13D Filing: Anchorage Advisors and Rosehill Resources Inc (ROSE)

In connection with its entry into the Business Combination Agreement, the Issuer entered into Subscription Agreements, each dated as of December 20, 2016, (each a “Subscription Agreement”) with KLR Sponsor and each of The K2 Principal Fund, L.P., AIO V, AIO V AIV 3, and Geode Diversified Fund, a segregated account of Geode Capital Master Fund Ltd. (each, a “Purchaser”), pursuant to which, among other things, the Issuer agreed to issue and sell in a private placement an aggregate of 75,000 shares of Series A Preferred Stock, which are convertible into Shares at a conversion price of $11.50 per share (subject to certain adjustments) and (b) 5,000,000 Warrants for aggregate gross proceeds of $75 million.  Additionally, KLR Sponsor agreed to contribute an aggregate of up to 734,704 Shares to the Purchasers.  The private placement was conditioned upon, and closed concurrently with, the Business Combination.

Pursuant to the Subscription Agreements, Purchasers are entitled to certain registration rights, subject to customary black-out periods, cutback provisions and other limitations as set forth therein.

The foregoing description of the Subscription Agreements does not purport to be complete and is qualified in its entirety by the terms and conditions of the Subscription Agreements entered into by each of AIO V and AIO V AIV 3, copies of which are filed hereto as Exhibits C and D, respectively, and are incorporated herein by reference.

8.0% Series A Cumulative Perpetual Preferred Stock

Holders of Series A Preferred Stock are entitled to receive, when, as and if declared by the Board, cumulative dividends, payable in cash, Series A Preferred Stock, or a combination thereof, in each case, at the sole discretion of the Issuer, at an annual rate of 8% on the $1,000 liquidation preference per share of the Series A Preferred Stock, payable quarterly in arrears on January 15, April 15, July 15 and October 15 of each year, beginning on July 15, 2017.

Each share of Series A Preferred Stock has a liquidation preference of $1,000 per share and is convertible, at the holder’s option at any time, initially into 86.9565 Shares (which is equivalent to an initial conversion price of approximately $11.50 per Share), subject to specified adjustments and limitations as set forth in the Certificate of Designations of the Series A Preferred Stock (“Certificate of Designations”).  Under certain circumstances, the Issuer may increase the conversion rate upon a “fundamental change” as described in the Certificate of Designations.

At any time on or after April 27, 2019, the Issuer may, at its option, give notice of its election to cause all outstanding shares of Series A Preferred Stock to be automatically converted into