EXHIBIT 4.1
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and entered
into as of March 11, 2005, by and among Mariner Energy, Inc., a Delaware
corporation (together with any successor entity thereto, the "Company"), MEI
Acquisition Holdings, LLC (the "Selling Stockholder"), and Friedman, Billings,
▇▇▇▇▇▇ & Co., Inc., a Delaware corporation ("FBR"), for the benefit of the
Selling Stockholder, the holders of Employee Shares (as defined below), FBR, the
purchasers of the Company's common stock, par value $.0001 per share, as
participants ("Participants") in the private placement by the Company of shares
of its common stock (the "Private Placement"), and the direct and indirect
transferees of FBR and each of the Participants.
This Agreement is made pursuant to the Purchase/Placement Agreement (the
"Purchase/Placement Agreement"), dated as of March 4, 2005, by and among the
Company, the Selling Stockholder and FBR in connection with the purchase and
sale or placement of an aggregate of 27,350,000 shares of the Company's common
stock (plus an additional 4,102,500 shares to cover additional allotments, if
any). In order to induce FBR and the Selling Stockholder to enter into the
Purchase/Placement Agreement, the Company has agreed to provide the registration
rights provided for in this Agreement to FBR, the Participants, the Selling
Stockholder, the holders of Employee Shares and their respective direct and
indirect transferees. The execution of this Agreement is a condition to the
closing of the transactions contemplated by the Purchase/Placement Agreement.
The parties hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
144A/Regulation S Shares: Shares initially sold to FBR in the Private
Placement and resold by FBR to "qualified institutional buyers" (as such
term is defined in Rule 144A) or to "non-U.S. persons" (in accordance with
Regulation S) in an "offshore transaction" (in accordance with Regulation
S).
Agreement: As defined in the preamble.
Affiliate: As to any specified Person, (i) any Person directly or
indirectly owning, controlling or holding, with power to vote, ten percent
or more of the outstanding voting securities of such other Person, (ii) any
Person ten percent or more of whose outstanding voting securities are
directly or indirectly owned, controlled or held, with power to vote, by
such other Person, (iii) any Person directly or indirectly controlling,
controlled by or under common control with such other Person, (iv) any
executive officer, director, trustee or general partner of such Person and
(v) any legal entity for which such Person acts as an executive officer,
director, trustee or general partner. An indirect relationship shall
include circumstances in which a Person's spouse, children, parents,
siblings or mother-, father-, sister- or brother-in-law is or has been
associated with a Person.
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Business Day: With respect to any act to be performed hereunder, each
Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which
banking institutions in New York, New York or other applicable places where
such act is to occur are authorized or obligated by applicable law,
regulation or executive order to close.
Closing Date: The date of this Agreement or such other time or such
other date as FBR and the Company may agree.
Commission: The Securities and Exchange Commission.
Common Stock: The common stock, par value $0.0001 per share, of the
Company.
Company: As defined in the preamble.
Controlling Person: As defined in Section 6(a) hereof.
Employee Shares: Shares of Common Stock of the Company issued pursuant
to the Company's Equity Participation Plan or pursuant to stock options or
restricted stock grants under the Company's Stock Incentive Plan each as
adopted by the Company to be effective on the Closing Date.
End of Suspension Notice: As defined in Section 5(b) hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated by the Commission pursuant thereto.
FBR: As defined in the preamble.
Holder: Each record owner of any Registrable Shares from time to time,
including FBR and its Affiliates.
Indemnified Party: As defined in Section 6(c) hereof.
Indemnifying Party: As defined in Section 6(c) hereof.
IPO Registration Statement: As defined in Section 2(b) hereof.
Liabilities: As defined in Section 6(a) hereof.
NASD: The National Association of Securities Dealers, Inc.
No Objections Letter: As defined in Section 4(t) hereof.
Offering Memorandum: The Offering Memorandum of the Company dated
March 4, 2005 pursuant to which the 144 A/Regulation S Shares and the
Private Placement Shares are offered and sold.
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Participant: As defined in the preamble.
Person: An individual, partnership, corporation, trust, unincorporated
organization, government or agency or political subdivision thereof, or any
other legal entity.
Private Placement: As defined in the preamble.
Private Placement Shares: Shares initially sold by the Company
directly to "accredited investors" (within the meaning of Rule 501(a)
promulgated under the Securities Act) as Participants, with FBR acting as
placement agent.
Proceeding: An action, claim, suit or proceeding (including without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or, to the knowledge of the Person subject thereto,
threatened.
Prospectus: The prospectus included in any Registration Statement,
including any preliminary prospectus, and all other amendments and
supplements to any such prospectus, including post-effective amendments,
and all material incorporated by reference or deemed to be incorporated by
reference, if any, in such prospectus.
Purchase/Placement Agreement: As defined in the preamble.
Purchaser Indemnitee: As defined in Section 6(a) hereof.
Registrable Shares: The 144A/Regulation S Shares, the Private
Placement Shares, the Selling Stockholder Shares, and the Employee Shares,
upon original issuance thereof, and at all times subsequent thereto,
including upon the transfer thereof by the original holder or any
subsequent holder and any shares or other securities issued in respect of
such Registrable Shares by reason of or in connection with any stock
dividend, stock distribution, stock split, purchase in any rights offering
or in connection with any exchange for or replacement of such Registrable
Shares or any combination of shares, recapitalization, merger or
consolidation, or any other equity securities issued pursuant to any other
pro rata distribution with respect to the Common Stock, until, in the case
of any such 144A/Regulation S Share, Private Placement Share, Selling
Stockholder Share, or Employee Share, the earliest to occur of (i) the date
on which it has been registered effectively pursuant to the Securities Act
and disposed of in accordance with the Registration Statement relating to
it, (ii) if such Share is an Employee Share, the date on which such Share
has been effectively registered for resale pursuant to the Securities Act
on Form S-8, (iii) the date on which either it is distributed to the public
pursuant to Rule 144 (or any similar provision then in effect) or is
eligible for sale without registration, pursuant to Rule 144(k) promulgated
by the Commission pursuant to the Securities Act or (iv) the date on which
it is sold to the Company.
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Registration Expenses: Any and all expenses incident to the
performance of or compliance with this Agreement, including, without
limitation: (i) all Commission, securities exchange, NASD (if any)
registration, listing, inclusion and filing fees, (ii) all fees and
expenses incurred in connection with compliance with international, federal
or state securities or blue sky laws (including, without limitation, any
registration, listing and filing fees and reasonable fees and disbursements
of counsel in connection with blue sky qualification of any of the
Registrable Shares and the preparation of a blue sky memorandum and
compliance with the rules of the NASD), (iii) all expenses in preparing or
assisting in preparing, word processing, duplicating, printing, delivering
and distributing any Registration Statement, any Prospectus, any amendments
or supplements thereto, any underwriting agreements, securities sales
agreements, certificates and any other documents relating to the
performance under and compliance with this Agreement, (iv) all fees and
expenses incurred in connection with the listing or inclusion of any of the
Registrable Shares on any securities exchange or The Nasdaq Stock Market
pursuant to Section 4(n) of this Agreement, (v) the fees and disbursements
of counsel for the Company and of the independent public accountants of the
Company (including, without limitation, the expenses of any special audit
and "cold comfort" letters required by or incident to such performance),
(vi) reasonable fees and disbursements of one counsel, reasonably
acceptable to the Company, for the Holders, selected by the Holders holding
a majority of the Registrable Shares (such counsel, "Selling Holders'
Counsel") and (vii) any fees and disbursements customarily paid in issues
and sales of securities (including the fees and expenses of any experts
retained by the Company in connection with any Registration Statement);
provided, however, that Registration Expenses shall exclude brokers' or
underwriters' discounts and commissions, if any, relating to the sale or
disposition of Registrable Shares by a Holder.
Registration Statement: Any registration statement of the Company that
covers the resale of Registrable Shares pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto and all material incorporated by reference
or deemed to be incorporated by reference, if any, in such registration
statement.
Regulation S: Regulation S (Rules 901-904) promulgated by the
Commission under the Securities Act, as such rules may be amended from time
to time, or any similar rule or regulation hereafter adopted by the
Commission as a replacement thereto having substantially the same effect as
such regulation.
Rule 144: Rule 144, and any of its referenced paragraphs, promulgated
by the Commission pursuant to the Securities Act, as such rule may be
amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission as a replacement thereto having substantially the
same effect as such rule.
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Rule 144A: Rule 144A promulgated by the Commission pursuant to the
Securities Act, as such rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission as a
replacement thereto having substantially the same effect as such rule.
Rule 158: Rule 158 promulgated by the Commission pursuant to the
Securities Act, as such rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission as a
replacement thereto having substantially the same effect as such rule.
Rule 174: Rule 174 promulgated by the Commission pursuant to the
Securities Act, as such rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission as a
replacement thereto having substantially the same effect as such rule.
Rule 415: Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission as a
replacement thereto having substantially the same effect as such rule.
Rule 424: Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission as a
replacement thereto having substantially the same effect as such rule.
Rule 429: Rule 429 promulgated by the Commission pursuant to the
Securities Act, as such rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission as a
replacement thereto having substantially the same effect as such rule.
Securities Act: The Securities Act of 1933, as amended, and the rules
and regulations promulgated by the Commission thereunder.
Selling Stockholder Shares: The shares of Common Stock owned by the
Selling Stockholder immediately following the sale of all Shares pursuant
to the Purchase/Placement Agreement.
Shares: The shares of Common Stock being offered and sold pursuant to
the terms and conditions of the Purchase/Placement Agreement
Shelf Registration Statement: As defined in Section 2(a) hereof.
Suspension Event: As defined in Section 5(b) hereof.
Suspension Notice: As defined in Section 5(b) hereof.
Underwritten Offering: A sale of securities of the Company to an
underwriter or underwriters for reoffering to the public.
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2. REGISTRATION RIGHTS
(a) Mandatory Shelf Registration. As set forth in Section 4 hereof, the
Company agrees to file with the Commission as soon as reasonably practicable
following the date of this Agreement (but in no event later than the date that
is 210 days after the Closing Date, except as set forth in Section 2(b)(iii)
hereof) a shelf Registration Statement on Form S-1 or such other form under the
Securities Act then available to the Company providing for the resale of any
Registrable Shares pursuant to Rule 415 from time to time by the Holders (a
"Shelf Registration Statement"). The Company shall use its commercially
reasonable efforts to cause such Shelf Registration Statement to be declared
effective by the Commission as soon as practicable. Any Shelf Registration
Statement shall provide for the resale from time to time, and pursuant to any
method or combination of methods legally available (including, without
limitation, an Underwritten Offering, a direct sale to purchasers or a sale
through brokers or agents, which may include sales over the internet) by the
Holders of any and all Registrable Shares.
(b) IPO Registration. If the Company proposes to file a registration
statement on Form S-1 or such other form under the Securities Act providing for
the initial public offering of shares of Common Stock (the "IPO Registration
Statement"), the Company will notify each Holder of the proposed filing and
afford each Holder an opportunity to include in the IPO Registration Statement
all or any part of the Registrable Shares then held by such Holder. Each Holder
desiring to include in the IPO Registration Statement all or part of the
Registrable Shares held by such Holder shall, within twenty (20) days after
receipt of the above-described notice from the Company, so notify the Company in
writing, and in such notice shall inform the Company of the number of
Registrable Shares such Holder wishes to include in the IPO Registration
Statement. Any election by any Holder to include any Registrable Shares in the
IPO Registration Statement will not affect the inclusion of such Registrable
Shares in the Shelf Registration Statement until such Registrable Shares have
been sold under the IPO Registration Statement.
(i) Right to Terminate IPO Registration. The Company, in its sole
discretion, shall have the right to terminate or withdraw the IPO
Registration Statement initiated by it referred to in this Section 2(b)
prior to the effectiveness of such registration whether or not any Holder
has elected to include Registrable Shares in such registration.
(ii) Selection of Underwriter. Subject to the engagement letter, dated
February 8, 2005, between the Company and FBR (as it may be amended), the
Company shall have the sole right to select the managing underwriter(s) for
its initial public offering, regardless of whether any Registrable
Securities are included in the IPO Registration Statement or otherwise.
(iii) Shelf Registration not Impacted by IPO Registration Statement.
The Company's obligation to file the Shelf Registration Statement pursuant
to Section 2(a) hereof shall not be affected by the filing or effectiveness
of the IPO Registration Statement; provided, however, that if, prior to
filing the Shelf Registration Statement with the Commission, the Company
shall have filed an IPO Registration Statement with the Commission on or
prior to the 210th day after
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the Closing Date and such IPO Registration Statement shall not have been
declared effective on or prior to such 210th day, the Company may delay the
filing of the Shelf Registration Statement beyond such 210th day in the
event the staff of the Commission requests in writing, a copy of which
shall be promptly provided to FBR, that the Company delay the filing of the
Shelf Registration Statement until a later date or point in time in the
staff review process, provided further, however, that such delay shall not
extend beyond thirty (30) days following the date of initial effectiveness
of the IPO Registration Statement.
(c) Underwriting. The Company shall advise all Holders of the managing
underwriter(s) for the Underwritten Offering proposed under the IPO Registration
Statement. The right of any such Holder's Registrable Shares to be included in
the IPO Registration Statement pursuant to Section 2(b) shall be conditioned
upon such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Shares in the underwriting to the extent provided herein.
All Holders proposing to distribute their Registrable Shares through such
underwriting shall enter into an underwriting agreement in customary form with
the managing underwriter(s) selected for such underwriting and complete and
execute any questionnaires, powers of attorney, indemnities, securities escrow
agreements and other documents reasonably required under the terms of such
underwriting, and furnish to the Company such information as the Company may
reasonably request in writing for inclusion in the Registration Statement;
provided, however, that no Holder shall be required to make any representations
or warranties to or agreements with the Company or the underwriters other than
representations, warranties or agreements regarding such Holder and such
Holder's intended method of distribution and any other representation required
by law or reasonably requested by the underwriters. Notwithstanding any other
provision of this Agreement, if the managing underwriter(s) determine(s) in good
faith that marketing factors require a limitation on the number of shares to be
included, then the managing underwriter(s) may exclude shares (including
Registrable Shares) from the IPO Registration Statement and Underwritten
Offering, and any shares included in such IPO Registration Statement and
Underwritten Offering shall be allocated first, to the Company, and second, to
each of the Holders requesting inclusion of their Registrable Shares in such IPO
Registration Statement (on a pro rata basis based on the total number of
Registrable Shares then held by each such Holder who is requesting inclusion);
provided, however, that the number of Registrable Shares to be included in the
IPO Registration Statement shall not be reduced unless all other securities of
the Company held by (i) officers, directors, other employees of the Company and
consultants (other than Registrable Shares held by such persons as Holders under
this Agreement); and (ii) other holders of the Company's capital stock with
registration rights that are inferior (with respect to such reduction) to the
registration rights of the Holders set forth herein, are first entirely excluded
from the underwriting and registration.
Regardless of whether a Holder elects to include Registrable Shares in the
IPO Registration Statement, each Holder of Registrable Shares shall be deemed to
have agreed not to effect any public sale or distribution of securities of the
Company of the same or similar class or classes of the securities included in
the IPO Registration Statement or any securities convertible into or
exchangeable or exercisable for such
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securities, including a sale pursuant to Rule 144 or Rule 144A, during such
periods as reasonably requested (but in no event for a period longer than thirty
(30) days prior to and sixty (60) days following the effective date of the IPO
Registration Statement) by the representatives of the underwriters, if an
Underwritten Offering, or by the Company in any other registration.
If any Holder disapproves of the terms of any such underwriting, such
Holder may elect to withdraw therefrom by written notice to the Company and the
underwriter, delivered at least ten (10) Business Days prior to the effective
date of the IPO Registration Statement, provided that the Holder may agree to
waive this right to withdraw with the Company, the underwriters or any custodial
agent in any custody agreement and/or power of attorney executed by such Holder
in connection with the underwriting. Any Registrable Shares excluded or
withdrawn from such underwriting shall be excluded and withdrawn from the
registration.
(d) Form S-3. As soon as the Company becomes eligible to use Form S-3, the
Selling Stockholder or any of ACON C/R CDP, L.P., UnionBanCal Equities, Inc.,
ACON E&P, LLC, and ACON Mariner UBOC, L.P., as applicable, shall have the right,
upon written request, to require the Company to file a Registration Statement on
Form S-3, with respect to any Registrable Shares owned by it, unless and until
the Registrable Shares owned by the Selling Stockholder or any of ACON C/R CDP,
L.P., UnionBanCal Equities, Inc., ACON E&P, LLC, and ACON Mariner UBOC, L.P., as
applicable, would otherwise be eligible to be sold under a previously effective
Registration Statement. Such Form S-3 shall be treated as a Shelf Registration
Statement for purposes of this Agreement, except that the initial filing
requirement for a Shelf Registration Statement (i.e., on or prior to a date 210
days after the Closing Date) shall not apply to such Form S-3, which instead
shall filed as soon as reasonably practicable after the written request shall
have been received by the Company.
(e) Expenses. The Company shall pay all Registration Expenses in connection
with the registration of the Registrable Shares pursuant to this Agreement. Each
Holder participating in a registration pursuant to this Section 2 shall bear
such Holder's proportionate share (based on the total number of Registrable
Shares sold in such registration) of all discounts and commissions payable to
underwriters or brokers in connection with a registration of Registrable Shares
pursuant to this Agreement.
(f) Executive Bonuses. If the Company does not file a Registration
Statement registering the resale of the Private Placement Shares, the
144A/Regulation S Shares, the Selling Stockholder Shares, and the Employee
Shares within 210 days after the Closing Date, other than as a result of the
Commission being unable to accept such filings, then ▇▇▇▇▇ ▇. ▇▇▇▇▇, the Chief
Executive Officer and Chairman of the Board of Directors of the Company, or his
successor, shall forfeit 1.0% of any cash bonus to which he became entitled or
earned as a result of performance during the 2005 fiscal year (whether or not
payable in 2005), whether under an employment agreement with the Company, a
bonus plan or any other bonus arrangement, including any bonus compensation for
which payment would otherwise be deferred until after 2005, for each business
day the registration default continues, up to a maximum amount of $500,000;
provided, however that such forfeiture shall not apply (i) at any time when the
Company has endeavored in good faith to file the Registration Statement within
the time period
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specified but is unable to make the filing as of the specified date as a result
of circumstances beyond the Company's reasonable control or (ii) under the
circumstances described in the proviso of Section 2(b)(iii) hereof.
3. RULES 144 AND 144A REPORTING
With a view to making available the benefits of certain rules and
regulations of the Commission that may at any time permit the sale of the
Registrable Shares to the public without registration, the Company agrees to:
(a) use commercially reasonable efforts to make and keep available adequate
current public information, as those terms are understood and defined in Rule
144, at all times after the effective date of the first registration under the
Securities Act filed by the Company for an offering of its securities to the
general public;
(b) use commercially reasonable efforts to file with the Commission in a
timely manner all reports and other documents required to be filed by the
Company under the Securities Act and the Exchange Act (at any time after it has
become subject to such reporting requirements);
(c) so long as a Holder owns any Registrable Shares constituting
144A/Regulation S Shares, if the Company is not required to file reports and
other documents under the Securities Act and the Exchange Act, it will make
available other information as required by, and so long as necessary to permit
sales of Registrable Shares pursuant to, Rule 144 or Rule 144A; and
(d) so long as a Holder owns any Registrable Shares, to furnish to the
Holder promptly upon request (i) a written statement by the Company as to its
compliance with the reporting requirements of Rule 144 (at any time after ninety
(90) days after the effective date of the first registration statement filed by
the Company for an offering of its securities to the general public), and of the
Securities Act and the Exchange Act (at any time after it has become subject to
the reporting requirements of the Exchange Act), (ii) a copy of the most recent
annual or quarterly report of the Company, and (iii) such other reports and
documents of the Company, and take such further actions, as a Holder may
reasonably request in availing itself of any rule or regulation of the
Commission allowing a Holder to sell any such Registrable Shares without
registration.
4. REGISTRATION PROCEDURES
In connection with the obligations of the Company with respect to any
registration pursuant to this Agreement, (i) the Company shall use its
commercially reasonable efforts to effect or cause to be effected the
registration of the Registrable Shares under the Securities Act to permit the
sale of such Registrable Shares by the Holder or Holders in accordance with the
Holder's or Holders' intended method or methods of distribution, and (ii) the
Company shall:
(a) notify FBR and Selling Holders' Counsel, in writing, at least ten (10)
Business Days prior to filing a Registration Statement, of its intention to file
a Registration Statement with the Commission and, at least five (5) Business
Days prior to filing, provide a copy of the Registration Statement to FBR, its
counsel, and Selling Holders' Counsel for review and
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comment; prepare and file with the Commission, as specified in this Agreement, a
Registration Statement(s), which Registration Statement(s) (x) shall comply as
to form in all material respects with the requirements of the applicable form
and include all financial statements required by the Commission to be filed
therewith and (y) shall be acceptable to FBR, its counsel and Selling Holders'
Counsel; notify FBR and Selling Holders' Counsel in writing, at least five (5)
Business Days prior to filing of any amendment or supplement to such
Registration Statement and, at least three (3) Business Days prior to filing,
provide a copy of such amendment or supplement to FBR, its counsel and Selling
Holders' Counsel for review and comment; promptly following receipt from the
Commission, provide to FBR, its counsel and Selling Holders' Counsel copies of
any comments made by the staff of the Commission relating to such Registration
Statement and of the Company's responses thereto for review and comment; and use
its commercially reasonable efforts to cause such Registration Statement to
become effective as soon as practicable after filing and to remain effective,
subject to Section 5 hereof, until the earlier of (i) such time as all
Registrable Shares covered thereby have been sold in accordance with the
intended distribution of such Registrable Shares, (ii) there are no Registrable
Shares outstanding (including as a result of such Shares having become eligible
to be sold pursuant to Rule 144(k)) or (iii) the second anniversary of the
effective date of such Registration Statement (subject to extension as provided
in Section 5(c) hereof); provided, further, that if the Company has an effective
Shelf Registration Statement on Form S-1 under the Securities Act and becomes
eligible to use Form S-3 or such other short-form registration statement form
under the Securities Act, the Company may, upon thirty (30) Business Days prior
written notice to all Holders, register any Registrable Shares registered but
not yet distributed under the effective Shelf Registration Statement on such a
short-form Shelf Registration Statement and, once the short-form Shelf
Registration Statement is declared effective, de-register such shares under the
previous Registration Statement or transfer the filing fees from the previous
Registration Statement (such transfer pursuant to Rule 429, if applicable)
unless any Holder registered under the initial Shelf Registration Statement
notifies the Company within twenty (20) Business Days of receipt of the Company
notice that such a registration under a new Registration Statement and
de-registration of the initial Shelf Registration Statement would interfere with
its distribution of Registrable Shares already in progress;
(b) subject to Section 4(i) hereof, (i) prepare and file with the
Commission such amendments and post-effective amendments to each such
Registration Statement as may be necessary to keep such Registration Statement
effective for the period described in Section 4(a) hereof; (ii) cause each
Prospectus contained therein to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 or any
similar rule that may be adopted under the Securities Act; (iii) amend or
supplement each such Registration Statement to include the Company's quarterly
and annual financial information and other material developments (until the
Company is eligible to incorporate such information by reference into the
Registration Statement), during which time sales of the Registrable Securities
under the Registration Statement will be suspended until such amendment or
supplement is filed and effective, and (iv) comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by each
Registration Statement during the applicable period in accordance with the
intended method or methods of distribution by the selling Holders thereof;
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(c) furnish to the Holders, without charge, as many copies of each
Prospectus, including each preliminary Prospectus, and any amendment or
supplement thereto and such other documents as such Holder may reasonably
request, in order to facilitate the public sale or other disposition of the
Registrable Shares; the Company consents to the use of such Prospectus,
including each preliminary Prospectus, by the Holders, if any, in connection
with the offering and sale of the Registrable Shares covered by any such
Prospectus;
(d) use its commercially reasonable efforts to register or qualify, or
obtain exemption from registration or qualification for, all Registrable Shares
by the time the applicable Registration Statement is declared effective by the
Commission under all applicable state securities or "blue sky" laws of such
jurisdictions as FBR or any Holder of Registrable Shares covered by a
Registration Statement shall reasonably request in writing, keep each such
registration or qualification or exemption effective during the period such
Registration Statement is required to be kept effective pursuant to Section 4(a)
and do any and all other acts and things that may be reasonably necessary or
advisable to enable such Holder to consummate the disposition in each such
jurisdiction of such Registrable Shares owned by such Holder; provided, however,
that the Company shall not be required to (i) qualify generally to do business
in any jurisdiction or to register as a broker or dealer in such jurisdiction
where it would not otherwise be required to qualify but for this Section 4(d)
and except as may be required by the Securities Act, (ii) subject itself to
taxation in any such jurisdiction, or (iii) submit to the general service of
process in any such jurisdiction;
(e) use its commercially reasonable efforts to cause all Registrable Shares
covered by such Registration Statement to be registered and approved by such
other governmental agencies or authorities as may be necessary to enable the
Holders thereof to consummate the disposition of such Registrable Shares;
(f) notify FBR and each Holder promptly and, if requested by FBR or any
Holder, confirm such advice in writing (i) when a Registration Statement has
become effective and when any post-effective amendments and supplements thereto
become effective, (ii) of the issuance by the Commission or any state securities
authority of any stop order suspending the effectiveness of a Registration
Statement or the initiation of any proceedings for that purpose, (iii) of any
request by the Commission or any other federal, state or foreign governmental
authority for amendments or supplements to a Registration Statement or related
Prospectus or for additional information, (iv) of the happening of any event
during the period a Registration Statement is effective as a result of which
such Registration Statement or the related Prospectus or any document
incorporated by reference therein contains any untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading (which notice may be in
the form of a Suspension Notice under Section 5(b) hereof) and (v) at the
request of any such Holder, promptly to furnish to such Holder a reasonable
number of copies of a supplement to or an amendment of such Prospectus prepared
in accordance with Section 4(i);
(g) except as provided in Section 5, use its commercially reasonable
efforts to avoid the issuance of, or if issued, as promptly as practicable to
obtain the withdrawal of, any order enjoining or suspending the use or
effectiveness of a Registration Statement or suspending of the
11
qualification (or exemption from qualification) of any of the Registrable Shares
for sale in any jurisdiction;
(h) upon written request, furnish to each requesting Holder of Registrable
Shares, without charge, at least one conformed copy of each Registration
Statement and any post-effective amendment or supplement thereto (without
documents incorporated therein by reference or exhibits thereto, unless
requested);
(i) except as provided in Section 5, upon the occurrence of any event
contemplated by Section 4(f)(iv) hereof, use its commercially reasonable efforts
to promptly prepare a supplement or post-effective amendment to a Registration
Statement or the related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter delivered
to the purchasers of the Registrable Shares, such Prospectus will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
(j) if requested by the representative of the underwriters, if any, or any
Holders of Registrable Shares being sold in connection with such offering, (i)
promptly incorporate in a Prospectus supplement or post-effective amendment such
information as the representative of the underwriters, if any, or such Holders
indicate relates to them or that they reasonably request be included therein and
(ii) make all required filings of such Prospectus supplement or such
post-effective amendment as soon as practicable after the Company has received
notification of the matters to be incorporated in such Prospectus supplement or
post-effective amendment;
(k) in the case of an Underwritten Offering, use its commercially
reasonable efforts to furnish to the underwriters, of: (i) an opinion of counsel
for the Company, dated the date of each closing under the underwriting
agreement, reasonably satisfactory to the underwriters; and (ii) a "comfort"
letter, dated the effective date of such Registration Statement and the date of
each closing under the underwriting agreement, signed by the independent public
accountants who have certified the Company's financial statements included in
such Registration Statement, covering substantially the same matters with
respect to such Registration Statement (and the Prospectus included therein) and
with respect to events subsequent to the date of such financial statements, as
are customarily covered in accountants' letters delivered to underwriters in
underwritten public offerings of securities;
(l) enter into customary agreements (including in the case of an
Underwritten Offering, an underwriting agreement in customary form) and take all
other action in connection therewith in order to expedite or facilitate the
distribution of the Registrable Shares included in such Registration Statement
and, in the case of an Underwritten Offering, make representations and
warranties to the underwriters in such form and scope as are customarily made by
issuers to underwriters in such underwritten offerings and confirm the same to
the extent customary if and when requested;
(m) make available for inspection by representatives of the Holders and the
representative of any underwriters participating in any disposition pursuant to
a Registration Statement and any special counsel or accountants retained by such
Holders or underwriters, all
12
financial and other records, pertinent corporate documents and properties of the
Company and cause the respective officers, directors and employees of the
Company to supply all information reasonably requested by any such
representatives, the representative of the underwriters, counsel thereto or
accountants in connection with a Registration Statement; provided, however, that
such records, documents or information that the Company determines, in good
faith, to be confidential and notifies such representatives, representative of
the underwriters, counsel thereto or accountants are confidential shall not be
disclosed by the representatives, representative of the underwriters, counsel
thereto or accountants unless (i) the disclosure of such records, documents or
information is necessary to avoid or correct a misstatement or omission in a
Registration Statement or Prospectus, (ii) the release of such records,
documents or information is ordered pursuant to a subpoena or other order from a
court of competent jurisdiction, or (iii) such records, documents or information
have been generally made available to the public;
(n) use its commercially reasonable efforts (including, without limitation,
seeking to cure any deficiencies cited by the exchange or market in the
Company's listing or inclusion application) to list or include all Registrable
Shares on the New York Stock Exchange, the American Stock Exchange or The Nasdaq
Stock Market and thereafter maintain the listing on such exchange or market;
(o) prepare and file in a timely manner all documents and reports required
by the Exchange Act and, to the extent the Company's obligation to file such
reports pursuant to Section 15(d) of the Exchange Act expires prior to the
expiration of the effectiveness period of the Registration Statement as required
by Section 4(a) hereof, the Company shall register the Registrable Shares under
the Exchange Act and maintain such registration through the effectiveness period
required by Section 4(a) hereof;
(p) provide a CUSIP number for all Registrable Shares, not later than the
effective date of the Registration Statement;
(q) (i) otherwise use its commercially reasonable efforts to comply with
all applicable rules and regulations of the Commission, (ii) make generally
available to its stockholders, as soon as reasonably practicable, earnings
statements covering at least 12 months that satisfy the provisions of Section
11(a) of the Securities Act and Rule 158 (or any similar rule promulgated under
the Securities Act ) thereunder, but in no event later than the earlier of any
filing date required for the filing of an annual report on Form 10-K as
applicable to the Company or forty-five (45) days after the end of each fiscal
year of the Company and (iii) not file any Registration Statement or Prospectus
or amendment or supplement to such Registration Statement or Prospectus to which
any Holder of Registrable Shares covered by any Registration Statement shall
have reasonably objected on the grounds that such Registration Statement or
Prospectus or amendment or supplement does not comply in all material respects
with the requirements of the Securities Act, such Holder having been furnished
with a copy thereof at least two (2) Business Days prior to the filing thereof;
(r) provide and cause to be maintained a registrar and transfer agent for
all Registrable Shares covered by any Registration Statement from and after a
date not later than the effective date of such Registration Statement;
13
(s) in connection with any sale or transfer of the Registrable Shares
(whether or not pursuant to a Registration Statement) that will result in the
security being delivered no longer being Registrable Shares, cooperate with the
Holders and the representative of the underwriters, if any, to the extent
reasonably necessary to facilitate the timely preparation and delivery of any
certificates representing the Registrable Shares to be sold, which certificates
shall not bear any transfer restrictive legends (other than as required by the
Company's certificate of incorporation or bylaws) and to enable such Registrable
Shares to be in such denominations and registered in such names as the
representative of the underwriters, if any, or the Holders may request at least
two (2) Business Days prior to any sale of the Registrable Shares;
(t) if required under the rules of the NASD, in connection with the initial
filing of a Shelf Registration Statement and each amendment thereto with the
Commission pursuant to Section 2(a) hereof, prepare and, within one Business Day
of such filing with the Commission, file with the NASD all forms and information
required or requested by the NASD in order to obtain written confirmation from
the NASD that the NASD does not object to the fairness and reasonableness of the
underwriting terms and arrangements (or any deemed underwriting terms and
arrangements) (each such written confirmation, a "No Objections Letter")
relating to the resale of Registrable Shares pursuant to the Shelf Registration
Statement, including, without limitation, information provided to the NASD
through its COBRADesk system, and pay all costs, fees and expenses incident to
the NASD's review of the Shelf Registration Statement and the related
underwriting terms and arrangements, including, without limitation, all filing
fees associated with any filings or submissions to the NASD and the legal
expenses, filing fees and other disbursements of FBR and any other NASD member
that is the holder of, or is affiliated or associated with an owner of,
Registrable Shares included in the Shelf Registration Statement (including in
connection with any initial or subsequent member filing); and
(u) upon effectiveness of the first Registration Statement filed under this
Agreement, the Company will take such actions and make such filings as are
necessary to effect the registration of the Common Stock under the Exchange Act
simultaneously with or immediately following the effectiveness of the
Registration Statement.
The Company may require the Holders to furnish to the Company such
information regarding the proposed distribution by such Holder of such
Registrable Shares as the Company may from time to time reasonably request in
writing or as shall be required to effect the registration of the Registrable
Shares, and no Holder shall be entitled to be named as a selling stockholder in
any Registration Statement and no Holder shall be entitled to use the Prospectus
forming a part thereof if such Holder does not provide such information to the
Company. Each Holder further agrees to furnish promptly to the Company in
writing all information required from time to time to make the information
previously furnished by such Holder not misleading.
Each Holder agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 4(f)(iii) or 4(f)(iv)
hereof, such Holder will immediately discontinue disposition of Registrable
Shares pursuant to a Registration Statement until such Holder's receipt of the
copies of the supplemented or amended Prospectus. If so directed by the Company,
such Holder will deliver to the Company (at the expense of the Company) all
copies in its possession, other than permanent file copies then in such Holder's
14
possession, of the Prospectus covering such Registrable Shares current at the
time of receipt of such notice.
5. BLACK-OUT PERIOD
(a) Subject to the provisions of this Section 5 following the effectiveness
of a Registration Statement (and the filings with any international, federal or
state securities commissions), the Company may direct the Holders, in accordance
with Section 5(b), to suspend sales of the Registrable Shares pursuant to a
Registration Statement for such times as the Company reasonably may determine is
necessary and advisable (but in no event for more than an aggregate of ninety
(90) days in any consecutive twelve (12)-month period commencing on the Closing
Date or more than sixty (60) days in any consecutive 90-day period, except as a
result of a review of any post-effective amendment by the Commission prior to
declaring any post-effective amendment to the Registration Statement effective,
provided the Company has used all commercially reasonable efforts to cause such
post-effective amendment to be declared effective), if any of the following
events shall occur: (i) the representative of the underwriters of an
Underwritten Offering of primary shares by the Company has advised the Company
that the sale of Registrable Shares pursuant to the Registration Statement would
have a material adverse effect on the Company's initial public offering; (ii)
the majority of the members of the Board of Directors of the Company shall have
determined in good faith that (1) the offer or sale of any Registrable Shares
would materially impede, delay or interfere with any proposed financing, offer
or sale of securities, acquisition, merger, tender offer, business combination,
corporate reorganization, consolidation or other significant transaction
involving the Company, (2) after the advice of counsel, the sale of Registrable
Shares pursuant to the Registration Statement would require disclosure of
non-public material information not otherwise required to be disclosed under
applicable law, and (3) either (x) the Company has a bona fide business purpose
for preserving the confidentiality of such transaction, (y) disclosure would
have a material adverse effect on the Company or the Company's ability to
consummate such transaction, or (z) the proposed transaction renders the Company
unable to comply with Commission requirements, in each case under circumstances
that would make it impractical or inadvisable to cause the Registration
Statement (or such filings) to become effective or to promptly amend or
supplement the Registration Statement on a post-effective basis, as applicable;
or (iii) the majority of the members of the Board of Directors of the Company
shall have determined in good faith, after the advice of counsel, that it is
required by law, rule or regulation to supplement the Registration Statement or
file a post-effective amendment to the Registration Statement in order to
incorporate information into the Registration Statement for the purpose of (1)
including in the Registration Statement any prospectus required under Section
10(a)(3) of the Securities Act; (2) reflecting in the prospectus included in the
Registration Statement any facts or events arising after the effective date of
the Registration Statement (or of the most-recent post-effective amendment)
that, individually or in the aggregate, represents a fundamental change in the
information set forth therein; or (3) including in the prospectus included in
the Registration Statement any material information with respect to the plan of
distribution not disclosed in the Registration Statement or any material change
to such information. Upon the occurrence of any such suspension, the Company
shall use its commercially reasonable efforts to cause the Registration
Statement to become effective or to promptly amend or supplement the
Registration Statement on a post-effective basis or to take such action as is
necessary to make resumed use of
15
the Registration Statement compatible with the Company's best interests, as
applicable, so as to permit the Holders to resume sales of the Registrable
Shares as soon as possible.
(b) In the case of an event that causes the Company to suspend the use of a
Registration Statement (a "Suspension Event"), the Company shall give written
notice (a "Suspension Notice") to FBR and the Holders to suspend sales of the
Registrable Shares and such notice shall state generally the basis for the
notice and that such suspension shall continue only for so long as the
Suspension Event or its effect is continuing and the Company is using its best
efforts and taking all reasonable steps to terminate suspension of the use of
the Registration Statement as promptly as possible. No Holder shall effect any
sales of the Registrable Shares pursuant to such Registration Statement (or such
filings) at any time after it has received a Suspension Notice from the Company
and prior to receipt of an End of Suspension Notice (as defined below). If so
directed by the Company, each Holder will deliver to the Company (at the expense
of the Company) all copies other than permanent file copies then in such
Holder's possession of the Prospectus covering the Registrable Shares at the
time of receipt of the Suspension Notice. The Holders may recommence effecting
sales of the Registrable Shares pursuant to the Registration Statement (or such
filings) following further notice to such effect (an "End of Suspension Notice")
from the Company, which End of Suspension Notice shall be given by the Company
to the Holders and FBR in the manner described above promptly following the
conclusion of any Suspension Event and its effect.
6. INDEMNIFICATION AND CONTRIBUTION
(a) The Company agrees to indemnify and hold harmless (i) each Holder of
Registrable Shares and any underwriter (as determined in the Securities Act) for
such Holder (including, if applicable, FBR), (ii) each Person, if any, who
controls (within the meaning of Section 15 of the Securities Act or Section
20(a) of the Exchange Act), any such Person described in clause (i) (any of the
Persons referred to in this clause (ii) being hereinafter referred to as a
"Controlling Person"), and (iii) the respective officers, directors, partners,
employees, representatives and agents of any such Person or any Controlling
Person (any Person referred to in clause (i), (ii) or (iii) may hereinafter be
referred to as a "Purchaser Indemnitee"), to the fullest extent lawful, from and
against any and all losses, claims, damages, judgments, actions, out-of-pocket
expenses, and other liabilities (the "Liabilities"), including without
limitation and as incurred, reimbursement of all reasonable costs of
investigating, preparing, pursuing or defending any claim or action, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, including the reasonable fees and expenses of counsel to any
Purchaser Indemnitee, joint or several, directly or indirectly related to, based
upon, arising out of or in connection with any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement or
Prospectus (as amended or supplemented if the Company shall have furnished to
such Purchaser Indemnitee any amendments or supplements thereto), or any
preliminary Prospectus or any other document used to sell the Shares, or any
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, except insofar as such
Liabilities arise out of or are based upon (i) any untrue statement or omission
or alleged untrue statement or omission made in reliance upon and in conformity
with information relating to any Purchaser Indemnitee furnished to the Company
or any underwriter in writing by such Purchaser Indemnitee expressly for use
therein, or (ii) any
16
untrue statement contained in or omission from a preliminary Prospectus if a
copy of the Prospectus (as then amended or supplemented, if the Company shall
have furnished to or on behalf of the Holder participating in the distribution
relating to the relevant Registration Statement any amendments or supplements
thereto) was not sent or given by or on behalf of such Holder to the Person
asserting any such Liabilities who purchased Shares, if such Prospectus (or
Prospectus as amended or supplemented) is required by law to be sent or given at
or prior to the written confirmation of the sale of such Shares to such Person
and the untrue statement contained in or omission from such preliminary
Prospectus was corrected in the Prospectus (or the Prospectus as amended or
supplemented). The Company shall notify the Holders promptly of the institution,
threat or assertion of any claim, proceeding (including any governmental
investigation), or litigation of which it shall have become aware in connection
with the matters addressed by this Agreement which involves the Company or a
Purchaser Indemnitee. The indemnity provided for herein shall remain in full
force and effect regardless of any investigation made by or on behalf of any
Purchaser Indemnitee.
(b) In connection with any Registration Statement in which a Holder of
Registrable Shares is participating, such Holder agrees, severally and not
jointly, to indemnify and hold harmless the Company, each Person who controls
the Company within the meaning of Section 15 of the Securities Act or Section
20(a) of the Exchange Act and the respective partners, directors, officers,
members, representatives, employees and agents of such Person or Controlling
Person to the same extent as the foregoing indemnity from the Company to each
Purchaser Indemnitee, but only with reference to untrue statements or omissions
or alleged untrue statements or omissions made in reliance upon and in strict
conformity with information relating to such Purchaser Indemnitee furnished to
the Company in writing by such Purchaser Indemnitee expressly for use in any
Registration Statement or Prospectus, any amendment or supplement thereto or any
preliminary Prospectus. The liability of any Purchaser Indemnitee pursuant to
this paragraph shall in no event exceed the net proceeds received by such
Purchaser Indemnitee from sales of Registrable Shares giving rise to such
obligations.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any Person in respect of which indemnity may be sought pursuant to paragraph (a)
or (b) above, such Person (the "Indemnified Party"), shall promptly notify the
Person against whom such indemnity may be sought (the "Indemnifying Party"), in
writing of the commencement thereof (but the failure to so notify an
Indemnifying Party shall not relieve it from any liability which it may have
under this Section 6, except to the extent the Indemnifying Party is materially
prejudiced by the failure to give notice), and the Indemnifying Party, upon
request of the Indemnified Party, shall retain counsel reasonably satisfactory
to the Indemnified Party to represent the Indemnified Party and any others the
Indemnifying Party may reasonably designate in such proceeding and shall pay the
reasonable fees and expenses actually incurred by such counsel related to such
proceeding. Notwithstanding the foregoing, in any such proceeding, any
Indemnified Party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Party,
unless (i) the Indemnifying Party and the Indemnified Party shall have mutually
agreed in writing to the contrary, (ii) the Indemnifying Party failed within a
reasonable time after notice of commencement of the action to assume the defense
and employ counsel reasonably satisfactory to the Indemnified Party, (iii) the
Indemnifying Party and its counsel do not actively and vigorously pursue the
defense of such action or (iv) the named
17
parties to any such action (including any impleaded parties), include both such
Indemnified Party and the Indemnifying Party, or any Affiliate of the
Indemnifying Party, and such Indemnified Party shall have been reasonably
advised by counsel that, either (x) there may be one or more legal defenses
available to it which are different from or additional to those available to the
Indemnifying Party or such Affiliate of the Indemnifying Party or (y) a conflict
may exist between such Indemnified Party and the Indemnifying Party or such
Affiliate of the Indemnifying Party (in which case the Indemnifying Party shall
not have the right to assume nor direct the defense of such action on behalf of
such Indemnified Party, it being understood, however, that the Indemnifying
Party shall not, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (in addition to any local
counsel), for all such Indemnified Parties, which firm shall be designated in
writing by those Indemnified Parties who sold a majority of the Registrable
Shares sold by all such Indemnified Parties and any such separate firm for the
Company, the directors, the officers and such control Persons of the Company as
shall be designated in writing by the Company). The Indemnifying Party shall not
be liable for any settlement of any proceeding effected without its written
consent, which consent shall not be unreasonably withheld, but if settled with
such consent or if there is a final, non-appealable judgment for the plaintiff,
the Indemnifying Party agrees to indemnify any Indemnified Party from and
against any loss or liability by reason of such settlement or judgment. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, effect any settlement of any pending or threatened proceeding in respect
of which any Indemnified Party is or could have been a party and indemnity could
have been sought hereunder by such Indemnified Party, unless such settlement
includes an unconditional release of such Indemnified Party from all liability
on claims that are the subject matter of such proceeding.
(d) If the indemnification provided for in paragraphs (a) and (b) of this
Section 6 is for any reason held to be unavailable to an Indemnified Party in
respect of any Liabilities referred to therein (other than by reason of the
exceptions provided therein) or is insufficient to hold harmless a party
indemnified thereunder, then each Indemnifying Party under such paragraphs, in
lieu of indemnifying such Indemnified Party thereunder, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such Liabilities
(i) in such proportion as is appropriate to reflect the relative benefits of the
Indemnified Party on the one hand and the Indemnifying Party(ies) on the other
in connection with the statements or omissions that resulted in such
Liabilities, or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Indemnifying Party(ies) and the Indemnified Party, as well as any
other relevant equitable considerations. The relative fault of the Company on
the one hand and any Purchaser Indemnitees on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or by such Purchaser Indemnitees
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 6 were determined by pro rata allocation
(even if such Indemnified Parties were
18
treated as one entity for such purpose), or by any other method of allocation
that does not take account of the equitable considerations referred to in
paragraph 6(d) above. The amount paid or payable by an Indemnified Party as a
result of any Liabilities referred to paragraph 6(d) shall be deemed to include,
subject to the limitations set forth above, any reasonable legal or other
expenses actually incurred by such Indemnified Party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 6, in no event shall a Purchaser Indemnitee be
required to contribute any amount in excess of the amount by which proceeds
received by such Purchaser Indemnitee from sales of Registrable Shares exceeds
the amount of any damages that such Purchaser Indemnitee has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. For purposes of this Section 6, each Person, if any, who
controls (within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act) FBR or a Holder of Registrable Shares shall have the same rights
to contribution as FBR or such Holder, as the case may be, and each Person, if
any, who controls (within the meaning of Section 15 of the Act or Section 20(a)
of the Exchange Act) the Company, and each officer, director, partner, employee,
representative, agent or manager of the Company shall have the same rights to
contribution as the Company. Any party entitled to contribution will, promptly
after receipt of notice of commencement of any action, suit or proceeding
against such party in respect of which a claim for contribution may be made
against another party or parties, notify each party or parties from whom
contribution may be sought, but the omission to so notify such party or parties
shall not relieve the party or parties from whom contribution may be sought from
any obligation it or they may have under this Section 6 or otherwise, except to
the extent that any party is materially prejudiced by the failure to give
notice. 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 was not guilty of such fraudulent misrepresentation.
(f) The indemnity and contribution agreements contained in this Section 6
will be in addition to any liability which the Indemnifying Parties may
otherwise have to the Indemnified Parties referred to above. The Purchaser
Indemnitee's obligations to contribute pursuant to this Section 6 are several in
proportion to the respective number of Shares sold by each of the Purchaser
Indemnitees hereunder and not joint.
7. MARKET STAND-OFF AGREEMENT
Each Holder hereby agrees that it shall not, to the extent requested by the
Company or an underwriter of securities of the Company, directly or indirectly
sell, offer to sell (including without limitation any short sale), grant any
option or otherwise transfer or dispose of any Registrable Shares or other
shares of Common Stock of the Company or any securities convertible into or
exchangeable or exercisable for shares of Common Stock of the Company then owned
by such Holder (other than to donees or partners of the Holder who agree to be
similarly bound) for a period of sixty (60) days following the effective date of
an IPO Registration Statement of the Company filed under the Securities Act;
provided, however, that:
(a) the restrictions above shall not apply to Registrable Shares sold
pursuant to the IPO Registration Statement;
19
(b) all executive officers and directors of the Company then holding shares
of Common Stock of the Company or securities convertible into or exchangeable or
exercisable for shares of Common Stock of the Company enter into similar
agreements;
(c) the Holders shall be allowed any concession or proportionate release
allowed to any officer or director that entered into similar agreements (with
such proportion being determined by dividing the number of shares being released
with respect to such officer or director by the total number of issued and
outstanding shares held by such officer or director); provided, that nothing in
this Section 7(c) shall be construed as a right to proportionate release for the
executive officers and directors of the Company upon the expiration of the
60-day period applicable to all Holders other than the executive officers and
directors of the Company.
In order to enforce the foregoing covenant, the Company shall have the
right to place restrictive legends on the certificates representing the
securities subject to this Section 7 and to impose stop transfer instructions
with respect to the Registrable Shares and such other securities of each Holder
(and the securities of every other Person subject to the foregoing restriction)
until the end of such period.
8. TERMINATION OF THE COMPANY'S OBLIGATION
The Company shall have no obligation pursuant to this Agreement with
respect to any Registrable Shares proposed to be sold by a Holder in a
registration pursuant to this Agreement if, in the opinion of counsel to the
Company, all such Registrable Shares proposed to be sold by a Holder may be sold
in a three-month period without registration under the Securities Act pursuant
to Rule 144 under the Securities Act.
9. LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS
From and after the date of this Agreement, the Company shall not, without
the prior written consent of Holders beneficially owning not less than a
majority of the then outstanding Registrable Shares (provided, however, that for
purposes of this Section 9, Registrable Shares that are owned, directly or
indirectly, by an Affiliate or employee of the Company shall not be deemed to be
outstanding), enter into any agreement with any holder or prospective holder of
any Common Stock of the Company that would allow such holder or prospective
holder (a) to include such Common Stock in any Registration Statement filed
pursuant to the terms hereof, unless under the terms of such agreement, such
holder or prospective holder may include such securities in any such
registration only to the extent that the inclusion of his securities will not
reduce the amount of Registrable Shares of the Holders that is included, or (b)
to have its Common Stock registered on a registration statement that could be
declared effective prior to, or within one hundred eighty (180) days of, the
effective date of any Registration Statement filed pursuant to this Agreement.
10. MISCELLANEOUS
(a) Remedies. In the event of a breach by the Company of any of its
obligations under this Agreement, each Holder, in addition to being entitled to
exercise all rights provided herein or, in the case of FBR, in the
Purchase/Placement Agreement, or granted by law, including recovery of damages,
will be entitled to specific performance of its rights under this
20
Agreement. Subject to Section 6, the Company agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by it
of any of the provisions of this Agreement and hereby further agree that, in the
event of any action for specific performance in respect of such breach, it shall
waive the defense that a remedy at law would be adequate.
(b) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to or departures from the provisions hereof may not be
given, without the written consent of the Company and Holders beneficially
owning not less than a majority of the then outstanding Registrable Shares;
provided, however, that for purposes of this Section 10(b), Registrable Shares
that are owned, directly or indirectly, by an Affiliate or employee of the
Company shall not be deemed to be outstanding. No amendment shall be deemed
effective unless it applies uniformly to all Holders. Notwithstanding the
foregoing, a waiver or consent to or departure from the provisions hereof with
respect to a matter that relates exclusively to the rights of a Holder whose
securities are being sold pursuant to a Registration Statement and that does not
directly or indirectly affect, impair, limit or compromise the rights of other
Holders may be given by such Holder; provided that the provisions of this
sentence may not be amended, modified or supplemented except in accordance with
the provisions of the immediately preceding sentence.
(c) Notices. All notices and other communications, provided for or
permitted hereunder shall be made in writing by delivered by facsimile (with
receipt confirmed), overnight courier or registered or certified mail, return
receipt requested, or by telegram
(i) if to a Holder, at the most current address given by the transfer
agent and registrar of the Shares to the Company, or if such Holder's
Registrable Shares are DTC eligible, through the relevant DTC participant;
and
(ii) if to the Company at the offices of the Company at:
Mariner Energy, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
(facsimile: (▇▇▇) ▇▇▇-▇▇▇▇)
(d) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties hereto,
including, without limitation and without the need for an express assignment or
assumption, subsequent Holders. The Company agrees that the Holders shall be
third party beneficiaries to the agreements made hereunder by FBR and the
Company, and each Holder shall have the right to enforce such agreements
directly to the extent it deems such enforcement necessary or advisable to
protect its rights hereunder; provided, however, that such Holder fulfills all
of its obligations hereunder.
(e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be
21
deemed to be an original and all of which taken together shall constitute one
and the same agreement.
(f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY STATE COURT IN THE STATE OF NEW YORK OR ANY FEDERAL COURT
SITTING IN NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT
OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION THAT IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(h) Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties hereto that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.
(i) Entire Agreement. This Agreement, together with the Purchase/Placement
Agreement, is intended by the parties hereto as a final expression of their
agreement, and is intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein.
(j) Adjustment for Stock Splits, etc. Wherever in this Agreement there is a
reference to a specific number of shares with respect to any Registrable Shares,
then upon the occurrence of any subdivision, combination, or stock dividend of
such shares, the specific number of shares with respect to any Registrable
Shares so referenced in this Agreement shall automatically be proportionally
adjusted to reflect the effect on the outstanding shares of such class or series
of stock by such subdivision, combination, or stock dividend.
22
(k) Survival. This Agreement is intended to survive the consummation of the
transactions contemplated by the Purchase/Placement Agreement. The
indemnification and contribution obligations under Section 6 of this Agreement
shall survive the termination of the Company's obligations under Section 2 of
this Agreement.
(l) Attorneys' Fees. In any action or proceeding brought to enforce any
provision of this Agreement, or where any provision hereof is validly asserted
as a defense, the prevailing party, as determined by the court, shall be
entitled to recover its reasonable attorneys' fees in addition to any other
available remedy.
23
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
MARINER ENERGY, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President, Chief Financial
Officer and Treasurer
24
MEI ACQUISITION HOLDINGS, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Authorized Person
25
FRIEDMAN, BILLINGS, ▇▇▇▇▇▇ & CO., INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Senior Managing Director
26
