NATION ENERGY INC. (OTCMKTS:NEGY) Files An 8-K Entry into a Material Definitive AgreementItem 1.01 Entry into a Material Definitive Agreement.
On August 9, 2017 (executed in Australia), Nation Energy Inc. (“Nation”), and Nation Energy (Australia) Pty Ltd (“Nation Australia”), a wholly owned subsidiary of Nation, entered into a Settlement Agreement and Release of All Claims (the “Settlement Agreement”) with Paltar Petroleum Limited (“Paltar”) and Paltar’s wholly owned subsidiary Officer Petroleum Ltd. (“Officer”). Also on August 9, 2017 (executed in Australia), Nation Australia executed two surrenders as required by the Settlement Agreement: a Surrender and Cancellation of Earning Agreements with Paltar and a Surrender and Cancellation of EP 468 Earning Agreement with Officer (collectively, the “Surrenders”). The Settlement Agreement calls for Nation to receive a 5% overriding royalty on production from certain lands in Australia and to issue shares of Nation common stock, as described below.
Under the Settlement Agreement, the parties agreed that: (a) Nation Australia would surrender all of its rights under the six May 31, 2016 earning agreements with Paltar and the May 31, 2016 earning agreement with Officer (collectively, the “Earning Agreements”) by executing surrender instruments to that effect; (b) the parties would undertake a debt-for-equity exchange, whereby certain damages and debts owed by Nation Australia to Paltar and Officer will be converted at a rate of $0.05 per share into a total of 627,833,445 shares of common stock of Nation to be issued to Paltar; (c) Nation is to receive a 5% overriding royalty from Paltar on the following hydrocarbon production: (I) all hydrocarbon production from the lands previously subject to the EP 231, EP 232, EP 234 and EP 237 Earning Agreements, (II) all hydrocarbon production from the lands in the EP 136 and EP 143 exploration blocks that were designated as “Paltar Blocks” in the Joint Venture and Operating Agreement dated 16 September 2011 between Paltar and Sweetpea Petroleum Pty Limited, and (III) all hydrocarbon production from the lands subject to current and any future applications for exploration permits in Australia that have been submitted or are submitted in the future by Paltar or Officer; and (d) the Third Amended and Restated Agreement dated August 30, 2015 between Nation and Paltar, as it has been further amended, is terminated.
Paltar is the majority shareholder of Nation. Nation Australia had previously received notices of default dated July 10, 2017 from Paltar and Officer to each of the seven Earning Agreements. The defaults consisted of failures to pay required amounts defined as “Work Permit Expenditures” in the Earning Agreements. Under the Earning Agreements, Nation Australia had thirty (30) days in which to cure such defaults. Nation Australia was not able to cure such defaults; however, Nation Australia was able to reach the settlement with Paltar and Officer set forth in the Settlement Agreement.
The description above is a summary and is qualified in its entirety by the agreements filed as Exhibits 10.1, 10.2 and 10.3 to this report and are incorporated herein by reference.
Item 1.02 Termination of a Material Definitive Agreement.
As part of the Settlement Agreement, the Earning Agreements between Nation Australia and Paltar and Officer were terminated, and Nation Australia surrendered all of its rights under the Earning Agreements. Also, the Third Amended and Restated Agreement dated August 30, 2015 between Nation and Paltar, as it had been further amended, was terminated. See the disclosure in Item 1.01 for a further summary.
