Except as otherwise required by applicable law, we disclaim any duty to update any
forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect new information obtained or events or circumstances that occur after the date of this information statement.
ACTIONS BY WRITTEN CONSENT
Issuance of Shares of Our Common Stock
On December 8, 2017, a special committee of our board of directors (the Special Committee), which consists solely of
independent and disinterested directors and was delegated the full authority of the board of directors to review, evaluate, investigate, pursue and negotiate the terms and conditions of the Proposed Transactions (as defined below), determined that
(i) the Travis Peak Acquisition, (ii) the Purchase and Sale Agreement, (iii) the Option Agreement (the Option Agreement), by and among Cardinal Midstream II, LLC (Cardinal Parent), Cardinal NE Holdings, LLC, a
wholly owned subsidiary of Cardinal Parent (Cardinal Holdings), Cardinal NE Midstream, LLC, a wholly owned subsidiary of Cardinal Holdings, the Company, Eclipse Resources Midstream, LP, a wholly owned subsidiary of the Company
(Eclipse Midstream), and Eclipse PA, pursuant to which, among other things, Eclipse Midstream acquired an exclusive right and option to purchase from Cardinal Parent all of the outstanding equity interests of Cardinal Holdings for an
aggregate purchase price of $18.3 million to be paid in cash in accordance with the form of Membership Interests Purchase Agreement (the Membership Interests Purchase Agreement, and together with the Purchase and Sale Agreement and
the Option Agreement, the Transaction Documents), by and among Cardinal Parent, Cardinal Holdings, Eclipse Midstream and the Company, attached thereto (the Cardinal Acquisition, and together with the Travis Peak Acquisition,
the Proposed Transactions), (iv) the form of the Membership Interests Purchase Agreement, (v) the Cardinal Acquisition, and (vi) the other transactions contemplated by the Transaction Documents were advisable and fair to, and
in the best interests of, the Company and its stockholders. The Special Committee approved the Proposed Transactions, the Transaction Documents and the other transactions contemplated thereby and recommended that our board of directors approve and
authorize the Proposed Transactions, the Transaction Documents and the other transactions contemplated thereby, submit the issuance of the Common Stock Consideration to the holders of our common stock, and resolve to recommend that our stockholders
approve such issuance of common stock, all of which actions our board of directors took on December 8, 2017.
Pursuant to the
Purchase and Sale Agreement, the number of shares of our common stock to be issued to Travis Peak as the Common Stock Consideration will equal the Purchase Price divided by the 30
consecutive-day
volume
weighted average price per share of our common stock ending on the second trading day immediately preceding the closing date (the Closing Date VWAP);
provided
, that the Purchase and Sale Agreement includes a collar mechanism that
provides if the Closing Date VWAP is less than $2.35, then the Closing Date VWAP will equal $2.35 and if the Closing Date VWAP is more than $2.60, then the Closing Date VWAP will equal $2.60. In the Travis Peak Acquisition, we expect to be issuing
shares of common stock in excess of 1% of our outstanding common stock prior to such issuance.
Because our common stock is traded on the
NYSE, we are subject to Section 312.03 of the NYSEs Listed Company Manual (Rule 312), which requires that we obtain stockholder approval before issuing shares of common stock in excess of 1% of our outstanding common stock
prior to such issuance to certain related parties, including, in this instance, Travis Peak. Pursuant to Section 228 of the DGCL and Section 2.14 of our amended and restated bylaws, any action required or permitted to be taken at any
annual or special meeting of stockholders may be taken without a meeting, without prior notice and without a vote of stockholders, if a consent or consents in writing, setting forth the action so taken, is signed by the holders of outstanding stock
having not less than the minimum 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. On December 8, 2017, we entered into the Purchase and
Sale Agreement, pursuant to which we agreed to issue the Common Stock Consideration to Travis Peak as consideration for the Travis Peak Acquisition, and the EnCap Funds, the holders of an aggregate of 172,955,027 shares of our common stock, which
represents a majority of our outstanding shares of common stock, approved by written consent (the Written Consent) the issuance of the Common Stock Consideration.
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