REGISTRATION RIGHTS AGREEMENT
EXHIBIT
10.2
This
Registration Rights Agreement dated as of the date set forth on the signature
page (“Agreement”) is by and between Tidelands Oil and Gas Corporation (the
“Company”), and Impact International LLC (the “Holder”).
WHEREAS,
the Holder was issued 39,890,180 shares of the Company’s common stock pursuant
to that certain General Release, by and among various parties, including the
Company and the Holder, dated of even date herewith (“Release Agreement”);
and
WHEREAS,
the Company desires to grant to the Holder certain registration rights in
respect of the shares issued pursuant to the Release Agreement, as well as the
8,812,980 shares owned prior to such issuance (collectively, the 48,703,160
shares are referred to as the “Shares”);
NOW,
THEREFORE, in consideration of the premises and the mutual covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE
ONE
SECTION
1.1 Registration Rights
Available. The Company agrees to provide Holder with respect to the
Shares and any other securities issued or issuable at any time or from time to
time in respect of the Shares upon a stock split, stock dividend,
recapitalization or other similar event involving the Company (collectively, the
“Securities”) rights to “piggyback” on a public offering of Company securities,
subject to the provisions of this Agreement and excluding (i) any registration
statement registering the Company’s common stock on Form S-4 or S-8 and (ii) any
Shares that are not eligible to be resold pursuant to the registration statement
filed by the Company (the piggyback registration rights hereunder being
“Registration Right”).
SECTION
1.2 Piggyback
Registration. With respect to Holder’s right to piggyback on a public
offering of the Company securities pursuant to Section 1.1, the parties agree as
follows:
(a) The amount of Securities that the
Company is required to include on a registration statement filed pursuant to
such Registration Right shall not exceed the number of shares of common stock,
the issuance or resale of which the Company is registering in such registration
statement, which share calculation shall exclude the Shares.
(b)
Pursuant to Section 1.1, the Company will (i) promptly give to Holder written
notice 15 days prior to the filing of any registration relating to a public
offering of the Company securities; and (ii) include in such registration (and
related qualification under blue sky laws or other compliance), and in the
underwriting involved therein, all the Securities specified in Holder’s written
request or requests, mailed in accordance with Section 3.8.
(c) The
right of Holder to participate in registration pursuant to Section 1.1 shall be
conditioned upon Holder’s participation in such offering, if such offering is a
best efforts or firm commitment offering, and the inclusion of the Securities in
the underwriting shall be limited to the extent provided herein. Notwithstanding
any other provision of this Agreement, if the managing underwriter determines
that marketing factors require a limitation of the number of shares to be
underwritten, the managing underwriter may limit some or all of the Securities
that may be included in the registration and underwriting as follows: the number
of Securities that may be included in the registration and underwriting by
Holder shall be determined by multiplying the number of shares of Securities of
all selling shareholder of the Company which the managing underwriter is willing
to include in such registration and underwriting, times a fraction, the
numerator of which is the number of Securities requested to be included in such
registration and underwriting by Holder, and the denominator of which is the
total number of Securities which all selling shareholder of the Company have
requested to have included in such registration and underwriting. To facilitate
the allocation of shares in accordance with the above provisions, the Company
may round the number of shares allocable to any such person to the nearest 100
shares. If Holder disapproves of the terms of any such underwriting, it may
elect to withdraw therefrom by written notice to the Company and the managing
underwriter, delivered not less than seven days before the effective date. Any
securities excluded or withdrawn from such underwriting shall be withdrawn from
such registration, and shall not be transferred in a public distribution prior
to 120 days after the effective date of the registration statement relating
thereto, or such other shorter period of, time as the underwriters may
require.
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SECTION
1.3 Registration
Procedure. With respect to the Registration Right, the following
provisions shall apply:
(a)
Holder shall be obligated to furnish to the Company and the underwriters (if
any) such information regarding the Securities and the proposed manner of
distribution of the Securities as the Company and the underwriters (if any) may
request in writing and as shall be required in connection with any registration,
qualification or compliance referred to herein and shall otherwise cooperate
with the Company and the underwriters (if any) in connection with such
registration, qualification or compliance.
(b) With
a view to making available the benefits of certain rules and regulations of the
Commission which may at any time permit the sale of the Restricted Securities
(used herein as defined in Rule 144 under the Securities Act of 1933, as
amended) to the public without registration, the Company agrees to use its best
lawful efforts to:
(i) Make
and keep public information available, as those terms are understood and defined
in Rule 144 under the Securities Act, at all times during which the Company is
subject to the reporting requirements of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”); and
(ii) File
with the SEC in a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act (at all times during which
the Company is subject to such reporting requirements).
(c) The
Company agrees that it will furnish to Holder such number of prospectuses,
offering circulars or other documents incident to any registration,
qualification or compliance referred to herein as provided or, if not otherwise
provided, as the Holder from time to time may reasonably request.
(d) All
expenses (except for the costs of any underwriting and selling discounts and
commissions and legal fees for Holder’s attorneys) of any registrations
permitted pursuant to this Agreement and of all other offerings by the Company
(including, but not limited to, the expenses of any qualifications under the
blue-sky or other state securities laws and compliance with governmental
requirements of preparing and filing any post-effective amendments required for
the lawful distribution of the Securities to the public in connection with such
registration, of supplying prospectuses, offering circulars or other documents)
will be paid by the Company.
(e) The
Registration Rights of this Agreement, subject to the terms and conditions
hereof, shall be available to any subsequent holder of the Securities owned by
Holder. Each subsequent holder entitled to the Registration Rights under this
Agreement shall be bound by the terms and subject to the obligations of this
Agreement as though it were an original signatory hereto.
SECTION
1.3. OBLIGATIONS OF THE
COMPANY. In connection with the Company's registration obligations
hereunder, the Company shall, as expeditiously as practicable:
(a) (i)
furnish to each Holder copies of all documents filed with the United States
Securities and Exchange Commission (“SEC”) prior to there being filed with the
SEC, (ii) use commercially reasonable best efforts to cause its officers and
directors, counsel and certified public accountants to respond to such inquiries
as shall be necessary, in the reasonable opinion of such Holder, to conduct a
reasonable investigation within the meaning of the Securities Act, and (iii)
notify the Holder of any stop order issued or threatened by the SEC and use best
efforts to prevent the entry of such stop order or to remove it if
entered.
(b) (i)
prepare and file with the SEC (electronically on XXXXX) such amendments and
supplements, including post-effective amendments, to each registration statement
filed pursuant to the this Agreement (the “Registration Statement”) and the
prospectus used in connection therewith (the “Prospectus”) as may be necessary
to comply with the Securities Act and to keep the Registration Statement
continuously effective as required herein, and prepare and file with the SEC
such additional Registration Statements as necessary to register for resale
under the Securities Act all of the shares registered (including naming any
permitted transferees of shares registered as selling stockholder in such
Registration Statement); (ii) cause any related Prospectus to be amended or
supplemented by any required Prospectus supplement, and as so supplemented or
amended to be filed pursuant to Rule 424; (iii) respond as promptly as possible
to any comments received from the SEC with respect to each Registration
Statement or any amendment thereto and as promptly as possible provide the
Holder true and complete copies of all correspondence from and to the SEC
relating to the Registration Statement (other than correspondence containing
material nonpublic information); and (iv) comply with the provisions of the
Securities Act and the Exchange Act with respect to the disposition of all
registered shares covered by such Registration Statement as so amended or in
such Prospectus as so supplemented.
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(c) Notify
the Holder as promptly as possible:
(i) when the SEC notifies the Company
whether there will be a “review” of a Registration Statement and whenever the
SEC comments in writing on such Registration Statement; and (ii) when a
Registration Statement, or any post-effective amendment or supplement thereto,
has become effective, and after the effectiveness thereof: (A) of any request by
the SEC or any other federal or state governmental authority for amendments or
supplements to the Registration Statement or Prospectus or for additional
information; (B) of the issuance by the SEC or any state securities commission
of any stop order suspending the effectiveness of the Registration Statement
covering any or all of the shares registered or the initiation of any
proceedings for that purpose; (C ) of a pending proceeding against the Company
under Section 8A of the Securities Act in connection with the offering of the
shares registered; and (D) of the receipt by the Company of any notification
with respect to the suspension of the qualification or exemption from
qualification of any of the shares registered for sale in any jurisdiction, or
the initiation or threatening of any proceeding for such purpose. If
any of the events described in Section 1.3 (c)(ii)(A), 1.3 (c)(ii)(B), and 1.3
(c)(ii)(C) occur, the Company shall use best efforts to respond to and correct
the event.
(d) Notify
the Holder and their counsel as promptly as possible of the happening of any
event as a result of which the Prospectus included in or relating to a
Registration Statement contains an untrue statement of a material fact or omits
any fact necessary to make the statements therein not misleading; and,
thereafter, the Company will as promptly as possible prepare (and, when
completed, give notice to each Holder) a supplement or amendment to such
Prospectus so that, as thereafter delivered to the purchasers of such shares
registered, such Prospectus will not contain an untrue statement of a material
fact or omit to state any fact necessary to make the statements therein not
misleading; provided that upon such notification by the Company, the Holder will
not offer or sell the shares registered pursuant to such Prospectus until the
Company has notified the Holder that it has prepared a supplement or amendment
to such Prospectus and delivered copies of such supplement or amendment to the
Holder (it being understood and agreed by the Company that the foregoing proviso
shall in no way diminish or otherwise impair the Company's obligation to as
promptly as possible prepare a Prospectus amendment or supplement as above
provided in this Section 1.3 (d).
(e) Upon
the occurrence of any event described in Section 1.3 (d) hereof, as promptly as
possible, prepare a supplement or amendment, including a post-effective
amendment, to the Registration Statement or a supplement to the related
Prospectus or any document incorporated or deemed to be incorporated therein by
reference, and file any other required document so that, as thereafter
delivered, neither the Registration Statement nor such Prospectus will contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they are made, not misleading.
(f)
Use best efforts to avoid the issuance of or, if
issued, obtain the withdrawal of, (i) any order suspending the effectiveness of
any Registration Statement or (ii) any suspension of the qualification (or
exemption from qualification) of any of the shares registered for sale in any
jurisdiction.
(g) Furnish
to the Holder, without charge, at least one conformed copy of each Registration
Statement and each amendment thereto, and all exhibits to the extent requested
by such Holder as promptly as possible after the filing of such documents with
the SEC.
(h) As
promptly as possible furnish to each selling Holder, without charge, such number
of copies of a Prospectus, including a preliminary Prospectus, in conformity
with the requirements of the Securities Act, and such other documents
(including, without limitation, Prospectus amendments and supplements) as each
such selling Holder may reasonably request in order to facilitate the
disposition of the registered shares covered by such Prospectus and any
amendment or supplement thereto. The Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
Holder in connection with the offering and sale of the shares registered covered
by such Prospectus and any amendment or supplement thereto to the extent
permitted by federal and state securities laws and regulations.
(i) Use
best efforts to register and qualify (or obtain an exemption from such
registration and qualification) the shares registered under such other
securities or blue sky laws of the states of residence of each Holder and such
other jurisdictions as each Holder shall reasonably request, to keep such
registration or qualification (or exemption therefrom) effective during the
periods each Registration Statement is effective, and do any and all other acts
or things which may be reasonably necessary or advisable to enable each Holder
to consummate the public sale or other disposition of registered shares in such
jurisdiction, provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions where
it is not then qualified or subject to process.
(j) Cooperate
with the Holder to facilitate the timely preparation and delivery of
certificates representing the shares registered to be delivered to a transferee
pursuant to a Registration Statement, which certificates shall be free, to the
extent permitted by the Release Agreement and applicable law, of all restrictive
legends, and to enable such registered shares to be in such denominations and
registered in such names as such Holder may request.
(k) Cooperate
with any reasonable due diligence investigation undertaken by the Holder, any
managing underwriter participating in any disposition pursuant to a Registration
Statement, Holder' Counsel and any attorney, accountant or other agent retained
by Holder or any managing underwriter, in connection with the sale of the shares
registered, including, without limitation, making available any documents and
information; provided, however, that the Company will not deliver or make
available to any Holder material, nonpublic information unless such Holder
specifically requests and consents in advance in writing to receive such
material, nonpublic information and, if requested by the Company, such Holder
agrees in writing to treat such information as confidential.
(l) Comply
with all applicable rules and regulations of the SEC in all material
respects.
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ARTICLE
TWO
Indemnification
SECTION
2.1 Indemnification by the
Company. In the event of any registration of the Securities of the
Company under the Securities Act, the Company agrees to indemnity and hold
harmless Holder and each other person who participates as an underwriter in the
offering or sale of such securities against any and all claims, demands, losses,
costs, expenses, obligations, liabilities, joint or several, damages, recoveries
and deficiencies, including interest, penalties and attorneys' fees
(collectively, “Claims”), to which Holder or underwriter may become subject
under the Securities Act or otherwise, insofar as such Claims (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based on any untrue statement or alleged untrue statement of any material
fact contained in any registration statement under which Holder’s Securities
were registered under-the Securities Act, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and the Company will reimburse Holder and each such
underwriter for any legal or any other expenses reasonably incurred by them in
connection with investigating or defending any such Claim (or action or
proceeding in respect thereof); provided that the Company shall not be liable in
any such case to the extent that any such Claim (or action or proceeding in
respect thereof) or expense arises out of or is based on an untrue statement or
alleged untrue statement or omission or alleged omission made in such
registration statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance on and in conformity
with written information furnished to the Company through an instrument duly
executed by Holder specifically stating that it is for use in the preparation
thereof. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of Holder or any such underwriter and shall
survive the transfer of the Securities by Holder.
SECTION
2.2 Indemnification by
Holder. The Company may require, as a condition to including the
Securities in any registration statement filed pursuant to this Agreement, that
the Company shall have received an undertaking satisfactory to it from Holder,
to indemnify and hold harmless (in the same manner and to the same extent as set
forth in Section 2.1) the Company, each director of the Company, each officer of
the Company and each other person, if any, who controls the Company, within the
meaning of the Securities Act, with respect to any statement or alleged
statement in or omission or alleged omission from such registration statement,
any preliminary prospectus contained therein, or any amendment or supplement
thereto, if such statement or alleged statement or omission or alleged omission
was made in reliance on and in conformity with written information furnished to
the Company through an instrument duly executed by Holder specifically stating
that it is for use in the preparation of such registration statement,
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement. Notwithstanding the foregoing, the maximum liability
hereunder which any holder shall be required to suffer shall be limited to the
net proceeds to such Holder from the Shares sold by such Holder in the offering.
Such indemnity shall remain in full force and effect, regardless of any
investigation made by or on behalf of the Company or any such director, officer
or controlling person and shall survive the transfer of the Securities by
Holder.
SECTION
2.3 Notices of Claims,
etc. Promptly after receipt by an indemnified party of notice of the
commencement of any action or proceeding involving a Claim referred to in this
Article Two, such indemnified party will, if a claim in respect thereof is to be
made against an indemnifying party, give written notice to the latter of the
commencement of such action, provided that the failure of any indemnified
party to give
notice as provided herein shall not relieve the indemnifying party of its
obligations under this Article Two, except to the extent that the indemnifying
party is actually prejudiced by such failure to give notice. In case
any such action is brought against an indemnifying party, unless in such
indemnified party reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such Claim, the
indemnifying party shall be entitled to participate in and to assume the defense
thereof, jointly with any other indemnifying party similarly notified to the
extent that it may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the consent of
the indemnified party, consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability in respect of such Claim.
SECTION
2.4 Indemnification
Payments. The indemnification required by this Article shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or expense, loss, damage or liability
is incurred. The indemnity and contribution agreements contained in this Article
2 are in addition to any other remedy that any indemnified party may have
against any indemnifying party.
SECTION
2.5 If any indemnified
party shall have reasonably concluded that there may be one or more legal
defenses available to such indemnified party which are different from or
additional to those available to the indemnifying party, or that such claim or
litigation involves or could have an effect upon matters beyond the scope of the
indemnity agreement provided in this Article 2, the indemnifying party shall not
have the right to assume the defense of such action on behalf of such
indemnified party, and such indemnifying party shall reimburse such indemnified
party and any person controlling such indemnified party for the fees and
expenses of counsel retained by the indemnified party which are reasonably
related to the matters covered by the indemnity agreement provided in this
Article 2. Subject to the foregoing, an indemnified party shall have the right
to employ separate counsel in any such action and to participate in the defense
thereof but the fees and expenses of such counsel shall not be at the expense of
the Company.
SECTION
2.6 If the indemnification
provided for in this Article 2 from the indemnifying party is applicable by its
terms but unavailable to an indemnified party hereunder in respect of any
losses, claims, damages, liabilities or expenses then the indemnifying party, in
lieu of indemnifying such indemnified party, shall, subject to the maximum
aggregate liability of any Holder as set forth in Section 2.2, contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and indemnified party in
connection with the actions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative faults of such indemnifying party and indemnified party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact, has been made by, or relates to
information supplied by, such indemnifying party or indemnified party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth in
Section 2, any legal or other fees, charges or expenses reasonably incurred by
such party in connection with any investigation or proceeding. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person. The parties
hereto agree that it would not be just and equitable if contribution pursuant to
this Section 2.6 were determined by pro rata allocation or by any other method
of allocation which does not take account of the equitable considerations
referred to in the immediately preceding paragraph.
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ARTICLE
THREE
Miscellaneous
SECTION
3.1 Consent to
Amendments. Except as otherwise expressly provided herein, the provisions
of this Agreement may be amended or waived only by the written agreement of the
Company and the Majority Purchasers (as defined in the Release Agreement) and
shall be effective only to the extent specifically set forth in such
writing.
SECTION
3.2 Term of the
Agreement. This Agreement shall terminate with respect to Holder on the
earlier to occur of (i) all of the Securities having been registered as provided
in Article One or (ii) March 31, 2010.
SECTION
3.3 Successors and
Assigns. Except as otherwise expressly provided herein, all covenants and
agreements contained in this Agreement by or on behalf of any of the parties
hereto are transferable and will bind and inure to the benefit of the respective
successors and assigns of the parties hereto, but only if so expressed in
writing.
SECTION
3.4 Severability.
Whenever possible, each provision of this Agreement will be interpreted in such
a manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be prohibited by or invalid under applicable law,
such provision will be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of this Agreement.
SECTION
3.5 Delays or Omissions.
No failure to exercise or delay in the exercise of any right, power or remedy
accruing to Holder on any breach or default of the Company under this Agreement
shall impair any such right, power or remedy nor shall it be construed to be a
waiver of any such breach or default.
SECTION
3.6 Remedies Cumulative.
All remedies under
this Agreement, or by law or otherwise afforded to any party hereto shall be
cumulative and not alterative.
SECTION
3.7 Descriptive Headings.
The descriptive headings of this Agreement are inserted for convenience only and
do not constitute a part of this Agreement. Unless clearly denoted otherwise,
any reference to Articles or Sections contained herein shall be to the Articles
or Sections of this Agreement.
SECTION
3.8 Notices. Any notices
required or permitted to be sent hereunder shall be delivered pursuant to the
terms of the Release Agreement.
SECTION
3.9 Governing Law. The
validity, meaning and effect of this Agreement shall be determined in accordance
with the laws of the State of Texas applicable to contracts made and to be
performed in that state.
SECTION
3.10 Final Agreement. This
Agreement, together with those documents expressly referred to herein,
constitutes the final agreement of the parties concerning the matters referred
to herein, and supersedes all prior agreements and understandings.
SECTION
3.11 Execution in
Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and such counterparts together shall constitute one
instrument.
SECTION
3.12 Replacement. This
Agreement replaces in its entirety the registration rights agreement that was
executed by the Company on March 25, 2008 in favor of Holder.
The
parties hereto have executed this Agreement as of March 25, 2008.
COMPANY:
Tidelands
Oil and Gas Corporation
By: /s/ Xxxxx. X.
Xxxxx
Name: Xxxxx X.
Xxxxx
Title: President
& Chief Executive Officer
HOLDER:
Impact
International LLC
By: /s/ Xxxxx X. Xxxxxx
III
Name: Xxxxx X. Xxxxxx
III
Title: Manager
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