Exhibit 10.1
SUBSCRIPTION AGREEMENT
Private Offering
of Shares of
Common Stock
This
Subscription Agreement (this "
Agreement "),
made as of the date set forth below by and among Northern Oil &
Gas, Inc., a Nevada corporation (the "
Company "),
and the undersigned subscriber (the "
Subscriber "),
is intended to set forth certain representations, covenants and
agreements among the Company and the Subscriber, with respect to
the offering (the "
Offering ")
for sale by the Company of shares of Common Stock, par value $.001
per share (the "
Common Stock "),
as described in the Private Placement Memorandum dated August 17,
2007 (the "
Memorandum "),
a copy of which has been delivered to Subscriber. The Shares are
being offered by the Company through FIG Partners, as placement
agent (the "
Placement Agent ").
1.
Subscription .
Subject to the terms and conditions hereof, the Subscriber hereby
subscribes for and agrees to purchase from the Company the number
of shares of Common Stock (the "
Shares ")
set forth under the Subscriber’s name on the signature page
hereto at a purchase price of $3.30 per share (the "
Offering Price "),
and the Company agrees to sell such Shares to the Subscriber at the
Offering Price, subject to the terms and conditions hereof. The
Company agrees that, if the conditions set forth in this Agreement
are satisfied, the Company will issue to the Subscriber a warrant
(the "
Warrant "),
in the form attached hereto as Exhibit A, to purchase a number of
shares of Common Stock equal to the number of Shares acquired by
the Subscriber in the Offering, with half of such shares having an
exercise price of $5.00 per share for a term of 18 months and half
of such shares having an exercise price of $6.00 per share for a
term of 48 months.
2.
Closing Deliveries .
Subscriber understands and agrees that this subscription is made
subject to the following terms and conditions:
(a)
Subscriber
understands that separate subscription agreements will be
executed with other subscribers for up to an aggregate of
4,242,424 shares of Common Stock to be sold by the Company in
the Offering.
(b)
Contemporaneously
with the execution and delivery of this Agreement, Subscriber
shall execute and deliver the Certificate of Accredited
Investor Status, and shall submit payment in the form of a
wire transfer or a check payable to the Company. Such payment
shall be made in immediately available funds in the amount
equal to the Offering Price multiplied by the number of Shares
for which the Subscriber has subscribed (the "
Subscription Amount ")
in accordance with the Subscription Instructions set forth on
Exhibit B hereto.
(c)
The
Company shall have the right to allocate the Common Stock
being offered by the Company among subscribers in any manner
it may desire.
(d)
The
payment of the Subscription Amount will be returned promptly,
without interest, if the Closing does not occur or the
Offering is withdrawn or canceled.
(e)
The
Placement Agent and the Company may conduct one or more
closings of this Offering (each a "
Closing ")
until all 4,242,424 shares of Common Stock offered hereby are sold.
The Closing of the Subscriber's purchase of Shares shall take place
as soon as practicable after the date hereof that all conditions to
this Agreement have been satisfied. The parties shall use best
efforts to effect the Closing as soon as practicable. Either party
may terminate this Agreement if the Closing has not occurred within
30 days from the date hereof due to the failure of any of the
conditions to its obligation to close to be met.
(f)
Certificates
representing the Shares purchased and the Warrant will be
issued in the name of the Subscriber within five business days
of the applicable Closing.
3.
Closing Conditions .
(a)
The
Company’s obligation to issue and sell the Shares to the
Subscriber is subject to the following
conditions:
(i)
receipt
by the Company of immediately available funds in the full
amount of the Subscription Amount;
(ii)
receipt
by the Company from
the Subscriber of
an executed
Certificate of Accredited Investor Status and an executed copy
of the Registration Rights Agreement;
(iii)
the
representations and warranties of the Subscriber contained in
this Agreement being true and correct in all material respects
as of the Closing with the same effect as though such
representations and warranties had been made as of the
Closing, and the fulfillment of those undertakings of the
Subscriber to be fulfilled prior to the Closing;
(iv)
absence
of any order, writ, injunction, judgment or decree that could
negatively affect the validity of this Agreement or the right
of the Company to enter into this Agreement or to consummate
the transactions contemplated hereby; and
(v)
receipt
by the Company of subscriptions to purchase at least
4,242,424
shares
of Common Stock of the Company on the terms contained in this
Agreement.
(b)
The
obligation of the Subscriber to purchase and pay for the
Shares is subject to the following conditions, any one or more
of which may be waived in writing at any time by the
Subscriber:
(i)
delivery
to the Subscriber of an opinion of counsel to the Company,
dated as of the Closing, in form and substance reasonably
satisfactory to the Subscriber;
(ii)
(A)
the representations and warranties of the Company contained in
this Agreement being true and correct in all material respects
as of the Closing with the same effect as though such
representations and warranties had been made as of the Closing
(except with respect to representations and warranties that
are made as of a specific date or period, which shall continue
to be true and correct in all material respects as of the
respective dates and for the respective periods covered), and
(B) the Company shall have performed all obligations and
covenants herein required to be performed by it on or prior to
the Closing;
(iii)
receipt
by the Subscriber of a certificate, dated as of the Closing
and signed by the chief financial officer of the Company, to
the effect that the condition set forth in clause (ii) above
has been satisfied;
(iv)
receipt
by the Subscriber of a certificate, dated as of the Closing
and signed by an authorized officer of the Company, certifying
on behalf of the Company: (a) that attached thereto is a true
and complete copy of the articles of incorporation and by-laws
of the Company as in effect as of the Closing; (ii) that
attached thereto is a true and complete copy of all
resolutions adopted by the Board of Directors and/or
stockholders of the Company authorizing the execution,
delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby; and
(iii) to the incumbency of each officer of the Company
executing on behalf of the Company this Agreement and the
other documents and agreements contemplated
hereby;
(v)
receipt
from the Company of a good standing certificate of the Company
from its state of incorporation dated as of a date within
three business days of the Closing;
(vi)
receipt
from the Company of an executed
copy of the Registration Rights Agreement; and
(vii)
absence
of any order, writ, injunction, judgment or decree that could
negatively affect the validity of this Agreement or the right
of the Company to enter into this Agreement or to consummate
the transactions contemplated hereby.
4.
Terms of Subscription .
(a)
The
Placement Agent will receive a fee equal to six percent of the
gross proceeds received by the Company in the Offering and
warrants to purchase a number of shares of Common Stock equal
to six percent of the aggregate number of shares of Common
Stock sold by the Company in the Offering (the "Placement
Agent Warrants"). The Placement Agent Warrants will be
in
the form attached hereto as Exhibit A, and half of the shares
subject to the warrants will have an exercise price of $5.00
per share for a term of 18 months and half of such shares will
have an exercise price of $6.00 per share for a term of 48
months. The
Company shall pay all expenses in connection with the
Offering, except for those expenses that the Placement Agent
has agreed with the Company to pay.
(b)
If
the Subscriber is not a United States citizen, the Subscriber
hereby represents that it has satisfied itself as to the full
observance of the laws of its jurisdiction in connection with
any invitation to subscribe for the Shares or any use of this
Agreement, including (i) the legal requirements within its
jurisdiction for the purchase of the Shares, (ii) any foreign
exchange restrictions applicable to such purchase, (iii) any
governmental or other consents that may need to be obtained,
and (iv) the income tax and other tax consequences, if any,
that may be relevant to the purchase, holding, redemption,
sale or transfer of the Shares. The Subscriber’s
subscription and payment for, and his, her or its continued
beneficial ownership of the Shares, will not violate any
applicable securities or other laws of the Subscriber’s
jurisdiction. The Subscriber shall comply in all respects with
all applicable provisions of Regulation S promulgated under
the Securities Act of 1933, as amended (the "
Securities Act ").
5.
Registration Rights .
(a)
Contemporaneous
with the execution and delivery of this Agreement, the Company
and Subscriber are executing and delivering a Registration
Rights Agreement, in the form attached hereto as Exhibit C
(the "
Registration Rights Agreement "),
pursuant to which the Company has agreed under certain
circumstances to register the resale of the Shares under the
Securities
Act and
the rules and regulations promulgated thereunder, and applicable
state securities laws.
(b)
Subscriber
acknowledges that it is acquiring the Shares for its own
account and for the purpose of investment and not with a view
to any distribution or resale thereof in violation of the
Securities Act or other applicable securities laws. The
Subscriber further agrees that it will not sell, assign or
transfer the Shares at any time in violation of the Securities
Act and acknowledges that, in taking unregistered securities,
it must continue to bear the economic risk of its investment
for an indefinite period of time because of the fact that the
Shares have not been registered under the Securities Act, and
further realizes that the Shares cannot be sold unless
subsequently registered under the Securities Act or an
exemption from such registration is available. The Subscriber
also acknowledges that appropriate legends reflecting the
status of the Shares under the Securities Act may be placed on
the face of the certificates for such shares at the time of
their transfer and delivery to the holder
thereof.
(c)
The
Shares may not be transferred except in a transaction that is
in compliance with the Securities Act. Except as provided in
the Registration Rights Agreement, it shall be a condition to
any such transfer that, if requested by the Company, the
Company shall be furnished with an opinion of counsel,
reasonably satisfactory to the Company, to the effect that the
proposed transfer would be in compliance with the Securities
Act.
6.
Representations, Warranties and Covenants of the
Subscriber .
Subscriber hereby represents, warrants and covenants to the Company
as follows:
(a)
Subscriber
is purchasing the Shares for its own account, not as a nominee
or agent, for investment purposes and not with a present view
towards resale, except pursuant to sales exempted from
registration under the Securities Act, or registered under the
Securities Act as contemplated by the Registration Rights
Agreement.
(b)
The
Subscriber understands that (A) the Shares (1) have not been
registered under the Securities Act or any state securities
laws, (2) will be transferred in reliance upon an exemption
from the registration and prospectus delivery requirements of
the Securities Act pursuant to Regulation D promulgated
thereunder, (3) will be transferred in reliance upon
exemptions from the registration and prospectus delivery
requirements of state securities laws that relate to private
offerings, and (4) must be held by the Subscriber
indefinitely, and (B) the Subscriber must therefore bear the
economic risk of such investment indefinitely unless a
subsequent disposition thereof is registered under the
Securities Act and applicable state securities laws or is
exempt therefrom. Subscriber further understands that such
exemptions depend upon, among other things, the bona fide
nature of the investment intent of the Subscriber expressed
herein. Pursuant to the foregoing, the Subscriber acknowledges
that until such time as the resale of the Shares has been
registered under the Securities Act as contemplated by the
Registration Rights Agreement or otherwise may be sold
pursuant to an exemption from registration, the certificates
representing the Shares acquired by the Subscriber shall bear
a restrictive legend substantially as follows (and a
stop-transfer order may be placed against transfer of the
certificates evidencing such Shares):
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"THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS
ON TRANSFER UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND STATE
SECURITIES LAWS, AND MAY NOT BE OFFERED FOR SALE, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF UNLESS (I) REGISTERED
UNDER THE APPLICABLE SECURITIES LAWS OR (II) AN OPINION OF COUNSEL,
WHICH OPINION AND COUNSEL ARE BOTH REASONABLY SATISFACTORY TO THE
COMPANY, HAS BEEN DELIVERED TO THE COMPANY AND SUCH OPINION STATES
THAT THE SHARES MAY BE TRANSFERRED WITHOUT SUCH
REGISTRATION."
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(c)
The
Subscriber has knowledge, skill and experience in financial,
business and investment matters relating to an investment of
this type and is capable of evaluating the merits and risks of
such investment and protecting the Subscriber’s interest
in connection with the acquisition of the Shares. The
Subscriber understands that the acquisition of the Shares is a
speculative investment and involves substantial risks and that
the Subscriber could lose the Subscriber’s entire
investment in the Shares. Further, the undersigned has
carefully read and considered the matters set forth under the
section entitled "Risk Factors" in the Company’s Annual
Report on Form 10-KSB for its fiscal year ended December 31,
2006 and in the Memorandum, and has taken full cognizance of
and understands all of the risks related to the purchase of
the Shares. To the extent deemed necessary by the Subscriber,
the Subscriber has retained, at its own expense, and relied
upon, appropriate professional advice regarding the
investment, tax and legal merits and consequences of
purchasing and owning the Shares. The Subscriber has the
ability to bear the economic risks of the Subscriber’s
investment in the Company, including a complete loss of the
investment, and the Subscriber has no need for liquidity in
such investment.
(d)
The
Subscriber has been furnished by the Company all information
(or provided access to all information) regarding the business
and financial condition of the Company, its expected plans for
future business activities, the attributes of the Shares and
the merits and risks of an investment in the Shares that the
Subscriber has requested or otherwise needs to evaluate the
investment in the Company.
(e)
Subscriber
is in receipt of and has carefully read and understands the
following items (collectively, the "
Disclosure Documents "):
(i)
the
Memorandum;
(ii)
the
Annual Report on Form 10-KSB of the Company filed with
the Securities and Exchange Commission (the "
SEC ")
for its fiscal year ended December 31, 2006;
(iii)
the
Quarterly Report on Form 10-QSB of the Company filed with the
SEC for its quarterly period ended March 31,
2007;
(iv)
the
Current Reports on Form 8-K filed or furnished by the Company
with the SEC since December 31, 2006, including the Current
Reports on Form 8-K filed or furnished by the Company on March
8, 2007, March 23, 2007, April 23, 2007, May 9, 2007 and July
2, 2007; and
(v)
the
Amendment No. 1 to Registration Statement on Form SB-2 of the
Company filed with the SEC on July 23, 2007.
(f)
In
making the proposed investment decision, the Subscriber is
relying solely on investigations made by the Subscriber and
the Subscriber’s representatives. The offer to sell the
Shares was communicated to the Subscriber in such a manner
that the Subscriber was able to ask questions of and receive
answers from the management of the Company concerning the
terms and conditions of the proposed transaction and that at
no time was the Subscriber presented with or solicited by or
through any advertisement, article, leaflet, public
promotional meeting, notice or other communication published
in any newspaper, magazine or similar media or broadcast over
television or radio or presented at any seminar or meeting or
any other form of general or public advertising or
solicitation.
(g)
The
Subscriber acknowledges that the Subscriber has been advised
that:
(i)
The
Shares offered hereby have not been approved or disapproved by
the SEC or any state securities commission nor has the SEC or
any state securities commission passed upon the accuracy or
adequacy of any representation by the Company. Any
representation to the contrary is a criminal
offense.
(ii)
In
making an investment decision, the Subscriber must rely on its
own examination of the Company and the terms of the Offering,
including the merits and risks involved. The Shares have not
been recommended by any federal or state securities commission
or regulatory authority. Furthermore, the foregoing
authorities have not confirmed the accuracy or determined the
adequacy of any representation by the Company. Any
representation to the contrary is a criminal
offense.
(iii)
The
Shares will be "restricted securities" within the meaning of
Rule 144 under the Securities Act, are subject to restrictions
on transferability and resale and may not be transferred or
resold except as permitted under the Securities Act and
applicable state securities laws, pursuant to registration or
exemption therefrom. The Subscriber is aware that the
Subscriber may be required to bear the financial risks of this
investment for an indefinite period of time.
(h)
The
Subscriber agrees to furnish the Company with such other
information as the Company may reasonably request in order to
verify the accuracy of the information contained herein and
agrees to notify the Company immediately of any material
change in the information provided herein that occurs prior to
the Closing.
(i)
The
Subscriber further represents and warrants that the Subscriber
is an "accredited investor" within the meaning of Rule 501 of
Regulation D promulgated under the Securities Act, and
Subscriber has executed the Certificate of Accredited Investor
Status, attached hereto as Exhibit D.
(j)
As
of the date of this Agreement the Subscriber and its
affiliates do not have, and during the 30-day period prior to
the date of this Agreement the Subscriber and its affiliates
have not entered into, any "put equivalent position" as such
term is defined in Rule 16a-1 of under the Securities Exchange
Act of 1934, as amended (the "
Exchange Act "),
or short sale positions with respect to the Common Stock of the
Company. In addition, the Subscriber shall comply with all
applicable provisions of Regulation M promulgated under the
Securities Act.
(k)
If
the Subscriber is a natural person, the Subscriber has reached
the age of majority in the state in which the Subscriber
resides, has adequate means of providing for the
Subscriber’s current financial needs and contingencies,
is able to bear the substantial economic risks of an
investment in the Shares for an indefinite period of time, has
no need for liquidity in such investment and, at the present
time, could afford a complete loss of such
investment.
(l)
If
this Agreement is executed and delivered on behalf of a
partnership, corporation, limited liability company, trust,
estate or other entity (an "
Entity "):
(i) such Entity has the full legal right and power and all
authority and approval required (a) to execute and deliver, or
authorize execution and delivery of, this Agreement and all other
instruments executed and delivered by or on behalf of such Entity
in connection with the purchase of the Shares, (b) to delegate
authority pursuant to power of attorney, and (c) to purchase and
hold such Shares; (ii) the signature of the party signing on behalf
of such Entity is binding upon such Entity; and (iii) such Entity
has not been formed for the specific purpose of acquiring such
Shares, unless each beneficial owner of such Entity is qualified as
an accredited investor within the meaning of Rule 501(a) of
Regulation D promulgated under the Securities Act and has submitted
information substantiating such individual
qualification.
(m)
If
the Subscriber is a retirement plan or is investing on behalf
of a retirement plan, the Subscriber acknowledges that
investment in the Common Stock poses additional risks,
including the inability to use losses generated by an
investment in the Common Stock to offset taxable
income.
(n)
The
Subscriber understands and confirms that the Company will rely
on the representations and covenants contained herein in
effecting the transactions contemplated by this Agreement and
the other Transaction Documents (as defined herein). All
representations and warranties provided to the Company
furnished by or on behalf of the Subscriber, taken as a whole,
are true and correct and do not contain any untrue statement
of material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of
the circumstances under which they were made, not
misleading.
7.
Representations, Warranties and Covenants of the Company
.
Except as set forth in the Company’s Disclosure Schedule
attached hereto, the Company represents and warrants to the
Subscriber as follows:
(a)
The
Company has no subsidiaries. The Company is a corporation duly
organized, validly existing and in good standing under the
laws of the jurisdiction in which it is incorporated or
organized, with corporate power and authority to own, lease,
use and operate its properties and to carry on its business as
now operated and conducted. The Company is duly qualified as a
foreign corporation to do business and is in good standing in
each jurisdiction in which its ownership or use of property or
the nature of the business conducted by it makes such
qualification necessary, except where the failure to be so
qualified or in good standing would not reasonably be expected
to have a material adverse effect on the business, operations,
assets, financial condition or prospects of the Company (a
"
Material Adverse Effect ").
(b)
The
Company has all requisite corporate power and authority to
enter into and perform this Agreement, the Registration Rights
Agreement, and each of the other documents contemplated by
this Agreement to be executed and delivered by the Company
(collectively, the "
Transaction Documents "),
and to consummate the transactions contemplated hereby and thereby,
in accordance with the terms hereof and thereof. The execution and
delivery of this Agreement and each of the other Transaction
Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly
authorized by the Company’s Board of Directors and no further
consent or authorization of the Company, its Board of Directors, or
its stockholders is required. This Agreement and each of the other
Transaction Documents have been duly executed and delivered by the
Company. This Agreement and each of the other Transaction Documents
will constitute, upon execution and delivery by the Company, a
legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as such
enforceability may be limited by: (i) applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws in
effect that limit creditors’ rights generally; (ii) equitable
limitations on the availability of specific remedies; (iii)
principles of equity (regardless of whether such enforcement is
considered in a proceeding in law or in equity); and (iv) to the
extent rights to indemnification and contribution may be limited by
federal securities laws or the public policy underlying such
laws.
(c)
As
of the date hereof, the authorized capital stock of the
Company consists of 100,000,000 shares of Common Stock, of
which 22,809,123 shares are issued and outstanding, and no
shares are held by the Company as treasury shares. All
outstanding shares of Common Stock are duly authorized,
validly issued, fully paid and nonassessable. No shares of
capital stock of the Company are subject to preemptive rights
or any other similar rights of the stockholders of the Company
or any liens or encumbrances imposed through the actions or
failure to act of the Company. As of the date hereof, the
Company has outstanding options to purchase 1,100,000 shares
of Common Stock. As of the date of this Agreement, except to
the extent described in the preceding sentence or on
Schedule 7(c) ,
(i) there are no outstanding options, warrants, scrip, rights to
subscribe for, puts, calls, rights of first refusal, agreements,
understandings, claims or other commitments or rights of any
character whatsoever relating to, or securities or rights
convertible into or exchangeable for any shares of capital stock of
the Company, or arrangements by which the Company is or may become
bound to issue additional shares of capital stock, and (ii) except
for the Registration Rights Agreement or as set forth on
Schedule 7(c) ,
there are no agreements or arrangements under which the Company is
obligated to register the sale of any of its securities under the
Securities Act. Except as may be described in any documents which
have been publicly filed by any of the Company's stockholders, to
the Company’s knowledge, there are no agreements between the
Company’s stockholders with respect to the voting or transfer
of the Company’s capital stock or with respect to any other
aspect of the Company’s affairs.
(d)
The
execution, delivery and performance of this Agreement and each
of the other Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated
hereby and thereby will not (i) conflict with or result in a
violation of any provision of the articles of incorporation,
as amended, of the Company or the bylaws, as amended, of the
Company, (ii) violate or conflict with, or result in a breach
of any provision of, or constitute a default (or an event
which with notice or lapse of time or both could become a
default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material
agreement, indenture, patent, patent license or instrument to
which the Company is a party, or (iii) result in a violation
of any federal, state, local, municipal, foreign,
international, multinational or other law, rule, regulation,
order, judgment, decree, ordinance, policy or directive,
including those entered, issued, made, rendered or required by
any court, administrative or other governmental body, agency
or authority, or any arbitrator (collectively, a "
Legal Requirement ")
applicable to the Company or by which any property or asset of the
Company is bound or affected (except for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and
violations as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect). The
Company is not in violation of its articles of incorporation, as
amended, or bylaws, as amended, or other organizational documents
and the Company is not in default (and no event has occurred that
with notice or lapse of time would result in a default) under, and
the Company has not taken any action or failed to take any action
that would give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement or instrument to
which the Company is a party or by which any property or assets of
the Company is bound or affected, except for possible defaults as
would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. Except as required by the NASD
or under the Securities Act and any applicable state securities
laws, the Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with,
any court, governmental agency, regulatory agency, self regulatory
organization or stock market or any third party in order for it to
execute, deliver or perform any of its obligations under the
Transaction Documents. All consents, authorizations, orders,
filings and registrations that the Company is required to effect or
obtain pursuant to the preceding sentence have been obtained or
effected on or prior to the date hereof.
(e)
Since
January 1, 2006, the Company has timely filed all reports,
schedules, forms, statements and other documents required to
be filed by it with the SEC pursuant to the reporting
requirements of the Securities Act and the Exchange Act (all
of the foregoing filed after January 1, 2006 and prior to the
date hereof and all exhibits included therein and financial
statements and schedules thereto and documents (other than
exhibits to such documents) incorporated by reference therein,
being hereinafter referred to herein as the "
SEC Documents "),
or has timely filed for a valid extension of such time of filing
and has filed any such SEC Documents prior to the expiration of any
such extension. As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as applicable, and the
applicable rules and regulations of the SEC promulgated thereunder,
and none of the SEC Documents, at the time they were filed with the
SEC, contained any untrue statement of a material fact or omitted
to state a material fact re
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