Exhibit 10.1

 

SECURITIES PURCHASE AGREEMENT

 

This SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of April 28,
2020, is by and among Tellurian Inc., a Delaware corporation with offices
located at 1201 Louisiana Street, Suite 3100, Houston, Texas 77002 (the
“Company”), and each of the investors listed on the Schedule of Buyers attached
hereto (individually, a “Buyer” and collectively, the “Buyers”).

 

RECITALS

 

A.                The Company has authorized a new series of Senior Unsecured
Notes in the form attached hereto as Exhibit A (the “Notes”), which Notes shall
under certain circumstances be convertible into freely tradeable shares of the
Company’s common stock, par value $0.01 per share (together with any capital
stock into which such common stock shall have been changed or any share capital
resulting from a reclassification of such common stock, the “Common Stock”)
(such underlying shares of Common Stock issuable pursuant to the terms of the
Notes, the “Note Shares”). The Notes will be issued pursuant to an Indenture to
be dated as of the Closing Date (as defined below) (the “Indenture”), between
the Company and Wilmington Trust, N.A., as trustee (the “Trustee”).

 

B.                 The Company has also authorized the issuance of Warrants to
purchase Common Stock in the form attached hereto as Exhibit B (the “Warrants”)
(such underlying shares of Common Stock issuable upon exercise of a Warrant,
collectively, the “Warrant Shares” and, together with the Note Shares, the
“Underlying Shares”).

 

C.                 Each Buyer wishes to purchase, and the Company wishes to
sell, upon the terms and conditions stated in this Agreement, the aggregate
principal amount of Notes set forth opposite such Buyer’s name in column (3) on
the Schedule of Buyers.

 

D.                Each Buyer wishes to purchase, and the Company wishes to sell,
upon the terms and conditions stated in this Agreement, a Warrant.

 

E.                 At or before the Closing (as defined below), the parties set
forth on Exhibit C hereto shall execute and deliver a Voting Agreement, in the
form attached hereto as Exhibit D (each, a “Voting Agreement”), pursuant to
which such parties shall agree to vote their shares of the Company’s Common
Stock in favour of providing the Requisite Stockholder Approval (as defined in
the Notes).

 

F.                  The Notes, Warrants, Note Shares and Warrant Shares are
collectively referred to herein as the “Securities.”

 

G.                The Company and each Buyer is executing and delivering this
Agreement in reliance upon the effective registration statement on Form S-3ASR
(Commission File No. 333-235793) (as amended, the “Registration Statement”)
filed by the Company with the United States Securities and Exchange Commission
(the “SEC”) pursuant to the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder (collectively, the “1933 Act”), for the
registration of the Securities, as such Registration Statement may be amended
and supplemented from time to time (including pursuant to Rule 462(b) of the
1933 Act), including all documents filed as part thereof or incorporated by
reference therein, and including all information deemed to be a part thereof at
the time of effectiveness pursuant to Rule 430B of the 1933 Act, and the
prospectus supplement (the “Prospectus Supplement”) complying with Rule 424(b)
of the 1933 Act that is delivered by the Company to each Buyer in connection
with the execution and delivery of this Agreement, including the documents
incorporated by reference therein, and that is filed with the SEC.

 

 

 

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and each
Buyer hereby agree as follows:

 

1.PURCHASE AND SALE OF PURCHASED SECURITIES.

 

(a)               Purchase of Purchased Securities. Subject to the satisfaction
(or waiver) of the conditions set forth in Sections 6 and 7 below, the Company
shall issue and sell to each Buyer, and each Buyer severally, but not jointly,
agrees to purchase from the Company on the Closing Date the following Securities
(collectively, the “Purchased Securities”):

 

(i)                 the aggregate principal amount of Notes as is set forth
opposite such Buyer’s name in column (3) on the Schedule of Buyers; and

 

(ii)              a Warrant exercisable for the aggregate number of Warrant
Shares as is set forth opposite such Buyer’s name in column (5) on the Schedule
of Buyers at an exercise price of $1.542 per share.

 

(b)               Closing. The closing (the “Closing”) of the purchase of the
Purchased Securities by the Buyers shall occur at the offices of Latham &
Watkins LLP, 885 Third Avenue, New York, NY 10022. The date and time of the
Closing (the “Closing Date”) shall be 10:00 a.m., New York time, on the
first (1st) Business Day on which the conditions to the Closing set forth in
Sections 6 and 7 below are satisfied or waived (or such other date as is
mutually agreed to by the Company and each Buyer). As used herein “Business Day”
means any day other than a Saturday, Sunday or other day on which commercial
banks in New York, New York are authorized or required by law to remain closed.

 

(c)               Securities Purchase Price. The aggregate purchase price for
the Purchased Securities to be purchased by each Buyer (the “Purchase Price”)
shall be the amount set forth opposite such Buyer’s name in column (7) on the
Schedule of Buyers.

 

(d)               Form of Payment for Purchased Securities. On the Closing Date,
(i) each Buyer shall pay its respective Purchase Price to the Company for the
Purchased Securities to be issued and sold to such Buyer at the Closing set
forth opposite such Buyer’s name in column (4) and column (6) on the Schedule of
Buyers, as applicable, by wire transfer of immediately available funds in
accordance with the Flow of Funds Letter (as defined below) and (ii) the Company
shall:

 

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(A)             deliver to each Buyer the aggregate principal amount of Notes as
is set forth opposite such Buyer’s name in column (3) of the Schedule of Buyers,
duly executed on behalf of the Company and registered on the books and records
of the Company in the name of such Buyer or its designee; and

 

(B)              deliver to each Buyer a Warrant exercisable for the aggregate
number of Warrant Shares as is set forth opposite such Buyer’s name in
column (5) on the Schedule of Buyers at an exercise price of $1.542 per share,
duly executed on behalf of the Company and registered on the books and records
of the Company in the name of such Buyer or its designee.

 

(e)               Purchase Price Allocation. Each Buyer and the Company agree
that the Notes and the Warrant constitute an “investment unit” for purposes of
Section 1273(c)(2) of the Code. The Buyers and the Company mutually agree that
the allocation of the issue price of such investment unit between the Notes and
the Warrants in accordance with Section 1273(c)(2) of the Code and Treasury
Regulation Section 1.1273-2(h) shall be as set forth on the Schedule of Buyers,
and neither the Buyers nor the Company shall take any position inconsistent with
such allocation in any tax return or in any judicial or administrative
proceeding in respect of taxes, except as may be otherwise required by GAAP (as
defined below).

 

2.BUYER’S REPRESENTATIONS AND WARRANTIES.

 

Each Buyer, severally and not jointly, represents and warrants to the Company
with respect to only itself that, as of the date hereof and as of the Closing
Date:

 

(a)               Organization; Authority. Such Buyer is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite power and authority to
conduct its business as currently conducted and enter into and to consummate the
transactions contemplated by the Transaction Documents (as defined below) to
which it is a party and otherwise to carry out its obligations hereunder and
thereunder.

 

(b)               Validity; Enforcement. This Agreement has been duly and
validly authorized, executed and delivered on behalf of such Buyer and shall
constitute the legal, valid and binding obligations of such Buyer enforceable
against such Buyer in accordance with their respective terms, except as such
enforceability may be limited by general principles of equity or to applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation and other
similar laws relating to, or affecting generally, the enforcement of applicable
creditors’ rights and remedies.

 

(c)               No Conflicts. The execution, delivery and performance by such
Buyer of this Agreement and the consummation by such Buyer of the transactions
contemplated hereby will not (i) result in a violation of the organizational
documents of such Buyer, or (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which such Buyer is a
party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws) applicable to
such Buyer, except in the case of clauses (ii) and (iii) above, for such
conflicts, defaults, rights or violations which could not, individually or in
the aggregate, reasonably be expected to have a material adverse effect on the
ability of such Buyer to perform its obligations hereunder.

 

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3.REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

The Company represents and warrants to each of the Buyers that, as of the date
hereof and as of the Closing Date:

 

(a)               Compliance with Registration Requirements. The Registration
Statement has become effective under the 1933 Act. The Company has complied, to
the SEC’s satisfaction with all requests of the SEC for additional or
supplemental information, if any. No stop order suspending the effectiveness of
the Registration Statement is in effect and no proceedings for such purpose have
been instituted or, to the knowledge of the Company, are pending or contemplated
or threatened by the SEC. At the time the Company’s Annual Report on Form 10-K
for the year ended December 31, 2019 (the “Annual Report”) was filed with the
SEC, the Company met the then-applicable requirements for use of Form S-3 under
the 1933 Act. The documents incorporated or deemed to be incorporated by
reference in the Registration Statement, at the time they were or hereafter are
filed with the SEC, or became effective under the Securities Exchange Act of
1934, as amended (the “1934 Act”), as the case may be, complied and will comply
with in all material respects with the requirements of the 1934 Act. As used
herein, the “knowledge of the Company,” “the Company’s knowledge,” the
“knowledge of any Subsidiary of the Company,” “the Subsidiary’s knowledge,” or
any other similar knowledge qualification, means the actual knowledge of Meg
Gentle, Keith Teague, Kian Granmayeh, Daniel Belhumeur and Khaled Sharafeldin.

 

(b)               Disclosure. The Prospectus Supplement when filed complied in
all material respects with the 1933 Act. Each of the Registration Statement and
any post-effective amendment thereto, at the time it became effective, complied
in all material respects with the 1933 Act and the Trust Indenture Act of 1939,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the “Trust Indenture Act”) and did not, and at the Closing Date
will not, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided that the Company makes no representation or
warranty with respect to that part of the Registration Statement that
constitutes the Statement of Eligibility and Qualification (Form T-1) of the
Trustee under the Trust Indenture Act. The Indenture, when filed with the SEC,
complied in all material respects with the requirements of
the Trust Indenture Act and was duly qualified as an indenture under
the Trust Indenture Act. The Prospectus Supplement (including any prospectus
wrapper), as of its date, did not, and at the Closing Date, will not, contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. There are no contracts
or other documents required to be described in the Prospectus Supplement or to
be filed as an exhibit to the Registration Statement which have not been
described or filed as required. No event, liability, development or circumstance
has occurred or exists, or is reasonably expected to exist or occur with respect
to the Company, any of its Subsidiaries (as defined below) or any of their
respective businesses, properties, liabilities, prospects, operations (including
results thereof) or condition (financial or otherwise), that would be required
to be disclosed by the Company under applicable securities laws on a
registration statement on Form S-3 filed with the SEC relating to an issuance
and sale by the Company of any shares of Common Stock and which has not been
publicly announced.

 

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(c)               Organization and Qualification. Each of the Company and each
of its Subsidiaries are entities duly organized and validly existing and in good
standing under the laws of the jurisdiction in which they are formed, and have
the requisite organizational power and authority to own their properties and to
carry on their business as now being conducted. Each of the Company and each of
its Subsidiaries is duly qualified as a foreign entity to do business and is in
good standing in every jurisdiction in which its ownership of property or the
nature of the business conducted by it makes such qualification necessary,
except to the extent that the failure to be so qualified or be in good standing
would not reasonably be expected to have a Material Adverse Effect (as defined
below). As used in this Agreement, “Material Adverse Effect” means any material
adverse effect on (i) the business, properties, assets, liabilities, operations
(including results thereof), or condition (financial or otherwise) of the
Company or its Subsidiaries, taken as a whole, (ii) the transactions
contemplated hereby or in any of the other Transaction Documents or any other
agreements or instruments to be entered into in connection herewith or
therewith, taken as a whole, or (iii) the authority or ability of the Company or
any of its Subsidiaries to perform any of their respective obligations under any
of the Transaction Documents. Other than the Persons (as defined below) set
forth on Schedule 3(c), the Company has no significant Subsidiaries within the
meaning of Rule 1-02(w) of Regulation S-X. “Subsidiaries” means any Person in
which the Company, directly or indirectly, (I) owns a majority of the
outstanding capital stock or holds any equity or similar interest of such Person
or (II) controls or operates the business, operations or administration of such
Person, and each of the foregoing, is individually referred to herein as a
“Subsidiary.” For purposes of this Agreement, “Person” means an individual, a
limited liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization, any other entity and any Governmental
Entity (as defined below) or any department or agency thereof.

 

(d)               Authorization; Enforcement; Validity. The Company has the
requisite corporate power and authority to enter into and perform its
obligations under this Agreement and the other Transaction Documents and to
issue the Securities in accordance with the terms hereof and thereof. The
execution and delivery of this Agreement and the other Transaction Documents by
the Company, and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the issuance of
the Notes and Warrants, the reservation for issuance (as described in
Section 3(e)) and issuance of the Underlying Shares issuable upon conversion or
exercise of the Notes and Warrants, as applicable) have been duly authorized by
the Company’s board of directors, and (other than (i) the filing with the SEC of
the Prospectus Supplement in accordance with the requirements of this Agreement,
(ii) any filings as may be required by any state securities agencies and (iii) a
Listing of Additional Shares Notification with the Principal Market (as defined
below) (collectively, the “Required Filings”)) no further filing, consent or
authorization is required by the Company or its board of directors or its
stockholders. This Agreement has been, and the other Transaction Documents to
which it is a party will be prior to the Closing, duly executed and delivered by
the Company (with respect to the Notes, in the form contemplated by the
Indenture), and each constitutes the legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with its respective
terms, except as such enforceability may be limited by general principles of
equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement
of applicable creditors’ rights and remedies and except as rights to
indemnification and to contribution may be limited by federal or state
securities law. “Transaction Documents” means, collectively, this Agreement, the
Notes, the Indenture, the Warrants, the Voting Agreements, the Irrevocable
Transfer Agent Instructions (as defined below) and each of the other agreements
and instruments entered into or delivered by any of the parties hereto in
connection with the transactions contemplated hereby and thereby, as may be
amended from time to time.

 

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(e)               Issuance of Securities. The issuance of the Securities is duly
authorized and, when issued and delivered in accordance with the terms of the
Transaction Documents, the Securities shall be validly issued, fully paid and
non-assessable, free from all preemptive or similar rights (including pursuant
to that certain Pre-Emptive Rights Agreement, entered into as of May 10, 2017,
by and among the Company and Total Delaware, Inc. (the “Pre-Emptive Rights
Agreement”), mortgages, defects, claims, liens, pledges, charges, taxes, rights
of first refusal, encumbrances, security interests and other encumbrances
(collectively “Liens”) with respect to the issuance thereof, and, in the case of
the Notes, entitled to the benefits of the Indenture. As of the Closing, the
Company shall have reserved from its duly authorized capital stock not less than
a number of shares of Common Stock equal to fifty-one million five hundred
sixty-seven thousand fifty (51,567,050) shares of Common Stock to satisfy the
Company’s obligation to issue shares of Common Stock under the Notes and (ii)
twenty million (20,000,000) shares of Common Stock to satisfy the Company’s
obligation to issue shares of Common Stock under the Warrants. Upon issuance or
exercise in accordance with the Indenture, Notes or Warrants, as applicable, the
Underlying Shares when issued, will be validly issued, fully paid and
nonassessable and free from all preemptive or similar rights (including pursuant
to the Pre-Emptive Rights Agreement) or Liens with respect to the issuance
thereof and, with the holders being entitled to all rights accorded to a holder
of Common Stock.

 

(f)                No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without limitation, the
issuance of the Notes, Warrants and the Underlying Shares and the reservation
for issuance of the Underlying Shares) will not (i) result in a violation of the
Certificate of Incorporation (as defined below), Bylaws (as defined below),
certificate of formation, memorandum of association, articles of association,
bylaws or other organizational documents of the Company or any of its
Subsidiaries, or any capital stock or other securities of the Company or any of
its Subsidiaries, (ii) conflict with, or constitute a default (or an event which
with notice or lapse of time or both would become a default) in any respect
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its Subsidiaries is a party, or (iii) assuming the accuracy of the
representations and warranties in Section 2, result in a violation of any law,
rule, regulation, order, judgment or decree (including, without limitation,
foreign, federal and state securities laws and regulations and the rules and
regulations of the Nasdaq Capital Market (the “Principal Market”) and including
all applicable foreign, federal and state laws, rules and regulations)
applicable to the Company or any of its Subsidiaries or by which any property or
asset of the Company or any of its Subsidiaries is bound or affected, assuming,
with respect to clauses (ii) and (iii) above, the making of the Required Filings
and except in the case of clauses (ii) and (iii), for such breaches, violations
or conflicts as would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.

 

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(g)               Consents. Neither the Company nor any Subsidiary is required
to obtain any consent from, authorization or order of, or make any filing or
registration with (other than the Required Filings and such consents,
authorizations, filings or registrations the absence of which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect), any Governmental Entity or any regulatory or self-regulatory
agency or any other Person in order for it to execute, deliver or perform any of
its respective obligations under or contemplated by the Transaction Documents,
in each case, in accordance with the terms hereof or thereof. To the Company’s
knowledge, other than the Required Filings, all consents, authorizations,
orders, filings and registrations which the Company or any Subsidiary is
required to obtain pursuant to the preceding sentence have been or will be
obtained or effected on or prior to the Closing Date, and the Company is not
aware of any facts or circumstances which are reasonably likely to prevent the
Company from obtaining or effecting any of the registration, application or
filings contemplated by the Transaction Documents. The Company is not in
violation of the requirements of the Principal Market and, except with respect
to future changes in the market price of the shares of Common Stock, has no
knowledge of any facts or circumstances which could reasonably lead to delisting
or suspension of the Common Stock. “Governmental Entity” means any nation,
state, county, city, town, village, district, or other political jurisdiction of
any nature, federal, state, local, municipal, foreign, or other government,
governmental or quasi-governmental authority of any nature (including any
governmental agency, branch, department, official, or entity and any court or
other tribunal), multi-national organization or body; or body exercising, or
entitled to exercise, any administrative, executive, judicial, legislative,
police, regulatory, or taxing authority or power of any nature or
instrumentality of any of the foregoing, including any entity or enterprise
owned or controlled by a government or a public international organization or
any of the foregoing.

 

(h)               Acknowledgment Regarding Buyer’s Purchase of Securities. The
Company acknowledges and agrees that each Buyer is acting solely in the capacity
of an arm’s length purchaser with respect to the Transaction Documents and the
transactions contemplated hereby and thereby and that no Buyer is (i) an officer
or director of the Company or any of its Subsidiaries, (ii) an “affiliate” (as
defined in Rule 144) of the Company or any of its Subsidiaries or (iii) to its
knowledge, a “beneficial owner” of more than 10% of the shares of Common Stock
(as defined for purposes of Rule 13d-3 of the 1934 Act. The Company further
acknowledges that no Buyer is acting as a financial advisor or fiduciary of the
Company or any of its Subsidiaries (or in any similar capacity) with respect to
the Transaction Documents and the transactions contemplated hereby and thereby,
and any advice given by a Buyer or any of its representatives or agents in
connection with the Transaction Documents and the transactions contemplated
hereby and thereby is merely incidental to such Buyer’s purchase of the
Securities. The Company further represents to each Buyer that the Company’s
decision to enter into the Transaction Documents to which it is a party has been
based solely on the independent evaluation by the Company and its
representatives.

 

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(i)                 Placement Agent. The Company shall be responsible for the
payment of any placement agent’s fees, financial advisory fees, or brokers’
commissions (other than for Persons engaged by any Buyer or its investment
advisor) relating to or arising out of the transactions contemplated hereby. The
Company shall pay, and hold each Buyer harmless against, any liability, loss or
expense (including, without limitation, attorney’s fees and reasonable and
documented out-of-pocket expenses) arising in connection with any such claim.
The Company has not engaged any placement agent or other agent other than Roth
Capital Partners, LLC in connection with the offer or sale of the Securities.

 

(j)                 No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any Person acting on their behalf has, directly or indirectly,
made any offers or sales of any security or solicited any offers to buy any
security, under circumstances that would require approval of stockholders of the
Company in connection with the offering of the Securities for purposes of any
applicable stockholder approval provisions, including, without limitation, under
the rules and regulations of any exchange or automated quotation system on which
any of the securities of the Company are listed or designated for quotation.
Neither the Company, its Subsidiaries, nor their affiliates nor any Person
acting on their behalf has taken any action or steps that would cause the
offering of any of the Securities to be integrated with other offerings of
securities of the Company.

 

(k)               Dilutive Effect. The Company understands and acknowledges that
the number of Underlying Shares will increase in certain circumstances. The
Company further acknowledges that its obligation to issue the Underlying Shares
pursuant to the terms of the Notes and Warrants in accordance with this
Agreement is not conditioned on the absence of any degree of dilutive effect
that such issuance may have on the ownership interests of other stockholders of
the Company.

 

(l)                 Application of Takeover Protections. The Company and its
board of directors have taken or will take prior to the Closing Date all
necessary action, if any, in order to render inapplicable any control share
acquisition, interested stockholder, business combination, poison pill,
stockholder rights plan or other similar anti-takeover provision under the
Certificate of Incorporation, Bylaws or other organizational documents or the
laws of the jurisdiction of its incorporation which is or could become
applicable to any Buyer as a result of the transactions contemplated by this
Agreement, including, without limitation, the Company’s issuance of the
Securities and any Buyer’s ownership of the Securities.

 

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(m)             Financial Statements. During the one (1) year prior to the date
hereof, the Company has timely filed all reports, schedules, forms, proxy
statements, statements and other documents required to be filed by it with the
SEC (other than Section 16 ownership filings) pursuant to the reporting
requirements of the 1934 Act (reports filed in compliance with the time period
specified in Rule 12b-25 promulgated under the 1934 Act shall be considered
timely for this purpose) (all of the foregoing filed prior to the date hereof
and all exhibits and appendices included therein and financial statements, notes
and schedules thereto and documents incorporated by reference therein being
hereinafter referred to as the “SEC Documents”). The Company has delivered or
has made available to the Buyers or their respective representatives true,
correct and complete copies of each of the SEC Documents not available on the
EDGAR system. As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the 1934 Act and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. As of their respective dates, the financial statements of the
Company included in the SEC Documents complied in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto as in effect as of the time of filing. Such
financial statements have been prepared in accordance with generally accepted
accounting principles (“GAAP”), consistently applied, during the periods
involved (except (i) as may be otherwise indicated in such financial statements
or the notes thereto, or (ii) in the case of unaudited interim statements, to
the extent they may exclude footnotes or may be condensed or summary statements)
and fairly present in all material respects the financial position of the
Company as of the dates thereof and the results of its operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments which will not be material, either
individually or in the aggregate) in accordance with GAAP. The Company is not
currently contemplating to amend or restate any of the financial statements
(including, without limitation, any notes or any letter of the independent
accountants of the Company with respect thereto) included in the SEC Documents
(the “Financial Statements”), nor is the Company currently aware of facts or
circumstances which would require the Company to amend or restate any of the
Financial Statements, in each case, in order for any of the Financials
Statements to be in material compliance with GAAP and the rules and regulations
of the SEC. The Company has not been informed by its independent accountants
that they recommend that the Company amend or restate any of the Financial
Statements or that there is any need for the Company to amend or restate any of
the Financial Statements.

 

(n)               Absence of Certain Changes. Since the date of the Company’s
most recent audited financial statements contained in the Annual Report, except
as disclosed in a subsequent SEC Document filed prior to the date hereof, there
has been no development in the business, assets, liabilities, properties,
operations (including results thereof), or condition (financial or otherwise) of
the Company or any of its Subsidiaries that has had, or would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
Since the date of the Company’s audited financial statements contained in the
Annual Report, except as disclosed in a subsequent SEC Document filed prior to
the date hereof, neither the Company nor any of its Subsidiaries has
(i) declared or paid any dividends, (ii) sold any assets, individually or in the
aggregate, outside of the ordinary course of business or (iii) made any capital
expenditures, individually or in the aggregate, outside of the ordinary course
of business. Neither the Company nor any of its Subsidiaries has taken any steps
to seek protection pursuant to any law or statute relating to bankruptcy,
insolvency, reorganization, receivership, liquidation or winding up, nor does
the Company or any Subsidiary have any knowledge of any pending or threatened
involuntary bankruptcy proceedings. The Company and its Subsidiaries,
individually and on a consolidated basis, are not as of the date hereof, and
after giving effect to the transactions contemplated hereby to occur at the
Closing, will not be Insolvent (as defined below). For purposes of this
Section 3(n), “Insolvent” means, (i) with respect to the Company and its
Subsidiaries, on a consolidated basis, (A) the present fair saleable value of
the Company’s and its Subsidiaries’ assets is less than the amount required to
pay the Company’s and its Subsidiaries’ total Indebtedness (as defined below),
(B) the Company and its Subsidiaries are unable to pay their debts and
liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured or (C) the Company and its Subsidiaries
intend to incur or believe that they will incur debts that would be beyond their
ability to pay as such debts mature.

 

9

 

 

(o)               Regulatory Permits. During the two years prior to the date
hereof, (i) the Common Stock has been listed or designated for quotation on the
Principal Market, (ii) trading in the Common Stock has not been suspended by the
SEC or the Principal Market and (iii) the Company has received no communication,
written or oral, from the SEC or the Principal Market regarding the suspension
or delisting of the Common Stock from the Principal Market. The Company and each
of its Subsidiaries possess all certificates, authorizations and permits issued
by the appropriate regulatory authorities necessary to conduct their respective
businesses, except where the failure to possess such certificates,
authorizations or permits would not reasonably be likely to have, individually
or in the aggregate, a Material Adverse Effect, and neither the Company nor any
such Subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or permit
where such revocation or modification would have a Material Adverse Effect.

 

(p)               Foreign Corrupt Practices. Neither the Company, any of the
Company’s Subsidiaries nor any director, officer or employee thereof, nor to the
Company’s knowledge, any agent or any other person acting for or on behalf of
the foregoing (individually and collectively, a “Company Affiliate”) have
violated the U.S. Foreign Corrupt Practices Act or any other applicable
anti-bribery or anti-corruption laws, nor, to the Company’s knowledge, has any
Company Affiliate offered, paid, promised to pay, or authorized the payment of
any money, or offered, given, promised to give, or authorized the giving of
anything of value, to any officer, employee or any other person acting in an
official capacity for any Governmental Entity to any political party or official
thereof or to any candidate for political office (individually and collectively,
a “Government Official”) or to any person under circumstances where such Company
Affiliate knew or was aware of a high probability that all or a portion of such
money or thing of value would be offered, given or promised, directly or
indirectly, to any Government Official, for the purpose of:

 

(i)                 (A) influencing any act or decision of such Government
Official in his/her official capacity, (B) inducing such Government Official to
do or omit to do any act in violation of his/her lawful duty, (C) securing any
improper advantage, or (D) inducing such Government Official to influence or
affect any act or decision of any Governmental Entity, or

 

(ii)              assisting the Company or its Subsidiaries in obtaining or
retaining business for or with, or directing business to, the Company or its
Subsidiaries.

 

(q)               Sarbanes-Oxley Act. The Company and each Subsidiary is in
material compliance with any and all applicable requirements of the
Sarbanes-Oxley Act of 2002, as amended, and any and all applicable rules and
regulations promulgated by the SEC thereunder.

 

10

 

 

(r)                Transactions With Affiliates. Except as set forth on Schedule
3(r), the Company is not a party to any transactions with any “related person”
(as such term is defined in Item 404 of Regulation S-K) that is not disclosed in
the SEC Documents but would be required to be so disclosed if such documents
were filed at this time.

 

(s)                Equity Capitalization.

 

(i)                 Authorized and Outstanding Capital Stock. As of the date
hereof, the authorized capital stock of the Company consists of (A) 400,000,000
shares of Common Stock, of which 257,835,259 are issued and outstanding and
26,650,015 shares are reserved for issuance pursuant to Convertible Securities
(as defined below) (other than the Notes, the Warrants, the Company securities
set forth on Schedule 3(s)(i), and the Series C Preferred Stock (as defined
below)) exercisable or exchangeable for, or convertible into, shares of Common
Stock and (B) 100,000,000 shares of preferred stock, par value $0.01 per share,
of which 8,000,000 shares are designated as Series C convertible preferred stock
(the “Series C Preferred Stock”), of which 6,123,782 shares of Series C
Preferred Stock are issued and outstanding. No shares of Common Stock are held
in the treasury of the Company. “Convertible Securities” means any capital stock
or other security of the Company or any of its Subsidiaries that is at any time
and under any circumstances directly or indirectly convertible into, exercisable
or exchangeable for, or which otherwise entitles the holder thereof to acquire,
any capital stock or other security of the Company (including, without
limitation, Common Stock) or any of its Subsidiaries.

 

(ii)              Valid Issuance; Available Shares; Affiliates. All of such
outstanding shares are duly authorized and have been, or upon issuance will be,
validly issued and are fully paid and nonassessable. Schedule 3(s)(ii) sets
forth the number of shares of Common Stock that are (A) reserved for issuance
pursuant to Convertible Securities (other than the Notes, Warrants and the
Company securities set forth on Schedule 3(s)(i)) and (B) that are, as of the
date hereof, owned by Persons who are “affiliates” (as defined in Rule 405 of
the 1933 Act and calculated based on the assumption that only officers,
directors and holders of at least 10% of the Company’s issued and outstanding
Common Stock are “affiliates” without conceding that any such Persons are
“affiliates” for purposes of federal securities laws) of the Company or any of
its Subsidiaries. To the Company’s knowledge, except as disclosed in the SEC
Documents, no Person owns 10% or more of the Company’s issued and outstanding
shares of Common Stock (calculated based on the assumption that all Convertible
Securities, whether or not presently exercisable or convertible, have been fully
exercised or converted (as the case may be) taking account of any limitations on
exercise or conversion (including “blockers”) contained therein without
conceding that such identified Person is a 10% stockholder for purposes of
federal securities laws).

 

(iii)            Existing Securities; Obligations. Except as set forth on
Schedule 3(s)(iii): (A) none of the Company’s or any Subsidiary’s shares,
interests or capital stock is subject to preemptive rights or any other similar
rights or Liens suffered or permitted by the Company or any Subsidiary;
(B) other than awards to employees, directors, and consultants of the Company
under equity incentive plans adopted by the Company and as described in the SEC
Documents, there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, or exercisable or exchangeable for, any
shares, interests or capital stock of the Company or any of its Subsidiaries, or
contracts, commitments, understandings or arrangements by which the Company or
any of its Subsidiaries is or may become bound to issue additional shares,
interests or capital stock of the Company or any of its Subsidiaries or options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, or exercisable
or exchangeable for, any shares, interests or capital stock of the Company or
any of its Subsidiaries; (C) except as described in the SEC Documents, there are
no agreements or arrangements under which the Company or any of its Subsidiaries
is obligated to register the sale of any of their securities under the 1933 Act;
(D) there are no outstanding securities or instruments of the Company or any of
its Subsidiaries which contain any redemption or similar provisions, and there
are no contracts, commitments, understandings or arrangements by which the
Company or any of its Subsidiaries is or may become bound to redeem a security
of the Company or any of its Subsidiaries; (E) there are no securities or
instruments containing anti-dilution or similar provisions that will be
triggered by the issuance of the Securities, except pursuant to the Pre-Emptive
Rights Agreement; and (F) the Company has no stock appreciation rights or
“phantom stock” plans or agreements or any similar plan or agreement, other than
stock appreciation rights or “phantom stock” awards that may be issuable under
the Company’s equity incentive compensation plans.

 

11

 

 

(iv)             Organizational Documents. The Company has made available to the
Buyers true, correct and complete copies of the Company’s Certificate of
Incorporation, as amended and as in effect on the date hereof (the “Certificate
of Incorporation”), and the Company’s bylaws, as amended and as in effect on the
date hereof (the “Bylaws”), and the terms of all Convertible Securities and the
material rights of the holders thereof in respect thereto.

 

(t)                 Indebtedness and Other Contracts. Except as set forth on
Schedule 3(t), neither the Company nor any of its Subsidiaries (i) has any
material outstanding debt securities, notes, credit agreements, credit
facilities or other agreements, documents or instruments evidencing Indebtedness
of the Company or any of its Subsidiaries or by which the Company or any of its
Subsidiaries is or may become bound or (ii) is in violation of any term of, or
in default under, any contract, agreement or instrument relating to any
Indebtedness, except where such violations and defaults would not result,
individually or in the aggregate, in a Material Adverse Effect. Neither the
Company nor any of its Subsidiaries have any liabilities or obligations required
to be disclosed in the SEC Documents which are not so disclosed in the SEC
Documents, other than those incurred in the ordinary course of the Company’s or
its Subsidiaries’ respective businesses consistent with past practice and which,
individually or in the aggregate, do not or could not have a Material Adverse
Effect. For purposes of this Agreement: (x) “Indebtedness” of any Person means,
without duplication, (A) all indebtedness for borrowed money, (B) all
obligations issued, undertaken or assumed as the deferred purchase price of
property or services (including, without limitation, “capital leases” in
accordance with GAAP) (other than trade payables entered into in the ordinary
course of business consistent with past practice), (C) all reimbursement or
payment obligations with respect to letters of credit, surety bonds and other
similar instruments, (D) all obligations evidenced by notes, bonds, debentures
or similar instruments, including obligations so evidenced incurred in
connection with the acquisition of property, assets or businesses, (E) all
indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect to
any property or assets acquired with the proceeds of such indebtedness (even
though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such property), (F) all
monetary obligations under any leasing or similar arrangement which, in
connection with GAAP, consistently applied for the periods covered thereby, is
classified as a capital lease, (G) all indebtedness referred to in clauses (A)
through (F) above secured by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured by) any Lien upon or
in any property or assets (including accounts and contract rights) owned by any
Person, even though the Person which owns such assets or property has not
assumed or become liable for the payment of such indebtedness, and (H) all
Contingent Obligations in respect of indebtedness or obligations of others of
the kinds referred to in clauses (A) through (G) above; and (y) “Contingent
Obligation” means, as to any Person, any direct or indirect liability,
contingent or otherwise, of that Person with respect to any Indebtedness, lease,
dividend or other obligation of another Person if the primary purpose or intent
of the Person incurring such liability, or the primary effect thereof, is to
provide assurance to the obligee of such liability that such liability will be
paid or discharged, or that any agreements relating thereto will be complied
with, or that the holders of such liability will be protected (in whole or in
part) against loss with respect thereto.

 

12

 

 

(u)               Litigation. There is no material action, suit, arbitration,
proceeding, inquiry or investigation before or by the Principal Market, any
court, public board, other Governmental Entity, self-regulatory organization or
body pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of its Subsidiaries, the Common Stock or any of the
Company’s or its Subsidiaries’ officers or directors, whether of a civil or
criminal nature or otherwise, in their capacities as such. To the knowledge of
the Company, no director, officer or employee of the Company or any of its
subsidiaries has willfully violated 18 U.S.C. §1519 or engaged in spoliation in
reasonable anticipation of litigation. Without limitation of the foregoing,
there has not been, and to the knowledge of the Company, there is not pending,
contemplated or anticipated, any inquiry or investigation by the SEC involving
the Company, any of its Subsidiaries or any current director or officer of the
Company or any of its Subsidiaries. The SEC has not issued any stop order or
other order suspending the effectiveness of any registration statement filed by
the Company under the 1933 Act or the 1934 Act. To its knowledge, the Company is
not aware of any fact which might result in or form the basis for any such
action, suit, arbitration, investigation, inquiry or other proceeding. Neither
the Company nor any of its Subsidiaries is subject to any order, writ, judgment,
injunction, decree, determination or award of any Governmental Entity that names
the Company or any of its Subsidiaries and, to the Company’s knowledge, neither
the Company nor any of its Subsidiaries is subject to any other order, writ,
judgment, injunction, decree, determination or award of any Governmental Entity.

 

13

 

 

 

(v)               Insurance. The Company and each of its Subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and its
Subsidiaries are engaged. Neither the Company nor any of its Subsidiaries has
been refused any insurance coverage sought or applied for, and neither the
Company nor any of its Subsidiaries has any reason to believe that it will be
unable to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would not have a Material Adverse
Effect.

 

(w)             Employee Relations. Neither the Company nor any of its
Subsidiaries is a party to any collective bargaining agreement or employs any
member of a union. No executive officer (as defined in Rule 501(f) promulgated
under the 1933 Act) or other key employee of the Company or any of its
Subsidiaries has notified the Company or any such Subsidiary that such officer
intends to leave the Company or any such Subsidiary or otherwise terminate such
officer’s employment with the Company or any such Subsidiary. To the knowledge
of the Company, (i) no executive officer or other key employee of the Company or
any of its Subsidiaries is, or is now expected to be, in violation of any
material term of any employment contract, confidentiality, disclosure or
proprietary information agreement, non-competition agreement, or any other
contract or agreement or any restrictive covenant, and (ii) the continued
employment of each such executive officer or other key employee (as the case may
be) does not subject the Company or any of its Subsidiaries to any liability
with respect to such violation. The Company and its Subsidiaries are in material
compliance with all applicable federal, state, local and foreign laws and
regulations respecting labor, employment and employment practices and benefits,
terms and conditions of employment and wages and hours, except where failure to
be in compliance would not, either individually or in the aggregate, reasonably
be expected to result in a Material Adverse Effect.

 

(x)               Title. Each of the Company and its Subsidiaries holds good
title, or a valid leasehold interest in, to all real property, facilities or
other interests in real property owned that is material to the business of the
Company (the “Real Property”). The Real Property is free and clear of all Liens
and is not subject to any rights of way, building use restrictions, exceptions,
variances, reservations, or limitations of any nature except for (i) Liens for
current taxes not yet due or being contested in good faith by appropriate
procedures, (ii) zoning laws and other land use restrictions that do not impair
the present or anticipated use of the property subject thereto and (iii) those
that are not likely, individually or in the aggregate, to result in a Material
Adverse Effect. Any Real Property held under lease by the Company or any of its
Subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere in any material
respect with the use made and proposed to be made of such property and buildings
by the Company or any of its Subsidiaries.

 

(y)               Fixtures and Equipment. Each of the Company and its
Subsidiaries (as applicable) has good title to, or a valid leasehold interest
in, the tangible personal property, equipment, improvements, fixtures, and other
personal property and appurtenances that are used by the Company or its
Subsidiary in connection with the conduct of its business (the “Fixtures and
Equipment”). The Fixtures and Equipment are structurally sound, are in good
operating condition and repair, are adequate for the uses to which they are
being put, are not in need of maintenance or repairs except for ordinary,
routine maintenance and repairs and are sufficient for the conduct of the
Company’s and/or its Subsidiaries’ businesses (as applicable) in the manner as
conducted prior to the Closing. Except as set forth on Schedule 3(y), each of
the Company and its Subsidiaries owns all of its Fixtures and Equipment free and
clear of all Liens except for (i) Liens for current taxes not yet due and
(ii) zoning laws and other land use restrictions that do not impair the present
or anticipated use of the property subject thereto.

 

14

 

 

(z)               Intellectual Property Rights. The Company and its Subsidiaries
own or possess adequate rights or licenses to use all trademarks, trade names,
service marks, service mark registrations, service names, original works of
authorship, patents, patent rights, copyrights, inventions, licenses, approvals,
governmental authorizations, trade secrets and other intellectual property
rights and all applications and registrations therefor (“Intellectual Property
Rights”) necessary to conduct their respective businesses as now conducted. The
Company does not have any knowledge of any infringement by the Company or its
Subsidiaries of Intellectual Property Rights of others. There is no claim,
action or proceeding being made or brought, or to the knowledge of the Company
or any of its Subsidiaries, being threatened, against the Company or any of its
Subsidiaries regarding its Intellectual Property Rights, except where such
claim, action or proceeding is not reasonably likely to result in a Material
Adverse Effect. Neither the Company nor any of its Subsidiaries has received any
written notice alleging any such infringement or claim, action or proceeding.

 

(aa)            Environmental Laws.

 

(i)                 The Company and its Subsidiaries (A) are in compliance with
any and all Environmental Laws (as defined below), (B) have received all
permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (C) are in
compliance with all terms and conditions of any such permit, license or approval
where, except in each of the foregoing clauses (A), (B) and (C), where the
failure to so comply or having such permits, licenses or other approval would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. The representations and warranties set forth in this
Section 3(aa) are the Company’s sole and exclusive representations and
warranties regarding environmental matters. The term “Environmental Laws” means
all applicable federal, state, local or foreign laws relating to pollution or
protection of human health or the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata),
including, without limitation, laws relating to emissions, discharges, releases
or threatened releases of chemicals, pollutants, contaminants, or toxic or
hazardous substances or wastes (collectively, “Hazardous Materials”) into the
environment, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous Materials,
as well as all authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters, orders, permits,
plans or regulations issued, entered, promulgated or approved thereunder.

 

15

 

 

(ii)              No Hazardous Materials:

 

(A)             to the Company’s knowledge, have been disposed of or otherwise
released from any Real Property of the Company or any of its Subsidiaries in
violation of any Environmental Laws; or

 

(B)              to the Company’s knowledge, are present on, over, beneath, in
or upon any Real Property or any portion thereof in quantities that would
constitute a violation of any Environmental Laws. No prior use by the Company or
any of its Subsidiaries of any Real Property has occurred that violates any
Environmental Laws, which violation would have a Material Adverse Effect on the
business of the Company or any of its Subsidiaries.

 

(iii)            Except as set forth on Schedule 3(aa)(iii), to the Company’s
knowledge, neither the Company nor any of its Subsidiaries knows of any other
person who or entity which has stored, treated, recycled, disposed of or
otherwise located on any Real Property any Hazardous Materials, including,
without limitation, such substances as asbestos and polychlorinated biphenyls.

 

(iv)             To the knowledge of the Company, none of the Real Property is
on any federal or state “Superfund” list or Liability Information System
(“CERCLIS”) list or any state environmental agency list of sites under
consideration for CERCLIS, nor subject to any environmental related Liens.

 

(bb)           Taxes. The Company and each of its Subsidiaries (i) has timely
made or filed all foreign, federal and state income tax returns, reports and
declarations required by any jurisdiction to which it is subject through the
date of this Agreement or have requested extensions thereof (except where the
failure to file would not, individually or in the aggregate, have a Material
Adverse Effect) and (ii) has timely paid all taxes and other governmental
assessments and charges that are material in amount, shown to be due on such
returns, reports and declarations, except those being contested in good faith
and for which reserves required by GAAP have been created in the financial
statements of the Company or for cases in which the failure to pay would not
have a Material Adverse Effect. There is no tax deficiency that has been
determined adversely to the Company or any of its Subsidiaries which has had a
Material Adverse Effect, nor does the Company or its Subsidiaries have any
knowledge or notice of any tax deficiency which could reasonably be expected to
be determined adversely to the Company or its Subsidiaries and which could
reasonably be expected to have a Material Adverse Effect.

 

(cc)            Internal Accounting and Disclosure Controls. The Company and
each of its Subsidiaries maintains internal control over financial reporting (as
such term is defined in Rule 13a-15(f) under the 1934 Act) that is effective to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with GAAP, including that (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
GAAP and to maintain asset and liability accountability, (iii) access to assets
or incurrence of liabilities is permitted only in accordance with management’s
general or specific authorization and (iv) the recorded accountability for
assets and liabilities is compared with the existing assets and liabilities at
reasonable intervals and appropriate action is taken with respect to any
difference. The Company maintains disclosure controls and procedures (as such
term is defined in Rule 13a-15(e) under the 1934 Act) that are effective in
ensuring that information required to be disclosed by the Company in the reports
that it files or submits under the 1934 Act is recorded, processed, summarized
and reported, within the time periods specified in the rules and forms of the
SEC, including, without limitation, controls and procedures designed to ensure
that information required to be disclosed by the Company in the reports that it
files or submits under the 1934 Act is accumulated and communicated to the
Company’s management, including its principal executive officer or officers and
its principal financial officer or officers, as appropriate, to allow timely
decisions regarding required disclosure. Since the filing of the Annual Report,
neither the Company nor any of its Subsidiaries has received any written notice
or correspondence from any accountant, Governmental Entity or other Person
relating to any potential material weakness or significant deficiency in any
part of the internal controls over financial reporting of the Company or any of
its Subsidiaries.

 

16

 

 

(dd)           Off Balance Sheet Arrangements. There is no transaction,
arrangement, or other relationship between the Company or any of its
Subsidiaries and an unconsolidated or other off balance sheet entity that is
required to be disclosed by the Company in its 1934 Act filings and is not so
disclosed or that otherwise could be reasonably likely to have a Material
Adverse Effect.

 

(ee)            Investment Company Status. The Company is not, and upon
consummation of the sale of the Securities will not be, an “investment company,”
as such term is defined in the Investment Company Act of 1940, as amended.

 

(ff)              Acknowledgement Regarding Buyers’ Trading Activity. It is
understood and acknowledged by the Company that (i) following the public
disclosure of the transactions contemplated by the Transaction Documents, in
accordance with the terms thereof, none of the Buyers have been asked by the
Company or any of its Subsidiaries to agree, nor has any Buyer agreed with the
Company or any of its Subsidiaries, to desist from effecting any transactions in
or with respect to (including, without limitation, purchasing or selling, long
and/or short) any securities of the Company, or “derivative” securities based on
securities issued by the Company or to hold any of the Securities for any
specified term; (ii) any Buyer, and counterparties in “derivative” transactions
to which any such Buyer is a party, directly or indirectly, presently may have a
“short” position in the Common Stock which was established prior to such Buyer’s
knowledge of the transactions contemplated by the Transaction Documents;
(iii) each Buyer shall not be deemed to have any affiliation with or control
over any arm’s length counterparty in any “derivative” transaction; and
(iv) each Buyer may rely on the Company’s obligation to timely deliver shares of
Common Stock upon conversion, exercise or exchange, as applicable, of the
Securities as and when required pursuant to the Transaction Documents for
purposes of effecting trading in the Common Stock of the Company. The Company
further understands and acknowledges that following the public disclosure of the
transactions contemplated by the Transaction Documents pursuant to the Press
Release (as defined below) one or more Buyers may engage in hedging and/or
trading activities (including, without limitation, the location and/or
reservation of borrowable shares of Common Stock) at various times during the
period that the Securities are outstanding, including, without limitation,
during the periods that the value and/or number of the Underlying Shares
deliverable with respect to the Securities are being determined and such hedging
and/or trading activities (including, without limitation, the location and/or
reservation of borrowable shares of Common Stock), if any, can reduce the value
of the existing stockholders’ equity interest in the Company both at and after
the time the hedging and/or trading activities are being conducted. The Company
acknowledges that such aforementioned hedging and/or trading activities do not
constitute a breach of this Agreement, the Notes, the Warrants or any other
Transaction Document or any of the documents executed in connection herewith or
therewith.

 

17

 

 

(gg)           Manipulation of Price. Neither the Company nor any of its
Subsidiaries has, and, to the knowledge of the Company, no Person acting on
their behalf has, directly or indirectly, (i) taken any action designed to cause
or to result in the stabilization or manipulation of the price of any security
of the Company or any of its Subsidiaries to facilitate the sale or resale of
any of the Securities, (ii) sold, bid for, purchased, or paid any compensation
for soliciting purchases of, any of the Securities, (iii) paid or agreed to pay
to any Person any compensation for soliciting another to purchase any other
securities of the Company or any of its Subsidiaries during the period in which
the Transaction Documents were being negotiated or (iv) since January 1, 2020,
paid or agreed to pay any Person for research services with respect to any
securities of the Company or any of its Subsidiaries.

 

(hh)           U.S. Real Property Holding Corporation. The Company is not a U.S.
real property holding corporation within the meaning of Section 897 of the Code
(a “USRPHC”) and, reasonably promptly upon any Buyer’s request, the Company
shall so certify whether or not it is a USRPHC.

 

(ii)              Transfer Taxes. All stock transfer or other taxes (other than
income or similar taxes) which are required to be paid in connection with the
issuance, sale and transfer of the Securities to be sold to each Buyer hereunder
will be, or will have been, fully paid or provided for by the Company, and all
laws imposing such taxes will be or will have been complied with; provided that
the Company shall not be required to pay any tax that may be payable in respect
of any transfer involved in the issuance and delivery of any Underlying Shares
upon conversion or exercise of the Notes or Warrants, as applicable, in a name
other than that of the Buyer of such Notes or Warrants, and the Company shall
not be required to issue or deliver such Underlying Shares unless or until the
Person or Persons requesting the issuance thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.

 

(jj)              Bank Holding Company Act. Neither the Company nor any of its
Subsidiaries is subject to the Bank Holding Company Act of 1956, as amended (the
“BHCA”) and to regulation by the Board of Governors of the Federal Reserve
System (the “Federal Reserve”). Neither the Company nor any of its Subsidiaries
owns or controls, directly or indirectly, five percent (5%) or more of the
outstanding shares of any class of voting securities or twenty-five
percent (25%) or more of the total equity of a bank or any entity that is
subject to the BHCA and to regulation by the Federal Reserve. Neither the
Company nor any of its Subsidiaries exercises a controlling influence over the
management or policies of a bank or any entity that is subject to the BHCA and
to regulation by the Federal Reserve.

 

18

 

 

(kk)           Shell Company Status. The Company is not, and has never been, an
issuer identified in, or subject to, Rule 144(i).

 

(ll)              Illegal or Unauthorized Payments; Political Contributions.
Neither the Company nor any of its Subsidiaries nor, to the best of the
Company’s knowledge (after reasonable inquiry of its officers and directors),
any of the officers, directors, employees, agents or other representatives of
the Company or any of its Subsidiaries or affiliates, has, directly or
indirectly, made or authorized any payment, contribution or gift of money,
property, or services, whether or not in contravention of applicable law, (i) as
a kickback or bribe to any Person or (ii) to any political organization, or the
holder of or any aspirant to any elective or appointive public office to
influence official action or secure an improper advantage, except for personal
political contributions not involving the direct or indirect use of funds of the
Company or any of its Subsidiaries.

 

(mm)      Management.  Since February 10, 2017, no current or former officer or
director of the Company, to its knowledge, has been the subject of:

 

(i)                 a petition under U.S. federal bankruptcy laws or any state
insolvency law or the appointment by a court of a receiver, fiscal agent or
similar officer for such Person, or any partnership in which such person was a
general partner at or within two years before the filing of such petition or
such appointment, or any corporation or business association of which such
person was an executive officer at or within two years before the time of the
filing of such petition or such appointment;

 

(ii)              a conviction in a criminal proceeding or a named subject of a
pending criminal proceeding (excluding traffic violations and other minor
offenses);

 

(iii)            any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining any such person from, or otherwise limiting, the following
activities:

 

(1)               Acting as a futures commission merchant, introducing broker,
commodity trading advisor, commodity pool operator, floor broker, leverage
transaction merchant, any other person regulated by the United States Commodity
Futures Trading Commission or an associated person of any of the foregoing, or
as an investment adviser, underwriter, broker or dealer in securities, or as an
affiliated person, director or employee of any investment company, bank, savings
and loan association or insurance company, or engaging in or continuing any
conduct or practice in connection with such activity;

 

(2)               Engaging in any particular type of business practice; or

 

(3)               Engaging in any activity in connection with the purchase or
sale of any security or commodity or in connection with any violation of U.S.
federal or state securities laws or U.S federal commodities laws;

 

19

 

 

(iv)             any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any U.S. federal or state authority barring, suspending
or otherwise limiting for more than sixty (60) days the right of any such person
to engage in any activity described in the preceding sub paragraph, or to be
associated with persons engaged in any such activity;

 

(v)               a finding by a court of competent jurisdiction in a civil
action or by the SEC to have violated any U.S. federal or state securities law
and the judgment in such civil action or finding by the SEC has not been
subsequently reversed, suspended or vacated; or

 

(vi)             a finding by a court of competent jurisdiction in a civil
action or by the Commodity Futures Trading Commission to have violated any U.S.
federal commodities law, and the judgment in such civil action or finding by the
Commodity Futures Trading Commission has not been subsequently reversed,
suspended or vacated.

 

(nn)           Money Laundering. The operations of the Company and its
Subsidiaries are and have been conducted at all times in material compliance
with the USA Patriot Act of 2001 and all other applicable U.S. and non-U.S.
anti-money laundering laws and regulations, including, without limitation, the
laws, regulations and Executive Orders and sanctions programs administered by
the U.S. Office of Foreign Assets Control, including, but not limited, to
(i) Executive Order 13224 of September 23, 2001 entitled, “Blocking Property and
Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support
Terrorism” (66 Fed. Reg. 49079 (2001)); and (ii) any regulations contained in 31
CFR, Subtitle B, Chapter V.

 

(oo)           Stock Option Plans. Each stock option granted by the Company was
granted (i) in accordance with the terms of the applicable stock option plan of
the Company and (ii) with an exercise price at least equal to the fair market
value of the Common Stock on the date such stock option would be considered
granted under GAAP and applicable law. To the Company’s knowledge, no stock
option granted under the Company’s stock option plan has been backdated. The
Company has not knowingly granted, and there is no and has been no policy or
practice of the Company to knowingly grant, stock options prior to, or otherwise
knowingly coordinate the grant of stock options with, the release or other
public announcement of material information regarding the Company or its
Subsidiaries or their financial results or prospects.

 

(pp)           Cybersecurity. The Company and its Subsidiaries’ information
technology assets and equipment, computers, systems, networks, hardware,
software, websites, applications, and databases (collectively, “IT Systems”) are
adequate for, and operate and perform in all material respects as required in
connection with the operation of the business of the Company and its
subsidiaries as currently conducted, and are, to the Company’s knowledge, free
and clear of all material bugs, errors, defects, Trojan horses, time bombs,
malware and other corruptants. The Company and its Subsidiaries have implemented
and maintained commercially reasonable physical, technical and administrative
controls, policies, procedures, and safeguards to maintain and protect their
material confidential information and the integrity, continuous operation,
redundancy and security of all IT Systems and such material confidential
information, including “Personal Data,” used in connection with their
businesses. “Personal Data” means (i) a natural person’s name, street address,
telephone number, e-mail address, photograph, social security number or tax
identification number, driver’s license number, passport number, credit card
number, bank information, or customer or account number; (ii) any information
which would qualify as “personally identifying information” under the Federal
Trade Commission Act, as amended; (iii) “personal data” as defined by the
European Union General Data Protection Regulation (“GDPR”) (EU 2016/679); (iv)
any information which would qualify as “protected health information” under the
Health Insurance Portability and Accountability Act of 1996, as amended by the
Health Information Technology for Economic and Clinical Health Act
(collectively, “HIPAA”); and (v) any other piece of information that allows the
identification of such natural person, or his or her family, or permits the
collection or analysis of any data related to an identified person’s health or
sexual orientation. To the Company’s knowledge, in the two years prior to the
date hereof, there have been no unauthorized uses of or accesses to Personal
Data in the possession or control of the Company, except for those that have
been remedied without material cost or liability or the duty to notify any other
person, nor any incidents under internal review or investigations relating to
the same. The Company and its Subsidiaries are presently in material compliance
with all Privacy Laws (as defined below), internal policies and contractual
obligations relating to the privacy and security of IT Systems and Personal Data
and to the protection of such IT Systems and Personal Data in the possession or
control of the Company from unauthorized use, access, misappropriation or
modification.

 

20

 

 

(qq)           Compliance with Data Privacy Laws. The Company and its
Subsidiaries are in material compliance with all applicable state and federal
data privacy and security laws and regulations, including without limitation
HIPAA, and the Company and its Subsidiaries have taken commercially reasonable
actions to prepare to comply with, and since May 25, 2018, have been and
currently are in material compliance with, the GDPR (EU 2016/679) (collectively,
the “Privacy Laws”). To ensure compliance with the Privacy Laws, the Company and
its Subsidiaries have in place, comply with, and take appropriate steps
reasonably designed to ensure compliance in all material respects with their
policies and procedures relating to data privacy and security and the
collection, storage, use, disclosure, handling, and analysis of Personal Data
(the “Policies”). The Company and its Subsidiaries have at all times made all
disclosures to users or customers required by Privacy Laws, and none of such
disclosures made or contained in any Policy have, to the knowledge of the
Company, been inaccurate or in violation of any Privacy Laws in any material
respect. The Company further certifies that neither it nor any Subsidiary:
(i) has received notice of any actual or potential liability under or relating
to, or actual or potential material violation of, any of the Privacy Laws, and
has no knowledge of any event or condition that would reasonably be expected to
result in any such notice; (ii) is currently conducting or paying for, in whole
or in part, any investigation, remediation, or other corrective action pursuant
to any violation of Privacy Law; or (iii) is a party to any order, decree, or
agreement that imposes any obligation or liability relating to any violation of
Privacy Law.

 

(rr)              No Additional Agreements. The Company does not have any
agreement or understanding with any Buyer with respect to the transactions
contemplated by the Transaction Documents other than as specified in the
Transaction Documents.

 

21

 

 

(ss)             Material Non-Public Information. The Company confirms that
neither it nor any other Person acting on its behalf has provided any of the
Buyers or their agents or counsel with any information that constitutes or could
reasonably be expected to constitute material, non-public information concerning
the Company or any of its Subsidiaries, other than the existence of the
transactions contemplated by this Agreement and the other Transaction Documents.
The Company understands and confirms that each of the Buyers will rely on the
foregoing representations in effecting transactions in securities of the
Company. The Company acknowledges and agrees that no Buyer makes or has made any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Section 2.

 

(tt)              No Other Representations or Warranties. Each Buyer has
conducted its own independent investigation, review and analysis of the
business, results of operations, prospects, condition (financial or otherwise)
or assets of the Company, and acknowledges that it has been provided adequate
access to the personnel, properties, assets, premises, books and records and
other documents and data of the Company for such purpose. Buyer acknowledges and
agrees that (i) in making its decision to enter into this Agreement and the
other Transaction Documents and to consummate the transactions contemplated
hereby and thereby, each Buyer has relied solely upon its own investigation and
the express representations and warranties of the Company set forth in this
Section 3, and (ii) neither the Company nor any other Person has made any
representation or warranty as to the Company or this Agreement, except as
expressly set forth in this Section 3.

 

4.COVENANTS.

 

(a)               Reasonable Best Efforts. Each Buyer shall use its reasonable
best efforts to timely satisfy each of the covenants hereunder and conditions to
be satisfied by it as provided in Section 6 of this Agreement. The Company shall
use its reasonable best efforts to timely satisfy each of the covenants
hereunder and conditions to be satisfied by it as provided in Section 7 of this
Agreement.

 

(b)               Blue Sky. The Company shall, on or before the Closing Date,
take such action as the Company shall reasonably determine is necessary in order
to obtain an exemption for, or to, qualify the applicable Securities for sale to
the Buyers at the Closing pursuant to this Agreement under applicable securities
or “Blue Sky” laws of the states of the United States (or to obtain an exemption
from such qualification), and shall provide evidence of any such action so taken
to the Buyers on or prior to the Closing Date. Without limiting any other
obligation of the Company under this Agreement, the Company shall timely make
all filings and reports relating to the offer and sale of the Securities
required under all applicable securities laws (including, without limitation,
all applicable federal securities laws and all applicable “Blue Sky” laws), and
the Company shall comply with all applicable foreign, federal, state and local
laws, statutes, rules, regulations and the like relating to the offering and
sale of the Securities to the Buyers.

 

(c)               Use of Proceeds. The Company will use the net proceeds from
the sale of the Securities for working capital and general corporate purposes,
but not, directly or indirectly, for (i) the redemption or repurchase of any
securities or repayment of any Indebtedness of the Company or any of its
Subsidiaries (other than Indebtedness incurred under the Transaction Documents)
or (ii) the settlement of any outstanding litigation.

 

22

 

 

(d)               Financial Information.  The Company agrees to send the
following to each Buyer during the term of the Notes (i) unless the following
are filed with the SEC through EDGAR and are available to the public through the
EDGAR system, within one (1) Business Day after the filing thereof with the SEC,
a copy of its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q,
any Current Reports on Form 8-K and any registration statements (other than on
Form S-8 or Form S-4) or amendments filed pursuant to the 1933 Act, (ii) unless
the following are either filed with the SEC through EDGAR or are otherwise
widely disseminated via a recognized news release service (such as PR Newswire),
on the same day as the release thereof, facsimile copies of all press releases
issued by the Company or any of its Subsidiaries and (iii) unless the following
are filed with the SEC through EDGAR, copies of any notices and other
information made available or given to the stockholders of the Company.

 

(e)               Listing. The Company shall promptly secure the listing or
designation for quotation (as the case may be) of all of the Underlying Shares
upon each national securities exchange and automated quotation system, if any,
upon which the Common Stock is then listed or designated for quotation (as the
case may be) (subject to official notice of issuance) and shall use its
commercially reasonably efforts to maintain such listing or designation for
quotation (as the case may be) of all Underlying Shares from time to time
issuable under the terms of the Transaction Documents on such national
securities exchange or automated quotation system. The Company shall maintain
the Common Stock’s listing or authorization for quotation (as the case may be)
on the Principal Market, The New York Stock Exchange, the NYSE American, the
Nasdaq Global Market or the Nasdaq Global Select Market (each, an “Eligible
Market”). Neither the Company nor any of its Subsidiaries shall take any action
which could be reasonably expected to result in the delisting or suspension of
the Common Stock on an Eligible Market. The Company shall pay all fees and
expenses in connection with satisfying its obligations under this Section 4(e).

 

(f)                Fees. The Company shall pay for the due diligence and legal
fees and expenses incurred by the Buyers in connection with the structuring,
documentation, negotiation, and closing of the transactions contemplated by the
Transaction Documents (and the enforcement thereof by the Buyers), including,
without limitation, all reasonable legal fees and disbursements of Latham &
Watkins LLP, counsel to the lead Buyer, and due diligence and regulatory filings
in connection therewith (the “Transaction Expenses”) and such Transaction
Expenses, to the extent that have not already been paid by the Buyer, may be
withheld by the lead Buyer from its Purchase Price at the Closing. The Company
shall be responsible for the payment of any placement agent’s fees, financial
advisory fees, transfer agent fees, The Depository Trust Company (“DTC”) fees or
broker’s commissions (other than for Persons engaged by any Buyer) relating to
or arising out of the transactions contemplated hereby. The Company shall pay,
and hold each Buyer harmless against, any liability, loss or expense (including,
without limitation, reasonable attorneys’ fees and reasonable and documented
out-of-pocket expenses) arising in connection with any claim relating to any
such payment. Except as otherwise set forth in the Transaction Documents, each
party to this Agreement shall bear its own expenses in connection with the sale
of the Securities to the Buyers.

 

23

 

 

(g)               Pledge of Securities. Notwithstanding anything to the contrary
contained in this Agreement, the Company acknowledges and agrees that the
Securities may be pledged by a Buyer in connection with a bona fide margin
agreement or other loan or financing arrangement that is secured by the
Securities. The pledge of Securities shall not be deemed to be a transfer, sale
or assignment of the Securities hereunder, and no Buyer effecting a pledge of
Securities shall be required to provide the Company with any notice thereof or
otherwise make any delivery to the Company pursuant to this Agreement or any
other Transaction Document. The Company hereby agrees to execute and deliver
such documentation as a pledgee of the Securities may reasonably request in
connection with a pledge of the Securities to such pledgee by a Buyer.

 

(h)               Disclosure of Transactions and Other Material Information.

 

(i)                 Disclosure of Transaction. The Company shall, on or before
9:15 a.m., New York time, on the date of this Agreement, issue a press release
(the “Press Release”) reasonably acceptable to the Buyers disclosing all the
material terms of the transactions contemplated by the Transaction Documents. No
later than 5:30 p.m., New York time, on the fourth (4th) Business Day after the
date of this Agreement, the Company shall file a Current Report on Form 8-K
describing all the material terms of the transactions contemplated by the
Transaction Documents in the form required by the 1934 Act and attaching all the
material Transaction Documents (the “8-K Filing”). From and after the issuance
of the Press Release, the Company shall have disclosed all material, non-public
information (if any) provided to any of the Buyers by the Company or any of its
Subsidiaries or any of their respective officers, directors, employees or agents
in connection with the transactions contemplated by the Transaction Documents.
In addition, effective upon the issuance of the Press Release, the Company
acknowledges and agrees that any and all confidentiality or similar obligations
under any agreement, whether written or oral, between the Company, any of its
Subsidiaries or any of their respective officers, directors, affiliates,
employees or agents, on the one hand, and any of the Buyers or any of their
affiliates, on the other hand, shall terminate.

 

(ii)              Limitations on Disclosure. Other than as required under the
Transaction Documents (but subject to any other disclosure obligations of the
Company with respect thereto), the Company shall not, and the Company shall
cause each of its Subsidiaries and each of its and their respective officers,
directors, employees and agents not to, provide any Buyer with any material,
non-public information regarding the Company or any of its Subsidiaries from and
after the date hereof unless prior thereto such Buyer shall have consented in
writing to the receipt of such information and agreed with the Company to keep
such information confidential. To the extent that the Company delivers any
material, non-public information to a Buyer without such Buyer’s prior written
consent, the Company hereby covenants and agrees that such Buyer shall not have
any duty of confidentiality with respect to, or a duty not to trade on the basis
of, such material, non-public information, provided that the Buyer shall remain
subject to applicable law. Subject to the foregoing, neither the Company, its
Subsidiaries nor any Buyer shall issue any press releases or any other public
statements with respect to the transactions contemplated hereby; provided,
however, the Company shall be entitled, without the prior approval of any Buyer,
to make the Press Release and any press release or other public disclosure with
respect to such transactions (i) in substantial conformity with the 8-K Filing
and contemporaneously therewith and (ii) as is required by applicable law and
regulations (provided that in the case of clause (i) above, each Buyer shall be
consulted by the Company in connection with any such press release or other
public disclosure prior to its release). Without the prior written consent of
the applicable Buyer (which may be granted or withheld in such Buyer’s sole
discretion), the Company shall not (and shall cause each of its Subsidiaries and
affiliates to not) disclose the name of such Buyer in any filing, announcement,
release or otherwise, except in the 8-K filing and as otherwise may be required
by applicable law. Notwithstanding anything contained in this Agreement to the
contrary and without implication that the contrary would otherwise be true, the
Company expressly acknowledges and agrees that no Buyer shall have (unless
expressly agreed to by a particular Buyer after the date hereof in a written
definitive and binding agreement executed by the Company and such particular
Buyer (it being understood and agreed that no Buyer may bind any other Buyer
with respect thereto)), any duty of confidentiality with respect to, or a duty
not to trade on the basis of, any material, non-public information regarding the
Company or any of its Subsidiaries.

 

24

 

 

(i)                 Additional Issuance of Securities.

 

(i)                 The Company shall not, directly or indirectly, without the
prior written consent of the Required Holders (as defined below), (i) issue any
Notes or Warrants (other than as contemplated by this Agreement, the Notes and
the Warrants) or (ii) issue any other securities or incur any Indebtedness that
(A) would cause a breach or Default (as defined in the Notes) under the Notes or
the Warrants or that by its terms would prohibit or restrict the performance of
any of the Company’s obligations under the Notes or the Warrants, including
without limitation, the payment of interest and principal thereon or (B) has a
final maturity date, amortization payment, sinking fund, mandatory redemption or
other repurchase obligation for cash or put right for cash at the option of the
lender or holder of such Indebtedness earlier than one hundred eighty-one (181)
days following the Maturity Date (as defined in the Notes) other than as a
result of a transaction constituting a Fundamental Change (as defined in the
Notes) to the extent that terms of such debt or securities provide that they
will not be required to be redeemed, repurchased or otherwise paid unless such
redemption, repurchase or payment is permitted under the Notes (including as a
result of a consent or waiver thereunder) or until the Notes have been paid in
full and the Warrants have either been fully exercised or terminated.

 

(ii)              In addition, so long as any Notes remain outstanding, the
Company and each Subsidiary shall be prohibited from effecting, or entering into
an agreement to, directly or indirectly issue, offer, sell, grant any option or
right to purchase, or otherwise dispose of (or announce any issuance, offer,
sale, grant of any option or right to purchase or other disposition of) any
equity security or any equity-linked or related security (including, without
limitation, any “equity security” (as that term is defined under Rule 405
promulgated under the 1933 Act), any Convertible Securities, any preferred stock
or any purchase rights), in each case involving a Variable Rate Transaction or
any Notes issued hereunder other than an ATM Issuance. “Variable Rate
Transaction” means a transaction in which the Company or any Subsidiary (i)
issues or sells any Convertible Securities either (A) at a conversion, exercise
or exchange rate or other price that is based upon and/or varies with the
trading prices of or quotations for the shares of Common Stock at any time after
the initial issuance of such Convertible Securities, or (B) with a conversion,
exercise or exchange price that is subject to being reset at some future date
after the initial issuance of such Convertible Securities or upon the occurrence
of specified or contingent events directly or indirectly related to the business
of the Company or the market for the Common Stock, other than pursuant to a
customary “weighted average” anti-dilution provision or customary adjustments
for stock splits, stock dividends, stock combinations, recapitalizations and
similar events or (ii) enters into any agreement (including, without limitation,
an equity line of credit) whereby the Company or any Subsidiary may sell
securities at a future determined price (other than standard and customary
“preemptive” or “participation” rights).

 

25

 

 

(j)                 Reservation of Shares.  So long as any of the Notes or
Warrants remain outstanding, the Company shall take all action necessary to at
all times have authorized, and reserved for the purpose of issuance, no less
than a number of shares of Common Stock equal to the sum of (i) the number of
shares of Common Stock necessary to satisfy the Company’s obligations under
Section 10(D)(v) of the Notes and (ii) twenty million (20,000,000) shares of
Common Stock to satisfy the Company’s obligation to issue shares of Common Stock
under the Warrants (collectively, the “Required Reserve Amount”); provided that
at no time shall the number of shares of Common Stock reserved pursuant to this
Section 4(j) be reduced other than in connection with any stock combination,
reverse stock split or other similar transaction or proportionally in connection
with any conversion and/or redemption, as applicable, of the Notes, or the
exercise of the Warrants.  If at any time the number of shares of Common Stock
authorized and reserved for issuance is not sufficient to meet the Required
Reserve Amount, the Company will promptly take all corporate action necessary to
authorize and reserve a sufficient number of shares, including, without
limitation, calling a special meeting of stockholders to authorize additional
shares to meet the Company’s obligations pursuant to the Transaction Documents,
in the case of an insufficient number of authorized shares, obtain stockholder
approval (if required) of an increase in such authorized number of shares, and
voting the management shares of the Company in favor of an increase in the
authorized shares of the Company to ensure that the number of authorized shares
is sufficient to meet the Required Reserve Amount.

 

(k)               Conduct of Business. The business of the Company and its
Subsidiaries shall not be conducted in violation of any law, ordinance or
regulation of any Governmental Entity, except where such violations would not
reasonably be expected to result, either individually or in the aggregate, in a
Material Adverse Effect.

 

(l)                 [Reserved.]

 

(m)             Restriction on Redemption and Cash Dividends.  So long as any of
the Notes are outstanding, the Company shall not, directly or indirectly,
redeem, or declare or pay any cash dividend or distribution on, any securities
of the Company without the prior express written consent of the Required Holders
(other than Permitted Restricted Payments (as defined in the Notes) or as
otherwise required by the Notes or as required by the terms thereof as in effect
on the date hereof).

 

26

 

 

(n)               Corporate Existence.  So long as any Notes or Warrants remain
outstanding, the Company shall not be party to any Fundamental Change (as
defined in the Notes) or a Fundamental Transaction (as defined in the Warrants)
unless the Company is in compliance with the applicable provisions governing
Fundamental Changes set forth in the Notes and the applicable provisions
governing Fundamental Transactions set forth in the Warrants.

 

(o)               Conversion / Exercise Procedures.  The form of conversion
notice included in the Notes and form of exercise notice included in the
Warrants, as applicable, set forth the totality of the procedures required of
the Buyers in order to convert the Notes or exercise the Warrants, as
applicable.  No additional legal opinion, other information or instructions
shall be required of the Buyers to convert their Notes or exercise their
Warrants, as applicable.  The Company shall honor conversions of the Notes and
exercises of the Warrants, and shall deliver the Underlying Shares in accordance
with the terms, conditions and time periods set forth in the Notes and Warrants,
as applicable. Except as explicitly set forth in the Notes or Warrants, no legal
opinion, information or instructions shall be required of the Buyers to receive
Underlying Shares pursuant to the Notes or Warrants.  The Company shall deliver
the Underlying Shares in accordance with the terms, conditions and time periods
set forth in the Notes and Warrants.

 

(p)               Regulation M. The Company will not take any action prohibited
by Regulation M under the 1934 Act, in connection with the distribution of the
Securities contemplated hereby.

 

(q)               Integration. None of the Company, any of its affiliates (as
defined in Rule 501(b) under the 1933 Act), or any person acting on behalf of
the Company or such affiliate will sell, offer for sale, or solicit offers to
buy or otherwise negotiate in respect of any security (as defined in the 1933
Act) which will be integrated with the sale of the Securities and the Company
will take all action that is appropriate or necessary to assure that its
offerings of other securities will not be integrated for purposes of the rules
and regulations of the Principal Market, with the issuance of Securities
contemplated hereby.

 

(r)                Closing Documents. After the Closing Date, the Company agrees
to deliver, or cause to be delivered, to each Buyer and Latham & Watkins LLP a
complete closing set of the respective executed Transaction Documents,
Securities and any other document required to be delivered to any party pursuant
to Section 7 hereof or otherwise (which may be in photocopies or pdf versions of
executed copies).

 

(s)                Stockholder Approval. Following the Closing, the Company
agrees to use commercially reasonable efforts to obtain, at a special or annual
meeting of the stockholders of the Company (at which a quorum is present) (the
“Stockholder Meeting”) as soon as reasonably practical and in no event later
than June 30, 2020 (the “Initial Stockholder Meeting”), the Requisite
Stockholder Approval. The Company will prepare and file with the SEC a proxy
statement to be sent to the Company’s stockholders in connection with the
Stockholder Meeting (the “Proxy Statement”). The Proxy Statement shall include
the Board of Directors’ recommendation that the holders of shares of the
Company’s Common Stock vote in favor of the Requisite Stockholder Approval. If
the Requisite Stockholder Approval is not obtained at or prior to the
Stockholder Meeting, the Company will hold a special meeting of the stockholders
of the Company for the purposes of obtaining such Requisite Stockholder Approval
no less often than every ninety (90) days following the date of the Stockholder
Meeting until the Requisite Stockholder Approval is obtained, and the Board of
Directors will recommend that the holders of shares of the Company’s Common
Stock vote in favor of the Requisite Stockholder Approval at each such meeting;
provided, however that if (i) the Requisite Stockholder Approval and (ii) an
increase in the Company’s authorized but unissued shares as contemplated by
clause (X) of the second sentence of Section 10(D)(v) of the Notes, including
sufficient shares to allow the Company to satisfy its obligation to issue up to
twenty million (20,000,000) shares of its Common Stock pursuant to the Warrants,
is not obtained at the Initial Stockholder Meeting, then the next such special
meeting of the stockholders of the Company for the purposes of obtaining such
approvals shall be held on or before August 31, 2020.

 

27

 

 

(t)                 Right to Participate. Until ninety days following the
Maturity Date (as defined in the Notes), the Company shall undertake
commercially reasonable efforts to provide the Buyer with as much advance
written notice as reasonably practicable of any proposed offering of Common
Stock or warrants exercisable for Common Stock that will be registered under the
1933 Act, other than an Excepted Offering (a “Participation Rights Offering”).
Contemporaneously with the public disclosure of a Participation Rights Offering,
the Company shall notify the Buyer in writing of the existence and, to the
extent then determined, the proposed terms of such Participation Rights
Offering, and the Buyer shall have a right to purchase, or to designate an
Affiliate of Buyer to purchase, up to thirty-five percent (35%) of the shares of
Common Stock or warrants (or any combination thereof) sold in such Participation
Rights Offering at the public offering price for such offering. The Buyer or
such Affiliate shall exercise its election to participate in a Participation
Rights Offering at or prior to the pricing of such offering. The term “Excepted
Offering” shall mean any offering of Common Stock (i) in connection with any
merger, acquisition, joint venture or other similar transaction (other than such
a transaction in which the Company is issuing securities primarily for the
purpose of raising capital or to an entity whose primary business is investing
in securities); (ii) pursuant to any board of directors approved equity
incentive plan (other than in connection with a capital-raising transaction);
(iii) to be issued pursuant to the Pre-Emptive Rights Agreement; (iv) in an ATM
Issuance (as defined in the Notes) (other than an ATM Issuance in which a single
investor or group of investors purchases in excess of five million dollars
($5,000,000) in the aggregate of the Common Stock or warrants exercisable for
Common Stock); (v) pursuant to the terms of the Warrant to Purchase Common Stock
or the Amended and Restated Common Stock Purchase Warrant issued by the Company
to Nineteen77 Capital Solutions A LP pursuant to the UBS Amendment, as amended,
restated or otherwise modified in a manner not adverse to the Buyers; and (vi)
any issuance of Common Stock to the lenders pursuant to Section 6.16 of the that
certain Credit and Guaranty Agreement, dated as of May 23, 2019, by and among
Driftwood LP, each of the guarantors party thereto, each of the lenders party
thereto and Wilmington Trust, National Association, as administrative agent, as
amended by the UBS Amendment.

 

(u)               Legends.

 

(i)                 Certificates and any other instruments evidencing the
Securities shall not bear any restrictive or other legend.

 

(ii)              Notwithstanding Section 4(t)(i), the Notes shall bear the
legend required by Section 1275(c) of the Internal Revenue Code of 1986, as
amended.

 

(v)               Taxes.

 

(i)                 On the date hereof and as reasonably requested thereafter by
the Company or the Transfer Agent (as defined below), each Buyer (or the person
that will be treated as owning the Purchased Security for U.S. federal income
tax purposes) shall provide the Company and the Transfer Agent with an Internal
Revenue Service Form W-9 indicating that such Buyer is a U.S. person that is
exempt from U.S. federal backup withholding.

 

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(ii)              Upon assignment of a Note by a Buyer pursuant to Section 9(g)
(including by means of a sale or other exchange of the a Note by a Buyer) and as
reasonably requested by the Company thereafter, each assignee (or, in each case,
the person that will be treated as owning the Purchased Security for U.S.
federal income tax purposes) shall provide the Company and the Transfer Agent
with an Internal Revenue Service Form W-9 or the applicable Internal Revenue
Service Form W-8 and any accompanying forms as will permit the Company to
determine the rate of withholding applicable to payments pursuant to the Note.

 

(iii)            The Company (and any person acting on behalf of any of the
Company, including the Transfer Agent) shall have the right to deduct and
withhold any taxes that it is required to deduct and withhold under applicable
law from any payments to be made pursuant to the Notes. To the extent that
amounts are so withheld and paid by the Company (or any person acting on behalf
of any of the Company, including the Transfer Agent) to the applicable
governmental authority, such withheld amounts shall be treated for all purposes
of this Agreement and the Notes as having been delivered and paid to the
applicable Buyer or any other recipient of payment in respect of which such
deduction and withholding was made. The Company and each Buyer (including any
assignee of Buyer) agree to cooperate in obtaining any available exemption or
reduction of such withholding, including the provision of forms pursuant to
Sections 4(v)(i) and 4(v)(ii).

 

(w)             UBS Amendment. The Company may not amend or modify the terms of
the UBS Amendment (as defined below) in any respect without the prior written
consent of the Required Holders.

 

5.REGISTER; TRANSFER AGENT INSTRUCTIONS.

 

(a)               Register. The Company shall maintain at its principal
executive offices (or such other office or agency of the Company as it may
designate by notice to each holder of Securities), a register for the Securities
in which the Company shall record the name and address of the Person in whose
name the Purchased Securities have been issued (including the name and address
of each transferee), the aggregate number of the Notes and Warrants held by such
Person, the number of Note Shares issuable pursuant to the terms of the Notes
held by such Person and the number of Warrant Shares issuable pursuant to the
exercise of Warrants held by such Person. The Company shall keep the register
open and available at all times during business hours for inspection of any
Buyer or its legal representatives.

 

(b)               Transfer Agent Instructions. The Company shall issue
irrevocable instructions to its transfer agent and any subsequent transfer agent
(as applicable) (the “Transfer Agent”) in a form acceptable to each of the
Buyers (the “Irrevocable Transfer Agent Instructions”) to credit shares to each
such Buyer’s (or its designee’s) account at DTC through its Deposit/Withdrawal
At Custodian (“DWAC”) System or, if the DWAC System is not available, to issue
certificates to the applicable balance accounts at DTC, registered in the name
of each Buyer or its respective nominee(s), for the Underlying Shares in such
amounts as specified from time to time by each Buyer to the Company upon
conversion of the Notes or the exercise of the Warrants, as applicable. The
Company represents and warrants that no instruction other than the Irrevocable
Transfer Agent Instructions referred to in this Section 5(b) will be given by
the Company to the Transfer Agent with respect to the Securities, and that the
Securities shall otherwise be freely transferable on the books and records of
the Company, as applicable, to the extent provided in this Agreement and the
other Transaction Documents. If a Buyer effects a sale, assignment or transfer
of the Securities, the Company shall permit the transfer and shall promptly
instruct Transfer Agent to issue one or more certificates or credit shares to
the applicable balance accounts at DTC in such name and in such denominations as
specified by such Buyer to effect such sale, transfer or assignment. The Company
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to a Buyer. Accordingly, the Company acknowledges that the
remedy at law for a breach of its obligations under this Section 5(b) will be
inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Section 5(b), that a Buyer shall be entitled,
in addition to all other available remedies, to an order and/or injunction
restraining any breach and requiring immediate issuance and transfer, without
the necessity of showing economic loss and without any bond or other security
being required. Any fees (with respect to the Transfer Agent, counsel to the
Company or otherwise) associated with the removal of any legends on any of the
Securities shall be borne by the Company.

 

29

 

 

(c)               FAST Compliance. While any Notes or Warrants remain
outstanding, the Company shall use commercially reasonable efforts to maintain a
transfer agent that participates in the DTC Fast Automated Securities Transfer
Program.

 

6.CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL THE PURCHASED SECURITIES.

 

(a)               The obligation of the Company hereunder to issue and sell the
Purchased Securities to each Buyer at the Closing is subject to the
satisfaction, at or before the Closing Date, of each of the following
conditions, provided that these conditions are for the Company’s sole benefit
and may be waived by the Company at any time in its sole discretion by providing
each Buyer with prior written notice thereof:

 

(i)                 Such Buyer shall have executed each of the other Transaction
Documents to which it is a party and delivered the same to the Company.

 

(ii)              Such Buyer and each other Buyer shall have delivered to the
Company the Purchase Price for the Purchased Securities being purchased by such
Buyer at the Closing by wire transfer of immediately available funds in
accordance with the Flow of Funds Letter.

 

(iii)            The representations and warranties of such Buyer shall be true
and correct in all material respects (except for such representations and
warranties that are qualified by materiality or material adverse effect, which
shall be true and correct in all respects) as of the date when made and as of
the Closing Date as though originally made at that time (except for
representations and warranties that speak as of a specific date, which shall be
true and correct as of such specific date), and such Buyer shall have performed,
satisfied and complied in all material respects with the covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by such Buyer at or prior to the Closing Date.

 

30

 

 

7.CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE THE PURCHASED SECURITIES.

 

(a)               The obligation of each Buyer hereunder to purchase its
Purchased Securities at the Closing is subject to the satisfaction, at or before
the Closing Date, of each of the following conditions, provided that these
conditions are for each Buyer’s sole benefit and may be waived by such Buyer at
any time in its sole discretion by providing the Company with prior written
notice thereof:

 

(i)                 The Company shall have duly executed and delivered to such
Buyer each of the Transaction Documents to which it is a party and the Company
shall have duly executed and delivered to such Buyer the Purchased Securities
set forth across from such Buyer’s name on the Schedule of Buyers.

 

(ii)              Such Buyer shall have received the opinions of each of Davis
Graham & Stubbs LLP and Baker Botts L.L.P., the Company’s counsel, dated as of
the Closing Date, in forms acceptable to such Buyer.

 

(iii)            The Company shall have delivered to such Buyer a copy of the
Irrevocable Transfer Agent Instructions, in the form acceptable to such Buyer,
which instructions shall have been delivered to and acknowledged in writing by
the Transfer Agent.

 

(iv)             The Company shall have delivered to such Buyer a certificate
evidencing the formation and good standing of the Company in such entity’s
jurisdiction of formation issued by the Secretary of State (or comparable
office) of such jurisdiction of formation as of a date within ten (10) days of
the Closing Date.

 

(v)               The Company shall have delivered to such Buyer a certified
copy of the Certificate of Incorporation as certified by the Delaware Secretary
of State within ten (10) days of the Closing Date.

 

(vi)             The Company shall have delivered to such Buyer a certificate,
in the form acceptable to such Buyer, executed by the Secretary of the Company
and dated as of the Closing Date, as to (i) the resolutions consistent with
Section 3(d) as adopted by the Company’s board of directors in a form reasonably
acceptable to such Buyer, (ii) the Certificate of Incorporation of the Company
and (iii) the Bylaws of the Company, each as in effect at the Closing.

 

(vii)          The representations and warranties of the Company shall be true
and correct in all material respects (except for such representations and
warranties that are qualified by materiality or material adverse effect, which
shall be true and correct in all respects) as of the date when made and as of
the Closing Date as though originally made at that time (except for
representations and warranties that speak as of a specific date, which shall be
true and correct as of such specific date) and the Company shall have performed,
satisfied and complied in all material respects with (except for covenants,
agreements or conditions) that are qualified by materiality or material adverse
effect, which shall be performed, satisfied and complied with in all respects
with) the covenants, agreements and conditions required to be performed,
satisfied or complied with by the Company at or prior to the Closing Date. Such
Buyer shall have received a certificate, duly executed by the Chief Executive
Officer of the Company, dated as of the Closing Date, to the foregoing effect in
the form acceptable to such Buyer.

 

31

 

 

(viii)        The Company shall have delivered to such Buyer a letter from the
Transfer Agent certifying the number of shares of Common Stock outstanding on
the Closing Date immediately prior to the Closing.

 

(ix)             The Common Stock (A) shall be designated for quotation or
listed (as applicable) on the Principal Market and (B) shall not have been
suspended, as of the Closing Date, by the SEC or the Principal Market from
trading on the Principal Market nor shall suspension by the SEC or the Principal
Market have been threatened, as of the Closing Date, either (1) in writing by
the SEC or the Principal Market or (2) by falling below the minimum maintenance
requirements of the Principal Market.

 

(x)               The Company shall have obtained all governmental, regulatory
or third party consents and approvals, if any, necessary for the sale of the
Securities, including without limitation, those required by the Principal
Market, if any.

 

(xi)             No statute, rule, regulation, executive order, decree, ruling
or injunction shall have been enacted, entered, promulgated or endorsed by any
court or Governmental Entity of competent jurisdiction that prohibits the
consummation of any of the transactions contemplated by the Transaction
Documents.

 

(xii)          Since the date of execution of this Agreement, no event or series
of events shall have occurred that reasonably would have or result in a Material
Adverse Effect.

 

(xiii)        The Company shall have obtained approval of the Principal Market
to list or designate for quotation (as the case may be) the Underlying Shares
and confirmation from the Principal Market that no stockholder vote or other
conditions under the rules of the Principal Market shall apply to the sale of
the Securities at the Closing.

 

(xiv)         Such Buyer shall have received a letter on the letterhead of the
Company, duly executed by the Chief Executive Officer of the Company, setting
forth the wire amounts of each Buyer and the wire transfer instructions of the
Company (the “Flow of Funds Letter”).

 

(xv)           The Company shall have delivered to such Buyer executed copies of
the Voting Agreements executed by each of the individuals listed on Exhibit D.

 

32

 

 

 

(xvi)         The Company shall have delivered to such Buyer an executed copy of
that certain Third Amendment to Credit and Guaranty Agreement, by and among
Driftwood Holdings LP, each of the guarantors party thereto, each of the lenders
signatory thereto and Wilmington Trust, National Association, as administrative
agent, in the form attached hereto as Exhibit E (the “UBS Amendment”).

 

(xvii)        All conditions to effectiveness under the UBS Amendment shall have
been satisfied or waived and the UBS Amendment shall have become effective in
accordance with its terms.

 

(xviii)      The Company and its Subsidiaries shall have delivered to such Buyer
such other documents, instruments or certificates relating to the transactions
contemplated by the Transaction Documents as such Buyer or its counsel may
reasonably request.

 

8.TERMINATION.

 

In the event that the Closing shall not have occurred with respect to a Buyer
within ten (10) days of the date hereof, then such Buyer shall have the right to
terminate its obligations under this Agreement with respect to itself at any
time on or after the close of business on such date without liability of such
Buyer to any other party; provided, however, (i) the right to terminate this
Agreement under this Section 8 shall not be available to such Buyer if the
failure of the transactions contemplated by this Agreement to have been
consummated by such date is the result of such Buyer’s breach of this Agreement
and (ii) the abandonment of the sale and purchase of the Purchased Securities
shall be applicable only to such Buyer providing such written notice; provided
further that no such termination shall affect any obligation of the Company
under this Agreement to reimburse such Buyer for the expenses described in
Section 4(f) above. Nothing contained in this Section 8 shall be deemed to
release any party from any liability for any breach by such party of the terms
and provisions of this Agreement or the other Transaction Documents or to impair
the right of any party to compel specific performance by any other party of its
obligations under this Agreement or the other Transaction Documents.

 

9.MISCELLANEOUS.

 

(a)               Governing Law; Jurisdiction; Jury Trial. All questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdictions) that would cause
the application of the laws of any jurisdictions other than the State of New
York. The Company and each Buyer hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in The City of New York,
Borough of Manhattan, for the adjudication of any dispute hereunder or in
connection herewith or under any of the other Transaction Documents or with any
transaction contemplated hereby or thereby, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit, action
or proceeding is brought in an inconvenient forum or that the venue of such
suit, action or proceeding is improper. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof to such party at the
address for such notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law.  Nothing contained herein shall be
deemed or operate to preclude any Buyer from bringing suit or taking other legal
action against the Company in any other jurisdiction to collect on the Company’s
obligations to such Buyer or to enforce a judgment or other court ruling in
favor of such Buyer. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE
TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT OR IN CONNECTION WITH OR
ARISING OUT OF THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY OR THEREBY.

 

33

 

 

(b)               Counterparts. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party. In the event that any signature is
delivered by facsimile transmission or by an e-mail which contains a portable
document format (.pdf) file of an executed signature page, such signature page
shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such
signature page were an original thereof.

 

(c)               Headings; Gender; Interpretation. The headings of this
Agreement are for convenience of reference and shall not form part of, or affect
the interpretation of, this Agreement. Unless the context clearly indicates
otherwise, each pronoun herein shall be deemed to include the masculine,
feminine, neuter, singular and plural forms thereof. The terms “including,”
“includes,” “include” and words of like import shall be construed broadly as if
followed by the words “without limitation.” The terms “herein,” “hereunder,”
“hereof” and words of like import refer to this entire Agreement instead of just
the provision in which they are found. Unless the context otherwise requires,
references herein: (x) to Articles, Sections, Schedules and Exhibits mean the
Articles and Sections of, and Schedules and Exhibits 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 (z) to a
statute means such statute as amended from time to time and includes any
successor legislation thereto and any regulations promulgated thereunder. This
Agreement shall be construed without regard to any presumption or rule requiring
construction or interpretation against the party drafting an instrument or
causing any instrument to be drafted. The Schedules and Exhibits referred to
herein shall be construed with, and as an integral part of, this Agreement to
the same extent as if they were set forth verbatim herein.

 

34

 

 

(d)               Severability; Maximum Payment Amounts. If any provision of
this Agreement is prohibited by law or otherwise determined to be invalid or
unenforceable by a court of competent jurisdiction, the provision that would
otherwise be prohibited, invalid or unenforceable shall be deemed amended to
apply to the broadest extent that it would be valid and enforceable, and the
invalidity or unenforceability of such provision shall not affect the validity
of the remaining provisions of this Agreement so long as this Agreement as so
modified continues to express, without material change, the original intentions
of the parties as to the subject matter hereof and the prohibited nature,
invalidity or unenforceability of the provision(s) in question does not
substantially impair the respective expectations or reciprocal obligations of
the parties or the practical realization of the benefits that would otherwise be
conferred upon the parties. The parties will endeavor in good faith negotiations
to replace the prohibited, invalid or unenforceable provision(s) with a valid
provision(s), the effect of which comes as close as possible to that of the
prohibited, invalid or unenforceable provision(s). Notwithstanding anything to
the contrary contained in this Agreement or any other Transaction Document (and
without implication that the following is required or applicable), it is the
intention of the parties that in no event shall amounts and value paid by the
Company, or payable to or received by any of the Buyers, under the Transaction
Documents (including without limitation, any amounts that would be characterized
as “interest” under applicable law) exceed amounts permitted under any
applicable law. Accordingly, if any obligation to pay, payment made to any
Buyer, or collection by any Buyer pursuant the Transaction Documents is finally
judicially determined to be contrary to any such applicable law, such obligation
to pay, payment or collection shall be deemed to have been made by mutual
mistake of such Buyer and the Company and such amount shall be deemed to have
been adjusted with retroactive effect to the maximum amount or rate of interest,
as the case may be, as would not be so prohibited by the applicable law. Such
adjustment shall be effected, to the extent necessary, by reducing or refunding,
at the option of such Buyer, the amount of interest or any other amounts which
would constitute unlawful amounts required to be paid or actually paid to such
Buyer under the Transaction Documents. For greater certainty, to the extent that
any interest, charges, fees, expenses or other amounts required to be paid to or
received by such Buyer under any of the Transaction Documents or related thereto
are held to be within the meaning of “interest” or another applicable term to
otherwise be violative of applicable law, such amounts shall be pro-rated over
the period of time to which they relate.

 

35

 

 

(e)               Entire Agreement; Amendments. This Agreement, the other
Transaction Documents and the schedules and exhibits attached hereto and thereto
and the instruments referenced herein and therein supersede all other prior oral
or written agreements between the Buyers, the Company, its Subsidiaries, their
affiliates and Persons acting on their behalf, including, without limitation,
any transactions by any Buyer with respect to Common Stock or the Securities,
and the other matters contained herein and therein, and this Agreement, the
other Transaction Documents, the schedules and exhibits attached hereto and
thereto and the instruments referenced herein and therein contain the entire
understanding of the parties solely with respect to the matters covered herein
and therein; provided, however, nothing contained in this Agreement or any other
Transaction Document shall (or shall be deemed to) (i) have any effect on any
agreements any Buyer has entered into with, or any instruments any Buyer has
received from, the Company or any of its Subsidiaries prior to the date hereof
with respect to any prior investment made by such Buyer in the Company or
(ii) waive, alter, modify or amend in any respect any obligations of the Company
or any of its Subsidiaries, or any rights of or benefits to any Buyer or any
other Person, in any agreement entered into prior to the date hereof between or
among the Company and/or any of its Subsidiaries and any Buyer, or any
instruments any Buyer received from the Company and/or any of its Subsidiaries
prior to the date hereof, and all such agreements and instruments shall continue
in full force and effect. Except as specifically set forth herein or therein,
neither the Company nor any Buyer makes any representation, warranty, covenant
or undertaking with respect to such matters. For clarification purposes, the
Recitals are part of this Agreement. No provision of this Agreement may be
amended other than by an instrument in writing signed by the Company and the
Required Holders, and any amendment to any provision of this Agreement made in
conformity with the provisions of this Section 9(e) shall be binding on all
Buyers and holders of Securities, as applicable; provided that no such amendment
shall be effective to the extent that it (A) applies to less than all of the
holders of the Securities then outstanding or (B) imposes any obligation or
liability on any Buyer without such Buyer’s prior written consent (which may be
granted or withheld in such Buyer’s sole discretion). No waiver shall be
effective unless it is in writing and signed by an authorized representative of
the waiving party, provided that the Required Holders may waive any provision of
this Agreement, and any waiver of any provision of this Agreement made in
conformity with the provisions of this Section 9(e) shall be binding on all
Buyers and holders of Securities, as applicable, provided that no such waiver
shall be effective to the extent that it (1) applies to less than all of the
holders of the Securities then outstanding (unless a party gives a waiver as to
itself only) or (2) imposes any obligation or liability on any Buyer without
such Buyer’s prior written consent (which may be granted or withheld in such
Buyer’s sole discretion). The Company has not, directly or indirectly, made any
agreements with any Buyers relating to the terms or conditions of the
transactions contemplated by the Transaction Documents except as set forth in
the Transaction Documents. Without limiting the foregoing, the Company confirms
that, except as set forth in this Agreement, no Buyer has made any commitment or
promise or has any other obligation to provide any financing to the Company, any
Subsidiary or otherwise. As a material inducement for each Buyer to enter into
this Agreement, the Company expressly acknowledges and agrees that (x) no due
diligence or other investigation or inquiry conducted by a Buyer, any of its
advisors or any of its representatives shall affect such Buyer’s right to rely
on, or shall modify or qualify in any manner or be an exception to any of, the
Company’s representations and warranties contained in this Agreement or any
other Transaction Document and (y) unless a provision of this Agreement or any
other Transaction Document is expressly preceded by the phrase “except as
disclosed in the SEC Documents,” nothing contained in any of the SEC Documents
shall affect such Buyer’s right to rely on, or shall modify or qualify in any
manner or be an exception to any of, the Company’s representations and
warranties contained in this Agreement or any other Transaction Document.
“Required Holders” means (I) prior to the Closing Date, each Buyer entitled to
purchase Purchased Securities at the Closing and (II) on or after the Closing
Date, holders of a majority of the Underlying Shares in the aggregate as of such
time issued or issuable hereunder or pursuant to the Notes or Warrants, as
applicable.

 

36

 

 

(f)                Notices. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered: (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile
(provided confirmation of transmission is mechanically or electronically
generated and kept on file by the sending party) or electronic mail (provided
that such sent email is kept on file (whether electronically or otherwise) by
the sending party and the sending party does not receive an automatically
generated message from the recipient’s email server that such e-mail could not
be delivered to such recipient); or (iii) one (1) Business Day after deposit
with an overnight courier service with next day delivery specified, in each
case, properly addressed to the party to receive the same. The addresses,
facsimile numbers and e-mail addresses for such communications shall be:

 

If to the Company:

 

Tellurian Inc.
1201 Louisiana Street, Suite 3100
Houston, Texas 77002
Telephone: (832) 962-4000
Attention: Legal
E-Mail: legal.notices@tellurianinc.com

 

If to the Transfer Agent:

 

Broadridge Corporate Issuer Solutions, Inc.
51 Mercedes Way
Edgewood, NY 11711
Telephone: (303) 420-8595
Attention: Theresa Henshaw
E-mail: theresa.henshaw@broadridge.com

 

37

 

 

If to a Buyer, to (i) its e-mail address set forth on the Schedule of Buyers,
with copies to such Buyer’s representatives as set forth on the Schedule of
Buyers and (ii) to Eric Helenek, High Trail Capital, 221 River Street, 9th
Floor, Hoboken, NJ 07030 (telephone: (917) 414-1733)

 

with a copy (for informational purposes only) to:

 

Latham & Watkins LLP
12670 High Bluff Drive
San Diego, CA 92130
Telephone: (858) 523-5400
Facsimile: (858) 523-5450
Attention: Michael E. Sullivan, Esq.
E-mail: michael.sullivan@lw.com

 

or to such other address, e-mail address and/or facsimile number and/or to the
attention of such other Person as the recipient party has specified by written
notice given to each other party five (5) days prior to the effectiveness of
such change. Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender’s facsimile machine or e-mail containing
the time, date, recipient facsimile number and, with respect to each facsimile
transmission, an image of the first page of such transmission or (C) provided by
an overnight courier service shall be rebuttable evidence of personal service,
receipt by facsimile or receipt from an overnight courier service in accordance
with clause (i), (ii) or (iii) above, respectively.

 

(g)               Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
assigns, including any purchasers of any of the Purchased Securities except that
a Buyer or holder of the Notes may not assign or otherwise transfer any of its
rights or obligations hereunder to an entity listed on Exhibit F attached
hereto. The Company shall not assign this Agreement or any rights or obligations
hereunder without the prior written consent of the Required Holders, including,
without limitation, by way of a Fundamental Change (as defined in the Notes) or
a Fundamental Transaction (as defined in the Warrants) (unless the Company is in
compliance with the applicable provisions governing Fundamental Changes set
forth in the Notes and the provisions governing Fundamental Transaction set
forth in the Warrants). A Buyer may assign some or all of its rights hereunder
in connection with any transfer of any of its Securities without the consent of
the Company, provided (i) such assignee agrees in writing to be bound by the
provisions hereof that apply to Buyers in which event such assignee shall be
deemed to be a Buyer hereunder with respect to such assigned rights (ii) a Buyer
may not assign its rights under Sections (4)(f) (to the extent referring to the
costs of enforcement of the Transaction Documents), 4(i), 4(t), 4(w) and 9(k)
without the prior written consent of the Company, and any purported assignment
in violation of the foregoing shall be void.

 

38

 

 

(h)               No Third Party Beneficiaries. This Agreement is intended for
the benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, other than the Indemnitees referred to in Section 9(k).

 

(i)                 Survival. Subject to the limitations and other provisions of
this Agreement, the representations and warranties contained herein shall
survive the Closing and shall remain in full force and effect until the date
that is six months after Maturity Date (as defined in the Notes); provided, that
the representations and warranties in (a) Section 3(c), Section 3(d),
Section (i), Section 3(s) and Section 3(aa) shall survive indefinitely and
(b) the representation and warranty in Section 3(bb) shall survive for the full
period of all applicable statutes of limitations (giving effect to any waiver,
mitigation or extension thereof) plus sixty (60) days. All covenants and
agreements of the parties contained herein shall survive the Closing
indefinitely or for the period explicitly specified therein. Notwithstanding the
foregoing, any claims asserted in good faith with reasonable specificity (to the
extent known at such time) and in writing by notice from the non-breaching party
to the breaching party prior to the expiration date of the applicable survival
period shall not thereafter be barred by the expiration of the relevant
representation or warranty and such claims shall survive until finally resolved.
No claim for indemnification may be asserted against either party for breach of
any representation, warranty, covenant or agreement contained herein, unless
written notice of such claim is received by such party describing in reasonable
detail the facts and circumstances with respect to the subject matter of such
claim on or prior to the date on which the representation, warranty, covenant or
agreement on which such claim is based ceases to survive as set forth in this
Section 9(i).

 

(j)                 Further Assurances. Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as any other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

 

39

 

 

(k)               Indemnification.

 

(i)                 In consideration of each Buyer’s execution and delivery of
the Transaction Documents and acquiring the Securities thereunder and in
addition to all of the Company’s other obligations under the Transaction
Documents, the Company shall defend, protect, indemnify and hold harmless each
Buyer and all of their stockholders, partners, members, officers, directors,
employees and direct or indirect investors and any of the foregoing Persons’
agents or other representatives (including, without limitation, those retained
in connection with the transactions contemplated by this Agreement)
(collectively, the “Indemnitees”) from and against any and all actions, causes
of action, suits, claims, losses, costs, penalties, fees, liabilities and
damages, and expenses in connection therewith (irrespective of whether any such
Indemnitee is a party to the action for which indemnification hereunder is
sought), and including reasonable attorneys’ fees and disbursements (the
“Indemnified Liabilities”), incurred by any Indemnitee as a result of, or
arising out of, or relating to (i) any misrepresentation or breach of any
representation or warranty made by the Company or any Subsidiary in any of the
Transaction Documents, (ii) any breach of any covenant, agreement or obligation
of the Company or any Subsidiary contained in any of the Transaction Documents.
To the extent that the foregoing undertaking by the Company may be unenforceable
for any reason, the Company shall make the maximum contribution to the payment
and satisfaction of each of the Indemnified Liabilities which is permissible
under applicable law or (iii) any cause of action, suit, proceeding or claim
brought or made against such Indemnitee by a third party (including for these
purposes a derivative action brought on behalf of the Company or any Subsidiary)
or which otherwise involves such Indemnitee that arises out of or results from
(A) the execution, delivery, performance or enforcement of any of the
Transaction Documents, or (B) the status of such Buyer or holder of the
Securities either as an investor in the Company pursuant to the transactions
contemplated by the Transaction Documents or as a party to this Agreement
(including, without limitation, as a party in interest or otherwise in any
action or proceeding for injunctive or other equitable relief); provided,
however, that the Company will not be liable in any such case to the extent that
any such claim, loss, damage, liability or expense arise primarily out of or is
based upon the inaccuracy of any representations and warranties made by such
Buyer herein or the willful misconduct or gross negligence on the part of such
Buyer.

 

40

 

 

(ii)              Promptly after receipt by an Indemnitee under this
Section 9(k) of notice of the commencement of any action or proceeding
(including, without limitation, any governmental action or proceeding) involving
an Indemnified Liability, such Indemnitee shall, if a claim in respect thereof
is to be made against any indemnifying party under this Section 9(k), deliver to
the indemnifying party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnitee; provided,
however, that an Indemnitee shall have the right to retain its own counsel with
the fees and expenses of such counsel to be paid by the indemnifying party if:
(i) the indemnifying party has agreed in writing to pay such fees and expenses;
(ii) the indemnifying party shall have failed promptly to assume the defense of
such Indemnified Liability and to employ counsel reasonably satisfactory to such
Indemnitee in any such Indemnified Liability; or (iii) the named parties to any
such Indemnified Liability (including, without limitation, any impleaded
parties) include both such Indemnitee and the indemnifying party, and such
Indemnitee shall have been advised by counsel that a conflict of interest is
likely to exist if the same counsel were to represent such Indemnitee and the
indemnifying party (in which case, if such Indemnitee notifies the indemnifying
party in writing that it elects to employ separate counsel at the expense of the
indemnifying party, then the indemnifying party shall not have the right to
assume the defense thereof and such counsel shall be at the expense of the
indemnifying party), provided further that in the case of clause (iii) above the
indemnifying party shall not be responsible for the reasonable fees and expenses
of more than one (1) separate legal counsel for such Indemnitee. The Indemnitee
shall reasonably cooperate with the indemnifying party in connection with any
negotiation or defense of any such action or claim by the indemnifying party and
shall furnish to the indemnifying party all information reasonably available to
the Indemnitee which relates to such Indemnified Liability. The indemnifying
party shall keep the Indemnitee reasonably apprised at all times as to the
status of the defense or any settlement negotiations with respect thereto. No
indemnifying party shall be liable for any settlement of any action, claim or
proceeding effected without its prior written consent; provided, however, the
indemnifying party shall not unreasonably withhold, delay or condition its
consent. No indemnifying party shall, without the prior written consent of the
Indemnitee, consent to entry of any judgment or enter into any settlement or
other compromise which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnitee of a release from all
liability in respect to such Indemnified Liability, and such settlement shall
not include any admission as to fault on the part of the Indemnitee. Following
indemnification as provided for hereunder, the indemnifying party shall be
subrogated to all rights of the Indemnitee with respect to all third parties,
firms or corporations relating to the matter for which indemnification has been
made. The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnitee under this Section 9(k),
except to the extent that the indemnifying party is materially and adversely
prejudiced in its ability to defend such action. The indemnification required by
this Section 9(k) shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as and when bills are
received or Indemnified Liabilities are incurred. The indemnity and contribution
agreements contained herein shall be in addition to (i) any cause of action or
similar right of the Indemnitees against the indemnifying party or others, and
(ii) any liabilities the indemnifying party may be subject to pursuant to the
law. To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution to
the payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law.

 

(l)                 Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party. No
specific representation or warranty shall limit the generality or applicability
of a more general representation or warranty unless otherwise provided for
herein. Each and every reference to share prices, shares of Common Stock and any
other numbers in this Agreement that relate to the Common Stock shall be
automatically adjusted for any stock splits, stock dividends, stock
combinations, recapitalizations or other similar transactions that occur with
respect to the Common Stock after the date of this Agreement. Notwithstanding
anything in this Agreement to the contrary, for the avoidance of doubt, nothing
contained herein shall constitute a representation or warranty against, or a
prohibition of, any actions with respect to the borrowing of, arrangement to
borrow, identification of the availability of, and/or securing of, securities of
the Company in order for such Buyer (or its broker or other financial
representative) to effect short sales or similar transactions in the future.

 

41

 

 

(m)             Remedies. Each Buyer and in the event of assignment by Buyer of
its rights and obligations hereunder, each holder of Securities, shall have all
rights and remedies set forth in the Transaction Documents and all rights and
remedies which such holders have been granted at any time under any other
agreement or contract and all of the rights which such holders have under any
law. Any Person having any rights under any provision of this Agreement shall be
entitled to enforce such rights specifically (without posting a bond or other
security), to recover damages by reason of any breach of any provision of this
Agreement and to exercise all other rights granted by law. Furthermore, the
Company recognizes that in the event that it or any Subsidiary fails to perform,
observe, or discharge any or all of its or such Subsidiary’s (as the case may
be) obligations under the Transaction Documents, any remedy at law would
inadequate relief to the Buyers. The Company therefore agrees that the Buyers
shall be entitled to specific performance and/or temporary, preliminary and
permanent injunctive or other equitable relief from any court of competent
jurisdiction in any such case without the necessity of proving actual damages
and without posting a bond or other security. The remedies provided in this
Agreement and the other Transaction Documents shall be cumulative and in
addition to all other remedies available under this Agreement and the other
Transaction Documents, at law or in equity (including a decree of specific
performance and/or other injunctive relief).

 

(n)               Withdrawal Right. Notwithstanding anything to the contrary
contained in (and without limiting any similar provisions of) the Transaction
Documents, whenever any Buyer exercises a right, election, demand or option
under a Transaction Document and the Company or any Subsidiary does not timely
perform its related obligations within the periods therein provided, then such
Buyer may rescind or withdraw, in its sole discretion from time to time upon
written notice to the Company or such Subsidiary (as the case may be), any
relevant notice, demand or election in whole or in part without prejudice to its
future actions and rights.

 

(o)               Payment Set Aside; Currency. To the extent that the Company
makes a payment or payments to any Buyer hereunder or pursuant to any of the
other Transaction Documents or any of the Buyers enforce or exercise their
rights hereunder or thereunder, and such payment or payments or the proceeds of
such enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to the Company,
a trustee, receiver or any other Person under any law (including, without
limitation, any bankruptcy law, foreign, state or federal law, common law or
equitable cause of action), then to the extent of any such restoration the
obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or
such enforcement or setoff had not occurred. Unless otherwise expressly
indicated, all dollar amounts referred to in this Agreement and the other
Transaction Documents are in United States Dollars (“U.S. Dollars”), and all
amounts owing under this Agreement and all other Transaction Documents shall be
paid in U.S. Dollars. All amounts denominated in other currencies (if any) shall
be converted into the U.S. Dollar equivalent amount in accordance with the
Exchange Rate on the date of calculation. “Exchange Rate” means, in relation to
any amount of currency to be converted into U.S. Dollars pursuant to this
Agreement, the U.S. Dollar exchange rate as published in the Wall Street Journal
on the relevant date of calculation.

 

42

 

 

(p)               Independent Nature of Buyers’ Obligations and Rights. The
obligations of each Buyer under the Transaction Documents are several and not
joint with the obligations of any other Buyer, and no Buyer shall be responsible
in any way for the performance of the obligations of any other Buyer under any
Transaction Document. Nothing contained herein or in any other Transaction
Document, and no action taken by any Buyer pursuant hereto or thereto, shall be
deemed to constitute the Buyers as a partnership, an association, a joint
venture or any other kind of group or entity, with respect to such obligations
or the transactions contemplated by the Transaction Documents. The decision of
each Buyer to purchase Securities pursuant to the Transaction Documents has been
made by such Buyer independently of any other Buyer. Each Buyer acknowledges
that no other Buyer has acted as agent for such Buyer in connection with such
Buyer making its investment hereunder and that no other Buyer will be acting as
agent of such Buyer in connection with monitoring such Buyer’s investment in the
Securities or enforcing its rights under the Transaction Documents. Each Buyer
shall be entitled to independently protect and enforce its rights, including,
without limitation, the rights arising out of this Agreement or out of any other
Transaction Documents, and it shall not be necessary for any other Buyer to be
joined as an additional party in any proceeding for such purpose. The use of a
single agreement to effectuate the purchase and sale of the Securities
contemplated hereby was solely in the control of the Company, not the action or
decision of any Buyer, and was done solely for the convenience of the Company
and its Subsidiaries and not because it was required or requested to do so by
any Buyer. It is expressly understood and agreed that each provision contained
in this Agreement and in each other Transaction Document is between the Company
and a Buyer, solely, and not between the Company and the Buyers collectively and
not between and among the Buyers.

 

(q)               Performance Date. If the date by which any obligation under
any of the Transaction Documents must be performed occurs on a day other than a
Business Day, then the date by which such performance is required shall be the
next Business Day following such date.

 

(r)                Enforcement Fees. The Company agrees to pay all costs and
expenses of the Buyers reasonably incurred as a result of enforcement of the
Transaction Documents and the collection of any amounts owed to the Buyers
hereunder (whether in cash, equity or otherwise), including, without limitation,
reasonable attorneys’ fees and expenses.

 

[signature pages follow]

 

43

 

 

IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Agreement to be duly executed as of the date first
written above.

  

  COMPANY:       TELLURIAN INC.       By: /s/ Kian Granmayeh     Name: Kian
Granmayeh     Title: Chief Financial Officer

 

[Signature Page to Securities Purchase Agreement]

 

 

 

IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Agreement to be duly executed as of the date first
written above.

 

  BUYER:       HIGH TRAIL INVESTMENTS SA LLC       By: /s/ Eric Helenek    
Name: Eric Helenek     Title: Authorized Signatory

 

[Signature Page to Securities Purchase Agreement]

 

 

 

 

   Exhibit A 

 

Form of Senior Unsecured Note

 

[see attached]

 

 

  

Exhibit A

 

Tellurian Inc.

 

Senior Unsecured Note due 2021

 

Certificate No. [__]

 

Tellurian Inc., a Delaware corporation (the “Company”), for value received,
promises to pay to High Trail Investments SA LLC (the “Initial Holder”), or its
registered assigns, the principal sum of fifty-six million dollars ($56,000,000)
(such principal sum, the “Principal Amount”), and to pay any outstanding Default
Interest thereon, on June 1, 2021, all as provided in and subject to the terms
and other provisions of this Note, including the earlier amortization,
redemption, repurchase or conversion of this Note.

 

This Note has been issued pursuant to that certain Indenture, dated as of April
[_], 2020 (the “Indenture”), between the Company and Wilmington Trust, National
Association, as trustee. The terms of this Note include those stated in the
Indenture.

 

Additional provisions of this Note are set forth on the other side of this Note.

 

THE FOLLOWING INFORMATION IS SUPPLIED SOLELY FOR U.S. FEDERAL INCOME TAX
PURPOSES. THIS NOTE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT (“OID”) WITHIN THE
MEANING OF SECTION 1273 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
“CODE”), AND THIS LEGEND IS REQUIRED BY SECTION 1275(c) OF THE CODE. HOLDERS MAY
OBTAIN INFORMATION REGARDING THE AMOUNT OF OID, THE ISSUE PRICE, THE ISSUE DATE
AND THE YIELD TO MATURITY RELATING TO THE NOTE BY CONTACTING THE COMPANY AT 1201
Louisiana Street, Suite 3100, Houston, TX 77002.

 

[The Remainder of This Page Intentionally Left Blank; Signature Page Follows]

 

 

 

 

IN WITNESS WHEREOF, Tellurian Inc. has caused this instrument to be duly
executed as of the date set forth below.

 

  Tellurian Inc.

 

Date: April [ • ], 2020 By:       Name:       Title:  

 

[Signature Page to Senior Unsecured Note due 2021, Certificate No. [_]]

  

 

 

 

Tellurian Inc.

 

Senior Unsecured Note due 2021

 

This Note (this “Note” and, collectively with any Note issued in exchange
therefor or in substitution thereof, the “Notes”) is issued by Tellurian Inc., a
Delaware corporation (the “Company”), and designated as its “Senior Unsecured
Note due 2021.”

 

This Note is subject to the terms of the Indenture.

 

Section 1. Definitions.

 

Capitalized terms used but not defined herein shall have the meanings set forth
in the Indenture to the extent defined therein.

 

“Affiliate” means with respect to any Person, means as to any Person, any other
Person that, directly or indirectly through one or more intermediaries, is in
control of, is controlled by, or is under common control with, such Person. For
purposes of this definition, “control” of a Person means the possession,
directly or indirectly, of the power to direct, or cause the direction of, the
management or policies of a Person, whether through the ability to exercise
voting power, by contract or otherwise.

 

“Amortization Date” means, with respect to the Note, (A) the first (1st)
calendar day of each month beginning on June 1, 2020; and (B) if not otherwise
included in clause (A), the Maturity Date.

 

“Amortization Payment” means, (A) with respect to the Amortization Date on June
1, 2020, three million five hundred thousand dollars ($3,500,000), (B) with
respect to Amortization Dates after June 1, 2020 up to and including October 1,
2020, five million dollars ($5,000,000) each, (C) with respect to the
Amortization Date on November 1, 2020, four million five hundred thousand
dollars ($4,500,000) and (D) with respect to Amortization Dates after November
1, 2020 up to and including the Maturity Date, four million dollars ($4,000,000)
each; provided, that the Holder and the Company may agree to decrease or
increase the size of any Amortization Payment by mutual written consent.

 

“Attribution Parties” means, collectively, the following Persons and entities:
(i) any investment vehicle, including, any funds, feeder funds or managed
accounts, currently, or from time to time after the Issue Date, directly or
indirectly managed or advised by the Holder’s investment manager or any of its
Affiliates or principals, (ii) any direct or indirect Affiliates of the Holder
or any of the foregoing, (iii) any Person acting or who could be deemed to be
acting as a “group” (within the meaning of Section 13(d)(3) of the Exchange Act)
together with the Holder or any of the foregoing and (iv) any other Persons
whose beneficial ownership of the Common Stock would or could be aggregated with
the Holder’s and the other Attribution Parties for purposes of Section 13(d) of
the Exchange Act. For clarity, the purpose of the foregoing is to subject
collectively the Holder and all other Attribution Parties to the Maximum
Percentage.

 

“Applicable Law” means with respect to any Person, property, or matter, any of
the following applicable thereto: any constitution, writ, injunction, statute,
law, regulation, ordinance, rule, judgment, rule of common law, order, decree,
court decision, authorization, approval, concession, grant, franchise, license,
agreement, directive, guideline, policy, requirement, or other governmental
restriction, or any similar form of decision of, or determination by, or any
interpretation or administration of, any of the foregoing, by any governmental
authority, whether in effect as of the date hereof or thereafter and in each
case as amended.

 

 

- 1 -

 

 

“ATM Issuance” means an Equity Issuance (i) pursuant to that certain Amended and
Restated Distribution Agency Agreement, dated as of January 21, 2020, by and
between the Company and Credit Suisse Securities (USA) LLC, (ii) pursuant to
that certain Distribution Agency Agreement, dated as of March 2, 2020, among the
Company, Raymond James & Associates, Inc. and T.R. Winston & Company, LLC or
(iii) that is otherwise an “at the market offering” within the meaning of Rule
415(a)(4) of the Securities Act.

 

“Authorized Denomination” means, with respect to the Notes, a Principal Amount
thereof equal to $1,000 or any integral multiple of $1,000 in excess thereof.

 

“Bankruptcy Law” means Title 11, United States Code, or any similar U.S. federal
or state or non-U.S. law for the relief of debtors.

 

“Board of Directors” means the board of directors of the Company or a committee
of such board duly authorized to act on behalf of such board.

 

“Business Combination Event” has the meaning set forth in Section 9.

 

“Business Day” means any day other than a Saturday, a Sunday or any day on which
the Federal Reserve Bank of New York or the Place of Payment is authorized or
required by law or executive order to close or be closed; provided, however, for
clarification, the Federal Reserve Bank of New York or in the Place of Payment
shall not be deemed to be authorized or required by law or executive order to
close or be closed due to “stay at home”, “shelter-in-place”, “non-essential
employee” or any other similar orders or restrictions or the closure of any
physical branch locations at the direction of any governmental authority so long
as the electronic funds transfer systems (including for wire transfers) of the
Federal Reserve Bank of New York or in the Place of Payment are open for use by
customers on such day.

 

“Capital Lease” means, with respect to any Person, any leasing or similar
arrangement conveying the right to use any property, whether real or personal
property, or a combination thereof, by that Person as lessee that, in conformity
with GAAP, is required to be accounted for as a capital lease on the balance
sheet of such Person.

 

“Capital Lease Obligation” means, at the time any determination is to be made,
the amount of the liability in respect of a Capital Lease that would at that
time be required to be capitalized on a balance sheet prepared in accordance
with GAAP, and the stated maturity thereof shall be the date of the last payment
of rent or any other amount due under such lease prior to the first date upon
which such lease may be prepaid by the lessee without payment of a penalty.

 

 

- 2 -

 

 

“Capital Stock” of any Person means any and all shares of, warrants or options
or similar securities that provide a right to purchase or acquire, the equity of
such Person, but excluding any debt securities convertible into such equity.

 

“Cash” means all cash and liquid funds.

 

“Cash Equivalents” means, as of any date of determination, any of the following:
(A) marketable securities (i) issued or directly and unconditionally guaranteed
as to interest and principal by the United States Government, or (ii) issued by
any agency of the United States the obligations of which are backed by the full
faith and credit of the United States, in each case maturing within one (1) year
after such date; (B) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof, in each case maturing within one (1) year after
such date and having, at the time of the acquisition thereof, a rating of at
least A-1 from Standard & Poor’s Corporation or at least P-1 from Moody’s
Investors Service; (C) commercial paper maturing no more than one (1) year from
the date of creation thereof and having, at the time of the acquisition thereof,
a rating of at least A-1 from Standard & Poor’s Corporation or at least P-1 from
Moody’s Investors Service; (D) certificates of deposit or bankers’ acceptances
maturing within one (1) year after such date and issued or accepted by any
commercial bank organized under the laws of the United States of America or any
State thereof or the District of Columbia that (i) is at least “adequately
capitalized” (as defined in the regulations of its primary federal banking
regulator), and (ii) has Tier 1 capital (as defined in such regulations) of not
less than $100,000,000; and (E) shares of any money market mutual fund that (i)
has substantially all of its assets invested continuously in the types of
investments referred to in clauses (A) and (B) above, (ii) has net assets of not
less than $500,000,000, and (iii) has the highest rating obtainable from either
Standard & Poor’s Corporation or Moody’s Investors Service.

 

“Commission” means the U.S. Securities and Exchange Commission.

 

“Common Stock” means the common stock, $0.01 par value per share, of the
Company.

 

“Common Stock Change Event” has the meaning set forth in Section 10(D)(iv).

 

“Company” has the meaning assigned to such term in the preamble.

 

“Contingent Obligation” means, as applied to any Person, any direct or indirect
liability, contingent or otherwise, of that Person with respect to (A) any
Indebtedness or other obligations of another Person, including any such
obligation directly or indirectly guaranteed, endorsed, co-made or discounted or
sold with recourse by that Person, or in respect of which that Person is
otherwise directly or indirectly liable; (B) any obligations with respect to
undrawn letters of credit; and (C) all obligations arising under any interest
rate, currency or commodity swap agreement, interest rate cap agreement,
interest rate collar agreement, or other agreement or arrangement designated to
protect a Person against fluctuation in interest rates, currency exchange rates
or commodity prices; provided, however, that the term “Contingent Obligation”
shall not include endorsements for collection or deposit in the ordinary course
of business. The amount of any Contingent Obligation shall be deemed to be an
amount equal to the stated or determined amount of the primary obligation in
respect of which such Contingent Obligation is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof as
determined by such Person in good faith; provided, however, that such amount
shall not in any event exceed the maximum amount of the obligations under the
guarantee or other support arrangement

 

 

- 3 -

 

 

“Conversion Consideration” has the meaning set forth in Section 10(D)(iii)(1).

 

“Conversion Date” means, with respect to a Note, the first Business Day on which
the requirements set forth in Section 10(D)(ii)(1) to convert such Note are
satisfied.

 

“Conversion Settlement Date” has the meaning set forth in Section 10(D)(iii)(3).

 

“Copyright License” means any written agreement granting any right to use any
Copyright or Copyright registration, now owned or hereafter acquired by the
Company or in which the Company now holds or hereafter acquires any interest.

 

“Copyrights” means all copyrights, whether registered or unregistered, held
pursuant to the laws of the United States, any State thereof, or of any other
country.

 

“Covering Price” has the meaning set forth in Section 10(D)(iii)(5).

 

“Daily VWAP” means, for any VWAP Trading Day, the per share volume-weighted
average price of the Common Stock as displayed under the heading “Bloomberg
VWAP” on Bloomberg page “TELL <EQUITY> VAP” (or, if such page is not available,
its equivalent successor page) in respect of the period from the scheduled open
of trading until the scheduled close of trading of the primary trading session
on such VWAP Trading Day (or, if such volume-weighted average price is
unavailable, the market value of one share of Common Stock on such VWAP Trading
Day, determined, using a volume-weighted average price method, by a nationally
recognized independent investment banking firm selected by the Company). The
Daily VWAP will be determined without regard to after-hours trading or any other
trading outside of the regular trading session.

 

“Default” means any event that is (or, after notice, passage of time or both,
would be) an Event of Default.

 

“Default Interest” has the meaning set forth in Section 4(C).

 

“Defaulted Shares” has the meaning set forth in Section 10(D)(iii)(5).

 

“Disqualified Institutions” means the entities listed on Exhibit E of the
Securities Purchase Agreement.

 

“Disqualified Stock” means, with respect to any Person, any Capital Stock that
by its terms (or by the terms of any security into which it is convertible or
for which it is exchangeable at the option of the holder) or upon the happening
of any event:

 

 

- 4 -

 

 

(A)        matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise;

 

(B)        is convertible or exchangeable for Indebtedness or Disqualified Stock
(excluding Capital Stock convertible or exchangeable solely at the option of the
issuer or a Subsidiary; provided that any such conversion or exchange will be
deemed an incurrence of Indebtedness or Disqualified Stock, as applicable); or

 

(C)        is redeemable at the option of the holder thereof, in whole or in
part,

 

in the case of each of clauses (A), (B) and (C), at any point prior to the one
hundred eighty-first (181st) day after the Maturity Date.

 

“Driftwood LP” means Driftwood Holdings LP (f/k/a Driftwood Holdings LLC), a
Delaware limited partnership.

 

“Driftwood Credit Agreement” means that certain Credit and Guaranty Agreement,
dated as of May 23, 2019, by and among Driftwood LP, the Company, the other
guarantors party thereto, the lenders party thereto and Wilmington Trust,
National Association, as administrative agent, as amended, restated,
supplemented or otherwise modified prior to the date hereof.

 

“DTC” means The Depository Trust Company.

 

“Eligible Exchange” means any of The New York Stock Exchange, The Nasdaq Capital
Market, The Nasdaq Global Market or The Nasdaq Global Select Market (or any of
their respective successors).

 

“Equipment” means all “equipment” as defined in the UCC with such additions to
such term as may hereafter be made, and includes without limitation all
machinery, fixtures, goods, vehicles (including motor vehicles and trailers),
and any interest in any of the foregoing.

 

 

“Equity Issuance shall mean any issuance or sale by the Company of shares of
Capital Stock of the Company, or securities convertible into shares of Capital
Stock of the Company, for cash consideration; provided that in no event shall an
Equity Issuance include (i) Capital Stock issued in connection with equity
compensation under the Company’s equity incentive plans, (ii) any Capital Stock
issuance upon the exercise of or pursuant to the terms of warrants issued on or
prior to the Issue Date, as such warrants have been amended, restated or
otherwise modified on or prior to the date hereof or otherwise amended, restated
or otherwise modified in a manner not adverse to the Holders; or (iii) any
Capital Stock issuance to the Holders pursuant to the Transaction Documents .

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and the regulations promulgated thereunder.

 

“Event of Default” has the meaning set forth in Section 10(A).

 

 

- 5 -

 

 

“Event of Default Acceleration Amount” means, with respect to the delivery of a
notice pursuant to Section 10(B)(ii) declaring this Note to be due and payable
immediately on account of an Event of Default, a cash amount equal to one
hundred fifteen percent (115%) of the then outstanding Principal Amount of this
Note.

 

“Event of Default Conversion Period” has the meaning set forth in Section
10(D)(i).

 

“Event of Default Conversion Price” means, with respect to the conversion of
this Note (or any portion of this Note), the greater of (A) the Floor Price and
(B) seventy five percent (75%) of the lowest Daily VWAP per share of Common
Stock during the ten (10) consecutive VWAP Trading Days ending on, and
including, such Conversion Date (or, if such Conversion Date is not a VWAP
Trading Day, the immediately preceding VWAP Trading Day).

 

“Event of Default Conversion Rate” means, with respect to the conversion of this
Note (or any portion of this Note), an amount (rounded to the nearest 1/10,000th
of a share of Common Stock (with 5/100,000ths rounded upward)) equal to (A) one
thousand dollars ($1,000) divided by (B) the Event of Default Conversion Price
applicable to such conversion.

 

“Event of Default Conversion Trigger Notice” has the meaning set forth in
Section 10(D)(i).

 

“Event of Default Notice” has the meaning set forth in Section 10(C).

 

“Excess Shares” has the meaning set forth in Section 7(A).

 

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

 

“Floor Price” means thirty cents ($0.30); provided, however, that such amount
shall be proportionately increased if the Company combines (by combination,
reverse stock split or otherwise) one or more classes of its outstanding shares
of Common Stock into a smaller number of shares and shall be proportionately
decreased (but not below the par value of such shares) in the event the Company
subdivides (by any stock split, stock dividend, recapitalization or otherwise)
one or more classes of its outstanding shares of Common Stock into a greater
number of shares.

 

“Freely Tradable” means, with respect to any shares of Common Stock issued or
issuable pursuant to this Note, that (A) such shares would be eligible to be
offered, sold or otherwise transferred by the Holder pursuant to Rule 144,
without any requirements as to volume, manner of sale, availability of current
public information (whether or not then satisfied) or notice under the
Securities Act and without any requirement for registration under any state
securities or “blue sky” laws; or (B) such shares are (or, when issued, will be)
(i) represented by book-entries at DTC and identified therein by an
“unrestricted” CUSIP number; (ii) not represented by any certificate that bears
a legend referring to transfer restrictions under the Securities Act or other
securities laws; and (iii) listed and admitted for trading, without suspension
or material limitation on trading, on an Eligible Exchange; and (C) no delisting
or suspension by such Eligible Exchange has been threatened (with a reasonable
prospect of delisting occurring after giving effect to all applicable notice,
appeal, compliance and hearing periods) or reasonably likely to occur or pending
as evidenced by a writing by such Eligible Exchange.

 

 

- 6 -

 

 

“Fundamental Change” means any of the following events:

 

(A)       a “person” or “group” (within the meaning of Section 13(d)(3) of the
Exchange Act), other than the Company, its Wholly Owned Subsidiaries or a
Permitted Holder, or the employee benefit plans of the Company or its Wholly
Owned Subsidiaries, files any report with the Commission indicating that such
person or group has become the direct or indirect “beneficial owner” (as defined
below) of shares of the Company’s common equity representing more than fifty
percent (50%) of the voting power of all of the Company’s then-outstanding
common equity;

 

(B)       the consummation of (i) any sale, lease or other transfer, in one
transaction or a series of transactions, of all or substantially all of the
assets of the Company and its Subsidiaries, taken as a whole, to any Person
(other than solely to one or more of the Company’s Wholly Owned Subsidiaries);
or (ii) any transaction or series of related transactions in connection with
which (whether by means of merger, consolidation, share exchange, combination,
reclassification, recapitalization, acquisition, liquidation or otherwise) all
of the Common Stock is exchanged for, converted into, acquired for, or
constitutes solely the right to receive, other securities, cash or other
property (other than a subdivision or combination, or solely a change in par
value, of the Common Stock); provided, however, that any merger, consolidation,
share exchange or combination of the Company pursuant to which the Persons that
directly or indirectly “beneficially owned” (as defined below) all classes of
the Company’s voting common equity immediately before such transaction directly
or indirectly “beneficially own,” immediately after such transaction, more than
fifty percent (50%) of all classes of voting common equity of the surviving,
continuing or acquiring company or other transferee, as applicable, or the
parent thereof, in substantially the same proportions vis-à-vis each other as
immediately before such transaction will be deemed not to be a Fundamental
Change pursuant to this clause (B);

 

(C)       the Company’s stockholders approve any plan or proposal for the
liquidation or dissolution of the Company; or

 

(D)       the Common Stock ceases to be listed on any Eligible Exchange.

 

For the purposes of this definition, (x) any transaction or event described in
both clause (A) and in clause (B)(i) or (ii) above (without regard to the
proviso in clause (B)) will be deemed to occur solely pursuant to clause (B)
above (subject to such proviso); and (y) whether a Person is a “beneficial
owner” and whether shares are “beneficially owned” will be determined in
accordance with Rule 13d-3 under the Exchange Act.

 

“Fundamental Change Base Repurchase Price” means, with respect to this Note (or
any portion of this Note) to be repurchased upon a Repurchase Upon Fundamental
Change, a cash amount equal to one hundred and five percent (105%) of the then
outstanding Principal Amount of this Note (or portion thereof).

 

“Fundamental Change Notice” has the meaning set forth in Section 6(C).

 

 

- 7 -

 

 

“Fundamental Change Repurchase Date” means the date as of which this Note must
be repurchased for cash in connection with a Fundamental Change, as provided in
Section 6(B).

 

“Fundamental Change Repurchase Price” means the cash price payable by the
Company to repurchase this Note (or any portion of this Note) upon its
Repurchase Upon Fundamental Change, calculated pursuant to Section 6(D).

 

“GAAP” means generally accepted accounting principles in the United States of
America, as in effect from time to time; provided the definitions set forth in
this Note and any financial calculations required by thereby shall be computed
to exclude any change to lease accounting rules from those in effect pursuant to
Financial Accounting Standards Board Accounting Standards Codification 840
(Leases) and other related lease accounting guidance as in effect on the date
hereof.

 

“Holder” means the person in whose name this Note is registered on the books of
the Company, which initially is the Initial Holder.

 

“Indebtedness” means indebtedness of any kind, including, without duplication
(A) all indebtedness for borrowed money or the deferred purchase price of
property or services (excluding trade credit entered into in the ordinary course
of business due within one hundred eighty (180) days), including reimbursement
and other obligations with respect to surety bonds and letters of credit, (B)
all obligations evidenced by notes, bonds, debentures or similar instruments,
(C) all Capital Lease Obligations, (D) all Contingent Obligations, and (E)
Disqualified Stock.

 

“Indenture” means that certain Indenture, dated as of April [_], 2020, between
the Company and the Trustee.

 

“Initial Holder” has the meaning set forth in the cover page of this Note.

 

“Intellectual Property” means all of the Company’s Copyrights; Trademarks;
Patents; Licenses; trade secrets and inventions; mask works; the Company’s
applications therefor and reissues, extensions, or renewals thereof; and the
Company’s goodwill associated with any of the foregoing, together with the
Company’s rights to sue for past, present and future infringement of
Intellectual Property and the goodwill associated therewith.

 

“Investment” means any beneficial ownership (including stock, partnership or
limited liability company interests) of or in any Person, or any loan, advance
or capital contribution to any Person or the acquisition of all, or
substantially all, of the assets of another Person.

 

“Issue Date” means April [ • ], 2020.

 

“License” means any Copyright License, Patent License, Trademark License or
other written license of rights or interests.

 

“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment for
security, security interest, encumbrance, levy, lien or charge of any kind,
whether voluntarily incurred or arising by operation of law or otherwise,
against any property, any conditional sale or other title retention agreement,
and any lease in the nature of a security interest; provided, that licenses,
strain escrows and similar provisions in collaboration agreements, research and
development agreements that do not create or purport to create a security
interest, encumbrance, levy, lien or charge of any kind shall not be deemed to
be Liens for purposes of this Note.

 

 

- 8 -

 

 

“Market Disruption Event” means, with respect to any date, the occurrence or
existence, during the one-half hour period ending at the scheduled close of
trading on such date on the principal U.S. national or regional securities
exchange or other market on which the Common Stock is listed for trading or
trades, of any material suspension or limitation imposed on trading (by reason
of movements in price exceeding limits permitted by the relevant exchange or
otherwise) in the Common Stock or in any options contracts or futures contracts
traded on such exchange or market relating to the Common Stock.

 

“Maturity Date” means June 1, 2021.

 

“Maximum Percentage” has the meaning set forth in Section 7(A).

 

“Note” has the meaning assigned to such term in the preamble.

 

“Other Holder” means any person in whose name any Other Note is registered on
the books of the Company.

 

“Other Notes” means any Notes that are of the same class of this Note and that
are represented by one or more certificates other than the certificate
representing this Note.

 

“Patents” means all letters patent of, or rights corresponding thereto, in the
United States or in any other country, all registrations and recordings thereof,
and all applications for letters patent of, or rights corresponding thereto, in
the United States or any other country.

 

“Patent License” means any written agreement granting any right with respect to
any invention on which a Patent is in existence or a Patent application is
pending, in which agreement the Company now holds or hereafter acquires any
interest.

 

“Permitted Holder” means: (a) Charif Souki; (b) Martin Houston; (c) Meg Gentle;
and (d) Total S.A. or its affiliates.

 

 

- 9 -

 

 

“Permitted Indebtedness” means (A) Indebtedness evidenced by this Note; (B)
Indebtedness disclosed pursuant to the Securities Purchase Agreement, as in
effect as of the Issue Date (including all other Indebtedness accrued in the
balance sheet included in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2019); (C) Indebtedness of up to one million dollars
($1,000,000) outstanding at any time secured by a Lien described in clause (G)
of the defined term “Permitted Liens,” provided such Indebtedness does not
exceed the cost of the Equipment and related expenses financed with such
Indebtedness; (D) Indebtedness to trade creditors incurred in the ordinary
course of business, including Indebtedness incurred in the ordinary course of
business with corporate credit cards; (E) Indebtedness that also constitutes a
Permitted Investment; (F) Subordinated Indebtedness of the Company; (G)
reimbursement obligations in connection with letters of credit or similar
instruments that are secured by Cash or Cash Equivalents and issued on behalf of
the Company or a Subsidiary thereof in an aggregate amount not to exceed five
hundred thousand dollars ($500,000) at any time outstanding; (H) Indebtedness
incurred as a result of permitted payments in kind under the Driftwood Credit
Agreement; (I) Indebtedness incurred by Tellurian International Holdings Ltd.
(U.K.) and its Subsidiaries, including in respect of obligations for letters of
credit and working capital, in each case, to support the acquisition of
liquefied natural gas, (J) Indebtedness amongst the Company and its Wholly Owned
Subsidiaries; (K) any Indebtedness incurred by Company or any of its
Subsidiaries to, or guaranteed, in part or in whole, by, any governmental
authority, extended or under the Coronavirus Aid, Relief and Economic Security
(“CARES”) Act, the Small Business Act, 15 USC Secs 632 et seq, and any loan or
grant programs made available to the Company of any of its Subsidiaries under
any financial support or funding program sponsored, funded, or guaranteed, in
whole or in part, by any Federal Reserve Bank or the Board of Governors of the
Federal Reserve Bank, or any federal, state or local governmental authority or
body; (L) convertible debt or other equity-linked securities of the Company or
Tellurian Investments, Inc., in each case, convertible into or linked to Capital
Stock of the Company, in an aggregate amount at any time not to exceed
$200,000,000, in each case so long as such Indebtedness does not have a final
maturity date, amortization payment, sinking fund, mandatory redemption or other
repurchase obligation for cash or put right for cash at the option of the lender
or holder of such Indebtedness earlier than one hundred eighty-one (181) days
following the Maturity Date other than as a result of a transaction constituting
a Fundamental Change, to the extent that terms of such debt or securities
provide that they will not be required to be redeemed, repurchased or otherwise
paid unless such redemption, repurchase or payment is permitted hereunder
(including as a result of a consent or waiver hereunder) or until the Notes have
been paid in full; (M) without duplication of the foregoing, (x) with respect to
ProductionCo and its Subsidiaries, any Indebtedness of ProductionCo and its
Subsidiaries permitted under Section 8.1 of the ProductionCo Credit Agreement
and (other than clause (e) thereof, except to the extent the Indebtedness
pursuant to such clause constitutes Subordinated Indebtedness; and subject to
the limitations set forth in Section 6.02(i) of the Driftwood Credit Agreement)
(y) without duplication of the preceding clause (x), with respect to the Company
or any Subsidiary thereof, any Indebtedness permitted under or not prohibited by
Section 6.02 of the Driftwood Credit Agreement (other than clause (g) thereof,
except to the extent the Indebtedness pursuant to such clause constitutes
Subordinated Indebtedness), (N) Contingent Obligations that are guarantees of
Indebtedness described in clauses (A) through (E) and (G) through (M); and (O)
extensions, refinancings and renewals of any items of Permitted Indebtedness
(other than any Indebtedness repaid with the proceeds of this Note), provided
that the principal amount is not increased or the terms modified to impose
materially more burdensome terms upon the Company or its Subsidiary, as the case
may be, and provided further, that if the lender of any such proposed extension,
refinancing or renewal of Permitted Indebtedness incurred hereunder is different
from the lender of the Permitted Indebtedness to be so extended, refinanced or
renewed then, in addition to the foregoing proviso, such Permitted Indebtedness
shall also not have a final maturity date, amortization payment, sinking fund,
mandatory redemption or other repurchase obligation or put right at the option
of the lender or holder of such Indebtedness earlier than one hundred eighty-one
(181) days following the Maturity Date.

 

 

- 10 -

 

 

“Permitted Intellectual Property Licenses” means Intellectual Property (A)
licenses in existence at the Issue Date and (B) non-perpetual licenses granted
in the ordinary course of business on arm’s length terms consisting of the
licensing of technology, the development of technology or the providing of
technical support which may include licenses with unlimited renewal options
solely to the extent such options require mutual consent for renewal or are
subject to financial or other conditions as to the ability of licensee to
perform under the license; provided such license was not entered into during
continuance of a Default or an Event of Default.

 

“Permitted Investment” means: (A) Investments disclosed in public filings; (B)
(i) marketable direct obligations issued or unconditionally guaranteed by the
United States of America or any agency or any State thereof maturing within one
year from the date of acquisition thereof, (ii) commercial paper maturing no
more than one year from the date of creation thereof and currently having a
rating of at least A-2 or P-2 from either Standard & Poor’s Corporation or
Moody’s Investors Service, (iii) certificates of deposit issued by any bank with
assets of at least $500,000,000 maturing no more than one year from the date of
investment therein, and (iv) money market accounts; (C) Investments accepted in
connection with Permitted Transfers; (D) Investments (including debt
obligations) received in connection with the bankruptcy or reorganization of
customers or suppliers and in settlement of delinquent obligations of, and other
disputes with, customers or suppliers arising in the ordinary course of the
Company’s business; (E) Investments consisting of notes receivable of, or
prepaid royalties and other credit extensions, to customers and suppliers in the
ordinary course of business and consistent with past practice, provided that
this subparagraph (E) shall not apply to Investments of the Company in any
Subsidiary; (F) Investments consisting of loans not involving the net transfer
on a substantially contemporaneous basis of cash proceeds to employees, officers
or directors relating to the purchase of Capital Stock of the Company pursuant
to employee stock purchase plans or other similar agreements approved by the
Company’s Board of Directors; (G) Investments consisting of travel advances in
the ordinary course of business; (H) Investments in Wholly Owned Subsidiaries;
(I) Permitted Intellectual Property Licenses; (J) additional Investments that do
not exceed fifty thousand dollars ($50,000) in the aggregate in any twelve (12)
month period; (K) Investments in shares of UK Oil & Gas PLC owned as of the date
hereof by the Company or any of its Subsidiaries; and (L) without duplication of
the foregoing, (x) with respect to ProductionCo and its Subsidiaries, any
Investments of ProductionCo and its Subsidiaries permitted under Section 8.6 of
the ProductionCo Credit Agreement (subject to the limitation set forth in clause
(g) of the definition of “Permitted Investment” in the Driftwood Credit
Agreement) and (y) without duplication of the preceding clause (x), with respect
to the Company or any Subsidiary thereof, any Investments permitted Section 6.04
of the Driftwood Credit Agreement.

 

“Permitted Liens” means any and all of the following: (A) Liens in favor of
Holder; (B) Liens disclosed in public filings; (C) Liens for taxes, fees,
assessments or other governmental charges or levies, either not delinquent or
being contested in good faith by appropriate proceedings; provided, that the
Company maintains adequate reserves therefor in accordance with GAAP; (D) Liens
securing claims or demands of materialmen, artisans, mechanics, carriers,
warehousemen, landlords and other like Persons arising in the ordinary course of
business; provided, that the payment thereof is not yet required; (E) Liens
arising from judgments, decrees or attachments in circumstances which do not
constitute a Default or an Event of Default hereunder; (F) the following
deposits, to the extent made in the ordinary course of business: deposits under
workers’ compensation, unemployment insurance, social security and other similar
laws, or to secure the performance of bids, tenders or contracts (other than for
the repayment of borrowed money) or to secure indemnity, performance or other
similar bonds for the performance of bids, tenders or contracts (other than for
the repayment of borrowed money) or to secure statutory obligations (other than
Liens arising under ERISA or environmental Liens) or surety or appeal bonds, or
to secure indemnity, performance or other similar bonds; (G) Liens on Equipment
or software or other intellectual property constituting purchase money Liens and
Liens in connection with Capital Leases securing Indebtedness permitted in
clause (C) of “Permitted Indebtedness”; (H) leasehold interests in leases or
subleases and licenses granted in the ordinary course of the Company’s business
and not interfering in any material respect with the business of the licensor
and Permitted Intellectual Property Licenses; (I) Liens in favor of customs and
revenue authorities arising as a matter of law to secure payment of custom
duties that are promptly paid on or before the date they become due; (J) Liens
on insurance proceeds securing the payment of financed insurance premiums that
are promptly paid on or before the date they become due (provided that such
Liens extend only to such insurance proceeds and not to any other property or
assets); (K) statutory and common law rights of set-off and other similar rights
as to deposits of cash and securities in favor of banks, other depository
institutions and brokerage firms; (L) easements, zoning restrictions,
rights-of-way and similar encumbrances on real property imposed by law or
arising in the ordinary course of business so long as they do not materially
impair the value or marketability of the related property; (M) Liens on Cash or
Cash Equivalents securing obligations permitted under clause (D) and (G) of the
definition of Permitted Indebtedness; (N) Liens securing obligations permitted
under clause (J) of the definition of Permitted Indebtedness; (O) without
duplication of the foregoing, (x) with respect to ProductionCo and its
Subsidiaries, any Liens of ProductionCo and its Subsidiaries permitted under
Section 8.3 of the ProductionCo Credit Agreement (subject to the limitation set
forth in Clause (m) of the definition of “Permitted Liens” in the Driftwood
Credit Agreement) and (y) without duplication of the preceding clause (x), with
respect to the Company or any Subsidiary, any Liens permitted or not prohibited
by Section 6.03 of the Driftwood Credit Agreement; and (P) Liens incurred in
connection with the extension, renewal or refinancing of the Indebtedness
secured by Liens of the type described in clauses (A) through (O) above (other
than any Indebtedness repaid with the proceeds of this Note); provided, that any
extension, renewal or replacement Lien shall be limited to the property
encumbered by the existing Lien and the principal amount of the Indebtedness
being extended, renewed or refinanced (as may have been reduced by any payment
thereon) does not increase.

 

 

- 11 -

 

 

“Permitted Restricted Payments” means, with respect to any Person, any of the
following: (A) repurchases, redemptions, dividends or distributions made in the
form of the Capital Stock of such Person; (B) payment in lieu of fractional
shares of the Capital Stock of such Person in connection with any dividend,
split, or combination thereof; (C) payments made or expected to be made in
respect of withholding or similar taxes payable upon exercise of the Capital
Stock of such Person by any future, present or former employee, director,
officer, manager or consultant (or their respective controlled Affiliates or
permitted transferees), and any repurchases of such Capital Stock deemed to
occur upon exercise of stock options or warrants if such Capital Stock
represents a portion of the exercise price of such options or warrants or
required withholding or similar taxes; (D) repurchases, redemptions, dividends
or distributions in accordance with incentive compensation plans approved by
such Person’s Board of Directors (or equivalent governing body); (E)
repurchases, redemptions, dividends or distributions in respect of (i) an
exercise of the warrant shares under or pursuant to the terms of the Amended and
Restated Common Stock Purchase Warrant, dated as of March 23, 2020, issued by
the Company to Nineteen77 Capital Solutions A LP, as amended, restated or
otherwise modified from time to time on or prior to the date hereof or otherwise
amended, restated or otherwise modified in a manner not adverse to the Holders,
(ii) an exercise of the warrant shares under or pursuant to the terms of the
Warrant to Purchase Common Stock, dated as of April [_], 2020, issued by the
Company to Nineteen77 Capital Solutions A LP, as amended, restated or otherwise
modified from time to time in a manner not adverse to the Holders or (iii) the
Warrants (as defined in the Securities Purchase Agreement), (E) dividends or
distributions by a Subsidiary of the Company to the Company or a parent company
of such Subsidiary that is a direct or indirect Wholly Owned Subsidiary of the
Company); (F) repurchases or redemptions any class of Capital Stock pursuant to
employee, director or consultant repurchase plans or other similar agreements
approved by the Board of Directors; and (G) to the extent constituting a
repurchase, redemption or distribution, conversion of the series C preferred
shares of the Company held by Bechtel Oil, Gas and Chemicals, Inc. into shares
of Common Stock.

 

“Permitted Transfers” means (A) dispositions of inventory sold, and Permitted
Intellectual Property Licenses entered into, in each case, in the ordinary
course of business, (B) dispositions of worn-out, obsolete or surplus property
at fair market value in the ordinary course of business; (C) dispositions of
accounts or payment intangibles (each as defined in the UCC) resulting from the
compromise or settlement thereof in the ordinary course of business for less
than the full amount thereof; (D) transfers consisting of Permitted Investments
in Wholly Owned Subsidiaries under clause (H) of Permitted Investments; (E)
other transfers of assets to any Person other than to a joint venture and which
have a fair market value of not more than fifty thousand dollars ($50,000) in
the aggregate in any fiscal year; (F) dispositions of shares of UK Oil & Gas PLC
owned as of the date hereof by the Company or any of its Subsidiaries; (G)
dispositions or other transfers among the Company and its Wholly Owned
Subsidiaries; and (H) without duplication of the foregoing, (x) with respect to
ProductionCo and its Subsidiaries, (i) any Dispositions (as defined in the
ProductionCo Credit Agreement) by ProductionCo and its Subsidiaries permitted
under Section 8.9 of the ProductionCo Credit Agreement or (ii) such other
Dispositions by ProductionCo and its Subsidiaries, for fair market value
consideration and conducted on arm’s length basis, as may be consented to or
permitted in accordance with the ProductionCo Credit Agreement after the date
hereof, and (y) without duplication of the preceding clause (x), with respect to
the Company or any Subsidiary thereof, any dispositions permitted in or not
prohibited by Section 6.07 of the Driftwood Credit Agreement.

 

“Person” or “person” means any individual, sole proprietorship, partnership,
limited liability company, joint venture, company, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or government agency.

 

“Principal Amount” has the meaning set forth in the cover page of this Note;
provided, however, that the Principal Amount of this Note will be subject to
reduction (A) pursuant to Section 6, (B) by an amount equal to the sum of all
Amortization Payments and Additional Amortization Payments made prior to date of
determination of the Principal Amount of the Note then outstanding and (C) by
optional prepayments pursuant to Section 4(D).

 

 

- 12 -

 

 

“ProductionCo” means Tellurian Production Holdings, LLC, a Delaware limited
liability company.

 

“ProductionCo Credit Agreement” means that certain Credit Agreement, dated as of
September 28, 2018, among ProductionCo, the lenders party thereto, Goldman Sachs
Lending Partners LLC, as administrative agent, and J. Aron & Company LLC, as
collateral agent, as such agreement, as amended, restated, supplemented or
otherwise modified, prior to the date hereof.

 

“Reference Property” has the meaning set forth in Section 10(D)(iv).

 

“Reference Property Unit” has the meaning set forth in Section 10(D)(iv).

 

“Reported Outstanding Share Number” has the meaning set forth in Section 7(A).

 

“Repurchase Upon Fundamental Change” means the repurchase of any Note by the
Company pursuant to Section 6.

 

“Requisite Stockholder Approval” means the stockholder approval contemplated by
Nasdaq Listing Standard Rule 5635(d) with respect to the issuance of shares of
Common Stock pursuant to this Note and Warrant (as defined in the Securities
Purchase Agreement) in excess of the limitations imposed by such rule; provided,
however, that the Requisite Stockholder Approval will be deemed to be obtained
if, due to any amendment or binding change in the interpretation of the
applicable listing standards of The Nasdaq Capital Market, such stockholder
approval is no longer required for the Company to deliver shares of Common Stock
to the Holder without limitation pursuant to Section 7(B).

 

“Securities Act” means the U.S. Securities Act of 1933, as amended.

 

“Securities Purchase Agreement” means that certain Securities Purchase
Agreement, dated as of April [ • ], 2020, between the Company and High Trail
Investments SA LLC providing for the issuance of this Note.

 

“Share Authorization Increase” has the meaning set forth in Section 10(D)(v).

 

“Significant Subsidiary” means, with respect to any Person, any Subsidiary of
such Person that constitutes a “significant subsidiary” (as defined in Rule
1-02(w) of Regulation S-X under the Exchange Act) of such Person; provided,
however, that, in the case of a Subsidiary that meets the criteria of clause (3)
of the definition thereof but not clause (1) or (2) thereof, such subsidiary
will be deemed not to be a Significant Subsidiary unless such Subsidiary's
income (loss) from continuing operations before income taxes, exclusive of
amounts attributable to any non-controlling interests, for the last completed
fiscal year prior to the date of such determination exceeds two million dollars
($2,000,000).

 

“Subordinated Indebtedness” means Indebtedness subordinated to the Notes
pursuant to a written agreement between the Holder and the applicable lender in
amounts and on terms and conditions satisfactory to the Holder in its sole
discretion.

 

- 13 -

 

 

“Subsidiary” means, with respect to any Person, (A) any corporation, association
or other business entity (other than a partnership or limited liability company)
of which more than fifty percent (50%) of the total voting power of the Capital
Stock entitled (without regard to the occurrence of any contingency, but after
giving effect to any voting agreement or stockholders’ agreement that
effectively transfers voting power) to vote in the election of directors,
managers or trustees, as applicable, of such corporation, association or other
business entity is owned or controlled, directly or indirectly, by such Person
or one or more of the other Subsidiaries of such Person; and (B) any partnership
or limited liability company where (i) more than fifty percent (50%) of the
capital accounts, distribution rights, equity and voting interests, or of the
general and limited partnership interests, as applicable, of such partnership or
limited liability company are owned or controlled, directly or indirectly, by
such Person or one or more of the other Subsidiaries of such Person, whether in
the form of membership, general, special or limited partnership or limited
liability company interests or otherwise; and (ii) such Person or any one or
more of the other Subsidiaries of such Person is a controlling general partner
of, or otherwise controls, such partnership or limited liability company.

 

“Successor Entity” has the meaning set forth in Section 9(A).

 

“Successor Person” has the meaning set forth in Section 10(D)(iv)(4).

 

“Trademark License” means any written agreement granting any right to use any
Trademark or Trademark registration, now owned or hereafter acquired by the
Company or in which the Company now holds or hereafter acquires any interest.

 

“Trademarks” means all trademarks (registered, common law or otherwise) and any
applications in connection therewith, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any State thereof or any other country or
any political subdivision thereof.

 

“Trading Day” means any day on which (A) trading in the Common Stock generally
occurs on the principal U.S. national or regional securities exchange on which
the Common Stock is then listed or, if the Common Stock is not then listed on a
U.S. national or regional securities exchange, on the principal other market on
which the Common Stock is then traded; and (B) there is no Market Disruption
Event. If the Common Stock is not so listed or traded, then “Trading Day” means
a Business Day.

 

“Transaction Documents” has the meaning set forth in the Securities Purchase
Agreement.

 

“Trustee” means Wilmington Trust, National Association in its capacity as
trustee under the Indenture.

 

“UCC” means the Uniform Commercial Code as the same is, from time to time, in
effect in the State of New York.

 

 

- 14 -

 

 

“VWAP Market Disruption Event” means, with respect to any date, (A) the failure
by the principal U.S. national or regional securities exchange on which the
Common Stock is then listed, or, if the Common Stock is not then listed on a
U.S. national or regional securities exchange, the principal other market on
which the Common Stock is then traded, to open for trading during its regular
trading session on such date; or (B) the occurrence or existence, for more than
one half hour period in the aggregate, of any suspension or limitation imposed
on trading (by reason of movements in price exceeding limits permitted by the
relevant exchange or otherwise) in the Common Stock or in any options contracts
or futures contracts relating to the Common Stock, and such suspension or
limitation occurs or exists at any time before 1:00 p.m., New York City time, on
such date.

 

“VWAP Trading Day” means a day on which (A) there is no VWAP Market Disruption
Event; and (B) trading in the Common Stock generally occurs on the principal
U.S. national or regional securities exchange on which the Common Stock is then
listed or, if the Common Stock is not then listed on a U.S. national or regional
securities exchange, on the principal other market on which the Common Stock is
then traded. If the Common Stock is not so listed or traded, then “VWAP Trading
Day” means a Business Day.

 

“Wholly Owned Subsidiary” of a Person means any Subsidiary of such Person all of
the outstanding Capital Stock or other ownership interests of which (other than
directors’ qualifying shares) are owned by such Person or one or more Wholly
Owned Subsidiaries of such Person.

 

“Withheld Shares” has the meaning set forth in Section 7(B).

 

Section 2. Persons Deemed Owners.

 

The Holder of this Note will be treated as the sole owner of this Note for all
purposes.

 

Section 3. Registered Form.

 

This Note, and any Note issued in exchange therefor or in substitution thereof,
will be in registered form (within the meaning of Section 163 of the Code),
without coupons. No interest shall accrue on any Note, except for Default
Interest (if applicable).

 

Section 4. Amortization Payments; Additional Amortization Payments; Defaulted
Amounts; Optional Prepayments.

 

(A)             Amortization Payments. The Company shall make payment of the
Principal Amount (without any prepayment premium or penalty) equal to the then
applicable Amortization Payment (or portion thereof, if applicable) on each
Amortization Date. The full amount of the Note, as set forth on the face hereof
(without taking into account any original issue discount), shall be repaid in
accordance with the terms hereof on or prior to the Maturity Date.

 

(B)              Additional Amortization Payments.

 

(i)                 On the June 1, 2020 Amortization Date, the aggregate amount
of all proceeds received in respect of any Equity Issuance (other than any ATM
Issuance) by the Company during the month immediately preceding such
Amortization Date shall be paid in cash by the Company to the Holder as follows:
(1) first, such amount shall be applied to the applicable Amortization Payment
due on such Amortization Date; and (2) second, a minimum of twenty percent (20%)
of any such amount remaining after applying Section 4(B)(i)(1) shall be used to
repay the Notes on such Amortization Date.

 

 

- 15 -

 

 

(ii)              On each Amortization Date after June 1, 2020, the aggregate
amount of all proceeds received in respect of any Equity Issuance (including any
ATM Issuance) by the Company during the month immediately preceding such
Amortization Date shall be paid in cash by the Company to the Holder as follows:
(1) first, such amount in respect of any Equity Issuance shall be applied to the
applicable Amortization Payment due on such Amortization Date, with the portion
of such amount derived from any Equity Issuances other than an ATM Issuance
being applied after the application of any portion of such amount derived from
an ATM Issuance; (2) second, a minimum of twenty percent (20%) of any such
amount in respect of any Equity Issuance (other than any ATM Issuance) remaining
after applying Section 4(B)(ii)(1) shall be used to repay the Notes on such
Amortization Date; and (3) third, a minimum of thirty-five percent (35%) of any
remaining proceeds in respect of any ATM Issuance remaining after applying
Section 4(B)(ii)(1) shall be used to repay the Notes on such Amortization Date.

 

(iii)            For purposes of this Note, any payment made to the Holder
pursuant to Section 4(B)(i)(2), Section 4(B)(ii)(2) or Section 4(B)(ii)(3) shall
be referred to as an “Additional Amortization Payment” and shall be applied to
the then outstanding Principal Amount of the Note. Notwithstanding anything to
the contrary herein, in no event shall the aggregate amount of Additional
Amortization Payments exceed eight million dollars ($8,000,000).

 

(iv)             Concurrently with the payment of each Amortization Payment, the
Company shall certify to Holder in writing (i) the amount of Equity Issuances
made during the preceding month (including the dates thereof, the class or
series and amount of securities issued, the consideration received therefore,
and the extent to which such Equity Issuances constituted Company ATM Issuances)
and (ii) the amount of proceeds received with respect to such Equity Issuances
that was applied to each Amortization Payment and Additional Amortization
Payment made for such month; provided, however, that, unless consented to by the
Holder in writing, in the event that the extent of such Equity Issuances is such
that the information required in such certification would constitute material
non-public information regarding the Company, then the Company shall instead
disclose such material non-public information in its next Annual Report on Form
10-K or Quarterly Report on Form 10-Q (whichever shall occur first) and shall
concurrently with the filing thereof provide to Holder such a certification with
respect to the Equity Issuances during the period covered by such report.

 

(C)              Defaulted Amounts. If an Event of Default occurs, then in each
case, to the extent permitted by Applicable Law, interest (“Default Interest”)
will accrue on the then outstanding Principal Amount at a rate per annum equal
to fifteen percent (15.0%), from, and including, the date of such Event of
Default to, but excluding, the date such Event of Default is cured or is no
longer continuing, as applicable. Default Interest hereunder will be payable in
arrears on each Amortization Date and will be computed on the basis of a 360-day
year comprised of twelve 30-day months.

 

 

- 16 -

 

 

(D)             Optional Prepayments. The Company shall have the right at any
time and from time to time, upon ten (10) Business Days’ notice to the Holder
and the Trustee, to irrevocably elect to prepay any or all of the Principal
Amount (but if paying less than the full Principal Amount, such prepayment must
be in integral multiples of $1,000,000) without premium or penalty.
Notwithstanding the foregoing, any notice of prepayment delivered in connection
with (x) any refinancing of any or all of the Notes with the proceeds of such
refinancing or of any other incurrence of Indebtedness or (y) the consummation
of another transaction, in each case, may be, if expressly so stated to be,
contingent upon the consummation of such refinancing, incurrence or transaction
and may be revoked by the Company in the event such refinancing, incurrence or
transaction is not consummated. Any such prepayment shall be applied to the
Amortization Payment(s) selected by the Company.

 

(E)              Tax Withholding. Notwithstanding anything to the contrary
herein, the Company (and any person acting on behalf of any of the Company)
shall have the right to deduct and withhold any taxes that it is required to
deduct and withhold under applicable law from any payments to be made pursuant
to this Note. To the extent that amounts are so withheld and paid by the Company
(or any person acting on behalf of any of the Company) to the applicable
governmental authority, such withheld amounts shall be treated for all purposes
of the Notes as having been delivered and paid to the applicable Holder or any
other recipient of payment in respect of which such deduction and withholding
was made. The Company and the Holder shall reasonably cooperate in obtaining any
available exemption or reduction of such withholding, including the provision by
the Holder of Internal Revenue Service Form W-9 or applicable Internal Revenue
Service Form W-8, with appropriate supporting documentation.

 

Section 5. Method of Payment; When Payment Date is Not a Business Day.

 

(A)             Method of Payment. The Company will pay all cash amounts due
under this Note by wire transfer of immediately available funds to the account
of Holder set forth in the Flow of Funds Letter (as defined in the Securities
Purchase Agreement) (or, if such Holder provides the Company, at least five (5)
Business Days before the date such amount is due, with written notice of an
account or address of such Holder within the United States, as applicable, by
check or wire transfer of immediately available funds to such account or address
set forth in such written notice, as applicable).

 

(B)              Delay of Payment when Payment Date is Not a Business Day. If
the due date for a payment on this Note as provided in this Note is not a
Business Day, then, notwithstanding anything to the contrary in this Note, such
payment may be made on the immediately following Business Day.

 

Section 6. Required Repurchase of Note upon a Fundamental Change.

 

(A)             Repurchase Upon Fundamental Change. Subject to the other terms
of this Section 6, if a Fundamental Change occurs, then the Holder will have the
right to require the Company to repurchase this Note (or any portion of this
Note in an Authorized Denomination) on the Fundamental Change Repurchase Date
for such Fundamental Change for a cash purchase price equal to the Fundamental
Change Repurchase Price.

 

 

- 17 -

 

 

(B)              Fundamental Change Repurchase Date. The Fundamental Change
Repurchase Date for any Fundamental Change will be a Business Day of the
Holder’s choosing that is no more than ten (10) Business Days after the later of
(x) the date the Holder delivers to the Company its election to require the
Company to repurchase this Note pursuant to Section 6(C); and (y) the effective
date of such Fundamental Change.

 

(C)              Fundamental Change Notice. No later than the tenth (10th)
Business Day before the occurrence of any Fundamental Change, the Company will
send to the Holder (with a copy to the Trustee) a written notice (the
“Fundamental Change Notice”) thereof, stating the expected date such Fundamental
Change will occur. Following receipt of a Fundamental Change Notice, the Holder
may elect, by written notice to the Company no later than the later of (i) ten
(10) Trading Days after receipt of such Fundamental Change Notice and (ii) ten
(10) Trading Days after the date of any amendment or other modification to the
form or value of consideration receivable by holders of the Common Stock in
connection with such Fundamental Change, to require the Company to repurchase
this Note (or any portion of this Note in an Authorized Denomination) on the
Fundamental Change Repurchase Date for such Fundamental Change for a cash
purchase price equal to the Fundamental Change Repurchase Price.

 

(D)             Fundamental Change Repurchase Price. The Fundamental Change
Repurchase Price for this Note (or any portion of this Note) to be repurchased
upon a Repurchase Upon Fundamental Change following a Fundamental Change is an
amount in cash equal to the Fundamental Change Base Repurchase Price for such
Fundamental Change plus any accrued and unpaid Default Interest on this Note to,
but excluding, the Fundamental Change Repurchase Date for such Fundamental
Change. If such Fundamental Change Repurchase Date is on an Amortization Date,
then the Amortization Payment otherwise payable on such Amortization Date will
be paid as part of the Fundamental Change Repurchase Price, in satisfaction of
the Company’s obligation to pay such principal on such Amortization Date.

 

(E)              Effect of Repurchase. If this Note (or any portion of this
Note) is to be repurchased upon a Repurchase Upon Fundamental Change, then, from
and after the date the related Fundamental Change Repurchase Price is paid in
full, this Note (or such portion) will cease to be outstanding.

 

 

- 18 -

 

 

 

Section 7. Stock Exchange Limitations.

 

(A)             Beneficial Ownership Limitation. Notwithstanding anything to the
contrary contained herein, the Company shall not effect the conversion of any
portion of this Note, and any such payment or conversion shall be null and void
and treated as if never made, to the extent that after giving effect to such
Amortization Payment or conversion, the Holder together with the other
Attribution Parties collectively would beneficially own in excess of 4.99% (the
“Maximum Percentage”) of the number of shares of Common Stock outstanding
immediately after giving effect to such payment or conversion. For purposes of
the foregoing sentence, the aggregate number of shares of Common Stock
beneficially owned by the Holder and the other Attribution Parties shall include
the number of shares of Common Stock held by the Holder and all other
Attribution Parties plus the number of shares of Common Stock issuable with
respect to such Amortization Payment (or applicable portion thereof) or upon
conversion of this Note with respect to which the determination of such sentence
is being made, but shall exclude the number of shares of Common Stock which
would be issuable upon (A) payment or conversion of the remaining, unpaid or
unconverted portion of this Note beneficially owned by the Holder or any of the
other Attribution Parties and (B) exercise or conversion of the unexercised or
unconverted portion of any other securities of the Company (including, without
limitation, any convertible notes or convertible preferred stock or warrants)
beneficially owned by the Holder or any other Attribution Party subject to a
limitation on conversion or exercise analogous to the limitation contained in
this Section 7(A). For purposes of this Section 7(A), beneficial ownership shall
be calculated in accordance with Section 13(d) of the Exchange Act. For purposes
of this Note, in determining the number of outstanding shares of Common Stock
the Company may issue upon conversion of this Note without exceeding the Maximum
Percentage, the Holder may rely on the number of outstanding shares of Common
Stock as reflected in (x) the Company's most recent Annual Report on Form 10-K,
Quarterly Report on Form 10-Q, Current Report on Form 8-K or other public filing
with the Commission, as the case may be, (y) a more recent public announcement
by the Company or (3) any other written notice by the Company or the Transfer
Agent (as defined in the Securities Purchase Agreement) setting forth the number
of shares of Common Stock outstanding (the “Reported Outstanding Share Number”).
For any reason at any time, (i) upon the written or oral request of the Holder,
the Company shall within one (1) Trading Day confirm in writing or by electronic
mail to the Holder the number of shares of Common Stock then outstanding and
(ii) upon the written or oral request of the Company (which may be made once in
connection with each delivery of a conversion notice), the Holder shall within
one (1) Trading Day confirm in writing or by electronic mail to the Company the
number of shares of Common Stock beneficially owned by the Holder and the other
Attribution Parties (and in no event will the Company be liable for any damages
under any Transaction Document resulting from its reliance on incorrect
information in such confirmation from the Holder or, if such confirmation is not
provided in a timely manner, its reasonable reliance on the best information
then available regarding the beneficial ownership of the Holder and the other
Attribution Parties). In any case, the number of outstanding shares of Common
Stock shall be determined after giving effect to the conversion or exercise of
securities of the Company, including this Note, by the Holder and any other
Attribution Party since the date as of which the Reported Outstanding Share
Number was reported. In the event that the issuance of shares of Common Stock to
the Holder pursuant to this Note results in the Holder and the other Attribution
Parties being deemed to beneficially own, in the aggregate, more than the
Maximum Percentage of the number of outstanding shares of Common Stock (as
determined under Section 13(d) of the Exchange Act), the number of shares so
issued by which the Holder's and the other Attribution Parties' aggregate
beneficial ownership exceeds the Maximum Percentage (the “Excess Shares”) shall
be deemed null and void and shall be cancelled ab initio, and the Holder shall
not have the power to vote or to transfer the Excess Shares. Upon delivery of a
written notice to the Company, the Holder may from time to time increase or
decrease the Maximum Percentage to any other percentage not in excess of 9.99%
as specified in such notice; provided that (i) any such increase in the Maximum
Percentage will not be effective until the sixty-first (61st) day after such
notice is delivered to the Company and (ii) any such increase or decrease will
apply only to the Holder and the other Attribution Parties and not to any Other
Holder of Notes that is not an Attribution Party of the Holder. For purposes of
clarity, the shares of Common Stock issuable pursuant to the terms of this Note
in excess of the Maximum Percentage shall not be deemed to be beneficially owned
by the Holder for any purpose including for purposes of Section 13(d) or Rule
16a-1(a)(1) of the Exchange Act. No prior inability to issue shares of Common
Stock to the Holder pursuant to this paragraph shall have any effect on the
applicability of the provisions of this paragraph with respect to any subsequent
determination of the ability to issue shares of Common Stock hereunder. The
provisions of this paragraph shall be construed and implemented in a manner
otherwise than in strict conformity with the terms of this Section 7(A) to the
extent necessary to correct this paragraph or any portion of this paragraph
which may be defective or inconsistent with the intended beneficial ownership
limitation contained in this Section 7(A) or to make changes or supplements
necessary or desirable to properly give effect to such limitation. The
limitation contained in this paragraph may not be waived and shall apply to a
successor holder of this Note. To the extent that (i) any shares of Common Stock
were not issuable to the Holder due to such shares constituting Excess Shares
and (ii) the Company has not otherwise paid or issued to the Holder the
applicable portion of the Amortization Payment, Conversion Consideration or
Event of Default Conversion Consideration applicable to such shares in
accordance with this Note, if the Holder subsequently determines that the
issuance of all or a portion of such shares would not cause the Holder’s and the
other Attribution Parties’ aggregate beneficial ownership to exceed the Maximum
Percentage, then the Holder may, by written notice to the Company, notify the
Company as to what portion of such shares no longer constitute Excess Shares and
the Company shall cause such shares to be delivered to the Holder on or before
the second (2nd) Business Day following receipt of such notice.

 

- 20 -

 

 

(B)              Stock Exchange Limitation. Notwithstanding anything to the
contrary in this Note, until the Requisite Stockholder Approval is obtained, in
no event will the number of shares of Common Stock issuable pursuant to this
Note, together with any shares of Common Stock issuable pursuant to the Warrant,
exceed fifty-one million five hundred sixty-seven thousand and fifty
(51,567,050) shares in the aggregate. If any one or more shares of Common Stock
are not delivered as a result of the operation of the preceding sentence (such
shares, the “Withheld Shares”), then, (1) the Company will pay to the Holder, in
cash, an amount equal to the product of (x) the number of such Withheld Shares
and (y) the Daily VWAP per share of Common Stock on such Conversion Date; and
(2) to the extent the Holder purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in settlement of a sale by the
Holder of such Withheld Shares, the Company will reimburse the Holder for (x)
any brokerage commissions and other out-of-pocket expenses, if any, of the
Holder incurred in connection with such purchases and (y) the excess, if any, of
(A) the aggregate purchase price of such purchases over (B) the product of (I)
the number of such Withheld Shares purchased by the Holder; and (II) the Daily
VWAP per share of Common Stock on such Conversion Date.

 

Section 8. Affirmative and Negative Covenants.

 

Until the Principal Amount and all other monetary obligations under the Notes
are paid in full (other than any contingent indemnification obligations):

 

(A)             Stay, Extension and Usury Laws. To the extent that it may
lawfully do so, the Company (i) agrees that it will not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law (wherever or whenever enacted or in force) that
may affect the covenants or the performance of this Note; and (ii) expressly
waives all benefits or advantages of any such law and agrees that it will not,
by resort to any such law, hinder, delay or impede the execution of any power
granted to the Holder by this Note, but will suffer and permit the execution of
every such power as though no such law has been enacted.

 

- 21 -

 

 

(B)              Corporate Existence. Subject to Section 8(A), the Company will
cause to preserve and keep in full force and effect:

 

(i)               its corporate existence in accordance with the organizational
documents of the Company; and

 

(ii)              the material rights (charter and statutory), licenses and
franchises of the Company and its Subsidiaries;

 

provided, however, that the Company need not preserve or keep in full force and
effect any such license or franchise if the Board of Directors determines in
good faith that (x) the preservation thereof is no longer desirable in the
conduct of the business of the Company and its Subsidiaries, taken as a whole;
and (y) the loss thereof is not, individually or in the aggregate, reasonably
expected to be materially adverse to the Holder.

 

(C)             Ranking. All payments due under this Note shall rank pari passu
with all Other Notes and all other unsecured unsubordinated Indebtedness and
shall rank senior to all Subordinated Indebtedness.

 

(D)             Incurrence of Indebtedness; Amendments to Indebtedness. The
Company shall not and shall not permit any Subsidiary to: (a) create, incur,
assume, guarantee or be or remain liable with respect to any Indebtedness, other
than Permitted Indebtedness; (b) prepay any Indebtedness for borrowed money
except for (i) by the conversion of Indebtedness into equity securities and the
payment of cash in lieu of fractional shares in connection with such conversion,
(ii) Indebtedness under the ProductionCo Credit Agreement or the Driftwood
Credit Agreement, (iii) a refinancing of the entire amount of such Indebtedness
which does not impose materially more burdensome terms upon the Company or its
Subsidiaries than exist in such Indebtedness prior to such refinancing, but
without any final maturity date, amortization payment, sinking fund, mandatory
redemption or other repurchase obligation or put right at the option of the
lender or holder of such Indebtedness that is prior to ninety-one (91) days
following the Maturity Date; or (c) amend or modify any documents or notes
evidencing any Permitted Indebtedness in any manner which shortens the maturity
date to a date prior to ninety-one (91) days following the Maturity Date or any
amortization payment, sinking fund, mandatory redemption, other repurchase
obligation or put right at the option of the lender or holder of such
Indebtedness or any interest payment date thereof to a date prior to (91) days
following the Maturity Date or otherwise imposes materially more burdensome
terms, taken as a whole, upon the Company or its Subsidiaries than exist in such
Indebtedness prior to such amendment or modification without the prior written
consent of Holder.

 

(E)              Liens. The Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien of any kind on any asset now owned or hereafter acquired, except
Permitted Liens.

 

(F)              Investments. The Company shall not directly or indirectly
acquire or own, or make any Investment in or to any Person, or permit any of its
Subsidiaries so to do, other than Permitted Investments.

 

- 22 -

 

 

(G)              Distributions. The Company shall not, and shall not allow any
Subsidiary to, (a) repurchase or redeem any class of Capital Stock, except for
Permitted Restricted Payments, or (b) declare or pay any cash dividend or make a
cash distribution on any class of Capital Stock, except for Permitted Restricted
Payments or (c) waive, release or forgive any Indebtedness owed by any
employees, officers or directors in excess of fifty thousand dollars ($50,000)
in the aggregate.

 

(H)             Transfers. Except for Permitted Transfers, Permitted Investments
and Permitted Restricted Payments, the Company shall not, and shall not allow
any Subsidiary to, voluntarily or involuntarily transfer, sell, lease, license,
lend or in any other manner convey any equitable, beneficial or legal interest
in any material portion of its assets.

 

(I)               Taxes. The Company and its Subsidiaries shall pay when due all
material taxes, fees or other similar governmental charges (together with any
related interest or penalties) now or hereafter imposed or assessed against the
Company and its Subsidiaries or their respective assets or upon their ownership,
possession, use, operation or disposition thereof or upon their rents, receipts
or earnings arising therefrom. The Company and its Subsidiaries shall file on or
before the due date therefor all material personal property tax returns.
Notwithstanding the foregoing, the Company and its Subsidiaries may contest, in
good faith and by appropriate proceedings, taxes, fees or other similar
governmental charges for which they maintain adequate reserves therefor in
accordance with GAAP.

 

(J)               Minimum Cash Balance. The Company shall cause, as of the last
day of each calendar month, the aggregate amount of, in each case subject to the
proviso below, unrestricted, unencumbered Cash in one or more deposit accounts
held solely in the Company’s name located in the United States to equal an
amount equal to the greater of (i) forty percent (40%) of the then outstanding
Principal Amount of this Note, (ii) eighteen million dollars ($18,000,000) and
(iii) the minimum aggregate amount of Cash required to be reserved by the
Company or its Subsidiaries pursuant to any Indebtedness (other than the Notes)
plus six million dollars ($6,000,000); provided, that up to twelve million
dollars ($12,000,000) in the aggregate of Cash held in accounts of the Company
or its Subsidiaries with respect to which a lien has been granted and a control
agreement is in place for the benefit of lenders pursuant to the Driftwood
Credit Agreement shall be included in the calculation of Cash that satisfies the
requirements of clauses (i) and (ii) of this Section 8(J), and the Company shall
certify compliance with this Section 8(J) with respect to each month to the
Holder in writing as of the first Business Day of the next succeeding calendar
month.

 

(K)             Change in Nature of Business. The Company shall not, and the
Company shall cause each of its Subsidiaries to not, directly or indirectly,
engage in any material line of business substantially different from those lines
of business conducted by or publicly contemplated to be conducted by the Company
and each of its Subsidiaries on the Issue Date or any business substantially
related or incidental thereto.

 

(L)              Maintenance of Properties, Etc. The Company shall maintain and
preserve all of its properties which are necessary or useful (as determined by
the Company in good faith) in the proper conduct of its business in good working
order and condition, ordinary wear and tear excepted, and comply at all times
with the provisions of all leases to which it is a party as lessee or under
which it occupies property, so as to prevent any loss or forfeiture thereof or
thereunder, except as could not reasonably be expected to cause a material
adverse effect.

 

- 23 -

 

 

(M)            Maintenance of Intellectual Property. The Company will take all
action necessary or advisable to maintain all of the Intellectual Property
Rights (as defined in the Securities Purchase Agreement) of the Company that are
necessary or material (as determined by the Company in good faith) to the
conduct of its business in full force and effect.

 

(N)             Maintenance of Insurance. The Company shall maintain insurance
with responsible and reputable insurance companies or associations (including,
without limitation, comprehensive general liability, hazard, rent and business
interruption insurance) with respect to its properties (including all real
properties leased or owned by it) and business, in such amounts and covering
such risks as is required by any governmental authority having jurisdiction with
respect thereto or as is carried generally in accordance with sound business
practice by companies in similar businesses similarly situated.

 

(O)             Transactions with Affiliates. Except for Permitted Restricted
Payments, Permitted Investments and transactions with Wholly Owned Subsidiaries,
the Company shall not enter into, renew, extend or be a party to, any
transaction or series of related transactions (including, without limitation,
the purchase, sale, lease, transfer or exchange of property or assets of any
kind or the rendering of services of any kind) with any Affiliate, except
transactions for fair consideration and on terms no less favorable, taken as a
whole, to it than would be obtainable in a comparable arm’s length transaction
with a Person that is not an Affiliate thereof.

 

(P)              Restricted Issuances. The Company shall not, directly or
indirectly, without the prior written consent of the holders of a majority in
aggregate principal amount of the Notes then outstanding, (i) issue any Notes
(other than as contemplated by the Securities Purchase Agreement and the Notes)
or (ii) issue any other securities or incur any Indebtedness that would cause a
breach or Default under the Notes or that by its terms would prohibit or
restrict the performance of any of the Company’s obligations under the Notes,
including without limitation, the payment of interest and principal thereon.

 

(Q)             [Reserved].

 

(R)              Material Non-Public Information. Upon delivery by the Company
to the Holder (or receipt by the Company from the Holder) of any notice in
accordance with the terms of this Note, unless the Company has in good faith
determined that the matters relating to such notice do not constitute material,
non-public information relating to the Company or any of its Subsidiaries, the
Company shall on or prior to 9:00 am, New York city time on the Business Day
immediately following such notice delivery date, publicly disclose such
material, non-public information on a Form 8-K or otherwise. In the event that
the Company believes that a notice contains material, non-public information
relating to the Company or any of its Subsidiaries, the Company so shall
indicate to the Holder explicitly in writing in such notice (or immediately upon
receipt of notice from the Holder, as applicable), and in the absence of any
such written indication in such notice (or notification from the Company
immediately upon receipt of notice from the Holder), the Holder shall be
entitled to presume that information contained in the notice does not constitute
material, non-public information relating to the Company or any of its
Subsidiaries. Nothing contained in this Section 8(R) shall limit any obligations
of the Company, or any rights of the Holder, under the Securities Purchase
Agreement.

 

- 24 -

 

 

(S)              No Fiduciary Duty. The Company acknowledges and agrees that the
Holder is not a fiduciary or agent of the Company and that the Holder shall have
no obligation to (a) maintain the confidentiality of any information provided by
the Company or (b) refrain from trading any securities while in possession of
such information in the absence of a written non-disclosure agreement signed by
the Holder that explicitly provides for such confidentiality and trading
restrictions. In the absence of such an executed, written non-disclosure
agreement, the Company acknowledges that the Holder may freely trade in any
securities issued by the Company, may possess and use any information provided
by the Company in connection with such trading activity, and may disclose any
such information to any third party.

 

Section 9. Successors.

 

The Company will not consolidate with or merge with or into, or (directly, or
indirectly through one or more of its Subsidiaries) sell, lease or otherwise
transfer, in one transaction or a series of transactions, all or substantially
all of the assets of the Company and its Subsidiaries, taken as a whole, to
another Person, other than the Holder or any of its Affiliates (a “Business
Combination Event”), unless:

 

(A)             the resulting, surviving or transferee Person either (x) is the
Company or (y) if not the Company, is an entity (the “Successor Entity”) duly
organized and existing under the laws of its jurisdiction of organization that
expressly assumes (by executing and delivering to the Holder, at or before the
effective time of such Business Combination Event, a supplement to this
instrument) all of the Company’s obligations under this Note; and

 

(B)              immediately after giving effect to such Business Combination
Event, no Default or Event of Default will have occurred and be continuing.

 

At the effective time of any Business Combination Event, the Successor Entity
(if not the Company) will succeed to, and may exercise every right and power of,
the Company under this Note with the same effect as if such Successor Entity had
been named as the Company in this Note, and, except in the case of a lease, the
predecessor Company will be discharged from its obligations under this Note.

 

Section 10. Defaults and Remedies

 

(A)             Events of Default. “Event of Default” means the occurrence of
any of the following:

 

(i)               a default in the payment or issuance when due of any Principal
Amount of this Note, Fundamental Change Repurchase Price, Amortization Payment,
Conversion Consideration, Additional Amortization Payment or payment of Default
Interest;

 

(ii)              a default in the Company’s obligation to deliver a Fundamental
Change Notice pursuant to Section 6(C), and such default continues for three (3)
Business Days;

 

- 25 -

 

 

(iii)             a materially false or inaccurate certification (including a
false or inaccurate deemed certification) by the Company as to whether any Event
of Default has occurred;

 

(iv)             a breach or default in any of the Company’s obligations or
agreements under this Note or the Transaction Documents (in each case, other
than a default set forth in clause (i) or (ix) of this Section 10(A)), or a
breach of any representation or warranty in any material respect (other than
representations or warranties subject to material adverse effect or materiality,
which may not be breached in any respect) of the Transaction Documents;
provided, however, that if such default or breach can be cured, then such
default or breach will not be an Event of Default unless the Company has failed
to cure such default within five (5) days after its occurrence;

 

(v)              any provision of any Transaction Document at any time for any
reason (other than pursuant to the express terms thereof) ceases to be valid and
binding on or enforceable against the parties thereto, or the validity or
enforceability thereof is contested, directly or indirectly, by the Company or
any of its Subsidiaries, or a proceeding is commenced by the Company or any of
its Subsidiaries or any governmental authority having jurisdiction over any of
them, seeking to establish the invalidity or unenforceability thereof;

 

(vi)             [Reserved];

 

(vii)            at any time, any shares of Common Stock issuable pursuant to
this Note are not Freely Tradable (other than pursuant to Clause (c) thereof);

 

(viii)           the Company fails to use commercially reasonable efforts to
obtain the Requisite Stockholder Approval on or prior to June 30, 2020;

 

(ix)              the Company fails to comply with Section 8(J) of this Note or
Section 4(w) of the Securities Purchase Agreement;

 

(x)               the suspension from trading or failure of the Common Stock to
be trading or listed on an Eligible Exchange for a period of three (3)
consecutive Trading Days;

 

(xi)             [Reserved];

 

(xii)            a default by the Company with respect to any other Indebtedness
of at least one million dollars ($1,000,000) or any of its Subsidiaries with
respect to any Indebtedness of at least one million dollars ($1,000,000) (in
each case, or its foreign currency equivalent and other than any lease that
would have been characterized as an operating lease under GAAP as in effect on
December 31, 2018 (whether such lease was entered into before or after such
date)), in each case, which results in such amount of Indebtedness becoming due
prior to its scheduled maturity, unless such default has been waived or cured;

 

(xiii)           one or more final judgments, orders or awards (or any
settlement of any litigation or other proceeding that, if breached, could result
in a judgment, order or award) for the payment by the Company of at least one
million dollars ($1,000,000) or any of its Subsidiaries of at least one million
dollars ($1,000,000) (in each case, or its foreign currency equivalent) in the
aggregate (excluding any amounts covered by insurance pursuant to which the
insurer has been notified and has not denied coverage), is rendered against the
Company or any of its Subsidiaries and remains unsatisfied and (i) enforcement
proceedings shall have been commenced by any creditor upon any such judgment,
order, award or settlement or (ii) there shall be a period of ten (10)
consecutive Trading Days after entry thereof during which (A) a stay of
enforcement thereof is not in effect or (B) the same is not vacated, discharged,
stayed or bonded pending appeal;

 

- 26 -

 

 

(xiv)           (A) the Company fails to timely file its quarterly reports on
Form 10-Q or its annual reports on Form 10-K with the Commission in the manner
and within the time periods required by the Exchange Act (giving effect to any
applicable grace periods or extensions) or (B) the Company withdraws or restates
any financial statements included in such quarterly report or annual report
previously filed with the Commission;

 

(xv)            the Company or any of its Significant Subsidiaries, pursuant to
or within the meaning of any Bankruptcy Law, either:

 

(1)               commences a voluntary case or proceeding;

 

(2)               consents to the entry of an order for relief against it in an
involuntary case or proceeding;

 

(3)               consents to the appointment of a custodian of it or for any
substantial part of its property;

 

(4)               makes a general assignment for the benefit of its creditors;

 

(5)               takes any comparable action under any foreign Bankruptcy Law;
or

 

(6)               generally is not paying its debts as they become due; or

 

(xvi)           a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that either:

 

(1)               is for relief against Company or any of its Significant
Subsidiaries in an involuntary case or proceeding;

 

(2)               appoints a custodian of the Company or any of its Significant
Subsidiaries, or for any substantial part of the property of the Company or any
of its Significant Subsidiaries;

 

(3)               orders the winding up or liquidation of the Company or any of
its Significant Subsidiaries; or

 

(4)               grants any similar relief under any foreign Bankruptcy Law,
and, in each case under this Section 10(A)(xvi), such order or decree remains
unstayed and in effect for at least thirty (30) days.

 

- 27 -

 

 

(B)              Acceleration.

 

(i)               Automatic Acceleration in Certain Circumstances. If an Event
of Default set forth in Section 10(A) (xv) or (xvi) occurs with respect to the
Company (and not solely with respect to a Significant Subsidiary of the
Company), then the then outstanding portion of the Principal Amount of, and all
accrued and unpaid Default Interest on, this Note will immediately become due
and payable without any further action or notice by any Person.

 

(ii)              Optional Acceleration. If an Event of Default (other than an
Event of Default set forth in Section 10(A) (xv) or (xvi) with respect to the
Company and not solely with respect to a Subsidiary of the Company) occurs and
is continuing, then Holders of a majority in aggregate of principal amount of
the Notes, by notice to the Company (with a copy to the Trustee), may declare
this Note to become due and payable immediately for Cash in an amount equal to
the Event of Default Acceleration Amount plus all accrued and unpaid Default
Interest on this Note.

 

(C)              Notice of Events of Default. Promptly, but in no event later
than two (2) Business Days after an Event of Default, the Company will provide
written notice of such Event of Default (an “Event of Default Notice”) to the
Holder and to the Trustee, which Event of Default Notice shall include (i) a
reasonable description of the applicable Event of Default, (ii) a certification
as to whether, in the opinion of the Company, such Event of Default is capable
of being cured and, if applicable, a reasonable description of any existing
plans of the Company to cure such Event of Default and (iii) a certification as
to the date the Event of Default occurred and, if cured on or prior to the date
of such Event of Default Notice, the date of such cure.

 

(D)             Conversion Upon Event of Default.

 

(i)                   If (x) an Event of Default occurs and, (y) on any Business
Day during the period beginning on, and including, the date such Event of
Default occurs and ending on the later of (A) the twentieth (20th) Trading Day
after the Holder’s receipt of an Event of Default Notice and (B) the fifth (5th)
Trading Date after the Holder has received notice that such Event of Default has
been cured, the Holder delivers a notice (the “Event of Default Conversion
Trigger Notice”) to the Company stating that it has elected the provisions of
this Section 10(D) to apply to this Note (or any portion of this Note) during
the related Event of Default Conversion Period; then the Holder may convert this
Note, in whole or in part, during an Event of Default Conversion Period. For
purposes of this Section 10(D), “Event of Default Conversion Period” means the
period from, and including, the fifth (5th) Business Day after the date such
Event of Default Conversion Trigger Notice is delivered and ending on the date
such Event of Default is waived (if at all) by the Holder; provided, however,
that if the Company pays the Holder cash in an amount equal to the Event of
Default Acceleration Amount plus all accrued and unpaid Default Interest on this
Note, then (for the avoidance of doubt, regardless of whether a notice has been
delivered by the Holder pursuant to Section 10(B)(ii)) the Event of Default
Conversion Period will instead end on the date of such payment (and, for the
avoidance of doubt, if such payment is made before the fifth (5th) Business Day
after the date such Event of Default Conversion Trigger Notice is delivered,
then the Event of Default Conversion Period will not begin). Upon payment of
such Event of Default Acceleration Amount in full, this Note will cease to be
outstanding and notice thereof shall be provided to the Trustee.

 

- 28 -

 

 

(ii)              Conversion Procedures.

 

(1)               To convert this Note, the Holder must complete, manually sign
and deliver to the Company the conversion notice attached to this Note or a
facsimile or portable document format (.pdf) version of such conversion notice
(at which time such conversion will become irrevocable). For the avoidance of
doubt, the conversion notice may be delivered by e-mail in accordance with
Section 13. If the Company fails to deliver, by the related Conversion
Settlement Date, any shares of Common Stock forming part of the Conversion
Consideration of the conversion of this Note, the Holder, by notice to the
Company, may rescind all or any portion of the corresponding conversion notice
at any time until such Defaulted Shares are delivered.

 

(2)               The person in whose name any shares of Common Stock is
issuable upon conversion of this Note will be deemed to become the holder of
record of such shares as of the Close of Business on the Conversion Date for
such conversion, conferring, as of such time, upon such person, without
limitation, all voting and other rights appurtenant to such shares.

 

(3)               If the Holder converts a Note, the Company will pay any
documentary, stamp or similar issue or transfer tax or duty due on the issue of
any shares of Common Stock upon such conversion; provided, however, that if any
tax or duty is due because such Holder requested such shares to be issued in a
name other than that of such Holder, then such Holder will pay such tax or duty
and, until having received a sum sufficient to pay such tax or duty, the Company
may refuse to deliver any such shares to be issued in a name other than that of
such Holder.

 

(4)               To the extent the amount of shares issuable pursuant to this
Section 10(D) is reduced as a result of clause (A) of the definition of Event of
Default Conversion Price, then concurrently with the issuance of such shares,
the Company shall also pay to the Holder an amount, in cash, equal to the
product of (i) the number of shares by which such amount was reduced as a result
of such clause (A), multiplied by (ii) the Event of Default Conversion Price.

 

(iii)            Settlement Upon Conversion.

 

(1)               The consideration (the “Conversion Consideration”) due in
respect of each $1,000 Principal Amount of this Note to be converted will
consist of (1) a number of shares of Common Stock equal to the Event of Default
Conversion Rate in effect on the Conversion Date for such conversion and (2)
cash in an amount equal to the aggregate accrued and unpaid Default Interest on
this Note to, but excluding, the Conversion Settlement Date for such conversion.

 

(2)               The total number of shares of Common Stock due in respect of
any conversion of this Note will be determined on the basis of the total
Principal Amount of this Note to be converted with the same Conversion Date;
provided, however, that if such number of shares of Common Stock is not a whole
number, then such number will be rounded up to the nearest whole number.

 

- 29 -

 

 

(3)               The Company will pay or deliver, as applicable, the Conversion
Consideration due upon the conversion of this Note to the Holder on or before
the second (2nd) Business Day (or, if earlier, the standard settlement period
for the primary Eligible Exchange on which the Common Stock is traded)
immediately after the Conversion Date for such conversion (the “Conversion
Settlement Date”).

 

(4)               If this Note is converted, then, from and after the date the
Conversion Consideration therefor is issued or delivered in settlement of such
conversion, this Note (or the applicable portion thereof) will cease to be
outstanding and notice thereof shall be delivered to the Trustee.

 

(5)               If (x) the Company fails to deliver, by the related Conversion
Settlement Date, any shares of Common Stock (the “Defaulted Shares”) forming
part of the Conversion Consideration of the conversion of this Note and (y) the
Holder (whether directly or indirectly, including by any broker acting on the
Holder’s behalf or acting with respect to such Defaulted Shares) purchases any
shares of Common Stock (whether in the open market or otherwise) to cover any
such Defaulted Shares (whether to satisfy any settlement obligations with
respect thereto of the Holder or otherwise), then, without limiting the Holder’s
right to pursue any other remedy available to it (whether hereunder, under
applicable law or otherwise), the Holder will have the right, exercisable by
notice to the Company, to cause the Company to either: (I) pay, on or before the
second (2nd) Business Day after the date such notice is delivered, cash to the
Holder in an amount equal to the aggregate purchase price (including any
brokerage commissions and other out-of-pocket costs) incurred to purchase such
shares (such aggregate purchase price, the “Covering Price”); or (II) promptly
deliver, to the Holder, such Defaulted Shares in accordance with this Note,
together with cash in an amount equal to the excess, if any, of the Covering
Price over the product of (X) the number of such Defaulted Shares; and (Y) the
Daily VWAP per share of Common Stock on the Conversion Date relating to such
conversion.

 

(iv)             If there occurs any (A) recapitalization, reclassification or
change of the Common Stock (other than (x) changes solely resulting from a
subdivision or combination of the Common Stock, (y) a change only in par value
or from par value to no par value or no par value to par value and (z) stock
splits and stock combinations that do not involve the issuance of any other
series or class of securities); (B) consolidation, merger, combination or
binding or statutory share exchange involving the Company; (C) sale, lease or
other transfer of all or substantially all of the assets of the Company and its
Subsidiaries, taken as a whole, to any Person; or (D) other similar event, and,
in each case, as a result of such occurrence, the Common Stock is converted
into, or is exchanged for, or represents solely the right to receive, other
securities or other property (including cash or any combination of the
foregoing) (such an event, a “Common Stock Change Event,” and such other
securities or other property, the “Reference Property,” and the amount and kind
of Reference Property that a holder of one (1) share of Common Stock would be
entitled to receive on account of such Common Stock Change Event (without giving
effect to any arrangement not to issue fractional shares of securities or other
property), a “Reference Property Unit”), then, notwithstanding anything to the
contrary in this Note:

 

- 30 -

 

 

(1)               at the effective time of such Common Stock Change Event, (1)
the Conversion Consideration due upon conversion of any Note will be determined
in the same manner as if each reference to any number of shares of Common Stock
in this Section 10(D) (or in any related definitions) were instead a reference
to the same number of Reference Property Units; (y) for purposes of this Section
10(D), each reference to any number of shares of Common Stock in such Section
(or in any related definitions) will instead be deemed to be a reference to the
same number of Reference Property Units; and (z) for purposes of the definition
of “Fundamental Change,” the term “Common Stock” and “common equity” will be
deemed to mean the common equity, if any, forming part of such Reference
Property.

 

(2)               For these purposes, (I) the Daily VWAP of any Reference
Property Unit or portion thereof that consists of a class of common equity
securities will be determined by reference to the definition of “Daily VWAP,”
substituting, if applicable, the Bloomberg page for such class of securities in
such definition; and (II) the Daily VWAP of any Reference Property Unit or
portion thereof that does not consist of a class of common equity securities
will be the fair value of such Reference Property Unit or portion thereof, as
applicable, determined in good faith by the Company (or, in the case of cash
denominated in U.S. dollars, the face amount thereof).

 

(3)               If the Reference Property consists of more than a single type
of consideration to be determined based in part upon any form of stockholder
election, then the composition of the Reference Property Unit will be deemed to
be the weighted average of the types and amounts of consideration actually
received, per share of Common Stock, by the holders of Common Stock. The Company
will notify the Holder of such weighted average as soon as practicable after
such determination is made.

 

(4)               At or before the effective date of such Common Stock Change
Event, the Company and the resulting, surviving or transferee Person (if not the
Company) of such Common Stock Change Event (the “Successor Person”) will execute
and deliver such instruments or agreements that (x) provides for subsequent
conversions of this Note in the manner set forth in this Section 10(D); and (y)
contains such other provisions as the Company reasonably determines are
appropriate to preserve the economic interests of the Holder and to give effect
to the provisions of this Section 10(D). If the Reference Property includes
shares of stock or other securities or assets of a Person other than the
Successor Person, then such other Person will also execute such instruments or
agreements and such instruments or agreements will contain such additional
provisions the Company reasonably determines are appropriate to preserve the
economic interests of the Holder.

 

(5)               As soon as practicable after learning the anticipated or
actual effective date of any Common Stock Change Event, the Company will provide
written notice to the Holder of such Common Stock Change Event, including a
brief description of such Common Stock Change Event, its anticipated effective
date and a brief description of the anticipated change in the conversion right
of this Note.

 

- 31 -

 

 

(6)               The Company will not become a party to any Common Stock Change
Event unless its terms are consistent with this Section 10(D).

 

(v)             Subject to the following sentence, at all times when this Note
is outstanding, the Company will reserve, out of its authorized but unissued and
unreserved shares of Common Stock, a number of shares of Common Stock for
issuance upon conversion of the Note equal to the greater of (A) eighty-five
million (85,000,000) shares multiplied by a fraction, the numerator of which
shall be the dollar amount of then outstanding Principal Amount and the
denominator of which shall be fifty-six million (56,000,000) and (B) two hundred
percent (200%) of the then outstanding Principal Amount divided by the Daily
VWAP. Notwithstanding anything herein to the contrary, (X) until the Company
shall have received stockholder approval with respect to an increase in its
number of authorized shares of at least one hundred million (100,000,000) shares
(the “Share Authorization Increase”), the Company shall only be required to
reserve, out of its authorized but unissued and unreserved shares of Common
Stock, fifty-one million five hundred sixty-seven thousand and fifty
(51,567,050) shares of Common Stock; provided, however, that the Company shall
use commercially reasonable efforts to obtain the Share Authorization Increase
at its next scheduled shareholder meeting, but it no event later than June 30,
2020, and if such approval is not then obtained, as promptly as practicable
thereafter, with the Company holding stockholder votes to obtain such approval
no less frequently than once per calendar quarter until such approval is
obtained and (Y) the Company shall never be required to reserve, out of its
authorized but unissued and unreserved shares of Common Stock, a number of
shares of Common Stock for issuance upon conversion of the Note in excess of one
hundred percent (100%) of the then outstanding Principal Amount divided by the
Floor Price.

 

(vi)             Each share of Common Stock delivered pursuant to this Note will
be a newly issued or treasury share and will be duly and validly issued, fully
paid, non-assessable, free from preemptive rights and free of any other Lien or
adverse claim (except to the extent of any Lien or adverse claim created by the
action or inaction of the Holder or the Person to whom such share will be
delivered). If the Common Stock is then listed on any securities exchange, or
quoted on any inter-dealer quotation system, then the Company will cause each
share of Common Stock issued pursuant to this Note, when delivered, to be
admitted for listing on such exchange or quotation on such system if required
under the rules of such exchange or quotation system. Any shares of Common Stock
issued pursuant to this Note will be issued in the form of book-entries at the
facilities of DTC, identified therein by an “unrestricted” CUSIP number.

 

Section 11. Ranking.

 

The Indebtedness represented by this Note will constitute the senior unsecured
obligations of the Company.

 

- 32 -

 

 

Section 12. Replacement Notes.

 

If the Holder of this Note claims that this Note has been mutilated, lost,
destroyed or wrongfully taken, then the Company will issue, execute and deliver
a replacement Note upon surrender to the Company of such mutilated Note, or upon
delivery to the Company of evidence of such loss, destruction or wrongful taking
reasonably satisfactory to the Company. In the case of a lost, destroyed or
wrongfully taken Note, the Company may require the Holder to provide such
security or an indemnity that is reasonably satisfactory to the Company to
protect the Company from any loss that it may suffer if this Note is replaced.

 

Section 13. Notices.

 

Any notice or communication to the Company will be deemed to have been duly
given if in writing and delivered in person or by first class mail (registered
or certified, return receipt requested), facsimile transmission, electronic
transmission (including e-mail) or other similar means of unsecured electronic
communication or overnight air courier guaranteeing next day delivery, or to the
other’s address, which initially is as follows:

 

Tellurian Inc.

1201 Louisiana Street, Suite 3100

Houston, TX 77002

Attention: Graham A. McArthur, Treasurer

Email: legal.notices@tellurianinc.com; treasury@tellurianinc.com

 

The Company, by notice to the Holder, may designate additional or different
addresses for subsequent notices or communications.

 

Any notice or communication to the Holder will be by email to its email address,
which initially are as set forth in the Securities Purchase Agreement. The
Holder, by notice to the Company, may designate additional or different
addresses for subsequent notices or communications.

 

If a notice or communication is mailed in the manner provided above within the
time prescribed, it will be deemed to have been duly given, whether or not the
addressee receives it.

 

Section 14. Interpretation.

 

For purposes of this Note, (a) the words “include,” “includes,” and “including”
are deemed to be followed by the words “without limitation”; (b) the word “or”
is not exclusive; and (c) the words “herein,” “hereof,” “hereby,” “hereto,” and
“hereunder” refer to this Agreement as a whole. Unless the context otherwise
requires, references herein: (x) to sections, schedules, and exhibits mean the
sections of, and schedules and exhibits attached to, this Note; (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 (z) to a statute means such
statute as amended from time to time and includes any successor legislation
thereto and any regulations promulgated thereunder. This Note shall be construed
without regard to any presumption or rule requiring construction or
interpretation against the party drafting an instrument or causing any
instrument to be drafted. The schedules and exhibits referred to herein shall be
construed with, and as an integral part of, this Note to the same extent as if
they were set forth verbatim herein.

 

- 33 -

 

 

Section 15. Successors and Assigns.

 

All agreements of in this Note will bind and insure to the benefit of the
parties hereto and their respective successors and assigns permitted hereby,
except that (i) the Holder may not assign or otherwise transfer any of their
rights or obligations hereunder to a Disqualified Institution, unless an Event
of Default has occurred and is continuing and (ii) the Holder may only assign or
otherwise transfer the portions of the Principal Amount of this Note in
principal increments of one million dollars ($1,000,000).

 

Section 16. Severability.

 

If any provision of this Note is invalid, illegal or unenforceable, then the
validity, legality and enforceability of the remaining provisions of this Note
will not in any way be affected or impaired thereby.

 

Section 17. Headings, Etc.

 

The headings of the Sections of this Note have been inserted for convenience of
reference only, are not to be considered a part of this Note and will in no way
modify or restrict any of the terms or provisions of this Note.

 

Section 18. Amendments

 

Other than as set forth in Section 7.01 of the Indenture, this Note may not be
amended or modified unless in writing by the Company and the Holders of a
majority of the outstanding Principal Amount, and no condition herein (express
or implied) may be waived unless waived in writing by each party whom the
condition is meant to benefit. No consideration (other than reimbursement of
legal fees) shall be offered or paid to any Holder to amend or consent to a
waiver or modification of any provision of any of this Note unless the same
consideration also is offered to all Holders.  From the date hereof and while
any Notes are outstanding, the Company shall not be permitted to receive any
consideration from a Holder that is not otherwise contemplated by this Note in
order to, directly or indirectly, induce the Company or any Subsidiary (i) to
treat such Holder in a manner that is more favorable than to other similarly
situated Holders, or (ii) to treat any Holder(s) in a manner that is less
favorable than the Holder that is paying such consideration; provided, however,
that the determination of whether a Holder has been treated more or less
favorably than another Holder shall disregard any securities of the Company
purchased or sold by any Holder.

 

Section 19.  Governing Law; Waiver of Jury Trial.

 

THE INTERNAL LAW OF THE STATE OF NEW YORK WILL GOVERN AND BE USED TO CONSTRUE
THIS NOTE. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS NOTE.

 

- 34 -

 

 

Section 20. Submission to Jurisdiction.

 

The Company and each Holder (A) agree that any suit, action or proceeding
against it arising out of or relating to this Note may be instituted in any U.S.
federal court with applicable subject matter jurisdiction sitting in The City of
New York; (B) waive, to the fullest extent permitted by Applicable Law, (i) any
objection that it may now or hereafter have to the laying of venue of any such
suit, action or proceeding; and (ii) any claim that it may now or hereafter have
that any such suit, action or proceeding in such a court has been brought in an
inconvenient forum; and (C) submit to the nonexclusive jurisdiction of such
courts in any such suit, action or proceeding.

 

Section 21. Integration; Effectiveness.

 

This Note constitutes the entire contract between the parties with respect to
the subject matter hereof and supersede all previous agreements and
understandings, oral or written, with respect thereto. Delivery of an executed
signature page to this Note by facsimile or in electronic (i.e., “pdf” or “tif”)
format shall be effective as delivery of a manually executed counterpart of this
Note.

 

Section 22. Electronic Execution.

 

The words “execution,” “signed,” “signature,” and words of similar import in the
Note shall be deemed to include electronic or digital signatures or the keeping
of records in electronic form, each of which shall be of the same effect,
validity, and enforceability as manually executed signatures or a paper-based
recordkeeping system, as the case may be, to the extent and as provided for
under applicable law, including the Electronic Signatures in Global and National
Commerce Act of 2000 (15 U.S.C. §§ 7001-7006), the Electronic Signatures and
Records Act of 1999 (N.Y. State Tech. §§ 301-309), or any other similar state
laws based on the Uniform Electronic Transactions Act.

 

Section 23. Enforcement Fees.

 

The Company agrees to pay all costs and expenses of the Holder incurred as a
result of enforcement of this Note and the collection of any amounts owed to the
Holder hereunder (whether in cash, Common Stock or otherwise), including,
without limitation, reasonable attorneys’ fees and expenses.

 

Section 24. Termination.

 

Upon repayment in full of the Principal Amount and all other monetary
obligations under the Notes (other than any contingent indemnification
obligations), whether in cash or in Common Stock pursuant to Section 10(D), this
Note shall terminate. Upon its termination, the Holder shall deliver this Note
to the Company for cancellation.

 

* * *

 

- 35 -

 

 

CONVERSION NOTICE

 

Tellurian Inc.

 

Senior Unsecured Note due 2021

 

Subject to the terms of this Note, by executing and delivering this Conversion
Notice, the undersigned Holder of this Note directs the Company to convert the
following Principal Amount of this Note: $ ,000 in accordance with the following
details.

 

Shares of Common Stock to be delivered:

 

       
Accrued Default Interest amount:                 DTC Participant Number:        
        DTC Participant Name:                 DTC Participant Phone Number:    
            DTC Participant Contact Email:            

 

Date:         (Legal Name of Holder)

 

  By:       Name:     Title:

  

 

 

 

 

Exhibit B 

 

Form of Warrant

 

[see attached]

 

 

 

 

 

Exhibit B

 

FORM OF WARRANT

 

Tellurian Inc.

 

Warrant To Purchase Common Stock

 

Warrant No.: ________

Number of Shares of Common Stock: 20,000,000

Date of Issuance: April [●], 2020 (“Issuance Date”)

 

Tellurian Inc., a corporation organized under the laws of Delaware (the
“Company”), hereby certifies that, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, High Trail Investments
SA LLC, the registered holder hereof or its permitted and registered assigns
(the “Holder”), is entitled, subject to the terms, conditions and adjustments
set forth below, to purchase from the Company, at the Exercise Price (as defined
below) then in effect, at any time or times on or after the date that is six
months following the Issuance Date (the “Initial Exercisability Date”), but not
after 11:59 p.m., New York time, on the Expiration Date (as defined below),
twenty million (20,000,000) duly authorized, validly issued, fully paid and
non-assessable shares of Common Stock (as defined below), subject to adjustment
as provided herein (the “Warrant Shares”). Except as otherwise defined herein,
capitalized terms in this Warrant to Purchase Common Stock (including any
Warrants to Purchase Common Stock issued in exchange, transfer or replacement
hereof, this “Warrant”), shall have the meanings set forth in Section 20. This
Warrant is one of the Warrants to Purchase Common Stock (the “Warrants”) issued
pursuant to (i) that certain Securities Purchase Agreement (the “Securities
Purchase Agreement”), dated as of April [●], 2020 (the “Subscription Date”), by
and between the Company and the Holder, (ii) the Company’s Registration
Statement on Form S-3ASR (File number 333-235793) (the “Registration Statement”)
and (iii) the Company’s prospectus supplement dated as of April [●], 2020.

 

 

 

 

 

1.             EXERCISE OF WARRANT.

 

(a)        Mechanics of Exercise. Subject to the terms and conditions hereof
(including, without limitation, the limitations set forth in Section 1(f)), this
Warrant may be exercised by the Holder on any Business Day and at any time or
times on or after the Initial Exercisability Date, in whole or in part in
increments of 25,000 Warrant Shares, by delivery (whether via electronic mail or
otherwise in accordance with Section 8) of a duly completed and executed written
notice, in the form attached hereto as Exhibit A (the “Exercise Notice”), of the
Holder’s election to exercise this Warrant. Within two (2) Trading Days
following the delivery of the Exercise Notice, the Holder shall make payment to
the Company of an amount equal to the Exercise Price in effect on the date of
such exercise multiplied by the number of Warrant Shares as to which this
Warrant is being exercised (the “Aggregate Exercise Price”) in cash by wire
transfer of immediately available funds or, if the provisions of Section 1(d)
are applicable, by notifying the Company that this Warrant is being exercised
pursuant to a Cashless Exercise (as defined in Section 1(d)). The Holder shall
not be required to deliver the original Warrant in order to effect an exercise
hereunder, nor shall any ink-original signature or medallion guarantee (or other
type of guarantee or notarization) with respect to any Exercise Notice be
required. Execution and delivery of the Exercise Notice with respect to less
than all of the Warrant Shares shall have the same effect as cancellation of the
original Warrant and issuance of a new Warrant evidencing the right to purchase
the remaining number of Warrant Shares and the Holder shall not be required to
physically surrender this Warrant to the Company until the Holder has purchased
all of the Warrant Shares available hereunder and this Warrant has been
exercised in full, in which case, the Holder shall surrender this Warrant to the
Company for cancellation within three (3) Trading Days of the date on which the
final Exercise Notice is delivered to the Company. On or before the first (1st)
Trading Day following the date on which the Holder has delivered the applicable
Exercise Notice, the Company shall transmit by electronic mail a duly executed
and completed acknowledgment of confirmation of receipt of the Exercise Notice,
in the form attached to the Exercise Notice, to the Holder and the Company’s
transfer agent (the “Transfer Agent”). So long as the Holder delivers the
Aggregate Exercise Price (or notice of a Cashless Exercise, if applicable) on or
prior to the first (1st) Trading Day following the date on which the Exercise
Notice has been delivered to the Company, then on or prior to the earlier of (i)
the second (2nd) Trading Day and (ii) the number of Trading Days comprising the
Standard Settlement Period, in each case following the date on which the
Exercise Notice has been delivered to the Company, or, if the Holder does not
deliver the Aggregate Exercise Price (or notice of a Cashless Exercise, if
applicable) on or prior to the first (1st) Trading Day following the date on
which the Exercise Notice has been delivered to the Company, then on or prior to
the first (1st) Trading Day following the date on which the Aggregate Exercise
Price (or notice of a Cashless Exercise, if applicable) is delivered (such
earlier date, or if later, the earliest day on which the Company is required to
deliver Warrant Shares pursuant to this Section 1(a) (the “Share Delivery
Date”), the Company shall (X) provided that the Transfer Agent is participating
in The Depository Trust Company (“DTC”) Fast Automated Securities Transfer
Program (“FAST”), credit such aggregate number of Warrant Shares to which the
Holder is entitled pursuant to such exercise to the Holder’s or its designee’s
balance account with DTC through its Deposit / Withdrawal At Custodian system,
or (Y) if the Transfer Agent is not participating in FAST, issue and dispatch by
overnight courier to the address as specified in the Exercise Notice, a
certificate, registered in the name of the Holder or its designee, for the
number of Warrant Shares to which the Holder is entitled pursuant to such
exercise. The Company shall be responsible for all fees and expenses of the
Transfer Agent and all fees and expenses with respect to the issuance of Warrant
Shares via DTC, if any, including without limitation for same day processing.
Upon delivery of the Aggregate Exercise Price (or notice of Cashless Exercise,
as applicable), the Holder shall be deemed for all corporate purposes to have
become the holder of record and beneficial owner of the Warrant Shares with
respect to which this Warrant has been exercised on the date of such delivery,
irrespective of the date such Warrant Shares are credited to the Holder’s DTC
account or the date of delivery of the certificates evidencing such Warrant
Shares, as the case may be. If this Warrant is physically delivered to the
Company in connection with any exercise pursuant to this Section 1(a) and the
number of Warrant Shares represented by this Warrant submitted for exercise is
greater than the number of Warrant Shares being acquired upon an exercise, then
the Company shall as soon as practicable and in no event later than three (3)
Trading Days after any exercise and at its own expense, issue and deliver to the
Holder (or its designee) a new Warrant (in accordance with Section 7(d))
representing the right to purchase the number of Warrant Shares issuable
immediately prior to such exercise under this Warrant, less the number of
Warrant Shares with respect to which this Warrant is exercised. No fractional
Warrant Shares are to be issued upon the exercise of this Warrant, but rather,
the number of Warrant Shares to be issued shall be rounded to the nearest whole
number. The Company shall pay any and all transfer, stamp, issuance and similar
taxes, costs and expenses (including, without limitation, fees and expenses of
the Transfer Agent) which may be payable with respect to the issuance and
delivery of Warrant Shares upon exercise of this Warrant; provided, that the
Company shall not be required to pay any tax or governmental charge that may be
imposed with respect to any applicable withholding or the issuance or delivery
of the Warrant Shares to any Person other than the Holder, and no such issuance
or delivery shall be made unless and until the Person requesting such issuance
has paid to the Company the amount of any such tax, or has established to the
satisfaction of the Company that such tax has been paid. The Company’s
obligations to issue and deliver Warrant Shares in accordance with the terms and
subject to the conditions hereof are absolute and unconditional, irrespective of
any action or inaction by the Holder to enforce the same, any waiver or consent
with respect to any provision hereof (except for consents and waivers provided
pursuant to Section 9), the recovery of any judgment against any Person or any
action to enforce the same, or any setoff, counterclaim, recoupment, limitation
or termination; provided, however, that the Company shall not be required to
deliver Warrant Shares with respect to an exercise prior to the Holder’s
delivery of the Aggregate Exercise Price (or notice of a Cashless Exercise, if
applicable) with respect to such exercise.

 

 

- 2 -

 

 

(b)       Exercise Price. For purposes of this Warrant, “Exercise Price” means
$1.542 per share, subject to adjustment as provided herein.

 

(c)        Company’s Failure to Timely Deliver Securities. If either (I) the
Company shall fail for any reason or for no reason on or prior to the applicable
Share Delivery Date, if (x) the Transfer Agent is not participating in FAST, to
issue to the Holder a certificate for the number of shares of Common Stock to
which the Holder is entitled and register such Common Stock on the Company’s
share register or (y) the Transfer Agent is participating in FAST, to credit the
Holder’s balance account with DTC such number of shares of Common Stock to which
the Holder is entitled upon the Holder’s exercise of this Warrant or (II) a
registration statement (which may be the Registration Statement) covering the
issuance or resale of the Warrant Shares that are the subject of the Exercise
Notice (the “Exercise Notice Warrant Shares”) is not available for the issuance
or resale, as applicable, of such Exercise Notice Warrant Shares and (x) the
Company fails to promptly, but in no event later than two (2) Business Days
after such registration statement becomes unavailable, to so notify the Holder
and (y) the Company is unable to deliver the Exercise Notice Warrant Shares
electronically without any restrictive legend by crediting such aggregate number
of Exercise Notice Warrant Shares to the Holder’s or its designee’s balance
account with DTC through its Deposit / Withdrawal At Custodian system (the event
described in the immediately foregoing clause (II) is hereinafter referred as a
“Notice Failure” (provided that no Notice Failure shall be deemed to have
occurred if the Exercise Notice Warrant Shares are freely tradeable upon
issuance to the Holder notwithstanding the unavailability of a registration
statement and such shares do not bear any restrictive legend) and together with
the event described in clause (I) above, an “Exercise Failure”), then, in
addition to all other remedies available to the Holder, if on or prior to the
applicable Share Delivery Date either (I) (x) if the Transfer Agent is not
participating in FAST and the Company shall have failed to issue and deliver a
certificate to the Holder and register such shares of Common Stock on the
Company’s share register or, (y) if the Transfer Agent is participating in FAST
and the Company shall have failed to credit the Holder’s balance account with
DTC the number of shares of Common Stock to which the Holder is entitled upon
the Holder’s exercise hereunder or pursuant to the Company’s obligation pursuant
to clause (ii) below, or (II) if a Notice Failure occurs, and if after such date
the Holder is required by its broker to purchase (in an open market transaction
or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of
Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant
Shares issuable hereunder pursuant to such exercise and which the Holder
anticipated receiving upon such exercise (a “Buy-In”), then the Company shall,
within five (5) Trading Days after the Holder’s request, (A) pay in cash to the
Holder the amount, if any, by which (x) the Holder’s total purchase price
(including brokerage commissions, if any) for the shares of Common Stock so
purchased exceeds (y) the amount obtained by multiplying (1) the number of
Warrant Shares that the Company was required to deliver to the Holder in
connection with the exercise at issue multiplied by (2) the price at which the
sell order giving rise to such purchase obligation was executed, and (B) at the
option of the Holder, either reinstate the portion of the Warrant and equivalent
number of Warrant Shares for which such exercise was not honored (in which case
such exercise shall be deemed rescinded) or deliver to the Holder the number of
shares of Common Stock that would have been issued had the Company timely
complied with its exercise and delivery obligations hereunder. For example, if
the Holder purchases Common Stock having a total purchase price of $11,000 to
cover a Buy-In with respect to an attempted exercise of shares of Common Stock
with an aggregate sale price giving rise to such purchase obligation of $10,000,
under clause (A) of the immediately preceding sentence the Company shall be
required to pay the Holder $1,000. The Holder shall provide the Company written
notice indicating the amounts payable to the Holder in respect of the Buy-In
and, upon request of the Company, evidence of the amount of such loss. Nothing
herein shall limit the Holder’s right to pursue any other remedies available to
it hereunder, at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief with respect to the Company’s
failure to timely deliver shares of Common Stock upon exercise of this Warrant
as required pursuant to the terms hereof. The Company’s current transfer agent
participates in FAST. In the event that the Company changes transfer agents
while this Warrant is outstanding, the Company shall use commercially reasonable
efforts to select a transfer agent that participates in FAST. While this Warrant
is outstanding, the Company shall request its transfer agent to participate in
FAST with respect to this Warrant. In addition to the foregoing rights, (i) if
the Company fails to deliver the applicable number of Warrant Shares upon an
exercise pursuant to Section 1 by the applicable Share Delivery Date, then the
Holder shall have the right to rescind such exercise in whole or in part and
retain and/or have the Company return, as the case may be, any portion of this
Warrant that has not been exercised pursuant to such Exercise Notice; provided
that the rescission of an exercise shall not affect the Company’s obligation to
make any payments that have accrued prior to the date of such notice pursuant to
this Section 1(c) or otherwise, and (ii) if a registration statement (which may
be the Registration Statement) covering the issuance or resale of the Warrant
Shares that are subject to an Exercise Notice is not available for the issuance
or resale, as applicable, of such Exercise Notice Warrant Shares and the Holder
has submitted an Exercise Notice prior to receiving notice of the
non-availability of such registration statement and the Company has not already
delivered the Warrant Shares underlying such Exercise Notice electronically
without any restrictive legend by crediting such aggregate number of Warrant
Shares to which the Holder is entitled pursuant to such exercise to the Holder’s
or its designee’s balance account with DTC through its Deposit / Withdrawal At
Custodian system, the Holder shall have the option, by delivery of notice to the
Company, to (x) rescind such Exercise Notice in whole or in part and retain or
have returned, as the case may be, any portion of this Warrant that has not been
exercised pursuant to such Exercise Notice; provided that the rescission of an
Exercise Notice shall not affect the Company’s obligation to make any payments
that have accrued prior to the date of such notice pursuant to this Section 1(c)
or otherwise, and/or (y) subject to the provisions of Section 1(d), switch some
or all of such Exercise Notice from a cash exercise to a Cashless Exercise. In
addition to the foregoing, but subject in each instance to the limitations set
forth in Section ‎1‎(i) below, if the Company fails for any reason to deliver to
the Holder the Warrant Shares subject to an Exercise Notice by the third Trading
Day following the Share Delivery Date, the Company shall pay to the Holder, in
cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant
Shares subject to such exercise (based on the Weighted Average Price of the
Common Stock on the date of the applicable Exercise Notice), $10 per Trading Day
(increasing to $20 per Trading Day on the fifth Trading Day after such
liquidated damages begin to accrue) for each Trading Day after the Share
Delivery Date until such Warrant Shares are delivered or Holder rescinds such
exercise.

 

 

- 3 -

 

 

(d)       Cashless Exercise. Notwithstanding anything contained herein to the
contrary, if a registration statement (which may be the Registration Statement)
covering the issuance or resale of the applicable Exercise Notice Warrant Shares
is not available for the issuance or resale, as applicable, of such Exercise
Notice Warrant Shares, then the Holder may, in its sole discretion, exercise
this Warrant in whole or in part (in increments of 25,000 Warrant Shares in the
case of a partial exercise of this Warrant) and, in lieu of making the cash
payment otherwise contemplated to be made to the Company upon such exercise in
payment of the Aggregate Exercise Price, elect instead to receive upon such
exercise the “Net Number” of shares of Common Stock determined according to the
following formula (a “Cashless Exercise”):

 

Net Number = (A x B) - (A x C)

B

 

For purposes of the foregoing formula:

 

A= the total number of shares with respect to which this Warrant is then being
exercised.

 

B= as applicable: (i) the Closing Sale Price of the Common Stock on the Trading
Day immediately preceding the date of the applicable Exercise Notice if such
Exercise Notice is (1) both executed and delivered pursuant to Section 1(a)
hereof on a day that is not a Trading Day, (2) both executed and delivered
pursuant to Section 1(a) hereof on a Trading Day prior to the opening of
“regular trading hours” (as defined in Rule 600(b)(68) of Regulation NMS
promulgated under the federal securities laws) on such Trading Day, or (3) both
executed and delivered pursuant to Section 1(a) hereof during “regular trading
hours” on a Trading Day, or (ii) the Closing Sale Price of the Common Stock on
the date of the applicable Exercise Notice if the date of such Exercise Notice
is a Trading Day and such Exercise Notice is both executed and delivered
pursuant to Section 1(a) hereof after the close of “regular trading hours” on
such Trading Day.

 

C= the Exercise Price then in effect for the applicable Warrant Shares at the
time of such exercise.

 

 

- 4 -

 

 

If Warrant Shares are issued in such a cashless exercise, the Company
acknowledges and agrees that in accordance with Section 3(a)(9) of the
Securities Act of 1933, as amended, the Warrant Shares shall take on the
registered characteristics of the Warrants being exercised, and the holding
period of the Warrants being exercised may be tacked on to the holding period of
the Warrant Shares. The Company agrees not to take any position contrary to this
Section 1(d).  Without limiting the rights of a Holder to receive Warrant Shares
on a “cashless exercise,” and to receive the cash payments contemplated pursuant
to Sections 1(c) and 4(b), in no event will the Company be required to net cash
settle a Warrant exercise. Any Cashless Exercise of this Warrant shall have the
effect of lowering the outstanding number of Warrant Shares purchasable
hereunder by an amount equal to the number of Warrant Shares that would be
issuable upon exercise of this Warrant in accordance with the terms of this
Warrant if such exercise were by means of a cash exercise rather than a Cashless
Exercise and not the number of Warrant Shares actually received by the Holder.

 

(e)       Disputes. In the case of a dispute as to the determination of the
Exercise Price or the arithmetic calculation of the Warrant Shares, the Company
shall promptly issue to the Holder the number of Warrant Shares that are not
disputed and resolve such dispute in accordance with Section 11.

 

 

- 5 -

 

 

(f)        Beneficial Ownership. Notwithstanding anything to the contrary
contained herein, the Company shall not effect the exercise of any portion of
this Warrant, and the Holder shall not have the right to exercise any portion of
this Warrant, pursuant to the terms and conditions of this Warrant and any such
exercise shall be null and void and treated as if never made, to the extent that
after giving effect to such exercise, the Holder together with the other
Attribution Parties collectively would beneficially own in the aggregate in
excess of 4.99% (the “Maximum Percentage”) of the number of shares of Common
Stock outstanding immediately after giving effect to such exercise. For purposes
of the foregoing sentence, the aggregate number of shares of Common Stock
beneficially owned by the Holder and the other Attribution Parties shall include
the number of shares of Common Stock held by the Holder and all other
Attribution Parties plus the number of shares of Common Stock issuable upon
exercise of this Warrant with respect to which the determination of such
sentence is being made, but shall exclude the number of shares of Common Stock
which would be issuable upon (A) exercise of the remaining, unexercised portion
of this Warrant beneficially owned by the Holder or any of the other Attribution
Parties and (B) exercise or conversion of the unexercised or unconverted portion
of any other securities of the Company (including, without limitation, any
convertible notes or convertible preferred stock or warrants, including the
other Warrants) beneficially owned by the Holder or any other Attribution Party
subject to a limitation on conversion or exercise analogous to the limitation
contained in this Section 1(f). For purposes of this Section 1(f), beneficial
ownership shall be calculated in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended (the “1934 Act”). For purposes of this Warrant,
in determining the number of outstanding shares of Common Stock the Holder may
acquire upon the exercise of this Warrant without exceeding the Maximum
Percentage, the Holder may rely on the number of outstanding shares of Common
Stock as reflected in (x) the Company’s most recent Annual Report on Form 10-K,
Quarterly Report on Form 10-Q and Current Reports on Form 8-K or other public
filing with the Securities and Exchange Commission (the “SEC”), as the case may
be, (y) a more recent public announcement by the Company or (z) any other
written notice by the Company or the Transfer Agent setting forth the number of
shares of Common Stock outstanding (the “Reported Outstanding Share Number”). If
the Company receives an Exercise Notice from the Holder at a time when the
actual number of outstanding shares of Common Stock is less than the Reported
Outstanding Share Number, the Company shall (i) notify the Holder in writing of
the number of shares of Common Stock then outstanding and, to the extent that
such Exercise Notice would otherwise cause the Holder’s beneficial ownership, as
determined pursuant to this Section 1(f), to exceed the Maximum Percentage, the
Holder must notify the Company of a reduced number of Warrant Shares to be
purchased pursuant to such Exercise Notice (the number of shares by which such
purchase is reduced, the “Reduction Shares”) and (ii) as soon as reasonably
practicable, the Company shall return to the Holder the Aggregate Exercise Price
(or applicable portion thereof) paid by the Holder for the Reduction Shares. For
any reason at any time, upon the written or oral request of the Holder, the
Company shall within one (1) Business Day confirm orally and in writing or by
electronic mail to the Holder the number of shares of Common Stock then
outstanding. In any case, the number of outstanding shares of Common Stock shall
be determined after giving effect to the conversion or exercise of securities of
the Company, including this Warrant, by the Holder and any other Attribution
Party since the date as of which the Reported Outstanding Share Number was
reported. In the event that the issuance of Common Stock to the Holder upon
exercise of this Warrant results in the Holder and the other Attribution Parties
being deemed to beneficially own, in the aggregate, more than the Maximum
Percentage of the number of outstanding shares of Common Stock (as determined
under Section 13(d) of the 1934 Act), the number of shares so issued by which
the Holder’s and the other Attribution Parties’ aggregate beneficial ownership
exceeds the Maximum Percentage (the “Excess Shares”) shall be deemed null and
void and shall be cancelled ab initio, and the Holder shall not have the power
to vote or to transfer the Excess Shares. As soon as reasonably practicable
after the issuance of the Excess Shares has been deemed null and void, the
Company shall return to the Holder the Aggregate Exercise Price (or applicable
portion thereof) paid by the Holder for the Excess Shares. Upon delivery of a
written notice to the Company, the Holder may from time to time increase or
decrease the Maximum Percentage to any other percentage not in excess of 4.99%
as specified in such notice; provided that (i) any such increase in the Maximum
Percentage will not be effective until the sixty-first (61st) day after such
notice is delivered to the Company and (ii) any such increase or decrease will
apply only to the Holder and the other Attribution Parties and not to any other
holder of Warrants that is not an Attribution Party of the Holder. For purposes
of clarity, the shares of Common Stock issuable pursuant to the terms of this
Warrant in excess of the Maximum Percentage shall not be deemed to be
beneficially owned by the Holder for any purpose including for purposes of
Section 13(d) or Rule 16a-1(a)(1) of the 1934 Act. No prior inability to
exercise this Warrant pursuant to this paragraph shall have any effect on the
applicability of the provisions of this paragraph with respect to any subsequent
determination of exercisability. The provisions of this paragraph shall be
construed and implemented in a manner otherwise than in strict conformity with
the terms of this Section 1(f) to the extent necessary to correct this paragraph
or any portion of this paragraph which may be defective or inconsistent with the
intended beneficial ownership limitation contained in this Section 1(f) or to
make changes or supplements necessary or desirable to properly give effect to
such limitation. The limitation contained in this paragraph may not be waived
and shall apply to a successor holder of this Warrant. The Holder hereby
acknowledges and agrees that the Company shall be entitled to rely on the
representations and other information set forth in any Exercise Notice and shall
not be required to independently verify whether any exercise of this Warrant
would cause the Holder (together with the other Attribution Parties) to
collectively beneficially own in excess of the Maximum Percentage of the number
of shares of Common Stock outstanding after giving effect to such exercise or
otherwise trigger the provisions of this Section 1(f).

 

 

- 6 -

 

 

(g)       Required Reserve Amount.  So long as this Warrant remains outstanding,
the Company shall at all times keep reserved for issuance under this Warrant a
number of shares of Common Stock at least equal to 100% of the maximum number of
shares of Common Stock as shall be necessary to satisfy the Company’s obligation
to issue shares of Common Stock under the Warrants then outstanding (without
regard to any limitations on exercise) (the “Required Reserve Amount”); provided
that at no time shall the number of shares of Common Stock reserved pursuant to
this Section 1(g) be reduced other than in connection with any exercise of
Warrants or such other event covered by Section 2(c) below.  The Required
Reserve Amount (including, without limitation, each increase in the number of
shares so reserved) shall be allocated pro rata among the holders of the
Warrants based on the number of shares of Common Stock issuable upon exercise of
Warrants held by each holder thereof on the Issuance Date (without regard to any
limitations on exercise) (the “Authorized Share Allocation”). In the event that
a holder shall sell or otherwise transfer any of such holder’s Warrants, each
transferee shall be allocated a pro rata portion of such holder’s Authorized
Share Allocation. Any shares of Common Stock reserved and allocated to any
Person which ceases to hold any Warrants shall be allocated to the remaining
holders of Warrants, pro rata based on the number of shares of Common Stock
issuable upon exercise of the Warrants then held by such holders thereof
(without regard to any limitations on exercise).

 

(h)       Insufficient Authorized Shares. If at any time while this Warrant
remains outstanding the Company does not have a sufficient number of authorized
and unreserved shares of Common Stock to satisfy its obligation to reserve for
issuance the Required Reserve Amount (an “Authorized Share Failure”), then the
Company shall promptly take all action reasonably necessary to increase the
Company’s authorized shares of Common Stock to an amount sufficient to allow the
Company to reserve the Required Reserve Amount for this Warrant then
outstanding. Without limiting the generality of the foregoing sentence, as soon
as practicable after the date of the occurrence of an Authorized Share Failure,
but in no event later than ninety (90) days after the occurrence of such
Authorized Share Failure, the Company shall hold a meeting of its stockholders
for the approval of an increase in the number of authorized shares of Common
Stock. In connection with such meeting, the Company shall provide each
stockholder with a proxy statement and shall use its commercially reasonable
efforts to solicit its stockholders’ approval of such increase in authorized
shares of Common Stock and the management of the Company shall recommend to the
board of directors that it recommend to the stockholders that they approve such
proposal. Notwithstanding the foregoing, with respect to any such Authorized
Share Failure, if the Company is able to obtain the written consent of a
majority of the shares of its issued and outstanding shares of Common Stock to
approve the increase in the number of authorized shares of Common Stock, the
Company may satisfy this obligation by obtaining such consent and submitting for
filing with the SEC an Information Statement on Schedule 14C. In addition to the
foregoing, in the event of any Authorized Share Failure that results in the
failure of the Company to deliver any shares of Common Stock that would have
otherwise been deliverable pursuant to an Exercise Notice (such shares the
“Authorized Shares Failure Shares”), (1) the Company will promptly pay to the
Holder, as liquidated damages and not as a penalty, cash in an amount equal (i)
to the product of (x) the number of such Authorized Shares Failure Shares; and
(y) the Daily VWAP per share of Common Stock on the date the Holder delivered
the applicable Exercise Notice hereunder (or, if such date is not a VWAP Trading
Day, the immediately preceding VWAP Trading Day), minus (ii) if such exercise is
not a cashless exercise the Aggregate Exercise Price applicable to such
Authorized Shares Failure Shares, to the extent not previously paid; and (2) to
the extent the Holder purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in settlement of a sale by the Holder of such
Authorized Shares Failure Shares, the Company will reimburse the Holder for (x)
any brokerage commissions and other out-of-pocket expenses, if any, of the
Holder incurred in connection with such purchases and (y) the excess, if any, of
(A) the aggregate purchase price of such purchases over (B) an amount equal to
(i) the product of (I) the number of such Authorized Shares Failure Shares
purchased by the Holder; and (II) the Daily VWAP per share of Common Stock on
the date the Holder delivered the applicable Exercise Notice hereunder (or, if
such date is not a VWAP Trading Day, the immediately preceding VWAP Trading
Day), minus (ii) if such exercise is not a cashless exercise, the Aggregate
Exercise Price applicable to such Authorized Shares Failure Shares, to the
extent not previously paid.

 

 

- 7 -

 

 

(i)         Liquidated Damages Limitations. Notwithstanding anything to the
contrary herein, (i) with respect to any particular Exercise Notice, the Holder
shall not be entitled to recover any liquidated damages from the Company under
Section 1(c) above in connection with any failure to deliver any Exercise Notice
Warrant Shares to the Holder subject to such Exercise Notice until the aggregate
liquidated damages for which the Company would otherwise be liable in respect of
all failures to deliver Exercise Notice Warrant Shares hereunder (in the absence
of this limitation) exceeds $25,000 (the “LD Threshold”), after which the Holder
shall be paid the aggregate amount of all such liquidated damages in respect of
all such failures to deliver Exercise Notice Warrant Shares hereunder from the
first dollar thereof (including the amount of the LD Threshold), and (ii) the
maximum aggregate liquidated damages (cumulatively, inclusive of any and all
liquidated damages under Section 1(c)) for which the Company will be liable will
in no event exceed the LD Cap.

 

(j)         Taxes. For income tax purposes, the Holder agrees that the Company
may withhold from any amounts payable to the Holder or its permitted assignee or
permitted transferee any taxes to be withheld from such amounts; provided that
the Company shall reasonably cooperate with the Holder to reduce or eliminate
the amounts required to be withheld.

 

2.             ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The
Exercise Price and the number of Warrant Shares shall be adjusted from time to
time as follows:

 

(a)        Intentionally omitted.

 

(b)       Voluntary Adjustment by Company. The Company may at any time during
the term of this Warrant reduce the then-current Exercise Price to any amount
and for any period of time deemed appropriate by the Board of Directors of the
Company.

 

(c)        Adjustment Upon Subdivision or Combination of Common Stock. If the
Company at any time on or after the Subscription Date subdivides (by any stock
split, stock dividend, recapitalization or otherwise) one or more classes of its
outstanding shares of Common Stock into a greater number of shares, the Exercise
Price in effect immediately prior to such subdivision will be proportionately
reduced and the number of Warrant Shares will be proportionately increased. If
the Company at any time on or after the Subscription Date combines (by
combination, reverse stock split or otherwise) one or more classes of its
outstanding shares of Common Stock into a smaller number of shares, the Exercise
Price in effect immediately prior to such combination will be proportionately
increased and the number of Warrant Shares will be proportionately decreased.
Any adjustment under this Section 2(c) shall become effective at the close of
business on the date the subdivision or combination becomes effective.

 

 

- 8 -

 

 

3.            RIGHTS UPON DISTRIBUTION OF ASSETS. In addition to any adjustments
pursuant to Section 2 above, if, on or after the Subscription Date and on or
prior to the Expiration Date, the Company shall declare or make any dividend or
other distribution of its assets (or rights to acquire its assets) to holders of
shares of Common Stock, by way of return of capital or otherwise (including,
without limitation, any distribution of cash, stock or other securities,
property, options, evidence of indebtedness or any other assets by way of a
dividend, spin-off, reclassification, corporate rearrangement, scheme of
arrangement or other similar transaction) (a “Distribution”), at any time after
the issuance of this Warrant, then, in each such case, the Holder shall be
entitled to participate in such Distribution to the same extent that the Holder
would have participated therein if the Holder had held the number of shares of
Common Stock acquirable upon complete exercise of this Warrant (without regard
to any limitations or restrictions on exercise of this Warrant, including
without limitation, the Maximum Percentage) immediately before the date on which
a record is taken for such Distribution, or, if no such record is taken, the
date as of which the record holders of shares of Common Stock are to be
determined for the participation in such Distribution (provided, however, that
to the extent that the Holder's right to participate in any such Distribution
would result in the Holder and the other Attribution Parties exceeding the
Maximum Percentage, then the Holder shall not be entitled to participate in such
Distribution to such extent (and shall not be entitled to beneficial ownership
of such shares of Common Stock as a result of such Distribution (and beneficial
ownership) to such extent) and the portion of such Distribution shall be held in
abeyance for the benefit of the Holder until such time or times as its right
thereto would not result in the Holder and the other Attribution Parties
exceeding the Maximum Percentage, at which time or times the Holder shall be
granted such Distribution (and any Distributions declared or made on such
initial Distribution or on any subsequent Distribution held similarly in
abeyance) to the same extent as if there had been no such limitation).

 

4.             PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.

 

(a)        Purchase Rights. In addition to any adjustments pursuant to Section 2
above, if at any time on or after the Subscription Date and on or prior to the
Expiration Date the Company grants, issues or sells any Options, Convertible
Securities or rights to purchase stock, warrants, securities or other property
pro rata to the record holders of any class of Common Stock (the “Purchase
Rights”), then the Holder will be entitled to acquire, upon the terms applicable
to such Purchase Rights, the aggregate Purchase Rights which the Holder could
have acquired if the Holder had held the number of shares of Common Stock
acquirable upon complete exercise of this Warrant (without regard to any
limitations or restrictions on exercise of this Warrant, including without
limitation, the Maximum Percentage) immediately before the date on which a
record is taken for the grant, issuance or sale of such Purchase Rights, or, if
no such record is taken, the date as of which the record holders of Common Stock
are to be determined for the grant, issuance or sale of such Purchase Rights
(provided, however, that to the extent that the Holder's right to participate in
any such Purchase Right would result in the Holder and the other Attribution
Parties exceeding the Maximum Percentage, then the Holder shall not be entitled
to participate in such Purchase Right to such extent (and shall not be entitled
to beneficial ownership of such Common Stock as a result of such Purchase Right
(and beneficial ownership) to such extent) and such Purchase Right to such
extent shall be held in abeyance for the benefit of the Holder until such time
or times as its right thereto would not result in the Holder and the other
Attribution Parties exceeding the Maximum Percentage, at which time or times the
Holder shall be granted such right (and any Purchase Right granted, issued or
sold on such initial Purchase Right or on any subsequent Purchase Right to be
held similarly in abeyance) to the same extent as if there had been no such
limitation.

 

 

- 9 -

 

 

(b)       Fundamental Transaction. In the event that the Company enters into a
Fundamental Transaction, the Company shall deliver or cause to be delivered to
the Holder in exchange for this Warrant a security of the Successor Entity
evidenced by a written instrument substantially similar in form and substance to
this Warrant, including, without limitation, which is exercisable for a
corresponding number of shares of capital stock equivalent to the shares of
Common Stock acquirable and receivable upon exercise of this Warrant (without
regard to any limitations on the exercise of this Warrant) prior to such
Fundamental Transaction, and with an exercise price which applies the exercise
price hereunder to such shares of capital stock (but taking into account the
relative value of the shares of Common Stock pursuant to such Fundamental
Transaction and the value of such shares of capital stock, such adjustments to
the number of shares of capital stock and such exercise price being for the
purpose of protecting the economic value of this Warrant immediately prior to
the consummation of such Fundamental Transaction) (the “Successor Entity
Security”). Upon the consummation of each Fundamental Transaction, the Successor
Entity shall succeed to, and be substituted for the Company (so that from and
after the date of the applicable Fundamental Transaction, the provisions of this
Warrant and the other Transaction Documents referring to the “Company” shall
refer instead to the Successor Entity), and may exercise every right and power
of the Company and shall assume all of the obligations of the Company under this
Warrant with the same effect as if such Successor Entity had been named as the
Company herein. Upon consummation of each Fundamental Transaction, the Successor
Entity to deliver to the Holder confirmation that there shall be issued upon
exercise of this Warrant at any time after the consummation of the applicable
Fundamental Transaction, in lieu of the shares of Common Stock (or other
securities, cash, assets or other property (except such items still issuable
under Sections 3 and 4(a) above, which shall continue to be receivable
thereafter)) issuable upon the exercise of this Warrant prior to the applicable
Fundamental Transaction, such shares of common stock (or its equivalent) of the
Successor Entity (including its Parent Entity) that the Holder would have been
entitled to receive upon the happening of the applicable Fundamental Transaction
had this Warrant been exercised immediately prior to the applicable Fundamental
Transaction (without regard to any limitations on the exercise of this Warrant),
as adjusted in accordance with the provisions of this Warrant. Notwithstanding
the foregoing, and without limiting Section 1(f) hereof, the Holder may elect,
at its sole option, by delivery of written notice to the Company to waive this
Section 4(b) to permit the Fundamental Transaction without the assumption of
this Warrant. In addition to and not in substitution for any other rights
hereunder, prior to the consummation of each Fundamental Transaction pursuant to
which holders of shares of Common Stock are entitled to receive securities or
other assets with respect to or in exchange for shares of Common Stock (a
“Corporate Event”), the Company shall make appropriate provision to provide the
Holder with the right to receive upon an exercise of this Warrant at any time
after the consummation of the applicable Fundamental Transaction but prior to
the Expiration Date, in lieu of the shares of the Common Stock (or other
securities, cash, assets or other property (except such items still issuable
under Sections 3 and 4(a) above, which shall continue to be receivable
thereafter)) issuable upon the exercise of the Warrant prior to such Fundamental
Transaction, such shares of stock, securities, cash, assets or any other
property whatsoever (including warrants or other purchase or subscription
rights) (collectively, the “Corporate Event Consideration”) that the Holder
would have been entitled to receive upon the happening of the applicable
Fundamental Transaction had this Warrant been exercised immediately prior to the
applicable Fundamental Transaction (without regard to any limitations on the
exercise of this Warrant). The provision made pursuant to the preceding sentence
shall be in a form and substance reasonably satisfactory to the Holder. The
provisions of this Section 4(b) shall apply similarly and equally to successive
Fundamental Transactions and Corporate Events. Notwithstanding the foregoing, in
the event of a Change of Control, at the request of the Holder delivered before
the 30th day after public disclosure of the consummation of such Change of
Control by the Company pursuant to a Current Report on Form 8-K filed with the
SEC, the Company (or the Successor Entity) shall purchase this Warrant from the
Holder by paying to the Holder, within ten (10) Business Days after such request
(or, if later, on the effective date of the Change of Control), an amount equal
to the Black Scholes Value of the remaining unexercised portion of this Warrant
on the effective date of such Change of Control, payable in cash; provided,
however, that, if the Change of Control is not within the Company's control,
including not approved by the Company's Board of Directors, Holder shall only be
entitled to receive from the Company or any Successor Entity, as of the date of
consummation of such Change of Control, the same type or form of consideration
(and in the same proportion), at the Black Scholes Value of the unexercised
portion of this Warrant, that is being offered and paid to the holders of Common
Stock of the Company in connection with the Change of Control, whether that
consideration be in the form of cash, stock or any combination thereof, or
whether the holders of Common Stock are given the choice to receive from among
alternative forms of consideration in connection with the Change of Control;
provided, further, that if holder of Common Stock are not offered or paid any
consideration in such Change of Control, such holders of Common Stock will be
deemed to have received common stock of the Successor Entity (which entity may
be the Company following such Change of Control) in such Change of Control.

 

 

- 10 -

 

 

5.            NONCIRCUMVENTION. The Company will not, by amendment of its
Certificate of Incorporation or Bylaws, or through any reorganization, transfer
of assets, consolidation, merger, scheme of arrangement, dissolution, issuance
or sale of securities, or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, and will at all
times in good faith carry out all of the provisions of this Warrant. Without
limiting the generality of the foregoing, the Company (i) shall not increase the
par value of any shares of Common Stock receivable upon the exercise of this
Warrant above the Exercise Price then in effect, (ii) shall take all such
actions as may be necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable shares of Common Stock upon the
exercise of this Warrant, and (iii) shall, so long as any of the Warrants are
outstanding, take all action necessary to reserve and keep available out of its
authorized and unissued shares of Common Stock, solely for the purpose of
effecting the exercise of the Warrants, the number of shares of Common Stock as
shall from time to time be necessary to effect the exercise of the Warrants then
outstanding (without regard to any limitations on exercise).

 

6.             WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise
specifically provided herein, the Holder, solely in such Person’s capacity as a
holder of this Warrant, shall not be entitled to vote or receive dividends or be
deemed the holder of capital stock of the Company for any purpose, nor shall
anything contained in this Warrant be construed to confer upon the Holder,
solely in such Person’s capacity as the Holder of this Warrant, any of the
rights of a stockholder of the Company or any right to vote, give or withhold
consent to any corporate action (whether any reorganization, issue of stock,
reclassification of stock, consolidation, merger, conveyance or otherwise),
receive notice of meetings, receive dividends or subscription rights, or
otherwise, prior to the issuance to the Holder of the Warrant Shares which such
Person is then entitled to receive upon the due exercise of this Warrant. In
addition, nothing contained in this Warrant shall be construed as imposing any
liabilities on the Holder to purchase any securities (upon exercise of this
Warrant or otherwise) or as a stockholder of the Company, whether such
liabilities are asserted by the Company or by creditors of the Company.
Notwithstanding this Section 6, the Company shall provide the Holder with copies
of the same notices and other information given to the stockholders of the
Company generally, contemporaneously with the giving thereof to the
stockholders.

 

7.             REISSUANCE OF WARRANTS.

 

(a)        Transfer of Warrant. If this Warrant is to be transferred, the Holder
shall surrender this Warrant to the Company, together with funds sufficient to
pay any transfer taxes in connection with the making of such transfer, whereupon
such compliance the Company will forthwith issue and deliver upon the order of
the Holder a new Warrant (in accordance with Section 7(d)), registered as the
Holder may request, representing the right to purchase the number of Warrant
Shares being transferred by the Holder and, if less than the total number of
Warrant Shares then underlying this Warrant is being transferred, a new Warrant
(in accordance with Section 7(d)) to the Holder representing the right to
purchase the number of Warrant Shares not being transferred. The Company shall
not be obligated to pay any tax which may be payable with respect to any
transfer (or deemed transfer) arising in connection with the registration of any
certificates for Warrant Shares or Warrants in the name of any Person other than
the Holder.

 

(b)        Lost, Stolen or Mutilated Warrant. Upon receipt by the Company of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant, and, in the case of loss, theft or destruction,
of any indemnification undertaking by the Holder to the Company in customary
form (but without the obligation to post a bond) and, in the case of mutilation,
upon surrender and cancellation of this Warrant, the Company shall execute and
deliver to the Holder a new Warrant (in accordance with Section 7(d))
representing the right to purchase the Warrant Shares then underlying this
Warrant.

 

 

- 11 -

 

 

(c)        Exchangeable for Multiple Warrants. This Warrant is exchangeable,
upon the surrender hereof by the Holder at the principal office of the Company,
for a new Warrant or Warrants (in accordance with Section 7(d)) representing in
the aggregate the right to purchase the number of Warrant Shares then underlying
this Warrant, and each such new Warrant will represent the right to purchase
such portion of such Warrant Shares as is designated by the Holder at the time
of such surrender.

 

(d)        Issuance of New Warrants. Whenever the Company is required to issue a
new Warrant pursuant to the terms of this Warrant, such new Warrant (i) shall be
of like tenor with this Warrant, (ii) shall represent, as indicated on the face
of such new Warrant, the right to purchase the Warrant Shares then underlying
this Warrant (or in the case of a new Warrant being issued pursuant to Section
7(a) or Section 7(c), the Warrant Shares designated by the Holder which, when
added to the number of shares of Common Stock underlying the other new Warrants
issued in connection with such issuance, does not exceed the number of Warrant
Shares then underlying this Warrant), (iii) shall have an issuance date, as
indicated on the face of such new Warrant which is the same as the Issuance
Date, and (iv) shall have the same rights and conditions as this Warrant.

 

8.            NOTICES. Whenever notice is required to be given under this
Warrant, including, without limitation, an Exercise Notice, unless otherwise
provided herein, such notice shall be given in writing, (i) if delivered (a)
from within the domestic United States, by first-class registered or certified
airmail, or nationally recognized overnight express courier, postage prepaid, or
by electronic mail or (b) from outside the United States, by International
Federal Express, or by electronic mail, and (ii) will be deemed given (A) if
delivered by first-class registered or certified mail domestic, three (3)
Business Days after so mailed, (B) if delivered by nationally recognized
overnight carrier, one (1) Business Day after so mailed, (C) if delivered by
International Federal Express, two (2) Business Days after so mailed and (D) at
the time of transmission, if delivered by electronic mail to each of the email
addresses specified in this Section 8 prior to 5:00 p.m. (New York time) on a
Trading Day, and (E) the next Trading Day after the date of transmission, if
delivered by electronic mail to each of the email addresses specified in this
Section 8 on a day that is not a Trading Day or later than 5:00 p.m. (New York
time) on any Trading Day, and will be delivered and addressed as follows:

 

(i) if to the Company, to:

Tellurian Inc.
1201 Louisiana Street

Suite 3100

Houston, TX 77002
Attention: Legal

Email: legal.notices@tellurianinc.com

 

(ii) if to the Holder, at such address or other contact information delivered by
the Holder to Company or as is on the books and records of the Company (provided
that, with respect to the Holder, such notice may only be delivered via
electronic mail or facsimile),

 

With a copy (for informational purposes only) to:

 

Latham & Watkins LLP

12670 High Bluff Drive

San Diego, CA 92130

Telephone: (858) 509-8427

Attention: Michael E. Sullivan, Esq.

Email: michael.sullivan@lw.com

 

 

- 12 -

 

 

The Company shall provide the Holder with prompt written notice of all actions
taken pursuant to this Warrant (other than issuances of shares of Common Stock
upon exercise of this Warrant in accordance with the terms hereof), including in
reasonable detail a description of such action and the reason therefor. Without
limiting the generality of the foregoing, the Company will give written notice
to the Holder (i) promptly upon any adjustment of the Exercise Price, setting
forth in reasonable detail, and certifying, the calculation of such adjustment,
(ii) at least fifteen (15) days prior to the date on which the Company closes
its books or the applicable record date (A) with respect to any dividend or
distribution upon the shares of Common Stock, (B) with respect to any grants,
issuances or sales of any Options, Convertible Securities or rights to purchase
stock, warrants, securities or other property made pro rata to holders of shares
of Common Stock or (C) for determining rights to vote with respect to any
Fundamental Transaction, dissolution or liquidation and (iii) ten (10) Business
Days (or such shorter period as is reasonably practicable under the
circumstances if the Company does not have 10 Business Days’ prior notice) prior
to the consummation of any Fundamental Transaction; provided in each case that
such information shall be made known to the public prior to or in conjunction
with such notice being provided to the Holder, but only to the extent the
information in such notice constitutes material non-public information regarding
the Company or any of its subsidiaries.

 

9.             AMENDMENT AND WAIVER. Except as otherwise provided herein, this
Warrant may only be amended, modified or supplemented by an agreement in writing
signed by each party hereto. No waiver by the Company or the Holder of any of
the provisions hereof shall be effective unless explicitly set forth in writing
and signed by the party so waiving. No waiver by any party shall operate or be
construed as a waiver in respect of any failure, breach or default not expressly
identified by such written waiver, whether of a similar or different character,
and whether occurring before or after that waiver. No failure to exercise, or
delay in exercising, any rights, remedy, power or privilege arising from this
Warrant shall operate or be construed as a waiver thereof; nor shall any single
or partial exercise of any right, remedy, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege.

 

10.           GOVERNING LAW; JURISDICTION; JURY TRIAL. This Warrant shall be
governed by and construed and enforced in accordance with, and all questions
concerning the construction, validity, interpretation and performance of this
Warrant shall be governed by, the internal laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdictions) that would cause
the application of the laws of any jurisdictions other than the State of New
York. Each party hereto hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in The City of New York, Borough of
Manhattan, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that such party is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereto hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address set forth with
respect to such party in Section 8 above or such other address as such party
subsequently delivers to the other party and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. Nothing contained herein shall be deemed or
operate to preclude a party hereto from bringing suit or taking other legal
action against the other party hereto in any other jurisdiction to collect on
its obligations or to enforce a judgment or other court ruling in favor of such
party. If either party shall commence an action, suit or proceeding to enforce
any provisions of this Warrant, the prevailing party in such action, suit or
proceeding shall be reimbursed by the other party for their reasonable
attorneys’ fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding. EACH PARTY HERETO
HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A
JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH
OR ARISING OUT OF THIS WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

 

- 13 -

 

 

11.           DISPUTE RESOLUTION. In the case of a dispute as to the
determination of the Exercise Price or the arithmetic calculation of the Warrant
Shares, the Company shall submit the disputed determinations or arithmetic
calculations via electronic mail within two (2) Business Days of receipt of the
Exercise Notice or other event giving rise to such dispute, as the case may be,
to the Holder. If the Holder and the Company are unable to agree upon such
determination or calculation of the Exercise Price or the Warrant Shares within
three (3) Business Days of such disputed determination or arithmetic calculation
being submitted to the Holder, then the Company shall, within two (2) Business
Days submit via electronic mail (a) the disputed determination of the Exercise
Price to an independent, reputable investment bank selected by the Company and
approved by the Holder or (b) the disputed arithmetic calculation of the Warrant
Shares to the Company’s independent, outside accountant. The Company shall cause
at its expense the investment bank or the accountant, as the case may be, to
perform the determinations or calculations and notify the Company and the Holder
of the results no later than ten (10) Business Days from the time it receives
the disputed determinations or calculations. Such investment bank’s or
accountant’s determination or calculation, as the case may be, shall be binding
upon all parties absent demonstrable error.

 

12.           REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The
remedies provided in this Warrant shall be cumulative and in addition to all
other remedies available under this Warrant and any other Transaction Documents,
at law or in equity (including a decree of specific performance and/or other
injunctive relief), and nothing herein shall limit the rights of the Holder or
the Company to pursue actual damages for any failure by the other party to
comply with the terms of this Warrant. Each of the Company and the Holder
acknowledges that a breach by such party of its obligations hereunder will cause
irreparable harm to the other party and that the remedy at law for any such
breach may be inadequate. The Company and the Holder therefore agree that, in
the event of any such breach or threatened breach, the other party shall be
entitled, in addition to all other available remedies, to an injunction
restraining any breach, without the necessity of showing economic loss and
without any bond or other security being required.

 

 

- 14 -

 

 

 

13.           TRANSFER. Subject to transfer conditions referred to in the terms
and conditions of the Securities Purchase Agreement, this Warrant and the
Warrant Shares may be offered for sale, sold, transferred, pledged or assigned
without the consent of the Company in accordance with Section 7(a).

 

14.           Securities Purchase Agreement. This Warrant and all Warrant Shares
issuable upon exercise of this Warrant are and shall become subject to, and have
the benefit of, the Securities Purchase Agreement, and the Holder shall be
required, for so long as the Holder holds this Warrant or any Warrant Shares, to
become and remain a party to the Securities Purchase Agreement.

 

15.           SEVERABILITY; CONSTRUCTION; HEADINGS. If any provision of this
Warrant is prohibited by law or otherwise determined to be invalid or
unenforceable by a court of competent jurisdiction, the provision that would
otherwise be prohibited, invalid or unenforceable shall be deemed amended to
apply to the broadest extent that it would be valid and enforceable, and the
invalidity or unenforceability of such provision shall not affect the validity
of the remaining provisions of this Warrant so long as this Warrant as so
modified continues to express, without material change, the original intentions
of the parties as to the subject matter hereof and the prohibited nature,
invalidity or unenforceability of the provision(s) in question does not
substantially impair the respective expectations or reciprocal obligations of
the parties or the practical realization of the benefits that would otherwise be
conferred upon the parties. The parties will endeavor in good faith negotiations
to replace the prohibited, invalid or unenforceable provision(s) with a valid
provision(s), the effect of which comes as close as possible to that of the
prohibited, invalid or unenforceable provision(s). This Warrant shall be deemed
to be jointly drafted by the Company and the Holder and shall not be construed
against any Person as the drafter hereof. The headings of this Warrant are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Warrant.

 

16.           DISCLOSURE. Upon delivery by the Company to the Holder (or receipt
by the Company from the Holder) of any notice in accordance with the terms of
this Warrant, unless the Company has in good faith determined that the matters
relating to such notice do not constitute material, non-public information
relating to the Company or any of its subsidiaries, the Company shall
contemporaneously with any such notice delivery date, publicly disclose such
material, non-public information on a Current Report on Form 8-K or otherwise.
In the event that the Company believes that a notice contains material,
non-public information relating to the Company or any of its subsidiaries, the
Company so shall indicate to the Holder in writing contemporaneously with the
delivery of such notice (or promptly following receipt of such notice from the
Holder, as applicable), and in the absence of any such written indication, the
Holder shall be allowed to presume that all matters relating to such notice do
not constitute material, non-public information relating to the Company or any
of its subsidiaries.

 

17.           ENTIRE AGREEMENT. This Warrant, together with the Securities
Purchase Agreement, constitutes the sole and entire agreement of the parties to
this Warrant with respect to the subject matter contained herein, and supersedes
all prior and contemporaneous understandings and agreements, both written and
oral, with respect to such subject matter. In the event of any inconsistency
between the statements in the body of this Warrant and the Securities Purchase,
the statements in the body of this Warrant shall control.

 

 

- 15 -

 

 

18.           ABSENCE OF TRADING AND DISCLOSURE RESTRICTIONS. The Company
acknowledges and agrees that the Holder is not a fiduciary or agent of the
Company and that the Holder shall have no obligation to (a) maintain the
confidentiality of any information provided by the Company or (b) refrain from
trading any securities while in possession of such information in the absence of
a written non-disclosure agreement signed by the Holder that explicitly provides
for such confidentiality and trading restrictions. In the absence of such an
executed, written non-disclosure agreement, the Company acknowledges that the
Holder may freely trade in any securities issued by the Company, may possess and
use any information provided by the Company in connection with such trading
activity, and may disclose any such information to any third party.

 

19.           COUNTERPARTS. This Warrant may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall be deemed
to be one and the same agreement. A signed copy of this Warrant delivered by
facsimile, e-mail or other means of electronic transmission shall be deemed to
have the same legal effect as delivery of an original signed copy of this
Warrant.

 

20.           CERTAIN DEFINITIONS. For purposes of this Warrant, the following
terms shall have the following meanings:

 

(a)      “Affiliate” means, with respect to any Person, any other Person that,
directly or indirectly through one or more intermediaries, is in control of, is
controlled by, or is under common control with, such Person. For purposes of
this definition, “control” of a 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 exercise of voting power, by
contract or otherwise.

 

(e)      “Attribution Parties” means, collectively, the following Persons and
entities: (i) any investment vehicle, including, any funds, feeder funds or
managed accounts, currently, or from time to time after the Subscription Date,
directly or indirectly managed or advised by the Holder’s investment manager or
any of its Affiliates or principals, (ii) any direct or indirect Affiliates of
the Holder or any of the foregoing, (iii) any Person acting or who could be
deemed to be acting as a Group together with the Holder or any of the foregoing
and (iv) any other Persons whose beneficial ownership of the Company’s Common
Stock would or could be aggregated with the Holder’s and the other Attribution
Parties for purposes of Section 13(d) of the 1934 Act. For clarity, the purpose
of the foregoing is to subject collectively the Holder and all other Attribution
Parties to the Maximum Percentage.

 

(f)       “Black Scholes Value” means the value of this Warrant based on the
Black-Scholes Option Pricing Model obtained from the “OV” function on Bloomberg
determined as of the day immediately following the first public announcement of
the applicable Change of Control, or, if the Change of Control is not publicly
announced, the date the Change of Control is consummated, for pricing purposes
and reflecting (i) a risk-free interest rate corresponding to the U.S. Treasury
rate for a period equal to the remaining term of this Warrant as of such date of
request, (ii) an expected volatility equal to 100%, (iii) the underlying price
per share used in such calculation shall be the highest Weighted Average Price
during the five (5) Trading Days immediately prior to the consummation of such
Change of Control, (iv) a remaining option time equal to the time between the
date of the public announcement of the applicable Change of Control and the
Expiration Date, and (v) a zero cost of borrow.

 

 

- 16 -

 

 

(g)      “Bloomberg” means Bloomberg Financial Markets.

 

(h)      “Business Day” means any day other than Saturday, Sunday or other day
on which commercial banks in The City of New York are authorized or required by
law to remain closed.

 

(i)       “Capital Stock” of any Person means any and all shares of, warrants or
options or similar securities that provide a right to purchase or acquire, the
equity of such Person, but excluding any debt securities convertible into such
equity.

 

(j)       “Change of Control” means any Fundamental Transaction other than (i)
any reorganization, recapitalization or reclassification of the Common Stock in
which holders of the Company’s voting power immediately prior to such
reorganization, recapitalization or reclassification continue after such
reorganization, recapitalization or reclassification to hold publicly traded
securities and, directly or indirectly, are, in all material respects, the
holders of the voting power of the surviving entity (or entities with the
authority or voting power to elect the members of the board of directors (or
their equivalent if other than a corporation) of such entity or entities) after
such reorganization, recapitalization or reclassification, (ii) pursuant to a
migratory merger effected solely for the purpose of changing the jurisdiction of
incorporation of the Company or (iii) a merger in connection with a bona fide
acquisition by the Company of any Person or a merger of equals in which (x) the
gross consideration paid, directly or indirectly, by the Company in such
acquisition is not greater than 50% of the Company’s market capitalization as
calculated on the date of the announcement of such merger and (y) such merger
does not contemplate a change to the identity of a majority of the board of
directors of the Company. Notwithstanding anything herein to the contrary, any
transaction or series of transaction that, directly or indirectly, results in
the Company or the Successor Entity not having Common Stock or common stock, as
applicable, registered under the 1934 Act and listed on an Eligible Market shall
be deemed a Change of Control.

 

(k)     “Closing Bid Price” and “Closing Sale Price” means, for any security as
of any date, the last closing bid price and last closing trade price,
respectively, for such security on the Principal Market, as reported by
Bloomberg, or, if the Principal Market begins to operate on an extended hours
basis and does not designate the closing bid price or the closing trade price,
as the case may be, then the last bid price or the last trade price,
respectively, of such security prior to 4:00:00 p.m., New York time, as reported
by Bloomberg, or, if the Principal Market is not the principal securities
exchange or trading market for such security, the last closing bid price or last
trade price, respectively, of such security on the principal securities exchange
or trading market where such security is listed or traded as reported by
Bloomberg, or if the foregoing do not apply, the last closing bid price or last
trade price, respectively, of such security in the over-the-counter market on
the electronic bulletin board for such security as reported by Bloomberg, or, if
no closing bid price or last trade price, respectively, is reported for such
security by Bloomberg, the average of the bid prices, or the ask prices,
respectively, of any market makers for such security as reported in the OTC Link
or on the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC). If
the Closing Bid Price or the Closing Sale Price cannot be calculated for a
security on a particular date on any of the foregoing bases, the Closing Bid
Price or the Closing Sale Price, as the case may be, of such security on such
date shall be the fair market value as mutually determined by the Company and
the Holder. If the Company and the Holder are unable to agree upon the fair
market value of such security, then such dispute shall be resolved pursuant to
Section 11. All such determinations to be appropriately adjusted for any stock
dividend, stock split, stock combination, reclassification or other similar
transaction during the applicable calculation period.

 

 

- 17 -

 

 

(l)       “Common Stock” means (i) the Company’s Common Stock, par value $0.01
per share, and (ii) any Capital Stock into which such Common Stock shall have
been changed or any Capital Stock resulting from a reclassification of such
Common Stock.

 

(m)     “Convertible Securities” means any capital stock or other security of
the Company or any of its subsidiaries (other than Options) that is at any time
and under any circumstances directly or indirectly convertible into, exercisable
or exchangeable for, or which otherwise entitles the holder thereof to acquire,
any capital stock or other security of the Company (including, without
limitation, shares of Common Stock) or any of its subsidiaries.

 

(n)      “Daily VWAP” means, for any VWAP Trading Day, the per share
volume-weighted average price of the Common Stock as displayed under the heading
“Bloomberg VWAP” on Bloomberg page “TELL <EQUITY> VAP” (or, if such page is not
available, its equivalent successor page) in respect of the period from the
scheduled open of trading until the scheduled close of trading of the primary
trading session on such VWAP Trading Day (or, if such volume-weighted average
price is unavailable, the market value of one share of Common Stock on such VWAP
Trading Day, determined, using a volume-weighted average price method, by a
nationally recognized independent investment banking firm selected by the
Company). The Daily VWAP will be determined without regard to after-hours
trading or any other trading outside of the regular trading session.

 

(o)      “Eligible Market” means The Nasdaq Capital Market, the NYSE American
LLC, The Nasdaq Global Select Market, The Nasdaq Global Market or The New York
Stock Exchange, Inc.

 

(p)      “Expiration Date” means the date that is sixty (60) months after the
Initial Exercisability Date or, if such date falls on a day other than a
Business Day or on which trading does not take place on the Principal Market,
the next day on which such trading occurs.

 

 

- 18 -

 

 

(q)      “Fundamental Transaction” means (A) that the Company shall, directly or
indirectly, including through subsidiaries, Affiliates or otherwise, in one or
more related transactions, (i) consolidate or merge with or into (whether or not
the Company is the surviving corporation) another Subject Entity, or (ii) sell,
assign, transfer, convey or otherwise dispose of all or substantially all of the
properties or assets of the Company and its subsidiaries (taken as a whole) to
one or more Subject Entities, or (iii) make, or allow one or more Subject
Entities to make, or allow the Company to be subject to or have its shares of
Common Stock be subject to or party to one or more Subject Entities making, a
purchase, tender or exchange offer that is accepted by the holders of at least
either (x) 50% of the outstanding shares of Common Stock, (y) 50% of the
outstanding shares of Common Stock calculated as if any shares of Common Stock
held by all Subject Entities making or party to, or Affiliated with any Subject
Entities making or party to, such purchase, tender or exchange offer were not
outstanding; or (z) such number of shares of Common Stock such that all Subject
Entities making or party to, or Affiliated with any Subject Entity making or
party to, such purchase, tender or exchange offer, become collectively the
beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50%
of the outstanding shares of Common Stock, or (iv) consummate a stock purchase
agreement or other business combination (including, without limitation, a
reorganization, recapitalization, spin-off or scheme of arrangement) with one or
more Subject Entities whereby all such Subject Entities, individually or in the
aggregate, acquire, either (x) at least 50% of the outstanding shares of Common
Stock, (y) at least 50% of the outstanding shares of Common Stock calculated as
if any shares of Common Stock held by all the Subject Entities making or party
to, or Affiliated with any Subject Entity making or party to, such stock
purchase agreement or other business combination were not outstanding; or (z)
such number of shares of Common Stock such that the Subject Entities become
collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act)
of at least 50% of the outstanding shares of Common Stock, or (v) reorganize,
recapitalize or reclassify its shares of Common Stock, (B) that the Company
shall, directly or indirectly, including through subsidiaries, Affiliates or
otherwise, in one or more related transactions, allow any Subject Entity
individually or the Subject Entities in the aggregate to be or become the
“beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or
indirectly, whether through acquisition, purchase, assignment, conveyance,
tender, tender offer, exchange, reduction in outstanding shares of Common Stock,
merger, consolidation, business combination, reorganization, recapitalization,
spin-off, scheme of arrangement, reorganization, recapitalization or
reclassification or otherwise in any manner whatsoever, of either (x) at least
50% of the aggregate ordinary voting power represented by issued and outstanding
shares of Common Stock, (y) at least 50% of the aggregate ordinary voting power
represented by issued and outstanding shares of Common Stock not held by all
such Subject Entities as of the Subscription Date calculated as if any shares of
Common Stock held by all such Subject Entities were not outstanding, or (z) a
percentage of the aggregate ordinary voting power represented by issued and
outstanding shares of Common Stock or other equity securities of the Company
sufficient to allow such Subject Entities to effect a statutory short form
merger or other transaction requiring other stockholders of the Company to
surrender their Common Stock without approval of the stockholders of the Company
or (C) directly or indirectly, including through subsidiaries, Affiliates or
otherwise, in one or more related transactions, the issuance of or the entering
into any other instrument or transaction structured in a manner to circumvent,
or that circumvents, the intent of this definition in which case this definition
shall be construed and implemented in a manner otherwise than in strict
conformity with the terms of this definition to the extent necessary to correct
this definition or any portion of this definition which may be defective or
inconsistent with the intended treatment of such instrument or transaction.
Notwithstanding the foregoing, the term “Fundamental Transaction” shall not
include transactions consisting solely of issuances of equity interests in
Driftwood Holdings LP (f/k/a Driftwood Holdings LLC), a Delaware limited
partnership, or any successor entity thereto, or any related reorganizations or
contributions of assets comprising the Driftwood LNG terminal, in connection
with the financing of the construction of the Driftwood LNG terminal pursuant to
a final investment decision in respect thereof.

 

 

- 19 -

 

 

(r)       “Group” means a “group” as that term is used in Section 13(d) of the
1934 Act and as defined in Rule 13d-5 thereunder.

 

(s)      “LD Cap” means an amount equal to (a) $1,000,000, multiplied by (b) a
fraction (i) the numerator of which is the initial total number of Warrant
Shares in respect of which this Warrant may be exercised as of the Issuance
Date, and (ii) the denominator of which is 20,000,000, in each case, as
proportionately adjusted in accordance with the provisions of Section 2 hereof.

 

(t)       “Options” means any rights, warrants or options to subscribe for or
purchase shares of Common Stock or Convertible Securities.

 

(u)      “Parent Entity” of a Person means an entity that, directly or
indirectly, controls the applicable Person, including such entity whose common
stock or equivalent equity security is quoted or listed on an Eligible Market
(or, if so elected by the Holder, any other market, exchange or quotation
system), or, if there is more than one such Person or such entity, the Person or
such entity designated by the Holder or in the absence of such designation, such
Person or entity with the largest public market capitalization as of the date of
consummation of the Fundamental Transaction.

 

(v)     “Person” means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization, any other entity and a government or any department or agency
thereof.

 

(w)     “Principal Market” means The Nasdaq Capital Market.

 

(x)       “Subject Entity” means any Person, Persons or Group or any Affiliate
or associate of any such Person, Persons or Group.

 

(y)     “Successor Entity” means one or more Person or Persons (or, if so
elected by the Holder, the Company or Parent Entity) formed by, resulting from
or surviving any Fundamental Transaction or one or more Person or Persons (or,
if so elected by the Holder, the Company or the Parent Entity) with which such
Fundamental Transaction shall have been entered into.

 

(z)      “Trading Day” means any day on which the Common Stock is traded on the
Principal Market, or, if the Principal Market is not the principal trading
market for the Common Stock, then on the principal securities exchange or
securities market on which the Common Stock is then traded.

 

(aa)    “Transaction Documents” means any agreement entered into by and between
the Company and the Holder in connection with or pursuant to this Warrant.

 

(bb)   “VWAP Market Disruption Event” means, with respect to any date, (A) the
failure by the principal U.S. national or regional securities exchange on which
the Common Stock is then listed, or, if the Common Stock is not then listed on a
U.S. national or regional securities exchange, the principal other market on
which the Common Stock is then traded, to open for trading during its regular
trading session on such date; or (B) the occurrence or existence, for more than
one half hour period in the aggregate, of any suspension or limitation imposed
on trading (by reason of movements in price exceeding limits permitted by the
relevant exchange or otherwise) in the Common Stock or in any options contracts
or futures contracts relating to the Common Stock, and such suspension or
limitation occurs or exists at any time before 1:00 p.m., New York City time, on
such date.

 

 

- 20 -

 

 

(cc)    “VWAP Trading Day” means a day on which (A) there is no VWAP Market
Disruption Event; provided that the Holder, by notice to the Company, may waive
any such VWAP Market Disruption Event; and (B) trading in the Common Stock
generally occurs on the principal U.S. national or regional securities exchange
on which the Common Stock is then listed or, if the Common Stock is not then
listed on a U.S. national or regional securities exchange, on the principal
other market on which the Common Stock is then traded. If the Common Stock is
not so listed or traded, then “VWAP Trading Day” means a Business Day.

 

(dd)   “Weighted Average Price” means, for any security as of any date, the
dollar volume-weighted average price for such security on the Principal Market
during the period beginning at 9:30:01 a.m., New York time (or such other time
as the Principal Market publicly announces is the official open of trading), and
ending at 4:00:00 p.m., New York time (or such other time as the Principal
Market publicly announces is the official close of trading), as reported by
Bloomberg through its “Volume at Price” function or, if the foregoing does not
apply, the dollar volume-weighted average price of such security in the
over-the-counter market on the electronic bulletin board for such security
during the period beginning at 9:30:01 a.m., New York time (or such other time
as such market publicly announces is the official open of trading), and ending
at 4:00:00 p.m., New York time (or such other time as such market publicly
announces is the official close of trading), as reported by Bloomberg, or, if no
dollar volume-weighted average price is reported for such security by Bloomberg
for such hours, the average of the highest Closing Bid Price and the lowest
closing ask price of any of the market makers for such security as reported in
the OTC Link or “pink sheets” by OTC Markets Group Inc. (formerly Pink OTC
Markets Inc.). If the Weighted Average Price cannot be calculated for a security
on a particular date on any of the foregoing bases, the Weighted Average Price
of such security on such date shall be the fair market value as mutually
determined by the Company and the Holder. If the Company and the Holder are
unable to agree upon the fair market value of such security, then such dispute
shall be resolved pursuant to Section 11 with the term “Weighted Average Price”
being substituted for the term “Exercise Price.” All such determinations shall
be appropriately adjusted for any stock dividend, stock split, stock
combination, reclassification or other similar transaction during the applicable
calculation period.

 

[Signature Page Follows]

 

 

- 21 -

 

 

IN WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock
to be duly executed as of the Issuance Date set out above.

 

  Tellurian Inc.           By:     Name:     Title:  

 

 

 

 

EXHIBIT A

 

EXERCISE NOTICE

 

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

WARRANT TO PURCHASE COMMON STOCK

 

Tellurian Inc.

 

The undersigned holder hereby exercises the right to purchase _________________
shares of Common Stock (“Warrant Shares”) of Tellurian Inc., a corporation
organized under the laws of Delaware (the “Company”), evidenced by the attached
Warrant to Purchase Common Stock (the “Warrant”). Capitalized terms used herein
and not otherwise defined shall have the respective meanings set forth in the
Warrant.

 

1. Form of Exercise Price. The Holder intends that payment of the Exercise Price
shall be made as:

 

____________  a “Cash Exercise” with respect to _________________ Warrant
Shares; and/or

 

____________  a “Cashless Exercise” with respect to _______________ Warrant
Shares.

 

2. Payment of Exercise Price. In the event that the holder has elected a Cash
Exercise with respect to some or all of the Warrant Shares to be issued pursuant
hereto, the holder shall pay the Aggregate Exercise Price in the sum of
$___________________ to the Company in accordance with the terms of the Warrant.

 

3. Delivery of Warrant Shares. The Company shall deliver to the holder
__________ Warrant Shares in accordance with the terms of the Warrant.

 

4. Maximum Percentage Representation. Notwithstanding anything to the contrary
contained herein, this Exercise Notice shall constitute a representation by the
Holder that, after giving effect to the exercise provided for in this Exercise
Notice, the Holder (together with the other Attribution Parties) will not have
beneficial ownership of a number of shares of Common Stock in excess of the
Maximum Percentage of the total outstanding shares of Common Stock of the
Company as determined pursuant to the provisions of Section 1(f) of the Warrant
and utilizing a Reported Outstanding Share Number (as provided or reported by
the Company, as applicable) equal to ______________.

 

Date: _______________ __, ______

 

    Name of Registered Holder           By:       Name:     Title:  

 

 

 

 

ACKNOWLEDGMENT

 

The Company hereby acknowledges this Exercise Notice and hereby directs
[TRANSFER AGENT] to issue the above indicated number of shares of Common Stock
on or prior to the applicable Share Delivery Date.

 

  TELLURIAN INC.           By:     Name:     Title:  

  

 

  

Exhibit C 

 

Voting Agreement Parties

 

1. Charif Souki

 

2. Martin Houston

 

3. Meg Gentle

 

4. Keith Teague

 

 

 

Exhibit E 

 

Form of UBS Amendment

 

 

 

 

THIRD AMENDMENT TO CREDIT AND GUARANTY AGREEMENT

 

THIS THIRD AMENDMENT TO CREDIT AND GUARANTY AGREEMENT (this “Amendment”) is
entered into as of April __, 2020, by and among Driftwood Holdings LP (f/k/a
Driftwood Holdings LLC), a Delaware limited partnership, as borrower (the
“Borrower”), each of the Guarantors party hereto, each of the Lenders that is a
signatory hereto, and Wilmington Trust, National Association, as administrative
agent (in such capacity, together with its successors and permitted assigns in
such capacity, the “Administrative Agent”). Capitalized terms used and not
otherwise defined herein shall have the meanings given to them in the Credit
Agreement (as defined below).

 

RECITALS

 

A.       The Borrower, the Administrative Agent, the Guarantors from time to
time party thereto, the lenders from time to time party thereto as lenders (the
“Lenders”), and Wilmington Trust, National Association, as Collateral Agent,
have entered into that certain Credit and Guaranty Agreement, dated as of May
23, 2019, as amended by that certain First Amendment to Credit and Guaranty
Agreement, dated as of February 28, 2020 and by that Second Amendment to Credit
and Guaranty Agreement, dated as of March 23, 2020 (as further amended,
restated, amended and restated, supplemented or otherwise modified from time to
time in accordance with its provisions prior to the date hereof, the “Credit
Agreement”).

 

B.       The Borrower wishes to amend, and the Lenders party hereto,
constituting all of the Lenders, are willing to amend, the Credit Agreement and
the other Financing Documents on the terms and subject to the conditions set
forth herein.

 

C.       Pursuant to Section 10.02(b) of the Credit Agreement, each amendment to
the Credit Agreement set forth herein shall not be effective unless set forth in
a writing signed by the Borrower and each Lender affected by such amendment and
acknowledged by the Administrative Agent.

 

NOW THEREFORE, in consideration of the premises set forth above and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:

 

1.       Amendments to Credit Agreement. The Borrower and the Lenders party
hereto (constituting collectively all of the Lenders) hereby agree to amend the
Credit Agreement on the Third Amendment Effective Date (as defined below) as
follows:

 

(a)Section 1.01 of the Credit Agreement is hereby amended by adding the
following new definitions in the appropriate alphabetical order:

 

“Equivalent Exchange Offer” has the meaning set forth in Section 6.16.

 

“High Trail Notes” means one or more senior unsecured notes originally issued in
favor of High Trail Capital LP (or an Affiliate thereof) in the original
aggregate principal amount of $56,000,000, together with any exchanged notes in
favor of High Trail Capital LP (or an Affiliate thereof); provided that (a) the
terms of each such note (whether an original or an exchanged note) are identical
(other than with respect to the beneficiary of such note and the principal
amount of such note); and (b) the aggregate principal amount of all such
outstanding notes (whether an original note or an exchanged note) does not at
any time exceed $56,000,000.

 

1

 

 

“HT Excluded Account” means, collectively, a single unencumbered deposit account
and a single unencumbered securities account, each of which is held solely in
the name of Tellurian and used solely to comply with the minimum cash balance
requirement contained in the High Trail Notes.

 

“Minimum Price” means, as of any relevant time in Section 6.16, as that term is
defined in Nasdaq Rule 5635(d)(1)(A) or any successor rule.

 

“Notes Exchange” has the meaning set forth in Section 6.16.

 

“Second NCS Warrant Agreement” means that certain Warrant to Purchase Common
Stock, dated as of the Third Amendment Effective Date, issued by Tellurian to
Nineteen77 Capital Solutions A LP, as amended, restated or otherwise modified
from time to time.

 

“Third Amendment” means that certain Third Amendment to Credit and Guaranty
Agreement, dated as of April __, 2020, among the Borrower, the Administrative
Agent, and the Lenders party thereto, which amends this Agreement.”

 

“Third Amendment Effective Date” shall have the meaning set forth in the Third
Amendment.

 

(b)Section 1.01 of the Credit Agreement is hereby amended by amending and
restating the definition of “Excluded Accounts” in its entirety as follows:

 

“Excluded Accounts” means any deposit account or securities account that: (a) is
used solely as a zero-balance payroll account, or solely as an account dedicated
to the payment of accrued employee benefits, or medical, dental and employee
benefits claims, to employees of Tellurian or any Subsidiary thereof; (b) is
used solely as a tax withholding account; (c) is used solely as an escrow
account, a fiduciary or trust account, or other account that is contractually
obligated to be segregated from the other assets of Tellurian or a Subsidiary
thereof for the benefit of unaffiliated third parties in connection with an
acquisition, disposition, or post-closing indemnity required under a purchase
and sale agreement (other than for the issuance of Capital Stock of Tellurian or
any Borrower Group Member); (d) is a segregated account, the balance of which
consists exclusively of funds due and owing to unaffiliated third parties in
connection with royalty payment obligations owed to such third parties, or
working interest payments received from unaffiliated third parties, solely to
the extent such amounts constitute property of such third party held in trust;
(e) is a fiduciary or trust account for the benefit of a Governmental Authority
securing plugging, abandonment, and similar obligations incurred in the ordinary
course of business; (f) subject to Section 5.18(f), is used by Tellurian to
raise capital through the sale of its Capital Stock under its “at the market” or
market equity program; (g) is an escrow account used solely to hold down
payments related to the proposed sale of the Capital Stock of the Borrower; (h)
is an escrow account required by the Driftwood EPC Contract (Phase 1), Driftwood
EPC Contract (Phase 2), Driftwood EPC Contract (Phase 3) or Driftwood EPC
Contract (Phase 4); (i) is a BofA LC Cash Collateral Account or a BofA CC Cash
Collateral Account; (j) is a zero-balance account held by Tellurian Services LLC
(for accounts payable) or Tellurian Supply & Trade LLC (for the receipt of
proceeds from third-party gas sales); (k) is owned or held by ProductionCo or
any of its Subsidiaries, but only for so long as ProductionCo or such
Subsidiary, as applicable, is not required to be a Guarantor hereunder; (l) is
owned or held by any Foreign Subsidiary; (m) is a securities account holding
Capital Stock in UK Oil & Gas PLC received as consideration from Tellurian
Investment’s sale of the Capital Stock of Magellan Petroleum (UK) Investment
Holdings Limited; and (n) the HT Excluded Account.”

 

2

 

 

(c)Section 1.01 of the Credit Agreement is hereby amended by adding “the Second
NCS Warrant Agreement,” immediately after “the NCS Warrant Agreement,” in the
definition of “Financing Documents”.      (d)Section 1.01 of the Credit
Agreement is hereby amended by adding “or the Second NCS Warrant Agreement”
immediately after “the NCS Warrant Agreement” in the definition of “Indemnified
Taxes”.

 

(e)Section 1.01 of the Credit Agreement is hereby amended by amending and
restating Clause (e) of the definition of “Permitted Restricted Payments” in its
entirety as follows:

 

“(e)       Restricted Payments in respect of an exercise of or pursuant to the
terms of (i) the warrant shares under the NCS Warrant Agreement, (ii) the
warrant shares under the Second NCS Warrant Agreement and (iii) the warrant
shares under that certain Warrant to Purchase Common Stock, dated as of the date
hereof, by Tellurian in favor of High Trail Investments SA LLC (as in effect on
the execution date of the Third Amendment or as amended or modified in a manner
not materially adverse to the Lenders, Tellurian, or the other equity holders of
Tellurian).”

 

(f)Section 1.01 of the Credit Agreement is hereby amended by adding the
following to the end of the Clause (c) of the definition of “Restricted
Payment”:

 

“(other than payments to an equity owner of Tellurian in respect of Permitted
Indebtedness)”

 

(g)Section 5.18 of the Credit Agreement is hereby amended to add the following
as new clause (f) thereto:

 

“(f)       Notwithstanding anything to the contrary in this Agreement, to the
extent: (i) Tellurian or any of its direct or indirect Subsidiaries (other than
ProductionCo or any of its Subsidiaries) receives the cash proceeds of: (A) any
Indebtedness incurred under Section 6.02(t); or (B) the issuance of any Capital
Stock of Tellurian through Tellurian’s “at the market” or market equity program;
and (ii) such cash proceeds are received in an account that is not a Collateral
Account, then the Borrower and each Guarantor shall, and shall cause any direct
or indirect Subsidiary of Tellurian who is not a Guarantor to, transfer such
proceeds to a Collateral Account held by Tellurian Investments: (x) pursuant to
a standard sweep instruction in place on the execution date of the Third
Amendment for the account that receives such proceeds (without any modification
of such instruction on or after such date); or (y) within two (2) Business Day
after receipt thereof.”

 

3

 

 

(h)Section 5.20 of the Credit Agreement is hereby deleted in its entirety and
replaced with the following:

 

“Section 5.20 Material Non-Public Information. Upon delivery by the Borrower or
Tellurian to any Secured Party (or receipt by any Secured Party from the
Borrower or Tellurian) of any notice in accordance with the terms of this
Agreement, unless the Borrower or Tellurian has in good faith determined that
the matters relating to such notice do not constitute material, non-public
information relating to Tellurian or any of its Subsidiaries, Tellurian shall,
and the Borrower shall cause Tellurian to, on or prior to 9:00 am New York city
time on the Business Day immediately following such notice delivery date, to
publicly disclose such material, non-public information on a Form 8-K or
otherwise. In the event that the Borrower or Tellurian believes that a notice
contains material, non-public information relating to Tellurian or any of its
Subsidiaries, the Borrower or Tellurian shall so indicate to the applicable
Secured Party explicitly in writing in such notice (or immediately upon receipt
of such notice by the applicable Secured Party, as applicable), and in the
absence of any such written indication in such notice (or notification from the
Borrower or Tellurian immediately upon receipt of notice from the applicable
Secured Party), such Secured Party shall be entitled to presume that information
contained in the notice does not constitute material, non-public information
relating to Tellurian or any of its Subsidiaries.”

 

(i)Section 6.02 of the Credit Agreement is hereby amended by (i) deleting “and”
from clause (q) thereof, (ii) replacing the “.” in clause (r) thereof with a “;”
and (iii) adding the following clauses (s) and (t) in the correct alphabetical
order:

 

“(s)       Indebtedness incurred by Tellurian under the High Trail Notes (as
such notes are in effect on the execution date of the Third Amendment and as
amended as permitted under Section 6.16); and

 

(t)       any unsecured Indebtedness incurred by Tellurian or any of its
Subsidiaries to, or guaranteed in whole or in part by, any governmental
authority, but only to the extent such Indebtedness is incurred pursuant to, and
is subject to the requirements of: (i) the Coronavirus Aid, Relief and Economic
Security (“CARES”) Act (H.R. 6074, H.R. 6201, H.R. 748 and H.R. 266 (116)); or
(ii) any other loan or grant programs made available to Tellurian of any of its
Subsidiaries under any financial support or funding program sponsored, funded,
or guaranteed, in whole or in part, by any Federal Reserve Bank, the Board of
Governors of the Federal Reserve Bank, or any federal, state, or local
governmental authority or body, in each case in response to, and to provide
relief from, impacts of the COVID-19 pandemic.”

 

4

 

 

(j)Section 6.11(d) of the Credit Agreement is hereby amended to add the
following after the reference to “Closing Date” therein:

 

“, is an HT Excluded Account, is an account listed on Schedule I of the Third
Amendment (which accounts shall be used solely for the receipt of funds under
Tellurian’s “at the market” or market equity program),”

 

(k)Section 6.11 of the Credit Agreement is hereby amended to add the following
as new clause (e) thereto:

 

“(e)       Notwithstanding anything to the contrary in this Agreement, other
than on an intraday basis on the date on which the proceeds of the High Trail
Notes are received, under no circumstances shall the Borrower or any Guarantor
permit the total amount on deposit in the HT Excluded Account to exceed at any
time the lesser of: (i) $10,400,000; and (ii) the amount of unrestricted and/or
unencumbered cash that Tellurian is required to maintain in a deposit account or
securities account held by Tellurian pursuant to the High Trail Notes (as such
notes are in effect on the execution date of the Third Amendment), taking into
account any amounts on deposit in the Collateral Accounts.”

 

(l)Article VI of the Credit Agreement is hereby amended to add the following as
new Section 6.16 thereto:

 

“Section 6.16     High Trail Notes. Notwithstanding anything to the contrary in
this Agreement, each Loan Party shall not amend or modify, or permit the
amendment or modification of, the High Trail Notes or the terms thereof (whether
through an amendment, side letter agreement, or any other contract, agreement,
or understanding) in a manner that:

 

(a)       except as set forth below, amends or modifies the amount or frequency
of “Amortization Payments” or “Additional Amortization Payments” (as each term
is defined in the High Trail Notes as of the execution date of the Third
Amendment) under the High Trail Notes in a manner that is materially more
burdensome, taken as a whole, upon Tellurian and its Subsidiaries than exist
under the High Trail Notes immediately prior to such amendment or modification
as determined by Tellurian (such determination to be evidenced in a written
certification delivered by the Borrower to the Administrative Agent prior to the
effectiveness of such amendment or modification certifying that such change will
not materially increase the likelihood of a payment default under the High Trail
Notes); provided that no such amendment or modification shall require Tellurian
to make “Additional Amortization Payments” under and as defined in the High
Trail Notes in excess of $8,000,000 in the aggregate; and

 

5

 

 

(b)        amends or modifies any affirmative or negative covenant in Section 8
of the High Trail Notes (or in any other part of the High Trail Notes) to impose
material additional or increased burdens or obligations on Tellurian and its
Subsidiaries taken as a whole;

 

(c)       (i) expands the events or circumstances that constitute an “Event of
Default” under and as defined in the High Trail Notes (or provides for a similar
event); or (ii) expands or modifies the remedies available to holders of the
High Trail Notes in connection with an Event of Default (or another default),
including any amendment or modification that effects the amount or application
of the “Event of Default Acceleration Amount” or amends or modifies Section
10(D) thereof or related definitions thereof in respect of the remedy of
conversion of the High Trail Notes into equity securities of Tellurian upon an
“Event of Default” under and as defined in the High Trail Notes, in each case
under clause (ii), in a manner adverse to Tellurian or the Lenders;

 

(d)       provides for, or results in, a security interest in, or lien on, any
assets of Tellurian or any of its Subsidiaries in favor of the holders of the
High Trail Notes (or any agent on their behalf);

 

(e)       imposes any new interest obligations on the principal balance of the
High Trail Notes or on any amounts owed by Tellurian in connection with the High
Trail Notes, increases any default interest rate under the High Trail Notes, or
imposes any new or additional fees on Tellurian in connection with the High
Trail Notes (other than any new or additional fees that are payable solely in
Tellurian Stock (or warrants to purchase Tellurian Stock), and solely to the
extent an equivalent amount of new or additional fees (for an equivalent amount
of Tellurian Stock or warrants, as applicable) are offered to the Lenders at the
time, and on the same terms, as are offered under the High Trail Notes);

 

(f)       amends or modifies Section 6 of the High Trail Notes (or any other
amendment or modification of the High Trail Notes that effectively results in a
modification or amendment of Section 6 of the High Trail Notes) that is
materially adverse to the Lenders;

 

6

 

 

(g)       increases the outstanding aggregate principal amount owed by Tellurian
under the High Trail Notes; or

 

(h)      otherwise imposes materially more burdensome terms, taken as a whole,
upon Tellurian and its Subsidiaries than exist under the High Trail Notes
immediately prior to such amendment or modification.

 

In addition:

 

(x)       under no circumstances shall any Loan Party amend or modify, or permit
the amendment or modification of, the High Trail Notes or the terms thereof
(whether through an amendment, side letter agreement, or any other contract,
agreement, or understanding), or enter into any other agreement, in any such
case if the effect thereof is to increase the aggregate economics payable to the
holders of the High Trail Notes thereunder in cash, or to otherwise increase the
cash amounts payable under or in connection with the High Trail Notes; provided
that nothing in this clause (x) is intended to limit or prohibit: (i) any change
to the amount or frequency of “Amortization Payments” or “Additional
Amortization Payments” (as each term is defined in the High Trail Notes as of
the execution date of the Third Amendment) under the High Trail Notes that are
not prohibited by Section 6.16(a) or clause (y) below; and (ii) any increase in
the aggregate economics, or the amounts payable, under or in connection with the
High Trail Notes that are payable solely in Tellurian Stock (or warrants to
purchase Tellurian Stock), and solely to the extent such additional economics or
payments (in the form of an equivalent amount of Tellurian Stock or warrants, as
applicable) are offered to the Lenders at the time, and on the same terms, as
are offered under the High Trail Notes; and

 

(y)       except to the extent set forth in Section 10(D) of the High Trail
Notes (as in effect on the execution date of the Third Amendment), neither
Tellurian nor any other Loan Party shall exchange, or agree to the exchange of,
any principal amount of the High Trail Notes into Tellurian Stock (a “Notes
Exchange”), except:

 

(i) at or above the Minimum Price; or

 

7

 

 

(ii) at a discount to the Minimum Price, but only if, after 4:00 p.m. Eastern
time but prior to 6:00 p.m. Eastern time on the date the binding agreement for
the Notes Exchange is executed (the “Exchange Notice Date”), Tellurian shall
have delivered to the Lenders: (A) a written offer to the Lenders to exchange,
subject to the requirements of applicable law and Nasdaq rules, up to an equal
amount of the principal of the Loans into Tellurian Stock at the same price
(each such offer, an “Equivalent Exchange Offer”); and (B) a copy of the
irrevocable and binding documentation governing such Notes Exchange; provided
that if the Lenders, due to applicable law or Nasdaq rules, would be prohibited
from receiving the maximum amount of Tellurian Stock that the Lenders would be
entitled to acquire pursuant to such Equivalent Exchange Offer based on the
foregoing, then the total principal amount of the Loans that the Lenders may
exchange shall be limited to the amount permitted by applicable law or Nasdaq
rules, after taking into account the amount of High Trail Notes to be exchanged
in the Note Exchange.

 

If, after receipt of an Equivalent Exchange Offer in accordance with the
foregoing, a Lender notifies the Borrower of its election to participate in such
Equivalent Exchange Offer by 11:00 p.m. Eastern time on the applicable Exchange
Notice Date, and Tellurian and the other Loan Parties have otherwise complied
with this Section 6.16 in connection with such Notes Exchange and Equivalent
Exchange Offer, then, subject to the requirements of applicable law and Nasdaq
rules, Tellurian shall, as soon as practicable thereafter: (I) consummate such
Notes Exchange in accordance with the terms on which the related Equivalent
Exchange Offer were based; and (II) consummate the exchange of the Loans
pursuant to the terms of such Equivalent Exchange Offer; provided that the
Tellurian Stock issued pursuant to such Notes Exchange and such Equivalent
Exchange Offer must be issued to their respective recipients simultaneously.

 

If, after receipt of an Equivalent Exchange Offer in accordance with the
foregoing, a Lender does not notify the Borrower of its election to participate
in such Equivalent Exchange Offer by 11:00 p.m. Eastern time on the applicable
Exchange Notice Date, and Tellurian and the other Loan Parties have otherwise
complied with this Section 6.16 in connection with such Notes Exchange and
Equivalent Exchange Offer, then, subject to the requirements of applicable law
and Nasdaq rules, Tellurian shall be permitted: (I) to consummate such Notes
Exchange in accordance with the terms on which the related Equivalent Exchange
Offer were based; and (II) such Lender shall have no later than three (3)
Business Days after such Exchange Notice Date to notify the Borrower of its
election to participate in such Equivalent Exchange Offer. If such Lender elects
to participate in such Equivalent Exchange Offer, then Tellurian and such Lender
shall consummate the exchange of the Loans pursuant to the terms of such
Equivalent Exchange Offer as soon as practicable thereafter.

 

If, after receipt of an Equivalent Exchange Offer in accordance with the
foregoing, a Lender does not notify the Borrower of its election to participate
in such Equivalent Exchange Offer by 11:00 p.m. Eastern time on the third (3rd)
Business Day after the applicable Exchange Notice Date, then such Lender shall
be deemed to have waived its right to accept such Equivalent Exchange Offer.”

 

 

(m)Article VI of the Credit Agreement is hereby amended to add the following as
new Section 6.17 thereto:

 

“Section 6.17     No Prepayment Restrictions. No Loan Party shall enter into,
permit the maintenance of, or suffer to exist any contract, agreement, or other
understanding that prohibits or restricts the ability of the Borrower to prepay
the Loans in accordance with Section 2.05.”

 

(n)Section 7.01(d) of the Credit Agreement is hereby amended by:

 

(i)adding “Section 5.18(f),” after “Section 5.13” in clause (i) thereof;

 

(ii)adding the word “or” immediately after the semicolon at the end of clause
(ii) thereof; and

 

(iii)adding the following new clause (iii) thereto:

 

“(iii)       Section 3 of the Third Amendment.”

 

(o)Section 7.01(p) of the Credit Agreement is hereby amended by adding “or the
Second NCS Warrant Agreement” immediately after the reference to “the NCS
Warrant Agreement” therein.

 

(p)Section 7.01 of the Credit Agreement is hereby amended to add the following
as new clause (s) thereto:

 

“(s)       without limiting or modifying Section 7.01(r), a default by Tellurian
with respect to any Indebtedness of at least one million dollars ($1,000,000),
or any of its Subsidiaries with respect to any Indebtedness of at least one
million dollars ($1,000,000) (in each case, or its foreign currency equivalent
and other than Indebtedness under the Financing Documents and any lease that
would have been characterized as an operating lease under GAAP as in effect on
December 31, 2018 (whether such lease was entered into before or after such
date)), in each case, which results in such amount of Indebtedness becoming due
prior to its scheduled maturity, unless such default has been waived or cured;”

 

8

 

 

(q)Section 10.17 of the Credit Agreement is hereby deleted in its entirety and
replaced with the following:

 

“Section 10.17 [Reserved].”

 

2.       Conditions. The amendments to the Credit Agreement set forth in Section
1 above shall not become effective until the date (the “Third Amendment
Effective Date”) on which all of the following conditions have been satisfied:

 

(a)The Borrower, each Lender party hereto (constituting all of the Lenders),
each Guarantor, and the Administrative Agent have delivered their fully executed
signature pages hereto.

 

(b)The Borrower shall have prepaid (in addition to any prepayments of the Loans
made prior to the date hereof) the Loans on a pro rata basis pursuant to Section
2.05(a) of the Credit Agreement an aggregate principal amount at least equal to
$1,750,000, plus any and all accrued but unpaid Cash Interest, fees, and
expenses relating to the Loans. The Lenders hereby consent to such prepayment
not being in a whole multiple of $500,000 and waive all notice requirements in
respect of such prepayment.

 

(c)In lieu of a prepayment of $15,000,000 of the principal amount of the Loans
in cash, Tellurian shall, and the Borrower shall cause Tellurian to, after or
substantially concurrently with the satisfaction of the condition set forth in
Section 2(b) above, as a prepayment of $15,000,000 of the principal amount of
the Loans: (i) issue, or have issued on its behalf, to the Lenders, 9,348,706
shares of Tellurian Stock; and (ii) satisfy the requirements of Section 2(d)
below, and the Lenders confirm that upon satisfaction of clauses (i) and (ii)
above, the principal amount of the Loans shall be decreased by $15,000,000. On
the Third Amendment Effective Date, following the issuance of shares of
Tellurian Stock to the Lenders pursuant to this Amendment, Tellurian shall file
with the United States Securities and Exchange Commission a prospectus
supplement to the prospectus accompanying the Registration Statement relating to
the resale by the Lenders of such shares of Tellurian Stock.

 

(d)Tellurian and Nineteen77 Capital Solutions A LP shall have entered into an
amendment to, or an amendment and restatement of, the NCS Warrant Agreement on
mutually agreed terms, and shall have entered into the Second NCS Warrant
Agreement on mutually agreed terms.

 

(e)Each of the representations and warranties contained in Section 4 of this
Amendment shall be true and correct on the Third Amendment Effective Date as set
forth in Section 4 of this Amendment.

 

9

 

 

(f)The Borrower shall have paid all reasonable and documented out-of-pocket
costs and expenses, including the reasonable and documented fees of Latham and
Watkins LLP, counsel to the Lenders, required to be reimbursed or paid by the
Borrower under the Credit Agreement in connection with this Amendment.

 

3.       Covenants.

 

(a)       The Borrower shall make a prepayment of the Loans pursuant to Section
2.05(a) of the Credit Agreement of at least $350,000 within thirty (30) days
after the Third Amendment Effective Date. The Lenders hereby consent to such
prepayment being less than $500,000.

 

(b)       On the Third Amendment Effective Date following the issuance of shares
of Tellurian Stock to the Lenders pursuant to this Amendment, Tellurian shall
file with the Securities and Exchange Commission a prospectus supplement under
its Registration Statement for the purpose of registering the resale of all of
the shares of Tellurian Stock to be issued pursuant to: (i) Section 2(c) of this
Amendment; and (ii) the Second NSC Warrant Agreement (collectively, the
“Shares”). Tellurian shall use commercially reasonable efforts to prepare and
file with the Securities and Exchange Commission such amendments and supplements
to the Registration Statement and the prospectus used in connection therewith as
may be necessary to keep the Registration Statement continuously effective for a
period ending when all of the Shares have been issued. If at any time when
Tellurian is required to re-evaluate its status as a “well-known seasoned
issuer” as defined under Rule 405 under the Securities Act, Tellurian determines
that it is not a “well-known seasoned issuer,” Tellurian shall use its
commercially reasonable efforts to refile a registration statement on Form S-3
and, if such form is not available, Form S-1, and keep such registration
statement effective during the period during which such registration statement
is required to be kept effective under this Section 3(b). In the event of the
issuance of any stop order suspending the effectiveness of the Registration
Statement, or the issuance of any order suspending or preventing the use of any
related prospectus or suspending the qualification of any Shares, Tellurian
shall promptly notify the Lenders and use commercially reasonable efforts
promptly to obtain the withdrawal of such order.

 

(c)       Subsequent to the issuance and registration of any Shares, Tellurian
shall take such further action as the Lenders may reasonably request in the
cooperation of the sale of the Shares by the Lenders, including: (i) instructing
the transfer agent for the Tellurian Stock to remove restrictive legends from
any Shares; and (ii) cooperating with the Lenders to facilitate the transfer of
such Shares securities through the facilities of The Depository Trust Company,
in such amounts and credited to such accounts as such Lenders may request.

 

(d)       Tellurian shall use its commercially reasonable efforts: (i) to list
for trading, subject to official notice of issuance, the Shares on the Nasdaq
Capital Market; and (ii) to maintain the listing of the Shares on the Nasdaq
Capital Market.

 

(e)       On the Third Amendment Effective Date, Tellurian shall deposit: (i) a
portion of the proceeds of the High Trail Notes equal to $10,400,000 into the HT
Excluded Account; and (ii) all remaining proceeds of the High Trail Notes into
one or more Collateral Accounts held by Tellurian Investments.

 

10

 

 

4.        Representations and Warranties.

 

(a)       The Borrower represents and warrants to the Administrative Agent and
each Lender that, as of the Third Amendment Effective Date, both immediately
before and immediately after giving effect to this Amendment: (i) each
representation and warranty of each of the Loan Parties and Tellurian set forth
in the Financing Documents is true and correct in all material respects (unless
such representation or warranty is already qualified by materiality or Material
Adverse Effect, in which case such representation or warranty shall be true and
correct in all respects); provided that if any such representation or warranty
relates solely to an earlier date, then such representation or warranty shall be
true and correct in all material respects as of such earlier date; and (ii) no
Default or Event of Default has occurred and is continuing.

 

(b)       Tellurian and the Borrower represent and warrant to the Administrative
Agent and each Lender that, as of the date of each issuance: (i) each share of
Tellurian Stock issued to the Lenders hereunder will be duly and validly
authorized and issued, and fully paid and non-assessable; (ii) each share of
Tellurian Stock issued to the Lenders hereunder will be unregistered under the
Securities Act; and (iii) such consents, approvals, authorizations, orders,
registrations or qualifications as may be required by the Financial Industry
Regulatory Authority, Inc. and under applicable state securities laws or Blue
Sky laws in connection with the issuance of each share of Tellurian Stock issued
to the Lenders hereunder will be obtained.

 

5.       Scope of Amendment; Reaffirmation. From and after the Third Amendment
Effective Date, all references to the Credit Agreement shall refer to the Credit
Agreement as amended by this Amendment. Except as expressly provided by this
Amendment, all of the terms and provisions of the Financing Documents are
unchanged and shall remain in full force and effect. This Amendment is a
Financing Document. However, in the event of any inconsistency between the terms
of the Credit Agreement (as amended by this Amendment) and any other Financing
Document, the terms of the Credit Agreement shall control and such other
document shall be deemed to be amended to conform to the terms of the Credit
Agreement. Each of the Guarantors acknowledges that its consent to this
Amendment is not required, but each of the undersigned nevertheless does hereby
agree and consent to this Amendment, and the documents and agreements referred
to herein. Each of the Guarantors agrees and acknowledges that (i)
notwithstanding the effectiveness of this Amendment, such Guarantor’s guaranty
(as applicable) and grant of Liens and security interests (as applicable) under
the Financing Documents to which it is a party shall remain in full force and
effect and shall apply to the Obligations as amended hereby and (ii) nothing
herein shall in any way limit any of the terms or provisions of such Guarantor’s
guaranty (as applicable) or grant of Liens and security interests (as
applicable) to the Collateral Agent or any other Financing Document executed by
such Guarantor, all of which are hereby ratified, confirmed and affirmed in all
respects after giving effect to this Amendment. Each of the Guarantors hereby
agrees and acknowledges that no other agreement, instrument, consent, or
document shall be required to give effect to this Section 5. Each of the
Guarantors hereby further acknowledges that the Borrower, the Administrative
Agent and any Lender may, in accordance with the terms of the Credit Agreement,
from time to time enter into any further amendments, modifications, terminations
and/or waivers of any provisions of the Financing Documents without notice to or
consent from such Guarantors and without affecting the validity or
enforceability of such Guarantor’s guaranty or grant of Liens and security
interests under the Financing Documents or giving rise to any reduction,
limitation, impairment, discharge or termination of such Guarantor’s guaranty or
grant of Liens and security interests under the Financing Documents.

 

11

 

 

6.       Miscellaneous.

 

(a)               No Waiver of Defaults. Except as expressly set forth herein,
this Amendment does not constitute: (i) a waiver of, or a consent to: (A) any
provision of the Credit Agreement or any other Financing Document; or (B) any
present or future violation of, or default under, any provision of the Financing
Documents; or (ii) a waiver of the Administrative Agent’s or any Lender’s right
to insist upon future compliance with each term, covenant, condition and
provision of the Financing Documents.

 

(b)               Applicable Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

(c)               Waiver of Jury Trial. EACH PARTY HERETO KNOWINGLY,
VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHTS THEY MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS AMENDMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF SUCH PARTY. THIS PROVISION
IS A MATERIAL INDUCEMENT FOR EACH PARTY TO ENTER INTO THIS AMENDMENT.

 

(d)               Counterparts. This Amendment may be executed on any number of
separate counterparts, by facsimile or electronic mail, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument; signature pages may be detached from multiple separate counterparts
and attached to a single counterpart so that all signatures are physically
attached to the same document. A facsimile or portable document format (“pdf”)
signature page shall constitute an original for purposes hereof.

 

(e)               Headings. The Section headings used herein have been inserted
in this Amendment as a matter of convenience for reference only, and it is
agreed that such Section headings are not a part of this Amendment and shall not
be used in the interpretation of any provision of this Amendment.

 

(f)                Severability. In case any one or more of the provisions
contained in this Amendment should be invalid, illegal, or unenforceable in any
respect, the validity, legality, and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby, and the parties hereto
shall enter into good faith negotiations to replace the invalid, illegal, or
unenforceable provision.

 

12

 

 

(g)               Indemnification of Lenders.

 

(i)                 The Borrower shall indemnify and hold harmless, to the
extent permitted by law, each Lender, such Lender’s officers, directors,
managers, employees, partners, stockholders, members, trustees, affiliates,
agents and representatives, and each person who controls such Lender (within the
meaning of the Securities Act) (the “Holder Indemnified Parties”) against all
losses, claims, actions, damages, liabilities, and expenses (including with
respect to actions or proceedings, whether commenced or threatened, and
including reasonable attorney fees and expenses) caused by, resulting from,
arising out of, based upon or related to any of the following statements,
omissions, or violations (each a “Violation”) by Tellurian or the Borrower: (i)
any untrue or alleged untrue statement of material fact contained in: (A) the
Registration Statement, any other registration statement, prospectus,
preliminary prospectus, or free writing prospectus, or any amendment thereof or
supplement thereto; or (B) any application or other document or communication
(in this clause (g), collectively called an “application”) executed by or on
behalf of Tellurian or the Borrower or based upon written information furnished
by or on behalf of Tellurian or the Borrower filed in any jurisdiction in order
to qualify any Shares covered by such registration under the securities laws
thereof; (ii) any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading; or
(iii) any violation or alleged violation by Tellurian or the Borrower of the
Securities Act or any other similar federal or state securities laws or any rule
or regulation promulgated thereunder applicable to Tellurian or the Borrower and
relating to action or inaction required of Tellurian or the Borrower in
connection with any such registration, qualification, or compliance. In
addition, the Borrower will reimburse such Lender for any legal or any other
expenses reasonably incurred by them in connection with investigating or
defending any such losses.

 

(ii)              Any person entitled to indemnification hereunder shall: (i)
give prompt written notice to the indemnifying party of any claim with respect
to which it seeks indemnification (provided that the failure to give prompt
notice shall impair any person’s right to indemnification hereunder only to the
extent such failure has prejudiced the indemnifying party); and (ii) unless in
such indemnified party’s reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is assumed,
the indemnifying party shall not be subject to any liability for any settlement
made by the indemnified party without its consent (but such consent shall not be
unreasonably withheld, conditioned, or delayed). An indemnifying party who is
not entitled to, or elects not to, assume the defense of a claim shall not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of interest may exist
between such indemnified party and any other of such indemnified parties with
respect to such claim. In such instance, the conflicted indemnified parties
shall have a right to retain one separate counsel, chosen by the Lenders
representing a majority of the Shares included in the registration if such
Lenders are indemnified parties, at the expense of the indemnifying party.

 

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(iii)            No indemnifying party shall, except with the consent of the
indemnified party, consent to the entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof giving by the
claimant or plaintiff to such indemnified party of a release from all liability
in respect to such claim or litigation. Notwithstanding anything to the contrary
in this clause (g), an indemnifying party shall not be liable for any amounts
paid in settlement of any loss, claim, damage, liability, or action if such
settlement is effected without the consent of the indemnifying party, such
consent not to be unreasonably withheld, conditioned, or delayed.

 

(iv)             The indemnification and contribution provided for under this
Amendment shall be in addition to any other rights to indemnification or
contribution that any indemnified party may have pursuant to law or contract and
shall remain in full force and effect regardless of any investigation made by or
on behalf of the indemnified party or any officer, director, or controlling
person of such indemnified party, and shall survive the transfer of the Shares
and the termination or expiration of the Credit Agreement.

 

(h)               Administrative Agent Instructions and Indemnification. By
signing below, each of the Lenders hereby directs the Administrative Agent to
execute this Amendment. The provisions of Sections 8.01 and 10.03 of the Credit
Agreement shall apply in respect of the actions of the Administrative Agent
taken pursuant to this Amendment.

 

(i)                 Recitals. The Recitals to this Agreement are hereby
incorporated and made a part hereof and are an integral part of this Agreement.

 

(j)                 Entirety. The Credit Agreement (as amended hereby) and the
other Financing Documents constitute the entire contract between the parties
hereto relative to the subject matter hereof.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

14

 

 

This Amendment is executed as of the date set out in the preamble to this
Amendment.

 

  DRIFTWOOD HOLDINGS LP,   a Delaware limited partnership,   as the Borrower    
  By: Driftwood GP Holdings LLC, its general partner         By:     Name:
Graham McArthur     Title: Treasurer

 

  DRIFTWOOD HOLDCO LLC,   as a Guarantor       By:       Name: Graham McArthur  
  Title: Treasurer

 

TELLURIAN PIPELINE LLC,   as a Guarantor       By:       Name: Graham McArthur  
  Title: Treasurer

 

  DRIFTWOOD PIPELINE LLC,   as a Guarantor       By:       Name: Graham McArthur
    Title: Treasurer

 

[Signature Page to Third Amendment to Credit Agreement]

  

 

 

 

  HAYNESVILLE GLOBAL ACCESS PIPELINE LLC,   as a Guarantor       By:       Name:
Graham McArthur     Title: Treasurer

 

  PERMIAN GLOBAL ACCESS PIPELINE LLC,   as a Guarantor       By:       Name:
Graham McArthur     Title: Treasurer

 

  TELLURIAN LNG LLC,   as a Guarantor       By:       Name: Graham McArthur    
Title: Treasurer

 

  DRIFTWOOD LNG TUG SERVICES LLC,   as a Guarantor       By:       Name: Graham
McArthur     Title: Treasurer

 

  DRIFTWOOD LNG LLC,   as a Guarantor       By:       Name: Graham McArthur    
Title: Treasurer

 

[Signature Page to Third Amendment to Credit Agreement]

 

 

 

 

  DRIFTWOOD GP HOLDINGS LLC,   as a Guarantor       By:       Name: Graham
McArthur     Title: Treasurer

 

  DRIFTWOOD LP HOLDINGS LLC,   as a Guarantor       By:       Name: Graham
McArthur     Title: Treasurer

 

  TELLURIAN INC.,   as a Guarantor       By:       Name: Graham McArthur    
Title: Senior Vice President, Treasurer

 

  TELLURIAN INVESTMENTS LLC,   as a Guarantor       By:       Name: Graham
McArthur     Title: Treasurer

 

[Signature Page to Third Amendment to Credit Agreement]

 

 

 

 

  NINETEEN77 CAPITAL SOLUTIONS A LP,   as a Lender       By: UBS O’Connor LLC,
its investment manager           By:       Name:       Title:             By:  
    Name:       Title:  

 

[Signature Page to Third Amendment to Credit Agreement]

 

 

 

 

Acknowledged and agreed by:

 

WILMINGTON TRUST, NATIONAL ASSOCIATION,

as Administrative Agent

 

By:       Name:       Title:    

 

[Signature Page to Third Amendment to Credit Agreement]