Explanatory Note
This Amendment No. 2 to the statement on Schedule 13D amends and supplements the statement on Schedule 13D filed by the Reporting Persons on September 9, 2016 and Amendment No. 1 filed by the Reporting Persons on January 26, 2017 (as amended, the “
Original Schedule 13D
”, and together with this Amendment No. 2, the “
Schedule 13D
”). Terms defined in the Original Schedule 13D are used herein as so defined.
Item 3.
Source and Amount of Funds or Other Consideration
Item 3 of the Original Schedule 13D is hereby amended to add the following:
The aggregate purchase price paid by the Purchasers with respect to the Preferred Stock purchased from the Issuer pursuant to the Stock Purchase Agreement was $20,010,000.00. The purchase of the Preferred Stock was financed with cash on hand from contributions of partners of the Purchasers.
Item 5.
Interest in Securities of the Issuer
Paragraphs (a), (b) and (c) of Item 5 of the Original Schedule 13D are hereby amended as follows:
(a) Aggregate number and percentage of securities.
On February 27, 2017, the Purchasers acquired an aggregate of 276 shares of the Issuer’s Preferred Stock pursuant to the Stock Purchase Agreement, each share of which is convertible into 10,000 shares of Common Stock upon the approval of the Issuer’s stockholders. The Preferred Stock will convert automatically on the 20
th
calendar day after the Issuer mails a definitive information statement to holders of its Common Stock notifying them that holders of a majority of the Issuer’s outstanding Common Stock have consented to the issuance of the Common Stock upon conversion of the Preferred Stock. The Issuer reported in its Current Report on Form 8-K filed on January 26, 2017, that as of January 24, 2017, the Issuer had received written consent for conversion of the Preferred Stock from stockholders representing more than 50% of the Issuer’s outstanding Common Stock.
The Purchasers, as of the date hereof, hold an aggregate of (i) 17,981,822 shares of Common Stock, (ii) shares of Preferred Stock convertible into an aggregate of 2,760,000 shares of Common Stock, and (iii) Warrants to purchase an aggregate of up to 340,906 shares of Common Stock, each in the individual amounts noted below:
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Ares Investment Vehicle
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Aggregate number of shares of
Common Stock
|
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Aggregate number of
shares of Common Stock to
be issued upon conversion
of the Preferred Stock
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Aggregate number of
shares of Common Stock
issuable upon
the exercise of the
Warrants
|
|
|
AF IV Energy II AIV B1, L.P.
|
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4,584,460
|
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733,705
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105,620
|
|
|
AF IV Energy II AIV A1, L.P.
|
|
727,651
|
|
116,455
|
|
16,764
|
|
|
AF IV Energy II AIV A2, L.P.
|
|
1,091,366
|
|
174,664
|
|
25,136
|
|
|
AF IV Energy II AIV A3, L.P.
|
|
460,774
|
|
73,743
|
|
10,613
|
|
|
AF IV Energy II AIV A4, L.P.
|
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471,169
|
|
75,407
|
|
10,846
|
|
|
AF IV Energy II AIV A5, L.P.
|
|
603,875
|
|
96,645
|
|
13,916
|
|
|
AF IV Energy II AIV A6, L.P.
|
|
472,916
|
|
75,686
|
|
10,899
|
|
|
AF IV Energy II AIV A7, L.P.
|
|
242,562
|
|
38,820
|
|
5,591
|
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See also items 11 and 13 of the cover pages to, and Item 2 of, this Schedule 13D for the aggregate number of shares of Common Stock and percentage of Common Stock beneficially owned by each of the Reporting Persons, that include 340,906 shares of Common Stock issuable upon exercise of the Warrants and 2,760,000 shares to be issued upon the conversion of the Preferred Stock.
The ownership percentages reported in this Schedule 13D are based on an aggregate of (i) 92,991,183 shares of Common Stock outstanding as of January 24, 2017 as reported by the Issuer in the Stock Purchase Agreement, and (ii) approximately 55,180,000 shares of Common Stock that will be issued upon conversion of the Preferred Stock.
(b) Power to vote and dispose.
See items 7 through 10 of the cover pages to, and Item 2 of, this Schedule 13D for the number of shares of Common Stock beneficially owned by each of the Reporting Persons as to which there is sole or shared power to vote or to direct the vote, and sole or shared power to dispose or to direct the disposition. The beneficial ownership disclosed on the cover pages of this Schedule 13D includes 340,906 shares of Common Stock issuable upon exercise of the Warrants and 2,760,000 shares to be issued upon the conversion of the Preferred Stock.
(c) Transactions within the past 60 days.
Except for the information set forth herein in this Item 5, none of the Reporting Persons has effected any transaction related to the Common Stock during the past 60 days.
Item 6.
Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer
Item 6 of the Original Schedule 13D is hereby amended to add the following:
Registration Rights Agreement
In connection with the Stock Purchase Agreement, on February 27, 2017 the Purchasers and certain other purchasers (together, the “
Selling Stockholders
”) entered into a registration rights agreement (the “
Registration Rights Agreement
”) with the Issuer. Pursuant to the terms of the Registration Rights Agreement, the Issuer has agreed to (1) file with the Securities and Exchange Commission (the “
SEC
”) a registration statement covering resales of the Issuer’s Common Stock issuable upon conversion of the Preferred Stock on or before the earlier of (i) 30 days following the date the Issuer files its annual report on Form 10-K for the year ended December 31, 2016, and (ii) 90 days after the closing date of the transactions contemplated by the Stock Purchase Agreement (the “
Closing Date
”), and (2) use commercially reasonable efforts to cause the registration statement to be declared effective within 90 days following the date of filing. The Issuer has agreed to keep the registration statement effective, subject to certain exceptions, for up to two years after it is declared effective by the SEC.
The Issuer has agreed to pay certain penalties if the registration statement is not declared effective by the SEC within 120 days following the Closing Date, which deadline may be extended under certain limited circumstances. After that deadline and until such time as the registration statement is declared effective (or until the Issuer is no longer required to cause the registration statement to be declared effective), the Issuer will be required to pay the holders of the Preferred Stock (or the Common Stock issued upon conversion thereof) a cash penalty of 0.25% of the price at which the Preferred Stock was sold per 30-day period. Such penalty will increase each subsequent 60-day period that the registration statement has not been declared effective, up to a maximum penalty of 5.0% of the price at which the Preferred Stock was sold per 30-day period.
The Issuer has agreed to indemnify each Selling Stockholder for certain violations of federal or state securities laws in connection with any registration statement in which such Selling Stockholder sells its shares of the Issuer’s Common Stock pursuant to the Registration Rights Agreement. Each Selling Stockholder has agreed to indemnify the Issuer and the other Selling Stockholders for federal or state securities law violations that occur in reliance upon written information it provides to the Issuer for inclusion in the registration statement filed pursuant to the Registration Rights Agreement.
The foregoing description of the Registration Rights Agreement is qualified in its entirety by reference to the full text of the agreement, a copy of which is attached hereto as Exhibit 7 and incorporated herein by reference.
Item 7.
Material to be Filed as Exhibits
Item 7 of the Original 13D is hereby amended to add the following:
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Exhibit
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Description
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Exhibit 7
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Registration Rights Agreement by and between the Issuer and the Purchasers, dated as of February 27, 2017 (filed herewith).
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