Document:

ex_199021.htm

Exhibit 10.2

 

 

REGISTRATION RIGHTS AGREEMENT

among

ABRAXAS PETROLEUM CORPORATION

and

EACH PERSON IDENTIFIED ON SCHEDULE A

dated as of

August 11, 2020

 

 

 

 

 

 

 

 

 

Table of Contents

	 	 	Page
	Section 1.	Defined Terms	1
	Section 2	5Demand Registration	3
	Section 3	Piggyback Registration	5
	Section 4.	Lock-up Agreement	7
	Section 5.	Registration Procedures	7
	Section 6.	Expenses	10
	Section 7.	Indemnification	10
	Section 8.	Participation in Underwritten Registrations	12
	Section 9.	Rule 144 Compliance	13
	Section 10.	Preservation of Rights  	13
	Section 11.	Termination	13
	Section 12.	Notices	13
	Section 13.	Entire Agreement	14
	Section 14.	Successor and Assigns	14
	Section 15.	No Third-Party Beneficiaries	14
	Section 16.	Headings	14
	Section 17.	Amendment, Modification and Waiver	14
	Section 18.	Severability	14
	Section 19.	Remedies	15
	Section 20.	Governing Law; Submission to Jurisdiction	15
	Section 21.	Waiver of Jury Trial	15
	Section 22.	Counterparts	15
	Section 23.	Further Assurances	16

 

 

	
			Schedule A

				
			Holders

			
	 	 

 

 

 

i

 

 

 

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement (this “Agreement”) is made and entered into as of August 11, 2020 (the “Effective Date”) among ABRAXAS PETROLEUM CORPORATION, a Nevada corporation (the “Company”), and the persons identified on Schedule A hereto (collectively, the “Holders” and, each individually, a “Holder”).

 

WHEREAS, as contemplated by the terms of the letter agreement, dated as of June 25, 2020 (the “Exit Fee Letter”), between the Company and Angelo Gordon Energy Services, LLC, the Company has issued to the Holders warrants (the “Warrants”) to purchase 33,445,792 Shares (the “Warrant Shares”); and

 

WHEREAS, the parties desire to memorialize and provide for certain registration rights of the Holders that are contemplated by the Exit Fee Letter.

 

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

 

Section 1.     Defined Terms. As used in this Agreement, the following terms shall have the following meanings:

 

“Affiliate” of a Person means any other Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, such Person. The term “control” (including the terms “controlling”, “controlled by” and “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.

 

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

 

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

 

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

 

“Common Stock” means the common stock, $0.01 per share, of the Company and any other shares of stock issued or issuable with respect thereto (whether by way of a stock dividend or stock split or in exchange for or upon conversion of such shares or otherwise in connection with a combination of shares, distribution, recapitalization, merger, consolidation, other corporate reorganization or other similar event with respect to the Common Stock).

 

“Company” has the meaning set forth in the preamble and includes the Company’s successors by merger, acquisition, reorganization or otherwise.

 

“Controlling Person” has the meaning set forth in Section 5(q).

 

“Demand Registration” has the meaning set forth in Section 2(b).

 

“DTCDRS” has the meaning set forth in Section 5(r).

 

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

 

 

 

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

“Exit Fee Letter” has the meaning set forth in the recitals.

 

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

 

“Governmental Authority” means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations or orders of such organization or authority have the force of law), or any arbitrator, court or tribunal of competent jurisdiction.

 

“Inspectors” has the meaning set forth in Section 5(h).

 

“Long-Form Registration” has the meaning set forth in Section 2(a).

 

“Person” means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization, trust, association or other entity.

 

“Piggyback Registration” has the meaning set forth in Section 3(a).

 

“Piggyback Registration Statement” has the meaning set forth in Section 3(a).

 

“Piggyback Shelf Registration Statement” has the meaning set forth in Section 3(a).

 

“Piggyback Shelf Takedown” has the meaning set forth in Section 3(a).

 

“Prospectus” means the prospectus or prospectuses included in any Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective Registration Statement in reliance on Rule 430A under the Securities Act or any successor rule thereto), as amended or supplemented by any prospectus supplement, including any Shelf Supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such prospectus or prospectuses.

 

“Records” has the meaning set forth in Section 5(h).

 

“Registrable Securities” means (a) the Warrant Shares issuable upon the exercise of the Warrants, (b) any other shares of Common Stock beneficially owned by the Holders, and (c) any shares of Common Stock issued or issuable with respect to any shares described in clause (a) or (b) above by way of a stock dividend or stock split or in exchange for or upon conversion of such shares or otherwise in connection with a combination of shares, distribution, recapitalization, merger, consolidation, other reorganization or other similar event with respect to the Common Stock (it being understood that, for purposes of this Agreement, a Person shall be deemed to be a holder of Registrable Securities whenever such Person has the right to then acquire or obtain from the Company any Registrable Securities, whether or not such acquisition has actually been effected). As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when (i) the Commission has declared a Registration Statement covering such securities effective and such securities have been disposed of pursuant to such effective Registration Statement, (ii) such securities are sold under circumstances in which all of the applicable conditions of Rule 144 under the Securities

 

 

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Act have been met, (iii) such securities become eligible for sale pursuant to Rule 144 without volume or manner-of-sale restrictions and without the requirement for the Company to be in compliance with the current public information requirement under Rule 144(c)(1) or (iv) such securities have ceased to be outstanding.

 

“Registration Statement” means any registration statement of the Company, including the Prospectus, amendments and supplements (including Shelf Supplements) to such registration statement, including post-effective amendments, all exhibits and all material incorporated by reference in such registration statement.

 

“Rule 144” means Rule 144 under the Securities Act or any successor rule thereto.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

“Selling Expenses” means all underwriting discounts, selling commissions and stock transfer taxes applicable to the sale of Registrable Securities, and fees and disbursements of counsel for any holder of Registrable Securities, except for the fees and disbursements of counsel for the holders of Registrable Securities required to be paid by the Company pursuant to Section 6.

 

“Shelf Registration” has the meaning set forth in Section 2(c).

 

“Shelf Registration Statement” has the meaning set forth in Section 2(c).

 

“Shelf Supplement” has the meaning set forth in Section 2(e).

 

“Shelf Takedown” has the meaning set forth in Section 2(e).

 

“Short-Form Registration” has the meaning set forth in Section 2(b).

 

“Warrant Shares” has the meaning set forth in the recitals.

 

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

 

Section 2.     Demand Registration.

 

(a)     Commencing 180 days after the Effective Date, holders of a majority of the Registrable Securities then outstanding may request up to three, and no more than three, registrations under the Securities Act of all or any portion of their Registrable Securities pursuant to a Registration Statement on Form S-1 or any successor form thereto (each, a “Long-Form Registration”). Each request for a Long-Form Registration shall specify the number of Registrable Securities requested to be included in the Long-Form Registration. Upon receipt of any such request, the Company shall promptly (but in no event later than five days following receipt thereof) deliver notice of such request to all other holders of Registrable Securities who shall then have 10 days from the date such notice is given to notify the Company in writing of their desire to be included in such registration. The Company shall prepare and file with (or confidentially submit to) the Commission a Registration Statement on Form S-1 or any successor form thereto covering all of the Registrable Securities that the holders thereof have requested to be included in such Long-Form Registration within 45 days after the date on which the initial request is given and shall use its reasonable best efforts to cause such Registration Statement to be declared effective by the Commission as soon as practicable thereafter; provided, that, the Company may use a Registration Statement on Form S-3 or any successor form thereto if the Company is again qualified to use such form.

 

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(b)     After the Effective Date, the Company shall use its reasonable best efforts to again qualify and remain qualified to register the offer and sale of securities under the Securities Act pursuant to a Registration Statement on Form S-3 or any successor form thereto. At such time as the Company shall have qualified for the use of a Registration Statement on Form S-3 or any successor form thereto, the holders of Registrable Securities shall have the right to request an unlimited number of registrations under the Securities Act of all or any portion of their Registrable Securities pursuant to a Registration Statement on Form S-3 or any similar short-form Registration Statement (each, a “Short-Form Registration” and, together with each Long-Form Registration and Shelf Registration (as defined below), a “Demand Registration”). Each request for a Short-Form Registration shall specify the number of Registrable Securities requested to be included in the Short-Form Registration. Upon receipt of any such request, the Company shall promptly (but in no event later than 5 days following receipt thereof) deliver notice of such request to all other holders of Registrable Securities who shall then have 10 days from the date such notice is given to notify the Company in writing of their desire to be included in such registration. The Company shall prepare and file with (or confidentially submit to) the Commission a Registration Statement on Form S-3 or any successor form thereto covering all of the Registrable Securities that the holders thereof have requested to be included in such Short-Form Registration within 25 days after the date on which the initial request is given and shall use its reasonable best efforts to cause such Registration Statement to be declared effective by the Commission as soon as practicable thereafter.

 

(c)     At such time as the Company shall have qualified for the use of a Registration Statement on Form S-3 or the then appropriate form for an offering to be made on a delayed or continuous basis pursuant to Rule 415 under the Securities Act or any successor rule thereto (a “Shelf Registration Statement”), the holders of a majority of the Registrable Securities shall have the right to request registration under the Securities Act of all or any portion of their Registrable Securities for an offering on a delayed or continuous basis pursuant to Rule 415 under the Securities Act or any successor rule thereto (a “Shelf Registration”). Each request for a Shelf Registration shall specify the number of Registrable Securities requested to be included in the Shelf Registration. Upon receipt of any such request, the Company shall promptly (but in no event later than 5 days following receipt thereof) deliver notice of such request to all other holders of Registrable Securities who shall then have 10 days from the date such notice is given to notify the Company in writing of their desire to be included in such registration. The Company shall prepare and file with (or confidentially submit to) the Commission a Shelf Registration Statement covering all of the Registrable Securities that the holders thereof have requested to be included in such Shelf Registration within 20 days after the date on which the initial request is given and shall use its reasonable best efforts to cause such Shelf Registration Statement to be declared effective by the Commission as soon as practicable thereafter.

 

(d)     The Company shall not be obligated to effect any Long-Form Registration within 90 days after the effective date of a previous Long-Form Registration or Piggyback Registration in which holders of Registrable Securities were permitted to register the offer and sale under the Securities Act, and actually sold, all of the shares of Registrable Securities requested to be included therein. The Company may postpone for up to 60 days the filing or effectiveness of a Registration Statement for a Demand Registration if the Board determines in its reasonable good faith judgment that such Demand Registration would (i) materially interfere with a significant acquisition, corporate organization, financing, securities offering or other similar transaction involving the Company; (ii) require premature disclosure of material information that the Company has a bona fide business purpose for preserving as confidential; or (iii) render the Company unable to comply with requirements under the Securities Act or Exchange Act; provided, that in such event the holders of a majority of the Registrable Securities initiating such Demand Registration shall be entitled to withdraw such request and, if such request for a Demand Registration is withdrawn, the holders of Registrable Securities shall not have any liability therefor and the Company shall pay all registration expenses in connection with such registration. The Company may delay a Demand Registration or Shelf Takedown hereunder only once in any period of 12 consecutive months.

 

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(e)     If the holders of the Registrable Securities initially requesting a Demand Registration or a shelf supplement (a “Shelf Supplement”) for the purpose of effecting an offering pursuant to Rule 415 under the Securities Act or any successor rule thereto (a “Shelf Takedown”) elect to distribute the Registrable Securities covered by their request in an underwritten offering, they shall so advise the Company as a part of their request made pursuant to the foregoing clauses of this Section 2, and the Company shall include such information in its notice to the other holders of Registrable Securities. The holders of at least a majority of the Registrable Securities initially requesting the Demand Registration or Shelf Takedown shall select the investment banking firm or firms to act as the managing underwriter or underwriters in connection with such offering.

 

(f)     The Company shall not include in any Demand Registration or Shelf Takedown any securities which are not Registrable Securities without the prior written consent of the holders of a majority of the Registrable Securities included in such Demand Registration or Shelf Takedown, which consent shall not be unreasonably withheld or delayed. If a Demand Registration or Shelf Takedown involves an underwritten offering and the managing underwriter of the requested Demand Registration or Shelf Takedown advises the Company and the holders of Registrable Securities in writing that in its reasonable and good faith opinion the number of shares of Common Stock proposed to be included in the Demand Registration or Shelf Takedown, including all Registrable Securities and all other shares of Common Stock proposed to be included in such underwritten offering, exceeds the number of shares of Common Stock which can be sold in such underwritten offering and/or the number of shares of Common Stock proposed to be included in such Demand Registration or Shelf Takedown would adversely affect the price per share of the Common Stock proposed to be sold in such underwritten offering, the Company shall include in such Demand Registration or Shelf Takedown (i) first, the shares of Common Stock that the holders of Registrable Securities propose to sell, and (ii) second, the shares of Common Stock proposed to be included therein by any other Persons (including shares of Common Stock to be sold for the account of the Company and/or other holders of Common Stock) allocated among such Persons in such manner as they may agree. If the managing underwriter determines that less than all of the Registrable Securities proposed to be sold can be included in such offering, then the Registrable Securities that are included in such offering shall be allocated pro rata among the respective holders thereof on the basis of the number of Registrable Securities owned by each such holder.

 

(g)     Any holder of Registrable Securities may withdraw its Registrable Securities from a Registration Statement at any time prior to the effectiveness of the applicable Registration Statement; provided, that, if such holder(s) has no reasonable basis for such withdrawal, such holder(s) will be responsible for a share, in proportion to the number of such holder’s Registrable Securities included in such registration, of any registration expenses paid in connection with such registration, other than expenses required to be paid by the Company pursuant to Section 6 of this Agreement.

 

Section 3.     Piggyback Registration.

 

(a)     Whenever the Company proposes to register the offer and sale of any shares of its Common Stock under the Securities Act (other than a registration (i) pursuant to a Registration Statement on Form S-8 (or other registration solely relating to an offering or sale to employees or directors of the Company pursuant to any employee stock plan or other employee benefit arrangement), (ii) pursuant to a Registration Statement on Form S-4 (or similar form that relates to a transaction subject to Rule 145 under the Securities Act or any successor rule thereto), or (iii) in connection with any dividend or distribution reinvestment or similar plan), whether for its own account or for the account of one or more stockholders of the Company and the form of Registration Statement (a “Piggyback Registration Statement”) to be used may be used for any registration of Registrable Securities (a “Piggyback Registration”), the Company shall give prompt written notice (in any event no later than 30 days prior to the

 

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filing of such Registration Statement) to the holders of Registrable Securities of its intention to effect such a registration and, subject to Section 3(b) and Section 3(c), shall include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion from the holders of Registrable Securities within 15 days after the Company’s notice has been given to each such holder. A Piggyback Registration shall not be considered a Demand Registration for purposes of Section 2. If any Piggyback Registration Statement pursuant to which holders of Registrable Securities have registered the offer and sale of Registrable Securities is a Registration Statement on Form S-3 or the then appropriate form for an offering to be made on a delayed or continuous basis pursuant to Rule 415 under the Securities Act or any successor rule thereto (a “Piggyback Shelf Registration Statement”), such holder(s) shall have the right, but not the obligation, to be notified of and to participate in any offering under such Piggyback Shelf Registration Statement (a “Piggyback Shelf Takedown”).

 

(b)     If a Piggyback Registration or Piggyback Shelf Takedown is initiated as a primary underwritten offering on behalf of the Company and the managing underwriter advises the Company and the holders of Registrable Securities (if any holders of Registrable Securities have elected to include Registrable Securities in such Piggyback Registration or Piggyback Shelf Takedown) in writing that in its reasonable and good faith opinion the number of shares of Common Stock proposed to be included in such registration or takedown, including all Registrable Securities and all other shares of Common Stock proposed to be included in such underwritten offering, exceeds the number of shares of Common Stock which can be sold in such offering and/or that the number of shares of Common Stock proposed to be included in any such registration or takedown would adversely affect the price per share of the Common Stock to be sold in such offering, the Company shall include in such registration or takedown (i) first, the shares of Common Stock that the Company proposes to sell; (ii) second, the shares of Common Stock requested to be included therein by holders of Registrable Securities, allocated pro rata among all such holders on the basis of the number of Registrable Securities owned by each such holder or in such manner as they may otherwise agree; and (iii) third, the shares of Common Stock requested to be included therein by holders of Common Stock other than holders of Registrable Securities, allocated among such holders in such manner as they may agree.

 

(c)     If a Piggyback Registration or Piggyback Shelf Takedown is initiated as an underwritten offering on behalf of a holder of Common Stock other than Registrable Securities, and the managing underwriter advises the Company in writing that in its reasonable and good faith opinion the number of shares of Common Stock proposed to be included in such registration or takedown, including all Registrable Securities and all other shares of Common Stock proposed to be included in such underwritten offering, exceeds the number of shares of Common Stock which can be sold in such offering and/or that the number of shares of Common Stock proposed to be included in any such registration or takedown would adversely affect the price per share of the Common Stock to be sold in such offering, the Company shall include in such registration or takedown (i) first, the shares of Common Stock requested to be included therein by the holder(s) requesting such registration or takedown and by the holders of Registrable Securities, allocated pro rata among all such holders on the basis of the number of shares of Common Stock other than the Registrable Securities (on a fully diluted, as converted basis) and the number of Registrable Securities, as applicable, owned by all such holders or in such manner as they may otherwise agree; and (ii) second, the shares of Common Stock requested to be included therein by other holders of Common Stock, allocated among such holders in such manner as they may agree; provided, that in any event the holders of Registrable Securities shall be entitled to register the offer and sale or distribute at least 50% of the securities to be included in any such registration or takedown.

 

(d)     If any Piggyback Registration or Piggyback Shelf Takedown is initiated as a primary underwritten offering on behalf of the Company, the Company shall select the investment banking firm or firms to act as the managing underwriter or underwriters in connection with such offering.

 

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Section 4.     Lock-up Agreement. Each holder of Registrable Securities agrees that in connection with any registered offering of the Common Stock or other equity securities of the Company, and upon the request of the managing underwriter in such offering, such holder shall not, without the prior written consent of such managing underwriter, during the seven days prior to the effective date of such registration and until the date specified by such managing underwriter (such period not to exceed 60 days), (a) offer, pledge, sell, contract to sell, grant any option or contract to purchase, purchase any option or contract to sell, hedge the beneficial ownership of or otherwise dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into, exercisable for or exchangeable for shares of Common Stock held immediately before the effectiveness of the Registration Statement for such offering, or (b) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of such securities, whether any such transaction described in clause (a) or (b) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise. The foregoing provisions of this Section 4 shall not apply to sales of Registrable Securities to be included in such offering pursuant to Section 2 or Section 3, and shall be applicable to the holders of Registrable Securities only if all officers and directors of the Company and all stockholders owning more than 5% of the Company’s outstanding Common Stock are subject to the same restrictions. Each holder of Registrable Securities agrees to execute and deliver such other agreements as may be reasonably requested by the Company or the managing underwriter which are consistent with the foregoing or which are necessary to give further effect thereto. Notwithstanding anything to the contrary contained in this Section 4, each holder of Registrable Securities shall be released, pro rata, from any lock-up agreement entered into pursuant to this Section 4 in the event and to the extent that the managing underwriter or the Company permit any discretionary waiver or termination of the restrictions of any lock-up agreement pertaining to any officer, director or holder of greater than 5% of the outstanding Common Stock.

 

Section 5.     Registration Procedures. If and whenever the holders of Registrable Securities request that the offer and sale of any Registrable Securities be registered under the Securities Act or any Registrable Securities be distributed in a Shelf Takedown pursuant to the provisions of this Agreement, the Company shall use its reasonable best efforts to effect the registration of the offer and sale of such Registrable Securities under the Securities Act in accordance with the intended method of disposition thereof, and pursuant thereto the Company shall as soon as reasonably practicable and as applicable:

 

(a)     subject to Section 2(a), Section 2(b) and Section 2(c), prepare and file with the Commission a Registration Statement covering such Registrable Securities and use its reasonable best efforts to cause such Registration Statement to be declared effective;

 

(b)     prepare and file with the Commission such amendments, post-effective amendments and supplements to a Registration Statement and the Prospectus used in connection therewith as may be necessary to keep such Registration Statement effective for a period of not less than 180 days, or, in the case of a Short-Form Registration or Shelf Registration, until all of such Registrable Securities have been disposed of and to comply with the provisions of the Securities Act with respect to the disposition of such Registrable Securities in accordance with the intended methods of disposition set forth in such Registration Statement;

 

(c)     at least 30 days before filing such Registration Statement, Prospectus or amendments or supplements thereto with the Commission, furnish to one counsel selected by holders of a majority of such Registrable Securities copies of such documents proposed to be filed, which documents shall be subject to the review, comment and approval of such counsel; provided, that the Company shall not have any obligation to modify any information if the Company reasonably expects that so doing would cause (i) the Registration Statement to contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading or (ii) the Prospectus to contain an untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading;

 

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(d)     notify each selling holder of Registrable Securities, promptly after the Company receives notice thereof, of the time when such Registration Statement has been declared effective or a supplement, including a Shelf Supplement, to any Prospectus forming a part of such Registration Statement has been filed with the Commission;

 

 

(e)     furnish to each selling holder of Registrable Securities such number of copies of the Prospectus included in such Registration Statement (including each preliminary Prospectus) and any supplement thereto, including a Shelf Supplement (in each case including all exhibits and documents incorporated by reference therein), and such other documents as such seller may request in order to facilitate the disposition of the Registrable Securities owned by such seller;

 

(f)     use its reasonable best efforts to register or qualify such Registrable Securities under such other securities or “blue sky” laws of such jurisdictions as any selling holder requests and do any and all other acts and things which may be necessary or advisable to enable such holders to consummate the disposition in such jurisdictions of the Registrable Securities owned by such holders; provided, that the Company shall not be required to qualify generally to do business, subject itself to general taxation or consent to general service of process in any jurisdiction where it would not otherwise be required to do so but for this Section 5(f);

 

(g)     notify each selling holder of such Registrable Securities, at any time when a Prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event that would cause the Prospectus included in such Registration Statement to contain an untrue statement of a material fact or omit any fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading, and, at the request of any such holder, the Company shall prepare a supplement or amendment to such Prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such Prospectus shall not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;

 

(h)     upon reasonable notice, make available for inspection by any selling holder of Registrable Securities, any underwriter participating in any disposition pursuant to such Registration Statement and any attorney, accountant or other agent retained by any such holder or underwriter (collectively, the “Inspectors”), all financial and other records, pertinent corporate documents and properties of the Company (collectively, the “Records”), as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Company’s officers, directors and employees to supply all information requested by any such Inspector in connection with such Registration Statement;

 

(i)     provide a transfer agent and registrar (which may be the same entity) for all such Registrable Securities not later than the effective date of such registration;

 

(j)     use its reasonable best efforts to cause such Registrable Securities to be listed on each securities exchange on which the Common Stock is then listed or, if the Common Stock is not then listed, on a national securities exchange selected by the holders of a majority of such Registrable Securities;

 

(k)     in connection with an underwritten offering, enter into such customary agreements (including underwriting and lock-up agreements in customary form) and take all such other customary actions as the holders of such Registrable Securities or the managing underwriter of such offering reasonably request in order to expedite or facilitate the disposition of such Registrable Securities (including, without limitation, making appropriate officers of the Company available to participate in “road show” and other customary marketing activities (including one-on-one meetings with prospective purchasers of the Registrable Securities));

 

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(l)     otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the Commission and make available to its stockholders an earnings statement (in a form that satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 under the Securities Act or any successor rule thereto) no later than 30 days after the end of the 12-month period beginning with the first day of the Company’s first full fiscal quarter after the effective date of such Registration Statement, which earnings statement shall cover said 12-month period, and which requirement will be deemed to be satisfied if the Company timely files complete and accurate information on Forms 10-K, 10-Q and 8-K under the Exchange Act and otherwise complies with Rule 158 under the Securities Act or any successor rule thereto; and

 

(m)     furnish to each selling holder of Registrable Securities and each underwriter, if any, with (i) a written legal opinion of the Company’s outside counsel, dated the closing date of the offering, in form and substance as is customarily given in opinions of the Company’s counsel to underwriters in underwritten registered offerings; and (ii) on the date of the applicable Prospectus, on the effective date of any post-effective amendment to the applicable Registration Statement and at the closing of the offering, dated the respective dates of delivery thereof, a “comfort” letter signed by the Company’s independent certified public accountants in form and substance as is customarily given in accountants’ letters to underwriters in underwritten registered offerings;

 

(n)     without limiting Section 5(f), use its reasonable best efforts to cause such Registrable Securities to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of the Company to enable the holders of such Registrable Securities to consummate the disposition of such Registrable Securities in accordance with their intended method of distribution thereof;

 

(o)     notify the holders of Registrable Securities promptly of any request by the Commission for the amending or supplementing of such Registration Statement or Prospectus or for additional information;

 

(p)     advise the holders of Registrable Securities, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the Commission suspending the effectiveness of such Registration Statement or the initiation or threatening of any proceeding for such purpose and promptly use its reasonable best efforts to prevent the issuance of any stop order or to obtain its withdrawal at the earliest possible moment if such stop order should be issued;

 

(q)     permit any holder of Registrable Securities which holder, in its sole and exclusive judgment, might be deemed to be an underwriter or a “controlling person” (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act) (a “Controlling Person”) of the Company, to participate in the preparation of such Registration Statement and to require the insertion therein of language, furnished to the Company in writing, which in the reasonable judgment of such holder and its counsel should be included;

 

(r)     cooperate with the holders of the Registrable Securities to facilitate the timely preparation and delivery of certificates representing the Registrable Securities to be sold pursuant to such Registration Statement or Rule 144 free of any restrictive legends and representing such number of shares of Common Stock and registered in such names as the holders of the Registrable Securities may reasonably request a reasonable period of time prior to sales of Registrable Securities pursuant to such

 

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Registration Statement or Rule 144; provided, that the Company may satisfy its obligations hereunder without issuing physical stock certificates through the use of The Depository Trust Company’s Direct Registration System (the “DTCDRS”);

 

(s)     not later than the effective date of such Registration Statement, provide a CUSIP number for all Registrable Securities and provide the applicable transfer agent with printed certificates for the Registrable Securities which are in a form eligible for deposit with The Depository Trust Company; provided, that the Company may satisfy its obligations hereunder without issuing physical stock certificates through the use of the DTCDRS;

 

(t)     take no direct or indirect action prohibited by Regulation M under the Exchange Act; provided, that, to the extent that any prohibition is applicable to the Company, the Company will take all reasonable action to make any such prohibition inapplicable; and

 

(u)     otherwise use its reasonable best efforts to take all other steps necessary to effect the registration of such Registrable Securities contemplated hereby.

 

Section 6.     Expenses. All expenses (other than Selling Expenses) incurred by the Company in complying with its obligations pursuant to this Agreement and in connection with the registration and disposition of Registrable Securities shall be paid by the Company, including, without limitation, all (i) registration and filing fees (including, without limitation, any fees relating to filings required to be made with, or the listing of any Registrable Securities on, any securities exchange or over-the-counter trading market on which the Registrable Securities are listed or quoted); (ii) underwriting expenses (other than fees, commissions or discounts); (iii) expenses of any audits incident to or required by any such registration; (iv) fees and expenses of complying with securities and “blue sky” laws (including, without limitation, fees and disbursements of counsel for the Company in connection with “blue sky” qualifications or exemptions of the Registrable Securities); (v) printing expenses; (vi) messenger, telephone and delivery expenses; (vii) fees and expenses of the Company’s counsel and accountants; (viii) Financial Industry Regulatory Authority, Inc. filing fees (if any); and (ix) fees and expenses of one counsel for the holders of Registrable Securities participating in such registration as a group (selected by, in the case of a registration under Section 2(a), the holders of a majority of the Registrable Securities initially requesting such registration, and, in the case of all other registrations hereunder, the holders of a majority of the Registrable Securities included in the registration). In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties) and the expense of any annual audits. All Selling Expenses relating to the offer and sale of Registrable Securities registered under the Securities Act pursuant to this Agreement shall be borne and paid by the holders of such Registrable Securities, in proportion to the number of Registrable Securities included in such registration for each such holder.

 

Section 7.     Indemnification.

 

(a)     The Company shall indemnify and hold harmless, to the fullest extent permitted by law, each holder of Registrable Securities, such holder’s officers, directors, managers, members, partners, stockholders and Affiliates, each underwriter, broker or any other Person acting on behalf of such holder of Registrable Securities and each other Controlling Person, if any, who controls any of the foregoing Persons, against all losses, claims, actions, damages, liabilities and expenses, joint or several, to which any of the foregoing Persons may become subject under the Securities Act or otherwise, insofar as such losses, claims, actions, damages, liabilities or expenses arise out of or are based upon any untrue or alleged untrue statement of a material fact contained in any Registration Statement, Prospectus, preliminary Prospectus, free writing prospectus (as defined in Rule 405 under the Securities Act or any successor rule thereto) or any amendment thereof or supplement thereto or any omission

 

10

 

or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of a Prospectus, preliminary Prospectus or free writing prospectus, in light of the circumstances under which they were made) not misleading; and shall reimburse such Persons for any legal or other expenses reasonably incurred by any of them in connection with investigating or defending any such loss, claim, action, damage or liability, except insofar as the same are caused by or contained in any information furnished in writing to the Company by such holder expressly for use therein or by such holder’s failure to deliver a copy of the Registration Statement, Prospectus, preliminary Prospectus, free writing prospectus (as defined in Rule 405 under the Securities Act or any successor rule thereto) or any amendments or supplements thereto (if the same was required by applicable law to be so delivered) after the Company has furnished such holder with a sufficient number of copies of the same prior to any written confirmation of the sale of Registrable Securities. This indemnity shall be in addition to any liability the Company may otherwise have.

 

(b)     In connection with any registration in which a holder of Registrable Securities is participating, each such holder shall furnish to the Company in writing such information as the Company reasonably requests for use in connection with any such Registration Statement or Prospectus and, to the extent permitted by law, shall indemnify and hold harmless, the Company, each director of the Company, each officer of the Company who shall sign such Registration Statement, each underwriter, broker or other Person acting on behalf of the holders of Registrable Securities and each Controlling Person who controls any of the foregoing Persons against any losses, claims, actions, damages, liabilities or expenses resulting from any untrue or alleged untrue statement of material fact contained in the Registration Statement, Prospectus, preliminary Prospectus, free writing prospectus (as defined in Rule 405 under the Securities Act or any successor rule thereto) or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of a Prospectus, preliminary Prospectus or free writing prospectus, in light of the circumstances under which they were made) not misleading, but only to the extent that such untrue statement or omission is contained in any information so furnished in writing by such holder; provided, that the obligation to indemnify shall be several, not joint and several, for each holder and shall not exceed an amount equal to the net proceeds (after underwriting fees, commissions or discounts) actually received by such holder from the sale of Registrable Securities pursuant to such Registration Statement. This indemnity shall be in addition to any liability the selling holder may otherwise have.

 

(c)     Promptly after receipt by an indemnified party of notice of the commencement of any action involving a claim referred to in this Section 7, such indemnified party shall, if a claim in respect thereof is made against an indemnifying party, give written notice to the latter of the commencement of such action. The failure of any indemnified party to notify an indemnifying party of any such action shall not (unless such failure shall have a material adverse effect on the indemnifying party) relieve the indemnifying party from any liability in respect of such action that it may have to such indemnified party hereunder. In case any such action is brought against an indemnified party, the indemnifying party shall be entitled to participate in and to assume the defense of the claims in any such action that are subject or potentially subject to indemnification hereunder, jointly with any other indemnifying party similarly notified to the extent that it may wish, with counsel reasonably satisfactory to such indemnified party, and after written notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be responsible for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof; provided, that, if (i) any indemnified party shall have reasonably concluded that there may be one or more legal or equitable defenses available to such indemnified party which are additional to or conflict with those available to the indemnifying party, or that such claim or litigation involves or could have an effect upon matters beyond the scope of the indemnity provided hereunder, or (ii) such action seeks an injunction or equitable relief against any indemnified party or involves actual or alleged criminal activity, the indemnifying party shall not have the right to assume the defense of such action on behalf of such indemnified party without such indemnified party’s prior written consent (but, without such

 

11

 

consent, shall have the right to participate therein with counsel of its choice) and such indemnifying party shall reimburse such indemnified party and any Controlling Person of such indemnified party for that portion of the fees and expenses of any counsel retained by the indemnified party which is reasonably related to the matters covered by the indemnity provided hereunder. If the indemnifying party is not entitled to, or elects not to, assume the defense of a claim, it shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim. In such instance, the conflicting indemnified parties shall have a right to retain one separate counsel, chosen by the holders of a majority of the Registrable Securities included in the registration, at the expense of the indemnifying party.

 

(d)     If the indemnification provided for hereunder is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, claim, damage, liability or action referred to herein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amounts paid or payable by such indemnified party as a result of such loss, claim, damage, liability or action in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions which resulted in such loss, claim, damage, liability or action as well as any other relevant equitable considerations; provided, that the maximum amount of liability in respect of such contribution shall be limited, in the case of each holder of Registrable Securities, to an amount equal to the net proceeds (after underwriting fees, commissions or discounts) actually received by such seller from the sale of Registrable Securities effected pursuant to such registration. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties agree that it would not be just and equitable if contribution pursuant hereto were determined by pro rata allocation or by any other method or allocation which does not take account of the equitable considerations referred to herein. No Person guilty or liable of fraudulent misrepresentation within the meaning of Section 11(f) of the Securities Act shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

 

Section 8.     Participation in Underwritten Registrations. No Person may participate in any registration hereunder which is underwritten unless such Person (a) agrees to sell such Person’s securities on the basis provided in any underwriting arrangements approved by the Person or Persons entitled hereunder to approve such arrangements and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements; provided, that no holder of Registrable Securities included in any underwritten registration shall be required to make any representations or warranties to the Company or the underwriters, or to undertake any indemnification obligation, other than those customarily made or undertaken by sellers in underwritten offerings.

 

Section 9.     Rule 144 Compliance. With a view to making available to the holders of Registrable Securities the benefits of Rule 144 and any other rule or regulation of the Commission that may at any time permit a holder to sell securities of the Company to the public without registration, the Company shall:

 

(a)     make and keep public information available, as those terms are understood and defined in Rule 144, at all times after the Registration Date;

 

12

 

 

(b)     use reasonable best efforts to file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act, at any time after the Registration Date; and

 

(c)     furnish to any holder so long as the holder owns Registrable Securities, promptly upon request, a written statement by the Company as to its compliance with the reporting requirements of Rule 144 and of the Securities Act and the Exchange Act, a copy of the most recent annual or quarterly report of the Company, and such other reports and documents so filed or furnished by the Company as such holder may reasonably request in connection with the sale of Registrable Securities without registration.

 

Section 10.     Preservation of Rights. The Company shall not (a) grant any registration rights to third parties without the prior written consent of the holders of a majority of the Registrable Securities, or (b) enter into any agreement, take any action, or permit any change to occur, with respect to its securities that violates or subordinates the rights expressly granted to the holders of Registrable Securities in this Agreement.

 

Section 11.     Termination. This Agreement shall terminate and be of no further force or effect when there shall no longer be any Registrable Securities outstanding; provided, that the provisions of Section 6 and Section 7 shall survive any such termination.

 

Section 12.     Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient; or (d) on the third business day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the addresses indicated below (or at such other address for a party as shall be specified in a notice given in accordance with this Section 12).

 

If to the Company:

 

	
			Abraxas Petroleum Corporation

			18803 Meisner Dr.

			San Antonio, TX 78258

			Facsimile: 210-490-8816

			                  210-918-6675

			E-mail: SHarris@abraxaspetroleum.com

			Attention: Steve Harris

			 

			with a copy to:

			
	
			Dykema Gossett PLLC

			112 E. Pecan Street

			Suite 1800

			San Antonio, TX 78205

			Facsimile: 210-226-8395

			E-mail: JSmith@dykema.com

			Attention: James B. Smith, Jr.

			

 

 

13

 

 

If to any Holder, to such Holder’s address as set forth on Schedule A hereto.

 

Section 13.     Entire Agreement. This Agreement, together with the Warrants, constitutes the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter.

 

Section 14.     Successor and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. No party shall assign any of its rights or delegate any of its obligations hereunder without the prior written consent of the other parties hereto; provided, however, that each Holder may assign its rights hereunder to any purchaser or transferee of Registrable Securities; provided, that such purchaser or transferee shall, as a condition to the effectiveness of such assignment, be required to execute a counterpart to this Agreement agreeing to be treated as an Holder whereupon such purchaser or transferee shall have the benefits of, and shall be subject to the restrictions contained in, this Agreement as if such purchaser or transferee was originally included in the definition of an Holder herein and had originally been a party hereto.

 

Section 15.     No Third-Party Beneficiaries. This Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever, under or by reason of this Agreement; provided, however, the parties hereto hereby acknowledge that the Persons set forth in Section 7 are express third-party beneficiaries of the obligations of the parties hereto set forth in Section 7.

 

Section 16.     Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

 

Section 17.     Amendment, Modification and Waiver. The provisions of this Agreement may only be amended, modified, supplemented or waived with the prior written consent of the Company and the holders of a majority of the Registrable Securities. No waiver by any party or parties shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. Except as otherwise set forth in this Agreement, no failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

 

Section 18.     Severability. If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

 

Section 19.     Remedies. Each holder of Registrable Securities, in addition to being entitled to exercise all rights granted by law, including recovery of damages, shall be entitled to specific performance of its rights under this Agreement. The Company acknowledges that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and the Company hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

 

14

 

 

Section 20.     Governing Law; Submission to Jurisdiction.

 

(a)     This Agreement and any claims, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement and the transactions contemplated hereby and thereby shall be governed by, and construed in accordance with, the laws of the State of New York and the applicable laws of the United States of America. The Company irrevocably and unconditionally agrees that it will not commence any action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or in tort or otherwise, against the Holders in any way relating to this Agreement or the transactions relating hereto, in any forum other than the courts of the State of New York sitting in the Borough of Manhattan and of the United States District Court for the Southern District of the State of New York and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits to the jurisdiction of such courts and agrees that all claims in respect of any such action, litigation or proceeding may be heard and determined in such New York State court or, to the fullest extent permitted by applicable law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action, litigation or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that the Holders may otherwise have to bring any action or proceeding relating to this Agreement against the Company or its properties in the courts of any jurisdiction.

 

(b)     The Company expressly and irrevocably and unconditionally waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement in any court referred to in Section 20(a). Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

 

Section 21.     Waiver of Jury Trial. Each party acknowledges and agrees that any controversy which may arise under this Agreement is likely to involve complicated and difficult issues and, therefore, each such party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any legal action arising out of or relating to this Agreement or the transactions contemplated hereby. Each party to this Agreement certifies and acknowledges that (a) no representative of any other party has represented, expressly or otherwise, that such other party would not seek to enforce the foregoing waiver in the event of a legal action, (b) such party has considered the implications of this waiver, (c) such party makes this waiver voluntarily, and (d) such party has been induced to enter into this Agreement by, among other things, the mutual waivers and certifications in this Section 21.

 

Section 22.     Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

 

Section 23.     Further Assurances. Each of the parties to this Agreement shall execute and deliver such additional documents, instruments, conveyances and assurances and take such further actions as may be reasonably required to carry out the provisions hereof and to give effect to the transactions contemplated hereby.

 

15

 

 

[Signature page follows]

 

 

 

 

16

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first written above.

 

	 	
			ABRAXAS PETROLEUM CORPORATION

			
	 	 
	 	 
	 	
			By:/s/.Steve Harris

			
	 	
			Name:Steve Harris

			
	 	
			Title:Vice President and Chief Financial Officer

			
	 	 
	 	 
	 	
			AG ENERGY FUNDING, LLC ON BEHALF OF SERIES 17 AND SERIES 20

			
	 	 
	 	 
	 	
			By:/s/Todd Dittmann

			
	 	
			Name:Todd Dittmann

			
	 	
			Title:Authorized Person

			
	 	 

 

 

[Signature Page to Registration Rights Agreement]

 

17

 

 

SCHEDULE A

HOLDERS

 

AG Energy Funding, LLC

 

Address for Notices

c/o Alter Domus

225 W. Washington Street, 9th Floor

Chicago, IL 60606

E-mail: angelogordonagency@alterdomus.com and legal@alterdomus.com

Attention: Agency Services – Angelo, Gordon and Legal Department

 

with a copy to:

 

Simpson Thacher & Bartlett LLP

600 Travis Street, Suite 5400

Houston, TX 77002

E-mail: RRabalais@stblaw.com

Attention: Robert Rabalais

 

 

Schedule A-1

18ex_198987.htm

Exhibit 10.3

 

 

 

 

GOVERNANCE AGREEMENT

among

ABRAXAS PETROLEUM CORPORATION

and

AG ENERGY FUNDING, LLC

dated as of

August 11, 2020

 

 

 

 

 

 

 

TABLE OF CONTENTS

 

 

	 	 	 	
			Page

			
	 	 	
			ARTICLE I

				 
	 	 	
			DEFINITIONS

				 
	 	 	 	 
	
			Section 1.01

				 	
			Defined Terms

				
			1

			
	 	 	 	 
	 	 	
			ARTICLE II

				 
	 	 	
			Governance rights

				 
	 	 	 	 
	
			Section 2.01

				 	
			Board Designation Rights

				
			2

			
	
			Section 2.02

				 	
			Board Observer

				
			3

			
	
			Section 2.03

				 	
			Board Resolutions

				
			4

			
	 	 	 	 
	 	 	
			ARTICLE III

				 
	 	 	
			TERM AND TERMINATION

				 
	 	 	 	 
	
			Section 3.01

				 	
			Term and Termination

				
			4

			
	
			Section 3.02

				 	
			Effect of Termination   

				
			4

			
	 	 	 	 
	 	 	
			ARTICLE IV

				 
	 	 	
			MISCELLANEOUS

				 
	 	 	 	 
	
			Section 4.01

				 	
			Expenses

				
			5

			
	
			Section 4.02

				 	
			Further Assurances

				
			5

			
	
			Section 4.03

				 	
			Notices

				
			5

			
	
			Section 4.04

				 	
			Interpretation

				
			6

			
	
			Section 4.05

				 	
			Severability

				
			6

			
	
			Section 4.06

				 	
			Entire Agreement

				
			6

			
	
			Section 4.07

				 	
			Successors and Assigns; Assignment

				
			7

			
	
			Section 4.08

				 	
			No Third-Party Beneficiaries

				
			7

			
	
			Section 4.09

				 	
			Amendment and Modification

				
			7

			
	
			Section 4.10

				 	
			Waiver

				
			7

			
	
			Section 4.11

				 	
			Governing Law

				
			7

			
	
			Section 4.12

				 	
			Submission to Jurisdiction

				
			7

			
	
			Section 4.13

				 	
			Waiver of Jury Trial

				
			8

			
	
			Section 4.14

				 	
			Equitable Remedies

				
			8

			
	
			Section 4.15

				 	
			Remedies Cumulative

				
			8

			
	
			Section 4.16

				 	
			Counterparts

				
			8

			
	 	 	 	 
	 	 	 	 

 

 

 

i

 

 

 

 

 

GOVERNANCE AGREEMENT

 

This Governance Agreement (this “Agreement”), dated as of August 11, 2020 (the “Effective Date”), is entered into between ABRAXAS PETROLEUM CORPORATION (the “Company”) and AG ENERGY FUNDING, LLC (“Holder”).

 

RECITALS

 

WHEREAS, as contemplated by the terms of the letter agreement, dated as of June 25, 2020 (the “Exit Fee Letter”), between the Company and Angelo Gordon Energy Servicer, LLC (“AGES”), the parties hereto desire to memorialize and provide for certain governance rights that are contemplated by the Exit Fee Letter; and

 

WHEREAS, as further contemplated by the terms of the Exit Fee Letter, the Company has issued, or is expected to issue after the Effective Date, to Holder or its Affiliates, warrants (the “Warrants”) to purchase 33,445,792 Shares.

 

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

 

ARTICLE I     

DEFINITIONS

 

Section 1.01     Defined Terms. Capitalized terms used herein and not otherwise defined shall have the meanings specified or referenced in this Article I.

 

“Affiliate” means with respect to any Person, any other Person who, directly or indirectly (including through one or more intermediaries), controls, is controlled by, or is under common control with, such Person. For purposes of this definition, “control,” when used with respect to any specified Person, shall mean the power, direct or indirect, to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities or partnership or other ownership interests, by contract or otherwise; and the terms “controlling” and “controlled” shall have correlative meanings.

 

“AG Director” has the meaning set forth in Section 2.01.

 

“AG Observer” has the meaning set forth in Section 2.02.

 

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

 

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

 

“Articles of Incorporation” means the articles of incorporation of the Company, as filed with the Secretary of State of the State of Nevada prior to the Effective Date, and as amended, modified, supplemented, or restated from time to time in accordance with the terms of this Agreement.

 

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

 

“Board Designation Notice” has the meaning set forth in Section 2.01.

 

“Business Day” means a day other than a Saturday, Sunday, or other day on which commercial banks in the State of Texas or New York are authorized or required to close.

 

 

 

 

“Bylaws” means the Amended and Restated Bylaws of the Company as in effect on the Effective Date, as amended, modified, supplemented, or restated from time to time in accordance with the terms of this Agreement.

 

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

 

“Independent” means, with respect to any person that serves as a Director or is nominated or designated to serve as a Director at any time, the satisfaction by such person of the requirements to be “independent” under (a) the Company’s Governing Documents or (b) Stock Exchange Rules and any applicable rules and regulations of the Securities and Exchange Commission (or any successor agency).

 

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

 

“Exchange Act” means the Securities Exchange Act of 1934.

 

“Exit Fee Letter” has the meaning set forth in the recitals.

 

“Governing Documents” means the Articles of Incorporation and the Bylaws.

 

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

 

“Person” means an individual, corporation, partnership, joint venture, limited liability company, governmental authority, unincorporated organization, trust, association, or other entity.

 

“Shares” means shares of common stock, $0.01 par value, of the Company and any securities issued in respect thereof, or in substitution therefor, in connection with any share split, dividend, or combination, or any reclassification, recapitalization, merger, consolidation, exchange, or similar reorganization.

 

“Stock Exchange Rules” means the rules and regulations of the NASDAQ Stock Market LLC or, if the Shares are listed on another primary securities exchange, of the securities exchange on which the Shares are listed at such time.

 

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

 

ARTICLE II     

Governance rights

 

Section 2.01     Board Designation Rights. Following the Effective Date, Holder shall have the right to designate one individual (such individual, the “AG Director”) to be appointed as a director to the Board by delivery of written notice to the Company (the “Board Designation Notice”). Upon delivery of the Board Designation Notice, the following rights and obligations shall apply:

 

(a)     Within 10 calendar days after delivery of the Board Designation Notice, the Company shall take all corporate and other action necessary to increase the size of the Board to 5 members.

 

(b)     Within 10 calendar days after delivery of the Board Designation Notice, the Company shall take all corporate and other action reasonably necessary to cause the AG Director to be appointed as a director to the Board and to fill one vacancy on the Board. The AG Director shall be designated as a member of the class of directors up for election at the next annual meeting of Company stockholders. The AG Director shall not be required to qualify as Independent.

 

2

 

 

(c)     The Company shall nominate the AG Director (or any replacement thereof as provided for in this Agreement) for re-election to the Board at each subsequent meeting of the stockholders of the Company held to consider a vote on the election of the class of directors of which the AG Director is a member, and shall not take any action to interfere with the election or re-election of the AG Director. If at any time a vacancy occurs on the Board with respect to the directorship of the AG Director (by reason of such director’s death, disability, resignation, removal or otherwise), the Company shall cause a replacement AG Director designated by Holder to be appointed to fill such vacancy. The AG Director may resign from the Board at any time, and, subject to applicable law and the Governing Documents, Holder shall have the right at any time to remove (with or without cause) the AG Director.

 

(d)     The Company shall undertake efforts to solicit from the stockholders of the Company eligible to vote for the election of directors proxies in favor of the AG Director to the same extent it does for all other Company directors.

 

(e)     The Company shall take or cause to be taken all lawful action reasonably necessary to ensure at all times that the Governing Documents are not at any time inconsistent with the provisions of this Agreement.

 

(f)     So long as Holder has the right to designate the AG Director hereunder, and the AG Director is then-serving on the Board, unless Holder otherwise agrees, the AG Director shall have the right to be appointed to each committee of the Board, except as otherwise required by applicable law or Stock Exchange Rules and except for the Company’s Audit Committee or any committee evaluating a related party transaction with respect to which Holder or any of its Affiliates have a conflict of interest with other Company shareholders.

 

(g)     Within 10 calendar days after delivery of the Board Designation Notice, the Company shall enter into and shall at all times maintain in effect an indemnification agreement with the AG Director in form and substance reasonably acceptable to Holder.

 

(h)     In the event any law, rule or regulation comes into force or effect (including by amendment) which conflicts with the terms and conditions of this Agreement, the parties shall negotiate in good faith to revise the Agreement to achieve the parties’ intention set forth herein.

 

(i)     The Company shall reimburse the AG Director for all reasonable out-of-pocket costs and expenses (including travel expenses) incurred in connection with the AG Director’s attendance and participation at meetings of the Board or any committee or subcommittee thereof.

 

(j)     For so long as the AG Director is serving on the Board, (i) any share ownership requirement for the AG Director serving on the Board will be deemed satisfied by the securities owned by Holder and its Affiliates and (ii) under no circumstances shall any policy, procedure, code, rule, standard or guideline applicable to the Board and adopted by the Company restrict the number of boards of directors of other companies on which the AG Director may serve, and, in the case of each of (i) and (ii), it is agreed that any such policies in effect from time to time that purport to impose terms inconsistent with this Section 2.01(j) shall not apply to the extent inconsistent with this Section 2.01(j).

 

Section 2.02     Board Observer. Following the Effective Date and throughout the term of this Agreement, at any time during which no AG Director is serving on the Board, Holder shall have the right to designate one individual (such individual, the “AG Observer”) to be appointed as a non-voting observer to the Board by delivery of written notice to the Company. The AG Observer shall have the right to attend all meetings of the Board and each committee or subcommittee thereof, except as otherwise required by applicable law or Stock Exchange Rules and except for the Company’s Audit Committee or any committee evaluating a related party transaction with respect to which Holder or any of its Affiliates have a conflict of interest with other Company shareholders. The AG Observer shall have the right to receive all notices, minutes, consents, information and materials relating to meetings of the Board and any committee or subcommittee thereof that the AG Observer has the right to attend at the same time and in the same format that such notices, minutes, consents, information and materials are distributed to the members of the Board or committee or subcommittee. The Company shall reimburse the AG Observer for all reasonable out-of-pocket costs and expenses (including travel expenses) incurred in connection with the AG Observer’s attendance and participation at meetings of the Board or any committee or subcommittee thereof.

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Section 2.03     Board Resolutions. The Company agrees that, prior to the appointment of the AG Director or AG Observer or the issuance of the Warrants, the Board shall, if not already taken, take all corporate and other action necessary reasonably requested by Holder:

 

(a)     To cause the exemption of the transactions contemplated by the Exit Fee Letter and this Agreement and any other transactions between Holder or its Affiliates and the Company or its subsidiaries related to such matters from the liability provisions of Section 16(b) of the Exchange Act pursuant to Rule 16b-3 so long as the Holders have the right to appoint the AG Director or AG Observer or the AG Director or AG Observer serves on or is appointed to the Board or is subject to Section 16 of the Exchange Act.

 

(b)     To cause the exemption of the AG Director, AG Observer and Holder and its Affiliates from the application of any corporate opportunities or similar doctrine that may otherwise be applicable to any of them under applicable law or the Governing Documents.

 

ARTICLE III     

TERM AND TERMINATION

 

Section 3.01     Term and Termination. This Agreement shall take effect immediately upon the Effective Date and shall terminate upon the earliest of:

 

(a)     the first date on which (1) the Holder or any of its Affiliates cease to beneficially own greater than 5% of the Shares (on an as converted basis and taking into account any adjustments pursuant to Section 4 of the Warrant Agreement between the parties) outstanding or (2) the Exercise Period (as defined in the Warrants) has expired without any of the holders thereof having exercised any Warrants; and

 

(b)     the agreement of Holder in writing.

 

Section 3.02     Effect of Termination.

 

(a)     The termination of this Agreement shall terminate all further rights and obligations of Holder under this Agreement except that such termination shall not effect:

 

(i)     the obligation of any party to this Agreement to pay any amounts arising on or prior to the date of termination, or as a result of or in connection with such termination;

 

(ii)     the rights which Holder may have by operation of law as a stockholder of the Company; or

 

(iii)     the rights contained herein which by their terms are intended to survive termination of this Agreement.

 

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(b)     The following provisions shall survive the termination of this Agreement: Section 2.01(i), this Section 3.02, Section 4.03, Section 4.04, Section 4.08, Section 4.10, Section 4.11, Section 4.12, Section 4.13, Section 4.14 and Section 4.15.

 

ARTICLE IV     

MISCELLANEOUS

 

Section 4.01     Expenses. Except as otherwise expressly provided herein, all costs and expenses, including fees and disbursements of counsel, financial advisors, and accountants, incurred in connection with the preparation and execution of this Agreement, or any amendment or waiver hereof, and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses.

 

Section 4.02     Further Assurances. In connection with this Agreement and the transactions contemplated hereby, the Company and Holder hereby agrees, at the request of the Company or Holder, to execute and deliver such additional documents, certificates, instruments, conveyances, and assurances and to take such further actions as may be required to carry out the provisions hereof and give effect to the transactions contemplated hereby.

 

Section 4.03     Notices.

 

(a)     All notices, requests, consents, claims, demands, waivers, and other communications hereunder shall be in writing and shall be deemed to have been given: (i) when delivered by hand (with written confirmation of receipt); (ii) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (iii) on the date sent by facsimile or email of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient; or (iv) on the third Business Day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid.

 

(b)     Such communications in Section 4.03(a) must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 4.03):

 

(i)     if to the Company, as follows:

 

	
			Abraxas Petroleum Corporation

			18803 Meisner Dr.

			San Antonio, TX 78258

			Facsimile: 210-490-8816

			                  210-918-6675

			E-mail: SHarris@abraxaspetroleum.com

			Attention: Steve Harris

			 

			with a copy to:

			
	
			Dykema Gossett PLLC

			112 E. Pecan Street

			Suite 1800

			San Antonio, TX 78205

			Facsimile: 210-226-8395

			E-mail: JSmith@dykema.com

			Attention: James B. Smith, Jr.

			

 

 

 

 

 

(ii)     if to Holder, as follows:

 

	
			AG Energy Funding, LLC

			c/o Alter Domus

			225 W. Washington Street, 9th Floor

			Chicago, IL 60606

			E-mail: angelogordonagency@alterdomus.com and legal@alterdomus.com

			Attention: Agency Services – Angelo, Gordon and Legal Department

			 

			with a copy to:

			
	
			Simpson Thacher & Bartlett LLP

			600 Travis Street

			Suite 5400

			Houston, TX 77002

			E-mail: RRabalais@stblaw.com

			Attention: Robert Rabalais

			

Section 4.04     Interpretation. For purposes of this Agreement: (a) the words “include,” “includes,” and “including” shall be deemed to be followed by the words “without limitation”; (b) the word “or” is not exclusive; and (c) the words “herein,” “hereof,” “hereby,” “hereto,” and “hereunder” refer to this Agreement as a whole. The definitions given for any defined terms in this Agreement shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine, and neuter forms. Unless the context otherwise requires, references herein: (x) to Articles, Sections, Exhibits, and Schedules mean the Articles and Sections of, and Exhibits and Schedules attached to, this Agreement; (y) to an agreement, instrument, or other document means such agreement, instrument, or other document as amended, supplemented, and modified from time to time to the extent permitted by the provisions thereof; and (z) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted. The Exhibits and Schedules referred to herein shall be construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

 

Section 4.05     Severability. If any term or provision of this Agreement is invalid, illegal, or unenforceable in any jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal, or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

 

Section 4.06     Entire Agreement. This Agreement and the Governing Documents constitute the sole and entire agreement of the parties with respect to the subject matter contained herein and therein, and supersede all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. In the event of any inconsistency or conflict between this Agreement and any Governing Document, Holder and the Company shall, to the extent permitted by applicable law, amend such Governing Document to comply with the terms of this Agreement.

 

6

 

 

Section 4.07     Successors and Assigns; Assignment. This Agreement is binding upon and inures to the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors, and permitted assigns. No party shall assign any of its rights or delegate any of its obligations hereunder without the prior written consent of the other parties hereto; provided, however, that Holder may assign its rights or delegate its obligations, in whole or in part, without such consent, to one or more of its Affiliates. Any purported assignment or delegation in violation of this Section shall be null and void.

 

Section 4.08     No Third-Party Beneficiaries. This Agreement is for the sole benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors, and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity any legal or equitable right, benefit, or remedy of any nature whatsoever under or by reason of this Agreement

 

Section 4.09     Amendment and Modification. This Agreement may only be amended, modified, or supplemented by an instrument in writing executed by the Company and Holder. Any such written amendment, modification, or supplement will be binding upon the Company and Holder.

 

Section 4.10     Waiver. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach, or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power, or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power, or privilege.

 

Section 4.11     Governing Law. This Agreement and any claims, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement and the transactions contemplated hereby and thereby shall be governed by, and construed in accordance with, the laws of the State of Nevada and the applicable laws of the United States of America.

 

Section 4.12     Submission to Jurisdiction.

 

(a)     The Company irrevocably and unconditionally agrees that it will not commence any action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or in tort or otherwise, against Holder in any way relating to this Agreement or the transactions relating hereto, in any forum other than the courts of the State of New York sitting in the Borough of Manhattan and of the United States District Court for the Southern District of the State of New York and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits to the jurisdiction of such courts and agrees that all claims in respect of any such action, litigation or proceeding may be heard and determined in such New York State court or, to the fullest extent permitted by applicable law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action, litigation or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that Holder may otherwise have to bring any action or proceeding relating to this Agreement against the Company or its properties in the courts of any jurisdiction.

 

(b)     The Company expressly and irrevocably and unconditionally waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement in any court referred to in Section 4.12(a). Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

 

7

 

 

Section 4.13     Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LEGAL REQUIREMENTS, ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS WAIVER BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY

 

Section 4.14     Equitable Remedies. Each party hereto acknowledges that a breach or threatened breach by such party of any of its obligations under this Agreement would give rise to irreparable harm to the other parties, for which monetary damages would not be an adequate remedy, and hereby agrees that in the event of a breach or a threatened breach by such party of any such obligations, each of the other parties hereto shall, in addition to any and all other rights and remedies that may be available to them in respect of such breach, be entitled to equitable relief, including a temporary restraining order, an injunction, specific performance, and any other relief that may be available from a court of competent jurisdiction (without any requirement to post bond).

 

Section 4.15     Remedies Cumulative. The rights and remedies under this Agreement are cumulative and are in addition to and not in substitution for any other rights and remedies available at law or in equity or otherwise.

 

Section 4.16     Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, email, or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

 

[Signature page follows]

 

 

 

8

 

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date.

 

	
			COMPANY:

				
			ABRAXAS PETROLEUM CORPORATION

			
	 	 
	 	 
	 	
			By:/s/Steve Harris

			
	 	
			Name:Steve Harris

			
	 	
			Title:Vice President and Chief Financial Officer

			
	 	 
	 	 
	
			HOLDER:

				
			AG ENERGY FUNDING, LLC ON BEHALF OF SERIES 17 AND SERIES 20

			
	 	 
	 	 
	 	
			By:/s/ Todd Dittmann

			
	 	
			Name:Todd Dittmann

			
	 	
			Title:Authorized Person

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