Document:

Exhibit 10.2

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

This Executive Employment Agreement (“Agreement”) is entered into on August 19, 2013, by and between David E. Fleming (“Executive”) and Warren Resources, Inc., a Maryland corporation (the “Company”), to be effective as of July 15, 2013 (as defined in Appendix A).  This Agreement shall supersede and replace in its entirety any and all prior agreements, whether oral or written, previously entered into by the parties.

 

Certain capitalized terms in this Agreement have the meanings set forth in Appendix A attached to this Agreement, which is incorporated into this Agreement in its entirety.

 

1.                                      EMPLOYMENT

 

The Company agrees to continue to employ Executive, and Executive agrees to continue to accept employment by the Company as its Senior Vice President, General Counsel and Corporate Secretary and report to the Company’s Chief Executive Officer.  Executive will perform the duties as are commensurate and consistent with Executive’s position and will devote Executive’s full working time, attention and efforts to the Company and to discharging the responsibilities of Executive’s position, and such other duties as may be assigned from time to time by the Company, which relate to the business of the Company and are reasonably consistent with Executive’s position.  Executive agrees to comply with the Company’s standard policies and procedures, including the Employee Handbook previously delivered and accepted by Executive, and with all applicable laws and regulations.

 

The Executive acknowledges that the Company’s principal executive offices are currently located at 1114 Avenue of the Americas, New York, New York, and the Executive’s principal place of employment shall be the Company’s principal executive offices, which shall be in New York County in the State of New York.

 

2.                                      TERM OF EMPLOYMENT

 

This Agreement, and the employment of the Executive by the Company hereunder, shall be effective as of July 15, 2013 (the “Effective Date”) and terminate on the first anniversary of the Effective Date (the “Term”), subject to earlier termination as set forth herein (the “Employment Period”).

 

3.                                      COMPENSATION AND BENEFITS

 

The Company agrees to pay or cause to be paid to Executive and Executive agrees to accept in exchange for the services rendered hereunder the following compensation and benefits:

 

3.1                               Annual Salary

 

Executive’s compensation shall consist of an annual base salary (the “Salary”) of not less than $329,221.00, payable in semi-monthly installments in accordance with the payroll practices of the Company, less all required withholdings for benefits, federal, state and local taxes, if any.  The Salary shall be reviewed, and may be increased but not decreased (unless there is an across the board reduction in the salary of all senior executives of the Company), by the Board of

 

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Directors (or the Compensation Committee thereof) at least annually while Executive is employed hereunder.

 

3.2                               Bonus and Equity Awards

 

Executive shall be eligible to participate in the Company’s incentive bonus plans as may be adopted from time to time by the Board of Directors (or the Compensation Committee thereof), subject to and in accordance with the terms and conditions of such plans, which shall not be paid later than March 15 of the calendar year immediately following the calendar year to which the bonus relates.  The Executive’s target annual bonus opportunity shall be up to sixty-two and one-half (62.5%) percent of the Salary, based on the achievement of performance goals set forth in the Company’s incentive bonus plan.

 

Executive also may be eligible to receive equity awards under the Company’s equity plans, with the amount, terms and conditions of such equity awards to be determined by the Board of Directors (or the Compensation Committee thereof).

 

3.3                               Benefits

 

Executive shall be eligible to participate, subject to and in accordance with applicable eligibility requirements, in such employee benefit plans, policies, programs and arrangements as are generally provided to the Company’s most senior executives, which benefits shall include, at a minimum, basic health, dental and vision insurance.

 

3.4                               Vacation and Other Paid Time-Off Benefits

 

Executive shall be entitled to four (4) weeks of paid vacation per year, which may be increased to equal to those provided to similarly situated executives of the Company, in accordance with the plans, policies, programs and arrangements of the Company applicable to similarly situated executives of the Company generally.  Executive also shall be provided such holidays and sick leave as the Company makes available to all of its other employees.

 

3.5                               Business Expenses

 

The Company shall reimburse Executive for all reasonable expenses incurred by him in accordance with the Company’s expense policy in the course of performing his duties and responsibilities under this Agreement.  Any reimbursement provided for under this Agreement that would constitute nonqualified deferred compensation subject to Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), shall be subject to the following additional rules:  (i) no reimbursement of any such expense shall affect the Executive’s right to reimbursement of any such expense in any other taxable year; (ii) reimbursement of the expense shall be made, if at all, promptly, but not later than the end of the calendar year following the calendar year in which the expense was incurred; and (iii) the right to reimbursement shall not be subject to liquidation or exchange for any other benefit.

 

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4.                                      TERMINATION

 

4.1                               Employment at Will

 

Executive acknowledges and understands that employment with the Company is at will and can be terminated by either party for no reason or for any reason not otherwise specifically prohibited by law, subject to the terms herein.  Except as expressly provided for in this Agreement, upon any termination of employment, Executive shall not be entitled to receive any payments or benefits under this Agreement other than unpaid Salary earned through the date of termination and unused vacation that has accrued as of the date of Executive’s termination of employment that would be payable under the Company’s standard policy.

 

4.2                               Automatic Termination on Death or Total Disability

 

This Agreement and Executive’s employment hereunder shall terminate automatically upon the death or Total Disability of Executive.  “Total Disability” shall mean Executive’s inability to perform the duties of Executive’s position for a period or periods aggregating ninety (90) days in any period of one hundred eighty (180) consecutive days as a result of physical or mental illness, loss of legal capacity or any other cause beyond Executive’s control.  Executive and the Company hereby acknowledge that Executive’s ability to perform Executive’s duties is the essence of this Agreement.  Termination hereunder shall be deemed to be effective (a) at the end of the calendar month in which Executive’s death occurs or (b) immediately upon a determination by the Board of Directors (or the Compensation Committee thereof) of Executive’s Total Disability provided, however, that the decision by the Board of whether Executive has a Total Disability shall be based upon the findings of a qualified Medical Doctor reasonably agreed to by the Company and the Executive.

 

In the case of termination of employment under this Section 4.2, Executive, or his estate in the event of his death, shall be entitled to receive:  (a) any accrued and unpaid salary, earned and unpaid incentive bonus, deferred or other compensation for any period preceding the employment termination date; (b) payment for any accrued and unpaid benefits pursuant to the terms of any compensation or benefit plans to the extent permitted by such plans and any accrued but unused vacation days; and (c) any unpaid expense reimbursement (unless covered under a separate company policy) (the “Accrued Obligations”).

 

Additionally, should Executive’s employment be terminated as a result of his death or Total Disability, he will be entitled to Executive’s then vested outstanding equity-based awards, and the unvested portion will be forfeited.  The Executive will have an extension of the time period during which Executive may exercise Executive’s then outstanding stock options, to the extent vested on the date of termination, until the earlier of (A) one (1) year from the date of termination and (B) the latest date upon which such stock options would have expired by their original terms under any circumstances.

 

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4.3                               Termination of Employment Without Cause or for Good Reason, Other Than in Connection with a Change of Control

 

(a)                                 If (1) the Company terminates Executive’s employment without Cause (as defined in Appendix A), or (2) Executive resigns for Good Reason (as defined in Appendix A), then Executive shall be entitled to receive the following termination payments and benefits; provided, however, that this Section 4.3 shall not apply to, and shall have no effect in connection with, any termination to which Section 4.2 or Section 4.4 of this Agreement applies:

 

(i)                                     an amount equal to nine (9) months of the Executive’s Annual Salary, at the rate in effect immediately prior to termination (the “Severance Payment”);

 

(ii)                                  the Accrued Obligations, payable in a lump sum on the next regularly scheduled payroll date following the date on which Executive’s employment terminated;

 

(iii)                               COBRA continuation coverage paid in full by the Company, so long as Executive has not become actually covered by the medical plan of a subsequent employer during any such month and is otherwise entitled to COBRA continuation coverage, with such payments for a maximum of 9 months following the date of termination.  After such period, Executive is responsible for paying the full cost for any additional COBRA continuation coverage to which Executive is then entitled.  If the Company’s payment of the COBRA premiums on the Executive’s behalf would violate the nondiscrimination rules or cause the reimbursement of claims to be taxable under the Patient Protection and Affordable Care Act of 2010, together with the Health Care and Education Reconciliation Act of 2010 (collectively, the “Act”) or Section 105(h) of the Code, the Company paid premiums shall be treated as taxable payments and be subject to imputed income tax treatment to the extent necessary to eliminate any discriminatory treatment or taxation under the Act or Section 105(h) of the Code;

 

(iv)                              accelerated prorated vesting of Executive’s then unvested equity-based awards that vest based solely on continued employment or service with the Company (the “Time-Based Equity Awards”).  The unvested portion of Time-Based Equity Awards to be accelerated as of the date of an event described in this Section 4.3 shall be determined as follows upon the occurrence of such event:  If the vested portion of Time-Based Equity Awards otherwise would be determined in increments of one year or greater, then the portion of the Time-Based Equity Awards that would vest on the next vesting date following the termination date had the Executive remained employed with the Company will vest.  For example, if the Executive’s Time-Based Equity Awards ordinarily vest in four equal annual installments and that Executive is subject to an event described in Section 4.3 after completing one and one-half years of service from the vesting commencement date, Executive would be vested in fifty (50%) of the Time-Based Equity Awards;

 

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(v)                                 Any Time-Based Equity Awards that are eligible to vest pursuant to this Section shall vest based upon the date the general release and waiver of all claims against the Company substantially the form attached hereto as Appendix B becomes effective.  Any Time-Based Equity Awards that vest pursuant to this Section 4.3 shall be promptly settled within (30) days following the date of vesting but in no event later than March 15 of the calendar year following the calendar year in which the later of the vesting event or your termination of Employment occurs; and

 

(vi)                              an extension of the time period during which Executive may exercise Executive’s then outstanding stock options, to the extent vested on the date of termination (taking into account the accelerated vesting provided in this Section 4.3(a)), until the earlier of (A) ninety (90) days from the date of termination, but excluding any stock trading blackout days, and (B) the latest date upon which such stock options would have expired by their original terms under any circumstances.

 

(b)                                 As a condition to receiving the payments and benefits under this Section 4.3 other than the Accrued Obligations, Executive shall execute (and not revoke within the applicable revocation period) a general release and waiver of all claims against the Company, which release and waiver shall be in a form acceptable to the Company, and in substantially the form attached hereto as Appendix B.  Such release and waiver shall be delivered to the Company no later than the date specified by the Company (which date shall in no event be later than twenty-one (21) days or forty-five (45) days, as applicable, after the date on which Executive is presented with the terms of the release and waiver).  In addition, payment of the amounts and benefits under this Section 4.3 are contingent on Executive’s full and continued compliance with the Company’s Confidential Information, Nonsolicitation and Noncompetition Agreement, as the same may be amended from time to time.

 

(c)                                  Notwithstanding the foregoing, termination of employment by Executive will not be for Good Reason unless (1) Executive notifies the Company in writing of the existence of the condition which Executive believes constitutes Good Reason within ninety (90) days of the initial existence of such condition (which notice specifically identifies such condition), (2) the Company fails to remedy such condition within thirty (30) days after the date on which it receives such notice (the “Remedial Period”), and (3) Executive actually terminates employment within one year following the initial existence of the Good Reason condition.  If Executive terminates employment before the expiration of the Remedial Period, then Executive’s termination will not be considered to be for Good Reason.

 

(d)                                 Subject to Section 4.3(b), Severance Payments under Section 4.3(a)(i) shall be paid to Executive through the Company’s normally scheduled payroll in a lump sum within sixty (60) days following the date on which Executive’s employment was terminated without Cause or Executive resigned for Good Reason; provided, however, that in the event such sixty (60) day period begins in one taxable year of Executive and ends in a second taxable year of Executive, the Company shall not make any Severance Payments to Executive until the second taxable year and any missed installment payment(s) shall be made together with the first permitted installment payment of severance pay hereunder (without interest). Each such payment

 

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shall be treated as a separate payment for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), including the rules and regulations thereunder (“Code Section 409A”).  Notwithstanding the foregoing, if any payments and benefits payable pursuant to Section 4.3(a) constitute a “deferral of compensation” subject to Code Section 409A (after taking into account, to the maximum extent possible, any applicable exemptions), then the applicable provisions of Section 14 hereof shall apply.

 

4.4                               Termination of Employment in Connection with a Change of Control

 

4.4.1                     Benefits for Qualified Terminations in Connection with a Change of Control

 

(a)                                 If (1) during the period commencing on the date the Company enters into a definitive agreement with respect to a transaction that would constitute a Change of Control (as defined in Appendix A) and ending on the date the Change of Control is consummated pursuant to such definitive agreement, the Company terminates Executive’s employment without Cause (as defined in Appendix A), (2) during the period commencing upon the consummation of the Change of Control and ending twenty-four (24) months thereafter, the Company or, if applicable, the surviving or successor employer (“Successor Employer”) terminates Executive’s employment without Cause (as defined in Appendix A), or (3) during the period commencing upon the consummation of the Change of Control and ending twenty-four (24) months thereafter, Executive resigns for Good Reason (as defined in Appendix A), then Executive shall be entitled to receive the following termination payments and benefits and shall not also be eligible to receive the payments and benefits under Section 4.3:

 

(i)                                     an amount equal to (A) one (1) times the Executive’s Annual Salary at the rate in effect immediately prior to termination, plus (B) the average amount of the annual bonus paid to the Executive over the course of the immediately preceding fiscal years, up to a maximum of three (3) years, plus (C) prorated bonus for the year of termination, all payable to Executive in accordance with the terms below (“CIC Severance Payment”);

 

(ii)                                  Accrued Obligations, payable in a lump sum on the next regularly scheduled payroll date following the date on which Executive’s employment terminated;

 

(iii)                               COBRA continuation coverage paid in full by the Company, so long as Executive has not become actually covered by the medical plan of a subsequent employer during any such month and is otherwise entitled to COBRA continuation coverage, with such payments for a maximum of 9 months following the date of termination.  After such period, Executive is responsible for paying the full cost for any additional COBRA continuation coverage to which Executive is then entitled.  If the Company’s payment of the COBRA premiums on the Executive’s behalf would violate the nondiscrimination rules or cause the reimbursement of claims to be taxable under the Act or Section 105(h) of the Code, the Company paid premiums shall be treated as taxable payments and be

 

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subject to imputed income tax treatment to the extent necessary to eliminate any discriminatory treatment or taxation under the Act or Section 105(h) of the Code

 

(iv)                              accelerated vesting of Executive’s then unvested Time-Based Equity Awards;

 

(v)                                 Any Time-Based Equity Awards that are eligible to vest pursuant to this Section shall vest based upon the date the general release and waiver of all claims against the Company substantially the form attached hereto as Appendix B becomes effective.  Any Time-Based Equity Awards that vest pursuant to this Section 4.4.1 shall be promptly settled within (30) days following the date of vesting but in no event later than March 15 of the calendar year following the calendar year in which the later of the vesting event or your termination of Employment occurs; and

 

(vi)                              an extension of the time period during which Executive may exercise Executive’s then outstanding stock options, to the extent vested on the date of termination (taking into account the accelerated vesting provided in this Section 4.4.1), until the earlier of (A) one (1) year from the date of termination and (B) the latest date upon which such stock options would have expired by their original terms under any circumstances.

 

(b)                                 As a condition to receiving the payments and benefits under this Section 4.4.1 other than the Accrued Obligations, Executive shall execute (and not revoke within the applicable revocation period) a general release and waiver of all claims against the Company, which release and waiver shall be in a form acceptable to the Company (including any Successor Employer thereto), and in substantially the form attached hereto as Appendix B.  Such release and waiver shall be delivered to the Company (or any Successor Employer thereto) no later than the date specified by the Company (or any Successor Employer thereto) (which date shall in no event be later than twenty-one (21) days or forty-five (45) days, as applicable, after the date on which Executive is presented with the terms of the release and waiver).  In addition, payment of the amounts and benefits under this Section 4.4.1 are contingent on Executive’s full and continued compliance with the Company’s Confidential Information, Nonsolicitation and Noncompetition Agreement, as the same may be amended from time to time

 

(c)                                  Subject to Section 4.4.1(b), the CIC Severance Payments under Section 4.4.1(a) shall be paid to Executive through the Company’s (or the Successor Employer’s) normally scheduled payroll in a lump sum within sixty (60) days following the date on which Executive’s employment was terminated without Cause or Executive resigned for Good Reason; provided, however, that in the event such sixty (60) day period begins in one taxable year of Executive and ends in a second taxable year of Executive, the Company will not make any CIC Severance Payments to Executive until the second taxable year.  Each such payment shall be treated as a separate payment for purposes of Code Section 409A.  Notwithstanding the foregoing, if any payments and benefits payable pursuant to Section 4.4.1(a) constitute a “deferral of compensation” subject to Code Section 409A (after taking into account, to the maximum extent possible, any applicable exemptions), then the applicable provisions of Section 14 hereof shall apply.

 

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4.4.2                     Code Section 280G

 

(a)                                 Notwithstanding anything in this Agreement to the contrary, in the event that Executive becomes entitled to receive or receives any payment or benefit under this Agreement or under any other plan, agreement or arrangement with the Company, any person whose actions result in a Change of Control or any other person affiliated with the Company or such person (all such payments and benefits being referred to herein as the “Total Payments”) and it is determined that any of the Total Payments will be subject to any excise tax pursuant to Code Section 4999, or any similar or successor provision (the “Excise Tax”), the Company shall pay to Executive either (1) the full amount of the Total Payments or (2) an amount equal to the Total Payments, reduced by the minimum amount necessary to prevent any portion of the Total Payments from being an “excess parachute payment” (within the meaning of Code Section 280G) (the “Capped Payments”), whichever of the foregoing amounts results in the receipt by Executive, on an after-tax basis, of the greatest amount of Total Payments notwithstanding that all or some portion of the Total Payments may be subject to the Excise Tax.  For purposes of determining whether Executive would receive a greater after-tax benefit from the Capped Payments than from receipt of the full amount of the Total Payments, (i) there shall be taken into account any Excise Tax and all applicable federal, state and local taxes required to be paid by Executive in respect of the receipt of such payments and (ii) such payments shall be deemed to be subject to federal income taxes at the highest rate of federal income taxation applicable to individuals that is in effect for the calendar year in which the effective date of the Change of Control occurs, and state and local income taxes at the highest rate of taxation applicable to individuals in the state and locality of Executive’s residence on the effective date of the Change of Control, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes (as determined by assuming that such deduction is subject to the maximum limitation applicable to itemized deductions under Code Section 68 and any other limitations applicable to the deduction of state and local income taxes under the Code).

 

(b)                                 All computations and determinations called for by this Section 4.4.2 shall be made by a reputable independent public accounting firm or independent tax counsel appointed by the Company (the “Firm”).  All determinations made by the Firm under this Section 4.4.2 shall be conclusive and binding on both the Company and Executive, and the Firm shall provide its determinations and any supporting calculations to the Company and Executive within ten (10) business days after Executive’s employment terminates under any of the circumstances described in Section 4.4.1, or such earlier time as is requested by the Company.  For purposes of making its determinations under this Section 4.4.2, the Firm may rely on reasonable, good faith interpretations concerning the application of Code Sections 280G and 4999.  The Company and Executive shall furnish to the Firm such information and documents as the Firm may reasonably request in making its determinations.  The Company shall bear all fees and expenses charged by the Firm in connection with its services.

 

(c)                                  In the event that Section 4.4.2(a) applies and a reduction is required to be applied to the Total Payments thereunder, the Total Payments shall be reduced by the Company in its reasonable discretion in the following order:  (1) reduction of any Total Payments that are subject to Code Section 409A on a pro-rata basis or such other manner that complies with Code Section 409A, as determined by the Company, and (2) reduction of any Total Payments that are exempt from Code Section 409A.

 

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4.5                               Voluntary Termination by Executive Other Than for Good Reason

 

Upon the voluntary resignation or retirement of Executive, the Executive shall receive the Accrued Obligations.

 

4.6                               No Mitigation; No Offset.

 

The Company and Executive acknowledge and agree that there is no duty of Executive to mitigate damages under this Agreement, and there shall be no offset against any amounts due to Executive under this Agreement on account of any remuneration attributable to any subsequent employment that Executive may obtain.  All amounts paid to the Executive pursuant to Section 4 shall be paid without regard to whether Executive has taken or takes actions to mitigate damages and, subject to all applicable laws and regulations, shall not be subject to setoff, counterclaim, recoupment, defense or other right which the Company may have against Executive or others.

 

5.                                      COVENANTS OF THE EXECUTIVE.

 

The Executive acknowledges that in the course of his employment with the Company he has and will become familiar with the Company’s trade secrets and with other confidential information concerning the Company, and that his services are of special, unique and extraordinary value to the Company.  Therefore, the Company and the Executive mutually agree that it is in the interest of both parties for the Executive to enter into the restrictive covenants set forth in this Section 5 and that such restrictions and covenants are reasonable given the nature of the Executive’s duties and the nature of the Company’s business.

 

(a)                                 Noncompetition.  During the Employment Term and for the period (“Restricted Period”), that is the greater of (A) one (1) year following termination of the Employment Term, and (2) the equivalent years of Salary payable to Executive as severance under this Agreement, the Executive shall not, within ten (10) miles of any location in which, as of the last day of the Employment Term, the Company owns Assets, directly or indirectly, own, manage, operate, control, or participate in the ownership, management, operation or control of any Business, provided that the Executive’s ownership of securities of two percent (2%) or less of any class of securities of a public company shall not, by itself, be considered to be competition with the Company or any Affiliate.  For purposes of this Agreement, “Business” shall mean the ownership of oil and/or gas assets, and “Assets” means the Company’s oil and/or gas assets.

 

(b)                                 Nonsolicitation.  During the Employment Term and for the Restricted Period following termination of the Employment Term, the Executive shall not, directly or indirectly, and any entity to which Executive is providing services shall not, directly or indirectly, (i) employ, solicit for employment or otherwise contract for the services of any individual who is or was an employee of the Company; (ii) otherwise induce or attempt to induce any employee of the Company to leave the employ of the Company, or in any way interfere with the relationship between the Company any employee respectively thereof; or (iii) induce or attempt to induce any customer, supplier, licensee or other business relation of the Company or any Affiliate to cease doing business with the Company, or interfere in any way with the

 

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relationship between any such customer, supplier, licensee or business relation and the Company.

 

(c)                                  Nondisclosure.  For the Employment Term and thereafter, (i) the Executive shall not divulge, transmit or otherwise disclose (except as legally compelled by court order, and then only to the extent required, after prompt notice to the Board of any such order), directly or indirectly, other than in the regular and proper course of business of the Company, any trade secrets or other confidential knowledge or information with respect to the operations or finances of the Company or any Affiliates or with respect to confidential or secret processes, services, techniques, customers or plans with respect to the Company (all of the foregoing collectively hereinafter referred to as, “Confidential Information”), and (ii) the Executive will not use, directly or indirectly, any Confidential Information for the benefit of anyone other than the Company; provided, however, that the Executive has no obligation, express or implied, to refrain from using or disclosing to others any such knowledge or information which is or hereafter shall become available to the general public other than through disclosure by the Executive.  All Confidential Information, new processes, techniques, know-how, methods, inventions, plans, products, patents and devices developed, made or invented by the Executive, alone or with others, while an employee of the Company which are related to the business of the Company and the Affiliates shall be and become the sole property of the Company, unless released in writing by the Board, and the Executive hereby assigns any and all rights therein or thereto to the Company.

 

(d)                                 Nondisparagement.  The Executive shall not take any action to disparage or criticize the Company or its respective employees, directors, owners or customers or to engage in any other action that injures or hinders the business relationships of the Company.  The Company shall not take any action to disparage or criticize the Executive or to engage in any other action that injures the Executive’s business reputation.  Nothing contained in this Section 5(d) shall preclude the Executive or the Company from enforcing his or its rights under this Agreement.

 

(e)                                  Return of Company Property.  All Confidential Information, files, records, correspondence, memoranda, notes or other documents (including, without limitation, those in computer-readable form) or property relating or belonging to the Company, whether prepared by the Executive or otherwise coming into his possession in the course of the performance of his services under this Agreement, shall be the exclusive property of the Company and shall be delivered to the Company, and not retained by the Executive (including, without limitations, any copies thereof), promptly upon request by the Company and, in any event, promptly upon termination of the Employment Term.

 

(f)                                   Enforcement.  The Executive acknowledges that a breach of his covenants contained in this Section 5 may cause irreparable damage to the Company, the exact amount of which would be difficult to ascertain, and that the remedies at law for any such breach or threatened breach would be inadequate.  Accordingly, the Executive agrees that if he breaches or threatens to breach any of the covenants contained in this Section 5, in addition to any other remedy which may be available at law or in equity, the Company shall be entitled to specific performance and injunctive relief to prevent the breach or any threatened breach thereof without bond or other security or a showing that monetary damages will not provide an adequate remedy.

 

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(g)                                  Scope of Covenants.  The Company and the Executive further acknowledge that the time, scope, geographic area and other provisions of this Section 5 have been specifically negotiated by sophisticated commercial parties and agree that all such provisions are reasonable under the circumstances of the activities contemplated by this Agreement.  In the event that the agreements in this Section 5 shall be determined by any court of competent jurisdiction to be unenforceable by reason of their extending for too great a period of time or over too great a geographical area or by reason of their being too extensive in any other respect, they shall be interpreted to extend only over the maximum period of time for which they may be enforceable and/or over the maximum geographical area as to which they may be enforceable and/or to the maximum extent in all other respects as to which they may be enforceable, all as determined by such court in such action.

 

6.                                      ASSIGNMENT

 

This Agreement is personal to Executive and shall not be assignable by Executive.  The Company may assign its rights hereunder to (a) any Successor Employer; (b) any other corporation resulting from any merger, consolidation or other reorganization to which the Company is a party; (c) any other corporation, partnership, association or other person to which the Company may transfer all or substantially all of the assets and business of the Company existing at such time; or (d) any subsidiary, parent or other affiliate of the Company.  All of the terms and provisions of this Agreement shall be binding upon and shall inure to the benefit of and be enforceable by the parties hereto and their respective successors and permitted assigns.

 

7.                                      AMENDMENTS IN WRITING

 

No amendment, modification, waiver, termination or discharge of any provision of this Agreement, or consent to any departure therefrom by either party hereto, shall in any event be effective unless the same shall be in writing, specifically identifying this Agreement and the provision intended to be amended, modified, waived, terminated or discharged and signed by the Company and Executive, and each such amendment, modification, waiver, termination or discharge shall be effective only in the specific instance and for the specific purpose for which given.  No provision of this Agreement shall be varied, contradicted or explained by any oral agreement, course of dealing or performance or any other matter not set forth in an agreement in writing and signed by the Company and Executive.

 

8.                                      NOTICES

 

Every notice relating to this Agreement shall be in writing and shall be given by personal delivery, by a reputable same-day or overnight courier service (charges prepaid), by registered or certified mail (postage prepaid, return receipt requested) or by facsimile to the recipient with a confirmation copy to follow the next day to be delivered by personal delivery or by a reputable same-day or overnight courier service to the appropriate party’s address or fax number below (or such other address and fax number as a party may designate by notice to the other parties):

 

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If   to the Company:
    	
Warren   Resources, Inc.
    
	
 
    	
1114   Avenue of the Americas
    
	
 
    	
34th Floor
    
	
 
    	
New   York, NY 10013
    
	
 
    	
Fax   Number: (212) 697-9466
    
	
 
    	
Attn:   Chief Executive Officer
    
	
 
    	
 
    
	
If   to the Executive:
    	
Last   known address on record at the Company
    

 

9.                                      APPLICABLE LAW

 

This Agreement shall in all respects, including all matters of construction, validity and performance, be governed by, and construed and enforced in accordance with, the laws of the State of New York, without regard to any rules governing conflicts of laws.

 

10.                               INDEMNIFICATION AND INSURANCE.

 

The Company shall provide Executive with indemnification and advancement of expenses to the fullest extent permitted by applicable law and the Company’s By-laws and other organization documents as they may be amended from time to time.  Without limiting the foregoing, the Company shall also provide Executive with directors and officers liability insurance coverage and other liability insurance coverage at levels and on terms reasonable and customary for companies of comparable size and profile and on terms and at rates no less favorable than those provided to other officers or directors of the Company.

 

11.                               ENTIRE AGREEMENT

 

This Agreement, on and as of the Effective Date, constitutes the entire agreement between the Company and Executive with respect to the subject matter hereof, and all prior or contemporaneous oral or written communications, understandings or agreements between the Company and Executive with respect to such subject matter are hereby superseded in their entirety, except as otherwise provided herein.

 

12.                               SEVERABILITY

 

If any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or any action in any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

 

13.                               WAIVERS

 

No delay or failure by any party hereto in exercising, protecting, or enforcing any of its rights, titles, interests, or remedies hereunder, and no course of dealing or performance with respect thereto, shall constitute a waiver thereof.  The express waiver by a party hereto of any

 

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right, title, interest, or remedy in a particular instance or circumstance shall not constitute a waiver thereof in any other instance or circumstance.  All rights and remedies shall be cumulative and not exclusive of any other rights or remedies.

 

14.                               HEADINGS

 

All headings used herein are for convenience only and shall not in any way affect the construction of, or be taken into consideration in interpreting, this Agreement.

 

15.                               COUNTERPARTS

 

This Agreement, and any amendment or modification entered into pursuant to Section 5 hereof, may be executed in any number of counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute one and the same instrument.

 

16.                               CODE SECTION 409A

 

The Company makes no representations or warranties to Executive with respect to any tax, economic or legal consequences of this Agreement or any payments or other benefits provided hereunder, including without limitation under Code Section 409A, and no provision of this Agreement shall be interpreted or construed to transfer any liability for failure to comply with Code Section 409A from Executive or any other individual to the Company or any of its affiliates.  Executive, by executing this Agreement, shall be deemed to have waived any claim against the Company and its affiliates with respect to any such tax, economic or legal consequences.  However, the parties intend that this Agreement and the payments and benefits provided hereunder be exempt from the requirements of Code Section 409A, and the rules and regulations issued thereunder, to the maximum extent possible, whether pursuant to the short-term deferral exception described in Treasury Regulation Section 1.409A-1(b)(4), the involuntary separation pay plan exception described in Treasury Regulation Section 1.409A-1(b)(9)(iii), or otherwise.  To the extent Code Section 409A is applicable to this Agreement, the parties intend that this Agreement and any payments and benefits hereunder comply with the deferral, payout and other limitations and restrictions imposed under Code Section 409A so as to avoid the imputation of any tax, penalty or interest under Code Section 409A.  Notwithstanding anything herein to the contrary, this Agreement shall be construed, interpreted, operated and administered in a manner consistent with such intentions.  Without limiting the generality of the foregoing, and notwithstanding any other provision of this Agreement to the contrary:

 

(a)                                 To the extent Code Section 409A is applicable to this Agreement, a termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of amounts or benefits upon or following a termination of employment unless such termination constitutes a “separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h)(1), without regard to the optional alternative definitions available thereunder (a “Separation from Service”), and, for purposes of any such provision of this Agreement, references to “terminate,” “termination,” “termination of employment,” “resigns” and like terms shall mean Separation from Service.

 

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(b)                                 If Executive is a “specified employee” within the meaning of Treasury Regulation Section 1.409A-1(i) as of the date of Executive’s Separation from Service, Executive shall not be entitled to any payment or benefit on account of Executive’s Separation from Service, until the earlier of (1) the date which is six (6) months after Executive’s Separation from Service for any reason other than death or (2) the date of Executive’s death.  The provisions of this paragraph shall only apply if, and to the extent, required to avoid the imputation of any tax, penalty or interest pursuant to Code Section 409A on Executive.  Any amounts otherwise payable to Executive upon or in the six (6) month period following Executive’s Separation from Service that are not so paid by reason of this Section 15(b) shall be paid (without interest) as soon as practicable (and in all events within thirty (30) days) after the date that is six (6) months after Executive’s Separation from Service (or, if earlier, as soon as practicable, and in all events within thirty (30) days, after the date of Executive’s death).

 

IN WITNESS WHEREOF, the parties have executed and entered into this Agreement effective on the date first set forth above.

 

	
 
    	
EXECUTIVE
    
	
 
    	
 
    
	
 
    	
 
    	
/s/ David E. Fleming
    
	
 
    	
David   E. Fleming
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WARREN   RESOURCES, INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Philip A. Epstein
    
	
 
    	
Philip   A. Epstein
    
	
 
    	
Chairman   and Chief Executive Officer
    

 

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APPENDIX A

 

DEFINITIONS

 

Capitalized terms used below that are not defined in this Appendix A have the meanings set forth in the Executive Employment Agreement (“Agreement”) to which this Appendix A is attached.  As used in the Agreement,

 

1.                                      “Cause” means the occurrence of one or more of the following events:

 

(a)                                 willful misconduct, insubordination or dishonesty in the performance of Executive’s duties or a knowing and material violation of the Company’s or the Successor Employer’s policies and procedures in effect from time to time which results in a material adverse effect on the Company or the Successor Employer;

 

(b)                                 the continued failure of Executive to satisfactorily perform his duties after receipt of written notice that identifies the areas in which Executive’s performance is deficient;

 

(c)                                  willful actions in bad faith or intentional failures to act in good faith by Executive with respect to the Company or the Successor Employer that materially impair the Company’s or the Successor Employer’s business, goodwill or reputation;

 

(d)                                 conviction of Executive of a felony or misdemeanor involving moral turpitude, conduct by Executive that the Company reasonably believes violates any statute, rule or regulation governing the Company, or conduct by Executive that the Company reasonably believes constitutes unethical practices, dishonesty or disloyalty and that results in a material adverse effect on the Company or the Successor Employer;

 

(e)                                  current use by Executive of illegal substances; or

 

(f)                                   any material violation by Executive of this Agreement or the Company’s Confidential Information, Nonsolicitation and Noncompetition Agreement.

 

2.                                      “Change of Control” means the occurrence of any of the following events:

 

(a)                                 an acquisition by any Entity of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than 50% of 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”); provided, however, that the following acquisitions shall not constitute a Change of Control:  (i) any acquisition directly from the Company, other than an acquisition by virtue of the exercise of a conversion privilege where the security being so converted was not acquired directly from the Company by the party exercising the conversion privilege, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Related Company, or (iv) any acquisition by any Entity pursuant to a transaction that meets the conditions of clauses (i), (ii) and (iii) set forth in the definition of Company Transaction;

 

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(b)                                 a change in the composition of the Board of Directors of the Company during any two-year period such that the individuals who, as of the beginning of such two-year period, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that for purposes of this definition, any individual who becomes a member of the Board subsequent to the beginning of the two-year period, whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of those individuals who are members of the Board and who were also members of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though such individual were a member of the Incumbent Board; and provided further, however, that any such individual whose initial assumption of office occurs as a result of or in connection with 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 an Entity other than the Board shall not be considered a member of the Incumbent Board; or

 

(c)                                  the date a majority of members of the corporation’s board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the corporation’s board of directors before the date of the appointment or election,

 

(d)                                 the consummation of a Company Transaction.

 

3.                                      “Company Transaction” means consummation of:

 

(a)                                 a merger or consolidation of the Company with or into any other company;

 

(b)                                 a statutory share exchange pursuant to which all of the Company’s outstanding shares are acquired or a sale in one transaction or a series of transactions undertaken with a common purpose of all of the Company’s outstanding voting securities; or

 

(c)                                  a sale, lease, exchange or other transfer in one transaction or a series of related transactions undertaken with a common purpose of all or substantially all of the Company’s assets, excluding, however, in each case, any such transaction pursuant to which (i) the Entities who are the beneficial owners of the Outstanding Company Voting Securities immediately prior to such transaction will beneficially own, directly or indirectly, at least 50% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the Successor Company in substantially the same proportions as their ownership, immediately prior to such transaction, of the Outstanding Company Voting Securities;

 

(ii)                                  no Entity (other than the Company, any employee benefit plan (or related trust) of the Company, a Related Company or a Successor Company) will beneficially own, directly or indirectly, more than 50% of the combined voting power of the outstanding voting securities of the Successor Company entitled to vote generally in the election of directors unless such ownership resulted solely from ownership of securities of the Company prior to such transaction; and

 

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(iii)                               individuals who were members of the Incumbent Board will immediately after the consummation of such transaction constitute at least a majority of the members of the board of directors of the Successor Company.

 

Where a series of transactions undertaken with a common purpose is deemed to be a Company Transaction, the date of such Company Transaction shall be the date on which the last of such transactions is consummated.

 

4.                                      “Effective Date” shall be the first date written above.

 

5.                                      “Entity” means any individual, entity or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act).

 

6.                                      “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

7.                                      “Good Reason” means that Executive, without Executive’s express, written consent, has:

 

(a)                                 incurred a material reduction in authority, duties or responsibilities at the Company or a Successor Employer (with respect to a termination in connection with a Change of Control, relative to authority, duties or responsibilities immediately prior to the Change of Control);

 

(b)                                 incurred a material reduction in Executive’s annual Salary or bonus opportunity (except for reductions in connection with a general reduction in annual Salary for all executives of the Company by an average percentage that is not less than the percentage reduction of Executive’s annual Salary);

 

(c)                                  a material diminution in the authority, duties, or responsibilities of the supervisor to whom the Executive is required to report

 

(d)                                 a material diminution in the budget over which the Executive retains authority;

 

(e)                                  suffered a material breach of this Agreement by the Company or a Successor Employer; or

 

(f)                                   been required to relocate or travel more than 50 miles from Executive’s then current place of employment in order to continue to perform the duties and responsibilities of Executive’s position (not including customary travel as may be required by the nature of Executive’s position).

 

8.                                      “Parent Company” means a company or other entity which as a result of a Company Transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more intermediaries.

 

9.                                      “Related Company” means any entity that is directly or indirectly controlled by, in control of or under common control with the Company.

 

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10.                               “Successor Company” means the surviving company, the successor company or Parent Company, as applicable, in connection with a Company Transaction.

 

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APPENDIX B

 

FORM OF RELEASE

 

In consideration for the payments and benefits to be provided pursuant to Section 4 of the Executive Employment Agreement (“Agreement”) entered into by and between David E. Fleming (“Executive”) and Warren Resources, Inc., a Maryland corporation (the “Company”), with an effective date of July 15, 2013, Executive agrees to the following:

 

(a)                                 Executive represents that Executive has not filed any complaints, charges or lawsuits against the Company with any governmental agency or any court.

 

(b)                                 Executive expressly waives all claims against the Company and releases the Company, and any of the Company’s past, present or future parent, affiliated, related, and/or subsidiary entities, and all of the past and present directors, shareholders, officers, general or limited partners, employees, agents, and attorneys, and agents and representatives of such entities, and employee benefit plans in which Executive is or has been a participant by virtue of his or her employment with the Company (collectively, the “Releasees”), from any claims that Executive may have against the Company or the Releasees.  It is understood that this release includes, but is not limited to, any claims arising directly or indirectly out of, relating to, or in any other way involving in any manner whatsoever, (1) Executive’s employment with the Company or its subsidiaries or the termination thereof or (2) Executive’s status at any time as a holder of any securities of the Company, including any claims for wages, stock or stock options, employment benefits or damages of any kind whatsoever arising out of any contracts, express or implied, any covenant of good faith and fair dealing, express or implied, any legal restriction on the Company’s right to terminate employment, or any federal, state or other governmental statute or ordinance, including, without limitation, the Employee Retirement Income Security Act of 1974, Title VII of the Civil Rights Act of 1964, the federal Age Discrimination in Employment Act, the Americans With Disabilities Act, the Family and Medical Leave Act, the Lilly Ledbetter Fair Pay Act, the Genetic Information Non-Discrimination Act, the New York Human Rights Law, the New York City Human Rights Law, all as amended, and any other federal, state or local law (the “Release”).  This Release specifically includes, but is not limited to, any claims based upon the right to the payment of wages, incentive and performance compensation, bonuses, vacation, stock benefits or any other employee benefits, or any other rights arising under federal, state or local laws prohibiting discrimination and/or harassment on the basis of race, color, age, religion, sexual orientation, religious creed, sex, national origin, ancestry, alienage, citizenship, nationality, mental or physical disability, denial of family and medical care leave, medical condition (including cancer and genetic characteristics), marital status, military status, gender identity, harassment or any other basis prohibited by law provided, however, notwithstanding anything to the contrary set forth herein, that this Release shall not extend to (i) benefit claims under employee pension benefit plans in which Executive is a participant by virtue of Executive’s employment with the Company or its subsidiaries or to benefit claims under employee welfare benefit plans for occurrences (e.g., medical care, death, or onset of disability) arising after the execution of this Release by Executive, (ii) Executive’s rights to severance pay and benefits under the Agreement; (iii) any claims Executive may have for indemnification pursuant to law, contract or Company policy, (iv) any claims for coverage under any applicable

 

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directors’ and officers’ insurance policy in accordance with the terms of such policy, or (v) any claims arising from events that occur after the date Executive signs this Release.

 

Executive understands that this Release includes a release of claims arising under the Age Discrimination in Employment Act (ADEA).  Executive understands and warrants that Executive has been given a period of twenty-one (21) days to review and consider this Release or forty-five (45) days if Executive’s termination is part of a group reduction in force.  Executive further warrants that Executive understands that, with respect to the release of age discrimination claims only, Executive has a period of seven days (7) after execution of this Release to revoke the release of age discrimination claims by notice in writing to the Company.

 

EXECUTIVE ACKNOWLEDGES ALL OF THE FOLLOWING:

 

(A)                               I HAVE CAREFULLY READ AND HAVE VOLUNTARILY SIGNED THIS RELEASE;

 

(B)                               I FULLY UNDERSTAND THE FINAL AND BINDING EFFECT OF THIS RELEASE, INCLUDING THE WAIVER OF CLAIMS UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT; AND

 

(C)                               PRIOR TO SIGNING THIS RELEASE, I HAVE BEEN ADVISED OF MY RIGHT TO CONSULT, AND HAVE BEEN GIVEN ADEQUATE TIME TO REVIEW MY LEGAL RIGHTS WITH AN ATTORNEY OF MY CHOICE.

 

	
 
    	
 
    
	
Executive   Signature
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Executive   Name (Print)
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Date
    	
 
    

 

20Exhibit 4.2

 

REGISTRATION RIGHTS AGREEMENT

 

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is dated July 24, 2013 (the “Effective Date”) and is by and among WCI Communities, Inc., a Delaware corporation (the “Company”), Monarch Debt Recovery Master Fund Ltd, a company organized under the laws of the Cayman Islands, Monarch Master Funding Ltd, a company organized under the laws of the Cayman Islands, Monarch Opportunities Master Fund Ltd, a company organized under the laws of the Cayman Islands, Monarch Income Master Fund Ltd, a company organized under the laws of the Cayman Islands, Monarch Capital Master Partners LP, a limited partnership organized under the laws of the Cayman Islands, Monarch Alternative Solutions Master Fund LTD, a company organized under the laws of the Cayman Islands, Monarch Capital Master Partners II LP, a limited partnership organized under the laws of the Cayman Islands, Monarch Capital Master Partners II-A LP, a limited partnership organized under the laws of the Cayman Islands, Monarch Cayman Fund Limited, a company organized under the laws of the Cayman Islands, Oakford MF Limited, a company organized under the laws of the Cayman Islands, and P Monarch Recovery LTD, a company organized under the laws of the British Virgin Islands, (collectively, the “Monarch Stockholders”), and Stonehill Institutional Partners, L.P., a Delaware limited partnership (the “Stonehill Stockholder”).

 

RECITALS

 

WHEREAS, the Company is currently contemplating an underwritten initial public offering (“IPO”) of shares of its Common Stock (as defined below); and

 

WHEREAS, the Company desires to grant registration rights to the Monarch Stockholders and the Stonehill Stockholder on the terms and conditions set out in this Agreement.

 

NOW, THEREFORE, the parties agree as follows:

 

ARTICLE I.

 

DEFINITIONS

 

SECTION 1.1.                                          Certain Definitions.  As used in this Agreement:

 

“Affiliate” has the meaning ascribed thereto in Rule 12b-2 promulgated under the Exchange Act, as in effect on the date hereof.

 

“Agreement” has the meaning set forth in the preamble.

 

“Blackout Period” has the meaning set forth in Section 2.3(g).

 

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

 

“Business Day” means a day other than a Saturday, Sunday, federal or New York State holiday or other day on which commercial banks in New York City are authorized or required by Law to close.

 

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“Company” has the meaning set forth in the preamble.

 

“Common Stock” means the shares of common stock, par value $0.01 per share, of the Company, and any other capital stock of the Company into which such stock is reclassified or reconstituted.

 

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

 

“Demand Party” has the meaning set forth in Section 2.1(a).

 

“Effective Date” has the meaning set forth in the preamble.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, as the same may be amended from time to time.

 

“FINRA” means the Financial Industry Regulatory Authority.

 

“Free Writing Prospectus” has the meaning set forth in Section 2.4(c).

 

“Governmental Authority” means any nation or government, any state or other political subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

 

“Holder” means the Stonehill Stockholder and each of the Monarch Stockholders that is a holder of Registrable Securities or any Transferee of such Person to whom the rights and obligations under this Agreement are assigned in accordance with Section 4.2 hereof.

 

“IPO” has the meaning set forth in the recitals.

 

“Law” means any statute, law, regulation, ordinance, rule, injunction, order, decree, governmental approval, directive, requirement, or other governmental restriction or any similar form of decision of, or determination by, or any interpretation or administration of any of the foregoing by, any Governmental Authority.

 

“Lockup Period” means the period for which each Holder has agreed to be bound by restrictions on the sale, disposition, hedging or other transfer of interests in Registrable Securities in connection with the IPO or, subject to and in accordance with Section 2.5(e) of this Agreement (including with respect to any waivers or consents thereunder), any subsequent offering of Common Stock.

 

“Loss” has the meaning set forth in Section 3.1.

 

“Monarch Stockholders” has the meaning set forth in the preamble, and shall include their Transferees who are Affiliates and have become stockholders of the Company.

 

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“Non-Affiliate Transferee” has the meaning set forth in Section 4.2.

 

“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.

 

“Registrable Securities” means (i) all shares of Common Stock beneficially owned by the Monarch Stockholders and Stonehill Stockholders upon consummation of or following the IPO and all shares of Common Stock beneficially owned by their Transferees who become “Holders” hereunder pursuant to Section 4.2 of this Agreement, and (ii) any shares of Common Stock issued or issuable with respect to any shares described in clause (i) above by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization (it being understood that for purposes of this Agreement, a Person shall be deemed to be a holder of Registrable Securities, whether or not such acquisition has actually been effected).  As to any Registrable Securities, such Securities will cease to be Registrable Securities when:

 

(i)                                     a registration statement covering such Registrable Securities has been declared effective and such Registrable Securities have been disposed of pursuant to such effective registration statement;

 

(ii)                                  such Registrable Securities shall have been sold pursuant to Rule 144 or 145 (or any similar provision then in effect) under the Securities Act;

 

(iii)                               such Registrable Securities cease to be outstanding; or

 

(iv)                              solely with respect to any Holder who, together with its Affiliates, holds Registrable Securities representing less than one percent of the total outstanding shares of Common Stock, such Registrable Securities may be sold pursuant to Rule 144 or 145 (or any similar provision then in effect) under the Securities Act.

 

“Registration Expenses” means any and all expenses incident to the performance by the Company of its obligations under this Agreement, including:

 

(i)                                     all SEC, stock exchange and FINRA registration and filing fees, and any other fees and expenses associated with such filings (including, if applicable, the fees and expenses of any “qualified independent underwriter,” as such term is defined in Rule 5121 of FINRA, and of its counsel);

 

(ii)                                  all fees and expenses of complying with securities or “Blue Sky” Laws (including fees and disbursements of counsel for the underwriters in connection with blue sky qualifications of the Registrable Securities);

 

(iii)                               all printing, duplicating, word processing, telephone, facsimile, messenger and delivery expenses;

 

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(iv)                              all fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange and FINRA and all rating agency fees;

 

(v)                                 all fees and disbursements of counsel for the Company and of its independent public accountants, including the expenses of any special audits and/or “cold comfort” letters required by or incident to such performance and compliance;

 

(vi)                              any fees and disbursements of underwriters customarily paid by the issuers or sellers of Securities, including liability insurance if the Company so desires or if the underwriters so require, and all fees and expenses of any special experts retained in connection with the requested registration, but excluding underwriting discounts and commissions and transfer taxes, if any;

 

(vii)                           the reasonable fees and disbursements of one legal counsel for the Holders incurred in connection with the registration (including any expenses of local counsel required by or incident to customary opinions of counsel);

 

(viii)                        the costs and expenses of the Company relating to analyst and investor presentations or any “road show” undertaken in connection with the registration and/or marketing of the Registrable Securities (including the reasonable out-of-pocket expenses of the Holders), including all travel, meals and lodging;

 

(ix)                              all of the Company’s internal expenses; and

 

(x)                                 any other fees and disbursements customarily paid by the issuers of securities.

 

“Representatives” means, with respect to any Person, any of such Person’s officers, directors, employees, agents, attorneys, accountants, actuaries, consultants, equity financing partners or financial advisors or other Person associated with, or acting on behalf of, such Person.

 

“SEC” means the Securities and Exchange Commission or any successor agency.

 

“Securities” means capital stock, limited partnership interests, limited liability company interests, beneficial interests, warrants, options, notes, bonds, debentures, and other securities, equity interests, ownership interests and similar obligations of every kind and nature of any Person.

 

“Securities Act” means the U.S. Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, as the same may be amended from time to time.

 

“Shelf Notice” has the meaning set forth in Section 2.3(a).

 

“Shelf Registration Statement” has the meaning set forth in Section 2.3(a).

 

“Shelf Takedown” has the meaning set forth in Section 2.3(d).

 

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“Stonehill Stockholder” has the meaning set forth in the preamble, and shall include its Transferees who are Affiliates and have become stockholders of the Company.

 

“Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership, association or other business entity of which: (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, representatives or trustees thereof is at the time owned or Controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof; or (ii) if a limited liability company, partnership, association or other business entity, a majority of the total voting power of stock (or equivalent ownership interest) of the limited liability company, partnership, association or other business entity is at the time owned or Controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof.  For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association or other business entity if such Person or Persons shall be allocated a majority of limited liability company, partnership, association or other business entity gains or losses or shall be or Control the managing director or general partner of such limited liability company, partnership, association or other business entity.

 

“Transfer” (including its correlative meanings, “Transferor”, “Transferee” and “Transferred”) shall mean, with respect to any security, directly or indirectly, to sell, contract to sell, give, assign, hypothecate, pledge, encumber, grant a security interest in, offer, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of any economic, voting or other rights in or to such security.  When used as a noun, “Transfer” shall have such correlative meaning as the context may require.

 

SECTION 1.2.                                          Other Definitional Provisions; Interpretation.

 

(a)                                 The words “hereof,” “herein,” and “hereunder” and words of similar import when used in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement, and references in this Agreement to a designated “Article” or “Section” refer to an Article or Section of this Agreement unless otherwise specified.

 

(b)                                 The headings in this Agreement are included for convenience of reference only and do not limit or otherwise affect the meaning or interpretation of this Agreement.

 

(c)                                  The meanings given to terms defined herein are equally applicable to both the singular and plural forms of such terms.

 

(d)                                 To the extent any period for notice provided herein lapses on a day that is not a Business Day, such notice period shall extend to the next Business Day.

 

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ARTICLE II.

 

REGISTRATION RIGHTS

 

SECTION 2.1.                                          Demand Registration.

 

(a)                                 At any time following the Effective Date, subject to any Lockup Period, upon the written request of any Holder (in such capacity, a “Demand Party”) requesting that the Company effect the registration under the Securities Act of Registrable Securities and specifying the amount and intended method of disposition thereof, the Company will (x) promptly (but in any event within five (5) days) give written notice of such requested registration to the other Holders pursuant to Section 2.2 and other holders of Securities entitled to notice of such registration, if any, and (y) as expeditiously as possible after a request for registration pursuant to this Section 2.1(a) is given to the Company, file a registration statement to effect the registration under the Securities Act of:

 

(A)                               such Registrable Securities which the Company has been so requested to register by the Demand Party in accordance with the intended method of disposition thereof;

 

(B)                               the Registrable Securities of other Holders which the Company has been requested to register by written request given to the Company within ten (10) days after the giving of such written notice by the Company pursuant to Section 2.2; and

 

(C)                               all shares of Common Stock which the Company may elect to register in connection with any offering of Registrable Securities pursuant to this Section 2.1.

 

Notwithstanding the foregoing, the Company shall not be obligated to file a registration statement relating to any registration request under this Section 2.1(a) (i) unless the aggregate offering price of the Registrable Securities to be sold in such offering is reasonably expected to be at least $20 million or (ii) within a period of sixty (60) days (or such lesser period as the managing underwriters in an underwritten offering may permit) after the effective date of any other registration statement relating to any registration request under this Section 2.1(a) or relating to any registration referred to in Section 2.3. A Demand Party can withdraw all or any portion of its Registrable Securities to be included in a registration under this Section 2.1 at any time and, upon receipt of notice thereof, the Company shall cease all efforts to secure effectiveness of the applicable registration statement.

 

(b)                                 The Company shall use reasonable best efforts to cause the registration statement filed pursuant to Section 2.1(a) to be declared effective by the SEC (if such registration statement is not an automatic shelf registration statement) promptly.  The Company shall use reasonable best efforts to cause the registration statement to become effective and remain effective for a period of at least one hundred and eighty (180) days (or such shorter period in which all Registrable Securities included in such registration statement have actually been sold thereunder).

 

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(c)                                  Each registration statement prepared at the request of a Demand Party shall be effected on such appropriate form as requested by the Demand Party and as shall be reasonably acceptable to the Company.

 

(d)                                 The Company will pay all Registration Expenses in connection with each registration of Registrable Securities requested pursuant to this Section 2.1.

 

(e)                                  If a requested registration pursuant to this Section 2.1 involves an underwritten offering, Holders of a majority of the Registrable Securities participating in such offering shall have the right to select the investment banker or bankers and managers to administer the offering, including the lead managing underwriter; provided, however, that such investment banker or bankers and managers shall be reasonably satisfactory to the Company.  For the avoidance of doubt, each applicable Holder participating in such an underwritten offering shall be responsible for paying the underwriting discounts and commissions applicable to such Holder’s Registrable Securities sold by the underwriters in such underwritten offering.

 

(f)                                   If a requested registration pursuant to this Section 2.1 involves an underwritten offering and the managing underwriter advises the Company that, in its opinion, the number of Securities requested to be included in such registration (including Securities of the Company which are not Registrable Securities) exceeds the number which can be sold in such offering, so as to be likely to have an adverse effect on the price, timing or distribution of, or the market for, the Securities offered in such offering, then the number of such Securities to be included in such registration shall be allocated in the following order of priority: (i) first, up to the number of Registrable Securities requested to be included in such registration by the Demand Party and such other Holders who have requested to have Registrable Securities included in such registration pursuant to Section 2.2, which, in the opinion of the managing underwriter, can be sold without having the adverse effect referred to above, which number of Registrable Securities shall be allocated pro rata among the Demand Party and the requesting Holders on the basis of the relative number of Registrable Securities requested to be included in such registration statement; and (ii) second, and only if all the Registrable Securities requested to be included by the Demand Party and such other Holders who have requested to have Registrable Securities included in such registration pursuant to Section 2.2 have been included, the number of Securities the Company proposes to sell that, in the opinion of the managing underwriter, can be sold without having the adverse effect referred to above.

 

(g)                                  Notwithstanding anything to the contrary in this Agreement, the Company shall be entitled, upon written notice to all applicable Holders, to postpone the filing or the effectiveness of a registration statement filed pursuant to this Section 2.1 for a reasonable period of time, which shall not exceed (i) two occasions during any twelve (12)-month period or (ii) thirty (30) days in succession on any one occasion, if the Board determines in good faith and in its reasonable judgment, after consultation with counsel, that the filing or effectiveness of such registration statement would require the disclosure of material, non-public information that would otherwise not be required to be disclosed and that the Company has a bona fide business purpose for preserving as confidential.  The Company shall immediately notify the Holders in writing once the Company is able to proceed with the filing or effectiveness of the registration statement and prepare any necessary amendments or supplements thereto such that the

 

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registration statement will not include an untrue statement of material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

 

SECTION 2.2.                                          Piggyback Rights.

 

(a)                                 If at any time following the Effective Date, subject to the Lockup Period, the Company proposes to register equity Securities under the Securities Act (other than a registration on Form S-4 or S-8, or any successor or other forms promulgated for similar purposes), whether for its own account or for the account of Security holders, it will at each such time give prompt written notice (but in any event at least fifteen (15) days prior to filing) to the Holders of its intention to do so and of such Holder’s rights under this Section 2.2.  Upon the written request of any Holder made within ten (10) days after the receipt of any such notice (which request shall specify the number of Registrable Securities intended to be disposed of by such Holder), the Company will effect the registration under the Securities Act of all Registrable Securities which the Holders have so requested to be registered; provided that if, at any time after giving written notice of its intention to register any Securities and prior to the effective date of the registration statement filed in connection with such registration, the Company shall determine for any reason not to proceed with the proposed registration of the Securities to be sold by it, the Company may, at its election, give written notice of such determination to the Holders and, thereupon, the Company shall be relieved of its obligation to register any Registrable Securities in connection with such registration (but not from its obligation to pay the Registration Expenses incurred in connection therewith) (and, for the avoidance of doubt, without prejudice to the rights of Holders to request registration pursuant to Section 2.1 or Section 2.3). Any Holder shall have the right to withdraw all or part of its request for inclusion of its Registrable Securities in a registration pursuant to this Section 2.2 by giving written notice to the Company of its request to withdraw; provided that such request must be made in writing prior to the effectiveness of such registration statement or, in the case of an underwritten offering, at least two (2) Business Days prior to the earlier of the anticipated filing of the “red herring” prospectus, if applicable, and the anticipated pricing date.

 

(b)                                 The Company will pay all Registration Expenses in connection with each registration of Registrable Securities requested pursuant to this Section 2.2.

 

(c)                                  If such registration involves an underwritten offering, the Holders of Registrable Securities requesting to be included in the registration must sell their Registrable Securities to the underwriters selected by the Company or the Holders, as applicable, on the same terms and conditions as apply to the other sellers.

 

(d)                                 If a registration pursuant to this Section 2.2 involves an underwritten offering initiated by the Company and the managing underwriter advises the Company that, in its opinion, the number of Registrable Securities and other Securities requested to be included in such registration exceeds the number which can be sold in such offering, so as to be likely to have an adverse effect on the price, timing or distribution of, or market for, the Securities offered in such offering, then the number of Securities to be included in such registration shall be allocated in the following order of priority: (i) first, 100% of the Securities the Company proposes to sell; (ii)

 

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second, up to the number of Registrable Securities requested to be included in such registration by all Holders who have requested to have Registrable Securities included in such registration, which, in the opinion of the managing underwriter, can be sold without having the adverse effect referred to above, which number of Registrable Securities shall be allocated pro rata among such Holders on the basis of the relative number of Registrable Securities requested to be included in such registration statement.

 

(e)                                  The Company shall not be obligated to effect any registration of Registrable Securities under this Section 2.2 incidental to the registration of any of its Securities in connection with any offering relating to employee benefits plans or dividend reinvestment plans.

 

(f)                                   If a registration pursuant to this Section 2.2 involves an underwritten offering initiated by the Company, the Company shall select the investment banker or bankers and managers to administer the offering, including the lead managing underwriter; provided, however, that if any Holder has requested that its Registrable Securities be registered pursuant to this Section 2.2, such investment banker or bankers and managers shall be reasonably satisfactory to the Holders of a majority of the Registrable Securities participating in such offering.  For the avoidance of doubt, each applicable Holder participating in such an underwritten offering shall be responsible for paying the underwriting discounts and commissions applicable to such Holder’s Registrable Securities sold by the underwriters in such underwritten offering.

 

SECTION 2.3.                                          Shelf Registration.

 

(a)                                 At any time following the Effective Date, subject to any Lockup Period and subject to the availability of a registration statement on Form S-3 to the Company, upon the delivery of a written notice by a Demand Party to the Company (the “Shelf Notice”) requesting that the Company effect a registration under the Securities Act of Registrable Securities on Form S-3 and specifying the amount and intended method of disposition thereof, the Company will file as expeditiously as possible, and, if the Shelf Registration Statement (as defined below) is not an automatic shelf registration statement, use reasonable best efforts to cause to be promptly declared effective by the SEC a registration statement on Form S-3 providing for an offering to be made on a continuous basis pursuant to Rule 415 under the Securities Act relating to the offer and sale, from time to time, of the Registrable Securities owned by such Demand Party and any other Holders who elect to participate therein as provided in Section 2.3(b) in accordance with the methods of distribution elected by such Holders and set forth in the prospectus included in such registration statement on Form S-3 (the “Shelf Registration Statement”).

 

(b)                                 Promptly (but in any event within five (5) days) after receipt of a Shelf Notice pursuant to Section 2.3(a), the Company will deliver written notice thereof to each other Holder pursuant to Section 2.2.  Each such Holder may elect to participate in the Shelf Registration Statement by delivering to the Company a written request to so participate within five (5) Business Days after the Shelf Notice is received by any such Holder.

 

(c)                                  Subject to Section 2.3(g), the Company will use its reasonable best efforts to keep the Shelf Registration Statement continuously effective, and, if necessary, to file one or more successor Shelf Registration Statements and keep such successor Shelf Registration Statement(s)

 

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continuously effective, such that there is no period when a Shelf Registration Statement is not in effect until the date on which all Registrable Securities covered by the Shelf Registration Statement have been sold thereunder in accordance with the methods of distribution disclosed in the prospectus included in the Shelf Registration Statement, or otherwise.

 

(d)                                 Subject to Section 2.3(g), each Holder who elected to participate in the Shelf Registration Statement shall have the right to request that an underwritten offering be effected off the Shelf Registration Statement at any time (each such offering, a “Shelf Takedown”); provided that in no event shall the Company be obligated to effect: (i) a Shelf Takedown pursuant to this Section 2.3(d) (y) unless the aggregate offering price of the Registrable Securities to be sold in such offering is reasonably expected to be at least $20 million or (z) within a period of sixty (60) days (or such lesser period as the managing underwriters in an underwritten offering may permit) after the effective date of any registration statement relating to any registration effected pursuant to Section 2.1; or (ii) more than four (4) Shelf Takedowns pursuant to this Section 2.3(d) in any twelve-month period.  Promptly (but in any event within three (3) Business Days) after receipt of a request that a Shelf Takedown be effected, the Company will deliver written notice thereof to each other Holder who elected to participate in the Shelf Registration Statement, and each such Holder may elect to participate in the Shelf Takedown by delivering to the Company a written request to so participate within two (2) Business Days after such notice is received by any such Holder.  All determinations as to whether to complete the Shelf Takedown and as to the timing, manner, price and other terms of any Shelf Takedown, shall be determined by the initiating Holder. If a Shelf Takedown is effected, the initiating Holder shall have the right to select the investment banker or bankers and managers to administer the offering, including the lead managing underwriter; provided, however, that such investment banker or bankers and managers shall be reasonably satisfactory to the Company.  For the avoidance of doubt, each applicable Holder participating in such a Shelf Takedown shall be responsible for paying the underwriting discounts and commissions applicable to such Holder’s Registrable Securities sold by the underwriters in such Shelf Takedown.  A request for a Shelf Takedown may be withdrawn by the initiating Holder prior to the consummation thereof, and, in such event, such withdrawal shall not be treated as a request for a Shelf Takedown which shall have been effected pursuant to this Section 2.3(d).

 

(e)                                  If a Shelf Takedown is requested and the managing underwriter advises the Company that, in its opinion, the number of Securities requested to be included in such Shelf Takedown (including Securities of the Company which are not Registrable Securities) exceeds the number which can be sold in such offering, so as to be likely to have an adverse effect on the price, timing or distribution of, or the market for, the Securities offered in such offering, then the number of such Securities to be included in such underwritten offering shall be allocated in the following order of priority: (i) first, up to the number of Registrable Securities requested to be included in such Shelf Takedown by the Holders, which, in the opinion of the managing underwriter, can be sold without having the adverse effect referred to above, which number of Registrable Securities shall be allocated pro rata among the Holders on the basis of the relative number of Registrable Securities requested to be included in such Shelf Takedown; and (ii) second, and only if all the Registrable Securities requested to be included by the Holders in such Shelf Takedown have been included, the number of Securities the Company proposes to sell that,

 

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in the opinion of the managing underwriter, can be sold without having the adverse effect referred to above.

 

(f)                                   The Company will pay all Registration Expenses in connection with each registration of Registrable Securities requested pursuant to this Section 2.3.

 

(g)                                  Notwithstanding anything to the contrary contained in this Agreement, the Company shall be entitled, from time to time, by providing written notice to the Holders who elected to participate in the Shelf Registration Statement, to require such Holders to suspend the use of the prospectus for sales of Registrable Securities under the Shelf Registration Statement for a reasonable period of time (a “Blackout Period”), which shall not exceed (i) two occasions during any twelve (12)-month period or (ii) thirty (30) days in succession on any one occasion, if the Board shall determine in good faith and in its reasonable judgment, after consultation with counsel, that it is required to disclose in the Shelf Registration Statement material, non-public information that would otherwise not be required to be disclosed and that the Company has a bona fide business purpose for preserving as confidential. Immediately upon receipt of such notice, the Holders covered by the Shelf Registration Statement shall suspend the use of the prospectus until the requisite changes to the prospectus have been made as required below.  Any Blackout Period shall terminate upon the earlier of: (i) such time as the public disclosure of such information is made or determined to no longer be necessary; or (ii) after thirty (30) days.  After the expiration of any Blackout Period and without any further request from a Holder the Company shall, if necessary, as promptly as reasonably practicable prepare a post-effective amendment or supplement to the Shelf Registration Statement or the prospectus, or any document incorporated therein by reference, or file any other required document so that, as thereafter delivered to purchasers of the Registrable Securities included therein, the prospectus will not include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

SECTION 2.4.                                          Registration Procedures.  If and whenever the Company is required to file a registration statement with respect to, or to use its reasonable best efforts to effect or cause the registration of, any Registrable Securities under the Securities Act as provided in this Agreement, the Company will as expeditiously as possible:

 

(a)                                 prepare and file with the SEC a registration statement (including all exhibits and financial statements required under the Securities Act) on an appropriate form with respect to such Registrable Securities and, if such registration statement is not an automatic effective registration statement, use its reasonable best efforts to cause such registration statement to become effective; provided, however, that the Company may discontinue any registration of Securities which it has initiated for its own account at any time prior to the effective date of the registration statement relating thereto (and, in such event, the Company shall pay the Registration Expenses incurred in connection therewith); and provided, further, that before filing a registration statement or prospectus, or any amendments or supplements thereto, the Company will furnish to the underwriters, sellers of Registrable Securities covered by such registration statement and their counsel copies of all documents proposed to be filed, which documents will be subject to the review of such counsel;

 

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(b)                                 prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be (x) reasonably requested by any Holder with Registrable Securities covered by the registration statement and (y) necessary to keep such registration statement effective and to comply with the provisions of the Securities Act and the Exchange Act with 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 seller or sellers thereof set forth in such registration statement; provided that before filing a registration statement or prospectus, or any amendments or supplements thereto, the Company will furnish to counsel for the sellers of Registrable Securities covered by such registration statement copies of all documents proposed to be filed, which documents will be subject to the review of such counsel;

 

(c)                                  furnish to each seller of such Registrable Securities and underwriters, if any, at no charge, such number of copies of such registration statement and of each amendment and supplement thereto (in each case including all exhibits filed therewith, excluding any documents incorporated by reference), such number of copies of the prospectus included in such registration statement (including each preliminary prospectus and summary prospectus) and each free writing prospectus (as defined in Rule 405 of the Securities Act) (a “Free Writing Prospectus”) utilized in connection therewith and any other prospectus filed under Rule 424 under the Securities Act, in conformity with the requirements of the Securities Act, and such other documents as such seller may reasonably request in order to facilitate the disposition of the Registrable Securities by such seller;

 

(d)                                 use its reasonable best efforts to register or qualify such Registrable Securities covered by such registration in such jurisdictions as each seller shall reasonably request, and do any and all other acts and things which may be reasonably necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the Registrable Securities owned by such seller, except that the Company shall not for any such purpose be required to qualify generally to do business as a foreign corporation in any jurisdiction where, but for the requirements of this subsection (d), it would not be obligated to be so qualified, to subject itself to taxation in any such jurisdiction or to consent to general service of process in any such jurisdiction;

 

(e)                                  use its reasonable best efforts to cause such Registrable Securities covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof, or the underwriters, to consummate the disposition of such Registrable Securities;

 

(f)                                   promptly notify each selling Holder and the managing underwriter or underwriters, if any, when the Company becomes aware (whether by the happening of any event or otherwise) (i) that the applicable registration statement or the prospectus included in such registration statement (as then in effect) contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein (in the case of such prospectus or any preliminary prospectus, in light of the circumstances under which they were made) not misleading, or (ii) that any Free Writing Prospectus includes information that may conflict with the information contained in the registration statement, or, if for any other reason it shall be

 

12

 

necessary during such time period to amend or supplement such registration statement or prospectus in order to comply with the Securities Act and, as promptly as reasonably practicable thereafter, prepare and file with the SEC, and furnish without charge to the selling Holders and the managing underwriter or underwriters, if any, an amendment or supplement to such registration statement or prospectus, which shall correct such misstatement or omission or effect such compliance;

 

(g)                                  otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the SEC or other applicable securities laws, and make available to its Security holders, as soon as reasonably practicable after the effective date of the registration statement, an earnings statement which shall satisfy the provisions of Section 11(a) of the Securities Act;

 

(h)                                 (i) use its best efforts to list such Registrable Securities on any securities exchange on which other Securities of the Company are then listed if such Registrable Securities are not already so listed; and (ii) provide and cause to be maintained a transfer agent and registrar for such Registrable Securities covered by such registration statement from and after a date not later than the effective date of such registration statement;

 

(i)                                     enter into such customary agreements (including underwriting and indemnification agreements), and take all such other actions as any participating Holder or the underwriters, if any, reasonably request in order to expedite or facilitate the registration and disposition of such Registrable Securities;

 

(j)                                    obtain a “cold comfort” letter or letters from the Company’s independent public accountants in customary form and covering matters of the type customarily covered by “cold comfort” letters as the managing underwriter or underwriters shall reasonably request;

 

(k)                                 make available for inspection by any seller of such Registrable Securities covered by such registration statement, by any underwriter participating in any disposition to be effected pursuant to such registration statement and by any attorney, accountant or other agent retained by any such seller or any such underwriter, all pertinent financial and other records, pertinent corporate documents and properties of the Company as reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement, and cause all of the Company’s officers, directors, employees and independent public accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement;

 

(l)                                     notify counsel for the Holders of Registrable Securities included in such registration statement and the managing underwriter or agent, immediately, and confirm the notice in writing: (i) when the registration statement, or any post-effective amendment to the registration statement, shall have been filed or become effective, or any supplement to the prospectus or any amendment to any prospectus or any Free Writing Prospectus utilized in connection therewith shall have been filed; (ii) of the receipt of any comments or other correspondence from the SEC; (iii) of any request of the SEC to amend the registration statement or amend or supplement the prospectus or for additional information; (iv) if, at any time, the representations and warranties of the Company in any applicable underwriting agreement cease to be true and correct in all material respects; and (v) of the issuance by the SEC of any stop

 

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order suspending the effectiveness of the registration statement or of any order preventing or suspending the use of any preliminary prospectus, or of the suspension of the qualification of the registration statement for offering or sale in any jurisdiction, or of the institution or threatening of any proceedings for any of such purposes;

 

(m)                             provide each Holder of Registrable Securities included in such registration statement reasonable opportunity to comment on the registration statement, any post-effective amendments to the registration statement, any supplement to the prospectus or any amendment to any prospectus, and make such changes as the Holders or their counsel shall reasonably request;

 

(n)                                 use reasonable best efforts to prevent the issuance of any stop order suspending the effectiveness of the registration statement or of any order preventing or suspending the use of any preliminary prospectus and, if any such order is issued, to obtain the withdrawal of any such order at the earliest possible moment;

 

(o)                                 if requested by the managing underwriter or agent or any Holder of Registrable Securities covered by the registration statement, promptly incorporate in a prospectus supplement or post-effective amendment such information as the managing underwriter or agent or such Holder reasonably requests to be included therein, including, with respect to the number of Registrable Securities being sold by such Holder to such underwriter or agent, the purchase price being paid therefor by such underwriter or agent and with respect to any other terms of the underwritten offering of the Registrable Securities to be sold in such offering; and make all required filings of such prospectus supplement or post-effective amendment as soon as practicable after being notified of the matters incorporated in such prospectus supplement or post-effective amendment;

 

(p)                                 cooperate with the Holders of Registrable Securities covered by the registration statement and the managing underwriter or agent, if any, to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legends) representing Securities to be sold under the registration statement, and enable such Securities to be in such denominations and registered in such names as the managing underwriter or agent, if any, or the Holders may request at least two (2) Business Days prior to any sale of Registrable Securities to the underwriters;

 

(q)                                 make such representations and warranties to the Holders of Registrable Securities being registered, and the underwriters or agents, if any, in form, substance and scope as are customarily made by issuers in public offerings similar to the offering then being undertaken;

 

(r)                                    cause the senior executive officers of the Company to participate in any “road shows” that may be reasonably requested by the Holders in connection with distribution of Registrable Securities and otherwise to facilitate, cooperate with, and participate in each proposed offering contemplated herein and customary selling efforts related thereto;

 

(s)                                   obtain for delivery to the Holders of Registrable Securities being registered and to the underwriter or agent an opinion or opinions from counsel for the Company in customary form, substance and scope, reasonably satisfactory to such Holders, underwriters or agents and their counsel;

 

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

 

(u)                                 take no direct or indirect action prohibited by Regulation M under the Exchange Act;

 

(v)                                 take all reasonable action to ensure that any Free Writing Prospectus utilized in connection with any registration complies in all material respects with the Securities Act, is filed in accordance with the Securities Act to the extent required thereby, is retained in accordance with the Securities Act to the extent required thereby and, when taken together with the related prospectus, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and

 

(w)                               take all such other commercially reasonable actions as are necessary or advisable in order to expedite or facilitate the disposition of such Registrable Securities in accordance with the terms of this Agreement.

 

SECTION 2.5.                                          Other Registration-Related Matters.

 

(a)                                 The Company may require any seller of Registrable Securities pursuant to Section 2.1, 2.2 or 2.3 to furnish to the Company in writing such information regarding such Person and pertinent to the disclosure requirements relating to the registration and the distribution of the Registrable Securities which are included in such offering as the Company may from time to time reasonably request in writing.

 

(b)                                 The Holders of Registrable Securities to be distributed by underwriters shall be parties to any underwriting agreement between the Company and such underwriters, which underwriting agreement shall (i) contain such representations and warranties by, and the other agreements on the part of, the Company to and for the benefit of such Holders as are customarily made by issuers to selling stockholders in secondary public offerings and (ii) provide that any or all of the conditions precedent to the obligations of such underwriters under such underwriting agreement also shall be conditions precedent to the obligations of such Holders. Any such Holder shall not be required to make any representations or warranties to or agreements with the Company or the underwriters other than representations, warranties or agreements regarding such Holder, such Holder’s title to the Registrable Securities and such Holder’s intended method of distribution or any other representations required to be made by the Holder under applicable law, and the aggregate amount of the liability of such Holder shall not exceed such Holder’s net proceeds from such offering.

 

(c)                                  Each Holder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 2.4(f), it will forthwith discontinue disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until its receipt of the copies of the amended or supplemented registration statement or prospectus contemplated by Section 2.4(f) and, if so directed by the Company, each Holder will deliver to the Company or destroy (at the Company’s expense) all copies, other than

 

15

 

permanent file copies then in their possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice.  In the event the Company gives any such notice, any applicable period during which such registration statement must remain effective pursuant to this Agreement shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to Section 2.4(f) to and including the date when all such sellers of Registrable Securities covered by such registration statement shall receive such a supplemented or amended registration statement or prospectus and such registration statement or prospectus shall have been filed with the SEC.

 

(d)                                 Each Holder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 2.4(l)(v), it will forthwith discontinue disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until the lifting of such stop order, other order or suspension or the termination of such proceedings and, if so directed by the Company, each Holder will deliver to the Company or destroy (at the Company’s expense) all copies, other than permanent file copies then in its possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice.  In the event the Company gives any such notice, any applicable period during which such registration statement must remain effective pursuant to this Agreement shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to Section 2.4(l)(v) to and including the date when such stop order, other order or suspension is lifted or such proceedings are terminated.

 

(e)                                  (i) Each Holder will, in connection with a sale of Registrable Securities pursuant to Section 2.1, Section 2.2 or Section 2.3 conducted as an underwritten offering, upon the request of the Company or of the managing underwriter, agree in writing not to effect any sale, disposition or distribution of Registrable Securities (other than those included in the offering, distributions-in-kind to a Holder’s partners or members and Transfers to Affiliates) without the prior written consent of the managing underwriter for a period not greater than 60 days (or such longer period, not to exceed 90 days, agreed to by the Holders of a majority of the Registrable Securities) after the date of the final prospectus relating to such offering; provided that all directors and officers of the Company, holders of more than 3% of the Registrable Securities and all other Persons with registration rights with respect to the Company’s Securities (whether or not pursuant to this Agreement) holding more than 5% of the Registrable Securities shall enter into agreements similar to those contained in this Section 2.4(e)(i) (without regard to this proviso); and (ii) the Company and its Subsidiaries will, in connection with an underwritten offering of the Company’s Securities in respect of which Registrable Securities are included, upon the request of the underwriters managing such offering, agree in writing not to effect any sale, disposition or distribution of equity Securities of the Company (other than those included in such offering, offered on Form S-8, issuable upon conversion of Securities or upon the exercise of options, or the grant of options in the ordinary course of business pursuant to then-existing management equity plans or equity-based employee benefit plans, in each case outstanding on the date a request is made pursuant to Section 2.1(a) or 2.3(a) or a notice is given by the Company pursuant to Section 2.2(a), as the case may be), without the prior written consent of the managing underwriter, for a period not greater than 90 days after the date of the final prospectus relating to such offering.

 

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(f)                                   With a view to making available the benefits of certain rules and regulations of the SEC which may at any time permit the sale of Securities of the Company to the public without registration after such time as a public market exists for Registrable Securities, the Company agrees to use its commercially reasonable efforts:

 

(1)                                 to make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times after the effective date of the first registration under the Securities Act filed by the Company for an offering of its Securities to the public;

 

(2)                                 to file with the SEC 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 such reporting requirements); and

 

(3)                                 so long as a Holder owns any Registrable Securities, to furnish to such Holder promptly upon request: (A) a written statement by the Company as to its compliance with the reporting requirements of Rule 144 (at any time after ninety (90) days after the effective date of the first registration statement filed by the Company for an offering of its Securities to the public), and of the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements); (B) a copy of the most recent annual or quarterly report of the Company; and (C) such other reports and documents of the Company as such Holder may reasonably request in availing itself or himself of any rule or regulation of the SEC allowing such Holder to sell any such Securities without registration.

 

(g)                                  Counsel to represent the selling Holders of Registrable Securities shall be selected by the Holders of a majority of the Registrable Securities participating in such registration, except counsel representing the selling Holders in connection with any Shelf Takedown shall selected by the initiating Holder.

 

(h)                                 Each of the parties hereto agrees that the registration rights provided to the Holders herein are not intended to, and shall not be deemed to, override or limit any other restrictions on Transfer to which any such Holder may otherwise be subject.

 

(i)                                     Neither the Company nor any of its Subsidiaries shall hereafter enter into, and neither the Company nor any of its Subsidiaries is currently a party to, any agreement with respect to its securities that is inconsistent with the rights granted to the Holders by this Agreement.  Without the approval of the Holders of a majority of the Registrable Securities, neither the Company nor any of its Subsidiaries shall enter into any agreement granting registration or similar rights to any Person, and the Company hereby represents and warrants that, as of the date hereof, no registration or similar rights have been granted to any other Person other than pursuant to this Agreement or pursuant to that certain registration rights agreement between the Company and WCI Communities, Inc. Creditor Trust.

 

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ARTICLE III.

 

INDEMNIFICATION

 

SECTION 3.1.                                          Indemnification by the Company.  The Company shall indemnify and hold harmless, to the full extent permitted by law, each Holder, each shareholder, member, limited or general partner thereof, each shareholder, member, limited or general partner of each such shareholder, member, limited or general partner, each of their respective Affiliates, officers, directors, shareholders, employees, advisors, and agents and each Person who controls (within the meaning of the Securities Act or the Exchange Act) such Persons and each of their respective Representatives from and against any and all losses, penalties, judgments, suits, costs, claims, damages, liabilities and expenses, joint or several (including reasonable costs of investigation and legal expenses) (each, a “Loss” and collectively “Losses”) arising out of or based upon (i) any untrue or alleged untrue statement of a material fact contained in any registration statement under which such Registrable Securities are registered or sold under the Securities Act, any final, preliminary or summary prospectus contained therein, or any Free Writing Prospectus, or any amendment or supplement to any of the foregoing or any documents incorporated by reference therein, or any other disclosure document produced by or on behalf of the Company or any of its Subsidiaries including any report and other document filed under the Exchange Act, (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus or preliminary prospectus, in light of the circumstances under which they were made) not misleading or (iii) any violation or alleged violation by the Company or any of its Subsidiaries of any federal, state, foreign or common law rule or regulation applicable to the Company or any of its Subsidiaries and relating to action or inaction in connection with any such registration, disclosure document or other document or report; provided, that no selling Holder shall be entitled to indemnification pursuant to this Section 3.1 in respect of any untrue statement or omission contained in any information furnished in writing by such selling Holder to the Company specifically for inclusion in a registration statement, final, preliminary or summary prospectus contained therein, or any Free Writing Prospectus, or any amendment or supplement to any of the foregoing, that has not been corrected in a subsequent writing prior to or concurrently with the sale of the Registrable Securities to the Person asserting the claim. This indemnity shall be in addition to any liability the Company may otherwise have. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Holder or any indemnified party and shall survive the Transfer of such securities by such Holder. The Company shall also indemnify underwriters, selling brokers, dealer managers and similar securities industry professionals participating in the distribution, their officers and directors and each Person who controls such Persons (within the meaning of the Securities Act and the Exchange Act) to the same extent as provided above with respect to the indemnification of the indemnified parties.

 

SECTION 3.2.                                          Indemnification by the Holders.  Each selling Holder agrees (severally and not jointly) to indemnify and hold harmless, to the fullest extent permitted by law, the Company, its directors and officers and each Person who controls the Company (within the meaning of the Securities Act or the Exchange Act) from and against any Losses resulting from (i) any untrue statement of a material fact in any registration statement under which such Registrable Securities were registered or sold under the Securities Act, any final, preliminary or

 

18

 

summary prospectus contained therein, any Free Writing Prospectus, or any amendment or supplement to any of the foregoing or any documents incorporated by reference therein or (ii) any omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus or preliminary prospectus, in light of the circumstances under which they were made) not misleading, in each case to the extent, but only to the extent, that such untrue statement or omission is contained in any information furnished in writing by such selling Holder to the Company specifically for inclusion in such registration statement, final, preliminary or summary prospectus contained therein, or any Free Writing Prospectus, or any amendment or supplement to any of the foregoing, and has not been corrected in a subsequent writing prior to or concurrently with the sale of the Registrable Securities to the Person asserting the claim. In no event shall the liability of any selling Holder hereunder be greater in amount than the dollar amount of the net proceeds received by such Holder under the sale of Registrable Securities giving rise to such indemnification obligation less any amounts paid by such Holder pursuant to Section 3.4 and any amounts paid by such Holder as a result of liabilities incurred under the underwriting agreement, if any, related to such sale. The Company shall be entitled to receive indemnities from underwriters, selling brokers, dealer managers and similar securities industry professionals participating in the distribution, to the same extent as provided above (with appropriate modification) with respect to information furnished in writing by such Persons specifically for inclusion in any prospectus or registration statement.

 

SECTION 3.3.                                          Notices of Claims, Etc.  Any Person entitled to indemnification hereunder shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that any delay or failure to so notify the indemnifying party shall relieve the indemnifying party of its obligations hereunder only to the extent, if at all, that it is actually and materially prejudiced by reason of such delay or failure) and (ii) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; provided, however, that any Person entitled to indemnification hereunder shall have the right to select and employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such Person unless (i) the indemnifying party has agreed in writing to pay such fees or expenses, (ii) the indemnifying party shall have failed to assume the defense of such claim within a reasonable time after receipt of notice of such claim from the Person entitled to indemnification hereunder and employ counsel reasonably satisfactory to such Person, (iii) the indemnified party has reasonably concluded (based upon advice of its counsel) that there may be legal defenses available to it or other indemnified parties that are different from or in addition to those available to the indemnifying party, or (iv) in the reasonable judgment of any such Person (based upon advice of its counsel) a conflict of interest may exist between such Person and the indemnifying party with respect to such claims (in which case, if the Person notifies the indemnifying party in writing that such Person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such Person). If the indemnifying party assumes the defense, the indemnifying party shall not have the right to settle such action without the consent of the indemnified party. No indemnifying party shall consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of an unconditional release from all liability in respect to such claim or litigation without the prior written consent of such indemnified party. If

 

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such defense is not assumed by the indemnifying party, the indemnifying party will not be subject to any liability for any settlement made without its prior written consent, but such consent may not be unreasonably withheld. It is understood that the indemnifying party or parties shall not, except as specifically set forth in this Section 3.3, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees, disbursements or other charges of more than one separate firm admitted to practice in such jurisdiction at any one time unless (x) the employment of more than one counsel has been authorized in writing by the indemnifying party or parties, (y) an indemnified party has reasonably concluded (based on the advice of counsel) that there may be legal defenses available to it that are different from or in addition to those available to the other indemnified parties or (z) a conflict or potential conflict exists or may exist (based upon advice of counsel to an indemnified party) between such indemnified party and the other indemnified parties, in each of which cases the indemnifying party shall be obligated to pay the reasonable fees and expenses of such additional counsel or counsels.

 

SECTION 3.4.                                          Contribution. If for any reason the indemnification provided for in Section 3.1 and Section 3.2 is unavailable to an indemnified party (other than as a result of exceptions contained in Section 3.1 and Section 3.2) or insufficient in respect of any Losses referred to therein, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such Loss in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and the indemnified party or parties on the other hand in connection with the acts, statements or omissions that resulted in such Losses, as well as any other relevant equitable considerations. In connection with any registration statement filed with the SEC by the Company, the relative fault of the indemnifying party on the one hand and the indemnified party on the other hand shall be determined by reference to, among other things, whether any untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just or equitable if contribution pursuant to this Section 3.4 were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in this Section 3.4. 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. The amount paid or payable by an indemnified party as a result of the Losses referred to in Sections 3.1 and 3.2 shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 3.4, in connection with any registration statement filed by the Company, a selling Holder shall not be required to contribute any amount in excess of the dollar amount of the net proceeds received by such holder under the sale of Registrable Securities giving rise to such contribution obligation less any amounts paid by such Holder pursuant to Section 3.2 and any amounts paid by such Holder as a result of liabilities incurred under the underwriting agreement, if any, related to such sale. If indemnification is available under this Article III, the indemnifying parties shall indemnify each indemnified party to the full extent provided in Sections 3.1 and 3.2 hereof without regard to the provisions of this

 

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Section 3.4. The remedies provided for in this Article III are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity.

 

SECTION 3.5.                                          Non-Exclusivity.  The obligations of the parties under this Article III will be in addition to any liability which any party may otherwise have to any other party.

 

ARTICLE IV.

 

OTHER

 

SECTION 4.1.                                          Notices.  Any notice, request, instruction or other document to be given hereunder by any party hereto to another party hereto shall be in writing, and shall be deemed given when (a) delivered personally, (b) five (5) Business Days after being sent by certified or registered mail, postage prepaid, return receipt requested, (c) one (1) Business Day after being sent by any nationally recognized overnight courier, or (d) if transmitted by facsimile, if confirmed within 24 hours thereafter by a signed original sent in the manner provided in clause (a), (b) or (c) to the parties at the following addresses (or at such other address for a party as shall be specified by notice from such party):

 

if to the Company:

 

WCI Communities, Inc.

24301 Walden Center Drive

Bonita Springs, Florida 34134

(Telephone) (239) 947-2600

(Facsimile) (239) 498-8338

Attention: Vivien Hastings

 

if to the Monarch Stockholders:

 

Monarch Alternative Capital LP

535 Madison Avenue, 26th Floor

New York, New York 10022

(Telephone) (212) 554-1700

(Facsimile) (212) 554-1701

Attention: Patrick Bartels

 

and

 

Monarch Alternative Capital LP

535 Madison Avenue, 26th Floor

New York, New York 10022

(Telephone) (212) 554-1700

(Facsimile) (212) 554-1701

Attention: Michael J. Kelly, Esq.

 

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if to the Stonehill Stockholders:

 

Stonehill Capital Management LLC

885 Third Avenue, 30th Floor

New York, New York 10022

(Telephone) (212) 739-7474

(Facsimile) (212) 838-2291

Attention: Christopher Wilson

 

and

 

Stonehill Capital Management LLC

885 Third Avenue, 30th Floor

New York, New York 10022

(Telephone) (212) 739-7474

(Facsimile) (212) 838-2291

Attention: Paul D. Malek, Esq.

 

SECTION 4.2.                                          Assignment.  Neither the Company nor any Holder shall assign all or any part of this Agreement without the prior written consent of the Company and the Holders of a majority of the Registrable Securities; provided, however, that the rights and obligations set forth herein may be assigned, in whole or in part, by any Monarch Stockholder or Stonehill Stockholder to any Affiliate of such Monarch Stockholder or Stonehill Stockholder, as applicable; provided, further, the rights and obligations set forth herein may be assigned, in whole or in part, by any Monarch Stockholder or Stonehill Stockholder to any transferee of Registrable Securities that is not an Affiliate that holds (after giving effect to such transfer) in excess of five percent (5%) of the then-outstanding Common Stock (each, a “Non-Affiliate Transferee”) but, notwithstanding the foregoing or anything in this Agreement to the contrary, (i) each Non-Affiliate Transferee shall only be entitled to one (1) request to effect registration pursuant to Section 2.1(a) or a Shelf Takedown pursuant to Section 2.3(d) provided the Company effects such registration or Shelf Takedown, as applicable, and (ii) such Non-Affiliate Transferee shall be responsible for the Registration Expenses in connection with any such registration or Shelf Takedown, as applicable, requested by such Non-Affiliate Transferee.  Notwithstanding the foregoing, no assignment permitted under the terms of this Section 4.2 will be effective unless the transferee to which the assignment is being made, if not a Holder, has delivered to the Company a joinder agreement, in substantially the form attached hereto as Exhibit A, agreeing to be bound by the terms and conditions of this Agreement and become a party hereto, whereupon such Person will be treated as a Holder for all purposes of this Agreement, with the same rights, benefits and obligations hereunder as the transferring Holder with respect to the transferred Registrable Securities.  Except as otherwise provided herein, this Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns.

 

SECTION 4.3.                                          Amendments; Waiver.  This Agreement may be amended, supplemented or otherwise modified only by a written instrument executed by the Company, the Monarch Stockholders and the Stonehill Stockholders; provided that no such amendment, supplement or other modification shall adversely affect the economic interests of any Holder

 

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hereunder disproportionately to other Holders without the written consent of such Holder.  No waiver by any party of any of the provisions hereof will be effective unless explicitly set forth in writing and executed by the party so waiving.  Except as provided in the preceding sentence, no action taken pursuant to this Agreement, including without limitation, any investigation by or on behalf of any party, will be deemed to constitute a waiver by the party taking such action of compliance with any covenants or agreements contained herein.  The waiver by any party hereto of a breach of any provision of this Agreement will not operate or be construed as a waiver of any subsequent breach.

 

SECTION 4.4.                                          Third Parties.  This Agreement does not create any rights, claims or benefits inuring to any person that is not a party hereto nor create or establish any third party beneficiary hereto.

 

SECTION 4.5.                                          Governing Law.  This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware.

 

SECTION 4.6.                                          Jurisdiction.  With respect to any suit, action or proceeding (“Proceeding”) arising out of or relating to this Agreement or any transaction contemplated hereby, each of the parties hereto hereby irrevocably (i) submits to the exclusive jurisdiction of the Court of Chancery of the State of Delaware and the United States District Court for the District of Delaware and the appellate courts therefrom (the “Selected Courts”) and waives any objection to venue being laid in the Selected Courts whether based on the grounds of forum non conveniens or otherwise and hereby agrees not to commence any such Proceeding other than before one of the Selected Courts; provided, however, that a party may commence any Proceeding in a court other than a Selected Court solely for the purpose of enforcing an order or judgment issued by one of the Selected Courts; (ii) consents to service of process in any Proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, or by recognized international express carrier or delivery service, to the Company or any Holder at their respective addresses referred to in Section 4.1 hereof; provided, however, that nothing herein shall affect the right of any party hereto to serve process in any other manner permitted by law; and (iii) TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED, WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING IN WHOLE OR IN PART UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE CONTEMPLATED TRANSACTIONS, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AND AGREES THAT ANY OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE PARTIES IRREVOCABLY TO WAIVE THE RIGHT TO TRIAL BY JURY IN ANY PROCEEDING WHATSOEVER BETWEEN THEM RELATING TO THIS AGREEMENT AND TO HAVE ALL MATTERS RELATING TO THIS AGREEMENT BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.

 

SECTION 4.7.                                          Specific Performance.  Each of the parties hereto acknowledges and agrees that in the event of any breach of this Agreement by any of them, the non-breaching party

 

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would be irreparably harmed and could not be made whole by monetary damages.  Each party accordingly agrees to waive the defense in any action for specific performance that a remedy at law would be adequate and that the parties, in addition to any other remedy to which they may be entitled at law or in equity, shall be entitled to compel specific performance of this Agreement.

 

SECTION 4.8.                                          Entire Agreement.  This Agreement sets forth the entire understanding of the parties hereto with respect to the subject matter hereof.  There are no agreements, representations, warranties, covenants or undertakings with respect to the subject matter hereof other than those expressly set forth herein.  This Agreement supersedes all other prior agreements and understandings between the parties with respect to such subject matter.

 

SECTION 4.9.                                          Severability.  If one or more of the provisions, paragraphs, words, clauses, phrases or sentences contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision, paragraph, word, clause, phrase or sentence in every other respect and of the remaining provisions, paragraphs, words, clauses, phrases or sentences hereof shall not be in any way impaired, it being intended that all rights, powers and privileges of the parties hereto shall be enforceable to the fullest extent permitted by Law.

 

SECTION 4.10.                                   Counterparts.  This Agreement may be executed in any number of counterparts, each of which will be deemed to be an original and all of which together will be deemed to be one and the same instrument.

 

SECTION 4.11.                                   Effectiveness.  This Agreement shall become effective, as to any Holder, as of the date signed by the Company and countersigned by such Holder.

 

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

 

	
 
    	
COMPANY:
    
	
 
    	
 
    
	
 
    	
WCI COMMUNITIES, INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Vivien Hastings
    
	
 
    	
 
    	
Name: Vivien Hastings
    
	
 
    	
 
    	
Title: Senior Vice President
    
	
 
    	
 
    	
 
    
	
 
    	
MONARCH STOCKHOLDERS:
    
	
 
    	
 
    	
 
    
	
 
    	
MONARCH   DEBT RECOVERY MASTER FUND LTD
   MONARCH MASTER FUNDING LTD
   MONARCH OPPORTUNITIES MASTER FUND LTD
   MONARCH INCOME MASTER FUND LTD
   MONARCH CAPITAL MASTER PARTNERS LP
   MONARCH ALTERNATIVE SOLUTIONS MASTER FUND LTD
   MONARCH CAPITAL MASTER PARTNERS II LP
   MONARCH CAPITAL MASTER PARTNERS II-A LP
   MONARCH CAYMAN FUND LIMITED
   OAKFORD MF LIMITED
   P MONARCH RECOVERY LTD.
    
	
 
    	
 
    
	
 
    	
By:
    	
Monarch   Alternative Capital LP, as investment manager
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Christopher Santana
    
	
 
    	
 
    	
Name: Christopher Santana
    
	
 
    	
 
    	
Title: Managing Principal
    
	
 
    	
 
    	
 
    
	
 
    	
STONEHILL STOCKHOLDERS:
    
	
 
    	
 
    	
 
    
	
 
    	
STONEHILL   INSTITUTIONAL PARTNERS, L.P.
    
	
 
    	
 
    
	
 
    	
By:
    	
Stonehill Capital Management LLC, its advisor
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Christopher Wilson
    
	
 
    	
 
    	
Name: Christopher Wilson
    
	
 
    	
 
    	
Title: Managing Member
    

 

25

 

EXHIBIT A

 

JOINDER AGREEMENT

 

THIS JOINDER AGREEMENT (the “Agreement”) is made as of the        day of                 ,            by [·] (the “Joining Party”).

 

W I T N E S S E T H

 

WHEREAS, WCI Communities, Inc., a Delaware corporation (the “Company”), is a party to that certain Registration Rights Agreement, dated as of                   , 2013 (as the same may be amended from time to time, the “Registration Rights Agreement”). (Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Registration Rights Agreement);

 

WHEREAS, the Registration Rights Agreement provides that as a condition to becoming a party to the Registration Rights Agreement, a Person must execute and deliver to the Company a Joinder Agreement pursuant to which such Person agrees to be bound by the terms and conditions of the Registration Rights Agreement, whereupon such Person will be treated as a Holder for all purposes of the Registration Rights Agreement;

 

WHEREAS, the Joining Party desires to become a Holder under the Registration Rights Agreement by executing a copy of this Agreement; and

 

WHEREAS, the Joining Party has reviewed the terms of the Registration Rights Agreement and determined that it is desirable and in the Joining Party’s best interests to execute this Joinder Agreement.

 

NOW, THEREFORE, the Joining Party hereby agrees as follows:

 

1.                                      Joinder of Registration Rights Agreement.  By executing this Joinder Agreement, the Joining Party (a) accepts and agrees to be bound by all of the terms and provisions of the Registration Rights Agreement as if it were an original signatory thereto and (b) shall be deemed to be, and shall be entitled to all of the rights and subject to all of the obligations of, a Holder thereunder.

 

2.                                      Representations and Warranties.

 

(i)                                     This Agreement constitutes a valid and binding obligation enforceable against the Joining Party in accordance with its terms.

 

(ii)                                  The Joining Party has received a copy of the Registration Rights Agreement.  The Joining Party has read and understands the terms of the Registration Rights Agreement and has been afforded the opportunity to ask questions concerning the Company and the Registration Rights Agreement.

 

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3.                                      Full Force and Effect.  Except as expressly modified by this Agreement, all of the terms, covenants, agreements, conditions and other provisions of the Registration Rights Agreement shall remain in full force and effect in accordance with its terms.

 

4.                                      Notices.  All notices provided to the Joining Party shall be sent or delivered to the Joining Party at the address set forth on the signature page hereto unless and until the Company has received written notice from the Joining Party of a changed address.

 

6.                                      Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware applicable to contracts made and to be performed entirely within such state.

 

IN WITNESS WHEREOF, the Joining Party has executed and delivered this Agreement as of the date first above written.

 

	
 
    	
 
    	
JOINING PARTY
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
[·]
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Address:
    
	
 
    	
 
    	
 
    
	
Acknowledged and   Accepted:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
WCI   COMMUNITIES, INC.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    	
 
    	
 
    

 

27

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