Registration No. 333-
Washington, D.C. 20549
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Item 4.
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Description of Securities.
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Capital Stock
The total number of shares of all classes
of stock which the Registrant shall have authority to issue is 345,000,000 shares, consisting of 300,000,000 shares of Common Stock
and 45,000,000 shares of Preferred Stock, par value $0.0001 per share (the “Preferred Stock”).
As of May 4, 2017, the Registrant had 25,000,000
shares of Common Stock and no shares of Preferred Stock outstanding. Summarized below are material provisions of the Registrant’s
amended and restated certificate of incorporation and amended and restated bylaws, as well as relevant sections of the Delaware
General Corporation Law (the “DGCL”). The following summary is qualified in its entirety by the provisions of the Registrant’s
amended and restated certificate of incorporation and amended and restated bylaws, copies of which have been filed as exhibits
to this Registration Statement, and by the applicable provisions of the DGCL.
Common
Stock
The holders of the Registrant’s Common
Stock are entitled to one vote per share on all matters submitted to a vote of stockholders, including the election of directors,
except that holders of the Common Stock shall not be entitled to vote on any amendment to the certificate of incorporation (including
any certificate of designations relating to any class or series of Preferred Stock) that relates solely to the terms of one or
more outstanding classes
or
series of Preferred Stock if the holders of such affected class or series are entitled, either separately or together with the
holders of one or more other such classes or series, to vote thereon pursuant to the certificate of incorporation (including any
certificate of designations relating to any class or series of Preferred Stock) or pursuant to the DGCL. Holders of the Common
Stock do not have any cumulative voting rights, which means that the holders of a majority of the outstanding Common Stock voting
for the election of directors can elect all directors then being elected. The holders of the Registrant’s Common Stock are
entitled to receive dividends when, as, and if declared by the Registrant’s board of directors out of legally available
funds. Upon the Registrant’s liquidation or dissolution, the holders of Common Stock will be entitled to share ratably in
those of the Registrant’s assets that are legally available for distribution to stockholders after payment of liabilities
and subject to the prior rights of any holders of Preferred Stock then outstanding. The rights, preferences and privileges of
holders of Common Stock are subject to the rights of the holders of shares of any series of Preferred Stock that may be issued
in the future.
Preferred
Stock
The Registrant is authorized to issue up
to 45,000,000 shares of Preferred Stock. The Registrant’s board of directors is authorized, subject to limitations prescribed
by the DGCL and the Registrant’s amended and restated certificate of incorporation, to determine the terms and conditions
of the Preferred Stock, including whether the shares of Preferred Stock will be issued in one or more series, the number of shares
to be included in each series and the powers, designations, preferences and relative, participating, relative or other rights of
the shares. The Registrant’s board of directors is also authorized to designate any qualifications, limitations or restrictions
on the shares without any further vote or action by the stockholders. The issuance of Preferred Stock may have the effect of delaying,
deferring or preventing a change in control of the Registrant and may adversely affect the voting and other rights of the holders
of its Common Stock, which could have an adverse impact on the market price of the Registrant’s Common Stock. The Registrant
has no current plan to issue any shares of Preferred Stock.
Certain
Certificate of Incorporation, Bylaw and Statutory Provisions
The provisions of the Registrant’s
amended and restated certificate of incorporation and amended and restated bylaws and of the DGCL summarized below may have an
anti-takeover effect and may delay, deter or prevent a tender offer or takeover attempt that a stockholder might consider in its
best interest, including an attempt that might result in the receipt of a premium over the market price for its shares.
Delaware Law
The Registrant is not subject to the provisions
of Section 203 of the DGCL, regulating corporate takeovers. In general, Section 203 prohibits a publicly held Delaware corporation
from engaging in a “business combination” with an “interested stockholder” for a three-year period following
the time that such stockholder becomes an interested stockholder, unless the business combination is approved in a prescribed manner.
A “business combination” includes, among other things, a merger, asset or stock sale, or other transaction resulting
in a financial benefit to the interested stockholder. An “interested stockholder” is a person who, together with affiliates
and associates, owns, or did own within three years prior to the determination of interested stockholder status, 15% or more of
the corporation's outstanding voting stock. Under Section 203, a business combination between a corporation and an interested stockholder
is prohibited unless it satisfies one of the following conditions:
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the transaction is approved by the board of directors before the date the interested stockholder attained that status;
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upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder
owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes
of determining the voting stock outstanding, shares owned by persons who are directors and also officers, and employee stock plans,
in some instances; or
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on or after such time, the business combination is approved by the board of directors and authorized at a meeting of stockholders
by at least two-thirds of the outstanding voting stock that is not owned by the interested stockholder.
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A Delaware corporation may “opt out”
of Section 203 with an express provision in its original certificate of incorporation or an express provision in its certificate
of incorporation or bylaws resulting from amendments
approved
by the holders of at least a majority of the corporation's outstanding voting shares. The Registrant elected to “opt out”
of the provisions of Section 203.
Amended and Restated Certificate of Incorporation and
Amended and Restated Bylaws
Provisions of the Registrant’s amended
and restated certificate of incorporation and amended and restated bylaws may delay or discourage transactions involving an actual
or potential change in control or change in the Registrant’s management, including transactions in which stockholders might
otherwise receive a premium for their shares, or transactions that stockholders might otherwise deem to be in their best interests.
Therefore, these provisions could adversely affect the price of the Registrant’s Common Stock.
Among other things, the Registrant’s
amended and restated certificate of incorporation and amended and restated bylaws:
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permit the board of directors to issue up to 45,000,000 shares of Preferred Stock, with any rights, preferences and privileges
as they may designate;
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provide that the authorized number of directors may be changed only by resolution of the majority of all of the board of directors
(including authorized but vacant directorships);
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provide that subject to the rights of the holders of any series of Preferred Stock of the Registrant then outstanding, all
vacancies, including newly created directorships, may, except as otherwise required by law, be filled by the affirmative vote of
a majority of directors then in office, even if less than a quorum (prior to such time, vacancies may also be filled by the affirmative
vote of the holders of a majority of the Registrant’s then outstanding Common Stock);
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provide that the Registrant’s amended and restated bylaws may only be amended by the affirmative vote of the
holders of a majority of its then outstanding Common Stock or by resolution adopted by a majority of all of the directors
(including authorized but vacant directorships);
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provide that certain provisions of the amended and restated bylaws relating to amendments to the bylaws, the election of directors,
information rights and certain actions requiring board of directors approval, may not be amended except with the affirmative vote
or written consent of one or more stockholders then holding, in the aggregate, a majority of the voting power of all of the then
outstanding shares of capital stock entitled to vote generally in the election of directors, voting together as a single class;
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provide for certain “tag-along” rights as described below;
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eliminate the personal liability of the Registrant’s directors for monetary damages resulting from breaches of their
fiduciary duty to the extent permitted by the DGCL and indemnify the directors and officers to the fullest extent permitted by
Section 145 of the DGCL;
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provide that stockholders seeking to present proposals before a meeting of stockholders or to nominate candidates for election
as directors at a meeting of stockholders must provide notice in writing in a timely manner, and also specify requirements as to
the form and content of a stockholder's notice; and
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not provide for cumulative voting rights, therefore allowing the holders of a majority of the shares of Common Stock entitled
to vote in any election of directors to elect all of the directors standing for election, if they should so choose.
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Directors’ Liability and Indemnification of
Directors and Officers
Section 145 of the DGCL authorizes a court
to award, or a corporation’s board of directors to grant, indemnity to directors and officers in terms sufficiently broad
to permit such indemnification under certain circumstances for liabilities, including reimbursements for expenses incurred arising
under the Securities Act.
The Registrant’s amended and restated
certificate of incorporation provides that a director will not be personally liable to the Registrant or its stockholders for monetary
damages for breach of fiduciary duty as a director, except:
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for any breach of the duty of loyalty;
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for acts or omissions not in good faith or which involve intentional misconduct or knowing violations of law;
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for liability under Section 174 of the DGCL (relating to unlawful dividends, stock repurchases or stock redemptions); or
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for any transaction from which the director derived any improper personal benefit.
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The effect of this provision is to eliminate
the Registrant’s rights, and its stockholders’ rights, to recover monetary damages against a director for breach of
a fiduciary duty of care as a director. This provision does not limit or eliminate the Registrant’s rights or those of any
stockholder to seek non-monetary relief such as an injunction or rescission in the event of a breach of a director’s duty
of care. The provisions will not alter the liability of directors under federal securities laws. In addition, the Registrant’s
amended and restated certificate of incorporation provides that it indemnify each director and the officers, employees and agents
determined by the board of directors to the fullest extent provided by the laws of the State of Delaware. The Registrant’s
amended and restated certificate of incorporation also requires the Registrant to advance expenses, including attorneys’
fees, to its directors and officers in connection with legal proceedings, subject to very limited exceptions.
Any amendment to or repeal of these provisions
will not adversely affect any right or protection of the Registrant’s directors in respect of any act or failure to act that
occurred prior to any amendment to or repeal of such provisions or the adoption of an inconsistent provision. If the DGCL is amended
to provide further limitation on the personal liability of directors of corporations, then the personal liability of the Registrant’s
directors will be further limited to the greatest extent permitted by the DGCL. In addition, the Registrant has entered into separate
indemnification agreements with each of its directors and executive officers. The Registrant also maintains director and officer
liability insurance.
Preemptive Rights
The Registrant’s amended and restated
certificate of incorporation provides that each stockholder that beneficially owns (including all shares beneficially owned by
such stockholder’s affiliates) at least 5% of the total shares of Common Stock outstanding as of the close of business on
the record date determined by the board of directors (each such stockholder, a “Preemptive Rightsholder”), shall have
the right to purchase up to its pro rata portion (based on the number of shares of Common Stock beneficially owned by such stockholder
as of the close of business on the record date, as a percentage of the total number of then-outstanding shares of Common Stock)
of any New Equity Securities (as defined below) that the Registrant or any of its subsidiaries proposes to sell or issue at any
time and from time to time after the date hereof. The rights of Preemptive Rightsholders to purchase such New Equity Securities
shall apply at the time of issuance of any right, warrant, or option or convertible or exchangeable security that constitutes a
New Equity Security, and not to the subsequent conversion, exchange or exercise of such New Equity Security in accordance with
its terms.
“New Equity Security”
means any and all (A) shares of Common Stock or other equity securities of the Registrant; (B) equity securities of any
subsidiary of the Registrant; (C) securities exchangeable into, or convertible or exercisable for, shares of securities of
the type specified in clause
(A) and
(B);
and (D) options, warrants or other rights to acquire securities of the type specified in clause
(A)
and
(B), in each case other than as issued (1) to employees, officers, directors or
consultants pursuant to any equity-based compensation or incentive plans approved by the board of directors or included in
the Registrant’s Plan of Reorganization confirmed by the United States Bankruptcy Court for the Southern District of
Texas, Houston Division, and securities issued upon exercise or conversion of such options, warrants, convertible securities
or other rights, (2) in connection with a stock split, payment of dividends or any similar recapitalization,
reclassification, distribution, exchange or readjustment of shares approved by the board of directors, (3) pursuant to the
Plan of Reorganization (including shares of Common Stock and warrants to purchase shares of Common Stock, in each case,
issued pursuant to the Plan), and securities issued upon exchange, conversion or exercise of such securities, (4)
as consideration in any business combination, consolidation, merger or acquisition transaction or joint venture involving
the Registrant or any of its subsidiaries, (5) upon the conversion or exercise of any securities convertible or exercisable
for shares of securities of the type specified in
(A) and
(B),
(6) as issuances (in one or more transactions) as a bona fide “equity kicker” in an aggregate amount with respect
to all such issuances of less than 5% of the then-outstanding shares of Common Stock to one or more third party lenders who
are not
stockholders
to whom the Registrant or one or more of its subsidiaries is becoming indebted in connection with the incurrence of any indebtedness
approved by the board of directors or (7) in an IPO.
Tag-Along Rights
The Registrant’s amended and restated
certificate of incorporation provides that if at any time prior to the earlier of a listing on a national securities exchange (which,
for the avoidance of doubt, does not include an “over-the-counter” system or network) or the consummation of an IPO,
stockholders acting as a group (collectively, the “Tag-Along Sellers”) propose to transfer shares of Common Stock in
a transaction or series of related transactions that constitutes a change of control, then each other stockholder that beneficially
owns (including all shares beneficially owned by such stockholder’s affiliates) at least 5% of the total shares of Common
Stock outstanding shall have the right to exercise certain tag-along rights.
Special Meetings of Stockholders
The Registrant’s amended and restated
bylaws provide that special meetings of stockholders may be called at any time pursuant to a resolution adopted by the board of
directors, or upon the written request to the Secretary by one or more stockholders holding, in the aggregate, at least a majority
of the voting power of the shares entitled to vote in the election of directors of the Registrant. Stockholders requesting a special
meeting must provide a notice to the Registrant with the proposed date, time and place of the meeting, the means of remote communications,
if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting, and the record date
for determining the stockholders entitled to vote at the meeting, if such date is different from the record date for determining
stockholders entitled to notice of the meeting, not less than 10 days nor more than 60 days before the date on which the meeting
is to be held.
Stockholder Action and Advance Notice Requirements
for Stockholder Proposals and Director Nominations
The Registrant’s amended and restated
bylaws provide that stockholders may take action by written consent if the consent is signed by holders of the Registrant’s
outstanding shares having the number of votes that would be necessary to authorize or take such action at a meeting at which all
shares entitled to vote thereon were present and voted.
In addition, the Registrant’s amended
and restated bylaws establish advance notice procedures for:
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stockholders to nominate candidates for election as a director; and
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stockholders to propose topics for consideration at stockholders’ meetings.
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For nominations of directors or proposals
of business to be properly brought before an annual meeting by a stockholder the stockholder must have given timely notice thereof
in writing (“Record Stockholder Notice”) to the Secretary of the Registrant (the “Secretary”) and any such
business must be a proper matter for stockholder action under Delaware law. To be timely, a Record Stockholder Notice shall be
received by the Secretary at the principal executive offices of the Registrant not less than 45 nor more than 75 days prior to
the one-year anniversary of the date on which the Registrant first mailed its proxy materials for the preceding year’s annual
meeting of stockholders; provided, however, that, subject to certain exceptions and limitations, (A) if the meeting is convened
more than 30 days prior to or delayed by more than 30 days after the one-year anniversary of the preceding year’s annual
meeting, or if no annual meeting was held during the preceding year, notice by the Record Stockholder to be timely must be so received
not later than the close of business on the later of (1) the 45th day before such annual meeting or (2) the 10th day following
the date on which public announcement of the date of such meeting is first made and (B) in the event that the number of directors
to be elected to the board of directors is increased and a public announcement naming all of the nominees for director or indicating
the increase in the size of the board of directors is not made by the Registrant at least 10 days before the last day a stockholder
may timely deliver a notice of nomination as set forth above, a Record Stockholder Notice shall also be considered timely, but
only with respect to nominees for any new positions created by such increase, if it is received by the Secretary at the principal
executive offices of the Registrant not later than the close of business on the 10th day following the date on which such public
announcement is first made by the Registrant.
Directors
The Registrant’s board of directors
currently has seven members. Each of the directors will serve for a term of one year. Directors hold office until the annual meeting
of stockholders and until their successors have been duly elected and qualified. The Registrant’s board of directors may
elect a director to fill a vacancy, including vacancies created by the expansion of the board of directors, upon the affirmative
vote of a majority of the remaining directors then in office or by a sole remaining director.
The Registrant’s amended and restated
certificate of incorporation and amended and restated bylaws do not provide for cumulative voting in the election of directors.
Forum for Adjudication of Disputes
The Registrant’s amended and restated
certificate of incorporation provides that unless the Registrant consents in writing to the selection of an alternative forum,
the Court of Chancery of the State of Delaware (or, if the Court of Chancery shall not have jurisdiction, another state court located
within the state of Delaware, or if no state court located within the state of Delaware has jurisdiction, the federal district
court for the District of Delaware), will be the sole and exclusive forum for any derivative action or proceeding brought on behalf
of the Registrant, any action asserting breach of a fiduciary duty owed by any director, officer or other employee of the Registrant,
any action asserting a claim arising pursuant to the DGCL, the amended and restated certificate of incorporation or the bylaws
of the Registrant, or any action asserting a claim governed by the internal affairs doctrine. Although the Registrant has included
a choice of forum provision in its amended and restated certificate of incorporation, it is possible that a court could rule that
such provision is inapplicable or unenforceable. In addition, this provision would not affect the ability of the Registrant’s
stockholders to seek remedies under the federal securities laws.
