Registration Rights Agreement
EXHIBIT 10.2
Execution Copy
This Registration Rights Agreement (the “Agreement”) is made and entered
into as of September 1, 2006, by and among American Oil & Gas, Inc., a Nevada corporation (the
“Company”), and the investors listed on the signature pages to this Agreement (the
“Stockholders”).
In order to induce the Stockholders to purchase shares of common stock of the Company, par
value $0.001 per share, from Sunstone Oil and Gas, LLC, an Oklahoma company (“Sunstone”),
which shares are to be issued to Sunstone pursuant to that certain Purchase and Sale Agreement
dated September 1, 2006 between the Company and Sunstone (the “Purchase Agreement”), the
Company has agreed to provide the registration rights set forth in this Agreement. The execution
of this Agreement is a condition to the closing under the Purchase Agreement. The terms “herein,”
“hereof,” “hereto,” “hereinafter” and similar terms, as used in this Agreement, shall in each case
refer to this Agreement as a whole and not to any particular section, paragraph, sentence or other
subdivision of this Agreement.
The Company agrees with the Stockholders (i) for their benefit and (ii) for the benefit of the
beneficial owners from time to time of the Registrable Securities (as defined herein) (each of the
foregoing a “Holder” and, together, the “Holders”), as follows:
1. Definitions. As used in this Agreement, the following terms shall have the
following meanings:
(a) “Affiliate” means, with respect to any specified person, an “affiliate,” as
defined in Rule 144, of such person.
(b) “Business Day” means each day on which the American Stock Exchange is open
for trading.
(c) “Claim” has the meaning set forth in Section 8(m) hereof.
(d) “Common Stock” means the 2,050,000 shares of common stock, par value $0.001
per share, of the Company issued pursuant to the Purchase Agreement, and any additional shares of common stock, par value $0.001 per share, of the Company issued pursuant to this
Agreement.
(e) “Effectiveness Deadline Date” has the meaning set forth in Section 2(a)
hereof.
(f) “Effectiveness Period” means a period that terminates when there are no
Registrable Securities outstanding or, with respect to a Holder, the date on which such
Holder may sell Registrable Securities held by it pursuant to Rule 144(k) under the
Securities Act
(g) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
(h) “Form S-3” means Form S-3 under the Securities Act.
(i) “Holder” has the meaning set forth in the preamble hereto.
(j) “Holder Information” has the meaning set forth in Section 5(b) hereof.
(k) “Indemnified Party” has the meaning set forth in Section 5(c) hereof.
(l) “Indemnifying Party” has the meaning set forth in Section 5(c) hereof.
(m) “Initial Shelf Registration Statement” has the meaning set forth in Section
2(a) hereof.
(n) “Material Event” has the meaning set forth in Section 3(i) hereof.
(o) “Proceeding” has the meaning set forth in Section 5(c) hereof.
(p) “Prospectus” means the prospectus included in any Shelf Registration
Statement (including, without limitation, a prospectus that discloses information previously
omitted from a prospectus filed as part of an effective registration statement in reliance
upon Rule 415 under the Securities Act), as amended or supplemented by any amendment or
prospectus supplement, including post-effective amendments and any prospectus filed with
respect to any Shelf Registration Statement pursuant to Rule 424 under the Securities Act,
and all materials incorporated by reference or deemed to be incorporated by reference in
such Prospectus.
(q) “Purchase Agreement” has the meaning set forth in the preamble hereof.
(r) “Registrable Securities” means the Common Stock, and any securities issued
with respect thereto by reason of or in connection with any stock dividend, stock split or
similar event, until, in the case of any such security, the earliest of:
(i) the date on which such security has been effectively registered under the
Securities Act and sold pursuant to a Registration Statement relating thereto; or
(ii) the date on which such security has been publicly sold pursuant to Rule
144 or any successor provision thereto.
(s) “Registration Expenses” has the meaning set forth in Section 4 hereof.
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(t) “Registration Statement” means any registration statement, under the
Securities Act, of the Company that covers any of the Registrable Securities pursuant to
this Agreement, including the Prospectus, amendments and supplements to such registration
statement, including post-effective amendments, all exhibits and all materials incorporated
by reference or deemed to be incorporated by reference in such registration statement,
Prospectus, amendment or supplement.
(u) “Rule 144” means Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted by the SEC.
(v) “SEC” means the Securities and Exchange Commission.
(w) “Securities Act” means the Securities Act of 1933, as amended, and the
rules and regulations promulgated by the SEC thereunder.
(x) “Shelf Registration Statement” means the Initial Shelf Registration
Statement and any Subsequent Shelf Registration Statement.
(y) “Subsequent Shelf Registration Statement” has the meaning set forth in
Section 2(b) hereof.
2. Shelf Registration.
(a) The Company shall prepare and file, or cause to be prepared and filed, with the SEC
as soon as practicable a Registration Statement (the “Initial Shelf Registration
Statement”) for an offering to be made on a delayed or continuous basis pursuant to Rule
415 under the Securities Act registering the resale from time to time by the Holders thereof
of any and all of the Registrable Securities. The Initial Shelf Registration Statement
shall be filed as a post-effective amendment to the Company’s Registration Statement on Form
S-3 (Registration No. 333-120987) or, with the agreement of the Holders, on a new Form S-3
or another appropriate form and shall provide for the registration of such Registrable
Securities for resale by such Holders in accordance with any reasonable method of
distribution elected by such Holders. The Company shall use its commercially reasonable
efforts to (i) cause the Initial Shelf Registration Statement to become effective under the
Securities Act as promptly as practicable but in any event by the date (the
“Effectiveness Deadline Date”) that is one hundred twenty (120) days after the date
hereof and (ii) keep the Initial Shelf Registration Statement (or any Subsequent Shelf
Registration Statement) continuously effective under the Securities Act until the expiration
of the Effectiveness Period. At the time the Initial Shelf Registration Statement becomes
effective under the Securities Act, the Company shall have named each Holder as a selling
securityholder in the Initial Shelf Registration Statement and the related Prospectus in
such a manner as to permit such Holder to deliver such Prospectus to purchasers of
Registrable Securities in accordance with applicable law.
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(b) If any Shelf Registration Statement ceases to be effective under the Securities Act
for any reason at any time during the Effectiveness Period, the Company shall use its
commercially reasonable efforts to promptly cause such Shelf Registration Statement to
become effective under the Securities Act (including obtaining the prompt withdrawal of any
order suspending the effectiveness of such Shelf Registration Statement), and in any event,
subject to Section 3(i)(B), shall within fifteen (15) days of such cessation of
effectiveness, (i) amend such Shelf Registration Statement in a manner reasonably expected
to obtain the withdrawal of any order suspending the effectiveness of such Shelf
Registration Statement or (ii) file an additional Registration Statement (a “Subsequent
Shelf Registration Statement”) for an offering to be made on a delayed or continuous
basis pursuant to Rule 415 of the Securities Act registering the resale from time to time by
Holders thereof of all securities that are Registrable Securities as of the time of such
filing. If a Subsequent Shelf Registration Statement is filed, the Company shall use its
commercially reasonable efforts to (A) cause such Subsequent Shelf Registration Statement to
become effective under the Securities Act as promptly as practicable after such filing, but
in no event later than the date that is thirty (30) days after the date such Subsequent
Shelf Registration Statement is required by this Section 2(b) to be filed with the SEC and
(B) keep such Subsequent Shelf Registration Statement (or another Subsequent Shelf
Registration Statement) continuously effective until the end of the Effectiveness Period.
Any such Subsequent Shelf Registration Statement shall be on Form S-3 or, with the Agreement
of the Holders, another appropriate form and shall provide for the registration of such
Registrable Securities for resale by such Holders in accordance with any reasonable method
of distribution elected by the Holders.
(c) The Company shall supplement and amend any Shelf Registration Statement if required
by the rules, regulations or instructions applicable to the registration form used by the
Company for such Shelf Registration Statement, if required by the Securities Act or as
reasonably requested by any Holder.
(d) The parties hereto agree that the Holders of Registrable Securities will suffer
damages, and that it would not be feasible to ascertain the extent of such damages with
precision, if: the Initial Shelf Registration Statement has not become effective under the
Securities act on or prior to the Effectiveness Deadline Date. In such event, the Company
shall, on or before the seventh (7th) day after the Effectiveness Deadline Date,
pay to each Holder, by wire transfer of immediately available funds to an account designated
by such Holder, an amount equal to ten cents ($0.10) in respect of each Registrable Security
then held by such Holder.
3. Registration Procedures. In connection with the registration obligations of the
Company under this Agreement, the Company shall:
(a) Prepare and file with the SEC a Shelf Registration Statement or Shelf Registration
Statements on Form S-3 or, with the agreement of the Holders, any other appropriate form
under the Securities Act available for the sale of the Registrable Securities by the Holders
thereof in accordance with the intended method or methods of
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distribution thereof, and use its commercially reasonable efforts to cause each such
Shelf Registration Statement to become effective under the Securities Act and remain
effective under the Securities Act as provided herein; provided, that, before filing
any Shelf Registration Statement or Prospectus or any amendments or supplements thereto with
the SEC, the Company shall furnish to the Holders and counsel for the Holders copies of all
such documents proposed to be filed and reflect in each such document when so filed with the
SEC such comments as the Holders or such counsel reasonably shall propose within three (3)
Business Days of the delivery of such copies to the Holders and such counsel.
(b) Prepare and file with the SEC such amendments and post-effective amendments to each
Shelf Registration Statement as may be necessary to keep such Shelf Registration Statement
or Subsequent Shelf Registration Statement continuously effective until the expiration of
the Effectiveness Period; cause the related Prospectus to be supplemented by any required
Prospectus supplement and, as so supplemented, to be filed with the SEC pursuant to Rule 424
(or any similar provisions then in force) under the Securities Act; and comply with the
provisions of the Securities Act applicable to it with respect to the disposition of all
securities covered by each Shelf Registration Statement during the Effectiveness Period in
accordance with the intended methods of disposition by the sellers thereof set forth in such
Shelf Registration Statement as so amended or such Prospectus as so supplemented.
(c) As promptly as practicable, give notice to the Holders and counsel for the Holders:
(i) when any Prospectus, Prospectus supplement, Shelf Registration Statement or
post-effective amendment to a Shelf Registration Statement has been filed with the
SEC and, with respect to a Shelf Registration Statement or any post-effective
amendment, when the same has become effective under the Securities Act,
(ii) of any request, following the effectiveness of a Shelf Registration
Statement under the Securities Act, by the SEC or any other governmental authority
for amendments or supplements to such Shelf Registration Statement or the related
Prospectus or for additional information,
(iii) of the issuance by the SEC or any other governmental authority of any
stop order suspending the effectiveness of any Shelf Registration Statement or the
initiation or threatening of any proceedings for that purpose,
(iv) of the receipt by the Company or its legal counsel of any notification
with respect to the suspension of the qualification or exemption from qualification
of any of the Registrable Securities for sale in any jurisdiction or the initiation
or threatening of any proceeding for such purpose,
(v) after the effective date of any Shelf Registration Statement filed
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with the SEC pursuant to this Agreement, of the occurrence of (but not the
nature of or details concerning) a Material Event, and
(vi) of the determination by the Company that a post-effective amendment to a
Shelf Registration Statement or a Subsequent Shelf Registration Statement will be
filed with the SEC, which notice may, at the discretion of the Company (or as
required pursuant to Section 3(i)), state that it constitutes a Suspension Notice,
in which event the provisions of Section 3(i) shall apply.
(d) Use its best efforts to (i) prevent the issuance of, and, if issued, to obtain the
withdrawal of, any order suspending the effectiveness of a Shelf Registration Statement and
(ii) obtain the lifting of any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any jurisdiction in which
they have been qualified for sale, in either case at the earliest possible moment, and
provide prompt notice to each Holder, and counsel for the Holders, of the withdrawal or
lifting of any such order or suspension.
(e) If requested by the Holders, as promptly as practicable incorporate in a Prospectus
supplement or a post-effective amendment to a Shelf Registration Statement such information
as the Holder or counsel for the Holders shall determine to be required to be included
therein by applicable law and make any required filings of such Prospectus supplement or
such post-effective amendment; provided, however, that the Company shall not
be required to take any actions under this Section 3(e) that, in the written opinion of
counsel for the Company, are not in compliance with applicable law.
(f) As promptly as practicable, furnish to each Holder and counsel for the Holders,
without charge, at least one (1) conformed copy of each Shelf Registration Statement and
each amendment thereto, including financial statements but excluding schedules, all
documents incorporated or deemed to be incorporated therein by reference and all exhibits
(unless requested in writing to the Company by such Holder or such counsel).
(g) During the Effectiveness Period, deliver to each Holder and, counsel for the
Holders, in connection with any sale of Registrable Securities pursuant to a Shelf
Registration Statement, without charge, as many copies of the Prospectus or Prospectuses
relating to such Registrable Securities (including each preliminary prospectus) and any
amendment or supplement thereto as such Holder may reasonably request; and the Company
hereby consents (except during such periods that a Suspension Notice is outstanding and has
not been revoked) to the use of such Prospectus and each amendment or supplement thereto by
each Holder, in connection with any offering and sale of the Registrable Securities covered
by such Prospectus or any amendment or supplement thereto in the manner set forth therein.
(h) Prior to any public offering of the Registrable Securities pursuant to a Shelf
Registration Statement, use its best efforts to register or qualify or cooperate with the
Holders in connection with the registration or qualification (or exemption from such
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registration or qualification) of such Registrable Securities for offer and sale under
the securities or Blue Sky laws of such jurisdictions within the United States as any Holder
reasonably requests in writing; use its best efforts to keep each such registration or
qualification (or exemption therefrom) effective during the Effectiveness Period in
connection with such Holder’s offer and sale of Registrable Securities pursuant to such
registration or qualification (or exemption therefrom) and do any and all other acts or
things reasonably necessary or advisable to enable the disposition in such jurisdictions of
such Registrable Securities in the manner set forth in the relevant Shelf Registration
Statement and the related Prospectus; provided, however, that the Company
will not be required to qualify generally to do business in any jurisdiction where it is not
then so qualified.
(i) Upon: (A) the occurrence or existence of any pending corporate development (a
“Material Event”) that, in the reasonable discretion of the Company, makes it
appropriate to suspend the availability of any Shelf Registration Statement and the related
Prospectus; (B) the issuance by the SEC of a stop order suspending the effectiveness of any
Shelf Registration Statement or the initiation of proceedings with respect to any Shelf
Registration Statement under Section 8(d) or 8(e) of the Securities Act; or (C) the
occurrence of any event or the existence of any fact as a result of which any Shelf
Registration Statement shall contain any 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, or any Prospectus shall contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
(i) in the case of clause (A) or (C) above, as promptly as practicable, prepare
and file, if necessary pursuant to applicable law, a post-effective amendment to
such Shelf Registration Statement or a supplement to such Prospectus or any document
incorporated therein by reference or file any other required document that would be
incorporated by reference into such Shelf Registration Statement and Prospectus so
that such Shelf Registration Statement does not contain any 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, and so that such Prospectus
does not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, as thereafter delivered to
the purchasers of the Registrable Securities being sold thereunder, and, in the case
of a post-effective amendment to a Shelf Registration Statement, use its best
efforts to cause it to become effective under the Securities Act as promptly as
practicable, and
(ii) give notice to the Holders and counsel for the Holders that the
availability of the Shelf Registration Statement is suspended (a “Suspension
Notice”).
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The Company will use its commercially reasonable efforts to ensure that the use of the
Prospectus may be resumed as promptly as is practicable and, in any event, so that the
period during which the availability of the Shelf Registration Statement and any Prospectus
is suspended pursuant to this Section 3(i) does not exceed thirty (30) days in the aggregate
in any three (3) month period or sixty (60) days in the aggregate in any twelve (12) month
period.
(j) Make available for inspection during normal business hours by representatives for
the Holders and any underwriters participating in any disposition pursuant to any Shelf
Registration Statement and any broker-dealers, attorneys and accountants retained by such
Holders or any such underwriters, all relevant financial and other records and pertinent
corporate documents and properties of the Company and its subsidiaries, and cause the
appropriate officers, directors and employees of the Company and its subsidiaries to make
available for inspection during normal business hours all relevant information reasonably
requested by such representatives for the Holders, or any such underwriters, broker-dealers,
attorneys or accountants in connection with such disposition, in each case as is customary
for similar “due diligence” examinations; provided, however, that such
persons shall, at the Company’s request, first agree in writing with the Company that any
information that is reasonably and in good faith designated by the Company in writing as
confidential at the time of delivery of such information shall be kept confidential by such
persons and shall be used solely for the purposes of exercising rights under this Agreement,
unless (i) disclosure of such information is required by court or administrative order or is
necessary to respond to inquiries of governmental or regulatory authorities, (ii) disclosure
of such information is required by law (including any disclosure requirements pursuant to
federal securities laws in connection with the filing of any Shelf Registration Statement or
the use of any Prospectus referred to in this Agreement) or necessary to defend or prosecute
a claim brought against or by any such persons (e.g., to establish a “due diligence”
defense), (iii) such information becomes generally available to the public other than as a
result of a disclosure or failure to safeguard by any such person or (iv) such information
becomes available to any such person from a source other than the Company and such source is
not bound by a confidentiality agreement or is not otherwise under a duty of trust to the
Company; provided further, that the foregoing inspection and information
gathering shall, to the greatest extent possible, be coordinated on behalf of all the
Holders and the other parties entitled thereto by counsel for the Holders in connection with
Shelf Registration Statements.
(k) Comply with all applicable rules and regulations of the SEC; and make generally
available to its securityholders earnings statements satisfying the provisions of Section
11(a) of the Securities Act and Rule 158 thereunder (or any similar rule promulgated under
the Securities Act), which statements shall cover a period of twelve (12) months commencing
on the first day of the first fiscal quarter of the Company commencing after the effective
date of each Shelf Registration Statement (within the meaning of Rule 158(c) under the
Securities Act), and which statements shall be so made generally available to the Company’s
securityholders no later than seventy-five (75) days after the end of each fiscal year of
the Company.
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(l) Cooperate with each Holder to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold pursuant to a Shelf Registration
Statement, which certificates shall not bear any restrictive legends, and cause such
Registrable Securities to be registered in such names as such Holder may request in writing.
(m) Cooperate and assist in any filings required to be made with the National
Association of Securities Dealers, Inc.
(n) Use its best efforts (including without limitation, seeking to cure in the
Company’s listing application any deficiencies listed by the exchange) to qualify for and
list and include all Registrable Securities on the American Stock Exchange.
(o) Take all actions and enter into such customary agreements as are necessary, or
reasonably requested by the Holders, in order to expedite or facilitate disposition of such
Registrable Securities.
4. Registration Expenses. The Company shall bear all fees and expenses incurred in
connection with the performance by the Company of its obligations under Section 2 and Section 3 of
this Agreement whether or not any of the Shelf Registration Statements are filed or declared
effective under the Securities Act. Such fees and expenses (“Registration Expenses”) shall
include, without limitation, (i) all registration and filing fees and expenses (including, without
limitation, fees and expenses with respect to compliance with federal securities laws and state
securities or Blue Sky laws, (ii) all printing expenses (including, without limitation, expenses of
printing certificates for Registrable Securities), (iii) all duplication and mailing expenses
relating to copies of any Shelf Registration Statement or Prospectus delivered to any Holders
hereunder, (iv) all fees and disbursements of counsel for the Company, (v) all fees and
disbursements of the registrar and transfer agent for the Common Stock, and (vi) Securities Act
liability insurance obtained by the Company. In addition, the Company shall pay the internal
expenses of the Company (including, without limitation, all salaries and expenses of officers and
employees performing legal or accounting duties), the expense of any annual audit or quarterly
review, the fees and expenses incurred in connection with the listing by the Company of the
Registrable Securities on any securities exchange or quotation system on which similar securities
of the Company are then listed and the fees and expenses of any person, including, without
limitation, special experts, retained by the Company. The Company shall not be responsible to pay
any brokerage fees and commissions incurred by the Holders in connection with their sale of
Registrable Securities.
5. Indemnification, Contribution.
(a) The Company agrees to indemnify, defend and hold harmless (i) each Holder, (ii)
each person (a “Controlling Person”), if any, who controls any Holder within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act and (iii) the
respective officers, directors, partners, members, employees, representatives and agents of
each Holder or any Controlling Person (each, an “Indemnified Party”), from
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and against any loss, damage, expense, liability, claim or any actions in respect
thereof (including the reasonable cost of investigation) which such Indemnified Party may
incur or become subject to under the Securities Act, the Exchange Act or otherwise, insofar
as such loss, damage, expense, liability, claim or action arises out of or is based upon any
untrue statement or alleged untrue statement of a material fact contained in any Shelf
Registration Statement or Prospectus or any free writing prospectus, including any document
incorporated by reference therein, or in any amendment or supplement thereto or in any
preliminary prospectus, or arises out of or is based upon any omission or alleged omission
to state a material fact required to be stated in any Shelf Registration Statement or in any
amendment or supplement thereto or necessary to make the statements therein not misleading,
or arises out of or is based upon any omission or alleged omission to state a material fact
necessary in order to make the statements made in any Prospectus or any free writing
prospectus or in any amendment or supplement thereto or in any preliminary prospectus, in
the light of the circumstances under which such statements were made, not misleading, and
the Company shall reimburse, as incurred, the Indemnified Parties for any legal or other
expenses reasonably incurred by them in connection with investigating or defending any such
loss, damage, expense, liability, claim or action in respect thereof; provided,
however, that the Company shall not be required to provide any indemnification
pursuant to this Section 5(a) in any such case insofar as any such loss, damage, expense,
liability, claim or action arises out of or is based upon any untrue statement or omission
or alleged untrue statement or omission of a material fact contained in, or omitted from,
and in conformity with information furnished in writing by or on behalf of a Holder to the
Company expressly for use in, any Shelf Registration Statement or any Prospectus;
provided, further, however, that this indemnity agreement will be in
addition to any liability which the Company may otherwise have to such Indemnified Party.
(b) Each Holder, severally and not jointly, agrees to indemnify, defend and hold
harmless (i) the Company, (ii) its directors, officers, employees and (iii) any person who
controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act (each, a “Company Indemnified Party”) from and against any loss,
damage, expense, liability, claim or any actions in respect thereof (including the
reasonable cost of investigation) which such Company Indemnified Party may incur or become
subject to under the Securities Act, the Exchange Act or otherwise, insofar as such loss,
damage, expense, liability, claim or action arises out of or is based upon any untrue
statement or alleged untrue statement of a material fact contained in, and in conformity
with information (the “Holder Information”) furnished in writing by or on behalf of
such Holder to the Company expressly for use in, any Shelf Registration Statement or
Prospectus, or arises out of or is based upon any omission or alleged omission to state a
material fact in connection with such Holder Information required to be stated in any Shelf
Registration Statement or Prospectus or necessary to make such Holder Information, in light
of the circumstances under which such statements were made, not misleading; and, subject to
the limitation set forth in the immediately preceding clause, each Holder shall reimburse,
as incurred, the Company for any legal or other expenses reasonably incurred by the Company
or any such controlling person in connection with investigating or defending any loss,
damage, expense, liability, claim or
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action in respect thereof. This indemnity agreement will be in addition to any
liability which such Holder may otherwise have to the Company or any of its controlling
persons. In no event shall the liability of any selling Holder of Registrable Securities
hereunder be greater in amount than the dollar amount of the proceeds received by such
Holder upon the sale, pursuant to the Shelf Registration Statement, of the Registrable
Securities giving rise to such indemnification obligation.
(c) If any action, suit or proceeding (each, a “Proceeding”) is brought against
any person in respect of which indemnity may be sought pursuant to either Section 5(a) or
Section 5(b), such person (the “Indemnified Party”) shall promptly notify the person
against whom such indemnity may be sought (the “Indemnifying Party”) in writing of
the institution of such Proceeding and the Indemnifying Party shall assume the defense of
such Proceeding; provided, however, that the omission to so notify such
Indemnifying Party shall not relieve such Indemnifying Party from any liability which it may
have to such Indemnified Party or otherwise. Such Indemnified Party shall have the right to
employ its own counsel in any such case, but the fees and expenses of such counsel shall be
at the expense of such Indemnified Party unless the employment of such counsel shall have
been authorized in writing by such Indemnifying Party in connection with the defense of such
Proceeding or such Indemnifying Party shall not have employed counsel to have charge of the
defense of such Proceeding within thirty (30) days of the receipt of notice thereof or such
Indemnified Party shall have reasonably concluded upon the written advice of counsel that
there may be one or more defenses available to it that are different from, additional to or
in conflict with those available to such Indemnifying Party (in which case such Indemnifying
Party shall not have the right to direct that portion of the defense of such Proceeding on
behalf of the Indemnified Party, but such Indemnifying Party may employ counsel and
participate in the defense thereof but the fees and expenses of such counsel shall be at the
expense of such Indemnifying Party), in any of which events such reasonable fees and
expenses shall be borne by such Indemnifying Party and paid as incurred (it being
understood, however, that such Indemnifying Party shall not be liable for the expenses of
more than one separate counsel in any one Proceeding or series of related Proceedings
together with reasonably necessary local counsel representing the Indemnified Parties who
are parties to such action). An Indemnifying Party shall not be liable for any settlement
of such Proceeding effected without the written consent of such Indemnifying Party, but if
settled with the written consent of such Indemnifying Party, such Indemnifying Party agrees
to indemnify and hold harmless an Indemnified Party from and against any loss or liability
by reason of such settlement. Notwithstanding the foregoing sentence, if at any time an
Indemnified Party shall have requested an Indemnifying Party to reimburse such Indemnified
Party for fees and expenses of counsel as contemplated by the second sentence of this
paragraph, then such Indemnifying Party agrees that it shall be liable for any settlement of
any Proceeding effected without its written consent if (i) such settlement is entered into
more than sixty (60) Business Days after receipt by such Indemnifying Party of the aforesaid
request, (ii) such Indemnifying Party shall not have fully reimbursed such Indemnified Party
in accordance with such request prior to the date of such settlement and (iii) such
Indemnified Party shall have given such Indemnifying Party at least thirty (30) days’ prior
notice of its intention to settle. No Indemnifying Party shall, without the prior
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written consent of any Indemnified Party, effect any settlement of any pending or
threatened Proceeding in respect of which such Indemnified Party is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Party, unless such
settlement includes an unconditional release of such Indemnified Party from all liability on
claims that are the subject matter of such Proceeding and does not include an admission of
fault or culpability or a failure to act by or on behalf of such Indemnified Party.
(d) If the indemnification provided for in this Section 5 is unavailable to an
Indemnified Party under Section 5(a) or Section 5(b), or insufficient to hold such
Indemnified Party harmless, in respect of any losses, damages, expenses, liabilities, claims
or actions referred to therein, then each applicable Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, damages, expenses, liabilities, claims or
actions (i) in such proportion as is appropriate to reflect the relative fault of the
Company, on the one hand, and of the Holders, on the other hand, in connection with the
statements or omissions which resulted in such losses, damages, expenses, liabilities,
claims or actions, as well as any other relevant equitable considerations. The relative
fault of the Company, on the one hand, and of the Holders, on the other hand, shall be
determined by reference to, among other things, whether the untrue statement or alleged
untrue statement of a material fact or omission or alleged omission relates to information
supplied by the Company or by the Holders and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or omission. The
amount paid or payable by a party as a result of the losses, damages, expenses, liabilities,
claims and actions referred to above shall be deemed to include any reasonable legal or
other fees or expenses reasonably incurred by such party in connection with investigating or
defending any Proceeding.
(e) The Company and the Holders agree that it would not be just and equitable if
contribution pursuant to this Section 5 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 Section 5(d) above. Notwithstanding the provisions of this Section 5, no
Holder shall be required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities giving rise to such contribution obligation and
sold by such Holder were offered to the public exceeds the amount of any damages which it
has otherwise been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The Holders’ respective
obligations to contribute pursuant to this Section 5 are several in proportion to the
respective amount of Registrable Securities they have sold pursuant to a Shelf Registration
Statement, and not joint. The remedies provided for in this Section 5 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any indemnified
party at law or in equity.
(f) The indemnity and contribution provisions contained in this Section 5
- 12 -
shall remain operative and in full force and effect regardless of (i) any termination
of this Agreement, (ii) any investigation made by or on behalf of any Holder or any person
controlling any Holder, or the Company, or the Company’s officers or directors or any person
controlling the Company and (iii) the sale of any Registrable Security by any Holder.
6. Information Requirements.
(a) The Company covenants that, if at any time before the end of the Effectiveness
Period it is not subject to the reporting requirements of the Exchange Act, it will
cooperate with any Holder of Registrable Securities and take such further action as any
Holder of Registrable Securities may reasonably request in writing (including, without
limitation, making such representations as any such Holder may reasonably request), all to
the extent required from time to time to enable such Holder to sell Registrable Securities
without registration under the Securities Act within the limitations of the exemptions
provided by Rule 144, Rule 144A, Regulation S and Regulation D under the Securities Act and
customarily taken in connection with sales pursuant to such exemptions. Upon the written
request of any Holder, the Company shall deliver to such Holder a written statement as to
whether the Company has complied with the reporting requirements of the Exchange Act, unless
such a statement has been included in the Company’s most recent report filed with the SEC
pursuant to Section 13 or Section 15(d) of Exchange Act.
(b) The Company shall use commercially reasonable efforts to file the reports required
to be filed by it under the Exchange Act and to comply with all other requirements set forth
in the instructions to Form S-3 in order to allow the Company to be eligible to file
registration statements on Form S-3.
7. Obligations of the Holders
(a) Within ten (10) Business Days of the Company’s request to a Holder therefore, such
Holder, if it wishes to include its Registrable Securities in a Registration Statement,
shall furnish in writing to the Company answers to the questions on the Investor
Questionnaire in the form attached hereto as Exhibit “A” and such Holder will notify the
Company promptly of any change in any of such information not less than five (5) Business
Days prior to any attempted or actual distribution of Registrable Securities under a
Registration Statement.
(b) Each Holder, by its acceptance of the Registrable Securities agrees to cooperate
with the Company as reasonably requested by the Company in connection with the preparation
and filing of a Registration Statement hereunder, unless such Investor has notified the
Company in writing of its election to exclude all of its Registrable Securities from such
Registration Statement.
(c) Each Holder agrees that, upon receipt of any Suspension Notice from the Company in
accordance with Section 3(i) hereof, such Holder will immediately
- 13 -
discontinue disposition of Registrable Securities pursuant to the Registration
Statement covering such Registrable Securities until (i) the Holder’s receipt of the copies
of the supplemented or amended prospectus filed with the SEC (and notice from the Company
that any related post-effective amendment is declared effective, which notice shall be
promptly provided by the Company) or (ii) or such Holder is advised in writing by the
Company that the Prospectus may be used.
8. Miscellaneous.
(a) Remedies. The Company acknowledges and agrees that any failure by the
Company to comply with its obligations under this Agreement may result in material
irreparable injury to the Holders for which there is no adequate remedy at law, that it will
not be possible to measure damages for such injuries precisely and that, in the event of any
such failure, any Holder may obtain such relief as may be required to specifically enforce
the Company’s obligations under this Agreement. The Company further agrees to waive the
defense in any action for specific performance that a remedy at law would be adequate.
(b) No Conflicting Agreements. The Company is not, as of the date hereof, a
party to, nor shall it, on or after the date of this Agreement, enter into, any agreement
with respect to the Company’s securities that conflicts with the rights granted to the
Holders in this Agreement. The Company represents and warrants that the rights granted to
the Holders hereunder do not in any way conflict with the rights granted to the holders of
the Company’s securities under any other agreements. The Company will not take any action
with respect to the Registrable Securities which would adversely affect the ability of any
of the Holders to include such Registrable Securities in a registration undertaken pursuant
to this Agreement.
(c) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the Company has
obtained the written consent of the Holders holding a majority of the Registrable
Securities. Notwithstanding the foregoing, a waiver or consent to depart from the
provisions hereof with respect to a matter that relates exclusively to the rights of Holders
of Registrable Securities whose securities are being sold pursuant to a Shelf Registration
Statement and that does not directly or indirectly affect the rights of other Holders of
Registrable Securities may be given by the Holders holding a majority of the Registrable
Securities being sold pursuant to such Shelf Registration Statement.
(d) Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand delivery, by telecopier, by courier guaranteeing
overnight delivery or by first-class mail, return receipt requested, and shall be deemed
given (A) when made, if made by hand delivery, (B) upon confirmation, if made by telecopier,
(C) one (1) Business Day after being deposited with such courier, if made by overnight
courier or (D) on the date indicated on the notice of receipt, if made by first-class mail,
to the parties as follows:
- 14 -
(i) if to a Holder, at the most current address given by such Holder to the
Company in a Notice and Questionnaire or any amendment thereto;
(ii) if to the Company, to:
American Oil & Gas, Inc.
0000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxx X’Xxxxx, Chief Executive Officer
Facsimile No.: (000) 000-0000
0000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxx X’Xxxxx, Chief Executive Officer
Facsimile No.: (000) 000-0000
(iii) if to a Holder, to the Holder at the most recent address for such Holder
given by the transfer agent and registrar of the common stock, par value $0.001 per
share, of the Company:
or to such other address as such person may have furnished to the other persons identified
in this Section 8(d) in writing in accordance herewith.
(e) Third Party Beneficiaries. The Holders shall be third party beneficiaries
to the agreements made hereunder between the Company, on the one hand, and the Stockholders,
on the other hand, and shall have the right to enforce such agreements directly to the
extent they may deem such enforcement necessary or advisable to protect their rights or the
rights of Holders hereunder.
(f) Successors and Assigns. Any person who purchases any Registrable Security
from any Holder shall be deemed, for purposes of this Agreement, to be an assignee of such
Holder. This Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of each of the parties hereto and shall inure to the benefit of and
be binding upon each Holder of any Registrable Security.
(g) Counterparts. This Agreement may be executed in any number of counterparts
and by the parties hereto in separate counterparts, each of which when so executed shall be
deemed to be original and all of which taken together shall constitute one and the same
agreement.
(h) Headings. The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES THEREOF.
(j) Severability. If any term, provision, covenant or restriction of this
Agreement is held to be invalid, illegal, void or unenforceable, the remainder of the
- 15 -
terms, provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated thereby, and the
parties hereto shall use commercially reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction, it being intended that all of the rights and
privileges of the parties shall be enforceable to the fullest extent permitted by law.
(k) Entire Agreement. This Agreement is intended by the parties hereto as a
final expression of their agreement and is intended to be a complete and exclusive statement
of the agreement and understanding of the parties hereto in respect of the subject matter
contained herein and the registration rights granted by the Company with respect to the
Registrable Securities. This Agreement supersedes all prior agreements and undertakings
among the parties with respect to such registration rights.
(l) Termination. This Agreement and the obligations of the parties hereunder
shall terminate upon the end of the Effectiveness Period, except for any liabilities or
obligations under Section 2(d) incurred prior to the end of the Effective Period and any
limitations or obligations under Section 4 or Section 5 hereof, all of which liabilities and
obligations shall remain in effect in accordance with the terms of this Agreement.
(m) Submission to Jurisdiction. Except as set forth below, no claim,
counterclaim or dispute of any kind or nature whatsoever arising out of or in any way
relating to this Agreement (“Claim”) may be commenced, prosecuted or continued in
any court other than the courts of the State of New York located in the City and County of
New York or in the United States District Court for the Southern District of New York, which
courts shall have jurisdiction over the adjudication of such matters, and the Company hereby
consents to the jurisdiction of such courts and personal service with respect thereto. The
Company hereby consents to personal jurisdiction, service and venue in any court in which
any Claim arising out of or in any way relating to this Agreement is brought by any third
party against any Holder. THE COMPANY HEREBY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY
PROCEEDING (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) IN ANY WAY ARISING OUT OF OR
RELATING TO THIS AGREEMENT. The Company agrees that a final judgment in any such Proceeding
brought in any such court shall be conclusive and binding upon the Company and may be
enforced in any other courts in the jurisdiction of which the Company is or may be subject,
by suit upon such judgment.
[The Remainder of This Page Intentionally Left Blank; Signature Page Follows]
- 16 -
In Witness Whereof, the parties have executed this Agreement as of the date first
written above.
| Very truly yours, American Oil & Gas, Inc. |
||||
| By: | /s/ Xxxxxx X. Xxxxxxxx | |||
| Name: | Xxxxxx X. Xxxxxxxx | |||
| Title: | President | |||
Investors:
Accepted and agreed to as of the date
first above written, on behalf of itself
and the Holders (as defined herein):
first above written, on behalf of itself
and the Holders (as defined herein):
Edison Sources Ltd.
By: State Street Research and Management Company
By: State Street Research and Management Company
By:
|
/s/ Xxx Xxxx | |||
| Name: Xxx Xxxx | ||||
| Title: Managing Director |
Raytheon Master Pension Trust
By: State Street Research and Management Company
By: State Street Research and Management Company
By:
|
/s/ Xxx Xxxx | |||
| Name: Xxx Xxxx | ||||
| Title: Managing Director |
Raytheon Combined DB/DC Master Trust
By: State Street Research and Management Company
By: State Street Research and Management Company
By:
|
/s/ Xxx Xxxx | |||
| Name: Xxx Xxxx | ||||
| Title: Managing Director |
SSR Energy and Natural Resources Hedge Fund LLC
By: State Street Research and Management Company
By: State Street Research and Management Company
By:
|
/s/ Xxx Xxxx | |||
| Name: Xxx Xxxx | ||||
| Title: Managing Director |
Exhibit “A”
Investor Questionnaire
Investor Questionnaire
AMERICAN OIL & GAS, INC.
Questionnaire for Selling Stockholders
Name (please print): |
||||
Please complete, sign and return this Questionnaire before September 14, 2006. If you have
questions about this Questionnaire or are unsure about what information is requested by a
particular question, please call Xxxx Xxxxxxxx at (000) 000-0000. When this Questionnaire is
completed, please retain one copy for your personal files and return one signed copy to:
Xxxx Xxxxxxxx
American Oil & Gas, Inc.
0000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Fax (000) 000-0000
Phone: (000) 000-0000
With a copy to:
Xxxxxx X. Xxxxxxx
Xxxxxx Xxxxx LLP
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Fax (000) 000-0000
Phone (000) 000-0000
American Oil & Gas, Inc.
0000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Fax (000) 000-0000
Phone: (000) 000-0000
With a copy to:
Xxxxxx X. Xxxxxxx
Xxxxxx Xxxxx LLP
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Fax (000) 000-0000
Phone (000) 000-0000
The information you supply in response to this Questionnaire will be used by American Oil &
Gas, Inc. (the “Corporation”) to assure the accuracy of certain data to be included in a
Registration Statement (the “Registration Statement) which is to be filed with the U.S. Securities
and Exchange Commission (the “SEC”) and which registers the sale by you of certain securities
issued by the Corporation. Please exercise great care in completing this Questionnaire. Under
certain circumstances, selling securityholders are subject to personal liability if the
Registration Statement misrepresents a material fact or omits a material fact. The information
requested is for your protection and that of the Corporation, and will be used to assure that
related information in the Registration Statement is correct.
Your signature at the end of this Questionnaire will constitute your consent to use the
information contained in your answers in the Registration Statement.
GLOSSARY
An “Affiliate” of the Corporation is any person, corporation, partnership, association or other
business or professional entity that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with the Corporation.
A “Beneficial Owner” of a security is any person who, directly or indirectly, through any contract,
arrangement, understanding, relationship or otherwise has or shares: (a) voting power (which
includes the power to vote or to direct the voting of such security), or (b) investment power
(which includes the power to dispose or to direct the disposition of such security). A person is
deemed to be the beneficial owner of the security if he has the right to acquire beneficial
ownership of such security at any time within 60 days, including but not limited to any right to
acquire (x) through the exercise of any option, warrant or right, (y) through the conversion of a
security, or (z) pursuant to the power to revoke a trust, discretionary account or similar
arrangement.
The above definition is very broad and may include, for example, securities held in the name of any
relative living in a person’s home. The final determination of beneficial ownership of the
securities is, of course, a question to be determined in light of the facts of each particular
case. Thus, while a person may include security holdings of members of his family or others, he
may, nonetheless, disclaim beneficial ownership of such securities. If a person does so disclaim,
he should give his details as to the number of such securities and the basis upon which he
disclaims beneficial ownership of such securities.
If you receive or are entitled to receive the benefits from shares that are not owned of record,
i.e., shares held for your benefit in the name of anyone else (your spouse or any member of your
family, an estate or trust, a partnership in which you are a member, a brokerage firm, etc.), such
shares are beneficially owned by you.
Shares held of record by another should also be listed as beneficially owned by you if you have the
power to invest or reinvest title to such shares in yourself at once or at some future time. The
number of shares as to which you have such power, the authority pursuant to which and the manner in
which your power may be exercised, and your relationship with the person who at present holds such
shares should be clearly indicated.
It is the position of the SEC that shares held by persons with whom you have certain specified
relationships shall be deemed to be beneficially owned by you. As a result, securities held by
your wife, or by a minor child, or by any other relative of you or your wife living in your
household, in which you believe you have no beneficial interest should be included in part Question
2, and you should indicate in Question 2 that you disclaim beneficial ownership.
“Immediate Family” includes your spouse, parents, children, siblings, mothers and fathers-in-law,
sons and daughters-in-law, and brothers and sisters-in-law.
Information is “material” if there is a substantial likelihood that a reasonable stockholder would
consider the information important in deciding how to vote. In addition, there are certain
specific requirements as to information concerning material transactions that are reported pursuant
to this Questionnaire, and certain exceptions for transactions that might otherwise be deemed
material. It is suggested that guidance of counsel be sought in the event of any questions in this
area.
“Restricted Shares” means the shares of common stock or other securities of the Corporation that
are Registrable Securities as defined in the Registration Rights Agreement dated as of September
, 2006 among the Corporation and the Investors listed on the signature pages thereto.
*****
| 1. | Ownership of the Corporation’s Securities | |
| Please provide the following information: |
| (i) | Full legal name of Selling Stockholder: | |||||||
| (ii) | Full legal name of registered holder (if different from Selling Stockholder): | |||||||
| (iii) | Address for notices to Selling Stockholder: | |||||||
| Telephone: | ||||||||
| Fax: | ||||||||
| Contact Person: | ||||||||
(a) Please list the number of shares of common stock of the Corporation you were the
“beneficial owner” of as of the current date. If such stock is not owned of record by you
(e.g. in the name of a family member, in “street” name, and partnership name, etc.), please
indicate the name of the record owner and the number of shares held by such record owner.
Please use the last row of the table to report any securities which you have the right to
acquire within sixty days from options, warrants, rights, conversion privilege or similar
obligations. Please see the definition of “beneficial ownership” in the glossary.
| Type of Ownership | Number of Shares | |
Common stock registered in your name |
||
Common stock registered in “immediate family’s” name (see Glossary) |
||
Common stock held as trustee of a trust |
||
Common stock held by a brokerage firm or other nominee (street name) |
||
Common stock held in other forms (explain) |
||
(b) Please identify below the number of shares of common stock of the Corporation
you listed in response to (a) above that are Restricted Securities as of the current date.
If any such Registrable Securities are not owned of record by you (e.g. in the name of a
family member, in “street” name, and partnership name, etc.), please indicate the name of
the record owner and the number of shares of Registrable Securities held by such record
owner.
| Type of Ownership | Number of Restricted Securities | |
Restricted Securities registered in your name |
||
Restricted Securities registered in “immediate family’s” name (see Glossary) |
||
Restricted Securities held as trustee of a trust |
||
Restricted Securities held by a brokerage firm or other nominee (street name) |
||
Restricted Securities held in other forms (explain) |
||
(c) Do you wish to disclaim beneficial ownership of any of the securities reported
in response to 1(a) or 1(b) above? ___yes ___no.
If the answer is “Yes,” please briefly state your reason(s) for disclaiming beneficial
ownership and furnish the following information with respect to the person or persons who
should be shown as the “beneficial owner” (see Appendix) of the securities in question.
| Number or Amount and | ||||
| Name of Actual | Relationship of | Class of Securities | ||
| Beneficial Owner | Beneficial Owner to You | Beneficially Owned | ||
(d) Do you own any other securities of the Corporation not described in item 1 above, e.g.,
debentures, bonds, notes? If so please describe.
| (e) If you share with any other “person” voting power or investment power over any of the securities listed above in response to Question 1 above, please describe the arrangement, indicating the person and the amount of securities involved. | |||
The undersigned agrees to promptly notify the Corporation of any inaccuracies or changes in the
information provided in this Questionnaire that may occur subsequent to the date hereof.
The undersigned hereby acknowledges that he or she understands the purposes for which the foregoing
information was obtained, and represents and warrants that the information supplied in this
Questionnaire is true and complete.
Printed Name of Entity: |
||||||||
By: |
||||||||
| (Signature) | ||||||||
| Printed Name: | ||||||||
| Title: | ||||||||
Date: |
||||||||
