Item
1.01 Entry into a Material Definitive Agreement
N&B
Energy Asset Disposition Agreement
On
July 12, 2018, Camber Energy, Inc. (the “
Company
”, “
we
” and “
us
”) entered
into an Asset Purchase Agreement (the “
Sale Agreement
”), as seller, with N&B Energy LLC, as purchaser, which
entity is affiliated with Richard N. Azar II, our former Chief Executive Officer and former director, and Donnie B. Seay, our former
director (“
N&B Energy
”). Pursuant to the Sale Agreement and the terms and conditions thereof, we agreed
to sell to N&B Energya substantial portion of our assets, including all of the assets we acquired pursuant to the terms of
our December 31, 2015 Asset Purchase Agreement with Segundo Resources, LLC (“
Segundo
”), which is owned and controlled
by Mr. Azar, and other sellers, and certain other more recent acquisitions, other than the production payment and overriding royalty
interests discussed below (the “
Assets
”). In consideration for the Assets, N&B Energy agreed to pay us $100
in cash, to assume all of our obligations and debt owed under our outstanding loan agreement and related note with International
Bank of Commerce (“
IBC
”), which has an outstanding principal balance of approximately $36.9 million as of the
date of this Report (such documents evidencing such assumption to be negotiated prior to closing, defined herein as the “
Assumption
Documents
”) and Segundo agreed to enter into the Segundo Settlement, described below.
In
the event the transaction is approved by the Company’s shareholders and closes, the Company will retain its assets in Glasscock
County and Hutchinson Counties, Texas and will also retain a 12.5% production payment (effective until a total of $2.5 million
has been received); a 3% overriding royalty interest in its existing Okfuskee County, Oklahoma asset; and will retain
an
overriding royalty interest on certain other undeveloped leasehold interests
.
The
parties currently anticipate the closing of the acquisition, which is subject to various closing conditions, including those described
below, to occur in or around September 2018, and to be effective as of the first day of the month preceding the month of closing.
For example, if closing occurs during the month of September 2018, the effective date will be August 1, 2018. The Assets will be
assigned “
as is
” with all faults.
The
Board of Directors of the Company has (i) adopted and declared advisable the Sale Agreement and the transactions contemplated by
the Sale Agreement, upon the terms and subject to the conditions set forth in the Sale Agreement; and (ii) determined that the
Sale Agreement and the transactions contemplated by the Sale Agreement are fair to, and in the best interests of, the Company and
its stockholders.
The
parties have made customary representations, warranties and covenants in the Sale Agreement including, among others, covenants
relating to (1) the conduct of each party’s business during the interim period between the execution of the Sale Agreement
and the consummation of the transactions described therein, (2) the Company’s obligations to facilitate its stockholders’
consideration of, and voting upon, the transactions contemplated by the Sale Agreement, and (3) the indemnification obligations
of the parties, subject to the limits of liability, deductibles and other terms set forth in the Sale Agreement.
The
acquisition is subject to customary closing conditions, including (1) approval of the disposition of the Assets by the stockholders
of the Company, (2) the approval of IBC and entry into assumption agreements between IBC, the Company, N&B Energy and the guarantors
of the Company’s IBC debt to provide for among other things, the release of the Company from any and all obligations owed
under such debt and related releases; (3) receipt of required regulatory approvals; (4) the absence of any law or order prohibiting
the consummation of the acquisition; and (5) satisfaction of due diligence by N&B Energy. Each party’s obligation to
complete the acquisition is also subject to certain additional customary conditions, including (a) subject to certain exceptions,
the accuracy of the representations and warranties of the other parties, and (b) performance in all material respects by the other
parties of its obligations under the Sale Agreement.
Each
of the Company and the N&B Energy agreed to pay all costs and expenses incurred by them in connection with the Sale Agreement.
The
Sale Agreement also includes customary termination provisions for both the Company and N&B Energy, which include, subject to
the terms of the Sale Agreement and in certain circumstances rights to cure or other prerequisites, that the Sale Agreement can
be terminated by us, if (i) our stockholders fail to approve the Asset Purchase at a meeting called for such purpose; (ii) if N&B
Energy fails to provide all required closing deliverables; (iii) if we fail to obtain all required consents; or (iv) if N&B
Energy breaches any representation or warranty in the Sale Agreement, subject to the right to cure; and by N&B Energy, (i)
if our stockholders fail to approve the Asset Purchase at a meeting called for such purpose; (ii) if we fail to provide all required
closing deliverables; (iii) if we breach any representation or warranty in the Sale Agreement, subject to the right to cure; or
(iv) if we seek bankruptcy protection or are involuntarily placed into bankruptcy and such bankruptcy is not dismissed within 60
days. The Sale Agreement can also be terminated by either party with five days prior written notice if the acquisition has not
been completed by September 30, 2018, provided that such failure is not the result of the breach of the agreement by the terminating
party. The Sale Agreement may also be terminated by either party if IBC has confirmed in writing that it will not approve and consent
to the terms of the Sale Agreement, or if the Assumption Documents are not acceptable to either us or N&B Energy.
Segundo Settlement Agreement
On July 12, 2018, we
entered into a Compromise Settlement Agreement and Mutual Release with Segundo (the “
Segundo Settlement
”),
in partial consideration for N&B Energy agreeing to enter into the Sale Agreement. Pursuant to the Segundo Settlement,
Segundo agreed to surrender to us 15,237 shares of common stock valued at $76.25 per share as of the effective date of the
closing of the acquisition contemplated by the December 31, 2015 Asset Purchase Agreement (which closing effective date was
April 1, 2016), and to release us from any and all claims which Segundo previously alleged was owed
under the terms of the December 31, 2015 Asset Purchase Agreement. We and Segundo also provided each other full releases in
connection with the December 31, 2015 Asset Purchase Agreement and Segundo agreed to indemnify us and hold us harmless
against any claims made by the other sellers under the December 31, 2015 Asset Purchase Agreement.
* * * * * * * * *
The
foregoing description of the Sale Agreement and production payment and overriding royalties and Segundo Settlement does not purport
to be complete and is qualified in its entirety by reference to the Sale Agreement, production payment and overriding royalties,
and Segundo Settlement, copies of which are attached hereto as
Exhibit 2.1
(which exhibit includes copies of the form of
production payment and overriding royalties as exhibits thereto) and
Exhibit 10.1
, respectively, to this Current Report
on Form 8-K and incorporated herein by reference. The representations, warranties and covenants contained in the Sale Agreement
(1) were made only for purposes of that agreement and as of specific dates, (2) are solely for the benefit of the parties to the
Sale Agreement, (3) may be subject to limitations agreed upon by the parties, including being qualified by confidential disclosures
made for the purposes of allocating contractual risk between the parties to the Sale Agreement instead of establishing these matters
as facts, and (4) may be subject to standards of materiality applicable to the parties that differ from those applicable to investors.
Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the date
of the Sale Agreement, which subsequent information may or may not be fully reflected in the parties’ public disclosures.
The representations and warranties contained in the Sale Agreement were made only for the purpose of the Sale Agreement as of specific
dates and may have been qualified by certain disclosures between the parties and a contractual standard of materiality different
from those generally applicable to stockholders, among other limitations. The representations and warranties were made for the
purpose of allocating contractual risk between the parties to the Sale Agreement and should not be relied upon as a disclosure
of factual information relating to any of the parties.
Item
8.01 Other Events
On
July 13, 2018, the Company filed a press release disclosing the entry into the Asset Purchase Agreement. A copy of the press release
is included as
Exhibit 99.1
.
Item
9.01 Financial Statements and Exhibits.
(d)
Exhibits.
Exhibit
Number
|
|
Description
of Exhibit
|
2.1*
|
|
Asset Purchase Agreement by and Between N&B
Energy, LLC, as Purchaser and Camber Energy, Inc., as Seller, dated July 12, 2018
|
10.1*
|
|
Compromise Settlement Agreement and Mutual Release by and between Camber Energy, Inc. and Segundo Resources, LLC, dated July 12, 2018
|
99.1**
|
|
Press
Release dated July 13, 2018
|
*
Filed herewith
*
*Furnished
herewith.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
|
CAMBER
ENERGY, INC.
|
|
|
|
|
|
|
By:
|
/s/
Robert Schleizer
|
|
|
Name:
|
Robert
Schleizer
|
|
|
Title:
|
Chief
Financial Officer
|
Date:
July 13, 2018
EXHIBIT
INDEX
Exhibit
Number
|
|
Description
of Exhibit
|
2.1*
|
|
Asset Purchase Agreement by and
Between N&B Energy, LLC, as Purchaser and Camber Energy, Inc., as Seller, dated July 12, 2018
|
10.1*
|
|
Compromise Settlement Agreement and Mutual Release by and between Camber Energy, Inc. and Segundo Resources, LLC, dated July 12, 2018
|
99.1**
|
|
Press Release dated July 13, 2018
|
*
Filed herewith
*
*Furnished
herewith.
Important Information
In connection with the proposed asset disposition
between Camber and the buyer, Camber currently intends to file a proxy statement with the Securities and Exchange Commission (the
“
SEC
”). This communication is not a substitute for any proxy statement or other document Camber may file with
the SEC in connection with the proposed transaction. Prospective investors are urged to read the proxy statement, when filed as
it will contain important information. Any definitive proxy statement(s) (if and when available) will be mailed to stockholders
of Camber. Prospective investors may obtain free copies of the proxy statement, when filed, as well as other filings containing
information about Camber, without charge, at the SEC’s website (www.sec.gov). Copies of Camber’s SEC filings may also
be obtained from Camber without charge at Camber’s website (https://www.camber.energy) or by directing a request to Camber
at (281) 998-4035. This document does not constitute an offer to sell or the solicitation of an offer to buy any securities or
a solicitation of any vote or approval nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation
or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
INVESTORS SHOULD
READ THE PROXY STATEMENT AND OTHER DOCUMENTS TO BE FILED WITH THE SEC CAREFULLY BEFORE MAKING A DECISION CONCERNING THE TRANSACTION.
Participants
in Solicitation
Camber and its directors
and executive officers and other members of management and employees are potential participants in the solicitation of proxies
in respect of the proposed transaction. Information regarding Camber’s directors and executive officers is available in Camber’s
definitive proxy statement on Schedule 14A, filed with the SEC on November 29, 2017 and in subsequent Form 8-K filings disclosing
changes in officers and directors. Additional information regarding the interests of such potential participants will be included
in the proxy statement to be filed with the SEC by Camber in connection with the proposed transaction and in other relevant documents
filed by Camber with the SEC. These documents can be obtained free of charge from the sources indicated above. Additional information
regarding the participants in the proxy solicitations and a description of their direct and indirect interests, by security holdings
or otherwise, will be contained in the proxy statement and other relevant materials to be filed with the SEC when they become available.
Forward-Looking
Statements
Certain statements
in this communication regarding the proposed disposition between Camber and the buyer are “
forward-looking
”
statements. The words “
anticipate,
” “
believe,
” “
ensure,
” “
expect,
”
“
if,
” “
intend,
” “
estimate,
” “
probable,
” “
project,
”
“
forecasts,
” “
predict,
” “
outlook,
” “
aim,
” “
will,
”
“
could,
” “
should,
” “
would,
” “
potential,
” “
may,
”
“
might,
” “
anticipate,
” “
likely
” “
plan,
” “
positioned,
”
“
strategy,
” and similar expressions, and the negative thereof, are intended to identify forward-looking statements.
These forward-looking statements, which are subject to risks, uncertainties and assumptions about Camber, may include projections
of Camber’s future financial performance, Camber’s anticipated growth strategies and anticipated trends in Camber’s
businesses. These statements are only predictions based on current expectations and projections about future events. There are
important factors that could cause actual results, level of activity, performance or achievements to differ materially from the
results, level of activity, performance or achievements expressed or implied by the forward-looking statements, including the risk
factors set forth in Camber’s most recent reports on Form 10-K, Form 10-Q and other documents on file with the SEC and the
factors given below:
●
failure
to mutually agree on definitive terms regarding the IBC debt assumption;
●
termination
of the proposed transaction by either party pursuant to the terms of the Sale Agreement;
●
failure
to obtain the approval of the shareholders of Camber in connection with the proposed transaction;
●
the
failure to consummate or delay in consummating the proposed transaction for other reasons;
●
the
timing to consummate the proposed transaction;
●
the
risk that a condition to closing of the proposed transaction may not be satisfied;
●
the
risk that a regulatory approval that may be required for the proposed transaction is delayed, is not obtained, or is obtained subject
to conditions that are not anticipated;
●
Camber’s
ability to achieve a benefit through the proposed transaction; and
●
the
diversion of management time on transaction-related issues.
Camber’s forward-looking
statements are based on assumptions that Camber believes to be reasonable but that may not prove to be accurate. Camber cannot
guarantee future results, level of activity, performance or achievements. Moreover, Camber does not assume responsibility for the
accuracy and completeness of any of these forward-looking statements. Camber assumes no obligation to update or revise any forward-looking
statements as a result of new information, future events or otherwise, except as may be required by law. Readers are cautioned
not to place undue reliance on these forward-looking statements that speak only as of the date hereof.