INVESTOR RIGHTS AGREEMENT
Exhibit
10.2
This Investor Rights Agreement dated as of December 18 2006 (this “Agreement”) is entered into
by and among Xxxxx-Xxxxxxxx Energy Inc., a Delaware corporation (the “Company”), and Oil & Gas
Rental Services, Inc., a Louisiana corporation (the “Investor”).
WHEREAS, the Company and the Investor have entered into an Asset Purchase Agreement dated as
of October 25, 2006 (the “Asset Purchase Agreement”) pursuant to which the Investor shall receive a
number of shares of the common stock, par value $0.01 per share, of the Company (the “Common
Stock”), as set forth therein;
WHEREAS, in order to induce the Investor to enter into the Asset Purchase Agreement, the
Company has agreed to grant certain registration rights to the Investor with respect to such shares
and certain Board designation rights, in each case, subject to the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
Section 1. Definitions. As used herein, the following terms have the indicated
meanings, unless the context otherwise requires:
“Agreement” has the meaning given to such term in the preamble hereto.
“Asset Purchase Agreement” has the meaning given to such term in the recitals hereto.
“Beneficially Own,” “Beneficially Owned,” “Beneficial Ownership” and “Beneficial Owner” with
respect to any securities means a Holder’s having such ownership, control or power to direct the
voting with respect to, or which otherwise enables a Holder to legally act with respect to, such
securities as contemplated hereby, including without limitation pursuant to any agreement,
arrangement or understanding, regardless of whether in writing. Securities “Beneficially Owned”
shall include securities Beneficially Owned by all other persons with whom a Holder would
constitute a “group” as within the meaning of Section 13(d) of the Exchange Act.
“Blackout Period” means, with respect to a Registration Statement, a period in each case
commencing on the day immediately after the Company notifies the Holders that they are required,
pursuant to Section 4(c)(vi), to suspend offers and sales of Registrable Securities during which
the Company, in the good faith judgment of the Board, 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 (and/or the registration of the offer and sale of) the Registrable Securities
covered or to be covered by such Registration Statement would be seriously detrimental to the
Company and its stockholders and ending on the earlier of (a) the date upon
which the material non-public information commencing the Blackout Period is disclosed to the
public or ceases to be material and (b) such time as the Company notifies the selling Holders that
the Company will no longer delay such filing of such Registration Statement, recommence taking
steps to make such Registration Statement effective, or allow sales pursuant to such Registration
Statement to resume; provided that no Blackout Period may last for more than 60 consecutive days;
provided, further, that during any period of 365 consecutive days, Blackout Periods may not, in the
aggregate, last for more than the greater of (a) zero days and (b) the result of 90 days minus the
number of days that Holders are required pursuant to Section 4(d) to discontinue and suspend
disposition of Registrable Securities because of the happening of any event described in Section
4(c)(vi).
“Board” means the board of directors of the Company.
“Business Day” means any day of the year, other than a Saturday, Sunday, or other day on which
the SEC is required or authorized to close.
“Closing Date” has the meaning given to such term in the Asset Purchase Agreement.
“Common Stock” has the meaning given to such term in the recitals hereto.
“Company” has the meaning given to such term in the preamble hereto.
“Designation Rights Termination Date” has the meaning given to such term in Section 2(b)
hereto.
“Effectiveness Period” has the meaning given to such term in Section 4(c)(i).
“Equity Securities Offering” means any underwritten registered offering of Relevant
Securities, and any offering or placement of any Relevant Securities pursuant to Rule 144A under
the Securities Act.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the SEC 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, limited liability company or other
entity 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.
“Form S-1” means such form under the Securities Act as in effect on the date of this Agreement
or any successor registration form thereto under the Securities Act subsequently adopted by the
SEC.
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“Form S-3” means such form under the Securities Act as in effect on the date of this Agreement
or any successor registration form thereto under the Securities Act subsequently adopted by the
SEC.
“Form S-4” means such form under the Securities Act as in effect on the date of this Agreement
or any successor registration form thereto under the Securities Act subsequently adopted by the
SEC.
“Form S-8” means such form under the Securities Act as in effect on the date of this Agreement
or any successor registration form thereto under the Securities Act subsequently adopted by the
SEC.
“Holder” means the Investor or any of such Investor’s successors and Permitted Assignees who
acquire rights in accordance with this Agreement with respect to the Registrable Securities
directly or indirectly from the Investor or another Holder (including from any Permitted Assignee)
and “Holders” means all of the foregoing individuals or entities.
“Inspector” means any attorney, accountant or other agent retained by a Holder for the
purposes provided in Section 4(c)(x).
“Investor” has the meaning given to such term in the preamble hereto.
“Investor Director” means any member of the Board that was nominated for election to the Board
by the Holders pursuant to and in accordance with Section 2(a).
“Market Standoff Period” means, with respect to each Equity Securities Offering, the period
beginning on the date of first sale of securities pursuant to such Equity Securities Offering and
ending on the date that shall be requested by the Company or the underwriters or initial purchasers
retained by the Company to facilitate such Equity Securities Offering; provided, however, that each
such period shall not be more than 90 days; provided further that (i) such period shall be no
longer than the shortest period imposed by the Company or the underwriters upon any other person or
entity and (ii) if any other person or entity receives a waiver with respect to any such matters,
the Holders shall be given a waiver with respect to their Shares as well.
“NASD” means the National Association of Securities Dealers.
“Permitted Assignee” means (a) with respect to a partnership or limited partnership, its
partners or former partners in accordance with their partnership interests, (b) with respect to a
corporation, its stockholders or former stockholders 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,
any Family Member or (e) an entity that is controlled by, controls, or is under common control with
a transferor.
“Piggyback Registration” has the meaning given to such term in Section 4(b)(i).
“Piggyback Registration Statement” has the meaning given to such term in Section 4(b)(i).
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“register,” “registered,” and “registration” refer 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 the Shares, excluding any such Shares (a) that have been
publicly sold or may be sold immediately without registration or the requirement to make filings
with the SEC under the Securities Act either pursuant to Rule 144 of the Securities Act or
otherwise, (b) sold by a person in a transaction pursuant to a registration statement filed under
the Securities Act or (c) that are at the time subject to an effective registration statement under
the Securities Act (other than the Registration Statements contemplated hereby).
“Registration Expenses” has the meaning given to such term in Section 4(e).
“Registration Statement” means either of the Piggyback Registration Statements or the Shelf
Registration Statement; and “Registration Statements” means, collectively, the Piggyback
Registration Statements and the Shelf Registration Statement.
“Relevant Security” means the Shares, any other equity security of the Company or any of its
subsidiaries and any security convertible into, or exercisable or exchangeable for, any Shares or
other such equity security.
“SEC” means the Securities and Exchange Commission or any other federal agency at the time
administering the Securities Act.
“SEC Effective Date” means, with respect to a Registration Statement, the date as of which
such Registration Statement is originally declared effective by the SEC.
“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 SEC thereunder, all as the
same shall be in effect from time to time.
“Selling Expenses” has the meaning given to such term in Section 4(e).
“Shares” means the shares of Common Stock issued to the Investor pursuant to the Asset
Purchase Agreement and (a) any and all shares of capital stock or other equity securities of the
Company which are added to or exchanged or substituted for such shares of 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 (b) any and all shares of capital stock or other equity securities of
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, for which such shares of Common Stock are exchanged or substituted in
connection with such merger, consolidation, reorganization or sale, 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.
“Shelf Registration Statement” has the meaning given to such term in Section 4(a).
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“Transfer” has the meaning given to such term in Section 3(a).
Section 2. Board Designation Rights.
(a) Designation. Until the Designation Rights Termination Date, the Holders of a
majority of the Shares shall have the right to designate one nominee for election to the Board.
(b) Termination of Designation Rights. The Holders of a majority of the Shares shall
not be entitled to designate any nominees for election to the Board pursuant to this Agreement from
and after the date (the “Designation Rights Termination Date”) that is the first date on which the
Shares Beneficially Owned by the Holders collectively represent less than thirty-one and
one-quarter percent (31.25%) of the Shares initially acquired by the Investor pursuant to the Asset
Purchase Agreement.
(c) Company Support. At all times prior to the Designation Rights Termination Date,
the Company shall support the nominations of the persons designated by the Holders of a majority of
the Shares pursuant to Section 2(a), and the Company shall use its best efforts to cause the Board
(and the Company’s nominating committee, if any) to recommend the inclusion of such persons in the
slate of nominees recommended to stockholders for election as directors at each annual meeting of
stockholders of the Company.
(d) Vacancies. If at any time prior to the Designation Rights Termination Date, a
vacancy is created on the Board by reason of the incapacity, death, removal or resignation of any
Investor Director, then the Company shall use its best efforts to cause the Board to appoint an
individual designated by the Holders of a majority of the Shares to fill such vacancy until the
next meeting of the Company’s stockholders at which directors are elected.
Section 3. Market Standoff. Notwithstanding anything to the contrary set forth in
this Agreement, with respect to each Equity Securities Offering conducted after the Closing Date,
the following provisions of this Section 3 shall apply, if and only if (x) the underwriters or
initial purchasers retained by the Company to facilitate such offering request, in connection with
such offering, that the officers or directors or significant stockholders of the Company refrain
from selling any Relevant Security during any period, and (y) either (1) any nominee designated by
the Holders pursuant to Section 2(a) is a member of the Board, or (2) the Holders Beneficially Own
shares of Common Stock representing at least 10% of the fully diluted equity interests in the
Company (calculated giving effect to the exercise of all outstanding options, warrants and other
rights to purchase to acquire any Common Stock of the Company):
(a) Without the prior written consent of the Company, during the Market Standoff Period
applicable to such Equity Securities Offering, each Holder will not (i), directly or indirectly,
offer, sell, agree to offer or sell, solicit offers to purchase, grant any call option or purchase
any put option with respect to, pledge, borrow or otherwise dispose of any Relevant Security, or
(ii) establish or increase any “put equivalent position” or liquidate or decrease any “call
equivalent position” (in each case within the meaning of Section 16 of the Exchange Act) with
respect to any Relevant Security, or otherwise enter into any swap, derivative or other transaction
or arrangement that transfers to another, in whole or in part, any economic consequence of
ownership of a Relevant Security (each of the transactions described in the immediately preceding
clauses (i) and (ii), being referred to as a “Transfer”), regardless of
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whether such transaction is to be settled by delivery of Relevant Securities, other
securities, cash or other consideration; provided, however, that a Transfer to a Permitted Assignee
will not be subject to this Section 3 as long as (x) such Transfer is effected in accordance with
applicable securities laws; (y) such transferee agrees in writing to become subject to the terms of
this Agreement as a Holder; and (z) the Company is given written notice by such Holder of such
Transfer, stating the name and address of the transferee and identifying the Shares being
Transferred.
(b) Furthermore, each Holder hereby authorizes the Company during the Market Standoff Period
to cause any transfer agent for the Relevant Securities to decline to transfer, and to note stop
transfer restrictions on the stock register and other records relating to, any Relevant Securities
for which such Holder is the record holder and, in the case of Relevant Securities for which such
Holder is the Beneficial Owner but not the record holder, agrees during the Market Standoff Period
to cause the record holder thereof to cause the relevant transfer agent to decline to transfer, and
to note stop transfer restrictions on the stock register and other records relating to, such
Relevant Securities.
(c) Subject to the provisions of Section 4(b), without the prior written consent of the
Company, during the Market Standoff Period such Holder (x) will not participate in the filing with
the SEC of any registration statement, or circulate or participate in the circulation of any
preliminary or final prospectus or other disclosure document with respect to any proposed offering
or sale of a Relevant Security and (y) will not exercise any rights the undersigned may have to
require registration with the SEC of any proposed offering or sale of a Relevant Security
(including without limitation pursuant to this Agreement).
Section 4. Registration Rights.
(a) Shelf Registration Statement. The Company shall (i) file with the SEC a shelf
registration statement on Form S-1 (or, if the Company is eligible to use such form, Form S-3)
relating to the registration of the offer and resale by the Holders of all of the Registrable
Securities (the “Shelf Registration Statement”) and (ii) use its commercially reasonable efforts to
cause the Shelf Registration Statement to be declared effective by the SEC no later than the date
that is one (1) year after the Closing Date; provided, however, that the Company shall not be
obligated to effect any such registration pursuant to this Section 4(a), or keep such registration
or the Shelf Registration Statement effective pursuant to Section 4(c)(i), during any Blackout
Period.
(b) Piggyback Registration Rights.
(i) Piggyback Registration. If after the date that is one (1) year after the
Closing Date, the Company shall determine to register the offer and sale for cash of any of
its Common Stock for its own account, 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 on Form S-4 in connection with a merger, acquisition, divestiture,
reorganization, exchange offer or similar event, or (iii) a registration in which the only
Common Stock being registered is Common Stock issuable upon conversion of debt
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securities that are also being registered, then (subject to Section 4(b)(iii)) 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 a registration
statement (each a “Piggyback Registration Statement” and collectively the “Piggyback
Registration Statements”) with respect to such registration (each a “Piggyback
Registration”), and shall, subject to Section 4(b)(ii) and Section 4(b)(iii), include in
such 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 from
the Company, by any Holder or Holders. However, the Company may, without the consent of the
Holders, withdraw such Piggyback Registration Statement prior to its becoming effective if
the Company has elected to abandon the proposal to register the securities proposed to be
registered thereby.
(ii) 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 4(b)(i). In such event the right of
any Holder to registration pursuant to Section 4(b)(i) 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)
enter into an underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company. Notwithstanding any other provision of this
Section 4(b)(ii), 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 that may be included in the
registration and underwriting shall be allocated:
(A) first to the Company; and
(B) then, subject to written obligations and commitments existing as of October
25, 2006, to all selling stockholders, 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 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
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limitations set forth herein in the same proportion used above in determining the
underwriter limitation.
(iii) Notwithstanding anything to the contrary set forth in this Agreement, the Company
shall not be obligated to effect, or take any action to effect, any registration pursuant to
Section 4(b) after the Company has initiated two (2) such registrations (counting for this
purpose only registrations which have been declared or ordered effective and pursuant to
which securities have been sold).
(c) Registration Procedures. In the case of each registration, qualification, or
compliance effected by the Company pursuant to Section 4(a) and Section 4(b), 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. In addition, the Company hereby agrees as follows with respect to each Registration
Statement:
(i) The Company will 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 (A) the sale by the Holders of all Registrable Securities covered by such
Registration Statement, (B) the availability under Rule 144 for the Holders to immediately,
freely resell without restriction under United States federal securities laws all
Registrable Securities covered by such Registration Statement, or (C) the date that is two
years after the SEC Effective Date of such Registration Statement (provided, however, that
if the Company files a Registration Statement on 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 commercially reasonable efforts to cause such
Registration Statement as amended to become effective until the end of such period) (in any
such case, the “Effectiveness Period”). At any time after the end of the Effectiveness
Period with respect to the Shelf Registration Statement, if (a) the Holders Beneficially Own
Registrable Securities representing more than 10% of the fully diluted equity interests in
the Company (calculated giving effect to the exercise of all outstanding options, warrants
and other rights to purchase to acquire any Common Stock of the Company) or (b) any nominee
designated by the Holders pursuant to Section 2(a) is a member of the Board, then (x) as
promptly as reasonably practicable after the written request of Holders of a majority of the
Registrable Securities, the Company shall file with the SEC another shelf registration
statement on Form S-1 (or, if the Company is eligible to use such form, Form S-3) relating
to the registration of the offer and resale by the Holders of all of the Registrable
Securities, (y) the provisions of this Agreement (including without limitation the
provisions of Section 4(a) and Section 4(c)) shall apply to such registration statement and
(z) such registration statement shall be deemed to be the Shelf Registration Statement (as
defined in Section 4(a)) for purposes of this Agreement.
(ii) If any Registration Statement becomes subject to review by the SEC, the Company
will promptly respond to all comments and diligently pursue resolution of any comments to
the satisfaction of the SEC.
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(iii) The Company will prepare and file with the SEC such amendments and supplements to
each Registration Statement and any prospectus used in connection therewith as may be
reasonably necessary to keep such Registration Statement effective during the applicable
Effectiveness Period, and will 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.
(iv) The Company will furnish, without charge, to each Holder (A) a reasonable number
of copies of each Registration Statement (including any exhibits thereto other than exhibits
incorporated by reference), each amendment and supplement thereto as such Holder may
request, (B) 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 each Holder may request, in conformity with the requirements of the
Securities Act, and (C) such other documents as each Holder may reasonably request in order
to facilitate the disposition of the Registrable Securities owned by such Holder, but only
during the applicable Effectiveness Period.
(v) The Company will use its commercially reasonable efforts to register or qualify the
Registrable Securities under such other applicable securities or blue sky laws of such
jurisdictions as the Holders of a majority of the Registrable Securities reasonably requests
as may be necessary for the marketability of the Registrable Securities (such request to be
made by the time the relevant Registration Statement is deemed effective by the SEC) and do
any and all other acts and things which may be reasonably necessary or advisable to enable
the Holders to consummate the disposition in such jurisdictions of the Registrable
Securities owned by the Holders; provided, however, that the Company shall not be required
to (A) qualify generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this paragraph (v), (B) subject itself to taxation in any such
jurisdiction, or (C) consent to general service of process in any such jurisdiction.
(vi) As promptly as practicable after becoming aware of such event, the Company will
notify each Holder of Registrable Securities being offered or sold pursuant to each
Registration Statement at any time when a prospectus relating thereto is required to be
delivered under the Securities Act of the happening of any event 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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(vii) The Company will comply, and continue to comply during the period that each
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
SEC with respect to the disposition of all securities covered by such Registration
Statement.
(viii) As promptly as practicable after becoming aware of such event, the Company will
notify each Holder of Registrable Securities being offered or sold pursuant to each
Registration Statement of the issuance by the SEC of any stop order or other suspension of
effectiveness of such Registration Statement.
(ix) The Company will permit the Holders of Registrable Securities being offered or
sold pursuant to each Registration Statement and their legal counsel, at such Holders’ sole
cost and expense to review and have a reasonable opportunity to comment on such Registration
Statement and all amendments and supplements thereto at least two Business Days prior to
their filing with the SEC.
(x) The Company will make available for inspection by the Holders and any Inspector
retained by the Holders, at the Holders’ sole expense, all records as shall be reasonably
necessary to enable the Holders to exercise their due diligence responsibility, and cause
the Company’s officers, directors, and employees to supply all information which the Holders
or any Inspector may reasonably request for purposes of such due diligence; provided,
however, that the Holders 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 the Holders are so notified at the time the Holders receive such
information, unless (w) the Holders have, or obtained, knowledge of such information without
violation of or protection under any agreements with the Company or, to its knowledge any
third party, (x) the disclosure of such record is reasonably necessary to avoid or correct a
misstatement or omission in each Registration Statement and a reasonable time prior to such
disclosure the Holders 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, (y) the release of such record is ordered pursuant to a subpoena or other order
from a court or governmental body of competent jurisdiction or (z) the information in such
record has been made generally available to the public other than by disclosure in violation
of this Agreement 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,
containing terms substantially similar to those set forth in this Section 4(c)(x), which
agreement shall permit such Inspector to disclose records to the Holders. 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 the Holders provided to the Company pursuant to this
Agreement unless (A) disclosure of such information is reasonably necessary to comply with
federal or state securities laws, (B) disclosure of such
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information to the SEC’s Staff of the Division of Corporation Finance is reasonably
necessary to respond to comments raised by such staff in its review of such Registration
Statement, (C) disclosure of such information is reasonably necessary to avoid or correct a
misstatement or omission in such Registration Statement, (D) release of such information is
ordered pursuant to a subpoena or other order from a court or governmental body of competent
jurisdiction, or (E) 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 the Holders is sought in
or by a court or governmental body of competent jurisdiction or through other means, give
prompt notice to the Holders and allow the Holders, at the Holders’ expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order for, such
information.
(xi) The Company will use its commercially reasonable efforts to cause all the
Registrable Securities covered by each 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.
(xii) The Company will provide a transfer agent and registrar, which may be a single
entity, for the Registrable Securities at all times.
(xiii) The Company will cooperate with the Holders of Registrable Securities being
offered pursuant to each Registration Statement to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legends) representing Registrable
Securities to be offered pursuant to such Registration Statement and enable such
certificates to be in such denominations or amounts as the Investor may reasonably request.
(xiv) The Company will take all other reasonable actions necessary to expedite and
facilitate disposition by the Holders of the Registrable Securities pursuant to each
Registration Statement, including without limitation making its chief executive officer,
president, chief financial officer and other appropriate officers and personnel available to
participate in marketing efforts with respect to any registered underwritten public
offering.
(d) 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(c)(vi) or of the commencement of a Blackout Period, such Holder shall
discontinue and suspend disposition of Registrable Securities pursuant to any Registration
Statement until the Holder’s receipt of the copies of the supplemented or amended prospectus
contemplated by Section 4(c)(vi) 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.
(e) Registration Expenses. All expenses incident to the Company’s performance of or
compliance with this Agreement, including without limitation all registration and filing fees,
11
messenger and delivery expenses, printing expenses, internal expenses (including without
limitation all salaries and expenses of its officers and employees performing legal or accounting
duties), all fees and expenses associated with filings required to be made with the NASD, as may be
required by the rules and regulations of the NASD, fees and expenses of compliance with securities
or blue sky laws (including reasonable fees and disbursements of counsel in connection with blue
sky qualifications of the Registrable Securities), rating agency fees, the fees and expenses
incurred in connection with the listing of the securities to be registered on all securities
exchanges on which similar securities issued by the Company are then quoted or listed, fees and
disbursements of counsel for the Company and its independent certified public accountants, and the
fees and expenses of any other persons retained by the Company, in connection with the registration
hereunder (collectively, the “Registration Expenses”) will be borne by the Company, but not
including any roadshow expenses, fees and expenses of counsel for the Holders and any underwriting,
broker or dealer discounts or commissions attributable to the sale of Registrable Securities (which
are hereinafter referred to as “Selling Expenses”). All Selling Expenses shall be borne solely by
the Holders.
(f) Information by the Holder. The Holder or Holders of Registrable Securities
included in any Registration Statement shall furnish to the Company such information required under
Regulation S-K under the Securities Act regarding such Holder or Holders and the distribution
proposed by such Holder or Holders as the Company may request in writing. No Holder of Registrable
Securities will be entitled to have such Registrable Securities included in a Registration
Statement if such Holder does not furnish such information requested by the Company.
(g) Indemnification.
(i) In the event of the offer and sale of Registrable Securities 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 such 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 (A) any Registration Statement, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or supplement thereto,
or (B) in any materials or information provided to investors by, or with the written
approval of, the Company in connection with the marketing of the offering of the Shares
(“Marketing Materials”), including any road show or investor presentations made to
investors by the Company (whether in person or electronically), 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
12
with investigating, defending or settling any such loss, claim, damage, liability,
action or proceeding; provided that the foregoing shall not apply, and the Company shall not
be liable, in any such case (A) 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, or (B) to
the extent that such Holder failed to comply with the terms of the plan of distribution
mechanics described in the applicable prospectus. 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 Holders.
(ii) As a condition to including any Registrable Securities to be offered by a Holder
in any Registration Statement, such Holder agrees to be bound by the terms of this Section
4(g) 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, (A) 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 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
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, or (B) to the extent
that such Holder failed to comply with the terms of the plan of distribution mechanics
described in the applicable prospectus. 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, 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 stockholder, 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 4(g)(ii)
shall in no event exceed the gross proceeds from the offering received by the Investor.
(iii) Promptly after receipt by an indemnified party of notice of the commencement of
any action or proceeding involving a claim referred to in Section 4(g)(i) or Section
4(g)(ii) (including any governmental action), such indemnified party
13
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,
however, that the failure of any indemnified party to give notice as provided herein shall
not relieve the indemnifying party of its obligations under Section 4(g)(i) or Section
4(g)(ii), 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.
(iv) In the event that an indemnifying party does or is not permitted to assume the
defense of an action pursuant to Section 4(g)(iii) or in the case of the expense
reimbursement obligation set forth in Section 4(g)(i) and Section 4(g)(ii), the
indemnification required by Section 4(g)(i) and Section 4(g)(ii) 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.
(v) If the indemnification provided for in this Section 4(g) 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 (A) 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 (B) if the allocation provided by
clause (A) 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
14
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 be entitled to contribution from any indemnifying party
who was not guilty of such fraudulent misrepresentation.
(vi) Indemnification similar to that specified in the preceding subsections of this
Section 4(g) (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.
Section 5. Miscellaneous.
(a) Assignment of Rights; Successors and Permitted Assignees. 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 (i) such transfer or assignment is effected in
accordance with applicable securities laws; (ii) such transferee or assignee agrees in writing to
become subject to the terms of this Agreement as a Holder; and (iii) 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 Shares with respect to which such rights are being
transferred or assigned. Except as otherwise provided herein, the provisions of this Agreement
shall inure to the benefit of, and be binding upon, the successors, Permitted Assignees, heirs,
legatees, executors and administrators of the parties hereto.
(b) Notices. 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: | Allis Chalmers Energy Inc. | |||
| 0000 Xxxxxxxxxx, Xxxxx 000 | ||||
| Xxxxxxx, Xxxxx 00000 | ||||
| Attention: Xxxxxxxx X. Pound, General Counsel | ||||
| Facsimile: (000) 000-0000 | ||||
| with a copy (which shall not constitute notice) to: |
Xxxxxxx Xxxxx LLP 000 Xxxxxx, Xxxxx 0000 Xxxxxxx, Xxxxx 00000 Attention: Xxxxxx X. Xxxxxx Facsimile: (000) 000-0000 |
15
| If to the Investor: | Oil & Gas Rental Services, Inc. | |||
| 000 XxXxxxxxxx Xxxx | ||||
| Xxxxxx, Xxxxxxxxx 00000 | ||||
| Attn: Xxxx X. Xxxxx, President and Chief | ||||
| Executive Officer | ||||
| Facsimile: (000) 000-0000 | ||||
| and | ||||
| Oil & Gas Rental Services, Inc. | ||||
| Whitney Bank Building | ||||
| 000 Xx. Xxxxxxx Xxxxxx | ||||
| Xxxxx 000 | ||||
| Xxx Xxxxxxx, Xxxxxxxxx 00000 | ||||
| Attn: Xxxx X. Xxxxx, Vice President and General | ||||
| Counsel | ||||
| Facsimile: (000) 000-0000 | ||||
| with a copy (which shall not constitute notice) to: |
Xxxxxx Xxxxxx LLP 000 Xxxxx Xxxxxx, Xxxxx 0000 Xxx Xxxxxxx, Xxxxxxxxx 00000 Attn: Xxxx X. Xxxxxxx Facsimile: (000) 000-0000 |
or at such other address as any party shall have furnished to the other party in writing.
(c) Specific Performance. Each party to this Agreement agrees that any breach by it
of any provision of this Agreement would irreparably injure the other party and that money damages
would be an inadequate remedy therefor. Accordingly, each party agrees that the other party shall
be entitled to one or more injunctions enjoining any such breach and requiring specific performance
of this Agreement and consents to the entry thereof, in addition to any other remedy to which such
other party is entitled at law or in equity.
(d) 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.
(e) 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 of the
Registrable Securities outstanding as of the date of such amendment or waiver. The Investor
acknowledges that by the operation of this Section 5(e), the Holders of a majority of the
outstanding Registrable Securities may have the right and power to diminish or eliminate all rights
of the Holders under this Agreement.
(f) Headings and Cross References. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in any way affect
16
the meaning or construction of any provision of this Agreement. Unless the context requires
otherwise, all cross references in this Agreement refer to sections and subsections of this
Agreement.
(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) Entire Agreement. This Agreement constitutes the full and entire understanding
and agreement between the parties with regard to the subject matter of this Agreement.
(i) Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas.
(SIGNATURE PAGES FOLLOW)
17
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the date first above written.
| THE COMPANY: XXXXX-XXXXXXXX ENERGY INC. |
||||
| By: | /s/ Xxxxx Xxxxx | |||
| Xxxxx Xxxxx | ||||
| President and Chief Operating Officer | ||||
| INVESTOR: OIL & GAS RENTAL SERVICES, INC. |
||||
| By: | /s/ Xxxx X. Xxxxx | |||
| Xxxx X. Xxxxx | ||||
| President and Chief Executive Officer | ||||
