425 1 d177340d425.htm 425 425

Filed by IE PubCo Inc.

Pursuant to Rule 425 of the Securities Act of 1933

and deemed filed pursuant to Rule 14a-12

of the Securities Exchange Act of 1934

Subject Company: Contango Oil & Gas Company

Commission File No.: 001-16317


 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15 (d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of Earliest Event Reported): June 7, 2021

 

 

CONTANGO OIL & GAS COMPANY

(Exact Name of Registrant as Specified in Charter)

 

 

 

Texas   001-16317   95-4079863

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

111 E. 5th Street, Suite 300

Fort Worth, Texas

(Address of principal executive offices)

76102

(Zip code)

(817) 529-0059

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

Common Stock, Par Value $0.04 per share   MCF   NYSE American

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Item 1.01

Entry into Material Definitive Agreement.

Transaction Agreement

On June 7, 2021, Contango Oil & Gas Company (the “Company,” “we,” “our”) entered into a transaction agreement (the “Transaction Agreement”) by and among the Company, Independence Energy, LLC, a Delaware limited liability company (“Isla”), an entity managed by KKR, IE PubCo Inc., a Delaware corporation (“New PubCo”), IE OpCo LLC, a Delaware limited liability company (“OpCo”), IE C Merger Sub Inc., a Delaware corporation (“C Merger Sub”), and IE L Merger Sub LLC, a Delaware limited liability company (“L Merger Sub”). Capitalized terms used but not defined herein will have the meanings ascribed to such terms in the Transaction Agreement.

Structure

In anticipation of the transactions, (i) Isla formed OpCo, (ii) Isla contributed 100% of the equity interests in Independence Energy Finance, LLC, a Delaware limited liability company (“Energy Finance”), to OpCo, (iii) Isla formed New PubCo and (iv) New PubCo formed C Merger Sub and L Merger Sub.

Pursuant to the Transaction Agreement, (i) Isla will merge with and into OpCo, with OpCo as the surviving person in the merger (the “Isla Merger”), (ii) immediately following the Isla Merger, C Merger Sub will merge with and into the Company, with the Company as the surviving corporation in the merger and a direct wholly owned subsidiary of New PubCo (the “Merger”), (iii) immediately following the Merger, the Company will merge with and into L Merger Sub, with L Merger Sub as the surviving person in the merger and a direct wholly owned subsidiary of New PubCo (the “LLC Merger”), (iv) immediately following the LLC Merger, New PubCo will contribute (the “Contribution”) 100% of the equity interests in L Merger Sub to OpCo in exchange for a certain number of units representing economic limited liability company interests in OpCo (“OpCo Units”) and (v) immediately following the Contribution, OpCo will contribute L Merger Sub to Energy Finance.

As a result of the transactions, New Pubco will have an “Up-C” structure. Each ordinary share of common stock, par value $0.04, of the Company (the “Company Common Stock”) will, upon the terms and subject to the conditions set forth in the Transaction Agreement, be converted into the right to receive 0.2000 (the “Exchange Ratio”) shares of Class A common stock, par value $0.0001 per share, of New PubCo (the “New PubCo Class A Common Stock”). The Company’s shareholders will receive New PubCo Class A Common Stock representing voting and economic rights in New PubCo. Isla’s equityholders will receive (i) a certain number of shares of Class B Common stock, par value $0.0001 per share, which will have no economic rights but will be entitled to vote as a class with the New PubCo Class A Common Stock, and (ii) a corresponding number of Units.

Upon consummation of the transactions contemplated by the Transaction Agreement (the “Transactions”), the Company expects that its current shareholders will own approximately 24% of the combined company and current Isla shareholders will own approximately 76% of the combined company.

Treatment of Equity Awards

Immediately prior to the effective time of the Merger (the “Merger Effective Time”), each award of restricted shares of Company Common Stock (whether vested or unvested) that is outstanding immediately prior to the Merger Effective Time (each, a “Company Restricted Stock Award”) will fully vest and be converted into the right to receive from New PubCo a number of unrestricted shares of New PubCo Class A Common Stock equal to the product of (x) the number of shares of Company Common Stock subject to such Company Restricted Stock Award immediately prior to the Merger Effective Time and (y) the Exchange Ratio (subject to tax withholding).

Immediately prior to the Merger Effective Time, each award of performance stock units that corresponds to shares of Company Common Stock (whether vested or unvested) will fully vest (with any performance-based vesting conditions for such awards held by then-current (as of closing) employees of the Company and its subsidiaries deemed achieved at the maximum performance level, subject to the terms and conditions set forth in the Transaction Agreement) and be cancelled, and in exchange therefor, New PubCo shall issue to the holder thereof a number of shares of New PubCo Class A Common Stock equal to the product of (x) the number of shares of Company Common Stock subject to such Company PSU Award immediately prior to the Merger Effective Time and (y) the Exchange Ratio (subject to tax withholding).


Immediately prior to the Merger Effective Time, each option to purchase shares of Company Common Stock (whether vested or unvested) that is outstanding immediately prior to the Merger Effective Time (each, a “Company Stock Option Award”) that is out-of-the-money will be cancelled for no consideration. Each Company Stock Option Award that is in-the-money will fully vest and be deemed exercised in a net exercise such that the holder of such Company Stock Option Award will receive, immediately prior to the Merger Effective Time, a number of shares of Company Common Stock equal to (x) the number of shares of Company Common Stock subject to such Company Stock Option Award immediately prior to the Merger Effective Time, multiplied by (y) the excess of the fair market value of a share of Company Common Stock minus the exercise price per share of Company Common Stock subject to such Company Stock Option Award, and then divided by (z) the fair market value (based on the five trading day volume weighted average price) of a share of Company Common Stock. Each such net exercised share would then be converted into the right to receive 0.20 shares of New PubCo Class A Common Stock.

Closing Conditions

The closing of the Transactions is subject to the satisfaction or waiver of closing conditions, including, among others, (1) the requisite approval of the shareholders of the Company (the “Company Stockholder Approval”) pursuant to the terms of the Transaction Agreement, (2) the approval for listing of the New PubCo Class A Common Stock issuable to the holders of shares of Company Common Stock on a nationally recognized stock exchange, (3) the requisite approval under certain antitrust and foreign investment laws and certain other legal requirements would have occurred, (4) there being no law, injunction or order by a governmental body prohibiting the consummation of the Merger, (5) the registration statement on Form S-4, to be filed with the SEC by the Company, having been declared effective by the SEC, (6) subject to specified materiality standards, the accuracy of the representations and warranties of the other party, (7) compliance by each other party to the Transaction Agreement in all material respects with their respective covenants, and (8) the absence of a Company Material Adverse Effect and an Isla Material Adverse Effect, as applicable.

Representations and Warranties; Covenants

The Transaction Agreement contains customary representations and warranties of both the Company and Isla and its subsidiaries, and each party has agreed to customary covenants, including, among others, covenants relating to the conduct of its respective business during the interim period between the execution of the Transaction Agreement and the closing of the Transactions. The parties are required to use their reasonable best efforts to cause the Transactions to be consummated as promptly as reasonably practicable and to obtain any required regulatory approvals, subject to certain exceptions.

Pursuant to the Transaction Agreement, the Company has agreed not to initiate, solicit, propose, knowingly encourage or knowingly facilitate any inquiry or the making of any competing proposals or to engage in any discussions or negotiations relating to, or in furtherance of a competing proposal, in each case subject to certain exceptions. The Board of Directors of the Company (the “Company Board”) may change its recommendation to its stockholders in response to certain competing proposals, as specified in the Transaction Agreement, or in response to an intervening event, in each case if the Company Board determines in good faith, after consultation with its outside legal counsel, that failure to take such action would reasonably be expected to be inconsistent with the fiduciary duties owed by the Company Board to the stockholders of the Company under applicable law, subject to complying with notice, and other specified, conditions, including giving Isla the opportunity to propose revisions to the terms of the Transaction Agreement during a period following such notice.

Termination and Termination Fee

The Transaction Agreement contains termination rights for each of the Company and Isla, including, among others, (i) a termination right for each party if the consummation of the Merger does not occur on or before 5:00 p.m. Houston, Texas time on January 7, 2022, subject to certain exceptions or (ii) if Company Stockholder Approval is not obtained in accordance with the terms of the Transaction Agreement.


If Isla terminates the Transaction Agreement (x) prior to the Company Stockholder Approval, if the Company Board changes its recommendation or (y) if the Company or its subsidiaries or a director or officer of the Company willfully breached the non-solicitation obligations in any material respect, then the Company is required pay a termination fee of $33,375,989 to Isla (the “Termination Fee”). The Company is also required to the pay the Termination Fee if the Company terminates the Transaction Agreement prior to obtaining Company Stockholder Approval in order to enter into a definitive agreement providing for a superior proposal. The Transaction Agreement also requires the Company to pay Isla the Termination Fee in certain additional circumstances, including if (i) either party terminates the Transaction Agreement due to the failure to obtain the Company Stockholder Approval, a competing proposal is made public and not publicly withdrawn at least seven business days prior to the Company’s stockholders meeting or (ii) Isla terminates the Transaction Agreement due to a breach by the Company, and in either case, and within 12 months of such termination a competing proposal is consummated or a definitive agreement is entered into with respect to a competing proposal. If either the Company or Isla terminates the Transaction Agreement due to the failure to obtain the Company Stockholder Approval, and the termination Fee is not otherwise payable by the Company pursuant to the Transaction Agreement, then the Company is required to reimburse Isla for transaction expenses in an amount equal to $6,068,362.

The foregoing description is qualified in its entirety by reference to the full text of the Transaction Agreement, which is attached as Exhibit 2.1 to this Current Report on Form 8-K and incorporated into this Item 1.01 by reference.

Governance

The Transaction Agreement contemplates that New PubCo will be governed by the Amended and Restated Certificate of Incorporation and Bylaws, which will provide, among other things, that:

 

   

KKR will be the sole stockholder of New PubCo’s of non-economic Series I preferred stock (“Series I Preferred Stock”). The Series I Preferred Stock entitles the holder thereof to appoint the entire Board of Directors of New PubCo (the “New PubCo Board”) and to certain other to approval rights with respect to certain fundamental corporate actions.

 

   

Holders of common stock would not vote for the election of directors but would be entitled to vote on all matters requiring shareholder approval under Delaware law or stock exchange rules [not otherwise reserved to the holders of Series I Preferred Stock].

 

   

At closing, New PubCo Board will have nine members.

 

   

Until the third annual shareholders meeting following the effective time (the “Protected Period”), John Goff will be entitled to serve as Chairman of the New PubCo Board and one former Company director will serve on each committee of the New PubCo Board. During the Protected Period, certain amendments to the charter and bylaws related to provisions applicable during the Protected Period would require approval of the independent directors.

 

   

KKR would automatically forfeit its Series I Preferred stock when certain affiliates of KKR cease to own a number of shares equal to or greater than 50% (the “Retained Ownership Percentage”) of its original share ownership; provided that, if, at any time following the Closing, the volume-weighted average sale price of the New PubCo Class A Common Stock (measured of a 20-trading-day period) exceeds 140% of the volume-weighted average sale price (measured over the first 20-trading-day period following the effective date), then the Retained Ownership Percentage shall be automatically reduced to 35% effective as of the first day after the end of the Protected Period.

 

   

The Series I Preferred Stock will also entitle the holder thereof to approve certain fundamental corporate actions, including debt incurrence in excess of 10% of then outstanding indebtedness, significant equity raises, preferred equity issuances, adoption of a shareholder rights plan, amendments of New PubCo’s certificate of incorporation and certain sections of its bylaws, a sale of all or substantially all of the assets of New PubCo, mergers involving New PubCo, removals of New PubCo’s Chief Executive Officer and the liquidation or dissolution of New PubCo.


   

The Series I Preferred Stock would only be transferable by KKR to a non-affiliate with the approval of New PubCo’s independent directors following the Closing.

 

   

New PubCo’s governing documents and agreements with KKR will not include any “standstill” or other limitations on transactions with KKR, other than the related party policy of New PubCo’s Audit Committee to be adopted following the Closing.

Management Agreement

The Transaction Agreement contemplates that, at the Effective Time, New PubCo will enter into a Management Agreement to engage an affiliate of Isla (the “Manager”) to manage and provide certain management and investment advisory services to New PubCo and its subsidiaries (the “Management Agreement”). Pursuant to the Management Agreement:

 

   

Investment opportunities in upstream oil and gas assets and operating companies will be presented to the Company with the total amount of the available investment allocated between New PubCo and KKR’s energy investment fund (“EIGF II”) in good faith by the Manager on a pro rata basis subject to and taking into account available capital, applicable concentration limits, investment restrictions and other similar considerations. Following the exhaustion of EIGF II’s investment capital, the Manager shall ensure that at least 70% of any such investment PubCoamounts are allocated to the Company.

 

   

From time to time, investment opportunities outside of upstream oil and gas assets and operating companies may arise that are suitable for investment by the Company and EIGF II (and any successor fund), on the one hand, and by other KKR funds, on the other that are (A) engaged in an investment strategy that is materially different from New Pubco’s (such as distressed debt or special situations investment vehicles) and (B) have pre-existing defined allocation rights pursuant to KKR’s allocation policies or contractual undertakings agreed with the investors in such other KKR funds. In such cases, New PubCo and EIGF II may elect to co-invest alongside such other KKR funds in such investments, in which case KKR will allocate such investment opportunities among New PubCo and EIGF II, on the one hand, and such other KKR funds, on the other hand, in a manner consistent with the priority investment rights of the other KKR funds, taking into account such factors as KKR deems appropriate. New PubCo shall have no obligation to make any such co-investment.

 

   

As consideration for the services rendered pursuant to the Management Agreement, the Manager is entitled to receive (i) a management fee equal to $53.3 million per annum plus 1.5% per annum of the net proceeds from all future issuances of equity securities of the Company and (ii) a performance-based incentive grant from a 10% equity compensation plan. The management fee will be allocated on a pro rata basis to reflect the percentage of New PubCo’s equity which is privately held (including shares held by KKR, KKR managed funds and other existing Independence investors) and the incentive grants will be sized based on the then-public ownership.

 

   

New PubCo shall reimburse the Manager for its pro rata share (based on percentage of public ownership of the Company) any costs or expenses incurred by Manager on behalf of New PubCo (other than normal overhead expenses relating to the business or operations of the Manager).

 

   

The Management Agreement has an initial three-year term, with automatic three-year renewals thereafter.

 

   

Upon the written notice to the Manager at least 180 days prior to the expiration of the initial term or any automatic renewal term, the Company may, without cause, decline to renew the Management Agreement upon the affirmative determination by at least two-thirds of the independent directors reasonably and in good faith that (1) there has been unsatisfactory long-term performance by the Manager that is materially detrimental to the Company and its subsidiaries taken as a whole or (2) the fees payable to the Manager, in the aggregate, is materially unfair and excessive compared to those that would be charged by a comparable asset manager managing assets comparable to the assets of the Company, subject to Manager’s right to renegotiate the fees. In the event of such a termination, the Company shall pay the Manager a termination fee equal to three (3) times the sum of (i) the average annual management fee and (ii) the average of the incentive fee (but only with respect to the fully vested portion thereof as of the termination date), in each case earned by the Manager during the 24-month period immediately preceding the most recently completed calendar quarter prior to the termination.

 

Item 7.01.

Regulation FD Disclosure.

On June 8, 2021, the Company issued a press release announcing the Transactions, held a conference call regarding the Transactions and distributed an e-mail to employees regarding the Pending Merger. A copy of each of the press release, the transcript and Q&A from the conference call, the e-mail to employees and the investor presentation is attached hereto as Exhibit 99.1, 99.2, 99.3 and 99.4 and is incorporated by reference into this Item 7.01. The information included herein and the related exhibits shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act.


Item 8.01.

Other Events.

Solely to the extent required, the information included in Item 7.01 of this Current Report on Form 8-K is incorporated into this Item 8.01.

Voting Agreement

In connection with the Transaction Agreement, Isla and John C. Goff and certain other stockholders party thereto (each, a “Stockholder”) entered into a voting agreement (the “Voting Agreement”) pursuant to which, among other things, each Stockholder agreed, among other things and subject to certain limitations and exceptions, to vote all shares of Company Common Stock beneficially owned by such stockholder in favor of the adoption of the Transaction Agreement and approval of any other matters necessary for consummation of the transactions.

 

Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit

No.

  

Description of Exhibit

 

Exhibit

No.

  

Description

  2.1    Transaction Agreement dated as of June 7, 2021, by and among Contango Oil & Gas Company, Independence Energy LLC, a Delaware limited liability company, IE PubCo Inc., a Delaware corporation, IE OpCo LLC, a Delaware limited liability company, IE C Merger Sub Inc., a Texas corporation and IE L Merger Sub LLC, a Delaware limited liability company.*
99.1    Press Release, dated June 8, 2021.
99.2    Call Transcript and Q&A from conference call held on June 8, 2021.
99.3    Employee email, dated June 8, 2021.
99.4    Investor presentation, dated June 8, 2021.

 

*

This filing excludes schedules pursuant to Item 601(b)(2) of Regulation S-K, which the registrant agrees to furnish supplementally to the Securities and Exchange Commission upon its request.

Additional Information and Where to Find It

This communication may be deemed to be solicitation material in respect of the proposed merger (the “Proposed Merger”). The Proposed Merger will be submitted to the stockholders of Contango Oil & Gas Company, a Texas corporation (the “Company”), for their consideration. In connection with the Proposed Merger, the Company and IE PubCo Inc., a Delaware corporation (“New PubCo”) intend to file (1) a preliminary proxy statement/prospectus (the “Proxy Statement/Prospectus”) with the U.S. Securities and Exchange Commission (the “SEC”) in connection with the Company Stockholder Approval (as defined in the Transaction Agreement) and (2) a registration statement on Form S-4 (the “Form S-4”) with the SEC, in which the Proxy Statement/Prospectus will be included as a prospectus. New PubCo and the Company also intend to file other relevant documents with the SEC regarding the Proposed Merger. After the Form S-4 is declared effective by the SEC, the definitive Proxy Statement/Prospectus will be mailed to the Company’s stockholders. BEFORE MAKING ANY VOTING OR INVESTMENT DECISION WITH RESPECT TO THE PROPOSED MERGER, INVESTORS AND STOCKHOLDERS OF THE COMPANY ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT/PROSPECTUS REGARDING THE PROPOSED MERGER (INCLUDING ANY AMENDMENTS


OR SUPPLEMENTS THERETO) AND OTHER RELEVANT MATERIALS CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER.

The Proxy Statement/Prospectus, any amendments or supplements thereto and other relevant materials, may be obtained once such documents are filed with the SEC free of charge at the SEC’s website at www.sec.gov or free of charge by directing a request to the Company’s Investor Relations Department at investorrelations@contango.com.

No Offer or Solicitation

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

Participants in the Solicitation

The Company and certain of its executive officers, directors, other members of management and employees may, under the rules of the SEC, be deemed to be “participants” in the solicitation of proxies in connection with the Proposed Merger. Information regarding the Company’s directors and executive officers is available in its Proxy Statement on Schedule 14A for its 2021 Annual Meeting of Stockholders, filed with the SEC on April 30, 2021 and in its Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 10, 2021. These documents may be obtained free of charge from the sources indicated above. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the Form S-4, the Proxy Statement/Prospectus and other relevant materials relating to the Proposed Merger to be filed with the SEC when they become available. Stockholders, potential investors and other readers should read the Proxy Statement/Prospectus carefully when it becomes available before making any voting or investment decisions.

Cautionary Statement about Forward-Looking Statements

This communication contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are based on current expectations. The words and phrases “should”, “could”, “may”, “will”, “believe”, “plan”, “intend”, “expect”, “potential”, “possible”, “anticipate”, “estimate”, “forecast”, “view”, “efforts”, “goal” and similar expressions identify forward-looking statements and express our expectations about future events. All statements, other than statements of historical facts, included in this communication that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond our control. Consequently, actual future results could differ materially from our expectations due to a number of factors, including, but not limited to:

 

   

the risk that the business of the combined company will not be integrated successfully;

 

   

the risk that the cost savings, synergies and growth from the Proposed Merger may not be fully realized or may take longer to realize than expected;

 

   

the diversion of management time on transaction-related issues;

 

   

the effect of future regulatory or legislative actions on the companies or the industries in which they operate;

 

   

the risk that the credit ratings of the combined company or its subsidiaries may be different from what the companies expect;

 

   

the risk that a condition to closing of the Proposed Merger may not be satisfied;

 

   

the length of time necessary to consummate the Proposed Merger, which may be longer than anticipated for various reasons;


   

the potential impact of the announcement or consummation of the Proposed Merger on relationships with customers, suppliers, competitors, management and other employees;

 

   

the effect of this communication of the Proposed Merger on our stock price;

 

   

the ability to hire and retain key personnel;

 

   

reliance on and integration of information technology systems;

 

   

the risks associated with assumptions the parties make in connection with the parties’ critical accounting estimates and legal proceedings;

 

   

volatility and significant declines in oil, natural gas and natural gas liquids prices, including regional differentials;

 

   

any reduction in our borrowing base from time to time and our ability to repay any excess borrowings as a result of such reduction;

 

   

the impact of the COVID-19 pandemic, including reduced demand for oil and natural gas, economic slowdown, governmental and societal actions taken in response to the COVID-19 pandemic, stay-at-home orders, and interruptions to our operations;

 

   

our ability to execute our corporate strategy of offering a “fee for service” property management service for oil and natural gas companies;

 

   

the impact of the climate change initiative by President Biden’s administration and Congress, including the January 2021 executive order imposing a moratorium on new oil and natural gas leasing on federal lands and offshore waters pending completion of a comprehensive review and reconsideration of federal oil and natural gas permitting and leasing practices;

 

   

our financial position;

 

   

the potential impact of our derivative instruments;

 

   

our business strategy, including our ability to successfully execute on our consolidation strategy or make any desired changes in our strategy from time to time;

 

   

meeting our forecasts and budgets, including our 2021 capital expenditure budget;

 

   

expectations regarding oil and natural gas markets in the United States and our realized prices;

 

   

the ability of the members of the Organization of Petroleum Exporting Countries and other oil exporting nations to agree to, adhere to and maintain oil price and production controls;

 

   

outbreaks and pandemics, even outside our areas of operation, including COVID-19;

 

   

operational constraints, start-up delays and production shut-ins at both operated and non-operated production platforms, pipelines and natural gas processing facilities;

 

   

our ability to successfully develop our undeveloped acreage in the Permian Basin and Midcontinent region, and realize the benefits associated therewith;

 

   

increased costs and risks associated with our exploration and development in the Gulf of Mexico or the Permian Basin;

 

   

the risks associated with acting as operator of deep high pressure and high temperature wells, including well blowouts and explosions, onshore and offshore;

 

   

the risks associated with exploration, including cost overruns and the drilling of non-economic wells or dry holes, especially in prospects in which we have made a large capital commitment relative to the size of our capitalization structure;

 

   

the timing and successful drilling and completion of oil and natural gas wells;

 

   

the concentration of drilling in the Permian Basin, including lower than expected production attributable to down spacing of wells;

 

   

our ability to generate sufficient cash flow from operations, borrowings or other sources to enable us to fund our operations, satisfy our obligations, fund our drilling program and support our acquisition efforts;

 

   

the cost and availability of rigs and other materials, services and operating equipment;

 

   

timely and full receipt of sale proceeds from the sale of our production;

 

   

our ability to find, acquire, market, develop and produce new oil and natural gas properties;

 

   

the conditions of the capital markets and our ability to access debt and equity capital markets or other non-bank sources of financing, and actions by current and potential sources of capital, including lenders;

 

   

interest rate volatility;


   

our ability to complete strategic dispositions or acquisitions of assets or businesses and realize the benefits of such dispositions or acquisitions;

 

   

uncertainties in the estimation of proved reserves and in the projection of future rates of production and timing of development expenditures;

 

   

the need to take impairments on our properties due to lower commodity prices or other changes in the values of our assets, which results in a non-cash charge to earnings;

 

   

the ability to post additional collateral for current bonds or comply with new supplemental bonding requirements imposed by the Bureau of Ocean Energy Management;

 

   

operating hazards attendant to the oil and natural gas business including weather, environmental risks, accidental spills, blowouts and pipeline ruptures, and other risks;

 

   

downhole drilling and completion risks that are generally not recoverable from third parties or insurance;

 

   

potential mechanical failure or under-performance of significant wells, production facilities, processing plants or pipeline mishaps;

 

   

actions or inactions of third-party operators of our properties;

 

   

actions or inactions of third-party operators of pipelines or processing facilities;

 

   

the ability to retain key members of senior management and key technical employees and to find and retain skilled personnel;

 

   

strength and financial resources of competitors;

 

   

federal and state legislative and regulatory developments and approvals (including additional taxes and changes in environmental regulations);

 

   

the uncertain impact of supply of and demand for oil, natural gas and natural gas liquids;

 

   

our ability to obtain goods and services critical to the operation of our properties;

 

   

worldwide and United States economic conditions;

 

   

the ability to construct and operate infrastructure, including pipeline and production facilities;

 

   

the continued compliance by us with various pipeline and gas processing plant specifications for the gas and condensate produced by us;

 

   

operating costs, production rates and ultimate reserve recoveries of our oil and natural gas discoveries;

 

   

expanded rigorous monitoring and testing requirements;

 

   

the ability to obtain adequate insurance coverage on commercially reasonable terms; and

 

   

the limited trading volume of our common stock and general market volatility.

Many of these risks, uncertainties and assumptions are beyond the Company’s or New PubCo’s ability to control or predict. Because of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements. Nothing in this communication is intended, or is to be construed, as a profit forecast or to be interpreted to mean that our earnings per share for the current or any future financial years or those of the combined company will necessarily match or exceed our historical published earnings per share. We do not give any assurance (1) that we will achieve our expectations, or (2) concerning any result or the timing thereof, in each case, with respect to the Proposed Merger or any regulatory action, administrative proceedings, government investigations, litigation, warning letters, consent decree, cost reductions, business strategies, earnings or revenue trends or future financial results.

All subsequent written and oral forward-looking statements concerning the Company, New PubCo, the Proposed Merger, the combined company or other matters and attributable to the Company or any person acting on its respective behalf are expressly qualified in their entirety by the cautionary statements above. We assume no duty to update or revise their respective forward-looking statements based on new information, future events or otherwise.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Current Report to be signed on its behalf by the undersigned hereunto duly authorized.

 

      CONTANGO OIL & GAS COMPANY
Date: June 8, 2021           

/s/ E. Joseph Grady

      E. Joseph Grady
      Senior Vice President and
      Chief Financial and Accounting Officer


Exhibit 2.1

Execution Version

TRANSACTION AGREEMENT

dated as of

June 7, 2021

by and among

CONTANGO OIL & GAS COMPANY,

INDEPENDENCE ENERGY LLC,

IE OPCO LLC,

IE PUBCO INC.,

IE L MERGER SUB LLC

and

IE C MERGER SUB INC.

 


TABLE OF CONTENTS

 

         Page  

ARTICLE I CERTAIN DEFINITIONS

     3  

1.1

  Certain Definitions      3  

1.2

  Terms Defined Elsewhere      3  

ARTICLE II THE TRANSACTIONS

     8  

2.1

  Conversions and AgentCo      8  

2.2

  Recapitalization      8  

2.3

  The Distribution      8  

2.4

  Isla Merger      8  

2.5

  The Merger      8  

2.6

  The LLC Merger      9  

2.7

  The Contributions      9  

2.8

  Closing      9  

2.9

  Effect of the Isla Merger      10  

2.10

  Effect of the Merger      10  

2.11

  Effect of the LLC Merger      10  

2.12

  Certificate of Formation and LLC Agreement of the Surviving Person      10  

2.13

  Certificate of Incorporation and Bylaws of the Surviving Corporation      11  

2.14

  Certificate of Formation and LLC Agreement of the Surviving Entity      11  

2.15

  Directors and Officers of the Surviving Corporation      11  

2.16

  Directors and Officers of the Surviving Entity and Surviving Person      11  

2.17

  Organizational Documents of New PubCo      11  

2.18

  Directors and Officers of New PubCo      12  

ARTICLE III EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE COMPANY, NEW PUBCO AND C MERGER SUB; EXCHANGE

     12  

3.1

  Effect of the Isla Merger on Equity Interests      12  

3.2

  Effect of the Merger on Capital Stock      12  

3.3

  Effect of the LLC Merger on Equity Interests      13  

3.4

  Treatment of Company Equity Awards      13  

3.5

  Payment for Securities; Exchange      15  

3.6

  Contribution      20  

3.7

  No Dissenters’ Rights      20  

3.8

  Impact of Stock Splits, Etc.      20  

3.9

  Closing Deliverables      20  

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     21  

4.1

  Organization, Standing and Power      21  

4.2

  Capital Structure      22  

4.3

  Authority; No Violations; Consents and Approvals      23  

4.4

  Consents      24  

4.5

  SEC Documents; Financial Statements      25  

4.6

  Absence of Certain Changes or Events      27  

 

i


4.7

  No Undisclosed Material Liabilities      28  

4.8

  Information Supplied      28  

4.9

  Company Permits; Compliance with Applicable Law      29  

4.10

  Compensation; Benefits      29  

4.11

  Labor Matters      31  

4.12

  Taxes      32  

4.13

  Litigation      33  

4.14

  Intellectual Property      34  

4.15

  Real Property      34  

4.16

  Rights-of-Way      35  

4.17

  Oil and Gas Matters      35  

4.18

  Environmental Matters      38  

4.19

  Material Contracts      39  

4.20

  Derivative Transactions      42  

4.21

  Insurance      43  

4.22

  Opinion of Financial Advisor      43  

4.23

  Brokers      43  

4.24

  Related Party Transactions      43  

4.25

  Regulatory Matters      44  

4.26

  Takeover Laws      44  

4.27

  No Rights Plan      44  

4.28

  No Additional Representations      44  

ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE ISLA PARTIES

     45  

5.1

  Organization, Standing and Power      45  

5.2

  Capital Structure      46  

5.3

  Authority; No Violations; Consents and Approvals      47  

5.4

  Consents      48  

5.5

  Financial Statements      49  

5.6

  Absence of Certain Changes or Events      49  

5.7

  No Undisclosed Material Liabilities      50  

5.8

  Information Supplied      50  

5.9

  Isla Permits; Compliance with Applicable Law      50  

5.10

  Compensation; Benefits      51  

5.11

  Labor Matters      52  

5.12

  Taxes      53  

5.13

  Litigation      54  

5.14

  Intellectual Property      55  

5.15

  Real Property      55  

5.16

  Oil and Gas Matters      56  

5.17

  Environmental Matters      58  

5.18

  Material Contracts      59  

5.19

  Insurance      62  

5.20

  Brokers      63  

5.21

  Ownership of Company Capital Stock      63  

5.22

  Business Conduct      63  

 

ii


5.23

  Regulatory Matters      63  

5.24

  Rights-of-Way      63  

5.25

  Derivative Transactions      64  

5.26

  Related Party Transactions      64  

5.28

  Sufficient Funds      65  

5.29

  No Additional Representations      65  

ARTICLE VI COVENANTS AND AGREEMENTS

     66  

6.1

  Conduct of Company Business Pending the Merger      66  

6.2

  Conduct of Isla Business Pending the Merger      70  

6.3

  No Solicitation      73  

6.4

  Preparation of Proxy Statement/Prospectus and Registration Statement      80  

6.5

  Stockholders Approval      82  

6.6

  Access to Information      84  

6.7

  HSR and Other Approvals      86  

6.8

  Indemnification; Directors’ and Officers’ Insurance      87  

6.9

  Transaction Litigation      90  

6.10

  Public Announcements      90  

6.11

  Advice of Certain Matters; Control of Business      90  

6.12

  Reasonable Best Efforts; Notification      91  

6.13

  Section 16 Matters      91  

6.14

  Derivative Contracts      91  

6.15

  Stock Exchange Listing and Delisting      92  

6.16

  Tax Characterization and Other Tax Matters      92  

6.17

  Takeover Laws      93  

6.18

  Employee Matters      94  

6.19

  Payoff Letter      95  

6.20

  Financing      95  

6.21

  Transfers of Isla and New PubCo Interests      96  

6.22

  Termination of Isla Management Agreement      96  

ARTICLE VII CONDITIONS PRECEDENT

     97  

7.1

  Conditions to Each Party’s Obligation to Consummate the Transactions      97  

7.2

  Additional Conditions to Obligations of the Isla Parties      97  

7.3

  Additional Conditions to Obligations of the Company      98  

7.4

  Frustration of Closing Conditions      99  

ARTICLE VIII TERMINATION

     99  

8.1

  Termination      99  

8.2

  Notice of Termination; Effect of Termination      101  

8.3

  Expenses and Other Payments      101  

ARTICLE IX GENERAL PROVISIONS

     103  

9.1

  Schedule Definitions      103  

9.2

  Survival      103  

9.3

  Notices      103  

9.4

  Rules of Construction      104  

 

iii


9.5

  Counterparts      106  

9.6

  Entire Agreement; No Third Party Beneficiaries      106  

9.7

  Governing Law; Venue; Waiver of Jury Trial      107  

9.8

  Severability      108  

9.9

  Assignment      108  

9.10

  Affiliate Liability      108  

9.11

  Specific Performance      109  

9.12

  Amendment      109  

9.13

  Extension; Waiver      110  

9.14

  Non-Recourse      110  

 

Annex A   

Certain Definitions

Exhibit A   

Form of Amended and Restated New PubCo Certificate of Incorporation

Exhibit B   

Form of Amended and Restated New PubCo Bylaws

Exhibit C   

Form of Amended and Restated OpCo Limited Liability Company Agreement

Exhibit D   

Form of Management Agreement

Exhibit E   

Form of Registration Rights Agreement

 

 

iv


TRANSACTION AGREEMENT

This TRANSACTION AGREEMENT (this “Agreement”), dated as of June 7, 2021, is entered into by and among Contango Oil & Gas Company, a Texas corporation (the “Company”), Independence Energy LLC, a Delaware limited liability company (“Isla”), IE PubCo Inc., a Delaware corporation (“New PubCo”), IE OpCo LLC, a Delaware limited liability company (“OpCo”), IE C Merger Sub Inc., a Delaware corporation (“C Merger Sub”) and IE L Merger Sub LLC, a Delaware limited liability company (“L Merger Sub”).

WHEREAS, in anticipation of the Transactions, (i) Isla has formed OpCo, (ii) Isla has contributed 100% of the equity interests in Energy Finance to OpCo, (iii) Isla has formed New PubCo and (iv) New PubCo has formed C Merger Sub and L Merger Sub;

WHEREAS, New PubCo has issued (i) to Isla, a number of shares of Class B common stock, par value $0.0001 per share, of New PubCo (“New PubCo Class B Common Stock”) equal to the Isla Ownership Number and one share of Class A common stock, par value $0.0001 per share, of New PubCo (“New PubCo Class A Common Stock”) and (ii) to the Series I Preferred Stockholder, one thousand (1,000) shares of preferred stock, par value $0.0001 per share, designated as the “Series I Preferred Stock” (as defined in the New PubCo Certificate of Incorporation) (the transactions contemplated by this Recital and the immediately precedent Recital, the “Pre-Signing Transactions”).

WHEREAS, the Parties desire to combine Isla and its Subsidiaries with the Company in a transaction involving the following steps:

(i) On the Closing Date, (i) OpCo will be recapitalized such that, after giving effect to such recapitalization, 100% of the equity interests in OpCo shall consist of a number of OpCo Units equal to the Isla Ownership Number, which OpCo Units shall be held by Isla, and Isla’s members shall receive the right to receive additional OpCo Units in the event of a PubCo LTIP Issuance (as defined in the A&R OpCo LLCA) (this clause (i), the “OpCo Recapitalization”), (ii) Isla shall distribute all of the OpCo Units held by it, and all of the shares of New PubCo Class B Common Stock and right to receive additional OpCo Units in the event of a PubCo LTIP Issuance held by it to the Isla equity holders in accordance with its Organizational Documents (this clause (ii), the “Distribution”), and (iii) immediately following the Distribution, Isla will merge with and into OpCo, with OpCo as the surviving Person in the merger (the “Isla Merger”);

(ii) Immediately following the Isla Merger, C Merger Sub will merge with and into the Company, with the Company as the surviving corporation in the merger and a direct wholly owned Subsidiary of New PubCo, on the terms and subject to the conditions set forth herein (the “Merger”);

(iii) As a result of the Merger, and in accordance with the TBOC, each issued and outstanding share of common stock, par value $0.04 per share, of the Company (the “Company Common Stock”) will, upon the terms and subject to the conditions set forth herein, be converted into the right to receive a number of shares of New PubCo Class A Common Stock equal to the Exchange Ratio;

 

1


(iv) Immediately following the Merger, the Company will merge with and into L Merger Sub, with L Merger Sub as the surviving Person in the merger and a direct wholly owned Subsidiary of New PubCo, on the terms and subject to the conditions set forth herein (the “LLC Merger”);

(v) Immediately following the LLC Merger, New PubCo will contribute 100% of the equity interests in L Merger Sub to OpCo in exchange for certain OpCo Units, as set forth in Section 3.6, on the terms and subject to the conditions set forth herein (the “Contribution”); and

(vi) Immediately following the Contribution, OpCo will contribute L Merger Sub to Energy Finance (the “L Merger Sub Contribution”).

WHEREAS, for U.S. federal income tax purposes, (a) the Merger and the LLC Merger, taken together, are intended to constitute an integrated plan and qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and (b) this Agreement is intended to constitute, and is hereby adopted by the Parties as, a “plan of reorganization” within the meaning of Treasury Regulations Sections 1.368-2(g) and 1.368-3(a);

WHEREAS, the Board of Directors of the Company (the “Company Board”), at a meeting duly called and held, has by unanimous vote (i) determined that this Agreement, the Merger and the other Transactions, are fair to, and in the best interests of, the Company and the holders of Company Common Stock, (ii) approved and declared advisable this Agreement, the Merger and the other Transactions, and (iii) resolved to recommend that the holders of Company Common Stock approve and adopt this Agreement, the Merger and the other Transactions;

WHEREAS, the Board of Directors of Isla, at a meeting duly called and held, has approved and declared advisable this Agreement and the Transactions on behalf of itself and, in Isla’s capacity as the sole member of OpCo, on behalf of OpCo;

WHEREAS, the Board of Directors of New PubCo (the “New PubCo Board”) has (i) determined that this Agreement and the Transactions are fair to, and in the best interests of, New PubCo and each of Isla and the Series I Preferred Stockholder, as the sole stockholders of New PubCo, (ii) approved and declared advisable this Agreement and the Transactions and (iii) in its capacity as the sole member of L Merger Sub, has approved and declared advisable this Agreement and the Transactions on behalf of L Merger Sub;

WHEREAS, the Board of Directors of C Merger Sub (the “C Merger Sub Board”) has (i) determined that this Agreement and the Transactions, including the Merger, are fair to, and in the best interests of, C Merger Sub and the sole stockholder of C Merger Sub and (ii) approved and declared advisable this Agreement and the Transactions, including the Merger;

WHEREAS, Isla, in its capacity as the sole stockholder of New PubCo that has any voting or approval rights with respect to New PubCo’s execution and delivery of this Agreement and consummation of the Transactions contemplated hereby (other than board designation rights described in the immediately following recital), will adopt this Agreement immediately following its execution;

 

2


WHEREAS, the Series I Preferred Stockholder, as the sole holder of Series I Preferred Stock, may following the execution of this Agreement deliver to the Company and Isla a letter agreeing, contemporaneously with the Merger Effective Time, to appoint the directors specified in accordance with Section 2.18 to the board of New PubCo (“Board Letter Agreement”);

WHEREAS, New PubCo, as the sole stockholder of C Merger Sub, will adopt this Agreement immediately following its execution;

WHEREAS, as an inducement to Isla to enter into this Agreement, concurrently with the execution and delivery of the Agreement, certain stockholders of the Company (the “Designated Stockholders”) set forth on Schedule 1.1 of the Company Disclosure Letter have entered into voting and support agreements (the “Designated Stockholder Voting Agreements”);

NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements contained in this Agreement, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Isla, the Isla Parties and the Company agree as follows:

ARTICLE I

CERTAIN DEFINITIONS

1.1 Certain Definitions. As used in this Agreement, the capitalized terms have the meanings ascribed to such terms in Annex A or as otherwise defined elsewhere in this Agreement.

1.2 Terms Defined Elsewhere. As used in this Agreement, the following capitalized terms are defined in this Agreement as referenced in the following table:

 

Definition    Section
A&R New PubCo Bylaws    2.17
A&R New PubCo Certificate    2.17
A&R OpCo LLCA    Annex A
Affiliate    Annex A
AgentCo    2.1
Aggregated Group    Annex A
Agreement    Preamble
Ancillary Documents    Annex A
Anti-Corruption Laws    Annex A
Antitrust Authority    6.7(b)
Antitrust Laws    6.7(b)
Applicable Date    4.5(a)
beneficial ownership    Annex A
Board Letter Agreement    Recitals
Book-Entry Shares    3.5(b)(ii)
Business Day    Annex A
C Merger Sub    Preamble
C Merger Sub Board    Recitals
Certificate of Merger    2.8(c)

 

3


Definition    Section
Certificates    3.5(b)(i)
Closing    2.8(a)
Closing Date    2.8(a)
Code    Annex A
Company    Preamble
Company 401(k) Plan    6.18(d)
Company Affiliate    9.10
Company Alternative Acquisition Agreement    6.3(d)(iv)
Company Board    Recitals
Company Board Recommendation    4.3(a)
Company Capital Stock    4.2(a)
Company Change of Recommendation    6.3(d)(vii)
Company Common Stock    Recitals
Company Competing Proposal    Annex A
Company Contracts    4.19(b)
Company Disclosure Letter    Article IV
Company Employee    6.18(a)
Company Equity Plans    Annex A
Company Independent Petroleum Engineers    4.17(a)
Company Intellectual Property    4.14(a)
Company Intervening Event    Annex A
Company Leased Real Property    4.15
Company Material Adverse Effect    4.1
Company Owned Real Property    4.15
Company Permits    4.9(a)
Company Plan    Annex A
Company Preferred Stock    4.2(a)
Company PSU Award    3.4(b)
Company Real Property Lease    4.15
Company Related Party Transaction    4.24
Company Reserve Reports    4.17(a)
Company Restricted Stock Award    3.4(a)
Company Rights-of-Way    4.16
Company SEC Documents    4.5(a)
Company Stock Option Award    3.4(c)
Company Stockholder Approval    Annex A
Company Stockholders Meeting    4.4
Company Superior Proposal    Annex A
Company Termination Fee    Annex A
Confidentiality Agreement    6.6(b)
Consent    Annex A
Conversions    2.1
Contribution    Recitals
control    Annex A
COVID-19    Annex A

 

4


Definition    Section
COVID-19 Measures    Annex A
Creditors’ Rights    4.3(a)
Debt Prepayment Expenses    Annex A
Derivative Transaction    Annex A
Designated Stockholder Voting Agreements    Recitals
Designated Stockholders    Recitals
DGCL    2.5
Distribution    Recitals
DLLCA    2.4
DTC    Annex A
Edgar    Annex A
Effect    Annex A
e-mail    9.3
Eligible Shares    3.2(b)(i)
Employee Benefit Plan    Annex A
Encumbrances    Annex A
Energy Finance    Annex A
Environmental Laws    Annex A
ERISA    Annex A
Exchange Act    Annex A
Exchange Agent    3.5(a)
Exchange Fund    3.5(a)
Exchange Ratio    3.2(b)(i)
Excluded Shares    3.2(b)(iii)
GAAP    4.5(b)
Governmental Entity    Annex A
Grizzly    4.17(a)
Grizzly Oil and Gas Properties    4.17(a)
Grizzly Reserve Report    4.17(a)
group    Annex A
Hazardous Materials    Annex A
HSR Act    4.4
Hydrocarbons    Annex A
Indebtedness    Annex A
Indemnified Liabilities    6.8(a)
Indemnified Persons    6.8(a)
Independent Company Reserve Report    4.17(a)
Intellectual Property    Annex A
Intended Tax Treatment    6.16
Isla    Preamble
Isla Affiliate    9.10
Isla Certificate of Merger    2.8(b)
Isla Contracts    5.18(b)
Isla Debt Agreements    Annex A

Isla Disclosure Letter

   Article V

 

5


Definition    Section

Isla Expenses

   Annex A

Isla Financial Statements

   5.5

Isla Independent Petroleum Engineers

   5.16(a)

Isla Intellectual Property

   5.14(a)

Isla Interim Financial Statements

   5.5

Isla Leased Real Property

   5.15

Isla Management Agreement

   Annex A

Isla Material Adverse Effect

   5.1

Isla Merger

   Recitals

Isla Merger Effective Time

   2.8(b)

Isla Owned Real Property

   5.15

Isla Ownership Number

   Annex A

Isla Parties

   Annex A

Isla Permits

   5.9(a)

Isla Plan

   Annex A

Isla Real Property Lease

   5.15

Isla Related Parties

   5.26

Isla Related Party Transactions

   5.26

Isla Reserve Reports

   5.16(a)

Isla Rights-of-Way

   5.24

Isla Year End Financial Statements

   5.5

IT Assets

   Annex A

knowledge

   Annex A

L Merger Sub

   Preamble

L Merger Sub Contribution

   Recitals

Law

   Annex A

Letter of Transmittal

   3.5(b)(i)

LLC Certificate of Merger

   2.8(d)

LLC Merger

   Recitals

LLC Merger Effective Time

   2.8(d)

Management Agreement

   Annex A

Manager Incentive Plan

   6.2(b)

Material Adverse Effect

   Annex A

Material Company Insurance Policies

   4.21

Material Isla Insurance Policies

   5.19

Measurement Date

   4.2(a)

Merger

   Recitals

Merger Consideration

   3.2(b)(i)

Merger Effective Time

   2.8(c)

Mid-Con

   4.17(a)

New PubCo

   Preamble

New PubCo 401(k) Plan

   6.18(d)

New PubCo Board

   Recitals

New PubCo Certificate of Incorporation

   Annex A

New PubCo Class A Common Stock

   Recitals

 

6


Definition    Section
New PubCo Class B Common Stock    Recitals
NYSE    Annex A
NYSE American    Annex A
Oil and Gas Leases    Annex A
Oil and Gas Properties    Annex A
OpCo    Preamble
OpCo Recapitalization    Recitals
OpCo Units    Annex A
ordinary course of business    Annex A
Organizational Documents    Annex A
other Party    Annex A
Outside Date    8.1(b)(ii)
Party    Annex A
Payoff Letters    6.19
Permitted Encumbrances    Annex A
Person    Annex A
Personal Information    Annex A
Pre-Signing Transactions    Recitals
Proceeding    Annex A
Production Burdens    Annex A
Proxy Statement/Prospectus    4.4
Registration Rights Agreement    Annex A
Registration Statement    4.8
Release    Annex A
Representatives    Annex A
Rights-of-Way    4.16
Sarbanes-Oxley Act    Annex A
SEC    Annex A
Securities Act    Annex A
Series I Preferred Stock    Recitals
Series I Preferred Stockholder    Annex A
Severance Plan    2.18
Subject Indebtedness    Annex A
Subsidiary    Annex A
Surviving Corporation    2.5
Surviving Entity    2.6
Surviving Person    2.4
Takeover Law    Annex A
Tax    Annex A
Tax Returns    Annex A
Taxing Authority    Annex A
TBOC    2.5
Terminable Breach    8.1(b)(iii)

Transaction Litigation

   6.9

Transactions

   Annex A

 

7


Definition    Section

Transfer Taxes

   Annex A

Voting Debt

   Annex A

Wells

   Annex A

Willful and Material Breach

   Annex A

ARTICLE II

THE TRANSACTIONS

2.1 Conversions and AgentCo. Upon the terms and subject to the conditions of this Agreement, at or prior to the Closing, the Company will (i) cause each of its Subsidiaries (other than AgentCo) that is classified as a corporation for U.S. federal income tax purposes to, as applicable, either (A) convert to a Delaware limited liability company that is disregarded as separate from the Company for U.S. federal income tax purposes pursuant to Treas. Reg. § 301.7701-3(b) with such conversion effective prior to the Merger Effective Time or (B) file a valid election pursuant to Treas. Reg. § 301.7701-3(c) to be treated as an entity disregarded as separate from the Company for U.S. federal income tax purposes with the effective date of such election being the Closing Date or a date prior to the Closing Date (the transactions described in clauses (i)(A) and (i)(B), the “Conversions”) (ii) form a wholly-owned Delaware corporation (“AgentCo”) and (iii) cause each of its Subsidiaries that hold any interests in any federal public lands to (A) enter into an agency agreement with AgentCo in a form reasonably satisfactory to the Company, whereby such Subsidiaries of the Company shall appoint AgentCo as agent and nominee of such Subsidiaries of the Company to hold legal title to such federal public lands for the sole benefit of such Subsidiaries of the Company, (B) grant, convey, transfer, and assign all of its right, title and interest in such federal public lands to AgentCo, which shall hold such right, title and interest in such federal public lands solely as the agent and nominee of such Subsidiaries of the Company in accordance with the agency agreement and (C) execute, deliver and file with any applicable Governmental Entities such instruments reasonably required or requested in order to effect and file of record the grants, conveyances, transfers and assignments referenced in clause (iii)(B).

2.2 Recapitalization. Upon the terms and subject to the conditions of this Agreement, at the Closing, following the Conversions, OpCo will consummate the OpCo Recapitalization.

2.3 The Distribution. Upon the terms and subject to the conditions of this Agreement, at the Closing, immediately following the OpCo Recapitalization, Isla and its equity holders shall consummate the Distribution.

2.4 Isla Merger. Upon the terms and subject to the conditions of this Agreement, immediately following the Distribution, Isla will be merged with and into OpCo in accordance with the provisions of the Delaware Limited Liability Company Act (the “DLLCA”). As a result of the Isla Merger, the separate existence of Isla shall cease and OpCo shall continue its existence under the laws of the State of Delaware as the surviving limited liability company (in such capacity, OpCo is sometimes referred to herein as the “Surviving Person”).

2.5 The Merger. Upon the terms and subject to the conditions of this Agreement, immediately following the Isla Merger and at the Merger Effective Time, C Merger Sub will be merged with and into the Company in accordance with the provisions of the Texas Business Organizations Code (the “TBOC”) and the Delaware General Corporation Law (the “DGCL”). As a result of the Merger, the separate existence of C Merger Sub shall cease and the Company shall continue its existence under the laws of the State of Delaware as the surviving corporation (in such capacity, the Company is sometimes referred to herein as the “Surviving Corporation”).

 

8


2.6 The LLC Merger. Upon the terms and subject to the conditions of this Agreement, immediately following the Merger Effective Time and at the LLC Merger Effective Time, the Surviving Corporation will be merged with and into L Merger Sub in accordance with the provisions of the DGCL and the DLLCA. As a result of the LLC Merger, the separate existence of the Surviving Corporation shall cease and L Merger Sub shall continue its existence under the laws of the State of Delaware as the surviving limited liability company (in such capacity, L Merger Sub is sometimes referred to herein as the “Surviving Entity”).

2.7 The Contributions. Upon the terms and subject to the conditions of this Agreement, immediately following the LLC Merger Effective Time, New PubCo and OpCo shall consummate the Contribution. Upon the terms and subject to the conditions of this Agreement, immediately following the Contribution, L Merger Sub and Energy Finance shall consummate the L Merger Sub Contribution.

2.8 Closing.

(a) The closing of the Transactions (the “Closing”) shall take place by the exchange of documents by facsimile, PDF or other electronic means at 9:00 a.m., Houston time, on a date that is two Business Days following the satisfaction or (to the extent permitted by applicable Law) waiver in accordance with this Agreement of all of the conditions set forth in Article VII (other than any such conditions which by their nature cannot be satisfied until the Closing Date, which shall be required to be so satisfied or (to the extent permitted by applicable Law) waived in accordance with this Agreement on the Closing Date), unless another date or place is agreed to in writing by Isla and the Company. For purposes of this Agreement “Closing Date” shall mean the date on which the Closing occurs.

(b) As soon as practicable on the Closing Date, after the Closing and the Distribution, a certificate of merger with respect to the Isla Merger prepared and executed in accordance with the relevant provisions of the DLLCA (the “Isla Certificate of Merger”) shall be filed with the Office of the Secretary of State of the State of Delaware. The Isla Merger shall become effective upon the filing and acceptance of the Isla Certificate of Merger with the Office of the Secretary of State of the State of the State of Delaware, or at such later time as shall be agreed upon in writing by Isla and Company and specified in the Isla Certificate of Merger (the “Isla Merger Effective Time”).

(c) As soon as practicable on the Closing Date after the Closing and the Isla Merger Effective Time, a certificate of merger with respect to the Merger prepared and executed in accordance with the relevant provisions of the TBOC and the applicable Laws of the State of Delaware (the “Certificate of Merger”) shall be filed with the Office of the Secretary of State of the State of Texas and the Office of the Secretary of State of the State of Delaware. The Merger shall become effective upon the filing and acceptance of the Certificate of Merger with the Office of the Secretary of State of the State of Texas and the Office of the Secretary of State of the State of Delaware, or at such later time as shall be agreed upon in writing by Isla and the Company and specified in the Certificate of Merger (the “Merger Effective Time”).

 

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(d) As soon as practicable on the Closing Date after the Closing and the Merger Effective Time, a certificate of merger with respect to the LLC Merger prepared and executed in accordance with the relevant provisions of the DGCL and the DLLCA (the “LLC Certificate of Merger”) shall be filed with the Office of the Secretary of State of the State of Delaware. The LLC Merger shall become effective upon the filing and acceptance of the LLC Certificate of Merger with the Office of the Secretary of State of the State of Delaware, or at such later time as shall be agreed upon in writing by Isla and the Company and specified in the LLC Certificate of Merger (the “LLC Merger Effective Time”).

2.9 Effect of the Isla Merger. At the Isla Merger Effective Time, the Isla Merger shall have the effects set forth in this Agreement and the applicable provisions of the DLLCA. Without limiting the generality of the foregoing, and subject thereto, at the Isla Merger Effective Time, all the property, rights, privileges, powers and franchises of each of the Surviving Person and Isla shall vest in the Surviving Person, and all debts, liabilities, obligations, restrictions, disabilities and duties of each of the Surviving Person and Isla shall become the debts, liabilities, obligations, restrictions, disabilities and duties of the Surviving Person.

2.10 Effect of the Merger. At the Merger Effective Time, the Merger shall have the effects set forth in this Agreement and the applicable provisions of the TBOC and the DGCL. Without limiting the generality of the foregoing, and subject thereto, at the Merger Effective Time, all the property, rights, privileges, powers and franchises of each of the Company and C Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities, obligations, restrictions, disabilities and duties of each of the Company and C Merger Sub shall become the debts, liabilities, obligations, restrictions, disabilities and duties of the Surviving Corporation.

2.11 Effect of the LLC Merger. At the LLC Merger Effective Time, the LLC Merger shall have the effects set forth in this Agreement and the applicable provisions of the DGCL and the DLLCA. Without limiting the generality of the foregoing, and subject thereto, at the LLC Merger Effective Time, all the property, rights, privileges, powers and franchises of each of the Surviving Corporation and L Merger Sub shall vest in the Surviving Entity, and all debts, liabilities, obligations, restrictions, disabilities and duties of each of the Surviving Corporation and L Merger Sub shall become the debts, liabilities, obligations, restrictions, disabilities and duties of the Surviving Entity.

2.12 Certificate of Formation and LLC Agreement of the Surviving Person. At the Isla Merger Effective Time, the certificate of formation of OpCo in effect immediately prior to the Isla Merger Effective Time shall be the certificate of formation of the Surviving Person until duly amended, subject to Section 6.8(a), as provided therein or by applicable Law. The Parties shall take all actions necessary so that the limited liability company agreement of OpCo in effect immediately prior to the Isla Merger Effective Time shall be the limited liability company agreement of the Surviving Person, until duly amended, subject to Section 6.8(a), as provided therein or by applicable Law.

 

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2.13 Certificate of Incorporation and Bylaws of the Surviving Corporation. At the Merger Effective Time, the certificate of incorporation of C Merger Sub in effect immediately prior to the Merger Effective Time shall be the certificate of incorporation of the Surviving Corporation, until duly amended, subject to Section 6.8(a), as provided therein or by applicable Law. The Parties shall take all actions necessary so that the bylaws of C Merger Sub in effect immediately prior to the Merger Effective Time shall be the bylaws of the Surviving Corporation upon the Merger Effective Time, until duly amended, subject to Section 6.8(a), as provided therein or by applicable Law.

2.14 Certificate of Formation and LLC Agreement of the Surviving Entity. At the LLC Merger Effective Time, the certificate of formation of L Merger Sub in effect immediately prior to the LLC Merger Effective Time shall be the certificate of formation of the Surviving Entity until duly amended, subject to Section 6.8(a), as provided therein or by applicable Law. The Parties shall take all actions necessary so that the limited liability company agreement of L Merger Sub in effect immediately prior to the LLC Merger Effective Time shall be the limited liability company agreement of the Surviving Entity, until duly amended, subject to Section 6.8(a), as provided therein or by applicable Law.

2.15 Directors and Officers of the Surviving Corporation. The Parties shall take all necessary action such that, from and after the Merger Effective Time, the directors of C Merger Sub shall be the directors of the Surviving Corporation and the officers of C Merger Sub shall be the officers of the Surviving Corporation, and such directors and officers shall serve until their successors have been duly elected or appointed and qualified or until their death, resignation or removal in accordance with the Organizational Documents of the Surviving Corporation.

2.16 Directors and Officers of the Surviving Entity and Surviving Person. The Parties shall take all necessary action such that, from and after the LLC Merger Effective Time, the officers of L Merger Sub shall be the officers of the Surviving Entity, and such officers shall serve until their successors have been duly elected or appointed and qualified or until their death, resignation or removal in accordance with the Organizational Documents of the Surviving Entity (it being understood that the Surviving Entity shall be member-managed following the LLC Merger). The Parties shall take all necessary action such that, unless otherwise determined by Isla, from and after the Isla Merger Effective Time, the officers of OpCo shall be the officers of the Surviving Person, and such directors and officers shall serve until their successors have been duly elected or appointed and qualified or until their death, resignation or removal in accordance with the Organizational Documents of the Surviving Person.

2.17 Organizational Documents of New PubCo. Isla and New PubCo shall take all requisite action to cause the certificate of incorporation of New PubCo (the “A&R New PubCo Certificate”) and the bylaws of New PubCo (the “A&R New PubCo Bylaws”) to be in effect immediately prior to the Merger Effective Time to be in the forms attached to this Agreement as Exhibit A and Exhibit B, respectively, except for such changes as are approved in writing by Isla and the Company prior to the Closing.

 

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2.18 Directors and Officers of New PubCo. The Parties acknowledge that as of the Merger Effective Time the directors of New PubCo shall consist of seven (7) directors to be designated by Isla following the date hereof and prior to the Closing and two (2) directors to be designated by the Company following the date hereof and prior to the Closing, each to hold office in accordance with the A&R New PubCo Certificate and the A&R New PubCo Bylaws. The persons who are the officers of New PubCo immediately prior to the Merger Effective Time, together with such other persons as designated by Isla following the date of this Agreement, shall be officers of New PubCo as of and following the Merger Effective Time, each such person to hold office in accordance with the A&R New PubCo Certificate and the A&R New PubCo Bylaws.

ARTICLE III

EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE COMPANY, NEW PUBCO AND C MERGER SUB; EXCHANGE

3.1 Effect of the Isla Merger on Equity Interests. At the Isla Merger Effective Time, all of the equity interests in Isla will be canceled without any conversion thereof, and the equity interests in OpCo will remain unchanged.

3.2 Effect of the Merger on Capital Stock. At the Merger Effective Time, by virtue of the Merger and without any action on the part of New PubCo, C Merger Sub, the Company, or any holder of any securities of New PubCo, C Merger Sub or the Company:

(a) Capital Stock of C Merger Sub. Each share of capital stock of C Merger Sub issued and outstanding immediately prior to the Merger Effective Time shall be converted into and shall represent one fully paid and nonassessable share of common stock, par value $0.01 per share, of the Surviving Corporation, which shall constitute the only outstanding shares of common stock of the Surviving Corporation immediately following the Merger Effective Time.

(b) Capital Stock of the Company.

(i) Subject to the other provisions of this Article III, each share of Company Common Stock issued and outstanding immediately prior to the Merger Effective Time (excluding any Excluded Shares, the “Eligible Shares”) shall be converted into the right to receive from New PubCo a number of fully paid and nonassessable shares of New PubCo Class A Common Stock equal to the Exchange Ratio (together with any cash to be paid in lieu of fractional shares of New PubCo Class A Common Stock in accordance with Section 3.5(h)), the “Merger Consideration”). As used in this Agreement, “Exchange Ratio” means 0.2000, as may be adjusted pursuant to Section 6.15.

(ii) All such shares of Company Common Stock, when so converted, shall cease to be outstanding and shall automatically be canceled and cease to exist. Each holder of a share of Company Common Stock that was outstanding immediately prior to the Merger Effective Time shall cease to have any rights with respect thereto, except the right to receive (A) the Merger Consideration (including any cash to be paid in lieu of fractional shares of New PubCo Class A Common Stock in accordance with Section 3.5(h) and (B) any dividends or other distributions in accordance with Section 3.5(g), in each case to be issued or paid in consideration therefor upon the exchange of any Certificates or Book-Entry Shares, as applicable, in accordance with Section 3.5(a).

 

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(iii) All shares of Company Common Stock held by the Company as treasury shares or by New PubCo or C Merger Sub immediately prior to the Merger Effective Time and, in each case, not held on behalf of third parties (collectively, “Excluded Shares”) shall automatically be canceled and cease to exist as of the Merger Effective Time, and no consideration shall be delivered in exchange therefor.

(c) Capital Stock of New PubCo.

(i) In connection with the Transactions, all shares of New PubCo Class B Common Stock held by the equity holders of Isla immediately following the Distribution shall remain outstanding such that, after giving effect to the Transactions, the equity holders of Isla as of the date hereof shall collectively hold a number of shares of New PubCo Class B Common Stock equal to the Isla Ownership Number.

(ii) In connection with the Transactions, at the Merger Effective Time, Isla shall forfeit the one share of New PubCo Class A Common Stock held by Isla at such time for no consideration.

3.3 Effect of the LLC Merger on Equity Interests. At the LLC Merger Effective Time, all of the equity interests in the Surviving Corporation will be canceled without any conversion thereof, and the equity interests in L Merger Sub will remain unchanged.

3.4 Treatment of Company Equity Awards.

(a) Company Restricted Stock Awards. Immediately prior to the Merger Effective Time, each award of restricted shares of Company Common Stock (whether vested or unvested) granted under a Company Equity Plan that is outstanding immediately prior to the Merger Effective Time (each, a “Company Restricted Stock Award”) shall, at the Merger Effective Time, automatically and without any action on the part of New PubCo, the Company or any holder thereof, fully vest and be converted into the right to receive from New PubCo a number of unrestricted shares of New PubCo Class A Common Stock (together with any cash to be paid in lieu of fractional shares of New PubCo Class A Common Stock in accordance with Section 3.5(h)) equal to the product of (x) the number of shares of Company Common Stock subject to such Company Restricted Stock Award immediately prior to the Merger Effective Time and (y) the Exchange Ratio, reduced by any applicable Tax withholding.

(b) Company PSU Awards. Immediately prior to the Merger Effective Time, each award of performance stock units that corresponds to shares of Company Common Stock (whether vested or unvested) granted under a Company Equity Plan that is outstanding immediately prior to the Merger Effective Time (each, a “Company PSU Award”) shall, at the Merger Effective Time automatically, and without any action on the part of New PubCo, the Company or any holder thereof, fully vest (with any performance-

 

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based vesting conditions for such awards held by then-current (as of Closing) employees of the Company and its Subsidiaries deemed achieved at the maximum performance level) and be cancelled, and in exchange therefor, New PubCo shall issue to the holder thereof a number of shares of New PubCo Class A Common Stock (together with any cash to be paid in lieu of fractional shares of New PubCo Class A Common Stock in accordance with Section 3.5(h)) equal to the product of (x) the number of shares of Company Common Stock subject to such Company PSU Award immediately prior to the Merger Effective Time and (y) the Exchange Ratio, reduced by any applicable Tax withholding ; provided, that, (i) to the extent that insufficient shares are available under a Company Equity Plan immediately prior to the Merger Effective Time to deem such Company PSU Awards to have been achieved at the maximum performance level, then an amendment to such Company Equity Plan to increase the number of shares available may be sought in accordance with Section 6.5 of this Agreement, and (ii) to the extent that, for any reason, such an amendment is not adopted and insufficient shares remain available, then such Company PSU Awards shall receive appropriate cash consideration as set forth under such Company Equity Plan or the award agreement governing such Company PSU Award (except that any performance-based vesting conditions shall be deemed achieved at the greater of the target performance level or actual performance through the Closing Date).

(c) Company Stock Options. Immediately prior to the Merger Effective Time, each option to purchase shares of Company Common Stock (whether vested or unvested) granted under a Company Equity Plan that is outstanding immediately prior to the Merger Effective Time (each, a “Company Stock Option Award”) shall, without any action on the part of New PubCo, the Company or any holder thereof, fully vest and be deemed exercised in a net exercise such that the holder of such Company Stock Option Award shall receive, immediately prior to the Merger Effective Time, a number of shares of Company Common Stock equal to (x) the number of shares of Company Common Stock subject to such Company Stock Option Award immediately prior to the Merger Effective Time, multiplied by (y) the excess of the Fair Market Value of a share of Company Common Stock minus the exercise price per share of Company Common Stock subject to such Company Stock Option Award, and then divided by (z) the Fair Market Value of a share of Company Common Stock (the “Net Exercise Shares”). All such Net Exercise Shares shall be deemed outstanding immediately prior to the Merger Effective Time and entitled to receive the Merger Consideration (together with any cash to be paid in lieu of fractional shares of New PubCo Class A Common Stock in accordance with Section 3.5(h)) as set forth in Section 3.2(b)(i), reduced by any applicable Tax withholding. For the avoidance of doubt, any Company Stock Option Award with an exercise price per share of Company Common Stock subject to such Company Stock Option Award that equals or exceeds the Fair Market Value of a share of Company Common Stock shall be cancelled for no consideration.

(d) For purposes of this Section 3.4 the “Fair Market Value” of a share of Company Common Stock shall equal the average of the volume weighted average price per share of Company Class A Common Stock on the five trading days preceding the Closing Date (as reported by Bloomberg, L.P. or, if not reported by Bloomberg, L.P., in another authoritative source mutually selected by New PubCo and the Company).

 

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(e) Prior to the Merger Effective Time, the Company Board and/or the compensation committee of the Company Board shall take such action and adopt such resolutions as are required to (i) effectuate the treatment of the Company Restricted Stock Awards, the Company PSU Awards and the Company Stock Option Awards pursuant to the terms of this Section 3.4, and (ii) take all actions reasonably required to effectuate any provision of this Section 3.4, including to ensure that, except as set forth in this Section 3.4, from and after the Merger Effective Time, none of New PubCo, the Surviving Corporation or the Surviving Entity will be required to deliver shares of Company Common Stock or other capital stock of the Company or any other Person to any Person pursuant to or in settlement of any equity awards of the Company, including any Company Restricted Stock Awards, Company PSU Awards or Company Stock Option Awards.

(f) As soon as practicable following the Merger Effective Time, the Company shall file a post-effective amendment to any Form S-8 registration statements previously filed by the Company deregistering all shares of Company Common Stock thereunder.

3.5 Payment for Securities; Exchange.

(a) Exchange Agent; Exchange Fund. Prior to the Merger Effective Time, New PubCo shall enter into an agreement with the Company’s transfer agent, or another firm reasonably acceptable to the Company and Isla, to act as agent for the holders of Company Common Stock in connection with the Merger (the “Exchange Agent”) and to receive the Merger Consideration to which such holders shall become entitled pursuant to this Article III. Promptly after the Merger Effective Time, New PubCo shall deposit, or cause to be deposited, with the Exchange Agent, for the benefit of the holders of Eligible Shares, for issuance in accordance with this Article III through the Exchange Agent, the number of shares of New PubCo Class A Common Stock issuable in respect of Eligible Shares pursuant to Section 3.2. New PubCo agrees to make available to the Exchange Agent, from time to time as needed, cash sufficient to pay any dividends and other distributions pursuant to Section 3.5(g). The Exchange Agent shall, pursuant to irrevocable instructions, deliver the Merger Consideration contemplated to be issued in exchange for Eligible Shares pursuant to this Agreement out of the Exchange Fund. Except as contemplated by this Section 3.5(a) and Section 3.5(g), the Exchange Fund shall not be used for any other purpose. Any shares of New PubCo Class A Common Stock deposited with the Exchange Agent and any cash held for payment in lieu of fractional shares of New PubCo Class A Common Stock in accordance with Section 3.5(h) or deposited to fund dividends or other distributions in accordance with Section 3.5(g) or in settlement of any Company PSU Awards pursuant to Section 3.4(b) shall hereinafter be referred to as the “Exchange Fund.” New PubCo shall pay all charges and expenses, including those of the Exchange Agent, in connection with the exchange of Eligible Shares pursuant to this Agreement. The cash portion of the Exchange Fund may be invested by the Exchange Agent as reasonably directed by New PubCo; provided, that, any such investment or losses resulting therefrom shall not in any event modify the obligations of New PubCo to pay to the Merger Consideration in full (including all amounts of cash paid in lieu of fractional shares in accordance with Section 3.5(h)) pursuant to this Article III or any amounts payable pursuant to Section 3.4(b) or Section 3.5(g). Any interest or other income resulting from investment of the cash portion of the Exchange Fund shall become part of the Exchange Fund, and any amounts in excess of the amounts payable hereunder shall be promptly returned to New PubCo or its designee following the earlier of the distribution of all amounts required to be paid pursuant to this Article III and the 180th day following the Closing Date, pursuant to Section 3.5(d).

 

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(b) Payment Procedures.

(i) Certificates. As soon as practicable after the Merger Effective Time, New PubCo shall cause the Exchange Agent to deliver to each record holder, as of immediately prior to the Merger Effective Time, of an outstanding certificate or certificates that immediately prior to the Merger Effective Time represented Eligible Shares (“Certificates”), a notice advising such holders of the effectiveness of the Merger and a letter of transmittal (“Letter of Transmittal”) (which shall specify that delivery shall be effected, and risk of loss and title to Certificates shall pass, only upon proper delivery of such Certificates to the Exchange Agent, and which shall be in a customary form and agreed to by Isla and the Company prior to the Closing) and instructions for use in effecting the surrender of Certificates for payment of the Merger Consideration set forth in Section 3.2(b)(i). Subject to Section 3.5(f), upon surrender to the Exchange Agent of a Certificate, together with the Letter of Transmittal, duly completed and validly executed in accordance with the instructions thereto, and such other customary documents as may be reasonably required by the Exchange Agent, the holder of such Certificate shall be entitled to receive in exchange therefor (A) one or more shares of New PubCo Class A Common Stock (which shall be in uncertificated book-entry form) representing, in the aggregate, the number of shares of New PubCo Class A Common Stock, if any, that such holder has the right to receive pursuant to Section 3.2 (after taking into account all shares of Company Common Stock then held by such holder) and (B) a check (or payment by wire transfer, if permitted pursuant to, and valid wire transfer information is provided in, such duly completed and executed Letter of Transmittal) in the amount equal to the cash payable in lieu of any fractional shares of New PubCo Class A Common Stock pursuant to Section 3.5(h) and dividends and other distributions pursuant to Section 3.5(g).

(ii) Non-DTC Book-Entry Shares. As soon as practicable after the Merger Effective Time, New PubCo shall cause the Exchange Agent to deliver to each record holder, as of immediately prior to the Merger Effective Time, of Eligible Shares represented by book-entry (“Book-Entry Shares”) not held through DTC, (A) a notice advising such holders of the effectiveness of the Merger, (B) a statement reflecting the number of shares of New PubCo Class A Common Stock (which shall be in uncertificated book-entry form) representing, in the aggregate, the whole number of shares of New PubCo Class A Common Stock, if any, that such holder has the right to receive pursuant to Section 3.2 (after taking into account all shares of Company Common Stock then held by such holder) and (C) a check in the amount equal to the cash payable in lieu of any fractional shares of New PubCo Class A Common Stock pursuant to Section (h) and dividends and other distributions pursuant to Section 3.5(g).

 

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(iii) DTC Book-Entry Shares. With respect to Book-Entry Shares held through DTC, New PubCo and the Company shall cooperate to establish procedures with the Exchange Agent and DTC to ensure that the Exchange Agent will transmit to DTC or its nominees as soon as reasonably practicable on or after the Closing Date, upon surrender of Eligible Shares held of record by DTC or its nominees in accordance with DTC’s customary surrender procedures, the Merger Consideration (including any cash to be paid in lieu of fractional shares of New PubCo Class A Common Stock in accordance with Section 3.5(h)) and any unpaid non-stock dividends and any other dividends or other distributions, in each case, that DTC has the right to receive pursuant to this Article III.

(iv) No interest shall be paid or accrued on any amount payable for Eligible Shares pursuant to this Article III.

(v) With respect to Certificates, if payment of the Merger Consideration (including any cash to be paid in lieu of fractional shares of New PubCo Class A Common Stock in accordance with Section 3.5(h)) and dividends or other distributions with respect to New PubCo Class A Common Stock pursuant to Section 3.5(g) is to be made to a Person other than the record holder of such Eligible Shares, it shall be a condition of payment that shares so surrendered shall be properly endorsed or shall be otherwise in proper form for transfer and that the Person requesting such payment shall have paid any transfer and other Taxes required by reason of the payment of the Merger Consideration (including any cash to be paid in lieu of fractional shares of New PubCo Class A Common Stock in accordance with Section 3.5(h)) and dividends or other distributions with respect to New PubCo Class A Common Stock pursuant to Section 3.5(g) to a Person other than the registered holder of such shares surrendered or shall have established to the satisfaction of New PubCo that such Taxes either have been paid or are not applicable. With respect to Book-Entry Shares, payment of the Merger Consideration (including any cash to be paid in lieu of fractional shares of New PubCo Class A Common Stock in accordance with Section 3.5(h)) and dividends or other distributions with respect to New PubCo Class A Common Stock pursuant to Section 3.5(g) shall only be made to the Person in whose name such Book-Entry Shares are registered in the stock transfer books of the Company as of the Merger Effective Time. Until surrendered as contemplated by this Section 3.5(b)(v) (subject to Section 3.5(f)), each Certificate shall be deemed at any time after the Merger Effective Time to represent only the right to receive upon such surrender the Merger Consideration (including any cash to be paid in lieu of fractional shares of New PubCo Class A Common Stock in accordance with Section 3.5(h)) and any dividends or other distributions to which such holder is entitled pursuant to Section 3.5(g) payable in respect of such shares of Company Common Stock.

(c) Termination of Rights. All Merger Consideration (including any cash to be paid in lieu of fractional shares of New PubCo Class A Common Stock in accordance with Section 3.5(h) and dividends or other distributions with respect to New PubCo Class A Common Stock pursuant to Section 3.5(g) paid upon the surrender of and in exchange for Eligible Shares in accordance with the terms hereof) shall be deemed to have been paid in

 

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full satisfaction of all rights pertaining to such Company Common Stock. At the Merger Effective Time, the stock transfer books of the Surviving Corporation shall be closed immediately, and there shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of the shares of Company Common Stock that were outstanding immediately prior to the Merger Effective Time. If, after the Merger Effective Time, Certificates are presented to New PubCo, the Surviving Corporation or the Surviving Entity for any reason, they shall be canceled and exchanged for the Merger Consideration (including any cash to be paid in lieu of fractional shares of New PubCo Class A Common Stock in accordance with Section 3.5(h)) and dividends or other distributions with respect to New PubCo Class A Common Stock pursuant to Section 3.5(g) payable in respect of the Eligible Shares previously represented by such Certificates.

(d) Termination of Exchange Fund. Any portion of the Exchange Fund that remains undistributed to the former stockholders of the Company on the 180th day after the Closing Date shall be delivered to New PubCo, upon demand, and any former common stockholders of the Company who have not theretofore received the Merger Consideration (including any cash to be paid in lieu of fractional shares of New PubCo Class A Common Stock in accordance with Section 3.5(h)) and dividends or other distributions with respect to New PubCo Class A Common Stock pursuant to Section 3.5(g), in each case without interest thereon, to which they are entitled under this Article III shall thereafter look only to the Surviving Corporation and New PubCo for payment of their claim for such amounts.

(e) No Liability. None of the Surviving Corporation, New PubCo, C Merger Sub or the Exchange Agent shall be liable to any holder of Company Common Stock for any amount of Merger Consideration properly delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law. If any Certificate has not been surrendered prior to the time that is immediately prior to the time at which Merger Consideration in respect of such Certificate would otherwise escheat to or become the property of any Governmental Entity, any such shares, cash, dividends or distributions in respect of such Certificate shall, to the extent permitted by applicable Law, become the property of Isla, free and clear of all claims or interest of any Person previously entitled thereto.

(f) Lost, Stolen, or Destroyed Certificates. If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if reasonably required by New PubCo, the posting by such Person of a bond in such reasonable amount as New PubCo may direct as indemnity against any claim that may be made against it with respect to such Certificate, the Exchange Agent shall issue in exchange for such lost, stolen or destroyed Certificate the Merger Consideration (including any cash to be paid in lieu of fractional shares of New PubCo Class A Common Stock in accordance with Section 3.5(h)) and dividends or other distributions with respect to New PubCo Class A Common Stock pursuant to Section 3.5(g) payable in respect of the shares of Company Common Stock formerly represented by such Certificate.

 

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(g) Distributions with Respect to Unexchanged Shares of New PubCo Class A Common Stock. No dividends or other distributions declared or made with respect to shares of New PubCo Class A Common Stock with a record date after the Merger Effective Time shall be paid to the holder of any unsurrendered Certificate with respect to the whole shares of New PubCo Class A Common Stock that such holder would be entitled to receive upon surrender of such Certificate and no cash payment in lieu of fractional shares of New PubCo Class A Common Stock shall be paid to any such holder, in each case, until such holder shall surrender such Certificate in accordance with this Section 3.5 or, if such Certificate shall have been lost, stolen or destroyed, such holder shall have delivered the affidavit and, if reasonably required by New PubCo, posted the bond, in accordance with Section 3.5(f). Following surrender of any such Certificate (or, if applicable, delivery of such affidavit and, if reasonably required by New PubCo, posting of such bond), there shall be paid to such holder of whole shares of New PubCo Class A Common Stock issuable in exchange therefor, without interest, (i) promptly after the time of such surrender (or delivery, as applicable), the amount of dividends or other distributions with a record date after the Merger Effective Time theretofore paid with respect to such whole shares of New PubCo Class A Common Stock, and (ii) at the appropriate payment date, the amount of dividends or other distributions with a record date after the Merger Effective Time but prior to such surrender (or delivery, as applicable) and a payment date subsequent to such surrender (or delivery, as applicable) payable with respect to such whole shares of New PubCo Class A Common Stock. For purposes of dividends or other distributions in respect of shares of New PubCo Class A Common Stock, all whole shares of New PubCo Class A Common Stock to be issued pursuant to the Merger shall be entitled to dividends pursuant to the immediately preceding sentence as if such whole shares of New PubCo Class A Common Stock were issued and outstanding as of the Merger Effective Time.

(h) No Fractional Shares of New PubCo Class A Common Stock. No certificates or scrip or shares representing fractional shares of New PubCo Class A Common Stock shall be issued upon the exchange of Eligible Shares and such fractional share interests will not entitle the owner thereof to vote or to have any rights of a stockholder of New PubCo or a holder of shares of New PubCo Class A Common Stock. In lieu of any fractional share of New PubCo Class A Common Stock to which any holder of Company Common Stock would otherwise be entitled in connection with the payment of the Merger Consideration, the holders of Eligible Shares shall be entitled to receive from the Exchange Agent in accordance with the provisions of this Section 3.5(h), a cash payment in lieu of such fractional share of New PubCo Class A Common Stock representing such holder’s proportionate interest, if any, in the proceeds from the sale by the Exchange Agent (reduced by any fees of the Exchange Agent attributable to such sale) in one or more transactions of shares of New PubCo Class A Common Stock equal to the excess of (i) the aggregate number of shares of New PubCo Class A Common Stock to be delivered to the Exchange Agent pursuant to this Agreement over (ii) the aggregate number of whole shares New PubCo Class A Common Stock to be issued to the holders of Eligible Shares pursuant to Section 3.2. No certificates or scrip representing fractional shares of New PubCo Class A Common Stock shall be issued in the Merger. The parties acknowledge that payment of the cash consideration in lieu of issuing fractional shares of New PubCo Class A Common Stock was not separately bargained-for consideration but merely represents a mechanical rounding off for purposes of avoiding the expense and inconvenience that would otherwise be caused by the issuance of fractional shares of New PubCo Class A Common Stock. As soon as practicable after the determination of the amount of cash, if any, to be paid to holders of Eligible Shares in lieu of any fractional shares of New PubCo Class A Common Stock, the Exchange Agent shall make available such amounts to such holders of Eligible Shares, without interest, subject to and in accordance with this Section 3.5.

 

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(i) Withholding Taxes. Notwithstanding anything in this Agreement to the contrary, New PubCo, the Surviving Corporation, the Surviving Entity, the Isla Parties, and the Exchange Agent and each of their respective Affiliates shall be entitled to deduct and withhold, or cause to be deducted or withheld, from any amounts (including shares, warrants, options or other property) otherwise payable, issuable or transferable to any Person pursuant to this Agreement any amount required to be deducted and withheld with respect to the making of such payment, issuance or transfer under applicable Law. To the extent that such amounts are so properly deducted or withheld and paid over to the relevant Taxing Authority, such deducted or withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Person with respect to which such amounts would have been paid absent such deduction or withholding.

3.6 Contribution. As consideration for the Contribution, New PubCo shall be issued a number of OpCo Units equal to the number of shares of New PubCo Class A Common Stock issued and outstanding immediately after giving effect to the Transactions it being understood that the equity holders of Isla as of immediately prior to the Isla Merger Effective Time shall hold collectively a number of OpCo Units equal to the Isla Ownership Number. In connection therewith, the limited liability company agreement of OpCo shall be amended and restated in the form of the A&R OpCo LLCA and New PubCo shall become the managing member of OpCo in accordance with and pursuant to the A&R OpCo LLCA.

3.7 No Dissenters Rights. No dissenters’ or appraisal rights shall be available with respect to the Transactions.

3.8 Impact of Stock Splits, Etc. In the event of any change in the number of shares of Company Common Stock, or securities convertible or exchangeable into or exercisable for shares of Company Common Stock issued and outstanding after the date of this Agreement and prior to the Merger Effective Time by reason of any stock split, reverse stock split, stock dividend, subdivision, reclassification, recapitalization, combination, exchange of shares or the like, the Exchange Ratio shall be equitably adjusted to reflect the effect of such change and, as so adjusted, shall from and after the date of such event, be the Exchange Ratio, subject to further adjustment in accordance with this Section 3.8. Nothing in this Section 3.8 shall be construed to permit the Parties to take any action except to the extent consistent with, and not otherwise prohibited by, the terms of this Agreement.

3.9 Closing Deliverables.

(a) At the Closing, the Company shall deliver, or cause to be delivered, to the Isla Parties the following:

 

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(i) counterparts of each Ancillary Document to which the Company (or any of its Affiliates, officers or directors, or any of their respective Affiliates) is a party, in each case duly executed by each such Person;

(ii) a properly executed IRS Form W-9 dated as of the Closing Date; and

(iii) such other agreements, instruments and documents that are required by other terms of this Agreement to be executed or delivered at or prior to the Closing or as Isla may reasonably request to effect the transactions contemplated by this Agreement and the Ancillary Documents.

(b) At the Closing, the Isla Parties will deliver, or cause to be delivered, to the Company the following:

(i) counterparts of each Ancillary Document to which such Isla Party is a party, in each case duly executed by the applicable Isla Party; and

(ii) such other agreements, instruments and documents that are required by other terms of this Agreement to be executed or delivered at or prior to the Closing or as the Company may reasonably request to effect the transactions contemplated by this Agreement and the Ancillary Documents.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except (i) as set forth in the disclosure letter dated as of the date of this Agreement and delivered by the Company to the Isla Parties on or prior to the date of this Agreement (the “Company Disclosure Letter”), it being agreed that disclosure of any information in a particular section or subsection of the Company Disclosure Letter shall be deemed disclosure of such information with respect to any other section or subsection of this Agreement to which the relevance of such information is reasonably apparent on its face or (ii) as disclosed in the Company SEC Documents filed with or furnished to the SEC and available on Edgar since December 31, 2020 and prior to the date of this Agreement (excluding any disclosures set forth or referenced in any risk factor section or in any other section, in each case, to the extent they are forward-looking statements or cautionary, predictive or forward-looking in nature), the Company represents and warrants to the Isla Parties as follows:

4.1 Organization, Standing and Power. Each of the Company and its Subsidiaries is a corporation, partnership or limited liability company duly organized, as the case may be, validly existing and in good standing under the Laws of its jurisdiction of incorporation or organization, with all requisite entity power and authority to own, lease and operate its properties and to carry on its business as now being conducted, other than, in the case of the Company’s Subsidiaries, where the failure to be so organized or, in the case of the Company or its Subsidiaries, to have such power, authority or standing, has not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company and its Subsidiaries, taken as a whole (a “Company Material Adverse Effect”). Each of the Company and its Subsidiaries is duly qualified or licensed and in good standing to do business in each jurisdiction

 

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in which the business it is conducting, or the operation, ownership or leasing of its properties, makes such qualification or license necessary, other than where the failure to so qualify, license or be in good standing has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. The Company has heretofore made available to Isla complete and correct copies of its Organizational Documents and the Organizational Documents of each Subsidiary of the Company (each of which is set forth on Schedule 4.1 of the Company Disclosure Letter), each as amended prior to the execution of this Agreement, and each as made available to Isla is in full force and effect, and neither the Company nor any of its Subsidiaries is in violation of any of the provisions of such Organizational Documents.

4.2 Capital Structure.

(a) As of the date of this Agreement, the authorized capital stock of the Company consists of (i) 400,000,000 shares of Company Common Stock and (ii) 5,000,000 shares of preferred stock, par value $0.04 per share (“Company Preferred Stock” and, together with Company Common Stock, “Company Capital Stock”). At the close of business on June 4, 2021 (the “Measurement Date”): (A) 201,071,407 shares of Company Common Stock were issued and outstanding (not including shares held in treasury) and no shares of Company Preferred Stock were issued and outstanding; (B) the shares of Company Common Stock issued and outstanding include 2,552,727 shares of Company Common Stock underlying Company Restricted Stock Awards; (C) 4,735,311 shares of Company Common Stock were subject to Company PSU Awards (assuming that such Company PSU Awards were earned at target performance levels); (D) 579 shares of Company Common Stock were subject to Company Stock Option Awards; and (E) 3,020,283 shares of Company Common Stock remained available for issuance pursuant to the Company’s Third Amended and Restated 2009 Incentive Compensation Plan and no shares of Company Common Stock remained available for issuance pursuant to the Company’s 2005 Stock Incentive Plan.

(b) All outstanding shares of Company Capital Stock have been duly authorized and are validly issued, fully paid and non-assessable and are not subject to preemptive rights. All outstanding shares of Company Capital Stock have been issued and granted in compliance in all material respects with (i) applicable securities Laws and other applicable Law and (ii) all requirements set forth in applicable contracts (including a Company Equity Plan and the Company’s Organizational Documents). As of the close of business on the Measurement Date, except as set forth in this Section 4.2, Schedule 4.2 of the Company Disclosure Letter and in the Designated Stockholder Voting Agreements, there are no outstanding options, warrants or other rights to subscribe for, purchase or acquire from the Company or any of its Subsidiaries any capital stock of the Company or securities convertible into or exchangeable or exercisable for capital stock of the Company (which Schedule 4.2 of the Company Disclosure Letter shall also set forth, with respect to any such options, warrants or other such rights, the exercise, conversion, purchase, exchange or other similar price thereof). All outstanding shares of capital stock or other equity interests of the Subsidiaries of the Company are owned by the Company, or a direct or indirect wholly owned Subsidiary of the Company, free and clear of all Encumbrances and have been duly authorized, validly issued, fully paid and nonassessable. Except as set forth in this Section 4.2 or Schedule 4.2 of the Company Disclosure Letter, and except for

 

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changes since the Measurement Date resulting from the exercise of stock options outstanding at such date (and the issuance of shares of Company Common Stock thereunder, which were reserved for issuance as set forth in Section 4.2(a)), or stock grants or other awards granted in accordance with Section 6.1(b)(ii), there are outstanding: (A) no shares of Company Capital Stock, Voting Debt or other voting securities of the Company, (B) no securities of the Company or any Subsidiary of the Company convertible into or exchangeable or exercisable for shares of Company Capital Stock, Voting Debt or other voting securities of the Company and (C) no options, warrants, subscriptions, calls, rights (including preemptive and appreciation rights), commitments or agreements to which the Company or any Subsidiary of the Company is a party or by which it is bound in any case obligating the Company or any Subsidiary of the Company to issue, deliver, sell, purchase, redeem or acquire, or cause to be issued, delivered, sold, purchased, redeemed or acquired, additional shares of Company Capital Stock or any Voting Debt or other voting securities of the Company, or obligating the Company or any Subsidiary of the Company to grant, extend or enter into any such option, warrant, subscription, call, right, commitment or agreement. Other than the Designated Stockholder Voting Agreement, there are not any stockholder agreements, voting trusts or other agreements (it being agreed and acknowledged that the Company’s and its Subsidiaries’ Organizational Documents do not constitute such agreements) to which the Company or any of its Subsidiaries is a party or by which it is bound relating to the voting of any shares of capital stock or other equity interest of the Company or any of its Subsidiaries. No Subsidiary of the Company owns any shares of Company Common Stock or any other shares of Company Capital Stock. As of the date of this Agreement, neither the Company nor any of its Subsidiaries has any (1) equity securities or other similar equity interests in any Person, other than the Company’s and its Subsidiaries’ equity securities in the Company’s Subsidiaries or (2) obligations, whether contingent or otherwise, to consummate any material additional investment in any Person other than the Company, its Subsidiaries and its investments listed on Schedule 4.2 of the Company Disclosure Letter.

4.3 Authority; No Violations; Consents and Approvals.

(a) The Company has all requisite corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement by the Company and the consummation by the Company of the Merger have been duly authorized by all necessary corporate action on the part of the Company, subject with respect to the consummation of the Merger, to Company Stockholder Approval and the filing of the Certificate of Merger with the Office of the Secretary of State of the State of Texas and the Office of the Secretary of State of the State of Delaware. This Agreement has been duly executed and delivered by the Company and, assuming the due and valid execution of this Agreement by the Isla Parties, constitutes a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, subject, as to enforceability, to bankruptcy, insolvency, reorganization, moratorium and other Laws of general applicability relating to or affecting creditors’ rights and to general principles of equity regardless of whether such enforceability is considered in a Proceeding in equity or at Law (collectively, “Creditors Rights”). The Company Board, at a meeting duly called and held, has by unanimous vote (i) determined that this Agreement, the Merger and the other Transactions, are fair to, and

 

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in the best interests of, the Company and the holders of Company Common Stock, (ii) approved and declared advisable this Agreement, the Merger and the other Transactions, and (iii) resolved to recommend that the holders of Company Common Stock approve and adopt this Agreement, the Merger and the other Transactions (such recommendation described in clause (iii), the “Company Board Recommendation”). The Company Stockholder Approval is the only approval of the holders of any class or series of Company Capital Stock necessary to approve and adopt this Agreement and the Merger. No Company stockholders or other holders of equity interests of the Company have any dissenters’ rights or rights of appraisal relating to the Transactions or this Agreement or the Ancillary Documents to which the Company or any of its Subsidiaries is a party.

(b) Except as set forth on Schedule 4.3(b) of the Company Disclosure Letter, the execution, delivery and performance of this Agreement by the Company does not, and the consummation of the Transactions will not (with or without notice or lapse of time, or both) (i) contravene, conflict with or result in a violation of any provision of the Organizational Documents of the Company as in effect prior to the Merger (assuming that the Company Stockholder Approval is obtained) or the Organizational Documents of any of its Subsidiaries, (ii) with or without notice, lapse of time or both, result in a violation of, a termination (or right of termination) of or default under, the creation or acceleration of any obligation or the loss of a benefit under, or result in the creation of any Encumbrance upon any of the properties or assets of the Company or any of its Subsidiaries under, any provision of any loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, permit, franchise or license to which the Company or any of its Subsidiaries is a party or by which it or any of its Subsidiaries or its or their respective properties or assets are bound, or (iii) assuming the Consents referred to in Section 4.4 are duly and timely obtained or made and the Company Stockholder Approval has been obtained, contravene, conflict with or result in a violation of any Law applicable to the Company or any of its Subsidiaries or any of their respective properties or assets, other than, in the case of clauses (ii) and (iii), any such contraventions, conflicts, violations, defaults, acceleration, losses, or Encumbrances that has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. The Company is not party to any contract, arrangement or other commitment that would or would reasonably be expected to entitle any Person to appoint one or more directors to the New PubCo Board.

4.4 Consents. No Consent from any Governmental Entity is required to be obtained or made by the Company or any of its Subsidiaries in connection with the execution, delivery and performance of this Agreement by the Company or the consummation by the Company of the Transactions, except for: (a) the filing of a premerger notification report by the Company under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”), and the expiration or termination of the applicable waiting period with respect thereto; (b) the filing with the SEC of (i) a proxy statement (which shall be a joint proxy statement of the Company and prospectus of New PubCo) in definitive form (the “Proxy Statement/Prospectus”) relating to the meeting of the stockholders of the Company to be held for the purposes of obtaining the Company Stockholder Approval (including any postponement, adjournment or recess thereof, the “Company Stockholders Meeting”) and (ii) such reports under Section 13(a) of the Exchange Act, and such other compliance with and filings as may be required under the Exchange Act and the rules and regulations thereunder, as may be required in connection with this Agreement and the

 

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Transactions; (c) the filing of the Certificate of Merger with the Office of the Secretary of State of the State of Texas and the Office of the Secretary of State of the State of Delaware and the filing of the LLC Certificate of Merger with the Office of the Secretary of State of the State of Delaware; (d) filings with the NYSE American; (e) such filings and approvals as may be required by any applicable state securities or “blue sky” Laws or Takeover Laws; and (f) any such Consent the failure to obtain or make as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

4.5 SEC Documents; Financial Statements.

(a) Since January 1, 2020 (the “Applicable Date”), the Company has filed or furnished with the SEC, on a timely basis, all forms, reports, certifications, schedules, statements and documents required to be so filed or furnished under the Securities Act or the Exchange Act, respectively, (such forms, reports, certifications, schedules, statements and documents so filed or furnished by the Company, collectively, the “Company SEC Documents”). As of their respective dates (or, if amended prior to the date of this Agreement, as of the date of such amendment with respect to those amended disclosures), each of the Company SEC Documents complied in all material respects with the applicable requirements of the Securities Act, the Exchange Act and the Sarbanes-Oxley Act, as the case may be, and the rules and regulations of the SEC thereunder applicable to such Company SEC Documents, and none of the Company SEC Documents contained, when filed (or, if amended prior to the date of this Agreement, as of the date of such amendment with respect to those disclosures that are amended), any untrue statement of a material fact or omitted to state a material fact required to be stated or incorporated by reference therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

(b) The financial statements of (i) the Company included in the Company SEC Documents, and (ii) to the knowledge of the Company, any other Person included in the Company SEC Documents, in each case, including all notes and schedules thereto, (x) complied in all material respects, when filed (or if amended prior to the date of this Agreement, as of the date of such amendment) with the rules and regulations of the SEC with respect thereto, were prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto or, in the case of the unaudited statements, as permitted by Rule 10-01 of Regulation S-X of the SEC) and (y) fairly present in all material respects in accordance with applicable requirements of GAAP (subject, in the case of the unaudited statements, to normal year-end audit adjustments) the financial position of the Company and its consolidated subsidiaries (and, to the knowledge of the Company, any other such Person and its consolidated Subsidiaries) as of their respective dates and the results of operations and the cash flows of such Person and its consolidated Subsidiaries for the periods presented therein (subject to normal period-end adjustments). To the knowledge of the Company, the statement of revenues and direct operating expenses of the Grizzly Oil and Gas Properties included in the Company SEC Documents present fairly, in all material respects, the revenues and direct operating expenses of the Grizzly Oil and Gas Properties for the year ended December 31, 2020, in accordance with GAAP. For the avoidance of doubt, no representations or warranties are made by the Company pursuant to this Section 4.5(b) with respect to any financial statements or other financial information furnished by the Isla Parties and included in the Registration Statement or the Proxy Statement/Prospectus.

 

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(c) The unaudited pro forma financial information and the related notes thereto included in the Company SEC Documents have been prepared in accordance with the SEC’s rules and guidance with respect to pro forma financial information, and the assumptions underlying such pro forma financial information are reasonable and are set forth in the Company SEC Documents. For the avoidance of doubt, no representations or warranties are made by the Company pursuant to this Section 4.5(c) with respect to any unaudited pro forma financial information or related notes included in the Registration Statement or the Proxy Statement/Prospectus (except as contemplated by Section 4.8).

(d) The Company has established and maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Such disclosure controls and procedures are designed to ensure that information relating to the Company, including its consolidated Subsidiaries, required to be disclosed in the Company’s periodic and current reports under the Exchange Act is made known to the Company’s chief executive officer and its chief financial officer by others within those entities to allow timely decisions regarding required disclosures as required under the Exchange Act. The chief executive officer and chief financial officer of the Company have evaluated the effectiveness of the Company’s disclosure controls and procedures and, to the extent required by applicable Law, presented in any applicable Company SEC Document that is a report on Form 10-K or Form 10-Q, or any amendment thereto, his or her conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by such report or amendment based on such evaluation.

(e) The Company and its Subsidiaries have established and maintain a system of internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) which is designed to ensure reasonable assurance regarding the reliability of the Company’s financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with GAAP. The Company has disclosed, based on its most recent evaluation of the Company’s internal control over financial reporting prior to the date hereof, to the Company’s auditors and audit committee (i) any significant deficiencies and material weaknesses in the design or operation of the Company’s internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

(f) Since the Applicable Date, (i) neither the Company nor any of its Subsidiaries nor, to the knowledge of the Company, any director, officer, employee, auditor, accountant or representative of the Company or any of its Subsidiaries has received or otherwise had or obtained knowledge of any material complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of the Company or any of its Subsidiaries or their respective

 

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internal accounting controls, including any material complaint, allegation, assertion or claim that the Company or any of its Subsidiaries has engaged in questionable accounting or auditing practices and (ii) no attorney representing the Company or any of its Subsidiaries, whether or not employed by the Company or any of its Subsidiaries, has reported evidence of a material violation of securities Laws, breach of fiduciary duty or similar violation by the Company or any of its Subsidiaries or any of their respective officers, directors, employees or agents to the Company Board or any committee thereof or to any director or officer of the Company or any of its Subsidiaries.

(g) As of the date of this Agreement, there are no outstanding or unresolved comments in the comment letters received from the SEC staff with respect to the Company SEC Documents. To the knowledge of the Company, none of the Company SEC Documents is subject to ongoing review or outstanding SEC comment or investigation.

(h) Neither the Company nor any of its Subsidiaries is a party to, or has any commitment to become a party to, any joint venture, off balance sheet partnership or any similar contract or arrangement (including any contract or arrangement relating to any transaction or relationship between or among the Company and any of its Subsidiaries, on the one hand, and any unconsolidated Affiliate, including any structured finance, special purpose or limited purpose entity or Person, on the other hand, or any “off balance sheet arrangements” (as defined in Item 303(a) of Regulation S-K under the Exchange Act)), where the result, purpose or intended effect of such contract or arrangement is to avoid disclosure of any material transaction involving, or material liabilities of, the Company or any of its Subsidiaries in the Company’s or such Subsidiary’s published financial statements or other Company SEC Documents.

(i) No Subsidiary of the Company is required to file any form, report, schedule, statement or other document with the SEC.

4.6 Absence of Certain Changes or Events.

(a) Since December 31, 2020, through the date of this Agreement, there has not been any event, change, effect or development that, individually or in the aggregate, has had or would reasonably be expected to have a Company Material Adverse Effect.

(b) From December 31, 2020 through the date of this Agreement, except as set forth in Schedule 4.6 of the Company Disclosure Letter:

(i) the Company and its Subsidiaries have conducted their business in the ordinary course of business consistent with past practice in all material respects, except for any commercially reasonable actions taken, or omitted to be taken, by the Company or any of its Subsidiaries in connection with COVID-19 or any COVID-19 Measures;

(ii) there has not been any material damage, destruction or other casualty loss with respect to any material asset or property owned, leased or otherwise used by the Company or any of its Subsidiaries, including the Oil and Gas Properties of the Company and its Subsidiaries, whether or not covered by insurance; and

 

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(iii) neither the Company nor any of its Subsidiaries has taken, or agreed, committed, arranged, authorized or entered into any understanding to take, any action that, if taken after the date of this Agreement, would (without Isla’s prior written consent) have constituted a breach of any of the covenants set forth in Section 6.1(b)(i), (iv), (v), (vi), (vii), (viii), (xi), (xiii), (xiv), (xv), or (xvii) (solely as it relates to the foregoing clauses (i), (iv), (v), (vi), (vii), (viii), (xi), (xiii), (xiv) or (xv)).

4.7 No Undisclosed Material Liabilities. There are no liabilities of the Company or any of its Subsidiaries of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise, other than: (a) liabilities adequately provided for on the balance sheet of the Company dated as of December 31, 2020 (including the notes thereto) contained in the Company’s Annual Report on Form 10-K for the twelve months ended December 31, 2020; (b) liabilities incurred in the ordinary course of business consistent with past practice subsequent to December 31, 2020; (c) liabilities which individually, and in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect, (d) liabilities incurred after the date of this Agreement permitted to be incurred pursuant to Section 6.1(b)(xi); and (e) liabilities incurred in connection with the Transactions.

4.8 Information Supplied. None of the information supplied or to be supplied by the Company for inclusion or incorporation by reference in (a) the registration statement on Form S-4 to be filed with the SEC by New PubCo pursuant to which shares of New PubCo Class A Common Stock issuable in the Merger will be registered with the SEC, and which will include the Proxy Statement/Prospectus (including any amendments or supplements, the “Registration Statement”), shall, at the time the Registration Statement becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they are made, not misleading or (b) the Proxy Statement/Prospectus will, at the date it is first mailed to stockholders of the Company and at the time of the Company Stockholders Meeting contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. Subject to the accuracy of the first sentence of Section 5.8, the Proxy Statement/Prospectus will comply as to form in all material respects with the provisions of the Exchange Act and the rules and regulations thereunder; provided, however, that no representation is made by the Company with respect to statements made therein based on information supplied by the Isla Parties specifically for inclusion or incorporation by reference therein.

 

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4.9 Company Permits; Compliance with Applicable Law.

(a) The Company and its Subsidiaries hold and at all times since the Applicable Date held all permits, licenses, certifications, registrations, consents, authorizations, variances, exemptions, orders, franchises and approvals of all Governmental Entities necessary to own, lease and operate their respective properties and assets and for the lawful conduct of their respective businesses as they were or are now being conducted, as applicable (collectively, the “Company Permits”), and have paid all fees and assessments due and payable in connection therewith, except where the failure to so hold any such Company Permit or make such a payment has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. All of the Company Permits are in full force and effect and no suspension or cancellation of any of the Company Permits is pending or, to the knowledge of the Company, threatened, and the Company and its Subsidiaries are in compliance with the terms of the Company Permits, except where the failure to be in full force and effect or failure to so comply has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

(b) The businesses of the Company and its Subsidiaries are not currently being conducted, and at no time since the Applicable Date have been conducted, in violation of any applicable Law, except for violations that have not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. To the knowledge of the Company, no investigation or review by any Governmental Entity with respect to the Company or any of its Subsidiaries is pending or threatened, other than those the outcome of which has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

4.10 Compensation; Benefits.

(a) Set forth on Schedule 4.10(a) of the Company Disclosure Letter is a list of all material Company Plans.

(b) True, correct and complete copies of each of the Company Plans and the related trust documents or other funding arrangements and the most recent favorable determination, advisory or opinion letters, if applicable, have been furnished or made available to Isla or its Representatives, along with, to the extent applicable, the most recent report filed on Form 5500 (with all schedules and attachments), the most recent summary plan description (with all summaries of material modifications thereto), the most recent financial statements and actuarial or other valuation reports, and all material non-routine correspondence to or from any Governmental Entity received in the last three years.

(c) Each Company Plan has been established, administered, operated, funded and maintained in material compliance with its terms and in compliance in all material respects with all applicable Laws, including ERISA and the Code.

(d) There are no material Proceedings pending (other than routine claims for benefits) or, to the knowledge of the Company, threatened against, or with respect to, any of the Company Plans.

(e) All material contributions required to be made by the Company or any of its Subsidiaries to the Company Plans pursuant to their terms or applicable Law have been timely made.

 

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(f) Each Company Plan that is intended to be qualified under Section 401(a) of the Code has been determined by the Internal Revenue Service to be qualified under Section 401(a) of the Code and has received a favorable determination letter (or in the case of a master or prototype plan, a favorable opinion or advisory letter) as to its qualification under the Code and nothing has occurred, whether by action or failure to act, that could reasonably be expected to adversely affect the qualification of such Company Plan. With respect to each Company Plan, none of the Company or any of its Subsidiaries, or, to the knowledge of the Company, any other Person, has engaged in a transaction in connection with which the Company or any of its Subsidiaries reasonably could be subject to either a civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a Tax imposed pursuant to Section 4975 or 4976 of the Code in an amount that would be material. The Company and its Subsidiaries do not have any material liability (whether or not assessed) under Sections 4980B, 4980D, 4980H, 6721 or 6722 of the Code.

(g) None of the Company, any of its Subsidiaries or any member of their respective Aggregated Groups sponsors, maintains, contributes to or has an obligation to contribute to (or has in the last six years sponsored, maintained, contributed to or had an obligation to contribute to), or has any current or contingent liability or obligation under or with respect to, and no Company Plan is: (i) a “defined benefit plan” (as defined in Section 3(35) of ERISA) or a plan that is or was subject to Title IV of ERISA, Section 302 of ERISA, or Section 412 or 4971 of the Code or (ii) a “multiple employer welfare arrangement” (as defined in Section 3(40) of ERISA), a “multiple employer plan” (as defined in Section 413(c) of the Code) or a “multiemployer plan” (within the meaning of Section 3(37) of ERISA).

(h) Other than continuation coverage pursuant to Section 4980B of the Code or any similar state Law, no Company Plan provides any retiree or post-employment or post-service medical or life insurance benefits to any Person, and none of the Company or any of its Subsidiaries has any obligation to provide such benefits.

(i) Except as set forth on Schedule 4.10(i) of the Company Disclosure Letter, neither the execution and delivery of this Agreement nor the consummation of the Merger could, either alone or in combination with another event, (i) entitle any current or former Company Employee, director or other service provider of the Company or any of its Subsidiaries to severance pay, any increase in severance pay or any other payment; (ii) accelerate the time of payment or vesting, or increase the amount of compensation due to any current or former Company Employee, director or other service provider of the Company or any of its Subsidiaries; (iii) directly or indirectly cause or require the Company to transfer or set aside any amount of assets to fund any benefits under any Company Plan; (iv) otherwise give rise to any material liability under any Company Plan, limit or restrict the right to amend, terminate or transfer the assets of any Company Plan on or following the Merger Effective Time; or (v) result in any payment (whether in cash or property or the vesting of property) to any “disqualified individual” (as such term is defined in Treasury Regulation Section 1.280G-1) of the Company or any of its Subsidiaries that could, individually or in combination with any other such payment, constitute an “excess parachute payment” (as defined in Section 280G(b)(1) of the Code).

 

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(j) Neither the Company nor any Subsidiary has any obligation to provide, and no Company Plan or other agreement provides any individual with the right to, a gross up, indemnification, reimbursement or other payment for any excise or additional Taxes, interest or penalties incurred pursuant to Section 409A, Section 280G or Section 4999 of the Code.

(k) Each Company Plan or any other agreement, arrangement, or plan of the Company or any of its Subsidiaries that constitutes, in any part, a “nonqualified deferred compensation plan” (within the meaning of Section 409A of the Code) has been operated and maintained in operational and documentary compliance with Section 409A of the Code and applicable guidance thereunder.

(l) No Company Plan is maintained outside the jurisdiction of the United States or covers any Company Employees or other service providers who reside or perform services primarily outside of the United States.

4.11 Labor Matters.

(a) (i) Neither the Company nor any of its Subsidiaries is a party to or bound by any collective bargaining agreement or other agreement with, and no employee of the Company or any of its Subsidiaries is represented by, any labor union, works council or other similar representative of employees, (ii) there is no pending or, to the knowledge of the Company, threatened union representation petition involving employees of the Company or any of its Subsidiaries, and (iii) the Company does not have knowledge of any activity or Proceeding of any labor organization (or representative thereof) or employee group (or representative thereof) to organize any such employees since the Applicable Date.

(b) There is, and since the Applicable Date there has been, no strike, labor dispute, slowdown, work stoppage or lockout or other labor disturbance pending, or, to the knowledge of the Company, threatened, against or involving the Company or any of its Subsidiaries.

(c) Except as has not had, and would not be reasonably expected to have, individually or in the aggregate, a Company Material Adverse Effect, the Company and its Subsidiaries are, and since January 1, 2019 have been, in compliance with all applicable Laws respecting labor, employment and employment practices (including all such Laws regarding wages and hours, classification of employees and contractors, anti-discrimination, anti-retaliation, recordkeeping, employee leave, Tax withholding and reporting, immigration and employee safety), and there are no material Proceedings pending or, to the knowledge of the Company, threatened against the Company or any of its Subsidiaries, by or on behalf of any applicant for employment, any current or former employee or any class of the foregoing, relating to any of the foregoing applicable Laws, including any such Proceedings alleging breach of any express or implied contract of employment, wrongful termination of employment, failure to pay required wages, failure to satisfy employment-related leave or recordkeeping requirements, or alleging any other discriminatory, wrongful or tortious conduct in connection with the employment

 

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relationship. Since January 1, 2019, neither the Company nor any of its Subsidiaries has received any written notice of the intent of the Equal Employment Opportunity Commission, the National Labor Relations Board, the Department of Labor or any other Governmental Entity responsible for the enforcement of labor or employment Laws to conduct any investigation with respect to the Company or any of its Subsidiaries, in each case, which investigation would be reasonably expected to have, individually or in the aggregate, a Company Material Adverse Effect.

4.12 Taxes.

(a) All U.S. federal income and other material Tax Returns required to be filed by the Company or any of its Subsidiaries have been duly and timely filed (taking into account extensions of time for filing), and all such Tax Returns are true, correct and complete in all material respects. All material Taxes that are due and payable by the Company or any of its Subsidiaries have been timely paid in full.

(b) There are no Encumbrances for material Taxes on any of the assets of the Company or any of its Subsidiaries, except for Permitted Encumbrances for Taxes not yet delinquent.

(c) Neither the Company nor any of its Subsidiaries has granted any currently effective extension or waiver of the limitation period with respect to the assessment or collection of any Tax.

(d) There is no outstanding claim, assessment, deficiency, audit, examination, investigation or litigation in respect of a material amount of Taxes or material Tax matters against the Company or any of its Subsidiaries that has been asserted in writing by any Governmental Entity. There are no Proceedings with respect to Taxes pending or, to the knowledge of the Company, proposed or threatened against the Company and its Subsidiaries or with respect to the assets of the Company and its Subsidiaries.

(e) No written claim has been made by any Taxing Authority in a jurisdiction where the Company or any of its Subsidiaries does not currently file a Tax Return that it is or may be subject to any material Tax in such jurisdiction, nor has any such assertion been, to the knowledge of the Company, proposed or threatened with respect to the Company or any of its Subsidiaries.

(f) Neither the Company nor any of its Subsidiaries has been a member of an affiliated group filing a consolidated, combined or unitary U.S. federal, state, local or non-U.S. income Tax Return (other than a group of which the Company is the common parent). Neither the Company nor any of its Subsidiaries has any material liability for Taxes of any Person (other than Taxes of the Company or any of its Subsidiaries) under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local or non-U.S. Law), as a transferee or successor, by contract (other than pursuant to any Tax sharing or indemnification provisions contained in any agreement entered into in the ordinary course of business and not primarily relating to Tax (e.g., leases, credit agreements or other commercial agreements)), or otherwise.

 

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(g) Neither the Company nor any of its Subsidiaries is a party to any material Tax allocation, sharing or indemnity contract or arrangement (other than pursuant to any Tax sharing or indemnification provisions contained in any agreement entered into in the ordinary course of business and not primarily relating to Tax (e.g., leases, credit agreements or other commercial agreements)).

(h) Neither the Company nor any of its Subsidiaries has participated, or is currently participating, in a “listed transaction” within the meaning of Treasury Regulations Section 1.6011-4(b)(2).

(i) Neither the Company nor any of its Subsidiaries has been either a “distributing corporation” or a “controlled corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock qualifying or intended to qualify for tax-free treatment, in whole or in part, under Section 355 of the Code (i) in the two years prior to the date of this Agreement or (ii) as part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) in conjunction with the Transactions.

(j) Neither the Company nor any of its Subsidiaries will be required to include any material item of income in, or to exclude any material item of deduction from, taxable income in any taxable period (or portion thereof) ending after the Closing Date as a result of any (i) adjustment under Section 481(a) or Section 482 of the Code (or any corresponding or similar provision of state, local or non-U.S. income Tax Law) by reason of a change in method of accounting or otherwise prior to the Closing, (ii) closing agreement within the meaning of Section 7121 of the Code (or any corresponding or similar provision of state, local or non-U.S. income Tax Law), installment sale or open transaction disposition made on or prior to the Closing Date, (iii) prepaid amount received on or prior to the Closing Date outside the ordinary course of business, or (iv) intercompany transaction or excess loss account described in the Treasury Regulations under Section 1502 of the Code (or any corresponding or similar provision of state, local or non-U.S. Tax Law).

(k) The Company is, and has been since formation, properly classified for U.S. federal income tax purposes as a corporation. Except as set forth on Schedule 4.12(k) of the Company Disclosure Letter, each of the Company’s Subsidiaries is, and has been since its formation, properly classified for U.S. federal income tax purposes as either a partnership or an entity disregarded as separate from its owner.

(l) The Company is not an “investment company” within the meaning of Section 368(a)(2)(F)(iii) of the Code.

4.13 Litigation. There is no (i) Proceeding pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries, any of their respective properties or assets, or any present or former officer, director or employee of the Company or any of its Subsidiaries in such individual’s capacity as such, or (ii) outstanding judgment, order, injunction, rule or decree of any Governmental Entity in each case other than as would not (if, with respect to clause (i), determined adversely to the Company or its applicable Subsidiaries), individually or in the aggregate, have or reasonably be expected to have a Company Material Adverse Effect.

 

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4.14 Intellectual Property.

(a) The Company and its Subsidiaries own or have the right to use all Intellectual Property used in or necessary for the operation of the businesses of each of the Company and its Subsidiaries as presently conducted (collectively, the “Company Intellectual Property”) free and clear of all Encumbrances except for Permitted Encumbrances, except where the failure to own or have the right to use such properties has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

(b) To the knowledge of the Company, the use of the Company’s Intellectual Property by the Company and its Subsidiaries in the operation of the business of each of the Company and its Subsidiaries as presently conducted does not infringe, misappropriate or otherwise violate any Intellectual Property of any other Person, except for such matters that have not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

(c) The Company and its Subsidiaries have taken reasonable measures consistent with prudent industry practices to protect the confidentiality of trade secrets used in the businesses of each of the Company and its Subsidiaries as presently conducted, except where failure to do so has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

(d) Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, the IT Assets owned, used, or held for use by the Company or any of its Subsidiaries (i) are sufficient for the current needs of the businesses of the Company and its Subsidiaries; (ii) have not malfunctioned or failed within the past three years and (iii) to the knowledge of the Company, are free from any malicious code.

(e) Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect (i) the Company and each of its Subsidiaries have used commercially reasonable measures to ensure the confidentiality, privacy and security of Personal Information collected or held for use by the Company or its Subsidiaries; and (ii) to the knowledge of the Company, there has been no unauthorized access to or unauthorized use of any IT Assets, Personal Information or trade secrets owned or held for use by the Company or its Subsidiaries.

4.15 Real Property. Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect and with respect to clauses (a) and (b), except with respect to any of Company’s Oil and Gas Properties, (a) the Company and its Subsidiaries have good, valid and defensible title to all real property owned by the Company or any of its Subsidiaries (collectively, the “Company Owned Real Property”) and valid leasehold estates in all material real property leased, subleased, licensed or otherwise

 

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occupied (whether as tenant, subtenant or pursuant to other occupancy arrangements) by the Company or any Subsidiary of the Company (collectively, including the improvements thereon, the “Company Leased Real Property”) free and clear of all Encumbrances, except Permitted Encumbrances, (b) each agreement under which the Company or any Subsidiary of the Company is the landlord, sublandlord, tenant, subtenant, or occupant with respect to the Company Leased Real Property (each, a “Company Real Property Lease”) is in full force and effect and is valid and enforceable against the Company or such Subsidiary and, to the knowledge of the Company, the other parties thereto, in accordance with its terms, subject, as to enforceability, to Creditors’ Rights, and neither the Company nor any of its Subsidiaries, or to the knowledge of the Company, any other party thereto, has received written notice of any default under any Company Real Property Lease, and (c) as of the date of this Agreement, there does not exist any pending or, to the knowledge of the Company, threatened, condemnation or eminent domain Proceedings that affect any of the Company’s Oil and Gas Properties, the Company Owned Real Property or the Company Leased Real Property.

4.16 Rights-of-Way. Each of the Company and its Subsidiaries has such Consents, easements, rights-of-way, permits and licenses from each Person (collectively, the “Company Rights-of-Way”) as are sufficient to conduct its business as presently conducted in the ordinary course, except for such Company Rights-of-Way the absence of which has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. Each of the Company and its Subsidiaries has fulfilled and performed all its material obligations with respect to such Company Rights-of-Way and conduct their business in a manner that does not violate any of the Company Rights-of-Way and no event has occurred that allows, or after notice or lapse of time would allow, revocation or termination thereof or would result in any impairment of the rights of the holder of any such Company Rights-of-Way, except for such revocations, terminations and impairments that have not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. All pipelines operated by the Company and its Subsidiaries are located on or are subject to valid Company Rights-of-Way, or are located on real property owned or leased by the Company, and there are no gaps (including any gap arising as a result of any breach by the Company or any of its Subsidiaries of the terms of any Company Rights-of-Way) in the Company Rights-of-Way other than gaps that have not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

4.17 Oil and Gas Matters.

(a) Except as has not had and would not reasonably be expected to have a Company Material Adverse Effect, and except for property (i) sold or otherwise disposed of in the ordinary course of business since the date of (A) the reserve report prepared by William M. Cobb & Associates, Inc. (in such capacity, the “Company Independent Petroleum Engineers”) relating to the Oil and Gas Properties referred to therein as of December 31, 2020, as updated and supplemented to reflect the acquisition of Michael Merger Sub LLC (successor to Mid-Con Energy Partners, LP) and its subsidiaries (collectively, “Mid-Con”) and the Oil and Gas Properties held by Mid-Con as of December 31, 2020 (the “Independent Company Reserve Report”) and (B) the reserve report prepared by Grizzly relating to and covering the Oil and Gas Properties acquired by the Company and/or its Subsidiaries from Grizzly Operating, LLC (“Grizzly” and such Oil and Gas

 

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Properties, the “Grizzly Oil and Gas Properties”), with such reserve estimates being as of December 31, 2020 (the “Grizzly Reserve Report” and collectively with the Independent Company Reserve Report, the “Company Reserve Reports”), (ii) reflected in the Company Reserve Reports or in the Company SEC Documents as having been sold or otherwise disposed of by the Company and/or its Subsidiaries (other than permitted sales or dispositions after the date hereof in accordance with Section 6.1(b)(v)), or (iii) Oil and Gas Leases that have expired or terminated in accordance with the terms thereof on a date on or after the date hereof and as set forth on Schedule 4.17(a) of the Company Disclosure Letter, the Company and its Subsidiaries have good and defensible title to all Oil and Gas Properties forming the basis for the reserves reflected in the Company Reserve Reports and in each case as attributable to interests owned by the Company and its Subsidiaries, free and clear of any Encumbrances, except for Permitted Encumbrances. The Company Reserve Reports reflect and include all Oil and Gas Properties held or owned by the Company and/or its Subsidiaries after giving effect to the acquisition of Mid-Con and the Grizzly Oil and Gas Properties. For purposes of the foregoing sentence, “good and defensible title” means that the Company’s or one or more of its Subsidiaries’, as applicable, record and/or beneficial title (as of the date hereof and as of the Closing) to each of the Oil and Gas Properties held or owned by them (or purported to be held or owned by them) (1) entitles the Company (or one or more of its Subsidiaries, as applicable) to receive (after satisfaction of all Production Burdens applicable thereto), not less than the net revenue interest share shown in the Company Reserve Reports of all Hydrocarbons produced from such Oil and Gas Properties throughout the productive life of such Oil and Gas Properties except, in each case, for (x) any decreases in connection with those operations in which the Company or any of its Subsidiaries may elect after the date hereof to be a non-consenting co-owner, (y) any decreases resulting from the establishment or amendment, after the date hereof, of pools or units, and (z) decreases required to allow other working interest owners to make up past underproduction or pipelines to make up past under deliveries, (2) obligates the Company (or one or more of its Subsidiaries, as applicable) to bear a percentage of the costs and expenses for the maintenance and development of, and operations relating to, such Oil and Gas Properties, of not greater than the working interest shown on the Company Reserve Reports for such Oil and Gas Properties (other than any positive difference between such actual percentage and the applicable working interest shown on the Company Reserve Reports for such Oil and Gas Properties that are accompanied by a proportionate (or greater) increase in the net revenue interest in such Oil and Gas Properties) and (3) is free and clear of all Encumbrances (other than Permitted Encumbrances).

(b) Except for any such matters that, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect, the factual, non-interpretive data supplied by (i) the Company to the Company’s Independent Petroleum Engineers relating to the Company interests referred to in the Independent Company Reserve Report, by or on behalf of the Company and its Subsidiaries that was material to such firm’s estimates of proved oil and gas reserves attributable to the Oil and Gas Properties of the Company and its Subsidiaries in connection with the preparation of the Independent Company Reserve Report was, as of the time provided, accurate and (ii) Grizzly relating to the Company interests referred to in the Grizzly Reserve Report, by or on behalf of Grizzly and its affiliates that was material to

 

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Grizzly’s estimates of proved oil and gas reserves attributable to the Grizzly Oil and Gas Properties in connection with the preparation of the Grizzly Reserve Report was, as of the time provided, accurate. Except for any such matters that, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect, the oil and gas reserve estimates of the Company and its Subsidiaries (A) set forth in the Independent Company Reserve Report are derived from reports that have been prepared by the Company Independent Petroleum Engineers, and such reserve estimates fairly reflect the oil and gas reserves of the Company (other than the oil and gas reserves attributable to the Grizzly Oil and Gas Properties) at the dates indicated therein and are in accordance with SEC guidelines applicable thereto applied on a consistent basis throughout the periods involved and (B) set forth in the Grizzly Reserve Report are derived from reports that have been prepared by or on behalf of Grizzly, and such reserve estimates fairly reflect the oil and gas reserves of the Grizzly Oil and Gas Properties at the dates indicated therein and are in accordance with SEC guidelines applicable thereto applied on a consistent basis throughout the periods involved. Except for changes generally affecting the oil and gas exploration, development and production industry (including changes in commodity prices) and normal depletion by production, there has been no change in respect of the matters addressed in the Company Reserve Reports that, individually or in the aggregate, has had or would reasonably be expected to have a Company Material Adverse Effect.

(c) Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, (i) all rentals, shut-ins and similar payments owed to any Person or individual under (or otherwise with respect to) any Oil and Gas Leases have been properly and timely paid, (ii) all royalties, minimum royalties, overriding royalties and other Production Burdens with respect to any Oil and Gas Properties owned or held by the Company or any of its Subsidiaries have been timely and properly paid or contested in good faith in the ordinary course of business (other than any such Production Burdens (x) as are being currently paid prior to delinquency in the ordinary course of business, (y) which are being held in suspense by the Company or its Subsidiaries in accordance with applicable Law, or (z) the amount or validity of which is being contested in good faith by appropriate proceedings and for which appropriate reserves have been established) and (iii) none of the Company or any of its Subsidiaries (and, to the Company’s knowledge, no third party operator) has violated any provision of, or taken or failed to take any act that, with or without notice, lapse of time, or both, would constitute a default under the provisions of any Oil and Gas Lease (or entitle the lessor thereunder to cancel or terminate such Oil and Gas Lease) included in the Oil and Gas Properties owned or held by the Company or any of its Subsidiaries.

(d) Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, all proceeds from the sale of Hydrocarbons produced from the Oil and Gas Properties of the Company and its Subsidiaries are being received by them in a timely manner and are not being held in suspense (by the Company, any of its Subsidiaries, any third party operator thereof or any other Person) for any reason other than awaiting preparation and approval of division order title opinions for recently drilled Wells.

 

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(e) All of the Wells located on the Oil and Gas Leases of the Company and its Subsidiaries or otherwise associated with an Oil and Gas Property of the Company or its Subsidiaries have been drilled, completed and operated within the limits permitted by the applicable Oil and Gas Lease(s), the applicable contracts entered into by the Company or any of its Subsidiaries related to such Wells and in accordance with applicable Law and the Company Permits, and all drilling and completion (and plugging and abandonment) of such Wells and all related development, production and other operations have been conducted in compliance with all such applicable Oil and Gas Lease(s), contracts and applicable Law and the Company Permits except, in each case, as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

(f) Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, none of the Oil and Gas Properties of the Company or its Subsidiaries is subject to any preferential purchase, consent or similar right that would become operative as a result of the Transactions.

(g) Following the consummation of the Transactions, all bonds or other financial assurances held by the Company or its Subsidiaries or issued for the benefit of any thereof that are required for the Company or such Subsidiaries to own and operate the Oil and Gas Properties that it currently owns and operates will remain in place for the benefit of the Surviving Corporation or the Surviving Entity.

4.18 Environmental Matters.

(a) The Company and its Subsidiaries and their respective operations and assets are, and for the past three years have been, in compliance in all material respects with Environmental Laws, which compliance includes, and for the past three years has included, obtaining, maintaining and complying in all material respects with all of the Company’s Permits required under Environmental Law for their respective operations and occupancy of any real property.

(b) The Company and its Subsidiaries are not subject to any pending or, to the Company’s knowledge, threatened material Proceedings under Environmental Laws. Neither the Company nor any of its Subsidiaries nor any of their respective properties or assets is subject to any outstanding material judgment, order, injunction, rule or decree of any Governmental Entity issued under or in relation to Environmental Law.

(c) There have been no Releases of Hazardous Materials by the Company or its Subsidiaries or, to the Company’s knowledge, any other Person at any property currently or, to the Company’s knowledge, formerly owned, operated or otherwise used by the Company or any of its Subsidiaries, or, to the Company’s knowledge, by any predecessors of the Company or any Subsidiary of the Company, which Releases have resulted or would result in material liability to the Company or its Subsidiaries under Environmental Law, and, as of the date of this Agreement, neither the Company nor any of its Subsidiaries has received any written notice, the subject matter of which is unresolved, asserting a material violation of, or material liability or obligation under, any Environmental Laws, including

 

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with respect to the investigation, remediation, removal, or monitoring of the Release or threatened Release of any Hazardous Materials at or from any property currently or formerly owned, operated, or otherwise used by the Company or its Subsidiaries, or at or from any offsite location where Hazardous Materials from the Company’s or its Subsidiaries’ operations have been sent for treatment, disposal, storage or handling.

(d) The Company and its Subsidiaries have not (i) generated, treated, stored, arranged for the disposal of, manufactured, distributed, or, to the Company’s knowledge, exposed any Person to any Hazardous Materials, so as to result in material liability to the Company or its Subsidiaries under Environmental Law, or (ii) assumed, provided an indemnity (excluding reasonable customary indemnities in master services agreements) with respect to or otherwise become subject to any such material outstanding liability of any other Person under Environmental Laws.

(e) There have been no written reports of non-privileged environmental investigations, studies, site assessments, reviews, or audits that are in the possession or reasonable control of the Company or its Subsidiaries addressing material or potentially material environmental matters with respect to any of their operations or any property owned, operated or otherwise used by any of them that have not been delivered or otherwise made available to Isla.

Except for the representations and warranties contained in Section 4.5, Section 4.6 and Section 4.7, this Section 4.18 contains the sole and exclusive representations and warranties of the Company with respect to Environmental Laws and Hazardous Materials.

4.19 Material Contracts.

(a) Schedule 4.19(a) of the Company Disclosure Letter sets forth a true and complete list, as of the date of this Agreement, of the following to which the Company or any of its Subsidiaries is party or by which any of their respective assets are bound:

(i) each “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K under the Exchange Act);

(ii) each contract that provides for the acquisition, disposition, license, use, distribution or outsourcing of assets, services, rights or properties (other than Oil and Gas Properties) with respect to which the Company reasonably expects that the Company and its Subsidiaries will make annual payments in excess of $2,500,000 or aggregate payments in excess of $5,000,000;

(iii) each contract relating to Indebtedness or the deferred purchase price of property by the Company or any of its Subsidiaries (whether incurred, assumed, guaranteed or secured by any asset), other than agreements solely between or among the Company and its Subsidiaries or those involving an amount of Indebtedness or deferred purchase price, individually or in the aggregate, of no more than $10,000,000;

 

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(iv) any acquisition or divestiture contract that contains “earn out” or other contingent payment obligations, or remaining indemnity or similar obligations (other than asset retirement obligations, plugging and abandonment obligations and other reserves of the Company set forth in the Company Reserve Reports), that would reasonably be expected to result in aggregate payments in excess of $10,000,000;

(v) each contract for lease of personal property or real property (other than Oil and Gas Properties) involving payments in excess of $2,500,000 in any calendar year or aggregate payments in excess of $5,000,000 that are not terminable without penalty or other liability to the Company (other than any ongoing obligation pursuant to such contract that is not caused by any such termination) within 60 days, other than contracts related to drilling rigs;

(vi) each contract that is a non-competition contract or other contract that (A) purports to limit in any material respect either the type of business in which the Company or its Subsidiaries (or, after the Merger Effective Time, New PubCo or its Subsidiaries) may engage or the manner or locations in which any of them may so engage in any business (including any contract containing any area of mutual interest, joint bidding area, joint acquisition area, or non-compete or similar type of provision), (B) could require the disposition of any material assets or line of business of the Company or its Subsidiaries (or, after the Merger Effective Time, New PubCo or its Subsidiaries) or (C) prohibits or limits the rights of the Company or any of its Subsidiaries to make, sell or distribute any products or services, or use, transfer or distribute, or enforce any of their rights with respect to, any of their material assets;

(vii) each contract involving the pending acquisition or sale of (or option to purchase or sell), or swap or exchange of, any Oil and Gas Properties of the Company or its Subsidiaries for consideration in excess of $10,000,000, other than contracts involving the acquisition or sale of (or option to purchase or sell) Hydrocarbons in the ordinary course of business;

(viii) each contract for any Derivative Transaction;

(ix) each collective bargaining agreement or other labor-related contract with a labor union, works council, or other labor organization;

(x) each material partnership, joint venture or limited liability company agreement, other than any customary joint operating agreements, unit agreements or participation agreements affecting the Oil and Gas Properties of the Company;

(xi) each joint development agreement, exploration agreement, participation, farmout, farmin or program agreement or similar contract requiring the Company or any of its Subsidiaries to make expenditures that would reasonably be expected to be in excess of $5,000,000 in the aggregate during the 12-month period following the date of this Agreement, other than customary joint operating agreements and continuous development obligations under Oil and Gas Leases;

 

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(xii) each agreement under which the Company or any of its Subsidiaries has advanced or loaned any amount of money to any of its officers, directors, employees or consultants, in each case with a principal amount in excess of $120,000;

(xiii) any Hydrocarbon purchase and sale, marketing, transportation, gathering, processing, storage or similar contract that is not terminable without penalty upon 30 days’ notice or less and that (A) involves the transportation, gathering, processing, purchase, sale or storage of more than 25 MMcf of gaseous Hydrocarbons per day, or 2,000 barrels of liquid Hydrocarbons per day, or (B) provides for an acreage dedication in excess of 2,500 gross surface acres, or (C) that could reasonably be expected to result in the payment by the Company or any of its Subsidiaries of an amount in excess of $5,000,000 over the remaining term of such agreement;

(xiv) any contract not entered into in the ordinary course of business that is a water rights agreement or disposal agreement or relates to the sourcing, transportation or disposal of water (including brine water and flowback water) produced from, or used in connection with the Oil and Gas Properties of the Company and its Subsidiaries, in each case, that (A) is not terminable without penalty upon 30 days’ notice or less, (B) provides for an acreage dedication in excess of 2,500 gross surface acres or (C) that could reasonably be expected to result in the payment by the Company or any of its Subsidiaries of an amount in excess of $1,000,000 over the remaining term of such agreement;

(xv) any contract that provides for a “take-or-pay” clause or any similar prepayment obligation, acreage dedication, minimum volume commitments or capacity reservation fees to a gathering, transportation or other arrangement downstream of the wellhead, that cover, guaranty or commit volumes of any Hydrocarbons, water or any other product of the Company or any of its Subsidiaries that has a remaining term of greater than 60 days and does not allow the Company or such Subsidiary to terminate it without penalty to the Company or such Subsidiary within 60 days;

(xvi) any contract with any Governmental Entity (other than the Company Permits, Oil and Gas Leases, joint operating agreements or unit agreements);

(xvii) any contract that obligates the Company or any of its Subsidiaries to make any future capital commitment, loan or expenditure in an amount in excess of $10,000,000, other than customary joint operating agreements, unit operating agreements or continuous development obligations under Oil and Gas Leases;

(xviii) each contract for any Company Related Party Transaction; or

 

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(xix) each agreement that contains any “most favored nation” or most favored customer provision, call or put option, preferential right or rights of first or last offer, negotiation or refusal, in each case other than those contained in (A) any agreement in which such provision is solely for the benefit of the Company or any of its Subsidiaries, (B) customary royalty pricing provisions in Oil and Gas Leases or (C) customary preferential rights in joint operating agreements, unit agreements or participation agreements affecting the business or the Oil and Gas Properties of the Company or any of its Subsidiaries, to which the Company or any of its Subsidiaries or any of their respective Affiliates is subject, and is material to the business of the Company and its Subsidiaries, taken as a whole.

(b) Collectively, the contracts set forth in Section 4.19(a) are herein referred to as the “Company Contracts.” A complete and correct copy of each of the Company Contracts has been made available to Isla. Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, each Company Contract is legal, valid, binding and enforceable in accordance with its terms on the Company and each of its Subsidiaries that is a party thereto and, to the knowledge of the Company, each other party thereto, and is in full force and effect, subject, as to enforceability, to Creditors’ Rights. Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, (i) neither the Company nor any of its Subsidiaries is in breach or default under any Company Contract nor, to the knowledge of the Company, is any other party to any such Company Contract in breach or default thereunder, and (ii) no event has occurred that with the lapse of time or the giving of notice or both would constitute a default thereunder by the Company or its Subsidiaries, or, to the knowledge of the Company, any other party thereto. There are no disputes pending or, to the knowledge of the Company, threatened with respect to any Company Contract and neither the Company nor any of its Subsidiaries has received any written notice of the intention of any other party to any Company Contract to terminate for default, convenience or otherwise any Company Contract, nor to the knowledge of the Company, is any such party threatening to do so, in each case except as has not had or would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

4.20 Derivative Transactions.

(a) Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, all Derivative Transactions entered into by the Company or any of its Subsidiaries or for the account of any of its customers as of the date of this Agreement were entered into in accordance with applicable Laws, and in accordance with the investment, securities, commodities, risk management and other policies, practices and procedures employed by the Company and its Subsidiaries, and were entered into with counterparties believed at the time to be financially responsible and able to understand (either alone or in consultation with their advisers) and to bear the risks of such Derivative Transactions.

 

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(b) Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, the Company and each of its Subsidiaries have duly performed in all respects all of their respective obligations under the Derivative Transactions to the extent that such obligations to perform have accrued, and there are no current or ongoing breaches, violations, collateral deficiencies, requests for collateral or demands for payment, or defaults or allegations or assertions of such by any party thereunder.

(c) Schedule 4.20(c) of the Company Disclosure Letter lists, as of the date of this Agreement, all Derivative Transactions to which the Company or any of its Subsidiaries is a party.

4.21 Insurance. Set forth on Schedule 4.21 of the Company Disclosure Letter is a true, correct and complete list of all material insurance policies held by the Company or any of its Subsidiaries as of the date of this Agreement (collectively, the “Material Company Insurance Policies”). Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, each of the Material Company Insurance Policies is in full force and effect on the date of this Agreement and a true, correct and complete copy of each Material Company Insurance Policy has been made available to Isla. Except as have not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, all premiums payable under the Material Company Insurance Policies prior to the date of this Agreement have been duly paid to date, and neither the Company nor any of its Subsidiaries has taken any action or failed to take any action that (including with respect to the Transactions), with notice or lapse of time or both, would constitute a breach or default, or permit a termination of any of the Material Company Insurance Policies. Except has not had and as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, as of the date of this Agreement, no written notice of cancellation or termination has been received with respect to any Material Company Insurance Policy.

4.22 Opinion of Financial Advisor. The Company Board has received the opinion of Jefferies LLC addressed to the Company Board to the effect that, based upon and subject to the limitations, qualifications and assumptions set forth therein, as of the date of the opinion, the Exchange Ratio pursuant to this Agreement is fair, from a financial point of view, to the holders of Eligible Shares (other than Independence, L Merger Sub, C Merger Sub and their respective affiliates). A copy of such opinion will be provided (solely for informational purposes) by the Company to Isla promptly following the execution of this Agreement (it being agreed that such opinion is for the benefit of the Company Board and may not be relied upon by the Isla Parties or any other Person).

4.23 Brokers. Except for the fees and expenses payable to Jefferies LLC, no broker, investment banker, or other Person is entitled to any broker’s, finder’s or other similar fee or commission in connection with the Transactions based upon arrangements made by or on behalf of the Company.

4.24 Related Party Transactions. Schedule 4.24 of the Company Disclosure Letter sets forth, as of the date of this Agreement, a complete and correct list of any transaction or arrangement involving in excess of $120,000 under which any (a) present or former executive officer or director of the Company or any of its Subsidiaries (excluding employment compensation and benefits payable thereto or other items related to employment thereof by the Company or such

 

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Subsidiary), (b) beneficial owner (within the meaning of Section 13(d) of the Exchange Act) of 5% or more of any class of the equity securities of the Company or any of its Subsidiaries whose status as a 5% holder is known to the Company as of the date of this Agreement or (c) Affiliate, “associate” or member of the “immediate family” (as such terms are respectively defined in Rules 12b-2 and 16a-1 of the Exchange Act) of any of the foregoing (but only, with respect to the Persons in clause (b), to the knowledge of the Company) is a party to any actual or proposed loan, lease or other contract with or binding upon the Company or any of its Subsidiaries or any of their respective properties or assets or has any interest in any property owned by the Company or any of its Subsidiaries, in each case, including any bond, letter of credit, guarantee, deposit, cash account, escrow, policy of insurance or other credit support instrument or security posted or delivered by any Person listed in clauses (a), (b) or (c) in connection with the operation of the business of the Company or any of its Subsidiaries (each of the foregoing, a “Company Related Party Transaction”).

4.25 Regulatory Matters.

(a) The Company is not (i) an “investment company” or a company “controlled” by an “investment company” within the meaning of the U.S. Investment Company Act of 1940 or (ii) a “holding company,” a “subsidiary company” of a “holding company,” an Affiliate of a “holding company,” a “public utility” or a “public-utility company,” as each such term is defined in the U.S. Public Utility Holding Company Act of 2005.

(b) All natural gas pipeline systems and related facilities constituting the Company’s and its Subsidiaries’ properties are (i) “gathering facilities” that are exempt from regulation by the U.S. Federal Energy Regulatory Commission under the Natural Gas Act of 1938 and (ii) not subject to rate regulation or comprehensive nondiscriminatory access regulation under the Laws of any state or other local jurisdiction.

4.26 Takeover Laws. Assuming the accuracy of the representations and warranties set forth in Section 5.21, subject to the Company Stockholder Approval, the approval of the Company Board of this Agreement and the Merger represents all the action necessary to conform to or render inapplicable to the Merger any Takeover Law (including Title 2, Chapter 21, Subchapter M of the TBOC) or any anti-takeover provision in the Company’s Organizational Documents that is applicable to the Company, the shares of Company Common Stock, this Agreement, the Designated Stockholder Voting Agreements or the Transactions.

4.27 No Rights Plan. There is no stockholder rights plan, “poison pill” anti-takeover plan or other similar device in effect to which the Company is a party or is otherwise bound.

4.28 No Additional Representations.

(a) Except for the representations and warranties made in this Article IV, neither the Company nor any other Person makes any express or implied representation or warranty with respect to the Company or its Subsidiaries or their respective businesses, operations, assets, liabilities or conditions (financial or otherwise) in connection with this Agreement or the Transactions, and the Company hereby disclaims any such other

 

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representations or warranties. In particular, without limiting the foregoing disclaimer, neither the Company nor any other Person makes or has made any representation or warranty to the Isla Parties or any of their respective Affiliates or Representatives with respect to (i) any financial projection, forecast, estimate, budget or prospect information relating to the Company or any of its Subsidiaries or their respective businesses; or (ii) except for the representations and warranties made by the Company in this Article IV, any oral or written information presented to the Isla Parties or any of their respective Affiliates or Representatives in the course of their due diligence investigation of the Company, the negotiation of this Agreement or in the course of the Transactions.

(b) Notwithstanding anything contained in this Agreement to the contrary, the Company acknowledges and agrees that none of the Isla Parties or any other Person has made or is making any representations or warranties relating to Isla or any of its Subsidiaries or Affiliates whatsoever, express or implied, beyond those expressly given in Article V, including any implied representation or warranty as to the accuracy or completeness of any information regarding Isla furnished or made available to the Company, or any of its Representatives and that the Company has not relied on any such other representation or warranty not set forth in this Agreement. Without limiting the generality of the foregoing, the Company acknowledges that no representations or warranties are made with respect to any projections, forecasts, estimates, budgets or prospect information that may have been made available to the Company or any of its Representatives (including in certain “data rooms,” “virtual data rooms,” management presentations or in any other form in expectation of, or in connection with, the Transactions).

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF THE ISLA PARTIES

Except as set forth in the disclosure letter dated as of the date of this Agreement and delivered by the Isla Parties to the Company on or prior to the date of this Agreement (the “Isla Disclosure Letter”), it being agreed that the disclosure of any information in a particular section or subsection of the Isla Disclosure Letter shall be deemed disclosure of such information with respect to any other section or subsection of this Agreement to which the relevance of such information is reasonably apparent on its face, the Isla Parties represents and warrants to the Company as follows:

5.1 Organization, Standing and Power. Each of Isla and its Subsidiaries (including New PubCo, C Merger Sub and L Merger Sub) is a corporation, partnership or limited liability company duly organized, as the case may be, validly existing and in good standing under the Laws of its jurisdiction of incorporation or organization, with all requisite entity power and authority to own, lease and operate its properties and to carry on its business as now being conducted, other than in the case of Isla’s Subsidiaries (other than those Subsidiaries that are Isla Parties), where the failure to be so organized or, in the case of Isla or its Subsidiaries, to have such power, authority or standing has not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Isla and its Subsidiaries, taken as a whole (an “Isla Material Adverse Effect”). Each of Isla and its Subsidiaries is duly qualified or licensed and in good standing to do business in each jurisdiction in which the business it is conducting, or the

 

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operation, ownership or leasing of its properties, makes such qualification or license necessary, other than where the failure to so qualify, license or be in good standing has not had and would not reasonably be expected to have, individually or in the aggregate, an Isla Material Adverse Effect. Each of New PubCo, OpCo, C Merger Sub, L Merger Sub and each of their respective Subsidiaries has heretofore made available to the Company complete and correct copies of its Organizational Documents, each as amended prior to the execution of this Agreement, and each as made available to the Company is in full force and effect, and neither Isla nor any of its Subsidiaries is in violation of any of the provisions of its Organizational Documents.

5.2 Capital Structure.

(a) Schedule 5.2(a)-I of the Isla Disclosure Letter sets forth 100% of the issued and outstanding equity interests in each of the Isla Parties, in each case, as of the date hereof, and in each case, the holder thereof as of the date hereof. Schedule 5.2(a)-II of the Isla Disclosure Letter sets forth each Subsidiary of Isla. Except as set forth on Schedule 5.2(a)-III of the Isla Disclosure Letter, as of the date hereof, (i) Isla owns all of the outstanding equity interests in OpCo, (ii) Isla and the Series I Preferred Stockholder collectively own all of the outstanding equity interests in New PubCo, (iii) New PubCo owns all of the outstanding equity interests in each of C Merger Sub and L Merger Sub and (iv) OpCo owns, directly or indirectly, all of the equity interests in each of its Subsidiaries.

(b) All of the equity interests in Isla and its Subsidiaries have been duly authorized and are validly issued, fully paid and non-assessable and are not subject to preemptive rights. The New PubCo Class A Common Stock to be issued pursuant to this Agreement, when issued, will be validly issued, fully paid and nonassessable, free and clear of all Encumbrances, and not subject to preemptive rights. All outstanding equity interests in Isla and its Subsidiaries have been issued and granted in compliance in all material respects with (i) applicable securities Laws and other applicable Law and (ii) all requirements set forth in applicable contracts (including any applicable Isla Plan and the applicable Organizational Documents). As of the close of business on the Measurement Date, except as set forth on Schedule 5.2(b)(i) of the Isla Disclosure Letter, there are no outstanding options, warrants or other rights to subscribe for, purchase or acquire from Isla or any of its Subsidiaries any capital stock of Isla or any of its Subsidiaries or securities convertible into or exchangeable or exercisable for capital stock of Isla or any of its Subsidiaries (which Schedule 5.2(b)(i) of the Isla Disclosure Letter shall also set forth, with respect to any such options, warrants or other such rights, the exercise, conversion, purchase, exchange or other similar price thereof). All outstanding equity interests of the Subsidiaries of Isla are free and clear of all Encumbrances. Except as set forth in this Section 5.2 or, Schedule 5.2(b)(i) of the Isla Disclosure Letter, there are outstanding: (A) no Voting Debt of any of the Isla Parties, (B) no securities of any of the Isla Parties convertible into or exchangeable or exercisable for shares of voting stock, Voting Debt or other voting securities of the Isla Parties and (C) no options, warrants, subscriptions, calls, rights (including preemptive and appreciation rights), commitments or agreements to which Isla or any of its Subsidiaries is a party or by which it is bound in any case obligating Isla or such Subsidiary to issue, deliver, sell, purchase, grant, redeem or acquire, or cause to be issued, delivered, sold, purchased, granted, redeemed or acquired, additional shares voting stock, any Voting Debt or other voting securities of Isla or any of its Subsidiaries,

 

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or obligating Isla or any Subsidiary of Isla to grant, extend or enter into any such option, warrant, subscription, call, right, commitment or agreement. There are not any stockholder agreements, voting trusts or other agreements to which Isla or any of its Subsidiaries is a party or by which it is bound relating to the voting of any equity interest of Isla or any of its Subsidiaries. As of the date of this Agreement, neither Isla nor any of its Subsidiaries has any (1) equity securities or other similar equity interests in any Person, or (2) obligations, whether contingent or otherwise, to consummate any material additional investment in any Person other than Isla, its Subsidiaries and its investments listed on Schedule 5.2(b)(ii) of the Isla Disclosure Letter.

5.3 Authority; No Violations; Consents and Approvals.

(a) Each Isla Party has all requisite organizational power and authority to execute and deliver this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement by the Isla Parties and the consummation by the Isla Parties of the Transactions have been duly authorized by all necessary corporate action on the part of each Isla Party (other than the adoption of this Agreement by Isla, whose adoption is the sole adoption required by the stockholders of New PubCo, and New PubCo as the sole stockholder of C Merger Sub, and the filing of the Certificate of Merger with the Office of the Secretary of State of the State of Texas and the Office of the Secretary of State of the State of Delaware and the filing of the LLC Certificate of Merger with the Office of the Secretary of State of the State of Delaware). This Agreement has been duly executed and delivered by each Isla Party, and, assuming the due and valid execution of this Agreement by the Company, constitutes a valid and binding obligation of each of the foregoing, enforceable against each such Person in accordance with its terms, subject, as to enforceability, to Creditors’ Rights. The C Merger Sub Board has (A) determined that this Agreement and the Transactions, including the Merger and the LLC Merger, are fair to, and in the best interests of, C Merger Sub and the sole stockholder of C Merger Sub and (B) approved and declared advisable this Agreement and the Transactions, including the Merger and the LLC Merger. The New PubCo Board has (1) determined that this Agreement and the Transactions are fair to, and in the best interests of, New PubCo and the stockholders of New PubCo, (2) approved and declared advisable this Agreement and the Transactions, and (3) on behalf of New Pubco, in its capacity as the sole member of L Merger Sub, has approved and declared advisable and adopted this Agreement and the Transactions on behalf of L Merger Sub. The Board of Directors of Isla, acting in accordance with the Isla Organizational Documents, has (1) determined that this Agreement and the Transactions are fair to, and in the best interests of, Isla and the holders of equity interests of Isla, (2) approved and declared advisable this Agreement and the Transactions, and (3) on behalf of Isla, in its capacity as the sole member of OpCo, has approved and declared advisable and has adopted this Agreement and the Transactions on behalf of OpCo. Isla, as the sole stockholder of New PubCo that has any voting or approval rights with respect to New PubCo’s execution and delivery of this Agreement and consummation of the Transactions contemplated hereby (other than board designation rights contemplated by the draft Board Letter Agreement shared among the Parties, which rights were granted in accordance with, and do not require the approval or consent of Isla under, the Organizational Documents of New PubCo), and New PubCo, as the owner of all of the outstanding shares of capital stock of C Merger Sub, will immediately after the

 

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execution and delivery of this Agreement adopt this Agreement in its capacity as sole stockholder of New PubCo or C Merger Sub, as applicable. The approvals described in this Section 5.3 are the sole approvals and affirmative votes necessary on the part of any shareholders or other holders of equity interests in any of the Isla Parties to approve and adopt this Agreement and the Transactions pursuant to the Organizational Documents thereof and applicable Law, and true, complete and correct copies thereof have been (or, in the case of the approvals to be obtained immediately after the execution of this Agreement, will be) delivered to the Company.

(b) The execution, delivery and performance of this Agreement does not, and the consummation of the Transactions will not (with or without notice or lapse of time, or both) (i) contravene, conflict with or result in a violation of any provision of the Organizational Documents of Isla or any of its Subsidiaries (assuming that the approvals referenced in Section 5.3(a) are obtained), (ii) with or without notice, lapse of time or both, result in a violation of, a termination (or right of termination) of or default under, the creation or acceleration of any obligation or the loss of a benefit under, or result in the creation of any Encumbrance upon any of the properties or assets of Isla or any of its Subsidiaries under, any provision of any loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, permit, franchise or license to which Isla or any of its Subsidiaries is a party or by which Isla or any of its Subsidiaries or their respective properties or assets are bound, or (iii) assuming the Consents referred to in Section 5.4 are duly and timely obtained or made and the approvals referenced in Section 5.3(a)) have been obtained, contravene, conflict with or result in a violation of any Law applicable to Isla or any of its Subsidiaries or any of their respective properties or assets, other than, in the case of clauses (ii) and (iii), any such contraventions, conflicts, violations, defaults, acceleration, losses, or Encumbrances that has not had and would not reasonably be expected to have, individually or in the aggregate, an Isla Material Adverse Effect. Except as set forth in Schedule 5.3(b) of the Isla Disclosure Letter, none of Isla, any of its Subsidiaries, any of its shareholders or the Series I Preferred Stockholder is party to any contract, arrangement or other commitment that would or would reasonably be expected to entitle any Person to appoint one or more directors to the New PubCo Board.

5.4 Consents. No Consent from any Governmental Entity is required to be obtained or made by Isla or any of its Subsidiaries in connection with the execution, delivery and performance of this Agreement by the Isla Parties or the consummation by the Isla Parties of the Transactions, except for: (a) the filing of a premerger notification report by Isla (or its ultimate parent) under the HSR Act, and the expiration or termination of the applicable waiting period with respect thereto; (b) the filing with the SEC of the Registration Statement and the Proxy Statement/Prospectus, any other reports under Section 13(a) of the Exchange Act, and such other compliance with the Exchange Act and the rules and regulations thereunder, as may be required in connection with this Agreement and the Transactions; (c) the filing of the Certificate of Merger with the Office of the Secretary of State of the State of Texas and the Office of the Secretary of State of the State of Delaware and the filing of the LLC Certificate of Merger with the Office of the Secretary of State of the State of Delaware; (d) filings with the NYSE and NYSE American, as applicable; (e) such filings and approvals as may be required by any applicable state securities or “blue sky” Laws or Takeover Laws; and (f) any such Consent that the failure to obtain or make has not had and would not reasonably be expected to have, individually or in the aggregate, an Isla Material Adverse Effect.

 

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5.5 Financial Statements. Schedule 5.5 of the Isla Disclosure Letter sets forth true, correct and complete copies of (i) an audited consolidated balance sheet of Isla as of December 31, 2020, and the related income statement and statement of cash flows for the year then ended (collectively, the “Isla Year End Financial Statements”), (ii) an unaudited consolidated balance sheet of Isla as of March 31, 2021, and the related income statement and statement of cash flows for the three months then ended (collectively, the “Isla Interim Financial Statements” and together with the Isla Year End Financial Statements, the “Isla Financial Statements”). The Isla Financial Statements (a) have been prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto), (b) fairly present in all material respects in accordance with applicable requirements of GAAP (subject, in the case of the unaudited statements, to normal year-end audit adjustments and the absence of footnote disclosures and other presentation items customarily included in audited financial statements) the financial position of Isla and its consolidated Subsidiaries as of their respective dates and the results of operations and the cash flows of Isla and its consolidated Subsidiaries for the periods presented therein, and (iii) were derived from the books and records of Isla and its Subsidiaries, which books and records (x) are accurate, complete and correct in all material respects, (y) represent actual, bona fide transactions and (z) have been prepared and maintained in all material respects in accordance with sound business and accounting practices for similarly situated private companies.

5.6 Absence of Certain Changes or Events.

(a) Since December 31, 2020 through the date of this Agreement, there has not been any event, change, effect or development that, individually or in the aggregate, has had or would reasonably be expected to have an Isla Material Adverse Effect.

(b) From December 31, 2020 through the date of this Agreement:

(i) Isla and its Subsidiaries have conducted their business in the ordinary course of business consistent with past practice in all material respects, except for any commercially reasonable actions taken, or omitted to be taken, by the Company or any of its Subsidiaries in connection with COVID-19 or any COVID-19 Measures;

(ii) there has not been any material damage, destruction or other casualty loss with respect to any material asset or property owned, leased or otherwise used by Isla and its Subsidiaries, including the Oil and Gas Properties of Isla and its Subsidiaries, whether or not covered by insurance; and

(iii) neither Isla nor any of its Subsidiaries has taken, or agreed, committed, arranged, authorized or entered into any understanding to take, any action that, if taken after the date of this Agreement, would (without the Company’s prior written consent) have constituted a breach of any of the covenants set forth in Section 6.2(b)(i),(iv), (v), (vi), (vii), (x), (xi), (xii), (xvi), or (xvii) (solely as it relates to the foregoing clauses 6.2(b)(i), (iv), (v), (vi), (vii), (x), (xi), (xii), (xvi) or (xvii)).

 

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5.7 No Undisclosed Material Liabilities. There are no liabilities of Isla or any of its Subsidiaries of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise, other than: (a) liabilities adequately provided for on the balance sheet included in the Isla Year End Financial Statements (including the notes thereto); (b) liabilities incurred in the ordinary course of business consistent with past practice subsequent to December 31, 2020 (c) liabilities which individually, and in the aggregate, have not had and would not reasonably be expected to have an Isla Material Adverse Effect, (d) liabilities incurred after the date of this Agreement permitted to be incurred pursuant to Section 6.2(b)(x), and (e) Section 6.2(b)(x) liabilities incurred in connection with the Transactions.

5.8 Information Supplied. None of the information supplied or to be supplied by Isla for inclusion or incorporation by reference in (a) the Registration Statement shall, at the time the Registration Statement becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading or (b) the Proxy Statement/Prospectus will, at the date it is first mailed to stockholders of the Company and at the time of the Company Stockholders Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. Subject to the accuracy of the first sentence of Section 4.8, the Registration Statement and Proxy Statement/Prospectus will comply as to form in all material respects with the provisions of the Securities Act and the rules and regulations thereunder; provided, however, that no representation is made by Isla with respect to statements made therein based on information supplied by the Company of any of its Subsidiaries specifically for inclusion or incorporation by reference therein.

5.9 Isla Permits; Compliance with Applicable Law.

(a) Isla and its Subsidiaries hold and at all times since the Applicable Date have held all permits, licenses, certifications, registrations, consents, authorizations, variances, exemptions, orders, franchises, and approvals of all Governmental Entities necessary to own, lease and operate their respective properties and assets and for the lawful conduct of their respective businesses as they were or are now being conducted, as applicable (collectively, the “Isla Permits”), and have paid all fees and assessments due and payable in connection therewith, except where the failure to so hold any such Isla Permit or make such a payment has not had and would not reasonably be expected to have, individually or in the aggregate, an Isla Material Adverse Effect. All of the Isla Permits are in full force and effect and no suspension or cancellation of any of the Isla Permits is pending or, to the knowledge of Isla, threatened, and Isla and its Subsidiaries are in compliance with the terms of the Isla Permits, except where the failure to be in full force and effect or failure to so comply has not had and would not reasonably be expected to have, individually or in the aggregate, an Isla Material Adverse Effect.

 

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(b) The businesses of Isla and its Subsidiaries are not currently being conducted, and at no time since the Applicable Date have been conducted, in violation of any applicable Law, except for violations that have not had and would not reasonably be expected to have, individually or in the aggregate, an Isla Material Adverse Effect. To the knowledge of Isla, no investigation or review by any Governmental Entity with respect to Isla or any of its Subsidiaries is pending or threatened, other than those the outcome of which have not had and would not reasonably be expected to have, individually or in the aggregate, an Isla Material Adverse Effect.

5.10 Compensation; Benefits.

(a) Set forth on Schedule 5.10(a) of the Isla Disclosure Letter is a list of all material Isla Plans. Each Isla Plan has been established, administered, operated, funded and maintained in material compliance with its terms and in compliance in all material respects with all applicable Laws, including ERISA and the Code.

(b) There are no material Proceedings pending (other than routine claims for benefits) or, to the knowledge of Isla, threatened against, or with respect to, any of the Isla Plans.

(c) All material contributions required to be made by Isla or any of its Subsidiaries to the Isla Plans pursuant to their terms or applicable Law have been timely made.

(d) Each Isla Plan that is intended to be qualified under Section 401(a) of the Code has been determined by the Internal Revenue Service to be qualified under Section 401(a) of the Code and has received a favorable determination letter (or in the case of a master or prototype plan, a favorable opinion or advisory letter) as to its qualification under the Code and nothing has occurred, whether by action or failure to act, that could reasonably be expected to adversely affect the qualification of such Isla Plan. With respect to each Isla Plan, neither Isla nor any of its Subsidiaries, or, to the knowledge of Isla, any other Person, has engaged in a transaction in connection with which Isla or any of its Subsidiaries reasonably could be subject to either a civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a Tax imposed pursuant to Section 4975 or 4976 of the Code in an amount that would be material. Isla and its Subsidiaries do not have any material liability (whether or not assessed) under Sections 4980B, 4980D, 4980H, 6721 or 6722 of the Code.

(e) Neither Isla nor any of its Subsidiaries or any member of their respective Aggregated Groups sponsors, maintains, contributes to or has an obligation to contribute to (or has in the last six years sponsored, maintained, contributed to or had an obligation to contribute to), or has any current or contingent liability or obligation under or with respect to, and no Isla Plan is: (i) a “defined benefit plan” (as defined in Section 3(35) of ERISA) or a plan that is or was subject to Title IV of ERISA, Section 302 of ERISA, or Section 412 or 4971 of the Code or (ii) a “multiple employer welfare arrangement” (as defined in Section 3(40) of ERISA), a “multiple employer plan” (as defined in Section 413(c) of the Code) or a “multiemployer plan” (within the meaning of Section 3(37) of ERISA).

 

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(f) Except as set forth on Schedule 5.10(f) of the Isla Disclosure Letter, other than continuation coverage pursuant to Section 4980B of the Code or any similar state Law, no Isla Plan provides any retiree or post-employment or post-service medical or life insurance benefits to any Person, and neither Isla nor any of its Subsidiaries has any obligation to provide such benefits.

(g) Except as set forth on Schedule 5.10(g) of the Isla Disclosure Letter, neither the execution and delivery of this Agreement nor the consummation of the Transactions could, either alone or in combination with another event, (i) entitle any current or former Isla employee, director or other service provider of Isla or any of its Subsidiaries to severance pay, any increase in severance pay or any other payment; (ii) accelerate the time of payment or vesting, or increase the amount of compensation due to any current or former Isla employee, director or other service provider of Isla or any of its Subsidiaries; (iii) directly or indirectly cause or require Isla to transfer or set aside any amount of assets to fund any benefits under any Isla Plan; or (iv) limit or restrict the right to amend, terminate or transfer the assets of any Isla Plan on or following the Merger Effective Time.

(h) Neither Isla nor any of its Subsidiaries has any obligation to provide, and no Isla Plan or other agreement provides any individual with the right to, a gross up, indemnification, reimbursement or other payment for any excise or additional Taxes, interest or penalties incurred pursuant to Section 409A, Section 280G or Section 4999 of the Code.

(i) Each Isla Plan or any other agreement, arrangement, or plan of Isla or any of its Subsidiaries that constitutes, in any part, a “nonqualified deferred compensation plan” (within the meaning of Section 409A of the Code) has been operated and maintained in operational and documentary compliance with Section 409A of the Code and applicable guidance thereunder.

(j) No Isla Plan is maintained outside the jurisdiction of the United States or covers any employees or other service providers of Isla or any of its Subsidiaries who reside or perform services primarily outside of the United States.

5.11 Labor Matters.

(a) (i) Neither Isla nor any of its Subsidiaries is a party to or bound by any collective bargaining agreement or other agreement with, and no employee of Isla or any of its Subsidiaries is represented by, any labor union, works council or similar representative of employees, (ii) there is no pending or, to the knowledge of Isla, threatened union representation petition involving employees of Isla or any of its Subsidiaries, and (iii) Isla does not have knowledge of any activity or Proceeding of any labor organization (or representative thereof) or employee group (or representative thereof) to organize any such employees since the Applicable Date.

(b) There is, and since the Applicable Date there has been, no strike, labor dispute, slowdown, work stoppage or lockout or other labor disturbance pending, or, to the knowledge of Isla, threatened, against or involving Isla or any of its Subsidiaries.

 

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(c) Except as has not had, and would not be reasonably expected to have, individually or in the aggregate, an Isla Material Adverse Effect, Isla and its Subsidiaries are, and since January 1, 2019 have been, in compliance with all applicable Laws respecting labor, employment and employment practices (including all such Laws regarding wages and hours, classification of employees and contractors, anti-discrimination, anti-retaliation, recordkeeping, employee leave, Tax withholding and reporting, immigration and employee safety), and there are no material Proceedings pending or, to the knowledge of Isla, threatened against Isla or any of its Subsidiaries, by or on behalf of any applicant for employment, any current or former employee or any class of the foregoing, relating to any of the foregoing applicable Laws, including any such Proceedings alleging breach of any express or implied contract of employment, wrongful termination of employment, failure to pay required wages, failure to satisfy employment-related leave or recordkeeping requirements, or alleging any other discriminatory, wrongful or tortious conduct in connection with the employment relationship. Since January 1, 2019, neither Isla nor any of its Subsidiaries has received any written notice of the intent of the Equal Employment Opportunity Commission, the National Labor Relations Board, the Department of Labor or any other Governmental Entity responsible for the enforcement of labor or employment Laws to conduct any investigation with respect to Isla or any of its Subsidiaries, in each case, which investigation would be reasonably expected to have, individually or in the aggregate, an Isla Material Adverse Effect.

5.12 Taxes.

(a) All U.S. federal income and other material Tax Returns required to be filed by Isla or any of its Subsidiaries have been duly and timely filed (taking into account extensions of time for filing), and all such Tax Returns are true, correct and complete in all material respects. All material Taxes that are due and payable by Isla or any of its Subsidiaries have been timely paid in full.

(b) There are no Encumbrances for material Taxes on any of the assets of Isla or any of its Subsidiaries, except for Permitted Encumbrances for Taxes not yet delinquent.

(c) Neither Isla nor any of its Subsidiaries has granted any currently effective extension or waiver of the limitation period with respect to the assessment or collection of any Tax.

(d) There is no outstanding claim, assessment, deficiency, audit, examination, investigation or litigation in respect of a material amount of Taxes or material Tax matters against Isla or any of its Subsidiaries that has been asserted in writing by any Governmental Entity. There are no Proceedings with respect to Taxes pending or, to the knowledge of Isla, proposed or threatened against Isla and its Subsidiaries or with respect to the assets of Isla and its Subsidiaries.

(e) No written claim has been made by any Taxing Authority in a jurisdiction where Isla or any of its Subsidiaries does not currently file a Tax Return that it is or may be subject to any material Tax in such jurisdiction, nor has any such assertion been, to the knowledge of Isla, proposed or threatened with respect to Isla or any of its Subsidiaries.

 

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(f) Neither Isla nor any of its Subsidiaries has been a member of an affiliated group filing a consolidated, combined or unitary U.S. federal, state, local or non-U.S. income Tax Return (other than a group of which Isla is the common parent). Neither Isla nor any of its Subsidiaries has any material liability for Taxes of any Person (other than Taxes of Isla or any of its Subsidiaries) under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local or non-U.S. Law), as a transferee or successor, by contract (other than pursuant to any Tax sharing or indemnification provisions contained in any agreement entered into in the ordinary course of business and not primarily relating to Tax (e.g., leases, credit agreements or other commercial agreements)), or otherwise.

(g) Neither Isla nor any of its Subsidiaries is a party to any material Tax allocation, sharing or indemnity contract or arrangement (other than pursuant to any Tax sharing or indemnification provisions contained in any agreement entered into in the ordinary course of business and not primarily relating to Tax (e.g., leases, credit agreements or other commercial agreements)).

(h) Neither Isla nor any of its Subsidiaries has participated, or is currently participating, in a “listed transaction” within the meaning of Treasury Regulations Section 1.6011-4(b)(2).

(i) Neither Isla nor any of its Subsidiaries will be required to include any material item of income in, or to exclude any material item of deduction from, taxable income in any taxable period (or portion thereof) ending after the Closing Date as a result of any (i) adjustment under Section 481(a) or Section 482 of the Code (or any corresponding or similar provision of state, local or non-U.S. income Tax Law) by reason of a change in method of accounting or otherwise prior to the Closing, (ii) closing agreement within the meaning of Section 7121 of the Code (or any corresponding or similar provision of state, local or non-U.S. income Tax Law), installment sale or open transaction disposition made on or prior to the Closing Date, (iii) prepaid amount received on or prior to the Closing Date outside the ordinary course of business, or (iv) intercompany transaction or excess loss account described in the Treasury Regulations under Section 1502 of the Code (or any corresponding or similar provision of state, local or non-U.S. Tax Law).

(j) Isla is, and has been since formation, properly classified for U.S. federal income tax purposes as either a partnership or an entity disregarded as separate from its owner. Except as set forth on Schedule 5.12(j) of Isla Disclosure Letter, each of Isla’s Subsidiaries is, and has been since its formation, properly classified for U.S. federal income tax purposes as either a partnership or an entity disregarded as separate from its owner.

(k) Isla is not an “investment company” within the meaning of Section 721(b) of the Code.

5.13 Litigation. There is no (i) Proceeding pending or, to the knowledge of Isla, threatened against or affecting the Isla or any of its Subsidiaries, any of their respective properties or assets, or any present or former officer, director or employee of Isla or its Subsidiaries in such individual’s capacity as such, or (ii) outstanding judgment, order, injunction, rule or decree of any Governmental Entity in each case other than as would not (if, with respect to clause (i), determined adversely to Isla or its applicable Subsidiaries), individually or in the aggregate, have or reasonably be expected to have an Isla Material Adverse Effect.

 

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5.14 Intellectual Property.

(a) Isla and its Subsidiaries own or have the right to use all Intellectual Property used in or necessary for the operation of the businesses of each of Isla and its Subsidiaries as presently conducted (collectively, the “Isla Intellectual Property”) free and clear of all Encumbrances except for Permitted Encumbrances, except where the failure to own or have the right to use such properties has not had and would not reasonably be expected to have, individually or in the aggregate, an Isla Material Adverse Effect.

(b) To the knowledge of Isla, the use of the Isla Intellectual Property by Isla and its Subsidiaries in the operation of the business of Isla and its Subsidiaries as presently conducted does not infringe, misappropriate or otherwise violate any Intellectual Property of any other Person, except for such matters that have not had and would not reasonably be expected to have, individually or in the aggregate, an Isla Material Adverse Effect.

(c) Isla and its Subsidiaries have taken reasonable measures consistent with prudent industry practices to protect the confidentiality of trade secrets used in the businesses of Isla and its Subsidiaries as presently conducted, except where failure to do so has not had and would not reasonably be expected to have, individually or in the aggregate, an Isla Material Adverse Effect.

(d) Except as has not had and would not reasonably be expected to have, individually or in the aggregate, an Isla Material Adverse Effect, the IT Assets owned, used, or held for use by Isla or any of its Subsidiaries (i) are sufficient for the current needs of the businesses of Isla and its Subsidiaries (ii) have not malfunctioned or failed within the past three years and (iii) to the knowledge of Isla, are free from any malicious code.

(e) Except as has not had and would not reasonably be expected to have, individually or in the aggregate, an Isla Material Adverse Effect (i) Isla and each of its Subsidiaries have used commercially reasonable measures to ensure the confidentiality, privacy and security of Personal Information collected or held for use by Isla and its Subsidiaries; and (ii) to the knowledge of Isla, there has been no unauthorized access to or unauthorized use of any IT Assets, Personal Information or trade secrets owned or held for use by Isla or its Subsidiaries.

5.15 Real Property. Except as has not had and would not reasonably be expected to have, individually or in the aggregate, an Isla Material Adverse Effect and with respect to clauses (a) and (b), except with respect to any of Isla’s Oil and Gas Properties, (a) Isla and its Subsidiaries have good, valid and defensible title to all real property owned by Isla or any of its Subsidiaries (collectively, the “Isla Owned Real Property”) and valid leasehold estates in all real property leased, subleased, licensed or otherwise occupied (whether as tenant, subtenant or pursuant to other occupancy arrangements) by Isla or any of its Subsidiaries (collectively, including the improvements thereon, the “Isla Leased Real Property”) free and clear of all

 

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Encumbrances, except Permitted Encumbrances, (b) each agreement under which Isla or any of its Subsidiaries is the landlord, sublandlord, tenant, subtenant, or occupant with respect to the Isla Leased Real Property (each, a “Isla Real Property Lease”) is in full force and effect and is valid and enforceable against Isla or any of its applicable Subsidiary and, to the knowledge of Isla, the other parties thereto, in accordance with its terms, subject, as to enforceability, to Creditors’ Rights, and neither Isla nor any of its Subsidiaries, or to the knowledge of Isla, any other party thereto, has received written notice of any default under any Isla Real Property Lease, and (c) as of the date of this Agreement, there does not exist any pending or, to the knowledge of Isla, threatened, condemnation or eminent domain Proceedings that affect any of Isla’s Oil and Gas Properties, Isla Owned Real Property or Isla Leased Real Property.

5.16 Oil and Gas Matters.

(a) Except as has not had and would not reasonably be expected to have an Isla Material Adverse Effect, and except for property (i) sold or otherwise disposed of in the ordinary course of business since the date of the reserve reports prepared by Haas Petroleum Engineering Services, Inc., Cawley, Gillespie & Associates, Inc. and Netherland Sewell & Associates, Inc. (in such capacity, the “Isla Independent Petroleum Engineers”) relating to Isla’s or its Subsidiaries’ interests referred to therein as of December 31, 2020 (the “Isla Reserve Reports”), (ii) reflected in the Isla Reserve Reports as having been sold or otherwise disposed of (other than permitted sales or dispositions after the date hereof in accordance with Section 6.2(b)(v)), or (iii) Oil and Gas Leases that have expired or terminated in accordance with the terms thereof on a date on or after the date hereof and as set forth on Schedule 5.16(a) of the Isla Disclosure Letter, Isla and its Subsidiaries have good and defensible title to all Oil and Gas Properties forming the basis for the reserves reflected in the Isla Reserve Reports and in each case as attributable to interests owned by Isla and its Subsidiaries, free and clear of any Encumbrances, except for Permitted Encumbrances. For purposes of the foregoing sentence, “good and defensible title” means that Isla’s or one or more of its Subsidiaries’, as applicable, record and/or beneficial title (as of the date hereof and as of the Closing) to each of the Oil and Gas Properties held or owned by them (or purported to be held or owned by them) (1) entitles Isla or one or more of its Subsidiaries, as applicable, to receive (after satisfaction of all Production Burdens applicable thereto), not less than the net revenue interest share shown in the Isla Reserve Reports of all Hydrocarbons produced from such Oil and Gas Properties throughout the productive life of such Oil and Gas Properties except, in each case, for (x) any decreases in connection with those operations in which Isla or any of its Subsidiaries may elect after the date hereof to be a non-consenting co-owner, (y) any decreases resulting from the establishment or amendment, after the date hereof, of pools or units, and (z) decreases required to allow other working interest owners to make up past underproduction or pipelines to make up past under deliveries, (2) obligates Isla or one or more of its Subsidiaries, as applicable, to bear a percentage of the costs and expenses for the maintenance and development of, and operations relating to, such Oil and Gas Properties, of not greater than the working interest shown on the Isla Reserve Reports for such Oil and Gas Properties (other than any positive difference between such actual percentage and the applicable working interest shown on the Isla Reserve Reports for such Oil and Gas Properties that are accompanied by a proportionate (or greater) increase in the net revenue interest in such Oil and Gas Properties) and (3) is free and clear of all Encumbrances (other than Permitted Encumbrances).

 

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(b) Except for any such matters that, individually or in the aggregate, have not had and would not reasonably be expected to have an Isla Material Adverse Effect, the factual, non-interpretive data supplied by Isla to the Isla Independent Petroleum Engineers relating to Isla’s and its Subsidiaries’ interests referred to in the Isla Reserve Reports, by or on behalf of Isla or its Subsidiaries that was material to such firm’s estimates of proved oil and gas reserves attributable to the Oil and Gas Properties of Isla and its Subsidiaries in connection with the preparation of the Isla Reserve Reports was, as of the time provided, accurate in all material respects. Except for any such matters that, individually or in the aggregate, have not had and would not reasonably be expected to have an Isla Material Adverse Effect, the oil and gas reserve estimates of Isla and its Subsidiaries set forth in the Isla Reserve Reports are derived from reports that have been prepared by the Isla Independent Petroleum Engineers, and such reserve estimates fairly reflect, in all material respects, the oil and gas reserves of Isla and its Subsidiaries at the dates indicated therein and are in accordance in all material respects with SEC guidelines applicable thereto applied on a consistent basis throughout the periods involved. Except for changes generally affecting the oil and gas exploration, development and production industry (including changes in commodity prices) and normal depletion by production, there has been no material adverse change in respect of the matters addressed in the Isla Reserve Reports that, individually or in the aggregate, has had or would reasonably be expected to have an Isla Material Adverse Effect.

(c) Except as, individually or in the aggregate, has not had and would not reasonably be expected to have, individually or in the aggregate, an Isla Material Adverse Effect, (i) all rentals, shut-ins and similar payments owed to any Person or individual under (or otherwise with respect to) any Oil and Gas Leases have been properly and timely paid, (ii) all royalties, minimum royalties, overriding royalties and other Production Burdens with respect to any Oil and Gas Properties owned or held by Isla or any of its Subsidiaries have been timely and properly paid or contested in good faith in the ordinary course of business (other than any such Production Burdens (x) as are being currently paid prior to delinquency in the ordinary course of business, (y) which are being held in suspense by Isla or any of its Subsidiaries in accordance with applicable Law, or (z) the amount or validity of which is being contested in good faith by appropriate proceedings and for which appropriate reserves have been established) and (iii) neither Isla nor any of its Subsidiaries (and, to the Isla’s knowledge, no third party operator) has violated any provision of, or taken or failed to take any act that, with or without notice, lapse of time, or both, would constitute a default under the provisions of any Oil and Gas Lease (or entitle the lessor thereunder to cancel or terminate such Oil and Gas Lease) included in the Oil and Gas Properties owned or held by Isla or any of its Subsidiaries.

(d) Except as has not had and would not reasonably be expected to have, individually or in the aggregate, an Isla Material Adverse Effect, all proceeds from the sale of Hydrocarbons produced from the Oil and Gas Properties of Isla and its Subsidiaries are being received by them in a timely manner and are not being held in suspense (by Isla, any of its Subsidiaries, any third party operator thereof or any other Person) for any reason other than awaiting preparation and approval of division order title opinions for recently drilled Wells.

 

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(e) All of the Wells located on the Oil and Gas Leases of Isla and its Subsidiaries or otherwise associated with an Oil and Gas Property of Isla or any of its Subsidiaries have been drilled, completed and operated within the limits permitted by the applicable Oil and Gas Lease(s), the applicable contracts entered into by Isla or its Subsidiaries related to such Wells and in accordance with applicable Law and Isla Permits, and all drilling and completion (and plugging and abandonment) of such Wells and all related development, production and other operations have been conducted in compliance with all such applicable Oil and Gas Lease(s), contracts and applicable Law and Isla Permits except, in each case, as has not had and would not reasonably be expected to have, individually or in the aggregate, an Isla Material Adverse Effect.

(f) Except as has not had and would not reasonably be expected to have, individually or in the aggregate, an Isla Material Adverse Effect, none of the Oil and Gas Properties of Isla or its Subsidiaries is subject to any preferential purchase, consent or similar right that would become operative as a result of the Transactions.

(g) Following the consummation of the Transactions, all bonds or other financial assurances held by Isla or its Subsidiaries or issued for the benefit of any thereof that are required for Isla or such Subsidiaries to own and operate the Oil and Gas Properties that it currently owns and operates will remain in place for the benefit of the Surviving Corporation or the Surviving Entity.

5.17 Environmental Matters.

(a) Isla and its Subsidiaries and their respective operations and assets are, and for the past three years have been, in compliance in all material respects with Environmental Laws, which compliance includes, and for the past three years has included, obtaining, maintaining and complying in all material respects with all Isla Permits required under Environmental Law for their respective operations and occupancy of any real property.

(b) Isla and its Subsidiaries are not subject to any pending or, to Isla’s knowledge, threatened material Proceedings under Environmental Laws. Neither Isla nor any of its Subsidiaries nor any of their respective properties or assets is subject to any outstanding material judgment, order, injunction, rule or decree of any Governmental Entity issued under or in relation to Environmental Law.

(c) There have been no Releases of Hazardous Materials by Isla or its Subsidiaries or, to Isla’s knowledge, any other Person at any property currently or, to Isla’s knowledge, formerly owned, operated or otherwise used by Isla or its Subsidiaries, or, to Isla’s knowledge, by any predecessors of Isla or any of its Subsidiaries, which Releases have resulted or would result in material liability to Isla or any of its Subsidiaries under Environmental Law, and, as of the date of this Agreement, neither Isla nor any of its Subsidiaries has received any written notice, the subject matter of which is unresolved,

 

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asserting a material violation of, or material liability or obligation under, any Environmental Laws, including with respect to the investigation, remediation, removal, or monitoring of the Release or threatened Release of any Hazardous Materials at or from any property currently or formerly owned, operated, or otherwise used by Isla or any of its Subsidiaries, or at or from any offsite location where Hazardous Materials from Isla’s or its Subsidiaries’ operations have been sent for treatment, disposal, storage or handling.

(d) Isla and its Subsidiaries have not (i) generated, treated, stored, arranged for the disposal of, manufactured, distributed, or, to Isla’s knowledge, exposed any Person to any Hazardous Materials, so as to result in material liability to Isla or its Subsidiaries under Environmental Law, or (ii) assumed, provided an indemnity (excluding reasonable customary indemnities in master services agreements) with respect to or otherwise become subject to any such material outstanding liability of any other Person under Environmental Laws.

(e) There have been no written reports of non-privileged environmental investigations, studies, site assessments, reviews, or audits that are in the possession or reasonable control of Isla or its Subsidiaries addressing material or potentially material environmental matters with respect to any of their operations or any property owned, operated or otherwise used by any of them that have not been delivered or otherwise made available to the Company.

Except for the representations and warranties contained in Section 5.5, Section 5.6 and Section 5.7, this Section 5.17 contains the sole and exclusive representations and warranties of Isla with respect to Environmental Laws and Hazardous Materials.

5.18 Material Contracts.

(a) Schedule 5.18 of the Isla Disclosure Letter sets forth a true and complete list, as of the date of this Agreement, of the following to which Isla or any of its Subsidiaries is party or by which any of their respective assets are bound:

(i) each contract that provides for the acquisition, disposition, license, use, distribution or outsourcing of assets, services, rights or properties (other than Oil and Gas Properties) with respect to which Isla reasonably expects that Isla and its Subsidiaries will make annual payments in excess of $7,500,000 or aggregate payments in excess of $15,000,000;

(ii) each contract relating to Indebtedness or the deferred purchase price of property by Isla or any of its Subsidiaries (whether incurred, assumed, guaranteed or secured by any asset), other than agreements solely between or among Isla and its Subsidiaries, or those involving an amount of Indebtedness or deferred purchase price, individually or in the aggregate, in excess of $30,000,000;

(iii) any acquisition or divestiture contract that contains “earn out” or other contingent payment obligations, or remaining indemnity or similar obligations (other than asset retirement obligations, plugging and abandonment obligations and other reserves of Isla set forth in the Isla Reserve Reports), that would reasonably be expected to result in aggregate payments in excess of $30,000,000;

 

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(iv) each contract for lease of personal property or real property (other than Oil and Gas Properties) involving payments in excess of $7,500,000 in any calendar year or aggregate payments in excess of $15,000,000 that are not terminable without penalty or other liability to Isla or its Subsidiaries (other than any ongoing obligation pursuant to such contract that is not caused by any such termination) within 60 days, other than contracts related to drilling rigs;

(v) each contract that is a non-competition contract or other contract that (A) purports to limit in any material respect either the type of business in which Isla or its Subsidiaries (or, after the Merger Effective Time, New PubCo or its Subsidiaries) may engage or the manner or locations in which any of them may so engage in any business (including any contract containing any area of mutual interest, joint bidding area, joint acquisition area, or non-compete or similar type of provision), (B) could require the disposition of any material assets or line of business of Isla or its Subsidiaries (or, after the Merger Effective Time, New PubCo or its Subsidiaries) or (C) prohibits or limits the rights of Isla or any of its Subsidiaries to make, sell or distribute any products or services, or use, transfer or distribute, or enforce any of their rights with respect to, any of their material assets;

(vi) each contract involving the pending acquisition or sale of (or option to purchase or sell), or swap or exchange of, any Oil and Gas Properties of Isla or its Subsidiaries for consideration in excess of $30,000,000, other than contracts involving the acquisition or sale of (or option to purchase or sell) Hydrocarbons in the ordinary course of business;

(vii) each contract for any Derivative Transaction;

(viii) each collective bargaining agreement or other labor-related contract with a labor union, works council, or other labor organization;

(ix) each material partnership, joint venture or limited liability company agreement, other than any customary joint operating agreements, unit agreements or participation agreements affecting the Oil and Gas Properties of Isla or its Subsidiaries;

(x) each joint development agreement, exploration agreement, participation, farmout, farmin or program agreement or similar contract requiring Isla or any of its Subsidiaries to make expenditures that would reasonably be expected to be in excess of $15,000,000 in the aggregate during the 12-month period following the date of this Agreement, other than customary joint operating agreements and continuous development obligations under Oil and Gas Leases;

(xi) each agreement under which Isla or any of its Subsidiaries has advanced or loaned any amount of money to any of its officers, directors, employees or consultants, in each case with a principal amount in excess of $120,000;

 

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(xii) any Hydrocarbon purchase and sale, marketing, transportation, gathering, processing, storage or similar contract that is not terminable without penalty upon 30 days’ notice or less and that (A) involves the transportation, gathering, processing, purchase, sale or storage of more than 75 MMcf of gaseous Hydrocarbons per day, or 6,000 barrels of liquid Hydrocarbons per day, or (B) provides for an acreage dedication in excess of 7,500 gross surface acres, or (C) that could reasonably be expected to result in the payment by Isla or any of its Subsidiaries of an amount in excess of $15,000,000 over the remaining term of such agreement;

(xiii) any contract not entered into in the ordinary course of business that is a water rights agreement or disposal agreement or relates to the sourcing, transportation or disposal of water (including brine water and flowback water) produced from, or used in connection with the Oil and Gas Properties of Isla and its Subsidiaries, in each case, that (A) is not terminable without penalty upon 30 days’ notice or less, (B) provides for an acreage dedication in excess of 2,500 gross surface acres or (C) that could reasonably be expected to result in the payment by Isla or any of its Subsidiaries of an amount in excess of $1,000,000 over the remaining term of such agreement;

(xiv) any contract that provides for a “take-or-pay” clause or any similar prepayment obligation, acreage dedication, minimum volume commitments or capacity reservation fees to a gathering, transportation or other arrangement downstream of the wellhead, that cover, guaranty or commit volumes of Hydrocarbons, water or any other product of Isla or its Subsidiaries that has a remaining term of greater than 60 days and does not allow Isla or any of its Subsidiaries to terminate it without penalty to Isla or such Subsidiary within 60 days;

(xv) any contract with any Governmental Entity (other than the Isla Permits, Oil and Gas Leases, joint operating agreements and unit agreements);

(xvi) any contract that obligates Isla or any of its Subsidiaries to make any future capital commitment, loan or expenditure in an amount in excess of $10,000,000, other than customary joint operating agreements, unit operating agreements or continuous development obligations under Oil and Gas Leases;

(xvii) each contract for any Isla Related Party Transaction; and

(xviii) each agreement that contains any “most favored nation” or most favored customer provision, call or put option, preferential right or rights of first or last offer, negotiation or refusal, in each case other than those contained in (a) any agreement in which such provision is solely for the benefit of the Isla or any of its Subsidiaries, (b) customary royalty pricing provisions in Oil and Gas Leases or (c) customary preferential rights in joint operating agreements, unit agreements or participation agreements affecting the business or the Oil and Gas Properties of Isla or any of its Subsidiaries, to which Isla or any of its Subsidiaries or any of their respective Affiliates is subject, and is material to the business of the Isla and its Subsidiaries, taken as a whole.

 

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(b) Collectively, the contracts set forth in Section 5.18(a) are herein referred to as the “Isla Contracts.” A complete and correct copy of each of the Isla Contracts has been made available to the Company. Except as has not had and would not reasonably be expected to have, individually or in the aggregate, an Isla Material Adverse Effect, each Isla Contract is legal, valid, binding and enforceable in accordance with its terms on Isla and each of its Subsidiary that is a party thereto and, to the knowledge of Isla, each other party thereto, and is in full force and effect, subject, as to enforceability, to Creditors’ Rights. Except as has not had and would not reasonably be expected to have, individually or in the aggregate, an Isla Material Adverse Effect, (i) neither Isla nor any of its Subsidiaries is in breach or default under any Isla Contract nor, to the knowledge of Isla, is any other party to any such Isla Contract in breach or default thereunder, and (ii) no event has occurred that with the lapse of time or the giving of notice or both would constitute a default thereunder by Isla or its Subsidiaries, or, to the knowledge of Isla, any other party thereto. There are no disputes pending or, to the knowledge of Isla, threatened with respect to any Isla Contract and neither Isla nor any of its Subsidiaries has received any written notice of the intention of any other party to any Isla Contract to terminate for default, convenience or otherwise any Isla Contract, nor to the knowledge of Isla, is any such party threatening to do so, in each case except as has not had or would not reasonably be expected to have, individually or in the aggregate, an Isla Material Adverse Effect.

5.19 Insurance. Set forth on Schedule 5.19 of the Isla Disclosure Letter is a true, correct and complete list of all material insurance policies held by Isla or any of its Subsidiaries as of the date of this Agreement (collectively, the “Material Isla Insurance Policies”). Except as has not had and would not reasonably be expected to have, individually or in the aggregate, an Isla Material Adverse Effect:

(a) Each of Material Isla Insurance Policies is in full force and effect on the date of this Agreement and a true, correct and complete copy of each Material Company Insurance Policy has been made available to Isla;

(b) all premiums payable under the Material Isla Insurance Policies prior to the date of this Agreement have been duly paid to date and neither Isla nor any of its Subsidiaries has taken any action or failed to take any action that (including with respect to the Transactions), with notice or lapse of time or both, would constitute a breach or default, or permit a termination of any of the Material Isla Insurance Policies; and

(c) as of the date of this Agreement, no written notice of cancellation or termination has been received with respect to any Material Isla Insurance Policy.

 

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5.20 Brokers. Except for the fees and expenses payable to Wells Fargo Securities, LLC, no broker, investment banker, or other Person is entitled to any broker’s, finder’s or other similar fee or commission in connection with the Transactions based upon arrangements made by or on behalf of the Isla Parties.

5.21 Ownership of Company Capital Stock. Neither Isla nor any of its Subsidiaries own any shares of Company Capital Stock (or other securities convertible into, exchangeable for or exercisable for shares of Company Capital Stock).

5.22 Business Conduct. Since their respective inception, none of New PubCo, OpCo, C Merger Sub and L Merger Sub has engaged in any activity, or incurred any liabilities or obligations, in each case, other than such actions as were taken, and such liabilities and obligations as were incurred in the ordinary course of business solely in connection with: (a) its organization and (b) the preparation, negotiation and execution of this Agreement and the Transactions (including the Pre-Signing Transactions).

5.23 Regulatory Matters.

(a) None of the Isla Parties is (i) an “investment company” or a company “controlled” by an “investment company” within the meaning of the U.S. Investment Company Act of 1940 or (ii) a “holding company,” a “subsidiary company” of a “holding company,” as each such term is defined in the U.S. Public Utility Holding Company Act of 2005.

(b) All natural gas pipeline systems and related facilities constituting Isla’s and its Subsidiaries’ properties are (i) “gathering facilities” that are exempt from regulation by the U.S. Federal Energy Regulatory Commission under the Natural Gas Act of 1938 and (ii) not subject to rate regulation or comprehensive nondiscriminatory access regulation under the Laws of any state or other local jurisdiction.

5.24 Rights-of-Way. Each of Isla and its Subsidiaries has such Consents, easements, rights-of-way, permits and licenses from each Person (collectively, the “Isla Rights-of-Way”, and together with the Company Rights-of-Way, the “Rights-of-Way”) as are sufficient to conduct its business as presently conducted in the ordinary course, except for such Isla Rights-of-Way the absence of which has not had and would not reasonably be expected to have, individually or in the aggregate, an Isla Material Adverse Effect. Each of Isla and its Subsidiaries has fulfilled and performed all its material obligations with respect to such Isla Rights-of-Way and conduct their business in a manner that does not violate any of the Isla Rights-of-Way and no event has occurred that allows, or after notice or lapse of time would allow, revocation or termination thereof or would result in any impairment of the rights of the holder of any such Isla Rights-of-Way, except for such revocations, terminations and impairments that have not had and would not reasonably be expected to have, individually or in the aggregate, an Isla Material Adverse Effect. All pipelines operated by Isla and its Subsidiaries are located on or are subject to valid Isla Rights-of-Way, or are located on real property owned or leased by Isla, and there are no gaps (including any gap arising as a result of any breach by Isla or any of its Subsidiaries of the terms of any Isla Rights-of-Way) in the Isla Rights-of-Way other than gaps that have not had and would not reasonably be expected to have, individually or in the aggregate, an Isla Material Adverse Effect.

 

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5.25 Derivative Transactions.

(a) Except as has not had and would not reasonably be expected to have, individually or in the aggregate, an Isla Material Adverse Effect, all Derivative Transactions entered into by Isla or any of its Subsidiaries or for the account of any of its customers as of the date of this Agreement were entered into in accordance with applicable Laws, and in accordance with the investment, securities, commodities, risk management and other policies, practices and procedures employed by Isla and its Subsidiaries, and were entered into with counterparties believed at the time to be financially responsible and able to understand (either alone or in consultation with their advisers) and to bear the risks of such Derivative Transactions.

(b) Except as has not had and would not reasonably be expected to have, individually or in the aggregate, an Isla Material Adverse Effect, Isla and each of its Subsidiaries have duly performed in all respects all of their respective obligations under the Derivative Transactions to the extent that such obligations to perform have accrued, and there are no current or ongoing breaches, violations, collateral deficiencies, requests for collateral or demands for payment, or defaults or allegations or assertions of such by any party thereunder.

(c) Schedule 5.25 of the Isla Disclosure Letter sets forth, as of the date of this Agreement, all Derivative Transactions to which the Isla or any of its Subsidiaries is a party, and summarizes, in all material respects, the outstanding positions under any Derivative Transaction of Isla and its Subsidiaries, including Hydrocarbon and financial positions under any Derivative Transaction of Isla attributable to the production and marketing of Isla and its Subsidiaries, as of the dates reflected therein.

5.26 Related Party Transactions. Schedule 5.26 of the Isla Disclosure Letter sets forth, as of the date of this Agreement, a complete and correct list of any transaction or arrangement involving in excess of $120,000 under which any (a) present or former executive officer or director of Isla or any of its Subsidiaries (excluding employment compensation and benefits payable thereto or other items related to employment thereof by Isla or such Subsidiary), (b) any direct or indirect holder of equity interests in Isla (including the Series I Preferred Stockholder) or the Series I Preferred Stockholder, or (c) Affiliate, “associate” or member of the “immediate family” (as such terms are respectively defined in Rules 12b-2 and 16a-1 of the Exchange Act) of any of the foregoing is a party to any actual or proposed loan, lease or other contract with or binding upon Isla or any of its Subsidiaries or any of their respective properties or assets or has any interest in any property owned by Isla or any of its Subsidiaries, in each case, including any bond, letter of credit, guarantee, deposit, cash account, escrow, policy of insurance or other credit support instrument or security posted or delivered by any Person listed in clauses (a), (b) or (c) in connection with the operation of the business of the Company or any of its Subsidiaries (each of the foregoing, an “Isla Related Party”, and each such transaction or arrangement, an “Isla Related Party Transaction”).

 

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5.27 Certain Transactions.

(a) The Pre-Signing Transactions have been consummated as described in the Recitals to this Agreement and in accordance with the Organizational Documents of the parties thereto, and true, complete and correct copies of the formation documents and any other documents and agreements providing for such Pre-Signing Transactions have been provided to the Company or its Representatives prior to the date of this Agreement, which formation documents and other documents and agreements have not been amended, restated, modified, supplemented or terminated in any material respect.

(b) As of immediately prior to the Merger, on the Closing Date, the OpCo Recapitalization, the Distribution and the Isla Merger shall have been consummated as described in Sections 2.1, 2.2, and 2.3, respectively, and in accordance with the Organizational Documents of the parties thereto.

(c) As of immediately prior to the Closing, the Isla Management Agreement shall have be terminated in full, without any consideration becoming due and payable on the part of any party thereto as a result of such termination, and without any further liability or obligation on the part of either party thereto under the terms thereof. Such termination shall not have an Isla Material Adverse Effect.

5.28 Sufficient Funds. As of the Closing Date, New PubCo will have access to sufficient funds to pay to each holder (or administrative agent or other authorized representative of such holders) of Subject Indebtedness the aggregate amount necessary to fully satisfy all outstanding principal, interest, Debt Prepayment Expenses, and all outstanding fees, costs and expenses payable by the Company and its Subsidiaries in respect of such Subject Indebtedness as of the anticipated Closing Date (and the daily accrual thereafter), pursuant to and in accordance with the Payoff Letters.

5.29 No Additional Representations.

(a) Except for the representations and warranties made in this Article V, neither Isla nor any other Person makes any express or implied representation or warranty with respect to Isla or its Subsidiaries or their respective businesses, operations, assets, liabilities or conditions (financial or otherwise) in connection with this Agreement or the Transactions, and Isla Parties hereby disclaim any such other representations or warranties. In particular, without limiting the foregoing disclaimer, neither Isla nor any other Person makes or has made any representation or warranty to the Company or any of its Affiliates or Representatives with respect to (i) any financial projection, forecast, estimate, budget or prospect information relating to Isla or any of its Subsidiaries or their respective businesses; or (ii) except for the representations and warranties made by Isla in this Article V, any oral or written information presented to the Company or any of its Affiliates or Representatives in the course of their due diligence investigation of Isla, the negotiation of this Agreement or in the course of the Transactions.

(b) Notwithstanding anything contained in this Agreement to the contrary, Isla acknowledges and agrees that none of the Company or any other Person has made or is making any representations or warranties relating to the Company or its Subsidiaries whatsoever, express or implied, beyond those expressly given by the Company in Article IV, including any implied representation or warranty as to the accuracy or completeness of any information regarding the Company furnished or made available to Isla, or any of its Representatives and that no Isla Party has relied on any such other representation or

 

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warranty not set forth in this Agreement. Without limiting the generality of the foregoing, Isla acknowledges that no representations or warranties are made with respect to any projections, forecasts, estimates, budgets or prospect information that may have been made available to Isla or any of its Representatives (including in certain “data rooms,” “virtual data rooms,” management presentations or in any other form in expectation of, or in connection with, the Transactions).

ARTICLE VI

COVENANTS AND AGREEMENTS

6.1 Conduct of Company Business Pending the Merger.

(a) Except (i) as set forth on Schedule 6.1(a) of the Company Disclosure Letter, (ii) as expressly permitted or required by this Agreement (including in connection with the Conversions), (iii) as may be required by applicable Law (including COVID-19 Measures), or (iv) otherwise consented to by Isla in writing (such consent not to be unreasonably withheld, conditioned or delayed), the Company covenants and agrees that, until the earlier of the Merger Effective Time and the termination of this Agreement pursuant to Article VIII, it shall, and shall cause each of its Subsidiaries to, use commercially reasonable efforts to conduct its businesses in the ordinary course, including by using reasonable best efforts to preserve substantially intact its present business organization and assets and preserve its existing relationships with Governmental Entities and its significant customers, suppliers, lessors and others having significant business dealings with it of business in all material respects.

(b) Except as set forth on the corresponding subsection of Schedule 6.1(b) of the Company Disclosure Letter, as expressly permitted or required by this Agreement (including in connection with the Conversions), as may be required by applicable Law (including COVID-19 Measures) or otherwise consented to by Isla in writing (such consent not to be unreasonably withheld, conditioned or delayed), until the earlier of the Merger Effective Time and the termination of this Agreement pursuant to Article VIII the Company shall not, and shall not permit its Subsidiaries to:

(i) (A) declare, set aside or pay any dividends on, or make any other distribution in respect of any outstanding capital stock of, or other equity interests in, the Company or its Subsidiaries, except for dividends and distributions by a direct or indirect wholly owned Subsidiary of the Company to the Company or another direct or indirect wholly owned Subsidiary of the Company; (B) split, combine or reclassify any capital stock of, or other equity interests in, or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for equity interests in the Company or any of its Subsidiaries; or (C) purchase, redeem or otherwise acquire, or offer to purchase, redeem or otherwise acquire, any capital stock of, or other equity interests in, the Company or any Subsidiary of the Company, except as required by the terms of any capital stock or equity interest of a Subsidiary existing and disclosed to Isla as of the date hereof or in respect of any Company Restricted Stock Award, Company PSU Award or Company Stock Option Award outstanding as of the date hereof, or issued after the date hereof in accordance with this Agreement, in accordance with the terms of a Company Equity Plan and applicable award agreements;

 

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(ii) offer, issue, deliver, grant or sell, or authorize or propose to offer, issue, deliver, grant or sell, any capital stock of, or other equity interests in, the Company or any of its Subsidiaries or any securities convertible into, or any rights, warrants or options to acquire, any such capital stock or equity interests, other than: (A) the delivery of Company Common Stock upon the vesting or lapse of any restrictions on any Company Restricted Stock Awards or Company PSU Awards or the exercise of any Company Stock Option Award, in each case, outstanding on the date hereof or issued after the date hereof in accordance with Section 6.1(b)(ix)(C) of this Agreement, in accordance with the terms of a Company Equity Plan and applicable award agreements; and (B) issuances by a wholly owned Subsidiary of the Company of such Subsidiary’s capital stock or other equity interests to the Company or any other wholly owned Subsidiary of the Company;

(iii) amend or propose to amend the Company’s Organizational Documents or amend or propose to amend the Organizational Documents of any of the Company’s Subsidiaries (other than ministerial changes);

(iv) (A) merge, consolidate, combine or amalgamate with any Person other than between wholly owned Subsidiaries of the Company or (B) acquire or agree to acquire (including by merging or consolidating with, purchasing any equity interest in or a substantial portion of the assets of, licensing, or by any other manner), (1) any business or any corporation, partnership, association or other business organization or division thereof for which the consideration is in excess of $15,000,000 (inclusive of any assumed debt), individually or in the aggregate, or (2) any assets of any other Person, for which the consideration is in excess of $15,000,000 (inclusive of any assumed debt), individually or in the aggregate;

(v) sell, lease, swap, exchange, transfer, farmout, license, Encumber (other than Permitted Encumbrances), abandon, permit to lapse, discontinue or otherwise dispose of, or agree to sell, lease, swap, exchange, transfer, farmout, license, Encumber (other than Permitted Encumbrances), abandon, permit to lapse, discontinue or otherwise dispose of, any material portion of its assets or properties; other than (A) sales, leases, exchanges or dispositions for which the consideration is less than $10,000,000 individually or $20,000,000 in the aggregate, (B) sales or dispositions of obsolete or worthless equipment in the ordinary course of business consistent with past practice, or (C) the sale of Hydrocarbons in the ordinary course of business;

(vi) authorize, recommend, propose, enter into, adopt a plan or announce an intention to adopt a plan of complete or partial liquidation or dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries, other than such transactions among wholly owned Subsidiaries of the Company;

 

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(vii) change in any material respect their material accounting principles, practices or methods that would materially affect the consolidated assets, liabilities or results of operations of the Company and its Subsidiaries, except as required by GAAP or applicable Law;

(viii) (A) make, change or revoke any material Tax election, (B) change an annual Tax accounting period or adopt or change any material Tax accounting method, (C) file any Tax Return in a manner materially inconsistent with past practice or file any material amended Tax Return, (D) surrender any right to claim a material Tax refund, (E) enter into any material closing agreement with respect to Taxes, (F) settle or compromise any material Tax Proceeding or (G) consent to an extension or waiver of the statute of limitations with respect to the assessment or determination of any material Tax;

(ix) (A) except to the extent required by the terms of any Company Plan as in effect on the date hereof, increase or grant any increases in the compensation payable or to become payable to, or the benefits provided or to be provided to, any of its current or former Company Employees, directors, officers, or other individual service providers, (i) outside the ordinary course of business consistent with past practice or (ii) to any individual who earns in excess of $150,000 in annual compensation, (B) take any action to accelerate the vesting or lapsing of restrictions or payment, or fund or in any other way secure the payment, of compensation or benefits under any Company Plan, (C) grant any equity-based awards, or amend or modify the terms of any outstanding equity-based awards, except the grant of equity awards to the Company’s non-employee directors in the ordinary course of business, (D) enter into any new, or amend any existing, employment or severance or termination agreement with any current or former Company Employee, director, officer or individual service provider; (E) pay any cash bonuses, other than annual cash bonuses in the ordinary course of business and consistent with past practice as required by a Company Plan existing as of the date hereof and set forth on Schedule 4.10(a) of the Company Disclosure Letter; (F) establish any Company Plan which was not in existence as of the date of this Agreement, or amend any such plan or arrangement in existence on the date of this Agreement, or terminate any Company Plan, in each case, except as required by Law or (G) transfer, hire or terminate (other than for cause) any Company Employee or engage any individual service provider, in each case who earns in excess of $150,000 in annual compensation;

(x) enter into any collective bargaining agreements or other agreements with any labor union, works council, or other representative of employees, or recognize any labor union, works council, or other labor organization as the bargaining representative of any employees;

(xi) (A) incur, create or assume any Indebtedness or guarantee any such Indebtedness of another Person or (B) create any Encumbrances on any property or assets of the Company or any of its Subsidiaries in connection with any Indebtedness thereof, other than Permitted Encumbrances; provided, however, that the foregoing shall not restrict the incurrence of Indebtedness (1) that is Subject

 

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Indebtedness, in an amount not to exceed $20,000,000, (2) that is owed to the Company or any of its Subsidiaries, (3) that is incurred or assumed in connection with any acquisition permitted pursuant to Section 6.1(b)(iv) or (4) the creation of any Encumbrances securing any Indebtedness permitted by the foregoing;

(xii) (A) enter into any contract that would be a Company Contract if it were in effect on the date of this Agreement, or (B) modify or amend in any material respect, terminate or assign, waive any material rights under, or assign any rights under, any Company Contract;

(xiii) cancel, modify or waive any debts or claims held by the Company or any of its Subsidiaries or waive any rights held by the Company or any of its Subsidiaries having a value in excess of $2,000,000 in the aggregate;

(xiv) waive, release, assign, settle or compromise or offer or propose to waive, release, assign, settle or compromise, any Proceeding (excluding any Proceeding with respect to Taxes, which are addressed in clause (viii) above) other than (A) the settlement of such Proceedings involving only the payment of monetary damages by Company or any of its Subsidiaries of any amount exceeding $2,000,000 in the aggregate; and (B) as would not result in any restriction on future activity or conduct or a finding or admission of a violation of Law; provided, that the Company shall be permitted to settle any Transaction Litigation in accordance with Section 6.9;

(xv) make or commit to make any capital expenditures that are, in the aggregate greater than 120% of the aggregate amount of capital expenditures scheduled to be made in the Company’s capital expenditure budget for the period indicated as set forth in Schedule 6.1(b)(xv) of the Company Disclosure Letter, except for capital expenditures (x) to repair damage resulting from insured casualty events or capital expenditures required on an emergency basis or for the safety of individuals, assets or the environment (provided that the Company shall notify Isla of any such emergency expenditure as soon as reasonably practicable) or (y) related to onshore plugging and abandonment obligations;

(xvi) fail to maintain in full force and effect in all material respects, or fail to replace or renew, the material insurance policies of the Company and its Subsidiaries to the extent commercially reasonable in the Company’s business judgment in light of prevailing conditions in the insurance market;

(xvii) take any action, or cause any action to be taken, which action would prevent or impede, or that could reasonably be expected to prevent or impede, the Transactions from qualifying for the Intended Tax Treatment; or

(xviii) agree to take any action that is prohibited by this Section 6.1(b).

 

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6.2 Conduct of Isla Business Pending the Merger.

(a) Except (i) as set forth on Schedule 6.2(a) of the Isla Disclosure Letter, (ii) as expressly permitted or required by this Agreement, (iii) as may be required by applicable Law (including COVID-19 Measures), or (iv) otherwise consented to by the Company in writing (such consent not to be unreasonably withheld, conditioned or delayed), each of the Isla Parties covenants and agrees that, until the earlier of the Merger Effective Time and the termination of this Agreement pursuant to Article VIII, it shall, and shall cause each of its Subsidiaries to, use commercially reasonable efforts to conduct its businesses in the ordinary course of business, including by using reasonable best efforts to preserve substantially intact its present business organization and assets and preserve its existing relationships with Governmental Entities and its significant customers, suppliers, lessors and others having significant business dealings with it in all material respects.

(b) Except as set forth on the corresponding subsection of Schedule 6.2(b) of the Isla Disclosure Letter, as expressly permitted or required by this Agreement, as may be required by applicable Law (including any COVID-19 Measures) or otherwise consented to by the Company in writing (such consent not to be unreasonably withheld, conditioned or delayed), until the earlier of the Merger Effective Time and the termination of this Agreement pursuant to Article VIII, each Isla Party shall not, and shall not permit any of its Subsidiaries to:

(i) (A) declare, set aside or pay any dividends on, or make any other distribution in respect of any outstanding capital stock of, or other equity interests in, Isla or any of its Subsidiaries, except for cash dividends or distributions made or issued (w) by a direct or indirectly wholly owned Subsidiary of Isla to Isla, (x) to another direct or indirect wholly owned Subsidiary of Isla or (y) by Isla to its members in the ordinary course of business, consistent with past practice, with respect to each of the first two fiscal quarters of 2021, or (z) by any of its Subsidiaries to their members as is necessary to satisfy any distribution obligations (including tax distributions) set forth in the Organizational Documents of such Subsidiary, or in connection with distributions by Isla pursuant to clause (y); (B) split, combine or reclassify any capital stock of, or other equity interests in, or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for equity interests in Isla or any of its Subsidiaries; or (C) purchase, redeem or otherwise acquire, or offer to purchase, redeem or otherwise acquire, any capital stock of, or other equity interests in, Isla or any of its Subsidiaries, except as required by the terms of any equity interest of Isla or any of its Subsidiaries and disclosed to the Company as of the date hereof, or issued after the date hereof in accordance with this Agreement, in accordance with the terms of an Isla Plan and the applicable award agreements;

(ii) offer, issue, deliver, grant or sell, or authorize or propose to offer, issue, deliver, grant or sell, any capital stock of, or other equity interests in, Isla or any of its Subsidiaries or any securities convertible into, or any rights, warrants or options to acquire, any such capital stock or equity interests, other than (1) issuances by a wholly owned Subsidiary of Isla of such Subsidiary’s capital stock

 

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or other equity interests to any other wholly owned Subsidiary of Isla; or (2) such grants to employees or other service providers of Isla and its Subsidiaries in the ordinary course of business; provided, however, that it shall not be a violation of this Section 6.2(b) if any action is taken pursuant to Section 6.5 of this Agreement or if Isla or any of its Subsidiaries (including New PubCo) (x) adopts the New PubCo Manager Incentive Plan (the “Manager Incentive Plan”) in substantially the form previously provided to the Company, so long as the total number of shares of New PubCo Class A Common Stock reserved under the Manager Incentive Plan does not exceed 10% of the total outstanding New PubCo Class A Common Stock in the aggregate, (y) adopts the New PubCo Equity Incentive Plan (the “Equity Incentive Plan”) for use following the Merger Effective Time, in substantially the form previously provided to the Company, so long as (1) the adoption of the Equity Incentive Plan is determined to be exempt from any requirement under the applicable rules of the NYSE to obtain approval of the stockholders of the Company at the Company Stockholders Meeting or otherwise and (2) the total number of shares of New PubCo Class A Common Stock reserved under the Equity Incentive Plan does not exceed 2% of the total outstanding New PubCo Class A Common Stock in the aggregate, or (z) grants an award pursuant to the Manager Incentive Plan using the form of award agreement attached as Exhibit B to the Management Services Agreement.

(iii) amend or propose to amend the Organizational Documents of any of the Isla Parties or Energy Finance in any material respect;

(iv) merge, consolidate, combine or amalgamate with any Person, other than between wholly owned Subsidiaries of the Company, or acquire or agree to acquire (including by merging or consolidating with, purchasing any equity interest in or a substantial portion of the assets of, licensing, or by any other manner), (1) any business or assets or any corporation, partnership, association or other business organization or division thereof or (2) any assets of any other Person, if, in each case of the foregoing clauses (1) or (2), (x) individually or in the aggregate, such acquisition or acquisitions would reasonably be expected to prevent, materially impede, materially interfere with or materially delay the consummation of the Transactions; provided, that, the prior written consent of the Company (not to be unreasonably withheld, conditioned or delayed) shall be required for any transaction described in this Section 6.2(b)(iv) that involves any such merger, consolidation, combination or amalgamation with, or any such acquisition of or from, any Isla Related Party;

(v) sell, lease, swap, exchange, transfer, farmout, license, Encumber (other than Permitted Encumbrances), abandon, permit to lapse, discontinue or otherwise dispose of, or agree to sell, lease, swap, exchange, transfer, farmout, license, Encumber (other than Permitted Encumbrances), abandon, permit to lapse, discontinue or otherwise dispose of, any material portion of its assets or properties; other than (A) sales, leases, exchanges or dispositions (other than to an Isla Related Party) for which the consideration is less than $100,000,000, individually or in the aggregate, (B) sales or dispositions of obsolete or worthless equipment in the

 

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ordinary course of business consistent with past practice, or (C) the sale of Hydrocarbons in the ordinary course of business; provided, that, the prior written consent of the Company (not to be unreasonably withheld, conditioned or delayed) shall be required for any transaction described in this Section 6.2(b)(v) that involves any such sale, lease, swap, exchange, transfer, farmout, license, or grant of any Encumbrance to, any Isla Related Party.

(vi) authorize, recommend, propose, enter into, adopt a plan or announce an intention to adopt a plan of complete or partial liquidation or dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of Isla or any of its Subsidiaries, other than such transactions or actions solely by or among wholly owned Subsidiaries of Isla;

(vii) change in any material respect their material accounting principles, practices or methods that would materially affect the consolidated assets, liabilities or results of operations of Isla and its Subsidiaries, except as required by GAAP or applicable Law;

(viii) in each case solely with respect to non-income Taxes, (A) make, change or revoke any material Tax election, (B) change an annual Tax accounting period or adopt or change any material Tax accounting method, (C) file any Tax Return in a manner materially inconsistent with past practice or file any material amended Tax Return, (D) surrender any right to claim a material Tax refund, (E) enter into any material closing agreement with respect to Taxes, (F) settle or compromise any material Tax Proceeding or (G) consent to an extension or waiver of the statute of limitations with respect to the assessment or determination of any material Tax;

(ix) enter into any collective bargaining agreements or other agreements with any labor union, works council, or other representative of employees, or recognize any labor union, works council, or other labor organization as the bargaining representative of any employees;

(x) (A) incur, create or assume any Indebtedness or guarantee any such Indebtedness of another Person or (B) create any Encumbrances on any property or assets of Isla or any of its Subsidiaries in connection with any Indebtedness thereof, other than Permitted Encumbrances; provided, however, that the foregoing shall not restrict the incurrence of Indebtedness (1) under the Isla Debt Agreements, (2) that is owed to Isla or any of its Subsidiaries, (3) incurred or assumed in connection with any acquisition permitted pursuant to Section 6.2(b)(iv), (4) issued or incurred to refinance any Indebtedness outstanding as of the date hereof or permitted by the foregoing or (5) the creation of any Encumbrances securing any Indebtedness permitted by the foregoing;

(xi) cancel, modify or waive any debts or claims held by Isla or any of its Subsidiaries or waive any rights held by Isla or any of its Subsidiaries having a value in excess of $6,000,000 in the aggregate;

 

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(xii) waive, release, assign, settle or compromise or offer or propose to waive, release, assign, settle or compromise, any Proceeding other than (A) the settlement of such Proceedings involving only the payment of monetary damages by Isla or any of its Subsidiaries of any amount not exceeding $6,000,000 in the aggregate; and (B) as would not result in any restriction on future activity or conduct or a finding or admission of a violation of Law;

(xiii) fail to maintain in full force and effect in all material respects, or fail to replace or renew, the material insurance policies of Isla and its Subsidiaries to the extent commercially reasonable in Isla’s business judgment in light of prevailing conditions in the insurance market;

(xiv) take any action, or cause any action to be taken, which action would prevent or impede, or that could reasonably be expected to prevent or impede, the Transactions from qualifying for the Intended Tax Treatment;

(xv) enter into, modify, terminate or amend any contract that is an Isla Related Party Agreement (except (i) pursuant to Section 6.22, and (ii) for any acquisition or similar agreement that is executed and delivered by an Isla Related Party in connection with compliance with such Isla Related Party’s existing contractual allocation obligations with respect to such acquisition);

(xvi) make or commit to make any capital expenditures that are, in the aggregate, greater than $225,000,000, except for capital expenditures to repair damage resulting from insured casualty events or capital expenditures required on an emergency basis or for the safety of individuals, assets or the environment (provided that the Company shall notify Isla of any such emergency expenditure as soon as reasonably practicable); or

(xvii) agree to take any action that is prohibited by this Section 6.2(b).

6.3 No Solicitation.

(a) From and after the date of this Agreement until the Closing Date, or if earlier, the termination of this Agreement, except as otherwise provided in this Section 6.3, the Company and its officers and directors will, and will cause the Company’s Subsidiaries and respective officers and directors to, and will use their respective reasonable best efforts to cause the other Representatives of the Company and its Subsidiaries to, immediately cease, and cause to be terminated, any discussions or negotiations with any Person conducted heretofore by the Company or any of its Subsidiaries or Representatives with respect to any inquiry, proposal or offer that constitutes, or would reasonably be expected to lead to, a Company Competing Proposal. Within two Business Days of the date of this Agreement, the Company shall (i) deliver a written notice to each Person that has received non-public information regarding the Company within the six months prior to the date of this Agreement pursuant to a confidentiality agreement with the Company for purposes of evaluating any transaction that could reasonably be expected to be a Company Competing Proposal and for whom no similar notice has been delivered prior to the date of this Agreement requesting the prompt return or destruction of all confidential information

 

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concerning the Company and any of its Subsidiaries heretofore furnished to such Person and (ii) notify each officer and director of the Company of the terms of this Section 6.3. The Company will immediately terminate any physical and electronic data access related to any such potential Company Competing Proposal previously granted to such Persons.

(b) From and after the date of this Agreement, subject to Section 6.3(e), the Company and its officers and directors will not, and will cause the Company’s Subsidiaries and their respective officers and directors not to, and will use their respective reasonable best efforts to cause the other Representatives of the Company and its Subsidiaries not to, directly or indirectly:

(i) initiate, solicit, propose, knowingly encourage or knowingly facilitate any inquiry or the making of any proposal or offer that constitutes, or would reasonably be expected to result in, a Company Competing Proposal;

(ii) engage in, continue or otherwise participate in any discussions or negotiations with any Person relating to, or in furtherance of a Company Competing Proposal or any inquiry, proposal or offer that would reasonably be expected to lead to a Company Competing Proposal;

(iii) furnish any non-public information regarding the Company or its Subsidiaries, or access to the properties, assets or employees of the Company or its Subsidiaries, to any Person in connection with or in response to any Company Competing Proposal or any inquiry, proposal or offer that would reasonably be expected to lead to a Company Competing Proposal;

(iv) enter into any letter of intent or agreement in principle relating to, or other agreement providing for, a Company Competing Proposal (other than a confidentiality agreement as provided in Section 6.3(e)(ii) entered into in compliance with Section 6.3(e)(ii)); or

(v) submit any Company Competing Proposal to the approval of the stockholders of the Company;

provided, that, notwithstanding anything to the contrary in this Agreement, the Company or any of its Representatives may, in response to an unsolicited inquiry or proposal from a third party, (A) seek to clarify the terms and conditions of such inquiry or proposal to determine whether such inquiry or proposal constitutes a bona fide Company Competing Proposal, and (B) inform a third party or its Representative of the restrictions imposed by the provisions of this Section 6.3 (without conveying, requesting or attempting to gather any other information except as otherwise specifically permitted hereunder).

(c) From and after the date of this Agreement until the Closing Date, or, if earlier, the termination of this Agreement, the Company shall promptly (and in any event within 24 hours) notify Isla of the receipt by the Company (directly or indirectly) of any Company Competing Proposal or any expression of interest, inquiry, proposal or offer with respect to a Company Competing Proposal made on or after the date of this Agreement, any request for non-public information or data relating to the Company or any of its

 

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Subsidiaries made by any Person in connection with a Company Competing Proposal or any request for discussions or negotiations with the Company or a Representative of the Company relating to a Company Competing Proposal (including the identity of such Person), and the Company shall provide to Isla promptly (and in any event within 24 hours) (i) an unredacted copy of any such expression of interest, inquiry, proposal or offer with respect to a Company Competing Proposal made in writing provided to the Company or any of its Subsidiaries or (ii) if any such expression of interest, inquiry, proposal or offer with respect to a Company Competing Proposal is not (or any portion thereof is not) made in writing, a written summary of the material financial and other material terms thereof. Thereafter the Company shall (A) keep Isla reasonably informed, on a prompt basis (and in any event within 24 hours), of any material development regarding the status or terms of any such expressions of interest, proposals or offers (including any amendments thereto) or material requests and shall promptly (and in any event within 24 hours) apprise Isla of the status of any such discussions or negotiations and (B) provide to Isla as soon as practicable after receipt or delivery thereof (and in any event within 24 hours) copies of all material written correspondence and other material written materials provided to the Company or its Representatives from any Person. Without limiting the foregoing, the Company shall notify Isla if the Company determines to begin providing information or to engage in discussions or negotiations concerning a Company Competing Proposal, prior to providing any such information or engaging in any such discussions or negotiations.

(d) Except as permitted by Section 6.3(e), neither the Company Board (nor any committee thereof) shall:

(i) withhold, withdraw, qualify or modify, or publicly propose or announce any intention to withhold, withdraw, qualify or modify, in a manner adverse to the Isla Parties, the Company Board Recommendation;

(ii) fail to include the Company Board Recommendation in the Proxy Statement/Prospectus;

(iii) approve, endorse or recommend, or publicly propose or announce any intention to approve, endorse or recommend, any Company Competing Proposal;

(iv) publicly declare advisable or publicly propose to enter into, any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement, option agreement, joint venture agreement, partnership agreement or other agreement (other than a confidentiality agreement entered into in compliance with Section 6.3(e)(ii)), in each case, relating to a Company Competing Proposal (a “Company Alternative Acquisition Agreement”);

(v) in the case of a Company Competing Proposal that is structured as a tender offer or exchange offer pursuant to Rule 14d-2 under the Exchange Act for outstanding shares of Company Common Stock (other than by Isla or one of its Subsidiaries), fail to recommend, in a Solicitation/Recommendation Statement on Schedule 14D-9, against acceptance of such tender offer or exchange offer by its stockholders on or prior to ten Business Days (as such term is used in Rule 14d-9 of the Exchange Act) after commencement of such tender offer or exchange offer;

 

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(vi) if a Company Competing Proposal shall have been publicly announced or disclosed (other than pursuant to the foregoing clause (v)), fail to publicly reaffirm the Company Board Recommendation on or prior to ten Business Days after Isla so requests in writing (which requests shall be limited to no more than once every 30 days with respect to any specific Company Competing Proposal, provided that any material amendment or modification to any Company Competing Proposal (it being understood that any amendment or modification to the economic terms of the Company Competing Proposal shall be deemed material) shall be deemed to be a new Company Competing Proposal for this purpose); or

(vii) cause or permit the Company to enter into a Company Alternative Acquisition Agreement (together with any of the actions set forth in the foregoing clauses (i), (ii), (iii), (iv), (v), and (vi), a “Company Change of Recommendation”).

(e) Notwithstanding anything in this Agreement to the contrary:

(i) the Company Board may after consultation with its outside legal counsel, make such disclosures as the Company Board determines in good faith are necessary to comply with Rule 14d-9 or Rule 14e-2(a) promulgated under the Exchange Act or other disclosure required to be made in the Proxy Statement/Prospectus by applicable U.S. federal securities laws (including a “stop, look and listen” communication or similar communication of the type contemplated by Section 14d 9(f) under the Exchange Act); provided, however, that this Section 6.3(e)(i) shall not be deemed to permit the Company Board to make a Company Change of Recommendation except to the extent permitted by Section 6.3(e)(iii) or Section 6.3(e)(iv)).

(ii) prior to, but not after, the receipt of the Company Stockholder Approval, the Company and its Representatives may engage in the activities described in Sections 6.3(b)(ii) or 6.3(b)(iii) (it being understood that Section 6.3(b)(i) shall not prohibit actions otherwise permitted by this Section 6.3(e)(ii)) with any Person if (1) the Company receives a bona fide written Company Competing Proposal from such Person that was not solicited at any time following the execution of this Agreement by the Company, its officers or directors or any of its other Representatives and (2) such Company Competing Proposal did not otherwise arise from a breach of the obligations set forth in this Section 6.3; provided, however, that (A) no information that is prohibited from being furnished pursuant to Section 6.3(b) may be furnished until the Company receives an executed confidentiality agreement from such Person containing limitations on the use and disclosure of non-public information furnished to such Person by or on behalf of the Company that are no less favorable to the Company in the aggregate than the terms of the Confidentiality Agreement; (provided, further, that such confidentiality agreement does not contain provisions which prohibit the Company

 

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from providing any information to Isla in accordance with this Section 6.3 or that otherwise prohibits the Company from complying with this Section 6.3), (B) that any such non-public information has previously been made available to, or is made available to, Isla prior to or concurrently with (or in the case of oral non-public information only, promptly (and in any event within 24 hours) after) the time such information is made available to such Person, (C) prior to taking any such actions, the Company Board or any committee thereof determines in good faith, after consultation with its financial advisors and outside legal counsel, that such Company Competing Proposal is, or would reasonably be expected to lead to, a Company Superior Proposal, and (D) prior to taking any such actions, the Company Board determines in good faith after consultation with its outside legal counsel that failure to take such action would reasonably be expected to be inconsistent with the fiduciary duties owed by the Company Board to the stockholders of the Company under applicable Law;

(iii) prior to, but not after, the receipt of the Company Stockholder Approval, in response to a bona fide written Company Competing Proposal from a third party that was not solicited at any time following the execution of this Agreement by the Company, its officers or directors or any of its other Representatives and did not otherwise arise from a breach of the obligations set forth in this Section 6.3, if the Company Board so chooses, the Company Board may effect a Company Change of Recommendation or terminate this Agreement pursuant to Section 8.1(e), if:

(A) the Company Board determines in good faith after consultation with its financial advisors and outside legal counsel that such Company Competing Proposal is a Company Superior Proposal;

(B) the Company Board determines in good faith, after consultation with its outside legal counsel, that failure to effect a Company Change of Recommendation or terminate this Agreement pursuant to Section 8.1(e), as applicable, in response to such Company Superior Proposal would reasonably be expected to be inconsistent with the fiduciary duties owed by the Company Board to the stockholders of the Company under applicable Law;

(C) the Company provides Isla written notice of such proposed action and the basis thereof four Business Days in advance, which notice shall set forth in writing that the Company Board intends to consider whether to take such action and include a copy of the available proposed Company Competing Proposal and any applicable transaction and financing documents;

(D) after giving such notice and prior to effecting such Company Change of Recommendation or terminating this Agreement pursuant to Section 8.1(e), the Company negotiates (and causes its officers, employees, financial advisor and outside legal counsel to negotiate) in good faith with Isla (to the extent Isla wishes to negotiate) to make such adjustments or revisions to the terms of this Agreement as would permit the Company Board not to take such action in response thereto; and

 

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(E) at the end of the four Business Day period, prior to taking action to effect a Company Change of Recommendation or terminating this Agreement pursuant to Section 8.1(e), the Company Board takes into account any adjustments or revisions to the terms of this Agreement proposed by Isla in writing and any other information offered by Isla in response to the notice, and determines in good faith after consultation with its financial advisors and outside legal counsel, that the Company Competing Proposal remains a Company Superior Proposal and that the failure to effect a Company Change of Recommendation or terminate this Agreement pursuant to Section 8.1(e), as applicable, in response to such Company Superior Proposal would reasonably be expected to be inconsistent with the fiduciary duties owed by the Company Board to the stockholders of the Company under applicable Law; provided, that in the event of any material amendment or material modification to any Company Superior Proposal (it being understood that any amendment or modification to the economic terms of any such Company Superior Proposal shall be deemed material), the Company shall be required to deliver a new written notice to Isla and to comply with the requirements of this Section 6.3(e)(iii) with respect to such new written notice, except that the advance written notice obligation set forth in this Section 6.3(e)(iii) shall be reduced to three Business Days; provided, further, that any such new written notice shall in no event shorten the original four Business Day notice period; and

(iv) prior to, but not after, the receipt of the Company Stockholder Approval, in response to a Company Intervening Event that occurs or arises after the date of this Agreement and that did not arise from or in connection with a material breach of this Agreement by the Company, the Company may, if the Company Board so chooses, effect a Company Change of Recommendation; provided, however, that such a Company Change of Recommendation may not be made unless and until:

(A) the Company Board determines in good faith after consultation with its financial advisors and outside legal counsel that a Company Intervening Event has occurred;

(B) the Company Board determines in good faith, after consultation with its outside legal counsel, that failure to effect a Company Change of Recommendation in response to such Company Intervening Event would reasonably be expected to be inconsistent with the fiduciary duties owed by the Company Board to the stockholders of the Company under applicable Law;

 

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(C) the Company provides Isla written notice of such proposed action and the basis therefore four Business Days in advance, which notice shall set forth in writing that the Company Board intends to consider whether to take such action and includes a reasonably detailed description of the facts and circumstances of the Company Intervening Event;

(D) after giving such notice and prior to effecting such Company Change of Recommendation, the Company negotiates (and causes its officers, employees, financial advisor and outside legal counsel to negotiate) in good faith with Isla (to the extent Isla wishes to negotiate) to make such adjustments or revisions to the terms of this Agreement as would permit the Company Board not to effect a Company Change of Recommendation in response thereto; and

(E) at the end of the four Business Day period, prior to taking action to effect a Company Change of Recommendation, the Company Board takes into account any adjustments or revisions to the terms of this Agreement proposed by Isla in writing and any other information offered by Isla in response to the notice, and determines in good faith after consultation with its financial advisors and outside legal counsel, that the failure to effect a Company Change of Recommendation in response to such Company Intervening Event would reasonably be expected to be inconsistent with the fiduciary duties owed by the Company Board to the stockholders of the Company under applicable Law; provided, that in the event of any material changes regarding any Company Intervening Event, the Company shall be required to deliver a new written notice to Isla and to comply with the requirements of this Section 6.3(e)(iv) with respect to such new written notice, except that the advance written notice obligation set forth in this Section 6.3(e)(iv) shall be reduced to three Business Days; provided, further, that any such new written notice shall in no event shorten the original four Business Day notice period.

(f) During the period commencing with the execution and delivery of this Agreement and continuing until the earlier of the Merger Effective Time and termination of this Agreement in accordance with Article VIII, the Company shall not (and it shall cause its Subsidiaries not to) terminate, amend, modify or waive any provision of any confidentiality, “standstill” or similar agreement to which it or any of its Subsidiaries is a party.

(g) Notwithstanding anything to the contrary in this Section 6.3, any action, or failure to take action, that is taken by any Representative of the Company or any of its Subsidiaries, in each case, at the direction of a director or officer of the Company, in violation of this Section 6.3 shall be deemed to be a breach of this Section 6.3 by the Company.

 

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(h) From and after the date of this Agreement, the Isla Parties and their respective officers and directors and managers (excluding the Liberty Member (as defined in the A&R OpCo LLCA), its equityholders and Affiliates and any directors appointed thereby) will and will use their commercially reasonable efforts to cause the other Representatives (excluding the Liberty Member, its equityholders and Affiliates and any directors appointed thereby) of the Isla Parties to immediately cease, and cause to be terminated, any discussions or negotiations with any Person conducted heretofore by any of the Isla Parties or their Representatives (excluding the Liberty Member, its equityholders and Affiliates and any directors appointed thereby) with respect to any inquiry, proposal or offer that constitutes, or would reasonably be expected to lead to, an Isla Competing Proposal. Isla will immediately terminate any physical and electronic data access related to any such potential Isla Competing Proposal previously granted to such Persons by the Isla Parties or their Representatives (excluding the Liberty Member, its equityholders and Affiliates and any directors appointed thereby). From and after the date of this Agreement, the Isla Parties will not and will use their commercially reasonable efforts to cause the other Representatives of the Isla Parties (excluding the Liberty Member, its equityholders and Affiliates and any directors appointed thereby) not to, directly or indirectly (i) initiate, solicit, propose, knowingly encourage or knowingly facilitate any inquiry or the making of any proposal or offer that constitutes, or would reasonably be expected to result in, an Isla Competing Proposal, (ii) engage in, continue or otherwise participate in any discussions or negotiations with any Person relating to, or in furtherance of a an Isla Competing Proposal or any inquiry, proposal or offer that would reasonably be expected to lead to an Isla Competing Proposal (iii) furnish any non-public information regarding any of the Isla Parties, or access to the properties, assets or employees of any of the Isla Parties, to any Person in connection with or in response to any Isla Competing Proposal or any inquiry, proposal or offer that would reasonably be expected to lead to an Isla Competing Proposal, (iv) enter into any letter of intent or agreement in principle, or other agreement providing for an Isla Competing Proposal, or (v) submit any Isla Competing Proposal to the approval of the holders of equity interests of Isla.

6.4 Preparation of Proxy Statement/Prospectus and Registration Statement.

(a) The Company will, as promptly as practicable, furnish to Isla such data and information relating to it, its Subsidiaries and the holders of its capital stock, as Isla may reasonably request for the purpose of including such data and information in the Registration Statement, the Proxy Statement/Prospectus and any amendments or supplements thereto.

(b) Promptly following the date hereof, the Company, Isla and New PubCo shall cooperate in preparing, and Isla and New PubCo shall use their respective reasonable best efforts to cause to be filed with the SEC as promptly as practicable following the execution of this Agreement (and shall use such reasonable best efforts to cause such filing to occur no later than July 31, 2021), the mutually acceptable Registration Statement (of which the Proxy Statement/Prospectus will be a part). The Company shall use its reasonable best efforts to furnish the information required to be included in the Registration Statement with respect to the Company and its Subsidiaries and to provide such other assistance as may be reasonably requested by Isla and New PubCo in connection with the preparation and filing of the Registration Statement. Isla and New PubCo shall use its reasonable best efforts to cause the Registration Statement to become effective under the

 

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Securities Act as soon after such filing as reasonably practicable and Isla and New PubCo shall use their respective reasonable best efforts to keep the Registration Statement effective as long as is necessary to consummate the Transactions. As promptly as practicable following the date on which the Registration Statement is declared effective under the Securities Act, the Company shall cause to be filed with the SEC the Proxy Statement/Prospectus and shall cause the Proxy Statement/Prospectus to be mailed to the holders of Company Common Stock.

(c) Each of the Company, on the one hand, and Isla and New PubCo, on the other, will advise the other promptly after it receives any request by the SEC for amendment of the Registration Statement or the Proxy Statement/Prospectus or comments thereon and responses thereto or any request by the SEC for additional information. Each of the Company, on the one hand, and Isla and New PubCo, on the other, shall use reasonable best efforts to respond promptly to any comments of the SEC or its staff. Notwithstanding the foregoing, prior to filing the Registration Statement (or any amendment or supplement thereto) or the Proxy Statement/Prospectus, or mailing the Proxy Statement/Prospectus, as applicable, (or any amendment or supplement thereto) or responding to any comments of the SEC with respect thereto, each of the Company, on the one hand, and Isla and New PubCo, on the other, will (i) provide the other with a reasonable opportunity to review and comment on such document or response (including the proposed final version of such document or response), (ii) shall include in such document or response all comments reasonably and promptly proposed by the other (to the extent that such comments comply with the applicable requirements of the Securities Act and the Exchange Act, the applicable rules and regulations promulgated by the SEC, and any comments of the SEC or its staff); and (iii) shall not file or mail such document or respond to the SEC prior to receiving the approval of the other, which approval shall not be unreasonably withheld, conditioned or delayed; provided, that, neither such right of approval, nor such requirement of inclusion of such comments, in each case, on the part of Isla or New PubCo shall apply with respect to information relating to a Company Change of Recommendation that is permitted to be made in accordance with Sections 6.3(e)(iii) and 6.3(e)(iv). For the avoidance of doubt, no filing of the Registration Statement will be made by New PubCo, and no filing of the Proxy Statement/Prospectus will be made by the Company, in each case without providing the other parties with a reasonable opportunity to review and comment thereon.

(d) New PubCo and the Company shall make all necessary filings with respect to the Transactions under the Securities Act and the Exchange Act and applicable blue sky laws and the rules and regulations thereunder. Each Party will advise the other, promptly after it receives notice thereof, of the time when the Registration Statement has become effective or any supplement or amendment has been filed, the issuance of any stop order, the suspension of the qualification of the New PubCo Class A Common Stock issuable in connection with the Merger for offering or sale in any jurisdiction. Each of the Company, Isla and New PubCo will use reasonable best efforts to have any such stop order or suspension lifted, reversed or otherwise terminated.

 

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(e) If at any time prior to the Merger Effective Time, any information relating to Isla or the Company, or any of their respective Affiliates, officers or directors, should be discovered by Isla or the Company that should be set forth in an amendment or supplement to the Registration Statement or the Proxy Statement/Prospectus, as applicable, so that (i) the Registration Statement would not contain any misstatement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) the Proxy Statement/Prospectus filed or to be filed by New PubCo would not include any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading or (iii) the Proxy Statement/Prospectus filed or to be filed by the Company would not contain any statement which, at the time and in the light of the circumstances under which it is made, is false or misleading with respect to any material fact or omit to state any material fact necessary in order to make the statements therein not false or misleading or necessary to correct any statement in any earlier communication with respect to the solicitation of a proxy for the Company Stockholders Meeting which has become false or misleading, the Party which discovers such information shall promptly notify the other Party and an appropriate amendment or supplement describing such information shall be promptly filed with the SEC and, to the extent required by applicable Law, disseminated to the stockholders of the Company.

6.5 Stockholders Approval.

(a) As promptly as practicable after the Registration Statement is declared effective under the Securities Act, the Company shall take all action necessary in accordance with applicable Laws and the Organizational Documents of the Company to duly give notice of, convene and hold a meeting of its stockholders for the purpose of obtaining the Company Stockholder Approval, to be held as promptly as reasonably practicable after the Registration Statement is declared effective by the SEC (and in any event will use reasonable best efforts to convene such meeting within 45 days thereof). Except, in each case, as permitted by Section 6.3, (x) the Company Board shall recommend that the stockholders of the Company approve the Merger, (y) the Company Board shall solicit from stockholders of the Company proxies in favor of the Merger, and (z) the Proxy Statement/Prospectus shall include the Company Board Recommendation; provided, that, following a Company Change of Recommendation, the Company shall not be required to solicit proxies in favor of the Merger. Notwithstanding anything to the contrary contained in this Agreement, the Company (i) shall be required to adjourn or postpone the Company Stockholders Meeting (A) to the extent necessary to ensure that any legally required supplement or amendment to the Proxy Statement/Prospectus is provided to the Company stockholders, or (B) unless the Company Board has effected a Company Change of Recommendation, if, as of the time for which the Company Stockholders Meeting is scheduled, there are insufficient shares of Company Common Stock represented (either in person or by proxy) to constitute a quorum necessary to conduct business at such Company Stockholders Meeting, and (ii) may adjourn or postpone the Company Stockholder Meeting after consultation with Isla, if, as of the time for which the Company Stockholders Meeting is scheduled, there are insufficient shares of Company Common Stock voted in favor of the Merger, to obtain the Company Stockholder Approval; provided, however, that unless otherwise agreed to by the Parties, the Company Stockholders Meeting shall not be adjourned or postponed to a date that is more than ten Business Days after the date for which the meeting was previously scheduled (it being understood that such Company

 

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Stockholders Meeting shall be adjourned or postponed every time the circumstances described in the foregoing clauses (i)(A) or (B), but not more than twice, and shall not be adjourned more than twice pursuant to the foregoing clause (ii) without Isla’s consent); and provided, further, that the Company Stockholders Meeting shall not be adjourned or postponed to a date on or after three Business Days prior to the Outside Date. If reasonably requested by Isla, the Company shall promptly provide all voting tabulation reports relating to the Company Stockholders Meeting that have been prepared by the Company or the Company’s transfer agent, proxy solicitor or other Representative, and shall otherwise keep Isla reasonably informed regarding the status of the solicitation. Once the Company has established a record date for the Company Stockholders Meeting, the Company shall not change such record date or establish a different record date for the Company Stockholders Meeting without the prior written consent of Isla (which consent shall not be unreasonably withheld, conditioned or delayed), unless required to do so by applicable Law or its Organizational Documents or in connection with a postponement or adjournment permitted hereunder. Without the prior written consent of Isla (not to be unreasonably withheld, conditioned or delayed) or as required by applicable Law, (i) the adoption of this Agreement shall be the only matter (other than a non-binding advisory proposal regarding compensation that may be paid or become payable to the named executive officers of the Company in connection with the Merger and matters of procedure) that the Company shall propose to be acted on by the stockholders of the Company at the Company Stockholders Meeting and the Company shall not submit any other proposal to such stockholders in connection with the Company Stockholders Meeting or otherwise (including any proposal inconsistent with the adoption of this Agreement) and (ii) the Company shall not call any meeting of the stockholders of the Company other than the Company Stockholders Meeting; provided, that, the Company may (A) amend any Company Equity Plan in order to effectuate, and (B) submit a proposal to the stockholders of the Company at the Company Stockholders Meeting or at a meeting of the stockholders of the Company other than the Company Stockholders Meeting for approval of, in each case, without the prior written consent of Isla, the issuance of additional shares under such Company Equity Plan in an amount necessary to effectuate the treatment of any Company Restricted Stock Awards, Company PSU Awards, or Company Stock Option Awards pursuant to Section 3.4; provided, further, that, solely to the extent that it is determined under the applicable rules of the NYSE that the adoption of the Equity Incentive Plan requires the approval of the stockholders of the Company at the Company Stockholders Meeting or otherwise, then the Company shall adopt an amendment to any Company Equity Plan that provides an for additional share reserve for issuance following the Merger Effective Time in an amount equivalent to up to 2% of the total outstanding New PubCo Class A Common Stock and shall submit a proposal to the stockholders of the Company at the Company Stockholders Meeting or at a meeting of the stockholders of the Company other than the Company Stockholders Meeting for approval of such amendment (it being understood that the approval of any such proposal shall not be a condition to Closing with respect to any Party).

(b) Without limiting the generality of the foregoing, unless this Agreement shall have been terminated pursuant to Article VIII, the Company agrees that its obligations to hold the Company Stockholders Meeting pursuant to this Section 6.5 shall not be affected by the making of a Company Change of Recommendation and, except as expressly provided otherwise in this Section 6.5, its obligations pursuant to this Section 6.5 shall not be affected by the commencement, announcement, disclosure, or communication to the Company of any Company Competing Proposal or other proposal (including a Company Superior Proposal) or the occurrence or disclosure of any Company Intervening Event.

 

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(c) Immediately after the execution of this Agreement, (i) Isla, acting upon the approval of Isla’s Board of Directors obtained prior to the date of this Agreement in accordance with Isla’s Organizational Documents, shall duly approve and adopt this Agreement in its capacity as the sole stockholder of New PubCo required to approve and adopt this Agreement in accordance with applicable Law and the Organizational Documents of New PubCo and shall deliver to the Company evidence of its vote or action by written consent so approving and adopting this Agreement (other than board designation rights contemplated by the draft Board Letter Agreement shared among the Parties, which rights were granted in accordance with, and do not require the approval or consent of Isla under, the Organizational Documents of New PubCo), (ii) New PubCo, acting upon the approval of the New PubCo Board of Directors obtained prior to the date of this agreement, shall duly approve and adopt this Agreement in its capacity as the sole stockholder of C Merger Sub in accordance with applicable Law and the Organizational Documents of C Merger Sub and shall deliver to the Company evidence of its vote or action by written consent so approving and adopting this Agreement, and (iii) Isla shall deliver to the Company evidence of the action by unanimous written consent of each of the holders of equity interests of Isla approving and adopting this Agreement in accordance with applicable Law and the Organizational Documents of Isla and shall deliver to the Company evidence of such written consent so approving and adopting this Agreement.

6.6 Access to Information.

(a) Subject to applicable Law and the other provisions of this Section 6.6, the Company and Isla each shall (and shall cause its Subsidiaries to), upon request by the other, furnish the other with all information concerning itself, its Subsidiaries, directors, officers and stockholders and such other matters as may be reasonably necessary or advisable in connection with the Proxy Statement/Prospectus, the Registration Statement, or any other statement, filing, notice or application made by or on behalf of Isla, the Company or any of their respective Subsidiaries or Affiliates to any third party or any Governmental Entity in connection with the Transactions. The Company shall, and shall cause each of its Subsidiaries to, afford to Isla and its Representatives, during the period prior to the earlier of the Merger Effective Time and the termination of this Agreement pursuant to the terms of Section 8.1, reasonable access, at reasonable times upon reasonable prior notice, to the officers, employees, agents, properties, offices and other facilities of the Company and its Subsidiaries and to their books, records, contracts and documents and shall, and shall cause each of its Subsidiaries to, furnish reasonably promptly to Isla and its Representatives such information concerning its and its Subsidiaries’ business, properties, contracts, records and personnel as may be reasonably requested, from time to time, by or on behalf of Isla; provided, that, such access may be limited by the Company to the extent reasonably necessary for (i) the Company to comply with any applicable COVID-19 Measures or (ii) such access, in light of COVID-19 or COVID-19 Measures, not to jeopardize the health and safety of the Company’s and its Subsidiaries’ respective Representatives or commercial partners (provided, that, in the case of each of clauses (i) and (ii), the Company

 

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shall, and shall cause its Subsidiaries to, use commercially reasonable efforts to provide such access as can be provided in a manner without risking the health and safety of such Persons or violating such COVID-19 Measures). Isla and its Representatives shall conduct any such activities in such a manner as not to interfere unreasonably with the business or operations of the Company or its Subsidiaries or otherwise cause any unreasonable interference with the prompt and timely discharge by the employees of the Company and its Subsidiaries of their normal duties. Notwithstanding the foregoing:

(i) No Party shall be required to, or to cause any of its Subsidiaries to, grant access or furnish information, as applicable, to the other Party or any of its Representatives to the extent that such information is regarding the value of the transaction or is subject to an attorney/client privilege or the attorney work product doctrine or that such access or the furnishing of such information, as applicable, is prohibited by applicable Law or an existing contract or agreement (provided, however, the Company or Isla, as applicable, shall inform the other Party as to the general nature of what is being withheld and the Company and Isla shall reasonably cooperate to make appropriate substitute arrangements to permit reasonable disclosure that does not suffer from any of the foregoing impediments, including through the use of commercially reasonable efforts to (A) obtain the required consent or waiver of any third party required to provide such information and (B) implement appropriate and mutually agreeable measures to permit the disclosure of such information in a manner to remove the basis for the objection, including by arrangement of appropriate clean room procedures, redaction or entry into a customary joint defense agreement with respect to any information to be so provided, if the Parties determine that doing so would reasonably permit the disclosure of such information without violating applicable Law or jeopardizing such privilege);

(ii) Notwithstanding the foregoing, each Party shall not be permitted to conduct any invasive or intrusive sampling or analysis (commonly known as a Phase II) of any environmental media or building materials at any facility of the other Party or its Subsidiaries without the prior written consent of the other Party (which may be granted or withheld in such other Party’s sole discretion); and

(iii) no investigation or information provided pursuant to this Section 6.6 shall affect or be deemed to modify any representation or warranty made by any Party herein.

(b) The Confidentiality Agreement dated as of April 5, 2021 between Kohlberg Kravis Roberts & Co. L.P. and the Company (the “Confidentiality Agreement”) shall survive the execution and delivery of this Agreement and shall apply to all information furnished thereunder or hereunder. From and after the date of this Agreement until the earlier of the Merger Effective Time and termination of this Agreement in accordance with Article VIII, each Party shall continue to provide access to the other Party and its Representatives to the electronic data room relating to the Transactions maintained by or on behalf of it to which the other Party and its Representatives were provided access prior to the date of this Agreement.

 

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6.7 HSR and Other Approvals.

(a) Except for the filings and notifications made pursuant to Antitrust Laws to which Sections 6.7(b) and 6.7(c), and not this Section 6.7(a), shall apply, promptly following the execution of this Agreement, the Parties shall proceed to prepare and file with the appropriate Governmental Entities and other third parties all authorizations, consents, notifications, certifications, registrations, declarations and filings that are necessary in order to consummate the Transactions and shall diligently and expeditiously prosecute, and shall cooperate fully with each other in the prosecution of, such matters. Notwithstanding the foregoing, in no event shall either the Company or Isla or any of their respective Affiliates be required to pay any consideration to any third parties or give anything of value to obtain any such Person’s authorization, approval, consent or waiver to effectuate the Transactions, other than filing, recordation or similar fees. Isla and the Company shall have the right to review in advance and, to the extent reasonably practicable, each will consult with the other on and consider in good faith the views of the other in connection with, all of the information relating to Isla or the Company, as applicable, and any of their respective Subsidiaries, that appears in any filing made with, or written materials submitted to, any third party or any Governmental Entity in connection with the Transactions (including the Proxy Statement/Prospectus). The Company and its Subsidiaries shall not agree to any actions, restrictions or conditions with respect to obtaining any consents, registrations, approvals, permits, expirations of waiting periods or authorizations in connection with the Transactions without the prior written consent of Isla (which consent, subject to Section 6.7(b), may be withheld in Isla’s sole discretion).

(b) As promptly as reasonably practicable following the execution of this Agreement, but in no event later than ten Business Days following the date of this Agreement, the Parties (or their ultimate parents) shall make any filings required under the HSR Act. Each of Isla and the Company shall cooperate fully with each other and shall furnish to the other such necessary information and reasonable assistance as the other may reasonably request in connection with its preparation of any filings and in connection with obtaining all required consents, authorizations, orders, expirations, terminations, waivers, or approvals under any applicable Antitrust Laws. Unless otherwise agreed, Isla and the Company shall each use its reasonable best efforts to ensure the prompt expiration or termination of any applicable waiting period under the HSR Act. Isla and the Company shall each use its reasonable best efforts to promptly make an appropriate response to any request for information from any Governmental Entity charged with enforcing, applying, administering, or investigating the HSR Act or any other Laws designed to prohibit, restrict or regulate actions for the purpose or effect of mergers, monopolization, restraining trade or abusing a dominant position (collectively, “Antitrust Laws”), including the Federal Trade Commission, the Department of Justice, any attorney general of any state of the United States or any other competition authority of any jurisdiction (“Antitrust Authority”). Isla and the Company shall keep each other apprised of the status of any material communications with, and any inquiries or requests for additional information from any Antitrust Authority. In connection with the efforts referenced in this Section 6.7 to obtain all requisite approvals and authorizations for the transactions contemplated by this Agreement under the HSR Act, any other Antitrust Law, or any state or provincial law, each of the Parties shall use reasonable best efforts to (i) cooperate with each other in

 

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connection with any filing or submission and in connection with any investigation or other inquiry, including any proceeding initiated by a private party, (ii) provide each other with advance copies and a reasonable opportunity to comment on all material proposed notices, submissions, filings, applications, undertakings, and information and correspondence proposed to be supplied to or filed with any Antitrust Authority, except the Parties’ HSR Act filings, regarding any of the transactions contemplated hereby and (iii) to the extent permitted by law, provide Isla or the Company, as applicable, a reasonable opportunity to attend and participate in any substantive meetings, discussions, telephone conversations, or correspondence with an Antitrust Authority; provided that materials required to be provided pursuant to this section may be redacted (A) to remove references concerning the valuation of the Company, (B) as necessary to comply with contractual arrangements, (C) as necessary to comply with applicable law, and (D) as necessary to address reasonable privilege or confidentiality concerns. The foregoing obligations in this Section 6.7(b) shall be subject to the Confidentiality Agreement and any attorney-client, work product or other privilege. Notwithstanding anything to the contrary in this Agreement, none of the Parties nor any of their respective Affiliates shall be required to, and none of the Parties may, nor shall any of them permit their Subsidiaries to, without the prior written consent of the other Parties hereto, take any action that would reasonably be expected to have a material adverse effect on the financial condition, business, revenue or earnings before interest, taxes, depreciation or amortization of New PubCo and its Subsidiaries, taken as a whole, from and after the Closing.

(c) The Isla Parties and the Company shall not take any action that could reasonably be expected to hinder or delay in any material respect the expiration or termination of the required waiting period under the HSR Act or any other applicable Antitrust Laws, or any consent or approval required pursuant to any other applicable Antitrust Laws.

6.8 Indemnification; Directors and Officers Insurance.

(a) Without limiting any other rights that any Indemnified Person may have pursuant to any employment agreement or indemnification agreement in effect on the date hereof or otherwise, from the Merger Effective Time, New PubCo and the Surviving Person shall jointly and severally indemnify, defend and hold harmless, in the same manner as provided by the Company or by Isla, as applicable, immediately prior to the date of this Agreement, each Person who is now, or has been at any time prior to the date of this Agreement or who becomes prior to the Merger Effective Time, a director or officer of the Company, of Isla or any of their respective Subsidiaries or who acts as a fiduciary under any Company Plan or any equivalent plan of Isla, in each case, when acting in such capacity (the “Indemnified Persons”) against all losses, claims, damages, costs, fines, penalties, expenses (including attorneys’ and other professionals’ fees and expenses), liabilities or judgments or amounts that are paid in settlement, of or incurred in connection with any threatened or actual Proceeding to which such Indemnified Person is a party or is otherwise involved (including as a witness) based, in whole or in part, on or arising, in whole or in part, out of the fact that such Person is or was a director or officer of the Company, of Isla or any of their respective Subsidiaries, a fiduciary under any Company Plan or any equivalent plan of Isla or is or was serving at the request of the Company, of Isla or any of

 

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their respective Subsidiaries as a director, officer, employee or fiduciary of another corporation, partnership, limited liability company, joint venture, Employee Benefit Plan, trust or other enterprise, as applicable, or by reason of anything done or not done by such Person in any such capacity, whether pertaining to any act or omission occurring or existing prior to, but not after, the Merger Effective Time and whether asserted or claimed prior to, but not after, the Merger Effective Time (“Indemnified Liabilities”), including all Indemnified Liabilities based in whole or in part on, or arising in whole or in part out of, or pertaining to, this Agreement or the Transactions, in each case to the fullest extent permitted under applicable Law (and New PubCo and the Surviving Person shall jointly and severally pay expenses incurred in connection therewith in advance of the final disposition of any such Proceeding to each Indemnified Person to the fullest extent permitted under applicable Law). Without limiting the foregoing, in the event any such Proceeding is brought or threatened to be brought against any Indemnified Persons (whether arising before or after the Merger Effective Time), (i) the Indemnified Persons may retain the Company’s, Isla’s or New PubCo’s regularly engaged legal counsel or other counsel satisfactory to them, and New PubCo and the Surviving Person shall jointly and severally pay all reasonable fees and expenses of such counsel for the Indemnified Persons as promptly as statements therefor are received, and (ii) New PubCo and the Surviving Person shall use their reasonable best efforts to assist in the defense of any such matter. Any Indemnified Person wishing to claim indemnification or advancement of expenses under this Section 6.8, upon learning of any such Proceeding, shall notify New PubCo and the Surviving Person (but the failure so to notify shall not relieve a Party from any obligations that it may have under this Section 6.8 except to the extent such failure materially prejudices such Party’s position with respect to such claims). With respect to any determination of whether any Indemnified Person is entitled to indemnification by New PubCo and the Surviving Person under this Section 6.8, such Indemnified Person shall have the right to require that such determination be made by special, independent legal counsel selected by the Indemnified Person and approved by New PubCo (which approval shall not be unreasonably withheld or delayed), and who has not otherwise performed material services for the Company, Isla, the Series I Preferred Stockholder or the Indemnified Person within the last three (3) years. Notwithstanding the foregoing and except as provided in Section 6.8(c), this Section 6.8(a) shall not require New PubCo or the Surviving Person to indemnify, defend or hold harmless, or advance expenses to any Indemnified Person in connection with any Proceeding (or part thereof) initiated by such Indemnified Person.

(b) New PubCo, the Surviving Entity and the Surviving Person, as applicable, shall not amend, repeal or otherwise modify any provision in the Organizational Documents of the Surviving Entity or Surviving Person in any manner that would affect adversely the rights thereunder or under the Organizational Documents of the Surviving Entity, Surviving Person or any of their respective Subsidiaries of any Person who is now, or has been at any time prior to the date of this Agreement or who becomes prior to the Merger Effective Time, a director or officer of the Company or any of its Subsidiaries, or Isla or any of its Subsidiaries, to indemnification, exculpation and advancement except to the extent required by applicable Law. New PubCo shall cause the Surviving Entity and the Surviving Person to fulfill and honor any indemnification, expense advancement or exculpation agreements between the Company or any of its Subsidiaries, or Isla or any of its Subsidiaries, and any of its directors or officers existing and in effect prior to the date of this Agreement.

 

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(c) To the fullest extent permitted under applicable Law, New PubCo and the Surviving Person shall indemnify any Indemnified Person against all reasonable costs and expenses (including reasonable attorneys’ fees and expenses), such amounts to be payable in advance upon request as provided in Section 6.8(a), relating to the enforcement of such Indemnified Person’s rights under this Section 6.8 or under any charter, bylaw or contract regardless of whether such Indemnified Person is ultimately determined to be entitled to indemnification hereunder or thereunder.

(d) Unless Isla and the Company agree in writing prior to the Merger Effective Time that retroactive coverage that is mutually satisfactory to Isla and the Company shall be obtained and prepaid in full by New PubCo or its Affiliate in connection with a director and officer liability insurance policy of New PubCo or the Surviving Person will cause to be put in place, and New PubCo or one of its Affiliates shall fully prepay immediately prior to the Merger Effective Time, “tail” insurance policies in favor of the Company’s Indemnified Persons with a claims reporting or discovery period of at least six years from the Merger Effective Time from an insurance carrier with the same or better credit rating as the Company’s or Isla’s current insurance carrier, as applicable, with respect to directors’ and officers’ liability insurance in an amount and scope at least as favorable as the Company’s or Isla’s existing policies, as applicable, with respect to matters, acts or omissions existing or occurring at, prior to, or after, the Merger Effective Time; provided, that in no event shall New PubCo and its Subsidiaries, collectively, be required to spend in the aggregate more than 300% of the amount of the annual premiums paid by the Company or Isla or its Subsidiaries (as applicable) for fiscal year 2020 for such purpose for the six years of coverage under such insurance policy, it being understood that New PubCo and its Subsidiaries, collectively, shall nevertheless be obligated to provide as much coverage as may be obtained for such 300% amount.

(e) In the event that New PubCo or the Surviving Person or any of their respective successors or assignees (i) consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers all or substantially all of its properties and assets to any Person, then, in each such case, proper provisions shall be made so that the successors and assigns of New PubCo or the Surviving Person, as the case may be, shall assume the obligations set forth in this Section 6.8. The provisions of this Section 6.8 are intended to be for the benefit of, and shall be enforceable by, the Parties and each Person entitled to indemnification or insurance coverage or expense advancement pursuant to this Section 6.8, and his heirs and Representatives. The rights of the Indemnified Persons under this Section 6.8 are in addition to any rights such Indemnified Persons may have under the Organizational Documents of the Company or any of its Subsidiaries, or under any applicable contracts or Law. New PubCo and the Surviving Person shall pay all reasonable out-of-pocket expenses, including reasonable and documented attorneys’ fees, that may be incurred by any Indemnified Person in enforcing the indemnity and other obligations provided in this Section 6.8, unless it is ultimately determined that such Indemnified Person is not entitled to such indemnity.

 

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6.9 Transaction Litigation. Except for any Proceeding taken by any Antitrust Authority which shall be subject to Sections 6.7(b) and 6.7(c), in the event any Proceeding by any Governmental Entity or other Person is commenced or, to the knowledge of the Company or Isla, as applicable, threatened, that questions the validity or legality of the Transactions or seeks damages in connection therewith, including stockholder litigation (“Transaction Litigation”), the Company or Isla, as applicable, shall promptly notify the other Party of such Transaction Litigation and shall keep the other Party reasonably informed with respect to the status thereof. The Company shall give Isla a reasonable opportunity to participate in the defense or settlement of any Transaction Litigation, at Isla’s sole cost and expense, and shall consider in good faith Isla’s advice with respect to such Transaction Litigation (it being agreed and acknowledged that the Company shall have the right to conduct the defense of such Transaction Litigation); provided that the Company shall not offer or agree to settle any Transaction Litigation without the prior written consent of Isla.

6.10 Public Announcements. The initial press release with respect to the execution of this Agreement shall be a joint press release to be reasonably agreed upon by the Parties. No Party shall, and each will cause its Representatives not to, issue any public announcements or make other public disclosures regarding this Agreement or the Transactions, without the prior written approval of the other Party. Notwithstanding the foregoing, a Party, its Subsidiaries or their Representatives may issue a public announcement or other public disclosures (a) required by applicable Law, (b) required by the rules of any stock exchange upon which such Party’s or its Subsidiary’s capital stock is traded or (c) consistent with the final form of the joint press release announcing the Merger and the investor presentation given to investors on the morning of announcement of the Merger; provided, in each case, such Party uses commercially reasonable efforts to afford the other Party an opportunity to first review the content of the proposed disclosure and provide reasonable comments thereon; and provided, however, that no provision this Agreement shall be deemed to restrict in any manner a Party’s ability to communicate with its employees and, with respect to Isla, its Affiliates and their respective limited partners, members, officers, employees, directors, advisors or representatives (provided, that prior to making any written communications to the directors, officers or employees of the Company or any of its Subsidiaries pertaining to compensation or benefit matters that are affected by the Transactions, the Company shall provide Isla with a copy of the intended communication, the Company shall provide Isla a reasonable period of time to review and comment on the communication, and the Company shall consider any timely comments in good faith) and that the Company shall not be required by any provision of this Agreement to consult with or obtain any approval from any other party with respect to a public announcement or press release issued in connection with the receipt and existence of a Company Competing Proposal, and matters related thereto or a Company Change of Recommendation, other than as set forth in Section 6.3.

6.11 Advice of Certain Matters; Control of Business. Subject to compliance with applicable Law, the Company and Isla, as the case may be, shall confer on a regular basis with each other and shall promptly advise each other orally and in writing of any change or event having, or which would be reasonably likely to have, individually or in the aggregate, a Company Material Adverse Effect or Isla Material Adverse Effect, as the case may be. Except with respect to Antitrust Laws as provided in Section 6.7, prior to the Closing, the Company and Isla shall promptly provide each other (or their respective counsel) copies of all filings made by such Party or its Subsidiaries with the SEC or any other Governmental Entity in connection with this

 

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Agreement and the Transactions. Without limiting in any way any Party’s rights or obligations under this Agreement, nothing contained in this Agreement shall give any Party, directly or indirectly, the right to control or direct the other Party and their respective Subsidiaries’ operations prior to the Merger Effective Time. Prior to the Merger Effective Time, each of the Parties shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its and its Subsidiaries’ respective operations.

6.12 Reasonable Best Efforts; Notification. Except to the extent that the Parties’ obligations are specifically set forth elsewhere in this Article VI:

(a) upon the terms and subject to the conditions set forth in this Agreement (including Section 6.3), each of the Parties shall use reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other Party in doing, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner reasonably practicable, the Merger and the other Transactions; and

(b) subject to applicable Law and as otherwise required by any Governmental Entity, the Company and Isla each shall keep the other apprised of the status of matters relating to the consummation of the Transactions, including promptly furnishing the other with copies of notices or other communications received by Isla or the Company, as applicable, or any of its Subsidiaries, from any third party or any Governmental Entity with respect to the Transactions (including those alleging that the approval or consent of such Person is or may be required in connection with the Transactions). The Company shall give prompt notice to Isla, and Isla shall give prompt notice to the Company, upon becoming aware of (i) any condition, event or circumstance that will result in any of the conditions in Sections 7.2(a) or 7.3(a) not being met, or (ii) the failure by such Party to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by it under this Agreement; provided, however, that no such notification shall affect the representations, warranties, covenants or agreements of the Parties or the conditions to the obligations of the Parties under this Agreement.

6.13 Section 16 Matters. Prior to the Merger Effective Time, New PubCo and the Company shall take all such steps as may be required to cause any dispositions of equity securities of the Company (including derivative securities) or acquisitions of equity securities of New PubCo (including derivative securities) in connection with this Agreement by each individual who is subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to the Company, or will become subject to such reporting requirements with respect to New PubCo, to be exempt under Rule 16b-3 under the Exchange Act.

6.14 Derivative Contracts. The Company shall use commercially reasonable efforts to assist Isla, its Affiliates and its and their Representatives in the amendment or novation of any Derivative Transaction of the Company or any of its Subsidiaries, in each case, on terms that are reasonably requested by Isla.

 

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6.15 Stock Exchange Listing and Delisting. New PubCo shall use reasonable best efforts to cause the New PubCo Class A Common Stock to be issued in the Merger and issuable in connection with the Transactions (including upon exchange of the OpCo Units) to be approved for listing on the NYSE prior to the Merger Effective Time, subject to official notice of issuance. Prior to the Closing Date, the Company shall cooperate with New PubCo and 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 on its part under applicable Law and rules and policies of the NYSE American and the NYSE, as applicable, to enable the approval for listing on the NYSE American or the NYSE of the New PubCo Class A Common Stock and the delisting by the Surviving Corporation or Surviving Entity of the shares of Company Common Stock from the NYSE American and the deregistration of the shares of Company Common Stock under the Exchange Act as promptly as practicable after the Merger Effective Time, and in any event no more than ten days after the Merger Effective Time. If the Surviving Corporation or Surviving Entity is required to file any quarterly or annual report pursuant to the Exchange Act by a filing deadline that is imposed by the Exchange Act and which falls on a date within the 15 days following the Closing Date, the Company shall make available to Isla, at least ten Business Days prior to the Closing Date, a substantially final draft of any such annual or quarterly report reasonably likely to be required to be filed during such period. Prior to Closing, (i) to the extent necessary to satisfy any listing requirements of the NYSE, Isla and the Company shall cooperate in good faith and shall agree (such agreement on the part of each such party, not to be unreasonably withheld, conditioned or delayed) to equitably adjust the Exchange Ratio and the Isla Ownership Number for all purposes of this Agreement by amendment hereof (preserving the economic allocation contemplated by the Exchange Ratio and Isla Ownership number set forth herein as of the date hereof) and (ii) to the extent that the number of shares of Company Common Stock issued and outstanding at the close of business on June 4, 2021 was not 201,071,407 and a different number is confirmed by the Company’s transfer agent in writing within 2 Business Days of the date hereof (or such later date as is approved by Isla in its sole discretion), the Exchange Ratio and the Isla Ownership Number shall automatically be equitably adjusted for all purposes of this Agreement to preserve the economic allocation contemplated by the Exchange Ratio and Isla Ownership number set forth herein as of the date hereof (which is based on 201,071,407 issued and outstanding shares of Company Common Stock). The Company shall cause the Company’s transfer agent to deliver the information described in the immediately preceding sentence within 2 Business Days of the date hereof.

6.16 Tax Characterization and Other Tax Matters.

(a) For U.S. federal income tax purposes (and for purposes of any applicable state or local income tax that follows the U.S. federal income tax treatment), the Parties intend that:

(i) the Merger and the LLC Merger, taken together, qualify as a “reorganization” within the meaning of Section 368(a) of the Code;

(ii) Isla continue as a partnership for U.S. federal income tax purposes pursuant to Section 708(a) of the Code following the Closing Date (and therefore OpCo be treated as a continuation of Isla for U.S. federal income tax purposes following the Closing Date); and

 

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(iii) the Contribution be treated as a contribution of assets and liabilities by New PubCo to OpCo (as the continuing Isla tax partnership) in a contribution described in Section 721(a) of the Code (such treatment in clauses (a)(i) through (iii), the “Intended Tax Treatment”).

(b) This Agreement is intended to constitute, and the Parties hereto adopt this Agreement as, a “plan of reorganization” within the meaning of Treasury Regulations Sections 1.368-2(g) and 1.368-3(a).

(c) Each of Isla and the Company shall, and shall cause its Subsidiaries to, use its commercially reasonable efforts to cause the Transactions to qualify for the Intended Tax Treatment. Each of the Parties will notify the other Party promptly after becoming aware of any reason to believe that the Transactions may not qualify for the Intended Tax Treatment. The Parties shall prepare and file all Tax Returns consistent with the Intended Tax Treatment and, except to the extent otherwise required by a final “determination” within the meaning of Section 1313(a) of the Code, shall take no Tax position inconsistent with the Intended Tax Treatment.

(d) Isla and the Company will use commercially reasonable efforts and reasonably cooperate with one another in connection with the issuance to Isla or the Company of any opinion relating to the Intended Tax Treatment, including using commercially reasonable efforts to deliver to the relevant counsel certificates (dated as of the necessary date and signed by an officer of Isla or the Company, as applicable) containing customary representations reasonably necessary or appropriate for such counsel to render such opinion.

(e) All Transfer Taxes shall be borne by OpCo. If the Company, New PubCo or Isla is required by Law to pay any such Transfer Taxes, OpCo shall promptly reimburse the Company, New PubCo or Isla, as applicable, within ten Business Days of receipt of written request from the Company, New PubCo or Isla, as applicable, for such Transfer Taxes together with documentation of payment thereof. OpCo shall timely file (and, where required by Law, the Company, New PubCo and/or Isla, as applicable, shall join in the timely filing of) any Tax Returns for Transfer Taxes as required by Law and shall notify the Company and Isla when such filings have been made. The Parties each agree to use commercially reasonable efforts to timely sign and deliver (or cause to be timely signed and delivered) such agreements, certificates or forms as may be necessary or appropriate and otherwise to reasonably cooperate to establish any available exemption from (or otherwise reduce) such Transfer Taxes.

6.17 Takeover Laws. None of the Parties will take any action that would cause the Transactions to be subject to requirements imposed by any Takeover Laws, and each of them will take all reasonable steps within its control to exempt (or ensure the continued exemption of) the Transactions from the Takeover Laws of any state that purport to apply to this Agreement or the Transactions.

 

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6.18 Employee Matters.

(a) For a period of at least one year following the Closing Date, New PubCo shall cause it or one of its Subsidiaries to provide each individual who is employed by the Company or any of its Subsidiaries immediately prior to the Closing Date (each, a “Company Employee”) and who continues employment with New PubCo or any of its Subsidiaries as of the Closing Date with a base salary or wage rate and employee benefits that are substantially comparable, in the aggregate, to the base salary or wage rate and employee benefits provided to such Company Employee immediately prior to the Closing Date.

(b) From and after the Closing Date, New PubCo or its Subsidiaries shall take commercially reasonable efforts to credit each Company Employee’s service with the Company or any of its Subsidiaries for purposes of eligibility to participate, vesting and severance and vacation benefit accrual (but not for purposes of defined benefit pension accrual or post-employment retiree welfare benefits) with respect to the Employee Benefit Plans of New PubCo or any of its Subsidiaries in which any Company Employee is eligible to participate after the Closing Date, to the extent that such service was recognized under a corresponding Company Plan immediately prior to the Closing Date; provided, however, that such service need not be recognized to the extent that such recognition would result in any duplication of benefits for the same period of service.

(c) For purposes of each Employee Benefit Plan of New PubCo or any of its Subsidiaries in which any Company Employee is eligible to participate after the Closing Date, New PubCo shall take commercially reasonable efforts to (i) cause all pre-existing condition exclusions, waiting periods, evidence of insurability and actively-at-work requirements to be waived for each Company Employee and their covered dependents, to the extent such conditions were inapplicable or waived under the comparable Company Plan in which such Company Employee participated immediately prior to the Closing Date and (ii) give full credit for all co-payments, coinsurance, maximum out-of-pocket requirements and deductibles to the extent satisfied in the plan year in which the Closing occurs as if there had been a single continuous employer.

(d) Effective as of the day prior to the Closing but contingent upon the Closing, the Company shall cause to be approved board resolutions terminating the Company 401(k) Plan (the “Company 401(k) Plan”) unless Isla provides written notice to the Company that the Company 401(k) Plan shall not be terminated. Unless Isla provides such written notice to the Company, the Company shall provide Isla copies of such board resolutions. Effective as soon as administratively practicable following the Closing Date, each Company Employee shall be eligible to participate in a tax-qualified defined contribution plan established or designated by New PubCo or its Affiliates (the “New PubCo 401(k) Plan”), subject to the terms and conditions of the New PubCo 401(k) Plan. As soon as practicable after the Closing and to the extent not prohibited under applicable Law, New PubCo shall take all action necessary to provide that each Company Employee may elect to rollover his or her full account balance in the Company 401(k) Plan in cash to the New PubCo 401(k) plan.

 

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(e) New PubCo or its Subsidiary shall honor all Company severance plans and policies, which, for sake of clarity, include plans and policies that provide for post-termination payments, covering the Company Employees in effect as of immediately prior to the Closing in accordance with the terms and conditions as in effect on the date hereof. For the sake of clarity, the foregoing proviso shall not in any way limit the rights of any participants in any Company severance plan or policy as in effect as of the date hereof.

(f) In determining the amount of discretionary annual incentive bonuses for the calendar year in which the Closing Date occurs, New PubCo shall consider and provide credit for, in good faith, periods of service by each Company Employee for the portion of such calendar year that that precedes the Closing Date.

(g) This Section 6.18 shall be binding upon and shall inure solely to the benefit of each of the Parties, and nothing in this Section 6.18, express or implied, (i) is intended to confer upon any other Person (including any current or former Company Employee, directors, officers, or consultants of the Company or any of its Subsidiaries or, on or after the Closing, New PubCo or any of its Subsidiaries) any rights or remedies of any nature whatsoever, (ii) is intended to be, shall constitute or be construed as an amendment to or modification of any Company Plan or any other Employee Benefit Plan, program, policy, agreement or arrangement of New PubCo, the Company or any respective Subsidiary thereof or (iii) obligates New PubCo or any of its Subsidiaries to retain the employment of any Company Employee or a service relationship with any other service provider of the Company or any of its Subsidiaries following the Closing.

6.19 Payoff Letter. Not less than three (3) Business Days prior to the Closing, the Company shall, and shall cause its Subsidiaries to, use reasonable best efforts to deliver to Isla from each holder (or administrative agent or other authorized representative of such holders) of Subject Indebtedness that will be outstanding immediately prior to the Closing, a copy of a payoff letter in form reasonably satisfactory to Isla, setting forth the total amounts payable to each such holder (or the aggregate amounts payable to the administrative agent or other authorized representative of such holders for the account of such holders) of such Subject Indebtedness to fully satisfy all outstanding principal, interest, Debt Prepayment Expenses, and all outstanding fees, costs and expenses payable by the Company and its Subsidiaries in respect of such Subject Indebtedness as of the anticipated Closing Date (and the daily accrual thereafter), together with appropriate wire instructions, and the agreement of each such holder of Subject Indebtedness that upon payment in full of all such amounts owed to such holder (which amounts shall be paid in full at the Closing in accordance with such Payoff Letters by New PubCo or an Affiliate thereof) the loan documents shall be terminated with respect to the Company and its Subsidiaries that are borrowers or guarantors thereof (or the assets or equity of which secure such Indebtedness) and such holder shall release and terminate all Encumbrances on the Company and its Subsidiaries and their respective assets and equity securing such Subject Indebtedness (the “Payoff Letters”), together with any applicable documents necessary to evidence the release and termination of all Encumbrances on the Company and its Subsidiaries and their respective assets and equity securing, and any guarantees by the Company and its Subsidiaries in respect of, such Subject Indebtedness.

6.20 Financing. Prior to the Closing, the Company shall, and shall cause its Subsidiaries to, use commercially reasonable efforts to provide to Isla such cooperation reasonably requested by Isla, and which is customarily provided by similarly situated Persons engaging in similar transactions, in connection with the Company, its Subsidiaries or its assets and any proposed

 

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financing, including any expansion of the Isla Debt Agreements, to reflect the consolidation of the assets of Isla and the Company, including: (a) using commercially reasonable efforts to cooperate with marketing efforts and assist with the preparation of materials for rating agency presentations and bank books, offering memoranda or other marketing documents, customarily reviewed or reasonably requested by such rating agencies and banks; (b) upon reasonable prior written notice, participating at reasonable times (and during regular business hours) in a reasonable number of meetings, presentations and rating agency and due diligence sessions; and (c) reasonably assisting with the preparation of any credit agreement, reasonable pledge and security documents, currency or interest hedging arrangements, other definitive financing documents, or other certificates or documents; provided that (A) nothing in this Section 6.20 shall require the Company to (I) take any action that would reasonably be expected to conflict with or violate any of the Company’s Organizational Documents or any Law or (II) pay any fees, reimburse any expenses or give any indemnities prior to the Closing, (B) nothing in this Section 6.20 shall require such cooperation to the extent it would unreasonably interfere with the ongoing business or operations of the Company, (C) no obligation of the Company or any Subsidiary of the Company under any document or agreement executed by the Company or any Subsidiary of the Company in connection with this Section 6.20 shall be effective until the Closing and (D) Isla shall promptly upon receipt of a reasonably detailed invoice therefor, reimburse the Company for any reasonable and documented out-of-pocket expenses and costs incurred in connection with the obligations of the Company and its Subsidiaries under this Section 6.20; provided, further, that, except as expressly set forth in this Agreement, nothing in this Agreement shall require the Company or its Subsidiaries to cause the delivery of (x) legal opinions or reliance letters, (y) any financial information in a form not customarily prepared by the Company with respect to such period or (z) any financial information with respect to a fiscal period that has not yet ended or has ended less than forty-five (45) days prior to the date of such request (or, in the case of annual financial statements, ninety (90) days prior to such request).

6.21 Transfers of Isla and New PubCo Interests. Isla hereby covenants and agrees that, until the earlier of the Distribution and the termination of this Agreement, other than as contemplated hereby, it shall not sell or transfer, or permit or consent to any pledge of or Encumbrance on, any of its shares of New PubCo. New PubCo covenants and agrees that, until the earlier of the Contribution and the termination of this Agreement, other than as contemplated hereby, it shall not sell, transfer permit or consent to any pledge of, or Encumbrance on, any of its equity interests in C Merger Sub or L Merger Sub.

6.22 Termination of Isla Management Agreement. No later than immediately prior to the Closing, the Isla Management Agreement shall be terminated in full, without any consideration becoming due and payable on the part of any party thereto as a result of such termination, and without any further liability or obligation on the part of either party thereto under the terms thereof.

 

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ARTICLE VII

CONDITIONS PRECEDENT

7.1 Conditions to Each Partys Obligation to Consummate the Transactions. The respective obligation of each Party to consummate the Transactions is subject to the satisfaction at or prior to the Merger Effective Time of the following conditions, any or all of which may be waived jointly by the Parties, in whole or in part, to the extent permitted by applicable Law:

(a) Stockholder Approvals. Company Stockholder Approval shall have been obtained in accordance with applicable Law and the Organizational Documents of the Company.

(b) Regulatory Approval. Any waiting period applicable to the Transactions under the HSR Act shall have been terminated or shall have expired.

(c) No Injunctions or Restraints. No Governmental Entity (including any Antitrust Authority) having jurisdiction over any Party shall have issued any order, decree, ruling, injunction or other action that is in effect (whether temporary, preliminary or permanent) restraining, enjoining or otherwise prohibiting the consummation of the Merger, and no Law shall have been adopted that makes consummation of the Merger illegal or otherwise prohibited.

(d) Registration Statement. The Registration Statement shall have been declared effective by the SEC under the Securities Act and shall not be the subject of any stop order or Proceedings seeking a stop order.

(e) Listing. The shares of New PubCo Class A Common Stock issuable to the holders of shares of Company Common Stock pursuant to this Agreement (and issuable to the holders of OpCo Units other than New PubCo upon exchange or redemption of such OpCo Units) shall have been authorized for listing on a nationally recognized stock exchange, upon official notice of issuance.

7.2 Additional Conditions to Obligations of the Isla Parties. The obligations of the Isla Parties to consummate the Transactions are subject to the satisfaction at or prior to the Merger Effective Time of the following conditions, any or all of which may be waived exclusively by Isla, in whole or in part, to the extent permitted by applicable Law:

(a) Representations and Warranties of the Company. (i) The representations and warranties of the Company set forth in the first sentence of Section 4.1 (Organization, Standing and Power), Section 4.2(a) (Capital Structure), the third and fifth sentences of Section 4.2(b) (Capital Structure), and Section 4.3(a) (Authority) shall have been true and correct as of the date of this Agreement and shall be true and correct as of the Closing Date, as though made on and as of the Closing Date (except, with respect to Section 4.2(a) and the third and fifth sentences of Section 4.2(b), for any de minimis inaccuracies) (except that representations and warranties that speak as of a specified date or period of time shall have been true and correct only as of such date or period of time), (ii) all representations and warranties of the Company set forth in Section 4.2(b) (Capital Structure) other than the third and fifth sentences thereof shall have been true and correct in all material respects as of the date of this Agreement and shall be true and correct in all material respects as of the Closing Date, as though made on and as of the Closing Date (except that representations and warranties that speak as of a specified date or period of time shall have been true and correct all material respects only as of such date or period of time) (it being understood

 

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that, for purposes of determining the accuracy of such representations and warranties, all materiality, “Material Adverse Effect” and similar qualifiers set forth in such representations and warranties shall be disregarded), and (iii) each of the remaining representations and warranties of the Company set forth in this Agreement shall be true and correct, in each case as of the date of this Agreement and as of the Closing Date as if made as of the Closing Date (except to the extent such representations and warranties expressly relate to an earlier date, in which case as of such earlier date), except for inaccuracies of representations or warranties with respect to which the circumstances giving rise to such inaccuracies would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect (it being understood that, for purposes of determining the accuracy of such representations and warranties, all materiality, “Material Adverse Effect” and similar qualifiers set forth in such representations and warranties shall be disregarded).

(b) Performance of Obligations of the Company. The Company shall have performed, or complied with, in all material respects all agreements and covenants required to be performed or complied with by it under this Agreement on or prior to the Merger Effective Time.

(c) Compliance Certificate. Isla shall have received a certificate of the Company signed by an executive officer of the Company, dated the Closing Date, confirming that the conditions in Sections 7.2(a) and (b) have been satisfied.

(d) Material Adverse Effect. No Company Material Adverse Effect shall have occurred between the date of this Agreement and the Closing.

7.3 Additional Conditions to Obligations of the Company. The obligation of Company to consummate the Transactions is subject to the satisfaction at or prior to the Merger Effective Time of the following conditions, any or all of which may be waived exclusively by the Company, in whole or in part, to the extent permitted by applicable Law:

(a) Representations and Warranties of Isla. (i) The representations and warranties of the Isla Parties set forth in the first sentence of Section 5.1 (Organization, Standing and Power), Section 5.2(a) (Capital Structure), the fourth and sixth sentences of Section 5.2(b) (Capital Structure), Section 5.3(a) (Authority), and Section 5.27 (Certain Transactions) shall have been true and correct as of the date of this Agreement and shall be true and correct as of the Closing Date, as though made on and as of the Closing Date (except, with respect to Section 5.2(a) and the fourth and sixth sentences of Section 5.2(b) (Capital Structure), for any de minimis inaccuracies) (except that representations and warranties that speak as of a specified date or period of time shall have been true and correct only as of such date or period of time), (ii) all representations and warranties of Isla set forth in Section 5.2(b) (Capital Structure) other than the fourth and sixth sentences thereof shall have been true and correct in all material respects as of the date of this Agreement and shall be true and correct in all material respects as of the Closing Date, as though made on and as of the Closing Date (except that representations and warranties that speak as of a specified date or period of time shall have been true and correct in all material respects only as of such date or period of time) (it being understood that, for purposes of determining

 

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the accuracy of such representations and warranties, all materiality, “Material Adverse Effect” and similar qualifiers set forth in such representations and warranties shall be disregarded), and (iii) each of the remaining representations and warranties of Isla set forth in this Agreement shall be true and correct, in each case as of the date of this Agreement and as of the Closing Date as if made as of the Closing Date (except to the extent such representations and warranties expressly relate to an earlier date, in which case as of such earlier date), except for inaccuracies of representations or warranties with respect to which the circumstances giving rise to such inaccuracies would not, individually or in the aggregate, reasonably be expected to have an Isla Material Adverse Effect (it being understood that, for purposes of determining the accuracy of such representations and warranties, all materiality, “Material Adverse Effect” and similar qualifiers set forth in such representations and warranties shall be disregarded).

(b) Performance of Obligations of the Isla Parties. The Isla Parties each shall have performed, or complied with, in all material respects all agreements and covenants required to be performed or complied with by them under this Agreement at or prior to the Merger Effective Time.

(c) Compliance Certificate. The Company shall have received a certificate of Isla signed by an executive officer of Isla, dated the Closing Date, confirming that the conditions in Sections 7.3(a) and 7.3(b) have been satisfied.

(d) Material Adverse Effect. No Isla Material Adverse Effect shall have occurred between the date of this Agreement and the Closing.

7.4 Frustration of Closing Conditions. None of the Parties may rely, either as a basis for not consummating the Merger or for terminating this Agreement, on the failure of any condition set forth in Sections 7.1, 7.2 or 7.3, as the case may be, to be satisfied if such failure was caused by such Party’s breach in any material respect of any provision of this Agreement.

ARTICLE VIII

TERMINATION

8.1 Termination. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Merger Effective Time, whether (except as expressly set forth below) before or after Company Stockholder Approval has been obtained:

(a) by mutual written consent of the Company and Isla;

(b) by either the Company or Isla:

(i) if any Governmental Entity (including any Antitrust Authority) having jurisdiction over any Party shall have issued any order, decree, ruling or injunction or taken any other action permanently restraining, enjoining or otherwise prohibiting the consummation of the Transactions and such order, decree, ruling or injunction or other action shall have become final and nonappealable, or if there shall be adopted any Law that permanently makes consummation of the Transactions illegal or otherwise permanently prohibited; provided, however, that the right to terminate this Agreement under this Section 8.1(b)(i) shall not be available to any Party whose material breach of a covenant or agreement under this Agreement has been the proximate cause of or directly resulted in the action or event described in this Section 8.1(b)(i) occurring;

 

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(ii) if the Merger shall not have been consummated on or before 5:00 p.m. Houston, Texas time, on January 7, 2022 (such date being the “Outside Date”); provided, however, that the right to terminate this Agreement under this Section 8.1(b)(ii) shall not be available to any Party whose material breach of any covenant or agreement under this Agreement has been the proximate cause of or directly resulted in the failure of the Merger to occur on or before such date;

(iii) in the event of a breach by the other Party of any representation, warranty, covenant or other agreement contained in this Agreement which would, if it occurred or continued on the Closing Date, give rise to the failure of a condition set forth in Sections 7.2(a) or (b) (in the case of a breach on the part of the Company) or Section 7.3(a) or (b) (in the case of a breach on the part of any of the Isla Parties), as applicable (and such breach is not curable prior to the Outside Date, or if curable prior to the Outside Date, has not been cured by the earlier of (i) 30 days after the giving of written notice to the breaching Party of such breach (which notice shall state the non-breaching Party’s intention to terminate this Agreement pursuant to this Section 8.1(b)(iii) in the event that such breach is not cured within such 30-day period) and (ii) two Business Days prior to the Outside Date) (a “Terminable Breach”); provided, however, that the terminating Party is not then in Terminable Breach of any representation, warranty, covenant or other agreement contained in this Agreement; or

(iv) if Company Stockholder Approval shall not have been obtained upon a vote held at a duly held Company Stockholders Meeting, or at any adjournment or postponement thereof; or

(c) by Isla prior to, but not after, the time the Company Stockholder Approval is obtained, if the Company Board or a committee thereof shall have effected a Company Change of Recommendation (whether or not such Company Change of Recommendation is permitted by this Agreement); and

(d) by Isla, if the Company or its Subsidiaries or a director or officer of the Company shall, or shall have caused the Company to, have willfully breached the obligations set forth in Section 6.3(b) in any material respect.

(e) by the Company, if, prior to, but not after, the time the Company Stockholder Approval is obtained (A) the Company Board authorizes the Company, to the extent permitted by and subject to complying with the terms of Section 6.3, to enter into a Company Alternative Acquisition Agreement with respect to a Company Superior Proposal, (B) substantially concurrently with the termination of this Agreement, the Company, subject to complying with the terms of Section 6.3, enters into a Company Alternative Acquisition Agreement providing for a Company Superior Proposal and (C) substantially concurrently with such termination, the Company pays to Isla the Company Termination Fee.

 

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8.2 Notice of Termination; Effect of Termination.

(a) A terminating Party shall provide written notice of termination to the other Party specifying with particularity the reason for such termination and any termination shall be effective immediately upon delivery of such written notice to the other Party.

(b) In the event of termination of this Agreement by any Party as provided in Section 8.1, this Agreement shall forthwith become void and there shall be no liability or obligation on the part of any Party except with respect to this Section 8.2, Section 6.6(b) (Confidentiality Agreement), Section 8.3 (Expenses and Other Payments) and Article I (Certain Definitions) and Article IX (General Provisions) (and the provisions that substantively define any related defined terms not substantively defined in Article I), each of which shall survive any such termination; provided, however, that notwithstanding anything to the contrary herein, no such termination shall relieve any Party from liability for any damages for a Willful and Material Breach of this Agreement or fraud committed by such Party.

8.3 Expenses and Other Payments.

(a) Except as otherwise provided in this Agreement, each Party shall pay its own expenses incident to preparing for, entering into and carrying out this Agreement and the consummation of the Transactions, whether or not the Transactions shall be consummated. All fees and expenses incurred by the Parties and their Affiliates related to the filings contemplated by Section 6.7 shall be borne 75% by Isla and 25% by the Company.

(b) If (x) Isla terminates this Agreement pursuant to Section 8.1(c) (Company Change of Recommendation) or Section 8.1(d) (Breach of Non-Solicitation), then the Company shall pay Isla the Company Termination Fee, in each case, in cash by wire transfer of immediately available funds to an account designated by Isla no later than three Business Days after notice of termination of this Agreement or (y) the Company terminates this Agreement pursuant to Section 8.1(e), then the Company shall pay Isla the Company Termination Fee in cash by wire transfer of immediately available funds to an account designated by Isla substantially concurrently with the termination of this Agreement.

(c) If either the Company or Isla terminates this Agreement pursuant to Section 8.1(b)(iv) (Failure to Obtain the Company Stockholder Approval), and the Company Termination Fee is not otherwise payable by the Company pursuant to this Section 8.3, then the Company shall pay Isla the Isla Expenses no later than three Business Days after notice of termination of this Agreement.

(d) If (i) (A) Isla or the Company terminates this Agreement pursuant to Section 8.1(b)(iv) (Failure to Obtain Company Stockholder Approval), and on or before the date of any such termination a Company Competing Proposal shall have been publicly announced or publicly disclosed and not publicly withdrawn without qualification at least

 

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seven Business Days prior to the Company Stockholders Meeting or (B) Isla terminates this Agreement pursuant to Section 8.1(b)(iii) (Company Terminable Breach), and following the execution of this Agreement and on or before the date of any such termination, a Company Competing Proposal shall have been announced, disclosed or otherwise communicated to senior management of the Company or to the Company Board and (ii) within twelve (12) months after the date of such termination, the Company enters into a definitive agreement with respect to a Company Competing Proposal (or publicly approves or recommends to the stockholders of the Company or otherwise does not oppose, in the case of a tender or exchange offer, a Company Competing Proposal) or a Company Competing Proposal is consummated, then the Company shall pay Isla the Company Termination Fee less any amount previously paid by the Company pursuant to Section 8.3(c). For purposes of clause (ii) of this Section 8.3(d), any reference in the definition of Company Competing Proposal to “20%” shall be deemed to be a reference to “more than 50%.”

(e) In no event shall Isla be entitled to receive more than one payment of the Company Termination Fee or more than one payment of Isla Expenses. If Isla receives the Company Termination Fee, then Isla will not be entitled to also receive a payment of the Isla Expenses. If Isla receives payment of the Isla Expenses, and following receipt thereof, Isla becomes entitled to payment of the Company Termination Fee, then the amount of the Company Termination Fee payable to Isla shall be reduced by the amount of the Isla Expenses so received by Isla. The Parties agree that the agreements contained in this Section 8.3 are an integral part of the Transactions, and that, without these agreements, the Parties would not enter into this Agreement. If the Company fails to promptly pay the amount due by it pursuant to this Section 8.3, interest shall accrue on such amount from the date such payment was required to be paid pursuant to the terms of this Agreement until the date of payment at the prime lending rate as published in the Wall Street Journal in effect on the date such payment was required to be made. If, in order to obtain such payment, Isla commences a Proceeding that results in judgment for Isla for such amount, the Company shall pay Isla its reasonable out-of-pocket costs and expenses (including reasonable attorneys’ fees and expenses) incurred in connection with such Proceeding. The Parties agree that (i) the specific performance remedies set forth in Section 9.11 shall be the sole and exclusive remedies of the Company and its Subsidiaries against the Isla Parties and any of their respective former, current or future directors, officers, shareholders, Representatives or Affiliates for any loss suffered as a result of the failure of the Merger to be consummated, except in the case of fraud or a Willful and Material Breach of any covenant, agreement or obligation (in which case only the Isla Parties shall be liable for damages for such fraud or Willful and Material Breach), and no Isla Party or any of their respective former, current or future directors, officers, shareholders, Representatives or Affiliates shall have any further liability or obligation relating to or arising out of this Agreement or the Transactions, except for the liability of the Isla Parties in the case of fraud or a Willful and Material Breach of any covenant, agreement or obligation; and (ii) the monetary remedies set forth in this Section 8.3 (to the extent applicable to any failure of the Merger to be consummated) and the specific performance remedies set forth in Section 9.11 shall be the sole and exclusive remedies of the Isla Parties against the Company, and the Isla Parties shall have no other remedies against the Company, and no remedies against any Person other than the Company, including the Company’s

 

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Subsidiaries and any of the Company’s or its Subsidiaries’ respective former, current or future directors, managers, officers, shareholders, members, Representatives or Affiliates, in each case, for any loss suffered as a result of the failure of the Merger to be consummated, except in the case of fraud or a Willful and Material Breach of any covenant, agreement or obligation (in which case only the Company shall be liable for damages for such fraud or Willful and Material Breach), and upon payment of such amount, none of the Company and its Subsidiaries or any of their respective former, current or future directors, officers, shareholders, Representatives or Affiliates shall have any further liability or obligation relating to or arising out of this Agreement or the Transactions, except for the liability of the Company in the case of such fraud or Willful and Material Breach of any covenant, agreement or obligation.

ARTICLE IX

GENERAL PROVISIONS

9.1 Schedule Definitions. All capitalized terms in the Company Disclosure Letter and the Isla Disclosure Letter shall have the meanings ascribed to them herein (including in Annex A) except as otherwise defined therein.

9.2 Survival. Except as otherwise provided in this Agreement, none of the representations, warranties, agreements and covenants contained in this Agreement will survive the Closing; provided, however, that Article I (and the provisions that substantively define any related defined terms not substantively defined in Article I), this Article IX and the agreements of the Parties in Article II and Article III, and Section 4.28 (No Additional Representations), Section 5.29 (No Additional Representations), Section 6.8 (Indemnification; Directors’ and Officers’ Insurance), Section 6.16 (Tax Matters), Section 6.18 (Employee Matters) and those other covenants and agreements contained herein that by their terms apply, or that are to be performed in whole or in part, after the Closing, shall survive the Closing. The Confidentiality Agreement shall (i) survive termination of this Agreement in accordance with its terms and (ii) terminate as of the Merger Effective Time.

9.3 Notices. All notices, requests and other communications to any Party under, or otherwise in connection with, this Agreement shall be in writing and shall be deemed to have been duly given (a) if delivered in person; (b) transmitted by electronic mail (“e-mail”); provided, that no “bounce back” or notice of non-delivery is received; or (c) if transmitted by national overnight courier, in each case as addressed as follows:

(i) if to any Isla Party, to:

Independence Energy LLC

c/o Kohlberg Kravis Roberts & Co.

600 Travis Street

Suite 7200

Houston, TX 77002

Attention: David Rockecharlie; Brandi Kendall; Todd Falk

E-mail: David.Rockecharlie@kkr.com; Brandi.Kendall@kkr.com

Todd.Falk@kkr.com

 

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with a required copy to (which copy shall not constitute notice):

Vinson & Elkins L.L.P.

1001 Fannin St.

Suite 2500

Houston, TX 77002

Attention: Keith Fullenweider; Douglas McWilliams

E-mail: kfullenweider@velaw.com; dmcwilliams@velaw.com

(ii) if to the Company, to:

Contango Oil & Gas Company

111 E. 5th Street, Suite 300

Fort Worth, TX 76102

Attention: Charles L. McLawhorn, III

E-mail: Chad.McLawhorn@contango.com

with a required copy to (which copy shall not constitute notice):

Gibson, Dunn & Crutcher LLP

811 Main Street

Suite 3000

Houston, TX 77002

Attention: Hillary Holmes

E-mail: HHolmes@gibsondunn.com

and

Gibson, Dunn & Crutcher LLP

2001 Ross Avenue

Suite 2100

Dallas, TX 75201

Attention: Jeffrey A. Chapman

E-mail: JChapman@gibsondunn.com

9.4 Rules of Construction.

(a) Each of the Parties acknowledges that it has been represented by counsel of its choice throughout all negotiations that have preceded the execution of this Agreement and that it has executed the same with the advice of said independent counsel. Each Party and its counsel cooperated in the drafting and preparation of this Agreement and the documents referred to herein, and any and all drafts relating thereto exchanged between the Parties shall be deemed the work product of the Parties and may not be construed against any Party by reason of its preparation. Accordingly, any rule of Law or any legal decision that would require interpretation of any ambiguities in this Agreement against any Party that drafted it is of no application and is hereby expressly waived.

 

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(b) The inclusion of any information in the Company Disclosure Letter or the Isla Disclosure Letter shall not be deemed an admission or acknowledgment, in and of itself and solely by virtue of the inclusion of such information in the Company Disclosure Letter or the Isla Disclosure Letter, as applicable, that such information is required to be listed in the Company Disclosure Letter or the Isla Disclosure Letter, as applicable, that such items are material to the Company and its Subsidiaries, taken as a whole, or Isla and its Subsidiaries, taken as a whole, as the case may be, or that such items have resulted in a Company Material Adverse Effect or an Isla Material Adverse Effect. The headings, if any, of the individual sections of each of the Isla Disclosure Letter and the Company Disclosure Letter are inserted for convenience only and shall not be deemed to constitute a part thereof or a part of this Agreement. The Company Disclosure Letter and the Isla Disclosure Letter are arranged in sections corresponding to the Sections of this Agreement merely for convenience, and the disclosure of an item in one section of the Company Disclosure Letter or the Isla Disclosure Letter, as applicable, as an exception to a particular representation or warranty shall be deemed adequately disclosed as an exception with respect to all other representations or warranties only to the extent that the relevance of such item to such representations or warranties is reasonably apparent on its face, notwithstanding the presence or absence of an appropriate section of the Company Disclosure Letter or the Isla Disclosure Letter with respect to such other representations or warranties or as an appropriate cross-reference thereto.

(c) The specification of any dollar amount in the representations and warranties or otherwise in this Agreement or in the Company Disclosure Letter or the Isla Disclosure Letter is not intended and shall not be deemed to be an admission or acknowledgment of the materiality of such amounts or items, nor shall the same be used in any dispute or controversy between the Parties to determine whether any obligation, item or matter (whether or not described herein or included in any schedule) is or is not material for purposes of this Agreement.

(d) All references in this Agreement to Annexes, Exhibits, Schedules, Articles, Sections, subsections and other subdivisions refer to the corresponding Annexes, Exhibits, Schedules, Articles, Sections, subsections and other subdivisions of this Agreement unless expressly provided otherwise. Titles appearing at the beginning of any Articles, Sections, subsections or other subdivisions of this Agreement are for convenience only, do not constitute any part of such Articles, Sections, subsections or other subdivisions, and shall be disregarded in construing the language contained therein. The words “this Agreement,” “herein,” “hereby,” “hereunder” and “hereof” and words of similar import, refer to this Agreement as a whole and not to any particular subdivision unless expressly so limited. The words “this Section,” “this subsection” and words of similar import, refer only to the Sections or subsections hereof in which such words occur. The word “including” (in its various forms) means “including, without limitation.” Pronouns in masculine, feminine or neuter genders shall be construed to state and include any other gender and words, terms and titles (including terms defined herein) in the singular form shall be construed to include the plural and vice versa, unless the context otherwise expressly requires. Unless the context otherwise requires, all defined terms contained herein shall include the singular and plural and the conjunctive and disjunctive forms of such defined terms. Unless the context otherwise requires, all references to a specific time shall refer to Houston, Texas

 

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time. The word “or” is not exclusive. The word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends and such phrase shall not mean simply “if.” The term “dollars” and the symbol “$” mean United States Dollars. The table of contents and headings herein are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof.

(e) In this Agreement, except as the context may otherwise require, references to: (i) any agreement (including this Agreement), contract, statute or regulation are to the agreement, contract, statute or regulation as amended, modified, supplemented, restated or replaced from time to time (in the case of an agreement or contract, to the extent permitted by the terms thereof and, if applicable, by the terms of this Agreement); any Governmental Entity include any successor to that Governmental Entity; (ii) any applicable Law refers to such applicable Law as amended, modified, supplemented or replaced from time to time (and, in the case of statutes, include any rules and regulations promulgated under such statute) and references to any section of any applicable Law or other Law include any successor to such section; (iii) “days” mean calendar days; when calculating the period of time within which, or following which, any act is to be done or step taken pursuant to this Agreement, the date that is the reference day in calculating such period shall be excluded and if the last day of the period is a non-Business Day, the period in question shall end on the next Business Day or if any action must be taken hereunder on or by a day that is not a Business Day, then such action may be validly taken on or by the next day that is a Business Day; and (iv) “made available” means, with respect to any document, that such document was in the electronic data room relating to the Transactions maintained by the Company or Isla, as applicable, prior to the execution of this Agreement.

9.5 Counterparts. This Agreement may be executed in two or more counterparts, including via facsimile or email in “portable document format” (“.pdf”) form transmission, all of which shall be considered one and the same agreement and shall become effective when two or more counterparts have been signed by each of the Parties and delivered to the other Parties, it being understood that all Parties need not sign the same counterpart.

9.6 Entire Agreement; No Third Party Beneficiaries. This Agreement (together with the Confidentiality Agreement, Designated Stockholder Voting Agreements and any other documents and instruments executed pursuant hereto) constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the Parties with respect to the subject matter hereof. Except for the provisions of (a) Article III (including, for the avoidance of doubt, the rights of the former holders of Company Common Stock to receive the Merger Consideration) but only from and after the Merger Effective Time and (b) Section 6.8 (which from and after the Merger Effective Time is intended for the benefit of, and shall be enforceable by, the Persons referred to therein and by their respective heirs and Representatives) but only from and after the Merger Effective Time, nothing in this Agreement, express or implied, is intended to or shall confer upon any Person other than the Parties any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

 

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9.7 Governing Law; Venue; Waiver of Jury Trial.

(a) SUBJECT TO SECTION 9.7(d), THIS AGREEMENT, AND ALL CLAIMS OR CAUSES OF ACTION (WHETHER IN CONTRACT OR TORT) THAT MAY BE BASED UPON, ARISE OUT OF RELATE TO THIS AGREEMENT, OR THE NEGOTIATION, EXECUTION OR PERFORMANCE OF THIS AGREEMENT, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF.

(b) THE PARTIES IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE COURT OF CHANCERY OF THE STATE OF DELAWARE OR, IF THE COURT OF CHANCERY OF THE STATE OF DELAWARE OR THE DELAWARE SUPREME COURT DETERMINES THAT, NOTWITHSTANDING SECTION 111 OF THE DELAWARE GENERAL CORPORATIONS LAW, THE COURT OF CHANCERY DOES NOT HAVE OR SHOULD NOT EXERCISE SUBJECT MATTER JURISDICTION OVER SUCH MATTER, THE SUPERIOR COURT OF THE STATE OF DELAWARE AND THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA LOCATED IN THE STATE OF DELAWARE SOLELY IN CONNECTION WITH ANY DISPUTE THAT ARISES IN RESPECT OF THE INTERPRETATION AND ENFORCEMENT OF THE PROVISIONS OF THIS AGREEMENT AND THE DOCUMENTS REFERRED TO IN THIS AGREEMENT OR IN RESPECT OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AND HEREBY WAIVE, AND AGREE NOT TO ASSERT, AS A DEFENSE IN ANY ACTION, SUIT OR PROCEEDING FOR INTERPRETATION OR ENFORCEMENT HEREOF OR ANY SUCH DOCUMENT THAT IT IS NOT SUBJECT THERETO OR THAT SUCH ACTION, SUIT OR PROCEEDING MAY NOT BE BROUGHT OR IS NOT MAINTAINABLE IN SAID COURTS OR THAT VENUE THEREOF MAY NOT BE APPROPRIATE OR THAT THIS AGREEMENT OR ANY SUCH DOCUMENT MAY NOT BE ENFORCED IN OR BY SUCH COURTS, AND THE PARTIES IRREVOCABLY AGREE THAT ALL CLAIMS WITH RESPECT TO SUCH ACTION, SUIT OR PROCEEDING SHALL BE HEARD AND DETERMINED EXCLUSIVELY BY SUCH A DELAWARE STATE OR FEDERAL COURT. THE PARTIES HEREBY CONSENT TO AND GRANT ANY SUCH COURT JURISDICTION OVER THE PERSON OF SUCH PARTIES AND OVER THE SUBJECT MATTER OF SUCH DISPUTE AND AGREE THAT MAILING OF PROCESS OR OTHER PAPERS IN CONNECTION WITH SUCH ACTION, SUIT OR PROCEEDING IN THE MANNER PROVIDED IN SECTION 9.3 OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW SHALL BE VALID AND SUFFICIENT SERVICE THEREOF.

(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS

 

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AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER; (II) SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THE FOREGOING WAIVER; (III) SUCH PARTY MAKES THE FOREGOING WAIVER VOLUNTARILY AND (IV) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS IN THIS SECTION 9.7.

(d) Notwithstanding the foregoing, (i) the matters pertaining to the TBOC contained in Article I, Article II and Article III, including matters relating to the filing of the Certificate of Merger and the effects of the Merger, shall be governed by the TBOC, and all matters relating to the duties of the board of directors of the Company shall be governed by and construed in accordance with the Laws of the State of Texas without regard to the conflicts of law principles thereof to the extent that such principles would direct a matter to another jurisdiction.

9.8 Severability. Each Party agrees that, should any court or other competent authority hold any provision of this Agreement or part hereof to be invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such other term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the Transactions be consummated as originally contemplated to the greatest extent possible. Except as otherwise contemplated by this Agreement, in response to an order from a court or other competent authority for any Party to take any action inconsistent herewith or not to take an action consistent herewith or required hereby, to the extent that a Party took an action inconsistent with this Agreement or failed to take action consistent with this Agreement or required by this Agreement pursuant to such order, such Party shall not incur any liability or obligation unless such Party did not in good faith seek to resist or object to the imposition or entering of such order.

9.9 Assignment. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the Parties (whether by operation of Law or otherwise) without the prior written consent of the other Party. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the Parties and their respective successors and permitted assigns. Any purported assignment in violation of this Section 9.9 shall be void.

9.10 Affiliate Liability. Each of the following is herein referred to as a “Company Affiliate”: (a) any direct or indirect holder of equity interests or securities in the Company (whether stockholders or otherwise), and (b) any director, officer, employee, Representative or agent of (i) the Company or (ii) any Person who controls the Company. Notwithstanding anything to the contrary herein, no Company Affiliate shall have any liability or obligation to the Isla Parties of any nature whatsoever in connection with or under this Agreement or the applicable Designated

 

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Stockholder Voting Agreement or the transactions contemplated hereby or thereby, and the Isla Parties hereby waive and release all claims of any such liability and obligation, except in each case as expressly provided by the applicable Designated Stockholder Voting Agreement between such Designated Stockholder and Isla. Each of the following is herein referred to as an “Isla Affiliate”: (x) any indirect holder of equity interests or securities in Isla (whether stockholders or otherwise, excluding, for the avoidance of doubt, each such Person that is party to this Agreement), (y) any Affiliate of Isla, and any other investment funds, vehicles or accounts sponsored or managed by Affiliates of Isla (or one of any such Person’s subsidiary advisory entities) (excluding, in each case, each of Isla’s Subsidiaries and such Persons that are parties to this Agreement) and the Persons in which they invest, and (z) any director, officer, employee, Representative or agent of Isla or any Person identified in clauses (x) and (y). No Isla Affiliate shall have any liability or obligation to the Company of any nature whatsoever in connection with or under this Agreement or the transactions contemplated hereby (excluding any Ancillary Documents or other agreements referred to herein (including any such agreements attached as Exhibits hereto), in each case, to which such Isla Affiliate is a party, and solely with respect to such agreements as set forth therein), and the Company hereby waives and releases all claims of any such liability and obligation.

9.11 Specific Performance. The Parties agree that irreparable damage, for which monetary damages would not be an adequate remedy, would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached by the Parties. Prior to the termination of this Agreement pursuant to Section 8.1, it is accordingly agreed that the Parties shall be entitled to an injunction or injunctions, or any other appropriate form of specific performance or equitable relief, to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of competent jurisdiction, in each case in accordance with this Section 9.11, this being in addition to any other remedy to which they are entitled under the terms of this Agreement at Law or in equity. Each Party accordingly agrees not to raise any objections to the availability of the equitable remedy of specific performance to prevent or restrain breaches or threatened breaches of, or to enforce compliance with, the covenants and obligations of such Party under this Agreement all in accordance with the terms of this Section 9.11. Each Party further agrees that no other Party or any other Person shall be required to obtain, furnish or post any bond or similar instrument in connection with or as a condition to obtaining any remedy referred to in this Section 9.11, and each Party irrevocably waives any right it may have to require the obtaining, furnishing or posting of any such bond or similar instrument. If prior to the Outside Date, any Party hereto brings an action to enforce specifically the performance of the terms and provisions hereof by any other Party, the Outside Date shall automatically be extended by such other time period established by the court presiding over such action.

9.12 Amendment. This Agreement may be amended by the Parties at any time before or after adoption of this Agreement by the stockholders of the Company, but, after any such adoption, no amendment shall be made which by Law would require the further approval by such stockholders without first obtaining such further approval. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the Parties.

 

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9.13 Extension; Waiver. At any time prior to the Merger Effective Time, the Company and Isla may, to the extent legally allowed:

(a) extend the time for the performance of any of the obligations or acts of the other Party hereunder;

(b) waive any inaccuracies in the representations and warranties of the other Party contained herein or in any document delivered pursuant hereto; or

(c) waive compliance with any of the agreements or conditions of the other Party contained herein.

Notwithstanding the foregoing, no failure or delay by the Company or Isla in exercising any right hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise of any other right hereunder. No agreement on the part of a Party to any such extension or waiver shall be valid unless set forth in an instrument in writing signed on behalf of such Party. No waiver by any of the parties hereto of any default, misrepresentation or breach of representation, warranty, covenant or other agreement hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation or breach or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.

9.14 Non-Recourse. This Agreement may only be enforced against, and any claim or cause of action based upon, arising out of, or related to this Agreement or the transactions contemplated by this Agreement may only be brought against, the entities that are expressly named as parties hereto (except with respect to such agreements contemplated hereby to which Persons that are not expressly named parties hereto are party and in such case solely with respect to such agreements as set forth therein) and then only with respect to the specific obligations set forth herein with respect to such party. Except to the extent a named party to this Agreement (and then only to the extent of the specific obligations undertaken by such named party in this Agreement and not otherwise), no past, present or future director, manager, officer, employee, incorporator, member, partner, equityholder, Affiliate (including, with respect to Isla, any other investment funds, vehicles or accounts sponsored or managed by Affiliates of Isla (or one of any such Person’s subsidiary advisory entities), and the Persons in which they invest), agent, attorney, advisor, consultant or Representative or Affiliate of any of the foregoing shall have any liability (whether in contract, tort, equity or otherwise) for any one or more of the representations, warranties, covenants, agreements or other obligations or liabilities of any one or more of the Company or the Isla Parties under this Agreement (whether for indemnification or otherwise) or of or for any claim based on, arising out of, or related to this Agreement or the transactions contemplated by this Agreement (excluding any claim based on, arising out of, or related to any Ancillary Documents or other agreements referred to herein (including any such agreements attached as Exhibits hereto), in each case, to which such Person is a party and solely with respect to such agreements as set forth therein).

[Signature Pages Follow]

 

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IN WITNESS WHEREOF, each Party hereto has caused this Agreement to be signed by its respective officer thereunto duly authorized, all as of the date first written above.

 

CONTANGO OIL & GAS COMPANY
By:  

/s/ Wilkie S. Colyer

Name:   Wilkie S. Colyer
Title:   Chief Executive Officer

SIGNATURE PAGE TO TRANSACTION AGREEMENT


INDEPENDENCE ENERGY LLC
By:   Independence Energy MM LLC, its
  managing member
By:  

/s/ David Rockecharlie

Name:   David Rockecharlie
Title:   Chief Executive Officer
IE PUBCO INC.
By:  

/s/ David Rockecharlie

Name:   David Rockecharlie
Title:   Chief Executive Officer
IE OPCO LLC
By:   Independence Energy LLC, its sole
  Member
By:   Independence Energy MM LLC, its
  managing member
By:  

/s/ David Rockecharlie

Name:   David Rockecharlie
Title:   Chief Executive Officer
IE C MERGER SUB INC.
By:  

/s/ David Rockecharlie

Name:   David Rockecharlie
Title:   Chief Executive Officer

SIGNATURE PAGE TO TRANSACTION AGREEMENT


IE L MERGER SUB LLC
By:   IE PubCo Inc., its sole Member
By:  

/s/ David Rockecharlie

Name:   David Rockecharlie
Title:   Chief Executive Officer

SIGNATURE PAGE TO TRANSACTION AGREEMENT


ANNEX A

Certain Definitions

A&R OpCo LLCA” means the Amended and Restated Limited Liability Company Agreement of OpCo substantially in the form attached hereto as Exhibit C.

Affiliate” means, with respect to any Person, any other Person directly or indirectly, controlling, controlled by, or under common control with, such Person, through one or more intermediaries or otherwise.

Aggregated Group” means all Persons, entities or trades or businesses (whether or not incorporated) under common control with any other Person within the meaning of Section 414 of the Code or Section 4001 of ERISA.

Ancillary Documents” means the following documents:

(a) the Registration Rights Agreement;

(b) the A&R OpCo LLCA; and

(c) the Management Agreement.

Anti-Corruption Laws” means (i) the United States Foreign Corrupt Practices Act of 1977, as amended, (ii) the U.K. Bribery Act 2010, (iii) legislation adopted in furtherance of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and (iv) similar legislation applicable to the Company or Isla and their respective Subsidiaries, as applicable, from time to time.

beneficial ownership,” including the correlative term “beneficially owning,” has the meaning ascribed to such term in Section 13(d) of the Exchange Act.

Business Day” means a day other than a day on banks in the State of New York are authorized or obligated to be closed.

Code” means the Internal Revenue Code of 1986, as amended.

Company Competing Proposal” means any contract, proposal, offer or indication of interest relating to any transaction or series of related transactions (other than transactions only with Isla or any of its Subsidiaries) involving, directly or indirectly: (a) any acquisition (by asset purchase, stock purchase, merger, or otherwise) by any Person or group of any business or assets of the Company or any of its Subsidiaries (including capital stock of or ownership interest in any Subsidiary) that generated 20% or more of the Company’s and its Subsidiaries’ (taken as a whole) assets (by fair market value), net revenue or earnings before interest, Taxes, depreciation and amortization for the preceding twelve months, or any license, lease or long-term supply agreement having a similar economic effect, (b) any acquisition of beneficial ownership by any Person or group of 20% or more of the outstanding shares of Company Common Stock or any other securities entitled to vote on the election of directors of the Company or any tender or exchange offer that if

 

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consummated would result in any Person or group beneficially owning 20% or more of the outstanding shares of Company Common Stock or any other securities entitled to vote on the election of directors or (c) any merger, consolidation, share exchange, business combination, recapitalization, liquidation, dissolution or similar transaction involving the Company or any of its Subsidiaries that generated 20% or more of the Company’s and its Subsidiaries’ (taken as a whole) net revenue or earnings before interest, Taxes, depreciation and amortization for the preceding twelve months.

Company Equity Plans” means the Company’s Third Amended and Restated 2009 Incentive Compensation Plan and the Company’s 2005 Stock Incentive Plan.

Company Intervening Event” means a material development or change in circumstance that occurs or arises after the date of this Agreement and that was not known to or reasonably foreseeable by the Company Board as of the date of this Agreement (or if known or reasonably foreseeable, the magnitude or material consequences of which were not known or reasonably foreseeable by the Company Board as of the date of this Agreement); provided, however, that in no event shall the following events, changes or developments constitute a Company Intervening Event: (A) the receipt, existence or terms of a Company Competing Proposal or any inquiry, proposal, offer, request for information or expression of interest that may reasonably be expected to lead to, or result in a Company Competing Proposal, (B) any fact, circumstance, effect, change, event or development relating to Isla or any of its Subsidiaries that does not amount to an Isla Material Adverse Effect, (C) changes in the market price or trading volume of Company Common Stock or any other securities of the Company, or any change in credit rating or the fact that the Company meets or exceeds (or that Isla fails to meet or exceed) internal or published estimates, projections, forecasts or predictions for any period (it being understood that for each of the foregoing, the underlying cause thereof may be taken into account for purposes of determining whether a Company Intervening Event has occurred).

Company Plan” means an Employee Benefit Plan sponsored, maintained, or contributed to (or required to be contributed to) by the Company or any of its Subsidiaries, or under or with respect to which the Company or any of its Subsidiaries has or could reasonably be expected to have any current or contingent liability or obligation.

Company Stockholder Approval” means the adoption of this Agreement by the holders of a majority of the outstanding shares of Company Common Stock in accordance with the TBOC and the Organizational Documents of the Company.

Company Superior Proposal” means a bona fide written proposal that is not solicited after the date of this Agreement and is made after the date of this Agreement by any Person or group (other than Isla or any of its Affiliates) to acquire, directly or indirectly, (a) businesses or assets of the Company or any of its Subsidiaries (including capital stock of or ownership interest in any Subsidiary) that account for 50% or more of the fair market value of the assets of the Company and its Subsidiaries, taken as a whole, or that generated 50% or more of the Company’s and its Subsidiaries’ consolidated net revenue or earnings before interest, Taxes, depreciation and amortization for the preceding twelve months, respectively, or (b) more than 50% of the outstanding shares of Company Common Stock, in each case whether by way of merger, amalgamation, share exchange, tender offer, exchange offer, recapitalization, consolidation, sale

 

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of assets or otherwise, that in the good faith determination of the Company Board, after consultation with its financial advisors and outside legal counsel that (i) if consummated, would result in a transaction more favorable to the Company’s stockholders from a financial point of view than the Merger (after taking into account the time likely to be required to consummate such proposal and any adjustments or revisions to the terms of this Agreement offered by Isla in response to such proposal or otherwise), and (ii) is reasonably likely to be consummated on substantially the terms proposed, taking into account any legal, financial, regulatory and stockholder approval requirements, the sources, availability and terms of any financing, financing market conditions and the existence of a financing contingency, the likelihood of termination, the timing of closing, the identity of the Person or Persons making the proposal and any other aspects considered relevant by the Company Board.

Company Termination Fee” means $33,375,989.

Consent” means any filing, notice, report, registration, approval, consent, ratification, permit, permission, waiver, expiration of waiting periods or authorization.

control” and its correlative terms, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

COVID-19” means SARS-CoV-2 or COVID-19, and any evolutions thereof or related or associated epidemics, pandemics or disease outbreaks.

COVID-19 Measures” means any quarantine, “shelter-in-place,” “stay at home,” workforce reduction, social distancing, shut down, closure or sequester order, curfew or other restrictions imposed by any Governmental Entity or any other Laws, orders, directives, guidelines or recommendations issued by any Governmental Entity, the Centers for Disease Control and Prevention, the World Health Organization or any industry group in connection with or in response to COVID-19 or any other epidemic or pandemic in each case as required by Law and applicable to the relevant Person.

Debt Prepayment Expenses” means all prepayment or termination fees, expenses or breakage costs, redemption prices or premiums (including any “make-whole” premiums) and penalties in each case payable in connection with any redemption, prepayment, defeasance or other satisfaction of amounts for any outstanding Indebtedness of the Company and its Subsidiaries under any Subject Indebtedness.

Derivative Transaction” means any swap transaction, option, warrant, forward purchase or sale transaction, futures transaction, cap transaction, floor transaction or collar transaction relating to one or more currencies, commodities (including, without limitation, natural gas, natural gas liquids, crude oil and condensate), bonds, equity securities, loans, interest rates, catastrophe events, weather-related events, credit-related events or conditions or any indexes, or any other similar transaction (including any put, call or other option with respect to any of these transactions) or combination of any of these transactions, including collateralized mortgage obligations or other similar instruments or any debt or equity instruments evidencing or embedding any such types of transactions, and any related credit support, collateral or other similar arrangements related to such transactions.

 

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DTC” means The Depositary Trust Company.

Edgar” means the Electronic Data Gathering, Analysis and Retrieval System administered by the SEC.

Employee Benefit Plan” means any “employee benefit plan” (within the meaning of Section 3(3) of ERISA, regardless of whether such plan is subject to ERISA), and any equity option, restricted equity, equity purchase plan, equity compensation plan, phantom equity or appreciation rights plan, bonus plan or arrangement, incentive award plan or arrangement, vacation or holiday pay policy, retention or severance pay plan, policy or agreement, deferred compensation agreement or arrangement, change in control, post-termination or retiree health or welfare, pension, savings, profit sharing, retirement, hospitalization or other health, medical, dental, vision, accident, disability, life or other insurance, executive compensation or supplemental income arrangement, individual consulting agreement, employment agreement, and any other benefit or compensation plan, policy, contract agreement, arrangement, program or practice.

Encumbrances” means liens, pledges, charges, encumbrances, claims, hypothecation, mortgages, deeds of trust, security interests, restrictions, rights of first refusal, defects in title, prior assignment, license sublicense or other burdens, options or encumbrances of any kind or any agreement, option, right or privilege (whether by Law, contract or otherwise) capable of becoming any of the foregoing (any action of correlative meaning, to “Encumber”).

Energy Finance” means Independence Energy Finance, LLC, a Delaware limited liability company.

Environmental Laws” means any and all Laws pertaining to pollution or protection of the environment, natural resources or occupational safety and health (including, without limitation, the plugging and abandonment of any Wells, any natural resource damages or any generation, use, storage, treatment, disposal or Release of, or exposure to, Hazardous Materials enacted or in effect as of or prior to the Closing Date).

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

Exchange Act” means the Securities Exchange Act of 1934.

Governmental Entity” means any court, governmental, regulatory or administrative agency or commission or other governmental authority or instrumentality, domestic or foreign.

group” has the meaning ascribed to such term in Section 13(d) of the Exchange Act.

Hazardous Materials” means any (a) chemical, product, material, substance, waste, pollutant, or contaminant that is defined or listed as hazardous or toxic or that is otherwise regulated under, or for which standards of conduct or liability may be imposed pursuant to, any Environmental Law; (b) asbestos containing materials, whether in a friable or non-friable condition, lead-containing material polychlorinated biphenyls, naturally occurring radioactive materials or radon; (c) any Hydrocarbons; or (d) per- and polyfluoroalkyl substances.

 

Annex A

Page 4


Hydrocarbons” means any hydrocarbon-containing substance, crude oil, natural gas, condensate, drip gas and natural gas liquids, coalbed gas, ethane, propane, iso-butane, nor-butane, gasoline, scrubber liquids and other liquids or gaseous hydrocarbons or other substances (including minerals or gases), or any combination thereof, produced or associated therewith.

Indebtedness” of any Person means, without duplication: (a) indebtedness of such Person for borrowed money; (b) obligations of such Person to pay the deferred purchase or acquisition price for any property of such Person; (c) reimbursement obligations of such Person in respect of drawn letters of credit or similar instruments issued or accepted by banks and other financial institutions for the account of such Person; obligations of such Person under a lease to the extent such obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP; and (d) indebtedness of others as described in clauses (a) through (c) above guaranteed by such Person; but Indebtedness does not include accounts payable to trade creditors, or accrued expenses arising in the ordinary course of business consistent with past practice, in each case, that are not yet due and payable, or are being disputed in good faith, and the endorsement of negotiable instruments for collection in the ordinary course of business.

Intellectual Property” means any and all proprietary, industrial and intellectual property rights, under the applicable Law of any jurisdiction or rights under international treaties, both statutory and common Law rights, including: (a) utility models, supplementary protection certificates, invention disclosures, registrations, patents and applications for same, and extensions, divisions, continuations, continuations-in-part, reexaminations, revisions, renewals, substitutes, and reissues thereof; (b) trademarks, service marks, certification marks, collective marks, brand names, d/b/a’s, trade names, slogans, domain names, symbols, logos, trade dress and other identifiers of source, and registrations and applications for registrations thereof and renewals of the same (including all common Law rights and goodwill associated with the foregoing and symbolized thereby); (c) published and unpublished works of authorship, whether copyrightable or not, copyrights therein and thereto, together with all common Law and moral rights therein, database rights, and registrations and applications for registration of the foregoing, and all renewals, extensions, restorations and reversions thereof; (d) trade secrets, know-how, and other rights in information, including designs, formulations, concepts, compilations of information, methods, techniques, procedures, and processes, whether or not patentable; (e) Internet domain names and URLs; and (f) all other intellectual property, industrial or proprietary rights.

Isla Debt Agreements” means that certain Indenture, dated as of May 6, 2021, among Energy Finance, certain of its subsidiaries and U.S. Bank National Association and that certain Credit Agreement, dated as of May 6, 2021, by and among Energy Finance, Wells Fargo Bank, National Association and the lenders and other entities party thereto, as amended from time to time.

Isla Expenses” means a cash amount equal to $6,068,362 to be paid in respect of Isla’s costs and expenses in connection with the negotiation, execution and performance of this Agreement and the Transactions.

 

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Isla Competing Proposal” means any contract, proposal, offer or indication of interest relating to any transaction or series of related transactions (other than transactions only with Isla or any of its Subsidiaries) involving, directly or indirectly: (a) any acquisition (by asset purchase, stock purchase, merger, or otherwise) by any Person or group of any business or assets of Isla or any of its Subsidiaries (including capital stock of or ownership interest in any Subsidiary) that generated 20% or more of Isla’s and its Subsidiaries’ (taken as a whole) assets (by fair market value), net revenue or earnings before interest, Taxes, depreciation and amortization for the preceding twelve months, or any license, lease or long-term supply agreement having a similar economic effect, (b) any acquisition of beneficial ownership by any Person or group of 20% or more of the outstanding equity interests of Isla (or any other securities, or class or series of series, in each case, entitled to vote on the election of the Board of Directors of Isla) or any tender or exchange offer that if consummated would result in any Person or group beneficially owning 20% or more of the outstanding shares of Isla or any other securities entitled to vote on the election of directors or (c) any merger, consolidation, share exchange, business combination, recapitalization, liquidation, dissolution or similar transaction involving Isla or any of its Subsidiaries that generated 20% or more of Isla’s and its Subsidiaries’ (taken as a whole) net revenue or earnings before interest, Taxes, depreciation and amortization for the preceding twelve months.

Isla Management Agreement” means that certain Management Agreement, dated as of August 18, 2020, by and between Isla and Kohlberg Kravis Roberts & Co. L.P., as amended from time to time.

Isla Ownership Number” means 127,345,224, as may be adjusted pursuant to Section 6.15.

Isla Parties” means Isla, New PubCo, OpCo, C Merger Sub and L Merger Sub.

Isla Plan” means an Employee Benefit Plan sponsored, maintained, or contributed to (or required to be contributed to) by Isla or any of its Subsidiaries, or under or with respect to which Isla or any of its Subsidiaries has or could reasonably be expected to have any current or contingent liability or obligation.

IT Assets” means computers, software, servers, networks, workstations, routers, hubs, circuits, switches, data communications lines, and all other information technology equipment, and all associated documentation.

knowledge” means the actual knowledge of, (a) in the case of the Company, the individuals listed in Schedule 1.2 of the Company Disclosure Letter and (b) in the case of Isla, the individuals listed in Schedule 1.1 of the Isla Disclosure Letter.

Law” means any law, rule, regulation, ordinance, code, judgment, order, injunction, award, treaty, convention, governmental directive or other legally enforceable requirement, U.S. or non-U.S., of any Governmental Entity, including common law.

Management Agreement” means the Management Agreement to be entered into as of the closing between New PubCo and an Affiliate of Isla to be specified by Isla prior to the Closing, substantially in the form attached hereto as Exhibit D.

 

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Material Adverse Effect” means, when used with respect to any Party, any fact, circumstance, condition, effect, change, event or development (“Effect”) that (a) prevents, materially delays or materially impairs the ability of such Party or its Subsidiaries to consummate the Transactions or could reasonably be expected to do so or (b) is, or could reasonably be expected to be, materially adverse to the financial condition, business, or results of operations of such Party and its Subsidiaries, taken as a whole; provided, however, that, in respect of clause (b) above, none of the following shall be deemed to be or constitute a “Material Adverse Effect” or shall be taken into account when determining whether a “Material Adverse Effect” has occurred or could occur:

(i) general economic conditions (or changes in such conditions) or conditions in the U.S. or global economies generally;

(ii) conditions (or changes in such conditions) in the securities markets, credit markets, currency markets or other financial markets, including (A) changes in interest rates and changes in exchange rates for the currencies of any countries, and (B) any suspension of trading in securities (whether equity, debt, derivative or hybrid securities) generally on any securities exchange or over-the-counter market;

(iii) conditions (or changes in such conditions) in the oil and gas exploration, development or production industry (including changes in commodity prices, general market prices and regulatory changes affecting the industry);

(iv) earthquakes, hurricanes, tsunamis, tornadoes, floods, mudslides, wild fires or other natural disasters, weather conditions, pandemics, epidemics, endemics or other widespread health crisis (including the existence, impact or worsening of COVID-19);

(v) political conditions (or changes in such conditions) or acts of war, sabotage or terrorism, civil unrest, public demonstrations, cyber attacks, hacking, or the escalation or general worsening of any of the foregoing;

(vi) changes in, or any adoption, implementation, modification, repeal, interpretation, proposal of, any Law, or changes in other legal or regulatory conditions, or the interpretation thereof, or changes in GAAP or other accounting standards (or the interpretation thereof);

(vii) changes in such Party’s stock price or the trading volume of such Party’s stock, or any failure by such Party to meet any analysts’ estimates or expectations of such Party’s revenue, earnings or other financial performance or results of operations for any period, or any failure by such Party or any of its Subsidiaries to meet any internal or published budgets, plans or forecasts of its revenues, earnings or other financial performance or results of operations (it being understood that the facts or occurrences giving rise to or contributing to such changes or failures that are not otherwise excluded from the definition of may “Material Adverse Effect” may constitute, or be taken into account in determining whether there has been or will be, a Material Adverse Effect);

 

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(viii) the announcement of this Agreement or the pendency or consummation of the Transactions, including the initiation of litigation by any Person with respect to this Agreement (other than with respect to any representation or warranty that is intended to address the consequences of the execution or delivery of this Agreement or the announcement or consummation of the Transactions); or

(ix) compliance with the terms of, or the taking of any action expressly permitted or required by, this Agreement (except for any obligation under this Agreement to operate in the ordinary course of business pursuant to Section 6.1 or 6.2, as applicable), including the taking of any actions required under this Agreement to obtain any approval or authorization under applicable Antitrust Laws for the consummation of the Transactions, or the taking of any action requested to be taken by the other Party;

provided, however, except to the extent such effects directly or indirectly resulting from, arising out of, attributable to or related to the matters described in the foregoing clauses (i) through (vi) disproportionately adversely affect such Party and its Subsidiaries, taken as a whole, as compared to other similarly situated participants operating in the United States domestic onshore oil and gas exploration, development or production industry (in which case, the incremental disproportionate adverse effect (if any) shall be taken into account when determining whether a “Material Adverse Effect” has occurred or may or could occur solely to the extent they are disproportionate).

New PubCo Certificate of Incorporation” means the Certificate of Incorporation of New PubCo, dated June 3, 2021.

NYSE” means the New York Stock Exchange.

NYSE American” means the NYSE American.

Oil and Gas Leases” means all leases, subleases, licenses or other occupancy or similar agreements (including any series of related leases with the same lessor) under which a Person leases, subleases or licenses or otherwise acquires or obtains rights to produce Hydrocarbons from real property interests.

Oil and Gas Properties” means all right, title and interest in (a) oil, gas, mineral, and similar properties of any kind and nature, including working, leasehold and mineral interests and operating rights and royalties, overriding royalties, non-participating royalty interests, production payments, net profit interests, carried interests and other non-working interests and non-operating interests (derived from Oil and Gas Leases, operating agreements, unitization and pooling agreements and orders, participation agreements, development agreements, communitization agreements, division orders, transfer orders, mineral deeds, royalty deeds, term assignments (or other similar agreements or instruments), surface interests, fee interests, reversionary interests, reservations and concessions and (b) all Wells located on or producing from such leases and properties.

OpCo Units” means the “Units” as defined in the A&R OpCo LLCA.

 

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ordinary course of business” means, with respect to an action taken by any Person, that such action is consistent with the ordinary course of business of such Person, excluding (whether or not such term is qualified by “consistent with past practice” or any similar phrase) any commercially reasonable deviations therefrom due to COVID-19 or COVID-19 Measures.

Organizational Documents” means (a) with respect to a corporation, the charter, articles or certificate of incorporation, as applicable, and bylaws thereof, (b) with respect to a limited liability company, the certificate of formation or organization, as applicable, and the operating or limited liability company agreement thereof, (c) with respect to a partnership, the certificate of formation and the partnership agreement, and with respect to any other Person the organizational, constituent and/or governing documents and/or instruments of such Person.

other Party” means (a) when used with respect to the Company, the Isla Parties and (b) when used with respect to any Isla Party, the Company.

Party” or “Parties” means a party or the parties to this Agreement, except as the context may otherwise require.

Permitted Encumbrances” means:

(a) to the extent not applicable to the transactions contemplated hereby or thereby or otherwise waived prior to the Merger Effective Time, preferential purchase rights, rights of first refusal, purchase options and similar rights granted pursuant to any contracts, including joint operating agreements, joint ownership agreements, participation agreements, development agreements, stockholders agreements, organizational documents and other similar agreements and documents;

(b) contractual or statutory mechanic’s, materialmen’s, warehouseman’s, journeyman’s, vendor’s, repairmen’s, construction and carrier’s liens and other similar Encumbrances arising in the ordinary course of business for amounts not yet delinquent and Encumbrances for Taxes or assessments or other governmental charges that are not yet delinquent or, in all instances, if delinquent, that are being contested in good faith in the ordinary course of business by appropriate Proceedings and for which adequate reserves have been established on the financial statements of the Company or Isla, as applicable, in accordance with GAAP;

(c) Production Burdens payable to third parties that are deducted in the calculation of discounted present value in the Company Reserve Reports or the Isla Reserve Reports, as applicable, and any Production Burdens payable to third parties affecting any Oil and Gas Property that was acquired subsequent to the date of the Company Reserve Reports or the dates of the Isla Reserve Reports, as applicable;

(d) Encumbrances arising in the ordinary course of business under operating agreements, joint venture agreements, partnership agreements, Oil and Gas Leases, farm-out agreements, division orders, contracts for the sale, purchase, transportation, processing or exchange of oil, gas or other Hydrocarbons, unitization and pooling declarations and agreements, area of mutual interest agreements, development agreements, joint ownership arrangements and other agreements that are customary in the oil and gas business,

 

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provided, however, that, in each case, such Encumbrance (i) secures obligations that are not Indebtedness or a deferred purchase price and are not delinquent and (ii) would not be reasonably expected to have a Material Adverse Effect, on the value, use or operation of the property encumbered thereby;

(e) such Encumbrances as the Company (in the case of Encumbrances with respect to properties or assets of Isla or its Subsidiaries) or Isla (in the case of Encumbrances with respect to properties or assets of the Company or its Subsidiaries), as applicable, have expressly waived in writing;

(f) all easements, zoning restrictions, Rights-of-Way, servitudes, permits, surface leases and other similar rights in respect of surface operations, and easements for pipelines, facilities, streets, alleys, highways, telephone lines, power lines, railways and other easements and Rights-of-Way, on, over or in respect of any of the properties of the Company or Isla, as applicable, or any of their respective Subsidiaries, that are customarily granted in the oil and gas industry and do not materially interfere with the operation, value or use of the property or asset affected;

(g) any Encumbrances discharged at or prior to the Merger Effective Time (including Encumbrances securing any Indebtedness that will be paid off in connection with Closing);

(h) Encumbrances imposed or promulgated by applicable Law or any Governmental Entity with respect to real property, including zoning, building or similar restrictions; or

(i) Encumbrances, exceptions, defects or irregularities in title, easements, imperfections of title, claims, charges, security interests, Rights-of-Way, covenants, restrictions and other similar matters that would be accepted by a reasonably prudent purchaser of oil and gas interests, that would not reduce the net revenue interest share of the Company or Isla, as applicable, or such Party’s Subsidiaries, in any Oil and Gas Lease below the net revenue interest share shown in the Company Reserve Reports or Isla Reserve Reports, as applicable, with respect to such lease, or increase the working interest of the Company or Isla (without at least a proportionate increase in net revenue interest), as applicable, or of such Party’s Subsidiaries, in any Oil and Gas Lease above the working interest shown on the Company Reserve Report or Isla Reserve Reports, as applicable, with respect to such lease and, in each case, that have not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect or Isla Material Adverse Effect, as applicable.

Person” means any individual, partnership, limited liability company, corporation, joint stock company, trust, estate, joint venture, Governmental Entity, association or unincorporated organization, or any other form of business or professional entity.

Personal Information” means any information that, alone or in combination with other information held by the Company or any of its Subsidiaries, identifies or could reasonably be used to identify an individual, and any other personal information that is subject to any applicable Laws.

 

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Proceeding” means any actual or threatened claim (including a claim of a violation of applicable Law), charge, cause of action, action, audit, arbitration, demand, litigation, suit, proceeding, investigation, grievance, citation, summons, subpoena, inquiry, hearing, originating application to a tribunal, arbitration or other proceeding at Law or in equity or order or ruling, in each case whether civil, criminal, administrative, investigative or otherwise, whether in contract, in tort or otherwise, and whether or not such claim, charge, cause of action, action, audit, arbitration, demand, litigation, suit, proceeding, investigation grievance, citation, summons, subpoena, inquiry, hearing, originating application to a tribunal, arbitration or other proceeding or order or ruling results in a formal civil or criminal litigation or regulatory action.

Production Burdens” means any royalties (including lessor’s royalties), overriding royalties, production payments, net profit interests or other similar interests that constitute a burden on, and are measured by or are payable out of, the production of Hydrocarbons or the proceeds realized from the sale or other disposition thereof (including any amounts payable to publicly traded royalty trusts), but excluding Taxes.

Registration Rights Agreement” means the Registration Rights Agreement to be entered into as of the Closing by and among New PubCo and certain stockholders of the Company, substantially in the form attached hereto as Exhibit E.

Release” means any depositing, spilling, leaking, pumping, pouring, placing, emitting, discarding, abandoning, emptying, discharging, migrating, injecting, escaping, leaching, dumping, or disposing into the indoor or outdoor environment.

Representatives” means, with respect to any Person, the officers, directors, employees, accountants, consultants, agents, legal counsel, financial advisors and other representatives of such Person.

Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002.

SEC” means the United States Securities and Exchange Commission.

Securities Act” means the Securities Act of 1933

Series I Preferred Stockholder” means Independence Energy Aggregator GP LLC, a Delaware limited liability company.

Subject Indebtedness” means any Indebtedness pursuant to that certain Credit Agreement, dated as of September 17, 2019, by and among the Company and JPMorgan Chase Bank, N.A., as administrative agent, and the lenders from time to time party thereto, as amended, modified, supplemented or replaced from time to time.

Subsidiary” means, with respect to a Person, any Person, whether incorporated or unincorporated, of which (a) at least 50% of the securities or ownership interests having by their terms ordinary voting power to elect a majority of the board of directors or other Persons performing similar functions (provided, that, for purposes of this Agreement, prior to the Closing, each of New PubCo, C Merger Sub, OpCo and L Merger Sub shall be deemed to be Subsidiaries of Isla), (b) a general partner interest or (c) a managing member interest, is directly or indirectly owned or controlled by the subject Person or by one or more of its respective Subsidiaries.

 

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Takeover Law” means any “fair price,” “moratorium,” “control share acquisition,” “business combination” or any other anti-takeover statute or similar statute enacted under applicable state Law.

Tax” or “Taxes” means (a) any and all taxes (including any duties, levies or other similar governmental assessments in the nature of taxes), unclaimed property and escheat obligations and other governmental charges, including, but not limited to, income, estimated, business, occupation, corporate, capital, gross receipts, transfer, stamp, registration, employment, payroll, unemployment, withholding, occupancy, license, severance, capital, production, ad valorem, excise, windfall profits, customs duties, real property, personal property, sales, use, turnover, value added and franchise taxes, in each case, imposed by any Governmental Entity, whether disputed or not, together with all interest, penalties, and additions to tax imposed with respect thereto; (b) any liability for the payment of any amounts of the type described in clause (a) as a result of being a member of an affiliated, combined, consolidated, unitary or similar group with respect to any Taxes, including any affiliated group within the meaning of Section 1504 of the Code electing to file consolidated U.S. federal income Tax Returns and any similar group under foreign, state or local law, for any period; and (c) any liability of for the payment of any amounts of the type described in clause (a) or (b) as a result of the operation of law or any express or implied obligation to indemnify any other person.

Tax Returns” means any return, report, statement, information return or other document (including any related or supporting information) filed or required to be filed with any Taxing Authority in connection with the determination, assessment, collection or administration of any Taxes.

Taxing Authority” means, with respect to any Tax, the Governmental Entity or other authority competent to impose such Tax or responsible for the administration and/or collection of such Tax or enforcement of any law in relation to Tax.

Transactions” means the Merger, the LLC Merger, the Contribution and the other transactions contemplated by this Agreement and each other agreement to be executed and delivered in connection herewith and therewith.

Transfer Taxes” means any transfer, sales, use, stamp, registration or other similar Taxes that are incurred as a result of the Transactions contemplated by this Agreement; provided, for the avoidance of doubt, that Transfer Taxes shall not include any income, franchise or similar taxes.

Voting Debt” of a Person means bonds, debentures, notes or other Indebtedness having the right to vote (or convertible into securities having the right to vote) on any matters on which stockholders of such Person may vote.

Wells” means all oil or gas wells and all CO2, water, injection, disposal or other wells, whether producing, operating, shut-in or temporarily abandoned, located on an Oil and Gas Lease or any pooled, communitized or unitized acreage that includes all or a part of such Oil and Gas Lease or otherwise associated with an Oil and Gas Property of the applicable Person or any of its Subsidiaries, together with all oil, gas and mineral production from such well.

 

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Willful and Material Breach” including the correlative term “Willfully and Materially Breach,” shall mean a deliberate act or failure to take an act by the breaching party (which act or failure to take an act is and of itself a material breach of this Agreement) with the knowledge that the taking of such act (or the failure to take such act) would, or would reasonably be expected to, constitute a material breach of this Agreement.

 

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EXHIBIT A

FORM OF AMENDED AND RESTATED NEW PUBCO CERTIFICATE OF

INCORPORATION

 

Exhibit A


AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

OF

IE PUBCO INC.

IE PubCo Inc., a corporation organized and existing under the laws of the State of Delaware, pursuant to Sections 242 and 245 of the General Corporation Law of the State of Delaware, as it may be amended (the “DGCL”), hereby certifies as follows:

1. The name of this corporation is IE PubCo Inc. The original Certificate of Incorporation of the corporation was filed on June 3, 2021 and became effective on June 3, 2021. The name under which this corporation was originally incorporated is IE PubCo Inc.

2. This Amended and Restated Certificate of Incorporation was duly adopted in accordance with the provisions of Sections 242 and 245 of the DGCL and by the written consent of the requisite stockholders of the corporation entitled to vote thereon in accordance with Section 228 of the DGCL, and shall become effective upon filing of this Amended and Restated Certificate of Corporation with the Secretary of State of the State of Delaware.

3. This Amended and Restated Certificate of Incorporation amends and restates the Certificate of Incorporation of the corporation to read in its entirety as follows:

ARTICLE I

NAME

The name of the Corporation is IE PubCo Inc. (the “Corporation”).

ARTICLE II

REGISTERED OFFICE AND AGENT

The address of the Corporation’s registered office in the State of Delaware is c/o Maples Fiduciary Services (Delaware) Inc., 4001 Kennett Pike, Suite 302, County of New Castle, Wilmington, Delaware 19807. The name of the registered agent at such address is Maples Fiduciary Services (Delaware) Inc.

ARTICLE III

PURPOSE

The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the DGCL.


ARTICLE IV

AUTHORIZED STOCK

Section 4.01 Capitalization. (a) The total number of shares of all classes of stock that the Corporation shall have authority to issue is 2,000,000,000 which shall be divided into three classes as follows:

 

  (i)

1,000,000,000 shares of Class A Common Stock, $0.0001 par value per share (the “Class A Common Stock”);

 

  (ii)

500,000,000 shares of Class B Common Stock, $0.0001 par value per share (the “Class B Common Stock” and, together with the Class A Common Stock, the “Common Stock”); and

 

  (iii)

500,000,000 shares of preferred stock, $0.0001 par value per share (“Preferred Stock”), of which (y) 1,000 shares are designated as “Series I Preferred Stock” (“Series I Preferred Stock”) and (z) the remaining 499,999,000 shares may be designated from time to time in accordance with this Article IV.

(b) Subject to Article XII, the number of authorized shares of Class A Common Stock, Class B Common Stock or Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of the outstanding Designated Stock, irrespective of the provisions of Section 242(b)(2) of the DGCL (or any successor provision thereto), and no other vote of the holders of the Class A Common Stock, Class B Common Stock or Preferred Stock, voting together or separately as a class, shall be required therefor, unless a vote of the holders of any such class, classes or series is expressly required pursuant to this Certificate of Incorporation.

Section 4.02 Preferred Stock. The Board of Directors of the Corporation (the “Board of Directors”) is hereby expressly authorized, by resolution or resolutions, to provide, out of the unissued shares of Preferred Stock, for one or more series of Preferred Stock and, with respect to each such series, to fix, without further stockholder approval (except as may be required by Article XIII or any certificate of designation relating to any series of Preferred Stock), the designation (the “Preferred Stock Designation”) of such series, the powers (including voting powers), preferences and relative, participating, optional and other special rights, and the qualifications, limitations or restrictions thereof, of such series of Preferred Stock and the number of shares of such series, which number the Board of Directors may, except where otherwise provided in the designation of such series, increase (but not above the total number of shares of Preferred Stock then authorized and available for issuance and not committed for other issuance) or decrease (but not below the number of shares of such series then outstanding); provided that, the Board of Directors may neither issue shares of Preferred Stock to KKR or an Affiliate of KKR, amend the terms of the Series I Preferred Stock, nor fix the designation of any new series of Preferred Stock issued to KKR or an Affiliate of KKR during the Protected Period without the approval of a majority of the Independent Directors. The powers, preferences and relative, participating, optional and other special rights of, and the qualifications, limitations or restrictions thereof, of each series of Preferred Stock, if any, may differ from those of any and all other series at any time outstanding.

 

2


ARTICLE V

TERMS OF COMMON STOCK

Section 5.01 General. Except as otherwise required by law or as expressly provided in this Certificate of Incorporation, (a) each share of Class A Common Stock shall have the same powers, privileges and rights and shall rank equally, share ratably and be identical in all respects as to all matters, with each other share of Class A Common Stock and (b) each share of Class B Common Stock shall have the same powers, privileges and rights and shall rank equally, share ratably and be identical in all respects as to all matters, with each other share of Class B Common Stock.

Section 5.02 Voting. Except as expressly provided otherwise in this Certificate of Incorporation, each holder of Common Stock shall have such voting powers as required by the DGCL and as expressly provided in this Certificate of Incorporation.    Until the Trigger Date (as defined in Section 13.09), holders of Common Stock shall not have any right to vote for, and shall not be entitled to vote on, the election or removal of directors. Following the Trigger Date, except as otherwise provided in this Certificate of Incorporation (including any Preferred Stock Designation), holders of Common Stock shall have the exclusive right to vote for the election or removal of directors. Except as otherwise provided in this Certificate of Incorporation (including any Preferred Stock Designation) or by applicable law, each record holder of Common Stock shall have one vote for each share of Common Stock that is outstanding in his, her or its name on the books of the Corporation on all matters on which holders of Common Stock are entitled to vote. With respect to all matters on which holders of Common Stock are entitled to vote, and except as otherwise required by law or this Certificate of Incorporation, holders of the Class A Common Stock and holders of the Class B Common Stock shall vote together as a single class.

Section 5.03 Dividends. Subject to applicable law and the rights, if any, of the holders of any outstanding series of Preferred Stock or any class or series of stock having a preference over or the right to participate with the Class A Common Stock with respect to the payment of dividends, dividends may be declared and paid ratably on the Class A Common Stock out of the assets of the Corporation that are legally available for this purpose at such times and in such amounts as the Board of Directors in its discretion shall determine. Dividends and other distributions shall not be declared or paid on the Class B Common Stock unless (i) the dividend consists of shares of Class B Common Stock or of rights, options, warrants or other securities convertible or exercisable into or exchangeable or redeemable for shares of Class B Common Stock and in each case is paid proportionally with respect to each outstanding share of Class B Common Stock and (ii) a dividend consisting of shares of Class A Common Stock or of rights, options, warrants or other securities convertible or exercisable into or exchangeable or redeemable for shares of Class A Common Stock on equivalent terms is simultaneously paid to the holders of Class A Common Stock. If dividends are declared on the Class A Common Stock and/or the Class B Common Stock that are payable in shares of Common Stock, or securities convertible or exercisable into or exchangeable or redeemable for Common Stock, the dividends payable to the holders of Class A Common Stock shall be paid only in shares of Class A Common Stock (or

 

3


securities convertible or exercisable into or exchangeable or redeemable for Class A Common Stock), the dividends payable to the holders of Class B Common Stock shall be paid only in shares of Class B Common Stock (or securities convertible or exercisable into or exchangeable or redeemable for Class B Common Stock), and such dividends shall be paid in the same number of shares (or fraction thereof) on a per share basis of the Class A Common Stock and Class B Common Stock, as applicable (or in the same number of securities convertible or exercisable into or exchangeable or redeemable for the same number of shares (or fraction thereof) on a per share basis of the Class A Common Stock and/or Class B Common Stock, respectively). In no event shall the shares of either Class A Common Stock or Class B Common Stock be paid a dividend consisting of voting securities or be split, divided, or combined unless the outstanding shares of the other class shall be paid a proportionate dividend consisting of voting securities or be proportionately split, divided or combined, as applicable.

Section 5.04 Liquidation. Upon a Dissolution Event, after payment or provision for payment of the debts and other liabilities of the Corporation and subject to the rights, if any, of the holders of any outstanding series of Preferred Stock or any class or series of stock having a preference over or the right to participate with the Class A Common Stock with respect to the distribution of assets of the Corporation upon such Dissolution Event, the holders of Class A Common Stock shall be entitled to receive the remaining assets of the Corporation available for distribution to its stockholders ratably in proportion to the number of shares of Class A Common Stock held by them. The holders of shares of Class B Common Stock, as such, shall not be entitled to receive any assets of the Corporation in the event of any Dissolution Event.

Section 5.05 Issuance of Class A Common Stock Upon Redemption/Exchange of Units. The Corporation will at all times reserve and keep available out of its authorized but unissued shares of Class A Common Stock a number of shares of Class A Common Stock that shall from time to time be sufficient to effect the redemption or exchange, as applicable, of all outstanding Units (as defined in the Amended and Restated Limited Liability Agreement of [•], a Delaware limited liability company (“OpCo”), dated as of [•], 2021 (as the same may be amended, modified, supplemented and/or restated from time to time, the “LLC Agreement”)), on the terms and subject to the conditions set forth in the LLC Agreement; provided that nothing contained herein shall be construed to preclude the Corporation from satisfying its obligations in respect of such redemption or exchange of Units by delivery of shares of Class A Common Stock that are held in the treasury of the Corporation or to preclude the Corporation or OpCo from exercising the Cash Election (as defined in the LLC Agreement) with respect to such redemption or exchange of Units. All shares of Class A Common Stock that shall be issued or disposed upon any such redemption will, upon issuance or disposition in accordance with the LLC Agreement, be validly issued, fully paid and non-assessable.

ARTICLE VI

AMENDMENTS

Section 6.01 Amendments of the Certificate of Incorporation.

(a) The Corporation shall have the right, subject to any express provisions or restrictions contained in this Certificate of Incorporation, from time to time, to amend this Certificate of Incorporation or any provision hereof in any manner now or hereafter provided by applicable law, and all rights and powers of any kind conferred upon a director or stockholder of the Corporation by this Certificate of Incorporation or any amendment thereof are subject to such right of the Corporation.

 

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(b) In addition to any greater or additional vote that may be required by applicable law or this Certificate of Incorporation (including any Preferred Stock Designation), any amendment to this Certificate of Incorporation that is required to be submitted to a vote of stockholders under the DGCL shall require the approval of the holders of at least a majority of the voting power of the outstanding Designated Stock entitled to vote thereon, voting together as a single class.

(c) Notwithstanding the foregoing, except as otherwise required by applicable law, holders of outstanding Designated Stock, as such, shall not be entitled to vote on any amendment to this Certificate of Incorporation (including any Preferred Stock Designation) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together as a class with the holders of one or more other such series, to vote thereon pursuant to this Certificate of Incorporation (including any Preferred Stock Designation) or pursuant to the DGCL.

Section 6.02 Bylaw Amendments. In furtherance and not in limitation of the powers conferred by the DGCL, except as expressly provided in this Certificate of Incorporation or the Bylaws, the Board of Directors is expressly authorized to adopt, amend and repeal, in whole or in part, the Bylaws without the assent or vote of the stockholders in any manner not inconsistent with the DGCL or this Certificate of Incorporation.

Section 6.03 Protected Period. Solely during the Protected Period, any amendment of the provisions of this Certificate of Incorporation that are expressly applicable only during the Protected Period shall require the prior approval of a majority of the Independent Directors.

Section 6.04 Lock-Up and Management Agreement. Notwithstanding anything else to the contrary, any waiver or amendment of (i) the last paragraph of Section 3.6(a)(ii) of the LLC Agreement or (ii) prior to the Trigger Date, the Management Agreement between the Company and [•] dated [•], 2021 shall require the affirmative approval of a majority of the Independent Directors.

ARTICLE VII

BOARD OF DIRECTORS

Section 7.01 Powers of the Board of Directors. Except as otherwise expressly provided in this Certificate of Incorporation or the DGCL, the business and affairs of the Corporation shall be managed by, or under the direction of, the Board of Directors.

Section 7.02 Number, Election and Term.

(a) Subject to the rights of holders of Preferred Stock, until the Trigger Date (as defined in Section 13.09), the Series I Preferred Stockholder shall have full and exclusive authority unilaterally to fix the number of directors to constitute the Board of Directors (which number of directors may be increased or decreased solely by the Series I Preferred Stockholder). On and following the Trigger Date (as defined in Section 13.09), and subject to the rights of the holders of Preferred Stock, the number of directors shall be fixed from time to time exclusively pursuant to a resolution adopted by the Board of Directors.

 

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(b) Unless this Certificate of Incorporation or the Bylaws provide otherwise, a director shall hold office until his or her term (if any) expires and until his or her successor has been elected and qualified, subject, however, to such director’s earlier death, resignation, retirement, disqualification or removal.

ARTICLE VIII

MEETINGS OF STOCKHOLDERS, ACTION WITHOUT A MEETING

Section 8.01 Special Meetings. Except as otherwise required by law and subject to the rights of the holders of any series of Preferred Stock, special meetings of the stockholders of the Corporation for any purpose or purposes may be called at any time only by or at the direction of (i) the Board of Directors, (ii) the Series I Preferred Stockholder or (iii) prior to the Trigger Date, a majority of the Independent Directors. The Series I Preferred Stockholder may call a special meeting by delivering to the Board of Directors one or more requests in writing stating that the majority of the Independent Directors or the Series I Preferred Stockholder, as applicable, wishes to call a special meeting and indicating the purposes for which the special meeting is to be called. Within 60 days after receipt of such a call from such person(s) or within such greater time as may be reasonably necessary for the Corporation to comply with any statutes, rules, regulations, listing, agreements or similar requirements governing the holding of a meeting or the solicitation of proxies for use at such a meeting, notice of such meeting shall be given in accordance with the DGCL. A special meeting shall be held at a time and place determined by the Board of Directors in its sole discretion on a date not less than 10 days nor more than 60 days after notice of the meeting is given (and, in the case of a special meeting called by a majority of the Independent Directors, a majority of the Independent Directors). To the fullest extent permitted by law, the Board of Directors (or, in the case of a special meeting called by a majority of the Independent Directors, a majority of the Independent Directors) shall have full power and authority concerning the satisfaction of the foregoing requirements of this Section 8.01 and any similar matters.

Section 8.02 Written Ballot. Unless the Bylaws provide otherwise, elections of directors need not be by written ballot.

Section 8.03 Action Without a Meeting. If consented to by the Board of Directors and the Series I Preferred Stockholder in writing, and subject to Section 13.04, any action that may be taken at a meeting of the stockholders entitled to vote may be taken without a meeting, without a vote and without prior notice, if a consent or consents setting forth the action so taken are signed by stockholders owning not less than the minimum percentage of the voting power of the outstanding stock of the Corporation (including stock of the Corporation deemed owned by the Series I Preferred Stockholder) that would be necessary to authorize or take such action at a meeting at which all the stockholders entitled to vote were present and voted and such consent or consents are delivered in accordance with Section 228 of the DGCL.

 

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ARTICLE IX

CORPORATE OPPORTUNITIES

Section 9.01 Outside Activities. To the fullest extent permitted by law, each Indemnitee (as hereinafter defined) shall have the right to engage in businesses of every type and description and other activities for profit and to engage in and possess an interest in other business ventures of any and every type or description, whether in businesses engaged in or anticipated to be engaged in by any Group Member, independently or with others, including business interests and activities in direct competition with the business and activities of any Group Member, and none of the same shall constitute a violation of this Certificate of Incorporation or any duty otherwise existing at law, in equity or otherwise to any Group Member or any stockholder of the Corporation. Subject to the immediately preceding sentence, no Group Member or any stockholder of the Corporation shall have any rights by virtue of this Certificate of Incorporation, the DGCL or otherwise in any business ventures of any Indemnitee, and the Corporation hereby waives and renounces any interest or expectancy therein.

Section 9.02 Approval and Waiver. To the extent allowed by law, the doctrine of corporate opportunity, or any other analogous doctrine, shall not apply with respect to the Corporation, any of its officers or directors, the Series I Preferred Stockholder, the direct and indirect owners of the Series I Preferred Stockholder or any of their respective Affiliates, including but not limited to (i) KKR & Co. Inc. and its subsidiaries (collectively, “KKR”), (ii) investment funds, vehicles and accounts advised, managed or sponsored by KKR (the “KKR Funds”) and (iii) Affiliates of KKR and the KKR Funds (including KKR portfolio companies), (the entities named in clauses (i) through (iii), which shall exclude members of the Corporate Group, collectively, the “KKR Participants”), in circumstances where the application of any such doctrine would conflict with any fiduciary duties or contractual obligations they may have as of the date of this Certificate of Incorporation or in the future, and the Corporation renounces any expectancy that any of the directors or officers of the Corporation or any of the KKR Participants will offer any such corporate opportunity of which he, she or it may become aware to the Corporation. Notwithstanding the foregoing provisions of this Article IX, the Corporation does not renounce its interest in any corporate opportunity offered to any of its directors or officers if such opportunity is expressly offered in writing to such person solely in his or her capacity as a director or officer of the Corporation and is one that such director or officer has no duty (contractual or fiduciary) to offer to a KKR Participant. In addition to and notwithstanding the foregoing provisions of this Article IX, a potential corporate opportunity shall not be deemed to be a corporate opportunity for the Corporation if it is a business opportunity that (i) the Corporation is neither financially or legally able, nor contractually permitted, to undertake, (ii) from its nature, is not in the line of the Corporation’s business or is of no practical advantage to the Corporation or (iii) is one in which the Corporation has no interest or reasonable expectancy.

ARTICLE X

BUSINESS COMBINATIONS

The Corporation hereby expressly elects not to be governed by Section 203 of the DGCL.

 

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ARTICLE XI

INDEMNIFICATION, ADVANCEMENT AND LIABILITY OF INDEMNITEES

Section 11.01 Limitation of Director Liability. A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL as the same exists or may hereafter be amended. Any amendment, modification or repeal of this Article XI, or the adoption of any provision of the Certificate of Incorporation inconsistent with this Article XI, shall not adversely affect its application with respect to an act or omission by a director or any right or protection of a director of the Corporation hereunder in respect of any act or omission occurring prior to the time of such amendment, modification or repeal.

Section 11.02 Indemnification and Advancement of Expenses.

(a) To the fullest extent permitted by applicable law, as the same exists or may hereafter be amended, the Corporation shall indemnify and hold harmless any person who is or was made a party or is threatened to be made a party to or is otherwise involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (a “proceeding”) by reason of the fact that he or she is or was a director or an officer of the Corporation (including Indemnitee’s service, while a director or officer of the Corporation, at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, other enterprise or nonprofit entity, including service with respect to an employee benefit plan (hereinafter, an “Indemnitee”), whether the basis of such proceeding is alleged action (or omission) in his or her official capacity as an Indemnitee, against all liability and loss suffered (including, without limitation, judgments, fines, excise taxes pursuant to the Employee Retirement Income Security Act of 1974, as amended (the “ERISA excise taxes”), penalties and amounts paid in settlement) and expenses (including, without limitation, attorneys’ fees) reasonably incurred by such Indemnitee in connection with such proceeding, all on the terms and conditions set forth in this Section 11.02 and the Corporation’s Bylaws. Notwithstanding the foregoing provisions of this Section 11.02(a), except for proceedings to enforce rights to indemnification and advancement of expenses, the Corporation shall indemnify and advance expenses to an Indemnitee in connection with a proceeding (or part thereof) initiated by such Indemnitee only if such proceeding (or part thereof) was authorized by the Board of Directors, or if the Board of Directors otherwise determines that indemnification or advancement of expenses is appropriate.

(b) To receive indemnification under this Section 11.02, an Indemnitee shall submit a written request to the Corporation. Such request shall include documentation or information that is necessary to determine the entitlement of the Indemnitee to indemnification and that is reasonably available to the Indemnitee. Upon receipt by the Corporation of such a written request, unless indemnification is required by Section 11.02(e), the entitlement of the Indemnitee to indemnification shall be determined by the following person or persons who shall be empowered to make such determination, as selected by the Board of Directors (except with respect to clause (v) of this Section 11.02(b)): (i) the Board of Directors by a majority vote of the directors who are not parties to such proceeding, whether or not such majority constitutes a quorum; (ii) a committee

 

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of such directors designated by a majority vote of such directors, whether or not such majority constitutes a quorum; (iii) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to the Indemnitee; (iv) the stockholders of the Corporation; or (v) in the event that a change of control (as defined below) has occurred, by independent legal counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to the Indemnitee. The determination of entitlement to indemnification shall be made and, unless a contrary determination is made, such indemnification shall be paid in full by the Corporation not later than 60 days after the later of (x) the receipt by the Corporation of a written request for indemnification and (y) the final adjudication (as defined below) of the proceeding for which indemnification is sought. For purposes of this Section 11.02(b), a “change of control” will be deemed to have occurred if, with respect to any particular 24-month period, the individuals who, at the beginning of such 24-month period, constituted the Board of Directors (the “incumbent board”), cease for any reason to constitute at least a majority of the Board of Directors; provided, however, that any individual becoming a director subsequent to the beginning of such 24-month period whose election, or nomination for election by the stockholders of the Corporation, was approved by the Series I Preferred Stockholder or by a vote of at least a majority of the directors then comprising the incumbent board shall be considered as though such individual were a member of the incumbent board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board of Directors.

(c) The Corporation shall to the fullest extent not prohibited by applicable law pay the expenses (including, without limitation, attorneys’ fees) incurred by an Indemnitee in defending or otherwise participating in any proceeding in advance of its final disposition; provided, however, that, solely to the extent required by applicable law, such payment of expenses in advance of the final disposition of the proceeding shall be made only upon receipt of an undertaking, by or on behalf of the Indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision of a court of competent jurisdiction from which there is no further right to appeal (hereinafter a “final adjudication”) that the Indemnitee is not entitled to be indemnified under this Section 11.02 or otherwise.

(d) To receive an advancement of expenses under this Section 11.02, an Indemnitee shall submit a written request to the Corporation. Such request shall reasonably evidence the expenses incurred by the Indemnitee and shall include or be accompanied by the undertaking required by Section 11.02(c). Each such advancement of expenses shall be made within 20 days after the receipt by the Corporation of a written request for advancement of expenses.

(e) To the extent that an Indemnitee has been successful on the merits or otherwise in defense of any proceeding (or in defense of any claim, issue or matter therein), such Indemnitee shall be indemnified under this Section 11.02(e) against expenses (including attorneys’ fees) actually and reasonably incurred in connection with such defense. Indemnification under this Section 11.02(e) shall not be subject to satisfaction of a standard of conduct, and the Corporation may not assert the failure to satisfy a standard of conduct as a basis to deny indemnification or recover amounts advanced, including in a suit brought pursuant to Section 11.02(f)

 

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(notwithstanding anything to the contrary therein); provided, however, that, any Indemnitee who is not a current or former director or officer (as such term is defined in the final sentence of Section 145(c)(1) of the DGCL) shall be entitled to Indemnification under Section 11.02(a) and this Section 11.02(e) only if such Indemnitee has satisfied the standard of conduct required for indemnification under Section 145(a) or Section 145(b) of the DGCL.

(f) In the event that a determination is made that the Indemnitee is not entitled to indemnification or if payment is not timely made following a determination of entitlement to indemnification pursuant to Section 11.02(b), if a request for indemnification under Section 11.02(e) is not paid in full by the Corporation within 60 days after the later of (x) the Corporation’s receipt of a written request and (y) the final adjudication of the proceeding for which indemnification is sought, or if an advancement of expenses is not timely made under Section 11.02(d), the Indemnitee may at any time thereafter bring suit against the Corporation in the Court of Chancery of the state of Delaware (or solely to the extent that the Court of Chancery lacks subject matter jurisdiction, any other state or federal court located in the State of Delaware) a court of competent jurisdiction in the State of Delaware seeking an adjudication of entitlement to such indemnification or advancement of expenses. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Indemnitee shall be entitled to be paid also the expense of prosecuting or defending such suit to the fullest extent permitted by law. In any suit brought by the Indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the Indemnitee to enforce a right to an advancement of expenses) it shall be a defense that the Indemnitee has not met any applicable standard of conduct for indemnification set forth in Section 145(a) or Section 145(b) of the DGCL. Further, in any suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Corporation shall be entitled to recover such expenses upon a final adjudication that the Indemnitee has not met any applicable standard of conduct for indemnification set forth in Section 145(a) or Section 145(b) of the DGCL. Neither the failure of the Corporation (including its directors who are not parties to such action, a committee of such directors, independent legal counsel or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the Indemnitee is proper in the circumstances because the Indemnitee has met such applicable standard of conduct, nor an actual determination by the Corporation (including its directors who are not parties to such action, a committee of such directors, independent legal counsel or its stockholders) that the Indemnitee has not met such applicable standard of conduct, shall create a presumption that the Indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the Indemnitee, be a defense to such suit. In any suit brought by the Indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the Indemnitee is not entitled to be indemnified, or to such advancement of expenses, under applicable law, this Section 11.02 or otherwise shall be on the Corporation.

(g) The rights to indemnification and advancement of expenses conferred by this Section 11.02 shall be contract rights and such rights shall continue as to an Indemnitee who has ceased to be or to serve in the capacity of Indemnitee and shall inure to the benefit of such Indemnitee’s heirs, executors, administrators, successors and assigns.

 

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(h) The rights to indemnification and advancement of expenses conferred on any Indemnitee by this Section 11.02 shall not be exclusive of any other rights that any Indemnitee may have or hereafter acquire under law, this Certificate of Incorporation, the Bylaws, an agreement, vote of stockholders or disinterested directors, or otherwise.

(i) Any repeal or amendment of this Section 11.02 by the stockholders of the Corporation or by changes in law, or the adoption of any other provision of this Certificate of Incorporation inconsistent with this Section 11.02, shall, unless otherwise required by law, be prospective only (except to the extent such amendment or change in law permits the Corporation to provide broader rights to indemnification or advancement of expenses on a retroactive basis than permitted prior thereto), and shall not in any way diminish or adversely affect any right or protection existing at the time of such repeal or amendment or adoption of such inconsistent provision in respect of any proceeding (regardless of when such proceeding is first threatened, commenced or completed) arising out of, or related to, any act or omission occurring prior to such repeal or amendment or adoption of such inconsistent provision.

(j) This Section 11.02 shall not limit the right of the Corporation, to the extent and in the manner authorized or permitted by law, to indemnify and to advance expenses to Persons other than Indemnitees.

(k) Any indemnification pursuant to this Section 11.02 shall be made only out of the assets of the Corporation. In no event may an Indemnitee subject any stockholders of the Corporation to personal liability by reason of the provisions set forth in this Certificate of Incorporation with respect to indemnification or any advancement of expenses. Without limiting the foregoing, the Series I Preferred Stockholder shall not be personally liable for such indemnification or any advancement of expenses and shall have no obligation to contribute or loan any monies or property to the Corporation to enable it to effectuate such indemnification or to advance any expenses.

(l) Notwithstanding that an Indemnitee may have certain rights to indemnification and/or advancement of expenses provided by other persons (collectively, the “Other Indemnitors”), with respect to the rights to an advancement of expenses or indemnification set forth herein, the Corporation: (i) shall be the indemnitor of first resort (i.e., its obligations to such Indemnitee are primary and any obligation of the Other Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by such Indemnitee are secondary); and (ii) shall be required to advance the full amount of expenses incurred by such Indemnitee and shall be liable for the full amount of all liabilities, without regard to any rights such Indemnitee may have against any of the Other Indemnitors. No advancement or payment by the Other Indemnitors on behalf of an Indemnitee with respect to any proceeding for which such Indemnitee has sought an advancement of expenses or indemnification from the Corporation shall affect the immediately preceding sentence, and the Other Indemnitors shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of such Indemnitee against the Corporation.

(m) Notwithstanding anything in this Section 11.02 to the contrary, the Corporation shall not be liable to indemnify any Indemnitee under this Section 11.02 for any amounts paid in settlement of any proceeding effected without the Corporation’s written consent, which consent shall not be unreasonably withheld.

 

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Section 11.03 If any provision or provisions of this Section 11.02 shall be held to be invalid, illegal or unenforceable as applied to any person or entity or circumstance for any reason whatsoever, then, to the fullest extent permitted by law: (a) the validity, legality and enforceability of such provision in any other circumstance and of the remaining provisions of this Section 11.02 (including, without limitation, all portions of any paragraph of this Section 11.02 containing any such provision held to be invalid, illegal or unenforceable, that are not by themselves invalid, illegal or unenforceable) and the application of such provision to other persons or entities or circumstances shall not in any way be affected or impaired thereby; and (b) to the fullest extent possible, the provisions of this Section 11.02 (including, without limitation, all portions of any paragraph of this Section 11.02 containing any such provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall be construed so as to give effect to the intent of the parties that the Corporation provide protection to the Indemnitee to the fullest extent set forth in this Section 11.02.

ARTICLE XII

EXCLUSIVE JURISDICTION

Section 12.01 Forum. Unless the Corporation, in writing, selects or consents to the selection of an alternative forum: (i) the sole and exclusive forum for any complaint asserting any internal corporate claims (as defined below), to the fullest extent permitted by law, and subject to applicable jurisdictional requirements, shall be the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have, or declines to accept, jurisdiction, another state court or a federal court located within the State of Delaware); and (ii) the sole and exclusive forum for any complaint asserting a cause of action arising under the Securities Act of 1933, to the fullest extent permitted by law, shall be the federal district courts of the United States of America. For purposes of this Article XII, internal corporate claims means claims, including claims in the right of the Corporation that are based upon a violation of a duty by a current or former director, officer, employee or stockholder in such capacity, or as to which the DGCL confers jurisdiction upon the Court of Chancery. Any person or entity purchasing or otherwise acquiring or holding any interest in shares of stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article XII.

Section 12.02 Consent to Jurisdiction. If any action the subject matter of which is within the scope of Section 12.01(a) immediately above is filed in a court other than the Court of Chancery of the State of Delaware (a “Foreign Action”) in the name of any stockholder, to the fullest extent permitted by law, such stockholder shall be deemed to have consented to (i) the personal jurisdiction of the Court of Chancery of the State of Delaware in connection with any action brought in any such court to enforce Section 12.01(a) (an “Enforcement Action”) and (ii) having service of process made upon such stockholder in any such Enforcement Action by service upon such stockholder’s counsel in the Foreign Action as agent for such stockholder. If any action the subject matter of which is within the scope of Section 12.01(b) above is filed in a court other than a federal district court of the United States of America (a “Foreign Securities Act Action”) in the name of any stockholder

 

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(current, former or future), to the fullest extent permitted by law, such stockholder shall be deemed to have consented to: (x) the personal jurisdiction of the federal district courts of the United States of America in connection with any action brought in any such court to enforce Section 12.01(b) above (a “Securities Act Enforcement Action”), and (y) having service of process made upon such stockholder in any such Securities Act Enforcement Action by service upon such stockholder’s counsel in the Foreign Securities Act Action as agent for such stockholder.

Section 12.03 Severability. If any provision or provisions of this Article XII shall be held to be invalid, illegal or unenforceable as applied to any person or entity or circumstance for any reason whatsoever, then, to the fullest extent permitted by law, the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Article XII (including, without limitation, each portion of any sentence of this Article XII containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) and the application of such provision to other persons or entities and circumstances shall not in any way be affected or impaired thereby. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article XII.

ARTICLE XIII

TERMS OF SERIES I PREFERRED STOCK

Section 13.01 Designation. The Series I Preferred Stock is hereby designated and created as a series of Preferred Stock. The Series I Preferred Stock is not “Designated Stock” for purposes of this Certificate of Incorporation.

Section 13.02 Dividends. Except for any distribution required by the DGCL to be made upon a Dissolution Event pursuant to Section 13.06, dividends shall not be declared on the Series I Preferred Stock.

Section 13.03 Voting. Except as required by the DGCL or as expressly provided in this Certificate of Incorporation, the exclusive right to elect members of the Board of Directors shall be vested in the Series I Preferred Stockholder. Subject to any limitations then set forth in this Certificate of Incorporation and the terms of any other outstanding series of Preferred Stock, prior to the Trigger Date, the Series I Preferred Stockholder shall have full authority to unilaterally remove and replace any director, with or without cause, at any time and for no reason; provided, however, that (i) John Goff shall be entitled to serve as a director and Chairman of the Board of Directors during and throughout all of the Protected Period, and to the fullest extent permitted by law, may be removed as a director and Chairman during such period by the Series I Preferred Stockholder solely upon a finding of Cause by a majority of the Independent Directors then in office and (ii) the Liberty Directors shall be entitled to serve as directors during and throughout all of the Protected Period, and to the fullest extent permitted by law, may be removed during such period by the Series I Preferred Stockholder solely upon a finding of Cause by a majority of the Independent Directors then in office. On and following the Trigger Date, subject to the rights of the holders of Preferred Stock, any director may be removed only upon the affirmative vote of the holders of at least 6623% in voting power of the outstanding shares of stock of the Corporation

 

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entitled to vote generally in an election of directors with or without cause. Except as otherwise provided by this Certificate of Incorporation, any directorships created as a result of an increase in the size of the Board of Directors or vacancies (whether by death, resignation, retirement, disqualification, removal or other cause) shall be filled solely by the Series I Preferred Stockholder. The Series I Preferred Stockholder shall have one vote for each share of Series I Preferred Stock that is outstanding in its name on the books of the Corporation.

Section 13.04 Approval of Certain Other Matters. The Corporation (whether directly or indirectly, by merger, division, consolidation or otherwise) shall not authorize, approve or ratify (or permit any of its Designated Subsidiaries to authorize, approve or ratify) any of the following actions or any plan with respect thereto without the prior approval of the Series I Preferred Stockholder, which approval may be in the form of an action by consent of the Series I Preferred Stockholder:

(a) entry into a debt financing arrangement by the Corporation or any of its Designated Subsidiaries, in one transaction or a series of related transactions, in an amount in excess of 10% of the then existing long-term indebtedness of the Corporation (other than the entry into of a debt financing arrangement between or among any of the Corporation and its wholly owned Designated Subsidiaries);

(b) the issuance by the Corporation or any of its Designated Subsidiaries, in one transaction or a series of related transactions, of any Securities that would (i) represent, after such issuance, or upon conversion, exchange or exercise, as the case may be, at least 5% on a fully diluted, as converted, exchanged or exercised basis, of any class of equity Securities of the Corporation or any of its Designated Subsidiaries or (ii) have designations, preferences, rights, priorities or powers that are more favorable than those of the Common Stock of the Corporation; provided that no such approval shall be required for issuance of Securities as contemplated by the LLC Agreement, any equity incentive plan of the Corporation, or that are issuable upon conversion, exchange or exercise of any Securities that were issued and outstanding as of the effective date of the first Amended and Restated Certificate of Incorporation of the Corporation;

(c) the adoption of a shareholder rights plan by the Corporation;

(d) the amendment of (i) this Certificate of Incorporation or (ii) Sections 2.05 through 2.07, Sections 3.02 through 3.10, Sections 5.03 through 5.05 and Articles IV, VI and VIII of the Bylaws;

(e) the sale, lease exchange or other disposition of all or substantially all of the assets, taken as a whole, of the Corporation in a single transaction or a series of related transactions;

(f) the merger, sale or other combination of the Corporation with or into any other Person;

(g) the removal of a Chief Executive Officer of the Corporation; provided that, a majority of the Independent Directors may remove a Chief Executive Officer without the prior approval of the Series I Preferred Stockholder solely for Cause;

 

14


(h) the termination of the employment of any officer of the Corporation or a Designated Subsidiary of the Corporation without Cause; provided that, a majority of the Independent Directors may remove any officer of the Corporation or a Designated Subsidiary of the Corporation without the prior approval of the Series I Preferred Stockholder solely for Cause; and

(i) the liquidation or dissolution of the Corporation.

Section 13.05 Officers. The officers of the Corporation shall include a “Chief Executive Officer” who shall be appointed by the Series I Preferred Stockholder, and who shall hold office for such terms as shall be determined by the Series I Preferred Stockholder (or, following the Trigger Date, shall be selected and designated by the Board of Directors) or until his or her earlier death, resignation, retirement, disqualification or removal. Any other officer of the Corporation shall be selected and designated pursuant to the Bylaws. Any vacancy occurring in the office of the Chief Executive Officer shall be filled by the Series I Preferred Stockholder in the same manner as such officer is appointed pursuant to this Section 13.05. Any vacancies occurring in any other offices shall be filled pursuant to the Bylaws. An officer of the Corporation may be removed from office with or without cause at any time by the Board of Directors (and, in case of the Chief Executive Officer, prior to the Trigger Date, only with the consent of the Series I Preferred Stockholder in accordance with Section 13.04).

Section 13.06 Liquidation Rights. Upon any Dissolution Event, after payment or provision for the liabilities of the Corporation (including the expenses of such Dissolution Event) and the satisfaction of all claims ranking senior to the Series I Preferred Stock in accordance with Section 5.04, the Series I Preferred Stockholder shall be entitled to receive out of the assets of the Corporation or proceeds thereof available for distribution to stockholders of the Corporation, before any payment or distribution of assets is made in respect of Common Stock, distributions equal to the Series I Liquidation Value. The Series I Preferred Stock ranks junior to any series of Preferred Stock that is designated as senior to the Series I Preferred Stock from time to time, with respect to distributions of assets upon a Dissolution Event.

Section 13.07 Transfers of Series I Preferred Stock.

(a) The Series I Preferred Stockholder may transfer all or part of the shares of Series I Preferred Stock held by it without the approval of any other stockholder of the Corporation; provided that, notwithstanding anything herein to the contrary but subject to Section 13.07(c), no transfer by the Series I Preferred Stockholder of all or part of the shares of Series I Preferred Stock held by it to another Person shall be permitted unless (i) the written approval of a majority of the Independent Directors is obtained prior to such transfer, and (ii) the transferee agrees to assume the rights and duties of the Series I Preferred Stockholder under this Certificate of Incorporation and to be bound by the provisions of this Certificate of Incorporation; provided, however that the approvals contemplated by clause (i) and the agreements contemplated by clause (ii) shall not be required in connection with any transfer of the shares of Series I Preferred Stock by the Series I Preferred Stockholder in connection with any merger, sale, combination or division of the Corporation in which all of the outstanding Common Stock of the Corporation is converted into cash, property or securities of another Person and the Series I Preferred Stockholder receives no or de minimis consideration in respect of the Series I Preferred Stock. Any purported transfer of shares of Series I Preferred Stock not made in accordance with this Section 13.07 shall be null and void and any shares of Series I Preferred Stock purportedly transferred in violation of this Section 13.07(a) shall be automatically redeemed by the Corporation without consideration and, notwithstanding anything herein to the contrary, shall become treasury shares and may only be disposed of by the Corporation with the approval of the Series I Preferred Stockholder.

 

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(b) Subject to (i) the provisions of this Section 13.07, (ii) any contractual provisions binding on the Series I Preferred Stockholder and (iii) provisions of applicable law, including the Securities Act, the shares of Series I Preferred Stock shall be freely transferable.

(c) Nothing contained in this Certificate of Incorporation shall be construed to prevent a disposition or any other type of transfer by any partner of the Series I Preferred Stockholder of any or all of the issued and outstanding equity or other interests in the Series I Preferred Stockholder.

Section 13.08 Limitation on Duties and Reimbursement of Expenses.

(a) To the fullest extent permitted by law, stockholders of the Corporation expressly acknowledge that the Series I Preferred Stockholder is under no obligation to consider the separate interests of the other stockholders of the Corporation (including the tax consequences to such stockholders) in deciding whether to cause the Corporation to take (or decline to take) any action, and that, to the fullest extent permitted by law, the Series I Preferred Stockholder shall not be liable to the other stockholders of the Corporation for monetary damages or equitable relief for losses sustained, liabilities incurred or benefits not derived by such stockholders in connection with such decisions.

(b) To the fullest extent permitted by law, the Series I Preferred Stockholder may exercise any of the powers granted to it by this Certificate of Incorporation and perform any of the duties imposed upon it hereunder either directly or by or through its agents, and the Series I Preferred Stockholder shall not be responsible for any misconduct, negligence or wrongdoing on the part of any such agent appointed by the Series I Preferred Stockholder in good faith.

(c) To the fullest extent permitted by law, in connection with any action taken with respect to the Corporate Group, the Series I Preferred Stockholder may (i) rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties and (ii) consult with legal counsel, accountants, appraisers, management consultants, investment bankers and other consultants and advisers selected by it, and, to the fullest extent permitted by law, any act taken or omitted to be taken in reliance upon the advice or opinion (including an opinion of counsel) of such Persons as to matters that the Series I Preferred Stockholder reasonably believes to be within such Person’s professional or expert competence shall be conclusively presumed to have been done or omitted in good faith and in accordance with such advice or opinion.

(d) The Series I Preferred Stockholder may, upon written request to the Corporation, be reimbursed for all direct and indirect expenses the Series I Preferred Stockholder incurs in connection with any action taken with respect to the Corporate Group. Reimbursements pursuant to this Section 13.08 shall be in addition to any reimbursement to the Series I Preferred Stockholder as a result of indemnification pursuant to Section 11.02.

 

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Section 13.09 Absence of Series I Preferred Stock. Notwithstanding anything in this Certificate of Incorporation to the contrary, on and following the earlier of (the “Trigger Date”) (i) the first date on which the Series I Preferred Stockholder and the Balance Sheet Affiliates no longer collectively beneficially own more than [14,347,820]1 shares of Common Stock (or successor interests, and as such number shall be adjusted for any stock split, reverse stock split, stock dividend, reorganization, subdivision, combination, recapitalization or reclassification) (the “Minimum Retained Ownership”) and (ii) the date the Series I Preferred Stockholder elects, by delivering written notice to the Corporation, to cause the Trigger Date to occur, all rights, powers, preferences and privileges associated with shares of Series I Preferred Stock and associated with being the Series I Preferred Stockholder in its capacity as the owner of the Series I Preferred Stock shall automatically terminate in all respects and all shares of Series I Preferred Stock shall be automatically cancelled and forfeited for no consideration; provided, that, if, at any time following the date hereof, the volume-weighted average sale price of the Class A Common Stock (as quoted on the exchange on which the shares of Class A Common Stock are then listed) for a period of 20 consecutive trading days (the “20 Day VWAP”) exceeds 140% of the 20 Day VWAP commencing on and including the date of the filing of this Amended and Restated Certificate of Incorporation, then the Minimum Retained Ownership shall be reduced to [10,043,474]2 shares of Common Stock, with such reduction to be effective either (A) following the last day of the Protected Period (if prior to the end of the Protected Period) or (B) automatically (if subsequent to the end of the Protected Period).

ARTICLE XIV

MISCELLANEOUS

Section 14.01 Definitions. The following definitions shall be for all purposes, unless otherwise clearly indicated to the contrary, applied to the terms used in this Certificate of Incorporation:

Affiliate” means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with, the Person in question.

Associate” means, when used to indicate a relationship with any Person, (a) any corporation, other entity or organization of which such Person is a director, officer or partner or is, directly or indirectly, the owner of 20% or more of any class of voting stock or other voting interest; (b) any trust or other estate in which such Person has at least a 20% beneficial interest or as to which such Person serves as trustee or in a similar fiduciary capacity; and (c) any relative or spouse of such Person, or any relative of such spouse, who has the same principal residence as such Person.

 

1 

Note to draft: To equal 50% of the balance sheet’s original share ownership. Bracketed number based on Isla Ownership Number of 127,345,224.

2 

Note to draft: To equal 35% of the balance sheet’s original share ownership. Bracketed number based on Isla Ownership Number of 127,345,224.

 

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Balance Sheet Affiliates” means, collectively, KKR and any of its direct and indirect subsidiaries.

Board of Directors” has the meaning assigned to such term in Section 4.02.

Bylaws” means the bylaws of the Corporation as in effect from time to time.

Cause” means the termination of a Person’s employment or service on the Board of Directors, for any of the following reasons: (A) a Person’s violation of any law or regulation applicable to the business of the Corporation, or conviction of or plea of no contest to a felony or any crime involving moral turpitude or dishonesty; (B) willful misconduct or gross negligence by a Person in the performance of a Person’s duties that is not cured by a Person (to the extent capable of cure) within ten (10) days following written notice being given to a Person of such breach; (C) any act or acts of dishonesty by a Person intended to result in a Person’s personal gain or enrichment at the expense of the Corporation or any of its customers, partners, affiliates, parents or employees, including but not limited to willful misappropriation or conversion of the Corporation’s assets. For the purposes of this provision, no act or failure to act on the part of a Person shall be considered “willful” unless it is done, or omitted to be done, by a Person in bad faith and without reasonable belief that a Person’s action or omission was in the best interests of the Corporation. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board of Directors, or upon the instructions of the Board of Directors, or based upon the good faith advice of counsel for the Corporation, shall be conclusively presumed to be done, or omitted to be done, by a Person in good faith and in the best interests of the Corporation.

Certificate of Incorporation” means this Amended and Restated Certificate of Incorporation, as amended and/or restated from time to time, including pursuant to any certificate of designation relating to any series of Preferred Stock.

Class A Common Stock” has the meaning assigned to such term in Section 4.01(a)(i).

Class B Common Stock” has the meaning assigned to such term in Section 4.01(a)(i).

Code” means the U.S. Internal Revenue Code of 1986, as amended and in effect from time to time. Any reference herein to a specific section or sections of the Code shall be deemed to include a reference to any corresponding provision of any successor law.

Common Stock” has the meaning assigned to such term in Section 4.01(a)(ii).

Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a person, whether through the ability to exercise voting power, by contract or otherwise.

Controlled Entity” when used with reference to a Person, means any Person controlled by such Person.

 

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Corporate Group” means the Corporation and its Subsidiaries.

Corporation” has the meaning assigned to such term in Article I.

Designated Stock” means the Common Stock and any other stock of the Corporation that is designated as “Designated Stock” from time to time pursuant to this Certificate of Incorporation (including any certificate of designation relating to any series of Preferred Stock). The Series I Preferred Stock is not Designated Stock as of the effectiveness of the First Amended and Restated Certificate of Incorporation of the Corporation.

Designated Subsidiary” of any Person means (a) any corporation, association or other business entity (other than a partnership, joint venture, limited liability company or similar entity) of which more than 50% of the total ordinary voting power of shares of capital stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof (or Persons performing similar functions) or (b) any partnership, joint venture, limited liability company or similar entity of which more than 50% of the capital accounts, distribution rights, total equity and voting interests or general or limited partnership interests, as applicable, is, in the case of clauses (a) and (b), at the time owned or controlled, directly or indirectly, by (1) such Person, (2) such Person and one or more Designated Subsidiaries of such Person or (3) one or more Designated Subsidiaries of such Person.

DGCL” means the Delaware General Corporation Law, as the same exists or as may hereafter be amended from time to time.

Dissolution Event” means an event giving rise to the dissolution, liquidation or winding up of the Corporation.

Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, supplemented or restated from time to time and any successor to such statute.

Group” means a Person that with or through any of its Affiliates or Associates has any contract, arrangement, understanding or relationship for the purpose of acquiring, holding, voting, exercising investment power or disposing of any stock of the Corporation with any other Person that beneficially owns, or whose Affiliates or Associates beneficially own, directly or indirectly, stock of the Corporation.

Group Member” means a member of the Corporate Group.

Independent Director” means a director that is independent for purposes of the Audit Committee of the Board of Directors under the rules and regulations of the New York Stock Exchange, the Exchange Act and the Sarbanes-Oxley Act of 2002, as amended.

KKR” has the meaning set forth in Section 9.02.

KKR Fund” has the meaning set forth in Section 9.02.

KKR Participants” has the meaning set forth in Section 9.02.

 

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Liberty Directors” means any director designees of PT Independence Energy Holdings, LLC appointed pursuant to any written agreement by and between PT Independence Energy Holdings, LLC and the Series I Preferred Stockholder.

Majority in Interest of the Series I Preferred Stock” means a majority of the outstanding shares of Series I Preferred Stock.

Person” means an individual or a corporation, limited liability company, partnership (general or limited, including any limited liability limited partnership), joint venture, trust, unincorporated organization, association (including any group, organization, co-tenancy, plan, board, council or committee), government (including a country, state, county, or any other governmental or political subdivision, agency or instrumentality thereof) or other entity (or series thereof).

Preferred Stock” has the meaning set forth in Section 4.01(a)(iii).

Protected Period” means the period from the date hereof until the date of the third annual meeting of the stockholders of the Corporation that is held following the date hereof in accordance with the Bylaws.

Securities” means any debt or equity securities of an issuer and its Designated Subsidiaries and other Controlled Entities, including common and preferred stock, interests in limited partnerships and interests in limited liability companies (including warrants, rights, put and call options and other options relating thereto or any combination thereof), notes, bonds, debentures, trust receipts and other obligations, instruments or evidences of indebtedness, choses in action, other property or interests commonly regarded as securities, interests in real property, whether improved or unimproved, interests in oil and gas properties and mineral properties, short-term investments commonly regarded as money-market investments, bank deposits and interests in personal property of all kinds, whether tangible or intangible, and any securities convertible into, or exercisable or exchangeable for, any of the foregoing.

Securities Act” means the U.S. Securities Act of 1933, as amended, supplemented or restated from time to time and any successor to such statute.

Series I Liquidation Value” means $0.01 per share of Series I Preferred Stock.

Series I Preferred Stock” means the Series I Preferred Stock having the designations, rights, powers and preferences set forth in Article XIII.

Series I Preferred Stockholder” which may be one or more Persons, means Independence Energy Aggregator GP LLC and any successor or permitted assign that owns any shares of Series I Preferred Stock at the applicable time. If the Series I Preferred Stock is held by more than one Person, any action taken by the Series I Preferred Stockholder hereunder or any approval of the Series I Preferred Stockholder required hereunder shall require a Majority in Interest of the Series I Preferred Stock.

 

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Subsidiary” means, with respect to any Person, (a) a corporation of which more than 50% of the voting power of shares entitled (without regard to the occurrence of any contingency) to vote in the election of directors or other governing body of such corporation is owned, directly or indirectly, at the date of determination, by such Person, by one or more Subsidiaries of such Person or a combination thereof, (b) a partnership (whether general or limited) in which such Person or a Subsidiary of such Person is, at the date of determination, a general or limited partner of such partnership, but only if more than 50% of the partnership interests of such partnership (considering all of the partnership interests of the partnership as a single class) is owned, directly or indirectly, at the date of determination, by such Person, by one or more Subsidiaries of such Person, or a combination thereof, (c) any other Person (other than a corporation or a partnership) in which such Person, one or more Subsidiaries of such Person, or a combination thereof, directly or indirectly, at the date of determination, has (i) at least a majority ownership interest or (ii) the power to elect or direct the election of a majority of the directors or other governing body of such Person or (d) any other Person the financial information of which is consolidated by such Person for financial reporting purposes under U.S. GAAP.

transfer”, when used in this Certificate of Incorporation with respect to shares of stock of the Corporation, shall include (i) with respect to any share of Series I Preferred Stock held by the Series I Preferred Stockholder, a sale, assignment, gift, pledge, encumbrance, hypothecation, mortgage, exchange or any other disposition by law or otherwise, and (ii) with respect to shares of any other stock of the Corporation, a sale, assignment, gift, exchange or any other disposition by law or otherwise, including any transfer upon foreclosure of any pledge, encumbrance, hypothecation or mortgage.

Trigger Date” has the meaning assigned to such term in Section 13.09.

U.S. GAAP” means U.S. generally accepted accounting principles consistently applied.

Section 14.02 Invalidity of Provisions. If any provision of this Certificate of Incorporation is or becomes invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not be affected thereby.

Section 14.03 Construction; Section Headings. For purposes of this Certificate of Incorporation, unless the context otherwise requires, (i) references to “Articles”, “Sections” and “clauses” refer to articles, sections and clauses of this Certificate of Incorporation and (ii) the term “include” or “includes” means includes, without limitation, and “including” means including, without limitation. Section headings in this Certificate of Incorporation are for convenience of reference only and shall not be given any substantive effect in limiting or otherwise construing any provision herein.

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, IE PubCo Inc. has caused this Amended and Restated Certificate of Incorporation to be executed by its duly authorized officer this [    ] day of [    ], 2021.

 

IE PUBCO INC.
By:  

 

  Name:
  Title:


EXHIBIT B

FORM OF AMENDED AND RESTATED NEW PUBCO BYLAWS

 

Exhibit B


AMENDED AND RESTATED BYLAWS

OF

IE PUBCO INC.

(Effective [                ], 2021)

ARTICLE I

OFFICES

Section 1.01 Registered Office. The registered office and registered agent of IE PubCo Inc. (the “Corporation”) shall be as set forth in the Certificate of Incorporation of the Corporation (as it may be amended and/or restated from time to time, the “Certificate of Incorporation”). The Corporation may also have offices in such other places in the United States or elsewhere as the Board of Directors of the Corporation (the “Board of Directors”) may, from time to time, determine or as the business of the Corporation may require.

ARTICLE II

MEETINGS OF STOCKHOLDERS

Section 2.01 Annual Meetings. If required, annual meetings of stockholders may be held at such place, if any, either within or without the State of Delaware, on such date and at such time as the Board of Directors shall determine. The Board of Directors may, in its sole discretion, determine that annual meetings of stockholders shall not be held at any place, but may instead be held solely by means of remote communication in accordance with Section 211(a)(2) of the DGCL. The Board of Directors may postpone, reschedule or cancel any annual meeting of stockholders previously scheduled by the Board of Directors.

Section 2.02 Special Meetings. Special meetings of stockholders may only be called in the manner provided in the Certificate of Incorporation and may be held at such place, if any, either within or without the State of Delaware, on such date and at such time, and for such purpose or purposes, as the Board of Directors or a majority of the Independent Directors, as applicable, shall determine and state in the notice of meeting, if any. The Board of Directors or a majority of the Independent Directors may postpone, reschedule or cancel any special meeting of stockholders previously scheduled by the Board of Directors or a majority of the Independent Directors, as applicable, subject to the requirements of the Certificate of Incorporation.


Section 2.03 Notice of Stockholder Business and Nominations.

(a) Prior to the Trigger Date, nominations of Persons for election to the Board of Directors and the proposal of other business to be considered by the stockholders may be made at an annual meeting of stockholders only (i) pursuant to the Corporation’s notice of meeting (or any supplement thereto) delivered pursuant to Section 2.04, (ii) by or at the direction of the Board of Directors or any authorized committee thereof or (iii) by the Series I Preferred Stockholder (as defined in the Certificate of Incorporation). On and following the Trigger Date, the Series I Preferred Stockholder will have no right to nominate Persons for election to the Board of Directors or propose other business to be considered by the stockholders at an annual meeting in its capacity as the Series I Preferred Stockholder except as required by law and all such rights will be held solely by stockholders in accordance with Section 2.03(b) below.

(c) Notwithstanding Section 2.03(a), if at any time applicable law provides stockholders of the Corporation other than the Series I Preferred Stockholder the right to propose business to be brought before a meeting of stockholders at an annual meeting (including at any time following the Trigger Date), then any such stockholder may bring any such business before such meeting only if such stockholder (i) is entitled to vote at the annual meeting on the proposal of such business, (ii) has complied with the notice procedures set forth in paragraphs (c) and (d) of this Section 2.03, (iii) was a stockholder of record as of the time such notice is delivered to the Secretary of the Corporation and as of the record date for notice and voting at the annual meeting and (iv) is a stockholder of record as of the date of the annual meeting. Nothing in this Section 2.03 shall be deemed to provide any voting or other rights or powers to the stockholders of the Corporation, but shall instead set forth the procedures and requirements applicable to stockholders of the Corporation other than the Series I Preferred Stockholder with respect to bringing business before an annual meeting in circumstances in which they are entitled by law to do so.

(d) For business to be properly brought before an annual meeting by a stockholder pursuant to Section 2.03(b), the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and such business must constitute a proper matter for action by stockholders. To be timely, a stockholder’s notice shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting (which date shall, for purposes of the Corporation’s first annual meeting of stockholders after the date hereof, be deemed to have occurred on [                ], 2021); provided, however, that in the event that the date of the annual meeting is advanced by more than 30 days, or delayed by more than 70 days, from the anniversary date of the previous year’s meeting, or if no annual meeting was held in the preceding year, notice by the stockholder to be timely must be so delivered not earlier than 120 days prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made. Public announcement of an adjournment or postponement of an annual meeting shall not commence a new time period (or extend any time period) for the giving of a stockholder’s notice.

(e) Such stockholder’s notice shall set forth (i) a brief description of the business desired to be brought before the annual meeting, the text of the proposal or business (including the text of any resolutions proposed for consideration), the reasons for conducting such business at the annual meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and (ii) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the proposal is made (A) the name and address of such stockholder, as they appear on the Corporation’s books and records, and of such beneficial

 

2


owner, (B) the class or series and number of shares of stock of the Corporation which are owned, directly or indirectly, beneficially and of record by such stockholder and such beneficial owner, (C) a representation that the stockholder (x) is a holder of record of the stock of the Corporation at the time of the giving of the notice, (y) will be entitled to vote at such meeting on the proposal of such business such stockholder intends to bring before the annual meeting and (z) will appear in person or by proxy at the annual meeting to propose such business, (D) a representation whether the stockholder or the beneficial owner, if any, will be or is part of a group which will (x) deliver a proxy statement and/or form of proxy to holders of at least the percentage of the voting power of the Corporation’s outstanding stock required to approve or adopt the proposal and/or (y) otherwise solicit proxies or votes from stockholders in support of such proposal, (E) a certification regarding whether such stockholder and beneficial owner, if any, have complied with all applicable federal, state and other legal requirements in connection with the stockholder’s and/or beneficial owner’s acquisition of shares of stock or other securities of the Corporation and/or the stockholder’s and/or beneficial owner’s acts or omissions as a stockholder of the Corporation and (F) any other information relating to such stockholder and beneficial owner, if any, required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal. A stockholder providing notice of business proposed to be brought before an annual meeting shall update and supplement such notice from time to time to the extent necessary so that the information provided or required to be provided in such notice shall be true and correct.

(f) Except as provided in Sections 2.03(g) and Section 3.02, only such Persons who are nominated in accordance with the procedures set forth in Section 2.03(a) shall be eligible to serve as directors and only such business shall be conducted at an annual meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section. Except as otherwise provided by law, the Certificate of Incorporation or these Bylaws, the Board of Directors, shall, in addition to making any other determination that may be appropriate for the conduct of the annual meeting of stockholders, have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in these Bylaws and, if any proposed nomination or business is not in compliance with these Bylaws, to declare that such defective proposal or nomination shall be disregarded. Notwithstanding the foregoing provisions of this Section 2.03, unless otherwise required by law, if the stockholder making a proposal (or a qualified representative of the stockholder) does not appear at the annual meeting of stockholders of the Corporation to present such business, such proposed business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation. For purposes of this Section 2.03, to be considered a qualified representative of the stockholder, a Person must be a duly authorized officer, manager or partner of such stockholder or must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the annual meeting of stockholders and such Person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the annual meeting of stockholders.

(g) For purposes of this Section 2.03, public announcement may be made by any means permitted by applicable law, including disclosure in a press release, on the website of the Corporation or in a document publicly filed with the Securities and Exchange Commission (the “Commission”) pursuant to the Exchange Act and the rules and regulations of the Commission thereunder.

 

3


(h) Notwithstanding the foregoing provisions of this Section 2.03, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations promulgated thereunder with respect to the matters set forth in this Section 2.03; provided, however, that, to the fullest extent permitted by law, any references in these Bylaws to the Exchange Act or the rules and regulations promulgated thereunder are not intended to and shall not limit any requirements applicable to proposals as to any business to be considered pursuant to these Bylaws, and compliance with Section 2.03(a) and Section 2.03(b) shall be the exclusive means for a stockholder other than the Series I Preferred Stockholder to submit business to the extent permitted pursuant to Section 2.03(a) and Section 2.03(b). Notwithstanding anything to the contrary herein, for so long as the Series I Preferred Stockholder shall have the right to submit business and make nominations pursuant to Section 2.03(a), the Series I Preferred Stockholder shall not be required to comply with the provisions of this Section 2.03, except as required by law.

Section 2.04 Notice of Meetings. If required by law, whenever stockholders are required to take any action at an annual or special meeting of stockholders, a timely notice in writing or by electronic transmission of the meeting, which shall state the place, if any, date and time of the meeting, the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting, the record date for determining the stockholders entitled to vote at the meeting, if such date is different from the record date for determining stockholders entitled to notice of the meeting, shall be mailed to or transmitted electronically by the Secretary of the Corporation to each stockholder of record entitled to vote thereat as of the record date for determining the stockholders entitled to notice of the meeting. Unless otherwise provided by law, the Certificate of Incorporation or these Bylaws, any such notice shall be given not less than 10 nor more than 60 days before the date of the meeting to each stockholder entitled to vote at such meeting as of the record date for determining the stockholders entitled to notice of the meeting.

Section 2.05 Adjournment. When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting and a new record date need not be fixed, if the time and place thereof are announced at the meeting at which the adjournment is taken, unless such adjournment shall be for more than 30 days. At the adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than 30 days, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. If after the adjournment a new record date for determination of stockholders entitled to vote is fixed for the adjourned meeting, the Board of Directors shall fix as the record date for determining stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote at the adjourned meeting, and shall give notice of the adjourned meeting to each stockholder of record as of the record date so fixed for notice of such adjourned meeting.

Section 2.06 Quorum. The stockholders of the Corporation holding a majority of the voting power of the outstanding stock of the class or classes entitled to vote at a meeting (including stock of the Corporation deemed owned by the Series I Preferred Stockholder) represented in person or by proxy shall constitute a quorum at a meeting of stockholders of such class or classes unless any such action by the stockholders of the Corporation requires approval by stockholders holding a greater percentage of the voting power of such stock, in which case the quorum shall be such greater percentage. At any meeting of the stockholders of the Corporation duly called and held in accordance with the Certificate of Incorporation and these Bylaws at which a quorum is present, the act of stockholders holding outstanding stock of the Corporation that in the aggregate

 

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represents a majority of the voting power of the outstanding stock entitled to vote at such meeting shall be deemed to constitute the act of all stockholders, unless a greater or different percentage is required with respect to such action under the Certificate of Incorporation or applicable law, in which case the act of the stockholders holding outstanding stock that in the aggregate represents at least such greater or different percentage of the voting power shall be required. The stockholders present at a duly called or held meeting at which a quorum is present may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum, if any action taken (other than adjournment) is approved by the required percentage of the voting power of outstanding stock of the Corporation specified in the Certificate of Incorporation or these Bylaws (including stock of the Corporation deemed owned by the Series I Preferred Stockholder). In the absence of a quorum, any meeting of stockholders may be adjourned from time to time by the affirmative vote of stockholders holding at least a majority of the voting power of the outstanding stock of the Corporation present and entitled to vote at such meeting (including stock of the Corporation deemed owned by the Series I Preferred Stockholder) represented either in person or by proxy, but no other business may be transacted, except as provided in Section 2.05 of these Bylaws.

Section 2.07 Conduct of a Meeting. To the fullest extent permitted by law, the Board of Directors shall have full power and authority concerning the manner of conducting any meeting of the stockholders of the Corporation or solicitation of written consents in lieu of a meeting of stockholders, including the determination of Persons entitled to vote, the existence of a quorum, the satisfaction of the requirements of Section 8.01 of the Certificate of Incorporation, the conduct of voting, the validity and effect of any proxies, the determination of any controversies, votes or challenges arising in connection with or during the meeting or voting and similar matters. The Chairman, to the fullest extent permitted by law, shall, among other things, be entitled to exercise the powers of the Board of Directors set forth in this Section 2.07. The Board of Directors may make such other regulations consistent with applicable law, the Certificate of Incorporation and these Bylaws as it may deem necessary or advisable concerning the conduct of any meeting of the stockholders or solicitation of stockholder action by written consent in lieu of a meeting, including regulations in regard to the appointment of proxies, the appointment and duties of inspectors of votes and approvals, the submission and examination of proxies and other evidence of the right to vote, and the revocation of ballots, proxies and written consents.

Section 2.08 Inspectors of Election. The Corporation may, and shall if required by law, in advance of any meeting of stockholders, appoint one or more inspectors of election, who may be employees of the Corporation, to act at the meeting or any adjournment thereof and to make a written report thereof. The Corporation may designate one or more Persons as alternate inspectors to replace any inspector who fails to act. In the event that no inspector so appointed or designated is able to act at a meeting of stockholders, the Person presiding at the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath to execute faithfully the duties of inspector with strict impartiality and according to the best of his or her ability. The inspector or inspectors so appointed

 

5


or designated shall (a) ascertain the number of shares of stock of the Corporation outstanding and the voting power of each such share, (b) determine the shares of stock of the Corporation represented at the meeting and the validity of proxies and ballots, (c) count all votes and ballots, (d) determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors, and (e) certify their determination of the number of shares of stock of the Corporation represented at the meeting and such inspectors’ count of all votes and ballots. Such certification and report shall specify such other information as may be required by law. In determining the validity and counting of proxies and ballots cast at any meeting of stockholders of the Corporation, the inspectors may consider such information as is permitted by applicable law. No Person who is a candidate for an office at an election may serve as an inspector at such election.

ARTICLE III

BOARD OF DIRECTORS

Section 3.01 Powers. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. The Board of Directors may exercise all such authority and powers of the Corporation and do all such lawful acts and things as are not directed or required by the DGCL or the Certificate of Incorporation to be exercised or done by the stockholders. The Board of Directors shall not be responsible for the day-to-day business, operations and affairs of the Designated Subsidiaries, including transactions entered into by a Designated Subsidiary in the ordinary course.

Section 3.02 Number of Directors; Removal; Vacancies and Newly Created Directorships. Subject to the rights of holders of Preferred Stock, until the Trigger Date (as defined in the Certificate of Incorporation), the Series I Preferred Stockholder shall have full authority unilaterally to fix the number of directors to constitute the Board of Directors (which number of directors may be increased or decreased solely by the Series I Preferred Stockholder). On and following the Trigger Date, and subject to the rights of the holders of Preferred Stock, the number of directors shall be fixed from time to time exclusively pursuant to a resolution adopted by a majority of the Board of Directors. Subject to any limitations then set forth in the Certificate of Incorporation, prior to the Trigger Date and other than with respect to any directors elected solely by the holders of Preferred Stock, the Series I Preferred Stockholder shall have full authority unilaterally to remove and replace any director, with or without cause, at any time and for any reason or no reason; provided, however, that (i) John Goff shall be entitled to serve as a director and Chairman of the Board of Directors during and throughout all of the Protected Period, and to the fullest extent permitted by law, may be removed as a director and Chairman during such period by the Series I Preferred Stockholder solely upon a finding of Cause by a majority of Independent Directors then in office and (ii) the Liberty Directors shall be entitled to serve as directors during and throughout all of the Protected Period, and to the fullest extent permitted by law, may be removed during such period by the Series I Preferred Stockholder solely upon a finding of Cause by a majority of Independent Directors then in office. On and following the Trigger Date, subject to the rights of the holders of Preferred Stock, any director may be removed only upon the affirmative vote of the holders of at least 6623% in voting power of the outstanding shares of stock of the Corporation entitled to vote generally in an election of directors with or without cause. Except as otherwise provided by the Certificate of Incorporation, prior to the Trigger Date, any directorships created as a result of an increase in the size of the Board of Directors or vacancies (whether by death, resignation, retirement, disqualification, removal or other cause) shall be filled solely by the Series I Preferred Stockholder. On and following the Trigger Date, any directorships created as a result of an increase in the size of the Board of Directors or vacancies (whether by death, resignation, retirement, disqualification, removal or other cause) shall be filled solely by the

 

6


affirmative vote of a majority of the total number of directors then in office, even if less than a quorum, or by a sole remaining director. Each director, including each appointed to fill a vacancy or newly created directorship, shall hold office until the next annual meeting of stockholders for the election of directors or action by written consent of stockholders in lieu of annual meeting for the purpose of electing directors and until such director’s successor is elected and qualified or until such director’s earlier death, resignation, retirement, disqualification or removal. Directors need not be stockholders.

Section 3.03 Resignations. Any director may resign at any time by giving notice of such director’s resignation in writing or by electronic transmission to the Chairman of the Board of Directors or the Secretary of the Board of Directors. Any such resignation shall take effect at the time specified therein, or if the time when it shall become effective shall not be specified therein, then it shall take effect immediately upon its receipt by the Corporation. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Notwithstanding anything to the contrary herein, but subject to the Certificate of Incorporation and applicable law, if, following the date hereof, any director that served on the Board of Directors that, as of immediately prior to the date of adoption of the first Amended and Restated Bylaws, served as a director of Contango Oil & Gas Company (a “Carlos Designated Director”) resigns or is unable to serve for any other reason during the Protected Period (in each case, a “Removed Designee”), then, in each case, the remaining Carlos Designated Directors (if any) shall have the sole authority to designate a replacement for such Removed Designee and the Series I Preferred Stockholder shall appoint such director.

Section 3.04 Compensation. The Board of Directors shall have the authority to fix the compensation of directors or to establish policies for the compensation of directors and for the reimbursement of expenses of directors, in each case, in connection with services provided by directors to the Corporation. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor.

Section 3.05 Meetings; Chairman and Secretary. The Board of Directors may hold meetings, both regular and special, within or outside the State of Delaware. Regular meetings of the Board of Directors may be held without notice at such time and at such place as shall from time to time be determined by the Board of Directors. Special meetings of the Board of Directors may be called by the Chairman of the Board of Directors or, in the absence of the Chairman of the Board of Directors, by any director on at least 24 hours’ (or less in times of emergency) notice to each director, either personally or by telephone or by mail or other form of electronic transmission or communication at such time and at such place as shall from time to time be determined by the Board of Directors. Notice of any such meeting need not be given to any director, however, if waived by such director in writing or by mail or other form of electronic transmission or communication, or if such director shall be present at such meeting. Unless otherwise indicated in the notice thereof, any and all business may be transacted at a special meeting. The Board of Directors, with the approval of the Series I Preferred Stockholder if prior to the Trigger Date, may appoint a “Chairman” and “Secretary” of the Board of Directors, who shall have the powers and perform such duties as provided in these Bylaws and as the Board of Directors may from time to time prescribe. At each meeting of the Board of Directors, the Chairman of the Board of Directors or, in the absence of the Chairman of the Board of Directors, a director chosen by a majority of the directors present, shall act as chairman of the meeting. In case the Secretary of the Board of Directors shall be absent from any meeting of the Board of Directors, a director or officer chosen by a majority of the directors present shall act as secretary of the meeting.

 

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Section 3.06 Quorum; Voting; Adjournment. Subject to the requirements of the Certificate of Incorporation and Section 3.07, at all meetings of the Board of Directors, a majority of the then total number of directors shall constitute a quorum for the transaction of business and, except as otherwise provided by law, the Certificate of Incorporation or these Bylaws, the act of a majority of the then total number of directors shall be the act of the Board of Directors. If a quorum shall not be present at any meeting of the Board of Directors, the directors present at such meeting may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

Section 3.07 Conflict of Interest. If a director abstains from voting on any matter in which he or she has a conflict of interest, the vote of a majority of the then total number of directors who have not so abstained shall be the act of the Board of Directors.

Section 3.08 Committees; Committee Rules. Except as expressly set forth in these Bylaws, the Board of Directors may, by resolution or resolutions passed by a majority of the then total number of members of the Board of Directors, designate one or more committees, each committee to consist of one or more of the directors of the Corporation, which, to the extent provided in such resolution or resolutions, shall have and may exercise, subject to applicable law, the Certificate of Incorporation and these Bylaws, the powers and authority of the Board of Directors. A majority of all the members of any such committee shall constitute a quorum for the transaction of business by the committee. A majority of all the members of any such committee present at a meeting at which a quorum is present may determine its action and fix the time and place, if any, of its meetings and specify what notice thereof, if any, shall be given, unless the Board of Directors shall otherwise provide. The Board of Directors shall have the power to change the members of any such committee at any time, to fill vacancies and to discharge any such committee, either with or without cause, at any time. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in place of any such absent or disqualified member. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when required. During the Protected Period, each committee of the Board of Directors (including the audit committee) shall include, to the extent that any such directors are serving at such time, at least one Carlos Designated Director, except to the extent that such membership would violate applicable securities laws or stock exchange or stock market rules. During the Protected Period, each committee of the Board of Directors (including the audit committee) shall include, to the extent that any such directors are serving at such time, at least one Liberty Director (excluding any committee formed for the purpose of evaluating a transaction between the Company or any of its Affiliates, on the one hand, and Liberty or any of its Affiliates, on the other hand), except to the extent that such membership would violate applicable securities laws or stock exchange or stock market rules.

 

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Section 3.09 Remote Meeting. Unless otherwise restricted by the Certificate of Incorporation, members of the Board of Directors, or members of any committee designated by the Board of Directors, may participate in meetings of the Board of Directors, or any committee thereof, by means of telephone conference or similar communications equipment that allows all Persons participating in the meeting to hear each other, and such participation in a meeting shall constitute presence in person at the meeting.

Section 3.10 Action Without a Meeting. Unless otherwise restricted by the Certificate of Incorporation, any action required or permitted to be taken at any meeting by the Board of Directors or any committee thereof, as the case may be, may be taken without a meeting if a consent thereto is signed or transmitted electronically, as the case may be, by all members of the Board of Directors or of such committee, as the case may be. After any such action is taken, the writing or writings or electronic transmission or transmissions shall be filed with the minutes of proceedings of the Board of Directors or such committee. Such filing shall be in paper form if the minutes are maintained in paper form or shall be in electronic form if the minutes are maintained in electronic form.

Section 3.11 Reliance on Books and Records. A member of the Board of Directors, or a member of any committee designated by the Board of Directors shall, in the performance of such Person’s duties, be fully protected in relying in good faith upon records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of the Corporation’s officers or employees, or committees of the Board of Directors, or by any other Person as to matters the member reasonably believes are within such other Person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation.

ARTICLE IV

OFFICERS

Section 4.01 Appointment, Selection and Designation of Officers Other Than Chief Executive Officer. The Chief Executive Officer may, from time to time as they deem advisable, select and designate other officers of the Corporation and assign titles to any such Persons, including “President,” “Chief Operating Officer,” “Chief Financial Officer,” “General Counsel,” “Chief Legal Officer,” “Chief Administrative Officer,” “Chief Compliance Officer,” “Principal Accounting Officer,” “Vice President,” “Treasurer,” “Assistant Treasurer,” “Secretary,” “Assistant Secretary,” “General Manager,” “Senior Managing Director,” “Managing Director,” “Director” or “Principal.” Any vacancies occurring in any office other than the office of Chief Executive Officer may be filled by the Chief Executive Officer in the same manner as such officers are appointed and selected pursuant to this Section 4.01.

Section 4.02 Delegation of Duties. Unless the Board of Directors determines otherwise, if a title is one commonly used for officers of a corporation formed under the DGCL, the assignment of such title shall constitute the delegation to such Person of the authorities and duties that are normally associated with that office. The Board of Directors may delegate to any officer any of the Board of Director’s powers to the extent permitted by applicable law, including the power to bind the Corporation. Any delegation pursuant to this Section 4.02 may be revoked at any time by the Board of Directors.

 

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Section 4.03 Officers As Agents. The officers, to the extent of their powers set forth under applicable law, the Certificate of Incorporation or these Bylaws or otherwise vested in them by action of the Board of Directors not inconsistent with applicable law, the Certificate of Incorporation or these Bylaws, are agents of the Corporation for the purpose of the Corporation’s business and the actions of the officers taken in accordance with such powers shall bind the Corporation.

ARTICLE V

STOCK

Section 5.01 List of Stockholders Entitled To Vote. The Corporation shall prepare, at least 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting (provided, however, that if the record date for determining the stockholders entitled to vote at the meeting is less than 10 days before the date of the meeting, the list shall reflect the stockholders entitled to vote at the meeting as of the 10th day before the meeting date), arranged in alphabetical order and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting at least 10 days prior to the meeting (a) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of meeting, if any, or (b) during ordinary business hours at the principal place of business of the Corporation. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. If the meeting is to be held at a place, then a list of stockholders entitled to vote at the meeting shall be produced and kept at the time and place of the meeting during the whole time thereof and may be examined by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting, if any, if required by law. Except as otherwise provided by law, the stock ledger shall be the only evidence as to who are the stockholders entitled to examine the list of stockholders required by this Section 5.01 or to vote in Person or by proxy at any meeting of stockholders.

Section 5.02 Fixing Date for Determination of Stockholders of Record.

(a) In order that the Corporation may determine the stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall, unless otherwise required by law, not be more than 60 nor less than 10 days before the date of such meeting. If the Board of Directors so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at or attend such meeting unless the Board of Directors determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for

 

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making such determinations. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at or attend a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at or attend a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for determination of stockholders entitled to vote at or attend the adjourned meeting, and in such case shall also fix as the record date for stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote in accordance herewith at or attend the adjourned meeting.

(b) In order that the Corporation may determine the stockholders entitled to express consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than 10 days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. If no record date for determining stockholders entitled to express consent to corporate action in writing without a meeting is fixed by the Board of Directors, (i) when no prior action of the Board of Directors is required by law, the record date for such purpose shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation in accordance with applicable law, and (ii) if prior action by the Board of Directors is required by law, the record date for such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action.

(c) In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall not be more than 60 days prior to such action. If no such record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

Section 5.03 Stock Certificates. Unless the Board of Directors shall provide by resolution or resolutions otherwise in respect of some or all of any or all classes or series of stock of the Corporation, the stock of the Corporation shall not be evidenced by certificates. Stock certificates that may be issued shall be executed on behalf of the Corporation by any two duly authorized officers of the Corporation. No certificate evidencing shares of Common Stock or Preferred Stock (each as defined in the Certificate of Incorporation) shall be valid for any purpose until it has been countersigned by the Transfer Agent; provided, however, that if the Board of Directors resolves to issue certificates evidencing shares of Common Stock or Preferred Stock in global form, the certificates evidencing such shares of Common Stock or Preferred Stock shall be valid upon receipt of a certificate from the Transfer Agent certifying that the certificates evidencing such shares of Common Stock or Preferred Stock have been duly registered in accordance with the directions of the Corporation. The use of facsimile signatures affixed in the name and on behalf of the Transfer Agent on certificates, if any, representing shares of stock of the Corporation is expressly permitted.

 

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Section 5.04 Mutilated, Destroyed, Lost or Stolen Stock Certificates.

(a) If any mutilated certificate evidencing shares of stock of the Corporation is surrendered to the Transfer Agent, two authorized officers of the Corporation shall execute, and, if applicable, the Transfer Agent shall countersign and deliver in exchange therefor, a new certificate evidencing the same number and class of stock as the certificate so surrendered.

(b) Any two authorized officers of the Corporation shall execute and deliver, and, if applicable, the Transfer Agent shall countersign a new certificate in place of any certificate previously issued if the record holder of shares represented by the certificate

 

  (i)

makes proof by affidavit, in form and substance satisfactory to the Corporation, that a previously issued certificate has been lost, destroyed or stolen;

 

  (ii)

requests the issuance of a new certificate before the Corporation has notice that the certificate has been acquired by a purchaser for value in good faith and without notice of an adverse claim;

 

  (iii)

if requested by the Corporation, delivers to the Corporation a bond, in form and substance satisfactory to the Corporation, with surety or sureties and with fixed or open penalty as the Corporation may direct to indemnify the Corporation, the stockholders and, if applicable, the Transfer Agent against any claim that may be made on account of the alleged loss, destruction or theft of the certificate; and

 

  (iv)

satisfies any other reasonable requirements imposed by the Corporation.

(c) As a condition to the issuance of any new certificate under this Section 5.04, the Corporation may require the payment of a sum sufficient to cover any tax or other charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Transfer Agent, if applicable) reasonably connected therewith.

Section 5.05 Registration and Transfer of Stock.

(a) The Corporation shall keep or cause to be kept on behalf of the Corporation a stock ledger in which, subject to such reasonable regulations as it may prescribe and subject to the provisions of this Section 5.05, the Corporation will provide for the registration and transfer of stock of the Corporation. The Transfer Agent is hereby appointed registrar and transfer agent for the purpose of registering Common Stock and Preferred Stock (other than Series I Preferred Stock (as defined in the Certificate of Incorporation)) and transfers of such stock as herein provided. The Corporation shall not recognize transfers of certificates evidencing shares of stock of the Corporation unless such transfers are effected in the manner described in this Section 5.05. Upon surrender of a certificate for registration of transfer of any shares of stock of the Corporation evidenced by a certificate, and subject to the provisions of Section 5.05(b), any two authorized

 

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officers of the Corporation shall execute and deliver, and in the case of Common Stock and Preferred Stock (other than Series I Preferred Stock), the Transfer Agent shall countersign and deliver, in the name of the holder or the designated transferee or transferees, as required pursuant to the holder’s instructions, one or more new certificates evidencing the same aggregate number and type of stock of the Corporation as was evidenced by the certificate so surrendered.

(b) The Corporation shall not recognize any transfer of shares of stock of the Corporation evidenced by certificates until the certificates evidencing such shares of stock are surrendered for registration of transfer. No charge shall be imposed by the Corporation for such transfer; provided that as a condition to the issuance of any new certificate, the Corporation may require the payment of a sum sufficient to cover any tax or other charge that may be imposed with respect thereto.

(c) Subject to (i) the provisions of the Certificate of Incorporation (including, with respect to any series of Preferred Stock of the Corporation, the provisions of any certificate of designations establishing such series), (ii) Section 5.05(d), (iii) any contractual provisions binding on any holder of shares of stock of the Corporation and (iv) provisions of applicable law, including the Securities Act, the stock of the Corporation shall be freely transferable. Stock of the Corporation issued pursuant to any employee-related policies or equity benefit plans, programs or practices adopted by the Corporation may be subject to any transfer restrictions contained therein.

(d) Notwithstanding the other provisions of this Section 5.05, no transfer of any shares of stock of the Corporation shall be made if such transfer would violate the then applicable U.S. federal or state securities laws or rules and regulations of the Commission, any U.S. state securities commission or any other governmental authority with jurisdiction over such transfer; provided, that nothing in this Section 5.05 shall preclude the settlement of any transactions involving shares of stock of the Corporation entered into through the facilities of any National Securities Exchange on which such shares of stock are listed for trading.

ARTICLE VI

BOOKS, RECORDS, ACCOUNTING

Section 6.01 Records and Accounting. The Corporation shall keep or cause to be kept appropriate books and records with respect to the Corporation’s business. Any books and records maintained by or on behalf of the Corporation in the regular course of its business, including its stock ledger, books of account, and minute books, may be kept on, or by means of, or be in the form of, any information storage device, method, or 1 or more electronic networks or databases (including one or more distributed electronic networks or databases), provided that the records so kept can be converted into clearly legible paper form within a reasonable time, and, with respect to the stock ledger, conforms with the requirements of the DGCL. The books of the Corporation shall be maintained, for financial reporting purposes, on an accrual basis in accordance with U.S. GAAP.

Section 6.02 Fiscal Year. The fiscal year of the Corporation (each, a “Fiscal Year”) shall be a year ending December 31. The Board of Directors may change the Fiscal Year of the Corporation at any time and from time to time in each case as may be required or permitted under the Internal Revenue Code of 1986, as amended, or applicable United States Treasury Regulations.

 

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ARTICLE VII

MISCELLANEOUS

Section 7.01 Definitions. Terms used in these Bylaws and not defined herein shall have the meanings assigned to such terms in the Certificate of Incorporation. The following definitions shall be for all purposes, unless otherwise clearly indicated to the contrary, applied to the terms used in these Bylaws:

Board of Directors” has the meaning assigned to such term in Section 1.01.

Cause” means the termination of a Person’s employment or service on the Board of Directors, for any of the following reasons: (A) a Person’s violation of any law or regulation applicable to the business of the Corporation, or conviction of or plea of no contest to a felony or any crime involving moral turpitude or dishonesty; (B) willful misconduct or gross negligence by a Person in the performance of a Person’s duties that is not cured by a Person (to the extent capable of cure) within ten (10) days following written notice being given to a Person of such breach; or (C) any act or acts of dishonesty by a Person intended to result in a Person’s personal gain or enrichment at the expense of the Corporation or any of its customers, partners, affiliates, parents or employees, including but not limited to willful misappropriation or conversion of the Corporation’s assets. For the purposes of this provision, no act or failure to act on the part of a Person shall be considered “willful” unless it is done, or omitted to be done, by a Person in bad faith and without reasonable belief that a Person’s action or omission was in the best interests of the Corporation. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board of Directors, or upon the instructions of the Board of Directors, or based upon the good faith advice of counsel for the Corporation, shall be conclusively presumed to be done, or omitted to be done, by a Person in good faith and in the best interests of the Corporation.

Certificate of Incorporation” has the meaning assigned to such term in Section 1.01.

Corporation” has the meaning assigned to such term in Section 1.01.

Designated Subsidiary” of any Person shall have the meaning assigned to such term in the Certificate of Incorporation.

electronic transmission” means any form of communication, not directly involving the physical transmission of paper, including the use of, or participation in, one or more electronic networks or databases (including one or more distributed electronic networks or databases), that creates a record that may be retained, retrieved, and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.

Fiscal Year” has the meaning assigned to such term in Section 6.02.

 

14


Independent Director” means a director that is independent for purposes of the Audit Committee of the Board of Directors under the rules and regulations of the New York Stock Exchange, the Exchange Act and the Sarbanes-Oxley Act of 2002, as amended.

Liberty” means Liberty Mutual Insurance Co.

Liberty Directors” means any director designees of PT Independence Energy Holdings, LLC appointed pursuant to any written agreement by and between PT Independence Energy Holdings, LLC and the Series I Preferred Stockholder.

Person” means an individual or a corporation, limited liability company, partnership (general or limited, including any limited liability limited partnership), joint venture, trust, unincorporated organization, association (including any group, organization, co-tenancy, plan, board, council or committee), government (including a country, state, county, or any other governmental or political subdivision, agency or instrumentality thereof) or other entity (or series thereof).

Protected Period” means the period from the date hereof until the date of the third annual meeting of the stockholders of the Corporation that is held following the date hereof in accordance with these Bylaws.

Section 7.02 Corporate Seal. The Board of Directors may provide a suitable seal, containing the name of the Corporation.

Section 7.03 Delivery to the Corporation. Whenever these Bylaws require any holder of Common Stock (including a record or beneficial owner thereof) to deliver a document or information to the Corporation or any officer, employee or agent thereof (including any notice, request, questionnaire, revocation, representation or other document or agreement), such document or information shall be in writing exclusively (and not in an electronic transmission) and shall be delivered exclusively by hand (including, without limitation, overnight courier service) or by certified or registered mail, return receipt requested and the Corporation shall not be required to accept delivery of any document not in such written form or so delivered. For the avoidance of doubt, with respect to any notice from any record or beneficial owner of Common Stock under the Certificate of Incorporation, these Bylaws or the DGCL, to the fullest extent permitted by law, the Corporation expressly opts out of Section 116 of the DGCL.

Section 7.04 Construction; Section Headings. For purposes of these Bylaws, unless the context otherwise requires, (a) references to “Articles”, “Sections” and “clauses” refer to articles, sections and clauses of these Bylaws and (b) the term “include” or “includes” means includes, without limitation, and “including” means including, without limitation. Section headings in these Bylaws are for convenience of reference only and shall not be given any substantive effect in limiting or otherwise construing any provision herein.

Section 7.05 Inconsistent Provisions. In the event that any provision of these Bylaws is or becomes inconsistent with any provision of the Certificate of Incorporation, the DGCL or any other applicable law, such provision of these Bylaws shall not be given any effect to the extent of such inconsistency but shall otherwise be given full force and effect.

 

15


ARTICLE VIII

AMENDMENTS

Section 8.01 Amendments. Except as provided in Section 8.02 or Section 8.03 of these Bylaws or in the Certificate of Incorporation, the Board of Directors is expressly authorized to adopt, amend and repeal, in whole or in part, these Bylaws without the assent or vote of the stockholders in any manner not inconsistent with the DGCL or the Certificate of Incorporation.

Section 8.02 Series I Preferred Stockholder Approval. In addition to any vote or consent required by the Certificate of Incorporation, these Bylaws or applicable law, the amendment or repeal, in whole or in part, of Sections 2.05 through 2.07, Sections 3.02 through 3.10, Sections 5.03 through 5.05 and Article IV, Article VI and this Article VIII, or the adoption of any provision inconsistent therewith, shall require, prior to the Trigger Date, the prior approval of the Series I Preferred Stockholder.

Section 8.03 Protected Period. Solely during the Protected Period, any amendment of the provisions of these Bylaws that are expressly applicable only during the Protected Period or this Article VIII shall require the prior approval of a majority of the Independent Directors.

* * *

 

16


Exhibit B

IE PUBCO INC.

2021 MANAGER INCENTIVE PLAN

PERFORMANCE STOCK UNIT GRANT NOTICE

Pursuant to the terms and conditions of the IE PubCo Inc. 2021 Manager Incentive Plan, as amended from time to time (the “Plan”), IE PubCo Inc., a Delaware corporation (the “Company”), hereby grants to [KKR External Manager], a Delaware limited liability company (the “Participant”), the number of Restricted Stock Units subject to performance-based vesting (the “PSUs”) set forth below. This award of PSUs (this “Award”) is subject to the terms and conditions set forth herein and in the Performance Stock Unit Agreement attached hereto as Exhibit A (the “Agreement”) and the Plan, each of which is incorporated herein by reference. Capitalized terms used but not defined herein shall have the meanings set forth in the Plan.

 

Participant:    [KKR External Manager]
Date of Grant:    [•]
Award Type and Description:   

This Award is granted pursuant to Article IX of the Plan. This Award represents the right to receive shares of Common Stock in an amount ranging from 0% to 240% of each Target PSU (as defined below), subject to the terms and conditions set forth herein and in the Agreement.

 

Each Target PSU corresponds to a number of shares of Common Stock equal to 2% of the total number of shares of Common Stock outstanding on each Performance Period End Date (as defined below).

 

Following the Committee’s certification of the level of achievement with respect to the Performance Goals (as defined below) following each Performance Period End Date, a portion of each Target PSU ranging from 0% to 240% of the Target PSU shall be deemed the “Earned Amount.” The Participant’s right to receive settlement of the applicable Earned Amount for a given Performance Period (as defined below) shall vest and become nonforfeitable as of the Performance Period End Date prior to such certification.

Target Number of PSUs:    5 (collectively the “Target PSUs” and each a “Target PSU”)

 

 

1 

Note to Draft: Each Performance Period to be three years.


Performance Period:

  

[•]1 (the “First Performance Period Commencement Date”) through [•] (the “First Performance Period End Date” and such period, the “First Performance Period”);

[•] (the “Second Performance Period Commencement Date”) through [•] (the “Second Performance Period End Date” and such period, the “Second Performance Period”);

 

[•] (the “Third Performance Period Commencement Date”) through [•] (the “Third Performance Period End Date” and such period, the “Third Performance Period”);

[•] (the “Fourth Performance Period Commencement Date”) through [•] (the “Fourth Performance Period End Date” and such period, the “Fourth Performance Period”); and

 

[•] (the “Fifth Performance Period Commencement Date”) through

[•] (the “Fifth Performance Period End Date” and such period, the “Fifth Performance Period”).

 

Each of the First Performance Period Commencement Date, the Second Performance Period Commencement Date, the Third Performance Period Commencement Date, the Fourth Performance Period Commencement Date and the Fifth Performance Period Commencement Date are referred to as a “Performance Period Commencement Date” with respect to the applicable period and each of the First Performance Period End Date, the Second Performance Period End Date, the Third Performance Period End Date, the Fourth Performance Period End Date and the Fifth Performance Period End Date are referred to as a “Performance Period End Date” with respect to the applicable period.

 

Each of First Performance Period, Second Performance Period, Third Performance Period, Fourth Performance Period and Fifth Performance Period are referred to as a “Performance Period.”

Performance Goals:

   The “Performance Goals” are based on the Company’s achievement with respect to the performance goals described in Exhibit B attached hereto.

Settlement:

   Subject to Section 3 of the Agreement, settlement of this Award shall be made solely in shares of Common Stock, which shall be delivered to the Participant in accordance with the Agreement.

By its signature below, the Participant agrees to be bound by the terms and conditions of the Plan, the Agreement and this Performance Stock Unit Grant Notice (this “Grant Notice”). The Participant acknowledges that it has reviewed the Agreement, the Plan and this Grant Notice in their entirety and fully understand all provisions of the Agreement, the Plan and this Grant Notice. The Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee regarding any questions or determinations that arise under the Agreement, the Plan or this Grant Notice. This Grant Notice may be executed in one or more counterparts (including portable document format (.pdf) and facsimile counterparts or through an electronic administrative system designated by the Company), each of which shall be deemed to be an original, but all of which together shall constitute one and the same agreement.

 

2


IN WITNESS WHEREOF, the Company has caused this Grant Notice to be executed by an officer thereunto duly authorized, and the Participant has caused this Grant Notice to be executed by an officer thereunto duly authorized, effective for all purposes as provided above.

 

IE PUBCO INC.
By:  

             

Name:  

             

Title:  

         

Date:  

             

The foregoing agreement is hereby accepted and the terms and conditions thereof hereby agreed to by the Participant.

 

[KKR EXTERNAL MANAGER]
By:  

             

Name:  

             

Title:  

         

Date:  

             

 

3


EXHIBIT A

PERFORMANCE STOCK UNIT AGREEMENT

This Performance Stock Unit Agreement (together with the Grant Notice to which this Agreement is attached, this “Agreement”) is made as of the Date of Grant set forth in the Grant Notice to which this Agreement is attached by and between [IE PubCo Inc.], a Delaware corporation (the “Company”), and [KKR External Manager], a Delaware limited liability company (the “Participant”). Capitalized terms used but not specifically defined herein shall have the meanings specified in the Plan or the Grant Notice.

1. Award. In consideration of the Participant’s past and/or continued service to the Company or its Affiliates and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, effective as of the Date of Grant set forth in the Grant Notice (the “Date of Grant”), the Company hereby grants to the Participant the Target PSUs set forth in the Grant Notice on the terms and conditions set forth in the Grant Notice, this Agreement and the Plan, which is incorporated herein by reference as a part of this Agreement. In the event of any inconsistency between the Plan and this Agreement, the terms of the Plan shall control. To the extent earned and vested, (i) this Award represents the right to receive shares of Common Stock in an amount ranging from 0% to 240% of the Target PSUs and (ii) each Target PSU represents the right to receive a number of shares of Common Stock equal to 2% of the total number of shares of Common Stock outstanding on each Performance Period End Date, subject to the terms and conditions set forth in the Grant Notice, this Agreement and the Plan. Unless and until any portion of this Award vests and becomes earned in the manner set forth in the Grant Notice, the Participant will have no right to receive any Common Stock or other payments in respect of this Award, except as otherwise specifically provided for in the Plan or this Agreement (including Section 4(b)). Prior to settlement of this Award, the Target PSUs and this Award represent an unsecured obligation of the Company, payable only from the general assets of the Company.

2. Earning and Vesting of PSUs.

(a) Except as otherwise set forth in Section 2(b), the Earned Amount for each Performance Period shall be determined with respect to a single Target PSU for such Performance Period based on the extent to which the Company has satisfied the Performance Goals set forth in the Grant Notice, which shall be determined by the Committee in its sole discretion following the end of such Performance Period as described in Exhibit B attached hereto. By way of example, (i) if the level of achievement with respect to the Absolute TSR Performance Goal is 145% for a given Performance Period, then the Earned Amount with respect to the 0.6 Target PSU that is subject to the Absolute TSR Performance Goal is equal to 300%, which means that 180% (300% times 0.6) of the Target PSU shall have been earned; (ii) if the level of achievement with respect to the Relative TSR Performance Goal is equal to or greater than the 80th percentile for the same Performance Period, then the Earned Amount with respect to the 0.4 Target PSU that is subject to the Relative TSR Performance Goal is equal to 150%, which means that 60% (150% times 0.4) of the Target PSU shall have been earned; and (iii) the total Earned Amount with respect to the Target PSU for such Performance Period is determined to be 240% (180% plus 60%) of the Target PSU for such Performance Period, which is equivalent to a number of shares of Common Stock equal

 

A-1


to 4.8% of the total number of shares of Common Stock outstanding on the applicable Performance Period End Date. To the extent that a Target PSU does not become earned during the corresponding Performance Period, such Target PSU shall be automatically forfeited without further notice and at no cost to the Company. In the event of the termination of that certain Management Agreement among the Company and the Participant, as amended from time to time (the “Management Agreement”) while any Target PSUs remain unearned (but after giving effect to any accelerated vesting pursuant to Section 2(b)), such unearned Target PSUs (and all rights arising from such Target PSUs and from being a holder thereof) will terminate automatically without any further action by the Company and will be forfeited without further notice and at no cost to the Company.

(b) Upon the occurrence of a Change in Control or a complete liquidation or dissolution of the Company, the Earned Amount with respect to all unearned Target PSUs shall immediately be deemed to be 100% of such Target PSUs on the Control Change Date or the date of liquidation or dissolution, as applicable, if the Management Agreement has not been terminated prior to such Control Change Date or such date of liquidation or dissolution, as applicable.

3. Settlement of PSUs. As soon as administratively practicable following each Performance Period End Date, but in no event later than 30 days thereafter, the Company shall deliver to the Participant a number of shares of Common Stock equal to the Earned Amount with respect to the Target PSU for the Performance Period, provided, however, that, notwithstanding anything contained herein to the contrary, if insufficient shares of Common Stock remain available under the Plan to be delivered in settlement of the Earned Amount, the Company shall deliver to the Participant a cash amount equal to the product of the Fair Market Value on such Performance Period End Date and the number of shares of Common Stock that could not be delivered. All Common Stock issued hereunder shall be delivered either by delivering one or more certificates for such shares to the Participant or by entering such shares in book-entry form, as determined by the Committee in its sole discretion. The value of Common Stock shall not bear any interest owing to the passage of time. Neither this Section 3 nor any action taken pursuant to or in accordance with this Agreement shall be construed to create a trust or a funded or secured obligation of any kind.

4. Rights as a Stockholder; Dividends.

(a) The Participant shall have no rights as a stockholder of the Company with respect to any Common Stock that may become deliverable hereunder unless and until the Participant has become the holder of record of such Common Stock, and no adjustments shall be made for dividends in cash or other property, distributions or other rights in respect of any such Common Stock, except as otherwise specifically provided for in the Plan or this Agreement; provided, however, that the Participant shall be entitled to participate in the gains and losses of the Company with respect to the Target PSUs granted hereunder.

(b) The Participant will have no right to receive any dividends or other distribution with respect to a Target PSU unless and until shares of Common Stock have been delivered in respect of the Earned Amount determined with respect to such Target PSU, if any, in accordance with the terms and conditions of this Agreement.

 

A-2


5. Tax Withholding. To the extent that the receipt, vesting or settlement of this Award results in any federal, state, local and/or foreign tax obligations applicable to the Participant, to the extent required under applicable law, the Participant shall make arrangements satisfactory to the Company for the satisfaction of such obligations.

6. Non-Transferability. Except as otherwise determined by the Committee, the Award may not be transferred at any time prior to becoming earned, vested and settled.

7. Compliance with Applicable Law. Notwithstanding any provision of this Agreement to the contrary, the issuance of Common Stock hereunder will be subject to compliance with all applicable requirements of applicable law with respect to such securities and with the requirements of any stock exchange or market system upon which the Common Stock may then be listed. No Common Stock will be issued hereunder if such issuance would constitute a violation of any applicable law or regulation or the requirements of any stock exchange or market system upon which the Common Stock may then be listed. In addition, Common Stock will not be issued hereunder unless (a) a registration statement under the Securities Act of 1933, as amended, is in effect at the time of such issuance with respect to the shares to be issued or (b) shares to be issued are permitted to be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act of 1933, as amended. The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed to be necessary for the lawful issuance and sale of any Common Stock hereunder will relieve the Company of any liability in respect of the failure to issue such shares as to which such requisite authority has not been obtained. As a condition to any issuance of Common Stock hereunder, the Company may require the Participant to satisfy any requirements that may be necessary or appropriate to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect to such compliance as may be requested by the Company.

8. Legends. If a stock certificate is issued with respect to Common Stock delivered hereunder, such certificate shall bear such legend or legends as the Committee deems appropriate in order to reflect the restrictions set forth in this Agreement and to ensure compliance with the terms and provisions of this Agreement, the rules, regulations and other requirements of the Securities and Exchange Commission, any applicable laws or the requirements of any stock exchange on which the Common Stock is then listed. If the shares of Common Stock issued hereunder are held in book-entry form, then such entry will reflect that the shares are subject to the restrictions set forth in this Agreement.

9. Lock-Up Period. If so requested by the Company or any representative of the underwriters in connection with any offering of the Company’s securities (an “Offering”), the Participant (or other holder) shall not sell or otherwise transfer or distribute any Common Stock or other securities of the Company (or any securities convertible or exchangeable or exercisable for Common Stock or engage in any hedging transactions relating to Common Stock) during such period as may be requested in writing by such underwriters and agreed to in writing by the Company.

 

A-3


10. Notices. Notices hereunder shall be mailed or delivered to the Company at its principal place of business and shall be mailed or delivered to the Participant at the address on file with the Company or, in either case, at such other address as one party may subsequently furnish to the other party in writing. Any notice that is delivered personally or by overnight courier or telecopier in the manner provided herein shall be deemed to have been duly given to the Participant when it is mailed by the Company or, if such notice is not mailed to the Participant, upon receipt by the Participant. Any notice that is addressed and mailed in the manner herein provided shall be conclusively presumed to have been given to the party to whom it is addressed at the close of business, local time of the recipient, on the fourth day after the day it is so placed in the mail.

11. Consent to Electronic Delivery; Electronic Signature. In lieu of receiving documents in paper format, the Participant agrees, to the fullest extent permitted by law, to accept electronic delivery of any documents that the Company may be required to deliver (including, but not limited to, prospectuses, prospectus supplements, grant or award notifications and agreements, account statements, annual and quarterly reports and all other forms of communications) in connection with this and any other Award made or offered by the Company. Electronic delivery may be via a Company electronic mail system or by reference to a location on a Company intranet to which the Participant has access. The Participant hereby consents to any and all procedures the Company has established or may establish for an electronic signature system for delivery and acceptance of any such documents that the Company may be required to deliver, and agrees that the Participant’s electronic signature is the same as, and shall have the same force and effect as, the Participant’s manual signature.

12. Agreement to Furnish Information. The Participant agrees to cause to be furnished to the Company all information requested by the Company to enable it to comply with any reporting or other requirement imposed upon the Company by or under any applicable statute or regulation.

13. Entire Agreement; Amendment. This Agreement and the provisions of the Management Agreement that relate to this Award constitute the entire agreement of the parties with regard to the subject matter hereof, and contains all the covenants, promises, representations, warranties and agreements between the parties with respect to the Target PSUs granted hereby. Without limiting the scope of the preceding sentence, except as provided therein, all prior understandings and agreements, if any, among the parties hereto relating to the subject matter hereof are hereby null and void and of no further force and effect. The Committee may, in its sole discretion, amend this Agreement from time to time in any manner that is not inconsistent with the Plan; provided, however, that except as otherwise provided in the Plan or this Agreement, any such amendment that materially reduces the rights of the Participant shall be effective only if it is in writing and signed by both the Participant and an authorized officer of the Company.

14. Severability and Waiver. If a court of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, then the invalidity or unenforceability of such provision shall not affect the validity or enforceability of any other provision of this Agreement, and all other provisions shall remain in full force and effect. Waiver by any party of any breach of this Agreement or failure to exercise any right hereunder shall not be deemed to be a waiver of any other breach or right. The failure of any party to take action by reason of such breach or to exercise any such right shall not deprive the party of the right to take action at any time while or after such breach or condition giving rise to such rights continues.

 

A-4


15. Clawback. Notwithstanding any provision in the Grant Notice, this Agreement or the Plan to the contrary, to the extent required by (a) applicable law, including, without limitation, the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, any Securities and Exchange Commission rule or any applicable securities exchange listing standards and/or (b) any policy that may be adopted or amended by the Board from time to time, all Common Stock issued hereunder shall be subject to forfeiture, repurchase, recoupment and/or cancellation to the extent necessary to comply with such law(s) and/or policy.

16. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED THEREIN, EXCLUSIVE OF THE CONFLICT OF LAWS PROVISIONS OF DELAWARE LAW.

17. Successors and Assigns. The Company may assign any of its rights under this Agreement without the Participants consent. This Agreement will be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein and in the Plan, this Agreement will be binding upon the Participant and any Affiliate of the Participant to whom the Target PSUs may be transferred.

18. Headings. Headings are for convenience only and are not deemed to be part of this Agreement.

19. Section 409A. Notwithstanding anything herein or in the Plan to the contrary, this Award is intended to be exempt from the applicable requirements of Section 409A and shall be limited, construed and interpreted in accordance with such intent. Notwithstanding the foregoing, the Company and its Affiliates make no representations that this Award is exempt from or compliant with Section 409A and in no event shall the Company or any Affiliate be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by the Participant on account of non-compliance with Section 409A.

 

A-5


EXHIBIT B

PERFORMANCE GOALS FOR PERFORMANCE STOCK UNITS

For each Performance Period, the performance goals for (i) 60% of the Target PSU (the “Absolute TSR Portion”) shall be based on the Company’s absolute total stockholder return (“Absolute TSR”) during the applicable Performance Period (the “Absolute TSR PSUs”) and (ii) 40% of the Target PSU (the “Relative TSR Portion”) shall be based on the relative total stockholder return (“Relative TSR” and together with Absolute TSR, the “Performance Goals”) ranking of the Company as compared to the Company’s Performance Peer Group during the applicable Performance Period (the “Relative TSR PSUs”). The Committee, in its sole discretion, shall have final authority to make factual determinations, interpret any ambiguities and resolve any and all issues with respect to the Performance Goals.

Absolute TSR Performance Goal

For each Performance Period, the Committee, in its sole discretion, will review, analyze and certify the Company’s Absolute TSR in order to determine the Earned Amount with respect to the Absolute TSR Portion for such Performance Period in accordance with the table below.

 

Absolute TSR (%)    Earned Amount (% of Absolute TSR Portion)*
<25%    0%
25%    100%
55%    150%
85%    200%
115%    250%
145%    300%

*The Earned Amount for performance between the achievement levels shall be calculated using linear interpolation.

Calculation of Absolute TSR

The Company’s Absolute TSR annualized for the applicable Performance Period will be calculated based on the following formula, which shall then be multiplied by 100 such that the result is expressed as a percentage:

 

 

Exhibit A-6


For purposes of the preceding formula, the following terms shall have the meanings specified below:

Beginning Share Price” means (i) with respect to the First Performance Period, the volume-weighted average price per share of Common Stock for the 20 consecutive trading days beginning on and including the First Performance Period Commencement Date or (ii) with respect to each Performance Period other than the First Performance Period, the volume-weighted average price per share of Common Stock for the 20 consecutive trading days immediately preceding the applicable Performance Period Commencement Date.

Cumulative Dividends” means the aggregate amount of dividends and other distributions paid on a share of Common Stock during the applicable Performance Period, assuming that such dividends and other distributions were reinvested in the Company as of the applicable ex-dividend dates during the applicable Performance Period.

Ending Share Price” means the volume-weighted average price per share of Common Stock for the 20 consecutive trading days immediately preceding the applicable Performance Period End Date.

Relative TSR Performance Goal

For each Performance Period, the Committee, in its sole discretion, will review, analyze and certify the Company’s Relative TSR in order to determine the Earned Amount with respect to the Relative TSR Portion for such Performance Period in accordance with the table below.

 

Relative TSR Percentile Ranking    Earned Amount (% of Relative TSR Portion)*
<20th Percentile    0%
20th Percentile    50%
40th Percentile    75%
60th Percentile    100%
70th Percentile    125%
³80th Percentile    150%

*The Earned Amount for performance between two different performance levels shall be calculated using linear interpolation.

 

A-7


Determination of Relative TSR

The total stockholder return for the Company shall be determined using the Absolute TSR formula set forth above. The total stockholder return for each member of the Performance Peer Group will be calculated by dividing (i) (a) the volume-weighted average price per share of such entit