EXHIBIT 10.25
CONTINENTAL SOUTHERN RESOURCES, INC.
SECURITIES PURCHASE AGREEMENT
COMMON STOCK
February 4, 2004
CONFIDENTIAL
NOTICE TO OFFEREES
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED OR QUALIFIED UNDER THE
APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. THIS SECURITIES
PURCHASE AGREEMENT AND THE OTHER OFFERING DOCUMENTS DO NOT CONSTITUTE AN OFFER
TO SELL OR SOLICITATION OF AN OFFER TO BUY THE SECURITIES IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL.
THE SECURITIES ARE BEING SOLD FOR INVESTMENT PURPOSES ONLY, WITHOUT A
VIEW TO RESALE OR DISTRIBUTION THEREOF, AND MAY NOT BE TRANSFERRED, RESOLD OR
OFFERED FOR RESALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND EFFECTIVE REGISTRATION OR QUALIFICATION UNDER THE
APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION, OR THE
AVAILABILITY OF AN EXEMPTION THEREFROM.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR THE SECURITIES
COMMISSION OR OTHER REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION HAS
APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR
ACCURACY OF THIS SECURITIES PURCHASE AGREEMENT OR ANY OF THE OTHER OFFERING
DOCUMENTS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
CONFIDENTIAL
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated February
4, 2004, by and between CONTINENTAL SOUTHERN RESOURCES, INC., a Nevada
corporation (the "Company"), and the purchaser or purchasers identified on the
signature page hereof ("Purchaser").
R E C I T A L S:
WHEREAS, Purchaser desires to purchase and the Company desires to sell
shares of the Company's common stock on the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the premises hereof and the
agreements set forth herein below, the parties hereto hereby agree as follows:
1. The Offering.
(a) Private Offering. The securities offered by this Agreement are
being offered in a private offering (the "Offering") of up to 100,000 shares
("Shares") of the Company's common stock, $.001 par value per share ("Common
Stock"). The Shares will be sold on a reasonable "best efforts" basis at a
purchase price of $2.00 per Share pursuant to Section 4(2) of the Securities Act
of 1933, as amended (the "Securities Act"), and Rule 506 of Regulation D
thereunder. The Shares are being offered solely to a limited number of
"accredited investors" as that term is defined in Rule 501(a) of the Securities
Act during an offering period commencing February 4, 2004, and terminating at
the sole discretion of the Company.
(b) Use of Proceeds. Assuming all of the Shares in the Offering
are sold, the net proceeds to the Company are estimated to be approximately
$200,000 (after deducting offering expenses payable by the Company estimated at
$10,000. The Company intends to use the net proceeds for general working capital
purposes and other general corporate purposes.
(c) Placement and Finder's Fees. The Company reserves the right to
pay placement or finder's fees in connection with the sale of the Shares in an
amount of up to five percent (5%) of the Purchase Price of such Shares.
2. Sale and Purchase of Shares.
(a) Sale and Purchase of Shares. Subject to the terms and
conditions hereof, the Company agrees to sell, and Xxxxxxxxx agrees to purchase,
the number of Shares specified on the signature page of this Agreement at a
purchase price of $2.00 per Share. The aggregate purchase price for the Share
shall be as set forth on the signature page hereto (the "Purchase Price") and
shall be payable upon execution hereof by check or wire transfer of immediately
available funds.
1
(b) Subscription Procedure. In order to purchase Shares, Purchaser shall deliver
to the Company, at its principal executive office identified in Section 16
hereof: (i) one completed and duly executed copy of this Agreement; and (ii)
immediately available funds in an amount equal to the Purchase Price. Execution
and delivery of this Agreement shall constitute an irrevocable subscription for
that number of Shares set forth on the signature page hereto. Payment for the
Shares may be made by wire transfer to:
Sovereign Bank
Wyomissing, PA.
ABA#000000000
For the account of: Continental Southern Resources, Inc.
Acct.#236 102 5973
or by check made payable to Continental Southern Resources, Inc. This Agreement
may be rejected by the Company, in whole or in part, in its sole discretion, in
which event the Purchase Price will be returned (by mail) to Purchaser within
ten (10) business days thereafter. Unless the Offering is otherwise terminated
by the Company, as soon as possible after the receipt and acceptance by the
Company of this Agreement and collection of the funds paid therefor, the Company
will issue certificates for the Shares to Purchaser, together with a copy of
Purchaser's executed Agreement countersigned by the Company.
(c) Closing.
(i) Closing Date. The closing of the transactions (the "Closing")
shall take place at such time, on such date and in such manner as the parties
may agree.
(ii) Closing Transactions. At the Closing, the Company shall
execute and deliver to Purchaser a certificate representing the number of Shares
specified on the signature page of this Agreement, against payment of the
Purchase Price specified on the signature page of this Agreement by wire
transfer or check payable to the Company.
3. Representations and Warranties of Purchaser. Purchaser represents
and warrants to the Company as follows:
(a) Organization and Qualification.
(i) If Purchaser is an entity, Purchaser is duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization, with the corporate or other entity power and authority to own and
operate its business as presently conducted, except where the failure to be or
have any of the foregoing would not have a material adverse effect on Purchaser,
and Purchaser is duly qualified as a foreign corporation or other entity to do
business and is in good standing in each jurisdiction where the character of its
properties owned or held under lease or the nature of their activities makes
such qualification necessary, except for such failures to be so qualified or in
good standing as would not have a material adverse effect on it.
2
(ii) If Purchaser is an entity, the address of its principal place
of business is as set forth on the signature page hereto, and if Purchaser is an
individual, the address of its principal residence is as set forth on the
signature page hereto.
(b) Authority; Xxxxxxxx and Effect of Agreement.
(i) If Purchaser is an entity, Purchaser has the requisite
corporate or other entity power and authority to execute and deliver this
Agreement and perform its obligations under this Agreement. The execution and
delivery of this Agreement by Xxxxxxxxx, the performance by Purchaser of its
obligations hereunder and all other necessary corporate or other entity action
on the part of Purchaser have been duly authorized by its Boards of Directors or
similar governing body, and no other corporate or other entity proceedings on
the part of Purchaser is necessary for Purchaser to execute and deliver this
Agreement and perform its obligations hereunder.
(ii) This Agreement has been duly and validly authorized, executed
and delivered by Purchaser and, assuming it has been duly and validly executed
and delivered by the Company, constitutes a legal, valid and binding obligation
of Purchaser, in accordance with its terms.
(c) No Conflict; Required Filings and Consents. Neither the
execution and delivery of this Agreement by Purchaser nor the performance by
Purchaser of its obligations hereunder will: (i) if Purchaser is an entity,
conflict with Purchaser's Articles of Incorporation or Bylaws, or other similar
organizational documents; (ii) violate any statute, law, ordinance, rule or
regulation, applicable to Purchaser or any of the properties or assets of
Purchaser; or (iii) violate, breach, be in conflict with or constitute a default
(or an event which, with notice or lapse of time or both, would constitute a
default) under, or permit the termination of any provision of, or result in the
termination of, the acceleration of the maturity of, or the acceleration of the
performance of any obligation of Purchaser under, or result in the creation or
imposition of any lien upon any properties, assets or business of Purchaser
under, any material contract or any order, judgment or decree to which Purchaser
is a party or by which it or any of its assets or properties is bound or
encumbered except, in the case of clauses (ii) and (iii), for such violations,
breaches, conflicts, defaults or other occurrences which, individually or in the
aggregate, would not have a material adverse effect on its obligation to perform
its covenants under this Agreement.
(d) Accredited Investor. Purchaser is an "accredited investor" as
that term is defined in Rule 501(a) of Regulation D under the Securities Act. If
Purchaser is an entity, Purchaser was not formed for the specific purpose of
acquiring the Shares, and, if it was, all of Purchaser's equity owners are
"accredited investors" as defined above.
(e) No Government Review. Purchaser understands that neither the
United States Securities and Exchange Commission ("SEC") nor any securities
commission or other governmental authority of any state, country or other
jurisdiction has approved the issuance of the Shares or passed upon or endorsed
the merits of the Shares, or this Agreement or any of the other documents
relating to the proposed Offering (collectively, the "Offering Documents"), or
3
confirmed the accuracy of, determined the adequacy of, or reviewed this
Agreement or the other Offering Documents.
(f) Investment Intent. The Shares are being acquired for the
Purchaser's own account for investment purposes only, not as a nominee or agent
and not with a view to the resale or distribution of any part thereof, and
Purchaser has no present intention of selling, granting any participation in or
otherwise distributing the same. By executing this Agreement, Purchaser further
represents that Purchaser does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participation to such
person or third person with respect to any of the Shares.
(g) Restrictions on Transfer. Purchaser understands that the
Shares are "restricted securities" as such term is defined in Rule 144 under the
Securities Act and have not been registered under the Securities Act or
registered or qualified under any state securities law, and may not be, directly
or indirectly, sold, transferred, offered for sale, pledged, hypothecated or
otherwise disposed of without registration under the Securities Act and
registration or qualification under applicable state securities laws or the
availability of an exemption therefrom. In any case where such an exemption is
relied upon by Purchaser from the registration requirements of the Securities
Act and the registration or qualification requirements of such state securities
laws, Purchase shall furnish the Company with an opinion of counsel stating that
the proposed sale or other disposition of such securities may be effected
without registration under the Securities Act and will not result in any
violation of any applicable state securities laws relating to the registration
or qualification of securities for sale, such counsel and opinion to be
satisfactory to the Company. Purchaser acknowledges that it is able to bear the
economic risks of an investment in the Shares for an indefinite period of time,
and that its overall commitment to investments that are not readily marketable
is not disproportionate to its net worth.
(h) Investment Experience. Purchaser has such knowledge,
sophistication and experience in financial, tax and business matters in general,
and investments in securities in particular, that it is capable of evaluating
the merits and risks of this investment in the Shares, and Purchaser has made
such investigations in connection herewith as it deemed necessary or desirable
so as to make an informed investment decision without relying upon the Company
for legal or tax advice related to this investment. In making its decision to
acquire the Shares, Purchaser has not relied upon any information other than
information provided to Purchaser by the Company or its representatives and
contained herein and in the other Offering Documents.
(i) Access to Information. Purchaser acknowledges that it has had
access to and has reviewed all documents and records relating to the Company,
including, but not limited to, the Company's filings with the SEC, that it has
deemed necessary in order to make an informed investment decision with respect
to an investment in the Shares; that it has had the opportunity to ask
representatives of the Company certain questions and request certain additional
information regarding the terms and conditions of such investment and the
finances, operations, business and prospects of the Company and has had any and
all such questions and requests answered to its satisfaction; and that it
understands the risks and other considerations relating to such investment.
4
(j) Reliance on Representations. Purchaser understands that the
Shares are being offered and sold to it in reliance on specific exemptions from
the registration requirements of the federal and state securities laws and that
the Company is relying in part upon the truth and accuracy of, and such
Purchaser's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Purchaser set forth herein in order
to determine the availability of such exemptions and the eligibility of such
Purchaser to acquire the Shares. Purchaser represents and warrants to the
Company that any information that Purchaser has heretofore furnished or
furnishes herewith to the Company is complete and accurate, and further
represents and warrants that it will notify and supply corrective information to
the Company immediately upon the occurrence of any change therein occurring
prior to the Company's issuance of the Shares. Within five (5) days after
receipt of a request from the Company, Purchaser will provide such information
and deliver such documents as may reasonably be necessary to comply with any and
all laws and regulations to which the Company is subject.
(k) No General Solicitation. Purchaser is unaware of, and in
deciding to participate in the Offering is in no way relying upon, and did not
become aware of the Offering through or as a result of, any form of general
solicitation or general advertising including, without limitation, any article,
notice, advertisement or other communication published in any newspaper,
magazine or similar media, or broadcast over television or radio or the
internet, in connection with the Offering.
(l) Placement and Finder's Fees. No agent, broker, investment
banker, finder, financial advisor or other person acting on behalf of Purchaser
or under its authority is or will be entitled to any broker's or finder's fee or
any other commission or similar fee, directly or indirectly, in connection with
the Offering, and no person is entitled to any fee or commission or like payment
in respect thereof based in any way on agreements, arrangements or understanding
made by or on behalf of Purchaser.
(m) Offering Risks. Purchaser understands that purchasing Shares
in the Offering will subject Purchaser to certain risks, including, but not
limited to, each of the following:
(i) The offering price of the Shares offered hereby has been
determined solely by the Company and does not necessarily bear any relationship
to the value of the Company's assets, current or potential earnings of the
Company, or any other recognized criteria used for measuring value, and
therefore, there can be no assurance that the offering price of the Shares is
representative of the actual value of the underlying Shares.
(ii) The Company has provided herein that it intends to use the
net proceeds from the Offering for general working capital purposes and other
general corporate purposes. Thus, Purchaser is making its investment in the
Shares based in part upon very limited information regarding the specific uses
to which the net proceeds will be applied.
(iii) An investment in the Shares may involve certain material
legal, accounting and federal and state tax consequences. Purchaser should
consult with its legal
5
counsel, accountant and/or business adviser as to the legal, accounting, tax and
related matters accompanying such an investment.
(n) Legends. The certificates and agreements evidencing the Shares
shall have endorsed thereon the following legend (and appropriate notations
thereof will be made in the Company's stock transfer books), and stop transfer
instructions reflecting these restrictions on transfer will be placed with the
transfer agent of the Shares:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO REGISTRATION
UNDER THE SECURITIES ACT AND REGISTRATION OR QUALIFICATION UNDER
APPLICABLE STATE SECURITIES LAWS, OR PURSUANT TO AN AVAILABLE EXEMPTION
THEREFROM. NO TRANSFER OF THE SECURITIES REPRESENTED HEREBY MAY BE MADE
IN THE ABSENCE OF SUCH REGISTRATION OR QUALIFICATION UNLESS THERE SHALL
HAVE BEEN DELIVERED TO THE ISSUER A WRITTEN OPINION OF UNITED STATES
COUNSEL OF RECOGNIZED STANDING, IN FORM AND SUBSTANCE SATISFACTORY TO
THE ISSUER, TO THE EFFECT THAT SUCH TRANSFER MAY BE MADE WITHOUT
REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND
REGISTRATION OR QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS.
4. Representations and Warranties of the Company. The Company
represents and warrants to Purchaser as follows:
(a) Organization and Qualification. The Company is duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization, with the corporate power and authority to own and operate its
business as presently conducted, except where the failure to be or have any of
the foregoing would not have a material adverse effect on the Company. The
Company is duly qualified as a foreign corporation or other entity to do
business and is in good standing in each jurisdiction where the character of its
properties owned or held under lease or the nature of their activities makes
such qualification necessary, except for such failures to be so qualified or in
good standing as would not have a material adverse effect on the Company.
(b) Authority; Xxxxxxxx and Effect of Agreement.
(i) The Company has the requisite corporate power and authority to
execute and deliver this Agreement, perform its obligations under this
Agreement, and conduct the Offering. The execution and delivery of this
Agreement by the Company, the performance by the Company of its obligations
hereunder, the Offering and all other necessary corporate action
6
on the part of the Company have been duly authorized by its Board of Directors,
and no other corporate proceedings on the part of the Company is necessary to
authorize this Agreement or the Offering. This Agreement has been duly and
validly executed and delivered by the Company and, assuming that it has been
duly authorized, executed and delivered by Purchaser, constitutes a legal, valid
and binding obligation of the Company, in accordance with its terms, subject to
the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
(ii) The Shares have been duly authorized and, when issued and
paid for in accordance with this Agreement, will be validly issued, fully paid
and non-assessable shares of Common Stock with no personal liability resulting
solely from the ownership of such shares and will be free and clear of all
liens, charges, restrictions, claims and encumbrances imposed by or through the
Company.
(c) No Conflict; Required Filings and Consents. Neither the
execution and delivery of this Agreement by the Company nor the performance by
the Company of its obligations hereunder will: (i) conflict with the Company's
Articles of Incorporation or Bylaws; (ii) violate any statute, law, ordinance,
rule or regulation, applicable to the Company or any of the properties or assets
of the Company; or (iii) violate, breach, be in conflict with or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or permit the termination of any provision of, or
result in the termination of, the acceleration of the maturity of, or the
acceleration of the performance of any obligation of the Company, or result in
the creation or imposition of any lien upon any properties, assets or business
of the Company under, any material contract or any order, judgment or decree to
which the Company is a party or by which it or any of its assets or properties
is bound or encumbered except, in the case of clauses (ii) and (iii), for such
violations, breaches, conflicts, defaults or other occurrences which,
individually or in the aggregate, would not have a material adverse effect on
its obligation to perform its covenants under this Agreement; and
(d) Placement and Finder's Fees. Except as provided in Section
1(c), neither the Company nor any of its respective officers, directors,
employees or managers, has employed any broker, finder, advisor or consultant,
or incurred any liability for any investment banking fees, brokerage fees,
commissions or finders' fees, advisory fees or consulting fees in connection
with the Offering for which the Company has or could have any liability.
5. Indemnification. Purchaser agrees to indemnify, defend and hold
harmless the Company and its respective affiliates and agents from and against
any and all demands, claims, actions or causes of action, judgments,
assessments, losses, liabilities, damages or penalties and reasonable attorneys'
fees and related disbursements incurred by the Company which arise out of or
result from a breach of any representations or warranties made by Purchaser
herein, and Purchaser agrees that in the event of any breach of any
representations or warranties made by Purchaser herein, the Company may, at its
option, forthwith rescind the sale of the Shares to Purchaser.
7
6. Registration Rights. The Company covenants and agrees as follows:
6.1 For the purpose of this Section 6, the following definitions
shall apply:
(a) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the SEC thereunder, all as the same
shall be in effect at the time.
(b) "Person" shall mean an individual, partnership (general or
limited), corporation, limited liability company, joint venture, business trust,
cooperative, association or other form of business organization, whether or not
regarded as a legal entity under applicable law, a trust (inter vivos or
testamentary), an estate of a deceased, insane or incompetent person, a
quasi-governmental entity, a government or any agency, authority, political
subdivision or other instrumentality thereof, or any other entity.
(c) "Register," "registered," and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or order of
effectiveness of such registration statement or document.
(d) "Registration Statement" shall mean any registration statement
of the Company filed with the SEC pursuant to the provisions of Section 6.2 of
this Agreement, which covers the resale of the Restricted Stock on an
appropriate form then permitted by the SEC to be used for such registration and
the sales contemplated to be made thereby under the Securities Act, or any
similar rule that may be adopted by the SEC, and all amendments and supplements
to such registration statement, including any pre- and post- effective
amendments thereto, in each case including the prospectus contained therein, all
exhibits thereto and all materials incorporated by reference therein.
(e) "Restricted Stock" shall mean (i) the Shares; and (ii) any
additional shares of Common Stock of the Company issued or issuable after the
date hereof in respect of any of the foregoing securities, by way of a stock
dividend or stock split; provided that as to any particular shares of Restricted
Stock, such securities shall cease to constitute Restricted Stock when (x) a
Registration Statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities shall have been
disposed of thereunder, (y) such securities are permitted to be transferred
pursuant to Rule 144 (or any successor provision to such rule) under the
Securities Act or (z) such securities are otherwise freely transferable to the
public without further registration under the Securities Act.
(f) "Selling Stockholders" shall mean Purchaser and any other
purchaser of Shares in the Offering, and their respective successors and
assigns.
6.2 Registration of the Shares.
(a) The Company shall notify all Selling Stockholders in writing
at least twenty (20) days prior to the filing of any registration statement
under the Securities Act for purposes of registering securities of the Company,
excluding registration statements on SEC
8
Forms S-4, S-8 or any similar or successor forms, and will afford each such
Selling Stockholder an opportunity to include in such registration statement all
or part of such Restricted Stock held by such Selling Stockholder. Each Selling
Stockholder desiring to include in any such registration statement all or any
part of the Restricted Stock held by it shall, within ten (10) days after the
above-described notice from the Company, so notify the Company in writing. Such
notice shall state the intended method of disposition of the Restricted Stock by
such Selling Stockholder. If a Selling Stockholder decides not to include all of
its Restricted Stock in any registration statement thereafter filed by the
Company, such Selling Stockholder shall nevertheless continue to have the right
to include any Restricted Stock in any subsequent registration statement or
registration statements as may be filed by the Company with respect to offerings
of its securities, all upon the terms and conditions set forth herein. The
Company may, without the consent of the Selling Stockholders, withdraw such
registration statement prior to its becoming effective if the proposal to
register the securities proposed to be registered thereby is abandoned.
(b) In the event that any registration pursuant to Section 6.2(a)
shall be, in whole or in part, an underwritten public offering of Common Stock
on behalf of the Company, all Purchasers proposing to distribute their
Restricted Stock through such underwriting shall enter into an underwriting
agreement in customary form with the underwriter or underwriters selected for
such underwriting by the Company. If the managing underwriter thereof advises
the Company in writing that in its opinion the number of securities requested to
be included in such registration exceeds the number which can be sold in an
orderly manner in such offering within a price range acceptable to the Company,
the Company shall include in such registration (i) first, the securities the
Company proposes to sell, and (ii) second, the Restricted Stock and any other
registrable securities eligible and requested to be included in such
registration to the extent that the number of shares to be registered under this
clause (ii) will not, in the opinion of the managing underwriter, adversely
affect the offering of the securities pursuant to clause (i). In such a case,
shares shall be registered pro rata among the holders of such Restricted Stock
and registrable securities on the basis of the number of shares eligible for
registration that are owned by all such holders and requested to be included in
such registration.
(c) Notwithstanding anything to the contrary contained herein, the
Company's obligation in Sections 6.2(a) and 6.2(b) above shall extend only to
the inclusion of the Restricted Stock in a Registration Statement. The Company
shall have no obligation to assure the terms and conditions of distribution, to
obtain a commitment from an underwriter relative to the sale of the Restricted
Stock or to otherwise assume any responsibility for the manner, price or terms
of the distribution of the Restricted Stock.
(d) The Company shall have the right to terminate or withdraw any
registration initiated by it under this Section 6.2 prior to the effectiveness
of such registration without thereby incurring liability to the holders of the
Restricted Stock, regardless of whether any holder has elected to include
securities in such registration. The Registration Expenses (as defined in
Section 6.5) of such withdrawn registration shall be borne by the Company in
accordance with Section 6.4 hereof.
9
6.3 Registration Procedures. Whenever it is obligated to register
any Restricted Stock pursuant to this Agreement, the Company shall:
(a) prepare and file with the SEC a Registration Statement with
respect to the Restricted Stock in the manner set forth in Section 6.2 hereof
and use its reasonable best efforts to cause such Registration Statement to
become effective as promptly as possible and to remain effective until the
earlier of (i) the sale of all shares of Restricted Stock covered thereby, (ii)
the availability under Rule 144 for the Selling Stockholder to immediately,
freely resell without restriction all Restricted Stock covered thereby, or (iii)
one (1) year from the effective date of the first Registration Statement filed
by the Company with the SEC pursuant to this Agreement or with respect to any
subsequent Registration Statement, 180 days from the effective date of such
Registration Statement;
(b) prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to such Registration Statement and
the prospectus used in connection therewith as may be necessary to keep such
Registration Statement effective for the period specified in Section 6.3(a)
above and to comply with the provisions of the Act with respect to the
disposition of all Restricted Stock covered by such Registration Statement in
accordance with the intended method of disposition set forth in such
Registration Statement for such period;
(c) furnish to the Selling Stockholders such number of copies of
the Registration Statement and the prospectus included therein (including each
preliminary prospectus) as such person may reasonably request in order to
facilitate the public sale or other disposition of the Restricted Stock covered
by such Registration Statement;
(d) use its reasonable best efforts to register or qualify the
Restricted Stock covered by such Registration Statement under the state
securities laws of such jurisdictions as any Selling Stockholder shall
reasonably request; provided, however, that the Company shall not for any such
purpose be required to qualify generally to transact business as a foreign
corporation in any jurisdiction where it is not so qualified or to consent to
general service of process in any such jurisdiction;
(e) in the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter(s) of such offering. Each
Purchaser participating in such underwriting shall also enter into and perform
its obligations under such an agreement, as described in Section 6.2(b);
(f) immediately notify each Selling Stockholder at any time when a
prospectus relating thereto is required to be delivered under the Act, of the
happening of any event as a result of which the prospectus contained in such
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required or necessary to be
stated therein in order to make the statements contained therein not misleading
in light of the circumstances under which they were made. The Company will use
reasonable efforts to amend or supplement such prospectus in order to cause such
prospectus not to include
10
any 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 not
misleading in the light of the circumstances under which they were made;
(g) prepare and file with the Commission such amendments and
supplements to such Registration Statement and the prospectus used in connection
with such Registration Statements as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement;
(h) make available for inspection by any Selling Stockholder and
any attorney, accountant or other agent retained by any Selling Stockholder, all
financial and other records, pertinent corporate documents and properties of the
Company, and cause the Company's officers, directors and employees to supply all
information reasonably requested by any Selling Stockholder, attorney,
accountant or agent in connection with such Registration Statement; provided,
however, that such Selling Stockholder, underwriter, attorney or accountant
shall agree to hold in confidence and trust all information so provided;
(i) use its reasonable best efforts to list the Restricted Stock
covered by such Registration Statement on each exchange or automated quotation
system on which similar securities issued by the Company are then listed (with
the listing application being made at the time of the filing of such
Registration Statement or as soon thereafter as is reasonably practicable);
(j) notify each Selling Stockholder of any threat by the SEC or
state securities commission to undertake a stop order with respect to sales
under the Registration Statement; and
(k) cooperate in the timely removal of any restrictive legends
from the shares of Restricted Stock in connection with the resale of such shares
covered by an effective Registration Statement.
6.4 Delay of Registration. No Selling Stockholder shall have any
right to obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 6.
6.5 Expenses.
(a) For the purposes of this Section 6.5, the term "Registration
Expenses" shall mean: all expenses incurred by the Company in complying with
Section 6.2 of this Agreement, including, without limitation, all registration
and filing fees, printing expenses, fees and disbursements of counsel and
independent public accountants for the Company, reasonable fees and
disbursements of a single special counsel for the Selling Stockholders, fees
under state securities laws, fees of the National Association of Securities
Dealers, Inc. ("NASD"), fees and expenses of listing shares of Restricted Stock
on any securities exchange or automated quotation system on which the Company's
shares are listed and fees of transfer agents
11
and registrars. The term "Selling Expenses" shall mean: all underwriting
discounts and selling commissions applicable to the sale of Restricted Stock and
all accountable or non-accountable expenses paid to any underwriter in respect
of such sale.
(b) Except as otherwise provided herein, the Company will pay all
Registration Expenses in connection with the Registration Statements filed
pursuant to Section 6.2 of this Agreement. All Selling Expenses in connection
with any Registration Statements filed pursuant to Section 6.1 of this Agreement
shall be borne by the Selling Stockholders pro rata on the basis of the number
of shares registered by each Selling Stockholder whose shares of Restricted
Stock are covered by such Registration Statement, or by such persons other than
the Company (except to the extent the Company may be a seller) as they may
agree.
6.6 Obligations of the Selling Stockholders.
(a) In connection with each registration hereunder, each Selling
Stockholder will furnish to the Company in writing such information with respect
to it and the securities held by it and the proposed distribution by it, as
shall be reasonably requested by the Company in order to assure compliance with
applicable federal and state securities laws as a condition precedent to
including the Selling Stockholder's Restricted Stock in the Registration
Statement. Each Selling Stockholder shall also promptly notify the Company of
any changes in such information included in the Registration Statement or
prospectus as a result of which there is an untrue statement of material fact or
an omission to state any material fact required or necessary to be stated
therein in order to make the statements contained therein not misleading in
light of the circumstances under which they were made.
(b) In connection with the filing of the Registration Statement,
each Selling Stockholder shall furnish to the Company in writing such
information and affidavits as the Company reasonably requests for use in
connection with such Registration Statement or prospectus.
(c) In connection with each registration pursuant to this
Agreement, each Selling Stockholder agrees that it will not effect sales of any
Restricted Stock until notified by the Company of the effectiveness of the
Registration Statement, and thereafter will suspend such sales after receipt of
telegraphic or written notice from the Company to suspend sales to permit the
Company to correct or update a Registration Statement or prospectus. At the end
of any period during which the Company is obligated to keep a Registration
Statement current, each Selling Stockholder shall discontinue sales of
Restricted Stock pursuant to such Registration Statement upon receipt of notice
from the Company of its intention to remove from registration the Restricted
Stock covered by such Registration Statement which remains unsold, and each
Selling Stockholder shall notify the Company of the number of shares registered
which remain unsold immediately upon receipt of such notice from the Company.
6.7 Information Blackout and Holdbacks.
(a) At any time when a Registration Statement effected pursuant to
Section 6.2 is effective, upon written notice from the Company to Purchaser
that the Company
12
has determined in good faith that the sale of Restricted Stock pursuant to the
Registration Statement would require disclosure of non-public material
information, Purchaser shall suspend sales of Restricted Stock pursuant to such
Registration Statement until such time as the Company notifies Purchaser that
such material information has been disclosed to the public or has ceased to be
material, or that sales pursuant to such Registration Statement may otherwise be
resumed.
(b) Notwithstanding any other provision of this Agreement,
Purchaser shall not effect any public sale or distribution (including sales
pursuant to Rule 144 under the Securities Act), if and when available, of equity
securities of the Company, or any securities convertible into or exchangeable or
exercisable for such securities, during the thirty (30) days prior to the
commencement of any primary offering to be undertaken by the Company of shares
of its unissued Common Stock ("Primary Offering"), which may also include other
securities, and ending one hundred twenty (120) days after completion of any
such Primary Offering, unless the Company, in the case of a non-underwritten
Primary Offering, or the managing underwriter, in the case of an underwritten
Primary Offering, otherwise agree.
6.8 Indemnification.
(a) The Company agrees to indemnify, to the extent permitted by
law, each Selling Stockholder, such Selling Stockholder's respective partners,
officers, directors, underwriters and each Person who controls any Selling
Stockholder (within the meaning of the Securities Act) against all losses,
claims, damages, liabilities and expenses caused by (i) any untrue statement of
or alleged untrue statement of material fact contained in the Registration
Statement, prospectus or preliminary prospectus or any amendment or supplement
thereto, (ii) any omission of or alleged omission of a material fact required to
be stated therein or necessary to make the statements therein not misleading, or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law in
connection with the offering covered by such registration statement
("Violations"); provided, however, that the indemnity agreement contained in
this Section 6.8(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Company, which consent shall not be unreasonably withheld,
nor shall the Company be liable in for any loss, claim, damage, liability or
action to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by such Selling
Stockholder, partner, officer, director, underwriter or controlling person of
such Selling Stockholder.
(b) To the extent permitted by law, each Selling Stockholder shall
indemnify and hold harmless the Company, each of its directors, its officers and
each person, if any, who controls the Company within the meaning of the
Securities Act, any underwriter and any other Selling Stockholder selling
securities under such registration statement or any of such other Selling
Stockholder's partners, directors or officers or any person who controls such
Selling Stockholder, against any losses, claims, damages or liabilities (joint
or several) to which the Company or any such director, officer, controlling
person, underwriter or other such Selling Stockholder, or partner, director,
officer or controlling person of such other Selling Stockholder,
13
may become subject under the Securities Act, the Exchange Act or other federal
or state law, insofar as such losses, claims, damages or liabilities (or actions
in respect thereto) arise out of or are based upon any Violation, in each case
to the extent (and only to the extent) that such Violation (i) occurs in
reliance upon and in conformity with written information furnished by such
Selling Stockholder under an instrument duly executed by such Selling
Stockholder for use in connection with such registration; (ii) occurs as a
result of any failure to deliver a copy of the prospectus relating to such
Registration Statement, or (iii) occurs as a result of any disposition of the
Restricted Stock in a manner that fails to comply with the permitted methods of
distribution identified within the Registration Statement.
(c) Any Person entitled to indemnification hereunder shall (i)
give prompt written notice to the indemnifying party of any claim with respect
to which it seeks indemnification (provided that the failure to give prompt
notice shall not impair any Person's right to indemnification hereunder to the
extent such failure has not prejudiced the indemnifying party), and (ii) unless
in such indemnified party's reasonable judgment a conflict of interest between
such indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is assumed,
the indemnifying party shall not be subject to any liability for any settlement
made by the indemnified party without its consent (but such consent shall not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim shall not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
(d) If the indemnification provided for in this Section 6.8 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any losses, claims, damages or liabilities referred to
herein, the indemnifying party, in lieu of indemnifying such indemnified party
thereunder, shall to the extent permitted by applicable law contribute to the
amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the violation(s) described in Section
6.8(a) that resulted in such loss, claim, damage or liability, as well as any
other relevant equitable considerations. The relative fault of the indemnifying
party and of the indemnified party shall be determined by a court of law by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission; provided, that in no event
shall any contribution by a Selling Stockholder hereunder exceed the net
proceeds from the offering received by such Selling Stockholder.
(e) The indemnification provided for under this Agreement shall
remain in full force and effect regardless of any investigation made by or on
behalf of the indemnified party or any officer, director or controlling Person
of such indemnified party and
14
shall survive the transfer of securities. The Company also agrees to make such
provisions as are reasonably requested by any indemnified party for contribution
to such party in the event the Company's indemnification is unavailable for any
reason.
7. Confidentiality. Purchaser acknowledges and agreements that:
(a) All of the information contained herein and in the other
Offering Documents is of a confidential nature and may be regarded as material
non-public information under Regulation FD of the Securities Act.
(b) This Agreement and the other Offering Documents have been
furnished to Purchaser by the Company for the sole purpose of enabling Purchaser
to consider and evaluate an investment in the Company, and will be kept
confidential by Purchaser and not used for any other purpose.
(c) The information contained herein shall not, without the prior
written consent of the Company, be disclosed by Purchaser to any person or
entity, other than Purchaser's personal financial and legal advisors for the
sole purpose of evaluating an investment in the Company, and will not, directly
or indirectly, disclose or permit Purchaser's personal financial and legal
advisors to disclose, any of such information without the prior written consent
of the Company.
(d) Purchaser shall make its representatives aware of the terms of
this section and to be responsible for any breach of this Agreement by such
representatives.
(e) Purchaser shall not, without the prior written consent of the
Company, directly or indirectly, make any statements, public announcements or
release to trade publications or the press with respect to the subject matter of
this Agreement and the other Offering Documents.
(f) If Xxxxxxxxx decides to not pursue further investigation of
the Company or to not participate in the Offering, Purchaser will promptly
return this Agreement, the other Offering Documents and any accompanying
documentation to the Company.
8. Non-Public Information. Purchaser acknowledges that information
concerning the matters that are the subject matter of this Agreement may
constitute material non-public information under United States federal
securities laws, and that United States federal securities laws prohibit any
person who has received material non-public information relating to the Company
from purchasing or selling securities of the Company, or from communicating such
information to any person under circumstances in which it is reasonably
foreseeable that such person is likely to purchase or sell securities of the
Company. Accordingly, until such time as any such non-public information has
been adequately disseminated to the public, Purchaser shall not purchase or sell
any securities of the Company, or communicate such information to any other
person.
9. Entire Agreement. This Agreement contains the entire agreement
between the parties and supercedes all prior agreements and understandings, both
written and oral, between
15
the parties with respect to the subject matter hereto, and no party shall be
liable or bound to any other party in any manner by any warranties,
representations, guarantees or covenants except as specifically set forth in
this Agreement. Nothing in this Agreement, express or implied, is intended to
confer upon any party other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations or liabilities under or
by reason of this Agreement, except as expressly provided in this Agreement.
10. Amendment and Modification. This Agreement may not be amended,
modified or supplemented except by an instrument or instruments in writing
signed by the party against whom enforcement of any such amendment, modification
or supplement is sought.
11. Extensions and Waivers. At any time prior to the Closing, the
parties hereto entitled to the benefits of a term or provision may (a) extend
the time for the performance of any of the obligations or other acts of the
parties hereto, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document, certificate or writing delivered pursuant
hereto, or (c) waive compliance with any obligation, covenant, agreement or
condition contained herein. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument or
instruments in writing signed by the party against whom enforcement of any such
extension or waiver is sought. No failure or delay on the part of any party
hereto in the exercise of any right hereunder shall impair such right or be
construed to be a waiver of, or acquiescence in, any breach of any
representation, warranty, covenant or agreement.
12. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, provided, however, that no party hereto may assign its rights or
delegate its obligations under this Agreement without the express prior written
consent of the other party hereto. Except as provided in Section 5, nothing in
this Agreement is intended to confer upon any person not a party hereto (and
their successors and assigns) any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
13. Survival of Representations, Warranties and Covenants. The
representations and warranties contained herein shall survive the Closing and
shall thereupon terminate eighteen (18) months from the Closing, except that the
representations contained in Sections 3(a), 3(b), 4(a), and 4(b) shall survive
indefinitely. All covenants and agreements contained herein which by their terms
contemplate actions following the Closing shall survive the Closing and remain
in full force and effect in accordance with their terms. All other covenants and
agreements contained herein shall not survive the Closing and shall thereupon
terminate.
14. Headings; Definitions. The Section headings contained in this
Agreement are inserted for convenience of reference only and will not affect the
meaning or interpretation of this Agreement. All references to Sections
contained herein mean Sections of this Agreement unless otherwise stated. All
capitalized terms defined herein are equally applicable to both the singular and
plural forms of such terms
15. Severability. If any provision of this Agreement or the
application thereof to any person or circumstance is held to be invalid or
unenforceable to any extent, the remainder of this
16
Agreement shall remain in full force and effect and shall be reformed to render
the Agreement valid and enforceable while reflecting to the greatest extent
permissible the intent of the parties.
16. Notices. All notices hereunder shall be sufficiently given for all purposes
hereunder if in writing and delivered personally, sent by documented overnight
delivery service or, to the extent receipt is confirmed, telecopy, telefax or
other electronic transmission service to the appropriate address or number as
set forth below:
If to the Company:
-----------------
Continental Southern Resources, Inc.
000 Xxxxxxxxxxxx Xxxxxxxxx, Xxxxx 000X
Xxxx Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxxx, President
with a copy to:
--------------
Xxxxxxx Xxxxx & Xxxxx, P.C.
Seven Penn Center
0000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Esquire
If to Purchaser:
---------------
To that address indicated on the signature page hereof.
17. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania, without regard to
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
18. Arbitration. If a dispute arises as to the interpretation of this
Agreement, it shall be decided in an arbitration proceeding conforming to the
Rules of the American Arbitration Association applicable to commercial
arbitration then in effect at the time of the dispute. The arbitration shall
take place in the Commonwealth of Pennsylvania. The decision of the arbitrators
shall be conclusively binding upon the parties and final, and such decision
shall be enforceable as a judgment in any court of competent jurisdiction. The
parties shall share equally the costs of the arbitration.
19. Counterparts. This Agreement may be executed and delivered by
facsimile in two or more counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the same agreement.
[Remainder of page intentionally left blank]
17
IN WITNESS WHEREOF, intending to be legally bound, the parties hereto
have caused this Agreement to be executed as of the date set forth below.
PURCHASER
Date: _____________________ _____________________________________
By:__________________________________
Name:
Title:
Address:
Number of Shares Purchased: _________
Purchase Price
@ $2.00 per Share: $_________________
CONTINENTAL SOUTHERN RESOURCES, INC.
Date:______________________ By:__________________________________
Xxxxxxx X. Xxxxxxxxxx
President
18
