UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 4
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 1, 2005
GALAXY ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
COLORADO 0-32237 98-0347827
(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) Identification No.)
1331 - 17TH STREET, SUITE 1050, DENVER, COLORADO 80202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 293-2300
NOT APPLICABLE
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On March 2, 2005, Dolphin Energy Corporation ("Dolphin"), a wholly-owned
subsidiary of Galaxy Energy Corporation ("Galaxy"), deposited $7,000,000 in
escrow as a condition precedent to an agreement to acquire an initial 58-1/3%
working interest in 4,000 net undeveloped mineral acres in the Piceance Basin in
Colorado. The terms of the acquisition are set forth in a Lease Acquisition and
Development Agreement with Apollo Energy LLC and ATEC Energy Ventures, LLC, the
Sellers. The Sellers were not willing to enter into the Agreement with Dolphin
without having some agreement regarding the remaining 41-2/3% working interest
in the subject properties. Since the management of Galaxy and its advisers had
previously decided that its maximum commitment should not exceed that provided
in the Agreement, it was necessary to find a third party to take the remaining
working interest, and Marc A. Bruner was willing to provide a guaranteed payment
of $2,000,000 to the Sellers and enter into an agreement with the Sellers to
acquire a 16-1/3% working interest for such $2,000,000 with the option to
acquire up to all of the then remaining 25% working interest in the subject
properties by investing an additional $3,000,000. If Mr. Bruner invests the
entire $5,000,000, his total working interest in the properties will be 41-2/3%.
Mr. Bruner and Dolphin entered into a Participation Agreement to address certain
rights and obligations as between them, pertaining to their acquisition
agreements with the Sellers. Marc A. Bruner is a significant shareholder of
Galaxy Energy Corporation, Chairman of Galaxy's Advisory Committee, and the
father of Marc E. Bruner, the president and a director of Galaxy.
Dolphin and Mr. Bruner entered into an Amended Participation Agreement dated
March 16, 2005, which set forth greater detail as to the performance by each
party and which specifically allowed Mr. Bruner to assign all of his rights and
obligations under the Amended Participation Agreement to Exxel Energy
Corporation, a British Columbia corporation. The Amended Participation Agreement
superseded the original Participation Agreement.
Under the Amended Participation Agreement, Marc A. Bruner had the right, but not
the obligation to deposit up to an additional $25,000,000 into escrow on or
before August 1, 2005, while Dolphin has the right, but not the obligation, to
deposit up to an additional $3,000,000 into escrow on or before December 1,
2005. Dolphin and Mr. Bruner have agreed that their respective ownership
interests shall be based upon the amounts deposited into escrow and used to
acquire the leases. Therefore, if both Dolphin and Mr. Bruner contribute their
maximum amounts, their ownership interests in the leases will be Dolphin 25% and
Bruner 75%.
On May 24, 2005, Exxel Energy Corporation and Dolphin entered into a Second
Amendment to Participation Agreement that extended from August 1, 2005 to
December 1, 2005, the date by which the deposit described above would have to be
made.
On October 4, 2005, Exxel Energy Corporation and Dolphin entered into a Third
Amendment to Participation Agreement that capped Dolphin's contribution at the
$7,000,000 already contributed and committed Exxel to contribute $21,000,000, in
total. These funds can be used for both acreage acquisition and operations.
Dolphin shall own a 25% working interest in the acquired acreage, while Exxel
will own a 75% working interest.
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In addition, Exxel has agreed to advance $1,000,000 within five business days of
Dolphin providing a proposed drilling contract for the initial test wells on the
acreage and an additional $1,000,000 within 30 days thereafter.
Under the acquisition agreements with the Sellers, Dolphin and Mr. Bruner are
obligated to drill one well by November 1, 2005 and nine additional wells by
August 22, 2006. If they should fail to drill any of the nine wells, they are
obligated to pay Sellers $500,000 for each well as liquidated damages or they
are to reassign to Sellers any of the acreage covered by the leases that remains
undrilled.
On May 31, 2005, the Sellers and Dolphin entered into an amendment to the Lease
Acquisition and Development Agreement that extended from November 1, 2005 to
December 31, 2005, the date by which the first well must be drilled.
Dolphin and Mr. Bruner have agreed that each shall be responsible for its/his
respective share of the cost of operations in accordance with the terms of the
operating agreement, with such share based on the ownership interest at the time
the cost is incurred.
Dolphin and Mr. Bruner had agreed that for the first 36 months of operations
under the operating agreement, Bruner would assign all of his rights and
obligations as operator, such that Dolphin would be the contract operator or
sub-operator under the operating agreement, and that Dolphin would be entitled
to a management fee of 10% of its costs as operator. Under the terms of the
Third Amendment to Participation Agreement, Exxel is being designated as
operator, but with Dolphin undertaking operations as sub-operator until March
16, 2008. Dolphin shall be entitled to a management fee of 10% of its costs as
sub-operator.
Funding for Dolphin's share of acquisition and project costs has been financed
through a private placement of $7,695,000 in senior subordinated convertible
notes due June 1, 2007. As of March 1, 2005, Galaxy had entered into Securities
Purchase Agreements with several accredited investors (the "Investors") pursuant
to which Galaxy agreed to sell, and the Investors agreed to purchase, in the
aggregate, up to $7,695,000 principal amount of Senior Subordinated Convertible
Notes and three-year warrants to purchase 1,637,234 shares of common stock at
$1.88 per share. The notes may be converted by the holders into shares of common
stock at a price of $1.88 per share.
Galaxy agreed to file a registration statement with the Securities and Exchange
Commission in order to register the resale of the shares issuable upon
conversion of the notes and the shares issuable upon exercise of the warrants.
That registration statement was declared effective October 3, 2005.
This summary description of the financing described by the agreements does not
purport to be complete and is qualified in its entirety by reference to the form
of the agreements and other documents that are filed as Exhibits hereto.
The press release issued by Galaxy on October 6, 2005 relating to the Third
Amendment to Participation Agreement is filed as Exhibit 99.2.
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ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
Exhibits:
REGULATION
S-K NUMBER DOCUMENT
10.1 Lease Acquisition and Development Agreement between Dolphin Energy
Corporation (Buyer/Operator) and Apollo Energy LLC and ATEC Energy
Ventures, LLC (Seller/Non-Operator) dated February 22, 2005*
10.2 Participation Agreement between Dolphin Energy Corporation and
Marc A. Bruner dated February 23, 2005*
10.3 Amended Participation Agreement between Marc A. Bruner and Dolphin
Energy Corporation dated March 16, 2005*
10.4 Second Amendment to Participation Agreement dated May 24, 2005*
10.5 Second Amendment to Lease Acquisition and Development Agreement*
10.6 Third Amendment to Participation Agreement dated October 4, 2005
99.1 Press release issued March 2, 2005*
99.2 Press release issued October 6, 2005
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*Filed previously
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.
GALAXY ENERGY CORPORATION
October 6, 2005 By: /s/ MARC E. BRUNER
---------------------------------
Marc E. Bruner, President
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