EXHIBIT 5
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of November 10, 1999, is
entered into by and among Texoil, Inc., a Nevada corporation (together with its
successors and assigns, the "Company"), Quantum Energy Partners, LP, EnCap
Equity 1996 Limited Partnership, Energy Capital Investment Company PLC, V&C
Energy Limited Partnership, Xxxxxx X. Xxxxx, Xxxx X. Xxxxx, Xxxxxx X. Xxxxxx and
Xxxxx X. Xxxxx (together, the "Investors").
1. Background. The Company and each of the Investors have entered into
a Preferred Stock Purchase Agreement, dated as of October 12, 1999 (the
"Purchase Agreement"), relating to a proposed transaction in which the Investors
will each purchase shares of Series A Preferred Stock, par value $0.01 per share
(the "Series A Preferred"), of the Company (the "Proposed Transaction"). The
execution and delivery of this Agreement is a condition to consummation of the
Proposed Transaction.
2. Registration under Securities Act, etc.
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2.1. Registration on Request.
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(a) Upon the written request of one or more holders of Registrable
Securities requesting that the Company effect the registration under the
Securities Act of all or a portion of such holders' Registrable Securities and
specifying the intended method of disposition thereof and whether or not such
requested registration is to be an underwritten offering, the parties hereto
agree as follows:
(i) The Company will promptly give written notice of such
requested registration to all other holders of Registrable Securities,
if any;
(ii) Promptly after the performance of any obligations imposed
under clause (i) of this Section 2.1(a), and subject to the
limitations set forth in subsection (e) of this Section 2.1, the
Company will use its best efforts to effect the registration under the
Securities Act of:
(A) the Registrable Securities which the Company has been so
requested to register by such holders, and
(B) all other Registrable Securities which the Company has
been requested to register by the holders thereof by written
request given to the Company within 30 days after the giving of
such written notice by the Company (which request shall specify
the intended method of disposition of such Registrable
Securities), all to the extent required to permit the disposition
(in accordance with the intended methods thereof as aforesaid) of
the Registrable Securities to be registered;
(b) Registration of Other Securities. Whenever the Company shall effect a
registration pursuant to this Section 2.1 in connection with an underwritten
offering by one or more holders of Registrable Securities, no securities other
than Registrable Securities shall be included among the securities covered by
such registration unless (i) the managing underwriter of such offering shall
have advised each holder of Registrable Securities to be covered by such
registration in writing that the inclusion of such other securities would not
adversely affect such offering or (ii) the holders of all
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Registrable Securities to be covered by such registration shall have consented
in writing to the inclusion of such other securities.
(c) Registration Statement Form. Registrations under this Section 2.1 shall
be on such appropriate registration form of the Commission (i) as shall be
selected by the Company and as shall be reasonably acceptable to the Requisite
Holders, and (ii) as shall permit the disposition of such Registrable Securities
in accordance with the intended method or methods of disposition specified in
their request for such registration. The Company agrees to include in any such
registration statement all information which holders of Registrable Securities
being registered shall reasonably request.
(d) Expenses. The Company will pay all Registration Expenses in connection
with any registration requested pursuant to this Section 2.1. Any Selling
Expenses in connection with any registration requested under this Section 2.1
shall be allocated among all Persons on whose behalf securities of the Company
are included in such registration, on the basis of the respective amounts of the
securities then being registered on their behalf.
(e) Limitations on Requested Registrations. The Company's obligation to
take or continue any action to effect a requested registration under this
Section 2.1 shall be subject to the following:
(i) The Company shall not be required to effect more than three
registrations requested pursuant to this Section 2.1; provided that, a
registration requested pursuant to this Section 2.1 shall not be deemed to
have been effected (A) unless a registration statement with respect thereto
has been declared effective for a period of at least 90 days, (B) if after
a registration statement has become effective, such registration is
interfered with by any stop order, injunction or other order or requirement
of the Commission or other governmental agency or court for any reason, or
(C) if the conditions to closing specified in the purchase agreement or
underwriting agreement entered into in connection with such registration
are not satisfied, other than as a result of the voluntary termination of
such offering by the Requisite Holders;
(ii) The Company will not be required to effect a registration
pursuant to this Section 2.1 unless such registration has been requested by
the holders of Registrable Securities which either (A) represent at least
25% of the Registrable Securities then outstanding, or (B) have an
estimated aggregate offering price to the public of at least $5,000,000;
(iii) The Company will not be required to effect a registration
pursuant to this Section 2.1 during the ninety-day period after a
registration statement shall have been filed and declared effective under
the Securities Act with respect to the public offering of any class of the
Company's equity securities (which shall exclude a registration of
securities with respect to an employee benefit, retirement or similar
plan); and
(iv) If (A) in the good faith judgment of the Board of Directors of
the Company, a required registration under this Section 2.1 would be
seriously detrimental to the Company and the Board of Directors of the
Company concludes, as a result, that it is essential to defer the filing of
such registration statement at such time, and (B) the Company shall furnish
to the holders of Registrable Securities requesting registration a
certificate signed by the President of the Company stating that in the good
faith judgment of the Board of Directors of the
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Company, it would be seriously detrimental to the Company for such
registration statement to be filed in the near future and that it is,
therefore, essential to defer the filing of such registration statement,
then the Company shall have the right to defer such filing for a period of
not more than one hundred eighty (180) days after receipt of the request of
a holder of Registrable Securities, and, provided further, that the Company
shall not defer its obligation in this manner more than once in any
twelve-month period.
(f) Selection of Underwriters. If a requested registration pursuant to this
Section 2.1 involves an underwritten offering, the underwriter or underwriters
thereof shall be selected by the Requisite Holders, subject to the approval of
the Company, such approval not to be unreasonably withheld.
(g) Priority in Requested Registrations. If a requested registration
pursuant to this Section 2.1 involves an underwritten offering, and the managing
underwriter shall advise the Company in writing (with a copy to each holder of
Registrable Securities requesting registration) that, in its opinion, the number
of securities requested to be included in such registration exceeds the number
which can be sold in such offering within a price range acceptable to the
Requisite Holders, the Company will include in such registration the number of
securities which the Company has been advised can be sold in such offering.
Registrable Securities requested to be included in such registration shall be
allocated on a pro rata basis among the holders thereof requesting such
registration. In connection with any registration as to which the provisions of
this clause (g) apply, no securities other than Registrable Securities shall be
covered by such registration.
2.2. Incidental Registration.
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(a) Right to Include Registrable Securities. If the Company at any time
proposes to register any of its securities under the Securities Act (other than
(i) in connection with a registration of any employee benefit, retirement or
similar plan, or (ii) with respect to a Rule 145 transaction, or (iii) pursuant
to Section 2.1), whether or not for sale for its own account, it will each such
time give prompt written notice to all holders of Registrable Securities of its
intention to do so and of such holders' rights under this Section 2.2. Upon the
written request of any such holder made within 30 days after the receipt of any
such notice (which request shall specify the Registrable Securities intended to
be disposed of by such holder and the intended method of disposition thereof),
the Company will use its best efforts to effect the registration under the
Securities Act of all Registrable Securities which the Company has been so
requested to register by the holders thereof, to the extent required to permit
the disposition (in accordance with the intended methods thereof as aforesaid)
of the Registrable Securities to be registered; provided, that if at any time
after giving written notice of its intention to register any securities and
prior to the effective date of the registration statement filed in connection
with such registration, the Company shall determine for any reason not to
register or to delay registration of such securities, the Company may, at its
election, give written notice of such determination to each holder of
Registrable Securities and, thereupon, (i) in the case of a determination not to
register, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration (but not from its obligation to
pay the Registration Expenses in connection therewith), without prejudice,
however, to the rights of any holder or holders of Registrable Securities
entitled to registration under Section 2.1, and (ii) in the case of a
determination to delay registering, shall be permitted to delay registering any
Registrable Securities, for the same period as the delay in registering such
other securities. No registration effected under this Section 2.2 shall be
deemed to have been effected pursuant to Section 2.1 or shall relieve the
Company of its obligation
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to effect any registration upon request under Section 2.1. The Company will pay
all Registration Expenses in connection with each registration of Registrable
Securities requested pursuant to this Section 2.2 and any Selling Expenses shall
be allocated among all Persons on whose behalf securities of the Company are
included in such registration, on the basis of the respective amounts of the
securities then being registered on their behalf.
(b) Priority in Incidental Registrations. If (i) a registration pursuant to
this Section 2.2 involves an underwritten offering of the securities being
registered, whether or not for sale for the account of the Company, and (ii) the
managing underwriter of such underwritten offering shall inform the Company and
the holders of the Registrable Securities requesting such registration by letter
of its belief that the number of securities requested to be included in such
registration exceeds the number which can be sold in (or during the time of)
such offering, then the Company will include in such registration, to the extent
of the number which the Company is so advised can be sold in (or during the time
of) such offering, first, all securities proposed by the Company to be sold for
its own account, and second, such Registrable Securities requested to be
included in such registration pro rata on the basis of the number of such
securities proposed to be sold and requested to be included.
2.3. Registration Procedures. If and whenever the Company is required
to use its best efforts to effect the registration of any Registrable Securities
under the Securities Act as provided in Sections 2.1 and 2.2, the Company will
as expeditiously as possible:
(i) prepare and (as soon thereafter as possible or in any event no
later than 60 days after the end of the period within which requests for
registration may be given to the Company) file with the Commission the
requisite registration statement to effect such registration and thereafter
use its best efforts to cause such registration statement to become
effective for the period of the distribution contemplated thereby;
provided, that the Company may discontinue any registration of its
securities which are not Registrable Securities (and, under the
circumstances specified in Section 2.2(a), its securities which are
Registrable Securities) at any time prior to the effective date of the
registration statement relating thereto;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such
registration statement until such time as all of such securities have been
disposed of in accordance with the intended methods of disposition by the
seller or sellers thereof set forth in such registration statement;
(iii) furnish to each seller of Registrable Securities covered by such
registration statement such number of conformed copies of such registration
statement and of each such amendment and supplement thereto (in each case
including all exhibits), such number of copies of the prospectus contained
in such registration statement (including each preliminary prospectus and
any summary prospectus) and any other prospectus filed under Rule 424 under
the Securities Act, in conformity with the requirements of the Securities
Act, and such other documents, as such seller may reasonably request;
(iv) use its best efforts to register or qualify all Registrable
Securities and other securities covered by such registration statement
under such other securities or blue sky laws
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of such jurisdictions as each seller thereof shall reasonably request, to
keep such registration or qualification in effect for so long as such
registration statement remains in effect, and take any other action which
may be reasonably necessary or advisable to enable such seller to
consummate the disposition in such jurisdictions of the securities owned by
such seller, except that the Company shall not for any such purpose be
required to qualify generally to do business as a foreign corporation in
any jurisdiction wherein it would not but for the requirements of this
subdivision (iv) be obligated to be so qualified or to consent to general
service of process in any such jurisdiction;
(v) use its best efforts to cause all Registrable Securities covered
by such registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable
the seller or sellers thereof to consummate the disposition of such
Registrable Securities;
(vi) furnish to each seller of Registrable Securities a signed
counterpart, addressed to such seller (and underwriters, if any) of:
(A) an opinion of counsel for the Company, dated the effective
date of such registration statement (and, if such registration
includes an underwritten public offering, dated the date of the
closing under the underwriting agreement), reasonably satisfactory in
form and substance to such seller, and
(B) a "comfort" letter, dated the effective date of such
registration statement (and, if such registration includes an
underwritten public offering, dated the date of the closing under the
underwriting agreement), signed by the independent public accountants
who have certified the Company's financial statements included in such
registration statement,
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of the
accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's
counsel and in accountants' letters delivered to the underwriters in
underwritten public offerings of securities and, in the case of the
accountants' letter, such other financial matters, and, in the case of the
legal opinion, such other legal matters, as such seller may reasonably
request;
(vii) notify each seller of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, upon discovery that, or
upon the happening of any event as a result of which, the prospectus
included in such registration statement, as then in effect, includes an
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances under which they were
made, and at the request of any such seller promptly prepare and furnish to
such seller a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such prospectus shall not
include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under which they
were made;
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(viii) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering
the period of at least twelve months, but not more than eighteen months,
beginning with the first full calendar month after the effective date of
such registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act, and will furnish to each
such seller at least five business days prior to the filing thereof a copy
of any amendment or supplement to such registration statement or prospectus
and shall not file any thereof to which any such seller shall have
reasonably objected on the grounds that such amendment or supplement does
not comply in all material respects with the requirements of the Securities
Act or of the rules or regulations thereunder;
(ix) provide and cause to be maintained a transfer agent and registrar
for all Registrable Securities covered by such registration statement from
and after a date not later than the effective date of such registration
statement;
(x) use its best efforts to list all Registrable Securities covered by
such registration statement on any securities exchange on which any of the
securities of the Company is then listed;
(xi) assist in marketing the offering, including conducting and
participating in a roadshow as recommended and scheduled by the
underwriters; and
(xii) enter into such agreements and take such other actions as the
Requisite Holders shall reasonably request in order to expedite or
facilitate the disposition of such Registrable Securities.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish the Company such information
regarding such seller and the distribution of such securities as the Company may
from time to time reasonably request in writing in order to assure compliance
with federal and applicable state securities laws.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that upon receipt of any notice from the Company of the
happening of any event of the kind described in subdivision (vii) of this
Section 2.3, such holder will forthwith discontinue such holder's disposition of
Registrable Securities pursuant to the registration statement relating to such
Registrable Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by subdivision (vii) of this
Section 2.3 and, if so directed by the Company, will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies, then in
such holder's possession of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice.
2.4. Underwritten Offerings.
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(a) Requested Underwritten Offerings. If requested by the underwriters
for any underwritten offering by holders of Registrable Securities pursuant to a
registration requested under Section 2.1, the Company will enter into an
underwriting agreement with such underwriters for such offering, such agreement
to be satisfactory in substance and form to each such holder, the
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underwriters and the Company, and to contain such representations and warranties
by the Company and such other terms as are generally prevailing in agreements of
this type, including, without limitation, indemnities and contribution to the
effect and to the extent provided in Section 2.7. The holders of Registrable
Securities to be distributed by such underwriters shall, as a condition to
inclusion of their Registrable Securities in such registration, be parties to
such underwriting agreement and may, at their option, require that any or all of
the representations and warranties by, and the other agreements on the part of,
the Company to and for the benefit of such underwriters shall also be made to
and for the benefit of such holders of Registrable Securities and that any or
all of the conditions precedent to the obligations of such underwriters under
such underwriting agreement be conditions precedent to the obligations of such
holders of Registrable Securities. Any such holder of Registrable Securities
shall not be required to make any representations or warranties to or agreements
with the Company or the underwriters other than representations, warranties or
agreements regarding such holder, such holder's Registrable Securities and such
holder's intended method of distribution and any other representation required
by law.
(b) Incidental Underwritten Offerings. If the Company at any time
proposes to register any of its securities under the Securities Act as
contemplated by Section 2.2 and such securities are to be distributed by or
through one or more underwriters, the Company will, if requested by any holder
of Registrable Securities as provided in Section 2.2 and subject to the
provisions of Section 2.2(b), arrange for such underwriters to include all the
Registrable Securities to be offered and sold by such holder among the
securities to be distributed by such underwriters. The holders of Registrable
Securities to be distributed by such underwriters shall, as a condition to the
inclusion of their Registrable Securities in such registration, be parties to
the underwriting agreement between the Company and such underwriters and may, at
their option, require that any or all of the representations and warranties by,
and the other agreements on the part of, the Company to and for the benefit of
such underwriters shall also be made to and for the benefit of such holders of
Registrable Securities and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be conditions
precedent to the obligations of such holders of Registrable Securities. Any such
holder of Registrable Securities shall not be required to make any
representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements regarding such
holder, such holder's Registrable Securities and such holder's intended method
of distribution and any other representation required by law.
2.5. Preparation: Reasonable Investigation. In connection with the
preparation and filing of each registration statement under the Securities Act
pursuant to this Agreement, the Company will give the holders of Registrable
Securities registered under such registration statement, and their counsel and
accountants, the opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, and will give each
of them such access to its books and records and such opportunities to discuss
the business of the Company with its officers and the independent public
accountants who have certified its financial statements as shall be necessary,
in the opinion of such holders' counsel, to conduct a reasonable investigation
within the meaning of the Securities Act.
2.6. Additional Rights of Investors. If any registration statement
prepared under this Agreement refers to any Investor by name or otherwise as the
holder of any securities of the Company, then such Investor shall have the right
to require (x) the insertion therein of language, in form and substance
satisfactory to such Investor, to the effect that the holding by such Investor
of such securities does not necessarily make such Investor a "controlling
person" of the Company within
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the meaning of the Securities Act and is not to be construed as a recommendation
by such Investor of the investment quality of the Company's debt or equity
securities covered thereby and that such holding does not imply that such
Investor will assist in meeting any future financial requirements of the
Company, or (y) in the event that such reference to such Investor by name or
otherwise is not required by the Securities Act or any rules and regulations
promulgated thereunder, the deletion of the reference to such Investor.
2.7. Indemnification and Contribution.
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(a) Indemnification by the Company. In the event of any registration of
any securities of the Company under the Securities Act, the Company will and
hereby does indemnify and hold harmless the seller of any Registrable Securities
covered by such registration statement, its directors and officers, each other
Person who participates in the offering or sale of such securities and each
other Person, if any, who controls such seller within the meaning of the
Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which such seller or any such director or officer or controlling
person may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any registration statement under which such securities were registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
the Company will reimburse such seller and each such director, officer, and
controlling person for any legal or any other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
liability, action or proceeding; provided, that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, any such preliminary prospectus,
final prospectus, summary prospectus, amendment or supplement in reliance upon
and in conformity with written information furnished to the Company through an
instrument duly executed by such seller specifically stating that it is for use
in the preparation thereof and; provided, further, that the Company shall not be
liable to any Person who participates as an underwriter, in the offering or sale
of Registrable Securities or any other Person, if any, who controls such
underwriter within the meaning of the Securities Act, in any such case to the
extent that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of such Person's failure to send or give
a copy of the final prospectus, as the same may be then supplemented or amended,
to the Person asserting an untrue statement or alleged untrue statement or
omission or alleged omission at or prior to the written confirmation of the sale
of Registrable Securities to such Person if such statement or omission was
corrected in such final prospectus. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of such seller
or any such director, officer, underwriter or controlling person and shall
survive the transfer of such securities by such seller.
(b) Indemnification by the Sellers. The Company may require, as a
condition to including any Registrable Securities in any registration statement
filed pursuant to Section 2.3, that the Company shall have received an
undertaking satisfactory to it from the prospective seller of such securities,
to indemnify and hold harmless (in the same manner and to the same extent as set
forth in subdivision (a) of this Section 2.7) the Company, each director of the
Company, each officer of the
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Company and each other Person, if any, who controls the Company within the
meaning of the Securities Act, with respect to any statement or alleged
statement in or omission or alleged omission from such registration statement,
any preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, if such statement or alleged
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company through an
instrument duly executed by such seller specifically stating that it is for use
in the preparation of such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement. Such indemnity shall
remain in full force and effect, regardless of any investigation made by or on
behalf of the Company or any such director, officer or controlling Person and
shall survive the transfer of such securities by such seller. Notwithstanding
the foregoing, the liability of a seller of Registrable Securities pursuant to
this Section 2.7(b) shall not exceed the net proceeds received by such seller in
connection with the sale of the Registrable Securities.
(c) Notices of Claims, etc. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding subdivisions of this Section 2.7, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the latter of the commencement of
such action; provided, that the failure of any indemnified party to give notice
as provided herein shall not relieve the indemnifying party of its obligations
under the preceding subdivisions of this Section 2.7, except to the extent that
the indemnifying party is actually prejudiced by such failure to give notice. In
case any such action is brought against an indemnified party, unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such claim, the
indemnifying party shall be entitled to participate in and to assume the defense
thereof, jointly with any other indemnifying party similarly notified to the
extent that it may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation. No indemnifying
party shall, without the consent of the indemnified party, consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation.
(d) Other Indemnification. Indemnification similar to that specified in
the preceding subdivisions of this Section 2.7 (with appropriate modifications)
shall be given by the Company and each seller of Registrable Securities with
respect to any required registration or other qualification of securities under
any federal or state law or regulation of any governmental authority other than
the Securities Act.
(e) Contribution.
(i) If the indemnification provided for in this Section 2.7 is
unavailable (except if inapplicable according to its terms) to an
indemnified party under paragraphs (a), (b) or (d) hereof or is
insufficient to hold such indemnified party harmless in respect of any
losses, claims, damages, liabilities or expenses referred to therein,
then an 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, claims, damages,
liabilities or expenses in such proportion as is appropriate to
reflect the relative fault of such indemnifying party, on the one
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hand, and such indemnified party, on the other hand, in connection with
the statements or omissions that resulted in such losses, claims,
damages, liabilities or expenses as well as any other relevant
equitable considerations. The relative fault of such indemnifying
party, on the one hand, and such indemnified party, on the other hand,
shall be determined by reference to, among other things, whether any
untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact has been taken, or relates to
information supplied by or on behalf of such indemnifying party, on the
one hand, or by or on behalf of such indemnified party, on the other
hand, and such parties' relative intent, knowledge, access to
information and opportunity to correct or prevent any such statement or
omission.
(ii) The Company and the Seller(s) of the Registrable
Securities agree that it would not be just and equitable if
contribution pursuant to this Section 2.7 were determined by a pro rata
allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (e)(i)
above. The amount paid or payable by an indemnified party as a result
of the losses, claims, damages, liabilities and expenses referred to in
paragraph (e)(i) above shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating any
claim or defending any such action, suit or proceeding. Notwithstanding
the provisions of this Section 2.7, the seller(s) of the Registrable
Securities shall not be required to contribute any amount in excess of
the amount by which the net proceeds received by them in connection
with the sale of the Registrable Securities exceeds the amount of any
damages which such sellers have 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.
(f) Indemnification or Contribution Payments. The indemnification and
contribution required by this Section 2.7 shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as and
when bills are received or expense, loss, damage or liability is incurred.
2.8. Limitations on Subsequent Registration Rights. So long as any of
the registration rights under this Agreement remain in effect, the Company will
not, without the prior written consent of the Majority Holders, grant to any
third party registration rights.
3. Definitions. As used herein, unless the context otherwise requires,
the following terms have the following respective meanings:
Class B Common Stock: The Class B Common Stock, $0.01 par value per
share, of the Company.
Commission: The Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
Common Stock: The common shares, $0.01 par value per share, of the
Company.
Company: As defined in the introductory paragraph of this Agreement.
10
Conversion Shares: The shares of Common Stock issued or issuable upon
conversion of the Series A Preferred or the Class B Common Stock.
Exchange Act: The Securities Exchange Act of 1934, or any similar
federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. Reference
to a particular section of the Securities Exchange Act of 1934 shall
include a reference to the comparable section, if any, of any such
similar federal statute.
Majority Holders: At any time, the holder or holders of more than 50%
of all Registrable Securities then outstanding.
Person: A corporation, an association, a partnership, a business, an
individual, a governmental or political subdivision thereof or a
governmental agency.
Registrable Securities: The Conversion Shares or shares of any
security of the Company issued or issuable upon conversion of the
Series A Preferred, and any securities issued or issuable with respect
to such securities by way of distribution or in connection with any
reorganization, recapitalization, merger, consolidation or otherwise.
As to any particular Registrable Securities, once issued such
securities shall cease to be Registrable Securities when (a) 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 in accordance with such
registration statement, (b) they shall have been sold to the public
pursuant to Rule 144 (or any successor provision) under the Securities
Act, (c) they shall have been otherwise transferred, new certificates
for them not bearing a legend restricting further transfer shall have
been delivered by the Company, and subsequent disposition of them
shall not require registration or qualification of them under the
Securities Act or any similar state law then in force, or (d) they
shall have ceased to be outstanding.
Registration Expenses: All expenses incident to the Company's
performance of or compliance with Sections 2.1 and 2.2, including,
without limitation, all registration, filing and National Association
of Securities Dealers, Inc. fees, all fees and expenses of complying
with securities or blue sky laws, all word processing, duplicating and
printing expenses, messenger and delivery expenses, the fees and
disbursements of counsel for the Company and of its independent public
accountants, including the expenses of any special audits or "cold
comfort" letters required by or incident to such performance and
compliance, the fees and disbursements incurred by the holders of
Registrable Securities to be registered (including the fees and
disbursements of not more than one special counsel to the holders of
such Registrable Securities), premiums and other costs of policies of
insurance against liabilities arising out of the public offering of
the Registrable Securities being registered, any fees and
disbursements of underwriters customarily paid by issuers or sellers
of securities, fees and expenses for independent reports and other
experts and fees and expenses incurred in connection with the listing
of the securities to be registered on each securities exchange on
which similar securities issued by the Company are then listed, but
excluding Selling Expenses, if any.
Requisite Holders: With respect to any registration of Registrable
Securities pursuant to Section 2.1, any holder or holders of more than
50% of the Registrable Securities to be so registered.
11
Securities Act: The Securities Act of 1933, or any similar federal
statute, and the rules and regulations of the Commission thereunder,
all as of the same shall be in effect at the time. References to a
particular section of the Securities Act of 1933 shall include a
reference to the comparable section, if any, of any such similar
federal Statute.
Selling Expenses: Underwriting discounts and selling commissions and
stock transfer taxes relating to the sale of securities registered by
the Company.
4. Rule 144 and Reports: The Company shall timely file the reports
required to be filed by it under the Securities Act and the Exchange Act
(including but not limited to the reports under Sections 13 and 15(d) of the
Exchange Act referred to in subparagraph (c)(1) of Rule 144 adopted by the
Commission under the Securities Act) and the rules and regulations adopted by
the Commission thereunder and will take such further action as any holder of
Registrable Securities 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 limitation of the exemptions
provided by (a) Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or (b) any similar rule or regulation hereafter adopted by
the Commission. Upon the request of any holder of Registrable Securities, the
Company will deliver to such holder a written statement as to whether it has
complied with such requirements. After any sale of Registrable Securities
pursuant to this Section 4, the Company will, to the extent allowed by law,
cause any restrictive legends to be removed and any transfer restrictions to be
rescinded with respect to such Registrable Securities.
5. Amendments and Waivers. This Agreement may be amended and the
Company may take any action herein prohibited or omit to perform any act herein
required to be performed by it, only if the Company shall have obtained the
written consent to such amendment, action or omission to act, of the holder or
holders of 75% or more of the Registrable Securities. Each holder of any
Registrable Securities at the time or thereafter outstanding shall be bound by
any consent authorized by this Section 5, whether or not such Registrable
Securities shall have been marked to indicate such consent.
6. Nominees for Beneficial Owners. In the event that any Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election, be treated as the holder of such
Registrable Securities for purposes of any request or other action by any holder
or holders of Registrable Securities pursuant to this Agreement or any
determination of any number or percentage of Registrable Securities held by any
holder or holders of Registrable Securities contemplated by this Agreement. If
the beneficial owner of any Registrable Securities so elects, the Company may
require assurances reasonably satisfactory to it of such owner's beneficial
ownership of such Registrable Securities.
7. Notices. All communications provided for hereunder shall be sent by
first-class mail and (a) if addressed to a party other than the Company,
addressed to such party at the address set forth opposite such party's name on
the execution page hereof or (b) if addressed to the Company, at 000 Xxxxxxx
Xxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000-0000 or at such other address, or
to the attention of such other officer, as the Company shall have furnished to
each holder of Registrable Securities at the time outstanding; provided,
however, that any such communication to the Company
12
may also, at the option of any of the parties hereunder, be either delivered to
the Company at its address set forth above or to any officer of the Company.
8. Assignment. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
successors and assigns. In addition, and whether or not any express assignment
shall have been made, the provisions of this Agreement which are for the benefit
of the parties hereto other than the Company shall also be for the benefit of
and enforceable by any subsequent holder of any Registrable Securities, subject
to the provisions respecting the minimum numbers or percentages of Registrable
Securities required in order to be entitled to certain rights, or take certain
actions, contained herein.
9. Termination. This Agreement shall terminate when no Registrable
Securities remain outstanding.
10. Descriptive Headings. The descriptive headings of the several
sections and paragraphs of this Agreement are inserted for reference only and
shall not limit or otherwise affect the meaning hereof.
11. Specific Performance. The parties hereto recognize and agree that
money damages may be insufficient to compensate the holders of any Registrable
Securities for breaches by the Company of the terms hereof and, consequently,
that the equitable remedy of specific performance of the terms hereof will be
available in the event of any such breach.
12. Governing Law. This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of Texas.
13. Severability. If any provision of this Agreement shall be held to
be illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein.
14. Counterparts. This Agreement may be executed simultaneously in any
number of counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
13
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
TEXOIL, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
---------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: President
Address: 000 Xxxxxxx Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
13
QUANTUM ENERGY PARTNERS, LP
By: Quantum Energy Management, LLC,
its General Partner
By: /s/ S. Xxx XxxXxx, Xx.
------------------------------
Name: S. Xxx XxxXxx, Xx.
Title: President
Address: 777 Xxxxxx
0000 Xxx Xxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
14
ENCAP EQUITY 1996 LIMITED PARTNERSHIP
By: EnCap Investments L.C.,
its general partner
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
Address: 0000 Xxxxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
ENERGY CAPITAL INVESTMENT COMPANY PLC
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Director
Address: 0000 Xxxxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
V&C ENERGY LIMITED PARTNERSHIP
By: Energy Resource Associates, Inc.,
its general partner
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: President
Address: 000 Xxxxxxx Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
15
/s/ Xxxxxx X. Xxxxx
------------------------------------------
Xxxxxx X. Xxxxx
Address: Xxxx X. Xxxxxx, Inc.
Wedgewood International Tower
0000 Xxxxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xx. Xxxxxx X. Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
/s/ Xxxx X. Xxxxx
------------------------------------------
Xxxx X. Xxxxx
Address: 000 Xxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
/s/ Xxxxxx X. Xxxxxx
------------------------------------------
Xxxxxx X. Xxxxxx
Address: 0000 X. Xxxxxxxx Xxx
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
/s/ Xxxxx X. Xxxxx
------------------------------------------
Xxxxx X. Xxxxx
Address: 0000 Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
16
