REGISTRATION RIGHTS AGREEMENT
Exhibit
10.39
REGISTRATION
RIGHTS AGREEMENT
(this
“Agreement”),
dated
as of May 11, 2007, by and between TEKOIL
& GAS CORPORATION,
a
Delaware corporation, with offices located at 0000 Xx. Xxxxxxxx Xxxx., Xxxxx
000, Xxxxxxx, Xxxxxxx 00000 (the “Company”),
and
XXXXXXX,
SACHS & CO.,
(referred to as “Buyer”)
with
offices located at c/o Goldman, Xxxxx E & P Capital, 0000 Xxxxxxxxx Xx.,
Xxxxx 000, Xxxxxxx, Xxxxx 00000.
PRELIMINARY
STATEMENTS
A. In
connection with a certain Warrant to Purchase Common Stock by and between the
parties of even date herewith (the “Warrant
Agreement”),
the
Company has agreed, upon the terms and subject to the conditions of the Warrant
Agreement, to issue to the Buyer up to 900,000 shares (subject to adjustment
as
provided in the Warrant Agreement) of the Company’s common stock, par value
$0.000001 per share (the “Common
Stock”);
and
B. The
Company has agreed to provide certain registration rights under the Securities
Act of 1933, as amended, and the rules and regulations thereunder, or any
similar successor statute (collectively, the “1933
Act”),
and
applicable state securities laws.
NOW,
THEREFORE,
in
consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, the Company and the Buyer hereby agree as
follows:
1. DEFINITIONS.
a. As
used
in this Agreement, the following terms shall have the following
meanings:
(i) “Investor”
means
each of the Buyer and any transferee or assignee thereof who agrees in writing
to become bound by the provisions of this Agreement.
(ii) “register,”
“registered,”
and
“registration”
refer
to a registration effected by preparing and filing a Registration Statement
or
Statements in compliance with the 1933 Act and pursuant to Rule 415 under the
1933 Act or any successor rule providing for offering securities on a continuous
basis (“Rule
415”),
and
the declaration or ordering of effectiveness of such Registration Statement
by
the United States Securities and Exchange Commission (the “SEC”).
(iii) “Registrable
Securities”
means
the shares of Common Stock or other securities issuable or issued, as the case
may be, to the Investors under the Warrant Agreement.
(iv) “Registration
Period”
means
the period commencing on the date on which the Registration Statement filed
pursuant to this Agreement is declared effective by the SEC and expiring on
the
date that (A) the Investors may sell all of the Registrable Securities without
restriction pursuant to Rule 144(k) promulgated under the 1933 Act, or (B)
the
Investors have sold all of the Registrable Securities.
(v) “Registration
Statement”
means
a
registration statement of the Company under the 1933 Act, as described in
Section 1.a.(ii) above.
1
b. Capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings set forth in the Warrant Agreement.
2. REGISTRATION
RIGHTS.
a. Mandatory
Registration.
The
Company shall prepare and file with the SEC a Registration Statement on Form
S-3
(or, if such form is unavailable for such a registration, on such other form
as
is available for such a registration) covering the resale of the Registrable
Securities within 45 days of the Warrant Issue Date. The Registration Statement
(and each amendment or supplement thereto, and each request for acceleration
of
effectiveness thereof) shall be provided to and approved by the Investors and
their counsel prior to its filing or other submission, such approval not to
be
unreasonably withheld. The Company will use its reasonable efforts to cause
such
Registration Statement to become effective within 120 days of
filing.
b.
Piggy-Back Registrations.
If at
any time prior to filing a Registration Statement under this Agreement, the
Company shall file with the SEC a Registration Statement relating to an offering
for its own account or the account of others under the 1933 Act of any of its
equity securities (other than on Form S-4 or Form S-8 or their then equivalents
relating to equity securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans), the Company
shall
send to each Investor who is entitled to registration rights under this Section
2 written notice of the intended filing of such Registration Statement and,
if
within twenty (20) days after receipt of such notice, any Investor shall so
request in writing, the Company shall include in such Registration Statement
all
or any part of the Registrable Securities such Investor requests to be
registered, except that if, in connection with any underwritten public offering
for the account of the Company the managing underwriter(s) thereof shall impose
a limitation on the number of shares of Common Stock which may be included
in
the Registration Statement because, in such underwriter(s)’ judgment, marketing
or other factors dictate such limitation is necessary to facilitate public
distribution, then the Company shall be obligated to include in such
Registration Statement only a limited portion of the Registrable Securities
with
respect to which such Investor has requested inclusion hereunder, such portion
to be determined as hereinafter provided; provided that no portion of the equity
securities which the Company is offering for its own account shall be excluded;
provided,
further
that the
Company shall be entitled to exclude Registrable Securities to the extent
necessary to avoid breaching obligations existing prior to the date hereof
to
other stockholders of the Company. Subject to the foregoing, the Company shall
not exclude any Registrable Securities unless the Company has first excluded
all
outstanding securities, the holders of which are not entitled to inclusion
of
such securities in such Registration Statement or are not entitled to pro rata
inclusion with the Registrable Securities, and, after giving effect to the
immediately preceding clause, any exclusion of Registrable Securities shall
be
made pro rata with holders of other securities having the right to include
such
securities in the Registration Statement other than holders of securities
entitled to inclusion of their securities in such Registration Statement by
reason of demand registration rights. If an offering in connection with which
an
Investor is entitled to registration under this Section 2 is an underwritten
offering and such Investor’s Registrable Securities are included in such
Registration Statement, then the Investor shall, unless otherwise agreed by
the
Company, offer and sell such Registrable Securities in such underwritten
offering using the same underwriter or underwriters and, subject to the
provisions of this Agreement, on the same terms and conditions as other shares
of Common Stock included in such underwritten offering.
2
3. OBLIGATIONS
OF THE COMPANY.
In
connection with the registration of the Registrable Securities, the Company
shall have the following obligations:
a. A
Registration Statement filed pursuant to this Agreement (including any
amendments or supplements thereto and prospectuses contained therein) shall
not
contain any untrue statement of a material fact or omit to state a material
fact
required to be stated therein, or necessary to make the statements therein
not
misleading.
b. The
Company shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and
the
prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective at all times during
the
Registration Period, and, during the Registration Period, comply with the
provisions of the 1933 Act with respect to the disposition of all Registrable
Securities of the Company covered by the Registration Statement until such
time
as all of such Registrable Securities have been disposed of in accordance with
the intended methods of disposition by the seller or sellers thereof as set
forth in the Registration Statement.
c. The
Company shall furnish to each Investor if its Registrable Securities are
included in the Registration Statement and its legal counsel (i) promptly after
the same is prepared and publicly distributed, filed with the SEC, or received
by the Company, one copy of the Registration Statement and any amendment
thereto, each preliminary prospectus and prospectus and each amendment or
supplement thereto, and (ii) such number of copies of a prospectus, including
a
preliminary prospectus, and all amendments and supplements thereto and such
other documents as such Investor may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by such
Investor.
d.
As
promptly as practicable after becoming aware of such event, the Company shall
notify the Investor of the happening of any event, of which the Company has
knowledge, as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact
or
omission to state a material fact required to be stated therein or necessary
to
make the statements therein not misleading, and use its best efforts promptly
to
prepare a supplement or amendment to the Registration Statement to correct
such
untrue statement or omission, and deliver such number of copies of such
supplement or amendment to the Investor as the Investor may reasonably
request.
e.
The
Company shall use its best efforts to prevent the issuance of any stop order
or
other suspension of effectiveness of a Registration Statement, and, if such
an
order is issued, to obtain the withdrawal of such order at the earliest possible
moment and to notify each Investor if such Investor holds Registrable Securities
being sold (or, in the event of an underwritten offering, the managing
underwriters) of the issuance of such order and the resolution thereof.
f.
The
Company shall hold in confidence and not make any disclosure of information
concerning the Investors provided to the Company unless (i) the Company
determines disclosure of such information is necessary to comply with federal
or
state securities laws, (ii) the disclosure of such information is necessary
to
avoid or correct a misstatement or omission in any Registration Statement,
(iii)
the release of such information is ordered pursuant to a subpoena or other
final, non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) 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 an Investor is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice to such
Investor and allow the Investor, at the Investor’s expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, such information.
3
g.
The
Company shall use its best efforts to cause all the Registrable Securities
covered by the Registration Statement to be listed on the American Stock
Exchange and on each additional national securities exchange on which securities
of the same class or series issued by the Company are then listed, if any,
if
the listing of such Registrable Securities is then permitted under the rules
of
such exchange.
h.
The
Company shall cooperate with each Investor if it holds Registrable Securities
and the managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing the Registrable Securities
to be offered pursuant to the Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may be, as
the
managing underwriter or underwriters, if any, or the Investor may reasonably
request and registered in such names as the managing underwriter or
underwriters, if any, or the Investor may request.
4. OBLIGATIONS
OF THE INVESTOR.
In
connection with the registration of the Registrable Securities, each Investor,
severally and not jointly with other Investors, shall have the following
obligations:
a. It
shall
be a condition precedent to the obligations of the Company to complete the
registration of Registrable Securities of an Investors pursuant to this
Agreement that such Investor shall furnish to the Company such information
regarding itself, the Registrable Securities held by it and the intended method
of disposition of the Registrable Securities held by it as shall be reasonably
required to effect the registration of such Registrable Securities and shall
execute such documents in connection with such registration as the Company
may
reasonably request. At least five (5) days prior to the first anticipated filing
date of the Registration Statement, the Company shall notify each Investor
of
the information the Company requires from the Investor if the Investor elects
to
have any of the Investor’s Registrable Securities included in the Registration
Statement.
b. Each
Investor by such Investor’s acceptance of the Registrable Securities agrees to
cooperate with the Company as reasonably requested by the Company in connection
with the preparation and filing of the Registration Statement hereunder, unless
such Investor has notified the Company in writing of the Investor’s election to
exclude all of the Investor’s Registrable Securities from the Registration
Statement.
c. Each
Investor agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3(d) or 3(e), the
Investor will immediately discontinue disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities
until the Investor’s receipt of the copies of the supplemented or amended
prospectus contemplated by Section 3(d) or 3(e) and, if so directed by the
Company, the Investor shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of destruction)
all copies in the Investor’s possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such
notice.
d. An
Investor may not participate in any underwritten registration hereunder unless
the Investor (i) agrees to sell the Investor’s Registrable Securities on the
basis provided in any underwriting arrangements, (ii) completes and executes
all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements, and (iii) agrees to pay its pro rata share of all underwriting
discounts and commissions.
4
e. Each
Investor shall give notice to the Company when it has sold all of its
Registrable Securities.
5. EXPENSES
OF REGISTRATION.
All
reasonable expenses, other than underwriting discounts and commissions, incurred
in connection with registrations, filings or qualifications pursuant to Sections
2 and 3, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, the fees and disbursements
of
counsel for the Company, shall be borne by the Company. Notwithstanding the
foregoing, each Investor shall be responsible for all expenses, fees and
disbursements incurred by such Investor or on such Investor’s behalf, including
all fees and disbursements of counsel to the Investor, except as provided in
Section 6 hereof.
6. INDEMNIFICATION.
In
the
event any Registrable Securities are included in a Registration Statement under
this Agreement:
a. The
Company will indemnify, hold harmless and defend (i) each Investor who holds
such Registrable Securities, and (ii) the directors, officers and each
person who controls any such Investor within the meaning of the 1933 Act or
the
Securities Exchange Act of 1934, as amended (the “1934
Act”),
if
any, (each, an “Indemnified
Person”),
against any losses, claims, damages, liabilities or expenses (joint or several)
(collectively, “Claims”)
to
which any of them may become subject insofar as such Claims (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out
of
or are based upon: (i) any untrue statement or alleged untrue statement of
a
material fact in a Registration Statement or the omission or alleged omission
to
state a material fact therein required to be stated or necessary to make the
statements therein not misleading, (ii) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary, final or free writing
prospectus or any amendment thereof or supplement or the omission or alleged
omission to state therein any material fact necessary to make the statements
made therein, in light of the circumstances under which the statements therein
were made, not misleading, or (iii) any violation or alleged violation by the
Company of the 1933 Act, the 1934 Act, any other law, including, without
limitation, any state securities law, or any rule or regulation thereunder
relating to the offer or sale of the Registrable Securities pursuant to a
Registration Statement (the matters in the foregoing clauses (i) through (iii)
being, collectively, “Violations”).
Subject to the restrictions set forth in Section 6(d), the Company shall
reimburse each Indemnified Person, promptly as such expenses are incurred and
are due and payable, for any legal fees or other reasonable expenses incurred
by
them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(a): (i) shall not apply to a Claim against
an Indemnified Person arising out of or based upon a Violation which occurs
in
reliance upon and in conformity with information furnished in writing to the
Company by such Indemnified Person expressly for use in connection with the
preparation of the Registration Statement or any such amendment thereof or
supplement thereto, if such prospectus was timely made available by the Company
pursuant to Section 3(c) hereof; (ii) shall not be available to the extent
such
Claim is based on a failure of the Indemnified Person to deliver or to cause
to
be delivered the prospectus made available by the Company; and (iii) shall
not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall not be
unreasonably withheld. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Indemnified Person
and shall survive the transfer of the Registrable Securities by the
Investors.
5
b. In
connection with any Registration Statement in which an Investor is
participating, such Investor agrees, severally and not jointly, to indemnify,
hold harmless and defend, to the same extent and in the same manner set forth
in
Section 6(a), the Company, each of its directors, each of its officers who
signs
the Registration Statement, each person, if any, who controls the Company within
the meaning of the 1933 Act or the 1934 Act, any underwriter and any other
stockholder selling securities pursuant to the Registration Statement or any
of
its directors or officers or any person who controls such stockholder or
underwriter within the meaning of the 1933 Act or the 1934 Act (collectively
and
together with an indemnified Person, an “Indemnified
Party”),
against any Claim to which any of them may become subject, under the 1933 Act,
the 1934 Act or otherwise, insofar as such Claim arises out of or is based
upon
any Violation, in each case to the extent (and only to the extent) that such
violation occurs in reliance upon and in conformity with written information
furnished to the Company by such Investor expressly for use in connection with
such Registration Statement or to the extent such Claim is based upon any
violation or alleged violation by the Investor of the 1933 Act, 1934 Act or
any
other law; and such Investor will reimburse any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such Claim; provided, however, that the indemnity agreement contained in this
Section 6(b) shall not apply to amounts paid in settlement of any Claim if
such
settlement is effected without the prior written consent of such Investor,
which
consent shall not be unreasonably withheld; provided, further, however, that
such Investor shall be liable under this Section 6(b) for only that amount
of a
Claim as does not exceed the net proceeds to such Investor as a result of the
sale of Registrable Securities pursuant to such Registration Statement. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such Indemnified Party and shall survive the transfer
of
the Registrable Securities by the Investors.
c. The
Company shall be entitled to receive indemnities from underwriters, selling
brokers, dealer managers and similar securities industry professionals
participating in any distribution, to the same extent as provided above, with
respect to information such persons so furnished in writing by such persons
expressly for inclusion in the Registration Statement.
d. Promptly
after receipt by an Indemnified Person or Indemnified Party under this Section
6
of notice of the commencement of any action (including any governmental action),
such Indemnified Person or Indemnified Party shall, if a Claim in respect
thereof is to made against any indemnifying party under this Section 6, deliver
to the indemnifying party a written notice of the commencement thereof, and
the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person
or
the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its
own
counsel with the fees and expenses to be paid by the indemnifying party, if,
in
the reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and
any
other party represented by such counsel in such proceeding. The failure to
deliver written notice to the indemnifying party within a reasonable time of
the
commencement of any such action shall not relieve such indemnifying party of
any
liability to the Indemnified Person or Indemnified Party under this Section
6,
except to the extent that the indemnifying party is prejudiced in its ability
to
defend such action. The indemnification required by this Section 6 shall be
made
by periodic payments of the amount thereof during the course of the
investigation or defense, as such expense, loss, damage or liability is incurred
and is due and payable.
6
7. CONTRIBUTION.
To
the
extent any indemnification by an indemnifying party is prohibited or limited
by
law, the indemnifying party agrees to make the maximum contribution with respect
to any amounts for which it would otherwise be liable under Section 6 to the
fullest extent permitted by law; provided, however, that (i) no contribution
shall be made under circumstances where the maker would not have been liable
for
indemnification under the fault standards set forth in Section 6, (ii) no seller
of Registrable Securities guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 0000 Xxx) shall be entitled to contribution
from
any seller of Registrable Securities who was not guilty of such fraudulent
misrepresentation, and (iii) contribution by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds received
by
such seller from the sale of such Registrable Securities.
8. AMENDMENT
OF REGISTRATION RIGHTS.
Provisions
of this Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Investor.
Any amendment or waiver effected in accordance with this Section 8 shall be
binding upon the Investor and the Company.
9. MISCELLANEOUS.
a. A
person
or entity is deemed to be a holder of Registrable Securities whenever such
person or entity owns of record such Registrable Securities or is a Holder
under
the Warrant Agreement. If the Company receives conflicting instructions, notices
or elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.
b. Any
notices required or permitted to be given under the terms of this Agreement
shall be sent by registered or certified mail, return receipt requested, or
delivered personally or by courier and shall be effective five days after being
placed in the mail, if mailed, or upon receipt, if delivered personally or
by
courier, in each case addressed to a party. The addresses for such
communications shall be:
| If to the Company: |
Tekoil & Gas Corporation
0000
Xx. Xxxxxxxx Xxxx., Xxxxx 000
Xxxxxxx,
Xxxxxxx 00000
Telephone:
(000) 000-0000
Telecopy:
(000) 000-0000
Attention:
Mr. Xxxx Xxxxxxx
|
|
| With copy to: |
Xxxxx & Xxxxxxxxx LLP
000
Xxxxx Xxxxxx Xxxxxx
Xxxxxxx,
XX 00000
Telephone:
(000) 000-0000
Telecopy:
(000) 000-0000
Attention:
Xxxxxxx X. Xxxxxx, Esq.
|
|
| If to the Buyer: |
Xxxxxxx, Xxxxx & Co.
c/o
Goldman, Sachs E & P Capital
0000
Xxxxxxxxx Xx., Xxxxx 000
Xxxxxxx,
XX 00000
Telephone:
(000) 000-0000
Telecopy:
(000) 000-0000
Attention:
Xxxx Xxxxx
|
7
If
to any
other Investor, to the address of such Investor provided by such Investor in
the
written instrument contemplated by the definition of "Investor"
above.
Each
party shall provide notice to the other party of any change in
address.
c. Failure
of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate as
a
waiver thereof.
d. This
Agreement shall be enforced, governed by and construed in accordance with the
laws of the State of New York applicable to agreements made and to be performed
entirely within such State. In the event that any provision of this Agreement
is
invalid or unenforceable under any applicable statute or rule of law, then
such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule
of
law. Any provision hereof which may prove invalid or unenforceable under any
law
shall not affect the validity or enforceability of any other provision
hereof.
e. This
Agreement, the letter agreement dated the date hereof between the Company and
the Buyer, the Warrant Agreement and the Credit Agreement constitute the entire
agreement among the parties hereto with respect to the subject matter hereof
and
thereof. There are no restrictions, promises, warranties or undertakings, other
than those set forth or referred to herein and therein. This Agreement, the
Warrant Agreement and the Credit Agreement supersede all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof and thereof.
f. This
Agreement shall inure to the benefit of and be binding upon the successors
and
assigns of each of the parties hereto.
g. The
headings in this Agreement are for convenience of reference only and shall
not
limit or otherwise affect the meaning hereof.
h. This
Agreement may be executed in two or more identical counterparts, each of which
shall be deemed an original but all of which shall constitute one and the same
agreement. This Agreement, once executed by a party, may be delivered to the
other party hereto by facsimile transmission of a copy of this Agreement bearing
the signature of the party so delivering this Agreement.
i. Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
[SIGNATURES
APPEAR ON FOLLOWING PAGE]
8
IN
WITNESS WHEREOF, the parties have caused this Registration Rights Agreement
to
be duly executed as of day and year first above written.
|
“Company”
TEKOIL
& GAS CORPORATION
|
||
| |
|
|
| By: | ||
|
Xxxx Xxxxxxx,
Chairman and CEO
|
||
Signature
Page to Registration Rights Agreement
9
|
“Buyer”
XXXXXXX,
XXXXX & CO.
|
||
| |
|
|
| By: | /s/ Xxxxxx X. Xxxxxxx | |
|
Print
Name: Xxxxxx
X. Xxxxxxx III
|
||
|
As
its: Authorized
Signatory
|
||
Signature
Page to Registration Rights Agreement
10
