EXHIBIT 4.12
FORM OF
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") is made and entered
into as of the ________ day of ___, 2002, by and among Magnum Hunter Resources,
Inc., a Nevada corporation (the "Company"), Pintail Energy, Inc., a Texas
corporation ("MERGER SUB"), and each of the parties listed as Owners on Exhibit
A hereto (collectively, the "OWNERS" and, individually, an "OWNER"). Certain
terms used herein are defined in Section 1 of this Agreement.
Background. The Company, Prize Energy Corp., a Delaware corporation
("PRIZE"), and Merger Sub, have entered into a transaction, which was
consummated on the date hereof, in which Prize was merged with and into Merger
Sub and became a wholly-owned subsidiary of the Company and the stockholders of
Prize received a combination of cash and shares of capital stock in the Company
in exchange for their shares of capital stock in Prize (the "MERGER"). Prize and
the Owners are parties to an Amended and Restated Registration Rights Agreement
dated February 8, 2000 (the "PRIOR PRIZE AGREEMENT"). Pursuant to the Prior
Prize Agreement, the Owners had the right to trigger a request for a shelf
registration (as defined in the Prior Prize Agreement). The parties hereto
desire to enter into this Agreement in order to terminate and replace the Prior
Prize Agreement as to the Owners and to set forth the rights of the parties
hereto with respect to the registration of shares of capital stock of the
Company. The Prior Prize Agreement is hereby terminated and canceled as to the
Owners, effective on the date hereof, and shall have no further force or effect.
In consideration of the Merger and the mutual covenants and agreements
herein set forth, the parties to this Agreement hereby agree, subject to the
terms and conditions hereinafter set forth, as follows:
1. Definitions. As used herein, unless the context otherwise requires, the
following terms shall have the following respective meanings:
Commission: The U.S. Securities and Exchange Commission or any other
governmental authority at the time administering the Securities Act or the
Exchange Act.
Company Public Sale: Any public offering by the Company made pursuant to a
registration statement of the Company filed with the Commission under the
Securities Act of its own common stock for its own account, except (a) a
registration pursuant to the Shelf Registration under Section 2.1 below, (b) a
registration pursuant to a Registration Statement on Form S-4 or S-8 or any
successor form to such Forms, (c) a registration of securities solely relating
to an offering and sale to employees and/or directors of the Company pursuant to
any employee stock plan or other employee benefit plan arrangement, (d) a
registration of securities issued solely in an acquisition or business
combination, or (e) a universal shelf registration
statement to the extent sales of securities thereunder are not made in an
underwritten offering.
Exchange Act: The U.S. Securities Exchange Act of 1934, as amended, or any
similar or successor 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 Exchange Act shall include a reference to the
comparable section, if any, of any such similar or successor federal statute.
Majority Owners: At any time, the owner or owners of more than 50% of all
Registrable Securities then outstanding.
Person: A corporation, an association, a partnership, a limited liability
company, an individual, a joint venture, a trust or estate, an unincorporated
organization, or any other entity or organization, including a government or any
department or agency or political subdivision thereof.
Registrable Securities: Any of the capital stock of the Company owned by an
Owner, including all capital stock of the Company issued upon exercise of
options or warrants held by an Owner, and any securities issued or issuable with
respect to any such capital stock by way of distribution or in connection with
any reorganization or other 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) such securities shall
have been distributed to the public pursuant to Rules 144, Rule 144A or 145 (or
any successor provision) under the Securities Act, (c) such securities 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)
such securities shall have ceased to be outstanding.
Registration Expenses: All reasonable expenses incident to the Company's
performance of or compliance with this Agreement, including, without limitation,
all registration, filing and National Association of Securities Dealers fees,
all fees and expenses of complying with applicable laws (including 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, without
limitation, the expenses of any special audits or "cold comfort" letters
required by or incident to such performance and compliance, the fees and
expenses of any special experts, including independent petroleum engineers,
retained by the Company in connection with such offering, all travel expenses of
the Company's officers and employees and any other expenses of the Company in
connection with attending or hosting meetings with prospective purchasers of the
offered securities, and any fees and disbursements of underwriters customarily
paid by issuers or sellers of securities, but excluding Selling Expenses, if
any; provided, that, in any case where Registration Expenses are not to be borne
by the Company, such expenses shall not include salaries of Company personnel or
general overhead expenses of the Company, auditing fees, premiums or other
expenses relating
2
to liability insurance required by underwriters of the Company or other expenses
for the preparation of financial statements or other data normally prepared by
the Company in the ordinary course of its business or which the Company would
have incurred in any event.
Securities Act: The U.S. Securities Act of 1933, as amended, or any similar
or successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. References to a
particular section of the Securities Act shall include a reference to the
comparable section, if any, of any such similar or successor federal statute.
Selling Expenses: Underwriting discounts and commissions and stock transfer
taxes relating to securities registered by the Company.
Shelf Registration: As defined in Section 2.1 of this Agreement.
2. Registration under Securities Act, etc.
2.1 Shelf Registration.
(a) Filing. The Company *[has prepared and filed with the Commission]*
**[will prepare and file with the Commission, as soon as possible and in no
event later than the fifth day following the date hereof,]** a "shelf"
registration statement on an appropriate form pursuant to Rule 415 under the
Securities Act (or any similar rule that may be adopted by the Commission)
relating to the offer and sale of the Registrable Securities by the holders
thereof from time to time in accordance with the methods of distribution elected
by such holders and set forth in such shelf registration statement (the "SHELF
REGISTRATION"). The parties acknowledge that it is their mutual intent to have
the Shelf Registration statement declared effective as soon as reasonably
possible following the consummation of the Merger. The Company will use its
reasonable best efforts to have the Shelf Registration declared effective under
the Securities Act as soon as reasonably practicable following filing thereof
(but not earlier than the Effective Time of the Merger). The Company will pay
all Registration Expenses in connection with the Shelf Registration.
(b) Continued Effectiveness. Subject to Section 2.1(c) below, so long as
permitted by applicable law, the Company shall use its reasonable best efforts
to keep the Shelf Registration continuously effective in order to permit the
prospectus forming a part thereof to be usable by holders of Registrable
Securities until the earlier of the date on which (i) all Registrable Securities
covered by the Shelf Registration have been sold pursuant to the Shelf
Registration or (ii) all restrictive legends have been removed from certificates
representing the Registrable Securities and counsel to the Company, reasonably
acceptable to the Majority Holder, shall have delivered a written opinion, which
opinion shall be satisfactory in form, scope and substance, addressed to each
holder of Registrable Securities affected thereby, to the effect that
registration of the
----------
* [PARTIES ANTICIPATE THE FIRST ALTERNATIVE]*
** [SECOND ALTERNATIVE WILL APPLY IF THE FIRST IS IMPOSSIBLE OR
IMPRACTICABLE]]**
3
Registrable Securities is (A) no longer required under the Securities Act and
(B) such holder may sell all remaining Registrable Securities in the open market
in the U.S. free from any limitations as to volume or manner of sale and without
being required to file any forms or reports with the Commission under the
Securities Act (the "REGISTRATION PERIOD"). The Company shall be deemed not to
have used its reasonable best efforts to keep the Shelf Registration effective
during the Registration Period if, among other things, it voluntarily takes any
action that would result in holders of Registrable Securities covered thereby
not to be able to offer and sell such Registrable Securities during the
Registration Period, unless such action is required by applicable law, is
pursuant to clause (c) below or is otherwise permitted under this Agreement, and
in such cases, so long as the Company promptly thereafter complies with the
applicable requirements of Section 2.3 hereof. Following the expiration of the
Registration Period, the Company shall have the right to terminate the
effectiveness of the Shelf Registration.
(c) Suspension of Use of Shelf Registration. The Company may, upon giving
prompt written notice (the "NOTICE") to the holders of Registrable Securities,
suspend the use of the Shelf Registration (a "SHELF SUSPENSION") for a period
not to exceed an aggregate of ten business days in any three month period for
valid business reasons (not including avoidance of the Company's obligations
hereunder), including without limitation the acquisition or disposition of
assets, public filings with the Commission, pending corporate developments and
similar events. The Company shall have no obligation to inform such holders of
the reason for such Shelf Suspension other than to inform such holders that such
action is being taken pursuant to this Section 2.1(c), and, except as required
by law, such holders and their affiliates (as defined in the Securities Act)
shall not make any public disclosure regarding, and shall treat as confidential,
any Shelf Suspension or Notice. In the event of a Shelf Suspension, such holders
agree to suspend use of the prospectus related to the Shelf Registration in
connection with any sale or purchase of or offer to sell or purchase Registrable
Securities upon receipt of the Notice. The Company shall promptly notify the
holders upon the termination of any Shelf Suspension, promptly amend or
supplement the Shelf Registration following the termination of such Shelf
Suspension, if necessary, so it does not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein in
order to make the statements therein not misleading, and furnish to such holders
such numbers of copies of the prospectus therein as so amended or supplemented
as such holders may reasonably request. The Company agrees, if necessary, to
supplement or make amendments to the Shelf Registration, if required by the
registration form used by the Company for the Shelf Registration or by the
instructions applicable to such registration form or by the Securities Act.
(d) Selection of Underwriters. The methods of distribution of Registrable
Securities under the Shelf Registration designated by the Owners may include one
or more underwritten offerings. The underwriter or underwriters thereof shall be
selected by the Majority Owners with the approval of the Company.
2.2 Incidental Registration.
(a) Right to Include Registrable Securities. If the Company at any time
prior to June
4
30, 2004 proposes to register any of its equity securities under the Securities
Act in a Company Public Sale, and such securities are to be distributed by or
through one or more underwriters, each such time it will give prompt (and in any
event no later than five business days prior to the anticipated filing date)
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 five calendar days after receipt of any such
notice (which request shall specify the Registrable Securities intended to be
disposed of by such holder in such underwritten offering), the Company will use
its reasonable best efforts to effect the registration under the Securities Act
of all Registrable Securities which the Company has been so requested to
register by a holder or holders of Registrable Securities, to the extent
requisite to permit the disposition through such underwriter or underwriters of
the Registrable Securities so to be registered and to cause such underwriter or
underwriters to permit the Registrable Securities requested to be included in
the offering to be so included on the same terms and conditions as any similar
securities of the Company and any other securityholder included therein and to
permit the sale or other disposition of the Registrable Securities in accordance
with the intended method of distribution thereof; 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, after
consultation with the holder or holders of Registrable Securities which have
requested inclusion in such registration, not to register or to delay
registration of all the securities being registered under such registration
statement, the Company may, at its election, give written notice of such
determination to each such 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), 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. Any
holder of Registrable Securities shall have the right to withdraw its request
for the inclusion of its Registrable Securities in any registration statement
pursuant to this Section 2.2(a) by giving written notice to the Company of its
request to withdraw at any time up to one business day prior to the
effectiveness of such registration statement. No registration effected under
this Section 2.2 shall relieve the Company of its obligation to effect any
registration under Section 2.1 above. The Company will pay all Registration
Expenses in connection with each registration of Registrable Securities
requested pursuant to this Section 2.2.
(b) Priority in Incidental Registrations. If the Company at any time
proposes to register any of its equity securities under the Securities Act as
contemplated by Section 2.2(a) above, the Company will, if requested by any
holder of Registrable Securities as provided in said Section 2.2(a) and subject
to the provisions of this Section 2.2(b), arrange for such underwriters to
include all of the Registrable Securities to be offered and sold by such holder
among the securities to be distributed by such underwriters. In the event that
the managing underwriter of any such underwritten offering shall inform the
Company and the holder or holders of Registrable Securities requesting the
inclusion of their securities in such offering in writing of its reasonable and
good faith belief that the size of the offering that such holders, the Company
and/or any other securityholders intend to make is such that the success of the
offering would be materially and adversely affected by the inclusion of the
Registrable Securities requested to be included, then the
5
Company shall include in such offering only securities proposed to be sold by
the Company for its own account and Registrable Securities and securities having
registration rights that are pari passu to those relating to the Registrable
Securities (the "PARI PASSU SECURITIES"). The Company may include in such
offering all securities proposed by the Company to be sold for its own account
and may decrease the number of Registrable Securities and Pari Passu Securities
so proposed to be sold and so requested to be included in such offering (pro
rata on the basis of the percentage of the securities, by number of shares, of
the Company requested to be included in the offering by the holder or holders of
such Registrable Securities and Pari Passu Securities) to the extent necessary
to reduce the number of securities to be included in such offering to the level
recommended by the managing underwriter. If, prior to the effectiveness of any
registration statement contemplated by this Section 2.2, the managing
underwriter reasonably determines in good faith, and gives written notice to the
holders of Registrable Securities requesting the inclusion of their securities
in such offering, that in its opinion the underwriting cannot be achieved at a
price acceptable to the Company due to the size of the offering, the Company may
further decrease the number of Registrable Securities and Pari Passu Securities
in the manner described in the preceding sentence to the minimum extent
necessary in order to achieve a price acceptable to the Company. The holder or
holders of Registrable Securities to be distributed by such underwriters shall
be parties to the underwriting agreement between the Company and such
underwriters and any necessary or appropriate custody agreements which are
reasonably acceptable to such holders, shall execute appropriate powers of
attorney which are reasonably acceptable to such holders, and shall take all
such actions as are reasonably requested by the managing underwriters in order
to expedite or facilitate the registration or the disposition of such
Registrable Securities, provided, however, that (i) such holder or holders of
Registrable Securities participating in such registration shall not be required
to make any representations or warranties other than those relating solely to
such holder, its Registrable Securities, and its intended method of distribution
and (ii) the liability of each such holder to any underwriter under such
underwriting agreement will be limited to liability arising from misstatements
or omissions regarding such holder, its Registrable Securities and its intended
method of distribution and any such liability shall not exceed an amount equal
to the net proceeds such holder derives from such registration
2.3 Registration Procedures. Whenever the Company is required to use its
reasonable best efforts to effect the registration of any Registrable Securities
under the Securities Act as provided in Section 2.1 or 2.2 above, the Company
will, as expeditiously as possible:
(a) (i) prior to filing the registration statement or prospectus or any
amendment or supplement thereto, furnish and afford each holder with
Registrable Securities covered by such registration statement, and each
managing underwriter, if any, of the Registrable Securities covered by such
registration statement or prospectus, a reasonable opportunity to review
copies of such document as proposed to be filed, together with exhibits
thereto, (ii) thereafter furnish each such holder and managing underwriter,
if any, such number of copies of such registration statement, each
amendment and supplement thereto (in each case including all exhibits
thereto), the prospectus included in such registration statement (including
each preliminary prospectus) and such other documents incident thereto as
such holder or managing underwriter, if any, may from time to time
reasonably request, and (iii) during the Registration Period, deliver to
each holder of Registrable Securities included
6
within the coverage of the Shelf Registration, without charge, as many
copies of the prospectus (including each preliminary prospectus) included
in such Shelf Registration and any amendment and supplement thereto as such
holder may require in connection with the offering and sale of securities
covered by the prospectus or any amendment or supplement thereto, and the
Company hereby consents to the use of the prospectus or amendment or
supplement thereto by each such holder in connection with such offers and
sales;
(b) prepare and file with the Commission such amendments and supplements to
the requisite 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 as set forth in
such registration statement or 90 days from the date on which the registration
statement became effective, whichever first occurs; provided, however, that the
Shelf Registration shall be kept effective for the time period set forth in
Section 2.1 above;
(c) except with respect to information provided by any holder for inclusion
in the registration statement, ensure that (i) such registration statement and
any amendment thereto and any prospectus forming a part thereof and any
amendment or supplement thereto complies in all material respects with the
Securities Act, (ii) such registration statement and any amendment thereto does
not, when it becomes effective, contain 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, and (iii) any prospectus forming a
part of such registration statement and any amendment or supplement to such
prospectus does not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(d) use its reasonable 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 of each state and other jurisdiction as
each seller thereof shall reasonably request, or as may be necessary by virtue
of the business and operations of the Company, and 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 either qualify generally to do business as a foreign
corporation, or subject itself to taxation in any jurisdiction wherein it would
not, but for the requirements of this subparagraph (d), be obligated to be so
qualified or subject to taxation or to consent to general service of process in
any such jurisdiction, or to any material restriction on the conduct of its
business or any restrictions on dividends or distributions to any of its
shareholders;
(e) (i) advise the holders of Registrable Securities in writing (A) when
such registration statement and any amendment thereto has been filed with
the Commission and
7
when such registration statement or any post-effective amendment has become
effective; and (B) of any request by the Commission for amendments or
supplements to such registration statement or the prospectus included
therein or for additional information;
(ii) advise the holders of Registrable Securities in writing: (A) of
the issuance by the Commission of any stop order suspending the
effectiveness of such a registration statement or the initiation or
threatening of any such proceeding for such purpose; (B) of the receipt by
the Company of any notification with respect to the suspension of the
qualification of the securities included in any registration statement for
sale in such jurisdiction or the initiation or threatening of any such
proceeding for such purpose; and (C) in the case of the Shelf Registration,
if such holder has delivered a Selling Notice, as defined below, to the
Company, of the suspension of the use of the prospectus pursuant to Section
2.1(c) hereof or of the happening of any event that requires the making of
any changes in such registration statement or the prospectus so that, as of
such date, the statements therein are not misleading and do not omit to
state a material fact required to be stated therein (in the case of the
prospectus, in light of the circumstances under which they were made);
provided that such notice shall not be required to specify the nature of
the event giving rise to such notice requirement;
(iii) use its reasonable best efforts to obtain the withdrawal of any
order suspending the effectiveness of such registration statement at the
earliest possible time;
(iv) use its reasonable 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;
(f) with respect to the Shelf Registration, upon the occurrence of any
event contemplated by Section 2.3(e)(ii)(C) above, the Company shall (if a
seller of Registrable Securities covered by the Shelf Registration has delivered
a Selling Notice, as defined below, to the Company) as promptly as reasonably
practicable prepare a post-effective amendment to any Shelf Registration or an
amendment or supplement to the related prospectus or file any other required
document so that, as thereafter delivered to purchasers of the securities
included therein, the prospectus will not include an untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein in light of the circumstances under which they were made, not
misleading;
(g) otherwise use its reasonable best efforts to comply with all applicable
rules and regulations of the Commission, and make generally available to its
security holders, as soon as reasonably practicable (but not more than 15
months) after the effective date of such registration statement, an earnings
statement satisfying the provisions of Section 11(a) of the Securities Act and
the rules and regulations thereunder;
(h) 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
8
date of such registration statement and reasonably cooperate with holders of
Registrable Securities to facilitate the timely preparation and delivery of
certificates representing the same to be sold pursuant to the Shelf Registration
free of any restrictive legends and in such denominations and registered in such
names as such holders may request;
(i) use its best reasonable efforts to list all Registrable Securities
covered by such registration statement on the primary national securities
exchange (or Nasdaq) on which the common stock of the Company is then listed;
(j) promptly as is reasonably practicable, incorporate in a prospectus
supplement or post-effective amendment to such registration statement such
information as the managing underwriters, if any, and the holders of a majority
of the Registrable Securities registered thereunder agree should be included
therein and shall make all required filings of such prospectus supplement or
post-effective amendment as soon as reasonably practicable after being notified
of the matters to be incorporated in such prospectus supplement or
post-effective amendment;
(k) enter into such agreements (including underwriting agreements) which
are requested by the Majority Owners and are reasonably acceptable to the
Company and take all other reasonably appropriate actions in order to expedite
or facilitate the registration or the disposition of the Registrable Securities
and, in connection therewith, if an underwriting agreement is entered into, such
agreement shall contain indemnification provisions and procedures not materially
less favorable than those set forth in Section 2.6 of this Agreement (or other
provisions acceptable to the Majority Owners), with respect to all parties to be
indemnified under Section 2.6 of this Agreement by holders of Registrable
Securities; and
(l) cooperate with the reasonable requests of the underwriters or the
Majority Owners to facilitate the marketing and disposition of the Registrable
Securities, including causing appropriate officers of the Company to attend
roadshows and other similar marketing activities; and
(m) (i) make reasonably available for inspection by any managing
underwriter participating in any disposition pursuant to such registration
statement, the holders of the majority of the Registrable Securities
thereunder, and any attorney, accountant or other agent retained by such
underwriter and/or the holders of the majority of the Registrable
Securities thereunder, all relevant financial and other records, pertinent
corporate documents and properties of the Company and its subsidiaries;
(ii) cause the Company's officers, directors and employees to supply all
relevant information reasonably requested by any such managing underwriter,
attorney, accountant or agent, or holders in connection with such
registration statement as is customary for similar due diligence
examinations; (iii) make such representations and warranties to such
underwriters, if any, in form, substance and scope as are customarily made
by issuers to underwriters in primary underwritten offerings; (iv) obtain
opinions of counsel to the Company and updates thereof (which counsel and
opinions (in form, scope and substance) shall be reasonably satisfactory to
the managing underwriters, if any) addressed to the underwriters, covering
such matters as are customarily covered in opinions requested in
underwritten offerings;
9
(v) obtain "cold comfort" letters and updates thereof from the independent
certified public accountants of the Company and its subsidiaries, addressed
to the managing underwriters, if any, in customary form and covering
matters of the type customarily covered in "cold comfort" letters in
connection with primary underwritten offerings; and (vi) deliver such
documents and certificates as may be reasonably requested by the holders of
a majority of the Registrable Securities registered thereunder and the
managing underwriters, if any, including those contained in the
underwriting agreement. The foregoing actions contained in (i) through (vi)
above shall be performed ( to the extent requested) at (A) the
effectiveness of such registration statement (including the Shelf
Registration) and each post-effective amendment thereto, and (B) each
closing under any underwriting or similar agreement as and to the extent
required thereunder.
Section 2.4.A. Information by the Holders and Suspension of Sales. 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, including its ownership of Registrable Securities, and the plan of
distribution of such securities as the Company may from time to time reasonably
request in writing. Each holder of Registrable Securities agrees to furnish such
information to the Company and to cooperate with the Company as is reasonably
necessary to enable the Company to comply with the provisions of this Agreement.
No holder of Registrable Securities shall be required, in connection with any
underwriting agreements entered into in connection with any registration, to
provide any information, representations or warranties, or covenants with
respect to the Company, its business or its operations nor shall it be required
to provide any indemnification beyond that contemplated herein. 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 2.3(e)(ii)(c)
above, (i) such holder shall 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 this Agreement, or until such
holder is advised in writing by the Company that the use of the prospectus may
be resumed, (ii) such holder will promptly deliver copies of such supplemented
or amended prospectus to each purchaser or potential purchaser to whom such
holder had delivered the initial prospectus, and (iii) 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.
Each holder of Registrable Securities further agrees that (a) prior to any
disposition of Registrable Securities pursuant to the Shelf Registration, such
holder shall give written notice of the desired disposition to the Company,
including the anticipated date thereof (a "SELLING NOTICE"), and such holder
shall not effect such disposition until such holder either (i) has received from
the Company copies of a supplemented or amended prospectus as contemplated in
this Agreement, or (ii) has been advised in writing by the Company that the use
of the applicable prospectus is appropriate and has received copies of any
previous amendments or supplements thereto, provided, however, that the Company
must comply with either (i) or (ii) of this subsection (a) within two business
days after receiving written notice of a desired disposition by such holder; and
(b) it will notify the Company in writing upon completion of such offer or sale
or
10
at such time as such holder no longer intends to make offers or sales under the
Shelf Registration.
2.4.B. Black-out Period. In the event of a Company Public Sale, the holders
of Registrable Securities agree, if requested by the Company, and, in the case
of a Company Public Sale that is an underwritten offering, by the managing
underwriter or underwriters in such underwritten offering, not to effect any
public sale or distribution of any securities the same as or similar to those
being offered in connection with such Company Public Sale, or any securities
convertible into or exchangeable or exercisable for such securities for a period
(as specified by the Company or such managing underwriters) not to exceed 120
days (or such lesser period as may be permitted by the Company or such managing
underwriters), during the period beginning seven days before the Company's
reasonable good faith estimate of the proposed date of filing, in connection
with such Company Public Sale, of a registration statement or a preliminary
prospectus supplement relating to a then existing shelf registration statement,
and ending on the date 120 days following the effective date of such
registration statement or the date of filing the final prospectus supplement, to
the extent timely notified in writing by the Company or the managing underwriter
or underwriters.
2.5 Reasonable Assistance. Subject to compliance with Regulation FD, the
Company agrees to take reasonable best efforts to assist each Owner with any
sale of its Registrable Securities, including permitting potential buyers of
Registerable Securities to meet with management of the Company.
2.6 Indemnification.
(a) Indemnification by the Company. In the event of any registration of any
securities of the Company under the Securities Act, the Company will indemnify
and hold harmless the seller of any Registrable Securities covered by such
registration statement, its directors, officers, employees, representatives and
agents, each other Person who participates as an underwriter in the offering or
sale of such securities and each other Person, if any, who controls such seller
or any such underwriter 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, officer, employee, representative, agent, underwriter 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 in any qualification or compliance related to such
registration, 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, employee, representative, agent, underwriter and controlling
Person for any reasonable legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, liability,
action or proceeding; provided, however, 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
11
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 by such seller specifically for use therein; 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,
employee, representative, agent, underwriter or controlling Person and shall
survive the transfer of such securities by such seller or the assignment by such
seller of its rights pursuant to this Agreement. This indemnity agreement will
be in addition to any liability which the Company may otherwise have.
(b) Indemnification by Holder of Registrable Securities. In connection with
any registration statement filed by the Company under the Securities Act in
which a holder of Registrable Securities is participating, such holder of
Registrable Securities agrees to indemnify and hold harmless (in the same manner
and to the same extent as set forth in Section 2.6(a) above) on a several, but
not joint, basis, the Company, each director, officer, employee, representative
and agent of the 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 by such holder
specifically for use in such registration statement, preliminary prospectus,
final prospectus, summary prospectus, amendment or supplement, provided,
however, that the obligations of each of the holders hereunder shall be limited
to an amount equal to the net proceeds to such holder of securities sold
pursuant to such registration statement or prospectus. 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, representative, agent, or
controlling Person and shall survive the transfer of such securities by such
holder. This indemnity agreement will be in addition to any liability which such
holder may otherwise have.
(c) Notices of Claims and Procedures. Promptly after receipt by an
indemnified Person of notice of the commencement of any action or proceeding
involving a claim referred to in Section 2.6(a) or (b) above, such indemnified
Person 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, however, that the failure of any indemnified Person to give notice as
provided herein shall not relieve the indemnifying party of its obligations
under Section 2.6(a) or (b) above, except to the extent that the indemnifying
party is actually prejudiced by such failure to give
12
notice. In case any such action is brought against an indemnified Person, unless
counsel for the indemnifying party reasonably determines that a conflict of
interest between such indemnified Person and such indemnifying party exists in
respect of such claim precluding such counsel from defending the indemnified
party under applicable ethical requirements, 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 Person, and after notice
from the indemnifying party to such indemnified Person of its election so to
assume the defense thereof, the indemnifying party shall not be liable to such
indemnified Person for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof. If such a conflict of interest
exists in respect of such claim, the indemnified Person or Persons shall have
the right to select separate counsel reasonably acceptable to the indemnifying
party to participate in the defense of such action on behalf of such indemnified
Person or Persons, in which case the indemnifying party shall bear the costs of
such defense; provided, however, the indemnifying party shall not be obligated
to pay the fees and expenses of more than one separate firm of legal counsel for
all indemnified parties in any one jurisdiction. No indemnifying party shall,
without the consent of the indemnified Person, 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 Person of a
release from all liability with respect to such claim or litigation and
otherwise in form and substance reasonably satisfactory to the indemnified
Person. The indemnifying party shall not be required to indemnify any
indemnified Person against any settlement or judgment which is consented to by
an indemnified Person without the consent of the indemnifying party.
(d) Contribution. If any of the indemnification provisions provided for in
this Section 2.6 are determined to be unenforceable or unavailable to an
indemnified Person in respect of any claim or action, then each indemnifying
party, in lieu of indemnifying such indemnified Person, shall contribute to the
amount paid or payable by such indemnified Person as a result of such claims in
such proportion as is appropriate to reflect the relative fault of the
indemnified Person and the indemnifying party in connection with the statements
or omissions which resulted in such claim or action as well as any other
relevant equitable considerations. The relative fault of the indemnifying party
and the indemnified Person shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified Person and their
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The parties hereto agree that it would not
be just and equitable if contribution pursuant to this Section 2.6(d) were
determined by any method of allocation that does not take account of the
equitable considerations referred to above in this Section 2.6(d). The amount
paid or payable by a party as a result of the claims referred to above shall be
deemed to include any legal or other fees or expenses reasonably incurred by
such Person in connection with investigating or defending any action or claim.
No Person guilty of fraudulent misrepresentation (within the meaning of the
Securities Act) shall be entitled to contribution from any Person who is not
guilty of such fraudulent misrepresentation. Notwithstanding anything to the
contrary contained in this Agreement, no holder of Registrable Securities shall
be required to contribute any amount pursuant to this Section 2.6 in excess of
the net proceeds paid to such holder pursuant to any sale by such holder
pursuant to a registration
13
statement and each holder's obligations to contribute pursuant to this Section
2.6 are several, in the proportion that the net proceeds of the offering
received by such holder bears to the total net proceeds of the offering received
by all the applicable holders, and not joint.
3. Rules 144 and 144A. The Company represents and warrants to the Owners
that it has filed registration statements pursuant to the requirements of
Section 12 of the Exchange Act and/or pursuant to the requirements of the
Securities Act, and has filed the reports required to be filed by it under the
Securities Act and the Exchange Act and the rules and regulations adopted by the
Commission thereunder. The Company 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) Rules 144, 144A and 145, as applicable, under the Securities
Act, as such Rules 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.
4. 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 prior written
consent to such amendment, action or omission to act, of the holder or holders
of a majority of the Registrable Securities at the time outstanding, provided,
however, that a waiver or consent to departure from the provisions hereof that
relates exclusively to the rights of holders of Registrable Securities being
sold pursuant to a registration statement and that does not directly or
indirectly affect the rights of other holders may be given by the holders of a
majority of the Registrable Securities being so registered. Each holder of any
Registrable Securities at the time or thereafter outstanding shall be bound by
any amendment, modification, waiver or consent authorized by this Section 4,
whether or not such Registrable Securities shall have been marked accordingly,
but provided that a copy of such amendment, modification, waiver or consent has
been theretofore delivered to all holders of the Registrable Securities.
5. Notices. All notices and other communications required or permitted
hereunder shall be in writing, and shall be delivered by hand or transmitted by
telegram, facsimile or by similar means or by recognized courier or overnight
delivery service (fees prepaid), or by mail, registered or certified (postage
prepaid), addressed (a) if to the holders, at the address set forth in opposite
their name on the signature pages hereto, or such other address as the holders
shall have furnished to the Company in writing, or (b) if to the Company, to 000
Xxxx Xxx Xxxxxxx Xxxx., Xxxxx 0000, Xxxxxx, Xxxxx 00000 (Attention: Xxxxxx X.
Xxxxxxxx, Vice President, General Counsel and Secretary), or such other address,
or to the attention of such other Person or Persons, as the Company shall have
furnished to each holder of Registrable Securities at the time outstanding. All
such notices and communications shall be deemed to have been duly given when
received.
6. 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 particular,
14
regardless of whether an express assignment shall have been made, the provisions
of this Agreement which are for the benefit of the Owners shall inure to the
benefit of and enforceable by a subsequent holder of any Registrable Securities
(a "PERMITTED ASSIGNEE"), that (i) is either (A) an affiliate or partner of an
Owner, or (B) shall have acquired from an Owner, Registrable Securities
constituting not less than 1,000,000 shares of common stock of the Company, and
(ii) has executed a copy of this Agreement or otherwise indicated its agreement
to be bound hereby. No assignee of Registrable Securities, other than a
Permitted Assignee, shall have any rights hereunder and any purported assignment
of rights hereunder to an anyone other than a Permitted Assignee shall be null
and void, unless the Company shall have provided its prior written consent
thereto.
7. 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.
8. Governing Law. This Agreement shall be construed and enforced in
accordance with, and the rights of the parties hereto shall be governed by, the
laws of the State of Delaware, without regard to principles of conflicts of
laws.
9. Counterparts. This Agreement may be executed 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.
10. Severability. If any one or more of the provisions contained in this
Agreement shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement.
WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement, or have caused this Agreement to be executed and delivered by their
respective duly authorized officers, on the date first above written.
MAGNUM HUNTER RESOURCES, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
15
PINTAIL ENERGY, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
ADDRESS FOR NOTICES: OWNERS
125 East Xxxx Xxxxxxxxx Fwy. NATURAL GAS PARTNERS V, L.P.
Suite 600 By: G.F.W. Energy V, L.P., general partner
Xxxxxx, XX 00000 By: GFW V, L.L.C., general partner
Attn: Xxxxxxx Xxxxxxxxx
Fax No. 000-000-0000
By:
--------------------------------------
Xxxxxxx X. Xxxxx, Authorized Member
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------------
Xxxxxx X. Xxxxx, Trustee of the Xxxxxx X.
Xxxxx Revocable Trust Dated July 25, 1994
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------------
Xxxxxx X. Xxxxx, Trustee of the Xxxxx X.
Xxxxx Irrevocable Trust Dated January 15,
1996
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------------
Xxxxxx X. Xxxxx, Trustee of the Xxxxx X.
Xxxxx Irrevocable Trust Dated January 15,
1996
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------------
Xxx X. Xxxx
16
