EXHIBIT 10.5
EXECUTION VERSION
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REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and entered
into as of October 29, 2004, among Carrizo Oil & Gas, Inc., a Texas corporation
(the "Company"), and the investors signatory hereto (each such investor is a
"Purchaser" and all such investors are, collectively, the "Purchasers").
WHEREAS, the parties have agreed to enter into this Agreement in connection
with, and as a condition to the Closing under, the Note Purchase Agreement,
dated as of the date hereof, among the Company the Purchasers and PCRL
Investments L.P., as Collateral Agent (the "Purchase Agreement");
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchasers agree
as follows:
1. Definitions. In addition to the terms defined elsewhere in this
Agreement, (a) capitalized terms that are not otherwise defined herein have the
meanings given to such terms in the Purchase Agreement, and (b) the following
terms have the meanings indicated:
"Blackout Restriction Period" means, a period beginning on the date on
which the aggregate number of Registrable Securities issued to any holder
of the Notes during the period of six (6) consecutive calendar months
immediately preceding such date and then held on such date exceeds
three-quarters of one percent (.75%) of the Common Stock issued and
outstanding on such date and ending on the date that such holder holds less
than sixty-five one hundredths of one percent (.65%) of the Common Stock
issued and outstanding.
"Current Value" means, with respect to the calculation of the
liquidated damages due any Holder pursuant to Section 2(b) hereof, the sum
of the number of shares of Registrable Securities then owned by such Holder
multiplied by the Current VWAP Price.
"Current VWAP Price" means, on any date of determination, that price
which shall be computed as the arithmetic average of the Volume Weighted
Average Price of the Common Stock on each of the ten (10) consecutive
Trading Days immediately preceding (but not including), the date of
determination.
"Damage Notice" means, with respect to any Holder, a written statement
of all damages, costs and expenses incurred by such Holder as a result of
the failure of the Company to comply with its obligations under Sections
7(a) or 7(b) hereof.
"Effective Date" means that date the initial Registration Statement
becomes effective.
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"Holder" means any holder, from time to time, of Registrable
Securities and, so long as any Notes are outstanding, any other holder of a
Note.
"Proceeding" means, with respect to any Person (i) any insolvency or
bankruptcy case or proceeding, or any receivership, liquidation,
reorganization or similar case or proceeding in connection therewith,
relative to such Person, or to its assets, or (ii) any proceeding for
liquidation, dissolution or other winding up of such Person, whether
voluntary or involuntary and whether or not involving insolvency or
bankruptcy, or (iii) any assignment for the benefit of creditors or any
other marshalling of assets and liabilities of such Person.
"Prospectus" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
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 the 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.
"Qualified Registrable Securities" means any Registrable Securities
held by any Holder at any time such Holder is not permitted to sell
Registrable Securities under a Registration Statement.
"Registrable Securities" means any Common Stock issued or issuable
pursuant to the Documents, together with any other securities issued or
issuable upon any stock split, dividend or other distribution,
recapitalization or similar event with respect to the foregoing, provided
that the same have not had their restrictive legends removed pursuant to
Rule 144(k); provided, however, that such securities shall be treated as
Registrable Securities only if and only for so long as they are held by a
Holder or a permitted transferee pursuant to the terms hereof, and (i) they
have not been disposed of pursuant to a registration statement declared
effective by the Commission, so that all transfer restrictions and
restrictive legends with respect to compliance with the Securities Act are
removed upon the consummation of such transfer, or (ii) they have not been
transferred in a transaction exempt from the registration and prospectus
delivery requirements of the Securities Act, so that all transfer
restrictions and restrictive legends with respect to compliance with the
Securities Act are removed upon the consummation of such transfer, or (iii)
the registration rights as to the Holder of such Registrable Securities
have not terminated pursuant to Section 9(m) unless the failure of the
Company to comply with its obligations under Sections 7(a) or 7(b) of this
Agreement is the reason (directly or indirectly) such registration rights
have not terminated in which case such securities shall continue to be
Registrable Securities.
"Registration Statement" means a registration statement filed
hereunder, including (in each case) the Prospectus, amendments and
supplements to such registration statement or Prospectus, including pre-
and post-effective amendments, all exhibits
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thereto, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.
"Repurchasable Registrable Securities" means, with respect to any
Holder on the date of any Repurchase Notice delivered by such Holder, the
Registrable Securities then held by such Holder that were issued by the
Company to such Holder within the Repurchase Period.
"Repurchase Period" means, with respect to any Repurchase Notice, the
period of six (6) consecutive calendar months ending on the Trading Day
immediately preceding the date of such Repurchase Notice; provided that if
during such six (6) month period the Holder delivering such Repurchase
Notice was not permitted to sell Registrable Securities under a
Registration Statement for any reason (other than such Holder's failure to
perform its obligations hereunder), or the Common Stock was not listed or
quoted or was suspended from trading, or the Company failed for any reason
to timely deliver any certificate evidencing any shares of Common Stock as
required by the Purchase Agreement or failed to comply with Section 7 or 8
hereof, the commencement date of such six (6) month period shall be
extended to an earlier date by a number of days equal to the aggregate
number of days that any one or more of such events or circumstances
existed, without duplication.
"Required Holders" means Holders holding a majority of the Registrable
Securities, the Purchaser (so long as the Purchaser and its Affiliates hold
at least ten percent (10%) of the Registrable Securities then outstanding
and/or Notes representing not less than ten percent (10%) of the
outstanding principal balance of the Notes then outstanding) and at any
time any Notes are outstanding, the Majority Holders.
"Rule 144" "Rule 144A" "Rule 144(k)" "Rule 415," "Rule 424" and "Rule
461" means Rule 144, Rule 144A, Rule 144(k), Rule 415, Rule 424 and Rule
461, respectively, promulgated by the Commission pursuant to the Securities
Act, as such Rules may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
"Special Counsel" means one special counsel to the Holders. Unless the
Holders notify the Company otherwise, the Special Counsel will be Gardere
Wynne Sewell LLP.
2. Shelf Registration
(a) As a condition to the delivery of any Stock Payment Notice and the
issuance of shares of Common Stock to any holder of a Note in satisfaction of
all or any portion of the Indebtedness, the Company shall prepare and file with
the Commission a "Shelf" Registration Statement covering the resale of all
Registrable Securities for an offering to be made on a continuous basis pursuant
to Rule 415. The Registration Statement shall be on Form S-3 (except if the
Company is not then eligible to register for resale the Registrable Securities
on Form S-3, in which case such registration shall be on another appropriate
form in accordance herewith as the Holders may consent, which consent may not be
unreasonably withheld) and shall contain (except if otherwise directed by the
Holders) the "Plan of Distribution" attached hereto as Annex
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A with such changes therein as shall be required by the Commission or as is
necessary to comply with any law, rule or regulation or, with the prior written
consent of the Required Holders (which may not be unreasonably withheld), as is
necessary to take into account the plan of distribution of the Company or other
selling stockholders. The Company shall use its best efforts to keep such
Registration Statement continuously effective under the Securities Act until the
earliest of (i) the second anniversary of the last issuance of Registrable
Securities to any holder of a Note; (ii) when all Registrable Securities covered
by such Registration Statement have been sold; and (iii) the registration rights
of all Holders of such Registrable Securities have expired pursuant to Section
9(m) hereof (the "Effectiveness Period"). The Company shall notify each Holder
in writing promptly (and in any event within one business day) after receiving
notification from the Commission that a Registration Statement has been declared
effective.
(b) At such time as Registrable Securities are held by any Holder,
upon the occurrence of any Event (as defined below) at any time after the
Effective Date and on every monthly anniversary of such Event until the
applicable Event is cured, as partial relief for the damages suffered therefrom
by such Holder (which remedy shall not be exclusive of any other remedies
available at law or in equity), the Company shall pay to such Holder an amount
in cash, as damages and not as a penalty, equal to 1% of the Current Value of
the Registrable Securities held by such Holder calculated as of the date of such
Event. The damages payable pursuant to the terms hereof shall apply on a
pro-rata basis for any portion of a month prior to the cure of an Event. For
such purposes, each of the following shall constitute an event requiring a
damages payment under this Agreement (an "Event"):
(i) such Holder is not permitted to sell Registrable Securities
under a Registration Statement for any reason for (A) if during a
Blackout Restriction Period, twenty (20) or more Trading Days (whether
or not consecutive) per year or (B) at any other time, thirty (30) or
more Trading Days (whether or not consecutive) per year, in each case
with respect to the foregoing clauses (A) and (B) excluding any period
in which such Holder is not permitted to sell Registrable Securities
solely (but directly or indirectly) as a result of (x) such Holder's
failure to perform its obligations under Section 3(a) or 9(e) hereof
or (y) the delivery by such Holder to the Company pursuant to Section
6(b) hereof of notice of the occurrence of an event or circumstance
relating to such Holder requiring the filing of an amendment or
supplement to a Registration Statement so long as the Company uses its
best efforts to file and/or cause such amendment or supplement to be
declared effective (but including, without limitation, periods in
which such Holder may not make sales in accordance with the provisions
of Section 6(a) or Section 6(c) hereof or as a result of the receipt
of Confidential Information as contemplated by Section 16.15 of the
Purchase Agreement); provided that such an Event shall be deemed
"cured" when and during such period such Holder is able to sell
Registrable Securities under such Registration Statement;
(ii) at any time Registrable Securities are outstanding, the
Common Stock is not listed or quoted, or is suspended from trading, on
an Eligible Market for a period of at least five (5) consecutive
Trading Days provided that such an Event shall be deemed "cured" when
and during such period such Common Stock is so listed and quoted and
not suspended from trading; or
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(iii) the Company fails for any reason to deliver a certificate
evidencing any shares of Common Stock issued to such Holder or to
provide required letters of instruction within three (3) Trading Days
after delivery of such certificate and/or required letters of
instruction is required pursuant to any Document (other than a Section
7 Event described in Section 2(d) hereof); provided that such an Event
shall be deemed "cured" upon the delivery of such certificate (it
being understood no such delivery shall be required until the Company
has received any opinion, payment of transfer taxes, if any, or any
other documentation contemplated by the Documents).
(c) If at any time Registrable Securities are outstanding (i) any
Event (other than an Event described in Section 2(b)(i) at any time during a
Blackout Restriction Period) occurs and remains uncured for 30 days or (ii) any
Event described in Section 2(b)(i) above occurs during a Blackout Restriction
Period and remains uncured for twenty (20) days, then at any time or times
thereafter any Holder may deliver to the Company a notice (a "Repurchase
Notice") requiring the Company to repurchase all or any portion of the
Repurchasable Registrable Securities then specified by such Holder in such
Repurchase Notice at a price per share equal to (x) the Interest Payment Price,
Voluntary Redemption Price or the Maturity Date Price, as the case may be, at
which such Repurchasable Registered Securities were issued to such Holder
divided by (y) 0.90 (the "Repurchase Price"). If a Holder delivers a Repurchase
Notice pursuant to this Section, the Company shall pay the aggregate Repurchase
Price (together with any other payments, expenses and liquidated damages then
due and payable pursuant to the this Agreement, but net of any liquidated
damages previously paid to such Holder) to such Holder in cash no later than the
tenth (10th) day following the date of delivery of the Repurchase Notice (the
"Repurchase Date"), and upon receipt thereof such Holder shall deliver
certificates evidencing the Registrable Securities so repurchased to the Company
(to the extent such certificates have been delivered to such Holder).
Notwithstanding the repurchase rights granted to each Holder in this
Section 2(c), the Company shall not be required to repurchase shares of Common
Stock on the Repurchase Date to the extent that (i) after giving effect to the
repurchase, the Company would be insolvent, (ii) the net assets of the Company
are less than the amount of the proposed repurchase or (iii) funds are not
otherwise legally available therefor under the Texas Business Corporation Act,
as from time to time amended (together with any successor law, the "TBCA"). In
the event that any of the circumstances described in the foregoing clauses (i),
(ii) or (iii) prevents the purchase of such shares of Common Stock, the Company
shall repurchase that portion of such shares of Common Stock of each Holder that
may be repurchased by the Company without causing any such circumstances to
occur ratably on the Repurchase Date based on the aggregate repurchase amount
payable with respect to such shares of Common Stock then to be repurchased.
Notwithstanding the foregoing, in the event the Company is the debtor in any
Proceeding, each Holder may file a proof of claim in such Proceeding and seek
and obtain a recovery on such claim in accordance with Applicable Law regardless
of whether any of the circumstances described in the foregoing clauses (i), (ii)
or (iii) would prevent the repurchase by the Company of any shares of Common
Stock the Company is otherwise obligated to repurchase under this Section 2(c).
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If a Repurchase Notice is given and the Company is unable to
repurchase all of the Common Stock on the Repurchase Date that are the subject
of such notice because (i) after giving effect to the repurchase the Company
would be insolvent, (ii) the net assets of the Company are less than the amount
of the proposed redemption or (iii) funds are not legally available therefor
under the TBCA, the obligation of the Company to repurchase any shares of Common
Stock on the Repurchase Date shall continue until the first date on which
Company is not prohibited to repurchase such Common Stock in accordance with
this Section at which date the Company shall be obligated to immediately
repurchase such shares of Common Stock in accordance with the provisions hereof.
(d) If at any time Registrable Securities are outstanding and the
Company fails to comply with Section 7(a) or 7(b) hereof with respect to any
Holder, unless the Company is unable to comply with such Section solely (but
directly or indirectly) as a result of such Holder's failure to perform its
obligations under such Section (a "Section 7 Event"), the Company shall pay to
such Holder the actual damages suffered by such Holder as a result of such
Section 7 Event. Such payment shall be made by the Company to such Holder within
10 days of delivery of a Damage Notice by a Holder.
(e) If at any time Registrable Securities are outstanding and the
Company fails to timely file its periodic filings with the Commission (including
any safe harbors provided by Form 8-K and grace periods pursuant to Rule 12b-25)
pursuant to Section 8 hereof and such failure remains uncured for 10 Trading
Days (a "Periodic Filing Event"), then the Company shall be obligated, upon
receipt of a Repurchase Notice from any Holder, to repurchase all of the
Repurchasable Registrable Securities issued to such Holder by the Company during
the ninety days immediately preceding the date of the Periodic Filing Event that
is specified in a Repurchase Notice at a price per share equal to the Repurchase
Price. Such amount shall be paid to such Holder no later than the Repurchase
Date. Additionally, if the Company's failure to comply with Section 8 hereof
continues for an additional 10 Trading Days beyond the Periodic Filing Event
specified in such Repurchase Notice, then the Company shall be obligated to
repurchase all Repurchasable Registrable Securities issued to such Holder by the
Company in the time period of the ninety-one to one hundred eighty days
immediately preceding the date of such Periodic Filing Event at a price per
share equal to the Repurchase Price. Such amount shall be paid no later than ten
(10) days after the end of such additional 10 Trading Day period.
(f) Payments made to any Holder pursuant to Sections 2(d) and 2(e)
hereof shall be such Holder's exclusive remedy for the damages resulting from a
Section 7 Event or a Periodic Filing Event. To the extent that a Section 7 Event
or a Periodic Filing Event relates to only a portion of the Registrable
Securities, the obligation to pay damages and the repurchase obligation provided
hereunder with respect to a Section 7 Event or a Periodic Filing Event shall be
payable only with respect to such portion of such Registrable Securities.
3. Registration Procedures. In connection with the Company's
registration obligations hereunder, the Company shall:
(a) Not less than three (3) Trading Days (or one (1) Trading Day prior
to any filing of a supplement or amendment of a Registration Statement or
Prospectus) prior to the initial filing of each Registration Statement or any
related Prospectus (excluding any document
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that would be incorporated or deemed to be incorporated therein by reference),
the Company shall (i) furnish to the Holders and their Special Counsel copies of
all such documents proposed to be filed, (other than those incorporated or
deemed to be incorporated by reference) which documents will be subject to the
review of such Holders and their Special Counsel, and (ii) cause its officers
and directors, counsel and independent certified public accountants to respond
to such inquiries as shall be necessary, in the reasonable opinion of respective
counsel, to conduct a reasonable investigation within the meaning of the
Securities Act. Except as otherwise required by law, the Company shall not file
a Registration Statement or any such Prospectus or any amendments or supplements
thereto to which the Required Holders and their Special Counsel shall reasonably
object provided the Company is notified of such objection within a reasonable
time taking into account the business and legal exigencies but in any event not
less than the second Trading Day (or one (1) Trading Day prior to any filing of
a supplement or amendment of a Registration Statement or Prospectus) after the
Holders have been so furnished copies of such document. The parties agree that
if the Holders or the Special Counsel shall fail to provide comments to the
Company or their counsel to a proposed Registration Statement or Prospectus
within a reasonable time taking into account the business and legal exigencies,
but in any event not less than the second Trading Day (or one (1) Trading Day
prior to any filing of a supplement or amendment of a Registration Statement or
Prospectus) following the date on which they received the same for review, then
the Company may proceed with the registration process without such comments. The
time periods under this Section 3(a) applicable to any period prior to the
Effective Date shall be shortened to the extent that failure by the Company to
file a document with the Commission could cause the Company to be in violation
of any law, rule, regulation or contract and such restrictions shall not apply
if the amendment or supplement relates solely to an underwritten offering by
another selling shareholder of the Company or by the Company for its own account
in which the Holders are not participating. No delay in filing of documents
beyond the periods specified in this Section 3(a) that are solely attributable
to the review by a Holder or Special Counsel for the periods specified herein
shall contribute to determining whether an Event has occurred nor counted in
determining the length of a time period with respect to an Event.
(b) (i) To the extent Registrable Securities are outstanding and
subject to Section 6(c), prepare and file with the Commission such amendments,
including post-effective amendments, to any Registration Statement and the
Prospectus used in connection therewith as may be necessary to keep a
Registration Statement effective to the extent required hereby as to the
applicable Registrable Securities for the Effectiveness Period and prepare and
file with the Commission such additional Registration Statements in order to
register for resale under the Securities Act all of the Registrable Securities;
(ii) cause the related Prospectus to be amended or supplemented by any required
Prospectus supplement, and as so supplemented or amended to be filed pursuant to
Rule 424; (iii) use reasonable best efforts to respond as promptly as
practicable but in any event within twenty (20) calendar days of receipt, to any
comments received from the Commission with respect to the Registration Statement
or any amendment thereto and as promptly as reasonably possible provide the
Holders true and complete copies of all correspondence from and to the
Commission relating to the Registration Statement except those relating to an
underwritten offering by the Company for its own account or other selling
shareholders of the Company in which the Holders are not participating; and (iv)
comply in all material respects with the provisions of the Securities Act and
the Exchange Act with respect to the disposition of all Registrable Securities
covered by the Registration Statement during the
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Effectiveness Period in accordance with the intended methods of disposition by
the Holders thereof set forth in the Registration Statement as so amended or in
such Prospectus as so supplemented.
(c) To the extent any Registrable Securities are then outstanding and
subject to Section 6(c), notify the Holders of Registrable Securities to be sold
and their Special Counsel as promptly as reasonably possible, and (if requested
by any such Person) confirm such notice in writing no later than one Trading Day
thereafter, of any of the following events: (i) the Commission notifies the
Company whether there will be a "review" of any Registration Statement; (ii) the
Commission comments in writing on any Registration Statement (in which case the
Company shall deliver to each Holder and the Special Counsel a copy of such
comments and of all written responses thereto except those relating to an
underwritten offering by the Company for its own account or other selling
shareholders of the Company in which the Holders are not participating); (iii)
any Registration Statement or any post-effective amendment is declared
effective; (iv) the Commission or any other Federal or state governmental
authority requests any amendment or supplement to a Registration Statement or
Prospectus or requests additional information related thereto; (v) the
Commission issues any stop order suspending the effectiveness of any
Registration Statement or initiates any Proceedings for that purpose; (vi) the
Company receives notice of any suspension of the qualification or exemption from
qualification of any Registrable Securities for sale in any jurisdiction, or the
initiation or threat of any Action for such purpose; or (vii) the financial
statements included in any Registration Statement become ineligible for
inclusion therein or any statement made in any Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference is untrue in any material respect or any revision to a Registration
Statement, Prospectus or other document is required so that 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, in
light of the circumstances under which they were made, not misleading.
(d) To the extent any Registrable Securities are then outstanding and
subject to Section 6(c), use its best efforts to avoid the issuance of or, if
issued, obtain the withdrawal of (i) any order suspending the effectiveness of
any Registration Statement or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.
(e) Furnish to each Holder and their Special Counsel, without charge,
at least one conformed copy of each Registration Statement and each amendment
thereto, including financial statements and schedules, all documents
incorporated or deemed to be incorporated therein by reference, and all exhibits
to the extent requested by such Person (including those previously furnished or
incorporated by reference) promptly after the filing of such documents with the
Commission.
(f) Promptly deliver to each Holder and their Special Counsel, 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. Subject to the provisions hereof, the Company hereby
consents to the use of such Prospectus and each amendment or supplement thereto
by each of the selling Holders in connection with the offering
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and sale of the Registrable Securities covered by such Prospectus and any
amendment or supplement thereto to the extent permitted by federal and state
securities laws and regulations.
(g) Use its best efforts to list the Registrable Securities covered by
such Registration Statement on an Eligible Market.
(h) Prior to any public offering of Registrable Securities, use its
best efforts to register or qualify or cooperate with the selling Holders and
their Special 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 Holder reasonably requests in
writing, to keep each such registration or qualification (or exemption
therefrom) effective during the Effectiveness Period and to do any and all other
acts or things reasonably requested in writing that are necessary or advisable
to enable the disposition in such jurisdictions of the Registrable Securities
covered by a Registration Statement provided, that the Company shall not be
required to qualify generally to do business or qualify as a dealer or consent
to service of process in any jurisdiction where it is not now so qualified or
has not so consented or subject the Company to any material tax in any such
jurisdiction where it is not then so subject.
(i) Cooperate with the Holders to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be delivered
to a transferee pursuant to a Registration Statement, which certificates shall
be free, to the extent permitted by the Documents and applicable law, of all
restrictive legends, and to enable such Registrable Securities to be in such
denominations and registered in such names as any such Holders may request.
(j) Subject to Section 6(c), upon the occurrence of any event
described in Section 3(c)(vii) or receipt of information from a Holder pursuant
to the second sentence of Section 6(b), use its best efforts to, as promptly as
reasonably practicable, prepare a supplement or amendment, including a
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, and file any other required document so that, as
thereafter delivered, neither the Registration Statement nor such Prospectus
will 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.
(k) Cooperate with any reasonable due diligence investigation
undertaken by the Holders in connection with the sale of Registrable Securities,
including without limitation by making available any reasonably requested
documents and information.
(l) Notwithstanding anything to the contrary contained herein, the
Registration Statement may not be used by the Holders for any underwritten
offering, nor may such Holders participate in any underwritten offering by the
Company or any other selling shareholders under a Registration Statement.
(m) Comply with all applicable rules and regulations of the
Commission.
4. Registration Expenses. All fees and expenses incident to the
performance of or compliance with this Agreement by the Company shall be borne
by the Company whether or
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not any Registrable Securities are sold pursuant to a Registration Statement.
The fees and expenses referred to in the foregoing sentence shall include,
without limitation, (a) all registration and filing fees (including, without
limitation, fees and expenses (i) with respect to filings required to be made
with any Eligible Market, and (ii) in compliance with applicable state
securities or Blue Sky laws (including, without limitation, fees and
disbursements of counsel for the Company in connection with Blue Sky
qualifications or exemptions of the Registrable Securities and determination of
the eligibility of the Registrable Securities for investment under the laws of
such jurisdictions as requested by the Holders), (b) printing expenses
(including, without limitation, expenses of printing certificates for
Registrable Securities and of printing prospectuses reasonably requested by the
Holders), (c) messenger, telephone and delivery expenses, (d) fees and
disbursements of counsel for the Company and one Special Counsel for the Holders
and (e) fees and expenses of all other Persons retained by the Company in
connection with the consummation of the transactions contemplated by this
Agreement; provided, that the Company shall have no obligation or liability for
any underwriting discounts, selling commissions and stock transfer taxes
applicable to the securities registered for resale by the Holders and, except as
set forth above, any fees and disbursements of counsel for any Holder.
5. Indemnification
(a) Indemnification by the Company. The Company shall, notwithstanding
any termination of this Agreement, indemnify and hold harmless each Holder, the
officers, directors, partners, members, agents, brokers (including brokers who
offer and sell Registrable Securities as principal as a result of a pledge or
any failure to perform under a margin call of Common Stock), investment advisors
and employees of each of them, each Person who controls any such Holder (within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act) and the officers, directors, partners, members, agents and employees of
each such controlling Person, to the fullest extent permitted by applicable law,
from and against any and all losses, claims, damages, liabilities, costs
(including, without limitation, costs of preparation and reasonable attorneys'
fees and disbursements) and expenses, including expenses of investigation
(collectively, "Losses"), as incurred, arising out of or relating to any untrue
or alleged untrue statement of a material fact contained in the Registration
Statement, any Prospectus or any form of prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or
relating to any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein (in the case of any
Prospectus or form of prospectus or supplement thereto, in light of the
circumstances under which they were made) not misleading, except to the extent,
but only to the extent, that (i) such untrue statements or omissions are based
solely upon information regarding such Holder furnished in writing to the
Company by such Holder or the Special Counsel expressly for use therein, or to
the extent that such information relates to such Holder or such Holder's
proposed method of distribution of Registrable Securities and was reviewed and
expressly approved in writing by such Holder or the Special Counsel expressly
for use in a Registration Statement, such Prospectus or such form of Prospectus
or in any amendment or supplement thereto ("Holder Information") or (ii) in the
case of an occurrence of an event of the type specified in Section
3(c)(v)-(vii), the use by such Holder of an outdated or defective Prospectus
after the Company has notified such Holder in writing that the Prospectus is
outdated or defective and prior to the receipt by such Holder of the Advice
contemplated in Section 6(b). The Company shall notify the Holders promptly of
the
10
institution, threat or assertion of any Action of which the Company is aware in
connection with the transactions contemplated by this Agreement.
(b) Indemnification by Holders. Each Holder shall, severally and not
jointly, indemnify and hold harmless the Company, its directors, officers,
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, to the
fullest extent permitted by applicable law, from and against all Losses (as
determined by a court of competent jurisdiction in a final judgment not subject
to appeal or review) arising solely out of any untrue statement of a material
fact contained in any Registration Statement, any Prospectus, or any form of
prospectus, or in any amendment or supplement thereto, or arising solely out of
any omission of a material fact required to be stated therein or necessary to
make the statements therein not misleading to the extent, but only to the
extent, that such untrue statement or omission is contained in any information
so furnished in writing by such Holder to the Company specifically for inclusion
in such Registration Statement or such Prospectus. In no event shall the
liability of any selling Holder hereunder be greater in amount than the dollar
amount of the net proceeds received by such Holder upon the sale of the
Registrable Securities giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. If any action shall be
brought or asserted against any Person entitled to indemnity hereunder (an
"Indemnified Party"), such Indemnified Party shall promptly notify the Person
from whom indemnity is sought (the "Indemnifying Party") in writing, and the
Indemnifying Party shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to the Indemnified Party and the payment of all
reasonable fees and expenses incurred in connection with defense thereof;
provided, that the failure of any Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations or liabilities pursuant to
this Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) that such failure shall have proximately
and materially adversely prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel in any
such 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 or
Parties unless: (i) the Indemnifying Party has agreed in writing to pay such
fees and expenses; or (ii) the Indemnifying Party shall have failed promptly to
assume the defense of such proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such proceeding; or (iii) the
named parties to any such proceeding (including any impleaded parties) include
both such Indemnified Party and the Indemnifying Party, and such Indemnified
Party shall have been advised by counsel that a conflict of interest is likely
to exist if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the Indemnifying Party) provided that the Indemnifying Party shall have no
liability for more than one such separate counsel for all Indemnified Parties
and local counsel. The Indemnifying Party shall not be liable for any settlement
of any such action effected without its written consent, which consent shall not
be unreasonably withheld. No
11
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, effect any settlement of any pending action in respect of which any
Indemnified Party is a party, unless such settlement includes an unconditional
release of such Indemnified Party from all liability on claims that are the
subject matter of such proceeding.
All fees and expenses of the Indemnified Party (including reasonable fees
and expenses to the extent incurred in connection with investigating or
preparing to defend such Proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred, within ten Trading
Days of written notice thereof to the Indemnifying Party (regardless of whether
it is ultimately determined that an Indemnified Party is not entitled to
indemnification hereunder; provided, that the Indemnifying Party may require
such Indemnified Party to undertake to reimburse all such fees and expenses to
the extent it is finally judicially determined that such Indemnified Party is
not entitled to indemnification hereunder).
(d) Contribution. If the indemnification under Section 5(a) or 5(b) is
held by a court of competent jurisdiction to be unavailable to an Indemnified
Party (by reason of public policy or otherwise) with respect to any Losses, then
each 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 one hand and the Indemnified Party on the
other 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 one hand and such Indemnified Party
on the other shall be determined by reference to, among other things, whether
any action in question, including any untrue or alleged untrue statement of
material fact or omission or alleged omission to state a material fact, 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 such action, statement or omission. The amount paid or
payable by an Indemnified Party as a result of any Losses shall be deemed to
include, subject to the limitations set forth in Section 5(c), any attorneys' or
other fees or expenses reasonably incurred by such Indemnified Party in
connection with any action to the extent such party would have been indemnified
for such fees or expenses if the indemnification provided for in this Section 5
was available to such party in accordance with its terms.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 5(d), no Holder shall be required
to contribute, in the aggregate, any amount in excess of the amount by which the
proceeds actually received by such Holder from the sale of the Registrable
Securities subject to the action exceeds the amount of any damages that such
Holder 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.
The indemnity and contribution agreements contained in this Section are in
addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.
12
(e) THE PARTIES HERETO INTEND THAT THE INDEMNITIES SET FORTH IN
SECTION 5 BE CONSTRUED AND APPLIED AS WRITTEN ABOVE NOTWITHSTANDING ANY RULE OF
CONSTRUCTION TO THE CONTRARY. WITHOUT LIMITING THE FOREGOING, THE INDEMNITIES
SHALL TO THE FULLEST EXTENT ALLOWED BY LAW, APPLY NOTWITHSTANDING ANY STATE'S
"EXPRESS NEGLIGENCE RULE" OR SIMILAR RULE THAT WOULD DENY COVERAGE BASED ON AN
INDEMNIFIED PERSON'S SOLE, CONCURRENT OR CONTRIBUTORY ACTIVE OR PASSIVE
NEGLIGENCE OR STRICT LIABILITY. IT IS THE INTENT OF THE PARTIES THAT, TO THE
EXTENT PROVIDED IN SECTION 5, THE INDEMNITIES SET FORTH HEREIN SHALL, TO THE
FULLEST EXTENT ALLOWED BY LAW, APPLY TO AN INDEMNIFIED PERSON'S SOLE, CONCURRENT
OR CONTRIBUTORY ACTIVE OR PASSIVE NEGLIGENCE OR STRICT LIABILITY. THE PARTIES
AGREE THAT THIS PROVISION IS "CONSPICUOUS" FOR PURPOSES OF ALL STATE LAWS.
6. Holder Covenants
(a) Each Holder agrees that, upon receipt of any written notice from
the Company of (i) the happening of any event requiring the preparation of a
supplement or amendment to a prospectus relating to Registrable Securities so
that, as thereafter delivered to such Holder, such prospectus will not contain
an untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading or (ii) the occurrence of an event of the kind described in Sections
3(c)(v), 3(c)(vi) or 3(c)(vii), each Holder will forthwith discontinue
disposition of Registrable Securities pursuant to the Registration Statements
until its receipt of copies of the supplemented or amended prospectus from the
Company as contemplated by Section 3(j) or until it is advised in writing (the
"Advice") by the Company that use of the applicable Prospectus may be resumed
and, in either case, has received copies of any additional or supplemental
filings that are incorporated or deemed to be incorporated by reference in such
Prospectus or Registration Statement. If so directed by the Company, each Holder
shall deliver to the Company all copies, other than permanent file copies then
in such Holder's possession, of the prospectus covering such Registrable
Securities that is current at the time of receipt of such notice.
(b) The Holder(s) included in any registration shall furnish to the
Company such information regarding such Holder(s), the Registrable Securities
owned by such Holders and the distribution proposed by such Holder(s), as the
Company may reasonably request in writing and as shall be reasonably required
under applicable law in connection with any registration, qualification or
compliance referred to in this Agreement. Each Holder agrees to notify the
Company of the occurrence of any event relating to such Holder which requires
the preparation of a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of Registrable Securities the Holder
Information with respect to such Holder in such prospectus will not contain an
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading
relating to such Holder, and such Holder shall promptly deliver to the Company
information necessary to enable the Company to prepare any such supplement or
amendment. Each Holder agrees not to take any action with respect to any
distribution deemed to be made pursuant to such registration statement that
constitutes a violation of Regulation M under the Exchange Act or any other
applicable rule, regulation or law.
13
(c) Each Holder acknowledges and agrees that it will not effect any
public sale or distribution of Registrable Securities pursuant to a Registration
Statement at any time that the Company shall have advised the Holders in writing
that the sale by such Holders pursuant to such Registration Statement should be
suspended, which may be utilized by the Company for any reason, including
without limitation, to facilitate an offering of the Company's securities for
its own account. The Company may provide appropriate stop orders to enforce the
provisions of this Section 6(c).
7. Rule 144 and Rule 144(k) Requirements.
(a) Rule 144. At any time and from time to time after Qualified
Registrable Securities become eligible for sale under Rule 144, upon receipt by
the Company of (i) written notice from any Holder of such Holder's desire to
sell Qualified Registrable Securities pursuant to Rule 144 and (ii) a written
representation from each of such Holder and its selling broker in form
reasonably satisfactory to the Company that each has complied with the
requirements of Rule 144 in connection with such sale and such other
documentation as is reasonably satisfactory to the Company (the "Rule 144
Documentation"), the Company shall cause its legal counsel to deliver a letter,
reasonably acceptable to such Holder, to the Company, such Holder and the
Company's transfer agent stating that the transfer may be made free of the
restrictive legend limiting transferability under the Securities Act and cause
its transfer agent to clear the sale of such Qualified Registrable Securities
within 3 Trading Days of receipt of the Rule 144 Documentation by the Company
and receipt of the physical certificates representing such shares by the
Company's transfer agent. Unless otherwise requested by the Company, such
Holder(s) shall deliver the original physical certificates representing such
shares to the Company's transfer agent directly.
(b) Rule 144(k). At any time and from time to time after any
Registrable Securities become eligible for sale under Rule 144(k), each Holder
of such Registrable Securities may deliver to the Company written notice of such
Holder's desire to have the restrictive legend removed from certificates
representing such Registrable Securities pursuant to Rule 144(k). Upon receipt
of such written notice and presentation by such Holder of documentation as is
reasonably satisfactory to the Company that such Registrable Securities are
eligible for removal of the restrictive legend on such shares pursuant to Rule
144(k) (the "Rule 144(k) Documentation"), the Company shall cause its legal
counsel to deliver to the Company, such Holder and the Company's transfer agent
a letter, reasonably acceptable to such Holder, stating that the removal of the
restrictive legend on the subject shares of Common Stock by the transfer agent
is appropriate under the Securities Act and shall cause its transfer agent to
remove the restrictive legend from such shares or to make an entry in the
Company's share transfer records in the event the shares without the restrictive
legend are to be held in book-entry form in the Depository Trust Company system
within three (3) Trading Days of receipt of the Rule 144(k) Documentation by the
Company and receipt of the physical certificates representing the shares by the
Company's transfer agent. Unless otherwise requested by the Company, such
Holder(s) shall deliver the original physical certificates representing such
shares to the Company's transfer agent directly.
14
8. Public Reporting. So long as any Holder holds Registrable
Securities, the Company shall remain current in its public reporting obligations
under the Exchange Act and the rules of any Eligible Market on which the Common
Stock is then either listed or quoted and otherwise shall fulfill all of its
obligations in order for the provisions of Rule 144 and 144A to be available to
such Holder for the sale of such Common Stock.
9. Miscellaneous
(a) Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Holders and the Company will be entitled to specific performance under this
Agreement. The parties agree that monetary damages may not be adequate
compensation for any loss incurred by reason of any breach of obligations
described in the foregoing sentence and hereby agrees to waive in any action for
specific performance of any such obligation the defense that a remedy at law
would be adequate. In addition, the Company hereby acknowledges and agrees that
its duties and obligations under this Agreement are secured by the Collateral
and that, in addition to any other remedies available at law or in equity, the
Holders may exercise the rights and remedies under the Security Documents in the
event the Company fails to comply with its obligations under this Agreement,
including Section 2(c) hereof.
(b) Amendments and Waivers.
(i) No failure or delay of the Holders in exercising any power or
right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise
of any other right or power. The rights and remedies of the Holders
hereunder are cumulative and not exclusive of any rights or remedies
which they would otherwise have. No waiver of any provision of this
Agreement or consent to any departure by the Company therefrom shall
in any event be effective unless the same shall be authorized as
provided in paragraph (ii) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose
for which given. No notice or demand on the Company in any case shall
entitle the Company to any other or further notice or demand in
similar or other circumstances.
(ii) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or
agreements in writing entered into by the Company and the Required
Holders; provided that no such amendment, waiver or modification shall
(a) change any of the provisions of this Section 9(b) or the
definition of "Required Holders" or any other provision hereof
specifying the number or percentage of Holders required to waive,
amend or modify any rights hereunder or make any determination or
grant any consent hereunder, without the written consent of each
Holder or (b) increase the obligations of any Holder or otherwise
disproportionately adversely affect any of the rights of any Holder
under this Agreement, without the written consent of each Investor
affected thereby.
15
(c) No Inconsistent Agreements. Neither the Company nor any of its
Subsidiaries has entered, as of the date hereof, nor shall the Company or any of
its Subsidiaries, on or after the date of this Agreement, enter into any
agreement with respect to its securities that would have the effect of impairing
the rights granted to the Holders in this Agreement or otherwise conflicts with
the provisions hereof. Except as and to the extent specified in the applicable
schedule to the Purchase Agreement, neither the Company nor any Subsidiary has
previously entered into any agreement granting any registration rights with
respect to any of its securities to any Person that have not been satisfied in
full.
(d) No Piggyback on Registrations. Neither the Company nor any of its
security holders (other than the Holders in such capacity pursuant hereto) may
include securities of the Company in the Registration Statements filed pursuant
to this Agreement other than the Registrable Securities.
(e) Compliance. Each Holder covenants and agrees that it will comply
with the prospectus delivery requirements of the Securities Act and other
requirements of the Exchange Act as applicable to it in connection with sales of
Registrable Securities pursuant to the Registration Statement. Notwithstanding
anything to the contrary contained herein the holders shall transfer their
Registrable Securities only in accordance with the Plan of Distribution
contained therein, and the Company shall have no responsibility for any such
failure of Holder to so comply, for the failure of such transfer to comply with
applicable law nor for any delay associated with the filing of any document with
the Commission or the clearance of comments to the extent solely attributable to
the Plan of Distribution requested by the Holders.
(f) Notices. All notices, demands and requests of any kind to be
delivered to any party hereto in connection with this Agreement shall be (a)
delivered personally, (b) sent by nationally recognized overnight courier, (c)
sent by first class, registered or certified mail, return receipt requested or
(d) sent by facsimile, in each case to such party at its address as set forth in
the Purchase Agreement. Any notice, demand or request so delivered shall
constitute valid notice under this Agreement and shall be deemed to have been
received (A) on the day of actual delivery in the case of personal delivery, (B)
on the next Business Day after the date when sent in the case of delivery by
nationally-recognized overnight courier, (C) on the fifth Business Day after the
date of deposit in the U.S. mail in the case of mailing or (D) upon receipt in
the case of a facsimile transmission or e-mail communication, on the date of
such facsimile transmission or e-mail communication or the next Business Day if
such day is not a Business Day provided that confirmation of such transmission
or communication is received by the sending party. Any party hereto may from
time to time by notice in writing served upon the other as aforesaid designate a
different mailing address or a different person to which all such notices,
demands or requests thereafter are to be addressed.
(g) Successors and Assigns. Whenever in this Agreement any of the
parties hereto is referred to, such reference shall be deemed to include the
successors and permitted assigns of such party, and all covenants, promises and
agreements by or on behalf of the Company or the Holders that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and permitted assigns except that the Company shall not assign its
rights or obligations hereunder without the consent of the Required Holders.
Each Holder shall have the right to assign or otherwise transfer its rights
under this Agreement in the manner and to
16
the extent permitted under the Purchase Agreement provided that: (i) such
transfer may otherwise be effected in accordance with applicable securities
laws, (ii) unless such assignee or transferee is a Holder, such assignee or
transferee acquires (a) Notes in an aggregate principal amount of at least
$3,000,000, or (b) Registrable Securities consisting of at least 250,000 shares
of Common Stock (subject to appropriate adjustment for any stock splits,
dividends, subdivisions, combinations, recapitalizations and the like) and (iii)
the Holder notifies the Company in writing of the transfer or assignment,
stating the name and the address of the transferee or assignee and identifying
the securities with respect to which such registration rights are being
transferred or assigned and the assignee or transferee agrees in writing to be
bound by the provisions of this Agreement.
(h) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute but one contract. In the event that any
signature is delivered by facsimile transmission, such signature shall create a
valid and binding obligation of the party executing (or on whose behalf such
signature is executed) the same with the same force and effect as if such
facsimile signature page were an original thereof.
(i) Governing Law; Waiver Of Jury Trial. All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by and construed and enforced in accordance with the internal laws
of the State of Texas, without regard to the principles of conflicts of law
thereof. Each party hereto hereby irrevocably waives to the fullest extent
permitted by applicable law personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof
via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
If any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction. Each party hereto hereby irrevocably waives, to the fullest extent
permitted by applicable law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Agreement or any of the Documents
or the transactions contemplated hereby or thereby. If either party shall
commence an action or proceeding to enforce any provisions of this Agreement or
any Document, then the prevailing party in such action or proceeding shall be
reimbursed by the other party for its reasonable attorneys fees and other
reasonable costs and expenses incurred with the investigation, preparation and
prosecution of such action or proceeding.
(j) Cumulative Remedies. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law.
(k) Severability. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties
17
will attempt to agree upon a valid and enforceable provision that is a
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Agreement.
(l) Headings. Article and Section headings used herein are for
convenience of reference only and are not to affect the construction of, or to
be taken into consideration in interpreting, this Agreement.
(m) Termination. The registration rights granted pursuant to this
Agreement shall terminate as to any Registrable Securities and the Holder of
such Registrable Securities as such (but not as to that Holder with respect to
any Registrable Securities, the registration rights of which have not expired)
at such time that such Registrable Securities either (i) have had their
restrictive legends removed pursuant to Rule 144(k) and such Registrable
Securities are freely transferable without restriction under the Securities Act
or (ii) may have their restrictive legend removed in accordance with the
provisions of Rule 144(k) upon the request of such Holder pursuant to Section
7(b) hereof and the performance by such Holder of its obligations under Section
7(b) and upon removal of such restrictive legend such Registrable Securities
will be freely transferable without restriction under the Securities Act, or
(iii) have been transferred under a Registration Statement or pursuant to Rule
144 (including Rule 144(k)). Notwithstanding the termination of the registration
rights granted pursuant to this Agreement, all other obligations of the Company
and the Holder hereunder not pertaining to the registration of such Registrable
Securities, including without limitation, Section 2 (but no amount shall become
payable in respect of Common Stock as to any Event that occurs after the time
such shares cease to be Registrable Securities), Section 5 and Sections 7(b) and
7(c) hereof but excluding, without limitation, Section 3 hereof, shall survive
the termination of such registration rights.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES TO FOLLOW]
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
CARRIZO OIL & GAS, INC.
By: /s/ PAUL F. BOLING
------------------
Name: Paul F. Boling
Title: Vice President and
Chief Financial Officer
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES OF PURCHASERS TO FOLLOW]
PCRL Investments L.P.
By: /s/ WILLIAM E. ROSE
-------------------
Name: William E. Rose
Title: Authorized Signatory
Address for Notice:
PCRL Investments L.P.
c/o HBK Investments L.P.
350 Park Avenue 19th Floor
New York, New York 10022
Attention: Ken Hirsh
Facsimile: (212) 446-1941
With a copy to:
HBK Investments L.P.
300 Crescent Court, Suite 700
Dallas, Texas 75201
Attention: Legal Department
Facsimile: (214) 758-1207
And with copies (which shall
not constitute notice) to:
Gardere Wynne Sewell LLP
1601 Elm Street, Suite 3000
Dallas, Texas 75201-4761
Facsimile No.: (214) 999-3341
Telephone No.: (214) 999-4341
Attn: Gary B. Clark, Esq.
Annex A
Plan of Distribution
The selling stockholders may, from time to time, sell any or all of their
shares of common stock on any stock exchange, market or trading facility on
which the shares are traded or in private transactions. These sales may be at
fixed or negotiated prices. The selling stockholders may use any one or more of
the following methods when selling shares:
o ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
o block trades in which the broker-dealer will attempt to sell the shares as
agent but may position and resell a portion of the block as principal to
facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the broker-dealer
for its account;
o an exchange distribution in accordance with the rules of the applicable
exchange;
o privately negotiated transactions;
o short sales;
o broker-dealers may agree with the selling stockholders to sell a specified
number of such shares at a stipulated price per share;
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
The selling stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.
The selling stockholders may also engage in short sales against the box,
puts and calls and other transactions in our securities or derivatives of our
securities and may sell or deliver shares in connection with these trades.
Broker-dealers engaged by the selling stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the selling stockholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The selling stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved. Any
profits on the resale of shares of common stock by a broker-dealer acting as
principal might be deemed to be underwriting discounts or commissions under the
Securities Act. Discounts, concessions, commissions and similar selling
expenses, if any, attributable to the sale of shares will be borne by a selling
stockholder. The selling stockholders may agree to indemnify any
18
agent, dealer or broker-dealer that participates in transactions involving sales
of the shares if liabilities are imposed on that person under the Securities
Act.
The selling stockholders may from time to time pledge or grant a security
interest in some or all of the shares of common stock owned by them and, if they
default in the performance of their secured obligations, the pledgees or secured
parties may offer and sell the shares of common stock from time to time under
this prospectus after we have filed a supplement or an amendment to this
prospectus under Rule 424(b)(3) or other applicable provision of the Securities
Act of 1933 amending the list of selling stockholders to include the pledgee,
transferee or other successors in interest as selling stockholders under this
prospectus.
The selling stockholders also may transfer the shares of common stock in
other circumstances, in which case the transferees, pledgees or other successors
in interest will be the selling beneficial owners for purposes of this
prospectus and may sell the shares of common stock from time to time under this
prospectus after we have filed a supplement or an amendment to this prospectus
under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933
amending the list of selling stockholders to include the pledgee, transferee or
other successors in interest as selling stockholders under this prospectus.
The selling stockholders and any broker-dealers or agents that are involved
in selling the shares of common stock may be deemed to be "underwriters" within
the meaning of the Securities Act in connection with such sales. In such event,
any commissions received by such broker-dealers or agents and any profit on the
resale of the shares of common stock purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act.
We are required to pay all fees and expenses incident to the registration
of the shares of common stock, including the fees and disbursements of counsel
to the selling stockholders. We have agreed to indemnify the selling
stockholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.
The selling stockholders have advised us that they have not entered into
any agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their shares of common stock, nor is there
an underwriter or coordinating broker acting in connection with a proposed sale
of shares of common stock by any selling stockholder. If we are notified by any
selling stockholder that any material arrangement has been entered into with a
broker-dealer for the sale of shares of common stock, if required, we will file
a supplement to this prospectus. If the selling stockholders use this prospectus
for any sale of the shares of common stock, they will be subject to the
prospectus delivery requirements of the Securities Act.
The anti-manipulation rules of Regulation M under the Securities Exchange
Act of 1934 may apply to sales of our common stock and activities of the selling
stockholders.