PROP 8-K
Prairie Operating Co. (PROP)
8-K
2026-03-03
For: 2026-03-02
View Original
Added on
April 08, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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) March 2, 2026
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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 (see General Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule
12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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| Item 5.02 |
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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On March 2, 2026, Edward Kovalik resigned as the CEO and Chairman of the Board of Directors (the “Board”) of Prairie Operating Co. (the “Company”), and Gary Hanna
retired as President and director of the Company. The Board has appointed Richard N. Frommer, a member of the Board, to serve as Interim President and CEO of the Company, while the Company conducts a search for a permanent President and CEO. The
Board has also appointed Erik Thoresen to serve as Chairman of the Board. The Company’s wholly owned subsidiary, Prairie Operating Employee Co., LLC, has entered into separation agreements with Mr. Kovalik and Mr. Hanna with respect to the terms
of their separation from the Company, which were negotiated on behalf of the Company by a special committee of the Board composed entirely of independent directors.
Pursuant to the Company’s separation agreement with Mr. Kovalik (the “Kovalik Separation Agreement”), Mr. Kovalik will receive lump sum severance payment of
$2,531,250, which is the equivalent of 1.5 times the sum of Mr. Kovalik’s annual base salary and target annual incentive bonus. Mr Kovalik will also receive his 2025 annual incentive bonus of $750,000 and a payout of his unused, accrued
vacation/PTO benefits. In addition, the Kovalik Separation Agreement provides that all of Mr. Kovalik’s unvested time-based restricted stock units will immediately vest and all of Mr. Kovalik’s unvested performance-based restricted stock units
will be immediately forfeited.
The Company’s separation agreement with Mr. Hanna (the “Hanna Separation Agreement” and, together with the Kovalik Separation Agreement, the “Separation Agreements”)
provides that Mr. Hanna will receive his 2025 annual incentive bonus of $675,000 and a payout of his unused, accrued vacation/PTO benefits. Pursuant to the Hanna Separation Agreement, all of Mr. Hanna’s unvested time-based restricted stock units
will immediately vest, and Mr. Hanna will retain all of his unvested performance-based restricted stock units through the end of the applicable performance period, which is consistent with the treatment of such performance awards in the event of
retirement under Mr. Hanna’s applicable award agreements.
The Separation Agreements also provide that Mr. Kovalik and Mr. Hanna will retain their respective fully vested non-compensatory stock options but will assign their
respective overriding royalty interests in certain of the Company’s Genesis/Exok assets. Mr. Kovalik and Mr. Hanna have also each agreed to vote the shares of the Company’s common stock they beneficially own in favor of the Board’s recommendation
at any annual or special meeting of the Company’s stockholders over the next three years, and that any lockup agreements entered into by Mr. Kovalik and Mr. Hanna, including with the holder of the Company’s Series F Preferred Stock, will remain in
full force and effect in accordance with the terms thereof.
The foregoing descriptions of the Kovalik Separation Agreement and the Hanna Separation Agreement are not complete and are qualified in their entirety by reference to the
full text of the Kovalik Separation Agreement and the Hanna Separation Agreement, which are filed as Exhibit 10.1 and Exhibit 10.2, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.
Mr. Frommer, age 73, has served as director of the Company since November 2024. Mr. Frommer was President and Chief Executive Officer of Great Western Petroleum from
February 2013 September 2021. From May 2002 to November 2012, Mr. Frommer was Senior Vice President, Rocky Mountain division at Samson Resources Company until its sale to KKR & Co., L.P. Prior to Mr. Frommer’s time at Samson Resources Company,
Mr. Frommer spent four years at HS Resources Inc. as New Ventures Manager where he was responsible for entrance into new areas and plays in Colorado, Wyoming and Louisiana. He attended advanced oil and gas management courses at Southern Methodist
University and earned his Bachelor of Arts in Earth Sciences from New York State University College at Oneonta. He is a Wyoming Certified Professional Geologist.
Mr. Thoresen, age 53, has served as a director of the Company since May 2023. Mr. Thoresen has been a partner at Boka Group, LLC since November 2022. From January 2022
to December 2023, Mr. Thoresen served as the chief financial officer of Fusion Acquisition Corp. II. Prior to that, he served as the chief business development officer of Glass House Group, Inc., a vertically integrated consumer packaged goods
cannabis company, from August 2021 to June 2022. Mr. Thoresen was the vice president of mergers and acquisitions and real estate at Harvest Health and Recreation, Inc., a multi-state cannabis company that is now part of Trulieve Cannabis Corp.,
from January 2019 to March 2021. Previously, from November 2013 to July 2018, Mr. Thoresen was the chief operating, and investment, officer of Jonathan D. Pond, LLC, a wealth management firm, and prior to that held executive roles at the Bank of
New York Mellon Corporation and E*TRADE Financial Corporation. He received a Bachelor of Arts in International Relations from Syracuse University in 1994, and a Master of Business Administration from the Darden School at the University of Virginia
in 2000.
There are no arrangements or understandings between either Mr. Frommer or Mr. Thoresen and any other person pursuant to which Mr. Frommer and Mr. Thoresen were
selected as a director or officer of the Company. There are no family relationships between either Mr. Frommer or Mr. Thoresen and any director or executive officer, or person nominated or chosen by the Company to become a director or executive
officer, of the Company. There are no transactions between either Mr. Frommer or Mr. Thoresen and the Company that would be reportable under Item 404(a) of Regulation S-K.
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Regulation FD Disclosure.
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On March 3, 2026, the Company issued a press release regarding these leadership team changes. A copy of the press release is furnished as Exhibit 99.1.
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Item 9.01
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Financial Statements and Exhibits.
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(d) Exhibits.
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Separation Agreement, dated March 2, 2026, by and between Prairie Operating Employee Co., LLC and Edward Kovalik.
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Separation Agreement, dated March 2, 2026, by and between Prairie Operating Employee Co., LLC and Gary Hanna.
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Press Release, dated March 3, 2026.
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Cover Page Interactive Data File-formatted as Inline XBRL.
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*The exhibit to this Current Report on Form 8-K is not being filed but is being furnished pursuant to Item 9.01.
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.
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Date: March 3, 2026
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Prairie Operating Co.
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By:
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/s/ Daniel T. Sweeney
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Name:
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Daniel T. Sweeney | |
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Title:
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Executive Vice President, General Counsel
and Corporate Secretary
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Exhibit 10.1
SEPARATION AGREEMENT
This Separation Agreement (this “Agreement”) is entered into by Prairie Operating Employee Co., LLC, a
Delaware limited liability company (the “Company”), and Edward Kovalik (“Executive”) as of March 2, 2026. The Company and Executive are collectively referred to herein
as the “Parties.”
WHEREAS, Executive serves as the Company’s Chief Executive Officer under the terms of that certain Second Amended and Restated Employment Agreement dated as of August 13, 2025, by and between the Company and Executive (the “Employment Agreement”). Capitalized terms used but not otherwise defined herein have the meanings set forth in the Employment Agreement;
WHEREAS, reference is made to: (i) the 2024 Amended & Restated Long-Term Incentive Plan (the “Plan”) of Prairie Operating Co., a Delaware corporation (“Parent”);
(ii) those certain Performance Unit Award Agreements, dated June 12, 2024 and August 13, 2025, between Parent and Executive and issued pursuant to the Plan (each, a “Performance Award Agreement” and
collectively, the “Performance Award Agreements”); (iii) those certain Restricted Stock Unit Award Agreements, dated June 12, 2024 and August 13, 2025, between Parent and Executive and issued pursuant to
the Plan (each, a “Stock Award Agreement,” collectively, the “Stock Award Agreements,” and collectively with the Performance Award Agreements, the “Award Agreements”); and (iv) that certain Form of Lock-Up Agreement by and between Parent and Executive, dated March 24, 2025 (the “Lock-Up Agreement”);
WHEREAS, the Company and Executive agree that Executive provided the Company with his notice of resignation from employment with the Company (and any other Released Party, as applicable), without Good Reason (either as defined in any of the
Employment Agreement or any of the Award Agreements) and his notice of resignation from the board of directors of Parent (the “Board”) (and any other Released Party) as of the Separation Date (as defined
below);
WHEREAS, Executive voluntarily resigned from employment pursuant to Section 7(d) of the Employment Agreement effective as of March 2, 2026 (the “Separation Date”); and
WHEREAS, the Parties wish for Executive to receive the benefits set forth in this Agreement, conditioned upon Executive’s timely entry into and return of this Agreement and Executive’s compliance with the terms of this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants and agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto
agree as follows:
1. Termination of Executive’s Employment. Executive’s employment with the Company ended as of the Separation Date due to Executive’s
voluntary resignation without Good Reason (either as defined in the Employment Agreement or any of the Award Agreements). Such termination constitutes a termination by Executive for Convenience pursuant to Section 7(d) of the Employment
Agreement. As of the Separation Date, Executive ceased to have any further employment with the Company or any other employment or service relationship with any other Released Party. Executive acknowledges that, as of the Separation Date,
Executive has resigned from and no longer holds any director, manager or officer positions with the Company, Parent, or any of their respective affiliates or subsidiaries, and Executive has ceased to serve on the Board.
2. Termination Payments and Benefits.
(a) Accrued Rights. Upon the Separation Date, notwithstanding anything in the Employment Agreement to the contrary,
Executive shall be entitled to the Accrued Rights (including payment of unused, accrued vacation/PTO benefits) other than the Accrued Rights described in 7(e)(i)(B), 7(e)(i)(C), 7(e)(i)(D) and 7(e)(i)(E) of the Employment Agreement. In
consideration of the Company’s willingness to enter this Agreement, and to provide the compensation and benefits to which Executive is not otherwise entitled but for Executive’s entry into this Agreement, Executive waives any and all rights
Executive has with respect to the Accrued Rights described in 7(e)(i)(B), 7(e)(i)(C), 7(e)(i)(D) and 7(e)(i)(E) of the Employment Agreement.
(b) Severance Benefits. Subject to Executive’s (i) timely execution and delivery of a signed copy of this Agreement to
the Company on March 2, 2026, and (ii) compliance with all of Executive's continuing obligations under the Employment Agreement and the terms of this Agreement, the Company shall pay Executive:
(i) A lump sum severance payment in a total amount equal to $2,531,250, less applicable taxes and withholdings (the “Severance Payment”), which Severance Payment shall be paid in a single lump sum on the Company’s first regularly scheduled pay date that is on or after the date that is sixty (60) days after the Separation
Date; and
(ii) A payment of $750,000, less applicable taxes and withholdings (the “2025 STIP”),
which 2025 STIP will be paid on the date that annual bonuses for 2025 are paid to the Company’s executives, but no later than the date that the Severance Payment is paid.
Collectively, the Severance Payment and 2025 STIP and consideration described in Section 2(c) below are referred to herein as the “Severance
Benefits.” Executive acknowledges and agrees that the 2025 STIP constitutes payment of the full amount of the Annual Bonus applicable with respect to calendar year 2025, and that Executive shall not receive any additional or duplicative
amounts pursuant to Section 7(e)(i)(B) of the Employment Agreement.
(c) Equity Awards. Effective as of the Separation Date, Executive’s Restricted Stock Units (as defined in the Stock
Award Agreements), to the extent outstanding and unvested as of immediately prior to the Separation Date, shall automatically and without any required action on the part of Executive, accelerate and vest in full and shall settle pursuant to the
terms of the applicable Stock Award Agreement as soon as administratively possible, but in no event later than thirty (30) calendar days after the Separation Date. Executive’s Restricted Stock Units which were vested but not settled as of
immediately prior to the Separation Date will be settled pursuant to the terms of the applicable Stock Award Agreement as soon as administratively possible, but in no event later than thirty (30) calendar days after the Separation Date. Effective
as of the Separation Date, Executive’s Performance Units (as defined in the Performance Award Agreements), to the extent outstanding and unvested as of immediately prior to the Separation Date, shall be immediately forfeited and cancelled without
consideration and without any further action by the Company. Executive holds no, and could hold no, ongoing rights with respect to such unvested Performance Units. In connection with tax withholdings or payments
due in connection with equity vesting, the following will be acceptable for such tax withholding obligations: the delivery of cash or cash equivalents or Stock (including through delivery of previously owned shares, net settlement, a
broker-assisted sale, or other cashless withholding or reduction of the amount of shares otherwise issuable or delivered pursuant to the Award). In the event Executive (or an affiliated entity or assignee) exercises non-compensatory options to
purchase Company shares, the Company will not withhold approval for a “cashless exercise” if elected pursuant to Section 3(c)(i) of the applicable Non-Compensatory Option Agreement.
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3. Waiver of Additional Compensation or Benefits.
(a) Other Compensation and Benefits. Other than as set forth in Sections 2(a), 2(b) or 3(b),
Executive expressly acknowledges and agrees that Executive has received all leaves (paid and unpaid) to which Executive was entitled during Executive’s employment or service relationship with the Company, Parent or any other Released Party, and
Executive has received all wages, bonuses and other compensation, been provided all benefits and been afforded all rights, been reimbursed for all expenses and been paid all sums that Executive is owed and has been owed by the Company, Parent or
any other Released Party, including all payments arising out of all incentive plans and any other bonus or contractual arrangements, and all payments owed for any accrued but unused paid time off, owed to him in connection with his employment or
service relationship with the Company, Parent or any other Released Party. Executive shall not be entitled to any other or additional compensation, benefits, vesting, payments or grants under any agreement, benefit plan, severance plan or bonus
or incentive program established by the Company, Parent or any other Released Party, regardless of whether any such additional compensation, benefits, vesting, payments or grants are provided for in the Employment Agreement, any Award Agreement
or the Plan. Executive agrees that the Released Claims cover any claims Executive might have regarding Executive’s compensation and any benefits Executive may or may not have received during Executive’s employment with the Company, Parent or any
other Released Party. Employee agrees that any and all amounts payable under this Agreement are due solely from the Company, and Insperity has no obligations to pay such amounts or any other additional compensation, even though such amounts may
be processed through Insperity.
(b) Outstanding Expenses. No later than ten (10) days following the Separation Date, Executive shall submit
reimbursement requests for all previously unsubmitted reasonable business expenses incurred in February 2026 but still reimbursed by the Company. The Company shall reimburse all properly incurred and documented expenses pursuant to the terms of
its expense reimbursement policy, including those submitted following the Separation Date and those outstanding expenses previously submitted prior to the Separation Date.
(c) Assignment of ORRI Agreements. Executive agrees, no later than one (1) day following the Separation Date, to
execute and deliver to the Company, care of Daniel Sweeney, General Counsel, that certain Assignment of Overriding Royalty Interests attached as Exhibit A. Following the Separation Date, Executive shall further cooperate fully with the
Company and Parent and to take all actions as may be reasonably necessary, and to execute and deliver all documents, instruments, and agreements reasonably requested by the Company or Parent, to further effect the assignment of interests
contemplated by Exhibit A.
4. Release of Claims.
(a) General Release. In exchange for the Severance Benefits and other valuable consideration provided to Executive
under this Agreement (and any portion thereof), Executive (on Executive’s own behalf and on behalf of Executive’s heirs, executors, representatives, agents, insurers, administrators, successors and assigns and anyone purporting to claim through
or on behalf of Executive) hereby generally and completely releases and forever discharges the Company, Parent, Insperity PEO Services, LP (“Insperity”) and each of their respective predecessors,
successors, affiliated, related, parent and subsidiary entities, and each of the foregoing entities’ respective current and former affiliates, stockholders, members, partners, directors, officers, managers, employees, agents, attorneys, heirs,
successors and representatives, in their personal and representative capacities, as well as all employee benefit plans maintained by the Company or any of its affiliates or subsidiaries and all fiduciaries and administrators of any such plans, in
their personal and representative capacities (collectively, the “Released Parties” and each a “Released Party”) from any and all claims, demands, actions, causes of
action, obligations, judgments, rights, fees, damages, debts, obligations, liabilities and expenses (inclusive of attorneys’ fees) of any kind whatsoever, whether known and unknown, that arise out of or are in any way related to events, acts,
conduct, or omissions occurring prior to or on the date Executive signs this Agreement (collectively, the “Released Claims”).
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(b) Scope of Release. The Released Claims include, but are not limited to, (i) all claims arising out of or in any
way related to Executive’s employment with the Company, or the termination of that employment; (ii) all claims arising out of or in any way related to Executive’s service relationship with Parent or the Board; (iii) all claims related to
Executive’s compensation or benefits from the Company, Parent or any other Released Party, including with respect to salary, fees, bonuses, commissions, vacation, paid time off, expense reimbursements, severance pay, fringe benefits, long-term
incentive plans, stock, stock options, or any other ownership, equity, or profits interests; (iv) all claims for breach of contract (including for the avoidance of doubt as arising from the Employment Agreement, the Plan, or any Award Agreement),
wrongful termination, and breach of the implied covenant of good faith and fair dealing; (v) all common law and tort claims, including claims for fraud, defamation, emotional distress, and discharge in violation of public policy; (vi) all
federal, state, and local statutory claims, including but not limited to claims for discrimination, harassment, retaliation, attorneys’ fees, and including but not limited to claims arising under the federal Civil Rights Act of 1964 (as amended),
the federal Americans with Disabilities Act of 1990, the federal the Family and Medical Leave Act, the Fair Labor Standards Act, the Equal Pay Act, the Employee Retirement Income Security Act, the Civil Rights Act of 1991, Section 1981 through
1988 of U.S.C. Title 42, the Employee Retirement Income Security Act of 1974 (“ERISA”), the Immigration Reform Control Act, the Family and Medical Leave Act of 1993, the Occupational Safety and Health Act,
the Securities Exchange Act of 1934, the Investment Advisers Act of 1940, the Investment Company Act of 1940, the Private Securities Litigation Reform Act of 1995, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, any
federal, state, municipal or local wage and hour law, the Sarbanes-Oxley Act of 2002, the Worker Adjustment and Retraining Notification Act, the National Labor Relations Act, or the Texas Labor Code (including Chapter 21 of the Texas Labor Code,
the Texas Payday Law, the Texas Anti-Retaliation Act, and the Texas Whistleblower Act); (vii) any and all rights, benefits, or claims Executive may have under any employment contract, offer letter, award agreement, bonus, equity-based or
incentive compensation plan, or other agreement (including the Employment Agreement, the Plan, or any Award Agreement) with any Released Party; (viii) any claim, whether direct or derivative, arising from, or relating to, Executive’s status as a
member or holder of any interests in the Company, Parent or any other Released Party; and (ix) any and all claims for monetary or equitable relief, including but not limited to attorneys’ fees, back pay, front pay, reinstatement, experts’ fees,
medical fees or expenses, costs and disbursements. THIS RELEASE INCLUDES MATTERS ATTRIBUTABLE TO THE SOLE OR PARTIAL NEGLIGENCE (WHETHER GROSS OR SIMPLE) OR OTHER FAULT, INCLUDING STRICT LIABILITY, OF ANY OF THE RELEASED PARTIES.
(c) Acknowledgements. This is an important legal document, and the Company hereby
advises Executive in writing to consult with legal counsel prior to executing this Agreement. Executive acknowledges that: (i) Executive has carefully read this Agreement and Executive knowingly, freely and voluntarily assents to all of
the terms and conditions set out in this Agreement including, without limitation, the waiver, release and covenants contained herein; (ii) Executive is executing this Agreement in exchange for good and valuable consideration in addition to
anything of value to which the Executive is otherwise entitled; (iii) Executive’s waiver and release does not apply to any rights or claims that may arise after the date that Executive signs this Agreement; (iv) Executive should consult with an
attorney prior to signing this Agreement (although Executive may choose voluntarily not to do so); (v) Executive has had sufficient time to consider this Agreement since this Agreement was first provided to Executive to consider this Agreement
before the execution and delivery to Company (although Executive may choose voluntarily to sign it earlier).
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(d) Excluded Claims. Notwithstanding the foregoing, the following are not included in the Released Claims (the “Excluded Claims”): (i) any claim to vested benefits under an employee benefit plan that is subject to ERISA and that ERISA prevents from being released pursuant to a release agreement; and (ii) any claims for
breach of this Agreement; and (iii) rights in connection with continued participation in Company-sponsored health and welfare plans, and vested rights with respect to Company-sponsored retirement plans, or (iv) any other claims that cannot be
released as a matter of law. Executive hereby represents and warrants that, other than the Excluded Claims, Executive is not aware of any claims Executive has or might have against any of the Released Parties that are not included in the Released
Claims. Nothing herein will prevent Executive from seeking workers’ compensation or unemployment insurance benefits.
(e) Governmental Agencies and Protected Activity. Further, notwithstanding this release of liability, nothing in this
Agreement prevents Executive from filing any non-legally waivable claim, including a challenge to the validity of this Agreement, with the Equal Employment Opportunity Commission, the Securities Exchange Commission, the National Labor Relations
Board, the Occupational Safety and Health Administration, or other federal, state or local government agency or commission (collectively “Governmental Agencies”) or participating in (or cooperating with)
any investigation or proceeding conducted by any Governmental Agency or communicating with any Governmental Agency; however, Executive understands and agrees that, to the extent permitted by law, Executive is waiving any and all rights to recover
any monetary or personal relief or recovery from any Released Party as a result of such Governmental Agency proceeding or subsequent legal actions. Nothing herein waives Executive’s right to receive an award for information provided to a
Governmental Agency (including, for the avoidance of doubt, any monetary award or bounty from any governmental agency or regulatory or law enforcement authority in connection with any protected “whistleblower” activity). Nothing herein shall
prohibit or restrict Executive from (i) initiating communications directly with, cooperating with, providing information or making statements to, causing information to be provided to, or otherwise assisting in an investigation by, any
Governmental Agency; (ii) responding truthfully to any inquiry or legal process directed to Executive from any Governmental Agency; (iii) testifying, participating or otherwise assisting in any action or proceeding by any Governmental Agency;
(iv) disclosing an act of sexual abuse or facts related to an act of sexual abuse to any other person; or (v) making any disclosures that are protected under the whistleblower provisions of any applicable law. Nothing in this Agreement requires
Executive to obtain prior authorization before engaging in any conduct described in this Section 4(e) or to notify any Released Party that Executive engaged in any such conduct.
(f) Not An Admission of Wrongdoing. The release contained in this Section 4 shall not in any way be construed
as an admission by either Party or Parent or any other Released Party of any acts of wrongdoing, violation of any statute, law or legal or contractual right.
5. Return of Company Property. Within seven (7) calendar days from the Separation Date, Executive shall, to the extent not previously
returned or delivered: (a) return all equipment, records, files, programs or other materials and property in Executive’s possession which belongs to the Company, Parent or any of their respective affiliates, including, without limitation, all
vehicles (including for the avoidance of doubt the Company vehicle provided in connection with Executive’s employment, with the vehicle identification number ending in -0204, which will be picked up by a service of the Company’s choosing in
Austin, Texas), computers, printers, laptops, personal data assistants, cell phones, credit cards, keys and access cards; and (b) deliver all original and copies of confidential and proprietary information (as described in Section 8 of the
Employment Agreement) in Executive’s possession and notes, materials, records, plans, technical data or other documents, files or programs (whether stored in paper form, computer form, digital form, electronically or otherwise) in Executive’s
possession that contain Confidential Information. Executive shall be permitted to remove personal data and files from any Company-issued equipment before returning the same; provided, however, Executive will reasonably cooperate with the Company prior to any such removal to allow the Company to confirm no Company Confidential Information or other Company or Parent property is removed. By
signing this Agreement, Executive represents and warrants that Executive has not retained and has or will timely return and deliver all the items described or referenced in subsections (a) or (b) above; and, that should Executive later discover
additional items described or referenced in subsections (a) or (b) above, Executive will promptly notify the Company and return/deliver such items to the Company.
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6. Non-Disparagement. Executive agrees that Executive will not, directly or indirectly, communicate or publish any disparaging statements
concerning the Company, Parent or any of the other Released Parties, or cause others to communicate or publish any disparaging statements concerning the Company, Parent or any of the other Released Parties. The Company agrees that it shall
instruct each of its officers and directors to not, directly or indirectly, communicate or publish any disparaging statements concerning Executive. Notwithstanding the foregoing, the provisions of this Section 6 shall not apply with
respect to any activities described in Section 4(e) of this Agreement, as nothing in this Section 6 shall prevent any individual or entity from communicating or publishing any statement to a Governmental Agency or as described in
Section 4(e) above.
7. Standstill and Voting Agreement.
(a) Executive agrees that, unless approved in advance in writing by the Board, neither Executive nor any person acting on
behalf of or in concert with Executive will, for a period of three (3) years after the date of this Agreement (such period the “Standstill Period”), directly or indirectly:
(i) make any statement or proposal to the Board, any of Parent’s or the Company’s respective directors, officers, employees,
managing members, general partners, agents or consultants (including attorneys, financial advisors and accountants) or any of the Company’s stockholders regarding, or make any public announcement, proposal or offer (including any “solicitation”
of “proxies” as such terms are defined or used in Regulation 14A of the Exchange Act) with respect to, or otherwise solicit, seek or offer to effect (including, for the avoidance of doubt, indirectly by means of communication with the press or
media) (A) any business combination, merger, tender offer, exchange offer or similar transaction involving Parent, the Company or any of their respective subsidiaries, (B) any restructuring, recapitalization, liquidation or similar transaction
involving Parent, the Company or any of their respective subsidiaries, (C) any acquisition of any of Parent’s, the Company’s or their respective subsidiaries’ loans, debt securities, equity securities or assets, or rights or options to acquire
interests in any of Parent’s, the Company’s or any of their respective subsidiaries’ loans, debt securities, equity securities or assets, (D) any proposal to seek representation on the Board or otherwise seek to control or influence the
management, Board or any policies of Parent, the Company or any of their respective subsidiaries, (E) any request or proposal to waive, terminate or amend the provisions of this Agreement, or (F) any proposal, arrangement or other statement that
is inconsistent with the terms of this Agreement, including this Section 14(a)(1);
(ii) instigate, encourage or assist any third party (including forming a “group” with any such third party) to do, or enter
into any discussions or agreements with any third party with respect to, any of the actions set forth in clause (i) above;
(iii) take any action which would reasonably be expected to require Parent, the Company or any of their respective
subsidiaries to make a public announcement regarding any of the actions set forth in clause (i) above; or
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(iv) acquire (or propose or agree to acquire), of record or beneficially, by purchase or otherwise, any loans, debt
securities, equity securities or assets of Parent, the Company or any of their respective subsidiaries, or rights or options to acquire interests in any of Parent’s, the Company’s or any of their respective subsidiaries’ loans, debt securities,
equity securities or assets, except that Executive may (A) exercise any vested stock options issued by Parent and held by Executive upon effectiveness of this Agreement and (B) beginning six (6) months after the date of this Agreement, Executive
may request advance written approval from the Board to acquire Parent’s securities, which approval shall be granted solely within the discretion of the Board.
(b) At any meeting of stockholders held during the Standstill Period, Executive shall vote or cause to be voted all shares of
Parent’s stock held directly or indirectly by Executive, whether now owned or hereafter acquired, over which the Executive has voting control and shall take all other necessary or desirable actions within such Executive’s control to vote in
accordance with the recommendations of the Board on any proposal and to elect to the Board any individual nominated by the Board, as reflected in Parent’s proxy statement for such meeting. Executive hereby grants to Parent, or any designee of
Parent, an irrevocable proxy, which shall be deemed coupled with an interest sufficient in law to support an irrevocable proxy, to vote all shares of stock of Parent over which the Executive has voting control at any meeting of stockholders held
during the Standstill Period in accordance with the foregoing sentence. Executive acknowledges that this irrevocable proxy shall survive the death, incapacity, bankruptcy or dissolution of the Executive and shall remain in full force and effect
until the expiration of the Standstill Period.
8. Continuing Obligations. Executive reaffirms and understands his continuing obligations in the Employment Agreement, including
Sections 7, 8, 9, and 20 of the Employment Agreement, and those provisions necessary to interpret and enforce them, all of which shall survive the termination of Executive's employment in accordance with Section 21 of the Employment Agreement
(collectively, the “Continuing Obligations”). Consistent with Section 9 of the Employment Agreement, any dispute arising out of or relating to this Agreement shall be resolved in accordance with the
dispute resolution (including arbitration) provisions set forth in Section 9 of the Employment Agreement.
9. Section 409A. Notwithstanding any provision of this Agreement to the contrary, all provisions of this Agreement are intended to
comply with Section 409A of the U.S. Internal Revenue Code of 1986, as amended (the “Code”) and the applicable Treasury regulations and administrative guidance issued thereunder (collectively, “Section 409A”) or an exemption therefrom and shall be construed and administered in accordance with such intent. Any payments under this Agreement that may be excluded from Section 409A either as separation pay
due to an involuntary separation from service or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible. For purposes of Section 409A, each installment payment provided under this Agreement shall be treated as
a separate payment. Any payments to be made under this Agreement upon a termination of Executive's employment shall only be made if such termination of employment constitutes a “separation from service” under Section 409A. To the extent that any
right to reimbursement of expenses or payment of any benefit in-kind under this Agreement constitutes nonqualified deferred compensation (within the meaning of Section 409A), (i) any such expense reimbursement shall be made by the Company no
later than the last day of Executive's taxable year following the taxable year in which such expense was incurred by Executive, (ii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another
benefit, and (iii) the amount of expenses eligible for reimbursement or in-kind benefits provided during any taxable year shall not affect the expenses eligible for reimbursement or in-kind benefits to be provided in any other taxable year;
provided, that the foregoing clause shall not be violated with regard to expenses reimbursed under any arrangement covered by Section 105(b) of the Code solely because such expenses are subject to a limit related to the period in which the
arrangement is in effect. Notwithstanding any provision in this Agreement to the contrary, if any payment or benefit provided for herein would be subject to additional taxes and interest under Section 409A if Executive’s receipt of such payment
or benefit is not delayed until the earlier of (a) the date of Executive's death or (b) the date that is six (6) months after the Separation Date (such date, the “Section 409A Payment Date”), then such
payment or benefit shall not be provided to Executive (or Executive's estate, if applicable) until the Section 409A Payment Date. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under
this Agreement are exempt from, or compliant with, Section 409A and in no event shall any member of the Company Group be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by Executive on
account of non-compliance with Section 409A.
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10. Binding Effect. This Agreement shall be binding upon the Company and upon Executive and Executive’s heirs, administrators,
representatives, executors, successors and assigns and the Company’s representatives, successors and assigns. In the event of Executive’s death, this Agreement shall operate in favor of Executive’s estate and all payments, obligations and
consideration will continue to be performed in favor of Executive’s estate.
11. Severability. Should any provision of this Agreement be declared or determined to be unenforceable, illegal, or invalid by any
government agency, arbitrator, or court of competent jurisdiction, (i) such provision shall be deemed to be amended / revised so that the intent of the Parties is fulfilled to the greatest extent possible, and (ii) the validity of the remaining
parts, terms or provisions of this Agreement shall not be affected and such provisions shall remain in full force and effect.
12. Entire Agreement. Except for the Continuing Obligations, this Agreement (and the Employment Agreement, the Plan, the Award Agreements,
the Lock-Up Agreement as referenced herein, and any Exhibit(s) attached hereto), and any agreement relating to Executive’s non-compensatory options, sets forth the entire agreement between the Parties, and fully supersedes any and all prior
agreements, understandings, or representations between the Parties pertaining to Executive’s employment with the Company, the subject matter of this Agreement or any other term or condition of the employment relationship between the Company and
Executive. Executive represents and acknowledges that in executing this Agreement, Executive does not rely, and has not relied, upon any representation(s) by the Company, Parent, or any of their respective agents except as expressly contained in
this Agreement or the Employment Agreement. Executive and the Company agree that they have each used their own judgment in entering into this Agreement. This Agreement may not be modified, altered, or changed except by a written agreement signed
by both Executive and a duly authorized representative of the Company.
13. Future Employment. Executive waives and releases any right to be considered for employment by the Company, Parent, or any of their
respective affiliates or successors and agrees that any refusal of employment in the future shall not constitute discrimination or retaliation by any of the Released Parties.
14. Cooperation. Following the Separation Date, Executive agrees to cooperate fully with the Company, Parent, and their respective
affiliates and their respective counsel in any capacity with respect to matters of which Executive has knowledge or with which he was involved. Without limitation, such assistance may include providing information or documents; making himself
available for interviews; cooperating with investigations (internal or external), negotiations, lawsuits, charges, claims, or administrative proceedings involving the Company, Parent, or any of their respective affiliates; preparing for and
giving truthful testimony including, but not limited to, written declarations, depositions, trial testimony, or statements; and other similar activities.
15. Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly received (a) when
delivered in person, (b) on the first business day after such notice is sent by express overnight courier service, or (c) on the second business day following deposit with an internationally-recognized second-day courier service with proof of
receipt maintained, in each case, to the following address, as applicable:
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If to Executive, at the most recent home address for Executive in the Company's personnel files.
If to the Company:
Prairie Operating Employee Co., LLC
Prairie Operating Employee Co., LLC
44 Cook Street, Suite 1000
Denver, Colorado 80206
Attention: Chair, Board of Directors
Attention: Chair, Board of Directors
Any Party may change the address to which notices and other communications are to be delivered by giving the other Party notice in the manner herein set forth.
16. Withholding of Taxes. The Company may withhold from any benefits payable under this Agreement all Federal, state, local or other
taxes as may be required by law, governmental regulation, or ruling.
17. Governing Law and Arbitration. This Agreement shall in all respects be construed according to the laws of the State of Texas without
regard to its conflict of laws principles that would result in the application of the laws of another jurisdiction. Any dispute, claim, or controversy regarding this Agreement shall be settled in accordance with the dispute resolution provisions
set forth in Section 9 of the Employment Agreement. IN ENTERING INTO THIS AGREEMENT, EXECUTIVE AND THE COMPANY ARE KNOWINGLY AND VOLUNTARILY WAIVING THEIR RIGHTS TO JURY TRIAL IN ANY DISPUTE ARISING OUT OF OR RELATING TO THIS AGREEMENT.
18. Counterparts. This Agreement may be executed in counterparts, each of which when executed and delivered (which deliveries may be by
facsimile or other electronic method of delivery) shall be deemed an original and all of which together shall constitute one and the same instrument.
19. No Assignment of Claims. Executive represents and agrees that Executive has not transferred or assigned, to any person or entity, any
claim involving the Company, or any portion thereof or interest therein.
20. No Waiver. This Agreement may not be waived, modified, amended, supplemented, canceled or discharged, except by written agreement of
the Parties. Failure to exercise and/or delay in exercising any right, power or privilege in this Agreement shall not operate as a waiver. No waiver of any breach of any provision shall be deemed to be a waiver of any preceding or succeeding
breach of the same or any other provision, nor shall any waiver be implied from any course of dealing between or among the Parties.
21. Lock-Up. Notwithstanding anything to the contrary contained herein, this Agreement shall not modify, alter, amend, supersede, or
otherwise affect any lock-up agreement or other voting agreement to which Executive is a party, including for the avoidance of doubt the Lock-Up Agreement. The Lock-Up Agreement shall remain in full force and effect in accordance with its terms.
22. Intended Third Party Beneficiaries. Each Released Party that is not a signatory hereto is an intended third-party beneficiary of
this Agreement and shall be entitled to rely upon and enforce Executive’s representations, covenants, and release of claims set forth herein as if such Released Party was a party hereto.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the Parties have executed this Agreement on the dates set forth below.
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PRAIRIE OPERATING EMPLOYEE CO., LLC
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By:
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/s/ Gregory S. Patton | ||
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Name:
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Gregory S. Patton
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Title:
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Executive Vice President and Chief Financial Officer
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Date: March 2, 2026
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I ACKNOWLEDGE THAT I HAVE CAREFULLY READ THE FOREGOING AGREEMENT, THAT I UNDERSTAND ALL OF ITS TERMS AND THAT I AM RELEASING CLAIMS AND THAT I AM ENTERING INTO IT
VOLUNTARILY.
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EXECUTIVE
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| /s/ Edward Kovalik | ||
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Name:
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Edward Kovalik | |
| Date: March 2, 2026 | ||
EXHIBIT A
ASSIGNMENT OF OVERRIDING ROYALTY INTERESTS
KNOW ALL MEN BY THESE PRESENTS:
THAT effective as of March 2, 2026 (the “Effective Time") the undersigned Red Arrow Interests, LLC, an Colorado limited liability company, (hereinafter referred to as "Assignor"), for and in consideration of the sum of Ten Dollars ($10.00) and other valuable considerations, the receipt and sufficiency of which is hereby acknowledged, does hereby GRANT, BARGAIN, SELL,
CONVEY AND ASSIGN unto Otter Holdings, LLC, a Delaware limited liability company (hereinafter referred to as "Assignee") with
the address of 44 Cook Street, Suite 1000, Denver, Colorado 80206, any and all overriding royalty interests ("Overriding Royalty Interest"), including, but not limited to:
(a) a 0.0066%
of the 8/8ths of the oil, gas, associated liquids and other hydrocarbons (collectively "Hydrocarbons") produced, saved
and sold from the oil and gas leases described in Exhibit "A" attached hereto and made a part hereof (the "Leases") and the lands covered thereby or pooled or unitized therewith (the "Lands") and;
(b) the
positive difference, if any, between (i) twenty-two and one-half percent (22.5%) of 8/8ths of Hydrocarbons produced, saved and sold from the Leases and the Lands, and (ii) all royalty, overriding royalty, production payments and other burdens
on such Hydrocarbon production in existence immediately prior to the Effective Time.
The Overriding Royalty Interest shall be calculated and measured on the same terms as the applicable royalties payable under the Leases; provided,
however, the Overriding Royalty Interest shall be free of all development, production, and operating expenses; however, said interest shall bear its proportionate share of gross production taxes assessed against the gross production subject to said
Overriding Royalty Interest. It is agreed that nothing contained herein shall impose upon the Assignor, its successors, or assigns, any duty or obligation to develop or operate the properties covered by the above-described "Leases" or to maintain
them by the payment of delay rentals, shut-in royalty payments or other similar payments.
The Overriding Royalty Interest shall be subject to any cooperative or unit plan of operation or development and to any pooling, communitization
or other agreement for the allocation of Hydrocarbon production among multiple tracts to which the Leases, or any part thereof, may have heretofore or may hereafter be committed by Assignor or by the predecessors to its interest or its successors
and assigns, including, but not limited to, any joint operating agreement, pooling or unit designation, or similar agreement unitizing the working interests in a contract area or pooled unit, including that of Assignor, regardless of whether such
agreement expressly purports to commit the Overriding Royalty Interest; and, in such event or events, the Overriding Royalty Interest shall be computed and paid on the basis of the applicable Hydrocarbons allocated to the Lands under and pursuant
to the terms of any such agreement or plan of operation; however, in the event that such cooperative or unit plan of operation or development or pooling or communitization agreement does not set out how payments are to be calculated, then in such
event, the Overriding Royalty Interest will be paid in the proportion that the surface acreage of the Lands bears to the total acreage within such contract area or pooled unit.
If any of the Leases covers an interest in the Lands less than the entire mineral estate therein (regardless of whether such Lease purports to
cover only the lessor's interest therein), then, as to such Lease, the Overriding Royalty Interest, insofar only as it affects and applies to production from or allocable to such Lands, shall be payable to Assignee in the proportion that the
mineral interests in such lands actually covered by the relevant Lease bear to the entire, undivided mineral estate in such lands. Similarly, if Assignor owns less than a one hundred percent (100%) leasehold interest in and to any of the Leases,
then, as to such Lease, the Overriding Royalty Interest shall be payable to Assignee in the proportion that the leasehold interest in such Lease actually owned by Assignor bears to a one hundred percent (100%) leasehold interest in and to such
Lease. In addition, if the leasehold interest in the Lease owned by Assignor is increased or decreased pursuant to the terms of any compulsory pooling order, farmout agreement, contractual rights agreement, applicable operating agreement, or other
instrument providing for a reversionary interest that is existing at the Effective Time, the Overriding Royalty Interest shall be proportionately increased or decreased accordingly.
Assignor hereby warrants defensible title to the Overriding Royalty Interest unto each Assignee. its successors and assigns, in each case, free
and clear of any liens and encumbrances, burdens, defects, against all Persons claiming or purporting to claim the same or any part thereof. by, through or under Assignor or any of its Affiliates, but not otherwise.
This Assignment shall be binding upon and inure to the benefit of the respective parties hereto, their heirs, successors, representatives and
assigns. No change in the ownership of the Overriding Royalty Interest shall be binding on Assignor until such time as Assignor shall have been furnished with either the original, a certified copy or an acceptable reproduced copy of the recorded
instrument or instruments effecting the change in ownership.
IN WITNESS WHEREOF, the said Assignor, executed this instrument this ____ day of March, 2026.
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RED ARROW INTERESTS, LLC
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By:
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Name:
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||
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Title:
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ACKNOWLEDGEMENT
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STATE OF
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COUNTY OF
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The foregoing instrument was acknowledged before me on this ___ day of March, 2026. by ________________________________.
| My Commission Expires: | |
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Name:
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Exhibit A to the Separation Agreement
Exhibit 10.2
SEPARATION AGREEMENT
This Separation Agreement (this “Agreement”) is entered into by Prairie
Operating Employee Co., LLC, a Delaware limited liability company (the “Company”), and Gary C. Hanna (“Executive”)
as of March 2, 2026. The Company and Executive are collectively referred to herein as the “Parties.”
WHEREAS, Executive serves as
the Company’s President under the terms of that certain Second Amended and Restated Employment Agreement dated as of August 13, 2025, by and between the Company and Executive (the “Employment
Agreement”). Capitalized terms used but not otherwise defined herein have the meanings set forth in the Employment Agreement;
WHEREAS, reference is made
to: (i) the 2024 Amended & Restated Long-Term Incentive Plan (the “Plan”) of Prairie Operating Co., a Delaware corporation (“Parent”); (ii) those certain Performance Unit Award Agreements, dated June 12, 2024 and August 13, 2025, between Parent and Executive and issued pursuant to the Plan (each, a “Performance Award Agreement” and collectively, the “Performance Award Agreements”); (iii) those certain Restricted Stock Unit Award
Agreements, dated June 12, 2024 and August 13, 2025, between Parent and Executive and issued pursuant to the Plan (each, a “Stock Award Agreement,” collectively, the “Stock Award Agreements,” and collectively with the Performance Award Agreements, the “Award Agreements”);
and (iv) that certain Form of Lock-Up Agreement by and between Parent and Executive, dated March 24, 2025 (the “Lock-Up Agreement”);
WHEREAS, the Company and
Executive agree that Executive provided the Company with his notice of voluntary retirement from employment with the Company (and any other Released Party, as applicable), without Good Reason (either as defined in any of the Employment Agreement
or any of the Award Agreements) and his notice of resignation from the board of directors of Parent (the “Board”) (and any other Released Party) as of the Separation Date (as
defined below);
WHEREAS, Executive
voluntarily resigned from employment pursuant to Section 7(d) of the Employment Agreement effective as of March 2, 2026 (the “Separation Date”); and
WHEREAS, the Parties wish
for Executive to receive the benefits set forth in this Agreement, conditioned upon Executive’s timely entry into and return of this Agreement and Executive’s compliance with the terms of this Agreement.
NOW, THEREFORE, in
consideration of the premises and mutual covenants and agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:
1. Termination
of Executive’s Employment. Executive’s employment with the Company ended as of the Separation Date due to Executive’s retirement, which was pursuant to a voluntary resignation without Good Reason (either as defined in the
Employment Agreement or any of the Award Agreements). Such retirement and attendant termination constitutes a termination by Executive for Convenience pursuant to Section 7(d) of the Employment Agreement. As of the Separation Date, Executive
ceased to have any further employment with the Company or any other employment or service relationship with any other Released Party. Executive acknowledges that, as of the Separation Date, Executive has resigned from and no longer holds any
director, manager or officer positions with the Company, Parent, or any of their respective affiliates or subsidiaries, and Executive has ceased to serve on the Board.
2. Termination
Payments and Benefits.
(a) Accrued Rights. Upon the Separation Date, notwithstanding anything in the Employment Agreement to the contrary, Executive shall be entitled to the Accrued Rights (including payment of unused, accrued vacation/PTO
benefits) other than the Accrued Rights described in 7(e)(i)(B), 7(e)(i)(C), 7(e)(i)(D) and 7(e)(i)(E) of the Employment Agreement. In consideration of the Company’s willingness to enter this Agreement, and to provide the compensation and
benefits to which Executive is not otherwise entitled but for Executive’s entry into this Agreement, Executive waives any and all rights Executive has with respect to the Accrued Rights described in 7(e)(i)(B), 7(e)(i)(C), 7(e)(i)(D) and
7(e)(i)(E) of the Employment Agreement.
(b) Severance Benefits. Subject to Executive’s (i) timely execution and delivery of a signed copy of this Agreement to the Company on March 2, 2026, and (ii) compliance with all of Executive's continuing obligations under
the Employment Agreement and the terms of this Agreement, the Company shall pay Executive a payment of $675,000, less applicable taxes and withholdings (the “2025 STIP”),
which 2025 STIP will be paid on the date that annual bonuses for 2025 are paid to the Company’s executives, but no later than the date that is sixty (60) days following the Separation Date. Executive acknowledges and agrees that the 2025 STIP
constitutes payment of the full amount of the Annual Bonus applicable with respect to calendar year 2025, and that Executive shall not receive any additional or duplicative amounts pursuant to Section 7(e)(i)(B) of the Employment Agreement.
(c) Equity Awards. Effective as of the Separation Date, Executive’s Restricted Stock Units (as defined in the Stock Award Agreements), to the extent outstanding and unvested as of immediately prior to the Separation Date,
shall automatically and without any required action on the part of Executive, accelerate and vest in full and shall settle pursuant to the terms of the applicable Stock Award Agreement as soon as administratively possible, but in no event later
than thirty (30) calendar days after the Separation Date. Executive’s Restricted Stock Units which were vested but not settled as of immediately prior to the Separation Date will be settled pursuant to the terms of the applicable Stock Award
Agreement as soon as administratively possible, but in no event later than thirty (30) calendar days after the Separation Date. Effective as of the Separation Date, Executive’s Performance Units (as defined in the Performance Award Agreements),
to the extent outstanding and unvested as of immediately prior to the Separation Date, shall remain outstanding and shall vest in accordance with Section 6(b) of the applicable Performance Award Agreement and shall otherwise continue to be
governed by the terms of the applicable Performance Award Agreement. In connection with tax withholdings or payments due in connection with equity vesting, the following will be
acceptable for such tax withholding obligations: the delivery of cash or cash equivalents or Stock (including through delivery of previously owned shares, net settlement, a broker-assisted sale, or other cashless withholding or reduction
of the amount of shares otherwise issuable or delivered pursuant to the Award). In the event Executive (or an affiliated entity or assignee) exercises non-compensatory options to purchase Company shares, the Company will not withhold approval
for a “cashless exercise” if elected pursuant to Section 3(c)(i) of the applicable Non-Compensatory Option Agreement.
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3. Waiver
of Additional Compensation or Benefits.
(a) Other Compensation and Benefits. Other than as set forth in Sections 2(a), 2(b) or 3(b), Executive expressly acknowledges and agrees that Executive has received all leaves (paid and unpaid) to which Executive was entitled during Executive’s employment or service
relationship with the Company, Parent or any other Released Party, and Executive has received all wages, bonuses and other compensation, been provided all benefits and been afforded all rights, been reimbursed for all expenses and been paid all
sums that Executive is owed and has been owed by the Company, Parent or any other Released Party, including all payments arising out of all incentive plans and any other bonus or contractual arrangements, and all payments owed for any accrued
but unused paid time off, owed to him in connection with his employment or service relationship with the Company, Parent or any other Released Party. Executive shall not be entitled to any other or additional compensation, benefits, vesting,
payments or grants under any agreement, benefit plan, severance plan or bonus or incentive program established by the Company, Parent or any other Released Party, regardless of whether any such additional compensation, benefits, vesting,
payments or grants are provided for in the Employment Agreement, any Award Agreement or the Plan. Executive agrees that the Released Claims cover any claims Executive might have regarding Executive’s compensation and any benefits Executive may
or may not have received during Executive’s employment with the Company, Parent or any other Released Party. Employee agrees that any and all amounts payable under this Agreement are due solely from the Company, and Insperity has no
obligations to pay such amounts or any other additional compensation, even though such amounts may be processed through Insperity.
(b) Outstanding Expenses. No later than ten (10) days following the Separation Date, Executive shall submit reimbursement requests for all previously unsubmitted reasonable business expenses incurred in February 2026 but
still reimbursed by the Company. The Company shall reimburse all properly incurred and documented expenses pursuant to the terms of its expense reimbursement policy, including those submitted following the Separation Date and those outstanding
expenses previously submitted prior to the Separation Date.
(c) Assignment of ORRI Agreements. Executive agrees, no later than one (1) day following the Separation Date, to execute and deliver to the Company, care of Daniel Sweeney, General Counsel, that certain Assignment of
Overriding Royalty Interests attached as Exhibit A. Following the Separation Date, Executive shall further cooperate fully with the Company and Parent and to take all actions as may
be reasonably necessary, and to execute and deliver all documents, instruments, and agreements reasonably requested by the Company or Parent, to further effect the assignment of interests contemplated by Exhibit A.
4. Release
of Claims.
(a) General Release. In exchange for the consideration provided to Executive under this Agreement (and any portion thereof), Executive (on Executive’s own behalf and on behalf of Executive’s heirs, executors,
representatives, agents, insurers, administrators, successors and assigns and anyone purporting to claim through or on behalf of Executive) hereby generally and completely releases and forever discharges the Company, Parent, Insperity PEO
Services, LP (“Insperity”) and each of their respective predecessors, successors, affiliated, related, parent and subsidiary entities, and each of the foregoing entities’
respective current and former affiliates, stockholders, members, partners, directors, officers, managers, employees, agents, attorneys, heirs, successors and representatives, in their personal and representative capacities, as well as all
employee benefit plans maintained by the Company or any of its affiliates or subsidiaries and all fiduciaries and administrators of any such plans, in their personal and representative capacities (collectively, the “Released Parties” and each a “Released Party”) from any and all claims, demands, actions, causes of action, obligations,
judgments, rights, fees, damages, debts, obligations, liabilities and expenses (inclusive of attorneys’ fees) of any kind whatsoever, whether known and unknown, that arise out of or are in any way related to events, acts, conduct, or omissions
occurring prior to or on the date Executive signs this Agreement (collectively, the “Released Claims”).
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(b) Scope of Release. The Released Claims include, but are not limited to, (i) all claims arising out of or in any way related to Executive’s employment with the Company, or the termination of that employment; (ii) all
claims arising out of or in any way related to Executive’s service relationship with Parent or the Board; (iii) all claims related to Executive’s compensation or benefits from the Company, Parent or any other Released Party, including with
respect to salary, fees, bonuses, commissions, vacation, paid time off, expense reimbursements, severance pay, fringe benefits, long-term incentive plans, stock, stock options, or any other ownership, equity, or profits interests; (iv) all
claims for breach of contract (including for the avoidance of doubt as arising from the Employment Agreement, the Plan, or any Award Agreement), wrongful termination, and breach of the implied covenant of good faith and fair dealing; (v) all
common law and tort claims, including claims for fraud, defamation, emotional distress, and discharge in violation of public policy; (vi) all federal, state, and local statutory claims, including but not limited to claims for discrimination,
harassment, retaliation, attorneys’ fees, and including but not limited to claims arising under the federal Civil Rights Act of 1964 (as amended), the federal Americans with Disabilities Act of 1990, the federal the Family and Medical Leave
Act, the Fair Labor Standards Act, the Equal Pay Act, the Employee Retirement Income Security Act, the Civil Rights Act of 1991, Section 1981 through 1988 of U.S.C. Title 42, the Employee
Retirement Income Security Act of 1974 (“ERISA”), the Immigration Reform Control Act, the Family and Medical Leave Act of 1993, the Occupational Safety and Health Act, the
Securities Exchange Act of 1934, the Investment Advisers Act of 1940, the Investment Company Act of 1940, the Private Securities Litigation Reform Act of 1995, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, any federal,
state, municipal or local wage and hour law, the Sarbanes-Oxley Act of 2002, the Worker Adjustment and Retraining Notification Act, the National Labor Relations Act, or the Texas Labor Code (including Chapter 21 of the Texas Labor Code, the
Texas Payday Law, the Texas Anti-Retaliation Act, and the Texas Whistleblower Act); (vii) any and all rights, benefits, or claims Executive may have under any employment contract, offer letter, award agreement, bonus, equity-based or incentive
compensation plan, or other agreement (including the Employment Agreement, the Plan, or any Award Agreement) with any Released Party; (viii) any claim, whether direct or derivative, arising from, or relating to, Executive’s status as a member
or holder of any interests in the Company, Parent or any other Released Party; and (ix) any and all claims for monetary or equitable relief, including but not limited to attorneys’ fees, back pay, front pay, reinstatement, experts’ fees,
medical fees or expenses, costs and disbursements. THIS RELEASE INCLUDES MATTERS ATTRIBUTABLE TO THE SOLE OR PARTIAL NEGLIGENCE (WHETHER GROSS OR SIMPLE) OR OTHER FAULT, INCLUDING STRICT LIABILITY, OF ANY OF THE RELEASED PARTIES.
(c) Acknowledgements. This is an important legal document, and the Company hereby advises Executive in writing to consult with legal counsel prior to
executing this Agreement. Executive acknowledges that: (i) Executive has carefully read this Agreement and Executive knowingly, freely and voluntarily assents to all of the terms and conditions set out in this Agreement including,
without limitation, the waiver, release and covenants contained herein; (ii) Executive is executing this Agreement in exchange for good and valuable consideration in addition to anything of value to which the Executive is otherwise entitled;
(iii) Executive’s waiver and release does not apply to any rights or claims that may arise after the date that Executive signs this Agreement; (iv) Executive should consult with an attorney prior to signing this Agreement (although Executive
may choose voluntarily not to do so); (v) Executive has had sufficient time to consider this Agreement since this Agreement was first provided to Executive to consider this Agreement before
the execution and delivery to Company (although Executive may choose voluntarily to sign it earlier).
(d) Excluded Claims. Notwithstanding the foregoing, the following are not included in the Released Claims (the “Excluded Claims”): (i) any claim to
vested benefits under an employee benefit plan that is subject to ERISA and that ERISA prevents from being released pursuant to a release agreement; and (ii) any claims for breach of this Agreement; and (iii) rights in connection with continued
participation in Company-sponsored health and welfare plans, and vested rights with respect to Company-sponsored retirement plans, or (iv) any other claims that cannot be released as a matter of law. Executive hereby represents and warrants
that, other than the Excluded Claims, Executive is not aware of any claims Executive has or might have against any of the Released Parties that are not included in the Released Claims. Nothing herein will prevent Executive from seeking workers’
compensation or unemployment insurance benefits.
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(e) Governmental Agencies and Protected Activity. Further, notwithstanding this release of liability, nothing in this Agreement prevents Executive from filing any non-legally waivable claim, including a challenge to the
validity of this Agreement, with the Equal Employment Opportunity Commission, the Securities Exchange Commission, the National Labor Relations Board, the Occupational Safety and Health Administration, or other federal, state or local government
agency or commission (collectively “Governmental Agencies”) or participating in (or cooperating with) any investigation or proceeding conducted by any Governmental Agency
or communicating with any Governmental Agency; however, Executive understands and agrees that, to the extent permitted by law, Executive is waiving any and all rights to recover any monetary or personal relief or recovery from any Released
Party as a result of such Governmental Agency proceeding or subsequent legal actions. Nothing herein waives Executive’s right to receive an award for information provided to a Governmental Agency (including, for the avoidance of doubt, any
monetary award or bounty from any governmental agency or regulatory or law enforcement authority in connection with any protected “whistleblower” activity). Nothing herein shall prohibit or restrict Executive from (i) initiating communications
directly with, cooperating with, providing information or making statements to, causing information to be provided to, or otherwise assisting in an investigation by, any Governmental Agency; (ii) responding truthfully to any inquiry or legal
process directed to Executive from any Governmental Agency; (iii) testifying, participating or otherwise assisting in any action or proceeding by any Governmental Agency; (iv) disclosing an act of sexual abuse or facts related to an act of
sexual abuse to any other person; or (v) making any disclosures that are protected under the whistleblower provisions of any applicable law. Nothing in this Agreement requires Executive to obtain prior authorization before engaging in any
conduct described in this Section 4(e) or to notify any Released Party that Executive engaged in any such conduct.
(f) Not An Admission of Wrongdoing. The release contained in this Section 4 shall not in any way be construed as an admission by either Party or Parent or any
other Released Party of any acts of wrongdoing, violation of any statute, law or legal or contractual right.
5. Return
of Company Property. Within seven (7) calendar days from the Separation Date, Executive shall, to the extent not previously returned or delivered: (a) return all equipment, records, files, programs or other materials and property
in Executive’s possession which belongs to the Company, Parent or any of their respective affiliates, including, without limitation, all vehicles, computers, printers, laptops, personal data assistants, cell phones, credit cards, keys and
access cards; and (b) deliver all original and copies of confidential and proprietary information (as described in Section 8 of the Employment Agreement) in Executive’s possession and notes, materials, records, plans, technical data or other
documents, files or programs (whether stored in paper form, computer form, digital form, electronically or otherwise) in Executive’s possession that contain Confidential Information. Executive shall be permitted to remove personal data and
files from any Company-issued equipment before returning the same; provided, however, Executive will reasonably cooperate with the Company prior to any such removal to allow the Company to confirm no Company Confidential Information or other
Company or Parent property is removed. By signing this Agreement, Executive represents and warrants that Executive has not retained and has or will timely return and deliver all the items described or referenced in subsections (a) or (b) above;
and, that should Executive later discover additional items described or referenced in subsections (a) or (b) above, Executive will promptly notify the Company and return/deliver such items to the Company.
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6. Non-Disparagement.
Executive agrees that Executive will not, directly or indirectly, communicate or publish any disparaging statements concerning the Company, Parent or any of the other Released Parties, or cause others to communicate or publish any disparaging
statements concerning the Company, Parent or any of the other Released Parties. The Company agrees that it shall instruct each of its officers and directors to not, directly or indirectly, communicate or publish any disparaging statements
concerning Executive. Notwithstanding the foregoing, the provisions of this Section 6 shall not apply with respect to any activities described in Section 4(e) of this Agreement, as nothing in this Section 6 shall prevent any individual or entity from communicating or publishing any statement to a
Governmental Agency or as described in Section 4(e) above.
7. Standstill
and Voting Agreement.
(a) Executive agrees that, unless approved
in advance in writing by the Board, neither Executive nor any person acting on behalf of or in concert with Executive will, for a period of three (3) years after the date of this Agreement (such period the “Standstill Period”), directly or indirectly:
(i) make any
statement or proposal to the Board, any of Parent’s or the Company’s respective directors, officers, employees, managing members, general partners, agents or consultants (including attorneys, financial advisors and accountants) or any of the
Company’s stockholders regarding, or make any public announcement, proposal or offer (including any “solicitation” of “proxies” as such terms are defined or used in Regulation 14A of the Exchange Act) with respect to, or otherwise solicit, seek
or offer to effect (including, for the avoidance of doubt, indirectly by means of communication with the press or media) (A) any business combination, merger, tender offer, exchange offer or similar transaction involving Parent, the Company or
any of their respective subsidiaries, (B) any restructuring, recapitalization, liquidation or similar transaction involving Parent, the Company or any of their respective subsidiaries, (C) any acquisition of any of Parent’s, the Company’s or
their respective subsidiaries’ loans, debt securities, equity securities or assets, or rights or options to acquire interests in any of Parent’s, the Company’s or any of their respective subsidiaries’ loans, debt securities, equity securities
or assets, (D) any proposal to seek representation on the Board or otherwise seek to control or influence the management, Board or any policies of Parent, the Company or any of their respective subsidiaries, (E) any request or proposal to
waive, terminate or amend the provisions of this Agreement, or (F) any proposal, arrangement or other statement that is inconsistent with the terms of this Agreement, including this Section 14(a)(1);
(ii) instigate, encourage or assist any
third party (including forming a “group” with any such third party) to do, or enter into any discussions or agreements with any third party with respect to, any of the actions set forth in clause (i) above;
(iii) take any action which would
reasonably be expected to require Parent, the Company or any of their respective subsidiaries to make a public announcement regarding any of the actions set forth in clause (i) above; or
(iv) acquire (or propose or agree to
acquire), of record or beneficially, by purchase or otherwise, any loans, debt securities, equity securities or assets of Parent, the Company or any of their respective subsidiaries, or rights or options to acquire interests in any of Parent’s,
the Company’s or any of their respective subsidiaries’ loans, debt securities, equity securities or assets, except that Executive may (A) exercise any vested stock options issued by Parent and held by Executive upon effectiveness of this
Agreement and (B) beginning six (6) months after the date of this Agreement, Executive may request advance written approval from the Board to acquire Parent’s securities, which approval shall be granted solely within the discretion of the
Board.
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(b) At any meeting of stockholders held
during the Standstill Period, Executive shall vote or cause to be voted all shares of Parent’s stock held directly or indirectly by Executive, whether now owned or hereafter acquired, over which the Executive has voting control and shall take
all other necessary or desirable actions within such Executive’s control to vote in accordance with the recommendations of the Board on any proposal and to elect to the Board any individual nominated by the Board, as reflected in Parent’s proxy
statement for such meeting. Executive hereby grants to Parent, or any designee of Parent, an irrevocable proxy, which shall be deemed coupled with an interest sufficient in law to support an irrevocable proxy, to vote all shares of stock of
Parent over which the Executive has voting control at any meeting of stockholders held during the Standstill Period in accordance with the foregoing sentence. Executive acknowledges that this irrevocable proxy shall survive the death,
incapacity, bankruptcy or dissolution of the Executive and shall remain in full force and effect until the expiration of the Standstill Period.
8. Continuing
Obligations. Executive reaffirms and understands his continuing obligations in the Employment Agreement, including Sections 7, 8, 9, and 20 of the Employment Agreement, and those provisions necessary to interpret and enforce
them, all of which shall survive the termination of Executive's employment in accordance with Section 21 of the Employment Agreement (collectively, the “Continuing Obligations”).
Consistent with Section 9 of the Employment Agreement, any dispute arising out of or relating to this Agreement shall be resolved in accordance with the dispute resolution (including arbitration) provisions set forth in Section 9 of the
Employment Agreement.
9. Section
409A. Notwithstanding any provision of this Agreement to the contrary, all provisions of this Agreement are intended to comply with Section 409A of the U.S. Internal Revenue Code of 1986, as amended (the “Code”) and the applicable Treasury regulations and administrative guidance issued thereunder (collectively, “Section
409A”) or an exemption therefrom and shall be construed and administered in accordance with such intent. Any payments under this Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation
from service or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible. For purposes of Section 409A, each installment payment provided under this Agreement shall be treated as a separate payment. Any
payments to be made under this Agreement upon a termination of Executive's employment shall only be made if such termination of employment constitutes a “separation from service” under Section 409A. To the extent that any right to reimbursement
of expenses or payment of any benefit in-kind under this Agreement constitutes nonqualified deferred compensation (within the meaning of Section 409A), (i) any such expense reimbursement shall be made by the Company no later than the last day
of Executive's taxable year following the taxable year in which such expense was incurred by Executive, (ii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (iii) the
amount of expenses eligible for reimbursement or in-kind benefits provided during any taxable year shall not affect the expenses eligible for reimbursement or in-kind benefits to be provided in any other taxable year; provided, that the
foregoing clause shall not be violated with regard to expenses reimbursed under any arrangement covered by Section 105(b) of the Code solely because such expenses are subject to a limit related to the period in which the arrangement is in
effect. Notwithstanding any provision in this Agreement to the contrary, if any payment or benefit provided for herein would be subject to additional taxes and interest under Section 409A if Executive’s receipt of such payment or benefit is
not delayed until the earlier of (a) the date of Executive's death or (b) the date that is six (6) months after the Separation Date (such date, the “Section 409A Payment Date”),
then such payment or benefit shall not be provided to Executive (or Executive's estate, if applicable) until the Section 409A Payment Date. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits
provided under this Agreement are exempt from, or compliant with, Section 409A and in no event shall any member of the Company Group be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by
Executive on account of non-compliance with Section 409A.
10. Binding
Effect. This Agreement shall be binding upon the Company and upon Executive and Executive’s heirs, administrators, representatives, executors, successors and assigns and the Company’s representatives, successors and assigns. In
the event of Executive’s death, this Agreement shall operate in favor of Executive’s estate and all payments, obligations and consideration will continue to be performed in favor of Executive’s estate.
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11. Severability.
Should any provision of this Agreement be declared or determined to be unenforceable, illegal, or invalid by any government agency, arbitrator, or court of competent jurisdiction, (i) such provision shall be deemed to be amended / revised so
that the intent of the Parties is fulfilled to the greatest extent possible, and (ii) the validity of the remaining parts, terms or provisions of this Agreement shall not be affected and such provisions shall remain in full force and effect.
12. Entire
Agreement. Except for the Continuing Obligations, this Agreement (and the Employment Agreement, the Plan, the Award Agreements, the Lock-Up Agreement as referenced herein, and any Exhibit(s) attached hereto), and any agreement
relating to Executive’s non-compensatory options, sets forth the entire agreement between the Parties, and fully supersedes any and all prior agreements, understandings, or representations between the Parties pertaining to Executive’s
employment with the Company, the subject matter of this Agreement or any other term or condition of the employment relationship between the Company and Executive. Executive represents and acknowledges that in executing this Agreement, Executive
does not rely, and has not relied, upon any representation(s) by the Company, Parent, or any of their respective agents except as expressly contained in this Agreement or the Employment Agreement. Executive and the Company agree that they have
each used their own judgment in entering into this Agreement. This Agreement may not be modified, altered, or changed except by a written agreement signed by both Executive and a duly authorized representative of the Company.
13. Future
Employment. Executive waives and releases any right to be considered for employment by the Company, Parent, or any of their respective affiliates or successors and agrees that any refusal of employment in the future shall not
constitute discrimination or retaliation by any of the Released Parties.
14. Cooperation.
Following the Separation Date, Executive agrees to cooperate fully with the Company, Parent, and their respective affiliates and their respective counsel in any capacity with respect to matters of which Executive has knowledge or with which he
was involved. Without limitation, such assistance may include providing information or documents; making himself available for interviews; cooperating with investigations (internal or external), negotiations, lawsuits, charges, claims, or
administrative proceedings involving the Company, Parent, or any of their respective affiliates; preparing for and giving truthful testimony including, but not limited to, written declarations, depositions, trial testimony, or statements; and
other similar activities.
15. Notices.
All notices and other communications hereunder shall be in writing and shall be deemed to have been duly received (a) when delivered in person, (b) on the first business day after such notice is sent by express overnight courier service, or (c)
on the second business day following deposit with an internationally-recognized second-day courier service with proof of receipt maintained, in each case, to the following address, as applicable:
If to Executive, at the most recent home address for Executive in the Company's personnel files.
If to the Company:
Prairie Operating Employee Co., LLC
44 Cook Street, Suite 1000
Denver, Colorado 80206
Attention: Chair, Board of Directors
Any Party may change the address to which notices and other communications are to be delivered by giving the other Party notice in the manner herein set forth.
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16. Withholding
of Taxes. The Company may withhold from any benefits payable under this Agreement all Federal, state, local or other taxes as may be required by law, governmental regulation, or ruling.
17. Governing
Law and Arbitration. This Agreement shall in all respects be construed according to the laws of the State of Texas without regard to its conflict of laws principles that would result in the application of the laws of another
jurisdiction. Any dispute, claim, or controversy regarding this Agreement shall be settled in accordance with the dispute resolution provisions set forth in Section 9 of the Employment Agreement. IN ENTERING INTO THIS AGREEMENT, EXECUTIVE AND
THE COMPANY ARE KNOWINGLY AND VOLUNTARILY WAIVING THEIR RIGHTS TO JURY TRIAL IN ANY DISPUTE ARISING OUT OF OR RELATING TO THIS AGREEMENT.
18. Counterparts.
This Agreement may be executed in counterparts, each of which when executed and delivered (which deliveries may be by facsimile or other electronic method of delivery) shall be deemed an original and all of which together shall constitute one
and the same instrument.
19. No
Assignment of Claims. Executive represents and agrees that Executive has not transferred or assigned, to any person or entity, any claim involving the Company, or any portion thereof or interest therein.
20. No
Waiver. This Agreement may not be waived, modified, amended, supplemented, canceled or discharged, except by written agreement of the Parties. Failure to exercise and/or delay in exercising any right, power or privilege in this
Agreement shall not operate as a waiver. No waiver of any breach of any provision shall be deemed to be a waiver of any preceding or succeeding breach of the same or any other provision, nor shall any waiver be implied from any course of
dealing between or among the Parties.
21. Lock-Up.
Notwithstanding anything to the contrary contained herein, this Agreement shall not modify, alter, amend, supersede, or otherwise affect any lock-up agreement or other voting agreement to which Executive is a party, including for the avoidance
of doubt the Lock-Up Agreement. The Lock-Up Agreement shall remain in full force and effect in accordance with its terms.
22. Intended
Third Party Beneficiaries. Each Released Party that is not a signatory hereto is an intended third-party beneficiary of this Agreement and shall be entitled to rely upon and enforce Executive’s representations, covenants, and
release of claims set forth herein as if such Released Party was a party hereto.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the Parties have executed this Agreement on the dates set forth below.
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PRAIRIE OPERATING EMPLOYEE CO., LLC
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By:
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/s/ Gregory S. Patton | ||
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Name:
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Gregory S. Patton
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Title:
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Executive Vice President and Chief Financial Officer
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| Date: March 2, 2026 |
I ACKNOWLEDGE THAT I HAVE CAREFULLY READ THE FOREGOING AGREEMENT, THAT I UNDERSTAND ALL OF ITS TERMS AND THAT I AM RELEASING CLAIMS AND THAT I AM ENTERING INTO IT
VOLUNTARILY.
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EXECUTIVE
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| /s/ Gary C. Hanna | ||
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Name:
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Gary C. Hanna
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| Date: March 2, 2026 |
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EXHIBIT A
ASSIGNMENT OF OVERRIDING ROYALTY INTERESTS
KNOW ALL MEN BY THESE PRESENTS:
THAT effective as of March 2, 2026 (the “Effective Time") the undersigned Monte Vista Partners, LLC, an Colorado limited liability company,
(hereinafter referred to as "Assignor"), for and in
consideration of the sum of Ten Dollars ($10.00) and other valuable considerations, the receipt and sufficiency of which is hereby acknowledged, does hereby GRANT, BARGAIN, SELL, CONVEY AND ASSIGN unto Otter Holdings, LLC, a Delaware limited
liability company (hereinafter referred to as "Assignee") with
the address of 44 Cook Street, Suite 1000, Denver, Colorado 80206, any and all overriding royalty interests ("Overriding Royalty Interest"), including, but
not limited to:
(a) a 0.0066% of the 8/8ths of the oil, gas, associated liquids and other hydrocarbons (collectively "Hydrocarbons") produced, saved and sold from the oil and gas leases described in Exhibit "A" attached hereto and made a part hereof (the "Leases") and the lands covered thereby or pooled or unitized therewith (the "Lands") and;
(b) the
positive difference, if any, between (i) twenty-two and one-half percent (22.5%) of 8/8ths of Hydrocarbons produced, saved and sold from the Leases and the Lands, and (ii) all royalty, overriding royalty, production payments and other burdens
on such Hydrocarbon production in existence immediately prior to the Effective Time.
The Overriding Royalty Interest shall be calculated and measured on the same terms as the applicable royalties payable under the Leases; provided,
however, the Overriding Royalty Interest shall be free of all development, production, and operating expenses; however, said interest shall bear its proportionate share of gross production taxes assessed against the gross production subject to said
Overriding Royalty Interest. It is agreed that nothing contained herein shall impose upon the Assignor, its successors, or assigns, any duty or obligation to develop or operate the properties covered by the above-described "Leases" or to maintain
them by the payment of delay rentals, shut-in royalty payments or other similar payments.
The Overriding Royalty Interest shall be subject to any cooperative or unit plan of operation or development and to any pooling, communitization
or other agreement for the allocation of Hydrocarbon production among multiple tracts to which the Leases, or any part thereof, may have heretofore or may hereafter be committed by Assignor or by the predecessors to its interest or its successors
and assigns, including, but not limited to, any joint operating agreement, pooling or unit designation, or similar agreement unitizing the working interests in a contract area or pooled unit, including that of Assignor, regardless of whether such
agreement expressly purports to commit the Overriding Royalty Interest; and, in such event or events, the Overriding Royalty Interest shall be computed and paid on the basis of the applicable Hydrocarbons allocated to the Lands under and pursuant
to the terms of any such agreement or plan of operation; however, in the event that such cooperative or unit plan of operation or development or pooling or communitization agreement does not set out how payments are to be calculated, then in such
event, the Overriding Royalty Interest will be paid in the proportion that the surface acreage of the Lands bears to the total acreage within such contract area or pooled unit.
If any of the Leases covers an interest in the Lands less than the entire mineral estate therein (regardless of whether such Lease purports to
cover only the lessor's interest therein), then, as to such Lease, the Overriding Royalty Interest, insofar only as it affects and applies to production from or allocable to such Lands, shall be payable to Assignee in the proportion that the
mineral interests in such lands actually covered by the relevant Lease bear to the entire, undivided mineral estate in such lands. Similarly, if Assignor owns less than a one hundred percent (100%) leasehold interest in and to any of the Leases,
then, as to such Lease, the Overriding Royalty Interest shall be payable to Assignee in the proportion that the leasehold interest in such Lease actually owned by Assignor bears to a one hundred percent (100%) leasehold interest in and to such
Lease. In addition, if the leasehold interest in the Lease owned by Assignor is increased or decreased pursuant to the terms of any compulsory pooling order, farmout agreement, contractual rights agreement, applicable operating agreement, or other
instrument providing for a reversionary interest that is existing at the Effective Time, the Overriding Royalty Interest shall be proportionately increased or decreased accordingly.
Assignor hereby warrants defensible title to the Overriding Royalty Interest unto each Assignee. its successors and assigns, in each case, free
and clear of any liens and encumbrances, burdens, defects, against all Persons claiming or purporting to claim the same or any part thereof. by, through or under Assignor or any of its Affiliates, but not otherwise.
This Assignment shall be binding upon and inure to the benefit of the respective parties hereto, their heirs, successors, representatives and
assigns. No change in the ownership of the Overriding Royalty Interest shall be binding on Assignor until such time as Assignor shall have been furnished with either the original, a certified copy or an acceptable reproduced copy of the recorded
instrument or instruments effecting the change in ownership.
IN WITNESS WHEREOF, the said Assignor, executed this instrument this ____ day of March, 2026.
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MONTE VISTA PARTNERS, LLC
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By:
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Name:
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Title:
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ACKNOWLEDGEMENT
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STATE OF
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COUNTY OF
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The foregoing instrument was acknowledged before me on this ___ day of March, 2026. by ________________________________.
| My Commission Expires: | |
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Name:
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Exhibit A to the Separation Agreement
Exhibit 99.1
Erik Thoresen appointed as Chairman of the Board
Houston, Texas, March 3, 2026 (GLOBE NEWSWIRE) - Prairie Operating Co. (Nasdaq: PROP) (the “Company,” “Prairie,” “we,” “our,” or
“us”), an independent energy company engaged in the development and acquisition of oil, natural gas, and natural gas liquids resources in the Denver-Julesburg (DJ) Basin, today announced several leadership changes, including the voluntary
resignation of CEO and Chairman, Edward Kovalik, and the retirement of President and director, Gary C. Hanna. The Company’s Board of Directors (the “Board”) has appointed Richard N. Frommer, a member of the Board, to serve as Interim President
and CEO of the Company, while the Company conducts a search for a permanent President and CEO. The Board has also appointed Erik Thoresen to serve as Chairman of the Board.
“Rich brings more than four decades of experience building and operating oil and gas businesses, including deep expertise in the
DJ Basin and broader Rocky Mountain region,” said Erik Thoresen, Chairman of the Board. “His proven track record as President and CEO of Great Western Petroleum, along with prior executive roles across the industry, reflects a disciplined
approach to asset development, capital allocation, and operational execution. We are confident that his experience, leadership, and regional knowledge position him well to guide Prairie through its next phase of growth and value creation.”
The Company has entered into separation agreements with Mr. Kovalik and Mr. Hanna with respect to the terms of their separation
from the Company. The Company has initiated a search process for a permanent President and CEO and intends on retaining a leading executive search firm to support this process, which will include both internal and external candidates.
“On behalf of the Board and the entire Company, I would like to thank Ed and Gary, Prairie’s co-founders, for their vision and
leadership to Prairie during the Company’s initial inception and acquisition phases,” said Richard N. Frommer, Interim President and CEO. “Their efforts helped strengthen our operational foundation and strategic position. I look forward to
working closely with our team to build on that momentum, maintain disciplined execution, and delivering long-term value for our shareholders.”
About Rich Frommer
Mr. Frommer has served as director of the Company since November 2024. Mr. Frommer was President and Chief Executive Officer of Great
Western Petroleum from February 2013 September 2021. From May 2002 to November 2012, Mr. Frommer was Senior Vice President, Rocky Mountain division at Samson Resources Company until its sale to KKR & Co., L.P. Prior to Mr. Frommer’s time at
Samson Resources Company, Mr. Frommer spent four years at HS Resources Inc. as New Ventures Manager where he was responsible for entrance into new areas and plays in Colorado, Wyoming and Louisiana. He attended advanced oil and gas management
courses at Southern Methodist University and earned his Bachelor of Arts in Earth Sciences from New York State University College at Oneonta. He is a Wyoming Certified Professional Geologist.
About Erik Thoresen
Mr. Thoresen has served as a director of the Company since May 2023. Mr. Thoresen has been a partner at Boka Group, LLC, a sovereign
resilience-focused investment firm, since November 2022. From January 2022 to December 2023, Mr. Thoresen served as the chief financial officer of Fusion Acquisition Corp. II. Prior to that, he served as the chief business development officer of
Glass House Group, Inc., from August 2021 to June 2022. Mr. Thoresen was the vice president of mergers and acquisitions and real estate at Harvest Health and Recreation, Inc., that is now part of Trulieve Corp., from January 2019 to March 2021.
Previously, from November 2013 to July 2018, Mr. Thoresen was the chief operating, and investment, officer of Jonathan D. Pond, LLC, a wealth management firm, and prior to that held executive roles at the Bank of New York Mellon Corporation and
E*TRADE Financial Corporation, now part of Morgan Stanley. He received a Bachelor of Arts in International Relations from Syracuse University in 1994, and a Master of Business Administration from the Darden School at the University of Virginia in
2000.
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About Prairie Operating Co.
Prairie Operating Co. is a Houston-based publicly traded independent energy company engaged in the development and acquisition of
oil, natural gas, and natural gas liquids resources in the United States. The Company’s assets and operations are concentrated in the oil and liquids-rich regions of the Denver-Julesburg (DJ) Basin, with a primary focus on the Niobrara and Codell
formations. The Company is committed to the responsible development of its oil, natural gas, and natural gas liquids resources and is focused on maximizing returns through consistent growth, capital discipline, and sustainable cash flow
generation.
More information about the Company can be found at www.prairieopco.com.
Cautionary Statement about Forward-Looking Statements
The information included in this press release and in any oral statements made in connection herewith include “forward-looking
statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include, without limitation, statements regarding future
financial performance, business strategies, expansion plans, future results of operations, estimated revenues, losses, projected costs, prospects, plans and objectives of management. These forward-looking statements are based on our management’s
current expectations, estimates, projections and beliefs, as well as a number of assumptions concerning future events, and are not guarantees of performance. Such statements can be identified by the fact that they do not relate strictly to
historical or current facts. When used in this press release, words such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “continue,” “project” or the negative of such terms or other similar
expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. The forward-looking statements contained herein are based on our current expectations and beliefs
concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties
(some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements.
These risks are not exhaustive. Other sections of this press release could include additional factors that could adversely affect
our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for our management to predict all risk factors nor can we
assess the effects of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in, or implied by, any forward-looking statements. Our SEC filings
are available publicly on the SEC website at www.sec.gov. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these
forward-looking statements. Accordingly, forward-looking statements in this press release should not be relied upon as representing our views as of any subsequent date, and we undertake no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
All forward-looking statements, expressed or implied, included in this press release are expressly qualified in their entirety by
this cautionary statement.
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