DEFM14A 1 tv498540-defm14a.htm DEFINITIVE PROXY STATEMENT tv498540-defm14a - none - 11.3939922s
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant ☒   Filed by the Party other than the Registrant ☐
Check the appropriate box:

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material Pursuant to §240.14a-12
ENERGY XXI GULF COAST, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):

No fee required.

Fee computed on table below per Exchange Act Rules 14a-6 (i) (1) and 0-11.
(1)
Title of each class of securities to which transaction applies:
   
(2)
Aggregate number of securities to which transaction applies:
   
(3)
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
   
(4)
Proposed maximum aggregate value of transaction:
   
(5)
Total fee paid:
   

Fee paid previously with preliminary materials:

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
(1)
Amount Previously Paid:
(2)
Form, Schedule or Registration Statement No.:
(3)
Filing Party:
(4)
Date Filed:

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Dear Energy XXI Gulf Coast, Inc. Stockholder:
The board of directors of Energy XXI Gulf Coast, Inc. (“EGC”) approved an Agreement and Plan of Merger among EGC, MLCJR LLC, a Texas limited liability company (“Cox”), and YHIMONE, Inc., a Delaware corporation and an indirect wholly owned subsidiary of Cox (“Merger Sub”) (the “merger agreement”), which provides for the acquisition of EGC by Cox. Pursuant to the terms of the merger agreement, Merger Sub will merge with and into EGC, with EGC surviving as an indirect wholly owned subsidiary of Cox (the “merger”).
If the merger is completed, each share of EGC common stock, par value $0.01 per share, issued and outstanding at the effective time of the merger, will be converted into the right to receive $9.10 in cash without interest (the “merger consideration”). EGC common stock is currently trading on the NASDAQ Global Select Market under the symbol “EGC.” We urge you to obtain current market quotations of EGC common stock.
At a special meeting of EGC stockholders, EGC stockholders will be asked to vote on the adoption of the merger agreement. Approval of this proposal requires the affirmative vote of the holders of two-thirds of the issued and outstanding shares of EGC common stock entitled to vote at the EGC special meeting. At the EGC special meeting, EGC stockholders will also be asked to approve, on an advisory (non-binding) basis, the compensation that may be paid or become payable to EGC’s named executive officers that is based on or otherwise relates to the proposed merger. At the EGC special meeting, EGC stockholders may also be asked to approve an adjournment of the EGC special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies in the event there are not sufficient votes at the time of the EGC special meeting to adopt the merger agreement.
The EGC board of directors has unanimously adopted and approved the merger and the merger agreement and unanimously recommends that the EGC stockholders vote:

“FOR” the proposal to adopt the merger agreement;

“FOR” the proposal to approve, on an advisory (non-binding) basis, the compensation that may be paid or become payable to EGC’s named executive officers that is based on or otherwise relates to the proposed merger; and

“FOR” the proposal to approve the adjournment of the EGC special meeting, if necessary or appropriate, to permit further solicitation of proxies in favor of the proposal to adopt the merger agreement.
Your vote is very important, regardless of the number of shares of EGC common stock you own. Regardless of whether you plan to attend the EGC special meeting in person, please complete, sign, date and return, as promptly as possible, the enclosed proxy card in the accompanying prepaid reply envelope, or submit your proxy by telephone or over the Internet, prior to the EGC special meeting to ensure that your shares of EGC common stock will be represented at the EGC special meeting if you are unable to attend. If you attend the EGC special meeting and vote in person, your vote by ballot will revoke any proxy previously submitted. The failure to vote your shares of EGC common stock will have the same effect as voting “AGAINST” the proposal to adopt the merger agreement.
If your shares of EGC common stock are held in “street name” by your bank, brokerage firm or other nominee, your bank, brokerage firm or other nominee will be unable to vote your shares of EGC common stock without instructions from you. You should instruct your bank, brokerage firm or other nominee on how to vote your shares of EGC common stock in accordance with the procedures provided by your bank, brokerage firm or other nominee. The failure to instruct your bank, brokerage firm or other nominee to vote your shares of EGC common stock will have the same effect as voting “AGAINST” the proposal to adopt the merger agreement.
Submitting a proxy will not prevent you from voting in person, but it will help to secure a quorum and avoid added solicitation costs. Any eligible record holder of EGC common stock who is present at the EGC special meeting may vote in person, thereby revoking any previous proxy. In any event, a proxy may be revoked in writing at any time before the EGC special meeting in the manner described in the accompanying proxy statement. If your shares are held in the name of a bank, broker or other nominee, please follow the instructions on the voting instruction card furnished by your bank, broker or other nominee.
The obligations of Cox and EGC to complete the merger are subject to the satisfaction or waiver of several conditions. The accompanying proxy statement contains detailed information about Cox, EGC, the EGC special meeting, the merger agreement and the merger. We encourage you to read the proxy statement carefully and in its entirety before voting.
On behalf of the board of directors and management of EGC, we thank you for your support.
Sincerely,
[MISSING IMAGE: sg_gary-hanna.jpg]
Gary C. Hanna
Chairman of the Board
[MISSING IMAGE: sg_douglas-brooks.jpg]
Douglas E. Brooks
Chief Executive Officer and President
The proxy statement is dated August 3, 2018 and, together with the form of proxy, is first being sent to stockholders on or about August 3, 2018.

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Energy XXI Gulf Coast, Inc.
1021 Main, Suite 2626
Houston, Texas 77002
(713) 351-3000
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held On September 6, 2018
To the Stockholders of Energy XXI Gulf Coast, Inc.:
We are pleased to invite you to attend the special meeting of stockholders of Energy XXI Gulf Coast, Inc. (“EGC”), at 1021 Main, 1st Floor, Houston, Texas 77002 on September 6, 2018, at 9:00 a.m., Houston time, for the following purposes:

to vote on a proposal to adopt the Agreement and Plan of Merger, dated as of June 18, 2018, by and among EGC, MLCJR LLC, a Texas limited liability company (“Cox”), and YHIMONE, Inc., a Delaware corporation and an indirect wholly owned subsidiary of Cox (“Merger Sub”), as it may be amended from time to time (the “merger agreement”), a copy of which is included as Annex A to the proxy statement of which this notice is a part;

to consider and cast an advisory (non-binding) vote on the compensation that may be paid or become payable to EGC’s named executive officers that is based on or otherwise relates to the proposed merger; and

to vote on a proposal to approve the adjournment of the EGC special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies in the event there are not sufficient votes at the time of the EGC special meeting to approve the first proposal listed above.
EGC will transact no other business at the EGC special meeting except such business as may properly be brought before the EGC special meeting or any adjournment or postponement thereof. Please refer to the proxy statement of which this notice is a part for further information with respect to the business to be transacted at the EGC special meeting.
The EGC board of directors has fixed the close of business on August 3, 2018 as the record date for the EGC special meeting. Only EGC stockholders of record at that time are entitled to receive notice of, and to vote at, the EGC special meeting or any adjournment or postponement thereof. A complete list of such stockholders will be available for inspection by any EGC stockholder for any purpose germane to the EGC special meeting during ordinary business hours for the ten days preceding the EGC special meeting at 1021 Main, Suite 2626, Houston, Texas 77002. The eligible EGC stockholder list will also be available at the EGC special meeting for examination by any stockholder present at such meeting.
The enclosed proxy statement provides a detailed description of the merger and the merger agreement and the other matters to be considered at the EGC special meeting. We urge you to carefully read the proxy statement including any documents incorporated by reference, and the Annexes in their entirety. If you have any questions concerning the merger or the proxy statement, would like additional copies or need help voting your shares of EGC common stock, please contact EGC’s proxy solicitor:
MacKenzie Partners Inc.
1407 Broadway, 27th Floor
New York, NY 10018
proxy@mackenziepartners.com
Stockholders, Banks and Brokerage Firms, please call:
toll free: (800) 322-2885
collect: (212) 929-5500
By Order of the EGC Board of Directors,
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Gary C. Hanna
Chairman of the Board
[MISSING IMAGE: sg_douglas-brooks.jpg]
Douglas E. Brooks
Chief Executive Officer and President
Houston, Texas
August 3, 2018

ABOUT THIS PROXY STATEMENT
This proxy statement constitutes a proxy statement for EGC under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and notice of meeting with respect to the special meeting of EGC stockholders.
You should rely only on the information contained in or incorporated by reference into this proxy statement. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this proxy statement. This proxy statement is dated August 3, 2018. You should not assume that the information contained in this proxy statement is accurate as of any date other than that date. You should not assume that the information incorporated by reference into this proxy statement is accurate as of any date other than the date of the incorporated document. Our mailing of this proxy statement to EGC stockholders will not create any implication to the contrary.
Information contained in this proxy statement regarding Cox has been provided by Cox, and information contained in this proxy statement regarding EGC has been provided by EGC.
All references in this proxy statement to “Cox” refer to MLCJR LLC, a Texas limited liability company; all references in this proxy statement to “Merger Sub” refer to YHIMONE, Inc., a Delaware corporation and an indirect wholly owned subsidiary of Cox formed for the sole purpose of effecting the merger; all references in this proxy statement to “EGC” refer to Energy XXI Gulf Coast, Inc., a Delaware corporation. All references in this proxy statement to “EXXI Ltd” or “predecessor” refer to Energy XXI Ltd, a Bermuda corporation, and EGC’s predecessor to which EGC succeeded upon EXXI Ltd’s emergence from chapter 11 bankruptcy on December 30, 2016. Unless otherwise indicated or as the context requires, all references in this proxy statement to “we,” “our” and “us” refer to EGC; and, unless otherwise indicated or as the context requires, all references to the “merger agreement” refer to the Agreement and Plan of Merger, dated as of June 18, 2018, by and among Cox, Merger Sub and EGC, which is incorporated by reference into this proxy statement and a copy of which is included as Annex A to this proxy statement, as the same may be amended from time to time.

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SUMMARY
This summary highlights information contained elsewhere in this proxy statement and may not contain all the information that is important to you with respect to the merger and the other matters being considered at the EGC special meeting. EGC urges you to read the remainder of this proxy statement carefully, including the attached Annexes, and the documents incorporated by reference in to this proxy statement. See also the section titled “Where You Can Find More Information” beginning on page 99. We have included page references in this summary to direct you to a more complete description of the topics presented below.
The Companies
Energy XXI Gulf Coast, Inc.
Energy XXI Gulf Coast, Inc. was formed in December 2016 after emerging from a voluntary reorganization under chapter 11 proceedings as the restructured successor of EXXI Ltd. EGC is headquartered in Houston, Texas, and engages in the development, exploitation, and operation of oil and natural gas properties primarily offshore on the Gulf of Mexico (“GoM”) Shelf, which is an area in less than 1,000 feet of water, and also onshore in Louisiana and Texas. EGC owns and operates nine of the largest GoM Shelf oil fields ranked by total cumulative oil production to date and utilizes various techniques to increase the recovery factor and thus increase the total oil recovered. At December 31, 2017, EGC’s total proved reserves were 88.2 MMBOE of which 84% were oil and 75% were classified as proved developed. As of that date, EGC operated or had an interest in 577 gross producing wells on 421,974 net developed acres, including interests in 55 producing fields.
EGC’s common stock is traded on the NASDAQ under the symbol “EGC.”
The principal executive offices of EGC are located at 1021 Main, Suite 2626, Houston, Texas 77002, and EGC’s telephone number is (713) 351-3000. Additional information about EGC and its subsidiaries is included in documents incorporated by reference into this proxy statement. See “Where You Can Find More Information” on page 99.
Cox
MLCJR LLC is an affiliate of Cox Oil Offshore, L.L.C. and Cox Operating, L.L.C. (collectively, “Cox Oil”), which are privately-held affiliated entities that own and operate assets in the Gulf of Mexico and were founded by fourth generation oilman, Brad E. Cox. Cox has grown through enhanced development of production and reserves in existing assets along with strategic acquisitions. Cox’s assets are located in both the Outer Continental Shelf and the shallow waters off the coast of Louisiana. Cox Oil currently operates more than 200 producing wells over 25 fields. Cox is based in Dallas, Texas with operation staff in New Orleans, Louisiana.
The principal executive offices of Cox are located at 4514 Cole Avenue, Suite 1175, Dallas, Texas 75205, and Cox’s telephone number is (214) 420-7710.
Merger Sub
YHIMONE, Inc., an indirect wholly owned subsidiary of Cox, is a Delaware corporation that was formed on June 15, 2018 for the sole purpose of effecting the merger. The principal executive office address and telephone number for Merger Sub are the same as for Cox. In the merger, Merger Sub will be merged with and into EGC, with EGC surviving as an indirect wholly owned subsidiary of Cox.
The EGC Special Meeting
The EGC Special Meeting (see page 23)
The special meeting of EGC stockholders (the “EGC special meeting”) will be held at 1021 Main, 1st Floor, Houston, Texas 77002 on September 6, 2018, at 9:00 a.m., Houston time. The EGC special meeting is being held in order to consider and vote on:
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a proposal to adopt the merger agreement, which is further described in the sections titled “The Merger” and “The Merger Agreement” beginning on pages 28 and 65, respectively;

an advisory (non-binding) proposal to approve the compensation that may be paid or become payable to EGC’s named executive officers that is based on or otherwise relates to the proposed merger; and

a proposal to approve the adjournment of the EGC special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies in the event there are not sufficient votes at the time of the EGC special meeting to approve the first proposal listed above.
Only record holders of shares of EGC common stock at the close of business on August 3, 2018, the record date for the EGC special meeting, are entitled to notice of, and to vote at, the EGC special meeting or any adjournment or postponement thereof. At the close of business on the record date, the only outstanding voting securities of EGC were common stock, and 33,396,563 shares of EGC common stock were issued and outstanding.
With respect to each EGC proposal listed above, EGC stockholders may cast one vote for each share of EGC common stock that they own as of the record date. The proposal to adopt the merger agreement requires the affirmative vote of the holders of two-thirds of the issued and outstanding shares of EGC common stock that are entitled to vote thereon at the EGC special meeting. No business may be transacted at the EGC special meeting unless a quorum is present. If a quorum is not present, to allow additional time for obtaining additional proxies, the EGC special meeting will be adjourned to solicit additional proxies in favor of the proposal to adopt the merger agreement. Additionally, if fewer shares are voted in favor of the proposal to adopt the merger agreement than is required, the EGC special meeting may be adjourned to solicit additional proxies in favor of the proposal to adopt the merger agreement. The EGC bylaws permit the chairman of the board to adjourn the meeting without a stockholder vote, regardless of whether a quorum is present. No notice of an adjourned meeting need be given unless the adjournment is for more than 30 days or, if after the adjournment, a new record date is fixed for the adjourned meeting, in which case a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.
EGC’s Reasons for the Merger; Recommendation of the EGC Board of Directors (see page 40)
After careful consideration, the EGC board of directors unanimously adopted and approved the merger agreement; determined that, on the terms and subject to the conditions set forth in the merger agreement, the merger agreement and the transactions contemplated thereby, including the merger, are advisable, fair to and in the best interests of EGC and its stockholders; and recommended that the merger agreement be adopted by EGC’s stockholders. For more information regarding the factors considered by the EGC board of directors in reaching its decision to recommend the adoption of the merger agreement, see the section titled “The Merger — EGC’s Reasons for the Merger; Recommendation of the EGC Board of Directors.” The EGC board of directors unanimously recommends that the EGC stockholders vote:

“FOR” the proposal to adopt the merger agreement;

“FOR” the proposal to approve, on an advisory (non-binding) basis, the compensation that may be paid or become payable to EGC’s named executive officers that is based on or otherwise relates to the proposed merger; and

“FOR” the proposal to approve the adjournment of the EGC special meeting, if necessary or appropriate, to permit further solicitation of proxies in favor of the proposal to adopt the merger agreement.
Opinion of EGC’s Financial Advisor (see page 44)
EGC engaged Intrepid Partners, LLC (“Intrepid”) to act as its financial advisor in connection with the merger. On June 17, 2018, Intrepid delivered to the EGC board of directors its oral opinion, confirmed by its delivery of a written opinion dated as of the same date, that, as of the date thereof, and based upon and
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subject to the assumptions, procedures, factors, qualifications, limitations and other matters set forth in Intrepid’s written opinion, the merger consideration to be received in the merger is fair, from a financial point of view, to EGC’s stockholders (other than stockholders who are affiliates of Cox).
The full text of Intrepid’s written opinion, dated June 17, 2018, which sets forth, among other things, assumptions made, procedures followed, matters considered qualifications and limitations on the review undertaken by Intrepid, is attached as Annex B to this proxy statement and is incorporated by reference herein. The summary of Intrepid’s opinion set forth in this proxy statement is qualified in its entirety by reference to the full text of the opinion. Holders of EGC common stock are encouraged to read the opinion and the description carefully and in their entirety. Intrepid provided its opinion solely for the information and benefit of the EGC board of directors (in its capacity as such) in connection with its evaluation of the merger. Intrepid’s opinion necessarily was based upon information made available to Intrepid as of June 17, 2018 and financial, economic, market and other conditions as they existed and could be evaluated by Intrepid on that date. Intrepid has no obligation to, and will not, update, revise or reaffirm its opinion based on subsequent developments. The opinion is not intended to be and does not constitute a recommendation to any EGC stockholder as to how that stockholder should act or vote with respect to the merger or any other matter.
For additional information, see the section titled “The Merger — Opinion of EGC’s Financial Advisor” beginning on page 44 and Annex B.
The Merger
A copy of the merger agreement is attached as Annex A to this proxy statement. We encourage you to read the entire merger agreement carefully because it is the principal document governing the merger. For more information on the merger agreement, see the section titled “The Merger Agreement” beginning on page 65.
Form of the Merger (see page 65)
The merger agreement provides that, on the terms and subject to the conditions in the merger agreement, at the effective time of the merger (the “effective time”), Merger Sub will merge with and into EGC. EGC will be the surviving corporation in the merger and will become an indirect wholly owned subsidiary of Cox.
See the section titled “The Merger — Terms of the Merger; Merger Consideration.”
Merger Consideration (see page 65)
Upon completion of the merger, each share of EGC common stock issued and outstanding immediately prior to the effective time (excluding shares held by EGC in treasury, any shares held by Cox or Merger Sub and any shares held by any other subsidiary of Cox or EGC and dissenting shares in accordance with Delaware law) will be converted into the right to receive $9.10 cash without interest.
The closing price of EGC common stock as of August 3, 2018 was $9.01 per share.
See the section titled “The Merger Agreement — Terms of the Merger; Merger Consideration.”
Treatment of EGC Equity Awards (see page 75)
EGC RSUs.   Immediately prior to the effective time, the vesting of each outstanding EGC restricted stock unit (each, an “EGC RSU”) will accelerate (if not already vested), with any performance conditions deemed achieved at target, and be cancelled and converted into the right to receive the merger consideration, multiplied by the number of shares of EGC common stock subject to that EGC RSU.
Stock Options.   The exercise price for each outstanding stock option is greater than the merger consideration. As a result, at the effective time, each stock option to purchase shares of EGC common stock will be cancelled for no consideration.
See the section titled “The Merger Agreement — Treatment of EGC Equity Awards.”
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Treatment of EGC Warrants (see page 63)
The exercise price for each outstanding warrant is greater than the merger consideration. As a result, at the effective time, each outstanding warrant to purchase shares of EGC common stock will be cancelled for no consideration.
See the section titled “The Merger Agreement — Treatment of EGC Warrants.”
Expected Timing of the Merger (see page 66)
Cox and EGC currently expect the closing of the merger to occur in the third calendar quarter of 2018. However, the merger is subject to the satisfaction or waiver of conditions as described in the merger agreement, and it is possible that factors outside the control of Cox and EGC could result in the merger being completed at a later time or not at all. See the section titled “The Merger Agreement — Completion of the Merger” for a discussion of the closing of the merger.
Conditions to Completion of the Merger (see page 76)
The obligations of EGC, Cox and Merger Sub to consummate the merger are subject to the satisfaction or waiver of the following conditions on or prior to the closing date, any or all of which may be waived jointly by the parties to the merger agreement, in whole or in part, to the extent permitted by applicable law:

the adoption of the merger agreement by the affirmative vote of holders of two-thirds of the issued and outstanding shares of EGC common stock entitled to vote at the EGC special meeting;

the expiration of any waiting periods or the receipt of any consent required to be obtained for the consummation of the merger and the other transactions contemplated by the merger agreement under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (as described in the section titled “The Merger — Regulatory Clearances Required for the Merger” on page 62, Cox and EGC have agreed that this closing condition has been satisfied);

the absence of any order restraining, enjoining or otherwise prohibiting the consummation of the merger and no law making the consummation of the merger illegal or otherwise prohibited.
In addition, the obligations of Cox and Merger Sub to consummate the merger are further subject to the satisfaction or waiver of the following conditions at the closing date:

(i) the representations and warranties of EGC regarding (A) organization, standing and power, (B) authority, (C) this proxy statement, (D) absence of certain changes since December 31, 2017, (E) title to oil and gas properties, (F) the opinion of financial advisor and (G) brokers shall be true and correct as of the closing date (except for any de minimis inaccuracies) (except that, in each case, representations and warranties that speak as of a specified date shall have been true and correct only as of such date); and (ii) all other representations and warranties of EGC set forth in the merger agreement shall be true and correct as of the Closing Date as though made on and as of the Closing Date (except that, in each case, representations and warranties that speak as of a specified date shall have been true and correct only as of such date), except for such failures to be true and correct (without regard to qualification or exceptions contained as to materiality or material adverse effect) that would not be reasonably expected to have, individually or in the aggregate, a material adverse effect on EGC or its ability to consummate the merger;

EGC having performed or complied with, in all material respects, all obligations required to be performed or complied with by it under the merger agreement;

the absence of any event, change or development after the date of the merger agreement that has had or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on EGC or its ability to consummate the merger;

the absence of any proceeding by any governmental authority in which such governmental authority is (i) challenging or seeking to make illegal, to delay materially or otherwise restrain or prohibit the consummation of the transaction, (ii) seeking to prohibit or limit in any material
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respect Cox’s ability to vote, receive dividends with respect to or otherwise exercise ownership rights with respect to EGC capital stock, or (iii) seeking to compel EGC, Cox or any of their subsidiaries to dispose of or hold separate any material assets as a result of any of the transactions contemplated by the merger agreement;

the aggregate number of shares of EGC common stock properly demanding appraisal not exceeding 10% of the shares of EGC common stock outstanding as of the record date for the EGC special meeting; and

the receipt of a certificate executed by EGC’s chief executive officer or chief financial officer as to the satisfaction of the conditions described above.
In addition, the obligation of EGC to consummate the merger is subject to the satisfaction or waiver of the following conditions at the closing date:

each of the representations and warranties of Cox and Merger Sub set forth in the merger agreement being true and correct as of the date of the merger agreement and as of the closing date as though made on and as of the closing date, unless otherwise specified, except for such failures to be true and correct (without regard to qualification or exceptions contained therein as to materiality or material adverse effect) that have not had and could not be reasonably expected to have, individually or in the aggregate, a material adverse effect on Cox’s ability to consummate the merger;

Cox and Merger Sub each having performed or complied with, in all material respects, all obligations required to be performed by it under the merger agreement;

absence of any event, change or development after the date of the merger agreement that has had or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on Cox’s ability to consummate the merger; and

the receipt of a certificate executed on behalf of Cox by an executive officer as to the satisfaction of the conditions described above.
No Solicitation of Competing Proposals (see page 71)
The merger agreement precludes EGC from soliciting or engaging in discussions or negotiations with respect to a competing proposal regarding an alternative transaction. However, if EGC receives an unsolicited competing proposal from a third party, and the EGC board of directors, among other things, reasonably determines in good faith (after consultation with its outside legal counsel and independent financial advisors) that such competing proposal is, or is reasonably likely to lead to, a superior proposal to the merger, EGC may furnish non-public information to and enter into discussions with that third party regarding such competing proposal. See the section titled “The Merger Agreement — No Solicitation of Competing Proposals” for a discussion of these and related rights of EGC to terminate the merger agreement.
Termination of the Merger Agreement (see page 77)
Cox and EGC may mutually agree to terminate the merger agreement at any time, whether before or after the receipt of the required EGC stockholder approval. Additionally, either Cox or EGC can terminate the merger agreement if  (i) there is a permanent injunction or adoption of any law that prohibits the merger, (ii) EGC’s stockholders do not approve the proposal to adopt the merger agreement, (iii) the merger is not consummated on or before November 15, 2018, subject to certain exceptions or (iv) the other party has breached the merger agreement and such breach would cause the conditions to the closing of the merger not to be satisfied. Cox may also terminate the merger agreement if the EGC board of directors changes its recommendation to the EGC stockholders. EGC may terminate the merger agreement in order to enter into an agreement with respect to a superior proposal, but only if EGC concurrently pays the termination fee to Cox and EGC complied in all material respects with its obligations under the merger agreement relating to that superior proposal. See the section titled “The Merger Agreement — Termination of the Merger Agreement” for a discussion of these and other rights of each of Cox and EGC to terminate the merger agreement.
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Effect of Termination of the Merger Agreement (see page 78)
If the merger agreement is terminated by any party in accordance with its terms, the merger agreement will become void, and there will be no liability or obligation on the part of any party to the merger agreement, except with respect to: (i) Cox’s unauthorized use of information for purposes unrelated to the transactions under the merger agreement; (ii) any applicable termination fees or expense reimbursement obligations; and (iii) the general provisions of the merger agreement. However, no such termination will relieve any party from liability for any damages of the parties to the merger agreement for a willful and material breach under the merger agreement or fraud (up to a maximum limit on damages of  $35,000,000 for each party).
Termination Fees and Expenses (see page 79)
Generally, all fees and expenses incurred in connection with the merger agreement and the transactions contemplated by the merger agreement will be paid by the party incurring those expenses, regardless of whether the merger is completed. However, in certain circumstances EGC may be required to pay Cox a termination fee of  $8,000,000 and/or to reimburse Cox for its documented out-of-pocket expenses up to $2,000,000. See the section titled “The Merger Agreement — Termination Fees and Expenses” for a discussion of the circumstances under which such termination fee or expense reimbursement will be required to be paid.
De-Listing and Deregistration of Shares of EGC Common Stock (see page 63)
Upon completion of the merger, the shares of EGC common stock currently listed on the NASDAQ will cease to be listed on the NASDAQ and will subsequently be deregistered under the Exchange Act.
Interests of EGC Directors and Executive Officers in the Merger (see page 56)
Some of EGC’s directors and executive officers have financial interests in the merger that are different from, or in addition to, those of EGC’s stockholders generally. The EGC board of directors was aware of and considered these potential interests, among other matters, in evaluating the merger agreement, the merger and the other transactions contemplated by the merger agreement and in recommending to you that you approve the proposals submitted for the EGC stockholder vote set forth in this proxy statement. These interests include:

Equity Awards.   Each executive officer and director has received grants of EGC RSUs. Immediately prior to the effective time, the vesting of each outstanding EGC RSU will accelerate (if not already vested), with any performance conditions deemed achieved at target, and be cancelled and converted into the right to receive the merger consideration, multiplied by the number of shares of EGC common stock subject to that EGC RSU.

Employment Agreements.   Each of EGC’s executive officers is party to an employment agreement with EGC, and each such employment agreement provides for certain cash payments and other severance benefits (including the accelerated vesting of certain equity-based awards) in the event of certain qualifying terminations of employment following the merger.

Indemnification.   EGC’s directors and executive officers are entitled to indemnification and insurance coverage under EGC’s certificate of incorporation and bylaws, indemnification agreements and the merger agreement.
For a more detailed discussion of these interests, see “The Merger — Interests of EGC Directors and Executive Officers in the Merger.”
Appraisal Rights (see page 86)
Under Delaware law, holders of shares of EGC common stock are entitled to appraisal rights in connection with the merger, provided that such holders satisfy fully all of the conditions set forth in Section 262 of the Delaware General Corporation Law (which we refer to as the “DGCL”). A holder of EGC common stock who properly demands appraisal and complies precisely with the applicable
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requirements under Delaware law (which we refer to as a “dissenting stockholder”) will not be entitled to receive the merger consideration provided by the merger agreement and instead will receive a cash payment of the amount determined by the Delaware Court of Chancery to be the fair value of the stockholder’s shares of EGC common stock at the effective time, together with interest on such amount from the effective time until paid. The ultimate amount dissenting stockholders receive in an appraisal proceeding may be more or less than, or the same as, the amount such holders would have received under the merger agreement. A detailed description of the appraisal rights available to holders of EGC common stock and procedures required to exercise statutory appraisal rights is included in the section titled “Appraisal Rights.”
To perfect appraisal rights, an EGC stockholder of record must, among other things, deliver a written demand for appraisal to EGC before the vote on the merger agreement at the EGC special meeting, not vote in favor of the proposal to adopt the merger agreement, continuously hold the shares of EGC common stock through the date the merger is completed, and otherwise comply with the procedures set forth in Section 262 of the DGCL. Failure to follow exactly the procedures specified under Delaware law will result in the loss of appraisal rights.
Payment Procedures (see page 63)
Prior to the effective time, Cox will designate a national bank or trust company reasonably acceptable to EGC to act as agent for the holders of EGC common stock in connection with the merger to receive the cash necessary to make the cash payments contemplated by the merger agreement.
As soon as reasonably practicable after the effective time, and in any event within two business days thereafter, Cox or EGC, as the surviving corporation after the merger, shall deposit, or cause to be deposited, in trust with the paying agent to mail to each holder of a certificate formerly representing a share of EGC common stock or any corresponding book-entry share of EGC common stock (“book-entry share”) a letter of transmittal specifying, among other things, that delivery will be effected, and risk of loss and title to any certificates representing EGC common stock will pass, only upon proper delivery of such certificates to the paying agent or, in the case of book-entry shares, upon adherence to the procedures set forth in such letter. The letter will also include instructions explaining the procedure for surrendering EGC stock certificates or book-entry shares in exchange for the merger consideration. Each holder of EGC stock certificates or book-entry shares may thereafter until the first anniversary of the effective time surrender such certificates or book-entry shares to the paying agent, as agent for such holder, under cover of the letter of transmittal.
All payments with respect to EGC RSUs will be made through the surviving corporation’s payroll system, and the surviving corporation will be entitled to deduct and withhold from the consideration otherwise payable to any holder of an EGC RSU pursuant to the merger agreement any amount required to be deducted and withheld with respect to the making of that payment under applicable law, including taxes.
After the effective time, shares of EGC common stock will no longer be outstanding, will be automatically canceled and will cease to exist and each certificate, if any, that previously represented shares of EGC common stock will represent only the right to receive the merger consideration as described above.
Material U.S. Federal Income Tax Consequences (see page 83)
The receipt of the merger consideration by a U.S. holder (as such term is defined below under “Material U.S. Federal Income Tax Consequences”) of EGC common stock in exchange for shares of EGC common stock pursuant to the merger will be a fully taxable transaction for U.S. federal income tax purposes. In general, a U.S. holder who receives the merger consideration in exchange for shares of EGC common stock pursuant to the merger will recognize capital gain or loss for U.S. federal income tax purposes equal to the difference, if any, between (i) the amount of cash received, and (ii) the U.S. holder’s adjusted tax basis in its shares of EGC common stock.
A non-U.S. holder (as such term is defined below under “Material U.S. Federal Income Tax Consequences”) of EGC common stock is generally not expected to be subject to U.S. federal income tax as a result of its receipt of the merger consideration in exchange for shares of EGC common stock pursuant to
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the merger, unless the non-U.S. holder (i) is an individual who is present in the United States for a period or periods aggregating 183 days or more during the calendar year of the merger and certain other conditions are met, (ii) is engaged in trade or business in the United States (and, if required by an applicable tax treaty, maintains a permanent establishment in the United States), or (iii) actually or constructively owns, or owned at any time during the five-year period ending on the date of the merger or, if shorter, the non-U.S. holder’s holding period for its EGC common stock, more than 5% of the shares of EGC common stock.
For a more detailed discussion of the material U.S. federal income tax consequences of the merger to holders of EGC common stock, see the section titled “Material U.S. Federal Income Tax Consequences.” Holders of EGC common stock are encouraged to consult their own tax advisors to determine the specific tax consequences to them of the merger, including the effect of any federal, state, local, foreign or other tax laws. Tax matters can be complicated, and the tax consequences of the merger to you will depend on your particular tax situation. You are encouraged to consult your tax advisor to determine the tax consequences of the merger to you.
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Summary Selected Consolidated Historical Financial Data of EGC
The following selected income statement, cash flow and balance sheet data for the year ended December 31, 2017 and as of December 31, 2016 have been derived from the audited consolidated financial statements of EGC contained in its Annual Report on Form 10-K for the fiscal year ended December 31, 2017, and the following selected income statement, cash flow, and balance sheet data for the three months ended March 31, 2018 and March 31, 2017 have been derived from the unaudited consolidated financial statements of EGC contained in its Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2018, each of which is incorporated into this proxy statement by reference. EGC’s predecessor, EXXI Ltd, emerged from bankruptcy on December 30, 2016 (the “emergence date”). In accordance with Accounting Standards Codification (“ASC”) 852, Reorganizations, EGC applied fresh start accounting upon EGC’s predecessor’s emergence from bankruptcy and it evaluated transaction activity between the emergence date and December 31, 2016 and concluded that an accounting convenience date of December 31, 2016 was appropriate.
You should read this summary financial data together with the financial statements that are incorporated by reference into this proxy statement and their accompanying notes and management’s discussion and analysis of financial condition and results of operations of EGC contained in such reports. See “Where You Can Find More Information” beginning on page 99.
Three Months Ended
Fiscal Year
Ended
December 31,
2017(1)
On
December 31,
2016(2)
March 31,
2018
March 31,
2017
(in thousands, except per share amounts)
Income Statement Data
Revenues
$ 122,171 $ 158,086 $ 511,644 $
Total lease operating expense
82,022 77,267 319,671
Pipeline facility fee
10,494 10,494 41,977
Depreciation, depletion and amortization
27,411 41,896 150,151
Impairment of oil and natural gas properties
40,774 185,860 406,275
Goodwill impairment
General and administrative
15,132 21,604 72,057
Operating (loss) income
(29,504) (60,735) (326,428) (406,275)
Other (expense) income – net
(3,551) (3,812) (14,582)
Net (loss) income
(33,055) (64,547) (341,010) (406,275)
Basic (loss) earnings per common share
$ (0.99) $ (1.94) $ (10.26) $ (12.23)
Diluted (loss) earnings per common share
$ (0.99) $ (1.94) $ (10.26) $ (12.23)
Cash Flow Data
Provided by (used in)
Operating activities
$ (16,800) $ (13,702) $ 45,638 $     —
Investing activities
Acquisitions
(12,977) (19,105)
Investment in properties
2,051 (59,223)
Proceeds from the sale of properties
250 1,269 4,119
Other
41
Total investing activities
(12,727) (15,785) (55,063)
Financing activities
(10,077) (602) (4,214)
(Decrease) increase in cash
$ (39,604) $ (30,089) $ (13,639) $
Dividends Paid per Common Share
$ $ $ $
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March 31,
2018
March 31,
2017
December 31,
2017
December 31,
2016
(in thousands, except share amounts)
Balance Sheet Data
Total assets
$ 1,025,035 $ 1,230,137 $ 1,076,982 $ 1,480,707
Long-term debt including current maturities
63,978 77,612 73,973 78,497
Stockholders’ equity (deficit)
134,409 432,020 164,192 495,715
Common shares outstanding
33,268,478 33,211,594 33,254,963 33,211,594
(1)
The year ended December 31, 2017 includes an impairment of EGC’s oil and natural gas properties of $185.9 million primarily due to the decrease in proved reserves and PV-10 value. See Note 7 — “Property and Equipment” of Notes to EGC’s Consolidated Financial Statements in EGC’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017.
(2)
On the accounting convenience date EGC selected upon emergence from bankruptcy, subsequent to the restructuring adjustments and fair value adjustments, EGC recorded an impairment of its oil and natural gas properties of  $406.3 million, due to the differences between the fair value of oil and natural gas properties recorded as part of fresh start accounting and the limitation of capitalized costs prescribed under Regulation S-X Rule 4-10.
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QUESTIONS AND ANSWERS
The following are some questions that you, as an EGC stockholder, may have regarding the merger and the other matters being considered at the EGC special meeting and the answers to those questions. EGC urges you to carefully read the remainder of this proxy statement, including the documents incorporated by reference and the Annexes attached to this proxy statement in their entirety because the information in this section does not provide all of the information that might be important to you with respect to the merger agreement, the merger and the other matters being considered at the EGC special meeting.
Q:
Why am I receiving this proxy statement?
A:
Cox and EGC have agreed to a business combination pursuant to the terms of the merger agreement that is described in this proxy statement. A copy of the merger agreement is included in this proxy statement as Annex A.
In order to complete the merger, among other conditions, EGC stockholders must adopt the merger agreement.
EGC will hold a special meeting of its stockholders to obtain this approval. This proxy statement, including its Annexes, contains or incorporates by reference important information about EGC, the merger and the EGC special meeting. This proxy statement also contains important information about Cox. You should read all of the available information carefully and in its entirety.
Q:
What effect will the merger have?
A:
Cox and EGC have entered into the merger agreement pursuant to which EGC will become an indirect wholly owned subsidiary of Cox and EGC stockholders will receive the merger consideration in exchange for their shares of EGC common stock. EGC will cease to be listed on the NASDAQ and will subsequently be deregistered under the Exchange Act publicly traded company at the effective time.
Q:
What will I receive in the merger if it is completed?
A:
At the effective time of the merger, each share of EGC common stock issued and outstanding immediately prior to such effective time (excluding any shares held by Cox or Merger Sub and any shares held by any other subsidiary of Cox or EGC and dissenting shares in accordance with Delaware law) will be converted into the right to receive $9.10 cash without interest. Because treasury shares are not “outstanding” shares of common stock for purposes of the DGCL, any treasury shares held by EGC at the effective time will effectively be treated the same as excluded shares.
The closing price of EGC common stock as of August 3, 2018 was $9.01 per share.
For a more complete description of what EGC stockholders will be entitled to receive pursuant to the merger, see “The Merger Agreement — Terms of Merger; Merger Consideration” on page 65.
Q:
When and where will the EGC special meeting be held?
A:
The EGC special meeting will be held at 1021 Main, 1st Floor, Houston, Texas on September 6, 2018, at 9:00 a.m., Houston time.
Q:
Who is entitled to vote at the EGC special meeting?
A:
The record date for the EGC special meeting is August 3, 2018. Only record holders of shares of EGC common stock at the close of business on such date are entitled to notice of, and to vote at, the EGC special meeting or any adjournment or postponement thereof.
Q:
What constitutes a quorum at the EGC special meeting?
A:
Stockholders who hold shares representing at least a majority of the outstanding voting power of all issued and outstanding shares of EGC common stock entitled to vote at the EGC special meeting must be present in person or represented by proxy to constitute a quorum.
Additional information on the quorum requirements can be found under “The EGC Special Meeting — Quorum” on page 24.
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Q:
How do I vote if I am a stockholder of record?
A:
If you were a record holder of EGC common stock at the close of business on the record date for the EGC special meeting, you may vote in person by attending the EGC special meeting or, to ensure that your shares are represented at the EGC special meeting, you may vote or authorize a proxy to vote using one or more of the following methods:

Internet.   You may submit a proxy electronically on the Internet by following the instructions at www.proxyvote.com. You will need the control number that appears on your proxy card to vote online. Internet voting facilities will be available 24 hours a day and will close at 11:59 p.m., Eastern Time, on the day prior to the EGC special meeting.

Telephone.   You may submit a proxy by telephone (from U.S. and Canada only) using the toll-free number listed on the proxy card sent to you. The telephone number is toll free, at no charge to EGC stockholders. Please have your proxy card in hand when you call. Telephone voting facilities will be available 24 hours a day and will close at 11:59 p.m., Eastern Time, on September 5, 2018, the day prior to the EGC special meeting. An agent will be available to answer questions from 8:00 a.m. through 8:00 p.m., Eastern Time, Monday through Friday.

Mail.   You may indicate your vote by completing, signing and dating your proxy card and returning it in the enclosed reply envelope.

In person.   You may vote in person at the EGC special meeting by completing a ballot; however, attending the meeting without completing a ballot will not count as a vote.
If you hold EGC shares in “street name” through a bank, broker or other nominee, please follow the voting instructions provided by your bank, broker or other nominee to ensure that your shares are represented at the EGC special meeting.
Q:
My shares are held in “street name” by my bank, broker or other nominee. Will my bank, broker or other nominee automatically vote my shares for me?
A:
No. If your shares are held through a bank, broker or other nominee, you are considered the “beneficial holder” of the shares held for you in what is known as “street name.” The “record holder” of such shares is your bank, broker or other nominee, and not you. If this is the case, this proxy statement has been forwarded to you by your bank, broker or other nominee. You must provide the record holder of your shares with instructions on how to vote your shares. Otherwise, your bank, broker or other nominee may not vote your shares on any of the proposals to be considered at the EGC special meeting, and a broker non-vote will result.
In connection with the EGC special meeting, broker non-votes will have:

the same effect as a vote “AGAINST” the proposal to adopt the merger agreement;

no effect on the proposal to approve, on an advisory (non-binding) basis, the compensation that may be paid or become payable to EGC’s named executive officers that is based on or otherwise relates to the proposed merger; and

no effect on the proposal to approve the adjournment of the EGC special meeting, if necessary or appropriate, to permit further solicitation of proxies in favor of the proposal to adopt the merger agreement.
Please follow the voting instructions provided by your bank, broker or other nominee so that it may vote your shares on your behalf. Please note that you may not vote shares held in street name by returning a proxy card directly to EGC or by voting in person at the EGC special meeting unless you first obtain a “legal proxy” from your bank, broker or other nominee.
Q:
How many votes do I have?
A:
With respect to each proposal to be presented at the EGC special meeting, holders of EGC common stock as of the record date are entitled to one vote for each share of EGC common stock owned at the close of business on the record date. At the close of business on the record date, there were       shares of EGC common stock outstanding and entitled to vote at the EGC special meeting.
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Q:
What vote is required to approve each proposal?
A:
The adoption of the merger agreement requires the affirmative vote of the holders of two-thirds of the issued and outstanding shares of EGC common stock. Failures to vote, broker non-votes and abstentions will have the same effect as a vote “AGAINST” the approval of such proposal.
The approval, on an advisory (non-binding) basis, of the compensation that may be paid or become payable to EGC’s named executive officers that is based on or otherwise relates to the proposed merger requires the affirmative vote of the holders of a majority of the issued and outstanding shares of EGC common stock present, in person or represented by proxy, at the EGC special meeting and entitled to vote at the meeting and which have actually been voted, assuming there is a quorum present. If you attend the EGC special meeting or are represented by proxy and, in either case, abstain from voting, that abstention will have the same effect as voting “AGAINST” this proposal. Failures to vote and broker non-votes will have no effect on the vote for this proposal.
The adjournment of the EGC special meeting, if necessary or appropriate, to solicit additional proxies in favor of the proposal to adopt the merger agreement requires the affirmative vote of the holders of a majority of the outstanding shares of EGC common stock present, in person or represented by proxy, and entitled to vote at the meeting, regardless of whether a quorum is present. If you attend the EGC special meeting or are represented by proxy and, in either case, abstain from voting, that abstention will have the same effect as voting “AGAINST” this proposal. Failures to vote and broker non-votes will have no effect on the vote for this proposal.
Q:
How does the EGC board of directors recommend that EGC stockholders vote?
A:
The EGC board of directors has unanimously adopted and approved the merger agreement and determined that, on the terms and subject to the conditions set forth in the merger agreement, the merger agreement and the transactions contemplated thereby, including the merger, are advisable, fair to and in the best interests of EGC and its stockholders. Accordingly, the EGC board of directors unanimously recommends that EGC stockholders vote:

“FOR” the proposal to adopt the merger agreement;

“FOR” the proposal to approve, on an advisory (non-binding) basis, the compensation that may be paid or become payable to EGC’s named executive officers that is based on or otherwise relates to the proposed merger; and

“FOR” the proposal to approve the adjournment of the EGC special meeting, if necessary or appropriate, to permit further solicitation of proxies in favor of the proposal to adopt the merger agreement.
Q:
What will happen if I fail to vote or I abstain from voting?
A:
If you fail to vote, it will have (i) the same effect as a vote “AGAINST” the proposal to adopt the merger agreement, (ii) no effect on the proposal to approve, on an advisory (non-binding) basis, the compensation that may be paid or become payable to EGC’s named executive officers that is based on or otherwise relates to the proposed merger and (iii) no effect on the proposal to approve the adjournment of the EGC special meeting, if necessary or appropriate, to permit further solicitation of proxies in favor of the proposal to adopt the merger agreement.
However, if you attend the EGC special meeting or are represented by proxy and, in either case, abstain from voting, that abstention will have the same effect as a vote “AGAINST” all three proposals.
Q:
What will happen if I return my proxy card without indicating how to vote?
A:
If you properly complete and sign your proxy card but do not indicate how your shares of EGC common stock should be voted on a proposal, the shares of EGC common stock represented by your proxy will be voted as the EGC board of directors recommends and, therefore,

“FOR” the proposal to adopt the merger agreement;
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“FOR” the proposal to approve, on an advisory (non-binding) basis, the compensation that may be paid or become payable to EGC’s named executive officers that is based on or otherwise relates to the proposed merger; and

“FOR” the proposal to approve the adjournment of the EGC special meeting, if necessary or appropriate, to permit further solicitation of proxies in favor of the proposal to adopt the merger agreement.
Q:
Can I change my vote or revoke my proxy after I have returned a proxy or voting instruction card?
A:
Yes.
If you are the record holder of EGC common stock, you can change your vote or revoke your proxy at any time before your proxy is voted at the applicable special meeting. You can do this by:

timely delivering a signed written notice of revocation;

timely delivering a new, valid proxy bearing a later date (including by telephone or through the internet); or

attending the EGC special meeting and voting in person, which will automatically cancel any proxy previously given, or revoking your proxy in person. Simply attending the EGC special meeting without voting will not revoke any proxy that you have previously given or change your vote.
If you choose either of the first two methods, your notice of revocation or your new proxy must be received by the Secretary of EGC no later than the beginning of the applicable special meeting.
Regardless of the method used to deliver your previous proxy, you may revoke your proxy by any of the above methods.
If you hold shares of EGC in “street name,” you must contact your bank, broker or other nominee to change your vote.
Q:
What are the expected material U.S. federal income tax consequences of the merger to a U.S. holder of EGC common stock?
A:
The receipt of the merger consideration by a U.S. holder (as such term is defined below under “Material U.S. Federal Income Tax Consequences”) of cash in exchange for shares of EGC common stock pursuant to the merger will be a fully taxable transaction for U.S. federal income tax purposes. In general, a U.S. holder who receives the merger consideration in exchange for shares of EGC common stock pursuant to the merger will recognize capital gain or loss for U.S. federal income tax purposes equal to the difference, if any, between (i) the amount of cash received and (ii) the U.S. holder’s adjusted tax basis in its shares of EGC common stock.
For a more detailed discussion of the material U.S. federal income tax consequences of the merger to U.S. holders of EGC common stock, see the section titled “Material U.S. Federal Income Tax Consequences” beginning on page 83. Tax matters can be complicated, and the tax consequences of the merger to you will depend on your particular tax situation. You are encouraged to consult your tax advisor to determine the tax consequences of the merger to you.
Q:
What are the expected material U.S. federal income tax consequences of the merger to a non-U.S. holder of EGC common stock?
A:
A non-U.S. holder (as such term is defined below under “Material U.S. Federal Income Tax Consequences”) of EGC common stock is generally not expected to be subject to U.S. federal income tax as a result of its receipt of the merger consideration in exchange for shares of EGC common stock pursuant to the merger, unless the non-U.S. holder (i) is an individual who is present in the United States for a period or periods aggregating 183 days or more during the calendar year of the merger and certain other conditions are met, (ii) is engaged in trade or business in the United States (and, if
14

required by an applicable tax treaty, maintains a permanent establishment in the United States), or (iii) actually or constructively owns, or owned at any time during the five-year period ending on the date of the merger or, if shorter, the non-U.S. holder’s holding period for its EGC common stock, more than 5% of the shares of EGC common stock.
For a more detailed discussion of the material U.S. federal income tax consequences of the merger to non-U.S. holders of EGC common stock, see the section titled “Material U.S. Federal Income Tax Consequences” beginning on page 83. Tax matters can be complicated, and the tax consequences of the merger to you will depend on your particular tax situation. You are encouraged to consult your tax advisor to determine the tax consequences of the merger to you.
Q:
When do you expect the merger to be completed?
A:
Cox and EGC hope to complete the merger as soon as reasonably possible and expect the closing of the merger to occur in the third calendar quarter of 2018. However, the merger is subject to the satisfaction or waiver of other conditions, and it is possible that factors outside the control of Cox and EGC could result in the merger being completed at a later time or not at all.
Q:
Do I need to do anything with my shares of common stock other than vote for the proposals at the EGC special meeting?
A:
No. Do NOT submit any stock certificates (or evidence of shares in book-entry form) with your proxy card.
Q:
How will I receive the merger consideration to which I am entitled?
A:
You will be paid the merger consideration as promptly as practicable after the effective time and after receipt by the paying agent of your stock certificates (or evidence of shares in book-entry form), a duly executed letter of transmittal and any additional documents required by the procedures set forth in the form of letter of transmittal. No interest will be paid or accrued on the cash amounts received as merger consideration. See “The Merger Agreement — Exchange Procedures.”
Q:
Should I send in my share certificates now?
A:
No. After the merger is completed, you will receive transmittal materials from the paying agent for the merger with detailed written instructions for exchanging your shares of EGC common stock for the consideration to be paid to former EGC stockholders in connection with the merger. If you are the beneficial owner of shares of EGC common stock held in “street name,” you may receive instructions from your broker, bank or other nominee as to what action, if any, you need to take to effect the surrender of such shares.
Q:
What will happen to EGC’s restricted stock units in the merger?
A:
Immediately prior to the effective time, the vesting of each outstanding EGC RSU will accelerate (if not already vested), with any performance conditions deemed achieved at target, and be cancelled and converted into the right to receive the merger consideration, multiplied by the number of shares of EGC common stock subject to that EGC RSU.
Q:
What will happen to EGC’s stock options in the merger?
A:
The exercise price for each outstanding stock option is greater than the merger consideration. As a result, at the effective time, each outstanding stock option to purchase shares of EGC common stock will be cancelled for no consideration.
Q:
What will happen to EGC’s warrants in the merger?
A:
The exercise price for each outstanding warrant is greater than the merger consideration. As a result, at the effective time, each outstanding warrant to purchase shares of EGC common stock will be cancelled for no consideration.
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Q:
Are EGC stockholders entitled to appraisal rights?
A:
Yes. Under Delaware law, if the merger is completed, in lieu of receiving the merger consideration provided by the merger agreement, holders of record of EGC common stock who do not vote in favor of adopting the merger agreement will have the right to demand appraisal of the fair value of their shares by the Delaware Court of Chancery and to receive a cash payment of the amount determined by the Court of Chancery as the fair value, together with interest on that amount from the effective time until such payment is made. In order to exercise your appraisal rights, you must follow the requirements set forth in Section 262 of the DGCL. Appraisal rights will be available only to holders of EGC common stock who deliver a written demand for appraisal to EGC prior to the vote on the proposal to adopt the merger agreement at the EGC special meeting and who comply with the procedures and requirements set forth in Section 262 of the DGCL. These procedures and requirements are summarized in this proxy statement. If the holders of more than 10% of the outstanding shares of EGC common stock demand appraisal, then Cox is not required to consummate the merger. The appraisal amount could be more than, the same as or less than the amount a stockholder would be entitled to receive under the terms of the merger agreement. A copy of Section 262 of the DGCL is included as Annex C to this proxy statement. For additional information, see the section titled “Appraisal Rights” beginning on page 86.
Q:
What happens if I sell my shares of EGC common stock before the EGC special meeting?
A:
The record date for the EGC special meeting is earlier than the date of the EGC special meeting and the date that the merger is expected to be completed. If you transfer your EGC shares after the record date but before the EGC special meeting, you will retain your right to vote at the EGC special meeting, but will have transferred the right to receive the merger consideration in the merger. In order to receive the merger consideration, you must hold your shares through the effective time.
Q:
What does it mean if I receive more than one set of materials?
A:
This means you own shares of EGC common stock that are registered under different names. For example, you may own some shares directly as a stockholder of record and other shares through a bank, broker or other nominee or you may own shares through more than one bank, broker or other nominee. In these situations, you will receive multiple sets of proxy materials. You must complete, sign and return all of the proxy cards or follow the instructions for any alternative voting procedure on each of the voting instruction forms you receive in order to vote all of the shares of EGC common stock that you own. Each proxy card you receive will come with its own self-addressed, stamped envelope; if you submit your proxy by mail, make sure you return each proxy card in the return envelope that accompanied that proxy card.
Q:
How can I find out more information?
A:
For more information about Cox and EGC, as well as about the merger agreement, the merger and the EGC special meeting, see the section titled “Where You Can Find More Information” beginning on page 99.
Q.
What is householding and how does it affect me?
A.
The SEC’s proxy rules permit companies and intermediaries, such as brokers and banks, to satisfy delivery requirements for proxy statements with respect to two or more stockholders sharing an address by delivering a single proxy statement to those stockholders, unless contrary instructions have been received. This procedure reduces the amount of duplicate information that stockholders receive and lowers printing and mailing costs for companies. Certain brokerage firms may have instituted householding for beneficial owners of common stock held through brokerage firms. If your family has multiple accounts holding common stock, you may have already received a householding notification from your broker. You may decide at any time to revoke your decision to household, and thereby receive multiple copies of proxy materials. If you wish to opt out of this procedure and receive a separate set of proxy materials in the future, or if you are receiving multiple copies and would like to receive only one, you should contact your broker, trustee or other nominee or EGC at the address and
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telephone number below. A separate copy of these proxy materials will be promptly delivered upon request by contacting EGC’s proxy solicitor, MacKenzie Partners Inc. (“MacKenzie”), at 1407 Broadway, 27th Floor, New York, NY 10018 or by telephone at (800) 322-2885 (toll-free) or (212) 929-5500 (collect call).
Q:
Who can help answer my questions?
A:
EGC stockholders who have questions about the merger, the other matters to be voted on at the EGC special meeting, or how to submit a proxy or desire additional copies of this proxy statement or additional proxy cards should contact MacKenzie at 1407 Broadway, 27th Floor, New York, NY 10018 or by telephone at (800) 322-2885 (toll-free) or (212) 929-5500 (collect call).
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement and the documents incorporated by reference into this proxy statement contain forward-looking statements within the meaning of the federal securities laws that are not limited to historical facts, but reflect EGC’s current beliefs, expectations or intentions regarding future events. These forward-looking statements relate not only to the proposed merger, but also to EGC’s financial and operating performance on a stand-alone basis prior to the consummation of the merger or if the merger is not consummated.
Words such as “may,” “will,” “could,” “should,” “expect,” “plan,” “project,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “pursue,” “target,” “continue,” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include statements regarding the benefits of the transaction and the anticipated timing of the transaction. These statements, including those relating to the intent, beliefs, plans, or expectations of EGC are based upon current expectations and are subject to a number of risks, uncertainties, and assumptions that could cause actual results to differ materially from the projections, anticipated results or other expectations expressed. While management believes that these forward-looking statements are reasonable, such statements are not guarantees of future performance and the actual results or developments anticipated may not be realized or, even if substantially realized, may not have the expected consequences to or effects on EGC’s business or results. Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to those summarized below:
Forward-Looking Statements Relating to the Merger

the risk that the transaction may not be completed in the third quarter of 2018 or at all, which may adversely affect our business and the price of our common stock;

the failure to satisfy the conditions to the consummation of the transaction, including the adoption of the merger agreement by our stockholders;

the risk that Cox may not be able to obtain the necessary financing to complete the merger in accordance with the merger agreement;

the occurrence of any event, change or other circumstance that could give rise to the termination of the merger agreement;

the effect of the announcement or pendency of the transaction on our business relationships, operating results, and business generally;

risks that the merger disrupts our current plans and operations;

the possibility that competing offers or acquisition proposals for us will be made;

lawsuits, if any, relating to the merger;
Forward-Looking Statements Relating to EGC’s Financial and Operating Performance

our ability to maintain sufficient liquidity and/or obtain adequate additional financing necessary to (i) maintain our infrastructure, particularly in light of its maturity, high fixed costs, and required level of maintenance and repairs compared to other GoM Shelf producers, (ii) fund our operations and capital expenditures, (iii) execute our business plan, develop our proved undeveloped reserves within five years and (iv) meet our other obligations, including plugging and abandonment and decommissioning obligations and collateral requests in support of our surety bonds;

disruption of operations and damages due to maintenance or repairs of infrastructure and equipment and our ability to predict or prevent excessive resulting production downtime within our mature field areas;
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our future financial condition, results of operations, revenues, expenses and cash flows;

our current or future levels of indebtedness, liquidity, compliance with financial covenants and our ability to continue as a going concern;

our inability to retain and attract key personnel;

our ability to post collateral for current or future bonds or comply with any new regulations or Notices to Lessees and Operators imposed by the Bureau of Ocean Energy Management;

our ability to comply with covenants under our three-year secured credit facility (the “First Lien Exit Facility”);

changes in our business strategy;

sustained declines in the prices we receive for our oil and natural gas production;

economic slowdowns that can adversely affect consumption of oil and natural gas by businesses and consumers;

geographic concentration of our assets;

our ability to make acquisitions and to integrate acquisitions;

our ability to develop, explore for, acquire and replace oil and natural gas reserves and sustain production;

our inability to maintain relationships with suppliers, customers, employees and other third parties;

uncertainties in estimating our oil and natural gas reserves and net present values of those reserves;

the need to incur ceiling test impairments due to lower commodity prices using methodology promulgated by the Securities and Exchange Commission (the “SEC”), under which commodity prices are computed using the unweighted arithmetic average of the first-day-of-the-month historical price, net of applicable differentials, for each month within the previous 12-month period;

future derivative activities that expose us to pricing and counterparty risks;

our ability to hedge future oil and natural gas production may be limited by lack of available counterparties;

our ability to hedge future oil and natural gas production may be limited by financial/seasonal limits as required under our First Lien Exit Facility;

our degree of success in replacing oil and natural gas reserves through capital investment;

uncertainties in exploring for and producing oil and natural gas, including exploitation, development, drilling and operating risks;

our ability to establish production on our acreage prior to the expiration of related leaseholds;

availability and cost of drilling and production equipment, facilities, field service providers, gathering, processing and transportation;

disruption of operations and damages due to capsizing, collisions, hurricanes or tropical storms and other severe weather events;

environmental risks;

availability, cost and adequacy of insurance coverage;

competition in the oil and natural gas industry;

the effects of government regulation and permitting and other legal requirements;
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costs associated with perfecting title for mineral rights in some of our properties; and

other risks and uncertainties.
These risks are not exhaustive and may not include factors that could adversely impact EGC’s business and financial performance. Additional information about these factors and other factors that may cause actual results to differ materially include those set forth in the reports that EGC files from time to time with the SEC, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, and quarterly and current reports on Forms 10-Q and 8-K. Consequently, all of the forward-looking statements we make in this document are qualified by the information contained or incorporated by reference herein, including, but not limited to, (i) the information contained under this heading and (ii) the information contained under the headings “Business” and “Risk Factors” and information in our consolidated financial statements and notes thereto included in our most recent filings, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, and quarterly and current reports on Forms 10-Q and 8-K (see the section titled “Where You Can Find More Information” beginning on page 99). Moreover, EGC operates in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for EGC’s management to predict all risk factors, nor can it assess the impact of all factors on EGC’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
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THE COMPANIES
Energy XXI Gulf Coast, Inc.
EGC was formed in December 2016 after emerging from a voluntary reorganization under chapter 11 proceedings as the restructured successor of EXXI Ltd. EGC is headquartered in Houston, Texas, and engage in the development, exploitation, and operation of oil and natural gas properties primarily offshore on the GoM Shelf, which is an area in less than 1,000 feet of water, and also onshore in Louisiana and Texas. EGC owns and operates nine of the largest GoM Shelf oil fields ranked by total cumulative oil production to date and utilize various techniques to increase the recovery factor and thus increase the total oil recovered. At December 31, 2017, EGC’s total proved reserves were 88.2 MMBOE of which 84% were oil and 75% were classified as proved developed. As of that date, EGC operated or had an interest in 577 gross producing wells on 421,974 net developed acres, including interests in 55 producing fields.
EGC’s common stock is traded on the NASDAQ under the symbol “EGC.”
The principal executive offices of EGC are located at 1021 Main, Suite 2626, Houston, Texas 77002 and EGC’s telephone number is (713) 351-3000. Additional information about EGC and its subsidiaries is included in documents incorporated by reference into this proxy statement. See “Where You Can Find More Information” on page 99.
Cox
MLCJR LLC is an affiliate of Cox Oil Offshore, L.L.C. and Cox Operating, L.L.C. (collectively, “Cox Oil”), which are privately-held affiliated entities that own and operate assets in the Gulf of Mexico and were founded by fourth generation oilman, Brad E. Cox. Cox has grown through enhanced development of production and reserves in existing assets along with strategic acquisitions. Cox’s assets are located in both the Outer Continental Shelf and the shallow waters off the coast of Louisiana. Cox Oil currently operates more than 200 producing wells over 25 fields. Cox is based in Dallas, Texas with operation staff in New Orleans, Louisiana.
The principal executive offices of Cox are located at 4514 Cole Avenue, Suite 1175, Dallas, Texas 75205, and Cox’s telephone number is (214) 420-7710.
Merger Sub
YHIMONE, Inc., an indirect wholly owned subsidiary of Cox, is a Delaware corporation that was formed on June 15, 2018 for the sole purpose of effecting the merger. The principal executive office and telephone number for Merger Sub are the same as for Cox. In the merger, Merger Sub will be merged with and into EGC, with EGC surviving as an indirect wholly owned subsidiary of Cox.
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Summary Selected Consolidated Historical Financial Data of Cox
The following selected consolidated balance sheet data as of December 31, 2017 and December 31, 2016, and the consolidated statements of operations, consolidated statements of changes in members’ equity and consolidated statements of cash flow data for the year ended December 31, 2017 and the period beginning April 15, 2016 and ended December 31, 2016 have been derived from the audited consolidated financial statements of Cox, which were provided by Cox to EGC in connection with the negotiation of the merger agreement. As a private company, Cox does not publicly disclose its financial information. Accordingly, Cox has respectfully declined EGC’s request to include Cox’s audited financial statements in this proxy statement.
Year Ended
December 31,
2017
April 15, 2016
(Inception) to
December 31,
2016
Income Statement Data
Total Net Revenues
$ 198,049,073 $ 128,813,339
Cash Flow Data
Net Cash Provided by Operating Activities
$ 83,053,820 $ 36,231,975
December 31,
2017
December 31,
2016
Balance Sheet Data
Total Assets
403,379,718 386,791,584
Total Members’ Equity
175,650,565 211,331,184
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THE EGC SPECIAL MEETING
This proxy statement is being provided to the EGC stockholders as part of a solicitation of proxies by the EGC board of directors for use at the EGC special meeting to be held at the time and place specified below and at any properly convened meeting following an adjournment or postponement thereof. This proxy statement provides EGC stockholders with information they need to know to be able to vote or instruct their vote to be cast at the EGC special meeting.
Date, Time and Place
The EGC special meeting will be held at 1021 Main, 1st Floor, Houston, Texas on September 6, 2018, at 9:00 a.m., Houston time.
Purpose of the EGC Special Meeting
At the EGC special meeting, EGC stockholders will be asked to consider and vote on the following:

a proposal to adopt the merger agreement, which is further described in the sections titled “The Merger” and “The Merger Agreement” beginning on pages 28 and 65, respectively;

an advisory (non-binding) proposal to approve the compensation that may be paid or become payable to EGC’s named executive officers that is based on or otherwise relates to the proposed merger; and

a proposal to approve the adjournment of the EGC special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies in the event there are not sufficient votes at the time of the EGC special meeting to approve the first proposal listed above.
Completion of the merger is conditioned on the adoption of the merger agreement by the EGC stockholders.
Recommendation of the EGC Board of Directors
At a special meeting held on June 17, 2018, the EGC board of directors adopted and approved the merger agreement and determined that, on the terms and subject to the conditions set forth in the merger agreement, the merger agreement and the transactions contemplated thereby, including the merger, are advisable, fair to and in the best interests of EGC and its stockholders. Accordingly, the EGC board of directors unanimously recommends that EGC stockholders vote:

“FOR” the proposal to adopt the merger agreement;

“FOR” the proposal to approve, on an advisory (non-binding) basis, the compensation that may be paid or become payable to EGC’s named executive officers that is based on or otherwise relates to the proposed merger; and

“FOR” the proposal to approve the adjournment of the EGC special meeting, if necessary or appropriate, to permit further solicitation of proxies in favor of the proposal to adopt the merger agreement.
EGC stockholders should carefully read this proxy statement, including any documents incorporated by reference, and the Annexes in their entirety for more detailed information concerning the merger and the other transactions contemplated by the merger agreement.
EGC Record Date; Stockholders Entitled to Vote
The record date for the EGC special meeting is August 3, 2018. Only record holders of shares of EGC common stock at the close of business on such date are entitled to notice of, and to vote at, the EGC special meeting or any adjournment or postponement thereof. At the close of business on the record date, the only outstanding voting securities of EGC were common stock, and 33,396,563 shares of EGC common stock were issued and outstanding. A list of the EGC stockholders of record who are entitled to vote at the EGC special meeting will be available for inspection by any EGC stockholder for any purpose germane to the
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EGC special meeting during ordinary business hours for the ten days preceding the EGC special meeting at 1021 Main, Suite 2626, Houston, Texas and will also be available at the EGC special meeting for examination by any EGC stockholder present at such meeting.
Each share of EGC common stock outstanding on the record date of the EGC special meeting is entitled to one vote on each proposal and any other matter coming before the EGC special meeting.
Voting by EGC’s Directors and Executive Officers
At the close of business on the record date of the EGC special meeting, EGC directors and executive officers were entitled to vote 86,794 shares of EGC common stock, representing less than 1% of the shares of EGC common stock outstanding on that date.
Quorum
No business may be transacted at the EGC special meeting unless a quorum is present. Stockholders who hold shares representing at least a majority of the outstanding voting power of all issued and outstanding shares of EGC common stock entitled to vote at the EGC special meeting must be present in person or represented by proxy to constitute a quorum. If a quorum is not present, to allow additional time for obtaining additional proxies, the EGC special meeting will be adjourned to solicit additional proxies in favor of the proposal to adopt the merger agreement. Additionally, if fewer shares are voted in favor of the proposal to adopt the merger agreement than is required, to allow additional time for obtaining additional proxies, the EGC special meeting may be adjourned to solicit additional proxies in favor of the proposal to adopt the merger agreement. EGC’s bylaws permit the chairman of the board to adjourn the meeting without a stockholder vote, regardless of whether a quorum is present. No notice of an adjourned meeting need be given unless the adjournment is for more than 30 days or, if after the adjournment, a new record date is fixed for the adjourned meeting, in which case a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. At any adjourned meeting, all proxies will be voted in the same manner as they would have been voted at the original convening of the EGC special meeting, except for any proxies that have been effectively revoked or withdrawn prior to the adjourned meeting.
All shares of EGC common stock represented at the EGC special meeting, including shares that are represented but that vote to abstain, will be treated as present for purposes of determining the presence or absence of a quorum. Broker non-votes will have no effect on determining the presence or absence of a quorum at the EGC special meeting.
Required Vote
The required votes to approve the EGC proposals are as follows:

The adoption of the merger agreement requires the affirmative vote of the holders of two-thirds of the issued and outstanding shares of EGC common stock. Each share of EGC common stock outstanding on the record date of the EGC special meeting is entitled to one vote on this proposal. Failures to vote, broker non-votes and abstentions will have the same effect as a vote “AGAINST” the approval of such proposal.

The approval, on an advisory (non-binding) basis, of the compensation that may be paid or become payable to EGC’s named executive officers that is based on or otherwise relates to the proposed merger requires the affirmative vote of the holders of a majority of the issued and outstanding shares of EGC common stock present, in person or by proxy, at the EGC special meeting and entitled to vote on the proposal, assuming there is a quorum at the EGC special meeting. Each share of EGC common stock outstanding on the record date of the EGC special meeting is entitled to one vote on this proposal. If you attend the EGC special meeting or are represented by proxy and, in either case, abstain from voting, that abstention will have the same effect as voting “AGAINST” this proposal. Failures to vote and broker non-votes will have no effect on the vote for this proposal.
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The adjournment of the EGC special meeting, if necessary or appropriate, to solicit additional proxies requires the affirmative vote of the holders of a majority of the issued and outstanding shares of EGC common stock present, in person or by proxy, at the EGC special meeting and entitled to vote on the proposal, assuming there is a quorum at the EGC special meeting. Each share of EGC common stock outstanding on the record date of the EGC special meeting is entitled to one vote on this proposal. If you attend the EGC special meeting or are represented by proxy and, in either case, abstain from voting, that abstention will have the same effect as voting “AGAINST” this proposal. Failures to vote and broker non-votes will have no effect on the vote for this proposal. EGC’s bylaws permit the chairman of the board to adjourn the meeting without a stockholder vote, regardless of whether a quorum is present.
Granting of Proxies by Holders of Record
If you were a record holder of EGC common stock at the close of business on the record date of the EGC special meeting, a proxy card is enclosed for your use. EGC requests that you submit your proxy as promptly as possible by (i) accessing the internet site listed on the EGC proxy card, (ii) calling the toll-free number listed on the EGC proxy card or (iii) submitting your EGC proxy card by mail by using the provided self-addressed, stamped envelope. Information and applicable deadlines for submitting a proxy through the internet or by telephone are set forth on the enclosed proxy card. When the accompanying proxy is returned properly executed, the shares of EGC common stock represented by it will be voted at the EGC special meeting or any adjournment or postponement thereof in accordance with the instructions contained in the proxy card. Your internet or telephone submission authorizes the named proxies to vote your shares in the same manner as if you had marked, signed and returned a proxy card.
If a proxy is returned without an indication as to how the shares of EGC common stock represented are to be voted with regard to a particular proposal, the EGC common stock represented by the proxy will be voted in accordance with the recommendation of the EGC board of directors and, therefore,

“FOR” the proposal to adopt the merger agreement;

“FOR” the proposal to approve, on an advisory (non-binding) basis, the compensation that may be paid or become payable to EGC’s named executive officers that is based on or otherwise relates to the proposed merger; and

“FOR” the proposal to approve the adjournment of the EGC special meeting, if necessary or appropriate, to permit further solicitation of proxies in favor of the proposal to adopt the merger agreement.
At the date hereof, the EGC board of directors has no knowledge of any business that will be presented for consideration at the EGC special meeting and that would be required to be set forth in this proxy statement or the related proxy card other than the matters set forth in EGC’s notice of special meeting of stockholders. If any other matter is properly presented at the EGC special meeting for consideration, it is intended that the persons named in the enclosed form of proxy and acting thereunder will vote in accordance with their best judgment on such matter.
Your vote is important. Accordingly, if you were a record holder of EGC common stock on the record date of the EGC special meeting, please sign and return the enclosed proxy card or submit your proxy via the internet or telephone regardless of whether you plan to attend the EGC special meeting in person. Proxies submitted through the specified internet website or by phone must be received by 11:59 p.m., Eastern Time, on September 5, 2018, the day before the EGC special meeting.
Shares Held in Street Name
If you hold shares of EGC common stock through a broker, bank or other nominee, you are considered the “beneficial holder” of the shares held for you in what is known as “street name.” The “record holder” of such shares is your broker, bank or other nominee, and not you, and you must provide the record holder of your shares with instructions on how to vote your shares. Please follow the voting instructions provided by your broker, bank or other nominee. Please note that you may not vote shares held in street name by returning a proxy card directly to EGC or by voting in person at the EGC special meeting unless
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you have a “legal proxy,” which you must obtain from your broker, bank or other nominee. Furthermore, brokers, banks or other nominees who hold shares of EGC common stock on behalf of their customers may not give a proxy to EGC to vote those shares without specific instructions from their customers.
If you are an EGC stockholder and you do not instruct your broker, bank or other nominee on how to vote your shares, your broker, bank or other nominee may not vote your shares on any of the EGC proposals.
Voting in Person
If you plan to attend the EGC special meeting and wish to vote in person, you will be given a ballot at the EGC special meeting. If you are a registered stockholder, please be prepared to provide proper identification, such as a driver’s license, at the EGC special meeting. If your shares are held in “street name,” you must bring to the EGC special meeting a “legal proxy” executed in your favor from the record holder (your broker, bank or other nominee) of the shares authorizing you to vote at the EGC special meeting.
Revocation of Proxies
If you are the record holder of EGC common stock, you can change your vote or revoke your proxy at any time before your proxy is voted at the EGC special meeting. You can do this by:

timely delivering a signed written notice of revocation;

timely delivering a new, valid proxy bearing a later date (including by telephone or through the internet); or

attending the EGC special meeting and voting in person, which will automatically revoke any proxy previously given, or revoking your proxy in person. Simply attending the EGC special meeting without voting will not revoke any proxy that you have previously given or change your vote.
A registered stockholder may revoke a proxy by any of these methods, regardless of the method used to deliver the stockholder’s previous proxy. Written notices of revocation and other communications with respect to the revocation of proxies should be addressed as follows:
Energy XXI Gulf Coast, Inc.
1021 Main, Suite 2626
Houston, Texas 77002
(713) 351-3000
Attention: Corporate Secretary
If your shares are held in “street name” through a broker, bank or other nominee, you may change your voting instructions by submitting new voting instructions to your broker, bank or nominee in accordance with its established procedures. If your shares are held in the name of a broker, bank or other nominee and you decide to change your vote by attending the EGC special meeting and voting in person, your vote in person at the EGC special meeting will not be effective unless you have obtained and present an executed “legal proxy” in your favor from the record holder (your broker, bank or nominee).
Tabulation of Votes
EGC has appointed a representative of Broadridge Financial Solutions, Inc. to serve as the Inspector of Votes for the EGC special meeting. The Inspector of Votes will independently tabulate affirmative and negative votes and abstentions.
Solicitation of Proxies
EGC is soliciting proxies for the EGC special meeting from its stockholders. In accordance with the merger agreement, EGC will pay its own cost of soliciting proxies, including the cost of mailing this proxy statement, from its stockholders. In addition to solicitation of proxies by mail, proxies may be solicited by EGC’s officers, directors and regular employees, without additional remuneration, by personal interview, telephone or other means of communication.
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EGC will make arrangements with brokerage houses, custodians, nominees and fiduciaries to forward proxy solicitation materials to beneficial owners of EGC common stock. EGC may reimburse these brokerage houses, custodians, nominees and fiduciaries for their reasonable expenses incurred in forwarding the proxy materials.
To help ensure the presence in person or by proxy of the largest number of stockholders possible, EGC has engaged MacKenzie, a proxy solicitation firm, to solicit proxies on EGC’s behalf. EGC has agreed to pay MacKenzie a retainer of  $40,000, to be applied to the final proxy solicitation fee. In the event of a contested solicitation or public opposition to the merger, EGC and MacKenzie will mutually agree on an appropriate final fee based upon customary fees for the proxy solicitation services that MacKenzie provides. If there is no contested solicitation or public opposition, the final fee would be $40,000. EGC will also reimburse MacKenzie for its reasonable out-of-pocket costs and expenses.
Adjournments
Any adjournment of the EGC special meeting may be made from time to time by the affirmative vote of a majority of the voting power of the outstanding shares of EGC common stock, present in person or by proxy at the EGC special meeting and entitled to vote thereon, and which have actually been voted, without further notice other than by an announcement made at the EGC special meeting (unless the adjournment is for more than 30 days or if a new record date is fixed). If a quorum is present at the EGC special meeting but there are not sufficient votes at the time of the EGC special meeting to approve the proposal to issue shares of EGC common stock in connection with the merger, then EGC stockholders may be asked to vote on a proposal to adjourn the EGC special meeting so as to permit the further solicitation of proxies in favor of the proposal to adopt the merger agreement. EGC’s bylaws permit the chairman of the board to adjourn the meeting without a stockholder vote, regardless of whether a quorum is present.
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THE MERGER
Effects of the Merger
At the effective time, Merger Sub, an indirect wholly owned subsidiary of Cox that was formed for the sole purpose of effecting the merger, will merge with and into EGC. EGC will survive the merger and become an indirect wholly owned subsidiary of Cox.
In the merger, each share of EGC common stock issued and outstanding immediately prior to the effective time will be converted into the right to receive $9.10 cash without interest.
Background of the Merger
Since EGC’s emergence from Chapter 11 reorganization on December 30, 2016, the EGC board of directors undertook a number of initiatives in order to, among other things:

effect a positive change in EGC’s leadership and corporate culture;

increase EGC’s financial and operating performance by exploiting EGC’s material asset base and improving margins; and

place EGC in the best possible position to both pursue strategic opportunities and to operate successfully on a stand-alone basis in order to enhance stockholder value.
However, since emergence, EGC has faced a number of headwinds – including operational challenges resulting in production declines and liquidity issues – that adversely affected EGC’s ability to achieve the intended results of these initiatives. As these headwinds developed and persisted, the EGC board of directors has been attentive to opportunities to help EGC better face these challenges.
In keeping with the EGC board of directors’ focus on pursuing strategic alternatives and enhancing stockholder value, on March 20, 2017, EGC announced that it had retained Morgan Stanley & Co. LLC (“Morgan Stanley”) as its financial advisor to assist the EGC board of directors and senior management with the evaluation, development and implementation of a long-term strategic plan, including a stand-alone financial plan and select strategic alternatives. EGC worked with Morgan Stanley on its strategic plan throughout 2017 and evaluated a variety of alternatives, including mergers or consolidations, a stand-alone plan and capital infusion options. While EGC received a reasonable level of interest from potential counterparties, particularly discussions of Gulf of Mexico Shelf consolidation, no executable transaction resulted from this review process.
After the conclusion of the Morgan Stanley strategic review process in late 2017, the EGC board of directors and management team shifted EGC’s near-term focus to the development of an optimized stand-alone strategy and multi-year plan. EGC announced in November 2017 that it would return to drilling in 2018, and would focus on optimizing and enhancing its existing production with an active drilling, recompletion and workover program, evaluating acquisitions, exploring potential dispositions of non-core properties, and continuing to control costs. However, throughout the first quarter of 2018, EGC experienced production declines primarily due to disruptions associated with shut-ins from severe weather, production equipment maintenance issues, pipeline shut-ins, facility-related unscheduled downtime and natural declines. The cumulative effect of these operational difficulties served to reduce EGC’s liquidity and its ability to raise external capital.
As a complement to EGC’s stand-alone capital plan, EGC retained Intrepid in January 2018 to assist EGC with the consideration of possible opportunities for raising additional capital. In addition to their work with Intrepid, the EGC board of directors and senior management:

continued to explore additional avenues for increasing EGC’s liquidity and supporting its capital plan, including entering into discussions with CorEnergy, the owner and lessor of EGC’s Grand Isle Gathering System (“GIGS”), regarding among other things, a potential lease restructuring, that preserves the long-term value of GIGS and supports EGC’s further recovery efforts and future success;
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continued to encourage opportunities with potential counterparties to permit EGC to increase its drilling activity, including potential “drillco” joint ventures and farm-out arrangements;

continued to consider the divestiture of certain of EGC’s non-core oil and gas properties; and

engaged Alvarez & Marsal North America, LLC to help EGC find and exploit greater efficiencies and cost savings.
In late 2017, as part of its review of all strategic alternatives, EGC considered a potential divestiture of its western GoM assets, consisting of properties that had significant near-term asset retirement obligations (“ARO”) and limited cash flow and development upside. Given the unique nature of the western GoM assets, EGC ran a trial sale process as a test case, focusing on a small subset of companies that had either in-house plugging and abandonment operations or access to plugging and abandonment services through contractual arrangements or affiliates. This targeted process did not produce an executable transaction, and the general feedback from the targeted potential purchasers was that the proposed asset package did not have enough production potential to support the ARO.
In late January 2018, as part of EGC’s trial western GoM divesture process, representatives of EGC met with representatives of Northstar Offshore Ventures LLC (“Northstar”), an affiliate of Orinoco Natural Resources, LLC (“ONR”). During that meeting, the Northstar representatives suggested that Doug Brooks, EGC’s chief executive officer, meet with Tom Clarke, one of the owners of Northstar and ONR. The Northstar representatives believed that Mr. Clarke might have some ideas for making attractive to both EGC and the counterparty the transfer of properties with large amounts of ARO (i.e., where the ARO attributable to a property is greater than or disproportionate to the value of that property’s remaining reserves) (such a transaction, an “ARO transfer transaction”).
After the meeting between Northstar and EGC, Mr. Clarke reached out to Mr. Brooks to set up a meeting, and on January 30, 2018, Mr. Brooks, Mr. Clarke, Scott Laverde, an EGC business development representative, and representatives of Northstar met at EGC’s offices to discuss how a potential ARO transfer transaction with EGC might work. A few days after that meeting, on February 1, 2018, Mr. Clarke emailed a letter to Mr. Brooks, reiterating Mr. Clarke’s desire to structure an ARO transfer transaction that would enable EGC to transfer its western GoM assets and their associated ARO. He acknowledged that any such transaction would need to be structured so that the buyer was able to “self perform” the plugging and abandonment necessary to service the ARO. In order to make the buyer entity more self-sustaining, Mr. Clarke proposed that EGC enter into a multi-year plugging and abandonment services agreement with the buyer. He also noted his willingness to invest in EGC’s upcoming capital raise efforts.
On February 20, 2018, Mr. Clarke and additional ONR representatives met with representatives from Intrepid at Intrepid’s offices to discuss structuring a potential ARO transfer transaction involving EGC’s western GoM assets. The participants in the meeting acknowledged that the buyer entity would need to be a stand-alone entity with access to cash flows in order to ensure that EGC would not have any successor liability with respect to the assumed ARO. Following that meeting, on February 22, 2018, Mr. Clarke emailed Intrepid a letter that described a high-level proposed structure for a potential ARO transfer transaction. Consistent with his prior conversations with Intrepid, he proposed forming a separate “environmental fund” entity, supported financially by ONR. In consideration for ONR’s ARO liability assumption, EGC would enter into a long-term plugging and abandonment services agreement with EPIC Offshore Specialty, LLC (“EPIC”), an ONR affiliate. Mr. Brooks forwarded this letter to the EGC board of directors on February 22, 2018. On March 5, 2018, representatives from ONR (including Mr. Clarke), EGC (including Mr. Brooks) and Intrepid met at EGC’s offices to further discuss structuring options for an ARO transfer transaction. Around this time, ONR and EGC began negotiating a more expansive confidentiality agreement, because the previous confidentiality agreements that ONR had executed with EGC did not provide for discussions with ONR affiliates like EPIC. That confidentiality agreement was executed by EGC, ONR and certain ONR affiliates on March 12, 2018. On March 14, 2018, EGC gave ONR access to EGC’s electronic dataroom.
On February 7, 2018, Scott Heck, EGC’s chief operating officer, attended an energy conference event in Houston hosted by Houlihan Lokey, Inc. (“Houlihan”). At that event, a Houlihan representative told Mr. Heck that he knew of a strategic opportunity that EGC might be interested in. He proposed that
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Mr. Heck and Mr. Brooks meet him for lunch to discuss further. On February 21, 2018, Mr. Brooks and Mr. Heck met for lunch with the Houlihan representative, as well another Houlihan colleague. During the course of this meeting, the Houlihan representatives indicated that Cox thought favorably of EGC’s core assets and asked Mr. Brooks and Mr. Heck whether they would be willing to meet with representatives from Cox to discuss the possibility of a transaction between the two companies.
On March 7, 2018, a dinner meeting was held that included Mr. Brooks, Mr. Heck, Craig Sanders (Cox’s chief executive officer), Brad Cox (Cox’s chairman), Ken Jackson (Cox’s chief financial officer), and representatives from Houlihan. At this dinner, the parties discussed the possibility of a potential transaction between EGC and Cox. Mr. Brooks indicated that he was open to the idea of discussing a potential combination. He told the Cox representatives that if they were interested in pursuing the matter further, they should provide a more formal expression of their interest that he could discuss with the EGC board of directors. Mr. Brooks informed EGC’s then-serving chairman of the board, Michael Reddin, about these discussions.
On March 9, 2018, Mr. Sanders sent a written expression of interest by email to Mr. Reddin, copying Mr. Brooks and Mr. Heck. Cox’s expression of interest contemplated the purchase by Cox Operating, L.L.C. and its affiliates (all of which are Cox affiliates, and for purposes of this section, the defined term “Cox” includes all of those entities) of  “all or part of” EGC’s assets (but did not include any pricing or valuation terms), and asked EGC for 120 days of exclusivity to permit Cox to conduct its due diligence review of EGC. Mr. Reddin replied to Mr. Sanders’ email that same day, informing Mr. Sanders that EGC was open to discussions with Cox regarding a combination. He also noted that he had passed along Cox’s letter to the EGC board of directors and that the EGC board of directors would discuss it at its upcoming meeting. He indicated that Mr. Brooks would reach out to Mr. Sanders after that board meeting to discuss the potential path forward.
On March 13, 2018, at a regularly scheduled meeting of the EGC board of directors, the EGC management team updated the EGC board of directors on the discussions with ONR and the March 9, 2018 expression of interest from Cox. The EGC board of directors encouraged management to continue pursuing both the proposed ONR transaction and the proposed Cox transaction, and agreed that EGC should not grant exclusivity to Cox at that time.
On March 15, 2018, Mr. Brooks sent an email to Mr. Sanders in response to Cox’s March 9, 2018 expression of interest, stating that EGC was not willing to grant Cox exclusivity, but that EGC was interested in continuing to have discussions with Cox regarding a corporate level transaction or a transaction for all of EGC’s assets. To facilitate those discussions, Mr. Brooks suggested that Cox and EGC enter into a mutual confidentiality agreement.
On March 19, 2018, EGC sent Mr. Sanders a formal written response to Cox’s March 9, 2018 expression of interest, reiterating the points from Mr. Brooks’ March 15, 2018 email to Mr. Sanders. Mr. Sanders replied that Cox was willing to enter into a confidentiality agreement with EGC. EGC and Cox finalized and executed that confidentiality agreement on March 22, 2018, and Cox was given access to EGC’s electronic data room on March 27, 2018. EGC and Cox continued to communicate regarding Cox’s diligence review throughout April 2018.
At a meeting of the EGC board of directors held on March 29, 2018, EGC management updated the board on the status of EGC’s strategic initiatives, including potential transactions with ONR and Cox. Also at that meeting, Gary Hanna was appointed to the EGC board of directors and was named chairman of the board.
On April 2, 2018, EGC announced that it had named Gary Hanna chairman of the board. Shortly after that announcement, on April 6, 2018, one of Party B’s senior executives sent Mr. Hanna an email, indicating his willingness to provide offshore oilfield services to EGC. Party B had previously participated in EGC’s trial western divesture process that ONR’s affiliate had participated in, and had previously indicated to EGC in February 2018 that it was not interested in purchasing EGC’s western GoM assets. The senior Party B executive’s April 6, 2018 email also mentioned the possibility of combining EGC with Party B, a privately held company with a primary focus on offshore oilfield services. However, the clear
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implication of the email was that any transaction like that would involve some sort of equity for equity transaction. During the course of the discussion described below between EGC and Party B, Party B never again raised the possibility of any sort of business combination.
On April 12, 2018, representatives from Intrepid called Mr. Brooks and told him that one of EGC’s stockholders had mentioned to Intrepid that Party B might be interested in acquiring EGC’s western GoM assets. However, because Party B had previously indicated to EGC that it was not interested in purchasing those assets, EGC did not re-engage with Party B at that time.
Mr. Hanna replied to the April 6 email from the Party B senior executive on April 20, 2018, thanking the executive for his interest and confirming that he would discuss Party B’s interest in providing offshore oilfield services with EGC management. Those discussions did not go any further at that time.
EGC, ONR and Intrepid continued to meet and hold discussions throughout April 2018 regarding potential ways to structure an ARO transfer transaction involving EGC’s non-core assets. EGC and Intrepid continued to focus on ensuring that ONR’s post-closing structure would be financially sound and have the ability to operate on a stand-alone basis, to reduce the risk of any of the ARO reverting to EGC. The parties also discussed valuation considerations at length, including the forms of potential consideration that ONR and its affiliates could receive in exchange for assuming the non-core assets’ ARO liability. They also discussed ONR’s bonding capabilities. The value proposition to EGC of a potential ARO transfer transaction was not based solely on decreasing EGC’s ARO, but also depended on the release of cash collateral held by EGC’s sureties, which would in turn serve to increase EGC’s liquidity. As a result, EGC stressed the importance of ONR being able to fully perform all bonding requirements with respect to the non-core assets. In one such meeting at EGC’s offices on April 20, 2018, with representatives from EGC, ONR, Intrepid and Sidley Austin LLP (“Sidley”), EGC’s outside M&A counsel, participating by phone or in person, EGC provided ONR with an initial draft of a term sheet, representing EGC’s proposal on transaction structure.
During the remainder of April 2018, the proposed term sheet went through several drafts, and EGC, ONR and Intrepid discussed the document on several occasions. These discussions were intended to address, among other issues, the parties’ differing valuations of the various components of the potential ARO transaction, including with respect to the margins under the long-term plugging and abandonment services agreement and the value of the other consideration payable to ONR and its affiliates in consideration for ONR’s assumption of ARO.
On April 29, 2018, the EGC board of directors held a special meeting, which also included certain members of EGC senior management and representatives from Intrepid and Sidley. At the meeting, EGC management walked the EGC board of directors through EGC’s current forecast and noted the operational challenges faced by EGC in the first quarter of 2018. The EGC board of directors and Intrepid discussed the implications of EGC’s maintaining the status quo, including the impact of the continued production downtime on EGC’s debt covenants and cash collateral requirements following the planned May 10, 2018 release of first quarter results. Intrepid indicated that current market sentiment was that EGC needed a capital and liability solution and that investors and other stakeholders were concerned about EGC’s ARO burden relative to cash flow and production. Intrepid then updated the EGC board of directors on the status of the term sheet negotiations with ONR. Sidley informed the EGC board of directors that the term sheet did not contain exclusivity provisions and would permit EGC to terminate the term sheet so long as EGC paid ONR’s reasonable transaction expenses up to $1,000,000. Intrepid presented the EGC board of directors with certain information about ONR and its affiliates and led a detailed discussion of the currently contemplated terms of the proposed ARO transfer transaction with ONR and the potential benefits of the proposed ONR transaction, including partially addressing EGC’s ARO liabilities and improving the likelihood of a third-party financing transaction. At the conclusion of these discussions, the EGC board of directors decided that it would take the proposed transaction and its terms under advisement and would re-convene on May 1, 2018 to discuss the matter further.
On May 1, 2018, the EGC board of directors held a special meeting, which also included certain members of EGC senior management and representatives from Intrepid and Sidley. Discussions regarding the term sheet with ONR resumed, and in the course of those discussions, a representative from Sidley walked the EGC board of directors through the remaining open issues in the ONR term sheet. The EGC
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board of directors then discussed the terms of the proposed plugging and abandonment services agreement with EPIC, and EGC management walked the EGC board of directors through an overview of EPIC, its capabilities, and the key terms. After further discussion, the EGC board of directors authorized EGC’s management to enter into a non-binding term sheet with ONR with respect to the proposed ARO transfer transaction, subject to approval of the resolution of the open items by Mr. Hanna, acting as the sole member of an ad hoc committee of the EGC board of directors established for that purpose.
On May 2, 2018, EGC, ONR and certain ONR affiliates (including EPIC) executed a non-binding term sheet, which did not include any exclusivity provisions. The ARO transfer transaction contemplated by that term sheet (the “Proposed ONR Transaction”) principally consisted of the following:

EGC would transfer its non-core oil and gas assets to an ONR affiliate and that affiliate would assume all related liabilities, including ARO;

in consideration for that assumption, EGC would

provide a $100,000,000 second lien note to an ONR affiliate, to be amortized ratably beginning 2019 and bearing interest at 9% per annum;

pay an ONR affiliate cash equal to $12,500,000 at closing;

to the extent EGC’s existing surety bond providers release a certain portion of cash collateral, pay ONR or its affiliate an additional cash amount six months after closing equal to $12,500,000 or the amount of cash collateral released, whichever was less;

issue to ONR a 35% equity ownership position in EGC, pro forma after giving effect to the transaction; and

sign a 10-year agreement with EPIC to provide plugging and abandonment and decommissioning services for EGC’s core assets; and

ONR and/or its affiliates would commit at closing to anchor a potential future EGC financing with at least a $25,000,000 participation.
The term sheet with ONR provided that the Proposed ONR Transaction would be subject to approval by EGC’s stockholders, lenders, the Bureau of Ocean Energy Management (“BOEM”) and the Bureau of Safety and Environmental Enforcement (“BSEE”). EGC then instructed Sidley to begin drafting definitive documentation for the Proposed ONR Transaction.
On May 1, 2018, shortly after the adjournment of the special meeting of the EGC board of directors, Mr. Sanders emailed Mr. Brooks a written, non-binding indicative proposal (the “May 1 Cox Proposal”), to acquire all outstanding EGC common stock for cash, at a 15% premium to EGC’s equity market value as of April 30, 2018 (which the proposal stated was $6.55 per share). This proposal was non-binding and subject to resolution of several due diligence items. It also noted that Cox was fully financed and that its proposed transaction would not be subject to any financing contingency. The May 1 Cox Proposal also included a request that EGC grant Cox exclusivity through June 30, 2018. On the same day Cox sent the proposal, Mr. Brooks replied to Mr. Sanders, indicating that he had received the proposal and would review it with the EGC board of directors. The following day, on May 2, 2018, Mr. Brooks provided an email update to the EGC directors regarding this proposal.
On May 7, 2018, following email communications with the EGC board of directors supporting this course of action, Mr. Brooks sent an email to Mr. Sanders in response to the May 1 Cox Proposal, indicating that EGC was still not willing to grant Cox exclusivity. However, Mr. Brooks stated that EGC was open to continuing discussions regarding a potential transaction with Cox and would continue providing due diligence items.
On May 9, 2018, the EGC board of directors held a regularly scheduled meeting, which also included certain members of EGC senior management and representatives from Intrepid. EGC management reminded the EGC board of directors that the term sheet for the Proposed ONR Transaction did not contain an exclusivity provision and therefore would not preclude EGC from continuing to explore additional strategic alternatives. After discussion, it was the consensus of the board that EGC management should continue discussions with Cox.
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Early in the morning of May 10, 2018, EGC announced its first quarter 2018 financial and operational results. EGC also announced the execution of the non-binding ONR term sheet because it was a key component of EGC’s financing initiative that was disclosed in the May 10, 2018 press release and in EGC’s quarterly report on Form 10-Q filed that day with the SEC. Also on May 10, 2018, representatives of EGC had an initial meeting with representatives of BOEM and BSEE to discuss the Proposed ONR Transaction. Later that day, Mr. Brooks also held a separate telephone conversation with BOEM and BSEE regarding the Proposed ONR Transaction.
Also on May 10, 2018, in response to the announcement of the Proposed ONR Transaction, Party B’s chief operating officer emailed Mr. Hanna and Mr. Brooks, indicating that Party B could make a “much better offer” for EGC’s non-core assets than the transaction that EGC had announced earlier that day, including providing substantially more post-closing capital to fund EGC’s development program. Mr. Brooks responded on May 11, 2018, offering to meet with Party B the following week to discuss Party B’s proposal in more detail.
On May 11, 2018, in response to the announcement of the Proposed ONR Transaction, Mr. Sanders emailed Mr. Brooks a letter reaffirming Cox’s commitment to proceed with an acquisition of EGC, as outlined in the May 1 Cox Proposal and requesting additional diligence items. On May 15, 2018, Mr. Hanna and Mr. Cox had a call to discuss the terms of the May 1 Cox Proposal and potential next steps. Mr. Hanna encouraged Mr. Cox to provide a more comprehensive proposal that described the specific transaction terms for the EGC board of directors to consider. He also asked Mr. Cox to provide additional information about Cox’s financing plan for the transaction, including financial statements for the Cox corporate family.
Also on May 11, 2018, Sidley sent ONR and its counsel, Latham & Watkins LLP (“Latham”), an initial draft of the purchase agreement for the Proposed ONR Transaction. Sidley continued to send drafts of various ancillary documents throughout that week.
On May 14, 2018, Party B’s chief financial officer called a representative of Intrepid to discuss the possibility of Party B pursuing a transaction with EGC similar to the Proposed ONR Transaction, and informing Intrepid that Party B would be sending a proposal to EGC shortly. The following day, on May 15, 2018, Party B’s chief financial officer emailed Intrepid a high-level proposal for an ARO transfer transaction on terms very similar to the terms that had been publicly disclosed with respect to the Proposed ONR Transaction (the “Proposed Party B Transaction”). However, instead of the 35% pro forma common stock ownership contemplated by the Proposed ONR Transaction, Party B proposed to receive instead a 19.99% common stock ownership position in EGC, pro forma for the transaction, with warrants giving Party B a right to purchase another 5% equity ownership position in EGC. Furthermore, Party B indicated that Party B would commit to anchor a potential future EGC financing with up to $35 million participation, with a financial partner potentially committing an additional $50 million participation for a possible total of  $85 million participation.
On May 17, 2018, at a joint meeting of the EGC board of directors and its nomination and governance committee attended by certain representatives of EGC management and Sidley, EGC management updated the directors on the status of the strategic alternatives being pursued by EGC, including the May 15, 2018 proposal from Party B. The EGC board of directors discussed Party B and its capabilities and the terms of its proposal (and the key differences between Party B’s proposal and the terms of the Proposed ONR Transaction). EGC management then informed the EGC board of directors of initial feedback received from key stakeholders in reaction to the May 10, 2018 announcement of the Proposed ONR Transaction, noting that concerns were expressed about the complexity of the transaction and the amount of equity being issued to ONR. EGC management then reiterated that EGC’s non-binding term sheet with ONR did not prohibit EGC from further discussions with Party B. It was the consensus of the EGC board of directors that EGC’s management should continue to pursue a transaction with Party B on a parallel basis with the Proposed ONR Transaction.
Later on May 17, 2018, representatives of EGC (including Mr. Brooks) and Intrepid had a call with Party B’s chief operating officer and chief financial officer to discuss Party B’s May 15, 2018 proposal. The Party B representatives indicated that, through Party B’s involvement in the trial divesture process for
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EGC’s western GoM assets earlier that year, it had already completed significant diligence and therefore the Party B representatives were confident they could move forward on an expedited basis. Mr. Brooks forwarded Party B’s expression of interest to the EGC board of directors on May 18, 2018, along with a summary of his call with Party B’s representatives.
Also on May 17, 2018, Mr. Brooks and representatives from Intrepid called Mr. Sanders and certain representatives from Houlihan, and asked for a more detailed proposal with a financing plan. They noted that EGC was continuing to actively pursue other strategic opportunities, some of which were progressing very quickly.
On May 18, 2018, prior to a scheduled call between Mr. Hanna and Mr. Cox, Mr. Sanders sent Mr. Hanna an email that described the issues that Cox believed were hindering the progress of a transaction between EGC and Cox. These points were primarily focused on the flow of due diligence information and Cox’s perception that EGC’s management was spending time finalizing the Proposed ONR Transaction, that, in Cox’s view, presented significant execution risk (presumably in comparison with Cox’s proposed transaction) and was generally inferior to the transaction proposed by Cox. The communication went on to re-confirm the May 1 Cox Proposal, clarifying that Cox’s proposed 15% premium would apply to EGC’s current stock price on a “rolling basis,” which EGC understood to mean that Cox’s proposed acquisition price would increase or decrease until signing of a definitive merger agreement as EGC’s stock price increased or decreased, so that a 15% premium would be in effect at signing.
Mr. Hanna promptly forwarded this communication to Mr. Brooks. Mr. Hanna then discussed the email with Mr. Cox by phone. Both men agreed that they should maintain open and direct lines of communication between Cox and EGC so that progress could be made in Cox’s diligence and in the parties’ discussions. Mr. Hanna again urged Mr. Cox to provide a more comprehensive proposal with specific transaction terms for consideration by EGC management and the EGC board of directors. They then discussed the details of Cox’s proposal, particularly the level of the proposed merger consideration. Mr. Hanna noted that Cox should be able to take advantage of synergies and execute considerable cost reductions in an acquisition of EGC, and he encouraged Mr. Cox to take these factors into account and to increase Cox’s proposed merger consideration by a meaningful amount.
On May 24, 2018, Party B sent an updated proposal to EGC, reaffirming the terms of its prior proposal, and including certain materials regarding Party B’s operational and financial ability to execute an ARO transfer transaction. On the same day, EGC and Party B executed a confidentiality agreement, and on May 29, 2018, EGC granted Party B electronic data room access.
Also on May 24, 2018, representatives from Cox, EGC and Intrepid participated in a due diligence meeting at EGC’s offices. One week later, on May 31, 2018, Mr. Sanders emailed Mr. Brooks another letter reconfirming Cox’s interest in pursuing a transaction with EGC on the terms set forth in the May 1 Cox Proposal, including at a 15% premium to EGC’s current stock price (as of May 31, 2018, this implied proposed merger consideration of approximately $8.15 per share). On that same day, a representative from Intrepid called a representative at Houlihan to discuss process and timing. He urged Cox to submit a more comprehensive proposal, ideally a fully drafted merger agreement, and a detailed financing plan, prior to the scheduled June 7 meeting of the EGC board of directors. He noted that those actions were necessary if Cox was to remain competitive with EGC’s other strategic alternatives and meet the EGC board of directors’ timeline.
On May 25, 2018, Mr. Brooks updated the EGC board of directors on the Proposed ONR Transaction. He reported that ONR and EGC were actively engaging to finalize the definitive documentation, and that EGC had a meeting scheduled to discuss key business issues on May 30, 2018, with ONR and Latham. Mr. Brooks also forwarded the May 24, 2018 proposal received from Party B to the EGC board of directors.
On June 5, 2018, the Houlihan and Intrepid representatives spoke again regarding the potential transation between Cox and EGC. During that call, Intrepid communicated to Houlihan that time was of the essence and that EGC’s current thinking was that it was very likely that Friday, June 15 was the date that the EGC Board would choose which transaction to pursue, with definitive documents executed either that day or over the weekend followed by a public announcement no later than Monday, June 18.
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Also on June 5, 2018, representatives from Party B, EGC and Intrepid met at EGC to discuss Party B’s May 24, 2018 proposal in more detail. During the course of those discussions, Party B indicated that its intent was to structure the Proposed Party B Transaction so that no EGC stockholder vote would be required under NASDAQ’s stockholder approval rules. Therefore, Party B clarified that it was proposing to receive (i) 19.99% of the shares of EGC common stock issued and outstanding immediately prior to closing and (ii) warrants with a strike price greater than EGC common stock’s fair market value that would be excluded under NASDAQ’s stockholder approval guidelines. Taking these qualifying warrants into account, Party B would have pro forma economic upside exposure equivalent to 25% of EGC common stock. After that meeting, Ms. Marguerite Woung-Chapman, EGC’s senior vice president and general counsel, sent Party B drafts of key definitive documents for its review.
Throughout May and early June 2018 (including the week of June 11, 2018), EGC management and its legal and financial advisors continued to engage in negotiations with ONR and Latham, including several in-person negotiations, and exchanged several definitive document drafts. Near the end of May 2018, the outstanding key business issues primarily consisted of:

understanding and agreeing on ONR’s post-closing structure and establishing the appropriate anti-leakage controls, to help ensure that EGC would have no successor liability for the transferred ARO, while still permitting ONR to operating the buying entity as an independent, financeable stand-alone enterprise;

working through a potential unwind structure in the event BOEM and BSEE did not approve both the property transfers and the replacements of surety bonds within a reasonable period of time after closing; and

continuing to work through issues related to replacement bonding, including whether ONR would need to satisfy any increased surety bond requirements imposed by applicable counterparties.
On June 6, 2018, Sidley sent the ONR working team a revised draft of the plugging and abandonment services agreement, as well as a revised draft of the second lien note agreement. In response to those distributions, a representative of one of ONR’s affiliates sent an email to the EGC and ONR working teams late that night, expressing his concern that the transaction documents were no longer consistent with the non-binding term sheet for the Proposed ONR Transaction. He stated in the email that ONR would terminate the term sheet if acceptable definitive documents were not signed within two days.
On June 7, 2018, Mr. Brooks called the ONR representative to discuss ONR’s concerns. They agreed that the parties and their respective advisors would meet the next day. Accordingly, on June 8, 2018, EGC and ONR, together with Sidley and Latham, met at EGC’s offices to discuss the open issues, primarily focused on the plugging and abandonment services agreement. At that meeting, ONR also indicated that it would be willing to consider a structure in which its 35% pro forma equity position consisted of 19.99% of the outstanding EGC common stock, with the remainder of the 35% exposure to upside composed of warrants that would not be counted in determining whether a stockholder vote is required under NASDAQ’s stockholder approval guidelines. At the conclusion of that meeting, several issues still remained open between EGC and ONR.
On June 7, 2018, Mr. Sanders emailed Mr. Brooks a letter reconfirming Cox’s interest in pursuing a transaction with EGC on the terms set forth in the May 1 Cox Proposal and setting forth certain final diligence items that Cox needed resolved. The June 7 letter included an attached draft letter agreement and term sheet, setting forth Cox’s proposed terms for the transaction. Cox’s draft letter agreement included a request for exclusivity and did not include Cox’s proposal on a definitive amount of merger consideration or termination fee. Shortly after Mr. Sanders sent this letter to Mr. Brooks, Mr. Sanders forwarded the letter to Mr. Hanna and Mr. Cox. The two Cox representatives then had a call with Mr. Hanna to discuss this updated proposal, including the draft letter agreement and term sheet. Mr. Hanna noted that he was encouraged by the progress, but reiterated to Mr. Cox and Mr. Sanders that the EGC board of directors expected to see upward movement in the merger consideration and wanted more detail around Cox’s financing plan. Mr. Hanna explained that certainty of closing was very important to the EGC board of directors and that EGC’s directors were concerned about the lack of visibility into Cox’s financing, particularly in light of the fact that Cox’s financial statements show Cox’s liquidity to be a small percentage
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of the total merger consideration. Mr. Sanders and Mr. Cox reminded Mr. Hanna that Cox was working diligently with Houlihan and that it was their view that — given Cox’s lack of leverage and strong capital base — financing would not be a hindrance to closing the transaction.
On June 7, 2018, the EGC board of directors held a special meeting, which also included certain members of EGC senior management and representatives from Intrepid and Sidley. EGC management updated the board on the progress being made with each of Cox, ONR and Party B in their respective negotiations, acknowledged they were each likely exclusive of the other, and discussed the risks associated with each transaction (including certainty of closing and relative complexity), as well as the stockholder vote required for each transaction (if any). During the course of that meeting, the directors discussed and considered a net asset value analysis of EGC’s stand-alone plan (that is, without giving effect to any of the proposed strategic transactions) that had been prepared by Intrepid based on assumptions provided by EGC’s management and to reflect an aggressive pricing structure to reflect an optimistic sell-side perspective. That net asset value analysis, which was prepared solely for this purpose and not as a valuation used by Intrepid for any other purpose, suggested a stand-alone value of EGC of approximately $9.25 per share. The EGC board of directors acknowledged the challenge — given the financial analyses presented to the board for consideration — of executing a successful capital raise after closing the Proposed ONR Transaction or Proposed Party B Transaction. The board also acknowledged that such a financing would be necessary for EGC to continue to succeed on a stand-alone basis. After much discussion, the EGC board of directors authorized EGC management to respond to the letter sent by Cox earlier that day by making a counterproposal to Cox of  $9.25 per fully diluted share and a termination fee equal to 3% of the total equity value implied by the transaction. Furthermore, the EGC board of directors encouraged management, Intrepid and Sidley to continue pursuing all strategic paths.
After the meeting, Mr. Brooks sent Mr. Sanders an email with a short letter responding to Cox’s letter from earlier that day. The letter stated that because of EGC’s continued pursuit of certain strategic alternatives, including the previously announced Proposed ONR Transaction, as well as the advanced stage of the negotiations and documentation of the Proposed ONR Transaction, EGC would be unwilling to agree to proceed exclusively with Cox without Cox agreeing to the following:

merger consideration of  $9.25 per share in cash;

additional merger consideration in the form of a contingent value right that would potentially increase the per share consideration by $0.75 per share, based on achieving certain oil price thresholds;

a termination fee equal to 3% of the total equity value implied by the transaction (approximately $9,800,000), payable under customary circumstances relating to any EGC change of recommendation or acceptance of a superior proposal;

execution of definitive documentation by June 15, 2018; and

a credible financing plan.
On the morning of June 8, 2018, representatives of Cox, EGC and Intrepid participated in a previously scheduled diligence meeting. At that meeting, they addressed the open diligence items noted in Cox’s June 7 letter. As that meeting was wrapping up, EGC instructed Sidley to start drafting a merger agreement for distribution to Cox and its counsel.
Also on June 8, 2018, Intrepid called Party B’s chief financial officer and chief operating officer to inform them that the EGC board of directors was supportive of EGC’s continued discussions and negotiations with Party B, and to inform them that EGC wanted to sign and announce a transaction by the end of the following week. The Party B representatives indicated that they were committed to working with EGC to meet the EGC board of directors’ timeline.
Later that day, Mr. Sanders emailed a letter to Mr. Brooks, reflecting Cox’s counterproposal to EGC’s June 7, 2018 letter. Cox’s revised proposal provided for:

merger consideration of  $9.00 per share in cash;
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additional merger consideration in the form of a contingent value right based on oil price variability (essentially the amount would increase if oil was over $72.00 a barrel, and would decrease if it dipped below $61.00 a barrel, and the maximum amount payable by Cox would be $1.00 per share);

a termination fee equal to 2.5% of the total equity value implied by the transaction (approximately $7,950,000), payable under the circumstances noted in EGC’s proposal; and

signing definitive documents by June 15, 2018.
Mr. Brooks and Mr. Sanders had a call on June 9, 2018 to discuss these proposals and counterproposals. Mr. Brooks impressed upon Mr. Sanders that EGC and the EGC board of directors needed to understand Cox’s financing plan in order to get comfortable, and that the non-contingent portion of the merger consideration needed to be higher and Cox agreed to $9.10 per share in cash. Later that morning, Mr. Brooks and Mr. Sanders had further discussions on valuation, and Mr. Sanders proposed to increase the merger consideration to $9.10 per share, plus the contingent value right discussed in Cox’s June 8 letter, subject to EGC’s agreement to the transaction fee as proposed by Cox on June 8. Mr. Sanders reiterated that Cox’s financing plan was in process and it did not anticipate any hindrance to obtaining financing given its strong financial position.
Also on June 9, 2018, representatives of Sidley and Locke Lord LLP (“Locke Lord”), Cox’s outside counsel, had an introductory call to generally discuss transaction structure and the draft merger agreement that Sidley planned to send the following day. In addition to general introductions and logistics, the parties discussed the contingent value right component of the proposed transaction and how that might be structured. The Locke Lord representatives told Sidley that it was their understanding from their client that Cox and EGC would ultimately agree to a fixed cash per share number, without any additional contingent value right. The Sidley and Locke Lord representatives agreed that the contingent value right would create securities law and derivatives law issues that would need to be addressed. Sidley also inquired as to the status of Cox’s financing efforts, including whether Cox would have fully committed financing in place at signing. Locke Lord replied that, while the transaction would not be subject to any financing contingency, Cox would not have fully committed financing in place at signing, in part because Cox had not yet decided the optimal equity-debt capital structure for the transaction.
On the afternoon of Sunday, June 10, 2018, Sidley delivered an initial draft of the merger agreement to Locke Lord. The Sidley draft contemplated that Cox would have fully committed financing in place at signing. Mr. Brooks promptly reported these counteroffers to Mr. Hanna, Intrepid and Sidley.
On the evening of June 11, 2018, Sidley circulated to the ONR working team a term sheet that described a proposed clawback mechanism for addressing the situation where BOEM did not approve a certain level of the proposed asset transfers within six months after the closing of the Proposed ONR Transaction. Shortly after that distribution, Ms. Woung-Chapman circulated the same term sheet to the Party B working team, modified to reflect the differences between the two proposed transactions.
During the week of June 11, 2018, the EGC working team and the Party B working team exchanged drafts on several of the key definitive document drafts and had several calls to discuss those drafts, including a call to discuss open items on the purchase agreement shortly before the scheduled June 15, 2018 meeting of the EGC board of directors. As a result of those document exchanges and negotiations, significant progress was made toward finalizing documentation with Party B.
Locke Lord sent Sidley a revised draft of the Cox merger agreement on June 12, 2018, and Sidley immediately distributed the draft to EGC’s management team. Locke Lord’s revised draft removed all references to committed financing but kept the representation in the merger agreement that Cox will have sufficient funds to pay the merger consideration at closing. On June 13, 2018, Mr. Hanna, Mr. Sanders and Mr. Cox discussed certain key open issues with regard to the merger and its documentation, primarily related to Cox’s financing plan and the merger consideration. Mr. Hanna encouraged Mr. Sanders and Mr. Cox to increase the fixed merger consideration in lieu of offering the contingent value right, due to the complication and uncertainty created by that feature, and reiterated the need to see a cohesive plan regarding Cox’s financing of the transaction. With respect to the financing issues, Mr. Sanders reiterated his view that financing would not be a hindrance, given Cox’s robust financial strength.
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On June 12, 2018, EGC and ONR, together with Sidley and Latham, met in EGC’s office to discuss the second lien note agreement and other ancillary documents for the Proposed ONR Transaction. On June 13, 2018, EGC and ONR, together with Sidley and Latham, re-convened in EGC’s office to discuss the ONR purchase and sale agreement. During that meeting, ONR informed EGC that the current post-closing structure of the ONR affiliate assuming the ARO liability would not be financeable and had to be changed to permit ONR to obtain the financing needed to operate that entity on a stand-alone basis post-closing. To that end, ONR indicated that EGC’s non-core assets should be held by Northstar instead of a separate entity that was insulated from Northstar’s debt and other liabilities. EGC indicated that it was willing to discuss potential solutions, but noted internally that these changes — which impacted certain structural components in the transaction documentation, including the anti-leakage protections — made it unlikely that the Proposed ONR Transaction would be in executable form by the end of that week.
On June 14, 2018, Latham distributed to the EGC working team revised drafts of the purchase and sale agreement and the plugging and abandonment services agreement.
Sidley sent a revised draft of the Cox merger agreement to Locke Lord early in the morning of June 14, 2018, reflecting the EGC management team’s response to the issues raised in Locke Lord’s initial response draft. Sidley’s draft reserved comment on the financing provisions in the merger agreement.
Later in the day on June 14, 2018, Mr. Sanders stated by email that Cox would not obtain financing commitments at signing. To provide EGC more comfort regarding the closing risk, he offered to have Cox’s holding company enter into the merger agreement. Also on June 14, 2018, through communications between Sidley and Locke Lord, EGC became aware that Cox’s proposed merger consideration of  $9.10 per share, plus a contingent value right, had been calculated based only on EGC’s currently outstanding shares when calculating the proposed merger consideration and did not include the settlement of EGC RSUs. This misunderstanding widened the gap between the parties’ relative positions on valuation, as it effectively dropped Cox’s fixed price per share (excluding the contingent value right) to approximately $8.60 per share.
During the morning of June 15, 2018, Sidley and Locke Lord discussed the contingent value right, and Sidley indicated that they were concerned that the securities and derivatives legal requirements would prevent the parties from providing any sort of contingent value right to all of EGC’s stockholders, particularly non-high net worth individuals. Locke Lord acknowledged that the contingent value right was problematic, as proposed. Later that morning, Locke Lord sent Sidley a revised draft of the merger agreement, and Sidley immediately distributed the draft to EGC’s management team. Sidley called Locke Lord immediately prior to the scheduled meeting of the EGC board of directors on the afternoon of June 15, 2018 to discuss the remaining open items in the merger agreement, primarily related to:

EGC’s remedies in the event of a termination of the merger agreement due to Cox’s breach (this became a concern for EGC and its counsel once Cox made clear that it would not seek to have committed in financing in place at signing of the merger agreement, which in turn made EGC less comfortable with accepting specific performance as its only remedy in such a situation);

instances in which Cox would be entitled to a termination payment from EGC;

the deletion of covenants protective to EGC’s employees; and

some relatively minor points on EGC’s representations and warranties.
Also, prior to the June 15 meeting of the EGC board of directors, Mr. Hanna, Mr. Brooks, Mr. Cox and Mr. Sanders discussed Cox’s proposed merger consideration, in light of Cox’s misunderstanding as to the total number of shares (including EGC RSUs) to receive consideration and the complications presented by the contingent value right. During that discussion, Mr. Sanders proposed a fixed merger consideration of $9.10 per share, payable to all outstanding shares and all settled EGC RSUs, and that they would proceed without the contingent value right.
In the afternoon of June 15, 2018, the EGC board of directors held a special meeting, which also included certain members of EGC senior management and representatives from Intrepid and Sidley. At this meeting, Sidley gave a presentation to the board regarding its fiduciary duties in connection with its consideration of the proposed Cox merger, Proposed ONR Transaction and Proposed Party B Transaction. EGC management then summarized for the directors the status of each of the three strategic transactions.
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EGC management noted that the post-closing structural changes recently proposed by ONR would likely require further negotiations (including among the various entities within the ONR corporate family) in order to reach an agreeable solution. They noted that documentation with Party B had progressed relatively quickly and that EGC and Party B could reach executable documents in a matter of days. With respect to Cox, EGC management walked the EGC board of directors through progress made on the merger agreement and the outstanding issues. These issues included the recent communication from Cox regarding its financing and the position EGC was taking in response that it should be able to pursue actual damages in the event of a Cox breach, in addition to specific performance. Intrepid then discussed with the EGC board of directors the financing risks associated with each of the three transactions. With respect to the Proposed ONR Transaction and the Proposed Party B Transaction, Intrepid indicated that there would need to be successful intercreditor negotiations with EGC’s first lien lenders between signing and closing, and EGC would need external financing after the closing of either of those transactions. With respect to the merger, Intrepid stated that Cox would likely need to obtain external financing to pay the total merger consideration.
At the request of the EGC board of directors, Sidley explained how the deal protection provisions in the merger agreement worked. The EGC board of directors discussed the three transactions with EGC management, Intrepid and Sidley. The EGC board of directors ultimately concurred that the merger appeared to have the highest likelihood for success with the lowest long-term business risk. The EGC board of directors then directed EGC management to prioritize its negotiations with Cox over the negotiations with ONR and Party B.
During this board meeting, a Sidley representative stepped out to take a call with representatives from Locke Lord. Locke Lord had discussed the remedies issue with Cox and Cox had indicated that it would be willing to permit EGC to seek actual damages in the event of a Cox breach leading to a failure to close up to $7,500,000, which was their approximation of the amount of the termination fee. The Sidley representative responded that the termination fee was not the appropriate analogy to a damages cap, since a termination fee is typically not payable in situations where a party is at fault. He indicated that he would pass Cox’s proposal on to the EGC board of directors, but advised the Locke Lord representatives that the cap was too low. The Sidley representative returned to the meeting after that call and updated the participants on this conversation.
During the morning of June 16, 2018, Mr. Brooks and Mr. Hanna had a discussion with Mr. Sanders and Mr. Cox regarding EGC’s remedies in the event of a termination of the merger agreement due to Cox’s breach. The EGC representatives noted that the proposed $7,500,000 cap on EGC’s actual damages in that situation was not acceptable, and that the EGC board of directors required the damages amount to be meaningful. In response, the Cox representatives reiterated their position that specific performance should be EGC’s sole remedy, but that they would also be comfortable with the $7,500,000 cap. The parties remained at an impasse over this issue. Sidley and Locke Lord discussed the same issue, and Sidley communicated to Locke Lord the position expressed by Mr. Hanna and Mr. Brooks to the Cox representatives.
Later in the day on Saturday, June 16, 2018, Mr. Brooks, Mr. Hanna, Mr. Cox and Mr. Sanders reached an agreement on EGC’s remedies in the event of a Cox breach of the merger agreement. EGC’s understanding of that agreement was that EGC would have a right of specific performance and a right to pursue up to $35,000,000 in actual damages. During the evening of June 16, 2018, Sidley distributed a revised draft of the merger agreement to Locke Lord, reflecting EGC management’s and the EGC board of directors’ responses to the open issues. During the afternoon of June 17, 2018, counsel for EGC and Cox participated in a phone call to discuss final outstanding issues on the merger agreement. Locke Lord then circulated a further revised draft of the merger agreement later that afternoon, prior to the scheduled meeting of the EGC board of directors. The primary open issues presented by Locke Lord’s draft were (i) movement of the proposed outside date from October 31, 2018 to November 15, 2018, (ii) changing the actual damages cap from $35,000,000 to $30,000,000 and (iii) modification to certain provisions protective to employees, officers and directors of EGC regarding the waiver and release of claims of liability and obligation arising from the merger agreement or merger.
Early in the evening of Sunday, June 17, 2018, the EGC board of directors held a telephonic board meeting, which also included certain members of EGC’s senior management team and representatives from
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Intrepid and Sidley. EGC management updated the EGC board of directors on the status of the merger agreement and the related ancillary documents. The management team indicated that all material issues had been resolved, including the level of merger consideration, which was set at $9.10 per share, with the sole exception of the amount of the damages cap in the event of a termination of the merger agreement due to a breach by Cox. A representative from Sidley reviewed with the EGC board of directors the terms of the merger agreement that had changed since the June 15th meeting of the EGC board of directors. Mr. Brooks then indicated to the EGC board of directors that he had agreed, during the June 17 meeting, to a $35,000,000 cap with Mr. Sanders, in exchange for moving the outside date out to November 15, 2018. This was acceptable to the EGC board of directors. Intrepid then delivered to the EGC board of directors its oral opinion, confirmed by its delivery of a written opinion dated as of the same date, that, as of the date of the opinion, and based upon and subject to the assumptions, procedures, factors, qualifications, limitations and other matters set forth in Intrepid’s written opinion, the merger consideration to be received in the merger is fair, from a financial point of view, to the EGC stockholders (other than stockholders who are affiliates of Cox). Following these discussions, the EGC board of directors adopted the merger agreement and determined that the merger agreement and the transactions contemplated thereby, including the merger, were advisable and in the best interests of EGC and its stockholders and the members present, representing all of the directors of EGC, unanimously voted to approve the merger agreement and the transactions contemplated thereby.
After the conclusion of the June 17 meeting of the EGC board of directors, Mr. Brooks and Mr. Sanders had two discussions, one with counsel for both parties participating, regarding the treatment of EGC’s severance plan and setting up a special retention pool for EGC’s non-executive employees, to encourage retention and business preservation between signing and closing. In the late evening of June 17, 2018, Sidley circulated a proposed execution version of the merger agreement to Locke Lord, reflecting the $35,000,000 actual damages cap, and accepting the proposed November 15, 2018 outside date — as agreed between Mr. Sanders and Mr. Brooks earlier that day — and reinserting the clarifying language Locke Lord previously struck regarding EGC’s employees, officers and directors for the waiver and release of claims of liability and obligation arising from the merger agreement or merger, as stated above.
Locke Lord informed Sidley in the early morning of June 18, 2018 that it considered the merger agreement final.
During the night of June 17, 2018 and into the early morning of June 18, 2018, EGC and Cox senior management and their respective legal counsel resolved the remaining open items and finalized the disclosure schedules to the merger agreement. At that point, but prior to executing the merger agreement, EGC sent a letter to ONR, terminating the ONR Term Sheet. As a courtesy, Mr. Brooks also called representatives of both ONR and Party B to inform them that EGC would be announcing a transaction shortly, but did not identify the transaction. Shortly after those calls, EGC and Cox, advised by their respective legal counsel, executed the merger agreement.
On June 18, 2018, prior to market open, EGC issued a press release announcing the merger and hosted a conference call for the investment community to explain the specific details of the proposed merger.
EGC’s Reasons for the Merger; Recommendation of the EGC Board of Directors
In adopting and approving the merger agreement, the merger and the other transactions contemplated by the merger agreement, and recommending the adoption of the merger agreement by EGC stockholders, the EGC board of directors consulted with EGC’s management, as well as with EGC’s legal and financial advisors, and considered a number of factors. The principal factors that the EGC board of directors viewed as important are:

the merger consideration represented a premium of:

approximately 21.5% to the $7.49 per share closing price of EGC common stock on June 15, 2018, the last trading day before the public announcement of the merger agreement;

approximately 22.5% to the $7.43 per share volume-weighted average trading price of EGC common stock for the 30 trading days ended June 15, 2018, the last trading day before the public announcement of the merger agreement; and
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approximately 41.7% to the $6.42 per share volume-weighted average trading price of EGC common stock for the 60 trading days ended June 15, 2018, the last trading day before the public announcement of the merger agreement;

the fact that 100% of the merger consideration consists of cash to be paid in full at closing, which provides certainty of value and immediate liquidity to EGC stockholders while avoiding potential long-term business risk;

the requirement that the merger is conditioned on the approval by the holders of at least two-thirds of the issued and outstanding shares of EGC common stock;

the fact that EGC stockholders who do not vote in favor of the merger are entitled to appraisal rights for their shares for EGC common stock, subject to complying with the procedures described in “The Merger — Appraisal Rights” beginning on page 63;

the fact that the merger is not conditioned upon Cox’s obtaining financing, and that Cox’s obligations under the merger agreement are enforceable by specific performance;

the fact that the merger is not conditioned upon obtaining the approval of Cox’s stockholders;

the fact that the merger agreement does not preclude a third party from making an unsolicited proposal for a competing transaction with EGC and, under certain circumstances more fully described in the sections titled “The Merger Agreement — No Solicitation of Competing Proposals” beginning on page 71 and “The Merger Agreement — Change in Board Recommendation” beginning on page 72, EGC may furnish non-public information to and enter into discussions with such third party regarding the competing transaction and the EGC board of directors may withdraw or modify its recommendations to EGC stockholders regarding the merger in response to an unsolicited proposal for a competing transaction;

the fact that EGC had retained Morgan Stanley in the first quarter of 2017 to assist EGC with a strategic review of a variety of alternatives — including mergers, a stand-alone plan and capital infusion options — and that, while EGC had a reasonable level of interest from potential counterparties, no executable combination resulted from the nine-month review process;

the fact that, following EGC’s May 10, 2018 announcement of the non-binding term sheet for the Proposed ONR Transaction, only two additional potential counterparties (Cox and Party B) approached EGC to discuss strategic transactions for EGC to pursue instead of the Proposed ONR Transaction, and that only Cox’s proposal contemplated an acquisition of EGC’s entire business;

the $9.10 per share merger consideration represented a premium of approximately 38.9% over Cox’s initial proposal of  $6.55 per share, and the conclusion reached by the EGC board of directors, after discussions with EGC’s management and financial advisors and negotiations with Cox, that the merger consideration of  $9.10 was likely the highest price per share that Cox was willing to pay and that the combination of public disclosure of the merger consideration and the ability to respond to unsolicited proposals for competing transactions (as further described in the sections titled “The Merger Agreement — No Solicitation of Competing Proposals” beginning on page 71 and “The Merger Agreement — Change in Board Recommendation” beginning on page 72) would likely result in a sale of EGC at the highest price per share that was reasonably attainable;

the expectation that, based upon advice from its regulatory advisors, the merger will obtain all necessary regulatory approvals without unacceptable conditions;

the operational and financial challenges that have been experienced by EGC since its emergence from bankruptcy, including those described in “Special Note Regarding Forward-Looking Statements — Forward-Looking Statements Relating to EGC’s Financial and Operating Performance” beginning on page 18;

the fact that, if EGC continues as a stand-alone company, it would need external financing in 2019 in order to finance its capital expenditures and cash shortfalls from operations;
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the expectation that, even though the Proposed ONR Transaction and the Proposed Party B Transaction would improve EGC’s balance sheet by removing approximately $321 million of plugging and abandonment liability and therefore improve EGC’s capability to finance its capital program and operations, obtaining financing on acceptable terms would still have been challenging;

the concern that, as the definitive documentation for the Proposed ONR Transaction and the Proposed Party B Transaction progressed:

the plugging and abandonment liabilities to be transferred in those proposed transactions would not be transferred until BOEM approved the assignments of the associated oil and gas assets;

the third party consents required to replace certain bonds may not have been obtained, resulting in the failure of the proposed transaction to close; and

the negotiation between EGC’s First Lien Exit Facility lenders and the proposed counterparty could fail to produce a mutually acceptable intercreditor agreement, resulting in the failure of the proposed transaction to close; and

the fact that, on June 17, 2018, Intrepid delivered to the EGC board of directors its oral opinion, confirmed by its delivery of a written opinion dated as of the same date, that, as of the date thereof, and based upon and subject to the assumptions, procedures, factors, qualifications, limitations and other matters set forth in Intrepid’s written opinion, the merger consideration is fair, from a financial point of view, to EGC’s stockholders (other than stockholders who are affiliates of Cox). For additional information regarding the opinion of Intrepid, see the section titled “The Merger — Opinion of EGC’s Financial Advisor” beginning on page 44. The full text of the written opinion of Intrepid is attached as Annex B to this proxy statement.
In addition to considering the factors above, the EGC board of directors also considered the following factors:

the recommendation of the merger by EGC management;

the EGC board of directors’ knowledge of EGC’s business, financial condition, results of operations and prospects, as well as Cox’s business, financial condition, results of operation and prospects, taking into account the results of EGC’s due diligence review of Cox;

the review by the EGC board of directors, in consultation with EGC’s management and advisors, of the structure of the merger and the terms and conditions of the merger agreement; and

the likelihood of consummating the merger on the anticipated schedule.
The EGC board of directors weighed the foregoing against a number of potentially negative factors, including:

the restrictions on the conduct of EGC’s business during the period between the execution of the merger agreement and the completion of the merger as set forth in the merger agreement;

that the receipt of merger consideration by EGC stockholders will be fully taxable;

that the merger consideration represents a 57.0% discount to EGC’s 52-week high trading price, which occurred on July 28, 2017;

the costs associated with the completion of the merger, including management’s time and energy and potential opportunity cost;

the fact that, if a transaction of the type being negotiated with ONR and Party B were to be successfully completed and EGC is thereafter able to obtain sufficient financing for its capital budget and operating budget, then EGC stockholders would be able to continue to participate in any improvement in EGC’s financial position and operating results;
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the fact that, even though the financial statements provided by Cox to EGC show sufficient net worth, Cox’s liquid assets would not be sufficient to pay the entirety of the merger consideration;

the fact that Cox had not obtained financing commitments to finance the payment of the merger consideration at the time of execution of the merger agreement;

the fact that Cox, as a private company with no publicly-traded securities, has less access to the capital markets than a publicly-traded counterparty likely would have;

the fact that, if Cox fails to consummate the merger in accordance the merger agreement, either as a result of the failure to obtain financing or otherwise, EGC would be entitled to seek specific performance but its right to recover monetary damages would be subject to a $35,000,000 cap, even though EGC’s actual damages could be higher;

the risks and contingencies relating to the announcement and pendency of the merger (including the likelihood of litigation brought by or on behalf of EGC stockholders challenging the merger and the other transactions contemplated by the merger agreement) and the risks and costs to EGC if the closing of the merger is not accomplished in a timely manner or if the merger does not close at all, including the diversion of management and employee attention, potential employee attrition, the impact on EGC’s relationships with third parties and the effect termination of the merger agreement may have on the trading price of EGC’s common stock and EGC’s operating results;

that the interests of EGC’s executive officers and directors with respect to the merger, apart from their interests as EGC stockholders may be different from, or in addition to, the interests of EGC stockholders generally, as more fully described under “The Merger — Interests of EGC Directors and Executive Officers in the Merger” beginning on page 56;

the terms of the merger agreement relating to non-solicitation provisions and termination fees, and the potential that such provisions might deter alternative bidders that might be willing to submit a superior proposal to EGC;

that, under the terms of the merger agreement, EGC will be required to pay to Cox a termination fee of  $8,000,000 and to reimburse Cox for up to $2,000,000 of expenses if the merger agreement is terminated under certain circumstances (see “The Merger Agreement — Termination Fees and Expenses” beginning on page 79); and

that EGC’s representations and interim operating covenants are significantly more expansive and restrictive than Cox’s representations and interim operating covenants are, thereby giving Cox more flexibility between signing and closing of the merger agreement.
This discussion of the information and factors considered by the EGC board of directors is forward-looking in nature. This information should be read in light of the factors described or otherwise referred to in the section titled “Special Note Regarding Forward-Looking Statements” beginning on page 18.
This discussion of the information and factors considered by the EGC board of directors in reaching its conclusions and recommendation includes the principal factors considered by the board of directors, but is not intended to be exhaustive and may not include all of the factors considered by the EGC board of directors. In view of the wide variety of factors considered in connection with its evaluation of the merger and the other transactions contemplated by the merger agreement, and the complexity of these matters, the EGC board of directors did not find it useful and did not attempt to quantify, rank or assign any relative or specific weights to the various factors that it considered in reaching its determination to approve the merger and the other transactions contemplated by the merger agreement, and to make its recommendation to EGC stockholders. Rather, the EGC board of directors viewed its decisions as being based on the totality of the information presented to it and the factors it considered, including its discussions with, and questioning of, members of EGC’s management and outside legal and financial advisors. In addition, individual members of the EGC board of directors may have assigned different weights to different factors.
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Certain of EGC’s directors and executive officers may have financial interests in the merger that are different from, or in addition to, those of EGC stockholders generally. The EGC board of directors was aware of and considered these potential interests, among other matters, in evaluating the merger and in making its recommendation to EGC stockholders. For a discussion of these interests, see “The Merger — Interests of EGC Directors and Executive Officers in the Merger” beginning on page 56.
The EGC board of directors unanimously adopted and approved the merger agreement and determined that, on the terms and conditions set forth in the merger agreement, the merger agreement and the transactions contemplated thereby, including the merger, are advisable, fair to and in the best interests of EGC and its stockholders. The EGC board of directors therefore unanimously recommends that the EGC stockholders vote:

“FOR” the proposal to adopt the merger agreement;

“FOR” the proposal to approve, on an advisory (non-binding) basis, the compensation that may be paid or become payable to EGC’s named executive officers that is based on or otherwise relates to the proposed merger; and

“FOR” the proposal to approve the adjournment of the EGC special meeting, if necessary or appropriate, to permit further solicitation of proxies in favor of the proposal to adopt the merger agreement.
Opinion of EGC’s Financial Advisor
EGC engaged Intrepid to act as its financial advisor in connection with the merger. As part of that engagement, the EGC board of directors requested that Intrepid evaluate the fairness, from a financial point of view, of the merger consideration to be received in the merger by EGC stockholders (other than stockholders who are affiliates of Cox). On June 17, 2018, Intrepid delivered to the EGC board of directors its oral opinion, confirmed by its delivery of a written opinion dated as of the same date, that, as of the date thereof, and based upon and subject to the assumptions, procedures, factors, qualifications, limitations and other matters set forth in Intrepid’s written opinion, the merger consideration in the merger is fair, from a financial point of view, to EGC stockholders (other than stockholders who are affiliates of Cox).
The full text of Intrepid’s written opinion, dated June 17, 2018, which sets forth, among other things, assumptions made, procedures followed, matters considered, qualifications and limitations on the review undertaken by Intrepid, is attached as Annex B to this proxy statement and is incorporated by reference in this section.
Intrepid provided its opinion solely for the information and benefit of the EGC board of directors (in its capacity as such) in connection with its evaluation of the merger. The opinion does not address EGC’s underlying business decision to enter into the merger or the relative merits of the merger as compared with any other strategic alternative that may be available to EGC. The opinion is not intended to be and does not constitute a recommendation to any EGC stockholder as to how that stockholder should act or vote with respect to the merger or any other matter. In addition, the opinion is not rendered to or for the benefit of, and does not confer rights or remedies upon, any person other than the EGC board of directors (including any equity holders, creditors, bondholders or other constituencies of EGC or Cox). This summary is qualified in its entirety by reference to the full text of the opinion.
Intrepid’s opinion necessarily was based upon information made available to Intrepid as of June 17, 2018 and financial, economic, market and other conditions as they existed and could be evaluated by Intrepid on that date. Intrepid has no obligation to, and will not, update, revise or reaffirm its opinion based on subsequent developments. Intrepid’s opinion did not express any opinion as to the price at which the shares of EGC common stock or any other security of EGC will trade at any time.
In connection with rendering its opinion, Intrepid reviewed, among other things:

a draft of the merger agreement dated June 17, 2018;

certain publicly available information relating to EGC that Intrepid deemed relevant, including EGC’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017, EGC’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018 and certain Current Reports on Form 8-K, in each case as filed with or furnished to the SEC by EGC;
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the reported prices and the historical trading activity of EGC;

certain non-public historical and projected financial, reserves, liquidity and operating data and assumptions relating to EGC, as prepared and furnished to Intrepid by EGC management, including financial projections, covenants and metrics and related assumptions relating to EGC;

internal analysis of the merger prepared by EGC management; and

certain non-public financial and operating data relating to Cox, including financial statements, reserves report as of year-end 2017, and related assumptions prepared by EGC management and management of Cox.
Intrepid also conducted the following procedures:

held discussions with members of the senior management of EGC regarding their assessment of the strategic rationale for, and the potential benefits of, the merger and the past and current operations, current financial condition and financial projections of EGC with EGC management (including their views on the risks and uncertainties of achieving the projections set forth in the forecasts provided by EGC management);

compared financial metrics of certain historical transactions that Intrepid deemed relevant with financial metrics implied by the merger;

performed discounted cash flow analyses based on forecasts related to EGC and data provided by EGC management;

participated in discussions with certain stakeholders of EGC;

analyzed publicly available historical and current financial information, stock price data, and public consensus estimates with respect to certain public companies with operations and assets that Intrepid considered comparable to EGC; and

conducted such other studies and investigations, performed such other analyses and examinations, reviewed such other information and considered such other factors that Intrepid deemed appropriate for purposes of providing its opinion.
For purposes of its analysis and opinion, Intrepid assumed and relied upon the accuracy and completeness of all of the foregoing information and any other financial, accounting, legal, operational, reserves, tax or other information provided to, discussed with or reviewed by it, and Intrepid has not assumed any responsibility for independent verification of the accuracy or completeness of any such information. Intrepid further relied upon the assurances of EGC management that they were not aware of any facts that would make such information inaccurate, incomplete or misleading. With respect to financial forecasts and projections of EGC, Intrepid relied, with the consent of the EGC board of directors, upon the assurances of EGC’s management that those forecasts and projections had been reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of EGC’s management as to the future financial performance of EGC, under the assumptions reflected in those financial forecasts and projections. Intrepid expresses no view as to those financial forecasts or any judgments, estimates or assumptions on which they were based.
Intrepid further relied, at the direction of EGC management and the EGC board of directors, upon the assessments of EGC management as to (i) the potential impact on EGC of market and other trends and prospects for, and governmental, regulatory and legislative matters relating to or otherwise affecting, the oil and gas industry, including commodity pricing and supply and demand for oil and gas, (ii) the potential impact on the operations, results and prospect on EGC of the merger, and (iii) existing and future contracts and relationships, agreements and arrangements with third parties that are necessary or desirable for the operation of EGC. Intrepid did not undertake an independent analysis of any potential or actual litigation, regulatory action, possible unasserted claims or other contingent liabilities, to which EGC is or may be a party or is or may be subject. Intrepid also assumed that there were no material changes in the liabilities, financial condition, results of operations, business or prospectus of or relating to EGC since the date of the latest information relating to EGC made available to it. Intrepid did not conduct a physical inspection of the properties and facilities of EGC and did not make an independent evaluation or appraisal of the assets
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or liabilities of EGC, the potential realization of the value of EGC or the solvency or fair value of EGC or any of the potential parties to the merger under any state or federal laws relating to bankruptcy, insolvency or similar matters, nor was Intrepid furnished with any such evaluations or appraisals. Estimates of values of companies and assets do not purport to be appraisals or necessarily reflect the prices at which companies or assets may actual be sold. Because such estimates are inherently subject to uncertainty, Intrepid assumed no responsibility for their accuracy.
In rendering its opinion, Intrepid assumed, in all respects material to its analysis and with the consent of the EGC board of directors, that the representations and warranties of each party contained in the merger agreement are true and correct, that each party will perform all of the covenants and agreements required to be performed by it under the merger agreement and that the merger will be consummated on the terms described in the merger agreement, in each case in the draft form reviewed by Intrepid, without any waiver or modification of any material terms or conditions contained therein. Intrepid assumed that all governmental, regulatory or other consents, approvals or releases, and any financing, necessary for the consummation of the merger will be obtained without any material delay, limitation, restriction or condition that would have an adverse effect on the parties to the merger, their equity holders or the consummation of the merger or materially reduce the expected benefits of the merger to EGC. Intrepid assumed that the merger will be consummated in a manner that complies with all applicable federal, state and local statutes, rules and regulations. Intrepid assumed that EGC and the EGC board of directors have relied upon the advice of their counsel, independent accountants, reserve engineers and other advisors (other than Intrepid) as to all legal, financial reporting, reserves, tax, accounting and regulatory matters with respect to EGC, the merger agreement and the merger. Intrepid assumed that the final executed and delivered versions of all documents reviewed by it in draft form will conform in all material respects to the drafts reviewed by it.
Intrepid was not asked to pass upon, and expresses no opinion with respect to, any matter other than the fairness, from a financial point of view, of the merger consideration to be received in the merger by EGC stockholders (other than stockholders who are affiliates of Cox). Intrepid was not asked to, nor does it express any view on, and its opinion does not address, any other terms, conditions, aspects or implications of the merger or any agreements, arrangements or understandings entered into in connection therewith or otherwise, including the structure or timing of the merger and the covenants of EGC under the merger agreement. Intrepid’s opinion does not address any financing transactions associated with the merger. In addition, Intrepid does not express any view on, and its opinion does not address, the fairness (financial or otherwise) of the merger to any individual subsidiary of EGC or the creditors, bondholders or other constituencies of EGC (other than the EGC stockholders, as described in Intrepid’s opinion) or its subsidiaries, or the fairness (financial or otherwise) of the amount or nature of, or any other aspects relating to, the compensation to be paid to any officers, directors or employees or any parties to the merger, or any class of such persons, whether relative to the merger consideration or otherwise. Intrepid’s opinion does not address the relative merits of the merger as compared to any other transaction or business strategy in which EGC might engage or the merits of the underlying decision by EGC to engage in the merger.
Intrepid does not express any opinion as to equity securities or debt securities of EGC or Cox and the price, trading range or volume at which any securities will trade at any time. Intrepid’s opinion does not address whether Cox or Merger Sub has sufficient cash, available lines of credit or other sources of funds to enable it to consummate the merger. Intrepid’s opinion does not address accounting, legal, actuarial, regulatory, reserves or tax matters. Intrepid is not a legal, tax or bankruptcy advisor. Its opinion does not constitute a solvency opinion and does not address the solvency or financial condition of EGC or any of the potential parties to the merger. Intrepid’s opinion expressly disclaims any responsibility or liability relating to counterparty credit risk, and its opinion assumes that, for purposes of the opinion, each of EGC and the counterparties to the merger agreement (including Cox and Merger Sub) is and will continue to be a solvent going concern with a stable and sound financial condition.
Intrepid’s opinion was necessarily based upon business, market, economic, regulatory and other conditions as they exist on, and can be evaluated as of, the date of Intrepid’s opinion. Intrepid assumes no responsibility for updating, revising or reaffirming its opinion based on developments, circumstances or events occurring after the date of its opinion.
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In arriving at its opinion, Intrepid did not attribute any particular weight to any particular analysis or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Several analytical methodologies were employed by Intrepid in its analyses, and no one single method of analysis should be regarded as critical to the overall conclusion reached by Intrepid. Each analytical technique has inherent strengths and weaknesses, and the nature of the available information may further affect the value of particular techniques. Accordingly, Intrepid believes that its analyses must be considered as a whole and that selecting portions of its analyses and of the factors considered by it, without considering all analyses and all factors in their entirety, could create a misleading or incomplete view of the evaluation process underlying its opinion. The conclusion reached by Intrepid, therefore, is based on the application of Intrepid’s own experience and judgment to all analyses and factors considered by it, taken as a whole. Intrepid’s opinion was approved by the fairness opinion committee of Intrepid.
Summary of Material Financial Analyses
The following is a brief summary of the following material financial and comparative analyses that Intrepid presented to the EGC board of directors in connection with delivering its opinion on June 17, 2018:

Net Asset Value (“NAV”) Analysis;

Discounted Cash Flow Analysis;

Comparative Gulf of Mexico (“GoM”) Company Analysis;

Select Comparable GoM Transactions Analysis; and

Exploration and Production (“E&P”) Premium Paid Analysis.
In addition to the analyses described above, Intrepid also analyzed and reviewed working capital projections of EGC provided by EGC management. Certain of Intrepid’s analyses relied on key information provided by EGC management, including (i) forecasted production and cash flows for the upstream assets of EGC, (ii) lease operating expenses, general and administrative expenses, capital expenditures and other costs, (iii) plugging and abandonment expenditures, and (iv) commodity price assumptions as summarized in the table below (“NYMEX strip pricing”).
NYMEX Strip Pricing as of June 8, 2018 (Annual Averages)
2018E
2019E
2020E
2021E
2022E
2023E
2024E+
Oil ($/Bbl)
$ 65.13 $ 62.96 $ 59.96 $ 57.61 $ 55.88 $ 55.28 $ 55.28
Gas ($/Mcf)
$ 2.92 $ 2.77 $ 2.67 $ 2.65 $ 2.66 $ 2.81 $ 2.81
The following summary does not purport to be a complete description of the financial and comparative analyses performed by Intrepid, nor does the order of analyses described represent relative importance or weight given to those analyses by Intrepid. The preparation of a fairness opinion is a complex analytic process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. A fairness opinion is thus not susceptible to partial analysis or summary descriptions.
The financial and comparative analyses summarized below include information presented in tabular format. In order to fully understand the analyses performed by Intrepid, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial and comparative analyses performed by Intrepid. Considering the data set forth in the tables below without considering the full narrative description of the analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of the financial and comparative analyses performed by Intrepid. Except as otherwise noted, the following quantitative information is based on market data or conditions as they existed at the time of the delivery of the opinion, and is not necessarily indicative of current market conditions.
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Implied Valuation Analysis
Intrepid made an assessment of the range of implied total enterprise values of the following analyses to compare the merger consideration, based on Intrepid’s knowledge of the industry: (i) net asset value, (ii) discounted cash flows, (iii) precedent asset transactions, (iv) public trading comparables, and (v) premium paid analysis.
Implied Total Enterprise Value
($ in millions)
Low
High
Net Asset Value Analysis(1)
Strip 1P Present Value
$ 104 $ 172
Strip 2P Present Value
$ 232 $ 340
Discounted Cash Flows Analysis(2)
$ 193 $ 367
Precedent Asset Transactions Analysis(3)
2018E Production
$ 292 $ 465
Strip 1P Reserves
$ 260 $ 468
Trading Comparables Analysis(4)
2018E Production
$ 399 $ 532
Strip 1P Reserves
$ 416 $ 520
Enterprise Value/2018E EBITDA(5)
$ 355 $ 474
Premium Paid Analysis
$ 459 $ 484
(1)
Reserves, lease operating expenses, capital expenditures and plugging and abandonment (P&A) costs estimated by EGC management. Risking based on Society of Petroleum Evaluation Engineers 36th Annual Survey of Parameters Used in Property Evaluation (“36th Annual SPEE Survey”).
(2)
Discounted cash flow analysis reflects five-year cash flow model provided by EGC management.
(3)
Multiples are based on transactions post-2014 due to commodity price environment and market conditions.
(4)
Multiples based on Fieldwood Energy LLC trading metrics given asset profile.
(5)
Adds back estimated hedge losses in 2018 of approximately $47 million.
Net Asset Value Analysis
Intrepid calculated the implied valuation of EGC based on the present value of the future pre-tax cash flows expected to be generated from the estimated proved and probable reserves and resources of EGC’s upstream assets. In performing this analysis, Intrepid applied discount rates to unlevered free cash flows ranging from, in the case of proved developed producing reserves, 9% to 10%, in the case of proved developed non-producing reserves, 10% to 15%, in the case of proved undeveloped reserves, 15% to 20%, and in the case of probable reserves, 20% to 25%. The risk adjusted discount rate ranges were based on the 36th Annual SPEE Survey reserve category specifications assuming P50 and P90 probability categories.
Intrepid calculated estimates of EGC’s net asset values from proved and probable reserves by calculating the result of  (i) the present value of the cash flows generated by the estimated proved developed reserves, proved undeveloped reserves and probable reserves, minus (ii) the present value of future estimated effects of plugging and abandonment costs. The total implied proved reserves present value ranged from $104 million to $172 million, or $1.00/Boe to $1.66/Boe at NYMEX strip pricing. The total implied present value of proved and probable reserves ranged from $232 million to $340 million, or $1.48/Boe to $2.18/Boe at NYMEX strip pricing.
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Discounted Cash Flow Analysis
Intrepid performed a discounted cash flow analysis of EGC to calculate the estimated present value, as of June 8, 2018, of the cash flows EGC is projected to generate for each of the years in the five-year period beginning with the year ending December 31, 2018, based on projections prepared by EGC management.
Intrepid applied discount rates ranging from 11.6% to 13.6%, reflecting estimates of EGC’s weighted average cost of capital (“WACC”), which ranged from 100 basis points less than the average WACC of the GoM companies listed below under “Comparable GoM Company Analysis” (the “GoM Peers”) to 100 basis points greater than the average WACC of the GoM Peers. Using these discount rates, Intrepid discounted to present value, as of June 8, 2018 (i) estimates of EGC’s unlevered free cash flows for each of the years in the five-year period beginning with the year ending December 31, 2018, and (ii) a range of illustrative terminal values for EGC with EBITDA multiples ranging from 3.0x to 4.0x. Intrepid also calculated the present value of the free cash flow of EGC using a terminal EBITDA multiple of 3.50x and a discount rate of 12.6% less the PV-10 of the remaining plugging and abandonment obligations after the 5-year period and arrived at an implied valuation of  $276.4 million. For purposes of this analysis, “EBITDA” is calculated as total revenue less total operating expenses (including G&A expenses, severance and ad valorem taxes and other operating expenses).
Comparable GoM Company Analysis
Intrepid reviewed and compared certain financial information, ratios and market multiples of the following comparable companies operating in the GoM:

Talos Energy Inc. (“Talos”);

W&T Offshore Inc. (“W&T Offshore”); and

Fieldwood Energy LLC (“Fieldwood”).
These companies are referred to in this section as the “selected comparable companies.” Intrepid performed the comparable GoM company analysis based on data derived from public filings and disclosures for Talos and W&T Offshore and from publicly available disclosure statements for Fieldwood. Although none of the selected comparable companies is directly comparable to EGC, the companies included were selected because they are exploration and production companies with operations that, in Intrepid’s experience and professional judgment, for purposes of this analysis, may be considered similar to certain aspects of EGC’s asset profile, operations, financial profile, size, service profile, geographic exposure and end market exposure. No selected comparable company or group of companies is identical to EGC. Accordingly, Intrepid believes that purely quantitative analyses are not, in isolation, determinative in the context of the merger and that qualitative judgments concerning differences between the financial and operating characteristics and prospects of EGC and the selected comparable companies also are relevant.
Intrepid also calculated and compared various financial multiples and ratios based on information from public company filings and disclosures, publicly available disclosure statements and consensus analyst estimates. Enterprise values were calculated for the purpose of these multiples as adjusted for certain mergers or acquisitions as disclosed in public filings and publicly available disclosure statements. The multiples and ratios were calculated using applicable market data as of June 8, 2018.
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The companies included in the analysis and their relevant financial and operating metrics reviewed were as follows:
Total Enterprise Value to
EBITDAX(1)
Total Debt to
($ in millions)
Market
Capitalization
Adjusted
Total
Enterprise
Value
2018E
2019E
1P
SEC
PV10
P&A
PV10
2018E
EBITDAX
Proved
Reserves
($/Boe)
Most
Recent
Quarter
Production
($/Boepd)
Talos
$ 1,705 $ 2,284 3.9x NA 1.0x 4.8x 1.3x $ 4.86 $ 14,022
W&T Offshore
908 1,667 5.4x 5.0x 2.3x 8.7x 2.9x 11.78 24,064
Fieldwood
700 2,251 2.5x 2.8x 0.9x NA 1.9x 6.20 22,147
Mean
3.9x 3.9x 1.4x 6.7x 2.0x $ 7.61 $ 20,077
Median
3.9x 3.9x 1.0x 6.7x 1.9x 6.20 22,147
(1)
EBITDAX projections are derived from research publications. Each such research publication may define EBITDAX differently and may not provide the definition in that publication.
Select Comparable GoM Transaction Analysis
Intrepid evaluated certain financial information with respect to the following GoM Shelf precedent transactions, each of which was announced during the period between January 2014 and May 2018:
Headline Metrics
Price Adjusted Metrics(1)
Date
Buyer
Seller
Deal
Value
($MM)
Reserves/​
Production
(Years)
$/​
Proved
Boe
$/​
Daily
Boe
$/​
Proved
Boe
$/​
Daily
Boe
May 2018 Orinoco Natural Resources Energy XXI NA 4.0 NA NA NA NA
Jan. 2018 Orinoco Natural Resources
PetroQuest Energy
NA 2.2 NA NA NA NA
July 2017 Orinoco Natural Resources Northstar Offshore
Group
$ 13 NA NA 9,743 NA 11,144
July 2015
Undisclosed Buyer
Energy XXI 21 12.6 2.23 10,244 2.45 11,230
Sept. 2014
W&T Offshore
Undisclosed Seller
18 4.6 4.00 6,693 2.94 4,920
June 2014 Talos Stone Energy 200 3.7 15.44 21,053 10.26 13,994
Mar. 2014 Energy XXI EPL Oil & Gas 2,255 10.3 28.87 108,413 19.45 73,018
Apr. 2014
Energy XXI M21K
Energy XXI 123 6.4 26.15 61,450 17.71 41,609
Mar. 2014 Rooster Energy
Cochon Properties
30 6.7 11.22 27,273 7.15 17,376
Jan. 2014 Fieldwood
SandRidge Energy
750 6.3 13.11 30,000 9.19 21,024
Jan. 2014 EPL Oil & Gas CNOOC (China) 70 7.9 27.08 78,222 18.72 54,080
Mean (All Deals) 6.5 $ 16.01 $ 39,232 $ 10.98 $ 27,600
Median (All Deals) 6.4 14.28 27,273 9.73 17,376
Mean (2015 to Current) 6.3 $ 2.23 $ 9,993 $ 2.45 $ 11,187
Median (2015 to Current) 4.0 2.23 9,993 2.45 11,187
(1)
Price Adjusted Metrics calculated by multiplying Headline Metrics by the ratio of current 12-month forward NYMEX strip prices as of June 8, 2018 ($64.53/Bbl and $2.89/Mcf) to the 12-month forward NYMEX strip prices on the date of announcement.
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The transactions listed in the table above are referred to in this section as the “selected comparable transactions.” No selected comparable transaction utilized in the select comparable GoM transaction analysis was identical or entirely comparable to the merger. Accordingly, Intrepid believes that purely quantitative analyses are not, in isolation, determinative in the context of the merger and that qualitative judgments concerning differences between the financial and operating characteristics and prospects of EGC and Cox the selected comparable transactions that could affect the values are also relevant. Intrepid considered certain financial metrics derived from such selected comparable transactions. However, Intrepid did not derive or apply any selected comparable transaction reference ranges in its selected comparable transactions analysis. Intrepid’s valuation was based on multiples of the transaction value to EBITDAX, proved reserves, current production and acreage for the select comparable transactions listed above.
Exploration and Production (E&P) Premium Paid Analysis
Intrepid compared the premiums per share paid by an acquirer company in 14 selected domestic E&P corporate transactions since 2013 with a transaction value ranging from approximately $390 million to $9.5 billion and involving consideration consisting of cash, stock or a combination thereof. These transactions are referred to in this section as the “precedent transactions.” For each transaction, Intrepid compared the premiums per share to the share price of the target company one day prior to announcement of a transaction, and based on a 10-day, 30-day, 60-day and 90-day volume-weighted average price (“VWAP”). With respect to all of those transactions, Intrepid observed the following mean and medium premiums paid per share price of the target company as compared to the premium to be paid with respect to the merger:
Premium
1-day
Prior
10-day
VWAP
30-day
VWAP
60-day
VWAP
90-day
VWAP
Precedent Transactions Mean
25.1% 23.8% 25.6% 28.2% 28.6%
Precedent Transactions Median
24.8% 24.3% 28.2% 29.1% 29.7%
Merger
21.5% NA 22.5% 41.7% NA
Intrepid made numerous judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters. Mathematical analysis, such as determining the median and mean, is not in itself a meaningful method of using comparable transaction data. Also, the transaction multiples for the precedent transactions reflect the cyclicality of the oil and gas industry and any potential business, economic, market, regulatory and other conditions impacting such transactions.
Liquidity Analysis
Intrepid reviewed certain projected financial information provided by EGC management relating to cash flow of EGC in comparison to its working capital requirements over a 12-month period from January until December 2018, assuming no strategic transactions or capital raise. Based solely on these projections, Intrepid observed that, at times at which EGC had less than $50 million of working capital, EGC would be unable to fund its current liabilities.
General
As described above in this section, the preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Intrepid’s opinion. In arriving at its fairness determination, Intrepid considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, Intrepid made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses taken as a whole. No company or transaction used in the above analyses as a comparison is directly comparable to EGC or the contemplated
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transaction. Accordingly, these analyses must take into account differences in the financial and operating characteristics of the selected publicly traded companies and differences in the structure and timing of the selected transactions and other factors that would affect the public trading value and acquisition value of the companies considered.
Intrepid prepared these analyses for purposes of Intrepid providing its opinion only to the EGC board of directors as to the fairness, from a financial point of view, of the merger consideration to be received in the merger by the holders (other than Cox and its affiliates) of shares of EGC common stock. These analyses do not purport to be appraisals nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of EGC, Intrepid or any other person assumes responsibility if future results are materially different from those forecast.
The merger consideration was determined through arm’s-length negotiations between EGC and Cox and was approved by the EGC board of directors. Intrepid provided advice to EGC during these negotiations. Intrepid did not, however, recommend any specific consideration to EGC or the EGC board of directors or that any specific consideration constituted the only appropriate merger consideration for the merger.
As described above, Intrepid’s opinion to the EGC board of directors was only one of many factors taken into consideration by the EGC board of directors and should not be viewed as determinative of the views of the EGC board of directors in making its determination to approve the merger. The foregoing summary does not purport to be a complete description of the analyses performed by Intrepid in connection with the fairness opinion and is qualified in its entirety by reference to the written opinion of Intrepid attached as Annex B to this proxy statement.
Miscellaneous
Intrepid and its affiliates, as part of their investment banking business, are regularly engaged in performing financial analyses with respect to businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, private placements and other transactions as well as for real estate, corporate and other purposes. Intrepid and its affiliates also engage in advisory work, private equity activities, underwriting and financing, principal investing, investment management and other financial and non-financial activities and services for various persons and entities.
Intrepid and its affiliates and employees, and funds or other entities in which they invest or with which they co-invest, may at any time purchase, sell, hold or vote long or short positions and investments in (i) equity, debt and other securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments (including bank loans and other obligations) of EGC, Cox, any of their respective affiliates and third parties or any of the other parties to the transactions contemplated by the merger agreement, or (ii) any currency or commodity that may be involved in the transactions and other matters otherwise contemplated by the merger agreement for the accounts of Intrepid and its affiliates and employees and their customers.
Intrepid acted as financial advisor to EGC in connection with, and participated in certain of the negotiations leading to, the transaction contemplated by the agreement. Intrepid has provided certain financial advisory services to EGC and its affiliates from time to time for which Intrepid has received, and may receive, compensation. Intrepid may also in the future provide investment banking services or other services to EGC, Cox and their respective affiliates for which Intrepid may receive compensation.
Intrepid was engaged by EGC to act as its financial advisor in connection with the transactions contemplated by the merger agreement by entering into an engagement letter. The engagement letter between EGC and Intrepid provides for an opinion fee of  $1,000,000 (“Opinion Fee”), which has been paid to Intrepid by EGC and was earned by Intrepid upon delivery, regardless of the conclusion reached by Intrepid. The Intrepid engagement letter also provides for a transaction fee of  $6,650,000 (“Transaction Fee”), which becomes payable upon the consummation of the merger. However, $500,000 of the Opinion
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Fee is creditable against the Transaction Fee. In addition, EGC has agreed to reimburse Intrepid for certain of its expenses, including certain attorneys’ fees and disbursements, and to indemnify Intrepid and related persons against various liabilities, including certain liabilities under the federal securities laws.
The EGC board of directors selected Intrepid as its financial advisor because it is a nationally recognized investment banking firm and is regularly engaged in the valuation of businesses and securities in connection with mergers and acquisitions, negotiated underwritings, private placements and valuations for corporate and other purposes. EGC selected Intrepid to act as its financial advisor on the basis of Intrepid’s qualifications and expertise, knowledge of the oil and gas industry, reputation in the investment community and its experience in transactions similar to the transactions described in the merger agreement and as well as familiarity with EGC and its business.
Certain Prospective Unaudited Financial and Operating Information of EGC
EGC does not, as a matter of course, publicly disclose long-term projections as to its future revenues, production, earnings or other results because of, among other reasons, the uncertainty of the underlying assumptions and estimates. However, in connection with the evaluation of the proposed merger, EGC is including the following summary of unaudited prospective financial and operating information, which is included herein because it was reviewed by and/or used in presentation to the EGC board of directors and Intrepid in connection with their evaluation of the merger. Intrepid was authorized by EGC to rely upon such information for purposes of its analysis and opinion. The inclusion of this information should not be regarded as an indication that any of EGC, the EGC board of directors or Intrepid or any other recipient of this information considered, or now considers, it to be necessarily predictive of actual future results.
The unaudited prospective financial and operating information prepared by the management of EGC was, in general, prepared solely for its internal use and is subjective in many respects. As a result, there can be no assurance that the prospective results will be realized or that actual results will not be significantly higher or lower than estimated. Since the unaudited prospective financial and operating information covers multiple years, such information by its nature becomes less predictive with each successive year. EGC stockholders are urged to review EGC’s SEC filings for a description of risk factors with respect to EGC’s business.
Neither EGC nor Intrepid has made any representations to Cox concerning prospective information or the estimates or assumptions on which they are based. EGC urges all stockholders to review EGC’s most recent SEC filings for a description of EGC’s reported financial results.
The following tables set forth certain summarized prospective operating and financial information regarding EGC for the years ending December 31, 2018, 2019, 2020, 2021 and 2022 as provided by EGC’s management to Intrepid. It should be noted that the EGC management team’s projections were based on the operational and financial expectations for EGC’s business, using realized commodity prices. The actual projections used by Intrepid and in conducting its evaluation and other financial analysis may have differed materially from these projections as it may have contemplated different assumptions regarding pricing, production risking and prospective acreage development, among other factors.
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Year ending December 31,
($ in thousands)
2018
2019
2020
2021
2022
Production
Net Oil Production (MBOPD)
21.4 25.4 29.5 31.3 29.0
Net NGL Production (MBOPD)
0.4 0.6 0.9 1.1 0.8
Net Gas Production (MMCFD)
28.3 32.2 47.7 60.3 46.9
Total Production (MBOED)
26.6 31.3 38.4 42.5 37.6
Price Strip
Realized OIL ($/Bbl)
$ 66.61 $ 63.96 $ 60.96 $ 58.61 $ 56.88
Realized NGLs ($/Bbl)
34.01 31.48 29.98 28.81 27.94
Realized GAS ($/Mcf)
2.94 2.77 2.67 2.65 2.66
Revenue
Crude Oil Sales
$ 520,964 $ 592,165 $ 658,335 $ 670,458 $ 602,427
NGL Sales
5,346 6,328 9,716 11,137 7,657
Natural Gas Sales
30,467 32,478 46,512 58,341 45,593
Derivative Revenues
(48,567) (7,193)
Other Revenue
4,698 4,140 4,140 4,140 4,140
Total Revenue
$ 512,908 $ 627,918 $ 718,702 $ 744,075 $ 659,816
Total Expenses
Lease operating
$ (311,517) $ (296,504) $ (281,242) $ (279,042) $ (276,864)
Production taxes
(2,252) (1,577) (1,786) (1,850) (1,639)
Gathering and transportation
(26,615) (29,698) (28,489) (28,432) (28,375)
Pipeline Facility Fees
(41,977) (41,977) (41,977) (41,977) (41,977)
General and administrative expenses
(58,595) (55,157) (53,896) (53,634) (53,634)
Total Operating Expenses
$ (440,957) $ (424,914) $ (407,391) $ (404,934) $ (402,489)
LTM EBITDA
$ 71,661 $ 203,004 $ 311,312 $ 339,141 $ 257,327
Capex
Abandonment
$ (55,553) $ (51,554) $ (53,103) $ (54,401) $ (48,720)
Capex excluding Abandonment
(105,167) (198,106) (280,857) (200,256) (178,650)
Total Capex
$ (160,720) $ (249,661) $ (333,960) $ (254,656) $ (227,370)
Net Unlevered Cash Flow
$ (88,769) $ (46,656) $ (22,648) $ 84,485 $ 29,957
Qualifications Regarding Prospective Financial Information of EGC
EGC does not, as a matter of course, make public long-term projections as to its future production, earnings or other results because of, among other reasons, the uncertainty of the underlying assumptions and estimates. However, EGC is including the preceding summary of unaudited prospective financial and operating information solely because that information was made available to the EGC board of directors and Intrepid. The EGC prospective financial and operating information was not prepared with a view toward public disclosure, nor was it prepared with a view toward compliance with the published guidelines of the SEC, the guidelines established by the American Institute of Certified Public Accountants for the preparation and presentation of financial forecasts or generally accepted accounting principles in the United States, which are referred to herein as GAAP. None of Ernst & Young LLP, which is the independent registered public accounting firm for EGC and is referred to herein as E&Y, or any other independent accountants, has compiled, examined or performed any procedures with respect to EGC’s prospective financial and operating information contained herein, nor has E&Y expressed any opinion or any other form of assurance on such information or its achievability, and assumes no responsibility for, and disclaims any association with, the prospective financial and operating information. The E&Y reports incorporated by reference in this proxy statement relate to historical financial information for EGC. Such reports do not extend to EGC’s prospective financial and operating information and should not be read to
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do so. The summary of EGC’s prospective financial and operating information is being included in this proxy statement not to influence your decision whether to vote for the merger proposal, but because the prospective financial and operating information was made available to the EGC board of directors and Intrepid in connection with the merger.
While presented herein with numeric specificity, the information set forth in the summary of EGC’s prospective financial and operating information contained herein was based on numerous variables and assumptions that are inherently uncertain and may be beyond the control of EGC’s management, including, among others, oil and gas activity, commodity prices, demand for natural gas and crude oil and the availability of financing to fund the exploration and development costs associated with the respective projected drilling programs. None of this prospective financial and operational information reflects any impact of the merger. In addition, since EGC’s prospective financial and operating information covers multiple years, such information by its nature becomes less predictive with each successive year.
In addition, the unaudited prospective financial and operating information requires significant estimates and assumptions that make it inherently less comparable to the similarly-titled GAAP measures in the historical GAAP financial statements of EGC. EGC believes the assumptions in the prospective financial and operating information were reasonable at the time the financial information was prepared, given the information EGC had at the time. However, important factors that may affect actual results and cause the results reflected in EGC’s prospective financial and operating information not to be achieved include, but are not limited to, risks and uncertainties relating to their respective businesses, industry performance, the regulatory environment, general business and economic conditions and other matters described in EGC’s filings with the SEC. See also “Special Note Regarding Forward-Looking Statements” and “Where You Can Find More Information.”
The unaudited prospective financial and operating information also reflects assumptions as to certain business decisions that are subject to change. As a result, actual results may differ materially from the results reflected in EGC’s prospective financial and operating information. For example, the unaudited prospective financial and operating information assumes that EGC would be able to implement a $150 million financing during 2018 in order to fund the capital spending plan and operating budget reflected in these financial forecasts. There can be no assurance that such a financing could be completed during 2018 or that, if completed, the terms of the financing would be acceptable. Accordingly, there can be no assurance that the results reflected in the prospective financial and operating information will be realized.
The inclusion of EGC’s prospective financial and operating information in this proxy statement should not be regarded as an indication that EGC or any of its affiliates, advisors, officers, directors, partners or representatives considered the prospective financial and operating information to be material or predictive of actual future events, and the prospective financial and operating information should not be relied upon as such. None of EGC nor any of its affiliates, advisors, officers, directors, partners or representatives can give you any assurance that actual results will not differ from the results reflected in the prospective financial and operating information, and none of these persons undertakes any obligation to update or otherwise revise or reconcile the prospective financial and operating information to reflect circumstances existing after the dates the prospective financial and operating information was generated or to reflect the occurrence of future events in the event that any or all of the assumptions underlying the prospective financial and operating information are shown to be in error. EGC does not intend to make publicly available any update or other revision to the prospective financial and operating information. The prospective financial and operational information for EGC does not take into account any circumstances or events occurring after the date such information was prepared. Readers of this proxy statement are cautioned not to place undue reliance on the prospective financial and operating information set forth above. None of EGC nor any of its affiliates, advisors, officers, directors, partners or representatives has made or makes any representation to any stockholder or other person regarding EGC’s ultimate performance compared to the information contained in the prospective financial and operating information or that financial or operating results will be achieved. EGC has made no representation to Cox, in the merger agreement or otherwise, concerning the EGC prospective financial and operating information.
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EGC’S PROSPECTIVE FINANCIAL INFORMATION DOES NOT REPRESENT PROJECTIONS, BUT RATHER POTENTIAL SCENARIOS BASED ON VARYING DEGREES OF SUCCESS. ACCORDINGLY, RESULTS ARE DEPENDENT ON THE OUTCOME OF FUTURE EXPLORATION AND DEVELOPMENT ACTIVITY AND EGC’S ABILITY TO RAISE CAPITAL, IN AMOUNTS AND ON TERMS ACCEPTABLE TO EGC, TO FUND SUCH FUTURE ACTIVITY, WHICH IS SUBJECT TO SIGNIFICANT RISK AND UNCERTAINTY. EGC DOES NOT INTEND TO UPDATE OR OTHERWISE REVISE THE PROSPECTIVE FINANCIAL AND OPERATING INFORMATION TO REFLECT CIRCUMSTANCES EXISTING AFTER THE DATE WHEN THE INFORMATION WAS GENERATED OR TO REFLECT THE OCCURRENCE OF FUTURE EVENTS, EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING SUCH INFORMATION ARE NO LONGER APPROPRIATE, EXCEPT AS MAY BE REQUIRED BY LAW.
Interests of EGC Directors and Executive Officers in the Merger
EGC’s directors and executive officers have various interests in the merger that may be in addition to, or different from, the interests of EGC stockholders generally. You should keep this in mind when considering the recommendation of the EGC board of directors “FOR” the adoption of the merger agreement. The members of the EGC board of directors were aware of these interests and considered them at the time they approved the merger agreement and in recommending that EGC stockholders adopt the merger agreement. These interests are described below.
Certain Assumptions
Except as otherwise specifically noted, for purposes of quantifying the potential payments and benefits described in this section, the following assumptions, as well as those described in the footnotes to the table in the section titled “— Golden Parachute Compensation” below, were used:

the merger consideration is $9.10 per share, which is the fixed price per share to be received by EGC stockholders in respect of their shares of EGC common stock in connection with the merger;

for any EGC RSUs subject to performance-based vesting conditions, the performance goals are deemed to be achieved at the target level of performance in accordance with the terms of the merger agreement;

the assumed effective time is July 1, 2018, which is the assumed date of the effective time solely for purposes of the disclosure in this section (the “assumed effective time”);

the employment of each executive officer of EGC is terminated without “cause” or due to the executive officer’s resignation for “good reason” (as each such term is defined in the relevant plan(s) and/or agreement(s)), in each case, immediately following the assumed effective time; and

the service of each non-employee director of EGC is terminated immediately following the assumed effective time.
Treatment of Outstanding Equity Awards
The merger agreement provides that, with respect to all outstanding options and EGC RSUs under EGC’s stock plans, as a result of the merger:

each option, whether vested or unvested, will be cancelled for no consideration because the per share exercise price of each outstanding option exceeds the merger consideration; and

each EGC RSU will accelerate and be converted into the right to receive a payment in cash of the merger consideration, multiplied by the number of shares subject to each such award, with any performance-based vesting conditions deemed to be achieved at the target level of performance.
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Treatment of Outstanding Equity Awards — Summary Tables
Non-Employee Directors
The following table sets forth the cash proceeds that each of EGC’s non-employee directors would receive in respect of outstanding equity awards held by that director as of the assumed effective time in accordance with the treatment of outstanding equity awards described above. Depending on when the effective time occurs, certain of these equity awards may vest, be exercised and/or cancelled, in each case, prior to the actual effective time in accordance with their terms and independent of the occurrence of the merger. All share numbers have been rounded down to the nearest whole number.
Non-Employee Director Equity Summary Table
Non-Employee Directors
Number of
EGC RSUs
(#)(1)
Value of
EGC RSUs
($)(1)
Michael S. Bahorich
42,048 382,637
Gabriel L. Ellisor
70,660 643,006
Gary C. Hanna
152,759 1,390,107
Stanford Springel
28,911 263,090
Charles W. Wampler
42,048 382,637
(1)
As of immediately prior to the effective time, each outstanding EGC RSU (regardless of whether vested) will be converted into the right to receive a payment in cash equal to the merger consideration of  $9.10 per share multiplied by the number of shares subject to each such award. As of the assumed effective time, none of EGC’s directors held any outstanding equity awards other than the time-based EGC RSUs set forth above.
Executive Officers
The following table sets forth the outstanding vested stock option awards held by each of EGC’s executive officers as of the assumed effective time. Because the exercise price for each outstanding stock option is greater than the merger consideration, none of EGC’s executive officers will receive any cash proceeds with respect to their vested option awards. All EGC RSUs granted to executive officers are settled for shares of EGC common stock upon vesting. Therefore, with the exception of the vested stock options included in the table below, no executive officer will hold any EGC RSUs or any other vested equity awards as of the assumed effective time. All share numbers have been rounded down to the nearest whole number.
Executive Officer Vested Equity Awards Summary Table
Executive Officers
Number of
Vested Stock
Options
(#)(1)
Value of
Vested Stock
Options
($)(1)
Estimated
Total
Consideration
($)
Douglas E. Brooks*
56,986 0 0
T.J. Thom Cepak
Scott M. Heck
14,639 0 0
Marguerite Woung-Chapman
0
*
Also a director of EGC.
(1)
The exercise price for each outstanding stock option is greater than the merger consideration. As a result, at the effective time, each stock option to purchase shares of EGC common stock will be cancelled for no consideration.
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The following table sets forth the cash proceeds that each of EGC’s executive officers would receive in respect of EGC RSUs and unvested stock options held by that executive officer as of the assumed effective time in accordance with the treatment of outstanding equity awards described above. All share and unit numbers have been rounded down to the nearest whole number.
Executive Officer Unvested Equity Awards Summary Table
Executive Officers
Number of
Unvested
Stock Options
(#)(1)
Value of
Unvested
Stock Options
($)(1)
Number of
EGC RSUs
(#)(2)
Value of
EGC RSUs
($)(1)
Estimated Total
Consideration
($)
Douglas E. Brooks*
115,700 0 441,049 4,013,546 4,013,546
T.J. Thom Cepak
0 194,300 1,768,130 1,768,130
Scott M. Heck
29,724 0 167,823 1,527,189 1,527,189
Marguerite Woung-Chapman
0 93,264 848,702 848,702
*
Also a director of EGC.
(1)
The exercise price for each outstanding stock option is greater than the merger consideration. As a result, at the effective time, each stock option to purchase shares of EGC common stock will be cancelled for no consideration.
(2)
As of immediately prior to the effective time, each outstanding EGC RSU will be converted into the right to receive a payment in cash equal to the merger consideration of  $9.10 per share multiplied by the number of shares subject to each such award, with any EGC RSU awards subject to performance-based vesting conditions deemed achieved at the target performance level.
Severance Benefits in Employment Agreements with Executive Officers
EGC previously entered into employment agreements (each of which we refer to as an “employment agreement” and, collectively, the “employment agreements”) with each of its named executive officers specifying certain compensation and benefits payable to those executive officers in the event of a qualifying termination of employment, regardless of whether in connection with a change in control.
Under his employment agreement, Douglas E. Brooks will become entitled, subject to his continuing compliance with restrictive covenants and the execution and non-revocation of a general release of claims against EGC, to the following termination payments and benefits if  (a) his employment is terminated by EGC without “cause” or (b) he terminates his employment for “good reason” (each as defined in his employment agreement).

a lump sum cash payment in an amount equal to (i) 200% of Mr. Brooks’s base salary plus (ii) a bonus severance component calculated in accordance with the following schedule: (x) if the termination of employment occurs during the year ending December 31, 2018, an amount equal to 200% of the target bonus opportunity for Mr. Brooks for the year ended December 31, 2017 and (y) if the termination of employment occurs during any calendar year after 2018, an amount equal to 200% of the average actual bonuses paid to Mr. Brooks for the most recent two completed years. However, each actual bonus amount for a prior year included in the calculation will be capped at the target bonus for that prior year;

reimbursement for the monthly cost of maintaining health benefits for Mr. Brooks (and Mr. Brooks’s spouse and eligible dependents) as of the date of termination of employment under EGC’s group health plan for purposes of COBRA, excluding any short-term or long-term disability insurance benefits, for a period of 18 months following the date of the termination of employment, to the extent Mr. Brooks elects COBRA;

full vesting of any unvested portion of Mr. Brooks’s sign-on grant of EGC RSUs as of the date of the termination; and
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full vesting of any unvested time-based EGC RSUs and stock options as of the date of the termination if Mr. Brooks’s employment terminates as a result of a “corporate change” (as defined in his employment agreement) on or before the 90th day after the corporate change is consummated.
Under his employment agreement, Scott M. Heck will become entitled, subject to his continuing compliance with restrictive covenants and the execution and non-revocation of a general release of claims against EGC, to the following termination payments and benefits if  (a) his employment is terminated by EGC without “cause” or (b) he terminates his employment for “good reason” (each as defined in his employment agreement):

a lump sum cash payment in an amount equal to (i) 200% of Mr. Heck’s base salary plus (ii) a bonus severance component calculated in accordance with the following schedule: (x) if the termination of employment occurs during the year ending December 31, 2018, an amount equal to 200% of the actual bonus paid to Mr. Heck for the year ended December 31, 2017 and (y) if the termination of employment occurs during any calendar year after 2018, an amount equal to 200% of the average actual bonuses paid to Mr. Heck for the most recent two completed years. However, each actual bonus amount for a prior year included in the calculation will be capped at the target bonus for that prior year; and

reimbursement for the monthly cost of maintaining health benefits for Mr. Heck (and Mr. Heck’s spouse and eligible dependents) as of the date of termination of employment under EGC’s group health plan for purposes of COBRA, excluding any short-term or long-term disability insurance benefits, for a period of 18 months following the date of the termination of employment, to the extent Mr. Heck elects COBRA.
Under their respective employment agreements, T.J. Thom Cepak and Marguerite Woung-Chapman will each become entitled, subject to continuing compliance with restrictive covenants and the execution and non-revocation of a general release of claims against EGC, to the following termination payments and benefits if  (a) the executive’s employment is terminated by EGC without “cause” or (b) the executive terminates her employment for “good reason” (each as defined in the executive’s respective employment agreement):

a lump sum cash payment in an amount equal to (i) 200% of the executive’s base salary plus (ii) a bonus severance component calculated in accordance with the following schedule: (x) if the termination of employment occurs during the year ending December 31, 2018 or December 31, 2019, an amount equal to 200% of the actual bonus paid to the executive for the year ending December 31, 2018 and (y) if the termination of employment occurs during any calendar year after 2019, an amount equal to 200% of the average actual bonuses paid to the executive for the most recent two completed years. However, each actual bonus amount for a prior year included in the calculation will be capped at the target bonus for that prior year;

reimbursement for the monthly cost of maintaining health benefits for the executive (and the executive’s spouse and eligible dependents) as of the date of termination of employment under EGC’s group health plan for purposes of COBRA, excluding any short-term or long-term disability insurance benefits, for a period of 18 months following the date of the termination of employment, to the extent the executive elects COBRA;

full vesting of the unvested portion, if any, of the executive’s sign-on grant of EGC RSUs as of the date of the termination;

full vesting of the unvested portion, if any, of Ms. Cepak’s or Ms. Woung-Chapman’s cash sign-on bonus of  $224,400 and $180,000, respectively (such that the bonus will no longer be subject to clawback); and

full vesting of any unvested time-based EGC RSUs and stock options if the executive’s employment terminates as a result of a “corporate change” (as defined in the respective executive’s employment agreement) on or before the 90th day after the corporate change is consummated.
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Under the employment agreements for each executive officer, “good reason” generally means the existence of any of the following conditions without the executive’s consent: a material diminution in the executive’s authority, duties, or responsibilities; a material diminution in the executive’s base salary or target bonus; relocation outside of greater Houston, Texas metropolitan area; or EGC’s material breach of the employment agreement. In the case of Mr. Brooks, Mr. Brooks also has good reason if EGC fails to nominate Mr. Brooks for election as a director or use all reasonable efforts to cause him to be elected or re-elected as director of EGC.
Under the employment agreements for each executive officer, “cause” generally means the occurrence of any one of the following: gross negligence or willful misconduct in the performance of, or the executive’s abuse of alcohol or drugs rendering the executive unable to perform, the material duties and services required for executive’s position with EGC; the executive’s conviction or plea of nolo contendere for any crime involving moral turpitude or a felony; the executive’s commission of an act of embezzlement, deceit or fraud intended to result in personal and unauthorized enrichment of the executive at the expense of EGC or any of its affiliates; the executive’s material violation of the written policies of EGC or any of its affiliates, material breach of a material obligation of the executive to EGC pursuant to the executive’s duties and obligations under EGC’s bylaws, or material breach of a material obligation of the executive to EGC or any of its affiliates pursuant to the employment agreement or any award or other agreement between the executive and EGC or any of its affiliates; or the executive’s failure to follow any lawful directive of EGC’s chief executive officer or the EGC board of directors or other refusal to perform the executive’s duties under the employment agreement.
Under the employment agreements for Mr. Brooks, Ms. Thom Cepak and Ms. Woung-Chapman, “corporate change” means the consummation of a business combination (including, without limitation, by merger, consolidation, share exchange, tender offer, exchange offer, sale of all or substantially all of the assets of one of the parties, or other similar transaction) between EGC (or one of its subsidiaries) and an unaffiliated third party entity. If consummated, the merger will qualify as a corporate change for purposes of each of those employment agreements.
Pursuant to each employment agreement for each executive officer, each executive officer is subject to restrictive covenants related to the protection of confidential information, non-competition, and the diversion of EGC’s employees. The term of the non-competition and non-solicitation covenants is one year following termination of employment. An executive officer’s breach of any of the restrictive covenants contained in an employment agreement entitles EGC to injunctive relief and the return of any severance payments (excluding accrued obligations) in addition to any other remedies to which EGC may be entitled.
If the severance payments to an executive officer under an employment agreement would cause the employee to be subject to an excise tax under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), then EGC will reduce the payments to the largest amount that could be payable without causing any payment to be subject to the excise tax, but only if that reduction would result in a better after-tax result for the executive officer.
In addition, upon termination of employment by EGC, EGC will pay any employee (including any executive officer) for all accrued, unused vacation leave as of the last day of active employment.
For illustrative purposes only, based on the assumptions described above under “— Certain Assumptions,” it is currently estimated that EGC’s current executive officers would be entitled to receive, in the aggregate, approximately $6,965,617 in cash severance benefits under the employment agreements (including COBRA premium reimbursements and payment of accrued and unused vacation). See the section titled “— Golden Parachute Compensation” below for an estimate of the amounts that would become payable to each of EGC’s named executive officers under the employment agreements.
Golden Parachute Compensation
The information set forth in the table below is intended to comply with Item 402(t) of Regulation S-K, which requires disclosure of compensation that each named executive officer could receive that is based on or otherwise relates to the merger. This compensation is referred to as “golden parachute” compensation by the applicable SEC disclosure rules, and in this section we use such term to describe the merger-related compensation payable to EGC’s named executive officers. For additional details regarding the terms of the
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payments and benefits described below, see the discussion above. This merger-related compensation is subject to a non-binding advisory vote of EGC stockholders, as set forth in proposal two to this proxy statement. See the section titled “EGC Proposal 2 — Advisory (Non-Binding) Vote on Compensation” on page 81.
The amounts set forth below are estimates of amounts that would be payable to the named executive officers using the assumptions described above under “— Certain Assumptions.” These estimates are based on multiple assumptions that may or may not actually occur, including assumptions described in this proxy statement. Some of the assumptions are based on information not currently available, and as a result the actual amounts, if any, to be received by a named executive officer may differ in material respects from the amounts set forth below.
All dollar amounts set forth below have been rounded to the nearest whole number. As described in the notes to the following table, the named executive officers disclosed in EGC’s proxy statement relating to EGC’s 2018 annual meeting of stockholders include four former executive officers, none of whom has been an EGC officer or employee during 2018.
Golden Parachute Payments(1)
Name
Cash(2)
Equity(3)
Pension/​
NQDC(4)
Perquisites/​
Benefits(5)
Tax
Reimbursement(6)
Other(7)
Total
Douglas E. Brooks
Chief Executive Officer
$ 2,296,000 $ 4,013,546 0 $ 29,863 0 $ 33,943 $ 6,373,352
T.J. Thom Cepak
Chief Financial Officer
$ 1,800,000 $ 1,768,130 0 $ 44,248 0 $ 20,986 $ 3,633,364
Scott M. Heck
Chief Operating Officer
$ 1,400,000 $ 1,527,189 0 $ 1,148 0 $ 34,075 $ 2,962,412
Michael S. Reddin(8)
Former Chief Executive Officer
John D. Schiller, Jr.(8)
Former Chief Executive Officer
Hugh A. Menown(8)
Former Chief Financial Officer
Bruce W. Busmire(8)
Former Chief Financial Officer
Antonio de Pinho(8)
Former Chief Operating Officer
(1)
The amounts reported in the “Cash” and “Perquisites/Benefits” columns are payable upon a qualifying termination of employment under the employment agreements and are not attributable to a change in control. The amounts reported in the “Equity” column are attributable to single-trigger arrangements (i.e., accelerated payment will occur upon the completion of the merger regardless of whether the named executive officer experiences a qualifying termination of employment).
(2)
Amounts reflect cash severance benefits under the employment agreements that would be payable in a lump sum, assuming a termination of employment by EGC without cause or by the named executive officer for good reason, as follows: (i) 200% of the named executive officer’s base salary (Mr. Brooks, $1,148,000, Ms. Cepak, $900,000, and Mr. Heck, $900,000); and (ii) 200% of the named executive officer’s actual bonus paid (except for Mr. Brooks), which for Mr. Heck is based on the 2017 bonus paid to Mr. Heck and for Ms. Cepak is to be based on the 2018 bonus paid to Ms. Cepak, but for purposes of this disclosure is based on Ms. Cepak’s 2018 target bonus opportunity since Ms. Cepak was not eligible to receive a 2017 bonus (Mr. Heck $250,000 and Ms. Cepak, $450,000). Under Mr. Brooks’ employment agreement, the bonus component of his cash severance during 2018 is based on his 2017 target bonus opportunity ($574,000). In addition, the sign-on bonus received by Ms. Cepak ($224,500) and the retention bonus received by Mr. Heck ($170,000), each would cease to be subject to clawback if the named executive officer experiences a qualifying termination of employment.
(3)
Amounts reflect the consideration to be received by each named executive officer in connection with the accelerated vesting of company EGC RSUs held by each of the named executive officers, which
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acceleration of vesting for EGC RSUs will occur upon completion of the merger, as described in more detail above in the section above entitled “— Treatment of Outstanding Equity Awards.” Pursuant to the terms of the merger agreement, each outstanding EGC RSU will be fully vested and converted into a right to receive the merger consideration of  $9.10 per share. For any EGC RSU awards that are subject to performance-based vesting conditions, the merger agreement provides that performance conditions will be deemed achieved at target.
(4)
As of the assumed effective time, none of EGC’s named executive officers participates in or has account balances in a qualified or non-qualified defined benefit plan or a non-qualified deferred compensation plan sponsored or maintained by EGC.
(5)
Amounts reflect the payments in respect of continued coverage under EGC’s group health plan for a period of 18 months following the named executive officer’s termination of employment, based on the insurance premiums in effect as of the assumed effective time, as provided for under the employment agreements, as described in detail above in the section titled “— Change in Control Severance Benefit for Executive Officers.”
(6)
None of the named executive officers is eligible to receive a tax reimbursement based on or otherwise related to the merger. The employment agreements provide that the change in control benefits payable to the named executive officers are subject to an automatic reduction to avoid the imposition of excise taxes under Section 4999 of the Code if that reduction would result in a better after-tax result for the named executive officer. The amounts above do not reflect any possible reductions under those provisions.
(7)
Includes payment of accrued and unused vacation, which is a severance benefit available to any EGC employee terminated by EGC.
(8)
In accordance with the SEC executive compensation disclosure rules, this individual is a named executive officer of the Company with respect to 2017. Mr. Reddin ceased to be EGC’s chief executive officer (a capacity in which he served on an interim basis) on April 17, 2017, but remained non-executive chairman of the board and a director until EGC’s annual meeting of stockholders on May 17, 2018. Mr. Schiller, Mr. di Pinho and Mr. Busmire each ceased to be an officer or employee of EGC on February 2, 2017. Mr. Menown ceased to be an officer of director of EGC on August 24, 2017. Because each of these named executive officers separated from the Company prior to the merger and ceased having any outstanding equity awards following his separation, this named executive officer will not receive any merger-related compensation in connection with the merger.
Regulatory Clearances Required for the Merger
Completion of the transactions contemplated by the merger agreement is subject to the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”). Cox has informed EGC that Cox has determined that the fair market values of EGC’s assets are below the applicable HSR Act threshold that would require the parties to make a filing under the HSR Act. Cox’s antitrust counsel has received informal interpretive advice of the Federal Trade Commission’s staff dated June 29, 2018, confirming Cox’s counsel’s interpretation. Accordingly, Cox and EGC have agreed that the closing condition relating to the HSR Act has been satisfied and that no further action needs to be taken with respect to the HSR Act.
At any time before or after the effective time, the U.S. antitrust authorities could take action under the antitrust laws, including seeking to prevent the merger, to rescind the merger or to conditionally approve the merger upon the divestiture of assets of Cox or EGC or subject to other remedies. In addition, U.S. state attorneys general could take action under the antitrust laws as they deem necessary or desirable in the public interest including, without limitation, seeking to enjoin the completion of the merger or permitting completion subject to regulatory concessions or conditions. Private parties may also seek to take legal action under the antitrust laws under some circumstances. There can be no assurance that a challenge to the merger on antitrust grounds will not be made or, if such a challenge is made, that it would not be successful.
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Treatment of EGC Stock Options and Other Equity-Based Awards
At or immediately prior to the effective time, any restrictions applicable to each EGC RSU outstanding as of the effective time, whether or not subject to service-based or performance-based vesting conditions, issued pursuant to EGC’s 2016 Long Term Incentive Plan, as amended from time to time, or the 2018 Long Term Incentive Plan, as amended from time to time (these plans are sometimes referred to together as the “EGC stock plans”), will, by virtue of the merger and without any action on the part of the holder of that EGC stock plan, lapse with the result that all of those outstanding EGC RSUs will be fully vested, with the performance conditions deemed achieved at target. As a result of the merger, each EGC RSU will be cancelled and converted into the right to receive the merger consideration, multiplied by the number of shares of EGC common stock subject to that EGC RSU, less applicable taxes as soon as reasonably practicable, but in no event later than 30 days, after the effective time (or any later date required by the Code).
The exercise price for each outstanding stock option is greater than the merger consideration. As a result, at or immediately prior to the effective time, each stock option to purchase shares of EGC common stock, regardless of whether vested or unvested, will be cancelled for no consideration and the holder will have no further rights with respect to such stock option.
Treatment of EGC Warrants
In accordance with the warrant agreement under which the warrants were issued, the warrants will no longer represent the right to acquire shares of EGC common stock at the effective time of the merger. Instead, at that time, each warrant will become exercisable for $9.10 in cash, but the warrant holder would be required to pay the warrant’s cash exercise price of  $43.66 per share in order to receive $9.10. Therefore, the merger agreement provides that, at the effective time of the merger, each outstanding warrant will be cancelled for no consideration.
Treatment of EGC Credit Agreement
Under the terms of EGC’s First Lien Exit Facility with Wells Fargo National Association, as administrative agent, and the other lenders and financial institutions party thereto, all amounts outstanding under the First Lien Exit Facility must be repaid in full at the effective time, and all outstanding letters of credit under the First Lien Exit Facility must be replaced at that time.
De-Listing and Deregistration of EGC Common Stock
Upon completion of the merger, the EGC common stock currently listed on the NASDAQ will cease to be listed on the NASDAQ and will subsequently be deregistered under the Exchange Act.
Payment of Merger Consideration
Prior to the effective time of the merger, Cox will designate a national bank or trust company reasonably acceptable to EGC to act as paying agent. Promptly after the closing date of the merger, the paying agent will send to each record holder of EGC common stock at the effective time a letter of transmittal and instructions for exchanging shares of EGC common stock for merger consideration.
Tax Consequences
For information regarding the tax consequences of the transactions, please see “Material U.S. Federal Income Tax Consequences.”
Appraisal Rights
Under Delaware law, holders of shares of EGC common stock are entitled to appraisal rights in connection with the merger, provided that such holders satisfy all of the conditions set forth in Section 262 of the DGCL. A dissenting EGC stockholder will not be entitled to receive the merger consideration provided by the merger agreement and instead receives a cash payment of the amount determined by the Delaware Court of Chancery to be the fair value of the EGC stockholder’s shares of EGC common stock at the effective time, together with interest on such amount from the effective time until paid. The ultimate
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amount dissenting EGC stockholders receive in an appraisal proceeding may be more or less than, or the same as, the amount such holders would have received under the merger agreement. A detailed description of the appraisal rights available to holders of EGC common stock and procedures required to exercise statutory appraisal rights is included in the section titled “Appraisal Rights” beginning on page 86.
To perfect appraisal rights, a EGC stockholder of record must, among other things, deliver a written demand for appraisal to EGC before the vote on the adoption of the merger agreement at the EGC special meeting, not vote in favor of the proposal to adopt the merger agreement, continuously hold the shares of EGC common stock through the date the merger is completed, and otherwise comply with the procedures set forth in Section 262 of the DGCL. Failure to follow exactly the procedures specified under Delaware law will result in the loss of appraisal rights. If the holders of more than 10% of the outstanding shares of EGC common stock demand appraisal, then Cox is not required to consummate the merger.
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THE MERGER AGREEMENT
The following section summarizes material provisions of the merger agreement, which is included in this proxy statement as Annex A and is incorporated herein by reference in its entirety. The rights and obligations of Cox and EGC are governed by the express terms and conditions of the merger agreement and not by this summary or any other information contained in this proxy statement. EGC stockholders are urged to read the merger agreement carefully and in its entirety as well as this proxy statement before making any decisions regarding the merger, including the proposal to adopt the merger agreement.
The merger agreement is included in this proxy statement to provide you with information regarding its terms and is not intended to provide any factual information about EGC, Merger Sub or Cox. The merger agreement contains representations and warranties by each of the parties to the merger agreement. These representations and warranties have been made solely for the benefit of the parties to the merger agreement and:

may not be intended as statements of fact, but rather as a way of allocating the risk between the parties in the event that the statements therein prove to be inaccurate;

have been qualified by certain disclosures that were made between the parties in connection with the negotiation of the merger agreement, which disclosures are not reflected in the merger agreement itself; and

may apply standards of materiality in a way that is different from what may be viewed as material by you or other investors.
Accordingly, the representations and warranties and other provisions of the merger agreement should not be read alone, but instead should be read together with the information provided elsewhere in this proxy statement and in the documents incorporated by reference into this proxy statement. See “Where You Can Find More Information” beginning on page 99.
This summary is qualified in its entirety by reference to the merger agreement.
Terms of the Merger; Merger Consideration
The merger agreement provides that, on the terms and subject to the conditions set forth in the merger agreement, at the effective time, Merger Sub will merge with and into EGC in accordance with provisions of the DGCL. EGC will be the surviving corporation in the merger and will become an indirect wholly owned subsidiary of Cox.
The merger agreement provides that, at the effective time, each share of EGC common stock issued and outstanding immediately prior to the effective time (excluding any shares held by Cox or Merger Sub and any shares held by any other subsidiary of Cox or EGC (the “excluded shares”)) will be converted into and will thereafter represent the right to receive $9.10 in cash without interest. Because treasury shares are not “outstanding” shares of common stock for purposes of the DGCL, any treasury shares held by EGC at the effective time will effectively be treated the same as excluded shares.
The merger agreement provides that each excluded share will automatically be cancelled and cease to exist as of the effective time and no merger consideration will be delivered or deliverable with respect to any excluded share.
Shares of EGC common stock owned by any EGC stockholder who has not voted those shares in favor of the merger and who is entitled to demand and properly demands appraisal of those shares under Delaware law will not be converted into the right to receive merger consideration and will be cancelled, and the holder of those shares will instead be entitled to the appraisal rights provided under Section 262 of the DGCL. A copy of Section 262 of the DGCL is included as Annex C to this proxy statement. If any holder of dissenting shares fails to perfect, or has effectively withdrawn or lost, its right to appraisal under Delaware law, that holder’s shares will be treated as if they had been converted into the right to receive the merger consideration.
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Completion of the Merger
The closing of the merger will take place at 9:00 a.m., Houston time, on the second business day following the day on which the last condition to the closing has been satisfied or waived. The merger will be effective at the time of filing of the certificate of merger with the Delaware Secretary of State, or at a later time as Cox and EGC agree to, as set forth in the certificate of merger.
Cox and EGC currently expect the closing of the merger to occur in the third calendar quarter of 2018. However, because the merger is subject to the satisfaction or waiver of other conditions described in the merger agreement, it is possible that factors outside the control of Cox and EGC could result in the merger being completed at a later time or not at all.
Payment of Merger Consideration
Prior to the effective time of the merger, Cox will designate a national bank or trust company reasonably acceptable to EGC to act as paying agent (the “paying agent”) for the holders of EGC common stock in connection with the merger to receive the cash necessary to make the cash payments contemplated by the merger agreement. At the effective time, shares of EGC common stock will be converted into the right to receive the merger consideration without the need for any action by the holders of EGC common stock. Promptly, and in any event no later than two business days, after the effective time, Cox will deposit cash with the paying agent in an amount sufficient to pay the merger consideration to the EGC stockholders.
As soon as reasonably practicable after the effective time, but in no event more than five business days thereafter, EGC will cause the paying agent to mail to each holder of a certificate formerly representing a share of EGC common stock or any corresponding book-entry share of EGC common stock (i) a letter of transmittal specifying, among other things, that delivery will be effected, and risk of loss and title to any certificates representing EGC common stock will pass, only upon proper delivery of those certificates to the paying agent or, in the case of book-entry shares, upon adherence to the procedures set forth in that letter and (ii) instructions explaining the procedure for surrendering EGC stock certificates or book-entry shares in exchange for the merger consideration. Each holder of EGC stock certificates or book-entry shares may thereafter until the first anniversary of the effective time of the merger surrender those certificates or book-entry shares to the paying agent, as agent for that holder, under cover of the letter of transmittal.
After the effective time, shares of EGC common stock will no longer be outstanding, will be automatically cancelled and will cease to exist and each certificate, if any, that previously represented shares of EGC common stock will represent only the right to receive the merger consideration as described above.
Representations and Warranties
The merger agreement contains representations and warranties made by each party to the merger agreement regarding aspects of that party’s business, financial condition, structure and other facts pertinent to the merger. Each of EGC and Cox have made representations and warranties regarding, among other things:

organization, standing and power;

corporate authority with respect to the execution, delivery and performance of the merger agreement, and the due and valid execution and delivery and enforceability of the merger agreement;

absence of conflicts with, or violations of, organizational documents, other contracts, permits and applicable laws;

required regulatory filings and consents and approvals of governmental entities;

financial statements;

absence of untrue statements or omissions of material fact in merger-related SEC filings;

absence of certain litigation; and
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compliance with laws.
EGC has also made additional representations and warranties relating to:

absence of undisclosed material liabilities;

capital structure;

certain required permits;

SEC documents;

corporate governance;

absence of certain changes and events since December 31, 2017;

taxes;

compensation and benefits;

labor matters;

intellectual property, data privacy and information security;

real property;

oil and gas matters;

environmental matters;

absence of undisclosed related party transactions;

insurance;

material contracts;

derivative transactions;

opinion of financial advisor;

brokers’ fees;

anti-takeover statutes; and certificate restrictions; and

regulatory matters.
Additional representations and warranties made only by Cox and Merger Sub relate to, among other things, availability of funds, the absence of business conduct by Merger Sub and ownership of EGC common stock.
Many of the representations and warranties in the merger agreement are qualified by a “materiality” or “material adverse effect” standard (that is, they will not be deemed to be untrue or incorrect unless their failure to be true or correct, individually or in the aggregate, would, as the case may be, be material or have a material adverse effect). For purposes of the merger agreement, a “material adverse effect” means, with respect to a party, a state of facts, change, event, effect or occurrence (when taken together with all other states of fact, changes, events, effects or occurrences), that is or could reasonably be expected to be materially adverse (a) in the case of EGC, (i) the financial condition, results of operations, prospects, properties, assets or liabilities of EGC and its subsidiaries, taken as a whole or (ii) the ability of EGC to consummate the merger by the November 15, 2018 termination date and (b) in the case of Parent, the ability of Parent or Merger Sub to consummate the merger by the November 15, 2018 termination date. However, with respect to EGC only, no state of facts, change, event, effect or occurrence arising or related to any of the following will be deemed to constitute, and none of the following will be taken into account in determining whether there has been a material adverse effect (except in the case of the first four bullet points below, that state of facts, change, event, effect or occurrence disproportionately affects EGC and its subsidiaries, taken as whole, as compared to other persons or businesses engaging principally in the industry in which EGC or its subsidiaries operate):
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national or international business, economic or political conditions, including the engagement by the United States of America in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon the United States of America;

financial, banking or securities markets;

the oil and gas exploration, development and production industry (including changes in oil, gas or other commodity prices and general market prices and changes in costs of supplies, oil field services or other operating costs);

changes in law or GAAP or the interpretation thereof; or

the failure to meet or exceed any projection or forecast (it being understood that the underlying circumstances giving rise to that failure may be taken into account in determining whether there has been a material adverse effect unless otherwise excluded by this provision).
However, with respect to EGC only, any moratoriums on (or changes or proposed changes in applicable law related to) the offshore exploration, development and/or operation of hydrocarbon assets that would reasonably be expected to have the effect of making those activities illegal or commercially impracticable may be taken into account in determining whether there has been a material adverse effect.
Conduct of Business
EGC has agreed to certain covenants in the merger agreement restricting the conduct of its business between the date of the merger agreement and the effective time. In general, EGC has agreed to conduct its business in the ordinary course, consistent with past practice and use all commercially reasonable efforts to preserve intact its present business organization, retain its officers and key employees, and preserve its relationships with its customers and suppliers and other persons having significant business dealings with it, to the end that its goodwill and ongoing business will not be impaired in any material respect. EGC has also agreed to comply, in all material respects, with all applicable law, except where the failure to comply would not reasonably likely to have, individually or in the aggregate, a material adverse effect, and to not voluntarily resign, transfer or relinquish any right as operator of its oil and gas properties.
In addition, EGC has agreed to specific restrictions relating to the conduct of its business between the date of the merger agreement and the effective time, including, but not limited to, not to take (or permit any of its subsidiaries to take) the following actions (subject, in each case, to exceptions specified below and in the merger agreement or previously disclosed in writing to Cox as provided in the merger agreement or as consented to in advance by Cox (which consent shall not be unreasonably withheld, delayed or conditioned) or as required by law or in the event of certain emergencies):

declare, set aside or pay dividends on, or make any other distributions in respect of any outstanding capital stock of, or other equity interests in, itself or any of its subsidiaries (other than dividends and distributions by a direct or indirect wholly owned subsidiary to EGC or to another subsidiary of EGC);

split, combine or reclassify any capital stock of, or other equity interests in, EGC or any of its subsidiaries;

repurchase, redeem or otherwise acquire, or offer to repurchase, redeem or otherwise acquire, any capital stock of, or other equity interests in, EGC or any of its subsidiaries, except as required by the terms of any capital stock of, or other equity interests in, EGC or any of its subsidiaries outstanding on the date of the merger agreement or as contemplated by any existing director compensation plan, employee benefit plan, or employment agreement of EGC, in each case, as those terms, plans or arrangements are in effect as of the date of the merger agreement;

offer, issue, deliver, grant or sell, or authorize or propose to offer, issue, deliver, grant or sell, any capital stock of, or other equity interests in, EGC or any of its subsidiaries or any securities convertible into, or any rights, warrants or options to acquire, any capital stock or equity interests of EGC or any of its subsidiaries, other than:
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the issuance of EGC common stock pursuant to awards granted under any of the EGC stock plans and outstanding on the date of the merger agreement; or

issuances by a wholly owned subsidiary of EGC of that subsidiary’s capital stock or other equity interests to EGC or any other wholly owned subsidiary of EGC;

amend or propose to amend its or its subsidiaries’ articles of incorporation, bylaws or other comparable organizational documents;

merge, consolidate or amalgamate with any person other than a wholly owned subsidiary of EGC;

acquire or agree to acquire (including by amalgamating, merging or consolidating with, purchasing any equity interest in or a substantial portion of the assets of, licensing, or by any other manner), any business or any corporation, partnership, association or other business organization or division thereof  (other than acquisitions of federal lease blocks);

sell, lease, license, transfer, exchange, swap, pledge, subject to any encumbrance or otherwise dispose of, or agree to sell, lease, license, transfer, exchange, swap, pledge, subject to any encumbrance or otherwise dispose of, any of its (or their, respectively), its or their assets or properties other than any sale, lease, license, transfer, exchange, swap, pledge, encumbrance or disposition of any of the foregoing assets and properties that:

are of obsolete or worthless equipment or hydrocarbons, crude oil and/or refined products and are made in the ordinary course of business;

were previously disclosed to Cox; or

involve the sales, leases, licenses, transfers, or other dispositions of any assets other than oil and gas properties with a fair market value of less than $1,000,000 in the aggregate;

consummate, authorize, recommend, propose or announce an intention to adopt, a plan of complete or partial liquidation, dissolution, recapitalization or other reorganization;

change in any respect its material accounting principles or methods and policies for the preparation of financial statements included in reports or registrations statements filed with the SEC, except as required by GAAP or statutory accounting requirements;

fail to maintain insurance in at least those amounts and against at least those risks and losses as are consistent in all material respects with those entities’ past practice;

make or rescind any election relating to taxes (including any election for any venture, partnership, limited liability company or other investment where EGC has the capacity to make that binding election, but excluding any election is required by applicable law to be made periodically and is made consistent with past practice);

settle or compromise any proceeding relating to taxes;

change in any material respect any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income tax returns that have been filed for prior taxable years;

grant any increases in the compensation (including bonuses) or benefits payable or to become payable to any of its directors, officers or key employees (where, “key employee” means any employee whose annual base salary is equal to or greater than $100,000);

grant any increases in the compensation (including bonuses) or benefits payable or to become payable to any of its employees who are not key employees, except for increases in the compensation or benefits of those employees made in the ordinary course of business consistent with past practice that do not, for any individual employee, exceed the rate of annual rate of inflation as determined by reference to the Consumer Price Index as published by the U.S. Bureau of Labor Statistics;
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pay or agree to pay to any director, officer or key employee, whether past or present, any material pension, retirement allowance or other employee benefit not required by any employee benefit plan existing on the date of the merger agreement;

enter into any new, or amend any existing employee benefit plan;

establish or become obligated under any collective bargaining agreement or employee benefit plan that was not in existence or approved by the EGC board of directors prior to the date of the merger agreement;

fund (or agree to fund) any compensation or benefits under any employee benefit plan, including through a “rabbi” or similar trust, not required by any employee benefit plan existing on the date of the merger agreement;

hire any new employee or independent contractor or terminate the employment or service relationship of any employee or independent contractor (other than a termination for “cause”), other than, in the case of this bullet point and of the six preceding bullet points), as required by law or for any action taken in the ordinary course of business consistent with past practice;

enter into or amend in any manner any contract with any former or present director or officer of that party or any of its subsidiaries or with any affiliate of any of the foregoing persons or any other person covered under Item 404 of Regulation S-K promulgated by the SEC, except as permitted under the merger agreement;

incur, create or assume any material indebtedness, or create any material encumbrances on any property or assets of EGC or any of its subsidiaries, other than permitted encumbrances, other than:

the incurrence of indebtedness under EGC’s revolving facility under the First Lien Exit Facility in the ordinary course of business;

indebtedness incurred in the ordinary course of business (and pre-payable without premium or penalty) related to working capital lines of credit, letters of credit, overdraft facilities, hedging transactions, bank guarantees, insurance premium financings (subject to the other restrictions contained in the merger agreement), factoring transactions and other ordinary course forms of indebtedness to the extent permitted by the First Lien Exit Facility, in an amount not to exceed $1,000,000 in the aggregate;

indebtedness incurred by EGC that is owed to a wholly owned subsidiary of EGC or by a wholly owned subsidiary of EGC that is owed to EGC or another wholly owned subsidiary of EGC;

trade credit provided to customers in the ordinary course of business consistent with past practice;

the incurrence of capital lease obligations in the ordinary course of business consistent with past practice not to exceed $1,000,000; or

the creation of any encumbrances securing any indebtedness permitted to be incurred by the five preceding bullet points;

enter into any contract that would be a material contract;

terminate, amend, modify or waive any material provision right or benefit of or under any material contract except where that termination, amendment, modification or waiver would not reasonably be likely to have, individually or in the aggregate, a material adverse effect;

authorize or make capital expenditures that are, on an individual basis, in excess of  $1,000,000, except for reasonable capital expenditures to repair damage resulting from casualty events or required due to an emergency;
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settle or offer or propose to settle, any proceeding involving the payment of monetary damages by EGC or any of its subsidiaries of any amount exceeding $1,000,000 in the aggregate, and notwithstanding the foregoing, neither EGC nor any of its subsidiaries may settle or compromise any proceeding if that settlement or compromise:

involves a conduct remedy or injunctive or similar relief; or

involves an admission of criminal wrongdoing by EGC or any of its subsidiaries; or

agree in writing or otherwise to take any action inconsistent with the foregoing.
In addition, Cox has agreed to specific restrictions relating to the conduct of its business between the date of the merger agreement and the effective time, including, but not limited to, the following (except as consented to in advance by EGC):

amend or propose to amend its or its subsidiaries’ articles of incorporation, bylaws or other comparable organizational documents;

consummate, authorize, recommend, propose or announce an intention to adopt, a plan of complete or partial liquidation, dissolution, recapitalization, scheme of arrangement or other reorganization; or

agree in writing or otherwise to take any action inconsistent with the foregoing.
No Solicitation of Competing Proposals
Promptly after the date of the merger agreement, and as required by the merger agreement, EGC terminated all physical and electronic data access to all counterparties with respect to which EGC has discussed potential transactions that would be treated as competing proposals under the merger agreement.
From and after the date of the merger agreement and except as otherwise specifically provided for in the merger agreement, EGC is prohibited from, will cause its subsidiaries not to, and must use its commercially reasonable efforts to cause its directors, officers, employees, consultants, agents, advisors, controlled affiliates, and other representatives (collectively, the “representatives”) not to, directly or indirectly:

initiate, solicit or knowingly encourage the making of a competing proposal;

participate or engage in any discussions or negotiations with any person with respect to a competing proposal;

furnish or provide any non-public information or data regarding EGC or its subsidiaries or provide access to any person to properties, assets or employees of EGC or its subsidiaries to any person who has made or informs EGC that it is considering making a competing proposal;

withdraw, modify or qualify, or propose publicly to withdraw, modify or qualify, in a manner adverse to Cox, the recommendation of the EGC board of directors that EGC’s stockholders adopt the merger agreement or publicly recommend the approval or adoption of, or publicly approve or adopt, any competing proposal (sometimes referred to in this proxy statement as an “EGC change of recommendation”); or

enter into, any letter of intent or agreement in principal or other agreement providing for a competing proposal.
However, prior to the adoption of the merger agreement by the EGC stockholders, EGC is permitted under the merger agreement to take any or all of the actions described in the first three bullets above with any person who has made a competing proposal. Nevertheless, EGC is permitted to take those actions only if  (A) no non-public information is furnished to the party making the competing proposal until EGC receives from that party an executed confidentiality agreement that does not contain provisions that prohibit EGC from complying with the provisions of the merger agreement and (B) prior to taking any of those actions, the EGC board of directors or any committee thereof determines in good faith, after consultation with its financial advisors and outside legal counsel, that the competing proposal is, or could reasonably be expected to lead to, a superior proposal.
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A “competing proposal” means any contract, proposal, offer or indication of interest relating to any transaction or series of related transactions (other than transactions with Cox or any of its subsidiaries) involving: (i) any direct or indirect acquisition (by asset purchase, stock purchase, merger, or otherwise) by any person or group of any business or assets of EGC or any of its subsidiaries (including capital stock of or ownership interest in any subsidiary) that generated 20% or more of EGC’s consolidated net revenue or earnings before interest, taxes, depreciation and amortization for the preceding 12 months, or any license, lease or long-term supply agreement having a similar economic effect, (ii) any direct or indirect acquisition of beneficial ownership by any person or group of 20% or more of the outstanding shares of EGC common stock or any tender or exchange offer that, if consummated, would result in any person or group beneficially owning 20% or more of the outstanding shares of EGC common stock or (iii) merger, consolidation, share exchange, business combination, recapitalization, liquidation, dissolution or similar transaction involving EGC that is structured to permit any person or group to acquire beneficial ownership of at least 20% of EGC’s consolidated assets or equity interests.
A “superior proposal” means any written proposal by any person or group (other than Cox or any of its affiliates) to acquire, directly or indirectly, (i) businesses or assets of EGC or any of its subsidiaries (including capital stock of or ownership interest in any subsidiary) that generated 50% or more of EGC’s consolidated net revenue or earnings before interest, taxes, depreciation and amortization for the preceding 12 months, respectively, or (ii) more than 50% of the outstanding shares of EGC common stock, in each case, whether by way of merger, amalgamation, share exchange, tender offer, exchange offer, recapitalization, consolidation, sale of assets or otherwise, that, in the good faith determination of the EGC board of directors or any committee thereof, after consultation with its financial advisors and after taking into account relevant legal, financial, regulatory, estimated timing of consummation and other aspects of that proposal and the person or group making that proposal, would, if consummated in accordance with its terms, result in a transaction more favorable to EGC stockholders than the merger.
The merger agreement requires EGC to advise Cox within two business days of  (i) any competing proposal, (ii) any request for non-public information or data relating to EGC or any of its subsidiaries made by any person that has made, or has informed EGC it is considering making, a competing proposal and (iii) any request for discussions or negotiations with EGC or its representatives relating to a competing proposal. EGC is also required to provide Cox, within two business days of its receipt of a competing proposal, with a copy of that competing proposal or a written summary of the material terms of that competing proposal.
Change in Board Recommendation
The EGC board of directors unanimously recommends that the EGC stockholders adopt the merger agreement. However, the merger agreement permits the EGC board of directors (or a committee thereof), at any time prior to receipt of the required EGC stockholder approval, to effect an EGC change of recommendation if, prior to taking that action, the EGC board of directors or any committee thereof determines in good faith, after consultation with outside legal counsel, that failure to take that action would be reasonably likely to be inconsistent with the EGC board of directors’ fiduciary duties to the EGC stockholders under applicable law.
Even though the merger agreement permits the EGC board of directors to effect an EGC change of recommendation under certain circumstances, an EGC change of recommendation does not necessarily permit EGC to terminate the merger agreement to accept a competing proposal. In order to terminate the merger agreement for that purpose, EGC must satisfy additional requirements. At any time prior to obtaining the required EGC stockholder approval, the EGC board of directors (or any committee thereof) may cause EGC to terminate the merger agreement in order to accept a competing proposal that the EGC board of directors determines is a superior proposal if, prior to taking that action:

the EGC board of directors (or a committee thereof) determines in good faith after consultation with its financial advisors and outside legal counsel that the competing proposal is a superior proposal (taking into account any adjustment to the terms and conditions of the merger proposed by Cox in response to the competing proposal); and

EGC gives notice to Cox that EGC has received that proposal, specifying the material terms and conditions of that proposal, and, that EGC intends to take that action, and either:
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Cox has not proposed revisions to the terms and conditions of the merger agreement prior to the scheduled time for the EGC special meeting or the second business day after the date on which EGC’s notice is given to Cox, whichever is earlier; or

if Cox within the period described above has proposed revisions to the terms and conditions of the merger agreement in a manner that would form a binding contract if accepted by EGC, and the EGC board of directors (or any committee thereof), after consultation with its financial advisors and outside legal counsel, shall have determined in good faith that the competing proposal remains a superior proposal with respect to Cox’s revised proposal.
For purposes of the process described above, each time material modifications are made to the financial terms of a competing proposal the EGC board determines to be a superior proposal, EGC must wait an additional 24 hours after notifying Cox of that modification before EGC may effect an EGC change of recommendation or terminate the merger agreement.
Efforts to Obtain Required Stockholder Votes
EGC will take all action necessary to duly give notice of, convene and hold a stockholders meeting as soon as reasonably practicable after the clearance of the proxy statement by the SEC for the purpose of obtaining stockholder approval of the adoption of the merger agreement, the merger and the other transactions contemplated by the merger agreement. The EGC board of directors has (i) approved and declared advisable the merger agreement, (ii) resolved to recommend adoption of the merger agreement, the merger and the other transactions contemplated by the merger agreement to EGC stockholders, and (iii) directed that the merger agreement be submitted to the EGC stockholders for adoption.
EGC is required to adjourn or postpone the EGC special meeting (i) to the extent necessary to ensure that any required supplement or amendment to this proxy statement is provided to the EGC stockholders or (ii) if, as of the time for which the EGC special meeting is scheduled, there are insufficient shares of EGC common stock represented (either in person or by proxy) to constitute a quorum necessary to conduct business at the EGC special meeting. Furthermore, EGC may adjourn or postpone the EGC special meeting if, as of the time for which the EGC special meeting is scheduled, there are insufficient shares of EGC common stock represented to obtain the required EGC stockholder approval. However, unless otherwise agreed to by the parties, the EGC special meeting may not be adjourned or postponed to a date that is more than 20 business days after the date for which the meeting was previously scheduled. EGC may not adjourn or postpone the EGC special meeting to a date on or after two business days prior to the termination date (as defined below). Nevertheless, EGC may adjourn or postpone the EGC special meeting to a date no later than the second business day after the expiration of any of the negotiation periods set forth in the merger agreement relating to EGC’s response to a competing proposal, as described above in “— Change in Board Recommendation.”
Efforts to Complete the Merger; Consents and Regulatory Approvals
The parties to the merger agreement have each agreed to use their commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper and advisable to consummate and make effective, in the most expeditious manner practicable, the merger, including:

the obtaining of all required consents and the taking of all commercially reasonable steps as may be required to obtain a consent from