EXHIBIT 10.26
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "AGREEMENT") is made and
entered into as of February 26, 2004 (the "EFFECTIVE DATE") among Continental
Southern Resources, Inc., a Nevada corporation (the "COMPANY"), the parties set
forth Exhibit A hereto (each, a "PURCHASER" and collectively, the "PURCHASERS"),
and the parties set forth on the signature page.
R E C I T A L S:
A. The Purchasers have purchased shares of the Company's Common Stock
(as defined below) pursuant to Subscription Agreements (each, a "SUBSCRIPTION
AGREEMENT" and collectively, the "SUBSCRIPTION AGREEMENTS") by and between the
Company and each Purchaser.
B. The Company has issued a warrant (the "WARRANT") to purchase shares
of the Company's Common Stock to Xxxxxxx Xxxxxx Xxxxxx Inc., a Texas corporation
("SMH").
C. Lancer Offshore, Inc., an international business company organized
under the laws of the British Virgin Islands, and Lancer Partners, LP, a
Connecticut limited partnership (together, "LANCER"), own shares of the
Company's Common Stock.
D. The Company, the Purchasers, SMH, and Lancer desire to set forth the
registration rights to be granted by the Company to the Purchasers, SMH, and
Lancer.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants, and conditions set forth herein, in the
Subscription Agreements, or otherwise, the parties mutually agree as follows:
A G R E E M E N T:
1. Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
"Blackout Period" means, with respect to a registration, a period in
each case commencing on the day immediately after the Company notifies the
Purchasers, SMH, and Lancer that they are required, pursuant to Section 4(f), to
suspend offers and sales of Registrable Securities during which the Company, in
the good faith judgment of its Board of Directors, determines (because of the
existence of, or in anticipation of, any acquisition, financing activity, or
other transaction involving the Company, or the unavailability for reasons
beyond the Company's control of any required financial statements, disclosure of
information which is in its best interest not to publicly disclose, or any other
event or condition of similar significance to the Company) that the registration
and distribution of the Registrable Securities to be covered by such
registration statement, if any, would be seriously detrimental to the Company
and its shareholders and ending on the earlier of (1) the date upon which the
material non-public information commencing the Blackout Period is disclosed to
the public or ceases to be material and (2) such time as the Company notifies
the selling Holders that the Company will no longer
delay such filing of the Registration Statement, recommence taking steps to make
such Registration Statement effective, or allow sales pursuant to such
Registration Statement to resume; provided, however, that (a) the Company shall
limit its use of Blackout Periods, in the aggregate, to 60 Trading Days in any
12-month period and (b) no Blackout Period may commence sooner than 60 days
after the end of a prior Blackout Period.
"Business Day" means any day of the year, other than a Saturday,
Sunday, or other day on which the Commission is required or authorized to close.
"Closing Date" means February 26, 2004, or such other time as is
mutually agreed between the Company and the Purchasers for the closing of the
sale referred to in Recital A above.
"Commission" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"Common Stock" means the common stock, par value $.001 per share, of
the Company and any and all shares of capital stock or other equity securities
of: (i) the Company which are added to or exchanged or substituted for the
Common Stock by reason of the declaration of any stock dividend or stock split,
the issuance of any distribution or the reclassification, readjustment,
recapitalization or other such modification of the capital structure of the
Company; and (ii) any other corporation, now or hereafter organized under the
laws of any state or other governmental authority, with which the Company is
merged, which results from any consolidation or reorganization to which the
Company is a party, or to which is sold all or substantially all of the shares
or assets of the Company, if immediately after such merger, consolidation,
reorganization or sale, the Company or the stockholders of the Company own
equity securities having in the aggregate more than 50% of the total voting
power of such other corporation.
"Equity Securities" means (i) any Common Stock, (ii) any security
convertible, with or without consideration, into any Common Stock (including any
option to purchase such a convertible security), (iii) any security carrying any
warrant or right to subscribe to or purchase any Common Stock, or (iv) any such
warrant or right.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"Family Member" means (a) with respect to any individual, such
individual's spouse, any descendants (whether natural or adopted), any trust all
of the beneficial interests of which are owned by any of such individuals or by
any of such individuals together with any organization described in Section
501(c)(3) of the Internal Revenue Code of 1986, as amended, the estate of any
such individual, and any corporation, association, partnership or limited
liability company all of the equity interests of which are owned by those above
described individuals, trusts or organizations and (b) with respect to any
trust, the owners of the beneficial interests of such trust.
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"Form S-1" means such form under the Securities Act as in effect on the
date hereof or any registration form under the Securities Act subsequently
adopted by the Commission, which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the Commission.
"Form S-3" means such form under the Securities Act as in effect on the
date hereof or any registration form under the Securities Act subsequently
adopted by the Commission, which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the Commission.
"Holder" means each Purchaser, SMH, Lancer, or any successor or
Permitted Assignee of a Purchaser, SMH, or Lancer who acquire rights in
accordance with this Agreement with respect to the Registrable Securities
directly or indirectly from a Purchaser, SMH, or Lancer, including from any
Permitted Assignee.
"Inspector" means any attorney, accountant, or other agent retained by
a Purchaser for the purposes provided in Section 4(j).
"Offering Price" means the Offering Price set forth in the Placement
Agent Agreement dated January 23, 2004, between the Company and SMH.
"Permitted Assignee" means (a) with respect to a partnership, its
partners or former partners in accordance with their partnership interests, (b)
with respect to a corporation, its shareholders in accordance with their
interest in the corporation, (c) with respect to a limited liability company,
its members or former members in accordance with their interest in the limited
liability company, (d) with respect to an individual party, any Family Member of
such party, (e) an entity that is controlled by, controls, or is under common
control with a transferor, or (f) a party to this Agreement.
The terms "register," "registered," and "registration" refers to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registrable Securities" means (i) shares of Common Stock issued to
each Purchaser pursuant to the Subscription Agreements (ii) shares of Common
Stock issued or issuable to SMH pursuant to the Warrant, and (ii) 2,000,000
shares of Common Stock owned by Lancer, but in each case excluding (A) any
Registrable Securities that have been publicly sold or may be publicly sold
immediately without registration under the Securities Act either pursuant to
Rule 144 of the Securities Act or otherwise; (B) any Registrable Securities sold
by a person in a transaction pursuant to a registration statement filed under
the Securities Act or (C) any Registrable Securities that are at the time
subject to an effective registration statement under the Securities Act.
"Registration Statement" means the registration statement required to
be filed by the Company pursuant to Section 3(a).
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"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal statute promulgated in replacement thereof, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect at
the time.
"SEC Effective Date" means the date the Registration Statement is
declared effective by the Commission.
"Trading Day" means a day on whichever (a) the national securities
exchange, (b) the Nasdaq Stock Market, or (c) such other securities market, in
any such case which at the time constitutes the principal securities market for
the Common Stock, is open for general trading of securities.
2. Term. This Agreement shall continue in full force and effect for a
period of two (2) years from the Effective Date, unless terminated sooner
hereunder.
3. Registration.
(a) Registration on Form S-1 or S-3. As promptly as reasonably
practicable after the date hereof, but in any event not later than 180 days
after the Closing Date (the "REGISTRATION FILING DATE"), the Company shall file
with the Commission a shelf registration statement on Form S-1 or, if the
Company is eligible to use such form, Form S-3 relating to the resale by the
Holders of all of the Registrable Securities; provided, however, that the
Company shall not be obligated to effect any such registration, qualification,
or compliance pursuant to this Section 3(a), or keep such registration effective
pursuant to Section 4: (i) in any particular jurisdiction in which the Company
would be required to qualify to do business as a foreign corporation or as a
dealer in securities under the securities or blue sky laws of such jurisdiction
or to execute a general consent to service of process in effecting such
registration, qualification or compliance, in each case where it has not already
done so; or (ii) during any Blackout Period, in which case the Registration
Filing Date shall be extended to the date immediately following the last day of
such Blackout Period.
(b) Piggyback Registration. If prior to the date that the Company files
a registration pursuant to Section 3(a), the Company shall determine to register
for sale for cash any of its Common Stock, for its own account or for the
account of others (other than the Holders), other than (i) a registration
relating solely to employee benefit plans or securities issued or issuable to
employees, consultants (to the extent the securities owned or to be owned by
such consultants could be registered on Form S-8) or any of their Family Members
(including a registration on Form S-8), (ii) a registration relating solely to a
Commission Rule 145 transaction, a registration on Form S-4 in connection with a
merger, acquisition, divestiture, reorganization, or similar event, or (iii) a
registration in which the only Common Stock being registered is Common Stock
issuable upon conversion of debt securities that are also being registered, the
Company shall promptly give to the Holders written notice thereof (and in no
event shall such notice be given less than 20 calendar days prior to the filing
of such registration statement), and shall, subject to Section 3(c), include in
such registration (and any related qualification under blue sky laws or other
compliance) (a "PIGGYBACK REGISTRATION"), all of the Registrable Securities
specified in a written request or requests, made within 10 calendar days after
receipt of such written notice
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from the Company, by any Holder or Holders. However, the Company may, without
the consent of the Holders, withdraw such registration statement prior to its
becoming effective if the Company or such other shareholders have elected to
abandon the proposal to register the securities proposed to be registered
thereby.
(c) Underwriting. If a Piggyback Registration is for a registered
public offering involving an underwriting, the Company shall so advise the
Holders in writing or as a part of the written notice given pursuant to Section
3(b). In such event the right of any Holder to registration pursuant to Section
3(b) shall be conditioned upon such Holder's participation in such underwriting
and the inclusion of such Holder's Registrable Securities in the underwriting to
the extent provided herein. All Holders proposing to distribute their securities
through such underwriting shall (together with the Company and any other
shareholders of the Company distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by the Company or
selling shareholders, as applicable. Notwithstanding any other provision of this
Section 3(c), if the underwriter or the Company determines that marketing
factors require a limitation of the number of shares to be underwritten, the
underwriter may exclude some or all Registrable Securities from such
registration and underwriting. The Company shall so advise all Holders (except
those Holders who failed to timely elect to distribute their Registrable
Securities through such underwriting or have indicated to the Company their
decision not to do so), and the number of shares of Registrable Securities that
may be included in the registration and underwriting, if any, shall be allocated
among such Holders as follows:
(i) In the event of a Piggyback Registration that is initiated by
the Company, the number of shares that may be included in the
registration and underwriting shall be allocated first to the Company
and then, subject to obligations and commitments existing as of the
date hereof, to all selling shareholders, including the Holders, who
have requested to sell in the registration on a pro rata basis
according to the number of shares requested to be included; and
(ii) In the event of a Piggyback Registration that is initiated
by the exercise of demand registration rights by a shareholder or
shareholders of the Company (other than the Holders), then the number
of shares that may be included in the registration and underwriting
shall be allocated first to such selling shareholders who exercised
such demand and then, subject to obligations and commitments existing
as of the date hereof, to all other selling shareholders, including the
Holders, who have requested to sell in the registration, on a pro rata
basis according to the number of shares requested to be included.
No Registrable Securities excluded from the underwriting by reason of
the underwriter's marketing limitation shall be included in such registration.
If any Holder disapproves of the terms of any such underwriting, such Holder may
elect to withdraw therefrom by written notice to the Company and the
underwriter. The Registrable Securities and/or other securities so withdrawn
from such underwriting shall also be withdrawn from such registration; provided,
however, that, 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
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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 pursuant to
the terms and limitations set forth herein in the same proportion used above in
determining the underwriter limitation.
4. Registration Procedures. In the case of each registration,
qualification, or compliance effected by the Company pursuant to Section 3
hereof, the Company will keep each Holder including securities therein
reasonably advised in writing (which may include e-mail) as to the initiation of
each registration, qualification, and compliance and as to the completion
thereof. With respect to any registration statement filed pursuant to Section 3,
the Company will use its commercially reasonable best efforts to:
(a) prepare and file with the Commission with respect to such
Registrable Securities, a registration statement on Form X-0, Xxxx X-0, or any
other form for which the Company then qualifies or which counsel for the Company
shall deem appropriate, and which form shall be available for the sale of the
Registrable Securities in accordance with the intended method(s) of distribution
thereof, and use its commercially reasonable efforts to cause such registration
statement to become and remain effective at least for a period ending with the
first to occur of (i) the sale of all Registrable Securities covered by the
registration statement, (ii) the availability under Rule 144 for the Holder to
immediately, freely resell without restriction all Registrable Securities
covered by the registration statement, (iii) one year after a registration
statement filed pursuant to Section 3(a) is declared effective by the Commission
(provided, however, that if the Company files a registration Form S-1 and
subsequently becomes eligible to use Form S-3, it may file a post-effective
amendment to such Form S-1 on Form S-3 prior to the end of such period and use
its best efforts to cause such registration statement as amended to become
effective until the end of such one-year period), or (iv) 90 days after a
Piggyback Registration is declared effective by the Commission (in either case,
the "EFFECTIVENESS PERIOD"); provided, however, if at the end of such one-year
period, any Holder is not able to immediately, freely resell all Registrable
Securities that it owns, the Effectiveness Period shall continue until
terminated pursuant to clause (i) or (ii)(but in no event, more than two years
after the SEC Effective Date); and provided that no later than two business days
before filing with the Commission a registration statement or prospectus or any
amendments or supplements thereto, the Company shall (i) furnish to (A) one
special counsel ("HOLDERS COUNSEL") selected by the Company for the benefit of
the Holders (which Holders Counsel initially shall be Xxxx X. Xxxxx of Xxxxxxxx
& Xxxxxx LLP, Houston, Texas) and Xxxxx X. Xxxxx of Hunton & Xxxxxxxx, LLP,
counsel to Lancer, copies of all such documents proposed to be filed (excluding
any exhibits other than applicable underwriting documents), in substantially the
form proposed to be filed, which documents shall be subject to the review of
such Holders Counsel, and (ii) notify each Holder of Registrable Securities
covered by such registration statement of any stop order issued or threatened by
the Commission and take all reasonable actions required to prevent the entry of
such stop order or to remove it if entered;
(b) if a registration statement is subject to review by the Commission,
promptly respond to all comments and diligently pursue resolution of any
comments to the satisfaction of the Commission;
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(c) 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
during the Effectiveness Period (but in any event at least until expiration of
the 90-day period referred to in Section 4(3) of the Securities Act and Rule
174, or any successor thereto, thereunder, if applicable), and comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended method(s) of disposition by the sellers thereof set
forth in such registration statement;
(d) furnish, without charge, to each Holder of Registrable Securities
covered by such registration statement (i) a reasonable number of copies of such
registration statement (including any exhibits thereto other than exhibits
incorporated by reference), each amendment and supplement thereto as such Holder
may request, (ii) such number of copies of the prospectus included in such
registration statement (including each preliminary prospectus and any other
prospectus filed under Rule 424 under the Securities Act) as such Holders may
request, in conformity with the requirements of the Securities Act, and (iii)
such other documents as such Holder may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such Holder,
but only during the Effectiveness Period;
(e) use its commercially reasonable best efforts to register or qualify
such Registrable Securities under such other applicable securities or blue sky
laws of such jurisdictions as any Holder of Registrable Securities covered by
such registration statement reasonably requests as may be necessary for the
marketability of the Registrable Securities (such request to be made by the time
the applicable registration statement is deemed effective by the Commission) and
do any and all other acts and things which may be reasonably necessary or
advisable to enable such Holder to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such Holder; provided that
the Company shall not be required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
paragraph (e), (ii) subject itself to taxation in any such jurisdiction, or
(iii) consent to general service of process in any such jurisdiction;
(f) as promptly as practicable after becoming aware of such event,
notify each Holder of such Registrable Securities at any time when a prospectus
relating thereto is required to be delivered under the Securities Act of the
happening of any event which comes to the Company's attention if as a result of
such event the prospectus included in such registration statement contains an
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein not misleading
and the Company shall promptly prepare and furnish to such Holder a supplement
or amendment to such prospectus (or prepare and file appropriate reports under
the Exchange Act) so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus shall not contain an untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, unless suspension of
the use of such prospectus otherwise is authorized herein or in the event of a
Blackout Period, in which case no supplement or amendment need be furnished (or
Exchange Act filing made) until the termination of such suspension or Blackout
Period;
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(g) comply, and continue to comply during the period that such
registration statement is effective under the Securities Act, in all material
respects with the Securities Act and the Exchange Act and with all applicable
rules and regulations of the Commission with respect to the disposition of all
securities covered by such registration statement, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least 12 months, but not more than 18 months,
beginning with the first full calendar month after the SEC Effective Date, which
earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act.
(h) as promptly as practicable after becoming aware of such event,
notify each Holder of Registrable Securities being offered or sold pursuant to
the Registration Statement of the issuance by the Commission of any stop order
or other suspension of effectiveness of the Registration Statement at the
earliest possible time;
(i) permit the Holders of Registrable Securities being included in the
Registration Statement and their legal counsel, at such Holders' sole cost and
expense (except as otherwise specifically provided in Section 6) to review and
have a reasonable opportunity to comment on the Registration Statement and all
amendments and supplements thereto at least two Business Days prior to their
filing with the Commission;
(j) make available for inspection by any Holder and any Inspector
retained by such Holder, at such Holder's sole expense, all Records as shall be
reasonably necessary to enable such Holder to exercise its due diligence
responsibility, and cause the Company's officers, directors, and employees to
supply all information which such Holder or any Inspector may reasonably request
for purposes of such due diligence; provided, however, that such Holder shall
hold in confidence and shall not make any disclosure of any record or other
information which the Company determines in good faith to be confidential, and
of which determination such Holder is so notified at the time such Holder
receives such information, unless (i) the disclosure of such record is necessary
to avoid or correct a misstatement or omission in the Registration Statement and
a reasonable time prior to such disclosure the Holder shall have informed the
Company of the need to so correct such misstatement or omission and the Company
shall have failed to correct such misstatement of omission, (ii) the release of
such record is ordered pursuant to a subpoena or other order from a court or
governmental body of competent jurisdiction or (iii) the information in such
record has been made generally available to the public other than by disclosure
in violation of this or any other agreement. The Company shall not be required
to disclose any confidential information in such records to any Inspector until
and unless such Inspector shall have entered into a confidentiality agreement
with the Company with respect thereto, substantially in the form of this Section
4(j), which agreement shall permit such Inspector to disclose records to the
Holder who has retained such Inspector. Each Holder agrees that it shall, upon
learning that disclosure of such Records is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
notice to the Company and allow the Company, at the Company's expense, to
undertake appropriate action to prevent disclosure of, or to obtain a protective
order for, the records deemed confidential. The Company shall hold in confidence
and shall not make any disclosure of information concerning a Holder provided to
the Company pursuant to this Agreement unless (i) disclosure of such information
is necessary to comply with federal or state securities laws, (ii) disclosure of
such
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information to the Staff of the Division of Corporation Finance is necessary to
respond to comments raised by the Staff in its review of the Registration
Statement, (iii) disclosure of such information is necessary to avoid or correct
a misstatement or omission in the Registration Statement, (iv) release of such
information is ordered pursuant to a subpoena or other order from a court or
governmental body of competent jurisdiction, or (v) such information has been
made generally available to the public other than by disclosure in violation of
this or any other agreement. The Company agrees that it shall, upon learning
that disclosure of such information concerning a Holder is sought in or by a
court or governmental body of competent jurisdiction or through other means,
give prompt notice to such Holder and allow such Holder, at such Holder's
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, such information;
(k) use its best efforts to cause all the Registrable Securities
covered by the Registration Statement to be listed or quoted on the principal
securities market on which securities of the same class or series issued by the
Company are then listed or traded;
(l) provide a transfer agent and registrar, which may be a single
entity, for the Registrable Securities at all times;
(m) cooperate with the Holders of Registrable Securities being offered
pursuant to the Registration Statement to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legends) representing
Registrable Securities to be offered pursuant to the Registration Statement and
enable such certificates to be in such denominations or amounts as the Holders
may reasonably request and registered in such names as the Holders may request;
and
(n) take all other reasonable actions necessary to expedite and
facilitate disposition by the Holders of the Registrable Securities pursuant to
the Registration Statement.
5. Suspension of Offers and Sales. Each Holder of Registrable
Securities agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 4(f) hereof or of the
commencement of an Blackout Period, such Holder shall discontinue disposition of
Registrable Securities pursuant to the registration statement covering such
Registrable Securities until such Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 4(f) hereof or notice
of the end of the Blackout Period, and, if so directed by the Company, such
Holder shall deliver to the Company (at the Company's expense) all copies
(including, without limitation, any and all drafts), other than permanent file
copies, then in such Holder's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice. In the
event the Company shall give any such notice, the period mentioned in Section
4(a)(iii) hereof shall be extended by the greater of (i) ten business days or
(ii) the number of days during the period from and including the date of the
giving of such notice pursuant to Section 4(f) hereof to and including the date
when each Holder of Registrable Securities covered by such registration
statement shall have received the copies of the supplemented or amended
prospectus contemplated by Section 4(f) hereof.
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6. Registration Expenses. The Company shall pay all expenses in
connection with any registration, including, without limitation, all
registration, filing, stock exchange and NASD fees, printing expenses, all fees
and expenses of complying with securities or blue sky laws, the fees and
disbursements of counsel for the Company and of its independent accountants, and
the reasonable fees and disbursements of a Holders Counsel; provided that, in
any underwritten registration, each party shall pay for its own underwriting
discounts and commissions and transfer taxes. Except as provided above in this
Section 6 and Section 10, the Company shall not be responsible for the expenses
of any attorney or other advisor employed by a Holder of Registrable Securities.
7. Preemptive Rights.
(a) Subsequent Offerings. In the event the Company issues and sells
Equity Securities other than the Equity Securities excluded by Section 7(e)
hereof at a price or conversion or exercise price, as the case may be, that is
less than $2.00 per share of Common Stock, each Holder who qualifies as an
"accredited investor" within the meaning of Rule 501(a) of Regulation D under
the Securities act (an "ELIGIBLE HOLDER") shall have a preemptive right to
purchase such number of shares of Equity Securities necessary for such Eligible
Holder to maintain its percentage ownership position in the Company. Each
Eligible Holder's preemptive share is equal to the ratio of (a) the number of
shares of the Company's Common Stock of which such Eligible Holder is deemed to
be a holder immediately prior to the issuance of such Equity Securities to (b)
the total number of shares of the Company's outstanding Common Stock (including
all shares of Common Stock issued or issuable upon conversion of any security of
the Company or upon the exercise of any outstanding warrants, options, or rights
to subscribe to or purchase any Common Stock or other security of the Company)
immediately prior to the issuance of the Equity Securities.
(b) Exercise of Preemptive Rights. If the Company issues any Equity
Securities, it shall give each Eligible Holder written notice of such issuance,
describing the Equity Securities and the price and the terms and conditions upon
which the Company issued the same and shall provide each Eligible Holder with
access to any information regarding such offering and the Company, provided to
the purchasers of Equity Securities. Each Eligible Holder shall have 10 Business
Days from the giving of such notice to exercise its preemptive right to purchase
Equity Securities for the price and upon the terms and conditions specified in
the notice by giving written notice to the Company and stating therein the
quantity of Equity Securities to be purchased. Notwithstanding the foregoing,
the Company shall not be required to offer or sell such Equity Securities to any
Holder who would cause the Company to be in violation of applicable federal
securities laws by virtue of such offer or sale.
(c) Issuance of Equity Securities to Other Persons. The Company shall
have 90 days after expiration of the 10-Business Day period set forth in Section
7(b) to sell the Equity Securities in respect of which the Holders' rights were
not exercised, at a price and upon general terms and conditions materially no
more favorable to the purchasers thereof than specified in the Company's notice
to the Eligible Holders pursuant to Section 7(b) hereof. If the Company has not
sold such Equity Securities within 90 days of the notice provided pursuant to
Section 7(b),
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the Company shall not thereafter issue or sell any Equity
Securities, without first offering such securities to the Eligible Holders in
the manner provided above.
(d) Termination and Waiver of Preemptive Rights. The preemptive rights
established by this Section 7 shall terminate upon the earlier of (i) the
effective date of a registration statement pursuant to Section 3(a) or (ii)
twelve months after the Closing Date.
(e) Excluded Securities. The preemptive rights established by this
Section 4 shall have no application to any of the following Equity Securities:
(i) up to 7,200,000 shares (as may be adjusted for any stock
dividend, combinations, splits, recapitalizations and the like) of
Common Stock (and/or options, warrants or other Common Stock purchase
rights issued pursuant to such options, warrants or other rights)
issued or to be issued after the date hereof to employees, officers or
directors of, or consultants or advisors to the Company or any
subsidiary, pursuant to stock purchase or stock option plans or other
arrangements that are approved by the board of directors of the
Company;
(ii) capital stock of the Company issued or issuable pursuant to
any rights or agreements outstanding as of the date of this Agreement,
options and warrants outstanding as of the date of this Agreement, and
capital stock issued pursuant to or upon the exercise of any such
rights or agreements granted after the date of this Agreement; provided
that in the case of rights or agreements granted after the date of this
Agreement, the pre-emptive right established by this Section 7 applied
with respect to the initial sale or grant by the Company of such rights
or agreements and such rights or agreements were approved by the board
of directors of the Company;
(iii) shares of Common Stock issued in connection with any stock
split, dividend, combination, distribution, or recapitalization; or
(iv) any Equity Securities issued for consideration other than
cash in connection with any merger, consolidation, strategic alliance,
acquisition, or similar business combination approved by the board of
directors of the Company.
8. Assignment of Rights. No Holder may assign its rights under this
Agreement to any party without the prior written consent of the Company;
provided, however, that a Holder may assign its rights under this Agreement
without such restrictions to a Permitted Assignee as long as (a) such transfer
or assignment is effected in accordance with applicable securities laws; (b)
such transferee or assignee agrees in writing to become subject to the terms of
this Agreement; and (c) the Company is given written notice by such Holder of
such transfer or assignment, stating the name and address of the transferee or
assignee and identifying the Registrable Securities with respect to which such
rights are being transferred or assigned.
9. 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.
11
10. Indemnification.
(a) In the event of the offer and sale of Registrable Securities held
by Holders under the Securities Act, the Company shall, and hereby does,
indemnify and hold harmless, to the fullest extent permitted by law, each
Holder, its directors, officers, partners, each other person who participates as
an underwriter in the offering or sale of such securities, and each other
person, if any, who controls or is under common control with such Holder or any
such underwriter within the meaning of Section 15 of the Securities Act, against
any losses, claims, damages or liabilities, joint or several, and expenses to
which the Holder or any such director, officer, partner or underwriter or
controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such shares
were registered under the Securities Act, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein in light of the circumstances in which they were made not misleading,
and the Company shall reimburse the Holder, and each such director, officer,
partner, underwriter and controlling person for any legal or any other expenses
reasonably incurred by them in connection with investigating, defending or
settling any such loss, claim, damage, liability, action or proceeding; provided
that the foregoing shall not apply to, and the Company shall not be liable, in
any such case (i) to the extent that any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense arises out of or is based
upon an untrue statement or alleged untrue statement in or omission or alleged
omission from such registration statement, any such preliminary prospectus,
final prospectus, summary prospectus, amendment or supplement in reliance upon
and in conformity with written information furnished to the Company through an
instrument duly executed by or on behalf of such Holder specifically stating
that it is for use in the preparation thereof, (ii) provided that the Company
has complied with its obligations hereunder to furnish such Holder with copies
of the applicable prospectus, if the person asserting any such loss, claim,
damage, liability (or action or proceeding in respect thereof) who purchased the
Registrable Securities that are the subject thereof did not receive a copy of an
amended preliminary prospectus or the final prospectus (or the final prospectus
as amended or supplemented) at or prior to the written confirmation of the sale
of such Registrable Securities to such person because of the failure of such
Holder or underwriter to so provide such amended preliminary or final prospectus
and the untrue statement or alleged untrue statement or omission or alleged
omission of a material fact made in such preliminary prospectus was corrected in
the amended preliminary or final prospectus (or the final prospectus as amended
or supplemented), or (iii) provided that the plan of distribution mechanics
described in the applicable prospectus are, in form and substance, reasonable
and customary for transactions of this type, to the extent that the Holders
failed to comply with the terms of such plan of distribution mechanics. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Holders, or any such director, officer, partner,
underwriter or controlling person and shall survive the transfer of such shares
by the Holder.
12
(b) As a condition to including any Registrable Securities to be
offered by a Holder in any registration statement filed pursuant to this
Agreement, each such Holder agrees to be bound by the terms of this Section 10
and to indemnify and hold harmless, to the fullest extent permitted by law, the
Company, its directors and officers, and each other person, if any, who controls
the Company within the meaning of Section 15 of the Securities Act, legal
counsel and accountants for the Company, any underwriter, any other Holder
selling securities in such registration statement and any controlling person
within the meaning of the Securities Act of any such underwriter or other
Holder, against any losses, claims, damages or liabilities, joint or several, to
which the Company or any such director or officer or controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon (i) an untrue
statement or alleged untrue statement in or omission or alleged omission from
such registration statement, any preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment or supplement thereto, if
such statement or alleged statement or omission or alleged omission was made in
reliance upon and in conformity with written information about such Holder as a
Holder of the Company furnished to the Company, (ii) provided that the Company
has complied with its obligations hereunder to furnish such Holder with copies
of the applicable prospectus, if the person asserting any such loss, claim,
damage, liability (or action or proceeding in respect thereof) who purchased the
Registrable Securities that are the subject thereof did not receive a copy of an
amended preliminary prospectus or the final prospectus (or the final prospectus
as amended or supplemented) at or prior to the written confirmation of the sale
of such Registrable Securities to such person because of the failure of such
Holder or underwriter to so provide such amended preliminary or final prospectus
and the untrue statement or alleged untrue statement or omission or alleged
omission of a material fact made in such preliminary prospectus was corrected in
the amended preliminary or final prospectus (or the final prospectus as amended
or supplemented), or (iii) provided that the plan of distribution mechanics
described in the applicable prospectus are, in form and substance, reasonable
and customary for transactions of this type, to the extent that the Holders
failed to comply with the terms of such plan of distribution mechanics. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Holders, or any such director, officer, partner,
underwriter or controlling person and shall survive the transfer of such shares
by the Holder, and such Holder shall reimburse the Company, and each such
director, officer, legal counsel and accountants, underwriter, other Holder, and
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating, defending, or settling and such loss, claim,
damage, liability, action, or proceeding; provided, however, that such indemnity
agreement found in this Section 10(b) shall in no event exceed the gross
proceeds from the offering received by such Holder. Such indemnity shall remain
in full force and effect, regardless of any investigation made by or on behalf
of the Company or any such director, officer or controlling person and shall
survive the transfer by any Holder of such shares.
(c) Promptly after receipt by an indemnified party of notice of the
commencement of any action or proceeding involving a claim referred to in
Section 10(a) or (b) hereof (including any governmental action), such
indemnified party shall, if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the indemnifying party of the
commencement of such action; provided that the failure of any indemnified party
to give notice
13
as provided herein shall not relieve the indemnifying party of its obligations
under Section 10(a) or (b) hereof, except to the extent that the indemnifying
party is actually prejudiced by such failure to give notice. In case any such
action is brought against an indemnified party, unless in the reasonable
judgment of counsel to such indemnified party a conflict of interest between
such indemnified and indemnifying parties may exist or the indemnified party may
have defenses not available to the indemnifying party in respect of such claim,
the indemnifying party shall be entitled to participate in and to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified party
and, after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof, unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties arises in respect of such claim after the
assumption of the defenses thereof or the indemnifying party fails to defend
such claim in a diligent manner, other than reasonable costs of investigation.
Neither an indemnified nor an indemnifying party shall be liable for any
settlement of any action or proceeding effected without its consent. No
indemnifying party shall, without the consent of the 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 of such claim or
litigation. Notwithstanding anything to the contrary set forth herein, and
without limiting any of the rights set forth above, in any event any party shall
have the right to retain, at its own expense, counsel with respect to the
defense of a claim.
(d) In the event that an indemnifying party does or is not permitted to assume
the defense of an action pursuant to Section 10(c) or in the case of the expense
reimbursement obligation set forth in Section 10(a) and (b), the indemnification
required by Section 10(a) and (b) hereof shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as and
when bills received or expenses, losses, damages, or liabilities are incurred.
(e) If the indemnification provided for in this Section 10 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, the
indemnifying party, in lieu of indemnifying such indemnified party hereunder,
shall (i) contribute to the amount paid or payable by such indemnified party as
a result of such loss, liability, claim, damage or expense as is appropriate to
reflect the proportionate relative fault of the indemnifying party on the one
hand and the indemnified party on the other (determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or omission relates to information supplied by the indemnifying party or the
indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission), or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law or provides a lesser sum to the indemnified party
than the amount hereinafter calculated, not only the proportionate relative
fault of the indemnifying party and the indemnified party, but also the relative
benefits received by the indemnifying party on the one hand and the indemnified
party on the other, as well as any other relevant equitable considerations. No
indemnified party guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall
14
be entitled to contribution from any indemnifying party who was not guilty of
such fraudulent misrepresentation.
(f) Other Indemnification. Indemnification similar to that specified in
the preceding subsections of this Section 10 (with appropriate modifications)
shall be given by the Company and each Holder of Registrable Securities with
respect to any required registration or other qualification of securities under
any federal or state law or regulation or governmental authority other than the
Securities Act.
11. Miscellaneous
(a) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas and the United States of America,
both substantive and remedial. Any judicial proceeding brought against either of
the parties to this agreement or any dispute arising out of this Agreement or
any matter related hereto shall be brought in the courts of the State of Texas,
Xxxxxx County, or in the United States District Court for the Southern District
of Texas and, by its execution and delivery of this agreement, each party to
this Agreement accepts the jurisdiction of such courts. The foregoing consent to
jurisdiction shall not be deemed to confer rights on any person other than the
parties to this Agreement.
(b) Successors and Assigns. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, Permitted Assigns, executors and administrators of the parties
hereto. In the event the Company merges with, or is otherwise acquired by, a
direct or indirect subsidiary of a publicly traded company, the Company shall
condition the merger or acquisition on the assumption by such parent company of
the Company's obligations under this Agreement.
(c) Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subjects
hereof.
(d) Notices, etc. All notices or other communications which are
required or permitted under this Agreement shall be in writing and sufficient if
delivered by hand, by facsimile transmission, by registered or certified mail,
postage pre-paid, by electronic mail, or by courier or overnight carrier, to the
persons at the addresses set forth below (or at such other address as may be
provided hereunder), and shall be deemed to have been delivered as of the date
so delivered:
If to the Company: Continental Southern Resources, Inc.
000 Xxxxxxxxxxxx Xxxxxxxxx, Xxxxx 000X
Xxxx Xxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxxx
Facsimile: 610-__________
e-mail: xxxxx@xxxxxxx.xxx
15
If to the Purchasers: To each Purchaser at the address
set forth on Exhibit A
with a copy to: Xxxxxxx Xxxxxx Xxxxxx Inc.
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: President
Facsimile: ( 000) 000-0000
e-mail: xxx.xxxxxx@xxxxxx.xxx
If to Lancer: Xxxxx Xxxxxxxxx, Esq., as the Receiver for
Lancer Management Group II, LLC, Lancer
Offshore, Inc., and as the party in control
of Lancer Partners, LP.
c/o Xxxxx X. Xxxxx
Hunton & Xxxxxxxx, LLP
0000 Xxxxxxxx Xxxxxx,
Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
e-mail: xxxxxx@xxxxxx.xxx
or at such other address as any party shall have furnished to the other parties
in writing.
(e) Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any Holder of any Registrable Securities, upon any
breach or default of the Company under this Agreement, shall impair any such
right, power or remedy of such Holder nor shall it be construed to be a waiver
of any such breach or default, or an acquiescence therein, or of or in any
similar breach or default thereunder occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on the part of any Holder of any breach or default under
this Agreement, or any waiver on the part of any Holder of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement, or by law or otherwise afforded to any holder, shall be
cumulative and not alternative.
(f) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
(g) Severability. In the case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
(h) Amendments. The provisions of this Agreement may be amended at any
time and from time to time, and particular provisions of this Agreement may be
waived, with and only with an agreement or consent in writing signed by the
Company and by the holders of a majority
16
of the number of shares of Registrable Securities outstanding as of the date of
such amendment or waiver. The Purchasers acknowledge that by the operation of
this Section 11(h), the holders of a majority of the outstanding Registrable
Securities may have the right and power to diminish or eliminate all rights of
the Purchasers under this Agreement.
(i) Limitation on Subsequent Registration Rights. After the date of
this Agreement, the Company shall not, without the prior written consent of the
Holders of at least a majority of the Registrable Share then outstanding, enter
into any agreement with any holder or prospective holder of any securities of
the Company that would grant such holder registration rights senior to those
granted to the Holder hereunder.
[Signatures on the following page]
17
This Registration Rights Agreement is hereby executed as of the date first above
written.
COMPANY:
CONTINENTAL SOUTHERN RESOURCES, INC.
By: /s/ XXXXXXX X. XXXXXXXXXX
--------------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: President
XXXXXXX XXXXXX XXXXXX INC., Individually
and as Agent and Attorney in Fact for the
Purchasers listed on Exhibit A attached
hereto
By: /s/ XXXX XXXXXXX
--------------------------------------
Name: Xxxx Xxxxxxx
Title: Vice President
LANCER OFFSHORE, INC.
By: /s/ XXXXX XXXXXXXXX
--------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Receiver
LANCER PARTNERS, LP
By: /s/ XXXXX XXXXXXXXX
--------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Party in Control
18
Exhibit A
Purchaser Information
[INTENTIONALLY OMITTED]
19
