REGISTRATION RIGHTS AGREEMENT
Exhibit
10.03
This
Registration Rights Agreement dated as of the date set forth on the signature
page (“Agreement”) is by and between Xxxxxxx Drilling Corporation (the
“Company”), and the signatory on the signature page (the
“Holders”).
WHEREAS,
the Holder has issued certain 12% Convertible Notes, convertible into shares
of
the Company's common stock, par value $0.002 per share (the “ Conversion
Shares”), pursuant to that certain Securities Purchase Agreement, dated of even
date herewith (“Purchase Agreement”); and
WHEREAS,
the Company desires to grant to the Holder certain registration rights in
respect of the Conversion Shares.
NOW,
THEREFORE, in consideration of the premises and the mutual covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE
ONE
SECTION
1.1 Registration
Rights Available.
The
Company agrees to provide Holder with respect to the Conversion Shares and
any
other securities issued or issuable at any time or from time to time in respect
of the Conversion Shares upon a stock split, stock dividend, recapitalization
or
other similar event involving the Company (collectively, the “Securities”)
unlimited rights to “piggyback” on a public offering of Company securities,
subject to the provisions of this Agreement (the unlimited piggyback
registration rights hereunder being “Registration Right”).
SECTION
1.2 Piggyback
Registration.
With
respect to Holder’s right to piggyback on a public offering of the Company
securities pursuant to Section 1.1, the parties agree as follows:
(a)
Pursuant to Section 1.1, the Company will (i) promptly give to Holder written
notice 15 days prior to the filing of any registration relating to a public
offering of the Company securities; and (ii) include in such registration
(and
related qualification under blue sky laws or other compliance), and in the
underwriting involved therein, all the Securities specified in Holder’s written
request or requests, mailed in accordance with Section 3.8.
(b)
The
right of Holder’s to participate in registration pursuant to Section 1.1 shall
be conditioned upon Holder’s participation in such offering, if such offering is
a best efforts or firm commitment offering, and the inclusion of the Securities
in the underwriting shall be limited to the extent provided herein.
Notwithstanding any other provision of this Agreement, if the managing
underwriter determines that marketing factors require a limitation of the
number
of shares to be underwritten, the managing underwriter may limit some or
all of
the Securities that may be included in the registration and underwriting
as
follows: the number of Securities that may be included in the registration
and
underwriting by Holder shall be determined by multiplying the number of shares
of Securities of all selling shareholders of the Company which the managing
underwriter is willing to include in such registration and underwriting,
times a
fraction, the numerator of which is the number of Securities requested to
be
included in such registration and underwriting by Holder, and the denominator
of
which is the total number of Securities which all selling shareholders of
the
Company have requested to have included in such registration and underwriting.
To facilitate the allocation of shares in accordance with the above provisions,
the Company may round the number of shares allocable to any such person to
the
nearest 100 shares. If Holder disapproves of the terms of any such underwriting,
it may elect to withdraw therefrom by written notice to the Company and the
managing underwriter, delivered not less than seven days before the effective
date. Any securities excluded or withdrawn from such underwriting shall be
withdrawn from such registration, and shall not be transferred in a public
distribution prior to 120 days after the effective date of the registration
statement relating thereto, or such other shorter period of, time as the
underwriters may require.
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SECTION
1.3 Registration
Procedure.
With
respect to the Registration Right, the following provisions shall
apply:
(a)
Holder shall be obligated to furnish to the Company and the underwriters
(if
any) such information regarding the Securities and the proposed manner of
distribution of the Securities as the Company and the underwriters (if any)
may
request in writing and as shall be required in connection with any registration,
qualification or compliance referred to herein and shall otherwise cooperate
with the Company and the underwriters (if any) in connection with such
registration, qualification or compliance.
(b)
With
a view to making available the benefits of certain rules and regulations
of the
Commission which may at any time permit the sale of the Restricted Securities
(used herein as defined in Rule 144 under the Securities Act of 1933, as
amended) to the public without registration, the Company agrees to use its
best
lawful efforts to:
(i)
Make
and keep public information available, as those terms are understood and
defined
in Rule 144 under the Securities Act, at all times during which the Company
is
subject to the reporting requirements of the Securities Exchange Act of 1934,
as
amended (the “Exchange Act”); and
(ii)
File
with the SEC in a timely manner all reports and other documents required
of the
Company under the Securities Act and the Exchange Act (at all times during
which
the Company is subject to such reporting requirements).
(c)
The
Company agrees that it will furnish to Holder such number of prospectuses,
offering circulars or other documents incident to any registration,
qualification or compliance referred to herein as provided or, if not otherwise
provided, as the Holder from time to time may reasonably request.
(d)
All
expenses (except for the costs of any underwriting and selling discounts
and
commissions and legal fees for Holder’s attorneys) of any registrations
permitted pursuant to this Agreement and of all other offerings by the Company
(including, but not limited to, the expenses of any qualifications under
the
blue-sky or other state securities laws and compliance with governmental
requirements of preparing and filing any post-effective amendments required
for
the lawful distribution of the Securities to the public in connection with
such
registration, of supplying prospectuses, offering circulars or other documents)
will be paid by the Company.
(e)
The
Registration Rights of this Agreement, subject to the terms and conditions
hereof, shall be available to any subsequent holder of the Securities owned
by
Holder. Each subsequent holder entitled to the Registration Rights under
this
Agreement shall be bound by the terms and subject to the obligations of this
Agreement as though it were an original signatory hereto.
SECTION
1.3. OBLIGATIONS
OF THE COMPANY.
In
connection with the Company's registration obligations hereunder, the Company
shall, as expeditiously as practicable:
(a)
(i)
furnish to each Holder copies of all documents filed with the United States
Securities and Exchange Commission (“SEC”) prior to there being filed with the
SEC, (ii) use commercially reasonable best efforts to cause its officers
and
directors, counsel and certified public accountants to respond to such inquiries
as shall be necessary, in the reasonable opinion of such Holder, to conduct
a
reasonable investigation within the meaning of the Securities Act, and (iii)
notify the Holders of any stop order issued or threatened by the SEC and
use
best efforts to prevent the entry of such stop order or to remove it if entered.
(b) (i)
prepare and file with the SEC (electronically on XXXXX) such amendments and
supplements, including post-effective amendments, to each registration statement
filed pursuant to the this Agreement (the “Registration Statement”) and the
prospectus used in connection therewith (the “Prospectus”) as may be necessary
to comply with the Securities Act and to keep the Registration Statement
continuously effective as required herein, and prepare and file with the
SEC
such additional Registration Statements as necessary to register for resale
under the Securities Act all of the shares registered (including naming any
permitted transferees of shares registered as selling stockholders in such
Registration Statement); (ii) cause any related Prospectus to be amended
or
supplemented by any required Prospectus supplement, and as so supplemented
or
amended to be filed pursuant to Rule 424; (iii) respond as promptly as possible
to any comments received from the SEC with respect to each Registration
Statement or any amendment thereto and as promptly as possible provide the
Holders true and complete copies of all correspondence from and to the SEC
relating to the Registration Statement (other than correspondence containing
material nonpublic information); and (iv) comply with the provisions of the
Securities Act and the Exchange Act with respect to the disposition of all
registered shares covered by such Registration Statement as so amended or
in
such Prospectus as so supplemented.
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(c) Notify
the Holders as promptly as possible:
(i)
when
the SEC notifies the Company whether there will be a “review” of a Registration
Statement and whenever the SEC comments in writing on such Registration
Statement; and (ii) when a Registration Statement, or any post-effective
amendment or supplement thereto, has become effective, and after the
effectiveness thereof: (A) of any request by the SEC or any other federal
or
state governmental authority for amendments or supplements to the Registration
Statement or Prospectus or for additional information; (B) of the issuance
by
the SEC or any state securities commission of any stop order suspending the
effectiveness of the Registration Statement covering any or all of the shares
registered or the initiation of any proceedings for that purpose; (C ) of
a
pending proceeding against the Company under Section 8A of the Securities
Act in
connection with the offering of the shares registered; and (D) 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 shares registered
for sale in any jurisdiction, or the initiation or threatening of any proceeding
for such purpose. If any of the events described in Section 1.3 (c)(ii)(A),
1.3
(c)(ii)(B), and 1.3 (c)(ii)(C) occur, the Company shall use best efforts
to
respond to and correct the event.
(d) Notify
the Holders and their counsel as promptly as possible of the happening of
any
event as a result of which the Prospectus included in or relating to a
Registration Statement contains an untrue statement of a material fact or
omits
any fact necessary to make the statements therein not misleading; and,
thereafter, the Company will as promptly as possible prepare (and, when
completed, give notice to each Holder) a supplement or amendment to such
Prospectus so that, as thereafter delivered to the purchasers of such shares
registered, such Prospectus will not contain an untrue statement of a material
fact or omit to state any fact necessary to make the statements therein not
misleading; provided that upon such notification by the Company, the Holders
will not offer or sell the shares registered pursuant to such Prospectus
until
the Company has notified the Holders that it has prepared a supplement or
amendment to such Prospectus and delivered copies of such supplement or
amendment to the Holders (it being understood and agreed by the Company that
the
foregoing proviso shall in no way diminish or otherwise impair the Company's
obligation to as promptly as possible prepare a Prospectus amendment or
supplement as above provided in this Section 1.3 (d).
(e) Upon
the
occurrence of any event described in Section 1.3 (d) hereof, as promptly
as
possible, prepare a supplement or amendment, including a post-effective
amendment, to the 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 the 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 are made, not misleading.
(f) Use
best
efforts to avoid the issuance of or, if issued, obtain the withdrawal of,
(i)
any order suspending the effectiveness of any Registration Statement or (ii)
any
suspension of the qualification (or exemption from qualification) of any
of the
shares registered for sale in any jurisdiction.
(g) Furnish
to the Holders, without charge, at least one conformed copy of each Registration
Statement and each amendment thereto, and all exhibits to the extent requested
by such Holder as promptly as possible after the filing of such documents
with
the SEC.
(h) As
promptly as possible furnish to each selling Holder, without charge, such
number
of copies of a Prospectus, including a preliminary Prospectus, in conformity
with the requirements of the Securities Act, and such other documents
(including, without limitation, Prospectus amendments and supplements) as
each
such selling Holder may reasonably request in order to facilitate the
disposition of the registered shares covered by such Prospectus and any
amendment or supplement thereto. 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 shares registered
covered by such Prospectus and any amendment or supplement thereto to the
extent
permitted by federal and state securities laws and regulations.
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(i) Use
best
efforts to register and qualify (or obtain an exemption from such registration
and qualification) the shares registered under such other securities or blue
sky
laws of the states of residence of each Holder and such other jurisdictions
as
each Holder shall reasonably request, to keep such registration or qualification
(or exemption therefrom) effective during the periods each Registration
Statement is effective, and do any and all other acts or things which may
be
reasonably necessary or advisable to enable each Holder to consummate the
public
sale or other disposition of registered shares in such jurisdiction, provided
that the Company shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to service
of
process in any such states or jurisdictions where it is not then qualified
or
subject to process.
(j) Cooperate
with the Holders to facilitate the timely preparation and delivery of
certificates representing the shares registered to be delivered to a transferee
pursuant to a Registration Statement, which certificates shall be free, to
the
extent permitted by the Securities Purchase Agreement and applicable law,
of all
restrictive legends, and to enable such registered shares to be in such
denominations and registered in such names as such Holders may request.
(k) Cooperate
with any reasonable due diligence investigation undertaken by the Holders,
any
managing underwriter participating in any disposition pursuant to a Registration
Statement, Holders' Counsel and any attorney, accountant or other agent retained
by Holders or any managing underwriter, in connection with the sale of the
shares registered, including, without limitation, making available any documents
and information; provided, however, that the Company will not deliver or
make
available to any Holder material, nonpublic information unless such Holder
specifically requests and consents in advance in writing to receive such
material, nonpublic information and, if requested by the Company, such Holder
agrees in writing to treat such information as confidential.
(l) At
the
request of an affiliate, the Company shall amend any Registration Statement
to
include such affiliate as a selling stockholder in such Registration Statement.
(m) Comply
with all applicable rules and regulations of the SEC in all material respects.
ARTICLE
TWO
Indemnification
SECTION
2.1 Indemnification
by the Company.
In the
event of any registration of the Securities of the Company under the Securities
Act, the Company agrees to indemnity and hold harmless Holder and each other
person who participates as an underwriter in the offering or sale of such
securities against any and all claims, demands, losses, costs, expenses,
obligations, liabilities, joint or several, damages, recoveries and
deficiencies, including interest, penalties and attorneys' fees (collectively,
“Claims”), to which Holders or underwriter may become subject under the
Securities Act or otherwise, insofar as such Claims (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or are
based
on any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which Holder’s Securities 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 not misleading, and the Company will reimburse Holder and each such
underwriter for any legal or any other expenses reasonably incurred by them
in
connection with investigating or defending any such Claim (or action or
proceeding in respect thereof); provided that the Company shall not be liable
in
any such case to the extent that any such Claim (or action or proceeding
in
respect thereof) or expense arises out of or is based on an untrue statement
or
alleged untrue statement or omission or alleged omission made in such
registration statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance on and in conformity
with written information furnished to the Company through an instrument duly
executed by Holder specifically stating that it is for use in the preparation
thereof. Such indemnity shall remain in full force and effect regardless
of any
investigation made by or on behalf of Holder or any such underwriter and
shall
survive the transfer of the Securities by Holder.
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SECTION
2.2 Indemnification
by Holder.
The
Company may require, as a condition to including the Securities in any
registration statement filed pursuant to this Agreement, that the Company
shall
have received an undertaking satisfactory to it from Holder, to indemnify
and
hold harmless (in the same manner and to the same extent as set forth in
Section
2.1) the Company, each director of the Company, each officer of the Company
and
each other person, if any, who controls the Company, within the meaning of
the
Securities Act, with respect to any statement or alleged statement in or
omission or alleged omission from such registration statement, any preliminary
prospectus contained therein, or any amendment or supplement thereto, if
such
statement or alleged statement or omission or alleged omission was made in
reliance on and in conformity with written information furnished to the Company
through an instrument duly executed by Holder specifically stating that it
is
for use in the preparation of such registration statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement.
Notwithstanding the foregoing, the maximum liability hereunder which any
holder
shall be required to suffer shall be limited to the net proceeds to such
Holder
from the Conversion Shares sold by such Holder in the offering. 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 of the Securities by Holder.
SECTION
2.3 Notices
of Claims, etc.
Promptly after receipt by an indemnified party of notice of the commencement
of
any action or proceeding involving a Claim referred to in this Article Two,
such
indemnified party will, if a claim in respect thereof is to be made against
an
indemnifying party, give written notice to the latter of the commencement
of
such action, provided that the failure of any indemnified party to
give
notice as provided herein shall not relieve the indemnifying party of its
obligations under this Article Two, 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 indemnifying party, unless in such indemnified
party reasonable judgment a conflict of interest between such indemnified
and
indemnifying parties may exist in respect of such Claim, the indemnifying
party
shall be entitled to participate in and to assume the defense thereof, jointly
with any other indemnifying party similarly notified to the extent that it
may
wish, 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 other than reasonable costs
of
investigation. No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any settlement
that 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.
SECTION
2.4 Indemnification
Payments.
The
indemnification required by this Article shall be made by periodic payments
of
the amount thereof during the course of the investigation or defense, as
and
when bills are received or expense, loss, damage or liability is incurred.
The
indemnity and contribution agreements contained in this Article 2 are in
addition to any other remedy that any indemnified party may have against
any
indemnifying party.
SECTION
2.5 If
any
indemnified party shall have reasonably concluded that there may be one or
more
legal defenses available to such indemnified party which are different from
or
additional to those available to the indemnifying party, or that such claim
or
litigation involves or could have an effect upon matters beyond the scope
of the
indemnity agreement provided in this Article 2, the indemnifying party shall
not
have the right to assume the defense of such action on behalf of such
indemnified party, and such indemnifying party shall reimburse such indemnified
party and any person controlling such indemnified party for the fees and
expenses of counsel retained by the indemnified party which are reasonably
related to the matters covered by the indemnity agreement provided in this
Article 2. Subject to the foregoing, an indemnified party shall have the
right
to employ separate counsel in any such action and to participate in the defense
thereof but the fees and expenses of such counsel shall not be at the expense
of
the Company.
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SECTION
2.6 If
the
indemnification provided for in this Article 2 from the indemnifying party
is
applicable by its terms but unavailable to an indemnified party hereunder
in
respect of any losses, claims, damages, liabilities or expenses then the
indemnifying party, in lieu of indemnifying such indemnified party, shall,
subject to the maximum aggregate liability of any Holder as set forth in
Section
2.2, contribute to the amount paid or payable by such indemnified party as
a
result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and indemnified party in connection with the actions which resulted
in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative faults 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 to state a material
fact, has been made by, or relates to 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. The amount
paid or payable by a party as a result of the losses, claims, damages,
liabilities and expenses referred to above shall be deemed to include, subject
to the limitations set forth in Section 2, any legal or other fees, charges
or
expenses reasonably incurred by such party in connection with any investigation
or proceeding. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person. The parties hereto agree that it would not
be just
and equitable if contribution pursuant to this Section 2.6 were determined
by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraph.
ARTICLE
THREE
Miscellaneous
SECTION
3.1 Consent
to Amendments.
Except
as otherwise expressly provided herein, the provisions of this Agreement
may be
amended or waived only by the written agreement of the Company and the Majority
Purchasers (as defined in the Purchase Agreement) and shall be effective
only to
the extent specifically set forth in such writing.
SECTION
3.2 Term
of the Agreement.
This
Agreement shall terminate with respect to Holder on the earlier to occur
of (i)
all of the Securities having been registered as provided in Article One or
(ii)
two years after the date hereof.
SECTION
3.3 Successors
and Assigns.
Except
as otherwise expressly provided herein, all covenants and agreements contained
in this Agreement by or on behalf of any of the parties hereto are transferable
and will bind and inure to the benefit of the respective successors and assigns
of the parties hereto, but only if so expressed in writing.
SECTION
3.4 Severability.
Whenever possible, each provision of this Agreement will be interpreted in
such
a manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be prohibited by or invalid under applicable
law,
such provision will be ineffective only to the extent of such prohibition
or
invalidity, without invalidating the remainder of this Agreement.
SECTION
3.5 Delays
or Omissions.
No
failure to exercise or delay in the exercise of any right, power or remedy
accruing to Holder on any breach or default of the Company under this Agreement
shall impair any such right, power or remedy nor shall it be construed to
be a
waiver of any such breach or default.
SECTION
3.6 Remedies
Cumulative.
All remedies
under this Agreement, or by law or otherwise afforded to any party hereto
shall
be cumulative and not alterative.
SECTION
3.7 Descriptive
Headings.
The
descriptive headings of this Agreement are inserted for convenience only
and do
not constitute a part of this Agreement. Unless clearly denoted otherwise,
any
reference to Articles or Sections contained herein shall be to the Articles
or
Sections of this Agreement.
SECTION
3.8 Notices.
Any
notices required or permitted to be sent hereunder shall be delivered pursuant
to the terms of the Purchase Agreement.
SECTION
3.9 Governing
Law.
The
validity, meaning and effect of this Agreement shall be determined in accordance
with the laws of the State of Texas applicable to contracts made and to be
performed in that state.
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SECTION
3.10 Final
Agreement.
This
Agreement, together with those documents expressly referred to herein,
constitutes the final agreement of the parties concerning the matters referred
to herein, and supersedes all prior agreements and understandings.
SECTION
3.11 Execution
in Counterparts.
This
Agreement may be executed in any number of counterparts, each of which when
so
executed and delivered shall be deemed an original, and such counterparts
together shall constitute one instrument.
The
parties hereto have executed this Agreement as of October 31, 2006.
COMPANY:
XXXXXXX
DRILLING CORPORATION
By:
Name:
Title:
HOLDER:
By:
Name:
Title:
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