Prairie Operating Co. appointed new CEO

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. 


Departure of Directors; Appointment of Directors


As contemplated by the Merger Agreement, John D. Maatta and Michael Breen resigned from the Board effective as of the Effective Time. Such resignations were not the result, in whole or in part, of any disagreement with the Company or the Company's management.


Effective as of the Effective Time, the Board increased to five members and appointed Gary C. Hanna, Edward Kovalik, Gizman Abbas and Stephen Lee (collectively, the "New Directors"). Biographical information for these individuals is set forth in the definitive information statement filed with the SEC, dated November 7, 2022 (the "Information Statement"), in the section titled "Management of PrairieCo Following the Transactions" beginning on page 51, which is incorporated herein by reference. The Board has determined that Mr. Abbas and Mr. Lee are "independent directors" as defined in the application SEC rules and will serve on the audit, compensation and nominating and corporate governance committees with Mr. Abbas serving as chair of the audit committee and nominating and corporate governance committee and Mr. Lee serving as chair of the compensation committee.


The New Directors are not related to any existing officer or director of the Company, or each other. There are no transactions or relationships between or among any of Mr. Abbas and Mr. Lee and the Company that would be required to be reported under Item 404(a) of Regulation S-K. The information relating to Mr. Hanna and Mr. Kovalik required to be reported under Item 404(a) of Regulation S-K is disclosed in the Information Statement in the section titled "Interests of Certain Persons in the Merger Agreement and Related Party Transactions" beginning on page 45 and the Introductory Note and Item 1.01 of this Current Report on Form 8-K, each of which is incorporated herein by reference.


Departure of Executive Officers; Appointment of Executive Officers


At the Effective Time, Paul Kessler resigned as Executive Chairman and John D. Maatta resigned as Chief Executive Officer and Interim Chief Financial Officer. Such resignations were not the result, in whole or in part, of any disagreement with the Company or the Company's management. 


The Board appointed Gary C. Hanna as President, Edward Kovalik as Chief Executive Officer, Craig Owen as Chief Financial Officer, Jeremy Ham as Chief Commercial Officer and Bryan Freeman as Executive Vice President of Operations (collectively, the "New Officers"). Biographical information for these individuals is set forth in the Information Statement in the section titled "Management of PrairieCo Following the Transactions" beginning on page 51, which is incorporated herein by reference. 


The New Officers are not related to any existing officer or director of the Company, or each other. There are no transactions or relationships between or among Mr. Owen, Mr. Ham and Mr. Freeman and the Company that would be required to be reported under Item 404(a) of Regulation S-K.


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Employment Agreements


In connection with the Merger and the appointment of the New Officers, Prairie LLC entered into employment agreements with each of the New Officers, effective May 3, 2023 (collectively, the "Employment Agreements"), which were previously approved by Prairie LLC prior to the Effective Time. The Employment Agreements have an indefinite term, and Prairie LLC has the right to terminate employment at any time for Cause (as defined in the Employment Agreements) or with 30 days' written notice for a termination other than for Cause. The New Officers may terminate employment with Prairie LLC at any time and for any reason, or no reason at all, with written notice provided to Prairie LLC. 


The Employment Agreements provide that the New Officers will each receive an annual base salary and be eligible for an annual bonus with a target amount equal to a percentage of annual base salary in the following amounts: for each of Messrs. Hanna and Kovalik, $550,000 in annual base salary and a target annual bonus equal to 250% of annual base salary and for each of Messrs. Owen, Ham and Freeman, $350,000 in annual base salary and a target annual bonus equal to 100% of annual base salary. The New Officers will also be eligible to participate in Prairie LLC's Long Term Incentive Plan, which was amended and restated in connection with the Merger as described below. 


The Employment Agreements also provide for certain severance benefits upon each New Officer's termination of employment without "Cause" or upon their resignation for "Good Reason" (each quoted term as defined in the Employment Agreements), including (i) for Messrs. Hanna and Kovalik, (a) cash severance equal to three times (or, if termination occurs in connection with a "Change of Control" (as defined in the applicable Employment Agreement), four times) the sum of (1) the then-current annualized base salary, (2) the target annual bonus for the year of termination and (3) the amount payable under Prairie LLC's Long Term Incentive Plan (as amended and restated), payable in a lump sum on the first regularly scheduled pay date that is sixty (60) days after the termination date and (b) reimbursement of certain premiums paid for continuation coverage under Prairie LLC's group health plans for a period of up to eighteen (18) months; and (ii) for Messrs. Owen, Ham and Freeman, (a) cash severance equal to two times the sum of (1) the then-current annualized base salary and (2) the target annual bonus for the year of termination, payable in a lump sum on the first regularly scheduled pay date that is sixty (60) days after the termination date and (b) reimbursement of certain premiums paid for continuation coverage under Prairie LLC's group health plans for a period of up to eighteen (18) months. The severance benefits are contingent upon each New Officer's execution and non-revocation of a release of claims in favor of Prairie LLC and its affiliates. 


Additionally, upon any termination, each New Officer is entitled to (i) any earned but unpaid base salary, (ii) any annual bonuses earned but unpaid for any calendar years prior to the calendar year in which the termination occurs, (iii) a pro-rated annual bonus for the year in which the termination occurs, (iv) any amounts owed pursuant to the terms of Prairie LLC's Long Term Incentive Plan, (v) any unreimbursed business expenses and (vi) any employee benefits under any employee benefit plan or program in which such New Officer participates as of the termination date. The Employment Agreements also contain certain restrictive covenants regarding confidential information. 


The foregoing description of the Employment Agreements does not purport to be complete and is qualified in its entirety by reference to the forms of the Employment Agreements, which are attached hereto as Exhibits 10.12 and 10.13 and are incorporated herein by reference into this Item 5.02.


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Long Term Incentive Plan


In connection with the Merger and pursuant to the Merger Agreement, prior to the Effective Time, the Board assumed Prairie LLC's Long Term Incentive Plan and immediately following the Effective Time, adopted the Amended and Restated Prairie Operating Co. Long Term Incentive Plan (the "Plan"), which was an amendment and restatement of Prairie LLC's Long Term Incentive Plan. Among other ministerial changes to reflect the Merger and conversion of membership interests in Prairie LLC to shares of Common Stock, the Plan provides for the assumption of shares remaining available for delivery as of immediately prior to the Effective Time (as appropriately adjusted to reflect the Merger) such that such shares shall be available for awards under the Plan to individuals who were employed by Prairie LLC or its affiliates prior to the Effective Time. 


The foregoing description of the Plan does not purport to be complete and is qualified in its entirety by reference to the full text of the Plan, which is attached hereto as Exhibit 10.14 and is incorporated herein by reference into this Item 5.02.