Document:

ssni-ex101_132.htm

Exhibit 10.1

July 28, 2015

Michael Bell

868 Robb Road

Palo Alto, CA 94306

 

Dear Mike: 

On behalf of Silver Spring Networks, Inc. (the “Company”), I am pleased to offer you the position of President and Chief Executive Officer. 

The terms of your new position with the Company are as set forth below: 

	
1.
	
Position.  You will be employed as President and Chief Executive Officer and will report to the Board of Directors.   You will begin this new position with the Company on September 2, 2015 (your “Start Date”). It is also our intention to have you appointed to serve as a member of our Board of Directors.

	
2.
	
Proof of Right to Work. For purposes of federal immigration law, you will be required to provide to the Company documentary evidence of your identity and eligibility for employment in the United States. Such documentation must be provided to us within three (3) business days of your Start Date, or our employment relationship with you may be terminated. 

	
3.
	
 Compensation. 

a)  Base Salary.  Your starting salary will be $525,000 per year (your “Base Salary”), subject to applicable withholding taxes and paid pursuant to the Company’s regular payroll schedule.  

b)  Bonus.  You will be entitled to participate in the Silver Spring Networks’ Bonus Plan.  Your bonus target is 100% of base salary for the applicable bonus period and subject to the terms and conditions of the applicable bonus plan. The Company’s Human Resources Department will inform you of the details of the plan.  The Company reserves the right to vary or terminate (with or without replacement by a further plan) any bonus plan in place at any time. 

c)  Annual Review. Following your first year of employment, your base salary will be reviewed at the end of each calendar year by the Compensation Committee and Board of Directors.

d) Equity.  In connection with the commencement of your employment, the Company will recommend to its Board of Directors that it grant you the following equity awards (the “Awards”) in accordance with the Company’s standard equity grant policy:

	
 
	

	
(i)  An option (the “Option”) to purchase 250,000 shares of common stock of the Company (the “Shares”) with an exercise price equal to the fair market value of a Share on the date of grant.  The Option will vest and become exercisable, subject to your continued employment with the Company on each applicable vesting date, as to 25% of the Shares on the first anniversary of the date of your commencement of employment with the Company and as to 1/48th of the Shares each month thereafter;

	
 
	

	
(ii) An award of 125,000 restricted stock units (the “RSUs”) which vest into Shares of the Company’s common stock.  The RSUs will vest, subject to your continued employment with the Company on each applicable vesting date, as follows: (a) 25% of the RSUs shall vest on the first anniversary of the grant date; and (b) the remaining RSUs shall vest in twelve equal quarterly installments following the first anniversary of the grant date until the RSUs have become fully vested four years from the grant date; and

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(iii)  Performance-based restricted stock units (the “PSUs”) with respect to 125,000 Shares.  The PSUs will be eligible to vest based on the attainment of average trading closing prices for the Company’s common stock as reported on the New York Stock Exchange for forty-five (45) consecutive trading days after the PSU Grant Date and prior to the three (3) year anniversary of the PSU grant date (such minimum average trading closing price, the “Average Price Threshold”) as follows:  

	
 
	
a.
	
12,500 shares shall be eligible to vest if the Average Price Threshold is equal to or greater than $20.00 per share (the “Tranche 1 PSU”); 

 

	
 
	
b.
	
an additional 56,250 shares shall be eligible to vest if the Average Price Threshold is equal to or greater than $25.00 per share (the “Tranche 2 PSU”); and

 

	
 
	
c.
	
an additional 56,250 shares shall be eligible to vest if the Average Price Threshold is equal to or greater than $30.00 per share (the “Tranche 3 PSU”).

 

Subject to your continued employment with the Company, and subject to the satisfaction of the applicable Average Price Threshold set forth above, the PSU shall vest as follows:

 

(i)the Tranche 1 PSU shall vest and settle as to 1/3rd of the total number of shares subject to the Tranche 1 PSU on the one-year anniversary of the PSU grant date and, and as to an additional 1/12th of the shares subject to the Tranche 1 PSU on each quarterly anniversary thereafter;

 

(ii)the Tranche 2 PSU shall vest and settle as to 1/3rd of the total number of shares subject to the Tranche 2 PSU on the one-year anniversary of the PSU grant date and, and as to an additional 1/12th of the shares subject to the Tranche 2 PSU on each quarterly anniversary thereafter; and

 

(iii)the Tranche 3 PSU shall vest and settle as to 1/3rd of the total number of shares subject to the Tranche 3 PSU on the one-year anniversary of the PSU grant date and, and as to an additional 1/12th of the shares subject to the Tranche 3 PSU on each quarterly anniversary thereafter.

If approved, your Awards will be granted pursuant to inducement award agreements, the terms of which will be substantially similar to the terms of the Company’s 2012 Equity Incentive Plan and the terms of the Company’s standard form of Option, RSU and PSU Agreement, as applicable, and will be contingent upon your execution of such agreements.  A copy of the agreements will be provided to you as soon as practicable after the grant date.  You agree to sign any other agreements or documents provided by the Company that may be required under applicable laws to receive the Awards and any Shares upon exercise or settlement of the Awards, as applicable.  Your Awards will also be subject to the applicable termination and change of control provisions set forth in Attachment A. 

	
4.
	
 Benefits.

	
 
	
a)
	
Employee Benefits.  You are eligible to participate in any medical insurance plans, 401(k) plans, deferred compensation plans, life insurance plans, retirement or other employee benefit plans or fringe benefit plans or perquisites established by the Company for its employees which may become effective from time to time during your employment with the Company.

	
 
	
b)
	
Vacation.  You are eligible to participate in the Company’s Exempt Employees’ Vacation Program.  There is no prescribed annual vacation allotment for exempt employees, meaning you will not accrue vacation.  

	
 
	
c)
	
Sick Leave.  You are eligible for paid sick leave in accordance with the terms of the Company’s sick leave policy.  You may take up to ten (10) paid sick days per calendar year, pro-rated for the remainder of this year.  

8.  Background & Reference Checks.  This offer is contingent upon successful completion of background         investigation and reference checks.

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9.  Termination of Employment and Severance Benefits. We are pleased to provide you with certain benefits in the event of your termination without “cause” or “constructive termination” from the Company as specifically set forth in Attachment A. 

10. Confidential Information and Invention Assignment Agreement. Your acceptance of this offer and commencement of employment with the Company is contingent upon your execution, and delivery to an officer of the Company, of the Company’s Employee Confidential Information and Invention Assignment Agreement, a copy of which is enclosed for your review and execution (the “Confidentiality Agreement”) as Attachment B, prior to or on your Start Date. 

11. At-Will Employment. You understand that your employment with the Company is not for any specified term and will at all times be on an “at will” basis, meaning that either you or the Company may terminate your employment at any time for any reason or no reason, without further obligation or liability (except as set forth on Attachment B). 

12. No Conflicts. You represent to the Company that your performance of all the terms of this letter agreement will not breach any other agreement to which you are a party and that you have not, and will not during the term of your employment with the Company, enter into any oral or written agreement in conflict with any of the provisions of this agreement. In addition, as we have advised you, you are not to bring with you to the Company, or use or disclose to any person associated with the Company, any confidential or proprietary information belonging to any former employer or other person or entity with respect to which you owe an obligation of confidentiality under any agreement or otherwise. The Company does not need and will not use such information and we will assist you in any way possible to preserve and protect the confidentiality of proprietary information belonging to third parties. You hereby agree that any service by you on an outside corporate board (public or private) or committee will require the prior approval of the Company’s Board of Directors.

13. Location.  Your principal place of work will be the Company’s corporate headquarters.

14. Cooperation.  During and after employment, you hereby agree that you will reasonably cooperate with the Company and its affiliates and representatives in connection with any action, investigation, proceeding, litigation or otherwise with regard to matters in which you have knowledge as a result of your employment. The Company will use its reasonable business efforts, whenever possible, to provide you with reasonable advance notice of its need for assistance and will attempt to coordinate with you the time and place at which such assistance is provided to minimize the impact of such assistance on any other material and pre-scheduled business commitment that you may have. The Company will reimburse you for the reasonable out-of-pocket expenses incurred by you in connection with such cooperation. Your cooperation will be subject to the Company’s standard indemnification and D&O liability insurance coverage.

 

15. Clawback.  You hereby agree that the Company may recover, or require reimbursement of, any bonus or equity award made to you, pursuant to a clawback policy which may be adopted by the Board of Directors of the Company for the purpose of complying with current or proposed U.S. law or regulation.

 

16. Nondisparagement.  You agree that you will not disparage the Company or its owners, agents, officers, stockholders, employees, directors, attorneys, subscribers, subsidiaries, affiliates, successors and assigns, or their products, services, agents, representatives, directors, officers, stockholders, attorneys, employees, vendors, affiliates, successors or assigns, or any person acting by, through, under or in concert with any of them, with any written or oral statement.

 

17. Governing Law.  The validity, interpretation, construction and performance of this agreement shall be governed by the laws of the State of California, without giving effect to the principles of conflict of laws.

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We are all delighted to be able to extend you this offer and look forward to working with you. To indicate your acceptance of the Company's offer, please sign and date this letter agreement  in the space provided below no later than July 30, 2015. Additionally, as part of your acceptance of the Company’s offer, please return a signed and dated copy of Attachment A (Termination of Employment and Severance Benefits) and Attachment B (Confidentiality Agreement). This offer letter, together with Attachment A and Attachment B, set forth the terms of your employment with the Company and supersede any prior representations or agreements, whether written or oral. Neither this letter agreement nor Attachment A and Attachment B may be modified or amended except by a written agreement, approved by the Company’s Board of Directors and signed by the Company’s General Counsel and by you.

Very truly yours, 

Silver Spring Networks, Inc. 

/S/ THOMAS H. WERNER/S/ SCOTT LANG

 

Thomas H. WernerScott Lang

Director Chairman of the Board

ACCEPTED AND AGREED: 

Michael Bell

 

/S/ MICHAEL BELL

Signature

07/28/2015

Date

Attachments:

1.Attachment A — Termination of Employment and Severance Benefits

2.Attachment B — Employee Confidential Information and Invention Assignment Agreement

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Attachment A

 

Termination of Employment and Severance Benefits

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Termination of Employment and Severance Benefits

1.Termination of Employment.

a)At-Will Employment.  Your employment with the Company is at-will, meaning either you or the Company can terminate your employment at any time, with or without cause, and with or without notice.  Neither you nor the Company can change the “at will” nature of your employment, unless approved by the Company’s Board of Directors and the General Counsel of the Company and you sign a written contract that explicitly changes your status as an “at will” employee.

b)Payment & Benefits Upon Termination.  Your entitlement to payment and benefits upon termination is as follows:

(i)Termination Without “Cause” or “Constructive Termination”.  If your employment is (1) terminated involuntarily other than (x) for Cause (as defined in Section 3(a), below), (y) your Disability (as defined in Section 3(e), below) or (z) your death or (2) in the event of your “Constructive Termination” (as defined in Section 3(d) below):  

(A) you will receive payment for any earned and unpaid salary, bonus and commissions as of the date of your termination of employment; and, 

(B) in the event you execute and do not revoke a separation agreement, including a release of claims (“Release”), to be drafted by the Company based upon its standard forms, you will be offered the applicable Separation Compensation (as defined in Section 2, below).  You will not be entitled to or offered any form of additional severance pay or benefits other than the applicable Separation Compensation (e.g., you will not be entitled to pay or benefits under any employee severance plan that is generally applicable to employees).

(ii)Voluntary Termination.  If you voluntarily terminate your employment, or give notice that you will voluntarily terminate your employment at a future date (and whether or not the Company accelerates the effective date of your resignation date that you provide to an earlier termination date), you will receive payment(s) for all earned and unpaid salary, bonus and commissions as of the date of termination.  You will not be entitled to the Separation Compensation, or any other form of severance pay or benefits.

(iii)Termination for Cause.  If your employment is terminated for Cause, you will receive payment(s) for all earned and unpaid salary, bonus and commissions as of the date of your termination of employment.  You will not be entitled to the Separation Compensation, or any other form of severance pay or benefits.

(iv)Termination due to death or Disability.  If your employment is terminated due to your death or Disability, you will receive payment(s) for all earned and unpaid salary, bonus and commissions as of the date of your termination of employment.  You will not be entitled to the Separation Compensation, or any other form of severance pay or benefits.

2.Separation Compensation.  

a.Termination Other Than in Connection with a Change of Control.  If you are entitled to Separation Compensation under Section 1 above and your Termination without Cause or your Constructive Termination does not occur within the period beginning two months prior to and ending twelve months following a Change of Control, your “Separation Compensation” will include each of the following: 

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(i)Salary Continuance.  You will be offered pay equal to twelve (12) months of your regular base salary and a pro-rated bonus (if any), subject to applicable payroll deductions and withholdings.  The first salary continuance payment equal to three (3) months of your regular base salary shall be made on the sixtieth (60th) day following your termination of employment provided the Release is effective at such time, and the remainder shall be paid in monthly installments beginning on the 1st day of the fourth month following your termination of employment, and on the 1st day of each month thereafter, until the total payment obligation is fulfilled.

(ii)Acceleration of Vesting.  The vesting applicable to any equity grants previously made by the Company to you shall accelerate (or the Company’s repurchase right with respect to such shares underlying such equity grants shall lapse) as to that number of shares that would have vested on the first anniversary of the date your employment terminates, such acceleration effective immediately prior to the termination of your employment.

(iii)Other Benefits.  The Company will reimburse you for your expenses in continuing medical insurance benefits for you and your family (meaning medical, dental, optical, and mental health, but not life, insurance) under the Company’s benefit plans (or otherwise in obtaining coverage substantially comparable to the coverage provided to you prior to the termination) over the period beginning on the date your employment terminates and ending on the earlier of (a) twelve (12) months following such date, or (b) the date you commence employment with another entity.  Notwithstanding the foregoing, if the Company determines in its sole discretion that it cannot provide the benefits described herein without violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), the Company shall in lieu thereof provide you a lump sum payment in an amount equal to the monthly premium that you would be required to pay to continue group health coverage for a period of up to twelve (12) months, subject to applicable payroll deductions and withholdings, which payment shall be made regardless of whether you elect continuation of medical insurance coverage.

b.Termination in Connection with a Change of Control.  If you are entitled to Separation Compensation under Section 1 above and your Termination without Cause or your Constructive Termination occurs within the period beginning two months prior to and ending twelve months following a Change of Control, your “Separation Compensation” will include each of the following, provided however that you may be required by the successor entity (at its sole discretion) to continue your employment for up to three (3) months from the effective date of a Change of Control in order to be eligible to receive any or all of the following:

(i)Salary Continuance.  You will be offered pay equal to twelve (12) months of your regular base salary and a pro-rated bonus (if any), subject to applicable payroll deductions and withholdings.  The first salary continuance payment equal to three (3) months of your regular base salary shall be made on the thirtieth (30th) day following your termination of employment (unless a longer period is required by law to make the Release effective, in which case the first salary continuance payment shall me made on the sixtieth (60th) day following your termination of employment) provided the Release is effective at such time, and the remainder shall be paid in monthly installments beginning on the 1st day of the fourth month following your termination of employment, and on the 1st day of each month thereafter, until the total payment obligation is fulfilled.

(ii)Acceleration of Vesting.  The vesting applicable to any equity grants previously made by the Company to you shall accelerate (or the Company’s repurchase right with respect to such shares underlying such equity grants shall lapse) (a) as to fifty percent (50%) of the unvested shares underlying such equity grant or grants at the time of the Change of Control if the Change of Control occurs within the first twelve (12) months of your employment with the Company or (b) as to one-hundred percent (100%) of the unvested shares underlying such equity grant or grants at the time of the Change of Control if the Change of Control occurs after the first twelve (12) months of your employment with the Company, in each case, such acceleration effective as of immediately prior to the termination of your employment.

(iii)Other Benefits.  The Company will reimburse you for your expenses in continuing medical insurance benefits for you and your family (meaning medical, dental, optical, and mental health, but not life, insurance) under the Company’s benefit plans (or otherwise in obtaining coverage substantially comparable to the coverage provided to you prior to the termination) over the period beginning on the date your employment 

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terminates and ending on the earlier of (a) twelve (12) months following such date, or (b) the date you commence employment with another entity.  

	
3.
	
Definitions. 

a)Cause.  For the purposes of this letter agreement, “Cause” for termination of your employment will exist if you are terminated for any of the following reasons: (i) your failure to perform your duties and responsibilities to the Company, including but not limited to a failure to cooperate with the Company in any investigation or formal proceeding; (ii) your commission of any act of fraud, embezzlement, dishonesty or any other intentional misconduct that results in injury to the Company; (iii) the unauthorized use or disclosure by you of any proprietary information or trade secrets of the Company or any other party to whom you owe an obligation of nondisclosure as a result of your relationship with the Company; (iv) you are convicted of, or enter a no contest plea to, a felony; or (v) your willful, wrongful and uncured breach of any of your obligations under any Company policy, written agreement or covenant with the Company (including this letter agreement).  The determination as to whether you are being terminated for Cause shall be made in good faith by the Company’s Board of Directors (the “Board”).  The foregoing definition does not in any way limit the Company’s ability to terminate your employment at any time as provided in Section 1 above.

b)Change of Control.  For purposes of this letter agreement, “Change of Control” of the Company is defined as: (i) the date any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becomes, subsequent to the date hereof, the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then outstanding voting securities, other than pursuant to a sale by the Company of its securities in a transaction or series of related transactions the primary purpose of which is to raise capital for the Company; (ii) the date of the consummation of a merger or consolidation of the Company with any other corporation that has been approved by the stockholders of the Company, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; (iii) the date of the consummation of the sale or disposition by the Company of all or substantially all the Company’s assets; or (iv) the date of a change in the composition of the Board such that a majority of the members of the Board immediately following such change in composition are no longer “Incumbent Directors.”  For purposes of the foregoing clause (iv), “Incumbent Directors” means (a) members of the Board as of the date of this letter agreement, or (b) members of the Board elected or appointed to the Board following the date of this letter agreement other than in connection with an actual or threatened proxy contest.

c)Code.  For purposes of this letter agreement, “Code” means the Internal Revenue Code of 1986, as amended.

d)Constructive Termination.  For the purposes of this letter agreement, “Constructive Termination” means the termination of your employment by you after the occurrence of any of the following events: (A) within the period beginning two months prior to and ending twelve months following a Change of Control, a material reduction in your job duties and responsibilities to which you have not consented to in advance of such change; provided, however, that following a Change of Control, neither a change in your title to a substantially equivalent title within any successor entity nor a reassignment to a position that is substantially similar to your position prior to the Change of Control shall constitute a material reduction in your job duties or responsibilities; (B) following a Change of Control and without your prior written approval, the Company requires you to relocate to a facility or location more than thirty-five (35) miles from the location of the primary location at which you were working for the Company immediately before the required change of location; (C) except as otherwise agreed by you, any reduction of your base salary in effect immediately prior to such reduction (other than as part of an across-the-board, proportional reduction); or (D) following a Change of Control, the failure of a successor entity to assume this letter agreement.  Notwithstanding anything else contained herein, in the event of the occurrence of a condition listed above, as a condition to receiving any benefits triggered by a Constructive Termination, you must provide notice to the Company within ninety (90) days of the occurrence of a condition listed above and allow the Company thirty (30) days in which to cure such condition.  Additionally, in the event the 

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Company fails to cure the condition within the cure period provided, as a condition to receiving any benefits triggered by a Constructive Termination, you must terminate employment with the Company within thirty (30) days of the end of the cure period.

e)Disability. For the purposes of this letter agreement, “Disability” means “disability” within the meaning of Section 22(e)(3) of the Code.

4.Code Section 409A.  For purposes of this letter agreement, a termination of employment will be determined consistent with the rules relating to a “separation from service” as defined in Section 409A of the Code and the regulations thereunder (“Section 409A”).  Notwithstanding anything else provided herein, to the extent any payments provided under this letter agreement in connection with your termination of employment constitute deferred compensation subject to Section 409A, and you are deemed at the time of such termination of employment to be a “specified employee” under Section 409A, then such payment shall not be made or commence until the earlier of (i) the expiration of the 6-month period measured from your separation from service from the Company or (ii) the date of your death following such a separation from service; provided, however, that such deferral shall only be effected to the extent required to avoid adverse tax treatment to you including, without limitation, the additional tax for which you would otherwise be liable under Section 409A(a)(1)(B) in the absence of such a deferral.  The first payment thereof will include a catch-up payment covering the amount that would have otherwise been paid during the period between your termination of employment and the first payment date but for the application of this provision, and the balance of the installments (if any) will be payable in accordance with their original schedule.  To the extent that any provision of this letter agreement is ambiguous as to its compliance with Section 409A, the provision will be read in such a manner so that all payments hereunder comply with Section 409A.  To the extent any payment under this letter agreement may be classified as a “short-term deferral” within the meaning of Section 409A, such payment shall be deemed a short-term deferral, even if it may also qualify for an exemption from Section 409A under another provision of Section 409A.  Payments pursuant to this section are intended to constitute separate payments for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations.

5.Code Section 280G.  In the event that the severance and other benefits provided for in this letter agreement or otherwise payable to you (i) constitute “parachute payments” within the meaning of Section 280G of the Code, and (ii) would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then your benefits under this letter agreement shall be either: 

a)delivered in full; or 

b)delivered as to such lesser extent that would result in no portion of such benefits being subject to the Excise Tax, (with first a pro rata reduction of (i) cash payments subject to Section 409A of the Code as deferred compensation and (ii) cash payments not subject to Section 409A of the Code, then (i) employee benefits that are subject to Section 409A of the Code as deferred compensation and (ii) employee benefits not subject to Section 409A of the Code and then a pro rata cancellation of (i) equity-based compensation subject to Section 409A of the Code as deferred compensation and (ii) equity-based compensation not subject to Section 409A of the Code), whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in your receipt on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code.  

Unless you and the Company otherwise agree in writing, the determination of your excise tax liability and the amount required to be paid under this Section shall be made in writing by an accounting firm to be selected by reasonable agreement between you and the Company (the “Accountants”), whose determination shall be conclusive and binding upon you and the Company for all purposes.  For purposes of making the calculations required by this Section, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. You and the Company shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section.  The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section.

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6.Other Agreements.  This Attachment A sets forth the terms of the benefits you are eligible to receive in the event your employment with the Company is terminated in the manner described herein and supersedes any prior representations or agreements, whether written or oral.  In the event of a conflict between the terms of this Attachment A and any other agreement you have entered into with the Company (including the cover letter to this Attachment A), the terms of this Attachment A shall apply.  The definitions, terms and conditions contained herein may not be modified or amended except by a written agreement, approved by the Company’s Board of Directors and signed by the Company’s General Counsel and by you.

*  *  *

ACCEPTED AND AGREED:

Michael Bell

 

 

/S/ MICHAEL BELL

Signature

Michael Bell

Name

07/28/2015

Date

 

 

 

 

 

 

 

 

 

 

 

 

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Exhibit 10.1

PROMISSORY NOTE

 

			
	
August 21, 2015
	
 
	
Up to $1,500,000

 

For value received, TRANSATLANTIC PETROLEUM (USA) CORP., a Delaware corporation (the “Company”), hereby promises to pay to GARY WEST CRT 2 LLC or its registered assigns (the “Holder”), the principal sum of ONE MILLION FIVE HUNDRED THOUSAND DOLLARS AND NO CENTS ($1,500,000.00) or so much as may be advanced hereunder, on the dates specified herein, with interest as specified herein.

This Note is subject to the following additional provisions, terms and conditions: 

ARTICLE 1

DEFINITIONS

1.1 Certain Definitions.

“Applicable Rate” means 9.0% per annum.

“Asset Sale/Joint Venture/Financing Repurchase Event” means the consummation of any (i) sale, lease or other transfer in one transaction or a series of related transactions of Hydrocarbon Interests of the Parent or any Subsidiary for net cash proceeds of at least $13.75 million (including by means of the sale of all the capital stock of a Subsidiary or by means of a merger, consolidation or similar transaction) or (ii) issuance by the Parent of a note, bond or similar debt security that results in net cash proceeds of at least $13.75 million, excluding term loans, credit facilities or similar lending arrangements with commercial banks.

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

“Business Day” means any day that is not a Saturday or Sunday or a day on which banks are required or permitted to be closed in Chicago, Illinois.

“Common Shares” means the common shares, par value $0.10 per share, of the Parent.

“Collateral” shall mean the Common Shares acquired under the Stock Repurchase Agreement. The Company will hold the Collateral until this Note is repaid in full.

“Default Rate” means 15.0% per annum.

“Distribution Event” means any insolvency, bankruptcy, receivership, liquidation, reorganization or similar proceeding (whether voluntary or involuntary) relating to the Company or Parent or their property, or any proceeding for voluntary liquidation, dissolution or other winding up of the Company or Parent, whether or not involving insolvency or bankruptcy.

“Event of Default” has the meaning given to such term in Section 5.1 of this Note. 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any similar federal statute, and the rules and regulations of the SEC thereunder, all as the same shall be in effect from time to time.

“Fundamental Change” is an event that shall be deemed to have occurred at such time after this Note is originally issued that any of the following occurs:

(a) a “person” or “group” within the meaning of Section 13(d) of the Exchange Act, other than a Permitted Holder, files a Schedule TO or any schedule, form or report under the Exchange Act disclosing that such person or group has become the direct or indirect “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of the Parent’s common equity representing more than 20% of the voting power of the Parent’s common equity, provided that such threshold shall be 35% or more of the voting power of the Parent’s common equity in cases where a person or group consists of holders who became a person or group as a result of acting or agreeing to act together as a partnership, limited partnership, syndicate, or other group for the purpose of acquiring, holding, voting or disposing of common equity of the Parent held by such persons prior to such action or agreement;

 

 

(b) the consummation of (A) any recapitalization, reclassification or change of the Common Shares (other than changes resulting from a subdivision or combination) as a result of which the Common Shares would be converted into, or exchanged for, stock, other securities, other property or assets; (B) any share exchange, consolidation or merger of the Parent pursuant to which the Common Shares will be converted into cash, securities or other property; (C) any sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the consolidated assets of the Parent and its Subsidiaries, taken as a whole, to any Person other than the Parent or one of the Parent’s Subsidiaries; or (D) 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 to any Person other than the Parent; provided, however, that a transaction described in clause (B) in which the holders of all classes of the Parent’s common equity immediately prior to such transaction own, directly or indirectly, more than 50% of all classes of common equity of the continuing or surviving corporation or transferee or the parent thereof immediately after such transaction in substantially the same proportions as such ownership immediately prior to such transaction shall not be a Fundamental Change;

(c) the shareholders of the Parent approve any plan or proposal for the liquidation or dissolution of the Parent;

(d)  the Common Shares cease to be listed or quoted on any Recognized Exchange; or

(e) the Company ceases to be a wholly-owned subsidiary of Parent;

provided, however, that a transaction or transactions shall not constitute a Fundamental Change if at least 90% of the consideration received or to be received by the common shareholders of the Parent, excluding cash payments for fractional shares and cash payments made pursuant to dissenters’ appraisal rights, in connection with such transaction or transactions consists of shares of common stock that are listed or quoted on any Recognized Exchange or will be so listed or quoted when issued or exchanged in connection with such transaction or transactions.

“Funded Debt” means funded indebtedness for money borrowed of the Company that by its terms will mature or will have mandatory principal repayments in cash (excluding contingent repayments arising due to asset sales, excess cash flow, change of control, equity issuances or similar events) on or prior to the Maturity Date. For the avoidance of doubt, Funded Debt does not include capital lease obligations, purchase money obligations and other obligations representing the unpaid purchase price of goods or services, hedging or swap obligations, obligations in respect of surety or performance bonds or letters of credit, contingent obligations, and obligations pursuant to operating agreements, production sharing agreements, mineral leases, royalty interests, working interests, agreements for the purchase, sale, transportation or exchange of hydrocarbons, processing agreements, joint venture agreements and other contracts customarily used in the conduct of the oil and gas business.

“Holder” has the meaning given to such term in the first paragraph of this Note.

“Hydrocarbon Interests” means oil and natural gas fee mineral interests, leases, licenses, working interests, and concessions.

“Initial Tranche” shall mean $500,000.

“Interest Payment Date” means each of January 1, 2016, April 1, 2016 and July 1, 2016.

“Lien” means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof).

“Maturity Date” means October 1, 2016.

“Maximum Rate” means the maximum nonusurious interest rate permitted under applicable law.

“Note” means this Promissory Note made by the Company payable to the Holder, together with all amendments and supplements hereto, all substitutions and replacements herefor, and all renewals, extensions, increases, restatements, modifications, rearrangements and waivers hereof from time to time.

“Parent” means TransAtlantic Petroleum Ltd., a Bermuda company with limited liability.

“Permitted Holder” means N. Malone Mitchell, 3rd and any other Person that, directly or indirectly, is controlled by him.

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“Permitted Liens” means (a) Liens on property securing Funded Debt that exist at the time the Company acquires the property, including any acquisition by means of a merger or consolidation of a Person with or into the Company, but only if at the time of such acquisition such Liens do not secure Funded Debt in an aggregate principal amount in excess of the fair market value of the property so acquired and (b) Liens to secure any refinancing (or successive refinancings) as a whole, or in part, of Funded Debt secured by any Permitted Lien, but only if (y) the principal amount of Funded Debt secured by such Lien at such time is not increased by an amount greater than the amount necessary to pay accrued but unpaid interest and any fees and expenses, including premiums, related to such refinancing and (z) the Lien securing such Funded Debt is limited to the same assets that secured the debt being so refinanced.

“Person” means any individual, corporation, partnership, joint venture, association, limited liability company, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.

“Recognized Exchange” means the Toronto Stock Exchange, the NYSE MKT, the New York Stock Exchange, the NASDAQ Global Select Market, the NASDAQ Global Market or any other stock exchange of similar reputation (or any of their respective successors).

“SEC” means the U.S. Securities and Exchange Commission or any successor to the rights and duties thereof.

“Stock Repurchase Agreement” means that certain Stock Repurchase Agreement between National Financial Services LLC and the Company, dated March 30, 2015.

“Subsequent Tranche” shall mean increments of $250,000.

“Subsidiary” means any direct or indirect subsidiary of the Parent. For the avoidance of doubt, the Company is a Subsidiary of the Parent.

ARTICLE 2

BASIC TERMS

2.1 Principal.

(a) Scheduled Repayment. Except as otherwise provided in this Note, the principal of this Note shall be due and payable on the Maturity Date.

(b) Optional Prepayment. This Note may be prepaid in whole or in part at any time, and from time to time, without premium or penalty.

2.2  Interest.

(a) The Company agrees to pay interest in respect of the unpaid principal amount of this Note at a rate per annum equal to the lesser of the Applicable Rate and the Maximum Rate. Notwithstanding the preceding sentence, the Company agrees to pay interest in respect of overdue principal, and, to the extent permitted by law, overdue interest, at a rate per annum equal to the lesser of the Default Rate and the Maximum Rate.

(b) Interest on the principal of this Note shall be due and payable (i) on each Interest Payment Date and the Maturity Date, (ii) upon the payment or prepayment, in full or in part, of any of the principal of this Note (but only with respect to the principal of the Note so prepaid), (iii) at the maturity of this Note (whether by acceleration or otherwise), and (iv) after maturity (whether by acceleration or otherwise), on demand.

(c)           All computations of interest, both before and after maturity, shall be made on the basis of a year of 360 days comprised of twelve 30 day months.

2.3 Payments in General. Whenever any payment to be made under this Note shall be stated to be due on a day that is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day, and, with respect to payments of principal, interest thereon shall be payable at the applicable rate during such extension. Each payment received by the Holder shall be applied (x) first to all costs and expenses incurred by Holder in enforcing this Note, (y) second, to the payment of accrued but unpaid interest hereunder, and (z) third, to the reduction of the unpaid principal balance hereof.

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2.4 Advances. The initial principal amount of this Note shall equal the Initial Tranche. Subsequent Tranches may be drawn by delivering written draw requests to the Holder no less than three (3) Business Days before the requested borrowing date. No advances shall be made after December 31, 2015.

2.5     Purpose of Loan. The proceeds from the loan are to be used only for the Company’s purchase of Common Shares under the Stock Repurchase Agreement.

ARTICLE 3

COVENANTS

The Company hereby covenants and agrees with the Holder that, so long as the principal of or interest on any Note shall be unpaid:

3.1 Compliance with Law. The Company will do or cause to be done all things necessary (i) to preserve and keep in full force and effect at all times the Company’s existence, and (ii) to cause the Parent and its Subsidiaries to comply in all material respects with all applicable laws and all applicable rules, regulations and orders issued by any governmental authority, noncompliance with which could reasonably be expected to have a material adverse effect on the business, operations, assets and/or financial or other condition of the Parent and its Subsidiaries taken as a whole (but any such noncompliance contested by the Parent or any Subsidiary in good faith by appropriate proceedings shall not constitute a breach of this Section 3.1(ii)).

3.2 Performance of Liabilities. The Company will (i) duly pay and discharge all of its material obligations in a timely manner, other than obligations that the Company is contesting in good faith by appropriate proceedings, and (ii) duly pay and discharge all taxes before the same shall become in default, which taxes, if unpaid, might become a Lien upon any properties of the Company if the loss of such properties could reasonably be expected to have a material adverse effect on the business, operations, prospects, assets and/or financial or other condition of the Company and its Subsidiaries taken as a whole.

3.3 Reporting Requirements. The Company shall furnish to the Holder the following: 

(a) Defaults. Within five business days after obtaining knowledge of the occurrence of any Event of Default, a statement of an appropriate officer of the Company setting forth the details of such Event of Default and the action that the Company has taken or proposes to take with respect thereto.

(b) Financial Statements. As soon as available, a copy of the annual audit report for each fiscal year for the Parent, including therein the balance sheet of the Parent as of the end of such fiscal year and related statements of income, shareholders’ equity and cash flows for such fiscal year; provided, that the Parent shall not be required to deliver any financial statements of the Parent to the Holder if the Parent is subject to the periodic reporting requirements of the Exchange Act.

(c) Litigation. Notification in writing within 10 days after learning thereof, of any litigation against the Parent or its Subsidiaries involving an amount in controversy exceeding $10,000,000, whether or not the claim is considered by the Parent to be covered by insurance.

3.4 Fundamental Change Repurchase. If a Fundamental Change occurs at any time prior to the Maturity Date, the Company shall repay the principal amount of this Note, plus accrued and unpaid interest.

3.5 Limitations on Liens.

(a) The Company shall not incur or permit to exist any Lien of any nature whatsoever on any of its properties, whether owned as of the date hereof or hereafter acquired, securing Funded Debt, other than Permitted Liens, without effectively providing that this Note shall be secured equally and ratably with (or, at the Company’s election, prior to) such Funded Debt for so long as such Funded Debt is so secured. Any Lien created securing this Note pursuant to the preceding sentence will be automatically and unconditionally released and discharged upon (i) the release and discharge of all Liens securing Funded Debt to which it relates or (ii) any sale or transfer to an independent third party of the property secured by such Lien (but if the net proceeds of such sale or transfer are applied towards the repayment of Funded Debt secured by such property, then the release and discharge of the Lien securing this Note shall only occur pursuant to this sentence if such net proceeds shall also be applied, on a pro rata basis, towards the repayment of the principal of this Note).

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(b) The Company shall not incur or permit to exist any Lien of any nature whatsoever on the Collateral except in favor of Holder.

3.6 Asset Sale/Joint Venture Event. If an Asset Sale/Joint Venture/Financing Repurchase Event occurs at any time prior to the Maturity Date, on or concurrently with the occurrence any such event, the Company will send a notice to Holder describing the transaction or transactions that constitute the event and promptly repay the Note in full, including any accrued but unpaid interest.

3.7 Origination Fee. In consideration of Holder making the advances contemplated by this Note, the Company covenants and agrees to pay Holder a loan origination fee equal to $15,000 concurrently with the execution of this Note by the Company.

3.8 Opinion of Counsel. On or prior to the execution of this Note by the Company, the Company shall deliver an opinion of counsel to the Company, in form and substance reasonably acceptable to Holder, that the execution, delivery and performance of the Note and the Guaranty by the Company and Parent, respectively, will not constitute a breach of or default under the (i) Indenture, dated as of February 20, 2015, between Parent and U.S. Bank National Association, as trustee; and (ii) Credit Agreement, dated as of May 6, 2014, among Amity Oil International Pty Ltd, DMLP, Ltd., Petrogas Petrol Gaz ve Petrokimya Ürünleri Insaat Sanayi ve Ticaret A.Ş., Talon Exploration, Ltd., TransAtlantic Exploration Mediterranean International Pty. Ltd., and TransAtlantic Turkey, Ltd., as borrowers, Parent, the Company and TransAtlantic Worldwide, Ltd., as guarantors, the lenders party thereto from time to time, BNP Paribas (Suisse) SA as coordinating mandated lead arranger, sole bookrunner, letter of credit issuer, administrative agent, collateral agent and technical agent, and International Finance Corporation, as mandated lead arranger.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES

The Company represents and warrants to the Holder that:

4.1 Execution and Delivery. The execution, delivery, and performance by the Company of this Note and the consummation of the transactions contemplated hereby do not and will not (i) violate in any material respect any provision of federal, state, or local law or regulation applicable the Company, or any order, judgment, or decree of any court or other governmental authority binding on the Company, or any of its organizational documents, (ii) result in a breach of, or constitute (with due notice or lapse of time or both) a default under any material agreement to which the Company is a party or bound, (iii) result in or require the creation or imposition of any Lien of any nature whatsoever upon any assets of the Company other than Liens in favor of the Holder, (iv) require any approval or consent of any third party under any material agreement to which the Company is a party or bound, other than consents or approvals that have been obtained and that are still in force and effect, or (v) require any material registration with, consent, or approval of, or notice to, or other action with or by, any governmental authority, other than registrations, consents, approvals, notices, or other actions that have been obtained and that are still in force and effect. Without limiting the generality of the foregoing, the Company is not party to any agreement that by its terms would preclude the Company from paying amounts due under this Note when due.

4.2 Consents and Approvals. No consent, approval, authorization or other order of any Person and no consent, authorization, approval, or other action by, and no notice to or filing with, any governmental authority is required for the execution, delivery or performance of this Agreement by the Company.

4.3 Enforceability. This Note has been duly executed, delivered and authorized by the Company and constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms.

4.4 Litigation. There are no litigation, arbitration, governmental or administrative proceedings, actions, examinations, claims or demands pending, or to the knowledge of the Company, threatened that could materially adversely affect performance by the Company of its obligations under this Note.

4.5 Use of Proceeds. The proceeds of advances made hereunder will be used solely for the purposes set forth in Section 2.5 hereof. 

The representations and warranties set forth in this Article 4 shall survive the execution and delivery of this Note.

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ARTICLE 5

DEFAULT AND REMEDIES

5.1 Events of Default. An “Event of Default” occurs if:

(a) the Company defaults in the payment of principal of or interest on this Note when the same becomes due and payable and, with respect to a default in the payment of interest, such default continues for 5 business days after the Company has received written notice thereof;

(b) the Company shall fail to observe or perform any other covenant or agreement contained in this Note and such default continues for 10 days after the Company has received written notice thereof;

(c) the Parent or the Company shall fail to make any payment of principal of or interest on any indebtedness for money borrowed when due after giving effect to any applicable grace periods (whether due by acceleration or otherwise) and the aggregate amount of all past-due indebtedness (including indebtedness accelerated pursuant to the terms thereof) shall be equal to or greater than $10,000,000;

(d) the Parent or the Company (i) shall commence a voluntary case concerning itself under any Bankruptcy Law now or hereafter in effect, or any successor thereof; (ii) is the object of an involuntary case under any Bankruptcy Law; or (iii) commences any Distribution Event or is the object of an involuntary Distribution Event; and/or

(e) any representation or warranty set forth in this Note shall prove to be incorrect in any material respect and such default continues for 10 days after the Company has received written notice thereof.

5.2  Remedies.

(a) If an Event of Default (other than an Event of Default under Section 5.1(d)) shall occur and be continuing, the Holder may declare by notice in writing given to the Company, the entire unpaid principal amount of this Note, together with accrued but unpaid interest thereon, to be immediately due and payable, in which case this Note shall become immediately due and payable, both as to principal and interest, without presentment, demand, default, notice of intent to accelerate and notice of such acceleration, protest or notice of any kind, all of which are hereby expressly waived, anything herein or elsewhere to the contrary notwithstanding.

(b) If an Event of Default under Section 5.1(d) shall occur and be continuing, the entire unpaid principal amount of this Note, together with accrued but unpaid interest thereon, shall automatically become immediately due and payable, both as to principal and interest, without presentment, demand, default, notice of intent to accelerate and notice of such acceleration, protest or notice of any kind, all of which are hereby expressly waived, anything herein or elsewhere to the contrary notwithstanding.

(c) If any Event of Default shall have occurred and is continuing, the Holder may proceed to protect and enforce its rights either by suit in equity or by action at law, or both. In addition, in such event the Holder shall be entitled to exercise all of its rights and remedies under the Guaranty (as hereinafter defined).

ARTICLE 6

SECURITY

6.1 Pledge of Collateral and Guaranty. To secure payment and performance of the obligations under this Note, the Company hereby grants to the Holder a first priority Lien and security interest in the Collateral. In addition, this Note is guaranteed by the Parent pursuant to a Guaranty of even date herewith (the “Guaranty”).

ARTICLE 7

MISCELLANEOUS

7.1 Amendment. This Note may be amended, modified, superseded or cancelled, and any of the terms, covenants, or conditions hereof may be waived, only by a written instrument executed by the Company and the Holder at such time.

7.2  Successors and Assigns.

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(a) The rights and obligations of the Company and the Holder under this Note shall be binding upon, and inure to the benefit of, and be enforceable by, the Company and the Holder, and their respective permitted successors and assigns.

(b) The Holder may not sell, assign (by operation of law or otherwise), transfer, pledge, grant a Lien on, or otherwise dispose of this Note or any portion hereof or any rights or obligations hereunder unless the Company has granted its prior written consent; provided, however, that the Holder may transfer or assign this Note or any portion thereof to any one or more affiliates of Holder.

(c) The registered owner of this Note may be treated as the owner of it for all purposes.

7.3 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial. This Note and the validity and enforceability hereof shall be governed by and construed and interpreted in accordance with the laws of the State of Illinois without giving effect to conflict of laws rules or choice of laws rules thereof. The Company hereby submits itself to non-exclusive jurisdiction in any suit, action or proceeding with respect to this Note brought in the Courts of the State of Illinois or in the United States District Court for the Northern District of Illinois. THE COMPANY AND THE HOLDER, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, EACH KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE IRREVOCABLY, ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS NOTE OR ANY AMENDMENT, INSTRUMENT OR DOCUMENT WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY LENDING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, OR ANY COURSE OF CONDUCT OR COURSE OF DEALING IN WHICH THE HOLDER AND THE COMPANY ARE ADVERSE PARTIES IN CONNECTION HEREWITH OR THEREWITH, AND EACH AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE HOLDER GRANTING ANY FINANCIAL ACCOMMODATION TO THE COMPANY.

7.4 Waivers. Except as may be otherwise provided herein, the makers, signers, sureties, guarantors and endorsers, if any, of this Note severally waive demand, presentment, notice of dishonor, notice of intent to demand or accelerate payment hereof, notice of acceleration, diligence in collecting, grace, notice, and protest, and agree to one or more extensions for any period or periods of time and partial payments, before or after maturity, without prejudice to the Holder.

7.5 No Waiver by Holder. No failure or delay on the part of the Holder in exercising any right, power or privilege hereunder and no course of dealing between the Company and the Holder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

7.6 Notices. All notices, requests, demands and other communications provided for hereunder shall be in writing and addressed as follows (i) if to the Holder, addressed to it at 1603 Orrington Avenue, Suite 810, Evanston, Illinois 60201, (ii) if to the Company, addressed to it at 16803 Dallas Parkway, Addison, Texas 75001, Attention: Chad Burkhardt, or to such other address as the Company may have designated in writing to the Holder. All notices addressed as above shall be deemed to have been properly given: (i) if served in person, upon acceptance or refusal of delivery; (ii) if mailed by certified or registered mail, return receipt requested, postage prepaid, on the third (3rd) day following the day such notice is deposited in any post office station or letter box; (iii) if sent by recognized overnight courier, on the first (1st) day following the day such notice is delivered to such carrier or (iv) if given by facsimile or other electronic transmission, on the day acknowledgment of receipt is received.

7.7 Limitation on Interest. Notwithstanding any other provision of this Note, interest on the indebtedness evidenced by this Note is expressly limited so that in no contingency or event whatsoever, whether by acceleration of the maturity of this Note or otherwise, shall the interest contracted for, charged or received by the Holder exceed the maximum amount permissible under applicable law. If from any circumstances whatsoever fulfillment of any provisions of this Note or of any other document evidencing, securing or pertaining to the indebtedness evidenced hereby, at the time performance of such provision shall be due, shall involve transcending the limit of validity prescribed by law, then, ipso facto, the obligation to be fulfilled shall be reduced to the limit of such validity, and if from any such circumstances the Holder shall ever receive anything of value as interest or deemed interest by applicable law under this Note or any other document evidencing, securing or pertaining to the indebtedness evidenced hereby or otherwise an amount that would exceed the Maximum Rate, such amount that would be excessive interest shall be applied to the reduction of the principal amount owing under this Note or on account of any other indebtedness of the Company to the Holder, and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal of this Note and such other indebtedness, such excess shall be refunded to the Company. In determining whether or not the interest paid or payable with respect to any indebtedness of the Company to the Holder, under any specific contingency, exceeds the Maximum Rate, the Company and the Holder shall, to the maximum extent permitted by applicable law, (a) characterize any non-principal payment as an expense, fee or premium rather than as interest, (b) exclude voluntary prepayments and the effects thereof, (c) amortize, prorate, 

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allocate and spread the total amount of interest throughout the term of such indebtedness so that the actual rate of interest on account of such indebtedness does not exceed the Maximum Rate permitted by applicable law, and/or (d) allocate interest between portions of such indebtedness, to the end that no such portion shall bear interest at a rate greater than the Maximum Rate. The terms and provisions of this paragraph shall control and supersede every other conflicting provision of this Note and all other agreements between the Company and the Holder.

7.8 Expenses. The Company shall pay the Holder all out-of-pocket fees and expenses, including, without limitation, reasonable out-of-pocket fees and expenses of legal counsel, incurred by the Holder in connection with the enforcement of this Note.

7.9 Interpretation. For purposes of this Note, (a) “or” is not exclusive, (b) “including” means “including without limitation,” (c) words in the singular include the plural, and vice versa, and (d) references to “$” and “dollars” mean lawful money of the United States of America.

7.10 Series of Notes. This Note is one of a series of Promissory Notes (the “Series Notes”) made in connection herewith in an aggregate principal amount of up to Three Million Dollars ($3,000,000). Each request for an advance pursuant to Section 2.4 hereof shall be made pro rata among Holder and the other holders of the Series Notes. This Note and the other Series Notes shall rank pari passu as to the payment of principal and interest. Holder agrees that any payments or prepayments to Holder and to holders of the other Series Notes, whether principal, interest or otherwise, shall be made pro rata among Holder and the other holders of the Series Notes based upon the aggregate unpaid principal amount of this Note and the other Series Notes. None of the Series Notes nor any term thereof may be amended or waived except by a written instrument signed by the Company and the holders of Series Notes representing a majority of the aggregate outstanding principal amounts under the Series Notes, and any such amendment or waiver shall be binding on all of the holders of Series Notes. Holder agrees that the exercise of any rights and remedies under this Note or the Guaranty by Holder or by another holder of a Series Note under such Series Note or any guaranty thereof by the Parent shall affect and be for the benefit all holders of the Series Notes on a pro rata basis based upon the aggregate unpaid principal amount of the Series Note held by such holder.

7.11 Counterpart Execution. This Note may be executed in any number of counterparts and by different parties hereto on separate counterparts, and all such counterparts taken together shall be deemed to constitute one instrument. Delivery of an executed counterpart signature page to this Note by telecopy or electronically (such as a .pdf file) shall be effective as delivery of manually executed counterparts of this Note.

EXECUTED as of the date first written above.

 

	
TRANSATLANTIC PETROLEUM (USA) CORP.

	
 
	
 

	
By: 
	
/s/ Wil F. Saqueton

	
Name: 
	
Wil F. Saqueton

	
Title: 
	
Vice President & CFO

	
 
	
 

	
The undersigned agrees to make advances as required pursuant to Section 2.4 of this Note.

	
 

	
GARY WEST CRT 2 LLC

	
 
	
 

	
By: 
	
/s/ Marc D. Harper

	
Name: 
	
Marc D. Harper

	
Title: 
	
Vice President

	
 
	
 

	
By:
	
 /s/ Thomas B. Barker

	
Name:
	
Thomas B. Barker

	
Title:
	
Trustee

 

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