PUT AGREEMENT AND PIGGY BACK REGISTRATION RIGHTS
This Put Agreement and Piggy Back Registration Rights (the "Agreement")
is entered into as of December 16th, 1997 by and between Arakis Energy
Corporation, (the "Company") whose address is 500 645 7 Ave. SW, Xxxxxx,
Xxxxxxx T2P4G8 and Xxxxxx Petroleum, Inc., a Tennessee corporation ("Xxxxxx")
whose address is 0000 Xxxxx Xxxxxxx, Xxxxxxxxxx, Xxxxxxxxx 00000.
R E C I T A L S:
WHEREAS, the Company's subsidiary, AKS Energy Corporation ("AKS") and
Xxxxxx entered into a Purchase and Sale Agreement ("the Sale Agreement")
dated the 16th day of December, 1997, which, inter alia, granted Arakis the
right to put forty-five thousand (45,000) common shares (the "Xxxxxx Stock")
of Xxxxxx and require Xxxxxx to register the Xxxxxx stock; and
WHEREAS, the parties wish to memorialize their understandings and
agreements.
W I T N E S S E T H:
NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained in this Agreement and previous agreements entered into in the
Amended Put Agreement, the parties agree as follows:
1. Piggy Back Registration Rights. If Xxxxxx at any time proposes
to file a registration statement under the Securities Act covering any of its
securities other than a registration on Form S-4 or Form S-8, or any successor
or similar forms, whether or not for sale or its own account, it will each
such time give prompt written notice to the Company of its intention to do so
and of such holders' rights under this Section of the Agreement. Upon the
written request of the Company within 30 days after the receipt of any such
notice (which request shall specify the Xxxxxx Stock intended to be disposed
of by such holder and the intended method of disposition thereof), Xxxxxx will
use its best efforts to effect the registration under the Securities Act of
all the Xxxxxx Stock which Xxxxxx has been so requested to register by the
holders thereof, to the extent requisite to permit the disposition (in
accordance with the intended methods thereof as aforesaid) of the Xxxxxx Stock
so to be registered, by inclusion of such Xxxxxx Stock in the registration
statement which covers the securities which Xxxxxx proposes to register;
provided, that if, at any time after giving written notice of its intention to
register any securities and prior to the effective date of the registration
statement filed in connection with such registration, Xxxxxx shall determine
for any reason either not to register or to delay registration of such
securities, Xxxxxx may, at its election, give written notice of such
determination to each holder of Xxxxxx Stock and, thereupon, (i) in the case
of a determination not to register, shall be relieved of its obligation to
register any of the Xxxxxx Stock in connection with such registration (but not
from its obligation to pay the Registration Expenses in connection therewith),
and (ii) in the case of a determination to delay registering, shall be
permitted to delay registering any of the Xxxxxx Stock, for the same period as
the delay in registering such other securities. Xxxxxx will pay all
Registration Expenses incurred by the holders of the Xxxxxx Stock in
connection with each registration of Xxxxxx Stock requested pursuant to this
Section.
If (i) a registration pursuant to this Section involves an underwritten
offering of the securities being registered, whether or not for sale for the
account of Xxxxxx, to be distributed (on a firm commitment basis) by or
through one or more underwriters of recognized standing under underwriting
terms appropriate for such a transaction, and (ii) the managing underwriter of
such underwritten offering shall inform Xxxxxx and holders of the Xxxxxx Stock
Securities requesting such registration by letter of its belief that the
distribution of all or a specified number of such Xxxxxx Stock concurrently
with the securities being distributed by such underwriters would interfere
with the successful marketing of the securities being distributed by such
underwriters (such writing to state the basis of such belief and the
approximate number of such Xxxxxx Stock which may be distributed without such
effect), then Xxxxxx may, upon written notice to all holders of such Xxxxxx
Stock, reduce pro rata (if and to the extent stated by such managing
underwriter to be necessary to eliminate such effect) the number of such
Xxxxxx Stock and securities proposed to be sold by any person other than
Xxxxxx the registration of which shall have been requested by each holder of
the Xxxxxx Stock and each person other than Xxxxxx so that the resultant
aggregate number of such Xxxxxx Stock so included in such registration shall
be equal to the number of shares stated in such managing underwriter's letter.
2. PUT. The Xxxxxx hereby grants to the Company, or one or more of
its subsidiaries, associated companies, assignees or designees, the
unconditional and irrevocable right to require Xxxxxx to purchase the Xxxxxx
Stock from the Company for the aggregate price of $90,000 (the "Put Price"),
payable in immediately available funds to the Company or such other persons as
the Company shall designate to Xxxxxx in writing (the "Company Put"), provided
Xxxxxx'x common stock is trading for an average of less than Two Dollars
($2.00) for the thirty day (30) period immediately prior to the anniversary
date hereof. The Company's right to require Xxxxxx to take and purchase the
Xxxxxx Stock shall be exercisable by the Company by delivery of a written
notice to Xxxxxx (the "Put Notice") on or after December 16, 1998. Upon
receipt of the Put Notice, Xxxxxx shall have 45 days to deliver the Put Price
to the Company. Upon receipt of the Put Price, the Company shall immediately
transfer the Xxxxxx Stock to Xxxxxx.
3. COVENANTS. At all times until such time as the Company Put has
been exercised and the obligations of Xxxxxx with respect thereto have been
fulfilled Xxxxxx covenants and agrees to duly and punctually perform the
following:
(a) Financial Statements. Xxxxxx will furnish the Company with the
following:
(i) Within 60 days following the end of each quarter of Xxxxxx'x
fiscal year, except the last such quarter of such year, a
copy of Xxxxxx'x Quarterly Report on Form 10-QSB (or Form
10-Q, as the case may be) as filed with the Securities and
Exchange Commission (the "SEC") or, if Xxxxxx no longer
files such report, an unaudited consolidated balance sheet
of Xxxxxx and its consolidated subsidiaries prepared by it
as of the close of the period ended, together with the
related statements of income and cash flows for such period,
and in each case certified the chief financial officer of
Xxxxxx as having been prepared in accordance with generally
accepted accounting principals ("GAAP") and as fairly
presenting the financial condition and results of operations
and changes in financial position for such period then ended
in accordance with such principles and practices (subject to
normal year-end audit adjustments);
(ii) Within 105 days after the close of each fiscal year of
Xxxxxx, a copy of Xxxxxx'x Annual Report on Form 10-KSB (or
form 10-K, as the case may be) as filed with the SEC or, if
Xxxxxx no longer files such reports, an audited consolidated
balance sheet, income statement, and cash flow statement of
Xxxxxx and its consolidated subsidiaries, as of the close of
such fiscal year, and each case as certified independent
public accountants, including their certificate and
accompanying comments, as having been prepared in accordance
GAAP and as fairly presenting the financial condition and
results of operations and changes in financial position for
such period then ended in accordance with GAAP, without
qualification as to scope of the audit or nonconformity with
GAAP;
(iii) Promptly upon their becoming available, copies of all
reports on Form 8-K filed by Xxxxxx under the Securities
Exchange Act of 1934, as amended, and each other
statement,
report or circular (other than the exhibits thereto and
any
registration statements on Form S-8 or its equivalent)
generally distributed to creditors or shareholders;
(iv) Together with each set of financial statements referred to
in clauses (i) and (ii), a certificate signed by the chief
financial officer of Xxxxxx, to the effect that such officer
has reviewed the relevant terms of this Agreement and has
made, or caused to be made under his supervision, a review
of the transactions and condition of Xxxxxx during the
accounting period covered by such financial statements, and
that such review has not disclosed the existence during
such accounting period, nor does such officer have any
knowledge of the existence, as at the date of such
certificate, of any condition or event which constitute a
Default or an Event of Default existed or exists, specifying
the nature and period of existence thereof and what action
Xxxxxx has taken or is taking or proposes to take with
respect thereto;
(v) Immediately after Xxxxxx knows or should know of the
occurrence thereof, notice of a Default or Event of Default;
and
(vi) From time to time such other information as the Company may
reasonably request.
(b) Maintenance of Corporate Existence. Except as provided in Section
(d) below, Xxxxxx will preserve and maintain its corporate existence and its
rights, privileges, licenses and franchises material to Xxxxxx'x ability to
perform its obligations hereunder in each applicable jurisdiction.
(c) Payment of Taxes. Xxxxxx will pay or cause to be paid all federal
and state taxes imposed upon it, or upon its income or profits, or upon any
property belonging to it, on or prior to the due date thereof, including any
extensions which have been duly obtained or granted; provided, however, that
Xxxxxx shall not be required to pay any such taxes, the payment of which is
being diligently contested in good faith and by appropriate proceedings with
appropriate reserves.
(d) Consolidation, Merger, Etc. Xxxxxx shall not liquidate or
dissolve; and Xxxxxx shall not consolidate with or merge into or with any
other corporation or other Person (defined below), and Xxxxxx shall not
convey, transfer, lease or otherwise dispose of all or substantially all of
its property and other assets to, or acquire all or any substantial part of
the property or other assets or capital stock of (if such acquisition is
analogous in either purpose or effect to a consolidation or merger), any
corporation or other Person, unless:
(i) the Person formed by or surviving such consolidation or
merger or the Person which acquires by conveyance, transfer,
lease or other disposition all or substantially all of such
property and other assets or stock (the "Successor Entity"):
(A) shall be a corporation organized and existing under the
laws of the United States of America or any State thereof or
the District of Columbia; (B) immediately after giving
effect to such transaction, shall be Xxxxxx or shall have
acquired or succeeded to all or substantially all of the
property and other assets of Xxxxxx (if such assets are
being transferred) as an entirety; (C) shall execute and
deliver to Xxxxxx such recordations and filings with any
governmental entity and such other documents as Xxxxxx
determines shall be reasonably necessary or advisable to
evidence, or in connection with, such consolidation, merger,
sale, lease, transfer or other disposition and an agreement,
in form and substance reasonably satisfactory to Xxxxxx,
which is a legal, valid, binding and enforceable assumption
by such Successor Entity of the due and punctual performance
and observance of each covenant and condition of this
Agreement and the other operative documents to which Xxxxxx
is a party and agreement to be bound thereby, and an
officer's certificate to such effect and to the effect that
the other requirements of this Section have been satisfied,
and a legal opinion from counsel to such effect and
otherwise in such form and substance reasonably satisfactory
to Xxxxxx. For the purposes of this Agreement, person shall
be defined to mean an individual, a partnership, a
corporation, an association, a joint stock company, a trust,
a joint venture, an unincorporated organization, or a
governmental entity (or any department, agency, or political
subdivision thereof); and
(ii) no Default or Event of Default shall have occurred and be
continuing or shall occur as a result thereof.
4. EVENTS OF DEFAULT. Any one or more of the following conditions or
events shall constitute an Event of Default (whether any such condition or
event shall be voluntary or involuntary or come about or be effected by
operation of law or pursuant to or in compliance with any judgment, decree or
order of any court or any order, rule or regulation of any other governmental
entity):
(a) Xxxxxx shall fail to make any payment payable to the Company under
this Agreement within ten days of the due date; or
(b) Any representation or warranty made or remade by Xxxxxx herein or
in any certificate furnished to the Company in connection herewith
is incorrect at the time made or deemed remade in any material
respect; or
(c) Xxxxxx shall fail to perform or observe any covenant, condition,
or agreement to be performed or observed by it pursuant to this
Agreement, and such failure shall continue for a period of ten
days after written notice thereof is given by the Company to
Xxxxxx; or
(d) Xxxxxx or any of its subsidiaries consents to the appointment of a
custodian, receiver, trustee or liquidator of itself or all or any
material part of Xxxxxx'x property or Xxxxxx'x consolidated
property, or Xxxxxx or any of its subsidiaries admits in writing
its inability to, or is unable to, or does not, pay its debts
generally as they come due, or makes a general assignment for the
benefit of creditors, or Xxxxxx or any of its subsidiaries files a
voluntary petition in bankruptcy or a voluntary petition seeking
reorganization in a proceeding under any bankruptcy or insolvency
laws (as now or hereafter in effect), or an answer admitting the
material allegations of a petition filed against Xxxxxx or any of
its subsidiaries in any such proceeding, or Xxxxxx or any of its
subsidiaries by voluntary petition, answer or consent seeks relief
under the provision of any other bankruptcy, insolvency or other
similar law providing for the reorganization or winding-up of
corporations, or provides for an agreement, composition, extension
or adjustment with its creditors, or any corporate action
(including, without limitation, any board of directors or
shareholder action) is taken by Xxxxxx or any of its subsidiaries
in furtherance of any of the foregoing, whether the same is fully
effected or accomplished; or
(e) An order, judgment or decree is entered by any court appointing,
without the consent of Xxxxxx or any of its subsidiaries, a
custodian, receiver, trustee or liquidator of Xxxxxx or any of its
subsidiaries, or of all or any material part of Xxxxxx'x property,
Xxxxxx'x consolidated property, or all or any material part of
Xxxxxx'x property or Xxxxxx'x consolidated property is
sequestered, and any such order, judgment or decree of appointment
or sequestration remains in effect, undismissed, unstayed or
unvacated for a period of sixty (60) days after the date of entry
thereof or at any time an order for relief is granted; or
(f) An involuntary petition against Xxxxxx or any of its subsidiaries
in a proceeding under the Federal bankruptcy laws or other
insolvency laws (as now or hereafter in effect) is filed and is
not withdrawn or dismissed within sixty (60) days thereafter or at
any time an order for relief is granted in such proceeding, or if,
under the provisions of any law providing for reorganization or
winding up of corporations which may apply to Xxxxxx or any of its
subsidiaries, any court of competent jurisdiction assumes
jurisdiction over, or custody or control of, Xxxxxx or any of its
subsidiaries or of all or any material part of Xxxxxx'x property,
or Xxxxxx'x consolidated property and such jurisdiction, custody
or control remains in effect, unrelinquished, unstayed or
unterminated for a period of sixty (60) days or at any time an
order for relief is granted in such proceeding.
5. REPRESENTATIONS AND WARRANTIES OF XXXXXX. Xxxxxx represents and
warrants to the Company that the statements contained in this Section 5 are
correct and complete as of the date of this Agreement.
(a) Organization of Xxxxxx. Xxxxxx is a corporation duly organized,
validly existing, and in good standing under the laws of the State of
Tennessee.
(b) Authorization of Transaction . Xxxxxx has full power and
authority (including full corporate power and authority) to execute and
deliver this Agreement and to perform its obligations hereunder. Without
limiting the generality of the foregoing, the board of directors of Xxxxxx has
duly authorized the execution, delivery, and performance of this Agreement by
Xxxxxx. This Agreement constitutes the valid and legally binding obligation
of Xxxxxx, enforceable in accordance with its terms and conditions.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
conflict with, result in a breach of any of the terms or provisions of or
constitute a default under any of the terms or provisions of any indenture,
mortgage, trust instrument or other agreement, or any judgment, order or
decree of any court or governmental authority, to which Xxxxxx is a party or
by which it is bound.
(d) Representations and Warranties of Xxxxxx. In the event Xxxxxx
acquires the Xxxxxx Stock, it will acquire such Xxxxxx Stock for treasury
shares and not with a view to the sale or other distribution thereof, and
Xxxxxx will not at any time sell, exchange, transfer, or otherwise dispose of
the Xxxxxx Stock under circumstances that would constitute a violation of the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder, or any state statute, rule, or regulation relating to the sale of
securities.
6. MISCELLANEOUS.
(a) One Agreement. This Agreement constitutes one, nonseverable
agreement.
(b) Notices. All notices or other communications hereunder shall be
in writing and delivered by registered mail, return receipt requested,
next-day
air courier delivery, personal service, telex or telecopier at the
respective addresses and to the attention of the respective parties set forth
below their signatures hereto. All notices hereunder shall be effective when
received.
(c) Entire Agreement. This Agreement contains the entire agreement
between Xxxxxx and the Company with respect to the subject matter hereof, and
no provision hereof shall be amended, supplements, waived, or otherwise
modified except by a writing executed by both parties.
(d) Confidentiality. Xxxxxx and the Company agree to maintain the
confidentiality of the terms of this Agreement and the transactions
contemplated hereby and the documents delivered hereunder and not disclose
such terms or documents to any other Person, except: (Ii) as required by
applicable law, rule or regulation or by legal process or in connection with
legal proceedings; (ii) to affiliates and subsidiaries, attorneys,
consultants, appraisers, accountants, prospective lenders, prospective
trustees, prospective equity participants, prospective direct or indirect
assignees or transferees, investment bankers, financial advisors, rating
agencies and other professional engaged by such party which have agreed in
writing to be bound by and comply with this Section or are under a
professional obligation to do so; (iii) for such information as was or is
available to the public other than as a result of a disclosure in violation of
this Agreement or was or becomes available to a third party on a
non-confidential basis; and (iv) for financial reporting purposes and the
disclosure of the commitments undertaken hereby. Neither party will issue any
press release or other public disclosure of the existence or any terms of this
transaction, without the prior consultation with the other concerning such
press release or other disclosure.
(e) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE SUBSTANTIVE INTERNAL LAWS OF THE COMMONWEALTH OF
KENTUCKY, WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPALS THEREOF.
(f) Counterparts. This Agreement may be executed in as many
counterparts as may be deemed necessary or convenient, and by the different
parties hereto on separate counterparts, each of which, when so executed,
shall be deemed an original but all such counterparts shall constitute but one
and the same agreement.
(g) Headings. Section headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement of any other purpose or be given any substantive effect.
(h) Further Assurances. Xxxxxx and the Company each agree to do such
further acts and things or cause to be performed such further acts and things,
including, without limitation, execute and deliver, or cause to be executed
and delivered, such assignments, security instruments, financing statements,
agreements and other documents as the other shall reasonably require or deem
advisable to effectuate the purposes of this Agreement or any other operative
document or to better assure or confirm its rights and remedies hereunder or
thereunder.
(i) Time of the Essence. Time is of the essence with respect to each
provision hereof in which time is a factor.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their duly authorized officers as of the day and year first above written.
XXXXXX PETROLEUM, INC.
By:/S/Xxxxx Xxxxxx
Its: President
Arakis Energy Corporation
By:/S/
Its:___________________________
