EXHIBIT 10.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of this 14th day of August, 1998, by and among Future
Petroleum Corporation, a Utah corporation (the "Company"), Energy Capital
Investment Company PLC, an English investment company ("Energy PLC"), and
EnCap Equity 1994 Limited Partnership, a Texas limited partnership ("EnCap
LP").
RECITALS:
A. Reference is herein made to that certain Agreement and Plan of
Merger dated as of August 14, 1998 (the "Merger Agreement"), by and among the
Company, Future CAL-TEX Corporation, a Texas corporation, Xxxxx Energy
Resources, Ltd., a Texas limited partnership, and SCL-CAL Company, a Texas
corporation.
B. Energy PLC and EnCap LP are the current record and beneficial
owners of an aggregate 1,850,000 shares of Common Stock (the "Fund I Current
Shares"). In connection with the transaction contemplated by the Merger
Agreement, Energy PLC and EnCap LP have agreed to subordinate certain
indebtedness owed to them by the Company. As part of the consideration for
such agreement, the Company will issue to Energy PLC and EnCap LP an aggregate
of 2,844,859 shares of Common Stock (the "Fund I Additional Shares").
C. In order to induce Energy PLC and EnCap LP to subordinate the
indebtedness referenced in the immediately preceding paragraph (and
recognizing that they would not be willing to take the above described actions
in the absence of this Agreement), the Company has agreed to provide Energy
PLC and EnCap LP with the registration rights set forth herein.
AGREEMENT:
NOW, THEREFORE, for and in consideration of the foregoing Recitals and
the mutual covenants contained herein, the sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound, do hereby
agree as follows:
Section 1. Definitions and References.
(a) When used in this Agreement, the following terms shall have the
respective meanings assigned to them in this Section 1 or in the sections,
subsections or other subdivisions referred to below:
"Agreement" shall mean this Agreement, as hereafter changed, modified or
amended in accordance with the terms hereof.
"Xxxxx Agreement" shall have the meaning assigned to it in Section
11(b).
"Xxxxx Holders" shall mean "Holders," as such term is defined in the
Xxxxx Agreement.
"Xxxxx Securities" shall mean "Registrable Securities," as such term is
defined in the Xxxxx Agreement.
"Commission" shall mean the Securities and Exchange Commission (or any
successor body thereto).
"Company" shall have the meaning assigned to it in the introductory
paragraph hereof.
"Common Stock" shall mean the common stock of the Company, $0.01 par
value per share.
"Demand Registration" shall have the meaning assigned to it in Section
2(a).
"EnCap LP" shall have the meaning assigned to it in the introductory
paragraph hereof.
"Energy PLC" shall have the meaning assigned to it in the introductory
paragraph hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and all rules and regulations promulgated under such Act.
"Fund I Additional Shares" shall have the meaning assigned to such term
in Paragraph B of the Recitals hereto.
"Fund I Current Shares" shall have the meaning assigned to such term in
Paragraph B of the Recitals hereto.
"Fund I Shares" shall mean the Fund I Current Shares and the Fund I
Additional Shares.
"Holder" shall mean any Person that holds Registrable Securities.
"Holder Indemnified Parties" shall have the meaning assigned to it in
Section 6(a).
"Merger Agreement" shall have the meaning assigned to it in Paragraph A
of the Recitals hereto.
"Person" shall mean any individual, corporation, partnership, joint
venture, limited partnership, limited liability company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Piggyback Registration" shall have the meaning assigned to it in
Section 3.
"Registrable Securities" shall mean (i) the Fund I Shares and (ii) any
securities issued or issuable with respect to any of the shares described in
clause (i) above by way of a stock dividend or other distribution or stock
split or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization; provided, that a share of Common Stock
or security described in clauses (i) and (ii) shall cease to be a Registrable
Security for purposes of this Agreement at such time as either (A) counsel to
the Company renders an opinion to the Holder of such share or security to the
effect that such share or security can be freely transferred without
registration under the Securities Act (which counsel and opinion shall be
reasonably acceptable to such Holder), (B) counsel to a Holder of such share
or security renders an opinion to the Company to the effect that such share
or security can be freely transferred without registration under the
Securities Act (which counsel and opinion shall be reasonably acceptable to
the Company), (C) securities for which a registration statement with respect
to the sale of such securities has become effective under the Securities Act
and such securities shall have been disposed of in accordance with such
registration statement, (D) such securities have been sold as permitted by
Rule 144 (or any successor provision) under the Securities Act and the
purchaser thereof does not receive "restricted securities" as defined in Rule
144, or (E) such securities shall have ceased to be outstanding.
"Registration Expenses" shall mean all expenses incident to the
Company's performance of or compliance with the registration rights granted
hereunder, including (without limitation) all registration, filing, listing
and NASD fees, fees and expenses of compliance with securities and blue sky
laws, all word processing, duplicating, printing and engraving expenses,
messenger, telephone and delivery expenses, and fees and disbursements of
counsel for the Company, of its independent certified public accountants and
any of its independent reserve engineers, including the expenses of any
special audits or "cold comfort" letters required by or incident to such
performance and compliance, premiums and other costs of policies of insurance
against liabilities arising out of the public offering of the Registrable
Securities being registered, and fees and disbursements of underwriters
(excluding discounts and commissions); provided, that Registration Expenses
shall not include any Selling Expenses. Without limiting the generality of
any other provision hereof, no holder of Registrable Securities shall be
responsible for any allocation of general and administrative (including all
employee and compensation expenses) expenses incurred by the Company in
connection with an offering.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
all rules and regulations under such Act.
"Selling Expenses" shall mean underwriting discounts or commissions, any
selling commissions and stock transfer taxes attributable to sales of
Registrable Securities and the fees and expenses of counsel for any Holder.
(b) All references in this Agreement to sections, subsections and
other subdivisions refer to corresponding sections, subsections and other
subdivisions of this Agreement unless expressly provided otherwise. Titles
appearing at the beginning of any of such subdivisions are for convenience
only and shall not constitute part of such subdivisions and shall be
disregarded in construing the language contained herein. The words "this
Agreement", "this instrument", "herein", "hereof", "hereby", "hereunder" and
words of similar import refer to this Agreement as a whole and not to any
particular subdivision unless expressly so limited. Words in the singular
form shall be construed to include the plural and vice versa, unless the
context otherwise requires. Pronouns in masculine, feminine and neuter
genders shall be construed to include any other gender.
Section 2. Demand Registration Rights.
(a) One or more Holders of not less than 20% of the Registrable
Securities ("Initiating Holders") then outstanding may request at any time
after the expiration of the one-year period commencing as of the date hereof a
registration by the Company under the Securities Act of all or a part its
Registrable Securities (a "Demand Registration").
(b) Notwithstanding subsection (a) above or anything else herein to
the contrary, the Company shall not be obligated to effect more than two
registrations pursuant to this Section 2; provided, however, that any
registration requested pursuant to this Section 2 will not be deemed to have
been effected (i) unless it has become effective and remained effective for
the lesser of (1) the period necessary to complete the sale or disposition of
the Registrable Securities covered by such registration statement, or (2) 180
days after the effective date of such registration statement, except with
respect to any registration statement filed pursuant to Rule 415 under the
Securities Act, in which case the Company shall use its best efforts to keep
such registration statement effective until such time as all of the
Registrable Securities cease to be Registrable Securities; (ii) if, after it
has become effective, such registration is interfered with by any stop order,
injunction or other order or requirement of the Commission or other
governmental agency or court for any reason not attributable to the selling
Holders and has not thereafter become effective, or (iii) if the conditions to
closing specified in the underwriting agreement, if any, entered into in
connection with such registration are not satisfied or waived, other than
solely by reason of a failure on the part of the selling Holders; provided,
further, that any such registration which does not become effective after the
Company has filed a registration statement in accordance with the provisions
of this Section 2 solely by reason of the refusal to proceed of the Holder or
Holders that have requested the Demand Registration pursuant to subsection (a)
above, including failure to comply with the provisions of this Agreement
(other than any refusal to proceed based upon the advice of counsel to such
Holder or Holders that the registration statement, or the prospectus contained
therein, contains an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing, or that such registration statement or such prospectus, or the
distribution contemplated thereby, otherwise violates or would, if such
distribution using such prospectus took place, violate any applicable state or
federal securities law) shall be deemed to have been effected by the Company
at the request of such Holder or Holders.
(c) Notwithstanding subsection (a) above or anything else herein to
the contrary, it is hereby agreed that a Demand Registration must cover no
less than 50% of the Registrable Securities then outstanding. In the event a
Holder requests that the Company effect a Demand Registration pursuant to this
Section 2, the Company will (i) promptly give notice of the proposed
registration to all other Holders and (ii) use its reasonable best efforts to
effect the registration of the Registrable Securities specified in the
request, together with the Registrable Securities of any other Holder joining
in such request as are specified in a written request received by the Company
within 20 days after receipt of the notice referred to in clause (i) above.
(d) If the managing underwriter in any registration effected under
this Section 2 advises the Company that, in its reasonable opinion, the number
of securities requested to be included in such registration exceeds the number
that can be sold in such offering within a price range acceptable to the
Holders of 66 2/3% of the Registrable Securities requested to be included in
such registration, the Company, except as provided in the following sentence,
will include in such registration, to the extent of the number and type that
the Company is so advised can be sold in such offering, Registrable Securities
requested to be included in such registration, pro rata among the Holders
requesting such registration on the basis of the estimated gross proceeds from
the sale thereof. If the total number of Registrable Securities requested to
be included in such registration cannot be included as provided in the
preceding sentence, holders of Registrable Securities requesting registration
thereof pursuant to this Section 2, representing not less than 33-1/3% of the
Registrable Securities with respect to which registration has been requested
and constituting not less than 66 2/3% of the initiating Holders, shall have
the right to withdraw the request for registration by giving written notice to
the Company within 20 days after receipt of such notice by the Company and, in
the event of such withdrawal, such request shall not be counted for purposes
of the requests for registration to which holders of Registrable Securities
are entitled pursuant to this Section 2.
Section 3. Piggyback Registration Rights. If the Company proposes to
register any of its securities under the Securities Act other than (a) under
employee compensation or benefit programs, (b) an exchange offer or an
offering of securities solely to the existing stockholders or employees of the
Company, or (c) securities to be issued in a transaction described in Rule
145(a) promulgated under the Securities Act, whether or not for sale for its
own account, and the registration form to be used may be used for the
registration of Registrable Securities, the Company will give prompt written
notice to Holders of Registrable Securities of its intention to effect such a
registration and will include in such registration all Registrable Securities
with respect to which the Company has received written requests for inclusion
therein within 15 days after the receipt of the Company's notice (a "Piggyback
Registration"). The Company shall use its reasonable best efforts to cause
the managing underwriters of a proposed underwritten offering to permit the
Registrable Securities requested to be included in the registration statement
(or registration statements) for such offering to be included therein on the
same terms and conditions as any similar securities of the Company included
therein. Notwithstanding the foregoing, if the Company gives notice of such a
proposed registration, the total number of Registrable Securities which shall
be included in such registration shall be reduced pro rata (on the basis of
the estimated proceeds from the sale thereof) to such number, if any, as in
the reasonable opinion of the managing underwriters of such offering would not
adversely affect the marketability or offering price of all of the securities
proposed to be offered by the Company in such offering; provided however, that
(i) if such Piggyback Registration is incident to a primary registration on
behalf of the Company, the securities to be included in the registration
statement (or registration statements) for any Person other than the Holders,
the Xxxxx Holders (if the Xxxxx Holders have exercised their rights under
Section 3 of the Xxxxx Agreement) and the Company shall be first reduced prior
to any such pro rata reduction and (ii) if such Piggyback Registration is
incident to a secondary registration on behalf of holders of securities of the
Company, the securities to be included in the registration statement (or
registration statements) for any Person not exercising "demand" registration
rights other than the Holders and the Xxxxx Holders (if the Xxxxx Holders have
exercised their rights under Section 3 of the Xxxxx Agreement) shall be first
reduced prior to any such pro rata reduction; provided, further, that if (1)
the Holders have made a request under this Section 3 and the Xxxxx Holders
have made a request under Section 3 of the Xxxxx Agreement and (2) all of the
Registrable Securities of the Holders and all of the Xxxxx Securities of the
Xxxxx Holders cannot be included in the registration statement(s) under the
terms of such sections, the total number of Registrable Securities of the
Holders and the Xxxxx Securities of the Xxxxx Holders which shall be included
in such registration shall be reduced pro rata to such number, if any, as in
the reasonable opinion of the managing underwriters of such offering would not
adversely affect the marketability or offering price of all of the securities
proposed to be offered by the Company in such offering. Subject to any
applicable underwriting agreement, any Holder of Registrable Securities may
withdraw at any time any Registrable Securities registered under this Section
3. No registration effected under this Section 3 shall relieve the Company of
its obligation to effect any registration upon request under Section 2.
Section 4. Registration Procedures.
(a) Whenever the Holders have requested that any Registrable
Securities be registered pursuant to Section 2 or Section 3, the Company will
as expeditiously as possible:
(i) prepare and file with the Commission a registration
statement on the appropriate form with respect to such Registrable
Securities, and use its reasonable best efforts to cause such
registration statement to become and remain effective as soon as
reasonably practicable after the filing thereof (provided, that before
filing a registration statement or prospectus or any amendments or
supplements thereto, the Company will furnish copies of all such
documents proposed to be filed to any Holder covered by such
registration statement);
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective until the earlier of (1)such time as all of such
Registrable Securities covered by such registration statement have been
sold (but not before the expiration of the applicable prospectus
delivery period) or (2) 180 days after the effective date of such
registration statement, except with respect to any registration
statement filed pursuant to Rule 415 under the Securities Act, in which
case the Company shall use its best efforts to keep such registration
statement effective until such time as all of the Registrable Securities
covered thereby cease to be Registrable Securities; and comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the sellers
thereof set forth in such registration statement;
(iii) notify each Holder of Registrable Securities covered by the
registration statement ("Seller") promptly after the Company shall
receive notice thereof of the time when such registration statement has
been filed;
(iv) furnish to each seller of Registrable Securities such number
of copies of such registration statement, each amendment and supplement
thereto, the prospectus included in such registration statement
(including, without limitation, each preliminary prospectus) and such
other documents as such Seller may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such
seller (it being understood that the Company consents to the use of the
prospectus and any amendment or supplement thereto by each Seller and
the underwriter or underwriters, if any, in connection with the offering
and sale of Registrable Securities covered by the prospectus or any
amendment or supplement thereto);
(v) use its reasonable best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of
such jurisdictions within the United States as any Seller reasonably
requests, to keep such registration or qualifications in effect for so
long as such registration statement remains in effect, and do any and
all other acts and things which may be reasonably necessary or advisable
to enable such seller to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such Seller
(provided that the Company will not be required to qualify generally to
do business or subject itself to any general service of process in any
jurisdiction where it is otherwise not then so subject);
(vi) notify each Seller of such Registrable Securities, at any
time when a prospectus relating thereto is required to be delivered
under the Securities Act, of the happening of any event (including those
set forth in clauses (1) through (6) of paragraph (vii) below) which
requires the making of any change in the prospectus included in such
registration statement so that such document will not contain an untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading, and, at the request of any such Seller, the Company will
promptly prepare and furnish to such Seller and each underwriter, if
any, a reasonable number of copies of a supplement or amendment to such
prospectus so that such prospectus will not contain an untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading;
(vii) The Company will also notify each Seller promptly, and (if
requested by a Seller) confirm such notice in writing, (1) when a
prospectus or any prospectus supplement or post-effective amendment has
been filed and, with respect to a registration statement or any post-
effective amendment, when the same has become effective under the
Securities Act and each applicable state law, (2) of any request by the
Commission or any other federal or state governmental authority for
amendments or supplements to a registration statement or related
prospectus or for additional information, (3) of the issuance by the
Commission of any stop order suspending the effectiveness of a
registration statement or the initiation of any proceedings for that
purpose, (4) if at any time the representations or warranties of the
Company or any subsidiary contained in any agreement (including any
underwriting agreement) contemplated hereby cease to be true and correct
in any material respect, (5) of the receipt by the Company of any
notification with respect to the suspension of the qualification or
exemption from qualification of any of the Registrable Securities for
sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose, or (6) of the Company's reasonable
determination that a post-effective amendment to a registration
statement would be appropriate;
(viii) use its reasonable best efforts to cause all such
Registrable Securities to be listed on each securities exchange or
exchanges, automated quotation system or over-the-counter market upon
which securities of the Company of the same class are then listed;
(ix) enter into such customary agreements (including, without
limitation, underwriting agreements in customary form, substance and
scope) and take all such other action as the Holders of a majority of
the Registrable Securities being sold or the underwriters, if any,
reasonably request in order to expedite or facilitate the disposition of
such Registrable Securities;
(x) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission and applicable state
securities authorities;
(xi) in the event of the issuance of any stop order suspending
the effectiveness of a registration statement, or of any order
suspending or preventing the use of any related prospectus or suspending
the qualification of any Registrable Securities included in such
registration statement for sale in any jurisdiction, the Company will
use its reasonable best efforts promptly to obtain the withdrawal of
such order;
(xii) use its reasonable best efforts to cause such Registrable
Securities covered by such registration statement to be registered with
or approved by such other governmental agencies or authorities as may be
necessary to enable the Sellers thereof to consummate the disposition of
such Registrable Securities;
(xiii) in connection with an underwritten public offering of
securities, use its reasonable best efforts to obtain a signed
counterpart of a comfort letter from the Company's public accountants in
customary form and covering such matters of the type customarily covered
by comfort letters with respect to offerings of the type being made
pursuant to the registration statement as the Sellers reasonably request
and an opinion of counsel for the Company covering such matters with
respect to such registration statement as are customarily covered in
opinions of issuer's counsel and delivered to the underwriters in
underwritten public offerings of securities;
(xiv) the Company shall make available for inspection by the
sellers of such Registrable Securities, any underwriter participating in
any distribution pursuant to such registration statement and any
attorney, accountant or other professional retained by the Holder or
underwriter (in this paragraph collectively referred to as
"inspectors"), all financial and other records, pertinent corporate
documents and properties of the Company as shall be reasonable necessary
to enable them to exercise their due diligence responsibility, and cause
the Company's officers, directors and employees to supply all
information reasonably requested by any such inspectors in connection
with such registration statement;
(xv) cause representatives of the Company to participate in any
"road show" or "road shows" reasonably requested by any underwriter of
an underwritten or "best efforts" offering of any Registrable
Securities; and
(xvi) provide and cause to be maintained a transfer agent and
registrar (which, in each case, may be the Company) for all Registrable
Securities covered by such registration agreement from and after a date
not later than the effective date of such registration.
(b) Whenever the Holders of Registrable Securities have requested that
any Registrable Securities be registered pursuant to Section 2 or Section 3,
each Holder of Registrable Securities (including Registrable Securities in any
registration statement filed pursuant to this Agreement) will be deemed to
have agreed as follows:
(i) upon receipt of notice from the Company of the happening of
any event of the kind described in Section 4(a)(vi), the Holders of
Registrable Securities covered by such registration statement will
forthwith discontinue disposition of any such Registrable Securities
until the Holders of Registrable Securities receive copies of the
supplemented or amended prospectus contemplated by Section 4(a)(vi), or
until they are advised in writing by the Company that the use of the
applicable prospectus may be resumed, and they have received copies of
any additional or supplemental filings that are incorporated or deemed
to be incorporated by reference in such prospectus (it being the
agreement of the parties hereto, however, that the obligation of the
Company with respect to maintaining the subject registration statement
current and effective shall be extended by a period of days equal to the
period the Holders of Registrable Securities are required by this
Section 4(b)(i) to discontinue disposition of such Registrable
Securities); and
(ii) furnish to the Company such information regarding each
Seller, the Registrable Securities held by such Seller, and the intended
method of disposition thereof as the Company shall reasonably request
and as shall be reasonably required in connection with the preparation
of the applicable registration statement and other actions taken by the
Company under this Agreement, and it shall be a condition precedent to
the obligation of the Company to take any action pursuant to this
Agreement in respect of the Registrable Securities owned by a Seller
that such information has been furnished to the Company by such Seller.
Section 5. Expenses of Registration. The Company shall pay all
Registration Expenses in connection with each registration effected pursuant
to Sections 2 and 3. All Selling Expenses incurred by a Seller in connection
with a registration effected pursuant to the terms hereof shall be borne by
such Seller
Section 6. Indemnification.
(a) The Company shall indemnify and hold harmless, with respect to any
registration statement filed by it, to the full extent permitted by law, each
Holder of Registrable Securities covered by such registration statement, its
directors, officers, partners, agents, employees and each other Person, if
any, who controls such Holder within the meaning of Section 15 of the
Securities Act (collectively, "Holder Indemnified Parties") against all
losses, claims, damages, liabilities and expenses (including reasonable costs
of investigation), joint or several, to which any such Holder Indemnified
Party may become subject under the Securities Act, the Exchange Act, at common
law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of a material fact contained in any registration
statement in which such Registrable Securities were included as contemplated
hereby or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, (ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary, final or summary prospectus,
together with the documents incorporated by reference therein (as amended or
supplemented if the Company shall have filed with the Commission any amendment
thereof or supplement thereto), or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading, or (iii) any violation by the Company of any
federal, state or common law rule or regulation applicable to the Company and
relating to action of or inaction by the Company in connection with any such
registration; provided, that each such Seller's liability under such
indemnification shall be limited to the sales proceeds from the sale of the
Company's securities owned by the sellers pursuant to such registration
statement, preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement, and in each such case, the Company shall reimburse
each such Holder Indemnified Party for any reasonable legal or other expenses
incurred by any of them in connection with investigating or defending any such
loss, claim, damage, liability, expense, action or proceeding; provided,
however, that the Company shall not be liable to any such Holder Indemnified
Party in any such case to the extent, that any such loss, claim, damage,
liability or expense (or action or proceeding, whether commenced or
threatened, in respect thereof) arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
such registration statement or amendment thereof or supplement thereto or in
any such preliminary, final or summary prospectus in reliance upon and in
conformity with written information furnished to the Company by or on behalf
of any such Holder Indemnified Party for use in the preparation thereof. Such
indemnity and reimbursement of expenses and other obligations shall remain in
full force and effect regardless of any investigation made by or on behalf of
the Holder Indemnified Parties and shall survive the transfer of such
securities by such Holder Indemnified Parties.
(b) Each Holder of Registrable Securities participating in any
registration hereunder shall severally (and not jointly or jointly and
severally) indemnify and hold harmless, to the fullest extent permitted by
law, the Company, its directors, officers, employees and agents, and each
Person who controls the Company (within the meaning of Section 15 of the
Securities Act) (collectively, "Company Indemnified Parties") against all
losses, claims, damages, liabilities and expenses to which any Company
Indemnified Party may become subject under the Securities Act, the Exchange
Act, at common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in any
registration statement in which such Holder's Registrable Securities were
included or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, (ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary, final or summary prospectus,
together with the documents incorporated by reference therein (as amended or
supplemented if the Company shall have filed with the Commission any amendment
thereof or supplement thereto), or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading to the extent in the cases described in clauses
(i) and (ii), that such untrue statement or omission was furnished in writing
by such Holder for use in the preparation thereof, or (iii) any violation by
such Holder of any federal, state or common law rule or regulation applicable
to such Holder and relating to action of or inaction by such Holder in
connection with any such registration; provided, that each such Seller's
liability under such indemnification shall be limited to the sales proceeds
from the sale of the Company's securities owned by the sellers pursuant to
such registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement, and in each such case, such Holder shall
reimburse each such Company Indemnified Party for any reasonable legal or
other expenses incurred by any of them in connection with investigating or
defending any such loss, claim, damage, liability, expense, action or
proceeding. Such indemnity obligation shall remain in full force and effect
regardless of any investigation made by or on behalf of the Company
Indemnified Parties (except as provided above) and shall survive the transfer
of such securities by such Holder.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) of written notice of the commencement of any action, suit,
proceeding, investigation or threat thereof made in writing with respect to
which a claim for indemnification may be made pursuant to this Section 6, such
indemnified party shall, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the indemnifying party of the
threat or commencement thereof; provided, however, that the failure to so
notify the indemnifying party shall not relieve it from any liability which it
may have to any indemnified party except to the extent that the indemnifying
party is actually prejudiced by such failure to give notice. If any such
claim or action referred to under subsection (a) or (b) is brought against any
indemnified party and it then notifies the indemnifying party of the threat or
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it wishes, jointly with any other indemnifying
party similarly notified, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party. After notice from the
indemnifying party to such indemnified party of its election so to assume the
defense of any such claim or action, the indemnifying party shall not be
liable to such indemnified party under this Section 6 for any legal expenses
of counsel or any other expenses subsequently incurred by such indemnified
party in connection with the defense thereof other than reasonable costs of
investigation unless the indemnifying party has failed to assume the defense
of such claim or action or to employ counsel reasonably satisfactory to such
indemnified party. Under no circumstances will the indemnifying party be
obligated to pay the fees and expenses of more than one law firm for all
indemnified parties. The indemnifying party shall not be required to
indemnify the indemnified party with respect to any amounts paid in settlement
of any action, proceeding or investigation entered into without the written
consent of the indemnifying party, which consent shall not be unreasonably
withheld. No indemnifying party shall consent to the entry of any judgment or
enter into any settlement without the consent of the indemnified party unless
(i) such judgment or settlement does not impose any obligation or liability
upon the indemnified party other than the execution, delivery or approval
thereof, and (ii) such judgment or settlement includes as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a full release and discharge from all liability in respect of such claim
for all Persons that may be entitled to or obligated to provide
indemnification or contribution under this Section 6.
(d) Indemnification similar to that specified in the preceding
subsections of this Section 6 (with appropriate modifications) shall be given
by the Company and each Seller with respect to any required registration or
qualification of securities under any state securities or blue sky laws.
(e) If the indemnification provided for in this Section 6 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b), then each indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of the losses,
claims, damages, liabilities or expenses (or actions or proceedings in respect
thereof) referred to in subsection (a) or (b) in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and the indemnified party on the other in connection with the statements,
omissions, actions or inactions which resulted in such losses, claims,
damages, liabilities or expenses as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and the
indemnified party 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 indemnifying party or the indemnified party, any action or
inaction by any such party, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement,
omission, action or inaction. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities or expenses (or
actions or proceedings in respect thereof) pursuant to this subsection (e)
shall be deemed to include, without limitation, any reasonable legal or other
expenses incurred by such indemnified party in connection with investigating
or defending any such action or claim (which shall be limited as provided in
subsection (c) if the indemnifying party has assumed the defense of any such
action in accordance with the provisions thereof) which is the subject of this
subsection (e). 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. Promptly after receipt by an indemnified party under this
subsection (e) of written notice of the commencement of any action, suit,
proceeding, investigation or threat thereof made in writing with respect to
which a claim for contribution may be made against an indemnifying party under
this subsection (e), such indemnified party shall, if a claim for contribution
in respect thereof is to be made against an indemnifying party, give written
notice to the indemnifying party in writing of the commencement thereof (if
the notice specified in subsection (c) has not been given with respect to such
action); provided, however, that the failure to so notify the indemnifying
party shall not relieve it from any obligation to provide contribution which
it may have to any indemnified party under this subsection (e) except to the
extent that the indemnifying party is actually prejudiced by the failure to
give notice.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this paragraph were determined by pro rata allocation
or by any other method of allocation which does not take account the equitable
considerations referred to in the immediately preceding paragraph.
If indemnification is available under this Section 6, the indemnifying
parties shall indemnify each indemnified party to the fullest extent provided
in subsections (a) and (b), without regard to the relative fault of said
indemnifying party or any other equitable consideration provided for in this
subsection. The provisions of this subsection shall be in addition to any
other rights to indemnification or contribution which any indemnified party
may have pursuant to law or contract, shall remain in full force and effect
regardless of any investigation made by or on behalf of any indemnified party,
and shall survive the transfer of securities by any such party.
(f) In connection with any underwritten offering contemplated by this
Agreement which includes Registrable Securities, the Company and Seller shall
be required to enter into a customary underwriting agreement with the
underwriter.
Section 7. Selection of Underwriters. If a registration effected
pursuant to Section 2 is an underwritten offering or a best efforts
underwritten offering, the investment bankers or investment bankers and
manager or managers that will administer the offering shall be selected by the
Holders of a majority of the Registrable Securities to be registered in such
registration; provided, however, that such investment bankers and managers
must be reasonably satisfactory to the Company.
Section 8. Rule 144. The Company covenants to each Holder that, to the
extent that the Company shall be required to do so under the Exchange Act, the
Company shall (a) timely file the reports required to be filed by it under the
Exchange Act or the Securities Act (including, but not limited to, the reports
under Section 13 and 15(d) of the Exchange Act referred to in subparagraph (c)
(1) of Rule 144 adopted by the Commission under the Securities Act) and the
rules and regulations adopted by the Commission thereunder, and (b) take such
further action as any Holder may reasonably request, all to the extent
required from time to time to enable such Holder to sell Registrable
Securities without registration under the Securities Act within the
limitations of the exemption provided by Rule 144 under the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission. Upon the request of any Holder, the
Company shall deliver to such Holder a written statement as to whether it has
complied with such requirements.
Section 9. Market Standoff Agreement.
(a) In order to facilitate the possibility of future public offerings
of Common Stock, the Holders agree that in connection with an underwritten
public offering for cash by the Company of its Common Stock or securities
convertible into or exercisable or exchangeable for its Common Stock, each
such Holder (regardless of whether such Holder is participating in the
offering) will execute a customary agreement with the underwriters of such
offering in substantially the form executed by directors and senior executive
management of the Company in which the Holder agrees not to sell Registrable
Securities owned by it for a period of up to 90 days following the effective
date of the registration statement for such offering. Holders agree that
during the above restricted period they will not directly or indirectly sell,
offer to sell, contract to sell (including without limitation any short sale),
grant an option to purchase or otherwise transfer of dispose of (other than
donees who agree to be similarly bound) shares of Registrable Securities at
any time during such period except securities included in such registration.
In order to enforce the foregoing covenant, the Company may impose stop-order
instructions with respect to such shares of Registrable Securities held by
each Holder, which shall be binding upon any assignee or successor of such
Holder (and the shares or securities of every other Person subject to the
foregoing restriction), until the end of the restricted period.
(b) During a period commencing on the filing by the Company of a
registration statement which includes Registrable Securities (other than
pursuant to Rule 415), the Company agrees not to effect any public sale or
distribution (including by registering securities held by others) of any
securities the same as or similar to those being registered by such
registration statement, or any securities convertible into or exchangeable or
exercisable for such securities, unless such sale or distribution is pursuant
to such registration statement.
Section 10. Existing Fund I Registration Rights. The Company, Energy PLC
and EnCap LP agree that effective immediately upon the execution and delivery
of this Agreement by the parties hereto: (i) that certain Registration Rights
Agreement dated as of November 25, 1997, by and among the Company, Energy PLC
and EnCap LP, as amended by that certain Amendment No. 1 to Registration
Rights Agreement dated as of May 1, 1998, shall be terminated and be of no
further force and effect whatsoever; and (ii) that the registration rights
accorded Energy PLC and EnCap LP under that certain April 1997 Agreement dated
as of April 28, 1997, by and among the Company, Future Acquisition 1995, Ltd.,
Energy PLC and EnCap LP shall be terminated and of no further force and effect
whatsoever.
Section 11. Other Existing or Subsequent Registration Rights.
(a) The Company represents and warrants to Energy PLC and EnCap LP
that other than the registration rights referenced in Section 10 (which rights
are being terminated as provided in such Section), the registration rights
granted under this Agreement and the registration rights granted under the
Xxxxx Agreement, the Company is not currently a party to any other agreement
whereby it accords any Person any demand or piggy-back registration rights
with respect to such Person's Common Stock.
(b) Contemporaneously with executing and delivering this Agreement,
the Company is executing and delivering that certain (i) Registration Rights
Agreement dated as of even date herewith by and between the Company and Xxxxx
Energy Resources, Ltd. (the "Xxxxx Agreement") and (ii) Registration Rights
Agreement dated as of even date herewith by and between the Company, Xxxx
Xxxxx, et al. (the "Price Agreement"). The Company represents and warrants
that it has provided Energy PLC and EnCap LP with a true, complete and
accurate copy of the Xxxxx Agreement and the Price Agreement and agrees that
it will not agree to any amendment or other modification to the Xxxxx
Agreement or the Price Agreement without having first received the written
consent of the Holders of a majority of the Registrable Securities then
outstanding.
(c) The Company agrees that it will not hereafter grant to any Person
demand registration rights without the prior written consent of the Holders of
a majority of the number of Registrable Securities then outstanding. The
Company agrees that it will not hereafter grant to any Person any piggy-back
registration rights that are inconsistent with or violates the rights granted
to the Holders of Registrable Securities under this Agreement.
Section 12. Miscellaneous.
(a) Energy PLC and EnCap LP agree, and each other Holder of
Registrable Securities (including Registrable Securities in any registration
statement filed pursuant to this Agreement) will be deemed to have agreed, as
follows:
(i) if any Registrable Securities are being registered in any
registration pursuant to this Agreement, the Holder thereof will comply
with all anti-stabilization, manipulation and similar provisions of
Section 10 of the Exchange Act, as amended, and any rules promulgated
thereunder by the Commission and, at the request of the Company, will
execute and deliver to the Company and to any underwriter participating
in such offering, an appropriate agreement to such effect; and
(ii) at the end of any period during which the Company is
obligated to keep a registration statement current and effective as
described herein, the Holders of Registrable Securities included in the
registration statement shall discontinue sales thereof pursuant to such
registration statement.
(b) All questions concerning the construction, validity and
interpretation of this Agreement shall be governed by the internal law, and
not the law of conflicts, of the State of Texas.
(c) All covenants and agreements in this Agreement by or on behalf of
any of the parties hereto will bind and inure to the benefit of the respective
successors and assigns of the parties hereto. In addition, the rights and
obligations under this Agreement shall automatically be transferred to and
binding on any transferee or assignee of the Registrable Securities; provided,
that (i) the Company is, within a reasonable time after such transfer,
furnished with written notice of the name and address of such transferee or
assignee and the Registrable Securities with respect to which such
registration rights are being transferred or assigned, (ii) such transferee or
assignee agrees in writing to be bound by and subject to the terms and
conditions of this Agreement and (iii) the transfer and assignment of the
subject Registrable Securities is in compliance with the Securities Act and
applicable state securities laws or an exemption from the registration
requirements of the Securities Act and applicable state securities laws.
(d) This Agreement is intended by the parties as a final expression of
their agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter herein contained. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein, with respect
to the registration rights granted by the Company to the Holders of the
Registrable Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
(e) All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally or
sent by reputable express courier service (charges prepaid), or mailed to the
recipient by certified or registered mail, return receipt requested and
postage prepaid, or sent by telefax, to the parties at the following address
(or to such other address or to the attention of such other person as the
recipient party has specified by prior like notice to the sending party):
If to the Company:
Future Petroleum Corporation
0000 Xxxx Xxxxxxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Telecopier No.: (000)000-0000
Attention: Xxxx Xxxxx
If to Energy PLC or EnCap LP:
c/o EnCap Investments L.C.
0000 Xxxxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxx X. Xxxxxxxx, Managing Director
(f) If any provision of this Agreement is held to be unenforceable,
this Agreement shall be considered divisible and such provision shall be
deemed inoperative to the extent it is deemed unenforceable, and in all other
respects this Agreement shall remain in full force and effect; provided,
however, that if any such provision may be made enforceable by limitation
thereof, then such provision shall be deemed to be so limited and shall be
enforceable to the maximum extent permitted by applicable law.
(g) This Agreement may be executed by the parties hereto in any number
of counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same agreement. Each counterpart may consist of
a number of copies hereof each signed by less than all, but together signed by
all, the parties hereto.
(h) Each Holder of Registrable Securities, in addition to being
entitled to exercise all rights granted by law, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement.
The Company agrees that monetary damages would not be adequate compensation
for any loss incurred by reason of breach by it of the provisions of this
Agreement and hereby agrees to waive (to the extent permitted by law) the
defense in any action for specific performance that a remedy of law would be
adequate.
(i) 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 successful party shall be entitled to recover reasonable
attorneys' fees in addition to any other available remedy.
(j) The Company agrees to remove any stop transfer orders and similar
instructions and any legends on certificates representing Registrable
Securities describing transfer restrictions applicable to such securities upon
the sale of such securities (i) pursuant to an effective Registration
Statement under the Securities Act or (ii) in accordance with the provisions
of Rule 144 under the Securities Act.
(k) This Agreement may be amended, modified, supplemented, restated or
discharged (and provisions hereof may be waived) only by an instrument in
writing signed by the Company and the Holders of not less than 95% of the
number of Registrable Securities then outstanding.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
FUTURE PETROLEUM CORPORATION, a Utah
corporation
By: /s/ Xxxx Xxxxx
Name: Xxxx Xxxxx
Title: President
ENERGY CAPITAL INVESTMENT COMPANY PLC
By: /s/ Xxxx X. Xxxxxxxx
Name: Xxxx X. Xxxxxxxx
Title : Director
ENCAP EQUITY 1994 LIMITED PARTNERSHIP
By: EnCap Investments L.C., General
Partner
By: /s/ Xxxx X. Xxxxxxxx
Name: Xxxx X. Xxxxxxxx
Title: Managing Director
