Document:

Exhibit 10.1

 

Execution Version

 

AGREEMENT AND AMENDMENT NO. 1

TO SECOND LIEN CREDIT AGREEMENT

 

This AGREEMENT AND AMENDMENT NO. 1 TO SECOND LIEN CREDIT AGREEMENT (“Agreement”) dated as of July 15, 2011 (“Effective Date”) is by and among Kodiak Oil & Gas (USA) Inc., a corporation duly formed and existing under the laws of the State of Colorado (“Borrower”), Kodiak Oil & Gas Corp., as guarantor (the “Guarantor”), the Lenders (as defined below) party to the Credit Agreement (as defined below), and Wells Fargo Energy Capital, Inc., as administrative agent for the Lenders (in such capacity, the “Administrative Agent”).

 

RECITALS

 

A.            The Borrower is party to that certain Second Lien Credit Agreement dated as of November 30, 2010, among the Borrower, the financial institutions party thereto from time to time, as lenders (the “Lenders”), and the Administrative Agent (the “Credit Agreement”).

 

B.            The Borrower has requested that the Lenders (i) provide commitments to make additional Loans pursuant to the Credit Agreement in an aggregate principal amount equal to $15,000,000 (the “Second Lien Increase”) and (ii) agree to amend certain provisions of the Credit Agreement.

 

C.            The parties hereto wish to, subject to the terms and conditions of this Agreement, amend the Credit Agreement as provided herein.

 

NOW THEREFORE, in consideration of the premises and the mutual covenants, representations and warranties contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

Section 1.               Defined Terms.  As used in this Agreement, each of the terms defined in the opening paragraph and the Recitals above shall have the meanings assigned to such terms therein.  Unless otherwise specifically defined herein, each term defined in the Credit Agreement and used herein without definition shall have the meaning assigned to such term in the Credit Agreement.

 

Section 2.               Other Definitional Provisions.  Article, Section, Schedule, and Exhibit references are to Articles and Sections of and Schedules and Exhibits to this Agreement, unless otherwise specified.  The words “hereof”, “herein”, and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.  The term “including” means “including, without limitation,”.  Paragraph headings have been inserted in this Agreement as a matter of convenience for reference only and it is agreed that such paragraph headings are not a part of this Agreement and shall not be used in the interpretation of any provision of this Agreement.

 

Section 3.               Additional Loans.  Subject to the terms of this Agreement, each Lender agrees to make on the Effective Date a Loan to the Borrower in the principal amount set forth

 

 

next to such Lender’s name on Exhibit A attached hereto (which amount shall be the amount of such Lender’s Commitment as of the Effective Date).  The aggregate amount of each Lender’s Loans as of the Effective Date (after giving effect to the making of the Loans contemplated by the preceding sentence) is set forth in Exhibit B attached hereto.

 

Section 4.               Amendments to Credit Agreement.

 

(a)           Section 1.02 (Certain Defined Terms) of the Credit Agreement is hereby amended by adding the following new defined terms in alphabetical order:

 

“Amendment No. 1” means that certain Agreement and Amendment No. 1 to Second Lien Credit Agreement dated as of July 15, 2011 among the parties thereto which amends this Agreement.

 

“Amendment No. 1 Effective Date” means the effective date of Amendment No. 1.

 

“Make-Whole Amount” means, with respect to the prepayment of any Loan, an amount equal to the sum of (a) the product of (i) the weighted average interest rate applicable to the Loans being prepaid, times (ii) x/365, where “x” equals the number of days until the first anniversary of the Effective Date, times (iii) the principal amount of the Loans being prepaid, plus (b) the prepayment premium that would be due between the first anniversary of the Effective Date and second anniversary date of the Effective Date, plus (c) the amount of interest accrued and owed as of the date of such prepayment.

 

(b)           Section 1.02 (Certain Defined Terms) of the Credit Agreement is hereby amended by deleting the defined terms “Commitment” in its entirety and replacing it with the following corresponding term:

 

“Commitment” means, with respect to each Lender, the commitment of such Lender to make Loans hereunder on the Effective Date and on the Amendment No. 1 Effective Date, and “Commitments” means the aggregate amount of the Commitments of all Lenders.  The amount of each Lender’s Commitment as of the Amendment No. 1 Effective Date is set forth on Annex I.

 

(c)           Section 2.01 (Term Loan) of the Credit Agreement is hereby deleted and replaced in its entirety with the following:

 

Section 2.01.        Term Loan.  On the Effective Date, the Lenders made Loans to the Borrower in an aggregate principal amount equal to $40,000,000.  Subject to the terms and conditions set forth herein, each Lender agrees to make on the Amendment No. 1 Effective Date, a Loan in dollars to the Borrower in an aggregate principal amount equal to such Lender’s Commitment on such date.  The Commitments are not revolving and amounts repaid or prepaid may not be re-borrowed under any circumstance.  Any portion of the Commitments available on the Effective Date or the Amendment No. 1 Effective Date and not drawn by the Borrower on or before 4:00 p.m. Denver, Colorado time on the Effective Date or

 

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the Amendment No. 1 Effective Date, as applicable, shall be permanently cancelled.

 

(d)           Section 2.06 (Termination of Commitments) of the Credit Agreement is hereby deleted and replaced in its entirety with the following:

 

Section 2.06.        Termination of Commitments.  The Commitments shall terminate at 4:00 p.m. Denver, Colorado time on the Amendment No. 1 Effective Date.

 

(e)           Section 3.04(a) (Optional Prepayments) of the Credit Agreement is hereby deleted and replaced in its entirety with the following:

 

(a)          Optional Prepayments.  Subject to any break funding costs payable pursuant to Section 5.02 and prior notice in accordance with Section 3.04(b) and subject to the Intercreditor Agreement, the Borrower shall have the right to prepay the Loans at any time and from time to time in whole or in part, as follows:

 

(i)           at any time during the period commencing on the Effective Date but prior to the first anniversary of the Effective Date, the Loans may be prepaid in whole or in part so long as the principal amount prepaid is accompanied by a premium equal to the Make-Whole Amount applicable to such principal amount prepaid; provided that if such principal amount being prepaid is greater than $40,000,000, then such Make-Whole Amount shall only be applicable to $40,000,000 and the remaining amount shall have no premium applied thereto;

 

(ii) at any time during the period commencing on the first anniversary of the Effective Date but prior to the second anniversary of the Effective Date, the Loans may be prepaid in whole or in part so long as the principal amount prepaid is accompanied by a premium equal to 2.0% of such amount prepaid; provided that if such principal amount being prepaid is greater than $40,000,000, then such premium shall only be applicable to $40,000,000 and the remaining amount shall have no premium applied thereto;

 

(iii)         at any time during the period commencing on the second anniversary of the Effective Date but prior to the third anniversary of the Effective Date, the Loans may be prepaid in whole or in part so long as the principal amount prepaid is accompanied by a premium equal to 1.0% of such amount prepaid; provided that if such principal amount being prepaid is greater than $40,000,000, then such premium shall only be applicable to $40,000,000 and the remaining amount shall have no premium applied thereto;

 

provided that, in any event each prepayment pursuant to this Section 3.04 shall be in an aggregate principal amount of $500,000 or any whole multiple of $500,000 in excess thereof.

 

(f)            The Credit Agreement is hereby further amended by deleting Annex I (List of Commitments) attached thereto and replacing it with Exhibit A (List of Commitments) attached hereto.

 

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Section 5.               Credit Parties Representations and Warranties.  Each Credit Party represents and warrants that: (a) after giving effect to this Agreement, the representations and warranties contained in the Credit Agreement, as amended hereby, and the representations and warranties contained in the other Loan Documents are true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representation or warranty that already is qualified or modified by materiality in the text thereof) on and as of the Effective Date as if made on as and as of such date except to the extent that any such representation or warranty expressly relates solely to an earlier date, in which case such representation or warranty is true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representation or warranty that already is qualified or modified by materiality in the text thereof) as of such earlier date; (b) after giving effect to this Agreement, no Default has occurred and is continuing; (c) the execution, delivery and performance of this Agreement are within the limited liability company, limited partnership, or corporate power and authority of such Credit Party and have been duly authorized by appropriate limited liability company, limited partnership or corporate action and proceedings; (d) this Agreement constitutes the legal, valid, and binding obligation of such Credit Party enforceable in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the rights of creditors generally and general principles of equity; (e) there are no governmental or other third party consents, licenses and approvals required in connection with the execution, delivery, performance, validity and enforceability of this Agreement; (f) the Liens under the Security Instruments are valid and subsisting and secure the Indebtedness (as such Indebtedness may be increased as a result of the transactions contemplated hereby); and (g) no authorization or approval or other action by, and no notice to or filing with, any Governmental Authority or other Person (other than those that have been, or on the Effective Date will be, duly obtained or made and that are, or on the Effective Date will be, in full force and effect) is required for the incurrence of the Borrowing Base Increase or for the due execution, delivery and/or performance of Senior Revolving Credit Documents in connection with the Borrowing Base Increase, in each case by the parties thereto.

 

Section 6.               Conditions to Effectiveness.  This Agreement shall become effective on the Effective Date and enforceable against the parties hereto upon the occurrence of the following conditions precedent:

 

(a)           The Administrative Agent shall have received:

 

(i)            multiple original counterparts, as requested by the Administrative Agent, of this Agreement duly and validly executed and delivered by duly authorized officers of the Borrower, the Guarantors, the Administrative Agent and the Lenders;

 

(ii)           evidence that the Borrowing Base under the Senior Revolving Credit Agreement has been increased to $110,000,000;

 

(iii)          executed original Notes, if any, requested by the Lenders made by the Borrower payable to such requesting Lenders in the amount of such Lenders’ respective Loans after giving effect to the transactions contemplated hereby;

 

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(iv)          a certificate, dated as of the Effective Date, duly executed and delivered by the Borrower’s and each Guarantor’s Secretary or Assistant Secretary as to (A) no change in the officers’ incumbency delivered at the original closing date for the Credit Agreement, (B) no change in authorizing resolutions delivered at such closing date, and (C) no change in organizational documents delivered at such closing date or, if any such changes have occurred, attaching new incumbency certificates, authorizing resolutions and/or organizational documents, as they case may be;

 

(v)           certificates of existence and good standing for the Borrower in its state of organization, which certificates shall be dated a date not sooner than 30 days prior to Effective Date;

 

(vi)          a certificate, dated as of the Effective Date, duly executed and delivered by a Responsible Officer of the Borrower as to governmental approvals, if any, with respect to this Agreement; and

 

(vii)         such other information, documents, governmental certificates, agreements, and lien searches as the Administrative Agent or any Lender may reasonably request.

 

(b)           The representations and warranties in this Agreement shall be true and correct in all material respects.

 

(c)           The Borrower shall have paid (i) all reasonable fees and expenses of the Administrative Agent’s outside legal counsel and other consultants pursuant to all invoices presented for payment on or prior to the Effective Date, and (ii) hereby agrees to pay to the Administrative Agent, for the pro rata account of each Lender, an upfront fee or an original issue discount on the Second Lien Increase in an amount equal to 2.00% of the Second Lien Increase.

 

Section 7.               Acknowledgments and Agreements.

 

(a)           The Borrower acknowledges that on the date hereof all outstanding Indebtedness is payable in accordance with its terms and the Borrower waives any defense, offset, counterclaim or recoupment with respect thereto.

 

(b)           The Administrative Agent and the Lenders hereby expressly reserve all of their rights, remedies, and claims under the Loan Documents, as amended hereby.  Except as expressly set forth herein, this Agreement shall not constitute a waiver or relinquishment of (i) any Default or Event of Default under any of the Loan Documents, as amended hereby, (ii) any of the agreements, terms or conditions contained in any of the Loan Documents, as amended hereby, (iii) any rights or remedies of the Administrative Agent or any Lender with respect to the Loan Documents, as amended hereby, or (iv) the rights of the Administrative Agent or any Lender to collect the full amounts owing to them under the Loan Documents, as amended hereby.

 

(c)           The Borrower, each Guarantor, the Administrative Agent and each Lender do hereby adopt, ratify, and confirm the Credit Agreement, as amended hereby, and acknowledge and agree that the Credit Agreement, as amended hereby, is and remains in full force and effect, and the Borrower and each Guarantor acknowledge and agree that their respective liabilities and

 

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obligations under the Credit Agreement, as amended hereby, the Guarantee and Collateral Agreement and the other Loan Documents are not impaired in any respect by this Agreement.

 

(d)           From and after the Effective Date, all references to the Credit Agreement in the Loan Documents shall mean the Credit Agreement, as amended by this Agreement.  This Agreement is a Loan Document for the purposes of the provisions of the other Loan Documents.

 

Section 8.               Reaffirmation of the Guarantee and Collateral Agreement.  Each Guarantor hereby ratifies, confirms, acknowledges and agrees that its obligations under the Guarantee and Collateral Agreement are in full force and effect and that such Guarantor continues to unconditionally and irrevocably guarantee the full and punctual payment, when due, whether at stated maturity or earlier by acceleration or otherwise, of all of the Obligations (as defined in the Guarantee and Collateral Agreement), as such Obligations may have been amended by this Agreement, and its execution and delivery of this Agreement does not indicate or establish an approval or consent requirement by such Guarantor under the Guarantee and Collateral Agreement in connection with the execution and delivery of amendments, consents or waivers to the Credit Agreement, the Notes or any of the other Loan Documents.

 

Section 9.               Counterparts.  This Agreement may be signed in any number of counterparts, each of which shall be an original and all of which, taken together, constitute a single instrument.  This Agreement may be executed by facsimile or PDF electronic mail signature, and all such signatures shall be effective as originals.

 

Section 10.             Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted pursuant to the Credit Agreement.

 

Section 11.             Invalidity.  In the event that any one or more of the provisions contained in this Agreement shall for any reason be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement.

 

Section 12.             Governing Law.  This Agreement shall be deemed to be a contract made under and shall be governed by and construed in accordance with the laws of the State of Colorado.

 

Section 13.             Entire Agreement.  THIS AGREEMENT, THE CREDIT AGREEMENT AS AMENDED BY THIS AGREEMENT, THE NOTES, AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.

 

THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

 

[SIGNATURES BEGIN ON NEXT PAGE]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the day and year first above written.

 

	
 
    	
BORROWER:
    
	
 
    	
 
    
	
 
    	
KODIAK OIL & GAS (USA) INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   James P. Henderson
    
	
Name:   James P. Henderson
    	
 
    	
 
    
	
Title:   Chief Financial Officer
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
GUARANTOR:
    
	
 
    	
 
    
	
 
    	
KODIAK OIL & GAS CORP.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   James P. Henderson
    
	
 
    	
Name:
    	
James   P. Henderson
    
	
 
    	
Title:
    	
Chief   Financial Officer
    

 

Signature page to Amendment No. 1 to Second Lien Credit Agreement

 

 

	
 
    	
ADMINISTRATIVE AGENT:
    
	
 
    	
 
    	
 
    
	
 
    	
WELLS FARGO ENERGY CAPITAL, INC.,
    
	
 
    	
as   the Administrative Agent
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Bryan McDavid
    
	
 
    	
 
    	
Bryan   McDavid
    
	
 
    	
 
    	
Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
LENDER:
    
	
 
    	
 
    	
 
    
	
 
    	
WELLS FARGO BANK, N.A.,
    
	
 
    	
as   a Lender
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Bryan McDavid
    
	
 
    	
 
    	
Bryan   McDavid
    
	
 
    	
 
    	
Director
    

 

Signature page to Amendment No. 1 to Second Lien Credit Agreement

 

 

EXHIBIT A

 

ANNEX I

LIST OF COMMITMENTS

(as of Amendment No. 1 Effective Date)

 

	
Name of Lender
    	
 
    	
Commitment Amount
    	
 
    
	
Wells Fargo Bank, N.A.
    	
 
    	
$
    	
15,000,000
    	
 
    
	
TOTAL
    	
 
    	
$
    	
15,000,000
    	
 
    

 

 

EXHIBIT B

 

OUTSTANDING LOANS

 

The aggregate outstanding principal amount of each Lender’s Loans as of the Effective Date (after giving effect to the making of the Loans contemplated by the preceding sentence) is as follows:

 

	
Name of Lender
    	
 
    	
Percentage
    	
 
    	
Aggregate Outstanding
   Principal Amount
    	
 
    
	
Wells Fargo Bank, N.A.
    	
 
    	
100.00
    	
%
    	
$
    	
55,000,000
    	
 
    
	
TOTAL
    	
 
    	
100.00
    	
%
    	
$
    	
55,000,000Exhibit 4.1

 

[Face of Note]

 

Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to the Issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as requested by an authorized representative of DTC (and any payment is made to Cede & Co. or such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.

 

 

 

	
CUSIP NO. 87612EAW6
    	
 
    	
PRINCIPAL AMOUNT: $
    	
 
    
	
ISIN US87612EAW66
    	
 
    	
 
    
	
Common Code No. 065064855
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
REGISTERED NO.
    	
 
    	
 
    	
 
    	
 
    
						

 

TARGET CORPORATION

 

1.125% Notes due 2014

 

 

TARGET CORPORATION, a corporation duly organized and existing under the laws of the State of Minnesota (hereinafter called the “Company,” which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to Cede & Co., or registered assigns, the principal sum of                          Dollars ($                  ) on July 18, 2014 and to pay interest thereon from July 18, 2011 or from the most recent Interest Payment Date to which interest has been paid or duly provided for semi-annually on January 18 and July 18 of each year, commencing January 18, 2012, at the rate of 1.125% per annum, until the principal hereof is paid or made available for payment.  The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date shall, as provided in the Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest next preceding such Interest Payment Date. The Regular Record Date for an Interest Payment Date shall be the date 15 calendar days prior to that Interest Payment Date (whether or not a Business Day).  As used herein, “Business Day” means a day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions are authorized or required by law or regulation to close in New York, New York.

 

Any interest not punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special

 

 

Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture.

 

Payment of interest on this Security shall be made in immediately available funds at the office or agency of the Company maintained for that purpose in New York, New York in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that, at the option of the Company, payment of interest may be paid by check mailed to the Person entitled thereto at such Person’s last address as it appears in the Security Register or by wire transfer to such account as may have been designated by such Person in writing not less than 10 days prior to the date of such payment.  Payment of principal of and interest on this Security at Maturity shall be made against presentation of this Security at the office or agency of the Company maintained for that purpose in New York, New York.

 

Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

 

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

 

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IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal.

 

	
DATED:
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
TARGET CORPORATION
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
  Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
[SEAL]
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attest:
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
TRUSTEE’S CERTIFICATE OF
    	
 
    	
 
    	
 
    
	
AUTHENTICATION
    	
 
    	
 
    	
 
    
	
This is one of the Securities of the
    	
 
    	
 
    	
 
    
	
series referred to in the
    	
 
    	
 
    	
 
    
	
within-mentioned Indenture.
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
THE BANK OF NEW YORK MELLON TRUST COMPANY,   NATIONAL ASSOCIATION,
    
	
as Trustee
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
Authorized Signatory
    	
 
    	
 
    	
 
    
									

 

 

[Reverse of Note]

 

 

 

TARGET CORPORATION

 

 

1.125% Notes due 2014

 

 

This Security is one of a duly authorized issue of securities of the Company (herein called the “Securities”), issued and to be issued in one or more series under an Indenture dated as of August 4, 2000 between the Company and The Bank of New York Mellon Trust Company, National Association (as successor in interest to Bank One Trust Company, N.A.), as trustee, as supplemented by the First Supplemental Indenture dated as of May 1, 2007, between the Company and The Bank of New York Mellon Trust Company, National Association, as trustee, and as further amended or supplemented from time to time (herein called the “Indenture”) (in its capacity as trustee, The Bank of New York Mellon Trust Company, National Association, being herein called the “Trustee,” which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities, and of the terms upon which the Securities are, and are to be, authenticated and delivered.  This Security is one of the series designated on the face hereof, such series being limited in initial aggregate principal amount to $                 ; provided, however, that the Company may, without the consent of the Holders of the Securities of this series, issue additional Securities with the same terms as the Securities of this series, and such additional Securities shall be considered part of the same series under the Indenture as the Securities of this series.

 

The Securities of this series shall not be entitled to any sinking fund.

 

The Securities of this series are not subject to redemption at the option of the Company prior to July 18, 2014.

 

Change of Control Offer

 

If a Change of Control Triggering Event occurs, the Company shall be required to make an offer (a “Change of Control Offer”) to each Holder of the Securities of this series to repurchase all or any part (equal to $2,000 or an integral multiple of $1,000 in excess thereof) of that Holder’s Securities on the terms set forth herein.  In a Change of Control Offer, the Company shall be required to offer payment in cash equal to 101% of the aggregate principal amount of Securities of this series repurchased, plus accrued and unpaid interest, if any, on the Securities of this series repurchased to the date of repurchase (a “Change of Control Payment”).  Within 30 days following any Change of Control Triggering Event or, at the Company’s option, prior to any Change of Control, but after public announcement of the transaction that constitutes or may constitute the Change of Control, a notice shall be mailed to Holders of the Securities of this series describing the transaction that constitutes or may constitute the Change of Control

 

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Triggering Event and offering to repurchase such Securities on the date specified in the notice, which date shall be no earlier than 30 days and no later than 60 days from the date such notice is mailed (a “Change of Control Payment Date”).  The notice shall, if mailed prior to the date of consummation of the Change of Control, state that the Change of Control Offer is conditioned on the Change of Control Triggering Event occurring on or prior to the Change of Control Payment Date.

 

In order to accept the Change of Control Offer, the Holder must deliver to the Paying Agent, at least five Business Days prior to the Change of Control Payment Date, this Security together with the form entitled “Election Form” (which form is annexed hereto) duly completed, or a telegram, telex, facsimile transmission or a letter from a member of a national securities exchange, or the Financial Industry Regulatory Authority or a commercial bank or trust company in the United States setting forth:

 

	
(i)
    	
 
    	
the name of the Holder of this Security;
    
	
 
    	
 
    	
 
    
	
(ii)
    	
 
    	
the principal amount of this Security;
    
	
 
    	
 
    	
 
    
	
(iii)
    	
 
    	
the principal amount of this Security to be repurchased;
    
	
 
    	
 
    	
 
    
	
(iv)
    	
 
    	
the certificate number or a description of the tenor and terms of   this Security;
    
	
 
    	
 
    	
 
    
	
(v)
    	
 
    	
a statement that the Holder is accepting the Change of Control Offer;   and
    
	
 
    	
 
    	
 
    
	
(vi)
    	
 
    	
a guarantee that this Security, together with   the form entitled “Election Form” duly completed, will be received by the   Paying Agent at least five Business Days prior to the Change of Control   Payment Date.
    

 

Any exercise by a Holder of its election to accept the Change of Control Offer shall be irrevocable. The Change of Control Offer may be accepted for less than the entire principal amount of this Security, but in that event the principal amount of this Security remaining outstanding after repurchase must be equal to $2,000 or an integral multiple of $1,000 in excess thereof.

 

On the Change of Control Payment Date, the Company shall, to the extent lawful:

 

	
(i)
    	
 
    	
accept for payment all Securities of this series or portions of such   Securities properly tendered pursuant to the Change of Control Offer;
    
	
 
    	
 
    	
 
    
	
(ii)
    	
 
    	
deposit with the Paying Agent an amount equal to the Change of Control   Payment in respect of all Securities of this series or portions of such   Securities properly tendered; and
    
	
 
    	
 
    	
 
    
	
(iii)
    	
 
    	
deliver or cause to be delivered to the Trustee the Securities of   this series properly accepted together with an Officers’ Certificate stating   the aggregate principal amount of Securities of this series or portions of   such Securities being repurchased.
    

 

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The Company shall not be required to make a Change of Control Offer upon the occurrence of a Change of Control Triggering Event if a third party makes such an offer in the manner, at the times and otherwise in compliance with the requirements for an offer made by the Company and the third party purchases all Securities of this series properly tendered and not withdrawn under its offer.  In addition, the Company shall not repurchase any Securities of this series if there has occurred and is continuing on the Change of Control Payment Date an Event of Default under the Indenture, other than a default in the payment of the Change of Control Payment upon a Change of Control Triggering Event.

 

The Company shall comply with the requirements of Rule 14e-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the Securities of this series as a result of a Change of Control Triggering Event. To the extent that the provisions of any such securities laws or regulations conflict with the Change of Control Offer provisions of the Securities of this series, the Company shall comply with those securities laws and regulations and shall not be deemed to have breached its obligations under the Change of Control Offer provisions of the Securities of this series by virtue of any such conflict.

 

For purposes of the Change of Control Offer provisions of the Securities of this series, the following terms are applicable:

 

“Change of Control” means the occurrence of any of the following: (1) the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or more series of related transactions, of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole, to any person, other than the Company or a Subsidiary; (2) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any person becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the Company’s outstanding Voting Stock or other Voting Stock into which the Company’s Voting Stock is reclassified, consolidated, exchanged or changed, measured by voting power rather than number of shares; (3) the Company consolidates with, or merges with or into, any person, or any person consolidates with, or merges with or into, the Company, in any such event pursuant to a transaction in which any of the Company’s outstanding Voting Stock or the Voting Stock of such other person is converted into or exchanged for cash, securities or other property, other than any such transaction where the shares of the Company’s Voting Stock outstanding immediately prior to such transaction constitute, or are converted into or exchanged for, a majority of the Voting Stock of the surviving person or any direct or indirect parent company of the surviving person immediately after giving effect to such transaction; (4) the first day on which a majority of the members of the Company’s Board of Directors are not Continuing Directors; or (5) the adoption of a plan relating to the Company’s liquidation or dissolution. Notwithstanding the foregoing, a transaction shall not be deemed to involve a Change of Control under clause (2) above if (i) the Company becomes a direct or indirect wholly-owned subsidiary of a holding company and (ii)(A) the direct or indirect holders of the Voting Stock of such holding company immediately following that transaction are

 

6

 

substantially the same as the holders of the Company’s Voting Stock immediately prior to that transaction or (B) immediately following that transaction no person (other than a holding company satisfying the requirements of this sentence) is the beneficial owner, directly or indirectly, of more than 50% of the Voting Stock of such holding company.  The term “person,” as used in this definition, has the meaning given thereto in Section 13(d)(3) of the Exchange Act.

 

“Change of Control Triggering Event” means the occurrence of both a Change of Control and a Rating Event.

 

“Continuing Directors” means, as of any date of determination, any member of the Company’s Board of Directors who (1) was a member of such Board of Directors on the date the Securities of this series were issued or (2) was nominated for election, elected or appointed to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board of Directors at the time of such nomination, election or appointment (either by a specific vote or by approval of the Company’s proxy statement in which such member was named as a nominee for election as a director, without objection to such nomination).

 

“Fitch” means Fitch Inc., and its successors.

 

“Investment Grade Rating” means a rating equal to or higher than BBB- (or the equivalent) by Fitch, Baa3 (or the equivalent) by Moody’s and BBB- (or the equivalent) by S&P, and the equivalent investment grade credit rating from any replacement rating agency or rating agencies selected by the Company.

 

“Moody’s” means Moody’s Investors Service, Inc., and its successors.

 

“Rating Agencies” means (1) each of Fitch, Moody’s and S&P; and (2) if any of Fitch, Moody’s or S&P ceases to rate the Securities of this series or fails to make a rating of such Securities publicly available for reasons outside of the Company’s control, a “nationally recognized statistical rating organization” within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act selected by the Company (as certified by a resolution of the Company’s Board of Directors) as a replacement agency for Fitch, Moody’s or S&P, or all of them, as the case may be.

 

“Rating Event” means the rating on the Securities of this series is lowered by at least two of the three Rating Agencies and the Securities of this series are rated below an Investment Grade Rating by at least two of the three Rating Agencies on any day during the period (which period shall be extended so long as the rating of the Securities of this series is under publicly announced consideration for a possible downgrade by any of the Rating Agencies) commencing 60 days prior to the first public notice of the occurrence of a Change of Control or the Company’s intention to effect a Change of Control and ending 60 days following consummation of such Change of Control.

 

“S&P” means Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc., and its successors.

 

7

 

“Voting Stock” means, with respect to any specified “person” (as that term is used in Section 13(d)(3) of the Exchange Act) as of any date, the capital stock of such person that is at the time entitled to vote generally in the election of the board of directors of such person.

 

The provisions of Article Thirteen of the Indenture shall apply to the Change of Control Offer provisions of this Security except as and to the extent otherwise specified in this Security.  For purposes of the Indenture, a Change of Control Payment Date shall be deemed to be a Repayment Date.

 

Other Provisions

 

If an Event of Default with respect to Securities of this series as set forth in the Indenture shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture.

 

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in principal amount of the Securities at the time Outstanding of each series to be affected.  The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences.  Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

 

The Indenture contains provisions for defeasance at any time of (i) the entire indebtedness on this Security and (ii) certain restrictive covenants and certain Events of Default, upon compliance by the Company with certain conditions set forth therein, which provisions apply to this Security.

 

Upon due presentment for registration of transfer of this Security at the office or agency of the Company in New York, New York, a new Security or Securities of this series in authorized denominations for an equal aggregate principal amount shall be issued to the transferee in exchange herefor, as provided in the Indenture and subject to the limitations provided therein and to the limitations described below, without charge except for any tax or other governmental charge imposed in connection therewith.

 

This Security is exchangeable for definitive Securities in registered form only if (i) the Depositary notifies the Company that it is unwilling or unable to continue as Depositary for this Security or if at any time the Depositary ceases to be a clearing agency registered under the Exchange Act and a successor depositary is not appointed within 90 days, (ii) the Company, in its sole discretion, determines that this Security shall be exchangeable for definitive Securities in registered form and notifies the Trustee thereof or (iii) an Event of Default with respect to the Securities represented hereby has occurred and is continuing.  If this Security is exchangeable

 

8

 

pursuant to the preceding sentence, it shall be exchangeable for definitive Securities in registered form, bearing interest at the same rate, having the same date of issuance, Stated Maturity and other terms and of authorized denominations aggregating a like amount.

 

This Security may not be transferred except as a whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor of the Depositary or a nominee of such successor.  Except as provided above, owners of beneficial interests in this global Security shall not be entitled to receive physical delivery of Securities in definitive form and shall not be considered the Holders hereof for any purpose under the Indenture.

 

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed, except that in the event the Company deposits money or Government Obligations as provided in Section 401 or 403 of the Indenture, such payments shall be made only from proceeds of such money or Government Obligations.

 

Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

 

No recourse shall be had for the payment of the principal of or the interest on this Security, or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture or any indenture supplemental thereto, against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or any successor corporation, either directly or through the Company, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for, and as a condition of, the issuance hereof, expressly waived and released.

 

All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture unless otherwise defined in this Security.

 

9

 

ABBREVIATIONS

 

 

The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations:

 

	
TEN COM
    	
--
    	
as tenants in common
    
	
 
    	
 
    	
 
    
	
TEN ENT
    	
--
    	
as tenants by the entireties
    
	
 
    	
 
    	
 
    
	
JT TEN
    	
--
    	
as joint tenants with right
    
	
 
    	
 
    	
of survivorship and not
    
	
 
    	
 
    	
as tenants in common
    
	
 
    	
 
    	
 
    
	
UNIF GIFT MIN ACT  --
    	
 
    	
 Custodian
    	
 
    	
 
    
	
 
    	
(Cust)
    	
 
    	
(Minor)
    	
 
    
							

 

Under Uniform Gifts to Minors Act

 

	
 
    	
 
    
	
(State)
    	
 
    

 

Additional abbreviations may also be used though not in the above list.

 

 

FOR VALUE RECEIVED, the undersigned hereby sell(s) and transfer(s) unto

 

Please Insert Social Security or

Other Identifying Number of Assignee

 

	
 
    	
 
    
	
 
    
	
 
    
	
 
    
	
 

 
    
	
 

 
    
	
 
    
	
(PLEASE PRINT OR TYPE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF   ASSIGNEE)
    

 

 

the within Security of TARGET CORPORATION and does hereby irrevocably constitute and appoint ______________________ attorney to transfer the said Security on the books of the Company, with full power of substitution in the premises.

 

	
Dated: 
    	
 
    	
 
    
	
 
    
	
 
    	
 
    
	

    	
 
    
	
 
    
				

 

NOTICE:  The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular, without alteration or enlargement or any change whatever.

 

 

 

 

ELECTION FORM

 

TO BE COMPLETED ONLY IF THE HOLDER

ELECTS TO ACCEPT THE CHANGE OF CONTROL OFFER

 

 

 

The undersigned hereby irrevocably requests and instructs the Company to repurchase the within Security (or the portion thereof specified below), pursuant to its terms, on the Change of Control Payment Date specified in the Change of Control Offer, for the Change of Control Payment specified in the within Security, to the undersigned, ___________________________________, at _____________________________________ (please print or typewrite name and address of the undersigned).

 

For this election to accept the Change of Control Offer to be effective, the Company must receive, at the address of the Paying Agent set forth below or at such other place or places of which the Company shall from time to time notify the Holder of the within Security, either (i) this Security with this “Election Form” form duly completed, or (ii) a telegram, telex, facsimile transmission or a letter from a member of a national securities exchange or the Financial Industry Regulatory Authority or a commercial bank or a trust company in the United States setting forth (a) the name of the Holder of the Security, (b) the principal amount of the Security, (c) the principal amount of the Security to be repurchased, (d) the certificate number or description of the tenor and terms of the Security, (e) a statement that the option to elect repurchase is being exercised, and (f) a guarantee stating that the Security to be repurchased, together with this “Election Form” duly completed will be received by the Paying Agent five Business Days prior to the Change of Control Payment Date.  The address of the Paying Agent is The Bank of New York Mellon Trust Company, National Association, c/o The Bank of New York, 101 Barclay Street, New York, New York 10286.

 

If less than the entire principal amount of the within Security is to be repurchased, specify the portion thereof (which principal amount must be $2,000 or an integral multiple of $1,000 in excess thereof) which the Holder elects to have repurchased:  $________.

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