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Item 1.01.
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Entry into a Material Definitive Agreement.
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On August 13, 2021, SilverBow Resources, Inc. (“SilverBow Resources” or the “Company”) entered into an Equity Distribution Agreement (the “Sale Agreement”) among the Company and Johnson Rice & Company L.L.C. and Truist Securities, Inc. as sales agents (together, the “Sales Agents” or, each, a “Sales Agent”). Pursuant to the terms of the Sale Agreement, the Company may sell, from time to time through the Sales Agents, shares of the Company’s common stock, par value $0.01 per share (“Common Stock”), having an aggregate offering price of up to $40,000,000 (the “Shares”). The Company intends to use the net proceeds from this offering, after deducting the Sales Agents’ commission and our offering expenses, for general corporate purposes, including, but not limited to, financing of capital expenditures, repayment or refinancing of outstanding debt, financing acquisitions or investments, financing other business opportunities, and general working capital purposes. The Shares to be sold, if any, will be issued pursuant to the Company’s shelf registration statement on Form S-3 that is currently on file (Registration No. 333-238778).
Sales of the Shares, if any, pursuant to the Sale Agreement and under the prospectus supplement and accompanying prospectus may be made by any method that is deemed to be an “at the market” offering as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended, as well as by any other method permitted by law, including but not limited to in privately negotiated transactions. Each time the Company wishes to issue and sell Shares under the Sale Agreement, it will notify the Sales Agent that is to make the sale (the “Selling Agent”) of the number of Shares to be issued, the time period during which such sales are requested to be made, any limitation on the number of Shares to be sold in any one day and any minimum price below which sales may not be made. Pursuant to the terms of the Sale Agreement, the Company has agreed that once the Selling Agent has notified the Company that it accepts such instructions, or the Company has accepted the Selling Agent’s proposed modification(s) of such instructions (and the Selling Agent has received such acceptance), the Selling Agent will use its commercially reasonable efforts consistent with its normal trading practice and sales practices to sell such Shares up to the amount specified on such terms. The obligations of the Selling Agent under the Sale Agreement to sell Shares are subject to a number of conditions that the Company must meet. The Company will pay the Sales Agents a fixed commission equal to an aggregate of 3.0% of the gross proceeds of any Shares sold through either of the Sales Agents under the Sale Agreement. The Company has also agreed to provide the Sales Agents with customary indemnification and contribution rights.
The offering of Common Stock pursuant to the Sale Agreement will terminate upon the earlier of (i) the sale of all shares of Common Stock subject to the Sale Agreement and (ii) the termination of the Sale Agreement by either of the Sales Agents or the Company.
The summary of the Sale Agreement in this report does not purport to be complete and is qualified by reference to the full text of the Sale Agreement, a copy of which is filed as Exhibit 1.1 to this Current Report on Form 8-K, and is incorporated herein by reference.