INFORMATION
STATEMENT
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ARE NOT ASKING YOU FOR A PROXY AND
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ABOUT
THIS INFORMATION STATEMENT
This
information statement is being provided by Creek Road Miners, Inc., a Delaware corporation (“Creek Road,” “we,”
“us,” the “Company” or “our Company”), to notify our stockholders of the approval of an anticipated
amendment to our Amended and Restated Certificate of Incorporation, dated June 5, 2020 (the “Charter”), to, among other things,
(i) effect a reverse stock split of the Company’s common stock, par value $0.0001 per share (“Common Stock”), on a
ratio between 1-23 and 1-30; (ii) increase the number of authorized shares of Common Stock from 100,000,000 to 150,000,000; (iii) amend
the Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series B Preferred Stock, dated July 16,
2021, to reflect a 10% decrease in the stated value of Series B Preferred Stock, par value $0.0001 per share; (iv) amend the Certificate
of Designation of Preferences, Rights and Limitations of Series C Preferred Stock, dated December 1, 2021, to reflect a 20% decrease
in the stated value of Series C Preferred Stock, par value $0.0001 per share; and (v) change the name of the Company to Prairie Operating
Co. (the “Corporate Name Change”). A copy of the form of the Certificate of Amendment to the Amended and Restated Certificate
of Incorporation (the “Charter Amendment”) is attached as Annex A to this information statement. The Company is adopting
the Charter Amendment in connection with the transactions described below.
We
have also obtained stockholder approval to approve an amendment and restatement of our Charter to make certain other changes, as described
further in the sections entitled “The Charter Amendment and The Proposed Charter” and “Description of Securities”
in the enclosed information statement, that the Company’s board of directors deems appropriate for the public operating company
after the Closing (as defined below). A copy of the form of the Second Amended and Restated Certificate of Incorporation (the “Proposed
Charter”) is attached as Annex A to this information statement. The Company is adopting the Proposed Charter immediately after
the Closing.
The
Company (i) entered into the Agreement and Plan of Merger, dated as of October 24, 2022 (the “Merger Agreement”), by and
among the Company, Creek Road Merger Sub, LLC, a wholly owned subsidiary of the Company (“Merger Sub”), and Prairie Operating
Co., LLC, a Delaware limited liability company (“Prairie”), pursuant to which such parties agreed to perform the transactions
contemplated thereby, including the Merger (as defined below); and (ii) at the closing of the Merger (the “Closing”), will
(a) deliver the greater of (A) 2,000,000 shares of Common Stock and (B) the product of (x) the number of issued and outstanding shares
of Common Stock immediately following the consummation of certain restructuring transactions by the Company (as set forth in the Merger
Agreement) multiplied by (y) 33.33% to the members of Prairie and (b) convert certain options to purchase membership interests of Prairie
into restricted performance-based options to purchase, in the aggregate, 8,000,000 shares of Common Stock for $0.25 per share only exercisable
if specific production hurdles are achieved.
Pursuant
to the Merger Agreement, Merger Sub will merge with and into Prairie (which we refer to as the “Merger”) on the terms and
subject to the conditions of the Merger Agreement, with Prairie continuing as the surviving entity in the Merger and a wholly-owned subsidiary
of Creek Road.
Conditions
precedent to the Closing require the Company to complete, among other items, the following corporate actions: (i) all of the holders
of the Company’s outstanding shares of Series A convertible preferred stock, par value $0.0001 per share (the “Series A Preferred
Stock”), Series B convertible preferred stock, par value $0.0001 per share (the “Series B Preferred Stock”), Series
C convertible preferred stock, par value $0.0001 per share (the “Series C Preferred Stock”), and 12% senior secured
convertible debentures (the “Convertible Debentures”), and holders of certain warrants, certain convertible
promissory notes and certain other accrued liabilities, will have converted their respective shares of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock and Convertible Debentures, and respective warrants, convertible promissory
notes and accrued liabilities into shares of Common Stock, (ii) all conditions precedent to the consummation of the sale
of shares of Common Stock and warrants to acquire shares of Common Stock in a private placement in an amount not less than $30.0 million
(the “PIPE Transaction”) shall have been met; (iii) Prairie shall have acquired certain oil and gas leases (the “Exok
Transaction”) pursuant to a Purchase and Sale Agreement, dated as of October 24, 2022, between Prairie and Exok, Inc., an Oklahoma
corporation, and (iv) the Company shall have obtained requisite stockholder approval for the Charter Amendment.
This
information statement is being mailed on or about November 7, 2022 to stockholders of record of the Company as of October
25, 2022, and is being delivered to inform you of the corporate actions described herein before they take effect in accordance
with Rule 14c-2 of the Securities Exchange Act of 1934, as amended. We encourage you to review this information statement for a more
complete description of the Charter Amendment and the Proposed Charter as well as the Merger Agreement and the Merger, the PIPE
Transaction, the Exok Transaction and the other transactions contemplated by the Merger Agreement.
The
Charter Amendment and the Proposed Charter will not be implemented prior to November 27, 2022, which is twenty (20) calendar days
following the date on which the definitive form of this information statement is first mailed to our stockholders.
Our
principal executive offices are located at 35 E Horizon Ridge Pkwy, Suite 110 - 502, Henderson, Nevada 89002, and our main telephone
number is (435) 900-1949.
CERTAIN
DEFINED TERMS
Unless
the context otherwise requires, references in this information statement to:
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“Authorized
Stock Increase” are to the amendment to our Charter to increase the number of authorized shares of Common Stock from 100,000,000
to 150,000,000; |
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“Board”
are to the board of directors of Creek Road; |
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“Charter”
are to the Amended and Restated Certificate of Incorporation of Creek Road, dated June 5, 2020; |
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“Charter
Amendment” are to the amendment to our Charter, which will be effective immediately prior to the completion of the Merger; |
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“Closing”
are to the closing of the Transactions; |
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“Closing
Date” are to the date on which the Closing occurs; |
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“Code”
are to Internal Revenue Code of 1986, as amended; |
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“Common
Stock” are to the common stock of Creek Road, par value $0.0001 per share; |
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“Convertible
Debentures” are to 12% senior secured convertible debentures of Creek Road; |
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“Corporate
Name Change” are to the amendment to our Charter to change the name of the Company to Prairie Operating Co.; |
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“Creek
Road,” “we,” “our” or the “Company” are to Creek Road Miners, Inc., a Delaware corporation; |
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“DGCL”
are to the General Corporation Law of the State of Delaware; |
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“Exchange
Act” are to the Securities Exchange Act of 1934, as amended; |
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“Exok”
are to Exok, Inc., an Oklahoma corporation; |
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“Exok
Agreement” are to that certain Purchase and Sale Agreement, dated as of October 24, 2022, between Prairie and Exok; |
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“Exok
Transaction” are to the acquisition of certain oil and gas leases by Prairie pursuant to the Exok Agreement; |
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“GAAP”
are to U.S. generally accepted accounting principles; |
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“In-the-Money
Warrants” are to warrants to purchase
shares of Common Stock and Series B Preferred Stock for which the exercise price per share of Common Stock or Series B
Preferred Stock, as applicable, subject to such warrants being less than or equal to $5.00 at the Closing; |
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“Merger”
are to the merger of Merger Sub with and into Prairie, with Prairie surviving the merger as a wholly owned subsidiary of Creek Road; |
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“Merger
Agreement” are to that certain Agreement and Plan of Merger, dated as of October 24, 2022, by and among the Creek Road, Merger
Sub and Prairie; |
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“Merger
Consideration” are to the greater of (a) 2,000,000 shares of Common Stock and (b) the product of (x) a number of issued and
outstanding shares of Common Stock immediately following the consummation of the Restructuring Transactions (as defined in “The
Merger Agreement and the Transactions — Restructuring Transactions”) multiplied by (y) 33.33%; |
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“Merger
Sub” are to Creek Road Merger Sub, LLC, a Delaware limited liability company and a wholly owned subsidiary of Creek Road; |
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“New
Board” are to the board of directors of PrairieCo; |
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“Out-of-the-Money
Options” are to options to purchase shares of Common Stock for which the exercise price per share of Common Stock subject to
such options is greater than $5.00 at the Closing; |
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“Out-of-the-Money
Warrants” are to warrants to purchase shares of Common Stock and Series B Preferred Stock for which the exercise price per
share of Common Stock or Series B Preferred Stock, as applicable, subject to such warrants is greater than $5.00 at the Closing; |
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“PIPE
Agreements” are to certain securities purchase agreements to be entered into by and among Creek Road and certain investors
prior to the Closing; |
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“PIPE
Investors” are to certain accredited investors in the PIPE Transaction; |
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“PIPE
Securities” are to, collectively, the shares of Common Stock that are issued in the PIPE Transaction and the PIPE Warrants; |
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“PIPE
Transaction” are to the private offering of securities of Creek Road to certain investors in connection with the Merger; |
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“PIPE
Warrants” are to the warrants to purchase shares of Common Stock at an exercise price of $6.00 per share that are issued in
the PIPE Transaction; |
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“Prairie”
are to Prairie Operating Co., LLC, a Delaware limited liability company; |
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“PrairieCo”
are to (a) prior to giving effect to the Merger, Creek Road, and (b) after giving effect to the Merger, Prairie Operating Co., the
new name of Creek Road after giving effect to the Merger; |
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“Prairie
Members” are to Gary C. Hanna and Edward Kovalik; |
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“Proposed
Charter” are to the proposed second amended and restated certificate of incorporation of PrairieCo, which will be made effective
immediately following the completion of the Merger; |
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“Reverse
Stock Split” are to the amendment to our Charter to effect a reverse stock split of Common Stock on a ratio between 1-23 and
1-30; |
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“Roth
Capital Partners” are to Roth Capital Partners, LLC, placement agent for the PIPE Transaction; |
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“SEC”
are to the U.S. Securities and Exchange Commission; |
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“Securities
Act” are to the Securities Act of 1933, as amended; |
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“Series
A Preferred Stock” are to the preferred stock of Creek Road, par value $0.0001 per share, designated as Series A Preferred
Stock in the Charter; |
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“Series
B Certificate of Designations” are to the Amended and Restated Certificate of Designation of Preferences, Rights and Limitations
of Series B Preferred Stock, dated July 16, 2021; |
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“Series
B Preferred Stock” are to the preferred stock of Creek Road, par value $0.0001 per share, designated as Series B Preferred
Stock in the Charter; |
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“Series
C Certificate of Designations” Certificate of Designation of Preferences, Rights and Limitations of Series C Preferred Stock,
dated December 1, 2021; |
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“Series
C Preferred Stock” are to the preferred stock of Creek Road, par value $0.0001 per share, designated as Series C Preferred
Stock in the Charter; |
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“Transactions”
are to, collectively, the Merger, the PIPE Transaction, the Exok Transaction and the other Transactions described in the Merger Agreement; |
SUMMARY
TERM SHEET
This
Summary Term Sheet, together with the section entitled “Summary of the Information Statement,” summarizes certain information
contained in this information statement, but does not contain all of the information that is important. Stockholders should read carefully
this entire information statement, including the attached annexes, for a more complete understanding of the Transactions.
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The
Charter Amendment will provide for, among other things, a reverse stock split and an increase in the number of authorized share of
the Common Stock. The Company will adopt the Charter Amendment in connection with the transactions described below. Additionally,
the Company will adopt the Proposed Charter immediately after the Closing to make certain changes appropriate for the public operating
company after the Closing. For more information, please see the sections entitled “The Charter Amendment and The Proposed Charter”
and “Description of Securities.” |
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On
October 24, 2022, Creek Road and Merger Sub entered into the Merger Agreement with Prairie, which provides for the merger of Merger
Sub with and into Prairie, with Prairie surviving the Merger as a wholly owned subsidiary of Creek Road. The Closing is subject to
the satisfaction (or waiver) of a number of conditions set forth in the Merger Agreement. For more information, please see the section
entitled “The Merger Agreement and the Transactions.” |
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Concurrently
with the execution of the Merger Agreement, Prairie entered into the Exok Agreement with Exok, pursuant to which it agreed to purchase
the Exok Assets. The consideration for the Exok Assets is (a) $24,000,000 in cash and (b) the issuance of $4,182,000 in total equity
consideration, consisting of (i) 836,400 shares of Common Stock and (ii) 836,400 warrants to purchase 836,400 shares of Common Stock
at an exercise price of $6.00 per share. For more information, please see the section entitled “The Merger Agreement and the
Transactions — Other Transaction Agreements — Exok Agreement.” |
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Prior
to the consummation of the PIPE Transaction, the Company will effectuate certain restructuring transactions, including converting
the Company’s outstanding Series A Preferred Stock (including dividends payable thereunder), Series B Preferred Stock, Series
C Preferred Stock, Convertible Debentures (including accrued interest payable thereunder) and certain warrants and convertible
promissory notes into shares of Common Stock. In addition, the Company will also convert certain accrued liabilities into shares
of Common Stock, including outstanding Board fees and consulting fees. Thereafter, the Company will effectuate the Reverse Stock
Split by filing of the Charter Amendment. For more information, see the section entitled “The Merger Agreement and the Transactions
— Restructuring Transactions.” |
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Creek
Road is in negotiations with certain investors and intends to enter into separate securities purchase agreements with such investors
prior to the Closing in connection with the private offering of shares of Common Stock and PIPE Warrants. The purpose of such transactions
is to raise capital to acquire the Exok Assets and for use by the combined company following the Closing. Creek Road intends to sell
to the PIPE Investors an aggregate of at least 6,000,000 shares of Common Stock for a purchase price of $5.00 per share and
an aggregate of at least 6,000,000 PIPE Warrants to purchase shares of Common Stock at an exercise price of $6.00 per share,
for aggregate gross proceeds of at least $30.0 million. As of the date of the execution of the Merger Agreement, no definitive
agreements have been executed with such investors. There is no guarantee that Creek Road will be able to successfully raise $30.0
million in the PIPE Transaction. For more information, please see the section entitled “The Merger Agreement and the Transactions
— Other Transaction Agreements — PIPE Agreements.” |
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At
Closing, the Prairie Members will receive the greater of (i) 2,000,000 shares of Common Stock and (ii) one-third of the issued and
outstanding shares of Common Stock immediately following the consummation of the Restructuring Transactions involving, among other
things, the conversion of certain outstanding convertible securities of the Company into Common Stock. For more information, please
see the section entitled please see the section entitled “The Merger Agreement and the Transactions—Merger
Consideration.” |
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At
Closing, the Company will also assume and convert options to purchase membership interests of Prairie into restricted performance-based
options to acquire shares of Common Stock, which will have substantially the same terms and conditions as were applicable to such
options immediately before the Effective Time, except that (a) certain operating metrics must be met for the Converted Options to
be exercisable, (b) the Converted Options, in the aggregate, will be exercisable for 8,000,000 shares of Common Stock and
(c) the per share exercise price for each share of Common Stock issuable upon exercise of the Converted Options will equal $0.25.
For more information, please see the section entitled please see the section entitled “The Merger Agreement and the Transactions—Merger
Consideration.” |
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The
Transactions involve numerous risks. For more information about these risks, please see the section entitled “Risk Factors.” |
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The
Board considered various factors in determining whether to approve the Merger Agreement and the Transactions, including certain interests
of members of the Board, Creek Road’s executive officers and members of Prairie that may be different from, or in addition
to, interests of Creek Road stockholders. For more information about the Board’s decision-making process, please see the sections
entitled “The Merger Agreement and the Transactions — Recommendation of the Board of Directors and Their Reasons
for the Merger Agreement and the Transactions” and “The Merger Agreement and the Transactions —Interests
of Certain Persons in the Merger Agreement and Related Party Transactions.” |
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After
giving effect to the Merger and the Charter Amendment, the Company will be re-named Prairie Operating Co. All of the Company’s
executive officers and directors will resign and only Paul Kessler will remain as a member of the New Board. Gary C. Hanna and Edward
Kovalik, both current members of Prairie, will become executive officers of PrairieCo and become members of the New Board. |
SUMMARY
OF THE INFORMATION STATEMENT
This
is a summary of more detailed information you will find in other sections of this information statement and in documents we have incorporated
by reference in this information statement. We encourage you to read the entire information statement and the documents we have incorporated
by reference and not rely on this summary.
The
Parties to the Merger Agreement
Creek
Road Miners, Inc.
35
E Horizon Ridge Pkwy, Suite 110 - 502
Henderson,
Nevada 89002
Creek
Road is a Delaware corporation and cryptocurrency miner. Prior to its cryptocurrency mining operations that began in October 2021, the
Company produced live and virtual pop culture conventions and events, and sold a gelatin machine and related consumables (known collectively
as “legacy operations”). All legacy operations were discontinued during 2021. In addition, the Company operated an eCommerce
site selling pop culture memorabilia that was discontinued on June 30, 2022.
Our
shares of Common Stock are currently traded on the OTCQB under the ticker symbol “CRKR.”
Creek
Road Merger Sub, LLC
35
E Horizon Ridge Pkwy, Suite 110 - 502
Henderson,
Nevada 89002
Merger
Sub is a wholly owned subsidiary of Creek Road formed solely for the purpose of effectuating the Merger. Merger Sub was formed as a Delaware
limited liability company on October 4, 2022. Merger Sub owns no material assets and does not operate any business.
Prairie
Operating Co., LLC
8636
N. Classen Boulevard
Oklahoma
City, Oklahoma 73114
Prairie
is a Delaware limited liability company formed on June 7, 2022. Prairie has conducted no operations and has generated no revenues. Prairie
has not conducted any material activities other than those incident to its formation and entering into the Merger Agreement, the Exok
Agreement and the other agreements related to the Transactions. Upon the terms and subject to the conditions of the Merger Agreement,
after the consummation of the Merger, Prairie will continue as a wholly owned subsidiary of the Company.
Prairie
is managed by its members, Gary C. Hanna and Edward Kovalik.
Overview
of the Merger Agreement and the Transactions
Restructuring
Transactions
Prior
to the consummation of the PIPE Transaction, the Company will effectuate the following Restructuring Transactions.
The
Company’s outstanding Series A Preferred Stock (including dividends payable thereunder), Series B Preferred Stock, Series C Preferred
Stock, Convertible Debentures (including accrued interest payable thereunder) and certain warrants and convertible promissory
notes will be converted into shares of Common Stock prior to the Closing pursuant to the Support Agreements. In addition, the Company
will also convert certain accrued liabilities into shares of Common Stock, including outstanding Board fees and consulting fees. Thereafter,
the Company will effectuate the Reverse Stock Split by filing of the Charter Amendment.
For
more information about the Restructuring Transactions, see the section entitled “The Merger Agreement and the Transactions —
Restructuring Transactions.”
The
Merger
On
October 24, 2022, Creek Road and Merger Sub entered into the Merger Agreement with Prairie pursuant to which, and subject to the terms
and conditions contained therein, Merger Sub will merge with and into Prairie, with Prairie surviving the Merger as a wholly owned subsidiary
of Creek Road.
The
Prairie Members will receive the greater of (a) 2,000,000 shares of Common Stock and (b) the product of (x) the number of issued and
outstanding shares of the Common Stock immediately following the consummation of the Restructuring Transactions multiplied by (y) 33.33%.
As
of the Effective Time (as defined below in the section entitled “The Merger Agreement and the Transaction—Effective
Time of the Merger”), the Company will assume and convert certain options to purchase membership interests of Prairie into
restricted performance-based options to acquire shares of Common Stock (the “Converted Options”), which will have substantially
the same terms and conditions as were applicable to such options immediately before the Effective Time, except that (a) certain operating
metrics must be met for the Converted Options to be exercisable, (b) the Converted Options, in the aggregate, will be exercisable
for 8,000,000 shares of Common Stock and (c) the per share exercise price for each share of Common Stock issuable upon exercise of the
Converted Options will equal $0.25. For further information about the Converted Options, please see the section entitled “The Merger
Agreement and the Transactions—Merger Consideration.”
Immediately
following the Closing Date, the Prairie Members are expected to own approximately 15.58% of the outstanding Common Stock, the Company’s
existing stockholders are expected to own approximately 31.16% of the outstanding Common Stock, Exok is expected to own approximately
6.52% of the outstanding Common Stock and the PIPE Investors are expected to own approximately 46.74% of the outstanding Common Stock.
This assumes (a) 12,836,400 shares of Common Stock outstanding as of the Closing consisting of (i) 6,000,000 shares of Common Stock issued
in the PIPE Transaction, (ii) 836,400 shares of Common Stock issued to Exok pursuant to the Exok Transaction, (iii) 2,000,000 shares
of Common Stock issued to the Prairie Members in the Merger and (iv) 4,000,000 shares of Common Stock outstanding after giving effect
to the Restructuring Transactions, including the Reverse Stock Split, (b) 6,000,000 PIPE Warrants are issued in the PIPE Transaction,
600,000 warrants to purchase shares of Common Stock are issued to Roth Capital Partners at Closing and 836,400 warrants to purchase shares
of Common Stock are issued to Exok pursuant to the Exok Transaction (c) no exercise or conversion of any of the Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Convertible Debentures, In-the-Money-Warrants and certain convertible promissory
notes and certain other accrued liabilities prior to the Restructuring Transactions, (d) no exercise of any other outstanding
options or warrants of Creek Road prior to or in connection with Closing and (e) no other issuances of equity interests of Creek Road.
Additionally,
if we assume that all 7,436,400 warrants to purchase Common Stock and all 8,000,000 options issued in the Transactions, and all 98,494
Out-of-the-Money Options and Out-of-the-Money Warrants outstanding after the Closing, are exchanged for shares of Common Stock, then
the Prairie Members are expected to own approximately 35.25% of the outstanding Common Stock, the Company’s existing stockholders
are expected to own approximately 14.45% of the outstanding Common Stock, Exok is expected to own approximately 5.90% of the outstanding
Common Stock, the PIPE Investors are expected to own approximately 42.30% of the outstanding Common Stock and Roth Capital Partners is
expected to own approximately 2.11% of the outstanding Common Stock. The foregoing scenario assumes that PrairieCo achieves production
of 10,000 barrels of oil equivalent per day resulting in 100% of the Converted Options becoming exercisable for 8,000,000 shares of Common
Stock and a volume-weighted average price of the Common Stock on a pre-Reverse Stock Split basis of $0.24 per share on the Closing Date.
For
further information about the Merger, including the Merger Agreement and related transactions, see the section entitled “The Merger
Agreement and the Transactions” below.
Conditions
to the Closing
The
respective obligations of each of the Company, Prairie and Merger Sub to complete the Merger are subject to the satisfaction, at or prior
to the Effective Time, of the following conditions:
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stockholders of the Company have approved the Charter Amendment and the Proposed Charter
(the “Requisite Consent”); |
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judgment by any court or governmental entity of competent jurisdiction or other legal restraint
or prohibition enjoining or preventing the consummation of the Merger is in effect, and no
law or judgment has been enacted, entered, promulgated or enforced by any governmental entity
of competent jurisdiction which prohibits or makes illegal the consummation of the Merger; |
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closing of the PIPE Transaction shall have been consummated in accordance with its terms; |
| ● | the
Charter Amendment has been filed and become effective; |
| ● | all
conditions precedent to the closing of the Exok Transaction, other than the consummation
of the Merger and the deliveries and actions to be made and performed at such closing, have
been satisfied or waived by the applicable persons; |
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required consents and governmental authorizations have been obtained and are in full force
and effect; |
| ● | the
Lock-up Agreements (as defined below) in the form attached to the Merger Agreement have been
duly executed and provided by the required parties and are in full force and effect; |
| ● | this
information statement was mailed to the Company’s stockholders at least 20 days prior
to the Closing Date, and the consummation of the Merger is permitted by Regulation 14C of
the Exchange Act; |
| ● | the
Stockholders Agreement (as defined below) in the form attached to the Merger Agreement has
been duly executed by the Company and the other parties thereto and is in full force and
effect; |
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accuracy of the representations and warranties of the other party contained in the Merger
Agreement as of the date on which the Merger Agreement was entered into and as of the date
on which the Merger is completed, subject to the materiality standards provided in the Merger
Agreement (and the receipt of an officer’s certificate from the other party to such
effect); |
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performance by the other party in all material respects of all obligations, covenants and
agreements required to be performed by it under the Merger Agreement at or prior to the date
on which the Merger is completed (and the receipt of an officer’s certificate from
the other party to such effect); and |
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the date of the Merger Agreement, there has not been any effect, change, event, circumstance,
condition, occurrence or development that has had or would reasonably be expected to have,
either individually or in the aggregate, a material adverse effect on any party (and each
party has provided an officer’s certificate to the other party to such effect). |
In
addition, Prairie’s obligation to complete the Merger is subject to the satisfaction or waiver, at or prior to the Effective
Time, of the condition that (i) no more than 20% of the Out-of-the-Money Options outstanding as of June 30, 2022 will be
outstanding as of the Closing Date and (ii) no more than 20% of the Out-of-the-Money Warrants outstanding as of the Merger
Agreement will be outstanding as of the Closing Date.
The
Company cannot provide assurance as to when or if all of the conditions to the Merger can or will be satisfied or waived by the appropriate
party.
Stockholders
Agreement
Pursuant
to the Merger Agreement, each of the Company, Bristol Investment Fund, Ltd. (“Bristol”), Paul L. Kessler, Gary C. Hanna and
Edward Kovalik will enter into the Stockholders Agreement (the “Stockholders Agreement”) prior to the Effective Time whereby
the parties thereto will use reasonable best efforts, including taking certain necessary actions, to cause the New Board to cause certain
nominees to be elected to serve as a director on the New Board under the following conditions: (a) one nominee designated by Bristol
and Paul L. Kessler, collectively, so long as Bristol, Paul L. Kessler and their respective affiliates collectively beneficially own
at least 50% of the number of shares of Common Stock collectively beneficially owned by such parties on the Closing Date; (b) four nominees
designated by the Prairie Members so long as the Prairie Members and their affiliates collectively beneficially own at least 50% of the
number of shares of Common Stock collectively beneficially owned by such parties on the Closing Date; (c) three nominees designated by
the Prairie Members so long as the Prairie Members and their affiliates collectively beneficially own at least 40% (but less than 50%)
of the number of shares of Common Stock collectively beneficially owned by such parties on the Closing Date; (d) two nominees designated
by the Prairie Members so long as the Prairie Members and their affiliates collectively beneficially own at least 30% (but less than
40%) of the number of shares of Common Stock collectively beneficially owned by such parties on the Closing Date; and (e) one nominee
designated by the Prairie Members so long as the Prairie Members and their affiliates collectively beneficially own at least 20% (but
less than 30%) of the number of shares of Common Stock collectively beneficially owned by such parties on the Closing Date.
For
more information about the Stockholders Agreement, see the section entitled “The Merger Agreement and the Transactions —
Other Transaction Agreements —Stockholders Agreement.”
Support
Agreements
Certain
holders of the Series A Preferred Stock, the Series
B Preferred Stock, the Series C Preferred Stock and the Convertible Debentures have each entered into support agreements (collectively,
the “Support Agreements”) pursuant to which each such holder has agreed to convert its (i) respective shares of Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred Stock and (ii) applicable Convertible Debentures into shares of Common
Stock as of the Effective Time.
Under
the respective Support Agreements, the applicable holders agreed to a decrease in the stated value of the Series B Preferred Stock
by 10%, a decrease in the stated value of the Series C Preferred Stock by 20% and a reduction in the principal balance of the Convertible
Debentures by 20%. Holders of the Series B Preferred Stock and Series C Preferred Stock agreed to convert their respective shares into
Common Stock immediately prior to the Closing at the lower of (i) the respective conversion prices or (ii) the lowest per share valuation
attributed to the Common Stock in the Merger.
Under
the Support Agreements, the applicable holders have also agreed (i) to use their reasonable best efforts to cooperate fully with
the Company in connection with the Merger, any financing in support of the Merger and the transaction contemplated thereby, including
any reasonable request for a lock-up agreement necessary to facilitate such financing, and (ii) not to initiate, solicit, encourage or
facilitate any inquiries or engage in discussions with any third party relating to alternative business combinations.
For
more information about the Support Agreements, see the section entitled “The Merger Agreement and the Transactions —
Other Transaction Agreements —Support Agreements.”
Lock-up
Agreements
Pursuant to the Merger
Agreement, certain executive officers and directors of the Company and the Prairie Members will execute lock-up agreements prior to
the Closing (collectively, the “Lock-up Agreements”) that impose a lock-up on any
sale of shares of Common Stock until 180 days after Closing, subject to certain exceptions.
For
more information about the Lock-up Agreements, see the section entitled “The Merger Agreement and the Transactions —
Other Transaction Agreements — Lock-up Agreements.”
PIPE
Agreements
Creek
Road is in negotiations with certain investors and intends to enter into separate PIPE Agreements with each PIPE Investor prior to the
Closing. Creek Road intends to sell to the PIPE Investors an aggregate of at least 6,000,000 shares of Common Stock for a purchase
price of $5.00 per share and an aggregate of at least 6,000,000 PIPE Warrants to purchase shares of Common Stock at an exercise
price of $6.00 per share, for aggregate gross proceeds of at least $30.0 million. As of the date of the execution of the Merger
Agreement, no definitive agreements have been executed with such investors. There is no guarantee that Creek Road will be able to successfully
raise $30.0 million in the PIPE Transaction.
The
closing of a PIPE Transaction with aggregate gross proceeds of $30.0 million is a condition to closing the Merger. The purpose of the
PIPE Transaction is to raise capital to acquire the Exok Assets (as defined in the section entitled “The Merger Agreement and
the Transactions —Exok Agreement”) and for use by the combined company following the Closing. In connection with
the PIPE Transaction, the PIPE Investors will enter into registration rights agreements with Creek Road at the Closing containing customary
terms.
Upon
closing of the PIPE Transaction, Creek Road will issue to Roth Capital Partners warrants to purchase shares of Common Stock at an exercise
price of $6.00 per share in an amount equal to 10% of the shares of Common Stock issued in the PIPE Transaction for its role as placement
agent in the PIPE Transaction.
For
more information about the PIPE Agreements, see the section entitled “The Merger Agreement and the Transactions —
Other Transaction Agreements — PIPE Agreements.”
Exok
Agreement
Concurrently
with the execution of the Merger Agreement, Prairie entered into the Exok Agreement, pursuant to which Exok agreed to sell to Prairie,
and Prairie agreed to purchase from Exok, certain oil and gas leases, including all of Exok’s right, title and interest in, to
and under certain undeveloped oil and gas leases located in Weld County, Colorado, together with certain other associated assets, data
and records (collectively, and as described more fully in the section entitled “The Merger Agreement and the Transactions —
Summary of the Exok Assets,” the “Exok Assets”). The effective date of conveyance of the Exok Assets will be
October 15, 2022.
As
consideration for the Exok Assets, Prairie has agreed to pay Exok a total amount of $28,182,000 at the closing of the Exok Transaction,
which amount will be payable as (a) $24,000,000 in cash and (b) the issuance of $4,182,000 in total equity consideration, consisting
of (i) 836,400 shares of Common Stock and (ii) 836,400 warrants to purchase 836,400 shares of Common Stock at the exercise price of $6.00
per share.
For
more information about the Exok Agreement, see the section entitled “The Merger Agreement and the Transactions —
Other Transaction Agreements — Exok Agreement.”
Summary
Unaudited Pro Forma Condensed Combined Financial Information
The
following summary unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation
S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses”
and presents the combination of historical financial information of Creek Road and Prairie, adjusted to give effect to the Transactions.
The
summary unaudited pro forma condensed combined financial information is derived from, and should be read in conjunction with, the unaudited
pro forma condensed combined financial information appearing elsewhere in this information statement and accompanying notes in the section
entitled “Unaudited Pro Forma Condensed Combined Financial Information.” The unaudited pro forma condensed combined financial
information is based on, and should be read in conjunction with, (a) Creek Road’s audited historical consolidated financial statements
and related notes included in its Annual Report on Form 10-K for the fiscal year ended 2021, filed with the SEC on March 31, 2022, (b)
Creek Road’s unaudited historical condensed consolidated financial statements and related notes included in its Quarterly Report
on Form 10-Q for the six months ended June 30, 2022, filed with the SEC on August 15, 2022, (c) Prairie’s audited financial statements
for the period from June 7, 2022 (inception) to June 30, 2022 and related notes included as Annex D in this document and (d) the section
“Management’s Discussion and Analysis of Financial Condition and Results of Operations of Prairie” included in this
document.
For
further information, see “Unaudited Pro Forma Condensed Combined Financial Information” below.
| |
Combined
Pro Forma | |
Summary Unaudited Pro Forma Condensed Combined Statement of Operations
For the Six Months Ended June 30, 2022 | |
| | |
Total operating expenses | |
| 5,488,826 | |
Loss from continuing operations | |
| (5,303,286 | ) |
Net loss | |
| (5,321,018 | ) |
Earnings (loss) per share, basic and diluted | |
| (0.35 | ) |
Weighted average common shares outstanding,
basic and diluted | |
| 15,836,400 | |
Summary Unaudited Pro Forma Condensed Combined Balance Sheet
As of June 30, 2022 | |
| | |
Total assets | |
| 59,888,148 | |
Total liabilities | |
| 1,963,802 | |
Total stockholders’ equity | |
| 57,924,346 | |
Interests
of Certain Persons in the Merger Agreement and Related Party Transactions
Members
of our Board, our executive officers and members of Prairie have interests in the Merger Agreement and the Transactions other than their
interests as Creek Road stockholders. These interests may be different from, or in addition to, your interests as Creek Road stockholders.
Our Board was aware of and considered these potential interests, among other matters, in evaluating, negotiating and approving the Merger
Agreement, the PIPE Transaction and related transactions.
These
interests are described in more detail in the sections entitled, see “Risk Factors — Risks Relating to the Transactions
— Some of our officers and directors have interests in the Transactions that are different from those of our stockholders,”
“The Merger Agreement and the Transactions — Interests of Certain Persons in the Merger Agreement and Related Party
Transactions” and “The Merger Agreement and the Transactions — Recommendation of the Board of Directors and
Their Reasons for the Merger Agreement and the Transactions” below.
Reasons
for the Merger Agreement and the Transactions
Our
Board considered a variety of factors in reaching its conclusion to approve the Merger Agreement and the related transactions, including
the PIPE Transaction, including:
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our
Board’s familiarity with, and information provided by our management as to, the business, financial condition, results of operations,
current business strategy and future prospects of the Company, as well as the risks involved in achieving those prospects and objectives; |
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the
ability of Creek Road to continue as a going concern without additional equity and/or debt financing; |
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the
implied valuation for Creek Road in the Transactions; |
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the
implied valuation for Prairie in the Transactions after giving effect to the acquisition of the Exok Assets; |
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the
Exok Assets; and |
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the
selection of Prairie as a business combination candidate was reached after exploring various other strategic alternatives. |
We
have carefully considered these and other factors in deciding to proceed with the Transactions. See “The Merger Agreement and the
Transactions — Background of the Merger Agreement” and “The Merger Agreement and the Transactions —
Recommendation of the Board of Directors and Their Reasons for the Merger Agreement and the Transactions” below.
Accounting
Treatment and Considerations
The
Merger will be recorded by Creek Road as a reverse asset acquisition in accordance with U.S. GAAP. For accounting purposes, Prairie is
considered to be acquiring Merger Sub in the Merger. The Merger is expected to be accounted for as a reverse asset acquisition under
existing U.S. GAAP, which is subject to change and interpretation.
For
further information, see “The Merger Agreement and the Transactions — Accounting Treatment and Considerations”
below.
No
Dissenters’ Rights or Appraisal Rights
Creek
Road stockholders will not be entitled to exercise dissenters’ rights or appraisal rights with respect to the Merger Agreement
or the Transactions.
For
further information, see “The Merger Agreement and the Transactions — No Dissenters’ Rights or Appraisal Rights”
below.
CAUTIONARY
NOTE ON FORWARD-LOOKING STATEMENTS
Certain
statements discussed in this information statement constitute forward-looking statements, about our expectations, beliefs or intentions
regarding, among other things, our and Prairie’s product development efforts, business, financial condition, results of operations,
strategies or prospects. Forward-looking statements can be identified by the use of forward-looking words such as “believe,”
“expect,” “intend,” “plan,” “may,” “should” or “anticipate” or
their negatives or other variations of these words or other comparable words or by the fact that these statements do not relate strictly
to historical or current matters. These forward-looking statements may be included in, but are not limited to, various filings made by
us with the SEC, press releases or oral statements made by or with the approval of one of our authorized executive officers. Forward-looking
statements relate to anticipated or expected events, activities, trends or results as of the date they are made. Because forward-looking
statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties that could
cause our or Prairie’s actual results to differ materially from any future results expressed or implied by the forward-looking
statements. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated
in forward-looking statements, including, but not limited to, the factors summarized below. Important risks, uncertainties, and other
factors that could cause Creek Road’s or Prairie’s actual results or conditions to differ materially from forward-looking
statements include, among others, the risks summarized in the section entitled “Risk Factors” of this information statement.
You
are cautioned not to place undue reliance on forward-looking statements. Creek Road makes no commitment to revise or update any forward-looking
statements in order to reflect events or circumstances after the date any such statement is made, except as otherwise required under
the federal securities laws. If Creek Road were in any particular instance to update or correct a forward-looking statement, investors
and others should not conclude that Creek Road would make additional updates or corrections thereafter except as otherwise required under
the federal securities laws.
In
addition, Creek Road cautions you that the forward-looking statements regarding Creek Road and PrairieCo, which are contained in this
information statement, are subject to the following factors:
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the
occurrence of any event, change or other circumstances that could delay the Transactions or give rise to the termination of the Merger
Agreement and the other agreements related to the Transactions (including catastrophic events, acts of terrorism, the outbreak of
war, the novel coronavirus pandemic (“COVID-19”) and/or any other pandemic and other public health events), as well as
management’s response to any of the foregoing; |
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the
outcome of any legal proceedings that may be instituted against Creek Road, Creek Road’s directors and officers, Prairie and
Prairie’s management following announcement of the Transactions; |
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any
litigation relating to the Transactions; |
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the
inability to complete the Transactions due to the failure to satisfy the conditions to the Closing in the Merger Agreement, the Exok
Agreement and the PIPE Agreements; |
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the
risk that Creek Road may not be able to obtain the financing necessary, including the PIPE Transaction, to consummate the Merger
or the Exok Transaction; |
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PrairieCo’s
ability to realize the anticipated benefits of the Merger, which may be affected by, among other things, competition and the ability
of PrairieCo to grow and manage growth profitably following the Merger; |
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costs
related to the Transactions; |
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PrairieCo’s
success in retaining or recruiting, or changes required in, its officers, key employees or directors following the Merger; |
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changes
in applicable laws or regulations; |
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competition
from companies with greater resources and financial strength in the industries in which PrairieCo will operate; |
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the
possibility that a catastrophic event, pandemic, or other economic, business or competitive factors may adversely affect the results
of operations, financial position and cash flows of Creek Road or PrairieCo; and |
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other
factors detailed in the section entitled “Risk Factors.” |
You
should carefully review the section entitled “Risk Factors” of this information statement and the other risk factors set
forth in the periodic and other filings of Creek Road with the SEC, for a discussion of these and other risks that relate to Creek Road’s
business, an investment in shares of Common Stock, the Merger Agreement and the Transactions.
RISK
FACTORS
Because
of the following factors, as well as other variables affecting our (and, following the Closing, PrairieCo’s) business, operating
results or financial condition, past financial performance may not be a reliable indicator of future performance, and historical trends
should not be used to anticipate results or trends in future periods. Creek Road stockholders should carefully read the following risk
factors and all of the information contained in or incorporated by reference herein, including, but not limited to, the matters addressed
in “Cautionary Note on Forward-Looking Statements” as well as Creek Road’s other filings with the SEC incorporated
herein by reference. Please see “Where You Can Find More Information.”
Risks
Relating to the Transactions
The
Transactions are subject to closing conditions and may not be completed and the Merger Agreement may be terminated in accordance with
its terms.
The
Transactions are subject to closing conditions, described in “The Merger Agreement and the Transactions—Closing
Conditions,” that must be satisfied or waived prior to the completion of the Transactions, including the closing
of a PIPE Transaction for aggregate proceeds of at least $30 million. Many of the closing conditions are not within our control. As of
the date of the execution of the Merger Agreement, no definitive agreements with potential investors have been executed in connection
with the PIPE Transaction. No assurance can be given that the required conditions to the Closing will be satisfied in a timely manner
or at all or that we will successfully raise $30 million in the PIPE Transaction. If we do not consummate a PIPE Transaction for aggregate
proceeds of at least $30 million, we may be unable to consummate the Merger and the Exok Transaction. Any delay in completing the Transactions
could cause the combined company not to realize, or to be delayed in realizing, some or all of the benefits that we expect to achieve
if the Transactions are successfully completed within their expected time frame.
Additionally,
either party may terminate the Merger Agreement under certain circumstances, including, among other reasons, if the Transactions are
not completed by 180 days after the date of the Merger Agreement (the “Termination Date”). Moreover, if the Transactions
are not completed for any reason, our ongoing business may be adversely affected and, without realizing any of the expected benefits
of having completed the Transactions, we would be subject to a number of risks, including the following:
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we
may experience negative reactions from the financial markets, including negative impacts on our stock price; |
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we
may experience negative reactions from our customers, suppliers, distributors and employees; |
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we
will be required to pay our costs relating to the Transactions, such as financial advisory, legal, financing and accounting costs
and associated fees and expenses, whether or not the Transactions are completed; |
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the
market price of our Common Stock could decline to the extent that the current market price reflects a market assumption that the
Transactions will not be completed; |
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the
Merger Agreement places certain restrictions on the conduct of our business prior to completion of the Transactions and such restrictions,
the waiver of which are subject to the consent of Prairie, may prevent us from taking actions during the pendency of the Transactions
that would be beneficial; and |
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matters
relating to the Transactions will require substantial commitments of time and resources by management, which could otherwise have
been devoted to day-to-day operations or to other opportunities that may have been beneficial to us as an independent company. |
We
may waive one or more of the conditions to the Merger.
We
may agree to waive, in whole or in part, one or more of the conditions to our obligations to complete the Merger, to the extent permitted
by our Charter, bylaws and applicable laws. For example, it is a condition to our obligation to close the Merger that certain of Prairie’s
representations and warranties be true and correct to the standards applicable to such representations and warranties. However, if the
Board determines that it is in the best interests of Creek Road to proceed with the Merger, then the Board may elect to waive that condition
and close the Merger.
We
may not achieve the perceived benefits of the Transactions and the market price of our Common Stock following the Transactions may decline.
The
market price of our Common Stock may decline as a result of the Transactions for a number of reasons, including if: investors react negatively
to the prospects of the Company’s business; the effect of the Transactions on the Company’s business and prospects is not
consistent with the expectations of our management or of financial or industry analysts; or the Company does not achieve the perceived
benefits of the Transactions as rapidly or to the extent anticipated by our management or financial or industry analysts.
Some
of our officers and directors have interests in the Transactions that are different from those of our stockholders.
Certain
of our officers and directors (some of whom will be, following the Closing Date, former officers or directors) participate in arrangements
that provide them with interests in the Transactions that are different from, or in addition to, the interests of our stockholders. These
interests include the assignment of Converted Options to and continued service of our Executive Chairman, Paul L. Kessler, as a director
of PrairieCo; the indirect majority ownership of our Series A Preferred Stock by Mr. Kessler and John D. Maatta, our Chief Executive
Officer; Mr. Kessler’s indirect ownership of a Convertible Debenture with an initial principal balance of $2.5 million; indemnification
and insurance of our directors and executive officers; the expected participation of Bristol in the PIPE Transaction; the assignment
of certain overriding royalty interests under the Exok Assets to Mr. Kessler following the Closing; and the ability of Bristol, an entity
controlled by Mr. Kessler, to designate nominees to the New Board so long as it beneficially owns a certain percentage of shares. For
more information, please see the section entitled “The Merger Agreement and the Transactions — Interests of Certain
Persons in the Merger Agreement and Related Party Transactions — Creek Road.”
Prairie
is not a publicly traded company, making it difficult to determine the fair market value thereof.
The
outstanding share capital of Prairie is not traded on any public market, which makes it difficult to determine the fair market value
of Prairie. There can be no assurance that the Merger Consideration issued to the Prairie Members will not exceed the actual value of
Prairie.
Our
stockholders will have a reduced ownership and voting interest in, and will exercise less influence over the management of, PrairieCo
following the Closing as compared to their current ownership and voting interest in Creek Road.
Following
the consummation of the Transactions, our pre-closing stockholders will own a smaller percentage of PrairieCo as compared to their pre-closing
ownership in Creek Road. Immediately following the Closing Date, the Prairie Members will beneficially own approximately 15.58% of our
Common Stock, while Creek Road pre-closing stockholders will own approximately 31.16% of the outstanding Common Stock. In addition, assuming
we consummate the PIPE Transaction for aggregate gross proceeds of $30.0 million concurrently with the Merger, the PIPE Transaction is
expected to be dilutive to existing stockholders and the PIPE Investors will own approximately 46.74% of the outstanding Common Stock,
and Exok will be issued shares of Common Stock in connection with the Exok Transaction resulting in Exok owning approximately 6.52% of
the outstanding Common Stock. Consequently, the pre-closing stockholders as a group have less influence over the management and policies
of the Company after the Transactions.
Our
pre-closing stockholders may not realize a benefit from the Transactions commensurate with the ownership dilution they will experience
in connection with the Transaction.
If
the Company is unable to realize the strategic and financial benefits currently anticipated from the Transactions, our pre-closing stockholders
will have experienced substantial dilution of their ownership interests without receiving the expected commensurate benefit, or only
receiving part of the commensurate benefit to the extent the Company is able to realize only part of the expected strategic and financial
benefits currently anticipated from the Transactions.
Our
business and financial condition will be materially adversely affected if we are required to register as an investment company under
the Investment Company Act.
Creek
Road is not, and does not intend to become, an “investment company” as defined in the U.S. Investment Company Act of 1940,
as amended (the “Investment Company Act”). Although the SEC and courts are providing increasing guidance on the treatment
of cryptocurrencies for purposes of federal securities law, this continues to be an evolving area of law. Therefore, it is possible that
the SEC or a court could take a position that may be adverse to the position Creek Road has taken on these matters. If Creek Road were
required to register as an investment company but fails to do so, the consequences may be severe. Among the various remedies it may pursue,
the SEC may seek an order of a court to enjoin Creek Road from continuing to operate as an unregistered investment company. In addition,
all contracts that Creek Road has entered into in the course of its business, including securities that it has offered and sold to investors,
will be rendered unenforceable except to the extent of any equitable remedies that might apply. An affected investor in such case may
pursue the remedy of rescission. If Creek Road were to register as an investment company, it may be forced to significantly change its
structure and operations in order to comply with the substantive requirements of the Investment Company Act. In particular, Creek Road
may be forced to change its capital structure in order to satisfy the limits on leverage and classes of securities imposed by the Investment
Company Act, modify the composition of its Board in order to maintain the required number of independent directors and the requirements
of “independence” set forth in rules under the Investment Company Act, restrict transactions that it may engage in with affiliated
persons, fair value its assets in the manner required by the Investment Company Act, adopt a code of ethics to comply with restrictions
on personal trading by officers and employees of Creek Road, etc. Compliance with the requirements of the Investment Company Act applicable
to registered investment companies may make it difficult for Creek Road to continue its current operations or, following the Closing
Date, its operations as a company that is engaged in the business of developing blockchain infrastructure and in activities related to
cryptocurrency mining.
Litigation
relating to the Transactions could result in an injunction preventing the completion of the Merger, require us to incur significant costs
and suffer management distraction.
We
could be subject to demands or litigation related to the Transactions, even if they were consummated. Such actions may result in substantial
costs to us and divert management time and resources. Securities class action lawsuits and derivative lawsuits are often brought against
public companies that have entered into acquisition, merger or other business combination agreements. Even if such a lawsuit is without
merit, defending against these claims can result in substantial costs and divert management time and resources. An adverse judgment could
result in monetary damages, which could have a negative impact on our liquidity and financial condition.
Lawsuits
that may be brought against us or our directors could also seek, among other things, injunctive relief or other equitable relief, including
a request to rescind parts of the Merger Agreement already implemented and to otherwise enjoin the parties from consummating the Merger.
Consequently, if a plaintiff is successful in obtaining an injunction prohibiting the completion of the Merger, that injunction may delay
or prevent the Merger from being completed within the expected timeframe or at all, which may adversely affect our business, financial
position and results of operation.
There
can be no assurance that any of the defendants will be successful in the outcome of any pending or any potential future lawsuits. The
defense or settlement of any lawsuit or claim that remains unresolved at the time the Merger is completed may adversely affect our business,
financial condition, results of operations and cash flows.
Uncertainties
associated with the Merger may cause a loss of our management personnel and other key employees, which could adversely affect the future
business and operations of the combined company following the Merger.
We
are dependent on the experience and industry knowledge of our officers and other key employees to execute our business plans. The combined
company’s success after the Merger will depend in part upon our ability to retain key management personnel and other key employees.
Current and prospective employees of Creek Road may experience uncertainty about their roles within the combined company following the
Merger or other concerns regarding the timing and completion of the Merger or the operations of the combined company following the Merger,
any of which may have an adverse effect on our ability to retain or attract key management and other key personnel. If we are unable
to retain personnel, including key management, who are critical to the future operations of the company, we could face disruptions in
our operations, loss of existing customers, loss of key information, expertise or know-how and unanticipated additional recruitment and
training costs. In addition, the loss of key personnel could diminish the anticipated benefits of the Merger. No assurance can be given
that the combined company, following the Merger, will be able to retain or attract key management personnel and other key employees to
the same extent that we have previously been able to retain or attract employees.
We
will incur significant transaction costs in connection with the Transactions.
We
have and expect to incur significant, non-recurring costs in connection with consummating the Transactions. Except as otherwise provided
in the Merger Agreement, all direct and indirect expenses incurred in connection with the preparation and negotiation of the Merger Agreement
and the consummation of the transactions contemplated thereby will be paid by the party incurring such expense. All amounts relating
to any financial, legal, accounting or other advisor, and all other transaction fees and expenses incurred by the Company or Prairie
in connection with the Merger Agreement and the transactions contemplated thereby, will be paid by the combined company in full at the
Closing.
The
unaudited pro forma condensed combined financial information included in this document may not be indicative of what our actual financial
position or results of operations would have been.
The
unaudited pro forma condensed combined financial information for PrairieCo following the Merger in this information statement is presented
for illustrative purposes only and is not necessarily indicative of what our actual financial position or results of operations would
have been had the Merger been completed on the dates indicated. See the section entitled “Unaudited Pro Forma Condensed Combined
Financial Information” for more information.
Risks
Relating to the Exok Assets
Oil,
natural gas and NGL prices are highly volatile. An extended decline in commodity prices may adversely affect our business, financial
condition or results of operations and our ability to meet our capital expenditure obligations and financial commitments.
Following
the Transactions and the acquisition and development of the Exok Assets, a portion of our revenues, profitability and cash flows will
depend upon the prices for oil, natural gas and natural gas liquids (“NGL”). The prices we would receive for oil, natural
gas and NGL production are volatile and a decrease in prices can materially and adversely affect our financial results and impede our
growth, including our ability to maintain or increase our borrowing capacity, to repay current or future indebtedness and to obtain additional
capital on attractive terms. Changes in oil, natural gas and NGL prices have a significant impact on the amount of oil, natural gas and
NGL that we can produce economically, the value of our reserves and on our cash flows. Historically, world-wide oil, natural gas and
NGL prices and markets have been subject to significant change and may continue to change in the future. Prices for oil, natural gas
and NGLs may fluctuate widely in response to relatively minor changes in supply and demand, market uncertainty and a variety of additional
factors that are beyond our control, such as:
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the
domestic and foreign supply of and demand for oil, natural gas and NGL; |
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● |
the
price and quantity of foreign imports of oil, natural gas and NGL; |
|
|
|
|
● |
political
and economic conditions and events in foreign oil and natural gas producing countries, including embargoes, continued hostilities
in the Middle East, Ukraine and other sustained military campaigns, the armed conflict in Ukraine and associated economic sanctions
on Russia, conditions in South America, Central America, China and Russia, and acts of terrorism or sabotage; |
|
|
|
|
● |
the
ability of and actions taken by members of Organization of the Petroleum Exporting Countries and other oil-producing nations in connection
with their arrangements to maintain oil prices and production controls; |
|
|
|
|
● |
the
impact on worldwide economic activity of an epidemic, outbreak or other public health events, such as COVID-19; |
|
● |
the
proximity of our production to and capacity of oil, natural gas and NGL pipelines and other transportation and storage facilities; |
|
|
|
|
● |
federal
regulations applicable to exports of liquefied natural gas (“LNG”), including the export of the first quantities of LNG
liquefied from natural gas produced in the lower 48 states of the United States; |
|
|
|
|
● |
the
level of consumer product demand; |
|
|
|
|
● |
weather
conditions; |
|
|
|
|
● |
U.S.
and non-U.S. governmental regulations, including environmental initiatives and taxation; |
|
|
|
|
● |
overall
domestic and global economic conditions; |
|
|
|
|
● |
the
value of the dollar relative to the currencies of other countries; |
|
|
|
|
● |
stockholder
activism or activities by non-governmental organizations to restrict the exploration, development and production of oil, natural
gas and NGL to minimize emissions of carbon dioxide, a GHG; |
|
|
|
|
● |
technological
advances affecting energy consumption and energy supply; |
|
|
|
|
● |
the
price and availability of alternative fuels; and |
|
|
|
|
● |
the
impact of energy conservation efforts. |
Drilling
for and producing oil and gas wells is a high-risk activity with many uncertainties that could adversely affect our business, financial
condition or results of operations.
Drilling
oil and gas wells, including development wells, involves numerous risks, including the risk that we may not encounter commercially productive
oil, natural gas and NGL reserves (including “dry holes”). We must incur significant expenditures to drill and complete wells,
the costs of which are often uncertain. It is possible that we will make substantial expenditures on drilling and not discover reserves
in commercially viable quantities.
Specifically,
we often are uncertain as to the future cost or timing of drilling, completing and operating wells, and our drilling operations and those
of our third-party operators may be curtailed, delayed or canceled. The cost of our drilling, completing and operating wells may increase
and our results of operations and cash flows from such operations may be impacted, as a result of a variety of factors, including:
|
● |
unexpected
drilling conditions; |
|
|
|
|
● |
title
problems; |
|
|
|
|
● |
pressure
or irregularities in formations; |
|
|
|
|
● |
equipment
failures or accidents; |
|
|
|
|
● |
adverse
weather conditions, such as winter storms, flooding and hurricanes, and changes in weather patterns; |
|
|
|
|
● |
compliance
with, or changes in, environmental laws and regulations relating to air emissions, hydraulic fracturing and disposal of produced
water, drilling fluids and other wastes, laws and regulations imposing conditions and restrictions on drilling and completion operations
and other laws and regulations, such as tax laws and regulations; |
|
|
|
|
● |
the
availability and timely issuance of required governmental permits and licenses; and |
|
● |
the
availability of costs associated with and terms of contractual arrangements for properties, including mineral licenses and leases,
pipelines, rail cars, crude oil hauling trucks and qualified drivers and related services, facilities and equipment to gather, process,
compress, store, transport and market crude oil, natural gas and related commodities. |
The
failure of the combined company to recover its investment in the Exok Assets, increases in the costs of our drilling operations or those
of third-party operators, and/or curtailments, delays or cancellations of its drilling operations or those of its third-party operators
in each case due to any of the above factors or other factors, may materially and adversely affect the combined company’s business,
financial condition and results of operations.
The
Exok Assets currently have no producing properties and there is no assurance that we will be able to successfully drill producing wells.
If the Exok Assets are not commercially productive of crude oil or natural gas, any funds spent on exploration and production may be
lost.
All
of the Exok Assets are in the pre-production stage and there is no assurance that we will be able to successfully drill producing wells.
We are dependent on establishing sufficient reserves at the Exok Assets for additional cash flow and a return of our investment. If the
Exok Assets are not economic, all of the funds that we have invested, or will invest, will be lost. In addition, the failure of the Exok
Assets to produce commercially may make it more difficult for us to raise additional funds in the form of additional sale of our equity
securities or working interests in other property in which we may acquire an interest.
Risks
Relating to the Combined Company
Since
we will operate a new business and have no operating history related to the exploration and production of oil and gas assets, investors
have no basis to evaluate our ability to operate profitability.
We
began cryptocurrency mining operations in October 2021 and have not generated any revenue in the exploration and production of oil and
gas assets to date. We face many of the risks commonly encountered by other new businesses, including the lack of an established operating
history, need for additional capital and personnel, and competition. There is no assurance that our business will be successful or that
we can ever operate profitably. We may not be able to effectively manage the demands required of a new business in a new industry, such
that we may be unable to successfully implement our business plan or achieve profitability.
Our
plan to develop the Exok Assets may require substantial additional capital, which we may be unable to raise on acceptable terms in the
future.
We
plan to develop the Exok Assets after Closing. Obtaining seismic data, as well as exploration, development and production activities
entail considerable costs, and we may need to raise substantial additional capital, through future private or public equity offerings,
strategic alliances or debt financing.
Our
future capital requirements will depend on many factors, including:
|
● |
the
scope, rate of progress and cost of our exploration, appraisal, development and production activities; |
|
|
|
|
● |
oil
and natural gas prices; |
|
|
|
|
● |
our
ability to locate and acquire hydrocarbon reserves; |
|
|
|
|
● |
our
ability to produce oil or natural gas from those reserves; |
|
|
|
|
● |
the
terms and timing of any drilling and other production-related arrangements that we may enter into; |
|
|
|
|
● |
the
cost and timing of governmental approvals and/or concessions; and |
|
|
|
|
● |
the
effects of competition by larger companies operating in the oil and gas industry. |
Even
if we succeed in selling additional equity securities to raise funds, at such time the ownership percentage of our existing stockholders
would be diluted, and new investors may demand rights, preferences or privileges senior to those of existing stockholders. If we raise
additional capital through debt financing, the financing may involve covenants that restrict our business activities. If we are not successful
in raising additional capital, we may be unable to continue our future exploration, development and production activities.
We
will face strong competition from other oil and gas companies.
We
will encounter competition from other oil and gas companies in all areas of our operations, including the acquisition of exploratory
prospects and proven properties. Our competitors include major integrated oil and gas companies and numerous independent oil and gas
companies, individuals and drilling and income programs. Many of our competitors are large, well-established companies that have been
engaged in the oil and gas business much longer than we have and possess substantially larger operating staffs and greater capital resources
than we do. These companies may be able to pay more for exploratory projects and productive oil and gas properties and may be able to
define, evaluate, bid for and purchase a greater number of properties and prospects than our financial or human resources permit. In
addition, these companies may be able to expend greater resources on the existing and changing technologies that we believe are and will
be increasingly important to attaining success in the industry. Such competitors may also be in a better position to secure oilfield
services and equipment on a timely basis or on favorable terms. These companies may also have a greater ability to continue drilling
activities during periods of low oil and gas prices, such as the current commodity price environment, and to absorb the burden of current
and future governmental regulations and taxation. We may not be able to conduct our operations, evaluate and select suitable properties
and consummate transactions successfully in this highly competitive environment.
Government
regulation and liability for oil and natural gas operations and environmental matters may adversely affect our business and results of
operations.
If
we are successful in our exploration, production and development activities, we will be subject to extensive federal, state, and local
government regulations, which may change from time to time. Matters subject to regulation include discharge permits for drilling operations,
drilling bonds, reports concerning operations, the spacing of wells, unitization and pooling of properties, and taxation. From time to
time, regulatory agencies have imposed price controls and limitations on production by restricting the rate of flow of oil and natural
gas from wells below actual production capacity in order to conserve supplies of oil and natural gas. There are federal, state, and local
laws and regulations primarily relating to protection of human health and the environment applicable to the development, production,
handling, storage, transportation, and disposal of oil and natural gas, by-products thereof, the emission of CO2 or other
greenhouse gases, and other substances and materials released, produced or used in connection with oil and natural gas operations. These
laws and regulations may affect the costs, manner, and feasibility of our operations by, among other things, requiring us to make significant
expenditures in order to comply and restricting the areas available for oil and gas production. Failure to comply with these laws and
regulations may result in substantial liabilities to third-parties or governmental entities. In addition, we may be liable for significant
environmental damages and cleanup costs, without regard to fault, for releases of hazardous materials on or from property we own or operate,
even if we did not cause or contribute to the release. We are also subject to changing and extensive tax laws, the effects of which cannot
be predicted. The implementation of new, or the modification of existing, laws or regulations, could have a material adverse effect on
us, such as by imposing new emission controls, penalties, fines and/or fees, taxes and tariffs on carbon that could have the effect of
raising prices to the end user and thereby reducing the demand for our products.
UNAUDITED
PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The
Company is providing the following unaudited pro forma condensed combined financial information to aid in the analysis of the financial
aspects of the Transactions. The following unaudited pro forma condensed combined financial information has been prepared in accordance
with Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about
Acquired and Disposed Businesses” and presents the combination of historical financial information of Creek Road and Prairie, adjusted
to give effect to the Transactions. The unaudited pro forma condensed combined balance sheet as of June 30, 2022 combines the historical
balance sheet of Prairie as of June 30, 2022 with the historical balance sheet of Creek Road as of June 30, 2022 on a pro forma basis
as if the Transactions, summarized below, had been consummated on June 30, 2022.
The
unaudited pro forma condensed combined statements of operations for the six months ended June 30, 2022 combine the historical statements
of operations of Prairie and the historical statements of operations of Creek Road for such periods on a pro forma basis as if the Transactions,
summarized below, had been consummated on January 1, 2021, the beginning of the earliest period presented. Since Prairie was formed on
June 7, 2022, there is no statement of operations for the year ended December 31, 2021 to include in the unaudited pro forma condensed
combined statement of operations for the year ended December 31, 2021.
The
unaudited pro forma condensed combined financial information is based on, and should be read in conjunction with, (a) Creek Road’s
audited historical consolidated financial statements and related notes included in its Annual Report on Form 10-K for the fiscal year
ended 2021, filed with the SEC on March 31, 2022, (b) Creek Road’s unaudited historical condensed consolidated financial statements
and related notes included in its Quarterly Report on Form 10-Q for the six months ended June 30, 2022, filed with the SEC on August
15, 2022, (c) Prairie’s audited financial statements for the period from June 7, 2022 (inception) to June 30, 2022 and related
notes included as Annex D in this document and (d) the section “Management’s Discussion and Analysis of Financial Condition
and Results of Operations of Prairie” included in this document.
The
unaudited pro forma condensed combined financial information has been presented for illustrative purposes only and does not necessarily
reflect what the financial condition or results of operations would have been had the Transactions occurred on the dates indicated. Further,
the unaudited pro forma condensed combined financial information also may not be useful in predicting the future financial condition
and results of operations. The actual financial position and results of operations may differ significantly from the pro forma amounts
reflected herein due to a variety of factors. The unaudited pro forma adjustments represent management’s estimates based on information
available as of the date of this filing and are subject to change as additional information becomes available and analyses are performed.
The
following describes the above entities:
Prairie
Prairie
Operating Co., LLC is a limited liability company formed under the laws of the State of Delaware on June 7, 2022. Prairie has two members
with each owning 50% of its membership interests. Prairie was formed for the purpose of acquiring and operating oil and gas properties
in the United States. As of June 30, 2022, Prairie had not commenced any operations. All activity for the period from June 7, 2022 (inception)
to June 30, 2022, relates to the Prairie’s formation, proposed merger and proposed acquisition of oil and gas properties. Prairie
will not generate any operating revenues until it acquires oil and gas properties and commences operations. Prairie has selected December
31 as its fiscal year end.
Creek
Road
Creek
Road Miners, Inc. was incorporated in Delaware on May 2, 2001. Prior to cryptocurrency mining operations that began in October 2021,
Creek Road produced live and virtual pop culture conventions and events and sold a gelatin machine and related consumables that were
discontinued in 2021. In addition, Creek Road operated an eCommerce site selling pop culture memorabilia that was discontinued on June
30, 2022. Creek Road generates substantially all of its revenue through cryptocurrency earned through cryptocurrency mining activities.
Description
of the Merger
On
October 24, 2022, Creek Road and Merger Sub entered into the Merger Agreement with Prairie pursuant to which, and subject to the terms
and conditions contained therein, Merger Sub will merge with and into Prairie, with Prairie surviving the Merger as a wholly owned subsidiary
of Creek Road.
The
Prairie Members will receive the greater of (a) 2,000,000 shares of Common Stock and (b) the product of (x) the number of issued and
outstanding shares of the Common Stock immediately following the consummation of the Restructuring Transactions multiplied by (y) 33.33%.
As
of the Effective Time, the Company will assume and convert certain options to purchase membership interests of Prairie into restricted
performance-based options to acquire shares of Common Stock (the “Converted Options”), which will have substantially the
same terms and conditions as were applicable to such options immediately before the Effective Time, except that (a) certain operating
metrics must be met for the Converted Options to be exercisable, (b) the Converted Options, in the aggregate, will be exercisable
for 8,000,000 shares of Common Stock and (c) the per share exercise price for each share of Common Stock issuable upon exercise of the
Converted Options will equal $0.25.
Prior
to the consummation of the PIPE Transaction, the Company will effectuate certain Restructuring Transactions. The Company’s outstanding
Series A Preferred Stock (including dividends payable thereunder), Series B Preferred Stock, Series C Preferred Stock, Convertible Debentures
(including accrued interest payable thereunder), and certain warrants and certain convertible promissory notes will be converted
into shares of Common Stock prior to the Closing pursuant to the Support Agreements. In addition, the Company will also convert certain
accrued liabilities into shares of Common Stock, including outstanding Board fees and consulting fees. Thereafter, the Company will effectuate
the Reverse Stock Split by filing of the Charter Amendment.
The
Merger is expected to be accounted for as a reverse recapitalization under existing U.S. GAAP, which is subject to change and interpretation.
For accounting purposes, Prairie is considered to be acquiring Merger Sub in the Merger.
Accordingly,
for accounting purposes, the financial statements of PrairieCo will represent a continuation of the financial statements of Prairie
with the acquisition being treated as the equivalent of Prairie issuing stock for the net assets of Creek Road, accompanied by a recapitalization.
The net assets of Creek Road will be stated at fair value, with no goodwill or other intangible assets recorded.
The
unaudited pro forma adjustments are based on information currently available, and assumptions and estimates underlying the unaudited
pro forma adjustments are described in the accompanying notes. Actual results may differ materially from the assumptions used to present
the accompanying unaudited pro forma condensed combined financial information. The pro forma adjustments do not consider borrowings and
financings that may have occurred subsequent to June 30, 2022, nor do they reflect anticipated financings that may occur in the normal
course of business.
UNAUDITED
PRO FORMA CONDENSED COMBINED BALANCE SHEET
as of June 30, 2022
|
|
Creek Road Miners, Inc. (Historical) |
|
|
Prairie Operating Co., LLC (Historical) |
|
|
Pro Forma Transaction Adjustments |
|
|
Note |
|
|
Combined Pro Forma |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
816,146 |
|
|
$ |
— |
|
|
$ |
30,000,000 |
|
|
|
3a |
|
|
$ |
4,356,246 |
|
|
|
|
|
|
|
|
|
|
|
|
-2,310,000 |
|
|
|
3b |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-24,000,000 |
|
|
|
3c |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-149,900 |
|
|
|
3d |
|
|
|
|
|
Accounts receivable |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
Prepaid expenses |
|
|
147,487 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
147,487 |
|
Deposits on mining equipment |
|
|
4,673,680 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
4,673,680 |
|
Cryptocurrency |
|
|
586 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
586 |
|
Current assets associated with discontinued operations |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
Total current assets |
|
|
5,637,899 |
|
|
|
— |
|
|
|
3,540,100 |
|
|
|
|
|
|
|
9,177,999 |
|
Other assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net of accumulated depreciation |
|
|
7,192,799 |
|
|
|
— |
|
|
|
24,000,000 |
|
|
|
3c |
|
|
|
35,374,799 |
|
|
|
|
|
|
|
|
|
|
|
|
4,182,000 |
|
|
|
3e |
|
|
|
|
|
Right of use asset, net of accumulated amortization |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
Investment |
|
|
225,000 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
225,000 |
|
Deposits and other assets |
|
|
110,350 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
110,350 |
|
Total assets |
|
$ |
13,166,048 |
|
|
$ |
— |
|
|
$ |
31,722,100 |
|
|
|
|
|
|
$ |
44,888,148 |
|
Liabilities and Stockholders’ Deficit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
|
$ |
1,889,091 |
|
|
$ |
179,405 |
|
|
$ |
-472,417 |
|
|
|
3f |
|
|
$ |
1,477,616 |
|
|
|
|
|
|
|
|
|
|
|
|
-99,000 |
|
|
|
3g |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-19,463 |
|
|
|
3h |
|
|
|
|
|
Accrued interest and expenses – related parties |
|
|
2,640,515 |
|
|
|
474 |
|
|
|
-2,434,265 |
|
|
|
3i |
|
|
|
474 |
|
|
|
|
|
|
|
|
|
|
|
|
-206,250 |
|
|
|
3j |
|
|
|
|
|
Note payable |
|
|
588,643 |
|
|
|
— |
|
|
|
-588,643 |
|
|
|
3k |
|
|
|
0 |
|
Lease liability, current portion |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
Secured convertible debenture – related party |
|
|
2,496,850 |
|
|
|
— |
|
|
|
-2,496,850 |
|
|
|
3l |
|
|
|
— |
|
Current liabilities associated with discontinued operations |
|
|
485,712 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
485,712 |
|
Total current liabilities |
|
|
8,100,811 |
|
|
|
179,879 |
|
|
|
-6,316,888 |
|
|
|
|
|
|
|
1,963,802 |
|
Non-current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease liability, long term portion |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
Secured convertible debenture – related party |
|
|
2,496,850 |
|
|
|
— |
|
|
|
-2,496,850 |
|
|
|
3l |
|
|
|
— |
|
SBA/PPP loans payable |
|
|
149,900 |
|
|
|
— |
|
|
|
-149,900 |
|
|
|
3d |
|
|
|
— |
|
Total non-current liabilities |
|
|
2,646,750 |
|
|
|
— |
|
|
|
-2,646,750 |
|
|
|
— |
|
|
|
|
|
Total liabilities |
|
|
10,747,561 |
|
|
|
179,879 |
|
|
|
-8,963,638 |
|
|
|
|
|
|
|
1,963,802 |
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock; 5,000,000 shares authorized: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series A convertible preferred stock; $0.0001 par value; 500,000 shares authorized; at June 30, 2022 |
|
|
23 |
|
|
|
— |
|
|
|
-23 |
|
|
|
3m |
|
|
|
— |
|
Series B convertible preferred stock; $0.0001 par value; 20,000 shares authorized; at June 30, 2022 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3n |
|
|
|
— |
|
Series C convertible preferred stock; $0.0001 par value; 15,000 shares authorized; at June 30, 2022 |
|
|
1 |
|
|
|
— |
|
|
|
-1 |
|
|
|
3o |
|
|
|
— |
|
Common stock; $0.0001 par value; 100,000,000 shares authorized; at June 30, 2022 |
|
|
1,251 |
|
|
|
— |
|
|
|
33 |
|
|
|
3p |
|
|
|
1,284 |
|
Additional paid-in capital |
|
|
54,868,200 |
|
|
|
— |
|
|
|
30,000,000 |
|
|
|
3a |
|
|
|
95,553,929 |
|
|
|
|
|
|
|
|
|
|
|
|
-2,310,000 |
|
|
|
3b |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,182,000 |
|
|
|
3e |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
472,417 |
|
|
|
3f |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
99,000 |
|
|
|
3g |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,463 |
|
|
|
3h |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,434,265 |
|
|
|
3i |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
206,250 |
|
|
|
3j |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
588,643 |
|
|
|
3k |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,993,700 |
|
|
|
3l |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23 |
|
|
|
3m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
|
|
3o |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-33 |
|
|
|
3p |
|
|
|
|
|
Accumulated deficit |
|
|
52,450,988 |
|
|
|
-179,879 |
|
|
|
— |
|
|
|
|
|
|
|
-52,630,867 |
|
Total stockholders’ equity |
|
|
2,418,487 |
|
|
|
-179,879 |
|
|
|
40,685,738 |
|
|
|
|
|
|
|
42,924,346 |
|
Total liabilities and stockholders’ equity |
|
$ |
13,166,048 |
|
|
$ |
— |
|
|
$ |
31,722,100 |
|
|
|
|
|
|
$ |
44,888,148 |
|
UNAUDITED
PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
For the Six Months Ended June 30, 2022
| |
Creek
Road Miners, Inc. (Historical) | | |
Prairie
Operating Co., LLC (Historical) | | |
Combined
Pro Forma | |
Revenue: | |
| | | |
| | | |
| | |
Cryptocurrency
mining | |
$ | 509,647 | | |
$ | — | | |
$ | 509,647 | |
Operating costs and expenses: | |
| | | |
| | | |
| | |
Cryptocurrency mining costs
(exclusive of depreciation and amortization shown below) | |
| 786,758 | | |
| — | | |
| 786,758 | |
Depreciation and amortization | |
| 329,040 | | |
| — | | |
| 329,040 | |
Stock based compensation | |
| 2,389,241 | | |
| — | | |
| 2,389,241 | |
General and administrative | |
| 1,697,769 | | |
| 179,879 | | |
| 1,877,648 | |
Impairment
of mined cryptocurrency | |
| 106,139 | | |
| — | | |
| 106,139 | |
Total
operating expenses | |
| 5,308,947 | | |
| 179,879 | | |
| 5,488,826 | |
Loss from operations | |
| (4,799,300 | ) | |
| (179,879 | ) | |
| (4,979,179 | ) |
Other income (expense): | |
| | | |
| | | |
| | |
Realized loss on sale of
cryptocurrency | |
| (131,075 | ) | |
| — | | |
| (131,075 | ) |
PPP loan forgiveness | |
| 197,662 | | |
| — | | |
| 197,662 | |
Interest
expense | |
| (390,694 | ) | |
| — | | |
| (390,694 | ) |
Total other income (expense) | |
| (324,107 | ) | |
| — | | |
| (324,107 | ) |
Loss from operations before
provision for income taxes | |
| (5,123,407 | ) | |
| — | | |
| (5,303,286 | ) |
Provision
for income taxes | |
| — | | |
| — | | |
| — | |
Loss
from continuing operations | |
| (5,123,407 | ) | |
| (179,879 | ) | |
| (5,303,286 | ) |
Discontinued operations: | |
| | | |
| | | |
| | |
Income (loss) from discontinued
operations | |
| (17,732 | ) | |
| — | | |
| (17,732 | ) |
Gain
on sale of discontinued operations | |
| — | | |
| — | | |
| — | |
Net
income from discontinued operations | |
| (17,732 | ) | |
| — | | |
| (17,732 | ) |
Net loss | |
$ | (5,141,139 | ) | |
$ | (179,879 | ) | |
$ | (5,321,018 | ) |
| |
| | | |
| — | | |
| | |
Dividends
on preferred stock | |
| (184,602 | ) | |
| — | | |
| (184,602 | ) |
Earnings
attributable to common stockholders | |
$ | (5,325,741 | ) | |
$ | (179,879 | ) | |
$ | (5,505,620 | ) |
Earnings (loss) per common share: | |
| | | |
| | | |
| | |
Earnings (loss) per share
from continuing operations, basic and diluted | |
$ | (0.49 | ) | |
$ | — | | |
$ | (0.41 | ) |
Earnings per share from
discontinued operations, basic and diluted | |
$ | — | | |
$ | — | | |
$ | — | |
Earnings (loss) per share,
basic and diluted | |
$ | (0.49 | ) | |
$ | — | | |
$ | (0.41 | ) |
Weighted average common
shares outstanding, basic and diluted | |
| 10,806,764 | | |
| — | | |
| 12,836,400 | |
Note
1. Basis of Pro Forma Presentation
The
Merger is expected to be accounted for as a reverse recapitalization under existing U.S. GAAP, which is subject to change and interpretation.
For accounting purposes, Prairie is considered to be acquiring Merger Sub in the Merger.
Accordingly,
for accounting purposes, the financial statements of PrairieCo will represent a continuation of the financial statements of Prairie
with the acquisition being treated as the equivalent of Prairie issuing stock for the net assets of Creek Road, accompanied by a recapitalization.
The net assets of Creek Road will be stated at fair value, with no goodwill or other intangible assets recorded.
The
unaudited pro forma condensed combined statements of operations for the six months ended June 30, 2022 combine the historical statements
of operations of Prairie and the historical statements of operations of Creek Road for such periods on a pro forma basis as if the Transactions
had been consummated on January 1, 2021, the beginning of the earliest period presented. Since Prairie was formed on June 7, 2022, there
is no statement of operations for the year ended December 31, 2021 to include in the unaudited pro forma condensed combined statement
of operations for the year ended December 31, 2021.
The
unaudited pro forma condensed combined financial information is based on, and should be read in conjunction with, the audited historical
financial statements of each of Prairie and Creek Road and the notes thereto, as well as the disclosures contained in the section “Management’s
Discussion and Analysis of Financial Condition and Results of Operations of Prairie” contained elsewhere in this document.
The
unaudited pro forma condensed combined financial information has been presented for illustrative purposes only and does not necessarily
reflect what the financial condition or results of operations would have been had the Transactions occurred on the dates indicated. Further,
the unaudited pro forma condensed combined financial information also may not be useful in predicting the future financial condition
and results of operations. The actual financial position and results of operations may differ significantly from the pro forma amounts
reflected herein due to a variety of factors. The unaudited pro forma adjustments represent management’s estimates based on information
available as of the date of this filing and are subject to change as additional information becomes available and analyses are performed.
Note
2. Accounting Policies
Upon
consummation of the Transactions, management is in the process of performing a comprehensive review of the two entities’ accounting
policies. As a result of the review, management may identify differences between the accounting policies of the two entities which, when
conformed, could have a material impact on the financial statements of the post-combination company. Based on its initial analysis, management
has not identified differences that would have an impact on the unaudited pro forma condensed combined financial information.
The
pro forma basic and diluted earnings per share amounts presented in the unaudited pro forma condensed combined statements of operations
are based upon the number of shares of Common Stock outstanding, assuming the Transactions occurred on January 1, 2021.
Note
3. Unaudited Pro Forma Condensed Combined Balance Sheet Adjustments
The
pro forma adjustments included in the unaudited pro forma condensed combined balance sheet as of June 30, 2022 are as follows:
|
a) |
Reflects
expected gross proceeds from the PIPE Transaction of $30.0 million. |
|
|
|
|
b) |
Reflects
placement agent fees and discounts and offering expenses of $2.31 million for the PIPE Transaction. |
|
|
|
|
c) |
Reflects
payment to Exok in the amount of $24.0 million for leasehold acquisition of the Exok Assets. |
|
|
|
|
d) |
Reflects
payment of SBA/PPP loan payable in the amount of $149,990. |
|
e) |
Represents
issuance of 836,400 shares of Common Stock to Exok amounting to $4.182 million. |
|
|
|
|
f) |
Reflects
the conversion into shares of Common Stock of $472,417 of accrued dividends on Series A Preferred Stock. |
|
|
|
|
g) |
Reflects
the conversion into shares of Common Stock of $99,000 of accrued Board fees. |
|
|
|
|
h) |
Reflects
the conversion into shares of Common Stock of $19,463 of accrued dividends on Series B Preferred Stock. |
|
|
|
|
i) |
Reflects
the conversion into shares of Common Stock of $2,434,265 in accrued interest on secured convertible debentures – related party. |
|
|
|
|
j) |
Reflects
the conversion into shares of Common Stock of $206,250 in accrued consulting fees to a related party. |
|
|
|
|
k) |
Reflects
the conversion into shares of Common Stock of a note payable amounting to $588,643 in outstanding principal and interest. |
|
|
|
|
l) |
Reflects
the conversion into shares of Common Stock of $4.964 million in aggregate outstanding principal amount of secured convertible debentures
– related party. |
|
|
|
|
m) |
Reflects
the conversion into shares of Common Stock of 226,915 (all outstanding) Series A Preferred Stock. |
|
|
|
|
n) |
Reflects
the conversion into shares of Common Stock of 1,400 (all outstanding) Series B Preferred Stock. |
|
|
|
|
o) |
Reflects
the conversion into shares of Common Stock of 7,880 (all outstanding) Series C Preferred Stock. |
|
|
|
|
p) |
Reflects
the net adjustment upon consummation of the Transactions to Common Stock par value of the Company that will net 12,836,400 shares
of Common Stock at $0.0001 par value (4,000,000 shares of Common Stock outstanding following the Reverse Stock Split, 2,000,000 shares
of Common Stock issued to Prairie, 6,000,000 shares of Common Stock issued in the PIPE Transaction, and 836,400 shares of Common
Stock issued to Exok). |
Note
4. PIPE Transaction
Projected
gross cash proceeds of $30.0 million from the PIPE Transaction are included as a pro forma transaction adjustment in the unaudited condensed
combined pro forma balance sheet. We are in negotiations with certain investors and intend to enter into separate PIPE Agreements
with each PIPE Investor prior to the Closing. We intend to sell to the PIPE Investors an aggregate of at least 6,000,000 shares
of Common Stock for a purchase price of $5.00 per share and an aggregate of at least 6,000,000 PIPE Warrants to purchase shares
of Common Stock at an exercise price of $6.00 per share, for aggregate gross proceeds of at least $30.0 million. As of the date
of the execution of the Merger Agreement, no definitive agreements have been executed with such investors. The anticipated use of funds
from the PIPE Transaction is presented below:
| |
Amount | |
Use of Funds: | |
| | |
Leasehold acquisition (Exok Assets) | |
$ | 24,000,000 | |
Estimated placement agent fees and discounts
and offering expenses | |
| 2,310,000 | |
Payment of SBA/PPP loan payable | |
| 149,900 | |
Working capital | |
| 3,540,100 | |
Total
Use of Funds | |
$ | 30,000,000 | |
THE
MERGER AGREEMENT AND THE TRANSACTIONS
The
following summary is not a complete description of all of the parties’ rights and obligations under the Merger Agreement, the Exok
Agreement and any potential PIPE Agreements, and is qualified in its entirety by reference to the full text of such documents. Copies
of the Merger Agreement and the Exok Agreement are filed as Exhibits 2.1 and 10.1 to the Form 8-K filed by Creek Road with the SEC on
October 25, 2022. A copy of the form of the PIPE Agreement will be filed as an Exhibit to the Form 8-K to be filed by Creek Road with
the SEC when, and if, such agreement is entered into. We encourage you to read carefully these documents in their entirety.
Explanatory
Note Regarding the Merger Agreement
The
Merger Agreement and this summary of terms are included to provide you with information regarding the terms of the Merger Agreement.
Factual disclosures contained in this information statement or in the public reports of the Company filed with the SEC may supplement,
update or modify the factual disclosures contained in the Merger Agreement. The Merger Agreement contains representations and warranties
by the Company and Merger Sub, on the one hand, and by Prairie, on the other hand, made solely for the benefit of the parties to the
Merger Agreement. The representations, warranties and covenants made in the Merger Agreement by the parties thereto were qualified and
subject to important limitations and qualifications agreed to in connection with negotiating the terms of the Merger Agreement. In particular,
it is important to bear in mind that the representations and warranties were negotiated with the principal purpose of establishing circumstances
in which a party to the Merger Agreement may have the right not to consummate the Merger if the representations and warranties of the
other party prove to be untrue due to a change in circumstance or otherwise, and allocating risk between the parties to the Merger Agreement,
rather than establishing matters as facts. The representations and warranties also may be subject to a contractual standard of materiality
different from that generally applicable to stockholders and reports and documents filed with the SEC. Moreover, information concerning
the subject matter of the representations and warranties, which do not purport to be accurate as of the date of this information statement,
may have changed since the date of the Merger Agreement. Accordingly, the representations and warranties in the Merger Agreement should
not be relied on by any persons as characterizations of the actual state of facts about the Company, Merger Sub or Prairie at the time
they were made or otherwise.
Restructuring
Transactions
Prior
to the consummation of the PIPE Transaction, the Company will effectuate the following transactions (collectively, the “Restructuring
Transactions”) in the order indicated below. The share amounts reflected below assume a Closing Date of November 30, 2022.
|
1. |
The
shares of Series A Preferred Stock (including all accrued dividends payable to the holders of Series A Preferred Stock), Series B
Preferred Stock and Series C Preferred Stock issued and outstanding plus accrued dividends immediately prior to the relevant time
of determination will be converted, in the aggregate, into an aggregate amount of 47,930,044
shares of Common Stock. |
|
|
|
|
2. |
The
Convertible Debentures, including all accrued interest payable thereunder, outstanding immediately prior to the relevant time of
determination will be converted, in the aggregate, into 38,963,313 shares of Common
Stock. |
|
|
|
|
3. |
Certain
warrants will be converted, in the aggregate, into 1,680,107 shares of Common Stock
(assuming a VWAP of $0.24 on the Closing Date and as calculated in accordance with the terms of such warrants). |
|
|
|
|
4. |
Accrued
fees payable to the Board in the amount of $88,200 will be converted into 441,000 shares of Common Stock. |
|
|
|
|
5. |
Accrued
consulting fees of Creek Road in the amount of $240,000 payable to Bristol Capital, LLC will be converted into 1,200,000 shares of
Common Stock. |
|
|
|
|
6. |
Amounts
payable under that certain Convertible Promissory Note, dated as of August 24, 2022, payable by Creek Road will be converted into
3,099,807 shares of Common Stock. |
|
7. |
Amounts
payable under that certain Convertible Promissory Note, dated as of September 8, 2022, payable by Creek Road will be converted into
1,930,866 shares of Common Stock. |
|
|
|
|
8. |
The
Company will effectuate the Reverse Stock Split by filing of the Charter Amendment. |
The
Merger Agreement
On
October 24, 2022, Creek Road and Merger Sub entered into the Merger Agreement with Prairie pursuant to which, and subject to the terms
and conditions contained therein, Merger Sub will merge with and into Prairie, with Prairie surviving the Merger as a wholly owned subsidiary
of Creek Road.
Merger
Consideration
The
Prairie Members will receive the greater of (a) 2,000,000 shares of Common Stock and (b) the product of (x) the number of issued and
outstanding shares of the Common Stock immediately following the consummation of the Restructuring Transactions multiplied by (y) 33.33%.
As
of the Effective Time, the Company will assume and convert certain options to purchase membership interests of Prairie into restricted
performance-based options to acquire shares of Common Stock, which will have substantially the same terms and conditions as were applicable
to such options immediately before the Effective Time, except that (a) certain operating metrics must be met for the Converted Options
to be exercisable, (b) the Converted Options, in the aggregate, will be exercisable for 8,000,000 shares of Common Stock and (c)
the per share exercise price for each share of Common Stock issuable upon exercise of the Converted Options will equal $0.25. The ability
for these options to be exercised are conditioned on certain operating metrics being achieved. The operating metrics that must be met
are a combination of average daily net production (daily produced BOE for a period of 30 days) meeting or exceeding certain quantities
as outlined below, while also achieving minimum financial performance hurdles defined as Earnings Before Interest, Depreciation, Depletion
and Amortization and Capital Expenditures (EBITDAX).
Average
Daily Net BOE per day Hurdle | |
Minimum
Annualized EBITDAX | | |
Percentage
of Options Becoming Exercisable | |
2,500 BOE/D | |
$ | 5,000,000 | | |
| 10 | % |
5,000 BOE/D | |
$ | 10,000,000 | | |
| 20 | % |
7,500 BOE/D | |
$ | 15,000,000 | | |
| 30 | % |
10,000 BOE/D | |
$ | 20,000,000 | | |
| 40 | % |
Ownership
After the Closing
Immediately
following the Closing Date, the Prairie Members are expected to own approximately 15.58% of the outstanding Common Stock, the Company’s
existing stockholders are expected to own approximately 31.16% of the outstanding Common Stock, Exok is expected to own approximately
6.52% of the outstanding Common Stock and the PIPE Investors are expected to own approximately 46.74% of the outstanding Common Stock.
This assumes (a) 12,836,400 shares of Common Stock outstanding as of the Closing consisting of (i) 6,000,000 shares of Common Stock issued
in the PIPE Transaction, (ii) 836,400 shares of Common Stock issued to Exok pursuant to the Exok Transaction, (iii) 2,000,000 shares
of Common Stock issued to the Prairie Members in the Merger and (iv) 4,000,000 shares of Common Stock outstanding after giving effect
to the Restructuring Transactions, including the Reverse Stock Split, (b) 6,000,000 PIPE Warrants are issued in the PIPE Transaction,
600,000 warrants to purchase shares of Common Stock are issued to Roth Capital Partners at Closing and 836,400 warrants to purchase shares
of Common Stock are issued to Exok pursuant to the Exok Transaction (c) no exercise or conversion of any of the Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Convertible Debentures, In-the-Money-Warrants and certain convertible promissory
notes and certain other accrued liabilities prior to the Restructuring Transactions, (d) no exercise of any other outstanding
options or warrants of Creek Road prior to or in connection with Closing and (e) no other issuances of equity interests of Creek Road.
Additionally,
if we assume that all 7,436,400 warrants to purchase Common Stock and all 8,000,000 options issued in the Transactions, and all 98,494
Out-of-the-Money Options and Out-of-the-Money Warrants outstanding after the Closing, are exchanged for shares of Common Stock, then
the Prairie Members are expected to own approximately 35.25% of the outstanding Common Stock, the Company’s existing stockholders
are expected to own approximately 14.45% of the outstanding Common Stock, Exok is expected to own approximately 5.90% of the outstanding
Common Stock, the PIPE Investors are expected to own approximately 42.30% of the outstanding Common Stock and Roth Capital Partners is
expected to own approximately 2.11% of the outstanding Common Stock. The foregoing scenario assumes that PrairieCo achieves production
of 10,000 barrels of oil equivalent per day resulting in 100% of the Converted Options becoming exercisable for 8,000,000 shares of Common
Stock and a volume-weighted average price of the Common Stock on a pre-Reverse Stock Split basis of $0.24 per share on the Closing Date.
Closing
of the Merger
Unless
the Merger Agreement is terminated, as described in the section entitled “—Termination of the Merger Agreement,” the
Closing will take place remotely via the electronic exchange of documents and signatures on the third business day after the satisfaction
or waiver (to the extent permitted under applicable law) of all of the conditions described in the section entitled “—Closing
Conditions” (other than those conditions that by their nature can only be satisfied at the Closing, but subject to the satisfaction
or permitted waiver thereof), unless another date, time or place is agreed to in writing by the Company and Prairie.
Effective
Time of the Merger
The
Merger will become effective at the time that the certificate of merger has been duly filed with the Secretary of State of the State
of Delaware, or at such later time as the Company and Prairie agree and specify in the certificate of merger (the “Effective Time”).
Withholding
The
Company, its affiliates, Prairie and any other applicable withholding agent will be entitled to deduct and withhold any amounts otherwise
payable pursuant to the Merger Agreement to the extent required by applicable law. To the extent that amounts are so withheld and paid
over to the appropriate governmental authority, such amounts will be treated for all purposes of the Merger Agreement as having been
paid to the person with respect to which such deduction and withholding was made.
Representations
and Warranties
The
Merger Agreement contains representations and warranties made by each of the Company and Merger Sub, jointly and severally, regarding:
|
● |
corporate
matters, including due incorporation and qualification and subsidiaries; |
|
|
|
|
● |
authority
relative to execution and delivery of the Merger Agreement and the enforceability thereof; |
|
|
|
|
● |
absence
of conflicts with, or violations of, organizational documents or other obligations as a result of the Merger; |
|
|
|
|
● |
required
governmental and other regulatory and self-regulatory filings and consents and approvals in connection with the Merger; |
|
|
|
|
● |
capitalization
and ownership; |
|
|
|
|
● |
legal
and regulatory proceedings; |
|
|
|
|
● |
certain
material contracts; |
|
|
|
|
● |
insurance
matters; |
|
|
|
|
● |
broker’s
fees payable in connection with the Merger; |
|
|
|
|
● |
inapplicability
of takeover statutes; |
|
● |
compliance
with applicable laws; |
|
|
|
|
● |
tax
matters; |
|
|
|
|
● |
employee
benefit matters; |
|
|
|
|
● |
real
property; |
|
|
|
|
● |
intellectual
property; |
|
|
|
|
● |
environmental
matters; |
|
|
|
|
● |
business
activity of Merger Sub; |
|
|
|
|
● |
SEC
reports; |
|
|
|
|
● |
the
accuracy of information supplied for inclusion in this information statement; |
|
|
|
|
● |
financial
statements; |
|
|
|
|
● |
the
absence of certain adverse changes or events; |
|
|
|
|
● |
digital
wallets; |
|
|
|
|
● |
bitcoin
miners; |
|
|
|
|
● |
ownership
of digital assets; |
|
|
|
|
● |
the
PIPE Transaction; and |
|
|
|
|
● |
the
absence of other representations or warranties. |
|
|
|
|
The
Merger Agreement contains representations and warranties made by Prairie regarding: |
|
|
|
|
● |
corporate
matters, including due organization and qualification and subsidiaries; |
|
|
|
|
● |
authority
relative to execution and delivery of the Merger Agreement and the enforceability thereof; |
|
|
|
|
● |
absence
of conflicts with, or violations of, organizational documents or other obligations as a result of the Merger; |
|
|
|
|
● |
required
governmental and other regulatory and self-regulatory filings and consents and approvals in connection with the Merger; |
|
|
|
|
● |
capitalization
and ownership; |
|
|
|
|
● |
the
absence of other rights to acquire membership interests; |
|
|
|
|
● |
legal
proceedings; |
|
|
|
|
● |
broker’s
fees payable in connection with the Merger; |
|
|
|
|
● |
compliance
with applicable laws; |
|
|
|
|
● |
tax
matters; |
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business
activity; |
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no
beneficial ownership of the Company’s securities; and |
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the
absence of other representations or warranties. |
Certain
representations and warranties of the Company and Prairie are qualified as to “material adverse effect.” For purposes of
the Merger Agreement, a “material adverse effect,” when used in reference to either the Company, Prairie, Merger Sub, the
surviving entity in the Merger or the combined company, means any effect, change, event, circumstance, condition, occurrence or development
that, either individually or in the aggregate, (i) prevents, materially delays or materially impairs such person’s ability to perform
its obligations under the Merger Agreement or any and all agreements, certificates and other instruments to be delivered at Closing pursuant
to the Merger Agreement, or the timely consummation of the transactions contemplated by the Merger Agreement or such other documents
or (ii) has had or would reasonably be expected to have a material adverse effect on the business, properties, results of operations
or financial condition of such person and its subsidiaries taken as a whole.
However,
a material adverse effect will not be deemed to include the impact of:
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changes,
after the date of the Merger Agreement, in U.S. GAAP or applicable regulatory accounting requirements or official interpretations
thereof; |
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changes,
after the date of the Merger Agreement, in laws, rules or regulations of general applicability to companies in the industries in
which such party and its subsidiaries operate, or interpretations thereof by courts or governmental entities; |
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changes,
after the date of the Merger Agreement, in global, national or regional political conditions (including the outbreak of war or acts
of terrorism) or in economic, market (including equity, credit and debt markets, as well as changes in interest rates) or other general
industry-wide conditions affecting the industries in which such party or its subsidiaries operate; |
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the
announcement or the existence of, compliance with, pendency of or performance under, the Merger Agreement or the transactions contemplated
thereby or the identity of the parties to the Merger Agreement or any of their affiliates (including the impact thereof on the relationships,
contractual or otherwise, of a party or any of its subsidiaries with officers and employees, financing sources, customers, suppliers,
vendors, service providers or other partners) (provided that this bullet will not apply to any representation or warranty to the
extent the purpose of such representation or warranty is to address the consequences resulting from the execution of or performance
under the Merger Agreement or the consummation of the transactions contemplated thereby); |
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the
failure, in and of itself, to meet earnings projections, earnings guidance, budgets, expectations, estimates or internal financial
forecasts, but not including any underlying causes thereof to the extent not otherwise excluded by any of the other bullets; |
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weather
conditions or other acts of God; or |
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any
action required to be taken by a party or any of its subsidiaries at the written request of the other party, |
except,
with respect to the first, second, third and sixth bullet, to the extent that the effects of such change are materially disproportionately
adverse to the business, properties, results of operations or financial condition of such party and its subsidiaries, taken as a whole,
as compared to other companies in the industry in which such party and its subsidiaries operate.
The
representations and warranties in the Merger Agreement do not survive the Effective Time.
Covenants
and Agreements
Conduct
of Businesses Prior to the Completion of the Merger
Each
of the Company and Prairie has agreed that, prior to the Effective Time (or earlier termination of the Merger Agreement), subject to
specified exceptions, it will, and will cause each of its respective subsidiaries to, without the prior written consent of the other
party (such consent not to be unreasonably withheld, conditioned or delayed), use commercially reasonable efforts to (i) conduct its
business in the ordinary course in all material respects and (ii) maintain and preserve intact its business organization, employees and
advantageous business relationships.
Additionally,
prior to the Effective Time (or earlier termination of the Merger Agreement), subject to specified exceptions, neither the Company nor
Prairie may, and neither the Company nor Prairie may permit any of their respective subsidiaries to, without the prior written consent
of the other party (such consent not to be unreasonably withheld, conditioned or delayed), take any of the following actions:
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incur,
assume, guarantee or become liable for any indebtedness, other than (x) any such indebtedness that will be discharged on or prior
to the Closing, (y) guarantees, letters of credit, bonds or other sureties and performance guarantees entered into in the ordinary
course of business and consistent with past practices or (z) any intercompany indebtedness; |
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adjust,
split, combine or reclassify any capital stock or other securities, other than the Reverse Stock Split; |
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make,
declare, pay or set a record date for any dividend, or any other distribution on, or directly or indirectly redeem, purchase or otherwise
acquire, any shares of its capital stock or other equity or voting securities or any securities or obligations convertible (whether
currently convertible or convertible only after the passage of time or the occurrence of certain events) or exchangeable into or
exercisable for any shares of its capital stock or other equity or voting securities; grant any stock options, restricted stock units,
performance stock units, phantom stock units, performance shares, restricted shares or other equity-based awards or interests (whether
payable in shares, cash or otherwise), or grant any person any right to acquire any membership interests, in the case of Prairie,
or shares of Common Stock, Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock, in the case of the Company; |
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issue,
sell, transfer, encumber or otherwise permit to become outstanding any shares of capital stock or voting securities or equity interests
or securities convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain
events) or exchangeable into, or exercisable for, any shares of its capital stock or other equity or voting securities, including
any membership interests, in the case of Prairie, or shares of Common Stock, Series A Preferred Stock, Series B Preferred Stock or
Series C Preferred Stock, in the case of the Company, or any options, warrants, or other rights of any kind to acquire any shares
of capital stock or other equity or voting securities, including any membership interests, in the case of Prairie, or shares of Common
Stock, Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock, in the case of the Company; |
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sell,
transfer, mortgage, encumber or otherwise dispose of any of its material properties, rights or assets to any person, or cancel, release
or assign any indebtedness to any such person or any claims held by any such person, in each case other than in the ordinary course
of business, consistent with past practices; |
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make
any material investment in or material acquisition of (whether by purchase of stock or securities, contributions to capital, property
transfers, merger or consolidation, or formation of a partnership, joint venture or otherwise) any other person or the property or
assets of any other person, in each case other than, with respect to acquisitions of properties and assets, in the ordinary course
of business, consistent with past practices; |
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except
in the ordinary course of business consistent with past practice, (i) terminate, materially amend, assign (or assign any material
rights under) or waive any material provision of, any contract material to the business of the Company or Prairie, as applicable,
or make any material change in any instrument or agreement governing any contract material to the business of the Company or Prairie,
as applicable, other than normal renewals of contracts and leases without material adverse changes of terms with respect to the Company
or Prairie, as the case may be, or (ii) enter into any contract that would be considered material to the business of the Company
or Prairie, as applicable; |
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(i)
enter into, adopt or terminate any employee benefit or compensation plan, program, policy or arrangement for the benefit or welfare
of any current or former employee, officer, director or individual consultant, other than in the ordinary course of business consistent
with past practice, (ii) amend (whether in writing or through the interpretation of) any employee benefit or compensation plan, program,
policy or arrangement for the benefit or welfare of any current or former employee, officer, director or individual consultant, other
than in the ordinary course of business consistent with past practice, (iii) materially increase the compensation or benefits payable
to any current or former employee, officer, director or individual consultant (other than in connection with a relocation of an employee
in the ordinary course of business or a bona fide promotion or change in responsibilities), (iv) pay or award, or commit to pay or
award, any bonuses or incentive compensation other than in the ordinary course of business consistent with past practice, (v) grant
or accelerate the vesting of any equity-based awards or other compensation, (vi) enter into any new, or amend any existing, employment,
severance, change in control, retention, bonus guarantee, collective bargaining agreement or similar agreement or arrangement, (vii)
terminate the employment or services of any officer or any employee whose target annual compensation (that is, base salary or wages
plus annual bonus or other short-term cash incentive compensation) is greater than $150,000, other than for cause, or (viii) hire
or promote any officer, employee or individual consultant who has (or, following such hire or promotion, would have) target annual
compensation (that is, base salary or wages plus annual bonus or other short-term cash incentive compensation) greater than $150,000; |
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compromise,
release, waive or settle any proceedings, except involving monetary remedies in an amount not in excess of $250,000 individually
or $500,000 in the aggregate and that would not impose any material restriction on, or create any adverse precedent that would be
material to, the business of the Company, Prairie, the surviving entity in the Merger or the combined company; |
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take
any action or fail to take any action where such action or failure to act could reasonably be expected to impede or prevent the Merger
from being treated as an exchange of all issued and outstanding membership interests in Prairie for Common Stock under Section 351
of the Code; |
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enter
into any new line of business outside of the business currently conducted by such person or discontinue any existing line of business,
other than in the ordinary course of business consistent with past practice; |
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amend
such party’s organizational documents, except with respect to the Charter Amendment; |
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make,
change or revoke any material tax election, change an annual tax accounting period, adopt or change any material tax accounting method,
file any material amended tax return, enter into any closing agreement with respect to a material amount of taxes, or settle any
material tax claim, audit, assessment or dispute or surrender any material right to claim a refund of taxes; |
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make
capital expenditures that are in excess of $25,000 individually or $50,000 in the aggregate; |
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establish
any non-wholly owned subsidiary; |
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enter
into any contract that would restrain or restrict the ability of the Company or Prairie, as the case may be, to compete in any material
respect with any person or to conduct any business or line of business in any geographic area; |
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make
any material change in any method of financial accounting principles or practices, in each case except for any such change required
by a change in U.S. GAAP or applicable law; |
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voluntarily
fail to maintain, cancel or materially change coverage under, in a manner detrimental to such person, any insurance policy maintained
with respect to such person and its assets and properties; |
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fail
to maintain its existence or authorize, recommend, propose, enter into, adopt or effect a plan of complete or partial liquidation,
dissolution, restructuring, recapitalization, or other reorganization; |
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amend,
waive or modify any term or provision of the Exok Agreement or the documentation with respect to the PIPE Transaction; |
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enter
into a subscription agreement for the offer and sale of the Company’s Common Stock or warrants to purchase Common Stock after
the date of the Merger Agreement and prior to the Closing; |
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take
or fail to take any action that is reasonably likely to cause any of the conditions precedent to the consummation of the Merger to
not be satisfied; or |
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announce
an intention, agree, or otherwise make a commitment, whether in writing or otherwise, to do any of the foregoing. |
Director
and Officer Indemnification and Insurance
The
Merger Agreement provides that after the Effective Time, the combined company will indemnify and hold harmless and will advance expenses
as incurred, in each case to the maximum extent permitted by applicable law, Prairie, its directors, officers and representatives and
such persons that are indemnified as of the date of the Merger Agreement by Prairie pursuant to Prairie’s organizational documents
and such other persons that are indemnified as of the date of the Merger Agreement by the Company pursuant to the Company’s organizational
documents, against any costs or expenses (including reasonable attorneys’ fees), judgments, fines, losses, damages or liabilities
incurred in connection with any threatened or actual proceeding, whether civil, criminal, administrative or investigative, whether arising
before or after the Effective Time, arising out of the fact that such person is or was a director, officer or employee of the Company
or Prairie, and pertaining to matters existing or occurring at or prior to the Effective Time, including the transactions contemplated
by the Merger Agreement and the matters included in the disclosure schedule attached thereto; provided, that in the case of advancement
of expenses, any indemnified party to whom expenses are advanced provides an undertaking to repay such advances if it is ultimately determined
that such person is not entitled to indemnification.
The
Merger Agreement requires the combined company to maintain, for a period of six years after the Effective Date, in effect insurance coverage
equivalent to the coverage under the current policies of directors’ and officers’ liability insurance maintained by the Company
as of the date of the Merger Agreement (provided, that the combined company may substitute therefor policies with a substantially comparable
insurer of at least the same coverage and amounts containing terms and conditions that are no less favorable to the insured) with respect
to claims arising from facts or events which occurred at or before the Effective Time. However, the combined company will not be obligated
to expend, on an annual basis, an amount in excess of 200% of the current annual premium paid as of the date of the Merger Agreement
by the Company for such insurance (referred to as the “premium cap”), and if such premiums for such insurance would at any
time exceed the premium cap, then the combined company will cause to be maintained policies of insurance which, in the combined company’s
good faith determination, provide the maximum coverage available at an annual premium equal to the premium cap.
In
lieu of the foregoing, the Company will obtain at or prior to the Effective Time a six-year “tail” policy under the Company’s
existing directors’ and officers’ insurance policy (provided that the Company may substitute therefor policies with a substantially
comparable insurer or insurers of at least the same coverage and amounts containing terms and conditions that are no less favorable to
the insured) providing equivalent coverage to that described in the preceding sentence if the same may be obtained for an amount that,
in the aggregate, does not exceed the premium cap.
Certain
Additional Covenants
The
Merger Agreement also contains additional covenants, including, among others, covenants relating to obtaining required consents and approvals,
access to information of the other party, advice of changes, confidentiality, public announcements with respect to the transactions contemplated
by the Merger Agreement, further assurances, exemption from takeover laws, the filing of a registration statement on Form S-1 with the
SEC (or such other form for which the Company is eligible), the filing of this information statement, the consummation of the PIPE Transaction,
certain matters under Section 16 of the Exchange Act, agreement on a form of amended and restated bylaws of the Company to serve as the
bylaws of the combined company, and the issuance of shares of Common Stock to Exok at the closing of the Exok Transaction.
Agreement
Not to Solicit Other Offers
From
the date of the Merger Agreement until the Closing Date, each of the Company and Prairie has agreed that it will not, and will cause
each of its respective affiliates and its and their respective representatives not to, directly or indirectly, (i) solicit, propose,
encourage or facilitate the initiation or submission of any indication of interest, proposal or offer from any person (other than such
other party to this Agreement) relating to a possible acquisition proposal or that would reasonably be expected to lead to a possible
acquisition proposal; (ii) engage in, continue or otherwise participate in any discussions or negotiations or enter into any agreement,
understanding or arrangement with, or provide any non-public information to, any person (other than the Company, Prairie, its affiliates
or their respective representatives) relating to or in connection with a possible acquisition proposal or that would reasonably be expected
to lead to a possible acquisition proposal; (iii) accept any proposal or offer from any person (other than any other party to the Merger
Agreement or any of its affiliates) relating to a possible acquisition proposal or that would reasonably be expected to lead to a possible
acquisition proposal.
For
purposes of the Merger Agreement, an “acquisition proposal” means any contract, offer, proposal or inquiry relating to, or
any indication of interest in, any transaction or series of related transactions involving, directly or indirectly, (a) any acquisition
of all or any material portion of the business of the Company or Prairie, as the case may be, including by way of equity purchase, asset
purchase, merger, consolidation, share exchange, equity issuance, business combination or otherwise, or (b) any acquisition of beneficial
ownership by any person or group of 20% or more of the outstanding shares of the Common Stock or membership interests of Prairie or any
other securities entitled to vote on the election of directors of the Company or any tender or exchange offer that if consummated would
result in any person or group beneficially owning 20% or more of the Common Stock or any other securities entitled to vote on the election
of the Company’s directors.
Each
of the Company and Prairie will promptly (and in any event within 24 hours of receipt) advise the other party following receipt of any
acquisition proposal, any request for non-public information or data in connection with an acquisition proposal, or any request for discussions
or negotiations relating to an acquisition proposal (including the identity of such person), in each case, after the date of the Merger
Agreement and prior to the Closing.
Closing
Conditions
The
respective obligations of each of the Company, Prairie and Merger Sub to complete the Merger are subject to the satisfaction, at or prior
to the Effective Time, of the following conditions:
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the
stockholders of the Company have approved the Charter Amendment and the Proposed Charter; |
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no
judgment by any court or governmental entity of competent jurisdiction or other legal restraint or prohibition enjoining or preventing
the consummation of the Merger is in effect, and no law or judgment has been enacted, entered, promulgated or enforced by any governmental
entity of competent jurisdiction which prohibits or makes illegal the consummation of the Merger; |
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the
closing of the PIPE Transaction shall have been consummated in accordance with its terms; |
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the
Charter Amendment has been filed and become effective; |
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all
conditions precedent to the closing of the Exok Transaction, other than the consummation of the Merger and the deliveries and actions
to be made and performed at such closing, have been satisfied or waived by the applicable persons; |
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the
required consents and governmental authorizations have been obtained and are in full force and effect; |
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the
Lock-up Agreements in the form attached to the Merger Agreement have been duly executed and provided by the required parties and
are in full force and effect; |
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this
information statement was mailed to the Company’s stockholders at least 20 days prior to the Closing Date, and the consummation
of the Merger is permitted by Regulation 14C of the Exchange Act; |
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the
Stockholders Agreement in the form attached to the Merger Agreement has been duly executed by the Company and the other parties thereto
and is in full force and effect; |
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the
accuracy of the representations and warranties of the other party contained in the Merger Agreement as of the date on which the Merger
Agreement was entered into and as of the date on which the Merger is completed, subject to the materiality standards provided in
the Merger Agreement (and the receipt of an officer’s certificate from the other party to such effect); |
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the
performance by the other party in all material respects of all obligations, covenants and agreements required to be performed by
it under the Merger Agreement at or prior to the date on which the Merger is completed (and the receipt of an officer’s certificate
from the other party to such effect); and |
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since
the date of the Merger Agreement, there has not been any effect, change, event, circumstance, condition, occurrence or development
that has had or would reasonably be expected to have, either individually or in the aggregate, a material adverse effect on any party
(and each party has provided an officer’s certificate to the other party to such effect). |
In
addition, Prairie’s obligation to complete the Merger is subject to the satisfaction or waiver, at or prior to the Effective
Time, of the condition that (i) no more than 20% of the Out-of-the-Money Options outstanding as of June 30, 2022 will be
outstanding as of the Closing Date and (ii) no more than 20% of the Out-of-the-Money Warrants outstanding as of the Merger
Agreement will be outstanding as of the Closing Date.
The
Company cannot provide assurance as to when or if all of the conditions to the Merger can or will be satisfied or waived by the appropriate
party.
Termination
of the Merger Agreement
The
Merger Agreement can be terminated at any time prior to the Effective Time, whether before or after the receipt of the Requisite Consent,
in the following circumstances:
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by
mutual written consent of the Company and Prairie; |
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by
either the Company or Prairie if (i) any governmental entity of competent jurisdiction that must grant a requisite regulatory approval
has denied approval of the Merger and such denial has become final and nonappealable or (ii) any court or governmental entity of
competent jurisdiction has issued a final and nonappealable order, injunction or decree or other legal restraint or prohibition permanently
enjoining or preventing the consummation of the Merger, unless the issuance of such order, injunction, decree or other legal restraint,
as applicable, is principally due to the failure of the party seeking to terminate the Merger Agreement to perform or observe the
obligations, covenants and agreements of such party set forth in the Merger Agreement; |
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by
either the Company or Prairie if the Merger has not been consummated by the Termination Date, unless the failure of the Merger to
occur by such date is principally due to the failure of the party seeking to terminate the Merger Agreement to perform or observe
the obligations, covenants and agreements of such party set forth in the Merger Agreement; |
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by
either the Company or Prairie (provided, that the terminating party is not then in material breach of any obligation, covenant or
other agreement contained in the Merger Agreement) if there has been a breach of any of the obligations, covenants or agreements
or any of the representations or warranties (or any such representation or warranty ceases to be true) set forth in the Merger Agreement
on the part of the Company or Merger Sub, in the case of a termination by Prairie, or by Prairie, in the case of a termination by
the Company, which breach or failure to be true, either individually or in the aggregate would constitute, if occurring or continuing
on the date the Merger is completed, the failure of a closing condition of the terminating party and which is not cured within thirty
(30) days (or such fewer days as remain prior to the Termination Date) following written notice to the party committing such breach,
or by its nature or timing cannot be cured during such period (or such fewer days as remain prior to the Termination Date); or |
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by
either the Company or Prairie if the Requisite Consent is not delivered to the Company and Prairie within 24 hours following the
execution of the Merger Agreement. |
Expenses
Except
as otherwise provided in the Merger Agreement, all direct and indirect expenses incurred in connection with the preparation and negotiation
of the Merger Agreement and the consummation of the transactions contemplated thereby will be paid by the party incurring such expense.
All amounts relating to any financial, legal, accounting or other advisor, and all other transaction fees and expenses incurred by the
Company or Prairie in connection with the Merger Agreement and the transactions contemplated thereby, will be paid by the combined company
in full at the Closing.
Amendments
and Waivers
The
Merger Agreement may not be amended except by an instrument in writing signed by the Company, Prairie and Merger Sub and the Company
and that identifies itself as an amendment to the Merger Agreement.
The
parties to the Merger Agreement may (i) extend the time for the performance of any of the obligations or other acts of any other party
to the Merger Agreement, (ii) waive any inaccuracies in the representations and warranties of any other party to the Merger Agreement
contained therein or in any document delivered by such other party pursuant to the Merger Agreement, or (iii) waive compliance with any
of the covenants, agreements or conditions for its benefit contained in the Merger Agreement. Any such extension or waiver on the part
of a party to the Merger Agreement will be valid only if set forth in a written instrument signed on behalf of the party against whom
the waiver or extension is to be effective.
Governing
Law
The
Merger Agreement is governed by and will be construed in accordance with the laws of the State of Delaware, without regard to any applicable
conflicts of law principles, unless any exhibit or schedule of the Merger Agreement specifies a different choice of law.
Specific
Performance
The
Company and Prairie will be entitled to injunctive relief to prevent breaches or threatened breaches of the Merger Agreement or to enforce
specifically the provisions of the Merger Agreement, in addition to any other remedy to which they are entitled at law or in equity.
The Company and Prairie have waived (i) any defense in any action for specific performance, including the defense that a remedy at law
would be adequate, and (ii) any requirement that any other party obtain any bond or provide any security or indemnity as a prerequisite
to obtaining injunctive relief or specific enforcement of the provisions of the Merger Agreement.
Other
Transaction Agreements
Stockholders
Agreement
Pursuant
to the Merger Agreement, each of the Company, Bristol, Paul L. Kessler, Gary C. Hanna and Edward Kovalik will enter into the Stockholders
Agreement prior to the Effective Time whereby the parties thereto will use reasonable best efforts, including taking certain necessary
actions, to cause the New Board to cause certain nominees to be elected to serve as a director on the New Board under the following conditions:
(a) one nominee designated by Bristol and Paul L. Kessler, collectively, so long as Bristol, Paul L. Kessler and their respective affiliates
collectively beneficially own at least 50% of the number of shares of Common Stock collectively beneficially owned by such parties on
the Closing Date; (b) four nominees designated by the Prairie Members so long as the Prairie Members and their affiliates collectively
beneficially own at least 50% of the number of shares of Common Stock collectively beneficially owned by such parties on the Closing
Date; (c) three nominees designated by the Prairie Members so long as the Prairie Members and their affiliates collectively beneficially
own at least 40% (but less than 50%) of the number of shares of Common Stock collectively beneficially owned by such parties on the Closing
Date; (d) two nominees designated by the Prairie Members so long as the Prairie Members and their affiliates collectively beneficially
own at least 30% (but less than 40%) of the number of shares of Common Stock collectively beneficially owned by such parties on the Closing
Date; and (e) one nominee designated by the Prairie Members so long as the Prairie Members and their affiliates collectively beneficially
own at least 20% (but less than 30%) of the number of shares of Common Stock collectively beneficially owned by such parties on the Closing
Date.
Support
Agreements
Certain
holders of the Series A Preferred Stock, the Series
B Preferred Stock, the Series C Preferred Stock and the Convertible Debentures have each entered into Support Agreements pursuant to
which each such holder has agreed to convert its (i) respective shares of Series A Preferred Stock, Series B Preferred Stock and Series
C Preferred Stock and (ii) applicable Convertible Debentures into shares of Common Stock as of the Effective Time.
Under
the respective Support Agreements, the applicable holders agreed to a decrease in the stated value of the Series B Preferred Stock
by 10%, a decrease in the stated value of the Series C Preferred Stock by 20% and a reduction in the principal balance of the Convertible
Debentures by 20%. Holders of the Series B Preferred Stock and Series C Preferred Stock agreed to convert their respective shares into
Common Stock immediately prior to the Closing at the lower of (i) the respective conversion prices or (ii) the lowest per share valuation
attributed to the Common Stock in the Merger.
Under
the Support Agreements, the applicable holders have also agreed (i) to use their reasonable best efforts to cooperate fully with
the Company in connection with the Merger, any financing in support of the Merger and the transaction contemplated thereby, including
any reasonable request for a lock-up agreement necessary to facilitate such financing, and (ii) not to initiate, solicit, encourage or
facilitate any inquiries or engage in discussions with any third party relating to alternative business combinations.
Lock-up
Agreements
Pursuant
to the Merger Agreement, certain executive officers and directors of the Company and the Prairie Members will execute Lock-up
Agreements prior to the Closing that impose a lock-up on any sale or other disposition of shares of Common Stock until 180 days after
Closing, subject to certain exceptions.
PIPE
Agreements
Creek
Road is in negotiations with certain investors and intends to enter into separate PIPE Agreements with each PIPE Investor prior to the
Closing. Creek Road intends to sell to the PIPE Investors an aggregate of at least 6,000,000 shares of Common Stock for a purchase
price of $5.00 per share and an aggregate of at least 6,000,000 PIPE Warrants to purchase shares of Common Stock at an exercise
price of $6.00 per share, for aggregate gross proceeds of at least $30.0 million. As of the date of the execution of the Merger
Agreement, no definitive agreements have been executed with such investors. There is no guarantee that Creek Road will be able to successfully
raise $30.0 million in the PIPE Transaction.
The
closing of a PIPE Transaction with aggregate gross proceeds of $30.0 million is a condition to closing the Merger. The purpose of the
PIPE Transaction is to raise capital to acquire the Exok Assets and for use by the combined company following the
Closing. In connection with the PIPE Transaction, the PIPE Investors will enter into registration rights agreements with Creek Road at
the Closing containing customary terms.
Upon
closing of the PIPE Transaction, Creek Road will issue to Roth Capital Partners warrants to purchase shares of Common Stock at an exercise
price of $6.00 per share in an amount equal to 10% of the shares of Common Stock issued in the PIPE Transaction for its role as placement
agent in the PIPE Transaction.
Exok
Agreement
Concurrently
with the execution of the Merger Agreement, Prairie entered into the Exok Agreement, pursuant to which Exok agreed to sell to Prairie,
and Prairie agreed to purchase from Exok, certain oil and gas leases, including all of Exok’s right, title and interest in, to
and under certain undeveloped oil and gas leases located in Weld County, Colorado, together with certain other associated assets, data
and records. The effective date of conveyance of the Exok Assets will be October 15, 2022.
As
consideration for the Exok Assets, Prairie has agreed to pay Exok a total amount of $28,182,000 at the closing of the Exok Transaction,
which amount will be payable as (a) $24,000,000 in cash and (b) the issuance of $4,182,000 in total equity consideration, consisting
of (i) 836,400 shares of Common Stock and (ii) 836,400 warrants to purchase 836,400 shares of Common Stock at the exercise price of $6.00
per share.
The
closing of the Exok Transaction is subject to several customary conditions, including that (i) each of the representations and warranties
of Exok and Prairie under the Exok Agreement be true and correct, in all material respects, as of the time of such closing, (ii) Exok
and Prairie have performed, in all material respects, all covenants and agreements under the Exok Agreement prior to such closing; (iii)
no injunction, order or award restraining, enjoining or otherwise prohibiting the consummation of the Exok Transaction has been issued;
(iv) all conditions precedent to the Closing will have been satisfied or waived, and the Closing will have occurred prior to the Exok
Transaction; and (v) at least twenty (20) calendar days will have passed since the mailing of this information statement by Creek Road
to its stockholders.
The
closing of the Exok Transaction will, unless otherwise agreed to in writing by Exok and Prairie, take place at the offices of Vinson
& Elkins L.L.P. located at 845 Texas Avenue, Suite 4700 Houston, Texas 77002 at 10:00 a.m., local time, on the date that is within
five (5) business days after the satisfaction of Exok and Prairie’s conditions to the closing.
The
Exok Agreement may be terminated at any time prior to the closing of the Exok Transaction, in the following circumstances:
| ● | by
the mutual prior written consent of Prairie and Exok; |
| ● | by
either Prairie or Exok (as long as the terminating party is not then in material breach of
any representation, warranty, covenant or agreement contained in the Exok Agreement) if there
has been a breach of any representation, warranty, covenant or agreement (or if any such
representation or warranty ceases to be true) contained in the Exok Agreement on the part
of Prairie, in the case of a termination by Exok, or on the part of Exok, in the case of
a termination by Prairie, in either case such that certain specified conditions to closing
would not be satisfied; provided that such breach has not been waived by the non-beaching
party or has not been cured within fifteen (15) days after notice of such breach is provided
to the party committing such breach; or |
| ● | by
Exok if the $24,000,000 in cash consideration has not been received by Exok on or before
January 18, 2023, so long as Exok is not then in material breach of its representations,
warranties, covenants or agreements in the Exok Agreement. |
On
May 15, 2022, Exok entered into an agreement with Gary C. Hanna and Edward Kovalik whereby Exok agrees to assign certain overriding royalty
interests under the Exok Assets to Gary C. Hanna and Edward Kovalik at the Closing. Following the Closing, it is anticipated that these
interests will be owned in equal one-third shares by entities controlled by each of Gary Hanna, Edward Kovalik and Paul Kessler. To avoid
any potential conflict of interest with certain members of our board of directors and management owning certain overriding royalty interests
under the Exok Assets, all PrairieCo drilling programs will be approved by an independent committee of the New Board on a quarterly basis.
Summary
of the Exok Assets
The
assets to be acquired by the Prairie from Exok include the following:
|
● |
all
of Exok’s right, title and interest in, to and under the fee oil and gas leases described more particularly in the Exok Agreement,
including all working interests, operating rights, record title interests and other interests of every kind and character (the “Fee
Leases”), that include and convey no less than a 75% net revenue interest (“NRI,” being the share of production
of all hydrocarbons produced, saved and sold, after all burdens, such as royalty and overriding royalty, have been deducted from
the working interest) in each Fee Lease; |
|
|
|
|
● |
all
of Exok’s right, title and interest in, to and under the State of Colorado Oil and Gas Lease described more particularly in
the Exok Agreement, including all working interests, operating rights, record title interests and other interests of every kind and
character (the “State Leases”), that include and convey no less than a 77.5% NRI in the State Leases; |
|
|
|
|
● |
100%
of Exok’s leasehold interest (Fee Leases and State Leases collectively referred to as the “Leases”) in 23,485 net
mineral acres in, on and under 37,030 gross acres located in Weld County, Colorado, as described more particularly in the Exok Agreement
(the “Lands”); |
|
|
|
|
● |
to
the extent transferable, Exok’s interests in and under all contracts, agreements and instruments by which the other Exok Assets
are bound or that relate to or are used or useful in connection with the ownership, development or operation of the Leases or the
Lands, to the extent applicable to the Leases or Lands, including all surface use agreements, surface rights, surface permits and
other similar rights and instruments; and |
|
|
|
|
● |
all
of Exok’s records, files and geological and geophysical data directly related to the Exok Assets, including without limitation
all seismic data and interpretations thereof, logs, core analyses, formation tests, films, surveyors’ notes, plane table sheets,
shot point data bases, land files, contract files, lease files, title files (including title reports, title opinions, runsheets,
abstracts, evidence of bonus and rental payments), maps, surveys and data sheets. |
Prairie
will acquire undeveloped oil and gas leasehold acreage located in northern Colorado, in Weld County covering approximately 37,030 gross
acres and 23,485 net acres. The operating area is rural and free of development. Access to the leases is by paved and dirt country roads
and private road access. Approximately 70% of the net leasehold is held under fee leases, with the remaining 30% held under State of
Colorado leases. Prairie does not hold any interest in federal oil and gas leases. All of the acreage is held by crude oil and natural
gas leases with varying expiration dates, some with options to extend ranging from 1 to 4 years. The fee leases are burdened with total
royalties of 25%. The State of Colorado leases are burdened with total royalties of 22.5%. The leases can be held indefinitely by production.
Unless production is established within the spacing units covering the undeveloped acreage, the leases for such acreage will eventually
expire. There are no lease expirations prior to July 23, 2025.
The
Exok Assets are located in and around wells drilled in the both the Niobrara Shale and the Codell Sandstone formations within the D-J
Basin. While production activities in the D-J Basin date back to the 1970s, production within the D-J Basin has increased rapidly since
the horizontal drilling boom in 2009, with both the Niobrara and Codell formations contributing to this activity. Within the D-J Basin
operating area, there are over 1,300 legacy vertical wells, with Noble Energy, Inc. (now Chevron Corporation), Civitas Resources, Inc.,
EOG Resources, Inc. and Samson Energy Company, LLC operating a substantial number of such wells.
The
primary drilling objective in this area is crude oil production from the fractured Codell and Niobrara Formations. The area has seen
a renewed interest in drilling activity over the past decade in conjunction with drilling success in the Niobrara in the D-J Basin on
the front range of Colorado. Active operators in the area have included Noble Energy, Inc. (now Chevron Corporation), Civitas Resources,
Inc., EOG Resources, Inc., Samson Energy Company, LLC and others. There is ample takeaway infrastructure in place within several miles
of the Exok Assets, including multiple midstream operators such as Summit Midstream Partners LP, Outrigger Energy II LLC, Rimrock Energy
Partners and Roaring Fork Midstream LLC.
Background
of the Merger Agreement and the Transactions
The
following chronology summarizes the key meetings and events that led to the signing of the Merger Agreement and other agreements related
to the Transactions. The following chronology does not purport to catalogue every conversation among the Board, members of Company management
or the Company’s representatives and other parties.
In
connection with the start of the Company’s cryptocurrency mining operations in October 2021, the Company’s management looked
to acquire energy assets in order to power the energy-intensive miners used in the cryptocurrency mining process.
Paul
Kessler, the Executive Chairman of the Company, and Edward Kovalik, one of the managing members of Prairie, have had a long-standing
professional and social relationship and would discuss potential business opportunities from time to time. In early 2022, Mr. Kessler
reached out to Mr. Kovalik and conveyed that the Company was active in pursuing opportunities to acquire energy assets.
On
April 1, 2022, based on a prior relationship between certain affiliates of Prairie (“Prairie Affiliates”), Prairie became
aware of the Exok assets and began analysis and due diligence on the Exok Assets. Prairie Affiliates evaluated data pertaining to the
Exok Assets and Exok’s offsetting leasehold, including well logs, completion design, seismic data, core samples, cuttings and other
data. Prairie Affiliates’ evaluation included consulting with third party engineers and geologists, culminating in the construction
of comprehensive hydrocarbon distribution models, and type curves.
Following
the completion of Prairie Affiliates’ initial technical evaluation, Prairie Affiliates’ executed a Letter of Intent to Purchase
with Exok on May 12, 2022. Prairie Affiliates then began constructing a virtual data room consisting of a collection of data and materials
with respect to the Exok Assets, including but not limited to those used in its evaluation of Exok’s leasehold.
On
May 12, 2022, Prairie Affiliates and Creek Road executed a non-disclosure agreement. On May 13, 2022, Prairie Affiliates forwarded a
teaser deck to Creek Road relating to the Exok Assets, and on May 22, 2022, Creek Road was granted access to the virtual data room relating
to the Exok Assets. Throughout the month of May 2022, Prairie Affiliates and Creek Road engaged in a number of discussions regarding
the evaluation of the Exok Assets and a potential deal structure. These discussions included the technical merits of the Exok Assets
and Prairie Affiliates’ development plan for the Exok Assets. Prairie Affiliates shared with Creek Road its assumptions related
to costs for various service providers and materials required to develop the Exok Assets. Prairie Affiliates and Creek Road also discussed
marketing plans for oil, gas, and NGLs derived from the Exok Assets, amongst other discussions relating to additional leasehold acquisition
plans.
On
June 1, 2022, initial marketing discussions were held between Roth Capital Partners, Prairie Affiliates and Creek Road regarding a potential
private investment in public equity transaction.
On
June 2, 2022, Prairie Affiliates contacted Vinson & Elkins L.L.P. (“Vinson & Elkins”) in regards to acting as counsel
to Prairie.
On
June 2, 2022, Prairie Affiliates evaluated a capitalization table provided by Creek Road, summarizing all of Creek Road’s series
of preferred stock, debt, options and warrants.
On
June 6, 2022, Creek Road and Prairie Affiliates held telephonic discussions regarding the proposed deal. On June 7, 2022, certain principals
from Prairie Affiliates and Creek Road, including Mr. Kovalik and Mr. Kessler, met in person in Houston regarding the proposed transactions.
Creek Road and Prairie Affiliates discussed the timeline for consummating a potential merger, the level of financing required to execute
the business plan described by Prairie Affiliates, the process of converting various tranches of preferred stock and debt on Creek Road’s
balance sheet into equity, the timing and process related to a reverse split of the Common Stock and subsequent listing strategy related
to the Common Stock on a national exchange, the composition of the post-closing board of directors and management team following a potential
merger between Creek Road and Prairie Affiliates, and other relevant items.
On
June 7, 2022, Prairie was legally formed.
On
June 8, 2022, Creek Road shared with Prairie various diligence materials describing its series of preferred stock for Prairie’s
evaluation.
On
June 14, 2022, Byron Roth (the Chief Executive Officer of Roth Capital Partners), Mr. Kovalik and Mr. Kessler held a call to discuss
the proposed deal structure. The parties discussed consummating a contemporaneous series of transactions including a merger between Creek
Road and Prairie, the acquisition of the Exok Assets, and the closing of a private placement transaction, followed by a listing of the
Common Stock on a national exchange. Following the discussion, Prairie shared a draft checklist of required documents for completion
of the proposed series of transactions.
On
June 15, 2022, Edward Kovalik and Gary Hanna were introduced to John Maatta, a current director and Chief Executive Officer of Creek
Road, with whom they continued discussions of the contemplated series of transactions.
On
June 16, 2022, Roth Capital Partners sent Prairie a list of comparable public companies and transactions in order to assess the value
associated with the series of transactions Creek Road and Prairie were contemplating.
On
June 17, 2022, Roth Capital Partners sent Prairie a data request in order to facilitate their construction of a cash flow model. Prairie
fulfilled Roth Capital Partners’ data request on June 19, 2022 and finalized its type curve analysis contemporaneously.
On
June 20, 2022, Prairie sent Creek Road a diligence request list, including but not limited to, audit reports, pertinent information related
to third party firms or contractors used for financial reporting and accounting, banking relationships, and insurance policies.
On
June 23, 2022, Creek Road hosted an introductory call between its auditors, MaughanSullivan LLC, and Prairie.
On
July 6, 2022, Creek Road organized an introductory call between Baker & McKenzie LLP, Creek Road’s outside legal counsel (“Baker
McKenzie”), and Prairie.
On
July 7, 2022, Creek Road and Prairie reviewed the pro forma cash flow model with Roth Capital Partners, as well as a preliminary analysis
of the sources and uses of capital to be raised in the PIPE Transaction. Also on that day, a call was organized between the Creek Road
and Prairie teams, and counsel to both companies (i.e., Baker McKenzie and Vinson & Elkins, respectively).
On
July 13, 2022, Creek Road and Prairie signed a non-binding term sheet relating to the Merger (the “Term Sheet”). The
Term Sheet provided for, among other things, (i) a pre-closing recapitalization of Creek Road pursuant to which the Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Convertible Debentures would be converted into Common Stock
and the Out-of-the-Money Options and Out-of-the-Money Warrants would be cancelled, in each case, prior to Closing, (ii) the PIPE
Transaction, (iii) the Exok Transaction, (iv) the issuance of (a) 2,000,000 shares of Common Stock to the beneficial owners of
Prairie and (b) 8,000,000 options to purchase Common Stock to the directors and senior management of PrairieCo, (v) certain board
representation rights by Prairie and Creek Road, (vi) the obtaining of the requisite equity holder approvals by each of Prairie and
Creek Road and (vii) certain conditions precedent to Closing, including the effectiveness of a registration statement registering
the issuance of the Merger Consideration by Creek Road, the execution of customary lock-up agreements by significant post-Closing
stockholders and the consummation of the Restructuring Transactions. Creek Road and Prairie also sought tax advice from third party
consultants for the contemplated transaction and began discussions with additional investment banks regarding participation in the
PIPE Transaction.
On
July 19, 2022, Creek Road issued a press release describing its execution of the Term Sheet.
On
July 25, 2022, Creek Road engaged Baker McKenzie as its outside legal counsel in connection with the contemplated transactions.
On
July 26, 2022, Creek Road signed an engagement agreement with Roth Capital Partners to act as placement agent in connection with the
PIPE Transaction, which contemplated the sale of the Company’s shares of Common Stock in order to finance the acquisition of the
Exok Assets post-merger.
On
July 29, 2022, Baker McKenzie circulated an initial draft of the Merger Agreement to Vinson & Elkins. In the months that followed,
Vinson & Elkins and Baker McKenzie exchanged several drafts of the Merger Agreement to resolve issues raised by Prairie and Creek
Road, which focused principally on (i) the scope of certain representations, warranties, covenants and closing conditions, (ii) matters
relating to the Restructuring Transactions (including the timing and scope thereof), (iii) the entry by Creek Road and certain specified
persons into a registration rights agreement at Closing and (iv) the ability of each of Creek Road and Prairie to engage in certain actions
in the period between signing and Closing, including with respect to alternative transactions.
On
August 5, 2022, Vinson & Elkins sent a revised draft of the Merger Agreement to Baker McKenzie.
On
August 7, 2022, the Board held a telephonic meeting and discussed updates to the proposed transaction. The members discussed the proposed
financing aspects of the transaction, including the requirement for a lock-up period following the Merger. The directors discussed the
waterfall and enquired regarding the mechanics of closing.
On
August 16, 2022, Baker McKenzie shared a further revised draft of the Merger Agreement with Vinson & Elkins.
On
August 19, 2022, the Board, acting by unanimous written consent, authorized the officers of the Company to negotiate with the holders
of the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and the Convertible Debentures relating to and amendments
required thereto in order to facilitate the Transactions. The Company negotiated separate forms of Support Agreements with the holders
of its Series B Preferred Shares and Series C Preferred Shares, dated as of August 18, 2022 and August 19, 2022, respectively.
On
August 23, 2022, Vinson & Elkins and Baker McKenzie held a videoconference call to discuss the open points in the Merger Agreement,
including (i) the Restructuring Transactions, (ii) the requisite voting standard under the organizational documents of Creek Road, (iii)
the pro forma organizational documents of PrairieCo and (iv) certain matters with respect to the PIPE Transaction.
On
August 24, 2022, the Company entered into an agreement with one of its investors pursuant to which the Company issued a convertible promissory
note in the principal amount of $900,000 in exchange for 600,000 shares of Common Stock that such investor received on March 20, 2022
in connection with its exercise of warrants at an aggregate conversion price of $900,000. Upon notice that the Merger is imminent, the
holder will convert such note at a 10% discount of the amounts owed thereunder into shares of the Company’s common stock.
On
August 31, Vinson & Elkins circulated a further revised draft of the Merger Agreement to Baker McKenzie.
Throughout
August, September and October of 2022, in addition to continuing to negotiate the terms and conditions of the Merger Agreement (including
Baker McKenzie and Vinson & Elkins exchanging revised drafts on September 9, September 13, September 21, October 4, October 7, October
12 and October 20), the parties negotiated the terms and conditions of the other agreements relating to the Transactions, including
(i) the Stockholders Agreement, (ii) the disclosure schedules to the Merger Agreement, (iii) the Exok Agreement, (iv) PrairieCo’s
go-forward organizational documents and (v) the Lock-Up Agreements. Baker McKenzie and Vinson & Elkins held various video conferences
over the course of August, September and October of 2022, including conferences on August 23, September 8, October 6 and October 21,
to discuss and negotiate the Transactions and the agreements relating to the Transactions. Concurrently, Roth Capital Partners marketed
the PIPE Transaction to a number of investors with whom Prairie had introductory calls. During this time, Prairie populated a virtual
data room established by Roth Capital Partners.
On
September 9, 2022, the Company issued a convertible note dated as of September 8, 2022 in the principal amount of $500,000 that documented
a loan made on May 18, 2022 pursuant to an oral agreement between the Company and one of its investors. Unless the holder opts to convert
such note contemporaneously with the Merger, the note will be immediately due and paid at the closing of the Merger.
On
October 24, 2022, Baker McKenzie circulated a proposed final draft of the Merger Agreement to Vinson & Elkins.
On
October 24, 2022, the Board unanimously approved the Merger Agreement and the other transaction documents related thereto.
On
October 24, 2022, the parties executed the Merger Agreement, the Exok Agreement and certain other related documents, and on October
25, 2022, Creek Road and Prairie issued a joint press release announcing the Merger. Creek Road filed with the SEC a Current Report
on Form 8-K announcing the execution of the Merger Agreement and related transactions. As of the time of execution of the Merger Agreement,
the Company did not enter into any definitive agreements related to the PIPE Transaction.
Creek
Road Approval of the Merger Agreement and the Transactions
The
Merger Agreement and the Transactions (aside from the PIPE Transaction) have been authorized and approved by Creek Road. As described
below in “Recommendation of the Board of Directors and Their Reasons for the Merger Agreement and the Transactions,” our
Board concluded that the potential benefits that it expects Creek Road and its stockholders to achieve as a result of the Transactions
outweigh the potentially negative factors associated with the Transactions. Accordingly, the Board, based on its consideration of the
specific factors listed below, unanimously (a) determined that the Merger Agreement and other Transactions are fair to, and in the best
interests, of Creek Road and stockholders of Creek Road and (b) approved, adopted and declared advisable the Merger Agreement and the
Transactions.
Recommendation
of the Board of Directors and Their Reasons for the Merger Agreement and the Transactions
Our
Board considered a variety of factors in reaching its conclusion to approve the Merger Agreement and the Transactions, including, but
not limited to, those described below.
This
explanation of the reasons for the Board’s approval of the Transactions and all other information presented in this section is
forward-looking in nature and, therefore, should be read in light of the factors discussed in the section entitled “Cautionary
Note on Forward-Looking Statements.”
| ● | Our
Board’s familiarity with, and information provided by our management as to, the business,
financial condition, results of operations, current business strategy and future prospects
of the Company, as well as the risks involved in achieving those prospects and objectives; |
| | |
| ● | The
ability of the Company to continue as a going concern without additional equity and/or debt
financing; |
| | |
| ● | The
implied valuation for Creek Road in the Transactions; |
| | |
| ● | The
implied valuation for Prairie in the Transactions after giving effect to the acquisition
of the Exok Assets; |
| | |
| ● | The
Exok Assets; and |
| | |
| ● | The
selection of Prairie as a business combination candidate was reached after exploring various
other strategic alternatives. |
In
the course of its deliberations, our Board also considered a variety of risks and other countervailing factors related to entering into
the Transactions, including:
| ● | The
potential dilution to the stockholders of Creek Road; |
| | |
| ● | The
interests of certain of our directors and officers in the transactions (see the section entitled
“—Interests of Certain Persons in the Merger Agreement and Related Party
Transactions”); |
| | |
| ● | Tax
implications on Creek Road and its stockholders; |
| ● | Prairie’s
management expertise and suitability to lead a public company, given that Prairie has not
operated as a publicly traded company since its inception; |
| | |
| ● | The
ability of Prairie to terminate the Merger Agreement; |
| | |
| ● | The
expenses to be incurred in connection with the Transactions; |
| | |
| ● | The
risk that the transaction might not be consummated in a timely manner or at all; |
| | |
| ● | The
risk to the business of Creek Road, operations and financial results in the event that the
Transactions are not consummated; and |
| | |
| ● | Various
other risks associated with the Company and the Transactions, including those described in
“Risk Factors” above. |
The
foregoing information and factors considered by our Board are not intended to be exhaustive but are believed to include all of the material
factors considered by the Board. In view of the wide variety of factors considered in connection with its evaluation of the Transactions
and the complexity of these matters, our Board did not find it useful and did not attempt to quantify, rank or otherwise assign relative
weights to these factors. In considering the factors described above, individual members of the Board may have given different weights
to different factors. Our Board conducted an overall analysis of the factors described above, including thorough discussions with, and
questioning of, the Creek Road management team and the legal advisors of Creek Road, and considered the factors overall to be favorable
to, and in support of, its unanimous determination.
NYSE
American Up-Listing
The
Common Stock are currently traded on the OTCQB under the ticker symbol “CRKR.” We expect that the Common Stock will continue
trading on the OTCQB under the new symbol “PROP” following the Closing. Following the Closing, we may seek to up-list to
the NYSE American Exchange, subject to our ability to meet all the requirements, at which time our shares of Common Stock are expected
to cease trading on the OTCQB.
Interests
of Certain Persons in the Merger Agreement and Related Party Transactions
Creek
Road
Members
of our Board and our executive officers have interests in the Merger Agreement and the Transactions other than their interests as Creek
Road stockholders generally, pursuant to agreements between such directors and executive officers and us and pursuant to the Merger Agreement
and the Transactions. These interests may be different from, or in addition to, your interests as Creek Road stockholders.
These
interests include, as more fully described below, conversion of existing securities; indemnification and insurance; termination arrangements;
receipt of Converted Options; and the PIPE Agreements. The members of our Board were aware of these additional interests, and considered
them, when they approved the Merger Agreement and the Transactions.
Conversion
of Series A Preferred Stock, Debentures and Accrued Liabilities. As a condition precedent to the Merger, all shares of Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock, the Convertible Debentures and certain accrued liabilities must be converted
into shares of Common Stock. Our Chief Executive Officer, John D. Maatta, Chief Operating Officer, Scott Sheikh, and Executive Chairman,
Paul L. Kessler, collectively have beneficial interests in more than a majority of our outstanding Series A Preferred Stock, and Mr.
Kessler indirectly holds a Convertible Debenture in the principal amount of approximately $2.5 million. The respective exercise/conversion
price for such securities is $0.175. Additionally, Mr. Kessler is a manager of Bristol Capital, LLC, whose approximately $217,500 in
outstanding consulting fees will be converted into shares of Common Stock.
Indemnification
and Insurance. Pursuant to the Merger Agreement, from and after the Effective Time, the combined company will indemnify and hold
harmless and will advance expenses as incurred, in each case to the maximum extent permitted by applicable law, the Company, its directors,
officers and representatives and such other persons that are indemnified as of the date of the Merger Agreement by Prairie and the Company
pursuant to their respective organizational documents, against any costs or expenses (including reasonable attorneys’ fees), judgments,
fines, losses, damages or liabilities incurred in connection with any threatened or actual proceeding, whether civil, criminal, administrative
or investigative, whether arising before or after the Effective Time, arising out of the fact that such person is or was a director,
officer or employee of the Company and pertaining to matters existing or occurring at or prior to the Effective Time.
The
combined company will maintain in effect, for six years after the Effective Time, directors’ and officers’ liability (“D&O”)
insurance policies covering claims arising from facts or events which occurred at or before the Effective Time, equivalent to the coverage
under the policies maintained by the Company as of the date of the Merger Agreement, provided that such coverage is subject to an annual
premium cap of 200% of the current annual premium paid as of the date of the Merger Agreement. In lieu of such D&O insurance, Creek
Road will purchase a six-year “tail” policy, providing equivalent coverage to that described in the preceding sentence if
the same may be obtained for an amount that, in the aggregate, does not exceed the premium cap (as defined below), at or under the Company’s
current D&O insurance policies prior to the Effective Time.
Termination
Arrangements. In connection with the Merger we procured the termination, effective as of the Closing Date, of each of the current
employment or consulting agreements of Creek Road’s officers. Mr. Kessler will remain a member of the Board.
Receipt
of Converted Options. As of the Effective Time, the Company will assume and convert certain options to purchase membership interests
of Prairie into the Converted Options exercisable for 8,000,000 shares of Common Stock, which will have substantially the same terms
and conditions as were applicable to such options immediately before the Effective Time with a per share exercise price of $0.25. Mr.
Kessler will receive an assignment of 1/3rd of such Converted Options. For further information about the Converted Options, please see
the section entitled “The Merger Agreement and the Transactions—Merger Consideration.”
PIPE
Agreements. As described in the section entitled “— PIPE Agreements,” Bristol anticipates that it will invest
approximately $5.0 million out of the $30.0 million being raised through the PIPE Agreements.
ORRI
Assignment and Agreement. As further described below, on May 15, 2022, Exok entered into an agreement with Gary C. Hanna and Edward
Kovalik whereby Exok agrees to share and assign certain of its overriding royalty interests under the Exok Assets to Gary C. Hanna and
Edward Kovalik at the Closing. The delivered NRI in all leasehold will remain as set forth herein. Following the Closing, it is anticipated
that these interests will be owned in equal one-third shares by entities controlled by each of Gary Hanna, Edward Kovalik and Paul Kessler.
New
Board Nomination. In connection with the Merger Agreement, the Company, Bristol and the Prairie Members will enter into the Stockholders
Agreement. Pursuant to such agreement, so long as Bristol and its affiliates collectively beneficially own at least 50% of the number
of shares of Common Stock collectively beneficially owned by such parties on the Closing Date, Bristol may designate one nominee to the
New Board. Mr. Kessler is the manager of Bristol Capital Advisors, LLC, which is the investment advisor to Bristol, and as such Mr. Kessler
exercises voting and investment power over shares held by Bristol.
Golden
Parachute Compensation. No executive officer or director of the Company is entitled to or will receive any severance payments or
“golden parachute compensation” in connection with the Merger.
Prairie
Receipt
of Converted Options. On August 31, 2022, Prairie granted to each of Gary C. Hanna and Edward Kovalik the right and option to purchase
40% of the membership interests in Prairie for a purchase price of $40,000, the fair market value of such option on such date, with an
exercise price of $1,000,000. As of the Effective Time, the Company will assume and convert such options into the Converted Options,
which will have substantially the same terms and conditions as were applicable to such options immediately before the Effective Time
with a per share exercise price of $0.25. For further information about the Converted Options, please see the section entitled “The
Merger Agreement and the Transactions—Merger Consideration.”
Receipt
of Common Stock. In connection with the Merger, Gary C. Hanna and Edward Kovalik will receive, in the aggregate, the greater of (a)
2,000,000 shares of Common Stock and (b) the product of (x) the number of issued and outstanding shares of the Common Stock immediately
following the consummation of the Restructuring Transactions multiplied by (y) 33.33%.
ORRI
Assignment and Agreement. On May 15, 2022, Exok entered into an agreement with Gary C. Hanna and Edward Kovalik whereby Exok agrees
to share and assign certain of its overriding royalty interests under the Exok Assets to Gary C. Hanna and Edward Kovalik at the Closing.
The delivered NRI in all leasehold will remain as set forth herein. Following the Closing, it is anticipated that these interests will
be owned in equal one-third shares by entities controlled by each of Gary Hanna, Edward Kovalik and Paul Kessler. To avoid any potential
conflict of interest with certain members of our board of directors and management owning certain overriding royalty interests under
the Exok Assets, all PrairieCo drilling programs will be approved by an independent committee of the New Board on a quarterly basis.
New
Board Nomination. In connection with the Merger Agreement, the Company, Bristol and the Prairie Members will enter into the Stockholders
Agreement. Pursuant to such agreement, so long as the Prairie Members and their affiliates collectively beneficially own at least 50%,
40%, 30% and 20% of the number of shares of Common Stock collectively beneficially owned by such parties on the Closing Date, the Prairie
Members may designate four, three, two and one nominee(s), respectively to the New Board.
Accounting
Treatment and Considerations
The
Merger will be recorded by Creek Road as a reverse asset acquisition in accordance with U.S. GAAP. For accounting purposes, Prairie is
considered to be acquiring Merger Sub in the Merger. The Merger is expected to be accounted for as a reverse asset acquisition under
existing U.S. GAAP, which is subject to change and interpretation.
Under
the reverse asset acquisition method of accounting, management of Creek Road and Prairie will be required to make a preliminary estimated
purchase price. The reverse asset acquisition method of accounting is dependent upon certain valuations and other studies that have yet
to commence or progress to a stage where there is sufficient information for a definitive measurement. A final determination of these
estimated fair values, which cannot be made prior to the completion of the transaction, will be based on the actual net tangible and
intangible assets of Merger Sub that exist as of the date of completion of the transaction.
No
Dissenters’ Rights or Appraisal Rights
Creek
Road stockholders will not be entitled to exercise dissenters’ rights or appraisal rights with respect to the Merger Agreement
or the Transactions.
Regulatory
Approvals
No
federal or state regulatory requirements must be complied with or approval must be obtained in connection with the Transactions.
THE
CHARTER AMENDMENT AND THE PROPOSED CHARTER
Reasons
for the Charter Amendment
The
Company is adopting the Charter Amendment in order to effectuate the Reverse Stock Split, Authorized Stock Increase and Corporate Name
Change.
Reverse
Stock Split. The purpose of the Reverse Stock Split is to increase the per share price of our Common Stock. The Board believes that
the Reverse Stock Split should have the effect of raising the minimum price per share of our Common Stock on the OTCQB market, which
is required to list on the NYSE American Exchange.
Authorized
Stock Increase. The purpose of increasing the number of authorized shares of Common Stock is to provide adequate authorized share
capital to (a) accommodate the issuance of shares of Common Stock in the Transactions, (b) accommodate the conversion of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Convertible Debentures, certain options, certain convertible promissory
notes and certain accrued liabilities into shares of Common Stock in the Restructuring Transactions, (c) accommodate any future conversions
of the PIPE Warrants and (d) provide flexibility for future issuances of shares of Common Stock to support potential growth and future
corporate needs.
Corporation
Name Change. The Board believes that changing the Company’s name from “Creek Road Miners, Inc.” to “Prairie
Operating Co.” is desirable to reflect the Merger with Prairie and to clearly identify PrairieCo as the new publicly traded entity.
Reasons
for the Proposed Charter
The
Company is adopting the Proposed Charter in order to make certain changes that the Board deems appropriate for the public operating company
after Closing.
Elimination
of Certain Preferred Stock Provisions. The existing Charter contains provisions relating to the
rights, preferences and restrictions of the Series A Preferred Stock and provisions governing the Company’s outstanding preferred
stock. The outstanding preferred stock of the Company, including the Series A Preferred Stock, will be converted into shares of
Common Stock pursuant to the Restructuring Transactions and there will not be any preferred stock of PrairieCo outstanding after the
Closing. The elimination of the provisions relating to the rights, preferences and restrictions of the Series A Preferred Stock and provisions
governing the Company’s outstanding preferred stock is desirable because these provisions will serve no purpose following the Closing.
No
Action by Written Consent of Stockholders. Under the Proposed Charter, any action required or permitted to be taken by the stockholders
of PrairieCo must be taken at a duly held annual or special meeting of stockholders. Eliminating the right of stockholders to act by
written consent limits the circumstances under which stockholders can act on their own initiative to remove directors, or alter or amend
the Proposed Charter outside of a duly called special or annual meeting of the stockholders of PrairieCo. Further, the Board believes
continuing to limit stockholders’ ability to act by written consent will reduce the time and effort the New Board and PrairieCo’s
management would need to devote to stockholder proposals, which time and effort could distract PrairieCo’s directors and management
from other important company business.
In
addition, the elimination of the stockholders’ ability to act by written consent may have certain anti-takeover effects by forcing
a potential acquirer to take control of the New Board only at a duly called special or annual meeting. However, this proposal is not
in response to any effort of which Creek Road is aware to obtain control of PrairieCo, and Creek Road and its management do not presently
intend to propose other anti-takeover measures in future proxy solicitations. Further, the Board does not believe that the effects of
the elimination of stockholder action by written consent will create a significant impediment to a tender offer or other effort to take
control of PrairieCo. Inclusion of these provisions in the Proposed Charter might also increase the likelihood that a potential acquirer
would negotiate the terms of any proposed transaction with the New Board and thereby help protect stockholders from the use of abusive
and coercive takeover tactics.
Corporate
Opportunity Doctrine. The existing Charter does not contain provisions waiving the corporate opportunity doctrine. The Board has
determined that it is in the best interest of Creek Road and its stockholders to include a waiver of the corporate opportunity doctrine.
Inclusion of the corporate opportunity waiver in the Proposed Charter provides PrairieCo with greater flexibility to attract and retain
the officers and directors it believes are the best candidates for such positions.
Election
and Removal of Directors. The Proposed Charter includes certain provisions addressing the appointment of directors in the event of
an increase in the number of directors or any vacancy on the New Board that results from the death, disability, resignation, disqualification
or removal of any director or from any other cause. Such appointments shall be filled solely by the affirmative vote of a majority of
the total number of directors then in office, even if less than a quorum, or by a sole remaining director and shall not be filled by
the stockholders. Under the Proposed Charter, no director of any class of directors may be removed except for cause and by the affirmative
vote of the holders of a majority of the shares then entitled to vote generally at an election of directors, acting at a meeting of the
stockholders in accordance with the DGCL, the Proposed Charter and PrairieCo’s bylaws. The Board believes
that such standards will (a) increase board continuity and the likelihood that experienced board members with familiarity of PrairieCo’s
business operations would serve on the New Board at any given time and (b) make it more difficult for a potential acquiror or other person,
group or entity to gain control of the New Board.
Exclusive
Forum. Adopting Delaware as the exclusive forum for certain stockholder litigation is intended
to assist PrairieCo in avoiding multiple lawsuits in multiple jurisdictions regarding the
same matter. The ability to require such claims to be brought in a single forum will help to assure consistent consideration of the issues,
the application of a relatively known body of case law, and level of expertise and should promote efficiency and cost-savings in the
resolutions of such claims. The Board believes that the Delaware courts are best suited to address disputes involving such matters given
that the Company is incorporated in Delaware. Delaware law generally applies to such matters and the Delaware courts have a reputation
for expertise in corporate law matters. Delaware offers a specialized Court of Chancery to address corporate law matters, with streamlined
procedures and processes, which help provide relatively quick decisions. This accelerated schedule can minimize the time, cost and uncertainty
of litigation for all parties. The Court of Chancery has developed considerable expertise with respect to corporate law issues, as well
as a substantial and influential body of case law construing Delaware’s corporate law and long-standing precedent regarding corporate
governance. This will provide PrairieCo and its stockholders with more predictability regarding
the outcome of intra-corporate disputes. In the event the Court of Chancery does not have jurisdiction, the other state courts located
in Delaware would be the most appropriate forums because these courts have more expertise on matters of Delaware law compared to other
jurisdictions; provided, that these exclusive forum provisions will not apply to suits brought to enforce any cause of action arising
under the Securities Act, any liability or duty created by the Exchange Act, or to any claim for which the federal courts have exclusive
jurisdiction. In addition, this amendment would promote judicial fairness and avoid conflicting results, as well as make PrairieCo’s
defense of applicable claims less disruptive and more economically feasible, principally by avoiding duplicative discovery.
Stockholder
Approval
Under
the provisions of The Delaware General Corporation Law, or the DGCL, and our Charter, stockholders representing 66 2/3% of the voting
power of our issued and outstanding capital stock must approve the Charter Amendment when taking any action by written consent, which
includes implementing the proposed Reverse Stock Split, Authorized Stock Increase and Corporate Name Change, and the Proposed Charter.
Under the provisions of the Series B Certificate of Designations and the Series C Certificate of Designations, stockholders representing
a majority of the voting power of our issued and outstanding Series B Preferred Stock and our Series C Preferred Stock, respectively,
must approve the Series B Preferred Amendment and the Series C Preferred Amendment, respectively. On October 25, 2022, we obtained these
approvals. Holders of approximately 88% of the voting power of our then outstanding capital stock signed a written consent, a
copy of which is attached as Annex A hereto, pursuant to which they approved the Charter Amendment and the Proposed Charter; the holder
of 100% of our then outstanding shares of Series B Preferred Stock signed a written consent, a copy of which is attached as Annex B hereto,
pursuant to which such holder approved the Series B Preferred Amendment; and holders of approximately 55% our then outstanding shares
of Series C Preferred Stock signed a written consent, a copy of which is attached as Annex C hereto, pursuant to which they approved
the Series C Preferred Amendment.
No
Voting Required
We
are not seeking a vote, authorization or proxies from our stockholders. Article I, Section 8 of our Bylaws and Article VIII of our Charter
provide that stockholders may take action without a stockholders meeting and without prior notice if a consent in writing, setting forth
the action so taken, is signed by a sufficient number of holders to take such action. The written consents approving the Charter Amendment,
the Proposed Charter, the Series B Preferred Amendment and the Series C Preferred Amendment signed by the respective signatories thereto
satisfied this requirement and we are therefore not seeking a vote, authorization or proxy from our other stockholders with respect to
the Charter Amendment, the Proposed Charter, the Series B Preferred Amendment or the Series C Preferred Amendment.
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION OF PRAIRIE
Prairie
did not commence or conduct business operations, had no significant assets or liabilities and did not conduct any activities other than
those incidental to its formation and in connection with the transactions contemplated by the Merger Agreement during the period from
June 7, 2022, Prairie’s date of formation, to June 30, 2022. Upon the Closing, Prairie will become a wholly owned subsidiary of
PrairieCo.
Prairie
has had a limited operating history and does not have any revenues or earnings from operations to date. Prairie has limited assets and
financial resources.
As
of June 30, 2022, Prairie had negative working capital. Prairie cannot assure that the Merger, the Exok Transaction or the PIPE Transaction
will be successful.
We
had no off-balance sheet arrangements as of June 30, 2022.
Contractual
Obligations
We
do not have any long-term debt obligations, capital lease obligations, operating lease obligations, purchase obligations or long-term
liabilities.
MANAGEMENT
OF PRAIRIECO FOLLOWING THE TRANSACTIONS
At
the Effective Time, the business and affairs of PrairieCo will be managed by or under the direction of the New Board following the Transactions.
The following table sets forth certain information, including ages as of October 25, 2022, regarding the person who are expected to serve
as executive officers and directors of PrairieCo upon the consummation of the Transactions.
Name |
|
Age |
|
Position
with Creek Road
prior to the Transactions |
|
Position
with Creek Road
After
the Transactions |
Executive
Officers |
|
|
|
|
|
|
Gary
C. Hanna |
|
64 |
|
— |
|
President
and Director |
Edward
Kovalik |
|
48 |
|
— |
|
Chief
Executive Officer and Director |
Craig
Owen |
|
53 |
|
— |
|
Chief
Financial Officer |
Jeremy
Ham |
|
43 |
|
— |
|
Chief
Commercial Officer |
Bryan
Freeman |
|
53 |
|
— |
|
Executive Vice President of Operations |
|
|
|
|
|
|
|
Non-Employee
Directors |
|
|
|
|
|
|
Paul
L. Kessler |
|
62 |
|
Executive
Chairman |
|
Director |
Gizman
Abbas |
|
50 |
|
— |
|
Director |
Stephen
Lee |
|
41 |
|
— |
|
Director |
Executive
Officers
Gary
C. Hanna. Mr. Hanna is the Founder of Prairie. Mr. Hanna served on the board of directors of
Crown Electrokinetics Corp. (“Crown Electrokinetics”; NASDAQ: CKRN) from March 2021 to October 2022. Mr. Hanna served
as the Chairman and Interim Chief Executive Officer of Rosehill Resources Inc. (“Rosehill Resources”; NASDAQ: ROSE), a business
combination between KLR Energy Acquisition Corp. (“KLR SPAC”; NASDAQ: KLRE), a special purpose acquisition company, and Tema
Oil & Gas Company, from 2017 to 2020. From 2015 to 2017, Mr. Hanna was the Chairman, President and Chief Executive Officer of KLR
Group, LLC (“KLR”). From 2009 until its sale in June 2014, Mr. Hanna was the Chairman, President and Chief Executive Officer
of EPL Oil and Gas, Inc. (NYSE: EPL), a publicly-traded company that was acquired by Energy XXI for $2.3 Billion. Mr. Hanna has 40 years
of management and board of director experience in the energy and service sectors, with a primary focus in the Permian, Mid-Continent
and GOM regions, with additional experience internationally in Southeast Asia, Mexico and Barbados. Mr. Hanna received a Bachelor’s
of Business Administration Degree from the University of Oklahoma.
We
believe that Mr. Hanna’s extensive operational, financial and management background, and his over 30 years of executive experience
in the energy exploration and production and service sectors bring important and valuable skills to our board of directors.
Edward
Kovalik. Mr. Kovalik is the co-Founder of Prairie. Mr. Kovalik was the President and Chief Operation Officer of Crown Electrokinetics
from February 2021 to October 2022 and served on its board of directors from December 2020 to October 2022. Previously,
Mr. Kovalik was the Chief Executive Officer of Unity National Financial Services (“Unity National”), a minority owned boutique
investment bank. He was also a co-Founder of Prairie Partners Solar & Wind, a renewable energy investor in utility-scale solar and
wind projects. Prior to Unity National, Mr. Kovalik was the co-Founder and, from April 2012 through October 2020, the Chief Executive
Officer of KLR, a merchant bank focused on the energy sector. Mr. Kovalik also served as the Chief Executive Officer of Seawolf Water
and the President of KLR SPAC, both of which were portfolio companies of KRL. His expertise includes private and public offerings of
debt and equity, M&A and fund management. While at KLR, Mr. Kovalik led the creation of Rosehill Resources, an independent oil &
gas company created through a merger of KLR SPAC with Tema Oil & Gas Company. Mr. Kovalik also led the creation of Seawolf Water,
a premier provider of water solutions to the oil & gas industry, for which he also served as CEO. Prior to KLR, Mr. Kovalik served
as the Head of Capital Markets at Rodman & Renshaw, the highest ranked PIPEs practice in the U.S. from 2005-2011. He has served on
multiple private and public boards of directors and is a member of the National Association of Corporate Director.
We
believe that Mr. Kovalik’s extensive financial and management background bring important and valuable skills to our board of directors.
Craig
Owen. Mr. Owen served as the Chief Financial Officer of Penn America Energy Holdings LLC from June 2022 to October 2022 where
he oversaw the financing initiatives for a proposed liquified natural gas facility. From January 2021 to June 2022, Mr. Owen provided
financial consulting services to various public and private companies in the energy and specialty construction industries. Prior to this,
Mr. Owen was Chief Financial Officer of Rosehill Resources from June 2017 through December 2020 where he established and managed Rosehill
Resources’ finance, treasury, accounting and tax departments. Prior to Rosehill Resources, Mr. Owen served as the Chief Financial
Officer of Southwestern Energy Company (“Southwestern”; NYSE: SW) from October 2012 to June 2017 after serving as Southwestern’s
Chief Accounting Officer beginning in 2008. Prior to that, Mr. Owen held numerous positions with Anadarko Petroleum Corporation, finally
serving as its Controller, Operations Accounting. Mr. Owen began his career at PricewaterhouseCoopers LLP serving as an audit manager.
He also served in roles with Hilcorp Energy Company and Arco Pipe Line Company. Mr. Owen holds a bachelor’s degree in accounting
from Texas A&M University and is a Certified Public Accountant (active) in Texas.
Jeremy
Ham. Mr. Ham has served as Chief Executive Officer of Greenfield Carbon Solutions since January 2019. Mr. Ham was the founder,
President & Chief Executive Officer of Greenfield Midstream from January 2017 to February 2019, where he structured and negotiated
a joint venture with Noble Midstream Partners, LP and acquired Black Diamond Gathering for approximately $639 million. Mr. Ham was previously
Chief Financial Officer of Renewable Biomass Group from February 2019 to December 2021. He has lead or participated in over $4 billion
of traditional and renewable energy transactions. He has over 20 years of experience in building, owning and operating both upstream
and midstream oil and gas assets. He began his career at Enterprise Products Partners L.P. (NYSE: EPD). Mr. Ham holds a bachelor’s
degree in Finance from the University of Houston.
Bryan
Freeman. Mr. Freeman served as the Senior Vice President of Drilling and Completions at Rosehill Resources from April 2017 to March
2020. Prior to that, Mr. Freeman served as Drilling and Operations Manager at Tema Oil &
Gas Company from July 2016 until April 2017 and Production & Operation Engineering Manager for SM Energy Company (NYSE: SM)
from July 2013 until July 2016. Before SM, Mr. Freeman served as a Senior Production Engineer at Hess Corporation (NYSE: HES), and Chevron
Corporation (NYSE: CVX) before that. Mr. Freeman began his career in the service sector in roles at Schlumberger Limited (NYSE: SLB)
& Weatherford International plc (Nasdaq: WFRD). Mr. Freeman holds a Bachelors of Science and Masters of Science in Engineering from
the University of Texas.
Non-Employee
Directors
Paul
L. Kessler. Mr. Kessler has served as Executive Chairman of Creek Road since December 2021. Previously, he served as Executive
Chairman of Creek Road from December 2016 through November 2020 before resigning from his position, but continued to serve as a member
of the Board. Mr. Kessler combines over 30 years of experience as an investor, financier and venture capitalist. In 2000, Mr. Kessler
founded Bristol Capital Advisors, LLC, a Los Angeles based investment advisor, where he has served as the Principal and Portfolio Manager
from 2000 through the present. Mr. Kessler has broad experience in operating, financing, capital formation, negotiating, structuring
and re-structuring investment transactions. He is involved in all aspects of the investment process including identification and engagement
of portfolio companies. His investment experience encompasses both public and private companies. Mr. Kessler has actively worked with
executives and boards of companies on corporate governance and oversight, strategic repositioning and alignment of interests with shareholders.
We
believe that Mr. Kessler’s extensive experience in matters including capital formation, corporate finance, investment banking,
operations, corporate governance, as well as his understanding of capital markets, bring important and valuable skills to our board of
directors.
Gizman
Abbas. Mr. Abbas served as a member of the board of directors of Crown Electrokinetics
from March 2021 to October 2022. He has served as Principal at Direct Invest Development, an impact-focused,
sustainable real estate development company formed to mine value in disinvested urban communities, since December 2014. Mr. Abbas
was a founding partner of the commodity investment business at Apollo Global Management (NYSE: APO). Previously, he was a Vice
President at The Goldman Sachs Group, Inc. (NYSE: GS), where he invested successfully in the power, bio-fuels, metals & mining,
and agriculture sectors. Mr. Abbas began his finance career in the investment banking division at Morgan Stanley (NYSE: MS), having
previously been a Senior Project Engineer on oil & gas construction projects for Exxon Mobil Corporation (NYSE: XOM) and a Co-Op
Power Engineer at The Southern Company (NYSE: SO). Mr. Abbas holds a Bachelor’s of Science degree in Electrical Engineering
from Auburn University and a Master’s of Business Administration degree from the Kellogg School of Management at Northwestern
University.
We
believe that Mr. Abbas’ executive, financial and investment experience bring important and valuable skills to our board of directors.
Stephen
Lee. Mr. Lee is the co-founder of Renewa, a private renewables real estate company and serves as its co-Chief Executive Officer
since January 2021. Prior to Renewa, Mr. Lee co-founded KLR in April 2012 and served as a Partner and a Managing Member of the firm.
Prior to founding KLR, Mr. Lee was a Director and co-Head of the Energy Investment Banking team at Rodman & Renshaw. Mr. Lee holds
a bachelor’s degree in Economics from New York University.
We
believe that Mr. Lee’s extensive experience in the corporate finance and energy industry bring important and valuable skills to
our board of directors.
Independence
of the Board
Based
upon information requested from and provided by each proposed director concerning his or her background, employment and affiliations,
including family relationships, it is anticipated that Gizman Abbas and Stephen Lee will be “independent” as that term is
defined under the applicable rules and regulations of the SEC. The Common Stock is currently quoted on the OTCQB, which currently does
not have director independence requirements.
Board
Committees
It
is anticipated that the New Board will maintain an audit committee, a compensation committee and a nominating and corporate governance
committee. The responsibilities of each committee of the New Board and their anticipated composition upon Closing is as follows.
Audit
Committee
Upon
Closing, we expect PrairieCo to have an audit committee, consisting of Gizman Abbas and Stephen Lee. We expect that each member of the
audit committee will qualify as an independent under the applicable rules and regulations of the SEC. Gizman Abbas will be the chair
of the audit committee. Gizman Abbas qualifies as an audit committee financial expert within the meaning of SEC regulations. Each member
of the audit committee is expected to be financially literate.
The
purpose of the audit committee will be to prepare the audit committee report required by the SEC to be included in PrairieCo’s
proxy statement and to assist the New Board in overseeing and monitoring (1) the quality and integrity of the financial statements, (2)
compliance with legal and regulatory requirements, (3) PrairieCo’s independent registered public accounting firm’s qualifications
and independence, (4) the performance of PrairieCo’s internal audit function and (5) the performance of PrairieCo’s independent
registered public accounting firm.
PrairieCo
will adopt a written charter for the audit committee which will be available on PrairieCo’s website upon completion of the Merger.
Compensation
Committee
Upon
Closing, we expect PrairieCo to have a compensation committee, consisting of Gizman Abbas and Stephen Lee. We expect that each member
of the compensation committee will qualify as an independent under the applicable rules and regulations of the SEC. Stephen Lee will
be the chair of the compensation committee.
The
purpose of the compensation committee is to assist the New Board in discharging its responsibilities relating to (1) setting PrairieCo’s
compensation program and compensation of its executive officers and directors, (2) monitoring PrairieCo’s incentive and equity-based
compensation plans and (3) preparing the compensation committee report required to be included in PrairieCo’s proxy statement under
the rules and regulations of the SEC.
PrairieCo
will adopt a written charter for the compensation committee which will be available on PrairieCo’s website upon completion of the
Merger.
Nominating
and Corporate Governance Committee
Upon
Closing, we expect PrairieCo to have a nominating and corporate governance committee, consisting of Gizman Abbas and Stephen Lee. We
expect that each member of the nominating and corporate governance committee will qualify as an independent under the applicable rules
and regulations of the SEC. Gizman Abbas will be the chair of the nominating and corporate governance.
The
purpose of the nominating and corporate governance committee will be to assist the New Board in discharging its responsibilities relating
to (1) identifying individuals qualified to become members of the New Board, consistent with criteria approved by the New Board, (2)
reviewing the qualifications of incumbent directors to determine whether to recommend them for re-election and selecting, or recommending
that the New Board select, the director nominees for the next annual meeting of stockholders, (3) identifying New Board members qualified
to fill vacancies on any New Board committee and recommending that the New Board appoint the identified member or members to the applicable
committee, (4) reviewing and recommending to the New Board corporate governance principles applicable to PrairieCo, (5) overseeing the
evaluation of the New Board and management and (6) handling such other matters that are specifically delegated to the committee by the
New Board from time to time.
PrairieCo
will adopt a written charter for the nominating and corporate governance committee which will be available on PrairieCo’s website
upon completion of the Merger.
Code
of Ethics
PrairieCo
will adopt a new code of ethics that applies to all of its directors, officers and employees, which will be available on PrairieCo’s
website upon the completion of the Merger. PrairieCo will make any legally required disclosures regarding amendments, or waivers of,
provisions of its code of ethics on its website.
DESCRIPTION
OF SECURITIES
If
the Merger is consummated, Creek Road will adopt the Charter Amendment and will subsequently replace its Charter with the Proposed Charter
in the form attached to this information statement as Annex A, which, in the judgment of the Board, is necessary to adequately address
the needs of the combined company.
The
following table sets forth a summary of the principal proposed changes and the differences between Creek Road’s stockholders’
rights under the existing Charter and such stockholders’ rights after the Closing under the Proposed Charter. This summary is qualified
by reference to the complete text of the Proposed Charter, copies of which are attached to this information statement as Annex A. We
urge you to read the Proposed Charter in its entirety for a complete description of the rights and preferences of the combined company’s
securities following the Merger. For more information, please see the section entitled “The Charter Amendment and The Proposed
Charter.”
|
|
Existing
Charter |
|
Proposed
Charter |
Number
of Authorized Shares |
|
The
total number of authorized share capital consists of 100,000,000 shares of Common Stock, 5,000,000 shares of preferred stock, including
500,000 shares of Series A Preferred Stock, 20,000 shares of Series B Preferred Stock, and 15,000 shares of Series C Preferred Stock. |
|
The
Proposed Charter provides that the total number of authorized shares of all classes of stock
is 550,000,000 shares, consisting of (i) 50,000,000 shares of preferred stock and (ii) 500,000,000
shares of Common Stock.
See
the Fourth Article of the Proposed Charter.
|
|
|
|
|
|
Preferred
Stock |
|
Under
the terms of the Charter, the Board is expressly granted authority to authorize the issuance from time to time of shares of
preferred stock in one or more series, for such consideration and for such corporate purposes as the Board may from time to time
determines, and by filing a certificate pursuant to applicable law of the State of Delaware to establish from time to time for each
such series the number of shares to be included in each such series and to fix the designations, powers, rights and preferences of
the shares of each such series, and the qualifications, limitations and restrictions thereof to the fullest extent permitted by the
Charter and the laws of the State of Delaware, including, without limitation, voting rights (if any), dividend rights, dissolution
rights, conversion rights, exchange rights and redemption rights thereof. |
|
The
Proposed Charter provides that shares of preferred stock may be issued from time to time
in one or more classes or series. The New Board is authorized to issue shares of preferred
stock from time to time in one or more classes or series, and with respect to each series
of preferred stock, to fix the powers, preferences, rights, qualifications, limitations and
restrictions relating to each class or series of preferred stock, including, but not limited
to (a) voting rights, (b) the number of shares to constitute the class or series and the
designations thereof, (c) the preferences, and relative, participating, option or other special
rights, if any, and the qualifications, limitations or restrictions thereof, if any, with
respect to any class or series, (d) redemption rights and the terms thereof, (e) whether
the shares of a class or series shall be subject to the operation of retirement or sinking
funds to be applied to the purchase or redemption of such shares for retirement and the terms
thereof, (f) dividend rate, whether dividends are payable in cash, stock or other property
and the conditions, preferences and terms for paying dividends, (g) the preferences, if any,
and the amounts thereof which the holders of any class or series thereof shall be entitled
to receive upon the voluntary or involuntary liquidation, dissolution or winding up of, or
upon any distribution of the assets of, PrairieCo, (h) whether or not the shares of any class
or series, at the option of PrairieCo of the holder thereof or upon the happening of any
specified event, shall be convertible into or exchangeable for, the shares of any other class
or classes or of any other series of the same or any other class or classes of stock, securities
or other property of PrairieCo and the conversion price, ratio or rates at which such conversion
or exchange may be made, with any adjustments and (i) such other powers, preferences, rights,
qualifications, limitations and restrictions with respect to any series as may to the New
Board seem advisable.
See
the Fourth Article, Section 1 of the Proposed Charter.
|
|
|
Existing
Charter |
|
Proposed
Charter |
Voting
Power |
|
The
holders of outstanding shares of Common Stock are entitled to one vote for each share and
shall have the right to vote on all questions to the exclusion of all other stockholders.
Holders
of Series A Preferred Stock are entitled to the number of votes per share equal to 2,000 shares of Common Stock.
Holders
of Series B Preferred Stock and Series C Preferred Stock have no voting rights. |
|
Each
holder of shares of Common Stock will be entitled to one vote per share on all matters on
which stockholders generally are entitled to vote. The holders of shares of Common Stock
shall have the exclusive right to vote for the election of directors.
See
the Fourth Article, Section 2 of the Proposed Charter.
|
|
|
|
|
|
Special
Meetings |
|
Subject
to the rights of the holders of any series of preferred stock with respect to such series of preferred stock, special
meetings of stockholders may only be called by order of the Chairman of the Board, the Board (pursuant to a resolution adopted by
a majority of the total number of directors that the Company would have if there were no vacancies) or the Chief Executive
Officer of the Company. |
|
Subject
to any special rights of the holders of any class or series of preferred stock, and to the
requirements of applicable law, special meetings of stockholders of PrairieCo, and any proposals
to be considered at such meetings, may be called and proposed only by the Chairman (or any
Co-Chairman) of the New Board or the New Board pursuant to a resolution adopted by a majority
of the total number of directors then in office. Subject to the rights of the holders of
any class or series of preferred stock, the stockholders of PrairieCo do not have the power
to call a special meeting of stockholders of PrairieCo.
See
the Seventh Article of the Proposed Charter.
|
|
|
Existing
Charter |
|
Proposed
Charter |
Action
by Written Consent |
|
Subject
to the rights of the holders of any series of preferred stock with respect to such series of preferred stock, any action
required or permitted to be taken by the stockholders may be taken without a meeting, without prior notice and without a vote, if
a consent in writing is signed by the holders of record of 66 2/3 percent of the issued and outstanding capital stock of the Company
authorized to vote on such action. |
|
Subject
to the rights of the holders of any class or series of preferred stock with respect to such
class or series of preferred stock, any action required or permitted to be taken by the stockholders
of PrairieCo must be taken at a duly held annual or special meeting of stockholders and may
not be taken by any consent in writing of such stockholders.
See
the Sixth Article of the Proposed Charter.
|
|
|
|
|
|
Corporate
Opportunities |
|
N/A |
|
The
officers and directors of PrairieCo (each, a “Specified Party”) have participated
in and may continue to participate and have interests in other investments that may, are
or will be competitive with the business of PrairieCo and its subsidiaries or in the same
or similar lines of business as PrairieCo and its subsidiaries or that could be suitable
for PrairieCo and its subsidiaries; provided, however, that an individual who is an employee
of PrairieCo or one of its subsidiaries shall only be a Specified Party to the extent that,
prior to participating in other investments or business opportunity for other investments
(including any overriding royalty interest participation program), (a) such Specified Party
receives prior written approval from the audit committee of the New Board authorizing such
participation and (b) PrairieCo publicly discloses such participation. Each Specified Party
shall have no duty to communicate or offer any other investment or business opportunity to
PrairieCo and PrairieCo renounces any interest or expectancy in any such investment or
business opportunity and, to the fullest extent permitted by applicable law, each
Specified Party shall not be liable to PrairieCo or any of its subsidiaries or any stockholder,
including for breach of any fiduciary or other duty, as a director or officer or controlling
stockholder or otherwise, and the PrairieCo shall indemnify each Specified Party against
any claim that such Specified Party is liable to PrairieCo or its stockholders for breach
of any fiduciary duty.
See
the Tenth Article of the Proposed Charter.
|
|
|
Existing
Charter |
|
Proposed
Charter |
Liability
of Directors and Officers |
|
A
director of the Company shall not be personally liable either to the Company or to any of its stockholders for monetary
damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not
permitted under the DGCL as the same exists or may hereafter be amended. Any amendment or modification or repeal of the foregoing
sentence shall not adversely affect any right or protection of a director of the Company in respect of any act or omission
occurring prior to the time of such amendment, modification or repeal. |
|
No
director or officer of PrairieCo shall be liable to PrairieCo or its stockholders for monetary
damages for breach of fiduciary duty as a director or officer, as applicable, except to the
extent such an exemption from liability or limitation thereof is not permitted under the
DGCL as it now exists. A director or officer of PrairieCo shall not be liable to the fullest
extent permitted by any amendment to the DGCL enacted after entering into the Proposed Charter
that further limits the liability of a director or officer.
See
the Ninth Article of the Proposed Charter.
|
|
|
|
|
|
Director
Elections and Removal |
|
Each
director shall serve until such director’s successor is duly elected and qualified or until such director’s death,
resignation or removal. No decrease in the number of directors constituting the Board shall shorten the term of any incumbent
director. |
|
Subject
to applicable law, the rights of the holders of any class or series of preferred stock and
the then-applicable terms of the Stockholders Agreement, any newly created directorship that
results from an increase in the number of directors or any vacancy on the New Board that
results from the death, disability, resignation, disqualification or removal of any director
or from any other cause shall be filled solely by the affirmative vote of a majority of the
total number of directors then in office, even if less than a quorum, or by a sole remaining
director and shall not be filled by the stockholders, and each director so chosen shall receive
the classification of the vacant directorship to which he or she has been appointed or, if
it is a newly created directorship, shall receive the classification that at least a majority
of the board of directors designates and shall hold office until the first meeting of stockholders
held after his or her election for the purpose of electing directors of that classification
and until his or her successor is elected and qualified or until his or her earlier death,
resignation or removal from office.
Subject
to the rights of the holders of shares of any class or series of preferred stock, if any, to elect additional directors pursuant
to the Proposed Charter and the then-applicable terms of the Stockholders Agreement, no director of any class of directors may be
removed except for cause and by the affirmative vote of the holders of a majority of the shares then entitled to vote generally at
an election of directors, acting at a meeting of the stockholders in accordance with the DGCL, the Proposed Charter and PrairieCo’s
bylaws.
Cumulative
voting for the election of directors shall be prohibited.
See
the Fifth Article of the Proposed Charter. |
|
|
Existing
Charter |
|
Proposed
Charter |
Dividends |
|
Subject
to the prior rights of holders of all classes of stock at the time outstanding having prior
rights as to dividends, the holders of the Common Stock shall be entitled to receive such
dividends as may be declared from time to time by the Board.
Holders
of Series A Preferred Stock are entitled to receive a cumulative dividend on each share of Series A Preferred Stock issued and outstanding
at the rate of twelve percent (12%) per annum on the Aggregate Stated Value (as defined in the Certificate of Designation and Restatement
of Rights, Preferences and restrictions of Series A Preferred Stock, the “Series A Certificate of Designation”) then
in effect, payable quarterly on January 1, April 1, July 1 and October 1. Such dividend is payable in cash, shares of Common
Stock or a combination thereof, at the election of the Company in its sole discretion.
Holders
of Series B Preferred Stock are entitled to receive a cumulative dividend on each share of Series B Preferred Stock issued and outstanding
at the rate of five percent (5%) per annum, in cash or at the Holder’s option, in fully paid and non-assessable shares of Series
B Preferred Stock, at the Dividend Conversion Rate (as defined in the Series B Certificate of Designation). Such dividends are payable
quarterly on January 1, April 1, July 1 and October 1.
Holders
of Series C Preferred Stock are entitled to receive dividends on Series C Preferred Stock equal (on an as-if-converted-to-Common-Stock
basis) to any dividends paid on Common Stock. |
|
Subject
to the prior rights and preferences, if any, applicable to shares of preferred stock or any
class or series thereof, and subject to the right of participation, if any, of the holders
of preferred stock in any dividends, the holders of shares of Common Stock shall be entitled
to receive ratably in proportion to the number of shares of Common Stock held by them such
dividends and distributions (payable in cash, stock or otherwise), if any, as may be declared
thereon by the New Board at any time and from time to time out of any funds of PrairieCo
legally available therefor.
See
the Fourth Article, Section 2 of the Proposed Charter.
|
|
|
Existing
Charter |
|
Proposed
Charter |
Exclusive
Forum |
|
N/A |
|
Unless
PrairieCo consents in writing to the selection of an alternative forum, the Court of Chancery
of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive
forum for (i) any derivative action or proceeding brought on behalf of PrairieCo, (ii) any
action asserting a claim of breach of a fiduciary duty owed by any director, officer, employee
or agent of PrairieCo to PrairieCo or its stockholders, (iii) any action asserting a claim
arising pursuant to any provision of the DGCL or as to which the DGCL confers jurisdiction
on the Court of Chancery of the State of Delaware, (iv) any action asserting a claim governed
by the internal affairs doctrine including, without limitation, any action to interpret,
apply, enforce or determine the validity of the Proposed Charter or the bylaws of PrairieCo
(as they shall be amended from time to time), or any provision thereof. Unless PrairieCo
consents in writing to the selection of an alternative forum, the federal district courts
of the United States of America shall be the sole and exclusive forum for the resolution
of any complaint asserting a cause of action arising under the Securities Act. Any person
or entity purchasing or otherwise acquiring any interest in any securities of PrairieCo shall
be deemed to have notice of and to have consented this provision.
See
the Thirteenth Article of the Proposed Charter.
|
|
|
Existing
Charter |
|
Proposed
Charter |
Liquidation,
Dissolution and Winding Up |
|
In
the event of any liquidation, dissolution or winding up of our company, whether voluntary
or involuntary, holders of Series A Preferred Stock, Series B Preferred Stock and
Series C Preferred Stock are entitled to receive, prior and in preference to any distribution
of any assets to the holders of Common Stock by reason of their ownership thereof, for each
share held, an amount equal to the Stated Value (as defined in the respective Certificates
of Designation), plus unpaid dividends, if any.
After
the full preferential amounts due to the holders of the Preferred Stock have been paid or set aside, the remaining assets available
shall be distributed to the holders of Common Stock ratably in proportion to the number of shares of Common Stock held by them. |
|
In
the event of any voluntary or involuntary liquidation, dissolution or winding-up of the affairs
of PrairieCo, after distribution in full of the preferential amounts, if any, to be distributed
to the holders of shares of preferred stock or any class or series thereof, and subject to
the right of participation, if any, of the holders of preferred stock in any dividends, the
holders of shares of Common Stock shall be entitled to receive all of the remaining assets
of PrairieCo available for distribution to its stockholders, ratably in proportion to the
number of shares of Common Stock held by them. A liquidation, dissolution or winding-up of
PrairieCo, as such terms are used in this paragraph, shall not be deemed to be occasioned
by or to include any consolidation or merger of PrairieCo with or into any other corporation
or corporations or other entity or a sale, lease, exchange or conveyance of all or a part
of the assets of PrairieCo.
See
the Fourth Article, Section 2 of the Proposed Charter. |
Common
Stock
Holders
of our Common Stock are entitled to one vote per share. Our Charter does not provide for cumulative voting. Holders of our Common Stock
are entitled to receive ratably such dividends, if any, as may be declared by our Board out of legally available funds. However, the
current policy of our Board is to retain earnings, if any, for our operations and expansion. Upon liquidation, dissolution or winding-up,
the holders of our Common Stock are entitled to share ratably in all of our assets which are legally available for distribution, after
payment of or provision for all liabilities. The holders of our Common Stock have no preemptive, subscription, redemption or conversion
rights. The rights, preferences and privileges of holders of our Common Stock are subject to and may be adversely affected by the rights
of the holders of shares of any series of preferred stock that we may designate and issue.
Warrants
In
connection with the PIPE Transaction, the PIPE Warrants will be issued in registered form and will entitle the registered holder to purchase
one share of Common Stock at a price equal to 120% of the per share purchase price of Common Stock in the PIPE Transaction, subject to
adjustment as discussed below, terminating at 5:00 p.m., New York City time, on the fifth anniversary of the date of issuance. If an
effective registration statement is not available with respect to the offering of shares of Common Stock upon exercise of such PIPE Warrants,
holders of such PIPE Warrants may exercise such warrants on a “cashless” basis. The exercise price of the PIPE Warrants may
be adjusted in certain circumstances, including in the event of a stock dividend, extraordinary dividend on or recapitalization, reorganization,
merger or consolidation. The PIPE Warrants may be exercised by delivery of a notice of exercise and the aggregate exercise price, if
no cashless exercise has been elected, to the Company as specified in such PIPE Warrant. Holders of PIPE Warrants do not have the rights
or privileges of holders of Common Stock and any voting rights until they exercise their PIPE Warrants and receive shares of Common Stock.
SECURITY
OWNERSHIP OF CREEK ROAD — BEFORE AND FOLLOWING THE
TRANSACTIONS
The
following table shows information with respect to (a) the beneficial ownership of our Common Stock as of October 24, 2022 and (b) the
expected beneficial ownership of our Common Stock immediately following the consummation of the Transactions for:
| ● | each
person, or group of affiliated persons, known to us to own beneficially 5% or more of our
outstanding Common Stock; |
| ● | each
of our executive officers and directors; |
| ● | each
person who will become a named executive officer or director following the Merger; and |
| ● | all
current executive officers and directors of Creek Road as a group prior to the Merger and
all executive officers and directors of PrairieCo as a group after the Merger. |
Beneficial
ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security
if he, she or it possesses sole or shared voting or investment power over that security, including options, warrants and other convertible
securities that are currently exercisable or exercisable within 60 days.
Percentage
ownership prior to the Closing Date is based on 12,297,117 shares of Common Stock outstanding as of October 24, 2022, prior to the effectuation
of the Reverse Stock Split. Percentage ownership following the Closing Date assumes (a) 12,836,400 shares of Common Stock outstanding
as of the Closing consisting of (i) 6,000,000 shares of Common Stock issued in the PIPE Transaction, (ii) 836,400 shares of Common Stock
issued to Exok pursuant to the Exok Transaction, (iii) 2,000,000 shares of Common Stock issued to the Prairie Members in the Merger and
(iv) 4,000,000 shares of Common Stock outstanding after giving effect to the Restructuring Transactions, including the Reverse Stock
Split, (b) 6,000,000 PIPE Warrants are issued in the PIPE Transaction, 600,000 warrants to purchase shares of Common Stock are issued
to Roth Capital Partners at Closing and 836,400 warrants to purchase shares of Common Stock are issued to Exok pursuant to the Exok Transaction
(c) no exercise or conversion of any of the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Convertible
Debentures, In-the-Money-Warrants and certain convertible promissory notes and certain other accrued liabilities prior
to the Restructuring Transactions, (d) no exercise of any other outstanding options or warrants of Creek Road prior to or in connection
with Closing and (e) no other issuances of equity interests of Creek Road. Except as indicated by footnote and subject to community property
laws where applicable, to our knowledge, the persons named in the table below have sole voting and investment power with respect to all
shares of Common Stock shown as beneficially owned by them. Unless otherwise specified, the address of each of the persons set forth
below under “Directors and Executive Officers” is c/o 35 E Horizon Ridge Pkwy, Ste 110 - 502, Henderson, NV 89002-7906.
| |
Shares
of Creek Road Common Stock Beneficially Owned Prior to Closing Date | | |
Shares
of Creek Road Common Stock Beneficially Owned Following the Closing Date | |
| |
Number | | |
Percent | | |
Number | | |
Percent | |
Greater
than 5% Stockholders | |
| | | |
| | | |
| | | |
| | |
Bristol Investment
Fund, Ltd.(1) | |
| 31,678,496 | | |
| 76.7 | % | |
| 1,161,177 | | |
| 9.0 | % |
Scott
D. Kaufman(2) | |
| 20,703,280 | | |
| 65.1 | % | |
| 825,521 | | |
| 6.4 | % |
Barlock 2019 Fund LP(2) | |
| 19,500,757 | | |
| 61.3 | % | |
|
780,852 | | |
| 6.1 | % |
Leviston
Resources, LLC(3) | |
| 27,122,967 | | |
| 69.5 | % | |
| 305,884 | | |
| 2.4 | % |
Alpha
Capital Anstalt(4) | |
| 6,399,600 | | |
| 34.2 | % | |
| 305,124 | | |
| 2.4 | % |
Exok, Inc.(5) | |
| — | | |
| —
| | |
| 836,400 | | |
| 6.52 | % |
Directors
and Executive Officers† | |
| | | |
| | | |
| | | |
| | |
Directors
and Executive Officers prior the Closing Date | |
| | | |
| | | |
| | | |
| | |
John
D. Maatta(6) | |
| 6,239,143 | | |
| 33.8 | % | |
| 232,761 | | |
| 1.8 | % |
Alan
Urban(7) | |
| 30,000 | | |
| * | | |
| 1,114 | | |
| * | % |
Paul L.
Kessler(1) | |
| 31,678,496 | | |
| 76.7 | % | |
| 1,161,177 | | |
| 9.0 | % |
Michael
Breen(8) | |
| 77,500 | | |
| * | | |
| 8,448 | | |
| * | % |
Scott
Sheikh(9) | |
| 643,600 | | |
| 5.0 | % | |
| 20,444 | | |
| * | % |
All
Directors and Executive Officers of Creek Road as a Group (5 Individuals) | |
| 38,668,739 | | |
| 80.2 | | |
| 1,423,945 | | |
| 11.1 | % |
Directors
and Executive Officers following the Closing Date | |
| | | |
| | | |
| | | |
| | |
Paul L.
Kessler(1) | |
| 31,678,496 | | |
| 76.7 | % | |
| 1,161,177 | | |
| 9.0 | % |
Gary C.
Hanna | |
| — | | |
| — | | |
| 1,000,000 | | |
| 7.8 | % |
Edward
Kovalik | |
| — | | |
| — | | |
| 1,000,000 | | |
| 7.8 | % |
Craig
Owen | |
| — | | |
| — | | |
| — | | |
| — | |
Jeremy
Ham | |
| — | | |
| — | | |
| — | | |
| — | |
Bryan
Freeman | |
| — | | |
| — | | |
| — | | |
| — | |
Gizman
Abbas | |
| — | | |
| — | | |
| — | | |
| — | |
Stephen
Lee | |
| — | | |
| — | | |
| — | | |
| — | |
All
Directors and Executive Officers of Creek Road as a Group (8 Individuals) | |
| 31,678,496 | | |
| 76.7 | % | |
| 3,161,177 | | |
| 24.6 | % |
†
Other than Mr. Kessler, all of the members of our Board and all executive officers will resign effective as of the Closing Date.
* | Represents
beneficial ownership of less than 1% of the outstanding shares of Common Stock. |
| |
(1) | Paul
L. Kessler exercises voting and investment power over the shares held by Bristol Investment
Fund, Ltd., Bristol Capital, LLC and the Bristol Capital Advisors Profit Sharing Plan, as
well as the shares held in his own name. Includes 2,589,990
shares of Common Stock as indicated on Mr. Kessler’s Form 4 dated July 11, 2022, and
14,267,714 shares of Common Stock issuable upon the conversion of the Convertible Debenture
in the aggregate principal amount of $2,496,850 held by Bristol Investment Fund, Ltd., at
a conversion price to $0.175; warrants held by Bristol Investment Fund, Ltd. to acquire 8,000,000
shares of Common Stock at an exercise price of $0.175 per share; 24,450 shares of Common
Stock held by Bristol Capital, LLC; 3,935 shares of common stock held by Mr. Kessler’s
IRA; 39,350 shares of Common Stock held by Bristol Capital Advisors Profit Sharing Plan;
options held by Mr. Kessler to acquire 15,000 shares of Common Stock at an exercise price
of $0.25 per share; and 6,738,057 shares of Common Stock issuable upon the conversion of
117,916 shares of Series A Preferred Stock with a conversion price of $0.175. Excludes
shares and warrants that Bristol may purchase in the PIPE Transaction. See “The Merger
Agreement and the Transactions — Interests of Certain Persons in the Merger Agreement
and Related Party Transactions — Creek Road.” The address of Bristol
Investment Fund, Ltd.is 555 Marin Street, Suite 140,
Thousand Oaks, CA 91360. |
| |
(2) | Scott
D. Kaufman and Sean McAvoy exercise voting and investment power over the shares held by Barlock
2019 Fund LP, and Barlock Capital Management, LLC. Mr. Kaufman also exercises voting and
investment power over the shares held in his own name. Includes 1,202,523 shares of Common
Stock as indicated on Mr. Kaufman’s Form 4 dated July 8, 2022, 14,267,714 shares of
Common Stock issuable upon the conversion of the Convertible Debenture in the aggregate principal
amount of $2,496,850 held by Barlock 2019 Fund LP, at a conversion price to $0.175; options
held by Mr. Kaufman to acquire 37,500 shares of Common Stock at an exercise price of $0.25
per share; warrants held by Barlock Capital Management, LLC to acquire 4,285,714 shares
of common stock at an exercise price to $0.175; and 909,829 shares of Common Stock issuable
upon the conversion of 15,922 shares of Series A Preferred Stock at a conversion price to
$0.175 held by Mr. Kaufman. The address of Barlock
2019 Fund LP is 2700 Homestead Road, Park City, UT 84098. |
| |
(3) | Includes
386,647 shares of common stock as indicated on the most recent 13G filing, 3,108,240 shares
of common stock issuable upon the conversion of 1,452 shares of Series B Preferred Stock
(which includes 13 shares of Series B Preferred Stock owed as dividends) at the conversion
price of $0.50; warrants to acquire 2,000,000 shares of Common Stock at an exercise price
of $0.175 per share
of Common Stock; and 10,000 Series B Preferred
Stock warrants at an exercise price of $1,000 per share, resulting in 21,600,000 shares of common
stock issuable upon the conversion of 1,000 shares of Series B Preferred Stock, convertible
by dividing the stated value per share, currently $1,080, by the Series B Conversion Price,
currently $0.50. The address of Leviston Resources, LLC is 708 Third Avenue, Suite 600, New
York, NY 10017. |
| |
(4) | Includes
3,333,000 shares of Common Stock issuable upon conversion of 1,500 shares of Series
C Preferred Stock, 1,266,600 shares of Common Stock issuable upon exercise of warrants at
an exercise price of $0.50 per share of Common Stock and 1,800,000 shares of Common Stock
issuable upon the conversion of an Convertible Promissory Note, dated August 24, 2022, in
the principal amount of $900,000, at a conversion price of $0.50. The address of Alpha Capital
Anstalt is c/o LH Financial Services, 510 Madison Avenue, Suite 1400, New York N.Y. 10022. |
| |
(5) | Includes 836,400 shares of Common Stock issued to Exok
in the Exok Transaction; excludes 836,400 warrants to purchase shares of Common Stock issued to Exok in the Exok Transaction. Exok
will be the record holder of such shares. Exok is controlled by its board of directors. The members of Exok’s board of
directors are James W. Wallis, Steven D. Bryant and Mary K. Buck and as such, each of Mr. Wallis, Mr. Bryant and Ms. Buck may be
deemed to share the right to direct the voting or disposition of the reported shares. Each of Mr. Wallis, Mr. Bryant and Ms. Buck
disclaims beneficial ownership of the reported shares except to the extent of any pecuniary interest they may have therein, directly
or indirectly. The address of Exok is 6410 N. Santa Fe, Oklahoma City, OK 73116. |
| |
(6) | Includes
60,000 shares of Common Stock held by Mr. Maatta, 6,059,143
shares of Common Stock issuable upon the conversion
of 106,035 shares of Series A Preferred Stock at a conversion price to $0.175, and options
to acquire 120,000 shares of Common Stock at an exercise price of $0.25 per share. |
| |
(7) | Includes
30,000 shares of Common Stock held by Mr. Urban. |
| |
(8) | Includes
10,000 shares of Common Stock held by Mr. Breen and
options to acquire 67,500 shares of Common Stock at
an exercise price of $0.25 per share. |
| |
(9) | Includes
643,600 shares of Common Stock issuable upon the conversion
of 11,263 shares of Series A Preferred Stock at a conversion price to $0.175. |
ADDITIONAL
INFORMATION
Householding
of Information Statements
Under
SEC rules, only one annual report, information statement or Notice of Internet Availability of Proxy Materials, as applicable, need be
sent to any household at which two or more of our stockholders reside if they appear to be members of the same family and contrary instructions
have not been received from an affected stockholder. This procedure, referred to as householding, reduces the volume of duplicate information
stockholders receive and reduces mailing and printing expenses for us. Brokers with accountholders who are our stockholders may be householding
these materials. Once you have received notice from your broker that it will be householding communications to your address, householding
will continue until you are notified otherwise or until you revoke your consent. If, now or at any time in the future, you no longer
wish to participate in householding and would like to receive a separate annual report, information statement or Notice of Internet Availability
of Proxy Materials, or if you currently receive multiple copies of these documents at your address and would prefer that the communications
be householded, you should contact us at 35 E. Horizon Ridge Pkwy, Suite 110 - 502, Henderson, Nevada 89002 or (435) 900-1949.
Important
Notice Regarding the Availability of Information Statement Materials
Pursuant
to rules promulgated by the SEC, we have elected to provide this information statement to you through the full-set delivery option.
This
information statement, including Annex A to this information statement, is also available at the following website: https://creekroadminers.com/.
The
Charter Amendment and the Proposed Charter will be effective not earlier than twenty (20) calendar days following the date on which the
definitive information statement is first mailed to stockholders.
We
are not soliciting you for a proxy with respect to the matters discussed in this information statement or otherwise. We are only furnishing
this information statement as a matter of regulatory compliance with SEC rules.
INCORPORATION
BY REFERENCE
The
SEC allows Creek Road to “incorporate by reference” information into this information statement, which means that important
information can be disclosed to you by referring you to another document filed separately with the SEC. The information incorporated
by reference is considered to be a part of this information statement, except for any information that is superseded by information included
directly in this document.
The
documents listed below that Creek Road has previously filed with the SEC are considered to be a part of this information statement (other
than any portions of the filings that were furnished, under applicable SEC rules, rather than filed). They contain important business
and financial information about us:
| ● | Our
Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed on March 31,
2022; |
| ● | Our
Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2022 and June 30, 2022, previously filed with the SEC on May 16, 2022 and August 15, 2022, respectively; and |
| ● | Our
Current Reports on Form 8-K filed on May
3, 2022, May
17, 2022, June
3, 2022, July
13, 2022, July
26, 2022, August
12, 2022, September
7, 2022, September
15, 2022, September
19, 2022, October
25, 2022 and October
28, 2022.
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Creek
Road also incorporates by reference into this information statement each document filed with the SEC after the date of this information
statement; provided, however, that documents or information deemed to have been furnished and not filed in accordance with SEC rules
will not be deemed incorporated by reference into this information statement. To the extent, however, required by the rules and regulations
of the SEC, Creek Road will amend this information statement to include information filed after the date of this information statement.
In
addition, we have incorporated by reference in this information statement the Merger Agreement and certain additional agreements summarized
in this information statement. Each of these agreements was filed with the SEC as exhibits to our Current Report on Form 8-K filed on
October 25, 2022. These exhibits are available on the SEC’s website: www.sec.gov.
WHERE
YOU CAN FIND MORE INFORMATION
Creek
Road’s reports on Forms 10-K, 10-Q, 8-K and other filings are available without charge through Creek Road’s website, https://creekroadminers.com/,
as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. The content of our website, however,
is not part of this information statement.
You
may request a copy of our SEC filings, as well as the foregoing corporate documents, at no cost to you, by writing Creek Road address
appearing in this information statement or by calling us at (435) 900-1949.
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By order of the Board of Directors, |
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/s/ John D. Maatta |
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John D. Maatta |
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Chief Executive Officer |
Annex
A
[FORM
OF STOCKHOLDERS’ WRITTEN CONSENT]
CREEK
ROAD MINERS, INC.
CONSENT
IN LIEU OF MEETING
OF THE STOCKHOLDERS
[●],
2022
The
undersigned, representing the holders of 66 2/3% of the issued and outstanding capital stock (after giving effect to the voting power
set forth in the organizational documents of the Corporation (as defined below)) (the “Majority Stockholders”) of
Creek Road Miners, Inc., a Delaware corporation (the “Corporation”), in their respective capacities as stockholders
of the Corporation (including as holders of preferred stock of the Corporation), hereby consent to and adopt, acting pursuant to Section
228(a) of the General Corporation Law of the State of Delaware (the “DGCL”), Article VIII of the Amended and Restated
Certificate of Incorporation of the Corporation (as amended, the “Certificate”), and Article I, Section 8 of the Bylaws
of the Corporation the following resolutions:
WHEREAS,
the Board of Directors (the “Board”) of the Corporation has previously determined that it is advisable and in the
best interests of the Corporation and its stockholders to (i) prior to the closing (the “Closing”) of the transactions
(the “Merger”) contemplated by that certain Agreement and Plan of Merger, dated as of October 24, 2022, by and among
the Corporation, Prairie Operating Co., LLC, a Delaware limited liability company, and Creek Road Merger Sub, LLC, a Delaware limited
liability company, adopt an amendment to the Certificate in order to, among other things, update the name of the Corporation, increase
the authorized capital stock of the Corporation and consummate a reverse stock split, all as set forth in the Certificate of Amendment
to the Amended and Restated Certificate of Incorporation in the form attached as Exhibit A hereto (the “Certificate
of Amendment”), (ii) following the Closing of the Merger, adopt a subsequent amendment and restatement of the Certificate in
order to, among other things, reflect the capitalization of the Corporation immediately following the Merger, all as set forth in the
Second Amended and Restated Certificate of Incorporation in the form attached as Exhibit B hereto (the “2nd
A&R Certificate”) and (iii) recommend to the stockholders of the Corporation that they adopt, authorize and approve
the Certificate of Amendment and the 2nd A&R Certificate;
NOW,
THEREFORE, IT IS:
RESOLVED,
that each of the Certificate of Amendment and the 2nd A&R Certificate is hereby approved; and
RESOLVED,
that any of the Corporation’s directors or officers is authorized to take any and all actions, to execute and deliver any and all
documents, agreements and instruments and to take any and all steps deemed by the Corporation to be necessary or desirable to carry out
the purpose and intent of the foregoing resolution, including, without limitation, the filing of each of the Certificate of Amendment
and the 2nd A&R Certificate with the secretary of state of the state of Delaware and all actions heretofore taken by any of them
in furtherance thereof are hereby approved, ratified and confirmed in all respects.
The
action taken by this consent shall have the same force and effect as if taken at a meeting of stockholders of the Corporation, duly called
and constituted.
This
consent may be executed in one or more counterparts (including by facsimile signature, scanned signatures or signature by electronic
means, including DocuSign and the like), each of which when executed shall be deemed to be an original, and all of which, when taken
together, shall constitute one and the same original Written Consent of Stockholders.
[Signature
page follows]
IN
WITNESS WHEREOF, the undersigned Majority Stockholders have executed this consent as of the date set forth above.
Exhibit
A
CERTIFICATE
OF AMENDMENT
TO THE
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
CREEK ROAD MINERS, INC.
Creek
Road Miners, Inc. (the “Corporation”), organized and existing under and by virtue of the General Corporation Law of the State
of Delaware (“DGCL”), does hereby certify:
FIRST,
that the current Amended and Restated Certificate of Incorporation of this Corporation as amended be further amended by changing Article
I so that, as amended, Article I shall be and read in its entirety as follows:
“The
name by which the corporation is to be known is Prairie Operating Co. (the “Corporation”).”
SECOND:
The Certificate of Incorporation is hereby amended by deleting the text of the first paragraph of Article IV(A) thereof and substituting
the following two paragraphs therefor.
“Effective
as of November [__] at 4:00 pm ET and upon the filing of the Certificate of Amendment to Amended and Restated Certificate of Incorporation
of the Corporation with the Secretary of State of the State of Delaware (the “Effective Date”), the shares of Common
Stock, par value $0.0001 per share, of the Corporation issued and outstanding immediately prior to the Effective Date (the “Old
Shares”) shall, automatically and without any action on the part of the respective holders thereof, be combined and converted
into shares of Common Stock (as defined below) at an exchange ratio [of insert number between 1-23 and 1-30, inclusive, as approved by
the Board] (the “Reverse Stock Split”). No fractional shares shall be issued as a result of the Reverse Stock Split
and, in lieu thereof, the Corporation shall pay to the holder of any such fractional share an amount in cash equal to such fraction multiplied
by the closing sale price of the Corporation’s common stock on the OTCQB on the trading day immediately before the Effective Date.
Each stock certificate representing the Old Shares immediately prior to the Effective Date shall thereafter represent that number of
whole shares of Common Stock outstanding after the Effective Date into which the Old Shares represented by such certificate shall have
been combined. Each holder of record of a stock certificate or certificates representing the Old Shares shall receive, upon surrender
of such certificate or certificates, a new certificate or certificates representing the number of whole shares of Common Stock to which
such holder is entitled pursuant to the Reverse Stock Split or, at the discretion of the Corporation and unless otherwise instructed
by such holder, book-entry shares in lieu of a new certificate or certificates representing the number of whole shares of Common Stock
to which such holder is entitled pursuant to the Reverse Stock Split. The shares of Common Stock issued in connection with the Reverse
Stock Split shall have the same rights, preferences and privileges as the Old Shares.
Immediately
after the effectiveness of the Reverse Stock Split, the total number of shares of all classes of stock which the Corporation shall have
authority to issue is 155,000,000 shares, consisting of (i) 150,000,000 shares of common stock, par value $0.0001 per share (“Common
Stock”), and (ii) 5,000,000 shares of preferred stock, par value $0.0001 per share (“Preferred Stock”).
The Board of Directors is vested with the authority to prescribe the classes, series and the number of each class or series of stock
and the voting powers, designations, preferences, limitations, restrictions and relative rights of each class or series of stock. If
more than one class or series of stock is authorized by the Board of Directors, the resolution of the Board of Directors must prescribe
distinguishing designations of each class or series.”
THIRD:
This Certificate of Amendment was duly adopted in accordance with Section 242 of the DGCL. The Board of Directors duly adopted resolutions
setting forth and declaring advisable this Certificate of Amendment and directed that the proposed Amendment be considered by the stockholders
of the Corporation. A majority written consent of the shareholders was entered into and duly noticed to all shareholders not signing
the written consent in accordance with Section 228 of the General Corporation Law of the State of Delaware, wherein the necessary number
of shares as required by statute were represented in favor of the amendment.
FOURTH:
The remaining provisions of the Certificate of Incorporation, including without limitation the remaining provisions of Article IV, are
not affected by the aforementioned amendment and remain in full force and are not affected by this Certificate of Amendment.
IN
WITNESS WHEREOF, said corporation has caused this certificate to be signed this ____ day of _______, 2022.
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CREEK
ROAD MINERS, INC. |
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a
Delaware corporation |
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By: |
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|
Name: |
John
D. Maatta |
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Title: |
Chief
Executive Officer |
Exhibit
B
SECOND
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
PRAIRIE OPERATING CO.
Prairie
Operating Co. (the “Corporation”), a corporation organized and existing under the General Corporation Law of the State
of Delaware as set forth in Title 8 of the Delaware Code (the “DGCL”), hereby certifies as follows:
1.
The original Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on May 2,
2001, and the Amended and Restated Certificate of Incorporation of the Corporation (as amended, the “Amended and Restated Certificate
of Incorporation”) was filed with the Secretary of State of the State of Delaware on June 5, 2020.
2.
This Second Amended and Restated Certificate of Incorporation (this “Certificate of Incorporation”), which restates
and amends the Amended and Restated Certificate of Incorporation, has been declared advisable by the board of directors of the Corporation
(the “Board”), duly adopted by the stockholders of the Corporation and duly executed and acknowledged by the officers
of the Corporation in accordance with Sections 103, 228, 242 and 245 of the DGCL.
3.
The Amended and Restated Certificate of Incorporation is hereby amended and restated in its entirety to read as follows:
First:
The name of the Corporation
is Prairie Operating Co.
Second:
The address of its registered
office in the State of Delaware is The Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801 in New Castle County,
Delaware. The name of its registered agent at such address is The Corporation Trust Company.
Third:
The nature of the business
or purposes to be conducted or promoted by the Corporation is to engage in any and all lawful acts or activities for which corporations
may be organized under the DGCL as it currently exists or may hereafter be amended, and the Corporation shall have the power to perform
all lawful acts and activities.
Fourth:
The total number of shares
of stock that the Corporation shall have authority to issue is 550,000,000 shares of stock, classified as (i) 50,000,000 shares of preferred
stock, par value $0.01 per share (“Preferred Stock”), and (ii) 500,000,000 shares of common stock, par value $0.01
per share (“Common Stock”).
The
designations and the powers, preferences, rights, qualifications, limitations and restrictions of Preferred Stock and Common Stock are
as follows:
1.
Provisions Relating to Preferred
Stock.
(a)
Preferred Stock may be issued from time to time in one or more classes or series, the shares of each class or series to have such designations
and powers, preferences and rights, and qualifications, limitations and restrictions thereof, as are stated and expressed herein and
in the resolution or resolutions providing for the issue of such class or series adopted by the Board as hereafter prescribed (a “Preferred
Stock Designation”).
(b)
Authority is hereby expressly granted to and vested in the Board to authorize the issuance of Preferred Stock from time to time in one
or more classes or series, and with respect to each series of Preferred Stock, to fix and state by the resolution or resolutions from
time to time adopted by the Board providing for the issuance thereof the designation and the powers, preferences, rights, qualifications,
limitations and restrictions relating to each class or series of Preferred Stock, including, but not limited to, the following:
(i)
whether or not the class or series is to have voting rights, full, special or limited, or is to be without voting rights, and whether
or not such class or series is to be entitled to vote as a separate class either alone or together with the holders of one or more other
classes or series of stock;
(ii)
the number of shares to constitute the class or series and the designations thereof;
(iii)
the preferences, and relative, participating, optional or other special rights, if any, and the qualifications, limitations or restrictions
thereof, if any, with respect to any class or series;
(iv)
whether or not the shares of any class or series shall be redeemable at the option of the Corporation or the holders thereof or upon
the happening of any specified event, and, if redeemable, the redemption price or prices (which may be payable in the form of cash, notes,
securities or other property), and the time or times at which, and the terms and conditions upon which, such shares shall be redeemable
and the manner of redemption;
(v)
whether or not the shares of a class or series shall be subject to the operation of retirement or sinking funds to be applied to the
purchase or redemption of such shares for retirement, and, if such retirement or sinking fund or funds are to be established, the annual
amount thereof, and the terms and provisions relative to the operation thereof;
(vi)
the dividend rate, whether dividends are payable in cash, stock of the Corporation or other property, the conditions upon which and the
times when such dividends are payable, the preference to or the relation to the payment of dividends payable on any other class or classes
or series of stock, whether or not such dividends shall be cumulative or noncumulative, and if cumulative, the date or dates from which
such dividends shall accumulate;
(vii)
the preferences, if any, and the amounts thereof which the holders of any class or series thereof shall be entitled to receive upon the
voluntary or involuntary liquidation, dissolution or winding up of, or upon any distribution of the assets of, the Corporation;
(viii)
whether or not the shares of any class or series, at the option of the Corporation or the holder thereof or upon the happening of any
specified event, shall be convertible into or exchangeable for, the shares of any other class or classes or of any other series of the
same or any other class or classes of stock, securities or other property of the Corporation and the conversion price or prices or ratio
or ratios or the rate or rates at which such conversion or exchange may be made, with such adjustments, if any, as shall be stated and
expressed or provided for in such resolution or resolutions; and
(ix)
such other powers, preferences, rights, qualifications, limitations and restrictions with respect to any series as may to the Board seem
advisable.
(c)
The shares of each class or series of Preferred Stock may vary from the shares of any other class or series thereof in any or all of
the foregoing respects. The Board may increase the number of shares of the Preferred Stock designated for any existing class or series
by a resolution adding to such class or series authorized and unissued shares of the Preferred Stock not designated for any class or
other series. Unless otherwise provided in the Preferred Stock Designation, the Board may decrease the number of shares of the Preferred
Stock designated for any existing class or series by a resolution subtracting from such class or series authorized and unissued shares
of the Preferred Stock designated for such existing class or series, and the shares so subtracted shall become authorized, unissued and
undesignated shares of the Preferred Stock.
2.
Provisions Relating to Common
Stock.
(a)
Each share of Common Stock shall have identical rights and privileges in every respect. Common Stock shall be subject to the express
terms of Preferred Stock and any class or series thereof. Except as may otherwise be provided in this Certificate of Incorporation, in
a Preferred Stock Designation or by applicable law, each stockholder shall be entitled to one vote for each share of Common Stock held
by that stockholder. Except as may otherwise be provided in this Certificate of Incorporation (including any Preferred Stock Designation),
the holders of shares of Common Stock shall have the exclusive right to vote for the election of directors and on all other matters upon
which stockholders are entitled to vote, and the holders of Preferred Stock shall not be entitled to vote at or receive notice of any
meeting of stockholders. Each holder of Common Stock shall be entitled to notice of any stockholders’ meeting in accordance with
the bylaws of the Corporation (as they may be amended or restated from time to time, the “Bylaws”) as in effect at
the time in question and applicable law on all actions to be taken by the stockholders of the Corporation.
(b)
Notwithstanding the foregoing, except as otherwise required by applicable law, holders of Common Stock, as such, shall not be entitled
to vote on any amendment to this Certificate of Incorporation (including any Preferred Stock Designation) that relates solely to the
terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or
together with the holders of one or more other such class or series, to vote thereon pursuant to this Certificate of Incorporation (including
any Preferred Stock Designation) or pursuant to the DGCL.
(c)
Subject to the prior rights and preferences, if any, applicable to shares of Preferred Stock or any class or series thereof, and subject
to the right of participation, if any, of the holders of Preferred Stock in any dividends, the holders of shares of Common Stock shall
be entitled to receive ratably in proportion to the number of shares of Common Stock held by them such dividends and distributions (payable
in cash, stock or otherwise), if any, as may be declared thereon by the Board at any time and from time to time out of any funds of the
Corporation legally available therefor.
(d)
In the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Corporation, after distribution in full of
the preferential amounts, if any, to be distributed to the holders of shares of Preferred Stock or any class or series thereof, and subject
to the right of participation, if any, of the holders of Preferred Stock in any dividends, the holders of shares of Common Stock shall
be entitled to receive all of the remaining assets of the Corporation available for distribution to its stockholders, ratably in proportion
to the number of shares of Common Stock held by them. A liquidation, dissolution or winding-up of the Corporation, as such terms are
used in this paragraph (d), shall not be deemed to be occasioned by or to include any consolidation or merger of the Corporation with
or into any other corporation or corporations or other entity or a sale, lease, exchange or conveyance of all or a part of the assets
of the Corporation.
(e)
The number of authorized shares of Common Stock or Preferred Stock may be increased or decreased (but not below the number of shares
thereof then outstanding plus the number reserved for issuance upon the exercise, conversion or exchange of outstanding securities) by
the affirmative vote of the majority of the voting power of the outstanding shares of stock of the Corporation entitled to vote generally
on the election of directors, voting as a single class, irrespective of the provisions of Section 242(b)(2) of the DGCL (or any successor
provision thereto), and no vote of the holders of either Common Stock or Preferred Stock voting separately as a class or series shall
be required therefor.
3.
General.
(a)
Subject to the foregoing provisions of this Certificate of Incorporation, the Corporation may issue shares of Preferred Stock and Common
Stock from time to time for such consideration (not less than the par value thereof) as may be fixed by the Board, which is expressly
authorized to fix the same in its absolute discretion subject to the foregoing conditions. Shares so issued for which the consideration
shall have been paid or delivered to the Corporation shall be deemed fully paid stock and shall not be liable to any further call or
assessment thereon, and the holders of such shares shall not be liable for any further payments in respect of such shares.
(b)
The Corporation shall have authority to create and issue rights and options entitling their holders to purchase shares of the Corporation’s
capital stock of any class or series or other securities of the Corporation, and such rights and options shall be evidenced by instrument(s)
approved by the Board. The Board shall be empowered to set the exercise price, duration, times for exercise and other terms of such rights
or options; provided, however, that the consideration to be received for any share of capital stock subject thereto shall not be
less than the par value thereof.
Fifth:
The business and affairs
of the Corporation shall be managed by or under the direction of the Board. Subject to applicable law, the rights of the holders of any
class or series of Preferred Stock and the then-applicable terms of the Stockholders’ Agreement, dated as of the date hereof (as
may be amended, restated, supplemented, modified or replaced), among the Corporation and certain of its stockholders (the “Stockholders’
Agreement”), any newly created directorship that results from an increase in the number of directors or any vacancy on the Board
that results from the death, disability, resignation, disqualification or removal of any director or from any other cause shall be filled
solely by the affirmative vote of a majority of the total number of directors then in office, even if less than a quorum, or by a sole
remaining director and shall not be filled by the stockholders, and each director so chosen shall receive the classification of the vacant
directorship to which he or she has been appointed or, if it is a newly created directorship, shall receive the classification that at
least a majority of the board of directors designates and shall hold office until the first meeting of stockholders held after his or
her election for the purpose of electing directors of that classification and until his or her successor is elected and qualified or
until his or her earlier death, resignation or removal from office. No decrease in the number of authorized directors constituting the
Board shall shorten the term of any incumbent director.
Subject
to the rights of the holders of shares of any class or series of Preferred Stock, if any, to elect additional directors pursuant to this
Certificate of Incorporation (including any Preferred Stock Designation thereunder) and the then-applicable terms of the Stockholders’
Agreement, no director of any class of directors may be removed except for cause and by the affirmative vote of the holders of a majority
of the shares then entitled to vote generally at an election of directors, acting at a meeting of the stockholders in accordance with
the DGCL, this Certificate of Incorporation and the Bylaws.
Subject
to the rights of the holders of any class or series of Preferred Stock to elect directors under specified circumstances, if any, and
the then-applicable terms of the Stockholders’ Agreement, the number of directors shall be fixed from time to time exclusively
pursuant to a resolution adopted by a majority of the members of the Board serving at that time. Unless and except to the extent that
the Bylaws so provide, the election of directors need not be by written ballot.
Cumulative
voting for the election of directors shall be prohibited.
The
Board may designate and appoint from among its members one or more committees, which may have one or more members, and may designate
one or more of its members as alternate members, who may, subject to any limitations imposed by the Board, replace absent or disqualified
members at any meeting of such committee. The stockholders of the Corporation shall have no power to appoint or remove directors as members
of committees of the Board, nor to abrogate the power of the Board to establish any such committees or the power of any such committee
to exercise the powers and authority of the Board.
Sixth:
Subject to the rights of
the holders of any class or series of Preferred Stock with respect to such class or series of Preferred Stock, any action required or
permitted to be taken by the stockholders of the Corporation must be taken at a duly held annual or special meeting of stockholders and
may not be taken by any consent in writing of such stockholders.
Seventh:
Except as otherwise required
by applicable law and the rights of the holders of any class or series of Preferred Stock, special meetings of stockholders of the Corporation,
and any proposals to be considered at such meetings, may be called and proposed only by the Chairman (or any Co-Chairman) of the Board
or the Board pursuant to a resolution adopted by a majority of the total number of directors then in office. Subject to the rights of
the holders of any class or series of Preferred Stock, the stockholders of the Corporation do not have the power to call a special meeting
of stockholders of the Corporation.
Eighth:
In furtherance of, and not
in limitation of, the powers conferred by the laws of the State of Delaware, the Board is expressly authorized to adopt, amend or repeal
the Bylaws without any action on the part of the stockholders of the Corporation. Any adoption, amendment or repeal of the Bylaws by
the Board shall require the approval of a majority of the members of the Board serving at the time of that vote. The stockholders of
the Corporation shall have the power to adopt, alter, amend and repeal the Bylaws with the vote of holders of not less than 66⅔%
in voting power of the then-outstanding shares of stock entitled to vote generally on the election of directors, voting together as a
single class. No bylaws hereafter made or adopted, nor any repeal of or amendment thereto, shall invalidate any prior act of the Board
that was valid at the time it was taken, nor contain any provision inconsistent with this Certificate of Incorporation.
Ninth:
No director or officer of
the Corporation shall be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director
or officer, as applicable, except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL as
it now exists. In addition to the circumstances in which a director or officer of the Corporation is not personally liable as set forth
in the preceding sentence, a director or officer of the Corporation shall not be liable to the fullest extent permitted by any amendment
to the DGCL hereafter enacted that further limits the liability of a director or officer.
Any
amendment, repeal or modification of this Article Ninth shall be prospective only and shall not affect any limitation on liability of
a director or officer for acts or omissions occurring prior to the date of such amendment, repeal or modification.
Tenth:
The (a) directors of the
Corporation and (b) officers of the Corporation (each such person, a “Specified Party,” and collectively, the “Specified
Parties”) have participated (directly or indirectly) in and may, but shall have no duty to, continue to (1) participate (directly
or indirectly) in venture capital and other direct investments in corporations, joint ventures, limited liability companies and other
entities conducting business of any kind, nature or description (“Other Investments”) and (2) have interests in, participate
with, aid and maintain seats on the boards of directors or similar governing bodies of Other Investments, in each case that may, are
or will be competitive with the business of the Corporation and its subsidiaries or in the same or similar lines of business as the Corporation
and its subsidiaries, or that could be suitable for the Corporation or its subsidiaries; provided, however, that an individual who is
an employee of the Corporation or one of its subsidiaries shall only be a Specified Party for purposes of this Article Tenth to the extent
that, prior to participating in the Other Investment or business opportunity for such Other Investment in question (including any overriding
royalty interest participation program) pursuant to clauses (1) or (2) above, (a) such Specified Party receives prior written approval
from the Audit Committee of the Board authorizing such participation and (b) the Corporation publicly discloses such participation. To
the fullest extent permitted by applicable law, the Corporation, on behalf of itself and its subsidiaries, renounces any interest or
expectancy of the Corporation and its subsidiaries in, or in being offered an opportunity to participate in, any such Other Investment
or any business opportunities for such Other Investments that are from time to time presented to any Specified Party or are business
opportunities in which a Specified Party participates or desires to participate, even if the Other Investment or business opportunity
is one that the Corporation or its subsidiaries might reasonably be deemed to have pursued or had the ability or desire to pursue if
granted the opportunity to do so, and, subject to the requirements included in this Article Tenth, each such Specified Party shall have
no duty to communicate or offer any such Other Investment or business opportunity to the Corporation and, to the fullest extent permitted
by applicable law, shall not be liable to the Corporation or any of its subsidiaries or any stockholder, including for breach of any
fiduciary or other duty, as a director or officer or controlling stockholder or otherwise, and the Corporation shall indemnify each Specified
Party against any claim that such Specified Party is liable to the Corporation or its stockholders for breach of any fiduciary duty,
by reason of the fact that such Specified Party (i) participates in any such Other Investment or pursues or acquires any such business
opportunity, (ii) directs any such business opportunity to another person or (iii) fails to present any such Other Investment or business
opportunity, or information regarding any such Other Investment or business opportunity, to the Corporation or its subsidiaries, unless,
in the case of a Specified Party who is a director or officer of the Corporation, such business opportunity is expressly offered to such
Specified Party in writing solely in his or her capacity as a director or officer of the Corporation.
Neither
the amendment nor repeal of this Article Tenth, nor the adoption of any provision of this Certificate of Incorporation or the Bylaws,
nor, to the fullest extent permitted by Delaware law, any modification of law, shall eliminate, reduce or otherwise adversely affect
any right or protection of any person granted pursuant hereto existing at, or arising out of or related to any event, act or omission
that occurred prior to, the time of such amendment, repeal, adoption or modification (regardless of when any proceeding (or part thereof)
relating to such event, act or omission arises or is first threatened, commenced or completed).
If
any provision or provisions of this Article Tenth shall be held to be invalid, illegal or unenforceable as applied to any circumstance
for any reason whatsoever, (a) the validity, legality and enforceability of such provisions in any other circumstance and of the remaining
provisions of this Article Tenth (including, without limitation, each portion of any paragraph of this Article Tenth containing any such
provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not in
any way be affected or impaired thereby and (b) to the fullest extent possible, the provisions of this Article Tenth (including, without
limitation, each such portion of any paragraph of this Article Tenth containing any such provision held to be invalid, illegal or unenforceable)
shall be construed so as to permit the Corporation to protect its directors, officers, employees and agents from personal liability in
respect of their good faith service to or for the benefit of the Corporation to the fullest extent permitted by applicable law.
This
Article Tenth shall not limit any protections or defenses available to, or indemnification or advancement rights of, any director or
officer of the Corporation under this Certificate of Incorporation, the Bylaws, applicable law or as may be set forth in individual indemnification
agreements with such director or officer. Any person or entity purchasing or otherwise acquiring any interest in any securities of the
Corporation shall be deemed to have notice of and to have consented to the provisions of this Article Tenth.
Eleventh:
The Corporation shall have
the right, subject to any express provisions or restrictions contained in this Certificate of Incorporation or Bylaws, from time to time,
to amend this Certificate of Incorporation or any provision hereof in any manner now or hereafter provided by applicable law, and all
rights and powers of any kind conferred upon a director, officer, or stockholder of the Corporation by this Certificate of Incorporation
or any amendment hereof are subject to such right of the Corporation.
Twelfth:
Notwithstanding any other
provision of this Certificate of Incorporation or the Bylaws (and in addition to any other vote that may be required by applicable law,
this Certificate of Incorporation or the Bylaws), the affirmative vote of at least 66⅔% of the voting power of the outstanding
shares of stock of the Corporation entitled to vote in an election of directors, voting together as a single class, shall be required
to amend, alter or repeal any provision of this Certificate of Incorporation.
Thirteenth:
Unless the Corporation consents
in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery of
the State of Delaware does not have jurisdiction, the Superior Court of the State of Delaware, or, if the Superior Court of the State
of Delaware does not have jurisdiction, the United States District Court for the District of Delaware, in each case, subject to that
court having personal jurisdiction over the indispensable parties named defendants therein) shall, to the fullest extent permitted by
law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action
asserting a claim for a breach of a fiduciary duty owed by any director, officer, employee or agent of the Corporation to the Corporation
or the Corporation’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL or as to which
the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware, or (iv) any action asserting a claim governed by the
internal affairs doctrine including, without limitation, any action to interpret, apply, enforce or determine the validity of this Second
Amended and Restated Certificate or the Bylaws of the Corporation (as they shall be amended from time to time), or any provision thereof.
Unless the Corporation consents in writing to the selection of an alternative forum, the federal district courts of the United States
of America shall be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities
Act of 1933. Any person or entity purchasing or otherwise acquiring any interest in any securities of the Corporation shall be deemed
to have notice of and to have consented to the provisions of this Article Thirteenth.
[Remainder
of Page Intentionally Left Blank]
IN
WITNESS WHEREOF, the undersigned has executed this Certificate of Incorporation as of [●], 2022.
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Annex
B
WRITTEN
CONSENT OF THE HOLDER
OF
THE SERIES B PREFERRED STOCK
OF
CREEK ROAD MINERS, INC.
Pursuant
to Section 228 of the General Corporation Law of the State of Delaware, the undersigned, being the holders of a majority of the outstanding
shares of the Series B Preferred Stock, par value $.0001 per share (the “Series B Preferred Stock”), of Creek Road
Miners, Inc., a Delaware corporation (the “Corporation”), issued pursuant to that certain Amended and Restated Certificate
of Designation of Preferences, Rights and Limitations of Series B Preferred Stock, dated July 16, 2021 (the “Certificate of
Designation”) and which now forms a part of the Corporation’s Amended and Restated Certificate of Incorporation (the
“Certificate of Incorporation”), hereby adopt the following resolutions by written consent:
WHEREAS,
the Board of Directors of the Corporation (the “Board”) has deemed it to be in the best interest of the Corporation
to amend Section 2 of the Certificate of Designation; and
WHEREAS,
the Certificate of Designation requires the affirmative vote of the holders of a majority of the outstanding shares of the Series B Preferred
Stock to amend the Certificate of Designation.
Amendment
to Certificate of Designation
NOW,
THEREFORE, BE IT RESOLVED, that the amendment to the Certificate of Incorporation to amend Section 2 of the Certificate of Designation,
in substantially the form attached hereto as Exhibit A (the “Amendment”), is hereby adopted and approved; and
FURTHER
RESOLVED, subject to the satisfaction or waiver of all conditions to closing of the proposed merger of Prairie Operating Co. with and
into a subsidiary of the Corporation and the concurrent filing of an amendment to that certain Certificate of Designation of Preferences,
Rights and Limitations of Series C Preferred Stock, dated December 1, 2021, the Board and the officers of the Corporation are hereby
authorized to file the Amendment with the Secretary of State of the State of Delaware.
Additional
Actions
FURTHER
RESOLVED, that the Board and the officers of the Corporation be, and hereby are, authorized and directed, on behalf of the Corporation,
to do or cause to be done all other things and acts, to execute, deliver, file and perform or cause to be executed, delivered, filed
and performed all other instruments, documents and certificates and to pay or cause to be paid all costs, fees and other amounts as may
be, in their sole judgment, necessary, proper or advisable in order to carry out and comply with the purposes and intent of the foregoing
resolutions; and that all of the acts and deeds of the Board and the officers of the Corporation which are consistent with the purposes
and intent of the foregoing resolutions be, and each hereby is, in all respects approved, adopted, ratified and confirmed as the acts
and deeds of the Corporation;
FURTHER
RESOLVED, that all actions, preparation, execution, deliveries and filings of all agreements, instruments, documents and certificates
in the name of and on behalf of the Corporation, and all fees and expenses incurred or paid by the Board or any of the officers of the
Corporation having been deemed necessary, proper or advisable to carry out the intent and effectuate the purposes of the foregoing resolutions
prior to the date hereof are hereby approved, adopted, ratified and confirmed in all respects; and
FURTHER
RESOLVED, that each and every action taken by the Board or any officer of the Corporation prior to the date of the adoption of the foregoing
resolutions which would have been authorized by the foregoing resolutions but for the fact that such actions were taken prior to such
date be, and each is hereby, approved, adopted, ratified and confirmed in all respects.
IN
WITNESS WHEREOF, the undersigned has executed this Written Consent on the date indicated alongside each name below.
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Number of Shares
of Series B Preferred Stock Held of Record:__________________ |
[Creek
Road Miners- Written Consent of Holders of Series B Preferred Stock]
EXHIBIT
A
AMENDMENT
TO CERTIFICATE OF DESIGNATION
OF
SERIES B PREFERRED STOCK
OF
CREEK ROAD MINERS, INC.
Creek
Road Miners, Inc., a Delaware corporation (the “Company”), does hereby certify:
FIRST:
That the Board of Directors of the Company, by the unanimous written consent of its members, duly adopted a resolution setting forth
a proposed amendment (the “Amendment”) to the Amended and Restated Certificate of Designation of Series B Preferred
Stock of the Company (the “Certificate of Designation”) in accordance with the provisions of Section 242 of the Delaware
General Corporation Law.
SECOND:
That thereafter written consents in lieu of meeting were obtained from the holders of a majority of the issued and outstanding Series
B Preferred Stock of the Company (the “Preferred Stock”), consenting to the Amendment, and that notice was promptly
thereafter given to those holders of Preferred Stock who had not consented in writing, all in accordance with Section 228 of the General
Corporation Law of the State of Delaware.
THIRD:
That the amendment so adopted is as follows:
Section
2 of the Certificate of Designation is amended and restated to read in its entirety as follows:
“Section
2. Designation, Amount and Par Value. The series of preferred stock shall be designated as its Series B Preferred Stock (the
“Preferred Stock”) and the number of shares so designated shall be 20,000 (which shall not be subject to increase
without the written consent of all of the holders of the Preferred Stock (each, a “Holder” and collectively, the “Holders”)).
Each share of Preferred Stock shall have a par value of $0.0001 per share and a stated value equal to $972 per share, subject to increase
set forth in Section 3 below (the “Stated Value”).”
IN
WITNESS WHEREOF, the Corporation has caused this Certificate to be duly executed on its behalf by its undersigned as of __________
__, 2022.
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John D. Maatta |
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Chief Executive Officer |
Annex
C
WRITTEN
CONSENT OF THE HOLDERS
OF
THE SERIES C PREFERRED STOCK
OF
CREEK ROAD MINERS, INC.
Pursuant
to Section 228 of the General Corporation Law of the State of Delaware, the undersigned, being the holders of a majority of the outstanding
shares of the Series C Preferred Stock, par value $.0001 per share (the “Series C Preferred Stock”), of Creek Road
Miners, Inc., a Delaware corporation (the “Corporation”), issued pursuant to that certain Certificate of Designation
of Preferences, Rights and Limitations of Series C Preferred Stock, dated December 1, 2021 (the “Certificate of Designation”)
and which now forms a part of the Corporation’s Amended and Restated Certificate of Incorporation (the “Certificate of
Incorporation”), hereby adopt the following resolutions by written consent:
WHEREAS,
the Board of Directors of the Corporation (the “Board”) has deemed it to be in the best interest of the Corporation
to amend Section 2 of the Certificate of Designation; and
WHEREAS,
the Certificate of Designation requires the affirmative vote of the holders of a majority of the outstanding shares of the Series C Preferred
Stock to amend the Certificate of Designation.
Amendment
to Certificate of Designation
NOW,
THEREFORE, BE IT RESOLVED, that the amendment to the Certificate of Incorporation to amend Section 2 of the Certificate of Designation,
in substantially the form attached hereto as Exhibit A (the “Amendment”), is hereby adopted and approved; and
FURTHER
RESOLVED, subject to the satisfaction or waiver of all conditions to closing of the proposed merger of Prairie Operating Co. with and
into a subsidiary of the Corporation and the concurrent filing of an amendment to that certain Amended and Restated Certificate of Designation
of Preferences, Rights and Limitations of Series B Preferred Stock, dated July 16, 2021, the Board and the officers of the Corporation
are hereby authorized to file the Amendment with the Secretary of State of the State of Delaware.
Additional
Actions
FURTHER
RESOLVED, that the Board and the officers of the Corporation be, and hereby are, authorized and directed, on behalf of the Corporation,
to do or cause to be done all other things and acts, to execute, deliver, file and perform or cause to be executed, delivered, filed
and performed all other instruments, documents and certificates and to pay or cause to be paid all costs, fees and other amounts as may
be, in their sole judgment, necessary, proper or advisable in order to carry out and comply with the purposes and intent of the foregoing
resolutions; and that all of the acts and deeds of the Board and the officers of the Corporation which are consistent with the purposes
and intent of the foregoing resolutions be, and each hereby is, in all respects approved, adopted, ratified and confirmed as the acts
and deeds of the Corporation;
FURTHER
RESOLVED, that all actions, preparation, execution, deliveries and filings of all agreements, instruments, documents and certificates
in the name of and on behalf of the Corporation, and all fees and expenses incurred or paid by the Board or any of the officers of the
Corporation having been deemed necessary, proper or advisable to carry out the intent and effectuate the purposes of the foregoing resolutions
prior to the date hereof are hereby approved, adopted, ratified and confirmed in all respects; and
FURTHER
RESOLVED, that each and every action taken by the Board or any officer of the Corporation prior to the date of the adoption of the foregoing
resolutions which would have been authorized by the foregoing resolutions but for the fact that such actions were taken prior to such
date be, and each is hereby, approved, adopted, ratified and confirmed in all respects.
IN
WITNESS WHEREOF, the undersigned has executed this Written Consent on the date indicated alongside each name below.
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Number of Shares
of Series C Preferred Stock Held of Record:__________________ |
[Creek
Road Miners - Written Consent of Holders of Series C Preferred Stock]
EXHIBIT
A
AMENDMENT
TO CERTIFICATE OF DESIGNATION
OF
SERIES C PREFERRED STOCK
OF
CREEK ROAD MINERS, INC.
Creek
Road Miners, Inc., a Delaware corporation (the “Company”), does hereby certify:
FIRST:
That the Board of Directors of the Company, by the unanimous written consent of its members, duly adopted a resolution setting forth
a proposed amendment (the “Amendment”) to the Certificate of Designation of Series C Preferred Stock of the Company
(the “Certificate of Designation”) in accordance with the provisions of Section 242 of the Delaware General Corporation
Law.
SECOND:
That thereafter written consents in lieu of meeting were obtained from the holders of a majority of the issued and outstanding
Series C Preferred Stock of the Company (the “Preferred Stock”), consenting to the Amendment, and that notice was
promptly thereafter given to those holders of Preferred Stock who had not consented in writing, all in accordance with Section 228
of the General Corporation Law of the State of Delaware.
THIRD:
That the amendment so adopted is as follows:
Section
2 of the Certificate of Designation is amended and restated to read in its entirety as follows:
“Section
2. Designation, Amount and Par Value. The series of preferred stock shall be designated as its Series C Preferred Stock (the
“Preferred Stock”) and the number of shares so designated shall be 15,000 (which shall not be subject to increase
without the written consent of all of the holders of the Preferred Stock (each, a “Holder” and collectively, the “Holders”)).
Each share of Preferred Stock shall have a par value of $0.0001 per share and a stated value equal to $888.80 per share, subject to increase
set forth in Section 3 below (the “Stated Value”).”
IN
WITNESS WHEREOF, the Corporation has caused this Certificate to be duly executed on its behalf by its undersigned Chief Executive
Officer as of ________ ___, 2022.
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By: |
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Name: |
John D. Maatta |
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Title: |
Chief Executive Officer |
Annex
D
Prairie
Operating Co., LLC