Document:

Exhibit 10.3

 

REGISTRATION RIGHTS AGREEMENT

 

This REGISTRATION RIGHTS AGREEMENT (this “Agreement”) dated as of December 23, 2010, is entered into by and among Bonanza Creek Energy, Inc., a Delaware corporation (the “Company”) and the parties listed on Schedule I hereto (each an “Investor,” and collectively, the “ Investors”).

 

WITNESSETH:

 

WHEREAS, certain of the Investors are parties to a Stock Purchase Agreement, dated December 23, 2010 (as amended, modified and supplemented from time to time, the “Stock Purchase Agreement”), pursuant to which such Investors have agreed to purchase from the Company following satisfaction of certain conditions set forth in the Stock Purchase Agreement, shares of Common Stock of the Company; and

 

WHEREAS, in connection therewith, the Company desires to and has agreed to grant to the Investors certain registration rights set forth herein.

 

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

 

ARTICLE 1.

 

CERTAIN DEFINITIONS;  SECURITIES SUBJECT TO THIS AGREEMENT

 

1.1           As used in this Agreement, the following terms shall have the following respective meanings.  Any other terms not otherwise defined in this Agreement shall have the meaning ascribed to such terms in the Stock Purchase Agreement.

 

“Affiliate” means any Person who is an “affiliate” as defined in Rule 12b-2 promulgated under the Exchange Act, and with respect to HMQ means, AIMCo, any corporation managed or controlled by AIMCo, the investment pools managed by AIMCo, any client in respect of whom AIMCo provides investment management services and any Affiliate of the foregoing.

 

“AIMCo” means Alberta Investment Management Corporation, as established by the Alberta Investment Management Corporation Act.

 

“Commission” means the Securities and Exchange Commission, or any other Federal agency at the time administering the Securities Act.

 

“Common Stock” means shares of the Company’s Class A common stock, par value $0.001 per share, or any other capital stock of the Company into which such stock is reclassified or reconstituted and any other common stock of the Company.

 

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any similar Federal statute, and the rules and regulations of the Commission issued thereunder, as they each may, from time to time, be in effect.

 

“FINRA” means the Financial Industry Regulatory Authority.

 

“Free Writing Prospectus” means any “free writing prospectus” as defined in Rule 405 promulgated under the Securities Act.

 

“HMQ” means Her Majesty the Queen in right of Alberta, in her own capacity and in her capacity as trustee/nominee for certain designated entities.

 

“Holders” means the WFC Holders and the Other Holders.

 

“Holders’ Counsel” shall have the meaning set forth in Section 4.1(a).

 

“Initial Public Offering” means the first offering by the Company of its Common Stock to the public for cash pursuant to an effective Registration Statement.

 

“Inspectors” has the meaning set forth in Section 4.1(i).

 

“Liability” has the meaning set forth in Section 6.1.

 

“Other Holders” means the Other Investors, any Person to which the rights granted to the Other Investors under this Agreement are transferred, in whole or in part, pursuant to Article 8 and any Person entitled to the benefits of this Agreement pursuant to Section 9.2, other than a transferee to whom Registrable Shares have been transferred pursuant to a Registration Statement under the Securities Act or Rule 144 promulgated under the Securities Act.

 

“Other Investors” means the Investors identified as Other Investors on Schedule I hereto.

 

“Person” means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, limited liability company, limited liability partnership, institution, public benefit corporation, entity or government (whether Federal, state, county, city, municipal or otherwise, including, without limitation, any instrumentality, division, agency, body or department thereof).

 

“Prospectus” means any “prospectus” as defined in Rule 405 promulgated under the Securities Act.

 

“Records” has the meaning set forth in Section 4.1(i).

 

“Registrable Class Securities” means the Registrable Shares and any other securities of the Company that are of the same class as the relevant Registrable Shares.

 

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“Registrable Shares” means (A) all Common Stock held directly or indirectly by a Holder, including any Common Stock issuable or issued upon exercise, conversion or exchange of other securities of the Company or any of its subsidiaries and (B) any securities of the Company issued in respect of the Common Stock or any other equity securities of the Company, including without limitation, by reason of or in connection with any stock dividend, stock distribution, stock split, spin-off, purchase in any rights offering or in connection with any exchange for or replacement of such shares or any combination of shares, recapitalization, merger or consolidation or other reorganization, or any other equity securities issued pursuant to any other pro rata distribution with respect to the Common Stock.  As to any particular Registrable Shares, once issued such securities shall cease to be Registrable Shares when (x) they are sold pursuant to an effective registration statement under the Act, (y) the entire amount of Registrable Shares held by such Holder thereof have been sold under Rule 144 (or any successor rule or regulation then in effect) or (z) they shall have ceased to be outstanding.  No Registrable Shares may be registered under more than one registration statement at any one time.

 

“Registration Expenses” means all expenses arising from or incident to the Company’s performance of, or compliance with, this Agreement, (x) including, without limitation: (i) all Commission, stock exchange and FINRA registration and filing fees and exchange listing fees, (ii) all printing, messenger and delivery expenses, (iii) all fees, charges and disbursements of counsel for the Company and the reasonable and documented fees, charges and expenses of one (1) counsel and any necessary counsel with respect to state securities law matters, in each case selected by the selling Holders holding a majority of the Registrable Shares being registered in such registration to represent the selling Holders, (iv) all fees and expenses incurred in complying with securities or state “blue sky” laws (including reasonable fees, charges and disbursements of counsel to any underwriter incurred in connection with “blue sky” qualifications of the Registrable Shares as may be set forth in any underwriting agreement), (v) any other accounting fees, charges or expenses incurred by the Company incident to or required by any such registration (including any expenses arising from any “cold comfort” letters or any special audits incident to or required by any registration or qualification), and (vi) any liability insurance or other premiums for insurance obtained in connection with any demand registration or piggy-back registration thereon, incidental registration or shelf registration pursuant to the terms of this Agreement, regardless of whether such Registration Statement is declared effective, and (y) excluding underwriting discounts, selling commissions and the fees and expenses of selling Holders’ own counsel (other than the counsel selected to represent all selling Holders).

 

“Registration Statement” means a registration statement filed by the Company with the Commission for a public offering and sale of securities of the Company for cash (other than a registration statement on Form S-8 or Form S-4).

 

“Securities Act” means the Securities Act of 1933, as amended, or any successor Federal statute, and the rules and regulations of the Commission issued under such Act, as they each may, from time to time, be in effect.

 

“Valid Business Reason” shall have the meaning set forth in Section 2.5.

 

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“WFC” means Project Black Bear LP, a Delaware limited partnership and a WFC Investor.

 

“WFC Holders” means the WFC Investors, and any Person to which the rights granted to WFC under this Agreement are transferred, in whole or in part, pursuant to Article 8 and any Person entitled to the benefits of this Agreement pursuant to Section 9.2, other than a transferee to whom Registrable Shares have been transferred pursuant to a Registration Statement under the Securities Act or Rule 144 promulgated under the Securities Act.

 

“WFC Investors” means the Investors identified as WFC Investors on Schedule I hereto.

 

1.2           Grant of Rights.  The Company hereby grants registration rights to the Holders upon the terms and conditions set forth in this Agreement.

 

1.3           Holders of Registrable Shares.  A Person is deemed to be a holder of Registrable Shares whenever such Person owns of record Registrable Shares (unless transferred into “street name” for the purpose of effecting a sale), or holds an option to purchase, or a security convertible into, or exercisable or exchangeable for, Registrable Shares whether or not such purchase, conversion, exercise or exchange has actually been effected.  If the Company receives conflicting instructions, notices or elections from two or more Persons with respect to the same Registrable Shares, the Company may act upon the basis of the instructions, notice or election received from the registered owner of such Registrable Shares.  Registrable Shares issuable upon exercise of an option or upon conversion, exercise or exchange of another security shall be deemed outstanding for the purposes of this Agreement.

 

ARTICLE 2.

 

REQUIRED REGISTRATIONS

 

2.1           Demand Registration Rights.  Subject to the limitations set forth in  Section 2.4, each of WFC and HMQ shall have the right to request, in writing, that the Company effect a registration on Form S-1 (or any other applicable or successor form) of some or all of the shares of Common Stock then held by the WFC Holders which constitute Registrable Shares; provided, however, that HMQ may not exercise such right until the earlier of (i) WFC’s exercise of all of its demand rights under this Article 2 or (ii) such time as WFC no longer holds any Registrable Shares.  If WFC intends to distribute the Registrable Shares by means of an underwriting, it shall so advise the Company in its request.  Upon receipt of any such request, the Company shall promptly give written notice of such proposed registration to all WFC Holders.  Such other WFC Holders shall have the right, by giving written notice to the Company within thirty (30) days after the Company provides its notice, to elect to have included in such registration such of their Registrable Shares as such WFC Holders may request in such notice of election.  All WFC Holders proposing to distribute their securities through such underwriting shall enter into an underwriting agreement in customary form with an underwriter or underwriters selected by the WFC Holders.  Thereupon, the Company shall, at its own expense and as expeditiously as 

 

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possible, subject to Section 2.5, use commercially reasonable efforts to effect the registration of all Registrable Shares that the Company has been requested so to register.

 

2.2           S-3 Registrations.  At any time after the Company becomes eligible to file a Registration Statement on Form S-3 (or any successor form relating to secondary offerings, hereinafter “Form S-3”), each of WFC and HMQ shall have the right to effect a Registration Statement on Form S-3 with respect to the WFC Holders’ Registrable Shares.  Upon receipt of any such request, the Company shall promptly give written notice of such proposed registration to all WFC Holders.  Such other WFC Holders shall have the right, by giving written notice to the Company within thirty (30) days after the Company provides its notice, to elect to have included in such registration such of their Registrable Shares as such WFC Holders may request in such notice of election.  Thereupon, the Company shall, at its own expense and as expeditiously as possible, subject to Section 2.5, use commercially reasonable efforts to effect the registration of all Registrable Shares that the Company has been requested so to register.

 

2.3           Participation in Underwritten Offering.  In connection with any offering under this Article 2 involving an underwriting, the Company shall not be required to include any Registrable Shares in such underwriting unless the Holders thereof accept the terms of the underwriting as agreed upon in good faith between the WFC Holder making such demand and the underwriters selected by it, and then only in such quantity as will not, in the good faith opinion of the underwriters, jeopardize the success of the offering by the Company.  If, in the opinion of the managing underwriter, the registration of all, or part of, the Registrable Shares that the Holders have requested to be included would materially and adversely affect such public offering, then the Company shall be required to include in the underwriting only that number of Registrable Shares, if any, that the managing underwriter in good faith believes may be sold without causing such adverse effect allocated, subject to Section 3.2, pro rata among the WFC Holders on the basis of the Registrable Shares held by such WFC Holders.

 

2.4           Limits on Number of Registrations; Withdrawal from Underwriting.  (a)  The Company shall not be required (i) to effect (A) more than two (2) Registration Statements in total pursuant to demands by WFC in accordance with this Article 2 if, in the Company’s Initial Public Offering, the WFC Holders receive less than $175,000,000 in gross proceeds as selling stockholders or (B) more than one (1) registration pursuant to demands by WFC in accordance with Article 2 if, in the Company’s Initial Public Offering, the WFC Holders receive at least $175,000,000 in gross proceeds as selling stockholders and (ii) to file any Registration Statement during the 180 day period following an Initial Public Offering.  The Company shall not be required to effect more than one (1) Registration Statement in total pursuant to the demand by HMQ in accordance with this Article 2.

 

(b)           Notwithstanding Section 2.4(a), if the WFC Holders disapprove of the terms of an underwritten offering that is the subject of a Registration Statement filed pursuant to this Article 2, WFC or HMQ may elect to withdraw its demand therefor prior to the effectiveness of the Registration Statement by written notice to the Company and the managing underwriter and such demand shall not count as a Registration Statement for purposes of Section 2.4(a) unless WFC has previously withdrawn its demand pursuant to this Section 2.4(b) twice or unless HMQ has previously withdrawn its demand pursuant to this Section 2.4(b) once, respectively.  

 

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Notwithstanding the foregoing, the Company may elect to proceed with such underwritten offering, in which case, the provisions of Article 3 hereof shall apply.

 

2.5           Right to Delay Registrations.  If at the time of any request to register Registrable Shares pursuant to this Article 2, the Company is engaged or has fixed plans to engage, within thirty (30) days of the time of the request, in a registered public offering as to which WFC Holders may include Registrable Shares pursuant to Article 3 or is engaged in any other activity that, in the good faith determination of the Company’s Board of Directors, would be adversely affected by the requested registration to the material detriment of the Company (a “Valid Business Reason”), then the Company, at its option, may direct that such request be delayed for a period not in excess of ninety (90) days from the effective date of such offering or the date of commencement of such other material activity, as the case may be, such right to delay a request to be exercised by the Company not more than once in any one (1) year period.  The Company shall give written notice to all WFC Holders of its determination to postpone or withdraw a Registration Statement and of the fact that the Valid Business Reason for such postponement or withdrawal no longer exists, in each case, promptly after the occurrence thereof.

 

ARTICLE 3.

 

PIGGYBACK REGISTRATION

 

3.1           General.  Subject to Section 3.2, whenever the Company proposes to file a Registration Statement for its own account, other than a Registration Statement on Form S-4 or Form S-8), or for the account of any stockholder of the Company at any time and from time to time, it shall give, prior to such filing, written notice (such notice shall describe the proposed registration, offering price (or reasonable range thereof) and distribution arrangements) to all Holders of its intention to do so and, upon the written request of a Holder or Holders given within twenty (20) days after the Company provides such notice, the Company shall use commercially reasonable efforts to cause all Registrable Shares that the Company has been requested by such Holder or Holders to register to be registered under the Securities Act to the extent necessary to permit their sale or other disposition in accordance with the intended methods of distribution; provided that the Company shall have the right to postpone or withdraw any registration effected for the Company’s own account without obligation to any Holder and shall have the rights set forth in Section 2.5 for any registration effected based on a demand under Article 2.  The Company shall bear all Registration Expenses in connection with any incidental registration pursuant to this Article 3, whether or not such incidental registration becomes effective.

 

3.2           Participation in Underwritten Offering.  In connection with any offering under this Article 3 involving an underwriting, the Company shall not be required to include any Registrable Shares in such underwriting unless the Holders thereof accept the terms of the underwriting as agreed upon in good faith between the Company or WFC, as the case may be, and the underwriters, and then only in such quantity as will not, in the good faith opinion of the underwriters, jeopardize the success of the offering by the Company.  If, in the opinion of the managing underwriter, the registration of all, or part of, the Registrable Shares that the Holders have requested to be included would materially and adversely affect such public offering, then 

 

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the Company shall be required to include in the underwriting only that number of Registrable Shares, if any, that the managing underwriter in good faith believes may be sold without causing such adverse effect; provided that the Company shall include Registrable Shares in the priorities described below with respect to the Registration Statements described below:

 

(a)                          in the Company’s Initial Public Offering, first, all of the securities to be offered for the account of the Company; second, the Registrable Shares to be offered for the account of the WFC Holders pursuant to this Article 3 pro rata based on the number of Registrable Shares owned by each such WFC Holder, up to a maximum of $175,000,000 of gross proceeds attributable to such WFC Holders; third, the Registrable Shares to be offered for the account of the Holders pursuant to this Article 3 pro rata based on the number of Registrable Shares owned by each such Holder (reduced, in the case of WFC Holders, by the number of Registrable Shares included in such registration pursuant to the preceding clause); and fourth, any other securities requested to be included in such offering;

 

(b)                         in the first demand Registration Statement effected pursuant to a demand by WFC in accordance with Article 2, if applying the limitation described in Section 2.4(a)(i)(A), first, the Registrable Shares to be offered for the account of the WFC Holders pro rata based on the number of Registrable Shares owned by each such WFC Holder, up to a maximum of $175,000,000 of gross proceeds attributable to such WFC Holders less any amount of gross proceeds received by the WFC Holders in the Company’s Initial Public Offering; second, the Registrable Shares to be offered for the account of the Holders pursuant to this Article 3 pro rata based on the number of Registrable Shares owned by each such Holder (reduced, in the case of WFC Holders, by the number of Registrable Shares included in such registration pursuant to the preceding clause); and third, any other securities requested to be included in such offering;

 

(c)                          in the second demand Registration Statement effected pursuant to a demand by WFC in accordance with Article 2, if applying the limitation described in Section 2.4(a)(i)(A), first, the Registrable Shares to be offered for the account of all Holders pursuant to this Article 3 pro rata based on the number of Registrable Shares owned by each such Holder; and second, any other securities requested to be included in such offering;

 

(d)                         in the only demand Registration Statement effected pursuant to a demand by WFC in accordance with Article 2, if applying the limitation described in Section 2.4(a)(i)(B), first, the Registrable Shares to be offered for the account of all Holders pursuant to this Article 3 pro rata based on the number of Registrable Shares owned by each such Holder; and second, any other securities requested to be included in such offering;

 

(e)                          in the demand Registration Statement effected pursuant to a demand by HMQ in accordance with Article 2, first, the Registrable Shares to be offered for the account of all Holders pursuant to this Article 3 pro rata based on the number of Registrable Shares 

 

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owned by each such Holder; and second, any other securities requested to be included in such offering; or

 

(f)                            in any other such registration, first, all of the securities to be offered for the account of the Company; second, the Registrable Shares to be offered for the account of the Holders pursuant to this Article 3 pro rata based on the number of Registrable Shares owned by each such Holder; and third, any other securities requested to be included in such offering.

 

ARTICLE 4.

 

REGISTRATION PROCEDURES

 

4.1           Company Obligations.  If and whenever the Company is required by the provisions of this Agreement to effect the registration of any of the Registrable Shares under the Securities Act, the Company shall use commercially reasonable efforts to effect the registration and sale of such Registrable Shares in accordance with the intended method of distribution thereof as promptly as practicable, and in connection with any such request or requirement, the Company shall:

 

(a)           as expeditiously as possible, prepare and file with the Commission a Registration Statement with respect to such Registrable Shares on any form for which the Company then qualifies or which counsel for the Company shall deem appropriate and which form shall be available for the sale of such Registrable Shares in accordance with the intended method of distribution thereof; provided, however, that (A) before filing a Registration Statement or Prospectus or any amendments or supplements thereto (including any documents incorporated by reference therein), or before using any Free Writing Prospectus, the Company shall provide counsel selected by the selling Holders holding a majority of the Registrable Shares being registered in such registration (“Holders’ Counsel”) and any other Inspector with an adequate and appropriate opportunity to review and comment on such Registration Statement, each Prospectus included therein (and each amendment or supplement thereto) and each Free Writing Prospectus to be filed with the Commission, subject to such documents being under the Company’s control, and (B) the Company shall notify the Holders’ Counsel and each seller of Registrable Shares pursuant to such Registration Statement of any stop order issued or threatened by the Commission and take all reasonable actions required to prevent the entry of such stop order or to remove it if entered;

 

(b)           as expeditiously as possible prepare and file with the Commission any amendments and supplements to the Registration Statement and the Prospectus included in the Registration Statement as may be necessary to keep the Registration Statement effective for the lesser of (A) 120 days and (B) such shorter period which will terminate when all Registrable Shares covered by such Registration Statement have been sold; provided that in the case of a shelf registration, the Company shall keep such Registration Statement effective until all Registrable Shares covered by such Registration Statement shall have been sold, and shall comply with the provisions of the Securities Act with 

 

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respect to the disposition of all securities covered by such Registration Statement during such period in accordance with the intended methods of disposition by the sellers thereof set forth in such Registration Statement;

 

(c)           as expeditiously as possible furnish to each selling Holder such reasonable numbers of copies of the Registration Statement, each amendment and supplement thereto, Prospectus, including a preliminary Prospectus, any Prospectus filed pursuant to Rule 424 promulgated under the Securities Act and any Free Writing Prospectus in conformity with the requirements of the Securities Act, and such other documents as the selling Holder may reasonably request in order to facilitate the public sale or other disposition of the Registrable Shares owned by the selling Holder;

 

(d)           as expeditiously as possible use its best efforts to register or qualify the Registrable Shares covered by the Registration Statement under the securities or “blue sky” laws of such states as the selling Holders shall reasonably request, and to continue such registration or qualification in effect in such jurisdiction for as long as permissible pursuant to the laws of such jurisdiction, or for as long as any such seller requests or until all of such Registrable Shares are sold, whichever is shortest, and do any and all other acts and things that may be necessary or desirable to enable the selling Holders to consummate the public sale or other disposition in such states of the Registrable Shares owned by the selling Holder; provided, however, that the Company shall not be required in connection with this subsection (d) to qualify as a foreign corporation or execute a general consent to service of process in any jurisdiction;

 

(e)           enter into and perform customary agreements (including underwriting and indemnification and contribution agreements in customary form with the approved underwriter for the Holders or the Company’s underwriter, as applicable) and take such other commercially reasonable actions as are required in order to expedite or facilitate each disposition of Registrable Shares and shall provide all reasonable cooperation, including causing appropriate officers to attend and participate in “road shows” and other information meetings organized by the underwriter, and causing counsel to the Company to deliver customary legal opinions in connection with any such underwriting agreements; provided, however, that the Company’s officers shall not be required to participate in road shows in connection with more than two registrations, and such road shows shall not last more than two weeks at a time;

 

(f)            as expeditiously as possible, notify each seller of Registrable Shares: (1) when a Prospectus, any Prospectus supplement, any Free Writing Prospectus, a Registration Statement or a post-effective amendment to a Registration Statement has been filed with the Commission, and, with respect to a Registration Statement or any post-effective amendment, when the same has become effective; (2) of any request by the Commission or any other federal or state governmental authority for amendments or supplements to a Registration Statement, related Prospectus or Free Writing Prospectus or for additional information; (3) of the issuance by the Commission or any other federal or state governmental authority of any stop order suspending the effectiveness of a Registration Statement or the initiation or threatening of any proceedings for that 

 

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purpose; (4) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Shares for sale in any jurisdiction or the initiation or threatening of any proceedings for such purpose; (5) of the existence of any fact or happening of any event of which the Company has knowledge which makes any statement of a material fact in such Registration Statement, related Prospectus or Free Writing Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue or which would require the making of any changes in the Registration Statement, Prospectus or Free Writing Prospectus in order that, in the case of the Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and that in the case of such Prospectus or Free Writing Prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and (6) of the determination by counsel of the Company that a post-effective amendment to a Registration Statement is advisable;

 

(g)           as expeditiously as possible, upon the occurrence of any event contemplated by Section 4.1(f)(5) or, subject to Section 2.5, the existence of a Valid Business Reason, as promptly as practicable, prepare a supplement or amendment to such Registration Statement, related Prospectus or Free Writing Prospectus and furnish to each seller of Registrable Shares a reasonable number of copies of such supplement to or an amendment of such Registration Statement, Prospectus or Free Writing Prospectus as may be necessary so that, after delivery to the purchasers of such Registrable Shares, in the case of the Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and that in the case of such Prospectus or Free Writing Prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;

 

(h)           if the Company has delivered preliminary or final Prospectuses to the selling Holders and after having done so the Prospectus is amended to comply with the requirements of the Securities Act, the Company shall promptly notify the selling Holders and, if requested, the selling Holders immediately shall cease making offers of Registrable Shares and return all Prospectuses in their possession to the Company.  The Company shall promptly provide the selling Holders with revised Prospectuses and, following receipt of the revised Prospectuses, the selling Holders shall be free to resume making offers of the Registrable Shares;

 

(i)            make available at reasonable times for inspection by any seller of Registrable Shares, any managing underwriter participating in any disposition of such Registrable Shares pursuant to a Registration Statement, Holders’ Counsel and any attorney, accountant or other agent retained by any such seller or any managing underwriter (collectively, the “Inspectors”), all financial and other records, pertinent

 

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corporate documents and properties of the Company and its subsidiaries (collectively, the “Records”) as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Company’s and its subsidiaries’ officers, directors and employees, and the independent public accountants of the Company, to supply all information reasonably requested by any such Inspector in connection with such Registration Statement.  Records that the Company determines, in good faith, to be confidential and which it notifies the Inspectors are confidential shall not be disclosed by the Inspectors (and the Inspectors shall confirm their agreement in writing in advance to the Company if the Company shall so request) unless (A) the disclosure of such Records is necessary, in the Company’s judgment, to avoid or correct a misstatement or omission in the Registration Statement, (B) the release of such Records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction after exhaustion of all appeals therefrom or (C) the information in such Records was known to the Inspectors on a non-confidential basis prior to its disclosure by the Company or has been made generally available to the public.  Each seller of Registrable Shares agrees that it shall, upon learning that disclosure of such Records is sought in a court of competent jurisdiction, give notice to the Company and allow the Company, at the Company’s expense, to undertake appropriate action to prevent disclosure of the Records deemed confidential;

 

(j)            if such sale is pursuant to an underwritten public offering, obtain a “cold comfort” letter dated the effective date of the Registration Statement and the date of the closing under the underwriting agreement from the Company’s independent public accountants in customary form and covering such matters of the type customarily covered by “cold comfort” letters as Holders’ Counsel or the managing underwriter reasonably requests;

 

(k)           comply with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as reasonably practicable but no later than 15 months after the effective date of the Registration Statement, an earnings statement covering a period of 12 months beginning after the effective date of the Registration Statement, in a manner which satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 promulgated thereunder;

 

(l)            cause all such Registrable Shares to be listed on each securities exchange on which Registrable Class Securities issued by the Company are then listed, provided that the applicable listing requirements are satisfied;

 

(m)          cooperate with each seller of Registrable Shares and each underwriter participating in the disposition of such Registrable Shares and their respective counsel in connection with any filings required to be made with FINRA;

 

(n)           if such registration is pursuant to a Registration Statement on Form S-3 or any similar short-form registration, include in such Registration Statement such additional information for marketing purposes as the managing underwriter reasonably requests; and

 

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(o)           take all other steps reasonably necessary to effect the registration and disposition of the Registrable Shares contemplated hereby.

 

4.2           Seller Obligations.  In connection with any offering under any Registration Statement under this Agreement, each Holder registering Registrable Shares in connection therewith:

 

(a)           shall promptly furnish to the Company in writing such information with respect to such Holder and the intended method of disposition of its Registrable Shares as the Company may reasonably request or as may be required by law for use in connection with any related Registration Statement or Prospectus (or amendment or supplement thereto) and all information required to be disclosed in order to make the information previously furnished to the Company by such Holder not contain a material misstatement of fact or necessary to cause such Registration Statement or Prospectus (or amendment or supplement thereto) not to omit a material fact with respect to such Holder necessary in order to make the statements therein not misleading; and

 

(b)           shall comply with the Securities Act and the Exchange Act and all applicable state securities laws and comply with all applicable regulations in connection with the registration and the disposition of the Registrable Shares.

 

4.3           Notice to Discontinue.  Each Holder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 4.1(f)(5), such Holder shall forthwith discontinue disposition of Registrable Shares pursuant to the Registration Statement covering such Registrable Shares until such Holder’s receipt of the copies of the supplemented or amended Prospectus or Free Writing Prospectus contemplated by Section 4.1(g) and, if so directed by the Company, such Holder shall deliver to the Company (at the Company’s expense) all copies, other than permanent file copies then in such Holder’s possession, of the Prospectus or Free Writing Prospectus covering such Registrable Shares which is current at the time of receipt of such notice.  If the Company shall give any such notice, the Company shall extend the period during which such Registration Statement shall be maintained effective pursuant to this Agreement (including the period referred to in Section 4.1(b)) by the number of days during the period from and including the date of the giving of such notice pursuant to Section 4.1(f)(5) to and including the date when sellers of such Registrable Shares under such Registration Statement shall have received the copies of the supplemented or amended Prospectus or Free Writing Prospectus contemplated by and meeting the requirements of Section 4.1(g).

 

ARTICLE 5.

 

ALLOCATION OF REGISTRATION EXPENSES

 

The Company shall pay all Registration Expenses arising from or incident to its performance of, or compliance with, this Agreement, including all registrations under this Agreement, regardless of whether any Registration Statement is declared effective.

 

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ARTICLE 6.

 

INDEMNIFICATION AND CONTRIBUTION

 

6.1           Company Indemnity.  The Company shall defend (at the sole election of the indemnified party and at the Company’s expense), indemnify and hold harmless each Holder and each Affiliate of each Holder and their respective stockholders, partners, members, directors, officers, employees, agents, accountants and attorneys (“Representatives”), each underwriter of such Holder and its Representatives, and each other Person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the Exchange Act and its Representatives, against any and all losses, claims, damages, liabilities and expenses, or any action or proceeding in respect thereof (including reasonable costs of investigation and reasonable and documented attorneys’ fees and expenses) (each, a “Liability”) to which such Holder, its Representatives, Affiliates, underwriter or controlling Person and their Representatives may become subject under the Securities Act, the Exchange Act, state securities or “blue sky” laws or otherwise, insofar as such Liabilities (or actions in respect thereof) arise out of or are related to any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement under which such Registrable Shares were registered under the Securities Act, any preliminary Prospectus or final Prospectus or Free Writing Prospectus contained in the Registration Statement, or any amendment or supplement to such Registration Statement, or arise out of or are based upon the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading or any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities laws in connection with the offering covered by such registration statement.  Notwithstanding the foregoing, the Company shall not be liable in any such case to the extent that any Liability arises out of or is based upon any untrue statement or omission made in such Registration Statement, preliminary Prospectus or final Prospectus or Free Writing Prospectus, or any amendment or supplement, in reliance upon and in conformity with information furnished to the Company, in writing, by or on behalf of such indemnified party specifically for use in the preparation thereof.

 

6.2           Seller Indemnity.  In the event of any registration of any of the Registrable Shares under the Securities Act pursuant to this Agreement, each seller of Registrable Shares, severally and not jointly, shall indemnify and hold harmless the Company, each of its Representatives and each underwriter (if any) and each Person, if any, who controls the Company or any such underwriter within the meaning of the Securities Act or the Exchange Act and their Representatives, and any other seller of Registrable Shares or any such seller’s partners, directors, officers or Representatives and each person, if any, who controls such seller within the meaning of the Securities Act and the Exchange Act, against any losses, claims, damages or liabilities, joint or several, to which the Company or its Representatives, an underwriter, selling Holder or controlling Person, or their Representatives, may become subject under the Securities Act, Exchange Act, state securities or “blue sky” laws or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement under which such Registrable Shares were registered under the Securities Act, any 

 

13

 

preliminary Prospectus or final Prospectus or Free Writing Prospectus contained in the Registration Statement, any amendment or supplement to the Registration Statement, or any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case, to the extent such losses, claims, damages or liabilities arise out of or are based upon written information furnished by such seller of Registrable Shares or on such seller’s behalf expressly for inclusion in the Registration Statement, preliminary Prospectus or final Prospectus or Free Writing Prospectus contained in the Registration Statement or any amendment or supplement thereto relating to the Registrable Shares.  Each such seller of Registrable Shares shall reimburse the Company for any legal or any other expenses reasonably incurred by the Company in connection with investigating or defending any such loss, claim, damage, liability or action if the statement or omission was made in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of such seller, specifically for use in connection with the preparation of such Registration Statement, Prospectus, Free Writing Prospectus, amendment or supplement; provided, however, that the obligations of such Holders under this Section 6.2 shall be limited to an amount equal to the net proceeds (after deducting the underwriters’ discounts and commissions) received by such selling Holder of Registrable Shares sold as contemplated herein.

 

6.3           Indemnification Conditions.  Each party entitled to indemnification under this Article 6 (the “Indemnified Party”) shall give notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has notice of any claim, suit or proceeding or any alleged claim, suit or proceeding, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom; provided, that:  (a) counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not be unreasonably withheld); and (b) the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Agreement, except to the extent that the Indemnifying Party’s ability to defend against such claim or litigation is impaired as a result of such failure to give notice.  The Indemnified Party shall have the right to participate in such defense at such party’s expense; provided, however, that the Indemnifying Party shall pay such expense of one counsel if representation of such Indemnified Party by the counsel retained by the Indemnifying Party would be inappropriate due to actual or potential differing interests between the Indemnified Party and any other party represented by such counsel in such proceeding.  No Indemnifying Party in the defense of any such claim or litigation shall consent, except with the written consent of each Indemnified Party, to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect of such claim or litigation, and no Indemnified Party shall consent to entry of any judgment or settle such claim or litigation without the prior written consent of the Indemnifying Party.  Each Indemnified Party shall furnish such information regarding itself or the claim in question as an Indemnifying Party may reasonably request in writing and as shall be reasonably required in connection with the defense of such claim and litigation resulting therefrom.

 

6.4           Contribution.  If the indemnification provided for in this Article 6 from the Indemnifying Party is unavailable to an Indemnified Party hereunder in respect of any Liabilities referred to herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party, 

 

14

 

shall contribute to the amount paid or payable by such Indemnified Party as a result of such Liabilities in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions which resulted in such Liabilities, as well as any other relevant equitable considerations.  The relative faults of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action.  The amount paid or payable by a party as a result of the Liabilities referred to above shall be deemed to include, subject to the limitations set forth in Sections 6.1, 6.2 and 6.3, any legal or other fees, charges or expenses reasonably incurred by such party in connection with any investigation or proceeding; provided, that the total amount to be contributed by such Holder shall be limited to the net proceeds (after deducting the underwriters’ discounts and commissions) received by such Holder in the offering.  The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 6.4 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph.  No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

 

6.5           Survival.  The provisions set forth in this Article 6 shall survive the termination of this Agreement for a period of time equal to the statute of limitations relating to a claim for a Liability.

 

ARTICLE 7.

 

OTHER REGISTRATION REQUIREMENTS AND RESTRICTIONS

 

7.1           Underwriting Agreement.  In the event that Registrable Shares are sold pursuant to a Registration Statement in an underwritten offering pursuant to Article 2, the Company agrees to enter into an underwriting agreement containing customary representations and warranties with respect to the business and operations of an issuer of the securities being registered and customary covenants and agreements to be performed by such issuer, including without limitation customary provisions with respect to indemnification by the Company of the underwriters of such offering.

 

7.2           Information by Holder.  Each Holder of Registrable Shares included in any registration shall furnish to the Company such information regarding such Holder and the distribution proposed by such Holder as the Company may reasonably request in writing and as shall be required in connection with any registration, qualification or compliance referred to in this Agreement.

 

7.3           “Market Stand-Off” Agreement.  Each Holder, if requested by the Company and an underwriter of Common Stock or other securities of the Company, shall agree not to sell or 

 

15

 

otherwise transfer or dispose of any Registrable Shares for a specified period of time determined by the Company and the underwriters (not to exceed one hundred eighty (180) days) following the effective date of the Company’s Initial Public Offering.  Such agreement shall be in writing in a form reasonably satisfactory to the Company and such underwriter.  The Company may impose stop-transfer instructions with respect to the Registrable Shares or other securities subject to the foregoing restriction until the end of the stand-off period.  No Holder subject to this Section 7.3 shall be released from any obligation under any agreement, arrangement or understanding entered into pursuant to this Section 7.3 unless all other Holders subject to the same obligation are also released.  Notwithstanding the foregoing, if (i) during the last 17 days of the lock-up period above, the Company releases earnings results or announces material news or a material event or (ii) prior to the expiration of the lock-up period above, the Company announces that it will release earnings results during the 15-day period following the last day of the lock-up period above, then in each case the lock-up period above will be automatically extended until the expiration of the 18-day period beginning on the date of release of the earnings results or the announcement of the material news or material event, as applicable, unless the Company or the underwriters, as the case may be, waives, in writing, such extension.

 

7.4           Rule 144 Requirements.  After the earliest of:  (a) the closing of the sale of securities of the Company pursuant to a Registration Statement and (b) the registration by the Company of a class of securities under Section 12 of the Exchange Act, the Company shall:

 

(a)           comply with the requirements of Rule 144(c) under the Securities Act with respect to current public information about the Company;

 

(b)           use its best efforts to file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act (at any time after it has become subject to their reporting requirements); and

 

(c)           furnish to any Holder upon written request,  a written statement by the Company as to its compliance with the requirements of said Rule 144(c), and the reporting requirements of the Securities Act and the Exchange Act (at any time after it has become subject to their reporting requirements).

 

7.5           Selection of Underwriter.  WFC shall have the right to designate the managing underwriter in the Company’s Initial Public Offering and in any registration effected pursuant to Article 2.

 

7.6           Mergers, Etc.  The Company shall not, directly or indirectly, enter into any merger, consolidation, or reorganization in which the Company shall not be the surviving corporation unless the proposed surviving corporation shall, prior to such merger, consolidation, or reorganization, agree in writing to assume the obligations of the Company under this Agreement, and for that purpose references hereunder to “Registrable Shares” shall be deemed to be references to the securities that the Holder would be entitled to receive in exchange for Registrable Shares under any such merger, consolidation, or reorganization; provided, however, that the provisions of this Agreement shall not apply in the event of any merger, consolidation, or 

 

16

 

reorganization in which the Company is not the surviving corporation if all Holders are entitled to receive in exchange for their Registrable Shares consideration consisting solely of:  (a) cash; (b) securities of the acquiring corporation that may be immediately sold to the public without registration under the Securities Act; or (c) securities of the acquiring corporation that the acquiring corporation has agreed to register within ninety (90) days of completion of the transaction for resale to the public pursuant to the Securities Act.

 

ARTICLE 8.

 

TRANSFERS OF CERTAIN RIGHTS

 

8.1           Amount.  Each Investor shall have the right to transfer the rights granted to such Investor under this Agreement, in whole or in part, only to (a) an Affiliate of such Investor or, in the case of a WFC Investor, to any Affiliate of such WFC Investor or to any other WFC Investor; or (b) any Person to which Registrable Shares are transferred; provided that, with respect to transfers under this clause (b): (x) the associated transfer of such shares, in the opinion of counsel reasonably acceptable to the Company, may be effected without registration under the Securities Act and any applicable state securities laws; (y) transferee reasonably cooperates with the Company to execute and deliver any documents and to take any actions reasonably requested by the Company to comply with the requirements of any such exemption from registration; and (z) following such transfer, the transferee shall hold at least one percent (1%) of the Registrable Class Shares.  For the avoidance of doubt, the transferee of any Registrable Shares, in whole or in part, in accordance with this Article 8 shall be deemed to be a “Holder” for all purposes of this Agreement, and if the transferor of such Registrable Shares is a WFC Investor, then the transferee of such Registrable Shares shall be deemed a “WFC Investor” for all purposes of this Agreement.

 

8.2           Transferees.  Any transferee to whom rights under this Agreement are transferred shall deliver to the Company, as a condition to such transfer, a written instrument by which such transferee agrees to be bound by the obligations imposed upon the Investor or other Holders, as applicable, under this Agreement to the same extent as if such transferee were an Investor or other Holder under this Agreement.

 

8.3           Subsequent Transferees.  A transferee to whom rights are transferred pursuant to this Article 8 shall not have the right to again transfer such rights to any other person or entity, other than as provided in Sections 8.1 or 8.2.

 

ARTICLE 9.

 

MISCELLANEOUS

 

9.1           No Inconsistent Agreements.  The Company shall not hereafter enter into any agreement with respect to its securities that is inconsistent with or violates the rights granted to the Holders of Registrable Shares in this Agreement.

 

17

 

9.2           Successors and Assigns; Third Party Beneficiaries.  Except as provided in Article 8, this Agreement shall not be transferable or assignable by either party hereto without the prior written consent of the other party.  The provisions of this Agreement shall be binding upon, and inure to the benefit of, the respective successors, permitted assigns, heirs, executors and administrators of the parties hereto.  Except as provided in Article 6, no Person other than the parties hereto and their successors and permitted assigns is intended to be a beneficiary of this Agreement.

 

9.3           Remedies.  Any person having rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting any bond or other security), to recover damages caused by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law.

 

9.4           Notices.  Any notice, request, instruction or other document or other communication to be given hereunder by a Party hereto shall be in writing and shall be deemed to have been given, (i) when received if given in person or by courier or a courier service, (ii) on the date of transmission if sent by confirmed facsimile, (iii) on the next Business Day if sent by an overnight delivery service, or (iv) five (5) Business Days after being deposited in the U.S. mail, certified or registered mail, postage prepaid:

 

To the Company:

 

Bonanza Creek Energy, Inc.

410 17th Street, Suite 1320

Denver, Colorado 80202

Attention: Michael R. Starzer

Telephone:  720-279-2330

Facsimile: 720-279-2331

Email: mrs@bonaznacrk.com

 

With a copy, which shall not constitute notice, to:

 

Thompson & Knight LLP

333 Clay Street, Suite 3300

Houston, Texas 77008

Attention: Harry R. Beaudry

Telephone:  713-653-8826

Facsimile:  832-397-8149

Email: harry.beaudtry@tk.com

 

To WFC:

 

Project Black Bear LP

c/o Project Black Bear GP LLC

2 Bloor Street East, Suite 810

Toronto, Ontario, Canada M4W 1A8

 

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Telephone: 647-724-8912

Facsimile: 647-724-8910

Email: blackbear@westfacecapital.com

 

With a copy, which shall not constitute notice, to:

 

Mayer Brown LLP

1675 Broadway

New York, NY 10019

Attention: Thomas M. Vitale

Telephone: 212-506-2510

Facsimile: 212-849-5510

Email: tvitale@mayerbrown.com

 

If to HMQ:

 

c/o AIMCo

1100 – 10830 Jasper Ave.

Edmonton, Alberta T5J 2B3

Attention:  Brian Gibson, Senior Vice President, Public Equities

Telephone:  780-392-3744

Facsimile:  780-392-3897

Email: brian.gibson@aimco.alberta.ca

 

With a copy, which shall not constitute notice, to:

 

c/o AIMCo

1100 – 10830 Jasper Ave.

Edmonton, Alberta T5J 2B3

Attention: Carole Hunt, Chief Legal Counsel and Corporate Secretary

Telephone: 780-392-3777

Facsimile: 780-392-3897

Email: carole.hunt@aimco.alberta.ca

 

If to any other Investor to the address set forth at the address or telecopy number shown for such Investor on the applicable signature page hereto, to the attention of the person who has signed this Agreement on behalf of such Stockholder or, in any such case, such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party. Any Party may change its address for notice by notice to the other in the manner set forth above.

 

9.5           Severability.  In case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions of this Agreement or any provision of the other Agreements shall not in any way be affected or impaired thereby.

 

19

 

9.6           Waiver.  Any failure by a party, at any time or times, to require strict performance by the other party of any provisions of this Agreement shall not waive, affect or diminish any right the first party thereafter to demand strict compliance and performance therewith.  None of the undertakings, agreements, warranties, covenants and representations of a party contained in this Agreement shall be deemed to have been suspended or waived by such party, unless such suspension or waiver is by an instrument in writing signed by an officer of such party and directed to the other party specifying such suspension or waiver.

 

9.7           Titles and Subtitles.  The titles of the articles and sections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.

 

9.8           Mutual Waiver of Jury Trial.  BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS AGREEMENT.

 

9.9           Governing Law; Consent to Jurisdiction.        THIS AGREEMENT AND ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE OF THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN NEW YORK, WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICT OF LAWS (FOR THE AVOIDANCE OF DOUBT, SECTION 5-1401 OF THE GENERAL OBLIGATION LAW OF THE STATE OF NEW YORK SHALL BE APPLICABLE TO THIS AGREEMENT).  THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN THE STATE OF NEW YORK OVER ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE AFFAIRS OF THE COMPANY.  TO THE FULLEST EXTENT THEY MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, THE PARTIES HERETO IRREVOCABLY WAIVE AND AGREE NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, ANY CLAIM THAT THEY ARE NOT SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, ANY OBJECTION THAT THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.  SERVICE OF PROCESS ON ANY PARTY HERETO IN ANY ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE EFFECTIVE IF MAILED TO THE PARTY AT THE ADDRESS REFERENCED IN SECTION 9.4 HEREOF.

 

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9.10         Wavier of Immunity.  Each party to this Agreement expressly acknowledges and agrees that this Agreement is being executed as part of a private, commercial transaction.  Solely with respect to this Agreement, each party hereby waives, to the maximum extent permitted by law, for itself and its Affiliates, and for its and their assets and revenues, any and all immunity to the extent that it may at any time exist whether on grounds of sovereignty, state immunity or otherwise, from suit, arbitration, proceeding, jurisdiction of any court, adjudication, enforcement of arbitration award, judgment, service of process upon it or any agent, execution or judgment, set off, attachment or other interim relief prior to judgment or on judgment or other legal process, including, without limitation, the defenses of “sovereign immunity”, and “act of state”, which such party or its assets or revenues may now have or may in the future have under the Laws of any jurisdiction, and each party agrees not to assert any such immunity or defenses in any proceedings with respect to this Agreement, or in the enforcement of any award, judgment or execution resulting therefrom or from any transactions contemplated hereby or hereunder.

 

9.11         Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of which together shall constitute one and the same document.

 

9.12         Entire Agreement; Modifications.  This Agreement embodies the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings relating to such subject matter.  Except as otherwise expressly set forth in this Agreement, any term of this Agreement may be amended with the prior written consent of:  (a) the Company, and (b) the WFC Holders only; provided that any amendment to the piggyback rights in Article 3 shall also require the written consent of the holders of a majority of the Registrable Shares held by Other Holders.  Any amendment effected in accordance with this Section 9.12 shall be binding upon each future holder of any Registrable Shares.

 

9.13         Further Assurances.  Each of the parties shall execute such documents and perform such further acts as may be reasonably required or desirable to carry out or to perform the provisions of this Agreement.

 

[Remainder of page intentionally left blank]

 

21

 

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

 

	
 
    	
THE   COMPANY:
    
	
 
    	
 
    	
 
    
	
 
    	
BONANZA CREEK ENERGY, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Michael R. Starzer
    
	
 
    	
Name:
    	
Michael R. Starzer
    
	
 
    	
Title:
    	
President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
STOCKHOLDERS:
    
	
 
    	
 
    	
 
    
	
 
    	
D.E. SHAW SYNOPTIC PORTFOLIOS 5, L.L.C.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Robert T. Ladd
    
	
 
    	
Name:
    	
Robert   T. Ladd
    
	
 
    	
Title:
    	
Authorized   Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Signature Page to the   Registration Rights Agreement
    

 

 

	
 
    	
BONANZA CREEK ENERGY COMPANY, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Michael R. Starzer
    
	
 
    	
Name:
    	
Michael   R. Starzer
    
	
 
    	
Title:
    	
President
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
THE FRED S. AND BARBARA J. HOLMES TRUST
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Fred S. Holmes
    
	
 
    	
Name:
    	
Fred   S. Holmes
    
	
 
    	
Title:
    	
Trustee
    
	
 
    	
 
    
	
 
    	
Address:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Signature Page to the Registration Rights Agreement
    

 

 

	
 
    	
/s/   Michael R. Starzer
    
	
 
    	
MICHAEL   R. STARZER
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
THE STARZER REVOCABLE LIVING TRUST,
    
	
 
    	
DATED FEBRUARY 26, 1998
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Michael R. Starzer
    
	
 
    	
Name:   
    	
Michael   R. Starzer
    
	
 
    	
Title:
    	
Trustee
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Signature Page to the Registration Rights Agreement
    

 

 

	
 
    	
PROJECT BLACK BEAR LP
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
WEST FACE CAPITAL   INC., its Adviser
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Alexander A. Singh
    
	
 
    	
 
    	
Name: Alexander A. Singh
    
	
 
    	
 
    	
Title:  Counsel &   Secretary
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
HER   MAJESTY THE QUEEN IN RIGHT OF ALBERTA, IN HER OWN CAPACITY AND AS   TRUSTEE/NOMINEE FOR CERTAIN DESIGNATED ENTITIES
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Brian Gibson
    
	
 
    	
 
    	
Name: Brian Gibson
    
	
 
    	
 
    	
Title:  Senior   Vice President
    
	
 
    	
 
    	
 
    

 

Signature Page to the Registration Rights Agreement

 

 

Schedule I

 

Investors

 

West Face Investors:

 

PROJECT BLACK BEAR LP

 

HER MAJESTY THE QUEEN IN RIGHT OF ALBERTA, IN HER OWN CAPACITY AND AS TRUSTEE/NOMINEE FOR CERTAIN DESIGNATED ENTITIES

 

Other Investors:

 

D.E. SHAW SYNOPTIC PORTFOLIOS 5, L.L.C.

 

BONANZA CREEK ENERGY COMPANY, LLC

 

THE FRED S. AND BARBARA J. HOLMES TRUST

 

MICHAEL R. STARZER

 

THE STARZER REVOCABLE LIVING TRUST, DATED FEBRUARY 26, 1998Exhibit 10.4

 

FORM OF INDEMNITY AGREEMENT

 

This Agreement made and entered into as of           , by and between Bonanza Creek Energy, Inc., a Delaware corporation (the “Company”), and            (“Indemnitee”), who is currently serving the Company in the capacity of director and/or executive officer.

 

WITNESSETH:

 

WHEREAS, the Company and Indemnitee recognize that the interpretation of ambiguous statutes, regulations and court opinions and of the Amended and Restated Certificate of Incorporation of the Company (the “Certificate of Incorporation”) and the Bylaws of the Company (the “Bylaws”), and the vagaries of public policy, are too uncertain to provide the directors and executive officers of the Company with adequate or reliable advance knowledge or guidance with respect to the legal risks and potential liabilities to which they become personally exposed as a result of performing their duties in good faith for the Company;

 

WHEREAS, competent and experienced individuals are reluctant to serve as members of the board of directors or executive officers of a corporation unless they are provided with adequate protection through insurance or indemnification against the risks of claims and actions against them arising out of such service;

 

WHEREAS, Section 145 of the General Corporation Law of the State of Delaware and the Certificate of Incorporation, which set forth certain provisions relating to the mandatory and permissive indemnification of, and advancement of expenses to, officers and directors (among others) of a Delaware corporation by such corporation, are specifically not exclusive of other rights to which those indemnified thereunder may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise;

 

WHEREAS, after due consideration and investigation of the terms and provisions of this Agreement and the various other options available to the Company and the Indemnitee in lieu thereof, the Board of Directors of the Company (the “Board of Directors”) has determined that the following Agreement is not only reasonable and prudent but necessary to promote and ensure the best interests of the Company and its stockholders; and

 

WHEREAS, the Company desires to have Indemnitee to serve or continue to serve as a director or executive officer of the Company, free from undue concern for unpredictable, inappropriate or unreasonable legal risks and personal liabilities by reason of his acting in good faith in the performance of his duty to the Company; and Indemnitee desires to serve (provided that he is furnished the indemnity provided for hereinafter), in such capacity;

 

NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and Indemnitee, intending to be legally bound, do hereby agree as follows:

 

1.             Agreement to Serve.  Indemnitee agrees to serve or continue to serve as a director or executive officer of the Company for so long as he is duly appointed and qualified in accordance with the provisions of the General Corporation Law of the State of Delaware and the Certificate of Incorporation and the Bylaws or until such time as he tenders his resignation.  The Company acknowledges that the Indemnitee is relying on this Agreement in so serving as a director or executive officer.

 

 

2.             Definitions.  As used in this Agreement:

 

(a)           “Change in Control” means the occurrence of any of the following:

 

(i)            the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either (A) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”).  For purposes of this Section 2(a), the following acquisitions by a Person will not constitute a Change of Control: (1) any acquisition directly from the Company; (2) any acquisition by the Company; (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company; or (4) any acquisition by any corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of paragraph (iii) below;

 

(ii)           the individuals who, as of the later of the date hereof or the last amendment to this Agreement approved by the Board of Directors, constitute the board of directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the board of directors.  Any individual becoming a director subsequent to the later of the date hereof or the last amendment to this Agreement approved by the Board of Directors whose election, or nomination for election by the Company’s stockholders, is approved by a vote of at least a majority of the directors then comprising the Incumbent Board of Directors will be considered a member of the Incumbent Board as of the later of the date hereof or the last amendment to this Agreement approved by the Board of Directors, but any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Incumbent Board of Directors will not be deemed a member of the Incumbent Board as of the later of the date hereof or the last amendment to this Agreement approved by the Board of Directors;

 

(iii)          the consummation of a reorganization, merger, consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), unless following such Business Combination: (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding shares of common stock (or, for a non-corporate entity, equivalent securities) and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business

 

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Combination) beneficially owns, directly or indirectly, 30% or more of, respectively, the then outstanding shares of common stock (or, for a non-corporate entity, equivalent securities) of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board of Directors, providing for such Business Combination; or

 

(iv)          the approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

 

(b)           “Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.

 

(c)           “Enterprise” shall mean any other corporation, limited liability company, partnership, joint venture, trust, employee benefit plan, organization or other enterprise of which Indemnitee is or was serving at the request of the Company as a director, officer, trustee, general partner, managing member, fiduciary, employee or agent.

 

(d)           The term “Expenses” includes, without limitation, all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, or being or preparing to be a witness in, or otherwise involved in, a Proceeding.  Should any payments by the Company under this Agreement be determined to be subject to any federal, state or local income or excise tax, Expenses will also include such amounts as are necessary to place Indemnitee in the same after-tax position, after giving effect to all applicable taxes, Indemnitee would have been in had such tax not have been determined to apply to those payments.  Expenses also shall include (i) Expenses incurred in connection with any appeal resulting from any Proceeding, including, without limitation, the premium, security for, and other costs relating to any cost bond, supersedeas bond, or other appeal bond or its equivalent and (ii) Expenses incurred by Indemnitee in connection with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement, by litigation or otherwise, but shall not include the amount of judgments, fines or penalties actually levied against Indemnitee.

 

(e)           “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder.  Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.  The Company agrees to pay the reasonable fees and expenses of the Independent Counsel referred to above and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

 

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(f)            “Proceeding” shall mean any threatened, pending or completed action, suit, or proceeding, whether civil, criminal, administrative, arbitrative or investigative, any appeal in such an action, suit, or proceeding, and any inquiry or investigation that could lead to such an action, suit or proceeding irrespective of the initiator thereof.  The final disposition of a Proceeding shall be as determined by a settlement or the judgment of a court or other investigative or administrative body.  The Board of Directors shall not make a determination as to the final disposition of a Proceeding.

 

(g)           References to “fines” shall include any (i) excise taxes assessed with respect to any employee benefit plan and (ii) penalties; references to “serving at the request of the Company” shall include any service as a director, officer, trustee, general partner, managing member, fiduciary, employee or agent which imposes duties on, or involves services by, such director, officer, trustee, general partner, managing member, fiduciary, employee or agent with respect to an Enterprise; and a person who acts in good faith and in a manner he reasonably believed to be in the interest of the Enterprise shall be deemed to have acted in a manner “not opposed to the best interests of the Company” as referred to in this Agreement.

 

3.             Indemnity in Third Party Proceedings.  The Company shall indemnify Indemnitee in accordance with the provisions of this Section 3 if Indemnitee is a party to or is threatened to be made a party to or is otherwise involved in any Proceeding (other than a Proceeding by or in the right of the Company to procure a judgment in its favor) by reason of the fact that Indemnitee is or was a director or executive officer of the Company, or was serving at the request of the Company as a director, officer, trustee, general partner, managing member, fiduciary, employee or agent of an Enterprise, against all Expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by Indemnitee (or on his behalf) in connection with such Proceeding or any claim, issue or matter therein, provided it is determined pursuant to Section 8 of this Agreement or by the court having jurisdiction in the matter, that Indemnitee acted in good faith and in a manner that he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal Proceeding, had no reasonable cause to believe his conduct was unlawful.  The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner that he reasonably believed to be in or not opposed to the best interests of the Company, or, with respect to any criminal Proceeding, had reasonable cause to believe that his conduct was unlawful.

 

4.             Indemnity in Proceedings By or In the Right of the Company.  The Company shall indemnify Indemnitee in accordance with the provisions of this Section 4 if Indemnitee is a party to or is threatened to be made a party to or otherwise involved in any Proceeding by or in the right of the Company to procure a judgment in its favor by reason of the fact that Indemnitee is or was a director or executive officer of the Company, or is or was serving at the request of the Company as a director, officer, trustee, general partner, managing member, fiduciary, employee or agent of an Enterprise, against all Expenses actually and reasonably incurred by Indemnitee (or on his behalf) in connection with such Proceeding provided it is determined pursuant to Section 8 of this Agreement or by the court having jurisdiction in the matter, that Indemnitee acted in good faith and in a manner that he reasonably believed to be in or not opposed to the best interests of the Company, except that no indemnification shall be made under this Section 4 in respect of any claim, issue or matter as to which Indemnitee shall have been adjudged to be liable to the Company unless and only to the extent that the Delaware Court of Chancery or the court in which such Proceeding was brought or is pending, shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such Expenses as the Delaware Court of Chancery or such other court shall deem proper.

 

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5.             Indemnification for Expenses of a Witness.  Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of the fact that Indemnitee is or was a director or executive officer of the Company, or is or was serving at the request of the Company as a director, officer, trustee, general partner, managing member, fiduciary, employee or agent of an Enterprise, a witness in any Proceeding to which Indemnitee is not a party, he shall be indemnified against all Expenses actually and reasonably incurred by Indemnitee (or on his behalf) in connection therewith.

 

6.             Indemnification for Expenses of Successful Party.  Notwithstanding any other provision of this Agreement to the contrary, to the extent that Indemnitee has been successful on the merits or otherwise in defense of any Proceeding referred to in Sections 3 and/or 4 of this Agreement, or in defense of any claim, issue or matter therein, including dismissal with or without prejudice, Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by Indemnitee (or on his behalf) in connection therewith.  If Indemnitee is not wholly successful in any Proceeding referred to in Sections 3 and/or 4 of this Agreement, but is successful on the merits or otherwise (including dismissal with or without prejudice) as to one or more, but less than all claims, issues or matters therein, including dismissal without prejudice, Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by Indemnitee (or on his behalf) in connection with each successfully resolved claim, issue or matter.  For purposes of this Section 6, and without limitation, the termination of any claim, issue or matter in any Proceeding referred to in Sections 3 and/or 4 of this Agreement by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

 

7.             Advances of Expenses; Notification and Defense of Claim.

 

(a)           To the fullest extent permitted by applicable law, the Expenses incurred by Indemnitee pursuant to Sections 3 and/or 4 of this Agreement in connection with any Proceeding or any claim, issue or matter therein shall be paid by the Company currently and in advance of the final disposition of such Proceeding or any claim, issue or matter therein no later than 20 days after receipt by the Company of a request for an Expense advancement with appropriate documentation (which shall include invoices received by Indemnitee in connection with such expenses but, in the case of invoices in connection with legal services, any references to legal work performed or to expenditures made that would cause Indemnitee to waive any privilege accorded by applicable law shall not be included with the invoice); provided, however, that Indemnitee shall deliver such request for an Expense advancement to the Company within 60 days after the Indemnitee receives appropriate documentation with regard to such Expense. The undersigned Indemnitee hereby undertakes to repay the advanced Expenses to the Company to the extent that it is ultimately determined pursuant to Section 8, or, in the event the Indemnitee elects to pursue other remedies pursuant to Section 10, that the undersigned Indemnitee is not entitled to be indemnified therefor by the Company.  This agreement of Indemnitee to repay is unsecured and interest free.

 

(b)           Promptly after receipt by Indemnitee of notice of the commencement of any Proceeding, Indemnitee shall, if a claim thereof is to be made against the Company hereunder, notify the Company of the commencement thereof.  The failure to promptly notify the Company of the commencement of the Proceeding, or Indemnitee’s request for indemnification, will not relieve the Company from any liability that it may have to Indemnitee hereunder, except to the extent that the Company is prejudiced in its defense of such Proceeding as a result of such failure.

 

(c)           In the event the Company shall be obligated to pay the expenses of Indemnitee with respect to an action, suit or proceeding, as provided in this Agreement, the Company, if appropriate, shall be entitled to assume the defense of such Proceeding, with counsel reasonably acceptable to Indemnitee, upon the delivery to Indemnitee of written notice of its election to do

 

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so.  After delivery of such notice, the approval of such counsel by Indemnitee and the retention of such counsel by the Company, the Company will not be liable to Indemnitee under this Agreement for any fees of counsel subsequently incurred by Indemnitee with respect to the same Proceeding, provided that (1) Indemnitee shall have the right to employ Indemnitee’s own counsel in such Proceeding at Indemnitee’s expense and (2) if (i) the employment of counsel by Indemnitee has been previously authorized in writing by the Company, (ii) counsel to the Company or Indemnitee shall have reasonably concluded that there may be a conflict of interest or position, or reasonably believes that a conflict is likely to arise, on any significant issue between the Company and Indemnitee in the conduct of any such defense or (iii) the Company shall not, in fact, have employed counsel to assume the defense of such Proceeding, then the fees and expenses of Indemnitee’s counsel shall be at the expense of the Company, except as otherwise expressly provided by this Agreement.  The Company shall not be entitled, without the consent of Indemnitee, to assume the defense of any claim brought by or in the right of the Company or as to which counsel for the Company or Indemnitee shall have reasonably made the conclusion provided for in clause (ii) above.

 

8.             Procedure for Determination of Entitlement to Indemnification.

 

(a)           To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request.

 

(b)           Upon written request by Indemnitee for indemnification pursuant to Section 8(a) hereof, a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall be made in the specific case: (i) if a Change in Control shall have occurred, the Disinterested Directors shall direct Independent Counsel to make such determination in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee; or (ii) if a Change in Control shall not have occurred, (A) by a majority vote of the Disinterested Directors, even though less than a quorum of the Board of Directors, or (B) by a committee of the Disinterested Directors designated by a majority vote of Disinterested Directors, even though less than a quorum, or (C) if there are no Disinterested Directors or, if the Disinterested Directors so direct, by Independent Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee; and, if it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within 20 days after such determination.  Any costs or expenses (including attorneys’ fees and disbursements) incurred in connection with successfully establishing Indemnitee’s right to indemnification, in whole or in part, by Indemnitee in cooperating with the person, persons or entity making the determination discussed in this Section 8(b) with respect to Indemnitee’s entitlement to indemnification, shall be borne by the Company and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.

 

(c)           In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 8(b) hereof, the Independent Counsel shall be selected as provided in this Section 8(c).  If a Change in Control shall not have occurred, the Independent Counsel shall be selected by the Board of Directors, and the Company shall give written notice to Indemnitee advising him of the identity of the Independent Counsel so selected.  If a Change in Control shall have occurred, the Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Board of Directors, in which event the preceding sentence shall apply), and Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected.  In either event, Indemnitee or the Company, as the case may be, may, within 10 days after such written notice of selection shall have been given, deliver to the Company or to Indemnitee, as the case may be, a written objection

 

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to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in this Agreement, and the objection shall set forth with particularity the factual basis of such assertion.  Absent a proper and timely objection, the person so selected shall act as Independent Counsel.  If such written objection is so made and substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit.  If, within 20 days after submission by Indemnitee of a written request for indemnification pursuant to Section 8(b) hereof, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition the Delaware Court of Chancery or other court of competent jurisdiction for resolution of any objection which shall have been made by the Company or Indemnitee to the other’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the Court or by such other person as the Court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 8(a) hereof.

 

(d)           Indemnitee will be deemed a party to a Proceeding for all purposes hereof if Indemnitee is named as a defendant or respondent in a complaint or petition for relief in that Proceeding, regardless of whether Indemnitee is ever served with process or makes an appearance in that Proceeding.

 

9.             Presumptions and Effect of Certain Provisions.

 

(a)           In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 8(a) of this Agreement, and the Company shall have the burden of proof in overcoming such presumption by clear and convincing evidence.  Neither the failure of the Company (including its Board of Directors or independent legal counsel) to have made a determination prior to the commencement of such action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including its Board of Directors or independent legal counsel) that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.

 

(b)           If the person, persons or entity empowered or selected under Section 8 of this Agreement to determine whether Indemnitee is entitled to indemnification shall not have made a determination within 30 days after receipt by the Company therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and Indemnitee shall be entitled to such indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided, however, that such 30-day period may be extended for a reasonable time, not to exceed an additional 15 days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith requires such additional time for the obtaining or evaluating of documentation and/or information relating thereto.

 

(c)           For purposes of any determination of whether Indemnitee acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal Proceeding, Indemnitee had no reasonable cause to believe his

 

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conduct was unlawful (collectively, “Good Faith”), Indemnitee shall be deemed to have acted in Good Faith if Indemnitee’s action is based on the records or books of account of the Company and any other Enterprise of which Indemnitee is or was serving at the request of the Company as a director, officer, trustee, general partner, managing member, fiduciary, employee or agent or information, opinions, reports or statements, including financial statements and other financial information, concerning the Company and any other Enterprise of which Indemnitee is or was serving at the request of the Company as a director, officer, trustee, general partner, managing member, fiduciary, employee or agent or any other person which were prepared or supplied to Indemnitee by: (i) one or more officers or employees of the Company and any Enterprise of which Indemnitee is or was serving at the request of the Company as a director, officer, trustee, general partner, managing member, fiduciary, employee or agent; (ii) appraisers, engineers, investment bankers, legal counsel or other persons as to matters Indemnitee reasonably believed were within the professional or expert competence of those persons; and (iii) any committee of the Board of Directors or equivalent managing body of the Company and any other Enterprise of which Indemnitee is or was serving at the request of the Company as a director, officer, trustee, general partner, managing member, fiduciary, employee or agent of which Indemnitee is or was, at the relevant time, not a member.  The provisions of this Section 9(c) shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement.

 

(d)           The knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Company and any other Enterprise of which Indemnitee is or was serving at the request of the Company as a director, officer, trustee, general partner, managing member, fiduciary, employee or agent shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.

 

10.          Remedies of Indemnitee.

 

(a)           In the event that (i) a determination is made pursuant to Section 8(b) of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 7 of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 8(b) of this Agreement within the time period provided in Section 9(b) after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to Section 5, Section 6, the last sentence of Section 8(b), or the last sentence of Section 2(d) of this Agreement within 20 days after receipt by the Company of a written request therefor, or (v) payment of indemnification pursuant to Section 3 or Section 4 of this Agreement is not made within 20 days after a determination has been made that Indemnitee is entitled to indemnification, Indemnitee shall be entitled to an adjudication by the Delaware Court of Chancery of his entitlement to such indemnification or advancement of Expenses and appeals therefrom, concluding in a final and unappealable judgment by the Delaware Supreme Court.  The Board of Directors shall not make a determination as to the final disposition of such adjudication.  The Company shall not oppose Indemnitee’s right to seek any such adjudication.

 

(b)           In the event that a determination shall have been made pursuant to Section 8(b) of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding commenced pursuant to this Section 10 shall be conducted in all respects as a de novo trial on the merits and Indemnitee shall not be prejudiced by reason of that adverse determination.

 

(c)           If a determination shall have been made pursuant to Section 8(b) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such

 

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determination in any judicial proceeding commenced pursuant to this Section 10, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law.

 

(d)           In the event that Indemnitee, pursuant to this Section 10, seeks a judicial adjudication of his rights under, or to recover damages for breach of, this Agreement, if such judicial adjudication determines that Indemnitee shall be entitled to recover from the Company, Indemnitee shall be indemnified by the Company against, any and all expenses (of the types described in the definition of Expenses in Section 2(d) of this Agreement) actually and reasonably incurred by him in such judicial adjudication.

 

(e)           The Company shall be precluded from asserting in any judicial proceeding commenced pursuant to this Section 10 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that the Company is bound by all the provisions of this Agreement.

 

11.          Exclusivity; Survival of Rights.  The rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall be in addition to and not limited by any other rights to which Indemnitee may be entitled under the Certificate of Incorporation or the Bylaws, any other agreement, any vote of stockholders or disinterested directors, the General Corporation Law of the State of Delaware or otherwise; provided this Agreement shall supersede the indemnification and advancement of Expenses provisions of any employment agreement entered into between the Indemnitee and the Company prior to the date of this Agreement.  No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee prior to such amendment, alteration or repeal.  To the extent that a change in the General Corporation Law of the State of Delaware, whether by statute or judicial decision, permits greater indemnification or advancement of Expenses than would be afforded currently under the Certificate of Incorporation and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change.  No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

 

12.          Partial Indemnification.  If Indemnitee is entitled under any provision of this Agreement to indemnification or to receive advancement by the Company for a portion of the Expenses, judgments, fines, penalties or amounts paid in settlement actually and reasonably incurred by Indemnitee (or on his behalf) in connection with such Proceeding, or any claim, issue or matter therein, but not, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee is entitled.

 

13.          Rights Continued.  The rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall continue as to Indemnitee even though Indemnitee may have ceased to be a director or officer of the Company and shall inure to the benefit of Indemnitee’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

 

14.          No Construction as an Employment Agreement or Any Other Commitment.  Nothing contained in this Agreement shall be construed as giving Indemnitee any right to be retained in

 

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the employ or as an officer of the Company or any of its subsidiaries, if Indemnitee currently serves as an officer of the Company, or to be renominated or reelected as a director of the Company, if Indemnitee currently serves as a director of the Company.

 

15.          Liability Insurance.  To the extent the Company maintains an insurance policy or policies providing liability insurance for directors, officers, trustees, general partners, managing members, fiduciaries, employees or agents of the Company or any other Enterprise which such person serves at the request of the Company, Indemnitee shall be covered by such policy or policies in accordance with its or their terms, to the maximum extent of the coverage available for any director, officer, trustee, general partner, managing member, fiduciary, employee or agent under such policy or policies.

 

16.          No Duplication of Payments.  The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable under this Agreement if, and to the extent that, Indemnitee has otherwise actually received such payment under any contract, agreement or insurance policy, the Certificate of Incorporation or the Bylaws, or otherwise.

 

17.          Subrogation.  In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all the rights of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including without limitation the execution of such documents as may be necessary to enable the Company effectively to bring suit to enforce such rights.

 

18.          Exceptions.  Notwithstanding any other provision in this Agreement, the Company shall not be obligated pursuant to the terms of this Agreement, to:

 

(a)           indemnify or advance Expenses to Indemnitee with respect to any Proceeding initiated, brought or made by Indemnitee, including by way of cross-claim, counter claim or the like, except with respect to a Proceeding brought to establish or enforce a right to indemnification, unless Proceeding was authorized or consented to by the Board of Directors;

 

(b)           indemnify Indemnitee with respect to any Proceeding in which final judgment is rendered against Indemnitee for an accounting of profits made from the purchase and sale or the sale and purchase by Indemnitee of securities of the Company pursuant to the provisions of Section 16(b) of the Act; or

 

(c)           indemnify Indemnitee for any expenses incurred by Indemnitee with respect to any Proceeding instituted by Indemnitee to enforce or interpret this Agreement, unless Indemnitee is successful in establishing Indemnitee’s right to indemnification in such Proceeding, in whole or in part, or unless and to the extent that the court in such Proceeding shall determine that, despite Indemnitee’s failure to establish his right to indemnification, Indemnitee is entitled to indemnity for such expenses; provided, however that nothing in this Section 18(c) is intended to limit the Company’s obligation with respect to the advancement of expenses to Indemnitee in connection with any Proceeding instituted by Indemnitee to enforce or interpret this Agreement, as provided in Section 7 of this Agreement.

 

Notwithstanding any other provision of this Agreement to the contrary, with respect to any reimbursements hereunder that are taxable as compensation to an Indemnitee, the amount of the Expenses that are eligible for reimbursement during one calendar year may not affect the amount of reimbursements to be provided in any subsequent calendar year, the reimbursement of an eligible expense shall be made on or before the last day of the calendar year following the calendar year in which the expense was

 

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incurred, and the right to reimbursement of the expenses shall not be subject to liquidation or exchange for any other benefit.

 

19.          Settlements.  The Company shall not be required to indemnify Indemnitee under this Agreement for any amounts paid in settlement of any action or Proceeding effected without its written consent.  The Company shall not settle any action or claim in any manner which would impose any penalty or limitation on Indemnitee without Indemnitee’s written consent.  Neither the Company nor Indemnitee may unreasonably withhold its consent to any proposed settlement.

 

20.          Notices.  Any notice or other communication required or permitted to be given or made to the Company or Indemnitee pursuant to this Agreement shall be given if made in writing and deposited in the United States mail, with postage thereon prepaid, addressed to the person to whom such notice or communication is directed at the address of such person on the records of the Company, and such notice or communication shall be deemed given or made at the time when the same shall be so deposited in the United States mail.  Any such notice or communication to the Company shall be addressed to the Secretary of the Company.

 

21.          Contractual Rights.  The right to be indemnified or to receive advancement of Expenses under this Agreement (i) is a contract right based upon good and valuable consideration, pursuant to which Indemnitee may sue, (ii) is and is intended to be retroactive and shall be available as to events occurring prior to the date of this Agreement and (iii) shall continue after any rescission or restrictive modification of this Agreement as to events occurring prior thereto.

 

22.          Severability.  If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby; to the fullest extent possible, the provisions of this Agreement shall be construed so as to give effect to the intent manifested by the provisions held invalid, illegal or unenforceable; and those provision or provisions held to be invalid, illegal or unenforceable for any reason whatsoever shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto.

 

23.          Successors; Binding Agreement.  The Company shall require and cause any successor (whether direct or indirect), by purchase, merger, consolidation or otherwise, to all or substantially all of the business or assets of the Company, by written agreement in form and substance reasonably satisfactory to Indemnitee, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.  As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid that executes and delivers the agreement provided for in this Section 23 or that otherwise becomes bound by the terms and provisions of this Agreement by operation of law.  This Agreement shall be binding upon the Company and its successors and assigns (including, without limitation, any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company) and will inure to the benefit of Indemnitee (and Indemnitee’s spouse, if Indemnitee resides in Texas or another community property state), heirs, executors and administrators.

 

24.          Counterparts, Modification, Headings, Gender.

 

(a)           This Agreement may be executed in counterparts, each of which shall constitute one and the same instrument, and either party hereto may execute this Agreement by signing any such counterpart.  Any such counterpart delivered by facsimile or other electronic means shall constitute an original signature for all purposes hereunder.

 

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(b)           No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by Indemnitee and an appropriate officer of the Company.  No waiver by any party at any time of any breach by any other party of, or compliance with, any condition or provision of this Agreement to be performed by any other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same time or at any prior or subsequent time.

 

(c)           Section headings are not to be considered part of this Agreement, are solely for convenience of reference, and shall not affect the meaning or interpretation of this Agreement or any provision set forth herein.

 

(d)           Pronouns in masculine, feminine and neuter genders shall be construed to include any other gender, and words in the singular form shall be construed to include the plural and vice versa, unless the context otherwise requires.

 

25.          Exclusive Jurisdiction; Governing Law.  The Company and Indemnitee agree that all disputes in any way relating to or arising under this Agreement, including, without limitation, any action for advancement of Expenses or indemnification, shall be litigated, if at all, exclusively in the Delaware Court of Chancery, and if necessary, the corresponding appellate courts.  This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware applicable to contracts made and to be performed in such state without giving effect to the principles of conflicts of laws.  The Company and Indemnitee (i) expressly submit themselves to the personal jurisdiction of the Delaware Court of Chancery for purposes of any action or proceeding arising out of or in connection with this Agreement, (ii) irrevocably appoint, to the extent such party is not a resident of the State of Delaware, The Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801 as its agent in the State of Delaware as such party’s agent for acceptance of legal process in connection with any such action or proceeding against such party with the same legal force and validity as if served upon such party personally within the State of Delaware, (iii) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court of Chancery, and (iv) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court of Chancery has been brought in an improper or otherwise inconvenient forum.

 

26.          Duration of Agreement.  This Agreement shall continue until and terminate upon the later of: (a) 10 years after the date that Indemnitee shall cease to serve as a director or executive officer of the Company or a director, officer, trustee, general partner, managing member, fiduciary, employee or agent of any other Enterprise which Indemnitee served at the request of the Company; or (b) one year after the final, nonappealable termination of any Proceeding then pending in respect of which Indemnitee is granted rights of indemnification or advancement of Expenses hereunder and of any proceeding commenced by Indemnitee pursuant to Section 10 of this Agreement relating thereto.

 

27.          Contribution.  If it is established, under Section 8 or otherwise, that Indemnitee has the right to be indemnified under this Agreement in respect of any claim, but that right is unenforceable by reason of applicable law or public policy, then, to the fullest extent applicable law permits, the Company, in lieu of indemnifying or causing the indemnification of Indemnitee under this Agreement, will contribute to the amount Indemnitee has incurred, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement or for Expenses reasonably incurred, in connection with that Proceeding, in such proportion as is deemed fair and reasonable in light of all the circumstances of that Proceeding in order to reflect:

 

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(a)           the relative benefits Indemnitee and the Company have received as a result of the event(s) or transactions(s) giving rise to that Proceeding; or

 

(b)           the relative fault of Indemnitee and of the Company and its other functionaries in connection with those event(s) or transaction(s).

 

[Signature page to follow]

 

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IN WITNESS WHEREOF, the Company and Indemnitee have executed this Agreement as of the date and year first above written.

 

	
 
    	
BONANZA   CREEK ENERGY, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
INDEMNITEE:
    
	
 
    	
 
    
	
 
    	
 
    

 

Indemnity Agreement – Signature Page

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