Item 2.01 Completion of Acquisition or Disposition of Assets
Pursuant to a Securities Purchase Agreement dated December 31, 2020 (the
"Purchase Agreement"), by and among Laredo Oil, Inc. ("Laredo"), Stranded Oil
Resources Corporation ("SORC"), Alleghany Corporation, SORC's sole stockholder
("Seller"), and SORC Holdings LLC, a wholly-owned subsidiary of Laredo
("Buyer"), Buyer purchased all of the issued and outstanding shares of SORC
stock (the "SORC Shares"). The transaction closed on December 31, 2020.
As consideration for the SORC Shares, Buyer paid to Seller $55,000 and Laredo
agreed to pay to Seller a revenue royalty of 5.0% of Laredo's future revenues
and net profits relating to oil, gas, gas liquids and all other hydrocarbons,
subject to certain adjustments, for a period of seven years after the closing.
The Purchase Agreement provides for customary adjustments to the purchase price
based on the effective date of December 31, 2020. SORC owns the enhancements to
UGD 3.0, an improved version of Laredo's enhanced oil recovery technique
utilized to produce oil from horizontally developed or mature pressure-depleted
oil fields. With this acquisition of SORC, Laredo now has exclusive rights to
utilize and license that technology worldwide, and has acquired oilfield assets
and equipment.
In connection with the transaction, the two senior promissory notes of Laredo
held by Seller were consolidated into a single Consolidated, Amended and
Restated Senior Promissory Note in the amount of $631,434.00 (which includes all
principal and accrued interest through December 31, 2020) (the "Consolidated
Note"), which Consolidated Note has a maturity date of June 30, 2022. The
Consolidated Note is now secured by a grant to Seller of a security interest in
certain oilfield equipment assets of SORC pursuant to a Security Agreement
executed at the closing.
Further, pursuant to the Purchase Agreement, Laredo and Seller entered into a
Consulting Agreement dated as of December 31, 2020 (the "Consulting Agreement"),
pursuant to which Seller agreed to pay an aggregate of approximately $1.245
million during 2021 in consideration of Laredo causing certain individuals,
including Mark See, Laredo's Chief Executive Officer and Chairman, and Chris
Lindsey, Laredo's General Counsel and Secretary, to provide consulting services
to Seller (for a period of three years for Mr. See and one year for Mr.
Lindsey).
Item 7.01 Regulation FD Disclosure
On January 5, 2021, Laredo issued a press release, attached as Exhibit 99.1,
announcing the closing of the purchase of the SORC Shares. A copy of the press
release is furnished as Exhibit 99.1 hereto and is incorporated by reference.
This information set forth in Exhibit 99.1 shall not be deemed to be "filed" for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or otherwise subject to the liabilities of that Section, and is
not incorporated by reference into a filing under the Securities Act of 1933, as
amended, or the Exchange Act, except as expressly set forth by specific
reference in such filing. Additionally, the submission of this report on Form
8-K in is not deemed an admission as to the materiality of any information in
this report that is required to be disclosed solely by Regulation FD.
Item 9.01 Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
Pursuant to Item 9.01(a)(4) of Form 8-K, the Company intends to file all
financial statements required by this item, if any, by an amendment to this
Current Report of Form 8-K to be filed within 71 calendar days after the date
this Current Report on Form 8-K must be filed.
(b) Pro Forma Financial Information
Pursuant to Item 9.01(b)(2) of Form 8-K, the Company intends to file all pro
forma financial information required by this item, if any, by an amendment to
this Current Report of Form 8-K to be filed within 71 calendar days after the
date this Current Report on Form 8-K must be filed.
(d) Exhibit
Exhibit 99.1 Press Release of Laredo dated January 5, 2021.
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