LIMITED WAIVER
Exhibit 10.19
This LIMITED WAIVER (hereinafter referred to as this “Agreement”), dated as of May 8, 2020 (the “Execution Date”), but effective as of the Effective Date (hereinafter defined), is made by and among SUNDANCE ENERGY INC., a Delaware corporation (“Parent”), SUNDANCE ENERGY, INC., a Colorado corporation (the “Borrower”), the other LOAN PARTIES hereto and TORONTO DOMINION (TEXAS) LLC, as administrative agent (in such capacity, the “Administrative Agent”). Unless the context otherwise requires or unless otherwise expressly defined herein, capitalized terms used but not defined in this Agreement have the meanings assigned to such terms in the Credit Agreement (as defined below).
WITNESSETH:
WHEREAS, the Parent, the Borrower, the Administrative Agent and the lenders party thereto (the “Lenders”) are parties to that certain Credit Agreement dated as of April 23, 2018 (as the same may have been amended, restated, amended and restated, supplemented or otherwise modified from time to time prior to the date hereof, the “Credit Agreement”);
WHEREAS, the Borrower has advised the Administrative Agent and the Lenders that (a) Deloitte & Touche LLP may include a going concern or like qualification or exception in its audit opinion with respect to the financial statements of the Parent and its Subsidiaries for the fiscal year ended December 31, 2019 (the “2019 Audited Financial Statements”) required to be delivered pursuant to Section 8.01(a) of the Credit Agreement as a result of the Borrower’s anticipated failure to comply with Section 9.01(b) of the Term Loan Credit Agreement during the 2020 calendar year (the “Going Concern Qualification”) and (b) the Borrower will not deliver (i) the 2019 Audited Financial Statements required by Section 8.01(a) of the Credit Agreement, (ii) the certificate of the Financial Officer of the Parent as required by Section 8.01(c) of the Credit Agreement, (iii) the certificates of insurance as required by Section 8.01(f) of the Credit Agreement (iv) the production report and lease operating statements for each calendar month during the then current fiscal year to date as required by Section 8.01(n) of the Credit Agreement, and (v) the operating budget for the immediately succeeding twelve (12) months as required by Section 8.01(p) of the Credit Agreement (the foregoing, collectively, the “2019 Financial Deliverable Package”) to the Administrative Agent and each Lender, in each case, within 120 days after the end of the fiscal year ended December 31, 2019 (the “2019 Financial Statements Delivery Deadline”);
WHEREAS, the delivery of (a) the 2019 Audited Financial Statements accompanied by an auditor’s report containing the Going Concern Qualification and (b) the 2019 Financial Deliverable Package after the 2019 Financial Statements Delivery Deadline, in each case, would violate Sections 8.01(a), (c), (f), (n) and (p) of the Credit Agreement and would result in a Default or Event of Default under Section 10.01(e) of the Credit Agreement (any such Defaults or Events of Default being, collectively, the “Specified Defaults”);
WHEREAS, the Loan Parties have requested that the Lenders waive the Specified Defaults arising from such breaches of the terms of Sections 8.01(a), (c), (f), (n) and (p) of the Credit Agreement;
WHEREAS, pursuant to Section 12.02(b) of the Credit Agreement, the Borrower, the other Loan Parties and the Majority Lenders may waive, or consent to the Administrative Agent’s waiver of, certain provisions of the Credit Agreement and other Loan Documents pursuant to an agreement in writing; and
WHEREAS, pursuant to Section 12.02(b) of the Credit Agreement, the Borrower, the other Loan Parties and Lenders comprising the Majority Lenders, are willing to waive the Specified Defaults with respect to the delivery of the 2019 Financial Deliverable Package on and subject to the terms and conditions set forth herein.
Limited Waiver – 2019 Audited Financial Statements (Revolving Facility) – Page 1
NOW, THEREFORE, for and in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
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1. |
Limited Waiver. Subject to the terms and conditions set forth herein, effective as of April 29, 2020 (the “Effective Date”), the Administrative Agent, on behalf of the Majority Lenders, hereby waives the Specified Defaults arising solely from (a) the Borrower’s delivery of an audit report of the Parent and its Subsidiaries containing the Going Concern Qualification with respect to the 2019 Audited Financial Statements and (b) the Borrower’s delivery of the 2019 Financial Deliverable Package after the 2019 Financial Statements Delivery Deadline. The limited waiver set forth in this Section 1 (the “Waiver”) is limited to the extent expressly set forth herein and no other terms, covenants or provisions of the Credit Agreement or any other Loan Document shall in any way be affected hereby. The Waiver is granted only with respect to the Specified Defaults relating to the 2019 Financial Deliverable Package, and shall not apply to any financial statements for any other fiscal year or period, any other breach of the terms of the Credit Agreement, or any actual or prospective default or breach of any other provision of the Credit Agreement or any other Loan Document. Other than with respect to the Going Concern Qualification and the 2019 Financial Statements Delivery Deadline, the Waiver does not waive any other requirement with respect to delivery of the 2019 Financial Deliverable Package. The Waiver shall not in any manner create a course of dealing or otherwise impair the future ability of the Administrative Agent or the Lenders to declare a Default or Event of Default under or otherwise enforce the terms of the Credit Agreement or any other Loan Document with respect to any matter other than the Specified Defaults specifically and expressly waived in, and subject to the terms of, the Waiver. |
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Conditions Precedent. This Agreement and the Waiver provided for in Section 1 shall become effective on the date when the following conditions are met: |
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(a) |
the Administrative Agent shall have received a counterpart signature page of this Agreement duly executed by each of the Parent, the Borrower, the other Loan Parties, and the Administrative Agent and a consent to the Administrative Agent’s entry into this Agreement, on behalf of and at the direction of the Lenders, from Lenders constituting the Majority Lenders; |
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(b) |
the Administrative Agent shall have received a fully executed copy of a valid waiver under the Term Credit Agreement and the other Term Loan Documents with respect to any default or event of default resulting from the Borrower delivering (i) the 2019 Audited Financial Statements with the Going Concern Qualification and (ii) the 2019 Financial Deliverable Package after the 2019 Financial Statements Delivery Deadline, in form reasonably satisfactory to the Administrative Agent (the “Term Waiver”); |
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(c) |
the Administrative Agent shall have received such other documents, instruments, opinions, certifications, undertakings, further assurances and other matters as the Administrative Agent may reasonably request; |
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(d) |
Borrower shall have delivered the 2019 Financial Deliverable Package to the Administrative Agent; and |
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(e) |
the Borrower shall have paid all fees and expenses payable to the Administrative Agent and the Lenders (including the fees and expenses of counsel to the Administrative Agent) accrued to date in full to the extent invoiced prior to the date hereof, but without prejudice to the later payment of accrued fees and expenses not so invoiced. |
Limited Waiver – 2019 Audited Financial Statements (Revolving Facility) – Page 2
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Borrowing Requests and Letters of Credit. In consideration of the Waiver, beginning on the Effective Date and ending upon the Business Day next succeeding delivery of the New Borrowing Base Notice with respect to the first Scheduled Redetermination following the Effective Date and notwithstanding any provision to the contrary in the Credit Agreement, Borrower shall not be permitted to request or receive any Borrowing or issuance, amendment, renewal or extension of any Letter of Credit (the “Draw Restrictions”), nor shall the Lenders be obligated to honor any such request. The Draw Restrictions shall not prohibit the Borrower from continuing or converting any Borrowing existing prior to the Effective Date. |
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Agreement to Amend the Credit Agreement. In consideration of the Waiver, each Loan Party hereby agrees to enter into an amendment (or amendments as applicable) to the Credit Agreement, and the other Loan Documents to the extent applicable, with the Administrative Agent and the number of Lenders required by Section 12.02(b) of the Credit Agreement (any such amendment, a “Tag-along Amendment”) that would have the effect of incorporating mutatis mutandis in favor of the Administrative Agent and/or the Lenders any of the provisions requested by the Administrative Agent and such Lenders that are or are to be incorporated in favor of the Term Agent or any Term Lender or any Secured Party (as defined in the Term Credit Agreement) in any amendment to the Term Credit Agreement or any Term Loan Documents between any Loan Party and the Term Agent and/or any Term Lender and/or any Secured Party (as defined in the Term Credit Agreement) (a) within 90 days from the Execution Date and/or (b) to discharge or satisfy the obligations of any Loan Party under the Term Waiver, including Section 3 of the Term Waiver (any such amendment, a “Term Amendment”). Borrower shall provide notice to the Administrative Agent of all substantive provisions to be incorporated in a Term Amendment at least [five] Business Days prior to entering into any such Term Amendment. Failure to enter into a Tag-along Amendment contemporaneously with entering into a Term Amendment or failure to provide the notice required pursuant to this Section 4 shall constitute an immediate Event of Default under the Credit Agreement. This Section 4 and any provision of the Term Waiver, including Section 3 of the Term Waiver, shall in all respects be subject to the Intercreditor Agreement, including Section 5.03 of the Intercreditor Agreement. |
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Ratification; Representations and Warranties. Each Loan Party hereby (a) ratifies and affirms its obligations under, and acknowledges, renews and extends its continued liability under, each Loan Document to which it is a party and agrees that each Loan Document to which it is a party remains in full force and effect, except as expressly amended hereby and (b) represents and warrants to the Lenders that, as of the date hereof, after giving effect to the terms of this Agreement: (i) all of the representations and warranties contained in each Loan Document to which it is a party are true and correct in all material respects (unless already qualified by materiality in which case such applicable representation and warranty shall be true and correct), except to the extent any such representations and warranties are expressly limited to an earlier date, in which case, such representations and warranties shall continue to be true and correct in all material respects (unless already qualified by materiality in which case such applicable representation and warranty shall be true and correct) as of such specified earlier date and (ii) no Default or Event of Default has occurred and is continuing. |
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Counterparts. 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. Delivery of an executed counterpart of a signature page of this Agreement by fax, as an attachment to an email or other similar electronic means shall be effective as delivery of a manually executed counterpart of this Agreement. |
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No Oral Agreement. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS EXECUTED HEREWITH AND THEREWITH REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES HERETO AND THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL |
Limited Waiver – 2019 Audited Financial Statements (Revolving Facility) – Page 3
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. |
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Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. |
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JURISDICTION; SERVICE OF PROCESS; JURY TRIAL WAIVER. BORROWER, PARENT AND THE OTHER LOAN PARTIES AGREE TO THE PROVISIONS OF SECTION 12.09(B) (JURISDICTION); SECTION 12.09(C) (SERVICE OF PROCESS) AND SECTION 12.09(D) (JURY TRIAL WAIVER) OF THE CREDIT AGREEMENT AND SUCH PROVISIONS ARE INCORPORATED HEREIN, MUTATIS MUTANDIS, AS A PART HEREOF. |
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Claims. As additional consideration to the execution, delivery, and performance of this Agreement by the parties hereto and to induce the Administrative Agent and the Lenders to enter into this Agreement, each Loan Party represents and warrants that it does not know of any defenses, counterclaims or rights of setoff to the payment of any Secured Obligations to the Administrative Agent, Issuing Bank or the Lenders. |
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WAIVER AND RELEASE. IN CONSIDERATION OF THE WAIVER HEREIN AND OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH IS HEREBY ACKNOWLEDGED, EACH LOAN PARTY HEREBY WAIVES, REMISES, RELEASES, AND FOREVER DISCHARGES EACH LENDER, ISSUING BANK, AND THE ADMINISTRATIVE AGENT, THEIR RESPECTIVE PREDECESSORS AND ITS SUCCESSORS, ASSIGNS, AFFILIATES, SHAREHOLDERS, DIRECTORS, OFFICERS, ACCOUNTANTS, ATTORNEYS, EMPLOYEES, AGENTS, REPRESENTATIVES, AND SERVANTS (COLLECTIVELY, THE “RELEASED PARTIES”) OF, FROM AND AGAINST ANY AND ALL CLAIMS, ACTIONS, CAUSES OF ACTION, SUITS, PROCEEDINGS, CONTRACTS, JUDGMENTS, DAMAGES, ACCOUNTS, RECKONINGS, EXECUTIONS, AND LIABILITIES WHATSOEVER OF EVERY NAME AND NATURE, WHETHER KNOWN OR UNKNOWN, WHETHER OR NOT WELL FOUNDED IN FACT OR IN LAW, AND WHETHER IN LAW, AT EQUITY, OR OTHERWISE, WHICH THE UNDERSIGNED EVER HAD OR NOW HAS FOR OR BY REASON OF ANY MATTER, CAUSE, OR ANYTHING WHATSOEVER TO THIS DATE RELATING TO OR ARISING OUT OF THE LOANS, OR ANY OF THEM, OR ANY OF THE LOAN DOCUMENTS, INCLUDING WITHOUT LIMITATION ANY ACTUAL OR ALLEGED ACT OR OMISSION OF ANY OF THE RELEASED PARTIES WITH RESPECT TO THE LOANS, OR ANY OF THEM, OR ANY OF THE LOAN DOCUMENTS, INCLUDING WITHOUT LIMITATION ANY ACTUAL OR ALLEGED ACT OR OMISSION OF ANY OF THE RELEASED PARTIES WITH RESPECT TO THE LOANS, OR ANY OF THEM, OR ANY OF THE LOAN DOCUMENTS, OR ANY LIENS OR COLLATERAL IN CONNECTION THEREWITH, OR THE ENFORCEMENT OF ANY OF SUCH LENDER’S OR ISSUING BANK’S OR THE ADMINISTRATIVE AGENT’S RIGHTS OR REMEDIES THEREUNDER. THE TERMS OF THIS WAIVER AND RELEASE SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT, THE LOANS, OR THE LOAN DOCUMENTS AND SHALL REMAIN IN FULL FORCE AND EFFECT AFTER THE TERMINATION THEREOF. |
Limited Waiver – 2019 Audited Financial Statements (Revolving Facility) – Page 4
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Headings. Section headings 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. |
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Fees and Expenses. The Parent and the Borrower hereby agree, jointly and severally, to reimburse the Administrative Agent and the Lenders for all reasonable and documented out-of-pocket costs and expenses incurred in connection with the development, preparation and execution of this Agreement, including the reasonable and documented fees, disbursements and other charges of one primary counsel to the Administrative Agent, in accordance with and to the extent required by Section 12.03 of the Credit Agreement. The Parent, the Borrower and each Loan Party further agree that any reasonable and documented out-of-pocket fees, costs and expenses paid by the Administrative Agent or any Lender to any restructuring advisor hired in connection with any workout, restructuring or similar negotiations in respect of the Credit Agreement and the Loans made thereunder shall be reimbursed in accordance with and subject to the obligations of the Parent and the Borrower set forth in Section 12.03 of the Credit Agreement. |
[Signature Pages Follow]
Limited Waiver – 2019 Audited Financial Statements (Revolving Facility) – Page 5
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the date first above written.
PARENT:
a Delaware corporation
By: /s/ Xxxx XxXxxxx
Name: Xxxx XxXxxxx
Title: CEO
BORROWER:
Sundance Energy, Inc.,
a Colorado corporation
By: /s/ Xxxx XxXxxxx
Name: Xxxx XxXxxxx
Title: CEO
OTHER LOAN PARTIES:
Sea Eagle Ford, LLC
By: /s/ Xxxx XxXxxxx
Name: Xxxx XxXxxxx
Title: CEO
Armadillo E&P, Inc.
By: /s/ Xxxx XxXxxxx
Name: Xxxx XxXxxxx
Title: CEO
Limited Waiver – 2019 Audited Financial Statements (Revolving Facility) – Signature Page
TORONTO DOMINION (TEXAS) LLC,
as Administrative Agent
By: /s/ Xxxxxxx Xxxxxx
Name: Xxxxxxx Xxxxxx
Title: Authorized Signatory
Limited Waiver – 2019 Audited Financial Statements (Revolving Facility) – Signature Page
