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EXHIBIT 10.2
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement") by and among Toreador
Royalty Corporation, a Delaware corporation (the "Company"), and each of the
persons listed on the Schedule of Purchasers attached hereto (each referred to
herein as a "Purchaser" and, collectively, as the "Purchasers").
The Company has agreed, on the terms and subject to the conditions set
forth in the Securities Purchase Agreement of even date herewith (the
"Securities Purchase Agreement"), to issue and sell to each Purchaser shares
(the "Preferred Shares") of the Company's Series A Convertible Preferred Stock,
par value $1.00 per share (the "Preferred Stock"). The Preferred Shares are
convertible pursuant to the Company's Certificate of Designation (the
"Certificate of Designation") into shares (the "Conversion Shares") of the
Company's Common Stock, par value $0.15625 per share (the "Common Stock"). In
order to induce the Purchasers to enter into the Securities Purchase Agreement,
the Company has agreed to provide certain registration rights under the
Securities Act of 1933, as amended (the "Securities Act"), and under applicable
state securities laws. Capitalized terms used herein and not otherwise defined
shall have the respective meanings set forth in the Securities Purchase
Agreement.
In consideration of each Purchaser entering into the Securities
Purchase Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. DEFINITIONS.
For purposes of this Agreement, the following terms shall have the
meanings specified:
(a) "Closing" shall mean the date hereof;
(b) "Demand" means written request to the Company signed by
holders of 26% of the Preferred Shares outstanding for the
registration of the Conversion Shares;
(c) "Registration Deadline" means the one hundred and
twentieth (120th) day following a Demand;
(d) "Holder" means any person owning or having the right to
acquire, through conversion of Preferred Shares, Registrable
Securities, including initially each Purchaser and thereafter
any permitted assignee thereof;
(e) "Register", "registered" and "registration" refer to a
registration effected by preparing and filing a registration
statement or statements in compliance with the Securities Act
and pursuant to Rule 415 under the Securities Act ("Rule 415")
or any successor rule providing for the offering of securities
on a continuous or delayed basis ("Registration Statement"),
and the declaration or ordering of effectiveness of the
Registration Statement by the Securities and Exchange
Commission (the "Commission"); and
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(f) "Registrable Securities" means the Conversion Shares, and
any other shares of Common Stock issuable pursuant to the
terms of the Preferred Stock, whether as a dividend, payment
of a redemption price or otherwise, and any shares of capital
stock issued or issuable from time to time (with any
adjustments) in replacement of, in exchange for or otherwise
in respect of the Conversion Shares, including without
limitation any securities received by a Holder in connection
with an Exchange Transaction (as defined in the Certificate of
Designation).
2. DEMAND REGISTRATION.
(a) On or before the ninetieth (90th) day following a Demand,
the Company shall prepare and file with the Commission a Registration Statement
on Form S-3 (or if the Company is not then eligible to utilize Form S-3 for a
registration of this type, such other form as may be available to the Company)
as a "shelf" registration statement under Rule 415 covering the resale of the
number of shares of Registrable Securities then issuable on conversion of the
Preferred Shares. In addition, the Company may elect to register for resale
shares of Common Stock held by other holders. The Registration Statement shall
state, to the extent permitted by Rule 416 under the Securities Act, that it
also covers such indeterminate number of shares of Common Stock as may be
required to effect conversion of the Preferred Shares to prevent dilution
resulting from stock splits, stock dividends or similar events, or by reason of
changes in the Conversion Price in accordance with the terms of the Certificate
of Designation.
(b) The Company shall use its best efforts to cause the
Registration Statement to become effective as soon as practicable following the
filing thereof, but in no event later than the Registration Deadline and shall
maintain the effectiveness of the Registration Statement until the earlier to
occur of (i) the date on which all of the Registrable Securities have been sold
pursuant to the Registration Statement and (ii) the date on which all of the
remaining Registrable Securities (in the reasonable opinion of counsel to the
Company) may be immediately sold to the public without registration and without
regard to the amount of Registrable Securities which may be sold by a Holder
thereof at a given time (the "Registration Period").
(c) Upon the declaration by the Commission of the
effectiveness of a Registration Statement with respect to a Demand, the right of
the Holders to make a Demand pursuant to this Section 2 shall terminate and the
Company shall have no further obligation under this Section 2 to file any
additional Registration Statements on Demand. The Company's obligations under
Section 3 shall continue unaffected hereby.
3. PIGGYBACK REGISTRATION.
If at any time prior to the expiration of the Registration
Period, (i) the Company proposes to register shares of Common Stock under the
Securities Act in connection with the public offering of such shares for cash
(other than a registration relating solely to the sale of securities to
participants in a Company stock plan or employee stock award or a registration
on Form S-4 under the Securities Act or any successor or similar form
registering stock issuable upon a reclassification, a business combination
involving an exchange of securities or an exchange offer for securities of the
issuer or another entity) (a "Proposed Registration") and (ii) a registration
statement covering the sale of all of the Registrable
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Securities is not then effective and available for sales thereof by the Holders,
the Company shall, at such time, promptly give each Holder written notice of
such Proposed Registration. Each Holder shall have thirty (30) days from its
receipt of such notice to deliver to the Company a written request specifying
the amount of Registrable Securities that such Holder intends to sell and such
Holder's intended method of distribution. Upon receipt of such request, the
Company shall use its best efforts to cause all Registrable Securities which the
Company has been requested to register to be registered under the Securities Act
to the extent necessary to permit their sale or other disposition in accordance
with the intended methods of distribution specified in the request of such
Holder; provided, however, that the Company shall have the right to postpone or
withdraw any registration effected pursuant to this Section 3 without obligation
to the Holder. If, in connection with any underwritten public offering for the
account of the Company, the managing underwriter(s) thereof shall impose a
limitation on the number of shares of Common Stock which may be included in the
Registration Statement because, in such underwriter(s)' judgment, marketing or
other factors dictate such limitation is necessary to facilitate public
distributions, then the Company shall be obligated to include in such
Registration Statement only such limited portion of the Registrable Securities
with respect to which each Holder has requested inclusion hereunder as such
underwriter(s) shall permit. Any exclusion of Registrable Securities shall be
made pro rata among the Holders seeking to include Registrable Securities in the
Registration Statement, in proportion to the number of Registrable Securities
sought to be included by such Holders; and provided, however, that any exclusion
of Registrable Securities shall be made pro rata with holders of other
securities having the right to include such securities in the Registration
Statement.
4. OBLIGATIONS OF THE COMPANY.
In addition to performing its obligations hereunder, including those
pursuant to Sections 2(a) and 2(b) above, the Company shall:
(a) prepare and file with the Commission such amendments and
supplements to the Registration Statement and the prospectus used in connection
with the Registration Statement as may be necessary to comply with the
provisions of the Securities Act or to maintain the effectiveness of the
Registration Statement during the Registration Period, or as may be reasonably
requested by a Holder in order to incorporate information concerning such Holder
or such Holder's intended method of distribution;
(b) furnish to each Holder such number of copies of the
prospectus included in such Registration Statement, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such
other documents as such Holder may reasonably request in order to facilitate the
disposition of such Holder's Registrable Securities;
(c) use all commercially reasonable efforts to register or
qualify the Registrable Securities under the securities or "blue sky" laws of
such jurisdictions within the United States as shall be reasonably requested
from time to time by a Holder, and do any and all other acts or things which may
be necessary or advisable to enable such Holder to consummate the public sale or
other disposition of the Registrable Securities in such jurisdictions; provided
that the Company shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to service of
process in any such jurisdiction;
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(d) in the event of an underwritten public offering of the
Registrable Securities, enter into and perform its obligations under an
underwriting agreement, in usual and customary form reasonably acceptable to the
Company, with the managing underwriter of such offering;
(e) notify each Holder immediately upon the occurrence of any
event as a result of which the prospectus included in such Registration
Statement, as then in effect, contains an untrue statement of material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing, and (except during a Blackout Period) as promptly as practicable,
prepare, file and furnish to each Holder a reasonable number of copies of a
supplement or an amendment to such prospectus as may be necessary so that such
prospectus does not contain an untrue statement of material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing.
For purposes hereof, "Blackout Period" means such day or days, not to exceed an
aggregate of thirty (30) days during any period of twelve (12) consecutive
months, with respect to which the Board of Directors of the Company determines
in good faith (A) that an amendment or supplement to the Registration Statement
or prospectus contained therein is necessary, in light of subsequent events, in
order to correct a material misstatement made therein or to include information
the absence of which would render the Registration Statement or such prospectus
materially misleading and (B) that the filing of such amendment or supplement
would result in the disclosure of information which the Company has a bona fide
business purpose for preserving as confidential; provided that the Company shall
be entitled to impose no more than three (3) Blackout Periods during any period
of twelve (12) consecutive months;
(f) use all commercially reasonable efforts to prevent the
issuance of any stop order or other order suspending the effectiveness of such
Registration Statement and, if such an order is issued, to obtain the withdrawal
thereof at the earliest possible time and to notify each Holder of the issuance
of such order and the resolution thereof;
(g) furnish to each Holder, on the date that such Registration
Statement becomes effective, a letter, dated such date, of outside counsel
representing the Company (and reasonably acceptable to such Holder) addressed to
such Holder, confirming the effectiveness of the Registration Statement and, to
the knowledge of such counsel, the absence of any stop order;
(h) provide each Holder and its representatives the
opportunity to conduct a reasonable inquiry of the Company's financial and other
records during normal business hours and make available its officers, directors
and employees for questions regarding information which such Holder may
reasonably request in order to fulfill any due diligence obligation on its part;
and
(i) permit counsel for each Holder (at such Holder's expense)
to review such Registration Statement and all amendments and supplements thereto
a reasonable period of time prior to the filing thereof with the Commission.
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5. OBLIGATIONS OF EACH HOLDER.
In connection with the registration of the Registrable Securities
pursuant to the Registration Statement, each Holder shall:
(a) furnish to the Company such information regarding itself
and the intended method of disposition of Registrable Securities as the Company
shall reasonably request in order to effect the registration thereof;
(b) upon receipt of any notice from the Company of the
happening of any event of the kind described in Sections 4(e) or 4(f),
immediately discontinue disposition of Registrable Securities pursuant to the
Registration Statement until the filing of an amendment or supplement as
described in Section 4(g) or withdrawal of the stop order referred to in Section
4(f);
(c) in the event of an underwritten offering of the
Registrable Securities, enter into a customary and reasonable underwriting
agreement and execute such other documents as the managing underwriter for such
offering may reasonably request;
(d) to the extent required by applicable law, deliver a
prospectus to each purchaser of Registrable Securities; and
(e) notify the Company when it has sold all of the Registrable
Securities theretofore held by it.
6. INDEMNIFICATION.
In the event that any Registrable Securities are included in a
Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company shall
indemnify and hold harmless each Holder, the officers, directors, employees,
agents and representatives of such Holder, and each person, if any, who controls
such Holder within the meaning of the Securities Act or the Securities Exchange
Act of 1934, as amended (the "1934 Act"), against any losses, claims, damages,
liabilities or reasonable out-of-pocket expenses (whether joint or several)
(collectively, including legal or other expenses reasonably incurred in
connection with investigating or defending same, "Losses"), insofar as any such
Losses arise out of or are based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in such Registration Statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The Company will reimburse such Holder, and each such
officer, director, employee, agent, representative or controlling person for any
legal or other expenses as reasonably incurred by any such entity or person in
connection with investigating or defending any Loss; provided, however, that the
foregoing indemnity shall not apply to amounts paid in settlement of any Loss if
such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be obligated to
indemnify any person for any Loss to the extent that such Loss arises out of or
is based upon and in conformity with written information furnished by such
person expressly
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for use in such Registration Statement; and provided, further, that the Company
shall not be required to indemnify any person to the extent that any Loss
results from such person selling Registrable Securities (i) to a person to whom
there was not sent or given, at or prior to the written confirmation of the sale
of such shares, a copy of the prospectus, as most recently amended or
supplemented, if the Company has previously furnished or made available copies
thereof or (ii) during any period following written notice by the Company to
such Holder of an event described in Section 4(e) or 4(f).
(b) To the extent permitted by law, each Holder, acting
severally and not jointly, shall indemnify and hold harmless the Company, the
officers, directors, employees, agents and representatives of the Company, and
each person, if any, who controls the Company within the meaning of the
Securities Act or the 1934 Act, against any Losses to the extent (and only to
the extent) that any such Losses arise out of or are based upon and in
conformity with written information furnished by such Holder expressly for use
in such Registration Statement; and such Holder will reimburse any legal or
other expenses as reasonably incurred by the Company and any such officer,
director, employee, agent, representative, or controlling person, in connection
with investigating or defending any such Loss; provided, however, that the
foregoing indemnity shall not apply to amounts paid in settlement of any such
Loss if such settlement is effected without the consent of such Holder, which
consent shall not be unreasonably withheld; provided, that, in no event shall
any indemnity under this Section 6(b) exceed the net purchase price of
securities sold by such Holder under the Registration Statement.
(c) Promptly after receipt by an indemnified party under this
Section 6 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 6, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in and to assume the
defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party shall have the right to retain its own
counsel, with the reasonably incurred fees and expenses of one such counsel to
be paid by the indemnifying party, if representation of such indemnified party
by the counsel retained by the indemnifying party would be inappropriate under
applicable standards of professional conduct due to actual or potential
conflicting interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action, to the extent prejudicial to its ability to defend such action,
shall relieve such indemnifying party of any liability to the indemnified party
under this Section 6 with respect to such action, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 6 or
with respect to any other action.
(d) In the event that the indemnity provided in subsection (a)
or (b) of this Section 6 is unavailable or insufficient to hold harmless an
indemnified party for any reason, the Company and each Holder agree, severally
and not jointly, to contribute to the aggregate Losses to which the Company or
such Holder may be subject in such proportion as is appropriate to reflect the
relative fault of the Company and such Holder in connection with the statements
or omissions which resulted in such Losses; provided, however, that in no case
shall such Holder be responsible for any amount in excess of the net purchase
price of securities sold by it under the Registration Statement. Relative fault
shall be determined by
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reference to whether any alleged untrue statement or omission relates to
information provided by the Company or by such Holder. The Company and each
Holder agree that it would not be just and equitable if contribution were
determined by pro rata allocation or any other method of allocation which does
not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (d), no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation. For purposes of this Section 6,
each person who controls a Holder within the meaning of either the Securities
Act or the Exchange Act and each officer, director, employee, agent or
representative of such Holder shall have the same rights to contribution as such
Holder, and each person who controls the Company within the meaning of either
the Securities Act or the Exchange Act and each officer, director, employee,
agent or representative of the Company shall have the same rights to
contribution as the Company, subject in each case to the applicable terms and
conditions of this subsection (d).
(e) The obligations of the Company and each Holder under this
Section 6 shall survive the conversion or redemption, if any, of the Preferred
Shares, the exercise of the Warrant, the completion of any offering of
Registrable Securities pursuant to a Registration Statement under this
Agreement, or otherwise.
7. REPORTS.
With a view to making available to each Holder the benefits of
Rule 144 under the Securities Act ("Rule 144") and any other similar rule or
regulation of the Commission that may at any time permit such Holder to sell
securities of the Company to the public without registration, the Company agrees
to:
(a) make and keep public information available, as those terms
are understood and defined in Rule 144;
(b) file with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act and the
1934 Act; and
(c) furnish to such Holder, so long as such Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company, if true, that it has complied with the reporting requirements of Rule
144, the Securities Act and the 1934 Act, (ii) a copy of the most recent annual
or quarterly report of the Company and such other reports and documents so filed
by the Company, and (iii) such other information as may be reasonably requested
in availing such Holder of any rule or regulation of the Commission which
permits the selling of any such securities without registration.
8. MISCELLANEOUS.
(a) Expenses of Registration. All expenses, other than
underwriting discounts and commissions and fees and expenses of counsel to each
Holder, incurred in connection with the registrations, filings or qualifications
described herein, including (without limitation) all registration, filing and
qualification fees, printers' and accounting fees and the fees and disbursements
of counsel for the Company shall be borne by the Company.
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(b) Amendment; Waiver. Any provision of this Agreement may be
amended only pursuant to a written instrument executed by the Company and
Holders of at least two thirds (2/3) of the Registrable Securities then issued
or issuable. Any waiver of the provisions of this Agreement may be made only
pursuant to a written instrument executed by the party against whom enforcement
is sought. Any amendment or waiver effected in accordance with this paragraph
shall be binding upon each Holder, each future Holder, and the Company. The
failure of any party to exercise any right or remedy under this Agreement or
otherwise, or the delay by any party in exercising such right or remedy, shall
not operate as a waiver thereof. Provided, however, that upon the issuance of
additional shares of Series A Preferred Stock subsequent to the date hereof and
in accordance with the Securities Purchase Agreement, without any further
consent or acknowledgment of the Holders party hereto, the Company may add
additional holders of Series A Preferred Stock to this Agreement from time to
time. Any such additional holders joining this Agreement shall execute a
signature page to this Agreement, which signature page shall be countersigned by
the Company and the original appended to this Agreement. A photocopy of such
appended signature page shall be sent to each prior Holder party to this
Agreement.
(c) Notices. Any notice, demand or request required or
permitted to be given by any party to any other party pursuant to the terms of
this Agreement shall be in writing and shall be deemed given (i) when delivered
personally or by verifiable facsimile transmission (with an original to follow)
on or before 5:00 p.m., central time, on a business day or, if such day is not a
business day, on the next succeeding business day, (ii) on the next business day
after timely delivery to a nationally-recognized overnight courier and (iii) on
the third business day after deposit in the U.S. mail (certified or registered
mail, return receipt requested, postage prepaid), addressed to the parties as
follows:
If to the Company:
Toreador Royalty Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn.: Chief Executive Officer
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ and ▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
and if to any Holder, to such address as shall be designated by such Holder in
writing to the Company.
(d) Termination. This Agreement shall terminate on the earlier
to occur of (a) the end of the Registration Period and (b) the date on which all
of the Registrable Securities have been publicly distributed; but any such
termination shall be without prejudice
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to (i) the parties' rights and obligations arising from breaches of this
Agreement occurring prior to such termination and (ii) the indemnification and
contribution obligations under this Agreement.
(e) Assignment. The rights of a Holder hereunder shall be
assigned automatically to any transferee of the Preferred Shares or Registrable
Securities from such Holder as long as: (i) the Company is, within a reasonable
period of time following such transfer, furnished with written notice of the
name and address of such transferee, (ii) the transferee agrees in writing with
the Company to be bound by all of the provisions hereof and (iii) such transfer
is made in accordance with the applicable requirements of the Securities
Purchase Agreement.
(f) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, and all of which
together shall be deemed one and the same instrument. This Agreement, once
executed by a party, may be delivered to any other party hereto by facsimile
transmission.
(g) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas without regard to
the conflict of laws provisions thereof.
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SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date indicated by their signature.
PURCHASER NAME: ▇▇▇▇▇▇▇ ▇. ▇▇▇ Dated: December 7, 1998
----------------------------------
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇
----------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇
Title:
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Accepted this 16th day of December 1998.
TOREADOR ROYALTY CORPORATION
By: /s/ G. ▇▇▇▇▇▇ ▇▇▇▇▇▇ III
----------------------------------------------------
Name: G. ▇▇▇▇▇▇ ▇▇▇▇▇▇ III
Title: President and Chief Executive Officer
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