Document:

Exhibit 10.2

 

REGISTRATION RIGHTS AGREEMENT

 

This REGISTRATION RIGHTS AGREEMENT (this “Agreement”) dated as of                , 2018 is made and entered into by and between Boaz Energy II, LLC, a Delaware limited liability company (the “Company”), and PermRock Royalty Trust, a statutory trust formed under the laws of the State of Delaware (the “Trust”). Unless expressly stated otherwise in this Agreement, as used in this Agreement, references to the “Trustee” mean Simmons Bank, in its capacity as trustee (in such capacity, or any successor trustee, the “Trustee”) of the Trust and not in its individual capacity.

 

RECITALS

 

WHEREAS, the Company and the Trust have entered into a Conveyance of Net Profits Interest of even date herewith (the “Conveyance Agreement”);

 

WHEREAS, in connection with the execution and delivery of the Conveyance Agreement, the Trust has issued to the Company                 trust units representing beneficial interests in the Trust (“Trust Units”);

 

WHEREAS, in connection with the Initial Public Offering (as defined below), the Company is selling                 Trust Units, and may sell up to                 additional Trust Units if the underwriters of the Initial Public Offering exercise their over-allotment option (the “Over-Allotment Option”); and

 

WHEREAS, the Trust has agreed to file a registration statement or registration statements relating to the sale by the Company and its Transferees (as defined below) of the                 Trust Units held by the Company after the Initial Public Offering (or such number of Trust Units held by the Company after giving effect to the Over-Allotment Option, if applicable) (the “Subject Units”).

 

NOW, THEREFORE, in consideration of the premises and the covenants hereinafter contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, it is agreed as follows:

 

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

 

“Affiliate” means, for any specified Person, another Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the specified Person. As used in this definition, the term “control” (and the correlative terms “controlling,” “controlled by,” and “under common control”) shall mean the possession, directly or indirectly, of the right or power to direct or cause the direction of the management and policies of another Person, whether through ownership of voting securities, by contract or otherwise.

 

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

 

“Business Day” means each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which national banking institutions in New York, New York are closed as authorized or required by law.

 

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

 

“Conveyance Agreement” has the meaning set forth in the recitals hereof.

 

“Deferral Notice” has the meaning set forth in Section 3(j) hereof.

 

“Deferral Period” has the meaning set forth in Section 3(j) hereof.

 

“Demand Notice” has the meaning set forth in Section 2(a) hereof.

 

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

 

 

“Effective Period” means the period commencing on the 180th day after the date hereof and ending on the date that all Registrable Securities have ceased to be Registrable Securities.

 

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

 

“Expenses” has the meaning set forth in Section 6(a) hereof.

 

“FINRA” has the meaning set forth in Section 3(o) hereof.

 

“Holder” shall mean the Company, its Affiliates that from time to time hold Registrable Securities and any Transferee of the Company to whom Registrable Securities are transferred in accordance with the terms of this Agreement, and, in each case, who continues to be entitled to the rights of a Holder hereunder.

 

“Indemnified Party” has the meaning set forth in Section 6(d) hereof.

 

“Indemnifying Party” has the meaning set forth in Section 6(d) hereof.

 

“Initial Public Offering” means the initial public offering of Trust Units registered with the SEC by a registration statement on Form S-1 (Registration No. 333-      ).

 

“Material Event” has the meaning set forth in Section 3(j) hereof.

 

“Over-Allotment Option” has the meaning set forth in the recitals hereof.

 

“Person” shall mean any individual, partnership, limited liability company, corporation, trust, unincorporated association, governmental agency, subdivision, or instrumentality, or other entity or association.

 

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

 

“Prospectus” means the prospectus included in any Registration Statement (including, without limitation, a prospectus that discloses information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A, Rule 430B or Rule 430C promulgated under the Securities Act), as amended or supplemented by any amendment, prospectus supplement or free writing prospectus (as defined in Rule 405 promulgated under the Securities Act), including post-effective amendments, and all materials incorporated by reference or explicitly deemed to be incorporated by reference in such Prospectus.

 

“Registrable Securities” means the Subject Units and any securities into or for which such Subject Units have been converted or exchanged, and any security issued with respect thereto upon any dividend, split or similar event until, in the case of any such security, the earliest of (a) its effective registration under the Securities Act and resale in accordance with the Registration Statement covering it, (b) its disposal pursuant to Rule 144 (or any similar provision then in force, but not Rule 144A) under the Securities Act, (c) its sale in a private transaction in which the transferor’s rights under this Agreement are not assigned to the transferee of the securities, (d) its being held by the Trust, or (e) if such security has been sold in a private transaction in which the transferor’s rights under this Agreement are assigned to the Transferee and such Transferee is not an Affiliate of the Trust, two years following the transfer of such security to such Transferee.

 

“Registration Statement” means any registration statement of the Trust, including any Shelf Registration Statement, that covers any of the Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus, amendments and supplements to such registration statement, including post-effective amendments, all exhibits and all materials incorporated by reference or explicitly deemed to be incorporated by reference in such registration statement.

 

“Required Information” has the meaning set forth in Section 4(a) hereof.

 

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“Rule 144” means Rule 144 under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC.

 

“Rule 144A” means Rule 144A under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC.

 

“SEC” means the Securities and Exchange Commission.

 

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

 

“Shelf Registration Statement” means a Registration Statement for an offering to be made on a delayed or continuous basis pursuant to Rule 415 under the Securities Act registering the resale of Registrable Securities from time to time by Holders thereof.

 

“Special Counsel” means Vinson & Elkins L.L.P. or such other successor counsel as shall be specified in writing by the Holders of a majority of all Registrable Securities.

 

“Subject Units” has the meaning set forth in the recitals hereof.

 

“Transferee” has the meaning set forth in Section 9(d) hereof.

 

“Trust” has the meaning set forth in the preamble hereof.

 

“Trust Units” has the meaning set forth in the recitals hereof.

 

“Trustee” has the meaning set forth in the preamble hereof.

 

Section 2. Demand Registration Rights.

 

(a)                                 During the Effective Period, the Holders representing a majority of the then outstanding Registrable Securities may request, by written notice to the Trust (the “Demand Notice”), that the Trust effect the registration under the Securities Act of the number of Registrable Securities requested to be so registered pursuant to the terms and conditions set forth in this Agreement (each a “Demand Registration”). Following receipt of a Demand Notice for a Demand Registration, the Trust shall use its reasonable best efforts to file a Registration Statement as promptly as practicable and shall use its commercially reasonable efforts to cause such Registration Statement to be declared effective under the Securities Act as promptly as practicable after the filing thereof. All Demand Notices made pursuant to this Section 2 will specify the number of Registrable Securities to be registered, whether or not such Registration Statement should be a Shelf Registration Statement, and the intended methods of disposition thereof.

 

The Holders shall be entitled to a maximum of five (5) Demand Registrations, which shall include (i) any Demand Registrations for registration pursuant to a Shelf Registration Statement and (ii) any Demand Registrations that are transferred to a Transferee in accordance with Section 9(d) hereof. No Demand Registration shall be deemed to have occurred for purposes of this Section 2(a) if the Registration Statement relating thereto does not become effective or is not maintained effective for the period required pursuant to Section 2(d).

 

(b)                                 Within ten (10) days after receipt by the Trust of a Demand Notice, the Trust will give notice to the other Holders of such Demand Registration. Such notice shall describe such securities and specify the form, manner and other relevant aspects of such proposed registration. Each Holder may, by written response delivered to the Trust within twenty (20) days after the receipt by such Holder of any such notice, request that all or a specified part of the Registrable Securities held by such Holder be included in such Demand Registration (a “Piggyback Registration”). Such response shall also specify the intended method of disposition of such Registrable Securities. The Trust thereupon will use commercially reasonable efforts to effect the registration under the Securities Act of all Registrable Securities which the Trust has been so requested to register by the Holders to the extent required to 

 

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permit the disposition (in accordance with the intended methods thereof as aforesaid) of the Registrable Securities to be so registered. No registration of Registrable Securities of the Holders effected by Piggyback Registration under this Section 2(b) shall relieve the Trust of any of its obligations to effect registrations of Registrable Securities of the Holders pursuant to, or reduce the total number of Demand Registrations to which the Holders continue to remain entitled under, Section 2(a) hereof.

 

(c)                                  If any of the Registrable Securities registered pursuant to a Demand Registration are to be sold in a firm commitment underwritten offering, and the managing underwriter or underwriters advise the Holders of such securities in writing that in its view the total number or dollar amount of Registrable Securities proposed to be sold in such offering is such as to adversely affect the success of such offering (including, without limitation, securities proposed to be included by other Holders of Registrable Securities entitled to include securities in such Registration Statement pursuant to incidental or piggyback registration rights), then there shall be included in such firm commitment underwritten offering the number or dollar amount of Registrable Securities that in the opinion of such managing underwriter can be sold without adversely affecting such offering, and such number of Registrable Securities shall be allocated as follows:

 

(i)                                     first, the securities for which inclusion in such Demand Registration for which the Demand Notice was submitted; and

 

(ii)                                  second, the securities for which inclusion in any Piggyback Registration for which a notice was submitted in accordance with this Agreement pro rata among the Registrable Securities requested to be included in such Piggyback Registration.

 

(d)                                 The Trust shall use commercially reasonable efforts to maintain the effectiveness of the Registration Statement with respect to any Demand Registration for a period of at least ninety (90) days (or three years if a Shelf Registration Statement is requested) after the effective date thereof or such shorter period in which all Registrable Securities included in such Registration Statement have actually been sold or all Registrable Securities have ceased to be Registrable Securities; provided, however, that such period shall be extended for a period of time equal to the period the holder of Registrable Securities refrains from selling any securities included in such registration at the request of the Trust pursuant to this Agreement, except that with respect to a Shelf Registration Statement on Form S-3 that becomes effective automatically pursuant to Rule 462(e) under the Securities Act, such period may not be extended beyond three years after the effective date thereof or such shorter or longer period as may be subsequently permitted by the SEC.

 

(e)                                  Notwithstanding the foregoing, if the Trust shall furnish to the Holders requesting a registration pursuant to this Section 2 within 30 days of receiving such request a certificate signed by the Trust stating that in the good faith judgment of the Trustee it would be detrimental to the Trust and its unitholders for such Registration Statement to be filed and it is therefore beneficial to defer the filing of such Registration Statement, the Trust shall have the right to defer such filing for up to two periods of not more than 30 days each after receipt of each request of the Holders; provided, however, that the Trust may not use this right more than once (for a total of up to 60 days) in any 12-month period. If the Trust shall so postpone the filing of a Registration Statement the demanding Holders shall have the right to withdraw the request for registration by giving written notice to the Trust within 20 days of the anticipated termination date of the postponement period, as provided in the certificate delivered by the Trust, and in the event of such withdrawal, such request shall not reduce the number of available registrations with respect to the Holders under this Section 2.

 

Section 3. Registration Procedures. In connection with the registration obligations of the Trust under Section 2 hereof, during the Effective Period, the Trust shall:

 

(a)                                 Prepare and file with the SEC, no later than 45 days after receiving the Demand Notice, a Registration Statement or Registration Statements, including, if so requested by the applicable Holders, a Shelf Registration Statement, on any appropriate form under the Securities Act available for the sale of the Registrable Securities by the Holders thereof in accordance with the intended method or methods of distribution thereof, and use commercially reasonable efforts to cause each such Registration Statement to become effective as promptly as practicable after filing and remain effective as provided herein; provided that before filing any Registration Statement or Prospectus or any amendments or supplements thereto with the SEC (but excluding reports filed with 

 

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the SEC under the Exchange Act), furnish to the Holders, the Special Counsel and the managing underwriter or underwriters, if any, copies of all such documents proposed to be filed at least five (5) Business Days prior to the filing of such Registration Statement or amendment thereto or Prospectus or supplement thereto.

 

(b)                                 Subject to Section 3(j), prepare and file with the SEC such amendments and post-effective amendments to each Registration Statement as may be necessary to keep such Registration Statement continuously effective during the period provided herein with respect to the disposition of all securities covered by such Registration Statement; cause the related Prospectus to be supplemented by any required prospectus supplement or free writing prospectus, and as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in force) under the Securities Act; and use commercially reasonable efforts to comply with the provisions of the Securities Act applicable to the Trust with respect to the disposition of all securities covered by such Registration Statement during the period provided herein with respect to the disposition of all securities covered by such Registration Statement in accordance with the intended methods of disposition by the sellers thereof set forth in such Registration Statement as so amended or such Prospectus as so supplemented.

 

(c)                                  Subject to Section 3(j), from and after the date a Registration Statement is declared effective, the Trust shall, as promptly as practicable after the date the Required Information is delivered pursuant to Section 4 hereof and in accordance with this Section 3(c):

 

(i)                                     if required by applicable law, file with the SEC a post-effective amendment to the Registration Statement or prepare and, if required by applicable law, file a supplement to the related Prospectus or a supplement or amendment to any document incorporated therein by reference or file any other required document so that the Holder delivering such Required Information is named as a selling securityholder in the Registration Statement and the related Prospectus in such a manner as to permit such Holder to deliver such Prospectus to purchasers of the Registrable Securities in accordance with applicable law and, if the Trust shall file a post-effective amendment to the Registration Statement, use commercially reasonable efforts to cause such post-effective amendment to be declared effective under the Securities Act as promptly as is practicable; and

 

(ii)                                  provide such Holder copies of any documents filed pursuant to Section 3(c)(i);

 

provided, that, if the Required Information is delivered during a Deferral Period, the Trust shall so inform the Holder delivering such Required Information. The Trust shall notify such Holder as promptly as practicable after the effectiveness under the Securities Act of any post-effective amendment filed pursuant to Section 3(c)(i). Notwithstanding anything contained herein to the contrary, the Trust shall be under no obligation to name any Holder that has failed to deliver the Required Information in the manner set forth in Section 4 hereof as a selling securityholder in any Registration Statement or related Prospectus.

 

(d)                                 As promptly as practicable, give notice to the Holders, the Special Counsel and the managing underwriter or underwriters, if any, (i) when any Prospectus, Registration Statement or post-effective amendment to a Registration Statement has been filed with the SEC and, with respect to a Registration Statement or any post-effective amendment thereto, when the same has been declared effective, (ii) of any request, following the effectiveness of any Registration Statement under the Securities Act, by the SEC or any other federal or state governmental authority for amendments or supplements to any Registration Statement or related Prospectus, (iii) of the issuance by the SEC or any other federal or state governmental authority of any stop order suspending the effectiveness of any Registration Statement or the initiation or threatening of any proceedings for that purpose, (iv) of the receipt by the Trust of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose, (v) of the occurrence of, but not the nature of or details concerning, a Material Event and (vi) of the determination by the Trust that a post-effective amendment to a Registration Statement will be filed with the SEC, which notice may, at the discretion of the Trust (or as required pursuant to Section 3(j)), state that it constitutes a Deferral Notice, in which event the provisions of Section 3(j) shall apply.

 

(e)                                  Use commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement or the lifting of any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction in which they have been qualified for 

 

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sale, in either case as promptly as practicable, and provide prompt notice to each Holder of the withdrawal of any such order.

 

(f)                                   If requested by the managing underwriters, if any, or the Holders of the Registrable Securities being sold in connection with an underwritten offering, promptly include in a prospectus supplement or post-effective amendment such information as the managing underwriters, if any, and such Holders may reasonably request in order to permit the intended method of distribution of such securities and make all required filings of such prospectus supplement or such post-effective amendment as soon as practicable after the Trust has received such request; provided, however, that the Trust shall not be required to take any actions under this Section 3(f) that are not, in the opinion of counsel for the Trust, in compliance with applicable law.

 

(g)                                  As promptly as practicable furnish to each Holder, the Special Counsel and each managing underwriter, if any, upon request, at least one (1) conformed copy of the Registration Statement and any amendment thereto, including exhibits and, if requested, all documents incorporated or deemed to be incorporated therein by reference.

 

(h)                                 Deliver to each Holder, the Special Counsel and each managing underwriter, if any, in connection with any sale of Registrable Securities pursuant to a Registration Statement as many copies of the Prospectus relating to such Registrable Securities (including each preliminary Prospectus) and any amendment or supplement thereto as such Persons may reasonably request; and the Trust hereby consents (except during such periods that a Deferral Notice is outstanding and has not been revoked and subject to Section 3(j)(ii) hereof) to the use of such Prospectus or each amendment or supplement thereto by each Holder and the underwriters, if any, in connection with any offering and sale of the Registrable Securities covered by such Prospectus or any amendment or supplement thereto in the manner set forth therein.

 

(i)                                     Prior to any public offering of the Registrable Securities pursuant to a Registration Statement, use commercially reasonable efforts to register or qualify or cooperate with the Holders, the Special Counsel and the underwriters, if any, in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Securities for offer and sale under the securities or blue sky laws of such jurisdictions within the United States as any Holder or underwriter reasonably requests in writing (which request may be included with the Required Information); prior to any public offering of the Registrable Securities pursuant to the Registration Statement, use commercially reasonable efforts to keep each such registration or qualification (or exemption therefrom) effective during the period provided herein with respect to the disposition of all securities covered by such Registration Statement in connection with such Holder’s offer and sale of Registrable Securities pursuant to such registration or qualification (or exemption therefrom) and do any and all other acts or things reasonably necessary or advisable to enable the disposition in such jurisdictions of such Registrable Securities in the manner set forth in the relevant Registration Statement and the related Prospectus; provided that neither the Trust nor the Trustee will be required to (i) qualify as a foreign entity or as a dealer in securities in any jurisdiction where it would not otherwise be required to qualify but for this Agreement or (ii) take any action that would subject it to general service of process or to taxation in any such jurisdiction where it is not then so subject.

 

(j)                                    Upon (A) the issuance by the SEC of a stop order suspending the effectiveness of any Registration Statement or the initiation of proceedings with respect to any Registration Statement under Section 8(d) or 8(e) of the Securities Act, (B) the occurrence of any event or the existence of any fact as a result of which (x) any Registration Statement shall contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, or (y) any Prospectus shall contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading (a “Material Event”), or (C) the occurrence or existence of any pending corporate development of the Trust that, in the reasonable discretion of the Trustee, makes it appropriate to suspend the availability of any Registration Statement and the related Prospectus, the Trust shall:

 

(i)                                     in the case of clause (B) above, subject to clause (ii) below, as promptly as practicable prepare and file, if necessary pursuant to applicable law, a post-effective amendment to such Registration Statement or a supplement to the related Prospectus or any document incorporated therein by reference or file any other required document that would be incorporated by reference into such Registration Statement 

 

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and Prospectus so that such Registration Statement does not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and such Prospectus does not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, as thereafter delivered to the purchasers of the Registrable Securities being sold thereunder, and, in the case of a post-effective amendment to a Registration Statement, subject to clause (ii) below, use commercially reasonable efforts to cause it to be declared effective as promptly as practicable; and

 

(ii)                                  give notice to the Holders and the Special Counsel, if any, that the availability of any Registration Statement is suspended (a “Deferral Notice”) and, upon receipt of any Deferral Notice, each Holder agrees not to sell any Registrable Securities pursuant to the Registration Statement until such Holder’s receipt of copies of the supplemented or amended Prospectus provided for in clause (i) above, or until it is advised in writing by the Trust that the Prospectus may be used, and has received copies of any additional or supplemental filings that are incorporated or deemed incorporated by reference in such Prospectus, in which case such Holder will use the Prospectus as so supplemented or amended in connection with any offering and sale of Registrable Securities covered thereby.

 

The Trust shall use commercially reasonable efforts to ensure that the use of the Prospectus may be resumed (x) in the case of clause (A) above, as promptly as is practicable, (y) in the case of clause (B) above, as soon as, in the sole judgment of the Trustee, public disclosure of such Material Event would not be prejudicial to or contrary to the interests of the Trust or, if necessary to avoid unreasonable burden or expense, as soon as practicable thereafter, and (z) in the case of clause (C) above, as soon as, in the reasonable discretion of the Trustee, such suspension is no longer appropriate. The Trust shall be entitled to exercise its right under this Section 3(j) to suspend the availability of any Registration Statement or any Prospectus (the “Deferral Period”) for use by any Holder.

 

(k)                                 If reasonably requested by a Holder or any underwriter participating in any disposition of Registrable Securities, if any, in writing in connection with a disposition by such Holder of Registrable Securities pursuant to a Registration Statement, make reasonably available for inspection during normal business hours by a representative for such Holder(s) of such Registrable Securities, any broker-dealers, underwriters, attorneys and accountants retained by such Holder(s), and any attorneys or other agents retained by a broker-dealer or underwriter engaged by such Holder(s), all relevant financial and other records and pertinent corporate documents and properties of the Trust, and cause the appropriate officers, directors and employees of the Trustee to make reasonably available for inspection during normal business hours on reasonable notice all relevant information reasonably requested by such representative for the Holder(s), or any such broker-dealers, underwriters, attorneys or accountants in connection with such disposition, in each case as is customary for similar “due diligence” examinations; provided that (i) the Trustee shall not be obligated to make available for inspection any information that, based on the reasonable advice of counsel to the Trustee, could subject the Trustee to the loss of attorney-client privilege with respect thereto and (ii) such Persons shall first agree in writing with the Trustee that all information shall be kept confidential by such Persons and shall be used solely for the purposes of exercising rights under this Agreement, unless (A) disclosure of such information is required by court or administrative order or is necessary to respond to inquiries of regulatory authorities, (B) disclosure of such information is required by law (including any disclosure requirements pursuant to federal securities laws in connection with the filing of any Registration Statement or the use of any Prospectus referred to in this Agreement) or (C) such information becomes generally available to the public other than as a result of a disclosure or failure to safeguard by any such Person; and provided further that the foregoing inspection and information gathering shall, to the greatest extent possible, be coordinated on behalf of all the Holders and the other parties entitled thereto by Special Counsel, if any, or another representative selected by the Holders of a majority of Registrable Securities being registered pursuant to such Registration Statement. Any Person legally compelled or required by administrative or court order or by a regulatory authority to disclose any such confidential information made available for inspection shall provide the Trustee with prompt prior written notice of such requirement so that the Trustee may seek a protective order or other appropriate remedy.

 

(l)                                     Use its best efforts to comply with all applicable rules and regulations of the SEC and make generally available to the Trust’s securityholders earnings statements (which need not be audited) satisfying the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any similar rule promulgated under the Securities Act) for a 12-month period commencing on the first day of the first fiscal quarter of the Trust 

 

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commencing after the effective date of a Registration Statement, which statements shall be made available no later than the next succeeding Business Day after such statements are required to be filed with the SEC.

 

(m)                             Cooperate with each Holder and the managing underwriters, if any, to facilitate the timely preparation and delivery of certificates representing Registrable Securities sold or to be sold pursuant to a Registration Statement, which certificates shall not bear any restrictive legends stating that the Registrable Securities evidenced by the certificates are “restricted securities” (as defined by Rule 144), and cause such Registrable Securities to be registered in such names as such Holder or the managing underwriters, if any, may request in writing at least two (2) Business Days prior to any sale of such Registrable Securities.

 

(n)                                 Provide a CUSIP number for all Registrable Securities covered by each Registration Statement not later than the effective date of such Registration Statement.

 

(o)                                 Cooperate with and assist each Holder, the Special Counsel and any underwriters participating in any disposition of Registrable Securities in any filings required to be made with the Financial Industry Regulatory Authority (“FINRA”) in connection with the filing or effectiveness of any Registration Statement, any post-effective amendment thereto or any offer or sale of Trust Units thereunder.

 

(p)                                 In the case of a proposed sale pursuant to a Registration Statement involving an underwritten offering, the Trust shall enter into such customary agreements on behalf of the Trust (including, if requested, an underwriting agreement in reasonably customary form containing standard representations and warranties, covenants and indemnities of the Trust similar to those representations and warranties, covenants and indemnities given by issuers of securities in underwritten offerings of securities) and take all such other action, if any, as Holders of a majority of the Registrable Securities being sold or any managing underwriters reasonably shall request in order to facilitate any disposition of the Registrable Securities pursuant to such Registration Statement, including, without limitation, (i) using commercially reasonable efforts to cause its counsel to deliver an opinion or opinions in reasonably customary form, (ii) using its reasonable best efforts to cause its officers to execute and deliver all customary documents and certificates on behalf of the Trust and (iii) using its reasonable best efforts to cause the Trust’s independent public accountants to provide a comfort letter or letters in reasonably customary form.

 

(q)                                 Use reasonable best efforts to support the marketing of the Registrable Securities covered by the Registration Statement.

 

(r)                                    Upon (i) the filing of any Registration Statement and (ii) the effectiveness of any Registration Statement, announce the same, in each case by press release to Bloomberg Business News or such other news or press organization as is reasonably calculated to broadly disseminate the relevant information to the public.

 

(s)                                   Use commercially reasonable efforts to cause all such Registrable Securities to be listed on each securities exchange or quotation system on which similar securities issued by the Trust are listed or traded.

 

Section 4. Holder’s Obligations.

 

(a)                                 Each Holder agrees that if such Holder wishes to sell Registrable Securities pursuant to a Registration Statement and related Prospectus, it will do so only in accordance with this Section 4 and Section 3(j) hereof. The Trust may require each seller of Registrable Securities as to which any registration is being effected to furnish to the Trust in writing such information required in connection with such registration regarding such seller and the distribution of such Registrable Securities as the Trust may, from time to time, reasonably request in writing (the “Required Information”) and the Trust may exclude from such registration the Registrable Securities of any seller who unreasonably fails to furnish such information within a reasonable time after receiving such request. In addition, following the date that a Registration Statement is declared effective, each Holder wishing to sell Registrable Securities pursuant to a Registration Statement and related Prospectus agrees to deliver, at least seven (7) Business Days prior to any intended distribution of Registrable Securities under the Registration Statement, to the Trust any additional Required Information as the Trust may reasonably request so that the Trust may complete or amend the information required by any Registration Statement.

 

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(b)                                 Each Holder agrees, by acquisition of the Registrable Securities, that no Holder shall be entitled to sell any of such Registrable Securities pursuant to a Registration Statement or to receive a Prospectus relating thereto unless such Holder has furnished the Trust with the Required Information as required pursuant to this Section 4 and the information set forth in the next sentence. Each Holder agrees promptly to furnish to the Trust all information required to be disclosed in order to make the information previously furnished to the Trust by such Holder not misleading and any other information regarding such Holder and the distribution of such Registrable Securities as the Trust may from time to time reasonably request. Any sale of any Registrable Securities by any Holder shall constitute a representation and warranty by such Holder that the information relating to such Holder and its plan of distribution is as set forth in the Prospectus delivered by such Holder in connection with such disposition, that such Prospectus does not as of the time of such sale contain any untrue statement of a material fact relating to or provided by such Holder or its plan of distribution and that such Prospectus does not as of the time of such sale omit to state any material fact relating to or provided by such Holder or its plan of distribution necessary in order to make the statements in such Prospectus relating to or provided by such Holder, in the light of the circumstances under which they were made, not misleading.

 

Section 5. Registration Expenses. Subject to the last sentence of this Section 5, the Company shall bear all out-of-pocket fees and expenses incurred in connection with the performance by the Trust of its obligations under this Agreement whether or not any Registration Statement is declared effective. Such fees and expenses shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses (x) with respect to filings required to be made with FINRA and (y) of compliance with federal and state securities or blue sky laws (including, without limitation, reasonable fees and disbursements of the Special Counsel, if any, in connection with blue sky qualifications of the Registrable Securities under the laws of such jurisdictions as Holders of a majority of the Registrable Securities being sold pursuant to a Registration Statement may designate)), (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities in a form eligible for deposit with The Depository Trust Company), (iii) duplication expenses relating to copies of any Registration Statement or Prospectus delivered to any Holders hereunder, (iv) fees and disbursements of counsel for the Trust and the Special Counsel, if any, in connection with any Registration Statement, (v) fees and disbursements of accountants and reserve engineers related to any Registration Statement and (vi) the fees and expenses incurred in connection with the listing by the Trust of the Registrable Securities on any securities exchange on which similar securities of the Trust are then listed. However, the Trust shall pay the internal expenses of the Trustee (including, without limitation, all salaries and expenses of officers and employees performing legal or accounting duties), the expense of any annual audit and annual reserve report and the other fees and expenses of the accountants and independent reserve engineers for the Trust not covered by clause (v) of the preceding sentence, the fees and expenses of any Person, including special experts, retained by the Trust and the fees and expenses of any transfer agent for the Registrable Securities. Notwithstanding the provisions of this Section 5, each seller of Registrable Securities shall pay its own selling expenses, including any underwriting discounts and commissions, all registration expenses to the extent required by applicable law and, except as otherwise provided herein, fees and expenses of such seller’s counsel.

 

Section 6. Indemnification and Contribution.

 

(a)                                 Indemnification by the Trust. The Trust shall indemnify and hold harmless the Company, each Holder and each Person, if any, who controls the Company or any Holder within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages and liabilities (including, without limitation, any reasonable legal or other expenses reasonably incurred in connection with defending or investigating any such action or claim) (“Expenses”) to which the Company, any Holder or any controlling Person of the Company or any Holder may become subject, under or with respect to the Securities Act, the Exchange Act, any other federal or state securities law or otherwise, insofar as such Expenses are caused by any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement at the date and time as of which such Registration Statement was declared effective by the SEC, any preliminary Prospectus or the Prospectus, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein (in the case of a preliminary Prospectus or Prospectus, in light of the circumstances under which they were made), not misleading, but in each case only with respect to written information relating to the Trust furnished by or on behalf of the Trust specifically for inclusion in the documents referred to in the foregoing indemnity. Subject to Section 6(e) of this Agreement, the Trust shall reimburse the Company, the Holders and any controlling Persons thereof for any legal or other expenses reasonably incurred by the Company, the Holders or any controlling Persons thereof in connection with the investigation or 

 

9

 

defense of any Expenses with respect to which the Company and the Holders or any controlling Persons thereof is entitled to indemnity by the Trust under this Agreement. The Trustee shall have no indemnification obligations under this Agreement, or any liability for failure of the Trust to satisfy its obligations under this Agreement.

 

(b)                                 Indemnification by the Company. The Company shall indemnify and hold harmless each Holder (other than the Company), the Trust and the Trustee and any agents thereof, individually and as trustee, as the case may be, and each Person, if any, who controls such Holder, the Trust or the Trustee within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any Expenses to which such Holder, the Trust, the Trustee or any agent thereof or any controlling Person of such Holder, the Trust or the Trustee may become subject, under or with respect to the Securities Act, the Exchange Act, any other federal or state securities law or otherwise, insofar as such Expenses are caused by (i) an untrue statement or alleged untrue statement of a material fact contained in any Registration Statement or an omission or alleged omission to state a material fact required to be stated in or necessary to make the statements therein not misleading at the date and time as of which such Registration Statement was declared effective by the SEC, (ii) an untrue statement or alleged untrue statement of a material fact contained in any preliminary Prospectus or any Prospectus or an omission or alleged omission to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading as of the date of such preliminary Prospectus or Prospectus and as of the closing of the sale of Trust Units sold thereunder or (iii) any untrue statement or alleged untrue statement of a material fact contained in any other filing, report or other action taken with respect to the Securities Act, the Exchange Act or any other Federal or state securities law, the listing of the Trust Units on the New York Stock Exchange or another national securities exchange or any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that the Company shall not be liable to and shall not indemnify the Holders (other than the Company), the Trustee or any agents or controlling Persons thereof, individually or as trustee, as the case may be, in any such case under the preceding clauses (i) and (ii) of this Section 6(b) to the extent that any such Expense arises out of, is based upon or is connected with information relating to (A) the Trustee in its individual capacity or (B) such Holder, in either case prepared or furnished by the Trustee or such Holder, as the case may be, expressly for use in any Registration Statement, any preliminary Prospectus or any Prospectus; and provided, further, that the Company shall not be liable to the Holders (other than the Company), the Trustee or any agents or controlling Persons thereof, individually or as trustee, as the case may be, in any such case under the preceding clause (iii) of this Section 6(b) to the extent that any such Expense arises out of, is based upon or is connected with information relating to (1) the Trustee in its individual capacity prepared or furnished by the Trustee and the Trustee is found liable or (2) such Holder prepared or furnished by such Holder and such Holder is found liable. Subject to Section 6(e) of this Agreement, the Company shall reimburse the Holders (other than the Company), the Trust and the Trustee and any agents or controlling Persons thereof for any legal or other expenses reasonably incurred by the Holders (other than the Company), the Trust and the Trustee or any agent or controlling Persons thereof in connection with the investigation or defense of any Expenses with respect to which the Holders (other than the Company), the Trust and the Trustee or any agent or controlling Persons thereof is entitled to indemnity by the Company under this Agreement.

 

(c)                                  Indemnification by Certain of the Holders. Each Holder (other than the Company), severally and not jointly, shall indemnify and hold harmless the Company, the Trust, the Trustee and any agents thereof, individually and as trustee, and any other Holder and each Person, if any, who controls the Company, the Trust, the Trustee and any agents thereof, individually and as trustee, or any other Holder within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all Expenses to which the Company, the Trust, the Trustee and any agents thereof, individually and as trustee, any other Holder or any controlling Person of the Company, the Trust, the Trustee and any agents thereof, individually and as trustee, or any other Holder may become subject, under or with respect to the Securities Act, the Exchange Act, any other federal or state securities law or otherwise, insofar as such Expenses are caused by any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement at the date and time as of which such Registration Statement was declared effective by the SEC, any preliminary Prospectus or the Prospectus, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein (in the case of a preliminary Prospectus or Prospectus, in light of the circumstances under which they were made), not misleading, but in each case only with respect to written information relating to such Holder (other than the Company) furnished by or on behalf of such Holder specifically for inclusion in the documents referred to in the foregoing indemnity. Subject to Section 6(e) of this Agreement, such Holder shall 

 

10

 

reimburse the Company, the Trust, the Trustee and any agents thereof, individually and as trustee, the other Holders and any agents or controlling Persons thereof for any legal or other expenses reasonably incurred by the Company, the Trust, the Trustee and any agents thereof, individually and as trustee, the other Holders or any agent or controlling Persons thereof in connection with the investigation or defense of any Expenses with respect to which the Company, the Trust, the Trustee and any agents thereof, individually and as trustee, and the other Holders or any agent or controlling Persons thereof is entitled to indemnity by such Holder under this Agreement.

 

(d)                                 Conduct of Indemnification Proceedings. In case any proceeding (including any governmental investigation) shall be instituted involving any Person in respect of which indemnity may be sought pursuant to Section 6(a), 6(b) or 6(c) hereof, such Person (the “Indemnified Party”) shall promptly notify the Person against whom such indemnity may be sought (the “Indemnifying Party”) in writing and the Indemnifying Party, upon request of the Indemnified Party, shall retain counsel reasonably satisfactory to the Indemnified Party and shall pay the reasonable fees and disbursements of such counsel related to such proceeding. In any such proceeding, any Indemnified Party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless (i) the Indemnifying Party and the Indemnified Party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the Indemnifying Party and the Indemnified Party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them, other than solely by virtue of the rights and obligations of the Indemnifying Party and the Indemnified Party under this Section 6. It is understood that the Indemnifying Party shall not, in respect of the legal expenses of any Indemnified Party in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all such indemnified parties and that all such fees and expenses shall be reimbursed as they are incurred. Such firm shall be designated in writing by, in the case of parties indemnified pursuant to Section 6(a), the Holders of a majority of the Registrable Securities covered by the Registration Statement held by Holders that are indemnified parties pursuant to Section 6(a) and, in the case of parties indemnified pursuant to Section 6(b) or Section 6(c), the Trustee. The Indemnifying Party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final, non-appealable judgment for the plaintiff, the Indemnifying Party agrees to indemnify the Indemnified Party from and against any Expenses by reason of such settlement or judgment. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such proceeding.

 

(e)                                  Contribution. To the extent that the indemnification provided for in Section 6(a), 6(b) or 6(c) is unavailable to an Indemnified Party or insufficient in respect of any Expenses referred to therein, then each Indemnifying Party under such paragraph, in lieu of indemnifying such Indemnified Party thereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Expenses (i) in such proportion as is appropriate to reflect the relative benefits received by the Indemnifying Party or Indemnifying Parties on the one hand and the Indemnified Party or Indemnified Parties on the other hand or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Indemnifying Party or Indemnifying Parties on the one hand and of the Indemnified Party or Indemnified Parties on the other hand in connection with the statements or omissions that resulted in such Expenses, as well as any other relevant equitable considerations. The relative fault of the Company and the other Holders on the one hand and the Trust on the other hand 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 required to be stated or necessary in order to make the statements (in the case of a preliminary Prospectus or Prospectus, in light of the circumstances under which they were made) not misleading, relates to information supplied by the Company, the other Holders or by the Trust, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Holders’ respective obligations to contribute pursuant to this Section 6 are several in proportion to the respective number of Registrable Securities they have sold pursuant to a Registration Statement, and not joint.

 

The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 6(e) were determined by pro rata allocation or by any other method of allocation that does not take into account the 

 

11

 

equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an Indemnified Party as a result of the 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. 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.

 

(f)                                   The remedies provided for in this Section 6 are not exclusive and shall not limit any rights or remedies which may otherwise be available to an Indemnified Party at law or in equity, hereunder or otherwise.

 

(g)                                  The indemnity and contribution provisions contained in this Section 6 shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of any Holder, any Person controlling the Company or any other Holder or any Affiliate of the Company or any other Holder or by or on behalf of the Trustee, its officers or directors or any Person controlling the Trustee and (iii) the sale of any Registrable Securities by any Holder.

 

Section 7. Information Requirements. The Trust covenants that, if at any time before the end of the Effective Period the Trust is not subject to the reporting requirements of the Exchange Act, it will cooperate with any Holder and take such further reasonable action as any Holder may reasonably request in writing (including, without limitation, making such reasonable representations as any such Holder may reasonably request), all to the extent required from time to time to enable such Holder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 or Rule 144A under the Securities Act and customarily taken in connection with sales pursuant to such exemptions. Upon the written request of any Holder, the Trust shall deliver to such Holder a written statement as to whether the Trust has complied with such filing requirements. Notwithstanding the foregoing, nothing in this Section 7 shall be deemed to require the Trust to register any of the Trust’s securities under any section of the Exchange Act.

 

Section 8. Underwritten Registrations. The Holders of Registrable Securities covered by any Registration Statement who desire to do so may sell such Registrable Securities to an underwriter in an underwritten offering for reoffering to the public. If any of the Registrable Securities covered by any Registration Statement are to be sold in an underwritten offering, the investment banker or investment bankers and manager or managers that will administer the offering will be selected by the Holders of a majority of such Registrable Securities included in such offering, subject to the consent of the Trust (which shall not be unreasonably withheld or delayed), and such Holders shall be responsible for all underwriting commissions and discounts and any transfer taxes in connection therewith. No Person may participate in any underwritten registration hereunder unless such Person (i) agrees to sell such Person’s Registrable Securities on the basis reasonably provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements.

 

Section 9. Miscellaneous.

 

(a)                                 Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, without the written consent of the Trust, the Company and the Holders of a majority of Registrable Securities. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of Holders whose securities are being sold pursuant to a Registration Statement and that does not directly or indirectly affect the rights of other Holders may be given by Holders of at least a majority of the Registrable Securities being sold by such Holders pursuant to such Registration Statement; provided that the provisions of this sentence may not be amended, modified or supplemented except in accordance with the provisions of the immediately preceding sentence. Notwithstanding the foregoing, this Agreement may be amended by written agreement signed by the Trust, without the consent of the Holders of Registrable Securities, to cure any ambiguity or to correct or supplement any provision contained herein that may be defective or inconsistent with any other provision contained herein, or to make such other provisions in regard to matters or questions arising under this Agreement that shall not adversely affect the interests of the Holders of Registrable Securities. Each Holder of Registrable Securities outstanding at the time of any such 

 

12

 

amendment, modification, supplement, waiver or consent or thereafter shall be bound by any such amendment, modification, supplement, waiver or consent effected pursuant to this Section 9(a), whether or not any notice, writing or marking indicating such amendment, modification, supplement, waiver or consent appears on the Registrable Securities or is delivered to such Holder.

 

(b)                                 Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand delivery, by facsimile, by courier guaranteeing overnight delivery or by first-class mail, return receipt requested, and shall be deemed given (i) when made, if made by hand delivery, (ii) upon confirmation, if made by facsimile, (iii) one (1) Business Day after being deposited with such courier, if made by overnight courier or (iv) on the date indicated on the notice of receipt, if made by first-class mail, to the parties as follows:

 

(v)                                 if to a Holder, at the most current address given by such Holder to the Trust;

 

(vi)                              if to the Trust or the Trustee, to:

 

PermRock Royalty Trust c/o Simmons Bank

P.O. Box 962020

Fort Worth, Texas 76162

Attention: Lee Ann Anderson

Fax: (817) 298-5579

 

with a copy to:

 

Greenberg Traurig, LLP

2200 Ross Avenue, Suite 5200

Dallas, Texas 75201

Attention: Michael L. Malone

Facsimile No.: (214) 665-5991

 

(vii)                           if to the Company, to:

 

Boaz Energy II, LLC

201 West Wall Street, Suite 421

Midland, Texas 79701

Attention: Marshall Eves

 

with a copy to:

 

Vinson & Elkins L.L.P.

1001 Fannin Street, Suite 2500

Houston, Texas 77002

Attention: Michael Telle

Fax: (713) 615-5651

 

or to such other address as such Person may have furnished to the other Persons identified in this Section 9(b) in writing in accordance herewith.

 

(c)                                  Approval of Holders. Whenever the consent or approval of Holders of a specified percentage of Registrable Securities is required hereunder, Registrable Securities held by the Trust or its Affiliates (as such term is defined in Rule 405 under the Securities Act) (other than the Company or subsequent Holders if such Holders are deemed to be such Affiliates solely by reason of their holdings of such Registrable Securities) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage.

 

(d)                                 Successors and Transferees. Any Person or group of Persons who purchases any Registrable Securities from the Company or otherwise holds any Registrable Securities as a result of any sale, liquidation, dividend or distribution by the Company or any of its Affiliates shall be deemed, for purposes of this Agreement, to 

 

13

 

be a transferee of the Company, but if and only if such Person or group (i) agrees to be designated as a transferee, (ii) is specifically designated as a transferee in writing by the Company to the Trust and (iii) in the case of a group, such group shall collectively constitute a Transferee for purposes of this Agreement (including without limitation, for purposes of exercising any Demand Registration right transferred by the Company to such group) (a “Transferee”). This Agreement shall inure to the benefit of and be binding upon such Transferees, provided that nothing herein shall be deemed to permit any assignment, transfer or other disposition of Registrable Securities in violation of the terms thereof. If the Company designates any Person as a Transferee in accordance with this Section 9(d), then the Registrable Securities acquired by such Transferee shall be held subject to all of the terms of this Agreement, and by taking and holding such Registrable Securities, such Person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement and such Person shall be entitled to receive the benefits hereof.

 

(e)                                  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.

 

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

 

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

 

(h)                                 Severability. If any term, provision, covenant or restriction of this Agreement is held to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, and the parties hereto shall use their reasonable best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction, it being intended that all of the rights and privileges of the parties shall be enforceable to the fullest extent permitted by law.

 

(i)                                     Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement and is 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 and the registration rights granted by the Trust with respect to the Registrable Securities. 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 Trust with respect to the Registrable Securities. This Agreement supersedes all prior agreements and undertakings among the parties with respect to such registration rights. No party hereto shall have any rights, duties or obligations other than those specifically set forth in this Agreement.

 

(j)                                    Termination. This Agreement and the obligations of the parties hereunder shall terminate upon the end of the Effective Period, except for any liabilities or obligations under Section 4, 5 or 6 hereof, each of which shall remain in effect in accordance with its terms.

 

(k)                                 Specific Enforcement; Venue; Waiver of Jury Trial. The parties hereto acknowledge and agree that each would be irreparably damaged if any of the provisions of this Agreement are not performed by the other in accordance with their specific terms or are otherwise breached. It is accordingly agreed that each party shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement by the other and to enforce this Agreement and the terms and provisions hereof specifically against the other, in addition to any other remedy to which such aggrieved party may be entitled at law or in equity. Any action or proceeding seeking to enforce any provision of, or based on any rights arising out of, this Agreement may be brought against any of the parties in the FEDERAL AND STATE COURTS LOCATED WITHIN THE STATE OF DELAWARE and each of the parties consents to the jurisdiction of such courts (and of the appropriate appellate courts) in any such action or proceeding and waives any objection to venue laid therein. Process in any action or proceeding referred to in the preceding sentence may be served on any party anywhere in the world. EACH OF THE PARTIES HEREBY WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

 

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(l)                                     Limitation of Liability. It is expressly understood and agreed by the parties hereto that (i) this Agreement is executed and delivered by the Trustee not individually or personally, but solely as Trustee on behalf of the Trust and (ii) under no circumstances shall the Trustee be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Trust under this Agreement.

 

[Signature page follows.]

 

15

 

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

 

	
 
    	
BOAZ ENERGY II, LLC
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
PERMROCK ROYALTY TRUST
    
	
 
    	
 
    
	
 
    	
By:
    	
SIMMONS BANK, as   Trustee of PermRock Royalty Trust
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    

 

SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENTExhibit 4.2

 

Grindrod Shipping Holdings Ltd.

 

FORM OF 2018 FORFEITABLE SHARE PLAN

 

 

TABLE OF CONTENTS

 

	
1.
    	
INTRODUCTION
    	
1
    
	
 
    	
 
    	
 
    
	
2.
    	
INTERPRETATION
    	
1
    
	
 
    	
 
    	
 
    
	
3.
    	
THE FSP
    	
10
    
	
 
    	
 
    	
 
    
	
4.
    	
OPERATION OF THE FSP
    	
10
    
	
 
    	
 
    	
 
    
	
5.
    	
FSP LIMITS
    	
13
    
	
 
    	
 
    	
 
    
	
6.
    	
MAKING AND SETTLEMENT OF AWARDS
    	
13
    
	
 
    	
 
    	
 
    
	
7.
    	
PARTICIPANT‘S RIGHTS BEFORE THE   VESTING DATE
    	
16
    
	
 
    	
 
    	
 
    
	
8.
    	
VESTING OF AWARDS
    	
17
    
	
 
    	
 
    	
 
    
	
9.
    	
TERMINATION OF EMPLOYMENT AND   DEATH
    	
17
    
	
 
    	
 
    	
 
    
	
10.
    	
CHANGE OF CONTROL
    	
20
    
	
 
    	
 
    	
 
    
	
11.
    	
VARIATION IN SHARE CAPITAL
    	
21
    
	
 
    	
 
    	
 
    
	
12.
    	
FORFEITURE AND LAPSE OF AWARDS
    	
23
    
	
 
    	
 
    	
 
    
	
13.
    	
FURTHER CONDITIONS
    	
24
    
	
 
    	
 
    	
 
    
	
14.
    	
DISCLOSURE IN ANNUAL FINANCIAL   STATEMENTS
    	
26
    
	
 
    	
 
    	
 
    
	
15.
    	
AMENDMENTS AND TERMINATION
    	
26
    
	
 
    	
 
    	
 
    
	
16.
    	
DOMICILIUM AND NOTICES
    	
27
    
	
 
    	
 
    	
 
    
	
17.
    	
DISPUTES
    	
29
    
	
 
    	
 
    	
 
    
	
18.
    	
TERMS OF EMPLOYMENT UNAFFECTED
    	
30
    
	
 
    	
 
    	
 
    
	
19.
    	
DISCLAIMER OF LIABILITY
    	
30
    
	
 
    	
 
    	
 
    
	
20.
    	
GOVERNING LAW
    	
30
    

 

 

1.                           INTRODUCTION

 

1.1                    The purpose of the FSP is to provide selected Employees of the Employer Companies with the opportunity of receiving Shares in the Company.

 

1.2                    The FSP will be used as a retention mechanism or as a tool to attract prospective Employees. The FSP will provide Participants with the opportunity to share in the success of the Company and provide alignment between these Participants and shareholders.

 

2.                           INTERPRETATION

 

2.1                    In these Rules, unless inconsistent with the context, the following words and expressions shall have the following meanings:

 

	
2.1.1
    	
 
    	
“Act”
    	
 
    	
the Companies Act (Cap. 50) of Singapore, as amended   and any re-enactment or replacement thereof;
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
2.1.2
    	
 
    	
“Allocated”
    	
 
    	
for purposes of setting the FSP limits referred to   in Rule 5, shall mean one Share allocated per Forfeitable Share Awarded;
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
2.1.3
    	
 
    	
“Auditors”
    	
 
    	
the auditors of the Company from time to time;
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
2.1.4
    	
 
    	
“Award”
    	
 
    	
an award of a specified number of Forfeitable Shares   to an Employee in
    

 

1

 

	
 
    	
 
    	
 
    	
 
    	
terms of Rule 4.6 on the basis   that the Forfeitable   Shares may be forfeited in the circumstances set out in the Award Letter and these Rules, and “Awarded” shall   bear a similar meaning;
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
2.1.5
    	
 
    	
“Award Date”
    	
 
    	
the date, specified in the Award Letter, on which an Award is   made to an  Employee and the Employee will be deemed   to have automatically accepted the Award on this date, unless otherwise specified   in the Rules;
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
2.1.6
    	
 
    	
“Award Letter”
    	
 
    	
a letter containing the information specified in Rule 6.2 sent   by the Company or its nominee, and on the recommendation of the Employer Company,   to an Employee informing the Employee of the making of an Award to him;
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
2.1.7
    	
 
    	
“Business Day”
    	
 
    	
any day on which the applicable stock exchange is open for the   transaction of business;
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
2.1.8
    	
 
    	
“Capitalisation Issue”
    	
 
    	
the issue of shares on capitalisation of the Company’s   profits and/or reserves;
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
2.1.9
    	
 
    	
“Change of Control”
    	
 
    	
where a person (or persons acting together in concert),
    

 

2

 

	
 
    	
 
    	
 
    	
 
    	
Acquires or consolidates Control of the Company;
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
2.1.10
    	
 
    	
“Company”
    	
 
    	
Grindrod Shipping Holdings Ltd (Registration Number   201731497H);
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
2.1.11
    	
 
    	
“Control”
    	
 
    	
means:
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
a) the holding of shares or the aggregate of holdings of shares   or other securities in the Company carrying 30% or more of the voting rights   attributable to the share capital of the Company which are currently   exercisable at a general meeting of the Company irrespective of whether such holding or   holdings confers de facto control;   or
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
b) the holding or   control by a shareholder alone or pursuant to an agreement with other   shareholders of more than 50% of the voting rights in the Company; or
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
(c) is entitled,   directly or indirectly, to appoint a majority of Directors of the board of   Directors of the Company, or to appoint or remove Directors having a majority   of the votes exercisable at meetings of the board of Directors of the   Company;
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
2.1.12
    	
 
    	
“Country Schedule”
    	
 
    	
any schedule to these Rules that may be adopted
    

 

3

 

	
 
    	
 
    	
 
    	
 
    	
as directed by the RemCom, governing participation   in the FSP by Participants employed by the Group in jurisdictions other than   Singapore. Such Country Schedule shall form part of the Rules;
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
2.1.13
    	
 
    	
“Date of Termination of Employment”
    	
 
    	
the date upon which a Participant is no longer   permanently employed by, or ceases to hold salaried office in, any Employer   Company; provided that, where a Participant’s employment   is terminated without notice or on terms in lieu of notice, the Date of Termination   of Employment shall be deemed to occur on the date on which the termination   takes effect, and where such employment is terminated with notice, the Date of   Termination of Employment shall be deemed to occur upon the date on which   that notice expires;
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
2.1.14
    	
 
    	
“Directors”
    	
 
    	
the directors of the Company from time to time;
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
2.1.15
    	
 
    	
“Employee”
    	
 
    	
any person holding permanent salaried employment or office with   any Employer Company,   including any executive director, but excluding any non- executive director   of a company in the
    

 

4

 

	
 
    	
 
    	
 
    	
 
    	
Group;
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
2.1.16
    	
 
    	
“Employer Company”
    	
 
    	
a company in the Group which   employs a Participant;
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
2.1.17
    	
 
    	
“Financial Year”
    	
 
    	
the financial year of the Company   currently running from 1 January to 31 December of each year;
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
2.1.18
    	
 
    	
“Forfeitable Shares”
    	
 
    	
the Shares comprised in the   Award, the vesting of which is subject to the fulfilment of the Vesting   Condition as specified in the Award Letter;
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
2.1.19
    	
 
    	
“FSP”
    	
 
    	
the Grindrod Shipping Holdings   Ltd. Forfeitable Share Plan constituted by these Rules;
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
2.1.20
    	
 
    	
“Group”
    	
 
    	
the Company and its   Subsidiary/ies from time to time;
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
2.1.21
    	
 
    	
“JSE”
    	
 
    	
the exchange operated by the JSE Limited (registration number   2005/022939/06), a public company duly registered and incorporated with   limited liability in accordance with the company
    

 

5

 

	
 
    	
 
    	
 
    	
 
    	
laws of South Africa, licensed as an exchange under   the Securities Services Act, No. 36 of 2004, of South Africa, as amended and   any re-enactment or replacement thereof;
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
2.1.22
    	
 
    	
“Liquidation Date”
    	
 
    	
the date on which any successful application for the winding up   of the Company is lodged at the relevant court;
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
2.1.23
    	
 
    	
“Majority of Operations”
    	
 
    	
all or the greater part of the assets or undertaking of the   Company;
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
2.1.24
    	
 
    	
“Nasdaq”
    	
 
    	
the NASDAQ Global Select Market;
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
2.1.25
    	
 
    	
“Participant”
    	
 
    	
an Employee who has accepted or is deemed to have   accepted an Award made to him in terms of the FSP and includes the executor   of such Employee’s deceased estate where appropriate;
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
2.1.26
    	
 
    	
“Prohibited Period”
    	
 
    	
a prohibited period,   including a closed period, as may be applicable to the Company from time to   time in accordance with the Securities and Futures Act (Cap. 289) of   Singapore and any other relevant legislation or regulations in relation to   dealing in securities or insider trading;
    

 

6

 

	
2.1.27
    	
 
    	
“Recharge Policy”
    	
 
    	
a policy or agreement in force from time to time   between the Company and an Employer Company regulating the funding of the   Settlement;
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
2.1.28
    	
 
    	
“RemCom”
    	
 
    	
the compensation and nomination committee of the   board of Directors, the members of which do not hold any executive office   within the Group, charged with the administration of all or part of the FSP   and, in the absence of such a RemCom, non-executive directors serving on the   board of Directors;
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
2.1.29
    	
 
    	
“Retirement”
    	
 
    	
in relation to a Participant, the normal retirement age as   determined by the Company, or with the approval of the Directors, prior to   the normal retirement age;
    

 

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2.1.30
    	
 
    	
“Rules”
    	
 
    	
these Rules of the FSP, as amended from time to time;
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
2.1.31
    	
 
    	
“Settlement”
    	
 
    	
registration in the name of, and delivery to, a Participant of   the required number of Forfeitable Shares to which the Participant is   entitled pursuant to the vesting of an Award in accordance with the   Settlement method stipulated in Rule 6.4, and the words “Settle” and   “Settled” shall bear a corresponding meaning;
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
2.1.32
    	
 
    	
“Settlement Date”
    	
 
    	
the date on which Settlement shall occur;
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
2.1.33
    	
 
    	
“Share”
    	
 
    	
an ordinary share in the capital of the Company;
    

 

8

 

	
2.1.34
    	
 
    	
“Subsidiary”
    	
 
    	
a company which is a subsidiary of the Company, within the   meaning of the Act;
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
2.1.35
    	
 
    	
“Vesting Condition”
    	
 
    	
the condition of continued employment with the Group for the   duration of the Vesting Period, as specified in the Award Letter;
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
2.1.36
    	
 
    	
“Vesting Date”
    	
 
    	
the date on which a Participant becomes unconditionally entitled   to the Forfeitable Shares (free of any restrictions and further conditions   that could result in forfeiture) on the fulfilment of the Vesting Condition   as set out in the Award Letter and “Vest”, “Vesting” and “Vested”   shall be construed accordingly; and
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
2.1.37
    	
 
    	
“Vesting Period”
    	
 
    	
the period or periods commencing on the Award Date and ending on   the date as specified in the Award Letter (both dates included) during which the   Participant is required to fulfil the Vesting Condition.
    

 

2.2                                                           The headings in these Rules are inserted for reference purposes only and shall in no way govern or affect the interpretation hereof.

 

9

 

2.3                                                           If any provision in a definition is a substantive provision conferring rights or imposing obligations on any party, effect shall be given to it as if it were a substantive provision.

 

2.4                                                           Unless the context indicates otherwise, an expression that denotes any gender includes the others, a natural person includes a created entity (corporate or unincorporated) and the singular includes the plural, and vice versa in each case.

 

2.5                                                           References in these Rules to any statutory provisions include a reference to those provisions as amended or replaced from time to time and include any regulations made under them.

 

3.                           THE FSP

 

These Rules shall govern all Awards made in terms of the FSP on or after the approval thereof by the shareholders of the Company, on recommendation of the board of directors.

 

4.                           OPERATION OF THE FSP

 

4.1                                                           Basis upon which Awards are made

 

4.1.1                                                                                      The basis upon which Awards of Forfeitable Shares are made includes the following:

 

4.1.1.1                                                                                                                   Awards of Forfeitable Shares will be made on an ad hoc basis, as and when the RemCom in consultation with the chief executive officer of the Group decides that there is a merit in making the Award to a particular Employee based on retention risks identified or requirements identified in appointing new

 

10

 

Employees, but subject to the provisions of Rule 4.2 and 4.3. When the chief executive officer is eligible to receive an Award of Forfeitable Shares, he will be excluded from the decision to make such Award.

 

4.1.1.2                                                                                                                   The number of Forfeitable Shares to be made to an Employee will primarily be based on the Employee’s annual salary, grade, and/or performance and/or market benchmarks and retention requirements.

 

4.1.1.3                                                                                                                   Subsequent to the Vesting Date, the Forfeitable Shares will be Settled to the Participant and the Participant has all shareholder rights from the Settlement Date.

 

4.1.1.4                                                                                                                   In all instances, Vesting of the Awards of Forfeitable Shares will be subject to the Vesting Condition for the applicable Vesting Period, unless otherwise stated in Rule 9.

 

4.2                                                           The RemCom may from time to time, in its discretion on an ad-hoc basis:

 

4.2.1                                                                                      call upon the Employer Companies to make recommendations to the RemCom as to which of their respective Employees they recommend retain the services of or attract the services of by the Award of Forfeitable Shares; and

 

4.2.2                                                                                      approve the grant of Awards to the Employees.

 

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4.3                                                           The RemCom will have the final authority to decide:

 

4.3.1                                                                                      which Employees will participate in the FSP in respect of each Award;

 

4.3.2                                                                                      the aggregate quantum of Awards to be made to all Employees;

 

4.3.3                                                                                      the Vesting Period and Vesting Date in respect of each Award; and

 

4.3.4                                                                                      all other issues relating to the governance of the FSP.

 

4.4                                                           If, and when, the RemCom approves the granting of an Award, the RemCom shall notify the Company and the Employer Company of each Employee who has been approved for participation in the FSP.

 

4.5                                                           Each Employer Company of an Employee whose participation in the FSP has been approved shall, in writing, acknowledge to the RemCom participation of its respective Employees in the FSP.

 

4.6                                                           The Company, or its nominee, shall issue an Award Letter to every Employee who has been approved for participation in the FSP as soon as is practically possible after receiving the RemCom’s notification in terms of Rule 4.4.

 

4.7                                                           The Company or Employer Companies will, however, remain responsible to procure the Settlement of the benefits under the FSP to the Participants employed by them on the Settlement Date, or as may otherwise be regulated under the Recharge Policy.

 

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5.                           FSP LIMITS

 

5.1                                                           Overall company Limit

 

5.1.1                                                                                      The aggregate number of Shares at any one time which may be Allocated and have not vested under the FSP shall not exceed 5% of the number of shares in issue (excluding treasury shares), as determined in reference to the day preceding the award.

 

5.1.2                                                                                      The Directors must, where required, adjust the number of Shares available for the FSP stated in Rule 5.1.1 (without the prior approval of the Company in a general meeting) and the number of Shares subject to existing Awards to take account of a sub-division or consolidation of the Shares of the Company.

 

5.1.3                                                                                      The limit on the number of Shares that may be Allocated as set out in Rule 5.1.1 and the ability of the RemCom to make an Award to an Employee, is subject to there being at the material time the requisite approval from the shareholders of the Company. The approval from the shareholders of the Company may be given at each annual general meeting of the Company and such approval, when given, is valid only until the date of the next annual general meeting or the date on which the next annual general meeting is required by law to be held.

 

6.                           MAKING AND SETTLEMENT OF AWARDS

 

6.1                                                           Time when Awards may be made

 

6.1.1                                                                                      Subject to Rule 3, the RemCom may, on recommendation and on behalf of any Employer Company, select any Employee for participation in the FSP, and make an Award to such Employee:

 

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6.1.1.1                                                                                                                   after the publication of the Company’s annual results for the relevant financial year. However, the RemCom may, on behalf of an Employer Company, allow an Employee to join the FSP part way through a Financial Year of the Company by making an Award as soon as is practically possible after the interim results are published; and

 

6.1.1.2                                                                                                                   on any day on which there are no restrictions on the making of Awards being restrictions imposed by a Prohibited Period, statute, order, regulation or directive.

 

6.1.2                                                                                      In the event that there is an announcement, on any matter of an exceptional nature which involves unpublished price sensitive information, the making,  settlement and vesting of Awards will occur after the aforesaid announcement is released.

 

6.2                                                           Award Letter

 

6.2.1                                                                                      The Award Letter shall be in writing and shall specify the terms of the Award including:

 

6.2.1.1                                                                                                                   the name of the Employee;

 

6.2.1.2                                                                                                                   the Award Date;

 

6.2.1.3                                                                                                                   the number of Forfeitable Shares subject to an Award;

 

6.2.1.4                                                                                                                   the Vesting Condition;

 

6.2.1.5                                                                                                                   the Vesting Date and Vesting Period; and

 

6.2.1.6                                                                                                                   any other relevant terms and conditions.

 

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6.3                                                           Award of Forfeitable Shares

 

6.3.1                                                                                      An Award shall:

 

6.3.1.1                                                                                                                   be personal to the Employee to whom it is addressed and may only be acted on by such Employee; and

 

6.3.1.2                                                                                                                   indicate that the Award will be deemed to have been accepted automatically by the Employee on the Award Date unless the Employee specifically rejects the Award in writing to the Company within five Business Days of the Award Date.

 

6.4                                                           Settlement of Awards

 

6.4.1                                                                                      Any one of the following Settlement methods may be used, as directed by the RemCom:

 

6.4.1.1                                                                                                                   The Company will, if so instructed by the RemCom, use treasury shares to effect Settlement to that Participant and where such Participants are employed by another Employer Company, it may recharge the related costs to the respective Employer Company in terms of the Recharge Policy; or

 

6.4.1.2                                                                                                                   The Company will, if so instructed by the RemCom, issue Shares to the Participants, and where such Participants are

 

15

 

employed by another Employer Company, it may recharge the related costs to the respective Employer Company in terms of the Recharge Policy.

 

Any proposed allotment and issue of new Shares as contemplated in Rules 6.4.1.2 will be subject to there being in force at the relevant time the requisite shareholders’ approval under the Act for the grant of Awards and issue of Shares in relation thereto. Any issued new Shares shall be subject to all the provisions of the Act, Remcom charter, the applicable listing regulation and the Constitution of the Company (including all provisions thereof relating to the voting, dividend, transfer and other rights attached to such new Shares, including those rights which arise from a liquidation of the Company), and shall rank pari passu in all respects with the then existing issued Shares except for any dividend, right, allotment or other distribution, the record date for which being prior to the relevant date of issue of such new Shares.

 

6.4.2                                                                               The number of Forfeitable Shares delivered to the Participant in Settlement shall be that stipulated in the Award Letter irrespective of the cost to the Company or Employer Company.

 

7.                           PARTICIPANT’S RIGHTS BEFORE THE VESTING DATE

 

Participants will not have any rights to voting or dividends prior to the Vesting Date in respect to Shares which have not been Settled.

 

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8.                           VESTING OF AWARDS

 

8.1                                        Subject to Rules 9, 10 and 13.3, the Award will Vest on the date or dates specified in the Award Letter to be the Vesting Date, provided the Vesting Condition specified in the Award Letter has been fulfilled.

 

9.                           TERMINATION OF EMPLOYMENT AND DEATH

 

9.1                                        Resignation or dismissal

 

9.1.1                                                                                      If a Participant’s employment with any Employer Company terminates before the Vesting Date by reason of:

 

(i)                    his resignation; or

 

(ii)                 dismissal on grounds of misconduct, proven poor performance or proven dishonest or fraudulent conduct (whether such cessation occurs as a result of notice given by him or otherwise or where he resigns to avoid dismissal on ground of misconduct, poor performance or proven dishonest or fraudulent conduct),

 

his Awards of Forfeitable Shares will be forfeited in its entirety and will lapse immediately on the Date of Termination of Employment. For the avoidance of doubt, any Awards of Forfeitable Shares which have already Vested will be unaffected by this provision.

 

9.1.2                                                                                      For the purposes of this Rule 9, a Participant will not be treated as ceasing to be an Employee of an Employer Company if, on the same date on which he ceases to be an Employee of an Employer Company, he is employed by another company in the Group.

 

17

 

9.2                                        Retrenchment, ill-health, injury, disability and sale of Employer Company

 

9.2.1                                                                                      If a Participant’s employment with any Employer Company terminates prior to the Vesting Date by reason of:

 

(i)                                     retrenchment, as determined in accordance with the Employer Company’s policy; or

 

(ii)                                  ill-health, injury or disability, as determined to the satisfaction of the RemCom; or

 

(iii)                               the Participant’s Employer Company ceasing to be a member of the Group or the undertaking in which he is employed being transferred to a transferee which is not a member of the Group,

 

a portion of his Award of Forfeitable Shares shall Vest on the Date of Termination of Employment or as soon as reasonably possible thereafter. The portion of the Award which shall Vest will reflect the number of complete months served since the Award Date to the Date of Termination of Employment, over the total number of months in the Vesting Period.

 

18

 

9.3                                                           To the extent that there is more than one Vesting Date and more than one Vesting Period in respect of a particular Award, the calculation set out in Rule 9.2.1 should be carried out in respect of each Vesting Period.

 

9.4                                                           The portion of the Award  that  does not  Vest  will lapse on the Date of Termination of Employment.

 

9.5                                                           For the avoidance of doubt, any Awards which have already Vested will be unaffected by this provision.

 

9.6                                                           If a Participant’s employment with any Employer Company terminates prior to the Vesting Date by reason of death, his Award will Vest immediately.

 

9.7                                                           If a Participant’s employment with any Employer Company terminates prior to the Vesting Date by reason of Retirement, the RemCom will determine the Vesting of his Award.

 

9.8                                                Other terminations and exceptional circumstances

 

9.8.1                                                                                      Subject to the RemCom determining otherwise in  its absolute discretion, if the Participant ceases to be in the employment of any Employer Company before the Vesting Date for any other reason, a portion of his Award shall Vest on the Date of Termination of Employment or as soon as reasonably practicable thereafter. The portion of the Award which shall Vest will be calculated in accordance with Rule 9.2.1.

 

9.8.2                                                                                      The portion of the Award that does not Vest shall lapse on the Date of Termination of Employment.

 

9.8.3                                                                                      For the avoidance of doubt, any Awards which have already Vested will be unaffected by this provision.

 

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10.                             CHANGE OF CONTROL

 

10.1                                                           Subject to Rule 10.2,:

 

10.1.1                                                                               in the event of a Change of Control of the Company occurring before the Vesting Date which directly results in:

 

10.1.1.1                                                                     the Shares ceasing to be listed on the Nasdaq and the JSE;

 

10.1.1.2                                                                     the Majority of Operations of the Company being merged with those of another company or companies; or

 

10.1.1.3                                                                     the FSP being terminated; or

 

10.1.2                                                                               if under any applicable laws, the court sanctions a compromise or arrangement proposed for the purposes of, or in connection with, a scheme for the reconstruction of the Company or its amalgamation with another company or companies; or

 

10.1.3                                                                               if the shareholders pass a resolution for a members’ solvent voluntary winding up (other than for amalgamation or reconstruction);

 

The RemCom will, at its discretion early vest all unvested shares.

 

10.2                                                           If there is an internal reconstruction or other event which does not involve:

 

10.2.1                                                                               any Change of Control; or

 

10.2.2                                                                               any change in the ultimate Control of the Company; or

 

10.2.3                                                                               a Change of Control which does not result directly in an event specified in Rules 10.1.1, 10.1.2 or 10.1.3; or

 

20

 

10.2.4                                                                               if any other event (other than the events set out in Rules 10.1.2 and 10.1.3) happens which may affect the Awards including the Shares ceasing to be listed on the JSE and the Nasdaq,

 

the Award held by a Participant shall not Vest as a consequence of that event and shall continue to be governed by the Rules of the FSP. However, the RemCom may take such action as it considers appropriate to protect the interests of Participants following the occurrence of such event, including converting Awards into awards in respect of shares in one or more other companies, provided the Participant is no worse off.

 

11.                             VARIATION IN SHARE CAPITAL

 

11.1                                                    Capitalisation Issue,       subdivision or consolidation of Shares, liquidation, etc

 

11.1.1 In the event of a:

 

(i)                                     Capitalisation Issue; or

 

(ii)                                  a subdivision of Shares; or

 

(iii)                               a consolidation of Shares; or

 

(iv)                              reduction (including any reduction arising by reason of the Company purchasing or acquiring its issued Shares); or

 

(v)                                 the Company making distributions, including a distribution in specie, other than a dividend paid in the ordinary course of business out of the current year’s retained earnings,

 

Participants shall continue to participate in the FSP. The RemCom may make such adjustment to the number of Forfeitable Shares comprised

 

21

 

in the relevant Award or take such other action to place Participants in no worse a position than they were prior to the occurrence of the relevant event. Such adjustment should give the Participant an entitlement to an equivalent proportion of the equity capital of the Company as that to which he was entitled prior to the occurrence of the relevant event.

 

11.2                                                    The issue of Shares or securities convertible into, or with rights to acquire or subscribe for Shares as consideration for an acquisition, for cash or for a vendor consideration placing will not be regarded as a circumstance that requires any adjustment to Awards.

 

11.3                                                    Unless the RemCom considers an adjustment to be appropriate, the following events shall not normally be regarded as a circumstance requiring adjustment:

 

11.3.1                                                                               the cancellation of issued Shares purchased or acquired by the Company by way of a market purchase of such Shares undertaken by the Company on any applicable stock exchange during the period when a share purchase mandate granted by shareholders (including any renewal of such mandate) is in force;

 

11.3.2                                                                               an issue of Shares or other securities convertible into or with rights to acquire or subscribe for Shares to the employees of the Company or any Employer Company including Employees pursuant to a purchase or an option scheme approved by shareholders in general meeting of the Company, including this FSP or any other share-based incentive schemes implemented by the Company; and

 

11.3.3                                                                               any issue of Shares arising from the exercise of any warrants or the conversion of any convertible securities issued by the Company.

 

22

 

11.4                                                    Notwithstanding the provisions of Rule 11.1 above, no such adjustment shall be made:

 

11.4.1                                                                               if as a result, the Participant receives a benefit that a shareholder does not receive;

 

11.4.2                                                                               if as a result, such adjustment will result in the number of Shares comprised in an Award, together with new Shares to be issued or issuable under the FSP, to exceed the limit referred to in Rule 5.1.1; and

 

11.4.3                                                                               unless the RemCom after considering all relevant circumstances considers it equitable to do so.

 

11.5                                                    The Company shall notify the Participants of any adjustments which are made under Rule 11.1. Where necessary, in  respect of any such adjustments, Auditors, acting as experts and not as arbitrators and whose decision shall be final and binding on all persons affected thereby, shall confirm to the Company in writing that these are calculated on a non- prejudicial basis.

 

11.6                                                    If an order is made for the winding up of the Company on the basis of its insolvency, an Award of Forfeitable Shares shall ipso facto lapse as from the Liquidation Date.

 

12.                    FORFEITURE AND LAPSE OF AWARDS

 

12.1                                                    Notwithstanding any other provision of the Rules, an Award shall lapse on the earliest of:

 

12.1.1                                                                               The RemCom determining that any further condition imposed under Rule 6.2, in relation to Forfeitable Shares, has not been satisfied in

 

23

 

respect of the Award and can no longer be satisfied;

 

12.1.2                                                                               Subject to Rule 9 and 10, the Date of Termination of Employment;

 

12.1.3                                                                               The Liquidation Date, in accordance with Rule 11.6; and

 

12.1.4                                                                               Any other date provided for under these Rules.

 

13.                    FURTHER CONDITIONS

 

13.1                                                    In circumstances where the tax and/or regulatory requirements of a particular jurisdiction where a Participant works makes the delivery of Shares impossible or impractical, the Directors can direct that the Participants be paid a cash amount in lieu of  Shares  on the Vesting Date. A separate Country Schedule detailing the provisions in respect of such jurisdiction may be adopted in addition to, or instead of, paying a cash amount in lieu of Shares on the Vesting Date.

 

13.2                                                    An Employer Company may withhold any amount required:

 

13.2.1                                                                               to meet any costs in respect of the Vesting of an Award of Forfeitable Shares for which the Participant is liable; or

 

13.2.2                                                                               for employees’ tax,

 

from the Participant’s remuneration or any other amount due by the Employer Company to the Participant. For the avoidance of doubt, all taxes (including income tax) arising from the grant and/or release of any Awards to any Participant under the FSP shall be borne by that Participant.

 

13.3                                                    The Employer Company will delay the Settlement or Vesting of the Award, whichever is appropriate, to the Participant if the acquisition or disposal of the Shares would otherwise:

 

24

 

13.3.1                                                                               occur during a Prohibited Period; or

 

13.3.2                                                                               be in contravention of any code adopted by the Company relating to dealings in securities by Directors; or

 

13.3.3                                                                               be prohibited by insider trading legislation or any other legislation or regulations,

 

until such time as the Settlement or Vesting of the Award will no longer constitute such a contravention.

 

13.4                                                    The rights of Participants under this FSP are determined exclusively by these Rules.

 

13.5                                                    Except as otherwise provided in the Rules, the Participant has no right to any compensation, damages or any other sum or benefit by reason of the fact that:

 

13.5.1                                                                               he ceased to be a Participant in the FSP; or

 

13.5.2                                                                               any of his rights or expectations under this FSP were reduced or lost.

 

13.6                                                    Where a Participant is transferred from one Employer Company to another Employer Company:

 

13.6.1                                                                               all Awards granted to such Participant by the first Employer Company shall remain in force on the same terms and conditions as set out in these Rules; and

 

13.6.2                                                                               the second Employer Company shall assume a pro-rata portion of the first Employer Company’s obligations in respect of the relevant Awards in consideration for obtaining the Participant’s services from the first Employer Company.

 

25

 

13.7                                                    Every Award shall be subject to the condition that no Settlement will be effected if such Settlement would be contrary to any law or enactment, or any rules or regulations of any legislative or non-legislative governing body for the time being in force in Singapore or any other relevant country having jurisdiction in relation thereto.

 

14.                    DISCLOSURE IN ANNUAL FINANCIAL STATEMENTS

 

The Company shall disclose in its annual financial statements the number of Shares that may be utilised for purposes of the FSP at the beginning of the accounting period and changes in such number during the accounting period and the balance of Shares available for utilisation for purposes of the FSP at the end of the accounting period.

 

15.                    AMENDMENTS AND TERMINATION

 

15.1                                                               Subject to the provision of this Rule 15, the RemCom may at any time alter, vary or add to these terms and conditions as it thinks fit. Amendments to these terms and conditions may only affect Awards to Participants that have already been made if they are to the advantage of Participants.

 

15.2                                                               Except as provided in Rule 15.3 the provisions relating to:

 

15.2.1                                                                               eligibility to participate in the FSP;

 

15.2.2                                                                               the number of Shares which may be utilised for the purpose of the FSP as envisaged in Rule 5.1;

 

15.2.3                                                                               the basis upon which Awards are made as stipulated in Rule 4.1.1;

 

15.2.4                                                                               the amount payable upon the grant, Settlement or Vesting of an Award;

 

15.2.5                                                                               the adjustment of Awards in the event of a variation of capital of the

 

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Company or a Change of Control of the Company;

 

15.2.6                                                                               the procedure to be adopted in respect of the Vesting of Awards in the event of termination of employment as envisaged in Rule 9; and

 

15.2.7                                                                               the terms of this Rule 15.2,

 

may not be amended without the prior approval by ordinary resolution of shareholders of the Company present or by proxy, in general meeting, excluding all the votes attached to Forfeitable Shares and all Shares owned and controlled by persons who are existing Participants in the FSP and which have been acquired under the FSP.

 

15.3                                                               Subject to Rule 15.2 the RemCom may make minor amendments for ease of the administration of the FSP, to comply with or take account of the provisions of any proposed or existing legislation or to obtain or maintain favourable, taxation or regulatory treatment of any Employer Company or any present or future Participant, including the adoption of a Country Schedule for the benefit of Employees of the Group working outside Singapore.

 

15.4                                                               The FSP may be terminated at any time by and at the discretion of the RemCom or by ordinary resolution of shareholders at a general meeting of the Company subject to all relevant approvals which may be required, and if the FSP is so terminated, no further Awards shall be offered hereunder but Awards granted before such termination will continue to be valid and as described in the provisions of the FSP.

 

16.                    DOMICILIUM AND NOTICES

 

16.1                                                               The parties choose domicilium citandi et executandi for all purposes arising from this FSP, including, without limitation, the giving of any notice, the payment of any sum, the delivery of Shares, the serving of any process, as

 

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follows:

 

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16.1.1                                                                               the Company, the company secretary and the RemCom: The address and telefax number of the registered office of the Company from time to time or such other address or telefax number, and marked for the attention of the RemCom, as may be notified by the Company to Participants in writing;

 

16.1.2                                                                               Employer Company: The address and telefax number of the Registered Office of the Employer Company from time to time or such other address or telefax number, and marked for the attention of the RemCom, as may be notified by the Employer Company to Participants in writing;

 

16.1.3                                                                               each Participant: The physical address, telefax number and electronic address from time to time reflected as being his address, telefax number and/or electronic address in the Employer Company’s relevant system from time to time or the address and place of business at which he performs the whole or substantially the whole of the duties of his office or employment.

 

16.2                                                               Any notice given and any delivery or payment made by any of the above persons to any other which:

 

16.2.1                                                                               is delivered by hand during the normal business hours of the addressee at the relevant address specified in Rule 16.1, shall be rebuttably presumed to have been received by the addressee at the time of delivery;

 

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16.2.2                                                                               is delivered by courier during the normal business hours of the addressee at the relevant address specified in Rule 16.1, shall be rebuttably presumed to have been received by the addressee on the 3rd (third day) after the date of the instruction to the courier to deliver to the addressee;

 

16.2.3                                                                               is posted by prepaid registered post to the addressee at the relevant address specified in Rule 16.1, shall be rebuttably presumed to have been received by the addressee on the 7th (seventh) day after the date of posting.

 

16.3                                                               Any notice given that is transmitted by electronic mail and/or facsimile to the addressee at the addressee’s electronic address and/or facsimile address (as the case may be) for the time being, shall be presumed, until the contrary is proved by the addressee, to have been received by the addressee on the date of successful transmission thereof.

 

17.                     DISPUTES

 

Any dispute arising under the FSP shall be referred to and finally resolved by arbitration administered by the Singapore International Arbitration Centre (“SIAC”) in accordance with the Arbitration Rules of the SIAC for the time being in force, which rules are deemed to be incorporated by reference in this Rule 17. The seat of the arbitration shall be Singapore. The tribunal shall consist of one (1) arbitrator. The language of the arbitration shall be English.

 

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18.                     TERMS OF EMPLOYMENT UNAFFECTED

 

The FSP or any Award shall not form part of any contract of employment between the Company or any Employer Company and any Participant and the rights and obligations of any individual under the terms of office or employment with such company within the Group shall not be affected by his participation in the FSP or any right which he may have to participate in it or any rights to compensation or damages in consequence of the termination of such office or employment for any reason whatsoever.

 

19.                     DISCLAIMER OF LIABILITY

 

Notwithstanding any provisions herein contained, the Directors, the RemCom and the Company shall not under any circumstances be held liable for any costs, losses, expenses and damages (including any interest arising thereof), whatsoever and howsoever arising in any matter under or in connection with the FSP, including but not limited to, the lapsing or early expiry of any Awards pursuant to any provision of the FSP, the failure or refusal by the RemCom to exercise, or the exercise by the RemCom of any discretion under the FSP, any decision or determination of the RemCom made pursuant to any provision of the FSP, and/or the Company’s delay or failure in allotting and issuing any Forfeitable Shares or procuring the Settlement otherwise of any Forfeitable Shares or in applying for or procuring the listing of and quotation for any Forfeitable Shares to be allotted pursuant to any Award on any stock exchanges on which the Shares are quoted or listed.

 

20.                     GOVERNING LAW

 

Singapore law governs the FSP unless the FSP so specifies the interpretation of other applicable laws then, in such case, those applicable laws shall govern.

 

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This FSP was duly adopted at a shareholders meeting of Grindrod Shipping Holdings Ltd held at [insert] on [insert], the Rules of the FSP having been made available for inspection for at least 14 (fourteen) days prior to the general meeting at the Company’s registered office.

 

	
 
    	
 
    
	
 
    	
Chairman   of the General Meeting
    

 

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