PLA-8039, Application for Order Approving Indirect Transfer of Control of License Amendments - Supplemental Information
| ML22356A307 | |
| Person / Time | |
|---|---|
| Site: | Susquehanna  |
| Issue date: | 12/22/2022 |
| From: | Berryman B Susquehanna, Talen Energy |
| To: | Office of Nuclear Material Safety and Safeguards, Office of Nuclear Reactor Regulation, Document Control Desk |
| Shared Package | |
| ML22356A306 | List: |
| References | |
| PLA-8039 | |
| Download: ML22356A307 (1) | |
Text
Addendum Contains Personally Identifiable Information -
Withhold in Accordance with 10 CFR 2.390 TALEN~
Brad Berryman Susquehanna Nuclear, LLC President and 769 Salem Boulevard Chief Nuclear Officer Berwick, PA 18603 ENERGY Tel. 570.542.2904 Fax 570.542.1504 Brad.Berryman@TalenEnergy.com December 22, 2022 Attn: Document Control Desk 10 CFR 50.80 U. S. Nuclear Regulatory Commission 10 CFR 50.90 Washington, DC 20555-0001 10 CFR 72.50 SUSQUEHANNA STEAM ELECTRIC STATION APPLICATION FOR ORDER APPROVING INDIRECT TRANSFER OF CONTROL OF LICENSES AND APPROVING CONFORMING LICENSE AMENDMENTS - SUPPLEMENTAL Docket No. 50-387 INFORMATION 50-388 PLA-8039 and 72-28
References:
- 1) Susquehanna letter to NRC: Application for Order Approving Indirect Transfer of Control of Licenses and Approving Conforming License Amendments (PLA-8015), dated September 29, 2022 (ADAMS Accession No. ML22272A604)
- 2) Susquehanna letter to NRC: Application for Order Approving Indirect Transfer of Control of Licenses and Approving Conforming License Amendments
- Supplemental Information (PLA-8032), dated October 28, 2022 (ADAMS Accession No. ML22301A205)
In Reference 1, Susquehanna Nuclear, LLC (Susquehanna Nuclear), acting on behalf of itself and certain Unsecured Creditors (as defined in Reference 1) of Talen Energy Supply, LLC (Talen Energy Supply) (collectively, the Applicants), submitted a request pursuant to Section 184 of the Atomic Energy Act of 1954, as amended, 10 CFR 50.80, and 10 CFR 72.50 for NRC consent to the indirect transfer of control of Susquehanna Nuclears interests in Facility Operating License Nos. NPF-14 and NPF-22 for the Susquehanna Steam Electric Station (SSES) Units 1 and 2, as well as the general license for the SSES Independent Spent Fuel Storage Installation (ISFSI) (the Application).1 In addition, Applicants requested 1
As noted in the Application, Allegheny Electric Cooperative owns a 10% share of SSES. There are no proposed changes to Allegheny Electric Cooperatives ownership share of SSES in this request.
Document Control Desk PLA-8039 conforming administrative license amendments to reflect a change in the entity responsible for providing a financial support agreement to Susquehanna Nuclear.
As detailed in Reference 1, commencing on May 9, 2022, Talen Energy Supply and certain of its subsidiaries each filed a voluntary case under Chapter 11 of Title 11 of United States Code in the United States Bankruptcy Court for the Southern District of Texas (Chapter 11 Cases).
The need for NRC consent is based upon the comprehensive restructuring of Talen Energy as a result of the Chapter 11 Cases. The Applicants, as identified in Reference 1, will update or supplement the Application as required.
In Reference 2, Applicants submitted a supplement to the Application to provide the NRC with updated information regarding the planned transaction. More specifically, the Applicants indicated that Talen Energy Supply made certain updates to its business plans as a result of developments in the Chapter 11 Cases, which resulted in changes to the pro forma projected income statement and cash flow statement for Susquehanna Nuclears share of SSES included in the Application. The Applicants also indicated in Reference 2 that they were considering the addition of two wholly-owned intermediate parents of Susquehanna Nuclear in the ownership structure.
Applicants are submitting the enclosed second Supplement to the Application (Second Supplement) to provide the NRC with updated information regarding the planned transaction, the Application, and the status of the Chapter 11 Cases. First, Applicants hereby notify the NRC that the United States Bankruptcy Court for the Southern District of Texas confirmed the Joint Plan of Reorganization on December 15, 2022. Second, upon further review of tax and other considerations, Applicants have determined not to proceed with the addition of two-wholly-owned intermediate parents of Susquehanna Nuclear in the ownership structure as identified in the First Supplement. Third, this Second Supplement notifies the NRC that, for certain reasons specified in its filing and related to the reorganization of Talen Energy Supply in the Chapter 11 Cases, the parent of Talen Energy Supply, Talen Energy Corporation, has itself filed a voluntary case under Chapter 11 of Title 11 of the United States Code, which is jointly administered with its subsidiary debtors Chapter 11 Cases. Fourth, Applicants inform the NRC of the names of the initial board members of Reorganized Talen Energy Corporation, which were not known at the time of the Application. Finally, the Application stated that the Applicants did not expect that there would be a shareholders voting agreement among the expected shareholders of Reorganized Talen Energy Corporation, but such shareholders have since determined to enter into one. The enclosed Second Supplement provides more information on each of these points, but none change the facts or conclusions regarding governance or control contained in the Application.
The enclosures to this Second Supplement provide replacements for Exhibit C - General Corporate Information Regarding NRC-Licensed Entities and their Corporate Parents (Redacted Version) provided with Reference 1, and Exhibit B - Updated Simplified Organization Chart (After Transaction) provided with Reference 2. The enclosures also provide Exhibit D -
Document Control Desk PLA-8039 Stockholders Agreement. This Second Supplement includes a non-public, separately bound Addendum with Enclosure 1 Exhibits C (unredacted). The unredacted version of Exhibit C contains personally identifiable information, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy. Susquehanna Nuclear and Talen Energy Supply request that this information be withheld from public disclosure pursuant to 10 CFR 2.390(a)(6).
A publicly available version of Enclosure 1 Exhibit C (redacted) suitable for public disclosure is provided with this Second Supplement.
There are no new or revised regulatory commitments contained in this submittal.
Should you have any questions regarding this submittal, please contact Ms. Melisa Krick, Manager - Nuclear Regulatory Affairs, at (570) 542-1818.
I declare under penalty of perjury that the information in this Application pertaining to Susquehanna Nuclear and Talen is true and correct to the best of my knowledge and belief.
Executed on December 22, 2022.
B. Berryman
Enclosure:
- 1. Application for Order Approving Indirect Transfer of Control of Licenses and Approving Conforming License Amendments - Supplemental Information Exhibits:
B. Updated Simplified Organizational Chart (After Transaction)
C. Updated General Corporate Information Regarding NRC- Licensed Entities and their Corporate Parents (redacted)
D. Form of Stockholders Agreement Addendum C. Updated General Corporate Information Regarding NRC-Licensed Entities and their Corporate Parents [Contains Personally Identifiable Information -
Withhold from Public Disclosure in Accordance with 10 CFR 2.390]
Document Control Desk PLA-8039 Copy: Director, Office of Nuclear Reactor Regulation NRC Region I Mr. C. Highley, NRC Senior Resident Inspector Ms. A. Klett, NRC Project Manager Mr. M. Shields, PA DEP/BRP
Enclosure 1 to PLA-8039 Application for Order Approving Indirect Transfer of Control of Licenses and Approving Conforming License Amendments - Supplemental Information
Enclosure 1 to PLA-8039 Page i List of Exhibits Exhibits:
B. Updated Simplified Organizational Chart (After Transaction)
C. Updated General Corporate Information Regarding NRC-Licensed Entities and their Corporate Parents (redacted)
D. Form of Stockholders Agreement Addendum C. Updated General Corporate Information Regarding NRC-Licensed Entities and their Corporate Parents [Contains Personally Identifiable Information -
Withhold from Public Disclosure in Accordance with 10 CFR 2.390]
Enclosure 1 to PLA-8039 Page 1 of 4 Application for Order Approving Indirect Transfer of Licenses and Approving Conforming License Amendments Supplemental Information In Reference 1, Susquehanna Nuclear, LLC (Susquehanna Nuclear), acting on behalf of itself and certain Unsecured Creditors (as defined in Reference 1) of Talen Energy Supply, LLC (Talen Energy Supply) (collectively, the Applicants), submitted a request pursuant to Section 184 of the Atomic Energy Act of 1954, as amended, 10 CFR 50.80, and 10 CFR 72.50 for NRC consent to the indirect transfer of control of Susquehanna Nuclears interests in Facility Operating License Nos. NPF-14 and NPF-22 for the Susquehanna Steam Electric Station (SSES) Units 1 and 2, as well as the general license for the SSES Independent Spent Fuel Storage Installation (ISFSI).1 In addition, Applicants requested conforming administrative license amendments to reflect a change in the entity responsible for providing a financial support agreement to Susquehanna Nuclear.
As detailed in Reference 1, commencing on May 9, 2022, Talen Energy Supply and certain of its subsidiaries each filed a voluntary case under Chapter 11 of Title 11 of United States Code in the United States Bankruptcy Court for the Southern District of Texas (Chapter 11 Cases).
The need for NRC consent is based upon the comprehensive restructuring of Talen Energy as a result of the Chapter 11 Cases. The Applicants, as identified in Reference 1, will update or supplement the Application as required based on developments in the Chapter 11 Cases.
In addition, the Application stated that the Unsecured Creditors planned to take ownership of Reorganized Talen Energy Corporation,2 a Delaware corporation, upon the completion of the reorganization. Reorganized Talen Energy Corporation in turn would own 100% of the membership interests in Talen Energy Supply, which in turn would own 100% of Susquehanna Nuclear.
In Reference 2, Applicants submitted a supplement to the Application to provide the NRC with updated information regarding the planned transaction. More specifically, Talen Energy Supply made certain updates to its business plans as a result of developments in the Chapter 11 Cases, which resulted in changes to the pro forma projected income statement and cash flow statement for Susquehanna Nuclears share of SSES included in the Application. The Applicants also 1
As noted in the Application, Allegheny Electric Cooperative owns a 10% share of SSES. There are no proposed changes to Allegheny Electric Cooperatives ownership share of SSES in this request.
2 As stated in the Application, Applicants expect that Reorganized Talen will be Reorganized Talen Energy Corporation. This outcome has been made more likely by the fact, addressed herein, that Talen Energy Corporation has now filed a voluntary case under Chapter 11 of Title 11 of the United States Code.
Enclosure 1 to PLA-8039 Page 2 of 4 indicated in Reference 2 that they were considering the addition of two wholly-owned intermediate parents of Susquehanna Nuclear in the ownership structure.
Applicants are submitting this second Supplement to the Application (Second Supplement) to provide the NRC with updated information regarding the planned transaction, the Application, and the status of the Chapter 11 Cases. First, Applicants hereby notify the NRC that the United States Bankruptcy Court for the Southern District of Texas (the Bankruptcy Court) confirmed the Joint Plan of Reorganization on December 15, 2022. Second, upon further review of tax and other considerations, Applicants have determined not to proceed with the addition of two-wholly-owned intermediate parents of Susquehanna Nuclear in the ownership structure as identified in the First Supplement. Third, this Second Supplement notifies the NRC that, for certain reasons specified in its filing and related to the reorganization of Talen Energy Supply in the Chapter 11 Cases, the parent of Talen Energy Supply, Talen Energy Corporation, has itself filed a voluntary case under Chapter 11 of Title 11 of the United States Code and is jointly administered with the Chapter 11 Cases. Fourth, Applicants inform the NRC of the names of the initial board members of Reorganized Talen Energy Corporation, which were not known at the time of the Application. Finally, the Application stated that the Applicants did not expect that there would be a shareholders voting agreement among the expected shareholders of Reorganized Talen Energy Corporation, but such shareholders have since determined to enter into one (styled as a Stockholders Agreement). The enclosed Second Supplement provides more information on each of these points, but none change the facts or conclusions regarding governance or control contained in the Application. More information follows.
First, the Bankruptcy Court confirmed the Joint Plan of Reorganization on December 15, 2022.
The Bankruptcy Courts confirmation does not result in any material changes to the Application, but it is an essential step toward resolving the Chapter 11 Cases and toward effecting the indirect transfer of control set forth in the Application.
Second, Applicants indicated in Reference 2 that for tax and other considerations, Applicants were considering the addition of two wholly-owned intermediate parents of Susquehanna Nuclear in the ownership chain between it and Reorganized Talen Energy Corporation. Upon further review, Applicants have determined not to proceed with the addition of any intermediate parents of Susquehanna Nuclear in the ownership structure. Exhibit B to this Second Supplement replaces the existing Exhibit B - Updated Simplified Organization Chart (After Transaction) provided with Reference 2, and is included as Exhibit B to this Supplement. The post-transaction organization chart in Exhibit B to this Supplement is identical to the post-transaction organization chart in Exhibit B of Reference 1. The determination that no additional intermediate parents will be included in the Transaction does not change the facts regarding governance or control contained in the Application and is being provided for NRCs information and convenience only.
Enclosure 1 to PLA-8039 Page 3 of 4 Third, on December 12, 2022, after Reference 1 was submitted, Talen Energy Corporation filed a voluntary case under Chapter 11 of Title 11 of United States Code in the Bankruptcy Court.
The voluntary filing by Talen Energy Corporation was made, among other reasons, to support the emergence from bankruptcy of Susquehanna Nuclear, Talen Energy Supply, and the other participants in the Chapter 11 Cases. Talen Energy Corp.s entrance into bankruptcy does not alter the conclusions on control of SSES or the ISFSI set forth in the Reference 1 as it is expected to emerge from bankruptcy at the same time as the other debtors under the Plan.
Fourth, Reference 1 stated that members of the board of directors of Reorganized Talen Energy Corporation were not yet known and that Applicants would file a supplement when the board members were identified. Applicants have now identified the independent directors who will serve on the board of Reorganized Talen Energy Corporation along with the Chief Executive Officer (CEO) of Reorganized Talen Energy Corporation.3 Exhibit C to this Supplement replaces Exhibit C - General Corporate Information Regarding NRC- Licensed Entities and their Corporate Parents provided with Reference 1.
Finally, Reference 1 stated that no shareholder voting agreements were anticipated for the Reorganized Talen Energy Corporation as part of the Plan. Since submitting Reference 1, however, Applicants have determined that Reorganized Talen Energy Corporation will have a Stockholders Agreement. The form of the Stockholders Agreement for Reorganized Talen Energy Corporation is included as Exhibit D to this Second Supplement. This Stockholders Agreement will become effective at the closing of the transactions that complete the emergence from bankruptcy. The Stockholders Agreement does not materially alter the facts regarding governance or control of licensed activities at SSES contained in the Application, as it relates primarily to certain information rights and drag-along rights for potential future transactions, which may be subject to a separate NRC review and consent prior to consummation. Therefore, the addition of the Stockholders Agreement does not materially change the conclusions the NRC must make to consent to the proposed transfers.
The enclosures to this Second Supplement provide replacements for the existing Exhibit C -
General Corporate Information Regarding NRC-Licensed Entities and their Corporate Parents (Redacted Version) provided with Reference 1, and Exhibit B - Updated Simplified Organization Chart (After Transaction) provided with Reference 2. The enclosures also provide Exhibit D - Stockholders Agreement. This Supplement includes a non-public, separately bound Addendum with Enclosure 1 Exhibits C (unredacted). The unredacted version of Exhibit C contains personally identifiable information, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy. Susquehanna Nuclear and Talen Energy Supply request that this information be withheld from public disclosure pursuant to 10 CFR 2.390(a)(6).
3 As stated in the Application, each of the directors, other than the CEO, are independent directors, and no shareholder or group of shareholders has any allocated ability to select any individual director or group of directors.
Enclosure 1 to PLA-8039 Page 4 of 4 A publicly available version of Enclosure 1 Exhibit C (redacted) suitable for public disclosure is provided with this Second Supplement.
Reference
- 1. Susquehanna letter to NRC: Application for Order Approving Indirect Transfer of Control of Licenses and Approving Conforming License Amendments (PLA-8015),
dated September 29, 2022 (ADAMS Accession No. ML22272A604)
- 2. Susquehanna letter to NRC: Application for Order Approving Indirect Transfer of Control of Licenses and Approving Conforming License Amendments - Supplement Information (PLA-8032), dated October 28, 2022 (ADAMS Accession No. ML22301A205)
Exhibit B to PLA-8039 Updated Simplified Organization Chart (After Transaction)
Exhibit B to PLA-8039 Page 1 of 1 Exhibit B Simplified Corporate Structure - Intended PostEmergence Rubric Capital CastleKnight Nuveen, Citadel Management LP Management LLC Advisors LLC LP 2225%
1116% 4.56%
9.5 15%
Other Equity... '
I Holders _,,'-~~ ~~
3856%
~~~~
....................... ~~ ~~
~~
~~~
. Reorganized Talen (DE Corp.) (expected)
I Talen Energy Supply, LLC (DE LLC)
I
- Ranges are explained in the Application Susquehanna Nuclear, LLC
Exhibit C to PLA-8039 Updated Corporate Information Regarding NRC-Licensed Entities and their Corporate Parents (Redacted Version)
Exhibit C to PLA-8039 Page 1 of 3 Exhibit C: Updated General Corporate Information Regarding NRC-Licensed Entities and their Corporate Parents (Redacted Version)
NAME: Susquehanna Nuclear, LLC ADDRESS 769 Salem Boulevard Berwick, PA 18603 STATE OF Delaware INCORPORATION:
MANAGERS Alejandro Hernandez Brad Berryman PRINCIPAL Brad Berryman, President and Chief Nuclear Officer OFFICERS John Chesser, Chief Financial Officer and Treasurer Andrew M. Wright, General Counsel and Secretary
- All of the listed individuals are U.S. Citizens.
Exhibit C to PLA-8039 Page 2 of 3 NAME: Talen Energy Supply, LLC ADDRESS 1780 Hughes Landing Blvd., Ste. 800 The Woodlands, TX 77380 STATE OF Delaware INCORPORATION:
PRINCIPAL Alejandro Hernandez, President and Chief Executive OFFICERS Officer John Chesser, Chief Financial Officer Brad Berryman, Senior Vice President and Chief Nuclear Officer Andrew M. Wright, General Counsel and Secretary Rajat Prakash, Vice President and Treasurer
- All of the listed officers [ ] are U.S.
Citizens.
Exhibit C to PLA-8039 Page 3 of 3 NAME: Reorganized Talen Energy Corporation ADDRESS 1780 Hughes Landing Blvd., Ste. 800 The Woodlands, TX 77380 STATE OF Delaware INCORPORATION:
MEMBERS OF Stephen Schaefer BOARD OF Mac McFarland DIRECTORS Tony Horton Karen Hyde Joseph Nigro Gizman Abbas Alejandro Hernandez PRINCIPAL Alejandro Hernandez, President and Chief Executive OFFICERS Officer John Chesser, Chief Financial Officer and Treasurer Brad Berryman, Senior Vice President and Chief Nuclear Officer Andrew M. Wright, General Counsel and Secretary
- All of the listed officers and directors are U.S. Citizens.
Exhibit D to PLA-8039 Form of Stockholders Agreement
Exhibit D to PLA-8039 Page 1 of 20 Case 22-90054 Document 1598 Filed in TXSB on 11/29/22 Page 92 of 225 TALEN ENERGY CORPORATION STOCKHOLDERS AGREEMENT1 This Stockholders Agreement (this Agreement) is made and entered into as of [], 2023, by and among Talen Energy Corporation, a Delaware corporation (the Company), and all of the stockholders of the Company who were issued shares of Common Stock pursuant to the Plan (including via the Rights Offering (as defined in the Plan) and/or the Backstop Order (as defined in the Plan)) (each such party as identified on Schedule I hereto, together with any Person who hereafter becomes a party to or bound by this Agreement, a Holder and, collectively, the Holders). The Company and the Holders are referred to collectively herein as the Parties.
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 by each Party, the Parties agree as follows:
- 1. Definitions. As used in this Agreement, the following terms shall have the respective meanings set forth in this Section 1:
Affiliate means, with respect to any Person, any other Person directly or indirectly Controlling, Controlled by, or under common Control with, such Person as of the date on which, or at any time during the period for which, the determination of affiliation is being made (including any investment fund the primary investment advisor to which is such Person or an Affiliate thereof); provided, that for purposes of this Agreement, no Holder shall be deemed an Affiliate of the Company or any of its Subsidiaries.
Agreement has the meaning set forth in the preamble.
Board means the board of directors of the Company.
Business Day means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by law to be closed in Houston, Texas.
Bylaws means the Bylaws of the Company, dated as of [the date hereof], as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time in accordance with their terms.
Chosen Courts has the meaning set forth in Section 5(e).
Close of Business means 5:00 p.m. Central Time.
Commission means the Securities and Exchange Commission or any other federal agency then administering the Securities Act or Exchange Act.
1 Note to Draft: This Agreement may trigger a governance-related supplemental filing with the NRC. Subject to continuing regulatory review.
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Exhibit D to PLA-8039 Page 2 of 20 Case 22-90054 Document 1598 Filed in TXSB on 11/29/22 Page 93 of 225 Common Stock means the shares of common stock, par value $0.001 per share, of the Company.
Company has the meaning set forth in the preamble.
Confidential Information has the meaning set forth in Section 2(d)(i).
Control (including its correlative meanings, Controlled by and under common Control with) shall mean possession, directly or indirectly, of the power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise) of a Person.
Designated Committee Member has the meaning set forth in Section 3(a)(i).
Designating Stockholder has the meaning set forth in Section 3(a)(i).
Drag-along Notice has the meaning set forth in Section 4(a)(ii).
Drag-along Sale has the meaning set forth in Section 4(a)(i).
Drag-along Stockholder has the meaning set forth in Section 4(a)(i).
Dragging Stockholder has the meaning set forth in Section 4(a)(i).
Equity Interest shall mean, with respect to any Person, any and all shares, interests, participations or other equivalents, however designated, and whether voting or nonvoting, or certificated or noncertificated, including capital stock, membership interests and partnership interests (whether general or limited) and any other interest or participation that confers on any other Person the right to receive a share of the profits and losses of, or distributions of property of, such Person.
Exchange Act means the Securities Exchange Act of 1934, as amended.
FINRA shall mean the Financial Industry Regulatory Authority, Inc.
Holder has the meaning set forth in the preamble.
IPO shall mean the initial Public Offering of the Company (or the Companys successor initial public offering-vehicle or entity).
IPO Securities shall mean the securities offered in the IPO.
Parties has the meaning set forth in the preamble.
Person means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, a cooperative, an unincorporated organization, or other form of business organization, whether or not regarded as a legal entity 2
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Exhibit D to PLA-8039 Page 3 of 20 Case 22-90054 Document 1598 Filed in TXSB on 11/29/22 Page 94 of 225 under applicable law, or any governmental authority or any department, agency or political subdivision thereof.
Plan means the Joint Chapter 11 Plan of Reorganization of the Company and certain of its debtor Affiliates under chapter 11 of Title 11 of the United States Code.
Proposed Transferee has the meaning set forth in Section 4(b)(i).
Public Offering shall mean the sale, in an underwritten public offering registered pursuant to an effective registration statement under the Securities Act of (i) the Common Stock or (ii) the Equity Interests of the Companys successor initial public offering-vehicle or entity, including in each case, any direct listing, and pursuant to which such securities are then traded on the New York Stock Exchange or Nasdaq Stock Market.
Related Party has the meaning set forth in Section 5(k).
Representatives of a Holder means its partners, shareholders, members, directors, officers, employees, agents, counsel, accountants, consultants, investment advisers or other professionals or representatives, or its Affiliates or wholly owned Subsidiaries or its Designated Committee Member.
Sale Notice has the meaning set forth in Section 4(b)(ii).
SEC means the U.S. Securities and Exchange Commission or any successor agency.
Securities Act means the Securities Act of 1933, as amended.
Selling Stockholder has the meaning set forth in Section 4(b)(i).
Significant Holder has the meaning set forth in Section 2(c).
Subsidiary means, when used with respect to any Person, any corporation or other entity, whether incorporated or unincorporated, (a) of which such Person or any other Subsidiary of such Person is a general partner (excluding partnerships, the general partnership interests of which held by such Person or any Subsidiary of such Person do not have a majority of the voting interests in such partnership) or (b) at least a majority of the securities or other interests of which having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions with respect to such corporation or other entity is directly or indirectly owned or controlled by such Person or by any one or more of its Subsidiaries, or by such Person and one or more of its Subsidiaries.
Tag-along Notice has the meaning set forth in Section 4(b)(iii).
Tag-along Period has the meaning set forth in Section 4(b)(iii).
Tag-along Sale has the meaning set forth in Section 4(b)(i).
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Exhibit D to PLA-8039 Page 4 of 20 Case 22-90054 Document 1598 Filed in TXSB on 11/29/22 Page 95 of 225 Tag-along Seller has the meaning set forth in Section 4(b)(iii).
Tag-along Stockholder has the meaning set forth in Section 4(b)(i).
Warrant Agreement means the Warrant Agreement, dated the date hereof, by and between the Company, on the one hand, and, on the other hand, [],2 pursuant to which the Warrants were issued.
Warrants means the warrants representing the right to acquire up to 5% of the shares of Common Stock issued pursuant to the Plan.
Unless the context requires otherwise: (a) any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms; (b) references to Sections, paragraphs and clauses refer to Sections, paragraphs and clauses of this Agreement; (c) the terms include, includes, including or words of like import shall be deemed to be followed by the words without limitation; (d) the terms hereof, herein or hereunder refer to this Agreement as a whole and not to any particular provision of this Agreement; (e) unless the context otherwise requires, the term or is not exclusive and shall have the inclusive meaning of and/or; (f) defined terms herein will apply equally to both the singular and plural forms and derivative forms of defined terms will have correlative meanings; (g) references to any law or statute shall be deemed to refer to such law or statute as amended or supplemented from time to time and shall include all rules and regulations and forms promulgated thereunder, and references to any law, rule, form or statute shall be construed as including any legal and statutory provisions, rules or forms consolidating, amending, succeeding or replacing the applicable law, rule, form or statute; (h) references to any Person include such Persons successors and permitted assigns; and (i) references to days are to calendar days unless otherwise indicated. Each of the Parties hereto acknowledges that each Party was actively involved in the negotiation and drafting of this Agreement and that no law or rule of construction shall be raised or used in which the provisions of this Agreement shall be construed in favor or against any Party hereto because one is deemed to be the author thereof.
- 2. Information Rights.
(a) Financial Statements. The Company will electronically furnish to each Holder, via the Companys primary website or a third-party data room, the following: (i) within [] days following the conclusion of each of the Companys first three fiscal quarters of each fiscal year, quarterly unaudited consolidated financial statements of the Company and its Subsidiaries; and (ii) as soon as reasonably practicable, but no later than [] days following the date hereof, the 2022 annual audited consolidated financial statements of the Company and its Subsidiaries and within
[] days after the end of each fiscal year thereafter, annual audited consolidated financial statements of the Company and its Subsidiaries.3 The Company may condition receipt of the foregoing financial statements on a certification from the recipient thereof that it is not directly 2
Note to Draft: To update with name of warrant agent.
3 Note to Draft: Assumes emergence and execution of this Agreement occurs on March 31, 2023.
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Exhibit D to PLA-8039 Page 5 of 20 Case 22-90054 Document 1598 Filed in TXSB on 11/29/22 Page 96 of 225 engaged in any business that is competitive with the Company or its Affiliates; provided, however, for the avoidance of doubt, the foregoing condition shall not apply to Holders who solely have a passive investment in a business that is competitive with the Company or its Affiliates.
(b) Conference Calls. Reasonably promptly following the release of each of the quarterly unaudited financial statements and annual audited financial statements, the Company will make a telephonic presentation to the Holders discussing the Companys financial condition and results of operation. The Company may condition receipt of the foregoing financial statements on a certification from the recipient thereof that it is not directly engaged in any business that is competitive with the Company or its Affiliates; provided, however, for the avoidance of doubt, the foregoing condition shall not apply to Holders who solely have a passive investment in a business that is competitive with the Company or its Affiliates.
(c) Additional Rights for Significant Holders. As soon as available (in any event, within 120 days after the end of each fiscal year of the Company (or 210 days, in the case of the 2023 fiscal year)) and upon the request of any Holder of []% or more of the outstanding Common Stock (a Significant Holder), the Company will provide to such Holder a budget and business plan for the next fiscal year, approved by the Board, which shall include consolidated statements of income (including an EBITDA target), stockholders equity and cash flows of the Company and its Subsidiaries for the next fiscal year. In addition, with reasonable promptness upon the reasonable request therefor, the Company shall provide to any Significant Holder such other information or documents regarding the operations, business affairs and the financial condition of the Company or any of its Subsidiaries as any such Significant Holder may reasonably request in writing from time to time in good faith. The Company may condition receipt of the foregoing information and documents on a certification from the recipient thereof that it is not directly engaged in any business that is competitive with the Company or its Affiliates; provided, however, for the avoidance of doubt, the foregoing condition shall not apply to Holders who solely have a passive investment in a business that is competitive with the Company or its Affiliates.
(d) Confidentiality.
(i) Each Holder acknowledges that any notices or information furnished pursuant to this Agreement (the Confidential Information) is confidential and competitively sensitive. Each Holder shall not disclose any Confidential Information to any Person, except that Confidential Information may be disclosed:
(A) to the Holders Representatives that, in the Holders reasonable judgment, need to know such information in the normal course of the performance of their duties for such Holder (it being understood that (1) such Representatives (x) shall be informed by the Holder of the confidential nature of such information and (y) must agree to treat such information in accordance with this Section 2(d), and (2) such Holder shall be liable for any breach of this Section 2(d) by its Representatives);
(B) to the extent requested or required by applicable law, rule or regulation; provided, that the Holder shall give the Company prompt written notice of such request(s), to the extent practicable, and to the extent permitted by law, so that the Company 5
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Exhibit D to PLA-8039 Page 6 of 20 Case 22-90054 Document 1598 Filed in TXSB on 11/29/22 Page 97 of 225 may, at its sole expense, seek an appropriate protective order or similar relief and provided, further, that the Holder shall not be required to give notice pursuant to any routine regulatory examination that does not specifically target the Company; (C) to any Person to whom the Holder is contemplating a transfer of its shares of Common Stock permitted in accordance with the terms hereof; provided, that such Person is not prohibited from receiving such information pursuant to this Section 2(d) and, prior to such disclosure, such potential transferee is advised by such Holder of the confidential nature of such information and agrees in writing to maintain its confidentiality (with the Company to be a third-party beneficiary of such agreement);
(D) to any regulatory authority to which the Holder or any of its Affiliates is subject or with which it has regular dealings, in each case, in the ordinary course of business consistent with past practice, as long as such authority is advised of the confidential nature of such information; (E) to any bona fide prospective purchaser of substantially all the equity or assets of the Holder or the Holders Affiliates, or prospective merger partner of the Holder or the Holders Affiliates; provided, that (x) prior to such disclosure the Persons to whom such information is disclosed are advised of the confidential nature of such information and agree to maintain its confidentiality and (y) such Holder shall be liable for any breach by any such Persons; or (F) if the prior written consent of the Company shall have been obtained.
(ii) Nothing contained herein shall prevent the use (subject, to the extent possible, to a protective order) of Confidential Information in connection with the assertion or defense of any claim by or against the Company or the Holder. The restrictions on disclosure of Confidential Information contained in this Section 2(d) shall terminate upon the earlier of 18 months following the date on which the Holder ceases to own any shares of Common Stock or the information ceases to be Confidential Information pursuant to Section 2(d)(iii).
(iii) Confidential Information does not include and shall cease to include information that: (a) is or becomes available to the public (including as a result of any information filed or submitted by the Company with the Commission) other than as a result of a disclosure by the Holder or its Representatives in violation of any confidentiality provision of this Agreement, (b) is or was available to the Holder or its Representatives on a non-confidential basis prior to its disclosure to the Holder or its Representatives by the Company, or (c) was or becomes available to the Holder or its Representatives on a non-confidential basis from a source other than the Company, which source is or was (at the time of receipt of the relevant information) not, to the Holders or its Representatives knowledge, bound by a confidentiality agreement with the Company or another Person.
- 3. IPO Rights.
(a) Offering Committee.
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Exhibit D to PLA-8039 Page 7 of 20 Case 22-90054 Document 1598 Filed in TXSB on 11/29/22 Page 98 of 225 (i) The Holders hereby establish an offering committee (the Offering Committee) consisting of one representative (a Designated Committee Member) of each of [],
[], [] and []4 (each, a Designating Stockholder and collectively, the Designating Stockholders). So long as the Designating Stockholders beneficially own in the aggregate at least
[20.0]%5 of the outstanding Common Stock, the Offering Committee shall have the authority to exercise the rights set forth in this Section 3 on behalf of the Holders.
(ii) Each Designating Stockholder shall have the right to designate one Designated Committee Member to the Offering Committee so long as such Designating Stockholder beneficially owns at least [7.5]% of the outstanding Common Stock. So long as a Designating Stockholder has the right to designate a Designated Committee Member to the Offering Committee, such Designating Stockholder may remove and/or replace such individual serving as its Designated Committee Member. Upon any Designating Stockholders beneficial ownership of Common Stock falling below [7.5]% of the outstanding Common Stock, such stockholders Designated Committee Member shall be removed from the Offering Committee, and such stockholder shall no longer be a Designating Stockholder for purposes of this Section 3.
(iii) Any proposed action of the Offering Committee hereunder may only be taken with the approval of a majority of the total number of Designated Committee Members then serving on the Offering Committee; provided, however, in the event that any such proposed action receives the approval of a number of Designated Committee Members equal to the number of Designated Committee Members that do not approve (or abstain from voting on) such proposed action, such action shall be deemed to be approved by the Offering Committee if Designated Committee Members representing Designating Stockholders that beneficially own a majority of the Common Stock then beneficially owned by all of the Designating Stockholders approve such proposed action.
(iv) Upon the written request of the Offering Committee, the Company shall pursue, and shall use its reasonable best efforts to consummate an IPO. In connection with such IPO, the following shall require the consent of the Offering Committee:
(A) the selection of a lead underwriter or underwriters for the IPO and the members of the underwriting syndicate; (B) the structure of the IPO, including without limitation, the primary and secondary components of the offering (or alternatively, any direct listing);
(C) the terms and conditions of all material transaction documentation to be executed in connection with the IPO, including without limitation, the underwriting agreement; 4
Note to Draft: To be inserted with certain of the creditors that will own 7.5% or more of the reorganized TEC equity, inclusive of the rights offering.
5 Note to Draft: Subject to change based on pro forma ownership.
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Exhibit D to PLA-8039 Page 8 of 20 Case 22-90054 Document 1598 Filed in TXSB on 11/29/22 Page 99 of 225 (D) the selection of the stock exchange on which the securities offered in the IPO will be traded; (E) matters related to valuation of the Company (or IPO entity);
(F) any go / no-go decision with respect to the launch of the IPO; and (G) the price at which the securities in the IPO are to be sold.
(b) Inclusion of Shares in Secondary Component. In the event that an IPO initiated by the Offering Committee pursuant to Section 3(a) provides for the offer and sale of shares of Common Stock of any Holder in a secondary component of the IPO, each Holder party to this Agreement that beneficially owns at least three percent (3%) of the outstanding Common Stock as of the date of this Agreement shall be entitled to participate in such secondary component on a pro rata basis.
(c) Company Obligations. In connection with its obligations under this Section 3, and subject to Section 3(a), the Company shall, without limitation:
(i) promptly prepare and file with the SEC the registration statement to be used in connection with the IPO (and any prospectus to be contained therein) and any such amendments and supplements thereto; (ii) furnish to the Offering Committee as far in advance as reasonably practicable before its filing, copies of the registration statement to be filed in connection with the IPO and any prospectus contained therein (and any amendments or supplements thereto or exhibits contained therein); and (iii) enter into customary agreements and take such other actions as is reasonably requested by the Offering Committee or the IPO underwriters in order to expedite or facilitate the IPO.
(d) Expenses. All Registration Expenses incurred in connection with the IPO will be borne by the Company. However, underwriters, brokers and dealers discounts and commissions applicable to IPO Securities sold for the account of any Holder will be borne by such Holder.
Registration Expenses means any and all expenses incurred in connection with the performance of or compliance with this Section 3, including: (a) all SEC, stock exchange, or FINRA registration and filing fees (including, if applicable, the fees and expenses of any qualified independent underwriter, as such term is defined in Rule 5121 of FINRA, and of its counsel); (b) all fees and expenses of complying with securities or blue sky laws (including fees and disbursements of counsel for the underwriters in connection with blue sky qualifications of the IPO Securities); (c) all printing, messenger and delivery expenses; (d) all fees and expenses incurred in connection with the listing of the IPO Securities on any securities exchange or FINRA and all rating agency fees; (e) the reasonable fees and disbursements of counsel for the Company and of its independent public accountants, including the expenses of any special audits and/or comfort letters required by or incident to such performance and compliance (including, without limitation, any such audits and comfort letters relating to financial statements pursuant to Rule 3-05 of Regulation S-X and 8
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Exhibit D to PLA-8039 Page 9 of 20 Case 22-90054 Document 1598 Filed in TXSB on 11/29/22 Page 100 of 225 Article 11 thereunder); (f) any fees and disbursements of underwriters customarily paid by the issuers or sellers of IPO Securities, including liability insurance if the Company so desires or if the underwriters so require, and the reasonable fees and expenses of any special experts retained in connection with the registration of the IPO Securities, but excluding underwriting discounts and commissions and transfer taxes, if any; (g) the reasonable fees and out-of-pocket expenses of not more than one law firm (as selected by the Offering Committee) incurred by all the Holders in connection with the IPO; (h) the costs and expenses of the Company relating to analyst and investor presentations or any road show undertaken in connection with the IPO; and (i) any other fees and disbursements customarily paid by the issuers of IPO securities.
(e) Indemnification.
(i) Indemnification by the Company. In the event of any registration under the Securities Act by any registration statement pursuant to rights granted in this Agreement of IPO Securities held by Holders, the Company will indemnify and hold harmless such Holders, their officers, directors and Affiliates, and each underwriter of such IPO securities and each other Person, if any, who Controls any such Holder or such underwriter within the meaning of the Securities Act, against any losses, claims, damages, or liabilities (including legal fees and costs of court), joint or several, to which such Holder or such underwriter or controlling Person may become subject under the Securities Act or otherwise, including any amount paid in settlement of any litigation commenced or threatened, and shall promptly reimburse such Persons, as and when incurred, for any legal or other expenses reasonably incurred by them in connection with investigating any claims and defending any actions, insofar as such losses, claims, damages, or liabilities (or any actions in respect thereof) arise out of or are based upon any violation or alleged violation by the Company of the Securities Act, any blue sky laws, securities laws or other applicable laws of any state or country in which such IPO Securities are offered and relating to action taken or action or inaction required of the Company in connection with such offering, or arise out of or are based upon any untrue statement or alleged untrue statement of any material fact (i) contained, on its effective date, in any registration statement under which such IPO Securities were registered under the Securities Act or any amendment or supplement to any of the foregoing, or which arise out of or are based upon the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading or (ii) contained in any preliminary prospectus, if used prior to the effective date of such registration statement, or in the final prospectus (as amended or supplemented if the Company shall have filed with the SEC any amendment or supplement to the final prospectus), or which arise out of or are based upon the omission or alleged omission to state a material fact required to be stated in such prospectus or necessary to make the statements in such prospectus not misleading; and will reimburse each such Holder and each such underwriter and each such controlling Person for any legal or any other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, or liability; provided, however, that the Company shall not be liable to any such Holder or underwriters or controlling Persons in any such case to the extent that any such loss, claim, damage, or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement or such amendment or supplement, in reliance upon and in conformity with information furnished to the Company through a written instrument duly executed by such Holder or such underwriter specifically for use in the preparation thereof.
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Exhibit D to PLA-8039 Page 10 of 20 Case 22-90054 Document 1598 Filed in TXSB on 11/29/22 Page 101 of 225 (ii) Indemnification by Holders. Each Holder, severally and not jointly, and only if such Holder included its IPO Securities in the IPO registration statement, will indemnify and hold harmless (in the same manner and to the same extent as set forth in Section 3(e)(i) hereof) the Company, each director of the Company, each officer of the Company who shall sign the registration statement, and any Person who Controls the Company within the meaning of the Securities Act, (i) with respect to any statement or omission from such registration statement, or any amendment or supplement to it, if such statement or omission was made in reliance upon and in conformity with information furnished to the Company through a written instrument duly executed by such Holder specifically regarding such Holder for use in the preparation of such registration statement or amendment or supplement, and (ii) with respect to compliance by such Holder with applicable laws in effecting the sale or other disposition of its IPO Securities covered by such registration statement.
- 4. Drag-along Rights and Tag-along Rights.
(a) Drag-along Rights.
(i) If at any time a Holder or group of Holders who individually or collectively hold 50% or more of the outstanding Common Stock (such Holder or group of Holders, a Dragging Stockholder), receives a bona fide offer from a third-party purchaser to consummate, in one transaction, or a series of related transactions, the sale of the Company or all or substantially all of its assets (a Drag-along Sale), the Dragging Stockholder shall have the right to require that each other Holder (each, a Drag-along Stockholder) participate in such transfer in the manner set forth in this Section 4(a); provided, notwithstanding anything to the contrary in this Agreement, each Drag-along Stockholder shall vote in favor of the transaction, agrees to not exercise any dissenters, appraisal or other similar rights in connection with such transaction.
(ii) The Dragging Stockholder shall exercise its rights pursuant to this Section 4(a) by delivering a written notice (the Drag-along Notice) to the Company no later than 20 days prior to the closing date of such Drag-along Sale. The Company will promptly deliver a copy of the Drag-along Notice to each Drag-along Stockholder. The Drag-along Notice shall make reference to the Dragging Stockholders rights and obligations hereunder and shall describe in reasonable detail: (a) the number of shares of Common Stock to be sold by the Dragging Stockholder, if the Drag-along Sale is structured as a transfer of Common Stock; (b) the identity of the third-party purchaser; (c) the proposed date, time and location of the closing of the Drag-along Sale; (d) the per share purchase price and the other material terms and conditions of the transfer, including a description of any non-cash consideration in sufficient detail to permit the valuation thereof; and (e) a copy of any form of agreement proposed to be executed in connection therewith to the extent available.
(iii) The consideration to be received by a Drag-along Stockholder shall be the same form and amount of consideration per share of Common Stock to be received by the Dragging Stockholder (or, if the Dragging Stockholder is given an option as to the form and amount of consideration to be received, the same option shall be given) and the terms and conditions of such transfer shall, except as otherwise provided in the immediately succeeding sentence, be the same as those upon which the Dragging Stockholder transfers its Common Stock. Any 10 WEIL:\98917535\3\76973.0005
Exhibit D to PLA-8039 Page 11 of 20 Case 22-90054 Document 1598 Filed in TXSB on 11/29/22 Page 102 of 225 (a) representations and warranties to be made or provided by a Drag-along Stockholder in connection with such Drag-along Sale shall be limited to representations and warranties related to such Drag-along Stockholders authority, ownership and the ability to convey title to its Common Stock, and with respect thereto, shall be the same representations and warranties that the Dragging Stockholder make or provide with respect to their Common Stock, (b) Drag-along Stockholder will not be required to agree to any non-competition or similar restrictions in connection with such Drag-along Sale, and (c) covenants, indemnities and agreements made by the Drag-along Stockholders shall be the same covenants, indemnities and agreements as the Dragging Stockholder makes or provides in connection with the Drag-along Sale, except that with respect to covenants, indemnities and agreements pertaining specifically to the Dragging Stockholder, the Drag-along Stockholder shall make the comparable covenants, indemnities and agreements pertaining specifically to itself; provided, that any indemnification obligation relating to the Company shall be pro rata based on the consideration received by the Dragging Stockholder and each Drag-along Stockholder, in each case in an amount not to exceed the aggregate proceeds received by the Dragging Stockholder and each such Drag-along Stockholder in connection with the Drag-along Sale.
(iv) The fees and expenses of the Dragging Stockholder incurred in connection with a Drag-along Sale and for the benefit of all Holders as determined in good faith by the Board, to the extent not paid or reimbursed by the Company or the third-party purchaser, shall be shared by all the Holders on a pro rata basis, based on the aggregate consideration received by each Holder; provided, that no Holder shall be obligated to make or reimburse any out-of-pocket expenditure prior to the consummation of the Drag-along Sale.
(v) Each Holder shall take all actions as may be reasonably necessary to consummate the Drag-along Sale, including entering into agreements and delivering certificates and instruments, in each case consistent with the agreements being entered into and the certificates being delivered by the Dragging Stockholder.
(vi) The Dragging Stockholder shall have 120 days following the date of the Drag-along Notice in which to consummate the Drag-along Sale, on the terms set forth in the Drag-along Notice (which such 120-day period may be extended for a reasonable time not to exceed
[240] days to the extent reasonably necessary to obtain any governmental or regulatory approvals).
If at the end of such period, the Dragging Stockholder has not completed the Drag-along Sale, the Dragging Stockholder may not then effect a transaction subject to this Section 4(a) without again fully complying with the provisions of this Section 4(a).
(b) Tag-along Rights.
(i) If at any time a Holder or group of Holders proposes to transfer more than 40% of the outstanding Common Stock (such Holder or group of Holders, the Selling Stockholder), in one or a series of related transactions, to a third party purchaser (the Proposed Transferee) and the Selling Stockholder cannot or has not elected to exercise its drag-along rights set forth in Section 4(a), each other Holder (each, a Tag-along Stockholder) shall be permitted to participate in such transfer (a Tag-along Sale) on the terms and conditions set forth in this Section 4(b).
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Exhibit D to PLA-8039 Page 12 of 20 Case 22-90054 Document 1598 Filed in TXSB on 11/29/22 Page 103 of 225 (ii) Prior to the consummation of any such transfer of Common Stock described in Section 4(b)(i), the Selling Stockholder shall deliver to the Company and each other Holder a written notice (a Sale Notice) of the proposed Tag-along Sale subject to this Section 4(b) no later than 10 days prior to the closing date of the Tag-along Sale. The Sale Notice shall make reference to the Tag-along Stockholders rights hereunder and shall describe in reasonable detail: (a) the aggregate number of shares of Common Stock the Proposed transferee has offered to purchase; (b) the identity of the Proposed Transferee; (c) the proposed date, time and location of the closing of the Tag-along Sale; (e) the per share purchase price and the other material terms and conditions of the transfer, including a description of any non-cash consideration in sufficient detail to permit the valuation thereof; and (f) a copy of any form of agreement proposed to be executed in connection therewith.
(iii) Each Tag-along Stockholder may exercise its right to participate in a transfer of Common Stock by the Selling Stockholder subject to this Section 4(b) by delivering to the Selling Stockholder a written notice (a Tag-along Notice) stating its election to do so and specifying the number of shares of Common Stock to be transferred by it no later than five days after receipt of the Sale Notice (the Tag-along Period). The offer of each Tag-along Stockholder set forth in a Tag-along Notice shall be irrevocable, and, to the extent such offer is accepted, such Tag-along Stockholder shall be bound and obligated to transfer in the proposed transfer on the terms and conditions set forth in this Section 4(b). Each Tag-along Stockholder that timely delivers a Tag-along Notice (a Tag-along Seller) shall have the right to transfer in a transfer subject to this Section 4(b) up to the number of shares of Common Stock equal to the product of (x) the aggregate number of shares of Common Stock owned by the Tag-along Seller and (y) a fraction (A) the numerator of which is equal to the number of shares of Common Stock proposed to be sold by the Selling Stockholder in the Tag-along Sale, and (B) the denominator of which is equal to the number of shares of Common Stock owned by the Selling Stockholder.
(iv) Each Tag-along Stockholder who does not deliver a Tag-along Notice in compliance with Section 4(b)(iii) above shall be deemed to have waived all of such Tag-along Stockholders rights to participate in such transfer, and the Selling Stockholder shall (subject to the rights of any Tag-along Seller) thereafter be free to transfer to the Proposed Transferee its shares of Common Stock at a per share price that is no greater than the per share price set forth in the Sale Notice and on other same terms and conditions which are not materially more favorable to the Selling Stockholder than those set forth in the Sale Notice without any further obligation to the non-accepting Tag-along Stockholders.
(v) Each Tag-along Seller shall receive the same consideration per share as the Selling Stockholder after deduction of such Tag-along Sellers proportionate share of the related expenses in accordance with Section 4(b)(vii) below.
(vi) Each Tag-along Seller shall make or provide the same representations, warranties, covenants, indemnities and agreements as the Selling Stockholder makes or provides in connection with the Tag-along Sale (except that in the case of representations, warranties, covenants, indemnities and agreements pertaining specifically to the Selling Stockholder, the Tag-along Seller shall make the comparable representations, warranties, covenants, indemnities and agreements pertaining specifically to itself); provided, that all representations, warranties, 12 WEIL:\98917535\3\76973.0005
Exhibit D to PLA-8039 Page 13 of 20 Case 22-90054 Document 1598 Filed in TXSB on 11/29/22 Page 104 of 225 covenants and indemnities shall be made by the Selling Stockholder and each Tag-along Seller severally and not jointly and any indemnification obligation in respect of breaches of representations and warranties shall be pro rata based on the consideration received by the Selling Stockholder and each Tag-along Seller, in each case in an amount not to exceed the aggregate proceeds received by the Selling Stockholder and each such Tag-along Seller in connection with any Tag-along Sale.
(vii) The fees and expenses of the Selling Stockholder incurred in connection with a Tag-along Sale and for the benefit of all Holders as determined in good faith by the Board (it being understood that costs incurred by or on behalf of the Selling Stockholder for its sole benefit will not be considered to be for the benefit of all Holders), to the extent not paid or reimbursed by the Company or the Proposed Transferee, shall be shared by all the Holders participating in the Tag-along Sale on a pro rata basis, based on the aggregate consideration received by each such Holder; provided, that no Holder shall be obligated to make or reimburse any out-of-pocket expenditure prior to the consummation of the Tag-along Sale.
(viii) Each Tag-along Seller shall take all actions as may be reasonably necessary to consummate the Tag-along Sale, including entering into agreements and delivering certificates and instruments, in each case consistent with the agreements being entered into and the certificates being delivered by the Selling Stockholder.
(ix) The Selling Stockholder shall have 120 days following the expiration of the Tag-along Period in which to transfer the shares of Common Stock described in the Sale Notice and the shares to be sold by the Tag-along Sellers, on the terms set forth in the Sale Notice (which such 120-day period may be extended for a reasonable time to the extent reasonably necessary to obtain any governmental or regulatory approvals). If at the end of such 120-day period, the Selling Stockholder has not completed such transfer, the Selling Stockholder may not then effect a transfer of Common Stock subject to this Section 4(b) without again fully complying with the provisions of this Section 4(b).
(x) If the Selling Stockholder transfers to the Proposed Transferee any of its shares of Common Stock in breach of this Section 4(b), then each Tag-along Stockholder shall have the right to transfer to the Selling Stockholder, and the Selling Stockholder undertakes to purchase from each Tag-along Stockholder, the number of shares of Common Stock that such Tag-along Stockholder would have had the right to transfer to the Proposed Transferee pursuant to this Section 4(b), for a per share amount and form of consideration and upon the terms and conditions on which the Proposed Transferee bought such Common Stock from the Selling Stockholder, but without indemnity being granted by any Tag-along Stockholder to the Selling Stockholder; provided, that, nothing contained in this Section 4(b) shall preclude any Holder from seeking alternative remedies against such Selling Stockholder as a result of its breach of this Section 4(b).
- 5. Miscellaneous.
(a) Termination. This Agreement shall terminate automatically upon the effectiveness of a registration statement filed with the Commission in connection with an underwritten public offering of Common Stock by the Company. This Agreement may also be terminated upon the 13 WEIL:\98917535\3\76973.0005
Exhibit D to PLA-8039 Page 14 of 20 Case 22-90054 Document 1598 Filed in TXSB on 11/29/22 Page 105 of 225 written consent of the Company and the Holders that beneficially own at least two-thirds of all of the outstanding shares of Common Stock. This Agreement will terminate as to any Holder at such time as such Holder no longer owns any shares of Common Stock.
(b) Remedies. In the event of a breach by the Company or a Holder of any of its obligations under this Agreement, the Company or the Holder, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. The Parties agree that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and further agrees that, in the event of any action for specific performance in respect of such breach, it shall waive the defense that a remedy at law would be adequate and shall waive any requirement for the posting of a bond.
No failure or delay by any Person in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.
(c) Amendment; Modification; Waivers. This Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed by the Company and Holders of a majority of the outstanding shares of the Common Stock, provided that no amendment may adversely affect a Holder relative to other Holders without such Holders consent; provided, further, that amendments to Section 3(a)(ii) and 3(a)(iii) shall only require the consent of the Designating Stockholders at such time. Any amendment or waiver must specifically reference this Agreement, specify the provision(s) hereof that it is intended to amend or waive and further specify that it is intended to amend or waive such provision(s).
(d) Notices. All notices and other communications hereunder shall be in writing and shall be deemed duly given (a) upon delivery, if served by personal delivery upon the Person for whom it is intended, (b) on the fifth Business Day after the date mailed if delivered by registered or certified mail, return receipt requested, postage prepaid, (c) on the following Business Day if delivered by a nationally-recognized, overnight, air courier or (d) when delivered or, if sent after the Close of Business, on the following Business Day if sent by email with electronic confirmation, in each case, so long as such notice is addressed to the intended recipient thereof at the address and as provided on such recipients signature page hereto, or pursuant to such other instructions as may be designated in writing by the party to receive such notice. At the request of the Company, each Holder will confirm in writing to the Company, (a) the number of shares of Common Stock beneficially owned by such Holder (including evidence of such holding), (b) the contact information for such Holder and (c) such other information as the Company may reasonably request in order to confirm the authorization of individuals acting on behalf of such Holder.
(e) Governing Law. This Agreement and all disputes or controversies arising out of or relating to this Agreement shall be governed by, and construed in accordance with, the internal laws of the State of Delaware, without regard to principles of conflicts of laws. Each of the Company and each Holder agrees that it shall bring any litigation with respect to any claim arising out of or related to this Agreement, exclusively in the Delaware Court of Chancery (and if 14 WEIL:\98917535\3\76973.0005
Exhibit D to PLA-8039 Page 15 of 20 Case 22-90054 Document 1598 Filed in TXSB on 11/29/22 Page 106 of 225 jurisdiction in the Delaware Court of Chancery shall be unavailable, the Federal courts of the United States of America sitting in the State of Delaware) (together with the appellate courts thereof, the Chosen Courts), and solely in connection with claims arising under this Agreement (a) irrevocably submits to the exclusive jurisdiction of the Chosen Courts, (b) waives any objection to laying venue in any such action or proceeding in the Chosen Courts, (c) waives any objection that the Chosen Courts are an inconvenient forum or as not having jurisdiction over either the Company or the Holder, (d) agrees, to the fullest extent permitted by law, that service of process in any such action or proceeding shall be effective if notice is given in accordance with Section 5(d), although nothing contained in this Agreement shall affect the right to serve process in any other manner permitted by law and (e) agrees not to seek a transfer of venue on the basis that another forum is more convenient. Notwithstanding anything herein to the contrary, (i) nothing in this Section 5(e) shall prohibit any party from seeking or obtaining orders for conservatory or interim relief from any court of competent jurisdiction and (ii) each of the Company and each Holder agrees that any judgment issued by a Chosen Court may be recognized, recorded, registered or enforced in any jurisdiction in the world and waives any and all objections or defenses to the recognition, recording, registration or enforcement of such judgment in any such jurisdiction.
(f) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective heirs, executors, administrators, successors, legal representatives, permitted assigns and Approved Transferees. The Company shall cause any successor or assign (whether by merger, consolidation, statutory conversion, sale of assets or otherwise) to assume the obligations of the Company under this Agreement or enter into a new agreement with the Holders on terms substantially the same as this Agreement as a condition of any such transaction.
(g) Waiver of Trial by Jury. EACH OF THE COMPANY AND EACH HOLDER ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT OR IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PERSON HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PERSON MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT. EACH OF THE COMPANY AND EACH HOLDER CERTIFIES AND ACKNOWLEDGES THAT (a) NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (b) SUCH PERSON UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (c) SUCH PERSON MAKES THIS WAIVER VOLUNTARILY, AND (d) SUCH PERSON HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND EACH ANCILLARY AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
(h) Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision hereof shall not affect the validity or enforceability of any other provision. Whenever possible, each provision or portion of any provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, 15 WEIL:\98917535\3\76973.0005
Exhibit D to PLA-8039 Page 16 of 20 Case 22-90054 Document 1598 Filed in TXSB on 11/29/22 Page 107 of 225 but if any provision of this Agreement, or the application thereof to any Person or any circumstance, is invalid or unenforceable, (i) a suitable and equitable provision shall be substituted therefor to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (ii) the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction; provided, that, if any one or more of the provisions contained in this Agreement shall be determined to be excessively broad as to activity, subject, duration or geographic scope, it shall be reformed by limiting and reducing it to the minimum extent necessary, so as to be enforceable under applicable law.
(i) Business Days. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a day other than a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.
(j) Entire Agreement. This Agreement constitutes the entire agreement among the Parties with respect to the subject matter hereof and supersedes all prior contracts or agreements with respect to the subject matter hereof and supersedes any and all prior or contemporaneous discussions, agreements and understandings, whether oral or written, that may have been made or entered into by or among any of the Parties or any of their respective Affiliates relating to the transactions contemplated hereby.
(k) No Recourse. Notwithstanding anything that may be expressed or implied in this Agreement, and notwithstanding the fact that certain of the Holders may be partnerships or limited liability companies, each Holder covenants, agrees and acknowledges that no recourse under this Agreement or any documents or instruments delivered in connection with this Agreement shall be had against any of the Companys or the Holders former, current or future direct or indirect equity holders, controlling Persons, stockholders, directors, officers, employees, agents, Affiliates, members, financing sources, managers, general or limited partners or assignees (each, a Related Party and collectively, the Related Parties), in each case other than the Company, the Holders or any of their permitted assigns under this Agreement, whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any applicable law, it being expressly agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on or otherwise be incurred by any of the Related Parties, as such, for any obligation or liability of the Company or the Holders under this Agreement or any documents or instruments delivered in connection herewith for any claim based on, in respect of or by reason of such obligations or liabilities or their creation; provided, however, nothing in this Section 5(k) shall relieve or otherwise limit the liability of the Company or any Holder, as such, for any breach or violation of its obligations under this Agreement or such agreements, documents or instruments.
(l) Third-Party Beneficiaries. Nothing in this Agreement, express or implied, is intended to confer upon any Person other than the Company and the Holders and their respective successors and permitted assigns any rights, benefits or remedies of any nature whatsoever.
(m) Recapitalizations, Exchanges, etc. The provisions of this Agreement shall apply to the full extent set forth herein with respect to (i) the Common Stock, (ii) any and all securities into 16 WEIL:\98917535\3\76973.0005
Exhibit D to PLA-8039 Page 17 of 20 Case 22-90054 Document 1598 Filed in TXSB on 11/29/22 Page 108 of 225 which shares of Common Stock are converted, exchanged or substituted in any recapitalization or other capital reorganization by the Company and (iii) any and all equity securities of the Company or any successor or assign of the Company (whether by merger, consolidation, statutory conversion, sale of assets or otherwise) which may be issued in respect of, in conversion of, in exchange for or in substitution of, the Common Stock and shall be appropriately adjusted for any stock dividends, splits, reverse splits, combinations, recapitalizations and the like occurring after the date hereof.
(n) Headings; Section References. All heading references contained in this Agreement are for convenience purposes only and shall not be deemed to limit or affect any of the provisions of this Agreement.
(o) Counterparts. This Agreement may be executed in one or more counterparts, and by the different Parties hereto in separate counterparts, each of which when executed will be deemed to be an original but all of which taken together will constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by telecopy or by electronic delivery in Adobe Portable Document Format will be effective as delivery of a manually executed counterpart of this Agreement.
[Signature Pages Follow.]
17 WEIL:\98917535\3\76973.0005
Exhibit D to PLA-8039 Page 18 of 20 Case 22-90054 Document 1598 Filed in TXSB on 11/29/22 Page 109 of 225 IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above.
COMPANY TALEN ENERGY CORPORATION By:
Name:
Title:
Address: 1780 Hughes Landing Blvd., Suite 800, The Woodlands Texas 77380 Attention: [Andrew M. Wright]
E-mail address: [andrew.wright@talenenergy.com]
[Signature Page to Stockholders Agreement]
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Exhibit D to PLA-8039 Page 19 of 20 Case 22-90054 Document 1598 Filed in TXSB on 11/29/22 Page 110 of 225 HOLDER By:
Name: []
Title:
[]
Notice information pursuant to Section 5(d):
Address:
E-mail:
[Signature Page to Stockholders Agreement]
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Exhibit D to PLA-8039 Page 20 of 20 Case 22-90054 Document 1598 Filed in TXSB on 11/29/22 Page 111 of 225 SCHEDULE I List of Certain Equityholders 6
- 1. []
6 Note to Draft: To be populated with equityholders of reorganized TEC.
[Schedule I to Stockholders Agreement]
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