Document:

Exhibit 4.5

 

EXECUTION VERSION

 

	
 
    

 

REGISTRATION RIGHTS AGREEMENT

 

Dated as of November 14, 2017

 

by and among

 

ITC HOLDINGS CORP.,

 

on the one hand, and

 

BARCLAYS CAPITAL INC.,

 

J.P. MORGAN SECURITIES LLC,

 

MORGAN STANLEY & CO. LLC,

 

and

 

WELLS FARGO SECURITIES, LLC,

 

as Representatives of the Initial Purchasers,

 

on the other hand

 

	
 
    

 

 

REGISTRATION RIGHTS AGREEMENT

 

This REGISTRATION RIGHTS AGREEMENT (the “Agreement”) is made and entered into on November 14, 2017, by and among ITC Holdings Corp., a corporation duly organized and existing under the laws of the State of Michigan (the “Issuer”), on the one hand, and Barclays Capital Inc., J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and Wells Fargo Securities, LLC, on their own behalf and as representatives (the “Representatives”) of each of the other Initial Purchasers named in Schedule A hereto (collectively, the “Initial Purchasers”), on the other hand.

 

This Agreement is made pursuant to that certain Purchase Agreement, dated November 9, 2017, by and among the Issuer and the Representatives (the “Purchase Agreement”), which provides for the sale by the Issuer to the Initial Purchasers of an aggregate of $500,000,000 principal amount of the Issuer’s 2.700% Notes due 2022 (the “2022 Notes”) and an aggregate of $500,000,000 principal amount of the Issuer’s 3.350% Notes due 2027 (the “2027 Notes” and, together with the 2022 Notes, the “Notes” and each, a “Series” of Notes).  In order to induce the Initial Purchasers to enter into the Purchase Agreement, the Issuer has agreed to provide to the Holders (as defined below) of the Notes the registration rights set forth in this Agreement.  The execution of this Agreement is a condition to the Initial Purchasers’ obligation to purchase the Notes under the Purchase Agreement.

 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual promises contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties hereto covenant and agree as follows:

 

1.                                      Definitions.

 

As used in this Agreement, the following capitalized defined terms shall have the following meanings:

 

“1933 Act” shall mean the Securities Act of 1933, as amended from time to time.

 

“1934 Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

 

“Additional Interest” shall have the meaning set forth in Section 2.5(a) hereof.

 

“Automatic Shelf Registration Statement” shall mean an “automatic shelf registration statement” as that term is defined in Rule 405, as amended, under the 1933 Act.

 

“Business Day” shall mean any day that is not a Saturday, Sunday or other day on which banking institutions in New York City are generally authorized or required by law, regulation or executive order to remain closed.

 

“Depositary” shall mean The Depository Trust Company, or any other depositary appointed by the Issuer; provided, however, that such depositary must have an address in the Borough of Manhattan, in the City of New York.

 

 

“Effectiveness Date” shall mean the 365th calendar day after the date hereof.

 

“Effectiveness Period” shall have the meaning set forth in Section 2.2(b).

 

“Exchange Date” shall have the meaning set forth in Section 2.1(b)(ii).

 

“Exchange Notes” means the notes to be issued by the Issuer under the Indenture containing terms identical to the applicable Series of Notes in all material respects (except for references to certain interest rate provisions, restrictions on transfers and restrictive legends), to be offered to Holders of such Series of Notes in exchange for the applicable Series of Transfer Restricted Notes pursuant to the Exchange Offer.

 

“Exchange Offer” shall mean, collectively, the exchange offers by the Issuer of Exchange Notes for each Series of Transfer Restricted Notes pursuant to Section 2.1 hereof.

 

“Exchange Offer Registration” shall mean a registration under the 1933 Act effected pursuant to Section 2.1 hereof.

 

“Exchange Offer Registration Statement” shall mean an exchange offer registration statement on Form S-4 (or, if applicable, on another appropriate form), and all amendments and supplements to such registration statement, including the Prospectus contained therein, all exhibits thereto and all documents incorporated by reference therein.

 

“Event Date” shall have the meaning set forth in Section 2.5(b).

 

“FINRA” means the Financial Industry Regulatory Authority.

 

“Free Writing Prospectus” means each free writing prospectus (as defined in Rule 405 under the 1933 Act) prepared by or on behalf of the Issuer or used or referred to by the Issuer in connection with the sale of the Notes or the Exchange Notes.

 

“Holder” shall mean an Initial Purchaser, for so long as it owns any Transfer Restricted Notes, and each of its successors, assigns and direct and indirect transferees who become registered owners of Transfer Restricted Notes under the Indenture and each Participating Broker-Dealer that holds Exchange Notes for so long as such Participating Broker-Dealer is required to deliver a prospectus meeting the requirements of the 1933 Act in connection with any resale of such Exchange Notes.

 

“Indenture” shall mean the indenture dated as of April 18, 2013, between the Issuer and Wells Fargo Bank, National Association, as Trustee, as supplemented by the Fourth Supplemental Indenture, dated as of November 14, 2017, by and between the Issuer and the Trustee pursuant to which the Notes are being issued, as the same may be amended, supplemented, waived or otherwise modified from time to time in accordance with the terms thereof.

 

“Initial Purchaser” or “Initial Purchasers” shall have the meaning set forth in the preamble.

 

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“Issuer” shall have the meaning set forth in the preamble.

 

“Majority Holders” shall mean the Holders of a majority of the aggregate principal amount of the outstanding Transfer Restricted Notes of both Series, treated for the purposes hereof as one class; provided that whenever the consent or approval of Holders of a specified percentage of Transfer Restricted Notes is required hereunder, Transfer Restricted Notes held by the Issuer or any Affiliate (as defined in the Indenture) of the Issuer shall be disregarded in determining whether such consent or approval was given by the Holders of such required percentage or amount; provided, further, that if the Issuer shall issue any additional Notes under the Indenture prior to consummation of the Exchange Offer or, if applicable, the effectiveness of any Shelf Registration Statement, such additional Notes and the Transfer Restricted Notes to which this Agreement relates shall be treated together as one class for purposes of determining whether the consent or approval of Holders of a specified percentage of Transfer Restricted Notes has been obtained.

 

“Notes” shall have the meaning set forth in the preamble hereof.

 

“Participating Broker-Dealer” shall mean any of the Initial Purchasers and any other broker-dealer which makes a market in the Notes and exchanges Transfer Restricted Notes in the Exchange Offer for Exchange Notes.

 

“Person” shall mean an individual, partnership (general or limited), corporation, limited liability company, trust or unincorporated organization, or a government or agency or political subdivision thereof.

 

“Prospectus” shall mean the prospectus included in, or, pursuant to the rules and regulations of the 1933 Act, deemed a part of, a Registration Statement, including any preliminary prospectus, and any such prospectus as amended or supplemented by any prospectus supplement, including any such prospectus supplement with respect to the terms of the offering of any portion of the Transfer Restricted Notes covered by a Shelf Registration Statement, and by all other amendments and supplements to a prospectus, including post effective amendments, and in each case including all material incorporated by reference therein.

 

“Purchase Agreement” shall have the meaning set forth in the preamble.

 

“Registration Default” shall have the meaning set forth in Section 2.5(a).

 

“Registration Expenses” shall mean any and all expenses incident to performance of or compliance by the Issuer with this Agreement, including without limitation: (i) all SEC, stock exchange or FINRA registration and filing fees, (ii) all fees and expenses incurred in connection with compliance with state securities or blue sky laws (including reasonable and documented fees and disbursements of counsel for any Underwriters or Holders in connection with blue sky qualification of any of the Exchange Notes or Transfer Restricted Notes), (iii) all expenses of any Persons in preparing or assisting in preparing, word processing, printing and distributing any Registration Statement, any Prospectus, any amendments or supplements thereto, any underwriting agreements, securities sales agreements and any other documents relating to the performance of and compliance with this Agreement, (iv) all fees and expenses incurred in connection with the listing, if any, of any of the Transfer Restricted Notes on any securities

 

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exchange or exchanges, (v) all rating agency fees, (vi) the fees and disbursements of counsel for the Issuer and of the independent public accountants of the Issuer, including the expenses of any special audits or “cold comfort” letters required by or incident to such performance and compliance, (vii) in the case of a Shelf Registration Statement, the reasonable and documented fees and disbursements of one counsel for the Holders as a group (which counsel shall be selected by the Majority Holders and which counsel may also be counsel for the Initial Purchasers, and if not counsel for the Initial Purchasers, such counsel shall be subject to the Issuer’s reasonable approval, which approval may not be unreasonably withheld); (viii) the fees and reasonable and documented expenses of the Trustee (including the reasonable and documented fees and disbursements of its counsel), and any escrow agent or custodian, (ix) all fees and disbursements relating to the qualification of the Indenture under applicable securities laws, and (x) any fees and disbursements of  the underwriters customarily required to be paid by issuers or sellers of securities (including one counsel to the underwriters, other than fees and expenses set forth in clause (ii) above), but excluding underwriting discounts and commissions and transfer taxes, if any, relating to the sale or disposition of Transfer Restricted Notes by a Holder.  Notwithstanding the foregoing, except as specifically provided above, the Issuer shall not be responsible for the fees and expenses of the Initial Purchasers in connection with the Exchange Offer, except for the reasonable and documented fees and expenses of counsel to the Initial Purchasers in connection therewith to the extent such counsel is also counsel to the Holders as described in clause (vii) of this definition.

 

“Registration Statement” shall mean any registration statement of the Issuer which covers any of the Exchange Notes or Transfer Restricted Notes pursuant to the provisions of this Agreement, and all amendments and supplements to any such Registration Statement, including post-effective amendments, in each case including the Prospectus contained therein or deemed a part thereof, all exhibits thereto and all material incorporated by reference therein.

 

“Rule 144” shall mean Rule 144 promulgated under the 1933 Act, as such Rule may be amended from time to time, and any successor rule thereto.

 

“SEC” shall mean the Securities and Exchange Commission or any successor agency or government body performing the functions currently performed by the United States Securities and Exchange Commission.

 

“Shelf Registration” shall mean a registration effected pursuant to Section 2.2.

 

“Shelf Registration Statement” shall mean a “shelf” registration statement of the Issuer pursuant to the provisions of Section 2.2, including an Automatic Shelf Registration Statement, if applicable, which covers all or a portion of the Transfer Restricted Notes on an appropriate form under Rule 415 under the 1933 Act, or any similar rule that may be adopted by the SEC, and all amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein or deemed a part thereof, all exhibits thereto and all material incorporated by reference therein.

 

“Shelf Request” shall have the meaning set forth in Section 2.2(a)(iii).

 

“TIA” shall mean the Trust Indenture Act of 1939, as amended.

 

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“Transfer Restricted Notes” shall mean each Series of Notes; provided, however, that any Series of Notes shall cease to be Transfer Restricted Notes on the earliest to occur of (i) the date on which a Registration Statement with respect to such Series of Notes has become effective under the 1933 Act and all Notes of that Series have been exchanged or disposed of pursuant to such Registration Statement, (ii) the date on which such Series of Notes ceases to be outstanding under the Indenture and (iii) the date on which such Series of Notes is distributed to the public by a Broker-Dealer pursuant to the “Plan of Distribution” contemplated by the Exchange Offer Registration Statement (including delivery of the Prospectus contained therein).

 

“Trustee” shall mean the trustee with respect to the Notes under the Indenture.

 

“Underwriter” shall have the meaning set forth in Section 4(a).

 

2.                                      Registration Under the 1933 Act.

 

1.                                      Exchange Offer.

 

(a)                                 To the extent not prohibited by any applicable law or applicable interpretations of the staff of the SEC, with respect to any Notes, if any, the Issuer shall use its commercially reasonable efforts to (X) cause to be filed and to become effective, on or prior to the Effectiveness Date, an Exchange Offer Registration Statement covering an offer to the Holders to exchange all the Transfer Restricted Notes of each Series of Notes for a like aggregate principal amount of Exchange Notes of such Series, (Y) have such Registration Statement remain effective until the consummation of the applicable Exchange Offer in accordance with its terms, and (Z) with respect to each Series of Notes, commence such Exchange Offer and issue, on or prior to the 30th Business Day after the date on which such Exchange Offer Registration Statement is declared effective by the SEC, Exchange Notes of the applicable Series of Notes in exchange for all Transfer Restricted Notes of such Series of Notes validly tendered prior thereto in, and in accordance with the terms of, such Exchange Offer.

 

(b)                                 The Issuer shall, for the benefit of the Holders, at the Issuer’s cost, commence each Exchange Offer, if any, by mailing the related Prospectus, appropriate letters of transmittal and other accompanying documents to each Holder of the applicable Series of Notes stating, in addition to such other disclosures as are required by applicable law, substantially the following:

 

i.                                          that the Exchange Offer is being made pursuant to this Agreement and that all Transfer Restricted Notes of the applicable Series of Notes validly tendered and not properly withdrawn will be accepted for exchange;

 

ii.                                       the dates of acceptance for exchange (which shall be a period of at least 20 Business Days from the date such notice is mailed) (the “Exchange Dates”);

 

iii.                                    that any Transfer Restricted Notes of the applicable Series of Notes not tendered will remain outstanding and continue to accrue interest but will not retain any rights under this Agreement, except as otherwise specified herein;

 

iv.                                   that any Holder electing to have a Transfer Restricted Note of the applicable Series of Notes exchanged pursuant to the Exchange Offer will be required to

 

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(A) surrender such Transfer Restricted Note, together with the appropriate letters of transmittal, to the institution and at the address (located in the Borough of Manhattan, The City of New York) and in the manner specified in the notice, or (B) effect such exchange otherwise in compliance with the applicable procedures of the Depositary, in each case prior to the close of business on the last Exchange Date; and

 

v.                                      that any Holder will be entitled to withdraw its election, not later than the close of business on the last Exchange Date, by (A) sending to the institution and at the address (located in the Borough of Manhattan, The City of New York) specified in the notice, a telegram, telex, facsimile transmission or letter setting forth the name of such Holder, the principal amount of Transfer Restricted Notes delivered for exchange and a statement that such Holder is withdrawing its election to have such Transfer Restricted Notes exchanged or (B) effecting such withdrawal in compliance with the applicable procedures of the Depositary.

 

(c)                                  As a condition to participating in the Exchange Offer  a Holder will be required to represent and warrant to the Issuer that (i) it is not an affiliate of the Issuer within the meaning of Rule 405 under the 1933 Act, or if it is an affiliate, it will comply with the registration and prospectus delivery requirements of the 1933 Act to the extent applicable, (ii) any Exchange Notes to be received by such Holder will be acquired in the ordinary course of its business, (iii) if such Holder is not a broker-dealer, that it is not engaged in, and does not intend to engage in, the distribution of the Exchange Notes, (iv) if such Holder is a broker-dealer that will receive Exchange Notes for its own account in exchange for Transfer Restricted Notes acquired as a result of market-making or other trading activities, then such broker-dealer will deliver a Prospectus (or, to the extent permitted by law, make available a Prospectus to purchasers) in connection with any resale of such Exchange Notes, and (v) it has no arrangements or understandings with any Person to participate in the distribution (within the meaning of the Securities Act) of the Transfer Restricted Notes or the Exchange Notes in violation of the provisions of the Securities Act.

 

(d)                                 With respect to each Series, the Exchange Notes of such Series, if any, shall be issued under (i) the Indenture or (ii) an indenture identical in all material respects to the Indenture and which, in either case, has been qualified under the TIA, or is exempt from such qualification, and which shall provide that the Exchange Notes of such Series shall not be subject to the transfer restrictions set forth in the Indenture.  The Exchange Notes of a Series and the Notes of the same Series shall vote and consent together on all matters as one class and none of the Exchange Notes or the Notes of such Series will have the right to vote or consent as a separate class on any matter.

 

(e)                                  As soon as practicable after the last Exchange Date, the Issuer shall:

 

i.                                          accept for exchange all Transfer Restricted Notes of the applicable Series validly tendered and not validly withdrawn pursuant to the Exchange Offer in accordance with the terms of the Exchange Offer Registration Statement and the letter of transmittal which shall be an exhibit thereto;

 

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ii.                                       deliver, or cause to be delivered, to the Trustee for cancellation all Transfer Restricted Notes of the applicable Series or portions thereof so accepted for exchange; and

 

iii.                                    with respect to each Series, issue and cause the Trustee promptly to authenticate and deliver Exchange Notes of the corresponding Series to each Holder of Transfer Restricted Notes of such Series so accepted for exchange Exchange Notes of the same Series in a principal amount equal to the principal amount of the Transfer Restricted Notes of such Series of such Holder so accepted for exchange.

 

(f)                                   With respect to each Series, interest on each Exchange Note, including Additional Interest, will accrue (i) from the later of (x) the last date on which interest was paid on the Transfer Restricted Notes of such Series surrendered in exchange therefor or (y) if the Transfer Restricted Notes of such Series are surrendered for exchange on a date in a period which includes the record date for an interest payment date on such Series to occur on or after the date of such exchange and as to which interest will be paid, the date of such interest payment date or (ii) if no interest has been paid on the Transfer Restricted Notes of such Series, from the date of issuance.

 

(g)                                  The Issuer shall use its commercially reasonable efforts to complete each Exchange Offer as provided above and shall comply with the applicable requirements of the 1933 Act, the 1934 Act and other applicable laws and regulations in connection with each Exchange Offer.  Each Exchange Offer shall not be subject to any conditions, other than (i) the Exchange Offer does not violate any applicable law or applicable interpretations of the staff of the SEC, (ii) no action or proceeding shall have been instituted or threatened in any court or by any governmental agency with respect to the Exchange Offer and (iii) all governmental approvals shall have been obtained that the Issuer deems necessary for the consummation of the Exchange Offer.

 

2.                                Shelf Registration.

 

(a)                                 If,

 

i.                                          the Issuer would otherwise be required to consummate an Exchange Offer Registration pursuant to Section 2.1 but determines that such Exchange Offer Registration is not available or that such Exchange Offer may not be completed on or prior to the 30th Business Day following the Effectiveness Date because it would violate any applicable law, SEC rules and regulations or any interpretation of the staff of the SEC,

 

ii.                                       an Exchange Offer is not for any other reason completed by the last Exchange Date or

 

iii.                                    upon receipt of a written request (a “Shelf Request”) from any Initial Purchaser representing that it holds Transfer Restricted Securities that are or were ineligible to be exchanged in an Exchange Offer,

 

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the Issuer shall promptly deliver to the Holders of each series of Notes and the Trustee written notice thereof and shall use its commercially reasonable efforts to cause to be filed as soon as practicable after such determination, date or Shelf Request, as the case may be, a Shelf Registration Statement providing for the sale of all the Transfer Restricted Notes of the applicable Series by the Holders thereof (offering such Holders the opportunity to include their Transfer Restricted Securities thereon, and advising such Holders that the distribution of such Transfer Restricted Securities will be made in accordance with the method selected by the Majority Holders participating in the Shelf Registration) and to have such Shelf Registration Statement become effective by the 90th day following such determination date or Shelf Request.

 

(b)                                 In the event that the Issuer is required to file a Shelf Registration Statement, the Issuer agrees to use its commercially reasonable efforts to keep the Shelf Registration Statement continuously effective, supplemented and amended (including through post-effective amendments on Form S-3 if the Issuer is eligible to use such Form) until the date which is the earliest of (i) 180 days after the Shelf Registration Statement is declared effective, (ii) the date when no Notes covered by such Shelf Registration Statement constitute Transfer Restricted Notes and (iii) the date when Holders, other than Holders that are “affiliates” (as defined in Rule 144) of the Issuer, have actually sold such Notes pursuant to Rule 144 or any successor or similar rule thereto (the “Effectiveness Period”).  The Issuer agrees to furnish to the Holders of Transfer Restricted Notes listed in the Shelf Registration Statement and the related Prospectus copies of any such supplement or amendment promptly after its being used or filed with the SEC.

 

(c)                                  Notwithstanding any other provisions hereof, the Issuer shall use its commercially reasonable efforts to ensure that (i) any Shelf Registration Statement and any amendment thereto and any Prospectus forming a part thereof and any supplement thereto complies in all material respects with the 1933 Act and the rules and regulations thereunder, (ii) any Shelf Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) any Prospectus forming part of any Shelf Registration Statement, and any supplement to such Prospectus (as amended or supplemented from time to time), does not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements, in the light of the circumstances under which they were made, not misleading.

 

(d)                                 The Issuer shall not permit any securities other than Transfer Restricted Notes to be included in the Shelf Registration Statement; provided, however, that if the offer and sale of the Transfer Restricted Notes is registered pursuant to an Automatic Shelf Registration Statement, the foregoing prohibition shall apply only to the supplement or amendment covering such registration.  The Issuer agrees, if necessary, to supplement or amend the Shelf Registration Statement, as required by Section 3(b) below, and to furnish to the Holders of Transfer Restricted Notes copies of any such supplement or amendment promptly after its being used or filed with the SEC.

 

3.                                      Expenses.  The Issuer shall pay all Registration Expenses in connection with any registration pursuant to Sections 2.1 and 2.2.  Each Holder shall pay all underwriting discounts and commissions, brokerage commissions and transfer taxes, if any, relating to the sale or

 

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disposition of such Holder’s Transfer Restricted Notes pursuant to a Shelf Registration Statement.

 

4.                                      Effectiveness.

 

(a)                                 The Issuer will be deemed not to have used its commercially reasonable efforts to cause an Exchange Offer Registration Statement or a Shelf Registration Statement, as the case may be, to become, or to remain, effective during the requisite period if the Issuer voluntarily takes any action that would, or omits to take any action which omission would, result in any such Registration Statement not being declared effective, or in the Holders of Transfer Restricted Notes covered thereby not being able to exchange or offer and sell such Transfer Restricted Notes during that period as and to the extent contemplated hereby, unless such action is required by applicable law, in each case other than under the circumstances described in Sections 3(e)(iii), (iv), (v) or (vi) below.

 

(b)                                 Neither an Exchange Offer Registration Statement pursuant to Section 2.1 hereof nor a Shelf Registration Statement pursuant to Section 2.2 hereof, if not otherwise effective upon filing with the SEC as provided by Rule 462, will be deemed to have become effective unless it has been declared effective by the SEC; provided, however, that if, after it becomes effective, the offering of Transfer Restricted Notes pursuant to an Exchange Offer Registration Statement or a Shelf Registration Statement is interfered with by any stop order, injunction or other order or requirement of the SEC or any other governmental agency or court, such Registration Statement will not be deemed effective during the period of such interference, until the offering of Transfer Restricted Notes pursuant to such Registration Statement may legally resume.

 

5.                                      Additional Interest.

 

(a)                                 In the event that:

 

(i) (A) neither an Exchange Offer Registration Statement nor a Shelf Registration Statement covering each Series of Notes is declared effective by the SEC on or prior to the Effectiveness Date or (B) notwithstanding that the Issuer has consummated or will consummate an Exchange Offer for each Series of Notes, the Issuer is required to file a Shelf Registration Statement for either Series of Notes and such Shelf Registration Statement is not declared effective by the SEC on or prior to the 90th day following the date such Shelf Registration Statement was filed; or

 

(ii) (A) the Issuer has not exchanged all Transfer Restricted Notes validly tendered in accordance with the terms of an Exchange Offer for Exchange Notes on or prior to the 30th Business Day after the date on which the Exchange Offer Registration Statement was declared effective or (B) if applicable, the applicable Shelf Registration Statement has been declared effective and such Shelf Registration Statement ceases to be effective at any time prior to the end of the Effectiveness Period (provided that the Issuer will be permitted to suspend the use of the prospectus that is part of such Shelf Registration Statement if the Issuer’s management determines to do so for valid business reasons, including circumstances relating to pending corporate developments and similar events or filings with the SEC, for a period not to exceed 45 days in any three-month

 

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period and not to exceed an aggregate of 90 days in any twelve-month period, and without specifying the nature of the event giving rise to a suspension in any notice of suspension provided to the Holders (any event referred to in the foregoing clauses (i) or (ii), a “Registration Default”)),

 

then additional interest (“Additional Interest”) will accrue on the principal amount of the Transfer Restricted Notes of the applicable Series at a rate of 0.25% per annum for the first 90 days commencing on the day following the Registration Default, which rate will be increased by an additional 0.25% per annum for each subsequent 90-day period thereafter that such Additional Interest continues to accrue; provided that the rate at which such Additional Interest accrues may in no event exceed 1.00% per annum), to but excluding the day on which the Registration Default with respect to such Series has been cured.

 

Additional Interest will be paid semi-annually in arrears with the interest payment due on the first interest payment date following the date on which such Additional Interest begins to accrue; provided, however, that (a) the Additional Interest applicable to any Series of Transfer Restricted Notes may not accrue under more than one of the foregoing clauses (i) and (ii) with respect to such Series at any one time, and in no event will Additional Interest accrue after the Effectiveness Period, (b) if a Holder is not able to or does not provide the representations and information required in connection with a Shelf Registration in a timely manner and is therefore not named as a selling security holder in a Shelf Registration Statement, the Holder will not be entitled to receive any Additional Interest with respect to its Transfer Restricted Notes; and (c) the Issuer will have no other liabilities to the Holders under this Agreement with respect to any Registration Default.

 

(b)                                 With respect to each Series, the Issuer shall notify the Trustee within three Business Days after each and every date on which an event occurs in respect of which Additional Interest is required to be paid (an “Event Date”) on the Notes of such Series.  Any Additional Interest due shall be payable on each interest payment date of the applicable series affected thereby to the Holder of Notes of such Series with respect to which Additional Interest is due and owing.  Each obligation to pay Additional Interest shall be deemed to accrue from and including the day following the applicable Event Date.

 

3.                                      Registration Procedures.

 

In connection with the obligations of the Issuer with respect to Registration Statements for each Series of Notes pursuant to Sections 2.1 and 2.2 hereof, the Issuer shall:

 

(a)                                 prepare and file with the SEC a Registration Statement, within the relevant time periods specified in Sections 2.1 and 2.2, on the appropriate form under the 1933 Act and the rules promulgated thereunder, which form (i) shall be selected by the Issuer, (ii) shall, in the case of a Shelf Registration, be available for the sale of the Transfer Restricted Notes by the selling Holders thereof, (iii) shall comply as to form in all material respects with the requirements of the applicable form and include or incorporate by reference all financial statements required by the SEC to be filed therewith or incorporated by reference therein and (iv) shall comply in all material respects with the requirements of Regulation S-T under the 1933 Act, and the Issuer shall use its commercially reasonable efforts to cause such Registration Statement to become

 

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effective and remain effective for the applicable period in accordance with Sections 2.1 and 2.2 hereof,

 

(b)                                 prepare and file with the SEC such amendments and post-effective amendments to each Registration Statement and file with the SEC any other required document as may be necessary under applicable law to keep such Registration Statement effective for the applicable period; and cause each Prospectus to be supplemented by any required prospectus supplement and, as so supplemented, to be filed pursuant to Rule 424 (or any similar provision then in force) under the 1933 Act and comply with the provisions of the 1933 Act, the 1934 Act and the rules and regulations thereunder applicable to them with respect to the exchange or disposition of all securities covered by each Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the exchanging Holders or selling Holders, as applicable, thereof (including sales by any Participating Broker-Dealer); and keep each Prospectus current during the period described in Section 4(a)(3) of the 1933 Act and Rule 174 under the 1933 Act that is applicable to transactions by brokers or dealers with respect to the Transfer Restricted Notes or Exchange Notes;

 

(c)                                  in the case of a Shelf Registration, furnish to each Holder of Transfer Restricted Notes to be covered thereby and to each underwriter of an underwritten offering of Transfer Restricted Notes, if any, without charge, as many copies of each Prospectus, including each preliminary Prospectus, and any amendment or supplement thereto and such other documents as such Holder or underwriter may reasonably request in order to facilitate the sale or other disposition of the Transfer Restricted Notes; and consent to the use of the Prospectus or any amendment or supplement thereto in accordance with applicable law by each of the Holders of Transfer Restricted Notes and any such Underwriter in connection with the offering and sale of the Transfer Restricted Notes covered by the Prospectus or any amendment or supplement thereto in accordance with applicable law;

 

(d)                                 use its commercially reasonable efforts to register or qualify the Transfer Restricted Notes under all applicable state securities or “blue sky” laws of such jurisdictions as any Holder of Transfer Restricted Notes covered by a Registration Statement and each underwriter of an underwritten offering of Transfer Restricted Notes shall reasonably request in writing by the time the applicable Registration Statement is declared effective by the SEC, cooperate with such Holders in connection with any filings required to be made with FINRA, and do any and all other acts and things which may be reasonably necessary or advisable to enable each such Holder and underwriter to consummate the disposition in each such jurisdiction of such Transfer Restricted Notes owned by such Holder; provided, however, that the Issuer shall not be required to (i) qualify as a foreign corporation or other entity or as a dealer in securities in any such jurisdiction where it would not otherwise be required to so qualify but for this Section 3(d), or (ii) take any action which would subject it to any general consent to service of process or taxation in any such jurisdiction where it is not then so subject;

 

(e)                                  notify promptly each Holder of Transfer Restricted Notes under a Shelf Registration or any Participating Broker-Dealer who has notified the Issuer that it is utilizing the Exchange Offer Registration Statement as provided in clause (f) below and, if requested by any such Holder or Participating Broker-Dealer, confirm such advice in writing as promptly as reasonably practicable (i) when a Registration Statement has become effective and when any

 

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post-effective amendments or any amendment or supplement to a Registration Statement and Prospectus have become effective, (ii) of any request by the SEC or any state securities authority for post-effective amendments and supplements to a Registration Statement and Prospectus or for additional information after the Registration Statement has become effective, (iii) of the issuance by the SEC or any state securities authority of any stop order suspending the effectiveness of a Registration Statement or the initiation of any proceedings for that purpose, including the receipt by the Issuer of any notice of objection of the SEC to the use of a Shelf Registration Statement or any post-effective amendment thereto pursuant to Rule 401(g)(2) under the 1933 Act, (iv) in the case of a Shelf Registration, if, between the effective date of a Registration Statement and the closing of any sale of Transfer Restricted Notes covered thereby, the representations and warranties of the Issuer contained in any underwriting agreement, securities sales agreement or other similar agreement, if any, relating to the offering cease to be true and correct in all material respects, (v) of the happening of any event or the discovery of any facts during the period a Shelf Registration Statement is effective which makes any statement made in such Registration Statement or the related Prospectus untrue in any material respect or which requires the making of any changes in such Registration Statement or Prospectus in order to make the statements therein not misleading, (vi) of the receipt by the Issuer of any notification with respect to the suspension of the qualification of the Transfer Restricted Notes or the Exchange Notes, as the case may be, for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose and (vii) of any determination by the Issuer that a post-effective amendment to such Registration Statement would be appropriate;

 

(f)                                   in the case of an Exchange Offer Registration Statement, (i) include in the Exchange Offer Registration Statement a section entitled “Plan of Distribution” which section shall be in customary form, and which shall contain a summary statement of the positions taken or policies made by the staff of the SEC with respect to the potential “underwriter” status of any broker-dealer that holds Transfer Restricted Notes acquired for its own account as a result of market-making activities or other trading activities and that will be the beneficial owner (as defined in Rule 13d-3 under the 1934 Act) of Exchange Notes to be received by such broker-dealer in the Exchange Offer, whether such positions or policies have been publicly disseminated by the staff of the SEC or such positions or policies represent the prevailing views of the staff of the SEC, including a statement that any such broker-dealer who receives Exchange Notes for Transfer Restricted Notes pursuant to the Exchange Offer may be deemed a statutory underwriter and must deliver a prospectus meeting the requirements of the 1933 Act in connection with any resale of such Exchange Notes, (ii) furnish to each Participating Broker-Dealer who has delivered to the Issuer the notice referred to in Section 3(e), without charge, as many copies of each Prospectus included in the applicable Exchange Offer Registration Statement, including any preliminary prospectus, and any amendment or supplement thereto, as such Participating Broker Dealer may reasonably request, (iii) does hereby consent to the use of the Prospectus forming part of the applicable Exchange Offer Registration Statement or any amendment or supplement thereto, by any Person subject to the prospectus delivery requirements of the SEC, including all Participating Broker-Dealers, in connection with the sale or transfer of the Exchange Notes covered by the Prospectus or any amendment or supplement thereto, and (iv) include in the transmittal letter or similar documentation to be executed by an exchange offeree in order to participate in the Exchange Offer (x) the following provision:

 

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“If the exchange offeree is a broker-dealer holding Transfer Restricted Notes acquired for its own account as a result of market-making activities or other trading activities, it will deliver a prospectus meeting the requirements of the 1933 Act in connection with any resale of Exchange Notes received in respect of such Transfer Restricted Notes pursuant to the Exchange Offer;”

 

and (y) a statement to the effect that by a broker-dealer’s making of the acknowledgment described in clause (x) and by delivering a Prospectus in connection with the exchange of Transfer Restricted Notes, the broker-dealer will not be deemed to admit that it is an underwriter within the meaning of the 1933 Act;

 

(g)                                  make every reasonable effort to promptly obtain the withdrawal of any order suspending the effectiveness of a Registration Statement or, in the case of a Shelf Registration, the resolution of any objection of the SEC pursuant to Rule 401(g)(2) under the 1933 Act, including by filing an amendment to such Shelf Registration Statement on the proper form, at the earliest possible moment and provide immediate notice to each Holder of the withdrawal of any such order or such resolution;

 

(h)                                 in the case of a Shelf Registration, furnish to each Holder of Transfer Restricted Notes, and each underwriter, if any, without charge, at least one conformed copy of each Registration Statement and any post-effective amendment thereto, including financial statements and schedules (without any documents incorporated therein by reference or exhibits thereto, unless requested);

 

(i)                                     in the case of a Shelf Registration, cooperate with the selling Holders of Transfer Restricted Notes to facilitate the timely preparation and delivery of certificates representing Transfer Restricted Notes to be sold and not bearing any restrictive legends; and enable such Transfer Restricted Notes to be issued in such denominations (consistent with the provisions of the Indenture) and registered in such names as the selling Holders or the underwriters, if any, may reasonably request at least three Business Days prior to the closing of any sale of Transfer Restricted Notes;

 

(j)                                    in the case of a Shelf Registration, upon the occurrence of any event or the discovery of any facts, each as contemplated by Sections 3(e)(ii), (iii), (v), (vi) and (vii) hereof, as promptly as practicable after the occurrence of such an event, use its reasonable best efforts to, as applicable, promptly cause the withdrawal of any such stop order or objection of the SEC or prepare and file with the SEC a supplement or post-effective amendment to the Registration Statement or the related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Transfer Restricted Notes or Participating Broker-Dealers, such Prospectus will not contain at the time of such delivery any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or will remain so qualified.  At such time as such public disclosure is otherwise made or the Issuer determines that such disclosure is not necessary, in each case to correct any misstatement of a material fact or to include any omitted material fact, the Issuer agrees promptly to notify each Holder of such determination and to furnish each Holder such

 

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number of copies of the Prospectus as amended or supplemented, as such Holder may reasonably request;

 

(k)                                 in the case of a Shelf Registration Statement, a reasonable time prior to the filing of any Registration Statement, any Prospectus, any amendment to a Registration Statement or amendment or supplement to a Prospectus, provide copies of such document to the Initial Purchasers on behalf of such Holders; and make representatives of the Issuer as shall be reasonably requested by the Holders of Transfer Restricted Notes, or the Initial Purchasers on behalf of such Holders, available for discussion of such document; and the Issuer shall not, at any time after the initial filing of a Registration Statement, use or file any Prospectus, any amendment of or supplement to a Registration Statement, of which the Initial Purchasers shall not have previously been advised and furnished a copy or to which the Initial Purchasers shall reasonably object;

 

(l)                                     obtain CUSIP numbers for all Exchange Notes or Transfer Restricted Notes of each Series, as the case may be, not later than the initial effective date of a Registration Statement, and provide the Trustee with certificates for the Exchange Notes or the Transfer Restricted Notes of each Series, as the case may be, in a form eligible for deposit with the Depositary;

 

(m)                             (i) in the case of a Shelf Registration, to the extent required by the SEC, cause the Indenture to be qualified under the TIA in connection with the registration of the Transfer Restricted Notes, and, in the case of an Exchange Offer Registration, cause or maintain, as the case may be, the Indenture to be qualified under the TIA in connection with the registration of the Exchange Notes, (ii) cooperate with the Trustee and the Holders to effect such changes to the Indenture as may be required for the Indenture to be, or continue to be, so qualified in accordance with the terms of the TIA and (iii) execute, and use their commercially reasonable efforts to cause the Trustee to execute, all documents as may be required to effect such changes, and all other forms and documents required to be filed with the SEC to enable the Indenture to be so qualified in a timely manner;

 

(n)                                 in the case of a Shelf Registration, enter into agreements (including underwriting agreements) and take all other customary and appropriate actions in order to expedite or facilitate the disposition of such Transfer Restricted Notes and, if so requested by the Holders of such Transfer Restricted Notes and in such connection whether or not an underwriting agreement is entered into and whether or not the registration is an underwritten registration:

 

i.                                          make such representations and warranties to the Holders of such Transfer Restricted Notes and the underwriters, if any, as the Issuer is able to make, in form, substance and scope as are customarily made by issuers to underwriters in similar underwritten offerings as may be reasonably requested by them;

 

ii.                                       in connection with an underwritten registration, obtain opinions of counsel to the Issuer and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the managing underwriters, if any, and the holders of a majority in principal amount of the Transfer Restricted Notes being sold) addressed to each selling Holder and the underwriters, if any, covering the matters

 

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customarily covered in opinions requested in sales of securities or underwritten offerings and such other matters as may be reasonably requested by such Holders and underwriters;

 

iii.                                    in connection with an underwritten registration, obtain “comfort” letters from the Issuer’s independent certified public accountants (and, if necessary, any other independent certified public accountants of any subsidiary of the Issuer or of any business acquired by the Issuer for which financial statements and financial data are, or are required to be, included in the Registration Statement) addressed to the underwriters, if any, and use its commercially reasonable efforts to have such letter addressed to the selling Holders of Transfer Restricted Notes (to the extent permitted by applicable professional standards), such letters to be in customary form and covering matters of the type customarily covered in “comfort” letters in connection with similar underwritten offerings;

 

iv.                                   enter into a securities sales agreement with the Holders and an agent of the Holders providing for, among other things, the appointment of such agent for the selling Holders for the purpose of soliciting purchases of Transfer Restricted Notes, which agreement shall be in form, substance and scope customary for similar offerings;

 

v.                                      if an underwriting agreement is entered into, cause the same to set forth indemnification provisions and procedures substantially equivalent to the indemnification provisions and procedures set forth in Section 4 hereof with respect to the underwriters and all other parties to be indemnified pursuant to such Section or, at the request of any underwriters, in the form customarily provided to such underwriters in similar types of transactions; and

 

vi.                                   deliver such documents and certificates as may be reasonably requested and as are customarily delivered in similar offerings to the Holders of a majority in principal amount of the Transfer Restricted Notes being sold and the managing underwriters, if any.

 

The above shall be done at (i) the effectiveness of such Shelf Registration Statement (and each post-effective amendment thereto) and (ii) each closing under any underwriting or similar agreement as and to the extent required thereunder;

 

(o)                                 in the case of a Shelf Registration or if a Prospectus is required to be delivered by any Participating Broker-Dealer in the case of an Exchange Offer, make available for inspection by representatives of the Holders of the Transfer Restricted Notes, any underwriters participating in any disposition pursuant to a Shelf Registration Statement, any Participating Broker-Dealer and any counsel or accountant retained by any of the foregoing, all non-confidential financial and other records, pertinent corporate documents and properties of the Issuer reasonably requested by any such persons, and cause the respective officers, directors, employees, and any other agents of the Issuer to supply all information reasonably requested by any such representative, underwriter, special counsel or accountant in connection with a Registration Statement, and make such representatives of the Issuer available for discussion of such documents as shall be reasonably requested by such persons;

 

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(p)                                 if so requested by the Initial Purchasers, in the case of an Exchange Offer Registration Statement, a reasonable time prior to filing of any Exchange Offer Registration Statement, any Prospectus forming a part thereof, any amendment to an Exchange Offer Registration Statement or amendment or supplement to such Prospectus, provide copies of such document to the Initial Purchasers and to counsel to the Holders of Transfer Restricted Notes;

 

(q)                                 in the case of a Shelf Registration, a reasonable time prior to filing any Shelf Registration Statement, any Prospectus forming a part thereof, any amendment to such Shelf Registration Statement or amendment or supplement to such Prospectus, provide copies of such documents to the Initial Purchasers, if so requested, to the Holders of Transfer Restricted Notes to be covered thereby, to counsel for such Holders designated by them and to the underwriter or underwriters of an underwritten offering of such Transfer Restricted Notes, if any, make such changes in any such document prior to the filing thereof relating to such Holders or such Transfer Restricted Notes as the counsel to the Holders or the underwriter or underwriters reasonably request and not file any such document in a form to which the Majority Holders of Transfer Restricted Notes covered by such Shelf Registration Statement, counsel for such Holders of Transfer Restricted Notes covered by such Shelf Registration Statement, or any underwriter shall not have previously been advised and furnished a copy of or to which the Majority Holders of Transfer Restricted Notes covered by such Shelf Registration Statement, counsel to such Holders of Transfer Restricted Notes or any underwriter shall reasonably object, and make the representatives of the Issuer available for discussion of such document as shall be reasonably requested by such Holders of Transfer Restricted Notes, the counsel for such Holders of Transfer Restricted Notes or any underwriter;

 

(r)                                    in the case of a Shelf Registration, use its commercially reasonable efforts to cause the Transfer Restricted Notes to be rated by the appropriate rating agencies, if so requested by the Majority Holders of the Transfer Restricted Notes covered by such Shelf Registration Statement, or if requested by the underwriter or underwriters of an underwritten offering of Transfer Restricted Notes, if any;

 

(s)                                   otherwise comply with all applicable rules and regulations of the SEC and make available to their security holders, as soon as reasonably practicable, an earning statement covering at least 12 months which shall satisfy the provisions of Section 11(a) of the 1933 Act and Rule 158 thereunder;

 

(t)                                    cooperate and assist in any filings required to be made with FINRA and, in the case of a Shelf Registration, in the performance of any due diligence investigation by any underwriter and its counsel (including any “qualified independent underwriter” that is required to be retained in accordance with the rules and regulations of FINRA);

 

(u)                                 if reasonably requested by any Holder of Transfer Restricted Notes covered by a Shelf Registration Statement, promptly include in a Prospectus supplement or post-effective amendment such information with respect to such Holder as such Holder reasonably requests to be included therein and make all required filings of such Prospectus supplement or such post-effective amendment as soon as the Issuer has received notification of the matters to be so included in such filing; and

 

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(v)                                 amend or supplement the Prospectus contained in the Exchange Offer Registration Statement for a period of up to 180 days after the last Exchange Date (as such period may be extended pursuant to this Agreement), in order to expedite or facilitate the disposition of any Exchange Notes by Participating Broker-Dealers consistent with the positions of the staff of the SEC.  The Issuer agrees that Participating Broker-Dealers shall be authorized to deliver such Prospectus (or, to the extent permitted by law, make available) during such period in connection with the resales contemplated by this clause (v).

 

In the case of a Shelf Registration Statement, the Issuer may (as a condition to such Holder’s participation in the Shelf Registration) require each Holder of Transfer Restricted Notes to furnish to the Issuer such information regarding the Holder and the proposed distribution by such Holder of such Transfer Restricted Notes as the Issuer may from time to time reasonably request in writing.

 

In the case of a Shelf Registration Statement, each Holder agrees that, upon receipt of any notice from the Issuer of the occurrence of any event or the discovery of any facts, each of the kind described in Section 3(e)(iii) or (vi) hereof, such Holder will forthwith discontinue disposition of Transfer Restricted Notes pursuant to a Registration Statement until such Holder’s receipt of the copies of the supplemented or amended Prospectus contemplated by Section 3(k) hereof, and, if so directed by the Issuer, such Holder will deliver to the Issuer (at its expense) all copies in such Holder’s possession, other than permanent file copies then in such Holder’s possession, of the Prospectus covering such Transfer Restricted Notes current at the time of receipt of such notice.

 

If any of the Transfer Restricted Notes covered by any Shelf Registration Statement are to be sold in an underwritten offering, the underwriter or underwriters and manager or managers that will manage such offering will be selected by the Majority Holders of such Transfer Restricted Notes to be included in such offering and shall be acceptable to the Issuer.  No Holder of Transfer Restricted Notes may participate in any underwritten registration hereunder unless such Holder (a) agrees to sell such Holder’s Transfer Restricted Notes on the basis provided in any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements.

 

If the Issuer shall give any notice to suspend the disposition of Transfer Restricted Notes pursuant to a Registration Statement, the Issuer shall extend the period during which such Registration Statement shall be maintained effective pursuant to this Agreement by the number of days during the period from and including the date of the giving of such notice to and including the date when the Holders of such Transfer Restricted Notes shall have received copies of the supplemented or amended Prospectus necessary to resume such dispositions.

 

4.                                      Indemnification; Contribution.

 

(a)                                 The Issuer agrees to indemnify and hold harmless the Initial Purchasers and each of their affiliates and any other Person under common control with the Initial Purchasers, each Holder, each Participating Broker-Dealer, each Person who participates as an underwriter (any

 

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such Person being an “Underwriter”) and each Person, if any, who controls any Holder or Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows:

 

i.                                          against any and all loss, liability, claim, damage and expense whatsoever (including, without limitation, reasonable and documented legal fees and other expenses incurred in connection with any suit, action or proceeding or any claim asserted, as such fees and expenses are incurred), as incurred, arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement (or any amendment or supplement thereto) pursuant to which Exchange Notes or Transfer Restricted Notes were registered under the 1933 Act, including all documents incorporated therein by reference, any Free Writing Prospectus used in violation of this Agreement or any “issuer information” filed or required to be filed pursuant to Rule 433(d) under the 1933 Act, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary in order to make the statements therein not misleading, or arising out of any untrue statement or alleged untrue statement of a material fact contained in any Prospectus (or any amendment or supplement thereto) or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;

 

ii.                                       against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, subject to Sections 4(c) and 4(d) below; and

 

iii.                                    against any and all expense whatsoever, as incurred (including reasonable fees and disbursements of one counsel chosen by any indemnified party, in addition to local counsel), reasonably incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under subparagraph (ii) above;

 

provided, however, that this indemnity agreement shall not apply to any loss, liability, claim, damage or expense to the extent arising out of or based upon any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with any information concerning any Holder or Underwriter furnished to the Issuer in writing by any selling Holder or Underwriter expressly for use in a Registration Statement (or any amendment thereto) or any Prospectus (or any amendment or supplement thereto); and provided, further, that the indemnity agreement contained in this subsection shall not inure to the benefit of any Holder or Participating Broker-Dealer from whom the person asserting any such losses, claims, damages or liabilities purchased the Notes concerned, to the extent that a prospectus relating to such Notes was required to be delivered by such Holder or Participating Broker-Dealer under the 1933 Act in connection with such purchase and any such loss, claim, damage or liability of such Holder or

 

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Participating Broker-Dealer results from the fact that there was not sent or given to such person, at or prior to the sale of such Notes to such person, a copy of such prospectus if the Issuer had previously furnished copies thereof to such Holder or Participating Broker-Dealer.

 

(b)                                 Each Holder, severally, but not jointly, agrees to indemnify and hold harmless the Issuer, each Underwriter and the other selling Holders, and each of their respective directors and officers, and each Person, if any, who controls the Issuer, any Underwriter or any other selling Holder within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, against any and all loss, liability, claim, damage and expense described in the indemnity contained in Section 4(a) hereof, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Shelf Registration Statement (or any amendment thereto) or any Prospectus included therein (or any amendment or supplement thereto) in reliance upon and in conformity with written information with respect to such Holder furnished to the Issuer by such Holder expressly for use in the Shelf Registration Statement (or any amendment thereto) or such Prospectus (or any amendment or supplement thereto); provided, however, that no such Holder shall be liable for any claims hereunder in excess of the amount of net proceeds received by such Holder from the sale of Transfer Restricted Notes pursuant to such Shelf Registration Statement.

 

(c)                                  Each indemnified party shall give notice as promptly as reasonably practicable to each indemnifying party of any action or proceeding commenced against it in respect of which indemnity may be sought hereunder, but failure so to notify an indemnifying party shall not relieve such indemnifying party from any liability hereunder to the extent it is not materially prejudiced as a result thereof and in any event shall not relieve it from any liability which it may have otherwise than on account of this indemnity agreement.  An indemnifying party may participate at its own expense in the defense of such action; provided, however, that counsel to the indemnifying party shall not (except with the consent of the indemnified party) also be counsel to the indemnified party.  In no event shall the indemnifying party or parties be liable for the fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances.  An indemnifying party shall not be liable for any settlement of any claim or action effected without its written consent, which consent may not be unreasonably withheld. No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section 4 (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party from all liability arising out of such litigation, investigation, proceeding or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party.

 

(d)                                 If the indemnification provided for in this Section 4, is for any reason unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such

 

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indemnified party, as incurred, in such proportion as is appropriate to reflect the relative fault of the Issuer, on the one hand, and the Holders and the Initial Purchasers, on the other hand, in connection with the statements or omissions which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations.

 

The relative fault of the Issuer on the one hand and the Holders and the Initial Purchasers on the other hand shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Issuer, the Holders or the Initial Purchasers and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

 

The Issuer, the Holders and the Initial Purchasers agree that it would not be just and equitable if contribution pursuant to this Section 4 were determined by pro rata allocation (even if the Initial Purchasers were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 4.  The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an indemnified party and referred to above in this Section 4 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged untrue statement or omission or alleged omission.

 

No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

 

For purposes of this Section 4, each Person, if any, who controls an Initial Purchaser or Holder within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as such Initial Purchaser or Holder, and each director of the Issuer, and each Person, if any, who controls the Issuer within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as the Issuer.  The Initial Purchasers’ respective obligations to contribute pursuant to this Section 4 are several in proportion to the principal amount of Notes set forth opposite their respective names in Schedule A to the Purchase Agreement and not joint, and in no event shall an Initial Purchaser be required to contribute any amount in excess of the amount of the total commissions and discounts received by it in connection with the sale of the Notes.  Notwithstanding the provisions of this Section 4, in no event shall a Holder be required to contribute any amount in excess of the amount by which the total price at which all of the Notes sold by such Holder exceeds the amount of any damages that such Holder has otherwise been required to pay under Section 4(b) hereof.

 

The remedies provided for in this Section 4 are not exclusive and shall not limit any rights or remedies that may otherwise be available to any indemnified party at law or in equity.

 

The indemnity and contribution provisions contained in this Section 4 shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any

 

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investigation made by or on behalf of the Initial Purchasers or any Holder or any Person controlling any Initial Purchaser or any Holder, or by or on behalf of the Issuer or the officers or directors of or any Person controlling the Issuer, (iii) acceptance of any of the Exchange Notes and (iv) any sale of Transfer Restricted Notes pursuant to a Shelf Registration Statement; provided, however, that the indemnity and contribution rights provided for, in this Section 4 shall not extend to any losses, liabilities or other damages arising out of actions occurring after the termination of this Agreement.

 

5.                                      Miscellaneous.

 

1.                                      Rule 144 and Rule 144A.  To the extent the Issuer is not subject to the reporting requirements of Section 13(a) or 15(d) of the 1934 Act, the Issuer covenants that it will, upon the request of any Holder of Transfer Restricted Notes:

 

(a) make publicly available such information as is necessary to permit sales pursuant to Rule 144 under the 1933 Act,

 

(b) deliver such information to a prospective purchaser as is necessary to permit sales pursuant to Rule 144A under the 1933 Act and take such further action as any Holder of Transfer Restricted Notes may reasonably request, and

 

(c) take such further action that is reasonable under the circumstances, in each case, to the extent required from time to time to enable such Holder to sell its Transfer Restricted Notes without registration under the 1933 Act within the limitation of the exemptions provided by (i) Rule 144 under the 1933 Act, as such Rule may be amended from time to time, (ii) Rule 144A under the 1933 Act, as such Rule may be amended from time to time, or (iii) any similar rules or regulations hereafter adopted by the SEC, including Section 4(a)(7) under the 1933 Act.  Upon the request of any Holder of Transfer Restricted Notes, the Issuer will deliver to such Holder a written statement as to whether they have complied with such requirements.

 

2.                                      No Inconsistent Agreements.  The Issuer has not entered into, and the Issuer will not after the date of this Agreement enter into, any agreement which is inconsistent with the rights granted to the Holders of Transfer Restricted Notes in this Agreement or otherwise conflicts with the provisions hereof.  The rights granted to the Holders hereunder do not and will not for the term of this Agreement in any way conflict with the rights granted to the holders of the Issuer’s other issued and outstanding securities under any such agreements.

 

3.                                      Amendments and Waivers.  The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Issuer has obtained the written consent of the Majority Holders of a majority of the aggregate principal amount of outstanding Transfer Restricted Notes of each Series affected by such amendment, modification, supplement, waiver or departure.

 

4.                                      Notices.  All notices and other communications provided for or permitted hereunder shall be made in writing by hand delivery, registered first-class mail, telex, telecopier, or any courier guaranteeing overnight delivery (a) if to a Holder, at the most current address given by such Holder to the Issuer by means of a notice given in accordance with the provisions

 

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of this Section 5.4, which address initially, and until so changed, is the address set forth in the Purchase Agreement with respect to the Initial Purchasers; and (b) if to the Issuer, initially at the Issuer’s address set forth in the Purchase Agreement, and thereafter at such other address of which notice is given in accordance with the provisions of this Section 5.4.

 

All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; two Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt is acknowledged, if telecopied; and on the next Business Day if timely delivered to an air courier guaranteeing overnight delivery.

 

Copies of all such notices, demands, or other communications shall be concurrently delivered by the person giving the same to the Trustee under the Indenture at the address specified therein.

 

5.                                      Successor and Assigns.  This Agreement shall inure to the benefit of and be binding upon the successors, assigns and transferees of each of the parties, including, without limitation and without the need for an express assignment, subsequent Holders; provided that nothing herein shall be deemed to permit any assignment, transfer or other disposition of Transfer Restricted Notes in violation of the terms of the Purchase Agreement or the Indenture.  If any transferee of any Holder shall acquire Transfer Restricted Notes, in any manner, whether by operation of law or otherwise, such Transfer Restricted Notes shall be held subject to all of the terms of this Agreement, and by taking and holding such Transfer Restricted Notes such person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement, including the restrictions on resale set forth in this Agreement and, if applicable, the Purchase Agreement, and such person shall be entitled to receive the benefits hereof.  The Initial Purchasers (in their capacity as Initial Purchasers) shall have no liability or obligation to the Issuer with respect to any failure by a Holder to comply with, or any breach by any Holder of, any of the obligations of such Holder under this Agreement

 

6.                                      Third Party Beneficiaries.  The Initial Purchasers (even if the Initial Purchasers are not Holders of Transfer Restricted Notes) shall be third party beneficiaries to the agreements made hereunder between the Issuer, on the one hand, and the Holders, on the other hand, and shall have the right to enforce such agreements directly to the extent they deem such enforcement necessary or advisable to protect their rights or the rights of Holders hereunder.  Each Holder of Transfer Restricted Notes shall be a third party beneficiary to the agreements made hereunder between the Issuer, on the one hand, and the Initial Purchasers, on the other hand, and shall have the right to enforce such agreements directly to the extent it deems such enforcement necessary or advisable to protect its rights hereunder.

 

7.                                      Specific Enforcement.  Without limiting the remedies available to the Initial Purchasers and the Holders, the Issuer acknowledges that any failure by the Issuer to comply with its obligations under Sections 2.1 through 2.4 hereof may result in material irreparable injury to the Initial Purchasers or the Holders for which there is no adequate remedy at law, that it would not be possible to measure damages for such injuries precisely and that, in the event of

 

22

 

any such failure, the Initial Purchasers or any Holder may obtain such relief as may be required to specifically enforce the Issuer’s obligations under Sections 2.1 through 2.4 hereof.

 

8.                                      Restriction on Resales.  Until the expiration of one year after the original issuance of the Notes, the Issuer will not, and will cause its “affiliates” (as such term is defined in Rule 144(a)(1) under the 1933 Act, but only to the extent controlled, directly or indirectly, by the Issuer) not to, resell any Notes which are “restricted securities” (as such term is defined under Rule 144(a)(3) under the 1933 Act) that have been reacquired by any of them and shall immediately upon any purchase of any such Notes submit such Notes to the Trustee for cancellation.

 

9.                                      Counterparts.  This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.  Delivery of an executed counterpart of a signature page of this Agreement by telecopier, facsimile, email or other electronic transmission (i.e. “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart of this Agreement.

 

10.                               Headings.  The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

 

11.                               Governing Law.  This Agreement, and any claim, controversy or dispute arising under or related to this Agreement, shall be governed by and construed in accordance with the laws of the state of New York.

 

12.                               Entire Agreement.  This Agreement contains the entire agreement between the parties relating to the subject matter hereof and supersedes all oral statements and prior writing with respect thereto.

 

13.                               Severability.  In the event that any one or more of the terms, provisions, covenants or restrictions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby.  The Issuer and the Initial Purchasers shall endeavor in good faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

 

14.                               Adjustments Affecting Notes.  The Issuer shall not, directly or indirectly, take any action with respect to the Notes of each Series as a class that would adversely affect the ability of the Holders of Notes of such Series to include such Notes in a registration undertaken pursuant to this Agreement other than as contemplated in this Agreement.

 

[Signature page follows]

 

23

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

	
 
    	
Very truly yours,
    
	
 
    	
 
    
	
 
    	
ITC HOLDINGS CORP.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Gretchen L. Holloway
    
	
 
    	
 
    	
Name:
    	
Gretchen L. Holloway
    
	
 
    	
 
    	
Title:
    	
Senior Vice President and Chief
    
	
 
    	
 
    	
 
    	
Financial Officer
    

 

[Signature Page to Registration Rights Agreement]

 

 

	
CONFIRMED AND ACCEPTED,
    
	
as of the date first above written:
    
	
 
    
	
 
    
	
BARCLAYS CAPITAL   INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 /s/ Robert Stowe
    	
 
    
	
 
    	
Name:
    	
Robert Stowe
    
	
 
    	
Title:
    	
Managing Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
J.P. MORGAN SECURITIES   LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ Robert Bottamedi
    	
 
    
	
 
    	
Name:
    	
Robert Bottamedi
    
	
 
    	
Title:
    	
Vice President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
MORGAN   STANLEY & CO. LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By: 
    	
/s/ Yurij Slyz
    	
 
    
	
 
    	
Name:
    	
Yurij Slyz
    
	
 
    	
Title:
    	
Executive Director
    
	
 
    	
 
    	
 
    
	
WELLS FARGO   SECURITIES, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By: 
    	
/s/ Carolyn Hurley
    	
 
    
	
 
    	
Name:
    	
Carolyn Hurley
    
	
 
    	
Title:
    	
Director
    
				

 

For themselves and as representatives of the other Initial Purchasers

 

[Signature Page to Registration Rights Agreement]

 

 

Schedule A

 

Initial Purchasers

 

Barclays Capital Inc.

 

J.P. Morgan Securities LLC

 

Morgan Stanley & Co. LLC

 

Wells Fargo Securities, LLC

 

Mizuho Securities USA LLC

 

Scotia Capital (USA) Inc.

 

Merrill Lynch, Pierce, Fenner & Smith

Incorporated

 

Credit Suisse Securities (USA) LLC

 

Goldman Sachs & Co. LLC

 

TD Securities (USA) LLCbaytex_ex101.htm

EXHIBIT 10.1
  
 EMPLOYMENT AGREEMENT
  
 This Employment Agreement is made and entered into this 1st day of November, 2017, by and between Baytex Credit Corp, a Texas corporation, with its principal place of business in Houston, Texas (hereinafter referred to as the “Company”), and William V. Walker an individual residing in Houston, Texas (hereinafter referred to as “Employee”).
  
 In consideration of the Company’s employment of Employee or continued employment by the Company, and in consideration of the mutual promises in this Agreement and the following covenants and conditions, and other good and valuable consideration, the parties hereto agree as follows:
  
 1. SUPERSEDING AGREEMENT. This Agreement supersedes any and all other employment agreements, written or oral, between the Company and Employee.
  
 2. EMPLOYMENT. The Company hereby employs Employee and Employee hereby accepts employment on a full-time basis for the term, at the salary, benefits and other consideration, and on the conditions specified in this Agreement and as prescribed by the Company’s policies.
  
 3. DUTIES AND RESPONSIBILITIES.
  
  	  
	A.	Employee agrees to perform the duties of President, together with such functions as are customarily performed by employees of a company in Texas with a similar position. The duties and hours of work of Employee may, from time to time, be modified and established by the Board of Directors and management of the Company during the term of this Agreement.
	  
	  
	  

	  
	B.	Employee shall conform to the rules, regulations, instructions, personnel practices and policies of the Company now in force or any changes that hereafter may be adopted from time to time by the Company.

  
 4. TERM OF EMPLOYMENT; EFFECTIVE DATE
  
  	  
	A.	This Agreement shall be effective as of, and the effective date of this Agreement shall be November 10, 2017.
	  
	  
	  

	  
	B.	The term of this Agreement shall expire on the first (1st) anniversary of its commencement unless renewed (in the manner hereinafter specified) or unless sooner terminated in accordance with the terms and provisions hereinafter set forth. If the Company desires not to renew this Agreement on the first maturity (or, if previously renewed, on any succeeding maturity date), the Company shall be obligated to: give Employee sixty (60) days written notice prior to the termination of this Agreement (or, if previously renewed, on any succeeding contract termination date) of the Company’s desire not to renew this Agreement; or give Employee less than the aforesaid sixty (60) days written notice, in which event the Company shall be required to pay Employee the compensation which would otherwise have been paid by the Company for two weeks after the date of termination set in the notice. In the event the Company has not given the notice described in the preceding sentence on or before any contract termination date after the commencement of the term of this Agreement, then this Agreement shall be automatically renewed for one year; and this Agreement may be renewed on any succeeding anniversary in like manner.

  
  	 
	 
	 
 
	 

  
  	  
	C.	In the event of the death of Employee during the term of this Agreement (its original term or as extended), this Agreement shall automatically be terminated upon the occurrence of such death; and in the event employee is disabled (irrespective of the cause or causes thereof and whether such disability is permanent or temporary) during the term of this Agreement, this Agreement may, at the option of the Company (exercisable by written notice to Employee at any time) be terminated at any time after the occurrence of such disability. The aforesaid prerogative of the Company to terminate this Agreement may be exercised by written notice from the Company to Employee. Employee shall be deemed “disabled” or under a “disability” (as such quoted terms are used in this paragraph) if due to illness or injury, Employee is rendered unable to perform the duties under this Agreement, in whole or in substantial part, for ninety (90) days or more (the phrase “substantial part” meaning to the extent of 15% or more). In the event this Agreement is terminated pursuant to this section, all warrants previously issued to Employee described in Exhibit A shall become vested and Employee or Employee’s estate shall have the right to exercise the warrant as to all the warrant shares not then previously exercised.

  
 5. COMPENSATION OF EMPLOYEE.
  
  	  
	 During the term of this Agreement, Employee shall be entitled to a base monthly salary payable in arrears as follows:

	  
	  
	  
	  

	  
	 A.
	 Salary: Monthly payments will be established by the Board in a separate document and attached to this Agreement, plus discretionary bonuses as may be set by the Board. The Company shall be entitled to make increases to the base monthly salary as decided by the Board in its sole discretion. The Company shall be entitled to make all payroll deductions from salary, bonuses and commissions as are required by law or otherwise apply uniformly to employees of the Company.

	  
	  
	  
	  

	  
	 B.
	 Bonuses and Incentives: Employee shall receive bonuses based on the performance of the Company and Employee.

	  
	  
	  
	  

	  
	 C.
	 Certain Other Benefits: During the term of this Agreement, Employee shall be entitled to the following additional benefits:

	  
	  
	  
	  

	  
	  
	a.	Employee shall be included in such hospital, surgical, medical and dental benefit plans, group term life insurance plans, and pension, profit-sharing and/or retirement plans as are from time to time maintained by the Company (to the extent maintained) at the same level of contributions or benefits (as the case may be) as other employees of the Company similar in rank to Employee.
	  
	  
	  
	  

	  
	  
	b.	Employee shall be reimbursed for reasonably and necessarily incurred business expenses in accordance with such policies for approval and/or reimbursement as are from time to time established by the Company and uniformly applied to employees of the Company similar in rank to Employee; provided, however, that the Company may refuse to reimburse Employee for expenses for which Employee cannot or does not provide an accounting or documentation which states the amount of expenditure, the date, place, and essential character of the expenditure, the business reason for the expenditure and/or the nature of the business derived or expected to be derived as a result of the expenditure. The Company shall determine, in its sole discretion, those expenditures which constitute “reasonable business expenses.”

  
  	 
	 
	 
 
	 

  
  	  
	  
	c.	Employee shall be entitled to four weeks (20 days) annual vacation with pay.
	  
	  
	  
	  

	  
	  
	d.	Employee shall be entitled to such other benefits as are then customarily furnished to other executive officers and key employees of the Company similar in rank to Employee, including but not limited to 401K Plans, stock bonus plans and incentive stock plans.

  
 6. CONFIDENTIAL INFORMATION OF EMPLOYER AND PROTECTION OF INTELLECTUAL PROPERTY OF COMPANY.
  
  	  
	 A.
	 Restrictive Covenant. During the term of this Agreement, Employee will have access to and has received certain confidential information of the Company and its subsidiaries, parent and affiliated corporations and certain shareholder records of same, including, but not limited to, corporate books and records, financial information, personnel information, lists of customers, customer relations, special know-how, trade secrets, intellectual property and other information. Employee recognizes and acknowledges that such confidential information is a valuable, special and unique asset of the Company and that the Company’s business is dependent on the same. To insure the continued secrecy of this confidential information and in consideration for the employment or continued employment by the Company, Employee agrees and covenants not at any time during the term of this Agreement and for a period of two years from the date of termination with the Company, regardless of the cause of such termination, either directly or indirectly, or by aid to others:

	  
	  
	  
	  

	  
	  
	a.	Make use of or divulge to any person, firm, corporation or other entity (collectively referred to as an “Entity”) any trade secrets, confidential intellectual property, customer lists, or any other information used by Employee in the performance of Employee’s duties on behalf of the Company, or fail to keep confidential all information obtained in the Company’s business.
	  
	  
	  
	  

	  
	  
	b.	Provide, perform or aid, directly or indirectly, in the providing or performance of, any service which is the same as or similar to any service performed or provided by Employee for the Company for or on behalf of any Entity which was a client or customer of the Company at the time of termination of Employee’s employment with the Company (any such Entity being herein referred to as the “Company’s Customer”).
	  
	  
	  
	  

	  
	  
	c.	Discuss with a Company’s Customer, or with any employee or agent of any Company’s Customer, the possibility of Employee’s providing or performing or aiding, directly or indirectly, in the providing or performing, of any service prohibited by paragraph 6.A.(b) above, on behalf of such Company’s Customer.
	  
	  
	  
	  

	  
	  
	d.	Discuss with any person who is, at the time of such discussion, an employee of the Company, the possibility of such person’s working for or with Employee to provide or perform (or aid, directly or indirectly, in the providing or performing) on behalf of any Entity any service which is the same as or similar to any service provided by such person in the scope of such person’s employment with the Company.

  
  	 
	 
	 
 
	 

  
  	  
	  
	e.	Employ any person, who was an employee of the Company on the date of termination of Employee’s employment with the Company, to perform or provide (or aid, directly or indirectly, in the providing or performing) on behalf of any Entity any service which is the same as or similar to any service performed or provided by such person in the scope of such person’s employment with the Company.
	  
	  
	  
	  

	  
	  
	f.	Take any action, directly or indirectly, which would tend to divert from the Company any trade or business with any of the Company’s Customers or any Entity whose identity or potential as a customer was confidential or learned by Employee during the course of the employment with the Company.
	  
	  
	  
	  

	  
	 Employee additionally covenants not to disclose to any person, firm or corporation any information which is not otherwise known to the public concerning the business, customers or affairs of the Company or its subsidiaries or affiliates which Employee may acquire in the course of or as an incident to the employment and service on behalf of the Company.

	  
	  
	  
	  

	  
	 Employee agrees that the provisions contained in this Paragraph 6 are of vital importance to the Company and that if any question shall ever arise as to whether any act of Employee is prohibited by this Paragraph 6, then, in all instances in which it is reasonable to interpret any provision of this Paragraph 6 to prohibit such act, such interpretation shall be controlling notwithstanding that it may also be reasonable to interpret such provision to permit such act. The geographic area covered by this Restrictive Covenant is the Houston Texas Metropolitan Region and any other area within the State of Texas and State of Washington in which the Company is transacting business at the time of termination of Employee’s employment (or within the maximum area permitted by law surrounding the Company’s principal offices in Houston and Seattle, whichever is less).

	  
	  
	  
	  

	  
	 B.
	 Work Product. Upon the termination of employment, Employee shall not take from the premises of the Company, or otherwise retain, any records, files or other documents, or copies thereof, relating to the business or affairs of the Company. As further consideration for said employment, Employee hereby assigns and agrees to assign to the Company, its successors and assigns:

	  
	  
	  
	  

	  
		 a.
	 All rights to computer programs, maps, plats, codes, drawings, blue prints, manuals, documents, brochures, flow charts, notes, research material, prospective customer lists, etc., which Employee made, conceived, or received during the term of the employment with the Company, in hard copy or electronic or magnetic media;

	  
	  
	  
	  

	  
		 b.
	 Employee will promptly disclose to the Company information relating to said computer programs, maps, plats, codes, drawings, blue prints, manuals, documents, brochures, flow charts, notes, research material, prospective customer lists, etc., and will execute, acknowledge, and deliver all papers and media and perform all other acts as may be necessary in the opinion of the Company to vest title to such material in the Company, its successors and assigns.

  
  	 
	 
	 
 
	 

  
  	  
	C.	Works Made for Hire and Inventions. Employee will promptly disclose to Company any and all inventions, discoveries, and improvements conceived or made by Employee during the period of employment and related to the business or activities of Company. Employee will assign and agrees to sign all of Employee’s interests therein to Company or its nominee. Employee agrees to execute all applications or other instruments that the Company deems necessary to apply for any protection for the inventions including letters patent in the U.S. or any other jurisdiction, and this obligation shall survive the termination of my Employment and is binding on my legal representatives. Employee agrees that any computer software and documentation made by Employee during the period of employment and related to the business, operation or activities of Company shall be considered “works made for hire” under the copyright laws of the United States and Employee agrees to execute any assignments or other documents reasonably necessary to vest full ownership in Company. Employee further agrees to assist the Company in securing and defending any patent in which Employee is an inventor or copyright of which Employee is the author if a contest is made. If this covenant arises after termination of employment, the Company shall pay reasonable compensation for this work.
	  
	  
	  

	  
	D.	Remedies. In the event of a breach or threatened breach by Employee of the provisions of this Paragraph, the Company shall be entitled to seek an injunction restraining Employee from disclosing, in whole or in part, the confidential information concerning its intellectual property and the lists of the Company’s customers, rate and pricing structures, discount policies or other confidential business information. Nothing herein shall be construed as prohibiting the Company from pursuing any other remedies available to the Company for such breach or threatened breach, including the recovery of damages from Employee.

  
 7. TERMINATION 
  
  	  
	 A.
	 Termination with Cause. The Company may terminate the employment of Employee with cause. “Cause” for termination by the Company shall include but shall not be limited to,

	  
	  
	  
	  

	  
	  
	a.	Employee’s failure or refusal to observe and keep any and all covenants or obligations to be performed or kept under the terms of this Employment Agreement or as required by other work rules, policies or guidelines from time to time established by the Company and communicated, in writing, to Employee and/or the Company’s employees in general;
	  
	  
	  
	  

	  
	  
	b.	The breach by Employee of fiduciary duty involving personal profit;
	  
	  
	  
	  

	  
	  
	c.	Employee’s willful violation of law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist orders or any crime of moral turpitude;
	  
	  
	  
	  

	  
	  
	d.	Theft, embezzlement, diversion, appropriation or other misapplication of the Company funds, accounts or confidential information;
	  
	  
	  
	  

	  
	  
	e.	Dishonesty, habitual neglect, gross insubordination or willful misconduct of Employee;
	  
	  
	  
	  

	  
	  
	f.	Drug, alcohol or other substance abuse.

  
  	 
	 
	 
 
	 

  
  	  
	  
	 In the event that the Company should ever terminate the employment of Employee for what the Company asserts is “for cause” and it is later determined by a court of competent jurisdiction in a judgment which is or becomes final and non-appealable that such termination was not “for cause,” then the liability of the Company to Employee shall be determined by the court of competent jurisdiction.

	  
	  
	  
	  

	  
	 B.
	 Termination without Cause. The Company may terminate the employment of the Employee without cause at the sole discretion of the Board of Directors. In the event Employee is terminated without cause, Employee shall be entitled to:

	  
	  
	  
	  

	  
	  
	a.	Severance. Employee shall be entitled to receive the then current base monthly salary for the remaining period of this Agreement or twelve (12) months, whichever is longer (the “Severance Period”). Such monthly salary shall be paid in accordance with existing payroll practices.
	  
	  
	  
	  

	  
	  
	b.	Benefits. Employee shall be entitled to continue participation in employee health and other benefit programs at levels consistent with those in place at the time of termination during the Severance Period. The cost of these other benefits shall be paid by Employee and the Company consistent with the then current practices at the time of termination.
	  
	  
	  
	  

	  
	  
	c.	Warrant Vesting Acceleration. All warrants previously issued to Employee and described in Exhibit A shall become vested and Employee shall have the right to exercise the warrant as to all warrant shares not then previously exercised.
	  
	  
	  
	  

	  
	 C.
	 Employee’s Permanent Disability. For the purposes hereof, Employee shall be deemed to have become permanently disabled if, during any consecutive twelve (12) month period, because of ill health, physical or mental disability, or for other causes beyond his control, Employee shall have been continuously unable or unwilling or shall have failed to have performed the duties under this Agreement for ninety (90) consecutive days, or, if, during any such twelve (12) month period, Employee shall have been unable or unwilling or shall have failed to perform the duties for a total period of ninety (90) days, either consecutive or not. If Employee is to be terminated for cause, under 7.A.(1) above, the Company will, prior to such termination, may give Employee a sixty (60) day period in which to cure or remedy the cause for termination. If at the end of such sixty (60) day period, the Employee has not cured or remedied the cause for termination to the full satisfaction of the Company, the Employee may be immediately terminated without any additional notice. The Company may elect, but shall not be obligated, to extend beyond sixty (60) days the period during which Employee shall be entitled to remedy or cure the cause for termination; provided, however, that no such extension shall preclude the Company from terminating Employee at any time after such sixty (60) day period without further notice. In the event this Agreement is terminated pursuant to this section, all warrants previously issued to Employee described in Exhibit A shall become vested and Employee or Employee’s estate shall have the right to exercise the warrant as to all the warrant shares not then previously exercised.

  
  	 
	 
	 
 
	 

  
 8. ASSIGNMENT OF AGREEMENT. The Company may assign this Agreement (and this Agreement shall be deemed assigned) without the consent of the Employee in connection with any merger of the Company with or into any other institution or entity; any other assignment of this Agreement by the Company may be made only with the written consent of Employee; in the event of any such assignment, all covenants, conditions and provisions hereunder shall inure to the benefit of and be enforceable by or against the successors and assigns of the Company. The rights and obligations of Employee under this Agreement are personal to Employee, and no such rights, benefits or obligations shall be subject to voluntary or involuntary alienation, assignment or transfer.
  
 9. NOTICE. Any notice given under this Agreement to either party shall be given in writing. Any such notice shall be deemed to be given when mailed to any such party by registered or certified mail, postage prepaid, addressed to such party at the respective addresses set out below, or at such other addresses as either party may hereafter designate (by written notice provided in accordance with this paragraph) as its address for purposes of notice hereunder:
  
  	 Employee Address:
	 William V. Walker
 4899 Montrose Blvd

	 
	 Houston, TX 77006

		 

	 Company Address:
	 Baytex Credit Corp

	 
	 4899 Montrose, # 805

	 
	 Houston, TX 77006

  
 10. WAVIER OF BREACH. The wavier by either party of a breach of any provision(s) of this Agreement shall not operate or be construed as a waiver of any subsequent breach of the same or any other provision(s) of this Agreement.
  
 11. ENTIRE AGREEMENT. This instrument contains the entire agreement of the parties. No affirmation, representation, covenant or agreement not expressed herein shall be binding on either party.
  
 12. AMENDMENT. This Agreement may be changed, modified or amended at any time and in any respect by the agreement of the parties hereto without the consent of any other person; provided, however, that no change, modification or amendment shall be binding unless same shall have been reduced to a writing and signed by the party against whom enforcement of the change, modification or amendment is sought. 
  
 13. APPLICABLE LAW. The parties intend and agree that the laws of the State of Texas hereunder shall govern the terms and provisions of this Agreement and the performance of the parties.
  
 14. SEVERABILITY. In the event that any portion(s) of this Agreement is declared to be invalid or illegal by final judgment of any court of competent jurisdiction, the remainder of this Agreement shall remain in full force and effect notwithstanding the invalidity or illegality of the other portion(s).
  
 15. MULTIPLE COUNTERPARTS. This Agreement may be executed in multiple counterparts, each of which shall be an original, but all of which, together, shall constitute one and the same instrument.
  
  	 
	 
	 
 
	 

  
 EXECUTED in multiple counterparts at Houston, Texas on this 1st day of November, 2017, but with an effective date as set forth herein.
  
  	 THE COMPANY:
	  
	 EMPLOYEE:
	  

	  
	  
	  
	  
	  
	  

	 Baytex Credit Corp 
	  
	  
	  
	  

	  
	 	 	 	 	 
	 By:
	/s/ Martin D. Estill	 	 	/s/ William V. Walker	 
	  
		 	 	 William V. Walker

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