Item 1.01 Entry into a Material Definitive Agreement.
In October and November of 2021, and
The securities offered will not be or have not been registered under the
Securities Act of 1933, as amended, and may not be offered or sold in
The foregoing description of the Subscription Agreements and the transactions and documents contemplated thereby is not complete and is subject to and qualified in its entirety by reference to the form of Subscription Agreement, which is filed as Exhibit 10.1 hereto and the terms of which are incorporated by reference herein.
Item 3.02 Unregistered Sales of
The disclosure set forth above in Item 1.01 of this Current Report on Form 8-K
with respect to the Subscription Agreements is incorporated by reference in this
Item 3.02. The Subscription Shares were issued in accordance with the
Subscription Agreements in reliance on an exemption from registration under the
Securities Act of 1933, as amended (the "Securities Act") pursuant to Section
4(a)(2) and/or Rule 506(b) of Regulation D of the Securities Act, since the
transactions did not involve a public offering, the recipients were (a)
"accredited investors"; and/or (b) had information regarding the Company similar
to what would be included in a Registration Statement under the Securities Act,
and acquired the securities for investment only and not with a view towards, or
for resale in connection with, the public sale or distribution thereof. The
securities are subject to transfer restrictions, and the certificates evidencing
the securities contain an appropriate legend stating that such securities have
not been registered under the Securities Act and may not be offered or sold
absent registration or pursuant to an exemption therefrom. The securities were
not registered under the Securities Act and such securities may not be offered
or sold in
The Subscription Shares are convertible into common stock of the Company pursuant to the terms of the Series C Designation (defined below). The maximum number of shares of common stock of the Company (the "Common Stock") issuable upon conversion of the Subscription Shares, without taking into account accrued dividends or payment-in-kind shares and without regard to any Beneficial Ownership Limitation (discussed below), is 11,000,000 shares of common stock.
Item 3.03 Material Modification to Rights of Security Holders.
The information and disclosures set forth in Item 5.03 hereof are incorporated by reference into this Item 3.03 in their entirety.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On
Series C Preferred Stock
The Series C Designation provides for the Series C Preferred Stock to have the following rights:
Ranking. The holders of Series C Preferred Stock will rank senior to the Common Stock and the Company's Series B Preferred Stock with respect to payment of dividends and rights upon liquidation and will rank junior to the Company's Series A Convertible Preferred Stock, the Corporation's capital leases as may be in place from time to time, and any other senior debt or other security holders of the Corporation, including certain banks and/or institutions, which hold security interests over the Corporation's assets as of the filing date of the Series C Designation.
Dividend Rights. Beginning on the original issue date of each share of the
Series C Preferred Stock (the "Original Issue Date"), dividends will accrue
monthly in arrears on the original issue price of
Payment of Accrued Dividends. Other than in connection with a conversion or redemption of shares of the Series C Preferred Stock as provided in the Series C Designation, or otherwise authorized by the Board of Directors, the Accrued Dividends are payable only in kind in a number of additional shares of Series C Preferred Stock (the "PIK Shares") equal to the quotient of (i) the aggregate amount of the Accrued Dividends being paid by the Company in respect of the shares of Series C Preferred Stock held by such holder, divided by (ii) the Original Issue Price, and rounded to the nearest whole share of Series C Preferred Stock.
Conversion Rights. The shares of Series C Preferred Stock, together with any
Accrued Dividends, are convertible into Common Stock at the election of the
holder of the Series C Preferred Stock, at a price equal to the quotient of (i)
the Original Issue Price of each share of Series C Preferred Stock and Accrued
Dividends being converted divided by (ii)
Redemption Rights. The Company has the option in its sole discretion, at any time, to redeem any outstanding shares of Series C Preferred Stock of the Company, together with any Accumulated Dividends, with thirty days prior written notice, by paying the holder(s) a redemption price equal to the Original Issue Price for each such Series C Preferred Stock shares, together with any Accumulated Dividends (the "Redemption Amount", and each a "Redemption"). The payment by the Company to the holder of such shares of Series C Preferred Stock (at such holder's address of record) of the Redemption Amount in connection with a Redemption automatically results in the cancellation, termination and invalidation of any outstanding Series C Preferred Stock held by such holder or his, her or its assigns.
Liquidation Preference. The Series C Preferred Shares have a liquidation preference at the Original Issue Price that is senior to the Company's Common Stock and Class B Preferred Stock, and junior to the Company's Class A Convertible Preferred Stock. The liquidation preference is payable upon a liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, or upon a deemed liquidation of the Company. A deemed liquidation includes any consolidation, merger, or reorganization of the Company in which the shareholders of the Company own less than fifty percent of the voting power of the resultant entity, or an acquisition to which the Company is a party in which at least fifty percent of the Company's voting power is transferred, or the sale, lease, exclusive license or transfer of all or substantially all of the assets of the Company other than to a wholly-owned subsidiary.
Voting Rights. The holders of Series C Preferred Stock will vote together with the holders of the Common Stock on an as-converted basis, subject to the Beneficial Ownership Limitation, on each matter submitted to a vote of holders of Common Stock (whether at a meeting of shareholders or by written consent).
Protective Provisions. Subject to the rights of series of preferred stock which may from time to time come into existence, so long any shares of Series C Preferred Stock are outstanding, the Company cannot without first obtaining the approval (by written consent, as provided by law) of the holders of a majority of the then outstanding shares of Series C Preferred Stock, voting together as a class:
(a) Increase or decrease (other than by redemption or conversion) the total number of authorized shares of Series C Preferred Stock (except to the extent required to issue PIK Shares, if any);
(b) Adopt or authorize any new designation of any Preferred Stock or amend the Certificate of Formation of the Company in a manner which adversely affects the rights, preferences and privileges of the Series C Preferred Stock;
(c) Create (by reclassification or otherwise) any new series or shares of capital stock having rights, preferences, or privileges senior to or on a parity with the Series C Preferred Stock in connection with liquidation rights or dividends;
(d) Re-issue any shares of Series C Preferred Stock converted or redeemed pursuant to the terms of the Series C Designation (except to the extent required to issue PIK Shares, if any);
(e) Effect an exchange, or create a right of exchange, cancel, or right to cancel all or part of the shares of another class of shares into shares of Series C Preferred Stock; or
(f) Alter or change the rights, preferences or privileges of the shares of Series C Preferred Stock so as to affect adversely the shares of such series, including the rights set forth in the Series C Designation.
* * * * *
The description of the Series C Designation above is not complete and is qualified in its entirety by the full text of the Series C Designation, filed herewith as Exhibit 3.1, which is incorporated by reference in this Item 5.03.
Item 8.01 Other Events.
The Company undertook the offering of the Series C Preferred Stock discussed
above in Item 1.01, to raise funding to engage legal counsel to potentially take
legal action against (i) the operator of certain of its properties located in
Investors in the offering include the Company's director,
Item 9.01. Financial Statements and Exhibits.
Exhibit No. Description 10.1* Form of Subscription Agreement (November 2021 Private Offering) 3.1* Certificate of Designation ofPetrolia Energy Corporation Establishing the Designations, Preferences, Limitations, and Relative Rights of its Series C Convertible Preferred Stock as filed with the Secretary ofState of Texas onDecember 15, 2021 3.2* Certificate of Correction ofPetrolia Energy Corporation , Correcting the Certificate of Designation of the Company's Series C Convertible Preferred Stock, as filed with the Secretary ofState of Texas onFebruary 25, 2022
* Filed herewith.
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