Item 3.02 Unregistered Sale of Equity Securities.
On February 4, 2019, Legacy Reserves Inc. (the "Company") issued 363,636 shares
of its common stock, par value $0.01 per share ("Common Stock"), in exchange for
$1.0 million aggregate principal amount of Legacy Reserves LP and Legacy
Reserves Finance Corporation's (the "Issuers") 8% Convertible Senior Notes due
2023 (the "2023 Convertible Notes") pursuant to the Notes Exchange Agreement
dated January 30, 2019 between the Company and existing holders of the 2023
On February 5, 2019, the Company issued 363,636 shares of Common Stock, in
exchange for $1.0 million aggregate principal amount of the Issuers 2023
Convertible Notes pursuant to the Notes Exchange Agreement dated February 4,
2019 between the Company and existing holders of the 2023 Convertible Notes.
The issuance of Common Stock in exchange for the 2023 Convertible Senior Notes
was made in reliance on the exemption from registration provided in Section
3(a)(9) of the Securities Act of 1933, as amended (the "Securities Act"), on the
basis that the exchange constitutes an exchange with existing securityholders of
the Company and no commission or other renumeration was paid or given for
soliciting the exchanges.
The information set forth under Item 5.02 below with respect to the issuance of
an inducement award of restricted stock units to Robert L. Norris is
incorporated by reference into this Item 3.02. The inducement award is exempt
from the registration requirements of the Securities Act pursuant to Section
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of
Appointment of Chief Financial Officer
On February 6, 2019, the Board of Directors (the "Board") of the Company
appointed Robert L. Norris as Chief Financial Officer effective as of February
19, 2019. Mr. Norris, age 39, succeeds James Daniel Westcott as Chief Financial
Officer. As previously disclosed, Mr. Westcott will continue to serve in his
role as President until his promotion to Chief Executive Officer becomes
effective on March 1, 2019.
Mr. Norris from April 2015 to his appointment at the Company served as a
Principal at The Catalyst Group, a private equity firm focused on lower middle
market investments, where he was involved in the sourcing, structuring,
evaluation, and execution of equity investments and the management of the firm's
portfolio companies. From June 2014 to March 2015, Mr. Norris led the corporate
development and strategy efforts at Civeo, a workforce accommodations provider
that was spun out from Oil States International. From August 2003 to June 2014,
Mr. Norris served in various capacities at Oil States International, a
diversified oilfield service company, ultimately leading their corporate
development and strategy groups. Mr. Norris received a Bachelor of Arts degree
in Economics and an MBA both from the University of Texas, Austin.
Employment Agreement with the Chief Financial Officer
In connection with Mr. Norris' appointment as Chief Financial Officer, on
February 7, 2019, the Company, Legacy Reserves Services LLC, an indirect wholly
owned subsidiary of the Company (the "Employer"), and Mr. Norris entered into an
employment agreement effective as of February 19, 2019 (the "Employment
Pursuant to the Employment Agreement, Mr. Norris will receive an annual base
salary of $400,000, subject to annual review and adjustments, and is eligible to
receive an annual bonus with a target equal to at least 80% of his annual base
salary. Additionally, Mr. Norris will be eligible to receive long-term incentive
awards from time to time in amounts determined by the Board in its discretion.
Upon a termination of Mr. Norris' employment by the Employer without cause, or
by Mr. Norris for good reason, Mr. Norris will be entitled to receive, subject
to his execution of a release of claims, (1) any accrued benefits, (2), a
pro-rata bonus for the fiscal year in which the termination occurs (3) severance
pay equal to the sum of Mr. Norris' highest monthly annual base salary rate in
effect at any time during the 12 month period prior to termination and 1/12th of
Mr. Norris' target bonus, paid monthly for a period of 12 months (or, if the
termination is within 24 months following a change of control, such 12-month
period is increase to 18) and (4) the full costs of COBRA continuation coverage
for the shorter of the severance period or the time when Mr. Norris receives
substantially similar benefits from a subsequent employer.
Upon a termination of Mr. Norris' employment due to disability or death, Mr.
Norris or Mr. Norris' estate will be entitled to receive any earned but unpaid
base salary, any earned but unpaid bonus for any preceding fiscal year, any
unreimbursed business expenses, any accrued benefits and a pro-rata bonus for
such fiscal year.
Upon a termination of Mr. Norris' employment for cause, or by Mr. Norris without
good reason, Mr. Norris will be entitled to receive any earned but unpaid base
salary, any unreimbursed business expenses and any accrued benefits.
Mr. Norris will be subject to customary restrictive covenants, including
non-competition and non-solicitation covenants during his employment and for one
year following termination of employment for any reason. For a termination of
employment by the Employer within two years following a change of control by Mr.
Norris for good reason or by the company without cause, Mr. Norris will not be
subject to a non-competition covenant following termination of employment.
As an inducement to Mr. Norris' employment, Mr. Norris will receive an award of
496,894 restricted stock units ("RSUs") pursuant a restricted stock unit award
agreement effective as of February 19, 2019 (the "Award Agreement") entered into
between the Company and Mr. Norris. The award is being made outside of the
Legacy Reserves Inc. 2018 Omnibus Incentive Plan (the "Plan") but will be
subject to terms and conditions generally consistent with those in the Plan. The
RSUs will vest over a three-year period, with 25% vesting in each of February
2020 and 2021 and the remaining 50% vesting in February 2022, subject to Mr.
Norris' continued employment with the Company. Additionally, the RSUs may be
subject to accelerated vesting in certain events.
There is no arrangement or understanding between Mr. Norris and any other person
pursuant to which he was selected as an officer of the Company. There are no
family relationships between Mr. Norris and any of the Company's directors or
executive officers. There are no relationships between Mr. Norris and the
Company or any of the Company's subsidiaries that would require disclosure
pursuant to Item 404(a) of Regulation S-K.
The foregoing descriptions of the Employment Agreement and Award Agreement are
qualified by reference to the full text of the Employment Agreement and Award
Agreement, copies of which are filed herewith as Exhibit 10.1 and 10.2,
respectively, and incorporated herein by reference.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
The information set forth under Item 8.01 below is incorporated by reference
into this Item 5.03.
Item 8.01 Other Events.
On February 6, 2019, the Board approved a one-time waiver and change to the
window for shareholders to provide timely advance notice of any director
nomination under Article II, Section 2.03 of the Second Amended and Restated
Bylaws of the Company (the "Bylaws") in connection with the Company's 2019
annual meeting of the shareholders (the "2019 Annual Meeting").
To be timely, any shareholder notice of any director nomination for the 2019
Annual Meeting must be received by the Corporate Secretary of the Company no
later than 5:00 p.m. Central Time on April 1, 2019. This waiver to the advance
notice window is applicable only for the 2019 Annual Meeting, and does not
affect any other requirements under the Bylaws or pursuant to state or federal
law that shareholders must meet in order to properly submit director
Item 9.01 Financial Statements and Exhibits.
Exhibit Number Description
Exhibit 10.1 Employment Agreement, dated as of February 7, 2019, between
Robert L. Norris, Legacy Reserves Services LLC and Legacy
Exhibit 10.2 Restricted Stock Unit Award Agreement, dated February 19, 2019,
between Robert L. Norris and Legacy Reserves Inc.
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