the requests of all requesting Rights Agreement Parties); provided, further, that in no event will Key be required to comply with more than one demand by any Rights Agreement Party (other than Soter, Platinum and its other affiliates) in any six-month period.
Key is also required to effect underwritten offerings pursuant to shelf takedowns (if a shelf registration statement is then in effect) and demands by the Rights Agreement Parties. Key will not be required to facilitate an underwritten offering facilitated by marketing efforts on the part of Key (a “Marketed Underwritten Offering”) unless the proceeds to all requesting Rights Agreement Parties from such offering are at least $12.5 million. Furthermore, Key will not be required to effect (i) more than two Marketed Underwritten Offerings in any calendar year or more than six Marketed Underwritten Offerings in the aggregate, or (ii) more than four underwritten offerings other than Marketed Underwritten Offerings in any calendar year or more than eight underwritten offerings that are not Marketed Underwritten Offerings in the aggregate, in each case of (i) and (ii), as requested by any Rights Agreement Party other than Soter, Platinum and its other affiliates.
The Rights Agreement Parties have certain piggyback registration rights, and the Registration Rights Agreement also includes customary indemnification provisions. The Registration Rights Agreement will terminate with respect to any Rights Agreement Party when such party ceases to hold or beneficially own Registrable Securities.
Corporate Advisory Services Agreement
On the Effective Date, the Company entered into the CASA with Platinum, an affiliate of Soter. Pursuant to the CASA, Platinum will provide certain business advisory services to Key, and Key, as consideration therefor, will pay Platinum an advisory fee of $2.75 million per year (subject to certain limitations and adjustments). In addition, Key will reimburse Platinum for ordinary course, reasonable and documented out-of-pocket expenses of up to an aggregate amount of $375,000, on an annual basis, subject to certain limitations.
The CASA has an initial term commencing on the Effective Date and ending on December 31, 2019. Thereafter, the independent members of the Board will have the option to renew the CASA for additional one-year terms, with each such extended term ending on December 31 of the subsequent year. The CASA may be terminated by Platinum upon 90-days’ written notice, and automatically terminates 45 days after the date Platinum owns less than 33% of the outstanding shares of our common stock.
Relationships and Transactions with Other Related Persons
Mr. C. Christopher Gaut joined our Board on December 15, 2016, Mr. Gaut served as the Chairman and Chief Executive Officer of Forum until May of 2017. Forum owns approximately 100% of Global Tubing, LLC (“Global”), an equipment supplier of the Company. Sales to Key from Global were approximately $1.8 million for the year ended December 31, 2017. Transactions with Global for their equipment supplies are made on terms consistent with other equipment suppliers. The Board has determined that our relationship with Global did not affect the independence of Mr. Gaut and that Mr. Gaut qualifies as “independent” in accordance with NYSE listing standards.
Review and Approval Policies and Procedures for Related Party Transactions
Bylaw Provisions Regarding Related Party Transactions
Our bylaws, which were amended and restated on the Effective Date, require the approval of a Supermajority (as defined below) of the Board for the Company to enter into any transaction with related parties of Key, Platinum or any Related Advisor (as defined below), except for (i) compensation agreements with directors in the ordinary course of business, and (ii) arm’s-length commercial transactions in the ordinary course of business between any Platinum portfolio company and the Company if the aggregate transaction does not exceed $1 million per calendar year. “Related Advisor” means (i) any affiliates, current employees and certain former employees of Platinum, (ii) any person or entity that earns more than 50% of its annual revenue from Platinum or its affiliates or (iii) Palm Tree Advisors LLC or any of its successors or affiliates.
During the Initial Board Term, if our CEO is currently serving on the Board, then “Supermajority” Board approval means at least nine of the thirteen director votes, including (i) at least seven votes cast by Soter Directors, (ii) at least two votes cast by directors who are not Soter Directors and (iii) at least one vote cast by an Other Director.