Item 1.01
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Entry into a Material Definitive Agreement
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On July 24, 2020, Pure Acquisition Corp., a Delaware corporation (the “Company”), entered into (i) an amendment to the Business Combination Agreement, as defined below, with the parties thereto, and (ii) the Forward Purchase Agreement Amendment, as defined below, with the parties thereto.
Third Amendment to Business Combination Agreement
On July 24, 2020, the Company, HighPeak Energy, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“HighPeak Energy”), Pure Acquisition Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of HighPeak Energy (“MergerSub” and, together with the Company and HighPeak Energy, the “Parent Parties”), HighPeak Energy, LP, a Delaware limited partnership (“HighPeak I”), HighPeak Energy II, LP, a Delaware limited partnership (“HighPeak II”), HighPeak Energy III, LP, a Delaware limited partnership (“HighPeak III”), HPK Energy, LLC, a Delaware limited liability company (together with HighPeak I, HighPeak II and HighPeak III, the “HPK Contributors”), and HighPeak Energy Management, LLC, a Delaware limited liability company (“HPK Representative”), entered into the Third Amendment (the “Third BCA Amendment”) to Business Combination Agreement, dated May 4, 2020, by and among the Parent Parties, the HPK Contributors and, solely for limited purposes specified therein, HPK Representative (as amended by the First Amendment to Business Combination Agreement, dated June 12, 2020, as amended by the Second Amendment to Business Combination Agreement, dated July 1, 2020, and as may be further amended from time to time, the “Business Combination Agreement” and the transactions contemplated thereby, the “business combination”).
The Third BCA Amendment provides for the additional issuance of one (1) warrant to purchase HighPeak Energy common stock for each share of HighPeak Energy common stock to be issued as merger consideration to holders of the Company’s Class A common stock, par value $0.0001 per share (“Class A Common Stock”) and to increase the Minimum Equity Capitalization (as such term is defined in the Third BCA Amendment) closing condition from $50 million to $100 million and remove the $100 million Minimum Aggregate Finding Availability closing condition (as such term was defined in the Second Amendment to Business Combination Agreement). The Third BCA Amendment also provides for the contingent value rights contemplated to be issued in the business combination (“CVRs”) to have the same terms, whether such CVRs are issued as merger consideration to holders of the Company’s Class A Common Stock or to qualified institutional buyers and accredited investors that will purchase forward purchase units in connection with commitments under the amended and restated forward purchase agreement, dated July 24, 2020 (the “Forward Purchase Agreement Amendment”). Additionally, the Third BCA Amendment added the requirement that the CVRs and warrants issuable for HighPeak Energy common stock, including the Company’s public warrants that will become warrants of HighPeak Energy, warrants of HighPeak Energy to be issued pursuant to the Forward Purchase Agreement Amendment and warrants to be issued as merger consideration, will be registered under the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and listed for trading on the Nasdaq Global Market (the “Nasdaq”) or the New York Stock Exchange (the “NYSE”).
The foregoing description of the Third BCA Amendment does not purport to be complete and is qualified in its entirety by the terms and conditions of the Third BCA Amendment, a copy of which is filed as Exhibit 2.4 to this Current Report on Form 8-K (this “Current Report”) and is incorporated herein by reference.
Forward Purchase Agreement Amendment
On July 24, 2020, HighPeak Energy, each party designated as a purchaser therein (which may include purchasers that subsequently join as parties thereto), HighPeak Energy Partners, LP (“HPEP I”) and, solely for the limited purposes specified therein, the Company, entered into the Forward Purchase Agreement Amendment, which amends the Forward Purchase Agreement entered into by and between HPEP I and the Company, dated April 12, 2018 (the “Original Forward Purchase Agreement”), pursuant to which HPEP I agreed to purchase up to 15,000,000 shares of Class A Common Stock of the Company and 7,500,000 warrants for $10.00 per unit, for an aggregate purchase price of $150,000,000 in a private placement which would have closed immediately prior to the consummation of the business combination.
The Forward Purchase Agreement Amendment provides for, (A) the inclusion of CVRs in the forward purchase units issued thereunder and (B) registration rights with respect to the securities issuable pursuant to the forward purchase units issued thereunder. The purchasers thereunder will collectively purchase, in connection with the consummation of the business combination, the number of forward purchase units as indicated therein, up to a maximum amount of 15,000,000 forward purchase units (and of which 5,000,000 are currently committed), with each forward purchase unit consisting of one share of HighPeak Energy common stock, one CVR and one warrant (which one whole warrant is exercisable for HighPeak Energy common stock), for $10.00 per forward purchase unit, or an aggregate maximum amount of up to $150,000,000. Additionally, the Original Forward Purchase Agreement was also amended to provide that HPEP I may elect to commit, but is not obligated, to purchase uncommitted forward purchase units or assign all or part of its right to purchase uncommitted forward purchase units to one or more third parties prior to the consummation of the business combination.
Other Related Agreements
Stockholders’ Agreement
The Third BCA Amendment amended the Form of Stockholders’ Agreement, to be entered into by and among HighPeak Energy, HighPeak Pure Acquisition, LLC, a Delaware limited liability company and the Company’s sponsor (the “Company’s Sponsor”), the HPK Contributors and Jack Hightower (“Hightower” and together with the Company’s Sponsor and the HPK Contributors, the “Principal Stockholder Group”) at the consummation of the business combination, to provide that, for so long as the Principal Stockholder Group has the right to designate one or more individuals for nomination to the board of directors of HighPeak Energy (the “Board”), the Principal Stockholder Group shall also have the right to designate from time to time one person (defined as the “Board Observer” therein) to (i) receive notice of, and any other materials relating to, each meeting of the Board and each meeting of each committee of the Board substantially concurrently with the provision thereof to the members of the Board or such committee, as applicable, and (ii) attend and participate as an observer in each meeting of the Board and meeting of each committee of the Board.
Registration Rights Agreement
The Third BCA Amendment amended the Form of Registration Rights Agreement, to be entered into by and among HighPeak Energy and certain HighPeak Holders (as such term is defined in the Form of Registration Rights Agreement) at the consummation of the business combination, to, among other things, provide for any holder to demand registration of some or all of its shares of HighPeak Energy common stock, CVRs and warrants (“Registerable Securities”) registered for sale provided that such demand registration notice covers (x) not less than $25 million of Registrable Securities or (y) all of the Registerable Securities held by such holder.
Contingent Value Rights Agreement
The Third BCA Amendment includes one Form of CVR Agreement, to be entered into by and among HighPeak Energy, the Company’s Sponsor, HighPeak I, HighPeak II and Continental Stock Transfer & Trust Company, as rights agent, which will govern the terms of the CVRs to be issued in the business combination.