PROP Prairie Operating Company

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

 

SCHEDULE 13D/A

 

Under the Securities Exchange Act of 1934
(Amendment No. 1)

 

 

Prairie Operating Co.

(Name of Issuer)

 

Common Stock, par value $0.01

(Title of Class of Securities)

 

739650109

(CUSIP Number)

 

Gregory K. O’Neill

Level 27, 60 City Road Southbank
Melbourne, Australia
+ 61 3 9694 3000

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

 

August 15, 2024

(Date of Event which Requires Filing of this Statement)

 

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), Rule 13d-1(f) or Rule 13d-1(g), check the following box. ☐

 

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent.

 

*	The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

 

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

 

 

 

1	NAME OF REPORTING PERSON   Narrogal Nominees Pty Ltd ATF Gregory K O’Neill Family Trust
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP   (a) ☐ (b) ☐
3	SEC USE ONLY
4	SOURCE OF FUNDS   AF
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) ☐
6	CITIZENSHIP OR PLACE OF ORGANIZATION   Australia

NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER   0
	8	SHARED VOTING POWER   6,268,493 (1)
	9	SOLE DISPOSITIVE POWER   0
	10	SHARED DISPOSITIVE POWER   10,483,230 (2)

11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON   10,483,230 (2)
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)   ☐
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)   49.9% (3)
14	TYPE OF REPORTING PERSON   OO (Australian Trust)

 

(1)	Includes 6,268,493, shares of common stock, par value $0.01 per share (“Common Stock”), representing 29.9% of the voting power of the Common Stock based on 20,964,861 shares of Common Stock outstanding, which includes (i) 12,564,861 shares of Common Stock outstanding as of August 8, 2024 (as reported in the Quarterly Report of Prairie Operating Co., a Delaware corporation (the “Issuer”) on Form 10-Q filed with the Securities and Exchange Commission (the “SEC”) on August 9, 2024); and (ii) 8,400,000 shares of Common Stock issued to Family Trust (as defined herein) in connection with the Warrant Exercise and the Preferred Stock Conversion (as defined herein), and subject to the 29.9% limitation on voting described in Item 6 below.
(2)	Includes (i) 10,439,614 shares of Common Stock; and (ii) 43,616 shares of Common Stock issuable within 60 days of the date hereof upon the conversion of the Series D Preferred Stock. The shares reported herein do not include an additional 7,156,384 shares of Common Stock that underlie, in the aggregate, the remaining shares of Series D Preferred Stock, the Series D A Warrant, and the Series E A Warrant held by the Family Trust, as the exercise or conversion of these securities would exceed the Beneficial Ownership Limitation, as amended.
(3)	This percentage is based on 21,008,477 shares of Common Stock outstanding, which includes (i) 12,564,861 shares of Common Stock outstanding as of August 8, 2024 (as reported in the Quarterly Report of the Issuer on Form 10-Q filed with the SEC on August 9, 2024); (ii) 8,400,000 shares of Common Stock issued to the Family Trust in connection with the Warrant Exercise and the Preferred Stock Conversion; and (iii) 43,616 shares of Common Stock issuable within 60 days of the date hereof upon the conversion of Series D Preferred Stock.

 

 

1	NAME OF REPORTING PERSON   Narrogal Nominees Pty Ltd
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP   (a) ☐ (b) ☐
3	SEC USE ONLY
4	SOURCE OF FUNDS   WC
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) ☐
6	CITIZENSHIP OR PLACE OF ORGANIZATION   Australia

NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER   0
	8	SHARED VOTING POWER   6,268,493 (1)
	9	SOLE DISPOSITIVE POWER   0
	10	SHARED DISPOSITIVE POWER   10,483,230 (2)

11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON   10,483,230 (2)
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)   ☐
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)   49.9% (3)
14	TYPE OF REPORTING PERSON   OO (Australian proprietary company)

 

(1)	Includes 6,268,493, shares of Common Stock, representing 29.9% of the voting power of the Common Stock based on 20,964,861 shares of Common Stock outstanding, which includes (i) 12,564,861 shares of Common Stock outstanding as of August 8, 2024 (as reported in the Quarterly Report of the Issuer on Form 10-Q filed with the SEC on August 9, 2024); and (ii) 8,400,000 shares of Common Stock issued to Family Trust in connection with the Warrant Exercise and the Preferred Stock Conversion, and subject to the 29.9% limitation on voting described in Item 6 below.
(2)	Includes (i) 10,439,614 shares of Common Stock; and (ii) 43,616 shares of Common Stock issuable within 60 days of the date hereof upon the conversion of the Series D Preferred Stock. The shares reported herein do not include an additional 7,156,384 shares of Common Stock that underlie, in the aggregate, the remaining shares of Series D Preferred Stock, the Series D A Warrant, and the Series E A Warrant held by the Family Trust, as the exercise or conversion of these securities would exceed the Beneficial Ownership Limitation, as amended.
(3)	This percentage is based on 21,008,477 shares of Common Stock outstanding, which includes (i) 12,564,861 shares of Common Stock outstanding as of August 8, 2024 (as reported in the Quarterly Report of the Issuer on Form 10-Q filed with the SEC on August 9, 2024); (ii) 8,400,000 shares of Common Stock issued to the Family Trust in connection with the Warrant Exercise and the Preferred Stock Conversion; and (iii) 43,616 shares of Common Stock issuable within 60 days of the date hereof upon the conversion of Series D Preferred Stock.

 

 

1	NAME OF REPORTING PERSON   Gregory K. O’Neill
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP   (a) ☐ (b) ☐
3	SEC USE ONLY
4	SOURCE OF FUNDS   AF
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) ☐
6	CITIZENSHIP OR PLACE OF ORGANIZATION   Australia

NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER   0
	8	SHARED VOTING POWER   6,268,493 (1)
	9	SOLE DISPOSITIVE POWER   0
	10	SHARED DISPOSITIVE POWER   10,483,230 (2)

11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON   10,483,230 (2)
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)   ☐
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)   49.9% (3)
14	TYPE OF REPORTING PERSON   IN

 

(1)	Includes 6,268,493, shares of Common Stock, representing 29.9% of the voting power of the Common Stock based on 20,964,861 shares of Common Stock outstanding, which includes (i) 12,564,861 shares of Common Stock outstanding as of August 8, 2024 (as reported in the Quarterly Report of the Issuer on Form 10-Q filed with the SEC on August 9, 2024); and (ii) 8,400,000 shares of Common Stock issued to Family Trust in connection with the Warrant Exercise and the Preferred Stock Conversion, and subject to the 29.9% limitation on voting described in Item 6 below.
(2)	Includes (i) 10,439,614 shares of Common Stock; and (ii) 43,616 shares of Common Stock issuable within 60 days of the date hereof upon the conversion of the Series D Preferred Stock. The shares reported herein do not include an additional 7,156,384 shares of Common Stock that underlie, in the aggregate, the remaining shares of Series D Preferred Stock, the Series D A Warrant, and the Series E A Warrant held by the Family Trust, as the exercise or conversion of these securities would exceed the Beneficial Ownership Limitation, as amended.
(3)	This percentage is based on 21,008,477 shares of Common Stock outstanding, which includes (i) 12,564,861 shares of Common Stock outstanding as of August 8, 2024 (as reported in the Quarterly Report of the Issuer on Form 10-Q filed with the SEC on August 9, 2024); (ii) 8,400,000 shares of Common Stock issued to the Family Trust in connection with the Warrant Exercise and the Preferred Stock Conversion; and (iii) 43,616 shares of Common Stock issuable within 60 days of the date hereof upon the conversion of Series D Preferred Stock.

 

 

This Amendment No. 1 (this “Amendment No. 1”) amends and supplements the Schedule 13D originally filed by Narrogal Nominees Pty Ltd ATF Gregory K O’Neill Family Trust (the “Family Trust”), Narrogal Nominees Pty Ltd, (“Narrogal Nominees”), as trustee to the Family Trust; and Gregory K. O’Neill, as Sole Director of Narrogal Nominees (the “Reporting Persons”) with the SEC on November 21, 2023 (the “Schedule 13D”) with respect to the Common Stock of the Issuer. This Amendment No. 1 is being filed to report (i) the entry into the Consent & Agreement (as defined below) by the Issuer and the Family Trust; and (ii) the Warrant Exercise and the Preferred Stock Conversion (each as defined below). Capitalized terms used in this Amendment No. 1 and not otherwise defined shall have the same meanings ascribed to them in the Schedule 13D.

  

Item 3.

SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION

 

Item 3 of the Schedule 13D is hereby amended by inserting the following information at the end of Item 3:

 

On August 15, 2024, the Family Trust delivered notice to the Issuer of the exercise of the Series E B Warrants to purchase 4,000,000 shares of Common Stock at an exercise price of $6.00 per share for a total exercise price of $24 million (the “Warrant Exercise”). The source of the funds used by the Family Trust to exercise the Series E B Warrants was paid from the working capital of Narrogal Nominees.

 

 

Item 4.

PURPOSE OF TRANSACTION

 

Item 4 of the Schedule 13D is amended and restated in its entirety as follows:

 

The information contained in Items 5 and 6 is incorporated herein by reference.

 

Subject to the Beneficial Ownership Limitation, the Standstill and the Voting Agreement described in Item 6, the Reporting Persons may further purchase, hold, vote, trade, dispose of, or otherwise deal in the shares of Common Stock, and may exercise warrants or convert shares of preferred stock, at such times, and in such manner, as they deem advisable to benefit from changes in the market prices of such Common Stock, changes in the Issuer’s operations, business strategy, or prospects. Pursuant to the Consent & Agreement, the Family Trust agreed to convert Series D Preferred Stock at such time that any incremental conversion of Series D Preferred Stock is no longer precluded by the Beneficial Ownership Limitation. The Reporting Persons may review, monitor, and evaluate their investments in the Issuer at any time, which may give rise to plans or proposals that, if consummated, would result in one or more of the events described in Item 4 of Schedule 13D. Any such discussion or actions may consider various factors, including, without limitation, the Issuer’s business prospects and other developments concerning the Issuer, alternative investment opportunities, general economic conditions, financial and stock market conditions, the Issuer’s management, competitive and strategic matters, capital structure, liquidity objectives, and any other facts and circumstances that may become known to the Reporting Persons regarding or related to the matters described in this Schedule 13D.

 

Except as described in this Schedule 13D, the Reporting Persons do not have any present plans or proposals that relate to or would result in any of the actions described in clauses (a) through (j) of Item 4 of Schedule 13D.

 

 

Item 5.

INTEREST IN SECURITIES OF THE ISSUER

 

Item 5 of the Schedule 13D is amended and restated in its entirety as follows:

 

(a) — (b)

 

The ownership information presented below represents beneficial ownership of Common Stock of the Issuer as of August 15, 2024. This percent of class presented below is based on 21,008,477 shares of Common Stock outstanding, which includes (i) 12,564,861 shares of Common Stock outstanding as of August 8, 2024 (as reported in the Quarterly Report of the Issuer on Form 10-Q filed with the SEC on August 9, 2024); (ii) 8,400,000 shares of Common Stock issued to the Family Trust in connection with the Warrant Exercise and the Preferred Stock Conversion (each as defined below); and (iii) 43,616 shares of Common Stock issuable within 60 days of the date hereof upon the conversion of Series D Preferred Stock.

 

Reporting Person		Amount beneficially owned (1)				Percent of class:				Sole power to vote or to direct the vote:				Shared power to vote or to direct the vote (2):				Sole power to dispose or to direct the disposition of:				Shared power to dispose or to direct the disposition of:
Narrogal Nominees Pty Ltd ATF Gregory K O’Neill Family Trust			10,483,230				49.9	%			0				6,281,534				0				10,483,230
Narrogal Nominees Pty Ltd			10,483,230				49.9	%			0				6,281,534				0				10,483,230
Gregory K. O’Neill			10,483,230				49.9	%			0				6,281,534				0				10,483,230

 

(1) The Family Trust is the record holder of: (i) 10,439,614 shares of Common Stock and (ii) 43,616 shares of common stock issuable within 60 days of the date hereof upon the conversion of the Series D Preferred Stock. The shares reported herein do not include 7,156,384 shares of Common Stock that underlie, in the aggregate, the remaining Series D Preferred Stock, the Series D A Warrants, and the Series E A Warrants, as the exercise or conversion of these securities is subject to the Beneficial Ownership Limitation. Mr. O’Neill is the Sole Director of Narrogal Nominees, which is the trustee of the Family Trust, and as such, Mr. O’Neill has voting and investment control over the shares directly held by the Family Trust.

 

(2) Represents the number of shares of Common Stock equal to 29.9% of the voting power of the Common Stock outstanding after giving effect to the Warrant Exercise and the Preferred Stock Conversion (each as defined below) and 12,564,861 shares of Common Stock outstanding as of August 8, 2024 (as reported in the Quarterly Report of the Issuer on Form 10-Q filed with the SEC on August 9, 2024). See description of Voting Threshold and Voting Agreement in Item 6.

 

(c) On August 15, 2024, in addition to the Warrant Exercise described in Item 3, the Family Trust delivered notice to the Issuer of the conversion of (i) all of its 20,000 shares of Series E Preferred Stock into 4,000,000 shares of Common Stock and (ii) 2,000 shares of Series D Preferred Stock into 400,000 shares of Common Stock (the conversion of each of the Series E Preferred Stock and certain of the Series D Preferred Stock, the “Preferred Stock Conversion”). The Warrant Exercise and the Preferred Stock Conversion result in total ownership of 10,439,614 shares of Common Stock by the Family Trust, or 49.8% of the outstanding Common Stock, based on 20,964,861 shares of Common Stock outstanding, which includes (i) 12,564,861 shares of Common Stock outstanding as of August 8, 2024 (as reported in the Quarterly Report of the Issuer on Form 10-Q filed with the SEC on August 9, 2024); and (ii) 8,400,000 shares of Common Stock issued to the Family Trust in connection with the Warrant Exercise and Preferred Stock Conversion. Except as set forth in this Item 5(c), the Reporting Persons have not engaged in any transaction during the past 60 days involving Common Stock of the Issuer.

 

(d) This Item 5(d) is not applicable.

 

(e) This Item 5(e) is not applicable.

 

 

Item 6.

CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER

 

The information set forth in Items 3, 4, and 5 hereof is hereby incorporated by reference into this Item 6, as applicable.

 

Consent & Agreement

 

On August 15, 2024, the Issuer entered into a Consent & Agreement (the “Consent & Agreement”) with the Family Trust. Prior to entering into the Consent & Agreement, the Family Trust was the beneficial owner of 25% of the Common Stock of the Issuer.

 

Each of the Series D Preferred Stock, Series E Preferred Stock, Series D A Warrant, Series E A Warrant and the Series E B Warrant held by the Family Trust were subject to a limitation on exercise or conversion, as applicable, if as a result of such exercise or conversion, the Family Trust would own more than the Beneficial Ownership Limitation, which may be increased by the Family Trust upon written notice to the Issuer, to any specified percentage not in excess of 9.99% (the “Beneficial Ownership Limitation Ceiling”). As previously reported, on November 13, 2023, the Family Trust entered into an agreement with the Issuer pursuant to which it amended the terms of each of its Warrants to increase the Beneficial Ownership Limitation Ceiling from 9.99% to 25% and gave notice to the Issuer that it was increasing its Beneficial Ownership Limitation to 25% with respect to each of its Warrants.

 

Pursuant to the Consent & Agreement, the Issuer and the Family Trust agreed to (i) amend Section 6(d) of the Series E Certificate to increase the Beneficial Ownership Limitation Ceiling from 9.99% to 49.9% (the “Series E BOL Amendment”); (ii) subject to consent from the requisite holders of the Series D Preferred Stock, amend Section 6(d) of the Series D Certificate to increase the Beneficial Ownership Limitation from 9.99% to 49.9% (the “Series D BOL Amendment”); and (iii) amend Section 2(e) of each of the Family Trust’s Series D A Warrant and Series E A Warrant and Section 2(d) of the Family Trust’s Series E B Warrant to increase the Beneficial Ownership Limitation Ceiling from 25% to 49.9% (collectively, the “BOL Amendments”). Concurrently with the Consent & Agreement, the requisite holders of the Series D Preferred Stock provided consent pursuant to Section 6 of the Series D Certificate for the Series D BOL Amendment (the “Series D Consent”). If the Beneficial Ownership Limitation, as amended, does not permit the conversion of any or all of the Series D Preferred Stock held by the Family Trust, the Issuer, pursuant to the Consent & Agreement, must periodically, but no less than once per month, determine whether greater than 100,000 shares of Common Stock underlying the Series D Preferred Stock may be converted, and if so, provide notice to the Family Trust and must promptly effect such a conversion upon direction by the Family Trust.

 

In connection with the increase to the Beneficial Ownership Limitation Ceiling, the Family Trust agreed pursuant to the Consent & Agreement that (i) until its remaining Preferred Stock and Warrants are exercised or converted, as applicable, it will not acquire any other shares of Common Stock of the Issuer, and (ii) for a period of ten years following the date of the Consent & Agreement, it will not, directly or indirectly, acquire by means of public equity trading markets, any Common Stock or other securities with underlying Common Stock, to the extent the Family Trust would beneficially own the voting, investment or economic control over 49.9% of the Common Stock of the Issuer (the “Standstill”).

 

The Family Trust further agreed that if at any time it beneficially owns, or exercises control over, shares of Common Stock with voting rights that exceed 29.9% of the Common Stock of the Issuer (the “Voting Threshold”), the Issuer shall exercise the voting rights with respect to such shares of Common Stock beneficially owned in excess of the Voting Threshold in the same proportion as the outstanding Common Stock (excluding Common Stock beneficially owned, directly or indirectly, by the Family Trust or any Affiliate (as defined in the Consent & Agreement) of the Family Trust, but including any securities of the Issuer eligible to vote with the Common Stock on an as-converted basis) voted on all matters submitted to a vote of the holders of Common Stock of the Issuer (the “Voting Agreement”).

 

Additionally, the Family Trust consented to the Issuer’s entering into one or more agreements with investors or creditors to raise funds to fund the cash consideration in connection with a certain acquisition of the Issuer and its ongoing operations, and that such agreements may include the offer and issuance of debt, equity or convertible securities, a revolving credit facility, each of which may include the incurrence of liens on certain property of the Issuer (any such issuance, facility or agreement, a “Transaction” and, together, the “Transactions”). The Family Trust consented to the Transactions and waived any and all future rights with respect to the Transactions and irrevocably (i) waived any and all consent rights with respect to the Negative Covenants set forth in Section 9 of the Series E Certificate of Designation and the consent rights with respect to any issuance of securities under Section 4 of the Series E Certificate of Designation and (ii) to the extent any consent is required under Section 4 of the Series D Certificate of Designation with respect to an issuance of securities or under Section 9 with respect to the Negative Covenants, the Family Trust agreed to vote in favor of the recommendation of the Board with respect to any such consent for so long as Family Trust holds any shares of Series D Preferred Stock.

 

Pursuant to the Consent & Agreement, the Family Trust also irrevocably released its Mortgage on certain property of the Issuer in favor of the Family Trust in connection with the Series E Preferred Stock and agreed to execute and deliver or cause to be executed and delivered such instruments of satisfaction and reassignment as may be requested by the Issuer to effect such Release.

 

This summary is qualified by the actual terms of the Consent and Agreement which is filed as Exhibit 1 to this Schedule 13D and incorporated herein by reference.

 

 

Item 7.

MATERIAL TO BE FILED AS EXHIBITS

 

Exhibit No.		Description of Exhibit
1		Consent and Agreement, dated August 15, 2024, by and among Prairie Operating Co. and Narrogal Nominees Pty Ltd ATF Gregory K O’Neill Family Trust.
2		Joint Filing Agreement, dated November 21, 2023, by and among the Family Trust, Narrogal Nominees and Mr. O’Neill (incorporated by reference to the Schedule 13D originally filed with the SEC on November 21, 2023).

 

 

SIGNATURES

 

After reasonable inquiry and to the best of his knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct.

 

Dated: August 19, 2024
	NARROGAL NOMINEES PTY LTD ATF GREGORY K O’NEILL FAMILY TRUST
	By: Narrogal Nominees Pty Ltd, as trustee
	/s/ Gregory K. O’Neill
	Gregory K. O’Neill, Sole Director
	NARROGAL NOMINEES PTY LTD
	/s/ Gregory K. O’Neill
	Gregory K. O’Neill, Sole Director
	/s/ Gregory K. O’Neill
	Gregory K. O’Neill

 

 

 

Exhibit 1

 

CONSENT AND AGREEMENT

 

August 15, 2024

 

This Consent and Agreement (this “Agreement”) is dated as of August 15, 2024, by and between Prairie Operating Co., a Delaware corporation (the “Company”) and Narrogal Nominees Pty Ltd ATF Gregory K O’Neill Family Trust (including its successors and assigns, the “Holder”).

 

WHEREAS, the Holder is the holder of (i) 2,039,614 shares of common stock, par value $0.01 per share, of the Company (“Common Stock”); (ii) 10,000 shares of Series D convertible preferred stock, par value $0.01 per share, of the Company (“Series D Preferred Stock”) convertible into 2,000,000 shares of Common Stock; (iii) an A warrant to purchase 2,000,000 shares of Common Stock (the “Series D A Warrant”) expiring May 3, 2028; (iv) 20,000 shares of Series E convertible preferred stock, par value $0.01 per share, of the Company (“Series E Preferred Stock”) convertible into 4,000,000 shares of Common Stock; (v) an A warrant to purchase 4,000,000 shares of Common Stock (the “Series E A Warrant”) expiring August 15, 2028; and (vi) a B warrant to purchase 4,000,000 shares of Common Stock, expiring August 15, 2024 (the “Series E B Warrant,” and, together with the Series D A Warrant and the Series E A Warrant, the “Warrants”);

 

WHEREAS, the Series D Preferred Stock is governed by that certain Certificate of Designation of Preferences, Rights and Limitations of the Series D Preferred Stock, filed with the Delaware Secretary of State on May 3, 2024 (the “Series D CoD”);

 

WHEREAS, the Series E Preferred Stock is governed by that certain Certificate of Designation of Preferences, Rights and Limitations of the Series E Preferred Stock, filed with the Delaware Secretary of State on August 15, 2024 (the “Series E CoD”);

 

WHEREAS, upon issuance, the conversion or exercise, as applicable, of each of the Series D Preferred Stock, Series D A Warrant, Series E Preferred Stock, Series E A Warrant and Series E B Warrant, may not be effected to the extent that after giving effect to such exercise the Holder or any of its Affiliates (as defined below) would beneficially own in excess of 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion or exercise, as applicable, of the Series D Preferred Stock, the Series E Preferred Stock or the applicable Warrant (the “Beneficial Ownership Limitation”); provided, however, that the Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of the Series D Preferred Stock, the Series E Preferred Stock or the applicable Warrant so long as, among other things, the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the exercise of the Series D Preferred Stock, the Series E Preferred Stock or the applicable Warrant (such 9.99% ceiling, the “Beneficial Ownership Limitation Ceiling”), with any such increase not to be effective until the 61st day after such notice is delivered to the Company (such 61-day period, the “Waiting Period”);

 

 

WHEREAS, pursuant to that certain letter agreement, dated as of November 13, 2023, by and between the Company and the Holder (the “BOL Letter Agreement”), the Company and the Holder agreed to amend each of the Warrants to increase the Beneficial Ownership Limitation Ceiling from 9.99% to 25%, the Holder notified the Company of its election to increase the Beneficial Ownership Limitation to the amended Beneficial Ownership Limitation Ceiling and the Company and the Holder agreed to waive the Waiting Period with respect to such increase;

 

WHEREAS, the Holder desires to exercise the Series E B Warrant in full (the “Warrant Exercise”) for an aggregate exercise price of $24 million (the “Exercise Price”) and to convert its Series D Preferred Stock and Series E Preferred Stock, subject to the Beneficial Ownership Limitation;

 

WHEREAS, the Holder desires to increase the Beneficial Ownership Limitation to 49.9% with respect to the Series D Preferred Stock, the Series E Preferred Stock and the Warrants (the “BOL Increase”);

 

WHEREAS, pursuant to Section 4 of the Series D CoD and the Series E CoD, the Company shall not, without the affirmative vote of the holders of not less than 66% of the then outstanding shares of each series of Preferred Stock, among other things authorize or create any class of stock ranking senior to, or otherwise pari passu with, such series of Preferred Stock;

 

WHEREAS, Section 9 of each of the Series D CoD and the Series E CoD, sets forth certain negative covenants (the “Negative Covenants”), which provide that for so long as any shares of either such series of Preferred Stock are outstanding, unless the holders of more than 25% of the then outstanding shares of each such series of Preferred Stock, voting as a separate class, shall have otherwise given prior written consent, the Company shall not, subject to certain exceptions, incur indebtedness or liens or enter into certain agreements;

 

WHEREAS, pursuant to Section 11(j) of the Series E CoD and that certain Deed of Trust, Mortgage, Assignment of As-Extracted Collateral, Security Agreement and Fixture Filing and Financing Statement, dated August 15, 2023, by and among the Company and Holder (the “Mortgage”), the Company’s obligations under the Series E CoD are secured by a mortgage on certain property of the Company in favor of the Holder for so long as any shares of Series E Preferred Stock are outstanding;

 

WHEREAS, it is contemplated that the Company will enter into one or more agreements with investors or creditors to raise funds to fund the cash consideration in connection with the acquisition of the assets of Nickel Road Operating LLC (“NRO”) pursuant to that certain asset purchase agreement, dated January 11, 2024 (the “APA”), by and among the Company, NRO and Nickel Road Development LLC (the “NRO Acquisition”), and in order to fund its ongoing operations, and that such agreements may include the offer and issuance of debt, equity or convertible securities, a revolving credit facility, each of which may include the incurrence of liens on certain property of the Company (any such issuance, facility or agreement, a “Transaction” and, together, the “Transactions”)

 

WHEREAS, the consent of the Holder may be required under the Series D CoD and the Series E CoD to consummate certain of the contemplated Transactions (the “Consent”);

 

WHEREAS, the release of the Mortgage by the Holder may be required in order to consummate certain of the Transactions (the “Release”);

 

 

WHEREAS, it is proposed that the Holder’s voting interest with respect to shares of Common Stock beneficially owned by the Holder and its Affiliates be limited to 29.9% of the voting power on any matter submitted to a vote of the holders of Common Stock (the “Voting Threshold”), and the remainder to be voted in a Neutral Manner (as defined below) (the “Voting Limitation”);

 

WHEREAS, it is proposed that the Holder agree, for a period of 10 years, not to purchase any additional shares of Common Stock of the Company that would result in beneficial ownership by the Holder of greater than 49.9% of the voting or economic interest in the Common Stock of the Company, subject to the exceptions set forth herein (the “Standstill”); and

 

WHEREAS, the board of directors of the Company (the “Board”) has determined that it is advisable and in the best interest of the Company to: (i) amend the Series E B Warrant to permit the Warrant Exercise upon payment in full of the Exercise Price; (ii) amend the Series D A Warrant, the Series E A Warrant and the Series E CoD to effect the BOL Increase with respect to the Series E Preferred Stock, the Series D A Warrant and the Series E A Warrant; and (iii) upon receipt by the Company of the consent of the requisite holders of Series D Preferred Stock, amend the Series D CoD to effect the BOL Increase with respect to the Series D Preferred Stock, in each case, conditioned upon the Holder delivering the Consent with respect to any and all contemplated Transactions, the Waiver of Negative Covenants and Future Consents, the Release with respect to the Mortgage, including the execution and filing of the Evidence of Release (as defined below), and establishment of the Voting Limitation and the Standstill.

 

NOW, THEREFORE, in consideration of the mutual covenants, and agreements contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and the Holder agree as follows:

 

1. Holder Consent to the Transactions. The Holder, in its capacity as a holder of the Series D Preferred Stock and as the sole holder of the Series E Preferred Stock, pursuant to Section 4 and Section 9 of each of the Series D CoD and the Series E CoD, hereby irrevocably consents to the Transactions and the Holder waives any and all future rights with respect to the Transactions in the Holder’s capacity as a holder of the Series D Preferred Stock and as the sole holder of the Series E Preferred Stock.

 

2. Waiver of Negative Covenants and Future Consents. The Holder, in its capacity as a holder of the Series D Preferred Stock and as the sole holder of the Series E Preferred Stock, hereby irrevocably (i) waives any and all consent rights with respect to the Negative Covenants set forth in Section 9 of the Series E CoD and the consent rights with respect to any issuance of securities under Section 4 of the Series E CoD (the “Waiver”); and (ii) to the extent any consent is required under Section 4 of the Series D CoD with respect to an issuance of securities or under Section 9 with respect to the Negative Covenants, the Holder agrees to vote in favor of the recommendation of the Board with respect to any such consent for so long as Holder holds any shares of Series D Preferred Stock (the “Future Consent”).

 

3. Release of the Mortgage. The Holder hereby irrevocably releases the Mortgage and agrees to execute and deliver or cause to be executed and delivered such instruments of satisfaction and reassignment as may be requested by the Company to effect such Release, including, for the avoidance of doubt, the Release of Deed of Trust and Release by Holder of the Evidence of Debt without Production of Evidence of Debt pursuant to § 38-39-102 (1) (a) and (3), Colorado Revised Statutes (the “Evidence of Release”), attached hereto as Exhibit A.

 

 

4. Beneficial Ownership Limitation.

 

(a) The amendments set forth in this Section 4 shall become effective upon the satisfaction of the following conditions:

 

(i) The execution and delivery of this agreement, including the Consent, Waiver, Future Consent and Release set forth herein;

 

(ii) The execution and delivery by the Holder of the Evidence of Release;

 

(iii) The payment in full by the Holder of the Exercise Price for the Series E B Warrants and delivery of the Notice of Exercise specified in Section 5(a);

 

(iv) The delivery of the Conversion Notice specified in Section 5(b); and

 

(v) With respect to the amendments to the Series D CoD in clause (c), the receipt by the Company of the consent of the requisite holders of Series D Preferred Stock pursuant to Section 4 of the Series D CoD.

 

(b) Series E Preferred Stock.

 

(i) Pursuant to Section 4 of the Series E CoD, the Holder, in its capacity as the sole holder of the Series E Preferred Stock, consents to the amendment of Section 6(d) of the Series E CoD to increase the Beneficial Ownership Limitation Ceiling from 9.99% to 49.9% (the “Series E CoD Amendment”).

 

(ii) Upon satisfaction of the conditions set forth in clause (a), the Company agrees to enter into the Series E CoD Amendment and to promptly file the amended Series E CoD with the Delaware Secretary of State.

 

(iii) Effective upon the filing of the Series E CoD Amendment with the Delaware Secretary of State, the Holder hereby provides notice to the Company of its election with respect to the Series E Preferred Stock to increase the Beneficial Ownership Limitation from 4.99% to 49.9% and the Company and the Holder hereby agree to waive the Waiting Period with respect to such increase in the Beneficial Ownership Limitation.

 

 

(c) Series D Preferred Stock.

 

(i) Pursuant to Section 4 of the Series D CoD, the Holder, in its capacity as a holder of the Series D Preferred Stock, consents to the amendment of Section 6(d) of the Series D CoD to increase the Beneficial Ownership Limitation Ceiling from 9.99% to 49.9% (the “Series D CoD Amendment”).

 

(ii) Upon satisfaction of the conditions set forth in clause (a), the Company agrees to enter into the Series D CoD Amendment and to promptly file the amended Series D CoD with the Delaware Secretary of State.

 

(iii) Effective upon the filing of the Series D CoD Amendment with the Delaware Secretary of State, the Holder hereby provides notice to the Company of its election with respect to the Series D Preferred Stock to increase the Beneficial Ownership Limitation from 4.99% to 49.9% and the Company and the Holder hereby agree to waive the Waiting Period with respect to such increase in the Beneficial Ownership Limitation.

 

(d) Warrants.

 

(i) Pursuant to Section 5(l) of each of the Series D A Warrant, the Series E A Warrant and the Series E B Warrant, the Company and the Holder agree to amend Section 2(e) of each of the Series D A Warrant and the Series E A Warrant and Section 2(d) of the Series E B Warrant to increase the Beneficial Ownership Limitation Ceiling from 25% to 49.9%, upon satisfaction of the conditions set forth in clause (a).

 

(ii) The Holder hereby provides notice to the Company of its election to increase the Beneficial Ownership Limitation of the Warrants from 25% to 49.9% and the Company and the Holder hereby agree to waive the Waiting Period with respect to such increase in the Beneficial Ownership Limitation.

 

5. Exercises and Conversions.

 

(a) The Holder shall deliver a Notice of Exercise pursuant to Section 2(a) of the Series E B Warrant of its election to exercise the Series E B Warrants held by the Holder, and shall deliver payment in full of the Exercise Price to the Company in immediately available funds. The Company shall immediately effect the exercise of the number of Series E B Warrants permitted by the Beneficial Ownership Limitation in place at such time. Upon the effectiveness of the increase of the Beneficial Ownership Limitation set forth in Section 4(d), the Company shall effect the exercise of the remaining Series E B Warrants.

 

(b) The Holder shall deliver a Notice of Conversion pursuant to Section 6 of the Series E CoD of its election to convert all of the Series E Preferred Stock held by the Holder, subject to the Beneficial Ownership Limitation, as amended. Upon the effectiveness of the Series E CoD Amendment and exercise in full of the Series E B Warrants, the Company shall effect the conversion of the Series E Preferred Stock, up to the Beneficial Ownership Limitation. The result of the conversion will result in the retirement of the Series E Preferred Stock and the release of the Mortgage.

 

 

(c) The Holder shall deliver a Notice of Conversion pursuant to Section 6 of the Series D CoD of its election to convert the Series D Preferred Stock held by the Holder, subject to the Beneficial Ownership Limitation, as may be amended. Upon the effectiveness of the Series D CoD Amendment and conversion in full of the Series E Preferred Stock, the Company shall effect the conversion of Holder’s Series D Preferred Stock, up to the Beneficial Ownership Limitation. If the Beneficial Ownership Limitation, as may be amended, does not permit the conversion of any or all of the Series D Preferred Stock held by the Holder, the Company shall periodically, and no less than once per month, determine whether additional shares could be issued pursuant to the Beneficial Ownership Limitation and shall provide notice to Holder if greater than 100,000 additional shares of Series D Preferred Stock could be converted within the Beneficial Ownership Limitation and shall promptly effect such conversion upon direction by Holder.

 

6. Standstill and Voting Agreement.

 

(a) The Holder agrees that until such time that all the Series E B Warrants, all the Series E Preferred Stock and all the Series D Preferred Stock held by the Holder have been exercised or converted, as applicable, the Holder shall not (i) exercise the Series D A Warrants or Series E A Warrants held by the Holder, or, (ii) directly or indirectly, acquire, offer or seek to acquire, agree to acquire, or acquire rights or options to acquire (except by way of stock dividends or other distributions or offerings made available to holders of Common Stock generally on a pro rata basis), any Common Stock of the Company.

 

(b) The Holder agrees that for a period of 10 years following the date hereof, it shall not, directly or indirectly, acquire, offer or seek to acquire, agree to acquire, or acquire rights or options to acquire (except by way of stock dividends or other distributions or offerings made available to holders of Common Stock generally on a pro rata basis), by means of public equity trading markets, whether through the acquisition of control of another person, by joining a group, through swap or hedging transactions or otherwise, any Common Stock (other than through a broad-based market basket or index), or any derivative securities, contracts or instruments in any way related to the price of shares of Common Stock, that would result in Holder beneficially owning the voting, investment or economic control over greater than 49.9% of the Common Stock of the Company.

 

(c) If the Holder shall at any time beneficially own, or exercise control over, shares of Common Stock with voting rights that exceed the Voting Threshold, the Holder will not be permitted to exercise the voting rights with respect to any shares of Common Stock held by the Holder in excess of the Voting Threshold, and the Company shall exercise the voting rights with respect to such shares of Common Stock in excess of the Voting Threshold in the same proportion as the outstanding Common Stock (excluding the Common Stock beneficially owned, directly or indirectly, by the Holder or any Affiliate of the Holder, but including any securities of the Company eligible to vote with the Common Stock on an as-converted basis) voted on all matters submitted to a vote of the holders of Common Stock (a “Neutral Manner”). The Holder deems to irrevocably appoint as its proxy and attorney-in-fact, the Chief Executive Officer, the Chief Financial Officer and the General Counsel of the Company, each of them individually, with full power of substitution and resubstitution, to consent to or vote any shares of Common Stock held by them in excess of the Voting Threshold with respect to any matters that must be voted in a Neutral Manner. “Affiliate” shall mean an individual or entity of any kind that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with the Holder, as such terms are used in and construed under Rule 405 of the Securities Act.

 

 

7. Counterparts. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to each other party, it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

 

8. Entire Agreement. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes any prior support or other agreements between the Holder and the Company with respect to the subject matter hereof.

 

9. Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware, without giving effect to the conflict of law provisions thereof to the extent such provisions would require or permit the application of the laws of any jurisdiction other than the State of Delaware. Any legal suit, action, proceeding or dispute arising out of or relating to this Agreement or the transactions contemplated hereby or thereby may be instituted in the federal courts of the United States of America or the courts of the State of Delaware in each case located in the city of Wilmington and county of New Castle County, and each party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action, proceeding or dispute.

 

10. Severability. In the event that any of the provisions of this Agreement are held to be invalid or unenforceable in whole or in part, all other provisions will nevertheless continue to be valid and enforceable with the invalid or unenforceable parts severed from the remainder of this Agreement.

 

[Signature Pages Follow.]

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

 

	PRAIRIE OPERATING CO.
	By:	/s/ Edward Kovalik
	Name:	Edward Kovalik
	Title:	Chief Executive Officer

 

Signature Page to

Consent and Agreement

 

 

	NARROGAL NOMINEES PTY LTD ATF GREGORY K O’NEILL FAMILY TRUST
	By:	/s/ Gregory K. O’Neill
	Name:	Gregory K. O’Neill
	Title:	Managing Director

 

Signature Page to

Consent and Agreement

 

 

EXHIBIT A

 

Evidence of Release

 

Execution Version

 

AFTER RECORDING RETURN TO: Vinson & Elkins L.L.P. 1114 6th Ave 32nd Floor New York, NY 10036 Attn: Kerryanne McHugh

) ) ) ) )

 

FULL RELEASE OF LIENS

 

For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned does hereby fully release and discharge and forever relinquish all of its rights, titles, interests, liens and security interests (including, without limitation, any assignment of production) under the instruments heretofore executed or delivered to or for the benefit of the undersigned (together with any deed of trust or mortgage amended thereby or any supplement, modification or amendment thereto, the “Mortgage”) more particularly described on Schedule I hereto, including all liens, security interests and assignments created and existing under the Mortgage on all of the properties and interests described in and burdened thereby and does hereby terminate and release the Mortgage.

 

Reference is hereby made to the Mortgage and the recordation thereof for all purposes in connection herewith. Recording references of the Mortgage are to the mortgage, deed of trust, financing statement or other appropriate records in the county in which the original Mortgage is recorded. Capitalized terms used in this Full Release of Liens or in Schedule I but not defined herein or therein shall have the meanings given to such terms in the Mortgage.

 

This Full Release of Liens may be executed in multiple counterparts, all of which are identical and shall constitute one and the same instrument.

 

[Signature page follows]

 

 

EXECUTED this 15th day of August, 2024.

 

	Narrogal Nominees Pty Ltd ATF Gregory K O’Neill Family Trust, as Mortgagee
	By:

 

 

SCHEDULE I

 

1.

Deed of Trust, Mortgage, Assignment of As-Extracted Collateral, Security Agreement, Fixture Filing and Financing Statement dated as of August 15, 2023 from Prairie Operating Co., LLC, a Delaware limited liability company, as Mortgagor, to Gregory O’Neill, as Trustee, for the benefit of Narrogal Nominees Pty Ltd ATF Gregory K O’Neill Family Trust and recorded as follows:

 

Jurisdiction		Filing Reference		File Date
Weld County, CO		Document No. 4915993		08/18/2023

 

 

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