Document:

ex_216170.htm

 

Exhibit 10.1

 

ADMINISTRATIVE SERVICES AGREEMENT

 

This ADMINISTRATIVE SERVICES AGREEMENT (this “Agreement”), dated effective as of January 1, 2021 (the “Effective Date”), is by and between Regional Energy Investors, LP, a Texas limited partnership d/b/a Regional Energy Management (the “Administrator”) and Energy 11, LP, a Delaware limited partnership (“E11”), Energy 11 Operating Company, LLC, a Delaware limited liability company (“E11OC” and, together with E11, the “E11 Companies”), Energy Resources 12, LP, a Delaware limited partnership (“ER12”) and Energy Resources 12 Operating Company, LLC, a Delaware limited liability company (“ER12OC” and, together with ER12, the “ER12 Companies”) (E11, E11OC, ER12 and ER12OC are sometimes collectively referred to herein as the “Company”). The Administrator and the Company are sometimes referred to herein individually as a “Party,” and collectively as the “Parties.”

 

BACKGROUND:

 

A.     The Company is engaged in conducting the Business (as defined below).

 

B.     The Administrator employs or engages, or will employ or engage, individuals who provide administrative, advisory, financing, operating and/or professional services that are necessary and useful to the Company.

 

C.     The Company desires to engage the Administrator to provide such services and the Administrator desires to be engaged to provide such services, in each case in accordance with the terms hereof, and the Administrator and the Company desire to enter into this Agreement for purposes of documenting the terms and conditions upon which such services will be provided.

 

NOW THEREFORE, in consideration of the agreements herein set forth and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:

 

ARTICLE I

DEFINED TERMS, INTERPRETATION

 

Section 1.1 Defined Terms. As used in this Agreement, each of the following terms has the meaning given in this Section 1.1 as follows:

 

“Administrator” has the meaning specified in the introductory paragraph of this Agreement.

 

“Administrator Expenses” has the meaning specified in Section 3.1(a).

 

“Administrator Indemnified Parties” has the meaning specified in Section 7.l(a).

 

“Affiliate” means, with respect to any Person, each other Person that directly or indirectly (through one or more intermediaries or otherwise) Controls, is Controlled by, or is under common Control with such Person.

 

“Agreement” has the meaning specified in the introductory paragraph of this Agreement.

 

“Allocated Costs and Expenses” has the meaning specified in Section 3.2.

 

-1-

 

 

“Business” means the acquisition, disposition, ownership and management of oil and gas properties as a non-operator and associated financings, refinancings, mergers, acquisitions and related activities.

 

“Company” has the meaning specified in the introductory paragraph of this Agreement and, unless the context otherwise requires, includes any Subsidiaries of the Company.

 

“Company Indemnified Parties” has the meaning specified in Section 7.l(b).

 

“Control” (including collective meanings, “Controlling,” “Controlled by” and “under common Control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.

 

“Direct Costs and Expenses” has the meaning specified in Section 3.2.

 

“Effective Date” has the meaning specified in the introductory paragraph of this Agreement.

 

“Employee” means each employee or individual independent contractor of Administrator.

 

“Estimated Expense Statement” has the meaning specified in Section 3.l(b).

 

“Estimated Administrator Expenses” has the meaning specified in Section 3.l(b).

 

“Expense Statement” has the meaning specified in Section 3.l(a).

 

“Force Majeure Event” means any cause or event not reasonably within the control of the Party whose performance is sought to be excused thereby that cannot, despite the exercise of commercially reasonable remediation or mitigation efforts, be prevented, avoided or removed and that prevents the total or partial performance of obligations of the affected Party under this Agreement. The following causes and events (the list of which is not exhaustive) shall be considered Force Majeure Events to the extent such causes and events present the characteristics described in the preceding sentence: lack of availability of drilling and completion equipment and governmental ordered drilling, hydraulic fracturing, and other oil and gas development moratoriums and delays, the inability or delay in obtaining governmental permits, landowner restrictions and objections or lack of access to sufficient water, act of God, act of the public enemy, war, blockade, public riot, lightning, fire, storm, flood, freeze, drought, excessive rainfall or other act of nature, explosion, governmental action (including changes in Laws or regulations, policies or, in each case, the enforcement thereof), governmental inaction, any strike, work stoppage or other organized labor difficulty, or any health emergency or pandemic (e.g., COVID-19).

 

“Governmental Authority” means any federal, national, regional, state, municipal or local government, any political subdivision or any governmental, judicial, public or statutory instrumentality, tribunal, court, arbitral panel, or other regulatory bureau, authority, body or entity having legal jurisdiction over the matter or Person in question.

 

“Initial Term” has the meaning specified in Section 6.1.

 

“Law” means any and all applicable laws, statutes, ordinances, permits, decrees, rulings, writs, injunctions, orders, codes, judgments, principles of common law, rules or regulations which are promulgated, issued or enacted by a Governmental Authority having jurisdiction.

 

“Liabilities” has the meaning specified in Section 7.1(a).

 

-2-

 

 

“Management Fee” means the annual advisory fee paid by ER12 Companies to Energy Resources 12 GP, LLC, the general partner of the ER12 Companies.

 

“Non-Parties” has the meaning specified in Section 9.15.

 

“Parties” has the meaning specified in the introductory paragraph of this Agreement.

 

“Person” means any natural person, corporation, company, limited or general partnership, joint stock company, joint venture, association, limited liability company, trust, bank, trust company, land trust, business trust or other entity or organization, whether or not a Governmental Authority.

 

“Portfolio Company” means corporation, association, partnership or other business entity that is, directly or indirectly, managed or advised by the Administrator or its Affiliates (including the Company).

 

“Services” has the meaning set forth in Section 2.1.

 

“Subsidiary” means, with respect to any specified Person, any corporation, association, partnership or other business entity (a) which is controlled by such Person, or (b) the outstanding equity securities of which are entitled to more than fifty percent (50%) of the distributions therefrom and are held, directly or indirectly, by such Person.

 

“Term” has the meaning specified in Section 6.1.

 

“Third Party” means any Person other than a Party to this Agreement or an Affiliate of a Party to this Agreement.

 

Section 1.2 References and Titles. All references in this Agreement to Exhibits, Schedules, Sections, paragraphs, subsections and other subdivisions refer to the corresponding Exhibits, Schedules, Sections, paragraphs, subsections and other subdivisions of or to this Agreement unless expressly provided otherwise. The words “this Agreement,” “herein,” “hereby,” “hereunder” and “hereof,” and words of similar import, refer to this Agreement as a whole and not to any particular Section, subsection or other subdivision unless expressly so limited. The word “including” (in its various forms) means including without limitation. All references to “$” or “dollars” shall be deemed references to United States Dollars. Titles appearing at the beginning of any Sections, subsections or other subdivisions of this Agreement are for convenience only, do not constitute any part of this Agreement, and shall be disregarded in construing the language hereof. The word “or” is not exclusive. Exhibits and Schedules referred to herein are attached to and by this reference incorporated herein for all purposes. Pronouns in masculine, feminine or neuter genders shall be construed to state and include any other gender, and words, terms and titles (including terms defined herein) in the singular form shall be construed to include the plural and vice versa, unless the context otherwise requires. References to any Law or agreement (or contract) means such Law or agreement (or contract) as it may be amended from time-to-time. If an ambiguity, question of intent or question of interpretation arises, this Agreement must be construed as if drafted jointly, and there must not be any presumption, inference or conclusion drawn against either Party by virtue of the fact that its representatives have authored this Agreement or any of its terms. Any reference to an agreement or contract herein shall include any amendment, modification or replacement thereof that is in accordance with the provisions of this Agreement.

 

ARTICLE II 

SERVICES

 

Section 2.1 Engagement of Administrator. Commencing on the Effective Date, the Company hereby appoints, retains and authorizes the Administrator, and the Administrator hereby accepts such

 

-3-

 

 

appointment and agrees, to perform, or arrange to be performed, any and all day to day administrative, operating and professional services reasonably requested by and at the direction of the Company or as might be reasonably required for the effective administration and operation of the Business (collectively, the “Services”) on the terms and conditions in this Agreement. The Services shall exclude, however, the following other than providing information and data related thereto: matters concerning regulatory or legal compliance (e.g., SEC and FINRA), audits, investor relations, financing, acquisition or disposition of assets with a value of $50,000 or more, or the hiring of outside advisors, consultants, independent contractors, attorneys or experts.

 

Section 2.2 Management Standards. Subject to the terms hereof, the Administrator will act in material compliance with the provisions of this Agreement, and perform the Services in accordance with prudent industry practices and with a degree of care, diligence and skill of a reasonably prudent manager involved in the Services to entities involved in the identification, acquisition, disposition, ownership, finance and of oil and natural gas assets. The Administrator shall have no obligation to advance funds for the account of the Company or to pay any sums of its own in connection with the performance of the actions which it is authorized or required to take on behalf of the Company hereunder.

 

Section 2.3 Certain Limitations on Services. It is the intent of the Company and the Administrator to maintain the separate existence of each entity, to hold themselves out to others as separate entities and to conduct their respective businesses in a manner which respects and preserves their separate identities. Accordingly, the Administrator will provide the Services, and the Company will operate its business, consistent with this intent. Nothing in this Agreement shall prohibit the Administrator and the Company from acknowledging to Third Parties their status as parties to this Agreement.

 

Section 2.4 Records. The Administrator shall maintain reasonable books of account, receipts, disbursements, and all other records relating to the Services performed hereunder.

 

ARTICLE III 

COMPANY EXPENSES AND FEES

 

Section 3.1 Company Expenses.

 

(a)     Expense Statements. The Company shall reimburse the Administrator (in the event the Administrator, at its sole option, elects to pay for same) for the costs and expenses incurred by the Administrator on behalf of the Company in connection with performing the Services, including any costs or expenses of the kind described on Exhibit A (the “Administrator Expenses”). The Administrator shall provide the Company with a statement on a regular basis setting forth such Administrator Expenses (the “Expense Statement”), and the amount noted in the Expense Statement shall be payable on demand to the Administrator and no later than the timeframe indicated in the Expense Statement (except to the extent such Administrator Expenses have been advanced by the Company to the Administrator pursuant to Section 3.l(b)).

 

(b)     Advance Payments to Administrator. On or prior to the first day of each calendar month, the Administrator shall deliver to the E11 Companies and the ER12 Companies a reasonable estimated statement (the “Estimated Expense Statement”) of the Administrator Expenses it expects to incur on behalf of the Company in connection with performing the Services for such calendar month (the “Estimated Administrator Expenses”), and the amount noted in the Estimated Expense Statement shall be payable to the Administrator by the E11 Companies and the ER12 Companies, as applicable, on or before the tenth (10th) day of the calendar month to which it relates. To the extent any Estimated Administrator Expenses are not incurred by the Administrator or have been reasonably disapproved by the Company, such Administrator Expenses will be credited to the Estimated Administrator Expenses payable for the immediately following month or the Administrator Expenses payable pursuant to Section 3.1. Any Estimated Administrator Expenses that are not incurred by the Administrator during the Term will be refunded to the E11 Companies or the ER12 Companies, as applicable, within 30 days after the month in which such expenses did not occur.

 

-4-

 

 

Section 3.2 Cost Allocation. To the extent reasonably practicable, when allocating the costs and expenses between the Portfolio Companies, the Administrator shall allocate to the Portfolio Companies the costs and expenses that are attributable to Services that are provided for the benefit such Portfolio Company (the “Direct Cost and Expenses”), including costs and expenses of (a) any of the Administrator’s personnel that are working for such Portfolio Company, or (b) financing, acquisitions, divestitures or other transactions exclusively attributable to such Portfolio Company. For all remaining costs and expenses (the “Allocated Costs and Expenses”), the percentage allocation between the Portfolio Companies shall be determined on a periodic basis (but not less than once per calendar year) by the Administrator and each Portfolio Company, in their joint good faith determination. In making such a determination, the parties will take into consideration the relative amount of time and expense the Administrator has incurred (or is expected to incur) in performing the Services for each Portfolio Company.

 

Section 3.3 Fees. In exchange for its services hereunder, the ER12 Companies shall pay the Administrator one-half of the Management Fee (the portion of the annual Management Fee to Administrator is currently estimated to be $545,000.00). Such fee shall be payable quarterly during the Term. The E11 Companies shall not be obligated to pay a fee hereunder.

 

ARTICLE IV

CONTRACT ADMINISTRATION; POWER OF ATTORNEY

 

Section 4.1 Contract Administration. The Services shall include negotiating, administering and terminating contracts (in each case as approved in advance by the Company), by and on behalf of the Company, in the ordinary course of Business. All such contracts shall be executed either by the Administrator in the name of the Company, pursuant to the power of attorney granted herein, or in the name of the Administrator for the benefit of the Company.

 

Section 4.2 Power of Attorney. By execution of this Agreement, the Company does hereby make, constitute and appoint the Administrator, and its successors, with full power of substitution, as its true and lawful attorney and agent with full power and authority in its name, place and stead to execute, swear to, acknowledge, deliver, file, record in the appropriate public offices and publish any and all contracts, agreements, instruments, conveyances, mortgages, deeds, notes and other documents of any kind or nature related to, arising out of or in connection with the Administrator’s performance of this Agreement, provided that such documents have been approved in advance by the Company. During the Term of this Agreement, the power of attorney granted in this Section 4.2 shall survive the bankruptcy, dissolution or other termination of the Company, shall extend and be binding upon the Company’s successors and assigns and shall continue in full force and effect regardless of the occurrence of any of the foregoing. The Company hereby agrees to be bound by any such contracts, agreements, instruments, conveyances, mortgages, deeds, notes and other documents executed or otherwise entered into by the attorney and agent acting in good faith pursuant hereto and pursuant to such power of attorney, and hereby waives any and all defenses that may be available to contest, negate, or disaffirm any action of the attorney and agent taken under such power of attorney, except in cases of bad faith, gross negligence, intentional misconduct or the absence of approval in advance by the Company of the document in question.

 

-5-

 

 

ARTICLE V

ADDITIONAL AGREEMENTS OF ADMINISTRATOR

 

Section 5.1 Compliance with Laws. In the performance of the Services pursuant to this Agreement, the Administrator shall comply in all material respects with applicable Law relative to the operation of the Business and the Company’s assets. The Administrator shall use its reasonable commercial efforts to remedy any violation of any such applicable Law that comes to its attention. The Administrator shall promptly notify the Company of any material violation of applicable Law in the performance of the Services pursuant to this Agreement, and the Administrator shall transmit promptly to the Company a copy of any citation or other communication received by the Administrator setting forth any such violation.

 

Section 5.2 Compliance with Obligations. The Administrator, to the extent such matters are reasonably within its control, shall use diligent and reasonable efforts to cause compliance in all material respects with all terms and conditions contained in any contract, agreement, judicial, administrative or governmental order, law or ruling, lease, mortgage, deed of trust or other contractual or security instrument affecting the Business or any of the Company’s assets; provided, however, that, except as otherwise set forth herein, the Administrator shall not be required to make any payment or incur any liability on account thereof. The Administrator shall promptly notify the Company of any material violation of any such instrument or agreement in any material respect.

 

ARTICLE VI

TERM; TERMINATION

 

Section 6.1 Term. The initial term of this Agreement will begin on the Effective Date and, subject to termination in accordance with Section 6.2, shall continue until the first to occur of (a) the date that is Five (5) years after the Effective Date (the “Initial Term”) or the end of any extension thereof, and (b) the date that the Company ceases to hold, directly or indirectly, any assets whatsoever. The Initial Term will automatically be extended for additional one (1) year periods after the Initial Term (as so extended); provided, however, that following the Initial Term, any Party may terminate this Agreement upon not less than sixty (60) days’ prior written notice to all other Parties (the Initial Term together with any such extension thereafter, the “Term”). The Company or the Administrator may terminated this Agreement with immediate effect upon material breach of the Agreement by the other, which breach has not been cured within 30 days after written notice of the details of the breach.

 

Section 6.2 Effect of Termination. The expiration or earlier termination of this Agreement shall not relieve any Party from any expense, liability or other obligation or remedy therefor that has accrued or attached prior to the expiration or earlier termination of this Agreement and the following provisions of this Agreement shall survive such termination: this Section 6.2. each of the indemnity obligations, the limitation on consequential and other damages under Section 7.4 and the other provisions of Article VII, which provisions shall survive indefinitely.

 

ARTICLE VII

INDEMNIFICATION; LIABILITY OF THE PARTIES

 

Section 7.1 Indemnification. From and after the Effective Date, the Parties will indemnify each other as follows:

 

-6-

 

 

(a)     Company Indemnification. The Company shall indemnify, defend, reimburse and hold harmless the Administrator and its Affiliates and their respective officers, managers, representatives, agents, members, Employees (together with the Administrator, the “Administrator Indemnified Parties”) from and against and in respect of any and all claims, liabilities, losses, costs, expenses (including reasonable attorneys’ fees and costs of investigation) or damages (collectively, “Liabilities”) incurred or suffered by an Administrator Indemnified Party in connection with, arising out of, or relating to, directly or indirectly, its performance of the Services hereunder for such Company, EVEN IF SUCH LIABILITIES AROSE IN WHOLE OR IN PART FROM THE SOLE, ACTIVE, PASSIVE, CONCURRENT OR COMPARATIVE NEGLIGENCE, STRICT LIABILITY, BREACH OF DUTY (STATUTORY OR OTHERWISE) OR OTHER FAULT OR VIOLATION OF ANY LAW OF OR BY ANY SUCH ADMINISTRATOR INDEMNIFIED PARTY, provided, however, that such indemnity will not apply in cases in which any such Liabilities are determined by a final and non-appealable judgment of a court of competent jurisdiction to have resulted from the gross negligence or intentional misconduct of the Administrator or any other Administrator Indemnified Party.

 

(b)     Administrator Indemnification. The Administrator shall indemnify, defend and hold harmless the Company, its Affiliates and their respective officers, directors, representatives, agents, members and employees (collectively, “Company Indemnified Parties”) from and against and in respect of any and all Liabilities incurred or suffered by a Company Indemnified Party in connection with, arising out of, or relating to, the gross negligence or intentional misconduct of the Administrator or another Administrator Indemnified Party in the Administrator’s performance of the Services.

 

Section 7.2 EXTENT OF INDEMNIFICATION: EXPRESS NEGLIGENCE RULE. WITHOUT LIMITING OR ENLARGING THE SCOPE OF THE INDEMNIFICATION, DEFENSE AND ASSUMPTION PROVISIONS SET FORTH IN THIS AGREEMENT, TO THE FULLEST EXTENT PERMITTED BY LAW, AN INDEMNIFIED PARTY SHALL BE ENTITLED TO INDEMNIFICATION HEREUNDER IN ACCORDANCE WITH THE TERMS OF SECTION 7.l REGARDLESS OF WHETHER THE ACT, OCCURRENCE OR CIRCUMSTANCE GIVING RISE TO ANY SUCH INDEMNIFICATION OBLIGATION IS THE RESULT OF THE SOLE, ACTIVE, PASSIVE, CONCURRENT OR COMPARATIVE NEGLIGENCE, STRICT LIABILITY, BREACH OF DUTY (STATUTORY OR OTHERWISE) OR OTHER FAULT OR VIOLATION OF ANY LAW OF OR BY ANY SUCH INDEMNIFIED PARTY, PROVIDED, HOWEVER, THAT NO SUCH INDEMNIFICATION SHALL BE APPLICABLE TO THE EXTENT OF ANY GROSS NEGLIGENCE OR INTENTIONAL MISCONDUCT OF THE INDEMNIFIED PARTY.

 

Section 7.3 Indemnification Procedure. If any indemnified party discovers or otherwise becomes aware of an indemnification claim arising under this Agreement, such party will give written notice to the indemnifying party, specifying such claim, and may thereafter exercise any remedies available to such indemnified party under this Agreement; provided, however, the failure of any indemnified party to give notice as provided herein will not relieve the indemnifying party of any obligations hereunder, to the extent the indemnifying party is not materially prejudiced thereby. Further, promptly after receipt by an indemnified party hereunder of written notice of the commencement of any action or proceeding with respect to which a claim for indemnification may be made against the indemnifying party, the indemnified party will give written notice to the indemnifying party of the commencement of such action, accompanied by a copy of all papers, if any, served with respect to the action or proceeding; provided, however, the failure of any indemnified party to give notice as provided herein will not relieve the indemnifying party of any obligations hereunder, to the extent the indemnifying party is not materially prejudiced thereby.

 

Section 7.4 Limitation on Consequential and Other Damages. NO PARTY SHALL BE ENTITLED TO RECOVER FROM ANY OTHER PARTY, OR SUCH PARTY’S RESPECTIVE AFFILIATES ANY INDIRECT, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES OR DAMAGES FOR LOST PROFITS OF ANY KIND ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, EXCEPT TO THE EXTENT ANY SUCH DAMAGES (INCLUDING COSTS OF DEFENSE AND REASONABLE ATTORNEY’S FEES INCURRED IN

 

-7-

 

 

CONNECTION WITH DEFENDING OF SUCH DAMAGES) ARE OWED TO A THIRD PARTY AS A RESULT OF THE ACTION OR INACTION OF A PARTY OR AS PART OF ITS INDEMNITY OBLIGATIONS UNDER THIS AGREEMENT, IN WHICH CASE SUCH THIRD PARTY DAMAGES (INCLUDING COSTS OF DEFENSE AND REASONABLE ATTORNEYS’ FEES INCURRED IN CONNECTION WITH DEFENDING AGAINST SUCH DAMAGES) SHALL NOT BE EXCLUDED BY THIS PROVISION AS TO RECOVERY HEREUNDER. SUBJECT TO THE PRECEDING SENTENCE, EACH PARTY, ON BEHALF OF ITSELF AND EACH OF ITS AFFILIATES WAIVES ANY RIGHT TO RECOVER PUNITIVE, SPECIAL, EXEMPLARY AND CONSEQUENTIAL DAMAGES, INCLUDING DAMAGES FOR LOST PROFITS, ARISING IN CONNECTION WITH OR WITH RESPECT TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

Section 7.5 Administrator Liability. Subject to the rights of the Company to terminate this Agreement, in no event shall the Administrator or its Affiliates have any liability under this Agreement or applicable Law, with respect to the provision of the Services under this Agreement for any claim, damage, loss or liability sustained or incurred in connection with its provision of the Services or any breach of any provision of this Agreement regarding the standard of performance of the Administrator in performing the Services under this Agreement, except to the extent (and only to the extent) such liability is attributable to or arises from the gross negligence or intentional misconduct of any Administrator Indemnified Party, and the Company, on its own behalf and on behalf of its Affiliates, releases the Administrator and its Affiliates from such liability, except to the extent (and only to the extent) such liability is attributable to or arises from the gross negligence or intentional misconduct of any Administrator Indemnified Party. Nothing in this Section 7.5 shall be deemed to be a release by the Company or any of its Affiliates of any claims against the Administrator arising from a breach by Administrator of its obligation to pay amounts owing to the Company pursuant to the terms hereof.

 

Section 7.6 Conspicuous. THE PARTIES AGREE THAT, TO THE EXTENT REQUIRED BY APPLICABLE LAW TO BE EFFECTIVE OR ENFORCEABLE, THE PROVISIONS IN THIS AGREEMENT IN ALL-CAPS FONT ARE “CONSPICUOUS” FOR THE PURPOSE OF ANY APPLICABLE LAW.

 

ARTICLE VIII 

FORCE MAJEURE

 

If a Party is rendered unable, wholly or in part, by reason of a Force Majeure Event to perform its obligations under this Agreement, other than obligations to make payments or provide indemnification or defense when due hereunder, then such Party’s obligations shall be suspended to the extent affected by the Force Majeure Event. Any Party claiming any Force Majeure Event shall provide prompt written notice thereof to the other Parties including full particulars of such Force Majeure Event.

 

ARTICLE IX 

MISCELLANEOUS

 

Section 9.1 Time. The Parties agree that time is of the essence in the performance of this Agreement.

 

-8-

 

 

Section 9.2 Independent Contractor. The Administrator and the Company are independent contractors and this Agreement shall not be construed as one of partnership, agency, joint venture, or employment between the Administrator and the Company, and the rights, duties, obligations and liabilities of each of the Parties under this Agreement shall be individual, not collective or joint. As between the Parties, (a) it is not the intention of the Parties to create, nor shall this Agreement be deemed or construed to create, a partnership, joint venture, association or trust, (b) the Administrator is not the actual or implied agent for the Company, (c) the Administrator has the exclusive authority to control and direct the specific means, method and manner of performance of the details of the Services to be provided hereunder, and (d) subject to the other express provisions of this Agreement and the right of the Company to direct the Administrator with respect to the ends to be accomplished, the Administrator shall have the exclusive responsibility for (i) the direction and supervision of its personnel (whether employees or contractors), (ii) the salary, employee benefits, other compensation and related costs of such Administrator personnel and (iii) the collection and payment of any payroll taxes or contributions or taxes for unemployment insurance, workers’ compensation, pensions and social security for the Administrator personnel that are imposed by any Governmental Authority.

 

Section 9.3 Notices. All notices and communications required or permitted under this Agreement shall be in writing addressed as indicated below, and any communication or delivery hereunder shall be deemed to have been duly delivered upon the earliest of: (a) actual receipt by the Party to be notified on personal delivery; or (b) if sent via overnight delivery by reputable overnight courier (e.g., Federal Express or UPS), on the first business day after depositing with such carrier U.S. certified mail, postage prepaid, return receipt requested, then the date shown as received on the return notice. Additionally, in order to be effective, all notices must be copied by same-day email. Addresses for all such notices and communication shall be as follows:

 

	
			 

				
			To the Administrator:

				
			Regional Energy Management

			
	
			 

				
			 

				
			5815 N. Western Ave.

			Oklahoma City, OK 73118-1215

			Attn: Anthony F. Keating, III

			Email: chip@keatinginv.com and michael@mallickgroup.com

			
	
			 

				
			 

				
			 

			
	
			 

				
			To the Company:

				
			Energy 11, LP

			
	
			 

				
			 

				
			Energy Resources 12, LP

			814 E. Main Street

			Richmond, VA 23201

			Attn: David McKenney

			Phone: 804-727-6318

			Email: dmckenney@applereit.com

			

 

Any Party may, upon written notice to the other Parties, change the address(es) and person(s) to whom such communications are to be directed.

 

Section 9.4 Cooperation. Prior to termination of this Agreement and at all times following the consummation of this Agreement, the Parties agree to execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such documents and instruments and do, or cause to be done, such other acts and things as may reasonably be requested by any Party to this Agreement, or are otherwise necessary or advisable, to assure that the benefits of this Agreement are realized by the Parties and that the Parties carry out their obligations under this Agreement and any document or other instrument delivered pursuant hereto; provided, however, that this Section 9.4 shall in no way be construed to amend, modify or otherwise change any obligations of the Parties under any other agreements to which such Party is a party.

 

-9-

 

 

Section 9.5 No Third-Party Beneficiaries. Except for the indemnification rights under Article VII, nothing in this Agreement, express or implied, is intended to confer upon anyone, other than the Parties hereto and their respective successors and assigns, any rights or remedies under or by reason of this Agreement or to constitute any Person a Third Party beneficiary of this Agreement.

 

Section 9.6 Cumulative Remedies. Subject to the other provisions hereof, no failure on the part of any Party to this Agreement to exercise and no delay in exercising any right hereunder will operate as a waiver thereof, nor will any single or partial exercise by any Party hereto of any right hereunder preclude any other or further right of exercise thereof or the exercise of any other right.

 

Section 9.7 Governing Law; Jurisdiction: Waiver of Jury Trial. THE VALIDITY, CONSTRUCTION, INTERPRETATION AND EFFECT OF THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO CONFLICTS RULES WHICH WOULD OTHERWISE APPLY THE LAWS OF ANOTHER JURISDICTION. EACH PARTY AGREES THAT IT SHALL BRING ANY ACTION OR PROCEEDING IN RESPECT OF ANY CLAIM ARISING OUT OF OR RELATED TO THIS AGREEMENT, WHETHER IN TORT OR CONTRACT OR AT LAW OR IN EQUITY, EXCLUSIVELY IN THE U.S. FEDERAL OR STATE COURT WITH JURISDICTION THEREOVER IN TARRANT COUNTY, TEXAS AND (A) IRREVOCABLY SUBMITS TO THE JURISDICTION OF SUCH COURTS, (B) WAIVES ANY OBJECTION TO LAYING VENUE IN ANY SUCH ACTION OR PROCEEDING IN SUCH COURTS, (C) WAIVES ANY OBJECTION THAT SUCH COURTS ARE AN INCONVENIENT FORUM OR DO NOT HAVE JURISDICTION OVER IT AND (D) AGREES THAT SERVICE OF PROCESS UPON IT MAY BE EFFECTED BY MAILING A COPY THEREOF POSTAGE PREPAID, REGISTERED OR CERTIFIED WITH RETURN RECEIPT REQUESTED AT THE ADDRESS SPECIFIED IN SECTION 9.3. THE FOREGOING CONSENTS TO JURISDICTION AND SERVICE OF PROCESS SHALL NOT CONSTITUTE GENERAL CONSENTS TO SERVICE OF PROCESS IN THE STATE OF TEXAS FOR ANY PURPOSE EXCEPT AS PROVIDED HEREIN AND SHALL NOT BE DEEMED TO CONFER RIGHTS ON ANY PERSON OTHER THAN THE PARTIES. FURTHER, EACH PARTY HEREBY KNOWINGLY AND INTENTIONALLY, IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING UNDER, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.

 

Section 9.8 Entire Agreement. This Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof, supersedes any prior agreements with respect to the subject matter hereof and there are no agreements, understandings, warranties or representations except as set forth herein.

 

Section 9.9 Assignment. Neither Party may assign any of its rights or delegate any of its duties under this Agreement without the express written consent of the other Party, except that the Administrator may assign any such rights or delegate any such duties to any of its Affiliates. Any assignment of rights or delegation of duties under this Agreement in violation of this section shall be void ab initio.

 

Section 9.10 Amendment. Neither this Agreement, nor any of the provisions hereof can be changed, waived, discharged or terminated, except by an instrument in writing, signed by the Party against whom enforcement of the change, waiver, discharge or termination is sought.

 

Section 9.11 Severability. If any clause or provision of this Agreement is illegal, invalid or unenforceable under any present or future law, the remainder of this Agreement will not be affected thereby. It is the intention of the Parties that if any such provision is held to be illegal, invalid or unenforceable, there will be added, in lieu thereof, a provision as similar in terms to such provisions as is possible to make such provision legal, valid and enforceable.

 

-10-

 

 

Section 9.12 Waiver. Waiver of performance of any obligation or term contained in this Agreement by any Party, or waiver by one Party of the other’s default hereunder, will not operate as a waiver of performance of any other obligation or term of this Agreement or a future waiver of the same obligation or a waiver of any future default.

 

Section 9.13 Counterparts; Facsimiles; Electronic Transmission. This Agreement may be executed in multiple counterparts, each of which will be an original instrument, but all of which will constitute one agreement. The execution and delivery of this Agreement by any Party may be evidenced by facsimile or any other electronic transmission recognized by law as a signature (including scanned documents delivered by email), which shall be binding upon all Parties.

 

Section 9.14 Joint Acknowledgement. This written Agreement represents the final agreement between the Parties and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the Parties. There are no unwritten oral agreements between the Parties.

 

Section 9.15 No Other Parties/No Alter Ego. Each Party hereto recognizes that only the Parties, and not their owners, agents or representatives (collectively and individually, “Non-Parties”), are parties to this Agreement. Each Party recognizes that the Non-Parties are not the alter ego of, or otherwise responsible for, any Party and covenants never to assert to the contrary.

 

Section 9.16. Notwithstanding anything contained herein, the Parties agree that the scope of Services will be adjusted accordingly if a disposition of any of the assets held by either the E11 Companies or ER12 Companies should occur.

 

 

[Remainder of Page Intentionally Left Blank-Signature Pages Follow]

 

 

 

-11-

 

 

IN WITNESS WHEREOF, the Parties have executed this Agreement as of December 1, 2020 to be effective for all purposes as of the Effective Date.

 

ADMINISTRATOR:

 

Regional Energy Investors, LP,

a Texas limited partnership

d/b/a Regional Energy Management

 

By: Regional Energy GP, LLC,

a Texas limited liability company

Its: General Partner

 

 

By: /s/ Anthony F. Keating, III

Name: Anthony F. Keating, III

Title: Manager

 

COMPANY:

 

	
			Energy 11, LP,

			a Delaware limited partnership

			 

			By: Energy 11 GP, LLC

			a Delaware limited liability company

			Its: General Partner

			 

			 

			By:  /s/ David S. McKenney

			Name: David S. McKenney

			Title: Chief Financial Officer

			 

			Energy 11 Operating Company, LLC

			a Delaware limited liability company

			 

			 

			By:  /s/ David S. McKenney

			Name: David S. McKenney

			Title: Chief Financial Officer

			 

				
			Energy Resources 12, LP,

			a Delaware limited partnership

			 

			By: Energy Resources 12 GP, LLC

			a Delaware limited liability company

			Its: General Partner

			 

			 

			By:  /s/ David S. McKenney

			Name: David S. McKenney

			Title: Chief Financial Officer

			 

			Energy Resources 12 Operating Company, LLC

			a Delaware limited liability company

			 

			 

			By:  /s/ David S. McKenney

			Name: David S. McKenney

			Title: Chief Financial Officer 

			

 

 

 

 

 

EXHIBIT A

 

COSTS AND EXPENSES

 

The following is a list of costs and expenses of the Administrator that shall be reimbursable by the Company to the extent such costs are allocable to Services pursuant to this Agreement (with references to personnel including employees and, approved in advance by the Company, independent contractors including, without limitation, consultants):

 

	 	
			•

				
			Personnel salaries and bonuses

			
	 	
			•

				
			Personnel burdens, benefits and other perquisites

			
	 	
			•

				
			Pension, retirement and insurance plans

			
	 	
			•

				
			Unemployment, payroll and other taxes

			
	 	
			•

				
			Office rent and occupancy costs

			
	 	
			•

				
			Office equipment and rentals

			
	 	
			•

				
			Office supplies

			
	 	
			•

				
			Office utilities

			
	 	
			•

				
			Data processing

			
	 	
			•

				
			Office maintenance and repairs

			
	 	
			•

				
			Employee parking

			
	 	
			•

				
			Telephone and communications

			
	 	
			•

				
			Postage and delivery expense

			
	 	
			•

				
			Business meals

			
	 	
			•

				
			Professional dues and subscriptions

			
	 	
			•

				
			Training expenses

			
	 	
			•

				
			Outsourced accounting services

			
	 	
			•

				
			Computer and software support

			
	 	
			•

				
			General land services

			
	 	
			•

				
			Information technology services including the provision of computer networks and databases, technology systems, and phone networks and plans

			
	 	
			•

				
			Regulatory and governmental consulting or lobbying services

			
	 	
			•

				
			Engineering, operations or other technical consulting or counseling services

			
	 	
			•

				
			Approvals, authorizations, licenses or permits required in connection with ownership of the Company’s assets or operation of the Business

			
	 	
			•

				
			Independent geological, geophysical and engineering services

			

 

In addition to the ordinary Costs and Expenses above, from time to time there could be additional costs and expenses listed below which Company and Administrator will have to expressly agree in writing the approval thereof. Those expenses are including, but not limited to:

 

	 	
			•

				
			Banking and industry relationships

			
	 	
			•

				
			Audit expense

			
	 	
			•

				
			Tax related services

			
	 	
			•

				
			Investor reporting expense

			
	 	
			•

				
			Legal services (other than legal services for prosecuting or defending claims regarding breach of this Agreement or in formation of the Administrator)

			
	 	•	Acquisition and due diligence costs - engineering, title, general land services associated with acquisitions, third-party consultants, environmental, broker fees, travel, meals and lodging directly related to acquisitions for the Company

 

A-1

 

 

	 	
			•

				
			Divestiture costs - engineering, title, third-party consultants, financial advisors, environmental, broker fees, travel, meals and lodging directly related to the Company’s assets

			
	 	
			•

				
			Formation and offering costs of the Company

			
	 	
			•

				
			Travel costs associated with meetings for the Company or meeting with any investors or prospective investors in the Company (including the cost and/or out-of-pocket expenses of chartering private aircraft owned by third parties or parties related to Administrator)

			
	 	
			•

				
			Bank services, including any amendment, restatement or replacement thereof and any waiver thereunder

			
	 	
			•

				
			Insurance

			
	 	
			•

				
			Franchise or state taxes

			
	 	
			•

				
			Third Party marketing fees

			
	 	
			•

				
			Risk management expenses

			
	 	
			•

				
			Board meeting expenses

			
	 	
			•

				
			Director fees and expenses

			

 

 

 

A-2adom-ex101_6.htm

Exhibit 10.1

 

EXCHANGE AGREEMENT

EXCHANGE AGREEMENT (the “Agreement”) is made as of the 2nd day of December, 2020, by and between ADOMANI, Inc., a Delaware corporation (the “Company”), and the parties identified as a "Holder" or “Holders” on the signature page hereto (collectively, the “Holders”).  Notwithstanding the foregoing, in the event that there is only one Holder as a party to this Agreement, then any and all references to Holders shall mean Holder. 

WHEREAS, each Holder holds the Company’s common stock purchase warrants to purchase up to the number of shares of common stock of the Company, $0.00001 par value per share (the “Common Stock”) as set forth on such Holder's signature page attached hereto, which were issued on January 9, 2018 (collectively, “Warrants”);

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act”), the Company and each Holder has agreed to exchange the Warrants for the number of shares of Common Stock as set forth on such Holder's signature page attached hereto (the “Shares”); and

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in consideration of the premises and the mutual agreements, representations and warranties, provisions and covenants contained herein, the parties hereto, intending to be legally bound hereby, agree as follows:

1.Definitions.  In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the meanings set forth in this Section 1:

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 405 under the Securities Act.  

“Board of Directors” means the board of directors of the Company.

“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

“Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

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

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

1

 

“Subsidiary” means any subsidiary of the Company, and shall, where applicable, also include any direct or indirect subsidiary of the Company formed or acquired after the date hereof.

2.Exchange. On the Closing Date (as defined below), subject to the terms and conditions of this Agreement, the Company agrees to issue to the Holders the Shares in exchange for the Warrants held by the Holders as of the date hereof and as set forth in the Holders’ signature pages attached hereto.  Subject to the conditions set forth below, the Exchange shall take place remotely on the second Trading Day (as defined below) after the date hereof, or at such other time and place as the Company and the Holders mutually agree (the “Closing” and the “Closing Date”).  At the Closing, the following transactions shall occur (such transactions in this Section 1, the “Exchange”):

2.1On the Closing Date, in exchange for the Warrants, the Company shall credit the number of Shares set forth on each Holder’s signature page to such Holder or its designee’s balance account with the Depository Trust Company (“DTC”) in accordance with the DTC instructions delivered by such Holder to the Company on or prior to the Closing Date.  The Shares shall not contain any restrictive legends.  Upon receipt of the Shares in accordance with this Section 2.1, all of the Holders’ rights under the Warrants shall be extinguished.  Each Holder shall tender to the Company its Warrants within five Trading Days (as defined below) of the Closing Date.  

2.2On the Closing Date, each Holder shall be deemed for all corporate purposes to have become the holder of record of its respective Shares, irrespective of the date such Shares are delivered to the Holder in accordance herewith. As used herein, “Trading Day” means any day on which the Common Stock is traded on the OTC Markets, or, if the OTC Markets 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.

2.3The Company and each Holder shall execute and/or deliver such other documents and agreements as are customary and reasonably necessary to effectuate the Exchange.

3.Closing Conditions.

3.1Conditions to Holders’ Obligations. The obligation of the Holders to consummate the Exchange is subject to the fulfillment, prior to or at the Closing, of each of the following conditions:

(a)Representations and Warranties. The representations and warranties of the Company contained in this Agreement shall be true and correct in all material respects on the date hereof and on and as of the Closing Date as if made on and as of such date.

(b)Issuance of Shares. At the Closing, the Company shall issue the Shares on the books and records of the Company in the name of the Holders.

(c)No Actions. No action, proceeding, investigation, regulation or legislation shall have been instituted, threatened or proposed before any court, 

2

 

governmental agency or authority or legislative body to enjoin, restrain, prohibit or obtain substantial damages in respect of, this Agreement or the consummation of the transactions contemplated by this Agreement.

(d)Proceedings and Documents. All proceedings in connection with the transactions contemplated hereby and all documents and instruments incident to such transactions shall be satisfactory in substance and form to the Holders, and the Holders shall have received all such counterpart originals or certified or other copies of such documents as they may reasonably request.

3.2Conditions to the Company’s Obligations. The obligation of the Company to consummate the Exchange is subject to the fulfillment, to the Company’s reasonable satisfaction, prior to or at the Closing, of each of the following conditions:

(a)Representations and Warranties. The representations and warranties of the Holders contained in this Agreement shall be true and correct in all material respects on the date hereof and on and as of the Closing Date as if made on and as of such date.

(b)No Actions. No action, proceeding, investigation, regulation or legislation shall have been instituted, threatened or proposed before any court, governmental agency or authority or legislative body to enjoin, restrain, prohibit, or obtain substantial damages in respect of, this Agreement or the consummation of the transactions contemplated by this Agreement.

(c)Proceedings and Documents. All proceedings in connection with the transactions contemplated hereby and all documents and instruments incident to such transactions shall be satisfactory in substance and form to the Company and the Company shall have received all such counterpart originals or certified or other copies of such documents as the Company may reasonably request. 

4.Representations and Warranties of the Company. The Company hereby represents and warrants to each Holder that:

4.1Organization and Qualification.  The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted.  Neither the Company nor any Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents.  Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability of this Agreement, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to 

3

 

perform in any material respect on a timely basis its obligations under this Agreement (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

4.2Authorization; Enforcement.  The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement, including but not limited to the Exchange.  The execution and delivery of this Agreement by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Board of Directors or the Company’s stockholders in connection herewith or therewith.  This Agreement has been duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law

4.3No Conflicts.  The execution, delivery and performance by the Company of this Agreement, the issuance of the Shares and the consummation by it of the transactions contemplated hereby and thereby do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.

4.4Valid Issuance of the Shares. The Shares when issued and delivered in accordance with the terms of this Agreement, for the consideration expressed herein, will be duly and validly issued, fully paid and non­assessable. The Company has reserved from its duly authorized capital stock the number of Shares issuable pursuant to this Agreement.  The Shares issued in exchange for the Warrants are freely tradeable without the need for registration under the Securities Act and shall not be required to bear any Securities Act legend.  

4.5Capitalization.  The Company has 73,663,797 shares of Common Stock outstanding.  The Company has not issued any capital stock since its most recently filed periodic 

4

 

report under the Exchange Act, other than pursuant to the exercise of employee stock options under the Company’s stock option plans, the issuance of shares of Common Stock to employees pursuant to the Company’s employee stock purchase plans and pursuant to the conversion and/or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic report under the Exchange Act.  No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by this Agreement.  The issuance of the Shares will not obligate the Company or any Subsidiary to issue shares of Common Stock or other securities to any Person (other than the Holders) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities.

4.6SEC Reports; Financial Statements.  The Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension.  As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, 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. The Company has never been an issuer subject to Rule 144(i) under the Securities Act. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing.  Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

4.7Compliance With Laws. The Company has not violated any law or any governmental regulation or requirement which violation has had or would reasonably be expected to have a Material Adverse Effect, and the Company has not received written notice of any such violation.

4.8Consents; Waivers.  No consent, waiver, approval or authority of any nature, or other formal action, by any Person, not already obtained, is required in connection with the execution and delivery of this Agreement by the Company or the consummation by the Company of the transactions provided for herein and therein.

4.9Absence of Litigation. Except as disclosed in the SEC Reports, there is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government 

5

 

agency, self­regulatory organization or body pending or, to the knowledge of the Company, threatened against or affecting the Company or any of the Company’s officers or directors in their capacities as such.

4.10[Other Agreements.  The Company hereby represents and warrants that none of the terms offered to other holders (“Other Holder”)  of Common Stock purchase warrants pursuant to separate agreements (“Other Warrant Agreement”, including any amendment, modification or waiver thereof), is or will be more favorable to such Other Holder than those of the Holder and this letter agreement.  Nothing contained in this letter agreement, and no action taken by the Holder pursuant hereto, shall be deemed to constitute the Holder and any Other Holder as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Holder and the Other Holders are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by this letter agreement and the Company acknowledges that the Holder and the Other Holders are not acting in concert or as a “group” with respect to such obligations or the transactions contemplated by this letter agreement or any Other Warrant Agreement.  The Company and the Holder confirm that the Holder has independently participated in the negotiation of the transactions contemplated hereby with the advice of its own counsel and advisors.]1

4.11No Group. The Company acknowledges that, to the Company’s knowledge, each Holder is acting independently in connection with this Agreement and the transactions contemplated hereby, and is not acting as part of a “group” as such term is defined under Section 13(d) of the Securities Act and the rules and regulations promulgated thereunder.

4.12No Commission Paid. Neither the Company nor any of its Affiliates nor any Person acting on behalf of or for the benefit of any of the foregoing, has paid or given, or agreed to pay or give, directly or indirectly, any commission or other remuneration (within the meaning of Section 3(a)(9) of the Securities Act and the rules and regulations of the Securities and Exchange Commission promulgated thereunder) for soliciting the Exchange.

5.Representations and Warranties of the Holders. Each Holder, for itself and for no other Holder, hereby represents, warrants and covenants that:

5.1Authorization. Such Holder has full power and authority to enter into this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby and has taken all action necessary to authorize the execution and delivery of this Agreement, the performance of its obligations hereunder and the consummation of the transactions contemplated hereby.

5.2Information. Such Holder and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and issuance of the Securities which have been requested by such Holder.  Such Holder has had the opportunity to review the Company's filings with the Securities and Exchange Commission.  Such Holder and its advisors, if any, have been afforded the opportunity to ask questions of the Company. Neither such inquiries nor any other due diligence investigations 

	
	 

	
1 
	
 Note to Draft: Holder may elect to remove upon execution.

6

 

conducted by such Holder or its advisors, if any, or its representatives shall modify, amend or affect such Holder’s right to rely on the Company’s representations and warranties contained herein. Such Holder understands that its investment in the Shares involves a high degree of risk.  Such Holder has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Shares. Such Holder is relying solely on its own accounting, legal and tax advisors, and not on any statements of the Company or any of its agents or representatives, for such accounting, legal and tax advice with respect to its acquisition of the Shares and the transactions contemplated by this Agreement.

5.3No Governmental Review. Such Holder understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Shares or the fairness or suitability of the investment in the Shares nor have such authorities passed upon or endorsed the merits of the offering of the Shares.

5.4Validity; Enforcement; No Conflicts. This Agreement to which such Holder is a party has been duly and validly authorized, executed and delivered on behalf of the such Holder and shall constitute the legal, valid and binding obligations of such Holder enforceable against such Holder 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. The execution, delivery and performance by such Holder of this Agreement to which such Holder is a party and the consummation by such Holder of the transactions contemplated hereby will not (i) result in a violation of the organizational documents of such Holder 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 Holder is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities or “blue sky” laws) applicable to such Holder, except in the case of clause (ii) above, for such conflicts, defaults or rights which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of such Holder to perform its obligations hereunder.

5.5Ownership of Warrants. Such Holder owns and holds, beneficially and of record, the entire right, title, and interest in and to the Warrants set forth on the signature page hereto free and clear of all rights and Liens (as defined below).  Such Holder has full power and authority to transfer and dispose of the Warrants to the Company free and clear of any right or Lien.  Other than the transactions contemplated by this Agreement, there is no outstanding vote, plan, pending proposal, or other right, of any Person to acquire all or any part of the Warrants or any shares of Common Stock issuable upon exercise the Warrants. As used herein, “Liens” shall mean any security or other property interest or right, claim, lien, pledge, option, charge, security interest, contingent or conditional sale, or other title claim or retention agreement, interest or other right or claim of third parties, whether perfected or not perfected, voluntarily incurred or arising by operation of law, and including any agreement (other than this Agreement) to grant or submit to any of the foregoing in the future.

7

 

5.6No Consideration Paid.  Neither the Holder nor any of its Affiliates nor any Person acting on behalf of or for the benefit of any of the foregoing, has paid or given, or agreed to pay or give, directly or indirectly, any commission or other remuneration (within the meaning of Section 3(a)(9) of the Securities Act and the rules and regulations of the Securities and Exchange Commission promulgated thereunder) for soliciting the Exchange, including any payments to the Company.

6.Additional Covenants.

6.1Listing. The Company shall use its best efforts to maintain the listing or designation for quotation (as applicable) of all of the Shares upon each national securities exchange and automated quotation system on which the Common Stock is currently listed or designated while the Shares are held by the Holders. The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 6.1.

6.2Registered Characteristics.  The parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the Shares issued in exchange for the registered Warrants take on the registered characteristics of such Warrants and the Company agrees not to take a position to the contrary.

6.3Blue Sky. The Company shall make all filings and reports relating to the Exchange required under applicable securities or “Blue Sky” laws of the states of the United States following the date hereof, if any.

6.4Fees and Expenses.  Each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement.

6.5Voting Agreement.  Each Holder agrees, separately and not jointly, to vote at the Company’s next meeting of stockholders all of such Holder’s shares of Common Stock it beneficially owns on and after the Closing Date, including but not limited to the Shares, in respect to the proposal to approve a reverse stock split of all outstanding shares of Common Stock, at a ratio to be determined by the Board of Directors.  This covenant does not in any way restrict the Holder from disposing or selling any shares, including the Shares, directly or indirectly, obligate the Holder to hold a minimum number of shares of Common Stock, prior to such next meeting of the stockholders, or obligate the Holder to vote in any particular manner regarding such proposal.

6.6Filing of Form 8-K.  Within 4 days of the date hereof, the Company shall issue a Current Report on Form 8-K disclosing the material terms of the transactions contemplated hereby (the “8-K Filing”). From and after December 31, 2020, the Company shall have disclosed all material, non-public information (if any) provided up to such time to the Holder by the Company or any of its Subsidiaries or any of their respective officers, directors, employees, affiliates or agents.  The Company shall not, and shall cause its officers, directors, employees, affiliates and agents, not to, provide the Holder with any material, nonpublic information regarding the Company from and after December 31, 2020 without the express written consent of the Holder.  After December 31, 2020, to the extent that the Company delivers any material, non-public information to the Holder 

8

 

without the Holder’s express prior written consent, the Company hereby covenants and agrees that the Holder shall not have any duty of confidentiality to the Company, any of its Subsidiaries or any of their respective officers, directors, employees, affiliates or agent with respect to, or a duty to the to the Company, any of its Subsidiaries or any of their respective officers, directors, employees, affiliates or agent or not to trade on the basis of, such material, non-public information.  The Company shall not disclose the name of the Holder in any filing, announcement, release or otherwise, unless such disclosure is required by law or regulation.  In addition, effective upon December 31, 2020, the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement with respect to the Company, 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 Holder or any of their affiliates, on the other hand, shall terminate.

7.Miscellaneous. 

7.1Successors and Assigns. Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the parties hereto and the respective successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party, other than the parties hereto or their respective successors and assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

7.2Governing 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. Each party hereby irrevocably submits to the exclusive jurisdiction of the state or 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 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. EACH PARTY 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 AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

7.3Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

9

 

7.4Notices. 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 delivery, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party) or by electronic mail (provided that no automatic notice of delivery failure is received by the sending party); or (iii) one Business Day after deposit with an overnight courier service, in each case properly addressed to the party to receive the same. The addresses, facsimile numbers and email addresses for such communications shall be:

If to the Company:

ADOMANI, Inc.

1215 Graphite Drive

Corona, CA 92881

Attention:  Chief Financial Officer

Telephone: (951) 407-9860

E-mail:  mike.m@ADOMANIelectric.com

With a copy to:

K&L Gates, LLP

1 Park Plaza, Twelfth Floor

Irvine, CA 92614

Attention:  Michael Hedge

Telephone: (949) 623-3519

Email:  michael.hedge@klgates.com

If to a Holder, to its address, email address set forth on its signature page hereto,

or to such other address, facsimile number and/or email address 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 email containing the time, date, recipient facsimile number and 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.

7.5Finder’s Fees. Each party represents that it neither is nor will be obligated for any finders’ fee or commission in connection with this transaction. Each Holder shall, separately and not jointly, indemnify and hold harmless the Company from any liability for any commission or compensation in the nature of a finders’ fee (and the costs and expenses of defending against such liability or asserted liability) for which such Holder or any of its officers, partners, employees or representatives is responsible. The Company shall indemnify and hold harmless each Holder from any liability for any commission or compensation in the nature of a 

10

 

finders’ fee (and the costs and expenses of defending against such liability or asserted liability) for which the Company or any of its officers, employees or representatives is responsible.

7.6Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and Holders holding a majority of the then outstanding Shares. Any amendment or waiver effected in accordance with this paragraph shall be binding upon all of the Holders and the Company, provided that no such amendment shall be binding on a holder that does not consent thereto to the extent such amendment treats such party differently than any party that does consent thereto.

7.7Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of this Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

7.8Entire Agreement. This Agreement represents the entire agreement and understanding between the parties concerning the Exchange and the other matters described herein and therein and supersedes and replaces any and all prior agreements and understandings solely with respect to the subject matter hereof and thereof.

7.9Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

7.10Interpretation.  Unless the context of this Agreement clearly requires otherwise, (a) references to the plural include the singular, the singular the plural, the part the whole, (b) references to any gender include all genders, (c) “including” has the inclusive meaning frequently identified with the phrase “but not limited to” and (d) references to “hereunder” or “herein” relate to this Agreement.

7.11No 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.

7.12Survival.  The representations, warranties and covenants of the Company and the Holder contained herein shall survive the Closing and delivery of the Shares.

7.13Further 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.

11

 

7.14No Strict 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.

[SIGNATURES ON THE FOLLOWING PAGES]

12

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the date provided above.

THE COMPANY

ADOMANI, INC.

By: 
Name: Michael K. Menerey
Title: Chief Financial Officer

13

 

[HOLDER SIGNATURE PAGES TO EXCHANGE AGREEMENT]

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the date provided above.

HOLDER

Name of Holder: ________________________________________________________

Signature of Authorized Signatory of Holder: __________________________________

Name of Authorized Signatory: ____________________________________________________

Title of Authorized Signatory: _____________________________________________________

Email Address of Authorized Signatory: _____________________________________________

Facsimile Number of Authorized Signatory: __________________________________________

Address for Notice to Holder:

 

 

 

 

Address for Delivery of Shares to Holder (if not same as address for notice):

 

 

 

 

 

Warrants Surrendered: ________________

 

 

Shares to be Received: ________________

 

[SIGNATURE PAGES CONTINUE]

 

 

 

 

14

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00317-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00317-of-00352.parquet"}]]