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EXHIBIT 99.1
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and entered
into effective as of the _____ day of February, 2000, by and among SOUTH TEXAS
DRILLING & EXPLORATION, INC., a Texas corporation (the "Company"), and WEDGE
ENERGY SERVICES, L.L.C., a ___________ limited liability company (such entity
being referred to herein as the "Investor").
W I T N E S S E T H:
WHEREAS, Investor is acquiring 1,153,846 shares of $0.10 par value common
stock of the Company (the "Common Stock") in accordance with a Subscription
Agreement dated _____________, 2000 (the "Subscription Agreement"); and
WHEREAS, the Company has agreed to provide the Investor with certain
registration rights with respect to the Registrable Securities (as defined
herein).
NOW THEREFORE, in consideration of the mutual covenants herein contained
and for other good and valuable consideration, the parties hereto hereby agree
as follows:
Section 1. Certain Definitions. As used in this Agreement, the following
definitions shall apply:
"Affiliate" means a Person who directly or indirectly controls, is
controlled by, or is under common control with, the Person referred to. For this
purpose, "control" means the ability to direct or cause the direction of the
management or affairs of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"Commission" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any similar successor federal statute, and the rules and regulations
thereunder, all as the same shall be in effect from time to time.
"Holder" means any holder of outstanding Registrable Securities.
"Person" means any natural Person, any unincorporated organization or
association, and any partnership, limited liability company, corporation,
estate, trust, nominee, custodian or other individual or entity.
The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act (and any post-effective amendments thereto
filed or required to be filed), and the declaration or ordering of the
effectiveness of such registration statement.
"Registrable Securities" means: (i) the Common Stock held by the
Investor issued pursuant to the Subscription Agreement, (ii) any securities of
the Company held by the Investor that are or were issued or issuable, directly
or indirectly, in respect of or by way of exchange for such Common
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Stock or any capital stock into which such Common Stock may be converted,
together with any other securities which are issued with respect thereto by way
of any stock split, stock dividend, recapitalization, reorganization, or similar
event; provided, however, that Registrable Securities shall not include any
Registrable Securities which have previously been registered or sold to the
public.
"Registration Expenses" means all expenses incurred by the Company in
complying with registration obligations hereunder, including, without
limitation, all registration, qualification and filing fees, printing expenses,
escrow fees, fees and disbursements of counsel for the Company and the
reasonable fees and disbursements of not more than one counsel chosen by the
Holders who are the holders of a majority of Registrable Securities being
registered, blue sky fees and expenses, and the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company which shall be paid in any event by the
Company). Registration Expenses shall not include fees of counsel for the
Holders other than of one counsel as set forth above or Selling Expenses as
defined below.
"Requisite Holders" means Holders of not less than 50% of the
Registrable Securities who are also holders of at least 5% of the then
outstanding equity securities of the Company.
"Restricted Securities" means the securities of the Company required to
bear the legend set forth in Section 2 hereof.
"Rule 144" means Rule 144 promulgated under the Securities Act, or any
similar successor rule, as the same shall be in effect from time to time.
"Rule 145" means Rule 145 promulgated under the Securities Act, or any
similar successor rule, as the same shall be in effect from time to time.
"Rule 415" means Rule 415 promulgated under the Securities Act, or any
similar successor rule, as the same shall be in effect from time to time.
"Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the sale of Registrable
Securities.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal statute, and the rules and regulations of the Commission
thereunder, as shall be in effect at the time.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules, regulations and interpretations promulgated thereunder.
Section 2. Demand Registration.
(a) Request for Registration. If, at any time after the same day of the
month of November, 2000, as the day of the month of February, 2000, which is the
effective date of this Agreement, the Company shall receive from the Requisite
Holders a written request that the Company effect the registration under the
Securities Act of the resale of Registrable Securities held by such Requisite
Holders (a "Demand Registration"), then the Company shall:
(i) promptly give written notice of the proposed registration to all
other Holders; and
(ii) use its best efforts to effect, as soon as practicable, the
registration under
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the Securities Act of the Registrable Securities which the Company has been so
requested to register, together with all or such portion of the Registrable
Securities of any Holders joining in such request as are specified in a written
request received by the Company within 20 days after the Company mails such
written notice in accordance with the registration procedures set forth in
Section 6 hereof;
provided, however, that the Company shall not be obligated to take any action to
effect any such registration under the Securities Act:
(A) after the Company has effected one such registration
pursuant to this Section 2 which has been declared or ordered effective and
pursuant to which securities have been sold; or
(B) if such request is for a shelf registration pursuant to
Rule 415 of the Securities Act.
Subject to the foregoing clauses (A) and (B) the Company shall file a
registration statement covering the Registrable Securities so requested to be
registered as soon as practicable, and in any event within 90 days, after
receipt of the request or requests of the Requisite Holders; provided, however,
that if the Company shall furnish to such Holder a certificate signed by the
president of the Company stating that in the good faith judgment of the board of
directors of the Company, it would be detrimental to the Company or its
shareholders for such registration statement to be filed on or before the date
filing would be required and it is therefore essential to defer the filing of
such registration statement, the Company shall have the right to defer such
filing for a reasonable period not to exceed 90 days. The Company's right to
delay such registration as set forth in the previous sentence may only be
exercised one time during any twelve month period.
(b) Underwritten Demand Registrations. The offering of the
Registrable Securities pursuant to such Demand Registration shall be in the form
of an underwritten offering. In the event the managing underwriter or
underwriters of the Demand Registration advise the Company and the Requisite
Holders in writing that the total amount of Registrable Securities requested to
be included in such offering would exceed the maximum amount of securities which
can be marketed at a price reasonably related to the current fair market value
of such securities without adversely affecting such offering (the "Underwriters
Maximum Number"), the Company will be required to include in such registration
to the extent of the Underwriters Maximum Number: first, all of the Registrable
Securities requested to be included in such registration by the Holders thereof,
allocated pro rata among such Holders on the basis of the number of Registrable
Securities requested to be included therein by each such Holder; and second, any
equity securities requested to be included in such registration by the Company
and any other holders of such securities, allocated as determined by the Company
subject to any agreements between the Company and any such holders.
(c) Selection of Underwriters. The managing underwriter or
underwriters to be used in connection with such registration shall be selected
by the Requisite Holders holding a majority of the Registrable Securities being
registered. The Company shall have the right to approve the selection of any
such underwriters, which approval shall not be unreasonably withheld.
(d) Underwriting Agreements. The Company shall (together with all
Holders selling Registrable Securities) enter into an underwriting agreement in
customary form with the managing underwriter selected for such underwriting by a
majority in interest of the Requisite Holders, and each Holder selling
Registrable Securities shall participate in such underwriting.
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(e) Withdrawal from Underwriting. If any Holder of Registrable
Securities disapproves of the terms of the underwriting, such person may elect
to withdraw therefrom by written notice to the Company, the managing underwriter
and the Requisite Holders. The Registrable Securities and/or other securities so
withdrawn shall also be withdrawn from registration, and such Registrable
Securities shall not be transferred in a public distribution prior to 120 days
after the effective date of such registration, or such other shorter period of
time as the underwriters may require. If by the withdrawal of such Registrable
Securities a greater number of Registrable Securities held by other Holders may
be included in such registration (up to the maximum of any limitation imposed by
the underwriters), then the Company shall offer to all Holders who have included
Registrable Securities in the registration the right to include additional
Registrable Securities in the same proportion and manner used in determining the
underwriter limitation in this Section 2.
(f) Inclusion as a Demand Registration. For purposes of this Section
2, a registration will not count as a Demand Registration until it has become
effective; provided, however, if the Requisite Holders withdraw their
Registrable Securities (whether before or after the effectiveness of such
registration), such demand will count as a Demand Registration for purposes of
this Section 2 unless the Requisite Holders pay all of the Registration Expenses
associated with such attempted registration.
Section 3. Piggyback Registration.
(a) Right to Include Registrable Securities. Whenever the Company
proposes to register the sale of any of its equity securities under the
Securities Act other than on Form S-4 or Form S-8 promulgated under the
Securities Act or any similar form then in effect, the Company shall give
written notice thereof to each Holder as soon as practicable (but in any event
at least 30 days before such filing), offering such Holder the opportunity to
register on such registration statement such number of Registrable Securities as
such Holder may request in writing, subject to the provisions of section 3(b),
not later than 20 days after the date of the giving of such notice (a "Piggyback
Registration"). Upon receipt by the Company of any such request, the Company
shall use reasonable efforts to, or in the case of an underwritten offering, to
cause the managing underwriter or underwriters to, include such Registrable
Securities in such registration statement (or in a separate registration
statement concurrently filed) and to cause such registration statement to become
effective with respect to such Registrable Securities in accordance with the
registration procedures set forth in Section 6 hereof. If the Company's
registration is to be effected pursuant to an underwritten offering, Registrable
Securities registered pursuant to this Section 3 shall be distributed in
accordance with such offering. Notwithstanding the foregoing, if at any time
after giving written notice of its intention to register its equity securities
and before the effectiveness of the registration statement filed in connection
with such registration, the Company determines for any reason either not to
effect such registration or to delay such registration, the Company may, at its
election, by delivery of written notice to each Holder (A) in the case of a
determination not to effect registration, relieve itself of its obligation to
register the Registrable Securities in connection with such registration or (B)
in the case of a determination to delay registration, delay the registration of
such Registrable Securities for the same period as the delay in the registration
of such other equity securities. Each Holder requesting inclusion in a
registration pursuant to this Section 3 may, at any time before the effective
date of the registration statement relating to such registration, revoke such
request by delivering written notice of such revocation to the Company (which
notice shall be effective only upon receipt by the Company); provided, however,
that if the Company, in consultation with its financial and legal advisors,
determines that such revocation would materially delay the registration or
otherwise require a recirculation of the prospectus contained in the
registration statement, then such holder shall have no right to so revoke its
request.
(b) Priority in Piggyback Registration. Notwithstanding the
foregoing, with respect to a Piggyback Registration that is underwritten and
with respect to which the managing
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underwriter or underwriters advise the Company of an Underwriters Maximum
Number, then the Company will so notify all Holders requesting inclusion in such
registration and will be required to include in such registration, to the extent
of the Underwriters Maximum Number: first, any equity securities that the
Company proposes to sell for its own account; second, the Registrable Securities
requested by Holders to be included in such registration allocated pro rata with
any other holders of equity securities having piggyback registration rights on
the basis of the number of securities requested to be included therein by each
such holder provided, however, in no event will the number of shares to be
included by the Holder be reduced to less than 25% of the total shares available
to be requested; and third, to the extent that the Underwriters Maximum Number
has not been filled by the application of the preceding clauses, any further
equity securities that the Company proposes to sell for its own account and/or
any equity securities requested to be included in such registration by other
holders of such securities, allocated as determined by the Company subject to
agreements between the Company and any such holders.
(c) Selection of Underwriters. If any Piggyback Registration is in
the form of an underwritten offering, the managing underwriter or underwriters
and any additional investment bankers and managers to be used in connection with
such registration shall be selected by the Company (subject to any separate
agreement with the holders on behalf of which a secondary underwritten offering
is being made).
(d) Underwriting Agreements. All Holders proposing to distribute
their securities through such underwriting shall (together with the Company and
the other holders distributing their securities through such underwriting) enter
into an underwriting agreement in customary form with the managing underwriter
selected for such underwriting by the Company, and each Holder selling
Registrable Securities shall participate in such underwriting.
(e) Withdrawal from Underwriting. If any Holder or other holder
disapproves of the terms of any such underwriting, he may elect to withdraw
therefrom by written notice to the Company and the managing underwriter. Any
securities excluded or withdrawn from such underwriting shall be withdrawn from
such registration, and shall not be transferred in a public distribution prior
to 180 days after the effective date of the registration statement relating
thereto, or such other shorter period of time as the underwriters may require.
Sales under Rule 144 shall not be considered a public distribution for purposes
of this paragraph.
(f) Right to Terminate Registration. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 3 prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in such registration.
Section 4. Market Standoff. If the Company at any time shall register the
offer and sale of shares of Common Stock to the public under the Securities Act
(including any registration pursuant to Sections 2 or 3), the Holders shall not
sell publicly, make any short sale of, grant any option for the purchase of, or
otherwise dispose publicly of, any Registrable Securities (other than those
shares of Common Stock included in such registration pursuant to Sections 2 or
3) without the prior written consent of the Company for a period designated by
the Company in writing to the Holders, which period shall begin not more than 10
days prior to the effectiveness of the registration statement pursuant to which
such public offering shall be made and shall not last more than 120 days after
the effective date of such registration statement. The Company shall obtain the
agreement of any person permitted to sell shares of stock in a registration to
be bound by and to comply with this Section 4 as if such person was a Holder
hereunder.
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Section 5. Expenses of Registration. All Registration Expenses incurred in
connection with the one Demand Registration and the Piggyback Registrations
shall be borne by the Company. All Selling Expenses relating to securities so
registered as well as all Registration Expenses relating to Demand Registrations
and Piggyback Registrations not required to be borne by the Company shall be
borne by the holders of such securities pro rata on the basis of the number of
shares of securities so registered on their behalf.
Section 6. Registration Procedures. If and whenever the Company is required
by the provisions of Section 2 or 3 hereof to use its best efforts to effect
promptly the registration of Registrable Securities, the Company shall:
(a) Prepare and file with the Commission a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become and remain effective as provided herein;
(b) 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 and
current and to comply with the provisions of the Securities Act with respect to
the sale of or other disposition of all Registrable Securities covered by such
registration statement, including such amendments and supplements as may be
necessary to reflect the intended method of disposition of the prospective
seller or sellers of such Registrable Securities, but for no longer than one
hundred twenty (120) days subsequent to the effective date of such registration;
provided, however, that (i) such period shall be extended for a period of time
equal to the period the Holder refrains from selling any securities included in
such registration at the request of an underwriter of Common Stock (or other
securities) of the Company; and (ii) in the case of any registration of
Registrable Securities on Form S-3 which are intended to be offered on a
continuous or delayed basis, such period shall be extended, if necessary, to
keep the registration statement effective until all such Registrable Securities
are sold, provided that Rule 415 permits an offering on a continuous or delayed
basis, and provided further that applicable rules under the Securities Act
governing the obligation to file a post-effective amendment permit, in lieu of
filing a post-effective amendment that (I) includes any prospectus required by
Section 10(a)(3) of the Securities Act or (II) reflects facts or events
representing a material or fundamental change in the information set forth in
the registration statement. the incorporation by reference of information
required to be included in (I) and (II) above to be contained in periodic
reports filed pursuant to Section 13 or 15(d) of the Exchange Act in the
registration statement;
(c) Furnish to each prospective seller of Registrable Securities
such number of copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other
documents, as such seller may reasonably request in order to facilitate the
public sale or other disposition of the Registrable Securities of such seller;
(d) Notify each seller of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes 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 or incomplete in the light of the
circumstances then existing, and at the request of any such seller, prepare and
furnish to such seller a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such shares, such prospectus shall not include an
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 not misleading or
incomplete in the light of the circumstances then existing;
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(e) Cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange or approved for quotation on
any inter-dealer quotation system on which similar securities issued by the
Company are then listed or quoted;
(f) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant to such registration statement and a CUSIP number
of all such Registrable Securities, in each case not later than the effective
date of such registration;
(g) Use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions as
any Holder may reasonably request and do any and all other acts and things which
may be reasonably necessary or advisable to enable any Holder to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
Holder; provided, however, that the Company will not be required to qualify
generally to do business, subject itself to general taxation or consent to
general service of process in any jurisdiction where it would not otherwise be
required to do so but for this paragraph (g);
(h) Use its best efforts to cause such Registrable Securities to be
registered with or approved by such other governmental agencies or authorities
as may be necessary by virtue of the business and operations of the Company to
enable each Holder holding such Registrable Securities to consummate the
disposition of such Registrable Securities;
(i) Subject to the execution of confidentiality agreements in form
and substance satisfactory to the Company, make available upon reasonable notice
and during normal business hours, for inspection by each Holder holding such
Registrable Securities, any underwriter participating in any disposition
pursuant to such registration statement and any attorney, accountant or other
agent retained by any Holder or underwriter (collectively, the "Inspectors"),
all pertinent financial and other records, pertinent corporate documents and
properties of the Company as shall be reasonably 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 Inspector in connection with such registration statement;
(j) Use its best efforts to obtain from its independent certified
public accountants "cold comfort" letters in customary form and at customary
times and covering matters of the type customarily covered by cold comfort
letters;
(k) Use its best efforts to obtain from its counsel an opinion or
opinions in customary form;
(1) Issue to any underwriter to which any Holder holding such
Registrable Securities may sell shares in such offering certificates evidencing
such Registrable Securities;
(m) Otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering the
period of at least twelve months, but not more than eighteen months, beginning
with the first month after the effective date of the Registration Statement,
which earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act;
(n) In connection with any offering pursuant to a registration
statement filed pursuant to Section 2 hereof, enter into an underwriting
agreement reasonably necessary to effect the sale of the Common Stock, provided
such underwriting agreement contains customary underwriting provisions; and
provided further that if the underwriter so requests, the underwriting agreement
will contain a customary contribution provision; and
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(o) Use its best efforts to take all other steps necessary to effect
the registration of such Registrable Securities contemplated hereby.
Section 7. Indemnification. In the event any of the Registrable Securities
are included in a registration statement under this Section:
(a) The Company will indemnify each Holder, each of such Holder's
officers and directors and partners (and each partner's officers, directors and
partners) and such Holder's separate legal counsel and independent accountants,
and each person controlling such Holder within the meaning of Section 15 of the
Securities Act, and each underwriter, if any, and each person who controls any
underwriter within the meaning of Section 15 of the Securities Act, against all
expenses, claims, losses, damages or liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained, on the
effective date thereof; in any registration statement, any prospectus contained
therein, or any amendment or supplement thereto. or based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein (in the case of a prospectus, in the
light of the circumstances under which they were made) not misleading, or any
violation by the Company of any rule or regulation promulgated under the
Securities Act applicable to the Company in connection with any such
registration, qualification or compliance, and the Company will reimburse each
such Holder, each of its officers, directors and partners (and each partner's
officers, directors and partners) and such Holders' separate legal counsel and
independent accountants and each person controlling such Holder, each such
underwriter and each person who controls any such underwriter, for any legal and
any other expenses reasonably incurred in connection with investigating,
preparing or defending any such claim, loss, damage, liability or action,
provided that the Company will not be liable in any such case to the extent that
any such claim, loss, damage, liability or expense arises out of or is based on
any untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Holder or underwriter and stated
to be specifically for use therein.
(b) Each Holder will, if Registrable Securities held by such Holder
are included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors and
officers and its legal counsel and independent accountants, each underwriter, if
any, of the Company's securities covered by such a registration statement, each
person who controls the Company or such underwriter within the meaning of
Section 15 of the Securities Act, and each other such Holder, each of its
officers and directors and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, against all claims, losses, damages
and liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained, on
the effective date thereof, in any such registration statement, any prospectus
contained therein, 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 the case of a prospectus, in the light of the circumstances under
which they were made) not misleading, and will reimburse the Company, such
Holders, such directors, officers, persons, underwriters or control persons for
any legal or any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action, in
each case to the extent, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement or prospectus in reliance upon and in conformity with
written information furnished to the Company by an instrument duly executed by
such Holder and stated to be specifically for use therein; provided, however,
that the obligations of any such Holder hereunder shall be limited to an amount
equal to the proceeds to each such Holder of Registrable Securities sold as
contemplated herein.
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(c) Each party entitled to indemnification under this Section (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Section 7 to the extent such failure is not
prejudicial. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
(d) If the indemnification provided for in this Section 7 is held by
a court of competent jurisdiction to be unavailable to an Indemnified Party with
respect to any loss, liability, claim, damage or expense referred to herein,
then the Indemnifying Party, in lieu of indemnifying the Indemnified Party,
shall contribute to the amount paid or payable by such Indemnified Party with
respect to such loss, liability, claim, damage or expense in the proportion that
is appropriate to reflect the relative fault of the Indemnifying Party and the
Indemnified Party in connection with the statements or omissions that resulted
in such loss, liability, claim, damage or expense, as well as any other relevant
equitable considerations. The relative fault of the Indemnifying Party and the
Indemnified Party shall he determined by reference to, among other things,
whether the untrue or alleged untrue statement of material fact or the omission
(or alleged omission) to state a material fact relates to information supplied
by the Indemnifying Party or by the Indemnified Party, and the parties, relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
Section 8. Information by Holder. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders and the distribution proposed by
such Holder or Holders as the Company may request in writing and as shall be
required in connection with any registration, qualification or compliance
referred to in this Section.
Section 9. Rule 144 Reporting. With a view to making available the benefits
of certain rules and regulations of the Commission which may at any time permit
the sale of the Restricted Securities to the public without registration, after
such time as a public market exists for the Common Stock of the Company, the
Company shall use its best efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, beginning 90 days
after (i) the Registration Date, or (ii) the Company issues an offering circular
meeting the requirements of Regulation A under the Securities Act;
(b) File with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Securities Exchange Act (at any time after it has become subject to such
reporting requirements); and
(c) Furnish to any Holder promptly upon request a written statement
as to its compliance with the reporting requirements of Rule 144 and the
Securities Act and the Securities Exchange Act, a copy of the most recent annual
or quarterly report of the Company and such other reports and documents of the
Company and other information in the possession of or reasonably
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obtainable by the Company as a Holder may reasonably request in availing itself
of any rule or regulation of the Commission allowing a Holder to sell any such
securities without registration.
Section 10. Assignment of Registration Rights. The rights to cause the
Company to register securities granted under this Agreement may be assigned to a
transferee or assignee in connection with the transfer assignment of shares of
Registrable Securities (i) to a Family Affiliate of the Holder, (ii) to
Affiliates of the Holder, (iii) to the Company, (iv) to Persons to whom the
Registrable Securities are transferred by reason of the Holder's death or
involuntarily by operation of law, (v) pursuant to a transfer approved by the
Company in its sole and absolute discretion, or (vi) to Persons to whom the
Registrable Securities are transferred in accordance with the transfer
restriction provisions, if any, in the Subscription Agreement, articles of
incorporation, bylaws, any Shareholder's Agreement among the Holders, the
Company and other holders of capital stock of the Company or other documents or
agreements of Holder; provided, however, that the Company is given written
notice thereof.
Section 11. Subsequent Purchasers. Without the affirmative vote of the
Holders of at least 66-2/3% of the Registrable Securities, the Company shall not
grant to any purchaser of the Company's securities any demand registration
rights, or any piggyback registration rights that, with respect to underwriters
cutbacks, would be inconsistent or in conflict with the provisions hereof.
Moreover, for so long as the holders of the Registrable Securities are entitled
to exercise the registration rights described herein, they shall receive the
benefit of any and all registration rights granted by the Company to any other
person who is as of the date of this Agreement securities holder in the Company
(or any affiliate of such existing securities holder) which are more favorable
than the registration rights granted to the Investor herein.
Section 12. Term. This Agreement and all rights granted to the Investor
hereunder shall expire on the seventh anniversary of the date on which the first
registration statement by the Company for an offering of its securities to the
general public is declared effective by the Commission.
Section 13. Miscellaneous.
(a) Notices. Any notice or other communications required or
permitted hereunder shall be deemed to be sufficient if contained in a written
instrument delivered in person or by nationally-recognized overnight courier or
duly sent by First Class certified mail, postage prepaid, or by telecopy
addressed to such party at the address or telecopy number set forth below or
such other address or telecopy number as may hereafter be designated in writing
by the addressee to the address or listing all parties:
If to the Company: South Texas Drilling & Exploration, Inc.
0000 Xxxxxxxx, Xxxx. 0
Xxx Xxxxxxx, Xxxxx 00000
ATTN: Wm. Xxxxx Xxxxx
If to the Investor: Wedge Energy Services, L.L.C.
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
ATTN: Xxxxxxx X. Xxxxx
(b) Entire Agreement: Amendments. This Agreement represents the
entire agreement of the parties hereto, and supersedes any other agreements
among the parties with respect to the subject matter hereof. The terms and
provisions of this Agreement may not be modified or amended, or any of the
provisions hereof waived, except pursuant to the written consent of the Company
and holders of a majority of the Registrable Securities.
11
(c) Assignment. This Agreement may not be assigned by any party
without the prior written consent of the other parties, except by a Holder in
accordance with Section 10 above. Any assignment which contravenes this Section
shall be void ab initio.
(d) Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
(e) Headings: Interpretations. The headings of the various sections
of this Agreement have been inserted for convenience of reference only and shall
not be deemed to be a part of this Agreement. Whenever the context requires,
references in this Agreement to the singular number shall include the plural
and, likewise, the plural number shall include the singular, and words denoting
gender shall include the masculine, feminine and neuter.
(f) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas without regard to the
principles of conflicts of law thereof.
(g) Separability. In case any one or more of the provisions
contained in this Agreement or any application thereof shall be invalid, illegal
or unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions contained herein and other applications thereof shall
not in any way be affected or impaired thereby.
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be executed the day and date above written.
SOUTH TEXAS DRILLING & EXPLORATION, INC.
By: /s/ WM. XXXXX XXXXX
------------------------
Name: Wm. Xxxxx Xxxxx
----------------------
Title: President
---------------------
WEDGE ENERGY SERVICES, L.L.C.
By: /s/ XXXXXXX X. XXXXX
------------------------
Name: Xxxxxxx X. Xxxxx
----------------------
Title: President
---------------------
