Document:

Exhibit

Exhibit 10.3

AMENDMENT NUMBER NINE TO CREDIT AGREEMENT AND AMENDMENT NUMBER THREE TO GUARANTY AND SECURITY AGREEMENT
THIS AMENDMENT NUMBER NINE TO CREDIT AGREEMENT AND AMENDMENT NUMBER THREE TO GUARANTY AND SECURITY AGREEMENT (this “Amendment”), dated as of April 29, 2016, is entered into by and among the lenders identified on the signature pages hereof (such Lenders, together with their respective successors and permitted assigns, are referred to hereinafter each individually as a “Lender” and, collectively, as the “Lenders”), WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association (“Wells Fargo”), as administrative agent for each member of the Lender Group and the Bank Product Providers (as such terms are defined in the below referenced Credit Agreement) (in such capacity, together with its successors and assigns in such capacity, “Agent”), ERICKSON INCORPORATED (formerly known as Erickson Air-Crane Incorporated), a Delaware corporation (“EAC”), ERICKSON HELICOPTERS, INC. (formerly known as Evergreen Helicopters, Inc.), an Oregon corporation (“Helicopters”) (Helicopters, together with EAC, are referred to hereinafter each individually as a “Borrower”, and individually and collectively, jointly and severally, as the “Borrowers”), the Subsidiaries of Borrowers  identified on the signature pages hereof (such Subsidiaries are referred to hereinafter each individual as a “Guarantor”, and individually and collectively, jointly and severally, as the “Guarantors”), and in light of the following:
W I T N E S S E T H
WHEREAS, Lenders, Agent, Wells Fargo, as lead arranger, book runner, syndication agent, and documentation agent, and Borrowers are parties to that certain Credit Agreement, dated as of May 2, 2013 (as amended, restated, supplemented, or otherwise modified from time to time, the “Credit Agreement”); 
WHEREAS, Agent, Borrowers, and Guarantors are parties to that certain Guaranty and Security Agreement, dated as of May 2, 2013 (as amended, restated, supplemented, or otherwise modified from time to time, the “Guaranty and Security Agreement”);
WHEREAS, Borrowers have requested that Agent and Lenders make certain amendments to the Credit Agreement and the Guaranty and Security Agreement;
WHEREAS, upon the terms and conditions set forth herein, Agent and Lenders are willing to accommodate Borrowers’ requests.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
1.Defined Terms.  All initially capitalized terms used herein (including the preamble and recitals hereof) without definition shall have the meanings ascribed thereto in the Credit Agreement (including Schedule 1.1 thereto), as amended hereby.

2.Amendments to Loan Documents.  Subject to the satisfaction (or waiver in writing by Agent) of the conditions precedent set forth in Section 3 hereof, the Loan Documents shall be amended as follows:

(a)    Schedule 1.1 to the Credit Agreement is hereby amended and modified by amending and restating, or inserting in proper alphabetical order, the following defined terms in their entirety:

““Aircraft and Engine Security Agreements” means (a) an aircraft and engine security agreement executed and delivered by EAC in favor of Agent, in form and substance reasonably satisfactory to Agent, (b) an aircraft and engine security agreement executed and delivered by Evergreen in favor of Agent, in form and substance reasonably satisfactory to Agent, (c) an aircraft and engine security agreement executed and delivered by Evergreen Equity in favor of Agent, in form and substance reasonably satisfactory to Agent, and (d) an aircraft and engine security agreement executed and delivered by Evergreen Alaska in favor of Agent, in form and substance reasonably satisfactory to Agent.”

““Evergreen Alaska” means Erickson Transport, Inc., an Alaska corporation.”

““Excess Availability” means, as of any date of determination, the amount equal to Availability minus the aggregate amount, if any, of all trade payables of the Loan Parties and their Subsidiaries aged in excess of historical levels with respect thereto and all book overdrafts of the Loan Parties and their Subsidiaries in excess of historical practices with respect thereto, in each case as determined by Agent in its Permitted Discretion.”
““Financial Covenant Period” means any period on or after January 1, 2017 which shall commence on any date (the “Commencement Date”) on which Excess Availability is less than $20,000,000 as of such date and shall continue until the later of:  
(a) the date that is the last day of the second full fiscal quarter after the Commencement Date, and 
(b) the last day of the fiscal quarter after the Commencement Date in which Excess Availability on each day for a period of 30 consecutive days is greater than or equal to $20,000,000     for each such day.”
““Fixed Charge Coverage Ratio” means, with respect to Borrowers for any fiscal period, the ratio of the following for Borrowers and their Subsidiaries determined on a consolidated basis in accordance with GAAP:  (a) EBITDA for such period minus Capital Expenditures (other than Capital Expenditures financed with the proceeds of Indebtedness (other than proceeds of Revolving Loans), to (b) Fixed Charges for such period.”
““Ninth Amendment Effective Date” has the meaning specified therefor in that certain Amendment Number Nine to Credit Agreement and Amendment Number Three to Guaranty and Security Agreement, dated as of April 29, 2016, by and among Agent, the Lenders party thereto, and the Loan Parties.”
““Permitted Air Amazonia Disposition” means the sale or other disposition of Air Amazonia Serviços Aeronáuticos Ltda. in which the following conditions are satisfied:  (a) immediately before and after giving effect to such sale or other disposition, no Event of Default shall have occurred and be continuing or would result therefrom, (b) such sale or other disposition is for fair market value, (c) such sale or other disposition is to a Person that is not an Affiliate of a Loan Party, (d) such transaction is permitted to be consummated pursuant to the terms of the Senior Notes Documents, (e) such sale or other disposition will generate at least $600,000 in gross cash proceeds, and (f) the Net Cash Proceeds from such sale or disposition are used to immediately repay the Revolving Loans, without a concurrent reduction of the Revolver Commitments.”

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““Permitted Central Point/White City Sale-Leaseback Transactions” means the sale or other disposition of the real estate located at 3100 Willow Springs Road, Central Point, OR and/or the real estate located at 1993 Kirtland Road, White City, OR by a Loan Party in one or more transactions or series of related transactions in which the following conditions are satisfied:  (a) immediately before and after giving effect to any such sale or other disposition, no Event of Default shall have occurred and be continuing or would result therefrom, (b) any such sale or other disposition is for fair market value, (c) such Loan Party leases back such real estate at fair market value, (d) any such sale or other disposition is to a Person that is not an Affiliate of a Loan Party, (e) each such transaction is permitted to be consummated pursuant to the terms of the Senior Notes Documents, (f) each such sale and leaseback transaction will generate at least $3,000,000 in gross cash proceeds, (g) such sales or dispositions must be consummated on or before September 30, 2016, and (h) the Net Cash Proceeds from such sales or dispositions are used to immediately repay the Revolving Loans, without a concurrent reduction of the Revolver Commitments.”
““Permitted Seller Note Prepayment” means the prepayment of the outstanding principal amount of Seller Notes after September 30, 2016 so long as (a) any such Seller Note is repaid at an amount that is less than the par amount of the principal amount such Seller Note, (b) no Event of Default has occurred and is continuing or would result therefrom, (c) Average Availability is at least 20% of the Maximum Revolver Amount for the 30 day period prior to any such prepayment, (d) Availability is at least 20% of the Maximum Revolver Amount immediately after giving effect to any such prepayment, and (e) the aggregate outstanding principal amount of Seller Notes repaid in connection with all Permitted Seller Note Repayments does not exceed $1,300,000.”
(b)        Clause (r) of the definition of “Permitted Dispositions” in Schedule 1.1 of the Credit Agreement is hereby amended and restated as follows:  

“(r)    (i) Permitted Medford Sale-Leaseback and Exchange Transactions, (ii) the Permitted Air Amazonia Disposition, and (iii) the Permitted Central Point/White City Sale-Leaseback Transactions so long as the aggregate fair market value of all assets disposed of in any fiscal year pursuant to such transactions described in this clause (iii) (including the proposed transaction), together with the aggregate fair market value of any assets disposed of in such fiscal year pursuant to clause (t) of this definition, would not exceed $25,000,000,” ”

(c)        Clause (t) of the definition of “Permitted Dispositions” in Schedule 1.1 of the Credit Agreement is hereby amended and restated as follows:

“(t)    sales or dispositions of assets (other than Accounts, Inventory, and Equity Interests of Subsidiaries of EAC) not otherwise permitted in clauses (a) through (s) above so long as (i) made at fair market value, (ii) made pursuant to clauses (1) or (15) of the definition of Asset Sale in the Senior Note Indenture (and subject to satisfaction of the conditions precedent of such clause as such conditions precedent appear as of the Closing Date), and (iii) the aggregate fair market value of all assets disposed of in any fiscal year (including the proposed transaction), together with the aggregate fair market value of any assets disposed of in such fiscal year in connection with the Permitted Central Point/White City Sale-Leaseback Transactions, would not exceed $25,000,000.”

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(d)    Section 6.6(a)(i) of the Credit Agreement is hereby amended and restated in its entirety as follows:

“(i)    optionally prepay, redeem, defease, purchase, or otherwise acquire the Senior Note Indebtedness, the Preferred Equity, or the Seller Debt other than, with respect to the Seller Debt, any Permitted Seller Note Prepayments,”

(e)    Article 7 of the Credit Agreement is hereby amended by adding the following new clause (c) at the end thereof:

“(c)        Excess Availability.  Borrowers shall have Excess Availability at all times of at least (i) as of any date of determination during the period from the April 29, 2016 through and including May 29, 2016, $10,000,000, (ii) as of any date of determination during the period from the May 30, 2016 through and including July 15, 2016, $15,000,000, (iii) as of any date of determination during the period from the July 16, 2016 through and including September 29, 2016, $17,500,000, and (iv) as of any date of during the period from September 30, 2016 through and including December 31, 2016, $20,000,000.”

(f)        Section 9.3 of the Credit Agreement is hereby amended and restated in its entirety as follows:

“9.3    Curative Equity.  
(a)Subject to the limitations set forth in clause (e) below, Borrowers may cure (and shall be deemed to have cured) an Event of Default arising out of a breach of any of the financial covenants set forth in clause (a) of Section 7 (the “Specified Financial Covenant”) if they receive the cash proceeds of an investment of Curative Equity within 10 Business Days after the date on which the Specified Financial Covenant is first required to be tested pursuant to the terms hereof.  

(b)Borrowers shall promptly notify Agent of its receipt of any proceeds of Curative Equity (and shall immediately apply the same to the payment of the Obligations in the manner specified in Section 2.4(e)(vii)).

(c)Any investment of Curative Equity shall be in immediately available funds and, subject to the limitations set forth in clause (e) below, shall be in an amount that is sufficient, after giving effect to the payment of the Obligations as specified in Section 2.4(e)(vii), to cause Borrowers’ Excess Availability to be equal to the Excess Availability threshold set forth in the definition of “Financial Covenant Period”.

(d)Upon delivery of a certificate by Borrowers to Agent as to the amount of the proceeds of such Curative Equity and that such amount (i) has been applied in accordance with clause (b) above, and (ii) is in an amount equal to the amount required by clause (c) above, then (A)  the Borrowers shall be deemed to have had sufficient Excess Availability to avoid testing the Specified Financial Covenant as of the end of the fiscal quarter for which such Curative Equity was invested (but not any future 12 month periods), and (B) any Event of Default that occurred and is continuing from a breach of the Specified Financial Covenant solely for that one 12 month period ended as of the end of the fiscal quarter for which such Curative Equity was invested (and not any future 12 month periods) 

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such shall be deemed cured with no further action required by the Required Lenders.  Prior to the date of the delivery of a certificate conforming to the requirements of this Section, any Event of Default that has occurred as a result of a breach of any Specified Financial Covenant shall be deemed to be continuing and, as a result, the Lenders (including the Swing Lender and the Issuing Bank) shall have no obligation to make additional loans or otherwise extend additional credit hereunder.  In the event Borrowers do not cure all financial covenant violations as provided in this Section 9.3, the existing Event(s) of Default shall continue unless waived in writing by the Required Lenders in accordance herewith. 

(e)Notwithstanding anything to the contrary contained in the foregoing or this Agreement, (i) Borrowers’ rights under this Section 9.3 may (A) be exercised not more than 3 times during the term of this Agreement, (B) not be exercised twice within any 180 day period, (C) not be exercised if the amount of the proposed investment of Curative Equity, together with the amount of all prior investments of Curative Equity, exceeds $30,000,000, (D) not be exercised if the amount of the proposed investment of Curative Equity exceeds $10,000,000, (ii) the Curative Equity contributed in any fiscal quarter shall be no greater than the amount required to cause Borrowers’ Excess Availability to be equal to the Excess Availability threshold set forth in the definition of “Financial Covenant Period”, and (iii) the Curative Equity shall be disregarded for purposes of determining EBITDA for the Specified Financial Covenant, and for any pricing, financial covenant based conditions or any baskets with respect to the covenants contained in this Agreement and there shall be no pro forma reduction in Indebtedness with the proceeds of any Curative Equity for determining any pricing, financial covenant based conditions or baskets with respect to the covenants contained in this Agreement, in each case in the quarter in which such Curative Equity is used.”

(g)        Schedule 5.2 to the Credit Agreement is hereby amended and restated in its entirety in the form of Schedule 5.2 attached hereto.

(h)        Section 1(a) of the Guaranty and Security Agreement is hereby amended and modified by amending and restating the definition of “Triggering Event” in its entirety as follows:

““Triggering Event” means the occurrence of the Ninth Amendment Effective Date.”

(i)        Section 7(k)(ii) of the Guaranty and Security Agreement is hereby amended and modified by amending and restating in its entirety as follows:

“(ii)    Except to the extent otherwise excused by Section 7(k)(iv) and subject to Schedule 3.6 to the Credit Agreement, each Grantor shall establish and maintain Controlled Account Agreements with Agent and the applicable Controlled Account Bank, in form and substance reasonably acceptable to Agent.  Each such Controlled Account Agreement shall provide, among other things, that (A) the Controlled Account Bank will comply with any instructions originated by Agent directing the disposition of the funds in such Controlled Account without further consent by the applicable Grantor, (B) the Controlled Account Bank waives, subordinates, or agrees not to exercise any rights of setoff or recoupment or any other claim against the applicable Controlled Account other than for payment of its service fees and other charges directly related to the administration of such Controlled Account and for returned checks or other items of payment, and (C) upon the instruction of Agent (an “Activation Instruction”), the Controlled Account Bank will forward by daily sweep all 

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amounts in the applicable Controlled Account to the Agent’s Account.  Agent agrees not to issue an Activation Instruction with respect to the Controlled Accounts unless a Triggering Event has occurred and is continuing at the time such Activation Instruction is issued.”

3.Conditions Precedent to Amendment. The satisfaction (or waiver in writing by Agent) of each of the following shall constitute conditions precedent to the effectiveness of the Amendment (such date being the “Ninth Amendment Effective Date”):

(a)The Amendment Effective Date shall occur on or prior to April 29, 2016.

(b)Agent shall have received this Amendment, duly executed by the parties hereto, and the same shall be in full force and effect.

(c)Agent shall have received each of the following documents, each in form and substance satisfactory to Agent, each duly executed and delivered by the parties thereto, and each such document shall be in full force and effect:

i.in connection with the Permitted Air Amazonia Disposition, a fully executed letter of intent dated on or prior to the date hereof, providing for an aggregate purchase price for the assets described therein of no less than $600,000 and otherwise in form and substance reasonably satisfactory to Agent; and

ii.in connection with the proposed Permitted Central Point/White City Sale-Leaseback Transactions, a fully executed purchase agreement for the Kirtland Road real estate and a letter of intent signed by the purchaser of the Willow Springs Road real estate, providing for an aggregate purchase price for the real estate described therein of no less than $3,000,000 per parcel of real estate and otherwise in form and substance reasonably satisfactory to Agent.

(d)Agent shall have received each of the following documents, each in form and substance satisfactory to Agent, each duly executed and delivered by the parties thereto, and each such document shall be in full force and effect:

i.an amendment fee letter, dated as of the date hereof, by and among Agent and Borrowers; 

ii.Security Agreement Supplement No. 3 for Erickson Helicopters, Inc. with respect to Turbomeca Engine with manufacturer’s serial number 152, General Electric Engine with manufacturer’s serial number 343021, and General Electric Engine with manufacturer’s serial number 343C001, to be filed with the FAA and the International Registry; and

iii.Aircraft and Engine Security Agreement for Erickson Transport, Inc. with respect to the Garrett Engine with manufacturer’s serial number P37470C, to be filed with the FAA and the International Registry.

(e)Agent shall have received a certificate of status or equivalent documentation with respect to each Borrower, dated within 20 days of the date hereof, any such certificate to be issued by the appropriate officer of the jurisdiction of organization of such Borrower, which certificate shall indicate that such Loan Party is in good standing in such jurisdiction.

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(f)Agent shall have received a certificate from the Secretary of EAC, identifying each asset disposed of during the current fiscal year pursuant to clause (s) or clause (t) of the definition of “Permitted Dispositions”, identifying which such clause was utilized for each assets, and identifying the fair market value of each such asset.

(g)The representations and warranties herein and in the Credit Agreement and the other Loan Documents as amended hereby shall be true, correct and complete in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) on and as of the date hereof, as though made on such date (except to the extent that such representations and warranties relate solely to an earlier date, in which case such representations and warranties shall be true, correct and complete in all material respects as of such earlier date).

(h)No Default or Event of Default shall have occurred and be continuing or shall result from the consummation of the transactions contemplated herein.

(i)No injunction, writ, restraining order, or other order of any nature prohibiting, directly or indirectly, the consummation of the transactions contemplated herein shall have been issued and remain in force by any Governmental Authority against any Loan Party, Agent, or any Lender.

(j)Borrowers shall pay concurrently with the closing of the transactions evidenced by this Amendment, all fees, costs, expenses and taxes then payable pursuant to the Credit Agreement and Section 5 of this Amendment.

(k)All other documents and legal matters in connection with the transactions contemplated by this Amendment shall have been delivered, executed, or recorded and shall be in form and substance satisfactory to Agent.

4.Representations and Warranties. Each Loan Party hereby represents and warrants to Agent and the Lenders as follows:

(a)    It (i) is duly organized and existing and in good standing under the laws of the jurisdiction of its organization, (ii) is qualified to do business in any state where the failure to be so qualified could reasonably be expected to result in a Material Adverse Effect, and (iii) has all requisite power and authority to own and operate its properties, to carry on its business as now conducted and as proposed to be conducted, to enter into this Amendment and the other Loan Documents to which it is a party and to carry out the transactions contemplated hereby and thereby.

(b)    The execution, delivery, and performance by it of this Amendment and the other Loan Documents to which it is a party (i) have been duly authorized by all necessary action on the part of such Loan Party and (ii) do not and will not (A) violate any material provision of federal, state, or local law or regulation applicable to such Loan Party, the Governing Documents of Borrower, or any order, judgment, or decree of any court or other Governmental Authority binding on such Loan Party, (B) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any Material Contract of such Loan Party except to the extent that any such conflict, breach or default could not individually or in the aggregate reasonably be expected to have a Material Adverse Effect, (C) result in or require the creation or imposition of any Lien of any nature whatsoever upon any assets of such Loan Party, other than Permitted Liens,  (D) require any approval of such Loan Party’s interest holders or any approval or consent of any Person under any Material Contract of such Loan Party, other than consents or approvals that have been 

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obtained and that are still in force and effect and except, in the case of Material Contracts, for consents or approvals, the failure to obtain could not individually or in the aggregate reasonably be expected to cause a Material Adverse Effect, or (E) require any 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 and except for filings and recordings with respect to the Collateral to be made, or otherwise delivered to Agent for filing or recordation in connection with this Amendment.

(c)    This Amendment has been duly executed and delivered by each Loan Party.  This Amendment and each Loan Document to which such Loan Party is a party is the legally valid and binding obligation of such Loan Party, enforceable against such Loan Party in accordance with its respective terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors’ rights generally.

(d)    No injunction, writ, restraining order, or other order of any nature prohibiting, directly or indirectly, the consummation of the transactions contemplated herein has been issued and remains in force by any Governmental Authority against any Loan Party, Agent or any Lender.

(e)    No Default or Event of Default has occurred and is continuing as of the date of the effectiveness of this Amendment, and no condition exists which constitutes a Default or an Event of Default.

(f)    The representations and warranties in the Credit Agreement and the other Loan Documents as amended hereby are true, correct and complete in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) on and as of the date hereof, as though made on such date (except to the extent that such representations and warranties relate solely to an earlier date, in which case such representations and warranties shall be true, correct and complete in all material respects as of such earlier date).

5.Payment of Costs and Fees.  Borrowers agree to pay all out-of-pocket costs and expenses of Agent (including, without limitation, the reasonable fees and disbursements of outside counsel to Agent) in connection with the preparation, negotiation, execution and delivery of this Amendment and any documents and instruments relating hereto.

6.Covenants; Cash Dominion.  

(a)Borrowers agree that on or before the date that is 10 days after the Ninth Amendment Effective Date, they shall deliver to Agent the following documents, each in form and substance satisfactory to Agent and each duly executed and delivered by the parties thereto:

i.supplements to the Aircraft and Engine Security Agreements requested by Agent or its counsel  prior to such date, to be filed with the FAA and the International Registry, covering any Aircraft and Engines constituting Collateral (as defined in the Guaranty and Security Agreement) and Collateral (as defined in the Aircraft and Engine Security Agreements) that are not subject to the Aircraft and Engine Security Agreements on or immediately prior to the Ninth Amendment Effective Date; and

ii.supplements or amendments to the Aircraft and Engine Security Agreements requested by Agent or its counsel prior to such date, to be filed with the FAA and the 

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International Registry, correcting any incorrect or inaccurate information contained on any Aircraft and Engine Security Agreements or any supplements thereto.

Borrowers agree that their failure to timely comply with the foregoing shall constitute an immediate Event of Default.

(b)Borrowers agree that in accordance with the terms of the Guaranty and Security Agreement as amended hereby, Agent is permitted to, and Agent will upon the occurrence of the Ninth Amendment Effective Date, issue Activation Instructions (as defined in the Guaranty and Security Agreement) to each Controlled Account Bank (as defined in the Guaranty and Security Agreement) in accordance with Section 7(k)(ii) of the Guaranty and Security Agreement.   

7.Release. 

(a)Each Loan Party hereby acknowledges and agrees that the Obligations under the Credit Agreement and the other Loan Documents are payable pursuant to the Credit Agreement and the other Loan Documents as modified hereby without defense, offset, withholding, counterclaim, or deduction of any kind.  

(b)Effective on the date hereof, each Loan Party, for itself and on behalf of its successors, assigns, and officers, directors, employees, agents and attorneys, and any Person acting for or on behalf of, or claiming through it, hereby waives, releases, remises and forever discharges each member of the Lender Group, each Bank Product Provider, and each of their respective Affiliates, and each of their respective successors in title, past, present and future officers, directors, employees, limited partners, general partners, investors, attorneys, assigns, subsidiaries, shareholders, trustees, agents and other professionals and all other persons and entities to whom any member of the Lenders would be liable if such persons or entities were found to be liable to such Loan Party (each a “Releasee” and collectively, the “Releasees”), from any and all past, present and future claims, suits, liens, lawsuits, adverse consequences, amounts paid in settlement, debts, deficiencies, diminution in value, disbursements, demands, obligations, liabilities, causes of action, damages, losses, costs and expenses of any kind or character, whether based in equity, law, contract, tort, implied or express warranty, strict liability, criminal or civil statute or common law (each a “Claim” and collectively, the “Claims”), whether known or unknown, fixed or contingent, direct, indirect, or derivative, asserted or unasserted, matured or unmatured, foreseen or unforseen, past or present, liquidated or unliquidated, suspected or unsuspected, which such Loan Party ever had from the beginning of the world to the date hereof, or now has, against any such Releasee which relates, directly or indirectly to the Credit Agreement, any other Loan Document, or to any acts or omissions of any such Releasee with respect to the Credit Agreement or any other Loan Document, or to the lender-borrower relationship evidenced by the Loan Documents, except for the duties and obligations set forth in any of the Loan Documents or in this Amendment.  As to each and every Claim released hereunder, each Loan Party hereby represents that it has received the advice of legal counsel with regard to the releases contained herein, and having been so advised, specifically waives the benefit of the provisions of Section 1542 of the Civil Code of California which provides as follows:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH A CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM, MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.”

As to each and every Claim released hereunder, each Loan Party also waives the benefit of each other similar provision of applicable federal or state law (including without limitation the laws of the 

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state of California), if any, pertaining to general releases after having been advised by its legal counsel with respect thereto.

Each Loan Party each acknowledges that it may hereafter discover facts different from or in addition to those now known or believed to be true with respect to such Claims and agrees that this instrument shall be and remain effective in all respects notwithstanding any such differences or additional facts.  Each Loan Party understands, acknowledges and agrees that the release set forth above may be pleaded as a full and complete defense and may be used as a basis for an injunction against any action, suit or other proceeding which may be instituted, prosecuted or attempted in breach of the provisions of such release.

(c)    Each Loan Party, for itself and on behalf of its successors, assigns, and officers, directors, employees, agents and attorneys, and any Person acting for or on behalf of, or claiming through it, hereby absolutely, unconditionally and irrevocably, covenants and agrees with and in favor of each Releasee above that it will not sue (at law, in equity, in any regulatory proceeding or otherwise) any Releasee on the basis of any Claim released, remised and discharged by such Person pursuant to the above release.  If any Loan Party or any of its respective successors, assigns, or officers, directors, employees, agents or attorneys, or any Person acting for or on behalf of, or claiming through it violate the foregoing covenant, such Person, for itself and its successors, assigns and legal representatives, agrees to pay, in addition to such other damages as any Releasee may sustain as a result of such violation, all attorneys’ fees and costs incurred by such Releasee as a result of such violation.

7.    Choice of Law and Venue; Jury Trial Waiver; Judicial Reference.  THIS AMENDMENT SHALL BE SUBJECT TO THE PROVISIONS REGARDING CHOICE OF LAW AND VENUE, JURY TRIAL WAIVER, AND JUDICIAL REFERENCE SET FORTH IN SECTION 12 OF THE CREDIT AGREEMENT, AND SUCH PROVISIONS ARE INCORPORATED HEREIN BY THIS REFERENCE, MUTATIS MUTANDIS.

8.    Amendments.   This Amendment cannot be altered, amended, changed or modified in any respect or particular unless each such alteration, amendment, change or modification is made in accordance with the terms and provisions of Section 14.1 of the Credit Agreement.

9.    Counterpart Execution.  This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, taken together shall constitute but one and the same agreement. Delivery of an executed counterpart of this Amendment by facsimile or other electronic method of transmission shall be equally effective as delivery of an original executed counterpart of this Amendment.  Any party delivering an executed counterpart of this Amendment by facsimile or other electronic method of transmission also shall deliver an original executed counterpart of this Amendment, but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Amendment.

10.    Effect on Loan Documents.

(a)    The Credit Agreement, as amended hereby, and each of the other Loan Documents, as amended as of the date hereof, shall be and remain in full force and effect in accordance with their respective terms and hereby are ratified and confirmed in all respects.  The execution, delivery, and performance of this Amendment shall not operate, except as expressly set forth herein, as a waiver of, consent to, or a modification or amendment of, any right, power, or remedy of Agent or any Lender under the Credit Agreement or any other Loan Document.  Except for the amendments to the Credit Agreement and the 

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Guaranty and Security Agreement expressly set forth herein, the Credit Agreement and the other Loan Documents shall remain unchanged and in full force and effect.   

(b)    Upon and after the effectiveness of this Amendment, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “herein”, “hereof” or words of like import referring to the Credit Agreement, and each reference in the other Loan Documents to “the Credit Agreement”, “thereunder”, “therein”, “thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement as modified and amended hereby.

(c)    Upon and after the effectiveness of this Amendment, each reference in the Guaranty and Agreement to “this Agreement”, “hereunder”, “herein”, “hereof” or words of like import referring to the Guaranty and Security Agreement, and each reference in the other Loan Documents to “the Guaranty and Security Agreement”, “thereunder”, “therein”, “thereof” or words of like import referring to the Guaranty and Security Agreement, shall mean and be a reference to the Guaranty and Security Agreement as modified and amended hereby.

(d)    To the extent that any of the terms and conditions in any of the Loan Documents shall contradict or be in conflict with any of the terms or conditions of the Credit Agreement, after giving effect to this Amendment, such terms and conditions are hereby deemed modified or amended accordingly to reflect the terms and conditions of the Credit Agreement and the Guaranty and Security Agreement as modified or amended hereby.

(e)    This Amendment is a Loan Document.

(f)    Unless the context of this Amendment clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, the terms “includes” and “including” are not limiting, and the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or”.  The words “hereof”, “herein”, “hereby”, “hereunder”, and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement.  Section, subsection, clause, schedule, and exhibit references herein are to this Agreement unless otherwise specified.  Any reference in this Agreement to any agreement, instrument, or document shall include all alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements, thereto and thereof, as applicable (subject to any restrictions on such alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements set forth herein).  The words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts, and contract rights.  Any reference herein to any Person shall be construed to include such Person’s successors and assigns.  

11.    Entire Agreement.  This Amendment, and the terms and provisions hereof, the Credit Agreement and the other Loan Documents constitute the entire understanding and agreement between the parties hereto with respect to the subject matter hereof and supersede any and all prior or contemporaneous amendments or understandings with respect to the subject matter hereof, whether express or implied, oral or written.   

12.    Reaffirmation of Obligations.  Each Loan Party hereby reaffirms its obligations under each Loan Document to which it is a party.  Each Loan Party hereby further ratifies and reaffirms the validity and enforceability of all of the Liens and security interests heretofore granted, pursuant to and in connection with the Guaranty and Security Agreement, the Aircraft and Engine Security Agreement, or any other Loan 

- 11 -

Document, to Agent, as collateral security for the obligations under the Loan Documents in accordance with their respective terms, and acknowledges that all of such Liens and security interests, and all collateral heretofore pledged as security for such obligations, continue to be and remain collateral for such obligations from and after the date hereof.  Each Loan Party hereby further does grant to Agent, for the benefit of each member of the Lender Group and the Bank Product Providers, a perfected security interest in the Collateral (as defined in the Guaranty and Security Agreement) and the Collateral (as defined in the Aircraft and Engine Security Agreement) in order to secure all of its present and future obligations under the Loan Documents.

13.    Severability.  In case any provision in this Amendment shall be invalid, illegal or unenforceable, such provision shall be severable from the remainder of this Amendment and the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

14.    Guarantors.  Each of the undersigned Guarantors consent to the amendments to the Loan Documents contained herein.  Although the undersigned Guarantors have been informed of the matters set forth herein and have consented to same, each Guarantor understands that no member of the Lender Group has any obligation to inform it of such matters in the future or to seek its acknowledgement or agreement to future consents, waivers, or amendments related to the Credit Agreement, and nothing herein shall create such a duty.

[signature pages follow]

        

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered as of the date first above written.

- 12 -

	
		
	 
	ERICKSON INCORPORATED (formerly known as Erickson Air-Crane Incorporated), 
a Delaware corporation

By:/s/ Eric Struik
Name:Eric Struik 
Title: Chief Financial Officer, VP

	 
	EAC ACQUISITION CORPORATION,                                                                       a Delaware corporation

By:/s/ Eric Struik
Name: Eric Struik
Title: Chief Financial Officer, Treasurer, VP

	 
	ERICKSON HELICOPTERS, INC. (formerly known as Evergreen Helicopters, Inc.),
an Oregon corporation

By:/s/ Eric Struik
Name: Eric Struik
Title: Chief Financial Officer, Treasurer, VP

	 
	ERICKSON TRANSPORT, INC. (formerly known as Evergreen Helicopters of Alaska, Inc.),
 an Alaska corporation

By:/s/ Eric Struik
Name: Eric Struik
Title: Chief Financial Officer, Treasurer, VP

	 
	EVERGREEN HELICOPTERS INTERNATIONAL, INC., a Texas corporation

By:/s/ Eric Struik
Name: Eric Struik
Title: Chief Financial Officer, Treasurer, VP

	
		
	 
	EVERGREEN EQUITY, INC.,                                                                       a Nevada corporation

By:/s/ Eric Struik
Name: Eric Struik
Title: Chief Financial Officer, Treasurer, VP

	 
	EVERGREEN UNMANNED SYSTEMS, INC.,                                                                       a Delaware corporation

By:/s/ Eric Struik
Name: Eric Struik
Title: Chief Financial Officer, Treasurer, VP

	
	
	WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as Agent, Lead Arranger, Book Runner, Syndication Agent, Documentation Agent, and a Lender

	 

	By: /s/ Amelie Yehros                     
Name: Amelie Yehros     
Title: SVP

	
			
	 
	 

	 
	DEUTSCHE BANK TRUST COMPANY AMERICAS, as a Lender

	 
	 
	 

	 
	By:
	/s/ Frank Fazio

	 
	Name:
	Frank Fazio

	 
	Title:
	Managing Director

	 
	 
	 

	 
	By:
	/s/ Stephen Lapidus

	 
	Name:
	Stephen R. Lapidus

	 
	Title:
	Director

Schedule 5.2
Provide Agent (and if so requested by Agent, with copies for each Lender) with each of the documents set forth below at the following times in form satisfactory to Agent:

	
		
	Weekly until January 4, 2017 (not later than Wednesday of each week) 
	a Borrowing Base Certificate,
a detailed aging and roll-forward, by total, of Borrowers’ Accounts, together with a reconciliation and supporting documentation for any reconciling items noted (delivered electronically in an acceptable format, if Borrowers have implemented electronic reporting), 
a summary aging, by vendor, of the Loan Parties’ accounts payable and any book overdraft (delivered electronically in an acceptable format, if Borrowers have implemented electronic reporting) and an aging, by vendor, of any held checks,
an Account roll-forward, in a format acceptable to Agent in its discretion,  with supporting details supplied from sales journals, collection journals, credit registers and any other records, tied to the beginning and ending account receivable balances of the Loan Parties’ general ledger, and
a 13 week cash flow forecast model, in the form provided to Agent on April 27, 2016 and for the forthcoming 13 weeks.

	
		
	Monthly (not later than the 25th day of each month); provided that, if, as of any date of determination on or after January 5, 2017, Excess Availability is less than $20,000,000, the reports specified in clauses (a) - (p) shall be delivered on a weekly basis (not later than Wednesday of each week) until such time as Excess Availability shall have been at least $20,000,000 at all times during each of the preceding 30 days
	a report regarding Borrowers’ and their Subsidiaries’ cash and Cash Equivalents, including (i) daily cash collections, (ii) an indication of which amounts constitute Qualified Cash, (iii) account numbers, and (iv) balances for such account numbers,
notice of all claims, offsets, or disputes asserted by Account Debtors with respect to Borrowers’ Accounts,
a Borrowing Base Certificate,
a detailed aging and roll-forward, by total, of Borrowers’ Accounts, together with a reconciliation and supporting documentation for any reconciling items noted (delivered electronically in an acceptable format, if Borrowers have implemented electronic reporting), 
a summary aging, by vendor, of the Loan Parties’ accounts payable and any book overdraft (delivered electronically in an acceptable format, if Borrowers have implemented electronic reporting) and an aging, by vendor, of any held checks,
an Account roll-forward, in a format acceptable to Agent in its discretion,  with supporting details supplied from sales journals, collection journals, credit registers and any other records, tied to the beginning and ending account receivable balances of the Loan Parties’ general ledger,
a reconciliation of Accounts, Inventory and trade accounts payable of the Loan Parties’ general ledger to its monthly financial statements including any book reserves related to each category,
(m)  a detailed PPO Inventory system/perpetual report (which shall include a list of all PPO Inventory of each Loan Party as of each such day and includes the owner, serial parts, item numbers, item names, location codes, warehouse codes, country code, amount, and any other information reasonably requested by Agent) (delivered electronically in an acceptable format, if the Borrowers have implemented electronic reporting),
(n)  a detailed Spare Parts Inventory system/perpetual report (which shall include a list of all Spare Parts by of each Loan Party as of each such day and includes the owner, item numbers and names, country codes, item group codes, status codes, warehouse codes, on hand amount, inventory value, and any other information reasonably requested by Agent) (delivered electronically in an acceptable format, if the Borrowers have implemented electronic reporting),
(o)  a detailed work-in-process Inventory system/perpetual report (which shall include material and labor cost, and any other information reasonably requested by Agent (delivered electronically in an acceptable format, if the Borrowers have implemented electronic reporting),
(p) a report showing (i) all deferred revenues as set forth in the Loan Parties’ balance sheet for the prior month, and (ii) the portion of such deferred revenues that will be earned during the next four fiscal quarters, 
(q)  a detailed description by type and current location of  all of the Inventory, Aircrafts, and Engines, owned by any Loan Party located both in and outside the United States, and for each Aircraft and each Engine that is located outside of the United States an indication of whether the country of its location is a signatory to either (i) the Geneva Convention, or (ii) the Cape Town Convention, 
(r)  a detailed calculation of Inventory, Aircrafts, and Engines that are not eligible for the Borrowing Base (delivered electronically in an acceptable format, if Borrowers have implemented electronic reporting), 
(s)  a detailed report regarding any Inventory (i) with no usage in the immediately preceding seven years, (ii) with more than ten years of usage in the aggregate, or (iii) that has become obsolete due to engineering advances, 
(t)  a detailed report regarding any write down or obsolete adjustment of any Loan Party’s Inventory, Aircrafts, and Engines, and 
(u)  a 13 week cash flow forecast model, in the form provided to Agent on April 27, 2016 and for the forthcoming 13 weeks.

	
		
	Quarterly (not later than the 45th day after each fiscal quarter)
	(v)  a report regarding the Loan Parties’ accrued, but unpaid, ad valorem taxes, and
(w)  a Perfection Certificate or a supplement to the Perfection Certificate.

	Semi-annually (not later than February 15th and August 15th of each fiscal year)
	(x)  a schedule of the Maintenance Program for each Aircraft and Engine and a report detailing any scheduled long-term maintenance or overhaul for any Aircraft or Engine.  

	On each anniversary of the Closing Date if requested by Agent
	(y)  an opinion of FAA counsel, in form and substance reasonably satisfactory to Agent, dated as of a date not more than 30 days prior to such anniversary, that, with respect to all Collateral consisting of Aircraft, Engines, and Spare Parts, based on FAA's review of the Aviation Registry of the FAA and the International Registry, Agent has a perfected first priority security interest thereon and International Interest therein, free and clear of all Liens (other than Permitted Liens), and attaching thereto the related "priority search certificates" from the Aviation Registry of the FAA, the International Registry, and the Spare Parts perfection locations. 

	Contemporaneously with the consummation of the applicable sale or other disposition,
	(z)  if the aggregate amount of any asset sales or other dispositions (or series of asset sales or dispositions) of Eligible Accounts, Eligible Inventory, or Eligible Aircraft since the date of delivery of the most recently delivered Borrowing Base Certificate pursuant to clause (c) above exceeds $2,500,000, an updated Borrowing Base Certificate excluding such disposed of assets from the Borrowing Base; provided that Borrowers may, in their discretion, update through the date of such sale or disposition all of the other calculations of the Borrowing Base Certificate in accordance with the terms and definitions of the Agreement.  For the avoidance of doubt, nothing contained in this clause (t) shall permit any Borrower or any of its Subsidiaries to sell or otherwise dispose of any assets other than in accordance with Section 6.4 of the Agreement.

	Within 10 days after a request by Agent
	(aa)  such other reports as to the Collateral or the financial condition of Borrowers and their Subsidiaries, as Agent may reasonably request.

	Promptly, but in any event within 10 days prior to any such action
	(bb)  written notice that any Aircraft or Engine will be deregistered with the FAA or any Aircraft or Engine will be taken to a country that is not a signatory to the Geneva Convention or the Cape Town Convention, and 
(cc)  written notice of any Engine being removed from any Aircraft.lone-ex101_104.htm

Exhibit 10.1

Executed Version

 

REPURCHASE FACILITATION AGREEMENT

This repurchase facilitation agreement (the “Agreement”) is made this 29th day of September, 2016 and is by and between Seaport Global Securities LLC, a Delaware limited liability company (“Seaport Global”) and Lonestar Resources US Inc., a Delaware corporation (“Lonestar”), by and on behalf of itself and certain of its subsidiaries (collectively referred to as the “Company”).  Each of Seaport Global and Lonestar is sometimes hereinafter referred to as a “Party” and collectively as the “Parties.”

Whereas, Lonestar Resources Americas Inc., a Delaware corporation and wholly owned subsidiary of Lonestar, has currently outstanding its 8.750% Senior Notes due 2019 (the “Notes”), some or all of which may be available for repurchase by Lonestar at prices below the price at which the Notes were originally issued (the “Discounted Notes”);

Whereas, the Company desires, from time to time, to repurchase some or all of the Discounted Notes as they become available for repurchase and Seaport Global proposes to provide financing for all or a portion of the purchase price thereof (“Gap Financing”), upon the terms and subject to the conditions set forth herein;

Whereas, the Company proposes that all or a portion of the consideration for any Gap Financing may take the form of private placements to Seaport Global of up to 460,000 shares (the “Share Cap”) of unregistered common equity securities of Lonestar (the “Restricted Stock”); and

Whereas, in order to effect such private placements, the Board of Directors of Lonestar has approved the transactions contemplated hereby and Lonestar will receive written consent from EF Realisation Company Limited (the sole owner of EFR Holding Guernsey Limited and EFR Holding Guernsey Limited, Lonestar’s majority stockholder (the “Stockholder Consent”), to issue sufficient shares of Restricted Stock as contemplated hereby and, in connection therewith, will file all requisite information statements (the “Information Statements”) with the United States Securities and Exchange Commission (the “SEC”) describing such written consent and the amount of Restricted Stock approved thereby (any requisite waiting period with respect to the Information Statements under the rules promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) before effecting the actions approved by the Stockholder Consent is referred to herein as a “Waiting Period”).

THEREFORE, intending to be legally bound, and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the Parties to this Agreement, Seaport Global and Lonestar agree as follows:

	
 
	
1.
	
Discounted Notes. From time to time, Seaport Global may identify an opportunity for Lonestar to purchase Discounted Notes.  Upon becoming aware of such opportunity, Lonestar will advise 

 

 

	
 
		
Seaport Global if it desires to purchase such Discounted Notes with the use of Gap Financing and, if so, the amount of Gap Financing that it will require from Seaport Global in order to do so.  Seaport Global will then advise Lonestar of whether or not it is willing to provide the necessary amount of Gap Financing. 

 

	
 
	
2.
	
Discounted Note Acquisition. In all cases where Seaport Global identifies opportunities for Lonestar to purchase Discounted Notes where either (i) Discounted Notes are to be acquired using Gap Financing (“Seaport Global Assisted Purchases” or “SGAP”),  or (ii) Discounted Notes are identified as being available for repurchase by the Seaport Global debt trading desk (of which Discounted Notes Lonestar is not otherwise aware are available for repurchase) and no Gap Financing is required, Lonestar agrees that such SGAP and such other repurchase opportunities will be accomplished with the assistance of Seaport Global’s debt trading desk at such times and at such acquisition prices as are agreed upon by the Parties.  In connection with each SGAP or other purchase of Discounted Notes accomplished with the assistance of Seaport Global, Seaport Global shall be paid an acquisition fee by Lonestar with respect to that repurchase in the amount of (a) six and one-quarter of one percent (6.25%) of the difference between the original par value of the Discounted Notes that are acquired and the purchase price actually paid for those Discounted Notes by Lonestar (the “Discount”) in all  transactions in which any Gap Financing is employed, and (b) three and one-eighth of one percent (3.125%) of the amount of the  Discount with respect to any acquisition of Discounted Notes pursuant to clause (ii) of the first sentence of this Section 2. 

 

	
 
	
3.
	
Gap Financing. The agreed amount of any Gap Financing in connection with any SGAP will be advanced in cash by Seaport Global at the time of the repurchase of Discounted Notes against delivery, upon the later of (a) thirty (30) calendar days after the date of such advance or (b) the completion of the applicable Waiting Period (subject to applicable transfer agent procedures and customary settlement periods), by Lonestar to Seaport Global of a number of shares of  Restricted Stock determined by dividing the dollar amount of such Gap Financing by an amount equal to 90% of the closing price of Lonestar’s common stock (Symbol: LONE) (i) with respect to any Gap Financing prior to the completion of the applicable Waiting Period, on the most recently completed trading date prior to the date hereof and (ii) with respect to any Gap Financing subsequent to the completion of the applicable Waiting Period,  on the most recently completed trading date prior to the date that the shares of Restricted Stock in respect thereof are delivered to Seaport Global (such closing price being referred to herein as the “Applicable Acquisition Price” with respect to the shares of Restricted Stock issued in respect of any Gap Financing) ; provided that the aggregate number of shares of Restricted Stock issued pursuant to this Section 3 shall not exceed the Share Cap.  

 

	
 
	
4.
	
Restricted Stock Price Protection.  At such time or times as Seaport Global determines, in its sole and absolute discretion, to dispose of any or all of the shares of Restricted Stock it holds as a result of any Gap Financing (the date on which Seaport Global disposes of such Restricted Stock, the “Disposition Date”), if Seaport Global sells any such Restricted Stock (including in connection 

2

 

 

	
 
		
with any public offering) at a price that results in gross proceeds to it of less than the Applicable Acquisition Price (a “Gap Financing Deficit”), then Lonestar shall issue a number of additional shares of Restricted Stock (the “Make-up Shares” and, together with the shares of Restricted Stock held by Seaport Global, the “Seaport Global Shares”) to Seaport Global determined by dividing the dollar amount of the Gap Financing Deficit by an amount equal to 90% of the closing price of Lonestar’s common stock on the Disposition Date (the “Make-Up Acquisition Price”); provided that the aggregate number of shares of Restricted Stock issued pursuant to this Section 4 shall not exceed the Share Cap less the aggregate number of shares of Restricted Stock issued pursuant to Section 3 hereof (the “Make-Up Share Cap”). Thereafter, Lonestar shall continue to be obligated to issue additional Make-up Shares with respect to any Seaport Global Shares that continue to be held by and subsequently sold by Seaport Global which sale results in a Gap Financing Deficit in the same manner and on the same terms as set forth above. To the extent that Make-Up Shares issuable in respect of any Gap Financing Deficit are in excess of the Make-Up Share Cap, Lonestar shall pay any remaining Gap Financing Deficit with an amount of cash equal to the amount of such remaining Gap Financing Deficit. Notwithstanding the foregoing, Lonestar may, at any time in its sole and absolute discretion, and in lieu of issuing additional Make-up Shares to Seaport Global, elect to pay Seaport Global an amount of cash equal to the amount of any Gap Financing Deficit. 

 

In addition to the foregoing “price protection” afforded to Seaport Global with respect to the Seaport Global Shares that it holds pursuant to or otherwise in connection with this Agreement, Lonestar agrees (i) to use commercially reasonable efforts to cause the Seaport Global Shares to be registered for sale with Seaport Global as a “selling shareholder” in connection with any registration statement relating to Lonestar’s common stock filed with or submitted to the SEC, subject to customary cutbacks, and (ii) at Seaport Global’s option (to be exercised in its sole and absolute discretion), to repurchase from Seaport Global any Seaport Global Shares that continue to be held by Seaport Global for a period equal to or in excess of one (1) year and one (1) day after the date of their initial acquisition (the “Holding Period”) by Seaport Global for a period of the next 20 business days following the end of such Holding Period at a price equal to the Applicable Acquisition Price. 

 

	
 
	
5.
	
Seller Commissions. Nothing herein shall restrict in any way or prevent Seaport Global from charging the seller(s) of any Discounted Notes customary and usual commissions on such sales in the ordinary course of its business of buying and selling debt instruments for and from unrelated third parties.

 

 

	
 
	
6.
	
Lonestar Representations and Warranties. 

 

	
 
	
a.
	
Authorization; Enforcement; Validity.  Lonestar has the requisite corporate power and authority to enter into and, upon completion of any applicable Waiting Period, to consummate the transactions contemplated by this 

3

 

 

	
 
		
Agreement and otherwise to carry out its obligations hereunder.  Lonestar’s execution and delivery of this Agreement have been, and, upon completion of any applicable Waiting Period, the consummation by it of the transactions contemplated hereby (including, but not limited to, the delivery of the Restricted Stock and the Make-up Shares) will be, duly authorized by all necessary corporate action on the part of Lonestar, and no further corporate action will be required by Lonestar, its Board of Directors or its stockholders in connection therewith.  The Agreement has been duly executed by Lonestar and is the legally valid and binding obligation of Lonestar enforceable against Lonestar in accordance with its terms, except (i) as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as the indemnification provision may be limited by applicable law. 

 

	
 
	
b.
	
No Conflicts.  The execution and delivery by Lonestar does not and will not, and, upon the Stockholder Consent and the completion of any applicable Waiting Period, the performance by Lonestar of the Agreement and the consummation by Lonestar of the transactions contemplated hereby (including, without limitation, the issuance of the Restricted Stock and the Make-up Shares) will not (i) conflict with or violate any provisions of Lonestar’s or any of its subsidiaries’ certificate or articles of incorporation, bylaws or other organizational documents, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would result in a default) under, result in the creation of any lien upon any of the properties or assets of Lonestar or any of its subsidiaries or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material contract, 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 Lonestar or any of its subsidiaries is subject (including federal and state securities laws and regulations and the rules and regulations, of any self-regulatory organization to which Lonestar or its securities are subject, including all applicable trading markets, assuming in each case the accuracy of the representations and warranties made by Seaport Global herein), or by which any property or asset of Lonestar or any of its subsidiaries is bound, except in the case of clauses (ii) and (iii) such as would not, individually or in the aggregate, have  or  reasonably be expected to result in a material adverse effect on the Company.

 

	
 
	
c.
	
Filings, Consents and Approvals.  Neither Lonestar nor any of its subsidiaries is required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other person in connection with the execution, delivery and performance by Lonestar of this Agreement (including the issuance of the Restricted Stock and the Make-up Shares), other than (i) the receipt of the Stockholder Consent and the completion of the 

4

 

 

	
 
		
applicable Waiting Period, (ii) the filing of a Notice of Sale of Securities on Form D with the Commission under Regulation D of the Securities Act, (iii) the filing of any requisite notices and/or application(s) to the Lonestar’s principal trading market for the issuance and sale of the Lonestar Common Stock and the listing of the Restricted Stock and the Make-up Shares for trading or quotation, as the case may be, thereon in the time and manner required thereby, (iv) the filing of any Current Report on Form 8-K with respect to any of the transactions contemplated hereby; and (v) those that have been made or obtained prior to the date of this Agreement.   

 

	
 
	
d.
	
Issuance of the Restricted Stock and the Make-up Shares.  Upon completion of any applicable Waiting Period, the Restricted Stock and the Make-up Shares will have been duly authorized and, when issued in accordance with the terms of this Agreement, will be duly and validly issued, fully paid and non-assessable and free and clear of all Liens, other than restrictions on transfer imposed by applicable securities laws, and shall not be subject to preemptive or similar rights.  Assuming the accuracy of the representations and warranties of Seaport Global in this Agreement, the Restricted Stock and the Make-up Shares will be issued in compliance with all applicable federal and state securities laws.  

 

	
 
	
e.
	
SEC Reports; Disclosure Materials.  Lonestar has filed and will continue to file all reports, schedules, forms, statements and other documents required to be filed by it under the Exchange Act to qualify the Restricted Stock and the Make-up Shares for resale by Seaport Global through the use of Rule 144.  

 

	
 
	
f.
	
No Additional Agreements.  Lonestar does not have any agreement or understanding with any other person with respect to the transactions contemplated by this Agreement other than as specified herein.

 

	
 
	
7.
	
Seaport Global Representations and Warranties. 

 

	
 
	
a.
	
Organization; Authority.  Seaport Global is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite corporate or partnership power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of this Agreement by Seaport Global and performance by Seaport Global of the transactions contemplated by this Agreement have been duly authorized by all necessary limited liability company action.  The Agreement has been duly executed by Seaport Global and constitutes the valid and legally binding obligation of Seaport Global, enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application.

 

	
 
	
b.
	
No Conflicts.  The execution, delivery and performance by of this Agreement by Seaport Global and the consummation by Seaport Global of the transactions 

5

 

 

	
 
		
contemplated hereby will not (i) result in a violation of the organizational documents of Seaport Global, (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 Seaport Global is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment  or decree (including federal and state securities laws) applicable to Seaport Global, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Seaport Global to perform its obligations hereunder. 

 

	
 
	
c.
	
Investment Intent.  Seaport Global understands that the Restricted Stock and the Make-up Shares are “restricted securities” and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Restricted Stock and the Make-up Shares as principal for its own account and not with a view to, or for distributing or reselling such Restricted Stock or Make-up Shares or any part thereof in violation of the Securities Act or any applicable state securities laws, provided, however, that by making the representations herein, Seaport Global does not agree to hold any of the Restricted Stock or the Make-up Shares for any minimum period of time and reserves the right, subject to the provisions of this Agreement, at all times to sell or otherwise dispose of all or any part of such Restricted Stock and Make-up Shares  pursuant to an effective registration statement under the Securities Act or under an exemption from such registration; provided that in any event, Seaport Global will make any sale or other disposition of the Restricted Stock or Make-up Shares in compliance with applicable federal and state securities laws.

 

Lonestar and Seaport Global acknowledge and agree that no party to this Agreement has made or makes any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth above.

	
 
	
8.
	
Other Agreements of the Parties.

	
 
	
a.
	
Delivery of Engagement Letter.  The Engagement Letter attached as Exhibit “A” to this Agreement shall be executed and delivered by Lonestar and Seaport Global simultaneously with, and as an express condition to, the execution and delivery of this Agreement.

 

	
 
	
b.
	
In connection with the initial transaction to be accomplished pursuant to this Agreement immediately upon the date of its execution, Lonestar and Seaport Global have specifically additionally agreed as follows:

 

	
 
	
i.
	
The Board of Directors will, pursuant to the Board Resolution, (a) approve this Agreement and the transactions contemplated hereby,  (b) set a record date (the “Record Date”) for purposes of obtaining the Stockholder Consent, (c) recommend that Lonestar’s stockholders as of 

6

 

 

	
 
		
the Record Date approve the issuance of Common Stock as contemplated hereby, (d) authorize the preparation, filing and distribution of Information Statements as required by the Exchange Act. 

	
 
	
ii.
	
Promptly after the Board of Directors sets the Record Date, Lonestar will notify the NASDAQ thereof.

 

	
 
	
iii.
	
On the Record Date, EF Realisation Company Limited and EFR Holding Guernsey Limited will execute or otherwise make effective the Stockholder Consent, a form of which is attached to this Agreement as Exhibit “B,” and, upon any applicable Waiting Period with respect to any preliminary Information Statement, Lonestar will finalize the applicable Information Statement to be filed with the SEC and mail such Information Statement to its shareholders. 

 

	
 
	
iv.
	
Upon receiving the appropriate notice or communication from the SEC regarding the conclusion of the Waiting Period with respect to the final Information Statement, Lonestar will issue and deliver any Restricted Stock to Seaport Global pursuant to any Gap Financing, subject to applicable transfer agent procedures and customary settlement periods.

 

	
 
	
v.
	
Notwithstanding any of the foregoing, in the event that the Restricted Stock is not issued and delivered to Seaport Global within ninety (90) days of the consummation of the related Gap Financing, then, at its option (to be exercised in its sole and absolute discretion), Seaport Global shall be entitled to receive an immediate payment in cash from Lonestar in the amount of one hundred and ten percent (110.0%) of the entire amount of the Gap Financing in lieu of the subsequent issuance of any Restricted Stock.

 

	
 
	
c.
	
Furnishing of Information.  In order to enable Seaport Global to sell the Restricted Stock and the Make-up Shares under Rule 144, during the period provided for in Section 4, above, Lonestar shall use its commercially reasonable efforts to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by Lonestar after the date hereof pursuant to the Exchange Act. 

 

	
 
	
d.
	
Indemnification of Seaport Global.  Lonestar will indemnify and hold Seaport Global and its directors, officers, shareholders, members, partners, employees and agents, each person who controls Seaport Global (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees of such controlling persons (each, a “Seaport Global Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Seaport 

7

 

 

	
 
		
Global Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by Lonestar in this Agreement, or (b) any action instituted against a Seaport Global Party in any capacity, or any of them or their respective Affiliates, by any stockholder of Lonestar with respect to any of the transactions contemplated by this Agreement (unless such action is based upon a breach of Seaport Global’s representations, warranties or covenants under this Agreement or any violations by Seaport Global of state or federal securities laws or any conduct by Seaport Global which constitutes fraud, gross negligence, willful misconduct or malfeasance).  

 

	
 
	
e.
	
Principal Trading Market Listing.  In the time and manner required by Lonestar’s principal trading market, Lonestar shall prepare and file with such principal trading market an additional shares listing application covering all of the Restricted Stock and the Make-up Shares and shall use its commercially reasonable efforts to take all steps necessary to cause all of the Restricted Stock and the Make-up Shares to be approved for listing on the principal trading market as promptly as possible thereafter.         

 

	
 
	
f.
	
Form D; Blue Sky.  Lonestar agrees to timely file a Form D with respect to the Restricted Stock and the Make-up Shares as may be required under Regulation D and to provide a copy thereof, promptly upon the written request of Seaport Global.  Lonestar, on or before the delivery of any of the Restricted Stock and the Make-up Shares, shall take such action as Lonestar shall reasonably determine is necessary in order to obtain an exemption for or to qualify the Restricted Stock and the Make-up Shares for issuance to Seaport Global under applicable securities or “Blue Sky” laws of the states of the United States (or to obtain an exemption from such qualification) and shall provide evidence of such actions promptly upon the written request of Seaport Global.  

 

	
 
	
g.
	
Delivery of Restricted Stock and the Make-up Shares. Lonestar shall promptly deliver, or cause to be delivered, the Restricted Stock and the Make-up Shares to Seaport Global at the time or times contemplated by Section 4 of this Agreement.  

8

 

 

9. Miscellaneous.

	
 
	
a.
	
Fees and Expenses.  Lonestar and Seaport Global shall each pay the fees and expenses of their respective advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such Party in connection with the negotiation, preparation, execution, delivery and performance of this Agreement. Lonestar shall pay all Transfer Agent fees, stamp taxes and other taxes and duties levied in connection with the issuance to Seaport Global of the Restricted Stock and the Make-up Shares. 

	
 
	
b.
	
Entire Agreement.  The Agreement contains the entire understanding of the Parties with respect to the subject matter hereof and supersede all prior agreements, understandings, discussions and representations, oral or written, with respect to such matters, which the Parties acknowledge have been merged into such document.  From time to time, and without further consideration, Lonestar and Seaport Global will execute and deliver to the other such further documents as may be reasonably requested in order to give practical effect to the intention of the parties under this Agreement.

	
 
	
c.
	
Notices.  Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile (provided the sender receives a machine-generated confirmation of successful transmission) or electronic message at the facsimile number or e-mail address, as applicable, specified in this Section prior to 5:00 P.M., New York City time, on a trading day, (b) the next trading day after the date of transmission, if such notice or communication is delivered via facsimile or electronic message at the facsimile number or e-mail address, as applicable, specified in this Section on a day that is not a trading day or later than 5:00 P.M., New York City time, on any trading day, (c) the trading day following the date of mailing, if sent by U.S. nationally recognized overnight courier service with next day delivery specified, or (d) upon actual receipt by the Party to whom such notice is required to be given.  The address for such notices and communications shall be as follows:

If to Lonestar:Lonestar Resources US Inc.

600 Bailey Avenue, Suite 200

Fort Worth, TX 76107

Attn: Frank D. Bracken

Telephone No.:

E-mail:

 

 

      If to Seaport Global:Seaport Global Securities LLC

400 Poydras Street, Suite 3100

New Orleans, LA 70130

Attn: General Counsel-IB

504-410-8017

9

 

 

gmeringer@seaportglobal.com 

 

     or such other address as may be designated in writing hereafter, in the same  

     manner, by such Person.

 

	
 
	
d.
	
Amendments; Waivers; No Additional Consideration.  No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by Lonestar and Seaport Global or, in the case of a waiver, by the Party against whom enforcement of any such waiver is sought.  No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either Party to exercise any right hereunder in any manner impair the exercise of any such right.  

 

	
 
	
e.
	
Construction.  The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.  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.  This Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provisions of this Agreement.

 

	
 
	
f.
	
Successors and Assigns.  The provisions of this Agreement shall inure to the benefit of and be binding upon the parties and their successors and permitted assigns.  This Agreement, or any rights or obligations hereunder, may not be assigned by any Party without the prior written consent of the other Parties.  

 

	
 
	
g.
	
No Third-Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other person.

 

	
 
	
h.
	
Governing Law.  All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof.  Each Party agrees that all proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement shall be commenced exclusively in the New York Courts.  Each Party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts 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 proceeding, any claim that it is not personally subject to the jurisdiction of any such New York Court, or that such proceeding has been commenced in an improper or inconvenient forum.  Each 

10

 

 

	
 
		
Party hereto hereby irrevocably waives personal service of process and consents to process being served in any such proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such Party at the address in effect for 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 HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. 

  

	
 
	
i.
	
Execution.  This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each Party and delivered to the other Party, it being understood that both parties need not sign the same counterpart.  In the event that any signature is delivered by facsimile transmission, or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the Party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original thereof.

 

	
 
	
j.
	
Severability.  If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement.

 

 

	
 
	
k.
	
Termination. This Agreement may be terminated at any time by either Lonestar or Seaport Global upon written notice to the other.  Nothing in this Section shall be deemed to release any Party from (i) any indemnity due to the other Party hereunder, or (ii) for any breach by such Party of the terms and provisions of this Agreement as in effect, in either such case immediately prior to such termination.

 

 

 

 

11

 

 

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

 

 

LONESTAR RESOURCES US INC 

By: _/s/ Frank D. Bracken III____________________  

           Frank D. Bracken III, Chief Executive Officer

	
 
	

	
 

SEAPORT GLOBAL SECURITIES LLC 

By: _/s/ Gary Meringer        ____________________  

           Gary Meringer, General Counsel-IB

 

 

 

 

12

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