Document:

mntx-ex102_467.htm

 

Exhibit 10.2

 

TENTH AMENDMENT
TO LOAN AND SECURITY AGREEMENT

THIS TENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”) entered into as of this _16th_ day of March , 2021 is by and among MANITEX INTERNATIONAL, INC., a Michigan corporation (“Manitex International”), MANITEX, INC., a Texas corporation (“Manitex”), MANITEX SABRE, INC., a Michigan corporation (“Sabre”), BADGER EQUIPMENT COMPANY, a Minnesota corporation (“Badger”), CRANE AND MACHINERY, INC., an Illinois corporation (“Crane and Machinery”), CRANE AND MACHINERY LEASING, INC., an Illinois corporation (“Crane and Machinery Leasing”), and MANITEX, LLC, a Delaware limited liability company (“Manitex LLC”; together with Manitex International, Manitex, Sabre, Badger, Crane and Machinery, and Crane and Machinery Leasing, collectively, the “Borrowers”), CIBC BANK, USA, formerly known as The PrivateBank and Trust Company (in its individual capacity, “CIBC Bank”), as administrative agent and sole lead arranger (in such capacity, “Administrative Agent”), and the lenders party thereto (the “Lenders”).

W I T N E S S E T H:

WHEREAS, Administrative Agent, Lenders, and Borrowers are party to that certain Loan and Security Agreement dated as of July 20, 2016, as amended by that certain First Amendment to Loan and Security Agreement dated as of August 4, 2016, that certain Consent and Second Amendment to Loan and Security Agreement dated as of September 30, 2016, that certain Third Amendment to Loan and Security Agreement dated as of November 8, 2016, that certain Fourth Amendment to Loan and Security Agreement dated as of February 10, 2017, that certain Fifth Amendment to Loan and Security Agreement dated as of April 26, 2017, that certain Sixth Amendment to Loan and Security Agreement dated as of March 9, 2018, that certain Seventh Amendment to Loan and Security Agreement dated as of July 23, 2018, that certain Eighth Amendment to Loan and Security Agreement dated as of September 30, 2019 and that certain Ninth Amendment to Loan and Security Agreement dated as of December 22, 2020 (as amended hereby and as the same may be from time to time further amended, supplemented or otherwise modified, the “Agreement”); and

WHEREAS, Administrative Agent, Lenders and Borrowers desire to enter into this Amendment to, among other items, amend the Agreement in accordance with the terms herein.

NOW, THEREFORE, for and in consideration of the premises and mutual agreements herein contained and for the purposes of setting forth the terms and conditions of this Amendment, the parties, intending to be bound, hereby agree as follows:

Section 1Incorporation of the Agreement.  All capitalized terms which are not defined hereunder shall have the same meanings as set forth in the Agreement, and the Agreement, to the extent not inconsistent with this Amendment, is incorporated herein by this reference as though the same were set forth in its entirety.  To the extent any terms and provisions of the Agreement are inconsistent with the amendments set forth in Section 2 below, such terms and provisions shall be deemed superseded hereby.  Except as specifically set forth herein, the 

	
 
	
 
	
 

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Agreement shall remain in full force and effect and its provisions shall be binding on the parties hereto.

Section 2Amendment of the Agreement.  

(a)The definition of the term “LIBOR Rate” appearing in Section 1.1 of the Agreement is hereby amended and restated to read as follows:

LIBOR Rate shall mean a rate of interest equal to the greater of (a)(i) the per annum rate of interest at which United States dollar deposits for a period equal to the relevant Interest Period are offered in the London Interbank Eurodollar market at 11:00 A.M. (London time) two (2) Business Days prior to the commencement of such Interest Period, as displayed in the Bloomberg Financial Markets system (or other authoritative source selected by Administrative Agent in its sole discretion), divided by (ii)  a number determined by subtracting from 1.00 the then stated maximum reserve percentage for determining reserves to be maintained by member banks of the Federal Reserve System for Eurocurrency funding or liabilities as defined in Regulation D (or any successor category of liabilities under Regulation D), or as the LIBOR Rate is otherwise determined by Administrative Agent in its sole and absolute discretion; and (b)(i) on any LIBOR Loans subject to a Conforming Hedging Agreement, 0.00% per annum, and (ii) on any LIBOR Loans not subject to a Conforming Hedging Agreement (as defined below), 0.50% (as applicable in this clause (b), the “LIBOR Floor”); provided, that to the extent that only a portion of LIBOR Loans are subject to a Conforming Hedging Agreement, for purposes of determining the LIBOR Floor, LIBOR Loans will be deemed advanced first against the portion of LIBOR Loans subject to such Conforming Hedging Agreement. For purposes herein, a “Conforming Hedging Agreement” shall mean a Hedging Agreement maintained by Borrowers for interest rate protection with respect to LIBOR Loans on terms and conditions (including requirements that the intended swap counterparty maintains a credit-worthiness satisfactory to Administrative Agent) and subject to documentation satisfactory to Administrative Agent, which Hedging Agreement may not be amended without the consent of Administrative Agent and may not be terminated by Borrowers without three (3) Business Days’ prior written notice to Administrative Agent.  Administrative Agent’s determination of the LIBOR Rate shall be conclusive, absent manifest error and shall remain fixed during such Interest Period. 

Section 3Delivery of Documents.  The following documents and other items shall be delivered concurrently with this Amendment:

(i)this Amendment; and 

(ii)such other documents and certificates as Administrative Agent shall reasonably request.  

Section 4Representations, Covenants and Warranties; No Default.  Borrowers hereby represent and warrant to Administrative Agent as of the date hereof as follows:

	
 
	
 
	
 

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(a)The execution and delivery of this Amendment and the performance by Borrowers of their obligations hereunder are within Borrowers’ powers and authority, have been duly authorized by all necessary corporate action and do not and will not contravene or conflict with the organizational documents of Borrowers;

(b)The Agreement (as amended by this Amendment) and the other Loan Documents constitute legal, valid and binding obligations enforceable in accordance with their terms by Administrative Agent against Borrowers, and Borrowers expressly reaffirm and confirm each of their obligations under the Agreement (as amended by this Amendment) and each of the other Loan Documents.  Borrowers further expressly acknowledge and agree that Administrative Agent has a valid, duly perfected, first priority and fully enforceable security interest in and lien against each item of Collateral except as otherwise set forth in the Agreement.  Borrowers agree that they shall not dispute the validity or enforceability of the Agreement (as it was stated before and after this Amendment) or any of the other Loan Documents or any of its respective obligations thereunder, or the validity, priority, enforceability or extent of Administrative Agent’s security interest in or lien against any item of Collateral, in any judicial, administrative or other proceeding;

(c)No consent, order, qualification, validation, license, approval or authorization of, or filing, recording, registration or declaration with, or other action in respect of, any governmental body, authority, bureau or agency or other Person is required in connection with the execution, delivery or performance of, or the legality, validity, binding effect or enforceability of, this Amendment; 

(d)The execution, delivery and performance of this Amendment by Borrowers does not and will not violate any law, governmental regulation, judgment, order or decree applicable to Borrowers and does not and will not violate the provisions of, or constitute a default or any event of default under, or result in the creation of any security interest or lien upon any property of Borrowers pursuant to, any indenture, mortgage, instrument, contract, agreement or other undertaking to which any Borrower is a party or is subject or by which any Borrower or any of its real or personal property may be bound; and

(e)The representations, covenants and warranties set forth in Section 11 of the Agreement shall be deemed remade as of the date hereof by Borrowers, except that any and all references to the Agreement in such representations and warranties shall be deemed to include this Amendment.  No Event of Default has occurred and is continuing and no event has occurred and is continuing which, with the lapse of time, the giving of notice, or both, would constitute such an Event of Default under the Agreement.

Section 5Fees and Expenses.  The Borrowers agree to pay on demand all costs and expenses of or incurred by Administrative Agent, including, but not limited to, legal fees and expenses, in connection with the evaluation, negotiation, preparation, execution and delivery of this Amendment.

Section 6Effectuation.  The amendments to the Agreement contemplated by this Amendment shall be deemed effective immediately upon the full execution of this Amendment 

	
 
	
 
	
 

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and without any further action required by the parties hereto.  There are no conditions precedent or subsequent to the effectiveness of this Amendment.

Section 7Counterparts.  This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.  A facsimile or other electronic signature to this Amendment shall be deemed an original signature hereunder.

 

 

	
 
	
 
	
 

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 [SIGNATURE PAGES FOLLOW]

IN WITNESS WHEREOF, the parties hereto have duly executed this Tenth Amendment to Loan and Security Agreement as of the date first above written.

 

		
	
BORROWERS:
	
MANITEX INTERNATIONAL, INC., a Michigan corporation
MANITEX, INC., a Texas corporation
MANITEX SABRE, INC., a Michigan corporation
BADGER EQUIPMENT COMPANY, a Minnesota corporation
CRANE AND MACHINERY, INC., an Illinois corporation
CRANE AND MACHINERY LEASING, INC., an Illinois corporation
MANITEX, LLC, a Delaware limited liability company

 

		
	
By:
	
/s/ JOSEPH DOOLAN

	
Title:
	
Chief Financial Officer

 

 

 

	
 
	
 
	
 

VP/#41905702.2 

Signature Page to Tenth Amendment to Loan and Security Agreement

 

 

 

		
	
ADMINISTRATIVE AGENT
	
CIBC BANK, USA, as Administrative Agent

	
AND LENDER:
	
and a Lender

 

		
	
By:
	
/s/ TODD BERNIER

	
 
	
Todd Bernier, Managing Director

 

	
 
	
 
	
 

VP/#41905702.2Document

EXHIBIT 10.3

LAREDO PETROLEUM, INC.
OMNIBUS EQUITY INCENTIVE PLAN
PERFORMANCE SHARE UNIT AWARD AGREEMENT

This Performance Share Unit Award Agreement (“Agreement”) is made as of ____, 2021 (the “Grant Date”) by and between Laredo Petroleum, Inc. (the “Company”) and ____ (the “Participant”).
W I T N E S S E T H :
WHEREAS, the Participant is currently an employee of the Company or its Subsidiary, and the Company desires to have the Participant remain in such capacity and to afford the Participant the opportunity to participate in the potential increase in value of the Company over the Performance Period (as defined below).
NOW, THEREFORE, in consideration of the covenants and agreements herein contained, the parties hereto agree as follows:
1.    Grant of Performance Share Units.  Subject to the restrictions, terms and conditions set forth herein and in the Company’s Omnibus Equity Incentive Plan (the “Plan”), the Company hereby grants to the Participant ____ performance share units (the “Performance Share Units”, or the “Award”). The provisions of the Plan are incorporated herein by reference, and all capitalized terms not otherwise defined herein shall have the same meaning as set forth in the Plan.  In the event of any inconsistency between the provisions of the Plan and this Agreement, the provisions of this Agreement shall govern and control. 
The Performance Share Units will be payable, if at all, in cash based upon the achievement by the Company of the Performance Goals as described on Exhibit A, over a period commencing January 1, 2021 and ending on the earlier of (x) December 31, 2023 and (y) the date of the Participant’s termination of employment with the Company or any of its Subsidiaries (the “Performance Period”).  For purposes of this Agreement, the “Maturity Date” shall mean (i) December 31, 2023 if the Participant remains employed with the Company or any of its Subsidiaries on such date or, if earlier, (ii) the date of the Participant’s termination of employment as set forth in Section 4(b) of this Agreement. Subject to Section 4 below, the Performance Share Units shall vest on March 1, 2024 (the “Vest Date”); provided, however that if the Participant’s employment is terminated as set forth in Section 4(b) on or prior to March 1, 2024, then the date of the Participant’s termination of employment shall be considered the Vest Date. 
The specific Performance Goals described on Exhibit A were established by the Administrator.  Subject to the other terms and conditions of this Agreement and the Plan, payment of the Performance Share Units will only be made if the Administrator certifies, following the close of the Performance Period, that the pre-established threshold Performance Goals have been satisfied or exceeded in whole or in part on the Maturity Date and that the Participant is still employed by the Company or any of its Subsidiaries on the Vest Date, and then only to the extent of the level of performance so certified as having been achieved.
4839-5392-2269 v6

2.    Form and Time of Payment.  The Award earned by reason of the Administrator’s certification as described above will be payable to the Participant (or the Participant’s beneficiary, or personal administrator in the case of your death or Disability) in cash during the first calendar year that commences immediately following the Maturity Date and at any time after the Vest Date; provided, that, in all cases, such payment shall occur on or before March 15 of such subsequent calendar year (the “Payment Date”).  The amount of the cash payment shall be equal to the aggregate Fair Market Value of the Award Amount on the Vest Date.  For purposes of the foregoing, the “Award Amount” means the number of Performance Share Units multiplied by the Performance Multiple (as defined below), rounded to the nearest whole number; and the “Fair Market Value of the Award Amount on the Vest Date” means the Award Amount multiplied by the closing price of the Common Stock on the Vest Date (or the most recent closing stock price if the Vest Date occurs on a day when public markets are closed).
3.    Transferability.  This Award shall not be transferable otherwise than by will or the laws of descent and distribution.  Any attempt by the Participant (or in the case of the Participant’s death or Disability, the Participant’s beneficiary or personal administrator) to assign or transfer the Award, either voluntarily or involuntarily, contrary to the provisions hereof, shall be null and void and without effect and shall render the Award itself null and void.
4.    Forfeiture Provisions.  The following forfeiture provisions shall apply to the Performance Share Units:
(a)    If the Participant’s employment with the Company or any if its Subsidiaries is terminated prior to the Vest Date for any reason other than by reason of the Participant’s death or Disability as provided under Section 4(b) below, then the Award shall be forfeited by the Participant and cancelled for no consideration. 
(b)    If the Participant’s employment with the Company or any of its Subsidiaries is terminated (i) by reason of the Participant’s death or (ii) because the Participant is determined by the Board or the Administrator to be subject to a Disability, then the Participant shall be eligible to receive a pro-rated Award, based on the number of calendar days that Participant was employed with the Company or any of its Subsidiaries during the period commencing on January 1, 2021 and ending on December 31, 2023 and as determined by the Administrator in its sole discretion. Any amount payable pursuant to this Section 4 shall be paid in accordance with Sections 1 and 2 of this Agreement. 
5.    Withholding.  The Company shall be obligated to withhold amounts sufficient to satisfy any tax withholding or similar withholding obligations to which the Company or its Subsidiaries may be subject by reason of payment under this Award.  The Participant expressly acknowledges and agrees that the Participant’s rights hereunder are subject to this obligation of the Company regarding any applicable taxes required to be withheld in connection with the Award, in a form and manner satisfactory to the Company.
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6.    No Right to Continued Employment.  This Agreement does not confer upon the Participant any right to continuance of employment by the Company or any of its Subsidiaries, nor shall it interfere in any way with the right of the Company or any of its Subsidiaries to terminate the Participant’s employment at any time.
7.    Terms of Issuance.  The Participant acknowledges being subject to all terms, conditions and policies contained in the Company’s Employee Manual, as the same may be amended or modified from time-to-time at the sole discretion of the Company.
8.    Notice. Every notice or other communication relating to this Agreement shall be in writing, and shall be mailed to or delivered to the party for whom it is intended at such address as may from time to time be designated in a notice mailed or delivered to the other party as provided herein; provided that, unless and until some other address be so designated, all notices or communications by the Participant to the Company shall be mailed or delivered to the Company at its Tulsa, Oklahoma, office and all notices or communications by the Company to the Participant may be given to the Participant personally or mailed to the Participant’s home address as reflected on the books of the Company.
9.    Administration.  This Agreement and the payment of cash contemplated hereunder shall be administered by Board or a committee of one or more members of the Board appointed by the Board to administer this Agreement and such issuance (the “Administrator”).  Subject to applicable law, the Administrator shall have the sole and plenary authority to: (i)  interpret, administer, reconcile any inconsistency in, correct any defect in and/or supply any omission in this Agreement; (ii) establish, amend, suspend, or waive any rules and regulations and appoint such agents as the Administrator shall deem appropriate for the proper administration of this Agreement; (iii) accelerate the lapse of restrictions on the Award and/or modify the Maturity Date; and (iv) make any other determination and take any other action that the Administrator deems necessary or desirable for the administration of this Agreement.  The Administrator may delegate to one or more officers of the Company the authority to act on behalf of the Administrator with respect to any matter, right, obligation, or election that is the responsibility of or that is allocated to the Administrator herein, and that may be so delegated as a matter of law.  For the avoidance of doubt, in the event of a Change in Control the provisions of the Plan shall apply, including, without limitation, the authority and discretion granted to the Administrator with regard to Awards in Section 12 thereof.
10.    Governing Law.  THIS AGREEMENT IS GOVERNED BY AND SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES OF SUCH STATE.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.
11.    Miscellaneous.
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(a)    Amendment and Waiver.  Subject to Section 13(b) of the Plan, the Administrator may waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, the Award granted hereunder or this Agreement; provided that any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would materially and adversely affect the rights of the Participant with respect to the Award granted hereunder shall not to that extent be effective without the consent of the Participant.
(b)    Severability.  Any provision in this Agreement which is prohibited or unenforceable in any jurisdiction by reason of applicable law shall, as to such jurisdiction, be ineffective only to the extent of such prohibition or unenforceability without invalidating or affecting the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
(c)    Entire Agreement and Effectiveness.  This Agreement embodies the complete agreement and understanding among the parties hereto with respect to the subject matter hereof and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.
(d)    Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same Agreement.
(e)    Headings.  The paragraph headings have been inserted for purposes of convenience and shall not be used for interpretive purposes.
(f)    Gender and Plurals.  Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice versa.
(g)    Successors and Assigns.  This Agreement shall bind and inure to the benefit of and be enforceable by and against the Participant, the Company and their respective successors, allowable assigns, heirs, representatives and estates, as the case may be.
(h)    Construction.  Where specific language is used to clarify by example a general statement contained herein, such specific language shall not be deemed to modify, limit or restrict in any manner the construction of the general statement to which it relates.  The language used in this Agreement shall be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction shall be applied against any party.
(i)    Survival of Representations, Warranties and Agreements.  All representations, warranties and agreements contained herein shall survive the consummation of the transactions contemplated hereby and the termination of this Agreement.
(j)    WAIVER OF PUNITIVE AND EXEMPLARY DAMAGE CLAIMS.  EACH PARTY, BY EXECUTING THIS AGREEMENT, WAIVES, TO THE FULLEST EXTENT 
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ALLOWED BY LAW, ANY CLAIMS TO RECOVER PUNITIVE, EXEMPLARY OR SIMILAR DAMAGES NOT MEASURED BY THE PREVAILING PARTY’S ACTUAL DAMAGES IN ANY DISPUTE OR CONTROVERSY ARISING UNDER, RELATING TO OR IN CONNECTION WITH THIS AGREEMENT.
(k)    Delivery of Laredo Petroleum, Inc. Prospectus dated May 25, 2019. Participant acknowledges that Participant has been provided a copy of the Company’s prospectus related to the Company’s Omnibus Equity Incentive Plan through such prospectus’ availability on the Company’s shared network drive, at S:\Omnibus Equity Incentive Plan Prospectus. A copy will also be provided to Participant, upon Participant’s written request to the Company
12.    Section 409A.  Notwithstanding any of the foregoing, it is intended that this Agreement comply with, or be exempt from, the provisions of Section 409A of the Code and that this Award not result in unfavorable tax consequences to the Participant under Section 409A of the Code.  This Agreement will be administered and interpreted in a manner consistent with such intent.  Notwithstanding anything contained herein to the contrary, to the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A of the Code, the Participant shall not be considered to have terminated employment with Company or any of its Subsidiaries for purposes of this Agreement and no payments shall be due to him or her under this Agreement which are payable upon his or her termination of employment until he or she would be considered to have incurred a “separation from service” from the Company or any of its Subsidiaries within the meaning of Section 409A of the Code.  To the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A of the Code, amounts that would otherwise be payable and benefits that would otherwise be provided to a “specified employee” pursuant to this Agreement during the six-month period immediately following the Participant’s termination of employment shall instead be paid within 30 days following the first business day after the date that is six months following the Participant’s termination of employment with the Company or any of its Subsidiaries (or upon the Participant’s death, if earlier).  In addition, for purposes of this Agreement, each amount to be paid or benefit to be provided to the Participant pursuant to this Agreement shall be construed as a separate identified payment for purposes of Section 409A of the Code.  Notwithstanding any of the foregoing to the contrary, the Company and its respective officers, directors, employees, or agents make no guarantee that the terms of this Agreement as written comply with, or are exempt from, the provisions of Section 409A of the Code, and none of the foregoing shall have any liability for the failure of the terms of this Agreement as written to comply with, or be exempt from, the provisions of Section 409A of the Code.
13.    Clawback.  The Participant acknowledges and agrees that payments made under this Agreement are subject to clawback if such payments are made (i) on account of fraud or misconduct by the Participant, (ii) following an accounting restatement under certain circumstances (as referenced in the Company’s Omnibus Equity Incentive Plan) or (iii) as may be required by any other policy of the Company which may now exist or hereafter be adopted regarding repayment of incentive-based compensation, as may be in effect from time to time. 

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

COMPANY:
LAREDO PETROLEUM, INC.

Jason Pigott
President & CEO

PARTICIPANT:

Electronic Signature
Printed Name: Participant Name 

6

Exhibit A
Performance Goals
The Performance Goals established by the Administrator are based on four criteria: (i) relative total shareholder return comparing the Company’s shareholder return to the shareholder return of the E&P companies listed in the Russell 2000 index identified below (“Relative TSR”), (ii) absolute total shareholder return (“Absolute Return”), (iii) earnings before interest, taxes, depreciation, amortization and exploration expense (EBITDAX) and three-year total debt reduction (the “EBITDAX/Total Debt Component” stated below) and (iv) growth in inventory (the “Inventory Growth Component” stated below). The Relative TSR and Absolute Return will be used to identify the “PSU Matrix Component” as stated below. The PSU Matrix Component, the EBITDAX/Total Debt Component and the Inventory Growth Component shall be used to compute the Performance Multiple. The Performance Multiple shall be used to determine the final amount of cash delivered with respect to each Performance Share Unit settled at the Maturity Date. 
In computing the Performance Multiple, each of the PSU Matrix Component, the EBITDAX/Total Debt Component and the Inventory Growth Component shall be weighted as follows:
PSU Matrix – 50%
EBITDAX/Total Debt – 25%
Inventory Growth – 25%
such that the Performance Multiple is calculated as follows:
Performance Multiple = (.5) PSU Matrix Component + (.25) EBITDAX/Total Debt Component + (.25) Inventory Growth Component
By way of example, if the PSU Matrix Component is 100%, the EBITDAX/Total Debt Component is 65% and the Inventory Growth Component is 0%, then the Performance Multiple would be 0.5(1.0) + 0.25(0.65) + 0.25(0.0) = 0.6625. With a Performance Multiple of 0.6625, each Performance Share Unit would be settled for the cash equivalent of 0.6625 shares such that a holder of 600 Performance Share Units would receive a cash payment equal to the Fair Market Value of 398 shares of Common Stock.
Notwithstanding anything in this Exhibit A to the contrary, if in the Administrator’s discretion there is a need to adjust the Performance Multiple to more accurately reflect the Company’s performance than is calculated by using the criteria included on this Exhibit A due to the occurrence of extraordinary, nonrecurring and/or significant corporate events (including but not limited to a transaction approved by the Board that results in an increase in the Company’s EBITDAX/Total Debt multiple), then the Administrator may make any such adjustments to the Performance Multiple as it deems advisable.
A-1

PSU Matrix Component is calculated on the basis of the following matrix:
																		
			Relative TSR (quartile)
			1st
	2nd
	3rd
	4th

	1-Year	<6%	75%	50%	25%	0%
	Absolute	≥6% and <12%	100%	75%	50%	25%
	Return	≥12% and <18%	200%	100%	75%	50%
		≥18%	250%	200%	100%	75%

•Each individual year’s results are interpolated between points calculated using the grid. The 3-year average will be used for the final PSU calculation: (2021 result + 2022 result + 2023 result)/3, to be paid in total at the third anniversary of the Grant Date
•The 1-Year Absolute Return is calculated as: (last 20 trading days average stock price of December + Total Dividends – first 20 trading days average stock price of January)/(first 20 trading days average stock price of January)*100
•The Relative TSR performance will be measured against the E&P companies listed in the Russell 2000 index. Relative TSR = 1 – (Laredo Rank/24)*100. Laredo Rank for each year is sorted from high to low against the peer group with the following calculation: (last 20 trading days average stock price of December of each year + Total Dividends – first 20 trading days average stock price of January of each year)/( first 20 trading days average stock price of January of each year)*100 
•Notwithstanding the foregoing, the Administrator may adjust the Relative TSR calculation to reflect changes in the membership of the E&P companies listed in the Russell 2000 index, as it deems reasonable in the exercise of its discretion.
			
	

A-2

EBITDAX/Total Debt Component is calculated on the basis of the following:

•Three-year debt reduction target:
◦Threshold: 2.2 
◦Target: 2.0
◦Stretch 1.5
•Net Debt/EBITDAX calculation will tie to the definition in the current Credit Facility
•As of January 1, 2021 the Net Debt/EBITDAX of Laredo is 2.6

						
	EBITDAX/Total Debt	Payout Percentage
	2.2	50%
	2.0	100%
	1.5	200%

Inventory Growth Component is calculated on the basis of the following:

•Build out additional inventory to sustain Laredo’s long-term goals
•165 wells to be drilled over the next three years will deplete all of Laredo’s high return inventory
•Additional wells added over January 1, 2021 initial count:
◦Threshold: 165
◦Target: 275
◦Stretch: 385
•Definition of a well:
◦Minimum WI > 50%
◦Minimum lateral length of 7,500
◦25% ROR minimum inclusive of acquisition costs and strip pricing as of the acquisition date
◦Laredo’s current inventory at these conditions to be time-stamped and archived

						
	Inventory Growth	Payout Percentage
	165	50%
	275	100%
	385	200%

A-3

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