Document:

EXHIBIT 10.1

 

CERTAIN INFORMATION INDICATED BY [ * * * ] HAS BEEN DELETED FROM THIS EXHIBIT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT UNDER RULE 24b-2.

 

THIRD AMENDED AND RESTATED FORBEARANCE AGREEMENT

 

THIS THIRD AMENDED AND RESTATED FORBEARANCE AGREEMENT (the “Agreement”) is made as of this 29th day of March, 2013 (“Effective Date”), between HERON LAKE BIOENERGY,  LLC, a Minnesota limited liability company (“HLBE”) and AGSTAR FINANCIAL SERVICES, PCA, an United States instrumentality (“AgStar”).

 

RECITALS

 

A.                                    HLBE is indebted to AgStar under an Amended and Restated Term Note dated September 1, 2011, in the principal amount of $40,000,000.00 (“Note 1”), and an Amended and Restated Term Revolving Note dated September 1, 2011, in the principal amount of $8,008,689.00 (“Note 2,” and together with Note 1, the “Notes”).  The loans extended to HLBE and evidenced by the Notes are referred to herein collectively as the “Loans.”

 

B.                                    HLBE’s obligations to AgStar are further evidenced by the Fifth Amended and Restated Master Loan Agreement dated to be effective as of September 1, 2011, (the “MLA”).

 

C.                                    The Loans were made by AgStar to HLBE for the purpose of constructing and operating an ethanol production facility in or near Heron Lake, Minnesota (the “Project”).

 

D.                                    As collateral for the Notes, HLBE has granted to AgStar (among other things):

 

(i)                                     a Mortgage, Security Agreement and Assignment of Rents and Leases dated September 29, 2005 and recorded in the Office of the County Recorder of Jackson County on September 30, 2005, as Instrument No. 244879; as amended and restated by that certain Amended and Restated Mortgage, Security Agreement and Assignment of Rents and Leases dated November 20, 2006 and recorded in the Office of the County Recorder of Jackson County on December 6, 2006 as Instrument No. 248498; and further amended by that certain Second Amended and Restated Mortgage, Security Agreement and Assignment of Rents and Leases dated December 27, 2006 and recorded in the Office of the County Recorder of Jackson County on December 27, 2006 as Instrument No. 248658; and further amended by that certain Third Amended and Restated Mortgage, Security Agreement and Assignment of Rents and Leases dated May 18, 2007 and recorded in the Office of the County Recorder of Jackson County on June 4, 2007 as Instrument No. A 250019; and further amended by that certain Fourth Amended and Restated Mortgage, Security Agreement and Assignment of Rents and Leases dated September 1, 2011, recorded in the Office of the County Recorder of Jackson County on September 8, 2011 as Document No. A262710; and further amended by that certain Fifth

 

 

Amended and Restated Mortgage, Security Agreement and Assignment of Rents and Leases dated September 20, 2011, recorded in the Office of the County Recorder of Jackson County on September         , 2011 as Document No.                               , (collectively, the “Mortgage”) under which AgStar has a lien in certain real property in Jackson County, Minnesota, as further described in the Mortgage (the “Real Property”);

 

(ii)                                  security interests in all of the assets of HLBE, including without limitation, inventory, chattel paper, accounts, equipment, general intangibles, deposit accounts, and commodity accounts, (collectively, the “Collateral”) pursuant to the provisions of a Security Agreement dated September 29, 2005 (the “Security Agreement”);

 

(iii)                               collateral assignments of all material contracts related to the Project, including, without limitation, construction agreements, ethanol and distillers grains marketing agreements, grain procurement contracts and coal supply and transport agreement (collectively, the “Assignments”); and

 

(iv)                              unconditional continuing guarantees from Lakefield Farmers Elevator, LLC and HLBE Pipeline Company, LLC (as amended and restated from time to time, the “Guarantees”).

 

E.            The MLA, Notes, Mortgage, Security Agreement, Assignments, Guarantees and all other documents evidencing the obligations of HLBE under the Loans are referred to in this Agreement as the “Loan Documents.”  All capitalized terms not otherwise defined in this Agreement shall have the meaning attributed to such terms in the Loan Documents.

 

F.             HLBE has failed to make the required monthly installment of principal required by the Notes on December 1, 2012 and January 1, 2013, February 1, 2013, and March 1, 2013.  HLBE will not make the required monthly installment of principal required by the Notes on April 1, 2013.  HLBE has also failed to maintain the financial covenants of Section 5.01(d), (e) and (g) of the MLA.  On account of such defaults, AgStar has the right to declare the Notes fully and immediately due and payable without defense or right of setoff.

 

G.            Lakefield Farmers Elevator, LLC, the wholly-owned subsidiary of HLBE, has sold substantially all of the real property and personal property used in connection with the operation of its grain storage and handling facilities to FCA Co-op and has remitted the net sales proceeds to AgStar.

 

H.            HLBE has entered into an Asset Purchase Agreement dated January 22, 2013, by which it has proposed to sell substantially all of the real property and personal property used in connection with the operation of its ethanol production facility to Guardian Energy Heron Lake, LLC, or an affiliated entity (the “Ethanol Plant APA”).

 

I.             HLBE and AgStar previously entered into (i) a Forbearance Agreement dated December 21, 2012 (the “Forbearance Agreement”) which required entry into an Asset

 

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Purchase Agreement with Guardian for the sale and purchase of the ethanol plant by January 10, 2013, and closing of the transaction by January 31, 2013; (ii) an Amended and Restated Forbearance Agreement dated January 22, 2013, which extended the closing date of the sale of the ethanol plant to March 1, 2013; and (iii) a Second Amended and Restated Forbearance Agreement dated February 12, 2013, which further extended the closing date of the sale of the ethanol plant to March 31, 2013.

 

J.             As of December 1, 2012, the outstanding principal balance of the indebtedness evidenced by the Notes was as follows: Note 1 $36,360,313.29 ($18,147,173.06 variable interest rate portion, and $18,213,140.23 fixed interest rate portion), and Note 2 $4,211,163.01.

 

K.            Interest continues to accrue on the Notes at the Default Rate of interest set forth in the MLA and the Notes.  In addition, on account of the failure of HLBE to comply with the terms of the MLA and the Notes, AgStar is entitled to collect from HLBE the late charges set forth in the MLA and the Notes, and to recover from HLBE its costs and expenses, including reasonable attorney fees incurred in connection with the negotiation and execution of this Agreement and the compliance by HLBE with its terms.

 

L.            HLBE has requested AgStar extend the Forbearance Agreement and forbear from exercising its legal and contractual rights and remedies provided in the Loan Documents and by applicable law from the date of this Agreement until [ * * * ] (the “Forbearance Period”) in order to permit HLBE to pursue the closing of the transactions contemplated by the Ethanol Plant APA.  AgStar has agreed to do so subject to the terms and conditions set forth in this Agreement and in lieu of AgStar exercising its rights under the Loan Documents, including, but not limited to, the right to foreclose the real estate mortgages and security agreements and to obtain the appointment of a receiver pursuant to applicable law.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the facts set forth in these Recitals, which the parties agree are true and correct, and in consideration of the mutual covenants and agreements set forth in this Agreement, the parties hereto agree as follows:

 

1.                                      Acknowledgment of Default.  HLBE acknowledges due execution and delivery of the Loan Documents and agrees and acknowledges that the same are valid and enforceable by AgStar against HLBE in accordance with their terms.  HLBE acknowledges that it is in default under the MLA, Notes and other Loan Documents and that, as a result of such defaults, AgStar is entitled to declare that the indebtedness evidenced by the Loan Documents due and owing without any claims, defenses, counterclaims, offsets, and/or cross-complaints, or demands of any kind or nature whatsoever.

 

2.                                  Acknowledgment of Debt.  HLBE acknowledges that the principal balances owed AgStar and evidenced by the Notes as of December 1, 2012, are as set forth in the Recitals set forth above.  In addition to the outstanding principal balances, interest will continue to accrue on such indebtedness and AgStar has incurred, and will continue to incur, costs and legal expenses as a result of HLBE’s defaults under the Loan Documents

 

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which amounts are, in accordance with the terms of the Loan Documents, due and payable by HLBE.

 

3.                                      [Reserved].

 

4.                                      Sale of Assets.  HLBE agrees to use its best commercial efforts to close on the sale of it substantially all of its assets pursuant to the terms of the Ethanol Plant APA.  HLBE further agrees that it shall use the proceeds received by it upon the closing of the transactions contemplated under the Ethanol Plant APA, to pay the costs associated with the closing of such transactions; second, to pay the costs, fees and expenses or incurred by, or due to AgStar under or related to this Agreement; third, to pay all late charges and other costs, fees and expenses due under the MLA, Notes and other Loan Documents; and finally to repay the outstanding principal balance and accrued interest under the Notes, in such order and manner as AgStar shall determine in its sole and absolute discretion.

 

5.                                      Interest Rates and Payments Pending Closing.  The parties agree that the Loans shall accrue interest and be repaid in accordance with the following terms:

 

a.                                      Interest.  Interest shall continue to accrue on the unpaid principal balance of the Notes at the rates provided in the Loan Documents (including, as applicable, interest at the Default Rate specified in the Loan Documents).

 

b.                                      Payments.  Prior to closing on the transactions contemplated by the Ethanol Plant APA, HLBE shall pay to AgStar all regularly scheduled periodic payments of interest required under the MLA and Notes on each Monthly Payment Date.

 

6.                                      Advances on Term Revolving Loan.  Notwithstanding any provisions contained in the MLA, advances pursuant to Note 2 shall only be advanced to HLBE for the purpose of funding normal operating expenses pending the closing of the transactions contemplated by the Ethanol Plant APA, including the payment of interest to AgStar in accordance with paragraph 5.  Such advances will be available and shall not exceed $1,750,000.00.  Any request for advances on Note 2 shall further be subject to the terms and conditions set forth in the MLA.  No advances will be made by AgStar on Note 2 after [ * * * ].

 

7.                                      Conditions Precedent.  As conditions precedent to AgStar’s agreements under this Agreement, the following agreements, documents, and other items shall have been executed and/or delivered to AgStar, and the following events shall have occurred:

 

a.                                      Execution and Delivery of Agreement.  HLBE shall have executed and delivered to AgStar this Agreement and any other documents and agreements ancillary or incident hereto.

 

b.                                      Other Documentation.  HLBE shall have obtained and delivered to AgStar any and all further documentation reasonably requested by AgStar.

 

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c.                                       Fees.  HLBE shall have paid to AgStar a waiver and forbearance fee in the amount of $10,000.00, and all other costs and expenses incurred by AgStar in connection with the preparation, negotiation and execution of this Agreement, including, without limitation, reasonable attorneys’ fees.

 

8.                                      Distributions Pending Closing.  Notwithstanding any provisions contained in the Loan Documents to the contrary, HLBE shall not make, or cause to be made, any Distributions prior to the closing of the transactions contemplated by the Ethanol Plant APA.

 

9.                                      Representations and Warranties of HLBE.  HLBE represents and warrants to AgStar that the statements contained in this Section 9  are correct and complete as of the date of this Agreement.

 

a.                                      Organization and Good Standing.  HLBE is a limited liability company duly organized and validly existing and in good standing under the laws of the State of Minnesota and qualified to do business in all jurisdictions in which the nature of its business makes such qualification necessary.  HLBE has the power and authority to own and operate its assets and to carry on its business and to execute, deliver, and perform its obligations under this Agreement.

 

b.                                      Authorization of Transactions.  HLBE has full power and authority, corporate or otherwise, to enter into and perform its obligations under this Agreement.  This Agreement and the ancillary agreements attached to this Agreement as Exhibits constitute valid and legally binding obligations of the parties hereto and thereto, as applicable, enforceable in accordance with their respective terms and conditions.

 

c.                                       Noncontravention.  Neither the execution and the delivery of this Agreement or the ancillary documents attached to this Agreement as Exhibits to which HLBE is a party, nor the consummation of the contemplated transactions will (a) violate any law, order or regulation to which HLBE is subject; (b) violate any provision of the governing documents of HLBE; or (c) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any notice under any agreement, contract, lease, license, instrument or other arrangement to which HLBE is a party or is bound or to which any of such HLBE’s assets are subject.

 

d.                                      Broker Fees.  HLBE has no liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement for which AgStar could become liable or obligated.

 

e.                                       Legal Compliance; Litigation.  HLBE has complied with all applicable laws, and no action, suit, proceeding, hearing, investigation, charge, complaint, claim, demand or notice has been filed, commenced or alleged against it.  There are no pending or threatened claims, actions, suits, proceedings, hearings or investigations affecting HLBE or its assets.  HLBE is not operating under or subject to, or in default with respect to, any order, writ, injunction or decree of

 

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any court or governmental agency.

 

f.                                        Enforceability.  This Agreement is, and each of the ancillary documents attached to this Agreement as an exhibit are, or when delivered will be, legal, valid and binding obligations of HLBE set forth in such ancillary documents enforceable against such HLBE in accordance with their respective terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the enforcement of creditor’s rights generally and by general principles of equity.

 

g.                                       Environmental.

 

(i)                                     to HLBE’s knowledge, the current business operations of HLBE comply with, and are not subject to any claim or order concerning environmental, health or safety matters (“Environmental Laws”), and HLBE has received no notice, either written or to any HLBE’s knowledge otherwise, alleging that the activities of the business are in violation of any Environmental Laws.

 

(ii)                                  to HLBE’s knowledge, there has been no release of any hazardous substances that requires reporting under applicable Environmental Laws at, on or under any of the Real Property, and none of such properties has been used by any person as a landfill or storage, treatment or disposal site for any type of hazardous substance or non-hazardous solid wastes as defined under the Resource Conservation and Recovery Act of 1976, as amended.

 

(iii)                               HLBE has obtained all permits needed for the ownership of its assets and operation of the business of HLBE as currently operated under applicable Environmental Laws; HLBE is in compliance with all material conditions of such permits; the permits have not expired, and HLBE has timely applied to renew all such Permits.  There is no proceeding pending or, to HLBE’s knowledge, threatened that would reasonably be expected to result in the termination, revocation, suspension or restriction of, or the loss of any benefit to which such HLBE would obtain from, any permit needed for the ownership of its assets and operation of the business as currently operated under applicable Environmental Laws or the imposition of any fine, penalty or other sanctions for the violation of any applicable law relating to such Permit.

 

h.                                      Consents.  No consent approval, authorization or order of any court, governmental agency or body, or third party is required for HLBE to consummate the transactions contemplated by this Agreement.

 

i.                                          Other Information.  The information concerning HLBE set forth in this Agreement and the schedules and exhibits attached to this Agreement and any statement or certificate of HLBE furnished or to be furnished to AgStar pursuant

 

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to this Agreement, does not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated herein or therein or necessary to make the statements and facts contained herein or therein, in light of the circumstances in which they are made, not false or misleading.

 

10.                               Acknowledgement of Guarantors.  By signing the Acknowledgement and Agreement of Guarantors attached hereto, each Guarantor, as guarantor of all present and future obligations of HLBE to AgStar, consents and agrees to the terms of this Agreement and acknowledges that all indebtedness arising under the Loan Documents shall continue to constitute obligations guaranteed under each of the Guarantees.  Such confirmation shall not be deemed to limit the terms of any of the Guarantees in any manner.

 

11.                               Events of Default.  For purposes of this Agreement, “Event of Default” means (a) any Event of Default under the Loan Documents first occurring after the Effective Date, or at any prior date but regarding which AgStar did not have actual knowledge (excluding Events of Default relating to the matters expressly set forth in this Agreement), or (b) the occurrence of any one or more of the following:

 

a.                                      Payment Defaults.  HLBE shall fail to pay, when due, any amounts required to be paid hereunder, including any amounts owed on the expiration of the Forbearance Period, provided that failure to make the required monthly installment of principal required by the Notes on April 1, 2013 shall not constitute a payment default hereunder.

 

b.                                      Nonmonetary Defaults.  HLBE shall fail to observe or perform any covenant, condition, or agreement to be observed or performed by them under this Agreement for a period of five (5) Business Days after written notice, specifying such default and requesting that it be remedied, provided however that no Event of Default shall be deemed to exist if, within said five (5) day period, HLBE has commenced appropriate action to remedy such failure and shall diligently and continuously pursue such action until such cure is completed, unless such cure is or cannot be completed within thirty (30) days after written notice shall have been given.

 

c.                                       Failure to Close Ethanol Plant APA.  HLBE shall fail to close on the transaction contemplated by the Ethanol Plant APA pursuant to the terms of the Ethanol Plant APA on or before [ * * * ].

 

d.                                      Bankruptcy.  HLBE shall file a petition in bankruptcy or for reorganization or for an arrangement pursuant to any present or future state or federal bankruptcy law or under any similar federal or state law, or shall have an order for relief pursuant to 11 U.S.C. § 303 entered in any such proceeding brought by any other creditor, or shall make a general assignment for the benefit of their creditors.

 

e.                                       Creditor Proceedings.  The commencement of foreclosure or other proceeding to obtain possession of the Real Property and/or the Collateral, whether by judicial

 

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proceeding, self-help, repossession, garnishment, execution or any other method, by any creditor of HLBE.

 

f.                                        Weekly Financial Reporting.  HLBE shall fail to deliver to AgStar by 3:00 p.m. (Minneapolis, MN Time) on each Friday during the term of this Agreement: (i) weekly financial and operating reports, including without limitation its statements of cash flows and income statements; (ii) a weekly budget forecast for the operation of the Project; and (iii) such other reports relating to the financial condition or operation of the Project, in each case in a form and substance acceptable to AgStar in its sole discretion.

 

g.                                       Amendments to APA. HLBE shall amend, extend, modify or otherwise alter the terms of the Ethanol Plant APA without the prior written consent of AgStar in its sole discretion.

 

12.                               Remedies.  Upon the occurrence of an Event of Default:

 

a.                                      the entire unpaid balance of the Loans, including all unpaid principal, accrued interest, default charges and costs and expenses incurred by AgStar in connection with the Loans, including attorney fees shall be immediately due and payable by HLBE;

 

b.                                      AgStar may, in its sole discretion, and without further demand or notice to HLBE, protect and enforce all of its legal, contractual and equitable rights and remedies under the Loan Documents and this Agreement;

 

c.                                       AgStar may apply all amounts that HLBE has on deposit with AgStar, including, without limitation, all escrowed funds, to the payment of the outstanding principal balance, accrued interest, default charges, and the costs and expenses of collection, including attorneys’ fees, in such order as AgStar may deem appropriate; and

 

d.                                      [reserved]

 

e.                                       Each and every power or remedy herein specifically given shall be in addition to every other power or remedy, existing or implied, given now or hereafter existing at law or in equity, and each and every power and remedy herein specifically given or otherwise so existing may be exercised from time to time and as often and in such order as may be deemed expedient by AgStar, and the exercise or the beginning of the exercise of one power or remedy shall not be deemed a waiver of the right to exercise at the same time or thereafter any other power or remedy. No delay or omission of AgStar in the exercise of any right or power accruing hereunder shall impair any such right or power or be construed to be a waiver of any default or acquiescence therein.

 

13.                               Waiver and Release.  To the extent any claims or defenses may exist, HLBE, on behalf of themselves and their respective successors and assigns, hereby forever and irrevocably

 

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release AgStar and its officers, representatives, agents, attorneys, employees, predecessors, successors, and assigns, from any and all such claims and defenses, whether known or unknown arising out of any acts or omissions occurring prior to the date of this Agreement (including without limitation, those relating to late fees currently outstanding or previously paid), provided that HLBE does not waive any rights afforded it hereunder.

 

14.                               Effect of Agreement.  Except as expressly provided in this Agreement, the Loan Documents remain in full force and effect in accordance with their respective terms, and this Agreement shall not be construed to: (i) impair the validity, perfection or priority of any security interest or lien securing the Loans; (ii) waive or impair any rights, powers or remedies of AgStar under the Loan Documents; or (iii) constitute an agreement by AgStar or require it to waive any further defaults by HLBE, grant any forbearance, or otherwise forego the exercise of any rights or remedies under the Loan Documents or applicable law.

 

15.                               [Reserved].

 

16.                               Further Assurances.  If at any time after the date of this Agreement any further action is necessary or desirable to carry out the purposes of this Agreement and its contemplated transactions, each of the Parties will take such further action (including the execution and delivery of further instruments and documents) as any other Party reasonably may request, all at the sole cost and expense of the requesting Party.

 

17.                               Reinstatement.  If notwithstanding the provisions of this Agreement, any transfers made by HLBE pursuant to this Agreement are rescinded, or must otherwise be restored or returned by AgStar, by order of court, to or for the benefit of any HLBE or its legal representative or estate, whether upon any insolvency, bankruptcy, dissolution, liquidation or reorganization of HLBE, or otherwise, then (a) HLBE shall return, to AgStar, any and all transfers made to HLBE, or on HLBE’s behalf, by AgStar hereunder and (b) HLBE’s obligations under the terms of the Loan Documents shall be reinstated, and shall be effective, just as though the releases granted by AgStar in this Agreement had not been made.  As part of such reinstatement (i) the then outstanding indebtedness, including all default interest that would have accrued thereunder and any additional amounts due under the Loan Documents, shall be due and payable in full and (ii) the assets so returned shall remain subject to the Loan Documents including, but not limited to, the perfection and priority of the Loan Documents as of the Closing Date.

 

19.                               Miscellaneous.

 

a.                                      Recitals Incorporated.  The Recitals set forth at the beginning of this Agreement are deemed incorporated herein, and the parties hereto represent they are true, accurate and correct.

 

b.                                      Acknowledgement of Distressed Loan Notice.  HLBE acknowledges receipt of notice of its rights under AgStar’s distressed loan program and 12 U.S.C. § 2202a(b) and to request restructuring of their loans under such program.  HLBE

 

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acknowledges and agrees that it has not requested restructuring of their respective loans and has elected to enter into this Agreement in lieu of any such restructuring.

 

c.                                       [reserved]

 

d.                                      Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota.

 

e.                                       Severability.  If any provision of this Agreement shall be invalid, illegal or otherwise unenforceable, such provision shall be severable from the remainder of such agreement and the validity, legality and enforceability of the remaining provisions shall not be adversely affected or impaired thereby and shall remain in full force and effect.

 

f.                                        Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be one and the same instrument.  The exchange of copies of this Agreement and of signature pages by facsimile transmission shall constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes.  Signatures of the parties transmitted by facsimile shall be deemed to be their original signatures for all purposes.

 

g.                                       Entire Agreement.  This Agreement, together with the Exhibits set forth the entire agreement between the parties pertaining to the transactions contemplated by this Agreement.  This Agreement may be amended or modified only by a written instrument signed by the party against which enforcement is sought.

 

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IN WITNESS WHEREOF, the parties hereto have caused this agreement to be duly executed and delivered as of the date and year first above written.

 

 

	
Dated:   March 29, 2013
    	
HERON   LAKE BIOENERGY, LLC,
    
	
 
    	
a   Minnesota limited liability company
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
Robert   J. Ferguson
    
	
 
    	
 
    	
Its:   CEO
    
	
 
    	
 
    
	
 
    	
 
    
	
Dated:   March 29, 2013
    	
AGSTAR   FINANCIAL SERVICES, PCA,
    
	
 
    	
a   United States instrumentality,
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
Mark   Schmidt
    
	
 
    	
 
    	
Mark   Schmidt
    
	
 
    	
 
    	
Its:   Vice President
    

 

[Signature page to Third Amended and Restated Forbearance Agreement, dated March 29, 2013]

 

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ACKNOWLEDGMENT AND AGREEMENT OF GUARANTORS

 

Each of the undersigned hereby (i) acknowledges receipt of the foregoing Third Amended and Restated Forbearance Agreement (the “Forbearance Agreement”) and acknowledges and agrees that this Acknowledgement is executed by the undersigned in order to induce AgStar to enter into the Forbearance Agreement; (ii) consents and agrees to the terms of the Forbearance Agreement and the execution thereof; (iii) reaffirms the undersigned’s obligations to AgStar pursuant to the terms of the Guarantees (as defined in the Forbearance Agreement), (iv) acknowledges that AgStar may amend, restate, extend, renew or otherwise modify the Loan Documents (as defined in the Forbearance Agreement) and any indebtedness or agreement of HLBE, or enter into any agreement or extend additional or other credit accommodations, without notifying or obtaining the consent of the undersigned and without impairing the liability of the undersigned under the Guarantees for all of HLBE’s present and future indebtedness to AgStar; and (v) acknowledges to and agrees with AgStar that no events, conditions or circumstances have arisen or exist as of the date hereof which would give the undersigned the right to assert a defense, counterclaim and/or setoff to any claim by AgStar for the payment and performance of the obligations of each of such parties under the Guarantees, or to the extent that any such defense, counterclaim and/or setoff exist as of the date hereof, the same are hereby absolutely and forever waived and released.

 

GUARANTORS:

 

 

	
Dated:  March 29, 2013
    	
LAKEFIELD   FARMERS ELEVATOR,
    
	
 
    	
LLC, a Minnesota   limited liability company
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
Robert   J. Ferguson
    
	
 
    	
 
    	
Its:   President and Chief Manager
    
	
 
    	
 
    
	
 
    	
 
    
	
Dated:   March 29, 2013
    	
HLBE   PIPELINE COMPANY, LLC,
    
	
 
    	
a   Minnesota limited liability company
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
Robert   J. Ferguson
    
	
 
    	
 
    	
Its:   President
    

 

12Exhibit 10.1

 

Execution Copy

 

AGREEMENT

 

This AGREEMENT, dated as of April 4, 2013 (the “Agreement”), is by and among Nabors Industries Ltd., a Bermuda exempted company (the “Company”), and the other entity signatory hereto (the “Investor”).

 

WHEREAS, within two business days of the execution of this Agreement, the Board of Directors of the Company (the “Board”) intends to appoint Mr. Howard Wolf as a director (the “2013 Director Designee”) with a term expiring at the 2013 annual meeting of shareholders;

 

WHEREAS, at the Company’s 2013 and 2014 annual meetings of shareholders, the Board intends to nominate the 2013 Director Designee for election as a member of the Board, in each case with a term expiring at the Company’s next annual meeting of shareholders, and recommend that the shareholders of the Company vote to elect the 2013 Director Designee as a director of the Company at the Company’s 2013 and 2014 annual meetings of shareholders;

 

WHEREAS, at the Company’s 2014 annual meeting of shareholders, the Board intends to nominate an individual selected by the Company, subject to the approval of the 2013 Director Designee, who shall be independent of the Investor and would be considered an independent director of the Company under Section 303A of the New York Stock Exchange’s Listed Company Manual (the “2014 Director Designee” and, together with the 2013 Director Designee, the “Director Designees”) for election as a member of the Board to replace the retiring Class II director, with a term expiring at the Company’s next annual meeting of shareholders, and recommend that the shareholders of the Company vote to elect the 2014 Director Designee as a director of the Company at the Company’s 2014 annual meeting of shareholders;

 

WHEREAS, the Investor economically owns (as defined below) the interests in common stock, $0.001 par value, of the Company (the “Common Shares”) specified on Schedule A of this Agreement;

 

WHEREAS, the Investor supports the election of the Director Designees to the Board; and

 

WHEREAS, the Company has taken action pursuant to its Rights Agreement with Computershare Trust Company, N.A., dated as of July 16, 2012 (the “Rights Agreement”), to exempt the Investor from being an “Acquiring Person” as a result of this Agreement or the acquisition of additional Common Shares; provided that the Investor does not Beneficially Own (as defined in the Rights Agreement) more than 14.99% of the outstanding Common Shares.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

 

ARTICLE I

 

REPRESENTATIONS

 

Section 1.1.                                 Authority; Binding Agreement.  (a)  The Company hereby represents that this Agreement and the performance by the Company of its obligations hereunder (i) has been duly authorized, executed and delivered by it, and is a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, (ii) does not require the approval of the shareholders of the Company and (iii) does not and will not violate any law, any order of any court or other agency of government, the Memorandum of Association of the Company or the Amended and Restated Bye-laws of the Company, as amended, or any stock exchange rule or regulation, or any provision of any indenture, agreement or other instrument to which the Company or any of its properties or assets is bound, or conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any such indenture, agreement or other instrument, or result in the creation or imposition of, or give rise to, any lien, charge, restriction, claim, encumbrance or adverse penalty of any nature whatsoever pursuant to any such indenture, agreement or other instrument.

 

(b)                                 The Investor represents and warrants that this Agreement and the performance by the Investor of its obligations hereunder (i) has been duly authorized, executed and delivered by the Investor, and is a valid and binding obligation of such Investor, enforceable against such Investor in accordance with its terms, (ii) does not require approval by any owners or holders of any equity interest in the Investor (except as has already been obtained) and (iii) does not and will not violate any law, any order of any court or other agency of government, the charter or other organizational documents of the Investor, as amended, or any provision of any agreement or other instrument to which the Investor or any of its properties or assets is bound, or conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any such agreement or other instrument, or result in the creation or imposition of, or give rise to, any lien, charge, restriction, claim, encumbrance or adverse penalty of any nature whatsoever pursuant to any such agreement or instrument.

 

Section 1.2.                                 Interests in Securities and Other Indebtedness of the Company.  The Investor hereby represents and warrants that, as of the date hereof, it and its Affiliates (as such term is hereinafter defined) are, collectively, the “economic owners” (as such term is hereinafter defined) of such number of Common Shares (the “Shares”) as are accurately and completely set forth (including, without limitation, as to the form of ownership) on Schedule A, and neither the Investor nor any of its Affiliates economically own any other securities of the Company or any other indebtedness of  the Company or any of its subsidiaries.  Neither the Investor nor any of its Affiliates beneficially own, or have any rights, options or agreements to acquire any debt securities of the Company or any other indebtedness of the Company or any of its subsidiaries.

 

Section 1.3.                                 Defined Terms.  For purposes of this Agreement:

 

(a)                                 “Affiliate”  has the meaning set forth in Rule 12b-2 promulgated by the Securities and Exchange Commission (the “SEC”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).   For the avoidance of doubt, Pamplona Capital Partners III, L.P. and Pamplona Capital Management and their respective Affiliates shall be considered Affiliates of 

 

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the Investor, and the Investor (and only the Investor) shall be responsible for any breach of this Agreement by its Affiliates.

 

(b)                                 The terms “beneficial owner” and “beneficially own” have the same meanings as set forth in Rule 13d-3 promulgated by the SEC under the Exchange Act.  The terms “economic owner”, “economic ownership” and “economically own” shall have the same meanings as “beneficial owner” and “beneficially own,” except that a person will also be deemed to economically own and to be the economic owner of (i) all securities which such person has the right to acquire pursuant to the exercise of any rights in connection with any securities or any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, warrants, options or otherwise, regardless of when such rights may be exercised and whether they are conditional, (ii) all securities in which such person has any economic interest, including, without limitation, pursuant to a cash settled call option, cash settled total return swap transaction or other swap, derivative security, contract, “synthetic” ownership arrangement or other instrument, (iii) all securities beneficially owned by any member of a group (within the meaning of Section 13(d)(3) of the Exchange Act) of which such person is a member, in each case, whether such securities, rights or interests are held by such person directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise.

 

(c)                                  The “Standstill Period” means the period from the date of this Agreement through the earliest of (i) the date that is the 18 month anniversary of the date hereof, (ii) the Company failing to (A) appoint the 2013 Director Designee to the Board within two business days of the date of this Agreement or (B) include the 2013 Director Designee on its slate of directors nominated for election at the 2013 annual meeting of shareholders, or (iii) the date that is 30 days prior to the last day of the advance notification period for the Company’s 2014 annual meeting of shareholders if the Company fails to announce that it will be including on the Company’s slate of directors nominated for election at such annual meeting of shareholders the 2013 Director Designee and, subject to Section 2.1(b), the 2014 Director Designee on which the Company and the 2013 Director Designee have agreed (other than, in each of cases (ii) and (iii), as a result of the 2013 Director Designee’s or 2014 Director Designee’s refusal or inability to serve).

 

(d)                                 The “Standstill Threshold” means 14.99%.

 

ARTICLE II

 

COVENANTS

 

Section 2.1.                                 Directors.  (a)  During the Standstill Period, the Company shall not increase the size of the Board in excess of eight members, and shall not decrease the size of the Board if such decrease would result in the elimination of one or both of the Director Designees.

 

(i)                                     The Company agrees that the Board will:

 

(1)                                 at the 2013 and 2014 annual meetings of shareholders, nominate the 2013 Director Designee (other than in the case of his refusal or inability to serve, in which case, the Company shall nominate his/her substitute chosen in accordance with Section 2.1(a)(iii)), 

 

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together with the other persons included in the Company’s slate of nominees for election as director at such 2013 and 2014 annual meetings, as a director of the Company, in each case with a term expiring at the Company’s next annual meeting; provided, however, that as a condition to such nomination such Director Designee shall agree to comply with all policies, codes of conduct and codes of ethics applicable to all of the Company’s directors, including without limitation the Company’s Code of Business Conduct and the Company’s Board Guidelines on Significant Corporate Governance Issues, and to provide information regarding such Director Designee that is required to be disclosed for candidates for directors and directors in a proxy statement under the federal securities laws of the United States of America and/or applicable New York Stock Exchange rules and regulations, information required by the Company’s Board Guidelines on Significant Corporate Governance Issues and such other customary information as reasonably requested by the Company; and

 

(2)                                 recommend that the shareholders of the Company vote to elect the 2013 Director Designee as a director of the Company at the Company’s 2013 and 2014 annual meetings of shareholders.

 

(ii)                                  The Company shall use its reasonable best efforts (which shall include the solicitation of proxies) to obtain the election of the 2013 Director Designee at the Company’s 2013 and 2014 annual meetings of shareholders (it being understood that such efforts shall be not less than the efforts used by the Company to obtain the election of any other independent (as determined under Section 303A of the New York Stock Exchange’s Listed Company Manual) director nominee nominated by it to serve as a director on the Board at the respective meeting).

 

(iii)                               The Company agrees that if the 2013 Director Designee is not elected at each of the Company’s 2013 or 2014 annual meetings of shareholders or resigns as a director or refuses or is otherwise unable to serve as a director at any time during the Standstill Period, including as a result of death or disability, the Investor and the Company shall each use their respective reasonable best efforts to reach agreement with respect to the identity of a substitute person who shall be independent of the Investor and would be considered an independent director of the Company under Section 303A of the New York Stock Exchange’s Listed Company Manual.  If, notwithstanding their respective reasonable best efforts, the Company and the Investor are unable to agree on the identity of a substitute person, then any individual selected by the Company from a list of individuals agreed between the Investor and the Company prior to the date of this Agreement (the “List”) shall be deemed to be approved by the Investor for purposes of this Agreement.  Such individual will be appointed to serve as the 2013 Director Designee for the remainder of such 2013 Director Designee’s term (or in the case of the 2013 Director Designee not being elected at either the Company’s 2013 or 2014 annual meeting of shareholders, for the term that such 2013 Director Designee would have been elected to had such 2013 Director Designee been elected at such meeting).  For the avoidance of doubt, references to the 2013 Director Designee shall be deemed to also refer to such replacement director.

 

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(iv) The Company shall ensure that the 2013 Director Designee receives substantially similar compensation and other benefits (including director insurance and indemnity) made available to any other independent (as determined under Section 303A of the New York Stock Exchange’s Listed Company Manual) director of the Company.

 

(b)                                 (i)            If the Investor owns beneficially at least 5% of the issued and outstanding Common Shares as of the date that is 30 days prior to the last day of the advance notification period for the Company’s 2014 annual meeting of shareholders (and subject to satisfaction by the 2014 Director Designee of the conditions described in the proviso to Section 2.1(a)(i)(1)), the Board will:

 

(1)                                 at the 2014 annual meeting of shareholders, nominate the 2014 Director Designee (other than in the case of his refusal or inability to serve, in which case, the Company shall nominate his/her substitute chosen in accordance with Section 2.1(b)(iv)), together with the other persons included in the Company’s slate of nominees for election as director at such 2014 annual meeting (including the 2013 Director Designee), as a director of the Company to replace the retiring Class II director, with a term expiring at the Company’s next annual meeting; and

 

(2)                                 recommend that the shareholders of the Company vote to elect the 2014 Director Designee as a director of the Company at the Company’s 2014 annual meeting of shareholders.

 

(ii)                                  The Company and the 2013 Director Designee shall each use their respective reasonable best efforts to reach agreement with respect to the identity of the 2014 Director Designee.  If, notwithstanding their respective reasonable best efforts, the Company and the 2013 Director Designee are unable to agree on the identity of the 2014 Director Designee, then an individual from the List selected by the Company shall be deemed to be approved by the 2013 Director Designee for purposes of this Agreement and shall be nominated by the Company as the 2014 Director Designee.

 

(iii)                               The Company shall use its reasonable best efforts (which shall include the solicitation of proxies) to obtain the election of the 2014 Director Designee at the Company’s 2014 annual meeting of shareholders (it being understood that such efforts shall be not less than the efforts used by the Company to obtain the election of any other independent (as determined under Section 303A of the New York Stock Exchange’s Listed Company Manual) director nominee nominated by it to serve as a director on the Board at the 2014 annual meeting).

 

(iv)                              The Investor agrees that if the 2014 Director Designee is not elected at the Company’s 2014 annual meeting of shareholders or resigns as a director or refuses or is otherwise unable to serve as a director at any time during the Standstill Period, including as a result of death or disability, the Company and the 2013 Director Designee shall each use their respective reasonable best efforts to reach agreement with respect to the identity of a substitute person who shall be independent of the Investor and would be considered an independent director of the 

 

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Company under Section 303A of the New York Stock Exchange’s Listed Company Manual.  If, notwithstanding their respective reasonable best efforts, the Company and the 2013 Director Designee are unable to agree on the identity of a substitute person, then any individual selected by the Company from the List shall be deemed to be approved by the 2013 Director Designee for purposes of this Agreement.  Such individual will be appointed as the 2014 Director Designee for the remainder of such 2014 Director Designee’s term (or in the case of the 2014 Director Designee not being elected at the Company’s 2014 annual meeting of shareholders, for the term that such 2014 Director Designee would have been elected to had such 2014 Director Designee been elected at such meeting).  For the avoidance of doubt, references to the 2014 Director Designee shall be deemed to also refer to such replacement director.

 

(v) The Company shall ensure that the 2014 Director Designee receives substantially similar compensation and other benefits (including director insurance and indemnity) made available to any other independent (as determined under Section 303A of the New York Stock Exchange’s Listed Company Manual) director of the Company.

 

Section 2.2.                                 Voting Provisions.  During the Standstill Period, the Investor, together with its Affiliates, will cause all Common Shares for which they have the right to vote to be present for quorum purposes at any meeting of shareholders (including any adjournments or postponements thereof), and, at any such meeting or in response to any consent solicitation will vote or consent (a) in favor of each director nominated and recommended by the Board for election at any such meeting or in any such consent solicitation, as applicable, (b) against any shareholder nominations for director which are not approved and recommended by the Board for election at any such meeting or in any such consent solicitation, as applicable; and (c) with respect to all other matters, other than Extraordinary Matters, in accordance with the recommendation of the majority of the non-management directors of the Board.  “Extraordinary Matter” means (i) any merger, amalgamation, consolidation, share exchange (including any exchange offer or tender offer), recapitalization, or other business combination, in each case as a result of which the holders of the Common Shares of the Company immediately prior to the consummation of such transaction would cease to own at least a majority of the issued and outstanding shares of common stock of the resulting company (or, if such resulting company is a subsidiary, then the ultimate parent company); (ii) any acquisition or disposition requiring the approval of the Company’s shareholders under the New York Stock Exchange’s Listed Company Manual or the Amended and Restated Bye-laws of the Company; (iii) any authorization of the issuance of capital stock of the Company (other than in connection with the Company’s employee compensation or benefit plans) for which approval of the Company’s shareholders is sought; (iv) any liquidation, dissolution or sale of all or substantially all of the assets of the Company; (v) any amendment to, or repeal or adoption of, any provision of the Memorandum of Association of the Company or the Amended and Restated Bye-laws of the Company; or (vi) ratification of any shareholder rights plan (including any extension or replacement of the Rights Agreement) that has an expiration date that is later than the end of the Standstill Period (as defined herein).

 

Section 2.3.                                 Actions by the Investor.  The Investor agrees that, during the Standstill Period, neither it nor any of its Affiliates will, unless specifically requested or authorized in writing by a resolution of the Board, directly or indirectly:

 

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(a)                                 purchase or cause to be purchased or otherwise acquire or agree to acquire or maintain at any time any direct or indirect economic ownership of any (i) Common Shares, if in any such case, immediately after the taking of such action the Investor, together with its Affiliates, would, in the aggregate, economically own more than the applicable Standstill Threshold of the then issued and outstanding Common Shares (it being understood that the Company has, prior to the date hereof, taken action pursuant to the Rights Agreement to exempt the Investor from being an “Acquiring Person” as a result of this Agreement, provided that the Investor, together with its Affiliates, does not at any time economically own more than the applicable Standstill Threshold of the then issued and outstanding Common Shares), (ii) other securities issued by the Company, provided that the Investor, together with its Affiliates, shall be entitled to economically own, in the aggregate, not more than (A) 14.99% of any new series of common stock or preferred stock (except as otherwise provided in the Rights Agreement) issued by the Company, provided that the Investor, together with its Affiliates, shall be subject to all of the limitations described in this Section 2.3 with respect to such stock with all references to Common Shares being deemed to refer instead to such series of common stock or preferred stock, and (B) 9.99% of any series of public indebtedness of the Company, provided that the Investor, together with its Affiliates, shall (x) be subject to all of the limitations described in this Section 2.3 with respect to such indebtedness, with all references to Common Shares being deemed to refer instead to such series of indebtedness, (y) not, directly or indirectly, (I) enforce or seek to enforce any covenant of the relevant securities, the related indenture(s) or any other documents, instruments or agreements relating to or setting forth the terms applicable to such securities (collectively, the “Debt Documents”) or exercise or seek to exercise any rights or remedies they may have under the Debt Documents, applicable law or otherwise against the Company, any subsidiary thereof or any of their respective assets, in each case, other than a covenant, right or remedy relating to the payment of interest or principal by the Company to the Investor pursuant to such securities if the Investor were treated differently from other holders with respect to the payment of interest or principal pursuant to such securities  (any such action described in this clause (I), a “Debt Enforcement Action”), (II) cause or instruct the trustee(s) or agent(s) in respect of, or other representative for holders of, such securities to take any Debt Enforcement Action, or (III) otherwise vote in favor of or support or encourage any other person or entity in respect of  any Debt Enforcement Action, and (z)  provide its timely consent to any amendment, waiver or consent to any Debt Document sought by the Company or any of its subsidiaries, so long as consent to such amendment, waiver or consent is or would (after the giving of consent thereto by the Investor and its Affiliates) be received from a majority of the holders of the applicable series of securities, or (iii) any other indebtedness of or claims against the Company or any of its subsidiaries;

 

(b)                                 form, join in or in any other way participate in a “partnership, limited partnership, syndicate or other group” (other than any group consisting solely of the Investor and its Affiliates) within the meaning of Section 13(d)(3) of the Exchange Act with respect to the Common Shares or deposit any Common Shares in a voting trust or similar arrangement or subject any Common Shares to any voting agreement or pooling arrangement, or grant any proxy with respect to any Common Shares (other than to a designated representative of the Company pursuant to a proxy solicitation on behalf of the Board), other than solely with one or more Affiliates of the Investor with respect to the Shares and any other Common Shares acquired in compliance with paragraph (a) above or to the extent such a group may be deemed to result with the Company or any of its Affiliates as a result of this Agreement;

 

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(c)                                  solicit proxies or written consents of shareholders, or conduct any binding or nonbinding referendum with respect to Common Shares, or make, or in any way participate in, any “solicitation” of any “proxy” within the meaning of Rule 14a-1 promulgated by the SEC under the Exchange Act (but without regard to the exclusion set forth in Rule 14a-1(l)(2)(iv) from the definition of “solicitation”) to vote any Common Shares with respect to any matter, or become a participant in any contested solicitation for the election of directors with respect to the Company (as such terms are defined or used in the Exchange Act and the Rules promulgated thereunder), other than a solicitation or action as a participant in support of the voting obligations of the Investor and its Affiliates pursuant to Section 2.2;

 

(d)                                 seek to call, or to request the call of, or call a special meeting of the shareholders of the Company (or any class or series thereof), or seek to make, or make, a shareholder proposal (whether pursuant to Rule 14a-8 under the Exchange Act or otherwise) at any meeting of the shareholders of the Company (or any class or series thereof), or make a request for a list of the Company’s shareholders or debtholders of any class or series, or seek election to the Board, seek to place a representative on the Board or seek the removal of any director from the Board, or otherwise acting alone, or in concert with others, seek to control or influence the governance or policies of the Company (provided that the foregoing shall not be deemed to prohibit or otherwise restrict the Investor or its Affiliates from having private conversations with members of the Board or the Company’s management if such conversations are not required to be reported with the SEC or otherwise publicly disclosed and are not publicly disclosed);

 

(e)                                  effect or seek to effect (including, without limitation, by entering into any discussions, negotiations, agreements or understandings, whether or not legally enforceable, with any third person), offer or propose (whether publicly or otherwise) to effect, or cause or participate in, or in any way assist or facilitate any other person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in, (i) any acquisition of any securities (or economic ownership thereof), or any material assets or businesses of the Company or any of its subsidiaries, except purchases of Common Shares or any new series of common or preferred stock pursuant to the limits specified in paragraph (a) above, provided that the Investor shall be permitted to submit proposals for material assets or businesses of the Company if (A) the applicable assets or businesses are the subject of a Board-initiated bid process (it being understood that the Investor shall be required to comply with any rules and procedures established by the Company or its representatives and generally applicable to bidders in any such bid process, if any) or (B) the applicable assets or businesses are the subject of a process initiated by a third party which has not in any way been proposed, assisted or facilitated by the Investor or its Affiliates and in connection with which the Company has entered into discussions (other than discussions solely intended to clarify elements of such third party proposal for purposes of evaluating whether to endorse or oppose such third party proposal) or has otherwise entered into negotiations with respect to any such sale of material assets or businesses of the Company or pursued any such potential sale (it being understood that the Investor shall be required to comply with any rules and procedures established by the Company or its representatives and generally applicable to bidders in any such bid process, if any), or (ii) any tender offer or exchange offer, merger, amalgamation, acquisition, share exchange or other business combination involving the Company or any of its subsidiaries, or any recapitalization, restructuring, liquidation, disposition, dissolution or other extraordinary transaction with respect to the Company or any of its subsidiaries or any material portion of its or their businesses, provided that the Investor shall be permitted to submit proposals for any such 

 

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transactions if (A) the applicable transaction is the subject of a Board-initiated bid process (it being understood that the Investor shall be required to comply with any rules and procedures established by the Company or its representatives and generally applicable to bidders in any such bid process, if any) or (B) the applicable transaction is the subject of a process initiated by a third party which has not in any way been proposed, assisted or facilitated by the Investor or its Affiliates and in connection with which the Company has entered into discussions (other than discussions solely intended to clarify elements of such third party proposal for purposes of evaluating whether to endorse or oppose such third party proposal) or has otherwise entered into negotiations with respect to any such transaction or pursued any such potential transaction (it being understood that the Investor shall be required to comply with any rules and procedures established by the Company or its representatives and generally applicable to bidders in any such bid process, if any);

 

(f)                                   publicly disclose, or cause or facilitate the public disclosure (including without limitation the filing of any document or report with the SEC or any other governmental agency or any disclosure to any journalist, member of the media or securities analyst) of, any intent, purpose, plan or proposal to obtain any waiver or amendment of, or consent under, any of the provisions of Sections 2.2 or 2.3, or otherwise (i) request any waiver or amendment of, or consent under, any provision of this Agreement or (ii) bring any action or otherwise act to contest the validity of Section 2.2 or 2.3 or seek a release from the restrictions or obligations contained in Section 2.2 or 2.3;

 

(g)                                  make or issue or cause to be made or issued any disclosure, announcement or statement (including without limitation the filing of any document or report with the SEC or any other governmental agency or any public or private disclosure to any journalist, member of the media or securities analyst) (i) in support of any solicitation described in paragraph (c) above (other than solicitations on behalf of the Board), (ii) in support of any matter described in paragraph (d) above, (iii) concerning any potential matter described in paragraph (e) above or (iv) negatively commenting upon the Company, including the Company’s corporate strategy, business, corporate activities or management or any member of the Board or member of management of the Company or its Affiliates or which is inconsistent with the Press Release (as such term is hereinafter defined); provided that the foregoing shall not restrict the Investor from responding, without elaboration, either “Yes” or “No” to an unsolicited direct question regarding whether they voted or intend to vote their Common Shares in favor of any Extraordinary Matter subject to a vote (provided that the Investor shall not be permitted to engage in any further discussions on the matter or to provide any explanations for their “Yes” or “No” response); or

 

(h)                                 enter into any discussions, negotiations, agreements or understandings with any Person with respect to the foregoing or advise, assist, encourage, support or seek to persuade others to take any action with respect to any of the foregoing.

 

Section 2.4.                                 Additional Representations by the Investor.  The Investor represents that, as of the date of this Agreement, the Investor and its Affiliates are not engaged in any discussions or negotiations and do not have any agreements or understandings, whether or not legally enforceable, with any other entity concerning the acquisition of economic ownership of the Common Shares or any other securities issued by the Company.

 

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Section 2.5.                                 Rights Agreement.  The Company hereby confirms that it has taken action pursuant to the Rights Agreement to exempt the Investor from being an “Acquiring Person” as a result of this Agreement or the acquisition of additional Common Shares and agrees that it shall exempt the Investor from being an “Acquiring Person” under any extension of, amendment to, or other agreement adopted in place of the Rights Agreement, in each case as a result of acquiring additional Common Shares to the extent permitted by this Agreement; provided that in no event shall the Investor acquire Beneficial Ownership (as defined in the Rights Agreement) of Common Shares in excess of the Standstill Threshold.

 

Section 2.6.                                 Strategic Review.  The Company hereby agrees that it will include in the Press Release (as defined below) an announcement that the Board will evaluate strategies to enhance shareholder value, including optimizing the Company’s capital structure, reviewing its mix of businesses and improving operating performance, and will hire an independent financial advisory firm of international reputation to assist it in these efforts.  The Board shall not be restricted in the scope of alternatives it may evaluate. The Company’s evaluation shall commence promptly and is expected to be completed by the end of the summer of 2013.

 

Section 2.7.                                 Publicity.  Promptly after the execution of this Agreement, the Company and the Investor will issue a joint press release in the form attached hereto as Schedule B (the “Press Release”), and the Company will file a Current Report on Form 8-K with the SEC within four business days of the date hereof.  Any public statement or comment by the Company or the Investor regarding this Agreement or the matters addressed herein shall be consistent with the Press Release.

 

Section 2.8.                                 Claims.   The Investor represents and warrants that, as of the date hereof and to its knowledge, neither the Investor nor any of its Affiliates have any claims against the Company or any of its subsidiaries.  The Company represents and warrants that, as of the date hereof and to its knowledge, neither the Company nor any of its Affiliates have any claims against the Investor.

 

ARTICLE III

 

OTHER PROVISIONS

 

Section 3.1.                                 Specific Performance; Remedies.  (a)  Each party hereto hereby acknowledges and agrees, on behalf of itself and its Affiliates, that irreparable harm would occur in the event any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached.  It is accordingly agreed that the parties will be entitled to specific relief hereunder, including, without limitation, an injunction or injunctions to prevent and enjoin breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof in the Chancery Court of Delaware or if such court does not accept jurisdiction then any federal court in the State of Delaware, in addition to any other remedy to which they may be entitled at law or in equity.  Any requirements for the securing or posting of any bond with such remedy are hereby waived.

 

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(b)           Each party hereto agrees, on behalf of itself and its Affiliates, that any actions, suits or proceedings arising out of or relating to this Agreement or the transactions contemplated hereby will be brought solely and exclusively in the Chancery Court of Delaware, or if such court does not accept jurisdiction then any federal court in the State of Delaware (and the parties agree not to commence any action, suit or proceeding relating thereto except in such courts), and further agrees that service of any process, summons, notice or document by U.S. registered mail to the respective addresses set forth in Section 3.3 will be effective service of process for any such action, suit or proceeding brought against any party in any such court.  Each party, on behalf of itself and its Affiliates, irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby, in the Chancery Court of Delaware or if such court does not accept jurisdiction then the federal courts in the State of Delaware, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an improper or inconvenient forum.

 

Section 3.2.           Entire Agreement.  This Agreement contains the entire understanding of the parties with respect to the subject matter hereof and may be amended only by an agreement in writing executed by the parties hereto.

 

Section 3.3.           Notices.  All notices, consents, requests, instructions, approvals and other communications provided for herein and all legal process in regard hereto shall be in writing and shall be deemed validly given, made or served, if (a) given by telecopy, when such telecopy is transmitted to the telecopy number set forth below and the appropriate confirmation is received or (b) if given by any other means, when actually received during normal business hours at the address specified in this subsection:

 

if to the Company:

 

Nabors Industries Ltd. 
 Crown House Second Floor

4 Par-la-Ville Road

Hamilton, HM08

Bermuda
 Facsimile:  441-292-1334
 Attention:  Mark D. Andrews, Corporate Secretary

 

with a copy to:

 

Wachtell, Lipton, Rosen & Katz
 51 West 52nd Street 
 New York, NY 10019
 Facsimile:  (212) 403-2000
 Attention:  Daniel A. Neff 

David E. Shapiro

 

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if to the Investor:

 

PHM Investment (USD) 1 S.à.r.l.

68-70, boulevard de la Pétrusse

L-2320 Luxembourg

Telephone: +352 26 49 65 40

Facsimile:  +352 26 49 65 64

Attention:  Board of Managers

 

with a copy to:

 

Pamplona Capital Management LLP

25 Park Lane

London W1K 1RA

United Kingdom

Facsimile:  +44 20 7495 3909
 Attention:  Alexander M. Knaster

Kevin O’Flaherty

 

with a copy to:

 

Schulte Roth & Zabel LLP

919 Third Avenue

New York, NY 10022

Facsimile:  (212) 593-5955

Attention:  Marc Weingarten, Esq.

David E. Rosewater, Esq.

 

Section 3.4.           Governing Law.  This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware, without regard to any conflict of laws provisions thereof.

 

Section 3.5.           Further Assurances.  Each party agrees to take or cause to be taken such further actions, and to execute, deliver and file or cause to be executed, delivered and filed such further documents and instruments, and to obtain such consents, as may be reasonably required or requested by the other parties in order to effectuate fully the purposes, terms and conditions of this Agreement.

 

Section 3.6.           Third-Party Beneficiaries.  This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns, and nothing in this Agreement is intended to confer on any person other than the parties hereto or their respective successors and assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement.

 

Section 3.7.           Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

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Section 3.8            Interpretation.  Each of the parties hereto acknowledges that it has been represented by counsel of its choice throughout all negotiations that have preceded the execution of this Agreement, and that it has executed the same with the advice of said counsel.  Each party and its counsel cooperated and participated in the drafting and preparation of this Agreement and the documents referred to herein, and any and all drafts relating thereto exchanged among the parties shall be deemed the work product of all of the parties and may not be construed against any party by reason of its drafting or preparation.  Accordingly, any rule of law or any legal decision that would require interpretation of any ambiguities in this Agreement against any party that drafted or prepared it is of no application and is hereby expressly waived by each of the parties hereto.

 

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IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement, or caused the same to be executed by its duly authorized representative as of the date first above written.

 

	
 
    	
NABORS   INDUSTRIES LTD.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Mark D. Andrews
    
	
 
    	
 
    	
Name:   Mark D. Andrews
    
	
 
    	
 
    	
Title:   Corporate Secretary
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
PHM   Investment (USD) 1 S.à.r.l.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Raphail Poncelet
    
	
 
    	
 
    	
Name:   Raphail Poncelet
    
	
 
    	
 
    	
Title:   Authorized Signatory
    

 

 

SCHEDULE A

 

The Investor and its Affiliates beneficially own, in the aggregate, 27,002,322Common Shares.    The number of Common Shares economically owned by the Investor and its Affiliates is set forth below.

 

	
Investor
    	
 
    	
Common Shares
    	
 
    
	
PHM Investment (USD) 1 S.à.r.l.
    	
 
    	
25,602,322
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Affiliates
    	
 
    	
Common Shares
    	
 
    
	
Alexander M. Knaster
    	
 
    	
1,400,000
    	
 
    

 

 

SCHEDULE B

 

NABORS TO NOMINATE NEW INDEPENDENT DIRECTORS TO BOARD 
 AT 2013 AND 2014 ANNUAL GENERAL MEETINGS OF SHAREHOLDERS

 

Reaches Agreement with Pamplona

 

Hamilton, Bermuda and New York — [DATE] — Nabors Industries Ltd. (NYSE: NBR) (“Nabors”) and PHM Investment (USD) 1 S.à.r.l., managed by Pamplona Capital Management LLP (“Pamplona”), today announced that Nabors has agreed to nominate a mutually agreed upon independent director for election to the Nabors Board of Directors at the Company’s 2013 and 2014 annual general meetings of shareholders.  Nabors and Pamplona have also agreed that the 2013 nominee and Nabors will mutually agree on a second independent director who will be nominated at the Company’s 2014 annual general meeting of shareholders.  The 2013 nominee has already been appointed to the Board, as detailed in Nabors’ concurrent press release.  Pamplona and its affiliates are currently Nabors’ largest shareholders, owning approximately 9.3% of the outstanding shares.

 

Anthony G. Petrello, President and Chief Executive Officer of Nabors, commented, “We are pleased to have reached this beneficial agreement following a series of constructive discussions with Pamplona.  Today’s announcement enables us to add new and qualified independent directors to our Board and to continue executing on our strategic plan to create value for our shareholders.  The Board is also evaluating strategies to enhance shareholder value, including optimizing the Company’s capital structure, reviewing its mix of businesses and improving operating performance with the assistance of an independent financial advisory firm of international reputation.  We remain confident that our quality asset base, diverse product lines and geography, global infrastructure and talented employee base uniquely position us for the long-term.”

 

Alex Knaster, Chairman of Pamplona Capital Management, said, “We believe that the agreement reached will provide new independent voices and perspectives to Nabors’ Board and will improve the focus on maximizing shareholder value.  We are pleased with the Board’s commitment to conduct a strategic review and look forward to continued constructive interaction with Nabors.”

 

Nabors and Pamplona also announced that, pursuant to their agreement, Pamplona will receive an exemption from Nabors’ shareholder rights plan, allowing the fund to acquire up to 14.99% of Nabors’ common shares.  Additionally, Pamplona has agreed, among other items, to vote its shares in support of all of the Board’s director nominees at the Company’s 2013 and 2014 annual meetings.

 

Details of the agreement can be found in Nabors’ 8-K, filed today with the U.S. Securities and Exchange Commission.

 

About Nabors Industries Ltd.

 

The Nabors companies own and operate approximately 474 land drilling rigs throughout the world and approximately 548 land workover and well servicing rigs in North America.  

 

 

Nabors’ actively marketed offshore fleet consists of 36 platform rigs, 12 jackup units and 4 barge rigs in the United States and multiple international markets. In addition, Nabors is one of the largest providers of hydraulic fracturing, cementing, nitrogen and acid pressure pumping services with approximately 805,000 hydraulic horsepower currently in service.  Nabors also manufactures top drives and drilling instrumentation systems and provides comprehensive oilfield hauling, engineering, civil construction, logistics, and facilities maintenance and project management services.  Nabors participates in most of the significant oil and gas markets in the world.

 

About Pamplona Capital Management

 

Pamplona Capital Management is a specialist investment manager established in 2005 that provides an alternative investment platform across private equity, fund of hedge funds and single manager hedge fund investments. Pamplona manages over $6 billion in assets for a variety of clients including public pension funds, international wealth managers, multinational corporations, family offices and funds of hedge funds. Pamplona is currently managing its third private equity fund, Pamplona Capital Partners III, LP, which was raised in 2011 and has committed capital of Euro 2.0 billion. Pamplona invests long-term capital across the capital structure of its portfolio companies in both public and private market situations.  Pamplona invests primarily in Europe and North America.

 

Forward Looking Statements

 

The information above includes forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. Such forward-looking statements are subject to certain risks and uncertainties, as disclosed by Nabors from time to time in its filings with the Securities and Exchange Commission.  These statements are also subject to risks and uncertainties relating to each party’s compliance with the terms of the agreement between Nabors and Pamplona, the Board’s ability to successfully identify, evaluate and implement strategies to enhance shareholder value.  As a result of these factors, Nabors’ actual results may differ materially from those indicated or implied by such forward-looking statements.  Nabors does not undertake to update these forward-looking statements.

 

CONTACTS:

 

For further information regarding Nabors, please contact Dennis A. Smith, Director of Corporate Development & Investor Relations, at 281-775-8038. To request investor materials, contact Nabors’ corporate headquarters in Hamilton, Bermuda at 441-292-1510 or via email at mark.andrews@nabors.com.

 

For further information regarding Pamplona, please contact Kevin O’Flaherty, Chief Financial Officer of Pamplona, at  +44 20 7079 8009

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