Document:

Exhibit 10.3

 

Execution Version

 

 

 

PURCHASE AND SALE AGREEMENT

 

BY AND AMONG

 

KODIAK OIL & GAS (USA) INC.

 

AND

 

KODIAK WILLISTON, LLC,

 

COLLECTIVELY,

 

AS SELLER,

 

AND

 

TRIANGLE USA PETROLEUM CORPORATION,

 

AS PURCHASER

 

 

DATED AS OF AUGUST 5, 2013

 

 

 

 

 

TABLE OF CONTENTS

 

	
ARTICLE   1 DEFINITIONS AND INTERPRETATION
    	
 
    	
1
    
	
 
    	
 
    	
 
    
	
Section 1.1
    	
Defined Terms
    	
 
    	
1
    
	
Section 1.2
    	
References and Rules of Construction
    	
 
    	
1
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE   2 PURCHASE AND SALE
    	
 
    	
2
    
	
 
    	
 
    	
 
    
	
Section 2.1
    	
Purchase and Sale
    	
 
    	
2
    
	
Section 2.2
    	
Assets
    	
 
    	
2
    
	
Section 2.3
    	
Excluded Assets
    	
 
    	
3
    
	
Section 2.4
    	
Effective Time; Proration of Costs and Revenues
    	
 
    	
3
    
	
Section 2.5
    	
Procedures
    	
 
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE   3 PURCHASE PRICE
    	
 
    	
5
    
	
 
    	
 
    	
 
    
	
Section 3.1
    	
Purchase Price
    	
 
    	
5
    
	
Section 3.2
    	
Allocated Values
    	
 
    	
5
    
	
Section 3.3
    	
Allocation of Purchase Price
    	
 
    	
5
    
	
Section 3.4
    	
Adjustments to Purchase Price
    	
 
    	
5
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE   4 REPRESENTATIONS AND WARRANTIES OF SELLER
    	
 
    	
7
    
	
 
    	
 
    	
 
    
	
Section 4.1
    	
Existence and Qualification
    	
 
    	
7
    
	
Section 4.2
    	
Power
    	
 
    	
7
    
	
Section 4.3
    	
Authorization and Enforceability
    	
 
    	
7
    
	
Section 4.4
    	
Liability for Brokers’ Fees
    	
 
    	
8
    
	
Section 4.5
    	
Litigation
    	
 
    	
8
    
	
Section 4.6
    	
Liberty PSA
    	
 
    	
8
    
	
Section 4.7
    	
Obligations
    	
 
    	
9
    
	
Section 4.8
    	
Reports
    	
 
    	
9
    
	
Section 4.9
    	
Third Party Costs
    	
 
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE   5 REPRESENTATIONS AND WARRANTIES OF PURCHASER
    	
 
    	
9
    
	
 
    	
 
    	
 
    
	
Section 5.1
    	
Existence and Qualification
    	
 
    	
9
    
	
Section 5.2
    	
Power
    	
 
    	
10
    
	
Section 5.3
    	
Authorization and Enforceability
    	
 
    	
10
    
	
Section 5.4
    	
Liability for Brokers’ Fees
    	
 
    	
10
    
	
Section 5.5
    	
Litigation
    	
 
    	
10
    
	
Section 5.6
    	
Financial Resources
    	
 
    	
10
    
	
Section 5.7
    	
Securities Law Compliance
    	
 
    	
10
    
	
Section 5.8
    	
Independent Evaluation
    	
 
    	
10
    

 

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ARTICLE 6 COVENANTS OF THE   PARTIES
    	
 
    	
11
    
	
 
    	
 
    	
 
    	
 
    
	
Section   6.1
    	
Due Diligence Review
    	
 
    	
11
    
	
Section   6.2
    	
Operation of Business
    	
 
    	
13
    
	
Section   6.3
    	
Consents to Assignment and   Preferential Rights to Purchase
    	
 
    	
14
    
	
Section   6.4
    	
Defect Matters
    	
 
    	
15
    
	
Section   6.5
    	
Casualty Loss
    	
 
    	
19
    
	
Section   6.6
    	
Liberty PSA Matters
    	
 
    	
19
    
	
Section   6.7
    	
Public Announcements;   Confidentiality
    	
 
    	
19
    
	
Section   6.8
    	
Replacement of Bonds, Letters of   Credit and Guaranties
    	
 
    	
20
    
	
Section   6.9
    	
Operatorship
    	
 
    	
20
    
	
Section   6.10
    	
Suspense Accounts
    	
 
    	
20
    
	
Section   6.11
    	
Transition Services
    	
 
    	
20
    
	
Section   6.12
    	
Further Assurances
    	
 
    	
20
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 7 CONDITIONS TO CLOSING
    	
 
    	
21
    
	
 
    	
 
    	
 
    	
 
    
	
Section   7.1
    	
Seller’s Conditions to Closing
    	
 
    	
21
    
	
Section   7.2
    	
Purchaser’s Conditions to Closing
    	
 
    	
21
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 8 CLOSING
    	
 
    	
22
    
	
 
    	
 
    	
 
    	
 
    
	
Section   8.1
    	
Time and Place of Closing
    	
 
    	
22
    
	
Section   8.2
    	
Obligations of Seller at Closing
    	
 
    	
22
    
	
Section   8.3
    	
Obligations of Purchaser at Closing
    	
 
    	
23
    
	
Section   8.4
    	
Closing Payment and Post-Closing   Purchase Price Adjustments
    	
 
    	
23
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 9 TERMINATION
    	
 
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
Section   9.1
    	
Termination
    	
 
    	
25
    
	
Section   9.2
    	
Effect of Termination
    	
 
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 10 INDEMNIFICATION
    	
 
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
Section   10.1
    	
Allocation of Liability
    	
 
    	
25
    
	
Section   10.2
    	
Indemnification
    	
 
    	
26
    
	
Section   10.3
    	
Liberty Indemnified Matters
    	
 
    	
27
    
	
Section   10.4
    	
Limitation on Actions
    	
 
    	
29
    
	
Section   10.5
    	
Procedure
    	
 
    	
29
    
	
Section   10.6
    	
Reservation as to Non-Parties
    	
 
    	
31
    
	
Section   10.7
    	
Reductions in Damages
    	
 
    	
31
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE 11 TAX MATTERS
    	
 
    	
31
    
	
 
    	
 
    	
 
    	
 
    
	
Section   11.1
    	
Tax Filings
    	
 
    	
31
    
	
Section   11.2
    	
Current Tax Period Taxes
    	
 
    	
32
    
	
Section   11.3
    	
Characterization of Certain   Payments
    	
 
    	
32
    
	
Section   11.4
    	
Other Tax Matters
    	
 
    	
32
    

 

ii

 

	
ARTICLE 12 MISCELLANEOUS
    	
 
    	
33
    
	
 
    	
 
    	
 
    	
 
    
	
Section   12.1
    	
Notice
    	
 
    	
33
    
	
Section   12.2
    	
Governing Law; Dispute Resolution
    	
 
    	
34
    
	
Section   12.3
    	
Entire Agreement
    	
 
    	
35
    
	
Section   12.4
    	
No Third Party Beneficiaries
    	
 
    	
35
    
	
Section   12.5
    	
Limitation on Damages
    	
 
    	
35
    
	
Section   12.6
    	
Delivery of Records
    	
 
    	
35
    
	
Section   12.7
    	
Specific Performance
    	
 
    	
35
    
	
Section 12.8
    	
Severability
    	
 
    	
36
    
	
Section   12.9
    	
Financial Statements
    	
 
    	
36
    
	
Section   12.10
    	
Seller Liability
    	
 
    	
36
    
	
Section   12.11
    	
Incorporation
    	
 
    	
36
    

 

	
APPENDICES:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Appendix A
    	
-
    	
Definitions
    
	
 
    	
 
    	
 
    
	
EXHIBITS:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Exhibit A
    	
-
    	
Leases
    
	
Exhibit B
    	
-
    	
Wells
    
	
Exhibit C
    	
-
    	
Contracts
    
	
Exhibit D
    	
-
    	
Form of   Assignment, Bill of Sale and Conveyance
    
	
 
    	
 
    	
 
    
	
SCHEDULES:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Schedule 3.2
    	
-
    	
Allocated   Values
    
	
Schedule 3.4
    	
-
    	
Imbalances
    
	
Schedule 4.5
    	
-
    	
Litigation
    
	
Schedule 4.6-1
    	
-
    	
Material   Notices
    
	
Schedule 4.6-2
    	
-
    	
Certain   Excluded Assets
    
	
Schedule 4.7-1
    	
-
    	
Obligations
    
	
Schedule 4.7-2
    	
-
    	
Undisclosed   Contracts
    
	
Schedule 6.4
    	
-
    	
Permitted   Encumbrance and Defects
    

 

iii

 

PURCHASE AND SALE AGREEMENT

 

This Purchase and Sale Agreement (as may be amended, restated, supplemented or otherwise modified from time to time, this “Agreement”) is dated as of August 5, 2013 (the “Execution Date”), by and among (i) Kodiak Oil & Gas (USA) Inc., a Colorado corporation (“Kodiak USA”), (ii) Kodiak Williston, LLC, a Delaware limited liability company (“Kodiak Williston,” and together with Kodiak USA, “Seller”), and (iii) Triangle USA Petroleum Corporation, a Colorado corporation (“Purchaser”).  Seller and Purchaser are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

 

RECITALS

 

A.                                    Seller acquired certain interests in oil and gas properties, rights and related assets from Liberty Resources LLC, a Delaware limited liability company (“Liberty”), pursuant to that certain Purchase and Sale Agreement, dated as of June 2, 2013, by and among Liberty, Kodiak USA and Kodiak Oil & Gas Corp., as amended by such parties on July 12, 2013 through their entry into that certain Amendment No. 1 to the Purchase and Sale Agreement (as so amended, the “Liberty PSA”).

 

B.                                    Seller desires to sell to Purchaser, and Purchaser desires to purchase from Seller, the “Assets,” as defined and described herein, in the manner and upon the terms and conditions hereafter set forth.

 

NOW, THEREFORE, in consideration of the premises and of the mutual promises, representations, warranties, covenants, conditions and agreements contained herein, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound by the terms hereof, agree as follows:

 

ARTICLE 1
 DEFINITIONS AND INTERPRETATION

 

Section 1.1                                    Defined Terms.  In addition to the terms defined in the Preamble and the Recitals of this Agreement, for purposes hereof, the capitalized terms used herein and not otherwise defined shall have the meanings set forth in Appendix A.

 

Section 1.2                                    References and Rules of Construction.  All references in this Agreement to Appendices, Exhibits, Schedules, Articles, Sections, subsections, clauses and other subdivisions refer to the corresponding Appendices, Exhibits, Schedules, Articles, Sections, subsections, clauses and other subdivisions of or to this Agreement unless expressly provided otherwise.  Titles appearing at the beginning of any Appendices, Exhibits, Schedules, Articles, Sections, subsections, clauses and other subdivisions of this Agreement are for convenience only, do not constitute any part of this Agreement and shall be disregarded in construing the language hereof. The words “this Agreement,” “herein,” “hereby,” “hereunder” and “hereof,” and words of similar import, refer to this Agreement as a whole and not to any particular Article, Section, subsection, clause or other subdivision unless expressly so limited.  The words “this Article,” “this Section,” “this subsection,” “this clause,” and words of similar import, refer only to the Article, Section, subsection and clause hereof in which such words occur.  The word “including” (in its various forms) means including without limitation.  All references to “$” shall be deemed

 

 

references to U.S. Dollars.  Each accounting term not defined herein will have the meaning given to it under GAAP as interpreted as of the Execution Date.  Pronouns in masculine, feminine or neuter genders shall be construed to state and include any other gender, and words, terms and titles (including terms defined herein) in the singular form shall be construed to include the plural and vice versa, unless the context otherwise requires.  Appendices, Exhibits and Schedules referred to herein are attached to and by this reference incorporated herein for all purposes.  References to any Law, agreement or contract means such Law, agreement or contract, as applicable, as it may be amended from time to time.

 

ARTICLE 2
 PURCHASE AND SALE

 

Section 2.1                                    Purchase and Sale.  At the Closing, upon the terms and subject to the conditions of this Agreement, Seller agrees to sell, transfer and convey the Assets to Purchaser and Purchaser agrees to purchase, accept and pay for the Assets and to assume the Assumed Liabilities.

 

Section 2.2                                    Assets.  As used herein, the term “Assets” means, subject to the terms and conditions of this Agreement, all of Seller’s right, title and interest in and to the following: (a) all oil and gas leases specifically described in Exhibit A, together with all amendments, renewals, extensions, and ratifications thereof (collectively, the “Leases”); (b) the lands covered by the Leases or pooled or unitized therewith (the “Lands”); (c) the oil, gas, casinghead gas, coal bed methane, condensate and other gaseous and liquid hydrocarbons or any combination thereof that may be produced from under the Leases (the “Hydrocarbons”); (d) all oil, gas, water or injection wells located on or associated with the Lands, whether producing, shut-in, or temporarily abandoned, including the wells described in Exhibit B (the “Wells”), together with all of the personal property, equipment, fixtures and improvements used primarily in connection therewith; (e) the unitization, pooling and communitization agreements, declarations, spacing orders, and the pools, units, or spacing units created thereby, relating to the properties and interests described in clauses (a) through (d) and to the production of Hydrocarbons, if any, attributable to said properties and interests (collectively, the “Units,” and together with the Leases, the Lands and the Wells, the “Properties”), and the force-pooled and non-consent interests associated therewith; (f) all equipment, machinery, fixtures and other tangible personal property and improvements located on or used or held for use solely in connection with the operation of the interests described in clauses (a) through (e), including any tanks, boilers, buildings, fixtures, injection facilities, saltwater disposal facilities, compression facilities, pumping units and engines, platforms, flow lines, pipelines, gathering systems, gas and oil treating facilities, machinery, power lines, telephone and telegraph lines, roads, and other appurtenances, improvements and facilities; (g) all surface leases, permits, rights-of-way, licenses, easements and other surface rights agreements used primarily in connection with the production, gathering, treatment, processing, storage, sale or disposal of Hydrocarbons or produced water from the interests described in clauses (a) through (f), but excluding, in all such instances, any items the transfer of which is prohibited by applicable Law; (h) all claims for refunds of any Production Taxes attributable to any period from and after the Effective Time; (i) all existing contracts and effective sales and purchase contracts, operating agreements, exploration agreements, development agreements, balancing agreements, farmout agreements, service agreements, transportation, processing, treatment or gathering agreements, equipment leases and other

 

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contracts, agreements and instruments, including those described on Exhibit C, insofar as they directly relate to the properties and interests described in clauses (a) through (h), but excluding any contracts, agreements and instruments the transfer of which is prohibited by applicable Law (subject to such exclusion, collectively, the “Contracts”); (j) all unbilled costs for the joint interest billings and the accounts receivable for the joint interest billings on behalf of third party working interest owners in Assets operated by Seller; and (k) originals or copies of all the files, records, and data relating to the items described in clauses (a) through (j) above, which records shall include (i) lease records, (ii) well records, (iii) division order records, (iv) well files, (v) title records (including abstracts of title, title opinions and memoranda, and title curative documents), (vi) engineering records, (vii) geological and geophysical data (including seismic data) and all technical evaluations, interpretive data and technical data and information relating to the properties and interests described in clauses (a) through (j), (viii) correspondence, (ix) electronic data files (if any), (x) maps, (xi) production records, (xii) electric logs, (xiii) core data, (xiv) pressure data, (xv) decline curves and graphical production curves, (xvi) reserve reports, (xvii) appraisals and (xviii) accounting records (collectively, the “Records”).

 

Section 2.3                                    Excluded Assets.  The Assets shall not include, and there is excepted, reserved and excluded from this transaction, the Excluded Assets.

 

Section 2.4                                    Effective Time; Proration of Costs and Revenues.

 

(a)                                 Subject to the other terms and conditions of this Agreement, possession of the Assets shall be transferred from Seller to Purchaser at the Closing, but certain financial benefits and burdens of the Assets shall be transferred effective as of 7:00 a.m., Mountain Time, on July 1, 2013 (the “Effective Time”), as described below.

 

(b)                                 Purchaser shall be entitled to all production of Hydrocarbons from or attributable to the Assets at and after the Effective Time (and all products and proceeds attributable thereto), and to all other income, proceeds, receipts and credits earned with respect to the Assets at and after the Effective Time, and shall be responsible for (and entitled to any refunds with respect to) all Property Expenses incurred at and after the Effective Time.

 

(c)                                  Seller shall be entitled to all production of Hydrocarbons from or attributable to the Assets prior to the Effective Time (and all products and proceeds attributable thereto), and to all other income, proceeds, receipts and credits earned with respect to the Assets prior to the Effective Time, and shall be responsible for (and entitled to any refunds with respect to) all Property Expenses incurred prior to the Effective Time.

 

(d)                                 Should Purchaser receive after Closing any proceeds or other income to which Seller is entitled under Section 2.4(c), Purchaser shall fully disclose, account for and promptly remit the same to Seller.  If, after Closing, Seller receives any proceeds or other income with respect to the Assets to which Purchaser is entitled pursuant to Section 2.4(b), Seller shall fully disclose, account for, and promptly remit the same to Purchaser. If, after Closing, Seller receives any proceeds, payments or other credits with respect to the Third Party Costs (which are not accounted for in the adjustments provided for in Section 8.4(b)), Seller shall fully disclose, account for, and promptly remit the same to Purchaser.

 

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(e)                                  Should Purchaser pay after Closing any Property Expenses for which Seller is responsible under Section 2.4(c), Seller shall reimburse Purchaser within five Business Days after receipt of an invoice with respect to such Property Expenses, accompanied by copies of the relevant vendor or other invoice and proof of payment.  Should Seller pay after Closing any Property Expenses for which Purchaser is responsible under Section 2.4(b), Purchaser shall reimburse Seller within five Business Days after receipt of an invoice with respect to such Property Expenses, accompanied by copies of the relevant vendor or other invoice and proof of payment.

 

(f)                                   Taxes that are included in Property Expenses, right-of-way fees, insurance premiums and other Property Expenses that are paid periodically shall be prorated based on the number of days in the applicable period falling before and the number of days in the applicable period falling at and after the Effective Time, except that production, severance and similar Taxes measured by the quantity of or the value of production shall be prorated based on the number of units or value of production actually produced and sold, as applicable, before, and at or after, the Effective Time.  In each case, Purchaser shall be responsible for the portion allocated to the period at and after the Effective Time and Seller shall be responsible for the portion allocated to the period before the Effective Time.

 

(g)                                  Notwithstanding anything to the contrary, any Property Expenses associated with or giving rise to the Pro Frac Lien will be treated as Property Expenses for which Seller is responsible under Section 2.4(c) and will not be treated as a Defect Amount or otherwise give rise to a Title Defect (and, therefore, will not be subject to the threshold and deductible set forth in Section 6.4(d)) for purposes of this Agreement.

 

Section 2.5                                    Procedures.  For purposes of allocating production (and accounts receivable with respect thereto) under Section 2.4, (i) liquid Hydrocarbons shall be deemed to be “from or attributable to” the Assets when they pass through the inlet flange of the pipeline connecting into the storage facilities into which they are run or, if there are no such storage facilities, when they pass through the LACT meters or similar meters at the point of entry into the pipelines through which they are transported from the field and (ii) gaseous Hydrocarbons shall be deemed to be “from or attributable to” the Assets when they pass through the delivery point sales meters on the pipelines through which they are transported.  Seller shall utilize reasonable interpolative procedures to arrive at an allocation of production when exact meter readings or gauging and strapping data is not available.  Seller shall provide to Purchaser evidence of all meter readings and all gauging and strapping procedures conducted on or about the Effective Time in connection with the Assets, together with all data necessary to support any estimated allocation, for purposes of establishing the adjustment to the Unadjusted Purchase Price pursuant to Section 3.4.  The terms “earned” and “incurred” shall be interpreted in accordance with generally accepted accounting principles and Council of Petroleum Accountants Society standards, and expenditures that are incurred pursuant to an operating agreement, unit agreement or similar agreement shall be deemed incurred when expended by the operator of the applicable Asset.

 

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ARTICLE 3
 PURCHASE PRICE

 

Section 3.1                                    Purchase Price.  The purchase price for the Assets shall be $82,000,000 (the “Unadjusted Purchase Price”).  The Unadjusted Purchase Price shall be adjusted as provided in Section 3.4, and the determination of the Adjusted Purchase Price shall be made as provided in Section 8.4.

 

Section 3.2                                    Allocated Values.  The “Allocated Value” for any Asset equals the dollar amount specified for such Asset on Schedule 3.2, increased or reduced as described in Section 3.4.  The share of each adjustment to the Unadjusted Purchase Price under Section 3.4 shall be allocated to the particular Asset to which such adjustment relates, limited to the extent that such adjustment relates to such Asset and to the extent that it is possible to make such allocation.  Any adjustment not allocated to a specific Asset pursuant to the immediately preceding sentence shall be allocated among the various Assets on a pro-rata basis in proportion to the Unadjusted Purchase Price allocated to such Asset on Schedule 3.2.  Seller makes no representation or warranty as to the accuracy of the Allocated Values assigned to each of the Assets.

 

Section 3.3                                    Allocation of Purchase Price.  Seller, using the Allocated Values determined under Section 3.2 to the extent applicable, shall prepare an allocation of the Adjusted Purchase Price on a schedule (the “Proposed Section 1060 Allocation Schedule”) for purposes of, and in accordance with, Section 1060 of the Code and the regulations promulgated thereunder within 30 days following the final determination of the Adjusted Purchase Price under Section 8.4(b). Purchaser shall notify Seller in writing of any objections to the Proposed Section 1060 Allocation Schedule within 15 days of receipt thereof and if, within 30 days after delivery of notice of such objection, Purchaser and Seller cannot agree to a final allocation schedule to be used for income Tax reporting purposes, Purchaser and Seller shall submit the disputed matters to binding arbitration pursuant to Section 12.2 to finally determine the proper allocation of the Adjusted Purchase Price for purposes of Section 1060 of the Code, and shall request that the arbitrator issue a final allocation schedule (the “Final Section 1060 Allocation Schedule”) within 30 days of the submission of the dispute.  Seller and Purchaser agree that the allocation of the Adjusted Purchase Price as set forth on the Final Section 1060 Allocation Schedule shall be used by Seller and Purchaser as the basis for reporting asset values and other items for purposes of all federal, state and local Tax Returns, including without limitation Internal Revenue Service Form 8594.  Seller and Purchaser further agree that each will take no position inconsistent with such allocations on any applicable Tax Return, in any audit or proceeding before any Governmental Body related to Taxes, in any report made for Tax, financial accounting or any other purpose, or otherwise.  In the event that the allocation described herein is disputed by any Governmental Body, the Party receiving notice of the dispute shall promptly notify the other Party concerning resolution of the dispute.

 

Section 3.4                                    Adjustments to Purchase Price.  All adjustments to the Unadjusted Purchase Price shall be (x) made in accordance with the terms of this Agreement and, to the extent not inconsistent with this Agreement, in accordance with GAAP as consistently applied in the oil and gas industry, (y) made without duplication, in this Agreement or otherwise, and (z) allocated among the Assets in accordance with Section 3.2.  Without limiting the foregoing, the Unadjusted Purchase Price shall be adjusted, with the resulting adjustments to such Unadjusted

 

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Purchase Price herein the “Adjusted Purchase Price,” by the following amounts:

 

(a)                                 The Unadjusted Purchase Price shall be adjusted upward by the following amounts:

 

(i)                                     an amount equal to all Property Expenses attributable to the ownership or operation of the Assets that are incurred at and after the Effective Time but paid by Seller, but excluding any amounts previously reimbursed to Seller pursuant to Section 2.4(e);

 

(ii)                                  an amount equal to, to the extent that such amounts have been received by Purchaser and not remitted or paid to Seller, (A) all proceeds from the production of Hydrocarbons from or attributable to the Assets prior to the Effective Time, (B) all other income, proceeds, receipts and credits earned with respect to the Assets prior to the Effective Time and (C) any other amounts to which Seller is entitled pursuant to Section 2.4(c);

 

(iii)                               to the extent that proceeds for such volumes have been received by Purchaser and not remitted to Seller, an amount equal to the aggregated volumes of Hydrocarbons stored in stock tanks, pipelines or other storage as of the Effective Time that are attributable to the ownership and operation of the Assets multiplied by the contract price therefor on the Effective Time;

 

(iv)                              to the extent that Seller is underproduced as of the Effective Time,  as shown with respect to the net Imbalances set forth in Schedule 3.4, the amount of such net Imbalances multiplied by a price of $3.55 per MMBtu;

 

(v)                                 any other amount provided for elsewhere in this Agreement or otherwise agreed upon in writing by the Parties as an upward adjustment to the Unadjusted Purchase Price; and

 

(vi)                              an amount equal to the sum of (A) Property Expenses related to the Wells or Units which have been incurred prior to the Effective Time and paid by or on behalf of Seller, on behalf of other Third Party working interest owners in such Wells or Units and have not been billed to such Third Party working interest owners prior to the Closing and (B) accounts receivable of Seller with respect to Property Expenses described in Section Section 3.4(vi)(A) (collectively, “Third Party Costs”).

 

(b)                                 The Unadjusted Purchase Price shall be adjusted downward by the following amounts:

 

(i)                                     an amount equal to all Property Expenses attributable to the ownership or operation of the Assets that are incurred prior to the Effective Time but paid by Purchaser, but excluding any amounts previously reimbursed to Purchaser pursuant to Section 2.4(e);

 

(ii)                                  an amount equal to, to the extent that such amounts have been received by Seller and not remitted or paid to Purchaser, (A) all proceeds from the 

 

6

 

production of Hydrocarbons from or attributable to the Assets at and after the Effective Time, (B) all other income, proceeds, receipts and credits earned with respect to the Assets at and after the Effective Time and (C) any other amounts to which Purchaser is entitled pursuant to Section 2.4(b);

 

(iii)                               an amount equal to (A) the Allocated Values of any of the Assets that become Excluded Assets hereunder and (B) all Net Casualty Losses pursuant to Section 6.5;

 

(iv)                              to the extent that Seller is overproduced as of the Effective Time, as shown with respect to the net Imbalances set forth in Schedule 3.4, the amount of such net Imbalances multiplied by a price of $3.55 per MMBtu;

 

(v)                                 to the extent not transferred to Purchaser at the Closing, all funds held in suspense by Seller with respect to the operation, ownership, production and developments of the Assets (which funds shall thereafter be retained by Seller);

 

(vi)                              the Defect Adjustment Amount determined pursuant to Section 6.4(d) and Section 6.4(e);

 

(vii)                           any amounts that have been received by Seller or its Affiliates (including by offset or netting of amounts) with respect to Third Party Costs; and

 

(viii)                        any other amount provided for elsewhere in this Agreement or otherwise agreed upon in writing by the Parties as a downward adjustment to the Unadjusted Purchase Price.

 

ARTICLE 4
 REPRESENTATIONS AND WARRANTIES OF SELLER

 

Seller represents and warrants to Purchaser the following:

 

Section 4.1                                    Existence and Qualification.  Kodiak USA is a corporation, validly existing and in good standing under the Laws of the State of Colorado and is duly qualified to do business in the State of North Dakota.  Kodiak Williston is a limited liability company, validly existing and in good standing under the Laws of the State of Delaware and is duly qualified to do business in the State of North Dakota.

 

Section 4.2                                    Power.  Seller has the requisite power to enter into and perform this Agreement and consummate the transactions contemplated by this Agreement.  The execution and delivery of this Agreement does not, and the performance of Seller’s obligations hereunder will not, as of Closing, violate, or be in conflict with, any provision of Seller’s governing documents, or any judgment, decree, order, statute, rule or regulation applicable to Seller, provided that no representation is made in this Section 4.2 with respect to the assignability of the Assets under applicable Laws, as such subject matter is covered exclusively under Section 4.6 and Section 6.3.

 

Section 4.3                                    Authorization and Enforceability.  The execution, delivery and 

 

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performance of this Agreement and all documents required to be executed and delivered by Seller at Closing, and the performance of the transactions contemplated hereby and thereby, have been duly and validly authorized by all necessary company action on the part of Seller.  This Agreement has been duly executed and delivered by Seller (and all documents required hereunder to be executed and delivered by Seller at Closing will be duly executed and delivered by Seller) and this Agreement constitutes, and at the Closing such documents will constitute, the valid and binding obligations of Seller, enforceable in accordance with their terms except as such enforceability may be limited by applicable bankruptcy or other similar Laws affecting the rights and remedies of creditors generally as well as by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

 

Section 4.4                                    Liability for Brokers’ Fees.  Purchaser shall not directly or indirectly have any responsibility, liability or expense, as a result of undertakings or agreements of Seller, for brokerage fees, finder’s fees, agent’s commissions or other similar forms of compensation in connection with this Agreement or any agreement or transaction contemplated hereby.

 

Section 4.5                                    Litigation.  There are no actions, suits or proceedings pending or, to Seller’s knowledge, threatened against it which if decided unfavorably to Seller could have a material adverse effect on the ability of Seller to execute, deliver or perform its obligations under this Agreement.  Except as set forth on Schedule 4.5, since the closing of the Liberty PSA, Seller has not received any written notices or threats with respect to actions, suits or proceedings before any Governmental Body or arbitrator with respect to the Assets.

 

Section 4.6                                    Liberty PSA.  Schedule 4.6-1 sets forth the following items: (a) all material written notices contemplated by and provided for under the Liberty PSA by Liberty, Seller or Kodiak Oil & Gas Corp., as applicable, relating to the following: (i) “Title Defects,” “Environmental Defects,” or waivers of duties, obligations, terms or conditions of the Liberty PSA, in each case, with respect to the Assets only; (ii) indemnity claims submitted under the Liberty PSA (irrespective of whether or not relating to the Assets); and (iii) any other matter that is of a material nature relating to the Assets or operations thereon (excluding any communications made by Liberty, Seller or Kodiak Oil & Gas Corp. (A) in the ordinary course of business dealings with respect to the Liberty PSA, (B) relating primarily to the Retained Assets, (C) relating to the allocated values of assets transferred under the Liberty PSA, (D) relating to drilling proposals or AFEs submitted by Purchaser to Liberty or (E) relating to the “Preliminary Settlement Statement” under the Liberty PSA except as provided in Section 4.6(c)); (b) a description of any assets, properties, equipment, rights, interests or other items that were excluded from the Liberty PSA pursuant to the terms thereof relating to lands or operations thereon in Townships T149—R101, T150—R101 and T151—R101 of McKenzie County, North Dakota; and (c) the dollar amount of adjustments to the Preliminary Purchase Price under Section 2.6 of the Liberty PSA.  Except for those properties set forth on Schedule 4.6-2, the Assets include all rights, contracts, Permits, properties, equipment, benefits, agreements and other assets located in Townships T149N—R101W, T150N—R101W and T151N—R101W of McKenzie County, North Dakota conveyed by Liberty to Seller pursuant to the Liberty PSA.  To the knowledge of Seller, all preferential purchase rights and similar preemptive purchase rights with respect to the transfer of the Assets from Liberty to Seller under the Liberty PSA have been satisfied or otherwise waived (or deemed waived through the passage of time).  Prior to the execution of this Agreement, Seller has provided or made available to Purchaser, true, correct 

 

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and complete copies of (i) the Liberty PSA (without exhibits or schedules, except as described herein), Exhibit C to the Liberty PSA, and the Schedules to the Liberty PSA, but excluding Schedule 2.4(a), it being understood that the schedules and exhibits will be redacted as to all information other than information that relates solely to the Assets; (ii) Amendment No. 1 to Liberty PSA (without exhibits or schedules, except as described herein), Schedule 1.1(d) to Amendment No. 1 to Liberty PSA and (iii) the Assignment, Bill of Sale and Conveyance to Seller pursuant to the Liberty PSA.

 

Section 4.7                                    Obligations.  As of the Execution Date, except as set forth on Schedule 4.7-1, (a) since the closing of the transactions under the Liberty PSA, Seller has not incurred any expenses or obligations, and has not made any commitments to make expenditures, in connection with the ownership or operation of the Assets (other than with respect to routine operations performed in the ordinary course of operating the existing Wells), (b) Seller has not approved any outstanding AFEs or made other capital commitments to Third Parties that are binding on the Assets and could reasonably be expected to require expenditures by the owner of the Assets in excess of $250,000 (other than as set forth in the Liberty PSA), (c) Seller has not (i) encumbered or burdened, or otherwise placed any Liens or imposed any security interests on, any of the Assets, (ii) except for this Agreement, entered into Contracts with respect to the Assets or (iii) amended, modified, surrendered or terminated, as applicable, any Contract or Lease, (d) Seller has not materially breached, and is not in material default under, any Contract or Lease, and (e) Seller has not elected to be a non-consenting party under a Contract with respect to any operations proposed to be performed on the Assets.  Prior to execution of this Agreement, except as set forth on Schedule 4.7-2, Seller has provided or made available to Purchaser, true, correct and complete copies of the Material Contracts with respect to the Assets or operations thereon.  The Imbalances burdening or otherwise applying to the Assets as of the Effective Time are shown on Schedule 3.4.

 

Section 4.8                                    Reports.  All material reports, studies, written notices from Governmental Bodies, tests, analyses and other documents in Seller’s possession that address or otherwise pertain to environmental matters with respect to the Assets have been provided or otherwise made available to Purchaser.  Similarly, all title reports, ownership reports, run-sheets and similar documents in Seller’s possession with respect to the Assets have been provided or otherwise made available to Purchaser.

 

Section 4.9                                    Third Party Costs.  To the actual knowledge of the Seller, the Third Party Costs are for goods furnished or services rendered in the ordinary course of business, are payable in accordance with customary trade terms for such costs and expenses and are not subject to any rights of Third Parties of set-off or netting.

 

ARTICLE 5
 REPRESENTATIONS AND WARRANTIES OF PURCHASER

 

Purchaser represents and warrants to Seller the following:

 

Section 5.1                                    Existence and Qualification.  Purchaser is a limited liability company, validly existing, and in good standing under the Laws of the State of Colorado and is (or, as of the Closing, will be) duly qualified to do business in the State of North Dakota.

 

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Section 5.2                                    Power.  Purchaser has the requisite power to enter into and perform this Agreement and consummate the transactions contemplated by this Agreement.  The execution and delivery of this Agreement does not, and the performance of Purchaser’s obligations hereunder will not, as of Closing, violate, or be in conflict with, any provision of Purchaser’s governing documents, or any judgment, decree, order, statute, rule or regulation applicable to Purchaser.

 

Section 5.3                                    Authorization and Enforceability.  The execution, delivery and performance of this Agreement and all documents required to be executed and delivered by Purchaser at Closing, and the performance of the transactions contemplated hereby and thereby, have been duly and validly authorized by all necessary limited liability company action on the part of Purchaser.  This Agreement has been duly executed and delivered by Purchaser (and all documents required hereunder to be executed and delivered by Purchaser at Closing will be duly executed and delivered by Purchaser) and this Agreement constitutes, and at the Closing such documents will constitute, the valid and binding obligations of Purchaser, enforceable in accordance with their terms except as such enforceability may be limited by applicable bankruptcy or other similar Laws affecting the rights and remedies of creditors generally as well as by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

 

Section 5.4                                    Liability for Brokers’ Fees.  Seller shall not directly or indirectly have any responsibility, liability or expense, as a result of undertakings or agreements of Purchaser, for brokerage fees, finder’s fees, agent’s commissions or other similar forms of compensation in connection with this Agreement or any agreement or transaction contemplated hereby.

 

Section 5.5                                    Litigation.  There are no actions, suits or proceedings pending or, to Purchaser’s knowledge, threatened against it which if decided unfavorably to Purchaser could have a material adverse effect on the ability of Purchaser to execute, deliver or perform its obligations under this Agreement.

 

Section 5.6                                    Financial Resources.  Purchaser has (or, as of the Closing, will have) the financial resources available to consummate the transactions contemplated by this Agreement and to pay the purchase price and any fees and expenses incurred by Purchaser in connection with the transactions contemplated by this Agreement.

 

Section 5.7                                    Securities Law Compliance.  Purchaser is acquiring the Assets for its own account for use in its trade or business, and not with a view toward or for sale associated with any distribution thereof, nor with any present intention of making a distribution thereof within the meaning of the Securities Act of 1933, as amended, and applicable state securities Laws.

 

Section 5.8                                    Independent Evaluation.  Purchaser is knowledgeable of the oil and gas business and of the usual and customary practices of oil and gas producers, including those in the areas where the Assets are located.  Purchaser is a party capable of making such investigation, inspection, review and evaluation of the Assets as a prudent purchaser would deem appropriate under the circumstances including with respect to all matters relating to the Assets, their value, operation and suitability.  In making the decision to enter into this Agreement and consummate the transactions contemplated hereby, Purchaser has relied solely on the basis of its own 

 

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independent due diligence investigation of the Assets and the terms and conditions of this Agreement (including Seller’s representations and warranties in ARTICLE 4).

 

ARTICLE 6
 COVENANTS OF THE PARTIES

 

Section 6.1                                    Due Diligence Review.

 

(a)                                 Subject to the other provisions of this Section 6.1, upon execution of this Agreement, Seller will make the Assets available to Purchaser and its Representatives for inspection and review, at Purchaser’s sole cost, to permit Purchaser to perform its due diligence (“Due Diligence Review”) as hereinafter provided.  Purchaser shall be entitled to conduct its Due Diligence Review until the Claim Date (the “Due Diligence Period”).

 

(b)                                 Upon reasonable advance notice, the Records will be made available to Purchaser at the offices of Seller during Seller’s normal business hours.  Notwithstanding the foregoing, Records relating to Non-Op Properties will only be made available to Purchaser to the extent such Records are in Seller’s possession, provided that Seller will cooperate with and assist Purchaser in obtaining copies of any Records not within Seller’s possession relating to such Non-Op Properties.

 

(c)                                  Seller hereby consents to Purchaser conducting, during the Due Diligence Period and upon reasonable advance notice to Seller, at Purchaser’s sole risk and expense, on-site inspections and an Environmental Assessment of the Assets, provided that (x) Purchaser’s right to conduct due diligence on Assets operated by any Person other than Seller (the “Non-Op Properties”) shall be subject to obtaining such operator’s consent, which Seller will use commercially reasonable efforts to obtain (but which efforts will not require Seller to pay any consent fee to the operator or agree to give such operator any other financial concession), and (y) any such Environmental Assessment will be subject to the following:

 

(i)                                     Purchaser shall not conduct any sampling, boring, drilling or other invasive investigation activities upon the Assets (“Invasive Activities”) without the prior written consent of Seller, which consent will not be unreasonably withheld, conditioned or delayed and, with respect to any Non-Op Property, without the prior written consent of the third-party operator thereof, which Seller will use commercially reasonable efforts to obtain (but which efforts will not require Seller to pay any consent fee to the operator or agree to give such operator any other financial concession).

 

(ii)                                  If any Environmental Assessment indicates that a Condition exists or is reasonably likely to exist on any Asset, Purchaser may request Seller’s consent to conduct Invasive Activities (“Inspection Request”).  The Inspection Request shall include the specific Asset that would be subject to the Invasive Activities, the reasons for requesting Invasive Activities and a description of the proposed Invasive Activities to be conducted by Purchaser.  Seller shall consent to or deny the Inspection Request within three Business Days of receipt of the Inspection Request, provided that consent from Seller shall not be unreasonably withheld, conditioned or delayed and that the failure of Seller to respond within such three Business Day period shall be deemed to constitute 

 

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Seller’s denial of consent to the Inspection Request and the proposed Invasive Activities; and provided, further, Purchaser’s right to conduct Invasive Activities on any Non-Op Property is also subject to the prior written consent of the third-party operator of such property, which Seller will use commercially reasonable efforts to obtain (but which efforts will not require Seller to pay any consent fee to the operator or agree to give such operator any other financial concession).

 

(d)                                 Seller shall have the right to have its Representatives present at any time that Purchaser or any of its Representatives are present on the Assets, and Purchaser will cooperate reasonably with Seller’s scheduling requests so Seller or its Representatives can be present.  In connection with any Environmental Assessment or Invasive Activities, Purchaser agrees not to interfere with the normal operation of the Assets and agrees to comply with all requirements and safety policies of the operator.  If Purchaser or its agents prepares an Environmental Assessment or conducts Invasive Activities, Purchaser will furnish a copy of the assessment or report resulting therefrom to Seller.  The Parties shall execute a “common undertaking” letter regarding the confidentiality of Environmental Assessments and Invasive Activities.

 

(e)                                  During the Due Diligence Period, upon reasonable advance notice, Seller shall provide Purchaser with reasonable access to Seller’s employees (whom are familiar with the Assets) during normal business hours, and shall instruct such persons to cooperate in all reasonable respects with Purchaser in its Due Diligence Review.  Notwithstanding the foregoing, in the event that Seller is prohibited under an agreement currently binding on Seller to provide Purchaser access to an Asset or any Record, Seller’s obligation to provide Purchaser access with respect to such Asset or Record shall be deemed satisfied by Seller using commercially reasonable efforts to obtain permission for Purchaser or its Representatives to gain such access.

 

(f)                                   As a condition for granting Purchaser or any Representative thereof access to any Asset, Purchaser must present Seller with a customary insurance certificate confirming that it is adequately insured including the insurer’s waiver of subrogation of Purchaser’s or its Representatives’ rights and claims against Seller.

 

(g)                                  PURCHASER HEREBY WAIVES, RELEASES AND AGREES TO DEFEND AND INDEMNIFY SELLER GROUP AGAINST ALL CLAIMS FOR INJURY TO, OR DEATH OF, PERSONS OR FOR DAMAGE TO PROPERTY ARISING IN ANY WAY FROM THE ACCESS AFFORDED TO PURCHASER HEREUNDER OR THE ACTIVITIES OF PURCHASER OR ITS REPRESENTATIVES (INCLUDING INVASIVE ACTIVITIES), EXCLUDING CLAIMS INVOLVING THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY MEMBER OF SELLER GROUP.  This waiver, release and indemnity by Purchaser shall survive termination of this Agreement.

 

(h)                                 EXCEPT FOR THE SPECIFIC REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT, SELLER MAKES NO WARRANTY OR REPRESENTATION OF ANY KIND AS TO ANY INFORMATION OBTAINED BY PURCHASER PURSUANT TO THIS SECTION 6.1, INCLUDING THE RECORDS AND ANY INFORMATION CONTAINED THEREIN.  PURCHASER 

 

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AGREES THAT ANY CONCLUSIONS DRAWN FROM THE RECORDS SHALL BE THE RESULT OF ITS OWN INDEPENDENT REVIEW AND JUDGMENT.

 

Section 6.2                                    Operation of Business.

 

(a)                                 Except as otherwise consented to in writing by Purchaser or provided in this Agreement, from the Execution Date to the Closing Date, Seller: (i) will keep Purchaser informed of all material developments relating to the Assets; (ii) will conduct its business related to the Assets in a good and workmanlike manner and in compliance with all Leases and Contracts; (iii) shall pay or cause to be paid in the ordinary course of business its proportionate share of all costs and expenses incurred in connection with the Assets or operations thereon; and (iv) will notify Purchaser of capital expenditures anticipated to cost in excess of $100,000 per operation conducted on the Assets, other than those listed on Schedule 4.7.

 

(b)                                 Subject to Section 6.2(a) and except as otherwise provided in this Section 6.2(b), unless Seller obtains the prior written consent of Purchaser to act otherwise, which consent shall not be unreasonably withheld, conditioned or delayed, Seller will use commercially reasonable efforts within the constraints of the applicable operating agreements and other applicable Contracts not to: (i) abandon any part of the Assets; (ii) except for those operations set forth on Schedule 4.7, approve or otherwise commit to any operations on the Assets anticipated in any instance to cost more than $100,000 per activity (excepting emergency operations required under presently existing contractual obligations, ongoing commitments under existing AFEs and operations undertaken to avoid a monetary penalty or forfeiture provision of any applicable agreement or order all of which shall be deemed to be approved, provided that Seller immediately notifies Purchaser of any emergency operation or operation to avoid monetary penalty or forfeiture excepted herein); (iii) convey or dispose of any part of the Assets (other than replacement of equipment or sale of Hydrocarbons produced from the Assets in the ordinary course of business); (iv) enter into any Material Contract in respect of an Asset, or materially amend or change the terms of any Contract or Lease; (v) unless required by Law or a Governmental Body, plug or abandon any of the Wells; (vi) voluntarily relinquish its position as operator to anyone other than Purchaser with respect to any of the operated Assets; (vii) waive, compromise or settle any claims, demands, complaints, causes of action, suits, actions, judgments, awards, recoveries, settlements, and appeals, which can reasonably be expected to materially affect the ownership, operation or value of the Assets after the Closing Date; or (viii) issue any note, bond, or other debt instrument secured by the Assets or agree to the imposition of any security interest or Lien on the Assets or allow any encumbrance which would impose a security interest or Lien on account of unpaid amounts upon any of the Assets that will not be repaid at the Closing.

 

(c)                                  Requests for approval of any action restricted by this Section 6.2 shall be delivered to the following individual, who shall have full authority to grant or deny such requests for approval on behalf of Purchaser:

 

	
 
    	
Mike   Ross
    
	
 
    	
Business   Development Manager
    
	
 
    	
Fax:   (303) 260-5080
    
	
 
    	
Email:   MRoss@trianglepetroleum.com
    

 

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Section 6.3                                    Consents to Assignment and Preferential Rights to Purchase.

 

(a)                                 Promptly after the Execution Date (but no later than three Business Days thereafter), Seller shall prepare and send (i) notices to the holders of any required consents to assignment requesting consents to, (A) if not already obtained, the transfer of the Assets from Liberty to Kodiak Williston pursuant to the Liberty PSA and (B) the Conveyances and (ii) notices to the holders of any applicable preferential rights to purchase or similar rights with respect to the Conveyances, in each case, in compliance with the terms of such rights and requesting waivers of such rights.  Seller shall use commercially reasonable efforts to cause such consents to assignment and waivers of preferential rights to purchase or similar rights (or the exercise thereof) to be obtained and delivered prior to Closing (provided that Seller shall not be obligated to make any payments or undertake obligations in connection with the obtaining of such consents and waiver of preferential rights); and shall provide Purchaser with copies of all notices sent pursuant to this Section 6.3(a) and, promptly after Sellers’ receipt thereof (but no later than three Business Days thereafter), any responses from the holders of such consents and preferential purchase rights (or similar rights), as applicable, to such notices.  Purchaser shall reasonably cooperate with Seller in seeking to obtain such consents to assignment and waivers of preferential rights.  Any preferential purchase right must be exercised subject to all terms and conditions set forth in this Agreement, including the successful Closing of this Agreement pursuant to ARTICLE 8 as to those Assets for which preferential purchase rights have not been exercised.  The consideration payable under this Agreement for any particular Asset for purposes of preferential purchase right notices shall be the Allocated Value for such Asset, subject to adjustment pursuant to Section 3.4.  If, prior to the Closing Date, any Party discovers any required consents or preferential rights to purchase (applying to the Assets) for which notices have not been delivered pursuant to the first sentence of this Section 6.3(a), then (A) the Party making such discovery shall provide the other Party with written notification of such consents or preferential rights, as applicable, (B) Seller, following delivery or receipt of such written notification, will promptly send notices to the holders of the required consents requesting consents to the Conveyances and notices to the holders of preferential rights to purchase in compliance with the terms of such rights and requesting waivers of such rights and (C) the terms and conditions of this Section 6.3 shall apply to the Assets subject to such consents or preferential rights to purchase, as applicable.

 

(b)                                 In no event shall there be included in the Conveyances any Asset for which a Specified Consent Requirement has not been satisfied with respect to the transactions described in Section 6.3(a)(i).  In cases in which the Asset subject to such a requirement is a Contract and Purchaser is assigned the Lease, Well or Unit to which the Contract relates, but the Contract is not transferred to Purchaser due to the unwaived Specified Consent Requirement, (i) Seller shall continue after Closing to use commercially reasonable efforts to satisfy the Specified Consent Requirement so that such Contract can be transferred to Purchaser upon receipt of the Specified Consent Requirement (provided that Seller shall not be obligated to make any payments or undertake obligations in connection with satisfying such Specified Consent Requirements) and (ii) the Contract shall be held by Seller for the benefit of Purchaser until the Specified Consent Requirement is satisfied or the Contract has terminated.  In cases in which the Asset subject to such a Specified Consent Requirement is a Property and such consent is not satisfied by Closing, the affected Property and the Assets primarily related to that Property shall

 

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not be transferred at Closing and the Unadjusted Purchase Price shall be reduced by the Allocated Value of the Property and related Assets.  If an unsatisfied Specified Consent Requirement with respect to which an adjustment to the Unadjusted Purchase Price is made under Section 3.4 is subsequently satisfied prior to the date of delivery of the final settlement statement under Section 8.4(b), a separate closing shall be held within five Business Days thereof at which (i) Seller shall convey the affected Property and related Assets to Purchaser in accordance with this Agreement and (ii) Purchaser shall pay an amount equal to the Allocated Value of such affected Property and related Assets, adjusted in accordance with Section 3.4, to Seller.  If such consent requirement is not satisfied by the date of delivery of such final settlement statement, Seller shall have no further obligation hereunder to sell and convey such Property and related Assets and Purchaser shall have no further obligation hereunder to purchase, accept and pay for such Property, and the affected Property and related Assets shall be deemed to be deleted from the applicable Exhibits and Schedules to this Agreement for all purposes.

 

(c)                                  If any preferential right to purchase any Assets is exercised prior to Closing, the Unadjusted Purchase Price shall be decreased by the Allocated Value for such Assets, and the affected Assets shall be deemed to be deleted from the applicable Exhibits and Schedules to this Agreement for all purposes.  Seller shall retain the consideration paid by the Third Party, and shall have no further obligation with respect to such affected Assets under this Agreement.  Should a Third Party fail to exercise its preferential right to purchase as to any portion of the Assets prior to Closing and the time for exercise or waiver has not yet expired, the affected Assets shall not be transferred at Closing and the Unadjusted Purchase Price shall be reduced by the Allocated Values of such Assets.  In the event that such Third Party exercises its preferential right to purchase following the Closing, Seller shall have no further obligation to sell and convey the affected Assets and Purchaser shall have no further obligation to purchase, accept and pay for such affected Assets, and the affected Assets shall be deemed to be deleted from the applicable Exhibits and Schedules to this Agreement for all purposes.  If, on the other hand, the applicable preferential purchase rights are waived or expire, a separate closing shall be held within five Business Days thereof at which (i) Seller shall convey the affected Assets to Purchaser in accordance with this Agreement and (ii) Purchaser shall pay an amount equal to the Allocated Value of such Assets, adjusted in accordance with Section 3.4, to Seller.  In the event that the applicable preferential purchase rights are not exercised, waived or expired by 90 days after the Closing, Seller shall have no further obligation hereunder to sell and convey the Assets subject to the such preferential purchase rights and Purchaser shall have no further obligation hereunder to purchase, accept and pay for such Assets, and the affected Assets shall be deemed to be deleted from the applicable Exhibits and Schedules to this Agreement for all purposes.

 

Section 6.4                                    Defect Matters.

 

(a)                                 Defects.  Purchaser will have the right to assert Defects pursuant to this Section 6.4(a) for the purpose of (x) making an adjustment to the Unadjusted Purchase Price pursuant to Section 3.4(b)(vi) and (y) determining whether the closing condition in Section 7.2(e) has been satisfied.  Except as set forth in the preceding sentence and the special warranty of title provided in the Conveyance, and without prejudice to Purchaser’s rights under Section 10.2(b), Purchaser hereby acknowledges and agrees that Purchaser will have no other remedy for any Defect with respect to any of the Leases, Wells, Units and other Assets and Purchaser hereby releases and waives all other remedies and agrees not to assert or threaten to assert any claim

 

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with respect to any such waived remedies.

 

(i)                                     To assert a claim for a Defect for such purpose, Purchaser must deliver a claim notice to Seller (a “Defect Notice”) promptly after the discovery thereof, but in no event later than five Business Days prior to the Closing (such cut-off date, the “Claim Date”).  Each Defect Notice shall be in writing and include (a) a description of the alleged Defect that is reasonably sufficient for Seller to determine the basis of the alleged Defect, (b) the Asset adversely affected by the Defect (a “Defect Property”), (c) all documents upon that Purchaser relies for its assertion of a Defect, including supporting documents reasonably necessary for Seller to verify the existence of the alleged Defect, and (d) the amount by which Purchaser reasonably believes the value of each Defect Property is reduced by the alleged Defect (the “Defect Amount”) and the computations and information upon which Purchaser’s belief is based.  Seller shall have the opportunity to cure any Title Defects, to Purchaser’s reasonable satisfaction, on or before one Business Day prior to the Closing and any such cured Title Defects will no longer be considered Defects for purposes of this Agreement.  The Defect Amount shall be determined as provided in Section 6.4(a)(ii) and Section 6.4(a)(iii), as applicable, provided that, notwithstanding anything to the contrary in this Section 6.4, the aggregate Defect Amount, in the case of Section 6.4(a)(ii) only, attributable to all Title Defects upon any Defect Property shall not exceed the Allocated Value of such Defect Property.

 

(ii)                                  The Defect Amount for any Title Defect shall be based on the amount by which the Allocated Value of the Defect Property affected by such Title Defect is reduced as a result of the existence of such Title Defect and shall be determined in accordance with the following methodology, terms and conditions: (A) if Purchaser and Seller agree on the Defect Amount, that amount shall be the Defect Amount; (B) if the Title Defect is a Lien that is undisputed and liquidated in amount, then the Defect Amount shall be the amount of the payment necessary to remove such Title Defect from the Defect Property; and (C) if the Title Defect represents an obligation, encumbrance, burden or charge upon or other defect in title to the Defect Property of a type not described in subsections (A) or (B) above, the Defect Amount shall be determined by taking into account the following factors: (1) any discrepancy between (x) the Net Revenue Interest or Working Interest for any Defect Property and (y) the Net Revenue Interest or Working Interest stated in Exhibit A or Exhibit B, respectively; (2) the Allocated Value of the Defect Property; (3) the portion of the Defect Property affected by the Title Defect; (4) the legal effect of the Title Defect; (5) the values placed upon the Title Defect by Purchaser and Seller; (6) any discrepancy between (x) the Net Acre interest covered by a Lease and (y) the Net Acre interest covered by such Lease stated in Exhibit A; and (7) such other reasonable factors as are necessary to make a proper evaluation.

 

(iii)                               The Defect Amount for any Environmental Defect shall be based on the reasonable cost to remediate such Environmental Defect.  In no event shall the Defect Amount for any Environmental Defect for a particular Defect Property exceed the reasonable cost to remediate such Environmental Defect. The Defect Amount for any Environmental Defect shall be determined without duplication of any costs or losses included in another Environmental Defect, Defect Amount or Casualty Loss hereunder.

 

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(b)                                 Title Benefits.  Seller will have the right to assert rights, circumstances or conditions that operate to (i) increase the Net Revenue Interest of Seller in any Lease, Well, or Unit above that shown in Exhibit A or Exhibit B, respectively, to the extent the same does not cause a greater than proportionate increase in Seller’s Working Interest therein above that shown in Exhibit A or Exhibit B respectively, (ii) decrease the Working Interest of Seller in any Lease, Well, or Unit below that shown in Exhibit A or Exhibit B, respectively, to the extent that such decrease in Seller’s Working Interest does not cause a decrease in Seller’s Net Revenue Interest therein below that shown in Exhibit A or Exhibit B, respectively, or (iii) increase the Net Acres of Seller covered by a Lease (other than due to an increase in Seller’s Working Interest that is not accompanied by a proportionate increase in Seller’s Net Revenue Interest) above that shown in Exhibit A (each, a “Title Benefit”).  Title Benefits may be asserted hereunder for the purposes of offsetting (x) any Defect Amounts used to determine the Title Defect Adjustment Amount pursuant to Section 6.4(d) and (y) Defect Amounts used to determine whether the closing condition in Section 7.2(e) has been satisfied.  To assert a Title Benefit, Seller must deliver a claim notice to Purchaser (a “Title Benefit Notice”) promptly after the discovery thereof, but in no event later than Claim Date.  Each Title Benefit Notice shall be in writing and include (a) a description of the alleged Title Benefit that is reasonably sufficient for Purchaser to determine the basis of the alleged Title Benefit, (b) the Asset affected by the Title Benefit (a “Title Benefit Property”), (c) all documents upon that Seller relies for its assertion of a Title Benefit, including supporting documents reasonably necessary for Purchaser to verify the existence of the Title Benefit, and (d) the amount by which Seller reasonably believes the value of each Title Benefit Property is increased by the Title Benefit (the “Title Benefit Amount”) and the computations and information upon which Seller’s calculation is based.  The Title Benefit Amount resulting from a Title Benefit shall be determined in accordance with the same methodology, terms and conditions for determining the Defect Amount with respect to a Title Defect.

 

(c)                                  Remedies.  Subject to Seller’s right to dispute resolution under Section 6.4(f), in the event that any Defect is timely asserted by Purchaser in accordance with Section 6.4(a)(i), and is not waived by Purchaser or timely cured by Seller prior to Closing under Section 6.4(a)(i), Seller shall convey the Defect Property to Purchaser at Closing and the Defect Amount for such Defect Property shall be taken into account in the determination of the Defect Adjustment Amount pursuant to Section 6.4(d) and Section 6.4(e); provided, however, that in the event the Defect Amount asserted exceeds the Allocated Value for the relevant Defect Property, Seller may elect prior to Closing to exclude such Defect Property from the transaction and reduce the Unadjusted Purchase Price by the Allocated Value for such Defect Property pursuant to Section 3.4(b)(viii).

 

(d)                                 Title Defect Adjustment Amount.  If the aggregate Defect Amount of all Title Defects (disregarding any Defect whose Defect Amount is less than $100,000) exceeds the aggregate Title Benefit Amount of all Title Benefits (disregarding any Title Benefit whose Title Benefit Amount is less than $100,000), then the Unadjusted Purchase Price shall be reduced to the extent (and only to the extent) such excess exceeds $1,250,000 (such excess amount, if any, the “Title Defect Adjustment Amount”) pursuant to Section 3.4(b)(vi).  The Title Defect Adjustment Amount shall be recalculated as part of the final determination of the Adjusted Purchase Price under Section 8.4(b) to take into account the resolution of Disputed Defects and Disputed Title Benefits pursuant to Section 6.4(f).

 

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(e)                                  Environmental Defect Adjustment Amount.  If the aggregate Defect Amount of all Environmental Defects (disregarding any Defect whose Defect Amount is less than $100,000) exceeds $1,250,000, then the Unadjusted Purchase Price shall be reduced to the extent (and only to the extent) such excess exceeds $1,250,000 (such excess amount, if any, the “Environmental Defect Adjustment Amount”, and together with the Title Defect Adjustment Amount, “Defect Adjustment Amount”) pursuant to Section 3.4(b)(vi).  The Environmental Defect Adjustment Amount shall be recalculated as part of the final determination of the Adjusted Purchase Price under Section 8.4(b) to take into account the resolution of Disputed Defects pursuant to Section 6.4(f).

 

(f)                                   Defect Dispute Resolution.

 

(i)                                     The Parties agree to resolve disputes concerning the following matters pursuant to this Section 6.4(f):  (A) the existence and scope of a Defect, Title Benefit or Defect Adjustment Amount; (B) the Defect Amount for a Defect Property or the Title Benefit Amount for a Title Benefit Property; and (C) the adequacy of Seller’s Title Defect curative efforts as to whether a Title Defect continues to exist or Purchaser’s reasonable satisfaction of such efforts (the “Defect Disputed Matters”).

 

(ii)                                  The Parties agree to attempt to initially resolve all Defect Disputed Matters through negotiations between the Parties.  If the Parties cannot resolve a Defect or Title Benefit dispute on or before Closing (each, a “Disputed Defect” and a “Disputed Title Benefit,” respectively), solely for purposes of determining the Closing Payment (and subject to the final calculation of the Defect Adjustment Amount as part of the final determination of the Adjusted Purchase Price under Section 8.4(b)), the Defect Adjustment Amount shall be calculated as if Purchaser’s position on each Disputed Defect were correct and as if Seller’s position with respect to each Disputed Title Benefit were correct (the resulting amount, the “Closing Date Defect Adjustment”); and, following Closing, the Defect Disputed Matters will be finally determined by binding arbitration as described in Section 6.4(f)(iii).

 

(iii)                               The Defect Disputed Matters will be finally determined by binding arbitration pursuant to Section 12.2(b), provided, however, that the independent arbitrator appointed pursuant to Section 12.2(b) shall be (A) in the case of Disputed Defects that are Title Defects or Disputed Title Benefits, an oil and gas title attorney licensed in North Dakota with a minimum of ten years’ experience with title defects affecting the types of properties which are the subject of the Defect Disputed Matters and (B) in the case of Disputed Defects that are Environmental Defects, an environmental attorney qualified by education, knowledge and experience with environmental defects affecting the types of properties which are subject to the Disputed Defects and having a minimum of ten years’ experience with such types of defects and properties.  The arbitrator shall employ such independent attorneys, petroleum engineers and/or other consultants as deemed necessary.  Notwithstanding anything to the contrary set forth in Section 12.2(b) (x) on or before 45 days after Closing, Purchaser and Seller shall present their respective positions in writing to the arbitrator, together with such evidence as each Party deems appropriate, and (y) the arbitrator shall resolve the dispute through a final decision within 20 days after submission of the matters in dispute and the final decision shall be reflected in the

 

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final calculation of the Adjusted Purchase Price pursuant to Section 8.4(b).

 

Section 6.5                                    Casualty Loss.  If, prior to Closing, a portion of the Assets is destroyed by fire or other casualty or if a portion of the Assets is taken or threatened to be taken in condemnation or under the right of eminent domain (a “Casualty Loss”), Purchaser shall not be obligated to purchase such Asset.  If Purchaser declines to purchase such Asset, the Purchase Price shall be reduced by the Allocated Value of such Asset and such Asset will be deemed an Excluded Asset.  If Purchaser elects to purchase such Asset, the Purchase Price shall be reduced by the estimated cost to repair such Asset (with equipment of similar utility), less all insurance proceeds which shall be payable to Purchaser, up to the Allocated Value thereof (the reduction being the “Net Casualty Loss”).  Seller, at its sole option, may elect to cure such Casualty Loss prior to Closing and, in such event, Seller shall be entitled to all insurance proceeds in connection therewith.  If Seller elects to cure such Casualty Loss, such election shall be at Seller’s sole cost and expense and Seller may replace any personal property that is the subject of a Casualty Loss with equipment of similar grade and utility, or replace any real property with real property of similar nature and kind if such property is acceptable to Purchaser in its sole discretion.  If Seller elects to cure the Casualty Loss and cures such Casualty Loss prior to Closing, Purchaser shall purchase the affected Asset at Closing for the Allocated Value thereof.

 

Section 6.6                                    Liberty PSA Matters.  Seller shall communicate regularly with Purchaser with respect to any matters arising under or otherwise relating to the Liberty PSA or the Assets.  Except with Purchaser’s prior consent, Seller shall not (a) amend, restate, supplement or otherwise modify the Liberty PSA as to the Assets or in a manner that would be adverse to Purchaser in connection with the terms of Section 10.3 or (b) waive any rights and remedies available to Seller that relate to the Assets under the Liberty PSA or in a manner that would be adverse to Purchaser in connection with the terms of Section 10.3.

 

Section 6.7                                    Public Announcements; Confidentiality.

 

(a)                                 Subject to Section 6.7(b), neither Party shall make any press release or other public announcement regarding the existence of this Agreement, the contents hereof or the transactions contemplated hereby without the prior written consent of the other Party (collectively, the “Public Announcement Restrictions”).  The Public Announcement Restrictions shall not restrict disclosures to the extent (i) necessary for a Party to perform this Agreement (including disclosures to Governmental Bodies or Third Parties holding preferential rights to purchase, rights of consent or other rights that may be applicable to the transaction contemplated by this Agreement, as reasonably necessary to provide notices, seek waivers, amendments or termination of such rights, or seek such consents), (ii) required (upon advice of counsel) by applicable securities or other Laws or regulations or the applicable rules of any stock exchange having jurisdiction over the Parties or their respective Affiliates or (iii) that such Party has given the other Party a reasonable opportunity to review such disclosure prior to its release and no objection is raised.  In the case of the disclosures described under subsections (i) and (ii) of this Section 6.7(a), each Party shall use its reasonable efforts to consult with the other Party regarding the contents of any such release or announcement prior to making such release or announcement.

 

(b)                                 The Parties shall keep all information and data relating to this Agreement

 

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and the transactions contemplated hereby strictly confidential except for (i) disclosures to Representatives of the Parties (in which event, the disclosing Party will be responsible for making sure that the Representatives keep such information and data confidential), and (ii) any disclosures required to perform this Agreement (collectively, the “Confidentiality Restrictions”).  The Confidentiality Restrictions shall not restrict disclosures that are required (upon advice of counsel) by applicable securities or other Laws or regulations or the applicable rules of any stock exchange having jurisdiction over the Parties or their respective Affiliates.

 

Section 6.8                                    Replacement of Bonds, Letters of Credit and Guaranties.  The Parties understand that none of the bonds, letters of credit and guaranties, if any, posted by Seller with Governmental Bodies or co-owners and relating to the Assets will be transferred to Purchaser.  Promptly following Closing, but, as to Assets operated by Seller, in no event later than the transfer of operatorship of such Assets, Purchaser shall obtain, or cause to be obtained in the name of Purchaser, replacements for such bonds, letters of credit and guaranties, to the extent such replacements are necessary to permit the cancellation of the bonds, letters of credit and guaranties posted by Seller or to consummate the transactions contemplated by this Agreement.

 

Section 6.9                                    Operatorship.  Within three Business Days after Closing, Seller shall send notices to co-owners of those Assets that Seller currently operates indicating that Seller is resigning as operator, effective upon the Closing Date, and recommending that Purchaser be elected successor operator.

 

Section 6.10                             Suspense Accounts.  Prior to Closing, Seller will provide to Purchaser (a) information regarding all of Seller’s accounts holding moneys in suspense together with a written explanation (as contained in Seller’s files) of why such moneys are held in suspense or other information identifying the proper disposition of such moneys and (b) Seller’s division of interest and all supporting documentation regarding those royalty owners and working interest owners in the Leases for whom Seller disburses proceeds of production.  Following Closing, Purchaser shall be solely responsible for the proper distribution of such moneys held in suspense to the party or parties which or who are entitled to receive payment of the same, and hereby agrees to indemnify, defend and hold Seller harmless from any Damages therefor.

 

Section 6.11                             Transition Services.  Between the Execution Date and the Closing Date, the Parties will negotiate a form of transition services agreement (“Transition Services Agreement”) to be executed at Closing by the Parties, establishing the terms under which Seller would provide certain transition accounting services in respect of the Assets for a limited period of time following the Closing.  If the Parties do not reach an agreement regarding such a Transition Services Agreement prior to Closing, the Closing shall nonetheless occur (subject to the satisfaction of the conditions for Closing set forth herein) and, thereafter, until October 30, 2013, Seller shall provide transition accounting services for the Assets to Purchaser on substantially the same terms and conditions (as if Seller was the service provider, and Purchaser the service recipient, thereunder) as set forth in the Liberty TSA.

 

Section 6.12                             Further Assurances.  After Closing, the Parties agree to take such further actions and to execute, acknowledge and deliver all such further documents as are reasonably requested by the other Party for carrying out the purposes of this Agreement or of any document delivered pursuant to this Agreement. In addition, at the request of Purchaser, Seller agrees to

 

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assist Purchaser in collecting the Third Party Costs, which such assistance shall include providing supporting documentation to substantiate the Third Party Costs, identifying the proper Third Party responsible for payment of such Third Party Costs, the date, if any, when such Third Party Costs are due, an aging of such Third Party Costs and such other information as Purchaser may reasonably request.

 

ARTICLE 7
 CONDITIONS TO CLOSING

 

Section 7.1                                    Seller’s Conditions to Closing.  The obligations of Seller to consummate the transactions contemplated by this Agreement are subject to the satisfaction (or waiver by Seller) on or prior to Closing of each of the following conditions precedent:

 

(a)                                 Representations.  The representations and warranties of Purchaser set forth in ARTICLE 5 shall be true and correct in all material respects as of the Execution Date and as of the Closing Date as though made on and as of the Closing Date;

 

(b)                                 Performance.  Purchaser shall have performed and observed, in all material respects, all covenants and agreements to be performed or observed by it under this Agreement prior to or on the Closing Date;

 

(c)                                  No Action.  No temporary restraining order, preliminary or permanent injunction, or other order issued by any court of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the transactions contemplated by this Agreement will be in effect; and

 

(d)                                 Governmental Consents.  All material consents and approvals of any Governmental Body required for the transfer of the Assets from Seller to Purchaser as contemplated under this Agreement, except Customary Post-Closing Consents, shall have been granted, or the necessary waiting period shall have expired, or early termination of the waiting period shall have been granted.

 

(e)                                  Defect Amounts.  The aggregate sum of all Defect Amounts that Purchaser has asserted, reasonably and in good faith, pursuant to Section 6.4(a) prior to the Claim Date, net of all Title Benefit Amounts asserted by Seller, reasonably and in good faith, pursuant to Section 6.4(b) prior to the Claim Date, shall not exceed 20% of the Unadjusted Purchase Price.

 

Section 7.2                                    Purchaser’s Conditions to Closing.  The obligations of Purchaser to consummate the transactions contemplated by this Agreement are subject to the satisfaction (or waiver by Purchaser) on or prior to Closing of each of the following conditions precedent:

 

(a)                                 Representations.  The representations and warranties of Seller set forth in ARTICLE 4 shall be true and correct in all material respects as of the Execution Date and as of the Closing Date as though made on and as of the Closing Date (other than representations and warranties that refer to a specified date, which need only be true and correct in all material respects on and as of such specified date);

 

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(b)                                 Performance.  Seller shall have performed and observed, in all material respects, all covenants and agreements to be performed or observed by it under this Agreement prior to or on the Closing Date;

 

(c)                                  No Action.  No temporary restraining order, preliminary or permanent injunction, or other order issued by any court of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the transactions contemplated by this Agreement will be in effect;

 

(d)                                 Governmental Consents.  All material consents and approvals of any Governmental Body required for the transfer of the Assets from Seller to Purchaser as contemplated under this Agreement, except Customary Post-Closing Consents, shall have been granted, or the necessary waiting period shall have expired, or early termination of the waiting period shall have been granted; and

 

(e)                                  Defect Amounts.  The aggregate sum of all Defect Amounts that Purchaser has asserted, reasonably and in good faith, pursuant to Section 6.4(a) prior to the Claim Date, net of all Title Benefit Amounts asserted by Seller, reasonably and in good faith, pursuant to Section 6.4(b) prior to the Claim Date, shall not exceed 20% of the Unadjusted Purchase Price.

 

ARTICLE 8
 CLOSING

 

Section 8.1                                    Time and Place of Closing.  Consummation of the purchase and sale transaction as contemplated by this Agreement (the “Closing”), shall take place at, unless otherwise agreed by the Parties, the offices of Dorsey & Whitney LLP, at 1400 Wewatta St., Suite 400 Denver, CO, on August 28, 2013, or if all conditions in ARTICLE 7 to be satisfied prior to Closing have not yet been satisfied or waived, within five Business Days of such conditions having been satisfied or waived, subject to the rights of the Parties under ARTICLE 9.  The date on which the Closing occurs is herein referred to as the “Closing Date.”

 

Section 8.2                                    Obligations of Seller at Closing.  At the Closing, upon the terms and subject to the conditions of this Agreement, and subject to the simultaneous performance by Purchaser of its obligations pursuant to Section 8.3, Seller shall deliver or cause to be delivered to Purchaser, among other things, the following:

 

(a)                                 counterparts of the Conveyances of the Assets, in sufficient duplicate originals to allow recording in all appropriate jurisdictions and offices, duly executed by Seller and acknowledged before a notary public;

 

(b)                                 counterparts of mutually agreeable letters-in-lieu of transfer order covering the relevant Assets, duly executed by Seller;

 

(c)                                  a certificate duly executed by an authorized officer of Seller, dated as of Closing, certifying on behalf of Seller that the conditions set forth in Section 7.2(a) and Section 7.2(b) have been fulfilled;

 

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(d)                                 an executed statement described in Treasury Regulation § 1.1445-2(b)(2) certifying that Seller is not a foreign person within the meaning of Section 1445 of the Code;

 

(e)                                  where approvals are received by Seller pursuant to a filing or application in connection with Section 7.2(d), copies of those approvals; and

 

(f)                                   all other instruments, documents and other items reasonably necessary to effectuate the terms of this Agreement, as may be reasonably requested by Purchaser.

 

Section 8.3                                    Obligations of Purchaser at Closing.  At the Closing, upon the terms and subject to the conditions of this Agreement, and subject to the simultaneous performance by Seller of its obligations pursuant to Section 8.2, Purchaser shall deliver or cause to be delivered to Seller, among other things, the following:

 

(a)                                 a wire transfer of the Closing Payment to the account designated by Seller;

 

(b)                                 counterparts of the Conveyances of the Assets, in sufficient duplicate originals to allow recording in all appropriate jurisdictions and offices, duly executed by Purchaser and acknowledged before a notary public;

 

(c)                                  counterparts of mutually agreeable letters-in-lieu of transfer order covering the relevant Assets, duly executed by Purchaser;

 

(d)                                 a certificate by an authorized officer of Purchaser, dated as of Closing, certifying on behalf of Purchaser that the conditions set forth in Section 7.1(a) and Section 7.1(b) have been fulfilled;

 

(e)                                  where approvals are received by Purchaser pursuant to a filing or application under Section 7.1(d), copies of those approvals;

 

(f)                                   evidence of replacement bonds, guaranties and letters of credit pursuant to Section 6.8; and

 

(g)                                  all other instruments, documents and other items reasonably necessary to effectuate the terms of this Agreement, as may be reasonably requested by Seller.

 

Section 8.4                                    Closing Payment and Post-Closing Purchase Price Adjustments.

 

(a)                                 Not later than five Business Days prior to the Closing Date, Seller shall prepare and deliver to Purchaser, using and based upon the best information available to Seller, a preliminary settlement statement estimating the initial Adjusted Purchase Price after giving effect to all adjustments to the Unadjusted Purchase Price set forth in Section 3.4.  Within two Business Days after its receipt of such statement, Purchaser shall submit to Seller in writing any objections or proposed changes thereto and Seller shall consider all such objections and proposed changes in good faith.  Seller and Purchaser shall use commercially reasonable efforts to attempt to resolve any differences regarding the preliminary settlement statement before the Closing; provided, to the extent such objections are not so resolved by mutual agreement of Seller and Purchaser prior to the Closing Date, the Closing shall proceed using the Closing Date Defect

 

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Adjustment but otherwise using Seller’s calculation of the other components of the purchase price, adjusted to reflect agreed upon resolution of any disputed item.  All other adjustments to the Unadjusted Purchase Price not determined as of Closing shall be taken into account as provided in Section 8.4(b).  The estimate set forth in the final preliminary settlement statement shall constitute the U.S. Dollar amount to be paid by Purchaser to Seller at the Closing (the “Closing Payment”).

 

(b)                                 Seller shall prepare and deliver to Purchaser a statement setting forth the final calculation of the Adjusted Purchase Price and showing the calculation of each adjustment, based, to the extent possible, on actual credits, charges, receipts and other items before and after the Effective Time no later than the 90th day following the Closing Date.  Seller shall, at Purchaser’s request, supply reasonable documentation available to support any credit, charge, receipt or other item included in such statement.  Purchaser shall deliver to Seller a written report containing any changes that Purchaser proposes be made to Seller’s statement no later than the 60th day following Purchaser’s receipt thereof.  Seller may deliver a written report to Purchaser during this same period reflecting any changes that Seller proposes to be made to such statement as a result of additional information received after the statement was prepared.  The Parties shall undertake to agree on the final statement of the Adjusted Purchase Price no later than 195 days after the Closing Date.  In the event that the Parties cannot reach agreement within such period of time, either Party may refer the remaining matters in dispute to the Denver, Colorado office of a mutually-agreed upon accounting firm for review and final determination by arbitration.  The accounting firm shall conduct the arbitration proceedings in Denver, Colorado in accordance with the Commercial Arbitration Rules of the American Arbitration Association, to the extent that such rules do not conflict with the terms of this Section 8.4.  The accounting firm’s determination shall be made within 30 days after submission of the matters in dispute and shall be final and binding on both Parties, without right of appeal.  In determining the proper amount of any adjustment to the Unadjusted Purchase Price, the accounting firm shall not increase the Unadjusted Purchase Price more than the increase proposed by Seller nor decrease the Unadjusted Purchase Price more than the decrease proposed by Purchaser, as applicable.  The accounting firm shall act as an expert for the limited purpose of determining the specific disputed matters submitted by the Parties and may not award damages or penalties to the Parties with respect to any matter.  The Parties shall each bear its own legal fees and other costs of presenting its case.  Seller shall bear one-half and Purchaser shall bear one-half of the costs and expenses of the accounting firm.  Within ten days after the earlier of (i) the expiration of Purchaser’s 60-day review period without delivery of any written report or (ii) the date on which the Parties finally determine the Adjusted Purchase Price or the accounting firm finally determines the disputed matters, as applicable, (A) Purchaser shall pay to Seller the amount by which the Adjusted Purchase Price exceeds the Closing Payment or (B) Seller shall pay to Purchaser the amount by which the Closing Payment exceeds the Adjusted Purchase Price, as applicable.  Any post-closing payment pursuant to this Section 8.4(b) shall bear interest from the Closing Date to the date of payment at the Prime Rate.

 

(c)                                  Purchaser shall assist Seller in the preparation of the final statement of the Adjusted Purchase Price under Section 8.4(b) by furnishing invoices, receipts, reasonable access to personnel, and such other assistance as may be requested by Seller to facilitate such process post-Closing.

 

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(d)                                 All payments made or to be made under this Agreement to Seller shall be made by electronic transfer of immediately available funds to the accounts designated by Seller.  All payments made or to be made hereunder to Purchaser shall be by electronic transfer or immediately available funds to a bank and account specified by Purchaser in writing to Seller.

 

ARTICLE 9
 TERMINATION

 

Section 9.1                                    Termination.  This Agreement may be terminated at any time prior to Closing: (a) by the mutual prior written consent of the Parties; or (b) by either Party if Closing has not occurred on or before 75 days after the Execution Date.  However, no Party shall be entitled to terminate this Agreement under clause (b), immediately above, if the Closing has failed to occur because such Party negligently or willfully failed to perform or observe in any material respect its covenants or agreements hereunder.

 

Section 9.2                                    Effect of Termination.  If this Agreement is terminated pursuant to Section 9.1, this Agreement shall become void and of no further force or effect (except for the provisions of Section 4.4, Section 5.4, Section 6.1(f) (as to the indemnity provided therein), Section 6.7, this ARTICLE 9, ARTICLE 12 (other than Section 12.6 and Section 12.9) and Appendix A (as to those defined terms included in the other surviving provisions), which shall continue in full force and effect) and Seller shall be free immediately to enjoy all rights of ownership of the Assets and to sell, transfer, encumber or otherwise dispose of the Assets to any Person without any restriction under this Agreement.  Notwithstanding anything to the contrary in this Agreement, the termination of this Agreement under Section 9.1 shall not relieve either Party, subject to Section 12.5, from liability for any willful or negligent failure to perform or observe in any material respect any of its agreements or covenants contained herein that are to be performed or observed at or prior to Closing.

 

ARTICLE 10
 INDEMNIFICATION

 

Section 10.1                             Allocation of Liability.  Upon Closing, Purchaser shall assume and pay, perform, fulfill and discharge all of the following claims, costs, expenses, liabilities and obligations accruing or relating to the (a) ownership, use or operation of the Assets after the Effective Time, including owning, developing, exploring, operating or maintaining the Assets or the producing, transporting and marketing of Hydrocarbons from the Assets, the payment of Property Expenses, the make-up and balancing obligations for overproduction of gas from the Wells, and all liability for royalty and overriding royalty payments and Production Taxes (allocated in accordance with ARTICLE 11) made with respect to the Assets; and (b) the Environmental Liabilities (clauses (a) and (b), collectively, the “Assumed Liabilities”).  Notwithstanding the foregoing, the Assumed Liabilities shall not include any of the following: (i) the payment or improper payment by Seller of royalties accruing under the Leases after the closing of the Liberty PSA but prior to the Effective Time with respect to Assets for which Seller serves as the operator; (ii) any obligations, duties and liabilities that (A) do not primarily relate to or primarily arise out of, the Assets, (B) that are attributable to periods prior to or after the Effective Time that relate to Seller’s corporate overhead (including personnel) or (C) relate to any Property Expenses attributable to the period of time prior to the Effective Time; (iii) any

 

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obligations, duties and liabilities of Seller primarily relating to or arising from each of the Excluded Assets; and (iv) any income taxes of Seller or any of its Affiliates, which shall be retained by Seller (clauses (i) through (iv), collectively, the “Seller Retained Liabilities”).

 

Section 10.2                             Indemnification.  Subject to the other provisions of this ARTICLE 10:

 

(a)                                 From and after Closing, Purchaser shall indemnify, defend and hold harmless the Seller Group from and against all Damages incurred, suffered by or asserted against such Persons: (i) caused by or arising out of or resulting from the Assumed Liabilities; (ii) caused by or arising out of or resulting from Purchaser’s breach of any of Purchaser’s covenants or agreements contained herein; or (iii) caused by or arising out of or resulting from any breach of any representation or warranty made by Purchaser contained in ARTICLE 5 or in the certificate delivered by Purchaser at Closing pursuant to Section 8.3(d).

 

(b)                                 From and after Closing, Seller shall indemnify, defend and hold harmless the Purchaser Group from and against all Damages incurred, suffered by or asserted against such Persons: (i) caused by or arising out of or resulting from the Seller Retained Liabilities; (ii) caused by or arising out of the Liberty Indemnified Matters (but only to the extent relating to the Assets); (iii) caused by or arising out of or resulting from Seller’s breach of Seller’s covenants or agreements contained herein; or (iv) caused by or arising out of or resulting from any breach of any representation or warranty made by Seller contained in ARTICLE 4, or in the certificate delivered by Seller at Closing pursuant to Section 8.2(c).

 

(c)                                  Notwithstanding anything to the contrary set forth herein, Seller shall have no liability for indemnification hereunder or for any Damages pursuant to Section 10.2(b)(iii) and (iv) until the total of all Damages with respect to such matters exceeds $750,000 (the “Deductible”), after which point the Purchaser Group shall be entitled to indemnification only in excess of the Deductible.  The aggregate liability of Seller for indemnification pursuant to Section 10.2(b)(iii) and (iv) with respect to Damages suffered by Purchaser Group shall not exceed $8,200,000 (the “Cap”).  Notwithstanding the foregoing, the Deductible and the Cap will not apply to Seller’s obligation to indemnify Purchaser for the Seller Retained Liabilities, or for indemnification relating to Seller’s breach of representations and warranties contained in Section 4.1, Section 4.2, Section 4.3, Section 4.4, and Section 4.5.

 

(d)                                 Notwithstanding anything to the contrary contained in this Agreement, from and after Closing, Seller’s and Purchaser’s sole and exclusive remedy against each other with respect to breaches of the representations, warranties, covenants and agreements of the Parties contained in ARTICLE 4, ARTICLE 5 and ARTICLE 6, and the affirmations of such representations and warranties, covenants, and agreements contained in the certificates delivered by each Party at Closing pursuant to Section 8.2(c) and Section 8.3(d), as applicable, is set forth in this Section 10.2, and if no such right of indemnification is expressly provided, then such claims are hereby waived to the fullest extent permitted by Law.  Except for the remedies contained in this Section 10.2, and any other remedies available to the Parties at law or in equity for breaches of this Agreement other than ARTICLE 4, ARTICLE 5 and ARTICLE 6, upon Closing, each Party releases, remises, and forever discharges the other Party from any and all suits, legal or administrative proceedings, claims, demands, damages, Damages, costs, liabilities, interest, or causes of action whatsoever, in law or in equity, known or unknown, which such

 

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Parties might now or subsequently may have, based on, relating to, or arising out of this Agreement or Seller’s ownership, use, or operation of the Assets, or the condition, quality, status, or nature of the Assets, INCLUDING RIGHTS TO CONTRIBUTION OR COST RECOVERY UNDER THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT OF 1980, AS AMENDED, BREACHES OF STATUTORY AND IMPLIED WARRANTIES, NUISANCE OR OTHER TORT ACTIONS, RIGHTS TO PUNITIVE DAMAGES, COMMON LAW RIGHTS OF CONTRIBUTION, ANY RIGHTS UNDER INSURANCE POLICIES ISSUED OR UNDERWRITTEN BY THE OTHER PARTY OR ANY OF ITS AFFILIATES. THE FOREGOING INDEMNITIES WILL APPLY AND BE EFFECTIVE EVEN IF THE DAMAGES COVERED THEREBY ARE CAUSED OR ARISE FROM, IN WHOLE OR IN PART, BY THE NEGLIGENCE (WHETHER SOLE, JOINT OR CONCURRENT), STRICT LIABILITY OR OTHER LEGAL FAULT OF ANY INDEMNIFIED PERSON, INVITEE OR THIRD PERSON, AND WHETHER OR NOT CAUSED BY A PRE-EXISTING CONDITION, BUT EXCLUDING, IN EACH CASE, THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY INDEMNIFIED PERSON.

 

(e)                                  EACH PARTY CONFIRMS THAT IT IS NOT RELYING ON ANY REPRESENTATION OR WARRANTY OTHER THAN THOSE EXPRESSLY SET FORTH IN THIS AGREEMENT, AND EACH PARTY ACKNOWLEDGES THAT THIS NO RELIANCE CONFIRMATION IS A MATERIAL INDUCEMENT TO THE OTHER PARTY’S WILLINGNESS TO ENTER INTO THIS AGREEMENT AND CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY.

 

Section 10.3                             Liberty Indemnified Matters.

 

(a)                                 Seller is entitled to certain indemnity protections from Liberty under Section 14.2 of the Liberty PSA, including indemnity protections in respect of certain retained liabilities of Liberty and breaches by Liberty of certain representations, warranties, covenants and agreements set forth in the Liberty PSA (together with the events giving rise thereto, collectively, the “Liberty Indemnified Matters”).  Seller has agreed to indemnify Purchaser under Section 10.2(b)(ii) for the Liberty Indemnified Matters (as such matters relate to the Assets), with it being the intent of the Parties that such indemnification be provided from Seller to Purchaser hereunder in the same manner as if Purchaser was entitled to such indemnity protections as a party (with respect to the Assets) to the Liberty PSA.

 

(b)                                 In the event that Purchaser asserts a Liberty PSA Indemnity Claim, Seller shall promptly exercise (if not already exercised) all rights and seek all remedies available under the Liberty PSA for the Liberty Indemnified Matter to which such Liberty PSA Indemnity Claim relates.  In cases in which the Liberty PSA Indemnity Claim asserted by Purchaser is a Liberty PSA Non-Deductible Claim, the Damages for which Purchaser will be entitled to indemnification hereunder for such Liberty PSA Non-Deductible Claim will be the same amounts or other remedies (in each case, if and as recovered from Liberty) for which Seller is entitled to indemnification under the Liberty PSA in respect of such claim.  Alternatively, in cases in which the Liberty PSA Indemnity Claim asserted by Purchaser is a Liberty PSA Deductible Claim, the Damages for which Purchaser is entitled to indemnification under Section 10.2(b)(ii) for such Liberty PSA Indemnity Claim will be determined as set forth below:

 

27

 

(i)                                     Prior to the time at which the aggregate Liberty PSA Deductible Claim Amounts exceed the Liberty PSA Deductible, Purchaser will not be entitled to indemnification under Section 10.2(b)(ii) for any Damages for the Liberty PSA Deductible Claim.

 

(ii)                                  Following the time at which the aggregate Liberty PSA Deductible Claim Amounts exceed the Liberty PSA Deductible, but prior to the time at which such Liberty PSA Deductible Claim Amounts exceed the Liberty PSA Cap (such time period, the “Liberty Indemnity Period”), Purchaser will be entitled to indemnification under Section 10.2(b)(ii) for the Liberty PSA Deductible Claim in an amount equal to the Claiming Party Amount (if and as recovered from Liberty under the Liberty PSA) determined pursuant to Section 10.3(c)(i) (without prejudice to Purchaser’s rights to receive Non-Claiming Party Amounts pursuant to Section 10.3(c)(ii) that may be attributable to any such Liberty PSA Deductible Claim).

 

(iii)                               Following the time at which the aggregate Liberty PSA Deductible Claim Amounts exceed the Liberty PSA Cap, Purchaser will not be entitled to any further indemnification under Section 10.2(b)(ii) for any Damages for the Liberty PSA Deductible Claim.

 

(c)                                  It is acknowledged and understood that a Party’s recovery for a Liberty PSA Deductible Claim may be limited due to it bearing a disproportionate portion of the Liberty PSA Deductible for such indemnity claim (or previously asserted Liberty PSA Deductible Claims).  To avoid such disproportionate treatment, the Parties agree that, during the Liberty Indemnity Period, each time a Liberty PSA Deductible Claim is asserted, the Parties will be entitled to the amounts (if and when received by Liberty under the Liberty PSA, which, in the case of Purchaser, will be remitted by Seller) determined below in respect of such Liberty PSA Deductible Claim:

 

(i)                                     The Party making the Liberty PSA Deductible Claim will be entitled to an amount determined as follows (the “Claiming Party Amount”):

 

	
Claiming Party Amount =  
    	
 
    	
A
    	
  x  (B – $9,900,000)
    	
 
    	
  –   C
    
	
B
    

 

Where:

 

	
A
    	
=
    	
The   sum of the Liberty PSA Deductible Claim Amounts (including with respect to   the relevant Liberty PSA Deductible Claim) for such Party as of such time,   subject to Section 10.3(c)(iii) 
    
	
B
    	
=
    	
The   lesser of (A) $49,500,000 and (B) the sum of the Liberty PSA Deductible Claim   Amounts (including with respect to the relevant Liberty PSA Deductible Claim)   for all Parties as of such time
    

 

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C
    	
=
    	
The   sum of any Claiming Party Amounts and Non-Claiming Party Amounts previously   received by such Party
    

 

(ii)                                  The other Party will be entitled to an amount determined by subtracting the Claiming Party Amount from, subject to Section 10.3(c)(iii), the relevant Liberty PSA Deductible Claim Amount (the “Non-Claiming Party Amount”).

 

(iii)                               If a portion of any Liberty PSA Deductible Claim Amount is not recoverable due to it comprising a portion of the Liberty PSA Deductible, the Liberty PSA Deductible Claim Amount, for purposes of determining the Non-Claiming Party Amount under Section 10.3(c)(ii), will not include such non-recoverable amount.  Similarly, if a portion of any Liberty PSA Deductible Claim Amount is not recoverable due to it comprising a portion of the Liberty PSA Cap, the Liberty PSA Deductible Claim Amount, for purposes of determining (A) item “A” in the formula set forth in Section 10.3(c)(i) for the Claiming Party Amount and (B) the Non-Claiming Party Amount under Section 10.3(c)(ii) will not include, in each case, the non-recoverable amount.

 

Section 10.4                             Limitation on Actions.  The representations and warranties of the Parties in ARTICLE 4 and ARTICLE 5 and the covenants and agreements of the Parties in ARTICLE 6 and the corresponding representations and warranties given in the certificate delivered at Closing pursuant to Section 8.2(c) and Section 8.3(d) shall survive the Closing for a period of nine months, except that (i) the representations and warranties in Section 4.1, Section 4.2, Section 4.3, Section 4.4, Section 4.5, Section 5.1, Section 5.2, Section 5.3, Section 5.4 and Section 5.5 shall survive indefinitely, and (ii) the covenants and agreements, as applicable, in Section 6.7 and Section 6.12 shall survive indefinitely.  The remainder of this Agreement shall survive the Closing without time limit except (a) as may otherwise be expressly provided herein and (b) for the provisions of ARTICLE 11, which shall survive Closing until the applicable statute of limitations closes the taxable year to which the subject Taxes relate plus 90 days.  The representations, warranties, covenants and agreements of this Agreement shall be of no further force and effect after the date of their expiration, provided that there shall be no termination of any bona fide claim asserted pursuant to this Agreement with respect to such a representation, warranty, covenant or agreement prior to its expiration date.  The indemnities in Section 10.2(a)(ii), Section 10.2(a)(iii), Section 10.2(b)(iii) and Section 10.2(b)(iv) shall terminate as of the termination date of each respective representation, warranty, covenant or agreement that is subject to indemnification thereunder, except in each case as to matters for which a specific written claim for indemnity has been delivered to the indemnifying Party on or before such termination date.  The indemnity in Section 10.2(a)(i), Section 10.2(b)(i) and Section 10.2(b)(ii) shall continue without time limit.

 

Section 10.5                             Procedure.  The indemnifications contained in Section 10.2 and Section 10.3 shall be implemented as follows:

 

(a)                                 Claim Notice.  The Party seeking indemnification under the terms of this Agreement (the “Indemnified Party”) shall submit a written “Claim Notice” to the other Party (the “Indemnifying Party”) which, to be effective, must be delivered prior to the end of the survival period applicable to the representation or warranty, if applicable, that is the subject of 

 

29

 

the Claim Notice and must state the amount of each payment asserted by the Indemnified Party to be owing, the basis for such claim with supporting documentation, and a list of each separate item of loss for which payment is so claimed.

 

(b)                                 Claims under Section 10.2.  Upon receipt of an effective Claim Notice, the Indemnifying Party must within 60 days:

 

(i)                                     contest the indemnification claim asserted in the Claim Notice, with such disputes to be resolved by written agreement of the Parties or final arbitration in accordance with Section 12.2(b);

 

(ii)                                  object to the sufficiency of information contained in the Claim Notice and request specified additional information reasonably necessary for it to assess such Claim Notice, which information the Indemnified Party will promptly provide; or

 

(iii)                               pay the amount of the indemnification claim or, if applicable, elect to assume the control of the Claim under Section 10.5(d).

 

(c)                                  Claims under Section 10.3.  Upon Seller’s receipt of an effective Claim Notice from Purchaser asserting a Liberty PSA Indemnity Claim, Seller shall diligently take all actions permitted and required under Section 14.3 of the Liberty PSA, and upon recovery from Liberty, shall remit payment to Purchaser in accordance with Section 10.3.  Seller will use its commercially reasonably efforts to avail Purchaser of the rights available to Seller (including, to the extent available under the Liberty PSA, seeking reimbursement for Third Party costs and attorneys’ fees and costs incurred in enforcing such rights) under the Liberty PSA with respect to the Liberty PSA Indemnity Claim, provided that (i) Purchaser will be obligated to pay all reasonable out-of-pocket Third Party costs incurred by Seller in carrying out such efforts and (ii) Seller shall not be responsible or liable for costs or fees (in each case) of Purchaser’s attorneys related to pursuing the Liberty PSA Indemnity Claim, except that Seller will bear the costs described in clauses (i) and (ii) immediately above if Seller is able to obtain reimbursement of such costs under the Liberty PSA.

 

(d)                                 Information, Expenses. Promptly after the Indemnified Party receives notice of a claim or legal action by a Third Party that may result in a loss for which indemnification may be sought from the Indemnifying Party under Section 10.2 (a “Claim”), the Indemnified Party shall deliver a Claim Notice to the Indemnifying Party.  If the Indemnifying Party or its counsel so requests, the Indemnified Party shall furnish the Indemnifying Party with copies of all pleadings and other information with respect to such Claim.  At the election of the Indemnifying Party made within sixty days after receipt of such notice, the Indemnified Party shall permit the Indemnifying Party to assume control of such Claim, including the determination of all appropriate actions, the negotiation of settlements on behalf of the Indemnified Party, and the conduct of litigation through attorneys of the Indemnifying Party’s choice; provided, however, that no such settlement can result in any liability or cost to the Indemnified Party for which it is entitled to be indemnified hereunder without its consent.  If the Indemnifying Party elects to assume control, (i) any expense incurred by the Indemnified Party thereafter for investigation or defense of the matter shall be borne by the Indemnified Party (except as set forth in the proviso immediately below), and (ii) the Indemnified Party shall give all reasonable 

 

30

 

information and assistance, other than pecuniary, that the Indemnifying Party shall deem necessary to the proper defense of such Claim, legal action, or other matter.  In the absence of such an election, the Indemnified Party will use its best efforts to defend, at the Indemnifying Party’s expense, the Claim until the Indemnifying Party assumes such defense, and, if the Indemnifying Party fails to assume such defense within the time period provided above, settle the same in the Indemnified Party’s reasonable discretion at the Indemnifying Party’s expense with the Indemnifying Party’s consent which shall not be unreasonably withheld.  If the Indemnifying Party is entitled to, and does, assume the defense of any such Claim, the Indemnified Party shall have the right to employ separate counsel at its own expense and to participate in the defense thereof; provided, however, that notwithstanding the foregoing, the Indemnifying Party shall pay the reasonable attorneys’ fees of the Indemnified Party if the Indemnified Party’s counsel shall have advised the Indemnified Party that there is a conflict of interest that could make it inappropriate under applicable standards of professional conduct to have common counsel for the Indemnifying Party and the Indemnified Party (provided that the Indemnifying Party shall not be responsible for paying for more than one separate firm of attorneys and one local counsel to represent all of the Indemnified Parties subject to such Claim).

 

Section 10.6                             Reservation as to Non-Parties.  Nothing herein is intended to limit or otherwise waive any recourse Purchaser or Seller may have against any non-party for any obligations or liabilities that may be incurred with respect to the Assets

 

Section 10.7                             Reductions in Damages.  The amount of any Damages for which an Indemnified Party is entitled to indemnity under this ARTICLE 10, shall be reduced by the amount of insurance proceeds realized by the Indemnified Party or its Affiliates with respect to such Damages (net of any collection costs, and excluding the proceeds of any insurance policy issued or underwritten by the Indemnified Party or its insurance captive or other Affiliate), and by the amount of any net Tax benefit actually realized by Purchaser as a result of the events giving rise to the Damages in question.

 

ARTICLE 11
 TAX MATTERS

 

Section 11.1                             Tax Filings.  From the Effective Time through the Closing Date, Seller shall be responsible for filing with the Taxing authorities the applicable Tax Returns for ad valorem, property, severance, production and similar Taxes relating to the Assets which are required to be filed on or before the Closing Date and paying the Taxes reflected on such Tax Returns as due and owing (provided that to the extent such Taxes relate to the periods from and after the Effective Time, as determined pursuant to Section 11.2, such payment shall be on behalf of Purchaser, and promptly following the Closing Date, Purchaser shall pay to Seller any such Taxes; but only to the extent that such amounts have not already been accounted for under Section 3.4).  Purchaser shall be responsible for the filing with the appropriate taxing authorities the applicable Tax Returns for all ad valorem, property, severance, production and similar Taxes that are required to be filed after the Closing Date and paying the Taxes reflected on such Tax Returns as due and owing; provided, however, that in the event that Seller is required by applicable Tax Law to file a Tax Return with respect to such Taxes after the Closing Date which includes all or a portion of a Tax period for which Purchaser is liable for such Taxes, following Seller’s request, Purchaser shall promptly pay to Seller all such Taxes allocable to the period or 

 

31

 

portion thereof beginning at or after the Effective Time (but only to the extent that such amounts have not already been accounted for under Section 3.4), whether such Taxes arise out of the filing of an original return or a subsequent audit or assessment of Taxes; and provided further, if Purchaser is responsible hereunder for the filing of any Tax Returns which include Taxes for which Seller is responsible pursuant to Section 2.4(f), Section 10.1 or any other provision of this Agreement, on Purchaser’s request, Seller shall promptly pay to Purchaser all such Taxes allocable to the period or portion thereof prior to the Effective Time (but only to the extent that such amounts have not already been accounted for under Section 3.4), whether such Taxes arise out of the filing of an original return or a subsequent audit or assessment of Taxes.  Seller shall be entitled to all Tax credits and Tax refunds that relate to any such Taxes allocable to any Tax period, or portion thereof, ending before the Effective Time.

 

Section 11.2                             Current Tax Period Taxes.  Ad valorem, property, severance, production and similar Taxes assessed against the Assets with respect to the Tax period in which the Effective Time occurs (the “Current Tax Period”), but excluding ad valorem, property, severance production or similar Taxes that are based on quantity of or the value of production of Hydrocarbons, shall be apportioned between the Parties as of the Effective Time with (a) Seller being obligated to pay a proportionate share of the actual amount of such Taxes for the Current Tax Period determined by multiplying such actual Taxes by a fraction, the numerator of which is the number of days in the Current Tax Period prior to the Effective Time and the denominator of which is the total number of days in the Current Tax Period and (b) Purchaser being obligated to pay a proportionate share of the actual amount of such Taxes for the Current Tax Period determined by multiplying such actual Taxes by a fraction, the numerator of which is the number of days (including the Closing Date) in the Current Tax Period on and after the Effective Time and the denominator of which is the total number of days in the Current Tax Period.  As described in Section 2.4(f), ad valorem, property, severance, production and similar Taxes that are based on quantity of or the value of production of Hydrocarbons shall be apportioned between the Parties based on the number of units or value of production actually produced, as applicable, before, and at or after, the Effective Time.  In the event that Purchaser or Seller makes any payment for which it is entitled to reimbursement under this ARTICLE 11, the applicable Party shall make such reimbursement promptly but in no event later than ten days after the presentation of a statement setting forth the amount of reimbursement to which the presenting Party is entitled along with such supporting evidence as is reasonably necessary to calculate the amount of the reimbursement.

 

Section 11.3                             Characterization of Certain Payments.  The Parties agree that any payments made pursuant to this ARTICLE 11, ARTICLE 10, Section 2.4 and Section 8.4 shall be treated for all Tax purposes as an adjustment to the Unadjusted Purchase Price unless otherwise required by Law.

 

Section 11.4                             Other Tax Matters.  Purchaser and Seller, the extent each is legally permitted, agree to furnish or cause to be furnished to the other, upon request, as promptly as practicable, such information and assistance relating to the Assets, including access to books and records, as is reasonably necessary for the filing of all Tax Returns by Purchaser or Seller, the making of any election relating to Taxes, the preparation for any audit by any Taxing authority and the prosecution or defense of any claim, suit or proceeding relating to any Tax.  Each of Purchaser and Seller shall retain all books and records with respect to Taxes pertaining to the 

 

32

 

Assets for a period of at least seven years following the Closing Date.  Purchaser and Seller shall reasonably cooperate with each other in the conduct of any audit, litigation or other proceeding relating to Taxes involving the Assets or the Purchase Price Allocation Schedule.  Seller shall promptly notify Purchaser in writing upon receipt by Seller of notice of any pending Tax audits or assessments relating to the income, properties or operations of Seller that reasonably may be expected to relate to or give rise to a Lien on the Assets.

 

ARTICLE 12
 MISCELLANEOUS

 

Section 12.1                             Notice.  All notices and communications required or permitted to be given hereunder shall be sufficient in all respects (a) if given in writing and delivered personally, (b) if sent by overnight courier, (c) if mailed by U.S. Express Mail or by certified or registered U.S. Mail with all postage fully prepaid or (d) sent by facsimile transmission (provided any such facsimile transmission is confirmed either orally or by written confirmation) and, in each case, addressed to the appropriate Party hereto at the address for such Party shown below:

 

Seller:

 

Kodiak Oil & Gas (USA) Inc.

Kodiak Williston, LLC

1625 Broadway, Suite 250

Denver, Colorado  80202

Telephone: (720) 475-5943

Fax:  (303) 592-8071

Attention:  Cathleen Osborn and James Henderson

 

With a copy to (which shall not constitute notice):

 

Dorsey & Whitney LLP

Columbia Center

701 Fifth Avenue, Suite 6100

Seattle, Washington  98104-7043

Telephone: (206) 903-8814

Fax:  (206) 903-8820

Attention: Randal R. Jones and Wells Parker

 

Purchaser:

 

Triangle USA Petroleum Corporation

1200 17th Street, Suite 2600

Denver, CO 80202
 Attn: Ashley Garber
 Telephone: (303) 260-1682

Facsimile: (303) 260-5080

 

Any notice given in accordance herewith shall be deemed to have been given (i) when delivered to the addressee in person, or by courier, during normal business hours, or on the next Business 

 

33

 

Day if delivered after business hours, (ii) when received by the addressee via facsimile during normal business hours, or on the next Business Day if received after business hours, or (iii) upon actual receipt by the addressee after such notice has either been delivered to an overnight courier or deposited in the U.S. Mail, as the case may be.  The Parties may change the address, telephone number, facsimile number and individuals to which such communications to such Party are to be addressed by giving written notice to other Party in the manner provided in this Section 12.1.

 

Section 12.2                             Governing Law; Dispute Resolution.

 

(a)                                 Except as provided in this Section 12.2(a), this Agreement and the transactions contemplated hereby and any arbitration or dispute resolution conducted pursuant hereto shall be construed in accordance with, and governed by, the Laws of the State of Colorado, without regards to conflicts of law principles (except to the extent that the Laws of the State of North Dakota are applicable to issues relating to real property, royalty issues or oil and gas leases and interests therein).

 

(b)                                 All Disputes (other than a Party’s right to seek specific performance, which may be brought in any court of competent jurisdiction and as to which this Section 12.2(b) shall not apply) between the Parties related to this Agreement shall be resolved by arbitration, pursuant to the following procedures:

 

(i)                                     Each side to such arbitration shall each select a single, independent arbitrator within ten days after written demand for such arbitration by any Party.  The two arbitrators selected by the respective sides shall, in turn, select the third neutral and independent arbitrator.  For any Dispute concerning Section 3.2, Section 3.3, or ARTICLE 11 (with respect to the preparation of Tax Returns and the payment of Taxes), each of the three arbitrators shall be a tax accountant with a minimum of ten years’ experience with the types of Taxes in question.

 

(ii)                                  The arbitration shall be governed by Colorado Law but the specific procedure to be followed shall be determined by the arbitrator(s).  It is the intent of the Parties that the arbitration be conducted as efficiently and inexpensively as possible, with only limited discovery as determined by the arbitrator without regard to the discovery permitted under the Colorado or Federal Rules of Civil Procedure.

 

(iii)                               The arbitration proceeding shall be held in the City and County of Denver, Colorado, and a hearing shall be held no later than 60 days after submission of the matter to arbitration, and a written decision shall be rendered by the arbitrators within 30 days of the hearing.

 

(iv)                              At the hearing, the Parties shall present such evidence and witnesses as they may choose, with or without counsel.  Adherence to formal rules of evidence shall not be required but the arbitrator shall consider any evidence and testimony that he or she determines to be relevant, in accordance with procedures that it determines to be appropriate.

 

(v)                                 Any award entered in the arbitration shall be made by a written opinion stating the reasons and basis for the award made.

 

34

 

(vi)                              The costs incurred in employing the arbitrators, including the arbitrators’ retention of any independent qualified experts, shall be borne 50% by Seller and 50% by Purchaser.

 

(vii)                           The arbitrator’s award may be filed in any court of competent jurisdiction and may be enforced by any Party as a final judgment of such court.

 

(c)                                  Each of the Parties hereby irrevocably waives all right to trial by jury in any action, proceeding or counterclaim arising out of or relating to this Agreement.

 

Section 12.3                             Entire Agreement.  This Agreement (including, for purposes of certainty, the Appendix, Exhibits and Schedules attached hereto) and the documents to be executed hereunder constitute the entire agreement between the Parties pertaining to the subject matter hereof, and supersede all prior agreements, understandings, negotiations and discussions, whether oral or written, of the Parties pertaining to the subject matter hereof.

 

Section 12.4                             No Third Party Beneficiaries.  Except as provided in Section 10.2 (to the Persons described therein), nothing in this Agreement, express or implied, shall entitle any Person other than the Parties and their respective successors and permitted assigns to any claim, remedy or right of any kind under (or pursuant to) this Agreement.  Notwithstanding the foregoing, the Parties acknowledge and agree that only a Party or its successor or permitted assign, shall have the right to (it being understood and agreed that such Person shall not have the obligation to) enforce the provisions of (or exercise any right or remedy under) this Agreement on its own behalf or any of its related indemnified parties.

 

Section 12.5                             Limitation on Damages.  NOTWITHSTANDING ANYTHING TO THE CONTRARY, EXCEPT IN CONNECTION WITH ANY DAMAGES INCURRED BY THIRD PARTIES FOR WHICH INDEMNIFICATION IS SOUGHT UNDER THE TERMS OF THIS AGREEMENT, NONE OF PURCHASER, SELLER OR ANY OF THEIR RESPECTIVE AFFILIATES SHALL BE ENTITLED TO CONSEQUENTIAL, SPECIAL, INDIRECT, PUNITIVE OR EXEMPLARY DAMAGES IN CONNECTION WITH THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY AND, EXCEPT AS OTHERWISE PROVIDED IN THIS SENTENCE, EACH OF PURCHASER AND SELLER, FOR ITSELF AND ON BEHALF OF ITS AFFILIATES, HEREBY EXPRESSLY WAIVES ANY RIGHT TO CONSEQUENTIAL, SPECIAL, INDIRECT, PUNITIVE OR EXEMPLARY DAMAGES IN CONNECTION WITH THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY.

 

Section 12.6                             Delivery of Records.  Seller, at Purchaser’s cost and expense, shall deliver the Records to Purchaser within ten days following Closing.

 

Section 12.7                             Specific Performance.  The Parties agree that if any of the provisions of this Agreement were not performed in accordance with their specific terms, irreparable damage would occur, no adequate remedy at Law would exist and damages would be difficult to determine, and the Parties shall be entitled to specific performance of the terms hereof and immediate injunctive relief, without the necessity of proving the inadequacy of money damages as a remedy, in addition to any other remedy available at law or in equity.

 

35

 

Section 12.8                             Severability.  The invalidity or unenforceability of any term or provision of this Agreement in any situation or jurisdiction shall not affect the validity or enforceability of the other terms or provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction and the remaining terms and provisions shall remain in full force and effect, unless doing so would result in an interpretation of this Agreement that is manifestly unjust.

 

Section 12.9                             Financial Statements.  Seller acknowledges that Purchaser and its Affiliates may be required to include statements of revenues and direct operating expenses and other financial information relating to the transactions contemplated by this Agreement in documents filed by Purchaser and its Affiliates with the Securities Exchange Commission (the “SEC”) pursuant to the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and that such financial statements may be required to be audited.  Accordingly, from and after the Execution Date, Seller shall use commercially reasonable efforts to (a) promptly provide Purchaser with such information about the Assets as may be required to be included in the documents filed by Purchaser and its Affiliates with the SEC, (b) provide, and shall cause its Affiliates, officers and employees to provide, reasonable cooperation in connection with the preparation of such documents, including providing reasonable access to auditors, auditor work papers, employees, books and records, and any financial data reasonably requested by Purchaser in connection therewith, and (c) cause its independent public accountants to provide any consent necessary for the filing of such documents and to deliver a customary comfort letter to Purchaser with respect to financial information relating to the transactions contemplated by this Agreement included as part of such documents.

 

Section 12.10                      Seller Liability.  Each of Kodiak USA and Kodiak Williston shall be jointly and severally liable and responsible, as applicable, for any and all claims, liabilities, and payment and other obligations of Seller arising under, and in connection with, this Agreement.

 

Section 12.11                      Incorporation.  The provisions of Sections 15.2, 15.4 through 15.7, 15.10 and 15.14 of the Liberty PSA shall apply mutatis mutandis to this Agreement.

 

[Signature page follows]

 

36

 

IN WITNESS WHEREOF, this Agreement has been signed by each of the Parties on the Execution Date.

 

	
 
    	
SELLER:
    
	
 
    	
 
    
	
 
    	
Kodiak   Oil & Gas (USA) INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   James P. Henderson
    
	
 
    	
Name:   James P. Henderson
    
	
 
    	
Title:   Chief Financial Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Kodiak   Williston, LLC
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   James P. Henderson
    
	
 
    	
Name:   James P. Henderson
    
	
 
    	
Title:   Chief Financial Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
PURCHASER:
    
	
 
    	
 
    
	
 
    	
Triangle   USA Petroleum Corporation
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Jonathan Samuels
    
	
 
    	
Name:   Jonathan Samuels
    
	
 
    	
Title:   President
    

 

[Signature Page]

 

 

APPENDIX A

 

ATTACHED TO AND MADE A PART OF THAT CERTAIN

PURCHASE AND SALE AGREEMENT BY AND AMONG

KODIAK OIL & GAS (USA) INC., KODIAK WILLISTON, LLC AND

TRIANGLE USA PETROLEUM CORPORATION

 

DEFINITIONS

 

“Adjusted Purchase Price” has the meaning set forth in Section 3.4.

 

“AFE” means an authority for expenditure.

 

“Affiliate” means, with respect to any Person, any Person that directly or indirectly Controls, is Controlled by or is under common Control with such Person.

 

“Agreement” has the meaning set forth in the Preamble of this Agreement.

 

“Allocated Values” has the meaning set forth in Section 3.2.

 

“Assets” has the meaning set forth in Section 2.2.

 

“Assumed Liabilities” has the meaning set forth in Section 10.1.

 

“Business Day” means each calendar day except Saturdays, Sundays, and Federal holidays.

 

“Cap” has the meaning set forth in Section 10.2(c).

 

“Casualty Loss” has the meaning set forth in Section 6.5.

 

“Claim” has the meaning set forth in Section 10.5(d).

 

“Claim Date” has the meaning set forth in Section 6.4(a)(i).

 

“Claiming Party Amount” has the meaning set forth in Section 10.3(c)(i).

 

“Claim Notice” has the meaning set forth in Section 10.5(a).

 

“Closing” has the meaning set forth in Section 8.1.

 

“Closing Date” has the meaning set forth in Section 8.1.

 

“Closing Date Defect Adjustment” has the meaning set forth in Section 6.4(f)(ii).

 

“Closing Payment” has the meaning set forth in Section 8.4(a).

 

“Code” means the United States Internal Revenue Code of 1986, as amended.

 

Appendix A-1

 

“Condition” means any circumstance, status or defect that requires Remediation to comply with Environmental Laws.

 

“Confidentiality Restrictions” has the meaning set forth in Section 6.7(b).

 

“Contracts” has the meaning set forth in Section 2.2.

 

“Control” means the ability to direct the management and policies of a Person through ownership of voting shares or other equity rights, pursuant to a written agreement, or otherwise.  The terms “Controls” and “Controlled by” and other derivatives shall be construed accordingly.

 

“Conveyance” means the Assignment, Bill of Sale and Conveyance attached hereto as Exhibit D.

 

“Current Tax Period” has the meaning set forth in Section 11.2.

 

“Customary Post-Closing Consents” means the consents and approvals from Governmental Bodies for the assignment of the Assets to Purchaser that are customarily obtained after the assignment of properties similar to the Assets.

 

“Damages” shall mean any actual losses, costs, expenses (including court costs, reasonable fees and expenses of attorneys, technical experts and expert witnesses and the cost of investigation), liabilities, damages, demands, suits, claims, and sanctions of every kind and character (including civil fines) arising from, related to or reasonably incident to matters indemnified against; excluding, however, (i) any special, consequential, punitive or exemplary damages and (ii) any increase in liability, loss, cost, expense, claim, award or judgment to the extent such increase is caused by the actions or omissions of any Indemnified Party after the Closing Date.

 

“Deductible” has the meaning set forth in Section 10.2(c).

 

“Defect” means a Title Defect or Environmental Defect.

 

“Defect Adjustment Amount” has the meaning set forth in Section 6.4(e).

 

“Defect Amount” has the meaning set forth in Section 6.4(a)(i).

 

“Defect Disputed Matters” has the meaning set forth in Section 6.4(f)(i).

 

“Defect Notice” has the meaning set forth in Section 6.4(a)(i).

 

“Defect Property” has the meaning set forth in Section 6.4(a)(i).

 

“Defensible Title” means such ownership of record to the Leases, the Wells and the Units that is deducible from the applicable county, state and federal records such that a reasonably prudent person engaged in the business of the ownership, development and operation of oil and gas leasehold and properties and having knowledge of all of the facts and their legal bearing

 

Appendix A-2

 

would be willing to accept the same, and that, subject to and except for the Permitted Encumbrances:

 

(i)                                     entitles Seller to receive a share of the Hydrocarbons produced, saved and marketed from any Lease, Well or Unit throughout the duration of the productive life of such Lease, Well or Unit, after satisfaction of all royalties, overriding royalties, nonparticipating royalties, net profits interests or other similar burdens on or measured by production of Hydrocarbons (such share, a “Net Revenue Interest”), of not less than the Net Revenue Interest share shown in Exhibit A or Exhibit B, respectively, for such Lease, Well or Unit;

 

(ii)                                  obligates Seller to bear a share of the costs and expenses for the maintenance, development, operation and the production relating to any Lease, Well or Unit throughout the productive life of such Lease, Well or Unit (such share, a “Working Interest”) not greater than the Working Interest shown in Exhibit A or Exhibit B, respectively, for such Lease, Well or Unit without increase, except increases to the extent that they are accompanied by a proportionate increase in Seller’s Net Revenue Interest;

 

(iii)                               covers the Net Acres set forth in Exhibit A for each Lease; and

 

(iv)                              is free and clear of Liens.

 

“Dispute” means any dispute, claim or controversy of any kind or nature related to, arising under, or connected with this Agreement (including disputes as to the creation, validity, interpretation, breach or termination of this Agreement).

 

“Disputed Defect” has the meaning set forth in Section 6.4(f)(ii).

 

“Disputed Title Benefit” has the meaning set forth in Section 6.4(f)(ii).

 

“Due Diligence Period” has the meaning set forth in Section 6.1(a).

 

“Due Diligence Review” has the meaning set forth in Section 6.1(a).

 

“Effective Time” has the meaning set forth in Section 2.4(a).

 

“Environmental Assessment” means an environmental site assessment performed pursuant to the American Society for Testing and Materials E1527 - 05, or any similar environmental assessment.

 

“Environmental Defect” means a Condition in, on, under or relating to a particular Asset (including air, land, soil, surface and subsurface strata, surface water, groundwater, or sediments), but excluding any Plugging and Abandonment Obligations (which shall not constitute an Environmental Defect).

 

“Environmental Defect Adjustment Amount” has the meaning set forth in Section 6.4(e).

 

“Environmental Law” or “Environmental Laws” means any federal, tribal, state, local or foreign law (including common law), statute, rule, regulation, requirement, ordinance and any

 

Appendix A-3

 

writ, decree, bond, authorization, approval, license, permit, registration, binding criteria, standard, consent decree, settlement agreement, judgment, order, directive or binding policy issued by or entered into with a Governmental Body pertaining or relating to: (a) pollution or pollution control, including storm water; (b) protection of human health from exposure to Hazardous Materials or protection of the environment; (c) employee safety in the workplace; or (d) the management, presence, use, generation, processing, extraction, treatment, recycling, refining, reclamation, labeling, transport, storage, collection, distribution, disposal or release or threat of release of Hazardous Materials.  As used herein, “Environmental Laws” shall include the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601 et seq., the Solid Waste Disposal Act (as amended by the Resource Conservation and Recovery Act), 42 U.S.C. § 6901 et seq., the Hazardous Materials Transportation Act, 49 U.S.C. § 1801 et seq., the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq., the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq., the Federal Safe Drinking Water Act, 42 U.S.C. §§ 300f-300, the Federal Air Pollution Control Act, 42 U.S.C. § 7401 et seq., the Oil Pollution Act, 33 U.S.C. § 2701 et seq., the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq., the Endangered Species Act, 16 U.S.C. § 1531 et seq., the National Historic Preservation Act, 16 U.S.C. §470 et seq., and the regulations and orders respectively promulgated thereunder, each as amended, or any equivalent or analogous state or local statutes, laws or ordinances, any regulation promulgated thereunder and any amendments thereto.

 

“Environmental Liabilities” means all Damages (including any civil fines, penalties, costs of Remediation, any personal injury, illness or death, any damage to, destruction or loss of property, and any damage to natural resources (including soil, air, surface water or groundwater) and expenses for the modification, repair or replacement of facilities on the Lands) brought or assessed by any and all Persons, including any Governmental Body, to the extent any of the foregoing directly or indirectly involves any Condition relating to the Assets, including Plugging and Abandonment Obligations, all Environmental Defects, the presence, disposal or release of any Hazardous Material of any kind in, on or under the Assets, created or attributable to any period of time, whether before or after Seller acquired ownership of the Assets, including any period of time prior to or after the Effective Time.

 

“Excluded Assets” means: (i) (a) all corporate, financial, income, Tax and legal records of Seller that relate to Seller’s business generally (whether or not relating to the Assets, except in the case of Tax records relating to the Assets, which will not constitute “Excluded Assets” for purposes hereof) other than abstracts of title, title opinions and memoranda, and title curative documents that primarily relate to the Assets and (b) all books, records and files that relate primarily to the other Excluded Assets or this Agreement and the transactions contemplated hereby; (ii) (a) equipment, inventory, machinery, fixtures and other tangible personal property and improvements that are leased by Seller or located at or used in connection with any field office or yard of Seller other than those used solely in connection with the Assets, (b) any computers and related peripheral equipment that are not located on the Assets and (c) communications equipment that is not located on the Assets; (iii) all rights to any refunds for Taxes or other costs or expenses borne by Seller or Seller’s predecessors in interest and title attributable to periods prior to the Effective Time in accordance with the principles of ARTICLE 11; (iv) Seller’s area-wide bonds, permits and licenses or other permits, licenses or authorizations used in the conduct of Seller’s business generally; (v) all geophysical and other seismic and related technical data and information that is not transferrable without the payment

 

Appendix A-4

 

of a fee or other penalty (which Purchaser has not agreed prior to Closing to pay or otherwise reimburse Seller therefor); (vi) all cash, trade credits, account receivables (other than all unbilled costs for the joint interest billings and the accounts receivable for the joint interest billings on behalf of Third Party working interest owners in the Leases, Wells or Units operated by Seller), note receivables, take or pay amounts receivable, and other receivables attributable to the Assets with respect to any period of time prior to the Effective Time; (vii) to the extent not related to any Assumed Liability, any refunds due Seller by a Third Party for any overpayment of rentals, royalties, excess royalty interests or production payments attributable to the Assets with respect to any period of time prior to the Effective Time; (viii) to the extent not related to any Assumed Liability, any causes of action, claims, rights, indemnities or defenses with respect to the Assets relating to any period of time prior to the Effective Time; (ix) all rights and interests of Seller (a) under any policy or agreement of insurance or indemnity agreement, (b) under any bond and (c) to any insurance or condemnation proceeds or awards arising, in each case, from acts, omission or events, or damage to or destruction of property prior to the Effective Time; (x) any contracts and agreements relating to swaps, futures, hedges, and other similar derivative-based or hedging transactions; (xi) any part of the Assets excluded from the transactions contemplated hereunder pursuant to the terms of this Agreement, including pursuant to the terms of Section 6.3, Section 6.4(c) and Section 6.5; (xii) the Retained Assets; and (xiii) the properties set forth on Schedule 4.6-2.

 

“Execution Date” has the meaning set forth in the Preamble of this Agreement.

 

“Final Section 1060 Allocation Schedule” has the meaning set forth in Section 3.3.

 

“GAAP” means U.S. generally accepted accounting principles.

 

“Governmental Body” means any instrumentality, subdivision, court, administrative agency, commission, official or other authority of the United States or any other country or any state, province, prefect, municipality, locality or other government or political subdivision thereof, or any quasi-governmental or private body exercising any administrative, executive, judicial, legislative, police, regulatory, taxing, importing or other governmental or quasi-governmental authority.

 

“Hazardous Materials” means, without limitation, any waste, substance, product, or other material (whether solid, liquid, gas or mixed), which is or becomes identified, listed, published, or defined as a hazardous substance, hazardous waste, hazardous material, toxic substance, radioactive material, oil, or petroleum waste, or which is otherwise regulated or restricted under any Environmental Law.

 

“Hydrocarbons” has the meaning set forth in Section 2.2.

 

“Imbalances” means any imbalance at the wellhead between the amount of Hydrocarbons produced from any of the Wells and allocated to the interests of Seller therein and the shares of production from the relevant Well to which Seller was entitled, or at the pipeline flange (or inlet flange at a processing plant or similar location) between the amount of Hydrocarbons nominated by or allocated to Seller and the Hydrocarbons actually delivered on behalf of Seller at that point.

 

“Indemnified Party” has the meaning set forth in Section 10.5(a).

 

Appendix A-5

 

“Indemnifying Party” has the meaning set forth in Section 10.5(a).

 

“Inspection Request” has the meaning set forth in Section 6.1(c)(ii).

 

“Invasive Activities” has the meaning set forth in Section 6.1(c)(i).

 

“Kodiak USA” has the meaning set forth in the Preamble of this Agreement.

 

“Kodiak Williston” has the meaning set forth in the Preamble of this Agreement.

 

“Lands” has the meaning set forth in Section 2.2.

 

“Laws” means all Permits, statutes, rules, regulations, ordinances, orders, and codes of Governmental Bodies.

 

“Leases” has the meaning set forth in Section 2.2.

 

“Liberty” has the meaning set forth in the Recitals to this Agreement.

 

“Liberty Indemnified Matters” has the meaning set forth in Section 10.3(a).

 

“Liberty Indemnity Period” has the meaning set forth in Section 10.3(b)(ii).

 

“Liberty PSA” has the meaning set forth in the Recitals to this Agreement.

 

“Liberty PSA Cap” means the liability cap of $49,500,000 under the Liberty PSA for certain indemnity claims asserted pursuant to Article 14 thereof.

 

“Liberty PSA Deductible” means the deductible of $9,900,000 under the Liberty PSA for certain indemnity claims asserted pursuant to Article 14 thereof.

 

“Liberty PSA Deductible Claim” means a Liberty PSA Indemnity Claim that is subject to the Liberty PSA Deductible under the Liberty PSA.

 

“Liberty PSA Deductible Claim Amount” means the amount to which, (i) in the case of Seller, Seller is entitled to indemnification under the Liberty PSA and (b) in the case of Purchaser, Purchaser is entitled to indemnification under Section 10.2(b)(ii), in each case, in respect of a Liberty PSA Indemnity Claim.

 

“Liberty PSA Indemnity Claim” means, (i) in the case of Seller, an indemnification claim for a Liberty Indemnified Matter in respect of the Retained Assets or the “Fundamental Representations,” as such term is defined in the Liberty PSA, and (ii) in the case of Purchaser, an indemnification claim asserted under Section 10.2(b) for a Liberty Indemnified Matter in respect of the Assets.

 

“Liberty PSA Non-Deductible Claim” means a Liberty PSA Indemnity Claim that is not subject to the Liberty PSA Deductible under the Liberty PSA.

 

Appendix A-6

 

“Liberty TSA” means that certain Transition Services Agreement between Liberty and Kodiak Williston, dated July 12, 2013 and entered into pursuant to the Liberty PSA.

 

“Lien” means any of the following: mortgage, lien (statutory or other), other security agreement, arrangement or interest, hypothecation, pledge or other deposit arrangement, assignment, charge, levy, executory seizure, attachment, garnishment, encumbrance (including any easement, exception, reservation or limitation, right of way, and the like), conditional sale, title retention, voting agreement or other similar agreement, arrangement, device or restriction, preemptive or similar right, the filing of any financial statement under the Uniform Commercial Code or comparable law of any jurisdiction, or any option, equity, claim or right of or obligation to any other Person of whatever kind and character; provided, however, that the term “Lien” shall not include any of the foregoing to the extent created by this Agreement.

 

“Material Contract” means (i) any agreement with any Affiliate of Seller, (ii) any agreement or contract for the sale, exchange, or other disposition of Hydrocarbons produced from or attributable to Seller’s interest in the Assets or for the purchase, processing or transportation of any Hydrocarbons, in each case, that is not cancelable without penalty or other payment on not more than 60 days’ prior written notice, other than terms of operating agreements or gas balancing agreements which permit an operator or other co-owner to take or market production of a non-taking co-owner, (iii) any agreement of or binding on Seller to sell, lease, farmout, or otherwise dispose of any interest in any of the Assets after the Execution Date, other than non-consent penalties for nonparticipation in operations under operating agreements, conventional rights of reassignment arising in connection with Seller’s surrender or release of any of the Assets, (iv) any Tax partnership agreement of or binding upon Seller affecting any of the Assets, (v) any agreement that creates any area of mutual interest or similar provision with respect to the Assets, (vi) any agreement that requires expenditures in excess of $100,000 in the aggregate in any twelve month period beginning on or after the Execution Date, and (vii) any joint operating agreement or joint development agreement to which Seller is a party that relates to the Assets.

 

“Net Acres” means, as computed separately with respect to each Lease, (i) Seller’s Working Interest in the Lease multiplied by (ii) the number of gross acres covered by the Lease multiplied by (iii) the undivided interest in the oil and gas mineral fee estate in the land covered by the Lease.

 

“Net Casualty Loss” has the meaning set forth in Section 6.5.

 

“Net Revenue Interest” has the meaning set forth in the definition of “Defensible Title” in this Appendix A.

 

“Non-Claiming Party Amount” has the meaning set forth in Section 10.3(c)(ii).

 

“Non-Op Properties” has the meaning set forth in Section 6.1(c).

 

“Party” and “Parties” have the meanings set forth in the Preamble of this Agreement.

 

“Permits” means any permits, approvals or authorizations by, or filings with, Governmental Bodies.

 

Appendix A-7

 

“Permitted Encumbrances” means:

 

(i)                                     lessors’ royalties, overriding royalties, net profits interests, production payments, reversionary interests and similar burdens if the net cumulative effect of such burdens does not cause the Net Revenue Interest to be less than, or the Working Interest to be more than, the amounts set forth in Exhibit A or Exhibit B, respectively, for the applicable Asset;

 

(ii)                                  statutory liens for Taxes that are not yet due and payable or that are being contested in good faith in the normal course of business;

 

(iii)                               Customary Post-Closing Consents;

 

(iv)                              rights of reassignment contained in any Leases, or assignments thereof, providing for reassignment upon the surrender or expiration of any Leases;

 

(v)                                 easements, rights of way, servitudes, permits, surface leases and other rights with respect to surface operations, pipelines, grazing, logging, canals, ditches, reservoirs or the like, and easements for streets, alleys, highways, pipelines, telephone lines, power lines, railways and other easements and rights-of-way, on, over or in respect of any of the Assets or any restriction on access thereto that (a) do not materially interfere with the operation of the affected Asset and (b) do not cause the Net Revenue Interest to be less than, or the Working Interest to be more than, the amounts set forth in Exhibit A or Exhibit B, respectively, for the applicable Asset;

 

(vi)                              the terms and conditions of the Contracts listed in Exhibit C or any compulsory pooling order of the North Dakota Industrial Commission; provided, however, that the effect of any such items do not cause the Net Revenue Interest to be less than, or the Working Interest to be more than, the amounts set forth in Exhibit A or Exhibit B, respectively, for the applicable Asset;

 

(vii)                           materialmen’s, mechanics’, operators’ or other similar liens arising in the ordinary course of business (a) if such liens and charges have not been filed pursuant to law and the time for filing such liens and charges has expired, (b) if filed, such liens and charges have not yet become due and payable or payment is being withheld as provided by law or (c) if their validity is being contested in good faith by appropriate action;

 

(viii)                        any Liens burdening the Assets which will be released at or before Closing;

 

(ix)                              such Defects as Purchaser has waived, including any Defects waived by Purchaser pursuant to Section 6.4(a); and

 

(x)                                 any items set forth on Schedule 6.4.

 

“Person” means any individual, firm, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization, Government Body or any other entity.

 

Appendix A-8

 

“Plugging and Abandonment Obligations” means any and all responsibility and liability (other than an obligation to Remediate a Condition that constitutes a violation of Environmental Laws) for the following, arising out of or relating to the Assets, whether before, on, or after the Effective Time: (i) the necessary and proper plugging, re-plugging, and abandonment of all Wells; (ii) the necessary and proper removal, abandonment, and disposal of all structures, pipelines, equipment, operating inventory, abandoned property, trash, refuse, and junk located on or comprising part of the Assets related to such abandoned Wells; (iii) the necessary and proper capping and burying of all associated flow lines located on or comprising part of the Assets related to such abandoned Wells; and (iv) the necessary and proper restoration of the surface and subsurface to the condition required by applicable laws, permits, orders, and contracts related to such abandoned Wells.

 

“Prime Rate” means the rate of interest published from time to time as the “Prime Rate” in the “Money Rates” section of The Wall Street Journal.

 

“Pro Frac Lien” means any Lien arising from amounts owed to Pro Frac Heating & Trucking, LLC for certain services performed for Liberty prior to the Effective Time, as more particularly described in that certain demand letter dated April 25, 2013 from Neff Eiken & Neff, P.C. (on behalf of Pro Frac Heating & Trucking, LLC) to Liberty, a copy of which was provided by Seller to Purchaser prior to the Execution Date.

 

“Production Taxes” means all ad valorem, property, production, excise, net proceeds, severance, windfall profit and all other Taxes and similar obligations assessed against the Assets or based upon or measured by the ownership of the Assets or the production of Hydrocarbons or the receipt of proceeds therefrom, provided that Production Taxes shall not include income, franchise, margin Taxes, or transfer Taxes, but shall include any interest, penalties, additions to tax and fines assessed or due in respect of any Production Taxes, whether disputed or not.

 

“Properties” has the meaning set forth in Section 2.2.

 

“Property Expenses” means all (i) capital expenses and bonuses, broker fees, and other lease acquisition costs, costs of drilling and completing wells and costs of acquiring equipment, Production Taxes and operating and production expenses (including costs of insurance, rentals, shut-in payments and royalty payments; title examination and curative actions (other than any costs to cure a Title Defect); and gathering, processing and transportation costs in respect of Hydrocarbons produced from the Assets), in each case, incurred in the ownership, development and operation of the Assets in the ordinary course of business, (ii) general and administrative costs with respect to the Assets and (iii) overhead costs charged to the Assets under the applicable operating agreement.

 

“Proposed Section 1060 Allocation Schedule” has the meaning set forth in Section 3.3.

 

“Public Announcement Restrictions” has the meaning set forth in Section 6.7(a).

 

“Purchaser” has the meaning set forth in the Preamble of this Agreement.

 

“Purchaser Group” means Purchaser, its current and former Affiliates, and each of their respective officers, directors, employees, agents, advisors and other Representatives.

 

Appendix A-9

 

“Records” has the meaning set forth in Section 2.2.

 

“Remediation” or “Remediate” means investigation, assessment, characterization, delineation, monitoring, sampling, analysis, removal action, remedial action, response action, corrective action, mitigation, treatment or cleanup of Hazardous Materials or other similar actions as required by any applicable Environmental Laws from soil, land surface, groundwater, sediment, surface water, or subsurface strata or otherwise for the general protection of human health and the environment.

 

“Representatives” means (i) partners, employees, officers, directors, members, equity owners and counsel of a Party or any of its Affiliates or any prospective purchaser of a Party or an interest in a Party; (ii) any consultant or agent retained by a Party or the parties listed in subsection (i) above; and (iii) any bank, other financial institution or entity funding, or proposing to fund, such Party’s operations in connection with the Assets, including any consultant retained by such bank, other financial institution or entity.

 

“Retained Assets” means the assets, properties, equipment, rights, interests and other items acquired by Seller under the Liberty PSA, except and excluding the Assets.

 

“SEC” has the meaning set forth in Section 12.9.

 

“Seller” has the meaning set forth in the Preamble of this Agreement.

 

“Seller Group” means Seller, its current and former Affiliates, and each of their respective officers, directors, employees, agents, advisors and other Representatives.

 

“Seller Retained Liabilities” has the meaning set forth in Section 10.1.

 

“Specified Consent Requirement” means a requirement to obtain a lessor’s or other Person’s prior consent to assignment of an interest in a Lease or other Property that, if not obtained, would materially affect the value or use of such Lease or other Property, including requirements providing that (i) if the applicable consent to assignment is not obtained the assignment is void, (ii) if the applicable consent to assignment is not obtained the Person holding the right to such consent may terminate the affected Lease or other instrument creating Seller’s rights in the affected Property or (iii) the Person holding the right may impose additional conditions on the proposed assignee that involve the payment of money, the posting of collateral security or the performance of other obligations by the assignee that would not be required in the absence of Seller’s assignment of the affected Lease or other Property.

 

“Taxes” means all federal, state, local, and foreign income, profits, franchise, sales, use, ad valorem, property, severance, production, excise, stamp, documentary, real property transfer or gain, gross receipts, goods and services, registration, capital, transfer, or withholding taxes, or any other tax of any kind whatsoever, or other assessments, duties, fees or charges imposed by any Governmental Body, including any interest, penalties or additional amounts that may be imposed with respect thereto and including any obligation to indemnify or otherwise assume or succeed to the Tax liability of any other Person.

 

“Tax Return” means any return (including any information return), report, statement,

 

Appendix A-10

 

schedule, notice, form, election, estimated Tax filing, claim for refund or other document (including any attachments thereto and amendments thereof) filed with or submitted to, or required to be filed with or submitted to, any Governmental Body with respect to any Tax, including any schedule or amendment thereto, and any including any statement thereof.

 

“Third Party” means any Person other than a Party to this Agreement or an Affiliate of a Party to this Agreement.

 

“Third Party Costs” has the meaning set forth in Section 3.4(a)(vi).

 

“Title Benefit” has the meaning set forth in Section 6.4(b).

 

“Title Benefit Amount” has the meaning set forth in Section 6.4(b).

 

“Title Benefit Notice” has the meaning set forth in Section 6.4(b).

 

“Title Benefit Property” has the meaning set forth in Section 6.4(b).

 

“Title Defect” means any Lien, obligation (including contract obligation), defect, or other matter (including a discrepancy in Net Revenue Interest or Working Interest) that causes Seller not to have Defensible Title in and to the Leases, the Wells or the Units.  Notwithstanding the foregoing, the following shall not be considered “Title Defects:”

 

(i)                                     defects based solely on lack of information in connection with documents filed of record not contained in Seller’s files;

 

(ii)                                  defects in the chain of title consisting of the mere failure to recite marital status in a document or omissions of successions of heirship or estate proceedings, unless Purchaser provides clear and convincing evidence that such failure or omission has resulted in another Person’s actual and superior claim of title to the relevant Asset;

 

(iii)                               defects arising out of lack of survey, unless a survey is expressly required by applicable Laws;

 

(iv)                              defects asserting a change in Working Interest or Net Revenue Interest based on a change by a Third Party in drilling and spacing units, tract allocation or other changes in pool or unit participation occurring after the Effective Time;

 

(v)                                 defects arising out of lack of corporate or other entity authorization unless Purchaser provides affirmative evidence that such corporate or other entity action was not authorized and results in another Person’s actual and superior claim of title to the relevant Asset;

 

(vi)                              Liens created under deeds of trust, mortgages and similar instruments by the lessor under a Lease covering the lessor’s surface and mineral interests in the land covered thereby which would customarily be accepted in taking oil and gas leases or purchasing undeveloped oil and gas leases and for which the lessee would customarily seek a subordination of such Lien to the oil and gas leasehold estate prior to conducting drilling activities on the Lease;

 

Appendix A-11

 

(vii)                           defects based on failure to record a Lease issued by the Bureau of Land Management or the North Dakota Board of University and School Lands, or any assignments of record title or operating rights in such Leases, in the real property, conveyance or other records of the county in which such Lease is located, unless Purchaser provides clear and convincing evidence that such defect has resulted in another Person’s actual and superior claim of title to the relevant Asset;

 

(viii)                        defects that have been cured by applicable laws of limitations, prescription or otherwise; and

 

(ix)                              any items set forth on Schedule 6.4.

 

“Title Defect Adjustment Amount” has the meaning set forth in Section 6.4(d).

 

“Transition Services Agreement” has the meaning set forth in Section 6.11.

 

“Unadjusted Purchase Price” has the meaning set forth in Section 3.1.

 

“Units” has the meaning set forth in Section 2.2.

 

“Wells” has the meaning set forth in Section 2.2.

 

“Working Interest” has the meaning set forth in the definition of “Defensible Title” in this Appendix A.

 

Appendix A-12Exhibit 4.10

 

OVASCIENCE, INC.

 

Issuer

 

AND

 

[ ]

 

Trustee

 

INDENTURE

 

Dated as of [   ]

 

Senior Debt Securities

 

 

CROSS-REFERENCE TABLE (1)

 

	
Section of
    	
 
    	
 
    
	
Trust Indenture Act
    	
 
    	
Section of
    
	
of 1939, as Amended
    	
 
    	
Indenture
    
	
 
    	
 
    	
 
    
	
310(a).
    	
 
    	
7.09
    
	
310(b).
    	
 
    	
7.08
    
	
 
    	
 
    	
7.10
    
	
310(c).
    	
 
    	
Inapplicable
    
	
311(a).
    	
 
    	
7.13(a)
    
	
311(b).
    	
 
    	
7.13(b)
    
	
311(c).
    	
 
    	
Inapplicable
    
	
312(a)
    	
 
    	
5.02(a)
    
	
312(b).
    	
 
    	
5.02(b)
    
	
312(c).
    	
 
    	
5.02(c)
    
	
313(a).
    	
 
    	
5.04(a)
    
	
313(b).
    	
 
    	
5.04(a)
    
	
313(c).
    	
 
    	
5.04(a)
    
	
 
    	
 
    	
5.04(b)
    
	
313(d).
    	
 
    	
5.04(b)
    
	
314(a).
    	
 
    	
5.03
    
	
314(b).
    	
 
    	
Inapplicable
    
	
314(c).
    	
 
    	
13.06
    
	
314(d).
    	
 
    	
Inapplicable
    
	
314(e).
    	
 
    	
13.06
    
	
314(f).
    	
 
    	
Inapplicable
    
	
315(a).
    	
 
    	
7.01(a)
    
	
 
    	
 
    	
7.02
    
	
315(b).
    	
 
    	
6.07
    
	
315(c).
    	
 
    	
7.01
    
	
315(d).
    	
 
    	
7.01(b)
    
	
 
    	
 
    	
7.01(c)
    
	
315(e).
    	
 
    	
6.07
    
	
316(a).
    	
 
    	
6.06
    
	
 
    	
 
    	
8.04
    
	
316(b).
    	
 
    	
6.04
    
	
316(c).
    	
 
    	
8.01
    
	
317(a).
    	
 
    	
6.02
    
	
317(b).
    	
 
    	
4.03
    
	
318(a).
    	
 
    	
13.08
    

 

(1) This Cross-Reference Table does not constitute part of the Indenture and shall not have any bearing on the interpretation of any of its terms or provisions.

 

i

 

TABLE OF CONTENTS (2)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE I DEFINITIONS
    	
1
    
	
 
    	
 
    	
 
    
	
SECTION 1.01
    	
Definitions of Terms
    	
1
    
	
 
    	
 
    	
 
    
	
ARTICLE II ISSUE,   DESCRIPTION, TERMS, EXECUTION, REGISTRATION AND EXCHANGE OF SECURITIES
    	
4
    
	
 
    	
 
    	
 
    
	
SECTION 2.01
    	
Designation and Terms of Securities
    	
4
    
	
 
    	
 
    	
 
    
	
SECTION 2.02
    	
Form of Securities and Trustee’s Certificate
    	
5
    
	
 
    	
 
    	
 
    
	
SECTION 2.03
    	
Denominations: Provisions for Payment
    	
6
    
	
 
    	
 
    	
 
    
	
SECTION 2.04
    	
Execution and Authentications
    	
7
    
	
 
    	
 
    	
 
    
	
SECTION 2.05
    	
Registration of Transfer and Exchange
    	
7
    
	
 
    	
 
    	
 
    
	
SECTION 2.06
    	
Temporary Securities
    	
8
    
	
 
    	
 
    	
 
    
	
SECTION 2.07
    	
Mutilated, Destroyed, Lost or Stolen Securities
    	
9
    
	
 
    	
 
    	
 
    
	
SECTION 2.08
    	
Cancellation
    	
9
    
	
 
    	
 
    	
 
    
	
SECTION 2.09
    	
Benefits of Indenture
    	
9
    
	
 
    	
 
    	
 
    
	
SECTION 2.10
    	
Authenticating Agent
    	
9
    
	
 
    	
 
    	
 
    
	
SECTION 2.11
    	
Global Securities
    	
10
    
	
 
    	
 
    	
 
    
	
ARTICLE III REDEMPTION OF SECURITIES   AND SINKING FUND PROVISIONS
    	
11
    
	
 
    	
 
    	
 
    
	
SECTION 3.01
    	
Redemption
    	
11
    
	
 
    	
 
    	
 
    
	
SECTION 3.02
    	
Notice of Redemption
    	
11
    
	
 
    	
 
    	
 
    
	
SECTION 3.03
    	
Payment Upon Redemption
    	
12
    
	
 
    	
 
    	
 
    
	
SECTION 3.04
    	
Sinking Fund
    	
12
    
	
 
    	
 
    	
 
    
	
SECTION 3.05
    	
Satisfaction of Sinking Fund Payments with Securities
    	
12
    
	
 
    	
 
    	
 
    
	
SECTION 3.06
    	
Redemption of Securities for Sinking Fund
    	
12
    
	
 
    	
 
    	
 
    
	
ARTICLE IV COVENANTS
    	
13
    
	
 
    	
 
    	
 
    
	
SECTION 4.01
    	
Payment of Principal, Premium and Interest
    	
13
    
	
 
    	
 
    	
 
    
	
SECTION 4.02
    	
Maintenance of Office or Agency
    	
13
    
	
 
    	
 
    	
 
    
	
SECTION 4.03
    	
Paying Agents
    	
13
    
	
 
    	
 
    	
 
    
	
SECTION 4.04
    	
Appointment to Fill Vacancy in Office of Trustee
    	
14
    
	
 
    	
 
    	
 
    
	
SECTION 4.05
    	
Compliance with Consolidation Provisions
    	
14
    
	
 
    	
 
    	
 
    
	
ARTICLE V SECURITYHOLDERS’   LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE
    	
14
    
	
 
    	
 
    	
 
    
	
SECTION 5.01
    	
Company to Furnish Trustee Names and Addresses of   Securityholders
    	
14
    
	
 
    	
 
    	
 
    
	
SECTION 5.02
    	
Preservation of Information; Communications with   Securityholders
    	
14
    
	
 
    	
 
    	
 
    
	
SECTION 5.03
    	
Reports by the Company
    	
15
    
	
 
    	
 
    	
 
    
	
SECTION 5.04
    	
Reports by the Trustee
    	
15
    
	
 
    	
 
    	
 
    
	
ARTICLE VI REMEDIES OF THE TRUSTEE   AND SECURITYHOLDERS ON EVENT OF DEFAULT
    	
16
    
	
 
    	
 
    	
 
    
	
SECTION 6.01
    	
Events of Default
    	
16
    
	
 
    	
 
    	
 
    
	
SECTION 6.02
    	
Collection of Indebtedness and Suits for Enforcement by   Trustee
    	
17
    
	
 
    	
 
    	
 
    
	
SECTION 6.03
    	
Application of Moneys Collected
    	
18
    

 

ii

 

	
SECTION 6.04
    	
Limitation on Suits
    	
18
    
	
 
    	
 
    	
 
    
	
SECTION 6.05
    	
Rights and Remedies Cumulative; Delay or Omission Not   Waiver
    	
19
    
	
 
    	
 
    	
 
    
	
SECTION 6.06
    	
Control by Securityholders
    	
19
    
	
 
    	
 
    	
 
    
	
SECTION 6.07
    	
Undertaking to Pay Costs
    	
20
    
	
 
    	
 
    	
 
    
	
ARTICLE VII CONCERNING THE   TRUSTEE
    	
20
    
	
 
    	
 
    	
 
    
	
SECTION 7.01
    	
Certain Duties and Responsibilities of Trustee
    	
20
    
	
 
    	
 
    	
 
    
	
SECTION 7.02
    	
Certain Rights of Trustee
    	
21
    
	
 
    	
 
    	
 
    
	
SECTION 7.03
    	
Trustee Not Responsible for Recitals or Issuance of   Securities
    	
22
    
	
 
    	
 
    	
 
    
	
SECTION 7.04
    	
May Hold Securities
    	
22
    
	
 
    	
 
    	
 
    
	
SECTION 7.05
    	
Moneys Held in Trust
    	
22
    
	
 
    	
 
    	
 
    
	
SECTION 7.06
    	
Compensation and Reimbursement
    	
22
    
	
 
    	
 
    	
 
    
	
SECTION 7.07
    	
Reliance on Officers’ Certificate
    	
23
    
	
 
    	
 
    	
 
    
	
SECTION 7.08
    	
Disqualification; Conflicting Interests
    	
23
    
	
 
    	
 
    	
 
    
	
SECTION 7.09
    	
Corporate Trustee Required; Eligibility
    	
23
    
	
 
    	
 
    	
 
    
	
SECTION 7.10
    	
Resignation and Removal; Appointment of Successor
    	
23
    
	
 
    	
 
    	
 
    
	
SECTION 7.11
    	
Acceptance of Appointment By Successor
    	
24
    
	
 
    	
 
    	
 
    
	
SECTION 7.12
    	
Merger, Conversion, Consolidation or Succession to Business
    	
25
    
	
 
    	
 
    	
 
    
	
SECTION 7.13
    	
Preferential Collection of Claims Against the Company
    	
26
    
	
 
    	
 
    	
 
    
	
ARTICLE VIII CONCERNING THE   SECURITYHOLDERS
    	
26
    
	
 
    	
 
    	
 
    
	
SECTION 8.01
    	
Evidence of Action by Securityholders
    	
26
    
	
 
    	
 
    	
 
    
	
SECTION 8.02
    	
Proof of Execution by Securityholders
    	
26
    
	
 
    	
 
    	
 
    
	
SECTION 8.03
    	
Who May be Deemed Owners
    	
27
    
	
 
    	
 
    	
 
    
	
SECTION 8.04
    	
Certain Securities Owned by Company Disregarded
    	
27
    
	
 
    	
 
    	
 
    
	
SECTION 8.05
    	
Actions Binding on Future Securityholders
    	
27
    
	
 
    	
 
    	
 
    
	
SECTION 8.06
    	
Purposes for Which Meetings May Be Called
    	
27
    
	
 
    	
 
    	
 
    
	
SECTION 8.07
    	
Call Notice and Place of Meetings
    	
27
    
	
 
    	
 
    	
 
    
	
SECTION 8.08
    	
Persons Entitled To Vote at Meetings
    	
28
    
	
 
    	
 
    	
 
    
	
SECTION 8.09
    	
Quorum; Action
    	
28
    
	
 
    	
 
    	
 
    
	
SECTION 8.10
    	
Determination of Voting Rights; Conduct and Adjournment of   Meetings
    	
28
    
	
 
    	
 
    	
 
    
	
SECTION 8.11
    	
Counting Votes and Recording Action of Meetings
    	
29
    
	
 
    	
 
    	
 
    
	
ARTICLE IX SUPPLEMENTAL   INDENTURES
    	
29
    
	
 
    	
 
    	
 
    
	
SECTION 9.01
    	
Supplemental Indentures Without the Consent of   Securityholders
    	
29
    
	
 
    	
 
    	
 
    
	
SECTION 9.02
    	
Supplemental Indentures With Consent of Securityholders
    	
30
    
	
 
    	
 
    	
 
    
	
SECTION 9.03
    	
Effect of Supplemental Indentures
    	
31
    
	
 
    	
 
    	
 
    
	
SECTION 9.04
    	
Securities Affected by Supplemental Indentures
    	
31
    
	
 
    	
 
    	
 
    
	
SECTION 9.05
    	
Execution of Supplemental Indentures
    	
31
    
	
 
    	
 
    	
 
    
	
ARTICLE X SUCCESSOR ENTITY
    	
31
    
	
 
    	
 
    	
 
    
	
SECTION 10.01
    	
Company May Consolidate, Etc.
    	
31
    
	
 
    	
 
    	
 
    
	
SECTION 10.02
    	
Successor Entity Substituted
    	
32
    

 

iii

 

	
SECTION 10.03
    	
Evidence of Consolidation, Etc. to Trustee
    	
32
    
	
 
    	
 
    	
 
    
	
ARTICLE XI SATISFACTION AND   DISCHARGE
    	
32
    
	
 
    	
 
    	
 
    
	
SECTION 11.01
    	
Satisfaction and Discharge of Indenture
    	
32
    
	
 
    	
 
    	
 
    
	
SECTION 11.02
    	
Discharge of Obligations
    	
33
    
	
 
    	
 
    	
 
    
	
SECTION 11.03
    	
Deposited Moneys to be Held in Trust
    	
33
    
	
 
    	
 
    	
 
    
	
SECTION 11.04
    	
Payment of Moneys Held by Paying Agents
    	
33
    
	
 
    	
 
    	
 
    
	
SECTION 11.05
    	
Repayment to Company
    	
33
    
	
 
    	
 
    	
 
    
	
ARTICLE XII IMMUNITY OF   INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
    	
34
    
	
 
    	
 
    	
 
    
	
SECTION 12.01
    	
No Recourse
    	
34
    
	
 
    	
 
    	
 
    
	
ARTICLE XIII MISCELLANEOUS   PROVISIONS
    	
34
    
	
 
    	
 
    	
 
    
	
SECTION 13.01
    	
Effect on Successors and Assigns
    	
34
    
	
 
    	
 
    	
 
    
	
SECTION 13.02
    	
Actions by Successor
    	
34
    
	
 
    	
 
    	
 
    
	
SECTION 13.03
    	
Surrender of Company Powers
    	
34
    
	
 
    	
 
    	
 
    
	
SECTION 13.04
    	
Notices
    	
34
    
	
 
    	
 
    	
 
    
	
SECTION 13.05
    	
Governing Law
    	
35
    
	
 
    	
 
    	
 
    
	
SECTION 13.06
    	
Treatment of Securities as Debt
    	
35
    
	
 
    	
 
    	
 
    
	
SECTION 13.07
    	
Compliance Certificates and Opinions
    	
35
    
	
 
    	
 
    	
 
    
	
SECTION 13.08
    	
Payments on Business Days
    	
35
    
	
 
    	
 
    	
 
    
	
SECTION 13.09
    	
Conflict with Trust Indenture Act
    	
35
    
	
 
    	
 
    	
 
    
	
SECTION 13.10
    	
Counterparts
    	
36
    
	
 
    	
 
    	
 
    
	
SECTION 13.11
    	
Separability
    	
36
    
	
 
    	
 
    	
 
    
	
SECTION 13.12
    	
Assignment
    	
36
    
	
 
    	
 
    	
 
    

 

(2) This Table of Contents does not constitute part of the Indenture and shall not have any bearing on the interpretation of any of its terms and provisions.

 

iv

 

INDENTURE, dated as of [  ], by and between OvaScience, Inc., a Delaware corporation (the “Company”), and [   ], as trustee (the “Trustee”):

 

WHEREAS, for its lawful corporate purposes, the Company has duly authorized the execution and delivery of this Indenture to provide for the issuance of debt securities (hereinafter referred to as the “Securities”), in an unlimited aggregate principal amount to be issued from time to time in one or more series as in this Indenture provided, as registered Securities without coupons, to be authenticated by the certificate of the Trustee;

 

WHEREAS, to provide the terms and conditions upon which the Securities are to be authenticated, issued and delivered, the Company has duly authorized the execution of this Indenture; and

 

WHEREAS, all things necessary to make this Indenture a valid agreement of the Company, in accordance with its terms, have been done.

 

NOW, THEREFORE, in consideration of the premises and the purchase of the Securities by the holders thereof, it is mutually covenanted and agreed as follows for the equal and ratable benefit of the holders of Securities:

 

ARTICLE I

 

DEFINITIONS

 

SECTION 1.01              Definitions of Terms.

 

The terms defined in this Section (except as in this Indenture otherwise expressly provided or unless the context otherwise requires) for all purposes of this Indenture and of any indenture supplemental hereto shall have the respective meanings specified in this Section and shall include the plural as well as the singular.  All other terms used in this Indenture that are defined in the Trust Indenture Act of 1939, as amended, or that are by reference in such Act defined in the Securities Act of 1933, as amended (except as herein otherwise expressly provided or unless the context otherwise requires), shall have the meanings assigned to such terms in said Trust Indenture Act and in said Securities Act as in force at the date of the execution of this instrument.

 

“Authenticating Agent” means an authenticating agent with respect to all or any of the series of Securities appointed with respect to all or any series of the Securities by the Trustee pursuant to Section 2.10.

 

“Bankruptcy Law” means Title 11, U.S. Code, or any similar federal or state law for the relief of debtors.

 

“Board of Directors” means the Board of Directors of the Company or any duly authorized committee of such Board.

 

“Board Resolution” means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification.

 

“Business Day” means, with respect to any series of Securities, any day other than a day on which Federal or State banking institutions in the Borough of Manhattan, the City and State of New York, are authorized or obligated by law, executive order or regulation to close.

 

“Certificate” means a certificate signed by the principal executive officer, the principal financial officer or the principal accounting officer of the Company.  The Certificate need not comply with the provisions of Section 13.07.

 

“Commission” means the Securities and Exchange Commission.

 

“Company” means the corporation named as the “Company” in the first paragraph of this instrument until a successor corporation shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “Company” shall mean such successor corporation.

 

 

“Corporate Trust Office” means the office of the Trustee at which, at any particular time, its corporate trust business shall be principally administered, which office at the date hereof is located at [ ], except that whenever a provision herein refers to an office or agency of the Trustee in the Borough of Manhattan, the City and State of New York, such office is located, at the date hereof, at [ ].

 

“Custodian” means any receiver, trustee, assignee, liquidator, or similar official under any Bankruptcy Law.

 

“Default” means an event which is, or after notice or lapse of time, or both, would constitute an Event of Default.

 

“Depositary” means, with respect to Securities of any series, for which the Company shall determine that such Securities will be issued as a Global Security, The Depository Trust Company, New York, New York, another clearing agency, or any successor registered as a clearing agency under the Exchange Act, or other applicable statute or regulation, which, in each case, shall be designated by the Company pursuant to either Section 2.01 or Section 2.11.

 

“Event of Default” means, with respect to Securities of a particular series, any event specified in Section 6.01, continued for the period of time, if any, therein designated.

 

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

 

“Global Security” means, with respect to any series of Securities, a Security executed by the Company and delivered by the Trustee to the Depositary or pursuant to the Depositary’s instruction, all in accordance with this Indenture, which shall be registered in the name of the Depositary or its nominee.

 

“Governmental Obligations” means securities that are (i) direct obligations of the United States of America for the payment of which its full faith and credit is pledged or (ii) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America, the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America that, in either case, are non-callable at the option of the issuer thereof, and shall also include a depositary receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act of 1933, as amended) as custodian with respect to any such Governmental Obligation or a specific payment of principal of or interest on any such Governmental Obligation held by such custodian for the account of the holder of such depositary receipt; provided, however, that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the Governmental Obligation or the specific payment of principal of or interest on the Governmental Obligation evidenced by such depositary receipt.

 

“herein,” “hereof” and “hereunder,” and other words of similar import, refer to this Indenture as a whole and not to any particular Article, Section or other subdivision.

 

“Indenture” means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into in accordance with the terms hereof.

 

“Interest Payment Date,” when used with respect to any installment of interest on a Security of a particular series, means the date specified in such Security or in a Board Resolution or in an indenture supplemental hereto with respect to such series as the fixed date on which an installment of interest with respect to Securities of that series is due and payable.

 

“Officers’ Certificate” means a certificate signed by the President or a Vice President and by the Chief Financial Officer, Vice President of Finance, the Treasurer or an Assistant Treasurer or the Controller or an Assistant Controller or the Secretary or an Assistant Secretary of the Company that is delivered to the Trustee in accordance with the terms hereof.  Certificate shall include the statements provided for in Section 13.07, if and to the extent required by the provisions thereof.

 

2

 

“Opinion of Counsel” means a written opinion of counsel, who may be counsel to the Company (and may include directors or employees of the Company) and which opinion is acceptable to the Trustee which acceptance shall not be unreasonably withheld.

 

“Outstanding”, when used with reference to Securities of any series, means, subject to the provisions of Section 8.04, as of any particular time, all Securities of that series theretofore authenticated and delivered by the Trustee under this Indenture, except (a) Securities theretofore canceled by the Trustee or any paying agent, or delivered to the Trustee or any paying agent for cancellation or that have previously been canceled; (b) Securities or portions thereof for the payment or redemption of which moneys or Governmental Obligations in the necessary amount shall have been deposited in trust with the Trustee or with any paying agent (other than the Company) or shall have been set aside and segregated in trust by the Company (if the Company shall act as its own paying agent); provided, however, that if such Securities or portions of such Securities are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as in Article III provided, or provision satisfactory to the Trustee shall have been made for giving such notice; and (c) Securities in lieu of or in substitution for which other Securities shall have been authenticated and delivered pursuant to the terms of Section 2.07.

 

“Person” means any individual, corporation, limited liability company, partnership, joint-venture, association, joint-stock company, trust, estate, unincorporated organization or government or any agency or political subdivision thereof.

 

“Predecessor Security” of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 2.07 in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security.

 

“Responsible Officer,” when used with respect to the Trustee, means any officer of the Trustee, including any vice president, assistant vice president, secretary, assistant secretary, the treasurer, any assistant treasurer, the managing director or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of such officer’s knowledge of and familiarity with the particular subject.

 

“Securities” means the debt Securities authenticated and delivered under this Indenture.

 

“Security Register” has the meaning specified in Section 2.05.

 

“Security Registrar” has the meaning specified in Section 2.05.

 

“Securityholder,” “holder of Securities,” “registered holder,” or other similar term, means the Person or Persons in whose name or names a particular Security shall be registered in the Security Register.

 

“Subsidiary” means, with respect to any Person, (i) any corporation at least a majority of whose outstanding Voting Stock shall at the time be owned, directly or indirectly, by such Person or by one or more of its Subsidiaries or by such Person and one or more of its Subsidiaries, (ii) any general partnership, joint venture or similar entity, at least a majority of whose outstanding partnership or similar interests shall at the time be owned by such Person, or by one or more of its Subsidiaries, or by such Person and one or more of its Subsidiaries and (iii) any limited partnership of which such Person or any of its Subsidiaries is a general partner.

 

“Trustee” means the Person named as the “Trustee” in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “Trustee” shall mean such successor Trustee.  The term “Trustee” as used with respect to a particular series of the Securities shall mean the trustee with respect to that series.

 

“Trust Indenture Act” means the Trust Indenture Act of 1939, as amended, subject to the provisions of Sections 9.01, 9.02, and 10.01, as in effect at the date of execution of this instrument; provided, however, that in the event the

 

3

 

Trust Indenture Act is amended after such date, Trust Indenture Act means, to the extent required by such amendment, the Trust Indenture Act of 1939, as so amended, or any successor statute.

 

“Voting Stock,” as applied to any Person, means shares, interests, participations or other equivalents in the equity interest (however designated) in such Person having ordinary voting power for the election of a majority of the directors (or the equivalent) of such Person, other than shares, interests, participations or other equivalents having such power only by reason of the occurrence of a contingency.

 

ARTICLE II

 

ISSUE, DESCRIPTION, TERMS, EXECUTION,
 REGISTRATION AND EXCHANGE OF SECURITIES

 

SECTION 2.01              Designation and Terms of Securities.

 

(a)                                 The aggregate principal amount of Securities that may be authenticated and delivered under this Indenture is unlimited.  The Securities may be issued in one or more series up to the aggregate principal amount of Securities of that series from time to time authorized by or pursuant to a Board Resolution of the Company or pursuant to one or more indentures supplemental hereto. Prior to the initial issuance of Securities of a given series, there shall be established in or pursuant to a Board Resolution of the Company, and set forth in an Officers’ Certificate of the Company, or established in one or more indentures supplemental hereto:

 

(1)                                 the title of the Security of the series (which shall distinguish the Securities of the series from all other Securities);

 

(2)                                 the aggregate principal amount of the Securities of such series initially to be issued and any limit upon the aggregate principal amount of the Securities of that series that may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of that series);

 

(3)                                 the currency or units based on or relating to currencies in which debt securities of such series are denominated and the currency or units in which principal or interest or both will or may be payable;

 

(4)                                 the date or dates on which the principal of the Securities of the series is payable and the place(s) of payment;

 

(5)                                 the rate or rates at which the Securities of the series shall bear interest or the manner of calculation of such rate or rates, if any;

 

(6)                                 the date or dates from which such interest shall accrue, the Interest Payment Dates on which such interest will be payable or the manner of determination of such Interest Payment Dates, the place(s) of payment, and the record date for the determination of holders to whom interest is payable on any such Interest Payment Dates or the method for determining such dates;

 

(7)                                 the right, if any, to extend the interest payment periods or to defer the payment of interest and the duration of such extension;

 

(8)                                 the period or periods within which, the price or prices at which and the terms and conditions upon which, Securities of the series may be redeemed, in whole or in part, at the option of the Company;

 

4

 

(9)                                 the obligation, if any, of the Company to redeem or purchase Securities of the series pursuant to any sinking fund or analogous provisions (including payments made in cash in satisfaction of future sinking fund obligations) or at the option of a holder thereof and the period or periods within which, the price or prices at which, and the terms and conditions upon which, Securities of the series shall be redeemed or purchased, in whole or in part, pursuant to such obligation;

 

(10)                          whether or not the debt securities will be secured or unsecured, and the terms of any secured debt;

 

(11)                          the form of the Securities of the series including the form of the Certificate of Authentication for such series;

 

(12)                          if other than denominations of one thousand U.S. dollars ($1,000) or any integral multiple thereof, the denominations in which the Securities of the series shall be issuable;

 

(13)                          any and all other terms with respect to such series (which terms shall not be inconsistent with the terms of this Indenture, as amended by any supplemental indenture) including any terms which may be required by or advisable under United States laws or regulations or advisable in connection with the marketing of Securities of that series;

 

(14)                          whether the Securities are issuable as a Global Security and, in such case, the identity of the Depositary for such series;

 

(15)                          whether the Securities will be convertible into shares of common stock or other securities of the Company and, if so, the terms and conditions upon which such Securities will be so convertible, including the conversion price and the conversion period;

 

(16)                          if other than the principal amount thereof, the portion of the principal amount of Securities of the series which shall be payable upon declaration of acceleration of the maturity thereof pursuant to Section 6.01; and

 

(17)                          any additional or different Events of Default or restrictive covenants provided for with respect to the Securities of the series.

 

All Securities of any one series shall be substantially identical except as to denomination and except as may otherwise be provided in or pursuant to any such Board Resolution or in any indentures supplemental hereto.

 

If any of the terms of the series are established by action taken pursuant to a Board Resolution of the Company, a copy of an appropriate record of such action shall be certified by the Secretary or an Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Officers’ Certificate of the Company setting forth the terms of the series.

 

Securities of any particular series may be issued at various times, with different dates on which the principal or any installment of principal is payable, with different rates of interest, if any, or different methods by which rates of interest may be determined, with different dates on which such interest may be payable and with different redemption dates.

 

SECTION 2.02              Form of Securities and Trustee’s Certificate.

 

The Securities of any series and the Trustee’s certificate of authentication to be borne by such Securities shall be substantially of the tenor and purport as set forth in one or more indentures supplemental hereto or as provided in a Board Resolution of the Company and as set forth in an Officers’ Certificate of the Company and may have such letters, numbers or other marks of identification or designation and such legends or endorsements printed, lithographed or engraved thereon as the Company may deem appropriate and as are not inconsistent with the

 

5

 

provisions of this Indenture, or as may be required to comply with any law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange on which Securities of that series may be listed, or to conform to usage.

 

SECTION 2.03              Denominations:  Provisions for Payment.

 

The Securities shall be issuable as registered Securities and in the denominations of one thousand U.S. dollars ($1,000) or any integral multiple thereof, subject to Section 2.01(a)(12).  The Securities of a particular series shall bear interest payable on the dates and at the rate specified with respect to that series.  The principal of and the interest on the Securities of any series, as well as any premium thereon in case of redemption thereof prior to maturity, shall be payable in the coin or currency of the United States of America that at the time is legal tender for public and private debt, at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, the City and State of New York.  Each Security shall be dated the date of its authentication.  Interest on the Securities shall be computed on the basis of a 360-day year composed of twelve 30-day months.

 

The interest installment on any Security that is payable, and is punctually paid or duly provided for, on any Interest Payment Date for Securities of that series shall be paid to the Person in whose name said Security (or one or more Predecessor Securities) is registered at the close of business on the regular record date for such interest installment.  In the event that any Security of a particular series or portion thereof is called for redemption and the redemption date is subsequent to a regular record date with respect to any Interest Payment Date and prior to such Interest Payment Date, interest on such Security will be paid upon presentation and surrender of such Security as provided in Section 3.03.

 

Any interest on any Security that is payable, but is not punctually paid or duly provided for, on any Interest Payment Date for Securities of the same series (herein called “Defaulted Interest”) shall forthwith cease to be payable to the registered holder on the relevant regular record date by virtue of having been such holder; and such Defaulted Interest shall be paid by the Company, at its election, as provided in clause (1) or clause (2) below:

 

(1)                                 The Company may make payment of any Defaulted Interest on Securities to the Persons in whose names such Securities (or their respective Predecessor Securities) are registered at the close of business on a special record date for the payment of such Defaulted Interest, which shall be fixed in the following manner:  the Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each such Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided.  Thereupon the Trustee shall fix a special record date for the payment of such Defaulted Interest which shall not be more than 15 nor less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment.  The Trustee shall promptly notify the Company of such special record date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the special record date therefor to be mailed, first class postage prepaid, to each Securityholder at his or her address as it appears in the Security Register, not less than 10 days prior to such special record date.  Notice of the proposed payment of such Defaulted Interest and the special record date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the Persons in whose names such Securities (or their respective Predecessor Securities) are registered on such special record date.

 

(2)                                 The Company may make payment of any Defaulted Interest on any Securities in any other lawful manner not inconsistent with the requirements of any securities exchange on which such Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment

 

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pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee.

 

Unless otherwise set forth in a Board Resolution of the Company or one or more indentures supplemental hereto establishing the terms of any series of Securities pursuant to Section 2.01 hereof, the term “regular record date” as used in this Section with respect to a series of Securities with respect to any Interest Payment Date for such series shall mean either the fifteenth day of the month immediately preceding the month in which an Interest Payment Date established for such series pursuant to Section 2.01 hereof shall occur, if such Interest Payment Date is the first day of a month, or the last day of the month immediately preceding the month in which an Interest Payment Date established for such series pursuant to Section 2.01 hereof shall occur, if such Interest Payment Date is the fifteenth day of a month, whether or not such date is a Business Day.

 

Subject to the foregoing provisions of this Section, each Security of a series delivered under this Indenture upon transfer of or in exchange for or in lieu of any other Security of such series shall carry the rights to interest accrued and unpaid, and to accrue, that were carried by such other Security.

 

SECTION 2.04              Execution and Authentications.

 

The Securities shall be signed on behalf of the Company by its President, or one of its Vice Presidents, or its Treasurer, or one of its Assistant Treasurers, or its Secretary, or one of its Assistant Secretaries, under its corporate seal attested by its Secretary or one of its Assistant Secretaries.  Signatures may be in the form of a manual or facsimile signature.  The Company may use the facsimile signature of any Person who shall have been a President or Vice President thereof, or of any Person who shall have been a Treasurer or Assistant Treasurer thereof, or of any Person who shall have been a Secretary or Assistant Secretary thereof, notwithstanding the fact that at the time the Securities shall be authenticated and delivered or disposed of such Person shall have ceased to be the President or a Vice President, the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary, of the Company.  The seal of the Company may be in the form of a facsimile of such seal and may be impressed, affixed, imprinted or otherwise reproduced on the Securities.  The Securities may contain such notations, legends or endorsements required by law, stock exchange rule or usage.  Each Security shall be dated the date of its authentication.

 

A Security shall not be valid or obligatory for any purpose and shall not be entitled to any benefit under this Indenture, in each case, until authenticated with a certificate of authentication manually signed by an authorized signatory of the Trustee, or by an Authenticating Agent.  Such certificate shall be conclusive evidence, and the only evidence, that the Security so authenticated has been duly authenticated and delivered hereunder and that the Security is entitled to the benefits of this Indenture.  At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series executed by the Company to the Trustee for authentication, together with a written order of the Company for the authentication and delivery of such Securities, signed by its President or any Vice President and its Secretary or any Assistant Secretary, and the Trustee in accordance with such written order shall authenticate and deliver such Securities.

 

In authenticating such Securities and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and (subject to Section 7.01) shall be fully protected in relying upon, an Opinion of Counsel stating that the form and terms thereof have been established in conformity with the provisions of this Indenture.

 

The Trustee shall not be required to authenticate such Securities if the issue of such Securities pursuant to this Indenture will affect the Trustee’s own rights, duties or immunities under the Securities and this Indenture or otherwise in a manner that is not reasonably acceptable to the Trustee.

 

SECTION 2.05              Registration of Transfer and Exchange.

 

(a)                                 Securities of any series may be exchanged upon presentation thereof at the office or agency of the Company designated for such purpose in the Borough of Manhattan, the City and State of New York, for other Securities of such series of authorized denominations, and for a like aggregate principal amount, upon payment of a sum sufficient to cover any tax or other governmental charge

 

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in relation thereto, all as provided in this Section.  In respect of any Securities so surrendered for exchange, the Company shall execute, the Trustee shall authenticate and such office or agency shall deliver in exchange therefor the Security or Securities of the same series that the Securityholder making the exchange shall be entitled to receive, bearing numbers not contemporaneously outstanding.

 

(b)                                 The Company shall keep, or cause to be kept, at its office or agency designated for such purpose in the Borough of Manhattan, the City and State of New York, or such other location designated by the Company a register or registers (herein referred to as the “Security Register”) in which, subject to such reasonable regulations as it may prescribe, the Company shall register the Securities and the transfers of Securities as in this Article provided and which at all reasonable times shall be open for inspection by the Trustee.  The registrar for the purpose of registering Securities and transfer of Securities as herein provided shall be appointed as authorized by Board Resolution (the “Security Registrar”).

 

Upon surrender for transfer of any Security at the office or agency of the Company designated for such purpose, the Company shall execute, the Trustee shall authenticate and such office or agency shall deliver in the name of the transferee or transferees a new Security or Securities of the same series as the Security presented for a like aggregate principal amount.

 

All Securities presented or surrendered for exchange or registration of transfer, as provided in this Section, shall be accompanied (if so required by the Company or the Security Registrar) by a written instrument or instruments of transfer, in form satisfactory to the Company or the Security Registrar, duly executed by the registered holder or by such holder’s duly authorized attorney in writing.

 

(c)                                  No service charge shall be made for any exchange or registration of transfer of Securities, or issue of new Securities in case of partial redemption of any series, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge in relation thereto, other than exchanges pursuant to Section 2.06, Section 3.03(b) and Section 9.04 not involving any transfer.

 

(d)                                 The Company shall not be required (i) to issue, exchange or register the transfer of any Securities during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of less than all the Outstanding Securities of the same series and ending at the close of business on the day of such mailing, nor (ii) to register the transfer of or exchange any Securities of any series or portions thereof called for redemption.  The provisions of this Section 2.05 are, with respect to any Global Security, subject to Section 2.11 hereof.

 

SECTION 2.06              Temporary Securities.

 

Pending the preparation of definitive Securities of any series, the Company may execute, and the Trustee shall authenticate and deliver, temporary Securities (printed, lithographed or typewritten) of any authorized denomination.  Such temporary Securities shall be substantially in the form of the definitive Securities in lieu of which they are issued, but with such omissions, insertions and variations as may be appropriate for temporary Securities, all as may be determined by the Company.  Every temporary Security of any series shall be executed by the Company and be authenticated by the Trustee upon the same conditions and in substantially the same manner, and with like effect, as the definitive Securities of such series.  Without unnecessary delay the Company will execute and will furnish definitive Securities of such series and thereupon any or all temporary Securities of such series may be surrendered in exchange therefor (without charge to the holders), at the office or agency of the Company designated for the purpose in the Borough of Manhattan, the City and State of New York, and the Trustee shall authenticate and such office or agency shall deliver in exchange for such temporary Securities an equal aggregate principal amount of definitive Securities of such series, unless the Company advises the Trustee to the effect that definitive Securities need not be executed and furnished until further notice from the Company.  Until so exchanged, the temporary Securities of such series shall be entitled to the same benefits under this Indenture as definitive Securities of such series authenticated and delivered hereunder.

 

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SECTION 2.07              Mutilated, Destroyed, Lost or Stolen Securities.

 

In case any temporary or definitive Security shall become mutilated or be destroyed, lost or stolen, the Company (subject to the next succeeding sentence) shall execute, and upon the Company’s request the Trustee (subject as aforesaid) shall authenticate and deliver, a new Security of the same series, bearing a number not contemporaneously outstanding, in exchange and substitution for the mutilated Security, or in lieu of and in substitution for the Security so destroyed, lost or stolen.  In every case the applicant for a substituted Security shall furnish to the Company and the Trustee such security or indemnity as may be required by them to save each of them harmless, and, in every case of destruction, loss or theft, the applicant shall also furnish to the Company and the Trustee evidence to their satisfaction of the destruction, loss or theft of the applicant’s Security and of the ownership thereof.  The Trustee may authenticate any such substituted Security and deliver the same upon the written request or authorization of any officer of the Company.  Upon the issuance of any substituted Security, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.  In case any Security that has matured or is about to mature shall become mutilated or be destroyed, lost or stolen, the Company may, instead of issuing a substitute Security, pay or authorize the payment of the same (without surrender thereof except in the case of a mutilated Security) if the applicant for such payment shall furnish to the Company and the Trustee such security or indemnity as they may require to save them harmless, and, in case of destruction, loss or theft, evidence to the satisfaction of the Company and the Trustee of the destruction, loss or theft of such Security and of the ownership thereof.

 

Every replacement Security issued pursuant to the provisions of this Section shall constitute an additional contractual obligation of the Company whether or not the mutilated, destroyed, lost or stolen Security shall be found at any time, or be enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities of the same series duly issued hereunder.  All Securities shall be held and owned upon the express condition that the foregoing provisions are exclusive with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities, and shall preclude (to the extent lawful) any and all other rights or remedies, notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender.

 

SECTION 2.08              Cancellation.

 

All Securities surrendered for the purpose of payment, redemption, exchange or registration of transfer shall, if surrendered to the Company or any paying agent, be delivered to the Trustee for cancellation, or, if surrendered to the Trustee, shall be cancelled by it, and no Securities shall be issued in lieu thereof except as expressly required or permitted by any of the provisions of this Indenture.  On request of the Company at the time of such surrender, the Trustee shall deliver to the Company canceled Securities held by the Trustee.  In the absence of such request the Trustee may dispose of canceled Securities in accordance with its standard procedures and deliver a certificate of disposition to the Company.  If the Company shall otherwise acquire any of the Securities, however, such acquisition shall not operate as a redemption or satisfaction of the indebtedness represented by such Securities unless and until the same are delivered to the Trustee for cancellation.

 

SECTION 2.09              Benefits of Indenture.

 

Nothing in this Indenture or in the Securities, express or implied, shall give or be construed to give to any Person, other than the parties hereto and the holders of the Securities any legal or equitable right, remedy or claim under or in respect of this Indenture, or under any covenant, condition or provision herein contained; all such covenants, conditions and provisions being for the sole benefit of the parties hereto and of the holders of the Securities.

 

SECTION 2.10              Authenticating Agent.

 

So long as any of the Securities of any series remain Outstanding there may be an Authenticating Agent for any or all such series of Securities which the Trustee shall have the right to appoint.  Said Authenticating Agent shall be authorized to act on behalf of the Trustee to authenticate Securities of such series issued upon exchange, transfer or partial redemption thereof, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder.  All references in this Indenture

 

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to the authentication of Securities by the Trustee shall be deemed to include authentication by an Authenticating Agent for such series.  Each Authenticating Agent shall be acceptable to the Company and shall be a corporation that has a combined capital and surplus, as most recently reported or determined by it, sufficient under the laws of any jurisdiction under which it is organized or in which it is doing business to conduct a trust business, and that is otherwise authorized under such laws to conduct such business and is subject to supervision or examination by Federal or State authorities.  If at any time any Authenticating Agent shall cease to be eligible in accordance with these provisions, it shall resign immediately.

 

Any Authenticating Agent may at any time resign by giving written notice of resignation to the Trustee and to the Company.  The Trustee may at any time (and upon request by the Company shall) terminate the agency of any Authenticating Agent by giving written notice of termination to such Authenticating Agent and to the Company.  Upon resignation, termination or cessation of eligibility of any Authenticating Agent, the Trustee may appoint an eligible successor Authenticating Agent acceptable to the Company.  Any successor Authenticating Agent, upon acceptance of its appointment hereunder, shall become vested with all the rights, powers and duties of its predecessor hereunder as if originally named as an Authenticating Agent pursuant hereto.

 

SECTION 2.11              Global Securities

 

(a)                                 If the Company shall establish pursuant to Section 2.01 that some or all of the Securities of a particular series are to be issued as a Global Security, then the Company shall execute and the Trustee shall, in accordance with Section 2.04, authenticate and deliver, a Global Security that (i) shall represent, and shall be denominated in an amount equal to the aggregate principal amount of, the Outstanding Securities of such series which are to be issued as a Global Security, (ii) shall be registered in the name of the Depositary or its nominee, (iii) shall be delivered by the Trustee to the Depositary or pursuant to the Depositary’s instruction and (iv) shall bear a legend substantially to the following effect:  “Except as otherwise provided in Section 2.11 of the Indenture, this Security may be transferred, in whole but not in part, only to another nominee of the Depositary or to a successor Depositary or to a nominee of such successor Depositary.”

 

(b)                                 Notwithstanding the provisions of Section 2.05, the Global Security of a series may be transferred, in whole but not in part and in the manner provided in Section 2.05, only to another nominee of the Depositary for such series, or to a successor Depositary for such series selected or approved by the Company or to a nominee of such successor Depositary.

 

(c)                                  If at any time the Depositary for a series of the Securities notifies the Company that it is unwilling or unable to continue as Depositary for such series or if at any time the Depositary for such series shall no longer be registered or in good standing under the Exchange Act, or other applicable statute or regulation, and a successor Depositary for such series is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such condition, as the case may be, this Section 2.11 shall no longer be applicable to the Securities of such series and the Company will execute, and subject to Section 2.05, the Trustee will authenticate and deliver the Securities of such series in definitive registered form without coupons, in authorized denominations, and in an aggregate principal amount equal to the principal amount of the Global Security of such series in exchange for such Global Security.  In addition, the Company may at any time determine that the Securities of any series shall no longer be represented by a Global Security and that the provisions of this Section 2.11 shall no longer apply to the Securities of such series.  In such event the Company will execute and subject to Section 2.05, the Trustee, upon receipt of an Officers’ Certificate evidencing such determination by the Company, will authenticate and deliver the Securities of such series in definitive registered form without coupons, in authorized denominations, and in an aggregate principal amount equal to the principal amount of the Global Security of such series in exchange for such Global Security.  Upon the exchange of the Global Security for such Securities in definitive registered form without coupons, in authorized denominations, the Global Security shall be canceled by the Trustee.  Such Securities in definitive registered form issued in exchange for the Global Security pursuant to this Section 2.11(c) shall be registered in such names and in such authorized denominations as the Depositary, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the

 

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Trustee.  The Trustee shall deliver such Securities to the Depositary for delivery to the Persons in whose names such Securities are so registered.

 

ARTICLE III

 

REDEMPTION OF SECURITIES AND SINKING
 FUND PROVISIONS

 

SECTION 3.01              Redemption.

 

The Company may redeem the Securities of any series issued hereunder on and after the dates and in accordance with the terms established for such series pursuant to Section 2.01 hereof.

 

SECTION 3.02              Notice of Redemption.

 

(a)                                 In case the Company shall desire to exercise such right to redeem all or, as the case may be, a portion of the Securities of any series in accordance with the right reserved so to do, the Company shall, or shall cause the Trustee to, give notice of such redemption to holders of the Securities of such series to be redeemed by mailing, first class postage prepaid, a notice of such redemption not less than 30 days and not more than 90 days before the date fixed for redemption of that series to such holders at their last addresses as they shall appear upon the Security Register unless a shorter period is specified in the Securities to be redeemed.  Any notice that is mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the registered holder receives the notice.  In any case, failure duly to give such notice to the holder of any Security of any series designated for redemption in whole or in part, or any defect in the notice, shall not affect the validity of the proceedings for the redemption of any other Securities of such series or any other series.  In the case of any redemption of Securities prior to the expiration of any restriction on such redemption provided in the terms of such Securities or elsewhere in this Indenture, the Company shall furnish the Trustee with an Officers’ Certificate evidencing compliance with any such restriction.

 

Each such notice of redemption shall specify the date fixed for redemption and the redemption price at which Securities of that series are to be redeemed, and shall state that payment of the redemption price of such Securities to be redeemed will be made at the office or agency of the Company in the Borough of Manhattan, the City and State of New York, upon presentation and surrender of such Securities, that interest accrued to the date fixed for redemption will be paid as specified in said notice, that from and after said date interest will cease to accrue and that the redemption is for a sinking fund, if such is the case.  If less than all the Securities of a series are to be redeemed, the notice to the holders of Securities of that series to be redeemed in whole or in part shall specify the particular Securities to be so redeemed.  In case any Security is to be redeemed in part only, the notice that relates to such Security shall state the portion of the principal amount thereof to be redeemed, and shall state that on and after the redemption date, upon surrender of such Security, a new Security or Securities of such series in principal amount equal to the unredeemed portion thereof will be issued.

 

(b)                                 If less than all the Securities of a series are to be redeemed, the Company shall give the Trustee at least 30 days’ notice in advance of the date fixed for redemption as to the aggregate principal amount of Securities of the series to be redeemed, and thereupon the Trustee shall select, by lot or in such other manner as it shall deem appropriate and fair in its discretion and that may provide for the selection of a portion or portions (equal to one thousand U.S. dollars ($1,000) or any integral multiple thereof) of the principal amount of such Securities of a denomination larger than $1,000, the Securities to be redeemed and shall thereafter promptly notify the Company in writing of the numbers of the Securities to be redeemed, in whole or in part.  The Company may, if and whenever it shall so elect, by delivery of instructions signed on its behalf by its President or any Vice President, instruct the Trustee or any paying agent to call all or any part of the Securities of a particular series for redemption and to give notice of redemption in the manner set forth in this Section, such notice to be in the name of the Company or its own name as the Trustee or such paying agent may deem advisable.  In any case in which notice of redemption is to be given by the

 

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Trustee or any such paying agent, the Company shall deliver or cause to be delivered to, or permit to remain with, the Trustee or such paying agent, as the case may be, such Security Register, transfer books or other records, or suitable copies or extracts therefrom, sufficient to enable the Trustee or such paying agent to give any notice by mail that may be required under the provisions of this Section.

 

SECTION 3.03              Payment Upon Redemption.

 

(a)                                 If the giving of notice of redemption shall have been completed as above provided, the Securities or portions of Securities of the series to be redeemed specified in such notice shall become due and payable on the date and at the place stated in such notice at the applicable redemption price, together with interest accrued to the date fixed for redemption and interest on such Securities or portions of Securities shall cease to accrue on and after the date fixed for redemption, unless the Company shall default in the payment of such redemption price and accrued interest with respect to any such Security or portion thereof.  On presentation and surrender of such Securities on or after the date fixed for redemption at the place of payment specified in the notice, said Securities shall be paid and redeemed at the applicable redemption price for such series, together with interest accrued thereon to the date fixed for redemption (but if the date fixed for redemption is an interest payment date, the interest installment payable on such date shall be payable to the registered holder at the close of business on the applicable record date pursuant to Section 2.03).

 

(b)                                 Upon presentation of any Security of such series that is to be redeemed in part only, the Company shall execute and the Trustee shall authenticate and the office or agency where the Security is presented shall deliver to the holder thereof, at the expense of the Company, a new Security of the same series of authorized denominations in principal amount equal to the unredeemed portion of the Security so presented.

 

SECTION 3.04              Sinking Fund.

 

The provisions of Sections 3.04, 3.05 and 3.06 shall be applicable to any sinking fund for the retirement of Securities of a series, except as otherwise specified as contemplated by Section 2.01 for Securities of such series.

 

The minimum amount of any sinking fund payment provided for by the terms of Securities of any series is herein referred to as a “mandatory sinking fund payment,” and any payment in excess of such minimum amount provided for by the terms of Securities of any series is herein referred to as an “optional sinking fund payment.”  If provided for by the terms of Securities of any series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 3.05.  Each sinking fund payment shall be applied to the redemption of Securities of any series as provided for by the terms of Securities of such series.

 

SECTION 3.05              Satisfaction of Sinking Fund Payments with Securities.

 

The Company (i) may deliver Outstanding Securities of a series (other than any Securities previously called for redemption) and (ii) may apply as a credit Securities of a series that have been redeemed either at the election of the Company pursuant to the terms of such Securities or through the application of permitted optional sinking fund payments pursuant to the terms of such Securities, in each case in satisfaction of all or any part of any sinking fund payment with respect to the Securities of such series required to be made pursuant to the terms of such Securities as provided for by the terms of such series, provided that such Securities have not been previously so credited.  Such Securities shall be received and credited for such purpose by the Trustee at the redemption price specified in such Securities for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly.

 

SECTION 3.06              Redemption of Securities for Sinking Fund.

 

Not less than 45 days prior to each sinking fund payment date for any series of Securities, the Company will deliver to the Trustee an Officers’ Certificate specifying the amount of the next ensuing sinking fund payment for that series

 

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pursuant to the terms of the series, the portion thereof, if any, that is to be satisfied by delivering and crediting Securities of that series pursuant to Section 3.05 and the basis for such credit and will, together with such Officers’ Certificate, deliver to the Trustee any Securities to be so delivered.  Not less than 30 days before each such sinking fund payment date the Trustee shall select the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 3.02 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 3.02.  Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Section 3.03.

 

ARTICLE IV

 

COVENANTS

 

SECTION 4.01              Payment of Principal, Premium and Interest.

 

The Company will duly and punctually pay or cause to be paid the principal of (and premium, if any) and interest on the Securities of that series at the time and place and in the manner provided herein and established with respect to such Securities.

 

SECTION 4.02              Maintenance of Office or Agency.

 

So long as any series of the Securities remain Outstanding, the Company agrees to maintain an office or agency in the Borough of Manhattan, the City and State of New York, with respect to each such series and at such other location or locations as may be designated as provided in this Section 4.02, where (i) Securities of that series may be presented or surrendered for payment, (ii) Securities of that series may be presented as herein above authorized for registration of transfer and exchange, and (iii) notices and demands to or upon the Company in respect of the Securities of that series and this Indenture may be given or served, such designation to continue with respect to such office or agency until the Company shall, by written notice signed by its President or a Vice President and delivered to the trustee, designate some other office or agency for such purposes or any of them.  If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, notices and demands.

 

SECTION 4.03              Paying Agents.

 

(a)                                 If the Company shall appoint one or more paying agents for all or any series of the Securities, other than the Trustee, the Company will cause each such paying agent to execute and deliver to the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provisions of this Section:

 

(1)                                 that it will hold all sums held by it as such agent for the payment of the principal of (and premium, if any) or interest on the Securities of that series (whether such sums have been paid to it by the Company or by any other obligor of such Securities) in trust for the benefit of the Persons entitled thereto;

 

(2)                                 that it will give the Trustee notice of any failure by the Company (or by any other obligor of such Securities) to make any payment of the principal of (and premium, if any) or interest on the Securities of that series when the same shall be due and payable;

 

(3)                                 that it will, at any time during the continuance of any failure referred to in the preceding paragraph (a)(2) above, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such paying agent; and

 

(4)                                 that it will perform all other duties of paying agent as set forth in this Indenture.

 

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(b)                                 If the Company shall act as its own paying agent with respect to any series of the Securities, it will on or before each due date of the principal of (and premium, if any) or interest on Securities of that series, set aside, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient with monies held by all other paying agents to pay such principal (and premium, if any) or interest so becoming due on Securities of that series until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of such action, or any failure (by it or any other obligor on such Securities) to take such action.  Whenever the Company shall have one or more paying agents for any series of Securities, it will, prior to each due date of the principal of (and premium, if any) or interest on any Securities of that series, deposit with the paying agent a sum sufficient to pay the principal (an premium, if any) or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal, premium or interest, and (unless such paying agent is the Trustee) the Company will promptly notify the Trustee of this action or failure so to act.

 

(c)                                  Notwithstanding anything in this Section to the contrary, (i) the agreement to hold sums in trust as provided in this Section is subject to the provisions of Section 11.05, and (ii) the Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or direct any paying agent to pay, to the Trustee all sums held in trust by the Company or such paying agent, such sums to be held by the Trustee upon the same terms and conditions as those upon which such sums were held by the Company or such paying agent; and, upon such payment by any paying agent to the Trustee, such paying agent shall be released from all further liability with respect to such money.

 

SECTION 4.04              Appointment to Fill Vacancy in Office of Trustee.

 

The Company, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 7.10, a Trustee, so that there shall at all times be a Trustee hereunder.

 

SECTION 4.05              Compliance with Consolidation Provisions.

 

The Company will not, while any of the Securities remain Outstanding, consolidate with or merge into any other Person, in either case where the Company is not the survivor of such transaction, or sell or convey all or substantially all of its property to any other company unless the provisions of Article X hereof are complied with.

 

ARTICLE V

 

SECURITYHOLDERS’ LISTS AND REPORTS
 BY THE COMPANY AND THE TRUSTEE

 

SECTION 5.01              Company to Furnish Trustee Names and Addresses of Securityholders.

 

If the Company is not the Security Register, the Company will furnish or use reasonable efforts to cause to be furnished to the Trustee (a) on each regular record date (as defined in Section 2.03) a list, in such form as the Trustee may reasonably require, of the names and addresses of the holders of each series of Securities as of such regular record date, provided that the Company shall not be obligated to furnish or cause to furnish such list at any time that the list shall not differ in any respect from the most recent list furnished to the Trustee by the Company and (b) at such other times as the Trustee may request in writing within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished; provided, however, that, in either case, no such list need be furnished for any series for which the Trustee shall be the Security Registrar.

 

SECTION 5.02              Preservation of Information; Communications with Securityholders.

 

(a)                                 The Trustee shall preserve, in as current a form as is reasonably practicable, all information as to the names and addresses of the holders of Securities contained in the most recent list furnished to

 

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it as provided in Section 5.01 and as to the names and addresses of holders of Securities received by the Trustee in its capacity as Security Registrar (if acting in such capacity) and shall otherwise comply with Section 312(a) of the Trust Indenture Act.

 

(b)                                 The Trustee may destroy any list furnished to it as provided in Section 5.01 upon receipt of a new list so furnished.

 

(c)                                  Securityholders may communicate as provided in Section 312(b) of the Trust Indenture Act with other Securityholders with respect to their rights under this Indenture or under the Securities.

 

SECTION 5.03              Reports by the Company.

 

(a)                                 The Company covenants and agrees to file with the Trustee, within 15 days after the Company is required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) that the Company may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the Company is not required to file information, documents or reports pursuant to either of such sections, then to file with the Trustee and the Commission, in accordance with the rules and regulations prescribed from time to time by the Commission, such of the supplementary and periodic information, documents and reports that may be required pursuant to Section 13 of the Exchange Act, in respect of a security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations; provided, however, the Company shall not be required to deliver to the Trustee any materials for which the Company has sought and received confidential treatment by the Commission.  The Company also shall comply with the other provisions of Section 314(a) of the Trust Indenture Act.

 

(b)                                 The Company covenants and agrees to file with the Trustee and the Commission, in accordance with the rules and regulations prescribed from to time by the Commission, such additional information, documents and reports with respect to compliance by the Company with the conditions and covenants provided for in this Indenture as may be required from time to time by such rules and regulations.

 

(c)                                  The Company covenants and agrees to transmit by mail, first class postage prepaid, or reputable over-night delivery service that provides for evidence of receipt, to the Securityholders, as their names and addresses appear upon the Security Register, within 30 days after the filing thereof with the Trustee, such summaries of any information, documents and reports required to be filed by the Company pursuant to subsections (a) and (b) of this Section as may be required by rules and regulations prescribed from time to time by the Commission.

 

SECTION 5.04              Reports by the Trustee.

 

(a)                                 The Trustee shall transmit to holders as provided in Section 313 of the Trust Indenture Act such reports concerning the Trustee and its actions under this Indenture as may be required by Section 313 of the Trust Indenture Act at the times and in the manner provided by the Trust Indenture Act.

 

(b)                                 A copy of each such report shall, at the time of such transmission to Securityholders, be filed by the Trustee with the Company, with each stock exchange upon which any Securities are listed (if so listed) and, if required by Section 313 of the Trust Indenture Act, also with the Commission.  The Company agrees to notify the Trustee when any Securities become listed on any stock exchange.

 

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ARTICLE VI

 

REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
 ON EVENT OF DEFAULT

 

SECTION 6.01              Events of Default.

 

(a)                                 Whenever used herein with respect to Securities of a particular series, “Event of Default” means any one or more of the following events that has occurred and is continuing:

 

(1)                                 the Company defaults in the payment of any installment of interest upon any of the Securities of that series, as and when the same shall become due and payable, and continuance of such default for a period of 90 days; provided, however, that a valid extension of an interest payment period by the Company in accordance with the terms of any indenture supplemental hereto shall not constitute a default in the payment of interest for this purpose;

 

(2)                                 the Company defaults in the payment of the principal of (or premium, if any, on) any of the Securities of that series as and when the same shall become due and payable whether at maturity, upon redemption, by declaration or otherwise, or in any payment required by any sinking or analogous fund established with respect to that series; provided, however, that a valid extension of the maturity of such Securities in accordance with the terms of any indenture supplemental hereto shall not constitute a default in the payment of principal or premium, if any;

 

(3)                                 the Company fails to observe or perform any other of its covenants or agreements with respect to that series contained in this Indenture or otherwise established with respect to that series of Securities pursuant to Section 2.01 hereof (other than a covenant or agreement that has been expressly included in this Indenture solely for the benefit of one or more series of Securities other than such series) for a period of 90 days after the date on which written notice of such failure, requiring the same to be remedied and stating that such notice is a “Notice of Default” hereunder, shall have been given to the Company by the Trustee, by registered or certified mail, or to the Company and the Trustee by the holders of not less than a majority in principal amount of the Securities of that series at the time Outstanding;

 

(4)                                 the Company pursuant to or within the meaning of any Bankruptcy Law (i) commences a voluntary case, (ii) consents to the entry of an order for relief against it in an involuntary case, (iii) consents to the appointment of a Custodian of it or for all or substantially all of its property or (iv) makes a general assignment for the benefit of its creditors; or

 

(5)                                 a court of competent jurisdiction enters an order under any Bankruptcy Law that (i) is for relief against the Company in an involuntary case, (ii) appoints a Custodian of the Company for all or substantially all of its property, or (iii) orders the liquidation of the Company, and the order or decree remains unstayed and in effect for 90 consecutive days.

 

(b)                                 In each and every such case, unless the principal of all the Securities of that series shall have already become due and payable, either the Trustee or the holders of not less than a majority in aggregate principal amount of the Securities of that series then Outstanding hereunder, by notice in writing to the Company (and to the Trustee if given by such Securityholders), may declare the principal (or, if any Securities of that series are discount securities, that portion of the principal amount as may be specified in the terms of that series pursuant to Section 2.01(a)(16)) of (and premium, if any, on) and accrued and unpaid interest, if any, on all the Securities of that series to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable.

 

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(c)                                  At any time after the principal of the Securities of that series shall have been so declared due and payable, and before a judgment or decree for the payment of the moneys due shall have been obtained or entered as hereinafter provided, the holders of a majority in aggregate principal amount of the Securities of that series then Outstanding hereunder (or, by action at a meeting of holders of the Securities of such series in accordance with Section 8.09, the holders of a majority in aggregate principal amount of the Securities of such series then Outstanding represented at such meeting), by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if:  (i) the Company has paid or deposited with the Trustee a sum sufficient to pay all matured installments of interest upon all the Securities of that series and the principal of (and premium, if any, on) any and all Securities of that series that shall have become due otherwise than by acceleration and (ii) any and all Events of Default under this Indenture with respect to such series, other than the nonpayment of principal of (and premium, if any, on) and accrued and unpaid interest, if any, on Securities of that series that shall have become due solely because of such acceleration, shall have been remedied, cured or waived as provided in Section 6.06.  No such rescission and annulment shall extend to or shall affect any subsequent default or impair any right consequent thereon.

 

(d)                                 In case the Trustee shall have proceeded to enforce any right with respect to Securities of that series under this Indenture and such proceedings shall have been discontinued or abandoned because of such rescission or annulment or for any other reason or shall have been determined adversely to the Trustee, then and in every such case, subject to any determination in such proceedings, the Company, and the Trustee shall be restored respectively to their former positions and rights hereunder, and all rights, remedies and powers of the Company and the Trustee shall continue as though no such proceedings had been taken.

 

SECTION 6.02              Collection of Indebtedness and Suits for Enforcement by Trustee.

 

(a)                                 The Company covenants that (1) in case it shall default in the payment of any installment of interest on any of the Securities of a series, or any payment required by any sinking or analogous fund established with respect to that series as and when the same shall have become due and payable, and such default shall have continued for a period of 90 Business Days, or (2) in case it shall default in the payment of the principal of (or premium, if any, on) any of the Securities of a series when the same shall have become due and payable, whether upon maturity of the Securities of a series or upon redemption or upon declaration or otherwise, then, upon demand of the Trustee, the Company will pay to the Trustee, for the benefit of the holders of the Securities of that series, the whole amount that then shall have been become due and payable on all such Securities for principal (and premium, if any) or interest, or both, as the case may be, with interest upon the overdue principal (and premium, if any) and (to the extent that payment of such interest is enforceable under applicable law) upon overdue installments of interest at the rate per annum expressed in the Securities of that series; and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, and the amount payable to the Trustee under Section 7.06.

 

(b)                                 If the Company shall fail to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any action or proceedings at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceeding to judgment or final decree, and may enforce any such judgment or final decree against the Company or other obligor upon the Securities of that series and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or other obligor upon the Securities of that series, wherever situated.

 

(c)                                  In case of any receivership, insolvency, liquidation, bankruptcy, reorganization, readjustment, arrangement, composition or judicial proceedings affected the Company, or its creditors or property, the Trustee shall have power to intervene in such proceedings and take any action therein that may be permitted by the court and shall (except as may be otherwise provided by law) be entitled to file such proofs of claim and other papers and documents as may be necessary or

 

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advisable in order to have the claims of the Trustee and of the holders of Securities of such series allowed for the entire amount due and payable by the Company under this Indenture at the date of institution of such proceedings and for any additional amount that may become due and payable by the Company after such date, and to collect and receive any moneys or other property payable or deliverable on any such claim, and to distribute the same after the deduction of the amount payable to the Trustee under Section 7.06; and any receiver, assignee or trustee in bankruptcy or reorganization is hereby authorized by each of the holders of Securities of such series to make such payments to the Trustee, and, in the event that the Trustee shall consent to the making of such payments directly to such Securityholders, to pay to the Trustee any amount due it under Section 7.06.

 

(d)                                 All rights of action and of asserting claims under this Indenture, or under any of the terms established with respect to Securities of that series, may be enforced by the Trustee without the possession of any of such Securities, or the production thereof at any trial or other proceeding relative thereto, and any such suit or proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for payment to the Trustee of any amounts due under Section 7.06, be for the ratable benefit of the holders of the Securities of such series.

 

In case of an Event of Default hereunder, the Trustee may in its discretion proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any of such rights, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture, or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law.

 

Nothing contained herein shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Securityholder any plan of reorganization, arrangement, adjustment or composition affecting the Securities of that series or the rights of any holder thereof or to authorize the Trustee to vote in respect of the claim of any Securityholder in any such proceeding.

 

SECTION 6.03              Application of Moneys Collected.

 

Any moneys collected by the Trustee pursuant to this Article with respect to a particular series of Securities shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such moneys on account of principal (or premium, if any) or interest, upon presentation of the Securities of that series, and notation thereon the payment, if only partially paid, and upon surrender thereof if fully paid:

 

FIRST:  To the payment of costs and expenses of collection and of all amounts payable to the Trustee under Section 7.06; and

 

SECOND:  To the payment of the amounts then due and unpaid upon Securities of such series for principal (and premium, if any) and interest, in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal (and premium, if any) and interest, respectively.

 

SECTION 6.04              Limitation on Suits.

 

No holder of any Security of any series shall have any right by virtue or by availing of any provision of this Indenture to institute any suit, action or proceeding in equity or at law upon or under or with respect to this Indenture or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless (i) such holder previously shall have given to the Trustee written notice of an Event of Default and of the continuance thereof with respect to the Securities of such series specifying such Event of Default, as hereinbefore provided; (ii) the holders of not less than a majority in aggregate principal amount of the Securities of such series then Outstanding shall have made written request upon the Trustee to institute such action, suit or proceeding in its own name as trustee

 

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hereunder; (iii) such holder or holders shall have offered to the Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby; and (iv) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity, shall have failed to institute any such action, suit or proceeding and (v) during such 60 day period, the holders of a majority in principal amount of the Securities of that series (or such amount as shall have acted at a meeting of the holders of Securities of such series pursuant to the provisions of this Indenture) do not give the Trustee a direction inconsistent with the request; provided, however, that no one or more of such holders may use this Indenture to prejudice the rights of another holder or to obtain preference or priority over another holder.

 

Notwithstanding anything contained herein to the contrary, any other provisions of this Indenture, the right of any holder of any Security to receive payment of the principal of (and premium, if any) and interest on such Security, as therein provided, on or after the respective due dates expressed in such Security (or in the case of redemption, on the redemption date), or to institute suit for the enforcement of any such payment on or after such respective dates or redemption date, shall not be impaired or affected without the consent of such holder and by accepting a Security hereunder it is expressly understood, intended and covenanted by the taker and holder of every Security of such series with every other such taker and holder and the Trustee, that no one or more holders of Securities of such series shall have any right in any manner whatsoever by virtue or by availing of any provision of this Indenture to affect, disturb or prejudice the rights of the holders of any other of such Securities, or to obtain or seek to obtain priority over or preference to any other such holder, or to enforce any right under this Indenture, except in the manner herein provided and for the equal, ratable and common benefit of all holders of Securities of such series.  For the protection and enforcement of the provisions of this Section, each and every Securityholder and the Trustee shall be entitled to such relief as can be given either at law or in equity.

 

SECTION 6.05              Rights and Remedies Cumulative; Delay or Omission Not Waiver.

 

(a)                                 Except as otherwise provided in Section 2.07, all powers and remedies given by this Article to the Trustee or to the Securityholders shall, to the extent permitted by law, be deemed cumulative and not exclusive of any other powers and remedies available to the Trustee or the holders of the Securities, by judicial proceedings or otherwise, to enforce the performance or observance of the covenants and agreements contained in this Indenture or otherwise established with respect to such Securities.

 

(b)                                 No delay or omission of the Trustee or of any holder of any of the Securities to exercise any right or power accruing upon any Event of Default occurring and continuing as aforesaid shall impair any such right or power, or shall be construed to be a waiver of any such default or on acquiescence therein; and, subject to the provisions of Section 6.04, every power and remedy given by this Article or by law to the Trustee or the Securityholders may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or by the Securityholders.

 

SECTION 6.06              Control by Securityholders.

 

The holders of a majority in aggregate principal amount of the Securities of any series at the time Outstanding, determined in accordance with Section 8.01, shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee with respect to such series; provided, however, that such direction shall not be in conflict with any rule of law or with this Indenture or be unduly prejudicial to the rights of holders of Securities of any other series at the time Outstanding determined in accordance with Section 8.01.  Subject to the provisions of Section 7.01, the Trustee shall have the right to decline to follow any such direction if the Trustee in good faith shall, by a Responsible Officer or Officers of the Trustee, determine that the proceeding so directed would involve the Trustee in personal liability.  The holders either (a) through the written consent of not less than a majority in aggregate principal amount of the Securities of any series at the time Outstanding or (b) by action at a meeting of holders of the Securities of such series in accordance with Section 8.09, by the holders of a majority in aggregate principal amount of the Securities of such series then Outstanding represented at such meeting, may on behalf of the holders of all of the Securities of such series waive any past default in the performance of any of the covenants contained herein or established pursuant to Section 2.01 with respect to such series and its consequences, except a default in the payment of the principal of, or premium, if any, or interest on, any of the Securities of that series as and when the same shall

 

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become due by the terms of such Securities otherwise than by acceleration (unless such default has been cured and a sum sufficient to pay all matured installments of interest and principal and any premium has been deposited with the Trustee (in accordance with Section 6.01(c)) and except in respect a provision hereof which, under Section 9.02, cannot be modified or amended without the consent of the holders of each Outstanding Security affected; provided however that this Section shall not limit the right of holders of Securities of a series to rescind and annul any acceleration as set forth in Section 6.01.  Upon any such waiver, the default covered thereby shall be deemed to be cured for all purposes of this Indenture and the Company, the Trustee and the holders of the Securities of such series shall be restored to their former positions and rights hereunder, respectively; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.  The provisions which otherwise would be automatically deemed to be contained in this Indenture pursuant to Section (316)(a)(1) of the Trust Indenture Act are hereby expressly excluded from this Indenture, except to the extent such provisions are expressly included herein.

 

SECTION 6.07              Undertaking to Pay Costs.

 

All parties to this Indenture agree, and each holder of any Securities by such holder’s acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any suit instituted by any Securityholder, or group of Securityholders, holding more than 10% in aggregate principal amount of the Outstanding Securities of any series, or to any suit instituted by any Securityholder for the enforcement of the payment of the principal of (or premium, if any) or interest on any Security of such series, on or after the respective due dates expressed in such Security or established pursuant to this Indenture.

 

ARTICLE VII

 

CONCERNING THE TRUSTEE

 

SECTION 7.01              Certain Duties and Responsibilities of Trustee.

 

(a)                                 The Trustee, prior to the occurrence of an Event of Default with respect to the Securities of a series and after the curing of all Events of Default with respect to the Securities of that series that may have occurred, shall undertake to perform with respect to the Securities of such series such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants shall be read into this Indenture against the Trustee.  In case an Event of Default with respect to the Securities of a series has occurred (that has not been cured or waived), the Trustee shall exercise with respect to Securities of that series such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs.

 

(b)                                 No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:

 

(1)                                 prior to the occurrence of an Event of Default with respect to the Securities of a series and after the curing or waiving of all such Events of Default with respect to that series that may have occurred:

 

(i)                                     the duties and obligations of the Trustee shall with respect to the Securities of such series be determined solely by the express provisions of this Indenture, and the Trustee shall not be liable with respect to the Securities of such series except for the performance of such duties and obligations as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

 

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(ii)                                  in the absence of bad faith on the part of the Trustee, the Trustee may with respect to the Securities of such series conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirement of this Indenture;

 

(2)                                 the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer or Responsible Officers of the Trustee, unless it shall be proved that the Trustee, was negligent in ascertaining the pertinent facts;

 

(3)                                 the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the holders of not less than a majority in principal amount of the Securities of any series at the time Outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Indenture with respect to the Securities of that series; and

 

(4)                                 None of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if there is reasonable ground for believing that the repayment of such funds or liability is not reasonably assured to it under the terms of this Indenture or adequate indemnity against such risk is not reasonably assured to it.

 

SECTION 7.02              Certain Rights of Trustee.

 

Except as otherwise provided in Section 7.01:

 

(a)                                 The Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond, security or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;

 

(b)                                 Any request, direction, order or demand of the Company mentioned herein shall be sufficiently evidenced by a Board Resolution or an instrument signed in the name of the Company, by the President or any Vice President and by the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer thereof (unless other evidence in respect thereof is specifically prescribed herein);

 

(c)                                  The Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken or suffered or omitted hereunder in good faith and in reliance thereon;

 

(d)                                 The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Securityholders, pursuant to the provisions of this Indenture, unless such Securityholders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that may be incurred therein or thereby; nothing contained herein shall, however, relieve the Trustee of the obligation, upon the occurrence of an Event of Default with respect to a series of the Securities (that has not been cured or waived) to exercise with respect to Securities of that series such of the rights and powers vested in it by this Indenture, and to use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs;

 

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(e)                                  The Trustee shall not be liable for any action taken or omitted to be taken by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture;

 

(f)                                   The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond, security, or other papers or documents, unless requested in writing so to do by the holders of not less than a majority in principal amount of the Outstanding Securities of the particular series affected thereby (determined as provided in Section 8.04); provided, however, that if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Trustee, not reasonably assured to the Trustee by the security afforded to it by the terms of this Indenture, the Trustee may require reasonable indemnity against such costs, expenses or liabilities as a condition to so proceeding.  The reasonable expense of every such examination shall be paid by the Company or, if paid by the Trustee, shall be repaid by the Company upon demand; and

 

(g)                                  The Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder.

 

SECTION 7.03              Trustee Not Responsible for Recitals or Issuance of Securities.

 

(a)                                 The recitals contained herein and in the Securities shall be taken as the statements of the Company, and the Trustee assumes no responsibility for the correctness of the same.

 

(b)                                 The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities.

 

(c)                                  The Trustee shall not be accountable for the use or application by the Company of any of the Securities or of the proceeds of such Securities, or for the use or application of any moneys paid over by the Trustee in accordance with any provision of this Indenture or established pursuant to Section 2.01, or for the use or application of any moneys received by any paying agent other than the Trustee.

 

SECTION 7.04              May Hold Securities.

 

The Trustee or any paying agent or Security Registrar, in its individual or any other capacity, may become the owner or pledgee of Securities with the same rights it would have if it were not Trustee, paying agent or Security Registrar.

 

SECTION 7.05              Moneys Held in Trust.

 

Subject to the provisions of Section 11.05, all moneys received by the Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated from other funds except to the extent required by law.  The Trustee shall be under no liability for interest on any moneys received by it hereunder except such as it may agree with the Company to pay thereon.

 

SECTION 7.06              Compensation and Reimbursement.

 

(a)                                 The Company covenants and agrees to pay to the Trustee, and the Trustee shall be entitled to, such reasonable compensation (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust), as the Company, and the Trustee may from time to time agree in writing, for all services rendered by it in the execution of the trusts hereby created and in the exercise and performance of any of the powers and duties hereunder of the Trustee, and, except as otherwise expressly provided herein, the Company will pay or reimburse the Trustee

 

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upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any of the provisions of this Indenture (including the reasonable compensation and the expenses and disbursements of its counsel and of all Persons not regularly in its employ) except any such expense, disbursement or advance as may arise from its negligence or bad faith.  The Company also covenants to indemnify the Trustee (and its officers, agents, directors and employees) for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on the part of the Trustee and arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claim of liability in the premises.

 

(b)                                 The obligations of the Company under this Section to compensate and indemnify the Trustee and to pay or reimburse the Trustee for expenses, disbursements and advances shall constitute additional indebtedness hereunder.  Such additional indebtedness shall be secured by a lien prior to that of the Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of the holders of particular Securities.

 

SECTION 7.07              Reliance on Officers’ Certificate.

 

Except as otherwise provided in Section 7.01, whenever in the administration of the provisions of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering or omitting to take any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of negligence or bad faith on the part of the Trustee, be deemed to be conclusively proved and established by an Officers’ Certificate delivered to the Trustee and such certificate, in the absence of negligence or bad faith on the part of the Trustee, shall be full warrant to the Trustee for any action taken, suffered or omitted to be taken by it under the provisions of this Indenture upon the faith thereof.

 

SECTION 7.08              Disqualification; Conflicting Interests.

 

If the Trustee has or shall acquire any “conflicting interest” within the meaning of Section 310(b) of the Trust Indenture Act, the Trustee and the Company shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture Act.

 

SECTION 7.09              Corporate Trustee Required; Eligibility.

 

There shall at all times be a Trustee with respect to the Securities issued hereunder which shall at all times be a corporation organized and doing business under the laws of the United States of America or any State or Territory thereof or of the District of Columbia, or a corporation or other Person permitted to act as trustee by the Commission, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least 50 million U.S. dollars ($50,000,000), and subject to supervision or examination by Federal, State, Territorial, or District of Columbia authority.  If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.  The Company may not, nor may any Person directly or indirectly controlling, controlled by, or under common control with the Company, serve as Trustee.  In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, the Trustee shall resign immediately in the manner and with the effect specified in Section 7.10.

 

SECTION 7.10              Resignation and Removal; Appointment of Successor.

 

(a)                                 The Trustee or any successor hereafter appointed, may at any time resign with respect to the Securities of one or more series by giving written notice thereof to the Company and by transmitting notice of resignation by mail, first class postage prepaid, to the Securityholders of such series, as their names and addresses appear upon the Security Register.  Upon receiving such notice of resignation, the Company shall promptly appoint a successor trustee with respect to Securities of such series by written instrument, in duplicate, executed by order of the Board of

 

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Directors, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor trustee.  If no successor trustee shall have been so appointed and have accepted appointment within 30 days after the mailing of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor trustee with respect to Securities of such series, or any Securityholder of that series who has been a bona fide holder of a Security or Securities for at least six months may on behalf of himself and all others similarly situated, petition any such court for the appointment of a successor trustee.  Such court may thereupon after such notice, if any, as it may deem proper and prescribe, appoint a successor trustee.

 

(b)                                 In case at any time any one of the following shall occur:

 

(1)                                 the Trustee shall fail to comply with the provisions of Section 7.08 after written request therefor by the Company or by any Securityholder who has been a bona fide holder of a Security or Securities for at least six months; or

 

(2)                                 the Trustee shall cease to be eligible in accordance with the provisions of Section 7.09 and shall fail to resign after written request therefor by the Company or by any such Securityholder; or

 

(3)                                 the Trustee shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or commence a voluntary bankruptcy proceeding, or a receiver of the Trustee or of its property shall be appointed or consented to, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, the Company may remove the Trustee with respect to all Securities and appoint a successor trustee by written instrument, in duplicate, executed by order of the Board of Directors, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor trustee, or, unless the Trustee’s duty to resign is stayed as provided herein, any Securityholder who has been a bona fide holder of a Security or Securities for at least six months may, on behalf of that holder and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee.  Such court may thereupon after such notice, if any, as it may deem proper and prescribe, remove the Trustee and appoint a successor trustee.

 

(c)                                  The holders of a majority in aggregate principal amount of the Securities of any series at the time Outstanding may at any time remove the Trustee with respect to such series by so notifying the Trustee and the Company and may appoint a successor Trustee for such series with the consent of the Company.

 

(d)                                 Any resignation or removal of the Trustee and appointment of a successor trustee with respect to the Securities of a series pursuant to any of the provisions of this Section shall become effective upon acceptance of appointment by the successor trustee as provided in Section 7.11.

 

(e)                                  Any successor trustee appointed pursuant to this Section may be appointed with respect to the Securities of one or more series or all of such series, and at any time there shall be only one Trustee with respect to the Securities of any particular series.

 

SECTION 7.11              Acceptance of Appointment By Successor.

 

(a)                                 In case of the appointment hereunder of a successor trustee with respect to all Securities, every such successor trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties

 

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of the retiring Trustee; but, on the request of the Company or the successor trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor trustee all the rights, powers, and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor trustee all property and money held by such retiring Trustee hereunder.

 

(b)                                 In case of the appointment hereunder of a successor trustee with respect to the Securities of one or more (but not all) series, the Company, the retiring Trustee and each successor trustee with respect to the Securities of one or more series shall execute and deliver an indenture supplemental hereto wherein each successor trustee shall accept such appointment and which (1) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor trustee relates, (2) shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and (3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust, that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee and that no Trustee shall be responsible for any act or failure to act on the part of any other Trustee hereunder; and upon the execution and delivery of such supplemental indenture the resignation or removal of the retiring Trustee shall become effective to the extent provided therein, such retiring Trustee shall with respect to the Securities of that or those series to which the appointment of such successor trustee relates have no further responsibility for the exercise of rights and powers or for the performance of the duties and obligations vested in the Trustee under this Indenture, and each such successor trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor trustee relates; but, on request of the Company or any successor trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor trustee, to the extent contemplated by such supplemental indenture, the property and money held by such retiring Trustee hereunder with respect to the Securities of that or those series to which the appointment of such successor trustee relates.

 

(c)                                  Upon request of any such successor trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor trustee all such rights, powers and trusts referred to in paragraph (a) or (b) of this Section, as the case may be.

 

(d)                                 No successor trustee shall accept its appointment unless at the time of such acceptance such successor trustee shall be qualified and eligible under this Article.

 

(e)                                  Upon acceptance of appointment by a successor trustee as provided in this Section, the Company shall transmit notice of the succession of such trustee hereunder by mail, first class postage prepaid, to the Securityholders, as their names and addresses appear upon the Security Register.  If the Company fails to transmit such notice within ten days after acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be transmitted at the expense of the Company.

 

SECTION 7.12              Merger, Conversion, Consolidation or Succession to Business.

 

Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided that such corporation shall be qualified under the provisions of Section 7.08 and eligible under the provisions of Section 7.09, without the execution or filing of any paper or any further act on the part of any of the

 

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parties hereto, anything herein to the contrary notwithstanding.  In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities.

 

SECTION 7.13              Preferential Collection of Claims Against the Company.

 

The Trustee shall comply with Section 311(a) of the Trust Indenture Act, excluding any creditor relationship described in Section 311(b) of the Trust Indenture Act.  A Trustee who has resigned or been removed shall be subject to Section 311(a) of the Trust Indenture Act to the extent included therein.

 

ARTICLE VIII

 

CONCERNING THE SECURITYHOLDERS

 

SECTION 8.01              Evidence of Action by Securityholders.

 

Whenever in this Indenture it is provided that the holders of a majority or specified percentage in aggregate principal amount of the Securities of a particular series may take any action (including the making of any demand or request, the giving of any notice, consent or waiver or the taking of any other action), the fact that at the time of taking any such action the holders of such majority or specified percentage of that series have joined therein may be evidenced by any instrument or any number of instruments of similar tenor executed by such holders of Securities of that series in Person or by agent or proxy appointed in writing.

 

If the Company shall solicit from the Securityholders of any series any request, demand, authorization, direction, notice, consent, waiver or other action, the Company may, at its option, as evidenced by an Officers’ Certificate, fix in advance a record date for such series for the determination of Securityholders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other action, but the Company shall have no obligation to do so.  If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other action may be given before or after the record date, but only the Securityholders of record at the close of business on the record date shall be deemed to be Securityholders for the purposes of determining whether Securityholders of the requisite proportion of Outstanding Securities of that series have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other action, and for that purpose the Outstanding Securities of that series shall be computed as of the record date; provided, however, that no such authorization, agreement or consent by such Securityholders on the record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Indenture not later than six months after the record date.

 

SECTION 8.02              Proof of Execution by Securityholders.

 

Subject to the provisions of Section 7.01, proof of the execution of any instrument by a Securityholder (such proof will not require notarization) or his agent or proxy and proof of the holding by any Person of any of the Securities shall be sufficient if made in the following manner:

 

(a)                                 The fact and date of the execution by any such Person of any instrument may be proved in any reasonable manner acceptable to the Trustee.

 

(b)                                 The ownership of Securities shall be proved by the Security Register of such Securities or by a certificate of the Security Registrar thereof.

 

(c)                                  The Trustee may require such additional proof of any matter referred to in this Section as it shall deem necessary.

 

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SECTION 8.03              Who May be Deemed Owners.

 

Prior to the due presentment for registration of transfer of any Security, the Company, the Trustee, any paying agent and any Security Registrar may deem and treat the Person in whose name such Security shall be registered upon the books of the Company as the absolute owner of such Security (whether or not such Security shall be overdue and notwithstanding any notice of ownership or writing thereon made by anyone other than the Security Registrar) for the purpose of receiving payment of or on account of the principal of, premium, if any, and (subject to Section 2.03) interest on such Security and for all other purposes; and neither the Company nor the Trustee nor any paying agent nor any Security Registrar shall be affected by any notice to the contrary.

 

SECTION 8.04              Certain Securities Owned by Company Disregarded.

 

In determining whether the holders of the requisite aggregate principal amount of Securities of a particular series have concurred in any direction, consent of waiver under this Indenture, the Securities of that series that are owned by the Company or any other obligor on the Securities of that series or by any Person directly or indirectly controlling or controlled by or under common control with the Company or any other obligor on the Securities of that series shall be disregarded and deemed not to be Outstanding for the purpose of any such determination, except that for the purpose of determining whether the Trustee shall be protected in relying on any such direction, consent or waiver, only Securities of such series that the Trustee actually knows are so owned shall be so disregarded.  The Securities so owned that have been pledged in good faith may be regarded as Outstanding for the purposes of this Section, if the pledgee shall establish to the satisfaction of the Trustee the pledgee’s right so to act with respect to such Securities and that the pledgee is not a Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any such other obligor.  In case of a dispute as to such right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee.

 

SECTION 8.05              Actions Binding on Future Securityholders.

 

At any time prior to (but not after) the evidencing to the Trustee, as provided in Section 8.01, of the taking of any action by the holders of the majority or percentage in aggregate principal amount of the Securities of a particular series specified in this Indenture in connection with such action, any holder of a Security of that series that is shown by the evidence to be included in the Securities the holders of which have consented to such action may, by filing written notice with the Trustee, and upon proof of holding as provided in Section 8.02, revoke such action so far as concerns such Security.  Except as aforesaid any such action taken by the holder of any Security shall be conclusive and binding upon such holder and upon all future holders and owners of such Security, and of any Security issued in exchange therefor, on registration of transfer thereof or in place thereof, irrespective of whether or not any notation in regard thereto is made upon such Security.  Any action taken by the holders of the majority or percentage in aggregate principal amount of the Securities of a particular series specified in this Indenture in connection with such action shall be conclusively binding upon the Company, the Trustee and the holders of all the Securities of that series.

 

SECTION 8.06              Purposes for Which Meetings May Be Called.

 

A meeting of holders of any series of Securities may be called at any time and from time to time pursuant to this Article to make, give or take any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be made, given or taken by holders of such series of Securities.

 

Notwithstanding anything contained in this Article VIII, the Trustee may, during the pendency of a Default or an Event of Default, call a meeting of holders of any series of Securities in accordance with its standard practices.

 

SECTION 8.07              Call Notice and Place of Meetings.

 

(a)                                 The Trustee may at any time call a meeting of holders of any series of Securities for any purpose specified in Section 8.06 hereof, to be held at such time and at such place in The City of New York or Boston, Massachusetts.  Notice of every meeting of holders of any series of Securities, setting forth the time and the place of such meeting, in general terms the action proposed to be

 

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taken at such meeting and the percentage of the principal amount of the Outstanding Securities of such series which shall constitute a quorum at such meeting, shall be given, in the manner provided in Section 13.04 hereof, not less than 21 nor more than 180 days prior to the date fixed for the meeting to holders of Outstanding Securities of such series.

 

(b)                                 In case at any time the Company, pursuant to a Board Resolution, or the holders of at least 10% in principal amount of the Outstanding Securities of any series shall have requested the Trustee to call a meeting of the holders of Securities of such series for any purpose specified in Section 8.06 hereof, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have made the first publication of the notice of such meeting within 21 days after receipt of such request or shall not thereafter proceed to cause the meeting to be held as provided herein, then the Company or the holders of Securities of such series in the amount specified, as the case may be, may determine the time and the place in The City of New York or Boston, Massachusetts for such meeting and may call such meeting for such purposes by giving notice thereof as provided in paragraph (a) of this Section.

 

SECTION 8.08              Persons Entitled To Vote at Meetings.

 

To be entitled to vote at any meeting of holders of Securities of a given series, a Person shall be (a) a holder of one or more Outstanding Securities of such series or (b) a Person appointed by an instrument in writing as proxy for a holder or holders of one or more Outstanding Securities of such series by such holder or holders.  The only Persons who shall be entitled to be present or to speak at any meeting of holders shall be the Persons entitled to vote at such meeting and their counsel, any representatives of the Trustee and its counsel and any representatives of the Company and its counsel.

 

SECTION 8.09              Quorum; Action.

 

The Persons entitled to vote a majority in aggregate principal amount of the Outstanding Securities of a given series shall constitute a quorum with respect to a meeting of holders of Outstanding Securities of such series.  In the absence of a quorum within 30 minutes of the time appointed for any such meeting, the meeting shall, if convened at the request of holders of Securities of such series, be dissolved.  In any other case, the meeting may be adjourned for a period of not less than 10 days as determined by the chairman of the meeting prior to the adjournment of such meeting.  In the absence of a quorum at any such adjourned meeting, such adjourned meeting may be further adjourned for a period of not less than 10 days as determined by the chairman of the meeting prior to the adjournment of such adjourned meeting.  Notice of the reconvening of any adjourned meeting shall be given as provided in Section 8.07(a) hereof, except that such notice need be given only once and not less than five days prior to the date on which the meeting is scheduled to be reconvened.

 

At a meeting or an adjourned meeting duly reconvened and at which a quorum is present as aforesaid, any resolution and all matters (except as limited by the proviso to the first paragraph of Section 9.02 hereof) shall be effectively passed and decided if passed or decided by the Persons entitled to vote not less than a majority in aggregate principal amount of Outstanding Securities of a series represented and voting at such meeting with respect to a meeting of holders of Outstanding Securities of such series.

 

Any resolution passed or decisions taken at any meeting of holders of Securities duly held in accordance with this Section shall be binding on all the holders of Securities of such series, whether or not present or represented at the meeting.

 

SECTION 8.10              Determination of Voting Rights; Conduct and Adjournment of Meetings.

 

(a)                                 Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of holders of Securities in regard to proof of the holding of Securities and of the appointment of proxies and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other

 

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evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall deem appropriate.

 

(b)                                 The Trustee shall, by an instrument in writing, appoint a temporary chairman (which may be the Trustee) of the meeting, unless the meeting shall have been called by the Company or by holders of Securities of a given series as provided in Section 8.07(b) hereof, in which case the Company or the holders of Securities of such series calling the meeting, as the case may be, shall in like manner appoint a temporary chairman.  A permanent chairman and a permanent secretary of the meeting shall be elected by vote of the Persons entitled to vote a majority in principal amount of the Outstanding Securities of such series represented at the meeting.

 

(c)                                  At any meeting, each holder of a Security of the series in respect of which such meeting is being held or proxy shall be entitled to one vote for each $1,000 principal amount of Securities of such series held or represented by him; provided, however, that no vote shall be cast or counted at any meeting in respect of any Security of such series challenged as not Outstanding and ruled by the chairman of the meeting to be not Outstanding.  The chairman of the meeting shall have no right to vote, except as a holder of a Security of such series or proxy.

 

(d)                                 Any meeting of holders of Securities duly called pursuant to Section 8.07 hereof at which a quorum is present may be adjourned from time to time by Persons entitled to vote a majority in principal amount of the Outstanding Securities of the series in respect of which such meeting is being held represented at the meeting, and the meeting may be held as so adjourned without further notice.

 

SECTION 8.11              Counting Votes and Recording Action of Meetings.

 

The vote upon any resolution submitted to any meeting of holders of Securities of a given series shall be by written ballots on which shall be subscribed the signatures of the holders of Securities of such series or of their representatives by proxy and the principal amounts and serial numbers of the Outstanding Securities of such series held or represented by them.  The permanent chairman of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in duplicate of all votes cast at the meeting.  A record, at least in duplicate, of the proceedings of each meeting of holders of Securities of such series shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more Persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that said notice was given as provided in Section 8.07 hereof and, if applicable, Section 8.09 hereof. Each copy shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and one such copy shall be delivered to the Company and another to the Trustee to be preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting.  Any record so signed and verified shall be conclusive evidence of the matters therein stated.

 

ARTICLE IX

 

SUPPLEMENTAL INDENTURES

 

SECTION 9.01              Supplemental Indentures Without the Consent of Securityholders.

 

In addition to any supplemental indenture otherwise authorized by this Indenture, the Company and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act as then in effect), without the consent of the Securityholders, for one or more of the following purposes:

 

(a)                                 cure any ambiguity, correct or supplement any provision herein which may be inconsistent with any other provision herein or which is otherwise defective, or make any other provisions with respect to matters or questions arising under this Indenture which the Company and the Trustee

 

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may deem necessary or desirable and which shall not be inconsistent with the provisions of this Indenture;

 

(b)                                 to comply with Article X;

 

(c)                                  to provide for uncertificated Securities in addition to or in place of certificated Securities;

 

(d)                                 to add to the covenants of the Company for the benefit of the holders of all or any Series of Securities (and if such covenants are to be for the benefit of less than all series of Securities, stating that such covenants are expressly being included solely for the benefit of such series) or to surrender any right or power herein conferred upon the Company;

 

(e)                                  to add to, delete from, or revise the conditions, limitations, and restrictions on the authorized amount, terms, or purposes of issue, authentication, and delivery of Securities, as herein set forth;

 

(f)                                   to make any change that does not adversely affect the rights of any Securityholder in any material respect;

 

(g)                                  to provide for the issuance of and establish the form and terms and conditions of the Securities of any series as provided in Section 2.01, to establish the form of any certifications required to be furnished pursuant to the terms of this Indenture or any series of Securities, or to add to the rights of the holders of any series of Securities; or

 

(h)                                 comply with the requirements of the Commission in order to effect or maintain the qualification of this Indenture under the Trust Indenture Act.

 

The Trustee is hereby authorized to join with the Company in the execution of any such supplemental indenture, and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall not be obligated to enter into any such supplemental indenture that affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise.

 

Any supplemental indenture authorized by the provisions of this Section may be executed by the Company and the Trustee without the consent of the holders of any of the Securities at the time Outstanding, notwithstanding any of the provisions of Section 9.02.

 

SECTION 9.02              Supplemental Indentures With Consent of Securityholders.

 

With the written consent of the holders of at least a majority in aggregate principal amount of the Outstanding Securities of any series or by action at a meeting of holders of the Securities of such series in accordance with Section 8.09, by the holders of a majority in aggregate principal amount of the Securities of such series then Outstanding represented at such meeting, the Company, when authorized by Board Resolutions, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act as then in effect) for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying in any manner not covered by Section 9.01 the rights of the holders of the Securities of such series under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the holders of each Security then Outstanding and affected thereby, (i) extend the fixed maturity of any Securities of any series, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, or reduce any premium payable upon the redemption thereof, (ii) reduce the aforesaid percentage of Securities, the holders of which are required to consent to any such supplemental indenture, or any consent or waiver, (iii) reduce the principal amount of discount securities payable upon acceleration of the maturity of any Securities of any series or (iv) make the principal of or premium or interest on any Security of a series payable in currency or currency units other than that stated in the Securities of such series.

 

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It shall not be necessary for the consent of the Securityholders of any series affected thereby under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof.

 

SECTION 9.03              Effect of Supplemental Indentures.

 

Upon the execution of any supplemental indenture pursuant to the provisions of this Article or of Section 10.01, this Indenture shall, with respect to such series, be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Trustee, the Company and the holders of Securities of the series affected thereby shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes.

 

SECTION 9.04              Securities Affected by Supplemental Indentures.

 

Securities of any series affected by a supplemental indenture, authenticated and delivered after the execution of such supplemental indenture pursuant to the provisions of this Article or of Section 10.01, may bear a notation in form approved by the Company, provided such form meets the requirements of any exchange upon which such series may be listed, as to any matter provided for in such supplemental indenture.  If the Company shall so determine, new Securities of that series so modified as to conform, in the opinion of the Board of Directors of the Company, to any modification of this Indenture contained in any such supplemental indenture may be prepared by the Company, authenticated by the Trustee and delivered in exchange for the Securities of that series then Outstanding.

 

SECTION 9.05              Execution of Supplemental Indentures.

 

Upon the request of the Company, accompanied by its Board Resolutions authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of Securityholders required to consent thereto as aforesaid, the Trustee shall join with the Company in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion but shall not be obligated to enter into such supplemental indenture.  The Trustee, subject to the provisions of Section 7.01, may receive an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant to this Article is authorized or permitted by, and conforms to, the terms of this Article and that it is proper for the Trustee under the provisions of this Article to join in the execution thereof; provided, however, that such Opinion of Counsel need not be provided in connection with the execution of a supplemental indenture that establishes the terms of a series of Securities pursuant to Section 2.01 hereof.

 

Promptly after the execution by the Company and the Trustee of any supplemental indenture pursuant to the provisions of this Section, the Trustee shall transmit by mail, first class postage prepaid, a notice, setting forth in general terms the substance of such supplemental indenture, to the Securityholders of all series affected thereby as their names and addresses appear upon the Security Register.  Any failure of the Trustee to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture.

 

ARTICLE X

 

SUCCESSOR ENTITY

 

SECTION 10.01       Company May Consolidate, Etc.

 

Nothing contained in this Indenture or in any of the Securities shall prevent any consolidation or merger of the Company with or into any other Person (whether or not affiliated with the Company) or successive consolidations or mergers in which the Company or its successor or successors shall be a party or parties, or shall prevent any sale, conveyance, transfer or other disposition of the property of the Company or its successor or successors as an entirety, or substantially as an entirety, to any other corporation (whether or not affiliated with the Company or its

 

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successor or successors) authorized to acquire and operate the same; provided, however, the Company hereby covenants and agrees that, upon any such consolidation or merger (in each case, if the Company is not the survivor of such transaction), sale, conveyance, transfer or other disposition, the due and punctual payment of the principal of (premium, if any) and interest on all of the Securities of all series in accordance with the terms of each series, according to their tenor and the due and punctual performance and observance of all the covenants and conditions of this Indenture with respect to each series or established with respect to such series pursuant to Section 2.01 to be kept or performed by the Company shall be expressly assumed, by supplemental indenture (which shall conform to the provisions of the Trust Indenture Act, as then in effect) satisfactory in form to the Trustee executed and delivered to the Trustee by the entity formed by such consolidation, or into which the Company shall have been merged, or by the entity which shall have acquired such property.

 

SECTION 10.02       Successor Entity Substituted.

 

(a)                                 In case of any such consolidation, merger, sale, conveyance, transfer or other disposition and upon the assumption by the successor entity by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of the due and punctual payment of the principal of, premium, if any, and interest on all of the Securities of all series Outstanding and the due and punctual performance of all of the covenants and conditions of this Indenture or established with respect to each series of the Securities pursuant to Section 2.01 to be performed by the Company with respect to each series, such successor entity shall succeed to and be substituted for the Company with the same effect as if it had been named as the Company herein, and thereupon the predecessor corporation shall be relieved of all obligations and covenants under this Indenture and the Securities.

 

(b)                                 In case of any such consolidation, merger, sale, conveyance,  transfer or other disposition such changes in phraseology and form (but not in substance) may be made in the Securities thereafter to be issued as may be appropriate.

 

(c)                                  Nothing contained in this Article shall require any action by the Company in the case of a consolidation or merger of any Person into the Company where the Company is the survivor of such transaction, or the acquisition by the Company, by purchase or otherwise, of all or any part of the property of any other Person (whether or not affiliated with the Company).

 

SECTION 10.03       Evidence of Consolidation, Etc. to Trustee.

 

The Trustee, subject to the provisions of Section 7.01, may receive an Opinion of Counsel as conclusive evidence that any such consolidation, merger, sale, conveyance, transfer or other disposition, and any such assumption, comply with the provisions of this Article.

 

ARTICLE XI

 

SATISFACTION AND DISCHARGE

 

SECTION 11.01       Satisfaction and Discharge of Indenture.

 

If at any time:  (a) the Company shall have delivered to the Trustee for cancellation all Securities of a series theretofore authenticated (other than any Securities that shall have been destroyed, lost or stolen and that shall have been replaced or paid as provided in Section 2.07) and Securities for whose payment money or Governmental Obligations have theretofore been deposited in trust or segregated and held in trust by the Company (and thereupon repaid to the Company or discharged from such trust, as provided in Section 11.05); or (b) all such Securities of a particular series not theretofore delivered to the Trustee for cancellation shall have become due and payable, or are by their terms to become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption, and the Company shall deposit or cause to be deposited with the Trustee as trust funds the entire amount in moneys or Governmental Obligations sufficient or a combination thereof, sufficient (assuming that no tax liability will be imposed on the Trustee) in the

 

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opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay at maturity or upon redemption all Securities of that series not theretofore delivered to the Trustee for cancellation, including principal (and premium, if any) and interest due or to become due to such date of maturity or date fixed for redemption, as the case may be, and if the Company shall also pay or cause to be paid all other sums payable hereunder with respect to such series by the Company then this Indenture shall thereupon cease to be of further effect with respect to such series except for the provisions of Sections 2.03, 2.05, 2.07, 4.01, 4.02, 4.03 and 7.10, that shall survive until the date of maturity or redemption date, as the case may be, and Sections 7.06 and 11.05, that shall survive to such date and thereafter, and the Trustee, on demand of the Company and at the cost and expense of the Company shall execute proper instruments acknowledging satisfaction of and discharging this Indenture with respect to such series.

 

SECTION 11.02       Discharge of Obligations.

 

If at any time all such Securities of a particular series not heretofore delivered to the Trustee for cancellation or that have not become due and payable as described in Section 11.01 shall have been paid by the Company by depositing irrevocably with the Trustee as trust funds moneys or an amount of Governmental Obligations sufficient to pay at maturity or upon redemption all such Securities of that series not theretofore delivered to the Trustee for cancellation, including principal (and premium, if any) and interest due or to become due to such date of maturity or date fixed for redemption, as the case may be, and if the Company shall also pay or cause to be paid all other sums payable hereunder by the Company with respect to such series, then after the date such moneys or Governmental Obligations, as the case may be, are deposited with the Trustee the obligations of the Company under this Indenture with respect to such series shall cease to be of further effect except for the provisions of Sections 2.03, 2.05, 2.07, 4,01, 4.02, 4.03, 7.06, 7.10 and 11.05 hereof that shall survive until such Securities shall mature and be paid thereafter, Sections 7.06 and 11.05 shall survive.

 

SECTION 11.03       Deposited Moneys to be Held in Trust.

 

Subject to Section 11.05, all moneys or Governmental Obligations deposited with the Trustee pursuant to Sections 11.01 or 11.02 shall be held in trust and shall be available for payment as due, either directly or through any paying agent (including the Company acting as its own paying agent), to the holders of the particular series of Securities for the payment or redemption of which such moneys or Governmental Obligations have been deposited with the Trustee.

 

SECTION 11.04       Payment of Moneys Held by Paying Agents.

 

In connection with the satisfaction and discharge of this Indenture all moneys or Governmental Obligations then held by any paying agent under the provisions of this Indenture shall, upon demand of the Company, be paid to the Trustee and thereupon such paying agent shall be released from all further liability with respect to such moneys or Governmental Obligations.

 

SECTION 11.05       Repayment to Company.

 

Any moneys or Governmental Obligations deposited with any paying agent or the Trustee, or then held by the Company, in trust for payment of principal of or premium or interest on the Securities of a particular series that are not applied but remain unclaimed by the holders of such Securities for two years after the date upon which the principal of (and premium, if any) or interest on such Securities shall have respectively become due and payable, shall be repaid to the Company or (if then held by the Company) shall be discharged from such trust in each case, promptly after the end of any such two-year period or, at the request of the Company, on a later date specified by the Company; and thereupon the paying agent and the Trustee shall be released from all further liability with respect to such moneys or Governmental Obligations, and the holder of any of the Securities entitled to receive such payment shall thereafter, as an unsecured general creditor, look only to the Company for the payment thereof.

 

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ARTICLE XII

 

IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS

 

SECTION 12.01       No Recourse.

 

No recourse under or upon any obligation, covenant or agreement of this Indenture, or of any Security, or for any claim based thereon or otherwise in respect thereof, shall be had against any incorporator, stockholder, officer or director, past, present or future as such, of the Company or of any predecessor or successor corporation, either directly or through the Company or any such predecessor or successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that this Indenture and the obligations issued hereunder are solely corporate obligations, and that no such personal liability whatever shall attach to, or is or shall be incurred by, the incorporators, stockholders, officers or directors as such, of the Company or of any predecessor or successor corporation, or any of them, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any of the Securities or implied therefrom; and that any and all such personal liability of every name and nature, either at common law or in equity or by constitution or statute, of, and any and all such rights and claims against, every such incorporator, stockholder, officer or director as such, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any of the Securities or implied therefrom, are hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issuance of such Securities.

 

ARTICLE XIII

 

MISCELLANEOUS PROVISIONS

 

SECTION 13.01       Effect on Successors and Assigns.

 

All the covenants, stipulations, promises and agreements in this Indenture contained by or on behalf of the Company shall bind its successors and assigns, whether so expressed or not.

 

SECTION 13.02       Actions by Successor.

 

Any act or proceeding by any provision of this Indenture authorized or required to be done or performed by any board, committee or officer of the Company shall and may be done and performed with like force and effect by the corresponding board, committee or officer of any corporation that shall at the time be the lawful successor of the Company.

 

SECTION 13.03       Surrender of Company Powers.

 

The Company by instrument in writing executed by authority of its Board of Directors and delivered to the Trustee may surrender any of the powers reserved to the Company, and thereupon such power so surrendered shall terminate both as to the Company and as to any successor corporation.

 

SECTION 13.04       Notices.

 

Except as otherwise expressly provided herein any notice or demand that by any provision of this Indenture is required or permitted to be given or served by the Trustee or by the holders of Securities to or on the Company may be given or served by being deposited first class postage prepaid in a post-office letterbox addressed (until another address is filed in writing by the Company with the Trustee), as follows:  OvaScience, Inc., Attn: [   ], 215 First Street, Suite 240, Cambridge, Massachusetts 02142.  Any notice, election, request or demand by the Company or any Securityholder to or upon the Trustee shall be deemed to have been sufficiently given or made, for all purposes, if given or made in writing at the Corporate Trust Office of the Trustee.  Any notice or communication to a holder shall be mailed by first-class mail to his address shown on the Security Register kept by the Security Registrar.

 

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Failure to mail a notice or communication to a holder or any defect in such notice or communication shall not affect its sufficiency with respect to other holders.  If a notice or communication is mailed or sent in the manner provided above within the time prescribed, it is duly given as of the date it is mailed, whether or not the addressee receives it, except that notice to the Trustee or the Company shall only be effective upon receipt thereof by the Trustee or the Company, respectively.  If the Company mails a notice or communication to holders of Securities, it shall mail a copy to the Trustee at the same time.

 

SECTION 13.05       Governing Law.

 

This Indenture and each Security shall be deemed to be a contract made under the internal laws of the State of New York, and for all purposes shall be construed in accordance with the laws of said State.

 

SECTION 13.06       Treatment of Securities as Debt.

 

It is intended that the Securities will be treated as indebtedness and not as equity for federal income tax purposes.  The provisions of this Indenture shall be interpreted to further this intention.

 

SECTION 13.07       Compliance Certificates and Opinions.

 

(a)                                 Upon any application or demand by the Company to the Trustee to take any action under any of the provisions of this Indenture,  the Company, shall furnish to the Trustee an Officers’ Certificate stating that all conditions precedent provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent have been complied with, except that in the case of any such application or demand as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or demand, no additional certificate or opinion need be furnished.

 

(b)                                 Each certificate or opinion provided for in this Indenture and delivered to the Trustee with respect to compliance with a condition or covenant in this Indenture shall include (1) a statement that the Person making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such Person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been complied with.

 

SECTION 13.08       Payments on Business Days.

 

Except as provided pursuant to Section 2.01 pursuant to a Board Resolution, and as set forth in an Officers’ Certificate, or established in one or more indentures supplemental to this Indenture, in any case where the date of maturity of interest or principal of any Security or the date of redemption of any Security shall not be a Business Day, then payment of interest or principal (and premium, if any) may be made on the next succeeding Business Day with the same force and effect as if made on the nominal date of maturity or redemption, and no interest shall accrue for the period after such nominal date.

 

SECTION 13.09       Conflict with Trust Indenture Act.

 

If and to the extent that any provision of this Indenture limits, qualifies or conflicts with the duties imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall control.

 

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SECTION 13.10       Counterparts.

 

This Indenture may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument.

 

SECTION 13.11       Separability.

 

In case any one or more of the provisions contained in this Indenture or in the Securities of any series shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Indenture or of such Securities, but this Indenture and such Securities shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein or therein.

 

SECTION 13.12       Assignment.

 

The Company will have the right at all times to assign any of its rights or obligations under this Indenture to a direct or indirect wholly-owned Subsidiary of the Company, provided that, in the event of any such assignment, the Company, will remain liable for all such obligations.  Subject to the foregoing, this Indenture is binding upon and inures to the benefit of the parties thereto and their respective successors and assigns.  This Indenture may not otherwise be assigned by the parties thereto.

 

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed all as of the day and year first above written.

 

 

	
 
    	
OVASCIENCE, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
[                          ],
    
	
 
    	
As   Trustee
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

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