Document:

Exhibit 10.2

 

Execution Version

HALCÓN RESOURCES CORPORATION

 

BACKSTOP COMMITMENT AGREEMENT

 

August 2, 2019

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
 
    	
Page
    
	
1.
    	
CERTAIN DEFINITIONS
    	
2
    
	
 
    	
 
    	
 
    	
 
    
	
2.
    	
THE BACKSTOP COMMITMENT
    	
9
    
	
 
    	
2.1
    	
Backstop Commitment
    	
9
    
	
 
    	
2.2
    	
Escrow; Closing
    	
10
    
	
 
    	
2.3
    	
Expense Reimbursement
    	
11
    
	
 
    	
2.4
    	
Funding Default
    	
11
    
	
 
    	
 
    	
 
    	
 
    
	
3.
    	
REPRESENTATIONS AND   WARRANTIES OF THE COMPANY
    	
12
    
	
 
    	
3.1
    	
Organization
    	
12
    
	
 
    	
3.2
    	
Due Authorization,   Execution and Delivery; Enforceability
    	
12
    
	
 
    	
3.3
    	
Authorized and Issued   Equity Interests
    	
13
    
	
 
    	
3.4
    	
Consents
    	
13
    
	
 
    	
3.5
    	
No Conflicts
    	
13
    
	
 
    	
3.6
    	
Company Information
    	
14
    
	
 
    	
3.7
    	
Absence of Certain   Changes
    	
14
    
	
 
    	
3.8
    	
No Violation;   Compliance with Laws
    	
14
    
	
 
    	
3.9
    	
Legal Proceedings
    	
14
    
	
 
    	
3.10
    	
No Unlawful Payments
    	
14
    
	
 
    	
3.11
    	
Compliance with Money   Laundering Laws
    	
14
    
	
 
    	
3.12
    	
No Broker’s Fees
    	
15
    
	
 
    	
3.13
    	
Investment Company Act
    	
15
    
	
 
    	
3.14
    	
Takeover Statutes
    	
15
    
	
 
    	
3.15
    	
Arm’s-Length
    	
15
    
	
 
    	
3.16
    	
Title to Real Property
    	
15
    
	
 
    	
3.17
    	
No Undisclosed   Relationships
    	
16
    
	
 
    	
3.18
    	
Licenses and Permits
    	
16
    
	
 
    	
3.19
    	
Environmental
    	
16
    
	
 
    	
3.20
    	
Tax Matters
    	
17
    
	
 
    	
3.21
    	
Employee Benefit Plans
    	
18
    
	
 
    	
3.22
    	
Internal Control Over   Financial Reporting
    	
18
    
	
 
    	
3.23
    	
Disclosure Controls and   Procedures
    	
19
    
	
 
    	
3.24
    	
Material Contracts
    	
19
    
	
 
    	
3.25
    	
Insurance
    	
19
    
	
 
    	
3.26
    	
Intellectual Property
    	
19
    
	
 
    	
3.27
    	
No Other   Representations and Warranties
    	
21
    

 

i

 

	
4.
    	
REPRESENTATIONS AND   WARRANTIES OF EACH BACKSTOP PARTY
    	
21
    
	
 
    	
4.1
    	
Organization
    	
21
    
	
 
    	
4.2
    	
Due Authorization
    	
21
    
	
 
    	
4.3
    	
Due Execution;   Enforceability
    	
21
    
	
 
    	
4.4
    	
No Registration Under   the Securities Act; Selling Restrictions
    	
21
    
	
 
    	
4.5
    	
Acquisition for   Investment
    	
22
    
	
 
    	
4.6
    	
No Conflicts
    	
22
    
	
 
    	
4.7
    	
Consents and Approvals
    	
22
    
	
 
    	
4.8
    	
Investor Representation
    	
22
    
	
 
    	
4.9
    	
Investment Experience
    	
22
    
	
 
    	
4.10
    	
Sufficiency of Funds
    	
22
    
	
 
    	
4.11
    	
Ownership
    	
22
    
	
 
    	
4.12
    	
Legal Proceedings
    	
23
    
	
 
    	
4.13
    	
No Broker’s Fee
    	
23
    
	
 
    	
4.14
    	
Independent   Investigation
    	
23
    
	
 
    	
 
    	
 
    	
 
    
	
5.
    	
COVENANTS
    	
23
    
	
 
    	
5.1
    	
Conduct of Business
    	
23
    
	
 
    	
5.2
    	
Non-Disclosure of   Holdings Information
    	
24
    
	
 
    	
5.3
    	
Use of Proceeds
    	
24
    
	
 
    	
5.4
    	
Blue Sky
    	
24
    
	
 
    	
5.5
    	
Senior Noteholder   Rights Offering
    	
25
    
	
 
    	
5.6
    	
The New Common Shares
    	
25
    
	
 
    	
5.7
    	
Backstop Notice
    	
25
    
	
 
    	
5.8
    	
Facilitation
    	
25
    
	
 
    	
5.9
    	
Access to Information;   Confidentiality
    	
25
    
	
 
    	
5.10
    	
Regulatory Approvals
    	
27
    
	
 
    	
 
    	
 
    	
 
    
	
6.
    	
CONDITIONS TO THE   BACKSTOP PARTIES’ CLOSING OBLIGATIONS
    	
28
    
	
 
    	
6.1
    	
Conditions to the   Backstop Parties’ Closing Obligations
    	
28
    

 

ii

 

	
 
    	
6.2
    	
Conditions to the   Company’s Closing Obligations
    	
30
    
	
 
    	
 
    	
 
    	
 
    
	
7.
    	
INDEMNIFICATION AND   CONTRIBUTION
    	
31
    
	
 
    	
7.1
    	
Indemnification   Obligations
    	
31
    
	
 
    	
7.2
    	
Indemnification   Procedure
    	
31
    
	
 
    	
7.3
    	
Settlement of   Indemnified Claims
    	
32
    
	
 
    	
7.4
    	
Contribution
    	
33
    
	
 
    	
7.5
    	
Treatment of   Indemnification Payments
    	
33
    
	
 
    	
 
    	
 
    	
 
    
	
8.
    	
MISCELLANEOUS
    	
33
    
	
 
    	
8.1
    	
Notice
    	
33
    
	
 
    	
8.2
    	
Assignment
    	
34
    
	
 
    	
8.3
    	
Survival
    	
35
    
	
 
    	
8.4
    	
Entire Agreement
    	
35
    
	
 
    	
8.5
    	
Waivers and Amendments
    	
35
    
	
 
    	
8.6
    	
Governing Law;   Jurisdiction; Venue; Process
    	
36
    
	
 
    	
8.7
    	
Counterparts
    	
36
    
	
 
    	
8.8
    	
Headings
    	
36
    
	
 
    	
8.9
    	
Severability
    	
36
    
	
 
    	
8.10
    	
Termination
    	
36
    
	
 
    	
8.11
    	
Breach
    	
37
    
	
 
    	
8.12
    	
Effect of Termination
    	
37
    
	
 
    	
8.13
    	
Waiver of Jury Trial
    	
38
    
	
 
    	
8.14
    	
Damages
    	
38
    
	
 
    	
8.15
    	
Specific Performance
    	
38
    
	
 
    	
8.16
    	
No Reliance
    	
38
    
	
 
    	
8.17
    	
Publicity
    	
39
    
	
 
    	
8.18
    	
Settlement Discussions
    	
39
    
	
 
    	
8.19
    	
No Recourse
    	
39
    
	
 
    	
8.20
    	
Other Interpretive   Matters
    	
39
    

 

iii

 

HALCÓN RESOURCES CORPORATION 
 BACKSTOP COMMITMENT AGREEMENT 
 August 2, 2019

 

BACKSTOP COMMITMENT AGREEMENT, dated as of August 2, 2019 (this “Agreement”), among Halcón Resources Corporation (the “Company”), a Delaware corporation (collectively, with Halcón Resources Operating, Inc., Halcón Holdings, Inc., Halcón Energy Properties, Inc., Halcón Permian, LLC, Halcón Field Services, LLC, and Halcón Operating Co., Inc., the “Company Parties” or the “Debtors”) and the parties set forth on Schedule 1 hereto (each a “Backstop Party” and collectively, the “Backstop Parties”).  The Company and each Backstop Party is referred to herein, individually, as a “Party” and, collectively, as the “Parties.”

 

RECITALS

 

WHEREAS, the Company is the issuer of those certain 6.75% Senior Notes due 2025 (the “Senior Notes”) issued under that certain indenture, dated as of February 16, 2017 (as amended, modified, or otherwise supplemented from time to time, the “Senior Notes Indenture”), by and among the Company, each of the guarantors named therein, and U.S. Bank National Association, as indenture trustee.

 

WHEREAS, the Parties have engaged in arm’s-length, good faith discussions regarding a restructuring of certain of the Company’s indebtedness and other obligations, including the Company’s indebtedness and obligations under the Revolving Credit Agreement and Senior Notes Indenture.

 

WHEREAS, the Parties, and certain other Senior Noteholders, together with their respective successors and permitted assigns and any subsequent Senior Noteholder that becomes party to the RSA in accordance with the terms thereof (collectively, the “Consenting Creditors”), entered into that certain Restructuring Support Agreement, dated as of the date hereof (the “RSA”), pursuant to which the Parties agreed to, among other things, support a restructuring of the Company’s capital structure (the “Restructuring”).

 

WHEREAS, consistent with the RSA, the Restructuring is anticipated to be implemented through a prepackaged plan of reorganization (as may be supplemented, amended, or modified from time to time, the “Plan”), a solicitation of votes thereon (the “Solicitation”), the Rights Offerings and the commencement by the Company of voluntary cases (the “Chapter 11 Cases”) under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”).

 

WHEREAS, in connection with the Restructuring and pursuant to the Plan, among other things, (a) the Company will conduct an equity rights offering (the “Senior Noteholder Rights Offering”), by distributing to each Senior Noteholder rights to purchase such Senior Noteholder’s pro rata share of the New Common Shares (defined below) available to be purchased in connection with the Senior Noteholder Rights Offering, and in an amount consistent with the Restructuring Term Sheet, for an aggregate purchase price of $150,150,000.00, and (b) subject to the terms and conditions contained in this Agreement, each

 

1

 

Backstop Party has agreed to purchase (on a several and not joint basis) an aggregate amount of New Common Shares equal to its Backstop Obligation (as defined below).

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises, representations, warranties, and covenants hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

1.                                      CERTAIN DEFINITIONS

 

The following terms have the meanings set forth below:

 

“Ad Hoc Noteholder Group”  has the meaning set forth in the RSA.

 

“Affiliate” of any Person means any Person that directly or indirectly controls, or is under common control with, or is controlled by, such Person.  As used in this definition, “control” (including with its correlative meanings, “controlled by” and “under common control with”) shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise).

 

“Aggregate Commitment Amount” means USD $150,150,000.00.

 

“Agreement” has the meaning assigned to it in the Preamble hereto.

 

“Antitrust Authorities” means the United States Federal Trade Commission, the Antitrust Division of the United States Department of Justice, the attorneys general of the several states of the United States and any other governmental entity, whether domestic or foreign, having jurisdiction pursuant to the Antitrust Laws.

 

“Antitrust Laws” means the Sherman Act, the Clayton Act, the HSR Act, the Federal Trade Commission Act, and any other Law, whether domestic or foreign, governing agreements in restraint of trade, monopolization, pre-merger notification, the lessening of competition through merger or acquisition or anti-competitive conduct, and any foreign investment Laws.

 

“Approval Order” means an order entered by the Bankruptcy Court in the Chapter 11 Cases authorizing the Company (on behalf of the Debtors) to assume this Agreement, including all exhibits and other attachments hereto.

 

“Backstop Commitment” means, with respect to each Backstop Party, the maximum amount of consideration in exchange for New Common Shares that such Backstop Party may be required to pay under this Agreement.  Such amounts are set forth opposite each Backstop Party’s name in Schedule 1 hereto.  The aggregate Backstop Commitments under this Agreement shall equal $150,150,000.00.

 

2

 

“Backstop Commitment Premium” means (a) in the event of the purchase of New Common Shares by any Backstop Party in accordance with this Agreement, 6.00% of such Backstop Party’s Backstop Commitment, payable in the form of New Common Shares issued at the Per Share Price, and (b) in the event this Agreement is terminated by the Required Backstop Parties under Section 8.10.4, 6.00% of such Backstop Party’s Backstop Commitment, payable in full in cash.

 

“Backstop Notice” has the meaning assigned to it in Section 2.1.3 hereto.

 

“Backstop Obligation” means, with respect to each Backstop Party, the amount of New Common Shares required to be purchased by it on the Effective Date, in an amount equal to the product of:  (a) the Remaining Shares; and (b) such Backstop Party’s Backstop Percentage.

 

“Backstop Party” and “Backstop Parties” have the meanings assigned to them in the Preamble hereto.

 

“Backstop Party Professionals” means (a) Paul, Weiss, Rifkind, Wharton & Garrison LLP, as counsel to the Ad Hoc Noteholder Group, (b) one local counsel to the Ad Hoc Noteholder Group, (c) one financial advisor to the Ad Hoc Group of Noteholders, and (d) other professional advisors for specialized areas of expertise as circumstances warrant, which are retained by Consenting Creditors, with the consent of the Company (which consent shall not be unreasonably delayed, conditioned or withheld).

 

“Backstop Percentage” means, with respect to a Backstop Party, the figure expressed as a percentage, calculated by dividing: (a) such Backstop Party’s Backstop Commitment; by (b) the Aggregate Commitment Amount.  Such percentages are set forth opposite each Backstop Party’s name in Schedule 1 attached hereto.

 

“Backstop Purchase” has the meaning assigned to it in Section 2.1.2(b) hereto.

 

“Bankruptcy Code” means Chapter 11 of Title 11 of the United States Code.

 

“Bankruptcy Court” has the meaning assigned to it in the Recitals hereto.

 

“Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by Law to close.

 

“Chapter 11 Cases” has the meaning assigned to it in the Recitals hereto.

 

“Closing” has the meaning assigned to it in Section 2.2.2(a) hereto.

 

“Company” has the meaning assigned to it in the Preamble hereto.

 

“Company Disclosure Schedule” means the disclosure schedule delivered by the Company to the Backstop Parties on the date of this Agreement.

 

“Company Information” means all of the reports, schedules, forms, statements and other documents (including exhibits and other information incorporated therein) posted or filed by the Company with the SEC pursuant to the reporting requirements set forth in the Exchange Act.

 

3

 

“Company Parties” has the meaning assigned to it in the Preamble hereto.

 

“Company Plan” and “Company Plans” have the meanings assigned to them in Section 3.21.1 hereto.

 

“Confirmation Order” has the meaning set forth in the RSA.

 

“Consenting Creditors” has the meaning assigned to in the Recitals hereto.

 

“Debtors” has the meaning assigned to it in the Preamble hereto.

 

“Defaulting Backstop Party” means each Backstop Party that causes a Funding Default.

 

“Definitive Documents” has the meaning set forth in the RSA.

 

“Disclosure Statement” has the meaning assigned to in the RSA.

 

“Effective Date” has the meaning set forth in the Restructuring Term Sheet.

 

“Entity” has the meaning set forth in section 101(15) of the Bankruptcy Code.

 

“Environmental Laws” means all applicable Laws (including common law), rules, regulations, codes, ordinances, orders in council, orders, decrees, treaties, directives, judgments or legally binding agreements promulgated or entered into by or with any governmental entity, relating to the protection of the environment, preservation or reclamation of natural resources, the generation, management, use, transportation, treatment, storage, disposal, release or threatened release of, or exposure to, any Hazardous Material or to occupational health and safety matters (to the extent relating to the management of or exposure to Hazardous Materials).

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with the Company is, or at any relevant time during the past six years was, treated as a single employer under section 414(b), (c), (m) or (o) of the Internal Revenue Code.

 

“Event” means any event, change, effect, circumstance, occurrence, development, condition, result, state of facts or change of facts.

 

“Excepted Liens” has the meaning set forth in the Revolving Credit Agreement.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Exit Facility” means financing to be provided to the Debtors, as reorganized on the Effective Date in accordance with the Plan, in form and substance reasonably acceptable to the Required Backstop Parties.

 

“Expense Reimbursement” has the meaning assigned to it in Section 2.3.1 hereto.

 

“Filing Party” has the meaning assigned to it in Section 5.10.2 hereto.

 

“Funding Amount” has the meaning assigned to it in Section 2.1.3 hereto.

 

4

 

“Funding Default” means the failure by any Backstop Party to pay the Purchase Price with respect to its Backstop Obligation by the Effective Date in accordance with Section 2.2.

 

“GAAP” means U.S. generally accepted accounting principles.

 

“Hazardous Materials” means all pollutants, contaminants, hazardous wastes, chemicals, hazardous materials, and hazardous substances, including any sulphuric or other acid, explosive or radioactive substances or petroleum or petroleum distillates, asbestos or asbestos containing materials, lead in any form (including soluble and particulate), arsenic, polychlorinated biphenyls, urea-formaldehyde or radon gas that are subject to regulation or which can give rise to liability under any Environmental Law because of their hazardous or deleterious properties or characteristics.

 

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended from time to time.

 

“Indemnified Claim” has the meaning assigned to it in Section 7.2 hereto.

 

“Indemnified Losses” has the meaning assigned to it in Section 7.1 hereto.

 

“Indemnified Person” has the meaning assigned to it in Section 7.1 hereto.

 

“Indemnifying Party” and “Indemnifying Parties” have the meanings assigned to them in Section 7.1 hereto.

 

“Intellectual Property” means any and all of the following in any jurisdiction throughout the world, and all corresponding rights: (a) material inventions, patents and industrial designs (including utility model rights, design rights and industrial property rights), patent and industrial design applications, and patent disclosures, together with all reissues, continuations, continuations-in-part, revisions, divisionals, extensions, and reexaminations; (b) material trademarks, service marks, designs, trade dress, logos, slogans, trade names, business names, corporate names, Internet domain names, and all other indicia of origin, all applications and registrations in connection therewith, and all goodwill associated with any of the foregoing (this clause (b), “Marks”); (c) material works of authorship, copyrights, software, data, database rights and moral rights, and all applications and registrations in connection therewith; (d) trade secrets and other confidential information, including know how, methods, processes, techniques, formulae, and product specifications; (e) material rights of privacy and publicity, including rights to the use of names of real persons; and (f) material other intellectual property rights.

 

“Internal Revenue Code” means the Internal Revenue Code of 1986.

 

“Investment Company Act” means the Investment Company Act of 1940, as amended.

 

“Joinder Agreement” has the meaning assigned to it in Section 8.2 hereto.

 

“Joint Filing Party” has the meaning assigned to it in Section 5.10.3.

 

“Knowledge of the Company” means the actual knowledge of Richard Little, Quentin Hicks and David Elkouri.

 

5

 

“Law” means any law (including common law), statute, ordinance, treaty, rule, regulation, policy or requirement of any governmental authority and authoritative interpretations thereon, in each case, applicable to or binding on such Person or any of its properties or to which such Person or any of its properties is subject.

 

“Leased Real Property” has the meaning assigned to it in Section 3.16.2.

 

“Legal Proceedings” has the meaning assigned to it in Section 3.9 hereto.

 

“Lien” means any lien, adverse claim, charge, option, right of first refusal, servitude, security interest, mortgage, pledge, deed of trust, easement, encumbrance, restriction on transfer, conditional sale or other title retention agreement, defect in title, lien or judicial lien as defined in Sections 101(36) and (37) of the Bankruptcy Code or other restrictions of a similar kind.

 

“Material Adverse Effect” means any Event occurring after the date hereof that, individually or together with all other Events, has had or would reasonably be expected to have a material and adverse effect on the business, results of operations or condition (financial or otherwise) of the Company Parties, or the properties, assets, finances or liabilities of the Company Parties, taken as a whole; provided that “Material Adverse Effect” shall not include any Event occurring after the date hereof and arising out of or resulting from: (a) conditions or effects that generally affect persons or entities engaged in the industries, business, markets, financial conditions or the geographic area in which the Company Parties operate taking into consideration any Event that is related to the operations of the Company in the specific geographical and geological areas in which it operates, (b) general economic conditions in regions and markets in which the Company Parties operate, (c) regional, national or international political or social conditions, including acts of war, terrorism or natural disasters, escalation or material worsening of hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon the United States or its territories, possessions, diplomatic or consular offices or upon any military installation, equipment or personnel of the United States, (d) financial, banking, securities, credit, or commodities markets, prevailing interest rates or general capital markets conditions, (e) changes in United States generally accepted accounting principles, (f) changes in Laws, orders, or other binding directives issued by any governmental entity, (g) the taking of any action or any inaction required by this Agreement, the RSA, the Restructuring Term Sheet, the Plan, or any action or inaction in connection with the Chapter 11 Cases, including the commencement, announcement and pendency of the Chapter 11 Cases, or (h) any action or inaction consented to or requested by the Consenting Creditors; provided, that exceptions set forth in clauses (a), (b), (c) and (d) of this definition shall not apply to the extent that such Event is disproportionately adverse to the Company Parties, taken as a whole, as compared to other companies comparable in size and scale to the Company Parties operating in the industries and same geographical area in which the Company Parties operate.

 

“Marks” has the meaning assigned to it in the definition of Intellectual Property.

 

“Material Contracts” means (a) all “plans of acquisition, reorganization, arrangement, liquidation or succession” and “material contracts” (as such terms are defined in Items 601(b)(2) and 601(b)(10) of Regulation S-K under the Exchange Act) to which the Company is a party, (b) any contracts to which the Company is a party that are likely to reasonably involve consideration of more than $10,000,000, in the aggregate, over a twelve-month period, and

 

6

 

(c) all contracts: (i) the Company is granted a right or license with respect to any material Intellectual Property of any other Person thereunder, which right or license is material to the Company’s business; (ii) the Company grants to any other Person thereunder any right or license with respect to any material Owned IP; or (iii) the Company’s ability to use, own, license, transfer, enforce, or disclose any material Owned IP is adversely affected, including settlement agreements, but in the case of (i) and (iii), excluding Off-the-Shelf Licenses.

 

“MIP” means a post-emergence management incentive plan to be implemented by the board of the Company after the Effective Date as further described in the Plan.

 

“Money Laundering Laws” has the meaning assigned to it in Section 3.11 hereto.

 

“New Common Shares” means shares of common stock of the Company as reorganized on the Effective Date in accordance with the Plan.

 

“Notice of Assignment” has the meaning assigned to it in Section 8.2 hereto.

 

“Off-the-Shelf License” means any license for unmodified, commercially available “off-the-shelf” software that is used in the Company’s internal “back-office” operations for which the Company pays an aggregate fee, royalty, or other consideration for any such software or group of related Software licenses of no more than $50,000.

 

“Offering Deadline” means the date on which the subscription period for the Senior Noteholder Rights Offering shall expire (as such date may be extended pursuant to the Plan and the Senior Noteholder Rights Offering Procedures).

 

“Owned IP” means all Intellectual Property owned or purported to be owned by any Group Company, including the Registered IP.

 

“Party” and “Parties” have the meanings assigned to them in the Preamble hereto.

 

“Perella” has the meaning assigned to it in Section 5.9.1 hereto.

 

“Per Share Price” means an amount equal to the price at which one share of the New Common Shares is sold to holders of Senior Notes in the Senior Noteholder Rights Offering pursuant to the Senior Noteholder Rights Offering Documents.

 

“Person” includes any individual, corporation, partnership, joint venture, association, joint stock company, limited liability company, limited partnership, trust, estate, unincorporated organization, governmental unit (as defined in section 101(27) of the Bankruptcy Code), or other Entity.

 

“Petition Date” has the meaning assigned to it in the Plan.

 

“Plan” has the meaning assigned to it in the Recitals hereto.

 

“Purchase Price” means, with respect to any Backstop Party, the applicable purchase price in respect of its Backstop Purchase calculated as the product (expressed in U.S. dollars) of (a) such Backstop Party’s Backstop Obligation, multiplied by (b) the Per Share Price.

 

“Real Property” means, collectively, all right, title and interest (including any leasehold estate) in and to any and all parcels of or interests in real property owned in fee simple or leased by the Company or any of its Subsidiaries, together with, in each case, all easements, hereditaments and appurtenances relating thereto, all improvements and appurtenant fixtures incidental to the ownership or lease thereof.

 

7

 

“Registered IP” has the meaning assigned to it in Section 3.26.1 hereto.

 

“Related Party Agreement” has the meaning assigned to it in Section 3.17 hereto.

 

“Remaining Shares” means the aggregate number of New Common Shares that have not been subscribed for and purchased, if any, in the Senior Noteholder Rights Offering as of the Offering Deadline.

 

“Replacement Period” has the meaning assigned to it in Section 2.4.1 hereto.

 

“Replacement Purchase” has the meaning assigned to it in Section 2.4.1 hereto.

 

“Replacing Backstop Parties” has the meaning assigned to it in Section 2.4.1 hereto.

 

“Required Backstop Parties” has the meaning assigned to it in Section 8.5 hereto.

 

“Reserve Report” has the meaning assigned to it in Section 3.16.1 hereto.

 

“Restructuring” has the meaning assigned to it in the Recitals hereto.

 

“Restructuring Term Sheet” has the meaning assigned to it in the RSA.

 

“Revolving Credit Agreement” has the meaning assigned to it in the Restructuring Term Sheet.

 

“Rights Offerings” has the meaning set forth in the RSA for “Equity Rights Offerings.”

 

“RSA” has the meaning assigned to it in the Recitals hereto.

 

“SEC” means the U.S. Securities and Exchange Commission.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Senior Noteholder Rights Offering” has the meaning assigned to it in the Recitals hereto.

 

“Senior Noteholder Rights Offering Documents” means this Agreement and the Senior Noteholder Rights Offering Procedures.

 

“Senior Noteholder Rights Offering Procedures” means the procedures governing the Senior Notes Rights Offering, in form and substance reasonably acceptable to the Required Backstop Parties.

 

“Senior Notes” has the meaning assigned to it in the Recitals hereto.

 

“Senior Notes Indenture” has the meaning assigned to it in the Recitals hereto.

 

“Solicitation” has the meaning assigned to it in the Recitals hereto.

 

8

 

“Subscription Agent” means Kurtzman Carson Consultants LLC, together with its affiliates and subcontractors.

 

“Subscription Account” has the meaning assigned to it in Section 2.1.3 hereto.

 

“Subscription Amount” has the meaning assigned to it in Section 2.1.2(a) hereto.

 

“Subscription Funding Date” has the meaning assigned to it in Section 2.2.1 hereto.

 

“Subscription Rights” means those certain rights to purchase New Common Shares pursuant to the Senior Noteholder Rights Offering at the “Per Share Price” per share, which the reorganized Company will issue to participating Senior Noteholders pursuant to the Plan.

 

“Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership, joint venture or other legal entity as to which such Person (either alone or through or together with any other Subsidiary or Affiliate), (a) owns, directly or indirectly, more than fifty percent (50%) of the stock or other equity interests, (b) has the power to elect a majority of the board of directors or similar governing body thereof or (c) has the power to direct, or otherwise control, the business and policies thereof by contract, equity ownership or otherwise.

 

“Takeover Statute” means any restrictions contained in any “fair price,” “moratorium,” “control share acquisition”, “business combination” or other similar anti-takeover statute or regulation.

 

“Tudor” has the meaning assigned to it in Section 5.9.1 hereto.

 

“Warrants” has the meaning assigned to it in the RSA.

 

“Weil” has the meaning assigned to it in Section 5.9.1 hereto.

 

2.                                      THE BACKSTOP COMMITMENT

 

2.1                               Backstop Commitment.

 

2.1.1                     New Common Shares.  The Senior Noteholder Rights Offering will be made, and the New Common Shares will be issued and sold in reliance upon, the exemption from registration under the Securities Act provided in section 1145 of the Bankruptcy Code, and all New Common Shares (other than the New Common Shares issued on account of the Backstop Commitment Premium to the Backstop Parties) will be issued in reliance upon such exemption.  The issuance of the New Common Shares to the Backstop Parties on account of the Backstop Obligations and the Backstop Commitment Premium will be made in reliance on the exemption from registration provided by section 4(a)(2) and Regulation D of the Securities Act or another available exemption from registration under the Securities Act, and, in each case, the Disclosure Statement, Confirmation Order and Plan shall include a statement to such effect.

 

2.1.2                     The Rights Offering and the Backstop Commitment.  (a) On and subject to the terms and conditions hereof and the Senior Noteholder Rights Offering Procedures, including entry of the Confirmation Order, each Backstop Party agrees, severally and not jointly, to (i) fully exercise all Subscription Rights that 

 

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are properly issued to it and its Affiliates pursuant to the Senior Noteholder Rights Offering, (ii) duly  purchase all New Common Shares issuable to it and its Affiliates pursuant to such exercise (the “Subscription Amount”) at the applicable Per Share Price and (iii) complete, duly execute and submit a subscription exercise form and any other documentation required pursuant to the Senior Noteholder Rights Offering Procedures and the Plan.

 

(b)                                 On and subject to the terms and conditions hereof, including entry of the Confirmation Order, each Backstop Party agrees, severally and not jointly, to (i) purchase an aggregate number of New Common Shares equal to its Backstop Obligation (the “Backstop Purchase”) for an amount equal to the Purchase Price and (ii) complete, duly execute and submit a subscription exercise form and any other documentation required pursuant to the Senior Noteholder Rights Offering Procedures and the Plan.

 

2.1.3                     Backstop Notice.  On or before the fifth (5th) Business Day after the Offering Deadline, the Subscription Agent on behalf of the Company shall notify each Backstop Party in writing (the “Backstop Notice”) as to: (a) the Remaining Shares; (b) its consequent Backstop Obligation; (c) the aggregate amount payable on the Effective Date with respect to such Backstop Party’s Subscription Amount and Backstop Obligation (collectively, the “Funding Amount”); and (d) the account information (including wiring instructions) for the account to which such Backstop Party shall deliver and pay the Funding Amount, which account may be an escrow account and the Funding Amount (the “Subscription Account”).

 

2.2                               Escrow; Closing.

 

2.2.1                     Escrow.  No later than two (2) Business Days prior to the Effective Date (such date, the “Subscription Funding Date”), each Backstop Party shall deliver and pay its Funding Amount by wire transfer of immediately available funds in U.S. dollars into the Subscription Account in satisfaction of such Backstop Party’s Backstop Commitment.

 

2.2.2                     Closing.  (a) Subject to Article VI, the closing of the transactions contemplated hereby (the “Closing”) shall take places at the offices of Weil, Gotshal & Manges LLP, 767 5th Avenue, New York, NY 10253, at 5:00 p.m., New York City time, on the Effective Date contemporaneously with the substantial consummation of the Plan.

 

(b)                                 At the Closing, the funds held in the Subscription Account shall be released to the Company.

 

(c)                                  At the Closing, issuance of the Remaining Shares will be made by the Reorganized Company to each Backstop Party against payment of the applicable portion of such Backstop Party’s Funding Amount, in satisfaction of such Backstop Party’s Backstop Commitment.

 

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2.2.3                     Premium.  Subject to Section 2.4, the Company hereby agrees to pay each Backstop Party its Backstop Commitment Premium, which premium shall be deemed earned upon the effective date of this Agreement and payable upon the earlier of (a) the Effective Date and (b) termination of this Agreement by the Requisite Backstop Parties, pursuant to Section 8.10.4.

 

2.2.4                     Certain Tax Matters. All parties hereto agree to treat the transactions contemplated by this Agreement as follows for U.S. federal income tax purposes: (a) the Backstop Obligation shall be treated as a put option; (b) the Backstop Commitment Premium herein shall be treated as remuneration to the Backstop Parties for agreeing to enter into such put option; and (c) no party shall take any position or action inconsistent with such treatment and/or characterization, except, in each case, to the extent otherwise required by applicable Law.

 

2.2.5                     Withholding.  Except as otherwise required by applicable Law, the Company shall not withhold any taxes with respect to the Backstop Commitment Premium.

 

2.3                               Expense Reimbursement.

 

2.3.1                     The Company agrees to pay or reimburse when due, to the extent not otherwise paid pursuant to the RSA or in connection with the Chapter 11 Cases or another order of the Bankruptcy Court, all accrued and unpaid fees, costs and expenses of the Backstop Parties’ Professionals, incurred in connection with this Agreement, the RSA, and these Chapter 11 Cases, whether prior to, on, or after the date hereof through the Effective Date for which invoices or receipts are forwarded to the Company by the Backstop Parties at least one (1) Business Day prior to the Effective Date (the “Expense Reimbursement”).

 

2.4                               Funding Default.

 

2.4.1                     Upon the occurrence of a Funding Default, the Backstop Parties (other than any Defaulting Backstop Party) shall have the right, but not the obligation, within five (5) Business Days after receipt of written notice from the Company to all Backstop Parties of such Funding Default, which notice shall be given promptly following the occurrence of such Funding Default and to all Backstop Parties substantially concurrently (such five (5) Business Day period, the “Replacement Period”), to elect, by written notice to the Company, to purchase all or any portion of the New Common Shares attributable to such Defaulting Backstop Party’s Backstop Obligation (such purchase, a “Replacement Purchase”) on the terms and subject to the conditions set forth in this Agreement and in such amounts as may be agreed upon by all of the non-defaulting Backstop Parties that elect to purchase all or any portion of the New Common Shares attributable to such Defaulting Backstop Party, or, if no such agreement is reached by the date upon which the Replacement Period expires, based upon each such electing Backstop Party’s Backstop Percentage of the aggregate number of New Common Shares that have not been purchased as a result of such Funding Default (such Backstop Parties, the “Replacing Backstop Parties”).  The purchase price paid by 

 

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any Replacing Backstop Party in connection  with a Replacement Purchase shall be equal to the applicable Purchase Price.  Within one (1) Business Day from delivery of written notice of a Funding Default, electing Backstop Parties will fund the Subscription Account with the additional Purchase Price with respect to the Replacement Purchase.

 

2.4.2                     If a Backstop Party is a Defaulting Backstop Party, it shall not be entitled to any of the Backstop Commitment Premium hereunder.

 

2.4.3                     Other than as set forth in Section 2.4.1, nothing in this Agreement shall require any Backstop Party to purchase more than its Backstop Obligation.

 

2.4.4                     Notwithstanding anything to the contrary set forth in Section 8.12 but subject to Section 8.14, no provision of this Agreement shall relieve any Defaulting Backstop Party from liability hereunder, or limit the availability of the remedies set forth in Section 8.15 or otherwise available to the non-defaulting parties hereto, in connection with any such Backstop Party’s Funding Default.

 

3.                                      REPRESENTATIONS AND WARRANTIES OF THE COMPANY.  Except (a) as set forth in the corresponding section of the Company Disclosure Schedule or (b) as disclosed in the Company Information and publicly available on the SEC’s website prior to the date hereof, the Company, on behalf of itself and each of the Company Parties, as applicable, hereby represents and warrants to each of the Backstop Parties, in their capacities as Backstop Parties, as of the date hereof, as follows:

 

3.1                               Organization. Each Company Party:

 

3.1.1                     is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its organization, except where any such failure to be duly organized, validly existing and in good standing, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect;

 

3.1.2                     has all corporate power and authority to own and operate its properties, to lease the property it operates under lease and to conduct its business, except where any such failure to own and/or operate, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.

 

3.2                               Due Authorization, Execution and Delivery; Enforceability.  The Company has the requisite corporate power and authority to enter into, execute and deliver this Agreement and, subject to the entry of the Approval Order and the Confirmation Order, to perform its obligations hereunder, and has taken all necessary corporate action required for the due authorization, execution, delivery and performance by it of this Agreement.  Assuming due and valid execution and delivery by the other Parties, this Agreement constitutes the legally valid and binding obligation of the Company, enforceable against it in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency or similar Laws affecting the enforcement of creditors’ rights generally or by equitable principles relating to enforceability.

 

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3.3                               Authorized and Issued Equity Interests.

 

3.3.1                     On the Effective Date, (i) the outstanding equity interests in the Company will consist solely of the New Common Shares issued under the Rights Offerings and the Plan, any New Common Shares issued upon exercise of the Warrants or under the MIP, (ii) no New Common Shares will be held by the Company in its treasury, and, (iii) except as may otherwise be provided under the MIP or the Warrants issued under the Plan, no New Common Shares will be reserved for issuance upon exercise of options and other rights to purchase or acquire New Common Shares.

 

3.3.2                     As of the Effective Date, the New Common Shares, when issued, will be duly and validly issued and outstanding and will be fully paid and non-assessable.  As of the Effective Date, the Company shall have the ability to issue sufficient New Common Shares to consummate the transaction contemplated under this Agreement, the RSA and the Plan.

 

3.3.3                     Except as set forth in this Section 3.3, as of the Effective Date, no shares or other equity interests or voting interests in the Company will have been issued, reserved for issuance or be outstanding.

 

3.4                               Consents.  Subject to the entry of the Confirmation Order and the filing of the Amended Organizational Documents with the Delaware Secretary of State prior to or on the Effective Date, none of the execution, delivery or performance of this Agreement by the Company, including the issuance of the New Common Shares by the Company, will require any consent of, authorization by, exemption from, filing with, or notice to any governmental entity having jurisdiction over the Company Parties, other than the failure of which to make or obtain, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.

 

3.5                               No Conflicts.  Except for entry of the Confirmation Order, and subject to the occurrence of the Effective Date, the execution, delivery and performance of this Agreement by the Company, including the issuance of the New Common Shares and the consummation of the transactions contemplated hereunder, will not (a) conflict with or result in any breach of any provision of any Company Party’s certificate of incorporation, by-laws or equivalent governing documents as in effect on the Effective Date, (b) conflict with or result in the breach of the terms, conditions or provisions of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give rise to any right of termination or, except to the extent specified in the Plan, acceleration or cancellation under any Material Contract, lease, mortgage, license, indenture, instrument or any other material agreement or contract to which any Company Party is a party or by which any Company Party’s properties or assets are bound as in effect on the Effective Date after giving effect to the Plan, or (c) result in a violation of any Law, rule, regulation, order, judgment or decree (including, without limitation, federal and state securities Laws and regulations) applicable to any Company Party or by which any Company Party’s properties or assets will be bound or affected, except in the case of 

 

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clauses (b) and (c), as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

 

3.6                               Company Information.  Since December 31, 2018, the Company has timely filed all required Company Information with the SEC. The Disclosure Statement as filed with the Bankruptcy Court will contain “adequate information,” as such term in defined in section 1125 of the Bankruptcy Code, and will otherwise comply in all material respects with section 1125 of the Bankruptcy Code.

 

3.7                               Absence of Certain Changes.  Since December 31, 2018, no event has occurred or exists that constitutes, individually or in the aggregate, a Material Adverse Effect.

 

3.8                               No Violation; Compliance with Laws.  (a) The Company is not in violation of its charter or by-laws in any material respect, and (b) no other Company Party is in violation of its respective charter or by-laws, certificate of formation or limited liability company operating agreement or similar organizational document in any material respect.  None of the Company Parties is or has been at any time since February 16, 2017 deemed to be in violation of any Law or order, except for any such violations that have not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

3.9                               Legal Proceedings.  Other than the Chapter 11 Cases and any adversary proceedings or contested motions commenced in connection therewith, as of the date hereof, there are no legal, governmental, administrative, judicial or regulatory investigations, audits, actions, suits, claims, arbitrations, demands, demand letters, claims, notices of noncompliance or violations, or proceedings (“Legal Proceedings”) pending or, to the Knowledge of the Company, threatened to which any of the Company Parties is a party or to which any property of the Company Parties is the subject, in each case that (a) in any manner draws into question the validity or enforceability of this Agreement, the Definitive Documents or the Restructuring or (b) would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

3.10                        No Unlawful Payments.  Since February 16, 2017, none of the Company Parties nor, to the Knowledge of the Company, any of their respective directors, officers or employees acting on behalf of the Company with the express authority to do such act has in any material respect: (a) used any funds of any of the Company Parties for any unlawful contribution, gift, entertainment or other unlawful expense, in each case relating to political activity; (b) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (c) violated or is in violation of any applicable provision of the U.S. Foreign Corrupt Practices Act of 1977 or any other applicable statute, regulation, order or measure prohibiting bribery and corruption in any relevant jurisdiction; or (d) made any bribe, rebate, payoff, influence payment, kickback or other similar unlawful payment.

 

3.11                        Compliance with Money Laundering Laws.  The operations of the Company Parties are and, since February 16, 2017 have been at all times, conducted in compliance in all material respects with applicable financial recordkeeping and reporting requirements of 

 

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the U.S. Currency and Foreign Transactions Reporting Act of 1970, the money laundering statutes of all jurisdictions in which the Company Parties operate (and the rules and regulations promulgated thereunder) and any related or similar Laws (collectively, the  “Money Laundering Laws”) and, as of the date hereof, no material Legal Proceeding by or before any governmental entity or any arbitrator involving any of the Company Parties with respect to Money Laundering Laws is pending or, to the Knowledge of the Company, threatened.

 

3.12                        No Broker’s Fees.  None of the Company Parties is  a party to any contract with any Person (other than this Agreement) that would give rise to a valid claim against the Backstop Parties for a brokerage commission, finder’s fee or like payment in connection with the Senior Noteholder Rights Offering.

 

3.13                        Investment Company Act.  The Company Parties are not and, after giving effect to the Senior Noteholder Rights Offering and the application of the proceeds thereof as described in the Definitive Documents, will not be subject to registration and regulation as an “investment company” as such term is defined in the Investment Company Act.

 

3.14                        Takeover Statutes.  No Takeover Statute is applicable to this Agreement, the Backstop Commitment and the other transactions contemplated by this Agreement.

 

3.15                        Arm’s-Length.  The Company acknowledges and agrees that (a) each of the Backstop Parties is acting solely in the capacity of an arm’s-length contractual counterparty to the Company with respect to the transactions contemplated hereby (including in connection with determining the terms of the Senior Noteholder Rights Offering) and not as a financial advisor or a fiduciary to, or an agent of, the Company or any other Company Party or any of their Affiliates and (b) no Backstop Party is advising the Company or any other Company Party or any of their Affiliates as to any legal, tax, investment, accounting or regulatory matters in any jurisdiction.

 

3.16                        Title to Real Property.

 

3.16.1              Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (a) the Company Parties have good and defensible title to the oil and gas properties evaluated in the most recently delivered Reserve Report and good title to all its other personal properties, in each case, free and clear of all Liens except Liens permitted under the Revolving Credit Agreement, and (b) after giving full effect to the Excepted Liens, the Company (or applicable Subsidiary) owns the net interests in production attributable to the hydrocarbon interests as reflected in the most recently delivered Reserve Report, and the ownership of such properties shall not in any material respect obligate the Company or such Subsidiary to bear the costs and expenses relating to the maintenance, development and operations of each such property in an amount in excess of the working interest of each property set forth in the most recently delivered Reserve Report that is not offset by a corresponding proportionate increase in the Company’s or such Subsidiary’s net revenue interest in such property.  “Reserve Report” means that certain report issued by 

 

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Netherland, Sewell & Associates, Inc., as of December 31, 2018  with respect to the oil and gas reserves of the Company attributable to the properties of the Company and certain of its Subsidiaries.

 

3.16.2              Each Company Party is in compliance with all obligations under all material real property leases other than oil and gas leases to which it is a party (“Leased Real Property”), except where the failure to comply would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, and all such material real property leases are in full force and effect, except leases in respect of which the failure to be in full force and effect would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.  Each of the Company Parties enjoys peaceful and undisturbed possession under all such material leases, other than leases in respect of which the failure to enjoy peaceful and undisturbed possession would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

3.17                        No Undisclosed Relationships.  Other than contracts or other direct or indirect relationships between or among the Company Parties, there are no contracts or other direct or indirect relationships (a “Related Party Agreement”) existing as of the date hereof between or among the Company or any of its Subsidiaries, on the one hand, and any director, officer or greater than five percent (5%) stockholder of any Company Party on the other hand, that is required by the Exchange Act to be described in the Company Information and that is not so described, except for the transactions contemplated by this Agreement.  Any Related Party Agreement existing as of the date hereof is described in the Company Information or the Definitive Documents.

 

3.18                        Licenses and Permits.  Each Company Party possesses or has access to all licenses, certificates, permits and other authorizations issued by, and has made all declarations and filings with, the appropriate governmental entities that are necessary for the ownership or lease of its respective properties and the conduct of its business, except where the failure to possess, make or give the same would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.  No Company Party (a) has received notice of any revocation or modification of any such license, certificate, permit or authorization or (b) has reason to believe that any such license, certificate, permit or authorization will not be renewed in the ordinary course, except to the extent that any of the foregoing would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

3.19                        Environmental.  Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, since February 16, 2017: (a) no written notice, claim, demand, request for information, order, complaint or penalty has been received by any Company Party and there are no judicial, administrative or other actions, suits or proceedings pending or, to the Knowledge of the Company, threatened in each case which allege a violation of liability under any Environmental Laws, in each case relating to any Company Party and that have not been settled or resolved, (b) each Company Party has all environmental permits, licenses and other approvals, and has maintained all financial assurances, necessary for its operations to comply with all applicable

 

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Environmental Laws and is, and during the term of all applicable statutes of limitation, has been, in compliance with the terms of such permits, licenses and other approvals and with all other applicable Environmental Laws, (c) to the Knowledge of the Company, since February 16, 2017, no Hazardous Material has been released at, on or under any property currently owned, operated or leased by any Company Party in a manner or circumstance or condition that would reasonably be expected to give rise to any cost, liability or obligation of any Company Party under any Environmental Laws, (d) to the Knowledge of the Company, since February 16, 2017, no Hazardous Material has been generated, owned, treated, stored, handled or controlled by any Company Party or transported by any Company Party to or released by any Company Party at any location in a manner that would reasonably be expected to give rise to any cost, liability or obligation of any Company Party under any Environmental Laws, (e) except for leases of the Leased Real Property, there are no written agreements in which any Company Party has expressly assumed or undertaken responsibility for any known or reasonably likely liability or obligation of any other Person arising under or relating to Environmental Laws, which in any such case has not been filed or posted by the Company as Company Information or made available to the Backstop Parties prior to the date hereof, and (f) to the Knowledge of the Company, no Company Party has entered into any consent decree, settlement or other agreement with any governmental entity or is subject to any order issued by any governmental entity relating to any Environmental Laws or Hazardous Materials.

 

3.20                        Tax Matters.

 

3.20.1              Except as would not reasonably be expected to be material to the Company Parties taken as a whole, (a) each of the Company Parties has filed or caused to be filed all U.S. federal, state, provincial, local and non-U.S. tax returns required to have been filed by it and (b) taken as a whole, each such tax return is true and correct;

 

3.20.2              Each of the Company Parties has timely paid or caused to be timely paid all material taxes required to be paid by it (whether or not shown on any tax returns) or made adequate provision (to the extent required in accordance with GAAP) for the payment thereof; and

 

3.20.3              As of the date hereof, with respect to the Company Parties, other than in connection with the Chapter 11 Cases and other than taxes or assessments that are being contested in good faith or are not expected to result in material negative adjustments to the Company Parties taken as a whole, (a) there are no claims being asserted in writing with respect to any taxes, (b) no presently effective waivers or extensions of statutes of limitations with respect to taxes have been given or requested and (c) no tax returns are being examined by, and no written notification of intention to examine a tax return has been received from, the Internal Revenue Service or any other governmental entity charged with the administration and collection of taxes.

 

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3.21                        Employee Benefit Plans.

 

3.21.1              Except for the filing and pendency of the Chapter 11 Cases or otherwise as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (a) all employee benefit plans of the Company Parties (the “Company Plans”, each of them a “Company Plan”) comply in form and in operation in all material respects with their terms and with all applicable Laws; and (b) no Company Party, nor any ERISA Affiliate of a Company Party, in the four (4) years preceding the date hereof has contributed to, or incurred any liability or obligation with respect to, any employee benefit plan subject to Title IV of ERISA.

 

3.21.2              Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, there are no pending, or to the Knowledge of the Company, threatened claims, sanctions, actions or lawsuits, asserted or instituted against any Company Plan or any Person as fiduciary or sponsor of any Company Plan, in each case other than claims for benefits in the normal course.

 

3.21.3              Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (a) all other compensation and benefit arrangements of the Company Parties comply and have complied in both form and operation with their terms and all applicable Laws and legal requirements, and (b) no Company Party could reasonably be expected to have any obligation to provide any individual with a “gross up” or similar payment in respect of any taxes that may become payable under section 409A or 4999 of the Internal Revenue Code.

 

3.21.4              Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, there are (a) no labor disputes against the Company Parties, or, to the Knowledge of the Company, threatened against any Company Party, and (b) no claims of unfair labor practices, charges or grievances pending against any Company Party, or to the Knowledge of the Company, threatened against any of them by any Person.

 

3.21.5              Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (i) each Company Party has complied and is currently in compliance with all Laws and legal requirements in respect of personnel, employment and employment practices, (b) all service providers of the Company Parties are correctly classified as employees, independent contractors, or otherwise for all purposes (including any applicable tax and employment policies or Law), and (c) the Company Parties have not and are not engaged in any unfair labor practice.

 

3.22                        Internal Control Over Financial Reporting.  Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, the Company has established and maintains a system of internal control over financial reporting that has been designed to provide reasonable assurances regarding the 

 

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reliability of financial reporting (within the meaning of Rules 13(a)-15(f) and 15(d) — 15(f) under the Exchange Act) and the preparation of financial statements for external purposes in accordance with GAAP.  To the Knowledge of the Company, there are no material weaknesses in the Company’s internal control over financial reporting as of the date hereof.

 

3.23                        Disclosure Controls and Procedures.  Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, the Company maintains disclosure controls and procedures designed to ensure that information required to be disclosed by the Company under the Exchange Act in its Company Information is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, including information that is accumulated and communicated to management of the Company as appropriate to allow timely decisions regarding required disclosure.

 

3.24                        Material Contracts.  Other than as a result of the Chapter 11 Cases, all Material Contracts are valid, binding and enforceable by and against the Company Parties that are party thereto and, to the Knowledge of the Company, each other party thereto (except where the failure to be valid, binding or enforceable does not constitute a Material Adverse Effect), and since December 31, 2018, no written notice to terminate, in whole or part, any Material Contract has been delivered to any Company Party (except where such termination would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect).  No Company Party nor, to the Knowledge of the Company, any other party to any Material Contract, is in material default or breach under the terms thereof, in each case, except for such instances of material default or breach that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

3.25                        Insurance.  Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect: (a) the Company Parties have insured their properties and assets against such risks and in such amounts as are customary for companies engaged in similar businesses; (b) all premiums due and payable in respect of material insurance policies maintained by the Company Parties have been paid; (c) the Company reasonably believes that the insurance maintained by or on behalf of the Company Parties is adequate in all material respects; and (d) as of the date hereof, to the Knowledge of the Company, no Company Party has received notice from any insurer or agent of such insurer with respect to any material insurance policies of any Company Party of cancellation or termination of such policies, other than such notices which are received in the ordinary course of business or for policies that have expired in accordance with their terms.

 

3.26                        Intellectual Property.

 

3.26.1              Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect: (a) each Company Party exclusively owns and possesses the entire right, title and interest in and to all applications or registrations for Intellectual Property owned by or registered to any Company 

 

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Party (the “Registered IP”), free and clear of all encumbrances and licenses; (b) the material Registered IP is subsisting and, to the Knowledge of the Company, valid and enforceable; and (c) the Company Parties have taken reasonable steps under the circumstances to preserve, maintain and protect all material Owned IP.

 

3.26.2              Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, no Person possesses any Intellectual Property that materially restricts the use or registration anywhere in the world by the Company Parties of any material Mark used in the Company Parties’ respective businesses (other than Marks licensed from a third Person to the Company Parties pursuant to a Material Contract, but including any Marks constituting Registered IP).  No Person possesses any Intellectual Property sufficient to successfully cancel or otherwise invalidate any such Mark on grounds of prior use, registration, fraud, lack of distinctiveness, or other defects or circumstances.

 

3.26.3              Since February 16, 2017, there are no and there have not been any material Legal Proceedings pending or threatened in writing against or affecting any Company Party asserting or relating to (a) any material invalidity, misuse, misappropriation or unenforceability of or challenging the ownership or scope of any of the Owned IP, or (b) any material infringement, dilution, or misappropriation by, or conflict with, any Person with respect to any Intellectual Property (including any material demand or request that a Company Party license any rights from any Person).  To the Knowledge of the Company, none of the Company Parties or the conduct of any of their respective businesses (including any manufacture, marketing, distribution, importation, offer for sale, sale, or use of any of their respective products) has materially infringed, misappropriated, diluted, or conflicted with, or does materially infringe, misappropriate, dilute, or conflict with, any Intellectual Property of any other Person.  To the Knowledge of the Company, no material Owned IP has been infringed, misappropriated, diluted, or conflicted by any other Person.

 

3.26.4              The Company Parties uses commercially reasonable efforts to protect the confidentiality, integrity and security of the systems and all information stored or contained therein or transmitted thereby from any unauthorized use, access, interruption or modification by third parties.  The Company Parties have taken reasonable precautions to ensure that all material systems (a) are fully functional and operate and run in a reasonable and efficient business manner and (b) conform in all material respects to the specifications and purposes thereof.  The Company Parties have an adequate disaster recovery and business continuity plan in place with respect to the material systems and have adequately tested such plan for effectiveness.  Since February 16, 2017 there have not been any malfunctions, breakdowns, unplanned downtime, service interruptions, or continued substandard performance with respect to material systems that have disrupted the business of any Company Party that have not been remedied or replaced in all material respects.  To the Knowledge of the Company, there have been no actual or alleged security breaches or unauthorized use, access or intrusions, of any system or any 

 

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personal information, payment card information, data, or any other such information (including data of any customer of any Company Party) used, collected, maintained, or stored by or on behalf of any Company Party (or any loss, destruction, compromise, or unauthorized disclosure thereof).  The systems are adequate for the operation of the businesses of the Company Parties as currently conducted in all material respects.

 

3.27                        No Other Representations and Warranties.  Except for the representations and warranties contained in this Article III (including the related portions of the Company Disclosure Schedule), none of the Company Parties has made or makes any other express or implied representation or warranty, either written or oral, on behalf of the Company Parties, including any representation or warranty as to the accuracy or completeness of any information regarding the Company Parties furnished or made available to the Backstop Parties and their Affiliates or as to the future revenue, profitability or success of the Company Parties, or any representation or warranty arising from statute or otherwise in Law.

 

4.                                      REPRESENTATIONS AND WARRANTIES OF EACH BACKSTOP PARTY

 

Each Backstop Party hereby severally and not jointly represents and warrants, on its own behalf and in its capacity as investment manager for its managed funds and accounts party hereto, to the Company as of the date of this Agreement:

 

4.1                               Organization.  The Backstop Party is duly organized, validly existing and in good standing (or equivalent thereof) under the Laws of the jurisdiction of its organization.

 

4.2                               Due Authorization.  The Backstop Party has the requisite power and authority to enter into, execute and deliver this Agreement and to perform its obligations hereunder and has taken all necessary action required for the due authorization, execution, delivery and performance by it of this Agreement.

 

4.3                               Due Execution; Enforceability.  This Agreement has been duly and validly executed and delivered by the Backstop Party and constitutes its legally valid and binding obligation, enforceable against it in accordance with its terms.

 

4.4                               No Registration Under the Securities Act; Selling Restrictions.  Each Backstop Party acknowledges that the New Common Shares to be purchased by it, or to be issued to it in respect of the Backstop Commitment Premium, in each case, pursuant to the terms of this Agreement have not been registered under the Securities Act by reason of specific exemptions and the Company is relying on the truth and accuracy of, and such Backstop Party’s compliance with, the representations, warranties, agreements, acknowledgements and understandings of such Backstop Party set forth herein, and that the Company shall not be required to effect any registration under the Securities Act, or any state securities Law, of the New Common Shares.  Each Backstop Party understands and agrees that it will not offer, resell, pledge or otherwise transfer the New Common Shares unless the New Common Shares are offered, resold, pledged or otherwise transferred in accordance with any applicable securities Laws of the United States or any state thereof.

 

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4.5                               Acquisition for Investment.  The New Common Shares are being acquired under this Agreement by the Backstop Party in good faith solely for its own account, for investment and not with a view toward, or for resale in connection with, distribution within the meaning of the Securities Act.

 

4.6                               No Conflicts.  The execution, delivery, and, subject to the terms and conditions of this Agreement, performance by such Backstop Party of this Agreement and the consummation of the transactions contemplated hereunder, do not and will not (a) violate any provision of the organizational documents of such Backstop Party or (b) conflict with or violate any Law or order applicable to such Backstop Party or any of its respective assets or properties, except for any such conflict, violation, breach or default that would, individually or in the aggregate, reasonably be expected to result in a material adverse effect on the ability of the Backstop Parties to timely consummate the transactions contemplated by this Agreement.

 

4.7                               Consents and Approvals.  No consent, approval, order, authorization, filing, notice, registration or qualification of or with any court or governmental authority or body having jurisdiction over such Backstop Party is required in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby.

 

4.8                               Investor Representation.  It is (i) a qualified institutional buyer as defined in Rule 144A of the Securities Act and (ii) an institutional accredited investor as defined in Rule 501(a)(1), (2), (3), (7), or (8) under the Securities Act.

 

4.9                               Investment Experience.  It has substantial experience in evaluating and investing in securities and acknowledges that it is capable of evaluating the merits and risks of, and can bear the economic risk of entering into, the transactions contemplated by this Agreement, and that each Backstop Party’s financial condition and investments are such that it is in a financial position to bear the economic risk of and withstand a complete loss of such investment.

 

4.10                        Sufficiency of Funds.  As of the Effective Date, each Backstop Party shall have available funds sufficient to pay the total Funding Amount, including the Backstop Obligation of such Backstop Party as of the date thereof.

 

4.11                        Ownership.  (a) As of the date hereof, each Backstop Party and its Affiliates are, collectively, the beneficial owner of, or the investment advisor or manager for the beneficial owner of, the aggregate principal amount of Senior Notes set forth opposite such Backstop Party’s name under the column “Face Amount of Senior Notes Held” on Schedule 1 attached hereto.

 

(b)                                 As of the date hereof, such Backstop Party or its applicable Affiliates has the full power to vote, dispose of and compromise at least the aggregate principal amount of the Senior Notes set forth opposite such Backstop Party’s name under the column “Face Amount of Senior Notes Held” on Schedule 1 attached hereto.

 

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(c)                                  Such Backstop Party has not entered into any contract to transfer, in whole or in part, any portion of its right, title or interest in such Senior Notes where such transfer would prohibit such Backstop Party from complying with the terms of this Agreement or the RSA.

 

4.12                        Legal Proceedings.  There are no Legal Proceedings pending or, to the knowledge of such Backstop Party, threatened to which the Backstop Party or any of its Subsidiaries is a party or to which any property of the Backstop Party or any of its Subsidiaries is the subject, in each case that will (or would be reasonably likely to) prohibit, delay or adversely impact such Backstop Party’s timely performance of its obligations under this Agreement.

 

4.13                        No Broker’s Fee.  None of the Backstop Parties or their Affiliates is a party to any contract with any Person (other than this Agreement) that would give rise to a valid claim against the Company for a brokerage commission, finder’s fee or like payment in connection with the Senior Noteholder Rights Offering or the sale of the Remaining Shares.

 

4.14                        Independent Investigation.  (a) Each of the Backstop Parties has conducted its own independent investigation, review and analysis of the business, results of operations, prospects, condition (financial or otherwise) or assets of the Company Parties, and acknowledges that it has been provided adequate access to the personnel, properties, assets, premises, books and records, and other documents and data of the Company Parties for such purpose.

 

(b) Each of the Backstop Parties acknowledges and agrees that (i) none of the Company Parties, nor any other Person on behalf of the Company Parties has made any representation or warranty, expressed or implied, as to the Company Parties, or the accuracy or completeness of any information regarding the Company Parties furnished or made available to the Backstop Parties and its representatives, or any other matter related to the transactions contemplated herein, except as expressly set forth in this Agreement, (ii) such Backstop Party has not relied on any representation or warranty from the Company Parties or any other Person on behalf of the Company Parties in determining to enter into this Agreement, except as expressly set forth in this Agreement and (iii) none of the Company Parties or any other Person acting on behalf of the Company Parties shall have any liability to such Backstop Party or any other Person with respect to any projections, forecasts, estimates, plans or budgets of future revenue, expenses or expenditures, future results of operations, future cash flows or the future financial condition of the Company Parties or the future business, operations or affairs of the Company Parties, except as set forth in this Agreement.

 

5.                                      COVENANTS

 

5.1                               Conduct of Business.  Except as expressly set forth in this Agreement, the Definitive Documents or with the prior written consent of the Required Backstop Parties (not to be unreasonably withheld or delayed and taking into account the pendency of the Chapter 11 Cases), during the period from the date of this Agreement to the earlier of the Effective Date and 

 

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the date on which this Agreement is terminated in accordance with its terms, (a) the Company shall, and shall cause each of the other Company Parties to, carry on its business in the ordinary course and use its commercially reasonable efforts to: (i) preserve intact its current business and business organizations in all material respects, (ii) preserve its material relationships with customers, sales representatives, suppliers, licensors, licensees, distributors and others having material business dealings with any of the Company Parties in connection with their business, (iii) file or post Company Information within the time periods required under the Exchange Act, or reasonably promptly thereafter, in each case in accordance with ordinary course practices, (iv) maintain its physical assets, properties and facilities in all material respects in their current working order, condition and repair as of the date hereof, ordinary wear and tear excepted, (v) operate its businesses in compliance with all applicable laws, rules and regulations in all material respects, and (vi) maintain all insurance policies, or suitable replacements therefor, in full force and effect through the close of business on the Effective Date in all material respects, and (b) the Company shall not: (i) sell, license to any Person, transfer, assign, abandon, subject to a security interest, or allow to lapse or expire any material Intellectual Property (other than expiration of any issued or registered Intellectual Property at the end of its respective maximum statutory term), or (ii) enter into any transaction that is material to the Company Parties’ business other than (A) transactions in the ordinary  course of business that are consistent with prior business practices of the Company Parties, and (B) transactions expressly contemplated by the RSA and the Plan.

 

For the avoidance of doubt and without limiting the generality of the foregoing, the following shall be deemed to occur outside of the ordinary course of business of the Company Parties and shall require the prior written consent of the Required Backstop Parties unless the same would otherwise be permissible under the RSA, the Plan or this Agreement (including the preceding clause (A) or (B)):

 

1.              material amendments of the Company’s certificate of incorporation and bylaws;

2.              any new executive compensation or retention plans; or

3.              any executive bonuses or retention payments.

 

5.2                               Non-Disclosure of Holdings Information.  The Company shall not disclose publicly Schedule 1 to this Agreement or the holdings information of any Backstop Party as of the date hereof or any time hereafter; provided, that in connection with the Chapter 11 Cases, on or after the Petition Date, the Company Parties may file this Agreement with the Bankruptcy Court and the SEC, but shall redact Schedule 1 and any holdings information of any Backstop Party set forth in Schedule 1; provided, further, that the Company shall be permitted to disclose in connection with the Chapter 11 Cases, on or after the Petition Date, the aggregate principal amount of, and aggregate percentage of, the Senior Notes held by the Backstop Parties and Consenting Creditors, in each case, as a group.

 

5.3                               Use of Proceeds.  The Company will apply the proceeds from the Senior Noteholder Rights Offering for purposes identified in the Definitive Documents.

 

5.4                               Blue Sky.  The Company shall, on or before the Effective Date, take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for or 

 

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to qualify the New Common Shares to be issued pursuant to this Agreement, at the Effective Date, under applicable securities and “Blue Sky” laws of the states of the United States (or to obtain an exemption from such qualification).  The Company shall timely make all filings and reports relating to the offer and sale of the Remaining Shares issued hereunder required under applicable securities and “Blue Sky” laws of the states of the United States following the Effective Date.  The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 5.4.

 

5.5                               Senior Noteholder Rights Offering.  The Company shall use commercially reasonable efforts to take or cause to be taken all actions, and do or cause to be done all things, reasonably necessary, proper or advisable in order to consummate and effectuate the Senior Noteholder Rights Offering in accordance with the Plan, the RSA, the Restructuring Term Sheet, the Definitive Documents and this Agreement.

 

5.6                               The New Common Shares.  Subject to the entry of the Confirmation Order and the occurrence of the Effective Date, the New Common Shares, when issued, will be duly and validly issued and outstanding and will be fully paid and non-assessable.  As of the Effective Date, the Company shall have the ability to issue sufficient New Common Shares to consummate the transaction contemplated under this Agreement, the RSA and the Plan.

 

5.7                               Backstop Notice.  The Company shall determine the aggregate amount of Remaining Shares and Purchase Price, if any, set forth in the Backstop Notice in good faith, and shall direct the Subscription Agent to provide such written backup relating to the calculation thereof as the Backstop Parties may reasonably request.

 

5.8                               Facilitation.  The Company shall use commercially reasonable efforts to, and cause each of the other Company Parties to, and each Backstop Party shall use commercially reasonable efforts to, support and take all actions necessary or reasonably requested by the Required Backstop Parties to facilitate the Solicitation, the Rights Offerings and confirmation and consummation of the Plan within the timeframes contemplated by the RSA.

 

5.9                               Access to Information; Confidentiality.

 

5.9.1                     Subject to applicable Law and Section 5.9.2, upon reasonable, prior written, notice prior to the Effective Date and for a reasonable business purpose, the Debtors shall afford the Backstop Parties and the Backstop Party Professionals upon request reasonable access, during normal business hours and without unreasonable disruption or interference with the business or operations of the Company Parties or any of their subsidiaries, to the Debtors’ properties, books, assets, Contracts and records and, prior to the Effective Date, the Debtors shall furnish promptly to such parties all reasonable information concerning the Debtors’ business, properties and personnel as may reasonably be requested by any such party; provided that the foregoing shall not require the Company (i) to permit any inspection, or to disclose any information, that in the reasonable judgment of the Company, would cause any of the Company Parties or any of 

 

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their subsidiaries to violate any of their respective obligations with respect to confidentiality to a third-party, (ii) to disclose any legally privileged information of any of the Company Parties or any of their subsidiaries, (iii) to violate any applicable Law or (iv) to permit any invasive environmental sampling. All requests for information and access made in accordance with this Section 5.9 shall be directed to Weil, Gotshal & Manges LLP (“Weil”), Perella Weinberg Partners L.P. (“Perella”), Tudor, Pickering, Holt & Co. Advisors LP (“Tudor”), or any other entity or person identified by any of them in writing; provided, however, that the Backstop Parties may initiate communications with the Company’s officers, directors or management with the advance written consent of Weil, Perella or Tudor.

 

5.9.2                     From and after the date hereof until the date that is one (1) year after the expiration of the Effective Date, each Backstop Party shall, and shall cause the Backstop Party Professionals to, (i) treat as confidential and not provide or disclose to any Person any documents or information that is, was or becomes known by such Backstop Party or Backstop Party Professional on a non-confidential basis prior to its disclosure to such Backstop Party or Backstop Party Professional, or is or was received or otherwise obtained by such Backstop Party or the Backstop Party Professionals pursuant to Section 5.9.1 or in connection with a request for approval pursuant to Section 5.1 (except that provision or disclosure may be made to any Backstop Party Professional of such Backstop Party who needs to know such information for purposes of this Agreement and who agrees to observe the terms of this Section 5.9.2 (and such Backstop Party will remain liable for any breach of such terms by any such Backstop Party Professional)), and (ii) not use such documents or information for any purpose other than in connection with this Agreement or the transactions contemplated hereby or thereby. Notwithstanding the foregoing, the immediately preceding sentence shall not apply in respect of documents or information that (A) is now or subsequently becomes generally available to the public through no violation of this Section 5.9.2, (B) becomes available to a Backstop Party or the Backstop Party Professionals on a non-confidential basis from a source other than any of the Company Parties, provided that such information was not furnished to such Backstop Party or Backstop Party Professional by a source known by it to be prohibited from disclosing such information by a contractual, legal or fiduciary obligation to the Company (including its advisors) or any other party with respect to such information, (C) becomes available to a Backstop Party or the Backstop Party Professionals through document production or discovery in connection with the Chapter 11 Cases or other judicial or administrative process, but subject to any confidentiality restrictions imposed by the Chapter 11 Cases or other such process, or (D) such Backstop Party or any Backstop Party Professionals thereof is required to disclose pursuant to applicable Law, rule, regulation, governmental or regulatory authority or stock exchange requirements, or by legal, judicial, administrative or regulatory process or pursuant to applicable Law or applicable securities exchange rules; provided, that, such Backstop Party or such Backstop Party Professional shall provide the Company with prompt written notice of such legal compulsion and cooperate with the Company to obtain a protective order or

 

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similar remedy to cause such information or documents not to be disclosed, including interposing all available objections thereto, at the Company’s sole cost and expense; provided, further, that, in the event that such protective order or other similar remedy is not obtained, the disclosing party shall furnish only that portion of such information or documents that is legally required to be disclosed and shall exercise its commercially reasonable efforts (at the Company’s sole cost and expense) to obtain assurance that confidential treatment will be accorded such disclosed information or documents. The provisions of this Section 5.9.2 shall not apply to any Consenting Creditor that is or becomes a party to a confidentiality or non-disclosure agreement with the Company Parties, for so long as such agreement remains in full force and effect (including any amendments thereto).

 

5.10                        Regulatory Approvals.

 

5.10.1              Each Party agrees to use reasonable best efforts to make all filings and to obtain all consents, approvals and authorizations required to be obtained from any governmental authority, in each case in order to consummate the transactions contemplated hereby, and to make effective the Plan and the Senior Noteholder Rights Offering Documents, including (i) if applicable, filing, or causing to be filed, the Notification and Report Form pursuant to the HSR Act with respect to the transactions contemplated by this Agreement with the Antitrust Division of the United States Department of Justice and the United States Federal Trade Commission and any filings (or, if required by any Antitrust Authority, any drafts thereof) under any other Antitrust Laws that are necessary to consummate and make effective the transactions contemplated by this Agreement as soon as reasonably practicable after the commencement of the Senior Noteholder Rights Offering (and with respect to any filings required pursuant to the HSR Act, if any, no later than five (5) Business Days following the date of the commencement of the Senior Noteholder Rights Offering) and (ii) promptly furnishing any documents or information reasonably requested by any Antitrust Authority.

 

5.10.2              The Company and each Backstop Party subject to an obligation pursuant to the Antitrust Laws to notify any transaction contemplated by this Agreement, the Plan or the Senior Noteholder Rights Offering Documents that has notified the Company in writing of such obligation (each such Backstop Party, a “Filing Party”) agree to reasonably cooperate with each other as to the appropriate time of filing such notification and its content. The Company and each Filing Party shall, to the extent permitted by applicable Law: (i) promptly notify each other of, and if in writing, furnish each other with copies of (or, in the case of material oral communications, advise each other orally of) any material communications from or with an Antitrust Authority; (ii) not participate in any meeting with an Antitrust Authority unless it consults with each other Filing Party and the Company, as applicable, in advance and, to the extent permitted by the Antitrust Authority and applicable Law, give each other Filing Party and the Company, as applicable, a reasonable opportunity to attend and participate thereat; (iii) furnish each other Filing Party and the Company, as applicable, with copies of all material correspondence and communications between such Filing Party or the Company

 

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and the Antitrust Authority; (iv) furnish each other Filing Party with such necessary information and reasonable assistance as may be reasonably necessary in connection with the preparation of necessary filings or submission of information to the Antitrust Authority; and (v) not withdraw its filing, if any, under the HSR Act without the prior written consent of the Backstop Parties and the Company.

 

5.10.3              Should a Filing Party be subject to an obligation under the Antitrust Laws to jointly notify with one or more other Filing Parties (each, a “Joint Filing Party”) any transaction contemplated by this Agreement, the Plan or the Senior Noteholder Rights Offering Documents, such Joint Filing Party shall promptly notify each other Joint Filing Party of, and if in writing, furnish each other Joint Filing Party with copies of (or, in the case of material oral communications, advise each other Joint Filing Party orally of) any communications from or with an Antitrust Authority.

 

5.10.4              The Company and each Filing Party shall use their reasonable best efforts to obtain all authorizations, approvals, consents, or clearances under any applicable Antitrust Laws or to cause the termination or expiration of all applicable waiting periods under any Antitrust Laws in connection with the transactions contemplated by this Agreement at the earliest possible date after the date of filing. The communications contemplated by this Section 5.10.4 may be made by the Company or a Filing Party on an outside counsel-only basis or subject to other agreed upon confidentiality safeguards.

 

6.                                      CONDITIONS TO THE BACKSTOP PARTIES’ CLOSING OBLIGATIONS

 

6.1                               Conditions to the Backstop Parties’ Closing Obligations.  The obligation of the Backstop Parties to consummate the Backstop Purchase shall be subject to the satisfaction of each of the following conditions on the Effective Date:

 

6.1.1                     Certain Documents. Each of the Exit Facility and the Senior Noteholder Rights Offering Documents is in form and substance reasonably acceptable to the Required Backstop Parties.

 

6.1.2                     Agreements. The RSA and this Agreement shall not have been terminated.

 

6.1.3                     Antitrust Laws.  The expiration or termination of any waiting periods under the HSR Act or other Antitrust Laws, if applicable, with respect to the transactions contemplated by this Agreement.

 

6.1.4                     Approval Order.  The Bankruptcy Court shall have entered the Approval Order in form and substance reasonably acceptable to the Required Backstop Parties, and such order shall not be reversed, stayed, dismissed, vacated, reconsidered, modified or amended in any material respect (other than in accordance with the terms of this Agreement or the RSA).

 

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6.1.5                     Confirmation Order. The Bankruptcy Court shall have entered the Confirmation Order in form and substance reasonably acceptable to the Required Backstop Parties and such order shall not be reversed, stayed, dismissed, vacated, reconsidered, modified or amended in any material respect (other than in accordance with the terms of this Agreement or the RSA).

 

6.1.6                     Plan. The Company and all of the other Company Parties shall have complied in all material respects with the terms of the Plan, once filed, that are to be performed by the Company, and the other Company Parties on or prior to the Effective Date and the conditions to the occurrence of the Effective Date (other than the consummation of the Senior Noteholder Rights Offering and the Backstop Purchase) set forth in the Plan shall have been satisfied or waived in accordance with the terms of the Plan.

 

6.1.7                     Expense Reimbursement.  The Company shall have paid the Expense Reimbursement in full in cash, or such amount shall be paid concurrently with the Effective Date, in each case, to the extent invoiced in accordance with the terms hereof.

 

6.1.8                     Senior Noteholder Rights Offering.  The Senior Noteholder Rights Offering shall have been conducted in accordance with this Agreement and the Senior Noteholder Rights Offering Documents.

 

6.1.9                     Backstop Notice.  The Backstop Parties shall have received the Backstop Notice in accordance with the terms of this Agreement.

 

6.1.10              Material Adverse Effect.  Since the date of this Agreement, there shall not have occurred a Material Adverse Effect.

 

6.1.11              Representations and Warranties.

 

(a)                                 The representations and warranties of the Company contained in Section 3.1, Section 3.2 and Section 3.3 shall be true and correct in all material respects on and as of the Effective Date after giving effect to the Plan with the same effect as if made on and as of the Effective Date after giving effect to the Plan (except for such representations and warranties made as of a specified date, which shall be true and correct in all material respects only as of the specified date).

 

(b)                                 The representations and warranties of the Company contained in this Agreement other than those referred to in clauses (a) above shall be true and correct (disregarding all materiality or Material Adverse Effect qualifiers) on and as of the Effective Date after giving effect to the Plan with the same effect as if made on and as of the Effective Date after giving effect to the Plan (except for such representations and warranties made as of a specified date, which shall be true and correct only as of the specified date), except where the failure to be so true and correct would not

 

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reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

6.1.12              Covenants.  The Company, on behalf of itself and the other Company Parties, shall have performed and complied, in all material respects, with all of its respective covenants and agreements contained in this Agreement that contemplate, by their terms, performance or compliance prior to the Effective Date.

 

6.1.13              Officer’s Certificate.  The Backstop Parties shall have received on and as of the Effective Date a certificate of the chief executive officer or chief financial officer of the Company confirming that the conditions set forth in Sections 6.1.10 and 6.1.11 and have been satisfied.

 

6.1.14              No Legal Impediment.  No Law or order shall have been enacted, adopted or issued by any governmental entity that prohibits the consummation of the Restructuring or the transactions contemplated by this Agreement.

 

6.2                               Conditions to the Company’s Closing Obligations.   The obligation of the Company to consummate the Closing shall be subject to the satisfaction of each of the following conditions on the Effective Date:

 

6.2.1                     Confirmation Order. The Bankruptcy Court shall have entered the Confirmation Order in form and substance reasonably acceptable to the Required Backstop Parties and such order shall not be reversed, stayed, dismissed, vacated, reconsidered, modified or amended in any material respect (other than in accordance with the terms of this Agreement or the RSA).

 

6.2.2                     Plan.  The conditions to the occurrence of the Effective Date (other than the consummation of the Senior Noteholder Rights Offering and the Backstop Purchase) set forth in the Plan shall have been satisfied or waived in accordance with the terms of the Plan.

 

6.2.3                     Representations and Warranties.  Each of the representations and warranties of each of the Backstop Parties, set forth in Section 4 hereof, shall be true and correct in all material respects as of the Effective Date, except with respect to representations and warranties that expressly speak of an earlier date, which shall be true and correct in all material respects as of such date.

 

6.2.4                     Covenants.  Each of the Backstop Parties, on its own behalf and in its capacity as investment manager for its managed funds and accounts party hereto, shall have performed and complied, in all material respects, with all of its respective covenants and agreements contained in this Agreement that contemplate, by their terms, performance or compliance prior to the Effective Date.

 

6.2.5                     No Legal Impediment.  No Law or order shall have been enacted, adopted or issued by any governmental entity that prohibits the consummation of the Restructuring or the transactions contemplated by this Agreement.

 

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6.2.6                     Antitrust Approval.  All terminations or expirations of waiting periods imposed by any governmental entity required under any Antitrust Laws, shall have occurred and other notifications, consents, authorizations and approvals required to be made or obtained from any governmental entity under any Antitrust Law shall have been made or obtained for the transactions contemplated by this Agreement.

 

6.2.7                     Proceeds of Rights Offering.  The Company shall have received each of the Backstop Party’s respective Funding Amounts in accordance with the terms of this Agreement.

 

7.                                      INDEMNIFICATION AND CONTRIBUTION

 

7.1                               Indemnification Obligations.  The Company and the other Company Parties (the “Indemnifying Parties” and each, an “Indemnifying Party”) shall, jointly and severally, indemnify and hold harmless each Backstop Party and its Affiliates, equity holders, members, partners, general partners, managers and its and their respective representatives, attorneys, and controlling Persons (each, an “Indemnified Person”) from and against any and all losses, claims, damages, liabilities and costs and expenses (other than taxes of the Backstop Parties except to the extent otherwise provided for in this Agreement) (collectively, “Indemnified Losses”) that any such Indemnified Person may incur or to which any such Indemnified Person may become subject arising out of or in connection with this Agreement, or any claim, challenge, litigation, investigation or proceeding relating to any of the foregoing, regardless of whether any Indemnified Person is a party thereto, whether or not such proceedings are brought by the Company, the other Company Parties, their respective equity holders, Affiliates, creditors or any other Person, and reimburse each Indemnified Person upon demand for reasonable and documented out-of-pocket legal or other third-party expenses of counsel (which, so long as there are no actual conflicts of interests among such Indemnified Persons, shall be limited to one law firm serving as counsel for the Indemnified Persons) incurred in connection with investigating, preparing to defend or defending, or providing evidence in or preparing to serve or serving as a witness with respect to, any lawsuit, investigation, claim or other proceeding relating to any of the foregoing (including in connection with the enforcement of the indemnification obligations set forth herein), irrespective of whether or not the transactions contemplated by this Agreement or the Plan are consummated or whether or not this Agreement is terminated; provided, that the foregoing indemnity will not, as to any Indemnified Person, apply to Indemnified Losses (a) as to a Defaulting Backstop Party, its Affiliates or any Indemnified Person related thereto, caused by a default by such Defaulting Backstop Party (or Indemnified Persons related thereto) or any breach by any Backstop Party (or Indemnified Persons related thereto) under this Agreement, or (b) to the extent they are found by a final, non-appealable judgment of a court of competent jurisdiction to arise from the bad faith, willful misconduct or gross negligence of such Indemnified Person.  Notwithstanding anything to the contrary in this Agreement, the Indemnifying Parties will not be liable for, and no Indemnified Person shall claim or seek to recover, any punitive, special, indirect or consequential damages or damages for lost profits.

 

7.2                               Indemnification Procedure.  Promptly after receipt by an Indemnified Person of notice of the commencement of any indemnified claim, challenge, litigation, investigation or proceeding (an “Indemnified Claim”), such Indemnified Person will, if a claim is to be made

 

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hereunder against an Indemnifying Party in respect thereof, notify such Indemnifying Party in writing of the commencement thereof; provided, that (a) the omission to so notify the Indemnifying Party will not relieve the Indemnifying Party from any liability that it may have hereunder except to the extent it has been materially prejudiced by such failure and (b) the omission to so notify the Indemnifying Party will not relieve the Indemnifying Party from any liability that it may have to such Indemnified Person other than on account of this Section 7.2 or otherwise under this Agreement. In case any such Indemnified Claims are brought against any Indemnified Person and it notifies the Indemnifying Party of the commencement thereof, the Indemnifying Party will be entitled to participate therein, and, at its election by providing written notice to such Indemnified Person, the Indemnifying Party will be entitled to assume the defense thereof, with counsel reasonably acceptable to such Indemnified Person; provided, that if the parties (including any impleaded parties) to any such Indemnified Claims include both such Indemnified Person and the Indemnifying Party and based on advice of such Indemnified Person’s counsel there are legal defenses available to such Indemnified Person that are different from or additional to those available to the Indemnifying Party, such Indemnified Person shall have the right to select separate counsel to assert such legal defenses and to otherwise participate in the defense of such Indemnified Claims. Upon receipt of notice from the Indemnifying Party to such Indemnified Person of its election to so assume the defense of such Indemnified Claims with counsel reasonably acceptable to the Indemnified Person, the Indemnifying Party shall not be liable to such Indemnified Person for expenses incurred by such Indemnified Person in connection with the defense thereof or participation therein (other than reasonable and documented costs of investigation) unless (a) such Indemnified Person shall have employed separate counsel (in addition to any local counsel) in connection with the assertion of legal defenses in accordance with the proviso to the immediately preceding sentence (it being understood, however, that the Indemnifying Party shall not be liable for the expenses of more than one separate counsel representing the Indemnified Persons who are parties to such Indemnified Claims (in addition to one local counsel in each jurisdiction in which local counsel is required)), (b) after the Indemnifying Party assumes the defense of the Indemnified Claims, the Indemnified Person determines in good faith that the Indemnifying Party has failed or is failing to defend such claim and provides written notice of such determination and the basis for such determination, and such failure is not reasonably cured within ten (10) Business Days of receipt of such notice, or (d) the Indemnifying Party shall have authorized in writing the employment of counsel for such Indemnified Person. Notwithstanding anything herein to the contrary, the Company and its Subsidiaries shall have sole control over any tax controversy or tax audit and shall be permitted to settle any liability for taxes of the Company and its Subsidiaries.

 

7.3                               Settlement of Indemnified Claims. In connection with any Indemnified Claim for which an Indemnified Person is assuming the defense in accordance with this Section 7.3, the Indemnifying Party shall not be liable for any settlement, compromise, or consent to the entry of any judgment of any Indemnified Claims effected by such Indemnified Person without the written consent of the Indemnifying Party (which consent shall not be unreasonably withheld, conditioned or delayed).  If any settlement compromise, or consent to the entry of any judgment of any Indemnified Claims is consummated with the written consent of the Indemnifying Party or if there is a final judgment for the plaintiff in any such Indemnified Claims, the Indemnifying Party agrees to indemnify and hold harmless each Indemnified Person from and against any and all Indemnified Losses by reason of such settlement compromise, consent to the entry of any

 

32

 

judgment or judgment to the extent such Indemnified Losses are otherwise subject to indemnification by the Indemnifying Party hereunder in accordance with, and subject to the limitations of, this Section 7.3. The Indemnifying Party shall not, without the prior written consent of an Indemnified Person (which consent shall not be unreasonably withheld, conditioned or delayed), effect any settlement compromise, consent to the entry of any judgment with respect to any pending or threatened Indemnified Claims in respect of which indemnity or contribution has been sought hereunder by such Indemnified Person unless (a) such settlement, compromise or consent includes an unconditional release of such Indemnified Person from all liability on the claims that are the subject matter of such Indemnified Claims and (b) such settlement, compromise or consent does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any Indemnified Person.

 

7.4                               Contribution.  If for any reason the foregoing indemnification is unavailable to any Indemnified Person or insufficient to hold it harmless from Indemnified Losses that are subject to indemnification pursuant to Section 7.1, then the Indemnifying Party shall contribute to the amount paid or payable by such Indemnified Person as a result of such loss in such proportion as is appropriate to reflect not only the relative benefits received by the Indemnifying Party, on the one hand, and such Indemnified Person, on the other hand, but also the relative fault of the Indemnifying Party, on the one hand, and such Indemnified Person, on the other hand, as well as any relevant equitable considerations. It is hereby agreed that the relative benefits to the Indemnifying Party, on the one hand, and all Indemnified Persons, on the other hand, shall be deemed to be in the same proportion as (a) the total value received or proposed to be received by the Company pursuant to the issuance and sale of the unsubscribed New Common Shares in the Senior Noteholder Rights Offering contemplated by this Agreement and the Plan bears to (b) the Backstop Commitment Premium paid or proposed to be paid to the Backstop Parties. The Indemnifying Parties also agree that no Indemnified Person shall have any liability based on their comparative or contributory negligence or otherwise to the Indemnifying Parties, any Person asserting claims on behalf of or in right of any of the Indemnifying Parties, or any other Person in connection with an Indemnified Claim.

 

7.5                               Treatment of Indemnification Payments.  All amounts paid by an Indemnifying Party to an Indemnified Person under this Article 7 shall, to the extent permitted by applicable Law, be treated as adjustments to the Purchase Price for all tax purposes. The provisions of this Article 7 are an integral part of the transactions contemplated by this Agreement and without these provisions the Backstop Parties would not have entered into this Agreement. The Approval Order shall provide that the obligations of the Company under this Article 7 shall constitute allowed administrative expenses of the Debtors’ estate under sections 503(b) and 507 of the Bankruptcy Code and are payable without further order of the Bankruptcy Court, and that the Company may comply with the requirements of this Article 7 without further order of the Bankruptcy Court.

 

8.                                      MISCELLANEOUS

 

8.1                               Notice.  Any notice or other communication required or which may be given pursuant to this Agreement will be in writing and either delivered personally to the addressee or sent via electronic mail, courier, by certified mail, or registered mail (return receipt requested), and will be deemed given when so delivered personally or sent via electronic mail, or, if mailed, five (5) calendar days after the date of mailing, as follows:

 

33

 

if to a Backstop Party, to the address or email address set forth in Schedule 1 hereto:

 

with a copy to:

 

Paul, Weiss, Rifkind, Wharton & Garrison LLP 
 1285 Avenue of the Americas 
 New York, NY 10019

 

Attn.:

 

Andrew Rosenberg, Esq.

(arosenberg@paulweiss.com)

Robert Britton, Esq.

(rbritton@paulweiss.com)

John Weber, Esq.

(jweber@paulweiss.com)

 

if to the Company, to:

 

Denver, Colorado 80202

 

Attn.:                 David S. Elkouri
 Executive Vice President and Chief Legal Officer
 (delkouri@halconresources.com)

 

with copies to:

 

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, NY 10153

 

Attn.:                 Gary Holtzer, Esq.
 (Gary.Holtzer@weil.com)
 Alfredo R. Pérez, Esq.
 (Alfredo.Perez@weil.com)
 Gavin Westerman, Esq.
 (Gavin.Westerman@weil.com)
 Lauren Tauro, Esq.
 (Lauren.Tauro@weil.com)

 

8.2                               Assignment.  Except as described in this Section 8.2, this Agreement will be binding upon and inure to the benefit of each and all of the Parties, and neither this Agreement nor any of the rights, interests or obligations hereunder will be assigned by any of the Parties without the prior written consent of the Company.  Notwithstanding the foregoing, any Backstop Party may assign its rights and obligations hereunder prior to the date upon which the Backstop Notice is delivered to the Backstop Parties, to (a) any other Consenting Creditor in a manner consistent with the terms of the RSA that agrees as part of such assignment to assume such Backstop Party’s Backstop Obligation, or (b) any

 

34

 

Backstop Party or to any of its or their wholly-owned affiliates (and/or any affiliate that is wholly-owned by any of such Backstop Party’s wholly-owned affiliates); provided, that, in each case, any such assignment shall not release such Backstop Party from any of its obligations under this Agreement in the event that such assignee does not fulfill its obligations hereunder; provided, further, that (i) such assignee and the assigning Backstop Party shall have duly executed and delivered to the Company and Weil, Gotshal & Manges LLP a written notice of such assignment in substantially the form attached as Exhibit A hereto (a “Notice of Assignment”), and the Company shall have delivered countersigned copies of such notice to such assignee and the assigning Backstop Party and to Paul, Weiss, Rifkind, Wharton & Garrison LLP; and (ii) with respect to any assignee that is not a party to this Agreement, such assignee shall be required, by delivery of an executed agreement in substantially the form attached as Exhibit B hereto (a “Joinder Agreement”), to be bound by the obligations of such assignee’s assigning Backstop Party hereunder.  Upon the effectiveness of any assignment pursuant to this Section 8.2, the Company shall update Schedule 1 hereto to reflect such assignment.

 

8.3                               Survival. Subject to Section 8.12, (a) all representations and warranties made in this Agreement and the schedules attached hereto shall not survive the execution and delivery of this Agreement and consummation of the Senior Noteholder Rights Offering and (b) covenants and agreements that by their terms are to be satisfied after the Effective Date, including, without limitation, the Expense Reimbursement set forth in Section 2.3.1 and the covenants set forth in Section 5.3, shall survive the Effective Date until satisfied in accordance with their terms.

 

8.4                               Entire Agreement.  This Agreement, including the terms of the agreements contemplated hereby and referred to herein (including the RSA and Equity Rights Offering Documents (as defined in the RSA)) contain the entire agreement by and between the Company and the Backstop Parties with respect to the transactions contemplated by this Agreement and supersedes all prior agreements and representations, written or oral, with respect thereto.  To the extent there is an inconsistency between the provisions in this Agreement and the agreements contemplated hereby and referred to herein, the provisions in this Agreement shall control. To the extent there is an inconsistency between the provisions in this Agreement and the Plan, the Plan shall control; provided, that notwithstanding anything to the contrary in the Plan (including any amendments, supplements or modifications thereto) or the Confirmation Order (and any amendments, supplements or modifications thereto) or an affirmative vote to accept the Plan submitted by any Backstop Party, nothing contained in the Plan (including any amendments, supplements or modifications thereto) or Confirmation Order (including any amendments, supplements or modifications thereto) shall alter, amend or modify the rights of the Backstop Parties under this Agreement unless such alteration, amendment or modification has been made in accordance with Section 8.5.

 

8.5                               Waivers and Amendments.  This Agreement may be amended, modified or superseded, and the terms and conditions of this Agreement may be waived, only by a written instrument signed by the Company and the Backstop Parties who are holders of 66.67% of the aggregate issued and outstanding principal amount of Senior Notes held by all Backstop Parties (the “Required Backstop Parties”).  No delay on the part of any Party in

 

35

 

exercising any right, power or privilege pursuant to this Agreement will operate as a waiver thereof.  No waiver on the part of any Party of any right, power or privilege pursuant to this Agreement, nor any single or partial exercise of any right, power or privilege pursuant to this Agreement, shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege pursuant to this Agreement.  The rights and remedies provided pursuant to this Agreement are cumulative and are not exclusive of any rights or remedies which any Party otherwise may have at law or in equity.  Notwithstanding anything to the contrary in this Agreement, no amendment that reduces or otherwise modifies the Backstop Commitment Premium, Purchase Price, or increases a Backstop Party’s Backstop Obligation or any other funding or financial obligation of any Backstop Party shall be effective against any Backstop Party without such Backstop Party’s prior written consent.

 

8.6                               Governing Law; Jurisdiction; Venue; Process.  This Agreement shall be governed by and construed in accordance with the Laws of the State of New York, without giving effect to any conflict of laws principles that would require the application of the Law of any other jurisdiction. Each Party hereby irrevocably submits, for itself and its property, to the exclusive jurisdiction of the courts of the State of New York located in the Borough of Manhattan, for purposes of all legal proceedings arising out of or relating to this Agreement or the transactions contemplated hereby. Each Party irrevocably waives, to the fullest extent permitted by Law, any objection which it may now or hereafter have to the laying of venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum.  Notwithstanding the foregoing, during the pendency of the Chapter 11 Cases, all proceedings contemplated by this Section 8.6 shall be brought in the Bankruptcy Court.

 

8.7                               Counterparts.  This Agreement may be executed in two or more counterparts, each of which will be deemed an original but all of which together will constitute one and the same instrument.  All such counterparts will be deemed an original, will be construed together and will constitute one and the same instrument.

 

8.8                               Headings.  The headings in this Agreement are for reference purposes only and will not in any way affect the meaning or interpretation of this Agreement.

 

8.9                               Severability.  In the event that any one or more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein will not be in any way impaired thereby, it being intended that all of the rights and privileges of the parties hereto will be enforceable to the fullest extent permitted by Law.

 

8.10                        Termination.  This Agreement shall terminate:

 

8.10.1              automatically if the RSA is terminated pursuant to the terms thereof;

 

8.10.2              if the Parties mutually agree in writing to terminate this Agreement;

 

36

 

8.10.3              at the Company’s election, by written notice to the Backstop Parties, in the event of a material breach of this Agreement by any Backstop Party or any Replacing Backstop Party that has prevented the satisfaction of any condition, or the Company’s or any Backstop Party’s performance of any of its obligations hereunder or under the RSA, if such violation or breach has not been waived by the Company or cured in all material respects by the applicable Backstop Party or Replacing Backstop Parties within ten (10) Business Days after written notice thereof from the Company (provided, however, that the Company may not seek to terminate this Agreement based upon a material breach arising out of its own actions or omissions in breach hereof); or

 

8.10.4              at the Required Backstop Parties’ election, by written notice to the Company, in the event that a material breach of this Agreement by the Company has prevented the satisfaction of any condition to the effectiveness of the Plan, or the Company’s or any Backstop Party’s performance of any of its obligations hereunder or under the RSA, if such violation or breach has not been waived by the Required Backstop Parties or been cured in all material respects by the Company within ten (10) Business Days after written notice thereof from the Backstop Parties (provided, however, that the Backstop Parties may not seek to terminate this Agreement based upon a material breach arising out of the actions or omissions of any Backstop Party in breach hereof);

 

8.11                        Breach.  Regardless of the termination of this Agreement pursuant to Section 8.10, each Party shall remain liable for any breaches of this Agreement prior to its termination.

 

8.12                        Effect of Termination.

 

8.12.1              Upon termination of this Agreement pursuant to Section 8.10, this Agreement shall forthwith become void and there shall be no further obligations or liabilities on the part of the parties hereto; provided, that (a) the obligation of the Company to pay the Expense Reimbursement pursuant to Section 2.3 and to pay the Backstop Commitment Premium if payable pursuant to Sections 2.2.3 and/or 8.12.2 shall survive the termination of this Agreement and shall remain in full force and effect until such obligation has been satisfied (except as otherwise set forth herein), (b) the provisions set forth in this Section 8.12, Section 8.13, Section 8.14, Section 8.15, Section 8.17, Section 8.18, Section 8.19 and Section 8.20 shall survive the termination of this Agreement in accordance with their terms and (c) subject to Section 8.14, nothing in this Section 8.12 shall relieve any Party from liability for its intentional fraud or any willful or intentional breach of this Agreement occurring prior to the date of termination of this Agreement.  For purposes of this Agreement, “willful or intentional breach” means a breach of this Agreement that is a consequence of an intentional act undertaken by the breaching party with the knowledge that the taking of such act would, or would reasonably be expected to, cause a breach of this Agreement.  For the avoidance of doubt, the failure to timely pay the Purchase Price by any of the Backstop Parties in accordance with the terms of this Agreement (and subject to the applicable cure

 

37

 

period set forth in Section 8.10.3) shall constitute a willful breach of this Agreement.

 

8.12.2              If this Agreement is terminated by the Required Backstop Parties under Section 8.10.4, the Company shall, promptly after the date of such termination, pay the Backstop Commitment Premium; provided that such fee is payable pursuant to Section 2.2.3, entirely in cash to each Backstop Party or its designee(s). The Backstop Commitment Premium shall (to the extent payable in cash hereunder) pursuant to an Approval Order, constitute allowed administrative expenses of the Debtors’ estates under sections 503(b) and 507 of the Bankruptcy Code and shall be payable by the Debtors as provided in this Agreement without further order of the Bankruptcy Court.

 

8.13                        Waiver of Jury Trial.  EACH PARTY HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICALBE LAW ALL RIGHTS TO TRIAL BY JURY IN ANY JURISDICTION IN ANY ACTION, SUIT OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF THIS AGREEMENT, WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE.

 

8.14                        Damages.  Notwithstanding anything to the contrary in this Agreement, no Party will be liable for, and no Party shall claim or seek to recover, any punitive, special, indirect or consequential damages or damages for lost profits.

 

8.15                        Specific Performance.  The Parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the Parties shall be entitled to an injunction or injunctions without the necessity of posting a bond to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof, in addition to any other remedy to which they are entitled at law or in equity.  Unless otherwise expressly stated in this Agreement, no right or remedy described or provided in this Agreement is intended to be exclusive or to preclude a Party from pursuing other rights and remedies to the extent available under this Agreement, at law or in equity.

 

8.16                        No Reliance.  No Backstop Party or any of its Affiliates shall have any duties or obligations to the other Backstop Parties in respect of this Agreement, the transactions contemplated hereby, the Definitive Documents or the Restructuring, except those expressly set forth herein.  Without limiting the generality of the foregoing, (a) no Backstop Party or any of its Affiliates shall be subject to any fiduciary or other implied duties to the other Backstop Parties, (b) no Backstop Party or any of its Affiliates shall have any duty to take any discretionary action or exercise any discretionary powers on behalf of any other Backstop Party, (c) no Backstop Party or any of its Affiliates shall have any duty to the other Backstop Parties to obtain, through the exercise of diligence or otherwise, to investigate, confirm, or disclose to the other Backstop Parties any information relating to the Company or any of its Affiliates that may have been

 

38

 

communicated to or obtained by such Backstop Party or any of its Affiliates in any capacity, (d) no Backstop Party may rely, and each Backstop Party confirms that it has not relied, on any due diligence investigation that any other Backstop Party or any Person acting on behalf of such other Backstop Party may have conducted with respect to the Company or any of its Affiliates or any of their respective securities, and (e) each Backstop Party acknowledges that no other Backstop Party is acting as a placement agent, initial purchaser, underwriter, broker or finder with respect to its Backstop Obligation.

 

8.17                        Publicity.  Except as required by Law, at all times prior to the Effective Date or the earlier termination of this Agreement in accordance with its terms, the Company and the Backstop Parties shall consult with each other prior to issuing any press releases (and provide each other a reasonable opportunity to review and comment upon such release) or otherwise making public announcements with respect to the transactions contemplated by this Agreement.  No Party may identify or use the name of any Backstop Party in connection with any press release or other public announcement related to this Agreement without the prior written consent of such Backstop Party.

 

8.18                        Settlement Discussions.  This Agreement and the transactions contemplated herein are part of a proposed settlement of a dispute between the Parties.  Nothing herein shall be deemed an admission of any kind.  Pursuant to section 408 of the U.S. Federal Rules of Evidence and any applicable state rules of evidence, this Agreement and all negotiations relating thereto shall not be admissible into evidence in any Legal Proceeding (other than a legal proceeding to approve or enforce the terms of this Agreement).

 

8.19                        No Recourse.  Notwithstanding anything that may be expressed or implied in this Agreement, and notwithstanding the fact that certain of the Parties may be partnerships or limited liability companies, each Party covenants, agrees and acknowledges that no recourse under this Agreement or any documents or instruments delivered in connection with this Agreement shall be had against any Affiliates of any Party other than the parties to this Agreement and each of their respective successors and permitted assignees under this Agreement, whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any applicable Law, it being expressly agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on or otherwise be incurred by any of the Affiliates of any Party, as such, for any obligation or liability of any Party or any documents or instruments delivered in connection herewith for any claim based on, in respect of or by reason of such obligations or liabilities or their creation; provided, however, that nothing in this Section 8.19 shall relieve or otherwise limit the liability of any Party or any of their respective successors or permitted assigns for any breach or violation of its obligations under this Agreement or such other documents or instruments.  For the avoidance of doubt, none of the parties hereto will have any recourse, be entitled to commence any proceeding or make any claim under this Agreement or in connection with the transactions contemplated hereby except against any of the parties hereto or their respective successors and permitted assigns, as applicable.

 

8.20                        Other Interpretive Matters.  Unless otherwise expressly provided herein, for purposes of this Agreement, the following rules of interpretation shall apply: (a) when calculating

 

39

 

the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded and, if the last day of such period is a non-Business Day, the period in question shall end on the next succeeding Business Day; (b) any reference in this Agreement to “$” or “dollars” shall mean U.S. dollars; (c) all exhibits and schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein and any capitalized terms used in any such exhibit or schedule but not otherwise defined therein shall be defined as set forth in this Agreement; (d) words imparting the singular number only shall include the plural and vice versa; (e) words such as “herein,” “hereinafter,” “hereof,” and “hereunder” refer to this Agreement as a whole and not merely to a subdivision in which such words appear unless the context otherwise requires; (f) the word “including” or any variation thereof means “including, without limitation” and shall not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it; (g) the division of this Agreement into Sections and other subdivisions are for convenience of reference only and shall not affect or be utilized in construing or interpreting this Agreement; and (h) all references in this Agreement to any “Section” are to the corresponding Section of this Agreement unless otherwise specified.  The parties hereto have participated jointly in the negotiation and drafting of this Agreement and, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provision of this Agreement.

 

[Signature pages follow]

 

40

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed and delivered by their respective duly authorized officers, solely in their respective capacity as officers of the undersigned and not in any other capacity, as of the date first set forth above.

 

 

	
 
    	
HALCÓN RESOURCES CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Richard Little
    
	
 
    	
 
    	
Name: Richard Little
    
	
 
    	
 
    	
Title: Chief Executive Officer
    

 

[Signature page to Backstop Commitment Agreement]

 

 

	
 
    	
BLUE FALCON LIMITED
    
	
 
    	
By Brigade Capital Management,   LP as
    
	
 
    	
Investment Manager
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Patrick Criscillo
    
	
 
    	
 
    	
Name: Patrick Criscillo
    
	
 
    	
 
    	
Title: Authorized   Signatory
    

 

[Signature page to Backstop Commitment Agreement]

 

 

	
 
    	
CITY OF PHOENIX EMPLOYEES’
    
	
 
    	
RETIREMENT PLAN
    
	
 
    	
By Brigade Capital Management,   LP as
    
	
 
    	
Investment Manager
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Patrick Criscillo
    
	
 
    	
 
    	
Name: Patrick Criscillo
    
	
 
    	
 
    	
Title: Authorized   Signatory
    

 

[Signature page to Backstop Commitment Agreement]

 

 

	
 
    	
NORTHROP GRUMMAN PENSION
    
	
 
    	
MASTER TRUST
    
	
 
    	
By Brigade Capital Management,   LP as
    
	
 
    	
Investment Manager
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Patrick Criscillo
    
	
 
    	
 
    	
Name: Patrick Criscillo
    
	
 
    	
 
    	
Title: Authorized   Signatory
    

 

[Signature page to Backstop Commitment Agreement]

 

 

	
 
    	
GOLDMAN SACHS TRUST II -
    
	
 
    	
GOLDMAN SACHS MULTI-
    
	
 
    	
MANAGER NON-CORE FIXED
    
	
 
    	
INCOME FUND
    
	
 
    	
By Brigade Capital Management,   LP as
    
	
 
    	
Investment Manager
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Patrick Criscillo
    
	
 
    	
 
    	
Name: Patrick Criscillo
    
	
 
    	
 
    	
Title: Authorized   Signatory
    

 

[Signature page to Backstop Commitment Agreement]

 

 

	
 
    	
ILLINOIS STATE BOARD OF
    
	
 
    	
INVESTMENT
    
	
 
    	
By Brigade Capital Management,   LP as
    
	
 
    	
Investment Manager
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Patrick Criscillo
    
	
 
    	
 
    	
Name: Patrick Criscillo
    
	
 
    	
 
    	
Title: Authorized   Signatory
    

 

[Signature page to Backstop Commitment Agreement]

 

 

	
 
    	
FCA CANADA INC. ELECTED
    
	
 
    	
MASTER TRUST
    
	
 
    	
By Brigade Capital Management,   LP as
    
	
 
    	
Investment Manager
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Patrick Criscillo
    
	
 
    	
 
    	
Name: Patrick Criscillo
    
	
 
    	
 
    	
Title: Authorized Signatory
    

 

[Signature page to Backstop Commitment Agreement]

 

 

	
 
    	
FCA US LLC MASTER RETIREMENT
    
	
 
    	
TRUST
    
	
 
    	
By Brigade Capital Management,   LP as
    
	
 
    	
Investment Manager
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Patrick Criscillo
    
	
 
    	
 
    	
Name: Patrick Criscillo
    
	
 
    	
 
    	
Title: Authorized   Signatory
    

 

[Signature page to Backstop Commitment Agreement]

 

 

	
 
    	
JPMORGAN FUNDS - MULTI-
    
	
 
    	
MANAGER ALTERNATIVES FUND
    
	
 
    	
By Brigade Capital Management,   LP as
    
	
 
    	
Investment Manager
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Patrick Criscillo
    
	
 
    	
 
    	
Name: Patrick Criscillo
    
	
 
    	
 
    	
Title: Authorized   Signatory
    

 

[Signature page to Backstop Commitment Agreement]

 

 

	
 
    	
LOS ANGELES COUNTY
    
	
 
    	
EMPLOYEES RETIREMENT
    
	
 
    	
ASSOCIATION
    
	
 
    	
By Brigade Capital Management,   LP as
    
	
 
    	
Investment Manager
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Patrick Criscillo
    
	
 
    	
 
    	
Name: Patrick Criscillo
    
	
 
    	
 
    	
Title: Authorized   Signatory
    

 

[Signature page to Backstop Commitment Agreement]

 

 

	
 
    	
MEDIOLANUM BEST BRANDS
    
	
 
    	
By Brigade Capital Management,   LP as
    
	
 
    	
Investment Manager
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Patrick Criscillo
    
	
 
    	
 
    	
Name: Patrick Criscillo
    
	
 
    	
 
    	
Title: Authorized   Signatory
    

 

[Signature page to Backstop Commitment Agreement]

 

 

	
 
    	
NEW YORK CITY FIRE
    
	
 
    	
DEPARTMENT PENSION FUND,
    
	
 
    	
SUBCHAPTER TWO
    
	
 
    	
By Brigade Capital Management,   LP as
    
	
 
    	
Investment Manager
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Patrick Criscillo
    
	
 
    	
 
    	
Name: Patrick Criscillo
    
	
 
    	
 
    	
Title: Authorized   Signatory
    

 

[Signature page to Backstop Commitment Agreement]

 

 

	
 
    	
NEW YORK CITY POLICE PENSION
    
	
 
    	
FUND, SUBCHAPTER 2
    
	
 
    	
By Brigade Capital Management,   LP as
    
	
 
    	
Investment Manager
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Patrick Criscillo
    
	
 
    	
 
    	
Name: Patrick Criscillo
    
	
 
    	
 
    	
Title: Authorized   Signatory
    

 

[Signature page to Backstop Commitment Agreement]

 

 

	
 
    	
TEACHERS’ RETIREMENT SYSTEM
    
	
 
    	
OF THE CITY OF NEW YORK
    
	
 
    	
By Brigade Capital Management,   LP as
    
	
 
    	
Investment Manager
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Patrick Criscillo
    
	
 
    	
 
    	
Name: Patrick Criscillo
    
	
 
    	
 
    	
Title: Authorized   Signatory
    

 

[Signature page to Backstop Commitment Agreement]

 

 

	
 
    	
U.S. HIGH YIELD BOND FUND
    
	
 
    	
By Brigade Capital Management,   LP as
    
	
 
    	
Investment Manager
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Patrick Criscillo
    
	
 
    	
 
    	
Name: Patrick Criscillo
    
	
 
    	
 
    	
Title: Authorized   Signatory
    

 

[Signature page to Backstop Commitment Agreement]

 

 

	
 
    	
SEI GLOBAL MASTER FUND PLC
   THE SEI HIGH YIELD FIXED
   INCOME FUND
    
	
 
    	
By Brigade Capital Management,   LP as
   Investment Manager
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Patrick Criscillo
    
	
 
    	
 
    	
Name: Patrick Criscillo
    
	
 
    	
 
    	
Title: Authorized   Signatory
    

 

[Signature page to Backstop Commitment Agreement]

 

 

	
 
    	
SEI INSTITUTIONAL INVESTMENTS
   TRUST-HIGH YIELD BOND FUND
    
	
 
    	
By Brigade Capital Management,   LP as
   Investment Manager
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Patrick Criscillo
    
	
 
    	
 
    	
Name: Patrick Criscillo
    
	
 
    	
 
    	
Title: Authorized   Signatory
    

 

[Signature page to Backstop Commitment Agreement]

 

 

	
 
    	
SEI INSTITUTIONAL MANAGED
   TRUST-HIGH YIELD BOND FUND
    
	
 
    	
By Brigade Capital Management,   LP as
   Investment Manager
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Patrick Criscillo
    
	
 
    	
 
    	
Name: Patrick Criscillo
    
	
 
    	
 
    	
Title: Authorized Signatory
    

 

[Signature page to Backstop Commitment Agreement]

 

 

	
 
    	
GIC PRIVATE LIMITED
    
	
 
    	
By Brigade Capital Management,   LP as
    
	
 
    	
Investment Manager
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Patrick Criscillo
    
	
 
    	
 
    	
Name: Patrick Criscillo
    
	
 
    	
 
    	
Title: Authorized   Signatory
    

 

[Signature page to Backstop Commitment Agreement]

 

 

	
 
    	
ST. JAMES’S PLACE DIVERSIFIED
   BOND UNIT TRUST
    
	
 
    	
By Brigade Capital Management,   LP as
   Investment Manager
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Patrick Criscillo
    
	
 
    	
 
    	
Name: Patrick Criscillo
    
	
 
    	
 
    	
Title: Authorized Signatory
    

 

[Signature page to Backstop Commitment Agreement]

 

 

	
 
    	
SAS TRUSTEE CORPORATION
    
	
 
    	
By Brigade Capital Management,   LP as
    
	
 
    	
Investment Manager
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Patrick Criscillo
    
	
 
    	
 
    	
Name: Patrick Criscillo
    
	
 
    	
 
    	
Title: Authorized   Signatory
    

 

[Signature page to Backstop Commitment Agreement]

 

 

	
 
    	
TCORPIM HIGH YIELD FUND
    
	
 
    	
By Brigade Capital Management,   LP as
    
	
 
    	
Investment Manager
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Patrick Criscillo
    
	
 
    	
 
    	
Name: Patrick Criscillo
    
	
 
    	
 
    	
Title: Authorized   Signatory
    

 

[Signature page to Backstop Commitment Agreement]

 

 

	
 
    	
LION POINT MASTER, LP
    
	
 
    	
By: Lion Point Capital   GP, LLC, its general partner
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ James Murphy
    
	
 
    	
 
    	
Name: James Murphy
    
	
 
    	
 
    	
Title: Authorized   Signatory
    

 

[Signature page to Backstop Commitment Agreement]

 

 

	
 
    	
LUMINUS ENERGY PARTNERS
    
	
 
    	
MASTER FUND, LTD
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Shawn R. Singh
    
	
 
    	
 
    	
Name: Shawn R. Singh
    
	
 
    	
 
    	
Title: Authorized   Signatory
    

 

[Signature page to Backstop Commitment Agreement]

 

 

 

	
 
    	
OAKTREE OPPORTUNITIES FUND X
    
	
 
    	
HOLDINGS (DELAWARE), L.P.
    
	
 
    	
 
    
	
 
    	
By: Oaktree Fund GP,   LLC
    
	
 
    	
Its: General Partner
    
	
 
    	
 
    
	
 
    	
By: Oaktree Fund GP I,   L.P.
    
	
 
    	
Its: Managing Member
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Allen Li
    
	
 
    	
 
    	
Name: Allen Li
    
	
 
    	
 
    	
Title: Authorized   Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Emily Stephens
    
	
 
    	
 
    	
Name: Emily Stephens
    
	
 
    	
 
    	
Title: Authorized   Signatory
    

 

[Signature page to Backstop Commitment Agreement]

 

 

	
 
    	
OAKTREE OPPS XB HOLDCO LTD.
    
	
 
    	
 
    
	
 
    	
By: Oaktree Capital   Management, L.P.
    
	
 
    	
Its: Director
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Allen Li
    
	
 
    	
 
    	
Name: Allen Li
    
	
 
    	
 
    	
Title: Vice President
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Emily Stephens
    
	
 
    	
 
    	
Name: Emily Stephens
    
	
 
    	
 
    	
Title: Managing   Director
    

 

[Signature page to Backstop Commitment Agreement]

 

 

	
 
    	
OAKTREE OPPORTUNITIES FUND XB
    
	
 
    	
HOLDINGS (DELAWARE), L.P.
    
	
 
    	
 
    
	
 
    	
By: Oaktree Fund GP,   LLC
    
	
 
    	
Its: General Partner
    
	
 
    	
 
    
	
 
    	
By: Oaktree Fund GP I,   L.P.
    
	
 
    	
Its: Managing Member
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Allen Li
    
	
 
    	
 
    	
Name: Allen Li
    
	
 
    	
 
    	
Title: Authorized   Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Emily Stephens
    
	
 
    	
 
    	
Name: Emily Stephens
    
	
 
    	
 
    	
Title: Authorized Signatory
    

 

[Signature page to Backstop Commitment Agreement]

 

 

	
 
    	
OAKTREE VALUE OPPORTUNITIES   FUND
    
	
 
    	
HOLDINGS, L.P.
    
	
 
    	
 
    
	
 
    	
By: Oaktree Value   Opportunities Fund GP, L.P.
    
	
 
    	
Its: General Partner
    
	
 
    	
 
    
	
 
    	
By: Oaktree Value   Opportunities Fund GP Ltd.
    
	
 
    	
Its: General Partner
    
	
 
    	
 
    
	
 
    	
By: Oaktree Capital   Management, L.P.
    
	
 
    	
Its: Director
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Allen Li
    
	
 
    	
 
    	
Name: Allen Li
    
	
 
    	
 
    	
Title: Vice President
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Emily Stephens
    
	
 
    	
 
    	
Name: Emily Stephens
    
	
 
    	
 
    	
Title: Managing   Director
    

 

[Signature page to Backstop Commitment Agreement]

 

 

	
 
    	
GEN IV INVESTMENT 
    
	
 
    	
OPPORTUNITIES, LLC
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Paul Segal
    
	
 
    	
 
    	
Name: Paul Segal
    
	
 
    	
 
    	
Title: President
    

 

[Signature page to Backstop Commitment Agreement]

 

 

 

SCHEDULE 1

 

Backstop Parties

 

	
Backstop Party
    	
 
    	
Backstop
   Commitment
    	
 
    	
Backstop
   Percentage
    	
 
    	
Face Amount of
   Senior Notes Held
    	
 
    	
Address
    	
 
    
	
[On file   with the Company]
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Total:
    	
 
    	
$
    	
150,150,000
    	
 
    	
100.00
    	
%
    	
 
    	
 
    	
 
    	
 
    
											

 

 

EXHIBIT A

 

Form of Notice of Assignment

 

Halcón Resources Corporation

1801 California Street, Suite 3500

Denver, Colorado 80202

Attn.:                 David S. Elkouri
 Executive Vice President and Chief Legal Officer
 (delkouri@halconresources.com)

 

with copies to:

 

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, NY 10153

Attn.:                 Gary Holtzer, Esq.
 (Gary.Holtzer@weil.com)
 Alfredo R. Perez, Esq.
 (Alfredo.Perez@weil.com)
 Lauren Tauro, Esq.
 (Lauren.Tauro@weil.com)

 

[            ]

[Address]

Attn.: [   ]

Email address: [     ]

 

Re:                             Transfer Notice Under Backstop Agreement

 

Reference is hereby made to that certain Backstop Commitment Agreement, dated as of August 2, 2019, (the “Backstop Commitment Agreement”), by and among the Company and the Backstop Parties. Capitalized terms used but not defined herein shall have the meanings assigned to them in the Backstop Commitment Agreement.

 

The purpose of this notice (“Notice”) is to advise you, pursuant to Section 8.2 of the Backstop Commitment Agreement, of the proposed transfer by [·] (the “Transferor”) to [·] (the “Transferee”) of the Backstop Commitment representing [·]% of the aggregate Backstop Commitments as of the date hereof, which represents $[·] of the Transferor’s Backstop Commitment (or [·]% of the aggregate Backstop Commitments). [If applicable: The Transferee represents to the Company and the Transferor that it is a Backstop Party under the Backstop Commitment Agreement.]

 

By signing this Notice below, Transferee represents to the Company and the Transferor that it will execute and deliver a joinder to the Backstop Agreement.

 

 

This Notice shall serve as a transfer notice in accordance with the terms of the Backstop Commitment Agreement. Please acknowledge receipt of this Notice delivered in accordance with Section 8.2 by returning a countersigned copy of this Notice to counsel to the Backstop Parties via the contact information set forth above.

 

 

EXHIBIT B

 

Form of Joinder Agreement

 

JOINDER AGREEMENT

 

This Joinder Agreement (the “Joinder Agreement”) to the Backstop Commitment Agreement dated as of August 2, 2019 (as amended, supplemented or otherwise modified from time to time, the “Backstop Commitment Agreement”), among the Company and the Backstop Parties is executed and delivered by the undersigned (the “Joining Party”) as of                      , 2019 (the “Joinder Date”).  Each capitalized term used herein but not otherwise defined shall have the meaning set forth in the Backstop Commitment Agreement.

 

Agreement to be Bound.  The Joining Party hereby agrees to be bound by all of the terms of the Backstop Commitment Agreement, a copy of which is attached to this Joinder Agreement as Annex 1 (as the same has been or may be hereafter amended, restated or otherwise modified from time to time in accordance with the provisions hereof).  The Joining Party shall hereafter be deemed to be a “Backstop Party” for all purposes under the Backstop Commitment Agreement.

 

Representations and Warranties.  The Joining Party hereby severally and not jointly makes the representations and warranties of the Backstop Parties as set forth in Section 4 of the Backstop Commitment Agreement to the Company as of the date hereof.

 

Governing Law.  This Joinder Agreement shall be governed by and construed in accordance with the Laws of the State of New York, but without giving effect to applicable principals of conflicts of law to the extent that the application of the Law of another jurisdiction would be required thereby.

 

[Signature pages to follow]

 

 

IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above.

 

	
 
    	
[JOINING PARTY]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

[Signature Page to Joinder Agreement to Backstop Commitment Agreement]Exhibit 10.3

 

BMO HARRIS BANK N.A.

700 LOUISIANA STREET, SUITE 2100

HOUSTON, TEXAS 77002

 

BMO CAPITAL MARKETS CORP.

3 TIMES SQUARE

NEW YORK, NEW YORK 10036

 

August 2, 2019

 

Halcón Resources Corporation

1000 Louisiana St., Suite 1500

Houston, TX 77002

Attention:  Richard Little, PE, Chief Executive Officer

 

$750.0 Million Senior Secured Revolving Credit Facility

Commitment Letter

 

Ladies and Gentlemen:

 

BMO Harris Bank N.A. (“BMO Bank”) and BMO Capital Markets (“BMOCM” and, together with BMO Bank, the “Commitment Party”, “BMO”, “we” or “us”) understand that Halcón Resources Corporation, a Delaware corporation (“you” or the “Borrower”), and certain of your subsidiaries (together with the Borrower, the “Debtors”) are considering filing voluntary petitions to commence cases (the “Chapter 11 Cases”) under title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”) in order to implement a restructuring of the Debtors pursuant to a prepackaged plan of reorganization contemplated by the plan of reorganization substantially in the form attached hereto as Exhibit A (the “Chapter 11 Plan” and the foregoing collectively, the “Transactions”).

 

In connection therewith, the Borrower has requested that (a) we structure, arrange and syndicate a $750.0 million senior secured reserve-based revolving credit facility (the “Credit Facility”) with an initial borrowing base of $275.0 million (the “Initial Borrowing Base”), (b) BMO Bank serve as sole administrative agent and (c) BMO Bank commit to provide a portion of the Credit Facility as set forth herein.

 

1.              Commitments

 

BMO Bank is pleased to advise you of its commitment to provide 100% of the Initial Borrowing Base under the Credit Facility (BMO Bank, in such capacity, the “Initial Lender”), subject to the terms and conditions set forth in this letter and Exhibits B and C attached hereto (this letter, together with Exhibits A, B and C attached hereto, the “Commitment Letter”). Capitalized terms used in this letter but not defined herein shall have the meanings given to them in the Exhibits attached hereto.

 

 

2.              Titles and Roles

 

It is agreed that (a) BMOCM will act as sole lead arranger and sole bookrunner for the Credit Facility (acting in such capacities, the “Lead Arranger”) and (b) BMO Bank will act as sole administrative agent for the Credit Facility.

 

It is further agreed that BMO will have “left” and “highest” placement in any and all marketing materials or other documentation used in connection with the Credit Facility and shall hold the leading role and responsibilities conventionally associated with such placement, including maintaining the sole physical books for the Credit Facility. You agree that no other agents, co-agents, arrangers, co-arrangers, bookrunners, co-bookrunners, managers or co-managers will be appointed, no other titles will be awarded and no compensation (other than that expressly contemplated by this Commitment Letter and the Fee Letters referred to below) will be paid in connection with the Credit Facility unless you and we shall so agree (it being understood and agreed that no other agent, co-agent, arranger, co-arranger, bookrunner, co-bookrunner, manager or co-manager shall be entitled to greater economics in respect of the Credit Facility than BMO).  Notwithstanding the foregoing, BMO shall have the right, subject to your consent (not to be unreasonably withheld, delayed or conditioned), to award titles to other financial institutions as joint lead arrangers and joint bookrunners (each, an “Additional Arranger” and, together with the Lead Arranger, the “Arrangers”) who are (or whose respective lending affiliates are, as applicable) Lenders (each, an “Additional Initial Lender”) that provide (or whose affiliates provide) commitments in respect of the Credit Facility (it being agreed that (a) each of the parties hereto shall, upon request of you or the Lead Arranger, execute an amendment (or amendment and restatement) or joinder to this Commitment Letter to reflect the commitments of any such financial institutions, pursuant to which each such Additional Initial Lender will assume a portion of the commitments with respect to the Initial Borrowing Base under the Credit Facility, and upon such execution the commitments of BMO Bank in respect to the Initial Borrowing Base under the Credit Facility will be permanently reduced on a dollar for dollar basis by the amount of the commitments to the Initial Borrowing Base of such Additional Initial Lender and (b) no such other Additional Arranger or Additional Initial Lender will have rights in respect of the management of the syndication of the Credit Facility (including, without limitation, in respect of “market flex” rights under the Arranger Fee Letter, over which BMO will have sole control)).

 

3.              Syndication; Information

 

BMOCM, as Lead Arranger, intends to syndicate the Credit Facility (including, in our discretion, all or part of BMO Bank’s commitments hereunder) to a group of banks, financial institutions and other commercial bank lenders identified by us in consultation with you, and subject to your consent (not to be unreasonably withheld, delayed or conditioned) (together with the Initial Lender and any Additional Initial Lender, the “Lenders”).  Notwithstanding any other provision of this Commitment Letter to the contrary, (a) the Initial Lender and any Additional Initial Lender shall not be relieved or novated from their respective obligations hereunder (including their respective obligations to fund the Credit Facility on the Closing Date) in connection with any syndication, assignment or participation of the Credit Facility, including their respective commitments in respect thereof, until after the initial funding of the Credit Facility on the Closing Date, (b) no assignment or novation shall become effective with respect to all or any portion of the Initial Lender’s or Additional Initial Lender’s commitments in respect of the Credit Facility until after the initial funding of the Credit Facility on the Closing Date (except in respect of the foregoing clauses (a) and (b), upon execution and delivery of an amendment (or amendment and restatement) or joinder to this Commitment Letter to reflect the appointment of any financial institution as an Additional Agent or Additional Initial Lender as described in Section 2 above) and (c) unless you and we agree in writing, the Initial Lender and each Additional Initial Lender shall retain exclusive control over all rights and obligations with respect to their respective commitments in respect of the Credit

 

2

 

Facility, including all rights with respect to consents, modifications, supplements and amendments, until the Closing Date has occurred.

 

The Lead Arranger intends to commence syndication efforts promptly upon the execution of this Commitment Letter, and you agree actively to assist the Lead Arranger in completing a syndication satisfactory to us and you. Such assistance shall include, but not be limited to, until the earlier to occur of (i) a Successful Syndication (as defined in the Upfront Fee Letter) and (ii) forty-five (45) days after the Closing Date (such earlier date, the “Syndication Date”), (a) your using commercially reasonable efforts to ensure that the syndication efforts benefit from your and your affiliates’ existing lending relationships, (b) direct contact between your senior management and advisors and the proposed Lenders at times and locations to be mutually agreed upon, (c) your preparing and providing to the Lead Arranger a customary confidential information memoranda and other customary marketing materials (including, without limitation, lender slides and/or other marketing materials to be used in connection with the syndication) with respect to you and your properties, including financial information and Projections (as defined below), as the Lead Arranger may reasonably request in connection with the arrangement and syndication of the Credit Facility (all such information, memoranda and material, “Information Materials”) and (d) your hosting, with the Lead Arranger, of one or more meetings with prospective Lenders at such times and locations to be mutually agreed upon. You hereby authorize the Lead Arranger to download copies of the Borrower’s trademark logos from its website and post copies thereof on the SyndTrak site or similar workspace established by the Lead Arranger to syndicate the Credit Facility and use the logos on any confidential information memoranda, presentations and other marketing materials prepared in connection with the syndication of the Credit Facility or in any advertisements (to which you consent, such consent not to be unreasonably withheld, conditioned or delayed) that we may place after the closing of the Credit Facility in financial and other newspapers, journals, the World Wide Web, home page or otherwise, at our own expense describing our services to the Borrower hereunder. You also understand and acknowledge that we may provide to market data collectors, such as league table or other service providers to the lending industry, information regarding the closing date, size, type, purpose of, and parties to, the Credit Facility.

 

Notwithstanding anything to the contrary contained in this Commitment Letter or any Fee Letter or any other letter agreement or undertaking concerning the financing of the Transactions, without limiting your obligations to assist with syndication efforts as set forth above, none of the commencement or completion of syndication of the Credit Facility, the completion of a confidential information memorandum or other marketing materials, or compliance with any other provision set forth in this Commitment Letter (other than the conditions described in Section 5 of this Commitment Letter) shall constitute a condition to the commitments hereunder or to the funding of the Credit Facility on the Closing Date.

 

The Lead Arranger will manage all aspects of the syndication in consultation with you, including decisions as to (a) the selection of institutions to be approached (subject to your consent, not to be unreasonably withheld, delayed or conditioned) and when they will be approached, (b) when commitments will be accepted, (c) which institutions will participate (subject to your consent, not to be unreasonably withheld, delayed or conditioned), (d) the allocation of the commitments among the Lenders and (e) the amount and distribution of fees among the Lenders. You hereby acknowledge and agree that the Lead Arranger will have no responsibility other than to arrange the syndication of the commitments as set forth herein and to perform the other obligations to be performed by the Lead Arranger as set forth herein, and the Lead Arranger is acting solely in the capacity of an arm’s length contractual counterparty to you with respect to the arrangement of the Credit Facility (including in connection with determining the terms of the Credit Facility) and not as a financial advisor or a fiduciary to, or an agent of, the Borrower or any other person. In consideration of the Commitment Party’s commitments and other agreements hereunder, effective upon your acceptance of this Commitment Letter

 

3

 

and continuing until the earlier of the Syndication Date and the termination of this Commitment Letter, you will ensure that there will be no competing arrangement, offering, placement, or syndication of any other debt financing similar to, or as a replacement of, all or any portion of the Credit Facility, excluding with respect to amendments, waivers and other similar agreements to the Existing Credit Agreement (as defined in Exhibit B) prior to the commencement of the Chapter 11 Cases or with respect to the DIP Facility (as defined in Exhibit B) (it being agreed that deferred purchase obligations, intercompany debt, capital leases, purchase money financings and equipment financings are not restricted by the foregoing).

 

You hereby represent and warrant that (a) all written information (including all Information Materials), other than financial projections and other forward-looking information (collectively, the “Projections”), information of a general economic or general industry nature (such non-excluded items, the “Information”), that has been or will be made available to us by you or any of your representatives in connection with the transactions contemplated hereby, when taken as a whole, does not or will not, when furnished to us, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not materially misleading in light of the circumstances under which such statements are made (giving effect to all supplements thereto) and (b) the Projections that have been or will be made available to us by you or any of your representatives in connection with the transactions contemplated hereby have been or will be prepared in good faith based upon assumptions believed by you to be reasonable at the time furnished to us (it being recognized by the Commitment Party that such Projections are not to be viewed as facts and that actual results during the period or periods covered by any such Projections may differ from the projected results, and such differences may be material). You agree that if, at any time prior to the Closing Date, you become aware that any of the representations and warranties in the preceding sentence would be incorrect if such Information or Projections were furnished at such time and such representations were remade, in any material respect, then you will promptly supplement the Information and the Projections so that such representations when remade would be correct, in all material respects, under those circumstances. You understand that in arranging and syndicating the Credit Facility, the Commitment Party may use and rely on the Information and Projections without independent verification thereof.

 

If requested, you also will assist us in preparing an additional version of the Information Materials (the “Public-Side Version”) to be used by prospective Lenders’ public-side employees and representatives (“Public-Siders”) who do not wish to receive material non-public information (within the meaning of United States federal securities laws) with respect to the Borrower, its affiliates and any of their respective securities (“MNPI”) and who may be engaged in investment and other market related activities with respect to the Borrower’s or its affiliates’ securities or loans.  Before distribution of any Information Materials, you agree to execute and deliver to us (a) a customary letter in which you authorize distribution of the Information Materials to a prospective Lender’s employees willing to receive MNPI (“Private-Siders”) and (b) a separate customary letter in which you authorize distribution of the Public-Side Version to Public-Siders and represent that either (i) no MNPI is contained therein or (ii) neither the Borrower, nor any of its controlling or controlled entities has any debt or equity securities issued pursuant to a public offering or Rule 144A private placement and agree that if the Borrower, or any of its controlling or controlled entities is the issuer of any debt or equity securities issued pursuant to a public offering or Rule 144A private placement thereafter, you will publicly disclose any information contained in the Information Materials delivered to Public-Siders that constitutes MNPI at such time and, in the case of both clauses (a) and (b), exculpating us and our affiliates and the Borrower and its affiliates from any liability related to the use of the contents of the Information Materials by the recipients thereof. You also acknowledge that the Lead Arranger Public-Siders consisting of publishing debt analysts may participate in any meetings or telephone conference calls held pursuant to clause (d) of the second preceding paragraph; provided that such analysts shall not publish any information obtained from such meetings or calls (A) until the syndication of the Credit Facility has been completed upon the making of

 

4

 

allocations by BMOCM freeing the Credit Facility to trade or (B) in violation of any confidentiality agreement between you and the BMO.

 

The Borrower agrees that the following documents may be distributed to both Private-Siders and Public-Siders, unless the Borrower advises BMO in writing (including by email) within a reasonable time prior to their intended distribution that such materials should only be distributed to Private-Siders: (a) administrative materials prepared by BMO for prospective Lenders (such as a lender meeting invitation, bank allocation, if any, and funding and closing memoranda), (b) notification of changes in the Credit Facility’s terms and (c) drafts and final versions of the Loan Documents and administrative materials prepared by the Commitment Party for prospective Lenders (such as lender meeting invitations, allocations and funding and closing memoranda).  If you advise us that any of the foregoing should be distributed only to Private-Siders, then Public-Siders will not receive such materials without further discussions with you.

 

4.              Fees

 

As consideration for the commitment and agreements of the Commitment Party hereunder and the Lead Arranger’s agreements to perform the services described herein, you agree to pay or cause to be paid the nonrefundable fees described in the Arranger Fee Letter and Upfront Fee Letter, each dated as of the date hereof and delivered herewith (collectively, the “Fee Letters”) on the terms and subject to the conditions set forth therein.

 

All fees payable hereunder and under the Fee Letters shall be paid in immediately available funds in U.S. Dollars and shall not be subject to reduction by way of withholding, setoff or counterclaim or be otherwise affected by any claim or dispute related to any other matter. In addition, all fees payable hereunder shall be paid without deduction for any taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any national, state or local taxing authority, or will be grossed up by you for such amounts.

 

5.              Conditions

 

BMO Bank’s commitment hereunder and the Lead Arranger’s agreements to perform the services described herein are subject only to the conditions set forth in this Section 5, in Exhibit B under the heading “CERTAIN CONDITIONS — Initial Conditions” and in Exhibit C.  It being understood that there are no conditions (implied or otherwise) to the commitments hereunder, including compliance with the terms of this Commitment Letter, the Fee Letters and the Loan Documents other than those expressly stated in this Section 5.

 

6.              Indemnification and Expenses

 

You agree (a) to indemnify and hold harmless the Commitment Party, the Lead Arranger and any other arrangers or agents in respect of the Credit Facility appointed pursuant to the Commitment Letter, their affiliates and their respective directors, officers, employees, advisors, agents and other representatives (each, an “indemnified person”) from and against any and all losses, claims, damages and liabilities to which any such indemnified person may become subject arising out of or in connection with this Commitment Letter, the Chapter 11 Cases, the Fee Letters, the Credit Facility, the use of the proceeds thereof or the Transactions (or any related transaction) or any claim, litigation, investigation or proceeding (a “Proceeding”) relating to any of the foregoing, regardless of whether any indemnified person is a party thereto, whether or not such Proceedings are brought by you, your equity holders, affiliates, creditors or any other person, and to reimburse each indemnified person upon written demand with customary backup documentation for any reasonable and documented out-of-pocket legal or other

 

5

 

documented out-of-pocket expenses incurred in connection with investigating or defending any of the foregoing (limited, in the case of counsel, to the reasonable fees, disbursements and other charges of a single counsel to the indemnified persons, including (if necessary) one local counsel in each relevant jurisdiction and one regulatory counsel to all such indemnified persons, taken as a whole, and, solely in the event of a conflict of interest, one additional counsel (and, if necessary, one regulatory counsel and one local counsel in each relevant jurisdiction) to each group of similarly situated affected indemnified persons), provided that the foregoing indemnity will not, as to any indemnified person, apply (i) to losses, claims, damages, liabilities or related expenses to the extent they are found by a final, nonappealable judgment of a court of competent jurisdiction to arise from the willful misconduct, bad faith or gross negligence of such indemnified person or its control affiliates, directors, officers or employees, advisors or agents (collectively, the “Related Parties”), (ii) to losses, claims, damages, liabilities or related expenses to the extent they are found by a final, nonappealable judgment of a court of competent jurisdiction to arise from a material breach in bad faith of the funding obligations of such indemnified person or any control affiliate of such indemnified person under this Commitment Letter or (iii) to the extent arising from any dispute solely among indemnified persons (other than a Proceeding against any indemnified person in its capacity or in fulfilling its role as Lead Arranger, administrative agent, bookrunner, lender or any other similar role in connection with this Commitment Letter, the Fee Letters, the Credit Facility or the use of the proceeds thereof) not arising out of any act or omission on the part of you or your affiliates and (b) regardless of whether the Closing Date occurs, to reimburse the Commitment Party and its affiliates for all reasonable and documented out-of-pocket expenses (including, without limitation, due diligence expenses, syndication expenses, consultant’s fees and expenses, travel expenses, and fees, charges, expenses and disbursements of counsel) incurred in connection with the Chapter 11 Cases, the Credit Facility and any related documentation (including this Commitment Letter, the Fee Letters and the definitive financing documentation in connection with the Credit Facility) or the administration, amendment, modification or waiver thereof (limited, in the case of counsel, to the reasonable fees, disbursements and other charges of a single counsel to the Commitment Party and its affiliates, including (if necessary) one local counsel in each relevant jurisdiction and one regulatory counsel to all such persons, taken as a whole, and, solely in the event of a conflict of interest, one additional counsel (and, if necessary, one regulatory counsel and one local counsel in each relevant jurisdiction) to each group of similarly situated affected persons).  You further agree to pay all reasonable and documented out-of-pocket costs and expenses of each Commitment Party and its affiliates (including, without limitation, reasonable and documented fees and disbursements of counsel) incurred in connection with the enforcement of any of its rights and remedies hereunder.

 

It is further agreed that the Commitment Party shall only have liability to you (as opposed to any other person) and that the Commitment Party shall be liable solely in respect of its own commitment to the Credit Facility on a several, and not joint, basis with any other party committing to the Credit Facility. No indemnified person shall be liable for any damages arising from the use by others of Information or other materials obtained through electronic, telecommunications or other information transmission systems, except to the extent any such damages are found by a final, nonappealable judgment of a court of competent jurisdiction to arise from the gross negligence, bad faith or willful misconduct of such indemnified person. None of the indemnified persons or you or any of your or their respective Related Parties of the foregoing shall be liable for any indirect, special, punitive or consequential damages in connection with this Commitment Letter, the Fee Letters, the Credit Facility or the transactions contemplated hereby, provided that nothing contained in this sentence shall limit your indemnity obligations to the extent set forth in this Section 6.

 

You shall not, without the prior written consent of an indemnified person (which consent shall not be unreasonably withheld, conditioned or delayed), effect any settlement of any pending or threatened Proceedings in respect of which indemnity could have been sought hereunder by such indemnified person unless (a) such settlement includes an unconditional release of such indemnified person in form and

 

6

 

substance reasonably satisfactory to such indemnified person from all liability on claims that are the subject matter of such Proceedings and (b) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any indemnified person or any injunctive relief or other non-monetary remedy.  You acknowledge that any failure to comply with your obligations under the preceding sentence may cause irreparable harm to the indemnified persons.

 

On and after the commencement of the Chapter 11 Cases, the expense reimbursements and indemnification provisions of this Commitment Letter shall constitute administrative expenses under Sections 503(b)(1) and 507(a)(2) of the Bankruptcy Code in the Chapter 11 Cases without the need to file any motion (other than any motion as may be necessary to obtain the approvals of this Commitment Letter and the Fee Letters), application or proof of claim and notwithstanding any administrative claims bar date, and shall be immediately payable in accordance with the terms hereof without further notice or order of the Bankruptcy Court.

 

7.              Sharing of Information, Affiliate Activities

 

BMO may employ the services of its affiliates in providing certain services hereunder and, in connection with the provision of such services, may exchange with such affiliates information concerning you and the other companies that may be the subject of the transactions contemplated by this Commitment Letter, and, to the extent so employed, such affiliates shall be entitled to the benefits, and be subject to the obligations, of BMO hereunder.  BMO shall be responsible for its affiliates’ failure to comply with such obligations under this Commitment Letter.

 

You acknowledge that the Commitment Party and its affiliates may be providing debt financing, equity capital or other services (including financial advisory services) to other companies in respect of which you may have conflicting interests regarding the transactions described herein and otherwise. The Commitment Party will not use confidential information obtained from you by virtue of the transactions contemplated by this Commitment Letter or its other relationships with you in connection with the performance by the Commitment Party of services for other companies, and the Commitment Party will not furnish any such information to other companies. You also acknowledge that the Commitment Party has no obligation to use in connection with the transactions contemplated by this Commitment Letter, or to furnish to you, confidential information obtained from other companies.

 

You further acknowledge that the Commitment Party is a full service securities and banking firm engaged in securities trading and brokerage activities as well as providing investment banking and other financial services. In the ordinary course of business, the Commitment Party and/or its affiliates may provide investment banking and other financial services to, and/or acquire, hold or sell, for its own accounts and the accounts of customers, equity, debt and other securities and financial instruments (including bank loans and other obligations) of, you and other companies with which you may have commercial or other relationships. With respect to any securities and/or financial instruments so held by the Commitment Party, its affiliates or any of its respective customers, all rights in respect of such securities and financial instruments, including any voting rights, will be exercised by the holder of the rights, in its sole discretion.

 

8.              Confidentiality

 

This Commitment Letter is delivered to you on the understanding that neither this Commitment Letter nor any Fee Letter nor any of their terms or substance shall be disclosed by you, directly or indirectly, to any other person, except (a) to you and your officers, directors, employees, affiliates, members, partners, stockholders, attorneys, accountants, agents and advisors, in each case on a confidential and need-to-know basis, (b) in any legal, judicial or administrative proceeding or as

 

7

 

otherwise required by law or regulation or as requested by a governmental or regulatory authority (in which case you agree, to the extent permitted by law, to inform us promptly in advance thereof), in each case excluding disclosure in the context of the Chapter 11 Cases, which shall be governed by the last sentence of this paragraph, (c) if the Commitment Party consents in writing to such proposed disclosure, (d) in connection with the enforcement of your rights hereunder or under the Fee Letter and (e) this Commitment Letter and the existence and contents hereof (but not the Fee Letters or the contents thereof other than the existence thereof and the contents thereof as part of projections, pro forma information and a generic disclosure of aggregate sources and uses to the extent customary in marketing materials and other required filings) may be disclosed (i) in connection with the arrangement or syndication of the Credit Facility or in connection with any public filing, (ii) to the Ad Hoc Noteholder Group (as defined in the Restructuring Support Agreement, dated as of August 2, 2019 (as amended, supplemented or otherwise modified from time to time, the “RSA”)) and (iii) after the execution of the RSA, in connection with the Solicitation (as defined in the RSA) of any holder of Senior Notes (as defined in the RSA). Notwithstanding anything to the contrary in the foregoing, you shall be permitted to file the Fee Letters with the Bankruptcy Court under seal in form and substance reasonably satisfactory to BMO or in a redacted manner in form and substance reasonably satisfactory to BMO and provide an unredacted copy of the Fee Letters to the Bankruptcy Court, the Office of the United States Trustee and advisors to (x) any official committee appointed in the Chapter 11 Cases and (y) the Consenting Creditors who are party to the RSA; provided, that the disclosure to such advisors is on a confidential, “professionals only” basis.

 

The Commitment Party shall use all nonpublic information received by it in connection with the Credit Facility and the related transactions solely for the purposes of providing the services that are the subject of this Commitment Letter and shall treat confidentially all such information; provided, however, that nothing herein shall prevent the Commitment Party from disclosing any such information (a) to rating agencies in connection with any rating of the Commitment Party or any of its affiliates, (b) to any Lenders or participants or prospective Lenders or participants, (c) in any legal, judicial, administrative proceeding or other compulsory process or as required by applicable law or regulations (in which case the Commitment Party shall promptly notify you, in advance, to the extent permitted by law), (d) upon the request or demand of any regulatory authority having jurisdiction over the Commitment Party or its affiliates, (e) to the employees, legal counsel, independent auditors, professionals and other experts or agents of the Commitment Party (collectively, “Representatives”) who are informed of the confidential nature of such information and are or have been advised of their obligation to keep information of this type confidential, (f) to any of its respective affiliates (provided that any such affiliate is advised of its obligation to retain such information as confidential, and the Commitment Party shall be responsible for its affiliates’ compliance with this paragraph) solely in connection with the Transactions, (g) to the extent any such information becomes publicly available other than by reason of disclosure by the Commitment Party, its affiliates or Representatives in breach of this Commitment Letter, (h) for purposes of establishing a “due diligence” defense, (i) to any direct or indirect contractual counterparty to any swap or derivative transaction relating to the Borrower or any of its subsidiaries and (j) pursuant to customary disclosure about the terms of the financing contemplated hereby in the ordinary course of business to market data collectors and similar service providers to the loan industry for league table purposes; provided that the disclosure of any such information to any Lenders or prospective Lenders or participants or prospective participants referred to above shall be made subject to the acknowledgment and acceptance by such Lender or prospective Lender or participant or prospective participant that such information is being disseminated on a confidential basis in accordance with the standard syndication processes of the Commitment Party or customary market standards for dissemination of such type of information. If the Closing Date occurs, the Commitment Party’s obligations under this paragraph shall terminate and be superseded by the confidentiality provisions in the Credit Facility. Otherwise, the provisions of this paragraph shall automatically terminate on the earlier of (a) the Closing Date and (b) one year following the date of this Commitment Letter.

 

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9.              Miscellaneous

 

This Commitment Letter shall not be assignable by you without the prior written consent of the Commitment Party (and any purported assignment without such consent shall be null and void), is intended to be solely for the benefit of the parties hereto and the indemnified persons and is not intended to and does not confer any benefits upon, or create any rights in favor of, any person other than the parties hereto and the indemnified persons to the extent expressly set forth herein. The Commitment Party reserves the right to employ the services of its affiliates in providing services contemplated hereby and to allocate, in whole or in part, to its affiliates certain fees payable to the Commitment Party in such manner as the Commitment Party and its affiliates may agree in their sole discretion. This Commitment Letter may not be amended or waived except by an instrument in writing signed by you and the Commitment Party. This Commitment Letter may be executed in any number of counterparts, each of which shall be an original, and all of which, when taken together, shall constitute one agreement. Delivery of an executed signature page of this Commitment Letter by facsimile or electronic transmission (e.g., “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart hereof. This Commitment Letter and the Fee Letters are the only agreements that have been entered into among us and you with respect to the Credit Facility and set forth the entire understanding of the parties with respect thereto. This Commitment Letter and any claim or controversy arising hereunder or related hereto shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York and, to the extent applicable, the Bankruptcy Code.

 

The Borrower agrees that it will not assert any claim against any Arranger or the Commitment Party based on an alleged breach of fiduciary duty by such Arranger or Commitment Party in connection with this Commitment Letter and the transactions contemplated hereby. Additionally, the Borrower acknowledges and agrees that neither any Arranger nor the Commitment Party is advising the Borrower as to any legal, tax, investment, accounting, regulatory or any other matters in any jurisdiction. The Borrower shall consult with its own advisors concerning such matters and shall be responsible for making its own independent investigation and appraisal of the transactions contemplated hereby, and neither the Arranger nor the Commitment Party shall have any responsibility or liability to the Borrower with respect thereto. Any review by any Arranger or the Commitment Party of the Borrower, the transactions contemplated hereby or other matters relating to such transactions will be performed solely for the benefit of any Arranger or the Commitment Party, as applicable, and shall not be on behalf of the Borrower.

 

You and we hereby irrevocably and unconditionally submit to the exclusive jurisdiction of the Bankruptcy Court or any other Federal court having jurisdiction over the Chapter 11 Cases, and, to the extent that the Bankruptcy Court or Federal court do not have jurisdiction, any state or Federal court sitting in the Borough of Manhattan in the City of New York, over any suit, action or proceeding arising out of or relating to the Transactions or the other transactions contemplated hereby, this Commitment Letter or the Fee Letters or the performance of services hereunder or thereunder. You and we agree that service of any process, summons, notice or document by registered mail addressed to you or us shall be effective service of process for any suit, action or proceeding brought in any such court. You and we hereby irrevocably and unconditionally waive any objection to the laying of venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding has been brought in any inconvenient forum. You and we hereby irrevocably waive, to the fullest extent permitted by applicable law, trial by jury in any suit, action, proceeding, claim or counterclaim brought by or on behalf of any party related to or arising out of the Transactions, this Commitment Letter or the Fee Letters or the transactions contemplated hereby or thereby (whether based on contract, tort or any other theory) or the performance of services hereunder or thereunder.

 

The Commitment Party hereby notifies you that, pursuant to the requirements of the USA PATRIOT Act, Title III of Pub. L. 107-56 (signed into law on October 26, 2001) (the “PATRIOT Act”),

 

9

 

it is required to obtain, verify and record information that identifies the Borrower and each Guarantor, which information includes names, addresses, tax identification numbers and other information that will allow such Lender to identify the Borrower and each Guarantor in accordance with the PATRIOT Act. This notice is given in accordance with the requirements of the PATRIOT Act and is effective for the Commitment Party and each of their respective affiliates.

 

The indemnification, fee, expense, jurisdiction, syndication; information and confidentiality provisions contained herein and the provisions of the Fee Letters shall remain in full force and effect regardless of whether definitive financing documentation for the Credit Facility shall be executed and delivered and (other than in the case of the syndication and information provisions, which shall only survive if the Closing Date occurs) notwithstanding the termination of this Commitment Letter or the commitments hereunder; provided that your obligations under this Commitment Letter (other than your obligations with respect to confidentiality) shall automatically terminate and be superseded, to the extent comparable, by the provisions of the Credit Agreement upon the occurrence of the Closing Date thereunder.

 

If the foregoing correctly sets forth our agreement, please indicate your acceptance of the terms of this Commitment Letter and the Fee Letters by returning to us executed counterparts of this Commitment Letter and the Fee Letters not later than 11:59 p.m., New York City time, on August 2, 2019.  This offer will automatically expire at such time if we have not received such executed counterparts in accordance with the preceding sentence.  In the event that the initial borrowing under the Credit Facility does not occur on or before the Expiration Date (as defined below), then the commitments with respect to the Credit Facility shall automatically terminate unless the Commitment Party, in its sole discretion, agrees to an extension.

 

For purposes of this Commitment Letter, “Expiration Date” means the earliest to occur of: (i) the termination of the RSA, (ii) August 16, 2019, if and to the extent the Bankruptcy Court has not entered an order, in form and substance reasonably satisfactory the Lead Arranger (which order is final, is in full force and effect, is unstayed and has not been amended, supplemented or otherwise modified without the consent of the Lead Arranger) approving this Commitment Letter, the Fee Letters and the transactions contemplated hereby and thereby (including the fees, payments, expenses and indemnities and other obligations set forth in this Commitment Letter and the Fee Letters), (iii) on any date after which an order described in the immediately preceding clause (ii) has been entered but ceases to be in full force and effect, is stayed, is vacated, or is amended or modified without the consent of the Lead Arranger, (iv) the completion of the Chapter 11 Cases without the closing of the Credit Facility, (v) the dismissal or conversion of the Chapter 11 Cases to proceedings under Chapter 7 of the Bankruptcy Code and (vi) November 15, 2019.

 

[Signature Pages Follow]

 

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We are pleased to have been given the opportunity to assist you in connection with this important financing.

 

	
 
    	
Very truly yours,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
BMO HARRIS BANK N.A.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ James V. Ducote
    
	
 
    	
 
    	
Name:
    	
James V. Ducote
    
	
 
    	
 
    	
Title:
    	
Managing Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
BMO CAPITAL MARKETS   CORP.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Will Felder
    
	
 
    	
 
    	
Name:
    	
Will Felder
    
	
 
    	
 
    	
Title:
    	
Vice President
    

 

Commitment Letter Signature Page

 

 

	
Accepted and agreed to as of the date first written above:
    	
 
    
	
 
    	
 
    
	
HALCÓN RESOURCES CORPORATION
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ Richard H. Little
    	
 
    
	
 
    	
Name:
    	
Richard H. Little
    	
 
    
	
 
    	
Title:
    	
Chief Executive Officer
    	
 
    

 

Commitment Letter Signature Page

 

 

EXHIBIT A

 

CHAPTER 11 PLAN

 

Chapter 11 Plan is filed as Exhibit C to Exhibit 10.1 of this Form 8-K.

 

 

EXHIBIT B

 

$750.0 Million Senior Secured Revolving Credit Facility

Summary of Terms and Conditions

 

Set forth below is a summary of the principal terms and conditions for the Credit Facility.  Capitalized terms used but not defined shall have the meanings set forth in the Commitment Letter to which this Exhibit B is attached and in Exhibit C to such Commitment Letter.

 

	
I.                                        Parties
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Borrower:
    	
 
    	
Halcón Resources   Corporation (“Halcón”), a Delaware corporation.
    
	
 
    	
 
    	
 
    
	
Guarantors:
    	
 
    	
Each of the Borrower’s   direct and indirect, existing and future material domestic subsidiaries (the   “Guarantors” and together with the Borrower the “Credit Parties”);   provided that any subsidiary that (a) owns any Borrowing Base   Properties (as defined below) or (b) incurs or guarantees any   obligations under any Material Indebtedness (to be defined) shall, in each   case, be a Guarantor. On the Closing Date (as defined below) the following   subsidiaries will be Guarantors: Halcón Resources Operating, Inc.,   Halcón Holdings, Inc., Halcón Energy Properties, Inc., Halcón   Permian, LLC, Halcón Field Services, LLC and Halcón Operating Co., Inc.
    
	
 
    	
 
    	
 
    
	
Sole Lead Arranger and   Sole Bookrunner:
    	
 
    	
BMO Capital Markets (“BMOCM”)   will act as sole lead arranger and bookrunner (in such capacity, the “Lead   Arranger”) for the Credit Facility (as defined below), and will perform   the duties customarily associated with such role.
    
	
 
    	
 
    	
 
    
	
Administrative Agent:
    	
 
    	
BMO Harris Bank N.A.   (in such capacity, the “Administrative Agent”).
    
	
 
    	
 
    	
 
    
	
LC Issuer:
    	
 
    	
BMO Harris Bank N.A.   (acting through itself or such of its affiliates as it deems appropriate   under the circumstances), each named agent under the Credit Facility and any   other Lender reasonably acceptable to the Borrower (in such capacity, an “LC   Issuer”).
    
	
 
    	
 
    	
 
    
	
Lenders:
    	
 
    	
A syndicate of banks,   financial institutions and other commercial bank lenders, including BMO Bank   (acting through itself or such of its affiliates as it deems appropriate   under the circumstances), arranged by the Lead Arranger and reasonably   acceptable to the Borrower (the “Lenders”). 
    
	
 
    	
 
    	
 
    
	
Majority Lenders:
    	
 
    	
Lenders holding more   than 50.0% of the aggregate amount of the Loans and participations in Letters   of Credit and unused Commitments under the Credit Facility (each as defined   below) (the “Majority Lenders”).
    
	
 
    	
 
    	
 
    
	
Required Lenders:
    	
 
    	
Lenders holding not   less than 66 2/3% of the aggregate amount of the Loans and participations in   Letters of Credit and unused Commitments under the Credit Facility (the “Required   Lenders”).
    

 

 

	
II.                                   Credit Facility
    
	
 
    	
 
    	
 
    
	
Type and Amount of   Credit Facility:
    	
 
    	
A senior secured   revolving credit facility (the “Credit Facility”; the commitments   thereunder the “Commitments”) in an aggregate principal amount of up   to $750,000,000 (the loans thereunder, the “Loans”), subject to the   Borrowing Base (as defined below) then in effect.
    
	
 
    	
 
    	
 
    
	
Availability:
    	
 
    	
Subject to the Borrowing Base then in effect, the Credit Facility   shall be available on a revolving basis during the period commencing on the   Closing Date and ending on the fifth anniversary of the Closing Date (the “Maturity   Date”) in accordance with the terms hereof and subject to satisfaction of   applicable conditions precedent.

 

Availability under the   Credit Facility shall be equal to the lesser of (a) the then-effective   aggregate Commitments and (b) the then-effective Borrowing Base.
    
	
 
    	
 
    	
 
    
	
Letters of Credit:
    	
 
    	
A portion of the Credit Facility not in excess of $50,000,000 shall   be available for the issuance of letters of credit (the “Letters of Credit”)   by the LC Issuers.  The commitment to provide Letters of Credit   shall be ratable among each LC Issuer.    No Letter of Credit shall have an expiration date after the earlier of   (a) twelve (12) months after the date of issuance and (b) five   business days prior to the Maturity Date; provided that any Letter of   Credit may provide for the automatic renewal thereof; provided further   that any Letter of Credit may expire after the date referred to in clause   (b) above if (i) the LC Issuer consents to such expiration date and   (ii) such Letter of Credit is cash collateralized or backstopped on   terms reasonably acceptable to the LC Issuer and the Borrower.

 

Drawings under any   Letter of Credit shall be reimbursed by the Borrower (whether with its own   funds or with the proceeds of Loans) on the same business day.  To the extent that the Borrower does not so   reimburse the LC Issuer, the Lenders shall be irrevocably and unconditionally   obligated to reimburse the LC Issuer on a pro rata   basis.
    
	
 
    	
 
    	
 
    
	
Use of Proceeds:
    	
 
    	
The proceeds of the   Loans will be used by the Borrower (a) on the Closing Date, to refinance   in full the indebtedness under that certain Junior Secured   Debtor-In-Possession Credit Agreement, dated on or about August 7, 2019,   among the Borrower, certain subsidiaries of the Borrower, as guarantors   thereunder, the lenders party thereto and Wilmington Trust, N.A., as   administrative agent (the “DIP Facility”), (b) for working   capital and other general corporate purposes, (c) to issue Letters of   Credit, (d) for transactions fees and expenses and (e) for fees and   expenses related to the Borrower’s emergence from the Chapter 11 Cases.

 

The Borrower will not   use any proceeds for (a) the purpose of purchasing or carrying directly or   indirectly any margin stock or for any other purpose which would cause this   transaction to constitute a “purpose credit” within the meaning of Regulation   U or (b) in violation of any Anti-Corruption Laws or applicable   Sanctions (in each case to be defined in the Loan Documents).
    
	
 
    	
 
    	
 
    
	
Security and Priority:
    	
 
    	
The Loans and other   obligations under (a) the Credit Facility, (b) cash management   products between the Borrower or any of its subsidiaries and the   Administrative Agent or an affiliate of the Administrative Agent or a Lender   or an affiliate of a Lender and (c) each hedging agreement between the   Borrower or any of its
    

 

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subsidiaries and the   Administrative Agent or an affiliate of the Administrative Agent or a Lender   or an affiliate of a Lender shall be jointly and severally guaranteed by the   Guarantors and the Borrower (with respect to secured hedge obligations and   secured cash management obligations for which a Guarantor is the primary   obligor) and ratably secured by first priority, perfected liens and security   interests on (subject to customary exceptions and other exceptions to be   agreed), whether now or hereafter acquired, (i) substantially all   personal property (including a pledge of 100% of the stock of each of the   Borrower’s subsidiaries (limited to 65% of all the voting equity of any   foreign subsidiaries)), subject to exceptions to be agreed, (ii) oil and   gas properties of the Credit Parties comprising not less than 85% of the   total value of the PV-9 from the Borrowing Base Properties (as defined below)   and (iii) all deposit accounts, securities accounts and commodity   accounts of the Credit Parties which accounts shall be subject to control   agreements in form and substance reasonably satisfactory to the   Administrative Agent on the Closing Date (or such later date as may be   reasonably agreed by the Administrative Agent); provided that the Loan   Documents shall contain limited exceptions to the requirement to enter into   such control agreements with respect to (A) deposit accounts that have a   balance of no greater than $1.0 million, individually, and $3.0 million in   the aggregate for all such accounts and (B) certain types of other   accounts to be agreed (collectively, and together with all proceeds thereof,   the “Collateral”).

 

On the Closing Date,   the Borrower will also deliver acceptable evidence of title on not less than   85% of the total value of the PV-9 from the Borrowing Base Properties (as   defined below) evaluated in the Initial Reserve Report.

 

All the above-described   pledges and security interests shall be created on terms and pursuant to   documentation consistent with the Documentation Principles (as defined   below).
    
	
 
    	
 
    	
 
    
	
Borrowing Base:
    	
 
    	
The “Borrowing Base” shall be the loan value assigned to the   proved reserves attributable to the Borrower’s and its subsidiaries’ oil and   gas properties located within the geographic boundaries of the United States   as set forth in the reserve report most recently delivered to the   Administrative Agent and the Lenders pursuant to the Credit Agreement (the “Borrowing   Base Properties”).

 

As of the Closing Date, the Borrowing Base will be set initially at   an amount equal to $275.0 million (the “Initial Borrowing Base”) until   the next scheduled redetermination of the Borrowing Base or the Borrowing   Base is otherwise adjusted or redetermined as described herein (it being   understood that the first scheduled redetermination of the Borrowing Base   shall occur on or about May 1, 2020 (such date, the “Initial   Borrowing Base Redetermination Date”)).

 

The Borrowing Base will be redetermined on a semi-annual basis, with   the parties having the right to interim unscheduled redeterminations as   described below.  The Borrowing Base   will also be subject to interim adjustments in connection with   (a) liquidations or unwinds of hedging agreements, (b) dispositions   of Borrowing Base Properties, (c) the Credit Parties’ failure to provide   the minimum required satisfactory title information, (d) the incurrence   of Specified Additional Debt and (e) to the extent applicable, failure   to satisfy the Post-Closing Hedging Covenant, in each case as described   below.
    

 

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Scheduled Borrowing Base redeterminations will occur on a semi-annual   basis each May 1st and November 1st, commencing on or about   May 1, 2020, based upon a reserve report prepared as of the immediately   preceding December 31st and June 30th, respectively, and delivered   to the Administrative Agent on or before April 1st and October 1st,   respectively. Each December 31st reserve report will be prepared by an   independent petroleum engineering firm reasonably acceptable to the   Administrative Agent, and each June 30th reserve report will be prepared   by an independent petroleum engineering firm reasonably acceptable to the   Administrative Agent or internally by the Borrower consistent with the   procedures used in the immediately preceding reserve report prepared by an   independent petroleum engineer.  In the   case of the June 30th reserve report, if such reserve report is prepared   internally by or under the supervision of the Borrower’s chief engineer as   set forth above, the Borrower shall certify that such reserve report is true   and accurate in all material respects (with appropriate exceptions for   projections and cost estimates) and, except as otherwise specified therein,   has been prepared in all material respects in accordance with the procedures   used in the immediately preceding December 31st reserve report.  In addition, the Administrative Agent, at   the request of the Required Lenders, and the Borrower, each may request one   additional unscheduled Borrowing Base redetermination during each period   between scheduled Borrowing Base redeterminations; provided, that no request   for an unscheduled Borrowing Base redetermination may be made by the   Administrative Agent or the Lenders prior to the Initial Borrowing Base   Redetermination Date.

 

Decisions regarding the amount of the Borrowing Base will be made at   the sole credit discretion of the Lenders based upon the value of the   Borrowing Base Properties as set forth in the most recent reserve report and   in accordance with each Lender’s normal and customary standards and practices   for determining the value of oil and gas properties based upon its usual and   customary criteria for reserve based lending as they exist at such time.  Increases in the amount of the Borrowing   Base will require approval of all Lenders, and decreases or maintenance of   the amount of the Borrowing Base will require approval of the Required   Lenders.

 

If the Borrower or any subsidiary (a) liquidates or unwinds any   hedging agreement upon which the Lenders relied in determining the Borrowing   Base or (b) disposes of Borrowing Base Properties, and the Borrowing   Base value attributable to such liquidated or unwound hedging agreement   and/or the Borrowing Base value of such disposed Borrowing Base Properties,   since the last scheduled redetermination exceeds, individually or in the   aggregate, when combined with all such other liquidated or unwound hedging   agreements and disposed Borrowing Base Properties since the last scheduled   redetermination, ten percent (10%) of the then-effective Borrowing Base, then   the Borrowing Base shall be reduced by an amount equal to the Borrowing Base   value assigned to the such liquidated hedging agreement or disposed Borrowing   Base Properties in the then-effective Borrowing Base.

 

The Borrowing Base shall be adjusted as a result of the Credit   Parties’ failure to deliver acceptable evidence of title on not less than 85%   of the total value of the PV-9 from the Borrowing Base Properties unless   cured or otherwise rendered moot by the delivery of additional title   information.
    

 

4

 

	
 
    	
 
    	
The Borrowing Base shall be adjusted in connection with the issuance   of any permitted unsecured senior or senior subordinated indebtedness after   the Closing Date (such additional unsecured senior or senior subordinated loans   or notes, “Specified Additional Debt”), by an amount equal to $0.25   for every $1.00 of Specified Additional Debt incurred, other than any   Specified Additional Debt incurred to refinance any Specified Additional Debt   (only to the extent that the aggregate principal amount of such refinancing   indebtedness does not result in an increase in the principal amount thereof);   provided, that, in the event a Borrowing Base Deficiency (as defined below)   exists at the time of incurrence of Specified Additional Debt (after giving   effect to the adjustment required hereby), then the Borrower shall be   required to prepay the Loans in an amount equal to the lesser of the net cash   proceeds of such Specified Additional Debt or such Borrowing Base Deficiency.

 

If the Credit Parties fail to satisfy the Post-Closing Hedging   Covenant (as defined below) on or before the Post-Closing Hedging Date (as   defined below), the Administrative Agent shall have the right to reduce the   Borrowing Base then in effect, on the Post-Closing Hedging Date, by an amount   determined by the Administrative Agent acting in its sole discretion and   consistent with its normal oil and gas lending criteria as it exists at the   particular time (but in any event in an amount not more than the Borrowing   Base value attributable to the commodity hedging agreements not entered into   in connection with the Post-Closing Hedging Covenant).
    
	
 
    	
 
    	
 
    
	
III.                              Certain   Payment Provisions
    
	
 
    	
 
    	
 
    
	
Fees and Interest   Rates:
    	
 
    	
As set forth in Annex   I.
    
	
 
    	
 
    	
 
    
	
Maturity:
    	
 
    	
The fifth anniversary   of the Closing Date (the “Maturity Date”).
    
	
 
    	
 
    	
 
    
	
Optional Prepayments:
    	
 
    	
Loans may be prepaid at   any time on three (3) business day’s prior notice for Eurodollar Loans   (as defined in Annex I) and one (1) business day’s prior notice   for ABR Loans (as defined in Annex I), in writing, without premium or   penalty in minimum amounts to be agreed upon, subject to reimbursement of the   Lenders’ “breakage costs” in the case of a prepayment of Eurodollar Loans   prior to the last day of the relevant interest period. Amounts repaid under   the Credit Facility may be reborrowed.
    
	
 
    	
 
    	
 
    
	
Mandatory Prepayments:
    	
 
    	
If, as a result of   (a) a scheduled redetermination of the Borrowing Base or (b) any   adjustment of the Borrowing Base as a result of the failure to deliver   satisfactory title information, the sum of outstanding Loans and the Lender’s   exposure in respect of Letters of Credit exceeds the lesser of (x) the   aggregate Commitments and (y) the Borrowing Base, a  deficiency (a “Borrowing Base Deficiency”)   shall exist, and the Borrower will be required to eliminate such Borrowing   Base Deficiency notifying the Administrative Agent with 10 days that it   intends to take one or more of the following actions (provided that if the   Borrower fails to elect any of the following actions within 10 days it shall   be deemed to have elected option (i) hereof):
    

 

5

 

	
 
    	
 
    	
(i) within 30   days, prepay the Loans (and cash collateralize any such deficiency   attributable to Letter of Credit exposure) in an amount equal to such   Borrowing Base Deficiency,

 

(ii) prepay the   Loans (and cash collateralize any such deficiency attributable to Letter of   Credit exposure) in not more than six equal monthly installments, in an   aggregate amount equal to such Borrowing Base Deficiency (with the first such   payment to be made within 30 days),

 

(iii) within 30   days, provide additional collateral not evaluated in the most recently   delivered reserve report and/or evaluated but not mortgaged in the form of   proved oil and gas properties having a Borrowing Base value determined by the   Required Lenders sufficient to eliminate such Borrowing Base Deficiency or

 

(iv) a combination   of the foregoing options (i), (ii) and (iii) sufficient to   eliminate such Borrowing Base Deficiency.

 

If a Borrowing Base   Deficiency exists as a result of a Borrowing Base adjustment for an asset   disposition, an unwind or termination of a hedging agreement, the failure of   the Borrower to satisfy the Post-Closing Hedging Covenant on or before the   Post-Closing Hedging Date or an incurrence of Specified Additional Debt,   within one business day of such asset disposition, unwind or termination of a   hedging agreement, Post-Closing Hedging Date or incurrence of Specified   Additional Debt, as applicable, the Borrower will be required to prepay the   Loans in an amount equal to such Borrowing Base Deficiency, and if any   Borrowing Base Deficiency remains after prepaying all of the Loans as a   result of outstanding Letters of Credit, cash collateralize such excess.

 

Any mandatory   prepayment made by the Borrower shall not require or trigger a reduction of   the Commitments under the Credit Facility. 
    
	
 
    	
 
    	
 
    
	
Optional Commitment   Reductions:
    	
 
    	
Upon prior written   notice to be agreed, the Commitments may be reduced by the Borrower in   minimum amounts to be agreed upon or terminated in whole, subject to   reimbursement of the Lenders’ “breakage costs” in the case of a prepayment of   Eurodollar Loans prior to the last day of the relevant interest period.  If, as a result of any termination or   reduction of the Commitments, a Borrowing Base Deficiency exists, the   Borrower will be required to prepay the Loans on the date of such reduction   or termination in an aggregate principal amount equal to such excess, and if   any remains after prepaying all of the Loans as a result of outstanding   Letters of Credit, cash collateralize such excess.
    
	
 
    	
 
    	
 
    
	
IV.                               Certain Conditions
    
	
 
    	
 
    	
 
    
	
Initial Conditions:
    	
 
    	
The availability of the   initial borrowing under the Credit Facility on the Closing Date shall be   conditioned only upon satisfaction or waiver of (a) the delivery of a   customary borrowing notice, (b) the conditions precedent set forth in Section 5   of the Commitment Letter and (c) the conditions set forth in Exhibit C   (such requirements, the “Initial Conditions”).

 

For purposes of this   Commitment Letter and the Fee Letters, “Closing Date” shall mean the   date of the satisfaction or waiver of the Initial Conditions and the initial   funding of the Credit Facility.
    

 

6

 

	
Ongoing Conditions:
    	
 
    	
After the Closing Date,   the making of each Loan and the issuance of each Letter of Credit shall be   conditioned upon (a) the accuracy of all representations and warranties   in the Loan Documents (including, without limitation, the material adverse   effect, solvency and litigation representations) in all material respects (or   if such representation is already qualified by materiality, in all respects)   and (b) there being no default or event of default in existence at the   time of, or after giving effect to the making of, such extension of   credit.  
    
	
 
    	
 
    	
 
    
	
V.                                    Certain   Documentation Matters
    
	
 
    	
 
    	
 
    
	
Loan Documents:
    	
 
    	
The definitive   documentation for the Credit Facility (the “Loan Documents”) shall be   negotiated in good faith and shall contain only those conditions, mandatory   prepayments, prepayment premiums (if any), representations, warranties,   covenants and events of default expressly set forth in this Exhibit B   (applicable to the Borrower and its subsidiaries or restricted subsidiaries,   as applicable, in each case, with materiality thresholds, baskets,   exceptions, limitations, qualifications and grace and cure periods to be   agreed) and, except as set forth herein, those terms and conditions usual for   facilities and transactions of this type and which shall reflect (a) the Administrative   Agent’s required agency and other form provisions (including with respect to   a replacement of the LIBO Rate) so long as such changes are not inconsistent   with this Commitment Letter and are customarily included in credit agreements   with respect to which the Administrative Agent acts as administrative agent,   (b) the Chapter 11 Plan and (c) the terms and conditions set forth   in the Commitment Letter and as otherwise mutually agreed by the Borrower and   the Administrative Agent    (collectively, the “Documentation Principles”).  It is understood and agreed that the Loan   Documents shall give due regard to the Borrower’s existing Amended and   Restated Senior Secured Revolving Credit Agreement, dated as of   September 7, 2017, by and among the Borrower, the lenders party thereto   and JPMorgan Chase Bank, N.A., as administrative agent (as the same may be amended,   restated, amended and restated, supplemented or otherwise modified to date,   the “Existing Credit Agreement”).
    
	
 
    	
 
    	
 
    
	
Representations and   Warranties:
    	
 
    	
To be applicable to the   Borrower and its subsidiaries or restricted subsidiaries, as applicable, limited   to the following:

 

·                  Organization, Powers;

·                  Authority, Enforceability;

·                  Approvals, including full force and   effect of the confirmation order, No Conflicts;

·                  Financial Condition, No Material   Adverse Effect;

·                  Litigation;

·                  Environmental Matters;

·                  Compliance with Laws and   Agreements, No Defaults;

·                  Investment Company Act;

·                  Taxes;

·                  ERISA;

·                  Disclosure, No Material   Misstatements;

·                  Insurance;

·                  Restrictions on Liens;

·                  Subsidiaries;
    

 

7

 

	
 
    	
 
    	
·                  Location of Business and Offices;

·                  Properties, Titles, Etc.;

·                  Maintenance of Properties;

·                  Gas Imbalances, Prepayments;

·                  Marketing of Production;

·                  Swap Agreements;

·                  Use of Loans and Letters of Credit;

·                  Solvency;

·                  Anti-Corruption Laws and Sanctions;

·                  Senior Debt Status; and

·                  EEA Financial Institutions.
    
	
 
    	
 
    	
 
    
	
Affirmative Covenants:
    	
 
    	
To be applicable to the   Borrower and its subsidiaries or restricted subsidiaries, as applicable,   limited to the following:

 

·                  Delivery of Financial Statements   (with unaudited financial statements to be delivered within 45 days of the   end of each of the first three fiscal quarters of the Borrower’s fiscal year,   and with audited financial statements to be delivered within 90 days of the end   of the Borrower’s fiscal year) and other information customary for facilities   of this type (including a quarterly compliance certificate, consolidating   information regarding unrestricted subsidiaries, reporting of hedging   agreements in connection with the delivery of any reserve report, insurance   certificates, accounting reports, SEC filings and shareholder reports,   notices under other material instruments, lists of purchasers, notice of   dispositions and hedge liquidations, notice of casualty events, certain   organizational changes, production reports and lease operating statements, a   12 month cash flow forecast and capital budget delivered within 90 days of   fiscal year end and notice of certain incurrence of indebtedness);

·                  Notices of Material Events;

·                  Existence, Conduct of Business;

·                  Payment of Obligations;

·                  Performance of Obligations under   Loan Documents;

·                  Operation and Maintenance of   Properties;

·                  Insurance;

·                  Books and Records, Inspection   Rights;

·                  Compliance with Laws (including   OFAC, Patriot Act, FCPA and beneficial ownership requirements);

·                  Environmental Matters;

·                  Further Assurances;

·                  Reserve Reports;

·                  Title Information with respect to   at least 85% of the PV-9 of the Borrowing Base Properties;

·                  Additional Collateral (including   maintenance of liens on not less than 85% of the total value of the PV-9 of   the Borrowing Base Properties), Additional Guarantors;

·                  ERISA Compliance;
    

 

8

 

	
 
    	
 
    	
·                  Maintenance of control agreements over   deposit, securities and commodities accounts and location of proceeds of   Loans (violation of which will cause an immediate Event of Default);

·                  Unrestricted Subsidiaries;

·                  Marketing Activities;

·                  Keepwell;

·                  Swap Agreements as set forth in the   “Minimum Hedging” paragraph in the Section titled “Commodity Hedging”;   and

·                  Post-Closing Obligations (if   applicable).
    
	
 
    	
 
    	
 
    
	
Financial Covenants: 
    	
 
    	
Limited to the   following:

 

(a) Total Net   Leverage Ratio: The Borrower will not permit, as of the last day of any fiscal   quarter commencing with the first full fiscal quarter ending after the   Closing Date, its ratio of total net debt (net of unrestricted cash only to   the extent that such cash and cash equivalents are maintained in accounts   subject to a control agreement in favor of the Administrative Agent, in an   amount not to exceed (i) if any Loans are outstanding under the   Credit Facility, $50.0 million or (ii) if no Loans are outstanding under   the Credit Facility, an unlimited amount) as of such date to consolidated adjusted EBITDAX (to be defined in a manner to be   agreed, provided that fees, expenses and other restructuring   transaction costs which are incurred through a date to be agreed, in   connection with the Transactions, the Chapter 11 Cases and the other   transactions contemplated hereby or thereby and other non-recurring costs and   expenses will be permitted to be added back when calculating consolidated   adjusted EBITDAX) for the   four fiscal quarters ending on such date to be greater than 4.00 to 1.00 (the   “Total Net Leverage   Ratio”).

 

For purposes of calculating the Total Net Leverage Ratio, (A) for the   first full fiscal quarter ending after the Closing Date, consolidated   adjusted EBITDAX shall be   calculated by multiplying consolidated adjusted EBITDAX for such fiscal quarter by 4,   (B) for the period of the first two full fiscal quarters ending after   the Closing Date, consolidated adjusted EBITDAX shall be calculated by multiplying   consolidated adjusted EBITDAX   for such two fiscal quarters by 2, and (C) for the period of the first   three full fiscal quarters ending after the Closing Date, consolidated   adjusted EBITDAX shall be   calculated by multiplying consolidated adjusted EBITDAX for such three fiscal quarters by   4/3.

 

(b) Current   Ratio: The   Borrower will not permit, as of the last day of any fiscal quarter commencing   with the first full fiscal quarter ending after the Closing Date, its ratio   of (i) consolidated current assets (including the unused amount of the Borrowing   Base then available to be   borrowed, but excluding (A) all non-cash assets under Accounting   Standards Codification Topic No. 815, (B) the aggregate amount of   any deposits (in each case, whether in cash or otherwise) posted by the   Borrower or any of its restricted subsidiaries to secure swap obligations   owing by such persons or to cover market exposures) and (C) any deferred tax   assets to   (ii) consolidated current liabilities (excluding non-cash obligations   under FASB Accounting Standards Codification 815, current maturities under   the Credit Facility   and of long-term indebtedness and any deferred tax liabilities) to be less than 1.0 to 1.0   (the “Current Ratio” and, together with the Leverage Ratio, the “Financial   Covenants”).
    

 

9

 

	
Negative Covenants:
    	
 
    	
To be applicable to the   Borrower and its subsidiaries or restricted subsidiaries, as applicable,   limited to the following:

 

·                  Debt, to include a basket for   Specified Additional Debt without limit, subject to (i) no default or   event of default has occurred and is continuing after giving effect to any   such Specified Additional Debt issuance, (ii) pro forma compliance,   after giving effect to any such Specified Additional Debt issuance, with the   Financial Covenants, (iii) reduction in the Borrowing Base in the manner   described above (in the section titled “Borrowing Base”) and (iv) other   conditions and restrictions to be agreed;

·                  Liens;

·                  Dividends, Distributions and   Redemptions; Repayment and Amendment of certain junior debt (including any   Specified Additional Debt), to include a basket for restricted payments and   repayments of such junior debt, subject to (i) no default or event of   default has occurred and is continuing after giving effect to such restricted   payment or repayment of such junior debt, (ii) availability on a pro   forma basis of at least 20% of the then-effective Borrowing Base and   (iii) pro forma compliance, after giving effect to any such restricted   payment or repayment of such junior debt, with a Total Net Leverage Ratio of   not greater than 2.75:1.00 (the “Restricted Payment Conditions”);

·                  Investments, Loans and Advances, to   include a basket subject to the Restricted Payment Conditions;

·                  Designation and Conversion of   Restricted and Unrestricted Subsidiaries; Indebtedness of Unrestricted   Subsidiaries;

·                  Nature of Business; International   Operations;

·                  Proceeds of Loans;

·                  ERISA Compliance;

·                  Sales or Discount of Receivables;

·                  Mergers, Other Fundamental Changes,   Etc.;

·                  Sale of Properties;

·                  Environmental Matters;

·                  Transactions with Affiliates;

·                  Subsidiaries;

·                  Negative Pledge Agreements;   Dividends Restrictions;

·                  Gas Imbalances, Take-or-Pay or   Other Prepayments; and

·                  Swap Agreements as set forth in the   “Maximum Hedging” paragraph in the Section titled “Commodity Hedging”;   and

·                  Amendments to Organizational   Documents in a manner that is material and adverse to the interests of the   Lenders and Fiscal Year End.
    
	
 
    	
 
    	
 
    
	
Commodity Hedging:
    	
 
    	
Minimum Hedging:   The Credit Parties shall use commercially reasonable efforts to enter into as   of the Closing Date, and shall thereafter maintain, commodity hedging   contracts hedging at prices reasonably acceptable to the Administrative Agent   for no less than (a) 75% of the total forecasted production (based on   the most recently delivered reserve report) of crude oil and natural gas,   calculated separately, from total proved developed producing oil and gas   properties of the Credit Parties for a period through at least the first 12   full calendar months following the Closing Date and (b) 50% of the total   forecasted production (based on the most recently delivered reserve report)   of crude oil and natural gas, calculated separately, from
    

 

10

 

	
 
    	
 
    	
total proved developed   producing oil and gas properties of the Credit Parties for each of the full   calendar months 13 through 24 following the Closing Date (the hedge contracts   referred to herein, the “Required Hedges”).

 

Maximum Hedging:   As of the date of entry into any commodity hedging contract, the Credit   Parties shall have entered into commodity hedging contracts for no more than   85% of the total forecasted production (based on the most recently delivered   reserve report) of crude oil and natural gas, calculated separately, from   total proved developed producing oil and gas properties of the Credit Parties   for the 60 full calendar months following such date. No commodity hedging   contract shall have a tenor longer than 60 months from the date such hedging   arrangement is created.

 

Secured commodity   hedging contracts shall be limited to those entered into with the   Administrative Agent or affiliates of the Administrative Agent, Lenders or   affiliates of Lenders and “Approved Counterparties” (to be defined in a   customary manner).

 

If, after using their   commercially reasonable efforts, the Credit Parties are unable to enter into   the Required Hedges as of the Closing Date, within 30 days after the Closing   Date (or such later date as may be agreed by the Administrative Agent in its   sole discretion) (the “Post-Closing Hedging Date”), the Credit Parties   shall enter into the Required Hedges. The requirement set forth in this   paragraph is referred to herein as the “Post-Closing Hedging Covenant.
    
	
 
    	
 
    	
 
    
	
Events of Default:
    	
 
    	
To be applicable to the   Borrower and its restricted subsidiaries, limited to the following:

 

·                  Failure to pay any required   principal of any Loan or reimbursement obligation in respect of Letter of   Credit disbursement when due,

·                  Failure to pay interest, fees or   other amounts when due (subject to a grace period of 3 business days);

·                  Failure to comply with any covenant   or condition of the Loan Documents (subject to a grace period consistent with   the Documentation Principles);

·                  Any representation or warranty   shall have been incorrect in any material respect when made (without   duplication of a materiality qualifier);

·                  Cross-payment default (subject to a   grace period consistent with the Documentation Principles) and   cross-acceleration to other material indebtedness;

·                  Bankruptcy or insolvency (subject   to a grace period consistent with the Documentation Principles);

·                  Unsatisfied material judgment   (subject to a 30 day grace period);

·                  Change in control (the definition   of which is to be agreed);

·                  ERISA events;

·                  Actual or asserted (in writing)   invalidity of any guarantee, security document or intercreditor or   subordination provisions or non-perfection of any security interest; and

·                  The Loan Documents cease to be in   full force and effect and valid, binding and enforceable.
    

 

11

 

	
Voting:
    	
 
    	
Amendments and waivers   with respect to the Loan Documents shall require the approval of the Majority   Lenders, except that (a) the consent of each Lender directly affected   thereby shall be required with respect to (i) reductions in the amount   or extensions of the Maturity Date or the date for any scheduled date of   payment or prepayment of principal, (ii) reductions in the rate of   interest (other than waivers of default interest) or any fee or extensions of   any due date thereof, (iii) increases in the amount of, or extensions of   the expiry date of, any Lender’s commitment and (iv) changes in the pro   rata payment sharing provisions, (b) the consent of all of the Lenders   shall be required with respect to increases of the Borrowing Base,   (c) the consent of the Required Lenders, shall be required with respect   to reductions or reaffirmations of, waivers of an automatic reduction in, or   postponement of a scheduled redetermination of the Borrowing Base and   (d) the consent of all of the Lenders shall be required with respect to   modifications of any of the voting percentages, releases of all or   substantially all of the collateral or releases of any Guarantor (except as   otherwise expressly permitted in the Loan Documents).  Notwithstanding the foregoing the   Administrative Agent may (without the consent of the Lenders) enter into   amendments or modifications to the Loan Documents in order to implement a   LIBOR replacement rate in accordance with the terms thereof.

 

The Loan Documents   shall contain customary provisions for replacing non-consenting Lenders, in   connection with amendments, modifications, waivers and Borrowing Base   redeterminations requiring the consent of all Lenders or of all Lenders   directly affected thereby so long as the Required Lenders shall have   consented thereto.
    
	
 
    	
 
    	
 
    
	
Assignments and   Participations: 
    	
 
    	
After the Closing Date,   the Lenders shall be permitted to assign all or a portion of their Loans and   Commitments with the consent, not to be unreasonably withheld, conditioned or   delayed, of (a) the Borrower, unless (i) the assignee is a Lender,   an affiliate of a Lender or an approved fund or (ii) a payment or   bankruptcy event of default has occurred and is continuing, provided   that the Borrower shall be deemed to have consented to any such assignment   unless it shall object thereto by written notice to the Administrative Agent   within five (5) business days after having received notice thereof,   (b) the Administrative Agent and (c) the LC Issuer.  In the case of partial assignments (other   than to another Lender, to an affiliate of a Lender or an approved fund), the   minimum assignment amount shall be $5.0 million, unless otherwise agreed by   the Borrower and the Administrative Agent.

 

The Lenders shall also   be permitted to sell participations in their Loans.  Participants shall have the same benefits   as the Lenders with respect to yield protection and increased cost   provisions.  Voting rights of a   participant shall be limited to those matters set forth in   clause (a) of the preceding paragraph with respect to which the   affirmative vote of the Lender from which it purchased its participation would   be required.  Pledges of Loans in   accordance with applicable law shall be permitted without restriction.  Promissory notes shall be issued under the   Credit Facility upon request.  No   assignments or participations shall be permitted to be made to the Borrower   or any of its affiliates or to natural persons.
    
	
 
    	
 
    	
 
    
	
Yield Protection; Etc.:
    	
 
    	
The Loan Documents   shall contain customary provisions (a) protecting the Lenders against   increased costs or loss of yield resulting from changes in reserve, tax,   capital adequacy or other requirements of law, and from the imposition of or
    

 

12

 

	
 
    	
 
    	
changes in withholding   or other taxes (including reflecting that both (x) the Dodd-Frank Wall   Street Reform and Consumer Protection Act and all requests, rules,   guidelines, requirements and directives thereunder, issued in connection   therewith or in implementation thereof and (y) all requests, rules,   guidelines, requirements and directives promulgated by the Bank for International   Settlements, the Basel Committee on Banking Supervision (or any successor or   similar authority) or the United States or foreign regulatory authorities, in   each case pursuant to Basel III shall, in the case of each of the foregoing   clause (x) and clause (y), be deemed to be a change in law after the   Closing Date regardless of the date enacted, adopted or issued) and   (b) indemnifying the Lenders for “breakage costs” incurred in connection   with, among other things, any prepayment of a Eurodollar Loan on a day other   than the last day of an interest period with respect thereto.
    
	
 
    	
 
    	
 
    
	
Defaulting Lenders:
    	
 
    	
The Loan Documents   shall contain provisions relating to “defaulting” Lenders (including   provisions relating to reallocation of participations in, or the Borrower   providing cash collateral to support Letters of Credit, to the suspension of   certain voting rights and rights to receive certain fees, and to termination   or assignment of the Commitments or Loans of such Lenders).
    
	
 
    	
 
    	
 
    
	
Expenses and   Indemnification: 
    	
 
    	
The Borrower shall,   regardless of whether the Closing Date occurs, pay (a) all reasonable   and documented out-of-pocket expenses of the Administrative Agent and the   Lead Arranger associated with the syndication of the Credit Facility and the   preparation, execution, delivery and administration of the Loan Documents and   any amendment, modification or waiver with respect thereto (limited, in the   case of counsel, to the reasonable fees, disbursements and other charges of a   single counsel to the Administrative Agent and the Lead Arranger, including   (if necessary) one local counsel in each relevant jurisdiction and one   regulatory counsel to all such persons with respect to a relevant regulatory   matter, taken as a whole, and, solely in the event of a conflict of interest,   one additional counsel (and, if necessary, one regulatory counsel and one   local counsel in each relevant jurisdiction or for each matter) to each group   of similarly situated affected persons), (b) all reasonable and documented   out-of-pocket costs, expenses, taxes, assessments and other charges incurred   by the Administrative Agent or any Lender in connection with any filing,   registration, recording or perfection of any security interest contemplated   by the Credit Facility or any security instrument and (c) all reasonable   and documented out-of-pocket expenses incurred by the Administrative Agent,   the Issuing Lender or any Lender, including the fees, charges and   disbursements of any counsel for the Administrative Agent, the Issuing Lender   or any Lender, in connection with the enforcement or protection of its rights   in connection with the Loan Documents.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
The Administrative   Agent, the Arrangers and the Lenders (and their affiliates and their   respective officers, directors, employees, advisors, agents and other   representatives) will have no liability for, and will be indemnified and held   harmless against, any loss, claim, damage, liability, cost or expense   incurred in respect of the transactions and the financing contemplated hereby   or the use or the proposed use of proceeds thereof and any claim, litigation,   investigation or proceeding relating to any of the foregoing (except to the   extent resulting from the gross negligence, bad faith or willful misconduct   of the indemnified person, as determined by a court of competent jurisdiction   by final and nonappealable judgment); provided, that counsel shall be limited   to a single counsel to the
    

 

13

 

	
 
    	
 
    	
indemnitees, taken as a   whole, including (if necessary) one local counsel in each relevant   jurisdiction and, solely in the case of a conflict, one additional counsel   (and, if necessary one local counsel in each relevant jurisdiction) for the   conflicted parties.
    
	
 
    	
 
    	
 
    
	
EU Bail-In Provisions:
    	
 
    	
The Loan Documents will   contain customary EU Bail-In provisions.
    
	
 
    	
 
    	
 
    
	
QFC Provisions:
    	
 
    	
The Loan Documents will   contain customary “QFC” provisions.
    
	
 
    	
 
    	
 
    
	
Governing Law and   Forum:
    	
 
    	
State of New York.
    
	
 
    	
 
    	
 
    
	
Counsel to the Lead   Arranger and the Administrative Agent:
    	
 
    	
Simpson Thacher & Bartlett LLP.
    
	
 
    	
 
    	
 
    

 

14

 

Annex I

 

Interest and Certain Fees

 

	
Pricing Grid:
    	
 
    	
The applicable margin   and applicable commitment fee will be determined in accordance with the   following table:
    

 

	
Level
    	
 
    	
Borrowing Base Usage
    	
 
    	
Eurodollar Loans
    	
 
    	
ABR Loans
    	
 
    	
Commitment Fee
    
	
V
    	
 
    	
>   90%
    	
 
    	
300.0 bps
    	
 
    	
200.0 bps
    	
 
    	
50.0 bps
    
	
IV
    	
 
    	
> 75% <   90%
    	
 
    	
275.0 bps
    	
 
    	
175.0 bps
    	
 
    	
50.0 bps
    
	
III
    	
 
    	
> 50% <   75%
    	
 
    	
250.0 bps
    	
 
    	
150.0 bps
    	
 
    	
50.0 bps
    
	
II
    	
 
    	
> 25% <   50%
    	
 
    	
225.0 bps
    	
 
    	
125.0 bps
    	
 
    	
37.5 bps
    
	
I
    	
 
    	
<   25%
    	
 
    	
200.0 bps
    	
 
    	
100.0 bps
    	
 
    	
37.5 bps
    

 

	
 
    	
 
    	
Borrowing Base Usage at   any time is based on total outstanding Loans, Letters of Credit and   reimbursement obligations under the Credit Facility as a percentage of the   Borrowing Base.
    
	
 
    	
 
    	
 
    
	
Interest Rate Options:
    	
 
    	
The Borrower may elect that the Loans comprising each borrowing bear   interest at a rate per annum equal to the Alternate Base Rate plus the   Applicable Margin or the Adjusted LIBO Rate plus the Applicable Margin.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
As used herein:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
“Alternate Base Rate” means the highest of (i) the rate   of interest last quoted by The Wall Street Journal in the U.S. as the prime   rate in effect (the “Prime Rate”), (ii) the NYFRB Rate from time   to time plus 0.5% and (iii) the Adjusted LIBO Rate for a one   month interest period plus 1%.    If the ABR as determined pursuant to the foregoing would be less than   1.00%, such rate shall be deemed to be 1.00%.

 

“Adjusted LIBO Rate” means the LIBO Rate, as adjusted for   statutory reserve requirements for eurocurrency liabilities.

 

“Applicable Margin” means a percentage determined in   accordance with the pricing grid.

 

“Commitment Fee Rate” means a percentage determined in   accordance with the pricing grid.

 

“Federal Funds Effective Rate” means, for any day, the rate   calculated by the NYFRB based on such day’s federal funds transactions by   depositary institutions, as determined in such manner as the NYFRB shall set   forth on its
    

 

 

	
 
    	
 
    	
public website from time to time, and published on the next   succeeding Business Day by the NYFRB as the federal funds effective rate, provided   that if the Federal Funds Effective Rate shall be less than zero, such rate   shall be deemed to zero for the purposes of calculating such rate.

 

“Interest Period” means a period of one, two, three or six   months (as selected by the Borrower).
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
“Interpolated Rate” means, at any time, for any interest   period, the rate per annum   (rounded to the same number of decimal places as the LIBO Screen Rate)   determined by the Administrative Agent (which determination shall be   conclusive and binding absent manifest error) to be equal to the   rate that results from interpolating on a linear basis between: (a) the   LIBO Screen Rate for the longest period for which the LIBO Screen Rate is   available) that is shorter than the Impacted Interest Period; and   (b) the LIBO Screen Rate for the shortest period (for which that LIBO   Screen Rate is available) that exceeds the Impacted Interest Period, in each   case, at such time.

 

“LIBO Rate” means, with respect to any Eurodollar Borrowing   for any interest period, the LIBO Screen Rate at approximately 11:00 a.m.,   London time, two Business Days prior to the commencement of such interest   period; provided that if the LIBO Screen Rate shall not be available   at such time for such interest period (an “Impacted Interest Period”)   then the LIBO Rate shall be the Interpolated Rate.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
“LIBO Screen Rate” means, for any day and time, with respect   to any Eurodollar Borrowing for any interest period, the London interbank   offered rate as administered by ICE Benchmark Administration (or any other   Person that takes over the administration of such rate for a period equal in   length to such interest period as displayed on pages LIBOR01 or LIBOR02   of the Reuters screen that displays such rate (or, in the event such rate   does not appear on a Reuters page or screen, on any successor or   substitute page on such screen that displays such rate, or on the   appropriate page of such other information service that publishes such   rate from time to time as selected by the Administrative Agent in its   reasonable discretion); provided that if the LIBO Screen Rate as so   determined would be less than zero, such rate shall be deemed to zero for the   purposes of calculating such rate.

 

“NYFRB Rate” means, for any day, the greater of (a) the   Federal Funds Effective Rate in effect on such day and (b) the Overnight   Bank Funding Rate in effect on such day; provided, that if any of the   aforesaid rates shall be less than zero, such rate shall be deemed to zero   for the purposes of calculating such rate.

 

“Overnight Bank Funding Rate” means, for any day, the rate   comprised of both overnight federal funds and overnight Eurodollar Borrowings   by U.S.-managed banking offices of depository institutions, as such composite   rate shall be determined by the NYFRB as set forth on its public website from   time to time, and published on the next succeeding Business Day by the NYFRB   as an overnight bank funding rate (from and after such date as the NYFRB   shall commence to publish such composite rate).
    

 

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Interest Payment Dates:
    	
 
    	
In the case of Loans bearing interest based upon the Alternate Base   Rate (“ABR Loans”), quarterly in arrears.

 

In the case of Loans bearing interest based upon the Adjusted LIBO   Rate (“Eurodollar Loans”), on the last day of each relevant Interest   Period and, in the case of any Interest Period longer than three months, on   each successive date three months after the first day of such Interest   Period.
    
	
 
    	
 
    	
 
    
	
Commitment Fees:
    	
 
    	
The Borrower shall pay to the Administrative Agent for the account of   each Lender a commitment fee, which shall accrue at the applicable Commitment   Fee Rate on the average daily amount of the unused amount of the commitment   of such Lender. Accrued commitment fees shall be payable quarterly in arrears   and on the date that is the earlier of the Maturity Date and the date of   termination of the Commitments.
    
	
 
    	
 
    	
 
    
	
Letter of Credit Fees:
    	
 
    	
The Borrower shall pay a participation fee on all outstanding Letters   of Credit at a per annum rate equal to the Applicable Margin then in effect   with respect to Eurodollar Loans on the face amount of each such Letter of   Credit.  Such participation fee shall   be shared ratably among the Lenders and shall be payable quarterly in   arrears.  
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
A fronting fee equal to the greater of (i) $500 or   (ii) 0.25% per annum on the face amount of each Letter of Credit, shall   be payable quarterly in arrears to the applicable LC Issuer for its own   account.  In addition, customary   administrative, issuance, amendment, payment and negotiation charges shall be   payable to the applicable Issuing Bank for its own account.
    
	
 
    	
 
    	
 
    
	
Default Rate:
    	
 
    	
During the continuation of a payment or bankruptcy event of default,   and during the continuation of any other event of default after the   Administrative Agent has delivered notice to the Borrower, all outstanding   principal, fees and other obligations shall bear interest at 2.00% above the   rate applicable to ABR Loans.
    
	
 
    	
 
    	
 
    
	
Rate and Fee Basis:
    	
 
    	
All commitment fees and all per annum rates shall be calculated on   the basis of a year of 360 days (or 365/366 days, in the case of ABR Loans   the interest rate payable on which is then based on the Prime Rate) for   actual days elapsed.   
    

 

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EXHIBIT C

 

$750.0 Million Senior Secured Reserve-Based Revolving Credit Facility

Conditions Precedent

 

Capitalized terms used but not defined in this Exhibit C shall have the meanings set forth in the Summary of Terms and Conditions to which this Exhibit C is attached.

 

The Closing Date and the making of the initial extensions of credit under the Credit Facility will be subject to the satisfaction of the following conditions precedent:

 

1.              The Administrative Agent shall have received (a) the Loan Documents, which shall, in each case, be consistent with the terms of the Indicative Summary of Terms and Conditions to which this Exhibit C is attached and shall otherwise be in form and substance reasonably satisfactory to the Lead Arranger, shall have been executed and delivered by each of parties thereto, including all documents and instruments required to create and perfect the Administrative Agent’s security interest in the Collateral and (b) customary officer’s closing certificates (including incumbency certificates of officers), organizational documents, customary evidence of authorization and good standing certificates in jurisdictions of formation/organization, in each case, with respect to the Credit Parties, customary legal opinions related to the Loan Documents, including an opinion on no conflicts with applicable laws in addition to other customary opinions, a solvency certificate (with respect to the Borrower and its subsidiaries on a consolidated basis as of the Closing Date after giving effect to the transactions contemplated to occur on the Closing Date) certified by a senior authorized financial officer of the Borrower and such other documents and instruments as are customary for transactions of this type (including evidence of insurance).

 

2.              The Administrative Agent and the Arranger shall have received all commitment, arrangement, upfront and agency fees and all other fees and amounts due and payable on or prior to the Closing Date, and to the extent invoiced, reimbursement or payment of all reasonable and documented out-of-pocket expenses required to be reimbursed or paid by the Borrower (including, without limitation, the fees and expenses of Simpson Thacher & Bartlett LLP, counsel to the Administrative Agent).

 

3.              The Administrative Agent shall have received acceptable evidence of title on not less than 85% of the total value of the PV-9 from the Borrowing Base Properties evaluated in the Initial Reserve Report.

 

4.              All actions necessary to establish that the Administrative Agent will have a perfected first priority security interest in the Collateral (as described in the section titled “Collateral” on Exhibit B) shall have been taken, including (a) delivery of counterparts and exhibits for mortgages or deeds of trust, as applicable, which are necessary and appropriate for filing in the appropriate jurisdictions and (b) the Borrower’s execution and delivery of control agreements in connection with its deposit accounts, commodities accounts or securities accounts, as applicable.

 

5.              The Administrative Agent shall have received a certificate of a responsible officer of the Borrower certifying (a) that the Borrower and its subsidiaries have received all material third party and governmental consents and approvals required by the terms of the Loan Documents and (b) that since December 31, 2018, there has not been any event, occurrence, development or change in the circumstances or facts that has had or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on the business, financial condition, operations, performance or properties of the Borrower, the Guarantors or their respective restricted subsidiaries, taken as a whole; provided, that a material adverse effect shall not include any event, occurrence, development or change

 

 

in the circumstances or facts arising out of or resulting from: (a) conditions or effects that generally affect persons or entities engaged in the industries, business, markets, financial conditions or the geographic area in which the Credit Parties operate taking into consideration any event that is related to the operations of the Credit Parties in the specific geographical and geological areas in which it operates, (b) general economic conditions in regions and markets in which the Credit Parties operate, (c) regional, national or international political or social conditions, including acts of war, terrorism or natural disasters, escalation or material worsening of hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon the United States or its territories, possessions, diplomatic or consular offices or upon any military installation, equipment or personnel of the United States, (d) financial, banking, securities, credit, or commodities markets, prevailing interest rates or general capital markets conditions, (e) changes in United States generally accepted accounting principles, (f) changes in Laws, orders, or other binding directives issued by any governmental entity, (g) the taking of any action or any inaction required by the RSA, the Backstop Agreement, the Restructuring Term Sheet, the Chapter 11 Plan, or any action or inaction in connection with the Chapter 11 Cases, including the commencement, announcement and pendency of the Chapter 11 Cases, or (h) any action or inaction consented to or requested by the Consenting Noteholders; provided, that exceptions set forth in clauses (a), (b), (c) and (d) of this definition shall not apply to the extent that such Event is disproportionately adverse to the Credit Parties, taken as a whole, as compared to other companies comparable in size and scale to the Credit Parties operating in the industries and same geographical area in which the Credit Parties operate.

 

6.              The Administrative Agent and the Lead Arranger shall have received (a) satisfactory audited consolidated financial statements of the Borrower for the year ended December 31, 2018 and reasonably satisfactory unaudited consolidated financial statements of the Borrower for each fiscal quarter thereafter ending at least 45 days prior to the Closing Date, (b) a pro forma unaudited consolidated balance sheet of the Borrower and its subsidiaries as of the Closing Date, after giving effect to the making of the initial extensions of credit under the Facility, the application of the proceeds thereof and to the other transactions contemplated to occur on the Closing Date, certified by the Borrower’s chief financial officer, which shall reflect no indebtedness other than the Loans made by the Lenders on the Closing Date and other indebtedness permitted by the Facility Documentation (excluding any Specified Additional Debt), (c) a satisfactory reserve report prepared by Netherland Sewell & Associates, Inc. with an as of date of January 1, 2019 covering the oil and gas properties of the Borrower and its subsidiaries included in the Borrowing Base, (d) a satisfactory reserve report prepared internally by the Borrower consistent with the procedures used in the reserve report identified in clause (c) with an as of date of July 1, 2019 covering the oil and gas properties of the Borrower and its subsidiaries included in the Borrowing Base (the “Initial Reserve Report”), accompanied by an officer’s certificate covering certain customary matters with respect to such reserve report and (e) lease operating statements and production reports with respect to the oil and gas properties evaluated in the Initial Reserve Report, in form and substance satisfactory to the Lead Arranger, for the fiscal year ended December 31, 2018 and for each fiscal quarter ending thereafter ending at least 45 days prior to the Closing Date.

 

7.              The Administrative Agent and each Lender who has requested the same shall have received, at least three (3) business days prior to the Closing Date, (a) all documentation and other information regarding the Borrower in connection with applicable “know your customer” and anti-money laundering rules and regulations, including the Patriot Act, and (b) to the extent applicable, in connection with “beneficial ownership” rules and regulations, a customary certification regarding beneficial ownership or control of the Borrower in a form reasonably satisfactory to the Administrative Agent and each requesting Lender, in the case of clauses (a) and (b), to the extent reasonably requested in writing at least ten (10) business days prior to the Closing Date.

 

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8.              The Administrative Agent shall be reasonably satisfied that after the making of the Loans on the Closing Date, the application of the proceeds thereof and after giving effect to the other transactions contemplated hereby, the Borrower and the Guarantors shall have unused availability under the Borrowing Base of not less than $125.0 million.

 

9.              The Administrative Agent shall have received evidence reasonably satisfactory to it that all loans and other obligations under the DIP Facility are being repaid in full, the DIP Facility is being terminated, and the liens securing the DIP Facility are being released, in each case substantially contemporaneously with the proceeds of the initial funding under the Credit Facility. After giving effect to the transactions contemplated hereby, the Borrower and its subsidiaries shall have no indebtedness outstanding other than (a) the Loans and other extensions of credit under the Credit Facility and (b) any other indebtedness permitted under the Loan Documents (excluding any Specified Additional Debt).  The Administrative Agent shall have received evidence satisfactory to it that all liens on the assets of the Borrower and its subsidiaries (other than liens permitted by the Loan Documents) have been (or will be concurrently with the initial funding under the Credit Facility) released or terminated and that duly executed recordable releases and terminations in forms reasonably acceptable to the Administrative Agent with respect thereto have been obtained by the Borrower or its subsidiaries.

 

10.       Not later than August 16, 2019, the Bankruptcy Court shall have entered an order in form and substance reasonably satisfactory to the Lead Arranger (which order is final, is in full force and effect, is unstayed and has not been amended, supplemented or otherwise modified without the consent of the Lead Arranger) approving the Commitment Letter, the Fee Letters and the transactions contemplated thereby (including the fees set forth in the Fee Letters) and specifically providing for the right to receive all amounts due and owing, including indemnification obligations, the fees and other payments as set forth herein, and reimbursement of all reasonable costs and expenses incurred in connection with the transactions contemplated herein and as set forth herein and which shall be entitled to priority as administrative expense claims under Sections 503(b) and 507(a)(1) of title 11 of the Bankruptcy Code, regardless of whether the Closing Date occurs.

 

11.       The Chapter 11 Plan and all other related documentation (a) shall be satisfactory to the Lead Arranger with respect to any portions of such Chapter 11 Plan that directly relate to the Credit Facility, and reasonably satisfactory to the Lead Arranger in all other respects, (b) shall have been confirmed by an order of the Bankruptcy Court which order shall be satisfactory to the Lead Arranger with respect to any portions of such order that directly relate to the Credit Facility, and reasonably satisfactory to the Lead Arranger in all other respects, which order shall be in full force and effect, unstayed and final, and shall not have been modified or amended without the written consent of the Lead Arranger, reversed or vacated, (c) all conditions precedent to the effectiveness of the Chapter 11 Plan as set forth therein shall have been satisfied or waived (the waiver thereof having been approved by the Lead Arranger), and the substantial consummation (as defined in Section 1101 of the Bankruptcy Code) of the Chapter 11 Plan in accordance with its terms shall have occurred contemporaneously with the Closing Date and (d) the transactions contemplated by the Chapter 11 Plan to occur on the effective date of the Chapter 11 Plan shall have been substantially consummated (as defined in Section 1101 of the Bankruptcy Code) on the Closing Date and substantially contemporaneously with the initial funding hereunder in accordance with the terms of the Chapter 11 Plan and in compliance with applicable law and Bankruptcy Court and regulatory approvals.

 

12.       All representations and warranties shall be true and correct in all material respects with the same effect as though made on and as of such date, except in the case of any representation and warranty which (a) expressly relates to a given date, such representation and warranty shall be true and correct in all material respects as of the respective date and (b) is qualified by a materiality or material adverse effect standard in which case such representation and warranty shall be true and correct in all respects.

 

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