Item 1.01. Entry into a Material Definitive Agreement.
On May 23, 2017, Black Ridge Oil & Gas,
Inc. (the “Company”) entered into a standby purchase agreement (the “Standby Purchase Agreement”) with
a consortium of investors (the “Backstop Purchasers”). The Backstop Purchasers agreed to purchase from the Company
an aggregate number of shares of common stock equal to $2.9 million, at the subscription price, subject to the terms and conditions
of the Standby Purchase Agreement (the “Backstop Offering”).
The Backstop Purchasers will purchase up
to $2.9 million of shares, and such proceeds shall be available to the Company, based on the number of shares remaining unpurchased
after the exercise of the non-transferable subscription rights (each a “Right” and collectively the “Rights”)
issued to holders of the Company’s common stock (the “Rights Offering”).
In the Rights Offering, the Company intends
to distribute to its shareholders Rights entitling the holders thereof to purchase up to an aggregate of 431,819,910 shares of
the Company’s common stock. The Company will not know the aggregate amount of common stock to be sold to the Backstop Purchasers
until the completion of the Rights Offering. Further information about the Rights Offering is provided in Item 8.01 of this report.
In connection with the Standby Purchase
Agreement, the Company agreed to file a registration statement under the Securities Act of 1933, as amended (the “Securities
Act”), to register the resale of the shares acquired by the Backstop Purchasers subject to the terms and conditions set forth
in the registration rights agreement between the Company and the Backstop Purchasers. The Company will pay all expenses associated
with each registration, including filing and printing fees, fees of the Company’s counsel and accounting fees and expenses,
costs associated with clearing the securities for sale under applicable state securities laws, listing fees, and the reasonable
fees and expenses of one counsel to the Backstop Purchasers in connection with the registration.
The obligations of the Backstop Purchasers
to consummate the transactions under the Standby Purchase Agreement are subject to the satisfaction or waiver of specified conditions,
including, but not limited to, compliance with covenants and the accuracy of representations and warranties provided by the Backstop
Purchasers pursuant to the Standby Purchase Agreement, and consummation of the Rights Offering.
The Backstop Purchasers’ obligation
to participate in the Backstop Offering pursuant to the Standby Purchase Agreement do not expire as long as the Rights Offering
is open.
The obligations of
the Company and the Backstop Purchasers to consummate the transactions contemplated under the Standby Purchase Agreement in connection
with the Backstop Offering are subject to the fulfillment or waiver, prior to or on the Closing Date, of the following conditions:
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the Rights Offering shall have been consummated;
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no judgment, injunction, decree, regulatory proceeding or other legal restraint shall prohibit,
or have the effect of rendering unachievable, the consummation of the Backstop Offering or the material transactions contemplated
by the Standby Purchase Agreement; and
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all approvals and consents that are required in connection with the consummation of the Rights
Offering and the Backstop Offering shall have been duly obtained and shall be effective.
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The obligations of the Backstop Purchasers
to consummate the Backstop Offering are subject to the fulfillment or waiver of the following conditions:
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the representations and warranties of the Company in the Standby Purchase Agreement are true and correct in all material respects;
and
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there shall have been no Material Adverse Change (as defined below).
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The Standby Purchase Agreement may be terminated
at any point prior to the closing date under the following circumstances:
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by the Company, if it determines in its sole discretion that it is not in the best interests of
the Company and its stockholders to proceed with the Rights Offering;
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by the Backstop Purchasers, in his or her sole discretion, if (i) there is any event, state of
facts, circumstance, development, change, effect or occurrence that is materially adverse to the Company’s ability to consummate
the transactions contemplated by Standby Purchase Agreement (a “Material Adverse Change”) or (ii) trading in the Company’s
common stock shall have been suspended by the Securities and Exchange Commission (“SEC”) or the OTCQB or trading in
securities generally on the OTCQB shall have been suspended (each a “Market Adverse Change”) and such Material Adverse
Change or Market Adverse Change has not been cured within the applicable period for curing such Material Adverse Change or Market
Adverse Change;
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by either the Company or the Backstop Purchasers if:
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there is a material breach of the Standby Purchase Agreement that is not cured within the periods
provided in the Standby Purchase Agreement;
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consummation of the Backstop Offering is prohibited by law, rule or regulation.
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The Standby Purchase Agreement requires,
to the fullest extent permitted by law, each party to indemnify and hold harmless the other party, its affiliates, and their respective
directors, officers and authorized agents from and against any and all losses, claims, damages, expenses and liabilities relating
to or arising out of any breach of any representation, warranty, covenant or undertaking made by or on behalf of such party in
the Standby Purchase Agreement.
The shares of common stock to be sold and
issued pursuant to the Standby Purchase Agreement will be offered and sold in reliance upon an exemption from the registration
requirements of the Securities Act afforded by Section 4(a)(2) thereof and Regulation D promulgated thereunder. The Standby Purchase
Agreement contemplated privately negotiated transactions that did not involve a general solicitation, and each of the Backstop
Purchasers is an “accredited investor” as defined in Regulation D.
The foregoing description of the Standby
Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to such agreement, the form of
which is filed herewith as Exhibit 10.1. This summary is intended to provide shareholders and investors with information regarding
the terms of the Standby Purchase Agreement. The representations and warranties contained in the Standby Purchase Agreement are
generally made to, and solely for the benefit of, the parties to the Standby Purchase Agreement. Certain representations and warranties
in the Standby Purchase Agreement are made for the purpose of allocating risk between the parties, rather than establishing matters
as facts. Accordingly, shareholders and investors should not rely on the representations and warranties as characterizations of
the actual state of facts, since they were only made as of the date of the Standby Purchase Agreement. The representations and
warranties contained in the Standby Purchase Agreement should only be read in conjunction with the other information that the Company
makes publicly available in reports, statements, and other documents filed with the SEC.