Company not to participate in any discussions or negotiations with any person making any proposal for a competing transaction, and requiring the Board to recommend to the Companys
stockholders that they approve the transactions contemplated by the Merger Agreement, in each case subject to customary exceptions. The Board may terminate the Merger Agreement to enter into a superior proposal upon satisfaction of certain
conditions and upon payment of a termination fee of $25 million (the Company Termination Fee). The Board may also change its recommendation in certain circumstances specified in the Merger Agreement in response to an
unsolicited proposal for an Alternative Proposal that would constitute a superior proposal or following an Intervening Event (as such term is defined in the Merger Agreement) but only if certain conditions are satisfied with respect thereto and the
Company complies with its obligations in respect thereto. Under the Merger Agreement, each of the Company and Parent has also agreed to use reasonable best efforts to consummate the Merger, including using reasonable best efforts to obtain all
required regulatory approvals.
Termination; Termination Fees. The Merger Agreement also provides for certain termination rights
for both the Company and Parent, including the right of the Company to terminate the Merger Agreement to accept a Superior Proposal, subject to specified limitations. In addition, and subject to certain limitations, either party may terminate the
Merger Agreement if the Merger is not consummated by March 17, 2020. Upon termination of the Merger Agreement under certain circumstances, the Company would be obligated to pay Parent the Company Termination Fee. Upon termination of the Merger
Agreement under certain circumstances, Parent would be obligated to pay the Company a termination fee of $35.0 million (the Parent Termination Fee). The Merger Agreement also contains a provision that would require Parent to pay for
the cost (subject to a $15 million cap) to unwind certain hedging arrangements if the transaction is terminated due to Parents breach or failure to obtain financing and the amount of the Parent Termination Fee is insufficient to cover the
unwind costs (the Unwind Reimbursement).
Equity Financing. Parent has obtained equity and debt financing commitments
for the transactions contemplated by the Merger Agreement, the proceeds of which will be used by Parent to pay the Merger Consideration and all related fees and expenses. Pursuant to the terms and conditions set forth in an equity commitment letter
dated October 1, 2019, certain investment funds affiliated with Warburg Pincus LLC (Warburg) has committed to capitalize Parent with an equity contribution for an aggregate amount equal to $515 million. Warburg has also provided the
Company with a limited guarantee in favor of the Company guaranteeing the payment of certain monetary obligations that may become payable by Parent pursuant to the Merger Agreement, including the Parent Termination Fee and the Unwind Reimbursement,
in each case, subject to the terms and conditions set forth in the limited guarantee.
Debt Financing. Pursuant to the terms and
conditions set forth in a debt commitment letter dated October 1, 2019 (the Debt Commitment Letter), certain parties identified therein as the Commitment Parties (collectively, the Lenders) have committed to provide Parent
with debt financing in aggregate principal amount of $725 million. The obligation of the Lenders under the Debt Commitment Letter is subject to a number of customary conditions.
The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full
text of the Merger Agreement and any related agreements. The Merger Agreement is filed as Exhibit 2.1 to this Current Report on Form 8-K and incorporated herein by reference.
Voting Agreements
Simultaneously
with the execution of the Merger Agreement, Parent has entered into Voting Agreements (the Voting Agreements) with each of the directors and executive officers of the Company, Roan Holdings, LLC, Asklepios Energy Fund, LP, Hephaestus
Energy Fund, LP, Luxiver WI, LP, LVPU, LP, Navitas Fund, LP, Blackbird 1846 Energy Fund, LP, Childrens Energy Fun, LP, Panakeia Energy Fund, LP, Elliott Associates, L.P., The Liverpool Limited Partnership, Spraberry Investments Inc., Fir
Tree Capital Opportunity Master Fund III, L.P., Fir Tree Capital Opportunity Master Fund, L.P., Fir Tree E&P Holdings VI, LLC, FT SOF IV Holdings, LLC, FT SOF V Holdings, LLC, FT COF(E) Holdings, LLC, York Capital Management, L.P., York Credit
Opportunities Investments Master Fund, L.P., York Credit Opportunities Fund, L.P., York Multi-Strategy Master Fund, L.P., Exuma Capital, L.P., and York Select Strategy Master Fund, L.P. (collectively, the Holders), and, solely for the
purpose of certain specified sections, the Company, dated as of October 1, 2019. Pursuant to the Voting Agreements, the Holders agreed to vote all Company Common Stock owned by the Holders in favor of the Merger and the adoption of the Merger
Agreement at any meeting of the Companys stockholders called for such purpose and against any Alternative Proposal or any proposal made in opposition to the adoption of the Merger Agreement, without regard to the terms of any Alternative
Proposal.
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