EXHIBIT 10.18
STOCK OWNERSHIP AND
REGISTRATION RIGHTS AGREEMENT
AMONG
TEXOIL, INC.,
AND
T. W. HOEHN, JR.
T. W. HOEHN, III
AND
WILLIAM F. SEAGLE
SEPTEMBER 6, 1996
::ODMA\PCDOCS\DOCS\88117\1
Exhibit 10.18 - Page 1
STOCK OWNERSHIP AND REGISTRATION RIGHTS AGREEMENT
AMONG
TEXOIL, INC.
AND
T. W. HOEHN, JR., T. W. HOEHN, III, AND WILLIAM F. SEAGLE
THIS STOCK OWNERSHIP AND REGISTRATION RIGHTS AGREEMENT dated as of
September 6, 1996, (this "Agreement") among TEXOIL, INC., a Nevada corporation
(the "Company"), and T. W. HOEHN, JR., T. W. HOEHN III, AND WILLIAM F. SEAGLE
(collectively, the "Shareholder Holders," and together with their distributees,
successors and assigns, the "Holders"), is effective for all purposes as of the
date specified in Article III hereof.
W I T N E S S E T H:
WHEREAS, pursuant to the terms and subject to the conditions of those
three certain Amended and Restated Agreements of Purchase and Sale (the "Note
Purchase Agreements") dated as of even date herewith between the Company and,
respectively, the Shareholder Holders, the Company will issue and sell to each
Shareholder Holder, in various amounts, a Replacement 12% Convertible Promissory
Note (collectively, the "Notes", and each individually, a "Note") and the Notes
are in the aggregate principal amount of $900,000; and
WHEREAS, the Notes are convertible or exchangeable according to their
terms for shares of common stock of Company, par value $.01 per share (the
"Company Common Stock"); and
WHEREAS, the execution and delivery of this Agreement is a condition
precedent to the closing of the transactions contemplated by the Note Purchase
Agreements;
NOW, THEREFORE, to induce the parties hereto to close the transactions
contemplated by the Note Purchase Agreements (such closing referred to herein as
the "Closing") and in consideration of the aforesaid and of the mutual
representations, warranties and covenants contained herein and in the Note
Purchase Agreements, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto, intending
to be legally bound, agree as follows:
::ODMA\PCDOCS\DOCS\88117\1
Exhibit 10.18 - Page 2
ARTICLE I
DEFINITIONS; COMPANY REPRESENTATIONS,
WARRANTIES AND COVENANTS
SECTION 1.01 CERTAIN DEFINED TERMS. Capitalized terms used herein and not
otherwise defined herein shall have the respective meanings set forth in the
Note Purchase Agreements. For purposes of this Agreement,
"1933 ACT" means the Securities Act of 1933, as amended.
"1934 ACT" means the Securities and Exchange Act of 1934, as amended.
"AGREEMENT" has the meaning specified in the preamble.
"BLUE SKY FILING" has the meaning specified in SECTION 2.09(A).
"CLOSING" has the meaning specified in the recitals.
"COMMISSION" means the Securities and Exchange Commission.
"COMPANY" has the meaning specified in the preamble.
"COMPANY COMMON STOCK" has the meaning specified in the recitals.
"DEMAND REGISTRATIONS" has the meaning specified in SECTION 2.01(A).
"HOLDERS" has the meaning specified in the preamble.
"NOTE PURCHASE AGREEMENTS" has the meaning specified in the recitals.
"NOTES" has the meaning specified in the recitals.
"PERMITTED INTERRUPTION" has the meaning specified in SECTION 2.01(G).
"PIGGYBACK REGISTRATION" has the meaning specified in SECTION 2.02(A).
"REGISTRABLE SECURITIES" means the Shares and the Related Securities. 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
1933 Act and such securities shall have been disposed of in accordance with the
plan of
::ODMA\PCDOCS\DOCS\88117\1
Exhibit 10.18 - Page 3
distribution set forth in such registration statement, (b) such securities shall
have been distributed in accordance with Rule 144 under the 1933 Act or (c) such
securities shall have been otherwise transferred, new certificates therefor not
bearing a legend restricting further transfer shall have been delivered in
exchange therefor by Company and subsequent disposition of such securities shall
not require registration or qualification under the 1933 Act or any similar
state law then in force.
"REGISTRATION EXPENSES" has the meaning specified in SECTION 2.07.
"RELATED SECURITIES" means, collectively, other than the Shares, (i) any
and all securities issued or issuable as a result of adjustments made under the
Notes, and in each case any and all securities otherwise exchanged therefor or
distributed, issued or issuable with respect thereto and (ii) any and all
securities of Company or any successor thereto or assignee thereof that are
hereafter transferred, distributed, issued or issuable to the Holders.
"RIMCO NOTE PURCHASE AGREEMENT" means that certain Note Purchase Agreement
dated the same date as this Agreement among the Company, the RIMCO Noteholders,
and Texoil Company, a Tennessee corporation.
"RIMCO NOTEHOLDERS" means the holders of RIMCO Tranche A Notes, as defined
in the RIMCO Note Purchase Agreement.
"SHAREHOLDER HOLDERS" has the meaning specified in the preamble.
"SHARES" means, collectively, shares of Company Common Stock issued or
issuable upon exchange or conversion of the Notes and all shares of Company
Common Stock exchanged therefor or distributed, issued or issuable with respect
thereto.
SECTION A. UNDERTAKING TO FILE REPORTS AND COOPERATE IN RULE 144
TRANSACTIONS. For as long as any Holder shall continue to hold any Registrable
Securities, Company shall file, on a timely basis, all annual, quarterly and
other reports required to be filed by it under Sections 13 and 15(d) of the 1934
Act and the rules and regulations promulgated by the Commission thereunder, as
amended from time to time during the term of this Agreement. In the event of any
proposed transfer of Registrable Securities other than pursuant to a sale or
transfer registered under the 1933 Act, Company shall cooperate with each Holder
so as to enable such sales to be made in accordance with applicable laws, rules
and regulations, the requirements of Company's transfer agents, and the
reasonable requirements of the broker through which the sales are proposed to be
executed, and shall, upon request and subject to applicable law, furnish
unlegended certificates representing Shares and Related Securities in such
numbers and denominations as any Holder shall reasonably require for delivery
pursuant to such sales. The Holders will have all of the rights set forth
::ODMA\PCDOCS\DOCS\88117\1
Exhibit 10.18 - Page 4
in this Agreement to register the offering of the Registrable Securities
notwithstanding any availability of Rule 144 under the 1933 Act with respect to
the sale of all or part of the Registrable Securities.
SECTION 1.02 SECTIONS 411 THROUGH 444 OF THE NEVADA GENERAL CORPORATION
LAW. If at any time Company shall be governed by Sections 411 through 444 of
the Nevada General
Corporation Law, Company hereby covenants that it will use its reasonable best
efforts, subject to compliance with applicable law, to take all actions
necessary under Nevada law, including, without limitation, the approval by the
Board of Directors of Company of the Transaction Documents and the consummation
of the transactions contemplated thereby, to render the provisions of Sections
411 through 444 of the Nevada General Corporation Law inapplicable to the
Shareholder Holders and their affiliates and to the transactions contemplated in
the Transaction Documents, including, without limitation, the acquisition of
shares of Company Common Stock by the Shareholder Holders pursuant to the
transactions contemplated by the Transaction Documents, as may be amended from
time to time.
SECTION 1.03 BOSTON STOCK EXCHANGE. Company shall as promptly as
practicable prepare and file an application to list the Registrable Securities
on each exchange or automated market on which comparable securities of the
Company are then traded, including, without limitation, the Boston Stock
Exchange (if applicable), effective as soon as practicable after the issuance of
such Registrable Securities and shall use its reasonable best efforts to cause
such application to be approved as promptly as practicable.
ARTICLE II
REGISTRATION RIGHTS
SECTION 2.01 DEMAND REGISTRATIONS. (a) GENERAL. Upon the written request
to Company of Holders of not less than a majority (in then market value) of the
then outstanding Registrable Securities, including not less than a majority (in
then market value) of the then outstanding Registrable Securities held by the
Shareholder Holders, to Company that Company effect the registration under the
1933 Act, such registration to occur at any time, of all or part of the
Registrable Securities and specifying the intended method of disposition
thereof, Company will give prompt written notice of such request to all other
Persons, if any, who have contractual rights to request that any of their shares
be piggybacked onto any registration form proposed to be used to register the
Registrable Securities requested by such Holders, and thereupon Company will,
subject to the provisions of this Agreement, use its reasonable best efforts to
include in the registration under the 1933 Act all shares of Company Common
Stock that persons having contractual registration rights with respect to such
shares have requested in writing that Company register, PROVIDED such request is
given to Company within 20 days after the receipt of the aforesaid written
notice by Company (specifying the intended method of disposition of such Company
Common Stock), all to
::ODMA\PCDOCS\DOCS\88117\1
Exhibit 10.18 - Page 5
the extent requisite to permit the intended disposition of the Registrable
Securities and shares of Company Common Stock to be so registered. All
registrations requested pursuant to this SECTION 2.01(A) are referred to herein
as "Demand Registrations."
(b) NUMBER OF DEMAND REGISTRATIONS. Subject to the provisions of SECTION
2.01(A), the Holders shall, collectively, be entitled to request one Demand
Registration.
(c) REGISTRATION OF OTHER SECURITIES. Whenever Company shall effect a
Demand Registration of Company Common Stock pursuant to SECTION 2.01(A) in
connection with an underwritten offering by the Holders, no securities other
than shares of Company Common Stock shall be included among the securities
covered by such registration unless (i) the managing underwriter of such
offering shall have advised Company in writing that the inclusion of such other
securities would not adversely affect such offering or (ii) the Holders of
Registrable Securities participating in such Demand Registration shall have
consented in writing to the inclusion of such other securities.
(d) REGISTRATION STATEMENT FORM. Demand Registrations shall be on such
appropriate registration form of the Commission (excluding Form S-8 or Form S-4
(or any successor form)) (i) as shall be selected by Company and shall be
reasonably acceptable to the Holders and (ii) as shall permit the disposition of
such Registrable Securities in accordance with the intended method or methods of
disposition specified in the Holders' request for such registration, including,
without limitation, a "shelf offering" or disposition pursuant to Rule 415 under
the 1933 Act. Company and the Holders agree to include in any such registration
statement all information and exhibits that, in the opinion of counsel to the
Holders or counsel to Company, is required to be included therein.
(e) EFFECTIVE REGISTRATION STATEMENT. A registration requested pursuant to
SECTION 2.01(A) shall not be deemed to have been effected and will NOT be
considered one of the Demand Registrations which may be requested pursuant to
this Agreement if (i) a registration statement with respect thereto has not
become effective or if the request for the Demand Registration is withdrawn
prior to effectiveness or such registration is interfered with by any stop
order, injunction or other order or requirement of the Commission or other
governmental agency or court for any reason and has not thereafter become
effective, (ii) after it has become effective, it does not remain effective for
a period of at least 120 days or, in the case of a "shelf" registration or
registration pursuant to Rule 415 under the 1933 Act, for a period of at least
two years (unless the Registrable Securities registered thereunder have been
sold or disposed of prior to the expiration of such 120-day period or such
two-year period, as the case may be), (iii) the conditions to closing specified
in any underwriting agreement entered into in connection with such registration
are not satisfied or waived other than by reason of the failure or refusal of
the Holders to satisfy or perform a condition to such closing or (iv) the
Holders are not able to register and sell all of the Registrable Securities
requested to be included in such Demand Registration, but only if such
registration statement is for a "firm
::ODMA\PCDOCS\DOCS\88117\1
Exhibit 10.18 - Page 6
commitment underwriting" rather than for an "at the market sale" by the Holders.
In any event, Company shall pay all Registration Expenses in connection with any
such registration initiated but not so effected.
(f) PRIORITY ON DEMAND REGISTRATIONS. In the event that the managing
underwriters of a requested Demand Registration advise Company in writing that
in their opinion the number of shares of Registrable Securities proposed to be
included in any such registration exceeds the number of securities that can be
sold in such offering, Company shall include in such registration only the
number of shares of Registrable Securities that in the opinion of such
underwriters can be sold. If the number of Registrable Securities requested to
be sold in a Demand Registration exceeds the number of shares of Registrable
Securities that can be sold, Company shall include in such Demand Registration
(i) FIRST, the Registrable Securities requested to be included therein by the
Holders, and (ii) SECOND, other securities requested to be included in such
registration.
(g) RESTRICTIONS ON DEMAND REGISTRATIONS. Company shall not be obligated
to effect any Demand Registration within 180 days after the effective date of a
previous Demand Registration or a previous registration under which any Holder
exercised piggyback rights pursuant to SECTION 2.02 hereof. Company may postpone
(such postponement referred to herein as a "Permitted Interruption") for a
reasonable period of time (not to exceed 90 days, which may not thereafter be
extended without approval by the Holders participating in such Demand
Registration, which approval will not be unreasonably withheld) the filing or
the effectiveness of a registration statement for a Demand Registration if, at
the time it receives a request for such registration (i) Company is engaged in
any active program for repurchase of Company Common Stock and furnishes to the
Holders an Officer's Certificate to that effect, (ii) Company is conducting or
about to conduct an offering of Company Common Stock or other securities and
Company is advised by the investment banker engaged by Company to conduct the
offering that such offering would be affected adversely by the registration so
demanded and Company furnishes to the Holders an Officer's Certificate to that
effect, or (iii) the board of directors of Company shall determine in good faith
that such offering will interfere with a pending or contemplated financing,
merger, acquisition, business combination, sale of assets, recapitalization or
other similar corporate action of Company and Company furnishes to the Holders
an Officer's Certificate to that effect. After such Permitted Interruption,
Company shall effect such registration as promptly as practicable without
further request from the Holders unless such request has been withdrawn.
(h) SELECTION OF UNDERWRITERS. The Holders shall have the right to select
such investment bankers and managers as shall be reasonably acceptable to
Company to administer the offering of Registrable Securities for which a Demand
Registration is requested. The Holders shall, in their sole discretion,
negotiate the terms of the underwriters' fees and expenses, the underwriting
discount and commission and the transfer taxes.
::ODMA\PCDOCS\DOCS\88117\1
Exhibit 10.18 - Page 7
(i) PREEMPTION OF DEMAND REGISTRATION. Notwithstanding anything to the
contrary contained herein, if at any time a Demand Registration has been
requested pursuant to SECTION 2.01(A), Company may elect to effect an
underwritten primary registration on behalf of Company if Company's board of
directors believes that such primary registration would be in the best interests
of Company or if the managing underwriter for the requested Demand Registration
advises Company in writing that in their opinion in order to sell the
Registrable Securities subject to such Demand Registration Company should
include its own securities. Promptly after receiving a request for a Demand
Registration, Company shall notify the members of its board of directors (and
the board of directors shall consider the issue within 30 days after receiving
such request), and Company shall meet with the managing underwriter and shall
decide whether or not to effect an underwritten primary registration on behalf
of Company, and failure to convene such a meeting and make such determination
within such 30-day period shall constitute a waiver by Company of its right to
preempt a Demand Registration under this SECTION 2.01(I). If Company elects to
effect a primary registration after receiving a request to effect a Demand
Registration, Company shall give prompt written notice (and in any event within
60 days after receiving a request for a Demand Registration) to each Holder
requesting such Demand Registration of Company's intention to effect such a
primary registration and shall afford such Holder or Holders rights to Piggyback
Registrations contained in SECTION 2.02 hereof. If Company elects to effect a
primary registration after receiving a request to effect a Demand Registration,
such registration shall not count as one of the Demand Registrations of the
Holders permitted under SECTION 2.01(B) hereof, unless all Registrable
Securities requested to be included in the Demand Registration are included in
such primary registration.
SECTION 2.02 PIGGYBACK REGISTRATIONS. (a) GENERAL. Whenever Company
proposes to register any shares of Company Common Stock or other equity
securities under the 1933 Act (other than registrations solely for shares to be
issued in connection with any employee benefit plan or a merger, consolidation
or other business combination registered on Form S-4 (or any successor form
thereto)) and the registration form to be used may be used for the registration
of Shares or Related Securities, as the case may be (a "Piggyback
Registration"), Company shall give prompt written notice (in any event within 10
business days after its receipt of notice of any exercise of other registration
rights) to each Holder of its intention to effect such a registration and shall
use its reasonable best efforts to include in such registration all of the
Registrable Securities with respect to which Company receives from any Holder a
written request for inclusion therein within 20 days after the receipt by the
Holders of Company's notice (five business days if Company gives telephonic
notice to the Holders, with written confirmation to follow immediately
thereafter, stating that (i) such registration will be on Form S-3 (or any
comparable or successor form or comparable form then applicable to small
business issuers) and (ii) such shorter period of time is required because of a
planned filing date), which request shall specify the number of Registrable
Securities requested to be included in such registration by such Holder. If
Company elects, prior to effectiveness, not to proceed with a primary
registration of Company Common Stock or other equity securities, it shall not be
obligated to register any Registrable Securities pursuant to such registration
unless such
::ODMA\PCDOCS\DOCS\88117\1
Exhibit 10.18 - Page 8
primary registration was initiated as provided in SECTION 2.01(I) after Company
received a request for Demand Registration.
(b) PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback Registration is an
underwritten primary registration on behalf of Company and the managing
underwriter of such offering advises Company in writing that in their opinion
the number of securities requested to be included in such registration exceeds
the number that can reasonably be sold in such offering, then Company shall
include in such registration (i) FIRST, the securities that Company proposes to
sell, (ii) SECOND, the Registrable Securities and other securities requested to
be included therein by one or more Holders or RIMCO Noteholders, on a PRO RATA
basis according to the number of securities originally requested to be included
by each Holder and RIMCO Noteholder and (iii) THIRD, securities requested to be
included therein by any other persons having registration rights with respect to
securities of Company. If the managing underwriter of such offering subsequently
advises Company in writing that the number of securities that can be sold
exceeds the number of securities included in the offering, Company shall include
in the registration (i) FIRST, the securities that Company proposes to sell,
(ii) SECOND, such additional securities that one or more Holders or RIMCO
Noteholders had originally requested be included in the registration, on a PRO
RATA basis according to the number of securities originally requested to be
included by each Holder and RIMCO Noteholder and (iii) THIRD, securities
requested to be included therein by any other persons having registration rights
with respect to securities of Company.
(c) PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback Registration is an
underwritten secondary registration on behalf of holders of Company's securities
other than the Holders and the managing underwriter of such offering advises
Company in writing that in their opinion the number of securities requested to
be included in such registration exceeds the number that can reasonably be sold
in such offering, then Company shall include in such registration (i) FIRST, if
such registration is being made on behalf of other stockholders of Company
exercising demand registration rights, then the securities so requested to be
included therein in accordance with such demand registration rights, (ii)
SECOND, the Registrable Securities and other securities requested to be included
in such registration by one or more Holders or RIMCO Noteholders on a PRO RATA
basis according to the number of securities originally requested to be included
by each Holder and RIMCO Noteholder, and (iii) THIRD, securities requested to be
included therein by any other persons having registration rights with respect to
securities of Company. If the managing underwriter of such offering subsequently
advises Company in writing that the number of securities that can be sold
exceeds the number of securities included in the offering, Company shall include
in the registration (i) FIRST, the securities proposed to be sold on behalf of
the other stockholders of Company exercising demand registration rights, (ii)
SECOND, such additional securities that one or more Holders or RIMCO Noteholders
had originally requested be included in the registration, on a PRO RATA basis
according to the number of securities originally requested to be included by
each Holder and RIMCO Noteholder and (iii) THIRD, securities requested to be
included therein by any other persons having registration rights with respect to
securities of Company.
::ODMA\PCDOCS\DOCS\88117\1
Exhibit 10.18 - Page 9
(d) OTHER REGISTRATIONS. If (i) Company has previously filed a
registration statement with respect to any of the Registrable Securities
pursuant to SECTION 2.01(A) OR 2.02(A) and (ii) such previous registration has
not been withdrawn or abandoned, Company shall not file or cause to be effective
any other registration of any of its equity securities or securities convertible
or exchangeable into or exercisable for its equity securities under the 1933 Act
(except on Form S-8 or Form S-4 or any successor form), whether on its own
behalf or at the request of any holder or holders of such securities, until a
period of at least 180 days has elapsed from the effective date of such previous
registration (and, during the period of any "shelf offering" or offering
pursuant to Rule 415 under the 1933 Act, during such time as any Holder is
engaged in selling efforts pursuant thereto, except with the prior written
consent of the Holders named in the prospectus for such "shelf offering").
(e) PIGGYBACK NOT A DEMAND REGISTRATION. Should any Holder's participation
in a registration be pursuant to a Piggyback Registration in connection with (i)
an underwritten primary registration on behalf of Company as described in
SECTION 2.01(I) OR 2.02(B), or (ii) an underwritten secondary registration on
behalf of holders of Company's securities other than the Holders as described in
SECTION 2.02(C), then such participation by any Holder shall not constitute a
Demand Registration for purposes of determining the number of Demand
Registrations the Holders are entitled to pursuant to SECTION 2.01(B).
SECTION 2.03 HOLDBACK AGREEMENTS. (a) GENERAL. Each Holder hereby agrees
not to effect any public sale or distribution of equity securities of Company,
or any securities convertible into or exchangeable or exercisable for such
securities, including, without limitation, sales pursuant to Rule 144 under the
1933 Act (or any similar rule then in effect), during the 10 days prior to and
the 90 days beginning on the effective date of any underwritten Demand
Registration or any underwritten Piggyback Registration in which Registrable
Securities are included (except as part of such underwritten registration)
unless the underwriters managing the registered public offering otherwise agree.
(b) AGREEMENT BY COMPANY. Company agrees not to effect any public sale or
distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, during the 10 days prior to and
during the 90 days beginning on the effective date of any underwritten Demand
Registration or any underwritten Piggyback Registration in which Registrable
Securities are included (except as part of such underwritten registration in
accordance with the provisions of this Agreement) unless the underwriters
managing the registered public offering otherwise agree.
(c) REGISTRATION PROCEDURES. Whenever any Holder requests registration
pursuant to this Agreement, Company shall use its reasonable best efforts to
effect the registration of Registrable Securities for which registration is
requested in accordance with the intended method of disposition thereof, and
pursuant thereto Company shall as expeditiously as possible:
::ODMA\PCDOCS\DOCS\88117\1
Exhibit 10.18 - Page 10
(i) prepare and file with the Commission a registration statement with
respect to such securities and use its reasonable best efforts to cause
such registration statement to become effective (provided that before
filing a registration statement or prospectus or any amendments or
supplements thereto, Company will furnish to the counsel selected by the
Holders copies of all documents proposed to be filed, which documents will
be subject to the review of such counsel);
(ii) prepare and file with the Commission such amendments and supplements
to such registration statement and the prospectus used in connection
therewith and prepare and file any related registration statement pursuant
to Rule 462 under the 1933 Act, in each case as necessary to keep such
registration statement or registration statements effective for a period
of not less than 90 days after such registration statement is declared
effective, provided that Company shall have no obligation pursuant to this
Agreement to maintain the effectiveness of such registration statement
after the sale of the securities registered thereunder, and shall comply
with the provisions of the 1933 Act with respect to the disposition of all
securities owned by each Holder that are covered by such registration
statement during such period in accordance with the intended methods of
disposition by such Holder;
(iii) furnish to the Holders such number of copies of such registration
statement, each amendment and supplement thereto, the prospectus included
in such registration statement (including each preliminary prospectus) and
such other documents as any Holder may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such
Holder;
(iv) use its reasonable best efforts to register or qualify such
Registrable Securities under such other securities or Blue Sky Laws of
such jurisdictions as any Holder requests and do any and all other acts
and things that may be necessary or advisable to enable each Holder to
consummate the disposition in such jurisdictions of the Registrable
Securities (provided that Company will not be required to (A) qualify
generally to do business in any jurisdiction where it would not otherwise
be required to qualify but for this sub-clause (iv), (B) subject itself to
taxation in any such jurisdiction or (C) consent to general service of
process in such jurisdiction);
(v) cause all such shares of Registrable Securities to be listed on each
securities exchange or qualified for trading on each market on which
securities issued by Company that are of the same class as the Registrable
Securities are then listed or traded;
(vi) provide a transfer agent and registrar for all such Registrable
Securities no later than the effective date of such registration
statement;
::ODMA\PCDOCS\DOCS\88117\1
Exhibit 10.18 - Page 11
(vii) obtain a "cold comfort" letter from Company's independent public
accountants in customary form, covering such matters of the type
customarily covered by "cold comfort" letters delivered to underwriters,
and covering such other matters as any Holder may reasonably request; and
obtain an opinion of counsel for Company in customary form, covering such
matters of the type customarily covered in opinions of legal counsel
delivered to underwriters, and covering such other matters as any Holder
may reasonably request;
(viii)if underwriters are engaged in connection with any registration
referred to in this Agreement, Company shall provide customary
indemnification, representations, covenants, opinions, and other
assurances to the underwriters, in each case in form and substance
reasonably satisfactory to such underwriter;
(ix) notify each Holder and the managing underwriters, if any, promptly,
and (if requested by any such Person) confirm such advice in writing, (A)
when a prospectus or any prospectus supplement or post-effective amendment
(or related registration statement filed pursuant to Rule 462 under the
1933 Act) has been filed, and, with respect to a registration statement or
any post-effective amendment, when the same has become effective, (B) of
any request by the Commission for amendments or supplements to a
registration statement or related prospectus or for additional
information, (C) of the issuance by the Commission of any stop order
suspending the effectiveness of a registration statement or the initiation
of any proceedings for that purpose, (D) of the receipt by Company of any
notification with respect to the suspension of the qualification of any of
the registrable securities for sale in any jurisdiction or the initiation
or threatening of any proceeding for such purpose, (E) of the happening of
any event that requires the making of any changes in a registration
statement or related prospectus so that such documents 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 (F) of Company's reasonable determination that a
post-effective amendment to a registration statement would be required;
(x) notify each Holder at any time when a prospectus relating thereto is
required to be delivered under the 1933 Act, of the occurrence of any
event as a result of which the prospectus included in such registration
statement contains an untrue statement of a material fact or omits any
fact necessary to make the statements therein not misleading, and, at the
request of any Holder, Company shall prepare a supplement or amendment to
such prospectus so that, as thereafter delivered to the purchasers of such
shares such amended or supplemented prospectus shall not contain an untrue
statement of a material fact or omit to state any fact necessary to make
the statements therein not misleading;
(xi) use its reasonable best efforts to obtain as soon as reasonably
practicable the withdrawal of any order suspending the effectiveness of a
registration statement, or the lifting
::ODMA\PCDOCS\DOCS\88117\1
Exhibit 10.18 - Page 12
of any suspension of the qualification of any of the Registrable
Securities for sale in any jurisdiction;
(xii) if requested by the managing underwriters or any Holder, incorporate
in a prospectus supplement or post-effective amendment such information as
the managing underwriter and the Holders agree should be included therein
relating to the sale and distribution of Registrable Securities,
including, without limitation, information with respect to the number of
Registrable Securities being sold to such underwriters, the purchase price
being paid therefor by such underwriters and with respect to any other
terms of the underwritten (or best efforts underwritten) offering of the
Registrable Securities to be sold in such offering; make all required
filings of such prospectus supplement or post-effective amendment as soon
as notified of the matters to be incorporated in such prospectus
supplement or post-effective amendment; and supplement or make amendments
to any registration statement if requested by any Holder or any
underwriter of such securities;
(xiii)furnish to each Holder and each managing underwriter, without
charge, such signed copies of the registration statement or statements and
any post-effective amendment thereto, including financial statements and
schedules, all documents incorporated therein by reference and all
exhibits (including those incorporated by reference) as any Holder or
managing underwriter may reasonably request;
(xiv) cooperate with reasonable requests of the Holders and the managing
underwriter, if any, to facilitate the timely preparation and delivery of
certificates representing Shares or Related Securities to be sold and not
bearing any restrictive legends unless required by applicable law; and
enable such certificates to be in such denominations and registered in
such names as the managing underwriter may request at least two business
days prior to any sale of Registrable Securities to the underwriters;
(xv) in the case of an underwritten offering, enter into such customary
agreements (including underwriting agreements in customary form) and take
all such other actions as any Holder or underwriter reasonably requests in
order to expedite or facilitate the disposition of such Registrable
Securities; and
(xvi) make available for inspection by any Holder, any underwriter
participating in any disposition pursuant to such registration statement,
and any attorney, accountant or other agent retained by any such Holder or
underwriter, all financial and other records, pertinent corporate
documents and properties of Company, and cause Company's officers,
directors, employees and independent accountants to supply all information
reasonably requested by any such Holder, underwriter, attorney, accountant
or agent in connection with such registration statement.
::ODMA\PCDOCS\DOCS\88117\1
Exhibit 10.18 - Page 13
SECTION 2.04 COMPANY REPORTS. Company shall file all reports required to
be filed by it under the 1933 Act and the 1934 Act and the rules and regulations
promulgated by the Commission thereunder, and take such further reasonable
action as may be necessary or appropriate for Company to use Form S-2 or S-3 (or
any similar registration form then applicable to small business issuers or
hereafter adopted by the Commission) to register the Registrable Securities for
sale thereon. Upon request, Company shall deliver to the Holders a written
statement as to whether it has complied with such requirements.
SECTION 2.05 INFORMATION TO BE FURNISHED BY THE HOLDERS. In connection
with any registration of shares of Registrable Securities hereunder, Company may
require the Holders to furnish Company with such information regarding the
Holders and the distribution of such shares as Company may from time to time
reasonably request in writing in order to comply with the 1933 Act. Each Holder
agrees to notify Company as promptly as practicable of any inaccuracy or change
in information previously furnished to Company or of the occurrence of any event
in either case as a result of which any prospectus relating to such registration
contains untrue statements of a material fact regarding the Holders or the
distribution of such shares or omits to state any material fact regarding the
Holders or the distribution of such shares required to be stated therein or
necessary to make the statement therein not misleading in light of the
circumstances under which such statements were made, and to promptly furnish to
Company any additional information required to correct and update any previously
furnished information or required such that such prospectus shall not contain,
with respect to the Holders or the distribution of such shares, an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances under which such statements are made.
SECTION 2.06 SUSPENSION OF OFFERING PENDING PROSPECTUS SUPPLEMENT OR
AMENDMENT. Each Holder agrees that, upon receipt of any notice from Company of
the occurrence of any event of the kind described in SECTION 2.03(C)(IX)(B),
(C), (D), (E) OR (F) hereof, such Holder will forthwith discontinue disposition
of the Registrable Securities covered by such registration statement or
prospectus until such holder's receipt of the copies of the supplemented or
amended prospectus relating to such registration statement or prospectus, or
until it is advised in writing by Company that the use of the applicable
prospectus may be resumed, and has received copies of any additional or
supplemental filings which are incorporated by reference in such prospectus,
and, if so directed by Company, such Holder will deliver to Company all copies,
other than permanent file copies then in such Holder's possession, of the
prospectus covering the Registrable Securities current at the time of receipt of
such notice.
SECTION 2.07 REGISTRATION EXPENSES. (a) GENERAL. All expenses incident to
Company's performance and execution of Demand Registrations or Piggyback
Registrations, and Company's performance of or compliance with this Agreement,
including, without limitation, all registration and filing fees, fees and
expenses of compliance with securities or Blue Sky Laws,
::ODMA\PCDOCS\DOCS\88117\1
Exhibit 10.18 - Page 14
expenses and fees for listing the securities on the appropriate securities
exchanges or qualifying such securities for trading in the appropriate
securities markets, costs of liability insurance, all internal expenses, the
expense of any annual audit or quarterly review, printing expenses, messenger
and delivery expenses, fees and disbursements of counsel for Company and all
independent certified public accountants (including the expenses of any special
audit and "cold comfort" letters required by or incident to such performance),
and fees and costs of underwriters (excluding discounts and commissions and fees
of underwriters, selling brokers, dealer managers or similar securities industry
professionals relating to the distribution of the Registrable Securities) and
other Persons (all such expenses being herein called "Registration Expenses"),
shall be borne by Company.
(b) REIMBURSEMENT FOR COUNSEL FEES. In connection with each Demand
Registration and Piggyback Registration, Company shall reimburse the Holders for
the reasonable fees and disbursements of one law firm chosen by Holders of a
majority (in then market value) of the then outstanding Registrable Securities.
(c) PAYMENT OF EXPENSES BY THE HOLDERS. The Holders shall pay the
underwriters' discount and commissions and the commissions and fees, if any,
payable in respect of selling brokers, dealer managers or similar securities
industry professionals, and transfer taxes allocable to the registration of the
Holders' securities so included in any Demand Registration or Piggyback
Registration pursuant to this Agreement.
SECTION 2.08 UNDERWRITTEN OFFERINGS. (a) UNDERWRITING AGREEMENT. In any
underwritten offering by one or more Holders pursuant to a registration
requested under SECTION 2.01(A) OR 2.02(A), Company shall enter into an
underwriting agreement which shall be reasonably satisfactory in form and
substance to Company, such Holder or Holders and the underwriters and which
shall contain representations, warranties and agreements (including
indemnification agreements to the effect and consistent with that provided in
SECTION 2.09 hereof) as are customarily included by an issuer in underwriting
agreements with respect to primary distributions.
(b) CONDITION TO PARTICIPATION AND QUALIFICATIONS TO OBLIGATIONS UNDER
REGISTRATION COVENANTS. The obligations of Company to use its reasonable best
efforts to cause the Registrable Securities to be registered under the 1933 Act
are subject to each of the conditions that no Holder may participate in any
underwritten offering hereunder unless such Holder (a) agrees to sell such
Registrable Securities on the basis provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably and customarily required
under the terms of such underwriting arrangements.
::ODMA\PCDOCS\DOCS\88117\1
Exhibit 10.18 - Page 15
SECTION 2.09 INDEMNIFICATION. (a) BY THE COMPANY. In the event of any
registration of any Registrable Securities under the 1933 Act, the Company will,
and hereby does, indemnify and hold harmless, to the fullest extent permitted by
law, each Holder, its directors and officers, 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 Holder or any such underwriter within the
meaning of the 1933 Act, against any and all losses, claims, damages,
liabilities and expenses (or actions or proceedings, whether commenced or
threatened, in respect thereof), to which they or any of them may become subject
under the 1933 Act or any other statute or common law, including any amount paid
in settlement of any litigation, commenced or threatened, and to reimburse them
for any legal or other expenses incurred by them in connection with
investigating any claims and defending any actions, insofar as any such losses,
claims, damages, liabilities, expenses or actions arise out of or are based upon
(i) any untrue statement or alleged untrue statement of a material fact
contained in the registration statement relating to the sale of such securities
or any post-effective amendment thereto or any related registration statement
filed pursuant to Rule 462 or similar rule under the 1933 Act or in any filing
made in connection with the qualification of the offering under Blue Sky or
other securities laws or jurisdictions in which the Registrable Securities are
offered ("Blue Sky Filing"), or the omission or alleged omission to state
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading or (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus, if used prior to the effective date of such registration
statement (unless such statement is corrected in the final prospectus and
Company has previously furnished copies thereof to each Holder and the
underwriters), or contained in the final prospectus (as amended or supplemented
if Company shall have filed with the Commission, and furnished to each Holder
and the underwriters of such offering copies thereof, prior to the written
confirmation of any sale to the person asserting liability, any amendment
thereof or supplement thereto) if used within the period during which Company is
required to keep the registration statement to which such prospectus relates
current, or the omission or alleged omission to state therein (if so used) a
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; PROVIDED, HOWEVER,
that the indemnification agreement contained herein shall not (i) apply to such
losses, claims, damages, liabilities, expenses or actions arising out of, or
based upon, any such untrue statement or alleged untrue statement, or any such
omission or alleged omission, if such statement or omission was made in reliance
upon and in conformity with written information furnished to Company by a Holder
or such underwriter expressly for use in connection with preparation of the
registration statement, any preliminary prospectus or final prospectus contained
in the registration statement, any such amendment or supplement thereto or any
Blue Sky Filing or (ii) inure to the benefit of any underwriter or any person
controlling such underwriter, 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
::ODMA\PCDOCS\DOCS\88117\1
Exhibit 10.18 - Page 16
remain in full force and effect regardless of any investigation made by or on
behalf of such Holder or any such director, officer or controlling person and
shall survive the transfer of such securities by such Holder.
(b) BY THE HOLDERS. Company may require, as a condition to including any
Registrable Securities in any registration statement filed pursuant to SECTION
2.01 OR 2.02, that Company shall have received an undertaking satisfactory to it
from the Holders to indemnify and hold harmless (in the same manner and to the
same extent as set forth in SECTION 2.09(A)) Company, each director of Company,
each officer of Company and each other person, if any, who controls Company
within the meaning of the 1933 Act, with respect to any untrue statement or
alleged untrue statement in, or omission or alleged omission from, such
registration statement, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereto, if such statement or omission
was made in reliance upon and in conformity with written information furnished
to Company by a Holder expressly for use in the preparation of such registration
statement, preliminary prospectus, final prospectus, amendment or supplement.
Such indemnity shall remain in full force and effect, regardless of any
investigation made by or on behalf of Company or any such director, officer or
controlling person and shall survive the transfer of such securities by such
Holder. In no event shall any indemnity paid by any Holder to Company pursuant
to this SECTION 2.09(B), or otherwise, exceed the proceeds received by such
Holder in such offering.
(c) NOTICES OF CLAIMS, ETC. Promptly after receipt by an indemnified party
of notice of the commencement of any action or proceeding involving a claim
referred to in SECTION 2.09(A) OR 2.09(B), such indemnified party will, if a
claim in respect thereof is to be made against indemnifying party, give written
notice to the indemnifying party of the commencement of such action, PROVIDED
that the failure of any indemnified party to give notice as provided herein
shall not relieve the indemnifying party of its obligations under SECTION
2.09(A) OR 2.09(B), as the case may be. In case any such action is brought
against an indemnified party, the indemnifying party shall be entitled to
participate in and, unless in such indemnified party's reasonable judgment a
conflict of interest between such indemnified party and the indemnifying party
may exist in respect of such claim, 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 party, and after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof other than reasonable costs of
investigation. In the event that the indemnifying party advises an indemnified
party that it will contest a claim for indemnification hereunder, or fails,
within 30 days of receipt of any indemnification notice to notify, in writing,
such person of its election to defend, settle or compromise, at its sole cost
and expense, any action, proceeding or claim (or discontinues its defense at any
time after it commences such defense), then the indemnified party may, at its
option, defend, settle or otherwise compromise or pay such action or claim. In
any event, unless and until the indemnifying party elects
::ODMA\PCDOCS\DOCS\88117\1
Exhibit 10.18 - Page 17
in writing to assume and does so assume the defense of any such claim,
proceeding or action, the indemnified party's costs and expenses arising out of
the defense, settlement or compromise of any such action, claim or proceeding
shall be losses subject to indemnification hereunder. The indemnified party
shall cooperate fully with the indemnifying party in connection with any
negotiation or defense of any such action or claim by the indemnifying party and
shall furnish to the indemnifying party all information reasonably available to
the indemnified party which relates to such action or claim. The indemnifying
party shall keep the indemnified party fully apprised at all times as to the
status of the defense or any settlement negotiations with respect thereto. If
the indemnifying party elects to defend any such action or claim, then the
indemnified party shall be entitled to participate in such defense with counsel
of its choice at its sole cost and expense. If the indemnifying party does not
assume such defense, the indemnified party shall keep the indemnifying party
apprised at all times as to the status of the defense; PROVIDED, HOWEVER, that
the failure to keep the indemnifying party so informed shall not affect the
obligations of the indemnifying party hereunder. Indemnifying party shall not be
liable for any settlement of any action, claim or proceeding effected without
its written consent; PROVIDED, HOWEVER, that the indemnifying party shall not
unreasonably withhold, delay or condition its consent. Indemnifying party shall
not, without the consent of the indemnified party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect to such claim or litigation.
(d) CONTRIBUTION. If the indemnification provided for in or pursuant to
SECTION 2.09(A) OR 2.09(B) is due in accordance with the terms thereof, but is
held by a court to be unavailable or unenforceable in respect of any losses,
claims, damages, liabilities or expenses referred to therein, then indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified person as a result of such losses,
claims, damages, liabilities or expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the one hand and of the
indemnified party on the other in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or expenses as well
as any other relevant equitable considerations. The relative fault of the
indemnifying party on the one hand and of the indemnified person on the other
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 party, by such party's relative intent, knowledge,
access to information and opportunity to correct or prevent such statement, or
omission. In no event shall the liability of any Holder be greater in amount
than the amount of proceeds received by such Holder upon such sale.
::ODMA\PCDOCS\DOCS\88117\1
Exhibit 10.18 - Page 18
ARTICLE III
EFFECTIVE TIME AND TERM OF THIS AGREEMENT
SECTION 3.01 EFFECTIVE TIME AND TERM OF THIS AGREEMENT. This Agreement
will be effective for all purposes as of the Closing and will continue in full
force and effect until the date that no Holder owns any of the Registrable
Securities.
ARTICLE IV
MISCELLANEOUS
SECTION 4.01 SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by law)
not invalidate or render unenforceable such provision in any other jurisdiction.
SECTION 4.02 AMENDMENTS. This Agreement contains the entire understanding
of the parties with respect to the Registrable Securities, and may be amended
only by an agreement in writing signed by (i) the Company and (ii) the Holders
of not less than a majority (in then market value) of the then outstanding
Registrable Securities, including not less than a majority (in then market
value) of the then outstanding Registrable Securities held by the Shareholder
Holders, PROVIDED, HOWEVER, that in no event shall any amendment impose any
additional material obligations on any Holder without such Holder's written
consent.
SECTION 4.03 DESCRIPTIVE HEADINGS. Descriptive headings are for
convenience only and shall not control or affect the meaning or construction of
any provision of this Agreement.
SECTION 4.04 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one instrument. Each counterpart may consist of a number of copies
hereof, each signed by less than all, but together signed by all, of the parties
hereto.
SECTION 4.05 NOTICES. All notices and communications provided for
hereunder shall be in writing and sent (a) by telecopy if the sender on the same
day sends a confirming copy of such notice by a recognized overnight delivery
service (charges prepaid) or (ii) by registered or certified mail with return
receipt requested (postage prepaid) or (iii) by a recognized overnight delivery
service (with charges prepaid).
(i) if to a Shareholder Holder, at its addresses set forth below, or such
other address as it shall have specified to Company in writing,
::ODMA\PCDOCS\DOCS\88117\1
Exhibit 10.18 - Page 19
(ii) if to any other Holder, at such address as specified to Company in
writing in the notice provided in SECTION 4.08(B), or such other address
as such Holder shall have subsequently specified to Company in writing,
and
(iii) if to the Company, 1600 Smith Street, Suite 4000, Houston, Texas
77002, Telecopy No.: 713-652-9601, or such other address as it shall have
specified to the Holders in writing.
Notices given under this SECTION 4.05 shall be deemed given only when actually
received.
SECTION 4.06 GOVERNING LAW. This Agreement shall be construed and enforced
in accordance with, and the rights of the parties shall be governed by, the laws
of the State of Texas, excluding choice-of-law principles of the law of such
State that would require the application of the laws of a jurisdiction other
than such State.
SECTION 4.07 SURVIVAL. The representations and warranties made by the
Company herein shall survive the execution and delivery of the Transaction
Documents and the purchase and transfer by the Holders of any of the Registrable
Securities, regardless of any investigation made at any time by or on behalf of
the Shareholder Holders or any other Holder. All statements contained in any
certificate or other instrument delivered by or on behalf of the Company
pursuant to this Agreement shall be deemed to be representations and warranties
of the Company under this Agreement.
SECTION 4.08 SUCCESSORS AND ASSIGNS. (a) Subject to the provisions of
SECTION 4.08(B), all covenants and other agreements contained in this Agreement
by or on behalf of any of the parties hereto bind and inure to the benefit of
their respective successors and assigns (including, without limitation, any
subsequent holder of a Note or any Registrable Securities), whether so expressed
or not.
(b) The Registrable Securities and rights of any Holder under this
Agreement with respect to any Registrable Securities may be assigned to any
person who acquires Registrable Securities from a Holder, except that any Person
who acquires such Registrable Securities (x) pursuant to a public offering
registered under the 1933 Act or (y) pursuant to a transfer made in accordance
with Rule 144 under the 1933 Act may not be assigned rights hereunder with
respect to such Registrable Securities. Notwithstanding the foregoing, rights to
cause a Demand Registration under SECTION 2.01(A) may only be assigned if such
rights are expressly assigned in writing from a Holder. Any assignment of
registration rights pursuant to this SECTION 4.08(B) shall be effective upon
receipt by Company of written notice from such assigning Holder (i) stating the
name and address of any assignee, (ii) describing the manner in which the
assignee acquired the Registrable Securities from such Holder and (iii)
identifying the number of Registrable Securities with respect to which the
rights under this Agreement are being assigned.
::ODMA\PCDOCS\DOCS\88117\1
Exhibit 10.18 - Page 20
SECTION 4.09 ACTIONS BY HOLDERS OF MAJORITY OF REGISTRABLE SECURITIES.
Each of the parties hereto agrees, in connection with the taking of any action
permitted to be taken hereunder by the Holders or Shareholder Holders (as the
case may be), that the Holders or Shareholder Holders (as the case may be)
holding a majority (in then market value) of the then outstanding Registrable
Securities are entitled to take such action.
::ODMA\PCDOCS\DOCS\88117\1
Exhibit 10.18 - Page 21
IN WITNESS WHEREOF, the Company and the Shareholder Holders have caused
this Agreement to be executed by their respective representatives thereunto duly
authorized, effective as of the date first above written.
TEXOIL, INC.
By: /S/ RUBEN MEDRANO
Ruben Medrano, President
/S/ T. W. HOEHN, JR.
T. W. HOEHN, JR.
/S/ T. W. HOEHN, III
T. W. HOEHN, III
/S/ WILLIAM F. SEAGLE
WILLIAM F. SEAGLE
Addresses for Notices:
T. W. Hoehn, Jr.
2302 Rue Adriane
La Jolla, California 92037
Fax: (619) 454-2043
T. W. Hoehn, III
5454 Paseo del Norte
Carlsbad, California 92008
Fax: (619) 438-0568
William F. Seagle
c/o Wade Hampton Country Club
Highway 107 South
Cashiers, North Carolina 28717
Fax: (704) 743-2120
::ODMA\PCDOCS\DOCS\88117\1
Exhibit 10.18 - Page 22