EXHIBIT 10.5
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and
entered into as of ____________________, 2014, between T-XXX Oil, Inc., a
Colorado corporation (the "Company"), and each of the one or more Exchangors
signatory hereto (each such Exchangor, a "Exchangor" and, collectively, the
"Exchangors").
This Agreement is made pursuant to the Exchange Agreement, dated
__________, between the Company and each Exchangor (the "Exchange Agreement").
The Company and each Exchangor hereby agrees as follows:
1. DEFINITIONS
Capitalized terms used and not otherwise defined herein that are
defined in the Exchange Agreement or the agreements delivered pursuant thereto
shall have the meanings given such terms in the Exchange Agreement or such
agreements. As used in this Agreement, the following terms shall have the
following meanings:
"Advice" shall have the meaning set forth in Section 6(d).
"Effectiveness Date" means, with respect to the Demand Registration
Statement required to be filed hereunder, the 730th calendar day following the
date hereof (or, in the event of a "full review" by the Commission, the 827th
calendar day following the date hereof) and with respect to any additional
Registration Statements which may be required pursuant to Section 3(c), the 60th
calendar day following the date on which an additional Registration Statement is
required to be filed hereunder; provided, however, that in the event the Company
is notified by the Commission that one or more of the above Registration
Statements will not be reviewed or is no longer subject to further review and
comments, the Effectiveness Date as to such Registration Statement shall be the
fifth Trading Day following the date on which the Company is so notified if such
date precedes the dates otherwise required above.
"Effectiveness Period" shall have the meaning set forth in Section
2(a).
"Event" shall have the meaning set forth in Section 2(b).
"Event Date" shall have the meaning set forth in Section 2(b).
"Filing Date" means, with respect to the Registration Statement
required hereunder, the 180th calendar day following the date hereof and, with
respect to any Piggyback Registration Statements which may be required pursuant
to Section 3(c), the earliest practical date on which the Company is permitted
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by SEC Guidance to file such Registration Statement related to the Registrable
Securities.
"Holder" or "Holders" means the holder or holders, as the case may be,
from time to time of Registrable Securities.
"Indemnified Party" shall have the meaning set forth in Section 5(c).
"Indemnifying Party" shall have the meaning set forth in Section 5(c).
"Registration Statement" means the any Registration Statement filed
pursuant to this Agreement.
"Shares" means a number of Registrable Securities held by Exchangors.
"Losses" shall have the meaning set forth in Section 5(a).
"Plan of Distribution" shall have the meaning set forth in Section
2(a).
"Prospectus" means the prospectus included in a Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated by the Commission pursuant to
the Securities Act), as amended or supplemented by any prospectus supplement,
with respect to the terms of the offering of any portion of the Registrable
Securities covered by a Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.
"Registerable Securities" means all Exchange Shares issued upon
exchange under the Agreement and Plan of Merger.
"Registration Statement" means the registration statement required to
be filed hereunder and any additional registration statements contemplated by
Section 3(c), including (in each case) the Prospectus, amendments and
supplements to such registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference or deemed to be incorporated by reference in such registration
statement.
"Rule 415" means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended or interpreted from time to time, or
any similar rule or regulation hereafter adopted by the Commission having
substantially the same purpose and effect as such Rule.
"Rule 424" means Rule 424 promulgated by the Commission pursuant to the
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Securities Act, as such Rule may be amended or interpreted from time to time, or
any similar rule or regulation hereafter adopted by the Commission having
substantially the same purpose and effect as such Rule.
"Selling Shareholder Questionnaire" shall have the meaning set forth in
Section 3(a).
"SEC Guidance" means (i) any publicly-available written or oral
guidance, comments, requirements or requests of the Commission staff and (ii)
the Securities Act.
2. REGISTRATION
(a) On or prior each Filing Date, the Company shall prepare and file
with the Commission a Registration Statement covering the resale of all or such
maximum portion of the Registrable Securities as permitted by SEC Guidance
(provided that, the Company shall use diligent efforts to advocate with the
Commission for the registration of all of the Registrable Securities in
accordance with the SEC Guidance, including without limitation, the Manual of
Publicly Available Telephone Interpretations D.29) that are not then registered
on an effective Registration Statement for an offering to be made on a
continuous basis pursuant to Rule 415. The Registration Statement shall be on
Form S-1 and shall contain (unless otherwise directed by at least an 85%
majority in interest of the Holders) substantially the "Plan of Distribution"
attached hereto as Annex A. Subject to the terms of this Agreement, the Company
shall use its best efforts to cause a Registration Statement to be declared
effective under the Securities Act as promptly as possible after the filing
thereof, but in any event prior to the applicable Effectiveness Date, and shall
use its best efforts to keep such Registration Statement continuously effective
under the Securities Act until all Registrable Securities covered by such
Registration Statement have been sold, or may be sold without volume
restrictions pursuant to Rule 144(b), as determined by the counsel to the
Company pursuant to a written opinion letter to such effect, addressed and
acceptable to the Transfer Agent and the affected Holders (the "Effectiveness
Period"). The Company shall telephonically request effectiveness of a
Registration Statement as of 5:00 p.m. New York City time on a Trading Day. The
Company shall immediately notify the Holders via facsimile or by e-mail of the
effectiveness of a Registration Statement on the same Trading Day that the
Company telephonically confirms effectiveness with the Commission, which shall
be the date requested for effectiveness of such Registration Statement. The
Company shall, by 9:30 am. New York City time on the Trading Day after the
effective date of such Registration Statement, file a final Prospectus with the
Commission as required by Rule 424. Failure to so notify the Holder within 1
Trading Day of such notification of effectiveness or failure to file a final
Prospectus as foresaid shall be deemed an Event under Section 2(b).
(b) If: (i) the Registration Statement is not filed on or prior to its
Filing Date (if the Company files the Registration Statement without affording
the Holders the opportunity to review and comment on the same as required by
Section 3(a) herein, the Company shall be deemed to have not satisfied this
clause (i)), or (ii) the Company fails to file with the Commission a request for
acceleration of a Registration Statement in accordance with Rule 461 promulgated
by the Commission pursuant to the Securities Act, within five Trading Days of
the date that the Company is notified (orally or in writing, whichever is
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earlier) by the Commission that such Registration Statement will not be
"reviewed" or will not be subject to further review, or (iii) prior to the
effective date of a Registration Statement, the Company fails to file a
pre-effective amendment and otherwise respond in writing to comments made by the
Commission in respect of such Registration Statement within 10 calendar days
after the receipt of comments by or notice from the Commission that such
amendment is required in order for such Registration Statement to be declared
effective, or (iv) as to, in the aggregate among all Holders on a pro-rata basis
based on their Exchange of the Securities pursuant to the Exchange Agreement, a
Registration Statement registering for resale all of the Shares is not declared
effective by the Commission by the Effectiveness Date of the Initial
Registration Statement, or (v) all of the Registrable Securities are not
registered for resale pursuant to one or more effective Registration Statements
on or before Sept 30, 2015, or (vi) after the effective date of a Registration
Statement, such Registration Statement ceases for any reason to remain
continuously effective as to all Registrable Securities included in such
Registration Statement, or the Holders are otherwise not permitted to utilize
the Prospectus therein to resell such Registrable Securities, for more than 10
consecutive calendar days or more than an aggregate of 15 calendar days (which
need not be consecutive calendar days) during any 12-month period (any such
failure or breach being referred to as an "Event," and for purposes of clause
(i), (iv) and (v) the date on which such Event occurs, and for purpose of clause
(ii) the date on which such five Trading Day period is exceeded, and for purpose
of clause (iii) the date which such 10 calendar day period is exceeded, and for
purpose of clause (vi) the date on which such 10 or 15 calendar day period, as
applicable, is exceeded being referred to as "Event Date"), then, in addition to
any other rights the Holders may have hereunder or under applicable law, on each
such Event Date and on each monthly anniversary of each such Event Date (if the
applicable Event shall not have been cured by such date) until the applicable
Event is cured, the Company shall pay to each Holder an amount in cash, as
partial liquidated damages and not as a penalty, equal to 2.00% of the aggregate
Exchange price paid by such Holder pursuant to the Exchange Agreement for any
unregistered Registrable Securities then held by such Holder. The parties agree
that the Company shall not be liable for liquidated damages under this Agreement
with respect to any Warrants or Warrant Shares. If the Company fails to pay any
partial liquidated damages pursuant to this Section in full within seven days
after the date payable, the Company will pay interest thereon at a rate of 13%
per annum (or such lesser maximum amount that is permitted to be paid by
applicable law) to the Holder, accruing daily from the date such partial
liquidated damages are due until such amounts, plus all such interest thereon,
are paid in full. The partial liquidated damages pursuant to the terms hereof
shall apply on a daily pro rata basis for any portion of a month prior to the
cure of an Event.
3. REGISTRATION PROCEDURES.
In connection with the Company's registration obligations hereunder,
the Company shall:
(a) Not less than five (5) Trading Days prior to the filing of each
Registration Statement and not less than one (1) Trading Day prior to the filing
of any related Prospectus or any amendment or supplement thereto (including any
document that would be incorporated or deemed to be incorporated therein by
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reference), the Company shall (i) furnish to each Holder copies of all such
documents proposed to be filed, which documents (other than those incorporated
or deemed to be incorporated by reference) will be subject to the review of such
Holders, and (ii) cause its officers and directors, counsel and independent
certified public accountants to respond to such inquiries as shall be necessary,
in the reasonable opinion of respective counsel to each Holder, to conduct a
reasonable investigation within the meaning of the Securities Act. The Company
shall not file a Registration Statement or any such Prospectus or any amendments
or supplements thereto to which the Holders of a majority of the Registrable
Securities shall reasonably object in good faith, provided that, the Company is
notified of such objection in writing no later than five (5) Trading Days after
the Holders have been so furnished copies of a Registration Statement or one (1)
Trading Day after the Holders have been so furnished copies of any related
Prospectus or amendments or supplements thereto. Each Holder agrees to furnish
to the Company a completed questionnaire in the form attached to this Agreement
as Annex B (a "Selling Shareholder Questionnaire") not less than two (2) Trading
Days prior to the Filing Date or by the end of the fourth (4th) Trading Day
following the date on which such Holder receives draft materials in accordance
with this Section.
(b) (i) Prepare and file with the Commission such amendments, including
post-effective amendments, to a Registration Statement and the Prospectus used
in connection therewith as may be necessary to keep a Registration Statement
continuously effective as to the applicable Registrable Securities for the
Effectiveness Period and prepare and file with the Commission such additional
Registration Statements in order to register for resale under the Securities Act
all of the Registrable Securities; (ii) cause the related Prospectus to be
amended or supplemented by any required Prospectus supplement (subject to the
terms of this Agreement), and, as so supplemented or amended, to be filed
pursuant to Rule 424; (iii) respond as promptly as reasonably possible to any
comments received from the Commission with respect to a Registration Statement
or any amendment thereto and provide as promptly as reasonably possible to the
Holders true and complete copies of all correspondence from and to the
Commission relating to a Registration Statement (provided that, the Company may
excise any information contained therein which would constitute material
non-public information as to any Holder which has not executed a confidentiality
agreement with the Company); and (iv) comply in all material respects with the
provisions of the Securities Act and the Exchange Act with respect to the
disposition of all Registrable Securities covered by a Registration Statement
during the applicable period in accordance (subject to the terms of this
Agreement) with the intended methods of disposition by the Holders thereof set
forth in such Registration Statement as so amended or in such Prospectus as so
supplemented.
(c) The Exchangor shall have piggyback registration rights with respect
to the Registrable Securities subject to the conditions set forth below. If the
Company participates (whether voluntarily or by reason of an obligation to a
third party) in the registration of any shares of the Company's stock, the
Company shall give written notice thereof to the Holder and the Holder shall
have the right, exercisable within ten (10) Trading Days after receipt of such
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notice, to demand inclusion of all or a portion of the Holder's Registrable
Securities in such registration statement (a "Subsequent Registration
Statement"), without any cutbacks. If the Holder exercises such election, the
Registrable Securities so designated shall be included in the registration
statement (without any holdbacks) at no cost or expense to the Holder (other
than any commissions, if any, relating to the sale of Holder's shares). Each
Holder's rights under this Section 4(g)(i) shall expire at such time as such
Holder can sell all of such Holder's remaining Registrable Securities under Rule
144 (as defined below) without volume or other restrictions or limit.
(d) Notify the Holders of Registrable Securities to be sold (which
notice shall, pursuant to clauses (iii) through (vi) hereof, be accompanied by
an instruction to suspend the use of the Prospectus until the requisite changes
have been made) as promptly as reasonably possible (and, in the case of (i)(A)
below, not less than one Trading Day prior to such filing) and (if requested by
any such Person) confirm such notice in writing no later than one Trading Day
following the day (i)(A) when a Prospectus or any Prospectus supplement or
post-effective amendment to a Registration Statement is proposed to be filed;
(B) when the Commission notifies the Company whether there will be a "review" of
such Registration Statement and whenever the Commission comments in writing on
such Registration Statement; and (C) acknowledgment respect to a Registration
Statement or any post-effective amendment, when the same has become effective;
(ii) of any request by the Commission or any other federal or state governmental
authority for amendments or supplements to a Registration Statement or
Prospectus or for additional information; (iii) of the issuance by the
Commission or any other federal or state governmental authority of any stop
order suspending the effectiveness of a Registration Statement covering any or
all of the Registrable Securities or the initiation of any Proceedings for that
purpose; (iv) 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; (v) of the occurrence of any
event or passage of time that makes the financial statements included in a
Registration Statement ineligible for inclusion therein or any statement made in
a Registration Statement or Prospectus or any document incorporated or deemed to
be incorporated therein by reference untrue in any material respect or that
requires any revisions to a Registration Statement, Prospectus or other
documents so that, in the case of a Registration Statement or the Prospectus, as
the case may be, it will not contain any 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, in light of the circumstances under which they were
made, not misleading; and (vi) of the occurrence or existence of any pending
corporate development with respect to the Company that the Company believes may
be material and that, in the determination of the Company, makes it not in the
best interest of the Company to allow continued availability of a Registration
Statement or Prospectus, provided that, any and all of such information shall
remain confidential to each Holder until such information otherwise becomes
public, unless disclosure by a Holder is required by 1aw; provided, further,
that notwithstanding each Holder's agreement to keep such information
confidential, each such Holder makes no acknowledgment that any such information
is material, non-public information.
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(e) Use its best efforts to avoid the issuance of, or, if issued,
obtain the withdrawal of (i) any order stopping or suspending the effectiveness
of a Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.
(f) Furnish to each Holder, without charge, at least one conformed copy
of each such Registration Statement and each amendment thereto, including
financial statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference to the extent requested by such Person, and
all exhibits to the extent requested by such Person (including those previously
furnished or incorporated by reference) promptly after the filing of such
documents with the Commission; provided, that any such item which is available
on the XXXXX system need not be furnished in physical form.
(g) Subject to the terms of this Agreement, the Company hereby consents
to the use of such Prospectus and each amendment or supplement thereto by each
of the selling Holders in connection with the offering and sale of the
Registrable Securities covered by such Prospectus and any amendment or
supplement thereto, except after the giving of any notice pursuant to Section
3(d).
(h) The Company shall cooperate with any broker-dealer through which a
Holder proposes to resell its Registrable Securities in effecting a filing with
the FINRA Corporate Financing Department pursuant to NASD Rule 2710, as
requested by any such Holder, and the Company shall pay the filing fee required
by such filing within two (2) Business Days of request therefor.
(i) Prior to any resale of Registrable Securities by a Holder, use its
commercially reasonable efforts to register or qualify or cooperate with the
selling Holders in connection with the registration or qualification (or
exemption from the Registration or qualification) of such Registrable Securities
for the resale by the Holder under the securities or Blue Sky laws of such
jurisdictions within the United States as any Holder reasonably requests in
writing, to keep each registration or qualification (or exemption therefrom)
effective during the Effectiveness Period and to do any and all other acts or
things reasonably necessary to enable the disposition in such jurisdictions of
the Registrable Securities covered by each Registration Statement; provided,
that, the Company shall not be required to qualify generally to do business in
any jurisdiction where it is not then so qualified, subject the Company to any
material tax in any such jurisdiction where it is not then so subject or file a
general consent to service of process in any such jurisdiction.
(j) If requested by a Holder, cooperate with such Holders to facilitate
the timely preparation and delivery of certificates representing Registrable
Securities to be delivered to a transferee pursuant to a Registration Statement,
which certificates shall be free, to the extent permitted by the Exchange
Agreement, of all restrictive legends, and to enable such Registrable Securities
to be in such denominations and registered in such names as any such Holder may
request.
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(k) Upon the occurrence of any event contemplated by Section 3(d). as
promptly as reasonably possible under the circumstances taking into account the
Company's good faith assessment of any adverse consequences to the Company and
its stockholders of the premature disclosure of such event, prepare a supplement
or amendment, including a post-effective amendment, to a Registration Statement
or a supplement to the related Prospectus or any document incorporated or deemed
to be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, neither a Registration Statement nor such
Prospectus will contain 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, in light of the circumstances under which they were made,
not misleading. If the Company notifies the Holders in accordance with clauses
(iii) through (vi) of Section 3(d) above to suspend the use of any Prospectus
until the requisite changes to such Prospectus have been made, then the Holders
shall suspend use of such Prospectus. The Company will use its best efforts to
ensure that the use of the Prospectus may be resumed as promptly as is
practicable. The Company shall be entitled to exercise its right under this
Section 3(k) to suspend the availability of a Registration Statement and
Prospectus, subject to the payment of partial liquidated damages otherwise
required pursuant to Section 2(b), for a period not to exceed 60 calendar days
(which need not be consecutive days) in any 12 month period.
(l) Comply with all applicable rules and regulations of the Commission.
(m) The Company may require each selling Holder to furnish to the
Company a certified statement as to the number of shares of Common Stock
beneficially owned by such Holder and, if required by the Commission, the
natural persons thereof that have voting and dispositive control over the
shares. During any periods that the Company is unable to meet its obligations
hereunder with respect to the registration of the Registrable Securities solely
because any Holder fails to furnish such information within three Trading Days
of the Company's request, any liquidated damages that are accruing at such time
as to such Holder only shall be tolled and any Event that may otherwise occur
solely because of such delay shall be suspended as to such Holder only, until
such information is delivered to the Company.
4. REGISTRATION EXPENSES. All fees and expenses incident to the performance of
or compliance with this Agreement by the Company shall be borne by the Company
whether or not any Registrable Securities are sold pursuant to a Registration
Statement. The fees and expenses referred to in the foregoing sentence shall
include, without limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses of the Company's counsel and auditors) (A)
with respect to filings made with the Commission, (B) with respect to filings
required to be made with any Trading Market on which the Common Stock is then
listed for trading, (C) in compliance with applicable state securities or Blue
Sky laws reasonably agreed to by the Company in writing (including, without
limitation, fees and disbursements of counsel for the Company in connection with
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Blue Sky qualifications or exemptions of the Registrable Securities) and (D) if
not previously paid by the Company in connection with an Issuer Filing. with
respect to any filing that may be required to be made by any broker through
which a Holder intends to make sales of Registrable Securities with the FINRA
pursuant to NASD Rule 2710, so long as the broker is receiving no more than a
customary brokerage commission in connection with such sale. (ii) printing
expenses (including, without limitation, expenses of printing certificates for
Registrable Securities), (iii) messenger, telephone and delivery expenses, (iv)
fees and disbursements of counsel for the Company, (v) Securities Act liability
insurance, if the Company so desires such insurance, and (vi) fees and expenses
of all other Persons retained by the Company in connection with the consummation
of the transactions contemplated by this Agreement. In addition, the Company
shall be responsible for all of its internal expenses incurred in connection
with the consummation of the transactions contemplated by this Agreement
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual
audit and the fees and expenses incurred in connection with the listing of the
Registrable Securities on any securities exchange as required hereunder. In no
event shall the Company be responsible for any broker or similar commissions of
any Holder or, except to the extent provided for in the Transaction Documents,
any legal fees or other costs of the Holders.
5. INDEMNIFICATION.
(a) Indemnification by the Company. The Company shall, notwithstanding
any termination of this Agreement, indemnify and hold harmless each Holder, the
officers, directors, members, partners. agents, brokers (including brokers who
offer and sell Registrable Securities as principal as a result of a pledge or
any failure to perform under a margin call of Common Stock), investment advisors
and employees (and any other Persons with a functionally equivalent role of a
Person holding such titles, notwithstanding a lack of' such title or any other
title) of each of them, each Person who controls any such Holder (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
and the officers, directors, members, shareholders, partners, agents and
employees (and any other Persons with a functionally equivalent role of a Person
holding such titles, notwithstanding a lack of such title or any other title) of
each such controlling Person, to the fullest extent permitted by applicable law,
from and against any and all losses, claims, damages, liabilities, costs
(including, without limitation, reasonable attorneys' fees) and expenses
(collectively, "Losses"), as incurred, arising out of or relating to (1) any
untrue or alleged untrue statement of a material fact contained in a
Registration Statement, any Prospectus or any form of prospectus or in any
amendment or supplement thereto or in any preliminary prospectus, or arising out
of or relating to any omission or alleged omission of a material fact required
to be stated therein or necessary to make the statements therein (in the case of
any Prospectus or supplement thereto, in light of the circumstances under which
they were made) not misleading or (2) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act or any state securities law, or
any rule or regulation thereunder, in connection with the performance of its
obligations under this Agreement, except to the extent, but only to the extent,
that (i) such untrue statements or omissions are based solely upon information
regarding such Holder furnished in writing to the Company by such Holder
expressly for use therein, or to the extent that such information relates to
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such Holder or such Holder's proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing by such Holder
expressly for use in a Registration Statement, such Prospectus or in any
amendment or supplement thereto (it being understood that the Holder has
approved Annex A hereto for this purpose) or (ii) in the case of an occurrence
of an event of the type specified in Section 3(d)(iii)-(vi), the use by such
Holder of an outdated or defective Prospectus after the Company has notified
such Holder in writing that the Prospectus is outdated or defective and prior to
the receipt by such Holder of the Advice contemplated in Section 6(d). The
Company shall notify the Holders promptly of the institution, threat or
assertion of any Proceeding arising from or in connection with the transactions
contemplated by this Agreement of which the Company is aware.
(b) Indemnification by Holders. Each Holder shall, severally and not
jointly, indemnify and hold harmless the Company, its directors, officers,
agents and employees, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, agents or employees of such controlling Persons, to the
fullest extent permitted by applicable law, from and against all Losses, as
incurred, to the extent arising out of or based solely upon: (x) such Holder's
failure to comply with the prospectus delivery requirements of the Securities
Act or (y) any untrue or alleged untrue statement of a material fact contained
in any Registration Statement, any Prospectus, or in any amendment or supplement
thereto or in any preliminary prospectus, or arising out of or relating to any
omission or alleged omission of a material fact required to he stated therein or
necessary to make the statements therein not misleading (i) to the extent, but
only to the extent, that such untrue statement or omission is contained in any
information so furnished in writing by such Holder to the Company specifically
for inclusion in such Registration Statement or such Prospectus or (ii) to the
extent that such information relates to such Holder's proposed method of
distribution of Registrable Securities and was reviewed and expressly approved
in writing by such Holder expressly for use in a Registration Statement (it
being understood that the Holder has approved Annex A hereto for this purpose),
such Prospectus or in any amendment or supplement thereto or (ii) in the case of
an occurrence of an event of the type specified in Section 3(d)(iii)-(vi), the
use by such Holder of an outdated or defective Prospectus after the Company has
notified such Holder in writing that the Prospectus is outdated or defective and
prior to the receipt by such Holder of the Advice contemplated in Section 6(d).
In no event shall the liability of any selling Holder hereunder be greater in
amount than the dollar amount of the net proceeds received by such Holder upon
the sale of the Registrable Securities giving rise to such indemnification
obligation.
(c) Conduct of Indemnification Proceedings. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity hereunder (an
"Indemnified Party"), such Indemnified Party shall promptly notify the Person
from whom indemnity is sought (the "Indemnifying Party") in writing, and the
Indemnifying Party shall have the right to assume the defense thereof~ including
the employment of counsel reasonably satisfactory to the Indemnified Party and
the payment of all fees and expenses incurred in connection with defense
thereof; provided, that, the failure of any Indemnified Party to give such
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notice shall not relieve the Indemnifying Party of its obligations or
liabilities pursuant to this Agreement. except (and only) to the extent that it
shall be finally determined by a court of competent jurisdiction (which
determination is not subject to appeal or further review) that such failure
shall have prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel in
any such Proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party or
Parties unless: (1) the Indemnifying Party has agreed in writing to pay such
fees and expenses; (2) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (3) the named
parties to any such Proceeding (including any impleaded parties) include both
such Indemnified Party and the Indemnifying Party, and counsel to the
Indemnified Party shall reasonably believe that a material conflict of interest
is likely to exist if the same counsel were to represent such Indemnified Party
and the Indemnifying Party (in which case, if such Indemnified Party notifies
the Indemnifying Party in writing that it elects to employ separate counsel at
the expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and the reasonable fees and expenses of no
more than one separate counsel shall be at the expense of the Indemnifying
Party). The Indemnifying Party shall not be liable for any settlement of any
such Proceeding effected without its written consent, which consent shall not be
unreasonably withheld or delayed. No Indemnifying Party shall, without the prior
written consent of the Indemnified Party, effect any settlement of any pending
Proceeding in respect of which any Indemnified Party is a party, unless such
settlement includes an unconditional release of such Indemnified Party from all
liability on claims that are the subject matter of such Proceeding.
Subject to the terms of this Agreement, all reasonable fees and
expenses of the Indemnified Party (including reasonable fees and expenses to the
extent incurred in connection with investigating or preparing to defend such
Proceeding in a manner not inconsistent with this Section) shall be paid to the
Indemnified Party, as incurred, within ten Trading Days of written notice
thereof to the Indemnifying Party; provided, that, the Indemnified Party shall
promptly reimburse the Indemnifying Party for that portion of such fees and
expenses applicable to such actions for which such Indemnified Party is
judicially determined not to be entitled to indemnification hereunder.
(d) Contribution. If the indemnification under Section 5(a) or 5(b) is
unavailable to an Indemnified Party or insufficient to hold an Indemnified Party
harmless for any Losses, then each Indemnifying Party shall contribute to the
amount paid or payable by such Indemnified Party, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
-11-
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in this Agreement, any reasonable attorneys' or
other fees or expenses incurred by such party in connection with any Proceeding
to the extent such party would have been indemnified for such fees or expenses
if the indemnification provided for in this Section was available to such party
in accordance with its terms.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 5(d), no Holder shall be required
to contribute, in the aggregate, any amount in excess of the amount by which the
net proceeds actually received by such Holder from the sale of the Registrable
Securities subject to the Proceeding exceeds the amount of any damages that such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission.
The indemnity and contribution agreements contained in this Section are
in addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.
6. MISCELLANEOUS.
(a) Remedies. In the event of a breach by the Company or by a Holder of
any of their respective obligations under this Agreement, each Holder or the
Company, as the case may be. in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages,
shall be entitled to specific performance of its rights under this Agreement.
The Company and each Holder agree that monetary damages would not provide
adequate compensation for any losses incurred by reason of a breach by it of any
of the provisions of this Agreement and hereby further agrees that, in the event
of any action for specific performance in respect of such breach, it shall not
assert or shall waive the defense that a remedy at law would be adequate.
(b) No Piggyback on Registrations; Prohibition on Filing Other
Registration Statements. Except as set forth on Schedule 6(b) attached hereto,
neither the Company nor any of its security holders (other than the Holders in
such capacity pursuant hereto) may include securities of the Company in any
Registration Statements other than the Registrable Securities. The Company shall
not file any other registration statements until all Registrable Securities are
registered pursuant to a Registration Statement that is declared effective by
the Commission, provided that this Section 6(b) shall not prohibit the Company
from filing amendments to registration statements filed prior to the date of
this Agreement.
(c) Compliance. Each Holder covenants and agrees that it will comply
with the prospectus delivery requirements of the Securities Act as applicable to
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it in connection with sales of Rcgistrable Securities pursuant to a Registration
Statement.
(d) Discontinued Disposition. By its acquisition of Registrable
Securities, each Holder agrees that, upon receipt of a notice from the Company
of the occurrence of any event of the kind described in Section 3(d)(iii)
through (vi). such Holder will forthwith discontinue disposition of such
Registrable Securities under a Registration Statement until it is advised in
writing (the "Advice") by the Company that the use of the applicable Prospectus
(as it may have been supplemented or amended) may be resumed. The Company will
use its best efforts to ensure that the use of the Prospectus may be resumed as
promptly as is practicable. The Company agrees and acknowledges that any periods
during which the Holder is required to discontinue the disposition of the
Registrable Securities hereunder shall be subject to the provisions of Section
2(b).
(e) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures fi'om the provisions hereof may not be
given, unless the same shall be in writing and signed by the Company and the
Holders of a majority of the then outstanding Registrable Securities (including,
for this purpose any Registrable Securities issuable upon exercise or conversion
of any Security). If a Registration Statement does not register all of the
Registrable Securities pursuant to a waiver or amendment done in compliance with
the previous sentence, then the number of Registrable Securities to be
registered for each Holder shall be reduced pro rata among all Holders and each
Holder shall have the right to designate which of its Regisirable Securities
shall be omitted from such Registration Statement. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of a Holder or some Holders
and that does not directly or indirectly affect the rights of other Holders may
be given by such Holder or Holders of all of the Registrable Securities to which
such waiver or consent relates; provided, however, that the provisions of this
sentence may not be amended, modified, or supplemented except in accordance with
the provisions of the first sentence of this Section 6(f).
(f) Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be delivered as set forth
in the Exchange Agreement.
(g) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and permitted assigns of each of the
parties and shall inure to the benefit of each Holder. The Company may not
assign (except by merger) its rights or obligations hereunder without the prior
written consent of all of the Holders of the then outstanding Registrable
Securities. Each Holder may assign their respective rights hereunder in the
manner and to the Persons as permitted under the Exchange Agreement.
(h) No Inconsistent Agreements. Neither the Company nor any of its
Subsidiaries has entered, as of the date hereof, no!' shall the Company or any
of its Subsidiaries, on or after the date of this Agreement, enter into any
agreement with respect to its securities, that would have the effect of
impairing the rights granted to the Holders in this Agreement or otherwise
-13-
conflicts with the provisions hereof. Except as set forth on Schedule 6(i),
neither the Company nor any of its Subsidiaries has previously entered into any
agreement granting any registration rights with respect to any of its securities
to any Person that have not been satisfied in full.
(i) Execution and Counterparts. This Agreement may be executed in two
or more counterparts, all of which when taken together shall he considered one
and the same agreement and shall become effective when counterparts have been
signed by each party and delivered to the other party, it being understood that
both parties need not sign the same counterpart. In the event that any signature
is delivered by facsimile transmission or by e-mail delivery of a ."pdf' Format
data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile or ".pdf' signature page were an original
thereof
(j) Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be determined in
accordance with the provisions of the Exchange Agreement.
(k) Cumulative Remedies. The remedies provided herein are cumulative
and not exclusive of any other remedies provided by law.
(l) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their commercially reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
(m) Headings. The headings in this Agreement are for convenience only,
do not constitute a part of the Agreement and shall not be deemed to limit or
affect any of the provisions hereof.
(n) Independent Nature of Holders' Obligations and Rights. The
obligations of each Holder hereunder are several and not joint with the
obligations of any other Holder hereunder, and no Holder shall be responsible in
any way for the performance of the obligations of any other Holder hereunder.
Nothing contained herein or in any other agreement or document delivered at any
closing, and no action taken by any Holder pursuant hereto or thereto, shall be
deemed to constitute the Holders as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the Holders
are in any way acting in concert with respect to such obligations or the
transactions contemplated by this Agreement. Each Holder shall be entitled to
protect and enforce its rights, including without limitation the rights arising
out of this Agreement, and it shall not be necessary for any other Holder to be
joined as an additional party in any proceeding for such purpose.
-14-
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
T-XXX OIL, INC.
By:
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Name:
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Title: President & CEO
EXCHANGORS
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-15-
ANNEX A
PLAN OF DISTRIBUTION
Each Selling Stockholder (the "Selling Stockholders") of the common
stock and any of their pledgees, assignees and successors-in-interest may, from
time to time, sell any or all of their shares of common stock on the [principal
Trading Market] or any other stock exchange, market or trading facility on which
the shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. A Selling Stockholder may use any one or more of the
following methods when selling shares:
o ordinary brokerage transactions and transactions in which the
broker-dealer solicits Exchangors;
o block trades in which the broker-dealer will attempt to sell
the shares as agent but may position and resell a portion of
the block as principal to facilitate the transaction;
o Exchanges by a broker-dealer as principal and resale by the
broker-dealer for its account;
o an exchange distribution in accordance with the rules of the
applicable exchange;
o privately negotiated transactions;
o settlement of short sales entered into after the effective
date of the registration statement of which this prospectus is
a part;
o broker-dealers may agree with the Selling Stockholders to sell
a specified number of such shares at a stipulated price per
share;
o through the writing or settlement of options or other hedging
transactions, whether through an options exchange or
otherwise;
o a combination of any such methods of sale; or
o any other method permitted pursuant to applicable law.
The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act of 1933. as amended (the "Securities Act"), if available, rather
than under this prospectus.
Broker-dealers engaged by the Selling Stockholders may arrange for
other brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the Selling Stockholders (or, if any broker-dealer
-1-
acts as agent for the Exchangor of shares, from the Exchangor) in amounts to be
negotiated, but, except as set forth in a supplement to this Prospectus, in the
case of an agency transaction not in excess of a customary brokerage commission
in compliance with FINRA NASD Rule 2440; and in the case of a principal
transaction a markup or markdown in compliance with NASD IM-2440.
In connection with the sale of the common stock or interests therein,
the Selling Stockholders may enter into hedging transactions with broker-dealers
or other financial institutions, which may in turn engage in short sales of the
common stock in the course of hedging the positions they assume. The Selling
Stockholders may also sell shares of the common stock short and deliver these
securities to close out their short positions, or loan or pledge the common
stock to broker-dealers that in turn may sell these securities. The Selling
Stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such transaction).
The Selling Stockholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares Exchanged by them may be deemed to be underwriting
commissions or discounts under the Securities Act. Each Selling Stockholder has
informed the Company that it does not have any written or oral agreement or
understanding. directly or indirectly, with any person to distribute the Common
Stock. In no event shall any broker-dealer receive fees, commissions and markups
which, in the aggregate, would exceed eight percent (8%).
The Company is required to pay certain fees and expenses incurred by
the Company incident to the registration of the shares. The Company has agreed
to indemnify the Selling Stockholders against certain losses, claims, damages
and liabilities, including liabilities under the Securities Act.
Because Selling Stockholders may be deemed to be "underwriters" within
the meaning of the Securities Act, they will be subject to the prospectus
delivery requirements of the Securities Act including Rule 172 thereunder. In
addition, any securities covered by this prospectus which qualify for sale
pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather
than under this prospectus. There is no underwriter or coordinating broker
acting in connection with the proposed sale of the resale shares by the Selling
Stockholders.
We agreed to keep this prospectus effective until the earlier of (i)
the date on which the shares may be resold by the Selling Stockholders without
registration and without regard to any volume limitations by reason of Rule
144(k) under the Securities Act or any other rule of similar effect or (ii) all
-2-
of the shares have been sold pursuant to this prospectus or Rule 144 under the
Securities Act or any other rule of similar effect. The resale shares will be
sold only through registered or licensed brokers or dealers if required under
applicable state securities laws. In addition, in certain states, the resale
shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any
person engaged in the distribution of the resale shares may not simultaneously
engage in market making activities with respect to the common stock for the
applicable restricted period, as defined in Regulation M, prior to the
commencement of the distribution. In addition, the Selling Stockholders will be
subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, including Regulation M, which may limit the timing of
Exchanges and sales of shares of the common stock by the Selling Stockholders or
any other person. We will make copies of this prospectus available to the
Selling Stockholders and have informed them of the need to deliver a copy of
this prospectus to each Exchangor at or prior to the time of the sale (including
by compliance with Rule 172 under the Securities Act).
-0-
XXXXX X
[ ]
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SELLING SECURITYHOLDER NOTICE AND QUESTIONNAIRE
The undersigned beneficial owner of common stock (the "Registrable
Securities") of T-XXX OIL, Inc., a Nevada corporation (the "Company"),
understands that the Company has filed or intends to file with the Securities
and Exchange Commission (the "Commission") a registration statement (the
"Registration Statement") for the registration and resale under Rule 415 of the
Securities Act of 1933, as amended (the "Securities Act"), of the Registrable
Securities, in accordance with the terms of the Registration Rights Agreement
(the "Registration Rights Agreement") to which this document is annexed. A copy
of the Registration Rights Agreement is available from the Company upon request
at the address set forth below. All capitalized terms not otherwise defined
herein shall have the meanings ascribed thereto in the Registration Rights
Agreement.
Certain legal consequences arise from being named as a selling
securityholder in the Registration Statement and the related prospectus.
Accordingly, holders and beneficial owners of Registrable Securities are advised
to consult their own securities law counsel regarding the consequences of being
named or not being named as a selling securityholder in the Registration
Statement and the related prospectus.
NOTICE
The undersigned beneficial owner (the "Selling Securityholder") of
Registrable Securities hereby elects to include the Registrable Securities owned
by it in the Registration Statement.
-1-
The undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate:
QUESTIONNAIRE
1. Name.
(a) Full Legal Name of Selling Securityholder
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(b) Full Legal Name of Registered Holder (if not the same as (a)
above) through which Registrable Securities are held:
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(c) Full Legal Name of Natural Control Person (which means a
natural person who directly or indirectly alone or with others
has power to vote or dispose of the securities covered by this
Questionnaire):
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2. ADDRESS FOR NOTICES TO SELLING SECURITYHOLDER:
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Telephone:
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Fax:
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Contact Person:
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-2-
3. BROKER-DEALER STATUS:
(a) Are you a broker-dealer?
Yes [_] No [_]
(b) If "yes" to Section 3(a), did you receive your Registrable
Securities as compensation for investment banking services to
the Company?
Yes [_] No [_]
Note: If "no" to Section 3(b), the Commission's staff has indicated that you
should be identified as an underwriter in the Registration Statement.
(c) Are you an affiliate of a broker-dealer?
Yes [_] No [_]
(d) If you are an affiliate of a broker-dealer, do you certify
that you Exchanged the Registrable Securities in the ordinary
course of business, and at the time of the Exchange of the
Registrable Securities to be resold, you had no agreements or
understandings, directly or indirectly, with any person to
distribute the Registrable Securities?
Yes [_] No [_]
Note: If "no" to Section 3(d), the Commission's staff has indicated that you
should be identified as an underwriter in the Registration Statement.
4. Beneficial Ownership of Securities of the Company Owned by the Selling
Securityholder.
Except as set forth below in this Item 4, the undersigned is not the beneficial
or registered owner of any securities of the Company other than the securities
issuable pursuant to the Exchange Agreement.
(a) Type and Amount of other securities beneficially owned by the
Selling Securityholder:
5. Relationships with the Company:
Except as set forth below, neither the undersigned nor any of its affiliates,
officers, directors or principal equity holders (owners of 5% of more of the
equity securities of the undersigned) has held any position or office or has had
-3-
any other material relationship with the Company (or its predecessors or
affiliates) during the past three years.
State any exceptions here:
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The undersigned agrees to promptly notify the Company of any
inaccuracies or changes in the information provided herein that may occur
subsequent to the date hereof at any time while the Registration Statement
remains effective.
By signing below, the undersigned consents to the disclosure of the
information contained herein in its answers to Items I through 5 and the
inclusion of such information in the Registration Statement and the related
prospectus and any amendments or supplements thereto. The undersigned
understands that such information will be relied upon by the Company in
connection with the preparation or amendment of the Registration Statement and
the related prospectus.
IN WITNESS WHEREOF the undersigned, by authority duly given, has caused
this Notice and Questionnaire to be executed and delivered either in person or
by its duly authorized agent.
Date: Beneficial Owner:
----------------------- ------------------------
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
PLEASE FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND
RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:
T-Xxx Oil, Inc.
c/o
-4-
