REGISTRATION RIGHTS AGREEMENT
Exhibit
10.2
This
Registration Rights Agreement (the “Agreement”)
is
made and entered into as of this 4th day of April, 2006, by and among THE
EXPLORATION COMPANY OF DELAWARE, INC., a Delaware corporation (the “Company”),
and
the “Investors”
named
in that certain Purchase Agreement by and among the Company and the Investors
(the “Purchase
Agreement”).
The
parties hereby agree as follows:
1. Certain
Definitions.
As
used
in this Agreement, the following terms shall have the following
meanings:
“Affiliate”
means,
with respect to any person, any other person which directly or indirectly
controls, is controlled by, or is under common control with, such
person.
“Business
Day”
means
a
day, other than a Saturday or Sunday, on which banks in New York City are open
for the general transaction of business.
“Common
Shares”
means
the Company’s common shares, $0.01 par value per share, and any securities into
which such shares may hereinafter be reclassified.
“Investors”
means
the Investors identified in the Purchase Agreement, and any Affiliate or
permitted transferee of any Investor who is a subsequent holder of any
Registrable Securities.
“Prospectus”
means
the prospectus included in any Registration Statement, as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Securities covered by such
Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated
by
reference or deemed to be incorporated by reference in such
prospectus.
“Register,”
“registered”
and
“registration”
refer
to a registration made by preparing and filing a Registration Statement or
similar document in compliance with the 1933 Act (as defined below), and the
declaration or ordering of effectiveness of such Registration Statement or
document.
“Registrable
Securities”
means
(i) the Shares and (ii) any other securities issued or issuable with respect
to
or in exchange for Registrable Securities; provided, that, a security shall
cease to be a Registrable Security upon (A) sale pursuant to a Registration
Statement or Rule 144 under the 1933 Act or (B) such security becoming eligible
for sale by the Investors pursuant to Rule 144(k) and the removal of any
restrictive legend from the effected stock certificates.
“Registration
Statement”
means
any registration statement of the Company filed under the 1933 Act that covers
the resale of any of the Registrable Securities pursuant to the provisions
of
this Agreement, amendments and supplements to such Registration Statement,
including post-effective amendments, all exhibits and all material incorporated
by reference or deemed to be incorporated by reference in such Registration
Statement.
“Required
Investors”
means
the Investors holding a majority of the Registrable Securities.
“SEC”
means
the U.S. Securities and Exchange Commission.
“Shares”
means
the Common Shares issued pursuant to the Purchase Agreement.
“Transaction
Documents”
has
the
meaning set forth in the Purchase Agreement.
“1933
Act”
means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“1934
Act”
means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
2. Registration.
(a) Registration
Statements.
(i) Promptly
following the closing of the purchase and sale of the securities contemplated
by
the Purchase Agreement (the “Closing
Date”)
but no
later than 30 days after closing (the “Filing
Deadline”),
the
Company shall prepare and file with the SEC one Registration Statement on Form
S-1 (or on such other Registration Statement form under the 1933 Act that the
Company is then eligible to use), covering the resale of the Registrable
Securities in an amount at least equal to the number of Shares. Such
Registration Statement shall include, without modification (unless directed
or
consented to by the Required Investors), the plan of distribution attached
hereto as Exhibit
A.
Such
Registration Statement also shall cover, to the extent allowable under the
1933
Act and the rules promulgated thereunder (including Rule 416), such
indeterminate number of additional Common Shares resulting from share splits,
share dividends or similar transactions with respect to the Registrable
Securities. The Registration Statement (and each amendment or supplement
thereto, and each request for acceleration of effectiveness thereof) shall
be
provided in accordance with Section
3(c)
to the
Investors and their counsel prior to its filing or other submission. To the
extent permitted under applicable law, the Company may amend any Registration
Statement on Form S-1 to convert such Registration Statement to Form S-3. If
a
Registration Statement covering the Registrable Securities is not filed with
the
SEC on or prior to the Filing Deadline, the Company will make pro rata payments
to each Investor, as liquidated damages and not as a penalty, in an amount
equal
to 1.0% of the aggregate amount invested by such Investor for each 30-day period
or pro rata for any portion thereof following the date by which such
Registration Statement should have been filed for which no Registration
Statement is filed with respect to the Registrable Securities; provided,
however, that the Company shall not be liable to the Investors for any such
liquidated damages totaling, together with any liquidated damages incurred
pursuant to Section 2(c)(i), more than 10% of the Aggregate Purchase Price.
Such
payments shall be in partial compensation to the Investors, and shall not
constitute the Investors’ exclusive remedy for such events. Such payments shall
be made to each Investor in cash monthly on the last day of each month.
(b) Expenses.
The
Company will pay all reasonable expenses associated with each registration,
including filing and printing fees, the Company’s counsel and accounting fees
and expenses, costs associated with clearing the Registrable Securities for
sale
under applicable state securities laws, listing fees, fees and expenses of
one
counsel to the Investors and the Investors’ reasonable expenses in connection
with the registration, but excluding discounts, commissions, fees of
underwriters, selling brokers, dealer managers or similar securities industry
professionals with respect to the Registrable Securities being
sold.
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(c) Effectiveness.
(i) The
Company shall use commercially reasonable efforts to have the Registration
Statement declared effective as soon as practicable. The Company shall notify
the Investors by facsimile or e-mail as promptly as practicable, and in any
event, within twenty-four (24) hours, after any Registration Statement is
declared effective and shall as soon as reasonably practicable provide the
Investors with copies of any related Prospectus to be used in connection with
the sale or other disposition of the securities covered thereby. If (A) a
Registration Statement covering the Registrable Securities is not declared
effective by the SEC within 150 days after closing, (the “Effectiveness
Deadline”);
or
(B) after a Registration Statement has been declared effective by the SEC,
sales
cannot be made pursuant to such Registration Statement for any reason (including
without limitation by reason of a stop order, or the Company’s failure to update
the Registration Statement), but excluding the inability of any Investor to
sell
the Registrable Securities covered thereby due to market conditions and except
as excused pursuant to subparagraph (ii) below, then the Company will make
pro
rata payments to each Investor, as liquidated damages and not as a penalty,
in
an amount equal to 1.0% of the aggregate amount invested by such Investor for
each 30-day period or pro rata for any portion thereof following the date by
which such Registration Statement should have been effective (the “Blackout
Period”);
provided, however, that the Company shall not be liable to the Investors for
any
such liquidated damages totaling, together with any liquidated damages incurred
pursuant to Section 2(a)(i), more than 10% of the Aggregate Purchase Price.
Such
payments shall be in partial compensation to the Investors, and shall not
constitute the Investors’ exclusive remedy for such events. The amounts payable
as liquidated damages pursuant to this paragraph shall be paid monthly within
five (5) Business Days of the last day of each month following the commencement
of the Blackout Period until the termination of the Blackout Period. Such
payments shall be made to each Investor in cash.
(ii) Notwithstanding
anything to contrary, for not more than twenty (20) consecutive days or for
a
total of not more than sixty (60) days in any twelve (12) month period, the
Company may delay, suspend the use of, or withdraw any Registration Statement
or
qualification of Registrable Securities if the Company in good faith determines
that any such Registration Statement, or the use thereof, would materially
and
adversely affect any material corporate event or would otherwise require
disclosure of nonpublic information which the Board of Directors of the Company
determines, in its reasonable judgment, (A) is not in the best interests of
the
Company at such time, or, (B) is an event described in Section
3(g)
(an
“Allowed
Delay”);
provided, that the Company shall promptly (a) notify the Investors in writing
of
the existence of (but in no event, without the prior written consent of an
Investor, shall the Company disclose to such Investor any of the facts or
circumstances regarding) the event giving rise to an Allowed Delay, provided
that the Company shall not be required to disclose material nonpublic
information to an Investor; (b) advise the Investors in writing to cease all
sales under the Registration Statement until the end of the Allowed Delay;
and
(c) use commercially reasonable efforts to terminate an Allowed Delay as
promptly as practicable and to advise the Investors, in writing, when the
Allowed Delay has ended.
3. Company
Obligations.
The
Company will use commercially reasonable efforts to effect the registration
of
the Registrable Securities in accordance with the terms hereof, and pursuant
thereto the Company will, as expeditiously as possible:
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(a) cause
such Registration Statement to become effective and to remain continuously
effective for a period that will terminate upon the earlier of (i) the date
on
which all Registrable Securities covered by such Registration Statement as
amended from time to time, have been sold, (ii) the date on which all
Registrable Securities covered by such Registration Statement (other than
with
respect to Registrable Securities owned by Affiliates of the Company) may
be
sold pursuant to Rule 144(k) and the removal of restrictive legends in
connection therewith or (iii) two (2) years from the Closing Date (the
“Effectiveness
Period”);
(b) prepare
and file with the SEC such amendments, prospectus supplements or post-effective
amendments to the Registration Statement and the Prospectus as may be necessary
to keep the Registration Statement effective for the period specified in
Section
3(a)
and to
comply with the provisions of the 1933 Act and the 1934 Act with respect
to the
distribution of all of the Registrable Securities covered thereby;
(c) provide
copies to and permit counsel designated by the Investors to review each
Registration Statement and all amendments and supplements thereto no fewer
than
three (3) days prior to their filing with the SEC and not file any document
to
which such counsel reasonably objects based upon such counsel’s belief that such
Registration Statement is not in compliance with applicable laws, rules or
regulations or contains a material misstatement or omission;
(d) furnish
to the Investors and their legal counsel (i) promptly after the same is prepared
and publicly distributed, filed with the SEC, or received by the Company
(but
not later than two (2) Business Days after the filing date, receipt date
or
sending date, as the case may be) one (1) copy of any Registration Statement
and
any amendment thereto, each preliminary prospectus and Prospectus and each
amendment or supplement thereto, and each letter written by or on behalf
of the
Company to the SEC or the staff of the SEC, and each item of correspondence
from
the SEC or the staff of the SEC, in each case relating to such Registration
Statement (other than any portion of any thereof which contains information
for
which the Company has sought confidential treatment), and (ii) such number
of
copies of a Prospectus, including a preliminary prospectus, and all amendments
and supplements thereto and such other documents as each Investor may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such Investor that are covered by the related Registration
Statement;
(e) prevent
the issuance of any stop order or other suspension of effectiveness and,
if such
order is issued, obtain the withdrawal of any such order at the earliest
possible moment;
(f) cause
all
Registrable Securities covered by a Registration Statement to be listed on
each
securities exchange, interdealer quotation system or other market on which
similar securities issued by the Company are then listed;
(g) immediately
notify the Investors, at any time when a Prospectus relating to Registrable
Securities is required to be delivered under the 1933 Act, upon discovery
that,
or upon the happening of any event or the passage of time as a result of
which,
the Prospectus included in a 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 light of the circumstances then existing, and at the request
of
any such Investor, promptly prepare and furnish to such Investor a reasonable
number of copies of a supplement to or an amendment of such Prospectus or
the
Registration Statement as may be necessary so that, as thereafter delivered
to
the purchasers of such Registrable 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 light of the circumstances then existing;
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(h) comply
with all applicable rules and regulations of the SEC under the 1933 Act and
the
1934 Act, take such other actions as may be reasonably necessary to facilitate
the registration of the Registrable Securities hereunder; and
(i) with
a
view to making available to the Investors the benefits of Rule 144 (or its
successor rule) and any other rule or regulation of the SEC that may at any
time
permit the Investors to sell Common Shares to the public without registration,
the Company covenants and agrees to: (i) make and keep public information
available, as those terms are understood and defined in Rule 144, until the
earlier of (A) six months after such date as all of the Registrable Securities
may be resold pursuant to Rule 144(k) or any other rule of similar effect
or (B)
such date as all of the Registrable Securities shall have been resold; (ii)
file
with the SEC in a timely manner all reports and other documents required
of the
Company under the 1934 Act; and (iii) furnish to each Investor upon request,
as
long as such Investor owns any Registrable Securities, (A) a written statement
by the Company that it has complied with the reporting requirements of the
1934
Act, and (B) such other information as may be reasonably requested in order
to
avail such Investor of any rule or regulation of the SEC that permits the
selling of any such Registrable Securities without registration.
4. Due
Diligence Review; Information.
Subject
to the following paragraph, the Company shall make available, during normal
business hours, upon reasonable request, for inspection and review by the
Investors, advisors to and representatives of the Investors (who may or may
not
be affiliated with the Investors and who are reasonably acceptable to the
Company), all financial and other records, all SEC Filings (as defined in
the
Purchase Agreement) and other filings with the SEC and all other documents
respecting the Company, its assets, its properties or its business (including
without limitation minute books, corporate records, financial statements,
contracts, permits, licenses, approvals, technical or engineering reports,
and
any title opinions or valuations which the Company has obtained) as may be
reasonably necessary for the purpose of such review, and cause the Company’s
officers, directors and employees, within a reasonable time period, to supply
all such information reasonably requested by the Investors or any such
representative, advisor or underwriter in connection with such Registration
Statement (including, without limitation, in response to all questions and
other
inquiries reasonably made or submitted by any of them) to the extent not
publicly available on XXXXX or the Company’s website, prior to and from time to
time after the filing and effectiveness of the Registration Statement for
the
sole purpose of enabling the Investors and such representatives, advisors
and
underwriters and their respective accountants and attorneys to conduct initial
and ongoing due diligence with respect to the Company and the accuracy of
such
Registration Statement.
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The
Company shall not disclose material nonpublic information to the Investors,
or
to advisors to or representatives of the Investors, unless prior to disclosure
of such information the Company identifies such information as being material
nonpublic information and provides the Investors, such advisors and
representatives with the opportunity to accept or refuse to accept such material
nonpublic information for review and any Investor wishing to obtain such
information enters into an appropriate confidentiality agreement with the
Company with respect thereto.
5. Obligations
of the Investors.
(a) Each
Investor shall furnish in writing to the Company such information regarding
itself, the Registrable Securities held by it and the intended method of
disposition of the Registrable Securities held by it, as shall be reasonably
required to effect the registration of such Registrable Securities and shall
execute such documents in connection with such registration as the Company
may
reasonably request. At least five (5) Business Days prior to the first
anticipated filing date of any Registration Statement, the Company shall
notify
each Investor of the information the Company requires from such Investor
if such
Investor elects to have any of the Registrable Securities included in the
Registration Statement. The Investor shall provide such information to the
Company at least two (2) Business Days prior to the first anticipated filing
date of such Registration Statement if such Investor elects to have any of
the
Registrable Securities included in the Registration Statement. The Company
shall
not be required to include the Registrable Securities of an Investor in a
Registration Statement and shall not be required to pay any liquidated damages
or other damages under Section
2
until
such person furnishes to the Company such information. Each Investor agrees
to
provide the Company with written notice within a reasonable time after such
Investor ceases to own any Registrable Securities.
(b) Each
Investor, by its acceptance of the Registrable Securities, agrees to cooperate
with the Company as reasonably requested by the Company in connection with
the
preparation and filing of a Registration Statement hereunder, unless such
Investor has notified the Company in writing of its election to exclude all
of
its Registrable Securities from such Registration Statement.
(c) Each
Investor agrees that, upon receipt of any notice (which may be oral as long
as
written notice is provided by the next day) from the Company of either (i)
the
commencement of an Allowed Delay pursuant to Section
2(c)(ii);
or (ii)
the happening of an event pursuant to Section
3(g)
hereof,
such Investor will immediately discontinue disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities,
until otherwise notified in writing by the Company or until the Investor’s
receipt of the copies of the supplemented or amended prospectus filed with
the
SEC and until any related post-effective amendment is declared effective
and, if
so directed by the Company, the Investor shall deliver to the Company (at
the
expense of the Company) or destroy (and deliver to the Company a certificate
of
destruction) all copies in the Investor’s possession of the Prospectus covering
the Registrable Securities current at the time of receipt of such
notice.
(d)
The
Investors acknowledge and agree that, as described in Schedule
5(d)
hereto,
other security holders of the Company have the right to include such securities,
in addition to the Registrable Securities, in any Registration Statement
filed
or maintained by the Company pursuant to this Agreement or the Transaction
Documents.
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(e) Each
Investor covenants and agrees that it will comply with the prospectus delivery
requirements of the 1933 Act as applicable to it in connection with sales
of
Registrable Securities pursuant to the Registration Statement.
(f) No
Investor may use any confidential information received by it pursuant to
this
Agreement or the Purchase Agreement (including, without limitation, any notice
referred to in Section
2(c)(ii)
or
3(g)
hereof)
in violation of the 1934 Act or other applicable state or federal securities
law
or reproduce, disclose, or disseminate such information to any other person
(other than his or her attorneys, agents and representatives having a need
to
know, and then only if they expressly agree to be bound hereby), unless such
information has been made available to the public generally (other than by
such
recipient in violation hereof) or such recipient is required to disclose
such
information by a governmental body or regulatory agency or by law in connection
with a transaction that is not otherwise prohibited hereby, and then only
after
reasonable notice to the Company and it has been provided a reasonable
opportunity to object to such disclosure, with the reasonable cooperation
and
assistance of such Investor. Each Investor agrees to comply with the 1933
Act
and other applicable laws in connection with the offer or sale of any
Registrable Securities. The obligations in this Section
5(f)
shall
survive the expiration or termination of this Agreement.
6. Indemnification.
(a) Indemnification
by the Company.
The
Company will indemnify and hold harmless each Investor, and each of their
respective officers, directors, members, employees and agents, successors
and
assigns, and each other person, if any, who controls such Investor within
the
meaning of the 1933 Act, against any losses, claims, damages or liabilities,
joint or several, to which they may become subject under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in
respect thereof) arise out of or are based upon: (i) any untrue statement
or
alleged untrue statement of any material fact contained in any Registration
Statement, any preliminary prospectus or final prospectus contained therein,
or
any amendment or supplement thereof; (ii) the omission or alleged omission
to
state therein a material fact required to be stated therein or necessary
to make
the statements therein not misleading; (iii) any violation by the Company
or its
agents of any rule or regulation promulgated under the 1933 Act applicable
to
the Company or its agents and relating to action or inaction required of
the
Company in connection with such registration; or (iv) any failure to register
or
qualify the Registrable Securities included in any such Registration Statement
in any state where the Company or its agents has affirmatively undertaken
or
agreed in writing that the Company will undertake such registration or
qualification on an Investor’s behalf and will reimburse such Investor, and each
such officer, director or member and each such controlling person for any
legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
however,
that
the Company will not be liable in any such case if and to the extent that
any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission so
made in
conformity with information furnished by such Investor or any such controlling
person in writing specifically for use in such Registration Statement or
Prospectus, or to the extent that such information relates to such Investor
or
such Investor’s proposed method of distribution of Registrable Securities and
was reviewed and approved by such Investor for use in the Registration
Statement, such Prospectus or such form of Prospectus or in any amendment
or
supplement thereto (it being understood that the Investors have approved
Exhibit
A
hereto
for this purpose), or in the case of an occurrence of an Allowed Delay or
of an
event of the type specified in Section
3(g),
the use
by such Investor of an outdated or defective Prospectus after the Company
has
notified such Investor in writing that the Prospectus is outdated or defective
and prior to the receipt by such Investor of an amended or supplemented
Prospectus, but only if and to the extent that following the receipt of such
amended or supplemented Prospectus the misstatement or omission giving rise
to
such liability would have been corrected.
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(b) Indemnification
by the Investors.
Each
Investor agrees, severally but not jointly, to indemnify and hold harmless,
to
the fullest extent permitted by law, the Company, its directors, officers,
employees, shareholders and each person who controls the Company (within
the
meaning of the 0000 Xxx) against any losses, claims, damages, liabilities
and
expense (including reasonable attorney fees) resulting from any untrue statement
of a material fact or any omission of a material fact required to be stated
in
the Registration Statement or Prospectus or preliminary prospectus or amendment
or supplement thereto or necessary to make the statements therein not
misleading, to the extent that such untrue statement or omission is contained
in
any information furnished in writing by such Investor to the Company
specifically for inclusion in such Registration Statement or Prospectus or
amendment or supplement thereto, or to the extent that such information relates
to such Investor’s proposed method of distribution of Registrable Securities and
was reviewed and approved by such Investor for use in the Registration Statement
(it being understood that the Investors have approved Exhibit
A
hereto
for this purpose), such Prospectus or such form of Prospectus or in any
amendment or supplement thereto, or in the case of an occurrence of an Allowed
Delay or an event of the type specified in Section
3(g),
the use
by such Investor of an outdated or defective Prospectus after the Company
has
notified such Investor in writing that the Prospectus is outdated or defective
and prior to the receipt by such Investor of an amended or supplemented
Prospectus, but only if and to the extent that following the receipt of the
amended or supplemented Prospectus the misstatement or omission giving rise
to
such liability would have been corrected. In no event shall the liability
of an
Investor be greater in amount than the dollar amount of the proceeds (net
of any
damages such Investor has otherwise been required to pay by reason of such
untrue statement or omission by the Company) received by such Investor upon
the
sale of the Registrable Securities included in the Registration Statement
giving
rise to such indemnification obligation.
(c) Conduct
of Indemnification Proceedings.
Any
person entitled to indemnification hereunder shall (i) give prompt notice
to the
indemnifying party of any claim with respect to which it seeks indemnification;
and (ii) permit such indemnifying party to assume the defense of such claim
with
counsel reasonably satisfactory to the indemnified party; provided
that any
person entitled to indemnification hereunder shall have the right to employ
separate counsel and to participate in the defense of such claim, but the
fees
and expenses of such counsel shall be at the expense of such person unless
(a)
the indemnifying party has agreed to pay such fees or expenses; or (b) the
indemnifying party shall have failed to assume the defense of such claim
and
employ counsel reasonably satisfactory to such person; or (c) in the reasonable
judgment of any such person, based upon written advice of its counsel, a
conflict of interest exists between such person and the indemnifying party
with
respect to such claims (in which case, if the person notifies the indemnifying
party in writing that such person elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have
the
right to assume the defense of such claim on behalf of such person); and
provided,
further,
that
the failure of any indemnified party to give notice as provided herein shall
not
relieve the indemnifying party of its obligations hereunder, except to the
extent that such failure to give notice shall materially adversely affect
the
indemnifying party in the defense of any such claim or litigation. It is
understood that the indemnifying party shall not, in connection with any
proceeding in the same jurisdiction, be liable for fees or expenses of more
than
one separate firm of attorneys at any time for all such indemnified parties.
No
indemnifying party will, except with the consent of the indemnified party,
consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release from all liability in respect of such
claim or litigation.
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(d) Contribution.
If for
any reason the indemnification provided for in the preceding paragraphs (a)
and
(b) is unavailable to an indemnified party or insufficient to hold it harmless,
other than as expressly specified therein, then the indemnifying party shall
contribute to the amount paid or payable by the 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 indemnified party and the indemnifying
party,
as well as any other relevant equitable considerations. No person guilty
of
fraudulent misrepresentation within the meaning of Section 11(f) of the 1933
Act
shall be entitled to contribution from any person not guilty of such fraudulent
misrepresentation. In no event shall the contribution obligation of a holder
of
Registrable Securities be greater in amount than the dollar amount of the
proceeds (net of all expenses paid by such holder in connection with any
claim
relating to this Section
6
and the
amount of any damages such holder has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission)
received by it upon the sale of the Registrable Securities giving rise to
such
contribution obligation.
7. Miscellaneous.
(a) Amendments
and Waivers.
This
Agreement may be amended only by a writing signed by the Company and the
Required Investors. 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 waiver or consent to such amendment, action
or
omission to act, of the Required Investors.
(b) Notices.
All
notices and other communications provided for or permitted hereunder shall
be
made as set forth in Section 10.4 of the Purchase Agreement.
(c) Assignments
and Transfers by Investors.
The
provisions of this Agreement shall be binding upon and inure to the benefit
of
the Investors and their respective successors and assigns. Any Investor may
transfer or assign, in whole or from time to time in part, to one or more
persons, which shall be an “accredited investor” as defined in Rule 501(a) of
Regulation D, as amended under the 1933 Act, and which shall agree in writing
to
be bound by the terms and conditions of this Agreement, an executed counterpart
of which shall be furnished to the Company, its rights hereunder in connection
with the transfer of Registrable Securities by such Investor to such person,
provided that such Investor complies with all laws applicable thereto and
provides written notice of assignment to the Company promptly after such
assignment is effected.
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(d) Assignments
and Transfers by the Company.
This
Agreement may not be assigned by the Company (whether by operation of law
or
otherwise) without the prior written consent of the Required Investors,
provided, however, that the Company may assign its rights and delegate its
duties hereunder to any surviving or successor corporation in connection
with a
merger or consolidation of the Company with another corporation, or a sale,
transfer or other disposition of all or substantially all of the Company’s
assets to another corporation, without the prior written consent of the Required
Investors, after notice duly given by the Company to each Investor.
(e) Benefits
of the Agreement.
The
terms and conditions of this Agreement shall inure to the benefit of and
be
binding upon the respective permitted successors and assigns of the parties.
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.
(f) Counterparts;
Faxes.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument. This Agreement may also be executed via facsimile, which shall
be
deemed an original.
(g) Titles
and Subtitles.
The
titles and subtitles used in this Agreement are used for convenience only
and
are not to be considered in construing or interpreting this
Agreement.
(h) Severability.
Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of
such prohibition or unenforceability without invalidating the remaining
provisions hereof but shall be interpreted as if it were written so as to
be
enforceable to the maximum extent permitted by applicable law, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate
or
render unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, the parties hereby waive any provision of law
which
renders any provisions hereof prohibited or unenforceable in any
respect.
(i) Further
Assurances.
The
parties shall execute and deliver all such further instruments and documents
and
take all such other actions as may reasonably be required to carry out the
transactions contemplated hereby and to evidence the fulfillment of the
agreements herein contained.
-10-
(j) Entire
Agreement.
This
Agreement is intended by the parties as a final expression of their agreement
and intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter, except for, and
as
provided in the Transaction Documents.
(k) Governing
Law; Consent to Jurisdiction; Waiver of Jury Trial.
This
Agreement shall be governed by, and construed in accordance with, the internal
laws of the State of New York without regard to the choice of law principles
thereof. Each of the parties hereto irrevocably submits to the exclusive
jurisdiction of the courts of the State of New York located in New York County
and the United States District Court for the Southern District of New York
for
the purpose of any suit, action, proceeding or judgment relating to or arising
out of this Agreement and the transactions contemplated hereby. Service of
process in connection with any such suit, action or proceeding may be served
on
each party hereto anywhere in the world by the same methods as are specified
for
the giving of notices under this Agreement. Each of the parties hereto
irrevocably consents to the jurisdiction of any such court in any such suit,
action or proceeding and to the laying of venue in such court. Each party
hereto
irrevocably waives any objection to the laying of venue of any such suit,
action
or proceeding brought in such courts and irrevocably waives any claim that
any
such suit, action or proceeding brought in any such court has been brought
in an
inconvenient forum. EACH
OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY
LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS
BEEN
CONSULTED SPECIFICALLY AS TO THIS WAIVER.
-11-
[Company
Signature Page]
IN
WITNESS WHEREOF, the parties have executed this Agreement or caused their
duly
authorized officers to execute this Agreement as of the date first above
written.
|
THE
EXPLORATION COMPANY OF
DELWARE, INC.
|
||
| By: /s/ Xxxxx X. Xxxxxx | ||
| Name: Xxxxx X. Xxxxxx | ||
| Title: President | ||
-12-
[Investor
Signature Page]
IN
WITNESS WHEREOF, the parties have executed this Agreement or caused their
duly
authorized officers to execute this Agreement as of the date first above
written.
|
Name
of Investor: ________________________________
|
||
| By: _________________________ | ||
| Name: | ||
| Title: | ||
Note:
Each investor completed a copy of this signature page. A listing of investors
will be provided to the SEC upon request.
-13-
Exhibit
A
Plan
of Distribution
The
selling shareholders, which as used herein includes donees, pledgees,
transferees or other successors-in-interest selling common shares or interests
in common shares received after the date of this prospectus from a selling
shareholder as a gift, pledge, partnership distribution or other transfer,
may,
from time to time, sell, transfer or otherwise dispose of any or all of their
common shares or interests in common shares on any stock exchange, market
or
trading facility on which the common shares are traded or in private
transactions. These dispositions may be at fixed prices, at prevailing market
prices at the time of sale, at prices related to the prevailing market price,
at
varying prices determined at the time of sale, or at negotiated
prices.
The
selling shareholders may use any one or more of the following methods when
disposing of common shares or interests therein:
-
ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
-
block
trades in which the broker-dealer will attempt to sell the common shares
as
agent, but may position and resell a portion of the block as principal to
facilitate the transaction;
-
purchases by a broker-dealer as principal and resale by the broker-dealer
for
its account;
-
an
exchange distribution in accordance with the rules of the applicable
exchange;
-
privately negotiated transactions;
-
short
sales effected after the date of this prospectus;
-
through
the writing or settlement of options or other hedging transactions, whether
through an options exchange or otherwise;
-
broker-dealers may agree with the selling shareholders to sell a specified
number of such common shares at a stipulated price per common
share;
-
a
combination of any such methods of sale; and
-
any
other method permitted pursuant to applicable law.
The
selling shareholders may, from time to time, pledge or grant a security interest
in some or all of the common shares owned by them and, if they default in
the
performance of their secured obligations, the pledgees or secured parties
may
offer and sell the common shares, from time to time, under this prospectus,
or
under an amendment to this prospectus under Rule 424(b)(3) or other applicable
provision of the Securities Act amending the list of selling shareholders
to
include the pledgee, transferee or other successors in interest as selling
shareholders under this prospectus. The selling shareholders also may transfer
the common shares in other circumstances, in which case the transferees,
pledgees or other successors in interest will be the selling beneficial owners
for purposes of this prospectus.
In
connection with the sale of our common shares or interests therein, the selling
shareholders may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the common
shares in the course of hedging the positions they assume. The selling
shareholders may also sell our common shares short and deliver these securities
to close out their short positions, or loan or pledge the common shares to
broker-dealers that in turn may sell these securities. The selling shareholders
may also enter into option or other transactions with broker-dealers or other
financial institutions or the creation of one or more derivative securities
which require the delivery to such broker-dealer or other financial institution
of shares offered by this prospectus, which shares such broker-dealer or
other
financial institution may resell pursuant to this prospectus (as supplemented
or
amended to reflect such transaction).
The
aggregate proceeds to the selling shareholders from the sale of the common
shares offered by them will be the purchase price of the common shares less
discounts or commissions, if any. Each of the selling shareholders reserves
the
right to accept and, together with their agents from time to time, to reject,
in
whole or in part, any proposed purchase of common shares to be made directly
or
through agents. We will not receive any of the proceeds from this offering.
The
selling shareholders also may resell all or a portion of the shares in open
market transactions in reliance upon Rule 144 under the Securities Act of
1933,
provided that they meet the criteria and conform to the requirements of that
rule.
The
selling shareholders and any underwriters, broker-dealers or agents that
participate in the sale of the common shares or interests therein may be
"underwriters" within the meaning of Section 2(11) of the Securities Act.
Any
discounts, commissions, concessions or profit they earn on any resale of
the
shares may be underwriting discounts and commissions under the Securities
Act.
Selling shareholders who are "underwriters" within the meaning of Section
2(11)
of the Securities Act will be subject to the prospectus delivery requirements
of
the Securities Act.
To
the
extent required, our common shares to be sold, the names of the selling
shareholders, the respective purchase prices and public offering prices,
the
names of any agents, dealer or underwriter, any applicable commissions or
discounts with respect to a particular offer will be set forth in an
accompanying prospectus supplement or, if appropriate, a post-effective
amendment to the registration statement that includes this
prospectus.
In
order
to comply with the securities laws of some states, if applicable, the common
shares may be sold in these jurisdictions only through registered or licensed
brokers or dealers. In addition, in some states the common shares may not
be
sold unless it has been registered or qualified for sale or an exemption
from
registration or qualification requirements is available and is complied
with.
-2-
We
have
advised the selling shareholders that the anti-manipulation rules of Regulation
M under the Exchange Act may apply to sales of shares in the market and to
the
activities of the selling shareholders and their affiliates. In addition,
we
will make copies of this prospectus (as it may be supplemented or amended
from
time to time) available to the selling shareholders for the purpose of
satisfying the prospectus delivery requirements of the Securities Act. The
selling shareholders may indemnify any broker-dealer that participates in
transactions involving the sale of the shares against certain liabilities,
including liabilities arising under the Securities Act.
We
have
agreed to indemnify the selling shareholders against liabilities, including
liabilities under the Securities Act and state securities laws, relating
to the
registration of the shares offered by this prospectus.
We
have
agreed with the selling shareholders to keep the registration statement of
which
this prospectus constitutes a part effective until the earlier of (1) such
time
as all of the shares covered by this prospectus have been disposed of pursuant
to and in accordance with the registration statement, (2) the date on which
the
shares (other than shares held by our Affiliates) may be sold pursuant to
Rule
144(k) of the Securities Act and (3) April 4, 2008.
-3-
