Document:

Exhibit

TWELFTH AMENDMENT AND WAIVER TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT

This TWELFTH AMENDMENT AND WAIVER TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this “Agreement”) dated as of March 30, 2020, is among Lilis Energy Inc., a Nevada corporation (the “Borrower”), certain Subsidiaries of the Borrower (the “Guarantors”), BMO Harris Bank N.A. (“BMO”), as Administrative Agent for the Lenders, and the other Lenders from time to time party hereto.
Recitals
A.    WHEREAS, the Borrower, the Guarantors, the Lenders party thereto and the Administrative Agent are parties to that certain Second Amended and Restated Senior Secured Revolving Credit Agreement dated as of October 10, 2018 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), pursuant to which the Lenders have made certain credit available to and on behalf of the Borrower.
B.    WHEREAS, subject to the terms and conditions set forth herein, the Lenders have agreed to make amendments to the Credit Agreement as set forth herein.
C.    WHEREAS, the Borrower has informed the Administrative Agent that the Borrower will be unable to satisfy the requirement to deliver financial statements under Section 8.01(a) of the Credit Agreement for the Fiscal Year ending December 31, 2019 (i) not later than 90 days after the end of such Fiscal Year (the “Annual Financials Timing”) and (ii) without a “going concern” or like qualification or exception (the “Going Concern Requirement” and, together with the Annual Financials Timing, the “2019 Financials Waiver Request”) and the Borrower has requested that the Lenders (A) consent to a forty-five (45) day extension of the Annual Financials Timing and (B) consent to a waiver of the 2019 Financial Delivery Requirement (collectively, the “2019 Financials Waiver Request”). 
D.    WHEREAS, the Borrower has informed the Administrative Agent that the Borrower will be unable to satisfy (i) the leverage ratio covenant in Section 9.01(a) of the Credit Agreement as of the fiscal quarter ended December 31, 2019 (the “December 31, 2019 Leverage Ratio”) and (ii) the current ratio covenant in Section 9.01(b) of the Credit Agreement as of the fiscal quarter ended December 31, 2019 (the “December 31, 2019 Current Ratio”) and the Borrower has requested that the Lenders consent to a waiver of the requirement to comply with the December 31, 2019 Leverage Ratio and December 31, 2019 Current Ratio (collectively, the “Financial Covenant Waiver Request”).
E.    WHEREAS, the Borrower has notified the Administrative Agent of Liens on certain Properties of the Loan Parties as of the date hereof, and such Liens would cause an Event of Default arising under Section 10.01(d) of the Credit Agreement as a result of the failure by the Borrower to observe Section 9.03 of the Credit Agreement (the “Lien Covenant”) in connection with such Liens (the “Lien Covenant Event of Default”), and the Borrower has requested that the Lenders (i) waive the Lien Covenant Event of Default and (ii) notwithstanding the Lien Covenant, consent to the existence of certain other Liens imposed by law of the type that would be permitted under clause (c) of the definition of “Excepted Liens” in the Credit Agreement but for certain actions taken, or being taken, by the Loan Parties, in each case until April 14, 2020 (collectively, the “Lien Waiver and Consent Request”).
F.    WHEREAS, the Borrower has requested that the Lenders consent to a waiver of the requirement to comply with certain hedging obligations set forth in Section 8.20(b) of the Credit Agreement (the “Hedging Requirement”) until the Fiscal Quarter ending June 30, 2020 (the “Hedging Waiver Request” and, collectively with the 2019 Financials Waiver Request, the Financial Covenant Waiver Request and the Lien Waiver and Consent Request, the “Waiver and Consent Requests”).
G.    NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, which include all of the Lenders party to the Credit Agreement, agree as follows:

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Section 1Defined Terms.  Each capitalized term which is defined in the Credit Agreement, but which is not defined in this Agreement, shall have the meaning ascribed to such term in the Credit Agreement.
 
Section 2Amendment.  Subject to the occurrence of the Effective Date, the following amendment to the Credit Agreement shall be made:

Section 3Amendments.  Subject to the occurrence of the Effective Date, the following amendments to the Credit Agreement shall be made:
3.1Amendment to Section 1.01. The definition of “Indebtedness” in the Credit Agreement is hereby amended by replacing the reference to “March 31, 2020” with “April 14, 2020”:

3.2Amendment to Section 3.04(c)(ii)(B)(1). Section 3.04(c)(ii)(B)(1) of the Credit Agreement is hereby amended by replacing the reference to “March 30, 2020” with “April 14, 2020”.
s herein: 

Section 4Conditions Precedent to Effective Date.  This Agreement shall become effective on the date (such date, the “Effective Date”) when each of the following conditions is satisfied (or waived) in accordance with the terms herein: 

4.1The Administrative Agent and the Lenders, shall have received reimbursement or payment of all reasonable and documented out-of-pocket expenses (if any) required to be reimbursed or paid by the Borrower under Section 12.03 of the Credit Agreement (including, the fees, charges and disbursements of Simpson Thacher & Bartlett LLP, counsel to the Administrative Agent and other advisors to the Administrative Agent in accordance therewith (if any)).

4.2The Administrative Agent shall have received from the Borrower, each Guarantor, and each Lender, counterparts of this Agreement signed on behalf of such Persons.

4.3As of the Effective Date, after giving effect to this Agreement, (a) the representations and warranties of each Loan Party set forth in the Credit Agreement and in each other Loan Document are true and correct in all material respects (unless already qualified by materiality in which case such applicable representation and warranty shall be true and correct), except to the extent such representations and warranties expressly relate to an earlier date, in which case they shall be true and correct in all material respects (unless already qualified by materiality in which case such applicable representation and warranty shall be true and correct) as of such earlier date and (b) no Default or Event of Default has occurred and is continuing.

Each party hereto hereby authorizes and directs the Administrative Agent to declare the this Agreement to be effective (and the Effective Date shall occur) when it has received documents confirming or certifying, to the reasonable satisfaction of the Administrative Agent, compliance with the conditions set forth in this Section 4. Such declaration shall be final, conclusive and binding upon all parties to the Credit Agreement for all purposes.
		
	Section 5
	Miscellaneous.

5.1Limitation of Waivers. The consents, waivers, amendments and agreements contained herein, shall not be a consent, waiver or agreement by the Administrative Agent or the Lenders of any Defaults or Events of Default, as applicable, which may exist (other than, for the avoidance of doubt, with respect to the Annual Financials Timing, the Going Concern Requirement, the December 31, 2019 Leverage Ratio, the December 31, 2019 Current Ratio, the Lien Covenant, and the Hedging Requirement) or which may occur in the future under the Credit Agreement or any other Loan Document, or any future defaults of the same provision waived hereunder (collectively, “Violations”). Similarly, nothing contained in this Agreement shall directly or indirectly in any way whatsoever: (a) impair, prejudice or otherwise adversely affect the Administrative Agent’s or the Lenders’ right at any time to exercise any right, privilege or remedy in connection with the Credit Agreement or any other Loan Document, as the case may be, with respect to any Violations, (b) except as set forth herein, amend or alter any provision of the Credit Agreement, the other Loan Documents, or any other contract or instrument, or (c) constitute any course of dealing or other basis for altering any 

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obligation of the Borrower or any right, privilege or remedy of the Administrative Agent or the Lenders under the Credit Agreement, the other Loan Documents, or any other contract or instrument, as applicable. Nothing in this letter shall be construed to be a consent by the Administrative Agent or the Lenders to any Violations.

5.2Confirmation.  The provisions of the Credit Agreement shall remain in full force and effect following the Effective Date.

5.3Ratification and Affirmation; Representations and Warranties.  Each of the Guarantors and the Borrower (a) acknowledges the terms of this Agreement, (b) ratifies and affirms its obligations under, and acknowledges its continued liability under, each Loan Document (including, without limitation, the Guaranteed Liabilities) and agrees that each Loan Document remains in full force and effect as expressly amended hereby, (c) certifies to the Lenders, on the Effective Date, as applicable, that, after giving effect to this Agreement and the amendments and transactions occurring on the Effective Date, (i) the representations and warranties of each Loan Party set forth in the Credit Agreement and in each other Loan Document are true and correct in all material respects (unless already qualified by materiality in which case such applicable representation and warranty are true and correct), except to the extent such representations and warranties expressly relate to an earlier date, in which case they are true and correct in all material respects (unless already qualified by materiality in which case such applicable representation and warranty are true and correct) as of such earlier date and (ii) no Default or Event of Default has occurred and is continuing, (d) acknowledges that it is a party to certain Security Instruments securing the Secured Obligations and agrees that according to their terms the Security Instruments to which it is a party will continue in full force and effect to secure the Secured Obligations under the Loan Documents, as the same may be amended, supplemented or otherwise modified, and (e) hereby authorizes and directs any Secured Party which is a deposit bank at which accounts of any Loan Party are held to deliver to the Administrative Agent a report reflecting the balances of such accounts of the Loan Parties, as may be requested by the Administrative Agent.   

5.4Counterparts.  This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.  Delivery of an executed a signature page of this Agreement by facsimile or email transmission shall be effective as delivery of a manually executed counterpart of this Agreement.

5.5No Oral Agreement.  This Agreement, the Credit Agreement, the other Loan Documents and any separate letter agreement with respect to fees payable to the Administrative Agent constitute the entire contract among the parties relating to the subject matter hereof and thereof and supersede any and all previous agreement and understandings, oral or written, relating to the subject matter hereof and thereof. THIS AGREEMENT, THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES HERETO AND THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENT OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. 

5.6GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

5.7Payment of Expenses.  The Borrower hereby reconfirms its obligations pursuant to Section 12.03 of the Credit Agreement. In accordance with Section 12.03 of the Credit Agreement, the Borrower agrees to pay or reimburse the Administrative Agent for all of its reasonable and documented out-of-pocket expenses incurred in connection with this Agreement, any other documents prepared in connection herewith and the transactions contemplated hereby, including, without limitation, the reasonable fees, charges and disbursements of counsel to the Administrative Agent.

5.8Severability.  Any provision of this Agreement or any other Loan Document held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof or thereof, and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

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5.9Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns in accordance with Section 12.04 of the Credit Agreement.

5.10Loan Documents.  This Agreement is a Loan Document.

5.11GENERAL RELEASE.  

(a)AS PART OF THE CONSIDERATION FOR THE LENDERS’ AND THE ADMINISTRATIVE AGENT’S EXECUTION OF THIS AGREEMENT, EACH LOAN PARTY, ON BEHALF OF ITSELF AND ITS SUCCESSORS, ASSIGNS, EQUITYHOLDERS, SUBSIDIARIES, AFFILIATES, OFFICERS, PARTNERS, DIRECTORS, EMPLOYEES, AGENTS AND ATTORNEYS (COLLECTIVELY, THE “RELEASING PARTIES”) HEREBY FOREVER, FULLY, UNCONDITIONALLY, AND IRREVOCABLY RELEASES, WAIVES, AND FOREVER DISCHARGES THE LENDERS, THE ADMINISTRATIVE AGENT, THE ISSUING BANKS AND EACH OF THEIR SUCCESSORS, ASSIGNS, EQUITYHOLDERS, SUBSIDIARIES, AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, AND ATTORNEYS AND OTHER PROFESSIONALS (COLLECTIVELY, THE “RELEASEES”) FROM ANY AND ALL CLAIMS, LIABILITIES, OBLIGATIONS, DEBTS, DEMANDS, CAUSES OF ACTION (WHETHER AT LAW OR IN EQUITY OR OTHERWISE), DAMAGES, COSTS, ATTORNEYS’ FEES, SUITS, CONTROVERSIES, ACTS AND OMISSIONS, DEFENSES, COUNTERCLAIMS, SETOFFS, AND OTHER CLAIMS OF EVERY KIND OR NATURE WHATSOEVER, WHETHER KNOWN OR UNKNOWN, WHETHER LIQUIDATED OR UNLIQUIDATED, MATURED OR UNMATURED, FIXED OR CONTINGENT, DIRECTLY OR INDIRECTLY ARISING OUT OF, CONNECTED WITH, RESULTING FROM OR RELATED TO ANY ACT OR OMISSION UNDER ANY LOAN DOCUMENT BY ANY LENDER OR THE ADMINISTRATIVE AGENT OR ANY OTHER RELEASEE PRIOR TO THE DATE HEREOF (COLLECTIVELY, THE “CLAIMS”); PROVIDED THAT THE FOREGOING SHALL NOT RELEASE CLAIMS RESULTING FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY RELEASEE AS DETERMINED BY A FINAL NON-APPEALABLE JUDGMENT OF A COURT OF COMPETENT JURISDICTION.  EACH LOAN PARTY FURTHER AGREES THAT IT SHALL NOT COMMENCE, INSTITUTE, OR PROSECUTE ANY LAWSUIT, ACTION OR OTHER PROCEEDING, WHETHER JUDICIAL, ADMINISTRATIVE OR OTHERWISE, TO COLLECT OR ENFORCE ANY CLAIM EXCEPT THAT NO LOAN PARTY SHALL HAVE ANY OBLIGATION HEREUNDER WITH RESPECT TO ANY CLAIM RESULTING FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY RELEASEE AS DETERMINED BY A FINAL NON-APPEALABLE JUDGMENT OF A COURT OF COMPETENT JURISDICTION. FURTHERMORE, EACH OF THE RELEASING PARTIES HEREBY ABSOLUTELY, UNCONDITIONALLY AND IRREVOCABLY COVENANTS AND AGREES WITH AND IN FAVOR OF EACH RELEASEE THAT IT WILL NOT SUE (AT LAW, IN EQUITY, IN ANY REGULATORY PROCEEDING OR OTHERWISE) ANY RELEASEE ON THE BASIS OF ANY CLAIM RELEASED AND/OR DISCHARGED BY THE RELEASING PARTIES PURSUANT TO THIS SECTION 5.11.  IN ENTERING INTO THIS AGREEMENT, EACH OF THE RELEASING PARTIES HAS CONSULTED WITH, AND HAS BEEN REPRESENTED BY, LEGAL COUNSEL AND EXPRESSLY DISCLAIMS ANY RELIANCE ON ANY REPRESENTATIONS, ACTS OR OMISSIONS BY ANY OF THE RELEASEES AND HEREBY AGREES AND ACKNOWLEDGES THAT THE VALIDITY AND EFFECTIVENESS OF THE RELEASES SET FORTH ABOVE DO NOT DEPEND IN ANY WAY ON ANY SUCH REPRESENTATIONS, ACTS AND/OR OMISSIONS OR THE ACCURACY, COMPLETENESS OR VALIDITY THEREOF. 

(b)THE PROVISIONS OF THIS SECTION 5.11 SHALL SURVIVE AND REMAIN IN FULL FORCE AND EFFECT REGARDLESS OF THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY, THE REPAYMENT OR PREPAYMENT OF ANY OF THE LOANS, OR THE TERMINATION OF THE CREDIT AGREEMENT, THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY PROVISION HEREOF OR THEREOF.

(c)EACH RELEASING PARTY UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT THE RELEASE SET FORTH ABOVE MAY BE PLEADED AS A FULL AND COMPLETE DEFENSE AND MAY BE USED AS A BASIS FOR AN INJUNCTION AGAINST ANY ACTION, SUIT OR OTHER PROCEEDING WHICH 

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MAY BE INSTITUTED, PROSECUTED OR ATTEMPTED IN BREACH OF THE PROVISIONS OF SUCH RELEASE. 

[Signature Pages Follow]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed effective as of the Effective Date.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed effective as of the Effective Date.
	
		
	

BORROWER:
	

LILIS ENERGY, INC.

	 
	 

	 
	 

	 
	By:   /s/ Joseph C. Daches                                       

	 
	Name:   Joseph C. Daches 

	 
	Title:   Chief Executive Officer, President and Chief Financial Officer

	

GUARANTORS:
	

BRUSHY RESOURCES, INC.

	 
	HURRICANE RESOURCES LLC

	 
	IMPETRO OPERATING LLC

	 
	LILIS OPERATING COMPANY, LLC

	 
	IMPETRO RESOURCES, LLC

	 
	 

	 
	 

	 
	Each By:   /s/ Joseph C. Daches                               

	 
	Name:   Joseph C. Daches

	 
	Title:   Chief Executive Officer, President and Chief Financial Officer

Twelfth Amendment to Second Amended and Restated Credit Agreement

		
	ADMINISTRATIVE AGENT:
	BMO HARRIS BANK N.A.,  
as Administrative Agent, and a Lender

By:        /s/ Melissa Guzmann                 
Name:    Melissa Guzmann 
Title:    Director

Twelfth Amendment to Second Amended and Restated Credit Agreement

		
	LENDERS:
	TRUIST BANK, as successor in Merger to SUNTRUST BANK, as a Lender

By:     /s/ William S. Krueger                     
Name:    William S. Krueger
Title:    Senior Vice President
    

Twelfth Amendment to Second Amended and Restated Credit Agreement

CAPITAL ONE, NATIONAL ASSOCIATION, 
as a Lender
                                                                         By:    /s/ Michael P. Robinson                           
Name:    Michael P. Robinson
Title:    Vice President
    

Twelfth Amendment to Second Amended and Restated Credit Agreement

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as a Lender
By:  /s/ Bryan J. Matthews                          
Name:    Bryan J. Matthews
Title:    Authorized Signatory

By:  /s/ Didier Siffer                                    
Name:    Didier Siffer
Title:    Authorized Signatory
    

Twelfth Amendment to Second Amended and Restated Credit AgreementExhibit 4.2

 

Description of Common Stock

 

General. Seneca
Financial Corp. is authorized to issue 19,000,000 shares of common stock having a par value of $0.01 per share. Each share of Seneca
Financial Corp.’s common stock has the same relative rights as, and is identical in all respects with, each other share of
common stock. As of December 31, 2019, Seneca Financial Corp. had 1,912,959 shares of common stock outstanding. Presented below
is a description of the features of Seneca Financial Corp.’s common stock.

 

Dividends. Seneca Financial
Corp. can pay dividends if, as and when declared by its board of directors, subject to compliance with limitations which are imposed
by law. The holders of common stock of Seneca Financial Corp. will be entitled to receive and share equally in such dividends as
may be declared by the board of directors of Seneca Financial Corp. out of funds legally available therefor. The Federal Reserve
Board has issued a policy statement regarding the payment of dividends by holding companies. In general, the policy provides that
dividends should be paid only out of current earnings and only if the prospective rate of earnings retention by the holding company
appears consistent with the organization’s capital needs, asset quality and overall supervisory financial condition. Separate
regulatory guidance provides for prior consultation with Federal Reserve Bank staff concerning dividends in certain circumstances
such as where the company’s net income for the past four quarters, net of dividends previously paid over that period, is
insufficient to fully fund the dividend or the company’s overall rate or earnings retention is inconsistent with the company’s
capital needs and overall financial condition. The ability of a savings and loan holding company to pay dividends may be restricted
if a subsidiary savings association becomes undercapitalized.

 

If Seneca Financial Corp. pays dividends
to its stockholders, it would likely pay dividends to Seneca Financial MHC, unless Seneca Financial MHC is permitted by the Federal
Reserve Board to waive the receipt of dividends. The Federal Reserve Board’s current regulations significantly restrict the
ability of mutual holding companies organized after December 1, 2009 to waive dividends declared by their subsidiaries. Accordingly,
because dividends would be required to be paid to Seneca Financial MHC along with all other stockholders, the amount of dividends
available for all other stockholders would be less than if Seneca Financial MHC were permitted to waive the receipt of dividends.

 

Pursuant to our charter, Seneca Financial
Corp. is authorized to issue preferred stock. If Seneca Financial Corp. issues preferred stock, the holders thereof may have a
priority over the holders of the common stock with respect to dividends.

 

Voting Rights. The holders
of common stock of Seneca Financial Corp. possess exclusive voting rights in Seneca Financial Corp. Each holder of common stock
is entitled to one vote per share and does not have any right to cumulate votes in the election of directors. If Seneca Financial
Corp. issues preferred stock, holders of the preferred stock may also possess voting rights.

 

Liquidation. In the event
of any liquidation, dissolution or winding up of Seneca Savings, Seneca Financial Corp., as holder of Seneca Savings’ capital
stock, would be entitled to receive, after payment or provision for payment of all debts and liabilities of Seneca Savings, including
all deposit accounts and accrued interest thereon, all assets of Seneca Savings available for distribution. In the event of liquidation,
dissolution or winding up of Seneca Financial Corp., the holders of its common stock would be entitled to receive, after payment
or provision for payment of all its debts and liabilities, all of the assets of Seneca Financial Corp. available for distribution.
If preferred stock is issued, the holders thereof may have a priority over the holders of the common stock in the event of liquidation
or dissolution.

 

Rights to Buy Additional Shares.
Holders of the common stock of Seneca Financial Corp. are not entitled to preemptive rights. Preemptive rights are the priority
right to buy additional shares if Seneca Financial Corp. issues more shares in the future. The common stock is not subject to redemption.

 

     

     

    

 

Restrictions on the Acquisition of Seneca
Financial Corp.

 

The principal federal regulatory restrictions
which affect the ability of any person, firm or entity to acquire Seneca Financial Corp., Seneca Savings or their respective capital
stock are described below. Also discussed are certain provisions in Seneca Financial Corp.’s charter and bylaws that may
be deemed to affect the ability of a person, firm or entity to acquire Seneca Financial Corp.

 

Mutual Holding Company Structure

 

Seneca Financial MHC owns a majority of
the outstanding common stock of Seneca Financial Corp. and, through its board of directors, is able to exercise voting control
over virtually all matters put to a vote of stockholders. For example, Seneca Financial MHC may exercise its voting control to
prevent a sale or merger transaction or to defeat a stockholder nominee for election to the board of directors of Seneca Financial
Corp. It will not be possible for another entity to acquire Seneca Financial Corp. without the consent of Seneca Financial MHC.
Seneca Financial MHC, as long as it remains in the mutual form of organization, will control a majority of the voting stock of
Seneca Financial Corp.

 

Federal Law

 

Under the Change in Bank Control Act, no person may
acquire control of a savings and loan holding company unless the Federal Reserve Board has been given 60 days’ prior written
notice and has not issued a notice disapproving the proposed acquisition.

 

Control, as defined under federal law, means ownership,
control, or holding with power to vote, of 25% or more of any class of voting stock. Federal regulations establish a rebuttable
presumption of control upon ownership, control, or holding with power to vote, of 10% or more of a class of voting stock where
(i) the company has registered securities under Section 12 of the Securities Exchange Act of 1934 or (ii) no other person will
own control or hold the power to vote a greater percentage of that class of voting securities.

 

The Federal Reserve Board may deny an acquisition
of control if it finds, among other things, that:

 

		·	the acquisition would result in a monopoly or substantially lessen competition;

 

		·	the financial condition of the acquiring person might jeopardize the financial stability of the institution;

 

		·	the competence, experience or integrity of the acquiring person indicates that it would not be in the interest of the depositors
or the public to permit the acquisition of control by such person; or

 

		·	the acquisition would have an adverse effect on the Deposit Insurance Fund.

 

Until October 12, 2020, Federal Reserve
Board regulations generally prohibit any person from acquiring or making an offer to acquire beneficial ownership of more than
10% of the stock of Seneca Financial Corp. or Seneca Savings without the Federal Reserve Board’s prior approval.

 

Charters and Bylaws of Seneca Financial Corp.

 

The following discussion is a summary of
provisions of the charter and bylaws of Seneca Financial Corp. that may be deemed to affect the ability of a person, firm or entity
to acquire Seneca Financial Corp. The description is necessarily general and qualified by reference to the charter and bylaws.

 

Classified Board of Directors.
The board of directors of Seneca Financial Corp. is required by the charter and bylaws to be divided into three staggered classes
that are as equal in size as is possible. Each year one class will be elected by stockholders of Seneca Financial Corp. for a three-year
term. A classified board promotes continuity and stability of management of Seneca Financial Corp., but makes it more difficult
for stockholders to change a majority of the directors because it generally takes at least two annual elections of directors for
this to occur.

 

Authorized but Unissued Shares of
Capital Stock. Seneca Financial Corp. has authorized but unissued shares of preferred stock and common stock. Although
these shares could be used by the board of directors of Seneca Financial Corp. to make it more difficult or to discourage an attempt
to obtain control of Seneca Financial Corp. through a merger, tender offer, proxy contest or otherwise, it is unlikely that we
would use or need to use shares for these purposes since Seneca Financial MHC will own a majority of the common stock for so long
as we remain in the mutual holding company structure.

 

How Shares are Voted. Seneca
Financial Corp.’s charter provides that there will not be cumulative voting by stockholders for the election of Seneca Financial
Corp.’s directors. No cumulative voting rights means that Seneca Financial MHC, as the holder of a majority of the shares
eligible to be voted at a meeting of stockholders, may elect all directors of Seneca Financial Corp. to be elected at that meeting.
This could prevent minority stockholder representation on Seneca Financial Corp.’s board of directors.

 

     

     

    

 

Restrictions on Acquisitions of Shares.
A section in Seneca Financial Corp.’s charter provides that for a period of five years from the closing of the mutual holding
company reorganization and offering, no person, other than Seneca Financial MHC, may directly or indirectly offer to acquire or
acquire the beneficial ownership of more than 10% of any class of equity security of Seneca Financial Corp. held by persons other
than Seneca Financial MHC, and that any shares acquired in excess of this limit will not be entitled to be voted and will not be
counted as voting stock in connection with any matters submitted to the stockholders for a vote.

 

Procedures for Stockholder Nominations
and Proposals for New Business. Seneca Financial Corp.’s bylaws provide that any stockholder wanting to make a nomination
for the election of directors or a proposal for new business at a meeting of stockholders must send written notice to the Secretary
of Seneca Financial Corp. at least five days before the date of the annual meeting. Management believes that it is in the best
interests of Seneca Financial Corp. and its stockholders to provide enough time for management to disclose to stockholders information
about a dissident slate of nominations for directors. This advance notice requirement may also give management time to solicit
its own proxies in an attempt to defeat any dissident slate of nominations if management thinks it is in the best interest of stockholders
generally. Similarly, adequate advance notice of stockholder proposals will give management time to study such proposals and to
determine whether to recommend to the stockholders that such proposals be adopted.

 

Limitations on Calling Special Meetings
of Stockholders. Seneca Financial Corp.’s charter provides that special meetings of our stockholders may be called
by the chairman of the board, the president, or a majority of the board of directors, and shall be called by the chairman of the
board, the president, or the secretary upon the written request of the holders of not less than one-tenth of all of our outstanding
shares of voting stock.

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