Convertible Note Subscription Agreement, dated as of November 25, 2024, by and among Independence Contract Drilling, Inc., MSD PCOF Partners LXXIII, LLC, MSD Private Credit Opportunity (NON-ECI) Fund LLC, MSD Credit Opportunity Master Fund, L.P. and Glendon Opportunities Fund II, L.P
Execution Version
CONVERTIBLE NOTE SUBSCRIPTION AGREEMENT
This CONVERTIBLE NOTE SUBSCRIPTION AGREEMENT (this “Agreement”) is entered into on November 25, 2024, by and among Independence Contract Drilling, Inc., a Delaware corporation (the “Issuer”), and each undersigned subscriber (each, a “Subscriber” and collectively, the “Subscribers”). Notwithstanding anything herein to the contrary, the rights and obligations of each Subscriber hereunder shall be several, and not joint, and any covenants, representations or warranties made by any Subscriber hereunder shall be deemed to be made severally and not jointly by each Subscriber hereunder. Capitalized terms not defined herein have the meanings assigned to such terms in that certain Indenture (the “Indenture”) executed as of March 18, 2022 by and among the Issuer, the guarantors party thereto and U.S. Bank, National Association, as third-party trustee and collateral agent (the “Trustee” or “Collateral Agent”);
WHEREAS, in connection with the transactions contemplated hereby, each Subscriber desires to subscribe for and purchase, severally and not jointly, senior secured convertible notes (the “Convertible Notes”) of and from the Issuer in an aggregate principal amount to such Subscriber set forth on Schedule 1 hereto, and the Issuer desires to issue and sell to the Subscribers collectively $7,500,000 aggregate principal amount of the Convertible Notes, in consideration of the payment of 100% of the aggregate principal amount thereof (the “Purchase Price”) allocable to each Subscriber as set forth on Schedule 1 hereto by or on behalf of the Subscribers to the Issuer; and
WHEREAS, the Convertible Notes shall be the Additional Notes contemplated by the Indenture.
NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties and covenants, and subject to the conditions, herein contained, and intending to be legally bound hereby, the parties hereto hereby agree as follows:
(i) | each Subscriber or its nominee shall pay the Purchase Price to the following account of the Issuer: |
Account Name: INDEPENDENCE CONTRACT DRILLING, INC.
Account Number: 4660574294
Bank Name: Wells Fargo Bank NA.
Bank Address: 420 Montgomery St, San Francisco, CA 94104
ABA: 121000248
SWIFT Code: WFBIUS6S
Wire/ ACH Routing: 121000248
(ii) | the Issuer shall deliver to each Subscriber or its nominee, and the Trustee shall authenticate, certificated Convertible Notes, free and clear of any liens or other restrictions (other than those arising under this Agreement, the Indenture or applicable securities laws). |
(i) | no court or applicable governmental authority shall have enacted, issued, promulgated, enforced or entered any judgment, order, law, rule or regulation (whether temporary, preliminary or permanent) which is then in effect and has the effect of making the consummation of the transactions contemplated hereby illegal or otherwise restraining or prohibiting consummation of the transactions contemplated hereby and no such court or governmental authority shall have instituted or threatened in writing a proceeding seeking to impose any such restraint or prohibition. |
(i) | all representations and warranties of the Subscribers contained in this Agreement shall be true and correct in all material respects (other than representations and warranties that are qualified as to materiality or Subscriber Material Adverse Effect (as defined below), which representations and warranties shall be true and correct in all respects) at and as of the Closing Date; and |
(ii) | the Subscribers shall have performed, satisfied or complied in all material respects with all covenants and agreements required by this Agreement to be performed, satisfied or complied with by it at or prior to the Closing. |
(i) | all representations and warranties of the Issuer contained in this Agreement shall be true and correct in all material respects (other than representations and warranties that are qualified as to materiality or Material Adverse Effect, which representations and warranties shall be true and correct in all respects) at and as of the Closing Date (unless they specifically speak as of |
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an earlier date, in which case they shall be true and correct in all material respects (other than representations and warranties that are qualified as to Material Adverse Effect, which representations and warranties shall be true and correct in all respects) as of such date); |
(ii) | the Issuer shall have performed, satisfied or complied in all material respects with all covenants and agreements required by this Agreement to be performed, satisfied or complied with by it at or prior to the Closing. |
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(i) | The Note Parties are not in breach or in default of or under any material contract required to be filed as an exhibit under Item 601(b)(10) of Regulation S-K (“Material Contract”) which would reasonably likely result in a Material Adverse Effect and have not received any written notice of the intention of any other party thereto to terminate any Material Contract prior to the end of its current term. |
(ii) | No “default,” “Event of Default,”, “Change of Control” or similar event has occurred under the Indenture, other than the “Specified Default” (as defined in that certain Limited Waiver Agreement dated as of September 13, 2024, by and among Issuer, each Subscriber, the Trustee and Collateral Agent and Sidewinder Drilling LLC). |
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Each book entry for the Convertible Notes and the Underlying Shares, when issued, shall contain a notation, and each certificate (if any) evidencing the such shares shall be stamped or otherwise imprinted with a legend, in substantially the following form;
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION, AND MAY NOT BE OFFERED OR TRANSFERRED BY SALE, ASSIGNMENT, PLEDGE OR OTHERWISE UNLESS (I) A REGISTRATION STATEMENT FOR THESE SECURITIES UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS IN EFFECT OR (II) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
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in any event within one (1) Business Day) following the Termination Event be returned to the Subscribers.
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(Signature pages follow)
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IN WITNESS WHEREOF, each of the Issuer and the Subscribers has executed or caused this Agreement to be executed by its duly authorized representative as of the date first set forth above.
| INDEPENDENCE CONTRACT DRILLING, INC. | ||
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| By: | /s/ Philip A. Choyce | |
| | Name: Philip A. Choyce | |
| | Title: Executive Vice President, Chief Financial Officer, Treasurer and Secretary | |
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| Address for Notices: | ||
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| Independence Contract Drilling, Inc. 20475 State Highway 249, Suite 300 Houston, Texas 77070 ATTN: Philip A. Choyce, Chief Financial Officer EMAIL: ***@*** | ||
| with a copy (not to constitute notice) to: Sidley Austin LLP 1000 Louisiana Street, Suite 5900 ATTN: David C. Buck EMAIL: ***@*** |
[Signature Page to Subscription Agreement]
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SUBSCRIBER: | Address for Notices: | Restricted Ownership Percentage |
MSD PCOF PARTNERS LXXIII, LLC By: /s/ Marcello Liguori Name: Marcello Liguori Title: Authorized Signatory | c/o MSD Partners, L.P. 1 Vanderbilt Avenue, 26th Floor New York, NY 10017 Attn: Marcello Liguori | 19.9% |
MSD PRIVATE CREDIT OPPORTUNITY (NON-ECI) FUND, LLC By: /s/ Marcello Liguori Name: Marcello Liguori Title: Authorized Signatory | c/o MSD Partners, L.P. 1 Vanderbilt Avenue, 26th Floor New York, NY 10017 Attn: Marcello Liguori | 19.9% |
MSD CREDIT OPPORTUNITY MASTER FUND, L.P. By: /s/ Marcello Liguori Name: Marcello Liguori Title: Authorized Signatory | c/o MSD Partners, L.P. 1 Vanderbilt Avenue, 26th Floor New York, NY 10017 Attn: Marcello Liguori | 19.9% |
[Signature Page to Subscription Agreement]
SUBSCRIBER: | Address for Notices: | Restricted Ownership Percentage |
GLENDON OPPORTUNITIES FUND II, L.P. By: /s/ Haig Maghakian Name: Haig Maghakian Title: Authorized Person | c/o GLENDON CAPITAL MANAGEMENT LP Attention: General Counsel 2425 Olympic Blvd., Suite 500E Santa Monica, CA 90404 Email: ***@*** | 9.9% |
[Signature Page to Subscription Agreement]
SCHEDULE 1
| Aggregate Principal Amount of Convertible Notes to be Purchased |
MSD PCOF Partners LXXIII, LLC | $2,213,919.00 |
MSD PRIVATE CREDIT OPPORTUNITY (NON-ECI) FUND, LLC | $728,203.00 |
MSD CREDIT OPPORTUNITY MASTER FUND, L.P. | $815,378.00 |
GLENDON OPPORTUNITIES FUND II, L.P. | $3,742,500.00 |
Total | $7,500,000.00 |
Each Subscriber must pay the applicable Purchase Price by wire transfer of United States dollars in immediately available funds in accordance with the Subscription Agreement.