Termination Rights
The Merger Agreement contains certain termination rights for both Newfield and Encana including, among other things: (i) by Newfield, in
the event the Newfield board of directors effects a Change of Recommendation (as defined in the Merger Agreement) and substantially concurrently therewith Newfield enters into an acquisition agreement providing for a Superior Proposal (as
defined in the Merger Agreement); (ii) by Encana, in the event the Encana board of directors effects a Parent Change of Recommendation (as defined in the Merger Agreement) and substantially concurrently therewith Encana enters into an acquisition
agreement providing for a Parent Superior Proposal (as defined in the Merger Agreement); (iii) by Newfield or Encana, if Newfield fails to obtain the requisite approval of its stockholders necessary for the Merger; (iv) by Newfield or Encana,
if Encana fails to obtain the requisite approval of its shareholders related to the issuance of Encana common shares in the Merger; (v) by Newfield or Encana, if the other party breaches or fails to perform any of its representations,
warranties or covenants in the Merger Agreement that cannot be or is not cured in accordance with the terms of the Merger Agreement and such breach or failure to perform would cause applicable closing conditions not to be satisfied; (vi) by
Newfield, in the event that the Encana board of directors makes a Parent Change of Recommendation or upon any material breach by Encana of the
non-solicitation
covenant (as discussed further below under
No Solicitation) and (vii) by Encana, in the event that the Newfield board of directors makes a Change of Recommendation or upon any material breach by Newfield of the
non-solicitation
covenant. If the Merger Agreement is terminated in accordance with clause (i) or clause (vii), then Newfield shall be required to pay Encana a termination fee of $150,000,000 (the Termination Fee) and if the Merger
Agreement is terminated in accordance with clause (ii) or clause (vi), then Encana shall be required to pay Newfield a termination fee of $300,000,000 (the Parent Termination Fee), provided that a Termination Fee or Parent
Termination Fee will only be payable in connection with a breach of the
non-solicitation
covenant if, after the date of the Merger Agreement but prior to the termination thereof, an acquisition proposal is
made to the breaching partys board of directors or otherwise publicly announced or known and the breaching party, among other things, enters into or consummates an alternative transaction within 12 months of termination of the Merger
Agreement. If the Merger Agreement is terminated in accordance with clauses (iii), (iv) or (v) in circumstances where the Termination Fee or Parent Termination Fee would not otherwise be payable, then Newfield or Encana, as the breaching party,
shall be required to pay the
non-breaching
party $50,000,000 for costs fees and expenses incurred by such
non-breaching
party in connection with the Merger.
In addition to the foregoing termination rights, either party may terminate the Merger Agreement if the Merger has not been consummated on or
prior to June 30, 2019 or if a governmental entity with a material connection to either Encana or Newfield issues a final,
non-appealable
order or decree permanently restraining, enjoining or prohibiting
the transactions contemplated by the Merger Agreement. The parties may also mutually agree to terminate the Merger Agreement.
No Solicitation
Neither Encana, Newfield nor any of their respective affiliates is permitted, among other things, to solicit, initiate or knowingly encourage
or facilitate, among other things, any inquiries, proposals or offers from any person which constitutes or may reasonably be expected to result in an Acquisition Proposal (as defined in the Merger Agreement) or engage in or participate in any
discussions or negotiations regarding any such Acquisition Proposal. Notwithstanding this limitation, prior to receipt of certain approvals of a partys shareholders, such party may, under certain circumstances, provide
non-public
information to and participate in discussions or negotiations with third parties with respect to certain unsolicited Acquisition Proposals that such partys board of directors has determined in good
faith, after consultation with its outside financial advisors and legal counsel, constitutes or would reasonably be expected to result in a superior proposal. Each partys board of directors may change its recommendation to its shareholders
(subject to the other partys right to terminate the Merger Agreement following such change in recommendation) in response to an Acquisition Proposal that it has determined, after consultation with its outside financial advisors and legal
counsel, constitutes a superior proposal or in response to an intervening event if, in either case, the board of directors determines in good faith that the failure to take such action would be reasonably be expected to be inconsistent with its
fiduciary duties.
Treatment of Newfield Equity Awards
The Merger Agreement provides that: (i) all outstanding Newfield restricted stock awards will be cancelled and each holder of Newfield
restricted stock awards will be entitled to receive, on a fully vested basis, the Merger Consideration; (ii) all outstanding Newfield restricted stock units will be cancelled and (a) each holder of Newfield restricted stock units that have
a cash settlement feature will be entitled to receive, on a fully vested basis, a cash payment of equivalent value to the Merger Consideration, based on the volume weighted averages of the trading price