REGISTRATION RIGHTS AGREEMENT
This
Registration Rights Agreement (the "Agreement")
is
made and entered into as of April 28, 2006 (the "Effective
Date")
among
Houston American Energy Corp., a Delaware corporation (the "Company"),
and
Xxxxxxx Xxxxxx Xxxxxx Inc., a Texas corporation (“SMH”),
individually and as agent and attorney in fact for the purchasers set forth
on
Exhibit A
attached
hereto (each a “Purchaser”
and
collectively the “Purchasers”).
R
E C I T A L S:
A. The
Purchasers have purchased shares of common stock (the "Shares")
from
the Company pursuant to Subscription Agreements (each, a "Subscription
Agreement"
and
collectively, the "Subscription
Agreements")
by and
between the Company and each Purchaser.
B. The
Company has issued a warrant (the "Placement
Agent Warrant")
to
purchase shares of the Company's Common Stock to SMH.
C. The
Company, the Purchasers, and SMH desire to set forth the registration rights
to
be granted by the Company to the Purchasers and SMH.
NOW,
THEREFORE,
in
consideration of the mutual promises, representations, warranties, covenants,
and conditions set forth herein, in the Subscription Agreements, or otherwise,
the parties mutually agree as follows:
A
G R E E M E N T:
1. Certain
Definitions.
As used
in this Agreement, the following terms shall have the following respective
meanings:
"Approved
Market"
means
the Nasdaq National Market, the Nasdaq SmallCap Market, the New York Stock
Exchange, Inc., the American Stock Exchange, Inc., or the OTC Bulletin
Board.
"Blackout
Period"
means,
with respect to a registration, a period in each case commencing on the day
immediately after the Company notifies the Purchasers and SMH that they are
required, pursuant to Section 3(f), to suspend offers and sales of Registrable
Securities during which the Company, in the good faith judgment of its Board
of
Directors, determines (because of the existence of, or in anticipation of,
any
acquisition, financing activity, or other transaction involving the Company,
or
the unavailability for reasons beyond the Company's control of any required
financial statements, disclosure of information which is in its best interest
not to publicly disclose, or any other event or condition of similar
significance to the Company) that the registration and distribution of the
Registrable Securities to be covered by such registration statement, if any,
would be seriously detrimental to the Company and its shareholders and ending
on
the earlier of (1) the date upon which the material non-public information
commencing the Blackout Period is disclosed to the public or ceases to be
material and (2) such time as the Company notifies the selling Holders that
the
Company will no longer delay such filing of the Registration Statement,
recommence taking steps to make such Registration Statement effective, or allow
sales pursuant to such Registration Statement to resume; provided,
however,
that (a)
the Company shall limit its use of Blackout Periods, in the aggregate, to 60
Trading Days in any 12-month period and (b) no Blackout Period may commence
sooner than 60 days after the end of a prior Blackout Period.
"Business
Day"
means
any day of the year, other than a Saturday, Sunday, or other day on which the
Commission is required or authorized to close.
"Closing
Date"
means
April 28, 2006, or such other time as is mutually agreed between the
Company and the Purchasers for the closing of the sale referred to in Recital
A
above.
"Commission"
means
the Securities and Exchange Commission or any other federal agency at the time
administering the Securities Act.
"Common
Stock"
means
the common stock, $.001 par value per share, of the Company and any and all
shares of capital stock or other equity securities of: (i) the Company which
are
added to or exchanged or substituted for the Common Stock by reason of the
declaration of any stock dividend or stock split, the issuance of any
distribution or the reclassification, readjustment, recapitalization, or other
such modification of the capital structure of the Company; and (ii) any other
corporation, now or hereafter organized under the laws of any state or other
governmental authority, with which the Company is merged, which results from
any
consolidation or reorganization to which the Company is a party, or to which
is
sold all or substantially all of the shares or assets of the Company, if
immediately after such merger, consolidation, reorganization, or sale, the
Company or the stockholders of the Company own equity securities having in
the
aggregate more than 50% of the total voting power of such other
corporation.
"Equity
securities"
means
(i) any Common Stock, (ii) any security convertible, with or without
consideration, into any Common Stock (including any option to purchase such
a
convertible security), (iii) any security carrying any warrant or right to
subscribe to or purchase any Common Stock, or (iv) any such warrant or
right.
"Exchange
Act"
means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
of the Commission promulgated thereunder.
"Family
Member"
means
(a) with respect to any individual, such individual's spouse, any descendants
(whether natural or adopted), any trust all of the beneficial interests of
which
are owned by any of such individuals or by any of such individuals together
with
any organization described in Section 501(c)(3) of the Internal Revenue Code
of
1986, as amended, the estate of any such individual, and any corporation,
association, partnership, or limited liability company all of the equity
interests of which are owned by those above described individuals, trusts,
or
organizations and (b) with respect to any trust, the owners of the beneficial
interests of such trust.
"Form
S-1,"
“Form
SB-2”
and
"Form
S-3"
mean
such forms under the Securities Act as in effect on the date hereof.
"Holder"
means
each Purchaser, SMH, or any successor or Permitted Assignee of a Purchaser,
or
SMH who acquire rights in accordance with this Agreement with respect to the
Registrable Securities directly or indirectly from a Purchaser or SMH, including
from any Permitted Assignee.
"Inspector"
means
any attorney, accountant, or other agent retained by a Purchaser for the
purposes provided in Section 3(j).
"Offering
Price"
means
the price per share at which the Shares have been sold to the Purchasers
pursuant to the Subscription Agreements.
"Permitted
Assignee"
means
(a) with respect to a partnership, its partners or former partners in
accordance with their partnership interests, (b) with respect to a
corporation, its shareholders in accordance with their interest in the
corporation, (c) with respect to a limited liability company, its members
or former members in accordance with their interest in the limited liability
company, (d) with respect to an individual party, any Family Member of such
party, (e) an entity that is controlled by, controls, or is under common control
with a transferor, or (f) a party to this Agreement.
2
The
terms
"register,"
"registered,"
and
"registration"
refers
to a registration effected by preparing and filing a registration statement
in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registrable
Securities"
means
(i) shares of Common Stock issued to each Purchaser pursuant to the Subscription
Agreements, and (ii) shares of Common Stock issued or issuable to SMH pursuant
to the Placement Agent Warrant, but
in
each case excluding
(A) any
Registrable Securities that have been publicly sold or may be publicly sold
immediately without registration under the Securities Act either pursuant to
Rule 144(k) of the Securities Act or otherwise; (B) any Registrable Securities
sold by a person in a transaction pursuant to a registration statement filed
under the Securities Act; or (C) any Registrable Securities that are at the
time
subject to an effective registration statement under the Securities Act.
"Registration
Statement"
means
the registration statement required to be filed by the Company pursuant to
Section 3(a).
"Securities
Act"
means
the Securities Act of 1933, as amended, or any similar federal statute
promulgated in replacement thereof, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the
time.
"SEC
Effective Date"
means
the date the Registration Statement is declared effective by the
Commission.
"Trading
Day"
means a
day on whichever (a) the national securities exchange, (b) the Nasdaq Stock
Market, or (c) such other securities market, in any such case which at the
time
constitutes the principal securities market for the Common Stock, is open for
general trading of securities.
2. Registration.
(a) Registration
on Form S-1, Form SB-2 or Form S-3.
As
promptly as reasonably practicable after the date hereof, and within 60 days
following the Closing Date, the Company shall file with the Commission a shelf
registration statement on Form S-1, Form SB-2 or, if available, Form S-3
relating to the resale by the Holders of all of the Registrable Securities
on a
continuous basis pursuant to Rule 415 (except if the Company is not then
eligible to register for resale the Registrable Securities on such forms, in
which case such registration shall be on another appropriate form); provided,
however,
that
the Company shall not be obligated to effect any such registration,
qualification, or compliance pursuant to this Section 2(a), or keep such
registration effective pursuant to Section 3: (i) in any particular jurisdiction
in which the Company would be required to qualify to do business as a foreign
corporation or as a dealer in securities under the securities or blue sky laws
of such jurisdiction or to execute a general consent to service of process
in
effecting such registration, qualification, or compliance, in each case where
it
has not already done so; or (ii) during any Blackout Period.
(b) Intentionally
Omitted.
3.
Registration
Procedures.
In the
case of each registration, qualification, or compliance effected by the Company
pursuant to Section 2 hereof, the Company will keep each Holder including
securities therein reasonably advised in writing (which may include e-mail)
as
to the initiation of each registration, qualification, and compliance and as
to
the completion thereof. With respect to any registration statement filed
pursuant to Section 2, the Company will use its best efforts
to:
3
(a) prepare
and file with the Commission with respect to such Registrable Securities, a
registration statement on Form S-1, or any other form for which the Company
then
qualifies or which counsel for the Company shall deem appropriate, and which
form shall be available for the sale of the Registrable Securities in accordance
with the intended method(s) of distribution thereof, and use its best efforts
to
cause such registration statement to become effective as soon as possible and
remain effective at least for a period ending with the first to occur of (i)
the
sale of all Registrable Securities covered by the registration statement in
accordance with the registration statement, (ii) the availability under Rule
144
for the Holder to immediately, freely resell without restriction all Registrable
Securities covered by the registration statement, or (iii) one year after
expiration of the term of the Warrants (in each case, the
"Effectiveness Period");
provided,
however,
if at
the end of the one-year period referred to in clause (iii), any Holder is not
able to immediately, freely resell all Registrable Securities that it owns,
the
Effectiveness Period shall continue until terminated pursuant to clause (i)
or
(ii); and provided
that no
later than two business days before filing with the Commission a registration
statement or prospectus or any amendments or supplements thereto, the Company
shall (i) furnish to (A) one special counsel ("Holders
Counsel")
selected by the Company for the benefit of the Holders, copies of all such
documents proposed to be filed (excluding any exhibits other than applicable
underwriting documents), in substantially the form proposed to be filed, which
documents shall be subject to the review of such Holders Counsel, and (ii)
notify each Holder of Registrable Securities covered by such registration
statement of any stop order issued or threatened by the Commission and take
all
reasonable actions required to prevent the entry of such stop order or to remove
it if entered;
(b) if
a
registration statement is subject to review by the Commission, promptly respond
to all comments and diligently pursue resolution of any comments to the
satisfaction of the Commission;
(c) 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 during the Effectiveness
Period (but in any event at least until expiration of the 90-day period referred
to in Section 4(3) of the Securities Act and Rule 174, or any successor thereto,
thereunder, if applicable), and comply with the provisions of the Securities
Act
with respect to the disposition of all securities covered by such registration
statement during such period in accordance with the intended method(s) of
disposition by the sellers thereof set forth in such registration
statement;
(d) furnish,
without charge, to each Holder of Registrable Securities covered by such
registration statement (i) a reasonable number of copies of such registration
statement (including any exhibits thereto other than exhibits incorporated
by
reference), each amendment and supplement thereto as such Holder may request,
(ii) such number of copies of the prospectus included in such registration
statement (including each preliminary prospectus and any other prospectus filed
under Rule 424 under the Securities Act) as such Holders may request, in
conformity with the requirements of the Securities Act, and (iii) such other
documents as such Holder may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such Holder, but only during
the Effectiveness Period;
(e) use
its
best efforts to register or qualify such Registrable Securities under such
other
applicable securities or blue sky laws of such jurisdictions as any Holder
of
Registrable Securities covered by such registration statement reasonably
requests as may be necessary for the marketability of the Registrable Securities
(such request to be made by the time the applicable registration statement
is
deemed effective by the Commission) and do any and all other acts and things
which may be reasonably necessary or advisable to enable such Holder to
consummate the disposition in such jurisdictions of the Registrable Securities
owned by such Holder; provided
that the
Company shall not be required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
paragraph (e), (ii) subject itself to taxation in any such jurisdiction, or
(iii) consent to general service of process in any such
jurisdiction;
4
(f) as
promptly as practicable after becoming aware of such event, notify each Holder
of such Registrable Securities at any time when a prospectus relating thereto
is
required to be delivered under the Securities Act of the happening of any event
which comes to the Company's attention if as a result of such event the
prospectus included in such registration statement contains 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 and the
Company shall promptly prepare and furnish to such Holder a supplement or
amendment to such prospectus (or prepare and file appropriate reports under
the
Exchange Act) so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus shall not contain an untrue statement
of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, unless suspension
of
the use of such prospectus otherwise is authorized herein or in the event of
a
Blackout Period, in which case no supplement or amendment need be furnished
(or
Exchange Act filing made) until the termination of such suspension or Blackout
Period;
(g) comply,
and continue to comply during the period that such registration statement is
effective under the Securities Act, in all material respects with the Securities
Act and the Exchange Act and with all applicable rules and regulations of the
Commission with respect to the disposition of all securities covered by such
registration statement, and make available to its security holders, as soon
as
reasonably practicable, an earnings statement covering the period of at least
12
months, but not more than 18 months, beginning with the first full calendar
month after the SEC Effective Date, which earnings statement shall satisfy
the
provisions of Section 11(a) of the Securities Act.
(h) as
promptly as practicable after becoming aware of such event, notify each Holder
of Registrable Securities being offered or sold pursuant to the Registration
Statement of the issuance by the Commission of any stop order or other
suspension of effectiveness of the Registration Statement at the earliest
possible time;
(i) permit
the Holders of Registrable Securities being included in the Registration
Statement and their legal counsel, at such Holders' sole cost and expense
(except as otherwise specifically provided in Section 5) to review and have
a
reasonable opportunity to comment on the Registration Statement and all
amendments and supplements thereto at least two Business Days prior to their
filing with the Commission;
(j) make
available for inspection by any Holder and any Inspector retained by such
Holder, at such Holder's sole expense, all records as shall be reasonably
necessary to enable such Holder to exercise its due diligence responsibility,
and cause the Company's officers, directors, and employees to supply all
information which such Holder or any Inspector may reasonably request for
purposes of such due diligence; provided,
however, that
such
Holder shall hold in confidence and shall not make any disclosure of any record
or other information which the Company determines in good faith to be
confidential, and of which determination such Holder is so notified at the
time
such Holder receives such information, unless (i) the disclosure of such record
is necessary to avoid or correct a misstatement or omission in the Registration
Statement and a reasonable time prior to such disclosure the Holder shall have
informed the Company of the need to so correct such misstatement or omission
and
the Company shall have failed to correct such misstatement of omission, (ii)
the
release of such record is ordered pursuant to a subpoena or other order from
a
court or governmental body of competent jurisdiction, or (iii) the information
in such record has been made generally available to the public other than by
disclosure in violation of this or any other agreement. The Company shall not
be
required to disclose any confidential information in such records to any
Inspector until and unless such Inspector shall have entered into a
confidentiality agreement with the Company with respect thereto, substantially
in the form of this Section 3(j), which agreement shall permit such Inspector
to
disclose records to the Holder who has retained such Inspector. Each Holder
agrees that it shall, upon learning that disclosure of such records is sought
in
or by a court or governmental body of competent jurisdiction or through other
means, give prompt notice to the Company and allow the Company, at the Company's
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, the records deemed confidential. The Company shall
hold
in confidence and shall not make any disclosure of information concerning a
Holder provided to the Company pursuant to this Agreement unless (i) disclosure
of such information is necessary to comply with federal or state securities
laws, (ii) disclosure of such information to the Staff of the Division of
Corporation Finance is necessary to respond to comments raised by the Staff
in
its review of the Registration Statement, (iii) disclosure of such information
is necessary to avoid or correct a misstatement or omission in the Registration
Statement, (iv) release of such information is ordered pursuant to a subpoena
or
other order from a court or governmental body of competent jurisdiction, or
(v)
such information has been made generally available to the public other than
by
disclosure in violation of this or any other agreement. The Company agrees
that
it shall, upon learning that disclosure of such information concerning a Holder
is sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt notice to such Holder and allow such Holder,
at
such Holder's expense, to undertake appropriate action to prevent disclosure
of,
or to obtain a protective order for, such information;
5
(k) use
its
best efforts to cause all the Registrable Securities covered by the Registration
Statement to be listed or quoted on the principal securities market on which
securities of the same class or series issued by the Company are then listed
or
traded;
(l)
provide
a
transfer agent and registrar, which may be a single entity, for the Registrable
Securities at all times;
(m) cooperate
with the Holders of Registrable Securities being offered pursuant to the
Registration Statement to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing Registrable
Securities to be offered pursuant to the Registration Statement and enable
such
certificates to be in such denominations or amounts as the Holders may
reasonably request and registered in such names as the Holders may request;
and
(n) take
all
other reasonable actions necessary to expedite and facilitate disposition by
the
Holders of the Registrable Securities pursuant to the Registration
Statement.
4.
Suspension
of Offers and Sales.
Each
Holder of Registrable Securities agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in Section
3(f)
hereof or of the commencement of an Blackout Period, such Holder shall
discontinue disposition of Registrable Securities pursuant to the registration
statement covering such Registrable Securities until such Holder's receipt
of
the copies of the supplemented or amended prospectus contemplated by Section
3(f) hereof or notice of the end of the Blackout Period, and, if so directed
by
the Company, such Holder shall deliver to the Company (at the Company's expense)
all copies (including, without limitation, any and all drafts), other than
permanent file copies, then in such Holder's possession, of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice. In the event the Company shall give any such notice, the period
mentioned in Section 3(a)(iii) hereof shall be extended by the greater of (i)
ten business days or (ii) the number of days during the period from and
including the date of the giving of such notice pursuant to Section 3(f) hereof
to and including the date when each Holder of Registrable Securities covered
by
such registration statement shall have received the copies of the supplemented
or amended prospectus contemplated by Section 3(f) hereof.
5.
Registration
Expenses.
The
Company shall pay all expenses in connection with any registration, including,
without limitation, all registration, filing, stock exchange and NASD fees,
printing expenses, all fees and expenses of complying with securities or blue
sky laws, the fees and disbursements of counsel for the Company and of its
independent accountants, and the reasonable fees and disbursements of a Holders
Counsel; provided that each Holder shall pay for its own underwriting discounts
and commissions and transfer taxes. Except as provided above in this Section
5
and in Section 9, the Company shall not be responsible for the expenses of
any
attorney or other advisor employed by a Holder of Registrable
Securities.
6
6. Assignment
of Rights.
No
Holder may assign its rights under this Agreement to any party without the
prior
written consent of the Company; provided,
however,
that a
Holder may assign its rights under this Agreement without such restrictions
to a
Permitted Assignee as long as (a) such transfer or assignment is effected in
accordance with applicable securities laws; (b) such transferee or assignee
agrees in writing to become subject to the terms of this Agreement; and (c)
the
Company is given written notice by such Holder of such transfer or assignment,
stating the name and address of the transferee or assignee and identifying
the
Registrable Securities with respect to which such rights are being transferred
or assigned.
7.
Information
by Holder.
The
Holder or Holders of Registrable Securities included in any registration shall
furnish to the Company such information regarding such Holder or Holders and
the
distribution proposed by such Holder or Holders as the Company may request
in
writing.
8.
Delay
of Registration.
No
Holder shall have any right to obtain or seek an injunction restraining or
otherwise delaying any registration pursuant to this Agreement as the result
of
any controversy that might arise with respect to the interpretation or
implementation of this Agreement.
9.
Indemnification.
(a) In
the
event of the offer and sale of Registrable Securities held by Holders under
the
Securities Act, the Company shall, and hereby does, indemnify and hold harmless,
to the fullest extent permitted by law, each Holder, its directors, officers,
partners, each other person who participates as an underwriter in the offering
or sale of such securities, and each other person, if any, who controls or
is
under common control with such Holder or any such underwriter within the meaning
of Section 15 of the Securities Act, against any losses, claims, damages, or
liabilities, joint or several, and expenses to which the Holder or any such
director, officer, partner, or underwriter or controlling person may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages, liabilities, or expenses (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 shares 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 in light of the
circumstances in which they were made not misleading, and the Company shall
reimburse the Holder, and each such director, officer, partner, underwriter,
and
controlling person for any legal or any other expenses reasonably incurred
by
them in connection with investigating, defending, or settling any such loss,
claim, damage, liability, action, or proceeding; provided that the foregoing
shall not apply to, and the Company shall not be liable, in any such case (i)
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 in or omission or alleged omission from
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 or on behalf of such Holder specifically stating that it is for
use
in the preparation thereof, (ii) provided that the Company has complied with
its
obligations hereunder to furnish such Holder with copies of the applicable
prospectus, if the person asserting any such loss, claim, damage, or liability
(or action or proceeding in respect thereof) who purchased the Registrable
Securities that are the subject thereof did not receive a copy of an amended
preliminary prospectus or the final prospectus (or the final prospectus as
amended or supplemented) at or prior to the written confirmation of the sale
of
such Registrable Securities to such person because of the failure of such Holder
or underwriter to so provide such amended preliminary or final prospectus and
the untrue statement or alleged untrue statement or omission or alleged omission
of a material fact made in such preliminary prospectus was corrected in the
amended preliminary or final prospectus (or the final prospectus as amended
or
supplemented), or (iii) provided that the plan of distribution mechanics
described in the applicable prospectus are, in form and substance, reasonable
and customary for transactions of this type, to the extent that the Holders
failed to comply with the terms of such plan of distribution mechanics. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Holders, or any such director, officer, partner,
underwriter, or controlling person and shall survive the transfer of such shares
by the Holder.
7
(b) As
a
condition to including any Registrable Securities to be offered by a Holder
in
any registration statement filed pursuant to this Agreement, each such Holder
agrees, acting severally and not jointly and severally, to be bound by the
terms
of this Section 9 and to indemnify and hold harmless, to the fullest extent
permitted by law, the Company, its directors and officers, and each other
person, if any, who controls the Company within the meaning of Section 15 of
the
Securities Act, legal counsel and accountants for the Company, any underwriter,
any other Holder selling securities in such registration statement, and any
controlling person within the meaning of the Securities Act of any such
underwriter or other Holder, against any losses, claims, damages, or
liabilities, joint or several, to which the Company 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 (i) an untrue statement or alleged untrue 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 about such Holder as a Holder of the Company furnished
to
the Company, (ii) provided that the Company has complied with its obligations
hereunder to furnish such Holder with copies of the applicable prospectus,
if
the person asserting any such loss, claim, damage, or liability (or action
or
proceeding in respect thereof) who purchased the Registrable Securities that
are
the subject thereof did not receive a copy of an amended preliminary prospectus
or the final prospectus (or the final prospectus as amended or supplemented)
at
or prior to the written confirmation of the sale of such Registrable Securities
to such person because of the failure of such Holder or underwriter to so
provide such amended preliminary or final prospectus and the untrue statement
or
alleged untrue statement or omission or alleged omission of a material fact
made
in such preliminary prospectus was corrected in the amended preliminary or
final
prospectus (or the final prospectus as amended or supplemented), or (iii)
provided that the plan of distribution mechanics described in the applicable
prospectus are, in form and substance, reasonable and customary for transactions
of this type, to the extent that the Holders failed to comply with the terms
of
such plan of distribution mechanics. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of the Holders,
or any such director, officer, partner, underwriter, or controlling person
and
shall survive the transfer of such shares by the Holder, and such Holder shall
reimburse the Company, and each such director, officer, legal counsel and
accountants, underwriter, other Holder, and controlling person for any legal
or
other expenses reasonably incurred by them in connection with investigating,
defending, or settling and such loss, claim, damage, liability, action, or
proceeding; provided,
however,
that
such indemnity agreement found in this Section 9(b) shall in no event exceed
the
gross proceeds from the offering received by such Holder. 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 by any Holder of such shares.
8
(c) Promptly
after receipt by an indemnified party of notice of the commencement of any
action or proceeding involving a claim referred to in Section 9(a) or (b) hereof
(including any governmental action), such indemnified party shall, if a claim
in
respect thereof is to be made against an indemnifying party, give written notice
to the indemnifying party 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 Section 9(a) or (b)
hereof, except to the extent that the indemnifying party is materially and
actually prejudiced by such failure to give notice. In case any such action
is
brought against an indemnified party, unless in the reasonable judgment of
counsel to such indemnified party a conflict of interest between such
indemnified and indemnifying parties may exist or the indemnified party may
have
defenses not available to the indemnifying party in respect of such claim,
the
indemnifying party shall be entitled to participate in and to assume the defense
thereof, 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, unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties arises in respect of such claim after
the
assumption of the defenses thereof or the indemnifying party fails to defend
such claim in a diligent manner, other than reasonable costs of investigation.
Neither an indemnified nor an indemnifying party shall be liable for any
settlement of any action or proceeding effected without its written consent.
No
indemnifying party shall, without the written 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 of such
claim or litigation. Notwithstanding anything to the contrary set forth herein,
and without limiting any of the rights set forth above, in any event any party
shall have the right to retain, at its own expense, counsel with respect to
the
defense of a claim.
(d) In
the
event that an indemnifying party does or is not permitted to assume the defense
of an action pursuant to Section 9(c) or in the case of the expense
reimbursement obligation set forth in Section 9(a) and (b), the indemnification
required by Section 9(a) and (b) hereof shall be made by periodic payments
of
the amount thereof during the course of the investigation or defense, as and
when bills received or expenses, losses, damages, or liabilities are
incurred.
(e) If
the
indemnification provided for in this Section 9 is held by a court of competent
jurisdiction to be unavailable to an indemnified party with respect to any
loss,
liability, claim, damage, or expense referred to herein, the indemnifying party,
in lieu of indemnifying such indemnified party hereunder, shall (i) contribute
to the amount paid or payable by such indemnified party as a result of such
loss, liability, claim, damage, or expense as is appropriate to reflect the
proportionate relative fault of the indemnifying party on the one hand and
the
indemnified party on the other (determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission
relates to information supplied by the indemnifying party or the indemnified
party and the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such untrue statement or omission), or (ii)
if
the allocation provided by clause (i) above is not permitted by applicable
law
or provides a lesser sum to the indemnified party than the amount hereinafter
calculated, not only the proportionate relative fault of the indemnifying party
and the indemnified party, but also the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other,
as
well as any other relevant equitable considerations. No indemnified party guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any indemnifying party
who was not guilty of such fraudulent misrepresentation.
(f) Other
Indemnification.
Indemnification similar to that specified in the preceding subsections of this
Section 9 (with appropriate modifications) shall be given by the Company and
each Holder of Registrable Securities with respect to any required registration
or other qualification of securities under any federal or state law or
regulation or governmental authority other than the Securities Act.
9
10. Miscellaneous.
(a) Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Texas and the United States of America, both substantive and remedial.
Any
judicial proceeding brought against either of the parties to this agreement
or
any dispute arising out of this Agreement or any matter related hereto shall
be
brought in the courts of the State of Texas, Xxxxxx County, or in the United
States District Court for the Southern District of Texas and, by its execution
and delivery of this agreement, each party to this Agreement accepts the
jurisdiction of such courts. The foregoing consent to jurisdiction shall not
be
deemed to confer rights on any person other than the parties to this
Agreement.
(b) Successors
and Assigns.
Except
as otherwise provided herein, the provisions hereof shall inure to the benefit
of, and be binding upon, the successors, Permitted Assigns, executors, and
administrators of the parties hereto. In the event the Company merges with,
or
is otherwise acquired by, a direct or indirect subsidiary of a publicly traded
company, the Company shall condition the merger or acquisition on the assumption
by such parent company of the Company's obligations under this Agreement.
(c)
Entire
Agreement.
This
Agreement constitutes the full and entire understanding and agreement between
the parties with regard to the subjects hereof.
(d) Notices,
etc.
All
notices or other communications which are required or permitted under this
Agreement shall be in writing and sufficient if delivered by hand, by facsimile
transmission, by registered or certified mail, postage pre-paid, by electronic
mail, or by courier or overnight carrier, to the persons at the addresses set
forth below (or at such other address as may be provided hereunder), and shall
be deemed to have been delivered as of the date so delivered:
|
If
to the Company:
|
|
000
Xxxxxx, Xxxxx 0000
|
|
Xxxxxxx,
Xxxxx 00000
|
|
Facsimile:
(000) 000-0000
|
|
e-mail:
xxx@xxxxxxxxxxxxxxxxxxxxx.xxx
|
|
If
to the Purchasers:
|
To
each Purchaser at the address
|
|
set
forth on Exhibit A
|
|
with
a copy to:
|
Xxxxxxx
Xxxxxx Xxxxxx Inc.
|
|
000
Xxxxxx, Xxxxx 0000
|
|
Xxxxxxx,
Xxxxx 00000
|
|
Attention:
Xxxx X. Xxxxxxx
|
|
Facsimile:
(000) 000-0000
|
|
e-mail:
xxxx.xxxxxxx@xxxxxxxx.xxx
|
or
at
such other address as any party shall have furnished to the other parties in
writing.
(e) Delays
or Omissions.
No
delay or omission to exercise any right, power, or remedy accruing to any Holder
of any Registrable Securities, upon any breach or default of the Company under
this Agreement, shall impair any such right, power, or remedy of such Holder
nor
shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of or in any similar breach or default thereunder
occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring.
Any
waiver, permit, consent, or approval of any kind or character on the part of
any
Holder of any breach or default under this Agreement, or any waiver on the
part
of any Holder of any provisions or conditions of this Agreement, must be in
writing and shall be effective only to the extent specifically set forth in
such
writing. All remedies, either under this Agreement, or by law or otherwise
afforded to any holder, shall be cumulative and not
alternative.
10
(f) 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.
(g) Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall
be
enforceable against the parties actually executing such counterparts, and all
of
which together shall constitute one instrument.
(h) Severability.
In the
case any provision of this Agreement shall be invalid, illegal, or
unenforceable, the validity, legality, and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
(i) Amendments.
The
provisions of this Agreement may be amended at any time and from time to time,
and particular provisions of this Agreement may be waived, with and only with
an
agreement or consent in writing signed by the Company and by the holders of
a
majority of the number of shares of Registrable Securities outstanding as of
the
date of such amendment or waiver. The Purchasers acknowledge that by the
operation of this Section 10(i), the holders of a majority of the outstanding
Registrable Securities may have the right and power to diminish or eliminate
all
rights of the Purchasers under this Agreement.
(j) Limitation
on Subsequent Registration Rights.
After
the date of this Agreement, the Company shall not, without the prior written
consent of the Holders of at least a majority of the Registrable Shares then
outstanding, enter into any agreement with any holder or prospective holder
of
any securities of the Company that would grant such holder registration rights
senior to those granted to the Holder hereunder.
11
This
Registration Rights Agreement is hereby executed as of the date first above
written.
|
COMPANY:
|
|||||
|
By:
|
|||||
|
Name:
|
|||||
|
Title:
|
|||||
|
Xxxxxxx
Xxxxxx Xxxxxx Inc., Individually
and as Agent and Attorney in Fact for the Purchasers listed on Exhibit
A
attached hereto
|
|||||
|
By:
|
|||||
|
Name:
|
|||||
|
Title:
|
|||||
12
Exhibit
A
Purchaser
Information
13
