Document:

Exhibit 10.20

 

FORM OF CHANGE OF CONTROL SEVERANCE AGREEMENT

 

This Change of Control Severance Agreement (the “Agreement”) is entered into this          day of                , 20   (the “Effective Date”) between                                 (“Executive”) and Keysight Technologies, Inc., a Delaware corporation (the “Company”).  This Agreement is intended to provide Executive with the compensation and benefits described herein upon the occurrence of specific events following a change of control of the ownership of the Company (defined as “Change of Control”).

 

RECITALS

 

A.            As is the case with most, if not all, publicly-traded businesses, it is expected that the Company from time to time may consider or may be presented with the need to consider the possibility of an acquisition by another company or other change in control of the ownership of the Company.  The Board of Directors of the Company (the “Board”) recognizes that such considerations can be a distraction to Executive and can cause the Executive to consider alternative employment opportunities or to be influenced by the impact of a possible change in control of the ownership of the Company on Executive’s personal circumstances in evaluating such possibilities.  The Board has determined that it is in the best interests of the Company and its shareholders to assure that the Company will have the continued dedication and objectivity of Executive, notwithstanding the possibility, threat or occurrence of a Change of Control of the Company.

 

B.            [Moreover, the Employee Matters Agreement between Agilent Technologies, Inc. (“Agilent”) and the Company, dated as of [                    ], entered into in connection with the distribution to Agilent shareholders of all the outstanding common stock of the Company, provides that the Company shall use its reasonable best efforts to cause each employee of the Company who is party to a change in control severance agreement with Agilent (including Executive) to enter into a change in control severance agreement with the Company.](1)

 

C.            The Board has discretion to determine which Eligible Officers (as defined in Section 7.10) may receive a change of control severance agreement and has determined that it is in the best interest of the Company and its shareholders to enter into this Agreement with Executive to incentivize the continuation of Executive’s employment and to provide motivation to maximize the value of the Company upon a Change of Control for the benefit of its shareholders.

 

D.            The Board believes that it is important to provide Executive with certain benefits upon Executive’s termination of employment in certain instances prior to, upon or following a Change of Control that provide Executive with enhanced financial security and incentive and encouragement to Executive to remain with the Company notwithstanding the possibility of a Change of Control.

 

(1)  Include bracketed language for persons with Agilent CIC Agreements.

 

 

E.            At the same time, the Board expects the Company to receive certain benefits in exchange for providing Executive with this measure of financial security and incentive under the Agreement.  Therefore, the Board believes that Executive should provide various specific commitments which are intended to assure the Company that Executive will not direct Executive’s skills, experience and knowledge to the detriment of the Company for a period not to exceed the period during which payments are being made to Executive under this Agreement.

 

F.            Certain capitalized terms used in this Agreement are defined in Article VII.

 

The Company and Executive hereby agree as follows:

 

ARTICLE I.

 

EMPLOYMENT BY THE COMPANY

 

1.1          Executive is currently employed by the Company as an Eligible Officer.

 

1.2          Executive shall be entitled to the rights and benefits of this Agreement and this Agreement may not be terminated, except as otherwise provided in Section 4.5, if Executive is an Eligible Officer as of immediately prior to the occurrence of any event set forth in Section 2.1(a) or Section 2.2(a) hereof (the “Section 1.2 Time”).

 

1.3          The Company and Executive each agree and acknowledge that Executive is employed by the Company as an “at-will” employee and that either Executive or the Company has the right at any time to terminate or to change Executive’s employment with the Company, or to determine that Executive is no longer an Eligible Officer regardless of the continued employment of Executive with or without cause or advance notice, for any reason or for no reason.  The Company and Executive wish to set forth the compensation and benefits which Executive shall be entitled to receive in the event that Executive’s employment with the Company terminates under the circumstances described in Article II of this Agreement.

 

1.4          The duties and obligations of the Company to Executive under this Agreement shall be in consideration for Executive’s continued employment with the Company, Executive’s compliance with the obligations described in Section 4.2, and Executive’s execution of the Release described in Section 4.3.  The Company and Executive agree that Executive’s compliance with the obligations described in Section 4.2 and Executive’s execution and non-revocation of the Release described in Section 4.3 are preconditions to Executive’s entitlement to the receipt of benefits under this Agreement and that these benefits shall not be earned unless all such conditions have been satisfied through the scheduled date of payment.  The Company hereby declares that it has relied upon Executive’s commitments under this Agreement to comply with the requirements of Article IV, and would not have entered into this Agreement in the absence of such commitments.

 

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ARTICLE II.

 

TERMINATION EVENTS

 

2.1          Involuntary Termination Upon or Following Change of Control.

 

(a)           The Company may involuntarily terminate Executive’s employment with the Company and its subsidiaries at any time.  In the event Executive’s employment with the Company and its subsidiaries is involuntarily terminated by the Company without Cause either (i) at the time of or within twenty-four (24) months following the occurrence of a Change of Control, (ii) within three (3) months prior to a Change of Control, whether or not such termination is at the request of an “Acquiror”, or (iii) at any time prior to a Change of Control, if such termination is at the request of an Acquiror, then, upon the later of Executive’s termination date and such Change of Control, such termination of employment will be a Termination Event and the Company shall pay Executive the compensation and benefits described in and at the times provided under Article III.  For all purposes of this Agreement the term “Acquiror” is either a person or a member of a group of related persons representing such group that in either case obtains effective control of the Company in the transaction or a group of related transactions constituting the Change of Control.

 

(b)           In the event Executive’s employment with the Company and its subsidiaries is either involuntarily terminated by the Company with Cause at any time, or is involuntarily terminated by the Company without Cause at any time other than under the circumstances described in Section 2.1(a), then such termination of employment will not be a Termination Event, Executive will not be entitled to receive any payments or benefits under the provisions of this Agreement, and the Company will cease paying compensation and providing benefits to Executive as of Executive’s termination date.

 

2.2          Voluntary Termination Upon or Following Change of Control; Death; Disability.

 

(a)           Executive may voluntarily terminate Executive’s employment with the Company and its subsidiaries at any time.  In the event Executive voluntarily terminates Executive’s employment within three (3) months following the occurrence of an event constituting Good Reason and on account of an event constituting Good Reason, which event occurs either (i) at the time of or within twenty-four (24) months following the occurrence of a Change of Control, (ii) within three (3) months prior to a Change of Control, whether or not such termination is at the request of an “Acquiror”, or (iii) at any time prior to a Change of Control, if such triggering event or Executive’s termination is at the request of an Acquiror, then, upon the later of Executive’s termination date and such Change of Control, such termination of employment will be a Termination Event and the Company shall pay Executive the compensation and benefits described in and at the times provided under Article III.

 

(b)           In the event (i) Executive voluntarily terminates Executive’s employment for any reason other than on account of an event constituting Good Reason under the circumstances described in Section 2.2(a), or (ii) Executive’s employment terminates on account of either death or Disability, then such termination of employment will not be a Termination

 

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Event, Executive will not be entitled to receive any payments or benefits under the provisions of this Agreement, and the Company will cease paying compensation and providing benefits to Executive as of Executive’s termination date.

 

ARTICLE III.

 

TERMINATION COMPENSATION AND BENEFITS

 

3.1          Right to Benefits.  If a Termination Event occurs, Executive shall be entitled to receive the benefits described in this Agreement so long as Executive complies with the restrictions and limitations set forth in Article IV; provided, further, that (a) Executive must execute the Release, (b) the time period for revocation of the Release must expire without revocation by the Executive within sixty (60) days immediately following the Termination Event (the “Release Deadline”) and (c) the Release shall remain in effect at the time that the benefits of this Article III are paid.  If a Termination Event does not occur, Executive shall not be entitled to receive any benefits described in this Agreement, except as otherwise specifically set forth herein.

 

3.2          Severance.  Upon the occurrence of a Termination Event, Executive shall receive the Applicable Multiple times the sum of Executive’s Base Salary plus Target Bonus.  Amounts to be paid under this section shall be paid in a lump sum no later than five (5) business days after the Release Deadline.

 

3.3          Health Insurance Coverage.  Upon the occurrence of a Termination Event, Executive shall be entitled to receive a payment equal to the Health Expense Benefit.  The purpose of the Health Expense Benefit is to assist Executive with healthcare expenses, including additional health plan premium payments that may result from the occurrence of a Termination Event.  Amounts to be paid under this section shall be paid in a lump sum no later than five (5) business days after the Release Deadline.

 

This Section 3.3 provides only for the Company’s payment of the Health Expense Benefit.  This Section 3.3 does not affect the rights of Executive or Executive’s covered dependents under any applicable law with respect to health insurance continuation coverage.

 

3.4          Stock Award Acceleration.  Executive’s stock options which are outstanding as of the date of the Termination Event (the “Stock Options”) and that are not subject to performance-based vesting shall become fully vested upon the occurrence of the Termination Event and exercisable so long as Executive complies with the restrictions and limitations set forth in Article IV.  The maximum period of time during which the Stock Options shall remain exercisable, and all other terms and conditions of the Stock Options, shall be as specified in the relevant Stock Option agreements and relevant stock plans under which the Stock Options were granted.  The term “Stock Options” shall not include any rights of Executive under the Company’s employee stock purchase plan.

 

Executive’s restricted stock awards or restricted stock units awards (“RSUs”) that are outstanding as of the date of the Termination Event (“Restricted Stock”) and that are not subject to performance-based vesting shall become fully vested and, in the case of restricted stock, free

 

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from any contractual rights of the Company to repurchase or otherwise reacquire the Restricted Stock as a result of Executive’s termination of employment.  All shares of Restricted Stock or shares underlying RSUs which have not yet been delivered to Executive or Executive’s designee (whether because subject to joint escrow instructions or otherwise) shall be delivered to Executive or Executive’s designee as soon as administratively feasible after the occurrence of a Termination Event.

 

The treatment of Executive’s other awards, if any, outstanding under the 2014 Equity and Incentive Compensation Plan of the Company, or any successor plan thereto (together the “Stock Plan”), at the time of the Termination Event, including without limitation Stock Options, shares of Restricted Stock and RSUs that are subject to performance-based vesting, performance share awards and awards which may be settled in cash, shall be governed by the applicable award agreement.

 

Notwithstanding the above, if (i) Executive held unvested awards issued under the Stock Plan at the time of a Termination Event which is an Anticipatory Termination, (ii) such awards are forfeited or expire at or following such Anticipatory Termination, and before the applicable Change of Control, and (iii) such awards would have become vested on Executive’s date of termination on account of such Termination Event had it not been an Anticipatory Termination (such forfeited awards, the “Forfeited Equity”), then Executive shall receive a lump sum amount equal to the value of the Forfeited Equity no later than five (5) business days after the Release Deadline.  For purposes of the preceding sentence, the value of the Forfeited Equity shall equal to (i) in the case of an award other than Stock Options, the fair market value, as determined under the terms of the Stock Plan, of the shares as to which the award would have become vested had such Termination Event not been an Anticipatory Termination, determined as of the Change of Control, and (ii) in the case of a Stock Option,  the fair market value, as determined under the Stock Plan, of the shares as to which the Stock Option would have become vested had such Termination Event not been an Anticipatory Termination, determined as of the Change of Control, less the exercise price of such Stock Option (but in no event less than zero).

 

3.5          Bonus.  If a Termination Event occurs, Executive shall receive a pro-rated bonus under any bonus plan applicable to Executive, for the performance period in which Executive’s termination of employment occurs.  The amount of the bonus shall be calculated under the terms of such bonus program as established by the Company, including whether or not, or to what degree, any performance-based conditions have been met, and shall be equal to the amount of the bonus Executive would have been paid under the terms of such bonus program had Executive continued Executive’s employment with the Company until the end of such performance period multiplied by a fraction in which (i) the numerator is the number of days from and including the first day of the performance period until and including the date of the Executive’s termination of employment, and (ii) the denominator is the number of days in the performance period.  Such bonus shall be paid on the date Executive would have received the bonus if the termination of employment had not occurred during such performance period; provided, however, that in any event such bonus will be paid no later than two and one-half (2 1/2) months after the end of the calendar year in which the Termination Event occurs.  Such amount shall be reduced (but not below zero) by any bonus actually paid to Executive prior to the Termination Event in respect of such performance period.  Executive’s rights to the payment provided in this Section 3.5 shall

 

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not be terminated by the application of Section 4.2 of this Agreement.  This Section 3.5 shall not apply to awards issued pursuant to the Stock Plan.

 

3.6          Mitigation.  Except as otherwise specifically provided herein, Executive shall not be required to mitigate damages or the amount of any payment provided under this Agreement by seeking other employment or otherwise, nor shall the amount of any payment provided for under this Agreement be reduced by any compensation earned by Executive as a result of employment by another employer or by retirement benefits after the date of the Termination Event, or otherwise.

 

3.7          Compliance with Section 409A.  In the event that (i) one or more payments of compensation or benefits received or to be received by Executive pursuant to this Agreement (“Agreement Payment”) would constitute deferred compensation subject to Section 409A of the Code and (ii) Executive is deemed at the time of such termination of employment to be a “specified employee” under Section 409A(a)(2)(B)(i) of the Code, then such Agreement Payment shall not be made or commence until the earlier of (i) the day following the expiration of the six (6)-month period measured from the date of Executive’s “separation from service” (as such term is at the time defined in Treasury Regulations under Section 409A of the Code) with the Company or (ii) such earlier time permitted under Section 409A of the Code and the regulations or other authority promulgated thereunder; provided, however, that such deferral shall only be effected to the extent required to avoid adverse tax treatment to Executive under Section 409A of the Code, including (without limitation) the additional twenty percent (20%) tax for which Executive would otherwise be liable under Section 409A(a)(1)(B) of the Code in the absence of such deferral.  During any period in which an Agreement Payment to Executive is deferred pursuant to the foregoing, Executive shall be entitled to interest on the deferred Agreement Payment at a per annum rate equal to the highest rate of interest applicable to six (6)-month non-callable certificates of deposit with daily compounding offered by the following institutions:  Citibank N.A., Wells Fargo Bank, N.A. or Bank of America, on the date of such separation from service.  Upon the expiration of the applicable deferral period, any Agreement Payment which would have otherwise been made during that period (whether in a single sum or in installments) in the absence of this paragraph shall be paid to Executive or Executive’s beneficiary in one lump sum, including all accrued interest.

 

Termination of employment (and corollary terms) for purposes of this Agreement shall mean a separation from service within the meaning of Treasury Regulation § 1.409A-1(h).  Executive shall not be deemed to have separated from service if Executive continues to provide services to the Company at an annual rate that is fifty percent or more of the services rendered, on average, during the immediately preceding three full years of employment with the Company (or if employed by the Company less than three years, such lesser period); provided, however, that a separation from service will be deemed to have occurred if Executive service with the Company is reduced to an annual rate that is less than twenty percent of the services rendered, on average, during the immediately preceding three full years of employment with the Company (or if employed by the Company less than three years, such lesser period).  For purposes of this Section 3.7 only and for determining whether an Executive has experienced a separation from service, the “Company” shall mean the Company and its affiliates that are treated as a single employer under section 414(b) or (c) of the Code.

 

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ARTICLE IV.

 

LIMITATIONS AND CONDITIONS ON BENEFITS; AMENDMENT OF AGREEMENT

 

4.1          Reduction in Payments and Benefits; Withholding Taxes.  The benefits provided under this Agreement are in lieu of any benefit provided under any other severance plan, program or arrangement of the Company in effect at the time of a Termination Event; provided, however, that if Executive is entitled to other severance benefits, including, without limitation, under any employment contract, severance plan or applicable law, such Executive shall be entitled to receive only the benefit under this Agreement or such other severance benefit, whichever is greater as determined by the Board or its designee.  Notwithstanding the foregoing, where such other severance benefit is less than the benefit under this Agreement, but is (i) required to be paid pursuant to applicable non-U.S. law or (ii) nonqualified deferred compensation subject to Section 409A of the Code, the Executive shall be entitled to receive the benefit under this Agreement with the amount to be paid pursuant to Sections 3.2, 3.3 and 3.5 offset by the amount of cash payable under such other severance benefit.  The Company shall withhold appropriate federal, state or local income, employment and other applicable taxes from any payments hereunder.

 

4.2          Obligations of Executive.

 

(a)           For two years following the Termination Event, Executive agrees not to personally solicit any of the employees either of the Company or of any entity in which the Company directly or indirectly possesses the ability to determine the voting of 50% or more of the voting securities of such entity (including two-party joint ventures in which each party possesses 50% of the total voting power of the entity) to become employed elsewhere or provide the names of such employees to any other company which Executive has reason to believe will solicit such employees.

 

(b)           Following the occurrence of a Termination Event, Executive agrees to continue to satisfy Executive’s obligations under the terms of the Company’s standard form of Proprietary Information and Non-Disclosure Agreement previously executed by Executive (or any comparable agreement subsequently executed by Executive in substitution or supplement thereto).  Executive’s obligations under this Section 4.2(b) shall not be limited to the Term.

 

(c)           It is expressly understood and agreed that although Executive and the Company consider the restrictions contained in this Section 4 to be reasonable, if a final judicial determination is made by a court of competent jurisdiction that the time or territory or any other restriction contained in this Agreement is an unenforceable restriction against Executive, the provisions of this Agreement shall not be rendered void, but shall be deemed amended to apply as to such maximum time or territory and to such maximum extent as such court may judicially determine or indicate to be enforceable.  Alternatively, if any court of competent jurisdiction finds that any restriction contained in this Agreement is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein.

 

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(d)           Following a Termination Event, Executive agrees not to make any public statement or statements to the press concerning Keysight, its business objectives, its management practices, or other sensitive information without first receiving Keysight’s written approval.  Executive further agrees to take no action which would cause Keysight or its employees or agents any embarrassment or humiliation or otherwise cause or contribute to Keysight’s or any such person’s being held in disrepute by the general public or Keysight’s employees, clients, or customers.

 

(e)           Executive acknowledges and agrees that the Company’s remedies at law for a breach or threatened breach of any of the provisions of Section 4.2(a) or Section 4.2(b) would be inadequate and, in recognition of this fact, Executive agrees that, in the event of such a breach or threatened breach, in addition to any remedies at law, the Company, without posting any bond, shall, with respect to a breach or threatened breach of Section 4.2(a) or Section 4.2(b) only, obtain equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction, or any other equitable remedy which may then be available.

 

4.3          Employee Release Prior to Receipt of Benefits.  Prior to the receipt of any benefits under this Agreement on account of the occurrence of a Termination Event, Executive shall execute an employee release substantially in the form attached hereto as Exhibit A (“Release”) as shall be determined by the Company.  Executive shall have twenty-one (21) days (or such longer period, not to exceed forty-five (45) days, determined by the Company) after receipt of the form of Release from the Company to consider whether to execute the Release, and Executive may revoke the Release within seven (7) days after its execution.  In the event that Executive has not received a form of Release from the Company by the tenth (10th) day following the Termination Event, Executive may execute the form of Release attached hereto as Exhibit A (which shall be deemed received by Executive on the tenth (10th) day following the Termination Event and be deemed acceptable to the Company).  In the event Executive does not execute the Release within the twenty-one (21) day period (or such longer period, not to exceed forty-five (45) days, determined by the Company), or if Executive revokes the Release within the seven (7) day period, no benefits shall be payable under this Agreement and this Agreement shall be null and void.  Such seven (7) day period in which a Release may be revoked must have expired not later than sixty (60) days immediately following the Termination Event without revocation by the Executive in order for Executive to receive the benefits described in this Agreement.  Nothing in this Agreement shall limit the scope or time of applicability of the Release once it is executed and not timely revoked.

 

4.4          Parachute Payments.  In the event that the any payments or benefits received or to be received by Executive pursuant to this Agreement or otherwise (a) constitute “parachute payments” within the meaning of Section 280G of the Code, as determined by the accounting firm that audited the Company prior to the Change of Control or another nationally known accounting or employee benefits consulting firm selected by the Company prior to such Change of Control (the “Accounting Firm”) and (b) but for this Section 4.4, would, in the judgment of the Accounting Firm, be subject to the excise tax imposed by Section 4999 of the Code by reason of Section 280G of the Code, then Executive’s benefits under this Agreement shall be payable either:  (i) in full, or (ii) as to such lesser amount which would result in no portion of such payments or benefits being subject to the excise tax under Section 4999 of the Code, as determined by the Accounting Firm, whichever of the foregoing amounts, taking into account the

 

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applicable federal, state and local income and employment taxes and the excise tax imposed by Section 4999, results in the receipt by Executive, on an after-tax basis, of the greatest amount of benefits under this Agreement, as determined by the Accounting Firm, notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code.  In the event that a lesser amount is paid under clause (b)(ii) above, then the elements of Executive’s payments hereunder shall be reduced in such order (A) as the Company determines, in its sole discretion, has the least economic detriment to Executive and (B) which does not result in the imposition of any tax penalties under Section 409A on the Executive.  To the extent the economic impact of reducing payments from one or more elements is equivalent and subject to clause (B) of the preceding sentence, the reduction may be made pro rata by the Company in its sole discretion.

 

4.5          Amendment or Termination of This Agreement.  The Company may make amendments to this Agreement without the consent of Executive which are non-material and which are not adverse to Executive to the extent necessary or advisable to comply with laws.  Any other changes to or, termination of, this Agreement may be made only upon the mutual written consent of the Company and Executive; provided, however, that only prior to the Section 1.2 Time, the Company may unilaterally terminate this Agreement following eighteen (18) months’ prior written notice to Executive.  If the Company makes any changes to this Agreement without the consent of Executive pursuant to the first sentence of this Section 4.5 it shall provide prompt written notice and a copy of such change to Executive.

 

ARTICLE V.

 

OTHER RIGHTS AND BENEFITS NOT AFFECTED

 

5.1          Nonexclusivity.  Nothing in the Agreement shall prevent or limit Executive’s continuing or future participation in any benefit, bonus, incentive or other plans, programs, policies or practices provided by the Company and for which Executive may otherwise qualify, nor shall anything herein limit or otherwise affect such rights as Executive may have under any stock option or other agreements with the Company; provided, however, that subject to Section 4.1, any benefits provided hereunder shall be in lieu of any other severance benefits to which Executive may otherwise be entitled, including without limitation, under any employment contract or severance plan.  Except as otherwise expressly provided herein, amounts which are vested benefits or which Executive is otherwise entitled to receive under any plan, policy, practice or program of the Company at or subsequent to the date of a Termination Event shall be payable in accordance with such plan, policy, practice or program.

 

5.2          Employment Status.  This Agreement does not constitute a contract of employment or impose on Executive any obligation to remain as an employee, or impose on the Company any obligation (i) to retain Executive as an employee, (ii) to change the status of Executive as an at-will employee, or (iii) to change the Company’s policies regarding termination or alteration of employment.

 

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ARTICLE VI.

 

NON-ALIENATION OF BENEFITS

 

No benefit hereunder shall be subject to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any attempt to do so shall be void.

 

ARTICLE VII.

 

DEFINITIONS

 

For purposes of the Agreement, the following terms shall have the meanings set forth below:

 

7.1          “Agreement” means this Change of Control Severance Agreement.

 

7.2          “Anticipatory Termination” means a Termination Event described in clause (ii) or (iii) of Section 2.1(a) or clause (ii) or (iii) of Section 2.1(b).

 

7.3          “Applicable Multiple” means with respect to:

 

(i)            the Chief Executive Officer, three (3);

 

(ii)           a Section 16 Officer (other than the Chief Executive Officer) or other Senior Vice President, two (2); and

 

(iii)          Level II Executive, Level III Executive, or other Board appointed officers, one (1);

 

based on Eligible Officer status determined immediately prior to Executive’s termination of employment.

 

7.4          “Base Salary” means Executive’s annual salary (excluding, without limitation, bonus, any other incentive or other payments, stock option exercises, and equity compensation vesting or share delivery) from the Company at the time of the occurrence of the Change of Control or Executive’s termination of employment, whichever is greater.

 

7.5          “Cause” means misconduct, including but not limited to:  (i) conviction of any felony or any crime involving moral turpitude or dishonesty; (ii) repeated unexplained or unjustified absences from the Company; (iii) refusal or willful failure to act in accordance with any specific lawful direction or order of the Company or stated written policy of the Company which has a material adverse effect on the Company’s business or reputation; (iv) a material and willful violation of any state or federal law which if made public would materially injure the business or reputation of the Company; (v) participation in a fraud or act of dishonesty against the Company which has a material adverse effect on the Company’s business or reputation; (vi) conduct by Executive which the Board determines demonstrates gross unfitness to serve; or (vii) intentional, material violation by Executive of any contract between Executive and the Company or any statutory duty of Executive to the Company that is not corrected within thirty

 

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(30) days after written notice to Executive thereof.  Whether or not the actions or omissions of Executive constitute “Cause” within the meaning of this Section 7.5 shall be decided by the Board based upon a reasonable good faith investigation and determination.  Disability of Executive shall not constitute “Cause.”

 

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

 

(i)            The sale, exchange, lease or other disposition or transfer of all or substantially all of the consolidated assets of the Company to a person or group (as such terms are defined or described in Sections 3(a)(9) and 13(d)(3) of the Exchange Act) which will continue the business of the Company in the future; or

 

(ii)           A merger or consolidation involving the Company in which the shareholders of the Company immediately prior to such merger or consolidation are not the beneficial owners (within the meaning of Rules 13d-3 and 13d-5 promulgated under the Exchange Act) of more than 75% of the total voting power of the outstanding voting securities of the corporation resulting from such transaction in substantially the same proportion as their ownership of the total voting power of the outstanding voting securities of the Company immediately prior to such merger or consolidation; or

 

(iii)          The acquisition of beneficial ownership (within the meaning of Rules 13d-3 and 13d-5 promulgated under the Exchange Act) of at least 25% of the total voting power of the outstanding voting securities of the Company by a person or group (as such terms are defined or described in Sections 3(a)(9) and 13(d)(3) of the Exchange Act); or

 

(iv)          Individuals who, as of [November 1, 2014], constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to [November 1, 2014] whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual was a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person or group (as such terms are defined or described in Sections 3(a)(9) and 13(d)(3) of the Exchange Act) other than the Board.

 

7.7          “Code” means Internal Revenue Code of 1986, as amended.

 

7.8          “Company” means Keysight Technologies, Inc., a Delaware corporation, and any successor thereto.

 

7.9          “Disability” means the inability of the Executive to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.

 

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7.10        “Eligible Officer” means the Chief Executive Officer of the Company, a Section 16 Officer, other Senior Vice President, a Level II Executive, a Level III Executive, or other Board appointed officer.

 

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

 

7.12        “Level II Executive or Level III Executive” means an employee of the Company as designated by the Company as either a Level II Executive or Level III Executive.

 

7.13        “Good Reason” means (i) a more than $10,000 reduction of Executive’s rate of compensation as in effect immediately prior to the Effective Date of this Agreement or in effect immediately prior to the occurrence of a Change of Control, whichever is greater, other than reductions in Base Salary that apply broadly to employees of the Company or reductions due to varying metrics and achievement of performance goals for different periods under variable pay programs; (ii) either (A) failure to provide a package of benefits which, taken as a whole, provides substantially similar benefits to those in which Executive is entitled to participate in the day prior to the occurrence of the Change of Control (except that employee contributions may be raised to the extent of any cost increases imposed by third parties) or (B) any action by the Company which would significantly and adversely affect Executive’s participation or reduce Executive’s benefits under any of such plans in existence the day prior to the Change of Control, other than changes that apply broadly to employees of the Company; (iii) change in Executive’s duties, responsibilities, authority, job title, or reporting relationships resulting in a significant diminution of position, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith which is remedied by the Company within thirty (30) days after notice thereof is given by Executive; (iv) Executive’s relocate to a worksite that is more than 35 miles from Executive’s prior worksite, unless Executive consents to such relocation; (v) failure or refusal of a successor to the Company to assume the Company’s obligations under this Agreement, as provided in Section 8.7; or (vi) material breach by the Company or any successor to the Company of any of the material provisions of this Agreement.  For purposes of clause (iii) of the immediately preceding sentence, Executive’s duties, responsibilities, authority, job title or reporting relationships shall not be considered to be significantly diminished (and therefore shall not constitute “Good Reason”) so long as Executive continues to perform substantially the same functional role for the Company as Executive performed immediately prior to the occurrence of the Change of Control, even if the Company becomes a subsidiary or division of another entity.

 

To constitute “Good Reason”, the Executive must notify the Company of any event purporting to constitute Good Reason within 60 days following the Executive’s knowledge of its existence, and the Company shall have 30 days in which to correct or remove such Good Reason, or such event shall not constitute Good Reason.

 

7.14        “Health Expense Benefit” means with respect to:

 

(i)            the Chief Executive Officer, any other Section 16 officer or Senior Vice President, Eighty-Thousand U.S. Dollars ($80,000); and

 

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(ii)           a Level II Executive or Level III Executive, or other Board appointed officer, Forty-Thousand U.S. Dollars ($40,000);

 

based on Eligible Officer status determined immediately prior to Executive’s termination of employment.

 

7.15        “Release” has the meaning set forth in Section 4.3.

 

7.16        “Section 16 Officer” means a person who has been determined by the Company to be an “officer” of the Company for purposes of Section 16 of the Exchange Act.

 

7.17        “Target Bonus” means that amount (expressed as a percentage of Executive’s Base Salary) equal to Executive’s “target bonus” as defined under the Company’s Performance-Based Compensation Plan for Covered Employees (or the comparable term or standard under the Company’s cash incentive plan in effect at the time of Executive’s termination of employment if the Performance-Based Compensation Plan for Covered Employees is no longer in effect at such time) as set for Executive by the Compensation Committee of the Board or other authorized body covering the twelve-month period ending at the end of the performance period during which Executive’s termination of employment occurs.

 

7.18        “Termination Event” means an involuntary termination of employment described in Section 2.1(a) or a voluntary termination of employment described in Section 2.2(a).

 

ARTICLE VIII.

 

GENERAL PROVISIONS

 

8.1          Notices.  Any notices provided hereunder must be in writing and such notices or any other written communication shall be deemed effective upon the earlier of personal delivery (including personal delivery by telex, facsimile or email) or the third day after mailing by first class mail, to the Company at its primary office location and to Executive at Executive’s address as listed in the Company’s payroll records.  Any payments made by the Company to Executive under the terms of this Agreement shall be delivered to Executive either in person or at such address as listed in the Company’s payroll records.

 

8.2          Severability.  It is the intent of the parties to this Agreement that whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provisions had never been contained herein.

 

8.3          Waiver.  If either party should waive any breach of any provisions of this Agreement, that party shall not thereby be deemed to have waived any preceding or succeeding breach of the same or any other provision of this Agreement.

 

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8.4          Complete Agreement.  This Agreement, including Exhibit A, constitutes the entire agreement between Executive and the Company and it is the complete, final, and exclusive embodiment of their agreement with regard to this subject matter.  It is entered into without reliance on any promise or representation other than those expressly contained herein.

 

8.5          Counterparts.  This Agreement may be executed in separate counterparts, any one of which need not contain signatures of more than one party, but all of which taken together will constitute one and the same Agreement.

 

8.6          Headings.  The headings of the Articles and Sections hereof are inserted for convenience only and shall neither be deemed to constitute a part hereof nor to affect the meaning thereof.

 

8.7          Successors and Assigns.  This Agreement is intended to bind and inure to the benefit of and be enforceable by Executive and the Company, and their respective successors, assigns, heirs, executors and administrators, except that Executive may not delegate any of Executive’s duties hereunder and may not assign any of Executive’s rights hereunder without the written consent of the Company, which consent shall not be withheld unreasonably.  Any successor to the Company (whether direct or indirect and whether by purchase, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets shall assume the Company’s obligations under this Agreement in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession.  For all purposes under this Agreement, the term “Company” shall include any successor to the Company’s business and/or assets, whether or not such successor executes and delivers an assumption agreement referred to in the preceding sentence or becomes bound by the terms of this Agreement by operation of law or otherwise.

 

8.8          Attorney Fees.  If either party hereto brings any action to enforce such party’s rights hereunder, the prevailing party in any such action shall be entitled to recover such party’s reasonable attorneys’ fees and costs incurred in connection with such action.

 

8.9          Arbitration.  In order to ensure rapid and economical resolution of any dispute which may arise under this Agreement, Executive and the Company agree that any and all disputes or controversies, arising from or regarding the interpretation, performance, enforcement or termination of this Agreement shall submitted to JAMS for non-binding mediation in San Francisco, California.  If complete agreement cannot be reached within 60 days after the date of submission to mediation, any remaining issues will be submitted to JAMS to be resolved by final and binding arbitration under the JAMS Arbitration Rules and Procedures for Employment Disputes.  The reference to JAMS shall refer to any successor to JAMS, if applicable.  BY ENTERING INTO THIS AGREEMENT, THE COMPANY AND EXECUTIVE ACKNOWLEDGE THAT THEY ARE WAIVING THEIR RIGHT TO JURY TRIAL OF ANY DISPUTE COVERED BY THIS AGREEMENT.

 

8.10        Choice of Law.  All questions concerning the construction, validity and interpretation of this Agreement will be governed by the law of the State of California.

 

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8.11        Construction of Agreement.  In the event of a conflict between the text of the Agreement and any summary, description or other information regarding the Agreement, the text of the Agreement shall control.

 

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IN WITNESS WHEREOF, the parties have executed this Agreement effective on the day and year written above.

 

	
Keysight Technologies, Inc.,
    	
 
    	
EXECUTIVE
    
	
a Delaware corporation
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Signature
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    	
Title:
    	
 
    

 

16

 

Exhibit A

 

GENERAL RELEASE AND AGREEMENT

 

This General Release and Agreement (the “Agreement”) is made and entered into by                                                 (“Executive”).  The Agreement is part of an agreement between Executive and Keysight Technologies, Inc. (“Keysight”) to terminate Executive’s employment with Keysight on terms that are satisfactory both to Keysight and to Executive.  Therefore, Executive agrees as follows:

 

1.                                      Executive agrees to attend a Functional Exit Interview on                  , 20   at which time all company property and identification will be turned in and the appropriate personnel documents will be executed.  Executive agrees to remove all personal effects from Executive’s current office within seven days of signing this agreement and in any event not later than                  , 20  .

 

2.                                      Executive, on behalf of Executive’s heirs, estate, executors, administrators, successors and assigns does fully release, discharge, and agree to hold harmless Keysight, its officers, agents, employees, attorneys, subsidiaries, affiliated companies, successors and assigns from all actions, causes of action, claims, judgments, obligations, damages, liabilities, costs, or expense of whatsoever kind and character which he may have, relating to, arising out of, or connected with any other matter or event occurring prior to the execution of this Agreement whether or not brought before any judicial, administrative, or other tribunal, including but not limited to:

 

a.                                      any claims relating to employment discrimination on account of race, sex, age, national origin, creed, disability, or other basis, whether or not arising under the Federal Civil Rights Acts, the Age Discrimination in Employment Act, California Fair Employment and Housing Act, the Rehabilitation Act of 1973, the Americans With Disabilities Act, any amendments to the foregoing laws, or any other federal, state, county, municipal, or other law, statute, regulation or order relating to employment discrimination;

 

b.                                      any claims relating to pay or leave of absence arising under the Fair Labor Standards Act, the Family Medical Leave Act, and any similar laws enacted in California;

 

c.                                       any claims for reemployment, salary, wages, bonuses, vacation pay, stock options or other equity-based compensation, acquired rights, appreciation from stock options or other equity-based compensation, benefits or other compensation of any kind; and

 

d.                                      any claims relating to, arising out of, or connected with Executive’s employment with Keysight, whether or not the same be based upon any alleged violation of public policy; compliance (or lack thereof) with any internal Keysight policy, procedure, practice or guideline; or any oral, written, express, and/or implied employment contract or agreement, or the breach of any terms thereof, including but not limited to, any implied covenant of good faith and fair dealing; or any

 

 

federal, state, county or municipal law, statute, regulation, or order whether or not relating to labor or employment.

 

The foregoing release shall not apply to (i) Executive’s rights under the Change of Control Severance Agreement between Executive and the Company (the “Change of Control Agreement”); (ii) Executive’s rights under any employee benefit plan sponsored by the Company; (iii) Executive’s rights to indemnification under the Company’s bylaws or other governing instruments or under any agreement addressing indemnification between Executive and the Company or under any merger or acquisition agreement addressing such subject matter; (iv) Executive’s rights of insurance under any liability policy covering the Company’s officers or (v) claims which Executive may not release as a matter of law, including, but not limited to, indemnification claims under applicable law.

 

3.                                      Executive represents and warrants that Executive has not assigned any claim or authorized any other person or entity to assert any claim on Executive’s behalf.  Further, Executive agrees that under this Agreement Executive waives any claim for damages incurred at any time in the future because of alleged continuing effects of past wrongful conduct involving any such claims and any right to sue for injunctive relief against the alleged continuing effects of past wrongful conduct involving such claims.

 

4.                                      In entering into this Agreement, the parties have intended that this Agreement be a full and final settlement of all matters, whether or not presently disputed, that could have arisen between them.

 

5.                                      Executive understands and expressly agrees that this Agreement extends to all claims of every nature and kind whatsoever, known or unknown, suspected or unsuspected, past or present and all rights under Section 1542 of the California Civil Code and/or any similar statute or law or any other jurisdiction are hereby expressly waived.  Such section reads as follows:

 

“Section 1542.  A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor.”

 

6.                                      It is expressly agreed that the claims released pursuant to this Agreement include all claims against individual employees of Keysight and its affiliate, whether or not such employees were acting within the course and scope of their employment.

 

7.                                      Executive agrees that the terms, amount and fact of settlement shall be confidential unless Keysight needs to make any required disclosure of any agreements between Keysight and Executive.  Therefore, except as may be necessary to enforce the rights contained herein in an appropriate legal proceeding or as may be necessary to receive professional services from, an attorney, accountant, or other professional adviser in order for such adviser to render professional services, Executive agrees not to disclose any information concerning

 

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this Agreement or the Change of Control Agreement to anyone, including, but not limited to, past, present and future employees of Keysight, until such time of the public filings.

 

8.                                      At Keysight’s request, Executive shall cooperate fully in connection with any legal matter, proceeding or action relating to Keysight.

 

9.                                      The terms of this Agreement are intended by the parties as a final expression of their agreement with respect to such terms as are included in this Agreement and may not be contradicted by evidence of any prior or contemporaneous agreement.  The parties further intend that this Agreement constitutes the complete and exclusive statement of its terms and that no extrinsic evidence whatsoever may be introduced in any judicial or other proceeding, if any, involving this Agreement.  No modification of this Agreement shall be effective unless in writing and signed by both parties hereto.

 

10.                               It is further expressly agreed and understood that Executive has not relied upon any advice from Keysight and/or its attorneys whatsoever as to the taxability, whether pursuant to federal, state, or local income tax statutes or regulations or otherwise, of the payments made under the Change of Control Agreement and that Executive will be solely liable for all tax obligations, if any, arising from payment of the sums specified in the Change of Control Agreement and shall hold Keysight harmless from any tax obligations arising from said payment.

 

11.                               If there is any dispute arising out of or related to this Agreement, which cannot be settled by good faith negotiation between the parties, such dispute will be submitted to JAMS for non-binding mediation in San Francisco, California.  If complete agreement cannot be reached within 60 days of submission to mediation, any remaining issues will be submitted to JAMS for final and binding arbitration pursuant to JAMS Arbitration Rules and Procedures for Employment Disputes.  The reference to JAMS shall refer to any successor to JAMS, if applicable.  BY ENTERING INTO THIS AGREEMENT, EXECUTIVE ACKNOWLEDGES THAT EXECUTIVE IS WAIVING EXECUTIVE’S RIGHT TO JURY TRIAL OF ANY DISPUTE COVERED BY THIS AGREEMENT.

 

12.                               The following notice is provided in accordance with the provisions of Federal Law:

 

You have up to twenty-one days (21) days from the date this General Release and Agreement is given to you in which to accept its terms, although you may accept it any time within those twenty-one days.  You are advised to consult with an attorney regarding this Agreement.  You have the right to revoke your acceptance of this Agreement at any time within seven (7) days from the date you sign it, and this Agreement will not become effective and enforceable until this seven (7) day revocation period has expired.  To revoke your acceptance, a written notice of revocation must be received by Keysight, addressed to Keysight Technologies, Inc., Attention:  General Counsel located at 1400 Fountaingrove Parkway, Santa Rosa, CA  95403 on or before the seventh day after you sign this Agreement.

 

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EXECUTIVE FURTHER STATES THAT EXECUTIVE HAS HAD THE OPPORTUNITY TO CONSULT WITH THE ATTORNEY OF EXECUTIVE’S CHOICE, THAT EXECUTIVE HAS CAREFULLY READ THIS AGREEMENT, THAT EXECUTIVE HAS HAD AMPLE TIME TO REFLECT UPON AND CONSIDER ITS CONSEQUENCES, THAT EXECUTIVE FULLY UNDERSTANDS ITS FINAL AND BINDING EFFECT, THAT THE ONLY PROMISES MADE TO EXECUTIVE TO SIGN THIS AGREEMENT ARE THOSE STATED ABOVE OR IN THAT CHANGE OF CONTROL SEVERANCE AGREEMENT BETWEEN KEYSIGHT AND EXECUTIVE, AND THAT EXECUTIVE IS SIGNING THIS AGREEMENT VOLUNTARILY.

 

IN WITNESS WHEREOF, this Agreement has been executed in duplicate originals on the date indicated below, and shall become effective as indicated above.

 

	
EXECUTIVE
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Date:
    	
 
    	
 
    

 

4Exhibit 4.2

 

REGISTRATION RIGHTS AGREEMENT

 

 

by and among

 

 

SANCHEZ ENERGY CORPORATION

 

and the GUARANTORS party hereto

 

 

and

 

 

RBC CAPITAL MARKETS, LLC

CREDIT SUISSE SECURITIES (USA) LLC
 as Representative of the several Initial Purchasers

 

 

Dated as of September 12, 2014

 

 

REGISTRATION RIGHTS AGREEMENT

 

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of September 12, 2014, by and among SANCHEZ ENERGY CORPORATION, a Delaware corporation (the “Company”), the guarantors listed on the signature pages hereto (collectively, the “Guarantors”) and RBC Capital Markets, LLC and Credit Suisse Securities (USA) LLC, as representatives (the “Representatives”) of the several initial purchasers listed on Schedule 1 to the Purchase Agreement (collectively, the “Initial Purchasers”), each of whom has agreed, severally and not jointly, to purchase the Company’s 6.125% Senior Notes due 2023 (the “Notes”) fully and unconditionally guaranteed by the Guarantors (the “Guarantees”) pursuant to the Purchase Agreement (as defined below).  The Notes and the Guarantees attached thereto are herein collectively referred to as the “Securities.”

 

The Notes issued on the date hereof will constitute one series together with, and will be identical in all respects to, the $850,000,000 aggregate principal amount of 6.125% Senior Notes due 2023 (the “Initial Notes”) issued and sold by the Company pursuant to that certain Purchase Agreement, dated June 13, 2014, among the Company, the guarantors named therein and RBC Capital Markets, LLC.

 

This Agreement is made pursuant to the Purchase Agreement, dated September 9, 2014, among the Company, the Guarantors and the Representatives (the “Purchase Agreement”) (i) for the benefit of the Initial Purchasers and (ii) for the benefit of the holders from time to time of Transfer Restricted Securities, including the Initial Purchasers.  In order to induce the Initial Purchasers to purchase the Securities, the Company and the Guarantors have agreed to provide the registration rights set forth in this Agreement.  The execution and delivery of this Agreement is a condition to the obligations of the Initial Purchasers, as set forth in Section 6(k) of the Purchase Agreement.  Capitalized terms are defined in Section 1.

 

The parties hereby agree as follows:

 

Section 1.  Definitions.  Unless otherwise defined herein, capitalized terms shall have the meanings set forth in the Purchase Agreement.  As used in this Agreement, the following capitalized terms shall have the following meanings:

 

“Additional Interest”:  As defined in Section 5 hereof.

 

“Advice”:  As defined in Section 6(c) hereof.

 

“Affiliate”:  As defined in Rule 144.

 

“Agreement”:  As defined in the preamble hereof.

 

“Black-Out Notice”: As defined in Section 3(c) hereof.

 

“Broker-Dealer”:  Any broker or dealer registered under the Exchange Act.

 

“Broker-Dealer Resale Period”: As defined in Section 3(c) hereof.

 

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“Business Day”:  Any day other than a Saturday, Sunday or U.S. federal holiday or a day on which banking institutions or trust companies located in New York, New York are authorized or obligated to be closed or, where applicable, as defined by Commission rules for purposes of calculating the 20 Business Day period under Rule 14e-1(a) under the Exchange Act.

 

“Closing Date”:  The date of this Agreement.

 

“Commission”:  The U.S. Securities and Exchange Commission.

 

“Company”:  As defined in the preamble hereto.

 

“Consummate”:  A registered Exchange Offer shall be deemed “Consummated” for purposes of this Agreement upon the occurrence of (i) the filing and effectiveness under the Securities Act of the Exchange Offer Registration Statement relating to the Exchange Securities to be issued in the Exchange Offer, (ii) the maintenance of such Registration Statement continuously effective (except as permitted herein) and the keeping of the Exchange Offer open for a period not less than the minimum period required pursuant to Section 3(b) hereof, and (iii) the delivery by the Company to the Trustee (as defined in the Indenture) under the Indenture of Exchange Securities in the same aggregate principal amount as the aggregate principal amount of Transfer Restricted Securities that were validly tendered (and not withdrawn) by Holders thereof pursuant to the Exchange Offer.

 

“Effectiveness Target Date”:  As defined in Section 3(a) hereof.

 

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

 

“Exchange Offer”:  The registration by the Company under the Securities Act of the Exchange Securities pursuant to a Registration Statement pursuant to which the Company offers the Holders of all outstanding Transfer Restricted Securities (except as permitted herein) the opportunity to exchange all such outstanding Transfer Restricted Securities held by such Holders for Exchange Securities in an aggregate principal amount equal to the aggregate principal amount of the Transfer Restricted Securities validly tendered (and not withdrawn) in such exchange offer by such Holders.

 

“Exchange Offer Registration Statement”:  The Registration Statement relating to the Exchange Offer, including the related Prospectus.

 

“Exchange Securities”:  The 6.125% Senior Notes due 2023, of the same series under the Indenture as the Transfer Restricted Securities and the Initial Notes, to be issued to Holders in exchange for Transfer Restricted Securities pursuant to this Agreement.

 

“FINRA”:  Financial Industry Regulatory Authority, Inc.

 

“Free Writing Prospectus”:  Each free writing prospectus (as defined in Rule 405 under the Securities Act) prepared by or on behalf of the Company or used or referred to by the Company in connection with the sale of the Securities or the Exchange Securities.

 

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“Guarantees”:  As defined in the preamble hereof.

 

“Guarantors”:  As defined in the preamble hereof.

 

“Holders”:  As defined in Section 2(b) hereof.

 

“Indemnified Holder”:  As defined in Section 8(a) hereof.

 

“Indenture”:  The Indenture, dated as of June 27, 2014, by and among the Company, the Guarantors and U.S. Bank National Association, a national banking association, as trustee (the “Trustee”), as supplemented from time to time, pursuant to which the Securities are to be issued, as such Indenture is amended or supplemented from time to time in accordance with the terms thereof.

 

“Initial Notes”: As defined in the preamble hereto.

 

“Initial Placement”:  The issuance and sale by the Company of the Securities to the Initial Purchasers pursuant to the Purchase Agreement.

 

“Initial Purchasers”:  As defined in the preamble hereto.

 

“Initial Securities”:  The Securities issued and sold by the Company to the Initial Purchasers pursuant to the Purchase Agreement on the Closing Date.

 

“Notes”:  As defined in the preamble hereof.

 

“Person”:  An individual, partnership, corporation, limited liability company, trust, unincorporated organization, or other legal entity, or a government or agency or political subdivision thereof.

 

“Prospectus”:  The prospectus included in a Registration Statement, as amended or supplemented by any prospectus supplement and by all other amendments thereto, including post-effective amendments, and all material incorporated by reference into such Prospectus.

 

“Purchase Agreement”:  As defined in the preamble hereof.

 

“Registration Default”:  As defined in Section 5 hereof.

 

“Registration Statement”:  Any registration statement of the Company and the Guarantors relating to (a) an offering of Exchange Securities pursuant to an Exchange Offer or (b) the registration for resale of Transfer Restricted Securities pursuant to the Shelf Registration Statement, which is filed pursuant to the provisions of this Agreement, in each case, including the Prospectus included therein, all amendments and supplements thereto (including post-effective amendments) and all exhibits and material incorporated by reference therein.

 

“Rule 144”:  Rule 144 promulgated by the Commission

 

“Securities”:  As defined in the preamble hereto.

 

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

 

“Shelf Filing Deadline”:  As defined in Section 4(a) hereof.

 

“Shelf Registration Statement”:  As defined in Section 4(a) hereof.

 

“Transfer Restricted Securities”:  The Initial Securities; provided that an Initial Security shall cease to be a Transfer Restricted Security on the earlier to occur of (i) the date on which a Registration Statement with respect to such Initial Security has become effective under the Securities Act and such Initial Security have been exchanged or disposed of pursuant to such Registration Statement; (ii) if a Shelf Registration Statement is required to be filed in accordance with Section 4(a) hereof, one year from the effective date of such Shelf Registration Statement; (iii) the date on which such Initial Security is sold pursuant to Rule 144 under circumstances in which any legend borne by such Security relating to restrictions on transferability thereof, under the Securities Act or state blue sky laws (other than legends in respect of a Holder’s Affiliate status), is removed, or the restrictive CUSIP number is redesignated as non-restrictive, by the Company or pursuant to the Indenture; (iv) the date upon which such Initial Security is distributed to the public by a Broker-Dealer pursuant to the “Plan of Distribution” contemplated by the Exchange Offer Registration Statement (including delivery of the Prospectus contained therein) and (v) the date on which such Initial Security ceases to be outstanding.

 

“Trust Indenture Act”:  The Trust Indenture Act of 1939, as amended.

 

“Trustee”: As defined in the definition of “Indenture” herein.

 

“Underwritten Registration or Underwritten Offering”:  A registration in which securities of the Company are sold to an underwriter for reoffering to the public.

 

Section 2.  Securities Subject to this Agreement.

 

(a)                                 Transfer Restricted Securities.  The securities entitled to the benefits of this Agreement are the Transfer Restricted Securities.

 

(b)                                 Holders of Transfer Restricted Securities.  A Person is deemed to be a holder of Transfer Restricted Securities (each, a “Holder”) whenever such Person owns Transfer Restricted Securities.

 

Section 3.  Registered Exchange Offer.

 

(a)                                 Unless the Exchange Offer shall not be permissible under applicable law or Commission policy (after the procedures set forth in Section 6(a)(i) hereof have been complied with), or there are no Transfer Restricted Securities outstanding, each of the Company and the Guarantors shall (i) cause to be filed with the Commission within 380 days after the Closing Date (or if such 380th day is not a Business Day, the next succeeding Business Day), a Registration Statement under the Securities Act relating to the Exchange Securities and the Exchange Offer, (ii) use its commercially reasonable efforts to cause such Registration Statement to become effective as promptly as

 

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practicable, but in no event later than 20 Business Days before the 400th day after the Closing Date (the “Effectiveness Target Date”), (iii) in connection with the foregoing, (A) file all pre-effective amendments to such Registration Statement as may be necessary in order to cause such Registration Statement to become effective, (B) file, if applicable, a post-effective amendment to such Registration Statement pursuant to Rule 430A under the Securities Act and (C) cause all necessary filings in connection with the registration and qualification of the Exchange Securities to be made under the state securities or blue sky laws of such jurisdictions as are necessary to permit Consummation of the Exchange Offer, and (iv) upon the effectiveness of such Registration Statement, promptly commence the Exchange Offer.  The Exchange Offer shall be on the appropriate form permitting registration of the Exchange Securities to be offered in exchange for the Transfer Restricted Securities and to permit resales of Transfer Restricted Securities held by Broker-Dealers as contemplated by Section 3(c) hereof.

 

(b)                                 The Company and the Guarantors shall cause the Exchange Offer Registration Statement to be effective continuously (except as permitted herein) and shall keep the Exchange Offer open for a period of not less than the minimum period required under applicable federal and state securities laws to Consummate the Exchange Offer; provided, however, that in no event shall such period be less than 20 Business Days after the date the Exchange Offer commences.  The Company shall cause the Exchange Offer to comply with all applicable federal and state securities laws.  No securities other than the Exchange Securities (including, for the avoidance of doubt, the Guarantees and any exchange securities for the Initial Notes and related guarantees, or other securities of the same class or series as the Securities) shall be included in the Exchange Offer Registration Statement.  The Company shall use its commercially reasonable efforts to cause the Exchange Offer to be Consummated on the earliest practicable date after the Exchange Offer Registration Statement has become effective, but in no event later than 20 Business Days after the Effectiveness Target Date.

 

(c)                                  The Company shall indicate in a “Plan of Distribution” section contained in the Prospectus forming a part of the Exchange Offer Registration Statement that any Broker-Dealer who holds Transfer Restricted Securities that were acquired for its own account as a result of market-making activities or other trading activities (other than Transfer Restricted Securities acquired directly from the Company), may exchange such Transfer Restricted Securities pursuant to the Exchange Offer; however, such Broker-Dealer may be deemed to be an “underwriter” within the meaning of the Securities Act and must, therefore, deliver a prospectus meeting the requirements of the Securities Act in connection with any resales of the Exchange Securities received by such Broker-Dealer in the Exchange Offer, which prospectus delivery requirement may be satisfied by the delivery by such Broker-Dealer of the Prospectus contained in the Exchange Offer Registration Statement.  Such “Plan of Distribution” section shall also contain all other information with respect to such resales by Broker-Dealers that the Commission may require in order to permit such resales pursuant thereto, but such “Plan of Distribution” shall not name any such Broker-Dealer or disclose the amount of Transfer Restricted Securities held by any such Broker-Dealer except to the extent required by the Commission as a result of a change in policy or applicable law after the date of this Agreement.

 

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Each of the Company and the Guarantors shall use its commercially reasonable efforts to keep the Exchange Offer Registration Statement continuously effective, supplemented and amended as required by the provisions of Section 6(c) hereof to the extent necessary to ensure that it is available for resales of Transfer Restricted Securities acquired by Broker-Dealers for their own accounts as a result of market-making activities or other trading activities, and to ensure that it conforms with the requirements of this Agreement, the Securities Act and the policies, rules and regulations of the Commission as announced from time to time, for a period beginning upon the Consummation of the Exchange Offer and ending on the earlier of (i) 180 days from the date on which the Exchange Offer Registration Statement is declared effective and (ii) the date on which a Broker-Dealer is no longer required to deliver a prospectus in connection with market-making or other trading activities (such period, the “Broker-Dealer Resale Period”); provided that the Company may, during the Broker-Dealer Resale Period, for a period of up to 60 days in any three-month period, not to exceed 120 days in any calendar year, determine that the Exchange Offer Registration Statement is not usable under certain circumstances relating to corporate developments, public filings with the Commission and similar events, and suspend the use of the prospectus that is part of the Exchange Offer Registration Statement by providing written notice of such suspension (a “Black-Out Notice”) to each Holder of Transfer Restricted Securities.  For the avoidance of doubt, any period during which the use of the prospectus that is part of the Exchange Offer Registration Statement has been suspended pursuant to the immediately preceding proviso shall not be counted for the purposes of determining the expiration of the Broker-Dealer Resale Period.

 

The Company shall provide sufficient copies of the latest version of such Prospectus to Broker-Dealers promptly upon request at any time during such 180-day (or shorter as provided in the foregoing sentence) period in order to facilitate such resales.

 

Section 4.  Shelf Registration.

 

(a)                                 Shelf Registration.  If (i) the Company is not required to file an Exchange Offer Registration Statement or to consummate the Exchange Offer solely because the Exchange Offer is not permitted by applicable law or Commission policy (after the procedures set forth in Section 6(a)(i) hereof have been complied with), (ii) for any reason the Exchange Offer is not Consummated 20 Business Days after the Effectiveness Target Date or any date prior thereto (unless an Exchange Offer Registration Statement has been filed and has not yet been declared effective by the Commission, other than as a result of the fault of the Company or any of the Guarantors, and as a result of Commission review of data or information included or incorporated by reference in such Registration Statement that would also be included or incorporated in a Shelf Registration Statement, the Company and Guarantors reasonably believe that a Shelf Registration Statement would not become effective prior to Consummation of the Exchange Offer) or (iii) prior to 20 Business Days after the Effectiveness Target Date (or, if earlier, Consummation of the Exchange Offer):  (A) the Initial Purchasers request from the Company with respect to Transfer Restricted Securities not eligible under applicable law or Commission policy to be exchanged for Exchange Securities in the Exchange Offer other than because such Holder is an Affiliate of the Company or the Guarantors or

 

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because a Holder did not validly tender (and not withdraw) Initial Securities pursuant to the Exchange Offer (or otherwise elected to not participate in the Exchange Offer), (B) with respect to any Holder of Transfer Restricted Securities other than an Affiliate of the Company or the Guarantors, such Holder notifies the Company in writing (assuming the conclusions in such notification are correct) that (1) such Holder is prohibited by applicable law or Commission policy from participating in the Exchange Offer, (2) such Holder may not resell the Exchange Securities acquired by it in the Exchange Offer to the public without delivering a prospectus and that the Prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for such resales by such Holder, or (3) such Holder is a Broker-Dealer and holds Transfer Restricted Securities acquired directly from the Company or one of its affiliates or (C) in the case of any Initial Purchaser, such Initial Purchaser notifies the Company in writing (assuming the conclusions in such notification are correct) that it will not receive Exchange Securities in exchange for Transfer Restricted Securities constituting any portion of such Initial Purchaser’s unsold allotment, the Company and the Guarantors shall (1) if permitted by law and Commission policy, cause the Transfer Restricted Securities of such Holder to be reissued in a form that does not bear any restrictive legends relating to the Securities Act or a restrictive CUSIP number so that such Securities may be sold to the public in accordance with Rule 144 by a person that is not an Affiliate of the Company or any of the Guarantors where no conditions of Rule 144 are then applicable (other than the holding period requirement in paragraph (d)(1)(ii) of Rule 144 so long as such holding period requirement is satisfied at such time of such reissue) and (2) in the event the Company cannot or does not comply with the provisions of the foregoing clause by the later of (I) 20 Business Days of the date of receipt by the Company of such notice of such Holder or Initial Purchaser, if applicable under (iii), and (II) the Shelf Filing Deadline:

 

(x)                                 cause to be filed a shelf registration statement pursuant to Rule 415 under the Securities Act, which may be an amendment to the Exchange Offer Registration Statement (in either event, the “Shelf Registration Statement”) on or prior to the earliest to occur of (1) the 90th day after the date on which the filing obligation arises pursuant to Section 4(a)(i) above and (2) the 90th day after (A) the 400th day after the Closing Date pursuant to Section 4(a)(ii) or (B) the date on which the filing obligation arises under Section 4(a)(iii) (such earliest date being the “Shelf Filing Deadline”), which Shelf Registration Statement shall provide for resales of all Transfer Restricted Securities the Holders specified in the relevant provision of Section 4(a) and that have provided the information required pursuant to Section 4(b) hereof; and

 

(y)                                 use their commercially reasonable efforts to cause such Shelf Registration Statement to be declared effective by the Commission on or before the 180th day after the Shelf Filing Deadline (or if such 180th day is not a Business Day, the next succeeding Business Day).

 

Notwithstanding the foregoing, the Company shall have no obligation to file a Shelf Registration Statement or have it declared effective by the Commission prior to the Effectiveness Target Date.  Each of the Company and the Guarantors shall use its commercially reasonable efforts to keep such Shelf Registration Statement continuously

 

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effective, supplemented and amended as required by the provisions of Section 6(b) and Section 6(c) hereof to the extent necessary to ensure that it is available for resales of Transfer Restricted Securities by the Holders of such Securities entitled to the benefit of this Section 4(a), and to ensure that it conforms with the requirements of this Agreement, the Securities Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of at least one year following the effective date of such Shelf Registration Statement (or shorter period that will terminate when all the Transfer Restricted Securities covered by such Shelf Registration Statement have been sold pursuant to such Shelf Registration Statement); provided that the Company may for a period of up to 60 days in any three-month period, not to exceed 120 days in any calendar year, determine that the Shelf Registration Statement is not usable under certain circumstances relating to corporate developments, public filings with the Commission and similar events, and suspend the use of the prospectus that is part of the Shelf Registration Statement by providing a Black-Out Notice to each Holder of Transfer Restricted Securities registered thereon.

 

(b)                                 Provision by Holders of Certain Information in Connection with the Shelf Registration Statement.  No Holder of Transfer Restricted Securities may include any of its Transfer Restricted Securities in any Shelf Registration Statement pursuant to this Agreement unless and until such Holder furnishes to the Company in writing, within 20 Business Days after receipt of a request therefor, such information as the Company may reasonably request for use in connection with any Shelf Registration Statement or Prospectus or preliminary Prospectus included therein.  Each Holder as to which any Shelf Registration Statement is being effected agrees to furnish promptly to the Company all information required to be disclosed in order to make the information previously furnished to the Company by such Holder not materially misleading.

 

Section 5.  Additional Interest.  The Company and the Initial Purchasers agree that Holders will suffer damages if the Company and the Guarantors fail to fulfill their obligations under Section 3 or Section 4 hereof and that it would not be feasible to ascertain the extent of such damages with precision.  Accordingly, the Company and the Guarantors agree to pay, jointly and severally, as liquidated damages, additional interest on the Transfer Restricted Securities (“Additional Interest”) if, as of the applicable time limits provided for in this Agreement, (i) the Exchange Offer has not been Consummated or (ii) any Shelf Registration Statement, if required hereby, has not been declared effective (or has not automatically become effective) by the Commission (each such event referred to in clauses (i) and (ii), a “Registration Default”).  The Additional Interest shall accrue after such Registration Default on the principal amount of the Transfer Restricted Securities at a rate of 0.25% per annum during the 90-day period immediately following the 400th day after the Closing Date and shall increase by 0.25% per annum at the end of each subsequent 90-day period, in each case for the period of the Registration Default, but in no event shall such increase hereunder or under any other Registration Rights Agreement (as defined in the Indenture) exceed 1.00% per annum.  Following the cure of all Registration Defaults relating to the particular Transfer Restricted Securities (for the avoidance of doubt, a Registration Default may be cured if the Exchange Offer is Consummated or a required Shelf Registration Statement is declared effective (or has automatically become effective), as applicable, after the required deadline under this Agreement), the interest rate borne by the relevant Transfer Restricted Securities will be reduced

 

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to the original interest rate borne by such Transfer Restricted Securities; provided, however, that, if after any such reduction in interest rate, a different Registration Default occurs, the interest rate borne by the relevant Transfer Restricted Securities shall again be increased pursuant to the foregoing provisions.

 

Notwithstanding the foregoing, (i) the amount of Additional Interest payable shall not increase because more than one Registration Default has occurred and is pending, (ii) a Holder of Transfer Restricted Securities shall not be entitled to Additional Interest with respect to a Registration Default pursuant to clause (ii) of the preceding paragraph, unless it is entitled to the benefits of such Shelf Registration Statement pursuant to Section 4(a) and has complied with its obligations pursuant to Section 4(b), within the time limits provided for therein and (iii) no Additional Interest shall be payable to the extent any Transfer Restricted Securities are receiving such additional interest payable pursuant to another Registration Rights Agreement (as defined in the Indenture), except to the extent the Additional Interest payable hereunder exceeds such amount.

 

All obligations of the Company and the Guarantors set forth in the preceding paragraph that are outstanding with respect to any Transfer Restricted Security at the time such security ceases to be a Transfer Restricted Security shall survive until such time as all such obligations with respect to such security shall have been satisfied in full.

 

Section 6.  Registration Procedures.

 

(a)                                 Exchange Offer Registration Statement.  In connection with the Exchange Offer, the Company and the Guarantors shall comply with all of the provisions of Section 6(c) hereof, shall use their commercially reasonable efforts to effect such exchange to permit the sale of Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof, and shall comply with all of the following provisions:

 

(i)                                     If in the reasonable opinion of counsel to the Company there is a question as to whether the Exchange Offer is permitted by applicable law or Commission policy, each of the Company and the Guarantors hereby agrees to seek a no-action letter or other favorable decision from the Commission allowing the Company and the Guarantors to Consummate an Exchange Offer for such Transfer Restricted Securities.  Each of the Company and the Guarantors hereby agree to pursue the issuance of such a decision to the Commission staff level but shall not be required to take commercially unreasonable action to effect a change of Commission policy.  Each of the Company and the Guarantors hereby agree, however, to (A) participate in telephonic conferences with the Commission, (B) deliver to the Commission staff an analysis prepared by counsel to the Company setting forth the legal bases, if any, upon which such counsel has concluded that such an Exchange Offer should be permitted and (C) diligently pursue a favorable resolution by the Commission staff of such submission.

 

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(ii)                                  As a condition to its participation in the Exchange Offer pursuant to the terms of this Agreement, each Holder of Transfer Restricted Securities shall furnish, upon the request of the Company, prior to the Consummation thereof, a written representation to the Company (which may be contained in the letter of transmittal contemplated by the Exchange Offer Registration Statement) to the effect that (A) it is not an affiliate of the Company, (B) it is not engaged in, and does not intend to engage in, and has no arrangement or understanding with any Person to participate in, a distribution of the Exchange Securities to be issued in the Exchange Offer and (C) it is acquiring the Exchange Securities in its ordinary course of business.  In addition, all such Holders of Transfer Restricted Securities shall otherwise cooperate in the Company’s preparations for the Exchange Offer. Each Holder hereby acknowledges and agrees that any Broker-Dealer and any such Holder using the Exchange Offer to participate in a distribution of the securities to be acquired in the Exchange Offer (1) could not under Commission policy as in effect on the date of this Agreement rely on the position of the Commission enunciated in Morgan Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital Holdings Corporation (available May 13, 1988), as interpreted in the Commission’s letter to Shearman & Sterling dated July 2, 1993, and similar no-action letters (which may include any no-action letter obtained pursuant to clause (i) above), and (2) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction and that such a secondary resale transaction should be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K if the resales are of Exchange Securities obtained by such Holder in exchange for Transfer Restricted Securities acquired by such Holder directly from the Company.

 

(b)                                 Shelf Registration Statement.  If required pursuant to Section 4, in connection with the Shelf Registration Statement, each of the Company and the Guarantors shall comply with all the provisions of Section 6(c) hereof and shall use its commercially reasonable efforts to effect such registration to permit the sale of the Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof, and pursuant thereto each of the Company and the Guarantors will as expeditiously as practicable prepare and file with the Commission a Registration Statement relating to the registration on any appropriate form under the Securities Act, which form shall be available for the sale of the Transfer Restricted Securities in accordance with the intended method or methods of distribution thereof.

 

(c)                                  General Provisions.  In connection with any Registration Statement and any Prospectus required by this Agreement to permit the sale or resale of Transfer Restricted Securities (including, without limitation, any Registration Statement and the related Prospectus required to permit resales of Transfer Restricted Securities by Broker-Dealers), each of the Company and the Guarantors shall:

 

(i)                                     use its commercially reasonable efforts to keep such Registration Statement continuously effective during the period required by the Agreement and provide all requisite financial statements (including, if required by the Securities Act or any regulation thereunder, financial statements of the Guarantors for the period specified in Section 3 or Section 4 hereof, as applicable; upon the

 

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occurrence of any event that would cause any such Registration Statement or the Prospectus contained therein (A) to contain a material misstatement or omission or (B) not to be effective and usable for resale of Transfer Restricted Securities during the period required by this Agreement, the Company shall file promptly an appropriate amendment to such Registration Statement (or file with the Commission a document to be incorporated by reference into the Registration Statement), in the case of clause (A), correcting any such misstatement or omission, and, in the case of either clause (A) or (B), use its commercially reasonable efforts to cause such amendment to be declared effective and such Registration Statement and the related Prospectus to become usable for their intended purpose(s) as soon as practicable thereafter, subject to the provisions applicable to Exchange Offer Registration Statement suspension and black-out periods and the last paragraph hereof;

 

(ii)                                  prepare and file with the Commission such amendments and post-effective amendments to the applicable Registration Statement as may be necessary to keep the Registration Statement effective for the applicable period set forth in Section 3 or Section 4 hereof, as applicable, or such shorter period as will terminate when all Transfer Restricted Securities covered by such Registration Statement have been sold; cause the Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Securities Act, and to comply fully with the applicable provisions of Rules 424 and 430A under the Securities Act in a timely manner; and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof set forth in such Registration Statement or supplement to the Prospectus;

 

(iii)                               in the case of a Shelf Registration Statement, advise the underwriter(s), if any, and selling Holders promptly and, if requested by such Persons, to confirm such advice in writing, (A) when the Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to any Registration Statement or any post-effective amendment thereto, when the same has become effective, (B) of any request by the Commission for amendments to the Registration Statement or amendments or supplements to the Prospectus or for additional information relating thereto, (C) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement under the Securities Act or of the suspension by any state securities commission of the qualification of the Transfer Restricted Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes, and (D) of the existence of any fact or the happening of any event that makes any statement of a material fact made in the Registration Statement, the Prospectus, any amendment or supplement thereto, or any document incorporated by reference therein untrue, or that requires the making of any additions to or changes in the Registration Statement or the Prospectus in order to make the statements therein (with respect to the Prospectus, in light of the

 

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circumstances under which they were made) not misleading.  If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, or any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption from qualification of the Transfer Restricted Securities under state securities or blue sky laws, each of the Company and the Guarantors shall use its commercially reasonable efforts to obtain the withdrawal or lifting of such order at the earliest practicable time;

 

(iv)                              in the case of a Shelf Registration Statement, furnish, if and as requested, without charge to each of the Initial Purchasers, each selling Holder named in any Registration Statement, and each of the underwriter(s), if any, before filing with the Commission, copies of any Registration Statement or any Prospectus included therein or any amendments or supplements to any such Registration Statement or Prospectus (other than any documents incorporated by reference after the initial filing of such Registration Statement), which documents will be subject to the review and comment of such Holders and underwriter(s) in connection with such sale, if any, for a period of at least five Business Days, and the Company will not file any such Registration Statement or Prospectus or any amendment or supplement to any such Registration Statement or Prospectus (including all such documents incorporated by reference) to which an Initial Purchaser of Transfer Restricted Securities covered by such Registration Statement or the underwriter(s), if any, shall reasonably object in writing within five Business Days after the receipt thereof (such objection to be deemed timely made upon confirmation of telecopy transmission within such period); provided, that this clause (iv) shall not apply to any filing by the Company of any annual report on Form 10-K, quarterly report on Form 10-Q or Current Report on Form 8-K with respect to matters unrelated to the Initial Securities, the Transfer Restricted Securities and the Exchange Securities and the offering or exchange therefor.  The objection of an Initial Purchaser or underwriter, if any, shall be deemed to be reasonable if such Registration Statement, amendment, Prospectus or supplement, as applicable, as proposed to be filed, contains a material misstatement or omission;

 

(v)                                 in the case of a Shelf Registration Statement, promptly prior to the filing of any document that is to be incorporated by reference into a Registration Statement or Prospectus, provide upon request copies of such document to the Initial Purchasers, and to the underwriter(s), if any, and make the Company’s and the Guarantors’ representatives available for discussion of such document and other customary due diligence matters; provided, that this clause (v) shall not apply to any filing by the Company of any annual report on Form 10-K, quarterly report on Form 10-Q or Current Report on Form 8-K with respect to matters unrelated to the Initial Securities, the Transfer Restricted Securities and the Exchange Securities and the offering or exchange therefor;

 

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(vi)                              in the case of a Shelf Registration Statement, make available at normal business hours for inspection by the Initial Purchasers, the managing underwriter(s), if any, participating in any disposition pursuant to such Registration Statement and any attorney or accountant retained by such Initial Purchasers or any of the underwriter(s), all financial and other records, pertinent corporate documents and properties of each of the Company and the Guarantors and cause the Company’s and the Guarantors’ officers, directors and employees to supply all information reasonably requested by any such Holder, underwriter, attorney or accountant in connection with such Registration Statement or any post-effective amendment thereto subsequent to the filing thereof (and each such person shall agree that it will keep such information confidential and not disclose any such records, documents, properties or information unless (A) the disclosure of such records, documents, properties or information is, in the opinion of counsel to such person, necessary to avoid or correct a misstatement or omission in such Registration Statement, (B) the release of such records, documents, properties or information is ordered pursuant to a subpoena or other order from a court of competent jurisdiction, (C) the records, documents, properties or information in such records is public or has been made generally available to the public other than as a result of a disclosure or failure to safeguard by such person, or (D) disclosure of such records, documents, properties or information is, in the opinion of counsel for any such person, necessary or advisable in connection with any action, claim, suit or proceeding, directly or indirectly, involving such person and arising out of, based upon, related to, or involving this Agreement, or any transaction contemplated hereby or arising hereunder) and prior to its effectiveness and to use commercially reasonable efforts to participate in meetings with investors to the extent reasonably requested by the managing underwriter(s), if any;

 

(vii)                           in the case of a Shelf Registration Statement, if requested by any selling Holders or the underwriter(s), if any, promptly incorporate in any Registration Statement or Prospectus, pursuant to a supplement or post-effective amendment if necessary, such information as such selling Holders and underwriter(s), if any, may reasonably request to have included therein, including, without limitation, information relating to the “Plan of Distribution” of the Transfer Restricted Securities, information with respect to the principal amount of Transfer Restricted Securities being sold to such underwriter(s), the purchase price being paid therefor and any other terms of the offering of the Transfer Restricted Securities to be sold in such offering; and make all required filings of such Prospectus supplement or post-effective amendment as soon as practicable after the Company is notified of the matters to be incorporated in such Prospectus supplement or post-effective amendment, subject to the provisions applicable to Exchange Offer Registration Statement suspension and black-out periods and the last paragraph hereof;

 

(viii)                        in the case of a Shelf Registration Statement, cause the Transfer Restricted Securities covered by the Registration Statement to be rated with the appropriate rating agencies, if so requested by the Holders of a majority in aggregate principal amount of Securities covered thereby or the underwriter(s), if any;

 

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(ix)                              in the case of a Shelf Registration Statement, if and as requested, furnish to each Initial Purchaser, each selling Holder and each of the underwriter(s), if any, without charge upon request, at least one copy of the Registration Statement, as first filed with the Commission, and of each amendment thereto, including financial statements and schedules, all documents incorporated by reference therein and all exhibits (including exhibits incorporated therein by reference);

 

(x)                                 in the case of a Shelf Registration Statement, deliver to each selling Holder and each of the underwriter(s), if any, without charge upon request, as many copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto as such Persons reasonably may request; each of the Company and the Guarantors hereby consents to the use of the Prospectus and any amendment or supplement thereto by each of the selling Holders and each of the underwriter(s), if any, in connection with the offering and the sale of the Transfer Restricted Securities covered by the Prospectus or any amendment or supplement thereto;

 

(xi)                              in the case of a Shelf Registration Statement, enter into such customary agreements (including an underwriting agreement), and make such customary representations and warranties, and take all such other actions in connection therewith in order to expedite or facilitate the disposition of the Transfer Restricted Securities pursuant to any Registration Statement contemplated by this Agreement, all to such extent as may be reasonably requested by any Initial Purchaser or by any Holder of Transfer Restricted Securities or underwriter in connection with any sale or resale pursuant to any Registration Statement contemplated by this Agreement; and in connection with a Shelf Registration Statement, whether or not an underwriting agreement is entered into and whether or not the registration is an Underwritten Registration, each of the Company and the Guarantors shall:

 

(A)                     furnish to each Initial Purchaser, each selling Holder and each underwriter, if any, in such substance and scope as they may reasonably request and as are customarily made by issuers to underwriters in primary underwritten offerings, upon the date of the effectiveness of the Shelf Registration Statement:

 

(1)                                 a certificate, dated the date of effectiveness of the Shelf Registration Statement signed by (y) the President or any Vice President and (z) a principal financial or accounting officer of each of the Company and the Guarantors, confirming, as of the date thereof, the matters set forth in Section 6(d) of the Purchase Agreement and such other matters as such parties may reasonably request;

 

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(2)                                 an opinion, dated the date of effectiveness of the Shelf Registration Statement of counsel for the Company and the Guarantors, covering the matters set forth in Section 6(f) of the Purchase Agreement and such other matters as such parties may reasonably request, and a statement to the effect that such counsel has participated in conferences with officers and other representatives of the Company and the Guarantors, representatives of the independent public accountants for the Company and the Guarantors, representatives of the underwriter(s), if any, and counsel to the underwriter(s), if any, at which the contents of the Registration Statement and the related Prospectus and related matters were discussed and although such counsel has not independently checked or verified, and is not passing upon and does not assume any responsibility for the accuracy, completeness or fairness of such statements contained in the Registration Statement and related Prospectus; on the basis of the foregoing, nothing has come to such counsel’s attention that caused such counsel to believe that the applicable Registration Statement, at the time such Registration Statement or any post-effective amendment thereto became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus contained in such Registration Statement as of its date contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the case of the Prospectus, in the light of the circumstances under which they were made, not misleading (it being understood that such counsel need express no belief as to the financial statements, financial schedules or notes or other financial or statistical or accounting information or information pertaining to natural resource reserves, operation and production or data derived from any of the foregoing, in each case included in (or omitted from) the Registration Statement and related Prospectus or any amendments or supplements thereto); and

 

(3)                                 a customary comfort letter, dated the date of effectiveness of the Shelf Registration Statement, from the Company’s independent accountants, in the customary form and covering matters of the type customarily requested to be covered in comfort letters by underwriters in connection with primary underwritten offerings, and covering or affirming the matters set forth in the comfort letters delivered pursuant to Section 6(e) of the Purchase Agreement, without exception;

 

(B)                     set forth in full or incorporate by reference in the underwriting agreement, if any, if so requested by the parties thereto, the indemnification provisions and procedures of Section 8 hereof with respect to all parties to be indemnified pursuant to said Section; and

 

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(C)                     deliver such other documents and certificates as may be reasonably requested by such parties to evidence compliance with Section 6(c)(xi)(A) hereof and with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company or any of the Guarantors pursuant to this Section 6(c)(xi), if any.

 

If at any time the representations and warranties of the Company and the Guarantors contemplated in Section 6(c)(xi)(A)(1) hereof cease to be true and correct, the Company or the Guarantors shall so advise the Initial Purchasers and the underwriter(s), if any, and each selling Holder promptly and, if requested by such Persons, shall confirm such advice in writing;

 

(xii)                           in the case of a Shelf Registration Statement, prior to any public offering of Transfer Restricted Securities, cooperate with the selling Holders, the underwriter(s), if any, and their respective counsel in connection with the registration and qualification of the Transfer Restricted Securities under the state securities or blue sky laws of such jurisdictions as the selling Holders or underwriter(s), if any, may request and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Transfer Restricted Securities covered by the Shelf Registration Statement; provided, however, that none of the Company or the Guarantors shall be required to register or qualify as a foreign corporation where it is not then so qualified or to take any action that would subject it to the service of process in suits or to taxation, other than as to matters and transactions relating to the Registration Statement, in any jurisdiction where it is not then so subject;

 

(xiii)                        shall issue, upon the request of any Holder of Transfer Restricted Securities covered by the Shelf Registration Statement and only in connection with any sale of Transfer Restricted Securities by such Holder pursuant to such Registration Statement (and provided that such Holder delivers such certificates reasonably requested by the Company in connection with such sale), Exchange Securities having an aggregate principal amount equal to the aggregate principal amount of Transfer Restricted Securities being sold by such Holder; such Exchange Securities to be registered in the name of the purchaser(s) of such Securities; in return, the Transfer Restricted Securities held by such Holder shall be surrendered to the Company for cancellation;

 

(xiv)                       in the case of a Shelf Registration Statement, cooperate with the selling Holders and the underwriter(s), if any, to facilitate the timely preparation and delivery of certificates representing Transfer Restricted Securities to be sold and not bearing any restrictive legends; and enable such Transfer Restricted Securities to be in such denominations and registered in such names as the Holders or the underwriter(s), if any, may request at least two Business Days prior to any sale of Transfer Restricted Securities made by such Holders or underwriter(s);

 

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(xv)                          in the case of a Shelf Registration Statement, use its commercially reasonable efforts to cause the Transfer Restricted Securities covered by the Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof or the underwriter(s), if any, to consummate the disposition of such Transfer Restricted Securities, subject to the proviso contained in Section 6(c)(xii) hereof;

 

(xvi)                       if any fact or event contemplated by Section 6(c)(iii)(D) hereof shall exist or have occurred, prepare a supplement or post-effective amendment to the Registration Statement or related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of Transfer Restricted Securities, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, subject to the provisions applicable to Exchange Offer Registration Statement suspension and black-out periods and the last paragraph hereof;

 

(xvii)                    provide a CUSIP number for all Exchange Securities not later than the effective date of the Registration Statement covering such Exchange Securities and provide the Trustee under the Indenture with printed certificates for such Exchange Securities which are in a form eligible for deposit with the Depository Trust Company and take all other action reasonably necessary to ensure that all such Exchange Securities are eligible for deposit with the Depository Trust Company;

 

(xviii)                 in the case of a Shelf Registration Statement, cooperate and assist in any filings required to be made with FINRA and in the performance of any due diligence investigation by any underwriter (including any “qualified independent underwriter” as that term is defined within the rules and regulations of FINRA) that is required to be retained in accordance with the rules and regulations of FINRA;

 

(xix)                       in the case of a Shelf Registration Statement, otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the Commission, and make generally available to its security holders, as soon as practicable, a consolidated earnings statement meeting the requirements of Rule 158 under the Securities Act (which need not be audited) for the twelve-month period (A) commencing at the end of any fiscal quarter in which Transfer Restricted Securities are sold to underwriters in a firm commitment or reasonable best efforts Underwritten Offering or (B) if not sold to underwriters in such an offering, beginning with the first month of the Company’s first fiscal quarter commencing after the effective date of the Registration Statement;

 

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(xx)                          cause the Indenture to be qualified under the Trust Indenture Act not later than the effective date of the first Registration Statement required by this Agreement, and, in connection therewith, cooperate with the Trustee and the Holders of Securities to effect such changes to the Indenture as may be required for such Indenture to be so qualified in accordance with the terms of the Trust Indenture Act; and to execute and use its commercially reasonable efforts to cause the Trustee to execute, all documents that may be required to effect such changes and all other forms and documents required to be filed with the Commission to enable such Indenture to be so qualified in a timely manner;

 

(xxi)                       in the case of a Shelf Registration Statement, cause all Securities covered by the Registration Statement to be listed on each securities exchange or automated quotation system on which similar securities issued by the Company are then listed if requested by the Holders of a majority in aggregate principal amount of Securities or the managing underwriter(s), if any;

 

(xxii)                    in the case of a Shelf Registration Statement, provide promptly to each Holder upon request each document filed with the Commission pursuant to the requirements of Section 13 and Section 15 of the Exchange Act; and

 

(xxiii)                 in the case of a Shelf Registration Statement, represent, warrant, and covenant that it (including its agents and representatives) shall not prepare, make, use, authorize, approve or refer to any Free Writing Prospectus.

 

Each Holder agrees by acquisition of a Transfer Restricted Security that, upon receipt of any notice from the Company of the existence of any fact of the kind described in Section 6(c)(iii)(D) hereof or any Black-Out Notice delivered pursuant to Section 3(c) or Section 4(a), such Holder will forthwith discontinue disposition of Transfer Restricted Securities pursuant to the applicable Registration Statement until such Holder’s receipt of the copies of the supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof, or until it is advised in writing (the “Advice”) by the Company that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus.  If so directed by the Company, each Holder will deliver to the Company (at the Company’s expense) all copies, other than permanent file copies then in such Holder’s possession, of the Prospectus covering such Transfer Restricted Securities that was current at the time of receipt of such notice.  In the event the Company shall give any such notice, the time period regarding the effectiveness of such Registration Statement set forth in Section 3 or Section 4 hereof, as applicable, shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to Section 6(c)(iii)(D) hereof or any Black-Out Notice delivered pursuant to Section 3(c) or Section 4(a) to and including the date when each selling Holder covered by such Registration Statement shall have received the copies of the supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof or shall have received the Advice.

 

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Section 7.  Registration Expenses.

 

(a)                                 All expenses incident to the Company’s and the Guarantors’ performance of or compliance with this Agreement will be borne by the Company and the Guarantors, jointly and severally, regardless of whether a Registration Statement becomes effective, including, without limitation: (i) all registration and filing fees and expenses (including filings made by any Initial Purchaser or Holder with FINRA (and, if applicable, the fees and expenses of any “qualified independent underwriter” and its counsel that may be required by the rules and regulations of FINRA)); (ii) all fees and expenses of compliance with federal securities and state securities or blue sky laws; (iii) all expenses of printing (including printing certificates for the Exchange Securities to be issued in the Exchange Offer and printing of Prospectuses), messenger and delivery services and telephone; (iv) all fees and disbursements of counsel for the Company, the Guarantors and, subject to Section 7(b) hereof, the Holders of Transfer Restricted Securities; (v) all application and filing fees in connection with listing the Exchange Securities on a securities exchange or automated quotation system pursuant to the requirements thereof; and (vi) all fees and disbursements of independent certified public accountants of the Company and the Guarantors (including the expenses of any special audit and comfort letters required by or incident to such performance); provided, that all underwriting discounts and commissions and transfer taxes, if any, relating to the sale or disposition of a Holder’s Transfer Restricted Securities pursuant to a Shelf Registration Statement shall be the responsibility of each Holder.

 

Each of the Company and the Guarantors will, in any event, bear its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expenses of any annual audit and the fees and expenses of any Person, including special experts, retained by the Company or the Guarantors.

 

(b)                                 In connection with any Shelf Registration Statement required by this Agreement, the Company and the Guarantors, jointly and severally, will reimburse the Initial Purchasers and the Holders of Transfer Restricted Securities being registered pursuant to the Shelf Registration Statement, for the reasonable fees and disbursements of not more than one counsel, who shall be Paul Hastings LLP or such other counsel as may be chosen by the Holders of a majority in principal amount of the Transfer Restricted Securities for whose benefit such Registration Statement is being prepared.

 

Section 8.  Indemnification.

 

(a)                                 Each of the Company and the Guarantors, jointly and severally, agrees to indemnify and hold harmless each (i) Holder and each Initial Purchaser, their respective affiliates, directors, officers and employees, and (ii) each person, if any, who controls any Holder or Initial Purchaser within the meaning of the Securities Act and the Exchange Act (any of the Persons referred to in clauses (i) and (ii) may hereinafter be referred to as an “Indemnified Holder”) against any loss, claim, damage, liability or expense, as incurred, to which such Indemnified Holder may become subject, under the Securities Act, the Exchange Act or other federal or state statutory law or regulation, or at common

 

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law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of the Company or settled without the written consent of the Company pursuant to Section 8(d)), insofar as such loss, claim, damage, liability or expense (or actions in respect thereof as contemplated below) arises out of or is based: upon any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement or Prospectus (or any amendment or supplement thereto) or free writing prospectus, or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading and to reimburse each Indemnified Holder (including the fees and disbursements of counsel to any Indemnified Holder) as such expenses are reasonably incurred by such Indemnified Holder in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action; provided, however, that the foregoing indemnity agreement shall not apply, with respect to any Holder or Initial Purchaser, to any loss, claim, damage, liability or expense to the extent, but only to the extent, arising out of or based upon any untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with written information relating to any Holder or Initial Purchaser furnished to the Company by such Holder or Initial Purchaser expressly for use in such Registration Statement or Prospectus (or any amendment or supplement thereto) or free writing prospectus.  The indemnity agreement set forth in this Section 8(a) shall be in addition to any liabilities that the Company and the Guarantors may otherwise have.

 

(b)                                 Each Holder and each Initial Purchaser agrees, severally and not jointly, to indemnify and hold harmless the Company and each Guarantor, each of their respective directors and officers and each person, if any, who controls the Company or any Guarantor within the meaning of the Securities Act or the Exchange Act, against any loss, claim, damage, liability or expense, as incurred, to which the Company or any Guarantor or any such director, officer or controlling person may become subject, under the Securities Act, the Exchange Act, or other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of such Holder or Initial Purchaser or settled without the written consent of such Initial Purchaser pursuant to Section 8(d)), insofar as such loss, claim, damage, liability or expense (or actions in respect thereof as contemplated below) arises out of or is based: upon any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement or Prospectus (or any amendment or supplement thereto) or free writing prospectus, or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in any Registration Statement or Prospectus (or any amendment or supplement thereto) or free writing prospectus, in reliance upon and in conformity with written information relating to any Holder or Initial Purchaser furnished to the Company by such Holder or Initial Purchaser expressly for use in such Registration Statement or Prospectus (or any amendment or supplement thereto) or free writing prospectus; and to reimburse the Company or any Guarantor and each such director, officer or controlling person for any and all expenses (including the fees and

 

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disbursements of counsel) as such expenses are reasonably incurred by the Company, any Guarantor or such director, officer or controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action.  The indemnity agreement set forth in this Section 8(b) shall be in addition to any liabilities that each Holder and Initial Purchaser may otherwise have.

 

(c)                                  Promptly after receipt by an indemnified party under this Section 8 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under this Section 8, notify the indemnifying party in writing of the commencement thereof, but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party hereunder for contribution or otherwise than under the indemnity agreement contained in this Section 8 or to the extent it is not materially prejudiced (through the forfeiture of substantive rights and defenses) as a result of such failure and shall not relieve the indemnifying party from any liability that the indemnifying party may have to an indemnified party otherwise than under the provisions of this Section 8.  In case any such action is brought against any indemnified party and such indemnified party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in and, to the extent that it shall elect, jointly with all other indemnifying parties similarly notified, by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party; provided, however, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded (based on the advice of counsel to the indemnified party) that a conflict may arise between the positions of the indemnifying party and the indemnified party in conducting the defense of any such action or that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties.  Upon receipt of notice from the indemnifying party to such indemnified party of such indemnifying party’s election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 8 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed separate counsel in accordance with the proviso to the next preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel (together with local counsel (in each jurisdiction)), approved by the indemnifying party, representing the indemnified parties who are parties to such action) or (ii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of the action, in each of which cases the fees and expenses of counsel shall be at the expense of the indemnifying party.

 

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(d)                                 The indemnifying party under this Section 8 shall not be liable for any settlement of any proceeding effected without its written consent, which will not be unreasonably withheld, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party against any loss, claim, damage, liability or expense by reason of such settlement or judgment that would otherwise be subject to indemnification hereunder.  No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement, compromise or consent to the entry of judgment in any pending or threatened action, suit or proceeding in respect of which any indemnified party is or could have been a party and indemnity was or could have been sought hereunder by such indemnified party, unless such settlement, compromise or consent (i) includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such action, suit or proceeding and (ii) does not include any statements as to or any findings of fault, culpability or failure to act by or on behalf of any indemnified party.

 

(e)                                  If the indemnification provided for in this Section 8 is unavailable to an indemnified party under Section 8(a) or (b) hereof (other than by reason of exceptions provided in those Sections) in respect of any losses, claims, damages, liabilities, judgments, actions or expenses referred to therein, then each applicable indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative benefits received by the Company and the Guarantors, on the one hand, and the Holders, on the other hand, from the Initial Placement (which in the case of the Company and the Guarantors shall be deemed to be equal to the total net proceeds to the Company and the Guarantors from the Initial Placement (before deducting expenses)), the amount of Additional Interest which did not become payable as a result of the filing of the Registration Statement resulting in such losses, claims, damages, liabilities, judgments, actions or expenses, and such Registration Statement (including, in the case or Holders, the benefit of the offering of the Transfer Restricted Securities and Exchange Securities or receiving Exchange Securities registered under the Securities Act), or if such allocation is not permitted by applicable law, the relative fault of the Company and the Guarantors, on the one hand, and the Initial Purchaser or Holders, on the other hand, in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations.  The relative fault of the Company on the one hand and of the Indemnified Holder on the other 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 Company or any of the Guarantors, on the one hand, or the Initial Purchaser or the Indemnified Holders, on the other hand, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.  The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in this Section 8, any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim.

 

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The Company, the Guarantors and each Initial Purchasers and Holders of Transfer Restricted Securities agree that it would not be just and equitable if contribution pursuant to this Section 8(e) were determined by pro rata allocation (even if the Initial Purchasers and Holders were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph.  The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities or expenses referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim.  Notwithstanding the provisions of this Section 8, none of the Initial Purchasers and Holders (and its related Indemnified Holders) shall be required to contribute, in the aggregate, any amount in excess of the amount by which the aggregate proceeds received by such Initial Purchasers and Holder with respect to the Initial Securities or Exchange Securities exceeds the amount of any damages which such Initial Purchasers and Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.  No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.  The Holders’ obligations to contribute pursuant to this Section 8(e) are several in proportion to the respective principal amount of Initial Securities held by each of the Holders hereunder and not joint.

 

Section 9.  Rule 144A.  Each of the Company and the Guarantors hereby agrees with each Holder, if the Company is not subject to Section 13 or Section 15(d) of the Exchange Act and any Transfer Restricted Securities remain outstanding, to make available upon request to any Holder or beneficial owner of Transfer Restricted Securities in connection with any sale thereof and any prospective purchaser of such Transfer Restricted Securities from such Holder or beneficial owner, the information required by Rule 144A(d)(4) under the Securities Act in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144A under the Securities Act.

 

Section 10.  Participation in Underwritten Registrations.  No Holder may participate in any Underwritten Registration hereunder unless such Holder (a) agrees to sell such Holder’s Transfer Restricted Securities on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements and (b) completes and executes all reasonable questionnaires, powers of attorney, indemnities, underwriting agreements, lock-up letters and other documents required under the terms of such underwriting arrangements.

 

Section 11.  Selection of Underwriters.  The Holders of Transfer Restricted Securities covered by the Shelf Registration Statement who desire to do so may sell such Transfer Restricted Securities in an Underwritten Offering.  In any such Underwritten Offering, the investment banker(s) and managing underwriter(s) that will administer such offering will be selected by the Holders of a majority in aggregate principal amount of the Transfer Restricted Securities included in such offering; provided, however, that such investment banker(s) and managing underwriter(s) must be reasonably satisfactory to the Company.

 

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Section 12.  Miscellaneous.

 

(a)                                 Remedies.  Each of the Company and the Guarantors hereby agrees 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 hereby agree to waive the defense in any action for specific performance that a remedy at law would be adequate.

 

(b)                                 No Inconsistent Agreements.  Each of the Company and the Guarantors will not on or after the date of this Agreement enter into any agreement with respect to its securities that conflicts with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof.  The rights granted to the Holders hereunder do not in any way conflict with the rights granted to the holders of the Company’s or any of the Guarantors’ securities under any agreement in effect on the date hereof.

 

(c)                                  Adjustments Affecting the Securities.  The Company will not take any action, or permit any change to occur, with respect to the Securities that would materially and adversely affect the ability of the Holders to Consummate any Exchange Offer.

 

(d)                                 Amendments and Waivers.  The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to or departures from the provisions hereof may not be given unless the Company has (i) in the case of Section 5 hereof and this Section 12(d)(i), obtained the written consent of Holders of all outstanding Transfer Restricted Securities and (ii) in the case of all other provisions hereof, obtained the written consent of Holders of a majority of the outstanding principal amount of Transfer Restricted Securities (excluding any Transfer Restricted Securities held by the Company or its Affiliates).  Notwithstanding the foregoing, a waiver or consent to departure from the provisions hereof that relates exclusively to the rights of Holders whose securities are being tendered pursuant to the Exchange Offer or registered on a Shelf Registration Statement and that does not affect directly or indirectly the rights of other Holders whose securities are not being tendered pursuant to such Exchange Offer or registered on a Shelf Registration Statement may be given by the Holders of a majority of the outstanding principal amount of Transfer Restricted Securities being tendered or registered, as the case may be; provided, however, that, with respect to any matter that directly or indirectly affects the rights of any Initial Purchaser hereunder, the Company shall obtain the written consent of the Representatives with respect to which such amendment, qualification, supplement, waiver, consent or departure is to be effective.

 

(e)                                  Notices.  All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail (registered or certified, return receipt requested), telex, telecopier, or air courier guaranteeing overnight delivery:

 

(i)                                     if to a Holder, at the address set forth on the records of the Trustee under the Indenture, with a copy to the Trustee under the Indenture; and

 

if to the Company:

 

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Sanchez Energy Corporation

1111 Bagby Street, Suite 1800

Houston, Texas 77002

Facsimile:  (713) 783-5323

Attention:  Chief Financial Officer

 

(ii)                                  with a copy to:

 

Akin Gump Strauss Hauer & Feld LLP

1111 Louisiana Street

44th Floor

Houston, Texas 77002

Facsimile: 713-236-0822

Attention:  David P. Elder

 

All such notices and communications shall be deemed to have been duly given:  at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and on the next Business Day, if timely delivered to an air courier guaranteeing overnight delivery.

 

Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee at the address specified in the Indenture.

 

(f)                                   Successors and Assigns.  This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including, without limitation, and without the need for an express assignment, subsequent Holders of Transfer Restricted Securities; provided, however, that this Agreement shall not inure to the benefit of or be binding upon a successor or assign of a Holder unless and to the extent such successor or assign acquired Transfer Restricted Securities from such Holder.

 

(g)                                  Counterparts.  This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.  Delivery of an executed counterpart of a signature page to this Agreement by facsimile, email or other electronic means shall be effective as delivery of a manually executed counterpart of this Agreement.

 

(h)                                 Headings.  The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

 

(i)                                     Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

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(j)                                    Severability.  In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby.

 

(k)                                 Entire Agreement.  This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein.  There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the registration rights granted by the Company with respect to the Transfer Restricted Securities.  This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter.

 

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

 

	
 
    	
SANCHEZ   ENERGY CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Michael G. Long
    
	
 
    	
Name:   
    	
Michael   G. Long
    
	
 
    	
Title:
    	
Executive   Vice President, Chief 
    
	
 
    	
 
    	
Financial   Officer and Secretary
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
SEP   HOLDINGS III, LLC
    
	
 
    	
SN   COTULLA ASSETS, LLC
    
	
 
    	
SN   MARQUIS LLC
    
	
 
    	
SN   OPERATING, LLC
    
	
 
    	
SN   TMS, LLC
    
	
 
    	
SN   CATARINA, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Michael G. Long
    
	
 
    	
Name:   
    	
Michael   G. Long
    
	
 
    	
Title:
    	
Executive   Vice President, Chief 
    
	
 
    	
 
    	
Financial   Officer
    

 

[Registration Rights Agreement]

 

 

The foregoing Registration Rights Agreement is hereby confirmed and accepted as of the date first above written:

 

RBC CAPITAL MARKETS, LLC

 

For itself and on behalf of the several

Initial Purchasers listed in Schedule 1

to the Purchase Agreement.

 

 

	
By:
    	
/s/   Steve Pedone
    	
 
    
	
 
    	
Name:   
    	
Steve   Pedone
    	
 
    
	
 
    	
Title:
    	
Managing   Director
    	
 
    

 

 

CREDIT SUISSE SECURITIES (USA) LLC

 

For itself and on behalf of the several

Initial Purchasers listed in Schedule 1

to the Purchase Agreement.

 

 

	
By:
    	
/s/   Robert Priske
    	
 
    
	
 
    	
Name:   
    	
Robert   Priske
    	
 
    
	
 
    	
Title:
    	
Director
    	
 
    

 

[Registration Rights Agreement]

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