Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): May 4, 2011
Commission File Number 333-146627
BARON ENERGY, INC.
(Exact name of registrant as specified in its charter)
NEVADA 26-0582528
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
392 W. Mill Street,
New Braunfels, TX 78130
(Address of principal executive offices) (Zip Code)
(830) 608-0300
Registrant's telephone number, including area code
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligations of the registrant under any of the
following provisions.
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS.
On May 4, 2011, Baron Energy, Inc. (the "COMPANY", "WE", "OUR", or "US") and
Pronto Limited ("PRONTO") entered into an Assignment and Bill of Sale, effective
as of May 1, 2011 (the "BILL OF SALE"). Pursuant to the Bill of Sale, we
purchased all of Pronto's working interest and a 75% net revenue interest in the
Kirkpatrick "69" Lease, and all of Pronto's interest in the Salt Water Disposal
Agreement relating to the Kirkpatrick 68-1 well, both of which are located in
Garza County, Texas. We paid Pronto a total of $59,000 for the assets,
consisting of $35,000 in cash and 300,000 shares of our common stock (the
"SHARES") valued at $0.08 per share, or $24,000. The net daily production level
attributable to these non-operated working interests is approximately 3 barrels
of oil equivalent per day.
The Bill of Sale is filed herewith as Exhibit 10.1 and is incorporated herein by
reference. The foregoing description of the Bill of Sale and the transactions
contemplated thereby does not purport to be complete and is qualified in its
entirety by reference to the Bill of Sale.
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
Further to our Form 8-K filed on March 22, 2011 (the "MARCH 8-K"), as a
resolution to the Petition referenced in Item 2.04 of the March 8-K, on May 5,
2011, we entered into a First Amended and Restated Loan Agreement (the "LOAN
AGREEMENT") with BaseLine Capital, Inc. ("BASELINE"), dated and effective as of
April 27, 2011, amending and restating that certain Second Amendment to Loan
Agreement dated September 30, 2009 between Baseline and us (the "ORIGINAL LOAN
AGREEMENT"). A copy of the Original Loan Agreement is attached as Exhibit 10.45
to our Form 8-K filed with the United States Securities and Exchange Commission
("SEC") on February 26, 2010. In connection with the Loan Agreement, we paid
Baseline $175,000 in cash and executed a promissory note in the amount of
$100,000 (the "NOTE"). We are also required to pay Baseline $650 per month as a
service fee for consulting and other services during the term of the Note. The
Note bears interest at a rate of 8.0% and matures on May 1, 2015. Principal and
interest on the Note is due and payable monthly in the amount of $2,442,
commencing on June 1, 2011. The Note may be prepaid at any time without penalty.
If $60,000 of the principal and accrued interest is paid on or before October
27, 2011, the remaining $40,000 in principal will be forgiven and the Note will
be deemed paid in full.
The Company, Baseline and Newton Energy, Inc. ("NEWTON"), our senior lender,
executed a First Amended and Restated Subordination Agreement in conjunction
with execution of the Loan Agreement. We also granted Baseline a security
interest in all of our personal property now owned or hereafter acquired
pursuant to a Security Agreement we executed. In addition, we entered into a
First Amendment to Subordinated Deed of Trust, Mortgage, Security Agreement,
Assignment of Production and Financing Statement ("DOT AMENDMENT") amending that
certain Deed of Trust, Mortgage, Security Agreement, Assignment of Production
and Financing Statement dated August 1, 2007 (the "ORIGINAL DEED OF TRUST"). A
copy of the Original Deed of Trust is attached as Exhibit 10.49 to our Form 8-K
filed with the SEC on February 26, 2010. The DOT Amendment reflects the terms of
the new Loan Agreement and the Note, and the change in the indebtedness secured
by the Original Deed of Trust.
As consideration for entering into the Loan Agreement, and for various services
provided by Baseline to us in connection with the transactions contemplated by
the Original Loan Agreement, we executed Assignments of Oil and Gas Leases and
Bill of Sale (collectively, the "ASSIGNMENTS") assigning to Baseline 25% of our
right, title and interest in and to each of the properties covered by the DOT
Amendment and set forth in Exhibit A thereto (the "MORTGAGED PROPERTIES"). Along
with the Assignments, we also executed and delivered to Baseline a Memorandum of
Assignment with respect to each Assignment (a "MEMORANDUM") which Baseline may
file of record to evidence its interest in any of the Mortgaged Properties as
provided in the Assignments. Upon the earlier to occur of the following
("PAYOUT"): (a) our full payment to Baseline of all principal, interest and
other costs, expenses and fees under the Loan Agreement and Note; or (b) October
27, 2011 (even though indebtedness remains due and owing by us to Baseline),
Baseline may deem delivery of, accept and file of record any one or more of the
Assignments, and we must cause Newton to release any lien or interest it may
have on or in such assigned interest. Said Assignments will be free and clear of
any and all liens and other encumbrances. In the event we are unable to obtain a
release from Newton of its lien as to the interest assigned within 30 days from
the date of Payout, we agree to pay Baseline liquidated damages of $75,000.00
within said 30-day period and $5,000.00 per month as additional liquidated
damages for every month thereafter that a release of Newton's lien is not
delivered. The liquidated damages are in addition to any and all revenue which
Baseline and/or its assigns is entitled to under the terms and conditions of the
Assignments and payment of any of the indebtedness remaining outstanding.
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We are also required to execute and deliver such other documents and
instruments, including without limitation, assignments of federal and state
leases, which Baseline requests with respect to the Assignments. Furthermore, we
executed and delivered to Baseline, in conjunction with the Loan Agreement and
effective as of April 27, 2011, a Limited Power of Attorney appointing Karl J.
Reiter, President of Baseline, as our lawful agent and attorney-in-fact to
execute and deliver, in our name and on our behalf, such other documents and
instruments as may be proper or that may be required for the transfer of 25% of
our right, title and interest in and to any or all of the Mortgaged Properties.
The Loan Agreement contains representations, warranties and certain covenants of
the Company. The assertions embodied in those representations and warranties
were made for purposes of the Loan Agreement and are subject to qualifications
and limitations agreed to by the parties in connection with the negotiation of
the terms of the Loan Agreement. In addition, certain representations and
warranties may be made as of a specific date, may be subject to a contractual
standard of materiality different from that which an investor might view as
material, or may have been used for purposes of allocating risk between the
respective parties, rather than establishing matters as facts. Prospective or
current investors in our securities should read the Loan Agreement and other
agreements we entered into in conjunction therewith, together with the other
information concerning us that we publicly file in reports and statements with
the SEC.
The foregoing description of our new loan with Baseline and the agreements
relating thereto is qualified in its entirety by reference to the full text of
the Loan Agreement, the Note, the First Amended and Restated Subordination
Agreement, the Security Agreement, the DOT Amendment, a Form of Assignment, a
Form of Memorandum, and the Limited Power of Attorney filed as Exhibits 10.2,
10.3, 10.4, 10.5, 10.6, 10.7, 10.8, and 10.9, respectively, to this Current
Report on Form 8-K and incorporated herein by reference.
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES.
The information provided in Item 1.01 of this Current Report on Form 8-K is
incorporated by reference into this Item 3.02.
The offering of the Shares was not registered under the Securities Act of 1933,
as amended (the "SECURITIES ACT"), but was made in reliance upon the exemptions
from the registration requirements of the Securities Act set forth in Section
4(2) thereof and/or Rule 506 of Regulation D promulgated thereunder, insofar as
such securities were issued only to an "accredited investor" within the meaning
of Rule 501 of Regulation D. The recipient of our securities took them for
investment purposes without a view to distribution. Furthermore, they had access
to information concerning us and our business prospects; there was no general
solicitation or advertising for the purchase of our securities; and the
securities are restricted pursuant to Rule 144.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits
Exhibit No. Description
----------- -----------
10.1 Assignment and Bill of Sale by and between Baron Energy, Inc. and
Pronto Limited, effective as of May 1, 2011.
10.2 First Amended and Restated Loan Agreement dated April 27, 2011 by
and between Baron Energy, Inc. and BaseLine Capital, Inc.
10.3 $100,000 Promissory Note dated April 27, 2011 from Baron Energy,
Inc. in favor of BaseLine Capital, Inc.
10.4 First Amended and Restated Subordination Agreement dated April
27, 2011 by and between Baron Energy, Inc., Newton Energy, Inc.,
and BaseLine Capital, Inc.
10.5 Security Agreement dated April 27, 2011 by and between Baron
Energy, Inc. and BaseLine Capital, Inc.
10.6 First Amendment to Subordinated Deed of Trust, Mortgage, Security
Agreement, Assignment of Production and Financing Statement dated
April 27, 2011 granted by Baron Energy, Inc. in favor of BaseLine
Capital, Inc.
10.7 Form of Assignments of Oil and Gas Leases and Bill of Sale by and
between Baron Energy, Inc. and BaseLine Capital, Inc.
10.8 Form of Memorandum of Assignments by and between Baron Energy,
Inc. and BaseLine Capital, Inc.
10.9 Limited Power of Attorney from Baron Energy, Inc. to Karl J.
Reiter, effective as of April 27, 2011.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
BARON ENERGY, INC.
Date: May 10, 2011 By: /s/ Ronnie L. Steinocher
-----------------------------------------
Name: Ronnie L. Steinocher
Title: President and Chief Executive Officer
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EXHIBIT INDEX
Exhibit No. Description
----------- -----------
10.1 Assignment and Bill of Sale by and between Baron Energy, Inc. and
Pronto Limited, effective as of May 1, 2011.
10.2 First Amended and Restated Loan Agreement dated April 27, 2011 by
and between Baron Energy, Inc. and BaseLine Capital, Inc.
10.3 $100,000 Promissory Note dated April 27, 2011 from Baron Energy,
Inc. in favor of BaseLine Capital, Inc.
10.4 First Amended and Restated Subordination Agreement dated April
27, 2011 by and between Baron Energy, Inc., Newton Energy, Inc.,
and BaseLine Capital, Inc.
10.5 Security Agreement dated April 27, 2011 by and between Baron
Energy, Inc. and BaseLine Capital, Inc.
10.6 First Amendment to Subordinated Deed of Trust, Mortgage, Security
Agreement, Assignment of Production and Financing Statement dated
April 27, 2011 granted by Baron Energy, Inc. in favor of BaseLine
Capital, Inc.
10.7 Form of Assignments of Oil and Gas Leases and Bill of Sale by and
between Baron Energy, Inc. and BaseLine Capital, Inc.
10.8 Form of Memorandum of Assignments by and between Baron Energy,
Inc. and BaseLine Capital, Inc.
10.9 Limited Power of Attorney from Baron Energy, Inc. to Karl J.
Reiter, effective as of April 27, 2011
