Document:

tcec20150406_8k.htm

 

Exhibit 10.1

 

NINTH AMENDMENT TO LOAN AGREEMENT AND FORBEARANCE AGREEMENT

 

THIS NINTH AMENDMENT TO LOAN AGREEMENT AND FORBEARANCE AGREEMENT (this “Agreement”) is made and entered into as of April 2, 2015 (the “Effective Date”), by and among TRANSCOASTAL PARTNERS, LLC, a Texas limited liability company, TRANSCOASTAL CORPORATION, a Texas corporation, and TRANSCOASTAL CORPORATION, a Delaware corporation (collectively, the “Borrower”), the Guarantors party hereto, the Lenders party hereto, Dalton Lott (the “Junior Lender”), the shareholders party hereto (the “Shareholders”), and MELODY BUSINESS FINANCE, LLC (“Melody”), as administrative agent (in such capacity, the “Agent”).

 

PRELIMINARY STATEMENT

 

WHEREAS, Borrower, the lenders from time to time party thereto (the “Lenders”), and Agent (as successor, by purchase and assignment, to Green Bank), are parties to that certain Loan Agreement, dated as of May 19, 2011 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Loan Agreement”);

 

WHEREAS, Borrower, the Guarantors party hereto, the Lenders party hereto, the Junior Lender, the Shareholders and Melody entered into that certain Eighth Amendment to Loan Agreement and Forbearance Agreement dated as of February 20, 2015 (the “Eighth Amendment”);

 

WHEREAS, Borrower has acknowledged that certain Events of Default have occurred and are continuing under the Loan Agreement;

 

WHEREAS, due to the existence and continuation of the Designated Events of Default (as defined below), Agent and Lenders are entitled to exercise rights and remedies available to them related to such Designated Events of Default, including, without limitation, the right to declare the loan described in the Loan Agreement due and payable, to collect such indebtedness, to make demand upon Borrower and the other Loan Parties and to exercise the legal rights and remedies available to them pursuant to the terms of the Loan Agreement and the other Loan Documents;

 

WHEREAS, Borrower has asked Agent and Lenders to temporarily forbear from exercising their rights and remedies under the Loan Agreement and the other Loan Documents with respect to the Designated Events of Default and to make certain amendments to the Loan Agreement;

 

WHEREAS, upon the terms and conditions contained herein, Agent and Lenders (acting by and through the Agent) are prepared to temporarily forbear from the exercise of the additional rights and remedies otherwise available to them at law, in equity or by agreement as a result of the Designated Events of Default, without waiving any of such rights and to make certain amendments to the Loan Agreement;

 

 

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WHEREAS, the forbearance by Agent and Lenders from the current exercise of their rights and remedies as provided for in this Agreement, and the amendments set forth herein, shall result in direct and tangible benefits to Borrower;

 

WHEREAS, Agent and Lenders are willing to grant such forbearance and authorize Agent; 

 

WHEREAS, the parties hereto desire to evidence (i) such amendments to the Loan Agreement and Eight Amendment and (ii) their understanding with respect to performance by Borrower during the Forbearance Period (as hereinafter defined) of certain covenants and other undertakings and agreements made by Borrower. 

 

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

 

AGREEMENT

 

Definitions. Unless otherwise specifically defined herein, each term used herein which is defined in the Loan Agreement shall have the meaning assigned to such term in the Loan Agreement.

 

“Broker Payment” means that certain $300,000 payment made by Melody on March 6, 2015 to Casimir Capital LP on behalf of Borrower.

 

“Green Bank Legal Fees Payment” means that certain $30,000 payment made by Melody on February 19, 2015 to Green Bank, N.A. on behalf of Borrower. 

 

Adjustment of Borrowing Base. Effective as of the date hereof, the Borrowing Base is hereby increased to $16,729,200.78. The foregoing increase of the Borrowing Base shall be deemed to have been reaffirmed on May 1, 2015. The Borrowing Base as increased shall remain in effect until the next Determination Date, unless otherwise adjusted pursuant to the provisions of Section 3.4 of the Loan Agreement.

 

Amendment to Eighth Amendment. Section 4(a) of the Eighth Amendment is hereby amended by replacing the words “April 6, 2015” appearing therein with “June 1, 2015”.

 

Broker and Legal Fees Payment Conversion. Effective as of the date hereof, each of the Broker Payment and the Green Bank Legal Fees Payment shall be deemed to be a Loan under the Loan Agreement.

 

Acknowledgments by Borrower. Borrower acknowledges and agrees as follows:

 

Accuracy of Preliminary Statement. The recitals made in the Preliminary Statement hereof are accurate and are a part of this Agreement.

 

 

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Existing Events of Default. The following Events of Default (collectively the “Existing Events of Default”) have occurred and are continuing under the Loan Agreement:

 

Borrower incurred indebtedness under that certain loan agreement dated June 30, 2014, between Borrower and Dalton Lott, an individual, as further evidenced by that certain promissory note dated as of even date therewith in the original principal amount of $1,500,000 made by Borrower and payable to the order of Dalton Lott, in violation of Section 8.9 of the Loan Agreement, which constitutes an Event of Default under Section 10.3 of the Loan Agreement.

 

Borrower failed to maintain a debt service coverage ratio of at least 1.25 to 1.00 as of the end of the fiscal quarter ended September 30, 2014, as required by Section 8.3(b) of the Loan Agreement, which constitutes an Event of Default under Section 10.3 of the Loan Agreement;

 

Borrower failed to make principal payments on November 1, 2014, December 1, 2014, January 1, 2015 and February 1, 2015, as required by Section 3.6 of the Loan Agreement, which constitutes an Event of Default under Section 10.1 of the Loan Agreement; and

 

Borrower failed to cause all payments of production proceeds from the Mortgaged Properties to be deposited into the Cash Collateral Account, as required by Section 4.7 of the Loan Agreement, which constitutes an Event of Default under Section 10.1 of the Loan Agreement.

 

None of the Guarantors have accounts at Green Bank

 

Anticipated Events of Default. Borrower anticipates that the following Events of Default have either occurred or will occur during the Forbearance Period (collectively the “Anticipated Events of Default,” and together with the Existing Events of Default, the “Designated Events of Default”):

 

Borrower will fail to make any interest payments on the Loans as required by Section 2.4 of the Loan Agreement, which will constitute Events of Default under Section 10.1 of the Loan Agreement;

 

Borrower will fail to make principal payments, as required by Section 3.6 of the Loan Agreement, which will constitute Events of Default under section 10.1 of the Loan Agreement;

 

Borrower will fail to maintain a debt service coverage of at least 1.25 to 1.00, as required by Section 8.3(b) of the Loan Agreement, which will constitute an Event of Default under Section 10.3 of the Loan Agreement; and

 

Borrower will fail to make principal prepayments triggered by the next Determination Date, as required by Section 3.5 of the Loan Agreement, which will constitute an Event of Default under Section 10.1 of the Loan Agreement.

 

 

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Acknowledgment of Default. Prior to the date hereof: (i) the Existing Events of Default exist under the Loan Agreement (and Borrower waives all notice requirements related to such Existing Events of Defaults, as well as any grace periods applicable to the cure of such Existing Events of Default); (ii) the Existing Events of Default are continuing; and (iii) as of the date hereof, no waiver by Agent or Lenders with respect to the Existing Events of Default or their respective rights and remedies with respect thereto is in effect;

 

Acknowledgment of Right to Accelerate. That (i) on and as of the Effective Date, Agent and Lenders have the right upon termination of the Forbearance Period (as hereinafter defined) to accelerate and declare the Obligations to be immediately due and payable and to make demand upon Borrower and/or any or all of the Guarantors for the payment in full of all such Obligations; (ii) such acceleration and demand for payment, if made, would be in all respects adequate and proper; and (iii) Borrower waives any and all further notice, presentment, notice of dishonor or demand with respect to the Obligations;

 

Acknowledgment of Indebtedness. That (i) as of the date hereof, Borrower is indebted to Agent and Lenders in the principal amount of $16,729,200.78 under the Loan Agreement; (ii) all such amounts remain outstanding and unpaid without setoff, counterclaim or defenses; and (iii) all such amounts are subject to increase, decrease or other adjustment as a result of any and all interest, fees and other charges including, without limitation, attorneys’ fees and costs of collection to the extent that such amounts are payable to Agent and/or Lenders under the Loan Documents (such amounts, “Fees and Expenses”);

 

Acknowledgement of Binding Effect of Documents. That (i) each of the Loan Documents to which it is a party has been duly executed and delivered to Agent, and each is in full force and effect as of the date hereof; (ii) its agreements and obligations contained in the Loan Documents and in this Agreement constitute its legal, valid and binding obligations, enforceable against it in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally or by equitable principles relating to enforceability, and it has no valid defense to the enforcement of such obligations; and (iii) Agent and Lenders are and shall be entitled to the rights, remedies and benefits provided for them in the Loan Documents and applicable law;

 

Acknowledgement of Liens. That Agent on behalf of Lenders has and shall continue to have valid, enforceable, first-priority and perfected Liens (subject to certain Permitted Liens) in the Collateral heretofore granted by the Loan Parties to the Agent (for the benefit of the Secured Parties) pursuant to the Loan Documents;

 

Acknowledgment that Liabilities Continue in Full Force and Effect. That the Obligations of Borrower and Guarantors to Agent and Lenders, except as expressly modified herein, remain in full force and effect, and shall not be released, impaired, diminished or in any other way modified or amended as a result of the execution and delivery of this Agreement or by the agreements and undertakings of the parties contained herein; and 

 

 

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Generally as to this Agreement. That (i) it has the legal power and authority to execute and deliver this Agreement; (ii) the officer executing this Agreement on its behalf has been duly authorized to execute and deliver the same and bind it with respect to the provisions hereof; (iii) its execution and delivery hereof and its performance and observance of the provisions hereof do not (a) violate or conflict with (I) any of its organizational documents or (II) any law applicable thereto or (b) result in a breach of any provision of or constitute a default under any other agreement, instrument or document binding upon or enforceable against it, in the case of clauses (a)(I) and (b), in any material respect; (iv) except with respect to the Designated Events of Default, no Default or Event of Default exists under the Loan Agreement, nor will any occur as a result of the execution and delivery of this Agreement or by the performance or observance of any provision hereof; (v) it is not aware of any claim or offset against, or defense or counterclaim to, any of its obligations or liabilities under the Loan Agreement or any other Loan Document; and (vi) this Agreement and each document executed in connection herewith constitute its valid and binding obligations in every respect, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

 

Forbearance by Agent and Lenders. 

 

Forbearance Period. At the request of Borrower, Agent and Lenders agree to forbear from the exercise of their rights and remedies, whether at law, in equity, by agreement or otherwise, available to Agent and/or Lenders as a result of the Designated Events of Default, as of the Effective Date until the earliest to occur of the following: (i) the occurrence of any Event of Default under any of the Loan Documents (other than the Designated Events of Default); and (ii) June 1, 2015 (the period beginning on the Effective Date and terminating on the earliest of such dates (in each case subject to extension by the Agent in its sole discretion) being hereinafter referred to as the “Forbearance Period”). 

 

Termination of Forbearance Period. Upon the termination of the Forbearance Period pursuant to any of clauses (i) through (ii) of paragraph (a) above, all forbearances, deferrals and indulgences granted by Agent and Lenders in paragraph (a) above shall immediately terminate and Agent and Lenders shall thereupon have, and shall be entitled to exercise, any and all rights and remedies which Agent and Lenders may have upon the occurrence of an Event of Default, including, without limitation, the Designated Events of Default, and the Obligations shall become immediately due and payable.

 

Forbearance Period Interest. Borrower acknowledges and agrees that Agent and Lenders hereby are accruing interest at the default rate described in Section 1.1 of the Loan Agreement to the extent of interest accrued during the period from the occurrence of the earliest to occur of the Designated Events of Default (including, without limitation, during the period from the Effective Date through and including the expiration or termination of the Forbearance Period) against the Loans and all other Obligations.

 

 

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Acknowledgements regarding Forbearance. Other than the Term Sheet, Borrower acknowledges that neither Agent nor Lenders have made any assurances concerning (i) any possibility of an extension of the Forbearance Period; (ii) the manner in which or whether the Designated Events of Default may be resolved; or (iii) any additional forbearance, waiver, restructuring or other accommodations. Borrower agrees that the running of all statutes of limitation and the doctrine of laches applicable to all claims or causes of action that Agent or Lenders may be entitled to take or bring in order to enforce their rights and remedies against Borrower are, to the fullest extent permitted by law, tolled and suspended during the Forbearance Period.

  

Acknowledgement regarding Agent’s Inspection Rights. Borrower acknowledges and confirms its obligations and the rights of the Agent under Section 7.9 of the Loan Agreement. 

 

General Cooperation from Borrower’s Boards and Advisors. Subject to privilege and other confidentiality requirements, Borrower shall, and shall cause its officers, directors, employees and advisors to, cooperate fully with Agent (acting at the direction of the Lenders) and its designees in furnishing information available to Borrower as and when requested by Agent or its designees regarding the Collateral (as defined in the Security Agreement) or Borrower’s financial affairs, finances, financial condition, business and operations. At the reasonable request of Agent, subject to privilege and other confidentiality requirements, the chief executive officer and the chief financial officer of Borrower and such other officers, directors, employees and advisors of Borrower requested by Agent or its designees, shall make themselves available to discuss any matters regarding the Collateral or Borrower’s financial affairs, financial condition, business and operations, all upon reasonable notice during normal business hours, and shall direct and authorize all such persons and entities to fully disclose to Agent and its designees all information requested by Agent or its designees regarding the foregoing.

 

Direction and Indemnification. Each of the Lenders hereto:

 

confirms that it is a beneficial holder of Loans in the amount set forth on its signature page to this Agreement;

 

exercises its rights pursuant to Section 14.4 of the Loan Agreement and directs the Agent to execute and deliver this Agreement and take the actions contemplated herein; and

  

 

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agrees with the other Lenders signatory hereto (and such Lenders successors and assigns), to indemnify and hold harmless, in an amount equal to its pro rata share (based on its respective principal amounts of its outstanding Loans as a proportion of the total outstanding Loans of the Lenders party hereto), the Agent and each other Agent-related Person, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time be imposed on, incurred by or asserting against such Agent or Agent-related Person in any way relating to or arising out of, this Agreement, any of the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by such Agent under or in connection with any of the foregoing (the foregoing to be in addition to any rights of compensation or indemnification granted to the Agent pursuant to the Loan Documents); provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements that are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from such Agent’s or Agent-related Person’s gross negligence or willful misconduct; provided, further, that no action taken or refrained from in accordance with the directions or consent of the Lenders shall be deemed to constitute gross negligence or willful misconduct for purposes of this Section.

 

Conditions Precedent. Prior to or simultaneous with closing, and as a condition to closing, of this Agreement:

 

Agent shall have received this Agreement duly executed by Borrower, Guarantors, Agent and the Lenders; 

 

No Potential Event of Default or Event of Default shall exist except the Designated Events of Default;

 

The Borrower shall form a wholly-owned Subsidiary and shall cause all of its oil and gas assets to be contributed to such Subsidiary pursuant to assignment and conveyance instruments acceptable to, and approved in writing by, Agent. The Borrower shall pledge the equity of such Subsidiary to the Agent as Collateral for the Obligations. In addition, such Subsidiary shall guarantee the Obligations and pledge substantially all its assets as Collateral in accordance with the Security Documents; and

 

Borrower shall have paid all professional fees and expenses of Agent and its counsel (Willkie Farr & Gallagher LLP), and Borrower’s counsel (Carrington, Coleman, Sloman & Blumenthal, L.L.P.) that have been invoiced prior to the Restructuring Date.

 

 

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Representations and Warranties. Borrower hereby represents and warrants that, as of the date hereof: (a) except with respect to the representations and warranties in the Loan Agreement that may be untrue or incorrect as a result of the occurrence or existence of one or more of the Designated Events of Default, the representations and warranties contained in the Loan Agreement are true and correct in all material respects as of such date with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties shall have been true and correct in all material respects as of such earlier date); (b) other than the Designated Events of Default, no Default or Event of Default has occurred and is continuing, (c) the execution delivery and performance of this Amendment are within the corporate power and authority of such Loan Party and have been duly authorized by all necessary corporate action and proceedings; (d) this Agreement and the other Loan Documents each constitute the legal, valid and binding obligation of each Loan Party party thereto, enforceable against each such Loan Party in accordance with its terms, subject to (i) the effects of bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance or other similar laws affecting creditors’ rights generally, (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law), and (iii) implied covenants of good faith and fair dealing; (e) there are no consents, authorizations or approvals by any Governmental Authority or third party required in connection with the execution, delivery, and performance by each Loan Party of this Agreement or the other Loan Documents, or the enforceability of this Agreement or the other Loan Documents; and (f) Borrower has not incurred any liability, contingent or otherwise, for broker’s or finders’ fees relating to the transactions contemplated by this Agreement for which Agent, any Lender or any of their respective Affiliates shall have any responsibility.

 

Reaffirmation. Borrower and each Guarantor (a) represents and warrants that it has no defenses to the enforcement of any Loan Document to which it is a party, (b) reaffirms the terms of and its obligations (and the security interests granted by it) under each Loan Document to which it is a party, and agrees that each such Loan Document will continue in full force and effect to secure the Obligations as the same may be amended, supplemented or otherwise modified heretofore, hereby and from time to time hereafter, and such other amounts in accordance with the terms of such Loan Document, and (c) acknowledges, represents, warrants and agrees that the liens and security interests granted by it pursuant to the Security Documents are valid and subsisting and create a security interest to secure the Obligations.

 

Consent of Guarantors. Each Guarantor hereby consents, acknowledges and agrees to the terms of this Agreement and hereby confirms, reaffirms and ratifies in all respects the Guaranty Agreement to which it is a party (including without limitation the continuation of such Guarantor’s payment and performance obligations thereunder upon and after the effectiveness of this Agreement), as amended or restated, and the enforceability of such Guaranty Agreement against such Guarantor in accordance with its terms.

 

Reservation of Rights. Borrower acknowledges and agrees that Agent and Lenders (a) have not acquiesced to any noncompliance by Borrower with the exact terms of the Loan Agreement relating to any Event of Default (other than the temporary forbearance regarding the Designated Events of Default), (b) except as otherwise provided for in this Agreement, intend to strictly enforce the terms of the Loan Agreement and the other Loan Documents, in the exercise of their sole and absolute discretion, and (c) hereby reserve all rights, powers and remedies under the Loan Agreement and the other Loan Documents with respect to the Designated Events of Default (upon termination of the Forbearance Period) and any other noncompliance with the terms of the Loan Agreement or any of the other Loan Documents.

 

 

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Receipt and Application of Payments. Borrower acknowledges and agrees that Agent and Lenders shall be entitled during the Forbearance Period to accept such payments and proceeds as are remitted to it pursuant to any provision of the Loan Documents or this Agreement, that Agent and Lenders shall be entitled to apply any and all such proceeds and payments against the liabilities and Obligations owed by Borrower to Lenders in such order of application as set forth in the Loan Documents, and that the acceptance by Agent or Lenders of any such proceeds and payments as are remitted to it pursuant to the Loan Documents or this Agreement or otherwise shall in no way affect or impair the status of the indebtedness owed to Lenders by Borrower or be deemed to be a waiver of any Events of Default or any acquiescence therein.

 

RELEASE. BORROWER, THE OTHER LOAN PARTIES, AND THEIR AFFILIATES ON BEHALF OF THEMSELVES AND THEIR RELATED PARTIES, HEREBY ACKNOWLEDGES AND AGREES THAT IT DOES NOT HAVE ANY DEFENSES, COUNTERCLAIMS, OFFSETS, CROSS-COMPLAINTS, CLAIMS OR DEMANDS OF ANY KIND OR NATURE WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF THE LIABILITY OF BORROWER TO REPAY LENDERS AS PROVIDED IN THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS OR TO SEEK AFFIRMATIVE RELIEF OR DAMAGES OF ANY KIND OR NATURE FROM AGENT OR ANY LENDER PARTY HERETO. BORROWER, THE OTHER LOAN PARTIES, AND THEIR AFFILIATES ON BEHALF OF THEMSELVES AND THEIR RELATED PARTIES HEREBY VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES AGENT, LENDERS PARTY HERETO AND AGENT'S AND EACH LENDER PARTY HERETO'S PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, OR EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT, OR CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS AGREEMENT IS FULLY EXECUTED, WHICH ANY OF BORROWER, THE OTHER LOAN PARTIES, AND THEIR AFFILIATES OR THEIR RELATED PARTIES MAY NOW OR HEREAFTER HAVE AGAINST AGENT OR ANY LENDER PARTY HERETO IN THEIR CAPACITIES AS SUCH, AND AGENT'S OR ANY LENDER PARTY HERETO'S PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, IF ANY, IN THEIR CAPACITIES AS SUCH, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, THE EXERCISE OF ANY RIGHTS AND REMEDIES UNDER THIS AGREEMENT OR OTHER LOAN DOCUMENTS, AND NEGOTIATION AND EXECUTION OF THIS AGREEMENT. 

 

Miscellaneous. 

 

Entire Agreement. This Agreement reflects the entire understanding of the parties with respect to the subject matter herein contained and supersedes any prior agreements, whether written or oral, in regard thereto.

 

Full Force and Effect. Except as expressly modified herein during the Forbearance Period, all terms of the Loan Agreement and the Loan Documents shall be and shall remain in full force and effect and shall constitute the legal, valid, binding and enforceable obligations of Borrower.

 

 

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No Waiver. This Agreement is not intended to operate as, and shall not be construed as, a waiver of any Event of Default, whether known to Agent or Lenders or unknown, as to which all rights of Agent and Lenders shall remain reserved. 

 

Loan Document. This is a Loan Document for the purposes and provisions of the other Loan Documents. Without limiting the foregoing, any breach of representations, warranties, and covenants under this Agreement shall be a Default or Event of Default, as applicable, under the Loan Agreement.

 

Governing Law. This Agreement shall be governed by, and shall be construed in accordance with, the laws of the State of New York and all applicable laws of the United States of America.

 

WAIVER OF RIGHT TO JURY TRIAL. BORROWER WAIVES TRIAL BY JURY AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY A JUDGE OF A COURT OF COMPETENT JURISDICTION.

 

Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be an original and all of which, taken together, shall constitute but one and the same agreement among the parties. Any party hereto may execute and deliver a counterpart of this Agreement by delivering by facsimile or other electronic transmission a signature page of this Agreement signed by such party, and any such facsimile or other electronic signature shall be treated in all respects as having the same effect as an original signature. 

 

No Novation. This Agreement is given as an amendment and modification of, and not as payment of, the indebtedness of Borrower and each Guarantor under the Notes, the Loan Agreement and the other Loan Documents and is not intended to constitute a novation of the Notes, the Loan Agreement or any of the other Loan Documents. All of the indebtedness liabilities and obligations owing by Borrower and each Guarantor under the Notes, the Loan Agreement and the other Loan Documents shall continue.

 

Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of Borrower, each Guarantor, Agent, and each Lender and their respective successors, assigns and legal representatives; provided, however, neither Borrower nor any Guarantor, without the prior consent of the Agent, may assign any of its rights, powers, duties or obligations hereunder.

 

Expenses. Without limiting the provision of Section 12.1 of the Loan Agreement, Borrower and Guarantors agree to pay all out of pocket expenses (including without limitation reasonable fees and expenses of any counsel, financial advisor, industry advisor and agent for Agent or any Lender) incurred before or after the date hereof by Agent, any Lender and their respective Affiliates in connection with the preparation, negotiation, execution, delivery and administration of this Agreement and the Loan Documents.

 

 

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Captions. The captions to the Sections and paragraphs of this Agreement are for the convenience of the parties only, and are not a part of this Agreement.

 

Time of the Essence. Time is of the essence under this Agreement.

 

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

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IN WITNESS WHEREOF, this Agreement has been duly executed as of the date first written above.

 

 

	
 
	
BORROWER

 

TRANSCOASTAL CORPORATION, as Borrower

 

 

 

By: /s/ Stuart G. Hagler
Name: Stuart G. Hagler
Its: CEO

 

 

 

[Signature Page to Ninth Amendment to Loan Agreement and Forbearance Agreement]

 

 

	
 
	
SHAREHOLDERS

 

 

 

By: /s/ Stuart G. Hagler
Name: Stuart G. Hagler

 

 

 

By: /s/ David May
Name: David J. May 

 

 

 

By: /s/ W.A. Westmoreland
Name: W.A. Westmoreland

 

 

 

[Signature Page to Ninth Amendment to Loan Agreement and Forbearance Agreement]

 

 

	
 
	
AGENT

 

MELODY BUSINESS FINANCE, LLC, as Agent

 

 

 

By: /s/ Terri Lecomp
Name: Terri Lecamp
Its: Authorized signatory

 

 

 

LENDER

 

MELODY BUSINESS FINANCE, LLC, as Lender

 

 

 

By: /s/ Terri Lecomp
Name: Terri Lecomp
Its: Authorized signatory

 

 

 

[Signature Page to Ninth Amendment to Loan Agreement and Forbearance Agreement]

 

 

	
 
	
JUNIOR LENDER

 

 

 

/s/ Dalton Lott
Name: Dalton Lott

 

 

 

[Signature Page to Ninth Amendment to Loan Agreement and Forbearance Agreement]

 

 

	
 
	
Acknowledged and agreed:

 

TRANSCOASTAL PARTNERS, LLC, as Loan Party

 

By: /s/ Stuart G Hagler
Name: Stuart G. Hagler
Its: Manager

 

 

 

[Signature Page to Ninth Amendment to Loan Agreement and Forbearance Agreement]

 

 

Ratification of Guaranties

 

Each of the undersigned, as guarantors of the obligations under one or more Guaranty Agreements (each, as amended, restated and amended and restated, “Guaranty Agreement”), hereby (a) consents and agrees to this Forbearance Agreement, including without limitation, the terms and provisions of Sections 10, 11, 14, 15(h), 15(i) and 15(j) thereof, and (b) confirms and agrees that is Guaranty Agreement, as amended or restated prior to or concurrently with the execution of this Agreement, is and shall continue to be in full force and effect and is ratified and confirmed in all respects, except that, on and after the Effective Date, each reference in any Guaranty Agreement to the “Loan Agreement,” “thereunder,” “thereof,” “therein” or any other expression of like import referring to the Loan Agreement shall mean and be a reference to the Loan Agreement as modified by the Agreement.

 

 

 

 

	
 
	
By: /s/ Stuart G. Hagler
Name: Stuart G. Hagler

 

 

 

By: /s/ David May
Name: David J. May

 

 

By: /s/ W.A. Westmoreland
Name: W.A. Westmoreland

 

 

CORETERRA OPERATING, LLC

 

By: /s/ Stuart G. Hagler
Name: Stuart G. Hagler

Title: Manager

 

 

 

 

 

Consent of Spouse

 

The undersigned, being the spouse of Stuart G. Hagler, in order to induce the Administrative Agent and Lenders to forbear from the current exercise of their rights and remedies provided for in the Agreement, based, in part, on the foregoing Ratification of Guaranties, hereby consents to the foregoing Ratification of Guaranties and agrees that all assets listed on any financial statement of Stuart G. Hagler submitted to the Agent from time to time are subject to his liability under the Guaranty Agreement (as defined therein). Without limitation of the foregoing, by execution of this consent, the undersigned acknowledges that it understands the contents of the Ratification of Guaranties (and the Guaranty Agreement) and is aware that, by the provisions thereof, all assets of Stuart G. Hagler, including any community interest, are subject to the Stuart G. Hagler’s liability under the Guaranty Agreement.

 

IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, has executed this Consent of Spouse on the date and year first above written.

 

 

 

	
 
	
By: /s/ Jennifer Hagler

	 	Name: Jennifer Hagler

 

 

 

 

Consent of Spouse

 

The undersigned, being the spouse of David A. May, in order to induce the Administrative Agent and Lenders to forbear from the current exercise of their rights and remedies provided for in the Agreement, based, in part, on the foregoing Ratification of Guaranties, hereby consents to the foregoing Ratification of Guaranties and agrees that all assets listed on any financial statement of David A. May submitted to the Agent from time to time are subject to his liability under the Guaranty Agreement (as defined therein). Without limitation of the foregoing, by execution of this consent, the undersigned acknowledges that it understands the contents of the Ratification of Guaranties (and the Guaranty Agreement) and is aware that, by the provisions thereof, all assets of David A. May, including any community interest, are subject to the David A. May’s liability under the Guaranty Agreement.

 

IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, has executed this Consent of Spouse on the date and year first above written.

 

 

 

	
 
	By: /s/ Roseanne May 
	 	Name: Roseanne May

 

 

 

Consent of Spouse

 

The undersigned, being the spouse of W.A. Westmoreland, in order to induce the Administrative Agent and Lenders to forbear from the current exercise of their rights and remedies provided for in the Agreement, based, in part, on the foregoing Ratification of Guaranties, hereby consents to the foregoing Ratification of Guaranties and agrees that all assets listed on any financial statement of W.A. Westmoreland submitted to the Agent from time to time are subject to his liability under the Guaranty Agreement (as defined therein). Without limitation of the foregoing, by execution of this consent, the undersigned acknowledges that it understands the contents of the Ratification of Guaranties (and the Guaranty Agreement) and is aware that, by the provisions thereof, all assets of W.A. Westmoreland, including any community interest, are subject to the W.A. Westmoreland’s liability under the Guaranty Agreement.

 

IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, has executed this Consent of Spouse on the date and year first above written.

 

 

 

	
 
	
By: /s/ Keri L. Westmoreland 

	 	Name: Keri L. Westmoreland2015-04-01 Exhibit 10.1 Elliott Contract

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (this “Agreement”) is made as of March 25, 2015 (the “Agreement Date”), with and starting date of April 6, 2015 (the “Start Date”) by and among MILLER ENERGY RESOURCES, INC., a Tennessee corporation (the “Company”), PHILLIP G. ELLIOTT (“Executive”). 
 
WHEREAS, the Company is seeking an individual to serve as its Chief Financial Officer; 

WHEREAS, Executive possesses the necessary skills to serve as the Company’s Chief Financial Officer; 

WHEREAS, Company wishes to employ Executive and Executive wishes to serve the Company under the terms of this Agreement;

NOW, THEREFORE, in consideration of the mutual covenants and representations contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
 
     1.    Employment Period.  The Company hereby employs Executive, and Executive agrees to serve the Company under the terms of this Agreement, for the period commencing on the Start Date and ending on the second anniversary of the Start Date (the “Employment Period”), subject to earlier termination as provided herein. 
 
     2.    Duties and Status.  The Company hereby engages Executive as its Senior Vice President and Chief Financial Officer, and such other positions as the Company may require from time to time, on the terms and conditions set forth in this Agreement. During the Employment Period, Executive shall report directly to the Chief Executive Officer of the Company, and exercise such authority, perform such executive duties and functions and discharge such executive responsibilities as are reasonably associated with Executive’s position, consistent with the responsibilities assigned to officers of companies comparable to the Company, commensurate with the authority vested in Executive pursuant to this Agreement and consistent with the Charter and Bylaws of the Company as in effect from time to time (the “Charter and Bylaws”). Without limiting the generality of the foregoing, Executive shall undertake his duties in a manner consistent with the best interests of the Company and shall perform his duties to the best of his ability and in a diligent and proper manner. Executive shall perform all duties, services and responsibilities in accordance with the guidelines, policies and procedures established by the Company’s Board of Directors (the “Board”) from time to time. Executive further agrees to devote his entire business time, attention, full skill and best efforts to the interests and business of the Company. Notwithstanding the foregoing or any other provision of this Agreement, it shall not be a breach or violation of this Agreement for the Executive to (i) serve on corporate (subject to approval of the Board), civic or charitable boards or committees, (ii) deliver lectures, fulfill speaking engagements or teach at educational institutions, or (iii) manage personal investments, so long as such activities do not significantly interfere with or significantly detract from the performance of the Executive’s responsibilities to the Company in accordance with this Agreement.  

     3.    Compensation; Benefits and Expenses.
 
(a) Salary. During the Employment Period, the Company shall pay to Executive, as compensation for the performance of his duties and obligations under this Agreement, a base salary at the rate of $345,000 per annum (the “Base Salary”), payable in arrears in accordance with the normal payroll practices of the Company for its executive officers.  The Board or the Compensation Committee of the Board (the “Committee”), in accordance with the Charter and Bylaws, retain the discretion to increase the Base Salary during the Employment Period. 
 
(b) Incentives. In addition to his Salary, Executive will be eligible for the following incentives.  

(i)Stock Award.  The Executive shall receive 300,000 shares of the Company’s common stock under the 2011 Plan (the “Grant”).  The Grant shall vest in the Executive in two equal installments of 150,000 shares on the Start Date (the “Initial Grant”) and of 150,000 shares on the first anniversary of the 

Start Date (the “Second Grant”).  In the event the Executive resigns his position with the Company without Good Reason (defined below) before the first anniversary of the Start Date, then the Executive agrees that (x) the Initial Grant shall be forfeited notwithstanding its prior vesting and (y) for the avoidance of doubt, the Second Grant shall not vest in the Executive.  Executive understands and agrees that, prior to the first anniversary of the Start Date, no portion of the Initial Grant may be sold, assigned, transferred or conveyed by Executive to any person or entity without the prior written consent of the Company, that such certificates must be issued in physical certificated form to the Company for delivery to the Executive and that any such share certificate evidencing the Initial Grant shall, prior to the first anniversary of the Start Date, bear a legend in substantially the following form:

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF THE EMPLOYMENT AGREEMENT DATED MARCH 25, 2015, AND MAY UNDER CERTAIN CIRCUMSTANCES UPON THE RESIGNATION OF PHILLIP G. ELLIOTT FROM HIS POSITION WITH MILLER ENERGY RESOURCES, INC. (THE “ISSUER”), BE FORFEITED TO THE ISSUER ON THE TERMS SET FORTH IN THAT AGREEMENT. THESE SHARES MAY NOT BE SOLD, ASSIGNED, TRANSFERRED OR CONVEYED WITHOUT THE EXPRESS WRITTEN CONSENT OF THE ISSUER.

Provided that the Executive has not then resigned his position with the Company without Good Reason, on and after the first anniversary of the Start Date, the Company shall have the share certificate evidencing the Initial Grant reissued without such legend.  In all other respects, the Grant shall be governed by, and the rights of the Executive in the Grant shall be subject to, the terms and conditions of the Company’s 2011 Plan.

For purposes of this Agreement “Good Reason” means any of the following: (A) a material and adverse change in Executive's function, authority, duties, compensation, responsibilities or principal place of employment, without Executive’s consent (other than a reduction in Executive’s function, authority or duties incident to a Disability or temporary suspension effected by the CEO or Board to investigate whether circumstances constituting “Cause” exist); (B)  substantial difference of opinion between Executive, on the one hand, and the CEO or the Board, on the other hand, develops (or other circumstances should arise) such that Executive, in good faith, no longer believes that he can function effectively in his position for the Company as defined in Section 2 above; (C) there is a significant increase in the amount of travel required for Executive to perform his job, without Executive 's consent; (D) there is a material failure by the Company to comply with any of the provisions of this Agreement; (E) a Change in Control (defined below) of the Company occurs, (F) after the Start Date, any material adverse change in the financial condition of the Company (other than as a result of any events or circumstances that would be deemed “Cause” for termination under the terms hereof) develops; or (G) any other matter or circumstance arises as a result of an action of the CEO or Board if (x) made with the intent of materially hindering Executive in the performance of his duties hereunder or creating a material incentive for Executive to resign from his position with the Company or (y) the effect of such action could reasonably be expected to materially hinder Executive in the performance of his duties hereunder or create a material incentive for Executive to resign from his position with the Company; excluding, in each of clause (x) and (y) above, any temporary suspension effected by the CEO or Board to investigate whether circumstances constituting “Cause” exist. 

(ii)Additional Bonus Compensation.  During the Employment Period, Executive shall also be eligible to receive a bonus in an anticipated amount of one to three times his Base Salary (an “Annual Bonus”), payable in connection with the end of the Company’s fiscal year at times determined by the Board or the Committee, at least 50% of which shall be paid to the Executive in cash.  Subject to the Minimum Bonus described below, the exact amount of and the eligibility to receive any such Annual Bonus (including any performance metrics to be met in order to establish such eligibility) shall be determined at the discretion of the Board and the Committee in accordance with the Company’s Charter and Bylaws.  Notwithstanding the foregoing, so long as the Executive remains employed by the Company, the Executive shall be entitled to receive a minimum Annual Bonus (“Minimum Bonus”) in connection with the first two fiscal years of the Company ending during the Employment Period (currently expected to end on December 

31, 2015 and December 31, 2016, but specifically excluding the Company’s fiscal year ended April 30, 2015) equal to his Base Salary then in effect, at least 50% of which shall be payable in cash, in accordance with the Company’s normal timing of and payroll practices for bonus payments; provided that, with respect to any such Minimum Bonus payable for a fiscal year ended December 31, 2015, the amount of such bonus shall be the amount of such Base Salary as prorated from and including Start Date and to and including December 31, 2015.

(iii)Discretion.  The provisions of this Section 3(b) are not intended to be exclusive and the Board and Committee retain discretion to award additional cash and non-cash incentives, bonuses and long-term incentive awards to the Executive separate from the compensation and incentive opportunities specified in Sections3(b)(i) and (ii) above.
  
(c) Vacation and Sick Leave. Executive shall be entitled during the Employment Period to vacation time for each calendar year and such paid sick leave as are in accordance with the normal Company policies and practices in effect from time to time for senior executives but in no event less than four (4) weeks’ vacation; provided, however, that unless otherwise approved in writing by the Board, no more than two weeks of such vacation time may be used consecutively, and provided, further, that any accrued but unused vacation time and paid sick leave remaining at the end of each calendar year shall be forfeited unless otherwise agreed to in writing by the Company and Executive.
 
(d) Other Benefits. During the Employment Period, Executive shall be entitled to participate in the employee benefit plans, programs and arrangements of the Company in effect during the Employment Period which are generally available to senior executives of the Company (including, without limitation, 401(k) and group medical insurance plans), subject to and on a basis consistent with the terms, conditions and overall administration of such plans, programs and arrangements.
 
(e) Moving and Related Expenses.  Following the execution of this Agreement, the Company will pay to the Executive the sum of $60,000 to cover moving, relocation and related expenses for himself and his household (the “Relocation Reimbursement”).  Following the calculation of Executive’s taxes for tax year 2015, Executive shall provide the Company with a statement, in reasonable detail (the “Tax Statement”), showing the net income tax payable by the Executive in connection with his receipt of the Relocation Reimbursement for such tax year (the “Additional Tax Liability”).  As soon as practicable after the Company and Executive have reached agreement on the final calculation of the amount thereof, but in no event later than 60 days after Company’s receipt of the Tax Statement, the Company shall provide Executive with an additional payment to "gross up" Executive for the Additional Tax Liability so that on an after-tax basis Executive receives an amount equal to the Additional Tax Liability during the 2016 tax year. 

(f)    Other Expenses. In addition to any amounts payable to Executive pursuant to this Section 3, the Company shall reimburse Executive, upon production of accounts and vouchers or other reasonable evidence of payment by Executive, all in accordance with the Company’s regular procedures in effect from time to time, all reasonable and ordinary expenses as shall have been incurred by him in the performance of his duties hereunder or other expenses agreed upon in writing by the Company and Executive. 
 
     4.    Termination of Employment.  
 
(a) Termination for Cause. The Company may terminate Executive’s employment hereunder at any time for Cause, subject to Section 5 below. For purposes of this Agreement, “Cause” shall mean:
 
		
	(i)
	Willful, habitual and continued unavailability to act or respond on behalf of the Company;

 
		
	(ii)
	Willful misconduct or fraud;

		
	(iii)
	Conviction, by a court of competent jurisdiction, of a felony (whether or not committed during the term hereof or in the course of employment hereunder); 

		
	(iv)
	Willful, continued, and material failure to observe or perform the duties of his employment hereunder; and

		
	(v)
	Willfully acting in a manner materially adverse to the best interests of the Company;

in each case, which the Board reasonably determines has had or may be expected to have a material detrimental impact on the Company’s business or operations or would prevent Executive from effectively performing his duties under this Agreement

(b) Termination Upon Death or Disability. The Employment Period shall be terminated upon the death or Disability (as defined below) of Executive. "Disability" shall mean that as a result of physical or mental illness, injury, infirmity or other incapacity as determined by a physician selected by the Board, Executive is not able to substantially perform his duties and responsibilities to the Company for a period of one hundred twenty (120) consecutive days or an aggregate period of more than one hundred and eighty (180) days in any 12-month period.
 
     5.    Consequences of Termination.
 
(a) For Cause, Death or Disability; By Executive. In the event of termination of Executive’s employment at any time during the Employment Period: (i) by the Company for Cause, (ii) by Executive for any reason other than in connection with a Change in Control (as contemplated in Section 5(c) below) or (iii) as a result of death or Disability, Executive shall be entitled only to receive Base Salary accrued but not paid through the date of termination and the Company shall have no further obligations to Executive.
 
(b) Other Termination. In the event of a termination of Executive’s employment at any time during the Employment Period for any reason other than as set forth in Sections 5(a) or 5(c) hereof, including but not limited to a termination of the Executive by the Company without Cause therefor (in circumstances not otherwise governed by Section 5(c) below): 
 
(i)The Company shall provide to Executive his Base Salary accrued but not paid through the date of termination plus, subject to Section 5(d), an additional severance payment equal to the greater of (i) an amount equal to 1.0 times the Executive’s highest annualized Base Salary during the Employment Period or (ii) the full amount of Base Salary otherwise payable from the date of termination through the end of the Employment Period, payable over time in accordance with the Company’s normal payroll practices as if no termination had occurred; plus

(ii)     Executive and the Company intend that payment of severance under Section 5(b)(i) shall be exempt from treatment as nonqualified deferred compensation subject to Section 409A of the Internal Revenue Code (“Code Section 409A”) to the maximum extent permitted, first for amounts treated as short-term deferrals pursuant to Treasury Regulation § 1.409A-1(b)(4) and then for amounts treated as separation pay due to involuntary separation from service pursuant to Treasury Regulation § 1.409A-1(b)(9)(iii) to the extent of those amounts paid no later than the last day of the second taxable year of Executive following the taxable year of Executive’s termination date and otherwise qualifying for such exemption. 

(c) Change in Control. If at any time during the Employment Period, Executive’s employment with the Company is terminated by the Company after a Change in Control (as hereinafter defined) or in the 90 days prior to a Change in Control upon the request of the acquirer, or if the Executive resigns in connection with a Change in Control as a result of (i) the Company’s failure to obtain the assumption of this Agreement, without limitation or reduction, by any successor to the Company or any parent corporation of the Company or (ii) any material reduction in the Executive’s then current Base Salary or then current benefits or a relocation of more than 50 miles from the Executive’s then current place of employment being required, the Company shall pay to Executive, subject to Section 5(d) and in lieu of the amount otherwise payable under Section 5(b), an amount equal to 2.0 multiplied by Executive’s highest annualized Base Salary during the Employment Period in a lump-sum at the applicable time specified in Section 5(d) but not earlier than the closing of the Change in Control.  All units, stock options, incentive stock options, performance shares, stock appreciation rights and restricted stock granted and held by 

Executive immediately prior to a Change in Control will immediately become 100% vested to the extent duly granted by the Company and approved by its shareholders; and the Executive’s right to exercise any previously unexercised options will not terminate until the latest date on which such option would expire but for the termination of Executive’s employment. To the extent the Company is unable to provide for one or both of the foregoing rights the Company will provide in lieu thereof a lump-sum cash payment equal to the total value of such units, stock options, incentive stock options, performance shares, stock appreciation rights and shares of restricted stock.   

For purposes hereof, a “Change in Control” means the occurrence of any of the following events: 

(i)any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) other than the Company, any trustee or other fiduciary holding securities under any employee benefit plan of the Company, or any company owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of the Company is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing thirty percent (30%) or more of the combined voting power of Miller Energy Resources, Inc.'s then-outstanding securities; 

(ii)during any period of two (2) consecutive years (not including any period prior to the Agreement Date), individuals who, at the beginning of such period, constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (i), (iii), or (iv) of this definition) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the two-year period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the Board; 

(iii)the consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; provided, however, that a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no person acquires less than thirty percent (30%) of the combined voting power of the Company’s then-outstanding securities shall not constitute a Change in Control of the Company; or

(iv)the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets.

(d)    Obligation to Execute Release.  The Company’s obligation to make the payments provided for in Section 5(b) and 5(c) (the “Termination Payments”) shall be subject to Executive’s execution of a release, substantially in the form attached hereto as Exhibit A (a “Release”) in favor of the Company and its stockholders and their respective directors, officers and employees and which is not revoked by Executive by the end of any applicable revocation period and is thereafter non-revocable.  The Company will supply to Executive a form of the Release not later than the date of Employee's termination, which must be returned within 21 days of receipt by the Executive and must not be revoked by Employee within seven (7) days of the date the Executive delivers his signature thereto (such 7-day period, the “Revocation Period”).  Provided that Executive shall have executed and returned the Release within such 21-day period, and Executive shall not thereafter have revoked the Release during the Revocation Period, the amounts payable pursuant to Section 5(b) or 5(c) following Executive's termination shall be paid (or, in the case of installment payments, shall commence being paid) on the first regular payroll date of the Company following the Revocation Period (with such  payment to include, in the case of installment payments, an amount equal to the installment payments that accrued from the date of termination to the date of the initial payment).  

(e) Withholding of Taxes. All compensation, in cash or otherwise, required to be paid by the Company to Executive under this Agreement shall be subject to the withholding of such amounts, if any, relating to tax, excise tax and other payroll deductions as the Company may reasonably determine it should withhold pursuant to any applicable law or regulation.
 
(f) No Other Obligations. Except for the obligations of the Company provided by this Agreement, by any employee benefit plan of the Company in which Executive participates, or by operation of applicable law, the Company shall have no further obligations to Executive upon his termination of employment.
 
     6.    Indemnity.  The Company shall, during Executive’s employment with the Company and thereafter, indemnify Executive to the fullest extent permitted by law and by its Charter and Bylaws and shall assure that Executive is covered by the Company’s D&O insurance policies, if available, and any other insurance policies or indemnification programs adopted by the Company that protect employees as in effect from time to time. All such insurance policies shall be with providers, and provide for coverage in amounts, customary and reasonable within the industry in which the Company operates.
 
     7.    Restrictive Covenants.
 
(a) Confidential Information.
 
(i) Executive agrees that all information and know-how, whether or not in writing, of a private, secret or confidential nature concerning the business or financial affairs of the Company or any Affiliates (as defined below) is and shall be the exclusive property of the Company or any Affiliates. Such information and know-how shall include, but not be limited to, inventions, products, processes, methods, techniques, formulas, compositions, compounds, projects, developments, plans, research data, clinical data, financial data, personnel data, seismic data, geological or geophysical information, drilling plans, computer programs, customer and supplier lists, client lists, business plans, the terms or expected terms of business negotiations, operational methods, pricing policies, marketing plans, sales plans, identity of suppliers or vendors, trading positions, sales, profits or other financial or business information, in each case of or relating to the business of the Company or any Affiliates (including such information  of third-parties which has been shared with the Company or its Affiliates on a confidential basis, collectively, “Confidential Information”). Except in connection with, and on a basis consistent with, the performance of his duties hereunder, Executive shall not disclose any Confidential Information to others outside the Company or any Affiliates or use the same for any unauthorized purposes without written approval by the Board, either during or at any time after the Employment Period.
 
(ii) Executive agrees that all files, letters, memoranda, reports, records, data, drawings, notes, computer programs or files, vendor, partner, joint venturer or customer lists, solicitations or other written  or other tangible material containing Confidential Information, whether created by Executive or others, which shall come into his custody or possession, shall be and are the exclusive property of the Company or any Affiliates to be used by Executive only in the performance of his duties for the Company. Executive agrees to deliver to the Company upon the expiration of the Employment Period all such material containing Confidential Information.
 
 (iii) Executive agrees that his obligation not to disclose or use information, know-how and records of the types set forth in paragraphs (i) and (ii) above, also extends to such types of information, know-how, records and tangible and intellectual property of customers of the Company or any Affiliates or suppliers to the Company or any Affiliates or other third parties who may have disclosed or entrusted the same to the Company or any Affiliates or to Executive in the course of the Company’s business.
 
(iv) Notwithstanding the foregoing, Confidential Information shall not include information which (A) is or becomes generally available or known to the public, other than as a result of any disclosure which 

it itself in violation of a confidentiality obligation; or (B) is or becomes available to Executive on a non-confidential basis from any source other than the Company, other than any such source that is prohibited by a legal, contractual, or fiduciary obligation to the Company from disclosing such information.
 
(v) In the event that Executive is requested pursuant to, or becomes compelled by, any applicable law, regulation, or legal process to disclose any Confidential Information, Executive shall provide the Company with prompt written notice thereof so that the Company may seek a protective order or other appropriate remedy or, in the Company’s sole and absolute discretion, waive compliance with the terms hereof. In the event that no such protective order or other remedy is obtained, or the Company waives compliance with the terms hereof, Executive shall furnish only that portion of such Confidential Information which is legally required. Executive will cooperate with the Company, at the Company’s sole cost and expense, in its efforts to obtain reliable assurance that confidential treatment will be accorded such Confidential Information.
 
(b) Other Agreements. Executive represents that his performance of all the terms of this Agreement and as an employee of the Company does not and will not breach any agreement (i) to keep in confidence proprietary or confidential information, knowledge or data acquired by him in confidence or in trust prior to his employment with the Company, (ii) to refrain from competing, directly or indirectly, with the business of his previous employer or any other party, and (iii) to refrain from soliciting the employment of any employees of any previous employer or any other party.
 
(d) Survival; Enforcement. The provisions of this Section 7 shall survive the end of the Employment Period or other termination of the Agreement for a period of five years from the date of any such termination.  The Company shall be entitled to seek a restraining order, injunction or other appropriate equitable relief in any court of competent jurisdiction, without posting any bond and without the necessity of proving actual damages, to prevent any continuation of any violation of the provisions of this Section 7.
 
(e) Affiliates. For purposes of this Agreement, “Affiliates” shall mean any individuals or entities that directly or indirectly, through one or more intermediaries, controls, are controlled by or are under common control with the Company. For purposes of this definition, “control” means the power to direct the management and policies of another, whether through the ownership of voting securities, by contract or otherwise.
 
8.    Provisions Relating to Possible Excise Tax.

(a)    Cut-Back to Maximize Retained After-Tax Amounts.  The Company will reduce any payment relating to a Change in Control (with a "payment" including, without limitation, the vesting of an option or other non-cash benefit or property) pursuant to any plan, agreement or arrangement of the Company (together, "Separation Payments") to the Reduced Amount (as defined below) if but only if reducing the Separation Payment would provide to Executive a greater net after-tax amount of Separation Payments than would be the case if no such reduction took place.  The “Reduced Amount” shall be an amount expressed in present value which maximizes the aggregate present value of the Separation Payments without causing any Separation Payment to be subject to the excise tax under Section 4999 (and related Section 280G) of the Code (“Excise Tax”), determined in accordance with Section 280G(d)(4) of the Code.  Any reduction in Separation Payments shall be implemented in accordance with Section 8(b). 

(b)    Implementation Rules.  Any reduction in payments under Section 8(a) shall apply to cash payments and/or vesting of equity awards so as to minimize the amount of compensation that is reduced (i.e., it applies to payments or vesting that to the greatest extent represent parachute payments), with the amount of compensation based on vesting to be measured (to be minimally reduced, for purposes of this provision) by the intrinsic value of the equity award at the date of such vesting.  Executive will be advised of the determination as to which compensation will be reduced and the reasons therefor, and Executive and his advisors will be entitled to present information that may be relevant to this determination.  No reduction shall be applied to an amount that constitutes a deferral of compensation under Code Section 409A except for amounts that have become payable at the time of 

the reduction and as to which the reduction will not result in a non-reduction in a corresponding amount that is a deferral of compensation under Code Section 409A that is not currently payable. 
 
For purposes of determining whether any of the Separation Payments will be subject to the Excise Tax and the amount of such Excise Tax:

(i)    The Separation Payments shall be treated as "parachute payments" within the meaning of Section 280G(b)(2) of the Code, and all "excess parachute payments" within the meaning of Section 280G(b)(1) of the Code shall be treated as subject to the Excise Tax, unless, and except to the extent that, in the written opinion of independent compensation consultants, counsel or auditors of nationally recognized standing ("Independent Advisors") selected by the Company and reasonably acceptable to a majority of the employees who have agreements in place with the Company requiring additional payments to them which shall become due in connection with any Change in Control, the Separation Payments (in whole or in part) do not constitute parachute payments, or such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered within the meaning of Section 280G(b)(4) of the Code in excess of the base amount within the meaning of Section 280G(b)(3) of the Code or are otherwise not subject to the Excise Tax.

(ii)    The value of any non-cash benefits or any deferred payment or benefit shall be determined by the Independent Advisors in accordance with the principles of Sections 280G(d)(3) and (4) of the Code.

For purposes of determining reductions in compensation under Section 8(b), if any, Executive will be deemed (A) to pay federal income taxes at the applicable rates of federal income taxation for the calendar year in which the compensation would be payable; and (B) to pay any applicable state and local income taxes at the applicable rates of taxation for the calendar year in which the compensation would be payable, taking into account any effect on federal income taxes from payment of state and local income taxes.  Compensation will be adjusted not later than the applicable deadline under Code Section 409A to provide for accurate payments under the cut-back provision of Section 8(b), but after any such deadline no further adjustment will be made if it would result in a tax penalty under Code Section 409A. 

(c)    Internal Revenue Service Proceedings.  The Company shall have the right to control all proceedings with the Internal Revenue Service (or relating thereto) that may arise in connection with the determination and assessment of any Excise Tax and, at its sole option, the Company may pursue or forego any and all administrative appeals, proceedings, hearings, and conferences with any taxing authority in respect of such Excise Tax (including any interest or penalties thereon); provided, however, that the Company's control over any such proceedings shall be limited to issues with respect to which compensation may be reduced hereunder, and Executive will be entitled to settle or contest any other issue raised by the Internal Revenue Service or any other taxing authority.  Executive agrees to cooperate with the Company in any proceedings relating to the determination and assessment of any Excise Tax.

9.    Code Section 409A Compliance Rules.
 
(a)    In General. This Section 9 serves to ensure compliance with applicable requirements of Code Section 409A. Certain provisions of this Section 9 modify other provisions of this Agreement.  If the terms of this Section 9 conflict with other terms of the Agreement, the terms of this Section 9 shall control.
(b)    Timing of Certain Payments.  Unless an amount is payable under a plan, program or arrangement on explicit terms providing for a delay in payment after the Executive’s Termination (as defined below) for any reason, which terms comply with Code Section 409A, amounts earned or accrued as of the date of such Termination shall be payable at the date the amounts otherwise would have been payable under the respective plans, programs and arrangements but subject to the delay provided by Section 9(d).  Any payment or benefit required under this Agreement to be paid in a lump sum or otherwise to be paid promptly at or following a date or event shall be paid no later than 15 days after the due date, subject to Section 5(d) and Section 9(d), as applicable.  In no event may Executive, directly or indirectly, designate the calendar year of any payment to be made under this Agreement 

which constitutes nonqualified deferred compensation subject to Code Section 409A, and to the extent an amount of such deferred compensation is payable within a specified time period, the time during such period at which such amount is paid shall be at the discretion of the Company except as otherwise required by Section 5(d).
(c)    Separate Payments.  Each installment payment under Section 5(b) shall be deemed a separate payment for purposes of Code Section 409A.  Each other amount payable under this Agreement shall be deemed a separate payment for purposes of Code Section 409A. 
(d)    Special Rules for Severance Payments.  In the case of severance payments under Section 5(b) or 5(c) (the “Severance Payments”) which constitute nonqualified deferred compensation subject to Code Section 409A, the term “termination of employment” or similar term shall mean a “separation from service” as defined in Treasury Regulation § 1.409A-1(h).  If any of such Severance Payment is payable within six months after Executive’s termination of employment and, at the time of such termination, Executive was a “specified employee” as defined in Treasury Regulation § 1.409A-1(i), such payment shall instead be paid at the date that is six months after Executive’s termination of employment (or earlier at the date 15 days after the death of Executive).
(e)    Expense Reimbursements and In-Kind Benefits.  With regard to any provision in this Agreement that provides for reimbursement of expenses or in-kind benefits, except for any expense, reimbursement or in-kind benefit provided pursuant to this Agreement that does not constitute a “deferral of compensation,” within the meaning of Code Section 409A, (i) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, (ii) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year, provided that the foregoing clause (ii) shall not be deemed to be violated with regard to expenses reimbursed under any arrangement covered by Section 105(b) of the Internal Revenue Code solely because such expenses are subject to a limit related to the period the arrangement is in effect, and (iii) such payments shall be made on or before the last day of Executive’s taxable year following the taxable year in which the expense occurred.
(f)    Other Provisions.  
(i)    Non-transferability.  No right to any payment or benefit under this Agreement shall be subject to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by Executive’s creditors or of any of Executive’s beneficiaries; provided that the foregoing shall not subject the Company to any liability for complying with any lawful order for garnishment, attachment or the like issued by a court of competent jurisdiction or which the Company determines in good faith it is legally required to implement.
(ii)    No Acceleration.  The timing of payments and benefits under the Agreement may not be accelerated to occur before the time specified for payment hereunder, except to the extent permitted under Treasury Regulation § 1.409A-3(j)(4) or as otherwise permitted under Code Section 409A without Executive incurring a tax penalty.
(iii)    Intention to Comply with Code Section 409A; Modifications.  To the fullest extent possible, payments and benefits provided under this Agreement are intended to be exempt or excluded from the definition of “deferred compensation” under Code Section 409A in accordance with one or more exemptions or exclusions available under Code Section 409A.  If and to the extent that any such payment or benefit is, or becomes subject to, Code Section 409A due to a failure to qualify for such an exemption or exclusion, this Agreement is intended to comply with the applicable requirements of Code Section 409A with respect to such payment or benefit so as to avoid the imposition of any taxes and/or penalties due to a violation of Code Section 409A.  To the extent possible, this Agreement shall be interpreted and administered in a manner consistent with the foregoing statement of intent.  This Agreement may be modified in order to comply with Code Section 409A or exemptions or exclusions under Code Section 409A; any such modification shall be made in good faith and to the extent reasonably practical shall 

maintain the economic and other benefits provided to Executive and the Company under this Agreement without failing to comply with Code Section 409A.
(iv)    Company Not Liable for Non-Compliance with Code Section 409A.  In no event whatsoever (including without limitation as a result of this Section 9) shall the Company be liable for any taxes, penalties or interest that may be imposed on Executive pursuant to Code Section 409A or under any similar provision of state tax law, including by not limited to damages for failing to comply with Code Section 409A and/or any similar provision of state tax law. 
     10.    Notices.  Any notice or other communication required or permitted to be given to any party hereunder shall be in writing and shall be given to such party at such party’s address set forth below or such other address as such party may hereafter specify by notice in writing to the other party. Any such notice or other communication shall be addressed as aforesaid and given by (a) certified mail, return receipt requested, with first class postage prepaid, (b) hand delivery, or (c) reputable overnight courier. Any notice or other communication will be deemed to have been duly given (i) on the fifth day after mailing, provided receipt of delivery is confirmed, if mailed by certified mail, return receipt requested, with first class postage prepaid, (ii) on the date of service if served personally or (iii) on the business day after delivery to an overnight courier service, provided receipt of delivery has been confirmed:

If to the Company, to:

Miller Energy Resources, Inc.
1001 Louisiana St., Suite 3100
Houston, TX 77002
Attention: Chief Executive Officer

with a copy to:

Miller Energy Resources, Inc.
9721 Cogdill Road
Suite 302
Knoxville, Tennessee 37932
Attention: General Counsel

If to Executive, as follows:

REDACTED

Or to such address as the Company may have on file in its payroll records for the Executive from time to time.
 
     11.    Non-Assignment; Successors.  Neither party hereto may assign his or its rights or delegate his or its duties under this Agreement without the prior written consent of the other party, provided that, the Company may assign its rights hereunder to any affiliate or successor entity without obtaining such consent. This Agreement shall inure to the benefit of and be binding upon the heirs, assigns or designees of the parties hereto.  The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any such successor to its business and/or assets which assumes and agrees to perform this Agreement by operation of law, or otherwise.
 
     12.    Entire Agreement.  This Agreement, together with the 2011 Plan and any agreement evidencing the Grant, constitutes the entire agreement by the Company and Executive with respect to the subject matter hereof and 

supersedes any and all prior agreements or understandings between Executive and the Company with respect to the subject matter hereof, whether written or oral.
 
13.    Amendment and Waiver.  Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance, either retroactively or prospectively, and either for a specified period of time or indefinitely), only by the written consent of all parties hereto. Any agreement on the part of a party to any extension or waiver shall only be valid if set forth in an instrument in writing signed on behalf of such party. Any such waiver or extension shall not operate as waiver or extension of any other subsequent condition or obligation.
 
14.    Unenforceability, Severability.  If any provision of this Agreement is found to be void or unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall nevertheless be binding upon the parties with the same force and effect as though the unenforceable part had been severed and deleted.
 
15.    Mitigation.  Executive will not be required to mitigate the amount of payments provided for under this Agreement by seeking other employment or otherwise, nor shall the amount of payments provided for under this Agreement be reduced by any compensation earned by Executive as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by Executive to the Company, or otherwise. 

     16.    Governing Law.  This Agreement shall be construed, interpreted and enforced in accordance with, and shall be governed by, the laws of the State of Tennessee applicable to contracts made and to be performed wholly therein without giving effect to principles of conflicts or choice of laws thereof.
 
17.    Jurisdiction; Costs.  Each of the parties hereto hereby irrevocably consents and submits to the exclusive jurisdiction of the state and federal courts located in Knox County, Tennessee in connection with any proceeding arising out of or relating to this Agreement or the transactions contemplated hereby and waives any objection to venue in Knox County, Tennessee. In addition, each of the parties hereto hereby waives trial by jury in connection with any claim or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.  In the event of any legal proceeding (in arbitration, a court of law or otherwise) arises between the parties in respect of this Agreement, the substantially prevailing party under any final non-appealable award or judgment, will be entitled to recover from the other party hereto, in addition to any other relief awarded, all reasonable costs and expenses (including reasonable legal fees, costs and expenses) that the prevailing party incurs in connection with those proceedings. 
 
     18.    Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.
 
      

IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement as of the Agreement Date.
 
MILLER ENERGY RESOURCES, INC.

	
		
	 
	By: /s/ Carl F. Giesler, Jr.

	 
	Name: Carl F. Giesler, Jr.

	 
	Title: Chief Executive Officer

	 
	 

	 
	/s/ Phillip G. Elliott

	 
	Phillip G. Elliott

EXHIBIT A
RELEASE
I acknowledge that I have been given twenty-one (21) days to decide whether to execute this Release of Claims ("Release") and that I have been advised to consult an attorney before executing this Release.  I acknowledge that I have seven (7) days from the date I executed this Release to revoke my signature.  I understand that if I choose to revoke this Release, I must deliver my written revocation to Miller Energy Resources, Inc. (the “Company”) before the end of the seven-day period. 
I, for myself, my heirs, successors, and assigns, do hereby settle, waive, and release the Company and any of its past and present officers, owners, stockholders, partners, directors, agents, employees, successors, predecessors, assigns, representatives, attorneys, divisions, subsidiaries, or affiliates from any and all claims, charges, complaints, rights, demands, actions, and causes of actions of any kind or character, in contract, tort, or otherwise, based on actions or omissions occurring in the past and/or present, and regardless of whether known or unknown to me at this time, including those not specifically mentioned in this Release (“Claims”).  Among the Claims which I give up under this Release are those arising in connection with my employment and the termination of that employment, including, without limitation, rights or claims under federal, state, and local fair employment practice or discrimination laws (including the various Civil Rights Acts, the Age Discrimination in Employment Act, the Equal Pay Act, and the Tennessee Human Rights Act), laws pertaining to breach of employment contract, wrongful termination or other wrongful treatment, and any other laws or rights relating to my employment with the Company and the termination of that employment.  I acknowledge that I am aware of my rights under the Age Discrimination in Employment Act, and that I am knowingly and voluntarily waiving and releasing any claim of age discrimination which I may have under that statute as part of this Release.  This agreement does not waive or release any rights, claims, or causes of action that may arise from acts or omissions occurring after the date I execute this Release, nor does this agreement waive or release any rights, claims or causes of action relating to (a) indemnification from the Company and its affiliates with respect to my activities on behalf of the Company and its affiliates prior to my termination of employment (including, but not limited to, under any separate indemnification agreement entered into between the Company and me during my term of employment, which will remain in full force and effect), (b) compensation or benefits to which I am entitled under any compensation or benefits plan of the Company or its affiliates, (c) amounts to which I am entitled pursuant to the Employment Agreement dated as of March 25, 2015 between me and the Company (the “Employment Agreement”), (d) my right to file a charge with, or participate in any investigation conducted by, any federal, state, or local agency charged with enforcing laws prohibiting employment discrimination, (e) my right to challenge the voluntary and knowing nature of this release in court or before any federal, state, or local agency charged with enforcing employment laws, or (f) any right, claim, or cause of action arising after the effective date of this Release.
By my signature below, I further acknowledge my ongoing confidentiality obligations under Section 7(a) of the Employment Agreement.

By:_________________________
Phillip G. Elliott

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