Item 1.01 Entry into a Material Definitive Agreement.
Registration Rights Agreement
In connection with the Closing, the Company entered into registration rights
agreements (the "Registration Rights Agreements") with each PIPE Investor
pursuant to which the Company agreed to submit to or file with the Securities
and Exchange Commission (the "SEC"), within 45 calendar days after the Closing
Date, a registration statement registering the resale of the shares of Common
Stock underlying the PIPE Preferred Stock and PIPE Warrants (the "PIPE Resale
Registration Statement"), and the Company agreed to use its best efforts to have
the PIPE Resale Registration Statement declared effective as promptly as
possible after the filing thereof but no later than ninety (90) calendar days
(or one hundred twenty (120) calendar days if the SEC notifies the Company that
it will review the PIPE Resale Registration Statement) following the Closing
Date.
The foregoing description of the Registration Rights Agreements does not purport
to be complete and is qualified in its entirety by reference to the full text of
form of Registration Rights Agreement, which is attached hereto as Exhibit 10.3
and is incorporated herein by reference into this Item 1.01.
Stockholders Agreement
Prior to the Effective Time, the Company, Bristol Capital, Paul L. Kessler, Gary
C. Hanna and Edward Kovalik entered into the Stockholders Agreement (the
"Stockholders Agreement") pursuant to which the parties agreed to use reasonable
best efforts, including taking certain necessary actions, to cause the Board to
cause certain nominees to be elected to serve as a director on the Board under
the following conditions: (i) one nominee designated by Bristol Capital and Paul
L. Kessler, collectively, so long as Bristol Capital, Paul L. Kessler and their
respective affiliates collectively beneficially own at least 50% of the number
of shares of Common Stock collectively beneficially owned by such parties on the
Closing Date; (ii) four nominees designated by Gary C. Hanna and Edward Kovalik
(the "Prairie Members") so long as the Prairie Members and their affiliates
collectively beneficially own at least 50% of the number of shares of Common
Stock collectively beneficially owned by such parties on the Closing Date; (iii)
three nominees designated by the Prairie Members so long as the Prairie Members
and their affiliates collectively beneficially own at least 40% (but less than
50%) of the number of shares of Common Stock collectively beneficially owned by
such parties on the Closing Date; (iv) two nominees designated by the Prairie
Members so long as the Prairie Members and their affiliates collectively
beneficially own at least 30% (but less than 40%) of the number of shares of
Common Stock collectively beneficially owned by such parties on the Closing
Date; and (v) one nominee designated by the Prairie Members so long as the
. . .
Item 2.01 Completion of Acquisition or Disposition of Assets.
As discussed in the Introductory Note to this Current Report on Form 8-K, on May
3, 2023, the Company completed the Merger pursuant to the terms of the Merger
Agreement and the Exok Transaction pursuant to the Exok Agreement.
The foregoing description, the Merger Agreement and the Exok Agreement, and the
transactions contemplated thereby, is a summary only, does not purport to be
complete, and is subject to and qualified in its entirety by reference to the
full text of the Merger Agreement and the Exok Agreement, respectively. The
information set forth in the Introductory Note of this Current Report on Form
8-K is incorporated by reference into this Item 2.01.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 of this Current Report on Form 8-K with
respect to the AR Debentures is incorporated by reference into this Item 2.03.
Item 3.02 Unregistered Sales of Equity Securities.
Along with entering into AR Debentures with each of Bristol Investment and
Barlock, the Company issued 9,399,794 shares of Common Stock and 2,523 shares of
Series D Preferred Stock to Bristol Investment and 7,740,781 shares of Common
Stock and 1,900 shares of Series D Preferred Stock to Barlock, in exchange for
their respective Original Debentures, in full satisfaction of the outstanding
principal amount, accrued but unpaid interest and a 30% premium, pursuant to
support agreements (collectively, the "Support Agreements") entered into on May
3, 2023. Such Series D Preferred Stock shall automatically convert into shares
of Common Stock at a price of $0.175 per share immediately after the Uplisting.
Pursuant to the Support Agreement entered into with Barlock, the Company issued
to American Natural Energy Corporation, a Delaware corporation, 942,858 shares
of Common Stock at a price per share of $0.175 for an aggregate value of
$165,000. The issuance of the shares of Series D Preferred Stock and shares of
Common Stock pursuant to the Support Agreements was made pursuant to the
exemption from registration contained in Section 4(a)(2) of the Securities Act
of 1933, as amended (the "Securities Act").
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The disclosure set forth above in the Introductory Note and Item 1.01 of this
Current Report on Form 8-K with respect to the shares of Common Stock issued
pursuant to the Merger Consideration, the Options issued in the Merger, the PIPE
Preferred Stock and PIPE Warrants issued in the PIPE Transaction and the shares
of Common Stock issued in the Restructuring Transactions is incorporated by
reference herein. All such issuances of shares of Common Stock, Options, PIPE
Preferred Stock and PIPE Warrants were made pursuant to the exemption from
registration contained in Section 4(a)(2) of the Securities Act.
Item 3.03 Material Modification to Rights of Security Holders.
The information set forth in Item 5.03 to this Current Report on Form 8-K is
incorporated herein by reference into this Item 3.03.
Item 5.01 Changes in Control of the Registrant.
The information set forth in the Introductory Note, Item 2.01 and Item 5.02 to
this Current Report on Form 8-K is incorporated herein by reference into this
Item 5.01.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
Departure of Directors; Appointment of Directors
As contemplated by the Merger Agreement, John D. Maatta and Michael Breen
resigned from the Board effective as of the Effective Time. Such resignations
were not the result, in whole or in part, of any disagreement with the Company
or the Company's management.
Effective as of the Effective Time, the Board increased to five members and
appointed Gary C. Hanna, Edward Kovalik, Gizman Abbas and Stephen Lee
(collectively, the "New Directors"). Biographical information for these
individuals is set forth in the definitive information statement filed with the
SEC, dated November 7, 2022 (the "Information Statement"), in the section titled
"Management of PrairieCo Following the Transactions" beginning on page 51, which
is incorporated herein by reference. The Board has determined that Mr. Abbas and
Mr. Lee are "independent directors" as defined in the application SEC rules and
will serve on the audit, compensation and nominating and corporate governance
committees with Mr. Abbas serving as chair of the audit committee and nominating
and corporate governance committee and Mr. Lee serving as chair of the
compensation committee.
The New Directors are not related to any existing officer or director of the
Company, or each other. There are no transactions or relationships between or
among any of Mr. Abbas and Mr. Lee and the Company that would be required to be
reported under Item 404(a) of Regulation S-K. The information relating to Mr.
Hanna and Mr. Kovalik required to be reported under Item 404(a) of Regulation
S-K is disclosed in the Information Statement in the section titled "Interests
of Certain Persons in the Merger Agreement and Related Party Transactions"
beginning on page 45 and the Introductory Note and Item 1.01 of this Current
Report on Form 8-K, each of which is incorporated herein by reference.
Departure of Executive Officers; Appointment of Executive Officers
At the Effective Time, Paul Kessler resigned as Executive Chairman and John D.
Maatta resigned as Chief Executive Officer and Interim Chief Financial Officer.
Such resignations were not the result, in whole or in part, of any disagreement
with the Company or the Company's management.
The Board appointed Gary C. Hanna as President, Edward Kovalik as Chief
Executive Officer, Craig Owen as Chief Financial Officer, Jeremy Ham as Chief
Commercial Officer and Bryan Freeman as Executive Vice President of Operations
(collectively, the "New Officers"). Biographical information for these
individuals is set forth in the Information Statement in the section titled
"Management of PrairieCo Following the Transactions" beginning on page 51, which
is incorporated herein by reference.
The New Officers are not related to any existing officer or director of the
Company, or each other. There are no transactions or relationships between or
among Mr. Owen, Mr. Ham and Mr. Freeman and the Company that would be required
to be reported under Item 404(a) of Regulation S-K.
6
Employment Agreements
In connection with the Merger and the appointment of the New Officers, Prairie
LLC entered into employment agreements with each of the New Officers, effective
May 3, 2023 (collectively, the "Employment Agreements"), which were previously
approved by Prairie LLC prior to the Effective Time. The Employment Agreements
have an indefinite term, and Prairie LLC has the right to terminate employment
at any time for Cause (as defined in the Employment Agreements) or with 30 days'
written notice for a termination other than for Cause. The New Officers may
terminate employment with Prairie LLC at any time and for any reason, or no
reason at all, with written notice provided to Prairie LLC.
The Employment Agreements provide that the New Officers will each receive an
annual base salary and be eligible for an annual bonus with a target amount
equal to a percentage of annual base salary in the following amounts: for each
of Messrs. Hanna and Kovalik, $550,000 in annual base salary and a target annual
bonus equal to 250% of annual base salary and for each of Messrs. Owen, Ham and
Freeman, $350,000 in annual base salary and a target annual bonus equal to 100%
of annual base salary. The New Officers will also be eligible to participate in
Prairie LLC's Long Term Incentive Plan, which was amended and restated in
connection with the Merger as described below.
The Employment Agreements also provide for certain severance benefits upon each
New Officer's termination of employment without "Cause" or upon their
resignation for "Good Reason" (each quoted term as defined in the Employment
Agreements), including (i) for Messrs. Hanna and Kovalik, (a) cash severance
equal to three times (or, if termination occurs in connection with a "Change of
Control" (as defined in the applicable Employment Agreement), four times) the
sum of (1) the then-current annualized base salary, (2) the target annual bonus
for the year of termination and (3) the amount payable under Prairie LLC's Long
Term Incentive Plan (as amended and restated), payable in a lump sum on the
first regularly scheduled pay date that is sixty (60) days after the termination
date and (b) reimbursement of certain premiums paid for continuation coverage
under Prairie LLC's group health plans for a period of up to eighteen (18)
months; and (ii) for Messrs. Owen, Ham and Freeman, (a) cash severance equal to
two times the sum of (1) the then-current annualized base salary and (2) the
. . .
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
Year.
Immediately prior to the Effective Time, the Company filed the Certificate of
Amendment to the Amended and Restated Certificate of Incorporation of the
Company (the "Charter Amendment") to, among other things, (i) change the name of
the Company from "Creek Road Miners, Inc." to "Prairie Operating Co.," (ii)
increase the number of authorized shares of Common Stock from 100,000,000 shares
to 500,000,000 shares and (iii) make certain changes that the Board deems
appropriate for the public operating company after the Closing.
In connection with the Closing, the Company adopted the Amended and Restated
Bylaws (the "Bylaws").
In connection with the consummation of the PIPE Transaction, the Company filed
the Certificate of Designation of Preferences, Rights and Limitations of Series
D Convertible Preferred Stock (the "Certificate of Designation") which sets
forth the terms and provisions of the Series D Preferred Stock.
Dividends. Subject to certain adjustments, the holders of Series D Preferred
Stock are entitled to dividends equal to and in the same form as dividends paid
on the shares of Common Stock. No other dividends will be paid on the shares of
Series D Preferred Stock.
Voting Rights. As long as shares of Series D Preferred Stock are outstanding,
the Company shall not, without the affirmative vote of the holders of not less
than 66% of the then outstanding shares of Series D Preferred Stock, (i) alter
or change the powers, preferences or rights given to the Series D Preferred
Stock in a materially adverse manner or alter or amend the Certificate of
Designation in such a manner so as to materially adversely affect any rights of
the holders of Series D Preferred Stock, (ii) authorize or create any class of
stock ranking as to dividends, redemption or distribution of assets upon a
liquidation, dissolution or winding-up of the Company (a "Liquidation") senior
to, or otherwise pari passu with, the Series D Preferred Stock, (iii) amend its
certificate of incorporation or other charter documents in any manner that
materially adversely affects any rights of the holders of Series D Preferred
Stock, (iv) increase the number of authorized shares of Series D Preferred Stock
or (v) enter into any agreement with respect to any of the foregoing. The Series
D Preferred Stock have no other voting rights.
Liquidation. Upon a Liquidation, the holders of Series D Preferred Stock shall
be entitled to receive out of the assets, whether capital or surplus, of the
Company an amount equal to the $1,000 (the "Stated Value"), plus any accrued and
unpaid dividends thereon and any other fees or liquidated damages then due and
owing thereon under the Certificate of Designation, for each share of Series D
Preferred Stock before any distribution or payment shall be made to the holders
of any securities junior to the Series D Preferred Stock, and if the assets of
the Company shall be insufficient to pay in full such amounts, then the entire
assets to be distributed to the holders of Series D Preferred Stock shall be
ratably distributed among the holders of Series D Preferred Stock in accordance
with the respective amounts that would be payable on such shares if all amounts
payable thereon were paid in full.
Conversion Rights. The holders of Series D Preferred Stock may convert their
shares into shares of Common Stock, as is determined by dividing the Stated
Value by $0.175 (subject to certain adjustments, the "Conversion Price"). The
Company shall deliver the shares of Common Stock issuable upon conversion of the
Series D Preferred Stock not later than the earlier of two trading days and the
number of trading days comprising a standard settlement period. If the Company
fails to deliver such shares by the applicable deadline, the Company will pay to
such holder, in cash, as liquidated damages, for each $5,000 of Stated Value of
Series D Preferred Stock being converted, $50 per trading day for each trading
day (or $100 per trading day after the third trading day and $200 per trading
day after the sixth trading day) after the applicable deadline until such shares
are delivered or the holder rescinds such conversion.
8
Beneficial Ownership Limitation. The Company will not effect any conversion of
Series D Preferred Stock of a holder to the extent, after giving effect to the
conversion, such holder would beneficially own shares of Common Stock in excess
of 4.99% (or 9.99% upon election by the holder) of all of the Common Stock
outstanding at such time.
Company Redemption Rights. After the date on which the PIPE Resale Registration
Statement is first declared effective by the SEC, if the average of the
volume-weighted average price for shares of Common Stock for any 22 trading days
during a 30 consecutive trading day period (the "Threshold Period") exceeds
$0.2975, the Company may, within two trading days after the end of any such
Threshold Period, deliver a written notice to cause each holder to convert all
or a portion of their Series D Preferred Stock, not to exceed, in the aggregate
among all holders, 15% of the average daily trading volume of the shares of
Common Stock on the then applicable trading market during the Threshold Period.
At any time commencing on the 24-month anniversary of the Closing Date, the
Company may deliver a notice to the holders of its irrevocable election to
redeem some or all of the then outstanding Series D Preferred Stock for cash in
an amount equal to the sum of (i) 105% of the aggregate Stated Value then
outstanding, (ii) accrued but unpaid dividends and (iii) all liquidated damages
. . .
Item 7.01 Regulation FD Disclosure.
On May 4, 2023, the Company issued a press release announcing the Closing.
The full text of the press release is included as Exhibit 99.1 and is
incorporated herein by reference into this Item 7.01.
In accordance with General Instruction B.2 of Form 8-K, the information
furnished pursuant to Item 7.01 and the press release attached hereto as Exhibit
99.1 shall not be deemed to be "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise
subject to the liabilities of that section, nor shall such information be deemed
incorporated by reference in any filing under the Securities Act or the Exchange
Act, except as shall be expressly set forth by specific reference in such a
filing.
9
Item 9.01 Financial Statements and Exhibits.
The Company acknowledges that the information required by Item 9.01(a) and (b)
is required for the year ended December 31, 2022, and the Company will update
such information through an amendment to this Current Report on Form 8-K within
75 days after Closing once Prairie LLC's annual audit is completed, and the
unaudited financial statements as of and for the three months ended March 31,
2023 and related unaudited pro forma condensed combined financial information as
of March 31, 2023 and for the three months ended March 31, 2023 and the year
ended December 31, 2022 are available.
(d) Exhibits
Exhibit
Number Description
2.1† Amended and Restated Agreement and Plan of Merger, dated as of May
3, 2023, by and among Creek Road Miners, Inc., Creek Road Merger Sub,
LLC and Prairie Operating Co., LLC (incorporated by reference to
Exhibit 2.1 of the Company's Current Report on Form 8-K, filed with
the SEC on May 4, 2023).
3.1* Certificate of Amendment to the Amended and Restated Certificate of
Incorporation of Creek Road Miners, Inc.
3.2* Amended and Restated Bylaws of Prairie Operating Co.
3.3* Certificate of Designation of Preferences, Rights and Limitations of
Series D Convertible Preferred Stock.
10.1† Amended and Restated Purchase and Sale Agreement, dated as of May 3,
2023, by and among Prairie Operating Co., LLC, Exok, Inc. and Creek
Road Miners, Inc (incorporated by reference to Exhibit 10.1 of the
Company's Current Report on Form 8-K, filed with the SEC on May 4,
2023).
10.2 Form of Securities Purchase Agreement (incorporated by reference to
Exhibit 10.2 of the Company's Current Report on Form 8-K, filed with
the SEC on May 4, 2023).
10.3* Form of Registration Rights Agreement.
10.4* Stockholders Agreement, dated as of May 3, 2023, by and among Creek
Road Miners, Inc., Bristol Capital Advisors, LLC, Paul Kessler, Edward
Kovalik and Gary C. Hanna.
10.5* Form of Lock-up Agreement.
10.6* Form of Lock-up Agreement.
10.7 Form of Lock-up Agreement (incorporated by reference to Exhibit 10.9
of the Company's Current Report on Form 8-K, filed with the SEC on May
4, 2023).
10.8* Form of Indemnification Agreement.
10.9†* Form of 12% Amended and Restated Senior Secured Convertible
Debenture Due December 31, 2023.
10.10* Amended and Restated Security Agreement, dated as of May 3, 2023, by
and among Prairie Operating Co. and its subsidiaries, Barlock 2019
Fund, LP and Bristol Investment Fund, Ltd.
10.11* Form of Amended and Restated Non-Compensatory Option Agreement.
10.12* Form of Employment Agreement (President and CEO).
10.13* Form of Employment Agreement (Other Executive Officers).
10.14* Amended and Restated Prairie Operating Co. Long Term Incentive
Plan.
99.1* Press Release, dated May 4, 2023.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
† Certain exhibits and schedules to this Exhibit have been omitted in accordance
with Item 601(a)(5) of Regulation S-K. The Company agrees to furnish
supplementally a copy of any omitted exhibit or schedule to the SEC upon its
request.
* Filed herewith.
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