EXHIBIT 10.1
SUBSCRIPTION AND REGISTRATION RIGHTS AGREEMENT
PYR Energy Corporation
1675 Broadway, Suite 2450
Denver, Colorado 80202
Gentlemen and Ladies:
The undersigned desires to invest in PYR Energy Corporation (the "Company")
on the terms and conditions described in this Subscription And Registration
Rights Agreement (this "Subscription Agreement") and the Company's Confidential
Private Placement Memorandum dated September 28, 2005 (the "Memorandum").
Pursuant to the terms described in the Memorandum and in this Subscription
Agreement, the Company is offering to subscribers who are accredited investors
up to 6,328,000 shares of the Company's common stock, par value $0.001 per share
(the "Shares"). The Shares are offered at the price of $1.30 per Share (the
"Offering Price") for an aggregate of up to $8,226,400 (the "Offering"). The
undersigned shall be entitled to registration rights for the Shares, as further
described in this Subscription Agreement.
1. Subscription
Subject to and in accordance with the terms and conditions of this
Subscription Agreement, the undersigned hereby offers to purchase, in the
aggregate, 4,000,000 Shares. Upon receipt by the undersigned, or its designee,
of stock certificates representing the Shares, the undersigned will immediately
deliver to the Company the full purchase price of $5,200,000 (the "Purchase
Price") for the Shares in the form of a check or wire transfer to the Company.
It is understood by the undersigned that the Company reserves the right in its
sole discretion to reject all or any part of any subscription.
2. Representations And Warranties Of The Undersigned
The undersigned hereby represents and warrants to, and agrees with, the
Company as follows:
(i) the undersigned can bear the economic risk of losing the
undersigned's entire investment;
(ii) the undersigned is acquiring the Shares for its own account and
not with a view to, or for resale in connection with, a
distribution of the Shares, in violation of the Securities Act of
1933, as amended (the "Securities Act");
(iii) the undersigned's overall commitments to investments that are
not readily marketable is not disproportionate to the
undersigned's net worth and the undersigned's investment in the
Shares will not cause such overall commitments to become
excessive;
(iv) the undersigned's financial condition is such that the
undersigned is under no present or contemplated future need to
dispose of any portion of the Shares to satisfy any existing or
contemplated undertaking, need or indebtedness;
(v) the undersigned has adequate means of providing for the
undersigned's current needs and personal contingencies and has no
need for liquidity in the undersigned's investment in the Shares;
and
(vi) the undersigned has sufficient knowledge and experience in
business and financial matters to evaluate, and has evaluated,
the merits and risks of this investment.
(b) The address set forth below on the signature page of this Subscription
Agreement is the undersigned's true and correct principal office, and the
undersigned has no present intention of relocating its principal office to any
other state or jurisdiction.
(c) The undersigned is an "accredited investor" as that term is defined in
Rule 501 of Regulation D, as promulgated under the Securities Act because the
undersigned meets one of the following criteria (if the undersigned is not an
"accredited investor", place an "X" in the following blank: _____):
(i) An individual with a net worth, individually or jointly with the
undersigned's spouse, of $1,000,000; or
(ii) An individual with income in excess of $200,000 in each of the
two most recent years, or joint income with the undersigned's
spouse in excess of $300,000 in each of those years, and the
undersigned has a reasonable expectation of reaching the same
income level in the current year; or
(iii) An individual who is an officer or director of the Company; or
(iv) A corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the
securities offered, with total assets in excess of $5,000,000; or
(v) A trust with total assets in excess of $5,000,000 not formed for
the specific purpose of acquiring the securities offered, whose
purchase is directed by a sophisticated person as described in
Rule 506(b)(2)(ii) of Regulation D, as promulgated under the
Securities Act; or
(vi) An entity in which all of the equity owners are accredited
investors.
(d) The undersigned confirms that all documents, records and books
pertaining to an investment in the Shares that have been requested by the
undersigned have been made available or delivered to the undersigned. Without
limiting the foregoing, the undersigned has reviewed the Memorandum together
with the following documents: (a) the Company's Annual Report on Form 10-KSB for
the fiscal year ended August 31, 2004; (b) the Company's Quarterly Reports on
Form 10-Q for the periods ended November 30, 2004, February 28, 2005 and May 31,
2005, respectively; (c) the Company's Proxy Statement on Schedule 14A, as
amended, relating to the Company's Annual Meeting of Stockholders on August 8,
2005; (d) the Company's Current Reports on Form 8-K filed with the Securities
Exchange Commission (the "SEC") on December 9, 2004, January 14, 2005, March 22,
2005, April 18, 2005, June 14, 2005, July 20, 2005, and September 6, 2005,
respectively; and (e) any other documents included with the Memorandum, and the
undersigned has had the opportunity to discuss the acquisition of the Shares
with the Company. The undersigned has obtained or been given access to all
information concerning the Company that the undersigned has requested. As a
result of its review of the Company, including the review of the materials
provided to the undersigned, the undersigned understands, among other things,
the following: the Company has limited financial resources, has had periods when
it has incurred negative cash flow, and has had periods when it has not operated
at a profit; and the Company has not concurrently, and may not in the future,
receive additional investment funds. The undersigned further represents that the
undersigned is cognizant of the operations, financial condition and
capitalization of the Company; is cognizant of the intended use of proceeds from
this financing; and has available full information concerning the Company's
affairs to evaluate the merits and risks of an investment in the Shares.
2
(e) The undersigned has had the opportunity to ask questions of, and
receive answers from, the Company concerning the terms of an investment in the
Shares and to receive additional information necessary to verify the accuracy of
the information delivered to the undersigned.
(f) The undersigned understands that the issuance of the Shares has not
been registered under the Securities Act or any state securities laws in
reliance on an exemption for private offerings and no U.S. federal or state
agency has made any finding or determination as to the fairness of this
investment or any recommendation or endorsement of the offering of the Shares.
(g) The undersigned acknowledges that, in making the decision to purchase
the Shares, it has relied solely upon independent investigations made by it.
(h) The undersigned has the full right, power and authority to enter into
this Subscription Agreement and to carry out and consummate the transactions
herein. This Subscription Agreement constitutes the legal, valid and binding
obligation of the undersigned.
(i) The undersigned represents that an investment in the Shares is a
suitable investment for the undersigned.
(j) The undersigned acknowledges and is aware that the following legend
will be imprinted on the certificate(s) representing the Shares subscribed to by
the undersigned:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND ARE `RESTRICTED SECURITIES' AS
THAT TERM IS DEFINED IN RULE 144 UNDER THE SECURITIES ACT. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, OR PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, THE
AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION
OF THE COMPANY THROUGH REASONABLE MEANS AS DETERMINED BY THE
COMPANY, INCLUDING AN OPINION OF SELLER'S COUNSEL REASONABLY
ACCEPTABLE TO THE COMPANY."
(k) The undersigned acknowledges and is aware of the following, in addition
to other information included in the information provided to the undersigned:
(i) The Shares constitute a speculative investment and involve a high
degree of risk of loss by the undersigned of the undersigned's
total investment.
(ii) There are substantial restrictions on the transferability of the
Shares. The Shares cannot be transferred, pledged, hypothecated,
sold or otherwise disposed of unless they are registered under
the Securities Act, or an exemption from such registration is
available and established to the satisfaction of the Company. The
undersigned's registration rights with respect to the Shares are
as provided in Section 3 below.
3
(l) The undersigned understands and agrees that the Company is relying upon
the accuracy, completeness and truth of the undersigned's representations,
warranties, agreements and certifications contained in this Subscription
Agreement, in determining the undersigned's suitability as an investor in the
Company and in establishing compliance with federal and state securities laws.
The undersigned understands that any incomplete, inaccurate or untruthful
response, or the breach of the undersigned's representations, warranties,
agreements or certifications, may result in the undersigned or the Company, or
both, being in violation of federal or state securities laws, and any person,
including the Company, who suffers damage as a result may have a claim against
the undersigned for damages. The undersigned also acknowledges that the
undersigned is indemnifying the Company and others for any such losses in
accordance with Section 5 of this Subscription Agreement.
The foregoing representations and warranties are true and accurate in all
material respects as of the date hereof and shall survive the delivery of the
subscription amount and this completed Subscription Agreement.
3. Registration Rights
The Shares purchased in connection with the Offering are entitled to the
registration rights. Within 75 days after the First Closing (as that term is
defined below) of the Offering, the Company will prepare and file with the
Securities and Exchange Commission (the "SEC") a registration statement or an
amendment to an effective registration statement, on behalf of the purchasers
covering the Shares, subject to the following conditions and qualifications (the
"Filing Date"). As used in this Memorandum, the "First Closing" means the date
of the first acceptance by the Company of a subscription to purchase Shares
pursuant to the Memorandum.
(a) The Company shall use its best efforts to cause the registration
statement to be declared effective no later than ten (10) business days after
receipt of notice of "no review" and no further comments by the SEC or one
hundred twenty (120) days from the Filing Date in the event of SEC review. The
Company will undertake reasonable best efforts to cause any amendment to an
effective registration statement to become effective with the SEC as soon as
possible after its filing. Notwithstanding the foregoing, the Company shall not
be obligated to effect more than one registration covering the sale by the
undersigned of the Shares under this Section 3.
(b) The Company's obligations contained in this Section 3 shall be
conditioned upon timely receipt by the Company in writing of such information as
the Company reasonably may require from the undersigned to be included in the
registration statement or an amendment to the effective registration statement.
Such information shall be provided to the Company in writing within 10 days
after the request for that information by the Company.
(c) All registration expenses incurred by the Company in connection with
any registration, qualification or compliance pursuant to this Section 3,
including printing expenses, fees and disbursements of the Company's counsel,
and registration and filing fees relating to the sale of the Shares to be
registered on behalf of the undersigned pursuant to this Section 3, shall be
borne by the Company. All selling expenses, including commissions, allocable to
the sale of the Shares registered on behalf of the undersigned, and all costs of
the undersigned's legal counsel and other advisors shall be borne by the
undersigned.
4
(d) The Company shall keep the undersigned informed as to the completion of
the filing of the registration statement or an amendment to an effective
registration statement. At its expense, the Company will keep such registration
or amendment continuously effective for a period ending on the earlier to occur
of the date: (i) that is two years after the date on which the registration
statement or amendment becomes effective with the SEC; (ii) on which the
undersigned is eligible to sell the Shares pursuant to Rule 144(k) under the
Securities Act, or the successor to such provision; or (iii) on which the
undersigned has completed the distribution described in the registration
statement or amendment relating thereto.
(f) The Company shall use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions within the United States as the undersigned
may reasonably request that allow registration by coordination and to do any and
all other acts and things which may be necessary or advisable to enable the
undersigned to complete such proposed sale or other distribution by the
undersigned of Shares in any such jurisdiction; provided however, that in no
event shall the Company be obligated to register or qualify under the blue sky
laws of any state in which the Common Stock of the Company currently is not
qualified for resale, or be obligated to register or qualify the securities in
any jurisdiction which would require the Company to qualify to do business or to
file a general consent to service of process in any jurisdiction where it shall
not then be qualified.
(g) The Company shall prepare and file with the SEC such amendments and
supplements to the registration statement or an amendment to an effective
registration statement, and the prospectus used in connection therewith as may
be necessary to comply with the provisions of the Securities Act with respect to
the disposition of all Shares; shall furnish to the undersigned such number of
copies of a prospectus, including a preliminary prospectus, in conformity with
the requirements of the Securities Act, and such other documents (including,
without limitation, prospectus amendments and supplements as are prepared by the
Company) as the undersigned may reasonably request in order to facilitate the
disposition of the Shares; shall notify the undersigned at any time when a
prospectus relating to such registration statement or amendment is required to
be delivered under the Securities Act; shall immediately notify the undersigned
of the happening of any event as a result of which the prospectus included in or
relating to such registration statement or amendment contains an untrue
statement of a material fact or omits any fact necessary to make the statements
therein not misleading; and, thereafter, the Company will promptly prepare (and,
when completed, give notice to the undersigned) a supplement or amendment to
such prospectus so that, as thereafter delivered to the purchasers of such
Shares, such prospectus will not contain an untrue statement of a material fact
or omit to state any fact necessary to make the statements therein not
misleading; provided that upon such notification by the Company, the undersigned
will not offer or sell Shares under the registration statement or amendment
until the Company has notified the undersigned that it has prepared a supplement
or amendment to such prospectus and delivered copies of such supplement or
amendment to the undersigned (it being understood and agreed by the Company that
the foregoing proviso shall in no way diminish or otherwise impair the Company's
obligation to promptly prepare a prospectus amendment or supplement as above
provided and deliver copies of same as above provided).
(h) To the fullest extent permitted by law, the Company will indemnify and
hold harmless the undersigned, each officer, director, fiduciary, employee,
member, general partner and limited partner (and affiliates thereof) of the
undersigned, each broker or other person acting on behalf of the undersigned and
each person, if any, who controls the undersigned within the meaning of the
Securities Act, against any loss, claim, damage or liability (or action in
respect thereof) to which the undersigned may become subject, under the
Securities Act, or otherwise, insofar as any such loss, claim, damage or
liability (or action in respect thereof) is caused by any untrue statement or
alleged untrue statement of any material facts contained in the registration
statement, any prospectus contained in the registration statement, or any
amendment or supplement thereto, or arises out of or is based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements made therein not misleading, or
arises out of the failure of any representations or warranties of the Company
5
contained herein to be true and correct and the Company will reimburse on demand
the undersigned, such broker or other person acting on behalf of the undersigned
or such officer, director, fiduciary, employee, member, general partner, limited
partner, affiliate or controlling person for any legal or other expenses
reasonably incurred by any of them in connection with investigating or defending
any such loss, claim, damage, liability or action. Notwithstanding the foregoing
provisions of this paragraph, the Company will not be liable in any such case to
the extent that any such loss, claim, damage, expense or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with information furnished by the
undersigned or any agent or other representative of the undersigned. If the
indemnification provided for in this Section 3 from the indemnifying party is
applicable by its terms but unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and indemnified party in connection with the actions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative faults of such indemnifying
party and indemnified party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact, has been made by, or related to information supplied by, such indemnifying
party or indemnified party, and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such action.
(i) The undersigned will indemnify and hold harmless the Company and any
underwriter (as defined in the Securities Act) for the Company and each person,
if any, who controls the Company or such underwriter against any loss, claim,
damage or liability (or action in respect thereof) to which the Company or such
underwriter or controlling person may become subject, under the Securities Act
or otherwise, insofar as any such loss, claim, damage or liability (or action in
respect thereof) is caused by any untrue statement or alleged untrue statement
or omission or alleged omission made in conformity with information furnished by
the undersigned or any agent or other representative of the undersigned or other
representative of the undersigned for use in the registration statement or
amendment.
4. Indemnification
Both the Company and the undersigned acknowledge and understand the meaning
and legal consequences of the representations, warranties, agreements and
certifications contained above, and the Company and the undersigned hereby agree
to indemnify and hold harmless the other party (including, without limitation,
its respective managers, officers, directors, representatives and agents) from
and against any and all loss, damage or liability due to or arising out of a
breach of any representation, warranty, agreement or certification, or the
inaccuracy of any statement, of the Company or the undersigned, as the case may
be, contained in this Subscription Agreement or any other document submitted by
the Company or the undersigned in connection with the undersigned's subscription
for the Shares. The foregoing notwithstanding, nothing in this Subscription
Agreement, including the representations, warranties, agreements and
certifications contained above, shall be deemed to constitute a waiver of any
rights that the undersigned may have under the Securities Act and other federal
and state securities laws.
5. Miscellaneous
(a) This Subscription Agreement may be executed in one or more counterparts
all of which taken together shall constitute a single instrument.
6
(b) This Subscription Agreement shall be governed and construed as binding
upon the parties hereto, and their respective successors, and no other person
shall have any right or obligation hereunder. This subscription shall be
irrevocable, and may not be assigned by the undersigned. Subject to the
foregoing, this Subscription Agreement shall be binding upon and inure to the
benefit of the heirs, executors, administrators, legal representatives,
successors and assigns of the undersigned.
(c) This Subscription Agreement constitutes the entire agreement between
the undersigned and the Company with respect to the subject matter of this
Subscription Agreement and supersedes all prior and contemporaneous agreements
between the undersigned and the Company with respect to the subject matter of
this Subscription Agreement.
(d) This Subscription Agreement will be construed and enforced in
accordance with and governed by the laws of the State of Colorado, except for
matters arising under the Securities Act, without reference to principles of
conflicts of law.
With such full understandings and acknowledgements, the undersigned does
hereby affirm the undersigned's subscription to the purchase of the Shares being
offered by the Company as described herein and in the Memorandum. The
undersigned does further acknowledge the undersigned's understandings of all the
terms and provisions of this Subscription Agreement and, upon acceptance of this
Subscription Agreement by the Company, agrees to be bound by all the terms and
conditions of this Subscription Agreement.
[continued on signature page]
7
SIGNATURE PAGE FOR INDIVIDUALS
Please complete the following:
Date:
- ----------------------------------------
- ----------------------------------------
Exact Name in Which Title is to be Held
- ---------------------------------------- -------------------------------------
Signature Signature of Co-Owner
- ---------------------------------------- -------------------------------------
Print Name Print Name of Co-Owner
- ---------------------------------------- -------------------------------------
Social Security Number or Tax Social Security Number or Tax
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
City, State, Postal or Zip Code, Country
STATE OF )
---------------------------
) ss.
COUNTY OF )
--------------------------
On this _____ day of __________, 2005, before me personally appeared
___________________, who being duly sworn by me, acknowledged that (s)he
executed the foregoing instrument for the uses and purposes therein stated.
My commission expires:
----------------------------------------
- ------------------------------------------ ------------------------------------
Notary Public Address
* If the Securities are to be held in joint tenancy or as tenants in
common, both persons must sign above and please indicate the manner in which the
Securities are to be held:
_____ Tenants in Common _____ Joint Tenants
This subscription is accepted by PYR Energy Corporation on this _____ day
of __________, 2005.
PYR ENERGY CORPORATION
By:
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
8
SIGNATURE PAGE FOR ENTITIES
Date:
- ----------------------------------------
- ----------------------------------------
Printed Name of Entity
By:
- ----------------------------------------
Signature
- ----------------------------------------
Printed Name and Title
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
City, State, Postal or Zip Code, Country
- ----------------------------------------
Tax Identification Number
STATE OF )
---------------------------
) ss.
COUNTY OF )
--------------------------
On this _____ day of __________, 2005, before me personally appeared
___________________, who being duly sworn by me, acknowledged that (s)he
executed the foregoing instrument in the name of said entity, that (s)he had the
authority to execute the same, and that (s)he executed the same as the act and
deed of said entity for the uses and purposes therein stated.
My commission expires:
----------------------------------------
- ------------------------------------------ ------------------------------------
Notary Public Address
This subscription is accepted by PYR Energy Corporation on this _____ day
of __________, 2005.
PYR ENERGY CORPORATION
By:
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
9