EXHIBIT 10.33
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered
into as of , 1999, by and among Southern Mineral Corporation, a Nevada
corporation (the "Company"), and EnCap Energy Capital Fund III, L.P., a Texas
limited partnership, EnCap Energy Capital Fund III-B, L.P., a Texas limited
partnership, Energy Capital Investment Company PLC, an English investment
company, and BOCP Energy Partners, L.P., a Texas limited partnership
(collectively, the "EnCap Purchasers" and each individually an "EnCap
Purchaser").
This Agreement is made in connection with the Stock Purchase Agreement (the
"Stock Purchase Agreement"), dated as of July 20, 1999, among the Company and
the EnCap Purchasers with respect to the purchase by the EnCap Purchasers from
the Company of an aggregate of 43,829,787 newly issued shares of the Company's
common stock, par value $0.01 per share (the "Common Stock"), for an aggregate
purchase price of $20.6 million. In connection with the Stock Purchase
Agreement, the Company has agreed to provide the EnCap Purchasers with the
registration rights set forth in this Agreement.
In consideration of the foregoing, the parties hereto agree as follows:
Section 1. Certain Definitions:
For purposes of this Agreement, the following terms shall have the
respective meanings:
"Affiliate" shall mean, with respect to a specified Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person and, with respect to any fund or
trust, any Person which is a participant in or beneficiary of such fund or
trust. For purposes of this definition, "control" when used with respect to any
specified ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Common Stock" shall mean the common stock of the Company, par value $0.01
per share.
"Demand" shall have the meaning set forth in Section 3(a)(i).
"Eligible Common Stock" shall mean, as of any date of determination, shares
of Common Stock held by either an EnCap Purchaser or a Permitted Transferee of
an EnCap Purchaser.
"Eligible Holders" shall mean, as of any date of determination, the EnCap
Purchasers holding Eligible Common Stock and any Permitted Transferees holding
Eligible Common Stock to whom an EnCap Purchaser has assigned registration
rights pursuant to Section 10(d).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"Permitted Transferee" shall mean pursuant to Section 10(d) hereof a Person
(i) to whom the EnCap Purchasers have transferred Common Stock acquired by the
EnCap Purchasers pursuant to the Stock Purchase Agreement and (ii) who has
executed and delivered to the Company an Additional Party Counterpart in the
form set forth in Exhibit A hereto.
"Person" shall mean any individual, partnership, corporation, trust, limited
liability company or unincorporated organization, or a government or agency or
political subdivision thereof.
"Prospectus" shall mean the prospectus included in a Registration Statement,
including any preliminary prospectus, and any such prospectus as amended or
supplemented by any prospectus supplement with respect to the terms of the
offering of the Common Stock covered by the Registration Statement, and by all
other
amendments and supplements to such Prospectus, including post-effective
amendments, and in each case including all materials incorporated by reference
therein.
"Registration Statement" shall mean any registration statement of the
Company on an appropriate form under the Securities Act (other than any
registration statement with respect to securities filed on a Form S-4 or S-8 or
any other forms prescribed for the same or similar purposes) and all amendments
and supplements to such registration statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
materials incorporated by reference therein and all exhibits thereto (including
those incorporated by reference).
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Seller" shall mean an EnCap Purchaser or any Permitted Transferee of
Eligible Common Stock for which the Company shall be required to file a
registration statement or which shall be registered under the Securities Act at
the request of such holder pursuant to any of the provisions of Section 3.
Neither the Company nor any Affiliate of the Company shall be deemed a "Seller"
for any purposes of this Agreement.
"underwritten registration" or "underwritten offering" shall mean an
offering of the Common Stock pursuant to a Registration Statement in which the
Common Stock of the Company is sold to the public by one or more underwriters.
Section 2. Common Stock Subject to Registration Rights.
Shares of Eligible Common Stock will cease to be Eligible Common Stock when
either (i) a Registration Statement covering such Eligible Common Stock has
been declared effective by the SEC, (ii) it has been sold pursuant to Rule 144
(or any similar rule or regulation then in force) under the Securities Act, or
(iii) it has otherwise been transferred and it may be sold without registration
under the Securities Act and without restriction under Rule 144 (or any similar
rule or regulation then in force).
Section 3. Registration Rights.
(a) Demand Registration.
(i) At any time commencing six months following the closing date of the
Stock Purchase Agreement, any Eligible Holder shall have the right to make
written requests (each, a "Demand") on the Company to cause the Company to
use its best efforts to file and cause to be declared effective a
Registration Statement on Form S-3 or any other similar registration under
the Securities Act with respect to the Eligible Common Stock, provided,
that (x) the expected offering price of the Eligible Common Stock held by
the requesting Eligible Holder requested to be registered is at least $5
million, and (y) the expected offering of Eligible Common Stock includes at
least one-half of all remaining shares of Eligible Common Stock held by the
Eligible Holders, and provided further that the requesting Eligible Holder
shall use reasonable efforts to sell such Eligible Common Stock requested
to be registered. This Section 3(a)(i) shall be applicable for so long as
the Eligible Common Stock cannot be freely transferred pursuant to Rule 144
under the Securities Act (or any similar rule or regulation hereafter
adopted by the SEC) without the imposition of volume, manner of sale and
holding period limitations.
(ii) Each Demand shall set forth the number of shares of Eligible Common
Stock proposed to be sold by the Eligible Holders and the intended method
of distribution of such shares.
(iii) In the case of any underwritten public offering of Eligible Common
Stock pursuant to a registration under this Section 3(a), if the managing
underwriter advises the Eligible Holders and the Company in its opinion
that (A) the inclusion in such registration of some or all of such Common
Stock
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requested to be registered (including without limitation, securities to be
registered by the Company included pursuant to incidental or "piggyback"
rights heretofore or hereafter granted by the Company to Persons other than
the Eligible Holders) will cause the proceeds or price per share to the
Eligible Holders to be reduced or (B) that the number of securities to be
registered at the request of the Eligible Holders pursuant to this Section
3(a) plus the number of securities sought to be registered by the Company
or such other Persons will materially and adversely affect the success of
the offering, then the number of securities sought to be registered by each
holder other than an Eligible Holder of Common Stock shall be reduced pro
rata in proportion to the number of shares of Common Stock sought to be
registered by such holders to the extent necessary to reduce the number of
securities to be registered to the number recommended by the managing
underwriter (the "Recommended Number").
(b) Piggyback Registration.
(i) In the event the Company proposes to file a Registration Statement
with respect to its Common Stock, whether of its own accord or at the
request of any holder or holders of such securities, it will give written
notice to the Eligible Holders of the Company's intention to do so and,
upon the written request of any of the Eligible Holders given within 7 days
after receipt of such notice, the Company will use its best efforts to
effect the registration of the Eligible Common Stock of the requesting
Eligible Holder (the "Piggyback Securities") which it shall have been so
requested to register by including such Piggyback Securities in the
Registration Statement ("Piggyback Registration Rights"). Piggyback
Securities are to be included in the Registration Statement on the same
terms and conditions as the shares of Common Stock otherwise being sold
through underwriters under such Registration Statement; unless the managing
underwriter or underwriters of any proposed underwritten offering
determines and advises the Company that the inclusion in the Registration
Statement of some or all Piggyback Securities proposed to be included would
cause the proceeds or price per share the Company or the requesting or
demanding holder of Common Stock will derive from such registration to be
reduced or that the number of securities to be registered at the instance
of the Company or such requesting or demanding holder plus the number of
shares sought to be registered by the requesting Eligible Holder is too
large a number to be reasonably sold or will materially and adversely
affect the success of the offering. If, in such opinion of such managing
underwriter or underwriters, not all of the Common Stock requested to be
included should be included in such registration, then the number of
securities to be included in such registration will be reduced as set forth
below:
(A) the number of shares of Common Stock sought to be registered
by any holders of shares of Common Stock other than the Eligible
Holders and holders of Common Stock at whose instance the registration
is being made shall be reduced to the extent necessary to reduce the
number of securities to be registered to the Recommended Number;
(B) if the reduction provided for in clause (A) above does not
reduce the number of shares of Common Stock to be registered to the
Recommended Number and the registration is at the instance of
(x) the Company, then the number of Piggyback Securities sought
to be registered by the Eligible Holders shall be reduced to the
extent necessary to reduce the number of securities to be registered
to the Recommended Number; or
(y) any holder of Common Stock that is granted registration
rights after the date of this Agreement (a "New Holder"), then the
number of shares of Common Stock sought to be registered by the New
Holder and the Eligible Holders shall be reduced in accordance with
their relative rights to the extent necessary to reduce the number
of shares of Common Stock to be registered to the Recommended
Number, but in any event the reduction in Piggyback Securities shall
not be greater than pro rata in proportion to the number of
Piggyback Securities and other shares of Common Stock sought to be
registered by such holders.
(ii) In connection with any offering by the Company to which the
Eligible Holders have Piggyback Registration Rights, the Company, in its
sole discretion, shall determine (A) whether to initiate, proceed
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with or terminate such registration, (B) the pricing (including
underwriting discounts and commissions) for such offering and (C) the
timing of such offering. The Company may withdraw any Registration
Statement and abandon any proposed sale of Common Stock without the consent
of the Eligible Holders, notwithstanding the request of the Eligible
Holders to participate therein in accordance with this Agreement, if the
Company determines in its sole discretion to so withdraw and abandon such
proposed sale.
(iii) The rights set forth in this Section 3(b) shall be unlimited and
exercisable with any Registration Statement covering Common Stock.
Section 4. Holdback Agreements.
(a) Each of the Eligible Holders agrees, and any transferee of the Eligible
Holders, by acceptance of any Eligible Common Stock agrees, that if it is
requested by the managing underwriter or underwriters in an underwritten
offering, not to effect any public or private sale or distribution of
securities of the Company of the same class as the securities included in the
Registration Statement, during the period requested by the managing
underwriters but not to exceed the shorter of (i) the period agreed to by the
Company or management of the Company or (ii) 120 days, beginning on the
effective date of such Registration Statement, including a sale pursuant to
Rule 144 or Rule 144A under the Securities Act, to the extent timely notified
in writing by the Company or the managing underwriters.
(b) The Company agrees (i) if requested by the managing underwriter or
underwriters of an underwritten public offering pursuant to Section 3(a), not
to effect a public or private sale or distribution of its Common Stock, or any
securities convertible into or exchangeable for such securities (other than any
such sale or distribution of such securities in connection with any merger or
consolidation by the Company or a subsidiary thereof or the acquisition by the
Company or a subsidiary thereof of the capital stock or substantially all of
the assets of any other Person) during the period requested by the managing
underwriters but not to exceed 120 days beginning on, the effective date of any
Registration Statement filed pursuant to Section 3(a) hereof and (ii) that any
agreement entered into after the date hereof pursuant to which the Company
issues or agrees to issue any privately placed Common Stock or securities
convertible into or exchangeable for Common Stock shall contain a provision
under which holders of such securities agree, and the Company shall use its
reasonable efforts to cause any existing holders of its privately placed equity
securities to agree, that if it is requested by the managing underwriter or
underwriters in an underwritten offering, not to effect any public sale or
distribution of any such securities during the 30 day period prior to, and
during the applicable period requested by such underwriters beginning on, the
effective date of any Registration Statement, including a sale pursuant to Rule
144 or Rule 144A under the Securities Act (except pursuant to a Registration
Statement); provided, however, that the provisions of this paragraph (b) shall
not prevent (i) the conversion or exchange of any securities that the Company
is obligated to make pursuant to an agreement existing on the date hereof or
hereafter adopted by the Board of Directors, (ii) the exercise of warrants by
the holders thereof and (iii) grants and exercises of options pursuant to any
stock option plans or employee incentive plans of the Company.
Section 5. Registration Procedures.
In connection with the Company's registration obligations pursuant to
Section 3 hereof, the Company will use its best efforts to effect the
registration of the Eligible Common Stock in accordance with the intended
method or methods of distribution thereof, and pursuant thereto the Company
shall:
(a) prepare and file with the SEC, as soon as practicable after receipt
of a Demand, a Registration Statement on the appropriate form under the
Securities Act, which form shall be available for the sale of the Eligible
Common Stock in accordance with the intended method or methods of
distribution thereof and shall include all financial statements and other
information required by the SEC to be filed therewith, and use its best
efforts to cause such Registration Statement to become and remain
effective; provided, that notwithstanding the foregoing, the Company shall
not be required to file a Registration Statement within a period of 135
days after the effective date of any other Registration Statement for
Eligible Stock other than a Registration Statement on Form S-3; and further
provided that no Registration Statement will be
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filed by the Company until one counsel for Sellers shall have had a
reasonable opportunity to review the same and the right to reasonably
approve or disapprove any portion of such Registration Statement describing
or referring to Sellers;
(b) prepare and file with the SEC such amendments to the Registration
Statement as may be necessary to keep the Registration Statement effective
until the distribution of the Eligible Common Stock under the Registration
Statement is complete (which period shall not be required to exceed 270
days from the date the Registration Statement is declared effective)(such
270-day period to be extended by the number of days during which either (i)
any stop order suspending the effectiveness of such Registration Statement
shall be in effect or (ii) the Sellers or the underwriters, if any, shall
be prohibited from consummating sales pursuant to such Registration
Statement or the Prospectus pursuant to the penultimate paragraph of this
Section 5); cause the Prospectus to be supplemented by any required
prospectus supplement, and as so supplemented to be filed pursuant to Rule
424 under the Securities Act; and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by
such Registration Statement;
(c) notify the Sellers and the managing underwriters, if any, (i) when
the Registration Statement has become effective and when any post-effective
amendment or supplements thereto become effective, (ii) of the issuance by
the SEC of any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for the purpose, (iii) of
the receipt by the Company of any notification with respect to the
suspension of the qualification of the Eligible Common Stock for sale in
any jurisdiction or the initiation or threatening of any proceeding for
such purpose and (iv) during the period when the Registration Statement is
required to be effective, of the happening of any event as a result of
which the Prospectus included in the 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 will forthwith prepare a supplement or
amendment to such Prospectus so that, as thereafter delivered to the
purchasers of such Eligible Common Stock, such Prospectus will not contain
an untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading;
(d) use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of the Registration Statement at the earliest
possible time;
(e) furnish to Sellers, prior to filing a Registration Statement, copies
of such Registration Statement as proposed to be filed, each amendment and
supplement thereto, and the Prospectus included in such Registration
Statement (including each preliminary prospectus), which documents shall be
subject to the reasonable opportunity to review and approve of Sellers,
which approval shall not be unreasonably withheld;
(f) furnish to Sellers such number of copies of reports on Forms 10-K,
Form 10-Q and Form 8-K (or their equivalents) which the Company shall have
filed with the Commission and such financial statements, reports and proxy
statements mailed to stockholders of the Company as Sellers may reasonably
request in order to facilitate the disposition of the Eligible Common Stock
being offered;
(g) deliver to Sellers and each underwriter, if any, without charge, as
many copies of the Prospectus (including each preliminary prospectus) and
any amendment or supplement thereto as Sellers may reasonably request;
(h) prior to any public offering of Eligible Common Stock, use its best
efforts to register or qualify or cooperate with Sellers, the underwriters,
if any, and their respective counsel in connection with the registration or
qualification of such Eligible Common Stock for offer and sale under the
securities or blue sky laws of such jurisdictions as Sellers or any
underwriter reasonably requests in writing; provided that the Company will
not be required to (i) qualify generally to do business in any jurisdiction
where it is not then so qualified or (ii) take any action which would
subject it to general service of process or taxation in any such
jurisdiction where it is not then so subject;
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(i) cooperate with Sellers and the managing underwriters, if any, to
facilitate the timely preparation and delivery of certificates representing
the Eligible Common Stock to be sold; and enable such Eligible Common Stock
to be in such denominations and registered in such names as the managing
underwriters or Sellers, as the case may be, may request at least five
business days prior to any sale of the Eligible Common Stock;
(j) list all the Eligible Common Stock covered by the Registration
Statement on each securities exchange or automated quotation system, if
any, on which the Common Stock is then listed if requested by Sellers or by
the managing underwriters and such listing is permitted under the rules of
such exchange or automated quotation system, if any;
(k) if requested by Sellers, enter into an underwriting agreement with
an underwriter or underwriters providing for the sale of such Eligible
Common Stock in an underwritten offering which shall be customary in form,
substance and scope and shall contain customary requirements for
representations, warranties, covenants, opinions of counsel and
indemnification and contribution;
(l) make available upon reasonable notice and during business hours, for
inspection by a representative of Sellers and an underwriter, if any,
participating in any disposition pursuant to the Registration Statement,
and any attorney, accountant or other agent retained by Sellers or an
underwriter, all relevant financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors and employees to answer questions and to supply all information
reasonably requested by any such representative, underwriter, attorney,
accountant or agent in connection with such Registration Statement as shall
be reasonably necessary to enable them to exercise their due diligence
responsibilities; provided, however, that any records, information or
documents shall be kept confidential by such representative, underwriter,
attorney, accountant or agent unless disclosure of such records,
information or documents is required by securities laws in connection with
the sale of such Eligible Common Stock or by court or administrative order;
and provided, further, if such representative, underwriter, attorney,
accountant or agent is ordered to disclose any of such records, documents
or information, such representative, underwriter, attorney, accountant or
agent will provide the Company with prompt written notice of such
requirement so that the Company at its expense may seek a protective order
or other appropriate remedy and/or waive compliance with this Agreement. In
the event that such protective order or other remedy is not timely
obtained, or that the Company timely waives compliance with the provisions
hereof, such representative, underwriter, attorney, accountant or agent
agrees to furnish only that portion of such records, documents or
information which such representative, underwriter, attorney, accountant or
agent is legally required to disclose in the opinion of the special counsel
or counsel representing such representative, underwriter, accountant or
agent;
(m) otherwise use its best efforts to comply with all applicable rules
and regulations of the SEC, and make generally available to its security
holders earnings statements no later than 45 days after the end of any 12-
month period (or 90 days, if such period is a fiscal year) commencing at
the end of any fiscal quarter in which Eligible Common Stock is sold to
underwriters in an underwritten offering, which statements shall cover said
12-month period and shall satisfy the provisions of Section 11(a) of the
Securities Act; and
(n) furnish or cause to be furnished to Sellers any opinions of counsel
or customary accountants' "cold comfort" letters that might be reasonably
requested by Sellers and/or the underwriters, if any, in connection with
any registration of Eligible Common Stock in a Registration Statement and
take all such other reasonable actions in connection with such registration
to expedite or facilitate the disposition of the Eligible Common Stock as
contemplated by the Registration Statement and the related underwriting
agreement contemplated by Section 5(k).
The Company may require Sellers (i) to furnish to the Company such
information regarding Sellers and the distribution of the Eligible Common Stock
as may be required for inclusion in the Registration Statement and (ii) (A) in
connection with any Demand, to enter into an underwriting agreement in the form
and substance reasonably satisfactory to Sellers, (B) in connection with any
registration of Piggyback Securities with respect
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to any Registration Statement filed by the Company of its own accord, to enter
into an underwriting agreement in the form contemplated by Section 5(k);
provided that the Company uses its reasonable efforts to negotiate that the
indemnification and contribution provisions of any such underwriting agreement
be substantially as set forth in Section 7 hereof, or (C) in connection with
any other registration of Piggyback Securities, to enter into an underwriting
agreement in the form contemplated by Section 5(k).
Sellers agree that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 5(c) hereof, Sellers
will forthwith discontinue the offering and disposition of Eligible Common
Stock covered by such Registration Statement or Prospectus (i) until Sellers'
receipt of the copies of the supplemented or amended Prospectus contemplated by
Section 5(c) hereof or (ii) until Sellers are advised in writing (the "Advice")
by the Company that the use of the Prospectus may be resumed, and have received
copies of any additional or supplemental filings which are incorporated by
reference in the Prospectus, and, if so directed by the Company, Sellers will
deliver to the Company all copies, other than permanent file copies then in
Sellers' possession, of the Prospectus covering such Eligible Common Stock
current at the time of receipt of such notice. In the event the Company shall
give any such notice to suspend the offering and disposition of the Eligible
Common Stock, the time periods regarding the maintenance of the applicable
Registration Statement shall be extended by the number of days during the
period from and including the date of the giving of such notice pursuant to
Section 5(c) hereof to and including the date when Sellers shall have received
the copies of the supplemented or amended Prospectus hereof or the Advice.
Notwithstanding the foregoing, (a) the Company may delay the filing of any
Registration Statement, any amendment thereof or any supplement to the related
Prospectus, and may withhold efforts to cause any Registration Statement to
become effective, and (b) in the case of an effective Registration Statement,
upon the request of the Company, the holders of Eligible Common Stock
participating in such registration shall refrain from selling any shares
pursuant to such Registration Statement, if (i) the Company's Board of
Directors determines in good faith that such registration or sale would (A)
interfere with or adversely affect the negotiation or completion of any
material transaction that is being pursued by the Company at the time the
demand is made, (B) involve initial or continuing disclosure obligations with
respect to material non-public information not otherwise required by law or the
rules and regulations of the SEC, which disclosure would have a material
adverse effect on the Company or (C) would require the conduct of an audit
other than the regular audit conducted by the Company at the end of its fiscal
year, in which case the filing may be delayed until the completion of such
regular audit (unless Sellers agree to pay all expenses of the Company in
connection with such additional audit), or (ii) in the written opinion of a
nationally recognized investment bank with experience in the energy industry
and reasonably acceptable to Sellers, that the Company is unable to consummate
an underwritten offering on reasonable terms due to then currently prevailing
market conditions; provided however, that the duration of any such delay or
period in which shares of Eligible Common Stock may not be sold pursuant to an
effective Registration Statement shall only be for a reasonable period of time
(not to exceed a period of 135 days) and there shall not be more than one such
delay per calendar year).
Section 6. Registration Expenses.
All expenses incident to the Company's performance of or compliance with
this Agreement, including without limitation SEC, state and foreign
registration and filing fees, fees with respect to filings required to be made
with the National Association of Securities Dealers, Inc., printing expenses,
and fees and disbursements of counsel for the Company and one separate counsel
of Sellers, which for a Piggyback Registration by Sellers will constitute one
separate counsel for all holders selling Common Stock, and of all independent
certified public accountants of the Company (including the expenses of any
special audit and "cold comfort" letters required by or incident to such
performance), fees and expenses incurred in connection with any underwritten
offering, fees and expenses of independent engineering reports and other
experts and the fees and expenses incurred in connection with the listing of
the securities to be registered on each securities exchange on which similar
securities issued by the Company are then listed, in connection with the Demand
Registration and Piggyback Registration will be borne by the Company whether or
not any such Registration Statement becomes
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effective, provided that all underwriting discounts and selling commissions
applicable to the sale of the Eligible Common Stock and all other expenses of
Sellers incurred in connection with the distribution of Eligible Common Stock
(including all salaries of its officers and employees and all relevant taxes,
including transfer taxes) will be borne by Sellers.
Section 7. Indemnification; Contribution.
(a) Indemnification by the Company. The Company agrees to indemnify and hold
harmless each Person who participates as an underwriter (any such Person, an
"Underwriter") and Sellers and each of their respective directors and officers
and each other Person, if any, who controls Sellers or any Underwriter within
the meaning of the Securities Act as follows: (i) against any and all loss,
liability, claim, damage and expense, joint or several, whatsoever, as
incurred, arising out of any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement (or any amendment
thereto) pursuant to which Eligible Common Stock was registered under the
Securities Act, including all documents incorporated therein by reference, or
the omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not misleading or
arising out of any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement (or any amendment or supplement
thereto), including all documents incorporated therein by reference, or the
omission or alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; (ii) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or investigation or proceeding by
any governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with the
written consent of the Company, such consent not to be unreasonably withheld;
and (iii) against any and all expense whatsoever, as incurred (including,
subject to the provisions of Section 7(c), fees and disbursements of counsel),
reasonably incurred in investigating, preparing or defending against any
litigation, or investigation or proceeding by any governmental agency or body,
commenced or threatened, in each case whether or not a party, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such expense is
not paid under (i) or (ii) above; provided, however, that the Company shall not
be liable in any such case to the extent that any such loss, liability, claim,
damage, liability or expense arises out of or is based upon an untrue statement
or alleged untrue statement or alleged omission in a Prospectus, if such untrue
statement or alleged untrue statement, omission or alleged omission is
corrected in an amendment or supplement to such Prospectus and Sellers or the
Underwriter, as the case may be, thereafter fails to deliver such Prospectus as
so amended or supplemented prior to or concurrently with the sale by Sellers or
the Underwriter, as the case may be, of the Eligible Common Stock to the Person
asserting such loss, liability, claim, damage, or expense if the Company had
furnished Sellers or the Underwriter, as the case may be, within a reasonable
period of time prior to such sale with the number of copies of such amended or
supplemented Prospectus reasonably requested by Sellers or the Underwriter, as
the case may be; and provided, further, that this indemnity agreement does not
apply to Sellers or any Underwriter with respect to any loss, liability, claim,
damage or expense to the extent arising out of any untrue statement or omission
or alleged untrue statement or omission made in reliance upon and in conformity
with information furnished in writing to the Company by Sellers or any
Underwriter specifically for inclusion in a Registration Statement (or any
amendment thereto) or any Prospectus (or any amendment or supplement thereto).
(b) Indemnification by Sellers. Sellers agree to jointly and severally
indemnify and hold harmless the Company and each Underwriter, if any, and each
of their respective directors and officers (including each officer and director
of the Company who signed the Registration Statement), and each other Person,
if any, who controls the Company or any Underwriter within the meaning of the
Securities Act, against any and all loss, liability, claim, damage and expense
described in the indemnity contained in Section 7(a) hereof, as incurred, but
only with respect to untrue statements or omissions, or alleged untrue
statements or omissions, made in a Registration Statement (or any amendment
thereto) or any Prospectus (or any amendment or supplement thereto) in reliance
upon and in conformity with information regarding Sellers furnished in writing
to the
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Company by Sellers specifically for inclusion in such Registration Statement
(or any amendment thereto) or such Prospectus (or any amendment or supplement
thereto); provided, however, that Sellers shall not be obligated to provide
such indemnity to the extent that such losses, liabilities, claims, damages,
and expenses result, directly or indirectly, from the failure of the Company to
promptly amend or take action to correct or supplement any such Registration
Statement, Prospectus, amendment or supplement based on corrected or
supplemental information promptly provided in writing by Sellers to the Company
for such purpose and the Company thereafter fails to furnish to Sellers or the
Underwriter, as the case may be, such Prospectus as so amended or supplemented
within a reasonable period of time, the number of copies of such amended or
supplemented Prospectus requested by Sellers or the Underwriter, as the case
may be, prior to or concurrently with the sale by Sellers or the Underwriter,
as the case may be, of the Eligible Common Stock to the person asserting such
loss, liability, claim, damage or expense. This indemnity shall be in addition
to, and not in lieu of any liability that Sellers may otherwise have.
(c) Conduct of Indemnification Proceedings. Each indemnified party shall
give prompt notice to each indemnifying party of any action or proceeding
commenced against it in respect of which indemnity may be sought hereunder, but
failure to so notify an indemnifying party shall not relieve it from any
liability which it may have under this indemnity agreement unless the
indemnifying party is materially prejudiced by such failure. If the
indemnifying party so elects within a reasonable time after receipt of such
notice, the indemnifying party may assume the defense of such action or
proceeding at such indemnifying party's own expense with counsel chosen by the
indemnifying party and approved by the indemnified parties defendant in such
action or proceeding, which approval shall not be unreasonably withheld;
provided, however, that, if such indemnified party or parties reasonably
determine that a conflict of interest exists where it is advisable for such
indemnified party or parties to be represented by separate counsel or that,
upon advice of counsel, there may be legal defenses available to them which are
different from or in addition to those available to the indemnifying party,
then the indemnifying party shall not be entitled to assume the defense and the
indemnified party or parties shall be entitled to one separate counsel chosen
by the indemnified party or parties. If an indemnifying party is not entitled
to assume the defense of such action or proceeding as a result of the proviso
to the preceding sentence, such indemnifying party's counsel shall be entitled
to conduct such indemnifying party's defense and counsel for the indemnified
party or parties shall be entitled to conduct the defense of such indemnified
party or parties, it being understood that both such counsel will cooperate
with each other to conduct the defense of such action or proceeding as
efficiently as possible. If an indemnifying party is not so entitled to assume
the defense of such action or does not assume such defense, after having
received the notice referred to in the first sentence of this paragraph, the
indemnifying party or parties will pay the reasonable fees and expenses of
counsel for the indemnified party or parties. In such event, however, no
indemnifying party will be liable for any settlement effected without the
written consent of such indemnifying party, which consent shall not be
unreasonably withheld. If an indemnifying party is entitled to assume, and
assumes, the defense of such action or proceeding in accordance with this
paragraph, such indemnifying party shall not be liable for any fees and
expenses of counsel for the indemnified parties incurred thereafter in
connection with such action or proceeding.
(d) Contribution. If for any reason the indemnification provided for in the
preceding subsections (a) and (b) of this Section 7 is unavailable to an
indemnified party or insufficient to hold it harmless as contemplated by such
preceding subsections, then the indemnifying party shall contribute to the
amount paid or payable by the indemnified party as a result of such
unavailability or insufficiency in proportion as is appropriate to reflect not
only the relative benefits received by the indemnified party and the
indemnifying party, but also the relative fault of the indemnified party and
the indemnifying party, as well as any other relevant equitable considerations,
provided that Sellers shall not be required to contribute in any amount greater
than the dollar amount of the proceeds received by Sellers with respect to the
sale of any Eligible Common Stock. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) Investigation. Such indemnity provided in this Section 7 shall remain in
full force and effect regardless of any investigation made by or on behalf of
Sellers, the Underwriter, or such director, officer or
9
controlling Person of Sellers or the Underwriter, or by or on behalf of the
Company, its officers or directors or any other Person controlling the Company
and shall survive the transfer of such securities by Sellers.
Section 8 Rule 144 and Rule 144A.
The Company covenants that it will provide the information required pursuant
to Rule 144A and Rule 144 under the Securities Act upon the request of Sellers
and it will take such further action as Sellers may reasonably request,
including, without limitation, the timely filing of all reports as required
with the SEC in order to enable Sellers, if they so elect, to utilize Rule 144
or Rule 144A, as such Rules may be amended from time to time or any similar
rules or regulations hereafter adopted by the SEC.
Section 9 Participation in Underwritten Registrations.
(a) The investment banker or investment bankers and manager or managers, if
any, that will administer the registration of the Eligible Common Stock
pursuant to a Demand will be selected by the Company; provided that such
investment bankers and managers must be reasonably satisfactory to the Eligible
Holders holding a majority of the Eligible Common Stock.
(b) The Company will not permit any other Person to participate in any
underwritten registration hereunder unless such Person (x) agrees to sell such
Person's securities on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (y)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements. Nothing in this Section 9 shall be construed to
create any additional rights regarding the registration of Eligible Common
Stock in any Person otherwise than as set forth herein.
Section 10 Miscellaneous.
(a) No Inconsistent Agreements. The Company will not on or after the date of
this Agreement enter into any agreement with respect to its securities which
conflicts with the provisions hereof.
(b) Amendments and Waivers. The provisions of this Agreement may be amended,
modified or supplemented, and the Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by it,
only if the Company shall have obtained the written consent to such amendment,
modification, supplement, action or omission to act of the Eligible Holders of
50% of the then outstanding shares of Eligible Common Stock.
(c) Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand delivery, registered first-class
mail, telex, telecopier, or air courier guaranteeing overnight delivery:
(i) if to the EnCap Purchasers, to the addresses set forth on the
signature pages; and
(ii) if to the Company, to the addresses set forth on the signature
pages.
All such notices and communications shall be deemed to have been duly given:
at the time delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; when answered
back, if telexed; when receipt acknowledged, if telecopied; and on the next
business day, if timely delivered to any air courier guaranteeing overnight
delivery. The notice addresses may be changed at any time by notice given in
accordance with these provisions.
(d) Assignment of Registration Rights. Except as otherwise provided below,
no party may assign this Agreement or any of the rights and obligations of the
parties hereunder without the prior written consent of the other party:
(i) any EnCap Purchaser may assign to a Permitted Transferee the right
to participate with the EnCap Purchasers in any registration of Eligible
Common Stock held by the EnCap Purchasers pursuant to Section 3 hereof;
10
(ii) any EnCap Purchaser may assign this Agreement and all or a
proportionate part of its rights and obligations hereunder to a Permitted
Transferee who acquires from such EnCap Purchaser all or a proportionate
part of the shares of Eligible Common Stock owned by the EnCap Purchaser,
respectively; or
(iii) a party may assign this Agreement and all its rights and
obligations under this Agreement to the assignee of all or substantially
all of the assets of such party including an acquisition through merger,
provided that such party shall in no event be released from its obligations
hereunder without the prior written consent of the other party.
(e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO SUCH
JURISDICTION'S CONFLICTS OF LAW PROVISIONS.
(h) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
such provision in every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.
(i) Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be complete and exclusive
statement of the agreement and understanding of the parties hereto in respect
of the subject matter contained herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
11
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
SOUTHERN MINERAL CORPORATION
a Nevada corporation
By:
----------------------------------
Xxxxxx X. Xxxxx
President
Address for Notices
Southern Mineral Corporation
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
ENCAP ENERGY CAPITAL FUND III, L.P.
By EnCap Investments L.L.C., its
General Partner
By:
----------------------------------
D. Xxxxxx Xxxxxxxx
Managing Director
ENCAP ENERGY CAPITAL FUND III-B, L.P.
By EnCap Investments L.L.C., its
General Partner
By:
----------------------------------
D. Xxxxxx Xxxxxxxx
Managing Director
ENERGY CAPITAL INVESTMENT COMPANY,
PLC
By:
----------------------------------
Xxxx X. Xxxxxxxx
Director
BOCP ENERGY PARTNERS, L.P.
By EnCap Investments L.L.C., its
General Partner
By:
----------------------------------
Name:
--------------------------------
Title:
---------------------------------
Address for Notices
c/o EnCap Investments L.L.C.
0000 Xxxxxxxxx Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxxx & Knight
1700 Chase Tower
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Exhibit A
ADDITIONAL PARTY COUNTERPART
The undersigned, after having received and reviewed to its satisfaction a
copy of the Registration Rights Agreement, dated as of , 1999 (the
"Registration Rights Agreement"), by and among Southern Mineral Corporation
(the "Company") and the EnCap Purchasers, does hereby agree to become party to
the Registration Rights Agreement thereby accepting all the rights, benefits
and obligations of a holder of Eligible Common Stock thereunder. The Company
may attach this page as a counterpart to the Registration Rights Agreement and
the undersigned agrees that such attachment shall be deemed conclusive evidence
of its acknowledgment and acceptance of the terms thereof.
Defined terms used herein and not otherwise defined herein shall have the
meaning given such terms in the Registration Rights Agreement.
Dated:
[NAME]
[ADDRESS FOR NOTICES]
By:
----------------------------------
Name:
Title:
Acknowledged and Accepted this
day of , By:
SOUTHERN MINERAL CORPORATION
By:
-------------------------------
Name:
Title:
