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Item 1.01
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Entry into a Material Definitive Agreement.
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As previously reported on August 24, 2017, Victory Energy Corporation (the “Company”) entered into a divestiture agreement (the “Divestiture Agreement”) with Navitus Energy Group (“Navitus”) on August 21, 2017, pursuant to which the Company has agreed to divest and transfer its 50% ownership interest in Aurora Energy Partners to Navitus, which currently owns the remaining 50% interest, in consideration for a release from Navitus of all of the Company’s obligations under the second amended partnership agreement, dated October 1, 2011, between Victory and Navitus, including, without limitation, obligations to return to Navitus investors their accumulated deferred capital, deferred interest and related allocations of equity.
On September 14, 2017, the Company and Navitus entered into an amendment to the divestiture agreement (the “Amended Divestiture Agreement”), pursuant to which the parties amended the Divestiture Agreement to provide for the issuance of 166,549,134 shares of the Company’s common stock (or 4,382,872 shares of common stock following the Company’s planned 1-for-38 reverse stock split) to Navitus upon closing of the transactions contemplated by the Divestiture Agreement. The Company also agreed to provide Navitus with demand registration rights for these shares, whereby the Company agreed to file within thirty (30) of request a registration statement on an appropriate form covering the resale of these shares and use its commercially reasonable efforts to cause such registration statement to be declared effective within one hundred twenty (120) days following such filing.
In connection with the foregoing, the Company entered into a lock-up and resale restriction agreement (the “Lock-Up Agreement”) with Navitus, pursuant to which Navitus agreed to certain restrictions on the transfer of these shares.
The foregoing summary of the terms and conditions of the Amended Divestiture Agreement and the Lock-Up Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of those agreements filed as exhibits to this report.
Item 3.02 Unregistered Sales of Equity Securities.
The information set forth under Item 1.01 regarding the issuance of shares of common stock under the Amended Divestiture Agreement is incorporated by reference into this Item 3.02. The issuance of these securities is being made in reliance upon an exemption from registration provided under Section 4(a)(2) of the Securities Act of 1933, as amended.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On September 14, 2017, the Board of Directors of the Company adopted Amended and Restated Bylaws, which revised the Company’s former bylaws. The following is a summary of certain provisions of the Amended and Restated Bylaws adopted by the Board of Directors. Such summary is not intended to be complete and is qualified
in its entirety by reference to the full text of the Amended and Restated Bylaws, a copy of which is filed as Exhibit 3.1 to this report and is incorporated by reference herein.
Generally, the Amended and Restated Bylaws update the Company’s former bylaws, and include (among others) the following modifications.
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(1)
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The Amended and Restated Bylaws provide that directors shall be elected by a plurality vote of stockholders, while the former bylaws provided that directors were elected by a majority vote.
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(2)
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The Amended and Restated Bylaws include a provision setting forth the procedure for nominations of directors by stockholders, while the former bylaws did not include such a provision.
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(3)
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The Amended and Restated Bylaws removed a provision from the prior bylaws allowing for loans to, and guarantees for the benefit of, officers and employees of the Company.
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(4)
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The Amended and Restated Bylaws include a provision for the issuance of uncertificated shares, while the former bylaws did not include such a provision.
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