We may offer
and sell the securities listed above from time to time in one or more offerings of one or more classes or series. Any debt securities we offer pursuant to this prospectus may be fully and unconditionally guaranteed by certain of our subsidiaries.
This prospectus provides you with a general description of the securities that may be offered. Each time securities are offered, we will
provide a prospectus supplement and attach it to this prospectus. The prospectus supplement will contain more specific information about the offering and the terms of the securities being offered. A prospectus supplement may also add, update or
change information contained in this prospectus. This prospectus may not be used to offer or sell securities without a prospectus supplement describing the method and terms of the offering.
We may sell these securities directly or through agents, underwriters or dealers, or through a combination of these methods. See Plan of
Distribution. The prospectus supplement will list any agents, underwriters or dealers that may be involved and the compensation they will receive. The prospectus supplement will also show you the total amount of money that we will receive from
selling the securities being offered, after the expenses of the offering. You should carefully read this prospectus and any accompanying prospectus supplement, together with the documents we incorporate by reference, before you invest in any of our
securities.
Our common stock is listed on the New York Stock Exchange under the symbol CXO.
This prospectus is part of a registration statement that we filed with the Securities and Exchange Commission (the SEC), using a
shelf registration process. Under this shelf registration process, we may offer and sell any combination of the securities described in this prospectus in one or more offerings. This prospectus provides you with a general description of
the securities we may offer. Each time we sell securities, we will provide you with a prospectus supplement that will contain specific information about the terms of the offering and the offered securities. The prospectus supplement may also add,
update or change information contained in this prospectus. Any statement that we make in this prospectus will be modified or superseded by any inconsistent statement made by us in a prospectus supplement.
We have not authorized any person to provide you with any information or represent anything about us other than what is contained in this
prospectus, any prospectus supplement and any pricing supplement. We do not take any responsibility for, and can provide no assurance as to the reliability of, any information that others may provide to you. You should not assume that the
information in this prospectus or any document incorporated by reference is accurate as of any date other than the date on its front cover. Our business, financial condition, results of operations and prospects may have changed since the date
indicated on the front cover of such documents. This prospectus does not constitute an offer to sell or the solicitation of an offer to buy any securities other than the securities offered hereunder, nor does this prospectus constitute an offer to
sell or the solicitation of an offer to buy securities in any jurisdiction to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction.
Additional information, including our financial statements and the notes thereto, is incorporated in this prospectus by reference to our
reports filed with the SEC. Please read Where You Can Find More Information below. You are urged to read this prospectus carefully, including Risk Factors, any prospectus supplement and the documents incorporated by reference
in their entirety before investing in our securities.
Unless the context requires otherwise or unless otherwise noted, all references in
this prospectus or any accompanying prospectus supplement to Concho, the Company, we, us or our are to Concho Resources Inc. and its subsidiaries.
We are an independent oil and natural gas company engaged in the acquisition, development, exploration and production of oil and natural gas
properties. Our core operations are primarily focused in the Permian Basin of southeast New Mexico and west Texas. Our legacy in the Permian Basin provides us a deep understanding of operating and geological trends. We are actively developing our
resource base by utilizing extended length lateral drilling, enhanced completion techniques, multi-well pad locations and large-scale development projects throughout our four core operating areas: the Northern Delaware Basin, the Southern Delaware
Basin, the Midland Basin and the New Mexico Shelf. Our strategy remains focused on development and exploration activities on our multi-year project inventory and pursuing acquisitions that meet our strategic and financial objectives.
Our principal executive offices are located at One Concho Center, 600 W. Illinois Avenue, Midland, Texas 79701, and our telephone number at
that address is (432)
683-7443.
Our common stock is listed on the New York Stock Exchange (NYSE) under the symbol CXO.
We file annual, quarterly and current reports and other information with the SEC (File
No. 001-33615)
pursuant to the Securities Exchange Act of 1934 (the Exchange Act). You may read and copy any documents that are filed at the SECs public reference room at 100 F Street,
N.E., Washington, D.C. 20549. You may also obtain copies of these documents at prescribed rates from the public reference section of the SEC at its Washington address. Please call the SEC at
1-800-SEC-0330
for further information.
The SEC allows us to incorporate by
reference information that we file with it, which means that we can disclose important information to you by referring you to documents previously filed with the SEC. The information incorporated by reference is an important part of this
prospectus, and the information that we later file with the SEC will automatically update and supersede this information. The following documents that we filed with the SEC pursuant to the Exchange Act are incorporated herein by reference:
These reports contain important information about
us, our financial condition and our results of operations.
All documents subsequently filed pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act (excluding any information furnished pursuant to Item 2.02 or Item 7.01 on any Current Report on Form
8-K)
before the termination of each offering under this prospectus shall be
deemed to be incorporated in this prospectus by reference and to be a part hereof from the date of filing of such documents. Any statement contained herein, or in a document incorporated or deemed to be incorporated by reference herein, shall be
deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained herein or in any subsequently filed document that also is or is deemed to be incorporated by reference herein, modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus.
We also incorporate by reference the following information included in documents filed by RSP Permian, Inc., a Delaware corporation
(RSP), with the SEC (SEC File
No. 001-36264):
You may request a copy of our filings at no cost by writing or telephoning us at the following
address and telephone number:
600 W. Illinois
Avenue
Various statements and information contained in or incorporated by reference into this prospectus that express a belief, expectation, or
intention, or that are not statements of historical fact, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 (the Securities Act), and Section 21E of the Exchange Act.
These forward-looking statements include statements, projections and estimates concerning our future financial position, operations, performance, business strategy, oil and natural gas reserves, drilling program, capital expenditures, liquidity and
capital resources, the timing and success of specific projects, outcomes and effects of litigation, claims and disputes, derivative activities, potential financing and our proposed acquisition of RSP (the RSP Acquisition).
Forward-looking statements are generally accompanied by words such as estimate, project, predict, believe, expect, anticipate, potential, could,
may, foresee, plan, will, goal or other words that convey the uncertainty of future events or outcomes. Forward-looking statements are not guarantees of performance. We have based these
forward-looking statements on our current expectations and assumptions about future events and their potential effect on us. These statements are based on certain assumptions and analyses made by us in light of our experience and our perception of
historical trends, current conditions and expected future developments as well as other factors we believe are appropriate under the circumstances. Actual results may differ materially from those implied or expressed by any forward-looking
statements. These forward-looking statements speak only as of the date of this prospectus, or if earlier, as of the date they were made. We disclaim any obligation to update or revise these statements unless required by law, whether as a result of
new information, future events or otherwise, and we caution you not to rely on them unduly. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic,
competitive, regulatory and other risks, contingencies and uncertainties relating to, among other matters, the risks discussed in Part II, Item 1A, Risk Factors in our Quarterly Report on Form
10-Q
for the quarter ended March 31, 2018 and in Part I, Item 1A, Risk Factors in our Annual Report on Form
10-K
for the year ended December 31, 2017, in the other documents incorporated by
reference herein and our subsequent SEC filings, as well as those factors summarized below:
Reserve
engineering is a process of estimating underground accumulations of oil and natural gas that cannot be measured in an exact way. The accuracy of any reserve estimate depends on the quality of available data, the interpretation of such data and the
price and cost assumptions made by our reserve engineers. In addition, the results of drilling, testing and production activities may justify revisions of estimates that were made previously. If significant, such revisions would change the schedule
of any further production and development drilling. Accordingly, reserve estimates may differ from the quantities of oil and natural gas that are ultimately recovered.
DESCRIPTION OF DEBT SECURITIES
The debt securities will be either our senior debt securities (Senior Debt Securities) or our subordinated debt securities
(Subordinated Debt Securities, and, together with the Senior Debt Securities, Debt Securities). The Senior Debt Securities and the Subordinated Debt Securities will be issued under separate indentures among us, the Subsidiary
Guarantors (as defined below) of such Debt Securities, if any, and a trustee to be determined (the Trustee). Senior Debt Securities will be issued under a Senior Indenture and Subordinated Debt Securities will be issued under
a Subordinated Indenture. Together, the Senior Indenture and the Subordinated Indenture are called Indentures.
The Debt Securities may be issued from time to time in one or more series. The particular terms of each series that are offered by a
prospectus supplement will be described in the prospectus supplement.
Unless the Debt Securities are guaranteed by our subsidiaries as
described below, the rights of Concho and our creditors, including holders of the Debt Securities, to participate in the assets of any subsidiary upon the latters liquidation or reorganization, will be subject to the prior claims of the
subsidiarys creditors, except to the extent that we may ourselves be a creditor with recognized claims against such subsidiary.
We
have summarized selected provisions of the Indentures below. The summary is not complete. The form of each Indenture has been filed with the SEC as an exhibit to the registration statement of which this prospectus is a part, and you should read the
Indentures for provisions that may be important to you. Capitalized terms used in the below summary but not otherwise defined herein have the meanings specified in the Indentures.
General
The Indentures provide that Debt
Securities in separate series may be issued thereunder from time to time without limitation as to aggregate principal amount. We may specify a maximum aggregate principal amount for the Debt Securities of any series. We will determine the terms and
conditions of the Debt Securities, including the maturity, principal and interest, but those terms must be consistent with the Indenture. The Debt Securities will be our unsecured obligations.
The Subordinated Debt Securities will be subordinated in right of payment to the prior payment in full of all of our Senior Debt (as defined
in the Subordinated Indenture) as described under Subordination of Subordinated Debt Securities and in the prospectus supplement applicable to any Subordinated Debt Securities. If the prospectus supplement so indicates, the Debt
Securities will be convertible into our common stock.
If specified in the prospectus supplement respecting a particular series of Debt
Securities, certain subsidiaries of Concho named herein (each a Subsidiary Guarantor) will fully and unconditionally guarantee (the Subsidiary Guarantee) that series as described under Subsidiary Guarantee
and in the prospectus supplement. Each Subsidiary Guarantee will be an unsecured obligation of the Subsidiary Guarantor. A Subsidiary Guarantee of Subordinated Debt Securities will be subordinated to the Senior Debt of the Subsidiary Guarantor on
the same basis as the Subordinated Debt Securities are subordinated to our Senior Debt.
The applicable prospectus supplement will set
forth the price or prices at which the Debt Securities to be issued will be offered for sale and will describe the following terms of such Debt Securities:
(1) the title of the Debt Securities;
(2) whether the Debt Securities are Senior Debt Securities or Subordinated Debt Securities and, if Subordinated Debt Securities, the related
subordination terms;
(3) whether any Subsidiary Guarantor will provide a Subsidiary Guarantee of the Debt Securities;
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(4) any limit on the aggregate principal amount of the Debt Securities;
(5) each date on which the principal of the Debt Securities will be payable;
(6) the interest rate that the Debt Securities will bear and the Interest Payment Dates for the Debt Securities;
(7) each place where payments on the Debt Securities will be payable;
(8) any terms upon which the Debt Securities may be redeemed, in whole or in part, at our option;
(9) any sinking fund or other provisions that would obligate us to redeem or otherwise repurchase the Debt Securities;
(10) the portion of the principal amount, if less than all, of the Debt Securities that will be payable upon declaration of acceleration of
the Maturity of the Debt Securities;
(11) whether the Debt Securities are defeasible;
(12) any addition to or change in the Events of Default (as described under Events of Default);
(13) whether the Debt Securities are convertible into our common stock and, if so, the terms and conditions upon which conversion will be
effected, including the initial conversion price or conversion rate and any adjustments thereto and the conversion period;
(14) any
addition to or change in the covenants in the Indenture applicable to the Debt Securities; and
(15) any other terms of the Debt
Securities not inconsistent with the provisions of the Indenture.
Debt Securities, including any Debt Securities that provide for an
amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the Maturity thereof (Original Issue Discount Securities), may be sold at a substantial discount below their principal amount.
Special United States federal income tax considerations applicable to Debt Securities sold at an original issue discount may be described in the applicable prospectus supplement. In addition, special United States federal income tax or other
considerations applicable to any Debt Securities that are denominated in a currency or currency unit other than United States dollars may be described in the applicable prospectus supplement.
Subordination of Subordinated Debt Securities
The indebtedness evidenced by the Subordinated Debt Securities will, to the extent set forth in the Subordinated Indenture with respect to each
series of Subordinated Debt Securities, be subordinated in right of payment to the prior payment in full of all of our Senior Debt, including the Senior Debt Securities, and it may also be senior in right of payment to all of our Subordinated Debt.
The prospectus supplement relating to any Subordinated Debt Securities will summarize the subordination provisions of the Subordinated Indenture applicable to that series including:
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the applicability and effect of such provisions upon any payment or distribution respecting that series following any liquidation, dissolution or other
winding-up,
or any
assignment for the benefit of creditors or other marshalling of assets or any bankruptcy, insolvency or similar proceedings;
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the applicability and effect of such provisions in the event of specified defaults with respect to any Senior Debt, including the circumstances under which and the periods during which we will be prohibited from making
payments on the Subordinated Debt Securities; and
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the definition of Senior Debt applicable to the Subordinated Debt Securities of that series and, if the series is issued on a senior subordinated basis, the definition of Subordinated Debt applicable to that series.
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The prospectus supplement will also describe as of a recent date the approximate amount of Senior Debt to which the
Subordinated Debt Securities of that series will be subordinated.
The failure to make any payment on any of the Subordinated Debt
Securities by reason of the subordination provisions of the Subordinated Indenture described in the prospectus supplement will not be construed as preventing the occurrence of an Event of Default with respect to the Subordinated Debt Securities
arising from any such failure to make payment.
The subordination provisions described above will not be applicable to payments in respect
of the Subordinated Debt Securities from a defeasance trust established in connection with any legal defeasance or covenant defeasance of the Subordinated Debt Securities as described under Legal Defeasance and Covenant
Defeasance.
Subsidiary Guarantee
If specified in the prospectus supplement, one or more of the Subsidiary Guarantors will guarantee the Debt Securities of a series. Unless
otherwise indicated in the prospectus supplement, the following provisions will apply to the Subsidiary Guarantee of the Subsidiary Guarantor.
Subject to the limitations described below and in the prospectus supplement, one or more of the Subsidiary Guarantors will jointly and
severally, fully and unconditionally guarantee the punctual payment when due, whether at Stated Maturity, by acceleration or otherwise, of all our payment obligations under the Indentures and the Debt Securities of a series, whether for principal
of, premium, if any, or interest on the Debt Securities or otherwise. The Subsidiary Guarantors will also pay all expenses (including reasonable counsel fees and expenses) incurred by the applicable Trustee in enforcing any rights under a Subsidiary
Guarantee with respect to a Subsidiary Guarantor.
In the case of Subordinated Debt Securities, a Subsidiary Guarantors Subsidiary
Guarantee will be subordinated in right of payment to the Senior Debt of such Subsidiary Guarantor on the same basis as the Subordinated Debt Securities are subordinated to our Senior Debt. No payment will be made by any Subsidiary Guarantor under
its Subsidiary Guarantee during any period in which payments by us on the Subordinated Debt Securities are suspended by the subordination provisions of the Subordinated Indenture.
Each Subsidiary Guarantee will be limited in amount to an amount not to exceed the maximum amount that can be guaranteed by the relevant
Subsidiary Guarantor without rendering such Subsidiary Guarantee voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally.
Each Subsidiary Guarantee will be a continuing guarantee and will:
(1) remain in full force and effect until either (a) payment in full of all the applicable Debt Securities (or such Debt Securities are
otherwise satisfied and discharged in accordance with the provisions of the applicable Indenture) or (b) released as described in the following paragraph;
(2) be binding upon each Subsidiary Guarantor; and
(3) inure to the benefit of and be enforceable by the applicable Trustee, the Holders and their successors, transferees and assigns.
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In the event that (a) a Subsidiary Guarantor ceases to be a Subsidiary, (b) either
legal defeasance or covenant defeasance occurs with respect to the series or (c) all or substantially all of the assets or all of the Capital Stock of such Subsidiary Guarantor is sold, including by way of sale, merger, consolidation or
otherwise, such Subsidiary Guarantor will be released and discharged of its obligations under its Subsidiary Guarantee without any further action required on the part of the Trustee or any Holder, and no other person acquiring or owning the assets
or Capital Stock of such Subsidiary Guarantor will be required to enter into a Subsidiary Guarantee. In addition, the prospectus supplement may specify additional circumstances under which a Subsidiary Guarantor can be released from its Subsidiary
Guarantee.
Form, Exchange and Transfer
The Debt Securities of each series will be issuable only in fully registered form, without coupons, and, unless otherwise specified in the
applicable prospectus supplement, only in denominations of $1,000 and integral multiples thereof.
At the option of the Holder, subject to
the terms of the applicable Indenture and the limitations applicable to securities in global form (Global Securities), Debt Securities of each series will be exchangeable for other Debt Securities of the same series of any authorized
denomination and of a like tenor and aggregate principal amount.
Subject to the terms of the applicable Indenture and the limitations
applicable to Global Securities, Debt Securities may be presented for exchange as provided above or for registration of transfer (duly endorsed or with the form of transfer endorsed thereon duly executed) at the office of the Security Registrar or
at the office of any transfer agent designated by us for such purpose. No service charge will be made for any registration of transfer or exchange of Debt Securities, but we may require payment of a sum sufficient to cover any tax or other
governmental charge payable in that connection. Such transfer or exchange will be effected upon the Security Registrar or such transfer agent, as the case may be, being satisfied with the documents of title and identity of the person making the
request. The Security Registrar and any other transfer agent initially designated by us for any Debt Securities will be named in the applicable prospectus supplement. We may at any time designate additional transfer agents or rescind the designation
of any transfer agent or approve a change in the office through which any transfer agent acts, except that we will be required to maintain a transfer agent in each Place of Payment for the Debt Securities of each series.
If the Debt Securities of any series (or of any series and specified tenor) are to be redeemed in part, we will not be required to
(1) issue, register the transfer of or exchange any Debt Security of that series (or of that series and specified tenor, as the case may be) during a period beginning at the opening of business 15 days before the day of mailing of a notice of
redemption of any such Debt Security that may be selected for redemption and ending at the close of business on the day of such mailing or (2) register the transfer of or exchange any Debt Security so selected for redemption, in whole or in
part, except the unredeemed portion of any such Debt Security being redeemed in part.
Global Securities
Some or all of the Debt Securities of any series may be represented, in whole or in part, by one or more Global Securities that will have an
aggregate principal amount equal to that of the Debt Securities they represent. Each Global Security will be registered in the name of a Depositary or its nominee identified in the applicable prospectus supplement, will be deposited with such
Depositary or nominee or its custodian and will bear a legend regarding the restrictions on exchanges and registration of transfer thereof referred to below and any such other matters as may be provided for pursuant to the applicable Indenture.
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Notwithstanding any provision of the Indentures or any Debt Security described in this
prospectus, no Global Security may be exchanged in whole or in part for Debt Securities registered, and no transfer of a Global Security in whole or in part may be registered, in the name of any Person other than the Depositary for such Global
Security or any nominee of such Depositary unless:
(1) the Depositary has notified us that it is unwilling or unable to continue as
Depositary for such Global Security or has ceased to be qualified to act as such as required by the applicable Indenture, and in either case we fail to appoint a successor Depositary within 90 days;
(2) an Event of Default with respect to the Debt Securities represented by such Global Security has occurred and is continuing and the Trustee
has received a written request from the Depositary to issue certificated Debt Securities;
(3) subject to the rules of the Depositary, we
shall have elected to terminate the book-entry system through the Depositary; or
(4) other circumstances exist, in addition to or in lieu
of those described above, as may be described in the applicable prospectus supplement.
All certificated Debt Securities issued in
exchange for a Global Security or any portion thereof will be registered in such names as the Depositary may direct.
As long as the
Depositary, or its nominee, is the registered holder of a Global Security, the Depositary or such nominee, as the case may be, will be considered the sole owner and Holder of such Global Security and the Debt Securities that it represents for all
purposes under the Debt Securities and the applicable Indenture. Except in the limited circumstances referred to above, owners of beneficial interests in a Global Security will not be entitled to have such Global Security or any Debt Securities that
it represents registered in their names, will not receive or be entitled to receive physical delivery of certificated Debt Securities in exchange for those interests and will not be considered to be the owners or Holders of such Global Security or
any Debt Securities that it represents for any purpose under the Debt Securities or the applicable Indenture. All payments on a Global Security will be made to the Depositary or its nominee, as the case may be, as the Holder of the security. The
laws of some jurisdictions may require that some purchasers of Debt Securities take physical delivery of such Debt Securities in certificated form. These laws may impair the ability to transfer beneficial interests in a Global Security.
Ownership of beneficial interests in a Global Security will be limited to institutions that have accounts with the Depositary or its nominee
(participants) and to persons that may hold beneficial interests through participants. In connection with the issuance of any Global Security, the Depositary will credit, on its book-entry registration and transfer system, the respective
principal amounts of Debt Securities represented by the Global Security to the accounts of its participants. Ownership of beneficial interests in a Global Security will be shown only on, and the transfer of those ownership interests will be effected
only through, records maintained by the Depositary (with respect to participants interests) or any such participant (with respect to interests of Persons held by such participants on their behalf). Payments, transfers, exchanges and other
matters relating to beneficial interests in a Global Security may be subject to various policies and procedures adopted by the Depositary from time to time. None of us, the Subsidiary Guarantors, the Trustees or the agents of us, the Subsidiary
Guarantors or the Trustees will have any responsibility or liability for any aspect of the Depositarys or any participants records relating to, or for payments made on account of, beneficial interests in a Global Security, or for
maintaining, supervising or reviewing any records relating to such beneficial interests.
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Payment and Paying Agents
Unless otherwise indicated in the applicable prospectus supplement, payment of interest on a Debt Security on any Interest Payment Date will be
made to the Person in whose name such Debt Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest.
Unless otherwise indicated in the applicable prospectus supplement, principal of and any premium and interest on the Debt Securities of a
particular series will be payable at the office of such Paying Agent or Paying Agents as we may designate for such purpose from time to time, except that at our option payment of any interest on Debt Securities in certificated form may be made by
check mailed to the address of the Person entitled thereto as such address appears in the Security Register. Unless otherwise indicated in the applicable prospectus supplement, the corporate trust office of the Trustee under the Senior Indenture in
The City of New York will be designated as sole Paying Agent for payments with respect to Senior Debt Securities of each series, and the corporate trust office of the Trustee under the Subordinated Indenture in The City of New York will be
designated as the sole Paying Agent for payment with respect to Subordinated Debt Securities of each series. Any other Paying Agents initially designated by us for the Debt Securities of a particular series will be named in the applicable prospectus
supplement. We may at any time designate additional Paying Agents or rescind the designation of any Paying Agent or approve a change in the office through which any Paying Agent acts, except that we will be required to maintain a Paying Agent in
each Place of Payment for the Debt Securities of a particular series.
All money paid by us to a Paying Agent for the payment of the
principal of or any premium or interest on any Debt Security which remains unclaimed at the end of two years after such principal, premium or interest has become due and payable will be repaid to us, and the Holder of such Debt Security thereafter
may look only to us for payment.
Consolidation, Merger and Sale of Assets
Unless otherwise specified in the prospectus supplement, we may not consolidate with or merge into, or transfer, lease or otherwise dispose of
all or substantially all of our assets to, any Person (a Successor Person), and may not permit any Person to consolidate with or merge into us, unless:
(1) the Successor Person (if not us) is a corporation, partnership, trust or other entity organized and validly existing under the laws of any
domestic jurisdiction and assumes our obligations on the Debt Securities and under the Indentures;
(2) immediately before and after
giving pro forma effect to the transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, has occurred and is continuing; and
(3) several other conditions, including any additional conditions with respect to any particular Debt Securities specified in the applicable
prospectus supplement, are met.
The Successor Person (if not us) will be substituted for us under the applicable Indenture with the same
effect as if it had been an original party to such Indenture, and, except in the case of a lease, we will be relieved from any further obligations under such Indenture and the Debt Securities.
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Events of Default
Unless otherwise specified in the prospectus supplement, each of the following will constitute an Event of Default under the
applicable Indenture with respect to Debt Securities of any series:
(1) failure to pay principal of or any premium on any Debt Security
of that series when due, whether or not, in the case of Subordinated Debt Securities, such payment is prohibited by the subordination provisions of the Subordinated Indenture;
(2) failure to pay any interest on any Debt Securities of that series when due, continued for 30 days, whether or not, in the case of
Subordinated Debt Securities, such payment is prohibited by the subordination provisions of the Subordinated Indenture;
(3) failure to
deposit any sinking fund payment, when due, in respect of any Debt Security of that series, whether or not, in the case of Subordinated Debt Securities, such deposit is prohibited by the subordination provisions of the Subordinated Indenture;
(4) failure to perform or comply with the provisions described under Consolidation, Merger and Sale of Assets;
(5) failure to perform any of our other covenants in such Indenture (other than a covenant included in such Indenture solely for the benefit
of a series other than that series), continued for 60 days after written notice has been given by the applicable Trustee, or the Holders of at least 25% in principal amount of the Outstanding Debt Securities of that series, as provided in such
Indenture;
(6) any Debt of ourself, any Significant Subsidiary or, if a Subsidiary Guarantor has guaranteed the series, such Subsidiary
Guarantor, is not paid within any applicable grace period after final maturity or is accelerated by its holders because of a default and the total amount of such Debt unpaid or accelerated exceeds $20.0 million;
(7) any judgment or decree for the payment of money in excess of $20.0 million is entered against us, any Significant Subsidiary or, if a
Subsidiary Guarantor has guaranteed the series, such Subsidiary Guarantor, remains outstanding for a period of 60 consecutive days following entry of such judgment and is not discharged, waived or stayed;
(8) certain events of bankruptcy, insolvency or reorganization affecting us, any Significant Subsidiary or, if a Subsidiary Guarantor has
guaranteed the series, such Subsidiary Guarantor; and
(9) if any Subsidiary Guarantor has guaranteed such series, the Subsidiary
Guarantee of any such Subsidiary Guarantor is held by a final
non-appealable
order or judgment of a court of competent jurisdiction to be unenforceable or invalid or ceases for any reason to be in full force
and effect (other than in accordance with the terms of the applicable Indenture) or any Subsidiary Guarantor or any Person acting on behalf of any Subsidiary Guarantor denies or disaffirms such Subsidiary Guarantors obligations under its
Subsidiary Guarantee (other than by reason of a release of such Subsidiary Guarantor from its Subsidiary Guarantee in accordance with the terms of the applicable Indenture).
If an Event of Default (other than an Event of Default with respect to Concho Resources Inc. described in clause (8) above) with respect
to the Debt Securities of any series at the time Outstanding occurs and is continuing, either the applicable Trustee or the Holders of at least 25% in principal amount of the Outstanding Debt Securities of that series by notice as provided in the
Indenture may declare the principal amount of the Debt Securities of that series (or, in the case of any Debt Security that is an Original Issue Discount Security, such portion of the principal amount of such Debt Security as may be specified in the
terms of such Debt Security) to be due and payable immediately, together with any accrued and unpaid interest thereon. If an Event of Default
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with respect to Concho Resources Inc. described in clause (8) above with respect to the Debt Securities of any series at the time Outstanding occurs, the principal amount of all the Debt
Securities of that series (or, in the case of any such Original Issue Discount Security, such specified amount) will automatically, and without any action by the applicable Trustee or any Holder, become immediately due and payable, together with any
accrued and unpaid interest thereon. After any such acceleration, but before a judgment or decree based on acceleration, the Holders of a majority in principal amount of the Outstanding Debt Securities of that series may, under certain
circumstances, rescind and annul such acceleration and its consequences if all Events of Default with respect to that series, other than the
non-payment
of accelerated principal (or other specified amount),
have been cured or waived as provided in the applicable Indenture. For information as to waiver of defaults, see Modification and Waiver below.
Subject to the provisions of the Indentures relating to the duties of the Trustees in case an Event of Default has occurred and is continuing,
no Trustee will be under any obligation to exercise any of its rights or powers under the applicable Indenture at the request or direction of any of the Holders, unless such Holders have offered to such Trustee reasonable security or indemnity.
Subject to such provisions for the indemnification of the Trustees, the Holders of a majority in principal amount of the Outstanding Debt Securities of any series will have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee with respect to the Debt Securities of that series.
No Holder of a Debt Security of any series will have any right to institute any proceeding with respect to the applicable Indenture, or for
the appointment of a receiver or a trustee, or for any other remedy thereunder, unless:
(1) such Holder has previously given to the
Trustee under the applicable Indenture written notice of a continuing Event of Default with respect to the Debt Securities of that series;
(2) the Holders of at least 25% in principal amount of the Outstanding Debt Securities of that series have made written request, and such
Holder or Holders have offered reasonable security or indemnity, to the Trustee to institute such proceeding as trustee; and
(3) the
Trustee has failed to institute such proceeding and has not received from the Holders of a majority in principal amount of the Outstanding Debt Securities of that series a direction inconsistent with such request within 60 days after such notice,
request and offer.
However, such limitations do not apply to a suit instituted by a Holder of a Debt Security for the enforcement of
payment of the principal of or any premium or interest on such Debt Security on or after the applicable due date specified in such Debt Security or, if applicable, to convert such Debt Security.
We will be required to furnish to each Trustee annually a statement by certain of our officers as to whether or not we, to their knowledge,
are in default in the performance or observance of any of the terms, provisions and conditions of the applicable Indenture and, if so, specifying all such known defaults.
Modification and Waiver
We may modify or
amend an Indenture without the consent of any Holders of the Debt Securities in certain circumstances, including:
(1) to evidence the
succession under the Indenture of another Person to us or any Subsidiary Guarantor and to provide for its assumption of our or such Subsidiary Guarantors obligations to Holders of Debt Securities;
(2) to make any changes that would add any additional covenants of us or the Subsidiary Guarantors for the benefit of the Holders of Debt
Securities or that do not adversely affect the rights under the Indenture of the Holders of Debt Securities in any material respect;
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(3) to add any additional Events of Default;
(4) to provide for uncertificated Debt Securities in addition to or in place of certificated Debt Securities;
(5) to secure the Debt Securities;
(6) to establish the form or terms of any series of Debt Securities;
(7) to evidence and provide for the acceptance of appointment under the Indenture of a successor Trustee;
(8) to cure any ambiguity, defect or inconsistency;
(9) to add Subsidiary Guarantors; or
(10) in the case of any Subordinated Debt Security, to make any change in the subordination provisions that limits or terminates the benefits
applicable to any holder of Senior Debt.
Other modifications and amendments of an Indenture may be made by us, the Subsidiary Guarantors,
if applicable, and the applicable Trustee with the consent of the Holders of not less than a majority in principal amount of the Outstanding Debt Securities of each series affected by such modification or amendment; provided, however, that no such
modification or amendment may, without the consent of the Holder of each Outstanding Debt Security affected thereby:
(1) change the
Stated Maturity of the principal of, or any installment of principal of or interest on, any Debt Security;
(2) reduce the principal
amount of, or any premium or interest on, any Debt Security;
(3) reduce the amount of principal of an Original Issue Discount Security or
any other Debt Security payable upon acceleration of the Maturity thereof;
(4) change the place or currency of payment of principal of,
or any premium or interest on, any Debt Security;
(5) impair the right to institute suit for the enforcement of any payment due on or any
conversion right with respect to any Debt Security;
(6) modify the subordination provisions in the case of Subordinated Debt Securities,
or modify any conversion provisions, in either case in a manner adverse to the Holders of the Subordinated Debt Securities;
(7) except as
provided in the applicable Indenture, release the Subsidiary Guarantee of a Subsidiary Guarantor;
(8) reduce the percentage in principal
amount of Outstanding Debt Securities of any series, the consent of whose Holders is required for modification or amendment of the Indenture;
(9) reduce the percentage in principal amount of Outstanding Debt Securities of any series necessary for waiver of compliance with certain
provisions of the Indenture or for waiver of certain defaults;
(10) modify such provisions with respect to modification, amendment or
waiver; or
(11) following the making of an offer to purchase Debt Securities from any Holder that has been made pursuant to a covenant in
such Indenture, modify such covenant in a manner adverse to such Holder.
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The Holders of not less than a majority in principal amount of the Outstanding Debt Securities of
any series may waive compliance by us with certain restrictive provisions of the applicable Indenture. The Holders of not less than a majority in principal amount of the Outstanding Debt Securities of any series may waive any past default under the
applicable Indenture, except a default in the payment of principal, premium or interest and certain covenants and provisions of the Indenture which cannot be amended without the consent of the Holder of each Outstanding Debt Security of such series.
Each of the Indentures provides that in determining whether the Holders of the requisite principal amount of the Outstanding Debt
Securities have given or taken any direction, notice, consent, waiver or other action under such Indenture as of any date:
(1) the
principal amount of an Original Issue Discount Security that will be deemed to be Outstanding will be the amount of the principal that would be due and payable as of such date upon acceleration of maturity to such date;
(2) if, as of such date, the principal amount payable at the Stated Maturity of a Debt Security is not determinable (for example, because it
is based on an index), the principal amount of such Debt Security deemed to be Outstanding as of such date will be an amount determined in the manner prescribed for such Debt Security;
(3) the principal amount of a Debt Security denominated in one or more foreign currencies or currency units that will be deemed to be
Outstanding will be the United States-dollar equivalent, determined as of such date in the manner prescribed for such Debt Security, of the principal amount of such Debt Security (or, in the case of a Debt Security described in clause (1) or
(2) above, of the amount described in such clause); and
(4) certain Debt Securities, including those owned by us, any Subsidiary
Guarantor or any of our other Affiliates, will not be deemed to be Outstanding.
Except in certain limited circumstances, we will be
entitled to set any day as a record date for the purpose of determining the Holders of Outstanding Debt Securities of any series entitled to give or take any direction, notice, consent, waiver or other action under the applicable Indenture, in the
manner and subject to the limitations provided in the Indenture. In certain limited circumstances, the Trustee will be entitled to set a record date for action by Holders. If a record date is set for any action to be taken by Holders of a particular
series, only persons who are Holders of Outstanding Debt Securities of that series on the record date may take such action. To be effective, such action must be taken by Holders of the requisite principal amount of such Debt Securities within a
specified period following the record date. For any particular record date, this period will be 180 days or such other period as may be specified by us (or the Trustee, if it sets the record date), and may be shortened or lengthened (but not beyond
180 days) from time to time.
Satisfaction and Discharge
Each Indenture will be discharged and will cease to be of further effect as to all outstanding Debt Securities of any series issued thereunder,
when:
(1) either:
(a) all
outstanding Debt Securities of that series that have been authenticated (except lost, stolen or destroyed Debt Securities that have been replaced or paid and Debt Securities for whose payment money has theretofore been deposited in trust and
thereafter repaid to us) have been delivered to the Trustee for cancellation; or
(b) all outstanding Debt Securities of that series that
have been not delivered to the Trustee for cancellation have become due and payable or will become due and payable at their Stated Maturity within one year or are to
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be called for redemption within one year under arrangements satisfactory to the Trustee and in any case we have irrevocably deposited with the Trustee as trust funds money in an amount
sufficient, without consideration of any reinvestment of interest, to pay the entire indebtedness of such Debt Securities not delivered to the Trustee for cancellation, for principal, premium, if any, and accrued interest to the Stated Maturity or
redemption date;
(2) we have paid or caused to be paid all other sums payable by us under the Indenture with respect to the Debt
Securities of that series; and
(3) we have delivered an Officers Certificate and an Opinion of Counsel to the Trustee stating that
all conditions precedent to satisfaction and discharge of the Indenture with respect to the Debt Securities of that series have been satisfied.
Legal
Defeasance and Covenant Defeasance
To the extent indicated in the applicable prospectus supplement, we may elect, at our option at any
time, to have our obligations discharged under provisions relating to defeasance and discharge of indebtedness, which we call legal defeasance, or relating to defeasance of certain restrictive covenants applied to the Debt Securities of
any series, or to any specified part of a series, which we call covenant defeasance.
Legal Defeasance.
The Indentures
provide that, upon our exercise of our option (if any) to have the legal defeasance provisions applied to any series of Debt Securities, we and, if applicable, each Subsidiary Guarantor will be discharged from all our obligations, and, if such Debt
Securities are Subordinated Debt Securities, the provisions of the Subordinated Indenture relating to subordination will cease to be effective, with respect to such Debt Securities (except for certain obligations to convert, exchange or register the
transfer of Debt Securities, to replace stolen, lost or mutilated Debt Securities, to maintain paying agencies and to hold moneys for payment in trust) upon the deposit in trust for the benefit of the Holders of such Debt Securities of money or U.S.
Government Obligations, or both, which, through the payment of principal and interest in respect thereof in accordance with their terms, will provide money in an amount sufficient (in the opinion of a nationally recognized firm of independent public
accountants) to pay the principal of and any premium and interest on such Debt Securities on the respective Stated Maturities in accordance with the terms of the applicable Indenture and such Debt Securities. Such defeasance or discharge may occur
only if, among other things:
(1) we have delivered to the applicable Trustee an Opinion of Counsel to the effect that we have received
from, or there has been published by, the United States Internal Revenue Service a ruling, or there has been a change in tax law, in either case to the effect that Holders of such Debt Securities will not recognize gain or loss for federal income
tax purposes as a result of such deposit and legal defeasance and will be subject to federal income tax on the same amount, in the same manner and at the same times as would have been the case if such deposit and legal defeasance were not to occur;
(2) no Event of Default or event that with the passing of time or the giving of notice, or both, shall constitute an Event of Default
shall have occurred and be continuing at the time of such deposit or, with respect to any Event of Default described in clause (8) under Events of Default, at any time until 121 days after such deposit;
(3) such deposit and legal defeasance will not result in a breach or violation of, or constitute a default under, any agreement or instrument
(other than the applicable Indenture) to which we are a party or by which we are bound;
(4) in the case of Subordinated Debt Securities,
at the time of such deposit, no default in the payment of all or a portion of principal of (or premium, if any) or interest on any Senior Debt shall have occurred and be continuing, no event of default shall have resulted in the acceleration of any
Senior Debt and no other event of default with respect to any Senior Debt shall have occurred and be continuing permitting after notice or the lapse of time, or both, the acceleration thereof; and
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(5) we have delivered to the Trustee an Opinion of Counsel to the effect that such deposit shall
not cause the Trustee or the trust so created to be subject to the Investment Company Act of 1940.
Covenant Defeasance.
The
Indentures provide that, upon our exercise of our option (if any) to have the covenant defeasance provisions applied to any Debt Securities, we may fail to comply with certain restrictive covenants (but not with respect to conversion, if
applicable), including those that may be described in the applicable prospectus supplement, and the occurrence of certain Events of Default, which are described above in clause (5) (with respect to such restrictive covenants) and clauses (6), (7)
and (9) under Events of Default and any that may be described in the applicable prospectus supplement, will not be deemed to either be or result in an Event of Default and, if such Debt Securities are Subordinated Debt
Securities, the provisions of the Subordinated Indenture relating to subordination will cease to be effective, in each case with respect to such Debt Securities. In order to exercise such option, we must deposit, in trust for the benefit of the
Holders of such Debt Securities, money or U.S. Government Obligations, or both, which, through the payment of principal and interest in respect thereof in accordance with their terms, will provide money in an amount sufficient (in the opinion of a
nationally recognized firm of independent public accountants) to pay the principal of and any premium and interest on such Debt Securities on the respective Stated Maturities in accordance with the terms of the applicable Indenture and such Debt
Securities. Such covenant defeasance may occur only if we have delivered to the applicable Trustee an Opinion of Counsel to the effect that Holders of such Debt Securities will not recognize gain or loss for federal income tax purposes as a result
of such deposit and covenant defeasance and will be subject to federal income tax on the same amount, in the same manner and at the same times as would have been the case if such deposit and covenant defeasance were not to occur, and the
requirements set forth in clauses (2), (3), (4) and (5) above are satisfied. If we exercise this option with respect to any series of Debt Securities and such Debt Securities were declared due and payable because of the occurrence of any Event
of Default, the amount of money and U.S. Government Obligations so deposited in trust would be sufficient to pay amounts due on such Debt Securities at the time of their respective Stated Maturities but may not be sufficient to pay amounts due on
such Debt Securities upon any acceleration resulting from such Event of Default. In such case, we would remain liable for such payments.
If we exercise either our legal defeasance or covenant defeasance option, any Subsidiary Guarantee will terminate.
No Personal Liability of Directors, Officers, Employees and Stockholders
No director, officer, employee, incorporator, stockholder, member, partner or trustee of the Company or any Subsidiary Guarantor, as such,
shall have any liability for any obligations of the Company or any Subsidiary Guarantor under the Debt Securities, the Indentures or any Subsidiary Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their
creation. By accepting a Debt Security, each Holder shall be deemed to have waived and released all such liability. The waiver and release shall be a part of the consideration for the issue of the Debt Securities. The waiver may not be effective to
waive liabilities under the federal securities laws, and it is the view of the SEC that such a waiver is against public policy.
Notices
Notices to Holders of Debt Securities will be given by mail to the addresses of such Holders as they may appear in the Security Register.
Title
We, the Subsidiary Guarantors, the
Trustees and any agent of us, the Subsidiary Guarantors or a Trustee may treat the Person in whose name a Debt Security is registered as the absolute owner of the Debt Security (whether or not such Debt Security may be overdue) for the purpose of
making payment and for all other purposes.
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Governing Law
The Indentures and the Debt Securities will be governed by, and construed in accordance with, the law of the State of New York.
The Trustee
We will enter into the
Indentures with a Trustee that is qualified to act under the Trust Indenture Act of 1939, as amended (the Trust Indenture Act), and with any other Trustees chosen by us and appointed in a supplemental indenture for a particular series of
Debt Securities. We may maintain a banking relationship in the ordinary course of business with our Trustee and one or more of its affiliates.
Resignation or Removal of Trustee.
If the Trustee has or acquires a conflicting interest within the meaning of the Trust Indenture Act,
the Trustee must either eliminate its conflicting interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and the applicable Indenture. Any resignation will require the appointment
of a successor Trustee under the applicable Indenture in accordance with the terms and conditions of such Indenture.
The Trustee may
resign or be removed by us with respect to one or more series of Debt Securities and a successor Trustee may be appointed to act with respect to any such series. The Holders of a majority in aggregate principal amount of the Debt Securities of any
series may remove the Trustee with respect to the Debt Securities of such series.
Limitations on Trustee if It Is Our Creditor.
Each Indenture will contain certain limitations on the right of the Trustee, in the event that it becomes our creditor, to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security
or otherwise.
Certificates and Opinions to Be Furnished to Trustee.
Each Indenture will provide that, in addition to other
certificates or opinions that may be specifically required by other provisions of an Indenture, every application by us for action by the Trustee must be accompanied by an Officers Certificate and an Opinion of Counsel stating that, in the
opinion of the signers, all conditions precedent to such action have been complied with by us.
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DESCRIPTION OF CAPITAL STOCK
The following summary of our capital stock, Restated Certificate of Incorporation (the Certificate of Incorporation) and Fourth
Amended and Restated Bylaws (the Bylaws) does not purport to be complete and is qualified in its entirety by reference to the provisions of applicable law and to our Certificate of Incorporation and Bylaws.
Our authorized capital stock consists of 300,000,000 shares of common stock, $0.001 par value per share, and 10,000,000 shares of preferred
stock, $0.001 par value per share.
Common Stock
As of June 11, 2018, we had 149,069,126 shares of common stock outstanding, including 1,136,049 shares of restricted stock. The shares of
restricted stock have voting rights, rights to receive dividends and are subject to certain forfeiture restrictions.
Our common stock
commenced trading on the NYSE under the symbol CXO on August 3, 2007 in connection with our initial public offering. As of June 11, 2018, there were approximately 1,126 holders of record of our common stock.
Holders of our common stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders and do not have
cumulative voting rights. Accordingly, holders of a majority of the shares of our common stock entitled to vote in any election of directors may elect all of the directors standing for election.
Holders of our common stock are entitled to receive proportionately any dividends if and when such dividends are declared by our board of
directors, subject to any preferential dividend rights of preferred stock that may be outstanding at the time such dividends are declared. Upon the liquidation, dissolution or winding up of our company, the holders of our common stock are entitled
to receive ratably our net assets available after the payment of all debts and other liabilities and subject to the prior rights of any outstanding preferred stock. Holders of our common stock have no preemptive, subscription, redemption or
conversion rights. The rights, preferences and privileges of holders of our common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock that we may designate and issue in the
future.
We have not paid, and do not intend to pay in the foreseeable future, cash dividends on our common stock. Covenants contained in
our credit facility and the indenture governing our unsecured senior notes due 2025 limit the payment of dividends on our common stock. We currently intend to retain all future earnings to fund the development and growth of our business. Any payment
of future dividends will be at the discretion of our board of directors and will depend on, among other things, our earnings, financial condition, capital requirements, level of indebtedness, statutory and contractual restrictions applying to the
payment of dividends and other considerations that our board of directors deems relevant.
There are no redemption or sinking fund
provisions applicable to our common stock. All outstanding shares of our common stock are fully paid and
non-assessable.
Preferred Stock
Under the terms of our
Certificate of Incorporation, our board of directors is authorized to designate and issue shares of preferred stock in one or more series without further vote or action by our stockholders. Our board of directors has the discretion to determine the
rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock. It is not possible to state the actual effect of the
issuance of any shares of preferred stock upon the rights of holders of the common stock until the board of directors determines the specific rights of the holders of the preferred stock. However, these effects might include:
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restricting dividends on the common stock;
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diluting the voting power of the common stock;
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impairing the liquidation rights of the common stock; and
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delaying or preventing a change in control of our company.
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We currently have no shares of
preferred stock outstanding, and we have no present plans to issue any shares of preferred stock.
Anti-Takeover Provisions of Our Certificate of
Incorporation and Bylaws
Our Certificate of Incorporation and Bylaws contain several provisions that could delay or make more
difficult the acquisition of us through a hostile tender offer, open market purchases, proxy contest, merger or other takeover attempt that a stockholder might consider in his or her best interest, including those attempts that might result in a
premium over the market price of our common stock.
Written Consent of Stockholders
Our Certificate of Incorporation and Bylaws provide that any action required or permitted to be taken by our stockholders must be taken at a
duly called meeting of stockholders and not by written consent.
Special Meetings of Stockholders
Subject to the rights of the holders of any series of preferred stock, our Bylaws provide that special meetings of the stockholders may only be
called by the chairman of the board of directors or by the resolution of our board of directors approved by a majority of the total number of authorized directors. No business other than that stated in a notice may be transacted at any special
meeting.
Advance Notice Procedure for Director Nominations and Stockholder Proposals
Our Bylaws provide that adequate notice must be given to nominate candidates for election as directors or to make proposals for consideration
at annual meetings of our stockholders. For nominations or other business to be properly brought before an annual meeting by a stockholder, the stockholder must have delivered a written notice to the Secretary of our company at our principal
executive offices not later than the close of business 90 calendar days nor earlier than 120 calendar days prior to the first anniversary of the preceding years annual meeting; provided, however, that in the event that the date of the annual
meeting is more than 30 calendar days before or more than 30 calendar days after the first anniversary of the date of the preceding years annual meeting, or if no annual meeting was held in the preceding year, notice by the stockholder to be
timely must be so delivered not later than the close of business on the later of the 90th calendar day prior to such annual meeting or the 10th calendar day following the calendar day on which public announcement, if any, of the date of such meeting
is first made by us. In no event shall an adjournment or recess of an annual meeting, or a postponement of an annual meeting for which notice of the meeting has already been given to stockholders or a public announcement, if any, of the date of such
meeting has already been made, commence a new time period (or extend any time period) for the giving of a stockholders notice described in this paragraph.
Nominations of persons for election to our board of directors may be made at a special meeting of stockholders at which directors are to be
elected pursuant to our notice of meeting (i) by or at the direction of our board of directors, or (ii) by any stockholder of our company who is a stockholder of record at the time of the giving of notice of the meeting, who is entitled to
vote at the meeting and who complies with the notice procedures set forth in our Bylaws. In the event we call a special meeting of stockholders for the purpose of electing one or more directors to our board of directors, any stockholder may nominate
a person or persons (as the case may be) for election to such position(s) if the stockholder provides written notice to the Secretary of our company at our principal executive offices not earlier than the 90th calendar day prior to such special
meeting, nor later than the close of business on the later of the 70th calendar day prior to such special meeting or the 10th calendar day following the day on which public announcement, if any, is first made of the date of the special
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meeting and of the nominees proposed by our board of directors to be elected at such meeting. In no event shall an adjournment, recess or postponement of a special meeting commence a new time
period (or extend any time period) for the giving of a stockholders notice described in this paragraph.
These procedures may
operate to limit the ability of stockholders to bring business before a stockholders meeting, including the nomination of directors and the consideration of any transaction that could result in a change in control and that may result in a premium to
our stockholders.
Classified Board
Our Certificate of Incorporation divides our directors into three classes serving staggered three-year terms. As a result, stockholders will
elect approximately
one-third
of the board of directors each year. This provision, when coupled with provisions of our Certificate of Incorporation authorizing only the board of directors to fill vacant or
newly created directorships or increase the size of the board of directors and provisions providing that directors may only be removed for cause and then only by the holders of not less than 66
2
/
3
% of the voting power of all outstanding voting stock, may deter a stockholder from gaining control of our board of directors by removing incumbent directors or increasing the number of
directorships and simultaneously filling the vacancies or newly created directorships with its own nominees.
Authorized Capital Stock
Our Certificate of Incorporation contains provisions that the authorized but unissued shares of common stock and preferred stock are available
for future issuance, subject to various limitations imposed by the NYSE. These additional shares may be utilized for a variety of corporate purposes, including public offerings to raise capital, corporate acquisitions and employee benefit plans. The
existence of authorized but unissued shares of common stock and preferred stock could make it more difficult or discourage an attempt to obtain control of our company by means of a proxy contest, tender offer, merger or otherwise.
Amendment of Bylaws
Under Delaware law,
the power to adopt, amend or repeal bylaws is conferred upon the stockholders. A corporation may, however, in its certificate of incorporation also confer upon the board of directors the power to adopt, amend or repeal its bylaws. Our Certificate of
Incorporation and Bylaws grant our board of directors the power to adopt, amend and repeal our Bylaws on the affirmative vote of a majority of the directors then in office. Our stockholders may adopt, amend or repeal our Bylaws but only at any
regular or special meeting of stockholders by the holders of not less than 66
2
/
3
% of the voting power of all outstanding voting stock.
Certain Oil and Natural Gas Opportunities
Certain of our stockholders who received shares of common stock in connection with our formation and our
non-employee
directors may from time to time have investments in other exploration and production companies that may compete with us. Our Certificate of Incorporation and our Business Opportunities Agreement
provide a safe harbor under which these entities and directors may participate in the oil and gas exploration, exploitation, development and production business without breaching their fiduciary duties as controlling stockholders or directors. No
participation is allowed with respect to:
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any business opportunity that is brought to the attention of a covered individual or entity solely in such persons capacity as a director or officer of our company and with respect to which, at the time of such
presentment, no other covered individual or entity has independently received notice or otherwise identified such opportunity; or
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any business opportunity that is identified by a covered individual or entity solely through the disclosure of information by or on behalf of us.
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The covered individuals and entities have no obligation to offer such opportunities to us, but
interested directors are required to disclose conflicts of interest. We are not prohibited from pursuing any business opportunity with respect to which we have renounced any interest.
Limitation of Liability of Directors
Our
Certificate of Incorporation provides that no director shall be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director, except for liability as follows:
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for any breach of the directors duty of loyalty to us or our stockholders;
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for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of laws;
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for unlawful payment of a dividend or unlawful stock purchase or stock redemption; and
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for any transaction from which the director derived an improper personal benefit.
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The effect
of these provisions is to eliminate our rights and our stockholders rights, through stockholders derivative suits on our behalf, to recover monetary damages against a director for a breach of fiduciary duty as a director, including
breaches resulting from grossly negligent behavior, except in the situations described above.
Delaware Takeover Statute
We are subject to Section 203 of the Delaware General Corporation Law (DGCL), which prohibits a Delaware corporation from
engaging in any business combination with any interested stockholder for a period of three years after the date that such stockholder became an interested stockholder, with the following exceptions:
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before such date, the board of directors of the corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;
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upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the
transaction began, excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) those shares owned (1) by persons who are directors and also officers and
(2) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or
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on or after such date, the business combination is approved by the board of directors and authorized at an annual or special meeting of the stockholders, and not by written consent, by the affirmative vote of at least
66
2
/
3
% of the outstanding voting stock that is not owned by the interested stockholder.
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In general, Section 203 of the DGCL defines a business combination to include the following:
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any merger or consolidation involving the corporation and the interested stockholder;
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any sale, transfer, pledge or other disposition (in one transaction or a series of transactions) of 10% or more of the assets of the corporation involving the interested stockholder;
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subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder;
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any transaction involving the corporation that has the effect of increasing the proportionate share of the stock or any class or series of the corporation beneficially owned by the interested stockholder; or
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the receipt by the interested stockholder of the benefit of any loss, advances, guarantees, pledges or other financial benefits by or through the corporation.
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In general, Section 203 of the DGCL defines an interested stockholder as an
entity or person who, together with the persons affiliates and associates, beneficially owns, or within three years prior to the time of determination of interested stockholder status did own, 15% or more of the outstanding voting stock of the
corporation.