EXHIBIT 10.4
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REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of April
___, 2003, is made by and among Tidelands Oil & Gas Corporation, a Texas
corporation (the "Company") and Impact International, L.L.C. ("Impact").
Whereas, Impact has requested, and the Company has agreed to provide,
registration rights with respect to the Registrable Securities (as hereinafter
defined), as set forth in this Agreement.
Now, therefore, for and in consideration of the mutual agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound hereby, agree as follows:
Section 1. Definitions. As used in this Agreement, the following terms
shall have the following meanings:
"Affiliate" shall mean, when used with respect to a specified
Person, any Person which (a) directly or indirectly controls, is controlled by
or is under common control with such specified Person, (b) is an officer,
director, partner, trustee or manager of such Person, or of a Person described
in clause (a) of this sentence, or (c) is a Relative of such specified Person or
of an individual described in clauses (a) or (b) of this sentence. As used in
this definition, the term "control" means possession, directly or indirectly
(through one or more intermediaries), of the power to direct or cause the
direction of management and policies of a Person through an ownership of at
least a majority of the outstanding voting interests of such Person, or through
the power to appoint, elect or direct the vote of, a majority of the members of
the governing body of such Person whether by contract, voting trust or other
agreement. "Relative" shall mean, with respect to any individual, (i) such
individual's spouse, (ii) any direct descendent, parent, grandparent, great
grandparent or sibling (in each case, whether by blood or adoption) of such
individual or such individual's spouse, and (iii) any spouse of a person
described in clause (ii) of this sentence.
"Approved Appraiser" shall mean a nationally recognized
investment banking firm, accounting firm or valuation firm mutually acceptable
to the Company and the holders of the Registrable Securities.
"Common Stock" shall mean shares of the Company's Common
Stock.
"Current Market Price" at any date shall mean, in the event
the Common Stock is traded in the over the counter market or on a national or
regional securities exchange, the average of the daily closing prices per share
of Common Stock for thirty (30) consecutive trading days ending three trading
days before such date (as adjusted for any stock dividend, split, combination or
reclassification that took effect during such 33 trading day period). The
closing price for each day shall be the last reported sale price regular way or,
in case no such reported sale takes place on such day, the average of the last
closing bid and asked prices regular way, in either case on the principal
national securities exchange on which the Common Stock is listed or admitted to
trading, or if not listed or admitted to trading on any national securities
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exchange, the closing sale price for such day reported by Nasdaq, if the Common
Stock is traded over-the-counter and quoted in the National Market System, or if
the Common Stock is so traded, but not so quoted, the average of the closing
reported bid and asked prices of the Common Stock as reported by Nasdaq or any
comparable system, or, if the Common Stock is not listed on Nasdaq or any
comparable system, the average of the closing bid and asked prices as furnished
by two members of the National Association of Securities Dealers, Inc. selected
from time to time by the Corporation for that purpose. If the Common Stock is
not publicly traded or is not traded in such manner that the quotations referred
to above are available for the period required hereunder, Current Market Price
per share of Common Stock shall be deemed to be the fair value per share of
Common Stock as determined by an Approved Appraiser.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations of the SEC promulgated
thereunder.
"Holder" shall mean the holder of a Registrable Security, as
provided in Section 2 hereof.
"Losses" shall have the meaning set forth in Section 8
hereof.
"Person" shall mean an individual, partnership, corporation,
limited partnership, limited liability company, foreign limited liability
company, trust, estate, corporation, custodian, trustee-executor, administrator,
nominee or entity in a representative capacity.
"Piggyback Notice" shall have the meaning set forth in
Section 4 hereof.
"Piggyback Registration" shall have the meaning as set forth
in Section 4 hereof.
"Proceeding" shall mean an action, claim, suit, arbitration
or proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
"Prospectus" shall mean the prospectus included in any
Registration Statement (including, without limitation, a prospectus that
discloses information previously omitted from a prospectus filed as part of an
effective Registration Statement in reliance upon Rule 430A promulgated under
the Securities Act), as amended or supplemented by any prospectus supplement,
with respect to the terms of the offering of any portion of the Registrable
Securities covered by such Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.
"Purchase and Sale Agreement" means the Purchase and Sale
Agreement dated the date hereof between the Company and Impact.
"Registrable Securities" shall mean the shares of Common
Stock issued and issuable to the holder of the Warrant upon its exercise and,
subject to the next succeeding sentence and Section 12(c) hereof, any successor
or assign of such shares (including any shares of Common Stock issued or
distributed by way of dividend, stock split or other distribution in respect of
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such shares). As to any particular Registrable Securities, once issued such
securities shall cease to be Registrable Securities when (i) they are sold
pursuant to an effective Registration Statement under the Securities Act, (ii)
they are sold pursuant to Rule 144 (or any similar provision then in force under
the Securities Act), or (iii) they shall have ceased to be outstanding.
"Registration" shall mean any registration effected pursuant
to Section 3 or 4 hereof.
"Registration Notice" shall have the meaning set forth in
Section 3 hereof.
"Registration Statement" shall mean any registration
statement of the Company under the Securities Act that permits the public
offering of any of the Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits and
all material incorporated by reference or deemed to be incorporated by reference
in such registration statement.
"Rule 144" shall mean Rule 144 under the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC.
"SEC" shall mean the Securities and Exchange Commission or
any successor agency having jurisdiction under the Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations promulgated by the SEC thereunder.
"underwritten registration or underwritten offering" shall
mean a registration in which securities of the Company are sold to an
underwriter for reoffering to the public.
"Warrants" shall mean those stock purchase warrants executed
and delivered by the Company to Impact pursuant to the Purchase and Sale
Agreement dated the date hereof for the purchase of shares of Common Stock.
Section 2. Holders of Registrable Securities. A Person is deemed to be
a holder ("Holder") of Registrable Securities whenever such Person owns
Registrable Securities or has a right to acquire such Registrable Securities
through its exercise of a Warrant.
Section 3. Registration.
(a) Requests for Registration. A Holder, upon written request
(a "Registration Notice"), shall be entitled to cause the Company to prepare and
file a Registration Statement with respect to the aggregate number of shares for
which the Holder has requested registration. The Company shall file a
Registration Statement on the form that counsel for the Company and counsel for
the Holder agree is appropriate for the plan of sale or other disposition to be
used by the Holder of the Warrant. The Company shall prepare and file with the
SEC such amendments and supplements to the Registration Statement and Prospectus
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relating to the offer and sale of the shares covered by the Registration
Statement as may be necessary to keep the Registration Statement effective and
to comply with the provisions of Securities Act with respect to the offer and
sale of the shares during the period required to effect the distribution of the
shares.
After such time as the Company shall become eligible to use
Form S-3 (or comparable form) for the Registration under the Securities Act of
any of its securities, the Holder shall be entitled to request that such
Registration be a "shelf" registration pursuant to Rule 415 under the Securities
Act.
No Registration shall be deemed to have occurred for purposes
of this Section 3(a) if the Registration Statement relating thereto does not
become effective or is not maintained effective for the period required pursuant
to this Section 3(a), in which case the Holder shall be entitled to an
additional Registration in lieu thereof.
All requests for Registration made pursuant to this Section 3
shall specify the amount of Registrable Securities to be registered and the
intended methods of disposition thereof.
The Company shall be required to maintain the effectiveness
of the Registration Statement with respect to any Registration for a period of
at least 180 days (or such date as all Registrable Securities have been sold if
a "shelf registration" is requested) after the effective date thereof or such
shorter period in which all Registrable Securities included in such Registration
Statement have actually been sold; provided, however, that such period shall be
extended for a period of time equal to the period the holder of Registrable
Securities refrains from selling any securities included in such registration at
the request of an underwriter of the Company or the Company pursuant to this
Agreement.
(b) Priority on Registration. If any of the Registrable
Securities registered pursuant to a Registration are to be sold in a firm
commitment underwritten offering, and the managing underwriter or underwriters
advise the Holders in writing that in its view the total number or dollar amount
of Registrable Securities proposed to be sold in such offering is such as to
adversely affect the success of such offering (including, without limitation,
securities proposed to be included by other holders of securities entitled to
include securities in such Registration Statement pursuant to incidental or
piggyback registration rights), then there shall be included in such firm
commitment underwritten offering the number or dollar amount of Registrable
Securities that in the opinion of such managing underwriter can be sold without
adversely affecting such offering, and such Registrable Securities shall be
allocated pro-rata among the Holders requesting such registration on the basis
of the percentage of the Registrable Securities of the Company requested to be
included in such Registration Statement by the Holders that have requested that
such securities be included in the registration. In connection with any
Registration to which the provisions of this subsection (b) apply, no securities
other than Registrable Securities shall be covered by such Registration except
as provided in subsection (d)(ii) hereof, and such registration shall not
diminish the right of the Holders to request registration under this Section 3
for any Shares not included in such Registration as a result.
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(c) Postponement of Registration. The Company shall be
entitled to postpone (but not more than once in any twelve month period), for a
reasonable period of time not in excess of 60 days, the filing of a Registration
Statement requested pursuant to this Section 3 if the Company delivers to the
Holder a certificate signed by both the President and Chief Financial Officer of
the Company stating that, in the good faith judgment of the Board of Directors
of the Company, such Registration and offering could adversely affect or
interfere with any bona fide material financing of the Company or any material
transaction under consideration by the Company. Such certificate shall contain a
general statement of the reasons for such postponement and an approximation of
the anticipated delay.
(d) Registration of Other Securities. Whenever the Company
shall effect a Registration pursuant to this Section 3 in connection with an
underwritten offering by one or more Holders, no securities other than
Registrable Securities shall be included among the securities covered by such
Registration unless (i) the managing underwriter of such offering shall have
advised each holder of Registrable Securities requesting such registration in
writing that it believes that the inclusion of such other securities would not
adversely affect such offering or (ii) the inclusion of such other securities is
approved by the affirmative vote of the holders of at least a majority of the
Registrable Securities to be included in such Registration.
Section 4.Piggyback Registration.
(a) Right to Piggyback. If, at any time there are outstanding
any Registrable Securities, the Company proposes to file a Registration
Statement under the Securities Act with respect to an offering of Common Stock
(other than a registration statement (i) on Form X-0, Xxxx X-0 or any successor
forms thereto or (ii) filed solely in connection with an exchange offer or any
employee benefit or dividend reinvestment plan), whether or not for its own
account, then, the Company shall give prompt written notice of each such
proposed filing at least thirty (30) days before the anticipated filing date
(the "Piggyback Notice") to the Holders. The Piggyback Notice shall offer the
Holders the opportunity to include in such Registration Statement the number of
Registrable Securities as each such holder may request (a "Piggyback
Registration"). Subject to Section 4(b) hereof, the Company shall include in
each such Piggyback Registration all Registrable Securities with respect to
which the Company has received written requests for inclusion therein within ten
(10) days after notice has been given to the applicable Holder. The Holder shall
be permitted to withdraw all or part of the Registrable Securities from a
Piggyback Registration at any time prior to the effective date of such Piggyback
Registration. The Company shall not be required to maintain the effectiveness of
the Registration Statement for a Piggyback Registration beyond the earlier to
occur of (i) 120 days after the effective date thereof and (ii) consummation of
the distribution by the holders of the Registrable Securities included in such
Registration Statement.
(b) Priority on Piggyback Registrations. The Company shall
use reasonable efforts to cause the managing underwriter or underwriters of a
proposed underwritten offering to permit Holders of Registrable Securities
requested to be included in the registration for such offering to include all
such Registrable Securities on the same terms and conditions as any other shares
of capital stock, if any, of the Company included therein. Notwithstanding the
foregoing, if the managing underwriter or underwriters of such underwritten
offering have informed the Company in writing that it is their good faith
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opinion that the total amount of securities that such holders, the Company and
any other Persons having rights to participate in such registration, intend to
include in such offering is such as to adversely affect the success of such
offering, then the amount of securities to be offered (i) for the account of
holders of Registrable Securities and (ii) for the account of all such other
Persons (other than the Company) shall be reduced or limited pro-rata among the
holders of Registrable Securities and such other Persons requesting such
registration on the basis of the percentage of the Registrable Securities or
other securities of the Company requested to be included in such Registration
Statement by such holders that have requested that such securities be included
in the registration to the extent necessary to reduce the total amount of
securities to be included in such offering to the amount recommended by such
managing underwriter or underwriters.
Section 5. Restrictions on Public Sale by Holders of Registrable
Securities. Each Holder agrees, in connection with any underwritten registration
of Registrable Securities filed pursuant to Section 3 or Section 4 hereof, if
requested (pursuant to a written notice) by the managing underwriter or
underwriters in an underwritten offering, not to effect any public sale or
distribution of any of the Company's securities (except as part of such
underwritten offering), including a sale pursuant to Rule 144, during the period
commencing on the date of the request and continuing for not more than 60 days
after the effective date of the Registration Statement pursuant to which such
public offering shall be made or such lesser period as is required by the
managing underwriter, provided, however, that all officers and directors of the
Company must be subject to similar restrictions.
Section 6. Registration Procedures. If and 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 3 and
Section 4 hereof, the Company shall effect such registration to permit the sale
of such Registrable Securities in accordance with the intended method or methods
of disposition thereof, and pursuant thereto the Company shall cooperate in the
sale of the securities and shall, as expeditiously as possible:
(a) Prepare and file with the SEC a Registration Statement or
Registration Statements on such form which shall be available for the sale of
the Registrable Securities by the Holders thereof in accordance with the
intended method or methods of distribution thereof, and use its reasonable best
efforts to cause such Registration Statement to become effective and to remain
effective as provided herein; provided, however, that before filing a
Registration Statement or Prospectus or any amendments or supplements thereto
(including documents that would be incorporated or deemed to be incorporated
therein by reference), the Company shall furnish or otherwise make available to
the Holders covered by such Registration Statement, their counsel and the
managing underwriters, if any, copies of all such documents proposed to be
filed. The Company shall not file any such Registration Statement or Prospectus
or any amendments or supplements thereto (including such documents that, upon
filing, would be incorporated or deemed to be incorporated by reference therein)
with respect to a Registration to which the holders of a majority of the
Registrable Securities covered by such Registration Statement, their counsel, or
the managing underwriters, if any, shall reasonably object, in writing, on a
timely basis, unless, in the opinion of the Company, such filing is necessary to
comply with applicable law.
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(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be necessary to
keep such Registration Statement continuously effective during the period
provided herein with respect to the disposition of all securities covered by
such Registration Statement; and cause the related Prospectus to be supplemented
by any Prospectus supplement as may be necessary to comply with the provisions
of the Securities Act with respect to the disposition of the securities covered
by such Registration Statement, and as so supplemented to be filed pursuant to
Rule 424 (or any similar provisions then in force) under the Securities Act.
(c) Notify each selling Holder, its counsel and the managing
underwriters, if any, promptly, and (if requested by any such Person) confirm
such notice in writing, (i) when a Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to a Registration
Statement or any post-effective amendment, when the same has become effective,
(ii) of any request by the SEC or any other Federal or state governmental
authority for amendments or supplements to a Registration Statement or related
Prospectus or for additional information, (iii) of the issuance by the SEC of
any stop order suspending the effectiveness of a Registration Statement or the
initiation of any proceedings for that purpose, (iv) if at any time the
representations and warranties of the Company contained in any agreement
(including any underwriting agreement) contemplated by Section 6(o) below cease
to be true and correct, (v) of the receipt by the Company of any notification
with respect to the suspension of the qualification or exemption from
qualification of any of the Registrable Securities for sale in any jurisdiction,
or the initiation or threatening of any proceeding for such purpose, and (vi) of
the happening of any event that makes any statement made in such Registration
Statement or related Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires the making of any changes in such Registration Statement, Prospectus or
documents so that, in the case of the Registration Statement, it will not
contain any 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, and that in the case of the Prospectus, it will not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(d) Use its reasonable best efforts to obtain the withdrawal
of any order suspending the effectiveness of a Registration Statement, or the
lifting of any suspension of the qualification (or exemption from qualification)
of any of the Registrable Securities for sale in any jurisdiction.
(e) If requested by the managing underwriters, if any, or the
holders of a majority of the then outstanding Registrable Securities being sold
in connection with an underwritten offering, promptly include in a Prospectus
supplement or post-effective amendment such information as the managing
underwriters, if any, and such Holders may reasonably request in order to permit
the intended method of distribution of such securities and make all required
filings of such Prospectus supplement or such post-effective amendment as soon
as practicable after the Company has received such request; provided, however,
that the Company shall not be required to take any actions under this Section
6(e) that are not, in the opinion of counsel for the Company, in compliance with
applicable law.
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(f) Furnish to each selling Holder, its counsel and each
managing underwriter, if any, without charge, at least one conformed copy of the
Registration Statement, the Prospectus and Prospectus supplements, if
applicable, and each post-effective amendment thereto, including financial
statements (but excluding schedules, all documents incorporated or deemed to be
incorporated therein by reference, and all exhibits, unless requested in writing
by such holder, counsel or underwriter).
(g) Deliver to each selling Holder, its counsel, and the
underwriters, if any, without charge, as many copies of the Prospectus or
Prospectuses (including each form of Prospectus) and each amendment or
supplement thereto as such Persons may reasonably request in connection with the
distribution of the Registrable Securities; and the Company, subject to the last
paragraph of this Section 6, hereby consents to the use of such Prospectus and
each amendment or supplement thereto by each of the selling Holders and the
underwriters, if any, in connection with the offering and sale of the
Registrable Securities covered by such Prospectus and any such amendment or
supplement thereto.
(h) Prior to any public offering of Registrable Securities,
use its reasonable best efforts to register or qualify or cooperate with the
selling Holders, the underwriters, if any, and their respective counsel in
connection with the registration or qualification (or exemption from such
registration or qualification) of such Registrable Securities for offer and sale
under the securities or "Blue Sky" laws of such jurisdictions within the United
States as any seller or underwriter reasonably requests in writing and to keep
each such registration or qualification (or exemption therefrom) effective
during the period such Registration Statement is required to be kept effective
and to take any other action that may be necessary or advisable to enable such
holders of Registrable Securities to consummate the disposition of such
Registrable Securities in such jurisdiction; provided, however, that the Company
will not be required to (i) qualify generally to do business in any jurisdiction
where it is not then so qualified or (ii) take any action that would subject it
to general service of process in any such jurisdiction where it is not then so
subject.
(i) Cooperate with the selling Holders and the managing
underwriters, if any, to facilitate the timely preparation and delivery of
certificates (not bearing any legends) representing Registrable Securities to be
sold after receiving written representations from each Holder that the
Registrable Securities represented by the certificates so delivered by such
Holder will be transferred in accordance with the Registration Statement, and
enable such Registrable Securities to be in such denominations and registered in
such names as the managing underwriters, if any, or Holders may request at least
two (2) business days prior to any sale of Registrable Securities in a firm
commitment public offering, but in any other such sale, within ten (10) business
days prior to having to issue the securities.
(j) Use its reasonable best efforts to cause the Registrable
Securities covered by the Registration Statement to be registered with or
approved by such other governmental agencies or authorities within the United
States, except as may be required solely as a consequence of the nature of such
selling Holder's business, in which case the Company will cooperate in all
reasonable respects with the filing of such Registration Statement and the
granting of such approvals, as may be necessary to enable the seller or sellers
thereof or the underwriters, if any, to consummate the disposition of such
Registrable Securities.
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(k) Upon the occurrence of any event contemplated by Section
6(c)(vi) above, prepare a supplement or post-effective amendment to the
Registration Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, or file any
other required document so that, as thereafter delivered to the purchasers of
the Registrable Securities being sold thereunder, such Prospectus will not
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, in
light of the circumstances under which they were made, not misleading.
(l) Prior to the effective date of the Registration Statement
relating to the Registrable Securities, provide a CUSIP number for the
Registrable Securities.
(m) Provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by such Registration Statement
from and after a date not later than the effective date of such Registration
Statement.
(n) Use its reasonable best efforts to cause all shares of
Registrable Securities covered by such Registration Statement to be authorized
to be quoted on the Nasdaq National Market or listed on a national securities
exchange if shares of the particular class of Registrable Securities are at that
time quoted on the Nasdaq National Market or listed on such exchange, as the
case may be.
(o) Enter into such agreements (including an underwriting
agreement in form, scope and substance as is customary in underwritten
offerings) and take all such other actions reasonably requested by the holders
of a majority of the Registrable Securities being sold in connection therewith
(including those reasonably requested by the managing underwriters, if any) to
expedite or facilitate the disposition of such Registrable Securities, and in
such connection, whether or not an underwriting agreement is entered into and
whether or not the registration is an underwritten registration, (i) make such
representations and warranties to the holders of such Registrable Securities and
the underwriters, if any, with respect to the business of the Company and its
subsidiaries, and the Registration Statement, Prospectus and documents, if any,
incorporated or deemed to be incorporated by reference therein, in each case, in
form, substance and scope as are customarily made by issuers to underwriters in
underwritten offerings, and, if true, confirm the same if and when requested,
(ii) use its reasonable best efforts to furnish to the selling Holders 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, and counsels to the selling Holders), addressed to each
selling Holder and each of the underwriters, if any, covering the matters
customarily covered in opinions requested in underwritten offerings and such
other matters as may be reasonably requested by such counsel and underwriters,
(iii) use its reasonable best efforts to obtain "cold comfort" letters and
updates thereof from the independent certified public accountants of the Company
(and, if necessary, any other independent certified public accountants of any
subsidiary of the Company or of any business acquired by the Company for which
financial statements and financial data are, or are required to be, included in
the Registration Statement) who have certified the financial statements included
in such Registration Statement, addressed to each selling Holder (unless such
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accountants shall be prohibited from so addressing such letters by applicable
standards of the accounting profession) and each of the underwriters, if any,
such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with underwritten
offerings, (iv) if an underwriting agreement is entered into, the same shall
contain indemnification provisions and procedures substantially to the effect
set forth in Section 8 hereof with respect to all parties to be indemnified
pursuant to said Section and (v) deliver such documents and certificates as may
be reasonably requested by the holders of a majority of the Registrable
Securities being sold, their counsel and the managing underwriters, if any, to
evidence the continued validity of the representations and warranties made
pursuant to Section 6(o)(i) above and to evidence compliance with any customary
conditions contained in the underwriting agreement or other agreement entered
into by the Company. The above shall be done at each closing under such
underwriting or similar agreement, or as and to the extent required thereunder.
(p) Make available for inspection by a representative of the
selling Holders of Registrable Securities, any underwriter participating in any
such disposition of Registrable Securities, if any, and any attorneys or
accountants retained by such selling Holders or underwriter, at the offices
where normally kept, during reasonable business hours, all financial and other
records, pertinent corporate documents and properties of the Company and its
subsidiaries, and cause the officers, directors and employees of the Company and
its subsidiaries to supply all information in each case reasonably requested by
any such representative, underwriter, attorney or accountant in connection with
such Registration Statement; provided, however, that any information that is not
generally publicly available at the time of delivery of such information shall
be kept confidential by such Persons unless (i) disclosure of such information
is required by court or administrative order, (ii) disclosure of such
information, in the opinion of counsel to such Person, is required by law, or
(iii) such information becomes generally available to the public other than as a
result of a disclosure or failure to safeguard by such Person. In the case of a
proposed disclosure pursuant to (i) or (ii) above, such Person shall be required
to give the Company written notice of the proposed disclosure prior to such
disclosure and, if requested by the Company, assist the Company in seeking to
prevent or limit the proposed disclosure. Without limiting the foregoing, no
such information shall be used by such Person as the basis for any market
transactions in securities of the Company or its subsidiaries in violation of
law.
(q) Comply with all applicable rules and regulations of the
SEC and make available to the Holders earning statements satisfying the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder, or
any similar rule promulgated under the Securities Act, no later than forty-five
(45) days after the end of any twelve (12) month period (or ninety (90) days
after the end of any twelve (12) month period if such period is a fiscal year)
(i) commencing at the end of any fiscal quarter in which Registrable Securities
are sold to underwriters in a firm commitment or best efforts underwritten
offering and (ii) if not sold to underwriters in such an offering, commencing on
the first day of the first fiscal quarter of the Company after the effective
date of a Registration Statement, which statements shall cover one of said
twelve (12) month periods.
(r) Cause its officers to use their reasonable best efforts
to support the marketing of the Registrable Securities covered by the
Registration Statement (including, without limitation, participation in "road
shows") taking into account the Company's business needs.
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The Company may require each seller of Registrable Securities
as to which any registration is being effected to furnish to the Company in
writing such information required in connection with such registration regarding
such seller and the distribution of such Registrable Securities as the Company
may, from time to time, reasonably request in writing and the Company may
exclude from such registration the Registrable Securities of any seller who
unreasonably fails to furnish such information within a reasonable time after
receiving such request.
Each Holder agrees if such Holder has Registrable Securities
covered by such Registration Statement that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 6(c)(ii),
6(c)(iii), 6(c)(v) or 6(c)(vi) hereof, such Holder will forthwith discontinue
disposition of such Registrable Securities covered by such Registration
Statement or Prospectus until such Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 6(k) hereof, or until
it is advised in writing by the Company that the use of the applicable
Prospectus may be resumed, and has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus; provided, however that the Company shall extend
the time periods under Section 3 with respect to the length of time that the
effectiveness of a Registration Statement must be maintained by the amount of
time the Holder is required to discontinue disposition of such securities.
Section 7. Registration Expenses. All reasonable fees and expenses
incident to the performance of or compliance with this Agreement by the Company
(including, without limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses (A) with respect to filings required to be
made with the National Association of Securities Dealers, Inc. and (B) of
compliance with securities or Blue Sky laws, including, without limitation, any
fees and disbursements of counsel for the underwriters in connection with Blue
Sky qualifications of the Registrable Securities pursuant to Section 6(h)), (ii)
printing expenses (including, without limitation, expenses of printing
certificates for Registrable Securities in a form eligible for deposit with The
Depository Trust Company and of printing prospectuses if the printing of
prospectuses is requested by the managing underwriters, if any, or by the
holders of a majority of the Registrable Securities included in any Registration
Statement), (iii) messenger, telephone and delivery expenses of the Company,
(iv) fees and disbursements of counsel for the Company, (v) expenses of the
Company incurred in connection with any road show, and (vi) fees and
disbursements of all independent certified public accountants referred to in
Section 6(o)(iii) hereof (including, without limitation, the expenses of any
"cold comfort" letters required by this Agreement) and any other persons,
including special experts retained by the Company, and shall be borne, in the
case the Registration is made under Section 3, by the Holders requesting the
Registration and, in the case the Registration is made under Section 4, by the
Company whether or not any of the Registration Statements is filed or becomes
effective. The Company shall pay its internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the expense of any annual audit, the fees and
expenses incurred in connection with the listing of the securities to be
registered on any securities exchange on which similar securities issued by the
Company are then listed and rating agency fees and the fees and expenses of any
Person, including special experts, retained by the Company.
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The Company shall not be required to pay in any Registration
(i) fees and disbursements of any counsel retained by any Holder of Registrable
Securities or by any underwriter (except as set forth in clauses 7(i)(B) and
7(vii)), (ii) any underwriter's fees (including discounts, commissions or fees
of underwriters, selling brokers, dealer managers or similar securities industry
professionals) relating to the distribution of the Registrable Securities, or
(iii) any other expenses of the Holders of Registrable Securities not
specifically required to be paid by the Company pursuant to the first paragraph
of this Section 7.
Section 8. Indemnification.
(a) Indemnification by the Company. The Company shall,
without limitation as to time, indemnify and hold harmless, to the fullest
extent permitted by law, each Holder whose Registrable Securities are covered by
a Registration Statement or Prospectus, the officers, directors, accountants,
agents and employees of each of them, each Person who controls each such holder
(within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) and the officers, directors, accountants, agents and employees of
each such controlling person, each underwriter, if any, and each person who
controls (within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act) such underwriter, from and against any and all losses,
claims, damages, liabilities, costs (including, without limitation, costs of
preparation and reasonable attorneys' fees and any legal or other fees or
expenses incurred by such party in connection with any investigation or
Proceeding), expenses, judgments, fines, penalties, charges and amounts paid in
settlement (collectively, "Losses"), as incurred, arising out of or based upon
any untrue statement (or alleged untrue statement) of a material fact contained
in any prospectus, offering circular, or other document (including any related
registration statement, notification, or the like) incident to any such
registration, qualification, or compliance, or based on 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, or any violation by the
Company of the Securities Act or any rule or regulation thereunder applicable to
the Company and relating to action or inaction required of the Company in
connection with any such registration, qualification, or compliance, and will
reimburse each such Holder, each of its officers, directors, partners, legal
counsel, and accountants and each person controlling such Holder, each such
underwriter, and each person who controls any such underwriter, for any legal
and any other expenses reasonably incurred in connection with investigating and
defending or settling any such claim, loss, damage, liability, or action,
provided that the Company will not be liable in any such case to the extent that
any such claim, loss, damage, liability, or expense arises out of or is based on
any untrue statement or omission by such holder or underwriter, but only to the
extent, that such untrue statement (or alleged untrue statement) or omission (or
alleged omission) is made in such registration statement, prospectus, offering
circular, or other document in reliance upon and in conformity with written
information furnished to the Company by such Holder. It is agreed that the
indemnity agreement contained in this Section 8(a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld).
(b) Indemnification by Holder. In connection with any
Registration Statement in which a Holder is participating, such Holder shall
furnish to the Company in writing such information as the Company reasonably
requests for use in connection with any Registration Statement or Prospectus and
agrees to indemnify, to the fullest extent permitted by law, severally and not
12
jointly, the Company, its directors, officers, accountants, agents and
employees, each Person who controls the Company (within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act), and the directors,
officers, agents or employees of such controlling persons, and each underwriter,
if any, and each person who controls such underwriter (within the meaning of
Section 15 of the Securities Act and Section 20 of the Exchange Act), from and
against all Losses arising out of or based on any untrue statement of a material
fact contained in any such registration statement, prospectus, offering
circular, or other document, or any omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse the Company and such directors, officers,
partners, legal counsel, and accountants, persons, underwriters, or control
persons for any legal or any other expenses reasonably incurred in connection
with investigating or defending any such claim, loss, damage, liability, or
action, in each case to the extent, but only to the extent, that such untrue
statement or omission is made in such registration statement, prospectus,
offering circular, or other document in reliance upon and in conformity with
written information furnished to the Company by such Holder specifically for use
in connection with the preparation of such registration statement, prospectus,
offering circular or other document provided, however, that the obligations of
such Holder hereunder shall not apply to amounts paid in settlement of any such
claims, losses, damages, or liabilities (or actions in respect thereof) if such
settlement is effected without the consent of such Holder (which consent shall
not be unreasonably withheld); and provided, further, that the liability of each
selling Holder hereunder shall be limited to the net proceeds received by such
selling Holder from the sale of Registrable Securities covered by such
Registration Statement. In addition, insofar as the foregoing indemnity relates
to any such untrue statement or omission made in the preliminary prospectus but
eliminated or remedied in the amended prospectus on file with the SEC at the
time the registration statement becomes effective or in the final prospectus
filed pursuant to applicable rules of the SEC or in any supplement or addendum
thereto and such new prospectus is delivered to the underwriter, the indemnity
agreement herein shall not inure to the benefit of such underwriter, any
controlling person of such underwriter and their respective Representatives, if
a copy of the final prospectus filed pursuant to such rules, together with all
supplements and addenda thereto was not furnished to the person or entity
asserting the loss, liability, claim or damage at or prior to the time such
furnishing is required by the Securities Act.
(c) Conduct of Indemnification Proceedings. If any Person
shall be entitled to indemnity hereunder (an "indemnified party"), such
indemnified party shall give prompt notice to the party from which such
indemnity is sought (the "indemnifying party") of any claim or of the
commencement of any Proceeding with respect to which such indemnified party
seeks indemnification or contribution pursuant hereto; provided, however, that
the delay or failure to so notify the indemnifying party shall not relieve the
indemnifying party from any obligation or liability except to the extent that
the indemnifying party has been prejudiced by such delay or failure. The
indemnifying party shall have the right, exercisable by giving written notice to
an indemnified party promptly after the receipt of written notice from such
indemnified party of such claim or Proceeding, to, unless in the indemnified
party's reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, assume, at the
indemnifying party's expense, the defense of any such claim or Proceeding, with
counsel reasonably satisfactory to such indemnified party; provided, however,
that an indemnified party shall have the right to employ separate counsel in any
such claim or Proceeding and to participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such indemnified party
unless: (i) the indemnifying party agrees to pay such fees and expenses; or (ii)
the indemnifying party fails promptly to assume the defense of such claim or
Proceeding or fails to employ counsel reasonably satisfactory to such
indemnified party; in which case the indemnified party shall have the right to
employ counsel and to assume the defense of such claim or proceeding; provided,
however, that the indemnifying party shall not, in connection with any one such
13
claim or Proceeding or separate but substantially similar or related claims or
Proceedings in the same jurisdiction, arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one firm of attorneys (together with appropriate local counsel) at any time for
all of the indemnified parties, or for fees and expenses that are not
reasonable. Whether or not such defense is assumed by the indemnifying party,
such indemnified party shall not be subject to any liability for any settlement
made without its consent (but such consent shall not be unreasonably withheld).
The indemnifying party shall not consent to entry of any judgment or enter into
any settlement that does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such indemnified party of a release, in form and
substance reasonably satisfactory to the indemnified party, from all liability
in respect of such claim or litigation for which such indemnified party would be
entitled to indemnification hereunder.
(d) Contribution. If the indemnification provided for in this
Section 8 is unavailable to an indemnified party in respect of any Losses (other
than in accordance with its terms), because of a failure or refusal of a
governmental authority to enforce such provisions in accordance with its terms
due to public policy or otherwise, then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such Losses, in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party, on the one hand, and such indemnified party, on the other hand, in
connection with the actions, statements or omissions that resulted in such
Losses as well as any other relevant equitable considerations. The relative
fault of such indemnifying party, on the one hand, and indemnified party, on the
other hand, shall be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact, has been
taken by, or relates to information supplied by, such indemnifying party or
indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent any such action, statement or
omission.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 8(d) were determined by pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 8(d), an indemnifying
party that is a selling Holder shall not be required to contribute any amount in
excess of the amount by which the net proceeds from the sale of the Registrable
Securities sold by such indemnifying party exceeds the amount of any damages
that such indemnifying party has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
14
(e) Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement entered
into in connection with the underwritten public offering are in conflict with
the foregoing provisions, the provisions in the underwriting agreement shall
control.
Section 9. Rule 144. The Company shall file the reports required to be
filed by it under the Securities Act and the Exchange Act, and shall 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
limitations of the exemption provided by Rule 144. Upon the request of any
Holder, the Company shall deliver to such holder a written statement as to
whether it has complied with such requirements.
Section 10. Underwritten Registrations. If any Registration is an
underwritten offering, the Holder shall have the right to select the investment
banker or investment bankers and managers to administer the offering, subject to
approval by the Company, not to be unreasonably withheld. The Company shall have
the right to select the investment banker or investment bankers and managers to
administer any Piggyback Registration.
No Person may participate in any underwritten registration
hereunder unless such Person (i) agrees to sell the Registrable Securities it
desires to have covered by the Registration on the basis provided in any
underwriting arrangements in customary form and (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements,
provided that such Person shall not be required to make any representations or
warranties other than those related to title and ownership of shares and as to
the accuracy and completeness of statements made in a registration statement,
prospectus, offering circular, or other document in reliance upon and in
conformity with written information furnished to the Company or the managing
underwriter by such Person.
Section 11. Limitation on Subsequent Registration Rights. From and
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 then outstanding
Registrable Securities, enter into any agreement with any Holder or prospective
holder of any securities of the Company giving such Holder or prospective Holder
any registration rights the terms of which are equivalent to or more favorable
than the registration rights granted to Holders hereunder, or that would reduce
the amount of Registrable Securities the Holders can include in any Registration
filed pursuant to Section 3 hereof, unless such rights are subordinate to those
of the Holders.
Section 12. Miscellaneous.
(a) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of holders
of at least a majority of the Registrable Securities; provided, however, that in
no event shall the obligations of any Holder be materially increased or the
rights of any Investor be adversely affected (without similarly adversely
15
affecting the rights of all Investors), except upon the written consent of such
Holder. Notwithstanding the foregoing, a waiver or consent to depart from the
provisions hereof with respect to a matter that relates exclusively to the
rights of Holders whose securities are being sold pursuant to a Registration
Statement and that does not directly or indirectly affect the rights of other
Holders may be given by holders of at least a majority of the Registrable
Securities being sold by such Holders pursuant to such Registration Statement.
(b) Notices. All notices required to be given hereunder shall
be in writing and shall be deemed to be duly given if personally delivered,
telecopied and confirmed, or mailed by certified mail, return receipt requested,
or overnight delivery service with proof of receipt maintained, at the following
address (or any other address that any such party may designate by written
notice to the other parties):
If to the Company:
Tidelands Oil & Gas Corporation
13330 Leopard, Xxxxx 00
Xxxxxx Xxxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxx, President
If to Impact:
Impact Energy Services, L.L.C.
000 X. Xxxxxxx, Xxxxx 000
Xxxxx, Xxxxxxxx 00000
Attn: Xxx Xxxxxxxx, President
Any such notice shall, if delivered personally, be deemed received upon
delivery; shall, if delivered by telecopy, be deemed received on the first
business day following confirmation; shall, if delivered by overnight delivery
service, be deemed received the first business day after being sent; and shall,
if delivered by mail, be deemed received upon the earlier of actual receipt
thereof or five business days after the date of deposit in the United States
mail.
(c) Successors and Assigns. This Agreement shall inure to the
benefit of the Members of a Holder who have received shares of Registrable
Securities from a Holder pursuant to a distribution and shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders acquired, directly or indirectly, from the
Holders.
(d) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(e) Headings. The section and paragraph headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
16
(f) Governing Law. This agreement shall be governed by and
construed in accordance with the laws of the State of Oklahoma (without giving
effect to the choice of law principles thereof).
(g) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(h) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement, and is intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein, with respect to the registration rights granted by the
Company with respect to Registrable Securities. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
(i) Securities Held by the Company or its Affiliates.
Whenever the consent or approval of Holders of a specified percentage of
Registrable Securities is required hereunder, Registrable Securities held by the
Company or its subsidiaries shall not be counted in determining whether such
consent or approval was given by the holders of such required percentage.
(j) Termination. This Agreement shall terminate when no
Registrable Securities remain outstanding; provided that Sections 7 and 8 shall
survive any termination hereof.
(k) Specific Performance. The parties hereto recognize and
agree that money damages may be insufficient to compensate the holders of any
Registrable Securities for breaches by the Company of the terms hereof and,
consequently, that the equitable remedy of specific performance of the terms
hereof will be available in the event of any such breach.
17
IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be duly executed as of the date first above written.
TIDELANDS OIL & GAS CORPORATION
By: ________________________
Name: Xxxxxxx X. Xxxx
Title: President
IMPACT INTERNATIONAL, L.L.C.
By: ________________________
Name: Xxx Xxxxxxxx
Title: Manager
