LOAN AGREEMENT
Exhibit 2.5.0
dated as of September 2, 2022 among
NEXT BRIDGE HYDROCARBONS, INC. TORCHLIGHT ENERGY, INC. TORCHLIGHT XXXXX, LLC XXXXXXXX OIL CORPORATION XXXXXXXX OPERATING, LLC
as Borrowers
and
META MATERIALS, INC.
as Lender
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS
Section 1.01. Defined Terms 5
Section 1.02. Terms Generally 17
Section 1.03. Accounting Terms; GAAP 18
ARTICLE 2 THE LOANS
Section 2.01. Commitment 18
Section 2.02. Loans and Borrowings 18
Section 2.03. Requests for Loans 18
Section 2.04. Termination and Reduction of Commitments 19
Section 2.05. Repayment of Loans; Evidence of Debt 19
Section 2.06. Prepayment of Loans 19
Section 2.07. Interest 21
Section 2.08. Withholding of Taxes; Gross-Up 21
Section 2.09. Payments Generally; Pro Rata Treatment; Sharing of Setoffs 22
Section 2.10. Continuing Guaranty 22
ARTICLE 3 Representations and Warranties
Section 3.01. Organization; Powers 24
Section 3.02. Authorization; Enforceability 24
Section 3.03. Governmental Approvals; No Conflicts 25
Section 3.04. Financial Condition; No Material Adverse Change 25
Section 3.05. Properties 25
Section 3.06. Litigation and Environmental Matters 25
Section 3.07. Compliance with Laws and Agreements 26
Section 3.08. Investment Company Status 26
Section 3.09. Taxes 26
Section 3.10. ERISA 26
Section 3.11. Disclosure 26
Section 3.12. Anti-Corruption Laws and Sanctions 27
Section 3.13. Plan Assets; Prohibited Transactions 27
Section 3.14. Margin Regulations 27
Section 3.15. Solvency 27
ARTICLE 4 CONDITIONS
Section 4.01. Effective Date 27
Section 4.02. Each Credit Event 28
ARTICLE 5 Affirmative Covenants
Section 5.01. Financial Statements; Ratings Change and Other Information 29
Section 5.02. Notices of Material Events 30
Section 5.03. Existence; Conduct of Business 31
Section 5.04. Payment of Obligations 31
Section 5.05. Maintenance of Properties; Insurance 31
Section 5.06. Books and Records; Inspection Rights 31
Section 5.07. Compliance with Laws 32
Section 5.08. Use of Proceeds 32
Section 5.09. Accuracy of Information 32
ARTICLE 6 Negative Covenants
Section 6.01. Indebtedness 33
Section 6.02. Liens 33
Section 6.03. Fundamental Changes 34
Section 6.04. Dispositions 34
Section 6.05. Investments, Loans, Advances, Guarantees and Acquisitions 35
Section 6.06. Swap Agreements 35
Section 6.07. Restricted Payments 35
Section 6.08. Transactions with Affiliates 35
Section 6.09. Restrictive Agreements 36
ARTICLE 7 Events of Default
Section 7.01. Events of Default 36
Section 7.02. Remedies Upon an Event of Default 38
Section 7.03. Application of Payments 38
ARTICLE 8 Miscellaneous
Section 8.01. Notices 39
Section 8.02. Waivers; Amendments 39
Section 8.03. Expenses; Limitation of Liability; Indemnity, Etc 40
Section 8.04. Successors and Assigns 41
Section 8.05. Survival 42
Section 8.06. Counterparts; Integration; Effectiveness; Electronic Execution 42
Section 8.07. Severability 43
Section 8.08. Right of Setoff 44
Section 8.09. Governing Law; Jurisdiction; Consent to Service of Process 44
Section 8.10. WAIVER OF JURY TRIAL 45
Section 8.11. Headings 45
Section 8.12. Interest Rate Limitation 45
Section 8.13. No Fiduciary Duty, etc 45
Section 8.14. USA PATRIOT Act 46
3
SCHEDULES:
Schedule 2.01A – Commitments Schedule 3.06 – Disclosed Matters Schedule 6.01 – Existing Indebtedness Schedule 6.02 – Existing Liens Schedule 6.09 – Existing Restrictions
Schedule 8.01 – Addresses
4
LOAN AGREEMENT dated as of September 2, 2022 (this “Agreement”), by and among NEXT BRIDGE HYDROCARBONS, INC., a Nevada corporation (the “Parent Borrower”), TORCHLIGHT ENERGY, INC., a Nevada corporation (“Torchlight Energy”), TORCHLIGHT XXXXX, LLC, a Texas limited liability company (“Xxxxx”), XXXXXXXX OIL CORPORATION, a Texas corporation (“Xxxxxxxx Oil”), XXXXXXXX OPERATING, LLC, a Texas limited liability company (“Xxxxxxxx Operating”, and together with Parent Borrower, Torchlight Energy, Xxxxx and Xxxxxxxx Oil, the “Borrowers”), and META MATERIALS, INC., a Nevada corporation (a “Lender”).
The parties hereto agree as follows:
ARTICLE 1 DEFINITIONS
Section 1.01. Defined Terms. As used in this Agreement, the following terms have the meanings specified below:
“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.
“Agreement” has the meaning specified in introductory paragraph hereof. “Ancillary Document” has the meaning assigned to it in Section 9.06(b).
“Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to the Borrowers or any of their Subsidiaries from time to time concerning or relating to bribery or corruption.
“Applicable Law” means any statute or law or any judgment, order, decree, rule, or regulation of any court or Governmental Authority to which a specified Person or property is subject.
“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 9.04), in a form approved by the Lender.
“Availability Period” means the period from and including the Effective Date to but excluding the earlier of December 30, 2022 and the date of termination of the Commitment.
“Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy”, as now and hereafter in effect, or any successor statute.
“Borrowers” has the meaning set forth in the introductory paragraph hereto. “Borrowing” means a borrowing of a Loan hereunder.
“Borrowing Request” means a request by a Borrower for a Borrowing in accordance with Section 2.03, which shall be in a form approved by the Lender.
“Business Day” means, any day (other than a Saturday or a Sunday) on which banks are open for business in New York City, Boston, Massachusetts and Canada.
“Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases or financing leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.
“Change in Control” means: (a) before the Spin Out, the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the SEC thereunder as in effect on the date hereof), of Equity Interests representing more than 50% of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of any Borrower; or (b) from and after the Spin Out: (1) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the SEC thereunder as in effect on the date hereof), of Equity Interests representing more than 25% of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of the Parent Borrower; (2) occupation of a majority of the seats (other than vacant seats) on the board of directors of any Borrower by Persons who were not (A) directors of such Borrower on the date the Spin Out is consummated or nominated or appointed by the board of directors of such Borrower or
(B) appointed by directors so nominated or appointed; (3) the acquisition of direct or indirect Control of the Parent Borrower by any Person or group; (4) the Parent Borrower ceases to own, directly or indirectly, 100% of all Equity Interests of any one or more of Torchlight Energy, Xxxxx, Xxxxxxxx Oil or Xxxxxxxx Operating; (5) the Parent Borrower ceases to Control each other Borrower; or (6) the sale of all or any material portion of the assets, in the aggregate, of the Parent Borrower and its Subsidiaries; provided, the Spin Out shall not constitute a Change in Control.
“Code” means the Internal Revenue Code of 1986, as amended.
“Commitment” means, with respect to the Lender, the amount set forth on Schedule 2.01A opposite the Lender’s name, or in the Assignment and Assumption, and giving effect to (a) any reduction in such amount from time to time pursuant to Section 2.04(b) and (b) any reduction or increase in such amount from time to time pursuant to assignments by or to the Lender pursuant to Section 8.04.
“Consolidated EBITDA” means, at any date of determination, an amount equal to Consolidated Net Income of the Parent Borrower and its Subsidiaries on a consolidated basis for the most recently completed fiscal year of the Parent Borrower plus (a) the following to the extent deducted in calculating such Consolidated Net Income: (i) Consolidated Interest Charges, (ii) the provision for federal, state, local and foreign income taxes payable, (iii) depreciation and amortization expense and (iv) other expenses reducing such Consolidated Net Income which do not represent a cash item in such period or any future period (in each case of or by the Parent Borrower and its Subsidiaries for such fiscal year) and minus (b) the following to the extent included in calculating such Consolidated Net Income: (i) federal, state, local and foreign income tax credits and (ii) all non-cash items increasing Consolidated Net Income (in each case of or by the Parent Borrower and its Subsidiaries for such fiscal year).
“Consolidated Interest Charges” means, for any fiscal year of the Parent Borrower, the sum of (a) all interest, premium payments, debt discount, fees, charges and related expenses in
6
connection with borrowed money (including capitalized interest) or in connection with the deferred purchase price of assets, in each case to the extent treated as interest in accordance with GAAP, (b) all interest paid or payable with respect to discontinued operations and (c) the portion of rent expense under Capitalized Lease Obligations that is treated as interest in accordance with GAAP, in each case, of or the Parent Borrower and its Subsidiaries on a consolidated basis for the most recently completed fiscal year.
“Consolidated Net Income” means, at any date of determination, the net income (or loss) of the Parent Borrower and its Subsidiaries on a consolidated basis for the most recently completed fiscal year; provided that Consolidated Net Income shall exclude (a) extraordinary gains and extraordinary losses for such fiscal year, (b) the net income of any Subsidiary during such fiscal year to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary of such income is not permitted by operation of the terms of its constitutive documents or any agreement, instrument or law applicable to such Subsidiary during such fiscal year, except that the Parent Borrower’s equity in any net loss of any such Subsidiary for such fiscal year shall be included in determining Consolidated Net Income, and (c) any income (or loss) for such fiscal year of any Person if such Person is not a Subsidiary, except that Parent Borrower’s equity in the net income of any such Person for such fiscal year shall be included in Consolidated Net Income up to the aggregate amount of cash actually distributed by such Person during such fiscal year to the Parent Borrower or a Subsidiary as a dividend or other distribution (and in the case of a dividend or other distribution to a Subsidiary, such Subsidiary is not precluded from further distributing such amount to the Parent Borrower as described in clause (b) of this proviso).
“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. “Controlling” and “Controlled” have meanings correlative thereto.
“Debtor Relief Laws” means the Bankruptcy Code, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.
“Default” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.
“Disclosed Matters” means the actions, suits and proceedings and the environmental matters (if any) disclosed in Schedule 3.06.
“Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition (in one transaction or in a series of transactions and whether effected pursuant to a division or otherwise) of any property by any Person (including any sale and leaseback transaction and any issuance of Equity Interests by a Subsidiary of such Person), including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.
“Dollars”, “dollars” or “$” refers to lawful money of the United States of America. “Effective Date” means the date on which the conditions specified in Section 4.01 are
satisfied (or waived in accordance with Section 8.02).
7
“Electronic Signature” means an electronic sound, symbol, or process attached to, or associated with, a contract or other record and adopted by a Person with the intent to sign, authenticate or accept such contract or record.
“Environmental Laws” means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to (i) the environment, (ii) preservation or reclamation of natural resources, (iii) the management, release or threatened release of any Hazardous Material or (iv) health and safety matters.
“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower or any Subsidiary directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.
“Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such equity interest, but excluding any debt securities convertible into any of the foregoing.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations promulgated thereunder.
“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with the Borrowers, is treated as a single employer under Section 414(b) or (c) of the Code or Section 4001(14) of ERISA or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.
“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30 day notice period is waived); (b) the failure to satisfy the “minimum funding standard” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by any Borrowers or any of their ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by any Borrowers or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by any Borrowers or any of their ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal of any Borrowers or any of their ERISA Affiliates from any Plan or Multiemployer Plan; or (g) the receipt by any Borrowers or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from any Borrowers or any ERISA Affiliate of any notice, concerning the imposition upon any Borrowers or any of their ERISA Affiliates of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.
“Event of Default” has the meaning assigned to such term in Section 7.01.
8
“Excess Cash Flow” means, for any fiscal year of the Parent Borrower and its Subsidiaries, the excess (if any) of (a) Consolidated EBITDA for such fiscal year over (b) the sum (for such fiscal year) of (i) Consolidated Interest Charges actually paid in cash by the Parent Borrower and its Subsidiaries, (ii) scheduled principal repayments, to the extent actually made, of Existing Loans and the Existing Secured Note on the Maturity Date, (iii) all income taxes actually paid in cash by the Parent Borrower and its Subsidiaries and (iv) capital expenditures actually made by the Parent Borrower and its Subsidiaries in such fiscal year.
“Excluded Issuance” by the Parent Borrower means an issuance and sale of an Equity Interest in the Parent Borrower to its employees, officers, directors or consultants, or an issuance of shares of capital stock of (or other ownership or profit interests in) the Parent Borrower upon the exercise of warrants, options or other rights for the purchase of such capital stock (or other ownership or profit interest), in each case, pursuant to employee stock option plans of the Parent Borrower.
“Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which such Lender acquires such interest in the Loan or Commitment, except to the extent that, pursuant to Section 2.08, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender acquired the applicable interest in a Loan or Commitment or to such Lender immediately before it changed its lending office, and (c) any withholding Taxes imposed under FATCA.
“Existing Loans” means the term loans made by the Lender to the Borrower in the aggregate principal amount of $5,000,000, as further described in Schedule A hereto.
“Existing Secured Note” means the 8% Secured Promissory Note, dated October 1, 2021, issued by Oilco Holdings, Inc., a Nevada corporation (now known as Next Bridge Hydrocarbons, Inc.), in favor of Lender.
“Existing Security Documents” means, collectively, (a) the Stock Pledge Agreement dated as of September 30, 2021, executed and delivered by Xxxxxxx XxXxxx in favor of the Lender, and
(b) the Deed of Trust, Mortgage, Security Agreement, Fixture Filing, Financing Statement and Assignment of Production, dated as of September 30, 2021, executed and delivered by Wolfbone Investments, LLC, a Texas limited liability company, to Xxxxxx Xxxxx, as trustee, for the benefit of the Lender.
“Extraordinary Receipt” means any cash received by or paid to or for the account of any Person not in the ordinary course of business, including tax refunds, pension plan reversions, proceeds of insurance (other than proceeds of business interruption insurance to the extent such proceeds constitute compensation for lost earnings), condemnation awards (and payments in lieu thereof), indemnity payments and any purchase price adjustments; provided, that an Extraordinary Receipt shall not include cash receipts from proceeds of insurance, condemnation awards (or payments in lieu thereof) or indemnity payments to the extent that such proceeds, awards or payments in respect of loss or damage to equipment, fixed assets or real property are applied (or in
9
respect of which expenditures were previously incurred) to replace or repair the equipment, fixed assets or real property in respect of which such proceeds were received in accordance with the terms of Section 2.06(b)(v).
“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental Authorities and implementing such Sections of the Code.
“Federal Reserve Board” means the Board of Governors of the Federal Reserve System of the United States of America.
“Financial Officer” means the chief financial officer, principal accounting officer, treasurer or controller of a Borrower.
“GAAP” means generally accepted accounting principles in the United States of America. “Governmental Authority” means the government of the United States of America, any
other nation or any political subdivision thereof, whether state or local, and any agency, authority,
instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
“Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided, that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business.
“Guaranty” has the meaning assigned to it in Section 2.10.
“Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.
“Xxxxx” has the meaning set forth in the introductory paragraph hereto. “Xxxxxxxx Oil” has the meaning set forth in the introductory paragraph hereto.
“Xxxxxxxx Operating” has the meaning set forth in the introductory paragraph hereto.
10
“Immaterial Subsidiary” means any Subsidiary of the Parent Borrower that (a) individually constitutes or holds less than two and one half percent (2.5%) of the Parent Borrower’s consolidated total assets and generates less than two and one half percent (2.5%) of the Parent Borrower’s consolidated total revenue and (b) when taken together with all then existing Immaterial Subsidiaries, such Subsidiary and such Immaterial Subsidiaries, in the aggregate, would constitute or hold less than five percent (5%) of the Parent Borrower’s consolidated total assets and generate less than five percent (5%) of the Parent Borrower’s consolidated total revenue, in each case of the foregoing clauses as of the last day of, or for, the most recently ended fiscal period for which financial statements were required to have been delivered pursuant to 5.01(a) or (b).
“Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person,
(e) all obligations of such Person in respect of the deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course of business), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit, demand guarantees and similar independent undertakings and (j) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.
“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in (a) hereof, Other Taxes.
“Indemnitee” has the meaning assigned to it in Section 8.03(c). “IRS” means the United States Internal Revenue Service.
“Leases” shall mean the leases held by any Borrower or its Subsidiaries pertaining to such Borrower’s or such Subsidiary’s interests in any of the following oil and gas projects: the Orogrande Project in Xxxxxxxx County, Texas, the Xxxxx Project in Sterling, Xxx Xxxxx, and Xxxxx Counties, Texas, and two xxxxx in Central Oklahoma.
“Lender-Related Person” has the meaning assigned to it in Section 8.03(b).
“Lenders” means the Persons listed on Schedule 2.01A and any other Person that shall have become a party hereto pursuant to an Assignment and Assumption or otherwise, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption or otherwise.
“Liabilities” means any losses, claims (including intraparty claims), demands, damages or liabilities of any kind.
11
“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.
“Loan Documents” means this Agreement, including schedules and exhibits hereto, and any agreements entered into in connection herewith by any Loan Party with or in favor of the Lender, including the Note, any amendments, modifications or supplements thereto or waivers thereof, and any other documents prepared in connection with the other Loan Documents, if any.
“Loan Parties” means the Borrowers.
“Loans” means the loans made by the Lender to the Borrowers pursuant to this Agreement. “Margin Stock” means margin stock within the meaning of Regulations T, U and X, as
applicable.
“Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties, liabilities (actual or contingent), or condition (financial or otherwise) of the Parent Borrower and its Subsidiaries taken as a whole; (b) a material impairment of the rights and remedies of the Lender under any Loan Document, or of the ability of any Loan Party to perform its obligations under any Loan Document to which it is a party; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document to which it is a party.
“Material Indebtedness” means Indebtedness (other than the Loans), or obligations in respect of one or more Swap Agreements, of any one or more of any Borrower and its Subsidiaries in an aggregate principal amount exceeding $250,000. For purposes of determining Material Indebtedness, the “principal amount” of the obligations of any Borrower or any Subsidiary in respect of any Swap Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that such Borrower or such Subsidiary would be required to pay if such Swap Agreement were terminated at such time.
“Maturity Date” means March 31, 2023; provided, if the Parent Borrower consummates a Qualified Financing on or before March 31, 2023 and if no Default exists, then the Maturity Date shall be October 3, 2023.
“Maximum Lawful Rate” has the meaning assigned to it in Section 8.14.
“Monthly Payment Date” means the last Business Day of each of April 2023, May 2023, June 2023, July 2023 and August 2023, and the Maturity Date.
“Moody’s” means Xxxxx’x Investors Service, Inc.
“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of
ERISA.
“Note” means a promissory note made by the Borrowers in favor of the Lender evidencing the Loans made by the Lender, in form and substance satisfactory to the Lender.
12
“Obligations” means all advances to, and debts, liabilities, obligations, covenants and duties of, the Borrowers arising under any Loan Document or otherwise with respect to any Loan, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against the Borrowers or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed or allowable claims in such proceeding. Without limiting the foregoing, the Obligations include (a) the obligation to pay principal, interest, charges, expenses, fees, indemnities and all other amounts payable by the Borrowers under any Loan Document and
(b) the obligation of the Borrowers to reimburse any amount in respect of any of the foregoing that the Lender, in each case in its sole discretion, may elect to pay or advance on behalf of the Borrowers.
“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).
“Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment.
“Parent Borrower” has the meaning set forth in the introductory paragraph hereto. “Participant” has the meaning assigned to such term in Section 8.04(c). “Participant Register” has the meaning assigned to such term in Section 8.04(c). “Patriot Act” has the meaning assigned to it in Section 8.16.
“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.
“Permitted Encumbrances” means:
13
provided that the term “Permitted Encumbrances” shall not include any Lien securing Indebtedness. “Permitted Investments” means:
14
or any State thereof which has a combined capital and surplus and undivided profits of not less than $500,000,000;
“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.
“Plan” means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.
“Plan Asset Regulations” means 29 CFR § 2510.3-101 et seq., as modified by Section 3(42) of ERISA, as amended from time to time.
“Proceeding” means any claim, litigation, investigation, action, suit, arbitration or administrative, judicial or regulatory action or proceeding in any jurisdiction.
“Qualified Financing” means a transaction or series of transactions pursuant to which the Parent Borrower and/or any of its Subsidiaries issues and sells its Equity Interests (excluding, for avoidance of doubt, the Spin Out), and/or incurs Indebtedness (other than Indebtedness owing to the Lender), for aggregate gross proceeds of at least $30,000,000 (excluding all proceeds from the incurrence of any Indebtedness that is converted into such Equity Interests, or otherwise cancelled in consideration for the issuance of such Equity Interests) with the principal purpose of raising capital.
“Recipient” means the Lender.
“Register” has the meaning assigned to such term in Section 8.04(b).
“Regulation D” means Regulation D of the Federal Reserve Board, as in effect from time to time and all official rulings and interpretations thereunder or thereof.
“Regulation T” means Regulation T of the Federal Reserve Board, as in effect from time to time and all official rulings and interpretations thereunder or thereof.
“Regulation U” means Regulation U of the Federal Reserve Board, as in effect from time to time and all official rulings and interpretations thereunder or thereof.
“Regulation X” means Regulation X of the Federal Reserve Board, as in effect from time to time and all official rulings and interpretations thereunder or thereof.
15
“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates.
“Responsible Officer” means the president, Financial Officer or other executive officer of a Borrower.
“Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interests in any Borrower or any Subsidiary of a Borrower, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Equity Interests or any option, warrant or other right to acquire any such Equity Interests.
“S&P” means Standard & Poor’s Rating Services, a Standard & Poor’s Financial Services LLC business.
“Sanctioned Country” means, at any time, a country, region or territory which is itself the subject or target of any Sanctions (at the time of this Agreement, the so - called Donetsk People’s Republic, the so- called Luhansk People’s Republic, the Crimea Region of Ukraine, Cuba, Iran, North Korea and Syria).
“Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State, (b) any Person operating, organized or resident in a Sanctioned Country, (c) any Person owned or controlled by any such Person or Persons described in the foregoing clauses (a) or (b), or (d) any Person otherwise the subject of any Sanctions.
“Sanctions” means all economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State.
“SEC” means the Securities and Exchange Commission of the United States of America. “Solvent” means, as to any Person as of any date of determination, that on such date (a) the
fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person, (b) the present fair saleable value of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts, including contingent debts, as they become absolute and matured and (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities, including contingent debts and liabilities, beyond such Person’s ability to pay such debts and liabilities as they mature. The amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.
“Spin Out” means the transaction (or series of transactions) whereby the Lender distributes all of the shares of common stock of the Parent Borrower to the holders of the Series A Non-Voting Preferred Stock of the Lender, immediately after which all shares of the Series A Non-Voting Preferred Stock of the Lender are cancelled.
16
“Stated Rate” has the meaning assigned to such term in Section 8.12.
“subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as of such date, otherwise Controlled by the parent and/or one or more subsidiaries of the parent.
“Subsidiary” means any subsidiary of the Parent Borrower.
“Swap Agreement” means any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of the Parent Borrower or the Subsidiaries shall be a Swap Agreement.
“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), value added taxes, or any other goods and services, use or sales taxes, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“Torchlight Energy” has the meaning set forth in the introductory paragraph hereto. “Transactions” means, with respect to any Loan Party, the execution, delivery and
performance by such Loan Party of each Loan Document to which it is party, the borrowing of Loans, and the use of the proceeds thereof.
“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
Section 1.02. Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of,
17
and Exhibits and Schedules to, this Agreement, (e) any reference to any law, rule or regulation herein shall, unless otherwise specified, refer to such law, rule or regulation as amended, modified or supplemented from time to time and (f) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.
Section 1.03. Accounting Terms; GAAP. (a) Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time. Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made, without giving effect to (i) any election under Financial Accounting Standards Board Accounting Standards Codification 825 (or any other Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of the Borrower or any Subsidiary at “fair value”, as defined therein and (ii) any treatment of Indebtedness under Accounting Standards Codification 470-20 or 2015-03 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any such Indebtedness in a reduced or bifurcated manner as described therein, and such Indebtedness shall at all times be valued at the full stated principal amount thereof.
(b) Notwithstanding anything to the contrary contained in Section 1.04(a) or in the definition of “Capital Lease Obligations,” any change in accounting for leases pursuant to GAAP resulting from the adoption of Financial Accounting Standards Board Accounting Standards Update No. 2016-02, Leases (Topic 842) (“FAS 842”), to the extent such adoption would require treating any lease (or similar arrangement conveying the right to use) as a capital lease where such lease (or similar arrangement) would not have been required to be so treated under GAAP as in effect on December 31, 2015, such lease shall not be considered a capital lease, and all calculations and deliverables under any Loan Document shall be made or delivered, as applicable, in accordance therewith.
ARTICLE 2 THE LOANS
Section 2.01. Commitment. Subject to the terms and conditions set forth herein, the Lender agrees to make Loans to the Borrowers from time to time during the Availability Period in an aggregate principal amount not to exceed the Xxxxxx’s Commitment. Amounts borrowed under this Section 2.01(a) and repaid or prepaid may not be reborrowed.
Section 2.02. Loans and Borrowings. (a) Each Loan shall be in a principal amount of
$500,000 or a whole multiple of $100,000 in excess thereof (or, if less, the remaining unused portion of the Commitment).
Section 2.03. Requests for Loans. To request a Loan, the Parent Borrower shall notify the Lender of such request by submitting a Borrowing Request not later than 11:00 a.m., New York City time, at least ten Business Days before the date of the proposed Borrowing. Each such Borrowing Request shall be irrevocable and shall be signed by a Responsible Officer of the Parent
18
Borrower. Each such Borrowing Request shall specify the following information:
19
Section 2.04. Termination and Reduction of Commitments. (a) Unless previously terminated, the Commitment shall terminate on the Maturity Date.
(b) The Borrowers may at any time terminate, or from time to time reduce, the Commitment, by irrevocable written notice to the Lender. Any termination or reduction of the Commitment shall be permanent.
Section 2.05. Repayment of Loans; Evidence of Debt. (a) The Borrowers hereby unconditionally promise to pay, jointly and severally, to the Lender the then unpaid principal amount of each Loan on the Maturity Date. If a Qualified Financing is consummated on or before March 31, 2023, then the Borrowers shall repay, jointly and severally, to the Lender the aggregate principal amount of all Loans outstanding in equal monthly installments, one such installment due and payable on each Monthly Payment Date (which amounts shall be reduced as a result of the application of prepayments made pursuant to Section 2.06); provided, that the final principal repayment installment of the Loans shall be repaid on the Maturity Date and in any event shall be in an amount equal to the aggregate principal amount of all Loans outstanding on such date.
Section 2.06. Prepayment of Loans. (a) Optional. The Borrowers shall have the right at any time and from time to time to prepay any Loan in whole or in part, without penalty or premium, subject to prior notice in accordance with Section 2.06(c). Each prepayment of Loans pursuant to this Section 2.06(a) shall be applied ratably to the Loans.
20
21
Section 2.07. Interest. (a) The Loans shall bear interest at a rate equal to eight percent (8%) per annum.
Section 2.08. Withholding of Taxes; Gross-Up.
22
Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Parent Borrower by the Lender shall be conclusive absent manifest error.
Section 2.09. Payments Generally; Pro Rata Treatment; Sharing of Setoffs. (a) The Borrowers shall make each payment or prepayment required to be made by any Borrower hereunder (whether of principal, interest, fees or otherwise) in Dollars prior to 12:00 noon, New York City time, on the date when due or the date fixed for any prepayment hereunder, in immediately available funds, without setoff, recoupment or counterclaim. Any amounts received after such time on any date may, in the discretion of the Lender, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Lender at its offices set forth in Schedule 8.01, except that payments pursuant to Section 8.03 shall be made directly to the Persons entitled thereto. If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments hereunder shall be made in Dollars.
(b) If at any time insufficient funds are received by and available to the Lender to pay fully all amounts of principal, interest and fees then due hereunder, such funds shall be applied
(i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, towards payment of principal then due hereunder.
Section 2.10. Continuing Guaranty.
23
24
respect of the Obligations and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Laws or otherwise, all as if such payment had not been made or such setoff had not occurred and whether or not Lender is in possession of or have released this Guaranty and regardless of any prior revocation, rescission, termination or reduction. The obligations of each Borrower under this paragraph shall survive termination of this Guaranty.
ARTICLE 3 REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants to the Lender that:
Section 3.01. Organization; Powers. Each of such Borrower and its Subsidiaries is duly organized or formed, validly existing and in good standing under the laws of the jurisdiction of its organization, has all requisite power and authority to carry on its business as now conducted and, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required.
25
26
generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.
Section 3.03. Governmental Approvals; No Conflicts. The Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect,
(b) will not violate any applicable law or regulation or the charter, by-laws or other organizational documents of such Borrower or any of its Subsidiaries or any order of any Governmental Authority,
Section 3.04. Financial Condition; No Material Adverse Change. (a) The Parent Borrower has heretofore furnished to the Lender the consolidated and consolidating balance sheet and statements of income, stockholders equity and cash flows for the Parent Borrower and its Subsidiaries (i) as of and for the fiscal year ended December 31, 2021, reported on by XX Xxxxxxx CPA, independent public accountants, and (ii) as of and for the fiscal quarter ended June 30, 2022, certified by its chief financial officer. Such financial statements present fairly, in all material respects, the financial position and results of operations and cash flows of the Parent Borrower and its Subsidiaries as of such dates and for such periods in accordance with GAAP, subject to year- end audit adjustments and the absence of footnotes in the case of the statements referred to in clause
(ii) above.
(b) Since June 30, 2022, there has been no a material adverse change in, or a material adverse effect upon, the operations, business, properties, liabilities (actual or contingent), or condition (financial or otherwise) of the Parent Borrower and its Subsidiaries taken as a whole.
Section 3.05. Properties. (a) Each Borrower and its Subsidiaries has good title to, or valid leasehold interests in, all its real and personal property material to its business, except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties for their intended purposes.
(b) Each Borrower and its Subsidiaries owns, or is licensed to use, all trademarks, trade names, copyrights, patents and other intellectual property material to its business, and the use thereof by such Borrower and its Subsidiaries does not infringe upon the rights of any other Person, except for any such infringements that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.
Section 3.06. Litigation and Environmental Matters. (a) There are no actions, suits or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of such Borrower, threatened against or affecting any Borrower or any of its Subsidiaries (i) as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect (other than the Disclosed Matters) or (ii) that involve the Loan Documents or the Transactions.
27
Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) has become subject to any Environmental Liability, (iii) has received notice of any claim with respect to any Environmental Liability or (iv) knows of any basis for any Environmental Liability.
Section 3.07. Compliance with Laws and Agreements. Each Borrower and its Subsidiaries is in compliance with all laws, regulations and orders of any Governmental Authority applicable to it or its property and all indentures, agreements and other instruments binding upon it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. No Default has occurred and is continuing.
Section 3.08. Investment Company Status. Neither Borrower nor any of its Subsidiaries is an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940.
Section 3.09. Taxes. Each Borrower and its Subsidiaries has timely filed or caused to be filed all Tax returns and reports required to have been filed and has paid or caused to be paid all Taxes required to have been paid by it, except (a) Taxes that are being contested in good faith by appropriate proceedings and for which such Borrower or such Subsidiary, as applicable, has set aside on its books adequate reserves and (b) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect.
Section 3.10. ERISA. No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect. The present value of all accumulated benefit obligations under each Plan (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed by more than $5000 the fair market value of the assets of such Plan, and the present value of all accumulated benefit obligations of all underfunded Plans (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed by more than $5000 the fair market value of the assets of all such underfunded Plans.
Section 3.11. Disclosure. Each Borrower has disclosed to the Lender all agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. None of the reports, financial statements, certificates or other information furnished by or on behalf of such Borrower or any Subsidiary to the Lender in connection with the negotiation of this Agreement or delivered hereunder (as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financial information, such Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time.
28
Section 3.12. Anti-Corruption Laws and Sanctions. Such Borrower has implemented and maintains in effect policies and procedures designed to ensure compliance by such Borrower, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions, and such Borrower, its Subsidiaries and their respective officers and directors and to the knowledge of such Borrower its employees and agents, are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects. None of (a) such Borrower, any Subsidiary, any of their respective directors or officers or employees, or (b) to the knowledge of such Borrower, any agent of such Borrower or any Subsidiary that will act in any capacity in connection with or benefit from the credit facility established hereby, is a Sanctioned Person. No Loan, use of proceeds or other Transaction will violate any Anti-Corruption Law or applicable Sanctions.
Section 3.13. Plan Assets; Prohibited Transactions. None of such Borrower or any of its Subsidiaries is an entity deemed to hold “plan assets” (within the meaning of the Plan Asset Regulations), and neither the execution, delivery nor performance of the transactions contemplated under this Agreement, including the making of any Loan hereunder, will give rise to a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code.
Section 3.14. Margin Regulations. Such Borrower is not engaged and will not engage, principally or as one of its important activities, in the business of purchasing or carrying Margin Stock, or extending credit for the purpose of purchasing or carrying Margin Stock, and no part of the proceeds of any Loan hereunder will be used to buy or carry any Margin Stock. Following the application there has been no a material adverse change in, or a material adverse effect upon, the operations, business, properties, liabilities (actual or contingent), or condition (financial or otherwise) of the Parent Borrower and its Subsidiaries taken as a whole of the proceeds of each Loan, not more than 25% of the value of the assets (either of the Parent Borrower only or of the Parent Borrower and its Subsidiaries on a consolidated basis) will be Margin Stock.
Section 3.15. Solvency. Such Borrower and its Subsidiaries taken as a whole are Solvent.
ARTICLE 4 CONDITIONS
Section 4.01. Effective Date. The obligations of the Lender to make Loans hereunder shall not become effective until the date on which each of the following conditions is satisfied in the Lender’s sole discretion (or waived in writing in the Lender’s sole discretion):
29
30
The Lender shall notify the Parent Borrower of the Effective Date, and such notice shall be conclusive and binding.
Section 4.02. Each Credit Event. The obligation of the Lender to make a Loan on the occasion of any Borrowing of a Loan, is subject to the satisfaction of the following conditions:
Each Borrowing of a Loan shall be deemed to constitute a representation and warranty by each Borrower on the date thereof as to the matters specified in paragraphs (a), (b) and (c) of this Section.
31
ARTICLE 5 AFFIRMATIVE COVENANTS
Until the Commitment has expired or been terminated and all principal of, and interest on, each Loan and all fees payable hereunder and all other outstanding Obligations shall have been paid in full in cash, each Borrower covenants and agrees with the Lender that, from and after the Effective Date:
Section 5.01. Financial Statements; Ratings Change and Other Information. The Borrowers will furnish to the Lender:
32
33
Commission, or with any national securities exchange, or distributed by any Borrower to its shareholders generally, as the case may be;
Documents required to be delivered pursuant to Section 5.01(a), (b) or (e) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and, if so delivered, shall be deemed to have been delivered on the date (i) on which such materials are publicly available as posted on the Electronic Data Gathering, Analysis and Retrieval system (XXXXX); or (ii) on which such documents are posted on the Parent Borrower’s behalf on an Internet or intranet website, if any, to which the Lender has access (whether a commercial, third-party website or otherwise); provided that: (A) upon written request by the Lender to the Parent Borrower, the Parent Borrower shall deliver paper copies of such documents to the Lender until a written request to cease delivering paper copies is given by the Lender and
(B) the Parent Borrower shall notify the Lender (by telecopier or electronic mail) of the posting of any such documents and provide to the Lender by electronic mail electronic versions (i.e., soft copies) of such documents. The Lender shall have no obligation to request the delivery of or to maintain paper copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Borrowers with any such request by the Lender for delivery.
Section 5.02. Notices of Material Events. The Borrowers will furnish to the Lender prompt written notice of the following:
34
Each notice delivered under this Section (i) shall be in writing, and (ii) shall be accompanied by a statement of a Financial Officer or other executive officer of the Parent Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.
Section 5.03. Existence; Conduct of Business. Such Borrower will, and will cause each of its Subsidiaries to, do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges and franchises material to the conduct of its business; provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 6.03.
Section 5.04. Payment of Obligations. Such Borrower will, and will cause each of its Subsidiaries to, pay its obligations, including Tax liabilities, that, if not paid, could result in a Material Adverse Effect before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) such Borrower or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (c) the failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect.
Section 5.05. Maintenance of Properties; Insurance. Such Borrower will, and will cause each of its Subsidiaries to, (a) keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted, and (b) maintain, with financially sound and reputable insurance companies, insurance in such amounts and against such risks as are customarily maintained by companies engaged in the same or similar businesses operating in the same or similar locations.
Section 5.06. Books and Records; Inspection Rights. Such Borrower will, and will cause each of its Subsidiaries to, keep proper books of record and account in which full, true and correct entries are made of all dealings and transactions in relation to its business and activities. Such
35
Borrower will, and will cause each of its Subsidiaries to, permit any representatives designated by the Lender, upon at least 3 Business Days’ notice, to visit and inspect its properties, to examine and make extracts from its books and records, to discuss its affairs, finances and condition with its officers and independent accountants (and hereby authorizes the Lender to contact its independent accountants directly) and to provide contact information for each bank where such Borrower and its Subsidiaries have a depository and/or securities account and each such Loan Party hereby authorizes the Lender to contact the bank(s) in order to request bank statements and/or balances, all at such reasonable times during normal business hours and as often as reasonably requested.
Section 5.07. Compliance with Laws. Such Borrower will, and will cause each of its Subsidiaries to, comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. Such Borrower will maintain in effect and enforce policies and procedures designed to ensure compliance by such Borrower, its Subsidiaries and their respective directors, officers, employees and agents with Anti- Corruption Laws and applicable Sanctions.
Section 5.08. Use of Proceeds. The proceeds of the Loans (including the Existing Loans) will be used only for general and administrative expenses, working capital, payments for third party advisors, attorneys, engineers, and accountants, and operating and drilling expenses in the ordinary course of the Borrowers’ business. The proceeds of any Qualified Financing will be used solely (i) to pay for general and administrative expenses, payments for third party advisors, attorneys, engineers, and accountants, and operating and drilling expenses in the ordinary course of the Borrowers’ business, and transaction expenses related to such Qualified Financing, and (ii) to repay and/or prepay the Obligations. No part of the proceeds of any Loan will be used, whether directly or indirectly, for any purpose that entails a violation of any of the regulations of the Federal Reserve Board, including Regulations T, U and X. Such Borrower will not request any Loan, and such Borrower shall not use, and shall procure that its Subsidiaries and its or their respective directors, officers, employees and agents shall not use, the proceeds of any Loan (a) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (b) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, except to the extent permitted for a Person required to comply with Sanctions, or (c) in any manner that would result in the violation of any Sanctions applicable to any party hereto.
Section 5.09. Accuracy of Information. Such Borrower will ensure that any information, including financial statements or other documents, furnished to the Lender in connection with this Agreement or any amendment or modification hereof or waiver hereunder contains no material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and the furnishing of such information shall be deemed to be a representation and warranty by such Borrower on the date thereof as to the matters specified in this Section.
ARTICLE 6 NEGATIVE COVENANTS
Until the Commitment has expired or been terminated and all principal of, and interest on, each Loan and all fees payable hereunder and all other outstanding Obligations shall have been
36
paid in full in cash, each Borrower covenants and agrees with the Lender that, without the prior written consent of the Lender, from and after the Effective Date:
Section 6.01. Indebtedness. The Borrowers will not, and will not permit any Subsidiary to, create, incur, assume or permit to exist any Indebtedness, except:
(1) is unsecured and has a maturity date that is after December 31, 2023 and (2) are expressly subordinated to the Obligations and all other Indebtedness of the Loan Parties payable to the Lender pursuant to a subordination agreement in form and substance satisfactory to the Lender;
$500,000 at any time outstanding; and
Section 6.02. Liens. The Borrowers will not, and will not permit any Subsidiary to, create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable) or rights in respect of any thereof, except:
37
provided that (i) such security interests secure Indebtedness permitted by clause (e) of Section 6.01,
(ii) such security interests and the Indebtedness secured thereby are incurred prior to or within 90 days after such acquisition or the completion of such construction or improvement, (iii) the Indebtedness secured thereby does not exceed 100% of the cost of acquiring, constructing or improving such fixed or capital assets and (iv) such security interests shall not apply to any other property or assets of any Loan Party or any Subsidiary; and
Section 6.03. Fundamental Changes. (a) The Borrowers will not, and will not permit any Subsidiary to, merge into or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, or otherwise Dispose of all or any substantial part of its assets, or all or substantially all of the Equity Interests of any of their respective Subsidiaries (in each case, whether now owned or hereafter acquired), or liquidate or dissolve, except that, (i) if at the time thereof and immediately after giving effect thereto no Default shall have occurred and be continuing, any Subsidiary may merge into the Parent Borrower in a transaction in which the Parent Borrower is the surviving corporation; provided that any such merger involving a Person that is not a wholly owned Subsidiary immediately prior to such merger shall not be permitted unless also permitted by Section 6.05, (ii) Borrowers may consummate the Spin Out and (iii) a Borrower may Dispose of an Immaterial Subsidiary.
Section 6.04. Dispositions. The Borrowers will not, and will not permit any Subsidiary to, make any Disposition, except:
38
provided, for avoidance of doubt, the Borrowers will not, and will not permit any Subsidiary to, Dispose of any Lease without the prior written consent of Lender.
Section 6.05. Investments, Loans, Advances, Guarantees and Acquisitions. The Borrowers will not, and will not permit any of their Subsidiaries to, purchase, hold or acquire (including pursuant to any merger with any Person that was not a wholly owned Subsidiary prior to such merger) any capital stock, evidences of indebtedness or other securities (including any option, warrant or other right to acquire any of the foregoing) of, make or permit to exist any loans or advances to, Guarantee any obligations of, or make or permit to exist any investment or any other interest in, any other Person, or purchase or otherwise acquire (in one transaction or a series of transactions) any assets of any other Person constituting a business unit, except:
Section 6.06. Swap Agreements. The Borrowers will not, and will not permit any of their Subsidiaries to, enter into any Swap Agreement; provided, with the prior written consent of the Lender (such consent not to be unreasonably withheld), Borrowers may enter into a Swap Agreement in connection with a Qualified Financing.
Section 6.07. Restricted Payments. The Borrowers will not, and will not permit any of their Subsidiaries to, declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, except (a) the Parent Borrower may declare and pay dividends with respect to its Equity Interests payable solely in additional shares of its common stock, (b) each Subsidiary may make Restricted Payments to the Parent Borrower and to any Subsidiaries of the Parent Borrower that are Borrowers, (c) before the Spin Out, the Borrowers may make Restricted Payments to the Lender,
(d) the Parent Borrower may make Restricted Payments pursuant to and in accordance with stock option plans or other benefit plans for management or employees of the Parent Borrower and its Subsidiaries, (e) the Parent Borrower may pay cash in lieu of fractional shares and (f) the Borrowers may consummate the Spin Out.
Section 6.08. Transactions with Affiliates. The Borrowers will not, and will not permit any of their Subsidiaries to, sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except (a) in the ordinary course of business at prices and on terms and conditions not less favorable to a Borrower or such Subsidiary than could be obtained on an arm’s- length basis from unrelated third parties, (b) transactions between or among the Borrowers and their wholly owned Subsidiaries not involving any other Affiliate, (c) any Restricted Payment permitted by Section 6.07 and (d) the Spin Out.
39
Section 6.09. Restrictive Agreements. The Borrowers will not, and will not permit any of their Subsidiaries to, directly or indirectly, enter into, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon (a) the ability of any Borrower or any Subsidiary to create, incur or permit to exist any Lien upon any of its property or assets, or (b) the ability of any Subsidiary to pay dividends or other distributions with respect to any shares of its capital stock or to make or repay loans or advances to the Borrowers or any other Subsidiary or to Guarantee Indebtedness of the Borrowers or any other Subsidiary; provided that
(i) the foregoing shall not apply to restrictions and conditions imposed by law or by the Loan Documents, (ii) the foregoing shall not apply to restrictions and conditions existing on the date hereof identified on Schedule 6.09 (but shall apply to any extension or renewal of, or any amendment or modification expanding the scope of, any such restriction or condition), (iii) the foregoing shall not apply to customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary pending such sale; provided that such restrictions and conditions apply only to the Subsidiary that is to be sold and such sale is permitted hereunder, (iv) clause (a) of the foregoing shall not apply to restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by this Agreement if such restrictions or conditions apply only to the property or assets securing such Indebtedness, (v) clause (a) of the foregoing shall not apply to customary provisions in leases and other contracts restricting the assignment thereof, (vi) the foregoing shall not apply to customary restrictions and conditions contained in agreements relating to the Spin Out, and (vii) solely with and to the extent (if any) of the prior written consent of the Lender in the Lender’s reasonable discretion (it being understood and agreed that it would be reasonable for the Lender to withhold consent if the Lender’s board of directors does not approve, or if any Indebtedness that any Borrower or any Affiliate thereof owes to the Lender may be subordinated or structurally subordinated, or if a Default exists or could reasonably be expected to occur), clause (b) of the foregoing shall not apply to a Qualified Financing.
ARTICLE 7 EVENTS OF DEFAULT
Section 7.01. Events of Default. If any of the following events (“Events of Default”) shall occur:
40
41
42
Section 7.02. Remedies Upon an Event of Default. If an Event of Default occurs (other than an event with respect to any Loan Party described in Sections 7.01(h) or 7.01(i)), and at any time thereafter during the continuance of such Event of Default, the Lender may, by notice to the Borrower, take any or all of the following actions, at the same or different times:
If an Event of Default described in Sections 7.01(h) or 7.01(i) occurs with respect to any Loan Party, the Commitment shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrowers accrued hereunder and under any other Loan Document, and all other Obligations, shall automatically become due and payable, in each case, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrowers.
Section 7.03. Application of Payments. Notwithstanding anything herein to the contrary, following the occurrence and during the continuance of an Event of Default:
43
Lender (including fees and disbursements and other charges of counsel to the Lender payable under Section 8.03) arising under the Loan Documents;
ARTICLE 8 MISCELLANEOUS
Section 8.01. Notices. (a) Except in the case of notices and other communications expressly permitted to be given by telephone (and subject to paragraph (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, (i) if to a Borrower, to it at its address set forth in Schedule 8.01, and (ii) if to the Lender, to it at its address set forth in Schedule 8.01. Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient).
Section 8.02. Waivers; Amendments. (a) No failure or delay by the Lender in exercising any right or power under the Loan Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Lender under the Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of any Loan Document or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this
44
Section, and then such waiver or consent shall be effective only in the specific instance and for the
45
purpose for which given. Without limiting the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any Default, regardless of whether the Lender may have had notice or knowledge of such Default at the time.
(b) Neither this Agreement nor any other Loan Document nor any provision of any Loan Document may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrowers and the Lender.
Section 8.03. Expenses; Limitation of Liability; Indemnity, Etc.
(i) all out of pocket expenses incurred by the Lender and its Affiliates, including the fees, charges and disbursements of counsel for the Lender, in connection with the negotiation, preparation and administration of the Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), and (ii) all out-of-pocket expenses incurred by the Lender, including the fees, charges and disbursements of any counsel for the Lender, in connection with the enforcement or protection of its rights in connection with the Loan Documents, including its rights under this Section, or in connection with the Loans made hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of the Loans.
(iii) any Loan or the use of the proceeds therefrom, (iv) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by the Borrowers or any of their Subsidiaries, or any Environmental Liability related in any way to the Borrowers or any of their Subsidiaries, or (v) any actual or prospective Proceeding relating to any of the foregoing, whether or not such Proceeding is brought by any Loan Party or its equity holders, Affiliates, creditors or any other third Person and whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any
46
Indemnitee, be available to the extent that such Liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted primarily from the gross negligence or willful misconduct of such Indemnitee. This Section 8.03(c) shall not apply with respect to Taxes other than any Taxes that represent losses, claims or damages arising from any non-Tax claim.
Section 8.04. Successors and Assigns. (a) The provisions of this Agreement and the other Loan Documents shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that (i) no Loan Party may assign or otherwise transfer any of its rights or obligations under any Loan Document without the prior written consent of the Lender (and any attempted assignment or transfer by a Loan Party without such consent shall be null and void) and (ii) the Lender may not assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section. Nothing in any Loan Document, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants (to the extent provided in paragraph (c) of this Section) and, to the extent expressly contemplated hereby, the Related Parties of the Lender) any legal or equitable right, remedy or claim under or by reason of any Loan Document.
47
The Register shall be available for inspection by the Borrowers and any Lender, at any reasonable time and from time to time upon reasonable prior notice.
Section 8.05. Survival. All covenants, agreements, representations and warranties made by the Borrowers in the Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to any Loan Documents shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the making of any Loans, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other Obligations payable under this Loan Documents is outstanding and so long as the Commitment has not expired or terminated. The provisions of Sections 2.08 and 8.03 and Article
8 shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Obligations in full in cash, the expiration or termination of the Commitments or the termination of the Loan Documents or any provision thereof.
Section 8.06. Counterparts; Integration; Effectiveness; Electronic Execution. (a) This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Lender and when the Lender shall have received counterparts hereof which, when taken
48
together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.
(b) Delivery of an executed counterpart of a signature page of (x) this Agreement, (y) any other Loan Document and/or (z) any document, amendment, approval, consent, information, notice (including, for the avoidance of doubt, any notice delivered pursuant to Section 8.01), certificate, request, statement, disclosure or authorization related to this Agreement, any other Loan Document and/or the transactions contemplated hereby and/or thereby (each an “Ancillary Document”) that is an Electronic Signature transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page shall be effective as delivery of a manually executed counterpart of this Agreement, such other Loan Document or such Ancillary Document, as applicable. The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to this Agreement, any other Loan Document and/or any Ancillary Document shall be deemed to include Electronic Signatures, deliveries or the keeping of records in any electronic form (including deliveries by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page), each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be; provided that nothing herein shall require the Lender to accept Electronic Signatures in any form or format without its prior written consent and pursuant to procedures approved by it; provided, further, without limiting the foregoing, (i) to the extent the Lender has agreed to accept any Electronic Signature, the Lender shall be entitled to rely on such Electronic Signature purportedly given by or on behalf of any Loan Party without further verification thereof and without any obligation to review the appearance or form of any such Electronic signature and (ii) upon the request of the Lender, any Electronic Signature shall be promptly followed by a manually executed counterpart. Without limiting the generality of the foregoing, each Loan Party hereby (A) agrees that, for all purposes, including without limitation, in connection with any workout, restructuring, enforcement of remedies, bankruptcy proceedings or litigation among the Lender and the Loan Parties, Electronic Signatures transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page and/or any electronic images of this Agreement, any other Loan Document and/or any Ancillary Document shall have the same legal effect, validity and enforceability as any paper original, (B) the Lender may, at its option, create one or more copies of this Agreement, any other Loan Document and/or any Ancillary Document in the form of an imaged electronic record in any format, which shall be deemed created in the ordinary course of such Person’s business, and destroy the original paper document (and all such electronic records shall be considered an original for all purposes and shall have the same legal effect, validity and enforceability as a paper record), (C) waives any argument, defense or right to contest the legal effect, validity or enforceability of this Agreement, any other Loan Document and/or any Ancillary Document based solely on the lack of paper original copies of this Agreement, such other Loan Document and/or such Ancillary Document, respectively, including with respect to any signature pages thereto and (D) waives any claim against any Lender-Related Person for any Liabilities arising solely from the Lender’s and/or any Lender’s reliance on or use of Electronic Signatures and/or transmissions by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page, including any Liabilities arising as a result of the failure of any Loan Party to use any available security measures in connection with the execution, delivery or transmission of any Electronic Signature.
Section 8.07. Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability
49
of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.
Section 8.08. Right of Setoff. From and after the Spin Out, if an Event of Default shall have occurred and be continuing, the Lender and its Affiliates (other than any Borrower or any Borrower’s Affiliates) is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to setoff and apply any and all deposits (general or special, time or demand, provisional or final) at any time held, and other obligations at any time owing, by the Lender or any such Affiliate of the Lender, to or for the credit or the account of any Borrower against any and all of the obligations of any Borrower now or hereafter existing under any Loan Document to the Lender, irrespective of whether or not the Lender shall have made any demand under any Loan Document and although such obligations of the Borrowers may be contingent or unmatured or are owed to an Affiliate of the Lender different from the Affiliate holding such deposit or obligated on such indebtedness. The rights of the Lender and such Affiliates of the Lender under this Section are in addition to other rights and remedies (including other rights of setoff) that the Lender and such Affiliates of the Lender may have. The Lender agrees to notify the Parent Borrower promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application.
Section 8.09. Governing Law; Jurisdiction; Consent to Service of Process. (a) This Agreement and the other Loan Documents shall be construed in accordance with and governed by the law of the State of New York.
50
Section 8.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT 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 AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
Section 8.11. Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.
Section 8.12. Interest Rate Limitation. In no event shall the interest charged with respect to the Loans or any other Obligations of any Loan Party under any Loan Document exceed the maximum amount permitted under the laws of the State of New York or of any other applicable jurisdiction. Notwithstanding anything to the contrary herein or elsewhere, if at any time the rate of interest payable hereunder or under any Note or other Loan Document (the “Stated Rate”) would exceed the highest rate of interest permitted under any applicable law to be charged (the “Maximum Lawful Rate”), then for so long as the Maximum Lawful Rate would be so exceeded, the rate of interest payable shall be equal to the Maximum Lawful Rate; provided, that if at any time thereafter the Stated Rate is less than the Maximum Lawful Rate, each Loan Party shall, to the extent permitted by law, continue to pay interest at the Maximum Lawful Rate until such time as the total interest received is equal to the total interest which would have been received had the Stated Rate been (but for the operation of this provision) the interest rate payable. Thereafter, the interest rate payable shall be the Stated Rate unless and until the Stated Rate again would exceed the Maximum Lawful Rate, in which event this provision shall again apply. In no event shall the total interest received by the Lender exceed the amount which it could lawfully have received had the interest been calculated for the full term hereof at the Maximum Lawful Rate. If, notwithstanding the prior sentence, the Lender has received interest hereunder in excess of the Maximum Lawful Rate, such excess amount shall be applied to the reduction of the principal balance of the Loans or to other amounts (other than interest) payable hereunder, and if no such principal or other amounts are then outstanding, such excess or part thereof remaining shall be paid to Borrower. In computing interest payable with reference to the Maximum Lawful Rate applicable to the Lender, such interest shall be calculated at a daily rate equal to the Maximum Lawful Rate divided by the number of days in the year in which such calculation is made.
Section 8.13. No Fiduciary Duty, etc. Each Borrower acknowledges and agrees, and acknowledges its Subsidiaries’ understanding, that Lender will not have any obligations except those obligations expressly set forth in the Loan Documents and Lender is acting solely in the capacity of an arm’s length contractual counterparty to each Borrower with respect to the Loan Documents and the transactions contemplated herein and therein and not as a financial advisor or a fiduciary to, or an agent of, any Borrower or any other person. Each Borrower agrees that it will not assert any claim against Xxxxxx based on an alleged breach of fiduciary duty by Xxxxxx in connection with this Agreement and the transactions contemplated hereby. Additionally, each
51
Xxxxxxxx acknowledges and agrees that Xxxxxx is not advising any Borrower as to any legal, tax, investment, accounting, regulatory or any other matters in any jurisdiction. Each Borrower shall consult with its own advisors concerning such matters and shall be responsible for making its own independent investigation and appraisal of the transactions contemplated in the Loan Documents, and Lender shall have no responsibility or liability to the Borrowers with respect thereto.
Section 8.14. USA PATRIOT Act. From and after the Spin Out, to the extent the Lender is subject to the requirements of the USA PATRIOT Act of 2001 (the “Patriot Act”), the Lender hereby notifies the Borrowers that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies the Borrowers, which information includes the names and addresses of the Borrowers and other information that will allow the Lender to identify the Borrowers in accordance with the Patriot Act.
52
DocuSign Envelope ID: DC743403-C932-4988-BA01-5D5DE31FB2B2
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective authorized officers as of the day and year first above written.
BORROWERS:
NEXT BRIDGE HYDROCARBONS, INC.
By: Name: Xxxxxx Xxxxxxxxx
Title: President TORCHLIGHT ENERGY, INC.
By: Name: Xxxxxx Xxxxxxxxx
Title: President TORCHLIGHT XXXXX, LLC
By: Name: Xxxxxx Xxxxxxxxx
Title: President XXXXXXXX OIL CORPORATION
By: Name: Xxxxxx Xxxxxxxxx
Title: President XXXXXXXX OPERATING, LLC
By:
Name: Xxxxxx Xxxxxxxxx Title: President
[Signature Page to Loan Agreement]
DocuSign Envelope ID: DC743403-C932-4988-BA01-5D5DE31FB2B2
LENDER:
META MATERIALS, INC.
By: Name: Xxxxxxx Xxxx
Title: Chief Financial Officer and \ Chief Operating Officer
[Signature Page to Loan Agreement]
SCHEDULE A EXISTING LOANS
Date of Loan |
Principal Amount
(in $) |
Borrower |
April 14, 2022 |
90,000 |
Parent Borrower |
May 4, 2022 |
69,000 |
Parent Borrower |
May 12, 2022 |
89,000 |
Parent Borrower |
May 26, 2022 |
82,000 |
Parent Borrower |
June 1, 2022 |
30,000 |
Parent Borrower |
June 13, 2022 |
81,000 |
Parent Borrower |
June 28, 2022 |
1,900,000 |
Parent Borrower |
August 11, 2022 |
1,200,000 |
Parent Borrower |
August 29, 2022 |
1,459,000 |
Parent Borrower |
Total |
5,000,000 |
|
SCHEDULE 2.01A
Commitment
Name of Lender |
Commitment |
Meta Materials, Inc. |
$5,000,000 |
SCHEDULE 3.06
Disclosed Matters
None.
SCHEDULE 6.01
Existing Indebtedness
1. Indebtedness evidenced by and under the Existing Secured Note
SCHEDULE 6.02
Existing Liens
1. Liens securing the Existing Secured Notes under and pursuant to the Existing Security Documents
SCHEDULE 6.09
Existing Restrictions
None.
SCHEDULE 8.01
Addresses
If to a Borrower:
Next Bridge Hydrocarbons, Inc. 0000 Xxxxxxx Xxxxx, Xxxxx 000 Xxxx Xxxxx, XX 00000
United States of America
Tel: (000) 000-0000
Email: xxxxxxx@xxxxxxxxxxxxxxxxxxxxxx.xxx
With a copy to (which shall not constitute notice):
O’Melveny & Xxxxx LLP
0000 X. Xxxxxxx Xxxxxx, Xxxxx 00
Dallas, Texas 75201
Attn: Xxxxx X. Xxxxxxxxxx Email: xxxxxxxxxxx@xxx.xxx
If to the Lender:
Meta Materials, Inc.
00 Xxxxxxx Xxxx, Xxxxx 000
Boxborough, Massachusetts 01719 United States of America
Attn: Chief Financial Officer Tel: 0-000-000-0000
Fax:
Email: xxx.xxxx@xxxxxxxxxxxx.xxx
With a copy to (which shall not constitute notice):
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C. 00 Xxxxx Xxxxxx
Boston, MA 02109 Attn: Xxxxxxxxx Xxx Email: xxxx@xxxx.xxx
