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EX-10.1 - EXHIBIT 10.1 - Grid Petroleum Corp.ex10_1.htm
EX-10.2 - EXHIBIT 10.2 - Grid Petroleum Corp.ex10_2.htm

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 20, 2011

Grid Petroleum Corp.
(Exact name of registrant as specified in its charter)

NV 000-53276 NA
(State or other jurisdiction of incorporation) (Commission File Number) (I.R.S. Employer Identification No.)

 

999 18th Street, Suite 3000, Denver, CO 80202
(Address of principal executive offices) (Zip Code)

 

Registrant’s telephone number, including area code: 303-952-7658

 

 

___________________________________________________

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

[ ] Written communications pursuant to Rule 425 under the Securities Act (17CFR 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))
 
 

Section 1 – Registrant’s Business and Operations

 

Item 1.01 Entry Into a Material Definitive Agreement

 

On May 20, 2011, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an accredited investor (the “Holder”) for the sale of a Convertible Promissory Note (the “Note”) in the aggregate principal amount of $60,000. The proceeds of the Note are to be used for our general working capital purposes. The Notes bear interest at the rate of 8% per annum and matures on February 17, 2012. The Note is convertible into shares of our common stock beginning 180 days from the date of the Note at a conversion price of 61% of the average of the lowest three trading prices of our common stock during the ten trading days on the OTCBB proceeding the conversion date. The number of shares issuable upon conversion shall be proportionally adjusted to reflect any stock dividend, split or similar event.

 

Unless waived in writing by the Holder, we are prohibited from effecting the conversion of the Note to the extent that as a result of such conversion the Holder thereof would beneficially own more than 4.99% in the aggregate of our issued and outstanding common stock immediately after giving effect to the issuance of common stock upon conversion. While the Note is outstanding, the Holder is entitled to a reduction in the conversion price if we issue any securities for a per share price less than the conversion price in effect available to the Holder.

 

Under the Purchase Agreement, the Holder is entitled to a right of first refusal on any subsequent equity offerings (or debt offerings with an equity component) that we may engage in for a period of one year that are in excess of $250,000.

 

We are only entitled to prepay the Note from the date of the Note until 120 days thereafter at 140% of the outstanding principal balance, accrued and unpaid interest, default interest, and other amounts required under the Note, so long as the Holder has not elected to convert the Note into our common stock. We are only entitled to prepay the Note 121 days from the date of the Note up to 180 days from the date of the Note at 150% of the outstanding principal balance, accrued and unpaid interest, default interest, and other amounts required under the Note. We have no right to prepay the Note after 180 days from the date of the Note.

 

For so long as we have any obligation under the Note, we agreed to certain restrictions on our ability to declare dividends, repurchase our capital stock, borrow money, sell our assets, or advance loans to others.

 

The Note contains events of default which, if triggered, will result in the requirement to pay a default amount as specified in the Note. The default amount depends on the particular event of default. In some cases, the amount we would owe the Holder could be two times the sum of the outstanding principal balance of the Note, accrued and unpaid interest, default interest (at 22% per annum), and other amounts required under the Note. In other cases, the amount we would owe the Holder would be 150% of the sum of the outstanding principal balance of the Note, accrued and unpaid interest, default interest, and other amounts required under the Note. Other cases elicit other default amounts as provided under the Note. The Note also provides for an option for the Holder to take the default amount in shares of our common stock under a formula provided in the Note in lieu of a cash payout.

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The foregoing description of the Purchase Agreement and Note does not purport to be complete and is qualified in its entirety by reference to Purchase Agreement and Note, which are filed as Exhibits 10.1 and 10.2, respectively hereto and incorporated herein by reference.

 

Section 2 – Financial Information

 

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

 

The information contained in Item 1.01 is incorporated herein by reference.

 

Section 3 – Securities and Trading Markets

 

Item 3.02 Unregistered Sales of Equity Securities

 

The information contained in Item 1.01 is incorporated herein by reference.

 

The Note was issued in reliance upon the exemption from registration contained in Section 4(2) of the Securities Act of 1933, as amended, and Regulation D promulgated thereunder.

 

Section 5 – Corporate Governance and Management

 

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

 

Effective June 8, 2011, Rob Hoar resigned as Executive Vice President of the Company. There was no known disagreement with Mr. Hoar on any matter relating to our operations, policies or practices.

 

On June 8, 2011, the board of directors appointed Steve Olsen to act as the Company’s Executive Vice President.

 

From 2005 to the present, Mr. Olsen has been with Cheapeake Energy as a completion workover consultant where he coordinated and supervised wellsite operations.

 

There are no family relationships between Mr. Olsen and any of our directors or executive officers.

 

Mr. Olsen does not have any material direct or indirect interest in any of our transactions or proposed transactions over the last two years. At this time, we do not have any employment agreement with Mr. Olsen.

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Section 9 – Financial Statements and Exhibits

 

Item 9.01. Financial Statements and Exhibits

 

Exhibit No. Description
10.1 Form of Securities Purchase Agreement
10.2 Form of Convertible Promissory Note

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

Grid Petroleum Corp.

 

 

/s/ James Powell

James Powell
President

 

Date: June 10, 2011

 

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