EARTHSTONE ENERGY INC false 0000010254 --12-31 0000010254 2023-10-31 2023-10-31

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of report (date of earliest event reported): October 31, 2023

 

 

Earthstone Energy, LLC

(Exact name of registrant as specified in its charter)

(as successor in interest to Earthstone Energy, Inc.)

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-35049   81-0592823

(State or other jurisdiction

of incorporation)

  

(Commission

File Number)

  

(I.R.S. Employer

Identification No.)

 

1400 Woodloch Forest Drive, Suite 300

The Woodlands, Texas

     77380
(Address of principal executive offices)     (Zip Code)

Registrant’s telephone number, including area code: (281) 298-4246

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

  

Trading

Symbol(s)

  

Name of each exchange

on which registered

Common Stock, $0.001 par value per share   ESTE   New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

Introductory Note

As previously announced, on August 21, 2023, Earthstone Energy, Inc., a Delaware corporation (the “Company”), and Earthstone Energy Holdings, LLC, a Delaware limited liability company (“EEH”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Permian Resources Corporation, a Delaware corporation (“Permian Resources”), Smits Merger Sub I Inc., a Delaware corporation and a direct wholly owned subsidiary of Permian Resources (“Merger Sub I”), Smits Merger Sub II LLC, a Delaware limited liability company and a direct wholly owned subsidiary of Permian Resources (Merger Sub II”), and Permian Resources Operating, LLC, a Delaware limited liability company (“Permian OpCo”). Pursuant to the Merger Agreement, (i) Merger Sub I merged with and into the Company (the “Initial Company Merger”), with the Company surviving the Initial Company Merger as a wholly owned subsidiary of Permian Resources (the “Initial Surviving Corporation”), (ii) following the Initial Company Merger, the Initial Surviving Corporation merged with and into Merger Sub II (the “Subsequent Company Merger” and, together with the Initial Company Merger, the “Company Mergers”), with Merger Sub II surviving the Subsequent Company Merger as a wholly owned subsidiary of Permian Resources (in such capacity, the “Surviving Company”), and (iii) following the Company Mergers, EEH merged with and into Permian OpCo (the “OpCo Merger,” and, collectively with the Company Mergers, the “Mergers”), with Permian OpCo surviving the OpCo Merger. Capitalized terms used herein but not otherwise defined will have the meanings ascribed to them in the Merger Agreement.

The events described in this Current Report on Form 8-K took place in connection with the completion of the Mergers, which took place on November 1, 2023 (the “Closing Date”)

Item 1.02 Termination of a Material Definitive Agreement.

Credit Agreement

In connection with the consummation of the Mergers, on November 1, 2023, EEH, at the direction of the Company, terminated all outstanding lender commitments, including commitments of the lenders to issue letters of credit under that certain Credit Agreement, dated as of November 21, 2019, by and among EEH, as Borrower, the Company, as Parent, Wells Fargo Bank, National Association, as administrative agent and issuer of letters of credit thereunder, the lenders from time to time party thereto and the documentation agents party thereto (as amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”).

In connection with the termination of the Credit Agreement, on November 1, 2023, all outstanding obligations for principal, interest and fees under the Credit Agreement were paid off in full, and all liens securing such obligations and any letter of credit or hedging obligations permitted by the Credit Agreement to be secured by such liens and guarantees of such obligations were released.

Item 2.01 Completion of Acquisition or Disposition of Assets.

As discussed in the Introductory Note, on November 1, 2023, Permian Resources completed its previously announced acquisition of the Company and its subsidiaries. At the effective time of the Mergers (the “Effective Time”), subject to certain exceptions:

 

  •  

each eligible share of Earthstone Class A common stock, par value $0.001 per share (“Earthstone Class A Common Stock”) was converted automatically into the right to receive 1.446 shares of Permian Resources Class A common stock, par value $0.0001 per share (“Permian Class A Common Stock”), with cash paid in lieu of the issuance of fractional shares;

 

  •  

each restricted stock unit granted pursuant to the Earthstone Energy, Inc. 2014 Long-Term Incentive Plan, as amended (the “Earthstone LTIP”) that vests solely on the basis of time (each, an “Earthstone RSU”) that was outstanding immediately prior to the Effective Time automatically (i) vested in full immediately prior to the Effective Time (including with respect to any dividend equivalents credited with respect to such Earthstone RSU that remained unpaid as of the Effective Time) and (ii) was canceled and converted into the right to receive, at the Effective Time, without interest, 1.446 shares of Permian Class A Common Stock, with cash paid in lieu of the issuance of fractional shares and for credited dividend equivalents;

 

  •  

each restricted stock unit granted pursuant to the Earthstone LTIP that is subject to performance-based vesting (each, an “Earthstone PSU”) that was outstanding immediately prior to the Effective Time automatically (i) vested immediately prior to the Effective Time (including with respect to any dividend equivalents credited with respect to such Earthstone PSU that remained unpaid as of the Effective Time), based on the attainment of the applicable performance metrics at the maximum level of performance, and (ii) was canceled and converted into the right to receive, without interest, 1.446 shares of Permian Class A Common Stock, with cash paid in lieu of fractional shares and for credited dividend equivalents;

 

  •  

each eligible share of Earthstone Class B common stock, par value $0.001 per share (“Earthstone Class B Common Stock”) was converted automatically into the right to receive 1.446 shares of Permian Resources Class C common stock, par value $0.0001 per share (“Permian Class C Common Stock”), with fractional shares canceled for no consideration; and

 

  •  

each limited liability company interest in EEH (“Earthstone OpCo Unit”) was converted automatically into the right to receive 1.446 limited liability company interests in Permian OpCo (“Permian OpCo Units”), with cash paid in lieu of the issuance of fractional units.

The issuance of Permian Class A Common Stock in connection with the Mergers was registered under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Permian Resources’ registration statement on Form S-4, as amended (File No. 333-274355), which was declared effective by the U.S. Securities and Exchange Commission (the “SEC”) on September 25, 2023. The joint proxy statement/prospectus included in the registration statement contains additional information about the Mergers.

The foregoing description of the Mergers and the Merger Agreement, and the transactions contemplated thereby, is a summary only, does not purport to be complete, and is subject to and qualified in its entirety by reference to the full text of the Merger Agreement, a copy of which is attached hereto as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated by reference into this Item 2.01.

Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.

Prior to the completion of the Mergers, shares of Earthstone Class A Common Stock were listed and traded on the New York Stock Exchange (the “NYSE”) under the trading symbol “ESTE.” In connection with the completion of the Mergers, the Company notified the NYSE that each eligible and outstanding share of Earthstone Class A Common Stock was converted into the right to receive 1.446 shares of Permian Class A Common Stock and requested that NYSE withdraw the listing of the Earthstone Class A Common Stock. Upon the Company’s request, the NYSE filed a notification of removal from listing on Form 25 with the SEC with respect to the delisting of the Earthstone Class A Common Stock and the deregistration of the Earthstone Class A Common Stock under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Earthstone Class A Common Stock ceased being traded prior to the opening of the market on November 1, 2023, and is no longer listed on NYSE.

In addition, Earthstone Energy, LLC, as successor in interest to the Company, intends to file with the SEC a Form 15 requesting that the reporting obligations of the Company under Sections 13(a) and 15(d) of the Exchange Act be suspended.

Item 3.03 Material Modification to Rights of Security Holders.

The information set forth in the Introductory Note, Item 1.02, Item 2.01, Item 3.01 and Item 5.03 of this Current Report on Form 8-K is incorporated by reference into this Item 3.03.

At the Effective Time, each eligible share of the Earthstone Class A Common Stock was converted into the right to receive 1.446 shares of Permian Class A Common Stock.

Item 5.01 Changes in Control of Registrant.

As a result of the consummation of the Mergers, at the Effective Time, the Company became a wholly owned subsidiary of Permian Resources and was renamed “Earthstone Energy, LLC”. Pursuant to the Merger Agreement, Permian Resources is required to take all necessary corporate action so that prior to the Effective Time, the Permian Resources board is comprised of eleven directors and, upon the Effective Time, (i) one individual designated by the Company will be appointed to serve as a Class I director, with a term ending at the 2026 annual meeting of the combined company’s stockholders and (ii) one individual designated by the Company will be appointed to serve as a Class III director, with a term ending at the 2025 annual meeting of the combined company’s stockholders.

The information set forth in the Introductory Note, Item 2.01, Item 3.03, Item 5.02 and Item 5.03 of this Current Report on Form 8-K is incorporated by reference into this Item 5.01.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Departure of Directors and Named Executive Officers

In accordance with the terms of the Merger Agreement, Robert J. Anderson, Frank A. Lodzinski, Frost W. Cochran, David S. Habachy, Jay F. Joliat, Phillip D. Kramer, Ray Singleton, Douglas E. Swanson, Jr., Brad A. Thielemann, Zachary G. Urban and Robert L. Zorich, such members compromising all of the directors of the Company prior to the Effective Time, resigned as directors of the Company effective as of the Effective Time. None of these resignations were a result of any disagreement with the Company, its management or its board of directors. Earthstone Energy, LLC will be managed by its sole member, Permian Resources.

Also effective as of the Effective Time, Robert J. Anderson ceased to serve as the President and Chief Executive Officer of the Company, Mark Lumpkin, Jr. ceased to serve as the Executive Vice President and Chief Financial Officer of the Company, Steven C. Collins ceased to serve as Executive Vice President, Chief Operations Officer of the Company, Timothy D. Merrifield ceased to serve as Executive Vice President, Geology and Geophysics of the Company, and Tony Oviedo ceased to serve as Executive Vice President, Accounting and Administration of the Company. Earthstone Energy, LLC, as a member managed limited liability company, will be ultimately managed by the directors and officers of its sole member, Permian Resources.

Compensatory Arrangements

On October 31, 2023, the Compensation Committee of the Board of Directors (the “Earthstone Board”) of the Company (and, with respect to the amendment (the “Executive CIC Severance Plan Amendment”) to the Earthstone Energy, Inc. Second Amended and Restated Change in Control and Severance Benefit Plan (the “Executive CIC Severance Plan”), the Earthstone Board) approved:

 

  •  

transaction bonuses under the executive retention program previously disclosed by the Company and Permian Resources in the joint proxy statement/prospectus filed on September 26, 2023 for each of Messrs. Anderson, Lumpkin, Collins, Merrifield and Oviedo in an amount equal to 100% of each such officer’s annualized base salary ($650,000 for Mr. Anderson, $450,000 for each of Messrs. Lumpkin and Collins, $400,000 for Mr. Merrifield and $425,000 for Mr. Oviedo) to be paid on the Closing Date in recognition of their extraordinary efforts to consummate the Mergers;

 

  •  

an amendment to the award agreements governing all outstanding Earthstone RSUs to provide for a Cash Dividend Right (as defined in the Earthstone LTIP), or if the applicable award agreement already provides for a Cash Dividend Right, to clarify the language regarding such right, in either case, in accordance with the Earthstone LTIP, with such amendment subject to entry into a restrictive covenant agreement for certain officers and senior managers of the Company;

 

  •  

an amendment to the award agreements governing all outstanding Earthstone PSUs to (i) provide for a Cash Dividend Right, or if the applicable award agreement already provides for a Cash Dividend Right, to clarify the language regarding such right, in either case, in accordance with the Earthstone LTIP, and (ii) provide for vesting of such awards at the maximum performance level immediately prior to the Effective Time, in each case, with such amendment subject to entry into a restrictive covenant agreement for certain officers and senior managers of the Company; and

 

  •  

the Executive CIC Severance Plan Amendment, which, in addition to making certain administerial and clarifying changes to the Executive CIC Severance Plan:

 

  (i)

requires payment of 100% of each Eligible Individual’s AIP (each such capitalized term as defined in the Executive CIC Severance Plan) for the 2023 annual incentive year to the extent such Eligible Individual’s employment is terminated without Cause or such Eligible Individual resigns for a CIC Good Reason (each such capitalized term as defined in the Executive CIC Severance Plan and referred to herein as a “Qualifying Termination”) following the Effective Time and during the fourth calendar quarter of 2023 rather than a prorated AIP (provided, that if an Eligible Individual experiences a Qualifying Termination during the fourth calendar quarter of 2023 but following payment of his or her AIP for 2023, such Eligible Individual shall not be eligible to receive an additional AIP for 2023);

 

  (ii)

revises the definition of “AIP” for scheduled Eligible Individuals (including each of Messrs. Anderson, Lumpkin, Collins, Merrifield and Oviedo) for Qualifying Terminations that occur after October 31, 2023 but on or prior to December 31, 2023 to mean the annual incentive payment determined by multiplying such Eligible Individual’s target annual incentive payment opportunity for 2023 by (x) if the Eligible Individual was employed by the Company or any of its affiliates in 2022 and eligible to receive a full annual incentive payment for the 2022 annual incentive year, such Eligible Individual’s annual incentive performance multiplier for the 2022 annual incentive year, based on actual performance, or (y) if the Eligible Individual was not employed by the Company or any of its affiliates in 2022 or was not eligible to receive a full annual incentive payment for the 2022 annual incentive year, the annual incentive performance multiplier that applied for similarly situated employees of the Company or any of its affiliates for the 2022 annual incentive year, based on actual performance;

 

  (iii)

revises provisions pertaining to the timing of payments of premiums for continued health coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended for the relevant periods provided for under the Executive CIC Severance Plan (the “COBRA Premium Period”) to require that such payments be made by the Company in a single lump sum on the same date that other cash Severance Obligations (as defined in the Executive CIC Severance Plan) are paid under the Executive CIC Plan, rather than in monthly installments over the relevant COBRA Premium Period;

 

  (iv)

requires cash Severance Obligations to be paid (unless otherwise agreed) within ten business days following the date on which an Eligible Individual’s general release of claims becomes irrevocable; and

 

  (v)

subjects all Severance Obligations to a revised general release of claims.

The second and third bullets under Item 2.02 are incorporated by reference into this Item 5.02. The foregoing descriptions of the amendment to the award agreements governing all outstanding Earthstone RSUs, the amendment to the award agreements governing all outstanding Earthstone PSUs, and the Executive CIC Severance Plan Amendment are subject to and qualified in their entirety by reference to Exhibits 10.1, 10.2 and 10.3 of this Current Report on Form 8-K, which are incorporated by reference into this Item 5.02.

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

In connection with the consummation of the Mergers, on November 1, 2023, the certificate of formation and limited liability company agreement of Merger Sub II as in effect immediately prior to the effective time of the Subsequent Company Merger, as set forth in Exhibits 3.1 and 3.2 to this Current Report on Form 8-K, became the certificate of formation and limited liability company agreement (the “Original LLC Agreement”) of the Surviving Company.

On November 1, 2023, the Original LLC Agreement was amended and restated by the Amended and Restated Limited Liability Company Agreement of Earthstone Energy, LLC.

The foregoing description is a summary only, does not purport to be complete, and is subject to and qualified in its entirety by reference to Exhibits 3.1, 3.2 and 3.3 to this Current Report on Form 8-K and is incorporated by reference into this Item 5.03.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

 

Exhibit

Number

   

Description

2.1†    Agreement and Plan of Merger, dated as of August 21, 2023, among Permian Resources Corporation, Smits Merger Sub I Inc., Smits Merger Sub II LLC, Permian Resources Operating, LLC, Earthstone Energy, Inc. and Earthstone Energy Holdings, LLC (incorporated by reference to Exhibit 2.1 to Earthstone Energy Inc.’s Current Report on Form 8-K (File No. 001-35049) filed with the SEC on August 22, 2023).
3.1*    Certificate of Formation of Smits Merger Sub II LLC.
3.2*    Limited Liability Company Agreement of Smits Merger Sub II LLC.
3.3*    Amended and Restated Limited Liability Company Agreement of Earthstone Energy, LLC.
10.1†*    Global Amendment to Restricted Stock Unit Award Agreements.
10.2†*    Global Amendment to Performance-Based Award Agreements.
10.3*    First Amendment to the Earthstone Energy, Inc. Second Amended and Restated Change in Control and Severance Benefit Plan.

 

*

Filed herewith.

†

Certain schedules, annexes or exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K, but will be furnished supplementally to the SEC upon request.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    EARTHSTONE ENERGY, LLC
    (as successor in interest to Earthstone Energy, Inc.)
    By: Permian Resources Corporation, its sole member
Dated: November 3, 2023     By:  

/s/ Guy Oliphint

    Name:   Guy M. Oliphint
    Title:   Executive Vice President and Chief Financial Officer

Exhibit 3.1

CERTIFICATE OF FORMATION

OF

SMITS MERGER SUB II LLC

This Certificate of Formation is being executed as of August 17, 2023, for the purpose of forming a limited liability company pursuant to the Delaware Limited Liability Company Act, 6 Del. C. §§ 18-101, et seq.

The undersigned, being duly authorized to execute and file this Certificate of Formation, does hereby certify as follows:

1. Name. The name of the limited liability company is Smits Merger Sub II LLC (the “Company”).

2. Registered Office and Registered Agent. The Company’s registered office in the State of Delaware is located at 251 Little Falls Drive, City of Wilmington, New Castle County, Delaware 19808. The registered agent of the Company for service of process is Corporation Service Company located at 251 Little Falls Drive, City of Wilmington, New Castle County, Delaware 19808.

IN WITNESS WHEREOF, the undersigned has duly executed this Certificate of Formation as of the day and year first above written.

 

By:  

/s/ Kellie Keeling

Name:   Kellie Keeling
Its:   Authorized Person

Exhibit 3.2

LIMITED LIABILITY COMPANY AGREEMENT

OF

SMITS MERGER SUB II LLC

This LIMITED LIABILITY COMPANY AGREEMENT (this “Agreement”) of SMITS MERGER SUB II LLC (the “Company”) is entered into as of August 18, 2023, by Permian Resources Corporation, as sole member of the Company (the “Member”).

1. Name. The name of the limited liability company governed hereby is Smits Merger Sub II LLC.

2. Purpose. The Company does and will exist for the object and purpose of, and the nature of the business to be conducted and promoted by the Company is and will be, engaging in any lawful act or activity for which limited liability companies may be formed under the Delaware Limited Liability Company Act (6 Del. C. § 18-101, et seq.), as in effect from time to time (the “Act”), and engaging in any and all activities necessary or incidental to the foregoing.

3. Sole Member. The name and mailing address of the Member are as follows:

 

Name

   

Address

     
Permian Resources Corporation    300 N. Marienfeld St., Ste. 1000   
   Midland, Texas 79701   

4. Powers. The Member shall manage the Company in accordance with this Agreement. The actions of the Member taken in such capacity and in accordance with this Agreement shall bind the Company. The Company shall not have any “manager,” as that term is defined in the Act.

(i) The Member shall have full, exclusive and complete discretion to manage and control the business and affairs of the Company, to make all decisions affecting the business, operations and affairs of the Company, to amend, modify or otherwise revise this Agreement to provide for the admission of additional members in, and/or the issuance of units representing equity interests of, the Company and to take all such actions as it deems necessary or appropriate to accomplish the purpose of the Company as set forth herein. Subject to the provisions of this Agreement, the Member (and the officers appointed under clause (ii) below) shall have general and active management of the day-to-day business and operations of the Company. In addition, the Member shall have such other powers and duties as may be prescribed by this Agreement. Such duties may be delegated by the Member to officers, agents or employees of the Company as the Member may deem appropriate from time to time.

(ii) The Member may, from time to time, designate one or more persons to be officers of the Company. No officer need be a member of the Company. Any officers so designated will have such authority and perform such duties as the Member may, from time to time, delegate to them. The Member may assign titles to particular officers, including, without limitation, chairman, chief executive officer, president, vice president, chief operating officer, secretary, assistant secretary, treasurer and assistant treasurer. Each officer will hold office until his or her successor will be duly designated and will qualify or until his or her death or until he or she will resign or will have been removed. Any number of offices may be held by the same person. The salaries or other compensation, if any, of the officers and agents of the Company will be fixed from time to time by the Member or by any officer acting within his or her authority. Any officer may be removed as such, either with or without cause, by the Member whenever in its judgment the best interests of the Company will be served thereby. Any vacancy occurring in any office of the Company may be filled by the Member. The names of the initial officers of the Company, and their respective titles, are set forth on the attached Schedule 1. Such officers are authorized to control the day-to-day operations and business of the Company.

5. Tax Elections. The fiscal and taxable year of the Company shall be the calendar year.

6. Dissolution. The Company shall dissolve, and its affairs shall be wound up upon the first to occur of the following (a) the written consent of the Member, (b) the resignation, expulsion, insolvency, bankruptcy or dissolution of the Member, or (c) the occurrence of any other event which terminates the continued membership of the Member in the Company.

7. Allocation of Profits and Losses. The Company’s profits and losses shall be allocated to the Member.

8. Liability of Member. The Member shall not have any liability for the obligations or liabilities of the Company except to the extent provided in the Act.

9. Governing Law. This Agreement shall be governed by, and construed under, the internal laws of the State of Delaware, all rights and remedies being governed by said laws.

* * * * *

IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, has duly executed this Limited Liability Company Agreement as of the date first written above.

 

MEMBER: PERMIAN RESOURCES CORPORATION
By:  

/s/ James Walter

Name:   James Walter
Title:   Co-Chief Executive Officer

[Signature Page – Smits Merger Sub II – LLCA]

Schedule 1

Initial Officers

 

The Schedule of Officers is on file with the Company.

 

(Smits Merger Sub II LLC Limited Liability Company Agreement)

Exhibit 3.3

AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

OF

EARTHSTONE ENERGY, LLC

This AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this “Agreement”) of EARTHSTONE ENERGY, LLC (the “Company”) is entered into as of November 1, 2023, by Permian Resources Corporation, as sole member of the Company (the “Member”).

1. Name. The name of the limited liability company governed hereby is Earthstone Energy, LLC.

2. Purpose. The Company does and will exist for the object and purpose of, and the nature of the business to be conducted and promoted by the Company is and will be, engaging in any lawful act or activity for which limited liability companies may be formed under the Delaware Limited Liability Company Act (6 Del. C. § 18-101, et seq.), as in effect from time to time (the “Act”), and engaging in any and all activities necessary or incidental to the foregoing.

3. Sole Member. The name and mailing address of the Member are as follows:

 

Name

   

Address

     
Permian Resources Corporation    300 N. Marienfeld St., Ste. 1000   
   Midland, Texas 79701   

4. Powers. The Member shall manage the Company in accordance with this Agreement. The actions of the Member taken in such capacity and in accordance with this Agreement shall bind the Company. The Company shall not have any “manager,” as that term is defined in the Act.

(i) The Member shall have full, exclusive and complete discretion to manage and control the business and affairs of the Company, to make all decisions affecting the business, operations and affairs of the Company, to amend, modify or otherwise revise this Agreement to provide for the admission of additional members in, and/or the issuance of units representing equity interests of, the Company and to take all such actions as it deems necessary or appropriate to accomplish the purpose of the Company as set forth herein. Subject to the provisions of this Agreement, the Member (and the officers appointed under clause (ii) below) shall have general and active management of the day-to-day business and operations of the Company. In addition, the Member shall have such other powers and duties as may be prescribed by this Agreement. Such duties may be delegated by the Member to officers, agents or employees of the Company as the Member may deem appropriate from time to time.

(ii) The Member may, from time to time, designate one or more persons to be officers of the Company. No officer need be a member of the Company. Any officers so designated will have such authority and perform such duties as the Member may, from time to time, delegate to them. The Member may assign titles to particular officers, including, without limitation, chairman, chief executive officer, president, vice president, chief operating officer, secretary, assistant secretary, treasurer and assistant treasurer. Each officer will hold office until his or her successor will be duly designated and will qualify or until his or her death or until he or she will resign or will have been removed. Any number of offices may be held by the same person. The salaries or other compensation, if any, of the officers and agents of the Company will be fixed from time to time by the Member or by any officer acting within his or her authority. Any officer may be removed as such, either with or without cause, by the Member whenever in its judgment the best interests of the Company will be served thereby. Any vacancy occurring in any office of the Company may be filled by the Member. The names of the initial officers of the Company, and their respective titles, are set forth on the attached Schedule 1. Such officers are authorized to control the day-to-day operations and business of the Company.

  5.

Director and Officer Liability.

(i) To the fullest extent permitted by applicable law, the personal liability of a director or officer to the Company and the Member for monetary damages for breach of fiduciary duty as a director or officer of the Company is eliminated, provided that such provision shall not limit the liability of a director or officer (a) for any breach of the director’s or officer’s duty of loyalty to the Company, (b) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, or (c) for any transaction from which the director derived an improper personal benefit.

(ii) No amendment, modification or repeal of this Section 5 nor the adoption of any provision of the Company’s Amended and Restated Limited Liability Company Agreement inconsistent with this Section 5, shall adversely affect any right or protection of a director or officer that exists at the time of such amendment, modification or repeal.

 

  6.

Indemnification.

(i) The Company shall indemnify to the fullest extent permitted by and in the manner permissible under the Act, as amended from time to time (but, in the case of any such amendment, only to the extent that such amendment permits the Company to provide broader indemnification rights than said law permitted the Company to provide prior to such amendment), any person made, or threatened to be made, a party to any threatened, pending or completed action, suit, or proceeding, whether criminal, civil, administrative, or investigative, by reason of the fact that such person (a) is or was a director or officer of the Company or any predecessor of the Company or (b) served any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise as a director, officer, partner, trustee, employee or agent at the request of the Company or any predecessor of the Company; provided, however, that except for a suit by a person against the Company to recover indemnified amounts, the Company shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized in advance by the Member.

(ii) The right to indemnification in this Section 6 shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of this Agreement, agreement, vote or action of the Member or otherwise. No repeal or modification of this Section 6 shall in any way diminish or adversely affect the rights of any present or former director or officer of the Company or any predecessor thereof hereunder in respect of any occurrence or matter arising prior to any such repeal or modification.

(iii) The Company may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Company or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Company would have the power to indemnify such person against such expense, liability or loss under the Act.

(iv) The Company may grant rights to indemnification to any present or former employee or agent of the Company or any predecessor of the Company to the fullest extent of the provisions of this Section 6 with respect to the indemnification of directors and officers of the Company.

7. Tax Elections. The fiscal and taxable year of the Company shall be the calendar year.

8. Dissolution. The Company shall dissolve, and its affairs shall be wound up upon the first to occur of the following (a) the written consent of the Member, (b) the resignation, expulsion, insolvency, bankruptcy or dissolution of the Member, or (c) the occurrence of any other event which terminates the continued membership of the Member in the Company.

9. Allocation of Profits and Losses. The Company’s profits and losses shall be allocated to the Member.

10. Liability of Member. The Member shall not have any liability for the obligations or liabilities of the Company except to the extent provided in the Act.

11. Governing Law. This Agreement shall be governed by, and construed under, the internal laws of the State of Delaware, all rights and remedies being governed by said laws.

*  *  *  *  *

IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, has duly executed this Amended and Restated Limited Liability Company Agreement as of the date first written above.

 

MEMBER: PERMIAN RESOURCES CORPORATION
By:  

/s/ Guy M. Oliphint

Name:   Guy M. Oliphint
Title:   Executive Vice President and Chief Financial Officer

(Amended and Restated Limited Liability Company Agreement)

Schedule 1

Initial Officers

 

The Schedule of Officers is on file with the Company.

 

(Smits Merger Sub II LLC Limited Liability Company Agreement)

Exhibit 10.1

Execution Version

EARTHSTONE ENERGY, INC.

AMENDED AND RESTATED 2014 LONG-TERM INCENTIVE PLAN

GLOBAL AMENDMENT TO

RESTRICTED STOCK UNIT AWARD AGREEMENTS

This Global Amendment to Notices of Restricted Stock Unit Awards and related Restricted Stock Unit Agreements that include only time-based vesting provisions (this “Amendment”), is hereby adopted by Earthstone Energy, Inc., a Delaware corporation (the “Company”), as of October 31, 2023 (the “Effective Date”). Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Earthstone Energy, Inc. 2014 Long-Term Incentive Plan (as amended, the “Plan”).

WHEREAS, in 2021, 2022, and 2023, the Company granted time-based Restricted Stock Units under the Plan to Participants pursuant to the terms and conditions of the Notices of Restricted Stock Unit Awards and Restricted Stock Unit Agreements between the Company and each respective Participant, in each case, which remain outstanding on the Effective Date (collectively, the “Outstanding Award Agreements”);

WHEREAS, pursuant to the Plan and the Outstanding Award Agreements, the terms and conditions of the Outstanding Award Agreements may be amended without the consent of any Participant, provided that such amendment is not adverse to any Participant who holds an Award subject to such amendment;

WHEREAS, the Company has entered into that certain Agreement and Plan of Merger by and between Permian Resources Corporation, a Delaware corporation, Smits Merger Sub I Inc., a Delaware corporation and a direct wholly owned subsidiary of Parent, Smits Merger Sub II LLC, Permian Resources Operating, LLC, the Company, and Earthstone Energy Holdings, LLC dated as of August 21, 2023 (such agreement, along with the Company Disclosure Schedule and the Parent Disclosure Schedule, the “Merger Agreement”), which Merger Agreement contemplates that the Company may amend its outstanding Restricted Stock Unit awards to provide for dividend equivalent rights in accordance with the Plan;

WHEREAS, the Company desires to amend each Outstanding Award Agreement, subject to certain conditions set forth below, in order to provide for a Cash Dividend Right (or if the Outstanding Award Agreement already provides for a Cash Dividend Right, to clarify the language regarding such right), as permitted by the Merger Agreement; and

WHEREAS, certain Participants holding Outstanding Award Agreements, as set forth on Exhibit A hereto (the “Specified Participants”), shall be required to agree to enter into a Participant Covenant Agreement, substantially in the form attached hereto as Exhibit B, as a condition to the Company’s amendment of certain Outstanding Award Agreements.

NOW, THEREFORE, in consideration of the foregoing, effective as of the Effective Date, the Outstanding Award Agreements are hereby amended as follows:

 

1.

Section 1 is hereby deleted in its entirety and replaced with the following:

 

  1.

Award of Restricted Stock Units and Cash Dividend Rights. Earthstone Energy, Inc., a Delaware corporation (the “Company”), hereby grants to the Participant under the Plan an award (the “Award”) of (a) the number of Restricted Stock Units (each individually, a “Unit” and collectively, the “Units”) set forth in the Notice of Restricted Stock Unit Award (the “Notice”) to which this Restricted Stock Unit Agreement (this “Agreement”) is attached and (b) with respect to each Unit, a contingent right to receive an amount of cash equal to the per-share cash distributions, if any, declared by the Company with respect to Common Stock for any dividend with a record date occurring after the Grant Date and prior to the date the applicable Unit is settled, forfeited or otherwise expires (“Cash Dividend Right”). Each Cash Dividend Right entitles the Participant to receive the equivalent value of any such cash distribution paid on a single share of Common Stock. The Company will establish a separate bookkeeping account (a “Cash Dividend Account”) for each Unit and credit the Cash Dividend Account (without interest) on the applicable dividend payment date with the equivalent amount of any such cash distribution made. Except as may be

  explicitly provided otherwise, any reference in this Agreement to the Award shall be deemed to refer to the Units and Cash Dividend Right provided herein. This Agreement consists of the Notice and the terms and conditions of the Earthstone Energy, Inc. Amended and Restated 2014 Long-Term Incentive Plan, as amended from time to time (the “Plan”). Unless otherwise provided herein, capitalized terms herein will have the same meanings as in the Plan or in the Notice.

2. Notwithstanding anything herein to the contrary, with respect to the Restricted Stock Units under each Outstanding Award Agreement held by the Specified Participants , the amendments described in Section 1 of this Amendment shall not become effective until, and shall be expressly conditioned upon, the applicable Specified Participant who is party to each such Outstanding Award Agreement executing this Amendment, which signature acknowledges such Specified Participant’s agreement to enter into and be bound by an agreement substantially in the form of the Participant Covenant Agreement that is attached hereto as Exhibit B.

[Remainder of Page Intentionally Blank]

 

2

Exhibit A

Specified Participants

[Intentionally omitted.]

EXHIBIT A TO THE GLOBAL AMENDMENT

TO THE RESTRICTED STOCK UNIT AWARD AGREEMENTS

Exhibit B

Form of Participant Covenant Agreement

[Intentionally omitted.]

EXHIBIT B TO THE GLOBAL AMENDMENT

TO THE RESTRICTED STOCK UNIT AWARD AGREEMENTS

Exhibit 10.2

Execution Version

EARTHSTONE ENERGY, INC.

AMENDED AND RESTATED 2014 LONG-TERM INCENTIVE PLAN

GLOBAL AMENDMENT TO

PERFORMANCE-BASED AWARD AGREEMENTS

This Global Amendment to Notices of Performance Unit Awards and related Performance Unit Agreements and Notices of Performance Restricted Stock Unit Awards and related Performance Restricted Stock Unit Agreements, as applicable (this “Amendment”), is hereby adopted by Earthstone Energy, Inc., a Delaware corporation (the “Company”), as of October 31, 2023 (the “Effective Date”). Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Earthstone Energy, Inc. 2014 Long-Term Incentive Plan (as amended, the “Plan”).

WHEREAS, in 2021, 2022, and 2023, the Company granted performance-based Restricted Stock Units under the Plan to Participants pursuant to the terms and conditions of the Notices of Performance Unit Awards, Notices of Performance Restricted Stock Unit Awards, Performance Unit Agreements, and Performance Restricted Stock Unit Agreements between the Company and each respective Participant, in each case, which remain outstanding on the Effective Date (collectively, the “Outstanding Award Agreements”);

WHEREAS, pursuant to the Plan and the Outstanding Award Agreements, the terms and conditions of the Outstanding Award Agreements may be amended without the consent of any Participant, provided that such amendment is not adverse to any Participant who holds an Award subject to such amendment;

WHEREAS, the Company has entered into that certain Agreement and Plan of Merger by and between Permian Resources Corporation, a Delaware corporation, Smits Merger Sub I Inc., a Delaware corporation and a direct wholly owned subsidiary of Parent, Smits Merger Sub II LLC, Permian Resources Operating, LLC, the Company, and Earthstone Energy Holdings, LLC dated as of August 21, 2023 (such agreement, along with the Company Disclosure Schedule and the Parent Disclosure Schedule, the “Merger Agreement”), which Merger Agreement contemplates that the Company may amend its outstanding Performance Stock Unit awards to provide for dividend equivalent rights in accordance with the Plan and to provide for the settlement of such awards at the maximum performance level upon the closing of the transactions contemplated by the Merger Agreement (the “Transactions”);

WHEREAS, the Company desires to amend each Outstanding Award Agreement, subject to certain conditions set forth below, in order to provide for a Cash Dividend Right (or if the Outstanding Award Agreement already provides for a Cash Dividend Right, to clarify the language regarding such right) and to provide for the settlement of such awards at the maximum performance level upon the closing of the Transactions, in each case, as permitted by the Merger Agreement; and

WHEREAS, certain Participants holding Outstanding Award Agreements, as set forth on Exhibit A hereto (the “Specified Participants”), shall be required to agree to enter into a Participant Covenant Agreement, substantially in the form attached hereto as Exhibit B, as a condition to the Company’s amendment of certain Outstanding Award Agreements.

NOW, THEREFORE, in consideration of the foregoing, effective as of the Effective Date, the Outstanding Award Agreements are hereby amended as follows:

 

1.

Section 1 is hereby deleted in its entirety and replaced with the following:

 

  1.

Award of Performance Restricted Stock Units and Cash Dividend Rights. Earthstone Energy, Inc., a Delaware corporation (the “Company”), hereby grants to the Participant under the Plan an award (the “Award”) of (a) the number of Performance Restricted Stock Units (each individually, a “Unit” and collectively, the “Units”) set forth in the Notice of Performance Restricted Stock Unit Award or Notice of Performance Unit (as applicable, the “Notice”) to which this Performance Restricted Stock Unit Agreement (this “Agreement”) is attached and (b) with respect to each Unit, a contingent right to receive an amount of cash equal to the per-share cash distributions, if any, declared by the Company with respect to Common Stock for any dividend with a record date occurring after the Grant Date and prior to the date the applicable Unit is settled, forfeited or otherwise expires (“Cash Dividend Right”). Each Cash Dividend Right entitles the Participant to receive the equivalent value of any such cash distribution paid on a single share of Common Stock. The Company will establish a separate

  bookkeeping account (a “Cash Dividend Account”) for each Unit and credit the Cash Dividend Account (without interest) on the applicable dividend payment date with the equivalent amount of any such cash distribution made. Except as may be explicitly provided otherwise, any reference in this Agreement to the Award shall be deemed to refer to the Units and Cash Dividend Right provided herein. This Agreement consists of the Notice and the terms and conditions of the Earthstone Energy, Inc. Amended and Restated 2014 Long-Term Incentive Plan, as amended from time to time (the “Plan”). Unless otherwise provided herein, capitalized terms herein will have the same meanings as in the Plan or in the Notice.

 

2.

Section 6(a) is hereby deleted in its entirety and replaced with the following:

(a) Continuous Employment. If a Change of Control Event occurs and the Participant’s employment or service as a director of the Company or any of its subsidiaries has not terminated prior to the Change of Control Date, then the Participant will be issued a number of shares of Class A Common Stock (or paid an amount of cash to the extent provided by Section 4(b)) equal to the number of Units that would have become Earned Performance Units and paid an amount of cash for any Cash Dividend Rights equal to the number of Earned Performance Units assuming the maximum level of performance.

3. All references to “Performance Unit” in any Outstanding Award Agreements shall be replaced by a reference to “Performance Restricted Stock Unit.”

4. Notwithstanding anything herein to the contrary, with respect to the Performance Restricted Stock Units under each Outstanding Award Agreement held by the Specified Participants, the amendments described in Sections 1, 2 and 3 of this Amendment shall not become effective until, and shall be expressly conditioned upon, the applicable Specified Participant who is party to each such Outstanding Award Agreement executing this Amendment, which signature acknowledges such Specified Participant’s agreement to enter into and be bound by an agreement substantially in the form of the Participant Covenant Agreement that is attached hereto as Exhibit B.

[Remainder of Page Intentionally Blank]

 

2

Exhibit A

Specified Participants

[Intentionally omitted.]

EXHIBIT A TO THE GLOBAL AMENDMENT

TO THE PERFORMANCE-BASED AWARD AGREEMENTS

Exhibit B

 

Form of Participant Covenant Agreement

[Intentionally omitted.]

EXHIBIT B TO THE GLOBAL AMENDMENT

TO THE PERFORMANCE-BASED AWARD AGREEMENTS

Exhibit 10.3

Execution Version

FIRST AMENDMENT TO THE

EARTHSTONE ENERGY, INC.

SECOND AMENDED AND RESTATED

CHANGE IN CONTROL AND SEVERANCE BENEFIT PLAN

WHEREAS, Earthstone Energy, Inc. (the “Company”) has previously adopted the Earthstone Energy, Inc. Second Amended and Restated Change in Control and Severance Benefit Plan, initially effective as of April 8, 2019, which was amended and restated effective as of January 27, 2021 and further amended and restated effective as of January 6, 2023 (the “Plan”);

WHEREAS, the Board of Directors (the “Board”) of the Company and the Compensation Committee (the “Compensation Committee”) of the Board have determined that it is in the best interests of the Company to amend the Plan to (i) provide certain adjustments to severance benefit calculations and (ii) revise the payment mechanics for certain Severance Obligations, including the time and form in which the COBRA premiums are paid (each such capitalized term as defined in the Plan); and

WHEREAS, the Compensation Committee, together with the majority of the Board, may amend the Plan from time to time prior to a Change in Control (such capitalized term as defined in the Plan), subject to certain limitations included in the Plan.

NOW, THEREFORE, the Plan is hereby amended as follows, effective as of October 31, 2023:

1. For all Tier 1 Officers, Tier 2 Officers and Tier 3 Officers set forth on Schedule A attached hereto, the definition of “AIP” set forth in Section 2(d) of the Plan shall be deleted, and the following shall be substituted therefor:

“(d) “AIP” means the annual incentive payment, being the greatest of (i) any annual incentive payment amount earned by the Eligible Individual during the calendar year immediately preceding the Date of Termination, (ii) any annual incentive payment amount earned by the Eligible Individual two calendar years immediately preceding the Date of Termination, and (iii) the Eligible Individual’s then-current “target” annual incentive payment amount; provided, however, that, if an Eligible Individual’s Date of Termination occurs after October 31, 2023 but on or prior to December 31, 2023, then “AIP” means the annual incentive payment determined by multiplying such Eligible Individual’s target annual incentive payment opportunity (expressed as a percentage of Base Salary) for the annual incentive year that includes the Date of Termination by (x) if the Eligible Individual was employed by the Company or any of its Affiliates in 2022 and eligible to receive a full annual incentive payment for the 2022 annual incentive year, such Eligible Individual’s annual incentive performance multiplier for the 2022 annual incentive year, based on actual performance, or (y) if the Eligible Individual was not employed by the Company or any of its Affiliates in 2022 or was not eligible to receive a full annual incentive payment for the 2022 annual incentive year, the annual incentive performance multiplier that applied for similarly situated employees of the Company or any of its Affiliates for the 2022 annual incentive year, based on actual performance.”

For the avoidance of doubt, the definition of “AIP” set forth in Section 2(d) of the Plan shall remain unrevised for any Tier 1 Officer, Tier 2 Officer or Tier 3 Officer that is not set forth on Schedule A attached hereto.

2. The following sentence shall be added to the end of the introductory paragraph to each of Section 5(b) of the Plan:

“Notwithstanding anything herein to the contrary, if an Eligible Individual becomes eligible to receive Severance Obligations hereunder and the Date of Termination occurs on or after the date on which such Eligible Individual’s AIP is paid for the year in which the Date of Termination occurs, such Eligible Individual shall not be eligible to receive a pro-rata AIP for the year in which the Date of Termination occurs.”

3. The following sentences shall be added to the end of the introductory paragraph to Section 5(c) of the Plan:

“The Severance Obligations shall be paid at the time set forth below for each such Severance Obligation, unless otherwise agreed between the Eligible Individual and the Company; provided that in no event shall the payment date occur later than March 15 of the calendar year following the year in which the Date of Termination occurs. Notwithstanding anything herein to the contrary, if an Eligible Individual becomes eligible to receive Severance Obligations hereunder and the Date of Termination occurs on or after the date on which such Eligible Individual’s AIP is paid for the year in which the Date of Termination occurs, such Eligible Individual shall not be eligible to receive a pro-rata AIP for the year in which the Date of Termination occurs. Further, notwithstanding anything herein to the contrary, if an Eligible Individual becomes eligible to receive Severance Obligations under this Section 5(c) and the Date of Termination occurs on November 1, 2023, provided that the Release is executed on the Date of Termination and the Eligible Individual does not revoke the Release, the payment date for any such Severance Obligations hereunder shall occur no later than November 22, 2023.”

4. To correct a scrivener’s error whereby there are two Sections 5(c)(i) within the Plan, references to “Section 5(c)(i)” of the Plan that contain or pertain to provisions of the Plan applicable Tier 2 Officers shall be deleted and replaced with “Section 5(c)(ii).”

5. Section 5(c)(i) (1) of the Plan shall be deleted, and the following shall be substituted therefor:

“within ten business days following the date on which the Release becomes irrevocable, payment of a lump sum cash payment equal to 300% of the sum of (A) such officer’s then current Base Salary as of the Date of Termination and (B) such officer’s AIP;”

6. Section 5(c)(ii)(1) of the Plan shall be deleted, and the following shall be substituted therefor:

“within ten business days following the date on which the Release becomes irrevocable, payment of a lump sum cash payment equal to 200% of the sum of (A) such officer’s then current Base Salary as of the Date of Termination and (B) such officer’s AIP;”

7. Section 5(c)(i)(2) and Section 5(c)(ii)(2) of the Plan shall be deleted, and the following shall be substituted therefor:

“within ten business days following the date on which the Release becomes irrevocable, payment of an amount equal to 100% of such officer’s pro-rata AIP (such pro-rata amount to be equal to (i) if the Date of Termination occurs during the fourth quarter of the Company’s 2023 fiscal year, the product of (a) the amount of such officer’s AIP, times (b) 100%, or (ii) if the Date of Termination occurs at any other time during the applicable protected period, the product of (c) the amount of such officer’s AIP, times (d) a fraction, (x) the numerator of which shall be the number of calendar days commencing from January 1 of such year and ending on the Date of Termination, and (y) the denominator of which shall equal 365);”

8. Section 5(c)(i)(4) of the Plan shall be deleted, and the following shall be substituted therefor:

“(4) within ten business days following the date on which the Release becomes irrevocable, payment of an additional lump sum cash payment equal to (x) 24, multiplied by (y) the monthly premium that would otherwise be payable by the Eligible Individual for continued health benefits provided to the Eligible Individual and such Eligible Individual’s dependents pursuant to COBRA, at the full COBRA premium rate in effect under the applicable employer sponsored group health plan.”

9. Section 5(c)(ii)(4) of the Plan shall be deleted, and the following shall be substituted therefor:

“(4) within ten business days following the date on which the Release becomes irrevocable, payment of an additional lump sum cash payment equal to (x) 18, multiplied by (y) the monthly premium that would otherwise be payable by the Eligible Individual for continued health benefits provided to the Eligible Individual and such Eligible Individual’s dependents pursuant to COBRA, at the full COBRA premium rate in effect under the applicable employer sponsored group health plan.”

10. The portion of Schedule III to the Plan setting forth the severance payments and benefits available to a Tier 3 Officer pursuant to Section 5(c)(iii) of the Plan shall be deleted, and the following shall be substituted therefor:

 

2

“(1) within ten business days following the date on which the Release becomes irrevocable, payment of a lump sum cash payment equal to 100% of the sum of (A) such officer’s then current Base Salary as of the Date of Termination and (B) such officer’s AIP;

(2) within ten business days following the date on which the Release becomes irrevocable, payment of an amount equal to 100% of such officer’s pro-rata AIP (such pro-rata amount to be equal to (i) if the Date of Termination occurs during the fourth quarter of the Company’s 2023 fiscal year, the product of (a) the amount of such officer’s AIP, times (b) 100%, or (ii) if the Date of Termination occurs at any other time during the applicable protected period, the product of (c) the amount of such officer’s AIP, times (d) a fraction, (x) the numerator of which shall be the number of calendar days commencing from January 1 of such year and ending on the Date of Termination, and (y) the denominator of which shall equal 365);

(3) all equity incentives then held by such officer pursuant to the LTIP or otherwise will be governed by the award agreement applicable to the equity incentive award; and

(4) within ten business days following the date on which the Release becomes irrevocable, payment of an additional lump sum cash payment equal to (x) 12, multiplied by (y) the monthly premium that would otherwise be payable by the Eligible Individual for continued health benefits provided to the Eligible Individual and such Eligible Individual’s dependents pursuant to COBRA, at the full COBRA premium rate in effect under the applicable employer sponsored group health plan.”

11. Exhibit A of the Plan shall be deleted in its entirety and replaced by the Form of General Release attached as Exhibit A hereto.

 

3

EXHIBIT A

Attached.

EXHIBIT A TO

FIRST AMENDMENT TO THE

EARTHSTONE ENERGY, INC.

SECOND AMENDED AND RESTATED

CHANGE IN CONTROL AND SEVERANCE BENEFIT PLAN

EXHIBIT A

FORM OF GENERAL RELEASE

1. The employment of the undersigned (“Employee”) with the Company (as defined below) ended on ____________ (the “Date of Termination”). As of the Date of Termination, Employee was no longer an employee of (or held any other positions with) the Company and its affiliates. Employee agrees not to hold himself/herself out as a partner, member, director, officer or employee of, or as otherwise affiliated with, the Company or any of its affiliates (including on social media) after the Date of Termination. Employee agrees to execute such other documents promptly as may be reasonably requested by the Company to evidence his/her separation from employment. Regardless of whether Employee signs this agreement (this “Agreement”), Employee will receive a lump sum payment of all Accrued Obligations (as such term is defined in the Plan). Employee acknowledges and agrees that Employee shall submit any business expenses in accordance with Company policy within fifteen (15) days following the Date of Termination, which shall be reimbursed in accordance with Company policy and regular payroll practices. Except as specifically set forth in this Agreement or as required under applicable law (including rights to continue group health insurance under COBRA) or as specifically provided under any of the Company’s benefit plans, and except as to any vested benefits under the Company’s 401(k) plan, Employee’s right to, and participation in, all benefit plans as an employee of the Company shall terminate as of the Date of Termination in accordance with the specific terms of each plan. To the extent Employee has any vested assets under the Company’s 401(k) plan, the status and treatment of any such assets shall be governed by the applicable terms of such plan. Employee acknowledges and agrees that, with Employee’s execution and effectuation of this Agreement, Employee is waiving for all purposes any Claim for additional employment-related compensation (other than base salary or other wages for services performed prior to the Date of Termination) of any kind except as specifically set forth herein.

2. Employee, on Employee’s own behalf and on behalf of Employee’s heirs, agents, representatives, attorneys, assigns, executors and/or anyone acting on Employee’s behalf, and in consideration of the promises, assurances, and covenants set forth in the Earthstone Energy, Inc. Second Amended and Restated Change In Control and Severance Benefit Plan, as amended October 31, 2023 (the “Plan”), under which Employee is an Eligible Individual, but to which Employee is not automatically entitled, including, but not limited to, the payment of any severance thereunder (other than the severance and other payments and benefits set forth at Appendix A), hereby fully releases Earthstone Energy, Inc. and its successors and affiliates (the “Company”), its parents, subsidiaries (including, without limitation, Permian Resources Corporation and its subsidiaries), and its and their officers, shareholders, partners, members, individual employees, agents, representatives, directors, managers, employees, attorneys, affiliates, successors, and anyone acting on its behalf, known or unknown, from all claims and causes of action by reason of any injuries and/or damages or losses, known or unknown, foreseen or unforeseen, patent or latent which Employee has sustained or which may be sustained as a result of any facts and circumstances arising out of or in any way related to Employee’s employment by the Company or the termination of that employment, and to any other disputes, claims, disagreements, or controversies between Employee and the Company up to and including the date this Release is signed by Employee (collectively, “Claims”). Employee’s release includes, but is not limited to, any contract benefits, claims for quantum meruit, claims for wages, bonuses, employment benefits, moving expenses, stock options, profits units or other equity or equity-based awards (except for those payments and benefits scheduled on Appendix A hereto), or damages of any kind whatsoever, arising out of any contracts, express or implied, any covenant of good faith and fair dealing, express or implied, any theory of unlawful discharge, torts and related damages (including, but not limited to, emotional distress, loss of consortium, and defamation) any legal restriction on the Company’s right to terminate Employee’s employment and/or services, or any federal, state or other governmental statute or ordinance, including, without limitation, Title VII of the Civil Rights Act of 1964 (as amended), [the federal Age Discrimination in Employment Act of 1967 (29 U.S.C. § 21, et seq.), including as amended by the Older Workers Benefit Protection Act (the “ADEA”),] the federal Americans with Disabilities Act of 1990, the Americans with Disabilities Act of 2008, the Family Medical Leave Act of 1993, the Genetic Information Nondiscrimination Act of 2008, any state laws concerning discrimination or harassment including the Fair Employment and Housing Act, as well as other state employment laws including Chapter 21 of the Texas Labor Code (Tex. Lab. Code Ann. §§ 21.001 to 21.556), the Texas Anti-Retaliation Act (Tex. Lab. Code Ann. § 451.001), the Texas Payday Law (Tex. Lab. Code Ann. §§ 61.001 to 61.095), or any other legal limitation on contractual or employment relationships, and any and all claims for any loss, cost, damage, or expense with respect to Employee’s liability for taxes, penalties, interest or additions to tax on or with respect to any amount received from the Company or otherwise includible in Employee’s gross income, including, but not limited to, any liability for taxes, penalties, interest or additions to tax arising from the failure of the Plan, or any other employment, severance, profit sharing, bonus, equity incentive or other compensatory plan to which Employee and the Company are or were parties, to comply with, or to be operated in compliance with the Internal Revenue Code of 1986, as amended, including, but not limited to, Section 409A thereof, or any provision of state or local income tax law; provided, however, that notwithstanding the foregoing, the release set forth in this Section shall not extend to: (a) any vested rights under any pension, retirement, profit sharing or similar plan; or (b) Employee’s rights, if any, to indemnification or defense under the Company’s certificate of incorporation, bylaws and/or policy or procedure, any indemnification agreement with Employee or under any insurance contract, in connection with Employee’s acts or omissions within the course and scope of Employee’s employment with the Company (this “Release”). Appendix A to this Release sets forth the benefits, payments and obligations to which Employee is entitled under the Plan or otherwise if, and only if, this Release is executed, delivered and become irrevocable by no later than , which is 60 days after the Employee’s Date of Termination (but no earlier than the Date of Termination), and Employee satisfies the other terms and conditions set forth in Sections 5(e) and 7 of the Plan. Employee acknowledges and agrees that he or she is not entitled to any other termination or severance benefits whether under the Plan or otherwise. Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Plan.

3. [Employee acknowledges that Employee is knowingly and voluntarily waiving and releasing any rights Employee may have under the ADEA. Employee also acknowledges that the consideration given for the waiver and release hereunder is in addition to anything of value to which Employee is already entitled. Employee further acknowledges that Employee has been advised by this writing, as required by the ADEA, that: (a) Employee’s waiver and release hereunder do not apply to any rights or claims that may arise after the execution date of this Release; (b) Employee has been advised hereby that Employee has the right to consult with an attorney prior to executing this Release; (c) Employee has been provided at least [twenty-one (21) days][forty-five (45) days] to consider this Release (although Employee may choose to voluntarily execute this Release earlier, provided that the Release is executed no earlier than the Date of Termination) [and has received and understands the attached Exhibit A reflecting all job titles affected and not affected by the layoff of which Employee is a part, the ages of all employees holding those jobs, and whether each such employee is a participant in this severance program]; (d) Employee has seven (7) days following the execution of this Release to revoke this Release; and (e) this Release will not be effective until the date upon which the revocation period has expired, which will be the eighth (8th) day after the day on which this Release is executed by Employee (the “Effective Date”). Employee acknowledges and agrees that any changes made since Employee’s receipt of this Release are not material and/or were made at Employee’s request and shall not restart the [twenty-one (21)][forty-five (45)] day review period.]

4. Nothing in this Release (including, without limitation, Sections 1, 5, 6 and 8 hereof), the Plan or any other Company agreement, policy or procedure (this Release, the Plan and such other agreements, policies and procedures, collectively, the “Company Arrangements”) limits Employee’s ability to communicate directly with and provide information, including documents, not otherwise protected from disclosure by any applicable law or privilege to the Securities and Exchange Commission (the “SEC”) or any other federal, state or local governmental agency or commission (each, a “Government Agency”) regarding possible legal violations or make other disclosures under the whistleblower protections of any other applicable law, without disclosure to the Company. The Company may not retaliate against Employee for any of these activities, and nothing in the Company Arrangements requires Employee to waive Employee’s right to receive any monetary award or other payment that Employee might become entitled to from the SEC or any other Government Agency (including, for the avoidance of doubt, as the result of engaging in any “whistleblower” activity).

Further, nothing in the Company Arrangements precludes Employee from filing a charge of discrimination with the Equal Employment Opportunity Commission or a like charge or complaint with a state or local fair employment practice agency. However, once this Release becomes effective, Employee may not receive a monetary award or any other form of personal relief from the Company in connection with any such charge or complaint that Employee filed or is filed on Employee’s behalf.

Notwithstanding anything to the contrary in the Company Arrangements, as provided for in the Defend Trade Secrets Act of 2016 (18 U.S.C. § 1833(b)), Employee will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (a) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Without limiting the foregoing, if Employee files a lawsuit for retaliation by the Company for reporting a suspected violation of law, Employee may disclose the trade secret to Employee’s attorney and use the trade secret information in the court proceeding, if Employee (x) files any document containing the trade secret under seal, and (y) do not disclose the trade secret, except pursuant to court order.

5. Confidential Information; Developments.

(a) In the course of Employee’s employment with the Company and the performance of Employee’s duties on behalf of the Company, Employee was provided with, and had access to, Confidential Information (as defined below). At all times after the Date of Termination, except as expressly permitted by this Agreement (including as permitted by Section 4 above or Section 5(d) below) or in writing by the Company, Employee shall not, directly or indirectly, disclose, make available, sell, or otherwise communicate any Confidential Information to any person or entity and shall not use any Confidential Information except for the benefit of the Company or to the extent approved by the Company.

(b) Employee warrants and represents that Employee has returned any and all documents and other property of the Company containing Confidential Information in Employee’s possession, custody or control, and represents and warrants that Employee has not retained any copies or originals of any such property of the Company. In addition to any other remedies available to the Company, should Employee breach the covenants set forth in this Section 5, Employee shall forfeit his or her right to any and all remaining severance payments or benefits under the Plan and the Company shall have the right to terminate any and all such remaining scheduled payments.

 

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(c) “Confidential Information” means all confidential, competitively valuable, non-public or proprietary information that is conceived, made, or developed by Employee, individually or in conjunction with others, or acquired by, disclosed to, or otherwise accessed by Employee (whether in graphic, written, electronic or oral form), in each case during the period of Employee’s employment with the Company including: (i) technical information of the Company, its affiliates, its customers or other third parties, including computer programs, software, databases, data, ideas, know-how, formulae, compositions, processes, discoveries, machines, inventions (whether patentable or not), designs, developmental or experimental work, techniques, improvements, work in process, research or test results, original works of authorship, training programs and procedures, diagrams, charts, business and product development plans, and similar items; (ii) information relating to the Company’s businesses or properties, operations or prospects; and (iii) other valuable, confidential information and trade secrets of the Company, its affiliates, its customers or other third parties. For purposes of this Agreement, Confidential Information shall not include any information that is or becomes generally available to the public other than as a result of a direct or indirect disclosure or wrongful act of Employee or any of Employee’s agents.

(d) Notwithstanding the foregoing, nothing in this Agreement shall prohibit or restrict Employee from lawfully: (i) initiating communications directly with, cooperating with, providing information to, causing information to be provided to, or otherwise assisting in an investigation by, any Government Agency regarding a possible violation of any law; (ii) responding to any inquiry or legal process directed to Employee from any such Government Agency; (iii) testifying, participating or otherwise assisting in any action or proceeding by any Government Agency relating to a possible violation of law; (iv) exercising any rights Employee may have under Section 7 of the National Labor Relations Act, such as the right to engage in concerted activity, including collective action or discussion concerning wages or working conditions; or (v) making any other disclosures that are protected under the whistleblower or other provisions of any applicable law. Additionally, pursuant to the federal Defend Trade Secrets Act of 2016, an individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (A) is made (1) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney and (2) solely for the purpose of reporting or investigating a suspected violation of law; (B) is made to the individual’s attorney in relation to a lawsuit for retaliation against the individual for reporting a suspected violation of law; or (C) is made in a complaint or other document filed in a lawsuit or proceeding, if such filing is made under seal. Nothing in this Agreement requires Employee to obtain prior authorization before engaging in any conduct described in this paragraph, or to notify the Company that Employee has engaged in any such conduct.

(e) The results and proceeds of Employee’s services to the Company including, without limitation, all discoveries, inventions, ideas, technology, formulas, designs, software, programs, algorithms, products, systems, applications, processes, procedures, methods and improvements and enhancements conceived, developed or otherwise made or created by you alone or with others, and in any way relating to the business or proposed business of the Company and its affiliates, or the products and services of the Company and its affiliates, and in each case developed as part of Employee’s services to the Company and its affiliates, whether or not subject to patent, copyright or other protection and whether or not reduced to tangible form, at any time during the term of Employee’s employment with the Company (“Developments”) shall be works-made-for-hire and the Company or applicable affiliate, as the case may be, shall be deemed the sole owner of any and all rights therein, with the right to use the same without further payment to Employee. If for any reason any of such results or proceeds from the Developments shall not legally be a work-made-for-hire, then Employee hereby irrevocably assigns, without further consideration, any and all of Employee’s right, title and interest thereto to the Company or, at the instruction of the Company, to an affiliate of the Company.

6. Employee acknowledges that because of Employee’s position with the Company, Employee may possess information that may be relevant to or discoverable in connection with claims, litigation or judicial, arbitral or investigative proceedings initiated by a private party or by a regulator, governmental entity, or self-regulatory organization, that relates to or arises from matters with which Employee was involved during Employee’s employment with the Company, or that concern matters of which Employee has information or knowledge (collectively, a “Proceeding”). Employee agrees that Employee shall testify truthfully in connection with any such Proceeding. Except as provided in Section 4, Employee agrees that Employee shall cooperate with the Company in connection with every such Proceeding, and that Employee’s duty of cooperation shall include an obligation to meet with the Company representatives and/or counsel concerning all such Proceedings for such purposes, and at such times and places, as the Company reasonably requests, and to appear for deposition and/or testimony upon the Company’s request and without a subpoena. The Company shall reimburse Employee for reasonable out-of-pocket expenses that Employee incurs in honoring Employee’s obligation of cooperation under this Section 6 if the Employee timely submits receipts or documentation that supports the reimbursement that the Employee requests from the Company.

7. Employee and the Company understand and agree that it is in their mutual best interest to minimize the effect of Employee’s separation upon the Company’s business and upon Employee’s professional reputation. Accordingly, Employee agrees to take all actions reasonably requested of Employee by the Company in order to accomplish that objective. To this end, Employee shall consult with the Company concerning business matters on an as-needed and as-requested basis, the Company shall exercise reasonable efforts to avoid conflicts between such consulting and Employee’s personal and other business commitments, and Employee shall exercise reasonable efforts to fulfill the Company’s consulting requests in a timely manner.

 

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8. Employee covenants never to directly or indirectly make (or cause to be made) to any person or entity any maliciously untrue, egregiously offensive or knowingly false or reckless statement, comment or remark about the Company or any Company product or service, or of any past or present employee, manager, officer or director of the Company. This obligation shall include any verbal conversation, email/text/instant messaging statements, statements made to any electronic and print media, and any web-based social media site or blog (e.g., LinkedIn, Facebook, Glassdoor.com, Instagram and/or Twitter). Employee further agrees not to harass, intimidate, bully, or behave unprofessionally towards any past, present or future Company employee, manager, officer or director. Nothing in this Agreement shall prevent Employee from engaging in activity permitted by Section 4 or concerted activity protected under the National Labor Relations Act (to the extent applicable), including relative to the terms and conditions of Employee’s employment, Employee’s ability to file unfair labor practice charges or assist others in doing so, and cooperating in any investigative process with the National Labor Relations Board.

9. Release of Unknown Claims. It is the intention of Employee that this Release is a general release which shall be effective as a bar to each and every claim, demand, or cause of action it releases. Employee recognizes that Employee may have some claim, demand, or cause of action against the Company of which Employee is totally unaware and unsuspecting which Employee is giving up by execution of this release. It is the intention of Employee in executing this Release that it will deprive Employee of each such claim, demand or cause of action and prevent Employee from asserting it against the released parties.

10. Taxes. The Company and its Affiliates are authorized to withhold from any payments made hereunder amounts of withholding and other taxes due or potentially payable in connection therewith, and to take such other action as the Company and its applicable Affiliates may deem advisable to enable the Company and Employee to satisfy obligations for the payment of withholding taxes and other tax obligations relating to any payments made under this Agreement.

11. Miscellaneous. Sections 6 (Parachute Payment Limitations), 7 (Conditions to Receipt of Severance Obligations) and 9 (General Provisions) of the Plan are each incorporated into this Agreement by reference and shall be applied mutatis mutandis.

12. Counterparts. This Agreement may be executed simultaneously in counterparts, each of which shall be an original, but all of which shall constitute one and the same agreement. A faxed, .pdf-ed or electronic signature shall operate the same as an original signature.

[Remainder of Page Intentionally Blank; Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the below-indicated dates.

 

[•]:

 

By: [NAME AND TITLE]
Dated:  

 

EMPLOYEE:
[EMPLOYEE NAME]
By:  

 

[NAME]
Dated:  

 

[Signature Page to Release]

v3.23.3
Document and Entity Information
Oct. 31, 2023
Cover [Abstract]  
Entity Registrant Name EARTHSTONE ENERGY INC
Amendment Flag false
Entity Central Index Key 0000010254
Current Fiscal Year End Date --12-31
Document Type 8-K
Document Period End Date Oct. 31, 2023
Entity Incorporation State Country Code DE
Entity File Number 001-35049
Entity Tax Identification Number 81-0592823
Entity Address, Address Line One 1400 Woodloch Forest Drive
Entity Address, Address Line Two Suite 300
Entity Address, City or Town The Woodlands
Entity Address, State or Province TX
Entity Address, Postal Zip Code 77380
City Area Code (281)
Local Phone Number 298-4246
Written Communications false
Soliciting Material false
Pre Commencement Tender Offer false
Pre Commencement Issuer Tender Offer false
Security 12b Title Common Stock, $0.001 par value per share
Trading Symbol ESTE
Security Exchange Name NYSE
Entity Emerging Growth Company false
Earthstone Energy (NYSE:ESTE)
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