NOTE REDEMPTION
AGREEMENT
This NOTE
REDEMPTION AGREEMENT (this “Agreement”) is made and
entered into as of April 23, 2007, by and among PYR Energy
Corporation, a Maryland corporation (the “Company”),
Black Bear Fund I, L.P., Black Bear Fund II, L.L.C., and Black Bear
Offshore Master Fund, L.P. (collectively, the “Eastbourne
Parties”), and Samson Investment Company, a Nevada
corporation (“Parent”).
A. The
Eastbourne Parties are the record and beneficial owners of
Convertible Promissory Notes (Series 2002-A) dated
May 24, 2002, issued by the Company in an aggregate original
principal amount of $6 million (collectively, the
“Convertible Notes”). With respect to each Convertible
Note, Schedule I hereto identifies (i) the payee,
(ii) the date of issuance, (iii) the original principal
amount, (iv) the interest rate on the date hereof,
(v) the outstanding principal and accrued interest as of
April 20, 2007, and (vi) the conversion price on the date
hereof.
B. Concurrent
with the execution and delivery of this Agreement, the Company,
Parent and Samson Acquisition Corp., a Maryland corporation and
wholly owned subsidiary of Parent (“Purchaser”), have
entered into an Agreement and Plan of Merger dated the date hereof
(the “Merger Agreement”) pursuant to which, among other
things, Purchaser shall, subject to certain conditions,
(i) tender for all of the outstanding shares of common stock
of the Company (the “Shares”) and (ii) following
consummation of such tender offer, merge with and into the Company,
pursuant to which the Company will become a wholly owned subsidiary
of Parent.
C. The
Company has proposed to redeem the Convertible Notes at a
redemption price equal to the principal of and accrued interest on
the Convertible Notes through the date immediately preceding the
redemption date and the Eastbourne Parties wish to permit the
Company to redeem the Convertible Notes on such terms, all as more
fully set forth herein.
NOW, THEREFORE, in
consideration of the preliminary statements above and of the mutual
agreements, covenants, representations, and warranties contained
herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties
hereto, each intending to be legally bound, hereby agree as
follows:
Section 1.1
Redemption of Convertible Notes . Subject to the conditions
set forth in Article III, the Company shall redeem the
Convertible Notes held by the Eastbourne Parties for the aggregate
Redemption Consideration on or after the Purchase Date (as defined
in the Merger Agreement), provided that in any event such
Redemption shall be consummated no later than five business days
after the Purchase Date. The Company will give the Eastbourne
Parties written notice of the date the Redemption is to be
consummated (the “Redemption Date”) not less than three
days prior to such date.
Section 1.2
Deliveries . On the Redemption Date, (a) the Eastbourne
Parties shall deliver to the Company the original executed
Convertible Notes, each of which shall be duly executed in blank
for transfer, and (b) the Company shall pay to the Eastbourne
Parties an amount in cash equal to the principal of and accrued
interest on the Convertible Notes through the date immediately
preceding the Redemption Date (the “Redemption
Consideration”) by wire transfer of immediately available
funds to the account designated by the Eastbourne Parties prior to
the Redemption Date. The Parent hereby agrees to fund to the
Company any cash required to effect such Redemption on or prior to
the Redemption Date by wire transfer of immediately available
funds.
Section 1.3
Effect of Redemption . Upon consummation of the Redemption,
the Convertible Notes shall be cancelled by the Company on its
books and the Eastbourne Parties shall have no further rights to
payment of principal or interest or otherwise under the Convertible
Notes or any further rights, powers, entitlements or claims under
the Convertible Notes or the related Convertible Note Purchase
Agreement, dated May 24, 20002, among the Company and the
Eastbourne Parties (the “Convertible Note Purchase
Agreement”), all of which shall be fully and effectively
released, acquitted, and forever discharged without any further
action on the part of the Eastbourne Parties. Notwithstanding the
foregoing, except as set forth in Section 1.4 hereof, until
the Redemption is consummated, the Eastbourne Parties shall have
all rights under the Convertible Notes and the Convertible Note
Purchase Agreement, including any rights arising from an event of
default thereunder.
Section 1.4
Note Conversion; Restrictions on Transfer; Preemptive Rights
. The Eastbourne Parties hereby agree that they will not convert
any Convertible Notes into Company common stock or sell, transfer
or otherwise convey the Convertible Notes from and after the date
hereof and through the Redemption Date. The Eastbourne Parties also
hereby waive any preemptive right under Section 6.8 of the
Convertible Note Purchase Agreement that may arise in connection
with any of the transactions contemplated by the Merger
Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1
Company Representations and Warranties . The Company
represents and warrants to the Eastbourne Parties as set forth
below:
(a) The Company
has all corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. The execution,
delivery and performance of this Agreement has been duly and
validly authorized by the board of directors of the Company and no
other corporate proceedings on the part of the Company are
necessary to authorize or consummate this Agreement. This Agreement
has been duly and validly executed and delivered by the Company,
and (assuming the due authorization, execution and delivery hereof
by the other parties) constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in
accordance with its terms, except as may be limited by bankruptcy,
insolvency, moratorium, reorganization or similar laws affecting
the rights of creditors generally and of general principles of
equity.
2
(b) The execution,
delivery and performance by the Company of this Agreement does not
and will not contravene, conflict with, constitute a violation or
breach of, or constitute (with or without notice or lapse of time
or both) a default under, any of the terms, conditions or
provisions of (i) the organizational documents of the Company,
(ii) any laws binding upon or applicable to the Company or by
which any of its assets or properties is bound or (iii) any
material contract to which the Company is a party or by which any
of its assets or properties is bound.
Section 2.2
Parent Representations and Warranties . Parent represents
and warrants to the Eastbourne Parties as set forth
below:
(a) Parent has all
corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder. The execution, delivery
and performance of this Agreement has been duly and validly
authorized by the board of directors of Parent and no other
corporate proceedings on the part of Parent are necessary to
authorize or consummate this Agreement. This Agreement has been
duly and validly executed and delivered by Parent, and (assuming
the due authorization, execution and delivery hereof by the other
parties) constitutes the legal, valid and binding obligation of
Parent, enforceable against Parent in accordance with its terms,
except as may be limited by bankruptcy, insolvency, moratorium,
reorganization or similar laws affecting the rights of creditors
generally and of general principles of equity.
(b) The execution,
delivery and performance by Parent of this Agreement does not and
will not contravene, conflict with, constitute a violation or
breach of, or constitute (with or without notice or lapse of time
or both) a default under, any of the terms, conditions or
provisions of (i) the organizational documents of Parent,
(ii) any laws binding upon or applicable to Parent or by which
any of its assets or properties is bound or (iii) any material
contract to which Parent is a party or by which any of its assets
or properties is bound.
Section 2.3
Eastbourne Parties Representations and Warranties . The
Eastbourne Parties jointly and severally represent and warrant to
the Company and Parent as set forth below:
(a) Each
Eastbourne Party is an entity duly organized, validly existing and
in good standing under the laws of the jurisdiction under which it
was organized. Each Eastbourne Party has all requisite power and
authori
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