UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported):
August 3, 2018
Camber
Energy, Inc.
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(Exact
name of registrant as specified in its charter)
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Nevada
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001-32508
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20-2660243
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(State or other jurisdiction
of incorporation)
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(Commission File Number)
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(I.R.S. Employer
Identification No.)
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1415
Louisiana, Suite 3500, Houston, Texas 77002
(Address
of principal executive offices)
(210)
998-4035
(Registrant’s
telephone number, including area code)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
☐
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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☐
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Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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☐
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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☐
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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Emerging
growth company ☐
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If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item
1.01
Entry into a Material Definitive Agreement
IBC
Bank Standstill Agreement
On
August 3, 2018, Camber Energy, Inc. (the “
Company
”, “
we
” and
“
us
”) entered into an Agreement in Connection with the Loan (the “
Standstill
Agreement
”) with International Bank of Commerce (“
IBC Bank
”), which was effective August 1, 2018.
The Company is a party to that certain loan from IBC Bank to the Company (the “
Loan
”) evidenced by a Real
Estate Lien Note dated August 25, 2016 (the “
Note
”) in the original principal amount of $40,000,000 (which
has an outstanding principal balance of approximately $36.9 million as of the date of this Report), entered into pursuant to
that certain Loan Agreement dated August 25, 2016 (the “
Loan Agreement
” and together with the Note, and
the other documents entered into evidencing, documenting and securing the Loan, the “
Loan Documents
”), by
and among IBC Bank and the Company.
Among
other terms, described below, the Standstill Agreement was entered into to provide the Company sufficient time to close the transactions
contemplated by the July 12, 2018 Asset Purchase Agreement (the “
Sale Agreement
”), entered into by the Company,
as seller, and 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 Energy a 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
”).
We agreed to sell the Assets to N&B Energy in consideration for among other things, N&B Energy agreeing to pay us $100
in cash and agreeing to assume all of our obligations and debt owed under the Loan Documents.
Pursuant
to the Standstill Agreement:
(a)
We confirmed that certain defaults had occurred under the terms of the Loan Documents;
(b)
We, on behalf of us and our representatives, provided IBC Bank a release of all claims which we and such parties may have had
as of the date of the Standstill Agreement;
(c)
We agreed to certain venue requirements in connection with any bankruptcy proceeding we may file or have filed against us in the
future, agreed to waive certain automatic stays provided under applicable bankruptcy law and confirmed IBC Bank’s security
interests;
(d)
IBC Bank agreed to stand still and not take any action to collect the indebtedness evidenced by the Loan Documents, prior to the
earlier of (i) September 30, 2018, unless the closing date of the Sale Agreement is required to be extended due to no fault of
the Company, due to the regulatory requirements of the Securities and Exchange Commission and/or NYSE American, in which case
such date shall be automatically extended to no later than October 31, 2018, unless extended by both parties; or (ii) a default
of the conditions of the stand still as set forth in the Standstill Agreement (collectively, the “
Standstill Date
”);
(e)
We agreed to certain conditions to the stand still, including:
(i)
Depositing all
funds in excess of
$5,000 with IBC Bank by 5:00 p.m. on
Tuesday, August 7, 2018 (the “
Deadline
”);
(ii)
The Company pledging to IBC Bank prior to the Deadline, 87.5% of all of the Company’s right, title and interest to our assets
located in Okfuskee County, Oklahoma and all wells, leasehold, mineral and surface interest, personal property, and all other
property or assets located on or associated with said field owned by us that were recently purchased from Orion Energy (with the
remaining 12.5% to be pledged to IBC Bank prior to the closing date of the Sale Agreement);
(iii)
Paying all of IBC Bank’s expenses and reasonable attorney fees in connection with the Note prior to the Deadline;
(iv)
Paying the June 2018 interest on the Note prior to the Deadline;
(v)
Paying the July 2018 interest on the Note prior to the Deadline;
(vi)
Agreeing to certain covenants and restrictions regarding the assets securing the Loan Documents during the stand still period;
and
(vii)
Confirming that during the stand still period, the per annum interest rate of the Note will be 3% above the New York Prime Rate,
subject to a floor of 5.5% per annum, with a beginning interest rate of 8% per annum.
(f)
IBC Bank agreed to allow us to undertake the transactions contemplated by the Sale Agreement, subject to the terms of the Standstill
Agreement;
(g)
IBC Bank agreed, that if we are ready, willing and able to close the transactions contemplated by the Sale Agreement, but N&B
Energy is not ready to close such transaction, on or before the Standstill Date (as extended), that we could surrender the assets
planned to be sold pursuant to the Sale Agreement to IBC Bank (which may be undertaken pursuant to a foreclosure of such assets);
and
(h)
That upon the closing of the transactions contemplated by the Sale Agreement or the surrender of such assets proposed to be sold
pursuant to such Sale Agreement to IBC Bank (as discussed in (g) above), IBC Bank would pursue only the assets sold/surrendered,
N&B Energy (if applicable) and the guarantors of the debt; enter into a novation and release in favor of the Company; and
not pursue the Company for any deficiency in the amounts due under the Loan Documents, in each case subject to the terms and conditions
of the Standstill Agreement.
Pursuant
to both the Sale Agreement and the IBC Agreement, upon the closing of the sale (as to the Sale Agreement) or assignment (pursuant
to the IBC Agreement), 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
foregoing description of the IBC Agreement and production payment and overriding royalties does not purport to be complete and
is qualified in its entirety by reference to the IBC Agreement, production payment and overriding royalties, copies of which are
attached hereto as
Exhibit 10.1
(which exhibit includes copies of the form of production payment and overriding
royalties as exhibits thereto), to this Current Report on Form 8-K and incorporated herein by reference.
First
Amendment to Sale Agreement
Also
on August 3, 2018, the Company and N&B Energy entered into a First Amendment to Asset Purchase Agreement (the “
First
Amendment
”), which amended the terms of the Sale Agreement to (a) modify, clarify and replace certain of the exhibits
to the original Sale Agreement, including the terms of the overriding royalty interests and production payment agreed to be granted
to the Company as part of such Sale Agreement; (b) amend the Sale Agreement to remove the requirement that the Company obtain
shareholder approval prior to the closing of such Sale Agreement; and (c) include a deadline of August 31, 2018 for N&B Energy’s
due diligence under the Sale Agreement.
In
order to avoid the significant time required to file a proxy statement with the Securities and Exchange Commission, clear
comments with the Securities and Exchange Commission, hold a meeting and obtain shareholder approval, and because such
shareholder approval is not required pursuant to applicable law or the rules of the NYSE American, the Company’s
management has determined to not seek shareholder approval, but to instead seek a third-party opinion as to the fairness of
the transaction to the Company’s shareholders.
The
foregoing description of the First Amendment does not purport to be complete and is qualified in its entirety by reference to
the First Amendment, a copy of which is attached hereto as
Exhibit 2.2
(which exhibit includes copies of the form of production
payment and overriding royalties as exhibits thereto), to this Current Report on Form 8-K and is incorporated herein by reference.
Item
8.01
Other Events
On
August 7, 2018, the Company filed a press release disclosing the entry into the IBC Agreement and First Amendment. A copy of the
press release is included as
Exhibit 99.1
.
Item
9.01
Financial Statements and Exhibits.
(d)
Exhibits.
Exhibit
Number
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Description
of Exhibit
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2.1
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Asset Purchase Agreement
by and Between N&B Energy, LLC, as Purchaser and Camber Energy, Inc., as Seller, dated July 12, 2018 (incorporated by
reference to Exhibit 2.1 to the Form 8-K filed by the Company with the Securities and Exchange Commission on July 13, 2018
(File No. 001-32508))
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2.2*
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First Amendment
to Asset Purchase Agreement by and Between N&B Energy, LLC, as Purchaser and Camber Energy, Inc., as Seller, dated August
2, 2018
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10.1*
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Agreement in Connection
with the Loan by and Between Camber Energy, Inc. and International Bank of Commerce
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99.1**
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Press Release dated
August 7, 2018
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*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.
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CAMBER ENERGY, INC.
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By:
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/s/
Robert Schleizer
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Name:
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Robert Schleizer
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Title:
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Chief Financial Officer
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Date:
August 7, 2018
EXHIBIT
INDEX
Exhibit
Number
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Description
of Exhibit
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2.1
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Asset Purchase Agreement
by and Between N&B Energy, LLC, as Purchaser and Camber Energy, Inc., as Seller, dated July 12, 2018 (incorporated by
reference to Exhibit 2.1 to the Form 8-K filed by the Company with the Securities and Exchange Commission on July 13, 2018
(File No. 001-32508))
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2.2*
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First Amendment
to Asset Purchase Agreement by and Between N&B Energy, LLC, as Purchaser and Camber Energy, Inc., as Seller, dated August
2, 2018
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10.1*
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Agreement in Connection
with the Loan by and Between Camber Energy, Inc. and International Bank of Commerce
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99.1**
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Press Release dated August 7, 2018
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*Filed
herewith
**Furnished
herewith.
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