(d)            The term “including” is by way of example and not limitation.

 

(e)            The term “documents” includes any and all instruments, documents, agreements, certificates, notices, reports, financial statements and other writings, however evidenced, whether in physical or electronic form.

 

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

 

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

 

(h)            Any reference to any Person shall be constructed to include such Person’s successors or assigns (subject to any restrictions on assignment set forth herein) and, in the case of any Governmental Authority, any other Governmental Authority that shall have succeeded to any or all of the functions thereof.

 

(i)            Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.

 

(j)            The word “will” shall be construed to have the same meaning as the word “shall”.

 

(k)            The words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

 

(l)            The principal amount of any non-interest bearing Indebtedness or other discount security constituting Indebtedness at any date shall be the principal amount thereof that would be shown on a balance sheet of the Borrower dated such date prepared in accordance with GAAP.

 

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Section 1.3              Accounting Terms. All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP, except as otherwise specifically prescribed herein. Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made (i) without giving effect to any election under Accounting Standards Codification 825-10-25 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of the Borrower or any Subsidiary at “fair value”, as defined therein, (ii) without giving effect to any treatment of Indebtedness in respect of convertible debt instruments under Accounting Standards Codification 470-20 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any such Indebtedness in a reduced or bifurcated manner as described therein, and such Indebtedness shall at all times be valued at the full stated principal amount thereof and (iii) unless the Borrower has requested an amendment pursuant to the definition of “GAAP” with respect to the treatment of operating leases and Capital Leases under GAAP and until such amendment has become effective, all obligations of any Person that are or would have been treated as operating leases for purposes of GAAP prior to the issuance by the Financial Accounting Standards Board on February 25, 2016 of an Accounting Standards Update (the “ASU”) shall continue to be accounted for as operating leases for purposes of all financial definitions and calculations for purpose of this Agreement (whether or not such operating lease obligations were in effect on such date) notwithstanding the fact that such obligations are required in accordance with the ASU (on a prospective or retroactive basis or otherwise) to be treated as obligations with respect to Capital Leases in the financial statements to be delivered pursuant to Section 9.1.

 

Section 1.4              Rounding. Any financial ratios required to be maintained or complied with by the Borrower pursuant to this Agreement (or required to be satisfied in order for a specific action to be permitted under this Agreement) shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).

 

Section 1.5              References to Agreements, Laws, Etc. Unless otherwise expressly provided herein, (a) references to organizational documents, agreements (including the Credit Documents) and other Contractual Requirements shall be deemed to include all subsequent amendments, restatements, amendment and restatements, extensions, supplements and other modifications thereto, but only to the extent that such amendments, restatements, amendment and restatements, extensions, supplements and other modifications are permitted by any Credit Document and (b) references to any Requirement of Law shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such Requirement of Law.

 

Section 1.6              Times of Day. Unless otherwise specified, all references herein to times of day shall be references to New York City (daylight saving or standard, as applicable).

 

Section 1.7             Timing of Payment or Performance. When the payment of any obligation or the performance of any covenant, duty or obligation is stated to be due or performance required on a day which is not a Business Day, the date of such payment (other than as described in Section 2.9) or performance shall extend to the immediately succeeding Business Day.

 

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Section 1.8              Currency Equivalents Generally.

 

(a)            For purposes of any determination under Article 9, Article 10 (other than Section 10.11) or Article 11 or any determination under any other provision of this Agreement requiring the use of a current exchange rate, all amounts incurred, outstanding or proposed to be incurred or outstanding in currencies other than Dollars shall be translated into Dollars at the Exchange Rate then in effect on the date of such determination; provided, however, that (x) for purposes of determining compliance with Article 10 with respect to the amount of any Indebtedness, Investment, Disposition, Restricted Payment or payment under Section 10.7 in a currency other than Dollars, no Default or Event of Default shall be deemed to have occurred solely as a result of changes in rates of exchange occurring after the time such Indebtedness or Investment is incurred or Disposition, Restricted Payment or payment under Section 10.7 is made, (y) for purposes of determining compliance with any Dollar-denominated restriction on the incurrence of Indebtedness, the Dollar-equivalent principal amount of Indebtedness denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred, in the case of term debt, or first committed or first incurred (whichever yields the lower Dollar equivalent), in the case of revolving credit debt (provided that if such Indebtedness is incurred to refinance other Indebtedness denominated in a foreign currency, and such refinancing would cause the applicable Dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such Refinancing, such Dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such Refinanced Indebtedness does not exceed (i) the principal amount of such Indebtedness being Refinanced plus (ii) the aggregate amount of fees, underwriting discounts, premiums (including tender premiums) and other costs and expenses (including original issue discount, upfront fees or similar fees) incurred in connection with such refinancing) and (z) for the avoidance of doubt, the foregoing provisions of this Section 1.8 shall otherwise apply to such Sections, including with respect to determining whether any Indebtedness or Investment may be incurred or Disposition, Restricted Payment or payment under Section 10.7 may be made at any time under such Sections. For purposes of Section 10.11, amounts in currencies other than Dollars shall be translated into Dollars at the applicable exchange rates used in preparing the most recently delivered financial statements pursuant to Section 9.1(a) or (b).

 

(b)            Each provision of this Agreement shall be subject to such reasonable changes of construction as the Administrative Agent may from time to time specify with the Borrower’s consent (such consent not to be unreasonably withheld) to appropriately reflect a change in currency of any country and any relevant market conventions or practices relating to such change in currency.

 

Section 1.9              Classification of Loans and Borrowings. For purposes of this Agreement, Loans may be classified and referred to by Class (e.g., an “Extended Loan”) or by Type (e.g., a “SOFR Loan”) or by Class and Type (e.g., a “SOFR Extended Loan”).

 

Section 1.10          Hedging Requirements Generally. For purposes of any determination with respect to compliance with Sections 8.19 or 10.10 or any other calculation under, or requirement of, this Agreement in respect of hedging (other than pursuant to Section 6.1(p)), such determination shall be calculated separately for crude oil, natural gas and natural gas liquids.

 

Section 1.11          Certain Determinations. For purposes of determining compliance with any of the covenants set forth in Article 9 or Article 10 (including in connection with the Incremental Increase), but subject to any limitation expressly set forth therein, as applicable, at any time (whether at the time of incurrence or thereafter), any Lien, Investment, Indebtedness, Disposition, Restricted Payment, Affiliate transaction, prepayment, redemption or the consummation of any other transaction meets the criteria of one, or more than one, of the categories permitted pursuant to Article 9 or Article 10 (including in connection with any Incremental Increase), as applicable, the Borrower shall, in its sole discretion, determine under which category such Lien, Investment, Indebtedness, Disposition, Restricted Payment, Affiliate transaction, prepayment, redemption or the consummation of any other transaction (or, in each case, any portion thereof) is permitted.

 

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Section 1.12            Pro Forma and Other Calculations.

 

(a)            Notwithstanding anything to the contrary herein, financial ratios and tests, including the Consolidated Total Debt to EBITDAX Ratio and the Consolidated Current Ratio shall be calculated in the manner prescribed by this Section 1.12; provided, that notwithstanding anything to the contrary in clause (b), (c) or (d) of this Section 1.12, when calculating the Consolidated Total Debt to EBITDAX Ratio or the Consolidated Current Ratio, as applicable, for purposes of Section 10.11 (other than for the purpose of determining pro forma compliance with Section 10.11), the events described in this Section 1.12 that occurred subsequent to the end of the applicable Test Period shall not be given pro forma effect. In addition, whenever a financial ratio or test is to be calculated on a Pro Forma Basis, the reference to the “Test Period” for purposes of calculating such financial ratio or test shall be deemed to be a reference to, and shall be based on, the most recently ended Test Period for which internal financial statements of the Borrower (or applicable Parent Entity, as applicable) are available (as determined in good faith by the Borrower).

 

(b)            For purposes of calculating any financial ratio or test or compliance with any covenant determined by reference to Consolidated EBITDAX (or Consolidated Total Assets), Specified Transactions (with any incurrence or repayment of any Indebtedness in connection therewith to be subject to clause (d) of this Section 1.12) that have been made (i) during the applicable Test Period or (ii) if applicable as described in clause (a) above, subsequent to such Test Period and prior to or simultaneously with the event for which the calculation of any such ratio is made, shall be calculated on a Pro Forma Basis assuming that all such Specified Transactions (and any increase or decrease in Consolidated EBITDAX and the component financial definitions used therein attributable to any Specified Transaction) had occurred on the first day of the applicable Test Period (or, in the case of Consolidated Total Assets, on the last day of the applicable Test Period). If since the beginning of any applicable Test Period any Person that subsequently became a Restricted Subsidiary or was merged, amalgamated or consolidated with or into the Borrower or any of its Restricted Subsidiaries since the beginning of such Test Period shall have made any Specified Transaction that would have required adjustment pursuant to this Section 1.12, then such financial ratio or test (or Consolidated Total Assets) shall be calculated to give pro forma effect thereto in accordance with this Section 1.12; provided that with respect to any pro forma calculations to be made in connection with any acquisition or investment in respect of which financial statements for the relevant target are not available for the same Test Period for which internal financial statements of the Borrower are available, the Borrower shall determine such pro forma calculations on the basis of the available financial statements (even if for differing periods) or such other basis as determined on a commercially reasonable basis by the Borrower.

 

(c)            [Reserved].

 

(d)            In the event that (w) the Borrower or any Restricted Subsidiary incurs (including by assumption or guarantees) or repays (including by redemption, repayment, retirement, discharge, defeasance or extinguishment) any Indebtedness (other than Indebtedness incurred or repaid under any revolving credit facility unless such Indebtedness has been permanently repaid and not replaced), (x) the Borrower or any Restricted Subsidiary issues, repurchases or redeems Disqualified Stock or (y) any Restricted Subsidiary issues, repurchases or redeems Preferred Stock, (i) during the applicable Test Period or (ii) subsequent to the end of the applicable Test Period and prior to or simultaneously with the event for which the calculation of any such ratio is made, then such financial ratio or test shall be calculated giving pro forma effect to such incurrence or repayment of Indebtedness or such issuance, refinancing or redemption of Disqualified Stock or Preferred Stock to the extent required, as if the same had occurred on the last day of the applicable Test Period.

 

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(e)            Notwithstanding anything to the contrary in this Section 1.12 or in any classification under GAAP of any Person, business, assets or operations in respect of which a definitive agreement for the disposition thereof has been entered into, at the election of the Borrower, no pro forma effect shall be given to any discontinued operations (and the Consolidated EBITDAX or Consolidated Total Assets attributable to any such Person, business, assets or operations shall not be excluded for any purposes hereunder) until such disposition shall have been consummated.

 

(f)            Notwithstanding anything in this Agreement or any Credit Document to the contrary, in the event any Lien, Indebtedness, Disposition, Investment, Restricted Payment, transaction, action, judgment or amount under any provision in this Agreement or any other Credit Document (or any portion thereof) meets the criteria of one or more than one of the categories of permitted Baskets under this Agreement (including within any defined terms), including any Fixed Basket or Non-Fixed Basket, as applicable, the Borrower shall be permitted, in its sole discretion, at the time of incurrence to divide and classify and to later, at any time and from time to time, re-divide and re-classify (including to re-classify utilization of any Fixed Basket as being incurred under any Non-Fixed Basket or other Fixed Basket or utilization of any Non-Fixed Basket as being incurred under any Fixed Basket or other Non-Fixed Basket) on one or more occasions (based on circumstances existing on the date of any such re-division and re-classification) any such Lien, Indebtedness, Disposition, Investment, Restricted Payment, transaction, action, judgment, or amount in whole or in part, among one or more than one applicable Baskets under this Agreement (in the case of re-classification or re-division, so long as the amount so re-classified or re-divided is permitted at the time of such re-classification or re-division to be incurred pursuant to the applicable Basket into which such amount is re-classified or re-divided at such time). For the avoidance of doubt, the amount of any Lien, Indebtedness, Disposition, Investment, Restricted Payment, transaction, action, judgment, or amount that shall be allocated to each such Basket shall be determined by the Borrower at the time of such division, classification, re-division or re-classification, as applicable. For all purposes hereunder, (x) “Fixed Basket” shall mean any Basket that is subject to a fixed-Dollar limit (including Baskets based on a percentage of Consolidated EBITDAX or Consolidated Total Assets) and (y) “Non-Fixed Basket” shall mean any Basket that is subject to compliance with a financial ratio or test (including any Basket requiring compliance with the Leverage Ratio Covenant on a Pro Forma Basis) (any such ratio or test, a “Financial Incurrence Test”).

 

(g)            Notwithstanding anything in this Agreement or any Credit Document to the contrary, with respect to any amounts incurred, or transactions entered into or consummated, in reliance on a Fixed Basket substantially concurrently with any amounts incurred or transactions entered into (or consummated) in reliance on a Non-Fixed Basket, it is understood and agreed that such amounts incurred in reliance on any applicable Fixed Basket (and any cash proceeds thereof) shall be disregarded in the calculation of the financial ratio or test applicable to the Non-Fixed Basket in connection with such substantially concurrent incurrence; provided that full pro forma effect shall be given to all applicable and related transactions (including the use of proceeds of all applicable Indebtedness incurred and any repayments, repurchases and redemptions of Indebtedness) and all other adjustments as to which pro forma effect may be given under this Section 1.12.

 

(h)            If any Lien, Indebtedness, Disposition, Investment, Restricted Payment, transaction, action, judgment or amount (or any portion thereof) is incurred, issued, taken or consummated in reliance on any Basket which is to be measured as of the date of such incurrence, issuance or consummation by reference to a percentage of Consolidated EBITDAX or Consolidated Total Assets as of such date, then the Credit Parties shall not be deemed to be in violation of this Agreement if such Lien, Indebtedness, Disposition, Investment, Restricted Payment, transaction, action, judgment or amount, would exceed such Basket if calculated based on the Consolidated EBITDAX or Consolidated Total Assets, as applicable, as of a later date (including the date of any Refinancing).

 

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(i)            Notwithstanding anything in this Agreement or any Credit Document to the contrary, when (a) calculating any applicable Financial Incurrence Test, the amount or availability under any Basket, (b) determining (x) compliance with any provision of this Agreement which requires that no Default or Event of Default (or any type of Default or Event of Default) has occurred, is continuing or would result therefrom, (y) compliance with any provision of this Agreement which requires compliance with any representations and warranties set forth or referenced herein or (z) the satisfaction of any other conditions precedent to the making of acquisitions and/or the making of Restricted Payments, in each case under the foregoing clauses (a) and (b), in connection with the incurrence of any Limited Condition Transaction, the date of determination of such Financial Incurrence Test, availability under any Basket or other provisions, determination of whether any Default or Event of Default (or any type of Default or Event of Default) has occurred, is continuing or would result therefrom, determination of compliance with any representations or warranties or the satisfaction of any other conditions shall, at the option of the Borrower (in its sole discretion) (the Borrower’s election to exercise such option, an “LCT Election,” which LCT Election may be in respect of one or more of clauses (a), (b)(x), (b)(y) and (b)(z) above), be deemed to be the date the definitive agreements (or other relevant definitive documentation) for such Limited Condition Transaction are entered into (or, in the case of any Restricted Payment, the date such Restricted Payment becomes irrevocable) (such date, the “LCT Test Date”). If, after giving pro forma effect to the Limited Condition Transaction, any Indebtedness or other transaction in connection therewith and any actions or transactions related thereto and any related pro forma adjustments, the Borrower or any of its Restricted Subsidiaries would have been permitted to take such actions or consummate such transactions on the relevant LCT Test Date in compliance with such Baskets or other provisions (and any related requirements and conditions), such provisions (and any related requirements and conditions) shall be deemed to have been complied with (or satisfied) for all purposes; provided, that (A) if financial statements for one or more subsequent fiscal quarters shall have become available, the Borrower may elect, in its sole discretion, to re-determine availability under such Baskets or other provisions on the basis of such financial statements, in which case, such date of redetermination shall thereafter be deemed to be the applicable LCT Test Date for purposes of such Baskets or other provisions, (B) if the Borrowing Base shall have been subsequently re-determined or adjusted, the Borrower may elect, in its sole discretion, to re-determine availability under such Baskets or other provisions on the basis of such redetermined or adjusted Borrowing Base, in which case, such date of redetermination shall thereafter be deemed to be the applicable LCT Test Date for purposes of such Baskets or other provisions, and (C) compliance with such Baskets or other provisions (and any related requirements and conditions) shall not be determined or tested at any time after the applicable LCT Test Date for such Limited Condition Transaction, any Indebtedness or other transaction incurred in connection therewith and any actions or transactions related thereto (unless, for the avoidance of doubt, otherwise elected by the Borrower in its sole discretion in accordance with the foregoing clause (A)).

 

(j)            For the avoidance of doubt, if the Borrower has made an LCT Election, (1) if any of the ratios, tests or baskets for which compliance was determined or tested as of the LCT Test Date would at any time after the LCT Test Date have been exceeded or otherwise failed to have been complied with as a result of fluctuations in any such Financial Incurrence Test or Basket, including due to fluctuations in the Borrowing Base, Consolidated EBITDAX or Consolidated Total Assets of the Borrower or the Person subject to such Limited Condition Transaction, such baskets, tests or ratios will not be deemed to have been exceeded or failed to have been complied with as a result of such fluctuations, (2) if any related requirements and conditions (including as to the absence of any (or any type of) continuing Default or Event of Default and satisfaction of any representations and warranties) for which compliance or satisfaction was determined or tested as of the LCT Test Date would at any time after the LCT Test Date not have been complied with or satisfied (including due to the occurrence or continuation of any Default or Event of Default, failure to satisfy any representations and warranties or any re-determination or adjustment of the Borrowing Base), such requirements and conditions will not be deemed to have been failed to be complied with or satisfied (and such Default or Event of Default shall be deemed not to have occurred or be continuing and such representations and warranties shall be deemed to have been satisfied) and (3) in calculating the availability under any Financial Incurrence Test or Basket in connection with any action or transaction following the relevant LCT Test Date and prior to the earlier of the date on which such Limited Condition Transaction is consummated or the date that the definitive agreement or date for redemption, purchase or repayment specified in an irrevocable notice or declaration for such Limited Condition Transaction is terminated, expires or passes, as applicable, without consummation of such Limited Condition Transaction, any such Financial Incurrence Test or Basket (excluding, for the avoidance of doubt, any calculation, determination or re-determination of the Borrowing Base) shall be determined or tested giving pro forma effect to such Limited Condition Transaction and any actions or transactions related thereto.

 

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Section 1.13          Rates. The Administrative Agent does not warrant or accept responsibility for, and shall not have any liability with respect to (a) the continuation of, administration of, submission of, calculation of or any other matter related to ABR, the Term SOFR Reference Rate, Adjusted Term SOFR or Term SOFR, or any component definition thereof or rates referred to in the definition thereof, or any alternative, successor or replacement rate thereto (including any Benchmark Replacement), including whether the composition or characteristics of any such alternative, successor or replacement rate (including any Benchmark Replacement) will be similar to, or produce the same value or economic equivalence of, or have the same volume or liquidity as, ABR, the Term SOFR Reference Rate, Adjusted Term SOFR, Term SOFR or any other Benchmark prior to its discontinuance or unavailability, or (b) the effect, implementation or composition of any Conforming Changes. The Administrative Agent and its affiliates or other related entities may engage in transactions that affect the calculation of ABR, the Term SOFR Reference Rate, Term SOFR, Adjusted Term SOFR, any alternative, successor or replacement rate (including any Benchmark Replacement) or any relevant adjustments thereto, in each case, in a manner adverse to the Borrower. The Administrative Agent may select information sources or services in its reasonable discretion to ascertain ABR, the Term SOFR Reference Rate, Term SOFR, Adjusted Term SOFR or any other Benchmark, in each case pursuant to the terms of this Agreement, and shall have no liability to the Borrower, any Lender or any other person or entity for damages of any kind, including direct or indirect, special, punitive, incidental or consequential damages, costs, losses or expenses (whether in tort, contract or otherwise and whether at law or in equity), for any error or calculation of any such rate (or component thereof) provided by any such information source or service.

 

Section 1.14          Divisions. For all purposes under the Credit Documents, in connection with any division or plan of division under Delaware law (or any comparable event under a different jurisdiction’s laws):

 

(a)            if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person, and

 

(b)            if any new Person comes into existence, such new Person shall be deemed to have been organized on the first date of its existence by the holders of its Equity Interests at such time.

 

ARTICLE 2
Amount and Terms of Credit

 

Section 2.1             Commitments.

 

(a)            (i) Subject to and upon the terms and conditions herein set forth, each Lender severally, but not jointly, agrees to make a loan or loans denominated in Dollars (each an “Initial Loan” and, collectively, the “Initial Loans”) to the Borrower, which Loans (i) shall be made at any time and from time to time on and after the Effective Date and prior to the Termination Date, (ii) may, at the option of the Borrower, be incurred and maintained as, and/or converted into, ABR Loans or SOFR Loans; provided that all Loans made by each of the Lenders pursuant to the same Borrowing shall, unless otherwise specifically provided herein, consist entirely of Loans of the same Type, (iii) may be repaid and reborrowed in accordance with the provisions hereof, (iv) shall not, for any Lender at any time, after giving effect thereto and to the application of the proceeds thereof, result in such Lender’s Total Exposure at such time exceeding such Lender’s Commitment Percentage at such time of the Loan Limit and (v) shall not, after giving effect thereto and to the application of the proceeds thereof, result in the aggregate amount of all Lenders’ Total Exposures at such time exceeding the Loan Limit.

 

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(ii)            Each Lender may at its option make any SOFR Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan, provided that (i) any exercise of such option shall not affect the obligation of the Borrower to repay such Loan and (ii) in exercising such option, such Lender shall use its reasonable efforts to minimize any increased costs to the Borrower resulting therefrom (which obligation of the Lender shall not require it to take, or refrain from taking, actions that it determines would result in increased costs for which it will not be compensated hereunder or that it determines would be otherwise disadvantageous to it and in the event of such request for costs for which compensation is provided under this Agreement, the provisions of Section 2.10 shall apply).

 

(b)            Subject to and upon the terms and conditions herein set forth, the Swingline Lender in its individual capacity agrees, at any time and from time to time on and after the Effective Date and prior to the Swingline Maturity Date, to make a loan or loans (each a “Swingline Loan” and, collectively, the “Swingline Loans”) to the Borrower in Dollars, which Swingline Loans (i) shall be ABR Loans, (ii) shall have the benefit of the provisions of Section 2.1(c), (iii) shall not exceed at any time outstanding the Swingline Commitment, (iv) shall not, after giving effect thereto and to the application of the proceeds thereof, result at any time in the aggregate amount of the Lenders’ Total Exposure at such time exceeding the Loan Limit then in effect and (v) may be repaid and reborrowed in accordance with the provisions hereof. Each outstanding Swingline Loan shall be repaid in full on the earlier of (a) five (5) Business Days after such Swingline Loan is initially borrowed and (b) the Swingline Maturity Date; provided, that on each date a Loan is borrowed, the Borrower shall repay all Swingline Loans then outstanding and the proceeds of any such Loans shall be applied by the Administrative Agent to repay any Swingline Loans outstanding. The Swingline Lender shall not make any Swingline Loan after receiving a written notice from the Borrower or the Administrative Agent stating that an Event of Default exists and is continuing until such time as the Swingline Lender shall have received written notice of (i) rescission of all such notices from the party or parties originally delivering such notice or (ii) the waiver of such Event of Default in accordance with the provisions of Section 13.1.

 

(c)            On any Business Day, the Swingline Lender may, in its sole discretion, give notice to each Lender that all then-outstanding Swingline Loans shall be funded with a Borrowing of Loans, in which case Loans constituting ABR Loans (each such Borrowing, a “Mandatory Borrowing”) shall be made on the immediately succeeding Business Day by each Lender pro rata based on each Lender’s Commitment Percentage, and the proceeds thereof shall be applied directly to the Swingline Lender to repay the Swingline Lender for such outstanding Swingline Loans. Each Lender hereby irrevocably agrees to make such Loans upon one (1) Business Day’s notice pursuant to each Mandatory Borrowing in the amount and in the manner specified in the preceding sentence and on the date specified to it in writing by the Swingline Lender notwithstanding (i) that the amount of the Mandatory Borrowing may not comply with the minimum amount for each Borrowing specified in Section 2.2, (ii) whether any conditions specified in Article 7 are then satisfied, (iii) whether a Default or an Event of Default has occurred and is continuing, (iv) the date of such Mandatory Borrowing, (v) any reduction in the Total Commitment after any such Swingline Loans were made or (vi) any other event, circumstance or condition whatsoever, whether or not similar to the foregoing. In the event that, in the sole judgment of each Swingline Lender, any Mandatory Borrowing cannot for any reason be made on the date otherwise required above (including as a result of the commencement of a proceeding under the Bankruptcy Code in respect of the Borrower), each Lender hereby agrees that it shall forthwith purchase from the Swingline Lender (without recourse or warranty) such participation of the outstanding Swingline Loans as shall be necessary to cause the Lenders to share in such Swingline Loans ratably based upon their respective Commitment Percentages; provided that all principal and interest payable on such Swingline Loans shall be for the account of the Swingline Lender until the date the respective participation is purchased and, to the extent attributable to the purchased participation, shall be payable to such Lender purchasing same from and after such date of purchase.

 

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Section 2.2          Minimum Amount of Each Borrowing; Maximum Number of Borrowings. The aggregate principal amount of each Borrowing shall be in a minimum amount of at least the Minimum Borrowing Amount for such Type of Loans and in a multiple of $100,000 in excess thereof and Swingline Loans shall be in a minimum amount of $100,000 and in a multiple of $10,000 in excess thereof (except that Mandatory Borrowings shall be made in the amounts required by Section 2.1(c) and Loans to reimburse the applicable Issuing Bank with respect to any Unpaid Drawing shall be made in the amounts required by Section 3.3 or Section 3.4, as applicable). More than one Borrowing may be incurred on any date; provided, that at no time shall there be outstanding more than ten Borrowings of SOFR Loans under this Agreement.

 

Section 2.3              Notice of Borrowing.

 

(a)            Whenever the Borrower desires to incur Loans (other than Swingline Loans, Mandatory Borrowings or borrowings to repay Unpaid Drawings), the Borrower shall give the Administrative Agent at the Administrative Agent’s Office, (i) prior to 1:00 p.m. (New York City time) at least three (3) U.S. Government Securities Business Days’ prior written notice (or telephonic notice promptly confirmed in writing) of each Borrowing of Loans if such Loans are to be initially SOFR Loans (or prior to 12:00 p.m. noon (New York City time) three (3) U.S. Government Securities Business Days’ prior written notice in the case of a Borrowing of Loans to be made on the Effective Date initially as SOFR Loans) and (ii) written notice (or telephonic notice promptly confirmed in writing) prior to 11:00 a.m. (New York City time) on the date of each Borrowing of Loans that are to be ABR Loans. Such notice (together with each notice of a Borrowing of Swingline Loans pursuant to Section 2.3(b), a “Notice of Borrowing”) shall specify (A) the aggregate principal amount of the Loans to be made pursuant to such Borrowing, (B) the date of the Borrowing (which shall be a Business Day) and (C) whether the respective Borrowing shall consist of ABR Loans and/or SOFR Loans and, if SOFR Loans, the Interest Period to be initially applicable thereto (if no Interest Period is selected, the Borrower shall be deemed to have selected an Interest Period of one (1) month’s duration). The Administrative Agent shall promptly give each Lender written notice (or telephonic notice promptly confirmed in writing) of each proposed Borrowing of Loans, of such Lender’s Commitment Percentage thereof and of the other matters covered by the related Notice of Borrowing.

 

(b)            Whenever the Borrower desires to incur Swingline Loans hereunder, it shall give the Administrative Agent written notice (or telephonic notice promptly confirmed in writing) of each Borrowing of Swingline Loans prior to 3:00 p.m. (New York City time) on the date of such Borrowing. Each such notice shall specify (i) the aggregate principal amount of the Swingline Loans to be made pursuant to such Borrowing and (ii) the date of Borrowing (which shall be a Business Day). The Administrative Agent shall promptly give the Swingline Lender written notice (or telephonic notice promptly confirmed in writing) of each proposed Borrowing of Swingline Loans and of the other matters covered by the related Notice of Borrowing.

 

(c)            Mandatory Borrowings shall be made upon the notice specified in Section 2.1(c), with the Borrower irrevocably agreeing, by its incurrence of any Swingline Loan, to the making of Mandatory Borrowings as set forth in such Section.

 

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(d)            Borrowings to reimburse Unpaid Drawings shall be made upon the notice specified in Section 3.4(a).

 

(e)            Without in any way limiting the obligation of the Borrower to confirm in writing any notice it may give hereunder by telephone, the Administrative Agent may act prior to receipt of written confirmation without liability upon the basis of such telephonic notice believed by the Administrative Agent in good faith to be from an Authorized Officer of the Borrower.

 

Section 2.4             Disbursement of Funds.

 

(a)            No later than 1:00 p.m. (New York City time) on the date specified in each Notice of Borrowing (including Mandatory Borrowings), each Lender will make available its pro rata portion of each Borrowing requested to be made on such date in the manner provided below; provided that on the Effective Date, such funds shall be made available by 10:00 a.m. (New York City time) or such earlier time as may be agreed among the Lenders, the Borrower and the Administrative Agent for the purpose of consummating the Transactions; provided, further, that all Swingline Loans shall be made available in the full amount thereof by the Swingline Lender no later than 3:30 p.m. (New York City time) on the date requested.

 

(b)            Each Lender shall make available all amounts it is to fund to the Borrower under any Borrowing in immediately available funds to the Administrative Agent at the Administrative Agent’s Office in Dollars, and the Administrative Agent will (except in the case of Mandatory Borrowings and Borrowings to repay Unpaid Drawings) make available to the Borrower, by depositing or wiring to an account as designated by the Borrower in the Notice of Borrowing to the Administrative Agent the aggregate of the amounts so made available in Dollars. Unless the Administrative Agent shall have been notified by any Lender prior to the date of any such Borrowing (or, with respect to an ABR Loan, the date of such Borrowing prior to 1:00 p.m. (New York City time)) that such Lender does not intend to make available to the Administrative Agent its portion of the Borrowing or Borrowings to be made on such date, the Administrative Agent may assume that such Lender has made such amount available to the Administrative Agent on such date of Borrowing, and the Administrative Agent, in reliance upon such assumption, may (in its sole discretion and without any obligation to do so) make available to the Borrower a corresponding amount. If such corresponding amount is not in fact made available to the Administrative Agent by such Lender and the Administrative Agent has made available such amount to the Borrower, the Administrative Agent shall be entitled to recover such corresponding amount from such Lender. If such Lender does not pay such corresponding amount forthwith upon the Administrative Agent’s demand therefor the Administrative Agent shall promptly notify the Borrower and the Borrower shall immediately pay such corresponding amount to the Administrative Agent in Dollars. The Administrative Agent shall also be entitled to recover from such Lender or the Borrower, as the case may be, interest on such corresponding amount in respect of each day from the date such corresponding amount was made available by the Administrative Agent to the Borrower to the date such corresponding amount is recovered by the Administrative Agent, at a rate per annum equal to (i) if paid by such Lender, the Overnight Rate or (ii) if paid by the Borrower, the then-applicable rate of interest or fees, calculated in accordance with Section 2.8, for the respective Loans.

 

(c)            Nothing in this Section 2.4 shall be deemed to relieve any Lender from its obligation to fulfill its commitments hereunder or to prejudice any rights that the Borrower may have against any Lender as a result of any default by such Lender hereunder (it being understood, however, that no Lender shall be responsible for the failure of any other Lender to fulfill its commitments hereunder).

 

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Section 2.5              Repayment of Loans; Evidence of Debt.

 

(a)            The Borrower agrees to repay to the Administrative Agent, for the benefit of the applicable Lenders, on the earlier of (X) the Termination Date and (Y) (i) on the Initial Maturity Date, the then outstanding Initial Loans, (ii) on the relevant maturity date for any Extended Class, all then outstanding Extended Loans in respect of such Extension Series and (iii) on the Swingline Maturity Date, the then outstanding Swingline Loans.

 

(b)            Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to the appropriate lending office of such Lender resulting from each Loan made by such lending office from time to time, including the amounts of principal and interest payable and paid to such lending office from time to time under this Agreement.

 

(c)            The Administrative Agent, acting solely for this purpose as a non-fiduciary agent on behalf of the Borrower, shall maintain the Register pursuant to Section 13.6(b)(iv), and a subaccount for each Lender, in which Register and subaccounts (taken together) shall be recorded (i) the amount of each Loan made hereunder (whether such Loan is an Initial Loan, an Extended Loan or Swingline Loan, as applicable), the Type of each Loan made and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender or the Swingline Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder from the Borrower and each Lender’s share thereof.

 

(d)            The entries made in the Register and accounts and subaccounts maintained pursuant to clauses (b) and (c) of this Section 2.5 shall, to the extent permitted by applicable Requirements of Law, be prima facie evidence of the existence and amounts of the obligations of the Borrower therein recorded; provided, however, that the failure of any Lender or the Administrative Agent to maintain such account, such Register or such subaccount, as applicable, or any error therein, shall not in any manner affect the obligation of the Borrower to repay (with applicable interest) the Loans made to the Borrower by such Lender in accordance with the terms of this Agreement. In the event of any inconsistency between the Register and the Lender’s accounts described in Section 2.5(b), the Register shall control.

 

Section 2.6              Conversions and Continuations.

 

(a)            Subject to the penultimate sentence of this clause (a), (i) the Borrower shall have the option on any Business Day to convert all or a portion equal to at least the Minimum Borrowing Amount (and in multiples of $100,000 in excess thereof) of the outstanding principal amount of Loans of one Type into a Borrowing or Borrowings of another Type and (ii) the Borrower shall have the option on any Business Day to continue the outstanding principal amount of any SOFR Loans as SOFR Loans for an additional Interest Period; provided that (A) no partial conversion of SOFR Loans shall reduce the outstanding principal amount of SOFR Loans made pursuant to a single Borrowing to less than the Minimum Borrowing Amount, (B) ABR Loans may not be converted into SOFR Loans if an Event of Default is in existence on the date of the conversion and the Administrative Agent has or the Majority Lenders have determined in its or their sole discretion not to permit such conversion, (C) SOFR Loans may not be continued as SOFR Loans for an additional Interest Period if an Event of Default is in existence on the date of the proposed continuation and the Administrative Agent has or the Majority Lenders have determined in its or their sole discretion not to permit such continuation, and (D) Borrowings resulting from conversions pursuant to this Section 2.6 shall be limited in number as provided in Section 2.2. Each such conversion or continuation shall be effected by the Borrower by giving the Administrative Agent at the Administrative Agent’s Office prior to 2:00 p.m. (New York City time) at least (1) three (3) U.S. Government Securities Business Days’, in the case of a continuation of or conversion to SOFR Loans or (2) the date of conversion, in the case of a conversion into ABR Loans, prior written notice (or telephonic notice promptly confirmed in writing) (each, a “Notice of Conversion or Continuation”) specifying the Loans to be so converted or continued, the Type of Loans to be converted into or continued and, if such Loans are to be converted into or continued as SOFR Loans, the Interest Period to be initially applicable thereto (if no Interest Period is selected, the Borrower shall be deemed to have selected an Interest Period of one (1) month’s duration). The Administrative Agent shall give each applicable Lender notice as promptly as practicable of any such proposed conversion or continuation affecting any of its Loans.

 

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(b)            If any Event of Default is in existence at the time of any proposed continuation of any SOFR Loans and the Administrative Agent has or the Majority Lenders have determined in its or their sole discretion not to permit such continuation, such SOFR Loans shall be automatically converted on the last day of the current Interest Period into ABR Loans. If upon the expiration of any Interest Period in respect of SOFR Loans, the Borrower has failed to elect a new Interest Period to be applicable thereto as provided in clause (a) above, the Borrower shall be deemed to have elected to continue such Borrowing of SOFR Loans into a Borrowing of SOFR Loans having an interest period of one (1) month, effective as of the expiration date of such current Interest Period.

 

(c)            Notwithstanding anything to the contrary herein, the Borrower may deliver a Notice of Conversion or Continuation pursuant to which the Borrower elects to irrevocably continue the outstanding principal amount of any Loan subject to an interest rate Hedge Agreement as SOFR Loans for each Interest Period until the expiration of the term of such applicable Hedge Agreement; provided that any Notice of Conversion or Continuation delivered pursuant to this Section 2.6(c) shall include a schedule attaching the relevant interest rate Hedge Agreement or related trade confirmation.

 

Section 2.7              Pro Rata Borrowings. Each Borrowing of Initial Loans under this Agreement shall be made by the Lenders pro rata on the basis of their then applicable Commitment Percentages with respect to the applicable Class. Each Borrowing of Extended Loans under this Agreement shall be granted by the Lenders of the relevant Extension Series thereof pro rata on the basis of their then-applicable Extended Commitments for the applicable Extension Series. It is understood that (a) no Lender shall be responsible for any default by any other Lender in its obligation to make Loans hereunder and that each Lender severally but not jointly shall be obligated to make the Loans provided to be made by it hereunder, regardless of the failure of any other Lender to fulfill its commitments hereunder and (b) failure by a Lender to perform any of its obligations under any of the Credit Documents shall not release any Person from performance of its obligation under any Credit Document.

 

Section 2.8              Interest.

 

(a)            The unpaid principal amount of each ABR Loan shall bear interest from the date of the Borrowing thereof until maturity (whether by acceleration or otherwise) at a rate per annum that shall at all times be the Applicable Margin plus the ABR, in each case, in effect from time to time.

 

(b)            The unpaid principal amount of each SOFR Loan shall bear interest from the date of the Borrowing thereof until maturity thereof (whether by acceleration or otherwise) at a rate per annum that shall at all times be the Applicable Margin plus Adjusted Term SOFR, in each case, in effect from time to time.

 

(c)            If all or a portion of (i) the principal amount of any Loan or (ii) any other amount payable under the Credit Documents (including, without limitation, interest payable thereon and premium, if any) shall not be paid when due (whether at stated maturity, by acceleration or otherwise), such overdue amount (other than with respect to any such amount payable to a Defaulting Lender) shall bear interest at a rate per annum that is (the “Default Rate”) (A) in the case of overdue principal, the rate that would otherwise be applicable thereto plus 2.0%, (B) in the case of any overdue interest, to the extent permitted by applicable Requirements of Law, the rate described in Section 2.8(a) plus 2.0% from and including the date of such non-payment to the date on which such amount is paid in full (after as well as before judgment) and (C) in the case of any overdue amount not specified in subclause (A) or (B) above, a rate per annum equal to the rate per annum otherwise payable at such time on ABR Loans.

 

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(d)            Interest on each Loan shall accrue from and including the date of any Borrowing to but excluding the date of any repayment thereof and shall be payable in Dollars; provided that any Loan that is repaid on the same date on which it is made shall bear interest for one day. Except as provided below, interest shall be payable (i) in respect of each ABR Loan, quarterly in arrears on the last Business Day of each March, June, September and December, (ii) in respect of each SOFR Loan, on the last day of each Interest Period applicable thereto and, in the case of an Interest Period in excess of three (3) months, on each date occurring at three (3)-month intervals after the first day of such Interest Period, (iii) in respect of each Loan, (A) on any prepayment (on the amount prepaid), (B) at maturity (whether by acceleration or otherwise) and (C) after such maturity, on demand.

 

(e)            All computations of interest hereunder shall be made in accordance with Section 5.5.

 

(f)            The Administrative Agent, upon determining the interest rate for any Borrowing of SOFR Loans, shall promptly notify the Borrower and the relevant Lenders thereof. Each such determination shall, absent clearly demonstrable error, be final and conclusive and binding on all parties hereto.

 

(g)            Term SOFR Conforming Changes. In connection with the use or administration of Term SOFR, the Administrative Agent will have the right to make Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Credit Document, any amendments implementing such Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Credit Document. The Administrative Agent will promptly notify the Borrower and the Lenders of the effectiveness of any Conforming Changes in connection with the use or administration of Term SOFR.

 

Section 2.9             Interest Periods. At the time the Borrower gives a Notice of Borrowing or Notice of Conversion or Continuation in respect of the making of, or conversion into or continuation as, a Borrowing of SOFR Loans in accordance with Section 2.6(a), the Borrower shall give the Administrative Agent written notice (or telephonic notice promptly confirmed in writing) of the Interest Period applicable to such Borrowing, which Interest Period shall, at the option of the Borrower be a one-, three- or six-month period.

 

Notwithstanding anything to the contrary contained above:

 

(a)            the initial Interest Period for any Borrowing of SOFR Loans shall commence on the date of such Borrowing (including the date of any conversion from a Borrowing of ABR Loans) and each Interest Period occurring thereafter in respect of such Borrowing shall commence on the day on which the next preceding Interest Period expires;

 

(b)            if any Interest Period relating to a Borrowing of SOFR Loans begins on the last Business Day of a calendar month or begins on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period, such Interest Period shall end on the last Business Day of the calendar month at the end of such Interest Period;

 

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(c)            if any Interest Period would otherwise expire on a day that is not a Business Day, such Interest Period shall expire on the next succeeding Business Day; provided that, if any Interest Period in respect of a SOFR Loan would otherwise expire on a day that is not a Business Day, but is a day of the month after which no further Business Day occurs in such month, such Interest Period shall expire on the next preceding Business Day;

 

(d)            the Borrower shall not be entitled to elect any Interest Period in respect of any SOFR Loan if such Interest Period would extend beyond the Maturity Date; and

 

(e)            if any Available Tenor has been made unavailable pursuant to Section 2.18(d), then such tenor may not be elected on such Notice of Borrowing or Notice of Conversion or Continuation.

 

Section 2.10          Increased Costs, Illegality, Etc.

 

(a)            In the event that (x) in the case of clause (i) below, the Majority Lenders or the Administrative Agent, as applicable, or (y) in the case of clauses (ii) and (iii) below, any Lender, shall have reasonably determined (which determination shall, absent clearly demonstrable error, be final and conclusive and binding upon all parties hereto):

 

(i)            On or prior to any date for determining SOFR, Term SOFR, the Term SOFR Reference Rate or Adjusted Term SOFR for any Interest Period that (A) Adjusted Term SOFR cannot be determined pursuant to the definition thereof, (B) by reason of any changes arising on or after the Effective Date, adequate and fair means do not exist for ascertaining the applicable interest rate on the basis provided for in the definitions of SOFR, Term SOFR, the Term SOFR Reference Rate or Adjusted Term SOFR or (C) for any reason in connection with any request for a SOFR Loan or a conversion thereto or a continuation thereof that Adjusted Term SOFR for any requested Interest Period with respect to a proposed SOFR Loan does not adequately and fairly reflect the cost to such Lenders of making and maintaining such Loan, and the Required Lenders have provided notice of such determination to the Administrative Agent; or

 

(ii)            that a Change in Law occurring at any time after the Effective Date shall (A) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender, (B) subject any Recipient to any Tax (other than (i) Indemnified Taxes or Other Taxes indemnifiable under Section 5.4, (ii) Taxes described in clauses (ii) through (iv) of Excluded Taxes and (iii) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto, or (C) impose on any Lender any other condition, cost or expense (in each case, other than Taxes) affecting this Agreement or SOFR Loans made by such Lender, which results in the cost to such Lender of making, converting into, continuing or maintaining SOFR Loans or participating in Letters of Credit (in each case hereunder) increasing by an amount which such Lender reasonably deems material or the amounts received or receivable by such Lender hereunder with respect to the foregoing shall be reduced; or

 

(iii)            at any time, that the making or continuance of any SOFR Loan has become unlawful as a result of compliance by such Lender in good faith with any Requirement of Law (or would conflict with any such Requirement of Law not having the force of law even though the failure to comply therewith would not be unlawful) or that any Governmental Authority has asserted that it is unlawful for any Lender or its applicable lending office to make, maintain or fund SOFR Loans or to determine or charge interest based upon SOFR, the Term SOFR Reference Rate, Adjusted Term SOFR or Term SOFR;

 

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then, and in any such event, such Lenders (or the Administrative Agent, in the case of clause (i) above) shall within a reasonable time thereafter give notice (if by telephone, confirmed in writing) to the Borrower and to the Administrative Agent of such determination (which notice the Administrative Agent shall promptly transmit to each of the other Lenders). Thereafter (x) in the case of clause (i) above, SOFR Loans shall no longer be available until such time as the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice by the Administrative Agent no longer exist (which notice the Administrative Agent agrees to give at such time when such circumstances no longer exist), and any Notice of Borrowing or Notice of Conversion given by the Borrower with respect to SOFR Loans that have not yet been incurred shall be deemed rescinded by the Borrower, (y) in the case of clause (ii) above, the Borrower shall pay to such Lender, promptly (but no later than fifteen (15) days) after receipt of written demand therefor such additional amounts as shall be required to compensate such Lender for such increased costs or reductions in amounts receivable hereunder (it being agreed that a written notice as to the additional amounts owed to such Lender, showing in reasonable detail the basis for the calculation thereof, submitted to the Borrower by such Lender shall, absent clearly demonstrable error, be final and conclusive and binding upon all parties hereto and (z) in the case of clause (iii) above, the Borrower shall take one of the actions specified in Section 2.10(b) as promptly as possible and, in any event, within the time period required by applicable Requirements of Law.

 

(b)            At any time that any SOFR Loan is affected by the circumstances described in Section 2.10(a)(ii) or (iii), the Borrower may (and in the case of a SOFR Loan affected pursuant to Section 2.10(a)(iii) shall) either if the affected SOFR Loan is then being made pursuant to a Borrowing, cancel such Borrowing by giving the Administrative Agent telephonic notice (confirmed promptly in writing) thereof on the same date that the Borrower was notified by a Lender pursuant to Section 2.10(a)(ii) or (iii) or if the affected SOFR Loan is then outstanding, upon at least three (3) U.S. Government Securities Business Days’ notice to the Administrative Agent, require the affected Lender to convert each such SOFR Loan into an ABR Loan; provided that if more than one Lender are affected at any time, then all affected Lenders must be treated in the same manner pursuant to this Section 2.10(b).

 

(c)            If, after the Effective Date, any Change in Law relating to capital adequacy or liquidity requirements of any Lender or compliance by any Lender or its parent with any Change in Law relating to capital adequacy or liquidity requirements occurring after the Effective Date, has or would have the effect of reducing the rate of return on such Lender’s or its parent’s capital or assets as a consequence of such Lender’s commitments or obligations hereunder to a level below that which such Lender or its parent could have achieved but for such Change in Law (taking into consideration such Lender’s or its parent’s policies with respect to capital adequacy or liquidity requirements), then from time to time, promptly (but in any event no later than fifteen (15) days) after written demand by such Lender (with a copy to the Administrative Agent), the Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender or its parent for such reduction, it being understood and agreed, however, that a Lender shall not be entitled to such compensation as a result of such Lender’s compliance with, or pursuant to any request or directive to comply with, any applicable Requirement of Law as in effect on the Effective Date. Each Lender, upon determining in good faith that any additional amounts will be payable pursuant to this Section 2.10(c), will give prompt written notice thereof to the Borrower, which notice shall set forth in reasonable detail the basis of the calculation of such additional amounts, although the failure to give any such notice shall not, subject to Section 2.13, release or diminish the Borrower’s obligations to pay additional amounts pursuant to this Section 2.10(c) upon receipt of such notice.

 

Section 2.11          Compensation. If (a) any payment of principal of any SOFR Loan is made by the Borrower to or for the account of a Lender other than on the last day of the Interest Period for such SOFR Loan as a result of a payment or conversion pursuant to Section 2.5, 2.6, 2.10, 5.1, 5.2 or 13.7, as a result of acceleration of the maturity of the Loans pursuant to Article 11 or for any other reason, (b) any Borrowing of SOFR Loans is not made on the date specified in a Notice of Borrowing, (c) any ABR Loan is not converted into a SOFR Loan on the date specified in a Notice of Conversion or Continuation, (d) any SOFR Loan is not continued as a SOFR Loan on the date specified in a Notice of Conversion or Continuation or (e) any prepayment of principal of any SOFR Loan is not made as a result of a withdrawn notice of prepayment pursuant to Section 5.1 or 5.2, the Borrower shall after the Borrower’s receipt of a written request by such Lender (which request shall set forth in reasonable detail the basis for requesting such amount), pay to the Administrative Agent (within fifteen (15) days after such request) for the account of such Lender any amounts required to compensate such Lender for any additional losses, costs or expenses that such Lender may reasonably incur as a result of such payment, failure to convert, failure to continue or failure to prepay, including any loss, cost or expense (excluding loss of anticipated profits) actually incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Lender to fund or maintain such SOFR Loan.

 

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Section 2.12          Change of Lending Office. Each Lender agrees that, upon the occurrence of any event giving rise to the payment of additional amounts with respect to such Lender pursuant to Section 2.10(a)(ii), 2.10(a)(iii), 2.10(c), 3.11 or 5.4, it will, if requested by the Borrower use reasonable efforts (subject to overall policy considerations of such Lender) to designate another lending office for any Loans affected by such event; provided that such designation does not cause such Lender or its lending office to suffer any economic, legal or regulatory disadvantage, with the object of avoiding the consequence of the event giving rise to the payment of additional amounts under any such Section. Nothing in this Section 2.12 shall affect or postpone any of the obligations of the Borrower or the right of any Lender provided in Section 2.10, 3.11 or 5.4.

 

Section 2.13          Notice of Certain Costs. Notwithstanding anything in this Agreement to the contrary, to the extent any notice required by Section 2.10, 2.11 or 5.4 is given by any Lender more than one hundred eighty (180) days after such Lender has knowledge (or should have had knowledge) of the occurrence of the event giving rise to the additional cost, reduction in amounts, loss, Tax or other additional amounts described in such Sections, such Lender shall not be entitled to compensation under Section 2.10, 2.11 or 5.4, as the case may be, for any such amounts incurred or accruing prior to the 181st day prior to the giving of such notice to the Borrower; provided that if the circumstance giving rise to such claim is retroactive, then such one hundred eighty (180)-day period referred to above shall be extended to include the period of retroactive effect thereof.

 

Section 2.14          Borrowing Base.

 

(a)            Initial Borrowing Base. For the period from and including the Effective Date to but excluding the first Redetermination Date, the amount of the Borrowing Base shall be $2,000,000,000. Notwithstanding the foregoing, the Borrowing Base may be subject to further adjustments from time to time pursuant to Section 2.14(b), (e), (f), (g), and (h) and Section 9.16.

 

(b)            Scheduled and Interim Redeterminations. The Borrowing Base shall be redetermined semi-annually in accordance with this Section 2.14 (a “Scheduled Redetermination”), and, subject to Section 2.14(d), such redetermined Borrowing Base shall become effective and applicable to the Borrower, the Administrative Agent, the Issuing Banks and the Lenders on April 1st and October 1st of each year (or as promptly as possible thereafter); provided that the first Scheduled Redetermination after the Effective Date shall occur no earlier than April 1, 2027. In addition, following the first Scheduled Redetermination after the Effective Date, the Borrower may at any time, by notifying the Administrative Agent thereof not more than once in between Scheduled Redeterminations, and the Administrative Agent may, at the direction of the Required Lenders, by notifying the Borrower thereof, one time during any period in between Scheduled Redeterminations, in each case, elect to cause the Borrowing Base to be redetermined between Scheduled Redeterminations (an “Interim Redetermination”) in accordance with this Section 2.14. In addition to, and not including and/or limited by the annual Interim Redeterminations allowed above, the Borrower may, by notifying the Administrative Agent thereof, at any time between Scheduled Redeterminations, request additional Interim Redeterminations of the Borrowing Base in the event it acquires Oil and Gas Properties with Proved Reserves which are to be Borrowing Base Properties having a PV-9 (calculated at the time of acquisition) in excess of 5.0% of the Borrowing Base in effect immediately prior to such acquisition; provided that for purposes of the foregoing, the designation of an Unrestricted Subsidiary owning Oil and Gas Properties with Proved Reserves as a Restricted Subsidiary shall be deemed to constitute an acquisition by the Borrower of Oil and Gas Properties with Proved Reserves.

 

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(c)            Scheduled and Interim Redetermination Procedure.

 

(i)            Each Scheduled Redetermination and each Interim Redetermination shall be effectuated as follows: Upon receipt by the Administrative Agent of (A) the Reserve Report and the Reserve Report Certificate, and (B) such other reports, data and supplemental information, including the information provided pursuant to Section 9.14(c), as may, from time to time, be reasonably requested by the Required Lenders or the Administrative Agent (the Reserve Report, such Reserve Report Certificate and such other reports, data and supplemental information being the “Engineering Reports”), the Administrative Agent shall evaluate the information contained in the Engineering Reports and shall in good faith propose a new Borrowing Base (the “Proposed Borrowing Base”) based upon such information and such other information (including the status of title information with respect to the Borrowing Base Properties as described in the Engineering Reports and the existence of any Hedge Agreements or any other Indebtedness) as the Administrative Agent deems appropriate in good faith in accordance with its usual and customary oil and gas lending criteria as they exist at the particular time. For the avoidance of doubt, in the case of an Interim Redetermination, the Administrative Agent may utilize the Engineering Reports delivered in connection with the last Scheduled Redetermination, provided, however, the Administrative Agent may in its sole discretion or at the direction of the Required Lenders request Borrower-generated supplemental Engineering Reports in connection with such Interim Redetermination.

 

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

 

(A)            in the case of a Scheduled Redetermination, (1) if the Administrative Agent shall have received the Engineering Reports required to be delivered by the Borrower pursuant to Sections 9.14(a) and (c) in a timely manner, then on or about ten (10) Business Days following its receipt of the Engineering Reports or (2) if the Administrative Agent shall not have received the Engineering Reports required to be delivered by the Borrower pursuant to Sections 9.14(a) and (c) in a timely manner, then promptly after the Administrative Agent has received complete Engineering Reports from the Borrower and has had a reasonable opportunity to determine the Proposed Borrowing Base in accordance with Section 2.14(c)(i); and

 

(B)            in the case of an Interim Redetermination, promptly, and in any event, within fifteen (15) days after the Administrative Agent has received the required Engineering Reports.

 

(iii)            Any Proposed Borrowing Base that would increase the Borrowing Base then in effect must be approved by all Non-Defaulting Lenders in each such Lender’s sole discretion and consistent with each such Lender’s normal and customary oil and gas lending criteria as they exist at the particular time as provided in this Section 2.14(c)(iii) and any Proposed Borrowing Base that would decrease or maintain the Borrowing Base then in effect must be approved or be deemed to have been approved by Lenders constituting at least the Required Lenders in each such Lender’s sole discretion and consistent with each such Lender’s normal and customary oil and gas lending criteria as they exist at the particular time as provided in this Section 2.14(c)(iii). Upon receipt of the Proposed Borrowing Base Notice, each Lender shall have fifteen (15) days to agree with the Proposed Borrowing Base or disagree with the Proposed Borrowing Base by proposing an alternate Borrowing Base. If at the end of such fifteen (15)-day period, any Lender has not communicated its approval or disapproval in writing to the Administrative Agent, such silence shall be deemed to be an approval of any Proposed Borrowing Base that would decrease or maintain the Borrowing Base then in effect. If, at the end of such fifteen (15)-day period, all Non-Defaulting Lenders, in the case of a Proposed Borrowing Base that would increase the Borrowing Base then in effect, or the Required Lenders, in the case of a Proposed Borrowing Base that would decrease or maintain the Borrowing Base then in effect, have approved or deemed to have approved, as aforesaid, then the Proposed Borrowing Base shall become the new Borrowing Base, effective on the date specified in Section 2.14(d). If, however, at the end of such fifteen (15)-day period, all Non-Defaulting Lenders or the Required Lenders, as applicable, have not approved or deemed to have approved, as aforesaid, then the Administrative Agent shall promptly thereafter poll the Lenders to ascertain the highest Borrowing Base then acceptable to all Non-Defaulting Lenders (in the case of any increase to the Borrowing Base) or a number of Lenders sufficient to constitute the Required Lenders (in any other case) and such amount shall become the new Borrowing Base, effective on the date specified in Section 2.14(d).

 

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(d)            Effectiveness of a Redetermined Borrowing Base. Subject to Section 2.14(h), after a redetermined Borrowing Base is approved or is deemed to have been approved by all Non-Defaulting Lenders or the Required Lenders, as applicable, pursuant to Section 2.14(c)(iii), the Administrative Agent shall promptly thereafter notify the Borrower and the Lenders of the amount of the redetermined Borrowing Base (the “New Borrowing Base Notice”), and such amount shall become the new Borrowing Base, effective and applicable to the Borrower, the Administrative Agent, the Issuing Banks and the Lenders:

 

(i)            in the case of a Scheduled Redetermination, (A) if the Administrative Agent shall have received the Engineering Reports required to be delivered by the Borrower pursuant to Sections 9.14(a) and (c) in a timely and complete manner, on the April 1st or October 1st, as applicable, following such notice, or (B) if the Administrative Agent shall not have received the Engineering Reports required to be delivered by the Borrower pursuant to Sections 9.14(a) and (c) in a timely and complete manner, then on the Business Day next succeeding delivery of such New Borrowing Base Notice; and

 

(ii)            in the case of an Interim Redetermination, on the Business Day next succeeding delivery of such New Borrowing Base Notice.

 

Subject to Section 2.14(i), such amount shall then become the Borrowing Base until the next Scheduled Redetermination Date, the next Interim Redetermination Date or the next adjustment to the Borrowing Base under Section 2.14(e), (f), (g) or (h) or Section 9.16, whichever occurs first. Notwithstanding the foregoing, no Scheduled Redetermination or Interim Redetermination shall become effective until the New Borrowing Base Notice related thereto is received by the Borrower in accordance with Section 13.2.

 

(e)            Reduction of Borrowing Base Upon Incurrence of Borrowing Base Reduction Debt. Upon the issuance or incurrence of any Borrowing Base Reduction Debt (other than any Permitted Refinancing Indebtedness representing such Borrowing Base Reduction Debt, but (subject to the parenthetical set forth in the definition of “Borrowing Base Reduction Debt”) only to the extent that the aggregate principal amount of Permitted Refinancing Indebtedness incurred to Refinance such Indebtedness does not result in an increase in the principal amount thereof above (i) the principal amount originally incurred or issued up to the original principal amount of the Refinanced Indebtedness plus (ii) any additional amounts payable in connection with such refinancing, including any accrued interest, premiums (including reasonable tender premiums), defeasance costs, fees and other expenses), the Borrowing Base then in effect shall be reduced by an amount equal to the product of 0.25 multiplied by the stated principal amount of such Borrowing Base Reduction Debt (without regard to any original issue discount), and the Borrowing Base as so reduced shall become the new Borrowing Base immediately upon the date of such issuance or incurrence, effective and applicable to the Borrower, the Administrative Agent, the Issuing Banks and the Lenders on such date until the next redetermination or modification thereof hereunder.

 

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(f)            Reduction of Borrowing Base Upon Liquidation of Hedge Positions. If the Borrower or any Restricted Subsidiary shall Liquidate any commodity hedge positions (whether evidenced by a floor, put or Hedge Agreement) upon which (i) the Lenders relied in determining the Borrowing Base and (ii) since the later of (A) the date hereof, (B) the last redetermination date and (C) the last adjustment made pursuant to this clause (f) (the later of (A), (B) and (C), the “Last Borrowing Base Hedge Reduction”), (x) the Borrowing Base Value of such Liquidated positions (after taking into account any other Hedge Agreement executed since the Last Borrowing Base Hedge Reduction, including those executed substantially concurrently with the taking of any such action) exceeds 5.0% of the then-effective Borrowing Base or (y) the Borrowing Base Value of such Liquidated positions (after taking into account any other Hedge Agreement executed since the Last Borrowing Base Hedge Reduction, including those executed substantially concurrently with the taking of any such action), when taken together with the aggregate Borrowing Base Value of all such Borrowing Base Properties Disposed of since the later of (A) the date hereof, (B) the last redetermination date and (C) the last adjustment of the Borrowing Base made pursuant to Section 2.14(g), exceeds 7.5% of the then-effective Borrowing Base, then, the Required Lenders shall have the right to adjust the Borrowing Base in an amount equal to the Borrowing Base Value, if any, attributable to such Liquidated hedge positions in the calculation of the then-effective Borrowing Base (after taking into account any other Hedge Agreement executed since the Last Borrowing Base Hedge Reduction, including those executed substantially concurrently with the taking of any such action) and (if the Required Lenders in fact make any such adjustment) the Administrative Agent shall promptly notify the Borrower in writing of the Borrowing Base Value, if any, attributable to such hedge positions in the calculation of the then-effective Borrowing Base and upon receipt of such notice, the Borrowing Base shall be simultaneously reduced by such amount. For the purposes of this Section 2.14(f), a “Liquidation” of commodity hedges shall include the designation of a Restricted Subsidiary holding commodity hedge positions as an Unrestricted Subsidiary and the Disposition or other transfer of commodity hedge positions, or the Equity Interests in any Restricted Subsidiary or Minority Investment holding commodity hedge positions to an Unrestricted Subsidiary.

 

(g)            Reduction of Borrowing Base Upon Asset Dispositions. If (i) the Borrower or one of the other Credit Parties Disposes of Oil and Gas Properties or Disposes of any Equity Interests in any Restricted Subsidiary or Minority Investment owning Oil and Gas Properties, (ii) such Disposition described in clause (i) involves Borrowing Base Properties included in the most recently delivered Reserve Report and (iii) (x) the aggregate Borrowing Base Value of all such Borrowing Base Properties Disposed of since the later of (A) the date hereof, (B) the last redetermination date and (C) the last adjustment of the Borrowing Base made pursuant to this Section 2.14(g) exceeds 5.0% of the then-effective Borrowing Base or (y) the aggregate Borrowing Base Value of all such Borrowing Base Properties Disposed of since the later of (A) the date hereof, (B) the last redetermination date and (C) the last adjustment of the Borrowing Base made pursuant to this Section 2.14(g), when taken together with the Borrowing Base Value of any Liquidated positions in respect of any commodity hedge positions (whether evidenced by a floor, put or Hedge Agreement) (i) upon which the Lenders relied in determining the Borrowing Base and (ii) since the Last Borrowing Base Hedge Reduction (after taking into account any other Hedge Agreement executed since the Last Borrowing Base Hedge Reduction, including those executed substantially concurrently with the taking of any such action) exceeds 7.5% of the then-effective Borrowing Base, then, after the Administrative Agent has received the notice required to be delivered by the Borrower pursuant to Section 10.4(b) or Section 10.6(i), no later than two (2) Business Days after the date of consummation of any such Disposition, the Required Lenders shall have the right to adjust the Borrowing Base in an amount equal to the Borrowing Base Value, if any, attributable to such Disposed of Borrowing Base Properties in the calculation of the then-effective Borrowing Base and, if the Required Lenders in fact make any such adjustment, the Administrative Agent shall promptly notify the Borrower in writing of the Borrowing Base Value, if any, attributable to such Disposed of Borrowing Base Properties in the calculation of the then-effective Borrowing Base and upon receipt of such notice, the Borrowing Base shall be simultaneously reduced by such amount. For the purposes of this Section 2.14(g) a “Disposition” of Oil and Gas Properties shall be deemed to include the designation of a Restricted Subsidiary owning Oil and Gas Properties as an Unrestricted Subsidiary and the Disposition or other transfer of Oil and Gas Properties or the Equity Interests in any Restricted Subsidiary or Minority Investment owning Oil and Gas Properties to an Unrestricted Subsidiary.

 

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(h)            Borrower’s Right to Elect Reduced Borrowing Base. Within three (3) Business Days of its receipt of a New Borrowing Base Notice, the Borrower may provide written notice to the Administrative Agent and the Lenders that specifies for the period from the effective date of the New Borrowing Base Notice until the next succeeding Scheduled Redetermination Date, the Borrowing Base will be a lesser amount than the amount set forth in such New Borrowing Base Notice, whereupon such specified lesser amount (the “Draw Limit”) will become the new Borrowing Base. The Borrower’s notice under this Section 2.14(h) shall be irrevocable, but without prejudice to its rights to initiate Interim Redeterminations.

 

(i)            Administrative Agent Data. The Administrative Agent hereby agrees to provide, promptly, and in any event within three (3) Business Days, following its receipt of a request by the Borrower, an updated Bank Price Deck. In addition, the Administrative Agent and the Lenders agree, upon request, to meet with the Borrower to discuss their evaluation of the reservoir engineering of the Oil and Gas Properties included in the Reserve Report and their respective methodologies for valuing such properties and the other factors considered in calculating the Borrowing Base.

 

Section 2.15          Defaulting Lenders. Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:

 

(a)            Commitment Fees shall cease to accrue on the unfunded portion of the Commitment of such Defaulting Lender pursuant to Section 4.1(a);

 

(b)            The Commitment and Total Exposure of such Defaulting Lender shall not be included in determining whether all Lenders, the Majority Lenders or the Required Lenders or all Non-Defaulting Lenders have taken or may take any action hereunder (including any consent to any amendment or waiver pursuant to Section 13.1); provided that (i) any waiver, amendment or modification requiring the consent of all Lenders pursuant to Section 13.1 (other than Section 13.1(a)(B)(x)) or requiring the consent of each affected Lender pursuant to Section 13.1(a)(B)(i) or (ix) shall require the consent of such Defaulting Lender (which for the avoidance of doubt would include any change to the Maturity Date applicable to such Defaulting Lender, decreasing or forgiving any principal or interest due to such Defaulting Lender, any decrease of any interest rate applicable to Loans made by such Defaulting Lender (other than the waiving of post-default interest rates) and any increase in or extension of such Defaulting Lender’s Commitment) and (ii) any redetermination, whether an increase, decrease or affirmation, of the Borrowing Base shall occur without the participation of a Defaulting Lender, but the Commitment (i.e., the Commitment Percentage of the Borrowing Base) of a Defaulting Lender may not be increased without the consent of such Defaulting Lender;

 

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(c)            If any Swingline Exposure or Letter of Credit Exposure exists at the time a Lender becomes a Defaulting Lender, then (i) all or any part of such Swingline Exposure and Letter of Credit Exposure of such Defaulting Lender will, subject to the limitation in the first proviso below, automatically be reallocated (effective on the day such Lender becomes a Defaulting Lender) among the Non-Defaulting Lenders pro rata in accordance with their respective Commitment Percentages; provided that (A) each Non-Defaulting Lender’s Total Exposure may not in any event exceed the Commitment Percentage of the Loan Limit of such Non-Defaulting Lender as in effect at the time of such reallocation and (B) neither such reallocation nor any payment by a Non-Defaulting Lender pursuant thereto will constitute a waiver or release of any claim the Borrower, the Administrative Agent, the Issuing Banks or any other Lender may have against such Defaulting Lender or cause such Defaulting Lender to be a Non-Defaulting Lender, (ii) to the extent that all or any portion (the “unreallocated portion”) of the Defaulting Lender’s Swingline Exposure or Letter of Credit Exposure cannot, or can only partially, be so reallocated to Non-Defaulting Lenders, whether by reason of the first proviso in Section 2.15(c)(i) or otherwise, the Borrower shall within two (2) Business Days following notice by the Administrative Agent (x) first, prepay such Swingline Exposure and (y) second, Cash Collateralize for the benefit of the applicable Issuing Bank only the Borrower’s obligations corresponding to such Defaulting Lender’s Letter of Credit Exposure (after giving effect to any partial reallocation pursuant to clause (i) above), in accordance with the procedures set forth in Section 3.7 for so long as such Letter of Credit Exposure is outstanding, (iii) if the Borrower Cash Collateralizes any portion of such Defaulting Lender’s Letter of Credit Exposure pursuant to this Section 2.15(c), the Borrower shall not be required to pay any fees to such Defaulting Lender pursuant to Section 4.1(b) with respect to such Defaulting Lender’s Letter of Credit Exposure during the period such Defaulting Lender’s Letter of Credit Exposure is Cash Collateralized (and such fees shall be payable to the Issuing Banks), (iv) if the Letter of Credit Exposure of the Non-Defaulting Lenders is reallocated pursuant to this Section 2.15(c), then the Letter of Credit Fees payable for the account of the Lenders pursuant to Section 4.1(b) shall be adjusted in accordance with such Non-Defaulting Lenders’ Commitment Percentages and the Borrower shall not be required to pay any Swingline Loan fees (if any) or Letter of Credit Fees to the Defaulting Lender pursuant to Section 4.1(b) with respect to such Defaulting Lender’s Letter of Credit Exposure during the period that such Defaulting Lender’s Letter of Credit Exposure is reallocated, or (v) if any Defaulting Lender’s Letter of Credit Exposure is neither Cash Collateralized nor reallocated pursuant to this Section 2.15(c), then, without prejudice to any rights or remedies of any Issuing Bank or any Lender hereunder, all Letter of Credit Fees payable under Section 4.1(b) with respect to such Defaulting Lender’s Letter of Credit Exposure shall be payable to such Issuing Bank until such Letter of Credit Exposure is Cash Collateralized and/or reallocated;

 

(d)            So long as any Lender is a Defaulting Lender, the Swingline Lender shall not be required to fund any Swingline Loan and no Issuing Bank will be required to issue any new Letter of Credit or amend any outstanding Letter of Credit to increase the Stated Amount thereof, alter the drawing terms thereunder or extend the expiry date thereof, unless each Issuing Bank is reasonably satisfied that any exposure that would result from the exposure to such Defaulting Lender is eliminated or fully covered by the Commitments of the Non-Defaulting Lenders or by Cash Collateralization or a combination thereof in accordance with clause (c) above or otherwise in a manner reasonably satisfactory to such Issuing Bank, and participating interests in any such newly issued or increased Letter of Credit or newly made Swingline Loan shall be allocated among Non-Defaulting Lenders in a manner consistent with Section 2.15(c)(i) (and Defaulting Lenders shall not participate therein);

 

(e)            If the Borrower, the Administrative Agent, the Swingline Lender and each Issuing Bank agree in writing in their discretion that a Lender that is a Defaulting Lender should no longer be deemed to be a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon, as of the effective date specified in such notice and subject to any conditions set forth therein, such Lender will cease to be a Defaulting Lender and will be a Non-Defaulting Lender and any applicable Cash Collateral shall be promptly returned to the Borrower and any Letter of Credit Exposure of such Lender reallocated pursuant to Section 2.15(c) shall be reallocated back to such Lender; provided that, except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Non-Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from such Lender’s having been a Defaulting Lender; and

 

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(f)            Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of that Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article 11 or otherwise, and including any amounts made available to the Administrative Agent by that Defaulting Lender pursuant to Section 13.8), shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by that Defaulting Lender to the Administrative Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by that Defaulting Lender to each Issuing Bank and the Swingline Lender hereunder; third, as the Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which that Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; fourth, if so determined by the Administrative Agent and the Borrower, to be held in a non-interest bearing deposit account and released in order to satisfy obligations of that Defaulting Lender to fund Loans under this Agreement; fifth, to the payment of any amounts owing to the Lenders, each Issuing Bank or the Swingline Lender as a result of any final judgment of a court of competent jurisdiction obtained by any Lender, such Issuing Bank or the Swingline Lender against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; sixth, so long as no Event of Default exists, to the payment of any amounts owing to the Borrower as a result of any final judgment of a court of competent jurisdiction obtained by the Borrower against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; and seventh, to that Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if such payment is a payment of the principal amount of any Loans or Unpaid Drawings, such payment shall be applied solely to pay the relevant Loans of, and Unpaid Drawings owed to, the relevant Non-Defaulting Lenders on a pro rata basis prior to being applied in the manner set forth in this Section 2.15(f). Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to Section 3.7 shall be deemed paid to and redirected by that Defaulting Lender, and each Lender irrevocably consents hereto.

 

Section 2.16          [Reserved].

 

Section 2.17          Extension Offers.

 

(a)            The Borrower may, at any time and from time to time request that all or a portion of the Commitments and related Loans of a given Class be amended to extend the scheduled Maturity Date thereof and to provide for other terms consistent with this Section 2.17. In order to establish an Extended Class, the Borrower shall provide a notice to the Administrative Agent (who shall provide a copy of such notice to each of the Lenders under the applicable Existing Class) (each, a “Loan Extension Request”) setting forth the proposed terms of the Extended Class to be established, which shall (x) be identical as offered to each Lender under such Existing Class (including as to the proposed interest rates and fees payable, but excluding any arrangement, structuring or other similar fees payable in connection therewith that are not generally shared with all relevant Lenders) and offered pro rata to each Lender under such Existing Class and (y) be identical to the Commitments and Loans under the Existing Class from which such Extended Class is to be amended (the “Specified Existing Commitment Class”), except that: (i) the fees with respect to the Extended Commitments of any Extended Class may be different than the fees for the Commitments of such Existing Class, in each case to the extent provided in the applicable Extension Amendment, (ii) the yield with respect to the Extended Loans of any Extended Class (whether in the form of interest rate margin, upfront fees, original issue discount or otherwise) may be different than the yield for the Loans of such Existing Class, in each case, to the extent provided in the applicable Extension Amendment; (iii) the Extension Amendment may provide for other covenants and terms that apply solely to any period after the Latest Maturity Date that is in effect on the effective date of the Extension Amendment (immediately prior to the establishment of such Extended Class); provided that (A) in no event shall the final Maturity Date of any Extended Class of a given Extension Series at the time of establishment thereof be earlier than the Maturity Date of the Existing Class, (B) all documentation in respect of such Extension Amendment shall be consistent with the foregoing and (C) any Extended Loans of an Extended Class may participate on a pro rata basis or less than or greater than pro rata basis in any voluntary repayments or prepayments of principal of the Loans hereunder and on a pro rata basis or less than a pro rata basis (but not greater than a pro rata basis) in any mandatory repayments or prepayments of Loans hereunder, in each case as specified in the respective Loan Extension Request. Any Class of Loans and Commitments amended pursuant to any Loan Extension Request shall be designated a series (each, an “Extension Series”) of Extended Commitments and Extended Loans for all purposes of this Agreement; provided that any Extended Commitments and Extended Loans amended from an Existing Class may, to the extent provided in the applicable Extension Amendment, be designated as an increase in any previously established Extension Series with respect to an Existing Class. Each request for an Extension Series of Extended Commitments and Extended Loans proposed to be incurred under this Section 2.17 shall be in an aggregate principal amount that is not less than $10,000,000 (it being understood that the actual principal amount thereof provided by the applicable Lenders may be lower than such minimum amount) and the Borrower may impose an Extension Minimum Condition with respect to any Loan Extension Request, which may be waived by the Borrower in its sole discretion.

 

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(b)            The Borrower shall provide the applicable Loan Extension Request at least five (5) Business Days (or such shorter period as may be agreed by the Administrative Agent) prior to the date on which Lenders under the Existing Class are requested to respond, and shall agree to such procedures, if any, as may be established by, or acceptable to, the Administrative Agent and the Borrower, in each case acting reasonably to accomplish the purposes of this Section 2.17. No Lender shall have any obligation to agree to have any of its Commitments and Loans of any Existing Class amended into an Extended Class pursuant to any Loan Extension Request. Any Lender holding a Commitment or Loan under an Existing Class (each, an “Extending Lender”) wishing to have all or a portion of its Commitments and Loans under the Existing Class subject to such Loan Extension Request amended into Extended Commitments and Extended Loans shall notify the Administrative Agent (each, an “Extension Election”) on or prior to the date specified in such Loan Extension Request of the amount of its Commitments and Loans under the Existing Class, which it has elected to request be amended into an Extended Class (subject to any minimum denomination requirements imposed by the Administrative Agent). In the event that the aggregate principal amount of Commitments and Loans under the Existing Class in respect of which applicable Lenders shall have accepted the relevant Loan Extension Request exceeds the amount of Extended Commitments and Extended Loans requested to be extended pursuant to the Loan Extension Request, Commitments and Loans subject to Extension Elections shall be amended to Extended Commitments and Extended Loans on a pro rata basis (subject to rounding by the Administrative Agent) based on the aggregate principal amount of Commitments and Loans included in each such Extension Election. Notwithstanding the conversion of any Existing Commitment into an Extended Commitment, such Extended Commitment shall be treated identically to all Existing Commitments of the Specified Existing Commitment Class for purposes of the obligations of a Lender in respect of Swingline Loans under Section 2.1(c) and Letters of Credit under Article 3, except that the applicable Extension Amendment may provide that the Swingline Maturity Date and/or the last day for issuing Letters of Credit may be extended and the related obligations to make Swingline Loans and issue Letters of Credit may be continued (pursuant to mechanics to be specified in the applicable Extension Amendment) so long as the applicable Swingline Lender and/or the applicable Issuing Bank, as applicable, have consented to such extensions. For the avoidance of doubt, neither the Swingline Maturity Date and/or the last day for issuing Letters of Credit may be extended (and the related obligations to make Swingline Loans or issue Letters of Credit may not be continued) without the express consent of the Swingline Lender or applicable Issuing Bank, as applicable.

 

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(c)           Extended Commitments and Extended Loans shall be established pursuant to an amendment (each, a “Extension Amendment”) to this Agreement among the Borrower, the Administrative Agent and each Extending Lender providing an Extended Commitment and Extended Loan thereunder (and the Swingline Lender and Issuing Bank, if applicable), which shall be consistent with the provisions set forth in Sections 2.17(a) and (b) above (but which shall not require the consent of any other Lender). The Administrative Agent shall promptly notify each Lender as to the effectiveness of each Extension Amendment. Each of the parties hereto hereby agrees that this Agreement and the other Credit Documents may be amended pursuant to an Extension Amendment, without the consent of any other Lenders, to the extent (but only to the extent) necessary to (i) reflect the existence and terms of the Extended Commitment and Extended Loans incurred pursuant thereto, (ii) modify the prepayments set forth in Section 5.2 to reflect the existence of the Extended Commitments and Extended Loans and the application of prepayments with respect thereto, (iii) address technical issues relating to funding and payments and (iv) effect such other amendments to this Agreement and the other Credit Documents as may be necessary or appropriate, in the reasonable opinion of the Administrative Agent and the Borrower, to effect the provisions of this Section 2.17, and the Lenders hereby expressly authorize the Administrative Agent to enter into any such Extension Amendment. Notwithstanding the other provisions of this Agreement, no Extension Amendment shall be effective unless (i) all Letter of Credit Exposure will be covered on terms reasonably acceptable to the Issuing Bank, (ii) all Swingline Exposure will be covered on terms reasonably acceptable to the Swingline Lender and (iii) the Available Commitment shall not exceed the Borrowing Base.

 

(d)           No conversion of Commitments and Loans pursuant to any extension in accordance with this Section 2.17 shall constitute a voluntary or mandatory payment or prepayment for purposes of this Agreement.

 

Section 2.18          Benchmark Replacement Setting.

 

(a)           Benchmark Replacement.

 

(i)            Notwithstanding anything to the contrary herein or in any other Credit Document, upon the occurrence of a Benchmark Transition Event, the Administrative Agent and the Borrower may amend this Agreement to replace the then-current Benchmark with a Benchmark Replacement. Any such amendment with respect to a Benchmark Transition Event will become effective at 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the Administrative Agent has posted such proposed amendment to all affected Lenders and the Borrower so long as the Administrative Agent has not received, by such time, written notice of objection to such amendment from Lenders comprising the Required Lenders. No replacement of a Benchmark with a Benchmark Replacement pursuant to this Section 2.18(a)(i) will occur prior to the applicable Benchmark Transition Start Date.

 

(b)           Benchmark Replacement Conforming Changes. In connection with the use, administration, adoption or implementation of a Benchmark Replacement, the Administrative Agent will have the right to make Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Credit Document, any amendments implementing such Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Credit Document.

 

(c)           Notices; Standards for Decisions and Determinations. The Administrative Agent will promptly notify the Borrower and the Lenders of (i) the implementation of any Benchmark Replacement and (ii) the effectiveness of any Conforming Changes in connection with the use, administration, adoption or implementation of a Benchmark Replacement. The Administrative Agent will notify the Borrower of (x) the removal or reinstatement of any tenor of a Benchmark pursuant to Section 2.18(d) and (y) the commencement of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Administrative Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section 2.18, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party to this Agreement or any other Credit Document, except, in each case, as expressly required pursuant to this Section 2.18.

 

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(d)           Unavailability of Tenor of Benchmark. Notwithstanding anything to the contrary herein or in any other Credit Document, at any time (including in connection with the implementation of a Benchmark Replacement), (i) if the then-current Benchmark is a term rate (including the Term SOFR Reference Rate) and either (A) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion or (B) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is not or will not be representative, then the Administrative Agent may modify the definition of “Interest Period” (or any similar or analogous definition) and Section 2.9 for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor and (ii) if a tenor that was removed pursuant to clause (i) above either (A) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (B) is not, or is no longer, subject to an announcement that it is not or will not be representative for a Benchmark (including a Benchmark Replacement), then the Administrative Agent may modify the definition of “Interest Period” (or any similar or analogous definition) for all Benchmark settings at or after such time to reinstate such previously removed tenor.

 

(e)           Benchmark Unavailability Period. Upon the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, the Borrower may revoke any pending request for a SOFR Borrowing of, conversion to or continuation of SOFR Loans to be made, converted or continued during any Benchmark Unavailability Period and, failing that, the Borrower will be deemed to have converted any such request into a request for a Borrowing of or conversion to ABR Loans. During a Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available Tenor, the component of ABR based upon the then-current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of ABR.

 

ARTICLE 3
Letters of Credit

 

Section 3.1            Letters of Credit.

 

(a)           Subject to and upon the terms and conditions herein set forth, at any time and from time to time on and after the Effective Date and prior to the L/C Maturity Date, each Issuing Bank, severally, and not jointly, agrees, in reliance upon the agreements of the Lenders set forth in this Article 3, to issue upon the request of the Borrower and for the direct or indirect benefit of the Borrower and the Restricted Subsidiaries, a standby letter of credit or letters of credit (the “Letters of Credit” and each, a “Letter of Credit”) in such form and with such Issuer Documents as may be approved by the applicable Issuing Bank in its reasonable discretion; provided that the Borrower shall be a co-applicant of, and jointly and severally liable with respect to, each Letter of Credit issued for the account of a Restricted Subsidiary.

 

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(b)           Notwithstanding the foregoing, (i) no Letter of Credit shall be issued the Stated Amount of which, when added to the Letters of Credit Outstanding at such time, would exceed the Letter of Credit Commitment then in effect, (ii) no Letter of Credit shall be issued the Stated Amount of which would cause the aggregate amount of all Lenders’ Total Exposures at such time to exceed the Loan Limit then in effect, (iii) each Letter of Credit shall have an expiration date occurring no later than one (1) year after the date of issuance or such longer period of time as may be agreed by the applicable Issuing Bank, unless otherwise agreed upon by the Administrative Agent and the applicable Issuing Bank or as provided under Section 3.2(b); provided that any Letter of Credit may provide for automatic renewal thereof for additional periods of up to twelve (12) months or such longer period of time as may be agreed upon by the applicable Issuing Bank, subject to the provisions of Section 3.2(b); provided, further, that in no event shall such expiration date occur later than the L/C Maturity Date unless arrangements which are reasonably satisfactory to the applicable Issuing Bank to Cash Collateralize (or backstop) such Letter of Credit have been made, (iv) no Letter of Credit shall be issued if it would be illegal under any applicable Requirement of Law for the beneficiary of the Letter of Credit to have a Letter of Credit issued in its favor, (v) no Letter of Credit shall be issued by an Issuing Bank after it has received a written notice from any Credit Party or the Administrative Agent or the Majority Lenders stating that a Default or Event of Default has occurred and is continuing until such time as such Issuing Bank shall have received a written notice (A) of rescission of such notice from the party or parties originally delivering such notice, (B) of the waiver of such Default or Event of Default in accordance with the provisions of Section 13.1 or (C) that such Default or Event of Default is no longer continuing, (vi) no Issuing Bank shall have an obligation to issue a Letter of Credit in a Stated Amount which, when added to the outstanding Letters of Credit issued by such Issuing Bank, would exceed such Issuing Bank’s Maximum Letter of Credit Commitment, (vii) without the consent of the applicable Issuing Bank, no Letter of Credit shall be issued in any currency other than Dollars and (viii) no Letter of Credit shall be issued if the proceeds thereof would be made available to any Person (x) to fund any activity or business of or with any Sanctioned Person, or in any Sanctioned Country, in each case in violation of applicable Sanctions or (y) in any manner that would result in a violation of any Sanctions by any party to this Agreement.

 

(c)           Upon at least one (1) Business Day’s prior written notice (or telephonic notice promptly confirmed in writing) to the Administrative Agent and the applicable Issuing Bank (which notice the Administrative Agent shall promptly transmit to each of the applicable Lenders), the Borrower shall have the right, on any day, permanently to terminate or reduce the Letter of Credit Commitment in whole or in part; provided that, after giving effect to such termination or reduction, the Letters of Credit Outstanding shall not exceed the Letter of Credit Commitment.

 

Section 3.2            Letter of Credit Applications.

 

(a)           Whenever the Borrower desires that a Letter of Credit be issued, amended or renewed for its account on its own behalf, or on behalf of its Restricted Subsidiaries, the Borrower shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved by the applicable Issuing Bank) to the applicable Issuing Bank and the Administrative Agent a Letter of Credit application, amendment request or any such document as may be approved by the applicable Issuing Bank (each, a “Letter of Credit Application”). Upon receipt of any Letter of Credit Application or amendment request, (A) the applicable Issuing Bank will use its best efforts to process such Letter of Credit Application on the Business Day on which such Letter of Credit Application is received, provided that such Letter of Credit Application is received no later than 12:00 p.m. (New York City time) on such Business Day, or (B) otherwise, the first Business Day next succeeding receipt of such Letter of Credit Application. No Issuing Bank shall issue any Letters of Credit unless such Issuing Bank shall have received notice from the Administrative Agent that the conditions to such issuance have been met.

 

(b)           If the Borrower so requests in any applicable Letter of Credit Application, the applicable Issuing Bank may, in its sole and absolute discretion, agree to issue a Letter of Credit that has automatic extension provisions (each, an “Auto-Extension Letter of Credit”); provided that any such Auto-Extension Letter of Credit must permit such Issuing Bank to prevent any such extension at least once in each twelve (12)-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the “Non-Extension Notice Date”) in each such twelve (12)-month period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the applicable Issuing Bank, the Borrower shall not be required to make a specific request to such Issuing Bank for any such extension. Once an Auto-Extension Letter of Credit has been issued, the Lenders shall be deemed to have authorized (but may not require) the applicable Issuing Bank to permit the extension of such Letter of Credit at any time to an expiry date not later than the L/C Maturity Date; provided, however, that such Issuing Bank shall not permit any such extension if (i) such Issuing Bank has determined that it would not be permitted, or would have no obligation, at such time to issue such Letter of Credit in its revised form (as extended) under the terms hereof (by reason of the provisions of clause (b) of Section 3.1 or otherwise), or (ii) it has received notice (which may be by telephone or in writing) on or before the day that is five (5) Business Days before the Non-Extension Notice Date from the Administrative Agent that one or more of the applicable conditions specified in Article 7 are not then satisfied, and in each such case directing such Issuing Bank not to permit such extension.

 

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(c)           Each Issuing Bank (other than the Administrative Agent or any of its Affiliates) shall, at least once each week, provide the Administrative Agent with a list of all Letters of Credit issued by it that are outstanding at such time; provided that, upon written request from the Administrative Agent, such Issuing Bank shall thereafter notify the Administrative Agent in writing on each Business Day of all Letters of Credit issued on the prior Business Day by such Issuing Bank.

 

Section 3.3            Letter of Credit Participations.

 

(a)           Immediately upon the issuance by an Issuing Bank of any Letter of Credit, such Issuing Bank shall be deemed to have sold and transferred to each Lender (each such Lender, in its capacity under this Section 3.3, an “L/C Participant”), and each such L/C Participant shall be deemed irrevocably and unconditionally to have purchased and received from such Issuing Bank, without recourse or warranty, an undivided interest and participation (each an “L/C Participation”), to the extent of such L/C Participant’s Commitment Percentage, in each Letter of Credit, each substitute therefor, each drawing made thereunder and the obligations of the Borrower under this Agreement with respect thereto, and any security therefor or guaranty pertaining thereto.

 

(b)           In determining whether to pay under any Letter of Credit, the relevant Issuing Bank shall have no obligation relative to the L/C Participants other than to confirm that (i) any documents required to be delivered under such Letter of Credit have been delivered, (ii) such Issuing Bank has examined the documents with reasonable care and (iii) the documents appear to comply on their face with the requirements of such Letter of Credit. Any action taken or omitted to be taken by the relevant Issuing Bank under or in connection with any Letter of Credit issued by it, if taken or omitted in the absence of gross negligence or willful misconduct (as finally determined by a court of competent jurisdiction), shall not create for such Issuing Bank any resulting liability.

 

(c)           In the event that an Issuing Bank makes any payment under any Letter of Credit issued by it and the Borrower shall not have repaid such amount in full to such Issuing Bank pursuant to Section 3.4(a), such Issuing Bank shall promptly notify the Administrative Agent and each L/C Participant of such failure, and each such L/C Participant shall promptly and unconditionally pay to the Administrative Agent for the account of such Issuing Bank, the amount of such L/C Participant’s Commitment Percentage of such unreimbursed payment in Dollars and in immediately available funds. Each L/C Participant shall make available to the Administrative Agent for the account of the relevant Issuing Bank such L/C Participant’s Commitment Percentage of the amount of such payment no later than 1:00 p.m. (New York City time) on the first Business Day after the date notified by such Issuing Bank in immediately available funds. If and to the extent such L/C Participant shall not have so made its Commitment Percentage of the amount of such payment available to the Administrative Agent for the account of the relevant Issuing Bank, such L/C Participant agrees to pay to the Administrative Agent for the account of such Issuing Bank, forthwith on demand, such amount, together with interest thereon for each day from such date until the date such amount is paid to the Administrative Agent for the account of such Issuing Bank at a rate per annum equal to the Overnight Rate from time to time then in effect, plus any administrative, processing or similar fees customarily charged by such Issuing Bank in connection with the foregoing. The failure of any L/C Participant to make available to the Administrative Agent for the account of any Issuing Bank its Commitment Percentage of any payment under any Letter of Credit shall not relieve any other L/C Participant of its obligation hereunder to make available to the Administrative Agent for the account of such Issuing Bank its Commitment Percentage of any payment under such Letter of Credit on the date required, as specified above, but no L/C Participant shall be responsible for the failure of any other L/C Participant to make available to the Administrative Agent such other L/C Participant’s Commitment Percentage of any such payment.

 

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(d)           Whenever an Issuing Bank receives a payment in respect of an unpaid reimbursement obligation as to which the Administrative Agent has received for the account of such Issuing Bank any payments from the L/C Participants pursuant to clause (c) above, such Issuing Bank shall pay to the Administrative Agent and the Administrative Agent shall promptly pay to each L/C Participant that has paid its Commitment Percentage of such reimbursement obligation, in Dollars and in immediately available funds, an amount equal to such L/C Participant’s share (based upon the proportionate aggregate amount originally funded by such L/C Participant to the aggregate amount funded by all L/C Participants) of the principal amount so paid in respect of such reimbursement obligation and interest thereon accruing after the purchase of the respective L/C Participations at the Overnight Rate.

 

(e)           The obligations of the L/C Participants to make payments to the Administrative Agent for the account of an Issuing Bank with respect to Letters of Credit shall be irrevocable and not subject to counterclaim, set-off or other defense or any other qualification or exception whatsoever and shall be made in accordance with the terms and conditions of this Agreement under all circumstances, including under any of the following circumstances:

 

(i)           any lack of validity or enforceability of this Agreement or any of the other Credit Documents;

 

(ii)           the existence of any claim, set-off, defense or other right that the Borrower or any other Person (including an L/C Participant) may have at any time against a beneficiary named in a Letter of Credit, any transferee of any Letter of Credit (or any Person for whom any such transferee may be acting), the Administrative Agent, any Issuing Bank, any Lender or other Person, whether in connection with this Agreement, any Letter of Credit, the transactions contemplated herein or any unrelated transactions (including any underlying transaction between the Borrower and the beneficiary named in any such Letter of Credit);

 

(iii)         any draft, certificate or any other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect;

 

(iv)         the surrender or impairment of any security for the performance or observance of any of the terms of any of the Credit Documents; or

 

(v)          the occurrence of any Default or Event of Default; or

 

(vi)         any other event, condition of circumstance, whether or not similar to the foregoing.

 

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Section 3.4            Agreement to Repay Letter of Credit Drawings.

 

(a)           The Borrower hereby agrees to reimburse the relevant Issuing Bank by making payment in Dollars or to the Administrative Agent for the account of such Issuing Bank (whether with its own funds or with proceeds of the Loans) in immediately available funds, for any payment or disbursement made by such Issuing Bank under any Letter of Credit issued by it (each such amount so paid until reimbursed, an “Unpaid Drawing”) within one (1) Business Day following the date on which such Issuing Bank provides written notice to the Borrower of such payment or disbursement (such required date for reimbursement on such Business Day (the “Reimbursement Date”)), with interest on the amount so paid or disbursed by such Issuing Bank, from and including the date of such payment or disbursement to but excluding the Reimbursement Date, at the per annum rate for each day equal to the rate described in Section 2.8(a); provided that, notwithstanding anything contained in this Agreement to the contrary, with respect to any Letter of Credit, (i) unless the Borrower shall have notified the Administrative Agent and such Issuing Bank prior to 11:00 a.m. (New York City time) on the Reimbursement Date that the Borrower intends to reimburse such Issuing Bank for the amount of such drawing with funds other than the proceeds of Loans, the Borrower shall be deemed to have given a Notice of Borrowing requesting that the Lenders make Loans (which shall be ABR Loans) on the Reimbursement Date in an amount equal to the amount at such drawing, and (ii) the Administrative Agent shall promptly notify each L/C Participant of such drawing and the amount of its Loan to be made in respect thereof, and each L/C Participant shall be irrevocably obligated to make a Loan to the Borrower in the manner deemed to have been requested in the amount of its Commitment Percentage of the applicable Unpaid Drawing by 12:00 noon (New York City time) on such Reimbursement Date by making the amount of such Loan available to the Administrative Agent. Such Loans made in respect of such Unpaid Drawing on such Reimbursement Date shall be made without regard to the Minimum Borrowing Amount and without regard to the satisfaction of the conditions set forth in Article 7. The Administrative Agent shall use the proceeds of such Loans solely for purpose of reimbursing the relevant Issuing Bank for the related Unpaid Drawing. In the event that the Borrower fails to Cash Collateralize any Letter of Credit that is outstanding on the L/C Maturity Date, the full amount of the Letters of Credit Outstanding in respect of such Letter of Credit shall be deemed to be an Unpaid Drawing subject to the provisions of this Section 3.4 except that such Issuing Bank shall hold the proceeds received from the Lenders as contemplated above as cash collateral for such Letter of Credit to reimburse any Drawing under such Letter of Credit and shall use such proceeds first, to reimburse itself for any Drawings made in respect of such Letter of Credit following the L/C Maturity Date, second, to the extent such Letter of Credit expires or is returned undrawn while any such cash collateral remains, to the repayment of obligations in respect of any Loans that have not paid at such time and third, to the Borrower or as otherwise directed by a court of competent jurisdiction. Nothing in this Section 3.4(a) shall affect the Borrower’s obligation to repay all outstanding Loans when due in accordance with the terms of this Agreement.

 

(b)           The obligations of the Borrower under this Section 3.4 to reimburse the relevant Issuing Bank with respect to Unpaid Drawings (including, in each case, interest thereon) shall be absolute, unconditional and irrevocable under any and all circumstances and irrespective of any set-off, counterclaim or defense to payment that the Borrower or any other Person may have or have had against such Issuing Bank, the Administrative Agent or any Lender (including in its capacity as an L/C Participant), including any defense based upon (i) the failure of any drawing under a Letter of Credit (each a “Drawing”) to conform to the terms of the Letter of Credit, (ii) any non-application or misapplication by the beneficiary of the proceeds of such Drawing, (iii) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein, (iv) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect or (v) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section 3.4, constitute a legal or equitable discharge of, or provide a right of setoff against, the Borrower’s obligations hereunder; provided that the foregoing shall not be construed to excuse the relevant Issuing Bank from liability to the Borrower to the extent of any direct damages (as opposed to special, indirect, consequential or punitive damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by such Issuing Bank’s failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The Borrower agrees that any action taken or omitted to be taken by an Issuing Bank under or in connection with any Letter of Credit or the related drafts or documents, if done in the absence of gross negligence or willful misconduct (as finally determined by a court of competent jurisdiction), shall be binding on the Borrower and shall not result in any liability of such Issuing Bank to the Borrower; provided that the foregoing shall not be construed to excuse such Issuing Bank from liability to the Borrower to the extent of any direct damages suffered by the Borrower that are caused by such Issuing Bank’s failure to exercise care, when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof as determined by a final and non-appealable judgment of a court of competent jurisdiction. In furtherance of the foregoing, the parties hereto agree that, with respect to documents presented which appear on their face to be in compliance with the terms of a Letter of Credit, the Issuing Bank that issued such Letter of Credit may in its sole discretion either accept or make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit (unless the Borrower shall consent to payment thereon not withstanding such lack of strict compliance).

 

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Section 3.5            New or Successor Issuing Bank.

 

(a)           Any Issuing Bank may resign as an Issuing Bank upon thirty (30) days’ prior written notice to the Administrative Agent, the Lenders and the Borrower. The Borrower may replace any Issuing Bank for any reason upon written notice to such Issuing Bank and the Administrative Agent and may add Issuing Banks at any time upon notice to the Administrative Agent. If an Issuing Bank shall resign or be replaced, or if the Borrower shall decide to add a new Issuing Bank under this Agreement, then the Borrower may appoint from among the Lenders (who have agreed to act as successor issuer of Letters of Credit or a new Issuing Bank) a successor issuer of Letters of Credit or a new Issuing Bank, as the case may be, or, with the consent of the Administrative Agent (such consent not to be unreasonably withheld) and such new Issuing Bank, another successor or new issuer of Letters of Credit, whereupon such successor issuer shall succeed to the rights, powers and duties of the replaced or resigning Issuing Bank under this Agreement and the other Credit Documents, or such new issuer of Letters of Credit shall be granted the rights, powers and duties of an Issuing Bank hereunder, and the term “Issuing Bank” shall mean such successor or such new issuer of Letters of Credit effective upon such appointment. The acceptance of any appointment as an Issuing Bank hereunder whether as a successor issuer or new issuer of Letters of Credit in accordance with this Agreement, shall be evidenced by an agreement entered into by such new or successor issuer of Letters of Credit, in a form reasonably satisfactory to the Borrower and the Administrative Agent and, from and after the effective date of such agreement, such new or successor issuer of Letters of Credit shall become an “Issuing Bank” hereunder. After the resignation or replacement of an Issuing Bank hereunder, the resigning or replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement and the other Credit Documents with respect to Letters of Credit issued by it prior to such resignation or replacement, but shall not be required to issue additional Letters of Credit. In connection with any resignation or replacement pursuant to this clause (a) (but, in case of any such resignation, only to the extent that a successor issuer of Letters of Credit shall have been appointed), either (i) the Borrower, the resigning or replaced Issuing Bank and the successor issuer of Letters of Credit shall arrange to have any outstanding Letters of Credit issued by the resigning or replaced Issuing Bank replaced with Letters of Credit issued by the successor issuer of Letters of Credit or (ii) the Borrower shall cause the successor issuer of Letters of Credit, if such successor issuer is reasonably satisfactory to the replaced or resigning Issuing Bank, to issue “back-stop” Letters of Credit naming the resigning or replaced Issuing Bank as beneficiary for each outstanding Letter of Credit issued by the resigning or replaced Issuing Bank, which new Letters of Credit shall have a Stated Amount equal to the Letters of Credit being back-stopped and the sole requirement for drawing on such new Letters of Credit shall be a drawing on the corresponding back- stopped Letters of Credit. After any resigning or replaced Issuing Bank’s resignation or replacement as Issuing Bank, the provisions of this Agreement relating to an Issuing Bank shall inure to its benefit as to any actions taken or omitted to be taken by it (A) while it was an Issuing Bank under this Agreement or (B) at any time with respect to Letters of Credit issued by such Issuing Bank.

 

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(b)           To the extent that there are, at the time of any resignation or replacement as set forth in clause (a) above, any outstanding Letters of Credit, nothing herein shall be deemed to impact or impair any rights and obligations of any of the parties hereto with respect to such outstanding Letters of Credit (including any obligations related to the payment of fees or the reimbursement or funding of amounts drawn), except that the Borrower, the resigning or replaced Issuing Bank and the successor issuer of Letters of Credit shall have the obligations regarding outstanding Letters of Credit described in clause (a) above.

 

Section 3.6            Role of Issuing Bank. Each Lender and the Borrower agree that, in paying any drawing under a Letter of Credit, no Issuing Bank shall have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. None of the Issuing Banks, the Administrative Agent, any of their respective affiliates nor any correspondent, participant or assignee of any Issuing Bank shall be liable to any Lender for (a) any action taken or omitted in connection herewith at the request or with the approval of the Majority Lenders, (b) any action taken or omitted in the absence of gross negligence or willful misconduct or (c) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or Issuer Document. The Borrower hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided that this assumption is not intended to, and shall not, preclude the Borrower’s pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. None of the Issuing Banks, the Administrative Agent, any of their respective affiliates nor any correspondent, participant or assignee of any Issuing Bank shall be liable or responsible for any of the matters described in Section 3.3(e); provided that anything in such Section to the contrary notwithstanding, the Borrower may have a claim against an Issuing Bank, and such Issuing Bank may be liable to the Borrower, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by the Borrower which the Borrower proves were caused by such Issuing Bank’s willful misconduct or gross negligence (as finally determined by a court of competent jurisdiction) or such Issuing Bank’s unlawful failure (as finally determined by a court of competent jurisdiction) to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit. In furtherance and not in limitation of the foregoing, any Issuing Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and no Issuing Bank shall be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason.

 

Section 3.7            Cash Collateral.

 

(a)           Upon the request of the Majority Lenders if, as of the L/C Maturity Date, there are any Letters of Credit Outstanding, the Borrower shall immediately Cash Collateralize the then Letters of Credit Outstanding.

 

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(b)           If any Event of Default shall occur and be continuing, the Majority Lenders may require that the L/C Obligations be Cash Collateralized; provided that, upon the occurrence of an Event of Default referred to in Section 11.5 with respect to the Borrower, the Borrower shall immediately Cash Collateralize the Letters of Credit then outstanding and no notice or request by or consent from the Majority Lenders shall be required.

 

(c)           For purposes of this Agreement, “Cash Collateralize” shall mean to (i) pledge and deposit with or deliver to the Administrative Agent, for the benefit of the Issuing Banks and the Lenders, as collateral for the L/C Obligations, cash or deposit account balances (“Cash Collateral”) in an amount equal to the amount of the Letters of Credit Outstanding required to be Cash Collateralized (the “Required Cash Collateral Amount”) or (ii) if the relevant Issuing Bank benefiting from such collateral shall agree in its reasonable discretion, other forms of credit support (including any backstop letter of credit) in a face amount equal to 105% of the Required Cash Collateral Amount from an issuer reasonably satisfactory to such Issuing Bank, in each case under clause (i) and (ii) above pursuant to documentation in form and substance reasonably satisfactory to the Administrative Agent and the relevant Issuing Bank (which documents are hereby consented to by the Lenders). Derivatives of such term have corresponding meanings. The Borrower hereby grants to the Administrative Agent, for the benefit of the Issuing Banks and the L/C Participants, a security interest in all such cash, deposit accounts and all balances therein and all proceeds of the foregoing. Such cash Collateral shall be maintained in blocked, interest bearing deposit accounts established by and in the name of the Borrower, but under the “control” (as defined in Section 9-104 of the UCC) of the Administrative Agent.

 

Section 3.8            Applicability of ISP. Unless otherwise expressly agreed to by the relevant Issuing Bank and the Borrower when a Letter of Credit is issued the rules of the ISP or the Uniform Customs and Practice for Documentary Credits shall apply to each standby Letter of Credit.

 

Section 3.9            Conflict with Issuer Documents. In the event of any conflict between the terms hereof and the terms of any Issuer Document, the terms hereof shall control.

 

Section 3.10          Letters of Credit Issued for Restricted Subsidiaries. Notwithstanding that a Letter of Credit issued or outstanding hereunder is in support of any obligations of, or is for the account of, a Restricted Subsidiary, the Borrower shall be obligated to reimburse the relevant Issuing Bank hereunder for any and all drawings under such Letter of Credit. The Borrower hereby acknowledges that the issuance of Letters of Credit for the account of Restricted Subsidiaries inures to the benefit of the Borrower, and that the Borrower’s business derives substantial benefits from the businesses of such Restricted Subsidiaries.

 

Section 3.11          Increased Costs. If, after the Effective Date, the adoption of any Change in Law shall either (a) impose, modify or make applicable any reserve, deposit, capital adequacy or similar requirement against Letters of Credit issued by any Issuing Bank, or any L/C Participant’s L/C Participation therein, or (b) impose on any Issuing Bank or any L/C Participant any other conditions, costs or expenses affecting its obligations under this Agreement in respect of Letters of Credit or L/C Participations therein or any Letter of Credit or such L/C Participant’s L/C Participation therein, and the result of any of the foregoing is to increase the cost to such Issuing Bank or such L/C Participant of issuing, maintaining or participating in any Letter of Credit, or to reduce the amount of any sum received or receivable by such Issuing Bank or such L/C Participant hereunder (other than (i) Taxes indemnifiable under Section 5.4, (ii) Taxes identified in clauses (ii) through (iv) of Excluded Taxes and (iii) Connection Income Taxes) in respect of Letters of Credit or L/C Participations therein, then, promptly (and in any event no later than fifteen (15) days) after receipt of written demand to the Borrower by such Issuing Bank or such L/C Participant, as the case may be (a copy of which notice shall be sent by such Issuing Bank or such L/C Participant to the Administrative Agent), the Borrower shall pay to such Issuing Bank or such L/C Participant such additional amount or amounts as will compensate such Issuing Bank or such L/C Participant for such increased cost or reduction, it being understood and agreed, however, that no Issuing Bank or L/C Participant shall be entitled to such compensation as a result of such Person’s compliance with, or pursuant to any request or directive to comply with, any such Requirement of Law as in effect on the Effective Date. A certificate submitted to the Borrower by the relevant Issuing Bank or an L/C Participant, as the case may be (a copy of which certificate shall be sent by such Issuing Bank or such L/C Participant to the Administrative Agent), setting forth in reasonable detail the basis for the determination of such additional amount or amounts necessary to compensate such Issuing Bank or such L/C Participant as aforesaid shall be conclusive and binding on the Borrower absent clearly demonstrable error.

 

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Section 3.12          Independence. The Borrower acknowledges that the rights and obligations of each Issuing Bank under each Letter of Credit issued by it are independent of the existence, performance or nonperformance of any contract or arrangement underlying such Letter of Credit, including contracts or arrangements between such Issuing Bank and the Borrower (other than the Credit Documents and the Issuer Documents) and between the Borrower and the relevant beneficiary.

 

ARTICLE 4
Fees; Commitments.

 

Section 4.1            Fees.

 

(a)           The Borrower agrees to pay to the Administrative Agent in Dollars, for the account of each Lender (in each case pro rata according to the respective Commitment Percentages of the Lenders), a commitment fee (the “Commitment Fee”) for each day from the Effective Date until but excluding the Termination Date. Each Commitment Fee shall be payable by the Borrower quarterly in arrears on the last Business Day of each March, June, September and December (for the three (3)-month period (or portion thereof) ended on such day for which no payment has been received) and on the Termination Date (for the period ended on such date for which no payment has been received pursuant to clause (i) above), and shall be computed for each day during such period at a rate per annum equal to the Commitment Fee Rate in effect on such day on the Available Commitment (assuming for this purpose that there is no reference to “Swingline Exposure” in the definition of Total Exposure) in effect on such day.

 

(b)           The Borrower agrees to pay to the Administrative Agent in Dollars for the account of the Lenders pro rata on the basis of their respective Letter of Credit Exposure, a fee in respect of each Letter of Credit (the “Letter of Credit Fee”), for the period from the date of issuance of such Letter of Credit until the termination or expiration date of such Letter of Credit computed at the per annum rate for each day equal to the Applicable Margin for SOFR Loans on the average daily Stated Amount of such Letter of Credit. Such Letter of Credit Fees shall be due and payable (i) quarterly in arrears on the last Business Day of each March, June, September and December and (ii) on the Termination Date (for the period for which no payment has been received pursuant to clause (i) above).

 

(c)           The Borrower agrees to pay to each Issuing Bank a fee in respect of each Letter of Credit issued by it (the “Fronting Fee”), for the period from the date of issuance of such Letter of Credit to the termination or expiration date of such Letter of Credit, computed at the rate for each day equal to 0.125% per annum (or such other amount as may be agreed in a separate writing between the Borrower and the relevant Issuing Bank) on the average daily Stated Amount of such Letter of Credit (or at such other rate per annum as agreed in writing between the Borrower and the relevant Issuing Bank). Such Fronting Fees shall be due and payable by the Borrower (i) quarterly in arrears on the last Business Day of each March, June, September and December and (ii) on the Termination Date (for the period for which no payment has been received pursuant to clause (i) above).

 

(d)          The Borrower agrees to pay directly to each Issuing Bank upon each issuance of, drawing under, and/or amendment of, a Letter of Credit issued by it such amount as the relevant Issuing Bank and the Borrower shall have agreed upon for issuances of, drawings under or amendments of, letters of credit issued by it.

 

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(e)           The Borrower agrees to pay to the Administrative Agent the administrative agent fees in the amounts and on the dates as set forth in writing from time to time between the Administrative Agent and the Borrower.

 

Section 4.2            Voluntary Reduction of Commitments.

 

(a)           Upon at least two (2) Business Days’ prior written notice (or telephonic notice promptly confirmed in writing) to the Administrative Agent at the Administrative Agent’s Office (which notice the Administrative Agent shall promptly transmit to each of the Lenders), the Borrower shall have the right, without premium or penalty, on any day, permanently to terminate or reduce the Commitments of any Class, as determined by the Borrower, in whole or in part; provided that (a) with respect to the Commitments, any such termination or reduction shall apply proportionately and permanently to reduce the Commitments of each of the Lenders of such Class, except that, notwithstanding the foregoing, (1) the Borrower may allocate any termination or reduction of Commitments among Classes of Commitments either (A) ratably among Classes or (B) first to the Commitments with respect to any Existing Commitments and second to any Extended Commitments and (2) in connection with the establishment on any date of any Extended Commitments pursuant to Section 2.17, (i) the Existing Commitments of each Lender providing any such Extended Commitments on such date shall be reduced in an amount equal to the amount of Specified Existing Commitments so extended on such date by such Lender and (ii) the Existing Commitments of any Lender not providing such Extended Commitments shall be reduced, solely to the extent elected to be reduced by the Borrower pursuant to Section 2.17, among the Class or Classes of Commitments elected by the Borrower (provided that (x) after giving effect to any such reduction and to the repayment of any Loans made on such date, the Total Exposure of any such Lender does not exceed the Commitment of such Lender (such Total Exposure and Commitment in the case of an Extending Lender being determined for purposes of this proviso, for the avoidance of doubt, exclusive of such Extending Lender’s Extended Commitment and any exposure in respect thereof) and (y) for the avoidance of doubt, any such repayment of Loans contemplated by the preceding clause (x) shall be made in compliance with the requirements of Section 5.3(a) with respect to the ratable allocation of payments hereunder, with such allocation being determined after giving effect to any conversion pursuant to Section 2.17 of Existing Commitments and Existing Loans into Extended Commitments and Extended Loans respectively, and prior to any reduction being made to the Commitment of any other Lender), (b) any partial reduction pursuant to this Section 4.2 shall be in the amount of at least $1,000,000 and (c) after giving effect to such termination or reduction and to any prepayments of Loans or cancellation or Cash Collateralization of Letters of Credit made on the date thereof in accordance with this Agreement, the aggregate amount of the Lenders’ Total Exposures shall not exceed the Loan Limit and upon any reduction of the aggregate Commitments that would otherwise result in the aggregate Commitments being less than the Aggregate Elected Commitment Amount, the Aggregate Elected Commitment Amount shall be automatically reduced (ratably among the Lenders in accordance with each Lender’s Commitment Percentage) so that they equal the aggregate Commitments as so reduced.

 

(b)          The Borrower may terminate the unused amount of the Commitment of a Defaulting Lender upon not less than two (2) Business Days’ prior notice to the Administrative Agent (which will promptly notify the Lenders thereof), and in such event the provisions of Section 2.15(f) will apply to all amounts thereafter paid by the Borrower for the account of such Defaulting Lender under this Agreement (whether on account of principal, interest, fees, indemnity or other amounts), provided that such termination will not be deemed to be a waiver or release of any claim the Borrower, the Administrative Agent, any Issuing Bank, the Swingline Lender or any Lender may have against such Defaulting Lender.

 

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Notwithstanding anything to the contrary contained in this Agreement, any such notice of commitment termination pursuant to Section 4.2 may state that it is conditioned upon the occurrence or non-occurrence of any event specified therein (including the effectiveness of other credit facilities), in which case such notice may be revoked by the Borrower (by written notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied.

 

Section 4.3            Mandatory Termination of Commitments.

 

(a)           The Total Commitment shall terminate at 5:00 p.m. (New York City time) on the Termination Date.

 

(b)          The Swingline Commitment shall terminate at 5:00 p.m. (New York City time) on the earlier of (x) the Swingline Maturity Date and (y) the Termination Date.

 

Section 4.4            Termination, Revision and Reduction of Commitments; Increase, Reduction and Termination of Aggregate Elected Commitment Amount.

 

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

 

(b)           [Reserved].

 

(c)           Increases, Reductions and Terminations of Aggregate Elected Commitment Amount.

 

(i)            Subject to the conditions set forth in Section 4.4(c)(ii) and the prior written approval of the Administrative Agent (not to be unreasonably withheld, conditioned or delayed), the Borrower may increase the Aggregate Elected Commitment Amount then in effect by (x) increasing the Elected Commitment of a Lender and/or (y) by causing a Person that is reasonably acceptable to the Administrative Agent that at such time is not a Lender to become a Lender (any such Person that is not at such time a Lender and becomes a Lender, an “Additional Lender”). Notwithstanding anything to the contrary contained in this Agreement, in no case shall an Additional Lender be a natural person, the Borrower or any Affiliate of the Borrower.

 

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

 

(A)           such increase shall not be less than $10,000,000 (and in increments of $1,000,000 above that minimum) unless the Administrative Agent otherwise consents, and no such increase shall be permitted if after giving effect thereto the Aggregate Elected Commitment Amount exceeds the Borrowing Base then in effect;

 

(B)           [reserved];

 

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

 

(D)           any such increase shall be subject to Section 2.11;

 

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

 

(F)            if the Borrower elects to increase the Aggregate Elected Commitment Amount by increasing the Elected Commitment of a Lender, the Borrower and such Lender shall execute and deliver to the Administrative Agent a certificate substantially in the form of Exhibit L (an “Elected Commitment Increase Certificate”);

 

(G)            if the Borrower elects to increase the Aggregate Elected Commitment Amount by causing an Additional Lender to become a party to this Agreement, then the Borrower and such Additional Lender shall execute and deliver to the Administrative Agent a certificate substantially in the form of Exhibit M (an “Additional Lender Certificate”), together with an Administrative Questionnaire and a processing and recordation fee of $3,500 (provided that the Administrative Agent may, in its discretion, elect to waive such processing and recordation fee in connection with any such increase), the Administrative Agent shall have given its prior written consent (to the extent that such Additional Lender is not an existing Lender’s Affiliate and in each case, such consent not to be unreasonably withheld or delayed) and the Borrower shall (1) if requested by the Additional Lender, deliver a Note payable to such Additional Lender in a principal amount equal to its Commitment, and otherwise duly completed and (2) pay any applicable fees as may have been agreed to between the Borrower and the Additional Lender, and, to the extent applicable and agreed to by the Borrower, the Administrative Agent;

 

(H)           all of the terms and conditions applicable to such increased Aggregate Elected Commitment Amount (and the Loans made pursuant thereto), including the maturity date thereof, shall be identical to the terms and conditions applicable to the existing Commitments and Loans under this Agreement (other than with respect to any arrangement, structuring, upfront or other fees or discounts payable in connection with such increased commitment as may have been agreed to between the Borrower and the increasing Lender or Additional Lender, as applicable, and/or the Administrative Agent), provided that if the Applicable Margin of such increased Aggregate Elected Commitment Amount is higher than that for the then existing Commitments and Loans, then the Applicable Margin shall be increased for all existing Commitments and Loans to be consistent with such increased Applicable Margin;

 

(I)             the representations and warranties of the Credit Parties set forth in this Agreement and in the other Credit Documents shall be true and correct in all material respects on and as of the date of, and after giving effect to, such increase in the Aggregate Elected Commitment Amount, except to the extent any such representations and warranties (i) are expressly limited to an earlier date, in which case, on and as of the date of such increase in the Aggregate Elected Commitment Amount, such representations and warranties shall continue to be true and correct in all material respects as of such specified earlier date or (ii) are already qualified by materiality, Material Adverse Effect or a similar qualification, in which case, such representations and warranties shall be true and correct in all respects; and

 

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

 

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(iii)         Subject to acceptance and recording thereof pursuant to Section 4.4(c)(iv), from and after the effective date specified in the Elected Commitment Increase Certificate or the Additional Lender Certificate (or if any Borrowings of SOFR Loans are outstanding, then the last day of the Interest Period in respect of such Borrowings of SOFR Loans, unless the Borrower has paid any compensation required by Section 2.11): (A) the amount of the Aggregate Elected Commitment Amount shall be increased as set forth therein and (B) in the case of an Additional Lender Certificate, any Additional Lender party thereto shall be a party to this Agreement and have the rights and obligations of a Lender under this Agreement and the other Credit Documents. In addition, the Lender or the Additional Lender, as applicable, shall purchase a pro rata portion of the outstanding Loans (and participation interests in Letters of Credit) of each of the other Lenders (and such Lenders hereby agree to sell and to take all such further action to effectuate such sale) such that each Lender (including any Additional Lender, if applicable) shall hold its Commitment Percentage of the outstanding Loans (and participation interests) after giving effect to the increase in the Aggregate Elected Commitment Amount (and the resulting modifications of each Lender’s Commitment pursuant to Section 4.4(c)(v)).

 

(iv)         Upon its receipt of a duly completed Elected Commitment Increase Certificate or an Additional Lender Certificate, executed by the Borrower and the Lender or by the Borrower and the Additional Lender party thereto, as applicable, the processing and recording fee referred to in Section 4.4(c)(ii), if required, the Administrative Questionnaire referred to in Section 4.4(c)(ii) and the break-funding payments from the Borrower, if any, required by Section 2.11, if applicable, the Administrative Agent shall accept such Elected Commitment Increase Certificate or Additional Lender Certificate and record the information contained therein in the Register required to be maintained by the Administrative Agent pursuant to Section 13.6(b). No increase in the Aggregate Elected Commitment Amount shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this Section 4.4(c)(iv).

 

(v)          Upon any increase in the Aggregate Elected Commitment Amount pursuant to Section 4.4(c)(iv), (A) each Lender’s Commitment shall be automatically deemed amended to the extent necessary so that each such Lender’s Commitment Percentage equals the percentage of the Aggregate Elected Commitment Amount represented by such Lender’s Elected Commitment, in each case after giving effect to such increase, and (B) Schedule 1.1(a) to this Agreement shall be deemed amended to reflect the Elected Commitment of each Lender (including any Additional Lender) as thereby increased, any changes in the Lenders’ Commitments pursuant to the foregoing clause (A), and any resulting changes in the Lenders’ Commitment Percentages.

 

(vi)         The Borrower may from time to time terminate or reduce the Aggregate Elected Commitment Amount; provided that (A) each reduction of the Aggregate Elected Commitment Amount shall be in an amount that is not less than $1,000,000 and (B) the Borrower shall not reduce the Aggregate Elected Commitment Amount if, after giving effect to any concurrent prepayment of the Loans in accordance with Section 5.2, the aggregate Total Exposures of all Lenders would exceed the Aggregate Elected Commitment Amount as reduced.

 

(vii)        The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Aggregate Elected Commitment Amount under Section 4.4(c)(vi) at least three (3) Business Days prior to the effective date of such termination or reduction (or such lesser period as may be reasonably acceptable to the Administrative Agent), specifying such election and the effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section 4.4(c)(vii) shall be irrevocable; provided that a notice of termination or reduction of the Aggregate Elected Commitment Amount delivered by the Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities or the closing of a specified transaction, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date of such termination) if such condition is not satisfied. Any termination or reduction of the Aggregate Elected Commitment Amount shall be permanent and may not be reinstated, except pursuant to Section 4.4(c)(i). Each reduction of the Aggregate Elected Commitment Amount shall be made ratably among the Lenders in accordance with each Lender’s Commitment Percentage.

 

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(viii)       Upon any redetermination or other adjustment in the Borrowing Base pursuant to this Agreement that would otherwise result in the Borrowing Base becoming less than the Aggregate Elected Commitment Amount, the Aggregate Elected Commitment Amount shall be automatically reduced (ratably among the Lenders in accordance with each Lender’s Commitment Percentage) so that they equal such redetermined Borrowing Base (and Schedule 1.1(a) shall be deemed amended to reflect such amendments to each Lender’s Elected Commitment and the Aggregate Elected Commitment Amount).

 

(ix)          Contemporaneously with any increase in the Borrowing Base pursuant to this Agreement, if (A) the Borrower elects to increase the Aggregate Elected Commitment Amount and (B) each Lender has consented to such increase in its Elected Commitment, then the Aggregate Elected Commitment Amount shall be increased (ratably among the Lenders in accordance with each Lender’s Commitment Percentage) by the amount requested by the Borrower without the requirement that any Lender deliver an Elected Commitment Increase Certificate, and Schedule 1.1(a) shall be deemed amended to reflect such amendments to each Lender’s Elected Commitment and the Aggregate Elected Commitment Amount. The Administrative Agent shall record the information regarding such increases in the Register required to be maintained by the Administrative Agent pursuant to Section 13.6(b).

 

If, after giving effect to any reduction in the Aggregate Elected Commitment Amount pursuant to this Section 4.4, the aggregate Total Exposures of all Lenders exceeds the Loan Limit, then the Borrower shall (A) prepay the Borrowings on the date of such termination or reduction in an aggregate principal amount equal to such excess, and (B) if any excess remains after prepaying all of the Borrowings as a result of Letter of Credit Exposure, transfer to the Administrative Agent on behalf of the Lenders an amount equal to such excess to be held as cash collateral as provided in Section 3.7.

 

ARTICLE 5
Payments.

 

Section 5.1            Voluntary Prepayments. The Borrower shall have the right to prepay Loans and Swingline Loans, in each case, without premium or penalty, in whole or in part from time to time on the following terms and conditions:

 

(a)           the Borrower shall give the Administrative Agent at the Administrative Agent’s Office written notice (or telephonic notice promptly confirmed in writing) of its intent to make such prepayment, the amount of such prepayment and (in the case of SOFR Loans) the specific Borrowing(s) being prepaid, which notice shall be given by the Borrower no later than 1:00 p.m. (New York City time) (i) in the case of SOFR Loans, three (3) U.S. Government Securities Business Days prior to and (ii) in the case of ABR Loans on the date of such prepayment and shall promptly be transmitted by the Administrative Agent to each of the Lenders;

 

(b)           each partial prepayment of (i) SOFR Loans shall be in a minimum amount of $500,000 and in multiples of $100,000 in excess thereof or a lesser amount to the extent such lesser amount represents the entire aggregate outstanding SOFR Loans at such time, and (ii) any ABR Loans shall be in a minimum amount of $500,000 and in multiples of $100,000 in excess thereof or a lesser amount to the extent such lesser amount represents the entire aggregate outstanding ABR Loans at such time; provided that no partial prepayment of SOFR Loans made pursuant to a single Borrowing shall reduce the outstanding SOFR Loans made pursuant to such Borrowing to an amount less than the applicable Minimum Borrowing Amount for such SOFR Loans; and

 

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(c)           any prepayment of SOFR Loans pursuant to this Section 5.1 on any day other than the last day of an Interest Period applicable thereto shall be subject to compliance by the Borrower with the applicable provisions of Section 2.11.

 

Each such notice shall specify the date and amount of such prepayment and the Type and Class of Loans to be prepaid. At the Borrower’s election in connection with any prepayment pursuant to this Section 5.1, such prepayment shall not be applied to any Loans of a Defaulting Lender.

 

Notwithstanding anything to the contrary contained in this Agreement, any such notice of prepayment pursuant to Section 5.1 may state that it is conditioned upon the occurrence or non-occurrence of any event specified therein (including the effectiveness of other credit facilities), in which case such notice may be revoked by the Borrower (by written notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied.

 

Section 5.2            Mandatory Prepayments.

 

(a)           Repayment following Optional Reduction of Commitments. If, after giving effect to any termination or reduction of the Commitments pursuant to Section 4.2(a) or of the Aggregate Elected Commitment Amount pursuant to Section 4.4, a Loan Limit Deficiency exists, then the Borrower shall on the same Business Day (i) prepay the Swingline Loans and, after all Swingline Loans have been paid in full, the remaining Loans on the date of such termination or reduction in an aggregate principal amount equal to such Loan Limit Deficiency and (ii) if any Loan Limit Deficiency remains after prepaying all of the Loans as a result of any Letter of Credit Exposure, pay to the Administrative Agent on behalf of the Issuing Banks and the L/C Participants an amount in cash or otherwise Cash Collateralize an amount equal to such Loan Limit Deficiency as provided in Section 3.7.

 

(b)           Repayment of Loans Following Redetermination or Adjustment of Borrowing Base.

 

(i)            Upon any redetermination of the Borrowing Base in accordance with Section 2.14(b), if a Loan Limit Deficiency exists, then the Borrower shall, within ten (10) Business Days after its receipt of a New Borrowing Base Notice indicating such Loan Limit Deficiency, inform the Administrative Agent that it intends to take one or more of the following actions (provided that if the Borrower fails to inform the Administrative Agent within such ten (10) Business Days, the Borrower shall be deemed to have elected clause (B) below): (A) within thirty (30) days following such election prepay the Loans in an aggregate principal amount equal to such Loan Limit Deficiency, (B) prepay the Loans in six (6) equal monthly installments, commencing on the 30th day following such election with each payment being equal to l/6th of the aggregate principal amount of such Loan Limit Deficiency (as such Loan Limit Deficiency may be reduced during such six (6)-month period as a result of any Borrowing Base redetermination or other adjustment to the Borrowing Base described in this Agreement), (C) within thirty (30) days following such election, provide additional Oil and Gas Properties (accompanied by reasonably acceptable engineering reports) not evaluated in the most recently delivered Reserve Report (which shall become Mortgaged Properties within the time period prescribed by Section 9.11(d) regardless of whether the Collateral Coverage Minimum is then satisfied) or other Collateral reasonably acceptable to the Administrative Agent having a Borrowing Base Value (as proposed by the Administrative Agent and approved by the Required Lenders in good faith in accordance with their respective usual and customary oil and gas lending criteria as they exist at the particular time) sufficient, after giving effect to any other actions taken pursuant to this Section 5.2(b)(i) to eliminate any such Loan Limit Deficiency, or (D) undertake a combination of clauses (A), (B), and (C); provided that if, because of Letter of Credit Exposure, a Loan Limit Deficiency remains after prepaying all of the Loans, the Borrower shall Cash Collateralize such remaining Loan Limit Deficiency as provided in Section 3.7; provided further, that any Loan Limit Deficiency must be cured on or prior to the Termination Date.

 

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(ii)           Upon any adjustment to the Borrowing Base pursuant to Section 2.14(e), (f), (g) or (h) or Section 9.16, if a Loan Limit Deficiency exists, then the Borrower shall (A) prepay the Loans in an aggregate principal amount equal to such Loan Limit Deficiency and (B) if any Loan Limit Deficiency remains after prepaying all of the Loans as a result of any Letter of Credit Exposure, Cash Collateralize such Loan Limit Deficiency as provided in Section 3.7. The Borrower shall be obligated to make such prepayment and/or deposit of cash collateral no later than three (3) Business Days following the date it receives written notice from the Administrative Agent of the adjustment of the Borrowing Base and the resulting Loan Limit Deficiency; provided that all payments required to be made pursuant to this clause (ii) must be made on or prior to the Termination Date.

 

(c)           Application to Loans. With respect to each prepayment of Loans elected under Section 5.1 or required by Section 5.2, the Borrower may designate (i) the Types and Class of Loans that are to be prepaid and the specific Borrowing(s) being repaid and (ii) the Loans to be prepaid; provided that (A) each prepayment of any Loans made pursuant to a Borrowing shall be applied pro rata among such Loans, and (B) notwithstanding the provisions of the preceding clause (A), no prepayment of Loans shall be applied to the Loans of any Defaulting Lender unless otherwise agreed to in writing by the Borrower. In the absence of a designation by the Borrower as described in the preceding sentence, the Administrative Agent shall, subject to the above, make such designation in its reasonable discretion with a view, but no obligation, to minimize breakage costs owing under Section 2.11.

 

(d)           SOFR Interest Periods. In lieu of making any payment pursuant to this Section 5.2 in respect of any SOFR Loan, other than on the last day of the Interest Period therefor so long as no Event of Default shall have occurred and be continuing, the Borrower at its option may deposit, on behalf of the Borrower, with the Administrative Agent an amount equal to the amount of the SOFR Loan to be prepaid and such SOFR Loan shall be repaid on the last day of the Interest Period therefor in the required amount. Such deposit shall be held by the Administrative Agent in a corporate time deposit account established on terms reasonably satisfactory to the Administrative Agent, earning interest at the then customary rate for accounts of such type. The Borrower hereby grants to the Administrative Agent, for the benefit of the Lenders, a security interest in all such cash, deposit accounts and all balances therein and all proceeds of the foregoing. Such deposit shall constitute cash collateral for the SOFR Loans to be so prepaid; provided that the Borrower may at any time direct that such deposit be applied to make the applicable payment required pursuant to this Section 5.2.

 

(e)           Application of Proceeds. The application of proceeds pursuant to this Section 5.2 shall not reduce the aggregate amount of Commitments under the RBL Facility and amounts prepaid may be reborrowed subject to the Available Commitment.

 

Section 5.3            Method and Place of Payment.

 

(a)           Except as otherwise specifically provided herein, all payments under this Agreement shall be made by the Borrower without set-off, counterclaim or deduction of any kind, to the Administrative Agent for the ratable account of the Lenders entitled thereto or the Issuing Banks or the Swingline Lender entitled thereto, as the case may be, not later than 2:00 p.m. (New York City time), in each case, on the date when due and shall be made in immediately available funds at the Administrative Agent’s Office or at such other office as the Administrative Agent shall specify for such purpose by notice to the Borrower, it being understood that written or facsimile notice by the Borrower to the Administrative Agent to make a payment from the funds in the Borrower’s account at the Administrative Agent’s Office shall constitute the making of such payment to the extent of such funds held in such account. All repayments or prepayments of any Loans (whether of principal, interest or otherwise) hereunder and all other payments under each Credit Document shall be made in Dollars. The Administrative Agent will thereafter cause to be distributed on the same day (if payment was actually received by the Administrative Agent prior to 2:00 p.m. (New York City time) or, otherwise, on the next Business Day in the sole discretion of the Administrative Agent) like funds relating to the payment of principal or interest or fees ratably to the Lenders or the Issuing Banks, as applicable, entitled thereto.

 

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(b)           For purposes of computing interest or fees, any payments under this Agreement that are made later than 2:00 p.m. (New York City time) shall be deemed to have been made on the next succeeding Business Day in the sole discretion of the Administrative Agent. Whenever any payment to be made hereunder shall be stated to be due on a day that is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day and, with respect to payments of principal, interest shall be payable during such extension at the applicable rate in effect immediately prior to such extension.

 

Section 5.4            Net Payments.

 

(a)           Any and all payments made by or on behalf of the Borrower or any Guarantor under this Agreement or any other Credit Document shall be made free and clear of, and without deduction or withholding for or on account of, any Taxes; provided that if the Borrower, any Guarantor or Agent (such applicable Person, the “applicable withholding agent”) shall be required by applicable Requirements of Law to deduct or withhold any Taxes from such payments, then (i) the applicable withholding agent shall make such deductions or withholdings as are reasonably determined by the applicable withholding agent to be required by any applicable Requirement of Law, (ii) the applicable withholding agent shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable Requirements of Law, and (iii) to the extent withholding or deduction is required to be made on account of Indemnified Taxes or Other Taxes, the sum payable by the Borrower or such Guarantor shall be increased as necessary so that after all required deductions and withholdings of Indemnified Taxes or Other Taxes have been made (including deductions or withholdings of Indemnified Taxes or Other Taxes applicable to additional sums payable under this Section 5.4), the Recipient receives an amount equal to the sum it would have received had no such deductions or withholdings been made. After any payment of Taxes by any Credit Party or Agent to a Governmental Authority as provided in this Section 5.4, the Borrower shall deliver to the Administrative Agent or the Agent shall deliver to the Borrower, as the case may be, the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of any return required by law to report such payment or other evidence of such payment reasonably satisfactory to the Borrower or the Administrative Agent, as the case may be.

 

(b)           The Borrower shall timely pay to the relevant Governmental Authority in accordance with applicable Requirements of Law, or at the option of the Administrative Agent timely reimburse it for, any Other Taxes (whether or not such Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority).

 

(c)           The Borrower shall indemnify and hold harmless the Administrative Agent, the Collateral Agent and each Lender within fifteen (15) Business Days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes payable or paid by the Administrative Agent, the Collateral Agent or such Lender, as the case may be (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section 5.4), and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate setting forth in reasonable detail the basis and calculation of the amount of such payment or liability delivered to the Borrower by a Lender, the Administrative Agent or the Collateral Agent (as applicable) on its own behalf or on behalf of a Lender shall be conclusive absent manifest error and shall constitute a required notice for purposes of Section 2.13.

 

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(d)          Each Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Credit document shall deliver to the Borrower and the Administrative Agent, at such time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in this paragraph, the completion, execution and submission of such documentation (other than such documentation set forth in paragraphs (e), (h) and (i) of this Section) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

 

(e)           Without limiting the generality of Section 5.4(d), each Non-U.S. Lender shall, to the extent it is legally eligible to do so:

 

(i)           deliver to the Borrower and the Administrative Agent, on or prior to the date on which such Lender becomes a Lender under this Agreement, two copies of

 

(A)           in the case of a Non-U.S. Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Credit Document, executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Credit Document, IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;

 

(B)            executed copies of IRS Form W-8ECI;

 

(C)            in the case of a Non-U.S. Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a Non-Bank Tax Certificate substantially in the form of Exhibit K-1 to the effect that such Non-U.S. Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, or a “controlled foreign corporation” related to the Borrower as described in Section 881(c)(3)(C) of the Code and (y) executed copies of IRS Form W-8BEN or IRS Form W 8BEN-E;

 

(D)            to the extent a Non-U.S. Lender is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, IRS Form W 8BEN-E, a Non-Bank Tax Certificate substantially in the form of Exhibit K-2 or Exhibit K-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Non-U.S. Lender is a partnership and one or more direct or indirect partners of such Non-U.S. Lender are claiming the portfolio interest exemption, such Non-U.S. Lender may provide a Non-Bank Tax Certificate substantially in the form of Exhibit K-4 on behalf of each such direct and indirect partner;

 

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(E)            any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding tax duly completed together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower to determine the withholding or deduction required to be made; provided, however, that such other form and supplementary documentation described in this clause (E) (other than forms and documentation also described in clauses (A), (B), (C) or (D)) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender; and

 

(ii)          deliver to the Borrower and the Administrative Agent two further copies of any such form or certification (or any applicable successor form) (A) promptly after such form or certification expires or becomes obsolete, invalid or inaccurate in any respect, (B) promptly after the occurrence of any change in the Non-U.S. Lender’s circumstances requiring a change in the most recent form previously delivered by it to the Borrower and the Administrative Agent, and (C) from time to time thereafter if reasonably requested by the Borrower or the Administrative Agent, or promptly notify in writing the Borrower and the Administrative Agent of such Non-U.S. Lender’s legal inability to do so.

 

(f)            If any Lender, the Administrative Agent or the Collateral Agent, as applicable, determines, in its sole discretion exercised in good faith, that it has received a refund of an Indemnified Tax or Other Tax for which it has been indemnified pursuant to this Section 5.4 (including by the payment of additional amounts pursuant to this Section 5.4), then the Lender, the Administrative Agent or the Collateral Agent, as the case may be, shall reimburse the Borrower or such Guarantor for such amount (net of all reasonable out-of-pocket expenses of such Lender, the Administrative Agent or the Collateral Agent, as the case may be, and without interest other than any interest received thereon from the relevant Governmental Authority with respect to such refund) as the Lender, Administrative Agent or the Collateral Agent, as the case may be, determines in its sole discretion exercised in good faith to be the proportion of the refund as will leave it, after such reimbursement, in no better or worse net after-Tax position (taking into account expenses or any taxes imposed on the refund) than it would have been in if the payment had not been required; provided that the Borrower or such Guarantor, upon the request of the Lender, the Administrative Agent or the Collateral Agent, agrees to repay the amount paid over to the Borrower or such Guarantor (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Lender, the Administrative Agent or the Collateral Agent in the event the Lender, the Administrative Agent or the Collateral Agent is required to repay such refund to such Governmental Authority. In such event, such Lender, the Administrative Agent or the Collateral Agent, as the case may be, shall, at the Borrower’s request, provide the Borrower with a copy of any notice of assessment or other evidence of the requirement to repay such refund received from the relevant Governmental Authority (provided that such Lender, the Administrative Agent or the Collateral Agent may delete any information therein that it deems confidential). A Lender, the Administrative Agent or the Collateral Agent shall claim any refund that it determines is available to it, unless it concludes in its sole discretion that it would be adversely affected by making such a claim. No Lender nor the Administrative Agent nor the Collateral Agent shall be obliged to make available its tax returns (or any other information relating to its taxes that it deems confidential) to any Credit Party in connection with this clause (f) or any other provision of this Section 5.4.

 

(g)           If the Borrower determines that a reasonable basis exists for contesting an Indemnified Tax or Other Tax for which a Credit Party has paid additional amounts or indemnification payments, each Lender or Agent, as the case may be, shall use reasonable efforts to cooperate with the Borrower as the Borrower may reasonably request in challenging such Tax. The Borrower shall indemnify and hold each Lender and Agent harmless against any out-of-pocket expenses incurred by such Person in connection with any request made by the Borrower pursuant to this Section 5.4(g). Nothing in this Section 5.4(g) shall obligate any Lender or Agent to take any action that such Person, in its sole judgment, determines may result in a material detriment to such Person.

 

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(h)           Each U.S. Lender shall deliver to the Borrower and the Administrative Agent two IRS Forms W-9 (or substitute or successor form), properly completed and duly executed, certifying that such U.S. Lender is exempt from United States federal backup withholding (i) on or prior to the Effective Date (or on or prior to the date it becomes a party to this Agreement), (ii) on or before the date that such form expires or becomes obsolete, invalid or inaccurate in any respect, (iii) after the occurrence of a change in the U.S. Lender’s circumstances requiring a change in the most recent form previously delivered by it to the Borrower and the Administrative Agent, and (iv) from time to time thereafter if reasonably requested by the Borrower or the Administrative Agent.

 

(i)            If a payment made to any Lender or any Agent under this Agreement or any other Credit Document would be subject to U.S. federal withholding tax imposed by FATCA if such Lender or such Agent were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender or such Agent shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA, to determine whether such Lender has or has not complied with such Lender’s obligations under FATCA or to determine the amount, if any, to deduct and withhold from such payment. Solely for purposes of this Section 5.4(i), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

 

(j)            For the avoidance of doubt, for purposes of this Section 5.4, the term “Lender” includes any Issuing Bank and any Swingline Lender and the term “applicable law” or “Requirement of Law” includes FATCA.

 

(k)           The agreements in this Section 5.4 shall survive the resignation or replacement of an Agent or any assignment of rights by, or the replacement of, a Lender, the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.

 

(l)            Each Person that shall become a Participant pursuant to Section 13.6 or a Lender pursuant to Section 13.6 shall, upon the effectiveness of the related transfer, be required to provide all the forms and statements required pursuant to Section 5.4(d), Section 5.4(e), Section 5.4(h) and Section 5.4(i); provided that in the case of a Participant such Participant shall furnish all such required forms and statements to the Person from which the related participation shall have been purchased.

 

(m)          Each Agent shall deliver to the Borrower (x)(I) prior to the date on which the first payment by the Borrower is due hereunder or (II) prior to the first date on or after the date on which such Agent becomes a successor Agent pursuant to Section 12.9 on which payment by the Borrower is due hereunder, as applicable, two copies of either (i) a properly completed and executed IRS Form W-9 certifying its exemption from U.S. Federal backup withholding or (ii) a properly completed and executed IRS Form W-8ECI (with respect to any payments to be received on its own behalf) and IRS Form W-8IMY (certifying that it is either a “qualified intermediary” within the meaning of Treasury Regulation Section 1.1441-1(e)(5) that has assumed primary withholding obligations under the Code, including Chapters 3 and 4 of the Code, or a “U.S. branch” within the meaning of Treasury Regulation Section 1.1441-1(b)(2)(iv) that is treated as a U.S. person for purposes of withholding obligations under the Code) (with respect to any payments received by the Agent on the account of others), and (y) on or before the date on which any such previously delivered documentation expires or becomes obsolete or invalid, after the occurrence of any event requiring a change in the most recent documentation previously delivered by it to the Borrower, and from time to time if reasonably requested by the Borrower, two further copies of such documentation (or prompt notification in writing of its legal inability to do so)

 

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Section 5.5            Computations of Interest and Fees.

 

(a)           Except as provided in the next succeeding sentence, Interest on SOFR Loans and ABR Loans shall be calculated on the basis of a three hundred sixty (360)-day year for the actual days elapsed. Interest on ABR Loans in respect of which the rate of interest is calculated on the basis of the Administrative Agent’s prime rate and interest on overdue interest shall be calculated on the basis of a three hundred sixty-five (365)- (or three hundred sixty-six (366)-, as the case may be) day year for the actual days elapsed.

 

(b)           Fees and the average daily Stated Amount of Letters of Credit shall be calculated on the basis of a three hundred sixty (360)-day year for the actual days elapsed.

 

Section 5.6            Limit on Rate of Interest.

 

(a)           No Payment Shall Exceed Lawful Rate. Notwithstanding any other term of this Agreement, the Borrower shall not be obligated to pay any interest or other amounts under or in connection with this Agreement or otherwise in respect to any of the Obligations in excess of the amount or rate permitted under or consistent with any applicable law, rule or regulation.

 

(b)           Payment at Highest Lawful Rate. If the Borrower is not obliged to make a payment that it would otherwise be required to make, as a result of Section 5.6(a), the Borrower shall make such payment to the maximum extent permitted by or consistent with applicable laws, rules and regulations.

 

(c)           Adjustment if Any Payment Exceeds Lawful Rate. If any provision of this Agreement or any of the other Credit Documents would obligate the Borrower or any other Credit Party to make any payment of interest or other amount payable to any Lender in an amount or calculated at a rate that would be prohibited by any applicable Requirement of Law, then notwithstanding such provision, such amount or rate shall be deemed to have been adjusted with retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by applicable Requirements of Law, such adjustment to be effected, to the extent necessary, by reducing the amount or rate of interest required to be paid by the Borrower to the affected Lender under Section 2.8.

 

(d)           Rebate of Excess Interest. Notwithstanding the foregoing, and after giving effect to all adjustments contemplated thereby, if any Lender shall have received from the Borrower an amount in excess of the maximum permitted by any applicable Requirement of Law, then the Borrower shall be entitled, by notice in writing to the Administrative Agent to obtain reimbursement from that Lender in an amount equal to such excess, and pending such reimbursement, such amount shall be deemed to be an amount payable by that Lender to the Borrower.

 

ARTICLE 6
Conditions Precedent to Effectiveness and Initial Borrowing.

 

Section 6.1            Conditions to the Initial Borrowing. Subject to the Certain Funds Provision (as defined below), the effectiveness of the representations and warranties made by any Credit Party, the covenants and the events of default contained herein or in the other Credit Documents and the obligation of each Lender and, if applicable, each Issuing Bank, to fund the initial Borrowing under, this Agreement is subject to the Administrative Agent’s (or its counsel’s) receipt from the Borrower and Holdings of a counterpart of this Agreement (and any Schedules and Exhibits to this Agreement) signed on behalf of such party or written evidence satisfactory to the Administrative Agent (which may include e-mail transmission of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement and satisfaction or waiver (by the Lenders in accordance with Section 13.1) of the following conditions precedent (the making of such initial Credit Extensions by a Lender being conclusively deemed to be its satisfaction or waiver of the conditions precedent).

 

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(a)           Credit Documents. The Administrative Agent (or its counsel) shall have received from each Credit Party (i) an executed counterpart of each of the Credit Documents (and any Schedules, subject to Section 6.1(q), and Exhibits to this Agreement) (with final versions of the Schedules, subject to Section 6.1(q), and the Exhibits being attached to this Agreement on the date hereof and, solely with respect to the Schedules in accordance with Section 6.1(q), on the Effective Date) to which such Credit Party is a party to be entered into on the Effective Date; provided, however, that the foregoing items identified in this clause (i), and all other Credit Documents and related certificates and other documents required to be delivered on the Effective Date pursuant to any Credit Document, (x) shall be in the form attached hereto, (y) (A) shall be based upon (if available), and (except as expressly set forth in this Agreement) no less favorable to the Credit Parties than the Existing Credit Agreement precedent documentation (the “Documentation Precedent”); provided, further, that the Documentation Precedent shall be modified to reflect changes consistent with those set forth in this Agreement and be negotiated in good faith to finalize the same (giving effect to the Certain Funds Provision) as promptly as reasonably practicable after the date hereof and, in any event, by the date on which the Effective Date Acquisition is consummated pursuant to the Effective Date Acquisition Agreement and (B) shall give due regard to the operational and strategic requirements of Holdings and its Subsidiaries in light of their size and their capitalization, or (z) shall be in form and substance reasonably satisfactory to the Agents and the Credit Parties and (ii) subject to the Certain Funds Provisions, Section 9.18 and Section 9.19, evidence that all other actions, recordings and filings required by the Security Documents as of the Effective Date or that the Collateral Agent may deem reasonably necessary to create the Liens intended to be created by any Security Document and perfect such Liens to the extent required by such Security Document in a manner reasonably satisfactory to the Administrative Agent; provided that (i) the Credit Parties shall not be required to deliver any possessory Collateral to the Administrative Agent (or its counsel) on the Effective Date, and (ii) the Credit Parties shall only be required to use commercially reasonable efforts to deliver to the Administrative Agent (or its counsel) executed counterparts of Mortgages on at least 85% of the PV-9 of the Credit Parties’ total Proved Reserves included in the Initial Reserve Report (subject to the definition of Collateral Coverage Minimum) on or prior to the Effective Date.

 

(b)           Other Guarantees. The Administrative Agent (or its counsel) shall have received executed copies of the Parent Guarantee, the Opco Guarantee and the Holdings Parent Guarantee, in each case, executed by the Parent, Opco Parent and Holdings Parent, respectively.

 

(c)           Opinion of Counsel. The Administrative Agent (or its counsel) shall have received, on behalf of itself, the Collateral Agent and the Lenders, a written opinion of Kirkland & Ellis LLP, counsel to the Credit Parties, (i) dated the Effective Date, (ii) addressed to the Administrative Agent, the Collateral Agent, the Lenders and each Issuing Bank and (iii) in form and substance customary for transactions of this type. The Borrower, the other Credit Parties and the Administrative Agent hereby instruct such counsel to deliver such legal opinion.

 

(d)           Secretary’s Certificate. The Administrative Agent shall have received, in the case of each Credit Party, Parent, Opco Parent and Holdings Parent, each of the items referred to in subclauses (i) and (ii) below:

 

(i)            a copy of the certificate or articles of incorporation or certificate of formation, including all amendments thereto, of such Person, in each case, certified as of a recent date by the Secretary of State (or other similar official) of the jurisdiction of its organization, and a certificate as to the good standing (to the extent such concept or a similar concept exists under the laws of such jurisdiction) of each such Person as of a recent date from such Secretary of State (or other similar official); and

 

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(ii)           a certificate of the Secretary or Assistant Secretary or similar officer of each Credit Party, Parent and Opco Parent dated the Effective Date and certifying:

 

(A)           that attached thereto is a true and complete copy of the bylaws (or limited liability company agreement or other equivalent governing documents) of such Person as in effect on the Effective Date and at all times since a date prior to the date of the resolutions described in clause (B) below;

 

(B)            that attached thereto is a true and complete copy of resolutions duly adopted by the board of directors (or managing member or equivalent) of such Person authorizing the execution, delivery and performance of the Credit Documents to which such person is a party (and in the case of Parent, the Parent Guarantee, in the case of Opco Parent, the Opco Guarantee, and in the case of Holdings Parent, the Holdings Parent Guarantee) and, in the case of the Borrower, the borrowings hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect on the Effective Date;

 

(C)            that the certificate or articles of incorporation or certificate of formation of such Person has not been amended since the date of the last amendment thereto disclosed pursuant to subclause (i) above;

 

(D)           as to the incumbency and specimen signature of each officer executing any Credit Document or any other document delivered in connection herewith on behalf of such Credit Party, Parent, Opco Parent or Holdings Parent;

 

(E)            that the Specified Representations are true and correct in all material respects as of the Effective Date;

 

(F)            as to the absence of any pending proceeding for the dissolution or liquidation of such Person; and

 

(G)            a certificate of a director or an officer as to the incumbency and specimen signature of the Secretary or Assistant Secretary or similar officer executing the certificate pursuant to subclause (ii) above.

 

(e)           Insurance Certificates. The Administrative Agent (or its counsel) shall have received copies of insurance certificates evidencing the insurance required to be maintained by the Borrower and the Subsidiaries pursuant to Section 9.3.

 

(f)            Lien Searches. The Administrative Agent (or its counsel) shall have received customary UCC lien searches with respect to the Borrower and the Guarantors in their applicable jurisdictions of organization, reflecting the absence of Liens and security interests other than those being released on or prior to the Effective Date or which are otherwise permitted under the Credit Documents.

 

(g)          Solvency Certificate. On the Effective Date, the Administrative Agent (or its counsel) shall have received a solvency certificate substantially in the form of Exhibit J hereto and signed by a Financial Officer of the Borrower (or, at the sole option of the Borrower, a third party opinion of a nationally recognized valuation firm as to the solvency of the Borrower on a consolidated basis with its Subsidiaries).

 

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(h)           Fees. All fees required to be paid on the Effective Date pursuant to the Fee Letter and reasonable and documented out-of-pocket expenses required to be paid on the Effective Date pursuant to the Section 13.5, to the extent invoiced at least three (3) Business Days prior to the Effective Date, shall, upon the Borrowing under this Agreement, have been paid (which amounts may be offset against the proceeds of the Loans).

 

(i)            Patriot Act; Beneficial Ownership Certification. The Administrative Agent (or its counsel) shall have received, at least three (3) Business Days prior to the Effective Date, all documentation and other information about Holdings, the Borrower, the Guarantors, Parent, Opco Parent and Holdings Parent as has been reasonably requested in writing at least nine (9) Business Days prior to the Effective Date by the Administrative Agent that they reasonably determine is required by regulatory authorities under applicable “know your customer”, anti-money laundering rules and regulations and Beneficial Ownership Regulations, including without limitation the PATRIOT Act and if the Borrower qualifies as a “legal entity customer” under the Beneficial Ownership Regulations, a Beneficial Ownership Certification in respect of the Borrower, in each case, that has been requested in writing by the Administrative Agent or any Lender at least nine (9) Business Days prior to the Effective Date.

 

(j)            Available Commitments. After giving pro forma effect to the funding of Loans and any other extensions of credit on the Effective Date, the Available Commitment under the Facility shall be greater than or equal to 25% of the Loan Limit.

 

(k)           Reserve Report. The Administrative Agent (or its counsel) shall have received the Initial Reserve Report.

 

(l)            Borrowing Notice. The Administrative Agent shall have received, in the case of a Borrowing, a Notice of Borrowing as required by Section 2.3(a) or, in the case of an extension of a Letter of Credit, the applicable Issuing Bank and the Administrative Agent shall have received a Letter of Credit Application as required by Section 3.2(a).

 

(m)          Specified Effective Date Acquisition Agreement Representations. The Specified Effective Date Acquisition Agreement Representations shall be true and correct in all respects except for de minimis inaccuracies, but only to the extent the failure of any Specified Effective Date Acquisition Agreement Representation to be true and correct in all respects except for de minimis inaccuracies gives the Effective Date Acquisition Buyer the right to terminate its obligation to consummate the Effective Date Acquisition.

 

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(n)           Effective Date Acquisition. The Effective Date Acquisition shall have been consummated, or, substantially simultaneously with the initial Borrowing under this Agreement shall be consummated, in all material respects in accordance with the terms of the Effective Date Acquisition Agreement as in effect on the Effective Date, without giving effect to any modifications, amendments, consents or waivers that are materially adverse to the interests of the Lenders (in their capacities as such after the Effective Date) without the consent of the Administrative Agent (such consent not to be unreasonably withheld, delayed or conditioned) (it being understood that (a) any substantive modification, amendment, consent or waiver to the definition of Material Adverse Effect (as defined in the Effective Date Acquisition Agreement) shall be deemed to be material and adverse to the interest of the Lenders and the Administrative Agent, (b) the granting of any consent under the Effective Date Acquisition Agreement that is not materially adverse to the interest of the Lenders and the Administrative Agent (in their capacities as such) will not otherwise constitute an amendment, modification or waiver, (c) any increase in the purchase price of the Effective Date Acquisition shall not be deemed to be material and adverse to the interests of the Lenders and the Administrative Agent (in their capacities as such) so long as such increase is funded solely by an increase in the cash consideration, the proceeds of an issuance of the Borrower’s common equity (or other equity interests (other than Disqualified Stock) or other non-debt sources reasonably satisfactory to the Administrative Agent) or any combination thereof, (d) any reduction in the purchase price of the Effective Date Acquisition of less than 10% shall not be deemed to be material and adverse to the interests of the Lenders and the Administrative Agent (in their capacities as such) but shall be allocated to ratably reduce the aggregate amount of this RBL Facility and other sources of funding of the purchase price, (e) if on or prior to the Effective Date, the Credit Parties do not acquire all of the Effective Date Acquired Assets evaluated in the Initial Reserve Report pursuant to the Effective Date Acquisition and the total value (as such value is set forth in the Initial Reserve Report, as applicable) of all such Effective Date Acquired Assets not acquired is greater than 5% of the PV-9 value of the Borrowing Base Properties evaluated in the Initial Reserve Report, then the Borrowing Base as of the Effective Date shall be reduced on the Effective Date (prior to giving effect to any Loans or other Credit Extensions made on the Effective Date) by an amount equal to the Borrowing Base Value attributable to all such Effective Date Acquired Assets not acquired on the Effective Date, as determined by the Administrative Agent in good faith in accordance with its usual and customary oil and gas lending criteria as they exist on the Effective Date, (f) no modification to the purchase price as a result of any purchase price adjustment or working capital adjustment expressly contemplated by the Effective Date Acquisition Agreement as in effect on the date hereof shall constitute a reduction or increase in the purchase price and (g) each Lender shall be deemed to have consented to any modification, amendment, consent or waiver of the Effective Date Acquisition Agreement if it shall have not affirmatively objected to any such modification, amendment, consent or waiver within five (5) Business Days of receipt of written notice of such modification, amendment, consent or waiver). The Administrative Agent shall have received a certificate of an Authorized Officer of the Borrower certifying that attached thereto is a true and complete copy of the Effective Date Acquisition Agreement, together with any written modifications, amendments, consents or waivers, and that the Effective Date Acquisition has been consummated, or shall be consummated substantially concurrently with, the Effective Date.

 

(o)           Release of Liens on Effective Date Acquired Assets. The Administrative Agent shall have received evidence in form and substance reasonably satisfactory to the Administrative Agent that, contemporaneously with the effectiveness of this Agreement and the making of any Loans on the Effective Date, the Liens (other than Liens permitted hereunder) on the Acquisition Assets have been released and terminated.

 

(p)           Initial Hedge Requirement. The Borrower shall have used commercially reasonable efforts within 30 days after the Signing Date of the Effective Date Acquisition Agreement to deliver (and in any event not later than the Effective Date shall have delivered) to the Administrative Agent (or its counsel) executed copies of Acceptable Commodity Hedge Agreements hedging notational volumes of crude oil, natural gas and natural gas liquids (calculated on a total barrels of oil equivalent production basis rather than separately) (which Acceptable Commodity Hedge Agreements may also consist of the existing Hedge Agreements of WildFire in place on the Signing Date that are novated to a Hedge Bank or otherwise remain in effect immediately after giving effect to the Effective Date Acquisition and hedge notational volumes of crude oil, natural gas and natural gas liquids (calculated on a total barrels of oil equivalent production basis rather than separately)) covering the volumes set forth below and in each case shall remain in effect on and immediately following the Effective Date:

 

(i)            if the Acquisition Consolidated Total Debt to EBITDAX Ratio is greater than 2.25 to 1.00, at least 75% of the reasonably projected total production of crude oil, natural gas and natural gas liquids through December 31, 2028 (calculated on a total barrels of oil equivalent production basis rather than separately) from the Credit Parties’ Proved Developed Producing Reserves evaluated in the Initial Reserve Report;

 

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(ii)           if the Acquisition Consolidated Total Debt to EBITDAX Ratio is greater than 2.00 to 1.00:

 

(A)           at least 65% of the reasonably projected total production of crude oil, natural gas and natural gas liquids through December 31, 2027 (calculated on a total barrels of oil equivalent production basis rather than separately) from the Credit Parties’ Proved Developed Producing Reserves evaluated in the Initial Reserve Report; and

 

(B)            at least 50% of the reasonably projected total production of crude oil, natural gas and natural gas liquids through December 31, 2028 (calculated on a total barrels of oil equivalent production basis rather than separately) from the Credit Parties’ Proved Developed Producing Reserves evaluated in the Initial Reserve Report;

 

(iii)          if the Acquisition Consolidated Total Debt to EBITDAX Ratio is greater than 1.75 to 1.00:

 

(A)           at least 50% of the reasonably projected total production of crude oil, natural gas and natural gas liquids through December 31, 2027 (calculated on a total barrels of oil equivalent production basis rather than separately) from the Credit Parties’ Proved Developed Producing Reserves evaluated in the Initial Reserve Report; and

 

(B)           at least 25% of the reasonably projected total production of crude oil, natural gas and natural gas liquids through December 31, 2028 (calculated on a total barrels of oil equivalent production basis rather than separately) from the Credit Parties’ Proved Developed Producing Reserves evaluated in the Initial Reserve Report; and

 

(iv)         if the Acquisition Consolidated Total Debt to EBITDAX Ratio is greater than 1.50 to 1.00, at least 50% of the reasonably projected total production of crude oil, natural gas and natural gas liquids through December 31, 2027 (calculated on a total barrels of oil equivalent production basis rather than separately) from the Credit Parties’ Proved Developed Producing Reserves evaluated in the Initial Reserve Report.

 

(q)           Updated Schedules. The Administrative Agent shall have received updated Schedules (excluding Schedule 9.19) to this Agreement (the “Updated Schedules”) reflecting the consummation of the Effective Date Acquisition which Updated Schedules shall be in form and substance reasonably satisfactory to the Administrative Agent (it being understood and agreed that the Updated Schedules shall be deemed to amend and restate in their entirety the corresponding Schedules delivered on the date hereof, and all representations and warranties made by the Borrower and the other Credit Parties in this Agreement that refer to or are qualified by reference to the Schedules shall, from and after the Effective Date, be deemed to refer to the Updated Schedules).

 

Each Lender, by funding its Loans on the Effective Date, shall be deemed to have acknowledged receipt of, and consented to and approved, each Credit Document and each other document required to be approved by the Administrative Agent, Required Lenders or Lenders, as applicable, on the Effective Date.

 

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Section 6.2            Certain Funds Provision. Notwithstanding anything in this Agreement or any other agreement or other undertaking concerning the financing of the Transactions to the contrary, (i) the only representations and warranties the making and accuracy of which will be a condition to the availability Loans on the Effective Date shall be (A) such of the representations and warranties in the Effective Date Acquisition Agreement made by or on behalf of or with respect to the Effective Date Acquisition Seller and its subsidiaries as are material to the interests of the Lenders (in their capacity as such), but only to the extent that the Effective Date Acquisition Buyer has (and/or the Effective Date Acquisition Buyer or any of the Effective Date Acquisition Buyer’s applicable affiliate has) the right to terminate Effective Date Acquisition Buyer’s (and/or its) obligations under the Effective Date Acquisition Agreement (or refuse to consummate the Effective Date Acquisition) without liability to the Effective Date Acquisition Buyer as a result of a breach of such representations and warranties in the Effective Date Acquisition Agreement (to such extent, the “Specified Effective Date Acquisition Agreement Representations”) and (B) the Specified Representations (as defined below), and (ii) the terms of the Loan Documents shall be in a form such that they do not impair the availability of the Loans on the Effective Date if the conditions expressly set forth in the Certain Funds Provision are satisfied (or waived by the Majority Lenders in accordance with Section 13.1) (it being understood that, to the extent any Collateral (including the grant or perfection of any security interest) or any guarantee referred to herein is not or cannot be provided on the Effective Date (other than (i) the Guarantee and the provision of guarantees referred to in Section 6.1(b) by Parent, Opco Parent and Holdings Parent and (ii) the grant and perfection of security interests (A) in assets with respect to which a Lien may be perfected solely by the filing of a financing statement under the Uniform Commercial Code and (B) in the Oil and Gas Properties and other properties and assets that are subject to a Mortgage in favor of the Collateral Agent as of the Effective Date) after your use of commercially reasonable efforts to do so without undue burden or expense, then the provision of such Collateral shall not constitute a condition precedent to the effectiveness of the representations and warranties made by any Credit Party, the covenants or the events of default contained herein or in the other Credit Documents, the Effective Date, and availability of the Loans on the Effective Date, but may instead be provided, in the case of (x) Oil and Gas Properties and other properties and assets that are to be subject to a Mortgage to satisfy the Collateral Coverage Minimum, within thirty (30) days after the Effective Date (or such later date as the Administrative Agent may agree in its reasonable discretion), (y) the perfection of a Lien in Equity Interests of the Borrower and each Subsidiary Guarantor by delivery of stock certificates evidencing such Equity Interests, within fifteen (15) days after the Effective Date (or such later date as the Administrative Agent may agree in its reasonable discretion) and (z) the delivery of satisfactory title information with respect to the percentage of the PV-9 value of the Borrowing Base Properties evaluated in the Initial Reserve Report such that the Administrative Agent shall have received satisfactory title information with respect to not less than 85% of the PV-9 Value of the Borrowing Base Properties, within forty-five (45) days after the Effective Date (or such later date as the Administrative Agent may agree in its reasonable discretion). For purposes hereof, “Specified Representations” means the representations and warranties of the Borrower, and to the extent applicable, the Guarantors set forth in the Loan Documents relating to corporate or other organizational existence of the Borrower and the Guarantors (including incorporation or formation of the Borrower and the Guarantors), organizational power and authority, due authorization of, execution and delivery by and enforceability against the Borrower and the Guarantors, in each case, related to the entering into, execution, delivery and performance of the Loan Documents; no conflicts of the Loan Documents with charter and other organizational governing documents as it relates to the entering into, execution, delivery and performance of the Loan Documents; effectiveness, validity, perfection and priority of liens under the Security Documents (subject to the immediately preceding sentence); solvency as of the Effective Date (after giving effect to the Transactions) of the Borrower and its subsidiaries on a consolidated basis (consistent with the form of solvency certificate set forth on Exhibit J hereto); use of proceeds on the Effective Date with respect to Federal Reserve margin regulations; the Investment Company Act; the use of proceeds on the Effective Date not violating OFAC or the Foreign Corrupt Practices Act; PATRIOT Act (as defined below); and Beneficial Ownership Regulations (this paragraph, the “Certain Funds Provision”).

 

Section 6.3            Expiration Date. Notwithstanding anything herein to the contrary, if the Effective Date does not occur on or before the Expiration Date, then this Agreement, any other Loan Document and the Commitments of the Lenders hereunder shall automatically terminate unless with respect to the Commitments of each Lender, such Lender agrees, in its sole discretion, to an extension of such Commitment.

 

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ARTICLE 7
Conditions Precedent to All Subsequent Credit Events.

 

The agreement of each Lender to make any Loan requested to be made by it on any date after the Effective Date (excluding Mandatory Borrowings and Loans required to be made by the Lenders in respect of Unpaid Drawings pursuant to Sections 3.3 and 3.4), and the obligation of any Issuing Bank to issue Letters of Credit on any date after the Effective Date, is subject to the satisfaction of the following conditions precedent:

 

(a)           At the time of each such Credit Event (in the case of clause (iii) hereof, excluding any such Credit Event that constitutes an issuance, renewal or extension of a Letter of Credit) and also after giving effect thereto, (i) no Default or Event of Default shall have occurred and be continuing, (ii) all representations and warranties made by any Credit Party contained herein or in the other Credit Documents shall be true and correct in all material respects with the same effect as though such representations and warranties had been made on and as of the date of such Credit Event (except where such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects as of such earlier date and except that any representation and warranty that is qualified as to “materiality” or similar language shall be true and correct (after giving effect to any qualification therein) in all respects at such time) and (iii) the Consolidated Cash Balance shall not exceed the greater of $150,000,000 and 10.0% of the Aggregate Elected Commitment Amount then in effect (both at the time of and after giving effect to the application of the proceeds of such Credit Event).

 

(b)          Prior to the making of each Loan (other than any Loan made pursuant to Section 3.4(a)) and each Swingline Loan, the Administrative Agent shall have received a Notice of Borrowing (whether in writing or by telephone) meeting the requirements of Section 2.3(a).

 

(c)           Prior to the issuance of each Letter of Credit, the Administrative Agent and the applicable Issuing Bank shall have received a Letter of Credit Application meeting the requirements of Section 3.2(a).

 

The acceptance of the benefits of each Credit Event after the Effective Date shall constitute a representation and warranty by each Credit Party to each of the Lenders that all the applicable conditions specified in Article 7 above have been satisfied as of that time.

 

ARTICLE 8
Representations, Warranties and Agreements

 

In order to induce the Lenders to enter into this Agreement, to make the Loans and issue or participate in Letters of Credit as provided for herein, the Borrower makes, on the date of each Credit Event (but solely, on the Effective Date, to the extent such representations and warranties are required to be true and correct as a condition to Borrowing pursuant to Article 6), the following representations and warranties to, and agreements with, the Lenders, all of which shall survive the execution and delivery of this Agreement and the making of the Loans and the issuance of the Letters of Credit:

 

Section 8.1            Corporate Status. Each of the Borrower and each Material Subsidiary of the Borrower (a) is a duly organized and validly existing under the laws of the jurisdiction of its organization and has the corporate or other organizational power and authority to own its property and assets and to transact its business as now conducted and (b) has duly qualified and is authorized to do business and is in good standing (if applicable) in all jurisdictions where it is required to be so qualified, except where the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

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Section 8.2            Corporate Power and Authority; Enforceability. Each Credit Party has the corporate or other organizational power and authority to execute, deliver and carry out the terms and provisions of the Credit Documents to which it is a party and has taken all necessary corporate or other organizational action to authorize the execution, delivery and performance of the Credit Documents to which it is a party. Each Credit Party has duly executed and delivered each Credit Document to which it is a party and each such Credit Document constitutes the legal, valid and binding obligation of such Credit Party enforceable in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization and other similar laws relating to or affecting creditors’ rights generally and general principles of equity (whether considered in a proceeding in equity or law).

 

Section 8.3            No Violation. None of the execution, delivery or performance by any Credit Party of the Credit Documents to which it is a party will (a) contravene any Requirement of Law, except to the extent such contravention would not reasonably be expected to result in a Material Adverse Effect, (b) result in any breach of any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien upon any of the property or assets of such Credit Party or any of the Restricted Subsidiaries (other than Liens created under the Credit Documents and Permitted Liens) pursuant to the terms of any indenture, loan agreement, lease agreement, mortgage, deed of trust, agreement or other instrument to which such Credit Party or any of the Restricted Subsidiaries is a party or by which it or any of its property or assets is bound (any such term, covenant, condition or provision, a “Contractual Requirement”) except to the extent such breach, default or Lien that would not reasonably be expected to result in a Material Adverse Effect or (c) violate any provision of the Organization Documents of such Credit Party or any of the Restricted Subsidiaries.

 

Section 8.4            Litigation. Except as set forth on Schedule 8.4, there are no actions, suits or proceedings (excluding Environmental Claims) pending or, to the knowledge of the Borrower, threatened in writing with respect to the Borrower or any of its Restricted Subsidiaries that would, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

 

Section 8.5            Margin Regulations. Neither the making of any Loan hereunder nor the use of the proceeds thereof will violate the provisions of Regulation T, Regulation U or Regulation X of the Board.

 

Section 8.6            Governmental Approvals. The execution, delivery and performance of each Credit Document do not require any consent or approval of, registration or filing with, or other action by, any Governmental Authority, except for (a) such as have been obtained or made and are in full force and effect, (b) filings and recordings in respect of the Liens created pursuant to the Security Documents and (c) such consents, approvals, registrations, filings or actions the failure of which to obtain or make would not reasonably be expected to have a Material Adverse Effect.

 

Section 8.7            Investment Company Act. No Credit Party is required to be registered as an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

 

Section 8.8            True and Complete Disclosure.

 

(a)           As of the Effective Date, all written factual information delivered on or prior to the Effective Date by or on behalf of the Borrower, its Subsidiaries or any other Credit Party (other than the Projections, estimates and information of a general economic nature or general industry nature) (the “Information”) concerning Holdings, the Borrower, the Restricted Subsidiaries, the Transactions and any other transactions contemplated hereby prepared by or on behalf of the foregoing or their representatives and made available to any Lenders or the Administrative Agent in connection with the Transactions or the other transactions contemplated hereby did not, taken as a whole, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not materially misleading, taken as a whole, in light of the circumstances under which such statements were made (after giving effect to all supplements and updates thereto).

 

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(b)          The Projections have been prepared in good faith based upon assumptions believed by the Borrower to be reasonable as of the date thereof (it being understood that actual results may vary materially from the Projections), as of the date such Projections were furnished to the Lenders.

 

(c)           As of the Effective Date, to the knowledge of the Borrower, the information included in the Beneficial Ownership Certification delivered, on or prior to the Effective Date, to any Lender in connection with this Agreement is true and correct in all material respects.

 

Section 8.9            Tax Matters. Except where the failure of which would not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect, each of the Borrower and the Subsidiaries has filed all federal income Tax returns and all other Tax returns, domestic and foreign, required to be filed by it (including in its capacity as withholding agent) and has paid all Taxes payable by it that have become due, other than those (i) not yet delinquent or (ii) being contested in good faith by appropriate proceedings and as to which adequate reserves have been provided to the extent required by and in accordance with GAAP (or in the case of a Foreign Subsidiary, the comparable accounting principles in the relevant jurisdiction).

 

Section 8.10          Compliance with ERISA.

 

(a)           (i) Each Plan (excluding Multiemployer Plans and Foreign Plans) is in compliance with ERISA, the Code and any applicable Requirement of Law; (ii) none of the Borrower or any ERISA Affiliate has incurred (or is reasonably likely to incur) any liability to or on account of a Plan pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201 or 4204 of ERISA or Section 4971 or 4975 of the Code nor has the Borrower or, to the knowledge of the Borrower, any ERISA Affiliate, been notified in writing that it will incur any liability under any of the foregoing Sections with respect to any Plan; and (iii) no ERISA Event has or is reasonably likely to occur with respect to any Plan, except to the extent that a breach of any of the representations or warranties in this Section 8.10(a) would not result, individually or in the aggregate, in an amount of liability that would be reasonably likely to have a Material Adverse Effect. No Plan (other than a Multiemployer Plan) has an Unfunded Current Liability that would, individually or when taken together with any other liabilities referenced in this Section 8.10(a), be reasonably likely to have a Material Adverse Effect. With respect to Plans that are Multiemployer Plans, the representations and warranties in this Section 8.10(a), other than any made with respect to (i) liability under Section 4201 or 4204 of ERISA or (ii) liability for “termination” (within the meaning of Title IV of ERISA) of such Plans under ERISA, are made to the knowledge of the Borrower.

 

(b)          All Foreign Plans are in compliance with, and have been established, administered and operated in accordance with, the terms of such Foreign Plans and applicable law, except for any failure to so comply, establish, administer or operate the Foreign Plans as would not reasonably be expected to have a Material Adverse Effect. All contributions or other payments which are due with respect to each Foreign Plan have been made in full and there are no funding deficiencies thereunder, except to the extent any such events would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

Section 8.11          Subsidiaries. Schedule 8.11 lists each Subsidiary of the Borrower (and the direct and indirect ownership interest of the Borrower therein), in each case existing on the Effective Date (after giving effect to the Transactions). Each Subsidiary Guarantor, Material Subsidiary and Unrestricted Subsidiary as of the Effective Date (after giving effect to the Transactions) has been so designated on Schedule 8.11.

 

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Section 8.12          Intellectual Property. The Borrower and each of the Restricted Subsidiaries own or have obtained valid rights to use all intellectual property, free from any burdensome restrictions, that to the knowledge of the Borrower is reasonably necessary for the operation of their respective businesses as currently conducted and as proposed to be conducted, except where the failure to obtain any such rights would not reasonably be expected to have a Material Adverse Effect.

 

Section 8.13          Environmental Laws. Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (i) the Borrower and each of the Subsidiaries are in compliance with all applicable Environmental Laws; (ii) neither the Borrower nor any Subsidiary has received written notice of any Environmental Claim other than those matters that have been fully resolved and for which there is no further outstanding liability of the Borrower or any of its Subsidiaries; (iii) neither the Borrower nor any Subsidiary is conducting or has been ordered by a Governmental Authority to conduct any investigation, removal, remedial or other corrective action pursuant to any Environmental Law at any location; and (iv) neither the Borrower nor any of the Subsidiaries has treated, stored, transported, released or disposed or arranged for disposal or transport for disposal of Hazardous Materials at, on, under or from any currently or formerly owned or leased facility in a manner that would reasonably be expected to give rise to liability of the Borrower or any Subsidiary under Environmental Law. Notwithstanding anything to the contrary contained herein, this Section 8.13 contains the sole and exclusive representations and warranties with respect to environmental matters of the Borrower and its Subsidiaries.

 

Section 8.14          Properties.

 

(a)           Assuming that all applicable Governmental Authorities have granted approvals, made recordations and taken such other actions as are necessary in connection with the Transactions and any assignments made in connection therewith, except as set forth on Schedule 8.14 hereto, each Credit Party has good and defensible title to the Borrowing Base Properties evaluated in the most recently delivered Reserve Report (other than those (i) disposed of in compliance with Section 10.4 since delivery of such Reserve Report, (ii) leases that have expired in accordance with their terms and (iii) with title defects disclosed in writing to the Administrative Agent), and valid title to all its material personal properties, in each case, free and clear of all Liens other than Liens permitted by Section 10.2, except in each case where the failure to have such title would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. After giving full effect to the Liens permitted by Section 10.2, (A) the Borrower or the Restricted Subsidiary specified as the owner does not fail in any material respects to own the working interests and net revenue interests attributable to the Hydrocarbon Interests as such working interests and net revenue interests are reflected in the most recently delivered Reserve Report and (B) the ownership of such properties shall not in any material respect obligate the Borrower or such Restricted Subsidiary to bear the costs and expenses relating to the maintenance, development and operations of each such property in an amount in excess of the working interest of each property set forth in the most recently delivered Reserve Report that is not offset by a corresponding proportionate increase in the Borrower’s or such Restricted Subsidiary’s net revenue interest in such property.

 

(b)          All material leases and agreements necessary for the conduct of the business of the Borrower and the Restricted Subsidiaries are valid and subsisting, in full force and effect, except to the extent that any such failure to be valid or subsisting would not reasonably be expected to have a Material Adverse Effect.

 

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(c)           The rights and properties presently owned, leased or licensed by the Credit Parties including all easements and rights of way, include all rights and properties necessary to permit the Credit Parties to conduct their respective businesses as currently conducted, except to the extent any failure to have any such rights or properties would not reasonably be expected to have a Material Adverse Effect.

 

(d)          All of the properties of the Borrower and the Restricted Subsidiaries that are reasonably necessary for the operation of their businesses are in good working condition and are maintained in accordance with prudent business standards, except to the extent any failure to satisfy the foregoing would reasonably be expected to have a Material Adverse Effect.

 

Section 8.15          Solvency. On the Effective Date (after giving effect to the consummation of the Transactions (including the execution and delivery of this Agreement, the making of any Loans and the use of proceeds of such Loans on the Effective Date)), the Borrower on a consolidated basis with its Subsidiaries will be Solvent.

 

Section 8.16          Accounts. As of the Effective Date, Schedule 8.16 lists all Deposit Accounts, Securities Accounts and Commodity Accounts maintained by or for the benefit of any Credit Party together with the deposit bank or securities or commodity intermediary for any such account, the account name, the account type, the account number and whether such account is an Excluded Account (and, if any such account is listed as an Excluded Account, the subcategory in the “Excluded Account” definition to which such account applies).

 

Section 8.17          Gas Imbalances, Prepayments. On the Effective Date, except as set forth on Schedule 8.17, on a net basis, there are no gas imbalances, take or pay or other prepayments exceeding 2.5 Bcfe of Hydrocarbon volumes (stated on a gas equivalent basis) in the aggregate, with respect to the Credit Parties’ Oil and Gas Properties that would require any Credit Party to deliver Hydrocarbons either generally or produced from their Oil and Gas Properties at some future time without then or thereafter receiving full payment therefor.

 

Section 8.18          Marketing of Production. On the Effective Date, except as set forth on Schedule 8.18, no material agreements exist (which are not cancelable on sixty (60) days’ notice or less without penalty or detriment) for the sale of production of the Credit Parties’ Hydrocarbons at a fixed non-index price (including calls on, or other rights to purchase, production, whether or not the same are currently being exercised) that (i) represent in respect of such agreements 2.5% or more of the Borrower’s average monthly production of Hydrocarbon volumes and (ii) have a maturity or expiry date of longer than six (6) months from the Effective Date.

 

Section 8.19          Hedge Agreements. Schedule 8.19 sets forth, as of the Effective Date, a true and accurate summary of the Credit Parties’ hedging positions.

 

Section 8.20          PATRIOT Act; OFAC; FCPA. To the extent applicable, each of Holdings, the Borrower and its Subsidiaries and, to the knowledge of the Borrower, any director, officer or employee of Holdings, the Borrower and its Subsidiaries or any agent thereof acting in any capacity are in compliance, in all material respects, with the USA PATRIOT Act, and the Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 C.F.R. Subtitle B, Chapter V, as amended), Sanctions, and any other applicable enabling legislation or executive order relating thereto and other applicable Anti-Corruption Laws. Neither Holdings, the Borrower nor any Subsidiary nor, to the knowledge of the Borrower, any director, officer or employee of Holdings, the Borrower or any of the Subsidiaries, or agent or representative thereof acting in any capacity in connection with or benefiting from this Facility, is an individual or entity that is a Sanctioned Person.

 

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Section 8.21          No Material Adverse Effect. Since the Effective Date, there has been no event or circumstance that has had or would reasonably be expected to have a Material Adverse Effect.

 

Section 8.22          Well Bores. None of the wells comprising a part of the Oil and Gas Properties (or properties unitized therewith) of the Borrower or any Restricted Subsidiary is deviated from the vertical more than the maximum permitted by Requirement of Law, and such wells are, in fact, bottomed under and are producing from, and the well bores are wholly within, the Oil and Gas Properties (or in the case of wells located on properties unitized therewith, such unitized properties) of the Borrower or such Restricted Subsidiary, except, in each case, to the extent any failure to satisfy the foregoing would reasonably be expected to have a Material Adverse Effect.

 

Section 8.23          Effective Date Financials.

 

(a)           The Borrower has heretofore furnished to the Lenders (i) (A) the audited consolidated balance sheet and statements of income, shareholders’ equity and cash flows of the Parent as of and for the fiscal year ended December 31, 2025, reported on by KPMG LLP, independent public accountants, and (B) the unaudited consolidated balance sheet and statements of income, shareholders’ equity and cash flows of the Parent as of and for the fiscal quarter ended March 31, 2026 (collectively, the “Parent Financial Statements”), and (ii) (A) the audited consolidated balance sheet and the related audited consolidated statements of operations and cash flows of WildFire as of and for the fiscal year ended December 31, 2025 (collectively, the “WildFire Audited Financial Statements”), and (B) the unaudited consolidated balance sheet of WildFire as of and for the fiscal quarter ended March 31, 2026 and the related unaudited consolidated statements of operations and cash flows (collectively, the “WildFire Unaudited Financial Statements”; together, with the WildFire Audited Financial Statements and the Parent Financial Statements, the “Effective Date Financial Statements”) (it being acknowledged by the Lenders that this clause (a) has been satisfied as of the date hereof).

 

(b)          The Effective Date Financial Statements fairly present in all material respects the financial condition of the Persons or assets identified therein, as applicable, in each case, as of the date(s) thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the periods covered thereby, (i) except as otherwise expressly noted therein and (ii) subject to changes resulting from normal year-end adjustments and the absence of footnotes.

 

Section 8.24          Security Documents. Except as otherwise contemplated hereby or under any other Credit Document and subject to the limitations set forth in the Collateral Coverage Minimum:

 

(a)           each Security Document will, upon execution and delivery thereof, be effective to create in favor of the Collateral Agent for the benefit of the Secured Parties, legal, valid and enforceable Liens on, and security interests in, the Collateral described therein to the extent intended to be created thereby and (i) when financing statements and other filings in appropriate form are filed in the offices specified in the Collateral Agreement and (ii) upon the taking of possession or control by the Collateral Agent of such Collateral with respect to which a security interest may be perfected only by possession or control (which possession or control shall be given to the Collateral Agent to the extent possession or control by the Collateral Agent is required by the Collateral Agreement), the Liens created by the Security Documents shall constitute fully perfected Liens on, and security interests in (to the extent intended to be created thereby), all right, title and interest of the Grantors in such Collateral to the extent perfection can be obtained by filing financing statements, possession or control, in each case subject to no Liens other than Liens permitted under this Agreement; and

 

(b)          upon recording thereof in the appropriate recording office, each Mortgage is effective to create, in favor of the Collateral Agent, for its benefit and the benefit of the Secured Parties, legal, valid and enforceable perfected Liens on, and security interest in, all of the Credit Parties’ right, title and interest in and to the Mortgaged Properties thereunder and the proceeds thereof, subject only to Liens permitted under this Agreement, and when such Mortgage is filed in the appropriate office, such Mortgage shall constitute fully perfected Liens on, and security interests in, all right, title and interest of the Credit Parties in the Mortgaged Properties and the proceeds thereof, in each case prior and superior in right to any other person, other than Liens permitted under this Agreement.

 

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Section 8.25          Affected Financial Institution. No Credit Party is an Affected Financial Institution.

 

ARTICLE 9
Affirmative Covenants

 

The Borrower hereby covenants and agrees that on the Effective Date and thereafter, until Payment in Full has occurred:

 

Section 9.1            Information Covenants. The Borrower will furnish to the Administrative Agent (which shall promptly make such information available to the Lenders in accordance with its customary practice):

 

(a)           Annual Financial Statements. Within the earlier of (i) one hundred twenty (120) days after the end of each such fiscal year and (ii) five (5) days after the date on which such financial statements are required to be filed with the SEC (after giving effect to any permitted extensions), the audited consolidated balance sheets of the Borrower and the Subsidiaries and, if different, the Borrower and the Restricted Subsidiaries, in each case as at the end of such fiscal year, and the related consolidated statements of operations, shareholders’ equity and cash flows and a customary “management’s discussion and analysis” section for such fiscal year setting forth comparative consolidated figures for the preceding fiscal years (or, in lieu of such audited financial statements of the Borrower and the Restricted Subsidiaries, a reconciliation, reflecting such financial information for the Borrower and the Restricted Subsidiaries, on the one hand, and the Borrower and the Subsidiaries, on the other hand, reflecting adjustments necessary to eliminate the accounts of Unrestricted Subsidiaries (if any) from such consolidated financial statements) prepared in accordance with GAAP, and, except with respect to such reconciliation, certified by independent certified public accountants of recognized national standing whose opinion shall not be materially qualified with a scope of audit or “going concern” or like qualification or exception (other than with respect to, or resulting from, (x) the occurrence of an impending maturity date of any Indebtedness, (y) any actual or potential inability to satisfy a financial maintenance covenant, including the Financial Performance Covenants or (z) the activities, operations, financial results, assets or liabilities of any Unrestricted Subsidiary). Notwithstanding the foregoing, the obligations in this Section 9.1(a) may be satisfied with respect to financial information of the Borrower and its consolidated Subsidiaries by furnishing (A) the applicable financial statements of any Parent Entity of the Borrower or (B) the Borrower’s (or any Parent Entity thereof), as applicable, filing of a Form 10-K with the SEC; provided that, with respect to each of clauses (A) and (B), (i) to the extent such information relates to a Parent Entity of the Borrower, if and for so long as such Parent Entity has Independent Assets and Operations, such information is accompanied by consolidating information that explains in reasonable detail the differences between the information relating to such Parent Entity and its consolidated Subsidiaries, on the one hand, and the information relating to the Borrower and its consolidated Subsidiaries and the Borrower and its consolidated Restricted Subsidiaries on a standalone basis, on the other hand and (ii) to the extent such information is in lieu of information required to be provided under the first sentence of this Section 9.1(a), such materials are accompanied by an opinion of an independent registered public accounting firm of recognized national standing, which opinion shall not be materially qualified with a scope of audit or “going concern” or like qualification or exception (other than with respect to, or resulting from, (x) the occurrence of an impending maturity date of any Indebtedness, (y) any actual or potential inability to satisfy a financial maintenance covenant, including the Financial Performance Covenants or (z) the activities, operations, financial results, assets or liabilities of any Unrestricted Subsidiary).

 

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(b)         Quarterly Financial Statements. Within the earlier of (i) sixty (60) days after the end of each such fiscal quarter and (ii) five (5) days after the date on which such financial statements are required to be filed with the SEC (after giving effect to any permitted extensions) with respect to each of the first three (3) quarterly accounting periods in each fiscal year of the Borrower, the consolidated balance sheets of the Borrower and the Subsidiaries and, if different, the Borrower and the Restricted Subsidiaries, in each case as at the end of such quarterly period and the related consolidated statements of operations, shareholders’ equity and cash flows and a customary “management’s discussion and analysis” section for such quarterly accounting period and for the elapsed portion of the fiscal year ended with the last day of such quarterly period, setting forth comparative consolidated figures for the related periods in the prior fiscal year or, in the case of such consolidated balance sheet, for the last day of the prior fiscal year (or, in lieu of such unaudited financial statements of the Borrower and the Restricted Subsidiaries, a reconciliation reflecting such financial information for the Borrower and the Restricted Subsidiaries, on the one hand, and the Borrower and the Subsidiaries, on the other hand, reflecting adjustments necessary to eliminate the accounts of Unrestricted Subsidiaries (if any) from such consolidated financial statements), all of which shall be certified by a Financial Officer of the Borrower as fairly presenting in all material respects the financial condition, results of operations, shareholders’ equity and cash flows, of the Borrower and its consolidated Subsidiaries in accordance with GAAP, subject to changes resulting from audit and normal year-end audit adjustments and the absence of footnotes. Notwithstanding the foregoing, the obligations in this Section 9.1(b) may be satisfied with respect to financial information of the Borrower and its consolidated Subsidiaries by furnishing (A) the applicable financial statements of any Parent Entity of the Borrower or (B) the Borrower’s (or any Parent Entity thereof), as applicable, Form 10-Q filed with the SEC; provided that, with respect to each of clauses (A) and (B), to the extent such information relates to a Parent Entity of the Borrower, if and for so long as such Parent Entity has Independent Assets or Operations, such information is accompanied by consolidating information that explains in reasonable detail the differences between the information relating to such Parent Entity and its consolidated Subsidiaries, on the one hand, and the information relating to the Borrower and its consolidated Subsidiaries and the Borrower and its consolidated Restricted Subsidiaries on a standalone basis, on the other.

 

(c)           Officer’s Certificates. At the time of the delivery of the financial statements provided for in Section 9.1(a) and Section 9.1(b), a certificate of a Financial Officer of the Borrower to the effect that no Default or Event of Default exists or, if any Default or Event of Default does exist, specifying the nature and extent thereof, which certificate shall set forth (i) the calculations required to establish whether the Borrower and its Restricted Subsidiaries were in compliance with the applicable Financial Performance Covenants as at the end of such fiscal year or period, as the case may be and (ii) a specification of any change in the identity of the Restricted Subsidiaries, Guarantors and Unrestricted Subsidiaries as at the end of such fiscal year or period, as the case may be, from the Restricted Subsidiaries, Guarantors and Unrestricted Subsidiaries, respectively, provided to the Lenders on the Effective Date or the most recent fiscal year or period, as the case may be.

 

(d)           Notice of Default; Litigation. Promptly after an Authorized Officer of the Borrower or any of the Restricted Subsidiaries obtains actual knowledge thereof, notice of (i) the occurrence of any continuing Default or Event of Default, which notice shall specify the nature thereof and what action the Borrower proposes to take with respect thereto and (ii) any litigation or governmental proceeding pending against the Borrower or any of the Subsidiaries that would reasonably be expected to be determined adversely and, if so determined, to result in a Material Adverse Effect.

 

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(e)           Environmental Matters. Promptly after obtaining actual knowledge of any one or more of the following environmental matters, unless such environmental matters would not, individually, or when aggregated with all other such matters, be reasonably expected to result in a Material Adverse Effect, notice of:

 

(i)            any Environmental Claim brought, filed or threatened in writing against any Credit Party; and

 

(ii)           the actual release or threatened release of any Hazardous Material on, at, under or from any facility owned or leased by a Credit Party in violation of Environmental Laws or as would reasonably be expected to result in liability under Environmental Laws or the conduct of any investigation, or any removal, remedial or other corrective action under Environmental Laws in response to the actual or alleged presence, release or threatened release of any Hazardous Material on, at, under or from any facility owned or leased by a Credit Party.

 

All such notices shall describe in reasonable detail the nature of the claim, investigation, removal or remedial action.

 

(f)            Other Information. With reasonable promptness, subject to the limitations set forth in the last sentences of Section 9.2(a) and Section 13.6, such other information regarding the operations, business affairs and the financial condition of the Borrower or the Restricted Subsidiaries as the Administrative Agent on its own behalf or on behalf of any Lender (acting through the Administrative Agent) may reasonably request in writing from time to time.

 

(g)           Certificate of Authorized Officer - Hedge Agreements. Concurrently with any delivery of each Reserve Report, a certificate of an Authorized Officer of the Borrower, setting forth as of the last Business Day of the most recently ended fiscal year or period, as applicable, a true and complete list of all material commodity Hedge Agreements of the Borrower and each Credit Party, the material terms thereof (in respect of the type, term, effective date, termination date and notional amounts or volumes), the net mark-to-market value thereof (as of the last Business Day of such fiscal year or period, as applicable and for which a mark-to-market value is reasonably available), any new credit support agreements relating thereto not listed on Schedule 8.19 or on any previously delivered certificate delivered pursuant to this clause (g), any margin required or supplied under any credit support document and the counterparty to each such agreement; provided that such certificate shall be required solely to the extent the foregoing certification is not otherwise included in the applicable Reserve Report Certificate delivered in connection with such Reserve Report.

 

(h)           Certificate of Authorized Officer - Gas Imbalances. Concurrently with any delivery of each Reserve Report, a certificate of an Authorized Officer of the Borrower, certifying that as of the last Business Day of the most recently ended fiscal year or period, as applicable, except as specified in such certificate, on a net basis, there are no gas imbalances, ship or pay obligations or other prepayment obligations exceeding 2.5 Bcfe of Hydrocarbon volumes (stated on a gas equivalent basis) in the aggregate, with respect to the Credit Parties’ Oil and Gas Properties that would require any Credit Party to deliver Hydrocarbons either generally or produced from their Oil and Gas Properties at some future time without then or thereafter receiving full payment therefor; provided that such certificate shall be required solely to the extent the foregoing certification is not otherwise included in the applicable Reserve Report Certificate delivered in connection with such Reserve Report.

 

(i)            Certificate of Authorized Officer - Production Report and Lease Operating Statement. Concurrently with any delivery of each Reserve Report in connection with a Scheduled Redetermination, a certificate of an Authorized Officer of the Borrower, setting forth, for each calendar month during the then current fiscal year to date, the volume of production of Hydrocarbons and sales attributable to production of Hydrocarbons (and the prices at which such sales were made and the revenues derived from such sales) for each such calendar month from the Borrowing Base Properties, and setting forth the related ad valorem, severance and production taxes and lease operating expenses attributable thereto for each such calendar month; provided that such certificate shall be required solely to the extent the foregoing certification is not otherwise included in the applicable Reserve Report Certificate delivered in connection with such Reserve Report.

 

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(j)            Lists of Purchasers. At the time of the delivery of the financial statements provided for in Section 9.1(a), a certificate of an Authorized Officer of the Borrower setting forth a list of Persons purchasing Hydrocarbons from the Borrower or any other Credit Party which account for greater than 25% of the revenues resulting from the sale of all Hydrocarbons from the Borrower and such other Credit Parties during the fiscal year for which such financial statements relate.

 

(k)           [Reserved].

 

(l)            Certificate of Authorized Officer - Marketing Agreements. Concurrently with any delivery of each Reserve Report, a certificate of an Authorized Officer of the Borrower, setting forth as of the last Business Day of the most recently ended fiscal year or period, as applicable, a true and complete list of all material marketing agreements for the sale of production of the Credit Parties’ Hydrocarbons at a fixed non-index price (including calls on, or other parties rights to purchase, production, whether or not the same are currently being exercised) that (i) represent in respect of such agreements 2.5% or more of the Borrower’s average monthly production of Hydrocarbon volumes and (ii) have a maturity or expiry date of longer than six (6) months from the last day of such fiscal year or period, as applicable and are not cancellable on sixty (60) days’ notice or less without penalty or detriment; provided that such certificate shall be required solely to the extent the foregoing certification is not otherwise included in the applicable Reserve Report Certificate delivered in connection with such Reserve Report.

 

(m)          Accounts. At the time of the delivery of the financial statements provided for in Section 9.1(a) and Section 9.1(b), a certificate of an Authorized Officer of the Borrower setting forth a list of Deposit Accounts, Securities Accounts and Commodity Accounts that were opened during the fiscal quarter to which such financial statements relate maintained by or for the benefit of any Credit Party together with the deposit bank or securities intermediary for any such account, the account name, the account type, the account number and whether such account is an Excluded Account.

 

(n)          Notice of the Hedge Agreement Termination. To the extent the Borrower or a Restricted Subsidiary terminates any commodity-price Hedge Agreement or enters into a new Hedge Agreement which has the effect of creating an off-setting position under any such Hedge Agreement since the Last Borrowing Base Hedge Reduction and the Borrowing Base Value of such terminated and/or offsetting positions (as reasonably determined by the Borrower) (after taking into account any other Hedge Agreement executed since the Last Borrowing Base Hedge Reduction, including those executed substantially concurrently with the taking of any such action) exceeds in the aggregate 5.0% of the then effective Borrowing Base, the Borrower will give the Lenders prompt written notice of such event.

 

It is understood that documents required to be delivered pursuant to Sections 9.1(a) through (e) and (g) through (n) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Borrower posts such documents, or provides a link thereto on the Borrower’s website on the Internet at the website address listed on Schedule 13.2 or (ii) on which such documents are transmitted by electronic mail to the Administrative Agent; provided that: (i) upon written request by the Administrative Agent, the Borrower shall deliver paper copies of such documents delivered pursuant to Sections 9.1(a), 9.1(b), 9.1(c) and 9.1(f) to the Administrative Agent for further distribution to each Lender until a written request to cease delivering paper copies is given by the Administrative Agent and (ii) the Borrower shall notify (which may be by facsimile or electronic mail) the Administrative Agent of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents. Each Lender shall be solely responsible for timely accessing posted documents or requesting delivery of paper copies of such documents from the Administrative Agent and maintaining its copies of such documents.

 

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Notwithstanding the foregoing, in lieu of furnishing consolidated financial statements of the Borrower or a reconciliation reflecting adjustments necessary to eliminate the accounts of MGY Louisiana LLC (the “Designated Unrestricted Subsidiary”) as specified in Section 9.1(a) and (b), the Borrower may instead furnish, in addition to the consolidated financial statements of the Borrower and its Subsidiaries, separate consolidated financial statements of the Designated Unrestricted Subsidiary and its subsidiaries (the “Designated Unrestricted Subsidiary Financials”) (it being understood that any such annual financial statements shall not be required to be accompanied by an audit) in accordance with the deadlines set forth in Section 9.1(a) and (b) so long as the Designated Unrestricted Subsidiary and its subsidiaries formed or acquired in good faith and not for the purpose of avoiding the requirements of Section 9.1(a) and Section 9.1(b) (the “Unrestricted Subsidiary Group”) shall constitute the only Unrestricted Subsidiaries of the Borrower and the Designated Unrestricted Subsidiary Financials fairly present in all material respects the financial condition of the Unrestricted Subsidiary Group as of the date(s) thereof and their results of operations for the period covered thereby.

 

Section 9.2            Books, Records and Inspections.

 

(a)           The Borrower will, and will cause each Restricted Subsidiary to, permit officers and designated representatives of the Administrative Agent or officers and designated representatives of the Majority Lenders (as accompanied by the Administrative Agent), to visit and inspect any of the properties or assets of the Borrower or such Restricted Subsidiary in whomsoever’s possession to the extent that it is within such party’s control to permit such inspection (and shall use commercially reasonable efforts to cause such inspection to be permitted to the extent that it is not within such party’s control to permit such inspection), and to examine the financial records of the Borrower and any such Restricted Subsidiary and discuss the affairs, finances, accounts and condition of the Borrower or any such Restricted Subsidiary with its and their officers and independent accountants therefor, in each case of the foregoing upon reasonable advance notice to the Borrower, all at such reasonable times and intervals during normal business hours and to such reasonable extent as the Administrative Agent or the Majority Lenders may desire (and subject, in the case of any such meetings or advice from such independent accountants, to such accountants’ customary policies and procedures); provided that, excluding any such visits and inspections during the continuation of an Event of Default (i) only the Administrative Agent on behalf of the Majority Lenders may exercise rights of the Administrative Agent and the Lenders under this Section 9.2 and the Administrative Agent shall not exercise such rights more than two (2) times during any calendar year absent a continuing Event of Default, and (ii) only one such visit per fiscal year shall be at the Borrower’s expense; provided, further, that when an Event of Default exists, the Administrative Agent (or any of its representatives or independent contractors) or any representative of the Majority Lenders may do any of the foregoing at the expense of the Borrower at any time during normal business hours and upon reasonable advance notice. The Administrative Agent and the Majority Lenders shall give the Borrower the opportunity to participate in any discussions with the Borrower’s independent public accountants. Notwithstanding anything to the contrary in Section 9.1(f) or this Section 9.2, neither the Borrower nor any Restricted Subsidiary will be required to disclose, permit the inspection, examination or making copies or abstracts of, or discussion of, any document, information or other matter (i) that constitutes non-financial trade secrets or non-financial proprietary information, (ii) in respect of which disclosure to the Administrative Agent or any Lender (or their respective representatives or contractors) is prohibited by any Requirement of Law or any binding agreement or (iii) that is subject to attorney-client or similar privilege or constitutes attorney work product.

 

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(b)           The Borrower will, and will cause each of the Restricted Subsidiaries to, maintain financial reports as may be required in accordance with GAAP.

 

Section 9.3            Maintenance of Insurance. The Borrower will, and will cause each Restricted Subsidiary to, at all times maintain in full force and effect, pursuant to self-insurance arrangements or with insurance companies that the Borrower believes (in the good faith judgment of the management of the Borrower) are financially sound and reputable at the time the relevant coverage is placed or renewed, insurance in at least such amounts (after giving effect to any self-insurance which the Borrower believes (in the good faith judgment of management of the Borrower) is reasonable and prudent in light of the size and nature of its business) and against at least such risks (and with such risk retentions) as the Borrower believes (in the good faith judgment of management of the Borrower) is reasonable and prudent in light of the size and nature of its business; and will furnish to the Administrative Agent, upon written request from the Administrative Agent, information presented in reasonable detail as to the insurance so carried. The Secured Parties shall be the additional insureds on any such liability insurance as their interests may appear and, if property insurance is obtained, the Collateral Agent shall be the loss payee under any such property insurance; provided that, so long as no Event of Default has occurred and is then continuing, the Secured Parties will provide any proceeds of such property insurance to the Borrower.

 

Section 9.4            Payment of Taxes. The Borrower shall, and shall cause each Restricted Subsidiary to, pay, discharge or otherwise satisfy its obligations in respect of all Tax liabilities, assessments and governmental charges, before the same shall become delinquent or in default, except where (i) the amount or validity thereof is being contested in good faith by appropriate proceedings and the Borrower or a Subsidiary thereof has set aside on its books adequate reserves therefor in accordance with GAAP (or in the case of a Foreign Subsidiary, the comparable accounting principles in the relevant jurisdiction) or (ii) the failure to make payment could not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.

 

Section 9.5            Consolidated Corporate Franchises. The Borrower will do, and will cause each Restricted Subsidiary to do, or cause to be done, all things necessary to preserve and keep in full force and effect its existence, corporate rights and authority, except to the extent that the failure to do so would not reasonably be expected to have a Material Adverse Effect; provided, however, that the Borrower and its Restricted Subsidiaries may consummate any transaction permitted under Section 10.3, 10.4 or 10.5.

 

Section 9.6            Compliance with Statutes, Regulations, Etc. The Borrower will, and will cause each Restricted Subsidiary to, comply with all Requirements of Law applicable to it or its property, including all governmental approvals or authorizations required to conduct its business, and to maintain all such governmental approvals or authorizations in full force and effect, in each case except where the failure to do so would not reasonably be expected to have a Material Adverse Effect.

 

Section 9.7            ERISA.

 

(a)           Promptly after the Borrower knows or has reason to know of the occurrence of any of the following events that, individually or in the aggregate (including in the aggregate such events previously disclosed or exempt from disclosure hereunder, to the extent the liability therefor remains outstanding), would be reasonably likely to have a Material Adverse Effect, the Borrower will deliver to the Administrative Agent a certificate of an Authorized Officer or any other senior officer of the Borrower setting forth details as to such occurrence and the action, if any, that the Borrower or such ERISA Affiliate is required or proposes to take, together with any notices (required, proposed or otherwise) given to or filed with or by the Borrower, such ERISA Affiliate, the PBGC, a Plan participant (other than notices relating to an individual participant’s benefits) or the Plan administrator with respect thereto: (i) that the Borrower or any ERISA Affiliate has incurred or will incur (or has been notified in writing that it will incur) any liability (including any contingent or secondary liability) to or on account of a Plan pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201 or 4204 of ERISA or Section 4971 or 4975 of the Code or (ii) that any ERISA Event or similar event has occurred with respect to a Plan or Foreign Plan.

 

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(b)          Promptly following any request therefor, the Borrower will deliver to the Administrative Agent copies of (i) any documents described in Section 101(k) of ERISA that the Borrower and any of its Subsidiaries may request with respect to any Multiemployer Plan and (ii) any notices described in Section 101(l) of ERISA that the Borrower and any of its Subsidiaries may request with respect to any Multiemployer Plan; provided that if the Borrower or any of its Subsidiaries has not requested such documents or notices from the administrator or sponsor of the applicable Multiemployer Plan, the Borrower or the applicable Subsidiaries shall promptly make a request for such documents or notices from such administrator or sponsor and shall provide copies of such documents and notices promptly after receipt thereof.

 

Section 9.8            Maintenance of Properties. The Borrower will, and will cause each of the Restricted Subsidiaries to, except in each case, where the failure to so comply would not reasonably be expected to result in a Material Adverse Effect (it being understood that this Section 9.8 shall not restrict any transaction otherwise permitted by Section 10.3, 10.4 or 10.5):

 

(a)           operate its Oil and Gas Properties and other material properties or cause such Oil and Gas Properties and other material properties to be operated in a careful and efficient manner in accordance with the practices of the industry and in compliance with all applicable Contractual Requirements and all applicable Requirements of Law, including applicable proration requirements and Environmental Laws, and all applicable Requirements of Law of every other Governmental Authority from time to time constituted to regulate the development and operation of its Oil and Gas Properties and the production and sale of Hydrocarbons and other minerals therefrom;

 

(b)           keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted, and preserve, maintain and keep in good repair, working order and efficiency (ordinary wear and tear excepted) all of its material Oil and Gas Properties and other material properties, including all equipment, machinery and facilities; and

 

(c)           to the extent a Credit Party is not the operator of any property, the Borrower shall use commercially reasonable efforts to cause the operator to operate such property in accordance with customary industry practices.

 

Section 9.9            Transactions with Affiliates. The Borrower will conduct, and cause each of the Restricted Subsidiaries to conduct, all transactions involving aggregate payments or consideration in excess of $40,000,000 with any of its Affiliates (other than the Borrower and the Restricted Subsidiaries or any entity that becomes a Restricted Subsidiary as a result of such transaction) on terms that are substantially as favorable to the Borrower or such Restricted Subsidiary as it would obtain at the time in a comparable arm’s-length transaction with a Person that is not an Affiliate, as determined by the board of directors or managers of the Borrower or such Restricted Subsidiary in good faith; provided that the foregoing restrictions shall not apply to:

 

(a)           the consummation of the Transactions, including the payment of Transaction Expenses;

 

(b)           the issuance of Equity Interests of the Borrower (or any Parent Entity thereof) to the management of the Borrower (or any Parent Entity thereof) or any of its Subsidiaries;

 

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(c)           equity issuances, repurchases, retirements, redemptions or other acquisitions or retirements of Equity Interests by the Borrower (or any Parent Entity thereof) permitted under Section 10.6;

 

(d)           the payment of indemnities and reasonable expenses incurred by any Permitted Holder and its Affiliates in connection with management or monitoring or the provision of other services rendered to the Borrower (or any parent entity thereof) or any of its Subsidiaries;

 

(e)           [reserved];

 

(f)            loans, advances and other transactions between or among the Borrower, any Subsidiary or any joint venture (regardless of the form of legal entity) in which the Borrower or any Subsidiary has invested (and which Subsidiary or joint venture would not be an Affiliate of the Borrower or such Subsidiary, but for the Borrower’s or such Subsidiary’s ownership of Equity Interests in such joint venture or such Subsidiary) to the extent permitted under Article 10;

 

(g)           employment and severance arrangements and health, disability and similar insurance or benefit plans between the Borrower (or any Parent Entity thereof) and the Subsidiaries and their respective future, current or former directors, officers, employees or consultants (including management and employee benefit plans or agreements, subscription agreements or similar agreements pertaining to the repurchase of Equity Interests pursuant to put/call rights or similar rights with future, current or former employees, officers, directors or consultants and equity option or incentive plans and other compensation arrangements) in the ordinary course of business or as otherwise approved by the board of directors or managers of the Borrower (or any Parent Entity thereof);

 

(h)           [reserved];

 

(i)            transactions pursuant to agreements in existence on the Effective Date set forth on Schedule 9.9 or any amendment thereto or arrangement similar thereto to the extent such an amendment or arrangement is not adverse, taken as a whole, to the Lenders in any material respect (as determined by the Borrower in good faith);

 

(j)            Restricted Payments, redemptions, repurchases and other actions permitted under Section 10.6;

 

(k)           payments (including reimbursement of fees and expenses) by the Borrower and any of its Restricted Subsidiaries to any Permitted Holder made for any financial advisory, financing, underwriting or placement services or in respect of other investment banking activities (including in connection with acquisitions or divestitures, whether or not consummated), which payments are approved by the majority of the members of the board of directors or managers or a majority of the disinterested members of the board of directors or managers of the Borrower (or any Parent Entity thereof), in good faith;

 

(l)            any issuance of Equity Interests or other payments, awards or grants in cash, securities, Equity Interests or otherwise pursuant to, or the funding of, employment arrangements, equity options and equity ownership plans approved by the board of directors or board of managers of the Borrower (or any Parent Entity thereof);

 

(m)          transactions with joint ventures for the purchase or sale of Hydrocarbons, goods, equipment and services entered into in the ordinary course of business and in a manner consistent with prudent business practice followed by companies in the industry of the Borrower and its Subsidiaries;

 

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(n)          sales or conveyances of net profits interests for cash at Fair Market Value allowed under Section 10.4;

 

(o)          the issuance, sale or transfer of Equity Interests of the Borrower to Holdings in connection with capital contributions by Holdings to the Borrower;

 

(p)          any transaction in respect of which the Borrower delivers to the Administrative Agent a letter addressed to the board of directors or managers of the Borrower from an accounting, appraisal or investment banking firm, in each case of nationally-recognized standing that is in the good faith determination of the Borrower qualified to render such letter, which letter states that such transaction is (i) fair, from a financial point of view, to the Borrower or such Restricted Subsidiary or (ii) on terms, taken as a whole, that are no less favorable to the Borrower or such Restricted Subsidiary, as applicable, than would be obtained in a comparable arm’s length transaction with a person that is not an Affiliate;

 

(q)          transactions undertaken in good faith (as certified by a responsible financial or accounting officer of the Borrower) for the purpose of improving the consolidated tax efficiency of the Borrower, Holdings and the Subsidiaries and not for the purpose of circumventing any covenant set forth in this Agreement;

 

(r)            customary agreements and arrangements with oil and gas royalty trusts and master limited partnership agreements that comply with the affiliate transaction provisions of such royalty trust or master limited partnership agreement;

 

(s)           payments and distributions by Holdings (and any Parent Entity thereof) and the Subsidiaries to the extent such payments are permitted under Sections 10.6(f)(i) and (v);

 

(t)           Transactions undertaken pursuant to membership in a purchasing consortium;

 

(u)           the payment of customary fees and reasonable out-of-pocket costs to, and indemnities provided on behalf of, future, current or former directors, officers, employees and consultants of Holdings, the Borrower and its Restricted Subsidiaries or any Parent Entity;

 

(v)           Investments permitted under Section 10.5 (other than Sections 10.5(l), (n), (x) and (z) thereof);

 

(w)          [reserved];

 

(x)           the payment of reasonable out-of-pocket costs and expenses relating to registration rights and indemnities provided to shareholders of Holdings or any Parent Entity pursuant to the stockholders agreement or the registration rights agreement entered into on or after the Effective Date in connection therewith or similar equity holders’ agreements or limited liability company agreements;

 

(y)          transactions with customers, clients, joint venture partners, suppliers or purchasers or sellers of goods or services, in each case in the ordinary course of business and otherwise in compliance with the terms of this Agreement that are fair to the Borrower and the Restricted Subsidiaries, in the reasonable determination of the Board of Directors or the senior management of the Borrower, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party;

 

(z)           transactions permitted by Section 10.3 solely for the purpose of (a) forming a holding company or (b) reincorporating in a new jurisdiction;

 

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(aa)         transactions between the Borrower or any of its Restricted Subsidiaries and any Person that is an Affiliate solely because a director of such Person is also a director of the Borrower or any direct or indirect parent of the Borrower; provided, however, that such director abstains from voting as a director of the Borrower or such direct or indirect parent, as the case may be, on any matter involving such other Person;

 

(bb)        transactions with a Person (other than an Unrestricted Subsidiary) that is an Affiliate of the Borrower solely because the Borrower owns, directly or through a Restricted Subsidiary, an Equity Interest in, or controls, such Person;

 

(cc)         payments or loans (or cancellation of loans) to officers, directors, employees or consultants which are approved by a majority of the Board of Directors of the Borrower in good faith;

 

(dd)        payments to or from, and transactions with, any joint venture or Unrestricted Subsidiary in the ordinary course of business (including, without limitation, any cash management activities related thereto);

 

(ee)         any lease entered into between the Borrower or any Restricted Subsidiary, as lessee and any Affiliate of the Borrower, as lessor, which is approved by a majority of the disinterested members of the Board of Directors in good faith or, any lease entered into between the Borrower or any Restricted Subsidiary, as lessee, and any Affiliate of the Borrower, as lessor, in the ordinary course of business;

 

(ff)          pledges to any Person that is not an Affiliate of the Borrower or any of its Restricted Subsidiaries of Equity Interests of Unrestricted Subsidiaries; and

 

(gg)        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.

 

Section 9.10          End of Fiscal Years; Fiscal Quarters. The Borrower will, for financial reporting purposes, cause each of its, and each of its Restricted Subsidiaries’, fiscal years and fiscal quarters to end on dates consistent with past practice; provided, however, that the Borrower may, upon written notice to the Administrative Agent change the financial reporting convention specified above to any other financial reporting convention reasonably acceptable to the Administrative Agent, in which case the Borrower and the Administrative Agent will, and are hereby authorized by the Lenders to, make any adjustments to this Agreement that are necessary in order to reflect such change in financial reporting.

 

Section 9.11          Additional Guarantors, Grantors and Collateral.

 

(a)           Subject to any applicable limitations set forth in the Guarantee or the Security Documents, the Borrower will cause (i) any direct or indirect Domestic Subsidiary (other than any Excluded Subsidiary) formed or otherwise purchased or acquired after the Effective Date (including pursuant to a Permitted Acquisition) and (ii) any Domestic Subsidiary of the Borrower that ceases to be an Excluded Subsidiary, in each case within forty-five (45) days from the date of such formation, acquisition or cessation, as applicable (or such longer period as the Administrative Agent may agree in its reasonable discretion) to (x) execute (A) a supplement to the Guarantee, substantially in the form of Exhibit I thereto, in order to become a Guarantor, (B) a supplement to the Collateral Agreement, substantially in the form of Exhibit I thereto, in order to become a grantor and a pledgor thereunder, and (C) a joinder to the Intercompany Note and (y) if reasonably requested by the Administrative Agent or the Collateral Agent, within forty-five (45) days from the date of such formation, acquisition or cessation, as applicable (or such longer period as the Administrative Agent may agree in its reasonable discretion), deliver to the Administrative Agent a signed copy of an opinion of counsel for the Credit Parties addressed to the Administrative Agent, the Collateral Agent and the Lenders and reasonably acceptable to the Administrative Agent as to such matters set forth in this Section 9.11 as the Administrative Agent or the Collateral Agent may reasonably request.

 

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(b)          Subject to any applicable limitations set forth in the Collateral Agreement, the Borrower will pledge, and, if applicable, will cause each Subsidiary Guarantor (or Person required to become a Subsidiary Guarantor pursuant to Section 9.11(a)) to pledge, to the Collateral Agent, for the benefit of the Secured Parties, (i) all of the Equity Interests (other than any Excluded Equity Interests) of each Subsidiary directly owned by the Borrower or any Subsidiary Guarantor (or Person required to become a Guarantor pursuant to Section 9.11(a)), in each case, formed or otherwise purchased or acquired after the Effective Date, pursuant to supplements to the Collateral Agreement substantially in the form of Exhibit I thereto and (ii) except with respect to intercompany Indebtedness, all evidences of Indebtedness for borrowed money in a principal amount in excess of $20,000,000 (individually) that is owing to the Borrower or any Guarantor (or Person required to become a Guarantor pursuant to Section 9.11(a)) (which shall be evidenced by a promissory note), in each case pursuant to supplements to the Collateral Agreement substantially in the form of Exhibit I thereto.

 

(c)           The Borrower agrees that all Indebtedness of the Borrower and each of its Restricted Subsidiaries that is owing to any Credit Party (or a Person required to become a Subsidiary Guarantor pursuant to Section 9.11(a)) shall be evidenced by the Intercompany Note, which promissory note shall be required to be pledged to the Collateral Agent, for the benefit of the Secured Parties, pursuant to the Collateral Agreement.

 

(d)           In connection with each redetermination (but not any adjustment) of the Borrowing Base, the Borrower shall review the applicable Reserve Report, if any, and the list of current Mortgaged Properties (as described in Section 9.14(c)), to ascertain whether the PV-9 of the Mortgaged Properties (calculated at the time of redetermination) meets the Collateral Coverage Minimum after giving effect to exploration and production activities, acquisitions, Dispositions and production. In the event that the PV-9 of the Mortgaged Properties (calculated at the time of redetermination) does not meet the Collateral Coverage Minimum, then the Borrower shall, and shall cause the Credit Parties to, grant, within seventy-five (75) days of delivery of the certificate required under Section 9.14(c) (or such longer period as the Administrative Agent may agree in its reasonable discretion), to the Collateral Agent as security for the Obligations a Lien (subject to Liens permitted by Section 10.2) on additional Oil and Gas Properties not already subject to a Lien of the Security Documents such that, after giving effect thereto, the PV-9 of the Mortgaged Properties (calculated at the time of redetermination) meets the Collateral Coverage Minimum and if reasonably requested by the Administrative Agent or the Collateral Agent deliver to the Administrative Agent a signed copy of an opinion of counsel for the Credit Parties addressed to the Administrative Agent, the Collateral Agent and the Lenders and reasonably acceptable to the Administrative Agent as to such matters set forth in this Section 9.11(d) as the Administrative Agent or the Collateral Agent may reasonably request. All such Liens will be created and perfected by and in accordance with the provisions of the Security Documents, including, if applicable, any additional Mortgages. In order to comply with the foregoing, if any Restricted Subsidiary places a Lien on its property and such Subsidiary is not a Guarantor, then it shall become a Guarantor and comply with the provisions of Sections 9.11(a), (b) and (c).

 

(e)           Without limitation of clause (a), (b) or (d) above, substantially simultaneously with the delivery of any Mortgage on any Oil and Gas Property for the benefit of any other secured parties securing Indebtedness that is subject to a Customary Intercreditor Agreement, the Borrower shall, or shall cause the relevant Credit Party to, grant to the Collateral Agent as security for the Obligations a Lien on such Oil and Gas Property. All such Liens will be created and perfected by and in accordance with the provisions of the Security Documents, including, if applicable, any additional Mortgages. In order to comply with the foregoing, if any Restricted Subsidiary places a Lien on its property and such Subsidiary is not a Guarantor, then it shall become a Guarantor and comply with the provisions of Sections 9.11(a) and (b).

 

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Section 9.12           Use of Proceeds.

 

(a)           The Borrower will use the proceeds of Loans and any Letters of Credit for financing the Effective Date Acquisition, refinancing, as applicable, the Existing Credit Agreement, the payment of Transaction Expenses, the acquisition, development and exploration of Oil and Gas Properties and working capital and other general corporate purposes of the Borrower and its Subsidiaries (including, without limitation, for Permitted Acquisitions and any other transaction expressly permitted hereunder).

 

(b)           The Borrower will use Swingline Loans and Letters of Credit for general corporate purposes and in the case of Letters of Credit, to support deposits required under purchase agreements pursuant to which the Borrower or one or more Subsidiaries may acquire Oil and Gas Properties.

 

Section 9.13           Further Assurances.

 

(a)           Subject to the applicable limitations set forth in the Security Documents, the Borrower will, and will cause each other Credit Party to, execute any and all further documents, financing statements, agreements and instruments, and take all such further actions (including the filing and recording of financing statements, fixture filings, assignments of as-extracted collateral arising from the Borrowing Base Properties, mortgages, deeds of trust and other documents) that the Collateral Agent or the Required Lenders may reasonably request, in order to grant, preserve, protect and perfect the validity and priority of the security interests created or intended to be created by the applicable Security Documents, all at the expense of the Borrower and the Restricted Subsidiaries.

 

(b)           [Reserved].

 

(c)            Notwithstanding anything herein to the contrary, if the Collateral Agent and the Borrower reasonably determine in writing that the cost of creating or perfecting any Lien on any property is excessive in relation to the benefits afforded to the Lenders thereby, then such property may be excluded from the Collateral for all purposes of the Credit Documents. In addition, notwithstanding anything to the contrary in this Agreement, the Collateral Agreement, or any other Credit Document, (i) the Administrative Agent may grant extensions of time for or waivers of the requirements of the creation or perfection of security interests in or the obtaining of title opinions or other title information, legal opinions, appraisals, flood insurance and surveys with respect to particular assets (including extensions beyond the Effective Date for the perfection of security interests in the assets of the Credit Parties on such date) where it reasonably determines, in consultation with the Borrower, that perfection or obtaining of such items is not required by law or cannot be accomplished without undue effort or expense by the time or times at which it would otherwise be required by this Agreement or the other Credit Documents, (ii) Liens required to be granted from time to time pursuant to this Agreement and the Security Documents shall be subject to exceptions and limitations set forth in the Security Documents and, to the extent appropriate in any applicable jurisdiction, as otherwise agreed between the Administrative Agent and the Borrower and (iii) the Administrative Agent and the Borrower may make such modifications to the Security Documents, and execute and/or consent to such easements, covenants, rights of way or similar instruments (and Administrative Agent may agree to subordinate the lien of any mortgage to any such easement, covenant, right of way or similar instrument or record or may agree to recognize any tenant pursuant to an agreement in a form and substance reasonably acceptable to the Administrative Agent), as are reasonable or necessary and otherwise permitted by this Agreement and the other Credit Documents.

 

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(d)            Notwithstanding the foregoing provisions of this Section 9.13 or anything in this Agreement or any other Credit Document to the contrary: (A) Liens required to be granted from time to time shall be subject to exceptions and limitations set forth in the Collateral Agreement and the other Credit Documents and, to the extent appropriate in any applicable jurisdictions, as agreed between the Administrative Agent and the Borrower; (B) the Collateral shall not include any Excluded Assets; and (C) no actions in any jurisdiction outside of the United States or that are necessary to comply with any Requirement of Law of any jurisdiction outside of the United States shall be required in order to create any security interest in assets located, titled, registered or filed outside of the United States or to perfect such security interests (it being understood that there shall be no collateral agreements, security agreements, pledge agreements, or share charge (or mortgage) agreements governed under the laws of any jurisdiction outside of the United States); provided that nothing in this Section 9.13 or any other provision of the Credit Documents shall affect or impair the Borrower’s obligation to meet the Collateral Coverage Minimum.

 

Section 9.14           Reserve Reports.

 

(a)            On or before March 1st and September 1st of each year (beginning with March 1, 2027, with respect to the first Scheduled Redetermination following the Effective Date), the Borrower shall furnish to the Administrative Agent a Reserve Report evaluating, as of the immediately preceding December 31st and June 30th, respectively, the Proved Reserves of the Borrower and the Credit Parties located within the geographic boundaries of the United States and other applicable Oil and Gas Properties of the Credit Parties that the Borrower desires to have included in any calculation of the Borrowing Base. Each Reserve Report as of December 31 and June 30 shall be prepared, at the sole election of the Borrower, (x) by one or more Approved Petroleum Engineers or (y) by or under the supervision of the chief engineer of the Borrower or a Restricted Subsidiary; provided that Reserve Reports as of December 31 of each year that are prepared by or under the supervision of the chief engineer of the Borrower or a Restricted Subsidiary shall in each case be accompanied by an audit letter issued by the applicable Approved Petroleum Engineer that has audited at least 85% of the Proved Reserves attributable to the Borrowing Base Properties of the Credit Parties by value.

 

(b)           In the event of an Interim Redetermination, the Borrower shall furnish to the Administrative Agent a Reserve Report prepared by one or more Approved Petroleum Engineers or prepared under the supervision of the chief engineer of the Borrower or a Restricted Subsidiary. For any Interim Redetermination pursuant to Section 2.14(b), the Borrower shall provide such Reserve Report with an “as of” date as required by the Administrative Agent, as soon as possible, but in any event no later than thirty (30) days, in the case of any Interim Redetermination requested by the Borrower or forty-five (45) days, in the case of any Interim Redetermination requested by the Administrative Agent or the Lenders, following the receipt of such request.

 

(c)           With the delivery of each Reserve Report, the Borrower shall provide to the Administrative Agent a Reserve Report Certificate from an Authorized Officer of the Borrower certifying that in all material respects:

 

(i)            in the case of Reserve Reports prepared by or under the supervision of the chief engineer of the Borrower or a Restricted Subsidiary (other than December 31 Reserve Reports), such Reserve Report has been prepared, except as otherwise specified therein, in accordance with the procedures used in the immediately preceding December 31 Reserve Report or the Initial Reserve Report, if no December 31 Reserve Report has been delivered;

 

(ii)           the information contained in the Reserve Report and any other information delivered in connection therewith is true and correct in all material respects (it being understood that projections concerning volumes and production and cost estimates contained in each Reserve Report are necessarily based upon opinions, estimates and projections and that neither the Borrower nor such Authorized Officer warrants that such opinions, estimates and projections will ultimately prove to have been accurate);

 

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(iii)          assuming that all applicable Governmental Authorities have granted approvals, made recordations and taken such other actions as are necessary in connection with the Transactions and any assignments made in connection therewith, except as set forth in an exhibit to such certificate, to the best of its knowledge, the Borrower or another Credit Party has good and defensible title to the Borrowing Base Properties evaluated in such Reserve Report (other than those (x) Disposed of in compliance with Section 10.4 since delivery of such Reserve Report, (y) leases that have expired in accordance with their terms and (z) with title defects disclosed in writing to the Administrative Agent) and such Borrowing Base Properties are free of all Liens except for Liens permitted by Section 10.2;

 

(iv)          except as set forth on an exhibit to such certificate, on a net basis there are no gas imbalances, take or pay or other prepayments in excess of the volume specified in Section 8.17 with respect to the Credit Parties’ Oil and Gas Property evaluated in such Reserve Report that would require the Borrower or any other Credit Party to deliver Hydrocarbons either generally or produced from such Oil and Gas Properties at some future time without then or thereafter receiving full payment therefor;

 

(v)           none of the Borrowing Base Properties have been Disposed of since the date of the last Borrowing Base determination except those Borrowing Base Properties listed on such certificate as having been Disposed of; and

 

(vi)           the certificate shall also attach, as schedules thereto, a list of (1) all material marketing agreements (which are not cancellable on sixty (60) days’ notice or less without penalty or detriment) entered into subsequent to the later of the Effective Date and the most recently delivered Reserve Report for the sale of production of the Credit Parties’ Hydrocarbons at a fixed non-index price (including calls on, or other parties rights to purchase, production, whether or not the same are currently being exercised) that represent in respect of such agreements 2.5% or more of the Borrower’s average monthly production of Hydrocarbon volumes and that have a maturity date or expiry date of longer than six (6) months from the last day of such fiscal year or period, as applicable and (2) all Borrowing Base Properties evaluated by such Reserve Report that are Collateral and demonstrating that the PV-9 of the Collateral (calculated at the time of delivery of such Reserve Report) meets the Collateral Coverage Minimum.

 

Section 9.15           Change in Business. The Borrower and its Restricted Subsidiaries, taken as a whole, will not fundamentally and substantively alter the character of their business, taken as a whole, from the business conducted by them on the Effective Date, Industry Investments by the Borrower and its Restricted Subsidiaries and other business activities incidental, reasonably related, complementary, incidental, synergistic or ancillary thereto or reasonable extensions to any of the foregoing.

 

Section 9.16           Title Information.

 

(a)            On or before the date of delivery to the Administrative Agent of each Reserve Report required by Section 9.14(a) following the Effective Date, the Borrower will deliver, if reasonably requested by the Administrative Agent, title information consistent with usual and customary standards for the geographic regions in which the Borrowing Base Properties are located, taking into account the size, scope and number of leases and wells of the Borrower and its Restricted Subsidiaries as is required to demonstrate satisfactory title on eighty-five percent (85%) of the PV-9 value of the Borrowing Base Properties included in the most recently delivered Reserve Report.

 

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(b)           If, within thirty (30) days of the Administrative Agent’s request therefor in accordance with Section 9.16(a) (or such longer period as to which the Administrative Agent may agree in its reasonable discretion), the Borrower does not comply with the requirement to provide title information on eighty-five percent (85%) of the PV-9 value of the Borrowing Base Properties included in the most recently delivered Reserve Report in accordance with Section 9.16(a), such default shall not be a Default, but instead the Administrative Agent and/or the Required Lenders shall have the right (which may be exercised in their sole discretion from time to time, and any failure to so exercise such remedy at any time shall not be a waiver as to any future exercise of such remedy by the Administrative Agent or the Lenders) to send a written notice to the Borrower, the Administrative Agent and/or the other Lenders (as applicable) that the affected Borrowing Base Property shall not count towards the 85.0% title requirement and shall be deemed not to have been included in the most recently delivered Reserve Report and that the then outstanding Borrowing Base shall be reduced by an amount as determined by the Required Lenders to cause the Borrower to be in compliance with the requirement to provide title on eighty-five percent (85%) of the PV-9 value of the Borrowing Base Properties included in the most recently delivered Reserve Report set forth in Section 9.16(a). This new Borrowing Base shall become effective immediately after receipt of such notice.

  

Section 9.17           Holdings Covenant.

 

(a)            Holdings covenants and agrees that on the Effective Date and thereafter, until the Total Commitment and each Letter of Credit have terminated (unless such Letters of Credit have been collateralized on terms and conditions reasonably satisfactory to the relevant Issuing Banks following the termination of the Total Commitment) and the Loans, the Swingline Loans and Unpaid Drawings, together with interest, fees and all other Obligations incurred hereunder (other than Hedging Obligations under Secured Hedge Agreements, Cash Management Obligations under Secured Cash Management Agreements or contingent indemnification obligations not then due and payable), are paid in full, unless the Majority Lenders shall otherwise consent in writing, Holdings will not engage at any time in any business operating activity other than the following activities which shall not constitute the operation of a business and shall in all cases be permitted to the extent not otherwise restricted under the terms of this Agreement: (i) the ownership of the Equity Interests in the Borrower, (ii) the entry into and performance of its obligations under and in connection with the Credit Documents, the Senior Unsecured Notes, the Bridge Facility, the Senior WildFire Notes (in each case, including any Permitted Refinancing Indebtedness in respect thereof), the consummation of the Transactions and the Guarantee and performance of Indebtedness not prohibited by Section 10.1, (iii) financing activities, including the incurrence and performance of Indebtedness (provided that neither the Borrower nor any Subsidiary of the Borrower shall Guarantee any such Indebtedness), the issuance of securities, the payment of dividends and distribution (including any Tax distributions not prohibited under this Agreement) and making contributions to the capital of the Borrower or any other Credit Party, (iv) issuing, selling and redeeming its Equity Interests, (v) filing tax reports, paying taxes and performing other customary obligations related thereto (including contesting taxes), (vi) holding directors’ and shareholders’ meetings, preparing corporate and similar records and other activities required to maintain its corporate or other legal structure (including the ability to incur fees, costs and expenses relating to such maintenance and to perform activities relating to its and any of its Parent Entities’ officers, directors, managers and employees) or to comply with applicable laws or to participate in tax, accounting or other administrative matters as a member of the consolidated, combined, unitary or similar group of the Credit Parties, including compliance with applicable law and legal, tax and accounting matters related thereto, (vii) preparing reports to, and preparing and making notices to and filings with, Governmental Authorities and to its holders of Equity Interests, (viii) receiving, and holding proceeds of, Restricted Payments from the Borrower and the Subsidiaries and distributing the proceeds thereof to the extent not prohibited by Section 9.9 or Section 10.6, (ix) holding any cash and Permitted Investments, (x) [reserved], (xi) the performance of obligations under and compliance with its organizational documents, any demands or requests from or requirements of a Governmental Authority or any applicable law, ordinance, regulation, rule, order, judgment, decree or permit, including as a result of or in connection with the activities of its Subsidiaries, (xii) activities in connection with the formation and maintenance of the existence of any Parent Entity (it being understood that notwithstanding anything to the contrary herein or in any Credit Document, there shall be no restriction on the formation of any Parent Entity), (xiii) providing indemnification to officers and directors, (xiv) activities permitted hereunder or as otherwise required by Requirements of Law and (xv) the entry into and performance of obligations with respect to contracts and other arrangements in connection with, and activities incidental to, the business or activities described in each foregoing clause of this Section 9.17 or customary for passive holding companies.

 

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(b)           Holdings will not create, incur, assume or suffer to exist any Lien upon any Equity Interests of the Borrower, whether now owned or hereafter acquired, other than nonconsensual Liens of a type permitted by Section 10.2 or Liens of a type permitted by Section 10.2(a), (e) (solely to the extent relating to Liens incurred under clause (a)) or (u) (solely to the extent relating to Indebtedness permitted by Section 10.1(p)) and (z).

 

(c)            Notwithstanding the foregoing, so long as no Event of Default has occurred and is continuing or would result therefrom, Holdings may merge, amalgamate or consolidate with any other Person; provided that (i) Holdings shall be the continuing or surviving Person or (ii) if the Person formed by or surviving any such merger, amalgamation or consolidation is not Holdings or is a Person into which Holdings has been liquidated (any such Person, the “Successor Holdings”), (A) the Successor Holdings shall be an entity organized or existing under the laws of the United States, any state thereof, the District of Columbia or any territory thereof, (B) the Successor Holdings shall expressly assume all the obligations of Holdings under this Agreement and the other Credit Documents to which Holdings is a party pursuant to a supplement hereto or thereto in form reasonably satisfactory to the Administrative Agent, (C) the Borrower shall have delivered to the Administrative Agent an officer’s certificate and an opinion of counsel, each stating that such merger or consolidation and such supplement to this Agreement or any Security Document comply with this Agreement and (D) the Administrative Agent shall have received at least five (5) days prior to the date of such merger, amalgamation or consolidation all documentation and other information about Successor Holdings required under applicable “know your customer” and anti-money laundering rules and regulations, including the PATRIOT Act that has been requested by the Administrative Agent; provided, further, that if the foregoing are satisfied, the Successor Holdings will succeed to, and be substituted for, Holdings under this Agreement.

 

Section 9.18           Accounts. The Borrower shall, and shall cause each of the other Credit Parties to, in respect of any Deposit Account, Commodity Account or Securities Account (in each case, other than any Excluded Account) of the Borrower or such Credit Party (a) in existence on the Effective Date, deliver to the Administrative Agent a duly executed Control Agreement no later than the 30th day after the Effective Date (as may be extended by the Administrative Agent in its reasonable discretion) and (b) established after the Effective Date, deliver to the Administrative Agent duly executed Control Agreement no later than the 90th day after the date on which such Deposit Account, Commodity Account or Securities Account is established (or such later date as the Administrative Agent may reasonably agree) (and it being agreed the applicable Credit Party shall not direct or redirect funds into any such account until a duly executed Control Agreement has been established with respect to the applicable account) and (c) acquired after the Effective Date as a result of a Permitted Acquisition or other transaction not prohibited by this Agreement acquired after the Effective Date, deliver to the Administrative Agent duly executed Control Agreement no later than the 90th day after the date on which such Deposit Account, Commodity Account or Securities Account is acquired (or such later date as the Administrative Agent may reasonably agree) (and it being agreed that no proceeds of Loans shall be directed or deposited into any such account and no Credit Party or any Subsidiary thereof shall direct or redirect funds into any such account other than for ordinary course operational matters, in each case, until a duly executed Control Agreement has been established with respect to the applicable account).

 

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Section 9.19           Post-Closing Obligations. The Borrower shall, and shall cause each of the other Credit Parties to provide the documentation and complete the undertakings set forth on Schedule 9.19 within the time periods specified therein (as each may be extended by the Administrative Agent in its reasonable discretion, not to be unreasonably withheld, conditioned or delayed).

 

Section 9.20           Anti-Corruption Laws, Anti-Money Laundering Laws, and Sanctions. The Borrower will not request any Loan or Letter of Credit, and the Borrower shall not use, and shall ensure that its Subsidiaries and its or their respective directors, officers, employees and agents shall not use, the proceeds of any Loan or Letter of Credit, directly or, to its knowledge, indirectly, (i) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws or Anti-Money Laundering Laws or (ii) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, in each case in violation of Sanctions or in any manner that would result in the violation of any Sanctions applicable to any party hereto.

 

ARTICLE 10
Negative Covenants

 

The Borrower hereby covenants and agrees that on the Effective Date and thereafter, until Payment in Full has occurred:

 

Section 10.1           Limitation on Indebtedness. The Borrower will not, and will not permit any of the Restricted Subsidiaries to, create, incur, assume or suffer to exist any Indebtedness other than the following:

 

(a)           Indebtedness arising under the Credit Documents (including pursuant to Section 2.17 and any Permitted Refinancing Indebtedness issued or incurred to Refinance such Indebtedness);

 

(b)           [reserved];

 

(c)           unsecured Indebtedness (including Guarantee Obligations thereunder) in respect of the Senior Unsecured Notes and the Senior WildFire Notes (and any fees, underwriting discounts, premiums and other costs and expenses incurred in connection with the foregoing) and any unsecured Permitted Refinancing Indebtedness issued or incurred to Refinance such Indebtedness;

 

(d)           Indebtedness of (i) the Borrower or any Guarantor owing to the Borrower or any Subsidiary; provided that any such Indebtedness owing by a Credit Party to a Subsidiary that is not a Guarantor shall (x) be evidenced by the Intercompany Note or (y) otherwise be outstanding on the Effective Date so long as such Indebtedness is evidenced by an Intercompany Note or otherwise subject to subordination terms substantially identical to the subordination terms set forth in the Intercompany Note, in each case, to the extent permitted by Requirements of Law and not giving rise to material adverse tax consequences, (ii) any Subsidiary that is not a Guarantor owing to any other Subsidiary that is not a Guarantor and (iii) to the extent permitted by Section 10.5, any Subsidiary that is not a Guarantor owing to the Borrower or any Guarantor;

 

(e)           Indebtedness in respect of any bankers’ acceptance, bank guarantees, letter of credit, warehouse receipt or similar facilities entered into in the ordinary course of business or consistent with past practice or industry practice (including in respect of workers compensation claims, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement-type obligations regarding workers compensation claims);

 

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(f)            subject to compliance with Section 10.5, Guarantee Obligations incurred by (i) Restricted Subsidiaries in respect of Indebtedness or other obligations of the Borrower or other Restricted Subsidiaries that is permitted to be incurred under this Agreement (except that a Restricted Subsidiary that is not a Credit Party may not, by virtue of this Section 10.1(f), guarantee Indebtedness that such Restricted Subsidiary could not otherwise incur under this Section 10.1) and (ii) the Borrower in respect of Indebtedness of Restricted Subsidiaries that is permitted to be incurred under this Agreement; provided that (A) if the Indebtedness being guaranteed under this Section 10.1(f) is subordinated to the Obligations, such Guarantee Obligations shall be subordinated to the Guarantee of the Obligations on terms at least as favorable to the Lenders as those contained in the subordination of such Indebtedness and (B) no guarantee by any Restricted Subsidiary of any Permitted Additional Debt (or Indebtedness under clause (c) above) shall be permitted unless such Restricted Subsidiary shall have also provided a guarantee of the Obligations substantially on the terms set forth in the Guarantee;

 

(g)           Guarantee Obligations (i) incurred in the ordinary course of business in respect of obligations of (or to) suppliers, customers, franchisees, lessors, licensees or sublicensees or (ii) otherwise constituting Investments permitted by Sections 10.5(d), (g), (i), (j), (k), (r), (s), (t) and (u);

 

(h)           (i) Indebtedness (including Indebtedness arising under Capital Leases) incurred prior to or within three hundred sixty-five (365) days following the acquisition, construction, lease, repair, replacement, expansion or improvement of assets (real or personal, and whether through the direct purchase of property or the Equity Interests of a Person owning such property) to finance the acquisition, construction, lease, repair, replacement expansion, or improvement of such assets; (ii) Indebtedness arising under Capital Leases, other than (A) Capital Leases in effect on the Effective Date and (B) Capital Leases entered into pursuant to subclause (i) above (provided that, in the case of each of the foregoing subclauses (i) and (ii), the Borrower shall be in Compliance with the Leverage Ratio Covenant on a Pro Forma Basis immediately after giving effect to the incurrence of such Indebtedness (and the use of proceeds thereof); and (iii) any Permitted Refinancing Indebtedness issued or incurred to Refinance any such Indebtedness; provided, that the aggregate principal amount of Indebtedness permitted by subclauses (i), (ii) and (iii) of this Section 10.1(h) shall not exceed at any time outstanding the greater of $120,000,000 and 2.0% of Consolidated Total Assets;

 

(i)             Indebtedness outstanding on the Effective Date (provided that any Indebtedness that is in excess of $2,000,000 individually shall only be permitted under this clause (i) to the extent such Indebtedness is set forth on Schedule 10.1) and any Permitted Refinancing Indebtedness issued or incurred to Refinance such Indebtedness;

 

(j)             Indebtedness in respect of Hedge Agreements, subject to the limitations set forth in Section 10.10;

 

(k)            (i)            Indebtedness of a Person or Indebtedness attaching to the assets of a Person that, in either case, becomes a Restricted Subsidiary (or is a Restricted Subsidiary that survives a merger with such Person or any of its Subsidiaries) or Indebtedness attaching to the assets that are acquired by the Borrower or any Restricted Subsidiary, in each case, after the Effective Date as the result of a Permitted Acquisition or other Investment permitted under Section 10.5; provided that:

 

(A)          such Indebtedness existed at the time such Person became a Restricted Subsidiary or at the time such assets were acquired and, in each case, was not created in anticipation thereof;

 

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(B)           such Indebtedness is not guaranteed in any respect by the Borrower or any Restricted Subsidiary (other than any such Person that so becomes a Restricted Subsidiary or is the survivor of a merger with such Person or any of its Subsidiaries);

 

(C)           (1) the Equity Interests of such Person are pledged to the Collateral Agent to the extent required under Section 9.11(b) and (2) such Person executes a supplement to each of the Guarantee and the Collateral Agreement and a joinder to the Intercompany Note, in each case to the extent required under Section 9.11; provided that the assets covered by such pledges and security interests may, at the option of the Borrower, to the extent permitted by Section 10.2, equally and ratably secure such Indebtedness assumed with the Secured Parties subject to a Customary Intercreditor Agreement; provided, further, that the requirements of this clause (C) shall not apply to any Indebtedness of the type that could have been incurred under Section 10.1(h);

 

(D)           and the property acquired shall not constitute Oil and Gas Properties (and any Person acquired in such Permitted Acquisition or other Investment shall not own or hold any Oil and Gas Properties); and

 

(E)           immediately after giving effect to the assumption of any such Indebtedness, such acquisition and any related transactions, the Borrower shall be in compliance with the Leverage Ratio Covenant on a Pro Forma Basis; and

 

(ii)           any Permitted Refinancing Indebtedness issued or incurred to Refinance such Indebtedness;

 

(l)             (i)            Indebtedness incurred to finance a Permitted Acquisition or other Investment; provided that:

 

(A)           (1) the Equity Interests of such Person acquired in such Permitted Acquisition or other Investment, if any, is pledged to the Collateral Agent to the extent required under Section 9.11(b) and (2) such Person executes supplements to each of the Guarantee and the Collateral Agreement and a joinder to the Intercompany Note, in each case to the extent required under Section 9.11;

 

(B)           immediately after giving effect to the incurrence of any such Indebtedness, such acquisition and any related transactions, the Borrower shall be in compliance with the Leverage Ratio Covenant on a Pro Forma Basis;

 

(C)           the maturity of such Indebtedness is not earlier than, and no mandatory repayment or redemption is required prior to, ninety-one (91) days after the Latest Maturity Date of the Loans (determined at the time of issuance or incurrence) (other than customary change of control or asset sale offers or upon any event of default or Indebtedness incurred pursuant to a customary “bridge” facility);

 

(D)           the holders of such Indebtedness have no recourse to property other than the property so acquired and the property acquired shall not constitute Oil and Gas Properties (and any Person acquired in such Permitted Acquisition or other Investment shall not own or hold any Oil and Gas Properties);

 

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(E)           such Indebtedness is not guaranteed in any respect by the Borrower or any Subsidiary Guarantor except to the extent such guarantee is permitted under Section 10.5; and

 

(ii)           any Permitted Refinancing Indebtedness issued or incurred to Refinance such Indebtedness;

 

(m)           [reserved];

 

(n)           Indebtedness in respect of performance bonds, bid bonds, appeal bonds, surety bonds and completion guarantees and similar obligations not in connection with money borrowed, and obligations in respect of letters of credit, bank guaranties or instruments related thereto, in each case provided in the ordinary course of business or consistent with past practice, including those incurred to secure health, safety and environmental obligations in the ordinary course of business or consistent with past practice or industry practice;

 

(o)           (i) other additional Indebtedness and (ii) any Permitted Refinancing Indebtedness issued or incurred to Refinance such Indebtedness; provided that the aggregate principal amount of Indebtedness outstanding at any time pursuant to this Section 10.1(o) shall not at the time of incurrence thereof and immediately after giving effect thereto and the use of proceeds thereof on a Pro Forma Basis, exceed the greater of $450,000,000 and 7.5% of Consolidated Total Assets (subject to Section 1.12(h) with respect to any Indebtedness incurred pursuant to Section 10.1(o)(ii), measured as of the date of incurrence of such Indebtedness based upon the financial statements most recently available prior to such date) except, in the case of Indebtedness incurred pursuant to Section 10.1(o)(ii), to the extent permitted pursuant to the definition of Permitted Refinancing Indebtedness;

 

(p)           (i) Indebtedness in respect of Permitted Additional Debt; provided that, (x) immediately after giving effect to the incurrence or issuance thereof and the use of proceeds therefrom, the Borrower shall be in compliance with the Leverage Ratio Covenant on a Pro Forma Basis and (y) the Borrowing Base shall be adjusted to the extent required by Section 2.14(e) and (ii) any Permitted Refinancing Indebtedness issued or incurred to Refinance such Indebtedness;

 

(q)           Cash Management Obligations, Cash Management Services and other Indebtedness in respect of netting services, automatic clearing house arrangements, employees’ credit or purchase cards, overdraft protections and similar arrangements in each case incurred in the ordinary course of business;

 

(r)            Indebtedness incurred in the ordinary course of business in respect of obligations of the Borrower or any Restricted Subsidiary to pay the deferred purchase price of goods or services or progress payments in connection with such goods and services;

 

(s)            Indebtedness arising from agreements of the Borrower or any Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations (including earn-outs), in each case, whether payable with cash and/or Equity Interests, assumed or entered into in connection with any Permitted Acquisitions, other Investments permitted by Section 10.5 and the Disposition of any business, assets or Equity Interests not prohibited hereunder;

 

(t)             Indebtedness of the Borrower or any Restricted Subsidiary consisting of (i) obligations to pay insurance premiums or (ii) obligations contained in firm transportation or supply agreements or other take or pay contracts, in each case arising in the ordinary course of business;

 

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(u)           Indebtedness representing deferred compensation to employees, consultants or independent contractors of the Borrower or, to the extent attributable to the ownership or operation of the Borrower and its Subsidiaries any direct or indirect parent thereof (it being understood that 100% of such compensation shall be deemed attributable to the ownership and operation of the Borrower and its Subsidiaries at all times when Holdings owns no material assets other than the Equity Interests of the Borrower) and the Restricted Subsidiaries incurred in the ordinary course of business or consistent with past practice;

 

(v)           Indebtedness consisting of promissory notes issued by the Borrower or any Guarantor to current or former officers, managers, consultants, directors and employees (or their respective spouses, former spouses, successors, executors, administrators, heirs, legatees or distributees) to finance the purchase or redemption of Equity Interests of the Borrower (or any direct or indirect parent thereof) permitted by Section 10.6;

 

(w)           Indebtedness consisting of obligations of the Borrower and the Restricted Subsidiaries under deferred compensation or other similar arrangements incurred by such Person in connection with the Transactions, Permitted Acquisitions or any other Investment permitted hereunder;

 

(x)            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;

 

(y)           [reserved];

 

(z)            [reserved];

 

(aa)          (i) 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 and (ii) any Permitted Refinancing Indebtedness issued or incurred to Refinance such Indebtedness, in principal amount, when aggregated with the outstanding principal amount of Indebtedness incurred pursuant to this Section 10.1(aa), not to exceed, at the time of incurrence thereof, the greater of $180,000,000 and 3.0% of Consolidated Total Assets (subject to Section 1.12(h) with respect to any Indebtedness incurred pursuant to Section 10.1(aa)(ii), measured as of the date of incurrence of such Indebtedness based on the financial statements most recently available prior to such date) except, in the case of Indebtedness incurred pursuant to Section 10.1(aa)(ii), to the extent permitted pursuant to the definition of Permitted Refinancing Indebtedness;

 

(bb)          (i) Indebtedness in an aggregate principal amount not to exceed 100% of the net cash proceeds received by the Borrower after the Effective Date from the issuance and sale of its Equity Interests or in connection with the contribution of cash to the capital of the Borrower (other than Disqualified Stock and Cure Amounts); provided that (A) such Indebtedness is incurred within one hundred eighty (180) days after such contribution to the Borrower is made and (B) such Indebtedness is designated as “Contribution Indebtedness” in a certificate from an Authorized Officer on the date incurred; and (ii) any Permitted Refinancing Indebtedness in respect of any such Indebtedness;

 

(cc)          Indebtedness incurred pursuant to the Bridge Facility; and

 

(dd)         all premiums (if any), interest (including post-petition interest), fees, expenses, charges, and additional or contingent interest on obligations described in clauses (a) through (cc) above.

 

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The 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 of the same class, accretion or amortization 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, will, in each case, not be deemed to be an incurrence of Indebtedness for purposes of this Section 10.1. The principal amount of any Indebtedness incurred to refinance other Indebtedness, if incurred in a different currency from the Indebtedness or Disqualified Stock, as applicable, being refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such respective Indebtedness 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 shall be the principal amount thereof that would be shown on a balance sheet of the Borrower dated such date prepared in accordance with GAAP.

 

Section 10.2           Limitation on Liens. The Borrower will not, and will not permit any of the Restricted Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any property or assets of any kind (real or personal, tangible or intangible) of the Borrower or any Restricted Subsidiary, whether now owned or hereafter acquired, except:

 

(a)            Liens arising under the Credit Documents to secure the Obligations (including Liens in respect of any Letter of Credit or Letter of Credit Application or Liens contemplated by Section 3.7) or permitted in respect of any Mortgaged Property by the terms of the applicable Mortgage;

 

(b)           Permitted Liens;

 

(c)            (x) Liens (including liens arising under Capital Leases to secure Capital Lease obligations) securing Indebtedness permitted pursuant to Section 10.1(h); provided that (i) such Liens attach concurrently with or within three hundred sixty-five (365) days after the acquisition, lease, repair, replacement, construction, expansion or improvement (as applicable) financed thereby, (ii) other than the property financed by such Indebtedness, such Liens do not at any time encumber any property, except for replacements thereof and accessions and additions to such property and the proceeds and the products thereof and customary security deposits and (iii) with respect to Capital Leases, such Liens do not at any time extend to or cover any assets (except for accessions and additions to such assets, replacements and products thereof and customary security deposits) other than the assets subject to, or acquired, constructed, repaired, replaced or improved with the proceeds of, such Indebtedness; provided that in each case individual financings provided by one lender may be cross collateralized to other financings provided by such lender (and its Affiliates) and (y) Liens on the assets of a Restricted Subsidiary that is not a Credit Party securing Indebtedness of a Restricted Subsidiary that is permitted pursuant to Section 10.1;

 

(d)           Liens existing on the Effective Date; provided that any Lien securing Indebtedness in excess of $2,000,000 individually or $10,000,000 in the aggregate (when taken together with all other Liens securing obligations outstanding in reliance on this clause (d) that are not listed on Schedule 10.2(d)) shall only be permitted to the extent such Lien is listed on Schedule 10.2(d);

 

(e)            Liens to secure any refinancing, refunding, extension, renewal or replacement (or successive refinancings, refundings, extensions, renewals or replacements) as a whole, or in part, of any Indebtedness secured by any Lien permitted by this Section 10.2; provided, however, that (x) such new Lien shall be limited to all or part of the same type of property that secured the original Indebtedness (plus improvements on and accessions to such property and products and proceeds thereof) (or upon or in after-acquired property (i) that is affixed or incorporated into the property covered by such Lien or (ii) if the terms of such Indebtedness require or include a pledge of after acquired property), (y) the Indebtedness secured by such Lien at such time is not increased to any amount greater than the sum of (A) the outstanding principal amount or, if greater, committed amount of the applicable Indebtedness at the time the original Lien became a Lien permitted hereunder, and (B) an amount necessary to pay any fees and expenses, including premiums, related to such refinancing, refunding, extension, renewal or replacement and (z) on the date of the incurrence of the Indebtedness secured by such Liens, the grantors of any such Liens shall not be any different than the grantors of the Liens securing the debt being refinanced, refunded, extended, renewed or replaced;

 

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(f)           Liens existing on the assets of any Person that becomes a Subsidiary, or existing on assets acquired (other than Liens on the Equity Interests of any Person that becomes a Restricted Subsidiary), pursuant to a Permitted Acquisition or other Investment permitted by Section 10.5; provided that (1) if the Liens on such assets secure Indebtedness, such Indebtedness is permitted under Section 10.1 and (2) such Liens attach at all times only to the same assets that such Liens (or upon or in after-acquired property that is (i) affixed or incorporated into the property covered by such Lien, (ii) after-acquired property subject to a Lien securing Indebtedness permitted under Section 10.1, 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), (iii) the proceeds and products thereof) attached to, and to the extent such Liens secure Indebtedness, secure only the same Indebtedness (or any Permitted Refinancing Indebtedness incurred to Refinance such Indebtedness) that such Liens secured, immediately prior to such Permitted Acquisition or other Investment and (iv) if the Liens on such assets secure Indebtedness and attach to any Collateral, such Liens are Junior Liens and the representative of the holders of such Indebtedness becomes party to a Customary Intercreditor Agreement as a “Junior Representative” (as defined in such Customary Intercreditor Agreement);

 

(g)           Liens on the Equity Interests of any Person and the assets of such Person, in each case, that becomes a Restricted Subsidiary pursuant to a Permitted Acquisition or other Investment permitted by Section 10.5, or the assets of such a Restricted Subsidiary or its Subsidiaries, in each case, to secure Indebtedness incurred pursuant to Section 10.1(l); provided that such Liens attach at all times only to the Equity Interests or assets of such Restricted Subsidiary and its Subsidiaries;

 

(h)           Liens securing Indebtedness or other obligations (i) of the Borrower or a Restricted Subsidiary in favor of a Credit Party and (ii) of any Restricted Subsidiary that is not a Credit Party in favor of any Restricted Subsidiary that is not a Credit Party;

 

(i)             Liens (i) of a collecting bank arising under Section 4-210 of the UCC on items in the course of collection, (ii) attaching to commodity trading accounts or other commodity brokerage accounts incurred in the ordinary course of business and (iii) in favor of a banking institution arising as a matter of law encumbering deposits (including the right of set-off) or other funds maintained with a financial institution (including the right of setoff) and that are within the general parameters customary in the banking industry or arising pursuant to such banking institution’s general terms and conditions;

 

(j)             Liens (i) on cash advances in favor of the seller of any property to be acquired in an Investment permitted pursuant to Section 10.5 to be applied against the purchase price for such Investment and (ii) consisting of an agreement to Dispose of any property in a transaction permitted under Section 10.4, in each case, solely to the extent such Investment or Disposition, as the case may be, would have been permitted on the date of the creation of such Lien;

 

(k)            Liens arising out of conditional sale, title retention, consignment or similar arrangements for sale or purchase of goods entered into by the Borrower or any of the Restricted Subsidiaries in the ordinary course of business permitted by this Agreement;

 

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(l)             Liens deemed to exist in connection with Investments in repurchase agreements permitted under Section 10.5;

 

(m)           Liens encumbering reasonable customary initial deposits and margin deposits and similar Liens attaching to brokerage accounts incurred in the ordinary course of business and not for speculative purposes;

 

(n)           Liens that are contractual rights of set-off (i) relating to the establishment of depository relations with banks not given in connection with the issuance or incurrence of Indebtedness, (ii) relating to pooled deposit or sweep accounts of the Borrower or any Restricted Subsidiary to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business of the Borrower and the Restricted Subsidiaries or (iii) relating to purchase orders and other agreements entered into with customers of the Borrower or any Restricted Subsidiary in the ordinary course of business;

 

(o)           Liens solely on any cash earnest money deposits made by the Borrower or any of the Restricted Subsidiaries in connection with any letter of intent or purchase agreement;

 

(p)           Liens on insurance policies and the proceeds thereof securing the financing of the premiums with respect thereto;

 

(q)           Liens in respect of Production Payments and Reserve Sales, subject to adjustment of the Borrowing Base as set forth in Section 2.14(g) to the extent required under Section 10.4(b);

 

(r)            the prior right of consignees and their lenders under consignment arrangements entered into in the ordinary course of business;

 

(s)           agreements to subordinate any interest of the Borrower or any Restricted Subsidiary in any accounts receivable or other proceeds arising from inventory consigned by the Borrower or any Restricted Subsidiary pursuant to an agreement entered into in the ordinary course of business;

 

(t)            [reserved];

 

(u)            Liens securing any Indebtedness permitted by Sections 10.1(f) (solely and to the same extent that the Indebtedness guaranteed by such Guarantee Obligations is permitted to be subject to a Lien hereunder), (m) (as long as such Liens attach only to assets of Foreign Subsidiaries and Domestic Subsidiaries that are not Subsidiary Guarantors), (n), (p) (provided that, in the case of clause (p), such Liens are Junior Liens on the Collateral and subject a Customary Intercreditor Agreement), (q), (s) and (x);

 

(v)            Liens arising pursuant to Section 107(l) of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9607(l), or other Environmental Law, unless such Lien (i) by action of the lienholder, or by operation of law, takes priority over any Liens arising under the Credit Documents on the property upon which it is a Lien, and (ii) such Lien materially impairs the use of the property covered by such Lien for the purposes for which such property is held;

 

(w)           [reserved];

 

(x)            Liens on Equity Interests in a joint venture securing obligations of such joint venture so long as the assets of such joint venture do not constitute Collateral;

 

(y)           Liens on cash or Permitted Investments held by a trustee under any indenture or other debt agreement issued in escrow pursuant to customary escrow arrangements pending the release thereof, or under any indenture or other debt agreement pursuant to customary discharge, redemption or defeasance provisions, in each case solely to the extent the relevant release, discharge, redemption or defeasance would not be prohibited hereunder; and

 

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(z)            (i) additional Liens on property not constituting Borrowing Base Properties securing obligations not to exceed the greater of $120,000,000 and 2.0% of Consolidated Total Assets in the aggregate and (ii) Junior Liens on Collateral so long as in the case of this clause (z)(ii), the outstanding principal amount of the obligations secured thereby, when aggregated with the outstanding principal amount of other obligations secured by Liens permitted under this clause (z)(ii), at the time of the incurrence thereof and immediately after giving effect thereto and the use of proceeds thereof on a Pro Forma Basis, does not exceed the greater of $120,000,000 and 2.0% of Consolidated Total Assets in the aggregate.

 

No intention to subordinate the first priority Lien granted in favor of the Administrative Agent, the Collateral Agent and the Secured Parties is to be hereby implied or expressed by the permitted existence of the Liens permitted under this Section 10.2 or the use of the phrase “subject to” when used in connection with Permitted Liens, Liens permitted by this Section 10.2 or otherwise.

 

Section 10.3           Limitation on Fundamental Changes. Except as permitted by Section 10.4 or 10.5, the Borrower will not, and will not permit any of the Restricted Subsidiaries to, consummate any merger, consolidation or amalgamation, or liquidate, divide, wind up or dissolve itself (or suffer any liquidation or dissolution), or Dispose of, all or substantially all its business units, assets or other properties, except that:

 

(a)            any Subsidiary of the Borrower or any other Person may be merged, amalgamated or consolidated with or into the Borrower; provided that (i) the Borrower shall be the continuing or surviving Person (and the Borrower shall remain an entity organized or existing under the laws of the United States, any state thereof) or, in the case of a merger, amalgamation or consolidation with or into the Borrower, the Person formed by or surviving any such merger, amalgamation or consolidation (if other than the Borrower) shall be an entity organized or existing under the laws of the United States, any state thereof, the District of Columbia or any territory thereof (the Borrower or such Person, as the case may be, being herein referred to as the “Successor Borrower”), (ii) the Successor Borrower (if other than the Borrower) shall expressly assume all the obligations of the Borrower under this Agreement and the other Credit Documents pursuant to a supplement hereto or thereto in form reasonably satisfactory to the Administrative Agent, (iii) no Event of Default or Loan Limit Deficiency has occurred and is continuing at the date of such merger, amalgamation or consolidation or would result from such consummation of such merger, amalgamation or consolidation, (iv) such merger, amalgamation or consolidation does not adversely affect the Collateral in any material respect, (v) if such merger, amalgamation or consolidation involves the Borrower and a Person that, prior to the consummation of such merger, amalgamation or consolidation, is not a Subsidiary of the Borrower (A) the Successor Borrower shall be in compliance with the Financial Performance Covenant on a Pro Forma Basis immediately after giving effect to such merger, amalgamation or consolidation, (B) each Guarantor, unless it is the other party to such merger, amalgamation or consolidation or unless the Successor Borrower is the Borrower, shall have by a supplement to the Guarantee confirmed that its Guarantee shall apply to the Successor Borrower’s obligations under this Agreement, (C) each Subsidiary grantor and each Subsidiary pledgor, unless it is the other party to such merger, amalgamation or consolidation or unless the Successor Borrower is the Borrower, shall have by a supplement to the Credit Documents confirmed that its obligations thereunder shall apply to the Successor Borrower’s obligations under this Agreement, (D) if requested by the Administrative Agent, each mortgagor of a Mortgaged Property, unless it is the other party to such merger, amalgamation or consolidation or unless the Successor Borrower is the Borrower, shall have by an amendment to or restatement of the applicable Mortgage confirmed that its obligations thereunder shall apply to the Successor Borrower’s obligations under this Agreement, (E) the Borrower shall have delivered to the Administrative Agent an officer’s certificate stating that such merger, amalgamation or consolidation and any supplements to the Credit Documents preserve the enforceability of the Guarantee and the perfection and priority of the Liens under the Security Documents, (F) [reserved]; provided, further, that if the foregoing are satisfied, the Successor Borrower (if other than the Borrower) will succeed to, and be substituted for, the Borrower under this Agreement and (G) such merger, amalgamation or consolidation shall comply with all the conditions set forth in the definition of the term “Permitted Acquisition” or is otherwise permitted under Section 10.5; and (vi) at least five (5) days prior thereto, the Administrative Agent shall have received (x) notice of such pending merger, amalgamation or consolidation and (y) all documentation and other information about such Subsidiary or other Person required under applicable “know your customer” and anti-money laundering rules and regulations, including the PATRIOT Act, that has been requested by the Administrative Agent;

 

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(b)           any Subsidiary of the Borrower or any other Person may be merged, amalgamated or consolidated with or into any one or more Subsidiaries of the Borrower; provided that (i) in the case of any merger, amalgamation or consolidation involving one or more Restricted Subsidiaries, (A) a Restricted Subsidiary shall be the continuing or surviving Person or (B) the Borrower shall take all steps necessary to cause the Person formed by or surviving any such merger, amalgamation or consolidation (if other than a Restricted Subsidiary) to become a Restricted Subsidiary, (ii) in the case of any merger, amalgamation or consolidation involving one or more Guarantors, unless otherwise permitted by Section 10.5, a Guarantor shall be the continuing or surviving Person or the Person formed by or surviving any such merger, amalgamation or consolidation (if other than a Guarantor) shall execute a supplement to the Guarantee, the Collateral Agreement and any applicable Mortgage, and a joinder to the Intercompany Note, each in form and substance reasonably satisfactory to the Collateral Agent in order for the surviving Person to become a Guarantor, and pledgor, mortgagor and grantor of Collateral for the benefit of the Secured Parties and to acknowledge and agree to the terms of the Intercompany Note, (iii) no Event of Default has occurred and is continuing on the date of such merger, amalgamation or consolidation or would result from the consummation of such merger, amalgamation or consolidation, (iv) if such merger, amalgamation or consolidation involves a Subsidiary and a Person that, prior to the consummation of such merger, amalgamation or consolidation, is not a Restricted Subsidiary of the Borrower, (A) the Borrower shall be in compliance with the Financial Performance Covenants on a Pro Forma Basis immediately after giving effect to such merger, amalgamation or consolidation, (B) the Borrower shall have delivered to the Administrative Agent an officer’s certificate stating that such merger, amalgamation or consolidation and such supplements to any Credit Document preserve the enforceability of the Guarantee and the perfection and priority of the Liens under the Collateral Agreement and (C) such merger, amalgamation or consolidation shall comply with all the conditions set forth in the definition of the term “Permitted Acquisition” or is otherwise permitted under Section 10.5; and (v) the Administrative Agent shall have received at least five (5) days prior to the date of such merger, amalgamation or consolidation all documentation and other information about such Subsidiary or other Person required under applicable “know your customer” and anti-money laundering rules and regulations, including the PATRIOT Act that has been requested by the Administrative Agent;

 

(c)           any Restricted Subsidiary that is not a Guarantor may (i) merge, amalgamate or consolidate with or into any other Restricted Subsidiary and (ii) Dispose of any or all of its assets (upon voluntary liquidation or otherwise) to the Borrower, a Guarantor or any other Restricted Subsidiary of the Borrower;

 

(d)           any Subsidiary Guarantor may (i) merge, amalgamate or consolidate with or into the Borrower or any other Subsidiary Guarantor, (ii) merge, amalgamate or consolidate with or into any other Subsidiary which is not a Guarantor or Dispose of any or all of its assets (upon voluntary liquidation or otherwise) to any other Subsidiary that is not a Guarantor so long as after giving effect to such transaction the Collateral Coverage Minimum would be satisfied and the Borrower shall be in compliance with Section 9.11 on a Pro Forma Basis determined as if such merger, consolidation or amalgamation or Disposition had occurred as of the last day of the previous fiscal quarter and without regard to the 45-day timeframe provided in Section 9.11; provided that if such Subsidiary Guarantor is not the surviving entity, such merger, amalgamation or consolidation shall be deemed to be, and any such Disposition shall be, an “Investment” and subject to the limitations set forth in Section 10.5 and (iii) Dispose of any or all of its assets (upon voluntary liquidation or otherwise) to the Borrower or any other Guarantor;

 

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(e)           any Restricted Subsidiary may liquidate or dissolve if (i) the Borrower determines in good faith that such liquidation or dissolution is in the best interests of the Borrower and is not materially disadvantageous to the Lenders and (ii) to the extent such Restricted Subsidiary is a Credit Party, any assets or business of such Restricted Subsidiary not otherwise Disposed of or transferred in accordance with Section 10.4 or 10.5, in the case of any such business, discontinued, shall be transferred to, or otherwise owned or conducted by, a Credit Party after giving effect to such liquidation or dissolution;

 

(f)            the Borrower and its Restricted Subsidiaries may consummate the Transactions;

 

(g)           the Borrower and the Restricted Subsidiaries may consummate a merger, dissolution, liquidation, amalgamation, consolidation or Disposition, the purpose of which is to effect a Disposition permitted pursuant to Section 10.4 or an Investment permitted by Section 10.5; and

 

(h)           any merger the sole purpose of which is to reincorporate or reorganize a Credit Party in another jurisdiction in the United States shall be permitted as long as such merger does not adversely affect the value of the Collateral in any material respect and the surviving entity assumes all Obligations of the applicable Credit Parties under the Credit Documents and delivers any applicable information requested by the Administrative Agent or any Lender under applicable “know your customer” and anti-money laundering rules and regulations, including the PATRIOT Act.

 

Section 10.4           Limitation on Sale of Assets. The Borrower will not, and will not permit any of the Restricted Subsidiaries to, (x) convey, sell, lease, sell and leaseback, assign, transfer (including via a Farm-Out Agreement and any Production Payments and Reserve Sales) or otherwise dispose (including Liquidating any Hedge Agreement) (each of the foregoing a “Disposition”) of any of its property, business or assets (including receivables and leasehold interests), whether now owned or hereafter acquired or (y) sell to any Person (other than the Borrower or a Guarantor) any shares owned by it of any Restricted Subsidiary’s Equity Interests, except that:

 

(a)           the Borrower and the Restricted Subsidiaries may Dispose of (i) inventory and other goods held for sale, including Hydrocarbons, obsolete, worn out, used or surplus equipment, vehicles and other assets (other than accounts receivable) in the ordinary course of business, (ii) Permitted Investments, and (iii) assets for the purposes of charitable contributions or similar gifts to the extent such assets are not material to the ability of the Borrower and its Restricted Subsidiaries, taken as a whole, to conduct its business in the ordinary course;

 

(b)           the Borrower and the Restricted Subsidiaries may Dispose of any Oil and Gas Properties or any interest therein or the Equity Interests of any Restricted Subsidiary or of any Minority Investment owning Oil and Gas Properties (and including, but without limitation, Dispositions in respect of Production Payments and Reserve Sales and in connection with net profits interests, operating agreements, Farm-In Agreements, Farm-Out Agreements, joint exploration and development agreements and other agreements customary in the oil and gas industry for the purpose of developing such Oil and Gas Properties); provided that such Disposition is for Fair Market Value; provided, further, that if such Disposition of Oil and Gas Properties or of any Equity Interests of any Restricted Subsidiary or Minority Investment owning Oil and Gas Properties involves Borrowing Base Properties included in the most recently delivered Reserve Report and the aggregate Borrowing Base Value of all such Borrowing Base Properties Disposed of since the later of (i) the last redetermination date and (ii) the last adjustment of the Borrowing Base made pursuant to Section 2.14(g) exceeds 5.0% of the then-effective Borrowing Base, then no later than two (2) Business Days after the date of consummation of any such Disposition, the Borrower shall provide notice to the Administrative Agent of such Disposition and the Borrowing Base Properties so Disposed and the Borrowing Base shall be adjusted in accordance with the provisions of Section 2.14(g); provided, further, that to the extent that the Borrower is notified by the Administrative Agent that a Loan Limit Deficiency could result from an adjustment to the Borrowing Base resulting from such Disposition, after the consummation of such Disposition(s), the Borrower shall have received net cash proceeds, or shall have cash on hand, sufficient to eliminate any such potential Loan Limit Deficiency after giving effect to such Disposition;

 

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(c)           the Borrower and the Restricted Subsidiaries may Dispose of property or assets to the Borrower or to a Restricted Subsidiary; provided that if the transferor of such property is a Credit Party (i) the transferee thereof must either be a Credit Party or (ii) such transaction is permitted under Section 10.5;

 

(d)           the Borrower and any Restricted Subsidiary may effect any transaction permitted by Section 10.2, 10.3 (other than Section 10.3(g)), 10.5 (other than Section 10.5(x)) or 10.6;

 

(e)           the Borrower and the Restricted Subsidiaries may lease, sublease, license or sublicense (on a non-exclusive basis with respect to any intellectual property) real property (other than leases in respect of Oil and Gas Property), personal or intellectual property in the ordinary course of business;

 

(f)            Dispositions (including like-kind exchanges) of property (other than Borrowing Base Properties) to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property or (ii) the proceeds of such Disposition are applied to the purchase price of such replacement property, in each case under Section 1031 of the Code or otherwise;

 

(g)           Dispositions of Hydrocarbon Interests to which no Proved Reserves are attributable and Farm-Out Agreements with respect to undeveloped acreage to which no Proved Reserves are attributable and assignments in connection with such Farm-Out Agreements;

 

(h)           Dispositions of Investments in joint ventures (regardless of the form of legal entity) to the extent required by, or made pursuant to, customary buy/sell arrangements between the joint venture parties set forth in joint venture arrangements and similar binding arrangements to the extent the same would be permitted under Section 10.5(j);

 

(i)             any issuance or sale of Equity Interests in connection with the consummation of the Transactions;

 

(j)             transfers of property subject to a Casualty Event or in connection with any condemnation proceeding with respect to Collateral;

 

(k)            Dispositions of accounts receivable in true sale transactions (i) in connection with the collection or compromise thereof or (ii) to the extent the proceeds thereof are used to prepay any Loans then outstanding;

 

(l)             the unwinding of any Hedge Agreement (subject to the terms of Section 2.14(f));

 

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(m)           Dispositions of Oil and Gas Properties or any interest therein or the Equity Interests of any Restricted Subsidiary or of any Minority Investment owning Oil and Gas Properties that are not Borrowing Base Properties and other assets not included in the Borrowing Base;

 

(n)           any issuance or sale of Equity Interests in, or sale of Indebtedness or other securities of, an Unrestricted Subsidiary (or a Restricted Subsidiary which owns an Unrestricted Subsidiary, so long as such Restricted Subsidiary owns no assets other than the Equity Interests of such Unrestricted Subsidiary) for Fair Market Value;

 

(o)           any swap of assets (other than Permitted Investments) in exchange for assets of the same type of comparable or greater value or usefulness to the business of the Borrower and its Subsidiaries as a whole, as determined in good faith by the management of the Borrower;

 

(p)           (i) the abandonment or lapse of intellectual property that is not material to the operation of the business of the Borrower and its Restricted Subsidiaries and (ii) any Disposition of intellectual property licenses, which, in the aggregate, does not materially impair the operation of the business of the Borrower and its Restricted Subsidiaries; and

 

(q)           Disposition of any asset between or among the Borrower and/or its Restricted Subsidiaries as a substantially concurrent interim Disposition in connection with a transaction permitted by Section 10.3, or in connection with an Investment otherwise permitted pursuant to Section 10.5 or a Disposition otherwise permitted pursuant to clauses (a) through (p) above.

 

To the extent any Collateral is Disposed of as expressly permitted by this Section 10.4 to any Person other than a Credit Party, such Collateral shall be sold free and clear of the Liens created by the Credit Documents, and, if requested by the Administrative Agent, upon the certification by the Borrower that such Disposition is permitted by this Agreement, the Administrative Agent shall be authorized to take any actions deemed appropriate in order to effect the foregoing.

 

Section 10.5           Limitation on Investments. The Borrower will not, and will not permit any of the Restricted Subsidiaries, to (i) purchase or acquire (including pursuant to any merger, consolidation or amalgamation with a person that is not a Wholly owned Subsidiary immediately prior to such merger, consolidation or amalgamation) any Equity Interests, evidences of Indebtedness or other securities of any other Person, (ii) make any loans or advances to or guarantees of the Indebtedness of any other Person, or (iii) purchase or otherwise acquire (in one transaction or a series of related transactions) (x) all or substantially all of the property and assets or business of another Person or (y) assets constituting a business unit, line of business or division of such Person (each, an “Investment”), except:

 

(a)           extensions of trade credit and purchases of assets and services (including purchases of inventory, supplies and materials) in the ordinary course of business;

 

(b)           Investments in assets that constituted Permitted Investments at the time such Investments were made;

 

(c)           loans and advances to officers, directors, employees and consultants of the Borrower (or any direct or indirect parent thereof) or any of its Restricted Subsidiaries (i) for reasonable and customary business-related travel, entertainment, relocation and analogous ordinary business purposes (including employee payroll advances), (ii) in connection with such Person’s purchase of Equity Interests of the Borrower (or any direct or indirect parent thereof; provided that, to the extent such loans and advances are made in cash, the amount of such loans and advances used to acquire such Equity Interests shall be contributed to the Borrower in cash) and (iii) for purposes not described in the foregoing subclauses (i) and (ii); provided that the aggregate principal amount outstanding pursuant to subclause (iii) shall not exceed the greater of $20,000,000 and 0.30% of Consolidated Total Assets;

 

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(d)           (i) Investments existing on, or made pursuant to legally binding written commitments in existence on, the Effective Date as set forth on Schedule 10.5(d), (ii) Investments existing on the Effective Date of the Borrower or any Subsidiary in any other Subsidiary and (iii) any extensions, renewals or reinvestments thereof, so long as the amount of any Investment made pursuant to this clause (d) is not increased at any time above the amount of such Investment set forth on Schedule 10.5(d) (other than (x) pursuant to an increase as required by the terms of any such Investment as in existence on the Effective Date or (y) as otherwise permitted under this Section 10.5);

 

(e)           any Investment acquired by the Borrower or any of its Restricted Subsidiaries: (i) in exchange for any other Investment, accounts receivable or endorsements for collection or deposit held by the Borrower or any such Restricted Subsidiary in each case in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization of, or settlement of delinquent accounts and disputes with or judgments against, the issuer of such other Investment or accounts receivable (including any trade creditor or customer), (ii) in satisfaction of judgments against other Persons, (iii) as a result of a foreclosure by the Borrower or any of its Restricted Subsidiaries with respect to any secured Investment or other transfer of title with respect to any secured Investment in default or (iv) as a result of the settlement, compromise or resolution of litigation, arbitration or other disputes with Persons who are not Affiliates;

 

(f)           (i) Investments to the extent that payment for such Investments is made with Qualified Equity Interests of Holdings or a Parent Entity or (ii) Investments made out of the net cash proceeds of an offering of Qualified Equity Interests of Holdings or a Parent Entity to the extent contributed to the Borrower or a Restricted Subsidiary so long as such Investment is made within 180 days of such offering;

 

(g)           Investments (i) by the Borrower in any Guarantor or by any Guarantor in the Borrower, and (ii) by any Restricted Subsidiary that is not a Guarantor in Holdings, the Borrower or any other Restricted Subsidiary; provided, that Investments by any Restricted Subsidiary that is not a Guarantor in the Borrower or any Guarantor shall be subordinated in right of payment to the Loans, and (iii) by the Borrower or any Guarantor in any Restricted Subsidiary that is not a Guarantor; provided, that the aggregate amount outstanding pursuant to this Section 10.5(g)(iii)  at the time such Investment is made, would not exceed the greater of $120,000,000 and 2.0% of Consolidated Total Assets (measured as of the date such Investment is made based upon the financial statements most recently available prior to such date);

 

(h)           Investment by the Borrower or any Guarantor in any Restricted Subsidiary that is not a Guarantor, provided that, such Investments are made with Excluded Contribution Assets within thirty (30) days after the date such assets were designated as such;

 

(i)           Investments constituting Permitted Acquisitions;

 

(j)           Investments (including but not limited to (i) Minority Investments and Investments in Unrestricted Subsidiaries, (ii) Investments in joint ventures (regardless of the form of legal entity) or similar Persons that do not constitute Restricted Subsidiaries, (iii) Investments in Subsidiaries that are not Credit Parties and (iv) Investments in respect of royalty trusts and master limited partnerships), in each case valued at the Fair Market Value (determined by the Borrower acting in good faith) of such Investment at the time each such Investment is made; provided that, such Investments (i) are made with Excluded Contribution Assets within thirty (30) days after the date such assets were designated as such or (ii) without duplication of the preceding clause (i), do not exceed an aggregate amount outstanding pursuant to this Section 10.5(j)(ii) equal to the sum of (A) the net cash proceeds received by the Borrower or any of its Restricted Subsidiaries from a Disposition of Excluded Contribution Assets, in each case, to the extent not otherwise applied in determining the permissibility of a transaction under the Credit Documents where such permissibility was or is (or may have been) contingent on receipt of such amount or utilization of such amount for a specified purpose, (B) the greater of (I) $120,000,000 and (II) 2.0% of Consolidated Total Assets (measured as of the date such Investment is made based upon the financial statements most recently available prior to such date) and (C) an amount equal to any repayments, interest, returns, profits, distributions, income and similar amounts actually received in cash in respect of any such Investment described in this Section 10.5(j) (which amount shall not exceed the amount of such Investment valued at the Fair Market Value of such Investment at the time such Investment was made);

 

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(k)           Investments made at any such time, (i) so long as (A) immediately after giving effect thereto on a Pro Forma Basis no Event of Default or Loan Limit Deficiency shall have occurred and be continuing, (B) Available Commitments are not less than 20.0% of the then effective Aggregate Elected Commitment Amount (on a Pro Forma Basis immediately after giving effect to such Investment) and (C) the Consolidated Total Debt to EBITDAX Ratio shall not be greater than 2.75 to 1.00 (on a Pro Forma Basis after giving effect to such Investment) or (ii) so long as (A) no Event of Default or Loan Limit Deficiency shall have occurred and be continuing and (B) no Loans are outstanding under this Agreement;

 

(l)            Investments constituting non-cash proceeds of Dispositions of assets to the extent permitted by Section 10.4 or any other disposition of assets not constituting a Disposition;

 

(m)           Investments made to repurchase or retire Equity Interests of the Borrower or any Parent Entity thereof owned by any employee or any stock ownership plan or key employee stock ownership plan of the Borrower (or any direct or indirect parent thereof); provided that such Investment is otherwise permitted by Section 10.6 (other than Section 10.6(c) and 10.6(f)(ix));

 

(n)           Investments consisting of Restricted Payments permitted under Section 10.6 (other than Section 10.6(c) and 10.6(f)(ix));

 

(o)           loans and advances to any direct or indirect parent of the Borrower in lieu of, and not in excess of the amount of, Restricted Payments to the extent permitted to be made to such parent in accordance with Section 10.6;

 

(p)           Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors and other credits to suppliers in the ordinary course of business;

 

(q)           Investments in the ordinary course of business consisting of endorsements for collection or deposit and customary trade arrangements with customers consistent with past practices;

 

(r)            advances of payroll payments to employees, consultants or independent contractors or other advances of salaries or compensation to employees, consultants or independent contractors, in each case in the ordinary course of business;

 

(s)           guarantee obligations of the Borrower or any Restricted Subsidiary of leases (other than Capital Leases) or of other obligations that do not constitute Indebtedness, in each case entered into in the ordinary course of business;

 

(t)            Investments held by a Person acquired (including by way of merger, amalgamation or consolidation) after the Effective Date otherwise in accordance with this Section 10.5 to the extent that such Investments were not made in contemplation of or in connection with such acquisition, merger, amalgamation or consolidation and were in existence on the date of such acquisition, merger, amalgamation or consolidation;

 

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(u)           Investments in Industry Investments and in interests in additional Oil and Gas Properties and gas gathering systems related thereto or Investments related to Farm-Out Agreements, Farm-In Agreements, joint operating, joint venture (other than a joint venture in the form of a partnership, corporation, or limited liability company), joint development or other area of mutual interest agreements, other similar industry investments, gathering systems, pipelines or other similar oil and gas exploration and production business arrangements whether through direct ownership or ownership through a joint venture or similar arrangement (other than a joint venture in the form of a partnership, corporation, or limited liability company);

 

(v)           to the extent constituting an Investment, the Effective Date Acquisition Agreement;

 

(w)           Investments in Hedge Agreements permitted by Section 10.1 and Section 10.10;

 

(x)           Investments (excluding loans and advances made in lieu of Restricted Payments pursuant to and limited by Section 10.5(n)) consisting of Indebtedness, fundamental changes, Dispositions and Restricted Payments permitted under Sections 10.1 (other than Sections 10.1(d)(iii) and (g)(ii)), 10.3, 10.4 (other than Section 10.4(d)) and 10.6 (other than 10.6(c));

 

(y)           in the case of the Borrower and its Restricted Subsidiaries, Investments consisting of (i) intercompany Indebtedness having a term not exceeding three hundred sixty-four (364) days (inclusive of any roll-over or extensions of terms) and made in the ordinary course of business and (ii) intercompany current liabilities in connection with the cash management, tax and accounting operations of the Borrower and the Restricted Subsidiaries; provided that in the case of any such Indebtedness owing by a Restricted Subsidiary that is not a Guarantor to the Borrower or a Guarantor, such Indebtedness shall be evidenced by the Intercompany Note pledged in favor of the Collateral Agent for the benefit of the Secured Parties pursuant to the Collateral Agreement;

 

(z)            Investments resulting from pledges and deposits under clauses (d) and (e) of the definition of “Permitted Liens” and clauses (j), (o), (w) and (y) of Section 10.2;

 

(aa)          advances in the form of a prepayment of expenses, so long as such expenses are being paid in accordance with customary trade terms of the Borrower or the relevant Restricted Subsidiary;

 

(bb)          Investments consisting of licensing of intellectual property pursuant to joint marketing arrangements with other Persons in the ordinary course of business;

 

(cc)          Investments made in the ordinary course of business in connection with obtaining, maintaining or renewing client contacts and loans or advances made to distributors in the ordinary course of business;

 

(dd)         [reserved];

 

(ee)          Investments consisting of the contribution of Equity Interests of any Foreign Subsidiary or FSHCO to any other Foreign Subsidiary or FSHCO; and

 

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(ff)           any Investment constituting a Disposition or transfer of any asset between or among the Borrower and/or its Restricted Subsidiaries as a substantially concurrent interim Disposition or transfer in connection with an Investment otherwise permitted pursuant to clauses (a) through (dd) above or in connection with a transaction permitted by Section 10.3 or in connection with a Disposition permitted pursuant to Section 10.4.

 

Section 10.6           Limitation on Restricted Payments. The Borrower will not directly or indirectly pay any dividend or make any other distribution (by reduction of capital or otherwise), whether in cash, property, securities or a combination thereof, with respect to any of its Equity Interests (other than dividends and distributions on Equity Interests payable solely by the issuance of additional Qualified Equity Interests) or redeem, purchase, retire or otherwise acquire for value any of its Equity Interests or the Equity Interests of any Parent Entity (other than through the issuance of additional Qualified Equity Interests), or permit any Restricted Subsidiary to purchase or otherwise acquire for consideration (except in connection with an Investment permitted under Section 10.5) any Equity Interests of the Borrower or any Parent Entity, now or hereafter outstanding (all of the foregoing, “Restricted Payments”); except:

 

(a)           the Borrower may (or may make Restricted Payments to permit any Parent Entity thereof to) redeem in whole or in part any of its or a Parent Entity’s Equity Interests in exchange for another class of its (or such Parent Entity’s) Equity Interests or with proceeds from substantially concurrent equity contributions or issuances of new Equity Interests; provided that such new Equity Interests contain terms and provisions at least as advantageous to the Lenders in all material respects to their interests as those contained in the Equity Interests redeemed thereby, and the Borrower may pay Restricted Payments to Holdings payable solely in the Equity Interests (other than Disqualified Stock not otherwise permitted by Section 10.1) of the Borrower;

 

(b)           the Borrower may (i) (or may make Restricted Payments to permit any Parent Entity thereof to) redeem, acquire, retire or repurchase shares of its (or such Parent Entity’s) Equity Interests held by any present or former officer, manager, consultant, director or employee (or their respective Affiliates, estates, spouses, former spouses, successors, executors, administrators, heirs, legatees, distributees or immediate family members) of the Borrower and its Subsidiaries or any Parent Entity thereof, in connection with the death, disability, retirement or termination of employment of any such Person or otherwise in accordance with any equity option or equity appreciation rights plan, any management, director and/or employee equity ownership, benefit or incentive plan or agreement, equity subscription plan, employment termination agreement or any other employment agreements or equity holders’ agreement; provided that the aggregate amount of Restricted Payments made under this clause (b) does not exceed in any calendar year the sum of (A) $20,000,000 (with unused amounts in any calendar year being carried over to the next two succeeding calendar years) plus (B) all net cash proceeds obtained by or contributed to the Borrower during such calendar year from the sales of Equity Interests to other future, present or former officers, consultants, employees, directors and managers in connection with any permitted compensation and incentive arrangements plus (C) all net cash proceeds obtained from any key-man life insurance policies received during such calendar year plus (D) the amount of any cash bonuses otherwise payable to members of management, directors or consultants of Holdings, any Parent Entity, the Borrower or its Subsidiaries in connection with the Transactions that are foregone in return for the receipt of Equity Interests; notwithstanding the foregoing, the Borrower may elect to apply all or any portion of the aggregate increase contemplated by clauses (B), (C) and (D) above in any calendar year and provided, further, that cancellation of Indebtedness owing to the Borrower or any of its Restricted Subsidiaries from any future, present or former employees, directors, officers, members of management or consultants (or their respective Controlled Investment Affiliates or Immediate Family Members), of the Borrower, any Restricted Subsidiary, any direct or indirect parent company of the Borrower or any of the Borrower’s Restricted Subsidiaries in connection with a repurchase of Equity Interests of the Borrower or any of its direct or indirect parent companies will not be deemed to constitute a Restricted Payment for purposes of this covenant or any other provision of this Agreement;

 

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(c)            to the extent constituting Restricted Payments, the Borrower may make Investments permitted by Section 10.5 (other than Sections 10.5(m), (n) and (o));

 

(d)            to the extent constituting Restricted Payments, the Borrower may consummate transactions expressly permitted by Section 10.3;

 

(e)            the Borrower may repurchase Equity Interests of the Borrower (or any Parent Entity thereof) upon exercise of stock options or warrants if such Equity Interests represents all or a portion of the exercise price of such options or warrants;

 

(f)            the Borrower may make and pay Restricted Payments to Holdings or any other Parent Entity of the Borrower:

 

(i)           the proceeds of which will be used to pay (or to make Restricted Payments to allow Holdings or any other Parent Entity to pay), with respect to any taxable period (or a portion thereof) (x) for which the Borrower and any of its subsidiaries are members of a consolidated, combined, affiliated, unitary or similar income tax group for U.S. federal and/or applicable foreign, state or local income Tax purposes (each, a “Tax Group”) of which a Parent Entity is the common parent, or (y) for which the Borrower is a partnership or disregarded entity for U.S. federal or applicable foreign, state or local income Tax purposes that is wholly owned (directly or indirectly) by a Person that is taxable as a corporation for such income Tax purposes, dividends or distributions by the Borrower or any of its subsidiaries, as applicable, to Holdings or any Parent Entity of the Borrower in an amount not to exceed the sum of (A) the amount of any U.S. federal, foreign, state and/or local income Taxes that the Borrower and/or its subsidiaries that are members of the relevant Tax Group, as applicable, would have paid for such taxable period had the Borrower and/or such subsidiaries, as applicable, been a stand-alone corporate taxpayer or a stand-alone corporate group; provided, taking into account any such income Taxes directly paid or withheld at the level of the Borrower or such subsidiaries and (B) such amounts as are needed to pay any amounts owed by a Parent Entity of the Borrower under any tax receivable agreement with customary terms for similar transactions relating to any assets acquired by the Borrower or its subsidiaries after the Effective Date; provided, further that distributions pursuant to this clause (i) in respect of an Unrestricted Subsidiary shall be permitted only to the extent that cash distributions were made by such Unrestricted Subsidiary to the Borrower or any of its Restricted Subsidiaries for such purpose;

 

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(ii)           the proceeds of which will be used to pay, with respect to any taxable period (or a portion thereof) ending after the Effective Date during which the Borrower is a pass-through entity (including a partnership or disregarded entity (other than a partnership or disregarded entity described in clause (i)(y) above)), dividends or distributions to any member or partner of the Borrower, on or prior to each estimated Tax payment date as well as each other applicable due date, on a pro rata basis such that each such member or partner (or its direct or indirect members or partners, if applicable) receives, in the aggregate for such period, payments or distributions not to exceed the sum of (A) such member or partner’s U.S. federal, state and/or local income Taxes (as applicable) attributable to its direct or indirect ownership of the Borrower and its pass-through subsidiaries with respect to such taxable period (assuming that such member or partner is subject to Tax at the highest combined marginal U.S. federal, state, and/or local income Tax rates (including any Tax rate imposed on “net investment income” by Section 1411 of the Code) applicable to an individual or, if higher, a corporation, resident in New York, New York (for the avoidance of doubt, regardless of the actual rate applicable to such member or partner), determined by taking into account (I) the deductibility of state and local income Taxes for U.S. federal income Tax purposes (disregarding any deduction that is subject to a Dollar limitation), (II) the alternative minimum tax, (III) any U.S. federal, state and/or local (as applicable) loss carryforwards of such member or partner available from losses of such member or partner attributable to its direct or indirect ownership of the Borrower and its subsidiaries for prior taxable periods ending after the Effective Date 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), (IV) the character (e.g. long-term or short-term capital gain or ordinary or exempt) of the applicable income, (V) any adjustments of such member or partner by reason of Section 734(b) or Section 743(b) of the Code attributable to its direct or indirect ownership in the Borrower, and (VI) any adjustment to such member or partner’s taxable income attributable to its direct or indirect ownership of the Borrower and its subsidiaries as a result of any Tax examination, audit or adjustment with respect to any period or portion thereof ending after the Effective Date and (B) in the case of such member or partner that is a Parent Entity of the Borrower with an obligation under any tax receivable agreement with customary terms for similar transactions relating to any assets acquired by the Borrower or its subsidiaries after the Effective Date, such amounts as are needed by it during the relevant period in excess of the amount that will enable it to satisfy all of its U.S. federal, state and local and foreign Tax liabilities for such taxable period or portion thereof to pay amounts owed by it under such tax receivable agreement; provided that the amounts payable under this clause (ii)(B) shall be reduced by any excess distributions from the Borrower received by the relevant Parent Entity after the Effective Date over the actual income tax liability of such Parent Entity attributable to the Borrower to the extent such excess distributions were not contributed to the Borrower (provided that distributions pursuant to this clause (ii) in respect of an Unrestricted Subsidiary shall be permitted only to the extent that cash distributions were made by such Unrestricted Subsidiary to the Borrower or any of its Restricted Subsidiaries for such purpose);

 

(iii)          the proceeds of which shall be used to allow any Parent Entity to pay its operating expenses incurred in the ordinary course of business and other corporate overhead costs and expenses (including administrative, legal, accounting and other professional costs and expenses) to the extent attributable to the ownership or operation of the Borrower, it being understood that 100% of the foregoing costs and expenses shall be deemed attributable to the ownership and operation of the Borrower at all times when such Parent Entity owns no material assets other than the Equity Interests of the Borrower or any other Parent Entity;

 

(iv)          the proceeds of which shall be used by such Parent Entities to pay Restricted Payments contemplated by Section 10.6(b);

 

(v)           the proceeds of which shall be used to make Restricted Payments to allow any Parent Entity to pay fees and expenses related to any equity issuance or offering or debt issuance, incurrence or offering, Disposition or acquisition or investment transaction permitted by this Agreement, whether or not consummated;

 

(vi)          the proceeds of which shall be used to pay fees and expenses (including real and personal property Taxes, and franchise, excise or similar Taxes) required to maintain its corporate or legal existence, customary salary, bonus and other benefits payable to, and indemnities provided on behalf of, officers, employees and consultants of any Parent Entity, and any payroll, social security or similar Taxes thereof, to the extent such salaries, bonuses, other benefits and indemnities are attributable to the ownership or operation of the Borrower and the Restricted Subsidiaries, it being understood that 100% of the foregoing costs and expenses shall be deemed attributable to the ownership and operation of the Borrower at all times when such Parent Entity owns no material assets other than the Equity Interests of the Borrower or any other Parent Entity;

 

(vii)         in the form of Equity Interests of the Borrower (other than Disqualified Stock not otherwise permitted by Section 10.1);

 

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(viii)        to pay interest, principal and/or other payments (including AHYDO “catch-up payments”) on Indebtedness the proceeds of which have been contributed to the Borrower or any Restricted Subsidiary and that has been guaranteed by, or is otherwise, considered Indebtedness of, the Borrower or any Restricted Subsidiary incurred in accordance with Section 10.1;

 

(ix)           to finance Permitted Acquisitions and other Investments or other acquisitions in each case otherwise permitted to be made under Section 10.5 if made by the Borrower; provided, that (A) such Restricted Payment shall be made substantially concurrently with the closing of such Investment or other acquisition, (B) such direct or indirect parent company shall, promptly following the closing thereof, cause (1) all property acquired (whether assets or Equity Interests) to be contributed to the capital of the Borrower or one of its Restricted Subsidiaries or (2) the merger, amalgamation, consolidation, or sale of the Person formed or acquired into the Borrower or one of its Restricted Subsidiaries (to the extent not prohibited by Section 10.3) in order to consummate such Investment or other acquisition, (C) such direct or indirect parent company and its Affiliates (other than the Borrower or a Restricted Subsidiary) receives no consideration or other payment in connection with such transaction except to the extent the Borrower or a Restricted Subsidiary could have given such consideration or made such payment in compliance herewith and (D) to the extent constituting an Investment, such Investment shall be deemed to be made by Borrower or such Restricted Subsidiary pursuant to Section 10.5; and

 

(x)           the proceeds of which shall be used to pay Public Company Costs; and

 

(xi)          [reserved];

 

(g)           the Borrower or any of the Restricted Subsidiaries may (i) pay cash in lieu of fractional shares in connection with (A) any dividend, split or combination thereof or any Permitted Acquisition or other Investment permitted under Section 10.5 and (B) any conversion request by a holder of convertible Indebtedness and (ii) make cash payments in accordance with the terms of convertible Indebtedness in connection with any conversion request by a holder thereof so long as, in the case of the foregoing clauses (i)(B) and (ii), immediately after giving effect thereto on a Pro Forma Basis, (1) no Default or Event of Default shall have occurred and be continuing and (2) no Loan Limit Deficiency exists,

 

(h)           the Borrower may pay any dividends or distributions within sixty (60) days after the date of declaration thereof, if at the date of declaration such payment would have complied with the provisions of this Agreement;

 

(i)           immediately after giving effect thereto on a Pro Forma Basis, the Borrower may declare and make additional cash Restricted Payments to the holders of its or any Parent Entity’s Equity Interests so long as:

 

(i)            (x) no Event of Default or Loan Limit Deficiency shall have occurred and be continuing, (y) Available Commitments are not less than 20.0% of the then effective Aggregate Elected Commitment Amount (on a Pro Forma Basis immediately after giving effect to such Restricted Payment) and (z) the Consolidated Total Debt to EBITDAX Ratio shall not be greater than 2.75 to 1.00 (on a Pro Forma Basis after giving effect to such Restricted Payment); or

 

(ii)           (x) no Event of Default or Loan Limit Deficiency shall have occurred and be continuing and (y) no Loans are outstanding under this Agreement;

 

(j)             the Borrower may consummate the Transactions and make Restricted Payments in connection therewith and transactions related thereto (and pay fees and expenses in connection therewith on or following the Effective Date, including those owed to Affiliates), and make payments described in Sections 9.9(a), (f), (g), (h), (j) and (l) (subject to the conditions set out therein);

 

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(k)            [reserved];

 

(l)             payments and distributions to dissenting stockholders pursuant to applicable law, pursuant to or in connection with a consolidation, merger, amalgamation or transfer of all or substantially all of the assets of the Borrower and its Restricted Subsidiaries taken as a whole that complies with the terms of this Agreement or any other transaction that complies with the terms of this Agreement; and

 

(m)           Restricted Payments that are (i) made with Excluded Contribution Assets within thirty (30) days after the date such assets were designated as such or (ii) without duplication of the preceding clause (i), the net cash proceeds received by the Borrower or any of its Restricted Subsidiaries from a Disposition of Excluded Contribution Assets, in each case, to the extent not otherwise applied in determining the permissibility of a transaction under the Credit Documents where such permissibility was or is (or may have been) contingent on receipt of such amount or utilization of such amount for a specified purpose.

 

Section 10.7           Limitations on Debt Payments and Amendments.

 

(a)           The Borrower will not, and will not permit any Restricted Subsidiary to prepay, repurchase or redeem or otherwise defease prior to its scheduled maturity any Indebtedness for borrowed money that is unsecured (other than Indebtedness permitted by Section 10.1(cc); provided that any Permitted Refinancing Indebtedness of such Indebtedness permitted by Section 10.1(cc) shall be subject to the restrictions contained in this Section 10.7(a)) or expressly subordinated in right of payment or is secured by a Lien that is junior to the Liens securing the Obligations (or any Permitted Refinancing Indebtedness in respect thereof to the extent constituting Junior Debt) (such other Indebtedness or any Permitted Refinancing Indebtedness in respect thereof, “Junior Debt”) (for the avoidance of doubt, it being understood that payments of regularly-scheduled cash interest in respect of Junior Debt and any AHYDO payments shall be permitted); provided, however, that the Borrower or any Restricted Subsidiary may prepay, repurchase, redeem or defease prior to its scheduled maturity any Junior Debt (i) in exchange for or with the proceeds of any Permitted Refinancing Indebtedness, (ii) by converting or exchanging any Junior Debt to Qualified Equity Interests of the Borrower or any Parent Entity, (iii) so long as (A) immediately after giving effect thereto on a Pro Forma Basis no Event of Default or Loan Limit Deficiency shall have occurred and be continuing, (B) Available Commitments are not less than 20.0% of the then effective Aggregate Elected Commitment Amount (on a Pro Forma Basis immediately after giving effect to such prepayment, repurchase, redemption or defeasement) and (C) the Consolidated Total Debt to EBITDAX Ratio shall not be greater than 2.75 to 1.00 (on a Pro Forma Basis after giving effect to such prepayment, repurchase, redemption or defeasement), (iv) so long as (A) no Event of Default or Loan Limit Deficiency shall have occurred and be continuing and (B) no Loans are outstanding under this Agreement or (v) with the net cash proceeds of an offering of Qualified Equity Interests of Holdings or a Parent Entity to the extent contributed to the Borrower or a Restricted Subsidiary so long as such prepayment, repurchase, redemption or defeasement is made within 180 days of such offering; provided, further, that, after giving effect to any adjustment of the Borrowing Base made pursuant to Section 2.14(g) and any repayment of the Loans required in connection therewith, the Borrower or any Restricted Subsidiary may make mandatory prepayments in respect of any Junior Debt with the proceeds of the disposition of any assets that have been pledged to secure such Junior Debt;

 

(b)           The Borrower will not amend or modify the terms of any Junior Debt, other than amendments or modifications that (A) would not be materially adverse to the Lenders, taken as a whole (as determined in good faith by the Borrower), (B) otherwise comply with the definition of “Permitted Refinancing Indebtedness” that may be incurred to Refinance any such Indebtedness, (C) would have the effect of converting any Junior Debt to Qualified Equity Interests of the Borrower or a Parent Entity or (D) to the extent such amendment or modification would not have been prohibited under this Agreement at the time such Permitted Refinancing Indebtedness, Junior Debt or documentation was first issued, incurred or entered into, as applicable; and

 

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(c)            Notwithstanding the foregoing and for the avoidance of doubt, nothing in this Section 10.7 shall prohibit (i) the repayment or prepayment of intercompany subordinated Indebtedness owed among the Borrower and/or the Restricted Subsidiaries, in either case, unless an Event of Default pursuant to Section 11.1 or 11.5 has occurred and is continuing and the Borrower has received a notice from the Collateral Agent instructing it not to make or permit the Borrower and/or the Restricted Subsidiaries to make any such repayment or prepayment or (ii) substantially concurrent transfers of credit positions in connection with intercompany debt restructurings so long as such Indebtedness is permitted by Section 10.1 after giving effect to such transfer.

 

Section 10.8           Negative Pledge Agreements. The Borrower will not, and will not permit any of the Subsidiary Guarantors to, enter into or permit to exist any Contractual Requirement (other than this Agreement or any other Credit Document) that limits the ability of the Borrower or any Subsidiary Guarantor to create, incur, assume or suffer to exist Liens on property of such Person for the benefit of the Secured Parties with respect to the Obligations or under the Credit Documents; provided that the foregoing shall not apply to each of the following Contractual Requirements that:

 

(a)           (i) exist on the Effective Date and (to the extent not otherwise permitted by this Section 10.8) are listed on Schedule 10.8 and (ii) to the extent Contractual Requirements permitted by subclause (i) are set forth in an agreement evidencing Indebtedness or other obligations, are set forth in any agreement evidencing any Permitted Refinancing Indebtedness incurred to Refinance such Indebtedness or obligation so long as such Permitted Refinancing Indebtedness does not expand the scope of such Contractual Requirement in any material respect;

 

(b)           are binding on a Restricted Subsidiary at the time such Restricted Subsidiary first becomes a Restricted Subsidiary of the Borrower, so long as such Contractual Requirements were not entered into solely in contemplation of such Person becoming a Restricted Subsidiary of the Borrower;

 

(c)            [reserved];

 

(d)           arise pursuant to agreements entered into with respect to any sale, transfer, lease or other Disposition permitted by Section 10.4 and applicable solely to assets under such sale, transfer, lease or other Disposition;

 

(e)            are customary provisions in joint venture agreements and other similar agreements permitted by Section 10.5 and applicable to joint ventures or otherwise arise in agreements which restrict the Disposition or distribution of assets or property subject to oil and gas leases, joint operating agreements, joint exploration and/or development agreements, participation agreements and other similar agreements entered into in the ordinary course of the oil and gas exploration and development business and customary provisions in any Agreement of the type described in the definition of “Industry Investments” entered into in the ordinary course of business;

 

(f)            are customary restrictions on leases, subleases, licenses or asset sale agreements otherwise permitted hereby so long as such restrictions relate to the assets subject thereto;

 

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(g)           are customary provisions restricting subletting or assignment of any lease governing a leasehold interest of the Borrower or any Restricted Subsidiary;

 

(h)           are customary provisions restricting assignment of any agreement entered into in the ordinary course of business;

 

(i)             restrict the use of cash or other deposits imposed by customers under contracts entered into in the ordinary course of business;

 

(j)            are imposed by Requirements of Law;

 

(k)           exist under any documentation governing any Permitted Refinancing Indebtedness incurred to Refinance any Indebtedness but only to the extent such Contractual Requirement is not materially more restrictive, taken as a whole, than the Indebtedness being refinanced;

 

(l)             customary net worth provisions contained in real property leases entered into by any Restricted Subsidiary of the Borrower, so long as the Borrower has determined in good faith that such net worth provisions would not reasonably be expected to impair the ability of the Borrower and the Restricted Subsidiaries to meet their ongoing obligation;

 

(m)           are included in any agreement 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 Section 10.8;

 

(n)           are restrictions imposed by any agreement relating to Indebtedness incurred pursuant to Section 10.1 or Permitted Refinancing Indebtedness in respect thereof, to the extent such restrictions are not materially more restrictive, taken as a whole, than the restrictions contained in the Credit Documents or documentation with respect to the Senior Unsecured Notes, the Bridge Facility or Senior WildFire Notes (or Permitted Refinancing Indebtedness issued or incurred to Refinance such Senior Unsecured Notes, Bridge Facility or Senior WildFire Notes, as applicable) as determined by the Borrower in good faith;

 

(o)           are restrictions regarding licenses or sublicenses by the Borrower and the Restricted Subsidiaries of intellectual property in the ordinary course of business (in which case such restriction shall relate only to such intellectual property);

 

(p)           are encumbrances or restrictions contained in an agreement or other instrument of a Person acquired by or merged or consolidated with or into the Borrower or any Restricted Subsidiary, or of an Unrestricted Subsidiary that is designated a Restricted Subsidiary, or that is assumed in connection with the acquisition of assets from such Person, in each case that is in existence at the time of such transaction (but not created in contemplation thereof), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person and its Subsidiaries, or the property or assets of the Person and its Subsidiaries, so acquired or designated; and

 

(q)           comprise negative pledges or restrictions imposed by any agreement relating to secured Indebtedness permitted pursuant to Section 10.1 to the extent that such restrictions apply only to the property or assets securing such Indebtedness;

 

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(r)            are encumbrances or restrictions imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (a) through (q) above; provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of the Borrower’s board of directors, no more restrictive in any material respect with respect to such encumbrance and other restrictions taken as a whole than those prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing.

 

Section 10.9           Limitation on Subsidiary Distributions. The Borrower will not, and will not permit any of its Restricted Subsidiaries that are not Subsidiary Guarantors to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or consensual restriction on the ability of any such Restricted Subsidiary to pay dividends or make any other distributions to the Borrower or any Restricted Subsidiary on its Equity Interests or with respect to any other interest or participation in, or measured by, its profits or transfer any property to the Borrower or any Restricted Subsidiary except (in each case) for such encumbrances or restrictions existing under or by reason of:

 

(a)           contractual encumbrances or restrictions in effect on the Effective Date, including pursuant to the Credit Documents and any Hedging Obligations;

 

(b)           (i) the Senior Unsecured Notes and the Senior Unsecured Notes Indenture (or Permitted Refinancing Indebtedness issued or incurred to Refinance such Senior Unsecured Notes), (ii) the Bridge Facility (or Permitted Refinancing Indebtedness issued or incurred to Refinance such Bridge Facility) and (iii) the Senior WildFire Notes and the Senior WildFire Notes Indenture (or Permitted Refinancing Indebtedness issued or incurred to Refinance such Senior WildFire Notes);

 

(c)           purchase money obligations for property acquired in the ordinary course of business and Capital Lease obligations that impose restrictions on transferring the property so acquired;

 

(d)           any applicable Requirement of Law;

 

(e)            any agreement or other instrument of a Person acquired by or merged or consolidated with or into the Borrower or any Restricted Subsidiary, or of an Unrestricted Subsidiary that is designated a Restricted Subsidiary, or that is assumed in connection with the acquisition of assets from such Person, in each case that is in existence at the time of such transaction (but not created in contemplation thereof), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person and its Subsidiaries, or the property or assets of the Person and its Subsidiaries, so acquired or designated;

 

(f)            contracts for the sale of assets, including customary restrictions with respect to a Subsidiary of the Borrower pursuant to an agreement that has been entered into for the sale or disposition of all or substantially all of the Equity Interests or assets of such Subsidiary;

 

(g)           secured Indebtedness otherwise permitted to be incurred pursuant to Section 10.1 and Section 10.2 as it relates to the right of the debtor to dispose of the assets securing such Indebtedness;

 

(h)           restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business;

 

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(i)             other Indebtedness of (i) Restricted Subsidiaries permitted to be incurred subsequent to the Effective Date pursuant to Section 10.1 so long as either (A) the provisions relating to such encumbrance or restriction contained in such Indebtedness are no less favorable to the Borrower, taken as a whole, as determined by the board of directors of the Borrower in good faith, than the provisions contained in this Agreement as in effect on the Effective Date or (B) any such encumbrance or restriction contained in such Indebtedness does not prohibit (except upon a default or an event of default thereunder) the payment of dividends in an amount sufficient, as determined by the board of directors of the Borrower in good faith, to impair the ability of the Borrower to make scheduled payments of cash interest on the Loans when due or (ii) Foreign Subsidiaries as to such Foreign Subsidiaries and their Subsidiaries;

 

(j)             customary provisions in joint venture agreements or agreements governing property held with a common owner and other similar agreements or arrangements relating solely to such joint venture or property or are otherwise customary encumbrances or restrictions imposed pursuant to any agreement of the type described in the definition of “Industry Investments” entered into in the ordinary course of business;

 

(k)            customary provisions contained in leases, sub-leases, licenses, sub-licenses or similar agreements, in each case, entered into in the ordinary course of business;

 

(l)             any agreements entered into with respect to any sale, transfer, lease or other Disposition permitted by Section 10.4 and applicable solely to assets under such sale, transfer, lease or other Disposition; and

 

(m)           any encumbrances or restrictions imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (a) through (l) above; provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of the Borrower’s board of directors, no more restrictive in any material respect with respect to such encumbrance and other restrictions taken as a whole than those prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing.

 

Section 10.10         Hedge Agreements. The Borrower will not, and will not permit any Restricted Subsidiary to, enter into any Hedge Agreements with any Person other than:

 

(a)           Hedge Agreements in respect of commodities entered into not for speculative purposes the net notional volumes for which (when aggregated with other commodity Hedge Agreements then in effect, other than puts, floors and basis differential swaps on volumes already hedged pursuant to other Hedge Agreements) do not exceed, as of the date the latest hedging transaction is entered into under a Hedge Agreement, 85% of the reasonably anticipated Hydrocarbon production from the Credit Parties’ total Proved Reserves (as forecast based upon the Initial Reserve Report or the most recent Reserve Report delivered pursuant to Section 9.14(a), as applicable) for the fifty-four (54) month period from the date of creation of such hedging arrangement (the “Ongoing Hedges”). In addition to the Ongoing Hedges, in connection with a proposed Permitted Acquisition (a “Proposed Acquisition”), and without limiting the ability of the Borrower to enter into incremental hedging in connection with a Permitted Acquisition within the limitations set forth in the first sentence of this Section 10.10(a), the Credit Parties may also enter into incremental hedging contracts with respect to the Credit Parties’ reasonably anticipated projected production from the total Proved Reserves of the Borrower and its Restricted Subsidiaries as forecast based upon the most recent Reserve Report having notional volumes not in excess of 15% of the Credit Parties’ existing projected production prior to the consummation of such Proposed Acquisition for a period not exceeding thirty-six (36) months from the date such hedging arrangement is created, during the period between (1) the date on which such Credit Party signs a definitive acquisition agreement in connection with a Proposed Acquisition and (2) the earliest of (a) the date of consummation of such Proposed Acquisition, (b) the date of termination of such Proposed Acquisition and (c) one-hundred twenty (120) days after the date of execution of such definitive acquisition agreement (or such longer period as to which the Administrative Agent may agree); provided, however, notwithstanding the foregoing, in no event shall the notional volumes of incremental hedging contracts entered into in connection with a Proposed Acquisition exceed 85% of the reasonably anticipated Hydrocarbon production from the total Proved Reserves attributable to the properties to be acquired pursuant to the Proposed Acquisition, for each of crude oil, natural gas and natural gas liquids, calculated separately, as forecast based upon a Reserve Report delivered to the Administrative Agent in connection therewith; provided, further, that all such incremental hedging contracts entered into with respect to a Proposed Acquisition must be terminated or unwound within ninety (90) days following the date of termination of such Proposed Acquisition. It is understood that (x) the foregoing limitations shall in any event exclude basis differential swaps, put contracts and floors and (y) commodity Hedge Agreements which may, from time to time, “hedge” the same volumes, but different elements of commodity risk thereof, shall not be aggregated together when calculating the foregoing limitations on notional volumes;

 

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(b)           other Hedge Agreements (other than any Hedge Agreements in respect of equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions) entered into not for speculative purposes;

 

(c)            it is understood that for purposes of this Section 10.10, the following Hedge Agreements shall not be deemed speculative or entered into for speculative purposes: (i) any commodity Hedge Agreement intended, at inception of execution, to hedge or manage any of the risks related to existing and/or forecasted Hydrocarbon production of the Borrower or its Restricted Subsidiaries (whether or not contracted) and (ii) any Hedge Agreement intended, at inception of execution, (A) to hedge or manage the interest rate exposure associated with any debt securities, debt facilities or leases (existing or forecasted) of the Borrower or its Restricted Subsidiaries, (B) for foreign exchange or currency exchange management, (C) to manage commodity portfolio exposure associated with changes in interest rates or (D) to hedge any exposure that the Borrower or its Restricted Subsidiaries may have to counterparties under other Hedge Agreements such that the combination of such Hedge Agreements is not speculative taken as a whole; and

 

(d)           for purposes of entering into or maintaining Ongoing Hedges under Section 10.10(a), forecasts of reasonably projected Hydrocarbon production volumes and reasonably anticipated Hydrocarbon production from the Credit Parties’ total Proved Reserves based upon the Initial Reserve Report or the most recent Reserve Report delivered pursuant to Section 9.14(a), as applicable, shall be revised to account for any increase or decrease therein anticipated because of information obtained by Borrower or any other Credit Party subsequent to the publication of such Reserve Report including the Borrower’s or any other Credit Party’s internal forecasts of production decline rates for existing wells and additions to or deletions from anticipated future production from new wells and acquisitions coming on stream or failing to come on stream.

 

Section 10.11         Financial Performance Covenants.

 

(a)           The Borrower will not permit the Consolidated Total Debt to EBITDAX Ratio as of the last day of any Test Period (commencing with the first fiscal quarter ending on or after the Effective Date), to be greater than 3.50 to 1.00.

 

(b)           The Borrower will not permit the Consolidated Current Ratio as of the last day of any Test Period (commencing with the first fiscal quarter ending on or after the Effective Date), to be less than 1.00 to 1.00.

 

Section 10.12         Amendments to Organizational Documents. The Borrower shall not, nor shall it permit any of the Restricted Subsidiaries to amend, modify or change in any manner materially adverse to the interests of the Lenders (as determined by the Borrower acting in its reasonable discretion) the organizational documents of such entities.

 

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Section 10.13         Foreign Operations. From and after the Effective Date, the Borrower shall not, and shall not permit any Restricted Subsidiary to, acquire or make any other expenditures (whether such expenditure is capital, operating or otherwise) in or related to any Oil and Gas Properties not located within the geographical boundaries of the United States or form, acquire or make any Investments in any Person that is organized under the laws of jurisdictions other than the United States or any state thereof, or the District of Columbia.

 

ARTICLE 11
Events of Default

 

Upon the occurrence and during the continuation of any of the following specified events (each an “Event of Default”):

 

Section 11.1           Payments. The Borrower shall (a) default in the payment when due of any principal of the Loans or any Unpaid Drawings or (b) default, and such default shall continue for five (5) or more consecutive days, in the payment when due of any interest on the Loans or any Unpaid Drawings, fees or of any other amounts owing hereunder or under any other Credit Document (other than any amount referred to in clause (a) above).

 

Section 11.2           Representations, Etc. Any representation, warranty or statement made or deemed made by any Credit Party herein or in any other Credit Document or any certificate delivered or required to be delivered pursuant hereto or thereto shall prove to be untrue in any material respect on the date as of which made or deemed made.

 

Section 11.3           Covenants. Any Credit Party shall:

 

(a)            default in the due performance or observance by it of any term, covenant or agreement contained in Section 9.1(d)(i), 9.5 (solely with respect to the Borrower), 9.18, 9.19 or 9.20 or Article 10; or

 

(b)           default in the due performance or observance by it of any term, covenant or agreement (other than those referred to in Section 11.1 or 11.2 or clause (a) of this Section 11.3) contained in this Agreement or any Security Document and such default shall continue unremedied for a period of at least thirty (30) consecutive days after receipt of written notice thereof by the Borrower from the Administrative Agent.

 

Section 11.4           Default Under Other Agreements.

 

(a)           The Borrower or any of the Restricted Subsidiaries shall (i) default in any payment with respect to any Material Indebtedness (other than the Indebtedness described in Section 11.1) beyond the period of grace, if any, provided in the instrument of agreement under which such Indebtedness was created or (ii) default in the observance or performance of any agreement or condition relating to any such Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist (other than (1) with respect to indebtedness in respect of any Hedge Agreements, termination events or equivalent events pursuant to the terms of such Hedge Agreements, (2) any event requiring prepayment pursuant to customary asset sale or change of control provisions and (3) secured Indebtedness that becomes due as a result of a Disposition (including as a result of Casualty Event) of the property or assets securing such indebtedness permitted under this Agreement), the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause, any such Indebtedness to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity, unless, in the case of each of the foregoing, such holder or holders shall have (or through its or their trustee or agent on its or their behalf) waived such default in a writing to the Borrower, or

 

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(b)           Without limiting the provisions of clause (a) above, any such default under any such Material Indebtedness shall cause such Material Indebtedness to be declared to be due and payable, or required to be prepaid other than by a regularly scheduled required prepayment or as a mandatory prepayment (and (i) with respect to Indebtedness consisting of any Hedge Agreements, other than due to a termination event or equivalent event pursuant to the terms of such Hedge Agreements, (ii) other than pursuant to customary asset sale or change of control provisions and (iii) other than secured Indebtedness that becomes due as a result of a Disposition (including as a result of Casualty Event) of the property or assets securing such Indebtedness permitted under this Agreement) prior to the stated maturity thereof.

 

Section 11.5           Bankruptcy, Etc. Holdings, the Borrower or any Restricted Subsidiary shall commence a voluntary case, proceeding or action concerning itself under (a) Title 11 of the United States Code entitled “Bankruptcy” or any other applicable insolvency, debtor relief, or debt adjustment law; or (b) in the case of any Foreign Subsidiary that is a Restricted Subsidiary, any domestic or foreign law relating to bankruptcy, judicial management, insolvency, reorganization, administration or relief of debtors in effect in its jurisdiction of incorporation, in each case as now or hereafter in effect, or any successor thereto (collectively, the “Bankruptcy Code”); or an involuntary case, proceeding or action is commenced against Holdings, the Borrower or any Restricted Subsidiary and the petition is not dismissed or stayed within sixty (60) days after commencement of the case, proceeding or action, Holdings, the Borrower or the applicable Restricted Subsidiary consents to the institution of such case, proceeding or action prior to such sixty (60)-day period, or any order of relief or other order approving any such case, proceeding or action is entered; or a custodian (as defined in the Bankruptcy Code), receiver, receiver manager, trustee, conservator, liquidator, examiner, rehabilitator, administrator, or similar person is appointed for, or takes charge of, Holdings, the Borrower or any Restricted Subsidiary or all or any substantial portion of the property or business thereof; or Holdings, the Borrower or any Restricted Subsidiary suffers any appointment of any custodian, receiver, receiver manager, trustee, conservator, liquidator, examiner, rehabilitator, administrator, or the like for it or any substantial part of its property or business to continue undischarged or unstayed for a period of sixty (60) consecutive days; or Holdings, the Borrower or any Restricted Subsidiary makes a general assignment for the benefit of creditors.

 

Section 11.6           ERISA.

 

(a)           (i) The Borrower or any ERISA Affiliate has incurred or is likely to incur a liability to or on account of a Plan under Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201 or 4204 of ERISA or Section 4971 or 4975 of the Code (including the giving of written notice thereof), or (ii) an ERISA Event has or is reasonably like to occur; and

 

(b)           there would result from any event or events set forth in clause (a) of this Section 11.6 the imposition of a lien, the granting of a security interest, or a liability, or the reasonable likelihood of incurring a lien, security interest or liability; and

 

(c)           such lien, security interest or liability will or would be reasonably likely to have a Material Adverse Effect.

 

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Section 11.7           Guarantee. The Guarantee or any material provision thereof shall cease to be in full force or effect (other than pursuant to the terms hereof and thereof) or any Guarantor or any other Credit Party shall assert in writing that any such Guarantor’s obligations under the Guarantee are not to be in effect or are not to be legal, valid and binding obligations (other than pursuant to the terms hereof or thereof).

 

Section 11.8           Security Documents. The Collateral Agreement, Mortgage or any other Security Document or any material provision thereof shall cease to be in full force or effect (other than pursuant to the terms hereof or thereof) or any grantor thereunder or any other Credit Party shall assert in writing that any grantor’s obligations under the Collateral Agreement, the Mortgage or any other Security Document are not in effect or not legal, valid and binding obligations (other than pursuant to the terms hereof or thereof).

 

Section 11.9           Judgments. One or more monetary judgments or decrees shall be entered against the Borrower or any of the Restricted Subsidiaries involving a liability in excess of the greater of $150,000,000 and 2.5% of Consolidated Total Assets or more in the aggregate for all such judgments and decrees for the Borrower and the Restricted Subsidiaries (to the extent not paid or covered by insurance provided by a carrier not disputing coverage), which judgments are not discharged or effectively waived or stayed for a period of sixty (60) consecutive days.

 

Section 11.10         Change of Control. A Change of Control shall have occurred.

 

Then, and in any such event, and at any time thereafter, if any Event of Default shall then be continuing, the Administrative Agent may with the consent of and, upon the written request of the Majority Lenders, shall, by written notice to the Borrower, take any or all of the following actions, without prejudice to the rights of the Administrative Agent or any Lender to enforce its claims against the Borrower or any other Credit Party, except as otherwise specifically provided for in this Agreement (provided that, if an Event of Default specified in Section 11.5 shall occur with respect to the Borrower, the result that would occur upon the giving of written notice by the Administrative Agent as specified in clauses (a), (b) and (c) below shall occur automatically without the giving of any such notice): (a) declare the Total Commitment and Swingline Commitment terminated, whereupon the Commitment of each Lender and the Swingline Lender, as the case may be, shall forthwith terminate immediately and any fees theretofore accrued shall forthwith become due and payable without any other notice of any kind; (b) declare the principal of and any accrued interest and fees in respect of any or all Loans and any or all Obligations owing hereunder and thereunder to be, whereupon the same shall become, forthwith due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; and/or (c) demand cash collateral in respect of any outstanding Letter of Credit pursuant to Section 3.7(b) in an amount equal to the aggregate Stated Amount of all Letters of Credit issued and then outstanding. In addition, after the occurrence and during the continuance of an Event of Default, the Administrative Agent and the Lenders will have all other rights and remedies available at law and equity.

 

Section 11.11          Application of Proceeds. Any amount received by the Administrative Agent or the Collateral Agent from any Credit Party (or from proceeds of any Collateral) following any acceleration of the Obligations under this Agreement or any Event of Default with respect to the Borrower under Section 11.5 shall, subject to the terms of any applicable Customary Intercreditor Agreement, be applied:

 

(a)            First, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including fees, disbursements and other charges of counsel payable under Section 12.7 and amounts payable under Article 2) payable to the Administrative Agent and/or Collateral Agent in such Person’s capacity as such;

 

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(b)           Second, to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal, interest and Letter of Credit Fees) payable to the Lenders and the Issuing Banks (including fees, disbursements and other charges of counsel payable under Section 12.7) arising under the Credit Documents and amounts payable under Article 2, ratably among them in proportion to the respective amounts described in this clause Second payable to them;

 

(c)           Third, to payment of that portion of the Obligations constituting accrued and unpaid Letter of Credit Fees and interest on the Loans and Unpaid Drawings, ratably among the Lenders and the Issuing Banks in proportion to the respective amounts described in this clause Third payable to them;

 

(d)           Fourth, (i) to payment of that portion of the Obligations constituting unpaid principal of the Loans, the Unpaid Drawings and Obligations then owing under Secured Hedge Agreements and the Secured Cash Management Agreements and (ii) to Cash Collateralize that portion of Letters of Credit Outstanding comprising the aggregate undrawn amount of Letters of Credit to the extent not otherwise Cash Collateralized by the Borrower pursuant to Section 3.7, ratably among the Lenders, the Issuing Banks, the Hedge Banks and the Cash Management Banks in proportion to the respective amounts described in this clause Fourth held by them; provided that (x) any such amounts applied pursuant to the foregoing clause (ii) shall be paid to the Administrative Agent for the ratable account of the applicable Issuing Bank to Cash Collateralize such Letters of Credit Outstanding, (y) subject to Section 3.7, amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to this clause Fourth shall be applied to satisfy drawings under such Letters of Credit as they occur and (z) upon the expiration of any Letter of Credit, the pro rata share of Cash Collateral attributable to such expired Letter of Credit shall be distributed in accordance with this clause Fourth;

 

(e)            Fifth, to the payment of all other Obligations of the Credit Parties owing under or in respect of the Credit Documents that are due and payable to the Administrative Agent and the other Secured Parties on such date, ratably based upon the respective aggregate amounts of all such Obligations owing to the Administrative Agent and the other Secured Parties on such date; and

 

(f)            Last, the balance, if any, after Payment in Full, to the Borrower or as otherwise required by Requirements of Law.

 

Subject to Section 3.7, amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to clause Fourth above shall be applied to satisfy drawings under such Letters of Credit as they occur. If any amount remains on deposit as Cash Collateral after all Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied to the other Obligations, if any, in the order set forth above. Notwithstanding the foregoing, no amounts received from any Guarantor or Parent Entity Guarantor shall be applied to any Excluded Swap Obligations of such Guarantor or Parent Entity Guarantor.

 

Section 11.12         Equity Cure.

 

(a)           Notwithstanding anything to the contrary contained in this Article 11 or in any Credit Document, in the event that the Borrower fails to comply with the requirements of Section 10.11(a) or Section 10.11(b), then (A) at any time after the beginning of such fiscal quarter (but, in any event, after the Effective Date) until the expiration of the tenth Business Day subsequent to the date the compliance certificate for calculating the Consolidated Total Debt to EBITDAX Ratio and/or the Consolidated Current Ratio is required to be delivered pursuant to Section 9.1(c) (the “Cure Deadline”), the Borrower shall have the right to cure such failure (the “Cure Right”) by receiving cash proceeds (which cash proceeds shall be received no earlier than the first day of the applicable fiscal quarter for which there is a failure to comply with the applicable Financial Performance Covenant) from an issuance of Qualified Equity Interests (other than Disqualified Stock) for cash as a cash capital contribution (or from any other contribution of cash to capital or issuance or sale of any other Equity Interests on terms reasonably acceptable to the Administrative Agent), and upon receipt by the Borrower of such cash proceeds (such cash amount being referred to as the “Cure Amount”) pursuant to the exercise of such Cure Right, any applicable Financial Performance Covenant shall be recalculated giving effect to the following pro forma adjustments:

 

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(i)            Consolidated EBITDAX and/or Consolidated Current Assets, as specified by the Borrower, shall be increased, solely for the purpose of determining the existence of an Event of Default resulting from a breach of the applicable Financial Performance Covenant with respect to (A) in the case of an increase in Consolidated EBITDAX, any Test Period that includes the fiscal quarter for which the Cure Right was exercised and (B) in the case of an increase in Consolidated Current Assets, the Test Period then ending and, in all cases, not for any other purpose under this Agreement, by an amount equal to the Cure Amount; and

 

(ii)           if, after giving effect to the foregoing recalculations (without giving effect to any repayment of any Indebtedness with any portion of the Cure Amount or any portion of the Cure Amount on the balance sheet of Holdings and the Restricted Subsidiaries, in each case, with respect to such fiscal quarter only), the Borrower shall then be in compliance with the requirements of the applicable Financial Performance Covenants, the Borrower shall be deemed to have satisfied the requirements of such Financial Performance Covenants as of the relevant date of determination with the same effect as though there had been no failure to comply therewith at such date, and the applicable breach or default of any such Financial Performance Covenant that had occurred shall be deemed cured for the purposes of this Agreement; provided that (A) in each period of four consecutive fiscal quarters there shall be at least two fiscal quarters in which no Cure Right is exercised, (B) Cure Rights shall not be exercised more than four times during the term of this Agreement, (C) each Cure Amount shall be no greater than the amount required to cause the Borrower to be in compliance with any such applicable Financial Performance Covenant above (such amount, the “Necessary Cure Amount”; it being understood that, for the avoidance of doubt, the Necessary Cure Amount required to cure the two separate Financial Performance Covenants in respect of a fiscal quarter may differ); provided that if the Cure Right is exercised prior to the date financial statements are required to be delivered for such fiscal quarter, then the Cure Amount shall be equal to the amount reasonably determined by the Borrower in good faith that is required for purposes of complying with the applicable Financial Performance Covenants for such fiscal quarter (such amount, the “Expected Cure Amount”), (D) with respect to an increase of Consolidated EBITDAX, in respect of the fiscal quarter in which such Cure Right was exercised and for each Test Period that includes such fiscal quarter, all such Cure Amounts shall be disregarded for the purposes of any financial ratio determination under the Credit Documents other than for determining compliance with the applicable Financial Performance Covenants, (E) with respect to an increase in Consolidated Current Assets, in respect of the fiscal quarter in which such Cure Right was exercised, all such Cure Amounts shall be disregarded for the purposes of any financial ratio determination under the Credit Documents other than for determining compliance with the applicable Financial Performance Covenants, (F)  no Lender or Issuing Bank shall be required to make any extension of credit hereunder during the ten (10)-Business Day period referred to above, unless the Borrower shall have received the Cure Amount, and (G) no amounts received pursuant to any exercise of the Cure Right shall be applied to reduce the Indebtedness of the Borrower and the Restricted Subsidiaries on a Pro Forma Basis for purposes of determining compliance with the Financial Performance Covenants for the fiscal quarter in which such Cure Right was made (provided that to the extent such amounts are actually applied to prepay Indebtedness, such reduction may be given effect in determining compliance with the Financial Performance Covenants for fiscal quarters after the fiscal quarter in which such Cure Right was made); and

 

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(iii)          upon receipt by the Administrative Agent of written notice, on or prior to the Cure Deadline, that the Borrower intends to exercise the Cure Right in respect of a fiscal quarter, the Lenders shall not be permitted to accelerate Loans held by them or to exercise remedies against the Collateral on the basis of a failure to comply with the requirements of the applicable Financial Performance Covenants, unless such failure is not cured pursuant to the exercise of the Cure Right on or prior to the Cure Deadline.

 

(b)           Expected Cure Amount. Notwithstanding anything herein to the contrary, to the extent that the Expected Cure Amount is less than the Necessary Cure Amount, then not later than the applicable Cure Deadline, the Borrower must receive cash proceeds from issuance of Equity Interests (other than Disqualified Stock) or a cash capital contribution, which cash proceeds received by Borrower shall be equal to the shortfall between such Expected Cure Amount and such Necessary Cure Amount.

 

ARTICLE 12
The Agents

 

Section 12.1           Appointment.

 

(a)           Each Lender hereby irrevocably designates and appoints the Administrative Agent as the agent of such Lender under this Agreement and the other Credit Documents and irrevocably authorizes the Administrative Agent, in such capacity, to take such action on its behalf under the provisions of this Agreement and the other Credit Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement and the other Credit Documents, together with such other powers as are reasonably incidental thereto. The provisions of this Article 12 (other than Section 12.1(c) with respect to the Lead Arrangers and the Bookrunners, and Sections 12.9, 12.11, 12.12 and the last sentence of Section 12.4 with respect to the Borrower) are solely for the benefit of the Agents and the Lenders, and the Borrower shall not have rights as third party beneficiary of any such provision. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Credit Document or otherwise exist against the Administrative Agent.

 

(b)           The Administrative Agent, the Swingline Lender, each Lender and each Issuing Bank hereby irrevocably designate and appoint the Collateral Agent as the agent with respect to the Collateral, and each of the Administrative Agent, each Swingline Lender, each Lender and each Issuing Bank irrevocably authorizes the Collateral Agent, in such capacity, to take such action on its behalf under the provisions of this Agreement and the other Credit Documents and to exercise such powers and perform such duties as are expressly delegated to the Collateral Agent by the terms of this Agreement and the other Credit Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Collateral Agent shall not have any duties or responsibilities except those expressly set forth herein, or any fiduciary relationship with any of the Administrative Agent, the Swingline Lender, the Lenders or the Issuing Banks, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Credit Document or otherwise exist against the Collateral Agent.

 

(c)            Each of the Lead Arrangers and the Bookrunners, in their capacities as such, shall not have any obligations, duties or responsibilities under this Agreement but shall be entitled to all benefits of this Article 12.

 

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Section 12.2           Delegation of Duties. The Administrative Agent and the Collateral Agent may each execute any of its duties under this Agreement and the other Credit Documents by or through agents, sub-agents, employees or attorneys-in-fact (each, a “Subagent”) and shall be entitled to advice of counsel concerning all matters pertaining to such duties; provided, however, that no such Subagent shall be authorized to take any action with respect to any Collateral unless and except to the extent expressly authorized in writing by the Administrative Agent. If any Subagent, or successor thereto, shall die, become incapable of acting, resign or be removed, all rights, powers, privileges and duties of such Subagent, to the extent permitted by law, shall automatically vest in and be exercised by the Administrative Agent until the appointment of a new Subagent. Neither the Administrative Agent nor the Collateral Agent shall be responsible for the negligence or misconduct of any Subagents selected by it in the absence of gross negligence or willful misconduct (as determined in the final judgment of a court of competent jurisdiction).

 

Section 12.3           Exculpatory Provisions. No Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be (a) liable for any action lawfully taken or omitted to be taken by any of them under or in connection with this Agreement or any other Credit Document (except for its or such Person’s own gross negligence or willful misconduct, as determined in the final judgment of a court of competent jurisdiction, in connection with its duties expressly set forth herein) or (b) responsible in any manner to any of the Lenders or any participant for any recitals, statements, representations or warranties made by any of the Borrower, any other Credit Party or any officer thereof contained in this Agreement or any other Credit Document or in any certificate, report, statement or other document referred to or provided for in, or received by such Agent under or in connection with, this Agreement or any other Credit Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Credit Document, or the perfection or priority of any Lien or security interest created or purported to be created under the Security Documents or for any failure of the Borrower or any other Credit Party to perform its obligations hereunder or thereunder. No Agent shall be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Credit Document, or to inspect the properties, books or records of any Credit Party or any Affiliate thereof. The Collateral Agent shall not be under any obligation to the Administrative Agent, any Lender, the Swingline Lender or any Issuing Bank to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Credit Document, or to inspect the properties, books or records of any Credit Party.

 

Section 12.4           Reliance by Agents. The Administrative Agent and the Collateral Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or teletype message, statement, order or other document or instruction believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including counsel to the Borrower), independent accountants and other experts selected by the Administrative Agent or the Collateral Agent. The Administrative Agent may deem and treat the Lender specified in the Register with respect to any amount owing hereunder as the owner thereof for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with the Administrative Agent. The Administrative Agent and the Collateral Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Credit Document unless it shall first receive such advice or concurrence of the Majority Lenders as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action. The Administrative Agent and the Collateral Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Credit Documents in accordance with a request of the Majority Lenders, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Loans; provided that the Administrative Agent and Collateral Agent shall not be required to take any action that, in its opinion or in the opinion of its counsel, may expose it to liability or that is contrary to any Credit Document or applicable Requirements of Law. For purposes of determining compliance with the conditions specified in Article 6 and Article 7 on the Effective Date, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Effective Date specifying its objection thereto.

 

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Section 12.5           Notice of Default. Neither the Administrative Agent nor the Collateral Agent shall be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless the Administrative Agent or Collateral Agent, as applicable, has received notice from a Lender or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default”. In the event that the Administrative Agent receives such a notice, it shall give notice thereof to the Lenders and the Collateral Agent. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Majority Lenders; provided that unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders except to the extent that this Agreement requires that such action be taken only with the approval or consent of the Majority Lenders, the Required Lenders, each individual lender or adversely affect Lender, as applicable.

 

Section 12.6           Non-Reliance on Administrative Agent, Collateral Agent and Other Lenders. Each Lender expressly acknowledges that neither the Administrative Agent nor the Collateral Agent nor any of their respective officers, directors, employees, agents, attorneys-in-fact or Affiliates has made any representations or warranties to it and that no act by the Administrative Agent or Collateral Agent hereinafter taken, including any review of the affairs of the Borrower or any other Credit Party, shall be deemed to constitute any representation or warranty by the Administrative Agent or Collateral Agent to any Lender, any Swingline Lender or any Issuing Bank. Each Lender, each Swingline Lender and each Issuing Bank represents to the Administrative Agent and the Collateral Agent that it has, independently and without reliance upon the Administrative Agent, Collateral Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of the Borrower and each other Credit Party and made its own decision to make its Loans hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon the Administrative Agent, Collateral Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Credit Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Borrower and any other Credit Party. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, neither the Administrative Agent nor the Collateral Agent shall have any duty or responsibility to provide any Lender with any credit or other information concerning the business, assets, operations, properties, financial condition, prospects or creditworthiness of the Borrower or any other Credit Party that may come into the possession of the Administrative Agent or Collateral Agent any of their respective officers, directors, employees, agents, attorneys-in-fact or Affiliates.

 

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Section 12.7           Indemnification. The Lenders severally agree to indemnify the Administrative Agent and the Collateral Agent, each in its capacity as such (to the extent that the Credit Parties for any reason fail to indefeasibly pay any amount required under Section 13.5 and without limiting the obligation of the Credit Parties to do so), ratably according to their respective portions of the Commitments or Loans, as applicable, outstanding in effect on the date on which indemnification is sought (or, if indemnification is sought after Payment in Full, ratably in accordance with their respective portions of the Total Exposure in effect immediately prior to such date), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time occur (including at any time following the payment of the Loans) be imposed on, incurred by or asserted against the Administrative Agent or the Collateral Agent in any way relating to or arising out of any actual or threatened claim, action, suit litigation investigation or proceeding (each, a “Proceeding”) relating to the Commitments, this Agreement, any of the other Credit Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by the Administrative Agent or the Collateral Agent under or in connection with any Proceeding; provided that no Lender shall be liable to the Administrative Agent or the Collateral Agent for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from such Administrative Agent’s or the Collateral Agent’s, as applicable, gross negligence, bad faith or willful misconduct as determined by a final judgment of a court of competent jurisdiction; provided, further, that no action taken in accordance with the directions of the Majority Lenders (or such other number or percentage of the Lenders as shall be required by the Credit Documents) shall be deemed to constitute gross negligence, bad faith or willful misconduct for purposes of this Section 12.7. In the case of any investigation, litigation or proceeding giving rise to any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time occur (including at any time following the payment of the Loans), this Section 12.7 applies whether any such investigation, litigation or proceeding is brought by any Lender or any other Person. Without limitation of the foregoing, each Lender shall reimburse the Administrative Agent and the Collateral Agent upon demand for its ratable share of any costs or out-of-pocket expenses (including Attorney Costs) incurred by such Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice rendered in respect of rights or responsibilities under, this Agreement, any other Credit Document, or any document contemplated by or referred to herein, to the extent that such Agent is not reimbursed for such expenses by or on behalf of the Borrower; provided that such reimbursement by the Lenders shall not affect the Borrower’s continuing reimbursement obligations with respect thereto. If any indemnity furnished to any Agent for any purpose shall, in the opinion of such Agent, be insufficient or become impaired, such Agent may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such additional indemnity is furnished; provided, in no event shall this sentence require any Lender to indemnify any Agent against any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement in excess of such Lender’s pro rata portion thereof; and provided further, this sentence shall not be deemed to require any Lender to indemnify any Agent against any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement resulting from such Agent’s gross negligence, bad faith or willful misconduct. The agreements in this Section 12.7 shall survive the payment of the Loans and all other amounts payable hereunder.

 

Section 12.8           Agents in Its Individual Capacities. Each Agent and its Affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Borrower and any other Credit Party as though such Agent were not an Agent hereunder and under the other Credit Documents. With respect to the Loans made by it, each Agent shall have the same rights and powers under this Agreement and the other Credit Documents as any Lender and may exercise the same as though it were not an Agent, and the terms “Lender” and “Lenders” shall include each Agent in its individual capacity.

 

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Section 12.9           Successor Agents. Each of the Administrative Agent and Collateral Agent may at any time give notice of its resignation to the Lenders, the Swingline Lender, the Issuing Banks and the Borrower. If the Administrative Agent, any Swingline Lender and/or Collateral Agent becomes a Defaulting Lender, then such Administrative Agent, Swingline Lender or Collateral Agent, may be removed as Administrative Agent, Swingline Lender or Collateral Agent, as the case may be, at the reasonable request of the Borrower or the Majority Lenders. Upon receipt of any such notice of resignation or removal, as the case may be, the Majority Lenders shall have the right to appoint a successor, which successor agent shall be (a) subject to the consent of the Borrower at all times other than during the existence of an Event of Default under Section 11.1 or 11.5 (which consent of the Borrower shall not be unreasonably withheld or delayed) and (b) a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States; provided, that in no event shall any such successor be a Defaulting Lender or a Disqualified Institution. If, in the case of a resignation of a retiring Agent, no such successor shall have been so appointed by the Majority Lenders and shall have accepted such appointment within thirty (30) days after the retiring Agent gives notice of its resignation, then the retiring Agent may on behalf of the Lenders, the Swingline Lender and the Issuing Banks, appoint a successor Agent meeting the qualifications set forth above (provided that if the Administrative Agent shall notify the Borrower and the Lenders that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (a) the retiring Agent shall be discharged from its duties and obligations hereunder and under the other Credit Documents (except that in the case of any collateral security held by the Agent on behalf of the Lenders or Issuing Banks under and Credit Documents, the retiring Agent shall continue to hold such collateral security until such time as a successor Agent is appointed) and (b) all payments, communications and determinations provided to be made by, to or through the Agent shall instead be made by or to each Lender and Issuing Bank directly, until such time as the Majority Lenders appoint a successor Agent as provided for above in this Section 12.9). Upon the acceptance of a successor’s appointment as the Administrative Agent or Collateral Agent, as the case may be, hereunder, and upon the execution and filing or recording of such financing statements, or amendments thereto, and such other instruments or notices, as may be necessary or desirable, or as the Majority Lenders may request, in order to continue the perfection of the Liens granted or purported to be granted by the Security Documents, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Agent, and the retiring Agent shall be discharged from all of its duties and obligations hereunder or under the other Credit Documents (if not already discharged therefrom as provided above in this Section 12.9). After the retiring Agent’s resignation hereunder and under the other Credit Documents, the provisions of this Article 12 (including Section 12.7) and Section 13.5 shall continue in effect for the benefit of such retiring Agent, its Subagents and their respective Agent-Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Agent was acting as an Agent.

 

Any resignation of any Person as Administrative Agent pursuant to this Section 12.9 shall also constitute its resignation as Issuing Bank and Swingline Lender. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Issuing Bank, (b) the retiring Issuing Bank shall be discharged from all of its duties and obligations hereunder and under the other Credit Documents, and (c) the successor Issuing Bank shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to the retiring Issuing Bank to effectively assume the obligations of the retiring Issuing Bank with respect to such Letters of Credit.

 

Section 12.10         Withholding Tax. To the extent required by any applicable Requirement of Law, the Administrative Agent may withhold from any payment to any Lender an amount equivalent to any applicable withholding tax. If the IRS or any authority of the United States or other jurisdiction asserts a claim that the Administrative Agent did not properly withhold tax from amounts paid to or for the account of any Lender for any reason (including because the appropriate form was not delivered, was not properly executed, or because such Lender failed to notify the Administrative Agent of a change in circumstances that rendered the exemption from, or reduction of, withholding tax ineffective), such Lender shall severally indemnify the Administrative Agent (to the extent that the Administrative Agent has not already been reimbursed by any applicable Credit Party and without limiting the obligation of any applicable Credit Party to do so) fully for all amounts paid, directly or indirectly, by the Administrative Agent as Tax or otherwise, including penalties, additions to Tax and interest, together with all expenses incurred, including legal expenses, allocated staff costs and any out of pocket expenses. In addition, each Lender shall severally indemnify the Administrative Agent for (i) any Indemnified Taxes or Other Taxes attributable to such Lender (but only to the extent that any applicable Credit Party has not already indemnified the Administrative Agent for such Indemnified Taxes or Other Taxes and without limiting the obligation of any applicable Credit Party to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Credit Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under this Agreement or any other Credit Document against any amount due to the Administrative Agent under this Section 12.10. For the avoidance of doubt, for purposes of this Section 12.10, the term “Lender” includes any Issuing Bank and any Swingline Lender.

 

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Section 12.11         Security Documents and Collateral Agent under Security Documents and Guarantee. Each Secured Party hereby further authorizes the Administrative Agent or Collateral Agent, as applicable, on behalf of and for the benefit of Secured Parties, to be the agent for and representative of the Secured Parties with respect to the Collateral and the Security Documents. Without further written consent or authorization from any Secured Party, the Administrative Agent or Collateral Agent, as applicable, is authorized to (x) enter into or amend the Collateral Agreement on the Effective Date and (y) to amend the Security Documents to add additional Collateral. Subject to Section 13.1, without further written consent or authorization from any Secured Party, the Administrative Agent or Collateral Agent, as applicable, may (a) execute any documents or instruments necessary in connection with a Disposition of assets permitted by this Agreement, (b) release any Lien encumbering any item of Collateral that is (i) the subject of such Disposition of assets or otherwise becomes an Excluded Equity Interest, an Excluded Asset or property of an Excluded Subsidiary, (ii) to the extent the property constituting Collateral is owned by any Guarantor, upon the release of such Guarantor from its obligations under the Guarantee in accordance with Section 5(g) of the Guarantee or otherwise in accordance with this Agreement or (iii) with respect to which Majority Lenders (or such other Lenders as may be required to give such consent under Section 13.1) have otherwise consented or (c) release any applicable Guarantor from the Guarantee in connection with such Disposition or in connection with such Guarantor becoming an Excluded Subsidiary, or with respect to which Majority Lenders (or such other Lenders as may be required to give such consent under Section 13.1) have otherwise consented. The Lenders and the Issuing Banks (including in their capacities as potential Cash Management Banks and potential Hedge Banks) irrevocably agree that (x) the Collateral Agent is authorized and the Collateral Agent agrees it shall (for the benefit of Borrower), without any further consent of any Lender, enter into or amend the Customary Intercreditor Agreement or any intercreditor agreement with the collateral agent or other representatives of the holders of Indebtedness that is permitted to be secured by a Lien on the Collateral that is permitted under this Agreement, in each case for the purpose of adding the holders of such Indebtedness (or their representative) as a party thereto and otherwise causing such Indebtedness to be subject thereto (it being understood that any changes may be made to the Customary Intercreditor Agreement or any applicable intercreditor agreement as, in the good faith determination of the Administrative Agent, are required to effectuate the foregoing and with any material modifications to be reasonably satisfactory to the Administrative Agent), (y) the Collateral Agent may rely exclusively on a certificate of an Authorized Officer of the Borrower as to whether any such other Liens are permitted and (z) any such intercreditor agreement referred to in clause (x) above, entered into by the Collateral Agent, shall be binding on the Secured Parties. Furthermore, the Lenders and the Issuing Banks (including in their capacities as potential Cash Management Bank and potential Hedge Banks) hereby authorize the Administrative Agent and the Collateral Agent to subordinate any Lien on any property granted to or held by the Administrative Agent or Collateral Agent under any Credit Document to the holder of any Lien on such property that is permitted by clause (j) of the definition of “Permitted Liens” and clauses (c), (e) (with respect to Liens securing Indebtedness permitted under Section 10.1(f)), (f), (g), (j), (o), (p), (w), (x) and (y) of Section 10.2 or otherwise permitted to be senior to the Liens of Administrative Agent or Collateral Agent on such property; provided that prior to any such request, the Borrower shall have in each case delivered to the Administrative Agent a certificate of an Authorized Officer of the Borrower certifying that such subordination is permitted under this Agreement.

 

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Section 12.12         Right to Realize on Collateral and Enforce Guarantee. Anything contained in any of the Credit Documents to the contrary notwithstanding, the Borrower, the Agents and each Secured Party hereby agree that (a) no Secured Party shall have any right individually to realize upon any of the Collateral or to enforce the Guarantee, it being understood and agreed that all powers, rights and remedies hereunder may be exercised solely by the Administrative Agent, on behalf of the Secured Parties in accordance with the terms hereof and all powers, rights and remedies under the Security Documents may be exercised solely by the Collateral Agent, and (b) in the event of a foreclosure by the Collateral Agent on any of the Collateral pursuant to a public or private sale or other disposition, the Collateral Agent or any Lender may be the purchaser or licensor of any or all of such Collateral at any such sale or other disposition and the Collateral Agent, as agent for and representative of the Secured Parties (but not any Lender or Lenders in its or their respective individual capacities unless the Majority Lenders shall otherwise agree in writing) shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such public sale, to use and apply any of the Obligations as a credit on account of the purchase price for any collateral payable by the Collateral Agent at such sale or other disposition.

 

Section 12.13         Administrative Agent May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding, constituting an Event of Default under Section 11.5, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise:

 

(a)           to file and prove a claim for the whole amount of the principal and interest owing and unpaid hereunder or under any other Credit Document in respect of the Loans and all other Indebtedness that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel, to the extent due under Section 13.5) allowed in such judicial proceeding; and

 

(b)           to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

 

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, to the extent due under Section 13.5.

 

Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Indebtedness or the rights of any Lender or to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such proceeding.

 

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Section 12.14         Erroneous Payments.

 

(a)            If the Administrative Agent (x) notifies a Lender, Issuing Bank or Secured Party, or any Person who has received funds on behalf of a Lender, Issuing Bank or Secured Party (any such Lender, Issuing Bank, Secured Party or other recipient (and each of their respective successors and assigns), but in any event excluding the Credit Parties and their Affiliates, a “Payment Recipient”) that the Administrative Agent has determined in its sole discretion (whether or not after receipt of any notice under immediately succeeding clause (b)) that any funds (as set forth in such notice from the Administrative Agent) received by such Payment Recipient from the Administrative Agent or any of its Affiliates were erroneously or mistakenly transmitted to, or otherwise erroneously or mistakenly received by, such Payment Recipient (whether or not known to such Lender, Issuing Bank, Secured Party or other Payment Recipient on its behalf) (any such funds, whether transmitted or received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise, individually and collectively, an “Erroneous Payment”) and (y) demands in writing the return of such Erroneous Payment (or a portion thereof), such Erroneous Payment shall at all times remain the property of the Administrative Agent pending its return or repayment as contemplated below in this Section 12.14 and held in trust for the benefit of the Administrative Agent, and such Lender, Issuing Bank or Secured Party shall (or, with respect to any Payment Recipient who received such funds on its behalf, shall cause such Payment Recipient to) promptly, but in no event later than two Business Days thereafter (or such later date as the Administrative Agent may, in its sole discretion, specify in writing), return to the Administrative Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand was made, in same day funds (in the currency so received), together with interest thereon (except to the extent waived in writing by the Administrative Agent) in respect of each day from and including the date such Erroneous Payment (or portion thereof) was received by such Payment Recipient to the date such amount is repaid to the Administrative Agent in same day funds at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect. A notice of the Administrative Agent to any Payment Recipient under this clause (a) shall be conclusive, absent manifest error.

 

(b)           Without limiting immediately preceding clause (a), each Payment Recipient (and each of their respective successors and assigns), agrees that if it receives a payment, prepayment or repayment (whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise) from the Administrative Agent (or any of its Affiliates) (x) that is in a different amount than, or on a different date from, that specified in this Agreement or in a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates) with respect to such payment, prepayment or repayment, (y) that was not preceded or accompanied by a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates), or (z) that such Payment Recipient, otherwise becomes aware was transmitted, or received, in error or by mistake (in whole or in part), then in each such case:

 

(i)            it acknowledges and agrees that (A) in the case of immediately preceding clauses (x) or (y), an error and mistake shall be presumed to have been made (absent written confirmation from the Administrative Agent to the contrary) or (B) an error and mistake has been made (in the case of immediately preceding clause (z)), in each case, with respect to such payment, prepayment or repayment; and

 

(ii)           such Payment Recipient shall (and shall use commercially reasonable efforts to cause any other recipient that receives funds on its respective behalf to) promptly (and, in all events, within one Business Day of its knowledge of the occurrence of any of the circumstances described in immediately preceding clauses (x), (y) and (z)) notify the Administrative Agent of its receipt of such payment, prepayment or repayment, the details thereof (in reasonable detail) and that it is so notifying the Administrative Agent pursuant to this Section 12.14(b).

 

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For the avoidance of doubt, the failure to deliver a notice to the Administrative Agent pursuant to this Section 12.14(b) shall not have any effect on a Payment Recipient’s obligations pursuant to Section 12.14(a) or on whether or not an Erroneous Payment has been made.

 

(c)            Each Lender, Issuing Bank or Secured Party hereby authorizes the Administrative Agent to set off, net and apply any and all amounts at any time owing to such Lender, Issuing Bank or Secured Party under any Credit Document, or otherwise payable or distributable by the Administrative Agent to such Lender, Issuing Bank or Secured Party under any Credit Document with respect to any payment of principal, interest, fees or other amounts, against any amount that the Administrative Agent has demanded to be returned under immediately preceding clause (a).

 

(d)

 

(i)            In the event that an Erroneous Payment (or portion thereof) is not recovered by the Administrative Agent for any reason, after demand therefor in accordance with immediately preceding clause (a), from any Lender that has received such Erroneous Payment (or portion thereof) (and/or from any Payment Recipient who received such Erroneous Payment (or portion thereof) on its respective behalf) (such unrecovered amount, an “Erroneous Payment Return Deficiency”), upon the Administrative Agent’s notice to such Lender at any time, then effective immediately (with the consideration therefor being acknowledged by the parties hereto), (A) such Lender shall be deemed to have assigned its Loans (but not its Commitments) with respect to which such Erroneous Payment was made (the “Erroneous Payment Impacted Class”) in an amount equal to the Erroneous Payment Return Deficiency (or such lesser amount as the Administrative Agent may specify) (such assignment of the Loans (but not Commitments) of the Erroneous Payment Impacted Class, the “Erroneous Payment Deficiency Assignment”) (on a cashless basis and such amount calculated at par plus any accrued and unpaid interest (with the assignment fee to be waived by the Administrative Agent in such instance)), and is hereby (together with the Borrower) deemed to execute and deliver an Assignment and Assumption (or, to the extent applicable, an agreement incorporating an Assignment and Assumption by reference pursuant to an Approved Electronic Platform as to which the Administrative Agent and such parties are participants) with respect to such Erroneous Payment Deficiency Assignment, and such Lender shall deliver any Notes evidencing such Loans to the Borrower or the Administrative Agent (but the failure of such Person to deliver any such Notes shall not affect the effectiveness of the foregoing assignment), (B) the Administrative Agent as the assignee Lender shall be deemed to have acquired the Erroneous Payment Deficiency Assignment, (C) upon such deemed acquisition, the Administrative Agent as the assignee Lender shall become a Lender, as applicable, hereunder with respect to such Erroneous Payment Deficiency Assignment and the assigning Lender shall cease to be a Lender, as applicable, hereunder with respect to such Erroneous Payment Deficiency Assignment, excluding, for the avoidance of doubt, its obligations under the indemnification provisions of this Agreement and its applicable Commitments which shall survive as to such assigning Lender, (D) the Administrative Agent and the Borrower shall each be deemed to have waived any consents required under this Agreement to any such Erroneous Payment Deficiency Assignment, and (E) the Administrative Agent will reflect in the Register its ownership interest in the Loans subject to the Erroneous Payment Deficiency Assignment. For the avoidance of doubt, no Erroneous Payment Deficiency Assignment will reduce the Commitments of any Lender and such Commitments shall remain available in accordance with the terms of this Agreement.

 

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(ii)            Subject to Section 13.6, the Administrative Agent may, in its discretion, sell any Loans acquired pursuant to an Erroneous Payment Deficiency Assignment and upon receipt of the proceeds of such sale, the Erroneous Payment Return Deficiency owing by the applicable Lender shall be reduced by the net proceeds of the sale of such Loan (or portion thereof), and the Administrative Agent shall retain all other rights, remedies and claims against such Lender (and/or against any recipient that receives funds on its respective behalf). In addition, an Erroneous Payment Return Deficiency owing by the applicable Lender (x) shall be reduced by the proceeds of prepayments or repayments of principal and interest, or other distribution in respect of principal and interest, received by the Administrative Agent on or with respect to any such Loans acquired from such Lender pursuant to an Erroneous Payment Deficiency Assignment (to the extent that any such Loans are then owned by the Administrative Agent) and (y) may, in the sole discretion of the Administrative Agent, be reduced by any amount specified by the Administrative Agent in writing to the applicable Lender from time to time.

 

(e)           The parties hereto agree that (x) irrespective of whether the Administrative Agent may be equitably subrogated, in the event that an Erroneous Payment (or portion thereof) is not recovered from any Payment Recipient that has received such Erroneous Payment (or portion thereof) for any reason, the Administrative Agent shall be subrogated to all the rights and interests of such Payment Recipient (and, in the case of any Payment Recipient who has received funds on behalf of a Lender, Issuing Bank or Secured Party, to the rights and interests of such Lender, Issuing Bank or Secured Party, as the case may be) under the Credit Documents with respect to such amount (the “Erroneous Payment Subrogation Rights”) (provided that the Credit Parties’ Obligations under the Credit Documents in respect of the Erroneous Payment Subrogation Rights shall not be duplicative of such Obligations in respect of Loans that have been assigned to the Administrative Agent under an Erroneous Payment Deficiency Assignment) and (y) an Erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Obligations owed by the Borrower or any other Credit Party; provided that this Section 12.14 shall not be interpreted to increase (or accelerate the due date for), or have the effect of increasing (or accelerating the due date for), the Obligations of the Borrower relative to the amount (and/or timing for payment) of the Obligations that would have been payable had such Erroneous Payment not been made by the Administrative Agent; provided, further, that for the avoidance of doubt, immediately preceding clauses (x) and (y) shall not apply to the extent any such Erroneous Payment is, and solely with respect to the amount of such Erroneous Payment that is, comprised of funds received by the Administrative Agent from the Borrower for the purpose of making such Erroneous Payment.

 

(f)            To the extent permitted by applicable law, no Payment Recipient shall assert any right or claim to an Erroneous Payment, and hereby waives, and is deemed to waive, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Erroneous Payment received, including, without limitation, any defense based on “discharge for value” or any similar doctrine.

 

(g)           Each party’s obligations, agreements and waivers under this Section 12.14 shall survive the resignation or replacement of the Administrative Agent, any transfer of rights or obligations by, or the replacement of, a Lender or Issuing Bank, the termination of the Commitments and/or the repayment, satisfaction or discharge of all Obligations (or any portion thereof) under any Credit Document.

 

(h)           Notwithstanding anything to the contrary herein or in any other Credit Document, neither any Credit Party nor any of its respective Affiliates shall have any obligations or liabilities (including the payment of any assignment or processing fee payable to the Administrative Agent in connection therewith) directly or indirectly arising out of this Section 12.14 in respect of any Erroneous Payment (other than having consented to the assignment referenced in Section 12.14(d)(i) above). The foregoing shall not limit Section 13.5 (but for the avoidance of doubt, it is understood and agreed that, if a Credit Party has paid principal, interest or any other amounts owed to a Secured Party, Section 13.5 shall not require any such Credit Party to pay additional amounts that are duplicative (or by way of Section 13.5, effectively duplicative) of such previously paid amounts).

 

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Section 12.15        Certain ERISA Matters.

 

(a)           Each Lender (for purposes of this Section 12.15, all references to “Lender” or “Lenders” shall be deemed to include any Issuing Bank) (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent, the Collateral Agent, the Lead Arrangers, the Bookrunners and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Credit Party, that at least one of the following is and will be true:

 

(i)             such Lender is not using “plan assets” (within the meaning of Section 3(42) of ERISA or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) of one or more Plans in connection with the Loans, the Letters of Credit or the Commitments,

 

(ii)            the prohibited transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable so as to exempt from the prohibitions of Section 406 of ERISA and Section 4975 of the Code such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement,

 

(iii)           (A) such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and perform the Loans, the Letters of Credit, the Commitments and this Agreement, (C) the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement, or

 

(iv)           such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent, in its sole discretion, and such Lender.

 

(b)           In addition, unless either (1) sub-clause (i) in the immediately preceding clause (a) is true with respect to a Lender or (2) a Lender has provided another representation, warranty and covenant in accordance with sub-clause (iv) in the immediately preceding clause (a), such Lender further (x) represents and warrants, as of the date such Person became a Lender party hereto, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent, the Collateral Agent, the Lead Arrangers, the Bookrunners and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Credit Party, that none of the Administrative Agent, the Collateral Agent, the Lead Arrangers, the Bookrunners and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower or any of their respective Affiliates is a fiduciary with respect to the assets of such Lender involved in the Loans, the Letters of Credit, the Commitments and this Agreement (including in connection with the reservation or exercise of any rights by the Administrative Agent under this Agreement, any Credit Document or any documents related to hereto or thereto)

 

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ARTICLE 13
Miscellaneous.

 

Section 13.1          Amendments, Waivers and Releases.

 

(a)           Except as expressly set forth in this Agreement, neither this Agreement nor any other Credit Document, nor any terms hereof or thereof, may be amended, supplemented or modified except in accordance with the provisions of this Section 13.1. The Majority Lenders may, or, with the written consent of the Majority Lenders, the Administrative Agent and/or the Collateral Agent shall, from time to time, (A) enter into with the relevant Credit Party or Credit Parties written amendments, supplements or modifications hereto and to the other Credit Documents for the purpose of adding any provisions to this Agreement or the other Credit Documents or changing in any manner the rights of the Lenders or of the Credit Parties hereunder or thereunder or (B) waive in writing, on such terms and conditions as the Majority Lenders or the Administrative Agent and/or Collateral Agent, as the case may be, may specify in such instrument, any of the requirements of this Agreement or the other Credit Documents or any Default or Event of Default and its consequences; provided, however, that each such waiver and each such amendment, supplement or modification shall be effective only in the specific instance and for the specific purpose for which given; provided, further, that no such waiver and no such amendment, supplement or modification shall (i) forgive or reduce any portion of any Loan or reduce the stated rate (it being understood that only the consent of the Majority Lenders shall be necessary to waive any obligation of the Borrower to pay interest at the Default Rate or amend Section 2.8(c)), or forgive or reduce any portion, or extend the date for the payment (including the Maturity Date), of any principal, interest or fee payable hereunder (other than as a result of waiving the applicability of any post-default increase in interest rates and any change due to a change in the Borrowing Base or Available Commitment), or extend the final expiration date of any Lender’s Commitment (provided that (1) any Lender, upon the request of the Borrower, may extend the final expiration date of its Commitment without the consent of any other Lender, including the Majority Lenders, and (2) it is being understood that waivers or modifications of conditions precedent, covenants, Defaults or Events of Default shall not constitute an increase of the Commitments of any Lender) or extend the final expiration date of any Letter of Credit beyond the L/C Maturity Date, or increase the amount of the Commitment or Elected Commitment of any Lender (provided that, any Lender, upon the request of the Borrower, may increase the amount of its Commitment or Elected Commitment as provided herein without the consent of any other Lender, including the Majority Lenders), or make any Loan, interest, fee or other amount payable in any currency other than Dollars, in each case without the written consent of each Lender directly and adversely affected thereby, or (ii) amend, modify or waive any provision of this Section 13.1, or reduce the percentages specified in the definitions of the terms “Majority Lenders” or “Required Lenders” (it being understood that, with the consent of the Majority Lenders, additional extensions of credit pursuant to this Agreement may be included in the determination of the Majority Lenders, Required Lenders and all Non-Defaulting Lenders on substantially the same basis as the Loans and Commitments are included on the Effective Date) or any other provision hereof specifying the number or percentage of Lenders which are required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder, consent to the assignment or transfer by the Borrower of its rights and obligations under any Credit Document to which it is a party (except as permitted pursuant to Section 10.3), in each case without the written consent of each Lender directly and adversely affected thereby, or (iii) (1) amend the provisions of Sections 2.7, 4.2(a), 4.4(c)(vii), 11.11, 13.8 or any analogous provision of any Security Document, in a manner that would by its terms alter the pro rata sharing of payments, the pro rata reduction of Commitments or pro rata reduction of the Aggregate Elected Commitment Amount required thereby or (2) amend the provisions of Section 11.11 in a manner that would alter the order of application of payments required thereby, in each case, without the prior written consent of each Lender directly and adversely affected thereby, or (iv) amend, modify or waive any provision of Article 12 without the written consent of the then-current Administrative Agent and Collateral Agent, as applicable, or any other former or current Agent to whom Article 12 then applies in a manner that directly and adversely affects such Person, or (v) amend, modify or waive any provision of Article 3 with respect to any Letter of Credit without the written consent of each Issuing Bank to whom Article 3 then applies in a manner that directly and adversely affects such Person, or (vi) amend, modify or waive any provisions hereof relating to Swingline Loans without the written consent of the Swingline Lender, or (vii) release all or substantially all of the aggregate value of the Guarantees (except as expressly permitted by the Guarantee or this Agreement) without the prior written consent of each Lender, or (viii) release all or substantially all of the Collateral under the Security Documents (except as expressly permitted by the Security Documents or this Agreement) without the prior written consent of each Lender, or (ix) amend Section 2.9 so as to permit Interest Period intervals greater than six (6) months without regard to availability to Lenders, without the written consent of each Lender directly and adversely affected thereby, or (x) increase the Borrowing Base without the written consent of all Non-Defaulting Lenders (provided that no Defaulting Lender’s share of, or amount of, the Borrowing Base may be increased without its consent), decrease or maintain the Borrowing Base without the written consent of the Required Lenders or otherwise modify Section 2.14(b), (c), (d), (e), (f), (g) or (h) if such modification would have the effect of increasing the Borrowing Base without the written consent of all Non-Defaulting Lenders; provided that a Scheduled Redetermination may be postponed by, and a reduction in the Borrowing Base may be waived or reduced by, the Required Lenders; provided, further, that this clause (x) shall not apply (or be deemed to apply) to any other waiver, consent, amendment or other modification that directly or indirectly reduces the amount of, or waives the implementation of, any provision that would otherwise reduce the Borrowing Base, or (xi) affect the rights or duties of, or any fees or other amounts payable to, any Agent under this Agreement or any other Credit Document without the prior written consent of such Agent, or (xii) without the consent of each adversely affected Lender, subordinate the Liens on all or substantially all of the Collateral securing any of the Obligations or subordinate the right of payment of the Obligations (in each case, as such definitions were in effect on the Effective Date). Any such waiver and any such amendment, supplement or modification shall apply equally to each of the affected Lenders and shall be binding upon the Borrower, such Lenders, the Administrative Agent and all future holders of the affected Loans. In the case of any waiver, the Borrower, the Lenders and the Administrative Agent shall be restored to their former positions and rights hereunder and under the other Credit Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing; it being understood that no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon. In connection with the foregoing provisions, the Administrative Agent may, but shall have no obligations to, with the concurrence of any Lender, execute amendments, modifications, waivers or consents on behalf of such Lender whose consent is required hereunder.

 

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(b)           Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of the applicable Lenders other than Defaulting Lenders), except that the Commitment of such Defaulting Lender may not be increased or extended without the consent of such Defaulting Lender and no such amendment, waiver or consent shall disproportionately adversely affect such Defaulting Lender without its consent as compared to other Lenders (it being understood that any Commitments or Loans held or deemed held by any Defaulting Lender shall be excluded for a vote of the Lenders hereunder requiring any consent of the Lenders).

 

(c)           Without the consent of any Lender or Issuing Bank, the Credit Parties and the Administrative Agent or Collateral Agent may (in their respective sole discretion, or shall, to the extent required by any Credit Document) enter into any amendment, modification or waiver of any Credit Document, or enter into any new agreement or instrument, to effect the granting, perfection, protection, expansion or enhancement of any security interest in any Collateral or additional property to become Collateral for the benefit of the Secured Parties, or as required by local law to give effect to, or protect any security interest for the benefit of the Secured Parties, in any property or so that the security interests therein comply with applicable law or this Agreement or in each case to otherwise enhance the rights or benefits of any Lender under any Credit Document.

 

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(d)           In connection with the incurrence by the Borrower or any of its Restricted Subsidiaries of additional Indebtedness to be secured by a Lien on any Collateral permitted by Section 10.2 of this Agreement, at the request of the Borrower, the Administrative Agent (including in its capacity as “collateral agent” under the Credit Documents) agrees to enter into the Customary Intercreditor Agreement, and execute and deliver any amendments, amendments and restatements, restatements or waivers of or supplements to or other modifications to such agreement (each, an “Intercreditor Agreement Supplement”), and any amendments, amendments and restatements, restatements or waivers of or supplements to or other modifications to, any Security Document, and to make or consent to any filings or take any other actions in connection therewith, as may be reasonably determined by the Borrower, with the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed), to be necessary or reasonably desirable for any Lien on the Collateral permitted to secure such additional Indebtedness to become a valid, perfected lien (with such priority as may be designated by the Borrower, to the extent such priority is permitted by the Credit Documents) pursuant to the Security Document being so amended, amended and restated, restated, waived, supplemented or otherwise modified. The Lenders and each of the Issuing Banks hereby authorize the Administrative Agent to take any action contemplated by the preceding sentence, and any such amendment, amendment and restatement, restatement, waiver of or supplement to or other modification of any such Credit Document shall be effective notwithstanding the provisions of Section 13.1.

 

(e)           Notwithstanding the foregoing, this Agreement may be amended (or amended and restated) with the written consent of the Majority Lenders, the Administrative Agent and the Borrower (i) to add one or more additional credit or debt facilities to this Agreement and to permit the extensions of credit from time to time outstanding thereunder and the accrued interest and fees in respect thereof to share ratably in the benefits of this Agreement and the other Credit Documents with the Loans and the Commitments and the accrued interest and fees in respect thereof and (ii) to include appropriately the Lenders holding such credit or debt facilities in any determination of the Majority Lenders, the Required Lenders and all Non-Defaulting Lenders on substantially the same basis as the Lenders prior to such inclusion.

 

(f)            In addition, notwithstanding the foregoing, this Agreement may be amended with the written consent of the Administrative Agent, the Borrower and the Lenders providing the Replacement Loans (as defined below) to permit the refinancing of all outstanding Loans of any Class (“Replaced Loans”) with replacement loans (“Replacement Loans”) hereunder; provided that (i) the aggregate principal amount of such Replacement Loans shall not exceed the aggregate principal amount of such Replaced Loans, plus accrued interest, fees, premiums (if any) and penalties thereon and reasonable fees, expenses, original issue discount and upfront fees associated with such Replacement Loans, (ii) the All-In Yield with respect to such Replacement Loans shall not be higher than the All-In Yield for such Replaced Loans immediately prior to such refinancing unless the maturity of the Replacement Loans is at least one (1) year later than the maturity of the Replaced Loans and (iii) all other terms applicable to such Replacement Loans shall be substantially identical to, or less favorable to the Lenders providing such Replacement Loans than, those applicable to such Replaced Loans, except to the extent necessary to provide for covenants and other terms applicable to any period after the Latest Maturity Date of the Loans in effect immediately prior to such refinancing. Each amendment to this Agreement providing for Replacement Loans may, without the consent of any other Lenders, effect such amendments to this Agreement and the other Credit Documents as may be necessary or appropriate, in the opinion of the Administrative Agent and the Borrower to effect the provisions of this paragraph, and for the avoidance of doubt, this paragraph shall supersede any other provisions in this Section 13.1 to the contrary.

 

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(g)           Notwithstanding the foregoing, technical and conforming modifications to the Credit Documents (including any exhibit, schedule or other attachment) may be made with the consent of the Borrower and the Administrative Agent (i) if such modifications are not adverse in any material respect to the Lenders, the Swingline Lender or the Issuing Banks (in which case, the consent of the Swingline Lender and Issuing Banks shall be required) or (ii) to the extent necessary (A) to integrate any Extended Commitment contemplated by Section 2.17, (B) to change the financial reporting convention in accordance with Section 9.10 or (C) to cure any ambiguity, omission, mistake, defect or inconsistency so long as, in each case with respect to this clause (C), the Lenders, the Swingline Lender and the Issuing Banks shall have received at least five (5) Business Days’ prior written notice thereof and the Administrative Agent shall not have received, within five (5) Business Days of the date of such notice to the Lenders, a written notice from the Majority Lenders stating that the Majority Lenders object to such amendment.

 

(h)           Notwithstanding the foregoing, the Fee Letter may be amended, modified, or supplemented with only the consent of the parties thereto, and such amendment, modification or supplement will not require the consent of any other Person that is not party thereto.

 

(i)            Notwithstanding anything to the contrary herein the Administrative Agent and the Borrower may amend and restate the Schedules to this Agreement delivered as of the date hereof to reflect the Updated Schedules in accordance with Section 6.1(q).

 

Section 13.2           Notices. Unless otherwise expressly provided herein, all notices and other communications provided for hereunder or under any other Credit Document shall be in writing (including by facsimile transmission). All such written notices shall be mailed, faxed or delivered to the applicable address, facsimile number or electronic mail address, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:

 

(a)           if to the Borrower, the Administrative Agent, the Collateral Agent, any Swingline Lender or any Issuing Bank, to the address, facsimile number, electronic mail address or telephone number specified for such Person on Schedule 13.2 or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to the other parties; and

 

(b)           if to any other Lender, to the address, facsimile number, electronic mail address or telephone number specified in its Administrative Questionnaire or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to the Borrower, the Administrative Agent, the Collateral Agent, the Swingline Lender and the Issuing Banks.

 

All such notices and other communications shall be deemed to be given or made upon the earlier to occur of (i) actual receipt by the relevant party hereto and (ii)(A) if delivered by hand or by courier, when signed for by or on behalf of the relevant party hereto; (B) if delivered by mail, three (3) Business Days after deposit in the mails, postage prepaid; (C) if delivered by facsimile, when sent and receipt has been confirmed by telephone; and (D) if delivered by electronic mail, when delivered; provided that notices and other communications to the Administrative Agent or the Lenders pursuant to Sections 2.3, 2.6, 2.9, 4.2 and 5.1 shall not be effective until received.

 

The Borrower agrees that the Administrative Agent may, but shall not be obligated to, make the Communications (as defined below) available to the Issuing Banks and the other Lenders by posting the Communications on the platform. The platform is provided “as is” and “as available.” The Agent Parties (as defined below) do not warrant the adequacy of the platform and expressly disclaim liability for errors or omissions in the Communications. No warranty of any kind, express, implied or statutory, including any warranty of merchantability, fitness for a particular purpose, non-infringement of third party rights or freedom from viruses or other code defects, is made by any Agent Party in connection with the Communications or the platform. In no event shall the Administrative Agent or any of its Related Indemnified Persons (collectively, the “Agent Parties”) have any liability to the Borrower, any Lender or any other Person or entity for damages of any kind, including direct or indirect, special, incidental or consequential damages, losses or expenses (whether in tort, contract or otherwise) arising out of the Borrower’s or the Administrative Agent’s transmission of communications through the platform (other than, in the case of the Borrower or any Credit Party, in respect of any such damages incurred or paid by the Administrative Agent or any of its Related Indemnified Persons to a third party, or which are included in a third-party claim, and for any out-of-pocket expenses related thereto). “Communications” means, collectively, any notice, demand, communication, information, document or other material provided by or on behalf of the Borrower pursuant to any Credit Document or the transactions contemplated therein that is distributed to the Administrative Agent, any Lender or any Issuing Bank by means of electronic communications pursuant to this Section, including through the platform.

 

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Section 13.3           No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the Administrative Agent, the Collateral Agent or any Lender, any right, remedy, power or privilege hereunder or under the other Credit Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by Requirements of Law.

 

Section 13.4           Survival of Representations and Warranties. All representations and warranties made hereunder, in the other Credit Documents and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the making of the Loans hereunder. Such representations and warranties shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied (other than Obligations under Secured Hedge Agreements, Secured Cash Management Agreements or contingent indemnification obligations, in any such case, not then due and payable).

 

Section 13.5           Payment of Expenses; Indemnification.

 

(a)           The Borrower agrees (i) to pay or reimburse the Administrative Agent and the Lead Arrangers with “lead left” placement for all reasonable and documented out-of-pocket costs and expenses incurred in connection with the preparation, negotiation, syndication and execution of this Agreement and the other Credit Documents, and any amendment, waiver, consent or other modification of the provisions hereof and thereof (whether or not the transactions contemplated thereby are consummated), and the consummation and administration of the transactions contemplated hereby and thereby, including all Attorney Costs, which shall be limited to one counsel to the Lead Arrangers with “lead left” placement and one local counsel as reasonably necessary in any relevant jurisdiction material to the interests of the Lenders taken as a whole (and solely in the case of an actual conflict of interest, one additional counsel and (if reasonably necessary) one local counsel in each relevant jurisdiction to the affected Indemnitees similarly situated) and (ii) to pay or reimburse the Administrative Agent for all reasonable and documented out-of-pocket costs and expenses incurred in connection with the enforcement of any rights or remedies under this Agreement or the other Credit Documents (including all such costs and expenses incurred during any legal proceeding, including any bankruptcy or insolvency proceeding, and including all respective Attorney Costs, which shall be limited to Attorney Costs of one counsel to the Administrative Agent and the Lenders taken as a whole and one local counsel as reasonably necessary in any relevant jurisdiction material to the interests of the Lenders taken as a whole and solely in the case of a conflict of interest, one additional counsel and (if reasonably necessary) one local counsel in each relevant jurisdiction to the affected Indemnitees similarly situated). The agreements in this Section 13.5 shall survive the repayment of all other Obligations. All amounts due under this Section 13.5 shall be paid within thirty (30) days after written demand therefor (together with backup documentation supporting such reimbursement request); provided that, with respect to the Effective Date, all amounts due under this Section 13.5 shall be paid on the Effective Date solely to the extent invoiced to the Borrower within two (2) Business Days prior to the Effective Date. If any Credit Party fails to pay when due any costs, expenses or other amounts payable by it hereunder or under any Credit Document, such amount may be paid on behalf of such Credit Party by the Administrative Agent in its discretion.

 

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(b)           The Borrower shall indemnify and hold harmless each Agent, Lender, Lead Arrangers, the Bookrunners, each Agent-Related Person and their Affiliates, and their respective officers, directors, employees, partners, agents, advisors and other representatives of the foregoing (collectively the “Indemnitees”) from and against any and all liabilities, losses, damages, claims, or out-of-pocket expenses (including Attorney Costs but limited in the case of legal fees and expenses to the reasonable and documented out-of-pocket fees, disbursements and other charges of one counsel to all Indemnitees taken as a whole and, if reasonably necessary, one local counsel for all Indemnitees taken as a whole in each relevant jurisdiction, and solely in the case of a conflict of interest, one additional counsel and (if reasonably necessary) one local counsel in each relevant jurisdiction to the affected Indemnitees similarly situated) of any kind or nature whatsoever which may at any time be imposed on, incurred by or asserted against any such Indemnitee in any way relating to or arising out of or in connection with (i) the execution, delivery, enforcement, performance or administration of any Credit Document or any other agreement, letter or instrument delivered in connection with the transactions contemplated thereby or the consummation of the transactions contemplated thereby, (ii) any Commitment, Letter of Credit or Loan or the use or proposed use of the proceeds therefrom (including any refusal by an Issuing Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged Environmental Claim regarding, or liability or obligation under Environmental Law of, the Credit Parties or any Subsidiary or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory (including any investigation of, preparation for, or defense of any pending or threatened claim, investigation, litigation or proceeding) (a “Proceeding”) and regardless of whether any Indemnitee is a party thereto or whether or not such Proceeding is brought by the Borrower or any other Person and, in each case, whether or not caused by or arising, in whole or in part, out of the negligence of the Indemnitee (all of the foregoing, collectively, the “Indemnified Liabilities”); provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such liabilities, losses, damages, claims or out-of-pocket expenses resulted from (x) the gross negligence, bad faith or willful misconduct of such Indemnitee or of any of its Related Indemnified Persons, as determined by a final non-appealable judgment of a court of competent jurisdiction, (y) other than with respect to Citibank, N.A., in its capacity as Administrative Agent and the Collateral Agent, or any Lead Arranger or any Bookrunner in their respective capacities as such, a material breach of any obligations under any Credit Document by such Indemnitee or of any of its Related Indemnified Persons, as determined by a final non-appealable judgment of a court of competent jurisdiction or (z) any dispute solely among Indemnitees other than any claims against an Indemnitee in its capacity or in fulfilling its role as an administrative agent or collateral agent or arranger or any similar role under this Agreement and other than any claims arising out of any act or omission of the Borrower or any of its Affiliates (as determined in a final and non-appealable judgment of a court of competent jurisdiction). No Indemnitee shall be liable for any damages arising from the use by others of any information or other materials obtained through IntraLinks or other similar information transmission systems in connection with this Agreement (except for direct (as opposed to indirect, special, punitive or consequential) damages resulting from the gross negligence, bad faith or willful misconduct, as determined by a court of competent jurisdiction in a final and non-appealable judgment, of such Indemnitee), nor shall any Indemnitee, Agent-Related Parties, Credit Party or any Subsidiary have any liability for any special, punitive, indirect or consequential damages relating to this Agreement or any other Credit Document or arising out of its activities in connection herewith or therewith (whether before or after the Effective Date) (other than, in the case of any Credit Party, in respect of any such damages incurred or paid by an Indemnitee to a third party, or which are included in a third-party claim, and for any out-of-pocket expenses related thereto). In the case of an investigation, litigation or other proceeding to which the indemnity in this Section 13.5 applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by any Credit Party, any Subsidiary of any Credit Party, its directors, stockholders or creditors or an Indemnitee or any other Person, whether or not any Indemnitee is otherwise a party thereto and whether or not any of the transactions contemplated hereunder or under any of the other Credit Documents are consummated. All amounts due under this Section 13.5 shall be paid within thirty (30) days after written demand therefor (together with backup documentation supporting such reimbursement request); provided, however, that such Indemnitee shall promptly refund such amount to the extent that there is a final judicial or arbitral determination that such Indemnitee was not entitled to indemnification rights with respect to such payment pursuant to the express terms of this Section 13.5. The agreements in this Section 13.5 shall survive the resignation of the Administrative Agent, the replacement of any Lender and the repayment, satisfaction or discharge of all the other Obligations. For the avoidance of doubt, this Section 13.5(b) shall not apply to Taxes, except any Taxes that represent liabilities, obligations, losses, damages, penalties, claims, demands, actions, prepayments, suits, costs, expenses and disbursements arising from any non-Tax claims.

 

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Section 13.6           Successors and Assigns; Participations and Assignments.

 

(a)           The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any Affiliate of each Issuing Bank that issues any Letter of Credit), except that (i) except as expressly permitted by Section 10.3, the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer any of its rights or obligations hereunder except in accordance with this Section 13.6. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby (including any Affiliate of each Issuing Bank that issues any Letter of Credit), Participants (to the extent provided in clause (c) of this Section 13.6) and, to the extent expressly contemplated hereby, the Agent-Related Parties and each other Person entitled to indemnification under Section 13.5) any legal or equitable right, remedy or claim under or by reason of this Agreement.

 

(b)           (i)             Subject to the conditions set forth in clause (b)(ii) below, any Lender may at any time assign to one or more assignees (other than Holdings, the Borrower, its Subsidiaries and their respective Affiliates, any natural person, any Disqualified Institution or any Defaulting Lender) all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans (including participations in L/C Obligations or Swingline Loans) at the time owing to it) with the prior written consent of:

 

(A)           the Borrower (not to be unreasonably withheld, delayed, denied or conditioned); provided that no consent of the Borrower shall be required (x) for an assignment to an existing Lender and their Affiliates and (y) for an assignment if an Event of Default under Section 11.1 or Section 11.5 with respect to the Borrower has occurred and is continuing; and

 

(B)            the Administrative Agent, each Swingline Lender and each Issuing Bank (in each case, not to be unreasonably withheld, delayed, denied or conditioned).

 

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(ii)            Assignments shall be subject to the following additional conditions:

 

(A)           except in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment or Loans, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall be in integral multiples of $5,000,000, unless each of the Borrower, each Issuing Bank and the Administrative Agent otherwise consents (which consents shall not be unreasonably withheld or delayed); provided that no such consent of the Borrower shall be required if an Event of Default under Section 11.1 or Section 11.5 has occurred and is continuing;

 

(B)            each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement;

 

(C)            the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee in the amount of $3,500; provided that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment and the Administrative Agent shall enter the relevant information in the Register pursuant to paragraph (b)(iv) of this Section 13.6; and

 

(D)            the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire and applicable Tax forms (including those described in Sections 5.4(d), (e), (h) and (i), as applicable).

 

(iii)           Subject to acceptance and recording thereof pursuant to clause (b)(iv) of this Section 13.6, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.10, 2.11, 3.11, 5.4 and 13.5). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 13.6 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with clause (c) of this Section 13.6.

 

(iv)          The Administrative Agent, acting solely for this purpose as a nonfiduciary agent of the Borrower, shall maintain at the Administrative Agent’s Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders (including any SPVs that provide all or any part of a Loan pursuant to Section 13.6(g) hereof), and the Commitments and Elected Commitments of, and principal amount (and stated interest amounts) of the Loans and L/C Obligations and any payment made by each Issuing Bank under any applicable Letter of Credit owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). Further, the Register shall contain the name and address of the Administrative Agent and the lending office through which each such Person acts under this Agreement. The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent, the Collateral Agent, each Issuing Bank and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower, the Collateral Agent, each Issuing Bank, each Swingline Lender and, solely with respect to itself, each other Lender, at any reasonable time and from time to time upon reasonable prior notice.

 

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(v)           Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an assignee, the assignee’s completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in clause (b) of this Section 13.6 (unless waived) and any written consent to such assignment required by clause (b) of this Section 13.6, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register.

 

(vi)          The Administrative Agent shall have no duty to ascertain, monitor or enforce compliance with the restrictions on assignments and participations related to Disqualified Institutions.

 

(c)           (i)             Any Lender may, without the consent of the Borrower, the Administrative Agent, any Swingline Lender or any Issuing Bank, sell participations to one or more banks or other entities other than any Defaulting Lender, any Disqualified Institution (so long as the Administrative Agent may make the list of Disqualified Institutions available to any Lender upon request, in each case, subject to the confidentiality provisions of Section 13.16 and any failure of the Borrower to respond to any request for consent of assignment shall not cause any such Person to cease to constitute a Disqualified Institution), Holdings, the Borrower or any Subsidiary of the Borrower or their respective Affiliates or natural persons (each, a “Participant”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (C) the Borrower, the Administrative Agent, each Issuing Bank and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement or any other Credit Document; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in clause (i) or (ii) of the second proviso of the second sentence of Section 13.1(a) that affects such Participant, provided that the Participant shall have no right to consent to any modification to the percentages specified in the definitions of the terms “Majority Lenders” or “Required Lenders”. Subject to clause (c)(ii) of this Section 13.6, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.10, 2.11, 3.11 and 5.4 to the same extent as if it were a Lender (subject to the limitations and requirements of those Sections and Sections 2.12 and 13.7) as though it were a Lender and had acquired its interest by assignment pursuant to clause (b) of this Section 13.6). To the extent permitted by Requirements of Law, each Participant also shall be entitled to the benefits of Section 13.8(b) as though it were a Lender; provided such Participant agrees to be subject to Section 13.8(a) as though it were a Lender.

 

(ii)            A Participant shall not be entitled to receive any greater payment under Section 2.10, 2.11, 3.11 or 5.4 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent; provided that the Participant shall be subject to the provisions in Section 2.12 and Section 13.7 as if it were an assignee under clauses (a) and (b) of this Section 13.6. Each Lender that sells a participation or grants an SPV shall, acting solely for this purpose as a nonfiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant or each SPV and the principal amounts (and stated interest amounts) of each Participant’s or SPV’s interest in the Loans or other obligations under the Credit Documents (the “Participant Register”). The entries in the Participant Register shall be conclusive, absent manifest error, and each party hereto shall treat each Person whose name is recorded in the Participant Register as the owner of such participation or SPV for all purposes of this Agreement notwithstanding any notice to the contrary. No Lender shall have any obligation to disclose all or any portion of the Participant Register to any Person (including the identity of any Participant or SPV or any information relating to a Participant’s or SPV’s interest in any commitments, loans, letters of credit or its other obligations under any Credit Document) except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Treasury Regulations Section 5f.103-1(c), proposed Treasury Regulation Section 1.163-5 or any applicable temporary, final or other successor regulations or upon the Borrower’s request, to confirm that no Participant is a Disqualified Institution.

 

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(d)           Any Lender may, without the consent of the Borrower, any Swingline Lender, any Issuing Bank or the Administrative Agent, at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or any central bank having jurisdiction over such Lender, and this Section 13.6 shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto. In order to facilitate such pledge or assignment or for any other reason, the Borrower hereby agrees that, upon request of any Lender at any time and from time to time after the Borrower has made its initial borrowing hereunder, the Borrower shall provide to such Lender, at the Borrower’s own expense, a promissory note, substantially in the form of Exhibit H-1 or H-2, as the case may be, evidencing the Loans and Swingline Loans, respectively, owing to such Lender or its registered assigns.

 

(e)           Subject to Section 13.16, the Borrower authorizes each Lender to disclose to any Participant, secured creditor of such Lender or assignee (each, a “Transferee”) and any prospective Transferee any and all financial information in such Lender’s possession concerning the Borrower and its Affiliates that has been delivered to such Lender by or on behalf of the Borrower and its Affiliates pursuant to this Agreement or that has been delivered to such Lender by or on behalf of the Borrower and its Affiliates in connection with such Lender’s credit evaluation of the Borrower and its Affiliates prior to becoming a party to this Agreement.

 

(f)            The words “execution,” “signed,” “signature,” and words of like import in any Assignment and Assumption shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

 

(g)           Notwithstanding anything to the contrary contained herein, any Lender (a “Granting Lender”) may grant to a special purpose funding vehicle (a “SPV”), identified as such in writing from time to time by the Granting Lender to the Administrative Agent and the Borrower, the option to provide to the Borrower all or any part of any Loan that such Granting Lender would otherwise be obligated to make the Borrower pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPV to make any Loan and (ii) if an SPV elects not to exercise such option or otherwise fails to provide all or any part of such Loan, the Granting Lender shall be obligated to make such Loan pursuant to the terms hereof. The making of a Loan by an SPV hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as if, such Loan were made by such Granting Lender. Each party hereto hereby agrees that no SPV shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the Granting Lender). In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one (1) year and one (1) day after the payment in full of all outstanding commercial paper or other senior indebtedness of any SPV, it shall not institute against, or join any other person in instituting against, such SPV any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under the laws of the United States or any State thereof. In addition, notwithstanding anything to the contrary contained in this Section 13.6, any SPV may (A) with notice to, but without the prior written consent of, the Borrower and the Administrative Agent and without paying any processing fee therefor, assign all or a portion of its interests in any Loans to the Granting Lender or to any financial institutions (consented to by the Borrower and Administrative Agent) providing liquidity and/or credit support to or for the account of such SPV to support the funding or maintenance of Loans and (B) disclose on a confidential basis any non-public information relating to its Loans to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to such SPV. This Section 13.6(g) may not be amended without the written consent of the SPV. Notwithstanding anything to the contrary in this Agreement, subject to the following sentence, each SPV shall be entitled to the benefits of Sections 2.10, 2.11, 3.11 and 5.4 to the same extent as if it were a Lender (subject to the limitations and requirements of Sections 2.10, 2.11, 3.11 and 5.4 as though it were a Lender, and Sections 2.12 and 13.7), and had acquired its interest by assignment pursuant to clause (b) of this Section 13.6. Notwithstanding the prior sentence, an SPV shall not be entitled to receive any greater payment under Section 2.10, 2.11, 3.11 or 5.4 than its Granting Lender would have been entitled to receive absent the grant to such SPV, unless such grant to such SPV is made with the Borrower’s prior written consent.

 

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(h)           Any assignment or participation of a Loan or Commitment by a Lender without the Borrower’s consent (i) to a Disqualified Institution or (ii) to the extent the Borrower’s consent is required under this Section 13.6, to any other Person, shall be null and void, and, in the event of any assignment or participation of any Loan or Commitment by a Lender in breach of the foregoing, the Borrower shall be entitled to seek specific performance to unwind any such assignment or Participation in addition to any other remedies available to the Borrower at law or in equity. In addition, (A) the Borrower may (x) terminate any Commitment of such Person and prepay any applicable outstanding Loans at a price equal to the lesser of par and the amount such Person paid to acquire such Loans, without premium, penalty, prepayment fee or breakage and/or (y) require such Person to assign its rights and obligations to one or more permitted assignees under this Section 13.6 at the price indicated above (which assignment shall not be subject to any processing and recordation fee) and if such Person does not execute and deliver to the Administrative Agent a duly executed Assignment and Assumption reflecting such assignment within five (5) Business Days of the date on which the assignee Lender executes and delivers such Assignment and Assumption to such Person, then such Person shall be deemed to have executed and delivered such Assignment and Assumption without any action on its part, (B) no such Person shall receive any information, reporting or other materials provided by the Borrower, the Administrative Agent, the Collateral Agent or any Lender or attend or participate in any meetings attended by the Lenders and the Administrative Agent, (C) for purposes of voting, any Loans or Commitments held by such Person shall be deemed not to be outstanding, and such Person shall have no voting or consent rights with respect to “Majority Lender”, “Required Lender” or class votes or consents, (D) for purposes of any matter requiring the vote or consent of each Lender affected by any amendment or waiver, such Person shall be deemed to have voted or consented to approve such amendment or waiver if a majority of the affected class (giving effect to clause (C) above) so approves and (E) such Person shall not be entitled to any expense reimbursement or indemnification rights and shall be treated in all other respects as a Defaulting Lender; it being understood and agreed that the foregoing provisions shall only apply to the Person specified in clauses (i) or (ii) of the first sentence of this paragraph and not to any assignee of such Person that becomes a Lender so long as such assignee becomes an assignee in accordance with the provisions of this Section 13.6. Nothing in this Agreement shall be deemed to prejudice any right or remedy that the Borrower may otherwise have at law or equity, including against any Lender that enters into an assignment, participation or other transaction (including the disclosure of Confidential Information) with a Disqualified Institution in contravention of the terms of this Agreement. Each Lender acknowledges and agrees that the Borrower and its Subsidiaries will suffer irreparable harm if such Lender breaches any obligation under this Section 13.6. Additionally, each Lender agrees that the Borrower may seek to obtain specific performance or other equitable or injunctive relief to enforce this paragraph against such Lender with respect to such breach without posting a bond or presenting evidence of irreparable harm.

 

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Section 13.7           Replacements of Lenders under Certain Circumstances.

 

(a)           In the event that any Lender (i) requests reimbursement for amounts owing, or requires any Credit Party to pay any Indemnified Taxes or additional amounts to such Lender or any Governmental Authority for the account of such Lender (and in respect of the payment of Indemnified Taxes or additional amounts, such Lender has declined or is unable to designate a different lending office in accordance with Section 2.12), pursuant to Section 2.10, 3.11 or 5.4 (other than Section 5.4(b)), (ii) is affected in the manner described in Section 2.10(a)(iii) and as a result thereof any of the actions described in such Section is required to be taken or (iii) becomes a Defaulting Lender, the Borrower shall be entitled, at its sole expense and effort and upon notice to such Lender and the Administrative Agent, to replace such Lender or terminate the Commitment of such Lender; provided that (x) in the case of a replacement (A) such replacement does not conflict with any Requirement of Law, (B) the replacement bank or institution shall purchase, at par, all Loans and the Borrower shall pay all other amounts (other than any disputed amounts), pursuant to Section 2.10, 3.11 or 5.4, as the case may be, owing to such replaced Lender prior to the date of replacement, (C) the replacement bank or institution, if not already a Lender, and the terms and conditions of such replacement, shall be reasonably satisfactory to the Administrative Agent, the Swingline Lender and each Issuing Bank (except to the extent such Swingline Lender or Issuing Banks is, or is an Affiliate of, the Lender being replaced), (D) the replaced Lender shall be obligated to make such replacement in accordance with the provisions of Section 13.6(b) (provided that the Borrower shall be obligated to pay the registration and processing fee referred to therein as long as the replacement Lender pays such fee) and (y) in the case of a termination, repay all Obligations (including amounts (other than any disputed amounts), owing pursuant to Section 2.10, 3.11 or 5.4, as the case may be) owing to such Lender as of such termination date (and, in the case of an Issuing Bank, cancel or backstop on terms satisfactory to such Issuing Bank any Letters of Credit issued by it) and (E) resulting from a claim for compensation under Section 2.10, such replacement will result in a reduction in such compensation or payments thereafter.

 

(b)           If any Lender (such Lender, a “Non-Consenting Lender”) has failed to consent to a proposed amendment, waiver, discharge, termination or Borrowing Base determination that pursuant to the terms of Section 13.1 requires the consent of all of the Lenders affected or the Required Lenders or all Non-Defaulting Lenders and with respect to which the Majority Lenders shall have granted their consent, then the Borrower shall have the right (unless such Non-Consenting Lender grants such consent) to (x) replace such Non-Consenting Lender by requiring such Non-Consenting Lender to assign its Loans and its Commitments hereunder to one or more assignees reasonably acceptable to the Administrative Agent, the Swingline Lender and each Issuing Bank (except to the extent such Swingline Lender or Issuing Banks is, or is an Affiliate of, the Lender being replaced) or (y) terminate the Commitment of such Lender; provided that: (x) in the case of a replacement, (i) all Obligations of the Borrower owing to such Non-Consenting Lender being replaced (other than principal and interest) shall be paid in full to such Non-Consenting Lender concurrently with such assignment, (ii) the replacement Lender shall purchase the foregoing by paying to such Non-Consenting Lender a price equal to the principal amount thereof plus accrued and unpaid interest thereon, (iii) the Borrower, the Administrative Agent and such Non-Consenting Lender shall otherwise comply with Section 13.6 (provided that the Borrower shall not be obligated to pay the registration and processing fee referred to therein as long as the replacement Lender pays such fee) and (y) in the case of a termination, all Obligations owing to such Non-Consenting Lender shall be paid in full concurrently with such termination and (iv) the replacement Lender shall consent to such proposed amendment, waiver, discharge, termination or Borrowing Base determination that the Non-Consenting Lender failed to consent to.

 

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(c)           Notwithstanding anything herein to the contrary (i) each party hereto agrees that any assignment pursuant to the terms of this Section 13.7 may be effected pursuant to an Assignment and Assumption executed by the Borrower, the Administrative Agent, the Swingline Lender, each Issuing Bank and the assignee and that the Lender making such assignment need not be a party thereto and (ii) no termination of Commitments may be made pursuant to this Section 13.7 unless the Letter of Credit Exposure and Swingline Exposure of the terminated Lender is cash collateralized on terms reasonably satisfactory to the Issuing Bank and Swingline Lender.

 

(d)           Any such Lender replacement or Commitment termination pursuant to this Section 13.7 shall not be deemed to be a waiver of any rights that the Borrower, the Administrative Agent or any other Lender shall have against the replaced Lender.

 

Section 13.8           Adjustments; Set-off.

 

(a)           If any Lender (a “benefited Lender”) shall at any time receive any payment in respect of any principal of or interest on all or part of the Loans made by it, or the participations in L/C Obligations held by it, or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in Section 11.5, or otherwise), in a greater proportion than any such payment to or collateral received by any other Lender entitled thereto, if any, in respect of such other Lender’s Loans, or interest thereon, such benefited Lender shall (i) notify the Administrative Agent of such fact, and (ii) purchase for cash at face value from the other Lenders a participating interest in such portion of each such other Lender’s Loans, or shall provide such other Lenders with the benefits of any such collateral, or the proceeds thereof, as shall be necessary to cause such benefited Lender to share the excess payment or benefits of such collateral or proceeds ratably in accordance with the aggregate principal of and accrued interest on their respective Loans and other amounts owing them; provided, however, that (A) if all or any portion of such excess payment or benefits is thereafter recovered from such benefited Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest and (B) the provisions of this paragraph shall not be construed to apply to (1) any payment made by the Borrower or any other Credit Party pursuant to and in accordance with the terms of this Agreement and the other Credit Documents, (2) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans, Commitments or participations in Drawings to any assignee or participant or (3) any disproportionate payment obtained by a Lender as a result of the extension by Lenders of the maturity date or expiration date of some but not all Loans or Commitments or any increase in the Applicable Margin in respect of Loans or Commitments of Lenders that have consented to any such extension. Each Credit Party consents to the foregoing and agrees, to the extent it may effectively do so under Requirements of Law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Credit Party rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Credit Party in the amount of such participation.

 

(b)           After the occurrence and during the continuance of an Event of Default, in addition to any rights and remedies of the Lenders provided by Requirements of Law, each Lender shall have the right, without prior notice to the Borrower, any such notice being expressly waived by the Borrower to the extent permitted by applicable Requirements of Law, upon any amount becoming due and payable by the Borrower hereunder or under any Credit Document (whether at the stated maturity, by acceleration or otherwise) to set-off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Lender or any branch or agency thereof to or for the credit or the account of the Borrower. Each Lender agrees promptly to notify the Borrower (and the Credit Parties, if applicable) and the Administrative Agent after any such set-off and application made by such Lender; provided that the failure to give such notice shall not affect the validity of such set-off and application.

 

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Section 13.9          Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by facsimile or other electronic transmission, e.g., a “pdf” or a “tif”), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Agreement signed by all the parties shall be lodged with the Borrower and the Administrative Agent.

 

Section 13.10        Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

Section 13.11        Integration. This Agreement and the other Credit Documents represent the agreement of the Borrower, the Guarantors, the Collateral Agent, the Administrative Agent and the Lenders with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by the Borrower, the Guarantors, any Agent nor any Lender relative to subject matter hereof not expressly set forth or referred to herein or in the other Credit Documents.

 

Section 13.12        GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

Section 13.13        Submission to Jurisdiction; Waivers. Each party hereto hereby irrevocably and unconditionally:

 

(a)           submits for itself and its property in any legal action or proceeding relating to this Agreement and the other Credit Documents to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the exclusive general jurisdiction of the courts of the State of New York and the courts of the United States of America for the Southern District of New York, in each case located in New York County, and appellate courts from any thereof; provided that nothing contained herein or in any other Credit Document will prevent any Lender, the Collateral Agent or the Administrative Agent from bringing any action to enforce any award or judgment or exercise any right under the Credit Documents or against any Collateral or any other property of any Credit Party in any other forum in which jurisdiction can be established;

 

(b)           consents that any such action or proceeding shall be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same;

 

(c)           agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such Person at its address set forth on Schedule 13.2 at such other address of which the Administrative Agent shall have been notified pursuant to Section 13.2;

 

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(d)           agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by Requirements of Law or shall limit the right to sue in any other jurisdiction;

 

(e)           without limitation of Sections 12.7 and 13.5, waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section 13.13 any special, exemplary, punitive or consequential damages (other than, in the case of any Credit Party, in respect of any such damages incurred or paid by an Indemnitee to a third party, or which are included in a third-party claim, and for any out-of-pocket expenses related thereto); and

 

(f)            agrees that a final judgment in any action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

 

Section 13.14        Acknowledgments. The Borrower hereby acknowledges that:

 

(a)           it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Credit Documents;

 

(b)           (i) the credit facility provided for hereunder and any related arranging or other services in connection therewith (including in connection with any amendment, waiver or other modification hereof or of any other Credit Document) are an arm’s-length commercial transaction between the Borrower and the other Credit Parties, on the one hand, and the Administrative Agent, the Lenders and the other Agents on the other hand, and the Borrower and the other Credit Parties are capable of evaluating and understanding and understand and accept the terms, risks and conditions of the transactions contemplated hereby and by the other Credit Documents (including any amendment, waiver or other modification hereof or thereof); (ii) in connection with the process leading to such transaction, each of the Administrative Agent, other Agents and the Lenders, is and has been acting solely as a principal and is not the financial advisor, agent or fiduciary for any of the Borrower, any other Credit Parties or any of their respective Affiliates, equity holders, creditors or employees or any other Person; (iii) neither the Administrative Agent, any other Agent, any Lead Arranger, any Bookrunner nor any Lender has assumed or will assume an advisory, agency or fiduciary responsibility in favor of the Borrower or any other Credit Party with respect to any of the transactions contemplated hereby or the process leading thereto, including with respect to any amendment, waiver or other modification hereof or of any other Credit Document (irrespective of whether the Administrative Agent or any other Agent, any Lead Arranger, any Bookrunner or any Lender has advised or is currently advising any of the Borrower, the other Credit Parties or their respective Affiliates on other matters) and none of the Administrative Agent, any Agent, any Lead Arranger, any Bookrunner or any Lender has any obligation to any of the Borrower, the other Credit Parties or their respective Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Credit Documents; (iv) the Administrative Agent and its Affiliates, each other Agent and each of its Affiliates and each Lender and its Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower and its respective Affiliates, and none of the Administrative Agent, any other Agent or any Lender has any obligation to disclose any of such interests by virtue of any advisory, agency or fiduciary relationship; and (v) none of the Administrative Agent, any Agent or any Lender has provided and none will provide any legal, accounting, regulatory or tax advice with respect to any of the transactions contemplated hereby (including any amendment, waiver or other modification hereof or of any other Credit Document) and the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate. The Borrower hereby waives and releases, to the fullest extent permitted by law, any claims that it may have against the Administrative Agent and each Agent with respect to any breach or alleged breach of agency or fiduciary duty; and

 

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(c)            no joint venture is created hereby or by the other Credit Documents or otherwise exists by virtue of the transactions contemplated hereby among the Lenders or among the Borrower, on the one hand, and any Lender, on the other hand.

 

Section 13.15        WAIVERS OF JURY TRIAL. THE BORROWER, EACH AGENT, EACH ISSUING BANK AND EACH LENDER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

 

Section 13.16        Confidentiality. The Administrative Agent, each other Agent, any Issuing Bank, any Swingline Lender and each other Lender shall hold all information not marked as “public information” and furnished by or on behalf of the Borrower or any of its Subsidiaries in connection with such Lender’s evaluation of whether to become a Lender hereunder or obtained by such Lender, any Swingline Lender, the Administrative Agent, any Issuing Bank or such other Agent pursuant to the requirements of this Agreement (“Confidential Information”), confidential in accordance with its customary procedure for handling confidential information of this nature and in any event may make disclosure (a) pursuant to the order of any court or administrative agency or otherwise as required by applicable law or regulation or as requested by a Governmental Authority (in which case such Agent, Issuing Bank or Lender, as applicable, to the extent permitted by law, rule or regulation, shall inform the Borrower promptly thereof), (b) upon the request or demand of any regulatory authority having jurisdiction over such Agent, Issuing Bank or Lender or any of its Affiliates (in which case such Person shall inform the Borrower promptly thereof prior to such disclosure, unless such Person is prohibited by applicable law from so informing the Borrower, or except in connection with any request as part of any regulatory examination), (c) to such Agent’s, Issuing Bank’s or Lender’s Affiliates and their respective officers, directors, employees, controlling persons, trustees, managers and advisors, legal counsel, independent auditors, actual or potential insurer or reinsurer and other experts or agents, in each case who need to know such information in connection with the administration of the Credit Documents and are informed of the confidential nature of such information and agree to be bound by customary confidentiality arrangements, (d) to prospective Lenders, Participants or assignees (or their respective advisors) or, with the prior written consent of the Borrower, any potential counterparty to any swap or derivative transaction relating to the Borrower or any of its Subsidiaries or any of their respective obligations (in each case, other than Disqualified Institutions); provided that such disclosure shall be made subject to the acknowledgment and acceptance by such prospective Lender, Participant, assignee or potential counterparty, on behalf of itself and its advisors, that such information is being disseminated on a confidential basis (on substantially the terms set forth in this Section 13.16 or as is otherwise reasonably acceptable to the Borrower and the Administrative Agent, (e) to the extent that such information is received by such Agent, Issuing Bank or Lender from a third party that is not, to its knowledge, subject to confidentiality obligations to the Credit Parties or any of their respective Affiliates, (f) to a nationally recognized ratings agency that requires access to information regarding the Credit Parties, the Loans and Credit Documents in connection with ratings issued with respect to a securitization, (g) to the extent such Confidential Information becomes public other than by reason of improper disclosure by such Person or any of its Affiliates, (h) the extent that such information is independently developed by such Agent, Issuing Bank or Lender or its respective Affiliates, in each case, so long as not based on information obtained in a manner that would otherwise violate this Section 13.16, and (i) for purposes of establishing a “due diligence” defense; provided that no disclosure shall be made to any Disqualified Institution; provided further that in no event shall any Lender, the Administrative Agent, any Issuing Bank or any other Agent be obligated or required to return any materials furnished by the Borrower or any Subsidiary. In addition, each Lender, the Administrative Agent and each other Agent may provide Confidential Information to prospective Transferees or to any pledgee referred to in Section 13.6 or to prospective direct or indirect contractual counterparties in Hedge Agreements to be entered into in connection with Loans made hereunder as long as such Person is advised of and agrees to be bound by the provisions of this Section 13.16 or confidentiality provisions at least as restrictive as those set forth in the Section 13.16. For the avoidance of doubt, nothing herein prohibits any individual from communicating or disclosing information regarding suspected violations of laws, rules, or regulations to a governmental, regulatory, or self-regulatory authority without notification to any person.

 

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Section 13.17         Release of Collateral and Guarantee Obligations.

 

(a)           The Lenders hereby irrevocably agree that the Liens granted to the Collateral Agent by the Credit Parties on any Collateral shall be automatically released (i) in full, as set forth in clause (b) below, (ii) upon the Disposition of such Collateral (including as part of or in connection with any other Disposition permitted hereunder) to any Person other than another Credit Party (other than Holdings), to the extent such Disposition is not prohibited by the terms of this Agreement (and the Collateral Agent may rely conclusively on a certificate to that effect provided to it by any Credit Party upon its reasonable request without further inquiry), (iii) upon any Collateral becoming an Excluded Equity Interest, an Excluded Asset or becoming owned by an Excluded Subsidiary or becoming subject to Liens pursuant to clauses (d) and (e) of the definition of “Permitted Liens” or any Lien permitted pursuant to Sections 10.2(f), (g), (j), (m), (o), (p), (w), (x) and (y), in each case, except in connection with a transaction prohibited hereunder, (iv) to the extent such Collateral is comprised of property leased to a Credit Party, upon termination or expiration of such lease, (v) if the release of such Lien is approved, authorized or ratified in writing by the Majority Lenders (or such other percentage of the Lenders whose consent may be required in accordance with Section 13.1), (vi) to the extent the property constituting such Collateral is owned by any Guarantor, upon the release of such Guarantor from its obligations under the Guarantee in accordance with the second succeeding sentence or Section 5(g) of the Guarantee and (vii) as required by the Collateral Agent to effect any Disposition of Collateral in connection with any exercise of remedies of the Collateral Agent pursuant to the Security Documents. Any such release shall not in any manner discharge, affect, or impair the Obligations or any Liens (other than those being released) upon (or obligations (other than those being released) of the Credit Parties in respect of) all interests retained by the Credit Parties, including the proceeds of any Disposition, all of which shall continue to constitute part of the Collateral except to the extent otherwise released in accordance with the provisions of the Credit Documents. Additionally, the Lenders hereby irrevocably agree that (A) Parent, Opco Parent and Holdings Parent shall be released from the Parent Guarantee, Opco Guarantee or the Holdings Parent Guarantee, as applicable, pursuant to and in accordance with Section 5(g) thereof, as applicable, (B) any other Person that guarantees the Obligations shall be released from its guarantee pursuant to and in accordance with the terms of the documentation governing such guarantee and (C) Subsidiary Guarantors shall be released from the Guarantee upon consummation of any transaction permitted hereunder resulting in such Subsidiary Guarantor ceasing to constitute a Restricted Subsidiary or otherwise becoming an Excluded Subsidiary. The Lenders hereby authorize the Administrative Agent and the Collateral Agent, as applicable, to execute and deliver any instruments, documents, and agreements necessary or desirable to evidence and confirm the release of any guarantor or Collateral pursuant to the foregoing provisions of this paragraph, all without the further consent or joinder of any Lender. Any representation, warranty or covenant contained in any Credit Document relating to any such Collateral or guarantor shall no longer be deemed to be repeated. In connection with any release hereunder, the Administrative Agent and Collateral Agent shall promptly (and the Lenders hereby authorize the Administrative Agent and Collateral Agent to) take such action and execute any such documents as may be reasonably requested by the Borrower and at the Borrower’s expense in connection with the release of any Liens created by any Credit Document in respect of such Subsidiary, property or asset.

 

(b)           Notwithstanding anything to the contrary contained herein or any other Credit Document, when Payment in Full has occurred, upon request of the Borrower, the Administrative Agent and/or Collateral Agent, as applicable, shall (without notice to, or vote or consent of, any Secured Party) take such actions as shall be required to release its security interest in all Collateral, and to release all obligations under any Credit Document, whether or not on the date of such release there may be any (i) Hedging Obligations in respect of any Secured Hedge Agreements, (ii) Cash Management Obligations in respect of any Secured Cash Management Agreements and (iii) any contingent or indemnification obligations not then due. Any such release of Obligations shall be deemed subject to the provision that such Obligations shall be reinstated if after such release any portion of any payment in respect of the Obligations guaranteed thereby shall be rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower or any Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Borrower or any Guarantor or any substantial part of its property, or otherwise, all as though such payment had not been made.

 

191

 

 

Section 13.18        USA PATRIOT Act. The Agents and each Lender hereby notify the Borrower that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001, as amended from time to time, and any successor statute)) (the “PATRIOT Act”), it is required to obtain, verify and record information that identifies each Credit Party, which information includes the name and address of each Credit Party and other information that will allow such Agent and such Lender to identify each Credit Party in accordance with the PATRIOT Act.

 

Section 13.19        Payments Set Aside. To the extent that any payment by or on behalf of the Borrower is made to any Agent or any Lender, or any Agent or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by such Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender severally agrees to pay to the Administrative Agent upon demand its applicable share of any amount so recovered from or repaid by any Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the applicable Overnight Rate from time to time in effect.

 

Section 13.20        Reinstatement. This Agreement shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by the Administrative Agent or any other Secured Party upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Borrower or any substantial part of its property, or otherwise, all as though such payments had not been made.

 

Section 13.21        Disposition of Proceeds. The Security Documents contain an assignment by the Borrower and/or the Grantors unto and in favor of the Collateral Agent for the benefit of the Lenders of all of the Borrower’s or each Grantor’s interest in and to their as-extracted collateral in the form of production and all proceeds attributable thereto which may be produced from or allocated to the Mortgaged Property. The Security Documents further provide in general for the application of such proceeds to the satisfaction of the Obligations described therein and secured thereby. Notwithstanding the assignment contained in such Security Documents, until the occurrence of an Event of Default, (a) the Administrative Agent and the Lenders agree that they will neither notify the purchaser or purchasers of such production nor take any other action to cause such proceeds to be remitted to the Administrative Agent or the Lenders, but the Lenders will instead permit such proceeds to be paid to the Borrower and its Subsidiaries and (b) the Lenders hereby authorize the Administrative Agent to take such actions as may be necessary to cause such proceeds to be paid to the Borrower and/or such Subsidiaries.

 

192

 

 

Section 13.22        Collateral Matters; Hedge Agreements. The benefit of the Security Documents and of the provisions of this Agreement relating to any Collateral securing the Obligations shall also extend to and be available on a pro rata basis pursuant to terms agreed upon in the Credit Documents to any Person (a) under any Secured Hedge Agreement, in each case, after giving effect to all netting arrangements relating to such Hedge Agreements or (b) under any Secured Cash Management Agreement. No Person shall have any voting rights under any Credit Document solely as a result of the existence of obligations owed to it under any such Secured Hedge Agreement or Secured Cash Management Agreement.

 

Section 13.23        Agency of the Borrower for the Other Credit Parties. Each of the other Credit Parties hereby appoints the Borrower as its agent for all purposes relevant to this Agreement and the other Credit Documents, including the giving and receipt of notices and the execution and delivery of all documents, instruments and certificates contemplated herein and therein and all modifications hereto and thereto.

 

Section 13.24        Acknowledgement and Consent to Bail-In of Affected Financial Institutions. Notwithstanding anything to the contrary in any Credit Document or in any other agreement, arrangement or understanding among any parties hereto, each party hereto acknowledges that any liability of any Affected Financial Institution arising under any Credit Document may be subject to the Write-Down and Conversion Powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:

 

(a)           the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an Affected Financial Institution; and

 

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

 

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

 

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

 

(iii)           the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of the applicable Resolution Authority.

 

Section 13.25        Acknowledgment Regarding Any Supported QFCs. To the extent that the Credit Documents provide support, through a guarantee or otherwise, for Hedge Agreements or any other agreement or instrument that is a QFC (such support, “QFC Credit Support” and each such QFC, a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Credit Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States):

 

193

 

 

(a)           In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Credit Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Credit Documents were governed by the laws of the United States or a state of the United States.

 

(b)           As used in this Section 13.25, the following terms have the following meanings: “BHC Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.

 

“Covered Entity” shall mean any of the following:

 

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

 

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

 

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

 

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

 

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

 

Section 13.26        California Privacy Rights Act. The parties hereto do not anticipate any disclosure of personal information of California residents to Citi, or any collection or processing of personal information of California residents, in connection with the Transactions and Citi’s services contemplated under this Agreement; provided however, that to the extent any California personal information subject to the California Privacy Rights Act (“CPRA”) and their implementing regulations is disclosed by you to Citi and is covered by the CPRA and its implementing regulations, Citi agrees to process such personal information only for the limited and specified business purposes of facilitating the execution of the Transactions or as otherwise provided by, and in compliance with, the CPRA.

 

Section 13.27        Existing Credit Agreement.

 

(a)           On the Effective Date, the Existing Credit Agreement shall be amended and restated in its entirety by this Agreement, and the Existing Credit Agreement shall thereafter be of no further force and effect, except that the Borrower, Holdings, the Administrative Agent and the Lenders agree that (i) the incurrence by the Borrower of “Obligations” under and as defined in the Existing Credit Agreement (whether or not such Obligations are contingent as of the Effective Date) shall continue to exist under and be evidenced by this Agreement and the other Credit Documents, (ii) the Borrower shall pay any breakage costs incurred on the Effective Date under Section 2.11 of the Existing Credit Agreement, and (iii) except as expressly stated herein or amended, amended and restated or otherwise modified, the other Credit Documents are ratified and confirmed as remaining unmodified and in full force and effect with respect to all Obligations. The amendments and restatements set forth herein shall not cure any breach thereof or any “Default” or “Event of Default” under and as defined in the Existing Credit Agreement existing prior to the Effective Date. This Agreement is not in any way intended to constitute a novation of the obligations and liabilities existing under the Existing Credit Agreement or evidence payment of all or any portion of such obligations and liabilities.

 

194

 

 

(b)           The terms and conditions of this Agreement and the Administrative Agent’s, the Lenders’, Swingline Lender’s and the Issuing Banks’ rights and remedies under this Agreement and the other Credit Documents shall apply to all of the Obligations incurred under the Existing Credit Agreement and the Letters of Credit issued thereunder.

 

(c)           On and after the Effective Date, (i) all references to the Existing Credit Agreement (or to any amendment or any amendment and restatement thereof) in the Credit Documents (other than this Agreement) shall be deemed to refer to the Existing Credit Agreement, as amended and restated hereby (as it may be further amended, modified or restated), (ii) all references to any section (or subsection) of the Existing Credit Agreement or in any Credit Document (but not herein) shall be amended to become, mutatis mutandis, references to the corresponding provisions of this Agreement and (iii) except as the context otherwise provides, on or after the Effective Date, all references to this Agreement herein (including for purposes of indemnification and reimbursement of fees) shall be deemed to be references to the Existing Credit Agreement, as amended and restated hereby (as it may be further amended, modified or restated).

 

(d)           This amendment and restatement is limited as written and is not a consent to any other amendment, restatement or waiver, whether or not similar and, except as expressly provided herein or in any other Credit Document, all terms and conditions of the Credit Documents remain in full force and effect unless specifically amended hereby or by any other Credit Document.

 

(e)           The Lenders party to the Existing Credit Agreement have agreed among themselves, if applicable, to reallocate their respective Commitments (as defined in the Existing Credit Agreement) as contemplated by this Agreement. On the Effective Date and after giving effect to such reallocation and adjustment of the Commitments, the Commitments of each Lender shall be as set forth on Schedule 1.1(a) hereto and each Lender shall own its Commitment Percentage of the outstanding Loans. The reallocation and adjustment to the Commitments of each Lender as contemplated by this Section 13.26 shall be deemed to have been consummated pursuant to the terms of the Assignment and Assumption attached as Exhibit G hereto as if each of the Lenders had executed an Assignment and Assumption with respect to such reallocation and adjustment. The Borrower and the Administrative Agent hereby consent to such reallocation and adjustment of the Commitments. The Administrative Agent hereby waives the processing and recordation fee set forth in Section 13.6 with respect to the assignments and reallocations of the Commitments contemplated by this Section 13.27.

 

[Signature Pages Follow.]

 

195

 

 

IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Agreement to be duly executed and delivered as of the date first above written.

 

  MAGNOLIA OIL & GAS INTERMEDIATE LLC,
as Holdings
     
  By: /s/ Brian Corales
  Name: Brian Corales
  Title: Senior Vice President and Chief Financial Officer
     
     
  MAGNOLIA OIL & GAS Operating LLC,
as the Borrower
     
  By: /s/ Brian Corales
  Name: Brian Corales
  Title: Senior Vice President and Chief Financial Officer

 

Signature Page to Third Amended and Restated Credit Agreement

 

 

 

 

  CITIBANK, N.A., as Administrative Agent, Collateral Agent, Issuing Bank and Swingline Lender
     
  By: /s/ Todd Mogil
  Name: Todd Mogil
  Title: Vice President

 

Signature Page to Third Amended and Restated Credit Agreement

 

 

 

 

  CITIBANK, N.A., as a Lender
     
  By: /s/ Todd Mogil
  Name: Todd Mogil
  Title: Vice President

  

Signature Page to Third Amended and Restated Credit Agreement

 

 

 

 

  JPMorgan Chase Bank, N.A., as a Lender
     
  By: /s/ Hadrien Chain
  Name: Hadrien Chain
  Title: Vice President

 

Signature Page to Third Amended and Restated Credit Agreement

 

 

 

 

 

  WELLS FARGO BANK, N.A., as a Lender
     
  By: /s/ Matthew Denkler
  Name: Matthew Denkler
  Title: Executive Director

 

Signature Page to Third Amended and Restated Credit Agreement

 

 

 

 

  BANK OF AMERICA, N.A., as a Lender
     
  By: /s/ Kimberly Miller
  Name: Kimberly Miller
  Title: Director

 

Signature Page to Third Amended and Restated Credit Agreement

 

 

 

 

  Capital One, National Association, as a Lender
     
  By: /s/ Kristin Oswald
  Name: Kristin Oswald
  Title: Senior Director

 

Signature Page to Third Amended and Restated Credit Agreement

 

 

 

 

  KeyBank National Association, as a Lender
     
  By: /s/ David Bornstein
  Name: David Bornstein
  Title: Senior Vice President

 

Signature Page to Third Amended and Restated Credit Agreement

 

 

 

 

  MUFG Bank, Ltd., as a Lender
     
  By: /s/ Tennyson Ryals
  Name: Tennyson Ryals
  Title: Authorized Signatory

 

Signature Page to Third Amended and Restated Credit Agreement

 

 

 

 

  PNC Bank, National Association, as a Lender
     
  By: /s/ Denise Davis
  Name: Denise Davis
  Title: Managing Director

 

Signature Page to Third Amended and Restated Credit Agreement

 

 

 

 

  REGIONS BANK, as a Lender
     
  By: /s/ Cody Chance
  Name: Cody Chance
  Title: Managing Director

 

Signature Page to Third Amended and Restated Credit Agreement

 

 

 

 

  The Bank of Nova Scotia, Houston Branch, as a Lender
     
  By: /s/ Alex Franks
  Name: Alex Franks
  Title: Managing Director

 

Signature Page to Third Amended and Restated Credit Agreement

 

 

 

 

  TRUIST BANK, as a Lender
     
  By: /s/ Greg Krablin
  Name: Greg Krablin
  Title: Director

 

Signature Page to Third Amended and Restated Credit Agreement

 

 

 

 

  FIFTH THIRD BANK, N.A. AS SUCCESSOR BY MERGER TO COMERICA BANK, as a Lender
     
  By: /s/ Britney Moore
  Name: Britney Moore
  Title: Vice President

 

Signature Page to Third Amended and Restated Credit Agreement

 

 

 

 

Schedule 1.1(a)

 

Commitments

 

Lender  Commitment to
Facility		   Elected
Commitment		   Maximum Letter of
Credit Commitment		 
Citibank, N.A.  $225,000,000.00   $175,000,000.01   $100,000,000.00 
JPMorgan Chase Bank, N.A.  $225,000,000.00   $175,000,000.00   $- 
Wells Fargo Bank, N.A.  $225,000,000.00   $175,000,000.00   $- 
Bank of America, N.A.  $175,000,000.00   $136,111,111.11   $- 
Capital One, National Association  $175,000,000.00   $136,111,111.11   $- 
KeyBank National Association  $175,000,000.00   $136,111,111.11   $- 
MUFG Bank, Ltd.  $175,000,000.00   $136,111,111.11   $- 
PNC Bank, National Association  $175,000,000.00   $136,111,111.11   $- 
Regions Bank  $175,000,000.00   $136,111,111.11   $- 
The Bank of Nova Scotia, Houston Branch  $175,000,000.00   $136,111,111.11   $- 
Truist Bank  $175,000,000.00   $136,111,111.11   $- 
Fifth Third Bank, N.A. as successor by merger to Comerica Bank  $175,000,000.00   $136,111,111.11   $- 
Total  $2,250,000,000.00   $1,750,000,000.00   $100,000,000.00 

 

Schedule 1.1(a)

 

 

 

 

Exhibit 99.1

 

 

 

·Magnolia Oil & Gas Announces Acquisition of WildFire Energy, More than Doubling Giddings Acreage

 

·Highly Accretive Acquisition Creates Dominant Eagle Ford/Austin Chalk Position in South Texas By Combining Two High-Quality, Complementary Assets

 

·Magnolia’s Differentiated, Proven and Highly Investable Business Model Remains Unchanged

 

·Sustainable Asset Quality & Improved Free Cash Flow Supports Immediate 9% Dividend Increase

 

HOUSTON, TX, July 20, 2026 – Magnolia Oil & Gas Corporation (NYSE: MGY) (“Magnolia” or “the Company”) announced today that the Company has entered into a definitive purchase agreement to acquire WildFire Energy (“WildFire”) for approximately $4.06 billion, inclusive of WildFire’s debt and subject to customary purchase price adjustments (the “Acquisition”). The Acquisition has been unanimously approved by Magnolia’s board of directors.

 

“The acquisition of the WildFire oil and gas properties and acreage is a natural and strategic fit and most notably, it makes our business better by extending our runway of advantaged profitability and significant free cash flow generation,” said Magnolia’s Chairman, President and CEO Chris Stavros. “This transaction is the culmination of our extensive subsurface understanding, experience, and the demonstration of our proven resource capture in the Giddings field. With more than 1.25 million net acres and upside development opportunities across multiple benches including the Austin Chalk, Eagle Ford and Woodbine, this transaction creates a premier position in South Texas by combining two high-quality and complementary assets near Gulf Coast markets which offer premium pricing for our products. As we are acquiring a large position with similar financial and operating characteristics that we understand well, importantly this allows Magnolia to continue to execute on its differentiated and successful business model.

 

“The combination of our technical understanding of Giddings and our strong balance sheet put us in a unique position to execute on larger M&A in our own backyard. WildFire is not only a hand in glove fit for Magnolia, but it also offers unmatched benefits while meeting several important characteristics we look for – focused, high-quality assets with concentrated scale, a low capital reinvestment rate providing moderate production growth, high operating margins, and steady free cash flow allowing for consistent and significant shareholder returns. WildFire has a large, low-decline oily PDP base with historic development centered on the Eagle Ford. While there are significant future Eagle Ford development opportunities, our technical teams see extensive future potential in the Austin Chalk with further upside in the Woodbine as well as other appraisal opportunities that should expand on our success in Giddings since 2018.

 

“Together with the acquired WildFire assets, Magnolia’s adjacent and overlapping acreage creates a larger, contiguous position with additional infrastructure benefits, estimated to provide at least $100 million in cost savings and annual synergies that enhance our free cash flow. We expect the transaction to be immediately and highly accretive to our key per share financial metrics including cash flow, free cash flow and earnings, in addition to enhancing our D&C capital reinvestment rate. Our strong confidence in the high-quality and capability of the WildFire assets and higher free cash flow generation supports improved shareholder returns driving an immediate increase of 9 percent in our quarterly dividend to 18 cents per share, payable in the third quarter of this year. The combination of these two high-quality businesses improves our position for sustained growth, strengthens our financial returns, and increases our dividend-per-share payout capacity, creating improved long-term value for our shareholders.”

 

 

 

 

Strategic, Operational and Financial Benefits

 

·Acquisition Maintains Magnolia’s Differentiated, Proven and Highly Investable Business Model – The transaction supports and reinforces Magnolia’s business model, which is unchanged. On a pro forma basis, the Company plans to limit capital spending to 55 percent of annual adjusted EBITDAX, which is expected to deliver moderate total company and oil production growth on an annual basis with high pre-tax operating margins. Magnolia’s continued disciplined approach toward capital spending should generate consistent and significant amounts of free cash flow, a substantial amount of which will be returned to shareholders. This includes the continued payment of our safe, sustainable and growing dividend and ongoing share repurchases of at least 1 percent of our outstanding shares per quarter. The increase in Magnolia’s debt to execute the transaction should be viewed as temporary as our significant free cash flow generation above the Company’s shareholder return program allows for a swift and steady reduction of leverage and in-line with Magnolia’s conservative financial policy.

 

·Strong Fit and Overlap Enhances our Giddings Asset with Unmatched High-Quality Concentration of Scale and Duration – The Acquisition adds approximately 810,000 net acres in Giddings, further strengthening Magnolia’s already significant development inventory in this area. Magnolia’s pro forma position in Giddings now totals more than 1.25 million net acres (1.55+ million gross acres) creating a premier position of concentrated scale and expanding our high-quality resource development opportunities across the Austin Chalk, Eagle Ford and Woodbine formations while allowing for capture of further operational efficiencies.

 

·High-Margin, Low-Decline Production – The acquired assets contribute approximately 53,000 Boe/d of production, with an oil weighting of roughly 70 percent with a relatively low and attractive 29 percent base oil decline rate. These oily assets generate strong cash operating margins with access to premium Gulf Coast pricing while enhancing free cash flow generation and lowering our corporate reinvestment rate.

 

·Immediately and Highly Accretive to Key Financial Metrics – Magnolia expects the transaction to be immediately and highly accretive to our key per share financial metrics including cash flow, free cash flow and earnings, in addition to enhancing corporate operating margins and our D&C capital reinvestment rate.

 

·Meaningful Synergies – The Company expects to realize greater than $100 million in annual synergies and cost savings through development and operational efficiencies, as well as reduced pro forma corporate general and administrative (G&A) expenses. The estimated net present value of these synergies is approximately $700 million. Operational enhancements include longer lateral development, application of Magnolia's extensive subsurface knowledge and drilling and completion expertise, shared facilities and infrastructure, supply chain and logistics pricing, and streamlined field operations that eliminate overlap.

 

·Significant Infrastructure Included – Included in the transaction is a sand mine that supplies approximately 80 percent of Magnolia’s annual sand consumption, inclusive of 100 percent of WildFire’s sand requirements together with other third-party sand sales. Additionally, over 500 miles of gas gathering pipelines in Giddings are included in the transaction further benefiting operating margins.

 

 

 

 

·Enhanced Free Cash Flow Supports Improved and Consistent Strong Shareholder Returns – Strong free cash flow accretion from the transaction and our confidence in the high-quality and capability of the assets leads to an immediate 9 percent increase in the quarterly dividend to $0.18 per share from $0.165 per share, payable in the third quarter of 2026. In addition to the increase in our regular quarterly dividend, Magnolia will maintain its ongoing program of share repurchases of at least 1 percent of the outstanding shares per quarter.

 

Magnolia Second Quarter 2026 Operations Update

 

Magnolia’s second quarter total production averaged 106.1 Mboe/d with oil production of 41.9 Mbo/d. D&C capital for the second quarter was $125 million, and the Company ended the quarter with $296 million of cash on the balance sheet. Based on Magnolia’s strong second quarter production, the Company is increasing its full year 2026 annual production growth guidance (Magnolia standalone) to 6 percent from 5 percent.

 

Further details on the impact of the Acquisition to Magnolia’s 2026 production and capital spending will be provided after closing, which is expected to occur late in the third quarter of 2026.

 

Transaction Details

 

Under the terms of the agreement, the transaction is valued at approximately $4.06 billion. WildFire owners will receive 32.2 million shares of Magnolia’s Class A Common Stock and Magnolia is assuming WildFire’s $600 million of outstanding notes due in 2029. The Company intends to fund the remaining amount through a combination of cash on hand, and a balanced mix of debt and new Common equity. Magnolia has obtained committed financing from JPMorgan Chase Bank, N.A., Citigroup Global Markets Inc. and Wells Fargo Bank, N.A. in connection with this transaction and has amended and increased the Company’s secured credit facility to a $2 billion borrowing base and with elected commitments of $1.75 billion contingent upon closing the transaction.

 

Advisors

 

In connection with this transaction, Magnolia has retained J.P. Morgan Securities LLC and Moelis & Company LLC as lead financial advisors and Citigroup as a financial advisor. Kirkland & Ellis LLP acted as Magnolia’s legal advisor. WildFire has retained Jefferies LLC as lead financial advisor and BofA Securities, Inc. as a financial advisor. Troutman Pepper Locke acted as WildFire’s legal advisor.

 

Conference Call

 

Magnolia Oil & Gas Corporation (NYSE: MGY) will host a conference call and webcast to discuss the transaction on Monday, July 20 at 7:00 a.m. Central Time (8:00 a.m. Eastern Time).

 

Join the webcast by visiting Magnolia’s website at www.magnoliaoilgas.com/investors/events-and-presentations and clicking on the webcast link or by dialing 1-844-701-1059. Materials related to the transaction will be made available in the Investors section of the website prior to the call. The Company will post a replay of the webcast on its website following the call.

 

 

 

 

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.

 

Cautionary Note Regarding Forward-Looking Statements

 

The information in this press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of present or historical fact included in this press release, regarding the consummation of the Acquisition and the transactions contemplated thereby, the expected synergies of the Acquisition, Magnolia’s share repurchase program, Magnolia’s strategy, future operations, financial position, estimated revenues and losses, projected costs and capital expenditures, prospects, plans and objectives of management are forward looking statements. When used in this press release, the words could, should, will, may, believe, anticipate, intend, estimate, expect, project, the negative of such terms and other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on management’s current expectations and assumptions about future events. Except as otherwise required by applicable law, Magnolia disclaims any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this press release. Magnolia cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the control of Magnolia, incident to the development, production, gathering and sale of oil, natural gas and natural gas liquids. In addition, Magnolia cautions you that the forward looking statements contained in this press release are subject to the following factors: (i) the expected timetable for completing the Acquisition, the results, effects and benefits of the Acquisition, future opportunities for Magnolia, other plans and expectations with respect to the Acquisition, and the anticipated impact of the Acquisition on Magnolia’s results of operations, financial position, growth opportunities and competitive position; (ii) the market prices of oil, natural gas, natural gas liquids (“NGLs”), and other products or services; (iii) the supply and demand for oil, natural gas, NGLs, and other products or services, including impacts of actions taken by OPEC and other state-controlled oil companies; (iv) the outcome of any legal proceedings that may be instituted against Magnolia; (v) Magnolia’s ability to realize the anticipated benefits of its acquisitions, which may be affected by, among other things, competition and the ability of Magnolia to grow and manage growth profitably; (vi) legislative, regulatory, or policy changes, including those following the change in presidential administrations; (vii) geopolitical and business conditions in key regions of the world; (viii) cybersecurity threats, including increased use of artificial intelligence technologies; and (ix) the possibility that Magnolia may be adversely affected by other economic, business, and/or competitive factors, including inflation. Should one or more of the risks or uncertainties described in this press release occur, or should underlying assumptions prove incorrect, actual results and plans could differ materially from those expressed in any forward-looking statements. Additional information concerning these and other factors that may impact the operations and projections discussed herein can be found in Magnolia’s filings with the SEC, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2025. Magnolia’s SEC filings are available publicly on the SEC’s website at www.sec.gov.

 

Investors

 

Tom Fitter

713-331-4802

[email protected]

 

Media

 

Art Pike

713-842-9057

[email protected]

 

Christina Kuhl

713-314-4849

[email protected]

 

 

 

 

Exhibit 99.2

 

Magnolia Oil & Gas to Acquire WildFire Energy Highly Accretive Acquisition Creates Premier Eagle Ford & Austin Chalk Asset Position in South Texas July 20 , 2026 Christopher Stavros – Chairman, President & CEO Brian Corales – Senior Vice President & CFO Tom Fitter – Vice President, Investor Relations

 

 

Pro Forma $9.11 $4.06 $5.05 Enterprise Value ($ Bn) 79 37 42 Q2 2026 Oil Production (MBOPD) 159 53 106 Q2 2026 Production (MBOEPD) ~50% ~70% ~40% Oil Percentage ~1,252,000 1 ~810,000 ~562,000 Net Giddings Acreage Highly Accretive Acquisition Creates Premier Eagle Ford/Austin Chalk Position 2 Acquisition Overview » Total Purchase Price: ~$4.06 Bn » Funded with Balanced Mix of Cash and Equity (including 32.2 MM Shares of Magnolia’s Class A Common Stock to WildFire owners) » Adds Significant Acreage (~810,000 net acres) in Eagle Ford & Austin Chalk Providing Concentration of Quality Resource in the Giddings Field » Adds ~37 MBOPD of Oil Production and Improves Oil Mix to ~50% » Highly Accretive to All Key Financial Metrics, including: Operating Margins, Cash Flow and FCF per share, and EPS » Estimated Annual Run - rate Synergy Capture of >$100 MM by YE2027 » Increased FCF Supports Immediate Dividend Increase of 9% » Unanimously approved by Magnolia’s Board of Directors » Anticipated closing late Q3 2026 1) Approximately 120,000 net acres overlap with respective ownership in different formations Magnolia Oil & Gas to Acquire WildFire Energy Strong Strategic Fit With Highly Contiguous Acreage in Giddings Existing Acreage Acquired Acreage Increased WI Acquired Sand Mine

 

 

Magnolia’s Differentiated & Proven Business Model is Unchanged 3 Magnolia Oil & Gas to Acquire WildFire Energy x Maintain Conservative Leverage – Focus on Steady Reduction of Debt from WildFire Acquisition – Minimizes Risk & Provides Greater Financial Flexibility x Limit Capital Spending to <=55% of Adjusted EBITDAX ̶ Provides Consistent Free Cash Flow Generation x Deliver Moderate Production Growth – High - Quality Assets Drive Low Reinvestment Rate Providing Both Moderate Oil & Total Volume Growth x Generate High Pre - tax Operating Margins x Consistently Return a Substantial Portion of Our Free Cash Flow to Shareholders – Provide a Safe, Sustainable Dividend with a Long - term Compound Annual Growth Rate of ~10% – Share Repurchases of At Least 1% of Outstanding Shares Per Quarter Capital Allocation Priorities 1) D&C Capital of <=55% of Adjusted EBITDAX 2) Safe, Sustainable and Growing Dividend 3) Consistent Share Repurchases of At Least 1% of Outstanding Shares per Quarter 5) Small, Bolt - on Acquisitions that Improve the Business 4) Debt Reduction – Reduce Leverage to <= 0.5x Net Debt/EBITDA Differentiated & Proven Business Model

 

 

Acquisition Improves on Magnolia’s Unique E&P Platform Creates the Dominant Eagle Ford/Austin Chalk E&P Company through Combining Two High - Quality, Complementary Assets Substantial Increase in Duration of High - Return Development Opportunities through Expanded Eagle Ford and Austin Chalk Resource Optionality and Long - Lateral Optimization Magnolia’s Subsurface and D&C Technical Expertise in Giddings Expected to Lower Well Costs & Enhance Production Performance Utilizes Excess Balance Sheet Capacity with Clear Pathway to Reduce Debt in the Short Term and Maintain Strong Liquidity Significant Accretion Across All Key Financial Metrics Driven by Higher Oil Production Mix, Attractive Cost Structure & Operating Synergies Providing Strong Free Cash Flow Generation x x x x x 4 Improves on Industry - leading Reinvestment Economics Extending Sustainable Free Cash Flow Generation and Return of Capital x Magnolia Oil & Gas to Acquire WildFire Energy Existing Acreage Acquired Acreage Increased WI Acquired Sand Mine

 

 

Concentrated & High - Quality Scale in Eagle Ford/Austin Chalk 1,292 810 725 602 576 489 321 223 178 119 94 90 Eagle Ford/Austin Chalk Net Acreage 2 (thousand net acres) Transaction Positions Magnolia as the Largest Acreage Holder in the Eagle Ford/Austin Chalk Trend and a Top Oil Producer in the Advantageous South Texas Region 1) Approximately 120,000 net acres overlap with respective ownership in different formations. Includes Magnolia’s Giddings and Kar nes area net acreage. 2) Source: Enverus as of 7/9/2026. 5 Magnolia Oil & Gas to Acquire WildFire Energy

 

 

42 79 Magnolia Pro Forma 562 1,252 Magnolia Pro Forma 167 306 Magnolia Pro Forma Acquisition Creates Dominant Position in the Giddings Field Area 1) Approximately 120,000 net acres overlap with respective ownership in different formations 2) Represents Q2 2026 Oil Production 3) Represents YE 2025 Proved Developed Reserves Giddings Net Acreage 1 (‘000 acres) Proved Developed Reserves 3 ( MMBoe ) Oil Production 2 (Mbo/d) 39% Oil 54% Oil 6 Magnolia Oil & Gas to Acquire WildFire Energy Significant Additional Acreage, Oil Production & Reserves Support Future Resource Optionality

 

 

Synergy Capture to Drive Higher Margins & Free Cash Flow Complementary Assets & Operations Lead to Significant Synergy Capture ($ MM) D&C and Facilities Field Operations Corporate G&A Total Estimated Synergies by YE 2027 $60 $20 $20 >$100 MM Annual >$100 Million of Annual Synergies by YE 2027 Drilling, Completions & Facilities • Extended Laterals and Materials Benefit • Applying MGY Drilling & Completion Expertise & Technology • Supply Chain & Logistics Pricing • Shared Facilities & Infrastructure Field Operations • Acquired Sand Mine – Majority of Sand Needs Now Self - Supplied with Additional Margin Capture from Third Party Sales • Acquired ~500 Miles of Gas Gathering Pipelines • Reduced OpEx (LOE and GP&T) on WildFire Assets & Increased field synergies with significant acreage overlap Corporate G&A • Limited incremental G&A PV - 10 of Synergies ~$700 MM 7 Magnolia Oil & Gas to Acquire WildFire Energy

 

 

□ Significant Free Cash Flow Generation Provides Clear Pathway to Reduce Debt While Maintaining Strong Return of Capital to Shareholders and In - line with Magnolia’s Business Model □ Expect to Achieve Net Debt/EBITDA of <=1.0x by YE 2027 1 Increase in Free Cash Flow Supports Pathway to Reduce Debt Cumulative Free Cash Flow ($ MM) 1 1) Assumes strip pricing as of July 15, 2026. Forecasted free cash flow numbers are non - GAAP financial measures. Due to their f orward - looking nature, management cannot reliably predict certain of the necessary components of the most directly comparable forward - looking GAAP measures, such as working capital changes. Accordingly, Magnolia is unable to present a quantitative reconciliation of such forward - looking non - GAAP financial measures to their most directly comparable forward - looking GAAP financial measures. Amounts excluded from this non - GAAP measure in future periods could be signi ficant. $0 $1,000 $2,000 $3,000 $4,000 2H 2026 2027 2028 2029 2030 8 Magnolia Oil & Gas to Acquire WildFire Energy >$4.5 Bn Cumulative FCF Through 2030 1

 

 

$0.28 $0.40 $0.46 $0.52 $0.60 $0.66 2021 2022 2023 2024 2025 2026 Pre Wildfire 2026 Pro Forma Asset Quality & Improved Free Cash Flow Supports 9% Dividend Increase $0.72 □ Magnolia has a strong track record of consistent return of capital to shareholders □ Our confidence in the high - quality and capability of the WildFire assets and higher free cash flow generation supports improved shareholder returns ▪ Raising our regular quarterly dividend by 9%, to $0.18/share per quarter from $0.165 per share, payable in Q3 2026 ▪ We expect to maintain our ongoing share repurchases of at least 1% of outstanding shares per quarter after closing 9 Acquisition Supports Significant Return of Capital to Shareholders Magnolia Oil & Gas to Acquire WildFire Energy Annualized Dividend Per Share

 

 

2018 2019 2020 2021 2022 2023 2024 2025 2026 YTD History of Significant Return of Capital to Shareholders □ Magnolia has returned ~40% of its current market cap over the past 8 years □ Improved and durable return of capital focuses on compounding per share value through consistent share repurchases and safe, sustainable dividend growth Inception Cumulative Return of Capital ($MM) $79 $108 $467 $908 $1,213 ~$2 Billion Returned to Shareholders Share Repurchases Dividends $1,591 $1,913 10 $1,996 Magnolia Oil & Gas to Acquire WildFire Energy

 

 

Disclaimer FORWARD LOOKING STATEMENTS The information in this presentation includes forward - looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statement s of present or historical fact included in this presentation, regarding the consummation of the Acquisition and the transactions contempl ate d thereby, the expected synergies of the Acquisition, Magnolia’s share repurchase program, Magnolia’s strategy, future operat ion s, financial position, estimated revenues and losses, projected costs and capital expenditures, prospects, plans and objectives of managem ent are forward looking statements. When used in this presentation, the words could, should, will, may, believe, anticipate, inte nd , estimate, expect, project, the negative of such terms and other similar expressions are intended to identify forward - looking statements, a lthough not all forward - looking statements contain such identifying words. These forward - looking statements are based on managem ent’s current expectations and assumptions about future events. Except as otherwise required by applicable law, Magnolia disclaims any duty to update any forward - looking statements, all of which are expressly qualified by the statements in this section, to refle ct events or circumstances after the date of this presentation. Magnolia cautions you that these forward - looking statements are subject to al l of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the control of Magnolia , i ncident to the development, production, gathering and sale of oil, natural gas and natural gas liquids. In addition, Magnolia cautions you t hat the forward looking statements contained in this presentation are subject to the following factors: ( i ) the expected timetable for completing the Acquisition, the results, effects and benefits of the Acquisition, future opportunities for Magnolia, other plans and expecta tio ns with respect to the Acquisition, and the anticipated impact of the Pending Acquisition on Magnolia’s results of operations , f inancial position, growth opportunities and competitive position; (ii) the market prices of oil, natural gas, natural gas liquids (“NGLs”), and oth er products or services; (iii) the supply and demand for oil, natural gas, NGLs, and other products or services, including im pac ts of actions taken by OPEC and other state - controlled oil companies; (iv) the outcome of any legal proceedings that may be instituted against Magnolia ; (v) Magnolia’s ability to realize the anticipated benefits of its acquisitions, which may be affected by, among other thing s, competition and the ability of Magnolia to grow and manage growth profitably; (vi) legislative, regulatory, or policy changes, including thos e f ollowing the change in presidential administrations; (vii) geopolitical and business conditions in key regions of the world; (vi ii) cybersecurity threats, including increased use of artificial intelligence technologies; and (ix) the possibility that Magnolia may be adver sel y affected by other economic, business, and/or competitive factors, including inflation. Should one or more of the risks or u nce rtainties described in this presentation occur, or should underlying assumptions prove incorrect, actual results and plans could differ materially f rom those expressed in any forward - looking statements. Additional information concerning these and other factors that may impact th e operations and projections discussed herein can be found in Magnolia’s filings with the SEC, including its Annual Report on Form 10 - K for t he fiscal year ended December 31, 2025. Magnolia’s SEC filings are available publicly on the SEC’s website at www.sec.gov. NON - GAAP FINANCIAL MEASURES This presentation includes non - GAAP financial measures, including adjusted net income, free cash flow, adjusted EBITDAX, adjuste d cash operating costs, adjusted cash operating margin and return on capital employed. Magnolia believes these metrics are us efu l because they allow Magnolia to more effectively evaluate its operating performance and compare the results of its operations from per iod to period and against its peers without regard to accounting methods or capital structure. Magnolia does not consider these n on - GAAP measures in isolation or as an alternative to similar financial measures determined in accordance with GAAP. The computations of these non - GAAP measures may not be comparable to other similarly titled measures of other companies. Adjusted net income and adjusted EBITDAX should not be considered an alternative to, or more meaningful than, net income as d ete rmined in accordance with GAAP. Certain items excluded from free cash flow, adjusted net income, adjusted EBITDAX, adjusted c ash operating costs, adjusted cash operating margin, adjusted operating margin and return on capital employed are significant com pon ents in understanding and assessing a company’s financial performance and should not be construed as an inference that its re sul ts will be unaffected by unusual or non - recurring terms. As performance measures, adjusted net income, adjusted EBITDAX, adjusted cash operating costs, adjusted cash operating margin an d return on capital employed may be useful to investors in facilitating comparisons to others in the Company’s industry becau se certain items can vary substantially in the oil and gas industry from company to company depending upon accounting methods, book valu e o f assets, and capital structure, among other factors. Management believes excluding these items facilitates investors and ana lys ts in evaluating and comparing the underlying operating and financial performance of our business from period to period by eliminat ing differences caused by the existence and timing of certain expense and income items that would not otherwise be apparent on a GA AP basis. As a liquidity measure, management believes free cash flow is useful for investors and widely accepted by those following the oi l and gas industry as financial indicators of a company’s ability to generate cash to internally fund drilling and completion ac tivities, fund acquisitions, and service debt. Our presentation of adjusted net income, adjusted EBITDAX, free cash flow, adjusted cash oper ati ng costs, adjusted cash operating margin and return on capital employed may not be comparable to similar measures of other co mpa nies in our industry. Reconciliations of non - GAAP measures included herein to the nearest corresponding GAAP measure are included in thi s presentation. INDUSTRY AND MARKET DATA This presentation has been prepared by Magnolia and includes market data and other statistical information from sources belie ved by Magnolia to be reliable, including independent industry publications, governmental publications or other published indepen de nt sources. Some data is also based on the good faith estimates of Magnolia, which are derived from its review of internal sourc es as well as the independent sources described above. Although Magnolia believes these sources are reliable, it has not indepen den tly verified the information and cannot guarantee its accuracy and completeness. 11 Magnolia Oil & Gas to Acquire WildFire Energy