UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
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(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻
Item 1.01 | Entry into a Material Definitive Agreement. |
On September 6, 2023, Battalion Oil Corporation (the “Company”) entered into a purchase agreement (the “Purchase Agreement”) with each of the purchasers set forth on Schedule A thereto (the “Buyers”), pursuant to which the Company agreed to sell to the Buyers, in a private placement, an aggregate of 38,000 shares (the “Series A-1 Preferred Shares”) of Series A-1 Redeemable Convertible Preferred Stock, par value $0.0001 per share (the “Series A-1 Preferred Stock”). A description of the material terms of the transaction is set forth below and is qualified in its entirety by reference to the documents attached hereto as Exhibit 3.1, Exhibit 10.1 and Exhibit 10.2, which are incorporated herein by reference.
The Buyers of the Series A-1 Preferred Shares included certain funds managed by Luminus Management, LLC, Oaktree Capital Management, LP, and LSP Investment Advisors, LLC, our largest three (3) existing shareholders whose appointed representatives make up fifty percent (50%) of our board of directors. The issuance of Series A-1 Preferred Shares was approved by our board of directors upon recommendation by a special committee of disinterested directors that was established to evaluate the proposed terms of the transaction. The aggregate purchase price paid by the Buyers for the Series A-1 Preferred Shares was approximately $37,050,000, with related expenses and fees to be paid out of the proceeds. The Company intends to use the proceeds for general corporate and working capital purposes including scheduled debt principal and interest payments.
Purchase Agreement
The Purchase Agreement entered into by the Company and the Buyers contains representations, warranties, and covenants of the Company and each of the Buyers, as well as indemnification rights and other obligations of the parties. The closing of the transaction, including the issuance of the Series A-1 Preferred Shares, occurred on September 6, 2023 (the “Closing Date”), and was conditioned on customary closing conditions, including the accuracy of the representations and warranties in the Purchase Agreement, the compliance by the parties with the covenants in the Purchase Agreement, and no material adverse effect occurred with respect to the Company.
Description of Series A-1 Preferred Stock
The powers, preferences, rights, qualifications, limitations and restrictions applicable to the Series A-1 Preferred Stock issued in the transaction are set forth in the Series A-1 Certificate of Designations of the Company (the “Certificate of Designations”), which form is attached as Exhibit 3.1 to this Current Report on Form 8-K. The Certificate of Designations is filed with the Delaware Secretary of State.
The holders of shares of the Series A-1 Preferred Stock generally have no voting rights, except as required by the General Corporation Law of the State of Delaware (the “DGCL”), other applicable law, the Certificate of Incorporation (as amended from time to time in accordance with its terms and the DGCL, the “Certificate of Incorporation”), or as otherwise described in the Certificate of Designations, and except that the consent of the holders of at least two-thirds of the outstanding Series A-1 Preferred Stock is required to: (i) authorize, create, or increase the authorized amount of, or issue any class or series of class or series that ranks senior to the Series A-1 Preferred Stock with respect to dividend rights or rights upon a liquidation, winding-up or dissolution of the Company (collectively, together with any warrants, rights, calls or options exercisable for or convertible into such capital stock, the “Senior Stock”), or reclassify or amend the provisions of any existing class of securities of the Company into shares of Senior Stock; (ii) authorize, create or issue any stock or debt instrument or other obligation that is convertible or exchangeable into shares of its Senior Stock (or that is accompanied by options or warrants to purchase such Senior Stock); (iii) amend, alter or repeal any provision of the Certificate of Incorporation or the Certificate of Designations, in either case, in a manner that materially adversely affects the special rights, preferences, privileges or voting powers of the Series A-1 Preferred Stock; (iv) declare or pay any dividends or other distributions in cash or property with respect to its common stock, par value $0.0001 per share, of the Company (the “Common Stock”) or other class or series of capital stock of the Company, the terms of which do not expressly provide that such class or series ranks senior to or on a parity with the Series A-1 Preferred Stock with respect to dividend rights or rights upon a liquidation, winding-up or dissolution of the Company (collectively, together with any warrants, rights, calls or options exercisable for or convertible into such capital stock, the “Junior Stock”); (v) redeem, repurchase or acquire shares of its Common Stock or other Junior Stock (other than with respect to customary repurchase rights or tax withholding arrangements with respect to equity awards or benefit plans); or (vi) redeem, repurchase, recapitalize or acquire shares of its stock on a parity with any class or series of capital stock of the Company, the terms of which provide that such class or
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series ranks on a parity with the Series A-1 Preferred Stock with respect to dividend rights or rights upon a liquidation, winding-up or dissolution of the Company (such capital stock, including the Series A Redeemable Convertible Preferred Stock of the Company, par value $0.0001 per share, together with any warrants, rights, calls or options exercisable for or convertible into such capital stock, the “Parity Stock”) other than (A) pro rata offers to purchase all, or a pro rata portion, of the Series A-1 Preferred Stock and such Parity Stock (B) as a result of a reclassification of Parity Stock for or into other Parity Stock or Junior Stock, (C) the exchange or conversion of Parity Stock for or into other Parity Stock or Junior Stock or (D) the purchase of fractional interests in shares of Parity Stock pursuant to the conversion or exchange provisions of such Parity Stock or the security being converted or exchanged.
Holders of Series A-1 Preferred Stock are entitled to receive dividends at the rate per share of Series A-1 Preferred Stock equal to the Series A-1 Dividend Rate (the “Series A-1 Dividend”). The “Series A-1 Dividend Rate” means fourteen and one-half percent (14.50%) per annum on the then-applicable liquidation preference. If a Series A-1 Dividend is not declared and paid in cash on a Dividend Payment Date, then in full discharge of such Series A-1 Dividend for such Dividend Period, the Liquidation Preference of each outstanding share of Series A-1 Preferred Stock, regardless of its date of issue, automatically increases on such Dividend Payment Date by an amount equal to sixteen percent (16.00%) per annum multiplied by the Liquidation Preference in effect immediately after the immediately prior Dividend Payment Date (or the Issuance Date in respect of the first Dividend Period) (such automatic increase, the “Unpaid Dividend Accrual”), which, for the avoidance of doubt, will be pro-rated for the period of time elapsed during such Dividend Period. The period from the Closing Date to and including September 30, 2023, and each period from but excluding a Dividend Payment Date to and including the following Dividend Payment Date is herein referred to as a “Dividend Period.” “Dividend Payment Date” means March 31, June 30, September 30 and December 31 of each year, commencing on September 30, 2023, and the “Liquidation Preference” equals one thousand dollars ($1,000) per share of Series A-1 Preferred Stock, which amount shall be adjusted as the result of any Unpaid Dividend Accrual (or payment thereof), and as otherwise set forth in the Certificate of Designations.
Each Buyer has the option from time to time to convert all or a portion of such Buyer’s shares of Series A-1 Preferred Stock into Common Stock at the Conversion Ratio. The “Conversion Ratio” means, for each share of Series A-1 Preferred Stock, the quotient of (i) the liquidation preference as of the date of the conversion and (ii) the then applicable Conversion Price. The “Conversion Price” is initially $7.63, which may be adjusted from time to time as set forth in the Certificate of Designations.
Second Amendment to Registration Rights Agreement
In connection with the Purchase Agreement, the Company also entered into the Second Amendment to Registration Rights Agreement, dated September 6, 2023, by and between the Company and the parties identified thereto (the “Amendment No. 2”) to the Registration Rights Agreement, dated as of October 8, 2019, as amended (the “Registration Rights Agreement”). Under Amendment No. 2, the Company granted the parties certain registration rights with respect to Common Stock issuable upon conversion of the Series A-1 Preferred Stock.
The foregoing summaries of the material terms of the Purchase Agreement, the Certificate of Designations, and the Registration Rights Agreement are not complete and are qualified in their entirety by reference to the full text thereof, copies of which are filed herewith as Exhibit 3.1, Exhibit 10.1 and Exhibit 10.2, respectively, and incorporated by reference herein.
Item 3.02 | Unregistered Sale of Equity Securities. |
The information regarding the private placement of the Series A-1 Preferred Shares, issued to the Buyers pursuant to the Purchase Agreement, set forth in Item 1.01 and Item 5.03 of this Current Report on Form 8-K, is incorporated by reference into this Item 3.02.
The private placement of the Series A-1 Preferred Stock pursuant to the Purchase Agreement was undertaken in reliance upon an exemption from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereof.
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Item 3.03 | Material Modification to Rights of Security Holders. |
The information set forth under Item 5.03 is incorporated by reference into this Item 3.03.
Item 5.03 | Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. |
A summary of the rights, preferences and privileges of the Series A-1 Preferred Stock and other material terms and conditions of the Certificate of Designations is set forth in Item 1.01 of this Current Report on Form 8-K and is incorporated by reference into this Item 5.03.
The foregoing description of the Certificate of Designations does not purport to be complete and is qualified in its entirety by reference to the complete text of the Certificate of Designations, which is filed as Exhibit 3.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 9.01 | Financial Statements and Exhibits. |
(d)Exhibits.
Exhibit No. |
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3.1 | ||
10.1 | ||
10.2 | ||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| BATTALION OIL CORPORATION | |
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September 7, 2023 | By: | /s/ Matthew B. Steele |
| Name: | Matthew B. Steele |
| Title: | Chief Executive Officer |
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Exhibit 3.1
____________________
CERTIFICATE OF DESIGNATIONS
Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
____________________
SERIES A-1 REDEEMABLE CONVERTIBLE PREFERRED STOCK
(Par Value $0.0001 Per Share)
Battalion Oil Corporation (the “Corporation”), a corporation organized and existing under and by virtue of the provisions of the General Corporation Law of the State of Delaware (the “General Corporation Law”), hereby certifies that, pursuant to the authority expressly granted to and vested in the Board of Directors of the Corporation (the “Board of Directors”) by the Amended and Restated Certificate of Incorporation of the Corporation (as amended from time to time in accordance with its terms and the General Corporation Law, the “Certificate of Incorporation”), which authorizes the Board of Directors to issue shares of the preferred stock of the Corporation (the “Preferred Stock”), in one or more series of Preferred Stock and to fix for each such series such voting powers, full or limited, and such designations, preferences and relative, participating, optional, or other special rights and such qualifications, limitations or restrictions thereof, and in accordance with the provisions of Section 151 of the General Corporation Law, the Board of Directors duly adopted on September 5, 2023 the following resolution:
RESOLVED, that the rights, powers and preferences, and the qualifications, limitations and restrictions, of the Series A-1 Preferred Stock as set forth in this Certificate of Designations are hereby approved and adopted by the Board of Directors and Series A-1 Preferred Stock is hereby authorized out of the Corporation’s authorized preferred stock, par value $0.0001 per share; and the form, terms and provisions of this Certificate of Designations are hereby approved, adopted, ratified and confirmed in all respects as follows:
1. | General. |
Term | Section |
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30 Day Date | Section 8(c) |
Board of Directors | Preamble |
Business Day | Section 4(b) |
Capital Stock | Section 1(d) |
Certificate of Incorporation | Preamble |
Change of Control | Section 8(b)(iv) |
CoC Conversion Consideration | Section 8(b)(ii) |
Common Stock | Section 1(d)(i) |
Conversion Notice | Section 7(a) |
Conversion Price | Section 7(a) |
Conversion Ratio | Section 7(a) |
Corporation | Preamble |
Corporation Event | Section 7(f) |
Debt | Section 7(b)(ii) |
Dividend Payment Date | Section 2(a) |
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Term | Section |
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Dividend Period | Section 2(a) |
General Corporation Law | Preamble |
Holder | Section 3(a) |
Issuance Date | Section 2(a) |
Issuer Conversion Notice | Section 7(b) |
Junior Stock | Section 1(d)(i) |
Liquidation | Section 3(a) |
Liquidation Distribution | Section 3(a) |
Liquidation Preference | Section 3(a) |
Mandatory CoC Redemption Offer | Section 8(b)(ii) |
Mandatory Conversion Conditions | Section 7(b) |
Material Adverse Effect | Section 7(b) |
Maturity Date | Section 8(b)(vii) |
NYMEX Prices | Section 7(b)(v) |
NYSE American Issuance Limitation | Section 9(a) |
Optional CoC Conversion | Section 8(b)(iii) |
Optional CoC Redemption Offer | Section 8(b)(iii) |
Optional Holder Conversion | Section 7(a) |
Parity Stock | Section 1(d)(ii) |
PDP PV-20 | Section 7(b)(i) |
Permitted Holder | Section 8(b)(iv) |
Person | Section 8(b)(ix) |
Preferred Stock | Preamble |
Proved Developed Producing Reserves | Section 7(b)(iv) |
Purchase Agreement | Section 5(b) |
Redemption Notice | Section 8(a) |
Redemption Price | Section 8(a) |
Schedule 14C Action | Section 9(c) |
SEC | Section 9(c) |
Senior Stock | Section 1(d)(iii) |
Series A-1 Dividend | Section 2(a) |
Series A-1 Dividend Rate | Section 2(a) |
Series A-1 Preferred Stock | Section 1(a) |
Stockholder Approval | Section 9(b) |
Subject Transaction | Section 9(d) |
Term Loan Credit Agreement | Section 8(b)(vi) |
Term Loan Restricted Period | Section 8(b)(v) |
Unpaid Dividend Accrual | Section 2(d) |
Working Capital Adjustments | Section 7(b)(iii) |
2. | Dividends. |
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3. | Liquidation. |
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4. | Voting. |
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If the Corporation shall propose to take any action enumerated above in clauses (i) through (vi) of this Section 4(b) then, and in each such case, the Corporation shall give notice of such proposed action to each Holder of record appearing on the stock books of the Corporation as of the date of such notice at the address of said Holder shown therein. Such notice shall specify, inter alia (x) the proposed effective date of such action; (y) the date on which a record is to be taken for the purposes of such action, if applicable; and (z) the other material terms of such action. Such notice shall be given at least two Business Days prior to the applicable date or effective date specified above. For the purposes of this Certificate of Designations, “Business Day” shall mean each day that is not a Saturday, Sunday or other day on which banking institutions in Houston, Texas or New York, New York are authorized or required by law to close. If at any time the Corporation shall cancel any of the proposed actions for which notice has been given under this Section 4(b) prior to the consummation thereof, the Corporation shall give prompt notice of such cancellation to each holder of record of the shares of Series A-1 Preferred Stock appearing on the stock books of the Corporation as of the date of such notice at the address of said Holder shown therein. For the avoidance of doubt, if a holder of record of shares of Series A-1 Preferred Stock does not respond to the aforementioned notice, such non-response shall in no way be deemed to constitute the written consent or affirmative vote of such Holder regarding any of the aforementioned actions in this Section 4(b) or described within such notice.
5. | Reservation of Common Stock. |
6. | Uncertificated Shares |
The shares of Series A-1 Preferred Stock shall be in uncertificated, book-entry form as permitted by the Seventh Amended and Restated Bylaws of the Corporation (the “Bylaws”) and the General Corporation Law. Within a reasonable time after the issuance or transfer of uncertificated shares, the Corporation shall send to the registered owner thereof any written notice as required by the General Corporation Law.
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7. | Conversion. |
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8. | Redemption |
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9. | NYSE American Issuance Limitation. |
10. | Additional Procedures. |
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11. | No Other Rights. |
The shares of Series A-1 Preferred Stock shall not have any powers, designations, preferences or relative, participating, optional, or other special rights, nor shall there be any qualifications, limitations or restrictions or any powers, designations, preferences or rights of such shares, other than as set forth herein or in the Certificate of Incorporation, or as may be provided by law.
12. | Other Provisions. |
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT
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RELATING THERETO IS IN EFFECT UNDER THE SECURITIES ACT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFERS SET FORTH IN THE CERTIFICATE OF DESIGNATIONS FILED WITH THE SECRETARY OF STATE FOR THE STATE OF DELAWARE PURSUANT TO SECTION 202 OF THE DELAWARE GENERAL CORPORATION LAW (THE “CERTIFICATE OF DESIGNATIONS”). NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF THE CERTIFICATE OF DESIGNATIONS. A COPY OF THE CERTIFICATE OF DESIGNATIONS WILL BE FURNISHED WITHOUT CHARGE BY THE CORPORATION TO THE HOLDER UPON REQUEST.
13. | Effective Date. |
This Certificate of Designations shall become effective on September 6, 2023.
[The Remainder of this Page Intentionally Left Blank]
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IN WITNESS WHEREOF, Battalion Oil Corporation has caused this Certificate of Designations to be duly executed this 6th day of September, 2023.
| BATTALION OIL CORPORATION | |
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By: | /s/ Matthew B. Steele | |
| Name: | Matthew B. Steele |
| Title: | Chief Executive Officer |
[Signature Page to Certificate of Designations]
Annex A-1
Conversion Notice
The undersigned holder of Series A-1 Preferred Stock hereby irrevocably elects to convert the number of shares of Series A-1 Preferred Stock indicated below pursuant to Section 7(a) of the Certificate of Designations into shares of Common Stock at the Conversion Ratio. Capitalized terms utilized but not defined herein shall have the meaning ascribed to such terms in that certain Certificate of Designations of Series A-1 Redeemable Convertible Preferred Stock, filed by Battalion Oil Corporation on September 6, 2023 (the “Certificate of Designations”).
Conversion Calculations:
Number of shares of Series A-1 Preferred Stock owned prior to conversion: [_____]
Number of shares of Series A-1 Preferred Stock to be converted: [_____]
Number of shares of Common Stock to be issued: [_____]
[HOLDER]
Annex A-2
Issuer Conversion Notice
Battalion Oil Corporation, a Delaware corporation, hereby irrevocably elects to convert the number of shares of Series A-1 Preferred Stock held by you indicated below into shares of Common Stock at the Conversion Ratio on the date set forth below pursuant to Section 7(b) of the Certificate of Designations. Capitalized terms utilized but not defined herein shall have the meaning ascribed to such terms in that certain Certificate of Designations of Series A-1 Redeemable Convertible Preferred Stock, filed by Battalion Oil Corporation on September 6, 2023 (the “Certificate of Designations”).
Holder: [_____]
Conversion Calculations:
Number of Shares of Series A-1 Preferred Stock owned by you prior to conversion: [_____]
Number of Shares of Series A-1 Preferred Stock owned by you to be converted: [_____]
Number of shares of Common Stock to be issued: [_____]
BATTALION OIL CORPORATION
Annex B
Redemption Notice
Battalion Oil Corporation, a Delaware corporation, hereby irrevocably elects to redeem the number of shares of Series A-1 Preferred Stock held by you indicated below on the date set forth below. Capitalized terms utilized but not defined herein shall have the meaning ascribed to such terms in that certain Certificate of Designations of Series A-1 Redeemable Convertible Preferred Stock, filed by Battalion Oil Corporation on September 6, 2023.
Holder: [_____]
Date of redemption: [_____]
Redemption Calculations:
Number of Shares of Series A-1 Preferred Stock owned by you prior to redemption: [_____]
Number of Shares of Series A-1 Preferred Stock owned by you to be redeemed: [_____]
Redemption Price: [___]
Elect a Single Form of Payment of Redemption Price:
___ Cash (Cash payment to be made to you: [_____])
BATTALION OIL CORPORATION
Exhibit 10.1
EXECUTION VERSION
TABLE OF CONTENTS
Page
Schedule A – Schedule of Purchasers
Exhibit A – Form of Certificate of Designations for the Series A-1 Preferred Stock
Exhibit B – Form of Second Amendment to Registration Rights Agreement
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PURCHASE AGREEMENT
This PURCHASE AGREEMENT, dated as of September 6, 2023 (this “Agreement”), is entered into by and among Battalion Oil Corporation, a Delaware corporation (“BATL”), and each of the purchasers set forth on Schedule A hereto (the “Purchasers”).
RECITALS:
WHEREAS, BATL desires to sell the Purchased Securities (as defined below) and the Purchasers desire to purchase from BATL the Purchased Securities, in accordance with the provisions of this Agreement; and
WHEREAS, BATL has agreed to provide the Purchasers with certain registration rights with respect to the shares of Common Stock, par value $0.0001 per share, of BATL (the “Common Stock”) underlying the Purchased Securities acquired pursuant hereto.
NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, BATL and each of the Purchasers, severally and not jointly, hereby agree as follows:
“Affiliate” means, with respect to a specified Person, any other Person, directly or indirectly controlling, controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control” (including, with correlative meanings, “controlling,” “controlled by” and “under common control with”) means the power to direct or cause the direction of the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; provided however, that BATL and the Purchasers shall not be considered Affiliates for purposes of this Agreement.
“Agreement” has the meaning set forth in the introductory paragraph of this Agreement.
“Allocated Purchase Price” means with respect to each Purchaser, the dollar amount set forth opposite such Purchaser’s name under the heading “Allocated Purchase Price” on Schedule A hereto.
“Basic Documents” means, collectively, this Agreement, the Certificate of Designations and the Second Amendment to Registration Rights Agreement.
“BATL” has the meaning set forth in the introductory paragraph of this Agreement.
“BATL Bylaws” shall have the meaning specified in Section 2.05(d).
“BATL Charter” shall have the meaning specified in Section 2.04(b)(iii).
“BATL Financial Statements” shall have the meaning specified in Section 3.03(a).
“BATL Related Parties” shall have the meaning specified in Section 6.02.
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“BATL SEC Documents” shall have the meaning specified in Section 3.03(a).
“Board” means the board of directors of BATL.
“Business Day” means any day other than a Saturday, Sunday, any federal legal holiday or day on which banking institutions in the State of New York or State of Texas are authorized or required by Law or other governmental action to close.
“Certificate of Designations” shall have the meaning specified in Section 2.04(b)(iii).
“Change of Control” shall have the meaning specified in the Certificate of Designations.
“Closing” shall have the meaning specified in Section 2.03(a).
“Closing Date” shall have the meaning specified in Section 2.03(b).
“Code” means the Internal Revenue Code of 1986, as amended.
“Common Stock” shall have the meaning set forth in the recitals.
“Conversion Shares” means the Common Stock issuable upon conversion of the Series A-1 Preferred Stock.
“Delaware Corporations Act” means the General Corporation Law of the State of Delaware.
“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations of the SEC promulgated thereunder.
“GAAP” means generally accepted accounting principles in the United States of America.
“Governmental Authority” means, with respect to a particular Person, any country, state, county, city and political subdivision in which such Person or such Person’s Property is located or which exercises valid jurisdiction over any such Person or such Person’s Property, and any court, agency, department, commission, board, bureau or instrumentality of any of them and any monetary authority which exercises valid jurisdiction over any such Person or such Person’s Property. Unless otherwise specified, all references to Governmental Authority herein with respect to BATL means a Governmental Authority having jurisdiction over BATL, its Subsidiaries or any of their respective Properties.
“Indemnified Party” shall have the meaning specified in Section 6.03.
“Indemnifying Party” shall have the meaning specified in Section 6.03.
“Law” means any federal, state, local or foreign order, writ, injunction, judgment, settlement, award, decree, statute, law (including common law), rule or regulation.
“Lien” means any mortgage, claim, encumbrance, pledge, lien (statutory or otherwise), security agreement, conditional sale or trust receipt or a lease, consignment or bailment, preference or priority, assessment, deed of trust, charge, easement, servitude or other encumbrance upon or with respect to any property of any kind.
“Material Adverse Effect” means any event, change, circumstance or development that has a material adverse effect on the assets, business, results of operations or financial condition of BATL and its
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Subsidiaries, taken as a whole; provided, however, that in no event would any of the following (or the effect of any of the following), alone or in combination, be deemed to constitute, or be taken into account in determining whether there has been or will be, a “Material Adverse Effect”, unless solely with respect to subclauses (iii) and (iv) below, such event has a disproportionate and adverse effect on BATL or its business compared to similarly situated participants operating in the upstream oil and gas industry in the geographies in which they operate (in which case, such adverse effects shall be taken into account in determining whether a “Material Adverse Effect” has occurred solely to the extent they are disproportionate): (i) any change or development (including any downturn) in interest rates or general economic, political (including relating to any federal, state or local election), business, financial, commodity, currency or market conditions generally, including changes in the credit, debt, securities, financial, capital or reinsurance markets (including changes in interest or exchange rates, prices of any security or market index or commodity or any disruption of such markets); (ii) any change generally affecting any of the industries or markets in which BATL or its Subsidiaries operate or the economy as a whole; (iii) any earthquake, hurricane, tsunami, tornado, flood, mudslide, wild fire or other natural or man-made disaster, pandemic, epidemic or disease outbreak (including COVID-19), act of God or other force majeure event; (iv) any regional, state, local, national or international political or social conditions (or changes thereof) in countries in which BATL operates, including civil or social unrest, terrorism, acts of war, or sabotage or the engagement by the United States or such other countries in hostilities or the escalation thereof, whether or not pursuant to the declaration of a national emergency or war, or the occurrence or the escalation of any military or terrorist attack (including any internet or “cyber” attack or hacking) upon the United States or such other country, or any territories, possessions, or diplomatic or consular offices of the United States or such other countries or upon any United States or such other country military installation, equipment or personnel; and (v) any failure of BATL and its Subsidiaries, taken as a whole, to meet any projections, forecasts, guidance, estimates, milestones, budgets or financial or operating predictions of revenue earnings, cash flow or cash position (it being understood that the facts giving rise to such failure may be taken into account in determining whether there has been a Material Adverse Effect).
“Non-Recourse Party” shall have the meaning specified in Section 7.15.
“NYSE” means the NYSE American.
“Person” means any individual, corporation, company, voluntary association, partnership, joint venture, trust, limited liability company, unincorporated organization, government or any agency, instrumentality or political subdivision thereof or any other form of entity.
“Property” means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.
“Purchased Securities” means, with respect to each Purchaser, the number of shares of Series A-1 Preferred Stock as set forth opposite such Purchaser’s name on Schedule A hereto.
“Purchaser Related Parties” shall have the meaning specified in Section 6.01.
“Purchasers” has the meaning set forth in the introductory paragraph of this Agreement.
“Redemption Price” shall have the meaning specified in the Certificate of Designations.
“Registration Rights Agreement” means that certain Registration Rights Agreement, dated as of October 8, 2019, by and among BATL and the investors party thereto, as amended from time to time.
“Representatives” means, with respect to a specified Person, the officers, directors, managers, employees, agents, counsel, accountants, investment bankers and other representatives of such Person.
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“Schedule 14C Action” means, collectively, (i) the filing of an Information Statement on Schedule 14C relating to the transaction contemplated hereby with the SEC and the receipt from the SEC of notice that it has no comments thereon, (ii) the mailing of such Information Statement to BATL’s stockholders and (iii) the expiration of the twenty (20) calendar day waiting period under Rule 14c-2(b).
“SEC” means the United States Securities and Exchange Commission.
“Second Amendment to Registration Rights Agreement” means the Second Amendment to Registration Rights Agreement, to be entered into on the date hereof, between BATL and the Purchasers in substantially the form attached hereto as Exhibit B.
“Securities Act” means the Securities Act of 1933, as amended from time to time, and the rules and regulations of the SEC promulgated thereunder.
“Series A Preferred Stock” means the Series A Redeemable Convertible Preferred Stock of BATL, having the terms set forth in the Certificate of Designations of the Series A Redeemable Convertible Preferred Stock of BATL filed with the Secretary of State of the State of Delaware on March 24, 2023, as amended from time to time.
“Series A-1 Preferred Stock” means the Series A-1 Redeemable Convertible Preferred Stock having the terms set forth in the Certificate of Designations.
“Stockholder Consent” means an executed consent delivered by holders of a majority of the shares of Common Stock in lieu of a stockholder meeting and in compliance with the Delaware Corporations Act, for the purpose of providing all necessary approvals under the Delaware Corporations Act and the applicable rules and listing standards of the stock exchange upon which the Common Stock is then listed, if any, to consummate the issuance of more than twenty percent (20%) of the outstanding shares of Common Stock in connection with any conversion of the Series A-1 Preferred Stock.
“Subsidiary” means, as to any Person, any corporation or other entity of which: (i) such Person or a Subsidiary of such Person is a general partner or manager; (ii) at least a majority of the outstanding equity interest having by the terms thereof ordinary voting power to elect a majority of the board of directors or similar governing body of such corporation or other entity (irrespective of whether or not at the time any equity interest of any other class or classes of such corporation or other entity shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by such Person or one or more of its Subsidiaries; or (iii) any corporation or other entity as to which such Person consolidates for accounting purposes.
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(a)Each of the Purchasers shall pay to BATL (or a designated Subsidiary of BATL) its Allocated Purchase Price as of the Closing Date, such payments to be made by wire transfers of immediately available funds on the Closing Date to an account designated by BATL at least two (2) Business Days (or such shorter period of time as shall be agreeable by all parties hereto) prior to the Closing Date and deliver or cause to be delivered the Second Amendment to Registration Rights Agreement in substantially the form attached hereto as Exhibit B, which shall have been duly executed by the Required Holders (as defined in the Registration Rights Agreement).
(b)Each Purchaser (except Luminus Energy Partners Master Fund, LTD) shall deliver or cause to be delivered to BATL a properly executed IRS Form W-9 (or any applicable successor form).
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Except as set forth in any BATL SEC Documents filed or furnished by BATL (excluding any disclosures in such BATL SEC Documents under the headings “Risk Factors,” “Forward-Looking Statements” or “Qualitative Disclosures About Market Risk” and other disclosures that are predictive, cautionary or forward looking in nature and any exhibits or other documents appended thereto), BATL represents and warrants to each Purchaser as follows:
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Each Purchaser, severally and not jointly, hereby represents and warrants to BATL as follows:
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At such address indicated on Schedule A attached hereto.
Battalion Oil Corporation
3505 West Sam Houston Parkway North, Suite 300
Houston, Texas 77043
Attention: Walter R. Mayer
E-mail: wmayer@battalionoil.com
with a copy (which shall not constitute notice) to:
Weil, Gotshal & Manges LLP
201 Redwood Shores Parkway, Suite 400
Redwood City, CA 94065
Attn: Kyle C. Krpata / Nicholas Doloresco
Email: kyle.krpata@weil.com / nicholas.doloresco@weil.com
or to such other address as BATL or such Purchaser may designate in writing. All notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; upon actual receipt if sent by certified or registered mail, return receipt requested, or regular mail, if mailed; upon actual receipt if sent by overnight courier copy; when receipt is acknowledged, if sent via e-mail; and upon actual receipt when delivered to an air courier guaranteeing overnight delivery.
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[Remainder of Page Left Intentionally Blank]
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IN WITNESS WHEREOF, the parties hereto execute this Agreement, effective as of the date first above written.
| BATTALION OIL CORPORATION | |
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By: | /s/ Matthew B. Steele | |
| Name: | Matthew B. Steele |
| Title: | Chief Executive Officer |
LUMINUS ENERGY PARTNERS MASTER FUND, LTD. | ||
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By: | /s/ Jonathan Barrett | |
| Name: | Jonathan Barrett |
| Title: | President |
| OCM HLCN Holdings, L.P. By: Oaktree Fund GP, LLC, its General Partner By: Oaktree Fund GP I, L.P., its Managing Member | |
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By: | /s/ Allen Li | |
| Name: | Allen Li |
| Title: | Authorized Signatory |
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By: | /s/ Jordan Mikes | |
| Name: | Jordan Mikes |
| Title: | Authorized Signatory |
| GEN IV INVESTMENT OPPORTUNITIES, LLC | |
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By: | /s/ Jeff Wade | |
| Name: | Jeff Wade |
| Title: | Chief Compliance Officer |
Purchaser | Series A-1 | Allocated |
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LUMINUS ENERGY PARTNERS MASTER FUND, LTD c/o Luminus Management, LLC 1811 Bering Drive Suite 400 Houston, TX 77057 Attention: Jonathan Barrett; Carlos Treistman; Philip Cibulsky E-mail: jbarrett@luminusmgmt.com; ctreistman@luminusmgmt.com; pcibulsky@luminusmgmt.com | 20,269 | $19,762,275.00 |
OCM HLCN HOLDINGS, L.P. c/o Oaktree Capital Management, LLC | 9,921 | $9,672,975.00 |
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Vinson & Elkins L.L.P. Houston, Texas 77002 | | |
GEN IV INVESTMENT OPPORTUNITIES, LLC 1700 Broadway, 35th floor New York, NY 10019 Attention: David Chang E-mail: dchang@LSpower.com | 7,810 | $7,614,750.00 |
Total | ___________ 38,000 | ______________ $37,050,000 |
Schedule A
Exhibit 10.2
EXECUTION VERSION
SECOND AMENDMENT TO REGISTRATION RIGHTS AGREEMENT
This SECOND Amendment to registration rights agreement (this “Amendment”) is made as of September 6, 2023, between Battalion Oil Corporation (formerly known as Halcón Resources Corporation), a Delaware corporation (the “Company”), and each of the parties identified on the signatures pages hereto.
RECITALS
WHEREAS, the Company and the Investors previously entered into that certain Registration Rights Agreement, dated as of October 8, 2019, as amended by that certain First Amendment to the Registration Rights Agreement, dated as of March 28, 2023, by and between the parties hereto (as may be further amended from time to time, the “Agreement”);
WHEREAS, the Parties to the Agreement desire to further amend the Agreement as set forth in this Amendment;
WHEREAS, pursuant to Section 10 of the Agreement, any provision of the Agreement may be amended only by a written instrument signed by the Company and the Required Holders;
WHEREAS, the parties identified on the signature pages hereto represent the Required Holders; and
WHEREAS, capitalized terms used in this Amendment and not otherwise defined herein shall have the meanings given to such terms in the Agreement.
AGREEMENT
NOW, THEREFORE, the parties hereby agree as follows:
1. | The definition of “Registrable Securities” in Section 1 of the Agreement is hereby amended and restated in its entirety to read as follows: |
“Registrable Securities” means (i) any shares of Common Stock, whether now owned or hereafter acquired by the Investors (including shares of Common Stock issued pursuant to the Plan), (ii) the shares of Common Stock issued or issuable upon conversion or redemption of the Series A Preferred Stock now owned or hereafter acquired by the Investors in accordance with the terms of the Certificate of Designations, (iii) the shares of Common Stock issued or issuable upon conversion or redemption of the Series A-1 Preferred Stock now owned or hereafter acquired by the Investors in accordance with the terms of the Series A-1 Certificate of Designations, and (iv) any shares of capital stock of the Company issued or issuable with respect to the Common Stock described in clause (i), (ii) and (iii), as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise; provided, that any Registrable Securities beneficially owned by an Investor shall cease to be Registrable Securities to the extent such securities may be sold pursuant to Rule 144 (or any similar provisions in force) without volume or manner of sale limitations.
2. | Section 1 of the Agreement is hereby amended to add the following definitions: |
“Series A-1 Certificate of Designations” means the certificate of designations setting forth the terms of the Series A-1 Preferred Stock.
“Series A-1 Preferred Stock” means the Series A-1 Redeemable Convertible Preferred Stock of the Company, par value $0.0001 per share, and having the rights and obligations specified in the Certificate of Designations, effective as of September 6, 2023.
3. | Except as expressly amended hereby, the Agreement shall remain in full force and effect in accordance with the provisions thereof. |
4. | After giving effect to this Amendment, each reference in the Agreement to “this Agreement,” “the Agreement,” “hereof,” “hereunder,” “herein,” “hereby” or words of like import referring to the Agreement shall refer to the Agreement, as amended by this Amendment. |
5. | Section 11 of the Agreement shall apply to this Amendment, mutatis mutandis. |
6. | This Amendment may be executed in counterparts (including by facsimile or other electronic transmission), each of which shall be deemed an original and each of which shall constitute one and the same instrument. |
[Signature pages follow]
2
IN WITNESS WHEREOF, the parties to this Amendment have executed this Amendment as of the date first written above.
| COMPANY: | |
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| BATTALION OIL CORPORATION | |
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By: | /s/ Matthew B. Steele | |
| Name: | Matthew B. Steele |
| Title: | Chief Executive Officer |
| INVESTORS: | ||
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| LUMINUS ENERGY PARTNERS MASTER FUND, LTD. | ||
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By: | /s/ Jonathan Barrett | ||
| Name: | Jonathan Barrett | |
| Title: | President |
| OAKTREE OPPORTUNITIES FUND X HOLDINGS (DELAWARE), L.P. By: Oaktree Fund GP, LLC, its General Partner By: Oaktree Fund GP I, L.P., its Managing Member | |
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By: | /s/ Allen Li | |
| Name: | Allen Li |
| Title: | Authorized Signatory |
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By: | /s/ Jordan Mikes | |
| Name: | Jordan Mikes |
| Title: | Authorized Signatory |
| OAKTREE OPPS XB Holdco LTD. By: Oaktree Capital Management, L.P., its Director | |
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By: | /s/ Allen Li | |
| Name: | Allen Li |
| Title: | Managing Director |
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By: | /s/ Jordan Mikes | |
| Name: | Jordan Mikes |
| Title: | Managing Director |
Signature Page to
Second Amendment to Registration Rights Agreement
| OAKTREE OPPORTUNITIES FUND XB HOLDINGS (DELAWARE), L.P. By: Oaktree Fund GP, LLC, its General Partner By: Oaktree Fund GP I, L.P., its Managing Member | |
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By: | /s/ Allen Li | |
| Name: | Allen Li |
| Title: | Authorized Signatory |
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By: | /s/ Jordan Mikes | |
| Name: | Jordan Mikes |
| Title: | Authorized Signatory |
| OAKTREE VALUE OPPORTUNITIES FUND HOLDINGS, L.P. By: Oaktree Value Opportunities Fund GP, L.P., its General Partner By: Oaktree Value Opportunities Fund GP, Ltd., its General Partner By: Oaktree Capital Management, L.P., its Director | |
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By: | /s/ Allen Li | |
| Name: | Allen Li |
| Title: | Authorized Signatory |
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By: | /s/ Jordan Mikes | |
| Name: | Jordan Mikes |
| Title: | Authorized Signatory |
| GEN IV INVESTMENT OPPORTUNITIES, LLC | |
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By: | /s/ Jeff Wade | |
| Name: | Jeff Wade |
| Title: | Chief Compliance Officer |
Signature Page to
Second Amendment to Registration Rights Agreement
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Document and Entity Information |
Sep. 06, 2023 |
---|---|
Cover [Abstract] | |
Entity Registrant Name | Battalion Oil Corp |
Entity Address, Address Line One | 3505 West Sam Houston Parkway North |
Entity Central Index Key | 0001282648 |
Document Type | 8-K |
Entity Address, Address Line Two | Suite 300 |
Entity Address, City or Town | Houston |
Document Period End Date | Sep. 06, 2023 |
Entity Incorporation, State or Country Code | DE |
Securities Act File Number | 001-35467 |
Entity Address, State or Province | TX |
City Area Code | 832 |
Entity Tax Identification Number | 20-0700684 |
Entity Address, Postal Zip Code | 77043 |
Local Phone Number | 538-0300 |
Title of 12(b) Security | Common Stock par value $0.0001 |
Amendment Flag | false |
Security Exchange Name | NYSEAMER |
Written Communications | false |
Trading Symbol | BATL |
Soliciting Material | false |
Pre-commencement Issuer Tender Offer | false |
Current Fiscal Year End Date | --12-31 |
Pre-commencement Tender Offer | false |
Entity Emerging Growth Company | false |
-8?2
M0$3;8T.P6BP^0"X99K>]9!:G