Exhibit 2.1
Execution Version
PURCHASE AND SALE AGREEMENT
by and among
Three Rivers Royalty II, LLC and
Cypress Mineral Partners, LLC
as Sellers, and
WhiteHawk Income MARCELLUS LLC and
WhiteHawk Income HAYNESVILLE LLC
as Buyers
Dated as of August 12, 2026
TABLE OF CONTENTS
Page
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ARTICLE 1 Definitions |
1 |
1.1 |
Definitions |
1 |
ARTICLE 2 Purchase and Sale of Assets |
1 |
2.1 |
Purchase and Sale of the Assets |
1 |
2.2 |
Excluded Assets |
3 |
ARTICLE 3 Purchase Price |
4 |
3.1 |
Purchase Price |
4 |
3.2 |
Adjustment to Purchase Price |
5 |
3.3 |
Deposit |
5 |
3.4 |
Payment |
6 |
3.5 |
Closing Statement |
6 |
3.6 |
Post‑Closing Adjustment |
6 |
3.7 |
Right to Proceeds |
8 |
3.8 |
Withholding |
9 |
ARTICLE 4 Representations and Warranties of Sellers |
9 |
4.1 |
Organization |
9 |
4.2 |
Authorization; Approval; Enforceability |
10 |
4.3 |
No Conflicts |
10 |
4.4 |
Bankruptcy |
10 |
4.5 |
Litigation |
10 |
4.6 |
Taxes |
10 |
4.7 |
Material Contracts |
11 |
4.8 |
Preferential Purchase Rights; Required Consents |
11 |
4.9 |
No Brokers |
11 |
4.10 |
No Judgments |
11 |
4.11 |
Suspense Funds |
11 |
4.12 |
Affiliate Contracts |
11 |
4.13 |
No Intentionally Omitted Minerals or Royalties |
11 |
4.14 |
Operations |
12 |
ARTICLE 5 Representations and Warranties of Buyer |
12 |
5.1 |
Organization |
12 |
5.2 |
Authorization; Approval; Enforceability |
12 |
5.3 |
No Conflicts |
12 |
5.4 |
Litigation |
13 |
5.5 |
Securities Law Compliance |
13 |
5.6 |
Buyer’s Independent Investigation |
13 |
5.7 |
Bankruptcy |
14 |
5.8 |
No Brokers |
14 |
ARTICLE 6 Covenants |
14 |
6.1 |
Conduct of Business |
14 |
6.2 |
Access |
16 |
6.3 |
Further Assurances |
16 |
6.4 |
Fees and Expenses |
17 |
6.5 |
Assumed Obligations |
17 |
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6.6 |
Hedge Contracts |
17 |
6.7 |
Financial and Reserve Information Cooperation |
18 |
ARTICLE 7 Tax Matters |
19 |
7.1 |
Allocation of Property Taxes |
19 |
7.2 |
Payment of Taxes; Filing of Tax Returns |
20 |
7.3 |
Tax Refunds |
20 |
7.4 |
Transfer Taxes |
21 |
7.5 |
Tax Cooperation |
21 |
7.6 |
Tax Purchase Price Allocation |
21 |
ARTICLE 8 Title Matters |
22 |
8.1 |
Buyers’ Title Review |
22 |
8.2 |
Alleged Title Defects; Seller Cure Rights |
22 |
8.3 |
Alleged Title Benefits |
25 |
8.4 |
Value of Defects and Benefits |
26 |
8.5 |
Purchase Price Adjustments |
27 |
8.6 |
Title Dispute Resolution |
28 |
8.7 |
Special Warranty |
30 |
8.8 |
Defect Escrow Account |
31 |
ARTICLE 9 Conditions to Closing |
32 |
9.1 |
Conditions of Buyers to Closing |
32 |
9.2 |
Conditions of Sellers to Closing |
33 |
ARTICLE 10 Closing |
34 |
10.1 |
Closing |
34 |
10.2 |
Closing Deliverables by Sellers |
35 |
10.3 |
Closing Deliverables by Buyers |
36 |
10.4 |
Records; Recording |
36 |
ARTICLE 11 Indemnification and Waivers |
37 |
11.1 |
Indemnification |
37 |
11.2 |
Limitations on Liability |
37 |
11.3 |
Procedures |
39 |
11.4 |
Waiver of Consequential Damages |
41 |
11.5 |
Waivers and Disclaimers |
42 |
11.6 |
Exclusive Remedy and Release |
42 |
11.7 |
Express Negligence Rule |
43 |
11.8 |
No Duplication |
43 |
11.9 |
Tax Treatment of Post-Closing Payments |
43 |
ARTICLE 12 Termination |
44 |
12.1 |
Termination |
44 |
12.2 |
Effect of Termination |
44 |
12.3 |
Specific Performance |
46 |
ARTICLE 13 Governing Law; Arbitration; Jury Trial Waiver |
47 |
13.1 |
Governing Law |
47 |
13.2 |
Jurisdiction; Venue; Waiver of Jury Trial |
47 |
ARTICLE 14 Other Provisions |
47 |
14.1 |
Notices |
47 |
14.2 |
Assignment |
48 |
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14.3 |
Rights of Third Parties |
48 |
14.4 |
Counterparts |
49 |
14.5 |
Entire Agreement; Appendices, Exhibits and Schedules; Preparation of Agreement |
49 |
14.6 |
Disclosure Schedules |
49 |
14.7 |
Amendments |
49 |
14.8 |
Publicity |
50 |
14.9 |
Severability |
50 |
14.10 |
Waivers |
50 |
14.11 |
Rules of Construction |
50 |
14.12 |
No Recourse |
51 |
14.13 |
Confidentiality |
51 |
14.14 |
Specific Performance |
51 |
14.15 |
Buyer Representative |
52 |
List of Appendices, Exhibits and Schedules
Appendices:
Appendix A Definitions
Exhibits:
Exhibit A-1-1 Fee Minerals (TRR II)
Exhibit A-1-2 Fee Minerals (Cypress)
Exhibit A-2-1 ORRIs (TRR II)
Exhibit A-2-2 ORRIs (Cypress)
Exhibit A-3-1 NPRIs (TRR II)
Exhibit A-3-2 NPRIs (Cypress)
Exhibit A-4-1 Wells (TRR II)
Exhibit A-4-2 Wells (Cypress)
Exhibit B Closing Statement
Exhibit C-1-1 Form of Assignment (TRR II)
Exhibit C-1-2 Form of Assignment (Cypress)
Exhibit C-2-1 Form of Deed (TRR II)
Exhibit C-2-2 Form of Deed (Cypress)
Exhibit D-1 Form of Letter in Lieu (TRR II)
Exhibit D-2 Form of Letter in Lieu (Cypress)
Exhibit E-1 Sellers’ Certificate
Exhibit E-2 Buyers’ Certificate
Schedules:
Schedule 1(a) Pro Rata Shares
Schedule 1(b) Sellers’ Knowledge Individuals
Schedule 1(c) Buyers’ Knowledge Individuals
Schedule 3.1-1 Allocated Values (TRR II)
Schedule 3.1-2 Allocated Values (Cypress)
Schedule 3.7(b) Specified Wells
Schedule 4.5 Litigation
Schedule 4.6 Taxes
Schedule 4.7 Material Contracts
Schedule 4.11 Suspense Funds
Schedule 4.12 Affiliate Contracts
Schedule 4.13 No Intentionally Omitted Minerals or Royalties
Schedule 4.14 Cost-Bearing Interests
Schedule 6.1(a) Conduct of Business
Schedule AH Assumed Hedges
Schedule EA Excluded Assets
Schedule MR Seller Mortgages
Schedule PE Permitted Encumbrances
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this “Agreement”), dated as of August 12, 2026 (the “Execution Date”), is by and among Three Rivers Royalty II, LLC, a Colorado limited liability company (“TRR II Seller”), Cypress Mineral Partners, LLC, a Louisiana limited liability company (“Cypress Seller”, and together with TRR II Seller, “Sellers”), WhiteHawk Income Marcellus LLC, a Delaware limited liability company (“WhiteHawk Marcellus”), and WhiteHawk Income Haynesville LLC, a Delaware limited liability company (“WhiteHawk Haynesville” and, collectively with WhiteHawk Marcellus, “Buyers”). Sellers and Buyers are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”
Recitals:
WHEREAS, TRR II Seller desires to sell a certain undivided interest in certain TRR II Assets (as hereinafter defined) to Buyers, and Buyers desire to purchase all of such undivided interest in such TRR II Assets from TRR II Seller, in the manner and on the terms and conditions of this Agreement; and
WHEREAS, Cypress Seller desires to sell and convey to Buyers, and Buyers desire to purchase and acquire from Cypress Seller, all of Cypress Seller’s right, title and interest in and to the Cypress Assets (as hereinafter defined) in the manner and on the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and agreements hereinafter set forth, for the monetary consideration hereinafter set forth, and subject to the terms and provisions herein contained, the Parties agree as follows:
ARTICLE 1
Definitions
1.1 Definitions. In addition to the terms defined in the preamble of this Agreement, for purposes hereof, the capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in Appendix A.
ARTICLE 2
Purchase and Sale of Assets
2.1 Purchase and Sale of the Assets. Subject to the terms and conditions of this Agreement, (x) TRR II Seller agrees to sell, assign and deliver to Buyers, and Buyers agree to purchase and acquire from TRR II Seller at the Closing, but effective as of the Effective Time, an undivided fifty percent (50%) interest (the “TRR II Conveyed Interest”) in all of TRR II Seller’s right, title and interest in and to the following, and (y) Cypress Seller agrees to sell, assign and deliver to Buyers, and Buyers agree to purchase and acquire from Cypress Seller at the Closing, but effective as of the Effective Time, all (the “Cypress Conveyed Interest” and together with the TRR II Conveyed Interest, the “Conveyed Interest”) of Cypress Seller’s right, title and interest in and to the following, in each case, other than the Excluded Assets:
(a) all mineral interests, fee mineral interests, other mineral rights (of any kind and however defined), fee oil and gas rights, and other mineral and/or oil and gas assets based upon, derived from or measured by a fee oil and gas estate in and to the tracts of land described on Exhibit A-1-1 (the “TRR II Fee Properties”) and Exhibit A-1-2 (the “Cypress Fee Properties” and together with the TRR II Fee Properties, the “Fee Properties”), including those subject to one (1) or more oil and gas leases as described on Exhibit A-1-1 and Exhibit A-1-2 (each, a “Fee Mineral Lease”), together with all associated (i) rights, benefits and powers conferred upon Buyers as the holders of the Fee Properties, including appurtenant surface rights and water rights with respect to the Fee Properties executive rights, including the right to execute leases, and other rights to produce minerals in place; (ii) all lessor rights under the Fee Mineral Leases (including reversionary rights); and (iii) rights to receive all royalties (including lessor royalties), production payments, bonuses, rentals and all other profits, income or payments attributable to the foregoing and/or the Wells, in each case, to the extent attributable to periods from and after the Effective Time (and, if applicable, to the extent payable under the terms of the relevant Fee Mineral Lease or any subsequent oil and gas lease covering the applicable property) (collectively, the “Fee Minerals”, and, as applicable, the “TRR II Fee Minerals” or the “Cypress Fee Minerals”);
(b) all overriding royalty interests in the oil and gas leases listed on Exhibit A-2-1 (the “TRR II ORRI Leases”) and Exhibit A-2-2 (the “Cypress ORRI Leases” and together with the TRR II ORRI Leases, the “ORRI Leases”), together with any and all associated rights, to the extent applicable, to receive profits or income attributable to the ownership thereof and/or the Wells, to the extent attributable to periods and payable under the terms of the relevant instruments (the “ORRI Instruments”) from and after the Effective Time (collectively, the “ORRIs”, and, as applicable, the “TRR II ORRIs” or the “Cypress ORRIs”); provided that, for purposes of clarity and without limitation of Section 2.2, in no event shall the overriding royalty interests described on Schedule EA (the “Excluded ORRIs”) be included in the ORRIs and Sellers specifically exclude, reserve and retain the Excluded ORRIs from the transactions contemplated by this Agreement;
(c) all non-participating royalty interests in and to Hydrocarbons in, on and under or produced, saved or sold from the lands described on Exhibit A-3-1 (the “TRR II NPRI Properties”) and Exhibit A-3-2 (the “Cypress NPRI Properties” and together with the TRR II NPRI Properties, the “NPRI Properties”), together with all associated rights to receive all royalties (including lessor royalties), production payments and all other profits or income attributable to the foregoing and/or the Wells, in each case, to the extent attributable to periods from and after the Effective Time (collectively, the “NPRIs,” and, as applicable, the “TRR II NPRIs” or the “Cypress NPRIs”, and together with the Fee Minerals and the ORRIs, collectively the “Mineral Properties” and each, a “Mineral Property”; and, as applicable the “TRR II Mineral Properties” and the “Cypress Mineral Properties”);
(d) all proceeds, revenues, or other benefits attributable to production from or the ownership of the Mineral Properties, including all rights to receive Hydrocarbons underlying, produced from or otherwise allocable or attributable to the Mineral Properties and the oil and/or gas wells described on Exhibit A-4-1 (the “TRR II Wells”) and Exhibit A-4-2 (the “Cypress Wells” and together with the TRR II Wells, the “Wells”), in each case, to the extent attributable to periods from and after the Effective Time;
(e) to the extent assignable (with consent, if applicable), all presently existing Contracts, if any, to which any Seller or any Affiliate of a Seller is a party to the extent applicable to the Mineral Properties, rights and interests described in subsections (a) through (d) of this Section 2.1;
(f) copies of all files, records and data in Sellers’ possession, solely to the extent that they relate to the Mineral Properties and the rights and interests described in subsections (a) through (e) of this Section 2.1, excluding (i) the general corporate files and records of any Seller insofar as they relate to such Seller’s business generally (including, for purposes of clarity, those related to such Seller’s Taxes) and are not required for the future ownership of the Assets; (ii) any files, records or data to the extent disclosure or transfer would result in a violation of applicable Law or is subject to any Required Consent that is not obtained; (iii) reserve studies and evaluations; (iv) records relating to the negotiation and consummation of the purchase and sale of the Assets; and (v) any files, records or data relating to Income Taxes of any Seller or any Affiliate of a Seller (collectively, and subject to such exclusions, the “Records”); and
(g) all rights, claims, interests and causes of action (including rights to trade credits, receivables, warranties, audit rights (including rights to receive refunds and revenues in connection therewith) and rights to receive indemnity, funds, reimbursements or other payments and rights under policies or agreements of insurance), in each case to the extent attributable to the other Assets with respect to any period of time prior to, on or after the Effective Time, except, in each case, to the extent relating to any Excluded Asset or any matter for which any Seller has an indemnification obligation under this Agreement.
All of TRR II Seller’s right, title and interest in all of the real and personal properties, rights, titles and interests described in Section 2.1(a) through Section 2.1(g), after giving effect to the exclusion of the Excluded Assets, is hereinafter collectively referred to as the “TRR II Assets” or, individually, a “TRR II Asset.” All of Cypress Seller’s right, title and interest in all of the real and personal properties, rights, titles and interests described in Section 2.1(a) through Section 2.1(g), after giving effect to the exclusion of the Excluded Assets, is hereinafter collectively referred to as the “Cypress Assets” or, individually, a “Cypress Asset.” The TRR II Assets and the Cypress Assets are hereinafter collectively referred to as the “Assets”, or, individually, an “Asset”.
2.2 Excluded Assets. Notwithstanding anything to the contrary in Section 2.1 or elsewhere in this Agreement, Sellers specifically exclude, reserve and retain the following from the transactions contemplated by this Agreement (collectively, the “Excluded Assets”):
(a) all rights, claims, interests and causes of action to the extent related to any other Excluded Assets, any Retained Liabilities or any other matter for which any Seller has an indemnification obligation under this Agreement;
(b) any data, software and records to the extent disclosure or transfer is prohibited or subjected to payment of a fee or other consideration by any license agreement or other agreement with a Person other than an Affiliate of any Seller, or by applicable Law, and for which no consent to transfer has been received or for which Buyers have not agreed in writing to pay the fee or other consideration, as applicable;
(c) all rights to proceeds, revenues, income, receipts and credits attributable to any of the Assets that are attributable to the time period prior to the Effective Time (including, for purposes of clarity, any such proceeds or revenues that are or may be held in suspense and all security or other deposits made with respect thereto), as well as all claims or causes of action (whether asserted as of the Execution Date or not) for mispayment, nonpayment or miscalculation of such proceeds and revenues and all audit rights and rights to reimbursement with respect to such proceeds, revenues, income, receipts and credits;
(d) all claims for refunds of, credits attributable to, loss carry forwards with respect to, or similar Tax assets relating to, (i) Property Taxes attributable to the Assets with respect to any Pre-Effective Time Tax Period or the portion of any Straddle Period ending on the day before the date on which the Effective Time occurs (as determined in accordance with the principles set forth in Section 7.1), (ii) Income Taxes of any Seller or any Affiliate of a Seller, (iii) Taxes attributable to the Excluded Assets or (iv) any other Taxes relating to the acquisition, ownership or operation of the Assets that are attributable to any Tax period (or portion of any Straddle Period) ending prior to the Effective Time;
(e) all of Sellers’ proprietary computer software, patents, trade secrets, copyrights, names, trademarks, logos and other intellectual property, including for purposes of clarity, any and all of Sellers’ algorithms, interpretive and extrapolative data, information and projections;
(f) all documents and instruments of any Seller that may be protected by attorney-client privilege, excluding title opinions and title memoranda;
(g) with respect to the TRR II Conveyed Interest in the Assets, all rights, title and interest in and to any Mineral and Royalty Interest of any type (whether recorded or unrecorded, vested, contingent or otherwise) not expressly described on Exhibit A-1-1, Exhibit A-2-1, Exhibit A-3-1, or Exhibit A-4-1 (including, for the avoidance of doubt, any Mineral and Royalty Interests owned by Three Rivers Royalty, LLC, a Texas limited liability company, Three Rivers Royalty III, LLC, a Delaware limited liability company, or Three Rivers Royalty IV, LLC, a Delaware limited liability company);
(h) the Excluded ORRIs and all other assets, properties and interests more particularly described in Schedule EA;
(i) all personal property;
(j) all hedges, futures, swaps and other derivatives, including rights relating thereto, arising pursuant to hedging arrangements of any Seller or any Affiliate of a Seller or otherwise affecting the Assets, in each case that are not Assumed Hedges; and
(k) the Retained Interests.
ARTICLE 3
Purchase Price
3.1 Purchase Price.
(a) In consideration for the purchase of the Conveyed Interest in the Assets, Buyers agree to pay to Sellers an aggregate amount of One Hundred Five Million Dollars ($105,000,000) (the “Purchase Price”), subject to adjustment as set forth in this Agreement.
(b) Solely for the purposes of determining the value of the Assets in connection with any Title Defects, Title Benefits and/or breach of the special warranty of Defensible Title under this Agreement, the Parties agree that the portion of the unadjusted Purchase Price attributable to the (x) TRR II Assets shall be allocated among such Parcels and Wells as are set forth on Schedule 3.1-1 and (y) Cypress Assets shall be allocated among such Quarter Sections and Wells as are set forth on Schedule 3.1-2 (as set forth on such Schedules, the “Allocated Values”). No Party makes any representation or warranty concerning the accuracy of the Allocated Values.
3.2 Adjustment to Purchase Price. The Purchase Price for the Conveyed Interest in the Assets shall be adjusted as follows: (a) reduced (without duplication) by (i) the Allocated Value of any Parcel, Quarter Section or Well excluded from the Closing pursuant to Section 8.2(b), (ii) the amount of Purchase Price reductions related to any agreed upon and final Title Defects, as and to the extent determined pursuant to Article 8, (iii) the amount of any income, proceeds, revenues, receipts or credits allocable to Buyers under Section 3.7 which are paid to any Seller, (iv) the amount of Property Taxes allocated to any Seller pursuant to Section 7.1, but that are paid or otherwise economically borne by Buyers or any of its Affiliates, and (v) the aggregate amount of all amounts paid to or received by Sellers to the extent attributable to settlements of the Assumed Hedges (or any Deferred Hedges) for the period from the Effective Time through Closing or, in the case of any Deferred Hedges, through later novation or termination of any such Deferred Hedges (in each case, without offset or netting of amounts under any other Hedge Contract with the counterparty that is a party to such Assumed Hedge or Deferred Hedge, as applicable); and (b) increased (without duplication) by (i) the amount of any income, proceeds, revenues, receipts or credits allocable to any Seller under Section 3.7 which are paid to Buyers, (ii) the amount of Property Taxes allocated to Buyers pursuant to Section 7.1 but that are paid or otherwise economically borne by any Seller or any Affiliate thereof, (iii) the aggregate amount of Purchase Price increases related to Agreed Title Benefits, as and to the extent determined pursuant to Article 8, and (iv) all amounts paid by Sellers to the extent attributable to settlements of the Assumed Hedges (or Deferred Hedges) for the period from the Effective Time through Closing (or, in the case of any Deferred Hedges, through later novation or termination of any such Deferred Hedges). The Purchase Price, adjusted as set forth in this Agreement (including this Section 3.2), shall be referred to as the “Adjusted Purchase Price.”
3.3 Deposit. Contemporaneously with the execution of this Agreement, Buyers shall deliver to the Escrow Agent an aggregate amount equal to five percent (5%) of the unadjusted Purchase Price (such amount, the “Deposit”) to assure Buyers’ performance of its obligations hereunder. Such payment by Buyers shall be made in cash by wire transfer of immediately available funds to the account designated by the Escrow Agent in accordance with the Escrow Agreement. The Deposit shall be held and disbursed by the Escrow Agent in accordance with the terms of the Escrow Agreement and this Agreement. If this Agreement is terminated prior to the occurrence of the Closing, the distribution of the Deposit shall be governed by the provisions of Section 12.2. In the event of any conflict between the terms of this Agreement and the terms of
the Escrow Agreement with respect to the disbursement of the Deposit, the terms of this Agreement shall control.
3.4 Payment. At the Closing, Buyers shall pay to each Seller, in cash by wire transfer of immediately available funds, to the account or accounts designated by such Seller, the portion (as reflected on the Allocation Statement (as defined below)) of the Closing Payment payable to such Seller.
3.5 Closing Statement. Not later than five (5) Business Days prior to the Scheduled Closing Date, Sellers shall prepare and deliver to Buyers (a) a statement (the “Closing Statement”) showing Sellers’ good faith computation of the Adjusted Purchase Price described in Section 3.2, as determined by Sellers in good faith, including each adjustment to the Purchase Price and the computation thereof and (b) a statement showing the portion of the Closing Payment and the Deposit to be paid to each Seller (such statement, as Sellers may revise in good faith prior to Closing to account for any agreed adjustments to the Closing Statement in accordance with this Section 3.5, the “Allocation Statement”). Sellers will supply to Buyers reasonable documentation in Sellers’ possession to support the items for such adjustments that are proposed. Within three (3) Business Days of receipt of the Closing Statement, Buyers may deliver to Sellers a written report containing all changes, with the explanation therefor, that Buyers propose to be made to the Closing Statement, and Sellers will consider such proposed changes in good faith. The Closing Statement, as agreed upon by the Parties, will be used to calculate the Adjusted Purchase Price at Closing; provided, however, that if the Parties do not agree upon any particular adjustments set forth in the Closing Statement, then the amount of such disputed adjustment(s) to be used to calculate the Adjusted Purchase Price at Closing shall be that amount set forth in the draft Closing Statement, prepared in good faith and delivered by Sellers to Buyers pursuant to this Section 3.5 with respect to such adjustment (with any disputed amounts thereafter being subject to resolution in accordance with Section 3.6).
3.6 Post‑Closing Adjustment.
(a) Revised Closing Statement. On or before the date that is one hundred twenty (120) days after the Closing Date, Sellers shall prepare and deliver to Buyers a revised version of the Closing Statement setting forth the final Adjusted Purchase Price (the “Revised Closing Statement”), which shall be accompanied by the supporting documentation (if, and to the extent, in Sellers’ possession) reasonably necessary for Buyers to review and verify any adjustments set forth thereunder. The Adjusted Purchase Price reflected in the Revised Closing Statement shall take into account any prior payments made under Section 3.7. The Revised Closing Statement shall become final and binding upon the Parties on the date (the “Final Settlement Date”) that is thirty (30) days following receipt thereof by Buyers, unless Buyers delivers to Sellers a Notice of its disagreement (“Notice of Disagreement”) with respect to any matters set forth in the Revised Closing Statement prior to such date, which Notice of Disagreement shall specify in reasonable detail the basis of any disagreement so asserted. If a Notice of Disagreement is received by Sellers by the date specified in the immediately preceding sentence, then the Final Settlement Date shall be the earlier of (i) the date upon which Sellers and Buyers agree in writing with respect to all matters specified in the Notice of Disagreement and (ii) the date upon which the final statement is issued by the Accounting Referee. Sellers shall provide such assistance (including, to the extent applicable, access to the Records) as Buyers may
reasonably request in connection with its preparation of a Notice of Disagreement and, in furtherance of the foregoing, shall provide Buyers with prompt written notice following receipt by Sellers of any income, proceeds, revenues, receipts or credits allocable to Buyers under Section 3.7, including any amounts which may be held in suspense as of the Closing Date; and Buyers shall provide such assistance (including, to the extent applicable, access to the Records) as Sellers may reasonably request in connection with its preparation of the Revised Closing Statement and, in furtherance of the foregoing, shall provide Sellers with prompt written notice following receipt by Buyers of any income, proceeds, revenues, receipts or credits allocable to Sellers under Section 3.7, including any amounts which may be held in suspense as of the Closing Date.
(b) Revised Closing Statement Resolution. During the thirty (30) day period following the date on which Sellers receive a Notice of Disagreement, Sellers and Buyers shall use their respective commercially reasonable efforts to attempt in good faith to resolve in writing any differences that they may have with respect to all matters specified in the Notice of Disagreement. If at the end of such thirty (30) day period (or earlier by mutual agreement), Buyers and Sellers have not reached agreement in writing on such matters, upon any Party’s request, the Parties shall submit the matters that remain in dispute to the Houston, Texas, office of an independent, nationally recognized accounting firm mutually agreed upon by the Parties (and absent agreement by the Parties as to such arbitrator within ten (10) Business Days after the end of such thirty (30) day period, the arbitrator shall be selected by the Houston, Texas, office of the American Arbitration Association) (the “Accounting Referee”) for review and final and binding resolution. The Accounting Referee shall render a decision choosing either Sellers’ position or Buyers’ position with respect to each item or amount in the Revised Closing Statement which was identified in the Notice of Disagreement and which remains in dispute and the Accounting Referee’s decision resolving the matters in dispute shall be consistent with the terms and conditions in this Agreement and the other applicable Transaction Documents. The decision of the Accounting Referee shall be (i) final and binding on the Parties and (ii) final and non-appealable for all purposes hereunder. The Accounting Referee shall have no ex parte communications with the Parties concerning the Notice of Disagreement presented to it. The Accounting Referee shall act as an expert for the limited purpose of determining the specific Revised Closing Statement disputes presented to it and shall not act as an arbitrator or consider, hear or decide any matters except the specific Revised Closing Statement disputes presented and shall not award damages, interest or penalties (including punitive or exemplary damages, lost profits, consequential, special or indirect damages) to any Party. In addition, the Accounting Referee 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 Referee in the process of resolving such disputes. Notwithstanding anything to the contrary herein, the Parties acknowledge and agree that the fees and expenses of the Accounting Referee under this Section 3.6(b) shall be borne one-half (1/2) by Buyers and one-half (1/2) by Sellers (severally in accordance with their respective Pro Rata Shares).
(c) Final Settlement. If the amount of the Final Purchase Price exceeds the amount of the Closing Payment, then, (i) within five (5) days after the Final Settlement Date, Sellers shall deliver to Buyers an updated statement (the “Adjustment Allocation Statement”) that sets forth the portion of the amount by which the Final Purchase Price exceeds the amount of the Closing Payment (the “Upward Adjustment Amount”) payable to each Seller and (ii) Buyers shall pay to each Seller the portion (as reflected on the Adjustment Allocation Statement) of the Upward
Adjustment Amount payable to such Seller. If the amount of the Final Purchase Price is less than the amount of the Closing Payment, then each Seller shall pay to Buyers, within five (5) days after the Final Settlement Date, such Seller’s Pro Rata Share of the amount by which the Final Purchase Price is less than the amount of the Closing Payment. Any such post-Closing payment made pursuant to this Section 3.6(c) shall be made by means of a wire transfer of immediately available funds to a bank account designated by the applicable Party entitled to receive such funds.
3.7 Right to Proceeds.
(a) Entitlement. Without limitation of Section 6.4: (i) Buyers shall be entitled to all royalties, bonuses, rentals and other proceeds and revenues from or related or attributable to production from the Conveyed Interest in the Assets from and after the Effective Time and to all other income, proceeds, revenues, receipts and credits earned with respect to the Conveyed Interest in the Assets from and after the Effective Time (collectively, the “Buyer Entitlements”), in each case, including (A) any bonuses which may result from new leases, amendments, ratifications or renewals of leases affecting and applicable to the Conveyed Interest in the Assets executed after the Effective Time and (B) any other amounts that constitute the Conveyed Interest in the Assets under this Agreement; and (ii) Sellers shall be entitled to all royalties, bonuses, rentals and other proceeds and revenues from or related or attributable to production from the Conveyed Interest in the Assets prior to the Effective Time and to all other income, proceeds, revenues, receipts and credits earned with respect to the Conveyed Interest in the Assets prior to the Effective Time (collectively, the “Seller Entitlements”), in each case, including (A) any amounts which may be held in suspense as of the Closing Date and (B) giving effect to any such amounts that constitute Excluded Assets under this Agreement. Without duplication of any adjustments made to the Purchase Price pursuant to Section 3.2, in furtherance of the foregoing provisions of this Section 3.7, the Parties shall periodically account to one another in accordance with the procedures set forth in this Section 3.7. Notwithstanding the foregoing, all matters with respect to the allocation of, and responsibility for, Taxes pursuant to this Agreement shall be addressed in Article 7.
(b) Statement Procedure. For the period that begins on the Closing Date and runs through the end of the twelfth full calendar month following the month in which the Closing occurs (such period, the “Post-Closing Statement Period”), Buyers shall prepare and deliver to Sellers, and Sellers shall prepare and deliver to Buyers, beginning with the first full month following the month in which the Closing occurs (and including, in that instance, the partial month in which the Closing occurs), a statement of all revenues, income, proceeds, receipts and credits received by the delivering Party(ies) with respect to the Conveyed Interest in the Assets within thirty (30) days after the end of each such calendar month (the “Monthly Statements”), whether attributable to production from the Conveyed Interest in the Assets related to the time period prior to, on or after the Effective Time. Each Monthly Statement shall clearly identify all such revenues, income, proceeds, receipts and credits received by the delivering Party(ies) with respect to the Conveyed Interest in the Assets during the applicable period and the delivering Party(ies) shall provide all supporting documentation reasonably necessary for the other Party(ies) to verify such Monthly Statements. The receiving Party(ies) shall review each received Monthly Statement within thirty (30) days of receipt and the Parties shall endeavor in good faith to mutually agree on the final Monthly Statement for each month within such thirty (30) day period. When the Parties have mutually agreed on the final Monthly Statement for a month during the Post-Closing Statement Period, each owing Party shall pay each owed Party any owed amounts within three (3)
Business Days of such finalization of the Monthly Statement. Without limitation of the other terms of this Section 3.7(b), if, from and after the end of the Post-Closing Statement Period, (i) any Seller or any Affiliate thereof receives any Buyer Entitlement attributable to any of the Wells described on Schedule 3.7(b) (each, a “Specified Well”), such Seller shall, or shall cause its applicable Affiliate to, promptly remit such Buyer Entitlement to Buyers and (ii) any Buyer or any Affiliate thereof receives any Seller Entitlement attributable to a Specified Well, Buyers shall, or shall cause an applicable Affiliate thereof to, promptly remit such Seller Entitlement to the applicable Seller. Notwithstanding the foregoing or any other provision of this Agreement to the contrary, if any Buyer or any Affiliate thereof receives any invoice, billing statement, joint interest billing, authorization for expenditure or other cost or expense arising from, based upon, associated with or attributable or related to the matters set forth (or required to be set forth in order to make the representation and warranty set forth in Section 4.14 true and correct) on Schedule 4.14, such Buyer shall, or shall cause its applicable Affiliate to, promptly (and in any event within five (5) Business Days following receipt thereof) deliver a copy of such invoice, billing statement or other documentation to Sellers and Sellers shall, within fifteen (15) Business Days following receipt thereof, remit to such Buyer or its applicable Affiliate the full amount of such costs and expenses (or, at the election of the applicable Seller, directly pay such costs and expenses to the applicable third party); provided, that Sellers shall only be responsible for any such costs or expenses through the earlier of first production or termination of operations for the applicable Asset.
3.8 Withholding. Buyers shall, after providing at least five (5) Business Days written notice of its intent to withhold and a reasonably detailed explanation of the basis thereof, be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to Sellers or any other Person such amounts as Buyers are required to deduct and withhold under the Code, or any Tax law, with respect to the making of such payment. To the extent that such amounts are so properly withheld and timely paid over to the appropriate Governmental Authority in accordance with applicable Law, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of whom such deduction and withholding was made. The Parties agree that no withholding is anticipated, assuming that Sellers provide the IRS Form W-9s pursuant to Section 10.2(b). Buyers shall use commercially reasonable efforts to cooperate with Sellers to minimize or avoid any withholding or deduction.
ARTICLE 4
Representations and Warranties of Sellers
Each Seller represents and warrants to Buyers, except as disclosed in the Disclosure Schedules, the following:
4.1 Organization. Such Seller is duly formed, validly existing and in good standing under the Laws of the state of its formation and is duly qualified, authorized, registered and/or licensed, as applicable, to do business in each other jurisdiction in which the conduct of its business or ownership or leasing of its properties is such as to require it to be so qualified, authorized, registered and/or licensed, except where the failure to be so qualified, authorized, registered and/or licensed would not have a Material Adverse Effect.
4.2 Authorization; Approval; Enforceability. Such Seller has all requisite organizational power and authority to execute and deliver this Agreement and each other
Transaction Document to which such Seller is or will be a party (collectively, such Seller’s “Seller Documents”) and to perform its obligations hereunder and thereunder. The execution, delivery and performance by such Seller of such Seller’s Seller Documents and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized and approved by such Seller, and no other action on the part of such Seller is necessary to authorize any of such Seller’s Seller Documents. Such Seller’s Seller Documents have been, or, if to be executed after the date hereof, when executed will be, duly and validly executed and delivered by such Seller, and assuming the due execution and delivery by the other parties hereto or thereto, constitutes, or, if to be executed after the date hereof, upon execution by such Seller will constitute, a valid and binding obligation of such Seller, enforceable against such Seller in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar Laws affecting creditors’ rights generally and to general principles of equity.
4.3 No Conflicts. The execution, delivery, and performance by such Seller of such Seller’s Seller Documents, do not and will not (a) conflict with or result in a violation of any provision of the Organizational Documents of such Seller or (b) conflict with or result in a violation of any provision of, or constitute a default under, or give rise to any right of acceleration under, any material bond, debenture, note, mortgage or indenture to which such Seller is a party or by which such Seller’s Assets may be bound (subject to such contractual Consents or approvals which (i) such Seller has obtained prior to the Closing or (ii) constitute Customary Consents).
4.4 Bankruptcy. There are no bankruptcy or receivership Proceedings pending before any Governmental Authority, being contemplated by or, to such Seller’s Knowledge, Threatened against such Seller or any of its Affiliates.
4.5 Litigation. As of the Execution Date, except as set forth on Schedule 4.5, there is no Proceeding pending, or, to such Seller’s Knowledge, Threatened (a) against such Seller that would adversely affect the execution, delivery or consummation of this Agreement by such Seller or (b) against such Seller that relates to such Seller’s Assets.
4.6 Taxes. Except as set forth on Schedule 4.6, (a) all material Tax Returns required to be filed by such Seller with respect to Property Taxes have been timely (taking into account valid extensions of time to file) and properly filed, each such Tax Return is true, correct and complete in all material respects and all material Property Taxes that are or have become due and payable by such Seller have been properly paid in full (whether or not shown on a Tax Return), other than such Property Taxes being contested in good faith in appropriate proceedings set forth on Schedule 4.6; (b) there are no Liens (other than Permitted Encumbrances) on any of such Seller’s Assets attributable to any unpaid Taxes; (c) no audit, administrative, judicial or other proceeding with respect to Property Taxes has been commenced, by any Governmental Authority or, to such Seller’s Knowledge, is presently pending or threatened; (d) no written claim has been made by a Governmental Authority in a jurisdiction where such Seller does not file Tax Returns with respect to a material Property Tax that such Seller is or may be subject to taxation by that jurisdiction with respect to such Property Taxes; (e) there is not currently in effect any extension or waiver of any statute of limitations of any jurisdiction regarding the assessment or collection of any Property Taxes, other than extensions obtained in the ordinary course of business; and (f) 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 income Tax Return to be filed under Subchapter K of
Chapter 1 of Subtitle A of the Code, other than with respect to the classification of the Sellers or their beneficial owners as partnerships for Tax purposes.
4.7 Material Contracts. To such Seller’s Knowledge, except as set forth on Schedule 4.7, there are no Contracts to which such Seller is a party that are material to, or binding upon, such Seller’s Assets (and that will, from and after the Closing, be binding upon Buyers) (“Material Contracts”). There exists no material breach or default under any Material Contract by such Seller or its Affiliates or, to such Seller’s Knowledge, by any other Person that is a party to any such Material Contract, and no event has occurred that with notice or lapse of time or both would constitute any breach or default under any such Material Contract by such Seller, any of such Seller’s Affiliates, or, to such Seller’s Knowledge, any other Person who is a party to such Material Contract, and none of such Seller or any of such Seller’s Affiliates has given or received any unresolved written notice of any actual, potential or threatened termination, cancellation, breach, violation or default with respect to any Material Contract.
4.8 Preferential Purchase Rights; Required Consents. There are no preferential purchase rights, rights of first refusal or similar rights that are applicable to the transfer of such Seller’s Assets in connection with the transactions contemplated hereby (each, a “Preferential Purchase Right”) and there are no Required Consents that are applicable to the transfer of such Seller’s Assets in connection with the transactions contemplated hereby.
4.9 No Brokers. Neither such Seller nor any of its Affiliates has entered into any Contract with any Person that would require the payment by a Buyer or any of its Affiliates of any brokerage fee, finders’ fee or other commission in connection with the transactions contemplated by this Agreement.
4.10 No Judgments. There are no unsatisfied judgments or injunctions issued by a court of competent jurisdiction or other Governmental Authority outstanding against such Seller related to such Seller’s Assets.
4.11 Suspense Funds. To the Knowledge of such Seller, as of the Execution Date, Schedule 4.11 identifies each Well for which any amounts are being held in suspense by Third Parties and which may be owing to such Seller as the owner of mineral, lessor royalty, ORRI, NPRI or other interests in respect of past production of oil, gas or other Hydrocarbons attributable to such Seller’s Assets.
4.12 Affiliate Contracts. Schedule 4.12 sets forth a true and complete list of all Contracts between such Seller, on the one hand, and any Affiliate of such Seller, on the other hand, that are material to, or binding upon, such Seller’s Assets.
4.13 No Intentionally Omitted Minerals or Royalties. To the Knowledge of such Seller, as of the Execution Date, except as set forth on Schedule 4.13, the Excluded Assets do not include any mineral interests, fee mineral interests, other mineral rights, other mineral assets, overriding royalty interests, non-participating royalty interests, or associated rights to receive royalties, production payments or other profits, income or payments therefrom, in each case located in any of Wetzel, Monongalia, Marion, Tyler, Ritchie, Harrison, Marshall or Ohio Counties, West Virginia, or Westmoreland, Greene, Washington or Allegheny Counties, Pennsylvania, or Red
River, De Soto, Caddo or Bossier Parishes in Louisiana; provided, however, that the Assets do not include, and such Seller has no intention that this Agreement in any way apply to, the Excluded ORRIs or any assets, properties or interests owned by Three Rivers Royalty, LLC, a Texas limited liability company, Three Rivers Royalty III, LLC, a Delaware limited liability company, or Three Rivers Royalty IV, LLC.
4.14 Operations. To the Knowledge of such Seller, except as set forth on Schedule 4.14, (a) each such Seller’s Assets do not include any unleased mineral interest where such Seller has agreed to bear a share of drilling, operating or other costs as a participating mineral owner from and after Closing, and (b) each such Seller has not conducted any oil and gas operations on any of such Seller’s Assets, including, but not limited to, preparation, exploration, drilling, completion, reworking, or plugging or abandonment operations.
ARTICLE 5
Representations and Warranties of Buyer
Each Buyer hereby represents and warrants to Sellers as follows:
5.1 Organization. Such Buyer is duly formed, validly existing and in good standing under the Laws of the state of its formation and is duly qualified, authorized, registered and/or licensed, as applicable, to do business in each jurisdiction in which the conduct of its business or ownership or leasing of its properties makes such qualification, authorization, registration and/or licensing necessary, and, as of Closing, will be qualified, authorized, registered and/or licensed, as applicable, to do business and in good standing in each jurisdiction in which any of the Assets are located if so required in order to own any of the Assets, in each case except where the failure to be so qualified, authorized, registered and/or licensed would not have a material adverse effect on such Buyer’s ability to proceed with Closing.
5.2 Authorization; Approval; Enforceability. Such Buyer has all requisite organizational power and authority to execute and deliver this Agreement and each other Transaction Document to which such Buyer is or will be a party (collectively, the “Buyer Documents”) and to perform its obligations hereunder and thereunder. The execution, delivery and performance by such Buyer of the Buyer Documents and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized and approved by such Buyer, and no other action on the part of such Buyer is necessary to authorize any of the Buyer Documents. The Buyer Documents have been, or, if to be executed after the date hereof, when executed will be, duly and validly executed and delivered by such Buyer, and assuming the due execution and delivery by the other parties hereto or thereto, constitutes, or, if to be executed after the date hereof, upon execution by such Buyer will constitute, a valid and binding obligation of such Buyer, enforceable against such Buyer in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar Laws affecting creditors’ rights generally and to general principles of equity.
5.3 No Conflicts. The execution, delivery, and performance by such Buyer of the Buyer Documents and the consummation by such Buyer of the transactions contemplated hereby and thereby, do not and will not (a) conflict with or result in a violation of any provision of the Organizational Documents of such Buyer or (b) conflict with or result in a violation of any
provision of, or constitute a default under, or give rise to any right of acceleration under, any bond, debenture, note, mortgage or indenture to which such Buyer is a party or by which such Buyer may be bound.
5.4 Litigation. There are no Proceedings pending or, to Buyer’s Knowledge, Threatened against such Buyer or any of its Affiliates, that would adversely affect the execution, delivery or consummation of this Agreement by such Buyer.
5.5 Securities Law Compliance. Such Buyer is an “accredited investor,” as such term is defined in Regulation D of the Securities Act of 1933, as amended. Such Buyer is acquiring the Assets for its own account for use in its trade or business, and not with a view toward or for sale associated with any distribution thereof, nor with any present intention of making a distribution thereof within the meaning of the Securities Act of 1933, as amended, any applicable state blue sky Laws or any other applicable securities Law without in any way limiting the other terms and provisions of this Agreement. Such Buyer has substantial knowledge and experience in financial and business matters and the oil and gas industry such that such Buyer is capable of evaluating, and has evaluated, the merits and risks inherent in purchasing the Assets and is able to bear the economic risks of such investment.
5.6 Buyer’s Independent Investigation.
(a) Prior to executing this Agreement, such Buyer has (or its Representatives have) (i) been afforded an opportunity to (A) examine and evaluate the Assets and such materials as it has requested to be made available to it by Sellers or Sellers’ Representatives and (B) discuss with Sellers and their Representatives such materials and the nature of the Assets and (ii) satisfied itself through its own due diligence as to the condition of, and contractual arrangements and regulatory and other matters affecting or relating to, the Assets.
(b) Such Buyer is (or its Representatives are) (i) sophisticated in the investigation, inspection, evaluation, review, purchase and ownership of oil and gas properties and related interests, including those located in the areas where the Assets are located and (ii) a party capable of making such investigation, inspection, evaluation and review of the Assets as a reasonably prudent purchaser would deem appropriate under the circumstances with respect to all matters relating to the Assets, including their value, operation and suitability.
(c) In making its decision to enter into this Agreement and to consummate the transactions contemplated hereby, such Buyer has relied solely on the express representations of Sellers set forth in Article 4 of this Agreement, its independent investigation of, and judgment with respect to, the Assets and the advice of its own Representatives and has not been induced by and has not relied on (and such Buyer expressly acknowledges that it is not entitled to rely on) any comments, statements or information (whether written or oral or express or implied) provided by or on behalf of any Seller or any Representative of any Seller.
(d) Such Buyer acknowledges and agrees that no Seller or Representative of any Seller makes or has made any comments, statements, representations or warranties (whether written or oral or express or implied), as to the accuracy and completeness of any of the information provided by or made available to such Buyer or its Representatives in data rooms, management
presentations or supplemental due diligence information provided to such Buyer (including its Representatives) in connection with discussions or access to management of Sellers or their respective Representatives or in any other form in expectation of the transactions contemplated by this Agreement.
(e) Such Buyer acknowledges and agrees that (i) the due diligence information includes certain projections, estimates and other forecasts, and certain business plan information, (ii) there are uncertainties inherent in attempting to make such projections, estimates and other forecasts and plans and such Buyer is familiar with such uncertainties and (iii) such Buyer is taking full responsibility for making its own evaluation of the adequacy and accuracy of all projections, estimates and other forecasts and plans so furnished to it and any use of or reliance by such Buyer on such projections, estimates and other forecasts and plans shall be at its sole risk.
(f) Such Buyer agrees to the fullest extent permitted by Law, that no Seller or Representative of any Seller shall have any liability or responsibility whatsoever to such Buyer or its Representatives on any basis (including in contract or tort, under federal or state securities laws or otherwise) resulting from the distribution to such Buyer, or such Buyer’s use of, any due diligence information.
5.7 Bankruptcy. There are no bankruptcy or receivership Proceedings pending before any Governmental Authority, being contemplated by or, to Buyer’s Knowledge, Threatened against such Buyer or any of its Affiliates.
5.8 No Brokers. Neither such Buyer nor any of its Affiliates has entered into any Contract with any Person that would require the payment by any Seller or any of its Affiliates of any brokerage fee, finders’ fee or other commission in connection with the transactions contemplated by this Agreement.
ARTICLE 6
Covenants
6.1 Conduct of Business.
(a) Restricted Activities. Subject to the remaining provisions of this Section 6.1, except as set forth on Schedule 6.1(a) or as otherwise expressly provided by this Agreement or as consented to by Buyers in writing (in the cases of clauses (ii) and (viii) of this subsection (a), such consent not to be unreasonably withheld, conditioned or delayed) or as required by applicable Law, during the period from and after the Execution Date until the Closing Date, each Seller shall conduct its business with respect to the ownership and maintenance of the Assets in the ordinary course of business consistent with past practices in all material respects (including maintaining the books of account and Records relating to the Assets in accordance with the usual accounting practices of Sellers), and shall not:
(i) create, authorize, propose or grant any Lien (other than any Permitted Encumbrance) on any of the Assets;
(ii) amend or terminate any oil and gas lease that burdens any Mineral Properties or enter into any new oil and gas lease that will burden any of the Conveyed Interest in the Mineral Properties after Closing;
(iii) offer, issue, deliver, grant, transfer, sell, mortgage, pledge, hypothecate, encumber, novate or dispose of any of the Assets or any rights in or to any of the Assets or propose to do so;
(iv) (A) enter into, or execute, any Contract that would constitute a Material Contract (other than any oil and gas lease in the ordinary course of business) were such Seller a party thereto as of the Execution Date or (B) terminate (other than termination based on the expiration without any affirmative action by such Seller), novate, amend, modify, extend, surrender or waive any material right under any Material Contracts;
(v) except for the Proceedings set forth on Schedule 4.5 as of the Execution Date, waive, compromise or settle any right, claim or proceeding, in each case, attributable to any of the Assets; provided, however, that, for purposes of clarity, Section 6.1(a)(vii)(F) shall control with respect to any claim or proceeding relating to Property Taxes;
(vi) grant or create any Required Consent, preferential right, tag-along, drag-along or similar right with respect to any of the Conveyed Interest in the Mineral Properties;
(vii) (A) amend any Tax Return with respect to Property Taxes, (B) change, make or rescind any Tax election with respect to the Assets or Property Taxes, (C) change any accounting period or method with respect to the Assets or Property Taxes, (D) waive any claim for a refund of Property Taxes, (E) consent to any extension or waiver of the limitation period applicable to Property Taxes or (F) settle or compromise any Proceeding with respect to Property Taxes; or
(viii) agree or commit (whether in writing or otherwise) to do or not to do, as applicable, any of the foregoing.
(b) Operations Before Closing. During the period from and after the date hereof until the Closing Date (unless this Agreement is earlier terminated), without the prior written consent of Buyers, which shall not be unreasonably withheld, conditioned or delayed, Sellers shall manage the Assets in the ordinary course consistent with Sellers’ past practices in all material respects; provided that, if any Seller receives written notice of any Proceeding filed or threatened in connection with the Assets, the applicable Seller shall give prompt written notice of such Proceeding to Buyers including a description of the circumstances associated with such Proceeding to Buyers no later than 3 Business Days following receipt of such written notice.
(c) Consent and Procedures. Requests for approval of any action restricted by this Section 6.1 shall be delivered to the following individual, who shall have full authority to grant or deny such requests for approval on behalf of Buyers (and/or any Buyer):
WhiteHawk Income Marcellus LLC
2400 Market Street
Offsite Suite 230
Philadelphia, PA 19103
Attention: Jeffrey M. Slotterback
Email: [email protected]
Buyers’ consent to any action restricted by this Section 6.1 shall be considered granted within ten (10) Business Days of a Seller’s written notice sent via electronic mail to Buyers requesting such consent unless Buyers notify such Seller to the contrary during that period. Any matter approved (or deemed approved) by Buyers pursuant to this Section 6.1 that would otherwise constitute a breach of one or more of any Seller’s representations and warranties in Article 4 shall be deemed to be an exclusion from all representations and warranties for which it is reasonably relevant.
(d) Notwithstanding the foregoing provisions of this Section 6.1, each Buyer acknowledges and agrees that no provision of this Section 6.1 shall prohibit or restrict, or be deemed to prohibit or restrict, any Seller from exercising any of its rights or performing any of its obligations under any of the other provisions of this Agreement.
6.2 Access. From and after the date hereof until the Closing Date (or earlier termination of this Agreement), upon reasonable prior written notice and during normal business hours, each Seller will give Buyers or Buyers’ Representatives access to such Seller’s Records by online or other electronic means and to personnel of such Seller and its Affiliates responsible for such Seller’s Assets, for the purposes of conducting due diligence reviews. Notwithstanding the foregoing, Buyers shall have no right to, and no Seller shall have any obligation to provide to Buyers (a) access to such personnel if and to the extent, and only to the extent, such access would unreasonably interfere with the operations and business of such Seller or any of its Affiliates in the ordinary course of business consistent with past practices or (b) information, the disclosure of which would, in such Seller’s good faith opinion, (i) jeopardize any legal privilege against disclosure available to such Seller or any of its Affiliates relating to such information (except for title opinions or memoranda), or (ii) cause such Seller or any of its Affiliates to breach a confidentiality obligation arising under any Contract or any applicable Law (in which case such Seller shall use commercially reasonable efforts to seek waivers of such obligations; provided that such Seller shall not be required to make any payments or incur any liabilities therefor). All requests for access shall be directed to Nick Reiland (at [email protected]) or such other Person as Sellers may designate in writing from time to time. Under no circumstances shall any Seller, any of their respective Affiliates or any of the foregoing Persons’ respective Representatives be required to prepare, or cause to be prepared, any title opinions or title records whatsoever to the extent not already in existence.
6.3 Further Assurances. Subject to the terms of this Agreement, each Party shall (a) use commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary or desirable, under applicable Law, contract or otherwise, to consummate the transactions contemplated by this Agreement and (b) from and after Closing, execute and deliver such other documents, and take such other actions as may be reasonably requested by the other Party in order to carry out the purposes of this Agreement and the other Transaction Documents executed or delivered at Closing in accordance with their respective terms,
including revisions of the legal description of the Mineral Properties suggested by Buyers in good faith, to the extent reasonably necessary to facilitate the proper recording of the Instruments of Conveyance in each relevant jurisdiction and to give effect to the conveyance of the Assets contemplated by this Agreement and the other Transaction Documents.
6.4 Fees and Expenses. Except as otherwise provided in this Agreement, all fees and expenses, including, without limitation, fees and expenses of counsel, financial advisors, accountants and consultants incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the Party incurring such fee or expense.
6.5 Assumed Obligations. From and after the Closing, and subject to the terms and conditions set forth in this Agreement, Buyers shall assume and hereby agree to assume, fulfill, perform, pay and discharge the Assumed Obligations.
6.6 Hedge Contracts. From and after the Execution Date, until the earlier of Closing and the termination of this Agreement, Sellers shall not and shall cause their respective Affiliates not to voluntarily terminate, unwind, amend or modify, or waive or transfer any right or obligation under, any of the Assumed Hedges without the consent of Buyers. Prior to the Closing, pursuant to the Novation Agreements and such other customary documentation reasonably acceptable to the Parties, (a) each Seller shall use commercially reasonable efforts to take all actions necessary and reasonably requested by Buyers to assign to and novate in favor of Buyers all of the trades that are the subject of the Assumed Hedges and Buyers shall accept such assignment and novation from each such Seller and assume all obligations and liabilities attributable thereto, and (b) the Parties shall use commercially reasonable efforts to take all actions reasonably necessary to cause the hedge providers of the Assumed Hedges (the “Hedge Providers”) to assign to and novate in favor of the replacement hedge providers designated by Buyers in writing prior to the Closing (the “Replacement Hedge Providers”) all of the trades that are the subject of the Assumed Hedges and to cause the Replacement Hedge Providers to accept such assignment and novation from the applicable Hedge Providers and assume all obligations and liabilities attributable thereto; provided, however, that, subject to the immediately succeeding sentence, neither Sellers nor any of their respective Affiliates shall be required to undertake any liability or incur any Losses in connection with such novation (unless Buyers agree to bear such Losses). Sellers shall bear all fees charged by the Hedge Providers or Replacement Hedge Providers in connection with the novation or termination of the Assumed Hedges (or any Deferred Hedge, if applicable) but, for the avoidance of doubt, any changes in the economic terms of the Assumed Hedges required by a Hedge Provider or a Replacement Hedge Provider prior to or in connection with novation or termination (but in the case of termination, only with respect to any amounts in excess of $50,000) are the responsibility of Buyers. Notwithstanding the foregoing, the Parties may mutually agree in writing prior to Closing that any Assumed Hedge that has not been, or will not be, novated as of Closing shall be excluded from the transactions contemplated hereby at Closing and shall instead be novated or terminated following the Closing on terms and conditions mutually agreed by the Parties (each such Assumed Hedge, a “Deferred Hedge”); provided that, the novation or termination of all Deferred Hedges shall occur no later than ninety (90) days after the Closing; provided further that, the provisions of this Section 6.6 shall continue to apply to such Assumed Hedges that have become Deferred Hedges following the Closing until such Deferred Hedges have been novated or terminated in accordance with this Section 6.6. Notwithstanding anything in this Agreement to the contrary, with respect to any Assumed Hedges that, notwithstanding compliance
with this Section 6.6, cannot be novated to Buyers at Closing and are not Deferred Hedges, whether or not such Seller successfully terminates such Assumed Hedges prior to Closing (each such Assumed Hedge, an “Excluded Hedge”), the unadjusted Purchase Price shall be adjusted to reflect the net amount of all of the Hedge Termination Values for all of the Excluded Hedges, upward for a net amount of Hedge Termination Values owing by any Seller and downward for a net amount of Hedge Termination Values owed to any Seller. For purposes of this Agreement, “Hedge Termination Value” means, with respect to any Assumed Hedge that, notwithstanding this Section 6.6, is not novated to Buyers at Closing, the amount (without duplication) that the applicable Hedge Provider has agreed would be owed to it or to such Seller, as applicable, if such Assumed Hedge were to be terminated on the Closing Date, in each case without offset or netting of any amounts with the counterparty thereto.
6.7 Financial and Reserve Information Cooperation. For the period of time commencing on the Execution Date and continuing until the earlier of (i) the due date of WhiteHawk Minerals Corp.’s (“Parent”) Annual Report on Form 10-K for the fiscal year ended December 31, 2027 and (ii) the date on which Parent is no longer required to include financial statements with respect to the Assets in any filing with the Securities and Exchange Commission (the “Commission”) pursuant to Rule 3-05 or Article 11 of Regulation S-X, Sellers shall, from time to time, upon reasonable advance written notice from Buyer, and subject to the last paragraph of this Section 6.7:
(a) provide Buyers and their representatives, agents and employees with reasonable access to all information with respect to the historical results of operations and reserves information of the Assets for periods prior to the Closing Date as may be reasonably requested by Buyers, which information is reasonably necessary, in the opinion of Buyers or its outside third-party accountants (the “Accountants”) to enable Parent to prepare financial or reserve information and statements required to be filed with the Commission pursuant to Rule 3-05 and Article 11 of Regulation S-X or otherwise under the Securities Act of 1933 or Securities Exchange Act of 1934 (the “Requisite Financial and Reserves Information”) (including for use in the preparation of pro forma financial statements by Parent that are required to be filed with the SEC by Parent as an exhibit to a Current Report on Form 8-K within four (4) Business Days of the Closing (or no later than seventy-one (71) days thereafter if such pro forma financial statements are not included in the Current Report on Form 8-K filed by Parent within four (4) Business Days of the Closing));
(b) use commercially reasonable efforts to deliver to Buyers’ or their Affiliates’ auditors and/or reserve engineers any customary representation letters or consents that are reasonably required and requested by Buyers to allow Buyers’ or their Affiliates’ Accountants and/or reserve engineers, as applicable, to complete an audit or review of any Requisite Financial and Reserves Information; and
(c) direct Sellers’ auditors to deliver customary consents and/or comfort letters in connection with the filing of the Requisite Financial and Reserves Information relating to the period ended December 31, 2025 with the Commission; provided, that Sellers shall have no liability for any refusal by any auditor to provide such consents and/or comfort letters.
Notwithstanding anything to the contrary contained in this Agreement, all documented out-of-pocket cost and expenses incurred by or on behalf of Sellers in connection with the performance
of their obligations pursuant to this Section 6.7 (including the fees and expenses of counsel, any consultants and Seller’s independent accountants and reserve engineers) shall be borne by Buyers, and Buyers shall reimburse Sellers therefor within thirty (30) days following Buyers’ receipt of a written request accompanied by reasonable supporting documentation with respect thereto. For the avoidance of doubt, Buyers shall not be required to reimburse Sellers or their Affiliates for costs and expenses with respect to financial statements, financial information or other materials prepared prior to the Execution Date, unless such statements, information or materials were prepared at the written request of Buyers. Notwithstanding anything in this Agreement to the contrary: (i) no Seller shall be required to provide any information or take any action that would, in the reasonable judgment of such Seller, (A) waive or jeopardize any attorney-client privilege or work product protection, (B) violate any applicable Law or any confidentiality or non-disclosure obligation owed to a third party, or (C) unreasonably interfere with the conduct of the business of Sellers or any of their Affiliates; (ii) no Seller shall be required to prepare, or cause to be prepared, any financial statement or pro forma financial information, or to engage any accounting or reserves engineer firm; and (iii) following the Closing, Sellers’ obligations under this Section 6.7 shall be limited to information then in Sellers’ possession and control. Buyers shall indemnify, defend and hold harmless Sellers, Sellers’ Affiliates, and their respective directors, officers, managers, employees, agents and other representatives from and against any and all liabilities, losses, claims, demands, damages, costs and expenses (including reasonable attorneys’ fees) suffered or incurred by any of them arising out of or relating to (i) the performance by Sellers of their obligations under this Section 6.7, (ii) the use by any Buyer or any of their Affiliates of any information made available pursuant to this Section 6.7, and (iii) any filing made by any Buyer or any of their Affiliates with the Commission containing or derived from information made available pursuant to this Section 6.7. The indemnification obligations of Buyers under this paragraph of Section 6.7 shall survive the Closing indefinitely.
ARTICLE 7
Tax Matters
7.1 Allocation of Property Taxes.
(a) With respect to any Assets purchased by Buyers: each Seller shall be allocated and bear all Property Taxes attributable to such Seller’s Assets with respect to (a) any Pre-Effective Time Tax Period and (b) the portion of any Straddle Period ending on the day before the date on which the Effective Time occurs, and Buyers shall be allocated and bear all Property Taxes attributable to such Assets with respect to (x) any Post-Effective Time Tax Period and (y) the portion of any Straddle Period beginning on the date on which the Effective Time occurs.
(b) For purposes of determining the allocations described in Section 7.1(a), Property Taxes shall be allocated by (i) in the case of Property Taxes imposed on a periodic basis, prorating each such Property Tax based on the number of days in the Straddle Period that occur before the date on which the Effective Time occurs, on the one hand, and the number of days in such Straddle Period that occur on or after the date on which the Effective Time occurs, on the other hand, (ii) in the case of Property Taxes attributable to the severance or production of Hydrocarbons (other than such Property Taxes described in clause (i) above), allocating such Property Taxes to the period (or portion of the Straddle Period) in which the severance or production giving rise to such Property Taxes occurred, and (c) in the case of Property Taxes that
are based upon or related to sales or receipts or imposed on a transactional basis (other than Taxes described in clauses (i) or (ii)), allocating to the taxable period in which the transaction giving rise to such Property Taxes occurred. To the extent the actual amount of a Property Tax is not determinable at the time an adjustment to the Purchase Price is to be made with respect to such Property Tax pursuant to Section 3.2, (x) Sellers and Buyers shall utilize the most recent information available in estimating the amount of such Property Tax for purposes of such adjustment and (y) upon the later determination of the actual amount of such Property Tax, timely payments will be made from the applicable Seller to Buyers or from Buyers to the applicable Seller, as applicable, to the extent necessary to cause each applicable Party to economically (taking into account, for the avoidance of doubt, the adjustments described in Section 3.2 and Section 3.6) bear the amount of such Property Tax that is allocable to it under this Section 7.1. With respect to clause (y) of the preceding sentence, each applicable Party shall send to the other applicable Party a statement that apportions each Property Tax in accordance with this Section 7.1 based upon the amount of Property Taxes actually invoiced and paid to the applicable Governmental Authority by such Party and such statement shall be accompanied by proof of such Party’s actual payment of such Taxes. For purposes of applying this Section 7.1 to Property Taxes imposed on a periodic basis, the period for such Property Taxes shall begin on the date on which ownership of the applicable Asset gives rise to liability for the particular Property Tax and shall end on the day before the next such date.
7.2 Payment of Taxes; Filing of Tax Returns. With respect to any Assets purchased by Buyers, (a) Sellers shall be responsible for paying any and all Property Taxes that become due and payable after the date of this Agreement but on or before the Closing Date, shall timely file with the appropriate Governmental Authority any and all Tax Returns required to be filed after the date of this Agreement but on or before the Closing Date with respect to the Property Taxes, and Sellers shall prepare such Tax Returns in a manner consistent with Sellers’ past practice, except as required by applicable Law, (b) Buyers shall be responsible for paying all Taxes with respect to such Assets that become due and payable after the Closing Date applicable thereto and shall file with the appropriate Governmental Authority any and all Tax Returns required to be filed after the Closing Date with respect to such Taxes, (c) Buyers shall submit each such Tax Return that relates to a Pre-Effective Time Tax Period or a Straddle Period to Sellers for their review and comment reasonably in advance of the due date therefor and (d) Buyers shall timely file any such Tax Return, incorporating any reasonable comments received from Sellers prior to the due date therefor. The Parties agree that (1) this Section 7.2 is intended to solely address the timing and manner in which certain Tax Returns relating to Property Taxes are filed and the Property Taxes shown thereon are paid to the applicable Governmental Authority, and (2) nothing in this Section 7.2 shall be interpreted as altering the manner in which Property Taxes are allocated to and economically borne by the Parties (except for any penalties, interest or additions to Tax imposed as a result of any breach by Buyers of their obligations under this Section 7.2, which shall be borne solely by Buyers).
7.3 Tax Refunds. The Parties and their respective Affiliates shall reasonably cooperate with the other Party in connection with obtaining any refund of, credits in respect of, or offset in respect of Taxes. If a Buyer (or its Affiliate) receives or otherwise realizes a refund, credit, or other amount which constitutes an Excluded Asset pursuant to this Agreement, such Buyer (or its Affiliate) shall pay such amount (including any interest thereon) to the applicable Seller within ten (10) Business Days after such receipt. If any Seller (or its Affiliate) receives or otherwise realizes
a refund, credit, or other amount which constitutes an Asset that Buyers have purchased pursuant to this Agreement, such Seller (or its Affiliate) shall pay such amount (including any interest thereon) to Buyers within ten (10) Business Days after such receipt.
7.4 Transfer Taxes. To the extent that any sales, purchase, transfer, stamp, documentary stamp, registration, use or similar taxes (“Transfer Taxes”) are payable by reason of the purchase by Buyers of any Assets under this Agreement, such Transfer Taxes shall be borne and timely paid by Buyers. Sellers and Buyers will cooperate with each other in determining the amount of any such Transfer Taxes, if any, that are due in connection with the transactions contemplated by this Agreement and, if required by applicable Law, Buyers will pay any such Transfer Taxes to Sellers and Sellers shall remit such Transfer Taxes to the appropriate Governmental Authority and any such payment shall not be considered a reduction in the Purchase Price.
7.5 Tax Cooperation. The Parties shall cooperate fully, as and to the extent reasonably requested by the other Party, in connection with the filing of Tax Returns and any audit, litigation or other Proceeding with respect to Taxes relating to the Assets (including, for the avoidance of doubt, obtaining any refund, credit, or other offset in respect of a Tax). 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. Sellers and Buyers agree to retain all books and records with respect to Tax matters pertinent to the Assets relating to any Tax period beginning before the Closing Date until the expiration of the statute of limitations of the respective Tax periods and to abide by all record retention agreements entered into with any Governmental Authority. Notwithstanding anything to the contrary in this Agreement (including Article 11), Sellers shall be entitled to direct and control any controversy, examination, audit, dispute, or other proceeding relating to Taxes (a “Tax Contest”) for which any Seller could be liable, in whole or in part, under this Agreement; provided that (a) Buyers shall have the right to participate in such Tax Contest at its own expense, (b) Sellers shall keep Buyers reasonably informed of all material matters that come to its attention in respect of such Tax Contest and (c) if the settlement, compromise, or other disposition of such Tax Contest reasonably is expected to have an adverse effect on Buyers (or any of its Affiliates) no Seller shall consent to the entry of any judgment or enter into any compromise or settlement with respect to such Tax Contest without the prior written consent of Buyers (which shall not be unreasonably conditioned, withheld or delayed).
7.6 Tax Purchase Price Allocation. The Parties agree that the Adjusted Purchase Price (and any other amounts properly taken into account as consideration for U.S. federal income tax purposes) shall be allocated in accordance with Section 1060 of the Code and the Treasury Regulations promulgated thereunder, in accordance with an allocation schedule consistent with the Allocated Values, which shall be prepared by Sellers and delivered to Buyers within ten (10) Business Days following the final determination of the Adjusted Purchase Price pursuant to Section 3.2 and Section 3.6, and, for the avoidance of doubt, shall include a Seller by Seller and Buyer by Buyer allocation prepared in accordance with the Allocation Statement (the “Purchase Price Allocation Schedule”). If the Parties, acting reasonably and in good faith, agree on the Purchase Price Allocation Schedule or any revisions thereto within thirty (30) days subsequent to the delivery of the draft Purchase Price Allocation Schedule delivered by Sellers to Buyers (as
described in the immediately preceding sentence), then, except as otherwise required pursuant to a “determination” (as defined in Section 1313(a) of the Code), the Parties shall use the Purchase Price Allocation Schedule to allocate the Adjusted Purchase Price (and any other amounts properly taken into account as consideration for U.S. federal income tax purposes) among the Assets. If the Parties reach agreement, (i) the Purchase Price Allocation Schedule shall be updated to reflect any subsequent adjustments to the consideration payable for the Assets for U.S. federal income tax purposes, (ii) the Parties agree not to take any position that is inconsistent with the Purchase Price Allocation Schedule, on a Tax Return or otherwise, unless required by applicable Law, and (iii) the Parties shall promptly notify the other in writing upon receipt of notice of any pending or threatened Tax audit or assessment challenging the agreed Purchase Price Allocation Schedule, and neither Buyers nor Sellers shall agree to any proposed adjustment to the allocation contained in the Purchase Price Allocation Schedule by any taxing authority without first giving to the other prior written notice; provided, however, that nothing contained herein shall prevent any Party from settling any proposed deficiency or adjustment by any taxing authority based upon or arising out of the Purchase Price Allocation Schedule, and no Party shall be required to litigate any proposed deficiency or adjustment by any taxing authority challenging such allocation schedule. If Buyers and Sellers cannot mutually agree on a Purchase Price Allocation Schedule, each Party shall be entitled to determine its own purchase price allocation and no Party shall be unreasonably impeded in its ability and discretion to negotiate, compromise and/or settle any Tax audit, claim or similar proceedings in connection with such allocation.
ARTICLE 8
Title Matters
8.1 Buyers’ Title Review. Buyers may conduct a review of Sellers’ respective titles to the Mineral Properties and Wells during the Due Diligence Period for purposes of submitting a Title Defect Notice as set forth in this Article 8 until the earlier of (a) the Defect Claim Date and (b) the termination of this Agreement, and the rights and obligations of the Parties with respect to the access for such review shall be as set forth in Section 6.2 during such period.
8.2 Alleged Title Defects; Seller Cure Rights.
(a) As a condition to any right to adjustment to the Purchase Price as a result of any Title Defect under and to the extent provided in this Article 8, Buyers must give Sellers written notice of any matter that any Buyer believes in good faith constitutes a Title Defect under this Agreement (any such matter, an “Alleged Title Defect” and each such notice, an “Title Defect Notice”) no later than 5:00 p.m. prevailing Central Time on September 18, 2026 (the “Defect Claim Date” and, the period from and after the Execution Date until the Defect Claim Date, the “Due Diligence Period”); provided, however, that Buyers shall, at least once each week during the Due Diligence Period, use commercially reasonable efforts to provide Sellers with updates in writing (with email being sufficient) if any Buyer determines in good faith any Title Defect exists during such period (which updates shall be preliminary in nature and may be amended or supplemented at any time before the expiration of the Due Diligence Period); provided, further, that (1) the failure of Buyers to provide such weekly notice shall not be deemed to waive or otherwise prejudice Buyers’ right to assert Title Defects on or before the Defect Claim Date in accordance with this Section 8.2(a) or any of Buyers’ remedies with respect thereto, (2) no such preliminary notice shall be delivered to Sellers if no Title Defects or Title Benefits were discovered
by Buyers during the preceding week and (3) Buyers’ failure to provide such weekly notice shall not be considered in determining whether the conditions set forth in Section 9.2(a) have been satisfied. To be valid and effective, any Title Defect Notice must include the following: (i) a reasonably detailed description of the Title Defect (including reasonable supporting documentation in Buyers’ or any of their respective Representative’s possession or control) that is reasonably sufficient for Sellers to verify the existence of each Alleged Title Defect claimed therein; (ii) the Parcel(s), Quarter Section(s), Well(s), or portions thereof, affected by each such Alleged Title Defect (each such Parcel, Quarter Section or Well, a “Title Defect Property”) and the associated affected Mineral Properties; (iii) the Allocated Value of the affected Title Defect Property(ies) and (iv) the Defect Value that Buyers reasonably and in good faith attributes to each Alleged Title Defect with respect to each applicable Title Defect Property, as determined in accordance with Section 8.4, including any related computations. Any Alleged Title Defect shall be deemed to constitute an “Agreed Title Defect” for purposes of this Agreement only if (x) Buyers and Sellers agree in writing that such Alleged Title Defect constitutes a Title Defect under this Agreement or (y) the Defect Referee determines such Alleged Title Defect constitutes a Title Defect under this Agreement in accordance with Section 8.2(c).
(b) Following the Defect Claim Date, Buyers and Sellers shall attempt in good faith to agree on a resolution with respect to Alleged Title Defects and the Defect Values attributable thereto and to the Agreed Title Defects, if any. With respect to any Alleged Title Defect or Agreed Title Defect for which Buyers have delivered a Title Defect Notice in compliance with Section 8.2(a), Sellers shall have the right, but not the obligation, to elect, by delivery of written notice to Buyers on or prior to the Closing Date, (i) to attempt, at its sole cost, to cure on or before the date that is one hundred eighty (180) days after the Closing Date (the “Cure Period Deadline Date”) such Title Defect (a “Cure Notice”) or (ii) to the extent the Defect Value applicable to any affected Title Defect Property, as set forth in the applicable Title Defect Notice, is equal to or exceeds seventy-five percent (75%) of the Allocated Value of such affected Title Defect Property, to exclude the applicable Title Defect Property affected by such Alleged Title Defect or Agreed Title Defect from the purchase and sale transaction contemplated at Closing and reduce the Purchase Price by the Allocated Value of such affected Title Defect Property (an “Exclusion Notice”); provided, however, that, with respect to any Title Defect Property(ies) (x) for which Sellers have delivered (or is deemed to have delivered) to Buyers a Cure Notice hereunder (and Sellers have not delivered to Buyers an Exclusion Notice hereunder) or (y) for which an unresolved Disputed Title Matter exists as of Closing, at Closing (A) Sellers shall nevertheless convey such affected Title Defect Property(ies) and Title Benefit Property(ies) (together with all associated Assets) to Buyers and (B) subject to Section 8.8, there shall be no reduction to the Purchase Price. If Sellers do not deliver to Buyers a Cure Notice or an Exclusion Notice hereunder on or prior to the Closing Date, then Sellers shall be deemed to have elected the remedy set forth in Section 8.2(b)(i).
(c) During the period of time from Closing to the Cure Period Deadline Date, Buyers agree to use commercially reasonable efforts to cooperate with Sellers, including by giving Sellers reasonable access during normal business hours to all Records in Buyers’ or any of their Affiliates’ possession or control, to the extent necessary or convenient to facilitate any Seller’s attempt to cure any such Title Defects; provided that, under no circumstances shall any Buyer, any of its Affiliates or any of its or their respective Representatives be required to prepare, or cause to be prepared, any new records. Notwithstanding the foregoing, Sellers shall have no right to, and
Buyers shall have no obligation to provide to Sellers (i) such access if and to the extent, and only to the extent, such access would unreasonably interfere with the operations and business of any Buyer or any of its Affiliates in the ordinary course of business consistent with past practices or (ii) information, the disclosure of which would, in a Buyer’s good faith opinion, (A) jeopardize any legal privilege against disclosure available to a Buyer or any of its Affiliates relating to such information (except for title opinions or memoranda), or (B) cause a Buyer or any of its Affiliates to breach a confidentiality obligation arising under any Contract or any applicable Law (in which case such Buyer shall use commercially reasonable efforts to seek waivers of such obligations; provided that such Buyer shall not be required to make any payments or incur any liabilities therefor).
(d) Notwithstanding anything to the contrary contained in this Agreement, Sellers’ election to attempt to cure an Alleged Title Defect shall not constitute an obligation to cure such Alleged Title Defect or a waiver of Sellers’ right to dispute the validity, nature of any Alleged Title Defect or the Defect Value of, or the adequacy of curative efforts with respect to, any such Defect. Subject to (x) Sellers’ right to exclude affected Title Defect Property(ies) from the purchase and sale transactions contemplated hereby to occur in connection with the Closing pursuant and subject to Section 8.2(b), (y) the satisfaction and/or waiver of the conditions to Closing set forth in Section 9.1(c) or Section 9.2(c), as applicable, and (z) the Parties’ respective termination rights pursuant to Section 12.1(f), but, notwithstanding any other provision herein to the contrary, in no event shall the existence of any uncured Alleged Title Defects or any Disputed Title Matters, in either case, delay, prevent or otherwise affect the consummation of the Closing.
(e) If Sellers have failed to cure (or partially cure) by the Cure Period Deadline Date, any Alleged Title Defect (or portion thereof) or any Agreed Title Defect (or portion thereof) for which Sellers have provided or are deemed to have provided a Cure Notice, then subject to, and without limitation of, Section 8.2(f), the Parties’ respective rights and obligations under Section 8.6 and Section 8.8, the Parties shall deliver joint written instructions to the Escrow Agent instructing the Escrow Agent to release from the Defect Escrow Account to Buyers an amount equal to the Defect Values attributable to all such uncured (or uncured portion of such) Alleged Title Defect or Agreed Title Defect. If Sellers successfully cure (or partially cure) by the Cure Period Deadline Date an Alleged Title Defect or Agreed Title Defect (or portion thereof) for which Sellers have provided or are deemed to have provided a Cure Notice, then, subject to, and without limitation of, Section 8.2(f), the Parties’ respective rights and obligations under Section 8.6 and Section 8.8, the Parties shall deliver joint written instructions to the Escrow Agent instructing the Escrow Agent to release from the Defect Escrow Account to Sellers (in accordance with their respective Pro Rata Shares) an amount equal to the Defect Values attributable to all such cured (or portion of such) Alleged Title Defect or Agreed Title Defect, and the Parties shall deliver joint written instructions to the Escrow Agent instructing the Escrow Agent to release from the Defect Escrow Account to Buyers an amount equal to the Defect Values attributable to the uncured portions of such Alleged Title Defect or Agreed Title Defect.
(f) If (i) as of Closing, Sellers and Buyers have been unable to agree on the existence or Defect Value of any Alleged Title Defect or Agreed Title Defect or (ii) as of the Cure Period Deadline Date, Sellers and Buyers have been unable to agree on the validity, Defect Value, cure and/or existence of any Alleged Title Defect or Agreed Title Defect for which Sellers have provided or are deemed to have provided a Cure Notice, as applicable, then, in either such case,
(A) such disputed matters shall thereafter constitute Disputed Title Matters for all purposes of this Agreement and (B) either Party may submit such Disputed Title Matters to the Defect Referee in accordance with Section 8.6 within ten (10) Business Days following the Closing (with respect to Alleged Title Defects or Agreed Title Defects for which Sellers have not provided or are not deemed to have provided a Cure Notice), or the Cure Period Deadline Date (with respect to Alleged Title Defects or Agreed Title Defects for which Sellers have provided or are deemed to have provided a Cure Notice), and such Disputed Title Matters shall be resolved by the Defect Referee in accordance with Section 8.6; provided, however, if any Party fails to submit such Disputed Title Matter to the Defect Referee, then such Party shall be deemed to have waived such Disputed Title Matters and shall have no further rights (and the other Party shall not have any further obligations) with respect to such Disputed Title Matters and the Parties shall deliver joint written instruction to the Escrow Agent to release the Defect Escrow Amount attributable to all Alleged Title Defects and Agreed Title Defects subject to such Disputed Title Matters to Sellers.
(g) Notwithstanding anything herein to the contrary, but subject to Buyers’ right to aggregate Title Defects pursuant to clauses (A) and (B) of Section 8.5(a)(i), (i) Buyers shall not be entitled to any recovery under this Article 8 (including any adjustment to the Purchase Price pursuant to Section 8.5) with respect to, and, subject to and without limiting Buyers’ rights with respect to breaches of the special warranty of Defensible Title set forth in the Instruments of Conveyance, shall be deemed to have waived for all purposes of this Article 8, any individual Alleged Title Defect or individual Agreed Title Defect (or, in the case of aggregated Title Defects pursuant to clauses (A) and (B) of Section 8.5(a)(i), such aggregated Title Defects) for which the Defect Value asserted in a Title Defect Notice (as determined in accordance with Section 8.4 and after giving effect to any wholly or partially curative action) is an amount that is less than the Defect Threshold and (ii) any such Alleged Title Defect or Agreed Title Defect shall be deemed to constitute a Permitted Encumbrance for all purposes of this Agreement and each other Transaction Document and accepted and assumed by Buyers. The Parties acknowledge and agree that the Defect Threshold is not a deductible and the calculation of any reduction to the Purchase Price with respect to the Defect Value of any Alleged Title Defect or Agreed Title Defect shall be from the first dollar with respect thereto once the Defect Threshold has been reached with respect thereto. For purposes of clarity, notwithstanding anything to the contrary in this Agreement, all individual Alleged Title Defects and/or Agreed Title Defects with respect to which Buyers are not entitled to recovery pursuant to the foregoing provisions of this Section 8.2(g) shall not be counted toward the Defect Deductible.
8.3 Alleged Title Benefits.
(a) During the Due Diligence Period, Buyers shall use commercially reasonable efforts to promptly notify Sellers in writing (each such notice, a “Title Benefit Notice”) if any Buyer discovers the existence of any matter that would constitute a Title Benefit and the Benefit Value that Buyers in good faith attributes to such Title Benefit (any such matter, an “Alleged Title Benefit”). Any Title Benefit Notice must include a reasonably detailed description and explanation (including any available supporting documentation in Buyers’ or any of their respective Representative’s possession or control) that is reasonably sufficient for Sellers to verify the existence of each Alleged Title Benefit, the Parcel(s), Quarter Section(s) and/or Well(s) affected thereby (each such Parcel, Quarter Section or Well, a “Title Benefit Property”), the associated affected Mineral Properties, and the Benefit Value that Buyers in good faith attributes
to the Alleged Title Benefit with respect to each applicable Title Benefit Property. In addition, at any point during the Due Diligence Period, Sellers may deliver a Title Benefit Notice to Buyers with respect to any Alleged Title Benefit, which shall include the information contained in the preceding sentence.
(b) Any Alleged Title Benefit shall be deemed to constitute an “Agreed Title Benefit” for purposes of this Agreement only if (i) Buyers and Sellers agree thereto in writing that such Alleged Title Benefit constitutes a Title Benefit pursuant to the terms of this Agreement or (ii) the Defect Referee determines such Alleged Title Benefit constitutes a Title Benefit pursuant to the terms of this Agreement in accordance with Section 8.6.
(c) If, as of the Closing Date, Buyers and Sellers have been unable to mutually agree upon the validity, existence or Benefit Value of any Alleged Title Benefit or Agreed Title Benefit and any Disputed Title Matter exists with respect to any Alleged Title Benefit, Agreed Title Benefit and/or the Benefit Value thereof, then (i) such disputed matters shall thereafter constitute Disputed Title Matters for all purposes of this Agreement and (ii) any Party may submit such Disputed Title Matters to the Defect Referee in accordance with Section 8.6 within ten (10) Business Days following the Cure Period Deadline Date (and such Disputed Title Matters shall be resolved by the Defect Referee in accordance with Section 8.6).
8.4 Value of Defects and Benefits. The amount by which the Allocated Value of a Parcel, Quarter Section or Well is decreased by the existence of a Defect (the “Defect Value”) or is increased by the existence of a Benefit (the “Benefit Value”) shall be determined according to the following methodology:
(a) If the Parties agree in writing to the Defect Value applicable to a Defect or the Benefit Value applicable to a Benefit, that agreed value shall be the Defect Value of such Defect or the Benefit Value of such Benefit, as applicable.
(b) If a Defect is a Lien or other encumbrance which is undisputed and liquidated in amount, then the Defect Value of such Defect shall be the amount necessary to remove the Defect from the affected Title Defect Property, subject to Section 8.4(g).
(c) The value of any Defect or Benefit consisting of a negative discrepancy (with respect to a Defect) or a positive discrepancy (with respect to a Benefit), in each case, between (i) Sellers’ actual Revenue Interest for any Well and (ii) the Revenue Interest stated on Exhibit A-4-1 or Exhibit A-4-2, as applicable, for such Well, shall be the product of the Allocated Value of such Well multiplied by a fraction, the numerator of which is the increase (with respect to a Benefit) or decrease (with respect to a Defect) between (x) the Revenue Interest for such Well as stated on Exhibit A-4-1 or Exhibit A-4-2, as applicable, and (y) the actual Revenue Interest held by Sellers for such Well after giving effect to the applicable Defect or Benefit, and the denominator of which is the Revenue Interest stated on Exhibit A-4-1 or Exhibit A-4-2, as applicable, for such Well; provided that, if the Defect does not affect the property throughout its entire productive life, the Defect Value or Benefit Value, as applicable, determined under this Section 8.4(c) shall be reduced to take into account the applicable time period only.
(d) The value of any Defect or Benefit consisting of a negative discrepancy (with respect to a Defect) or a positive discrepancy (with respect to a Benefit), in each case, between, (i) with respect to the TRR II Assets, (A) TRR II Seller’s actual Net Royalty Acres in and to any Parcel and (B) the Net Royalty Acres stated on Schedule 3.1-1 for a Parcel, shall be the product of the Allocated Value for the applicable Parcel, multiplied by a fraction, the numerator of which is the increase (with respect to a Benefit) or decrease (with respect to a Defect) between (x) the Net Royalty Acres for such Parcel as stated on Schedule 3.1-1 and (y) the actual Net Royalty Acres held by TRR II Seller in and to such Parcel after giving effect to the applicable Defect or Benefit, as applicable, and the denominator of which is the Net Royalty Acres for such Parcel as stated on Schedule 3.1-1 or (ii) with respect to the Cypress Assets, (A) Cypress Seller’s actual Net Royalty Acres in and to any Quarter Section and (B) the Net Royalty Acres stated on Schedule 3.1-2 for a Quarter Section, shall be the product of the Allocated Value for the applicable Quarter Section, multiplied by a fraction, the numerator of which is the increase (with respect to a Benefit) or decrease (with respect to a Defect) between (x) the Net Royalty Acres for such Quarter Section as stated on Schedule 3.1-2 and (y) the actual Net Royalty Acres held by Cypress Seller in and to such Quarter Section after giving effect to the applicable Defect or Benefit, as applicable, and the denominator of which is the Net Royalty Acres for such Quarter Section as stated on Schedule 3.1-2; provided that, in each case, if the Defect or Benefit, as applicable, does not affect the property throughout its entire productive life, the Defect Value or Benefit Value, as applicable, determined under this Section 8.4(d) shall be reduced to take into account the applicable time period only.
(e) If a Defect or Benefit constitutes or represents any Title Defect or Title Benefit applicable to an affected Title Defect Property or Title Benefit Property, as applicable, of a type not described in subsections (a), (b), (c) or (d) of this Section 8.4, then the Defect Value of such Defect or Benefit Value of such Benefit, as applicable, shall be determined by taking into account the portion of the Title Defect Property or Title Benefit Property, as applicable, affected by the Defect or Benefit, the Allocated Value of such Title Defect Property or Title Benefit Property, as applicable, the legal and potential economic effect of the Defect or Benefit and such other factors as are necessary to make a proper evaluation.
(f) The Defect Value or Benefit Value of any Defect or Benefit, as applicable, shall be determined without duplication of (i) with respect to a Defect, any costs, Losses or amounts included in the Defect Value of any other Defect hereunder and (ii) with respect to a Benefit, any benefits or amounts included in the Benefit Value of any other Benefit hereunder.
(g) Notwithstanding anything to the contrary contained in this Agreement, the aggregate adjustment to the Purchase Price for all Defect Values attributable to Defects as to any Title Defect Property shall not exceed the Allocated Value of such Title Defect Property, except in the case of Liens that are undisputed and liquidated in amount.
8.5 Purchase Price Adjustments.
(a) Subject to, and without limitation of, Section 8.2(b), with respect to (x) all Title Defects with respect to which Sellers have made (or are deemed to have made) an election to cure post-Closing during the Post-Closing Cure Period and (y) any Agreed Title Defects with an agreed Defect Value that Sellers affirmatively elect not to attempt to cure post-Closing, a Purchase Price adjustment shall be made under Section 3.2 by reducing the Purchase Price by the Defect
Value attributable to such Title Defects (as determined after giving effect to any wholly or partially curative actions) as set forth in Buyers’ Title Defect Notice or as otherwise agreed by the Parties in writing, but only (i) with respect to any individual Title Defect, if the Defect Value attributable to such Title Defect exceeds the Defect Threshold (provided that (A) any individual Title Defect that affects both a Parcel (in the case of a TRR II Asset) or Quarter Section (in the case of a Cypress Asset), on the one hand, and a Well, on the other hand, shall be subject to a single application of the Defect Threshold and (B) any individual Title Defect that affects more than one Title Defect Property shall be aggregated and treated as a single Title Defect subject to a single application of the Defect Threshold), and (ii) with respect to all Title Defects, the Defect Value attributable to all such Title Defects which is in excess of the Defect Threshold, only if and to the extent that the aggregate amount of the Defect Values attributable to such Title Defects exceeds the Defect Deductible (and taking into account any applicable Title Benefits) and then, only to the extent of such excess. With respect to all Title Benefits, the Benefit Value thereof (as finally determined pursuant to this Article 8) shall only offset the reduction in the Purchase Price attributable to Title Defects and shall not result in an increase to the Purchase Price. Notwithstanding the foregoing, subject to, and without limitation of, Section 8.2(b), with respect to all Title Defects with respect to which Sellers elect to provide an Exclusion Notice set forth in Section 8.2(b)(ii), a Purchase Price adjustment shall be made under Section 3.2 by reducing the Purchase Price by the Allocated Value of such affected Title Defect Property(ies), without application of the Defect Threshold or the Defect Deductible.
(b) Subject to and without limitation of Section 8.5(a) and any other applicable provision of this Article 8, if, following the time at which all Purchase Price adjustments have been finally effected in accordance with the terms of Article 3, (i) the Defect Referee determines (or the Parties otherwise agree) that any Alleged Title Defect, Agreed Title Defect, Alleged Title Benefit or Agreed Title Benefit exists and/or that a particular Defect Value or Benefit Value is attributable to a particular Alleged Title Defect, Agreed Title Defect, Alleged Title Benefit or Agreed Title Benefit, as applicable and (ii) based on such determination or agreement, a Purchase Price adjustment would have been effected in connection therewith as and to the extent provided pursuant to Section 8.5(a), then subject to the remaining provisions of this Section 8.5(b), if the Purchase Price would have been reduced as a result thereof, Sellers shall deliver an amount equal to the Defect Values (or portion thereof) with respect to the applicable Title Defect Property(ies) to Buyers. Notwithstanding the foregoing and for purposes of clarity, if Sellers have elected to cure any relevant Defect and the determination of the Defect Referee occurs prior to the Cure Period Deadline Date, then Sellers shall not be obligated to deliver an amount equal to the applicable Defect Values under this Section 8.5(b), and the terms of Section 8.2 shall apply with respect to such Defect and the delivery or retention of the amount of such applicable Defect Values.
8.6 Title Dispute Resolution.
(a) The Parties will use commercially reasonable efforts to attempt to initially resolve all Disputed Title Matters through good faith negotiations; provided, however, that, without limitation of Section 8.2(b), Section 8.2(c) and Section 8.2(d), if the Parties are unable to resolve such Disputed Title Matters as of the Closing, then such Disputed Title Matters shall be finally resolved following Closing in accordance with this Section 8.6. Any such Dispute shall be referred to a title attorney or other consultant experienced in the examination of title to properties located in the state in which the applicable Title Defect Property(ies) and/or Title Benefit
Property(ies), as applicable, are located who is mutually agreed upon by the Parties for prompt resolution (the “Defect Referee”). The Defect Referee must have at least ten (10) years’ experience and must not have worked as an employee, consultant or outside counsel for either Party or any of its respective Affiliates during the five (5) year period preceding the arbitration or have any financial interest in the Dispute. If Sellers and Buyers cannot agree on the identity of the Defect Referee within thirty (30) days after the Cure Period Deadline Date, then the Houston, Texas regional office of the American Arbitration Association shall select such Defect Referee in accordance with the same criteria. Notwithstanding anything to the contrary herein, the Parties acknowledge and agree that the cost of any Defect Referee shall be borne by the non-prevailing Party; however, each of the Parties shall bear its own legal fees and other costs of presenting its case to the Defect Referee.
(b) Not later than ten (10) Business Days following the appointment or selection of the Defect Referee pursuant to Section 8.6(a), each of Buyers and Sellers shall submit to the Defect Referee, with a simultaneous copy to the other Party, its proposed resolution of the applicable Disputed Title Matter(s) (together with all supporting documentation related thereto), together with a copy of this Agreement and the Title Defect Notice. Within twenty (20) Business Days following the end of such ten (10) Business Day period following the appointment or selection of the Defect Referee, the Defect Referee will render a determination choosing either Sellers’ single proposal or Buyers’ single proposal for resolution of the aggregate Disputed Title Matters and such determination shall be (i) conclusive and binding on the Parties and (ii) enforceable against any Party in any court of competent jurisdiction. In making his determination, the Defect Referee shall make a determination of the applicable Disputed Title Matter(s) based solely on the written submissions of Buyers and Sellers made in accordance with this Section 8.6(b) (and without any additional or supplemental submittals by any Party, except to the extent the Defect Referee expressly requests any additional information from either Party), and shall be bound by the applicable terms, conditions and rules set forth in this Agreement with respect to the determination of such Disputed Title Matter(s). With respect to any Alleged Title Defect that the Defect Referee determines constitutes an Agreed Title Defect, the Defect Value determined by the Defect Referee with respect to such Agreed Title Defect shall be the Defect Value for such Agreed Title Defect. With respect to any Alleged Title Benefit that the Defect Referee determines constitutes an Agreed Title Benefit, the Benefit Value determined by the Defect Referee with respect to such Alleged Title Benefit shall be the Benefit Value for such Agreed Title Benefit. The Defect Referee shall act as an expert for the limited purpose of determining the specified disputed matters submitted to it pursuant to this Section 8.6, and, for purposes of clarity, may not award damages, interest or penalties to any Party with respect to any such disputed matter. The Defect Referee shall have no ex parte communications with the Parties concerning the disputed matters submitted to it pursuant to this Section 8.6. In addition, the Defect Referee 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 Defect Referee in the process of resolving such disputes. Subject to the Parties’ respective rights under this Section 8.6, the Closing shall not be delayed on account of any pending arbitration hereunder and, to the extent any adjustments are not agreed upon by the Parties as of the Closing, the provisions of this Section 8.6 shall apply on a post-Closing basis; provided, however, that, if the Defect Referee is resolving one (1) or more Disputed Title Matters that must be resolved in order to determine whether the “walk-right” conditions to closing are satisfied under Section 9.1(c) or Section 9.2(c) (it being understood and agreed that either Party may submit all relevant Disputed Title Matters to the Defect Referee to
the extent, and only to the extent, the Defect Referee determination is, or would reasonably be expected to be, required to determine whether any Disputed Title Matters related to Buyers’ assertions in the Title Defect Notice would, when taken together with all other finally determined Defect Values, Benefit Values and the Allocated Value of all Assets with respect to which Buyers have sent an Exclusion Notice hereunder, trigger such “walk-right” conditions to closing), the Outside Date shall be extended until the date that is ten (10) Business Days following the resolution of all relevant Disputed Title Matter(s), and no Party may terminate this Agreement pursuant to Section 12.1(e) or Section 12.1(f) on account of any such closing condition not being satisfied unless based on the Defect Referee’s resolution of such dispute, Sellers’ election to accept Buyers’ position in the Title Defect Notice(s), or the written agreement of the Parties, taken together with the Allocated Value of any Assets with respect to which Sellers have sent an Exclusion Notice hereunder, the applicable condition(s) are not satisfied; provided, further, that such ten (10) Business Day Outside Date extension shall not limit either Party’s right to terminate this Agreement pursuant to Section 12.1(c) or Section 12.1(d) (e.g., for purposes of clarity, such ten (10) Business Day Outside Date extension shall not operate to extend any cure period provided in Section 12.1(c) or Section 12.1(d)).
(c) Within two (2) Business Days following resolution of each Disputed Title Matter in accordance with this Section 8.6, the Parties shall deliver joint written instructions to the Escrow Agent instructing the Escrow Agent to release from the Defect Escrow Account the Defect Value (or portion thereof) attributable to the applicable Disputed Title Matter to Sellers (in accordance with their respective Pro Rata Shares) or to Buyers, as applicable, in accordance with the resolution of such Disputed Title Matter as determined by the Defect Referee and consistent with Section 8.8.
8.7 Special Warranty.
(a) The Instruments of Conveyance delivered by Sellers at Closing will contain a special warranty of Defensible Title to the Assets unto Buyers against every Person whomsoever lawfully claiming or to claim the same or any part thereof by, through or under Sellers, but not otherwise, subject, however, to the Permitted Encumbrances.
(b) Not later than 5:00 pm (prevailing central time) on the date that is twenty-four (24) months after the Closing Date (the “SW Claim Date”), Buyers may furnish Sellers a written notice meeting the requirements of a Title Defect Notice described in Section 8.2(a) setting forth any matters which Buyers assert as a breach of such special warranty of Defensible Title set forth in the Instruments of Conveyance (each such breach, a “Special Warranty Defect” and each such notice, a “Special Warranty Defect Notice”). Sellers shall have a reasonable opportunity, but not the obligation, to cure prior to the date that is ninety (90) days after the receipt of any Special Warranty Defect Notice any such Special Warranty Defect validly asserted by Buyers pursuant to the special warranty of Defensible Title contained in the Instruments of Conveyance. Buyers agree, subject to the limitations on Buyers’ cooperation set forth in Section 8.2(c) hereof, which shall apply here as well, mutatis mutandis, to reasonably cooperate in good faith with any attempt by Sellers (at Sellers’ sole cost and expense) to cure any such alleged Special Warranty Defect.
(c) Buyers shall not be entitled to any recovery with respect to, and shall be deemed to have waived, all breaches of Sellers’ special warranties of Defensible Title set forth in
the Instruments of Conveyance (i) for which any Buyer asserted an Alleged Title Defect in a Title Defect Notice prior to the Defect Claim Date or (ii) for which Sellers have not received a valid Special Warranty Defect Notice on or before the SW Claim Date. For purposes of such special warranty of Defensible Title set forth in the Instruments of Conveyance, the value of the Parcels, Quarter Sections and Wells shall be deemed to be the Allocated Values thereof, as adjusted in accordance with this Agreement, and recovery on a breach of the special warranty of Defensible Title shall not exceed the Allocated Value of the affected Asset, excluding any recovery attributable to such breaches that result from Liens that are undisputed and liquidated in amount. Notwithstanding anything to the contrary in this Agreement or any other Transaction Document, recovery for a breach of the special warranty of Defensible Title set forth in the Instruments of Conveyance shall (i) not be limited by the Defect Threshold or Defect Deductible or, except as expressly set forth in this Section 8.7(c), any other limitations set forth in this Agreement and (ii) terminate and be of no further force or effect as of the day after the SW Claim Date.
8.8 Defect Escrow Account.
(a) Establishment of Defect Escrow Account. If, as of the Closing, the Defect Escrow Amount is greater than zero, then, at the Closing, Buyers shall deposit, or cause to be deposited, the Defect Escrow Amount with the Escrow Agent into a separate subaccount (the “Defect Escrow Account”) established pursuant to the Escrow Agreement, in lieu of paying such amount directly to Sellers as part of the Closing Payment. The Defect Escrow Amount shall be held and disbursed by the Escrow Agent in accordance with the terms of the Escrow Agreement and this Agreement. Any interest or other amounts earned on the Defect Escrow Amount shall follow the Defect Escrow Amount and be disbursed to the Party or Parties entitled to receive the Defect Escrow Amount (or applicable portions thereof) pursuant to this Section 8.8. In the event of any conflict between the terms of this Agreement and the terms of the Escrow Agreement with respect to the disbursement of amounts from the Defect Escrow Account, the terms of this Agreement shall control.
(b) Release to Sellers Upon Cure or Favorable Resolution. The Parties shall deliver joint written instructions to the Escrow Agent instructing the Escrow Agent to release from the Defect Escrow Account to Sellers (in accordance with their respective Pro Rata Shares) an amount equal to the Defect Values (together with any interest or other amounts earned thereon) attributable to Alleged Title Defects or Agreed Title Defects (i) with respect to which Sellers have successfully cured (or partially cured) by the Cure Period Deadline Date, to the extent of such cure, in accordance with Section 8.2(e), (ii) with respect to which Sellers have retained amounts in accordance with Section 8.2(f) due to Buyers’ waiver or failure to timely submit Disputed Title Matters to the Defect Referee, or (iii) with respect to which the Defect Referee has determined (or the Parties have otherwise agreed) in favor of Sellers in accordance with Section 8.6, in each case, within five (5) Business Days following the applicable cure, waiver, agreement or final determination, as applicable.
(c) Release to Buyers Upon Failure to Cure or Favorable Resolution. The Parties shall deliver joint written instructions to the Escrow Agent instructing the Escrow Agent to release from the Defect Escrow Account to Buyers an amount equal to the Defect Values (together with any interest or other amounts earned thereon) attributable to Alleged Title Defects or Agreed Title Defects (i) which Sellers have failed to cure (or partially failed to cure) by the
Cure Period Deadline Date, to the extent of such failure, in accordance with Section 8.2(e), (ii) with respect to which Sellers have retained amounts in accordance with Section 8.2(f) and Buyers has timely submitted such Disputed Title Matters to the Defect Referee and such Disputed Title Matters have been resolved in Buyers’ favor, or (iii) with respect to which the Defect Referee has determined (or the Parties have otherwise agreed) in favor of Buyers in accordance with Section 8.6, in each case, within five (5) Business Days following the applicable cure failure, agreement or final determination, as applicable.
(d) Partial Cure or Determination. To the extent any Alleged Title Defect or Agreed Title Defect is partially cured by Sellers or the Defect Referee determines that only a portion of the claimed Defect Value is valid, the Parties shall deliver joint written instructions to the Escrow Agent instructing the Escrow Agent to release from the Defect Escrow Account (i) to Sellers (in accordance with their respective Pro Rata Shares), the portion of such Defect Value (together with any applicable interest or other amounts earned thereon) attributable to the cured portion or the portion not confirmed by the Defect Referee and (ii) to Buyers, the portion of such Defect Value (together with any applicable interest or other amounts earned thereon) attributable to the uncured portion or the portion confirmed by the Defect Referee, in each case, within five (5) Business Days following such partial cure or final determination, as applicable.
(e) Cooperation. Each Party agrees to cooperate in good faith with the other Party and to execute and deliver such joint written instructions and other documents as may be reasonably requested by the other Party in order to effectuate the release of amounts from the Defect Escrow Account in accordance with this Section 8.8.
(f) Final Distribution. Promptly following (i) the final resolution of all Disputed Title Matters in accordance with Section 8.6, (ii) the expiration of all applicable cure periods and (iii) the determination or agreement by the Parties of all Defect Values attributable to all Alleged Title Defects and Agreed Title Defects, but in no event later than thirty (30) days following the later of the Cure Period Deadline Date or the final resolution of all Disputed Title Matters, the Parties shall deliver joint written instructions to the Escrow Agent instructing the Escrow Agent to distribute any remaining amounts in the Defect Escrow Account to the Party or Parties entitled thereto in accordance with this Section 8.8. Any amounts remaining in the Defect Escrow Account following such final distribution (if any) shall be distributed to Sellers (in accordance with their respective Pro Rata Shares).
ARTICLE 9
Conditions to Closing
9.1 Conditions of Buyers to Closing. The obligation of Buyers to consummate the transactions contemplated by this Agreement at Closing is subject to the satisfaction (or waiver in writing by Buyers) of the following conditions:
(a) Representations, Warranties, Covenants and Agreements. (i) (A) Each of the Fundamental Representations of Sellers made in this Agreement shall be true and correct in all respects (other than de minimis inaccuracies) as of the Closing Date as if made at and as of the Closing Date (except those representations and warranties that address matters only as of a specified date, which shall be true and correct as of the specified date) and (B) all other
representations and warranties of Sellers made in this Agreement (disregarding any and all materiality, Material Adverse Effect and other similar qualifications) shall be true and correct in all respects as of the Closing Date as if made at and as of the Closing Date (except those representations and warranties that address matters only as of a specified date, which shall be true and correct as of the specified date), except, in each case of subclause (i)(B), to the extent such failure of a representation or warranty to be so true or correct, individually or in the aggregate, has not had and would not be reasonably expected to have a Material Adverse Effect and (ii) Sellers shall have performed, or complied with, in all material respects, all of the covenants and agreements required hereby to be performed or complied with by Sellers on or before Closing.
(b) No Order or Proceedings. No Order issued by a Governmental Authority of competent jurisdiction will be in effect that prohibits or makes illegal the consummation of the transactions contemplated by this Agreement and there shall not be any Proceeding commenced or threatened in writing by a Third Party seeking to restrain, enjoin, or otherwise prohibit or make illegal, or seeking to recover material damages on account of, the transactions contemplated by this Agreement.
(c) Title Defects. The aggregate sum of (i) all Defect Values determined pursuant to Section 8.4 with respect to Defects (A) asserted in any Title Defect Notice submitted on or before the Defect Claim Date (which have not been cured by Sellers prior to Closing), (B) agreed to by the Parties prior to the Closing or, if not so agreed prior to the Closing, as finally determined pursuant to Section 8.6 and (C) that would result in an adjustment to the Purchase Price pursuant to Section 3.2(a)(ii) less (ii) the sum of all Benefit Values determined pursuant to Section 8.4 with respect to Benefits (A) asserted in a Title Benefit Notice submitted during the Due Diligence Period, (B) agreed to by the Parties prior to the Closing or, if not so agreed prior to the Closing, as finally determined pursuant to Section 8.6 and (C) that would result in an offset in an adjustment to the Purchase Price pursuant to Section 3.2(a)(ii), plus (iii) the Allocated Value of all Assets excluded from the transactions contemplated by this Agreement pursuant to the terms hereof, shall be less than an amount equal to fifteen percent (15%) of the unadjusted Purchase Price.
(d) Closing Deliverables. Sellers shall have delivered (or stand ready, willing and able to deliver at the Closing) the closing deliverables required to be delivered by Sellers pursuant to Section 10.2.
9.2 Conditions of Sellers to Closing. The obligation of Sellers to consummate the transactions contemplated by this Agreement at Closing is subject to the satisfaction (or waiver in writing by Sellers) of the following conditions:
(a) Representations, Warranties, Covenants and Agreements. (i) (A) Each of the Fundamental Representations of Buyers made in this Agreement shall be true and correct in all respects (other than de minimis inaccuracies) as of the Closing Date as if made at and as of the Closing Date (except those representations and warranties that address matters only as of a specified date, which shall be true and correct as of the specified date) and (B) all other representations and warranties of Buyers made in this Agreement (disregarding any and all materiality, material adverse effect and other similar qualifications) shall be true and correct in all respects as of the Closing Date as if made at and as of the Closing Date (except those
representations and warranties that address matters only as of a specified date, which shall be true and correct as of that specified date), except, in each case of subclause (i)(B), to the extent such failure of a representation or warranty to be so true and correct, individually or in the aggregate, has not had and would not be reasonably expected to have a material adverse effect on Buyers’ ability to perform its obligations to consummate the transactions contemplated by this Agreement and (ii) Buyers shall have performed, or complied with, in all material respects, all of the covenants and agreements required hereby to be performed or complied with by Buyers on or before Closing.
(b) No Order or Proceedings. No Order issued by a Governmental Authority of competent jurisdiction will be in effect that restrains, enjoins or otherwise prohibits the consummation of the transactions contemplated by this Agreement and there shall not be any Proceeding commenced or threatened in writing by a Third Party seeking to restrain, enjoin, or otherwise prohibit or make illegal, or seeking to recover material damages on account of, the transactions contemplated by this Agreement.
(c) Title Defects. The aggregate sum of (i) all Defect Values determined pursuant to Section 8.4 with respect to Defects (A) asserted in any Title Defect Notice submitted on or before the Defect Claim Date (which have not been cured by Sellers prior to Closing), (B) agreed to by the Parties prior to the Closing or, if not so agreed prior to the Closing, as finally determined pursuant to Section 8.6 and (C) that would result in an adjustment to the Purchase Price pursuant to Section 3.2(a)(ii) less (ii) the sum of all Benefit Values determined pursuant to Section 8.4 with respect to Benefits (A) asserted in a Title Benefit Notice submitted during the Due Diligence Period, (B) agreed to by the Parties prior to Closing or, if not so agreed prior to the Closing, as finally determined pursuant to Section 8.6 and (C) that would result in an offset in an adjustment to the Purchase Price pursuant to Section 3.2(a)(ii), plus (iii) the Allocated Value of all Assets excluded from the transactions contemplated by this Agreement pursuant to the terms hereof, shall be less than an amount equal to fifteen percent (15%) of the unadjusted Purchase Price.
(d) Closing Deliverables. Buyers shall have delivered (or stands ready, willing and able to deliver at the Closing) the closing deliverables required to be delivered by Buyers pursuant to Section 10.3.
ARTICLE 10
Closing
10.1 Closing. Subject to the satisfaction and/or waiver of the conditions set forth in Section 9.1 and Section 9.2, (other than those conditions that by their nature are to be satisfied by actions taken at the Closing or can only be satisfied as of the Closing Date, but subject to the satisfaction or waiver of such conditions), the closing of the sale and transfer of the Assets to Buyers as contemplated by this Agreement (the “Closing”) shall take place at the offices of Gibson, Dunn & Crutcher LLP, 811 Main Street, Suite 3000, Houston, Texas, 77002, at 10:00 a.m. (prevailing central time) on September 25, 2026 (the “Scheduled Closing Date”), or such other time and/or place as Sellers and Buyers may agree upon in writing; provided that, if the Closing is not held on the Scheduled Closing Date, it shall occur no later than the third Business Day following the satisfaction or waiver of all conditions set forth in Section 9.1 and Section 9.2, (other than those conditions which by their nature cannot be satisfied prior to the Closing Date, but
subject to the satisfaction or waiver of such conditions), subject to the termination rights of the Parties set forth in Article 12. The date on which the Closing occurs is referred to herein as the “Closing Date.”
10.2 Closing Deliverables by Sellers. At or before Closing, each Seller shall deliver (or cause to be delivered) to Buyers the following:
(a) duly executed and acknowledged counterparts to the Instruments of Conveyance for such Seller’s Assets, in sufficient duplicate originals to facilitate recording in all appropriate jurisdictions;
(b) a validly executed IRS Form W-9 in respect of such Seller (or, if such Seller is a disregarded entity for U.S. federal income tax purposes, such Seller’s regarded owner);
(c) duly executed and acknowledged counterparts to all Mortgage Releases for the Conveyed Interest in such Seller’s Assets with respect to all Liens securing indebtedness for borrowed money that arise by, through or under such Seller or any Affiliates of such Seller, in sufficient duplicate originals to facilitate recording in all appropriate jurisdictions;
(d) duly executed letters in lieu for the Conveyed Interest in such Seller’s Mineral Properties and Wells, in the form attached hereto as Exhibit D-1 and Exhibit D-2, as applicable;
(e) a duly executed counterpart to the Closing Statement;
(f) a list of all ORRI Instruments in form and substance reasonably necessary to facilitate the proper recording of the Instruments of Conveyance;
(g) a certificate from such Seller substantially in the form of Exhibit E-1, duly executed by an authorized officer of such Seller, certifying that the conditions set forth in Section 9.1(a) have been fulfilled;
(h) a duly executed counterpart of the Novation Agreements, covering all Assumed Hedges other than Excluded Hedges; and
(i) joint written instructions executed by such Seller, in form and substance reasonably acceptable to such Seller and Buyers, instructing the Escrow Agent to release the Deposit (together with any interest or other amounts earned thereon) to Sellers (to be applied as a credit against the Closing Payment in accordance with the Allocation Statement);
(j) if the Defect Escrow Amount is greater than zero, joint written instructions executed by Buyer and such Seller, in form and substance reasonably acceptable to such Seller and Buyer, instructing the Escrow Agent to establish the Defect Escrow Account and to hold the Defect Escrow Amount in accordance with the Escrow Agreement and this Agreement; and
(k) such other documents or other agreements provided for herein or that are necessary to effectuate the transactions contemplated hereby as Buyers may reasonably request.
10.3 Closing Deliverables by Buyers. At Closing, each Buyer shall deliver (or cause to be delivered) to Sellers the following:
(a) duly executed and acknowledged counterparts to the Instruments of Conveyance for the Assets, in sufficient duplicate originals to facilitate recording in all appropriate jurisdictions;
(b) the Closing Payment by wire transfer of immediately available funds to the account(s) designated in writing to Buyers by Sellers in the Closing Statement;
(c) duly executed letters in lieu for the Conveyed Interest in each Seller’s Mineral Properties and Wells, in the form attached hereto as Exhibit D-1 and Exhibit D-2, as applicable;
(d) a duly executed counterpart to the Closing Statement;
(e) a certificate from Buyers substantially in the form of Exhibit E-2, duly executed by an authorized officer of Buyers, certifying on behalf of Buyers that the conditions set forth in Section 9.2(a) have been fulfilled;
(f) joint written instructions executed by Buyers, in form and substance reasonably acceptable to Sellers and Buyers, instructing the Escrow Agent to release the Deposit (together with any interest or other amounts earned thereon) to Sellers (to be applied as a credit against the Closing Payment in accordance with the Allocation Statement);
(g) duly executed counterparts of the Novation Agreements, by Buyers and the other parties thereto (except by any counterparty that is a Seller or Affiliate of any Seller), covering all Assumed Hedges other than Excluded Hedges;
(h) if the Defect Escrow Amount is greater than zero, (i) joint written instructions executed by Buyer and Sellers, in form and substance reasonably acceptable to Sellers and Buyer, instructing the Escrow Agent to establish the Defect Escrow Account and to hold the Defect Escrow Amount in accordance with the Escrow Agreement and this Agreement and (ii) the Defect Escrow Amount by wire transfer of immediately available funds to the Defect Escrow Account; and
(i) such other documents or other agreements provided for herein or that are necessary to effectuate the transactions contemplated hereby as any Seller may reasonably request.
10.4 Records; Recording. On the Closing Date, each Seller shall deliver to Buyers electronic copies of such Seller’s Records (to the extent such Records exist in electronic format). Within thirty (30) days following the Closing, each Seller shall make available to Buyers such Seller’s Records in their current form and format as maintained by such Seller as of the Execution Date, for pickup from Sellers’ offices during normal business hours (at Buyers’ sole cost and expense); provided that (a) no Seller shall be required to conduct processing, conversion, compiling or any other further work with respect to the delivery of the Records pursuant to this Section 10.4 and (b) from and after Closing, Sellers may retain originals and/or copies of any or all of the Records. Promptly after Closing, each Buyer shall, at its sole cost and expense
(including, for purposes of clarity, the payment of any applicable stamp taxes or other similar fees or taxes), file and record all documents and instruments for which filing of record is appropriate (including, for purposes of clarity, the Instruments of Conveyance) that are executed and delivered at Closing in the public records of each applicable Governmental Authority and provide Sellers with file-stamped copies of all such recorded and approved documents within five (5) Business Days following Buyers’ receipt thereof.
ARTICLE 11
Indemnification and Waivers
11.1 Indemnification.
(a) Indemnification by Sellers. From and after the Closing, each Seller shall indemnify, defend and hold harmless Buyers, each of their respective Affiliates, and each of its and their respective members, partners, directors, managers, officers, employees, agents, consultants, advisers and other Representatives (the “Buyer Indemnified Parties”) from and against any and all Losses actually incurred by the Buyer Indemnified Parties as a result of, relating to or arising out of (i) any Breach of any representation or warranty made by such Seller in Article 4, (ii) any Breach of any covenant or agreement made or to be performed by such Seller under this Agreement with respect to or related to the Conveyed Interest in the Assets and (iii) the Retained Liabilities applicable to, arising out of or related to the Conveyed Interest in the Assets.
(b) Indemnification by Buyers. From and after the Closing, each Buyer shall indemnify, defend, and hold harmless Sellers, each of their respective Affiliates, and each of the foregoing Persons’ respective members, partners, directors, managers, officers, employees, agents, consultants, advisers and other Representatives (the “Seller Indemnified Parties”) from and against any and all Losses actually incurred by the Seller Indemnified Parties as a result of, relating to or arising out of (i) any Breach of any representation or warranty made by Buyers in Article 5, (ii) any Breach of any covenant or agreement made or to be performed by Buyers under this Agreement with respect to or related to the Conveyed Interest in the Assets and (iii) the Assumed Obligations applicable to, arising out of or related to the Conveyed Interest in the Assets.
11.2 Limitations on Liability.
(a) Threshold. The Buyer Indemnified Parties shall not be entitled to indemnity under Section 11.1(a), for Losses with respect to any claim for Breach of any representation or warranty of any Seller set forth in this Agreement (other than Losses arising from a Breach of a Fundamental Representation) unless the Losses incurred with respect to such claim exceed the Indemnity Threshold, at which time all such Losses shall be fully indemnified subject to other limitations set forth in this Agreement. For purposes of clarity, Losses disallowed pursuant to this Section 11.2(a) shall not be counted toward the Indemnity Deductible under Section 11.2(b).
(b) Indemnity Deductible. The Buyer Indemnified Parties will not be entitled to indemnity under Section 11.1(a) for Losses with respect to any claim for Breach of any representation or warranty of any Seller set forth in this Agreement (other than Losses arising from a Breach of a Fundamental Representation) until the aggregate amount of all such Losses exceeds the Indemnity Deductible, and thereafter, the Buyer Indemnified Parties shall only be entitled to
indemnity for the aggregate amount of such Losses in excess of the Indemnity Deductible, subject to the other limitations set forth in this Agreement.
(c) Seller Liability Cap. Notwithstanding anything to the contrary contained elsewhere in this Agreement, no Seller shall be required to indemnify the Buyer Indemnified Parties under Section 11.1(a), in the aggregate, for an amount of Losses (other than Losses arising from a Breach of a Fundamental Representation, Seller’s representations and warranties set forth in Section 4.6 or any Breach of Sellers’ covenant and agreement set forth in the last sentence of Section 3.7(b)) exceeding an amount equal to ten percent (10%) of such Seller’s Pro Rata Share of the Adjusted Purchase Price; provided, however, that in no event shall any Seller be required to indemnify the Buyer Indemnified Parties under this Agreement, in the aggregate, for an amount of Losses exceeding an amount equal to one hundred percent (100%) of the portion of the Adjusted Purchase Price actually received by such Seller.
(d) Survival. Subject to the terms of this Section 11.2(d), the respective indemnification obligations of each Buyer and each Seller under this Agreement for any Breach of any of their respective representations, warranties, covenants and agreements contained in this Agreement shall survive the Closing as follows: (i) the representations and warranties of each Seller contained in this Agreement, and the indemnification obligations of a Seller under this Agreement for any Breach by the Seller making such representation or warranty, pursuant to Section 11.1(a)(i) or otherwise, shall terminate on the date that is twelve (12) months after the Closing Date; provided, however, that any such indemnification obligations of each Seller pursuant to Section 11.1(a)(i) for any Breach of (A) such Seller’s representations and warranties set forth in Section 4.6 shall survive until thirty (30) days after the expiration of the applicable statute of limitations and (B) such Seller’s Fundamental Representations shall survive until the expiration of the applicable statute of limitations; (ii) the representations and warranties of Buyers contained in this Agreement, and the indemnification obligations of Buyers under this Agreement for any Breach by Buyers thereof pursuant to Section 11.1(b), shall terminate upon the expiration of the applicable statute of limitations; (iii) the indemnification obligations of Buyers pursuant to Section 11.1(b)(iii) shall survive from and after the Closing without time limit; (iv) all respective indemnification obligations with respect to a failure to comply with the covenants and agreements of each Buyer and each Seller set forth in this Agreement (other than those contained in Article 7) pursuant to Section 11.1 or otherwise that, by their nature, constitute a Post-Closing Covenant or Agreement with respect to the Closing, shall survive the Closing until the applicable covenant and/or agreement is fully performed in accordance with its terms hereunder; (v) all of the respective indemnification obligations with respect to a failure to comply with the covenants and agreements of each Buyer and each Seller set forth in Article 7 pursuant to Section 11.1 or otherwise shall survive until thirty (30) days after the expiration of the applicable statute of limitations and (vi) each Seller’s indemnification obligations set forth in Section 11.1(a)(iii) with respect to the Retained Liabilities attributable to such Seller shall survive the Closing until the date that is twelve (12) months following the Closing. Notwithstanding anything to the contrary contained in this Agreement, (x) as a condition precedent to any rights to indemnification or defense under this Article 11, any claim made by any Party must be made in a Notice delivered to the other Party on or prior to the expiration of the applicable survival period, if any, with respect to the applicable representation, warranty, covenant or agreement (y) none of the Parties shall have any liability or obligation under Section 11.1 with respect to any applicable representation, warranty, covenant or agreement (including for Breaches thereof) if such claim is not so made on
or prior to the expiration of the applicable survival period and any Seller’s or Buyer’s respective indemnification and defense obligations under Section 11.1, and the rights of the Buyer Indemnified Parties or the Seller Indemnified Parties to indemnification and defense under Section 11.1, as it relates thereto, as applicable, shall be deemed to terminate at such time and (z) the indemnification obligations of any Buyer and any Seller under or with respect to each of their respective representations, warranties, covenants or agreements (including for Breaches thereof) shall be of no further force and effect after the applicable date of expiration set forth herein.
(e) Rescission. Sellers and Buyer acknowledge that, after the Closing, the payment of money, as limited by the terms of this Agreement and without limitation of rights to equitable remedies hereunder, shall be adequate compensation for Breach of any representation, warranty, covenant or agreement contained in this Agreement or for any other claim arising in connection with or with respect to the transactions contemplated in this Agreement. As the payment of money shall be adequate compensation, Buyer and Sellers waive any right to rescind this Agreement or any of the transactions consummated hereunder.
(f) Knowledge. Notwithstanding anything in this Agreement to the contrary, in no event shall the Buyer Indemnified Parties be entitled to assert the Breach or failure of any representation, warranty or covenant of TRR II Seller or, to the extent solely relating to the TRR II Assets, any condition precedent of Buyers in this Agreement or Transaction Document as a basis for a claim for indemnification or defense under this Article 11 to the extent that any Buyer Indemnified Party had Knowledge of such Breach or failure prior to the Closing Date and the Buyer Indemnified Parties shall be deemed to have waived any claim for Breach of a covenant, representation or warranty or for indemnity of TRR II Seller hereunder related thereto.
(g) Mitigation. From and after the Closing, to the extent and in the manner required to do so under applicable Law, each Party shall seek to mitigate and minimize Losses under or in relation to this Agreement upon and after becoming aware of any event or condition that would reasonably be expected to give rise to any Losses that are indemnifiable under this Article 11.
(h) Insurance. The amount of any liabilities for which any member of the Buyer Indemnified Parties are entitled to indemnification under this Agreement or in connection with or with respect to the transactions contemplated by this Agreement shall be reduced by any corresponding insurance proceeds from insurance policies carried by any member of the Buyer Indemnified Parties actually realized (net of any collection costs and excluding the proceeds of any insurance policy issued or underwritten by the Buyer Indemnified Parties).
(i) Joint and Several Liability. Each Buyer shall be jointly and severally liable for each representation, warranty, covenant, agreement, indemnification obligation and Breach of this Agreement given or committed by any other Buyer.
11.3 Procedures. Except as otherwise set forth in Section 7.2 or Section 7.3, claims for indemnification under this Agreement shall be asserted and resolved as follows:
(a) Third Party Claim. If any Party entitled to seek indemnification under this Agreement (an “Indemnified Party”) receives Notice of the assertion or commencement of any
claim asserted against an Indemnified Party by a Third Party (“Third Party Claim”), the Indemnified Party shall as soon as reasonably practicable, but in no event more than thirty (30) days after receipt of such Notice, (i) notify the Party obligated to indemnify such Indemnified Party pursuant hereto (the “Indemnifying Party”) of the Third Party Claim and (ii) transmit to the Indemnifying Party a Notice (“Claim Notice”) describing in reasonable detail the nature of the Third Party Claim, a copy of all papers served with respect to such claim (if any), the amount or estimated amount of damages, and the specific basis of the Indemnified Party’s request for indemnification under this Agreement. Failure to timely provide such Claim Notice shall not affect the right of the Indemnified Party’s indemnification hereunder, except to the extent the Indemnifying Party is actually prejudiced by such delay or omission.
(b) Indemnifying Party. In the case of a claim for indemnification based upon a Third Party Claim, the Indemnifying Party shall have thirty (30) days from its receipt of the relevant Claim Notice to notify the Indemnified Party whether it admits or denies its liability to the Indemnified Party with respect to such Third Party Claim. If the Indemnifying Party admits liability with respect to such Third Party Claim, the Indemnifying Party shall have the right to defend the Indemnified Party against such Third Party Claim only if such Indemnifying Party provides Notice to the Indemnified Party of its election to defend the Indemnified Party against such Third Party Claim at its sole cost and expense within thirty (30) days from the Indemnifying Party’s receipt of the relevant Claim Notice. The Indemnified Party is authorized, prior to and during such thirty (30)-day period, at the expense of the Indemnifying Party, to file any motion, answer or other pleading that it shall deem necessary or appropriate to protect its interests or those of the Indemnifying Party and that is not prejudicial to the Indemnifying Party. If the Indemnifying Party notifies the Indemnified Party of its desire to defend the Indemnified Party against such Third Party Claims in accordance with the foregoing, then such Indemnifying Party (the “Assuming Indemnifying Party”) shall have the right and the obligation to diligently defend, at its sole cost and expense, such Third Party Claim, with counsel reasonably selected by the Assuming Indemnifying Party, to a final conclusion or settlement at the discretion of the Assuming Indemnifying Party in accordance with this Section 11.3(b). The Assuming Indemnifying Party shall have full control of such defense and proceedings, including any compromise or settlement thereof; provided, however, that the Assuming Indemnifying Party shall not settle any Third Party Claim or consent to the entry of any judgment with respect thereto without the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld, conditioned or delayed); provided, further, that such consent shall not be required if (i) the settlement agreement or judgment contains a complete and unconditional general release by the Third Party asserting the claim to all Indemnified Parties affected by the claim, (ii) the settlement agreement or judgment does not contain or impose any obligation, limitation, liability, sanction or restriction upon the Indemnified Party or its Affiliates or the conduct of any business by the Indemnified Party or its Affiliates, and (iii) the settlement agreement or judgment does not adversely impact the Indemnified Parties or the Assets (including the value thereof). If requested by the Assuming Indemnifying Party, the Indemnified Party agrees, at the sole cost and expense of the Assuming Indemnifying Party, to cooperate with the Assuming Indemnifying Party and its counsel in contesting any Third Party Claim which the Assuming Indemnifying Party elects to contest, including (1) the making of any related reasonable counterclaim against the Person asserting the Third Party Claim or any cross complaint against any Person and (2) making reasonably available business records and employees relevant to the Third Party Claim. The Indemnified Party may participate in, but not control, any defense or settlement of any Third Party Claim controlled by
the Assuming Indemnifying Party pursuant to this Section 11.3(b), and, except in accordance with the preceding sentence, the Indemnified Party shall bear its own costs and expenses with respect to such participation.
(c) Indemnified Party. If the Indemnifying Party does not notify the Indemnified Party that the Indemnifying Party elects to defend the Indemnified Party pursuant to Section 11.3(b) or if the Indemnifying Party so elects to defend the Indemnified Party but fails to diligently prosecute or settle such Third Party Claim within five (5) days after receiving written notice from the Indemnified Party to the effect that the Indemnifying Party has so failed, then the Indemnified Party shall have the right to defend, and be reimbursed for its reasonable costs and expenses (but only if the Indemnified Party is actually entitled to indemnification hereunder) in regard to the Third Party Claim with counsel selected by the Indemnified Party. In such circumstances, the Indemnified Party shall defend the Third Party Claim in good faith and have full control of such defense and proceedings; provided, however, that the Indemnified Party may not enter into any compromise or settlement of such Third Party Claim if indemnification is to be sought hereunder, without the Indemnifying Party’s prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed). The Indemnifying Party may participate in, but not control, any defense or settlement controlled by the Indemnified Party pursuant to this Section 11.3(c), and the Indemnifying Party shall bear its own costs and expenses with respect to such participation.
(d) Direct Claim. Any claim by an Indemnified Party on account of Losses that does not result from a Third Party Claim (a “Direct Claim”) shall be asserted by giving the Indemnifying Party reasonably prompt Notice thereof, but in any event not later than thirty (30) days after the Indemnified Party obtains actual knowledge of such Direct Claim; provided, however, that failure to timely provide such Notice shall not affect the right of the Indemnified Party to indemnification hereunder, except to the extent the Indemnifying Party is actually prejudiced by such delay or omission. Such Notice by the Indemnified Party shall (i) describe the Direct Claim in reasonable detail, (ii) describe the specific basis of the Indemnified Party’s request for indemnification under this Agreement, (iii) include copies of all written background material relevant thereto and (iv) indicate the actual amount of Losses that have been sustained and the estimated amount of Losses that may be sustained by the Indemnified Party. The Indemnifying Party shall have a period of thirty (30) days within which to respond in writing and to either accept or reject such Direct Claim. If the Indemnifying Party does not so respond within such thirty (30) day period, the Indemnifying Party shall be deemed to have rejected such claim, in which event the Indemnified Party shall be free to pursue such remedies as may be available to the Indemnified Party on the terms and subject to the provisions of this Agreement.
11.4 Waiver of Consequential Damages. NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, NEITHER ANY BUYER, ANY SELLER NOR ANY OF THEIR RESPECTIVE AFFILIATES SHALL BE LIABLE HEREUNDER TO ANY INDEMNIFIED PARTY FOR ANY (A) PUNITIVE OR EXEMPLARY DAMAGES OR (B) LOST PROFITS, DIMINUTION IN VALUE OR CONSEQUENTIAL, SPECIAL OR INDIRECT DAMAGES, IN EACH CASE IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY AND ALL OF WHICH ARE HEREBY WAIVED, EXCEPT IN EACH CASE OF THE FOREGOING CLAUSES (A) AND (B), TO THE EXTENT ANY SUCH LOST PROFITS, DIMINUTION IN VALUE OR DAMAGES ARE
INCLUDED IN ANY ACTION BY A THIRD PARTY AGAINST SUCH INDEMNIFIED PARTY AND SUCH LOST PROFITS, DIMINUTION IN VALUE OR DAMAGES ARE OTHERWISE INDEMNIFIABLE OR RECOVERABLE LOSSES UNDER THIS AGREEMENT.
11.5 Waivers and Disclaimers.
(a) Title and Environmental Matters. Except for the express and specific representations and warranties of Sellers set forth in Article 4 and the special warranty of Defensible Title in the Instruments of Conveyance, as applicable, each Seller expressly disclaims and negates, and each Buyer hereby waives any liability or responsibility of such Seller for, all representations, warranties, or covenants related to title or the environmental or physical condition of the Assets of any kind or nature, either express, implied or statutory.
(b) Defects. Except for the express and specific representations and warranties of Sellers set forth in Article 4 and the special warranty of Defensible Title in the Instruments of Conveyance, as applicable, (i) the Assets are being conveyed and assigned to and accepted by Buyers in their “as is, where is” condition and state of repair, and with all faults and defects, without any representation, warranty or covenant of any kind or nature, express, implied or statutory, including, but not limited to, warranties of marketability, quality, condition, conformity to samples, merchantability and/or fitness for a particular purpose, all of which are expressly disclaimed and negated by Sellers and waived by Buyers and (ii) Buyers hereby waive for all purposes (A) all defects, irregularities, objections and other matters associated with the title to the Assets under this Agreement or any of the other Transaction Documents or otherwise and (B) any defect, irregularity, objection or other matter associated with the title to the Assets of which any Buyer had Knowledge prior to the Execution Date.
(c) Additional Disclaimers. Other than the representations and warranties of Sellers set forth in Article 4 and the special warranty of Defensible Title contained in the Instruments of Conveyance, each Seller expressly disclaims and negates, and each Buyer hereby waives, any liability or responsibility for, (i) all representations and warranties, express or implied, at Law or in equity and (ii) any statement or information orally or in writing made or communicated to Buyers, any of its Affiliates or any of its or their respective Representatives, including but not limited to, (A) any statement or information orally or in writing made or communicated to Buyers, any of its Affiliates or any of its or their respective Representatives by any Seller, any Affiliate thereof or any of their respective Representatives, (B) as to the accuracy, materiality or completeness of any data or records made available to Buyers, its Affiliates or any of its or their respective Representatives with respect to the Assets or (C) concerning the quality or quantity of Hydrocarbon reserves, if any, attributable to the Assets, or the ability of the Assets to produce Hydrocarbons, or the product prices which Buyers or any other Person is or will be entitled to receive from the sale of any such Hydrocarbons.
11.6 Exclusive Remedy and Release. Without limiting a Party’s express rights pursuant to this Agreement and the other Transaction Documents, the indemnification remedies set forth in this Article 11 shall, from and after the Closing, constitute the sole and exclusive remedies of the Parties with respect to any and all claims (whether arising before or after the Closing) relating to the transactions consummated pursuant to this Agreement or any other Transaction Document at
or in connection with the Closing (including, for purposes of clarity, Breaches of any representations, warranties, covenants or agreements of the Parties contained in this Agreement or any other Transaction Document), the Conveyed Interest in the Assets or Sellers’ ownership or operation of the Conveyed Interest in the Assets or the condition of the Conveyed Interest in the Assets, including statutory or other claims arising under any Law. Except as specified in Section 11.1(a) and the special warranty of Defensible Title in the Instruments of Conveyance, effective as of the Closing, Buyers, on their own behalf and on behalf of the Buyer Indemnified Parties, hereby releases, remises and forever discharges each Seller and its Affiliates and all of such Persons’ respective equityholders, partners, members, directors, officers, employees, agents, advisors, and other Representatives from any and all suits, legal or administrative Proceedings, claims, demands, damages, costs, liabilities, Losses, interest or causes of action whatsoever, at law or in equity, known or unknown, which Buyers or the Buyer Indemnified Parties might now or subsequently have, based on, relating to or arising out of this Agreement or any other Transaction Document, the transactions contemplated by this Agreement or any other Transaction Document, the ownership, use or operation of any of the Assets prior to the Closing or the condition, quality, status or nature of any of the Assets prior to the Closing, including rights to contribution under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, and any similar environmental Law, Breaches of statutory or implied warranties, nuisance or other tort actions, rights to punitive damages, common law rights of contribution and rights under insurance maintained by any Seller or any Affiliate thereof, in each case with respect to the Conveyed Interest in the Assets.
11.7 Express Negligence Rule. THE INDEMNIFICATION AND WAIVER PROVISIONS IN THIS AGREEMENT SHALL BE ENFORCEABLE REGARDLESS OF WHETHER ANY PERSON (INCLUDING THE PERSON FROM WHOM INDEMNIFICATION IS SOUGHT) ALLEGES OR PROVES THE SOLE, CONCURRENT, CONTRIBUTORY OR COMPARATIVE NEGLIGENCE OF THE PERSON SEEKING INDEMNIFICATION OR THE SOLE OR CONCURRENT STRICT LIABILITY IMPOSED UPON THE PERSON SEEKING INDEMNIFICATION. BUYERS AND SELLERS ACKNOWLEDGE THAT THIS STATEMENT COMPLIES WITH THE EXPRESS NEGLIGENCE RULE AND IS CONSPICUOUS.
11.8 No Duplication. Any liability for indemnification hereunder shall be determined without duplication of recovery by reason of the state of facts giving rise to such liability constituting a Breach of more than one representation, warranty, covenant, obligation, or agreement herein. Neither Buyers nor any Seller shall be liable for indemnification with respect to any Losses to the extent the Purchase Price has been adjusted pursuant to Section 3.2 with respect to such Losses.
11.9 Tax Treatment of Post-Closing Payments. The Parties agree that any payments made by Buyers to any Seller, or by any Seller to Buyers, in each case, pursuant to this Article 11 or Article 7 shall be treated for all Tax purposes as an adjustment to the Purchase Price for the Assets unless otherwise required by applicable Law.
ARTICLE 12
Termination
12.1 Termination. At any time prior to the Closing, this Agreement may be terminated:
(a) by the mutual consent of Buyers and Sellers as evidenced in writing signed by Buyers and Sellers;
(b) by either Buyers or Sellers, upon notice to the other Party(ies), if any Governmental Authority having competent jurisdiction has issued a final, non-appealable Order (other than a temporary restraining order) or taken any other action permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement and such other action shall have become final and non-appealable;
(c) by Buyers (provided that Buyers are not (and no Buyer is) in Breach of this Agreement such that such Breach, together with all other Breaches by Buyers (or any Buyer), has prevented or will prevent the satisfaction of any condition to the obligations of Sellers at the Closing), upon notice to Sellers, if there has been a Breach by Sellers of any representation, warranty, covenant or agreement contained in this Agreement that has prevented or will prevent the satisfaction of any condition to the obligations of Buyers at the Closing and, if such Breach is of a character that it is capable of being cured, such Breach has not been cured by Sellers on the earlier of (i) the date that is thirty (30) days after notice thereof from Buyers and (ii) the Outside Date;
(d) by Sellers (provided that Sellers are not in Breach of this Agreement such that such Breach, together with all other Breaches by Sellers, has prevented or will prevent the satisfaction of any condition to the obligations of Buyers at the Closing), upon notice to Buyers, if there has been a Breach by Buyers (or any Buyer) of any representation, warranty, covenant or agreement contained in this Agreement that has prevented or will prevent the satisfaction of any condition to the obligations of Sellers at the Closing and, if such Breach is of a character that it is capable of being cured, such Breach has not been cured by Buyers on the earlier of (i) the date that is thirty (30) days after notice thereof from Sellers and (ii) the Outside Date;
(e) by Sellers or Buyers (provided that the terminating Party(ies) are not in Breach of this Agreement such that such Breach, together with all other Breaches by such Party(ies), has prevented or will prevent the satisfaction of any condition to the obligations of the other Party(ies) at the Closing), upon notice from the terminating Party(ies) to the other Party(ies) if the transactions contemplated at the Closing have not been consummated by October 14, 2026 (subject to extension as provided in Section 8.6 and Section 12.3, if applicable, the “Outside Date”); or
(f) subject to Section 8.6, by (i) Buyers if the condition set forth in Section 9.1(c) is not satisfied as of the Scheduled Closing Date or (ii) Sellers if the condition set forth in Section 9.2(c) is not satisfied as of the Scheduled Closing Date.
12.2 Effect of Termination.
(a) If this Agreement is terminated pursuant to Section 12.1, this Agreement shall become void and of no further force or effect (except for the provisions of Section 1.1, Section 6.4, Section 11.4, this Article 12, Article 13, Article 14 and any applicable definitions set forth in Appendix A, all of which shall survive and continue in full force and effect indefinitely); provided, however, that the Confidentiality Agreement shall not be affected by the termination of this Agreement.
(b) In the event that Sellers have the right to terminate this Agreement pursuant to Section 12.1(d) or Section 12.1(e) (if at such time Sellers could have terminated this Agreement under Section 12.1(d) (without regard to any cure rights or cure periods contemplated therein)), then, in either case, Sellers shall have the right to, at their option, as Sellers’ sole and exclusive remedy for any breach by Buyers of this Agreement, either (i) terminate this Agreement and retain the entirety of the Deposit (together with any interest or other amounts earned thereon) for the sole account and use of Sellers as liquidated damages hereunder (and, within three (3) Business Days following such termination, Buyers and Sellers shall deliver joint written instructions to the Escrow Agent directing the Escrow Agent to disburse the Deposit (together with any interest or other amounts earned thereon) to Sellers, and each of Buyers and Sellers shall take such other actions as may be reasonably requested by the other Party to cause the Escrow Agent to promptly disburse the Deposit (together with any interest or other amounts earned thereon) to Sellers), which remedy shall be the sole and exclusive remedy available to Sellers against Buyers except for any remedies of Sellers with respect to a breach of the surviving provisions of this Agreement pursuant to Section 12.2(a) or the Confidentiality Agreement that, in each case, expressly survive any termination of this Agreement pursuant to Section 12.2(a), all other remedies being expressly waived by Sellers or (ii) in lieu of terminating this Agreement, seek specific performance as provided in Section 12.3; provided that, if Sellers seek specific performance pursuant to this clause (ii) but are unable to recover therefor from a court of competent jurisdiction or otherwise elect to cease pursuing specific performance to compel the Closing, Sellers may thereafter elect to terminate this Agreement, in which case Sellers shall retain the Deposit (together with any interest or other amounts earned thereon) as liquidated damages hereunder pursuant to the foregoing clause (i). Sellers and Buyer acknowledge and agree that if retained by Sellers pursuant to the immediately preceding sentence, (1) the Deposit (together with any interest or other amounts earned thereon) is a fair and reasonable estimate by the Parties of the actual damages of Sellers and (2) such liquidated damages do not constitute a penalty.
(c) In the event that Buyers have the right to terminate this Agreement pursuant to Section 12.1(c) or Section 12.1(e) (if at such time Buyers could have terminated this Agreement under Section 12.1(c) (without regard to any cure rights or cure periods contemplated therein)), then, in either case, Buyers shall have the right to, at its option, as Buyers’ sole and exclusive remedy for any breach by Sellers of this Agreement, either (i) (A) terminate this Agreement, (B) receive the entirety of the Deposit (together with any interest or other amounts earned thereon) for the sole account and use of Buyers (and, within three (3) Business Days following such termination, Buyers and Sellers shall deliver joint written instructions to the Escrow Agent directing the Escrow Agent to disburse the Deposit (together with any interest or other amounts earned thereon) to Buyers, and each of Buyers and Sellers shall take such other actions as may be reasonably requested by the other Party to cause the Escrow Agent to promptly disburse the Deposit (together with any interest or other amounts earned thereon) to Buyers) and (C) recover Losses from Sellers equal to Buyers’ reasonable and documented out-of-pocket costs and expenses
incurred in connection with the transactions contemplated by this Agreement, which Sellers shall pay to Buyers within three (3) Business Days following demand therefor (provided that any such recovery shall not, in the aggregate, exceed an amount equal to the Deposit), which remedy shall be the sole and exclusive remedy available to Buyers against Sellers except for any remedies of Buyers with respect to a breach of the surviving provisions of this Agreement pursuant to Section 12.2(a) or the Confidentiality Agreement that, in each case, expressly survive any termination of this Agreement pursuant to Section 12.2(a), all other remedies being expressly waived by Buyers or (ii) in lieu of terminating this Agreement, seek specific performance as provided in Section 12.3; provided that, if Buyers seek specific performance pursuant to this clause (ii) but is unable to recover therefor from a court of competent jurisdiction or otherwise elects to cease pursuing specific performance to compel the Closing, Buyers may thereafter elect to terminate this Agreement and the terms of clause (i) shall apply thereto.
(d) If this Agreement is terminated pursuant to Section 12.1 and Sellers are not entitled to the Deposit under Section 12.2(b) and Buyers are not entitled to the Deposit under Section 12.2(c), Buyers shall be entitled to receive the Deposit (together with any interest or other amounts earned thereon), free of any claims by Sellers or any other Person with respect thereto (and, within three (3) Business Days following such termination, Buyers and Sellers shall deliver joint written instructions to the Escrow Agent directing the Escrow Agent to disburse the Deposit (together with any interest or other amounts earned thereon) to Buyers, and each of Buyers and Sellers shall take such other actions as may be reasonably requested by the other Party to cause the Escrow Agent to promptly disburse the Deposit (together with any interest or other amounts earned thereon) to Buyers).
(e) If this Agreement is terminated for any reason, then, subject to the other provisions of this Section 12.2, but notwithstanding any other provision of this Agreement to the contrary, from and after such termination, (i) the Parties shall have no liability or obligation hereunder as a result of such termination and (ii) Sellers shall continue to own, and shall be permitted to encumber, dispose of, sell or otherwise transfer, in their sole discretion and for their sole benefit, and Buyers shall have no expectancy or other interest in, and shall have no consent, approval or similar rights with respect to, the ownership, use or maintenance or the encumbrance, disposal, sale or transfer of, all or any portion of the Assets.
12.3 Specific Performance. Each Party acknowledges that either Party would be damaged irreparably if the obligations of the other Party under this Agreement to be performed at or in connection with the Closing are not performed in accordance with their specific terms or are otherwise breached. Accordingly, each Party agrees that, in lieu of termination of this Agreement as contemplated in Section 12.1, the other Party may seek to enforce specifically the obligations of the other Party under this Agreement or in connection with the Closing as provided in Section 12.2(b) or Section 12.2(c), as applicable. Without limitation of the foregoing, from and after Closing, each Party shall have the right to seek to enforce specifically the obligations of the other Party under this Agreement to the extent arising after the Closing. Each Party further agrees that, notwithstanding anything herein to the contrary, (a) no Party or any other Person shall be required to obtain, furnish or post any bond or similar instrument in connection with or as a condition to obtaining any remedy referred to in this Section 12.3 and each Party irrevocably waives any right it may have to require the obtaining, furnishing or posting of any such bond or similar instrument, and (b) in no event will this Section 12.3 be used, alone or together with any other provision of
this Agreement, to require either Party to remedy any Breach of any representation or warranty of such Party made in this Agreement. If, prior to the Outside Date, any Party brings any action in accordance with this Section 12.3, the Outside Date will automatically be extended for the period during which such action is pending, plus ten (10) Business Days.
ARTICLE 13
Governing Law; Arbitration; Jury Trial Waiver
13.1 Governing Law. This Agreement shall be governed and construed in accordance with the Laws of the State of Texas, without regard to the Laws that might be applicable under conflicts of Laws principles; provided, however, that determinations regarding the validity, transfer and vesting of title to any interest in or to any Asset, shall apply the law of the applicable jurisdiction(s) where such Asset is located.
13.2 Jurisdiction; Venue; Waiver of Jury Trial. Jurisdiction and venue with respect to all disputes or controversies arising under, in relation to or involving this Agreement, any of the Transaction Documents or any of the transactions contemplated hereby or thereby (each, subject to such exceptions set forth above, a “Dispute”) shall be proper only in the federal courts of the United States located in Harris County, Texas or, if not permissible in federal courts, the state courts located in Harris County, Texas, and each Party irrevocably agrees that all Disputes permitted to be commenced in court shall be heard and determined exclusively in such courts. The Parties hereby irrevocably waive, to the fullest extent permitted by Law, any objection which they may now or hereafter have to the venue of any Dispute brought in such court or any defense of inconvenient forum for the maintenance of such Dispute. A judgment in any such Dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. EACH OF THE PARTIES AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF ANY OTHER PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF.
ARTICLE 14
Other Provisions
14.1 Notices. All notices and other communications that are required or that may be given pursuant to this Agreement (including notices to change the below information) (“Notice” or “Notices”) shall be (a) sufficient in all respects if given in writing, in English, and delivered by recognized courier service (including registered or certified mail or by overnight delivery, including by Federal Express) or by email transmission to the Party to be noticed pursuant to the contact information below that corresponds with the applicable form of notice and (b) deemed received when actually delivered (as reflected by the courier’s receipt, evidence of delivery or written confirmation of successful transmission, as applicable):
If to Buyers, to:
WhiteHawk Income Marcellus LLC
2400 Market Street
Offsite Suite 230 Philadelphia, PA 19103
Attention: Jeffrey M. Slotterback
Email: [email protected]
With a copy (which shall not constitute Notice) to:
Latham & Watkins LLP
811 Main Street, Suite 3700
Houston, Texas 77002
Attention: Chris Heasley; John Stavinoha
E-mail: [email protected]; [email protected]
If to any Seller, to:
Three Rivers Royalty II, LLC
5990 Greenwood Plaza Blvd., Ste. 120
Greenwood Village, CO 80111
Attention: Nick Reiland
Email: [email protected]
With a copy (which shall not constitute Notice) to:
Gibson, Dunn & Crutcher LLP
811 Main Street, Suite 3000
Houston, Texas 77002
Attention: Michael De Voe Piazza; Adam Whitehouse
Email: [email protected]; [email protected]
or to such other address or addresses as the Parties may from time to time designate in writing.
14.2 Assignment. No Party shall assign this Agreement or any part hereof, nor shall any Party delegate any of its rights or duties hereunder, without the prior written consent of the other Party and any assignment or delegation made without such consent shall be void; provided that Buyers may, without consent of Sellers but with prior written notice to Sellers and subject to the immediately succeeding sentence, assign to one or more of its wholly-owned Affiliates its rights hereunder to receive full or partial assignment and transfer of such Seller’s Assets (provided that, such assignment shall be permitted only if it would not result in adverse tax consequences to a Seller (or any Affiliate of a Seller) that would not have occurred had such assignment not been made), but Buyers shall remain liable for its obligations hereunder. Any assignment of this Agreement permitted by this Section 14.2 shall be made subject to the obligations contained in this Agreement and such assignment shall not relieve the assigning Party of any obligations or responsibilities hereunder. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the Parties and their respective permitted successors and assigns.
14.3 Rights of Third Parties. Notwithstanding anything contained in this Agreement to the contrary, nothing expressed or implied in this Agreement or in any other Transaction Document
is intended or shall be construed to confer upon or give any Person, other than the Parties (and their respective successors and permitted assigns), or the Parties’ respective related Indemnified Parties hereunder, any right or remedies under or by reason of this Agreement or the Transaction Documents; provided that, for purposes of clarity, only a Party (and its permitted successors and assigns) will have the right to enforce the provisions of this Agreement and each other Transaction Document on its own behalf or on behalf of its respective Indemnified Parties (including, for purposes of clarity, with respect to any indemnity claims that may be pursued pursuant to Article 11 hereof), but shall not be obligated to do so.
14.4 Counterparts. This Agreement may be executed in one (1) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Any .pdf or other electronic transmission hereof or signature hereon shall, for all purposes, be deemed originals.
14.5 Entire Agreement; Appendices, Exhibits and Schedules; Preparation of Agreement. This Agreement (together with the Appendices, Exhibits and Schedules to this Agreement), the other Transaction Documents constitute the entire agreement between the Parties and supersede any other agreements, whether written or oral, that may have been entered into by the Parties or any of their respective Affiliates relating to the transactions contemplated hereby. All of the Appendices, 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 has received a complete set of Appendices, Exhibits and Schedules prior to and as of the execution of this Agreement. Each of the Parties and their respective counsels participated in the preparation of this Agreement. In the event of any ambiguity in this Agreement, no presumption shall arise based on the identity of the draftsman of this Agreement.
14.6 Disclosure Schedules. Unless the context otherwise requires, all capitalized terms used in the Disclosure Schedules shall have the respective meanings ascribed thereto in this Agreement. No reference to or disclosure of any item or other matter in the Disclosure Schedules shall be construed as an admission or indication that such item or other matter is material or that such item or other matter is required to be referred to or disclosed in the Disclosure Schedules. No disclosure in the Disclosure Schedules relating to any possible breach or violation of any agreement or Law shall be construed as an admission or indication that any such breach or violation exists or has actually occurred. The statements and disclosures in the Disclosure Schedules qualify and relate to the corresponding provisions in the Sections or subsections of this Agreement to which they expressly refer and to each other provision of this Agreement to which the applicability of such statements and disclosures is reasonably apparent on its face. The inclusion of any information in the Disclosure Schedules shall not be deemed to be an admission or acknowledgment by any Seller, in and of itself, that such information is material to or outside the ordinary course of the business of any Seller or required to be disclosed on the Disclosure Schedules.
14.7 Amendments. This Agreement may be amended or modified in whole or in part, and terms and conditions may be waived, only by a duly authorized agreement in writing which makes reference to this Agreement executed by each Party; provided that, Schedule 1(a) may be amended by Sellers in the manner described in the definition of “Pro Rata Share;” provided,
further, that any such amendment shall only apply to any payments made by Buyers to Sellers after the date of such amendment.
14.8 Publicity. At or after the Closing, the content of any press release or public announcement announcing the consummation of the transactions contemplated by this Agreement by any Party is subject to the prior written consent of the non-releasing Party(ies) (which consent may be withheld in such non-releasing Party(ies)’ sole discretion); provided that such consent of the non-releasing Party(ies) is not required for any press release or public announcement that does not include the Purchase Price and/or the name of the non-releasing Party(ies); provided, further, that the foregoing does not restrict disclosures by any Party that are required by applicable securities or other Laws or regulations or the applicable rules of any stock exchange having jurisdiction over the disclosing Party(ies) or any of its or their respective Affiliates.
14.9 Severability. If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement shall remain in full force and effect. In addition, any such invalid or unenforceable provision shall be replaced by a provision that comes closest to the business objective intended by such invalid or unenforceable provision without being invalid or unenforceable itself.
14.10 Waivers. Any failure by any Party to comply with any of its obligations, agreements or conditions herein contained may be waived by the Party to whom such compliance is owed by an instrument signed by the Party to whom compliance is owed and expressly identified as a waiver, but not in any other manner. No waiver of, or consent to a change in or modification of, any of the provisions of this Agreement shall be deemed or shall constitute a waiver of, or consent to a change in or modification of, any other provisions hereof (whether or not similar), nor shall such waiver constitute a continuing waiver unless otherwise expressly provided.
14.11 Rules of Construction. All article, section, appendix, exhibit and schedule references used in this Agreement are to articles and sections of, and Appendices, Exhibits and Schedules to, this Agreement, unless otherwise specified. If a term is defined as one part of speech (such as a noun), it shall have a corresponding meaning when used as another part of speech (such as a verb). Terms defined in the singular have the corresponding meanings in the plural, and vice versa. The words “include,” “includes” or “including” do not limit the preceding terms and shall be deemed to be followed by the words “without limitation.” The words “hereof,” “hereto,” “hereby,” “herein,” “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular section or article in which such words appear. The term “or” is not exclusive. The terms “day” and “days” mean and refer to calendar day(s). The terms “year” and “years” mean and refer to calendar year(s). If any action is to be taken or given on or by a particular calendar day, and such calendar day is not a Business Day, then such action shall be deferred until the next Business Day. The phrases “made available”, “delivered” or “provided” mean that Buyers, one of their Affiliates or one of its or their respective Representatives has had the opportunity prior to the applicable or relevant date to review such documents or materials at the offices of Sellers or any of their respective Affiliates or electronically by virtue of the data room or any other electronic means provided by or on behalf of Seller(s) or one of its Affiliates or Representatives.
14.12 No Recourse. Notwithstanding anything that may be expressed or implied in this Agreement or any Transaction Document, Buyers, by their acceptance of the benefits of this Agreement, covenants, agrees and acknowledges that no Person other than Sellers (and their respective successors and assigns, collectively, the “Recourse Parties”) shall have any obligation hereunder and that Buyers have no rights of recovery hereunder against, and no recourse hereunder or under any Transaction Document or in respect of any oral representations made or alleged to be made in connection herewith or therewith, against (a) any former, current or future director, officer, agent, Affiliate, manager, incorporator, controlling Person, fiduciary, representative or employee of any Seller (or any of the foregoing Persons’ successors or permitted assignees), (b) any former, current, or future general or limited partner, owner, manager, stockholder or member of any Seller (or any of the foregoing Persons’ successors or permitted assignees) or any Affiliate thereof or (c) any former, current or future director, owner, officer, agent, employee, Affiliate, manager, incorporator, controlling Person, fiduciary, representative, general or limited partner, stockholder, manager or member of any of the foregoing, but in each case not including Sellers (each, but excluding for the avoidance of doubt, the Recourse Parties, a “Party Affiliate”), whether by or through attempted piercing of the corporate veil, by or through a claim (whether in tort, contract or otherwise) by or on behalf of Buyers against the Party Affiliates, by the enforcement of any assessment or by any legal or equitable Proceeding, or by virtue of any Law, or otherwise; it being expressly agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on, or otherwise be incurred by any Party Affiliate, as such, for any obligations of any Seller under this Agreement or the transactions contemplated hereby, under any Transaction Document or the transactions contemplated thereby, in respect of any oral representations made or alleged to be made in connection herewith or therewith, or for any claim (whether in tort, contract or otherwise) based on, in respect of, or by reason of, such obligations or their creation.
14.13 Confidentiality. Buyers acknowledge that confidential information of each Seller and their respective Affiliates may have been disclosed to, made available to, or otherwise obtained by Buyers, whether prior to or after the date of this Agreement and, from the Closing Date and continuing until the date that is two (2) years after the Closing Date, Buyers shall, and shall cause its Affiliates to, hold all information and data received by Buyers or their Affiliates from any Seller or any Affiliate thereof with respect to (a) any portion of the Assets that are not conveyed to Buyers pursuant to the provisions of this Agreement and (b) the Excluded Assets, in each case, strictly confidential. Subject to Section 14.8, the Parties shall keep, to the extent permitted by Law, strictly confidential this Agreement and the terms hereof and not disclose the same to any Person other than to their respective Representatives.
14.14 Specific Performance. From and after Closing, Sellers shall have the right to seek to enforce specifically the obligations of Buyers, and Buyers shall have the right to seek to enforce specifically the obligations of Sellers, in each case, under this Agreement to the extent arising after the Closing. Each Party further agrees that, notwithstanding anything herein to the contrary, (a) no Party or any other Person shall be required to obtain, furnish or post any bond or similar instrument in connection with or as a condition to obtaining any remedy referred to in this Section 14.14 and each Party irrevocably waives any right it may have to require the obtaining, furnishing or posting of any such bond or similar instrument, and (b) in no event will this Section 14.14 be used, alone or together with any other provision of this Agreement, to require any Party to remedy any Breach of any representation or warranty of such Party in this Agreement.
14.15 Buyer Representative. All decisions, actions, consents and instructions by any Buyer shall constitute a decision, action, consent and instruction of all of the Buyers and shall be final, conclusive and binding upon all Buyers, and no other Buyer shall have the right to object to, dissent from, protest or otherwise contest the same. Sellers shall be entitled to rely on any decision, action, consent or instruction of any Buyer as being the decision, action, consent or instruction of Buyers. Sellers are hereby relieved from any liability or obligation to any Person for acts done by any Seller in accordance with any such decision, act, consent or instruction. All obligations of Sellers to Buyers, collectively, shall be deemed fulfilled in the event such obligations are fulfilled to Buyers in the aggregate. For the avoidance of doubt and without limiting the foregoing, in no event shall Sellers have any responsibility to provide separate notices, separate payments or separate deliveries to each Buyer, and any notice, payment or delivery to either Buyer, that, in the aggregate, satisfies Sellers’ obligations to Buyers, collectively, shall be deemed to satisfy Sellers obligations hereunder.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by each of the Parties as of the Execution Date.
BUYERS:
WhiteHawk Income MARCELLUS LLC
By: /s/ Jeffrey M. Slotterback
Name: Jeffrey M. Slotterback
Title: Chief Financial Officer
WhiteHawk Income HAYNESVILLE LLC
By: /s/ Jeffrey M. Slotterback
Name: Jeffrey M. Slotterback
Title: Chief Financial Officer
[Signature Page to Purchase and Sale Agreement]
SELLERS:
Three Rivers Royalty II, LLC
By: /s/ Nick Reiland
Name: Nick Reiland
Title: Managing Member
CYPRESS MINERAL PARTNERS, LLC
By: /s/ Nick Reiland
Name: Nick Reiland
Title: Managing Member
[Signature Page to Purchase and Sale Agreement]
Appendix A
Definitions
“Accountant” has the meaning set forth in Section 6.7.
“Accounting Referee” has the meaning set forth in Section 3.6(b).
“Adjusted Purchase Price” has the meaning set forth in Section 3.2.
“Adjustment Allocation Statement” has the meaning set forth in Section 3.6(c).
“Affiliate” means, with respect to any Person, any other Person that, directly or indirectly, through one (1) 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 means 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. Notwithstanding anything to the contrary contained herein, (a) other than for purposes of Section 11.1(b) and Section 14.12, (i) Lime Rock Management LP, (ii) any of Lime Rock Management LP’s Affiliates and (iii) any fund, investment account or other investment vehicle managed, advised or sponsored by Lime Rock Management LP or any of its Affiliates (other than each Seller and any Person directly or indirectly controlled by San Jacinto Minerals II, LLC), in each case, shall not be deemed to be an Affiliate of any Seller for any purposes of this Agreement, and (b) for the avoidance of doubt, BCA-WHE, LLC and its members, employees and beneficial owners shall not be deemed to be an Affiliate of any Buyer for any purposes of this Agreement; provided that, in the event Daniel Herz (or any Person that is controlled by or under common control with Daniel Herz) directly or indirectly acquires, owns or holds any direct or beneficial interest in or to, or the ability to otherwise control, BCA-WHE, LLC, then BCA-WHE, LLC and its members, employees and beneficial owners shall be deemed an Affiliate of each Buyer for all purposes of this Agreement.
“Agreed Title Benefit” has the meaning set forth in Section 8.3(b).
“Agreed Title Defect” has the meaning set forth in Section 8.2(a).
“Agreement” has the meaning set forth in the preamble to this Agreement.
“Alleged Title Benefit” has the meaning set forth in Section 8.3(a).
“Alleged Title Defect” has the meaning set forth in Section 8.2(a).
“Allocated Values” has the meaning set forth in Section 3.1(b).
“Allocation Statement” has the meaning set forth in Section 3.5.
“Assets” has the meaning set forth in Section 2.1.
“Assignment” means (i) the Assignment and Bill of Sale from TRR II Seller to WhiteHawk Marcellus, substantially in the form attached hereto as Exhibit C-1, with respect to the TRR II ORRIs and the other TRR II Assets (excluding any TRR II Assets covered by a Deed), and (ii) the Assignment and Bill of Sale from Cypress Seller to WhiteHawk Haynesville, substantially in the form attached hereto as Exhibit C-1, with respect to the Cypress ORRIs and the other Cypress Assets (excluding any Cypress Assets covered by a Deed).
“Assumed Hedges” means those Hedge Contracts described on Schedule AH.
“Assumed Obligations” means all obligations and liabilities of any Seller, known or unknown, to the extent arising from, based upon, associated with or attributable or related to the Assets (or applicable portion thereof or interest therein) conveyed to Buyers pursuant to the terms hereof, regardless of whether such obligations and liabilities arose, or are otherwise attributable to periods occurring, prior to, on or after the Effective Time; provided, however, that the Assumed Obligations shall expressly exclude the Retained Liabilities.
“Assuming Indemnifying Party” has the meaning set forth in Section 11.3(b).
“Benefit Value” has the meaning set forth in Section 8.4.
“Breach” means, with respect to any representation, warranty, covenant, obligation or other provision of this Agreement, any event that shall be deemed to have occurred if there is or has been any inaccuracy in or breach of, or any failure to perform or comply with, such representation, warranty, covenant, obligation or other provision.
“Business Day” means any day that is not a Saturday, Sunday or legal holiday in the State of New York and that is not otherwise a federal holiday in the United States.
“Buyer Entitlements” has the meaning set forth in Section 3.7(a).
“Buyer Indemnified Parties” has the meaning set forth in Section 11.1(a).
“Buyers” has the meaning set forth in the preamble to this Agreement.
“Claim Notice” has the meaning set forth in Section 11.3(a).
“Closing” has the meaning set forth in Section 10.1.
“Closing Date” has the meaning set forth in Section 10.1.
“Closing Payment” means the Adjusted Purchase Price set forth in the Closing Statement in accordance with Section 3.5 for the Closing.
“Closing Statement” has the meaning set forth in Section 3.5.
“Code” means the Internal Revenue Code of 1986, as amended.
“Consent” means any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Authorities or any other Person which are required to be obtained, made or complied with for or in connection with the sale, assignment or transfer of any Assets in connection with the transactions contemplated hereunder.
“Contract” means any currently existing written contract, agreement or other legally binding arrangement, but excluding any instrument pursuant to which such applicable Seller derives its ownership interest in any of the Fee Minerals, ORRIs and NPRIs.
“Conveyed Interest” has the meaning set forth in Section 2.1.
“Cure Notice” has the meaning set forth in Section 8.2(b).
“Cure Period Deadline Date” has the meaning set forth in Section 8.2(b).
“Customary Consent” means any Consent to the assignment or conveyance of all or any part of any of the Assets in connection with the transactions contemplated by this Agreement that (a) is not required to be obtained from, or waived by, the applicable Person (including, for purposes of clarity, any Governmental Authority) that is the holder thereof prior to the Closing (or that is customarily obtained thereafter) or (b) cannot be unreasonably withheld, conditioned and/or delayed; provided, however, that Customary Consent shall not include any Required Consent.
“Cypress Assets” and “Cypress Asset” have the respective meanings set forth in Section 2.1.
“Cypress Seller” has the meaning set forth in the preamble to this Agreement.
“Deed” means (i) the Mineral and Royalty Deed from TRR II Seller to WhiteHawk Marcellus, substantially in the form attached hereto as Exhibit C-2, with respect to the TRR II Fee Minerals and the TRR II NPRIs, and (ii) the Mineral and Royalty Deed from Cypress Seller to WhiteHawk Haynesville, substantially in the form attached hereto as Exhibit C-2, with respect to the Cypress Fee Minerals and the Cypress NPRIs.
“Defect Claim Date” has the meaning set forth in Section 8.2(a).
“Defect Deductible” means an amount equal to two percent (2.0%) of the unadjusted Purchase Price.
“Defect Referee” has the meaning set forth in Section 8.6(a).
“Defect Escrow Amount” means, as of the Closing, an amount equal to the sum of the aggregate Defect Values (as set forth in the applicable Title Defect Notices or as otherwise agreed by the Parties in writing) attributable to all Alleged Title Defects and Agreed Title Defects (i) for which Sellers have provided (or are deemed to have provided) a Cure Notice or for which a Disputed Title Matter exists as of Closing, (ii) that exceed the Defect Threshold and (iii) that, in the aggregate, exceed the Defect Deductible (taking into account any applicable Title Benefits), in each case, to the extent such Alleged Title Defects and Agreed Title Defects have not been cured or excluded pursuant to an Exclusion Notice prior to Closing.
“Defect Escrow Account” has the meaning set forth in Section 8.8(a).
“Defect Threshold” means an amount equal to Seventy-Five Thousand Dollars ($75,000).
“Defect Value” has the meaning set forth in Section 8.4.
“Defensible Title” means such title of Sellers to the (i) Conveyed Interest in the Mineral Properties and (ii) Conveyed Interest in the Wells, in each case that, as of the Effective Time and as of the Closing Date, is deducible of record and/or provable title evidenced by documentation, which, although not constituting perfect, merchantable or marketable title, would reasonably be expected to successfully defended if challenged, subject to Permitted Encumbrances:
(a) for each Parcel, entitles TRR II Seller (and after the Closing, will entitle such applicable Buyer) to not less than the number of Net Royalty Acres in and to such Parcel as set forth in Schedule 3.1-1 for such Parcel without reduction or termination over the period of ownership thereof (unless a shorter term is otherwise specified on Schedule 3.1-1);
(b) for each Quarter Section, entitles Cypress Seller (and after the Closing, will entitle such applicable Buyer) to not less than the number of Net Royalty Acres in and to such Quarter Section as set forth in Schedule 3.1-2 for such Quarter Section without reduction or termination over the period of ownership thereof (unless a shorter term is otherwise specified on Schedule 3.1-2);
(c) for each Well, entitles Sellers (and after the Closing, will entitle such applicable Buyer) to receive not less than the Revenue Interest as set forth in Exhibit A-4-1 or Exhibit A-4-2, as applicable over the productive life of such Well, except as a result of decreases due to the establishment or amendment of pools or units after the Execution Date; and
(d) is free and clear of all Liens.
“Deferred Hedge” has the meaning set forth in Section 6.6.
“Deposit” has the meaning set forth in Section 3.3.
“Direct Claim” has the meaning set forth in Section 11.3(d).
“Disclosure Schedules” means the schedules attached hereto.
“Dispute” has the meaning set forth in Section 13.2.
“Dollars” and “$” mean the lawful currency of the United States.
“Due Diligence Period” has the meaning set forth in Section 8.2(a).
“Effective Time” means 12:01 a.m. (prevailing eastern time) on June 1, 2026.
“Escrow Agent” means UMB Bank N.A., or any successor escrow agent appointed in accordance with the Escrow Agreement.
“Escrow Agreement” means the Escrow Agreement dated as of the Execution Date, by and among Sellers, Buyers and the Escrow Agent, in form and substance reasonably acceptable to Sellers and Buyers.
“Excluded Assets” has the meaning set forth in Section 2.2.
“Excluded ORRIs” has the meaning set forth in Section 2.1(b).
“Exclusion Notice” has the meaning set forth in Section 8.2(b).
“Execution Date” has the meaning set forth in the preamble of this Agreement.
“Fee Mineral Lease” has the meaning set forth in Section 2.1(a).
“Fee Minerals” has the meaning set forth in Section 2.1(a).
“Fee Properties” has the meaning set forth in Section 2.1(a).
“Final Closing Statement” means, as applicable, (a) the Revised Closing Statement described in Section 3.6(a), as prepared by Sellers and as may be subsequently adjusted to reflect any subsequent written agreement among the Parties with respect thereto or (b) if any disputed matters are submitted to the Accounting Referee in accordance with Section 3.6(b) and are not subsequently withdrawn or otherwise
resolved by the Parties, the updated Revised Closing Statement as is finally determined and issued by the Accounting Referee.
“Final Purchase Price” means the remainder of the Adjusted Purchase Price set forth in the Final Closing Statement.
“Final Settlement Date” has the meaning set forth in Section 3.6(a).
“Fundamental Representations” means the representations and warranties of each Seller set forth in Section 4.1, Section 4.2, Section 4.3(a) and Section 4.9.
“GAAP” means generally accepted accounting principles of the United States, consistently applied.
“Governmental Authority” means any federal, state, municipal, local, tribal or other similar governmental authority, regulatory or administrative agency, commission, court or arbitral body or any subdivision of any of the foregoing, including any tribal authority having or asserting jurisdiction.
“Hedge Contracts” means any forward, futures, swap, collar, put, call, floor, cap, option or other similar contract (excluding, for the avoidance of doubt, any physically settled contract, including index, fixed price or physical basis transactions) to which the Sellers, or any of their respective Affiliates is a party that is intended to benefit from or reduce or eliminate the risk of fluctuations in the price of commodities, including any Hydrocarbons or other commodities, currencies, interest rates and indices, and any financial transmission rights and auction revenue rights.
“Hydrocarbons” means all of the oil, liquid hydrocarbons, gas, and any and all other liquid or gaseous hydrocarbons, as well as their respective constituent products.
“Income Tax” or “Income Taxes” means any U.S. federal, state or local or foreign income Tax or Tax based on profits, net profits, margin, revenues, gross receipts or similar measure.
“Indemnified Party” has the meaning set forth in Section 11.3(a).
“Indemnifying Party” has the meaning set forth in Section 11.3(a).
“Indemnity Deductible” means an amount equal to two percent (2.0%) of the unadjusted Purchase Price.
“Indemnity Threshold” means Seventy-Five Thousand Dollars ($75,000).
“Instruments of Conveyance” means, collectively, the Assignment and the Deed.
“Knowledge” means (a) with respect to each Seller, the actual, conscious knowledge of any individual identified on Schedule 1(b) without requirement of investigation or inquiry and (b) with respect to Buyers, the actual, conscious knowledge of any individual identified on Schedule 1(c) without requirement of investigation or inquiry.
“Law” means any applicable statute, law, rule, regulation, ordinance, Order, judgment, injunction, award, decree or other official act of a Governmental Authority.
“Liens” means liens, pledges, mortgages, deeds of trust or security interests or any other preferential arrangement having the practical effect of any of the foregoing (including any agreement to give any of the foregoing).
“Losses” means any loss, damage, notice of violation, investigation by any Governmental Authority, payment, deficiency, injury, harm, detriment, decline or diminution in value, Taxes, liability, exposure, claim, demand, Proceeding, settlement, judgment, award, fine, penalty, fee, charge, cost or expense (including costs of attempting to avoid or in opposing the imposition thereof, interest, penalties, costs of preparation and investigation, and the fees, disbursements and expenses of attorneys, accountants and other professional advisors).
“Material Adverse Effect” means, any circumstance, change, effect, condition, development, event or occurrence that has resulted in a material adverse effect on (x) the ownership, operation, financial condition or value of the Assets, taken as a whole, or (y) the ability of Sellers to consummate the transactions contemplated by this Agreement; provided, however, that none of the following circumstances, changes, effects, conditions, developments, events or occurrences shall be deemed to constitute a Material Adverse Effect, or shall be taken into account in determining whether a Material Adverse Effect has occurred: (a) any changes in commodity prices or in general conditions in the oil and gas industry, financial or securities markets, the economy or political conditions; (b) changes, events, effects or developments generally applicable to the oil and gas industry; (c) seasonal reductions in revenues and/or earnings of a Seller in the ordinary course of its business; (d) changes in Law, GAAP, or the interpretation thereof from and after the Execution Date; (e) any failure to meet internal or third party projections or forecasts or revenue or earnings or reserve predictions, including as a result of the failure of any Third Party operator or working interest owner to develop all or a portion of any Underlying Property or any other action taken or failed to be taken by a Third Party operator or owner or working interests with respect to an Underlying Property; (f) acts or failures to act of any Governmental Authorities (where not caused by a non-compliance with Law by a Seller); (g) entering into this Agreement, the announcement or pendency of this Agreement, actions contemplated by this Agreement or the other Transaction Documents, or the consummation of the transactions contemplated hereby; (h) natural declines in well performance or any reclassification of reserves in the ordinary course of business; (i) acts of God, including hurricanes, tornadoes, storms, diseases and viruses, including COVID-19 and other epidemics or pandemics, in each case, including the outbreak and continuation thereof; (j) civil unrest, any outbreak of hostilities, terrorist activities or war or any similar disorder; and (k) matters that are cured or no longer exist as of the Closing.
“Material Contracts” has the meaning set forth in Section 4.7.
“Mineral and Royalty Interest” means any (a) mineral interest, mineral fee interest, mineral classified lease, other mineral rights (of any kind and however derived), lessor royalty interests and other mineral assets based upon, derived from or measured by a fee mineral estate and (b) fee royalty interest, non-participating royalty interest, overriding royalty interest, term royalty interest, net profits interest, reversionary interest, production payment and other similar royalty interests (of any kind and however derived).
“Mineral Property” or “Mineral Properties” has the meaning set forth in Section 2.1(c).
“Monthly Statements” has the meaning set forth in Section 3.7(b).
“Mortgage Releases” means the partial release and/or termination (including all applicable UCC-3 termination statements) of the mortgages, deeds of trust, assignments of proceeds of production, security agreements, collateral assignments and/or financing statements, and other similar encumbrances put in place by any Seller or any of its Affiliates, in each case, burdening such Seller’s interest in the Conveyed Interest in the Assets, including those described on Schedule MR.
“Net Mineral Acres” means, for each Mineral Property:
(a) with respect to a Fee Property only, (i) the number of gross acres of land included in such Fee Property, multiplied by (ii) Sellers’ undivided interest in and to the mineral estate of such Fee Property;
(b) with respect to an ORRI Lease only, (i) the number of gross acres of land covered by such ORRI Lease, multiplied by (ii) the lessor’s undivided percentage interest ownership in the mineral estate of such ORRI Lease, multiplied by (iii) the aggregate undivided working interest in such ORRI Lease owned by the lessee of the leasehold estate burdened by the applicable ORRI; and
(c) with respect to an NPRI Property only, (i) the number of gross acres of land covered by such NPRI Property, multiplied by (ii) Sellers’ undivided interest in and to the royalty grantor’s undivided ownership in the right to receive lessor royalties with respect to the applicable mineral estate.
“Net Royalty Acres” means, for each Mineral Property:
(a) with respect to a Fee Property, (i) the number of Net Mineral Acres for such Fee Property, multiplied by (ii)(1) for those Fee Properties that are subject to a Fee Mineral Lease, the lessor’s royalty percentage under the applicable Fee Mineral Lease, if any, expressed on an 8/8ths basis to the Fee Mineral Lease, divided by 1/8th or (2) (x) for those TRR II Fee Properties that are not subject to a Fee Mineral Lease, eighteen percent (18%), divided by 1/8th and (y) for those Cypress Fee Properties that are not subject to a Fee Mineral Lease, twenty-five percent (25%), divided by 1/8th;
(b) with respect to an ORRI Lease, (i) the number of Net Mineral Acres covered by such ORRI Lease, multiplied by (ii) the applicable overriding royalty percentage for the applicable ORRI in such ORRI Lease, expressed on an 8/8ths basis, divided by (iii) 1/8th;
(c) with respect to an NPRI Property, (i) the number of Net Mineral Acres covered by such NPRI Property, multiplied by (ii) the applicable non-participating royalty percentage for the applicable NPRI in such NPRI Property, expressed on an 8/8ths basis, divided by (iii) 1/8th;
(d) with respect to a Parcel, the aggregate Net Royalty Acres attributable to all TRR II Mineral Properties to the extent located within such Parcel; and
(e) with respect to a Quarter Section, the aggregate Net Royalty Acres attributable to all Cypress Mineral Properties to the extent located within such Quarter Section.
“Notice” or “Notices” has the meaning set forth in Section 14.1.
“Notice of Disagreement” has the meaning set forth in Section 3.6(a).
“Novation Agreements” means those ISDA Assumption, Transfer and Novation Agreements executed on or around Closing, among the Hedge Providers, the Replacement Hedge Providers, any Seller, and any Buyer, in a form agreed to by the Parties, with such modifications as are required by Hedge Providers and the Replacement Hedge Providers, pursuant to which (a) all of Sellers’ rights and obligations under the Assumed Hedges are assigned to Buyers, (b) all of the Hedge Providers’ rights and obligations under the Assumed Hedges are assigned to the Replacement Hedge Providers and (c) all obligations of Sellers and its Affiliates under the Assumed Hedges are released.
“NPRI Properties” has the meaning set forth in Section 2.1(c).
“NPRIs” has the meaning set forth in Section 2.1(c).
“Order” means any order, judgment, injunction or award issued, made, entered or rendered by any court, Governmental Authority or arbitrator.
“Organizational Documents” means any applicable charter, certificate of incorporation, certificate of formation, partnership agreement, limited liability company agreement, bylaws, operating agreement or similar formation or governing documents applicable to any Person.
“ORRI Instruments” has the meaning set forth in Section 2.1(b).
“ORRI Leases” has the meaning set forth in Section 2.1(b).
“ORRIs” has the meaning set forth in Section 2.1(b).
“Outside Date” has the meaning set forth in Section 12.1(e).
“Parcel” means each applicable block of land outlined and described as a “Parcel” on Schedule 3.1-1. For the avoidance of doubt, if a single block of land is described multiple times on Schedule 3.1-1, each separate and distinct description will be treated as a separate Parcel.
“Party Affiliate” has the meaning set forth in Section 14.12.
“Party” and “Parties” have the respective meanings set forth in the preamble to this Agreement.
“Permitted Encumbrances” means any or all of the following:
(a) lessors’ royalties and any overriding royalties, reversionary interests, payments out of production, net profits interests and other burdens to the extent they do not, individually or in the aggregate, operate to (i) reduce Sellers’ Net Royalty Acres below the amount shown in Exhibit A-1-1 or Exhibit A-1-2, as applicable, for any Fee Property, Exhibit A-2-1 or Exhibit A-2-2, as applicable, for any ORRI Lease or Exhibit A-3-1 or Exhibit A-3-2, as applicable, for any NPRI Property, as applicable, or (ii) reduce Sellers’ Revenue Interest below the amount shown in Exhibit A-4-1 or Exhibit A-4-2, as applicable, for any Well;
(b) all deeds, conveyances, leases, unit agreements, pooling agreements, operating agreements, and other Contracts applicable to any of the Assets, including the terms and conditions thereof and provisions for penalties, suspensions or forfeitures contained therein, to the extent that any of them do not, individually or in the aggregate, operate to (i) reduce Sellers’ Net Royalty Acres below the amount shown in Exhibit A-1-1 or Exhibit A-1-2, as applicable, for any Fee Property, Exhibit A-2-1 or Exhibit A-2-2, as applicable, for any ORRI Lease or Exhibit A-3-1 or Exhibit A-3-2, as applicable, for any NPRI Property, as applicable, or (ii) reduce Sellers’ Revenue Interest below the amount shown in Exhibit A-4-1 or Exhibit A-4-2, as applicable, for any Well;
(c) any preferential rights to purchase and Third Party consents to assignment and similar arrangements with respect to which waivers or consents are obtained prior to the Closing or which are typically obtained after the Closing (including any applicable approval(s) from Governmental Authorities and any Customary Consents);
(d) Liens for Taxes not delinquent or with respect to Taxes being contested in good faith by appropriate actions;
(e) all mortgage liens or similar encumbrances encumbering all or any part of the Assets, to the extent such liens or encumbrances are not subject to a foreclosure or similar action and will, if created by any Seller or any of its Affiliates, be released as of the Closing;
(f) materialman’s, mechanic’s, repairman’s, employee’s, contractor’s, operator’s and other similar Liens or charges which, in each case, are not delinquent (or being actively contested in good faith);
(g) conventional rights of reassignment;
(h) easements, rights of way, covenants, servitudes, permits, surface leases and other rights in respect of surface operations or pipelines;
(i) all rights, titles and interests of a common owner or cotenant to the extent they do not, individually or in the aggregate, operate to (i) reduce Sellers’ Net Royalty Acres below the amount shown in Exhibit A-1-1 or Exhibit A-1-2, as applicable, for any Fee Property, Exhibit A-2-1 or Exhibit A-2-2, as applicable, for any ORRI Lease or Exhibit A-3-1 or Exhibit A-3-2, as applicable, for any NPRI Property, as applicable, or (ii) reduce Sellers’ Revenue Interest below the amount shown in Exhibit A-4-1 or Exhibit A-4-2, as applicable, for any Well;
(j) (i) all rights reserved to or vested in any Governmental Authorities to (A) control or regulate (1) any of the Assets in any manner or to assess Taxes with respect to the Assets or (2) the ownership, operation, development or use of any of the Assets, or the revenue, income or capital gains with respect thereto or (B) use all or any portion of any of the Assets in a manner which does not materially impair the use of such Asset for the purposes for which it is currently owned and (ii) all obligations and duties under all applicable Laws of or under any franchise, grant, license, order or permit issued by any such Governmental Authority;
(k) any Lien, defect, burden or irregularity on or affecting any of the Assets which (i) is expressly waived or assumed in writing by a Buyer at or prior to the Closing, (ii) is otherwise discharged by any Seller or any of its Affiliates at their cost at or prior to the Closing or (iii) affecting any Well or Mineral Property and has not prevented any Seller from receiving its share of the proceeds of production from any Well or Mineral Property at any time and which would be accepted by a reasonably prudent person engaged in the business of owning mineral and royalty interests;
(l) any lien or trust arising in connection with workers’ compensation, unemployment insurance, pension or employment Law;
(m) any matters or items identified or referenced on any of the Disclosure Schedules or Exhibit A-1-1, Exhibit A-1-2, Exhibit A-2-1, Exhibit A-2-2, Exhibit A-3-1, Exhibit A-3-2, Exhibit A-4-1, or Exhibit A-4-2, as applicable;
(n) any defects arising from (i) any leases for which the Underlying Properties are subject having no pooling provision, or an inadequate horizontal pooling provision or (ii) the absence of any lease amendment or consent authorizing the pooling of any Underlying Property;
(o) defects based on a gap in the chain of title of the Assets, unless such gap is affirmatively shown to exist in the county records by an abstract or title or title opinion;
(p) defects based on the inability of any Seller to locate an unrecorded instrument of which a Buyer has constructive or inquiry notice by virtue of a reference to such unrecorded instrument in
a recorded instrument, if no claim has been made under such unrecorded instruments within the last ten (10) years;
(q) any Liens, defects, burdens or irregularities arising out of, or related to, the existence (at any time prior to, on or after the Effective Time) of any waterway (whether navigable or otherwise) located on, under, abutting, touching, crossing or otherwise affecting any Underlying Property;
(r) the terms and conditions of this Agreement, any other Transaction Document or any Material Contract or division order;
(s) rights of reassignment arising upon final intention to abandon or release any of the Assets;
(t) any defect solely arising by the failure to obtain verification of identity of people in a class, heirship, or intestate succession;
(u) with respect to the TRR II Assets, any Liens, encumbrances, burdens or other matters to which a Buyer or any of its Affiliates, or any assets, properties or interests of a Buyer or any of its Affiliates, are subject;
(v) the conveyance of any properties prior to the Execution Date as set forth on Schedule PE; and
(w) any other encumbrances, Contracts, obligations, defects and irregularities affecting any of the Assets that (i) would not be considered material when applying general standards in the oil and gas industry or (ii) would be accepted by a reasonably prudent person engaged in the business of owning mineral and royalty interests.
“Person” means any individual, corporation, partnership, limited liability company, joint venture, Governmental Authority or other entity of any kind.
“Post-Closing Covenant or Agreement” means any and all covenants and agreements that, by their terms, are contemplated to be performed by or on behalf of a Party from and after the Closing with respect to or related to the Conveyed Interest in the Assets acquired by Buyers at and in connection with the Closing.
“Post‑Closing Statement Period” has the meaning set forth in Section 3.7(b).
“Post‑Effective Time Tax Period” means a taxable period that begins on or after the day on which the Effective Time occurs.
“Pre‑Effective Time Tax Period” means a taxable period that ends before the day on which the Effective Time occurs.
“Preferential Purchase Right” has the meaning set forth in Section 4.8.
“Pro Rata Share” means, as to each Seller, the percentage set forth opposite such Seller’s name on Schedule 1(a); provided that, Sellers may modify Schedule 1(a) at any time to adjust to respective percentages of such Sellers by delivering a Notice to Buyer; provided, further, that any such modification shall only apply to any payments made by Buyers to Sellers after the date of such modification.
“Proceeding” means any action, litigation, arbitration, lawsuit, proceeding, hearing, investigation, examination, audit or dispute, whether civil, criminal, administrative or otherwise, commenced, conducted or heard by or before any Governmental Authority or any arbitrator.
“Property Taxes” shall mean ad valorem, property, excise, severance, production, sales, use and similar Taxes based upon or measured by the acquisition, operation or ownership of the Assets or the production of Hydrocarbons or the receipt of proceeds therefrom, but excluding, for the avoidance of doubt, Income Taxes and Transfer Taxes.
“Purchase Price” has the meaning set forth in Section 3.1.
“Qualified Intermediary” has the meaning set forth in Section 3.4.
“Quarter Section” means each applicable approximately one quarter (1/4) square mile block of land (160 acres) outlined in accordance with the Public Land Survey System, or such larger or smaller block of land determined by any Governmental Authority responsible for delineating section, township and/or range boundaries, as more particularly described on Schedule 3.1-2. For the avoidance of doubt, if a single block of land is described multiple times on Schedule 3.1-2, each separate and distinct description will be treated as a separate Quarter Section.
“Records” has the meaning set forth in Section 2.1(f).
“Recourse Parties” has the meaning set forth in Section 14.12.
“Representatives” means, with respect to a Person, such Person’s Affiliates and its and their respective directors, officers, partners, members, managers, employees, agents or advisors, and any representatives of any such agents or advisors.
“Required Consent” means any Consent that expressly provides in the applicable Contract that the sale or transfer of any applicable Asset without compliance with the terms of such applicable Contract would result in the express termination, or right to terminate, any rights or benefits of any Seller (or any Buyer, as such Seller’s successor-in-interest) in relation to such Asset.
“Retained Interests” means an undivided fifty percent (50%) of all of TRR II Seller’s right, title and interest in and to the TRR II Assets.
“Retained Liabilities” means all obligations and liabilities, known or unknown, to the extent arising from, based upon, associated with or attributable or related to: (i) any of the Excluded Assets, (ii) any of the Assets not conveyed to Buyers pursuant to the terms hereof, (iii) the Proceedings set forth on Schedule 4.5 on the Execution Date, and (iv) any Losses pertaining to the overpayment of amounts previously paid to any Seller relating to periods before the Effective Time; provided that, from and after the date that is twelve (12) months after the Closing Date, (A) with respect to the TRR II Assets, the obligations and liabilities described in this clause (iv) shall thereafter no longer be deemed to constitute Retained Liabilities for all purposes of this Agreement and any underpayment, netting or reversal (or any other similar claim or action) related to such obligations and liabilities will be borne by the Parties pro rata based on each such Party’s then-applicable relative ownership interests in and to the Assets and (B) with respect to the Cypress Assets, all such liabilities and obligations arising out of clause (iv) shall no longer be Retained Liabilities and shall be deemed Assumed Obligations.
“Revenue Interest” means, with respect to a Well, the interest (expressed as a percentage or decimal) to which a Seller is entitled, based on its aggregate ownership of the Fee Minerals, ORRIs and/or
NPRIs and any pooling applicable to such Well, in and to all Hydrocarbons produced, saved and sold from or allocated to such Well.
“Revised Closing Statement” has the meaning set forth in Section 3.6(a).
“Scheduled Closing Date” has the meaning set forth in Section 10.1.
“Seller” has the meaning set forth in the preamble to this Agreement.
“Seller Documents” has the meaning set forth in Section 4.2.
“Seller Entitlements” has the meaning set forth in Section 3.7(a).
“Seller Indemnified Parties” has the meaning set forth in Section 11.1(b).
“Specified Well” has the meaning set forth in Section 3.7(b).
“Straddle Period” means any taxable period that begins before the date on which the Effective Time occurs and ends on or after the date on which the Effective Time occurs.
“Suspense Funds” has the meaning set forth in Section 4.11.
“SW Claim Date” has the meaning set forth in Section 8.7(b).
“Tax” or “Taxes” means (a) all federal, state, local and foreign taxes, assessments, duties, fees or other similar charges imposed by a Governmental Authority, including all income, franchise, profits, margins, capital gains, capital stock, transfer, gross receipts, sales, use, transfer, service, occupation, ad valorem, real or personal property, excise, severance, production, windfall profits, customs, premium, stamp, license, payroll, employment, social security, unemployment, disability, environmental, alternative minimum, add‑on, value‑added, withholding and other taxes, assessments, duties, fees or other similar charges of any kind and (b) all estimated taxes, deficiency assessments, additions to tax, penalties and interest with respect to any item described in clause (a) of this definition, whether disputed or not, and (c) any liability in respect of any item described in clauses (a) through (b) of this definition, that arises by reason of a contract, assumption, transferee or successor liability, or operation of Law (including by reason of being a member of a consolidated, combined or unitary group).
“Tax Contest” has the meaning set forth in Section 7.5.
“Tax Return” or “Tax Returns” means any report, return, election, document, estimated Tax filing, declaration, claim for refund, information return, or other filing provided to any Governmental Authority with respect to Taxes, including any schedules or attachments thereto and any amendment thereof.
“Third Party” means any Person other than any Seller, Buyer or any of their respective Affiliates.
“Third Party Claim” has the meaning set forth in Section 11.3(a).
“Threatened” means, with respect to any claim, Proceeding, dispute, action or other matter, an event that shall be deemed to have occurred if any demand, statement or claim has been made in writing to a Party or any of its officers, directors or employees that would lead a prudent Person to expect that such claim, Proceeding, dispute, action or other matter would reasonably be expected to be asserted, commenced, taken or otherwise pursued in the future.
“Transaction Documents” means this Agreement, the Instruments of Conveyance, the Escrow Agreement and any other agreement that any Buyer and any Seller deem to be a Transaction Document in writing.
“Transfer Taxes” has the meaning set forth in Section 7.4.
“Underlying Property” means any Fee Property, ORRI Lease, NPRI Property or Well from which either (a) any Net Royalty Acres or (b) a Revenue Interest, as applicable, is derived with respect to any Asset.
“Wells” has the meaning set forth in Section 2.1(d).
“WhiteHawk Haynesville” has the meaning set forth in the Preamble.
“WhiteHawk Marcellus” has the meaning set forth in the Preamble.
[End of Appendix A]
Exhibit A-1-1
Fee Minerals (TRR II)
See attached.
Exhibit A-1-2
Fee Minerals (Cypress)
See attached.
Exhibit A-2-1
ORRIs (TRR II)
See attached.
Exhibit A-2-2
ORRIs (Cypress)
See attached.
Exhibit A-3-1
NPRIs (TRR II)
See attached.
Exhibit A-3-2
NPRIs (Cypress)
See attached.
Exhibit A-4-1
Wells (TRR II)
See attached.
Exhibit A-4-2
Wells (Cypress)
See attached.
Exhibit B
Closing Statement
See attached.
Exhibit C-1-1 (TRR II)
Form of Assignment
See attached.
Exhibit C-1-2
Form of Assignment (Cypress)
See attached.
Exhibit C-2-1
Form of Deed (TRR II)
See attached.
Exhibit C-2-2
Form of Deed (Cypress)
See attached.
Exhibit D-1
Form of Letter in Lieu (TRR II)
See attached.
Exhibit D-2
Form of Letter in Lieu (Cypress)
See attached.
Exhibit E-1
Sellers’ Certificate
See attached.
Exhibit E-2
Buyers’ Certificate
See attached.
Exhibit 10.1
Corrected Version from that filed as Exhibit 10.1 to the Form 8-K on June 10, 2026
CONTRIBUTION AGREEMENT
by and among
WhiteHawk Income Corporation, a Delaware corporation,
WhiteHawk Income Operating Partnership L.P., a Delaware limited partnership,
WhiteHawk Management LLC, a Delaware limited liability company,
and
WhiteHawk Minerals LLC, a Delaware limited liability company,
dated as of
June 9, 2026
TABLE OF CONTENTS
Page
|
|
Article I CONTRIBUTION OF THE INTERESTS |
2 |
Section 1.01 CONTRIBUTION OF THE INTERESTS |
2 |
Section 1.02 SUBSCRIPTION TO WHIC SHARES |
2 |
Section 1.03 MISDIRECTED ASSETS, LIABILITIES AND PAYMENTS |
2 |
Article II CONTRIBUTION CONSIDERATION |
2 |
Section 2.01 CONTRIBUTION AND SUBSCRIPTION CONSIDERATION |
2 |
Section 2.02 EARNOUT CONSIDERATION |
2 |
Section 2.03 INTENDED TAX TREATMENT |
6 |
Article III CLOSING |
6 |
Section 3.01 CLOSING AND PLACE |
6 |
Section 3.02 CONDITIONS PRECEDENT |
6 |
Section 3.03 COSTS |
9 |
Article IV REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTOR |
9 |
Section 4.01 DUE EXECUTION; DUE AUTHORIZATION; APPROVALS |
9 |
Section 4.02 NO CONFLICT |
10 |
Section 4.03 LITIGATION |
10 |
Section 4.04 INSOLVENCY |
10 |
Section 4.05 FINANCIAL STATEMENTS |
11 |
Section 4.06 OWNERSHIP OF EQUITY INTERESTS; TITLE |
11 |
Section 4.07 ISSUANCE OF WHIC SHARES AND WHITEHAWK OP UNITS |
12 |
Section 4.08 ORGANIZATION AND QUALIFICATION |
13 |
Section 4.09 CONTRACTS |
13 |
Section 4.10 COMPLIANCE WITH LAWS |
13 |
Section 4.11 FOREIGN ASSET CONTROL |
13 |
Section 4.12 TAX MATTERS |
14 |
Section 4.13 ABSENCE OF CERTAIN CHANGES |
16 |
Section 4.14 EMPLOYEES |
16 |
Section 4.15 BENEFIT PLANS |
18 |
Section 4.16 LOANS TO THE COMPANY OR SERVICES |
20 |
Section 4.17 LICENSES AND PERMITS |
20 |
Section 4.18 ABSENCE OF UNDISCLOSED LIABILITIES |
20 |
Section 4.19 REAL PROPERTY |
21 |
Section 4.20 INTELLECTUAL PROPERTY; IT SYSTEMS |
21 |
Section 4.21 ENVIRONMENTAL LIABILITY |
21 |
Section 4.22 POWERS OF ATTORNEY |
22 |
Section 4.23 TRANSACTIONS WITH RELATED PARTIES |
22 |
Section 4.24 IMPROPER PAYMENTS |
22 |
Section 4.25 NO OTHER OPERATIONS |
23 |
Section 4.26 SUFFICIENCY OF ASSETS |
23 |
Section 4.27 INVESTMENT COMPANY ACT |
23 |
|
|
Section 4.28 BROKERS, FINDERS AND ADVISORS |
23 |
Article V REPRESENTATIONS AND WARRANTIES OF WHITEHAWK OP and WHIC |
24 |
Section 5.01 ORGANIZATION AND QUALIFICATION |
24 |
Section 5.02 DUE AUTHORIZATION; APPROVALS |
24 |
Section 5.03 BROKERS, FINDERS AND ADVISORS |
25 |
Section 5.04 COMMON UNITS |
25 |
Section 5.05 CLASS B COMMON STOCK |
25 |
Section 5.06 TAX MATTERS |
25 |
Section 5.07 NO CONFLICT |
25 |
Section 5.08 NO OTHER REPRESENTATIONS AND WARRANTIES |
26 |
Article VI COVENANTS |
26 |
Section 6.01 CONDUCT OF BUSINESS PRIOR TO CLOSING |
26 |
Section 6.02 ACCESS TO INFORMATION |
28 |
Section 6.03 CONSENTS AND APPROVALS |
29 |
Section 6.04 TAX MATTERS |
30 |
Section 6.05 SUPPLEMENTAL DISCLOSURE |
33 |
Section 6.06 CONFIDENTIALITY; PUBLICITY |
34 |
Section 6.07 TERMINATION AND ASSIGNMENT OF AGREEMENTS |
34 |
Section 6.08 EXPENSES AND INDEBTEDNESS |
34 |
Section 6.09 RESTRICTIVE COVENANTS |
34 |
Article VII INDEMNIFICATION AND CLAIMS |
35 |
Section 7.01 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS |
35 |
Section 7.02 INDEMNIFICATION OF WHITEHAWK OP |
36 |
Section 7.03 INDEMNIFICATION OF CONTRIBUTOR |
36 |
Section 7.04 LIMITATIONS |
36 |
Section 7.05 INDEMNIFICATION PROCEDURES |
38 |
Section 7.06 CHARACTER OF INDEMNITY PAYMENTS |
39 |
Section 7.07 REMEDIES |
40 |
Section 7.08 SUBROGATION/INSURANCE |
40 |
Article VIII TERMINATION |
40 |
Section 8.01 TERMINATION |
40 |
Section 8.02 EFFECT OF TERMINATION |
41 |
Article IX GENERAL PROVISIONS |
41 |
Section 9.01 NOTICES |
41 |
Section 9.02 ENTIRE AGREEMENT; AMENDMENTS |
42 |
Section 9.03 SUCCESSORS AND ASSIGNS |
42 |
Section 9.04 FURTHER DOCUMENTS |
42 |
Section 9.05 GOVERNING LAW; JURISDICTION; WAIVER OF JURY |
42 |
Section 9.06 COUNTERPARTS |
43 |
Section 9.07 CONSTRUCTION OF AGREEMENT |
43 |
Section 9.08 NO WAIVER |
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Section 9.09 SEVERABILITY |
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Section 9.10 HEADINGS |
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Section 9.11 INTERPRETATION |
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Section 9.12 RELEASE |
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Exhibits
Exhibit A Defined Terms
Exhibit B Form of A&R OP LPA
Exhibit C Form of Management Employment Agreements
Exhibit D Form of A&R WHIC Charter
Exhibit E Form of Registration Rights Agreement
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (this “Agreement”) is entered into as of June 9, 2026 by and among WhiteHawk Income Corporation, a Delaware corporation (“WHIC”), WhiteHawk Income Operating Partnership L.P., a Delaware limited partnership (“WhiteHawk OP”), WhiteHawk Management LLC, a Delaware limited liability company (the “Company”) and WhiteHawk Minerals LLC, a Delaware limited liability company (the “Contributor”). Capitalized terms used but not defined herein shall have the respective meanings set forth on Exhibit A.
RECITALS
WHEREAS, the Contributor owns 100% of the total issued and outstanding membership interests of the Company (the “Interests”);
WHEREAS, WhiteHawk Energy Services LLC, a Delaware limited liability company (“Services”), a wholly owned subsidiary of the Company, employs all the employees that provide services to WhiteHawk OP and its Affiliates as of the date hereof;
WHEREAS, (i) effective as of the Contribution Date, the Contributor will contribute and assign to WhiteHawk OP all of its right, title and interest in and to the Interests, and the Contributor will receive from WhiteHawk OP the WhiteHawk OP Units and (ii) effective as of the Closing, the Contributor will subscribe for the WHIC Shares for $0.0001 per share, in accordance with the terms and subject to the conditions set forth herein;
WHEREAS, in connection with the issuance by WhiteHawk OP to the Contributor of the WhiteHawk OP Units at the Closing, WhiteHawk OP, WHIC, the Contributor and others shall enter into an amendment and restatement of the WH OP Partnership Agreement substantially in the form of Exhibit B attached hereto (the “A&R OP LPA”) in order to set forth certain rights, responsibilities and restrictions with respect to, among other things, such WhiteHawk OP Units;
WHEREAS, contemporaneously with closing, WHIC will consummate an initial public offering (the “IPO”) of its Class A common stock, with a par value of $0.0001 per share (“Class A Common Stock”), and in connection with the IPO and the issuance by WHIC to the Contributor of the WHIC Shares at the Closing, amend and restate its certificate of incorporation substantially in the form of Exhibit E attached hereto (the “A&R WHIC Charter”) in order to set forth certain rights, responsibilities and restrictions with respect to, among other things, such WHIC Shares; and
WHEREAS, the Board of Directors of WHIC, on behalf of both WHIC and WhiteHawk Income OP GP LLC, a Delaware limited liability company wholly owned by WHIC and the general partner of WhiteHawk OP (the “WH OP GP”), has reviewed and evaluated this Agreement and the Transactions and, based on the recommendation of a duly authorized and fully empowered special committee of independent members of Board of Directors, who have unanimously determined that this Agreement, the Transactions, and the entering into by WHIC and WhiteHawk OP of this Agreement and the Transaction Documents, are in the best interests of WHIC and its stockholders and WhiteHawk OP and its limited partners.
NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and other terms contained in this Agreement, the parties hereto, intending to be legally bound hereby, agree as follows:
Article I
CONTRIBUTION OF THE INTERESTS
Section 1.01 CONTRIBUTION OF THE INTERESTS. On the terms and subject to the conditions contained in this Agreement, on the Contribution Date, the Contributor shall contribute to WhiteHawk OP all of the Contributor’s right, title, and interest in and to the Interests, free and clear of any Encumbrances (other than transfer restrictions imposed under applicable securities Laws) (the “Contribution”).
Section 1.02 SUBSCRIPTION TO WHIC SHARES. On the terms and subject to the conditions contained in this Agreement, at the Closing, the Contributor agrees to pay, at the time or times as determined by the Board of Directors of WHIC, cash in the amount that equals $0.0001 per share of the WHIC Shares.
Section 1.03 MISDIRECTED ASSETS, LIABILITIES AND PAYMENTS. At any time after the Closing, the Contributor shall, or shall cause its Affiliates to, take all actions reasonably requested by WhiteHawk OP or WHIC to effect the provisions of this Article I, including the transfer of any Misdirected Assets to WhiteHawk OP or WHIC (or its designated Affiliate) and the assumption or discharge by the Contributor of any Misdirected Liabilities. Further, the Contributor agrees to pay or otherwise discharge the Misdirected Liabilities or, to the extent that any Misdirected Liabilities are required to be discharged by WhiteHawk OP, WHIC or any of its Affiliates, to provide WhiteHawk OP, WHIC or its applicable Affiliate with the funds for such purpose. Any action taken pursuant to this Section 1.02 after the Closing shall be deemed to have occurred as of the Effective Time.
Article II
CONTRIBUTION CONSIDERATION
Section 2.01 CONTRIBUTION AND SUBSCRIPTION CONSIDERATION. In exchange for the Contribution, on the Contribution Date, WhiteHawk OP shall issue to the Contributor a number of Common Units equal to 75% of the quotient of the Internalization Price divided by the IPO Price (the “WhiteHawk OP Units”). In exchange for the Contributor subscribing to a corresponding number of shares of Class B Common Stock of WHIC for $0.0001 per share (the “WHIC Shares” and, together with the WhiteHawk OP Units, the “Contribution and Subscription Closing Consideration”), WHIC shall issue to the Contributor a corresponding number of shares of Class B Common Stock.
Section 2.02 EARNOUT CONSIDERATION.
(a) Determination of Earnout OP Units and Earnout WHIC Shares. As additional consideration for the Contribution, subject to and in accordance with the terms and conditions of this Section 2.02, Contributor may be entitled to receive from WhiteHawk OP up to an aggregate number of Common Units equal to 25% of the quotient of the Internalization Price divided by the IPO Price (the “Earnout OP Units”) and from WHIC a corresponding number of shares of Class
B Common Stock (the “Earnout WHIC Shares” and collectively, the “Earnout Consideration”), based on WhiteHawk OP’s financial performance during each of the three 12-month periods from July 1, 2026 to June 30, 2029 (each, an “Earnout Year”), as follows:
(i) the twelve (12)-month period beginning on July 1, 2026, and ending on June 30, 2027 (“Earnout Year One”);
(ii) the twelve (12)-month period beginning on July 1, 2027, and ending on June 30, 2028 (“Earnout Year Two”); and
(iii) the twelve (12)-month period beginning on July 1, 2028, and ending on June 30, 2029 (“Earnout Year Three”).
(b) Calculation of Earnout OP Units and Earnout WHIC Shares. The Earnout OP Units and corresponding Earnout WHIC Shares to be issued to the Contributor for each Earnout Year shall be calculated as follows:
(i) Earnout Year One.
(A) If Earnout EBITDA is less than or equal to $80,200,000, no Earnout OP Units and corresponding Earnout WHIC Shares shall be issued to the Contributor.
(B) If Earnout EBITDA is greater than $80,200,000 but less than $106,600,000, WhiteHawk OP shall issue to the Contributor a number of Earnout OP Units equal to: (1) Earnout EBITDA less $80,200,000, divided by (2) $26,400,000 multiplied by (3) the Earnout Year One Amount and WHIC shall issue to the Contributor a corresponding number of Earnout WHIC Shares.
(C) If Earnout EBITDA is greater than or equal to $106,600,000, WhiteHawk OP will issue to the Contributor a number of Earnout OP Units equal to the Earnout Year One Amount and WHIC shall issue to the Contributor a corresponding number of Earnout WHIC Shares.
(ii) Earnout Year Two.
(A) If Earnout EBITDA is less than or equal to $97,000,000, no Earnout OP Units and corresponding Earnout WHIC Shares shall be issued to the Contributor.
(B) If Earnout EBITDA is greater than $97,000,000 but less than $129,000,000, WhiteHawk OP will issue to the Contributor a number of Earnout OP Units equal to: (1)(x) Earnout EBITDA less $97,000,000, divided by (y) $32,000,000, multiplied by (z) the Earnout Year Two Amount, minus (2) the number of Earnout OP Units, if any, that were issued pursuant to Section 2.02(b)(i) and WHIC shall issue to the Contributor a corresponding number of Earnout WHIC Shares.
(C) If Earnout EBITDA is greater than or equal to $129,000,000, WhiteHawk OP will issue to the Contributor a number of Earnout OP Units equal to (1) the Earnout Year Two Amount minus (2) the number of Earnout OP Units, if any, that were issued pursuant to Section 2.02(b)(i) and WHIC shall issue to the Contributor a corresponding number of Earnout WHIC Shares.
(iii) Earnout Year Three.
(A) If Earnout EBITDA is less than or equal to $94,800,000, no Earnout OP Units and corresponding Earnout WHIC Shares shall be issued to the Contributor.
(B) If Earnout EBITDA is greater than $94,800,000 but less than $126,000,000, WhiteHawk OP will issue to the Contributor a number of Earnout OP Units equal to: (1)(x) Earnout EBITDA less $94,800,000, divided by (y) $31,200,000, multiplied by (z) the Earnout Year Three Amount minus (2) the number of Earnout OP Units, if any, that were issued pursuant to Section 2.02(b)(i) and/or Section 2.02(b)(ii) and WHIC shall issue to the Contributor a corresponding number of Earnout WHIC Shares.
(C) If Earnout EBITDA is greater than or equal to $126,000,000, WhiteHawk OP will issue to the Contributor a number of Earnout OP Units equal to the Earnout Year Three Amount minus (2) the number of Earnout OP Units, if any, that were issued pursuant to Section 2.02(b)(i) and/or Section 2.02(b)(ii) and WHIC shall issue to the Contributor a corresponding number of Earnout WHIC Shares.
(c) Financial Statements. All components of the Earnout EBITDA for each Earnout Year shall be determined based on the results of WhiteHawk OP’s consolidated financial statements for the applicable Earnout Period, which shall be completed in accordance with WhiteHawk OP’s customary processes (the “Financial Statements”). No Earnout OP Units or Earnout WHIC Shares shall be issued with respect to any Earnout Year unless and until the Financial Statements have been completed and delivered to the Contributor.
(d) Earnout Statement. Within thirty (30) days after receipt of the Financial Statements by the Contributor, the Contributor shall prepare and deliver to the Audit Committee of the Board of Directors of WHIC (the “Audit Committee”) a written statement (the “Earnout Statement”) setting forth (i) the Earnout EBITDA for the applicable Earnout Period, and (ii) the number of Earnout OP Units and corresponding Earnout WHIC Shares due, if any, together with reasonable supporting calculations. During such time and until the applicable Earnout Statement becomes final and binding, WhiteHawk OP shall provide the Contributor and its advisors with reasonable access to the financial books and records of WhiteHawk OP that pertain to the Earnout EBITDA, in each case, as necessary for them to prepare the Earnout Statement. The Earnout EBITDA and the components thereof shall be calculated in the same manner as “EBTIDAX” and the components thereof are calculated by WHIC or WhiteHawk OP under the Credit Agreement.
(e) Disputes. The Audit Committee, on behalf of WHIC and WhiteHawk OP, shall have ten (10) days to review the Earnout Statement after its receipt (the “Review Period”). During such time, WhiteHawk OP shall provide the Audit Committee and its advisors with reasonable access to the financial books and records of WhiteHawk OP that pertain to the Earnout EBITDA, in each case, as necessary for them to evaluate the Earnout Statement. If the Audit Committee disputes any portion of the Earnout Statement, then the Audit Committee may provide the Contributor with a written notice identifying the disputed items within the Review Period (an “Earnout Dispute Notice”). If the Audit Committee does not provide the Contributor with such notice during the Review Period, then the Earnout Statement shall be final and binding upon the parties hereto. If an Earnout Dispute Notice is timely delivered pursuant to this Section 2.02(e), then the Audit Committee and the Contributor shall, during the thirty (30) day period following such delivery, attempt in good faith to resolve such dispute. If during such thirty (30) day period, the Audit Committee and the Contributor are unable to resolve such dispute, then the amount of the Earnout EBITDA in dispute shall be submitted by the Audit Committee and the Contributor to Ernst & Young LLP (the “Accounting Firm”) for resolution of any matters based upon the terms of this Agreement that remain in dispute and which were included in the Earnout Dispute Notice. The Accounting Firm shall be instructed to deliver within thirty (30) days a written statement setting forth its determination of the Earnout EBITDA, which shall be final, conclusive and binding on the parties hereto. All costs and expenses of the Accounting Firm incurred by WHIC, the Contributor or their respective Affiliates in connection with resolution of a dispute by an Accounting Firm under this Section 2.02(e) shall be allocated between WHIC, on the one hand, and Contributor, on the other hand, based upon the percentage that the amount not awarded to WHIC or Contributor pursuant to this Section 2.02(e) bears to the amount actually contested by WHIC or Contributor, as applicable.
(f) Issuance of Earnout OP Units and Earnout WHIC Shares. As soon as reasonable practicable, and in any event within three (3) Business Days after the Earnout Statement becomes final and binding upon the parties hereto, WhiteHawk OP shall issue to the Contributor the Earnout OP Units, if any, due to the Contributor and WHIC shall issue to the Contributor a corresponding number of Earnout WHIC Shares.
(g) Distribution and Dividend Equivalents. Notwithstanding anything to the contrary herein or in the Transaction Documents, from and after the Closing Date and until the earlier of (i) the time when an Earnout OP Unit is issued in accordance with Section 2.02(f) or Section 2.02(h) hereof or (ii) the time when the Contributor’s right to receive an Earnout OP Unit is forfeited pursuant to Section 7.04(d)(i) or as a result of the Earnout Statement for Earnout Year Three becoming final and binding, on the date that WhiteHawk OP pays a cash Distribution (if any) to Limited Partners (other than to WHIC in respect of any Series B Preferred Units or Series D Preferred Units), the Earnout OP Units shall be considered outstanding Common Units held by the Contributor as of the close of business on such record date such that the amount of the pro rata Distribution received by the Contributor reflects a Common Unit Percentage Interest inclusive of Earnout OP Units that the Contributor may be entitled to receive from WhiteHawk OP. For the avoidance of doubt, (x) no Earnout WHIC Shares shall be issued or deemed issued unless and until the corresponding Earnout OP Units are actually issued pursuant to Section 2.02(f) or Section 2.02(h), as applicable, and (y) no Distributions paid pursuant to this Section 2.02(g) shall be forfeited or otherwise subject to claw back in the event that the Earnout OP Units included as
outstanding Common Units for purposes of the Distribution are not earned and issued pursuant to Section 2.02.
(h) Notwithstanding anything to the contrary herein or in the Transaction Documents, in the event of a Change of Control (as defined in the A&R WHIC Charter) or a Change of Control Transaction (as defined in the A&R OP LPA), all Earnout Consideration not previously issued in accordance with Section 2.02(f) or forfeited pursuant to Section 7.04(d)(i) immediately prior to the consummation of such Change of Control or Change of Control Transaction shall automatically and immediately vest and be issued or deemed issued effectively as of immediately prior to the consummation of such Change of Control or Change of Control Transaction, so that the Contributor may participate in such Change of Control or Change of Control Transaction on the same basis as other holders of Common Units and Class B Common Stock. For the avoidance of doubt, the IPO shall not constitute a Change of Control or a Change of Control Transaction and no Earnout Consideration shall vest or be issued pursuant to this Section 2.02(h) for any Change of Control or Change of Control Transaction occurring after Earnout Year Three.
Section 2.03 INTENDED TAX TREATMENT. For all applicable Tax purposes, the parties intend that the Contribution in exchange for the Contribution and Subscription Closing Consideration and the Earnout Consideration shall be treated as an exchange described in Section 721(a) of the Code and Revenue Ruling 99-5, Situation 2, 1999-1 C.B. 434 (the “Intended Tax Treatment”). Unless otherwise required by a final determination within the meaning of Section 1313(a) of the Code (or a similar determination under applicable state or local Law), WhiteHawk OP, WHIC, the Company, Services and the Contributor shall file all United States federal, state and local Tax Returns, to the extent applicable, in a manner consistent with such Intended Tax Treatment and shall take no position inconsistent with such treatment.
Article III
CLOSING
Section 3.01 CLOSING AND PLACE. Subject to the satisfaction or waiver of the applicable conditions set forth in Section 3.02(c), the contribution of the Interests (the “Contribution Date”) will take place remotely via the electronic exchange of documents and signatures on the date that is no more than two (2) Business Days prior to the IPO Date (or, if no such prior date is selected by WhiteHawk OP, then on the IPO Date). Subject to the satisfaction or waiver of the conditions set forth in Section 3.02(c), the closing of the Transactions (the “Closing”) will take place remotely via the electronic exchange of documents and signatures on the IPO Date (the “Closing Date”) effective contemporaneously with the consummation of the IPO.
Section 3.02 CONDITIONS PRECEDENT.
(a) Closing Actions and Documents of the Contributor. At the earlier of the Contribution Date or the Closing, the following closing documents shall be executed and delivered (or caused to be executed and delivered) by the Contributor and the Company to WhiteHawk OP and WHIC:
(i) the A&R OP LPA in the form attached as Exhibit B, duly executed and delivered by the Contributor;
(ii) an assignment of the Interests, in form and substance reasonably acceptable to WhiteHawk OP, duly executed by the Contributor, in favor of WhiteHawk OP;
(iii) duly executed employment agreements for each of the individuals listed on Schedule 3.02(a)(iii) in the form attached as Exhibit C (the “Management Employment Agreements”);
(iv) the Registration Rights Agreement, duly executed by the Contributor in the form attached as Exhibit E;
(v) duly executed resignations of each applicable director, officer or manager of the Company and Services, as applicable, in form and substance reasonably acceptable to WhiteHawk OP;
(vi) resolutions of the Company and the Contributor authorizing the execution, delivery and performance of this Agreement and any other Transaction Document to which the Company and the Contributor are a party;
(vii) the written consent to the transactions contemplated by this Agreement from the Persons listed on Schedule 3.02(a)(vii), in form and substance reasonably acceptable to WhiteHawk OP, duly executed by such Persons (the “Required Consents”);
(viii) evidence reasonably satisfactory to WhiteHawk OP that all of the issued and outstanding equity interests of Services have been contributed to and are wholly owned by the Company as of prior to the Closing; and
(ix) a validly executed Internal Revenue Service (“IRS”) Form W-9 from the Contributor.
(b) Closing Actions and Documents of WhiteHawk OP: At the earlier of the Contribution Date or the Closing (except as otherwise indicated below), the following closing documents shall be executed and delivered (or caused to be executed and delivered) by WhiteHawk OP or WHIC, as applicable, to the Contributor:
(i) the A&R OP LPA, duly executed and delivered by WhiteHawk OP and such limited partners party thereto as are required for the valid amendment and restatement of the WH OP Partnership Agreement;
(ii) at the Closing, evidence reasonably satisfactory to the Contributor that the A&R WHIC Charter in the form attached as Exhibit D has been duly executed and filed and has become or will become effective contemporaneously with the Closing;
(iii) evidence of issuance of the WHIC Shares at the Closing and the WhiteHawk OP Units on the Contribution Date comprising the Contribution and Subscription Closing Consideration;
(iv) duly executed employment agreements for each of the individuals listed on Schedule 3.02(a)(iii) in the form attached as Exhibit C;
(v) the Registration Rights Agreement, duly executed by WHIC in the form attached as Exhibit E; and
(vi) resolutions of WhiteHawk OP and WHIC, authorizing the execution, delivery and performance of this Agreement and any other Transaction Document to which WhiteHawk OP or WHIC is a party.
(c) Closing Conditions. The respective obligations of each party to effect the Contribution and Closing are subject to the satisfaction or waiver at or prior to each of the Contribution Date and the Closing (except as otherwise indicated below) of each of the following conditions that run in the favor of such party:
(i) For the benefit of the Contributor:
(A) (1) With only such exceptions as would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on the ability of WhiteHawk OP or WHIC to consummate the IPO or the Transactions, each of the representations and warranties of WhiteHawk OP and WHIC set forth in Article V shall be true and correct as of the Contribution Date and Closing Date as though made on and as of the Contribution Date and Closing Date (except any representations and warranties that expressly speak as of a specified date or time need only be true and correct as of such specified date or time) and (2) all of the covenants and agreements of WhiteHawk OP and WHIC set forth herein and required to have been performed as of the Contribution Date or Closing Date shall have been performed in all material respects as of the Contribution Date or Closing Date (as the case may be);
(B) The Contributor shall have received a certificate, in form and substance reasonably satisfactory to the Contributor, executed by the Secretary (or other officer) or manager, as applicable, of WHIC and the WH OP GP on behalf of WhiteHawk OP, to the effect of clause (A) above; and
(C) The execution and delivery of Transaction Documents required to be executed and delivered by each signatory thereto pursuant to Section 3.02(b);
(ii) For the benefit of WHIC and WhiteHawk OP:
(A) (1) The Fundamental Representations shall be true and correct in all respects as of the Contribution Date and Closing Date, (2) with only such exceptions as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, each of the other representations and warranties of the Contributor set forth in Article IV shall be true and correct as of the Contribution Date and Closing Date as though made on and as of the Contribution Date and Closing Date (except any representations and warranties that expressly speak as of a specified date or time need only be true and correct as of
such specified date or time); provided that any exceptions and qualifications with regard to materiality or Material Adverse Effect contained therein shall be disregarded for purposes of this Section 3.02(c)(ii)(A)(2), and (3) all of the covenants and agreements of the Contributor and the Company set forth herein and required to have been performed as of the Contribution Date or Closing Date shall have been performed in all material respects as of the Contribution Date or Closing Date (as the case may be);
(B) There shall not have occurred a Material Adverse Effect;
(C) WhiteHawk OP shall have received a certificate, in form and substance reasonably satisfactory to WhiteHawk OP, executed by the Secretary (or other officer) or manager, as applicable, of the Contributor, to the effect of clause (A) and clause (B) above; and
(D) The execution and delivery of the Transaction Documents required to be executed and delivered (or caused to be executed and delivered) by the Contributor and Services pursuant to Section 3.02(a);
(iii) For the benefit of all Parties hereto:
(A) no statute, rule, regulation, order, decree or injunction shall have been enacted, entered, promulgated or enforced by a Governmental Authority that prohibits the consummation of the IPO or the Transactions; and
(B) at the Closing, the substantially contemporaneous consummation of the IPO.
Section 3.03 COSTS.
(a) Contributor Costs. WhiteHawk OP and WHIC shall directly pay for all out of pocket costs and expenses incurred by the Company, Services or the Contributor in connection with the Transactions, including any legal fees or fees of any financial, accounting and other advisors incurred by the Company, Services or the Contributor in connection with the Transactions, in the aggregate up and including an amount equal to the Transaction Expenses Cap. Contributor shall pay for all such costs and expenses in excess of the Transaction Expenses Cap.
(b) WhiteHawk OP Costs. WhiteHawk OP and WHIC shall directly pay for all of their respective costs and expenses incurred in connection with the Transactions, including any legal fees or fees of any financial, accounting and other advisors.
(c) Survival. The provisions of this Section 3.03 shall survive the Closing.
Article IV
REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTOR
With respect to any Section of this Article IV, except as set forth in the disclosure schedules delivered by the Contributor to WhiteHawk OP and WHIC on the date of this Agreement, the
Contributor hereby represents and warrants to WhiteHawk OP and WHIC as follows as of the date hereof and as of the Contribution Date and Closing Date (except as to any representations and warranties that expressly speak as of a specified date or time, in which case only as of such specified date or time):
Section 4.01 DUE EXECUTION; DUE AUTHORIZATION; APPROVALS.
(a) This Agreement has been duly executed and delivered by the Contributor and the Company and constitutes the legal, valid and binding agreement of the Contributor and the Company enforceable against each such Person in accordance with its terms, subject to applicable bankruptcy, insolvency or other similar Laws affecting enforcement of creditors’ rights and to general principles of equity (the “Enforceability Exceptions”). Each of the Contributor and the Company has all requisite company power and authority to execute and deliver this Agreement and each Transaction Document to which it is a party and to perform its obligations hereunder and thereunder and to consummate the Transactions. The execution and delivery of this Agreement and the Transaction Documents to which any of the Contributor and the Company is a party, and the performance by the Contributor and the Company of each of the Transactions contemplated to be performed by it, have been approved by all necessary company action or other proceedings on the part of each.
Section 4.02 NO CONFLICT.
(a) Neither the execution, delivery, nor performance of this Agreement or any other Transaction Document to which it is a party by the Contributor or the Company, nor any action or omission on the part of the Contributor or the Company required pursuant hereto or thereto, nor the consummation of the Transactions by the Contributor or the Company will (i) violate or conflict with, or result in a breach or default of, any provision of any resolution adopted by the board of managers (or equivalent governing body), members or other equityholders, the certificate of formation, operating agreement or equivalent governing documents of the Contributor or the Company, (ii) result in a breach or violation of, or constitute a default under, any Legal Requirement applicable to the Contributor or the Company, or (iii) constitute a default or result in the cancellation, termination, acceleration, breach or violation of any Contract or other material document to which the Contributor or the Company is a party or by which any of their properties are bound, or give any Person the right to challenge any such transaction, to declare any such default, cancellation, termination, acceleration, breach or violation or to exercise any remedy or obtain any other relief under any such agreement, instrument, indenture or other material document or under any Legal Requirement; and (b) neither the Contributor nor the Company is or will be required to give any notice to, make any filing with, or obtain any consent from any Person in connection with the execution and delivery of this Agreement or any other Transaction Document to which it is a party.
Section 4.03 LITIGATION.
(a) There are no Actions pending or, to the Knowledge of the Contributor, threatened against the Contributor, and there are no outstanding, pending or threatened orders, writs, judgments, decrees, decisions, injunctions or settlements against the Contributor that would impair
the ability of the Contributor to perform its obligations under this Agreement or any other Transaction Document to which it is a party or prevent the consummation of the Transactions.
(b) There are no Actions pending or, to the Knowledge of the Company, threatened against the Company, and there are no outstanding, pending or threatened orders, writs, judgments, decrees, decisions, injunctions or settlements against the Company.
(c) There are no Actions pending or, to the Knowledge of Services, threatened against Services, and there are no outstanding, pending or threatened orders, writs, judgments, decrees, decisions, injunctions or settlements against Services.
Section 4.04 INSOLVENCY. Neither the Contributor, the Company nor Services is subject to: (i) a general assignment for the benefit of creditors; (ii) a voluntary petition in bankruptcy or the filing of an involuntary petition by its creditors; (iii) the appointment of a receiver to take possession of all, or substantially all, of its assets; (iv) the attachment or other judicial seizure of all, or substantially all, of its assets; (v) an admission in writing of its inability to pay its debts as they come due; or (vi) an offer of settlement, extension or composition to its creditors generally.
Section 4.05 FINANCIAL STATEMENTS.
(a) The Contributor has made available to WhiteHawk OP (i) the consolidated audited balance sheets of the Contributor and the Company as of the calendar years ended December 31, 2025, December 31, 2024 and December 31, 2023, (ii) the related consolidated audited statements of income, changes in members’ equity, and cash flows of the Contributor and the Company for the calendar years then ended, and (iii) the consolidated unaudited balance sheet of the Contributor and the Company as of March 31, 2026 and the consolidated unaudited statement of income, changes in members’ equity and cash flows of the Contributor and the Company for the three (3) month period then ended (collectively, the “Company Financial Statements”). The Company Financial Statements and the notes thereto, if any, fairly present in all material respects the financial position of the Company and results of its operations and cash flows, in each case, as of the dates or for the periods then ended and were prepared in accordance with GAAP except as otherwise stated therein or, in the case of unaudited financial statements, for the omission of footnotes and subject to year-end adjustments in the ordinary course of business, none of which are material, individually or in the aggregate.
Section 4.06 OWNERSHIP OF EQUITY INTERESTS; TITLE.
(a) All the issued and outstanding Equity Interests of the Company have been duly authorized and are validly issued, fully paid and not subject to any unsatisfied capital commitments. The Contributor owns (beneficially and of record) all the issued and outstanding Equity Interests of the Company, free and clear of Encumbrances (other than transfer restrictions arising under applicable securities Laws). Other than the Interests, which are owned beneficially and of record by the Contributor, there are no issued or outstanding Equity Interests of the Company. Other than the Company’s ownership of Services, the Company does not directly or indirectly own or otherwise hold any Equity Interests of any other Person, and the Company does not have any right or obligation (including a contingent right or obligation) to acquire such an
interest. There are no outstanding or authorized subscriptions, options, warrants, calls, rights or convertible or exchangeable securities or any other agreements or other instruments giving any Person the right to acquire any Equity Interests in the Company, or giving any Person any right or privilege (whether pre-emptive or contractual) capable of becoming an agreement or option to acquire any such Equity Interests. There are no outstanding or authorized share appreciation, phantom share, profit participation or similar rights for which the Company has any liability. There are no voting trusts, proxies or other agreements or understandings to which the Company or the Contributor is a party with respect to the acquisition, disposition or voting of any Equity Interests of the Company. There are no issued or outstanding bonds, indentures, notes or other Indebtedness having the right to vote (or convertible into securities that have the right to vote) on any matters on which the members of the Company may vote. Immediately following the Closing, WhiteHawk OP shall own all of the Interests, free and clear of all Encumbrances, other than those imposed by applicable securities Laws.
(b) The Company owns (beneficially and of record) all the issued and outstanding Equity Interests of Services, free and clear of Encumbrances (other than transfer restrictions arising under applicable securities Laws). Services does not directly or indirectly own or otherwise hold any Equity Interests of any other Person, and Services does not have any right or obligation (including a contingent right or obligation) to acquire such an interest. There are no outstanding or authorized subscriptions, options, warrants, calls, rights or convertible or exchangeable securities or any other agreements or other instruments giving any Person the right to acquire any Equity Interests in Services, or giving any Person any right or privilege (whether pre-emptive or contractual) capable of becoming an agreement or option to acquire any such Equity Interests. There are no outstanding or authorized share appreciation, phantom share, profit participation or similar rights for which Services has any liability. There are no voting trusts, proxies or other agreements or understandings to which Services or the Company is a party with respect to the acquisition, disposition or voting of any Equity Interests of Services, other than the contribution agreement pursuant to which the Company acquired all of the Equity Interests of Services. There are no issued or outstanding bonds, indentures, notes or other Indebtedness having the right to vote (or convertible into securities that have the right to vote) on any matters on which the members of Services may vote.
Section 4.07 ISSUANCE OF WHIC SHARES AND WHITEHAWK OP UNITS.
(a) The Contributor understands that the WHIC Shares and the WhiteHawk OP Units being issued hereunder have not been and will not be registered under the Securities Act of 1933, as amended (the “Securities Act”), or under applicable state securities Laws (“Blue Sky Laws”), in reliance upon exemptions contained in the Securities Act and Blue Sky Laws and any applicable regulations promulgated thereunder or interpretations thereof, and cannot be offered for sale, sold or otherwise transferred unless, among other things (including for estate planning purposes), such units subsequently are so registered or qualify for exemption from registration under the Securities Act (including, without limitation, the exemption provided by Rule 144 thereunder, if available) and applicable Blue Sky Laws.
(b) The WHIC Shares and WhiteHawk OP Units are being acquired under this Agreement by the Contributor in good faith solely for its own account for investment and not with a view toward resale or other distribution in violation of the Securities Act, and such units shall not be
disposed of by the Contributor in contravention of the Securities Act or any applicable Blue Sky Laws.
(c) The Contributor has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of its investment in the WHIC Shares and WhiteHawk OP Units and understands and is able to bear any economic risks associated with such investment (including the inherent risk of losing all or part of its investment in such units).
(d) The Contributor is directly familiar with the business that is conducted and is intended to be conducted by WhiteHawk OP and WHIC, including financial matters related to such business, has been given the opportunity to ask questions of, and receive answers from the officers and directors of WHIC and WhiteHawk OP concerning the business and financial affairs of WHIC and WhiteHawk OP, and the terms and conditions of its acquisition of such units, and has had further opportunity to obtain any additional information desired (including information necessary to verify the accuracy of the foregoing).
(e) The Contributor has had an opportunity, to the full extent it deemed necessary or desirable, to inform its legal and financial advisers of the terms, nature and risks of investing in the WHIC Shares and WhiteHawk OP Units at this time, and to consult with them as appropriate about the investment.
(f) The Contributor is an “accredited investor” within the meaning of Regulation D promulgated under the Securities Act.
Section 4.08 ORGANIZATION AND QUALIFICATION.
(a) The Company (i) is a duly formed limited liability company validly existing and in good standing under the Laws of the State of Delaware, and is duly qualified to do business and in good standing in all jurisdictions in which it is required to be qualified; and (ii) has the requisite power and authority to carry on its business as now being conducted. The Company is not in default under any provision of its certificate of formation, operating agreement or other organizational documents.
(b) Services (i) is a duly formed limited liability company validly existing and in good standing under the Laws of the State of Delaware, and is duly qualified to do business and in good standing in all jurisdictions in which it is required to be qualified; and (b) has the requisite power and authority to carry on its business as now being conducted. Services is not in default under any provision of its certificate of formation, operating agreement or other organizational documents
Section 4.09 CONTRACTS. Other than the IMA and the ASA and the Transaction Documents entered into at the Closing, neither the Company nor Services is a party to or otherwise bound by any Contract.
Section 4.10 COMPLIANCE WITH LAWS.
(a) Since the time of the Company’s formation, the Company has not received written notice of any violation of any Laws. The Company is not, and since its date of formation, has not been, in material default under or in material violation of, nor has it been charged with any material
violation of, any Law. The Business has at all times since the time of the Company’s formation been operated in all material respects in accordance with applicable Laws and Governmental Licenses.
(b) Since the time of Services’ formation, Services has not received written notice of any violation of any Laws. Services is not, and since its date of formation, has not been, in material default under or in material violation of, nor has it been charged with any material violation of, any Law. The Business has at all times since the time of Services’ formation been operated in all material respects in accordance with applicable Laws and Governmental Licenses.
Section 4.11 FOREIGN ASSET CONTROL.
(a) None of the Company or any of its directors, officers, employee, Affiliates, or any other Person acting for or on behalf of the Company (a) is a Person with whom transactions are prohibited or limited under any economic sanctions laws, rules, or regulations, including those administered by the U.S. government (including, without limitation, the Department of the Treasury’s Office of Foreign Assets Control, the Department of State, or the Department of Commerce), the United Nations Security Council, the European Union, or His Majesty’s Treasury, or (b) has violated any Anti-Terrorism Laws or any Laws relating to economic sanctions, export controls, import, customs, or antiboycott Laws within the last five (5) years. The Company is, and for the past five (5) years has been, in possession of and in compliance with any and all licenses, registrations, and permits that may be required for its lawful conduct under any Anti-Terrorism Laws and any economic sanctions, import, and export control Laws, including without limitation the Export Administration Regulations. Within the past five (5) years, the Company has not made any voluntary disclosure to any Governmental Authority relating to Anti-Terrorism Laws or any sanctions, import, customs, export control or antiboycott Laws, has not been the subject of any investigation or inquiry regarding compliance with such Laws, and has not been assessed any fine or penalty under such Laws. None of the Company or any of its Affiliates or constituents engages, or will engage in, any dealings or transactions, or is or will be otherwise associated, with any Designated Person. The Company has taken commercially reasonable measures to ensure compliance with the Anti-Terrorism Laws, including the requirement that: (y) no Person who owns any direct or indirect interest in the Company is a Designated Person; and (z) funds invested directly or indirectly in the Company are derived from legal sources.
(b) None of Services or any of its directors, officers, employee, Affiliates, or any other Person acting for or on behalf of Services (a) is a Person with whom transactions are prohibited or limited under any economic sanctions laws, rules, or regulations, including those administered by the U.S. government (including, without limitation, the Department of the Treasury’s Office of Foreign Assets Control, the Department of State, or the Department of Commerce), the United Nations Security Council, the European Union, or His Majesty’s Treasury, or (b) has violated any Anti-Terrorism Laws or any Laws relating to economic sanctions, export controls, import, customs, or antiboycott Laws within the last five (5) years. Services is, and for the past five (5) years has been, in possession of and in compliance with any and all licenses, registrations, and permits that may be required for its lawful conduct under any Anti-Terrorism Laws and any economic sanctions, import, and export control Laws, including without limitation the Export Administration Regulations. Within the past five (5) years, Services has not made any voluntary disclosure to any Governmental Authority relating to Anti-Terrorism Laws or any sanctions,
import, customs, export control or antiboycott Laws, has not been the subject of any investigation or inquiry regarding compliance with such Laws, and has not been assessed any fine or penalty under such Laws. None of Services or any of its Affiliates or constituents engages, or will engage in, any dealings or transactions, or is or will be otherwise associated, with any Designated Person. Services has taken commercially reasonable measures to ensure compliance with the Anti-Terrorism Laws, including the requirement that: (y) no Person who owns any direct or indirect interest in Services is a Designated Person; and (z) funds invested directly or indirectly in Services are derived from legal sources.
Section 4.12 TAX MATTERS.
(a) The Company is, and has been since its formation, an entity disregarded as separate from a “United States person” for U.S. federal Tax purposes.
(b) Services is, and has been since its formation, an entity disregarded as separate from a “United States person” for U.S. federal Tax purposes.
(c) The Company has timely filed all material federal, state, local and foreign Tax Returns required to be filed by it with the appropriate Governmental Authorities (after giving effect to any filing extension properly granted by any such Governmental Authority having authority to do so). All such Tax Returns are true, correct, and complete in all material respects.
(d) Services has timely filed all material federal, state, local and foreign Tax Returns required to be filed by it with the appropriate Governmental Authorities (after giving effect to any filing extension properly granted by any such Governmental Authority having authority to do so). All such Tax Returns are true, correct, and complete in all material respects.
(e) The Company has timely paid (or had timely paid on its behalf) all Taxes due and payable, including any Taxes levied on any of the Company’s properties, assets, income or franchises, whether or not shown as owing on such Tax Returns. Except to the extent that a failure to do so would not individually or in the aggregate be material, all amounts of Taxes that the Company was required by Law to withhold or collect in connection with amounts owing to any employee, independent contractor, creditor or other third party have been duly withheld or collected and, to the extent required, have been timely remitted to the appropriate Governmental Authority, and the Company has complied in all material respects with all information reporting and back-up withholding provisions of applicable Law. No deficiencies for any Taxes, other than deficiencies that would not individually or in the aggregate be material, have been proposed, asserted or assessed in writing against the Company, and no waivers or extensions of the time to assess or collect any such Taxes are currently in effect.
(f) Services has timely paid (or had timely paid on its behalf) all Taxes due and payable, including any Taxes levied on any of Services’ properties, assets, income or franchises, whether or not shown as owing on such Tax Returns. Except to the extent that a failure to do so would not individually or in the aggregate be material, all amounts of Taxes that Services was required by Law to withhold or collect in connection with amounts owing to any employee, independent contractor, creditor or other third party have been duly withheld or collected and, to the extent required, have been timely remitted to the appropriate Governmental Authority, and Services has
complied in all material respects with all information reporting and back-up withholding provisions of applicable Law. No deficiencies for any Taxes, other than deficiencies that would not individually or in the aggregate be material, have been proposed, asserted or assessed in writing against Services, and no waivers or extensions of the time to assess or collect any such Taxes are currently in effect.
(g) There are no liens for Taxes (other than statutory liens for Taxes not yet due and payable) upon any of the assets of the Company or the Interests.
(h) There are no liens for Taxes (other than statutory liens for Taxes not yet due and payable) upon any of the assets of Services.
(i) There are no pending or threatened in writing audits, assessments, claims, proceedings, or other actions with respect to Taxes or Tax Returns of, or with respect to, the Company. No power of attorney has been granted to any Person with respect to any Tax matter of the Company that will remain in force after the Closing. No claim has been made by any Governmental Authority in writing in a jurisdiction where the Company does not file Tax Returns that such entity is or may be subject to taxation by that jurisdiction.
(j) There are no pending or threatened in writing audits, assessments, claims, proceedings, or other actions with respect to Taxes or Tax Returns of, or with respect to, Services. No power of attorney has been granted to any Person with respect to any Tax matter of Services that will remain in force after the Closing. No claim has been made by any Governmental Authority in writing in a jurisdiction where Services does not file Tax Returns that such entity is or may be subject to taxation by that jurisdiction.
(k) Neither WhiteHawk OP nor any of its subsidiaries (solely in their capacities as owners of the Interests upon Closing) will be required to include any item of income in, or exclude any item of deduction from, taxable income for any period (or any portion thereof) ending after the Closing Date as a result of any (i) adjustments under Section 481 of the Code (or any similar adjustments under any provision of the Code or the corresponding foreign, state or local Tax Law) in respect of a Pre-Closing Tax Period, (ii) closing agreement as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign Tax Law) executed on or prior to the Closing Date, (iii) installment sale or other open transaction disposition made on or prior to the Closing Date outside of the ordinary course of business of either the Company or Services, as applicable, (iv) prepaid amount received on or prior to the Closing Date, or (v) any election made pursuant to Section 108(i) of the Code on or prior to the Closing Date.
Section 4.13 ABSENCE OF CERTAIN CHANGES.
(a) Since December 31, 2025, (a) there has not been a Material Adverse Effect with respect to the Company, (b) the Company has operated and the Business has been conducted in the ordinary course of business in all material respects, and (c) there has not been, with respect to the Company or the Business, any action that would have been prohibited by Section 6.01 had this Agreement been in effect for such period.
(b) Since December 31, 2025, (a) there has not been a Material Adverse Effect with respect to Services, (b) Services has operated and the Business has been conducted in the ordinary course
of business in all material respects, and (c) there has not been, with respect to Services or the Business, any action that would have been prohibited by Section 6.01 had this Agreement been in effect for such period.
Section 4.14 EMPLOYEES. Services represents and warrants as follows:
(a) Schedule 4.14(a) sets forth a list of the employees of, or individuals providing services to, Services as of the date hereof (each such employee or individual, together with any new or replacement employees or individuals who will be employees of, or individuals providing services to, Services as of the Contribution Date, being referred to herein as a “Business Employee”), showing each Business Employee’s date of hire, current hourly rate or salary or other basis of compensation, including annual bonus target for 2026, full-time or part-time status, location, exempt or non-exempt status, leave status, immigration status and job function. Other than the Business Employees set forth on Schedule 4.14(a) and any employees employed by any entity that is as of the date hereof a direct or indirect subsidiary of WHIC, there are no employees who are providing services to the Business.
(b) As of the date of this Agreement, no Business Employee has given written notice of intent to terminate his or her employment relationship with Services, or, to Knowledge of Services, intends to terminate his or her employment relationship with Services within the twelve (12) month period following the date hereof.
(c) Services is not, and has not been in the past five (5) years, a party to any collective bargaining agreement or other Contract with any labor union, labor organization or works council, and no such Contract is being negotiated, and Services is not the subject of any proceeding or organizing activity that seeks to compel Services to bargain with any labor organization or that seeks to represent any Business Employees. No labor organization or group of employees of Services has made a demand for recognition or certification within the last five (5) years, and there are no representation or certification proceedings or petitions seeking a representation proceeding presently pending or, to the Knowledge of Services, threatened in writing to be brought or filed, with the National Labor Relations Board or any other labor relations tribunal or authority. There is no strike, lockout, slowdown, or work stoppage against Services currently pending or, to the Knowledge of Services, threatened, that may interfere in any respect with the conduct of the Business. In the past five (5) years, there has been no grievance or other labor dispute against or involving Services or involving any Business Employee in respect of such Business Employee’s employment with Services. There are no unfair labor practice charges, grievances or complaints pending or threatened by or on behalf of any Business Employee or former Business Employee in respect of such current or former Business Employee’s employment with Services.
(d) Services is, and for the past five (5) years has been, in compliance in all material respects with all laws regarding employment and employment practices including, without limitation, all Laws respecting terms and conditions of employment, equal employment opportunity, discrimination, harassment, disability rights or benefits, wages and hours (including classification of employees, minimum wage, overtime, and equitable pay practices), hours of work, child labor, civil rights, withholdings and deductions, classification and payment of employees, temporary employees, independent contractors, and consultants, restrictive covenant obligations, employment and compensation equity, the Worker Adjustment and Retraining Notification Act of
1988 and any similar state or local “mass layoff” or “plant closing” Laws (collectively, “WARN”), collective bargaining, occupational health and safety, workers’ compensation, immigration, employee trainings and notices, whistleblowing, affirmative action, automated employment decision tools (including artificial intelligence), unemployment insurance, and other laws in respect of any reduction in force (including notice, information and consultation requirements). No claims relating to non-compliance with the foregoing are pending or threatened. Services is not a party to, and not otherwise bound by, any consent decree, judgment, or arbitration award with, or citation by, any Governmental Authority relating to employees or employment practices, and no judgment, consent decree, or arbitration award imposes continuing remedial obligations or otherwise limits or affects Services’ ability to manage its employees, service providers, or job applicants. There has been no “mass layoff” or “plant closing” (as defined by WARN) with respect to Services within the one (1) year prior to Closing. Services has not, within the one (1) year prior to Closing, incurred, and no circumstances exist under which Services would reasonably be expected to incur, any liability arising from (i) the failure to pay wages (including overtime wages), (ii) the misclassification of employees as independent contractors and/or (iii) the misclassification of employees as exempt from the requirements of the Fair Labor Standards Act or similar state Laws.
(e) Except as set forth in Schedule 4.14(e), there are no actions, suits, complaints, claims, charges, governmental investigations or other legal proceedings against Services pending or, to the Knowledge of Services, threatened to be brought or filed, by or with any Governmental Authority or arbitrator concerning the employment or termination of employment or failure to employ by Services of any current or former Business Employee of Services, including but not limited to any claim relating to the Laws outlined in Section 4.14(d).
(f) The Business Employees who work in the United States have appropriate documentation to work in the United States. Services has not been notified in the past three (3) years of any pending or threatened investigation by any branch or department of U.S. Immigration and Customs Enforcement (“ICE”), or other federal agency charged with administration and enforcement of federal immigration laws concerning Services, and Services has never received any “no match” notices from ICE, the Social Security Administration, or the IRS.
(g) For the past five (5) years, no allegations of sexual harassment or sexual misconduct have been made by any Business Employee or current or former director or officer of Services against any other Business Employee or current or former director or officer of Services, and Services has not entered into any settlement agreements related to allegations of sexual harassment or sexual misconduct by any current or former director, officer, or Business Employee. For the past five (5) years, Services has promptly, thoroughly and impartially investigated all employment discrimination and sexual harassment allegations by, or against, any Business Employee. Services has taken prompt corrective action that is reasonably calculated to prevent further discrimination and harassment with respect to each such allegation with potential merit. Services has not incurred, and, to the Knowledge of Services, no circumstances exist under which Services would reasonably be expected to incur, any liability arising from such allegations.
(h) To the Knowledge of Services, no Business Employee is in any respect in violation of any term of any employment agreement, nondisclosure agreement, common law nondisclosure
obligation, fiduciary duty, restrictive covenant agreement, or any other written obligation related to his or her engagement with Services.
(i) Services is not and has not been: (i) a “contractor” or “subcontractor” (as defined by Executive Order 11246), (ii) required to comply with Executive Order 11246, (iii) required to maintain an affirmative action plan, or (iv) party to or bound by any contract requiring the payment of prevailing wage rates and/or benefits to workers.
(j) The Business Employees are sufficient in number and skill to allow WhiteHawk OP to operate the Business in substantially the same manner as it was conducted immediately prior to the Contribution Date.
Section 4.15 BENEFIT PLANS.
(a) Schedule 4.15(a) sets forth a correct and complete list of each material Plan.
(b) Each Plan has been established, maintained, administered and funded, in all material respects, in accordance with its terms and in compliance with all applicable Laws, including ERISA and the Code. Each Plan that is intended to be qualified within the meaning of Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service on which Services is entitled to rely, and, to the Knowledge of Services, nothing has occurred with respect to the operation of such Plan that could reasonably be expected to cause the loss of such qualification.
(c) Services has made available to WhiteHawk OP correct and complete copies of each Plan, and to the extent applicable: (i) all plan documents currently in effect, including any related trust documents, insurance contracts or other funding arrangements, and all amendments thereto, (ii) for the most recent plan year, (A) the IRS Form 5500 and all schedules thereto, (B) audited financial statements and (C) actuarial or other valuation reports; (iii) the most recent Internal Revenue Service determination letter or opinion letter, as applicable, (iv) the most recent summary plan descriptions and summary of material modifications, and (v) written summaries of all non-written Plans.
(d) No Plan is, and neither Services nor any of its ERISA Affiliates maintains, sponsors, contributes to, participates in, has any obligation to contribute to, or has within the past six (6) years sponsored, maintained, contributed to, participated in or had any obligation to contribute to, or has or has ever had any current or potential obligation or liability under or with respect to any (i) “employee pension benefit plan” (as defined in Section 3(2) of ERISA), subject to Title IV of ERISA, Section 302 of ERISA, or Section 412 or Section 430 of the Code, including a “multiemployer plan” (within the meaning of Section 3(37) or Section 4001(a)(3) of ERISA), (ii) multiple employer plan (as described in Section 413(c) of the Code or 29 C.F.R. § 4001.2), (iii) “multiple employer welfare arrangement” (within the meaning of Section 3(40) of ERISA), or (iv) plan or arrangement providing for, post-employment health or life insurance benefits or coverage, or other post-employment welfare benefits, to any Person (other than as required under Part 6 of Subtitle B of Title I of ERISA, Section 4980B of the Code, or any similar state laws, and at the sole expense of such Person).
(e) With respect to the Plans, all required contributions, benefits, premiums, payments or other liabilities or expenses have been timely made, provided or paid or properly accrued in accordance with GAAP in all material respects.
(f) With respect to any Plan, (i) no actions, suits, claims (other than routine claims for benefits in the ordinary course), audits, inquiries, proceedings or lawsuits are pending, or, to the Knowledge of Services, threatened against any Plan, the assets of any of the trusts under such plans or the plan sponsor or administrator, or against any fiduciary of any Plan with respect to the operation thereof, and (ii) to the Knowledge of Services, no facts or circumstances exist that could reasonably be expected to give rise to any such actions, suits, claims, audits, inquiries, proceedings or lawsuits. No event has occurred, and to the Knowledge of Services, no condition exists that would, including by reason of Services’ affiliation with any of its ERISA Affiliates, subject Services to any material Tax, fine, lien, penalty or other liability imposed by ERISA, the Code or other Laws.
(g) Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby, whether alone or in connection with any other event, could reasonably be expected to (i) result in any payment or benefit becoming due to any current or former employee or other service provider of Services or under any Plan, (ii) increase any amount of compensation or benefits otherwise payable to any current or former employee or other service provider of Services or under any Plan, or (iii) result in the acceleration of the time of payment, funding or vesting of any benefits to any current or former employee or other service provider of Services or under any Plan.
(h) Services does not maintain any obligation to gross-up or reimburse any individual for any Tax or related interest or penalties incurred by such individual under any Plan, including under Section 409A of the Code or otherwise, other than as may be provided under an expense reimbursmenet policy of Services made available to WHIC or WhiteHawk OP prior to the date hereof.
Section 4.16 LOANS TO THE COMPANY OR SERVICES. There are no outstanding loans to, or other Indebtedness incurred by, the Company or Services.
Section 4.17 LICENSES AND PERMITS.
(a) (i) The Company holds all material licenses, permits and other regulatory and governmental authorizations (“Governmental Licenses”) that are required to be maintained by it in connection with the conduct of the Business, (ii) each such Governmental License is valid and in full force and effect in all material respects and will not be invalidated by consummation of the Transactions, and (iii) the Company is and has been in compliance in all material respects with all of the terms and requirements of each Governmental License, and there are no disputes, oral agreements or forbearance programs in effect as to any Governmental License.
(b) (i) Services holds all Governmental Licenses that are required to be maintained by it in connection with the conduct of the Business, (ii) each such Governmental License is valid and in full force and effect in all material respects and will not be invalidated by consummation of the Transactions, and (iii) Services is and has been in compliance in all material respects with all of
the terms and requirements of each Governmental License, and there are no disputes, oral agreements or forbearance programs in effect as to any Governmental License.
Section 4.18 ABSENCE OF UNDISCLOSED LIABILITIES.
(a) There are no liabilities or obligations relating to the Company or Business of any nature, whether accrued, contingent or otherwise, and, to the Knowledge of the Contributor, there is no existing condition, situation or set of circumstances that reasonably could be expected to result in such a liability or obligation, except for liabilities or obligations reflected in the Company Financial Statements previously provided to WhiteHawk OP (to the extent such liabilities or obligations reflected in the Company Financial Statements are reasonably apparent on their face to be specific liabilities or obligations of the Company) or that were incurred since January 1, 2026 in the ordinary course of business (none of which relates to any breach of Contract, Action or violation of Law).
(b) There are no liabilities or obligations relating to Services or Business of any nature, whether accrued, contingent or otherwise, and, to the Knowledge of the Company, there is no existing condition, situation or set of circumstances that reasonably could be expected to result in such a liability or obligation, except for existing payroll liabilities or obligations incurred in the ordinary course of business and not yet due or payable.
Section 4.19 REAL PROPERTY. Neither the Company nor Services owns or leases any real property, has ever owned or leased any real property, and will not as of the Contribution Date own or lease any real property.
Section 4.20 INTELLECTUAL PROPERTY; IT SYSTEMS.
(a) Neither the Company nor Services owns or purports to own or license any Intellectual Property.
(b) Neither the Company nor Services owns or purports to own, lease or license any IT Systems.
(c) The Company and the conduct and operation of the Business, as currently conducted and as currently proposed to be conducted, have not infringed, misappropriated, or otherwise violated, and do not currently infringe, misappropriate, or otherwise violate any Intellectual Property of any Person. The Company is not the subject of any pending or threatened legal proceedings alleging or involving any of the foregoing.
(d) Services and the conduct and operation of the Business, as currently conducted and as currently proposed to be conducted, have not infringed, misappropriated, or otherwise violated, and do not currently infringe, misappropriate, or otherwise violate any Intellectual Property of any Person. Services is not the subject of any pending or threatened legal proceedings alleging or involving any of the foregoing.
Section 4.21 ENVIRONMENTAL LIABILITY.
(a) The Company has not been subject to, and there are no currently pending legal, administrative, arbitral or other proceedings, or claims, actions, causes of action, private environmental investigations or remediation activities or governmental investigations of any nature seeking to impose, or that are reasonably likely to result in the imposition, on the Company of any material liability or obligation arising under common law or under any local, state or federal environmental statute, regulation or ordinance, pending or threatened against the Company, and the Company is and has been in material compliance with all such laws, statutes, regulations and ordinances. The Company is not subject to any agreement, order, judgment, decree, letter or memorandum by or with any Governmental Authority or third party imposing any material liability or obligation on the Company with respect to the foregoing.
(b) Services has not been subject to, and there are no currently pending legal, administrative, arbitral or other proceedings, or claims, actions, causes of action, private environmental investigations or remediation activities or governmental investigations of any nature seeking to impose, or that are reasonably likely to result in the imposition, on Services of any material liability or obligation arising under common law or under any local, state or federal environmental statute, regulation or ordinance, pending or threatened against Services, and Services is and has been in material compliance with all such laws, statutes, regulations and ordinances. Services is not subject to any agreement, order, judgment, decree, letter or memorandum by or with any Governmental Authority or third party imposing any material liability or obligation on Services with respect to the foregoing.
Section 4.22 POWERS OF ATTORNEY.
(a) There are no outstanding powers of attorney executed on behalf of the Company.
(b) There are no outstanding powers of attorney executed on behalf of Services.
Section 4.23 TRANSACTIONS WITH RELATED PARTIES. Except as set forth on Schedule 4.23, there are no outstanding loans, receivables or payables from or to the Contributor and its Affiliates, on the one hand, and any Business Employee, Services or the Company, on the other hand. Except as set forth on Schedule 4.23, there is no: (i) agreement between the Company or Services, on the one hand, and (A) the Contributor, (B) any current or former officer, employee, director, manager, partner, beneficiary or executor of the Contributor or the Company or (C) any Affiliate of the Persons identified in clauses (A) and (B), excluding the Company and Services, on the other hand; or (ii) agreements requiring payments to be made by the Company or Services to any Person on a change of control or otherwise as a result of the consummation of the Transactions.
Section 4.24 IMPROPER PAYMENTS.
(a) Neither the Company nor any director, officer, employee, Affiliate, representative, or any other Person acting for or on behalf of the Company has (a) made, offered, or promised to make or offer any payment, loan, or transfer of anything of value, including any reward, advantage, or benefit of any kind, to or for the benefit of any Government Official, candidate for public office, political party, or political campaign, for the purpose of (i) influencing any act or decision of such Government Official, candidate, party or campaign, (ii) inducing such Government Official, candidate, party or campaign to do or omit to do any act in violation of a lawful duty, (iii) obtaining
or retaining business for or with any Person, (iv) expediting or securing the performance of official acts of a routine nature, or (v) otherwise securing any improper advantage; (b) paid, offered, or promised to pay or offer any bribe, payoff, influence payment, kickback, unlawful rebate, or other similar unlawful payment of any nature; (c) made, offered or promised to make or offer any unlawful contributions, gifts, entertainment, or other unlawful expenditures; (d) established or maintained any unlawful fund of corporate monies or other properties; (e) created or caused the creation of any false or inaccurate books and records of the Company; or (f) otherwise violated any Anti-Corruption Law. The Company has not received any written communication that alleges that the Company, or any of its representatives, is, or may be, in violation of, or has, or may have, any liability under, any Anti-Corruption Law, has not made any voluntary disclosure to any Governmental Authority relating to any Anti-Corruption Law, has not been the subject of any investigation or inquiry regarding compliance with any Anti-Corruption Law, and has not been assessed any fine or penalty under any Anti-Corruption Law.
(b) Neither Services nor any director, officer, employee, Affiliate, representative, or any other Person acting for or on behalf of Services has (a) made, offered, or promised to make or offer any payment, loan, or transfer of anything of value, including any reward, advantage, or benefit of any kind, to or for the benefit of any Government Official, candidate for public office, political party, or political campaign, for the purpose of (i) influencing any act or decision of such Government Official, candidate, party or campaign, (ii) inducing such Government Official, candidate, party or campaign to do or omit to do any act in violation of a lawful duty, (iii) obtaining or retaining business for or with any Person, (iv) expediting or securing the performance of official acts of a routine nature, or (v) otherwise securing any improper advantage; (b) paid, offered, or promised to pay or offer any bribe, payoff, influence payment, kickback, unlawful rebate, or other similar unlawful payment of any nature; (c) made, offered or promised to make or offer any unlawful contributions, gifts, entertainment, or other unlawful expenditures; (d) established or maintained any unlawful fund of corporate monies or other properties; (e) created or caused the creation of any false or inaccurate books and records of Services; or (f) otherwise violated any Anti-Corruption Law. Services has not received any written communication that alleges that Services, or any of its representatives, is, or may be, in violation of, or has, or may have, any liability under, any Anti-Corruption Law, has not made any voluntary disclosure to any Governmental Authority relating to any Anti-Corruption Law, has not been the subject of any investigation or inquiry regarding compliance with any Anti-Corruption Law, and has not been assessed any fine or penalty under any Anti-Corruption Law.
Section 4.25 NO OTHER OPERATIONS.
(a) Except as set forth in Schedule 4.25(a) and except for activities such as opening and maintaining bank accounts and filing Tax Returns and matters contemplated by this Agreement, since its formation, the Company has not engaged in, and is not currently engaged in, any trade, business, or activity other than providing management services to WhiteHawk OP and its Affiliates.
(b) Except as set forth in Schedule 4.25(b) and except for activities such as opening and maintaining bank accounts and filing Tax Returns and matters contemplated by this Agreement, since its formation, Services has not engaged in, and is not currently engaged in, any trade,
business, or activity other than providing employment services to WhiteHawk OP and its Affiliates.
Section 4.26 SUFFICIENCY OF ASSETS.
(a) After giving effect to the transactions contemplated by this Agreement and the other Transaction Documents, (i) the properties, assets, and rights owned, leased, or licensed by WHIC and its Affiliates will collectively constitute all of the properties, assets, and rights, necessary to conduct the Business, and (ii) the Contributor and its Affiliates will not own, lease or license any properties, assets, or rights used in or relating to the Business.
(b) Other than at-will employment arrangements between Services and the Business Employees, Services has no assets or operations or is a party to any Contract.
Section 4.27 INVESTMENT COMPANY ACT.
(a) The Company is not required to be registered as an investment company under the Investment Company Act of 1940, as amended.
(b) Services is not required to be registered as an investment company under the Investment Company Act of 1940, as amended.
Section 4.28 BROKERS, FINDERS AND ADVISORS. Except as set forth in Schedule 4.28, neither the Company, Services nor the Contributor has entered into any agreement resulting in, or which will result in, the Company, WhiteHawk OP, or any Affiliate thereof having any obligation or liability as a result of the execution and delivery of this Agreement and the consummation of the Transactions for any brokerage, finder or advisory fees or charges of any kind whatsoever.
Article V
REPRESENTATIONS AND WARRANTIES OF WHITEHAWK OP and WHIC
Each of WhiteHawk OP and WHIC hereby represent and warrant, jointly and severally, to the Contributor as follows, as of the date hereof and as of the Contribution Date and Closing Date (except as to any representations and warranties that expressly speak as of a specified date or time, in which case only as of such specified date or time):
Section 5.01 ORGANIZATION AND QUALIFICATION.
(a) WhiteHawk OP is a duly formed limited partnership validly existing and in good standing under the Laws of the State of Delaware and is qualified to do business in each of the states in which it is required to be qualified, except where the failure to be so qualified would not reasonably be expected to prevent or materially delay the ability of WhiteHawk OP to perform its obligations under the Agreement and the Transaction Documents or consummate the IPO. WhiteHawk OP is not in material default under any provision of its certificate of limited partnership, partnership agreement or other organizational document.
(b) WHIC is a duly formed corporation validly existing and in good standing under the Laws of the State of Delaware and is qualified to do business in each of the states in which it is required to be qualified, except where the failure to be so qualified would not reasonably be expected to prevent or materially delay the ability of WHIC to perform its obligations under the Agreement and the Transaction Documents or consummate the IPO. WHIC is not in material default under any provision of its certificate of incorporation, bylaws or other organizational document.
Section 5.02 DUE AUTHORIZATION; APPROVALS.
(a) WhiteHawk OP has all necessary limited partnership power and authority to execute and deliver this Agreement and the Transaction Documents to which it is a party, to perform its obligations hereunder and to consummate the Transactions and the IPO. The execution and delivery of this Agreement and the Transaction Documents to which it is a party constitutes the legal, valid and binding agreement of WhiteHawk OP enforceable against WhiteHawk OP in accordance with its terms, subject to the Enforceability Exceptions. The execution and delivery of this Agreement and the Transaction Documents to which WhiteHawk OP is a party and the performance by WhiteHawk OP of its obligations hereunder and thereunder has been approved by the WH OP GP and no other limited partnership or other proceedings on the part of WhiteHawk OP is necessary to authorize the execution and delivery by WhiteHawk OP of this Agreement or the Transaction Documents to which WhiteHawk OP is a party or the performance by WhiteHawk OP of its obligations hereunder or thereunder.
(b) WHIC has all necessary corporate power and authority to execute and deliver this Agreement and the Transaction Documents to which it is a party, to perform its obligations hereunder and to consummate the Transactions and the IPO. The execution and delivery of this Agreement and the Transaction Documents to which it is a party constitutes the legal, valid and binding agreement of WHIC enforceable against WHIC in accordance with its terms, subject to the Enforceability Exceptions. The execution and delivery of this Agreement and the Transaction Documents to which WHIC is a party and the performance by WHIC of its obligations hereunder and thereunder has been approved by all necessary corporate action and no other proceedings on the part of WHIC is necessary to authorize the execution and delivery by WHIC of this Agreement or the Transaction Documents to which WHIC is a party or the performance by WHIC of its obligations hereunder or thereunder.
Section 5.03 BROKERS, FINDERS AND ADVISORS. Neither WHIC nor WhiteHawk OP has entered into any agreement resulting in, or which will result in, the Contributor or any Affiliate thereof having any obligation or liability as a result of the execution and delivery of this Agreement and the consummation of the Transactions for any brokerage, finder or advisory fees or charges of any kind whatsoever.
Section 5.04 COMMON UNITS. All of the WhiteHawk OP Units and Earnout OP Units have been duly authorized and, solely in the case of the WhiteHawk OP Units, are validly issued, fully paid and non-assessable. The Earnout OP Units will be validly issued, fully paid and non-assessable at the time of their issuance pursuant to Section 2.02(f). The Contributor will acquire the WhiteHawk OP Units and the Earnout OP Units, if any, in accordance with Section 2.01 and Section 2.02, as applicable, free and clear of all Encumbrances (other than those imposed by
Section 7.04(d) or applicable securities Laws and any transfer restrictions set forth in the A&R OP LPA). There are no restrictions on transfer of the WhiteHawk OP Units and Earnout OP Units except as referenced in this Agreement, the Management Employment Agreements and in the A&R OP LPA.
Section 5.05 CLASS B COMMON STOCK. As of the Closing, all of the WHIC Shares and the Earnout WHIC Shares have been duly authorized and, solely in the case of the WHIC Shares that are not Earnout WHIC Shares, are validly issued, fully paid and non-assessable. The Earnout WHIC Shares will be validly issued, fully paid and non-assessable at the time of their issuance pursuant to Section 2.02(f). The Contributor will acquire the WHIC Shares and the Earnout WHIC Shares, if any, in accordance with Section 2.01 and Section 2.02, as applicable, free and clear of all Encumbrances (other than those imposed by Section 7.04(d) or applicable securities Laws). There are no restrictions on transfer of the WHIC Shares and the Earnout WHIC Shares except as referenced in this Agreement and in the A&R WHIC Charter.
Section 5.06 TAX MATTERS. For all periods from its formation through the Contribution, WhiteHawk OP has been property classified as an entity disregarded as separate from its owner for U.S. federal income Tax purposes pursuant to Treasury Regulations Section 301.7701-3(b)(ii) and no election has been made or is pending to change such classification.
Section 5.07 NO CONFLICT.
(a) Neither the execution, delivery, nor performance of this Agreement or any other Transaction Document to which it is a party by WhiteHawk OP or WHIC, nor any action or omission on the part of WhiteHawk OP or WHIC required pursuant hereto or thereto, nor the consummation of the Transactions by WhiteHawk OP or WHIC will (i) violate or conflict with, or result in a breach or default of, any provision of any resolution adopted by the board of managers (or equivalent governing body), members or other equityholders, the certificate of formation, operating agreement or equivalent governing documents of WhiteHawk OP or WHIC, (ii) result in a breach or violation of, or constitute a default under, any Legal Requirement applicable to the WhiteHawk OP or WHIC, or (iii) constitute a default or result in the cancellation, termination, acceleration, breach or violation of any Contract or other material document to which the WhiteHawk OP or WHIC is a party or by which any of their properties are bound, or give any Person the right to challenge any such transaction, to declare any such default, cancellation, termination, acceleration, breach or violation or to exercise any remedy or obtain any other relief under any such agreement, instrument, indenture or other material document or under any Legal Requirement; and (b) neither WhiteHawk OP nor WHIC is or will be required to give any notice to, make any filing with, or obtain any consent from any Person in connection with the execution and delivery of this Agreement or any other Transaction Document to which it is a party.
Section 5.08 NO OTHER REPRESENTATIONS AND WARRANTIES. Neither the Contributor nor any of its Affiliates or representatives has made any representation or warranty, express or implied, as to the Company, the Business, the Interests, or any information provided to WhiteHawk OP or WHIC in connection with the Transactions, except as expressly set forth in Article IV (including the related portions of the Schedules) or any other Transaction Document. The Contributor shall not have or be subject to any liability to WhiteHawk OP or WHIC resulting
from the distribution to WhiteHawk OP or WhiteHawk OP’s use of, any such information, including any information, documents, projections, forecasts or other materials made available to WhiteHawk OP in expectation of the Transactions, unless such information is expressly included in a representation or warranty contained in Article IV (including the related portions of the Schedules) or any other Transaction Document. Neither WhiteHawk OP nor WHIC has relied and neither is relying on any statement, representation or warranty, oral or written, express or implied, made by the Company or any of their respective Affiliates or representatives as to the Company, the Business, or the Interests, except as expressly set forth in Article IV (including the related portions of the Schedules) or any other Transaction Document.
Article VI
COVENANTS
Section 6.01 CONDUCT OF BUSINESS PRIOR TO CLOSING. From the date hereof until the Closing or earlier termination of this Agreement, except as otherwise expressly provided in this Agreement or Schedule 6.01, the Company and Services shall, and the Contributor shall cause the Company and/or Services to: (i) conduct the Business in the ordinary course, consistent with past practice; (ii) use commercially reasonable efforts to preserve intact its present organization; (iii) use commercially reasonable efforts to keep available the services of its current employees and of all other Persons who provide services to WhiteHawk OP and its respective Affiliates; and (iv) use commercially reasonable efforts to preserve its relationships with others having business dealings with it relating to the Business. Without limiting the generality of the foregoing, except as otherwise contemplated by this Agreement, from the date hereof to the Closing, without the prior written consent of WhiteHawk OP, the Contributor (with respect to the Business) shall not, and shall cause the Company and/or Services not to:
(a) enter into any Contract;
(b) fail to timely pay any account payable relating to the Business in the ordinary course of business, other than amounts that are subject to dispute in good faith;
(c) enter into any commitment or transaction relating to the Business except in the ordinary course of business;
(d) enter into any new line of business or discontinue an existing line of business;
(e) incur, create, assume or guarantee any Indebtedness;
(f) make any loans, advances or capital contributions to, or investments in, any other Person (including to any of its officers, directors, affiliates, agents or consultants), make any change in its existing borrowing or lending arrangements for or on behalf of such Persons, or enter into any “keep well” or similar agreement to maintain the financial condition of another entity;
(g) allow the lapse or termination of material policies of insurance unless contemporaneously replaced with comparable policies, other than changes in terms, deductibles and coverage limits of any such material policies of insurance;
(h) (1) make or permit to be made any Tax election inconsistent with past practice or change or revoke any Tax election, (2) change any method of accounting (including for Tax purposes), (3) file any amended Tax Return or file any Tax Return in a manner inconsistent with past practice, (4) settle or compromise any Proceeding relating to Taxes, (5) agree to an extension or waiver of the statute of limitations with respect to any claim or assessment with respect to Taxes (other than such extension that arises solely as a result of an extension of time to file a Tax Return obtained in the ordinary course of business), (6) enter into any “closing agreement” within the meaning of Section 7121 of the Code (or any similar provision of applicable Tax Law), (7) enter into any Tax allocation agreement or Tax sharing agreement (other than (A) any commercial agreement entered into in the ordinary course of business that does not relate primarily to Taxes or (B) to the extent relating to the transactions contemplated by this Agreement) (8) change the Tax classification of the Company or Services, or (9) fail to pay any Taxes when due and payable;
(i) increase the compensation or benefits of any current or former employee or other service provider of the Business, other than (1) in the ordinary course of business consistent with past practices, (2) to the extent required by Law or (3) as required by the terms of any existing Plan set forth on Schedule 4.15(a);
(j) establish, adopt, enter into, amend or terminate any Plan or any plan, agreement, program, policy, practice, trust, fund or other arrangement that would be a Plan if it were in existence as of the date hereof;
(k) commit to any single or aggregate capital expenditure or commitment that would impose any obligations on WhiteHawk OP or its Affiliates after the Closing (including the Company);
(l) acquire, by merger, consolidation, acquisition of stock or assets, or otherwise, any business or Person or division thereof;
(m) cancel any debts or waive any claims or rights relating to the Business, the Company or Services;
(n) enter into any lease for real property or assign its rights under, amend or terminate any lease with respect to real property;
(o) issue, sell or grant any Equity Interests of the Company or Services, or any securities or rights convertible into, exchangeable for, or evidencing the right to subscribe for any Equity Interests of the Company or Services, or any rights, warrants, options, calls, commitments or any other agreements of any character to purchase or acquire any Equity Interests of the Company or Services or any securities or rights convertible into, exchangeable for, or evidencing the right to subscribe for, any Equity Interests of the Company or Services or any other securities in respect of, in lieu of, or in substitution for, the Equity Interests of the Company or Services that are outstanding on the date hereof;
(p) initiate any claim, action, suit or proceeding or settle or compromise any claim, action, suit or proceeding pending or threatened against it or relating to the Business, other than any such settlement or compromise that involves solely payment of money damages that is paid on or prior to Closing; provided, however, for the avoidance of doubt, that neither the Company nor Services
shall agree to, or shall, settle any claim, action, suit or proceeding if the settlement involves a conduct remedy or injunctive or similar relief or has a restrictive impact on the Business as conducted as of the date hereof;
(q) other than in the ordinary course of business consistent with past practice, hire or terminate, or enter into any employment contract with, any individual, engage the services of any individual service provider, or promote or appoint any Person to any position;
(r) make or authorize any change in its organizational documents;
(s) take, or agree or otherwise commit to take, any action that would reasonably be expected to, individually or in the aggregate, prevent, materially delay or materially impede the consummation of the Transactions;
(t) take or authorize any action that constitutes Leakage; or
(u) take, or agree or otherwise commit to take, any of the foregoing actions or any other action that if taken would reasonably be expected to prevent the satisfaction of any condition set forth in Section 3.02(c).
Section 6.02 ACCESS TO INFORMATION. During the period from the date hereof to the Closing or earlier termination of this Agreement, the Contributor shall furnish WhiteHawk OP and its representatives with any information and data (including copies of contracts, plans and other books and records) concerning the Business, the Company, Services and operations of the Business as WhiteHawk OP or any of its representatives reasonably may request.
Section 6.03 CONSENTS AND APPROVALS.
(a) Upon the terms and subject to the conditions set forth in this Agreement, WhiteHawk OP, WHIC, the Company, Services and the Contributor shall, and shall cause their respective Affiliates to, use reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties hereto, all things necessary, proper and advisable under applicable Law or pursuant to any Contract to consummate and make effective, as promptly as practicable, the Transactions, including (i) taking all actions necessary to cause the conditions to Closing set forth in Section 3.02(c) hereof to be satisfied, (ii) preparation and filing of all documentation to effect all required filings, notices, petitions, statements, registrations, submissions and applications and obtaining all necessary actions or nonactions, waivers, consents, authorizations and approvals from Governmental Authorities or other Persons necessary in connection with the consummation of the Transactions and making all necessary registrations and filings (including filings with Governmental Authorities, if any) and taking all reasonable steps as may be necessary to obtain an approval or waiver from, or to avoid legal proceeding by, any Governmental Authority or other Persons necessary in connection with the consummation of the Transactions, (iii) reasonably defending any legal proceedings, whether judicial or administrative, challenging this Agreement or the consummation of the Transactions,
and (iv) execution and delivery of any additional instruments necessary to consummate the Transactions and to fully carry out the purposes of this Agreement.
(b) In connection with, and without limiting the foregoing, each of WhiteHawk OP, WHIC, the Company, Services and the Contributor shall give (or shall cause to be given) any notices to any Person, and each shall use, and cause each of their respective Affiliates to use, reasonable efforts to obtain any consents from any Person not covered by Section 6.03(a) that are necessary, proper and advisable to consummate the Transactions. Each of WhiteHawk OP, WHIC, the Company, Services and the Contributor will furnish to the others such necessary information and reasonable assistance as the others may request in connection with the preparation of any required governmental filings or submissions and will cooperate in responding to any inquiry from a Governmental Authority, including promptly informing the other parties of such inquiry, consulting in advance before making any presentations or submissions to a Governmental Authority, and supplying each other with copies of all material correspondence, filings or communications between any party and any Governmental Authority with respect to this Agreement. To the extent reasonably practicable, WhiteHawk OP, WHIC, the Company, Services and the Contributor or their respective representatives shall have the right to review in advance and each of the parties will consult the others on, all the information relating to the other and each of their Affiliates that appears in any filing made with, or written materials submitted to, any Governmental Authority in connection with the Transactions, except that confidential competitively sensitive business information may be redacted from such exchanges. To the extent reasonably practicable, neither WhiteHawk OP, WHIC, the Company, Services or the Contributor shall, nor shall they permit their respective representatives to, participate independently in any meeting or engage in any substantive conversation with any Governmental Authority in respect of any filing, investigation or other inquiry without giving the other parties prior notice of such meeting or conversation and, to the extent permitted by applicable Law, without giving the other parties the opportunity to attend or participate (whether by telephone or in person) in any such meeting with such Governmental Authority. Notwithstanding the foregoing, obtaining any approval or consent from any Person solely pursuant to this Section 6.03(b) shall not be a condition to the obligations of the parties to consummate the Transactions.
(c) Notwithstanding anything to the contrary in this Agreement, in connection with obtaining any approval or consent from any Person (other than any Governmental Authority) with respect to the Transactions, none of WhiteHawk OP, WHIC, the Company, Services or the Contributor or any of their respective Affiliates or representatives shall be obligated to pay or commit to pay to such Person whose approval or consent is being solicited any cash or other consideration, make any accommodation or commitment or incur any liability or other obligation to such Person, in each case that is not conditioned upon the occurrence of the Closing. Subject to the immediately foregoing sentence, the parties shall cooperate with respect to reasonable accommodations that may be requested or appropriate to obtain such consents. WhiteHawk OP, WHIC, the Company, Services and the Contributor acknowledge and agree that no approval or consent of any such Person solely pursuant to this Section 6.03(c) is a condition to the obligations of any party to effect the Transactions.
Section 6.04 TAX MATTERS.
(a) Filing of Tax Returns.
(i) The Company shall timely prepare and file, or cause to be timely prepared and filed, in each case at its sole expense, all Tax Returns that are required to be filed by the Company and Services for Pre-Closing Tax Periods that are due on or before the Closing Date. Such Tax Returns shall be prepared in a manner consistent with the past practices applicable to the preparation of such Tax Returns including all elections, accounting methods and conventions, except as required by applicable Tax Law. The Company shall provide any such Tax Return that is an income Tax Return to WhiteHawk OP for its review, comment, and consent, which consent shall not be unreasonably withheld, conditioned or delayed, no less than 30 days prior to the due date for filing such Tax Return (including extensions).
(ii) From and after the Closing Date and subject to the consent right noted below, WhiteHawk OP shall have the exclusive obligation and authority, at its sole cost and expense, to prepare and file, or cause to be prepared and filed, all Tax Returns of the Company and Services for all Pre-Closing Tax Periods (including, for the avoidance of doubt, Tax Returns relating to the Saddle Periods) that are required to be filed after the Closing Date, including for those jurisdictions and Governmental Authorities that permit or require a short period Tax Return for the period ending on the Closing Date, and shall timely pay Taxes shown as due and owning on such Tax Returns; provided, that the Contributor shall be responsible for any such Taxes (excluding any such Taxes attributable to the portion of any Straddle Period beginning after the Closing Date) and shall pay to WhiteHawk OP the amount of any such Taxes at least five (5) days prior to the due date for such Taxes (excluding any such Taxes attributable to the portion of any Straddle Period beginning after the Closing Date). The Contributor shall cooperate fully and promptly in connection with the preparation and filing of such Tax Returns. All such Tax Returns shall be prepared in accordance with the past practice of the Company or Services, as applicable, except as required by applicable Tax Law. WhiteHawk OP shall provide any such Tax Return to the Contributor for its review, comment, and consent, which consent shall not be unreasonably withheld, conditioned or delayed, no less than 30 days prior to the due date for filing such Tax Return (including extensions). WhiteHawk OP shall make, or cause to be made, such revisions to such Tax Returns as a reasonably requested by the Contributor prior to the filing thereof.
(iii) To the extent permissible under applicable Law, the parties agree to elect (and have the Company and Services elect) to have each Tax year of the Company and Services to end on the Closing Date. If such election is not permitted or required in a jurisdiction with respect to a specific Tax such that the Company or Services is required to file a Tax Return for a Straddle Period, the Taxes for such Straddle Period (A) shall be allocable to the Contributor to the extent such Taxes are allocated to the portion of the Straddle Period ending at the end of the Closing Date pursuant to this Section 6.04(a)(iii) and (B) shall be allocable to WhiteHawk OP to the extent such Taxes are allocated to the portion of the Straddle Period beginning on the day after the Closing Date pursuant to this Section 6.04(a)(iii). For any Straddle Period, the Taxes of the Company or Services shall be allocated between the portion of the Straddle Period ending on the Closing Date and the portion of the Straddle Period beginning on the day after the Closing Date: (1) in the case of Taxes based on income, gross or net sales payments, receipts or payroll, on the basis of a deemed closing of the books and records of the Company or Services, as applicable, as
of the end of the Closing Date and (2) in the case of any other Taxes, pro rata on a per diem basis based on a fraction, the numerator of which is the number of calendar days in the portion of the period ending on the Closing Date and the denominator of which is the number of calendar days in the entire Straddle Period.
(b) Cooperation on Tax Matters. WhiteHawk OP, the Company and the Contributor shall cooperate fully, as and to the extent reasonably requested by the other parties, in connection with the preparation and filing of any Tax Returns, the conduct of any Tax audit, litigation or other proceeding with respect to Taxes or the Intended Tax Treatment, or in connection with determining any liability for Taxes of, or with respect to, the Company or Services. Such cooperation shall include (i) the retention and (upon another party’s reasonable written request) the provision of records and information that are reasonably relevant to any such Tax Return or such Tax audit, litigation or other proceeding and (ii) making employees reasonably available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder; provided that the party requesting assistance shall pay the reasonable out-of-pocket expenses incurred by the party providing such assistance; provided, further, that no party shall be required to provide assistance at times or in amounts that would interfere unreasonably with the business and operations of such party. The parties agree: (i) to retain all books and records with respect to Tax matters pertinent to the Company relating to any Pre-Closing Tax Period and to abide by all record retention agreements entered into with any Governmental Authority and (ii) to give the other parties reasonable written notice prior to destroying or discarding any such books and records and, if the other party so requests, WhiteHawk OP, the Company and the Contributor, as the case may be, shall allow the other party to take possession of such books and records; provided, however, that if WhiteHawk OP reasonably determines that any records, information or material are protected by attorney-client privilege and that the disclosure of such records, information or material would reasonably be expected to jeopardize such privilege, such records, information or material are not required to be provided pursuant to this Section 6.04(b).
(c) Refunds. Any refunds or credits of Taxes of the Company or Services for any Pre-Closing Tax Period that are received or realized by WhiteHawk OP, the Company or their Affiliates, shall be for the account of the Contributor, and WhiteHawk OP or the Company shall pay over to the Contributor any such refund or the amount of any such credit within fifteen (15) Business Days after receipt or entitlement thereto; provided that any such refund payable pursuant to this Section 6.04(c) shall be net of any Taxes or reasonable out-of-pocket costs or expenses incurred by WhiteHawk OP or the Company in connection with obtaining such refund; provided further, that if such refund is subsequently disallowed or required to be returned to the applicable Governmental Authority, the Contributor agrees to repay promptly to WhiteHawk OP (or the Company) the amount of such refund, together with any interest, penalties or other additional amounts imposed by such Governmental Authority.
(d) Amended Tax Returns. WhiteHawk OP shall not, and shall not cause or permit the Company or Services to, (i) amend any Tax Returns of the Company or Services filed with respect to any Tax year ending on or before the Closing Date or any Straddle Period, (ii) make or revoke any Tax election for the Company or Services that has retroactive effect to any Tax year ending on or before the Closing Date and adversely affects the Taxes or Tax Returns of the Company or Services for any Pre-Closing Tax Period or Straddle Period, (iii) extend or waive the applicable statute of limitations with respect to a Tax of the Company or Services for any Pre-Closing Tax
Period or Straddle Period, (iv) file any ruling request with any Governmental Authority that relates to Taxes or Tax Returns of the Company or Services for a Pre-Closing Tax Period or Straddle Period, or (v) enter into or pursue a voluntary disclosure agreement with a Governmental Authority with respect to filing Tax Returns or paying Taxes for a Pre-Closing Tax Period or Straddle Period, in each such case without the prior written consent of the Contributor, which consent shall not be unreasonably withheld, conditioned or delayed.
(e) Transfer Taxes. All transfer, documentary, sales, use, stamp, registration and other similar Taxes and fees (including any penalties and interest) incurred in connection with this Agreement (“Transfer Taxes”) will be split evenly between the Contributor, on the one hand, and WhiteHawk OP, on the other hand, and all necessary Tax Returns and other documentation with respect to Transfer Taxes will be prepared and filed by the party required to file such Tax Returns under applicable Law.
(f) Withholding. Any and all payments by or on account of any obligation under this Agreement shall be made without deduction or withholding for any Taxes, except as required by applicable Law. To the extent any party determines it is required to deduct or withhold any amounts payable pursuant to this Agreement, such party shall provide prompt written notice to the party in respect of which such deduction or withholding is required and shall cooperate therewith to reduce or eliminate such deduction or withholding to the maximum extent permitted by applicable Law.
(g) Tax Contests.
(i) If any Governmental Authority issues to any party hereto a notice of proposed adjustment, or a notice of its intent to audit or conduct another Action with respect to a Tax Return or Taxes of the Company or Services for any Pre-Closing Tax Period or Straddle Period that could reasonably be expected to require the Contributor to indemnify any WhiteHawk OP Indemnified Party pursuant to this Agreement (each, a “Tax Contest”), then the recipient of such notice shall notify the other parties of its receipt of such notice from the Governmental Authority within five (5) days of receipt and provide the other parties with copies of all material correspondence and other material documents received from the Governmental Authority.
(ii) WhiteHawk OP shall control any Tax Contest; provided, however, that (i) the Contributor may (at its sole cost and expense) participate in (but not control) any Tax Contest, including through the retention of its own legal counsel, and (ii) WhiteHawk OP shall (A) keep the Contributor reasonably and timely informed of all material developments and events relating to such Tax Contest, (B) consult with the Contributor in connection with the conduct of any such Tax Contest and (C) not settle or compromise any Tax Contest without the prior written consent of the Contributor (such consent not to be unreasonably withheld, conditioned or delayed).
(h) Allocation.
(i) Within sixty (60) days of the final determination of the Contribution and Subscription Closing Consideration, WhiteHawk OP shall provide to the Contributor a
schedule allocating the Contribution and Subscription Closing Consideration (and any other items properly treated as consideration for U.S. federal income Tax purposes) among the assets of the Company and Services (the “Allocation Schedule”).
(ii) If within thirty (30) days of receiving the Allocation Schedule, the Contributor has not objected, the Allocation Schedule shall be final and binding. If within thirty (30) days the Contributor objects to the Allocation Schedule, WhiteHawk OP and the Contributor shall cooperate in good faith to resolve their differences. If after thirty (30) days, WhiteHawk OP and the Contributor are unable to agree, the parties shall retain the Accounting Firm pursuant to the provisions of Section 2.02(e), mutatis mutandis, to resolve any remaining disputes. The determination of the Accounting Firm shall be final and binding on all parties.
(iii) The parties hereto shall make appropriate adjustments to the Allocation Schedule to reflect changes in the Contribution and Subscription Closing Consideration. The parties hereto agree for all Tax reporting purposes to report the transactions in accordance with the agreements herein and the Allocation Schedule, as adjusted pursuant to the preceding sentence, and to not take any position during the course of any audit or other proceeding inconsistent with the agreements as to Tax treatment herein or with such schedule unless required by a determination of the applicable Governmental Authority within the meaning of Section 1313(a) of the Code.
Section 6.05 SUPPLEMENTAL DISCLOSURE. Subject to applicable Law, WhiteHawk OP, on the one hand, and the Contributor and the Company, on the other hand, shall promptly, upon having or gaining actual knowledge of any event, condition or fact that would reasonably be expected to cause any of the conditions to the other party’s obligation to consummate the Transactions not to be fulfilled, notify the other party hereto, and furnish the other party hereto any information it may reasonably request with respect thereto.
Section 6.06 CONFIDENTIALITY; PUBLICITY. From and after the date hereof until the Closing, WhiteHawk OP shall, and shall cause their respective Affiliates and representatives to, keep confidential and not disclose to any Person documents and information concerning the Contributor or the Company disclosed to WhiteHawk OP or its Affiliates or representatives in connection with the Transactions. This Section 6.06 shall not apply to disclosure of information (a) to the extent that it is generally known to the public through no fault of WhiteHawk OP or any of its Affiliates or representatives or (b) to the extent that it is required to be disclosed by applicable Law; the rules and regulations of, or pursuant to any agreement of, a stock exchange or trading system; order by a Governmental Authority; or subpoena, summons or legal process; provided that any such disclosure shall to the extent permissible by applicable Law be made after (i) consultation with the Contributor and (ii) allowing the Contributor the reasonable opportunity to contest such disclosure. If this Agreement is, for any reason, terminated prior to the Closing, the provisions of this Section 6.06 shall nonetheless continue in full force and effect. So long as this Agreement is in effect, the Contributor, the Company and WhiteHawk OP shall consult with each other and give each other a reasonable opportunity to review and comment on, any press release or other public statement with respect to the Transactions and shall not issue any such press release or make any such public statement prior to obtaining the consent of the other parties, except as may be required by applicable Law or duties under applicable Law. Notwithstanding this Section 6.06, no party
shall be required to consult or obtain the consent of the other parties prior to making statements that are consistent with any previous press releases, public disclosures or public statements made by the Contributor, the Company, Services or WhiteHawk OP in compliance with this Section 6.06.
Section 6.07 TERMINATION AND ASSIGNMENT OF AGREEMENTS. Effective upon the Closing, unless WhiteHawk OP otherwise agrees, the Contributor shall cause the agreements set forth on Schedule 4.23 or required to be set forth on Schedule 4.23 (other than the agreements set forth on Schedule 6.07, if any), to terminate, in each case, with no liability following the Closing to the Company. Immediately prior to the Closing, the Company will assign to the Contributor the right of the Company under the IMA to receive (i) the Liquidity Incentive Fee and (ii) unrestricted 2025 Shares (as defined therein) on the Vesting Date (as defined therein), in each case notwithstanding anything to the contrary in the IMA or the termination thereof, which rights shall survive termination or amendment thereof unless consent is obtained from the Contributor.
Section 6.08 EXPENSES AND INDEBTEDNESS. At or prior to the Closing, the Contributor shall cause all Transaction Expenses in excess of the Transaction Expenses Cap and all Indebtedness of the Company and Services to be repaid and discharged in full (including any and all prepayment premiums, penalties, breakage costs, and other amounts due in connection therewith).
Section 6.09 RESTRICTIVE COVENANTS.
(a) Except as otherwise permitted by the Management Employment Agreements, for a period of five (5) years following the Closing Date (the “Restricted Period”), the Contributor and each of its Affiliates (other than the Company and Services following the Closing) shall not, and shall cause its respective Representatives not to, directly or indirectly, anywhere in the United States (or any other jurisdiction in which the Business is conducted or proposed to be conducted as of the Closing Date): (i) engage in, manage, operate, control, or participate in the ownership, management, operation or control of any business or Person that competes with the Business as conducted by WhiteHawk OP and its Affiliates (including the services provided by the Company and Services) as of the Closing Date (a “Competing Business”); or (ii) own any interest in any Competing Business (other than passive ownership of less than five percent (5%) of the outstanding securities of any publicly traded company).
(b) Except as otherwise permitted by the Management Employment Agreements, during the Restricted Period, the Contributor and each of its Affiliates shall not, and shall cause its Representatives not to, directly or indirectly: (i) solicit, hire, or attempt to solicit or hire any Business Employee (or any Person who was a Business Employee within the twelve (12) months prior to such solicitation) or induce any such Person to leave the employ of WhiteHawk OP, the Company, Services or any of their Affiliates; or (ii) solicit or attempt to solicit any customer, client, supplier, licensee, or other business relation of WhiteHawk OP, the Company, Services or any of their Affiliates with whom the Contributor or its Affiliates had material contact during the twelve (12) months prior to the Closing Date, for the purpose of providing products or services that are competitive with the Business.
(c) The Contributor acknowledges that the restrictions contained in this Section 6.09 are reasonable in scope, duration and geographic area in light of the nature of the Business, the consideration received by the Contributor, and the protection of the goodwill and value of the Interests and the Business being contributed to WhiteHawk OP. If any provision of this Section 6.09 is held to be invalid or unenforceable, the provision shall be reformed to the extent necessary to make it valid and enforceable, or if it cannot be reformed, it shall be severed and the remainder of this Section 6.09 shall remain in full force and effect. The Contributor agrees that any breach of this Section 6.09 would cause irreparable injury to WhiteHawk OP and its Affiliates and that WhiteHawk OP shall be entitled to specific performance and injunctive relief (without the need to post any bond) in addition to any other remedies available at law or in equity.
The covenants in this Section 6.09 shall survive the Closing and shall be binding on the Contributor and its Affiliates.
Article VII
INDEMNIFICATION AND CLAIMS
Section 7.01 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS. The representations and warranties of the Contributor contained in this Agreement will survive until 12 months after the later of the Contribution Date or Closing Date; provided that the Fundamental Representations shall survive until three (3) years after the later of the Contribution Date or Closing Date. The representations and warranties of WhiteHawk OP and WHIC shall survive until three (3) years after the later of the Contribution Date or Closing Date. Notwithstanding the foregoing, a claim given in good faith in accordance with this Article VII in respect of a representation or warranty on or prior to the date on which the representation or warranty ceases to survive shall not thereafter be barred by the expiration of the survival period, and may be pursued thereafter without regard to such expiration. None of the covenants or other agreements contained in this Agreement shall survive the Closing Date other than those which by their terms contemplate performance after the Closing Date, and each such surviving covenant and agreement shall survive each of the Contribution Date and Closing for the period contemplated by its terms. Nothing in this Section 7.01 shall limit any claim for Fraud.
Section 7.02 INDEMNIFICATION OF WHITEHAWK OP. From and after the earlier of the Contribution Date or Closing, the Contributor shall indemnify and hold harmless WhiteHawk OP and its Affiliates, successors and the respective stockholders, members, managers, partners, officers, directors, employees and agents of each such indemnified Person (collectively, the “WhiteHawk OP Indemnified Parties”) from and against any and all Losses that may be asserted against, or paid, suffered or incurred by any WhiteHawk OP Indemnified Party arising out of, resulting from, based upon or relating to, without duplication:
(a) any material breach of or inaccuracy in any representation or warranty made by the Contributor in Article IV (other than any Fundamental Representations) of this Agreement;
(b) any breach of or inaccuracy in any of the Fundamental Representations;
(c) any failure to repay or discharge in full, at or prior to the Contribution Date, all Indebtedness of the Company and/or Services (including any prepayment premiums, penalties,
breakage costs, make-whole payments, or other amounts due in connection therewith) and any Transaction Expenses in excess of the Transaction Expenses Cap;
(d) any breach of or failure by the Contributor or, prior to the Contribution Date, the Company or Services, to duly and timely to perform or fulfill any of its covenants or agreements required to be performed by it under this Agreement or any of the Transaction Documents;
(e) any (i) Taxes (or the non-payment thereof) imposed on or with respect to the Company or Services for any Pre-Closing Tax Period or (ii) any Taxes of the Contributor or any Affiliate thereof; and
(f) any amounts that constitute Leakage.
Section 7.03 INDEMNIFICATION OF CONTRIBUTOR . From and after the earlier of the Contribution Date or Closing, WhiteHawk OP and WHIC shall jointly and severally indemnify and hold harmless the Contributor and its successors, stockholders, members, managers, partners, officers, directors, employees and agents of each such indemnified Person (collectively, the “Contributor Indemnified Parties”) from and against any and all Losses that may be asserted against, or paid, suffered or incurred by any Contributor Indemnified Party arising out of, resulting from, based upon or relating to:
(a) any breach of or inaccuracy in any representation or warranty made by WhiteHawk OP and WHIC in Article V of this Agreement; and
(b) any breach of or failure by WHIC or WhiteHawk OP to duly and timely perform or fulfill any of its covenants or agreements required to be performed by it under this Agreement or any of the Transaction Documents.
Section 7.04 LIMITATIONS.
(a) Notwithstanding anything to the contrary in this Agreement, no indemnity payments shall be payable by the Contributor as a result of any claim (other than a claim for Fraud) arising under:
(i) Section 7.02(a) unless and until the Losses claimed thereunder, when aggregated, are in excess of an amount equal to one percent (1%) of the aggregate value of the Earned Consideration on the date a claim made in good faith in accordance with this Article VII is finally resolved (the “Deductible”), in which case the WhiteHawk OP Indemnified Parties may recover the aggregate amount of all Losses payable thereunder in excess of the Deductible, subject to the remaining provisions of this Section 7.04;
(ii) Section 7.02(a) in excess of an amount equal to ten percent (10%) of the aggregate value of the Earned Consideration on the date a claim made in good faith in accordance with this Article VII is finally resolved; or
(iii) Section 7.02 in excess of an amount equal to the aggregate value of the Earned Consideration on the date a claim made in good faith in accordance with this Article VII is finally resolved.
(b) No party will be entitled to duplication of recovery for a Loss under any provision of this Agreement to the extent such party has actually received proceeds for the same Loss by reason of the state of facts giving rise to such Loss constituting a breach of more than one representation, warranty, covenant or agreement.
(c) Each Indemnified Party shall take, and cause its Affiliates to take, all commercially reasonable steps to mitigate any Loss upon becoming aware of any event or circumstance of Loss that would be reasonably expected to, or does, give rise to an indemnification obligation hereunder, including incurring costs only to the minimum extent necessary, in such Indemnified Party’s reasonable discretion, to remedy the breach that gives rise to such Loss.
(d) Until the later of (x) the three (3) year anniversary of the Contribution Date or Closing Date and (y) the date on which any claim for indemnification made in good faith in accordance with this Article VII is finally resolved, the Contributor will satisfy any indemnification liability for which the Contributor is liable as follows:
(i) first, by offsetting the amount of such indemnification liability against any Earnout Consideration otherwise payable or paid to the Contributor (or its Affiliates or designees) under this Agreement (or any equity interests exchanged therefor); and
(ii) second, to the extent the Earnout Consideration is insufficient or unavailable to satisfy the full amount of such indemnification liability, by clawing back (i.e., requiring repayment of) a portion of the Contribution and Subscription Closing Consideration previously paid to the Contributor (or its Affiliates or designees), or any equity interests exchanged therefor, equal to the remaining unpaid balance of the indemnification liability.
For purposes of this Section 7.04(d), Earnout Consideration and Contribution and Subscription Closing Consideration (in each case, or any equity interests exchanged therefor) shall be valued at the VWAP for the thirty (30) days prior to the Trading Day immediately preceding the payment date. For the avoidance of doubt, any clawback, set off or other forfeiture of the Earnout Consideration or Contribution and Subscription Closing Consideration pursuant to this Section 7.04 shall include any corresponding WHIC Shares and Earnout WHIC Shares issued in connection therewith.
(e) Until the later of (x) the twelve (12)-month anniversary of the Contribution Date or Closing Date (the “Release Date”) and (y) the date on which any claim for indemnification made on or prior to the Release Date in good faith in accordance with this Article VII is finally resolved, the Contributor shall retain and not distribute, encumber, transfer or otherwise dispose of any portion of the Contribution and Subscription Closing Consideration (other than pursuant to Section 7.04(d)(ii)); provided, however, that to the extent there are any unresolved indemnification claims as of the Release Date, the Contributor shall be permitted to distribute, transfer and otherwise dispose of any portion of the Contribution and Subscription Closing Consideration then held by Contributor with a value in excess of one hundred ten percent (110%) of the Losses estimated by WHIC or WhiteHawk OP in good faith in respect of such unresolved indemnification claims.
Section 7.05 INDEMNIFICATION PROCEDURES. All claims for indemnification by any Indemnified Party shall be asserted and resolved as follows:
(a) If an Indemnified Party intends to seek indemnification under this Article VII, it shall promptly notify the Indemnifying Party in writing of such claim, indicating with reasonable particularity the nature of such claim and provide the Indemnifying Party with such additional relevant information in the Indemnified Party’s possession that the Indemnifying Party may reasonably request. The failure to provide such notice will not affect any rights hereunder except to the extent the Indemnifying Party is actually and materially prejudiced thereby.
(b) If such claim involves a Third Party Claim against the Indemnified Party, the Indemnifying Party may, within thirty (30) days after receipt of such notice and information, and upon notice to the Indemnified Party, at the sole cost and expense of the Indemnifying Party, assume the settlement or defense thereof, with counsel reasonably satisfactory to the Indemnified Party; provided, that the Indemnifying Party shall have acknowledged in writing its obligation to indemnify the Indemnified Party for such claim in accordance with the terms of this Agreement; provided, further, that the Indemnified Party may participate in such settlement or defense through counsel chosen by it at the sole cost and expense of the Indemnified Party. The Indemnifying Party shall not be entitled to control the defense of (i) any action seeking an injunction or other equitable relief that, if granted, would reasonably be expected to have a material impact on the Indemnified Party’s business, (ii) any criminal proceeding, action, indictment, allegation or investigation by a Governmental Authority or (iii) any action pursuant to which Losses would reasonably be expected to exceed the maximum Liability of the Indemnifying Party hereunder. If the Indemnifying Party assumes the settlement or defense of such claim and the Indemnified Party determines reasonably and in good faith that representation by the Indemnifying Party’s counsel of both the Indemnifying Party and the Indemnified Party would present such counsel with a conflict of interest or that there are legal defenses available to the Indemnified Party that are different from or additional to those available to the Indemnifying Party, then the Indemnifying Party shall pay the reasonable fees and expenses of the Indemnified Party’s counsel. So long as the Indemnifying Party is contesting any such claim in good faith in accordance with the first sentence of this Section 7.05(b), the Indemnifying Party shall have the right to settle any claim for which indemnification has been sought and is available hereunder that imposes solely monetary obligations that are paid by the Indemnifying Party, does not contain a finding or admission of any violation of Law or any violation of the rights of any Person and contains an unconditional release of the Indemnified Party from all liability thereunder; provided, that to the extent that such settlement requires the Indemnified Party to take, or prohibits the Indemnified Party from taking, any action or purports to obligate the Indemnified Party, then the Indemnifying Party shall not settle such claim without the prior written consent of the Indemnified Party, such consent not to be unreasonably withheld, conditioned or delayed. So long as the Indemnifying Party is contesting any such claim in good faith in accordance with the first sentence of this Section 7.05(b), the Indemnified Party shall: (i) not pay or settle any such claim without the Indemnifying Party’s consent, such consent not to be unreasonably withheld, conditioned or delayed; and (ii) cooperate with the Indemnifying Party and its counsel in the settlement and defense of such claim. If the Indemnifying Party is not entitled to join in or assume the defense of the claim pursuant to the foregoing provisions or is entitled but does not contest such claim in good faith (including if it does not notify the Indemnified Party of the assumption of the defense of such claim within the thirty (30) day period set forth above), then the Indemnified Party may conduct and control,
through counsel of its own choosing and at the expense of the Indemnifying Party, the settlement or defense thereof and the Indemnifying Party shall cooperate reasonably with it in connection therewith. Except as otherwise expressly provided in this Section 7.05, the failure of the Indemnified Party to participate in, conduct or control such defense shall not relieve the Indemnifying Party of any obligation it may have hereunder. Any costs and expenses incurred by such Indemnified Party in connection with the investigation and defense of such claim (including, without limitation, reasonable out of pocket attorneys’ fees, other professionals’ and experts’ fees and court or arbitration costs) required to be paid by the Indemnifying Party on behalf of the Indemnified Party shall be paid as incurred, promptly against delivery of reasonably detailed invoices therefor.
(c) If the Indemnifying Party chooses to defend any Third Party Claim, the Indemnifying Party shall not, without the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld, conditioned or delayed) cause, or agree to, the waiver of the attorney-client privilege, attorney work-product immunity or any other privilege or protection in respect of confidential legal memoranda and other privileged materials drafted by, or otherwise reflecting the legal advice of, internal or outside counsel of an Indemnified Party (the “Subject Materials”) relating to such Third Party Claim. Each party hereto mutually acknowledges and agrees, on behalf of itself and its Affiliates, that (i) each shares a common legal interest in preparing for the defense of legal proceedings, or potential legal proceedings, arising out of, relating to or in respect of any actual or threatened Third Party Claim or any related claim or counterclaim, (ii) the sharing of Subject Materials will further such common legal interest and (iii) by disclosing any Subject Materials to and/or sharing any Subject Materials with the Indemnifying Party, the Indemnified Party shall not waive the attorney-client privilege, attorney work-product immunity or any other privilege or protection. The Indemnified Party shall not be required to make available to the Indemnifying Party any information that is subject to an attorney-client or other applicable legal privilege that based on the advice of outside counsel would be impaired by such disclosure or any confidentiality restriction under applicable Law.
(d) In any action or proceeding between, on the one hand, the Contributor or any Contributor Indemnified Party and, on the other hand, WhiteHawk OP or any WhiteHawk OP Indemnified Party, arising out of or relating to this Agreement or any other Transaction Document, the prevailing party shall be entitled to recover its reasonable attorneys’ fees and other costs and expenses incurred, in addition to any other relief to which it may be entitled.
(e) In the event of a conflict between this Section 7.05 and Section 6.04(g), Section 6.04(g) shall control.
Section 7.06 CHARACTER OF INDEMNITY PAYMENTS. The parties agree that any indemnification payments made with respect to this Agreement shall be treated for all Tax purposes as an adjustment to the Aggregate Contribution and Subscription Consideration, unless otherwise required by Law (including by a determination of a Governmental Authority that, under applicable Law, is not subject to further review or appeal).
Section 7.07 REMEDIES.
(a) Each of the parties hereto shall be entitled to injunctive or other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement and the obligations of each other party hereto in the event that (i) all conditions set forth in Section 3.02(c)(i) or Section 3.02(c)(ii), as applicable, and Section 3.02(c)(iii), have been satisfied or waived by the party seeking injunctive or other equitable relief hereunder (other than those conditions that by their terms or their nature are to be satisfied at the Closing, but subject to such conditions being satisfied or waived assuming a Closing would occur), and (ii) any party fails to complete the Closing by the Outside Date.
(b) Except for claims based on Fraud, following the Closing, the rights of the Indemnified Parties for indemnification relating to breaches of this Agreement shall be limited to those contained in this Article VII and such indemnification rights shall be the exclusive remedies of the Indemnified Parties with respect to breaches of this Agreement.
Section 7.08 SUBROGATION/INSURANCE. If an Indemnified Party recovers Losses from an Indemnifying Party, the Indemnifying Party shall be subrogated, to the extent of such recovery, to the Indemnified Party’s rights against any third party (including any employees) with respect to such recovered Losses, subject to the subrogation rights of any insurer providing insurance coverage under one of the Indemnified Party’s policies and except to the extent that the grant of subrogation rights to the Indemnifying Party is prohibited by the terms of the applicable insurance policy. With respect to any rights of any Indemnifying Party (including any employees) against a third party to which an Indemnified Party is entitled pursuant to the preceding sentence, such Indemnified Party shall use commercially reasonable efforts to preserve any rights that such Indemnifying Parties may have to make claims against such third parties (including under applicable insurance policies) and the Indemnified Parties and the Indemnifying Parties shall cooperate with and assist the other in issuing notices of claims to such third parties, presenting claims for payment and collecting proceeds related thereto. Notwithstanding anything in this Agreement to the contrary, the amount of any Losses of any Person under this Article VII shall be net of the amount, if any, actually received by the Indemnified Party (after deducting all costs and expenses associated with recovering such amount) from any third party (including any insurance company or other insurance provider).
Article VIII
TERMINATION
Section 8.01 TERMINATION. This Agreement may be terminated and the Transactions may be abandoned at any time prior to the Closing by:
(a) the mutual written agreement of WhiteHawk OP and the Contributor;
(b) either WhiteHawk OP or the Contributor, if any court of competent jurisdiction or other competent Governmental Authority shall have enacted a statute or issued a rule, regulation, order, decree or injunction or taken any other action, in each case, permanently restraining, enjoining or otherwise prohibiting all or any portion of the Transactions and such statute, rule, regulation, order, decree or injunction or other action shall have become final and nonappealable;
(c) either WhiteHawk OP or the Contributor, in the event: (i) of a material breach of this Agreement by the non-terminating party if such non-terminating party fails to cure such breach prior to the earlier of the Outside Date and the date that is thirty (30) days following written notification thereof by the terminating party; or (ii) that the satisfaction of any condition to the terminating party’s obligations under this Agreement becomes impossible, but only if the failure of such condition to be satisfied does not result from a breach of this Agreement by the terminating party; or
(d) either WhiteHawk OP or the Contributor, in the event that the Closing shall not have occurred on or before December 31, 2026 (the “Outside Date”), unless the failure of the Closing to occur on or before the Outside Date is a result of a breach of this Agreement by the terminating party; provided, however, that the provisions of this Section 8.01(d) shall not be available, as applicable, to (A) the Contributor, in the event that all conditions set forth in Section 3.02(c)(i) and Section 3.02(c)(iii) or (B) WhiteHawk OP, in the event that all conditions set forth in Section 3.02(c)(ii) and Section 3.02(c)(iii) have been satisfied or waived (other than those conditions that by their terms or their nature are to be satisfied at the Closing, but subject to such conditions being satisfied or waived assuming a Closing would occur).
Section 8.02 EFFECT OF TERMINATION. If this Agreement is validly terminated pursuant to Section 8.01, this Agreement will forthwith become null and void, and have no further effect, without any liability on the part of any party hereto or its Affiliates, directors, managers, officers, stockholders, partners or members, other than the provisions of Section 6.06, this Section 8.02 and Article IX hereof. Nothing contained in this Section 8.02 shall relieve any party from liability for Fraud occurring prior to termination.
Article IX
GENERAL PROVISIONS
Section 9.01 NOTICES. All notices, demands and requests hereunder shall be in writing and shall be deemed to have been properly given if: (a) hand delivered; (b) sent by reputable overnight courier service; (c) emailed (provided such transmission does not generate an error message or notice of non-delivery); or (d) sent by United States registered or certified mail, postage prepaid, addressed to the parties at the respective addresses set forth below, or at such other address as any of the parties may from time to time designate by written notice given as herein required. Service of any such notice or other communications so made shall be deemed effective on the day of actual delivery (whether accepted or refused) as shown by the addressee’s return receipt if by certified mail, and as confirmed by the courier service if by courier; provided, however, that if such actual delivery occurs after 5:00 p.m. (local time where received) or on a non-Business Day, then such notice or communication so made shall be deemed effective on the first Business Day after the day of actual delivery. All such notices shall be addressed as follows:
If to WHIC or WhiteHawk OP: 2000 Market Street, Suite 910
Philadelphia, PA 19103
Attention: Barrie Hananel
Email: [email protected]
With a copy to (not constituting notice): Greenberg Traurig, LLP
One Vanderbilt Avenue
New York, New York 10017
Attention: Joseph Herz
Email: [email protected]
If to the Contributor or, prior to the
Closing, the Company or Services: 2000 Market Street, Suite 910
Philadelphia, PA 19103
Attention: Daniel Herz
Email: [email protected]
With a copy to (not constituting notice): Paul Hastings LLP
2001 Ross Ave #2700,
Dallas, Texas 75201
Attention: Charles Haag
Email: [email protected]
Section 9.02 ENTIRE AGREEMENT; AMENDMENTS. This Agreement (together with any exhibits and the other Transaction Documents) contains the entire agreement among the parties with respect to the Transactions, and shall supersede all previous oral and written agreements and all contemporaneous oral negotiations, commitments and understandings between the parties. This Agreement may be amended, changed, terminated or modified only by agreement in writing duly authorized (which authorization shall include approval of a majority of the independent directors of the Board of Directors of WHIC) and executed by all of the parties.
Section 9.03 SUCCESSORS AND ASSIGNS. The covenants, agreements, rights and obligations contained in this Agreement shall be binding upon and shall inure to the benefit of the respective heirs, executors, successors and assigns of the parties hereto and all Persons or entities claiming by, through or under any of them.
Section 9.04 FURTHER DOCUMENTS. Each party hereto agrees to execute any and all further documents and writings and perform such other reasonable actions that may be or become necessary or expedient to effectuate and carry out the Transactions, whether before or after the Closing.
Section 9.05 GOVERNING LAW; JURISDICTION; WAIVER OF JURY.
(a) This Agreement, and all claims or causes of actions (whether at law, in equity, in contract or in tort) that may be based upon, arise out of or relate to this Agreement or the negotiation, execution or performance of this Agreement, shall be governed by, and construed in accordance with, the internal Laws of the State of Delaware without giving effect to conflicts of Laws principles (whether of the State of Delaware or any other jurisdiction that would cause the application of the Laws of any jurisdiction other than the State of Delaware).
(b) All legal proceedings arising out of or relating to this Agreement shall be heard and determined exclusively in the Court of Chancery of the State of Delaware sitting in Wilmington,
Delaware (or if such court declines to exercise such jurisdiction in any appropriate state or federal court in the State of Delaware sitting in Wilmington, Delaware). Each of the parties hereby irrevocably and unconditionally: (i) submits to the exclusive jurisdiction of such courts, for the purpose of any legal proceeding arising out of or relating to this Agreement and the Transactions brought by any party; (ii) agrees not to commence any such legal proceeding except in such courts; (iii) agrees that any claim in respect of any such legal proceedings may be heard and determined in such courts; (iv) 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 such legal proceeding; and (v) waives, to the fullest extent permitted by Law, the defense of an inconvenient forum to the maintenance of such legal proceeding. Each of the parties agrees that a final judgment in any such legal proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. Each party hereto irrevocably consents to service of process in the manner provided for notices in Section 9.01. Nothing in this Agreement will affect the right of any party to serve process in any other manner permitted by Law.
(c) EACH PARTY HERETO ACKNOWLEDGES THAT ANY ACTION OR LEGAL PROCEEDING, DIRECTLY OR INDIRECTLY, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE NEGOTIATION, EXECUTION OR PERFORMANCE OF THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUCH ACTION OR LEGAL PROCEEDING. EACH PARTY HERETO CERTIFIES AND ACKNOWLEDGES THAT: (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF SUCH ACTION OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER; (II) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER; (III) IT MAKES THIS 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 9.05(C).
Section 9.06 COUNTERPARTS. This Agreement may be executed in a number of identical counterparts, each of which shall be deemed an original and all of which, collectively, shall constitute one (1) agreement.
Section 9.07 CONSTRUCTION OF AGREEMENT. No party, or its respective counsel, shall be deemed the drafter of this Agreement for purposes of construing the provisions of this Agreement, and all language in all parts of this Agreement shall be construed in accordance with its fair meaning, and not strictly for or against any party.
Section 9.08 NO WAIVER. A waiver by any party hereto of a breach of or failure to perform any of the covenants or agreements in this Agreement to be performed by any other party shall not be construed as a waiver of any succeeding breach of or failure to perform the same or other covenants, agreements, restrictions or conditions of this Agreement. No waiver shall be effective unless duly authorized (which authorization, relating to WhiteHawk OP, shall include approval of a majority of the independent directors of the Board of Directors of WHIC) and memorialized in a writing signed by the party against whom such waiver is to be effective.
Section 9.09 SEVERABILITY. In the event that any phrase, clause, sentence, paragraph, section, article or other portion of this Agreement shall become illegal, null or void or against public policy, for any reason, or shall be held by any court of competent jurisdiction to be illegal, null or void or against public policy, the remaining portions of this Agreement shall not be affected thereby and shall remain in force and effect to the full extent permissible by Law.
Section 9.10 HEADINGS. The headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the parties and shall not in any way affect the meaning or interpretation of this Agreement. All references in this Agreement to sections and exhibits are to sections and exhibits of this Agreement, unless otherwise indicated.
Section 9.11 INTERPRETATION. For purposes of this Agreement, the words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole. Unless the context otherwise requires, references herein: (x) to articles, sections, exhibits and schedules mean the articles and sections of, and the exhibits and schedules attached to, this Agreement; (y) to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and by this Agreement, as applicable; and (z) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. All references to “dollars” or “$” shall mean United States Dollars.
Section 9.12 RELEASE. Effective as of the later of the Contribution Date or the Closing Date, except for any rights or obligations under this Agreement or the other Transaction Documents, the Contributor, on behalf of itself and each of its Affiliates (other than the Company and Services) and each of its current, former and future officers, directors, employees, partners, members, advisors, successors and assigns (collectively, the “Releasing Parties”), hereby irrevocably and unconditionally releases and forever discharges WhiteHawk OP and its Affiliates (including, after the Contribution Date, the Company and Services) and each of their respective current, former and future officers, directors, managers, employees, partners, members, advisors, successors and assigns (collectively, the “Released Parties”) of and from any and all actions, causes of action, suits, proceedings, executions, judgments, duties, debts, dues, accounts, bonds, contracts and covenants (whether express or implied), and claims and demands whatsoever whether in law or in equity which the Releasing Parties may have against each of the Released Parties, now has or in the future may have, in respect of any cause, matter or thing relating to WhiteHawk OP and its Subsidiaries (including, after the Contribution Date, the Company and Services), in each case, occurring or arising on or prior to the date of the later of the Contribution Date or the Closing Date, but, to the extent applicable, only to the extent that such cause, matter or thing does not otherwise constitute Fraud. The Contributor, on behalf of itself and each Releasing Party, covenants and agrees that no Releasing Party shall assert any such claim against the Released Parties. Notwithstanding anything to the contrary herein, nothing contained in this Section 9.12 shall operate to release any Releasing Party’s (a) rights under any Plan, in such Releasing Party’s capacity as an employee, officer, manager or director of the Company or Services, (b) rights or remedies under any Transaction Document, (c) amounts due to the Contributor under the IMA or ASA prior to termination of such agreements or otherwise related to the Liquidity Incentive Fee or the 2025 Shares, and (d) rights to indemnification, exculpation or liability or advancement of expenses under the Company’s or Services’ organizational documents
or any applicable benefits under any directors and officers insurance policy maintained by the Company or Services.
[Signature Pages Follow]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date hereof.
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COMPANY: WHITEHAWK MANAGEMENT LLC By: /s/ Jeffrey Slotterback
Name: Jeffrey Slotterback
Title: Chief Financial Officer |
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SERVICES: WHITEHAWK ENERGY SERVICES LLC By: /s/ Jeffrey Slotterback
Name: Jeffrey Slotterback
Title: Chief Financial Officer |
[Signature Page to Contribution Agreement]
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CONTRIBUTOR: WHITEHAWK MINERALS LLC By: /s/ Jeffrey Slotterback
Name: Jeffrey Slotterback
Title: Chief Financial Officer |
[Signature Page to Contribution Agreement]
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WHITEHAWK OP: WHITEHAWK INCOME OPERATING PARTNERSHIP L.P. By: WHITEHAWK INCOME OP GP LLC,
its general partner By: WHITEHAWK INCOME CORPORATION,
its sole Member By: /s/ Jeffrey Slotterback
Name: Jeffrey Slotterback
Title: Chief Financial Officer, Treasurer and Secretary |
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WHIC: WHITEHAWK INCOME CORPORATION By: /s/ Jeffrey Slotterback
Name: Jeffrey Slotterback
Title: Chief Financial Officer, Treasurer and Secretary |
[Signature Page to Contribution Agreement]
EXHIBIT A
DEFINED TERMS
“2025 Shares” has the meaning given such term in the IMA.
“2025 Restricted Stock” has the meaning given such term in the IMA.
“A&R OP LPA” is defined in the Recitals.
“A&R WHIC Charter” is defined in the Recitals.
“Accounting Firm” is defined in Section 2.02(f).
“Acquired EBITDAX” means, with respect to any Acquired Entity or Business with an acquisition price in excess of $1,000,000, the amount for such period of EBITDAX of such Acquired Entity or Business (determined as if references to WhiteHawk OP and its subsidiaries in the definition of Earnout EBITDA (and in the component definitions used therein) were references to such Acquired Entity or Business and its subsidiaries), all as determined on a consolidated basis for such Acquired Entity or Business; provided that if the acquisition consideration of the Acquired Entity or Business exceeds $30,000,000 (each, a “Material Acquisition”), (i) for the fiscal quarter in which such Acquired Entity or Business was acquired, Acquired EBITDAX shall be calculated by multiplying Earnout EBITDA of such Acquired Entity or Business for the most recent fiscal quarter by 4, (ii) for the fiscal quarter in which such Acquired Entity or Business was acquired and the immediately following fiscal quarter, Acquired EBITDAX shall be calculated by multiplying Earnout EBITDA of such Acquired Entity or Business for the two most recent fiscal quarters by 2, (iii) for the fiscal quarter in which such Acquired Entity or Business was acquired and the two immediately following fiscal quarters, Acquired EBITDAX shall be calculated by multiplying Earnout EBITDA of such Acquired Entity or Business or Converted Restricted Subsidiary for the three most recent fiscal quarters by 4/3 and (iv) thereafter, Acquired EBITDAX of such Acquired Entity or Business was acquired shall be Earnout EBITDA for the four most recent fiscal quarters.
“Action” means any action, suit, complaint, petition, arbitration, proceeding, demand, claim, hearing, audit, litigation, citation, summons, investigation or other legal proceeding by or before any Governmental Authority, mediator or arbitrator, whether at law or in equity, civil or criminal.
“Affiliate” means, with respect to any Person, any other Person that directly, or indirectly through one (1) or more intermediaries, controls or is controlled by or is under common control with the Person specified. The term “control” (including the terms “controlling”, “controlled by” and “under common control with”) means possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise; provided, however, that in no event shall (i) any of the Company or Services (prior to the Closing) or the Contributor be deemed to be an “Affiliate” of WHIC or WhiteHawk OP, and (ii) WHIC or WhiteHawk OP be deemed to be an “Affiliate” of the Company or Services (prior to the Closing) or the Contributor.
“Aggregate Contribution and Subscription Consideration” means the sum of the Contribution and Subscription Closing Consideration and the Earnout Payment.
“Agreement” is defined in the preamble.
“Allocation Schedule” is defined in Section 6.04(h).
“Anti-Corruption Laws” means (a) the U.S. Foreign Corrupt Practices Act of 1977, as amended and (b) any anti-bribery, anti-corruption or similar applicable Law of any other jurisdiction.
“Anti-Terrorism Law” means each of: (a) the Money Laundering Control Act of 1986, 18 U.S.C. Sect. 1956; and (b) any other Law now or hereafter enacted to monitor, deter or otherwise prevent terrorism or the funding or support of terrorism or otherwise related to money laundering.
“ASA” means that certain Administration Services Agreement dated March 1, 2025, by and between WhiteHawk OP and the Company.
“Audit Committee” is defined in Section 2.02(d)
“Blue Sky Laws” is defined in Section 4.07(a).
“Business” means the business currently conducted or proposed to be conducted by WhiteHawk OP and its Affiliates as of the date hereof and the business of the Company and Services as of the date hereof.
“Business Day(s)” means any day except Saturday, Sunday or any other day on which commercial banks located in New York, New York are authorized or required by Law to be closed for business.
“Business Employee” is defined in Section 4.14(a).
“Class A Common Stock” is defined in the Recitals.
“Class B Common Stock” means shares of Class B common stock, with a par value of $0.0001 per share, of WHIC having the voting and non-economic rights and other privileges set forth in the A&R WHIC Charter for such class of shares.
“Closing” is defined in Section 3.01.
“Closing Date” is defined in Section 3.01.
“Code” means the Internal Revenue Code of 1986, as amended.
“Common Unit Percentage Interest” has the meaning given such term in the A&R OP LPA.
“Common Units” has the meaning given such term in the A&R OP LPA.
“Company” is defined in the Preamble.
“Company Financial Statements” is defined in Section 4.05(a).
“Competing Business” is defined in Section 6.09(a).
“Consideration Adjustment” means (i) if the IPO Price is less than or equal to $22.00 per share, negative $15,000,000, (ii) if the IPO Price is greater than or equal to $28.00 per share, $15,000,000 and (iii) if the IPO Price is between $22.00 per share and $28.00 per share, (x) the IPO Price less $25.00, multiplied by (y) $5,000,000.
“Consolidated Net Income” means, with respect to WhiteHawk OP and its consolidated subsidiaries, for any period, the aggregate of the net income (or loss) of WhiteHawk OP and its consolidated subsidiaries after allowances for Taxes for such period determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded, without duplication, from such net income (to the extent otherwise included therein) the following: (a) the net income of any Person in which WhiteHawk OP or any of its consolidated subsidiaries has an interest (which interest does not cause the net income of such other Person to be consolidated with the net income of WhiteHawk OP and its consolidated subsidiaries in accordance with GAAP), except to the extent of the amount of dividends or distributions actually paid in cash during such period by such other Person to WhiteHawk OP or to one of its consolidated subsidiaries, as the case may be; (b) the net income (but not loss) during such period of any consolidated subsidiary of WhiteHawk OP to the extent that the declaration or payment of dividends or similar distributions or transfers or loans by that consolidated subsidiary is not at the time permitted by operation of the terms of its charter or any agreement, instrument or Governmental Requirement applicable to such consolidated subsidiary or is otherwise restricted or prohibited, in each case determined in accordance with GAAP, but in each case only to the extent of such prohibition or restriction; (c) the net income (or loss) of any Person accrued prior to the date it becomes a consolidated subsidiary of WhiteHawk OP or is merged into or consolidated with WhiteHawk OP or any of its consolidated subsidiaries; (d) any extraordinary or non-recurring gains or losses during such period, (e) any gains or losses attributable to writeups or writedowns of assets, (f) any gain or loss from the sale of assets other than in the ordinary course of business, (g) any income attributable to the early extinguishment of any Indebtedness of WhiteHawk OP or any of its consolidated subsidiaries; and (h) 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.
“Contracts” means all contracts, leases, deeds, mortgages, licenses, instruments, notes, commitments, undertakings, indentures, joint ventures and all other agreements, commitments and legally binding arrangements, whether written or oral (and all amendments or modifications thereto).
“Contribution” is defined in Section 1.01.
“Contribution and Subscription Closing Consideration” is defined in Section 2.01.
“Contribution Date” is defined in Section 3.01.
“Contributor” is defined in the Preamble.
“Contributor Indemnified Parties” is defined in Section 7.03.
“Credit Agreement” means that certain Credit Agreement dated May 10, 2026, by and among WHIC, WhiteHawk OP, Capital One, N.A., and the lenders party thereto, as may be amended from time to time.
“Credit Agreement Transactions” has the meaning given such term in the Credit Agreement.
“Credit Agreement Transaction Expenses” has the meaning given such term in the Credit Agreement.
“Deductible” is defined in Section 7.04(a)(i).
“Designated Person” means any Person who: (a) is named on the list of Specially Designated Nationals or Blocked Persons maintained by the U.S. Department of the Treasury’s Office of Foreign Assets Control or any other similar lists maintained by the U.S. Department of the Treasury’s Office of Foreign Assets Control pursuant to authorizing statute, executive order or regulation; or (b) (i) is an agency of the government of a country, (ii) is an organization controlled by a country or (iii) is a Person resident in a country that is subject to a sanctions program identified on the list maintained by the U.S. Department of the Treasury’s Office of Foreign Assets Control, or as otherwise published from time to time, as such program may be applicable to such agency, organization or Person.
“Disposed EBITDAX” means, with respect to any Sold Entity or Business with a sale price in excess of $1,000,000, the amount for such period of Earnout EBITDA of such Sold Entity or Business (determined as if references to WhiteHawk OP and its subsidiaries in the definition of Earnout EBITDA (and in the component definitions used therein) were references to such Sold Entity or Business and its subsidiaries), all as determined on a consolidated basis for such Sold Entity or Business.
“Disposition” means any conveyance, sale, lease, sale and leaseback, assignment, farm-out, transfer or other disposition of any Property and includes, for the avoidance of doubt, (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. “Dispose” has a correlative meaning thereto.
“Distribution” has the meaning given such term in the A&R OP LPA.
“Earned Consideration” means, as of any date of determination, the sum of (i) Contribution and Subscription Closing Consideration and (ii) Earnout Consideration actually issued or due under a final and binding Earnout Statement as of such date of determination.
“Earnout Consideration” is defined in Section 2.02(a).
“Earnout Dispute Notice” is defined in Section 2.02(e).
“Earnout EBITDA” means, for any period, the sum of:
(a) Consolidated Net Income for such period
plus (without duplication) (b) the following expenses or charges to the extent deducted from Consolidated Net Income in such period: (i) interest expense, (ii) income Tax expense, (iii) depreciation, depletion, amortization, and exploration expenses and other similar non-cash charges, (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) WhiteHawk OP may determine not add back such non-cash charge in the current period and (2) to the extent WhiteHawk OP does decide to add back such non-cash charge in the current period, the cash payment in respect thereof in such future period shall be subtracted from Earnout EBITDA to such extent, and excluding amortization of a prepaid cash item that was paid in a prior period), (v) losses on asset Dispositions, disposals and abandonments, (vi) (x) Credit Agreement Transaction Expenses incurred prior to or on or about the Closing Date in connection with the Credit Agreement Transactions, and (y) any Credit Agreement Transaction Expenses after the Closing Date and any costs and expenses incurred in connection with any Investments, acquisitions (or purchases of assets), incurrence of Indebtedness or expenses incurred in connection with Public Company Compliance after the Closing Date; provided that the aggregate amount of add backs under this clause (y) and clause (vii) below shall not exceed 10% of Earnout EBITDA (calculated prior to giving effect to such add-backs) for such period, and (vii) the amount of any restructuring charges or reserves, equity-based or non-cash compensation charges or expenses including any such charges or expenses arising from grants of stock appreciation or similar rights, stock options, restricted stock or other rights, retention charges (including charges or expenses in respect of incentive plans), severance costs, costs relating to initiatives aimed at profitability improvement, costs or reserves associated with improvements to information technology and accounting functions and integration and facilities opening costs or any one-time costs incurred in connection with acquisitions and investments provided that the aggregate amount of add backs under this (vii) and clause (vi)(y) above shall not exceed 10% of Earnout EBITDA (calculated prior to giving effect to such add-backs) for such period;
minus (without duplication) (c) to the extent included in the statement of Consolidated Net Income for such period, the sum of (i) interest income, (ii) income Tax credits (to the extent not netted from income Tax expense), (iii) all 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 Earnout EBITDA in accordance with this definition) and (iv) gains on asset Dispositions, disposals and abandonments (other than the sale of Hydrocarbons in the ordinary course of business, but including any gain from the Liquidation of any Swap Agreement).
There may, at WhiteHawk OP’s option, be included in determining Earnout EBITDA for any period of four consecutive fiscal quarters (each a “Reference Period”), without duplication, the positive amount of Acquired EBITDAX of any Person, property, business or asset acquired by WhiteHawk OP or its subsidiaries during such Reference Period (but not the Acquired EBITDAX of any related Person, property, business or assets to the extent not so acquired), to the extent not subsequently sold, transferred or otherwise disposed of by WhiteHawk OP or its subsidiaries during such Reference Period (each such Person, property, business or asset acquired and not
subsequently so disposed of, an “Acquired Entity or Business”) based on the actual Acquired EBITDAX of such Acquired Entity or Business for such Reference Period (including the portion thereof occurring prior to such acquisition). There shall be excluded in determining Earnout EBITDA for any Reference Period (a) the negative amount of Acquired EBITDAX of any Acquired Entity or Business during such Reference Period and (b) the Disposed EBITDAX of any Person, property, business or asset sold, transferred or otherwise disposed of or, closed or classified as discontinued operations (but if such operations are classified as discontinued due to the fact that they are subject to an agreement to dispose of such operations, only when and to the extent such operations are actually disposed of) by WhiteHawk OP or any of its subsidiaries during such Reference Period (each such Person, property, business or asset so sold or disposed of, a “Sold Entity or Business”) based on the actual Disposed EBITDAX of such Sold Entity or Business for such Reference Period (including the portion thereof occurring prior to such sale, transfer or disposition). For the avoidance of doubt, Acquired EBITDAX (in the case of any Acquired Entity or Business) and Disposed EBITDAX (in the case of any Disposed Entity or Business) shall be included in the calculation of Earnout EBITDA for such Reference Period, as though Acquired EBITDAX were acquired and Disposed EBITDAX were disposed, as applicable, in each case, on the first day of such Reference Period. For the avoidance of doubt, and notwithstanding anything to the contrary contained herein, this paragraph shall not apply to any Acquired EBITDAX with respect to any Material Acquisition that is being annualized pursuant to the proviso to the definition of “Acquired EBITDAX”.
“Earnout OP Units” is defined in Section 2.02(a).
“Earnout Statement” is defined in Section 2.02(d).
“Earnout WHIC Shares” is defined in Section 2.02(a).
“Earnout Year” is defined in Section 2.02(a).
“Earnout Year One” is defined in Section 2.02(a)(i).
“Earnout Year One Amount” means one-third of the aggregate number of Earnout OP Units that may be earned hereunder.
“Earnout Year Three” is defined in Section 2.02(a)(iii).
“Earnout Year Three Amount” means 100% of the aggregate number of Earnout OP Units that may be earned hereunder.
“Earnout Year Two” is defined in Section 2.02(a)(ii).
“Earnout Year Two Amount” means two-thirds of the aggregate number of Earnout OP Units that may be earned hereunder.
“Effect” means any change, effect, development, circumstance, condition, state of facts, event or occurrence.
“Encumbrances” means any and all liens, charges, security interests, easements, encroachments, servitudes, community or other marital property interests, licenses, title defects, mortgages, pledges, options, preemptive rights, rights of first refusal or first offer, proxies, levies, voting trusts or agreements or other adverse claims or restrictions on use, title or transfer of any nature whatsoever.
“Enforceability Exceptions” is defined in Section 4.01.
“Equity Interests” means: (a) with respect to a corporation, as determined under the Laws of the jurisdiction of organization of such entity, shares of capital stock (whether common, preferred or treasury); (b) with respect to a partnership, limited liability company, limited liability partnership or similar Person, as determined under the Laws of the jurisdiction of organization of such entity, units, interests or other partnership or limited liability company interests; or (c) any other equity ownership.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder.
“ERISA Affiliate” means any trade or business (whether or not incorporated) that, at the relevant time, together with the Company is treated as a single employer or under common control under Section 414 of the Code or Section 4001 of ERISA.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Financial Statements” is defined in Section 2.02(c).
“Fraud” means, with respect to a party, an actual and intentional misrepresentation of a material existing fact with respect to the making of any representation or warranty in Article IV or Article V, made by such party, to such party’s actual knowledge, of its falsity and made for the purpose of inducing the other party to act, and upon which the other party justifiably relies with resulting Losses. For the avoidance of doubt, Fraud shall not include any claim for constructive fraud, promissory fraud or unfair dealings fraud.
“Fundamental Representations” means the representations set forth in Section 4.01 (Due Execution by the Contributor; Due Authorization; Approvals), Section 4.06 (Ownership of Equity Interests; Title), Section 4.08 (Organization and Qualification), (Due Authorization; Approvals), and Section 4.28 (Brokers, Finders and Advisors).
“GAAP” means generally accepted accounting principles in the United States of America as in effect from time to time.
“Governmental Authority(ies)” means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision (including, for the avoidance of doubt, any taxing authority), or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority, or any arbitrator, court or tribunal of competent jurisdiction.
“Governmental Licenses” is defined in Section 4.17.
“Government Official” means any officer or employee of a Governmental Authority or any department, agency, or instrumentality thereof, including any political subdivision thereof or any corporation or other Person owned or controlled in whole or in part by any Governmental Authority or any sovereign wealth fund, or of a public international organization, or any Person acting in an official capacity for or on behalf of any such government or department, agency, or instrumentality, or for or on behalf of any such public international organization, or any political party, party official, or candidate thereof.
“Governmental Requirement” means any law, statute, code, ordinance, order, determination, rule, regulation, judgment, decree, injunction, rules of common law, authorization or other legally binding directive or requirement, whether now or hereinafter in effect, of any Governmental Authority.
“Hydrocarbons” means oil, gas, casinghead gas, drip gasoline, natural gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and all products refined or separated therefrom.
“ICE” is defined in Section 4.14(f).
“IMA” means that certain Investment Management Agreement dated October 3, 2025, by and between WhiteHawk OP and the Company.
“Indemnified Parties” means any Person asserting a claim for indemnification under any provision of Article VII.
“Indemnifying Party” means any Person against whom a claim for indemnification is being asserted under any provision of Article VII.
“Indebtedness” means, as to any Person: (a) all obligations of such Person for borrowed money (including reimbursement and all other obligations with respect to surety bonds, letters of credit and bankers’ acceptances, whether or not matured); (b) all obligations of such Person evidenced by notes, bonds, debentures or similar instruments; (c) all obligations of such Person to pay the deferred purchase price of property or services; (d) all interest rate and currency swaps, caps, collars and similar agreements or hedging devices under which payments are obligated to be made by such Person, whether periodically or upon the happening of a contingency; (e) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person; (f) all obligations of such Person under leases which have been or should be, in accordance with United States generally accepted accounting principles, recorded as capital leases; (g) all indebtedness secured by any lien on any property or asset owned or held by such Person regardless of whether the indebtedness secured thereby shall have been assumed by such Person or is non-recourse to the credit of such Person; and (h) all guarantees by such Person of the Indebtedness of any other Person.
“Intellectual Property” means any and all of the following arising pursuant to the Laws of any jurisdiction throughout the world: (a) trademarks, service marks, trade names, and similar indicia of source of origin, all registrations and applications for registration thereof, and the goodwill connected with the use of and symbolized by the foregoing (“Marks”); (b) copyrights and all registrations and applications for registration thereof (“Copyrights”); (c) trade secrets and
corresponding rights in confidential information and other non-public or proprietary information (whether or not patentable or copyrightable), including ideas, know-how, inventions, technology,. software, discoveries, improvements, methods, procedures, processes, techniques, formulae, drawings, designs, models and plans (“Trade Secrets”); (d) patents and patent applications, together with all reissuance, divisionals, continuations, continuations-in-part, revisions, substitutions, provisionals, renewals, extensions and re-examinations thereof, and all rights to claim priority from any of the foregoing (“Patents”); (e) internet domain name registrations; (f) intellectual property rights arising from software and technology, and (f) all other intellectual property and related proprietary rights.
“Intended Tax Treatment” is defined in Section 2.03.
“Internalization Price” means one hundred and twenty-five million dollars ($125,000,000) plus the Consideration Adjustment.
“Interests” is defined in the Recitals.
“Investment” means, for any Person: (a) the acquisition (whether for cash, Property, services or securities or otherwise) of Equity Interests of any other Person or any agreement to make any such acquisition (including, without limitation, any “short sale” or any sale of any securities at a time when such securities are not owned by the Person entering into such short sale); (b) the making of any deposit with, or advance, loan or capital contribution to, assumption of Indebtedness of, purchase or other acquisition of any other Indebtedness or equity participation or interest in, or other extension of credit to, any other Person (including the purchase of Property from another Person subject to an understanding or agreement, contingent or otherwise, to resell such Property to such Person) and made in the ordinary course of business and consistent with past practice); (c) the purchase or acquisition (in one or a series of transactions) of Property (other than Equity Interests) of another Person that constitutes a business unit; or (d) the entering into of any guarantee of, or other contingent obligation (including the deposit of any Equity Interests to be sold) with respect to, Indebtedness or other liability of any other Person and (without duplication) any amount committed to be advanced, lent or extended to such Person.
“IPO” is defined in the Recitals.
“IPO Date” means the date on which the IPO is consummated.
“IPO Price” means the price to the public of the Class A Common Stock in the IPO.
“IRS” is defined in Section 3.02(a)(ix).
“IT Systems” means all information technology, computer systems and communications systems, computers, hardware, software, databases, websites, and other equipment used to process, store, maintain, or operate data, information or functions used in connection with or in the operation of the Business.
“Knowledge” of the Contributor, Company or Services, means the actual knowledge of Daniel Herz and Jeffrey Slotterback, after reasonable inquiry of such person’s direct reports.
“Law(s)” means all international, foreign, federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directives, decrees, policies, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law, rule, regulation, ordinance, order, code interpretation, judgment, decree, directive, guideline, policy or similar form of decision of any Governmental Authority.
“Leakage” means any of the following, without duplication, which occurs on or after December 31, 2025 and before the Closing: (a) any payment by the Company or Services to the Contributor or any of its Affiliates for the purchase, redemption or repayment of any capital or loan contribution, or other securities the Company or Services; (b) any waiver, deferral or release in favor of the Contributor or any of its Affiliates of any sum or obligation owed by the Contributor or any of its Affiliates to the Company or Services, or of any claim or right of the Company or Services against the Contributor or any of its Affiliates; (c) any liabilities guaranteed, assumed, secured, incurred or indemnified for the benefit of the Contributor or any of its Affiliates by the Company or Services; (d) any increase to compensation payments, retirement, health or welfare benefits, or expense reimbursements, in each case, other than in the ordinary course of business, and the employer portion of any payroll, employment, social security, unemployment and other applicable Taxes with respect thereto; (e) any bonuses paid outside of the ordinary course of business and the employer portion of any payroll, employment, social security, unemployment and other applicable Taxes with respect thereto; (f) any liabilities in respect of accrued and unpaid and/or deferred payroll, compensation, severance, bonuses, commissions and benefits (including paid sick/leave/vacation/paid time off), and the employer portion of any payroll, employment, social security, unemployment and other applicable Taxes with respect thereto, (g) the transfer or surrender of any asset to, or for the benefit of, the Contributor or any of its Affiliates by the Company or Services; (h) the sale or purchase of any asset by the Company or Services to the extent that the amount received is less than, or amount paid materially exceeds, respectively, the fair market value thereof; and (i) without duplication, any Tax payable (whether or not yet due) or incurred by the Company or Services as a result of any of the items listed in clauses (a) through (h) above. Notwithstanding the foregoing, the term “Leakage” will exclude payments to the Contributor in respect of consideration payable pursuant to Section 2.01.
“Legal Requirement(s)” means any and all judicial decisions, orders, injunctions, writs, statutes, laws, rulings, rules, regulations, permits, certificates or ordinances of any Governmental Authority.
“Liability” means any debt, liability, commitment, or obligation of any nature, whether pecuniary or not, whether asserted or unasserted, accrued or unaccrued, absolute or contingent, matured or unmatured, liquidated or unliquidated, determined or determinable, known or unknown, and whether due or to become due, including those arising under any Contract, Law, or order.
“Liquidate” means, with respect to any Swap Agreement, the sale, assignment, novation, unwind, monetization or early termination of all or any part of such Swap Agreement or the
creation of an offsetting position against all or any part of such Swap Agreement. The terms “Liquidating”, “Liquidated” and “Liquidation” have a correlative meaning thereto.
“Liquidity Incentive Fee” means 12.5% of the proceeds from a WHIC liquidity event, including the IPO, after shareholders have received 100% of their initial invested capital plus a 7.5% annualized non-compounded return.
“Losses” means any and all damages, fines, fees, penalties, liabilities, losses and costs and expenses (including interest, court costs and fees, reasonable costs of attorneys, accountants and other experts or other reasonable expenses of litigation or other proceedings or of any claim, default or assessment, including the investigation thereof); provided, that Losses shall not include any (a) indirect, incidental or consequential damages that are not reasonably foreseeable and (b) special or punitive damages unless, in either case, such damages are asserted in a claim by a third party.
“made available” means posted at least two (2) Business Days prior to the date hereof in the electronic data room established for purposes of the Transactions and made available to WhiteHawk OP in such data room on a continuous basis.
“Management Employment Agreements” is defined in Section 3.02(a)(iii).
“Material Adverse Effect” means any Effect that, individually or in the aggregate, has had, or would reasonably be expected to (i) have a material adverse effect on the condition (financial or otherwise), business, properties, assets, liabilities or results of operations of the Business, or (ii) prevent, materially impede or materially delay the ability of the Contributor, Services or the Company to consummate the Transactions; provided, however, that in the case of the immediately preceding clause (i), none of the following shall be deemed, either alone or in combination, to constitute, and none of the following shall be taken into account in determining whether there has been or would be, a Material Adverse Effect: any Effect arising out of or resulting from (a) changes in conditions in the U.S. or global economy or capital or financial markets generally, including changes in interest or exchange rates, (b) changes in general legal, regulatory, political, economic or business conditions or changes in generally accepted accounting principles after the date of this Agreement, (c) acts of war, sabotage or terrorism, or any escalation or worsening of any such acts of war, sabotage or terrorism threatened or underway as of the date of this Agreement, (d) earthquakes, hurricanes or other natural disasters, or (e) any epidemic, pandemic or outbreak of disease (including, for the avoidance of doubt, COVID-19), or any escalation or worsening of such conditions; provided, further, however, that any Effect arising out of or resulting from the matters described in clauses (a) through (e) shall not be excluded if, but only to the extent, that such Effect materially and disproportionately affects the Company and Services as compared to similarly situated companies engaged in the businesses in which the Company and Services are engaged.
“Misdirected Assets” means any asset, right, or property (whether tangible or intangible, real or personal) that (a) was intended by the parties to be contributed to WhiteHawk OP (or its designated Affiliate) as part of the Contribution of the Interests and the Business, (b) relates to or arises out of the Business or the operations of the Company or Services, or (c) would otherwise have been transferred to WhiteHawk OP had it been properly identified or documented prior to
Closing, but that, for any reason, remained in the possession, ownership, or control of the Contributor or any of its Affiliates after the Closing.
“Misdirected Liabilities” means any liability, obligation, claim, or indebtedness (whether accrued, contingent, known or unknown, matured or unmatured) that (a) was not intended by the parties to be assumed by WhiteHawk OP (or its designated Affiliate) as part of the Contribution and the transfer of the Business, (b) does not relates to or arise out of the Business, the Interests, the Company, or Services, or (c) would not otherwise have been assumed by WhiteHawk OP had it been properly identified or documented prior to Closing, but that, for any reason, remains the responsibility of, or is asserted against, WhiteHawk OP, the Company, or Services, or any of their respective Affiliates after the Closing.
“Outside Date” is defined in Section 8.01(d).
“Person(s)” means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization, trust, association or other entity.
“Plan” means each employment, individual consulting, bonus, incentive compensation, deferred compensation, pension, profit sharing, retirement, stock purchase, stock option, stock ownership, stock appreciation rights, phantom stock, equity (or equity-based), leave of absence, layoff, vacation, day or dependent care, legal services, cafeteria, life, health, medical, dental, vision, welfare, accident, disability, workmen’s compensation or other insurance, retention, severance, separation, termination, change of control, collective bargaining or other compensation or benefit plan, agreement, practice, policy, program or arrangement of any kind, whether written or oral, and whether or not subject to ERISA, including any “employee benefit plan” within the meaning of Section 3(3) of ERISA (a) which is sponsored, maintained or contributed to (or required to be contributed to) by the Company or Services and under or with respect to which any current or former employee or other service provider of the Company or Services or any of their respective spouses, dependents or beneficiaries has any present or future rights to benefits or (b) with respect to which the Company or Services has, or could reasonably be expected to have, any current or potential liability with respect to any current or former Business Employee or other service provider (including any indirect or successor liability on account of any ERISA Affiliates).
“Pre-Closing Tax Period” means any Tax period ending on or before the Closing Date and any period through the Closing Date in the case of a Straddle Period.
“Property” means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, including, without limitation, cash, securities, accounts and contract rights.
“Public Company Compliance” means compliance with the requirements of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith, the provisions of the Securities Act and the Exchange Act, and the rules of national securities exchange listed companies (in each case, as applicable to companies with equity or debt securities held by the public), including procuring directors’ and officers’ insurance, legal and other professional fees, and listing fees.
“Release Date” is defined in Section 7.04(e).
“Released Parties” is defined in Section 9.12.
“Releasing Parties” is defined in Section 9.12.
“Required Consents” is defined in Section 3.02(a)(vii).
“Restricted Period” is defined in Section 6.09(a).
“Review Period” is defined in Section 2.02(e).
“SEC” is defined in Section 3.02(c)(iii)(B).
“Securities Act” is defined in Section 4.07(a).
“Series B Preferred Units” has the meaning given such term in the A&R OP LPA.
“Series D Preferred Units” has the meaning given such term in the A&R OP LPA.
“Services” is defined in the Recitals.
“Straddle Period” means any taxable period that includes, but does not end on, the Closing Date.
“Subject Materials” is defined in Section 7.05(b).
“Swap Agreement” means any agreement with respect to any swap, forward, collar, future or derivative transaction or option or similar agreement, whether exchange traded, “over-the-counter” or otherwise (for the avoidance of doubt, including on a prepaid basis), involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions (including any agreement, contract or transaction that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute, and any regulations promulgated thereunder); provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of WhiteHawk OP or its subsidiaries shall be a Swap Agreement.
“Tax” means any and all taxes, governmental fees, imposts, levies or other like assessments or charges of any kind whatsoever (including all net income, gross receipts, capital, sales, use, ad valorem, value added, goods and services, transfer, franchise, profits, alternative, environmental, inventory, license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation, property (real or personal) and estimated taxes and customs duties), whether federal, state, local, foreign or other, together with any interest, penalty, addition to tax or additional amount imposed by any Governmental Authority and any liability for any of the foregoing as transferee or successor.
“Tax Contest” is defined in Section 6.04(g).
“Tax Law” means any Law relating to Taxes.
“Tax Return” means any return, declaration, report, claim for refund or information return or statement relating to Taxes, including any schedule or attachment thereto, and any amendment thereof.
“Third Party Claim” means a third party action which constitutes a matter: (a) for which an Indemnified Party is entitled to indemnification under Article VII; or (b) which if determined adversely to the applicable Indemnified Party, would provide a basis for a claim for indemnification under Article VII.
“Trading Day” means a day on which the Class A Common Stock is traded on a Trading Market.
“Trading Market” means any of the following markets or exchanges on which the Class A Common Stock is listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, or the New York Stock Exchange (or any successors to any of the foregoing).
“Transaction Documents” means this Agreement, the A&R OP LPA, the A&R WHIC Charter, the Management Employment Agreements, the Registration Rights Agreement and any agreements, documents, certificates or instruments prepared or executed pursuant to the transactions contemplated by such agreements, any exhibits or attachments to any of the foregoing and any other agreement signed by the parties in connection therewith or in furtherance thereof, in each case, as the same may be amended from time to time.
“Transactions” means the transactions contemplated by the Transaction Documents.
“Transaction Expenses” means all fees, costs, charges, and expenses incurred or payable by the Company, Services, or the Contributor in connection with the negotiation, preparation, execution, and consummation of this Agreement and the transactions contemplated hereby, including, without limitation: (a) fees and expenses of legal counsel, accountants, investment bankers, financial advisors, brokers, and other advisors, (b) any sale bonuses, change-of-control payments, retention bonuses, severance, or similar compensatory amounts payable as a result of the Transactions (including the employer portion of any related Taxes), and (c) any costs or expenses related to the payoff or discharge of Indebtedness (including prepayment premiums and related fees). For the avoidance of doubt, Transaction Expenses shall not include any fees or expenses incurred by WHIC, WhiteHawk OP, or their Affiliates.
“Transaction Expenses Cap” means $500,000 in the aggregate.
“Treasury Regulations” means the Treasury Regulations (including temporary regulations) promulgated by the United States Department of Treasury with respect to the Code.
“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Class A Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Class A Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Class A Common Stock is then listed or
quoted as reported by Bloomberg (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Class A Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Class A Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Class A Common Stock are then reported on The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Class A Common Stock so reported, or (d) in all other cases, the fair market value of a share of Class A Common Stock as determined by an independent appraiser selected in good faith by the Contributor and reasonably acceptable to WHIC, the fees and expenses of which shall be paid by the Contributor.
“WARN” is defined in Section 4.14(d).
“WH OP GP” is defined in the Recitals.
“WH OP Partnership Agreement” means that certain Agreement of Limited Partnership of WhiteHawk OP, dated as of January 27, 2026 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time until immediately prior to the Contribution Date, together with all schedules, exhibits and annexes thereto).
“WHIC” is defined in the Recitals.
“WHIC Shares” is defined in Section 2.01.
“WhiteHawk OP” is defined in the Preamble.
“WhiteHawk OP Indemnified Parties” is defined in Section 7.02.
“WhiteHawk OP Units” is defined in Section 2.01.
EXHIBIT B
FORM OF A&R OP LPA
EXHIBIT C
FORM OF MANAGEMENT EMPLOYMENT AGREEMENT
EXHIBIT D
FORM OF A&R WHIC CHARTER
EXHIBIT E
FORM OF REGISTRATION RIGHTS AGREEMENT
