Common use of overrides Clause in Contracts

overrides. (i) On the Closing Date, the Company shall, and shall cause each of the Subsidiaries that own any Real Property (as defined in Section 3(bb)) to, deliver to each of the Buyers Overrides, each duly and validly executed by the Company and each of the Subsidiaries (as applicable), providing such Buyer with perpetual overriding royalty interests, effective from the Closing Date, in the hydrocarbon production of all of the Company’s and the Subsidiaries’ current and future interest in all of the Current Override Properties equal to three percent (3%), multiplied by such Buyer’s Allocation Percentage. (ii) During the period commencing on (and including) the one-year anniversary of the Closing Date and terminating on (and excluding) the two-year anniversary of the Closing Date, the Company shall have the right to purchase from the Buyers all (but not less than all) of the Overrides issued to the Buyers prior to the one-year anniversary of the Closing Date (the Override Exchange”), by delivery of a written notice of election (the date of delivery of the written notice, the “Override Exchange Election Date,” and each such written notice, an “Override Exchange Notice”) to each of the Buyers, provided that the Conditions to Override Exchange (as set forth in Section 1(d)(iii)) are satisfied (or waived in writing by each of the Buyers). An Override Exchange Notice shall be irrevocable by the Company. The Company shall not be entitled or permitted to effect the Override Exchange, or deliver any Override Exchange Notice, unless the Company takes the same action, at the same time, with respect to all of the Overrides. No later than ten (10) Business Days following the Override Exchange Election Date, each of the Company and Buyers holding a majority in interest of the outstanding Overrides shall select an oil and gas industry recognized appraiser, independent of the Company, the Subsidiaries and each of the Buyers (each, an “Appraiser” and together, the “Appraisers”), to determine the Fair Market Value of the Overrides held by each of the Buyers. The designation of an Appraiser by the Company and by Buyers holding a majority in interest of the outstanding Overrides, respectively, shall not be made without the prior consent of the other, which consent shall not be unreasonably withheld. Each Appraiser shall be directed to deliver a written report (each, a “Valuation Report”) to the Company and each of the Buyers as to such Appraiser’s valuation of the Overrides (in the aggregate and as to those held by each Buyer) as promptly as practicable, and in no event later than forty-five (45) days after the Override Exchange Election Date (the “Valuation Deadline”). No later than three (3) Business Days prior to the Override Exchange Date, each Buyer shall deliver to the Company a written notice (an “Override Exchange Election Notice”) as to Buyer’s election (A) to receive Override Exchange Shares as (I) Common Override Exchange Shares or (II) on or after the Preferred Authorization (as defined in Section 4(z)), Preferred Override Exchange Shares, or a combination of Common Override Exchange Shares and Preferred Override Exchange Shares and, if a combination, as to the respective proportions thereof; or (B) to receive Warrants (“Override Warrants”) to purchase Warrant Shares (“Override Warrant Shares”) at an initial exercise price per share of $0.01. If the Company has delivered an Override Exchange Notice in accordance with this Section 1(d)(ii) and each of the Conditions to Override Exchange (as set forth in Section 1(d)(iii)) are satisfied (or waived in writing by the Buyers), then, on the Override Exchange Date, the Company shall deliver to each of the Buyers a number (rounded to the nearest whole number, with 0.5 being rounded up) of Override Exchange Shares (or, if so elected by such Buyer in its Override Election Notice, Override Warrants to purchase a number of Warrant Shares) equal to the quotient of (X) the Fair Market Value of the Overrides held by such Buyer, divided by (Y) the arithmetic average of the closing price per share of the Common Stock on the Principal Market (as defined in Section 3(s)) on each of the twenty (20) consecutive Trading Days immediately preceding the Override Exchange Date (the “Applicable Average Share Price”). The failure of the Company to deliver the Override Exchange Shares (or Override Warrants, as applicable) in full on the Override Exchange Date shall constitute an Event of Default (as defined in the Notes). For purposes hereof, the “Fair Market Value” of the Overrides shall mean (I) if both Valuation Reports have been delivered on or prior to the Valuation Deadline, the arithmetic average of the valuations of the Overrides set forth in the Valuation Reports, (II) if only one Valuation Report is delivered on or prior to the Valuation Deadline, the valuation set forth in such Valuation Report, and (III) if neither Valuation Report has been delivered by the Valuation Deadline, the valuation set forth in the first Valuation Report delivered after the Valuation Deadline (the date that is two (2) Business Days after the Valuation Deadline, or, if neither Valuation Report has been delivered by the Valuation Deadline, the date that is two (2) Business Days after delivery of the first Valuation Report, being referred to herein as the “Valuation Determination Date”); “Override Exchange Date” shall mean the twenty-first (21st) Trading Day after the Valuation Determination Date; “Override Exchange Shares” means, at each Buyer’s election as set forth in such Buyer’s Override Exchange Election Notice, shares of Common Stock (“Common Override Exchange Shares”), and/or, at any time on or after the Preferred Authorization, shares of convertible preferred stock of the Company having terms as provided in Section 1(d)(iv) (“Preferred Override Exchange Shares”); provided that, if any Buyer fails to deliver an Override Exchange Election Notice as required hereby, it shall be deemed to have elected to receive all of its Override Exchange Shares as Preferred Override Exchange Shares if the Preferred Authorization has occurred, or as Override Warrants if it has not; and “Trading Day” means any day on which the Common Stock is traded on its Principal Market; provided that “Trading Day” shall not include any day on which the Principal Market is open for trading for less than 4.5 hours.