Document:

novt-ex103_631.htm

 

Exhibit 10.3

NOVANTA inc.

2010 incentive award PLAN 

 

PERFORMANCE STOCK UNIT AWARD GRANT NOTICE

 

Novanta Inc., a company organized under the laws of the Province of New Brunswick, Canada (the “Company”), pursuant to its 2010 Incentive Award Plan, as amended from time to time (the “Plan”), hereby grants to the holder listed below (“Participant”) an award of performance stock units (the “Performance Stock Units”).  Each Performance Stock Unit represents the right to receive a number of shares of Common Stock (as defined in the Plan) equal to the Settlement Amount (as described below) (the “Shares”) upon the achievement of certain performance goals.  This award of Performance Stock Units is subject to all of the terms and conditions set forth herein and in the Performance Stock Unit Award Agreement attached hereto as Exhibit A (the “Performance Stock Unit Award Agreement”) and the Plan, each of which is incorporated herein by reference.  

		
	
Participant:
	
 

	
Grant Date:
	
 

	
Number of Performance Stock Units:
	
 

	
Performance Years:
	
 

	
Performance Goals:
	
Threshold Cumulative Adjusted EPS: 

Target Cumulative Adjusted EPS: 

Maximum Cumulative Adjusted EPS: 

	
Settlement Amount:
	
If Cumulative Adjusted EPS is less than Threshold Cumulative Adjusted EPS: % of the number of vested Performance Stock Units;

If Cumulative Adjusted EPS equals Threshold Cumulative Adjusted EPS: % of the number of vested Performance Stock Units;

If Cumulative Adjusted EPS equals Target Cumulative Adjusted EPS: % of the number of vested Performance Stock Units; and

If Cumulative Adjusted EPS equals or exceeds Maximum Cumulative Adjusted EPS: % of the number of vested Performance Stock Units;

in each case, with linear interpolation for Cumulative Adjusted EPS between applicable Performance Goals.  

Participant agrees not to disclose the terms of this Grant Notice to any entity or person unless the Company agrees to such disclosure in advance and in writing; provided that Participant may, without such permission, (a) make such disclosures as are required by applicable law, including disclosures to taxing agencies and pursuant to federal or state securities law, and (b) disclose the terms of this Grant Notice to his or her attorney(s), accountant(s) and tax advisor(s), as reasonably necessary, and to members of his or her immediate family; provided, further, that Participant instructs such person(s) that the terms of this Grant Notice are strictly confidential and are not to be revealed to anyone else except as required by applicable law.

By his or her signature below, Participant agrees to be bound by the terms and conditions of the Plan, the Performance Stock Unit Award Agreement and this Grant Notice.  Participant has reviewed the Performance Stock Unit Award Agreement, the Plan and this Grant Notice in their entirety, and fully understands all provisions of this Grant Notice, the Performance Stock Unit Award Agreement and the Plan. 

				
	
NOVANTA INC.:
	
PARTICIPANT:

	
By:
	
 
	
By:
	
 

	
Print Name: 
	
 
	
Name:  
	
 

	
Title:
	
 
	
  
	
 

	
Address: 
	
 
	
Address: 
	
 

	
 
	
 
	
 
	
 

 

 

 

 

EXHIBIT A

TO PERFORMANCE STOCK UNIT AWARD GRANT NOTICE

PERFORMANCE STOCK UNIT AWARD AGREEMENT

Pursuant to the Performance Stock Unit Award Grant Notice (the “Grant Notice”) to which this Performance Stock Unit Award Agreement (this “Agreement”) is attached, Novanta Inc., a company organized under the laws of the Province of New Brunswick, Canada (the “Company”), has granted to Participant performance stock units (the “Performance Stock Units”) under the Novanta Inc. 2010 Incentive Award Plan, as amended from time to time (the “Plan”).  

ARTICLE 1.

GENERAL

1.1Defined Terms.  Capitalized terms not specifically defined herein shall have the meanings specified in the Grant Notice and the Plan.  

(a)“Adjusted Earnings” means, with respect to any Performance Year, the Company’s non-GAAP net income for such Performance Year calculated in accordance with the same methodology used to calculate such non-GAAP metric as reported in the Company’s earnings press release in the Company’s Current Report on Form 8-K furnished to the Securities and Exchange Commission for such Performance Year.

(b) “Adjusted EPS” means, with respect to any Performance Year, the Adjusted Earnings for such Performance Year divided by the diluted weighted average number of shares of Common Stock outstanding for such Performance Year calculated in accordance with the same methodology used to calculate Adjusted EPS as reported in the Company’s earnings press release in the Company’s Current Report on Form 8-K furnished to the Securities and Exchange Commission for such Performance Year. 

(c)“Cause” shall have the meaning of “Cause” (or similar term) set forth in Participant’s written employment agreement or, if no such written employment agreement (or no definition of “Cause” or similar term therein), shall mean (i) Participant’s willful failure to substantially perform the duties set forth in any written employment agreement (other than any such failure resulting from Participant’s Disability); (ii) Participant’s willful failure to carry out, or comply with, in any material respect any lawful and reasonable directive of the Board (or his or her supervisor); (iii) Participant’s commission at any time of any act or omission that results in, or may reasonably be expected to result in, a conviction, plea of no contest, plea of nolo contendere, or imposition of unadjudicated probation for any felony or crime involving moral turpitude; or (iv) Participant’s unlawful use (including being under the influence) or possession of illegal drugs on the Company’s premises or while performing Participant’s duties and responsibilities for the Company.

(d)“CIC Qualifying Termination” shall mean Termination of Service of Participant by the Company without Cause or by Participant for Good Reason during the twelve (12)-month period immediately following a Qualifying Change in Control.

(e)“Cumulative Adjusted EPS” means the sum of Adjusted EPS for all Performance Years.  

(f)“Disability” shall mean Participant’s inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or that can be expected to last for (i) a continuous period of not less than 90 days or (ii) at least 180 total calendar days in any 12-month period, in each case as determined by a physician selected by the Company or its insurers and reasonably acceptable to Participant. The Company will inform Participant of the selection of the physician so that Participant may consent to such selection (and Participant’s  consent shall not be unreasonably withheld). Participant shall be deemed to have consented to the selection of the physician if Participant does not provide the Company with written notice objecting to such selection within five business days of Participant being informed of the physician's selection. If Participant objects to such selection (and the Company determines in good faith that such withholding is not unreasonable), then the Company shall select another physician pursuant to the process described in this Section 1.1(f).

(g)“Good Reason” shall have the meaning of “Good Reason” (or similar term) set forth in Participant’s written employment agreement or, if no such written employment agreement (or no definition of “Good Reason” or similar term therein), Participant shall have “Good Reason” to terminate his or her employment within one (1) year after the occurrence of one or more of the following conditions without Participant’s consent: (i) a material diminution in the nature or scope of Participant’s responsibilities, duties or authority; or (ii) a material change in the geographic location at which Participant must perform Participant’s material services to the Company (which shall in no event include a relocation of Participant’s principal place of business less than 

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50 miles from its location as of the Grant Date); provided, however, that, notwithstanding the foregoing, Participant may not resign his employment for Good Reason unless: (A) Participant provides the Company with at least 30 days prior written notice of his or her intent to resign for Good Reason (which notice is provided not later than the 90th day following Participant’s knowledge of the occurrence of the event constituting Good Reason); and (B) the Company does not remedy the alleged violation(s) within such 30-day period. 

(h)“Determination Date” means .  

(i)“Performance Period” means the period commencing on  and ending on .

(j)“Performance Year” means each of the 12-month periods starting on January 1 and ending on December 31 within the Performance Period. 

(k) “Qualifying Change in Control” means a Change in Control consummated prior to the last day of the Performance Period.

1.2Incorporation of Terms of Plan.  The Performance Stock Units are subject to the terms and conditions of the Plan, which are incorporated herein by reference.  In the event of any conflict between the provisions of this Agreement and the Plan, the terms of the Plan shall control.

ARTICLE 2.

PERFORMANCE STOCK UNITS

2.1Grant of Performance Stock Units.  In consideration of Participant’s past and/or continued employment with or service to the Company or a Subsidiary and for other good and valuable consideration, effective as of (the “Grant Date”), the Company grants to Participant an award of Performance Stock Units as set forth in the Grant Notice, upon the terms and conditions set forth in the Plan and this Agreement, subject to adjustments as provided in Article 14 of the Plan.  

2.2Company’s Obligation to Pay.  Each Performance Stock Unit is a unit of measurement based on the Fair Market Value of a share of Common Stock that may entitle Participant to receive a payment in shares of Common Stock following the date it becomes vested.  Unless and until the Performance Stock Units will have vested in the manner set forth in Article 2 hereof, Participant will have no right to payment of any such Performance Stock Units.  Prior to actual payment in respect of any vested Performance Stock Units, such Performance Stock Units will represent an unsecured obligation of the Company, payable (if at all) only from the general assets of the Company.  

2.3Vesting. Subject to Sections 2.4 and 2.5 hereof, all Performance Stock Units will, subject to Participant’s continued employment or services through , vest and become nonforfeitable on  and shall be subject to settlement with respect to the number of Shares as described on the Grant Notice and at the time set forth in Section 2.6.  

2.4CIC Qualifying Termination. Notwithstanding the Grant Notice or the provisions of Section 2.3 and 2.5 hereof, but subject to the terms of the Plan and any employment or similar agreement between Participant and the Company, in the event of a CIC Qualifying Termination, all Performance Stock Units will vest and become nonforfeitable on the date of the CIC Qualifying Termination. 

2.5Forfeiture, Termination and Cancellation.  Notwithstanding any contrary provision of this Agreement:

(a)Except as otherwise set forth in Section 2.4 or as otherwise determined by the Administrator consistent with the Plan, upon Participant’s Termination of Service for any or no reason, all then unvested Performance Stock Units subject to this Agreement will thereupon be automatically forfeited, terminated and cancelled as of the date of Termination of Service without payment of any consideration by the Company, and Participant, or Participant’s beneficiary or personal representative, as the case may be, shall have no further rights hereunder.

(b)If, on or prior to the Determination Date, Cumulative Adjusted EPS is determined by the Administrator to be less than Threshold Cumulative Adjusted EPS, then any outstanding Performance Stock Units shall automatically be forfeited by Participant on the date of such determination, and Participant, or Participant’s beneficiary or personal representative, as the case may be, shall have no further rights hereunder.

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2.6Payment Following Vesting.   

(a)As soon as administratively practicable on or following the Determination Date or, if earlier, the date of a CIC Qualifying Termination (but in no event later than the 15th of the calendar month commencing immediately following the Determination Date or, if earlier, the date of a CIC Qualifying Termination) (for the avoidance of doubt, this deadline is intended to comply with the “short-term deferral” exemption from Section 409A of the Code), the Company shall deliver to Participant (or any transferee permitted under Section 3.2 hereof) a number of shares of Common Stock (either by delivering one or more certificates for such shares or by entering such shares in book entry form, as determined by the Company in its sole discretion) equal to the Settlement Amount, unless such Performance Stock Units terminate prior to the given vesting date pursuant to Section 2.5 hereof.  Notwithstanding anything to the contrary contained herein, the exact date of issuance of Shares in respect of the Performance Stock Units during the period set forth in this Section 2.6(a) shall be determined by the Company in its sole discretion (and Participant shall not have a right to designate the time of payment). Notwithstanding the foregoing, in the event shares of Common Stock cannot be issued pursuant to Section 2.7(a), (b) or (c) hereof, then the shares of Common Stock shall be issued pursuant to the preceding sentence as soon as administratively practicable after the Administrator determines that shares of Common Stock can again be issued in accordance with Sections 2.7(a), (b) and (c) hereof.

(b)Notwithstanding anything to the contrary in this Agreement, the Company shall be entitled to require payment by Participant of any sums required by applicable law to be withheld with respect to the grant and/or vesting of Performance Stock Units or the issuance of shares of Common Stock.  Such payment shall be made by deduction from other compensation payable to Participant or in the following other form(s) of consideration (as determined appropriate by the Administrator):

(i)Cash or check;

(ii) Surrender of shares of Common Stock (including, without limitation, shares of Common Stock otherwise issuable under the Performance Stock Units) held for such period of time as may be required by the Administrator in order to avoid adverse accounting consequences and having a Fair Market Value on the date of delivery equal to the minimum amount required to be withheld by statute; or

(iii)Other property acceptable to the Administrator (including, without limitation, through the delivery of a notice that Participant has placed a market sell order with a broker with respect to shares of Common Stock then issuable under the Performance Stock Units, and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of its withholding obligations; provided that payment of such proceeds is then made to the Company upon settlement of such sale).

The Company shall not be obligated to deliver any new certificate representing shares of Common Stock to Participant or Participant’s legal representative or enter such share of Common Stock in book entry form unless and until Participant or Participant’s legal representative shall have paid or otherwise satisfied in full the amount of all federal, state and local taxes applicable to the taxable income of Participant resulting from the grant of the Performance Stock Units or the issuance of shares of Common Stock. To the extent that any Federal Insurance Contributions Act tax withholding obligations arise in connection with the Performance Stock Units prior to the applicable vesting or payment date, the Administrator may accelerate the payment in respect of a portion of the award of Performance Stock Units sufficient to satisfy (but not in excess of) such tax withholding obligations and any tax withholding obligations associated with any such accelerated payment, and the Administrator shall withhold such amounts in satisfaction of such withholding obligations.

2.7Conditions to Delivery of Common Stock.  Subject to Section 12.4 of the Plan, the shares of Common Stock deliverable hereunder, or any portion thereof, may be either previously authorized but unissued shares of Common Stock or issued shares of Common Stock which have then been reacquired by the Company. Such shares of Common Stock shall be fully paid and nonassessable.  The Company shall not be required to issue or deliver any shares of Common Stock deliverable hereunder or portion thereof prior to fulfillment of all of the following conditions:

(a)The admission of such shares of Common Stock to listing on all stock exchanges on which such Common Stock is then listed; 

(b)The completion of any registration or other qualification of such shares of Common Stock under any state or federal law or under rulings or regulations of the Securities and Exchange Commission or of any other governmental regulatory body, which the Administrator shall, in its absolute discretion, deem necessary or advisable; 

(c)The obtaining of any approval or other clearance from any state or federal governmental agency which the Administrator shall, in its absolute discretion, determine to be necessary or advisable; 

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(d)The receipt by the Company of all payments in connection with such shares of Common Stock, including payment of any applicable withholding tax, which may be in one or more of the forms of consideration permitted under Section 2.6(b) hereof; and 

(e)The lapse of such reasonable period of time following the Determination Date or the date of a CIC Qualifying Termination, as applicable, as the Administrator may from time to time establish for reasons of administrative convenience (provided that delivery of shares of Common Stock shall in all events comply with the “short-term deferral” exemption from Section 409A of the Code).

2.8Rights as Stockholder.  The holder of the Performance Stock Units shall not be, nor have any of the rights or privileges of, a stockholder of the Company, including, without limitation, voting rights and rights to dividends, in respect of the Performance Stock Units and any shares of Common Stock underlying the Performance Stock Units and deliverable hereunder unless and until such shares of Common Stock shall have been issued by the Company and held of record by such holder (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company).  No adjustment will be made for a dividend or other right for which the record date is prior to the date the shares of Common Stock are issued, except as provided in Section 14.2 of the Plan.

ARTICLE 3.

 

OTHER PROVISIONS

3.1Administration.  The Administrator shall have the power to interpret the Plan, this Agreement and the Grant Notice and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret, amend or revoke any such rules.  All actions taken and all interpretations and determinations made by the Administrator (including, without limitation, determinations, interpretations and assumptions with respect to the Performance Goals) in good faith shall be final and binding upon Participant, the Company and all other interested persons.  No member of the Committee or the Board shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan, this Agreement or the Performance Stock Units.

3.2Grant is Not Transferable.  During the lifetime of Participant, the Performance Stock Units may not be sold, pledged, assigned or transferred in any manner other than by will or the laws of descent and distribution, unless and until the shares of Common Stock underlying the Performance Stock Units have been issued, and all restrictions applicable to such shares of Common Stock have lapsed.  Neither the Performance Stock Units nor any interest or right therein shall be liable for the debts, contracts or engagements of Participant or his or her successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect, except to the extent that such disposition is permitted by the preceding sentence.

3.3Binding Agreement.  Subject to the limitation on the transferability of the Performance Stock Units contained herein, this Agreement will be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto.

3.4Adjustments Upon Specified Events.  The Administrator may accelerate payment and vesting of the Performance Stock Units in such circumstances as it, in its sole discretion, may determine.  In addition, upon the occurrence of certain events relating to the Common Stock contemplated by Section 14.2 of the Plan (including, without limitation, an extraordinary cash dividend on such Common Stock), the Administrator shall make such adjustments the Administrator deems appropriate in the number of Performance Stock Units then outstanding and the number and kind of securities that may be issued in respect of the Performance Stock Units.  Participant acknowledges that the Performance Stock Units are subject to amendment, modification and termination in certain events as provided in this Agreement and Article 14 of the Plan.  

3.5Notices.  Any notice to be given under the terms of this Agreement to the Company shall be addressed to the Company in care of the Secretary of the Company at the Company’s principal office, and any notice to be given to Participant shall be addressed to Participant at Participant’s last address reflected on the Company’s records.  By a notice given pursuant to this Section 3.5, either party may hereafter designate a different address for notices to be given to that party.  Any notice shall be deemed duly given when sent via email or when sent by certified mail (return receipt requested) and deposited (with postage prepaid) in a post office or branch post office regularly maintained by the United States Postal Service.

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3.6Titles.  Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement. 

3.7Governing Law.  The laws of the Commonwealth of Massachusetts shall govern the interpretation, validity, administration, enforcement and performance of the terms of this Agreement regardless of the law that might be applied under principles of conflicts of laws.

3.8Conformity to Securities Laws.  Participant acknowledges that the Plan and this Agreement are intended to conform to the extent necessary with all provisions of the Securities Act and the Exchange Act and any and all regulations and rules promulgated by the Securities and Exchange Commission thereunder, and state securities laws and regulations.  Notwithstanding anything herein to the contrary, the Plan shall be administered, and the Performance Stock Units are granted, only in such a manner as to conform to such laws, rules and regulations.  To the extent permitted by applicable law, the Plan and this Agreement shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.

3.9Amendments, Suspension and Termination.  To the extent permitted by the Plan, this Agreement may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Committee or the Board; provided that, except as may otherwise be provided by the Plan, no amendment, modification, suspension or termination of this Agreement shall adversely affect the Performance Stock Units in any material way without the prior written consent of Participant.    

3.10Successors and Assigns.  The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company.  Subject to the restrictions on transfer herein set forth in Section 3.2 hereof, this Agreement shall be binding upon Participant and his or her heirs, executors, administrators, successors and assigns.

3.11Limitations Applicable to Section 16 Persons.  Notwithstanding any other provision of the Plan or this Agreement, if Participant is subject to Section 16 of the Exchange Act, the Plan, the Performance Stock Units and this Agreement shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the Exchange Act) that are requirements for the application of such exemptive rule.  To the extent permitted by applicable law, this Agreement shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.

3.12Not a Contract of Service.  Nothing in this Agreement or in the Plan shall confer upon Participant any right to continue to serve as an Employee, Director, Consultant or other service provider of the Company or any of its Subsidiaries or shall interfere with or restrict in any way the rights of the Company and its Subsidiaries, which rights are hereby expressly reserved, to discharge or terminate the services of Participant at any time for any reason whatsoever, with or without Cause, except to the extent expressly provided otherwise in a written agreement between the Company or a Subsidiary and Participant.

3.13Entire Agreement.  The Plan, the Grant Notice and this Agreement (including all exhibits thereto, if any) constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and its Subsidiaries and Participant with respect to the subject matter hereof.

3.14Section 409A. The Performance Stock Units are not intended to constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Code (together with any Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the date hereof, “Section 409A”).  However, notwithstanding any other provision of the Plan, the Grant Notice or this Agreement, if at any time the Administrator determines that the Performance Stock Units (or any portion thereof) may be subject to Section 409A, the Administrator shall have the right in its sole discretion (without any obligation to do so or to indemnify Participant or any other person for failure to do so) to adopt such amendments to the Plan, the Grant Notice or this Agreement, or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, as the Administrator determines are necessary or appropriate either for the Performance Stock Units to be exempt from the application of Section 409A or to comply with the requirements of Section 409A.

3.15Limitation on Participant’s Rights.  Participation in the Plan confers no rights or interests other than as herein provided.  This Agreement creates only a contractual obligation on the part of the Company as to amounts payable and shall not be construed as creating a trust.  Neither the Plan nor any underlying program, in and of itself, has any assets.  Participant shall have only the rights of a general unsecured creditor of the Company with respect to amounts credited and benefits payable, if any, with respect to the Performance Stock Units, and rights no greater than the right to receive the Common Stock as a general unsecured creditor with respect to Performance Stock Units, as and when payable hereunder.

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3.16Account Administration.  The Company may from time to time appoint a broker to administer the awards under the Plan.  To the extent the Company appoints such a broker, Participant agrees that he or she shall, upon request by the Company, open an employee brokerage services account at such broker.   

A-6este-ex101_6.htm

Execution Version

THIRD AMENDMENT AND LIMITED WAIVER TO CREDIT AGREEMENT

 

THIS THIRD AMENDMENT AND LIMITED WAIVER TO CREDIT AGREEMENT (this “Amendment”) entered into on July 27, 2016, is among EARTHSTONE ENERGY, INC., a Delaware corporation (“Borrower”), EARTHSTONE OPERATING, LLC, a Texas limited liability company (“EO”), EF NON-OP, LLC, a Texas limited liability company (“EF”), SABINE RIVER ENERGY, LLC, a Texas limited liability company (“Sabine”), BASIC PETROLEUM SERVICES, INC., a Texas corporation (“Basic”), LYNDEN ENERGY CORP., a company existing under the laws of British Columbia (“LE”), and LYNDEN USA, INC., a Utah corporation (“LUSA”), as guarantors (EO, EF, Sabine, Basic, LE and LUSA, each a “Guarantor” and collectively, the “Guarantors”); each Lender (defined below) who is a signatory hereto and BOKF, NA dba BANK OF TEXAS, a national banking association, as administrative agent (“Agent”) for the Lenders.  The party or parties are sometimes individually referred to herein as a “Party” or collectively referred to as “Parties.”

 

R E C I T A L S

WHEREAS, Borrower, Agent and the lenders from time to time party thereto (each a “Lender” and collectively, the “Lenders”) are parties to that certain Credit Agreement dated as of December 19, 2014, as amended by that certain First Amendment to Credit Agreement dated as of December 1, 2015 and that certain Second Amendment to Credit Agreement (the “Second Amendment”) dated as of May 18, 2016 (as may be further amended, modified or restated from time to time, the “Credit Agreement”), whereby the Lenders agreed to make available to Borrower a credit facility upon the terms and conditions set forth therein; and

 

WHEREAS, Borrower has requested that Agent and the Lenders amend and waive certain provisions of the Credit Agreement as provided herein; and

 

WHEREAS, subject to the terms hereof, the Agent and the Lenders are willing to agree to the amendment to and waiver of certain provisions of the Credit Agreement as set forth herein.

 

NOW, THEREFORE, for and in consideration of the mutual covenants and agreements contained herein, and other good and valuable consideration, the Parties to this Amendment hereby agree as follows:

 

SECTION 1.Defined Terms. Except as may otherwise be provided herein, all capitalized terms which are defined in the Credit Agreement shall have the same meaning herein as therein, all of such terms and their definitions being incorporated herein by reference.  

 

SECTION 2.Amendment to Credit Agreement. Subject to the conditions precedent set forth in Section 4 hereof:

 

(a)Section 1.02 of the Credit Agreement is hereby amended by inserting the following as a new definition:

 

“NABORS Promissory Note” means that certain Promissory Note, dated as of July 8, 2016, from Borrower to NABORS Drilling Technologies USA, Inc., as in effect on July 8, 2016. 

 

(b)Section 9.01 of the Credit Agreement is hereby amended by (i) inserting the following as a new subsection (g): “(g)Debt under the NABORS Promissory Note in a principal amount not to exceed $5,059,146.00.” and (ii) renumbering the existing subsection (g) to subsection (h).  

 

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SECTION 3.  Limited Waiver.  Subject to the conditions precedent set forth in Section 4 hereof, Agent and the Lenders hereby waive any Default or Event of Default existing pursuant to Section 9.01 of the Credit Agreement, but to the extent and only to the extent such Default or Event of Default is exclusively attributable to Borrower’s incurrence of Debt under the NABORS Promissory Note (as defined in Section 2(a) of this Amendment) on July 8, 2016 (the “Specified Default”).  Except as expressly set forth in the preceding sentence, nothing in this Amendment shall be deemed to be (a) a waiver of any Default or Event of Default which exists or may exist other than the Specified Default or (b) a waiver of (or an agreement to forbear from exercising) any rights or remedies that Agent or the Lenders have pursuant to the Agreement and applicable law by reason of any Default or Event of Default.  Except as expressly set forth in this Section 3, nothing in this Amendment shall be deemed to imply any obligation on the part of Agent or the Lenders, and neither Agent nor the Lenders shall be obligated, at any time, to grant further amendments, consents or waivers.

 

SECTION 4.  Conditions of Effectiveness.  The obligations of Agent and the Lenders to amend the Credit Agreement and grant the waiver of the Specified Default as provided herein are subject to the fulfillment of the following conditions precedent: 

 

(a)Agent shall have received counterparts of this Amendment, which shall have been executed by the Lenders, Borrower and the Guarantors.  

 

(b)Borrower shall have made payment of all fees and expenses due and owing under the Credit Agreement including such fees and expenses specified in Section 8.  

 

(c)All representations and warranties set forth in each of the Loan Documents shall be true and correct.

 

(d)No Material Adverse Effect shall have occurred. 

 

(e)After giving effect to the waiver of the Specified Default, no Default or Event of Default shall have occurred. 

 

SECTION 5.Second Amendment Post-Closing Condition. Section 5(b) of the Second Amendment requires that within sixty (60) Business Days after the date of the Second Amendment, Agent shall be satisfied that Borrower has entered into Hedging Agreements for (a) sixty percent (60%) of its anticipated monthly production from its PDP Reserves for the months of January 2017 through December 2017 with a strike price of not less than $46.36 per barrel and (b) fifty percent (50%) of its anticipated monthly production from its PDP Reserves for the months of January 2018 through December 2018 with a strike price of not less than $47.97 per barrel.  The Parties to this Amendment hereby agree that the deadline set forth in Section 5(b) of the Second Amendment shall be extended from sixty (60) Business Days after the date of the Second Amendment to ninety (90) Business Days after the date of the Second Amendment.

 

SECTION 6.Representations and Warranties. Borrower and each Guarantor represents and warrants to Agent and the Lenders, with full knowledge that Agent and the Lenders are relying on the following representations and warranties in executing this Amendment, as follows:

 

(a)It has the power and authority to execute, deliver and perform this Amendment, and all organizational action on the part of itself, as applicable, requisite for the due execution, delivery and performance of this Amendment has been duly and effectively taken.

 

(b)This Amendment and each other document executed and delivered in connection herewith constitute its legal, valid and binding obligation, to the extent it is a party thereto, enforceable against it in 

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accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting the enforcement of creditors’ rights generally or by equitable principles relating to enforceability.

 

(c)This Amendment does not and will not violate any provisions of (i) its Charter Documents; (ii) any contract, agreement, or instrument to which it is a party; or (iii) any requirement of any governmental authority to which it is subject. Its execution of this Amendment will not result in the creation or imposition of any lien upon its properties other than those permitted by the Credit Agreement and this Amendment.

 

(d)Its execution, delivery and performance of this Amendment does not require the consent or approval of any other Person, including, without limitation, any regulatory authority or governmental body of the United States of America or any state thereof or any political subdivision of the United States of America or any state thereof.

 

(e)As of the date of this Amendment, it is solvent and has taken no action such as may invoke applicable bankruptcy, insolvency, or similar laws affecting the enforcement of creditors’ rights generally or by equitable principles relating to enforceability.

 

(f)Upon giving effect to this Amendment, no Default or Event of Default exists, and all of the representations and warranties made by it contained in the Credit Agreement are true and correct in all material respects on and as of this date other than those which have been disclosed to Lenders in writing (except to the extent such representations and warranties expressly refer to an earlier or other date, in which case they shall be true and correct as of such earlier or other date).

 

Except to the extent expressly set forth herein to the contrary, nothing in this Section 6 is intended to amend any of the representations or warranties contained in the Agreement.

 

SECTION 7.Reference to and Effect on the Credit Agreement.

 

(a)Upon and after the execution of this Amendment by each of the parties hereto, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Credit Agreement, and each reference in the other Loan Documents to “the Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement as modified hereby.  This Amendment shall constitute a Loan Document.

 

(b)Except as specifically amended by this Amendment, the Credit Agreement shall remain in full force and effect and is hereby ratified and confirmed.

 

SECTION 8.Fees, Cost, Expenses and Taxes. Borrower agrees to pay all reasonable legal fees and expenses to be incurred in connection with the preparation, reproduction, execution and delivery of this Amendment and the other instruments and documents to be delivered in connection with the transactions associated herewith, including reasonable attorneys’ fees and out-of-pocket expenses of Agent and the Lenders, and agrees to save Agent and the Lenders harmless from and against any and all liabilities with respect to or resulting from any delay in paying or omission to pay such fees.

 

SECTION 9.Extent of Amendment. Except as otherwise expressly provided herein, neither the Credit Agreement nor the other Loan Documents are amended, modified or affected by this Amendment. Borrower and each Guarantor hereby ratifies and confirms that (i) except as expressly amended or waived hereby, all of the terms, conditions, covenants, representations, warranties and all other provisions of the 

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Credit Agreement, as applicable, remain in full force and effect, (ii) each of the other Loan Documents to which it is a party are and remain in full force and effect in accordance with their respective terms, and (iii) the Collateral granted by it is unimpaired by this Amendment.

 

Nothing contained in this Amendment nor any past indulgence by Agent and/or the Lenders, nor any other action or inaction on behalf of Agent and/or the Lenders (i) shall constitute or be deemed to constitute a waiver of any unknown or future Defaults or Events of Default which may now or in the future exist under the Credit Agreement or the other Loan Documents (other than the Specified Default), or (ii) shall constitute or be deemed to constitute an election of remedies by Agent and/or the Lenders or a waiver of any of the rights or remedies of Agent and/or the Lenders provided in the Credit Agreement or the other Loan Documents or otherwise afforded at law or in equity. 

 

SECTION 10.Grant and Affirmation of Security Interest. Borrower and each Guarantor hereby confirms and agrees that (i) any and all liens, security interests and other security or Collateral granted by it and now or hereafter held by Lenders as security for payment and performance of the Obligations are hereby renewed and carried forth to secure payment and performance of all of the Obligations, and (ii) the Loan Documents, as such may be amended in accordance herewith, are and remain legal, valid and binding obligations, enforceable in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting the enforcement of creditors’ rights generally or by equitable principles relating to enforceability.  

 

SECTION 11. Claims; Release. As additional consideration to the execution, delivery, and performance of this Amendment by the parties hereto and to induce Agent and the Lenders to enter into this Amendment, Borrower and each Guarantor hereby represents and warrants that it does not know of any defenses, counterclaims or rights of setoff to the payment of any Obligations of Borrower or any Guarantor to Agent and/or the Lenders.  In consideration of the amendments contained herein, Borrower and each Guarantor hereby waives and releases each of the Lenders and Agent from any and all claims and defenses, known or unknown, with respect to the Credit Agreement and the other Loan Documents and the transactions contemplated thereby.

 

SECTION 12.Execution and Counterparts. This Amendment may be executed in any number of counterparts and by different Parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument. Delivery of an executed counterpart of this Amendment by facsimile or other electronic transmission (such as Portable Document Format) and other Loan Documents shall be equally as effective as delivery of a manually executed counterpart of this Amendment and such other Loan Documents.

 

SECTION 13.Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of Texas.

 

SECTION 14.Headings. Section headings in this Amendment are included herein for convenience and reference only and shall not constitute a part of this Amendment for any other purpose.

 

SECTION 15.NO ORAL AGREEMENTS. The rights and obligations of each of the parties to the loan documents shall be determined solely from written agreements, documents, and instruments, and any prior oral agreements between such parties are superseded by and merged into such writings. This Amendment and the other written loan documents executed by Borrower, Guarantor, Agent and/or the Lenders (together with any fee letters as they relate to the payment of fees after the closing date) represent the final agreement between such parties, and may not be contradicted by evidence of prior, 

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contemporaneous, or subsequent oral agreements by such parties. There are no unwritten oral agreements between such parties. 

 

[signature pages to follow]

H-15831132v25

IN WITNESS WHEREOF, the Parties hereto have caused this Amendment to be duly executed and delivered by their proper and duly authorized officers as of the Effective Date.

 

 

BORROWER:

 

EARTHSTONE ENERGY, INC.

a Delaware corporation

 

 

By: /s/ Christopher E. Cottrell__

                                                                        Christopher E. Cottrell
Executive Vice President, Land and Marketing, 
and Corporate Secretary

 

GUARANTORS:

 

EARTHSTONE OPERATING, LLC, 

a Texas limited liability company

EF NON-OP, LLC, 

a Texas limited liability company 

SABINE RIVER ENERGY, LLC, 

a Texas limited liability company 

BASIC PETROLEUM SERVICES, INC.,

a Texas corporation

LYNDEN ENERGY CORP.,

a company existing under the laws of British Columbia

LYNDEN USA, INC.,

a Utah corporation

 

 

Each by:  /s/ Christopher E. Cottrell____________

   Christopher E. Cottrell

Executive Vice President, Land and Marketing, and Corporate Secretary

 

 

 

Signature Page to Third Amendment and Limited Waiver to Credit Agreement (Earthstone Energy, Inc.)

LENDER AND AGENT:

 

BOKF, NA dba BANK OF TEXAS, 

as Agent and Lender

 

 

By: /s/ Mari Salazar

    Mari Salazar

Senior Vice President

 

 

Signature Page to Third Amendment and Limited Waiver to Credit Agreement (Earthstone Energy, Inc.)

LENDER:

 

WELLS FARGO BANK, NATIONAL ASSOCIATION, 

as Lender

 

 

By: /s/ Matthew Denkler

Name: Matthew Denkler

Title:   Vice President

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Signature Page to Third Amendment and Limited Waiver to Credit Agreement (Earthstone Energy, Inc.)

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