Entry into a Material Definitive Agreement, Creation of a Direct Financial
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENTOn April 3, 2014, Petron Energy II, Inc., a Nevada corporation (the “Company”) entered into a Master Exchange Agreement (the “Agreement”) with a certain investor (the “Institutional Investor”) who is the holder of certain outstanding debt securities of the Company and certain options to purchase certain outstanding debt securities of the Company in the aggregate amount of $393,268 (collectively the “Debt Securities”) that the Institutional Investor acquired from TCA Global Credit Master Fund L.P. (“TCA”).
Pursuant to the Agreement and subject to its terms and conditions, the Institutional Investor has agreed to exchange the Debt Securities for shares of the Company’s common stock, $0.0001 par value per share (the “Common Stock”), in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”) and Rule 144(d)(3)(ii) of the Securities Act, as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the Securities Act. The number of Common Stock shares issuable to the Institutional Investor upon exchange of the Debt Securities shall be determined by dividing the “Exchange Amount” (as defined in the Agreement) by the “Exchange Price” (as defined in the Agreement). The Institutional Investor shall receive 30,303,030 shares in exchange for the initial Exchange Amount of Debt Securities exchanged by the Institutional Investor pursuant to the Agreement and shall exchange the remaining Debt Securities at its sole option from time to time.
The above description of the Agreement is intended as a summary only and is qualified in its entirety by the terms and conditions set forth therein, and may not contain all information that is of interest to the reader. For further information regarding the terms and conditions of the Agreement, this reference is made to such Agreement, which is filed hereto as Exhibit 10.1, and is incorporated herein by this reference.
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.The information set forth above in Item 1.01 of this Current Report on Form 8-K is incorporated herein by this reference.
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIESThe information set forth above in Item 1.01 of this Current Report on Form 8-K is incorporated herein by this reference.Exemption From Registration. The shares of Common Stock referenced herein are intended to be issued in reliance upon the exemption from securities registration afforded by the provisions of Section 4(2) of the Securities Act of 1933, as amended, (“Securities Act”), and/or Regulation D, as promulgated by the U.S. Securities and Exchange Commission under the Securities Act, based upon the following: (a) each of the persons to whom the shares of Common Stock were issued (each such person, an “Investor”) confirmed to the Company that it or he is an “accredited investor,” as defined in Rule 501 of Regulation D promulgated under the Securities Act and has such background, education and experience in financial and business matters as to be able to evaluate the merits and risks of an investment in the securities, (b) there was no public offering or general solicitation with respect to the offering of such shares, (c) each Investor was provided with certain disclosure materials and all other information requested with respect to the Company, (d) each Investor acknowledged that all securities being purchased were being purchased for investment intent and were “restricted securities” for purposes of the Securities Act, and agreed to transfer such securities only in a transaction registered under the Securities Act or exempt from registration under the Securities Act and (e) a legend has been, or will be, placed on the certificates representing each such security stating that it was restricted and could only be transferred if subsequently registered under the Securities Act or transferred in a transaction exempt from registration under the Securities Act.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
Exhibits
EXHIBIT NO. DESCRIPTION
10.1 Master Exchange Agreement by and among Petron Energy II, Inc. and Institutional Investor dated April 4, 2014
