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EXHIBIT 4.1
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement ("Agreement") is made and
entered into this 12th day of June, 1997, by and among ▇▇▇▇▇▇▇▇▇ ENERGY, INC.,
a Delaware corporation ("PEC"), and ▇▇▇-▇▇▇ DRILLING COMPANY, a Texas
corporation ("▇▇▇-▇▇▇"), ▇▇▇▇▇▇▇▇▇▇ FOUNDATION, a Texas non-profit corporation
(the "Foundation"), and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, TRUSTEE under Agreement, dated
June 2, 1997 (the "▇▇▇▇▇▇▇▇▇▇ Charitable Remainder Trust") .
A. Pursuant to that certain Asset Purchase Agreement dated
June 4, 1997, as amended by the Amendment to Asset Purchase Agreement, dated
June 4, 1997 (collectively, as amended, the "Asset Purchase Agreement"), by and
among PEC, ▇▇▇▇▇▇▇▇▇ Drilling Company, a wholly-owned subsidiary of PEC
("PDC"), and ▇▇▇-▇▇▇, and that certain Agreement dated of even date herewith
(the "Stock Purchase Agreement") by and among PEC, PDC, the Foundation, and the
▇▇▇▇▇▇▇▇▇▇ Charitable Remainder Trust, PEC has agreed to issue a total of
283,000 shares ("Restricted Shares") of PEC's Common Stock, $0.01 par value
(the "Common Stock"), and, pursuant to the Asset Purchase Agreement, PEC has
further agreed to issue to ▇▇▇-▇▇▇ a three-year Stock Purchase Warrant (the
"Stock Purchase Warrant") to purchase up to an additional 200,000 shares of
PEC's Common Stock (the "Warrant Shares") at an exercise price of $32.00 per
share, as partial consideration for the purchase by PEC and PDC of the contract
drilling operations of ▇▇▇-▇▇▇.
B. This Agreement is being entered into in connection with
and as a condition to the parties closing the transactions contemplated under
the Asset Purchase Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement the
following terms shall have the following respective meanings:
"Commission" shall mean the United States Securities and
Exchange Commission and any successor federal agency having
similar powers.
"Holder" shall mean, with respect to the Restricted
Shares, ▇▇▇-▇▇▇, the Foundation and the ▇▇▇▇▇▇▇▇▇▇ Charitable
Remainder Trust and their respective successors and assigns
(including stockholders or partners thereof, as the case may be)
and, with respect to the Warrant Shares, ▇▇▇-▇▇▇, and any
subsequent successors and assigns, of the Warrant Shares or any
portion thereof.
"Person" shall mean an individual, a partnership, a joint
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venture, a corporation, a trust, an unincorporated organization
and a government or any department or agency thereof.
The terms "register," "registered," and "registration"
refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act, and
the declaration or ordering of the effectiveness of such
registration statement.
"Registration Expenses" shall mean all expenses incident
to PEC'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
and all reasonable printing expenses, messenger and delivery
expenses, and fees and disbursements of counsel for PEC and all
independent certified public accountants, underwriters (excluding
discounts and commissions) and other Person retained by PEC (all
such expenses being herein called "Registration Expenses"), will
be borne as provided in this Agreement, except that PEC will, in
any event, pay its internal expenses (including, without
limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of
any annual audit or quarterly review, the expense of any
liability insurance and the expenses and fees for listing the
securities to be registered on each securities exchange on which
similar securities issued by PEC are then listed or on the NASD
automated quotation system.
"Requesting Holder" shall mean any Holder of Warrant
Shares who shall request registration of Warrant Shares pursuant
hereto.
"Restricted Shares" shall include Common Stock issued or
issuable with respect to the Restricted Shares by way of a stock
dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other
reorganization. As to any particular Restricted Shares, such
shares will cease to be Restricted Shares when they have been
distributed to the public pursuant to an offering registered
under the Securities Act or sold to the public through a broker,
dealer or market maker in compliance with Rule 144 under the
Securities Act (or any similar rule then in force).
"Securities Act" shall mean the Securities Act of 1933, or
any successor thereto, as the same shall be amended from time to
time.
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"Warrant Shares" shall include the Common Stock issued or
issuable with respect to the Warrant Shares by way of a stock
dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other
reorganization. As to any particular Warrant Shares such shares
will cease to be Warrant Shares when they have been distributed
to the public pursuant to an offering registered under the
Securities Act or sold to the public through a broker, dealer or
market maker in compliance with Rule 144 under the Securities Act
(or any similar rule then in force).
2. Restrictions on Transfer. The Restricted Shares were
acquired by each of ▇▇▇-▇▇▇, the Foundation and the ▇▇▇▇▇▇▇▇▇▇ Charitable
Remainder Trust, and the Warrant Shares will be acquired by ▇▇▇-▇▇▇, from PEC
for investment for its own account and not as a nominee or agent and not with a
present view to the resale or distribution of any part thereof, except in
compliance with the Securities Act. Each of ▇▇▇-▇▇▇, the Foundation and the
▇▇▇▇▇▇▇▇▇▇ Charitable Remainder Trust acknowledges that the Restricted Shares
are, and ▇▇▇-▇▇▇ acknowledges that the Warrant Shares will be upon issuance,
"restricted securities" within the meaning of the Securities Act.
3. Restricted Shares - Registration Under Securities Act,
etc.
3.1 Registration.
(a) Filing. Contemporaneously with the execution of this
Agreement, PEC shall have filed a Registration Statement on Form S-3 (the
"Form S-3") with the Commission covering the distribution of the Restricted
Shares. PEC agrees to use its best efforts to have the Form S-3 declared
effective.
(b) Expenses. PEC shall pay all Registration Expenses in
connection with the Form S-3.
3.2 Registration Procedures. Following the effective date of
the Form S-3, PEC will promptly:
(a) prepare and file with the Commission such amendments and
supplements to the Form S-3 and the prospectus used in connection therewith as
may be necessary to keep the Form S-3 effective and to comply with the
provisions of the Securities Act with respect to the disposition of the
Restricted Shares until the earlier of (i) such time as all of such Restricted
Shares have been disposed of in accordance with the intended methods of
disposition by ▇▇▇-▇▇▇, the Foundation and the ▇▇▇▇▇▇▇▇▇▇ Charitable Remainder
Trust, or (ii) the expiration of twelve (12) months after such effective date
and furnish to ▇▇▇-▇▇▇, the Foundation and the ▇▇▇▇▇▇▇▇▇▇ Charitable Remainder
Trust prior to the filing thereof a copy of any amendment or supplement to the
Form S-3 or prospectus and shall not file any such amendment or supplement to
which ▇▇▇-▇▇▇
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shall have reasonably objected on the grounds that such amendment or supplement
does not comply in all material respects with the requirements of the
Securities Act or of the rules or regulations thereunder;
(b) furnish to each of ▇▇▇-▇▇▇, the Foundation and the
▇▇▇▇▇▇▇▇▇▇ Charitable Remainder Trust one originally executed Form S-3, with
all amendments, supplements and additional documentation; such number of
conformed copies of such Form S-3 and of each such amendment and supplement
thereto (in each case including all exhibits) as ▇▇▇-▇▇▇, the Foundation and
the ▇▇▇▇▇▇▇▇▇▇ Charitable Remainder Trust may reasonably request; such number
of copies of the prospectus included in the Form S-3 (including each
preliminary prospectus and any summary prospectus) as required by the
Securities Act as such Seller may reasonably request; such documents, if any,
incorporated by reference in the Form S-3 or prospectus; and such other
documents as ▇▇▇-▇▇▇, the Foundation or the ▇▇▇▇▇▇▇▇▇▇ Charitable Remainder
Trust may reasonably request;
(c) use its best efforts to register or qualify the Restricted
Shares and other securities covered by the Form S-3 under such other securities
or blue sky laws of such jurisdictions as ▇▇▇-▇▇▇ shall reasonably request, to
keep such registration or qualification in effect for so long as the Form S-3
remains in effect, and do any and all other acts and things which may be
necessary or advisable to enable ▇▇▇-▇▇▇, the Foundation and the ▇▇▇▇▇▇▇▇▇▇
Charitable Remainder Trust to consummate the disposition in such jurisdictions
of the Restricted Shares covered by the Form S-3, except that PEC shall not for
any such purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction wherein it would not but for the requirements
of this subdivision (c) be obligated to be so qualified, or to subject itself
to taxation in any such jurisdiction, or to consent to general service of
process in any such jurisdiction;
(d) immediately notify ▇▇▇-▇▇▇, the Foundation or the
▇▇▇▇▇▇▇▇▇▇ Charitable Remainder Trust at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, upon discovery
that, or upon the happening of any event as a result of which, the prospectus
included in the Form S-3, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances then existing, or if it is necessary to amend or supplement such
prospectus or Form S-3 to comply with law, and at the request of ▇▇▇-▇▇▇,
prepare and furnish to ▇▇▇-▇▇▇, the Foundation and the ▇▇▇▇▇▇▇▇▇▇ Charitable
Remainder Trust a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such Restricted Shares, such prospectus shall
not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statement therein
not misleading in light of the circumstances then existing and shall otherwise
comply in all material respects with the law and so that such prospectus or
Form S-3, as amended or supplemented, will comply with law;
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(e) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
securities holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve (12) months beginning with the first
month of the first fiscal quarter after the effective date of the Form S-3, if
such earnings statement is necessary to satisfy the provisions of Section 11(a)
of the Securities Act.
4. Warrant Shares - Registration Under Securities Act, etc.
4.1 Registration Upon Demand
(a) Demand Rights. At any time after the date hereof but
expiring on the third anniversary date hereof ("Demand Registration Period"),
but subject to (a) prior exercise of the Stock Purchase Warrant and payment in
full to PEC of the exercise price for the Warrant Shares, and (b) the
provisions of Section 4.1(c), below, at the written demand of Requesting
Holders and on one (1) occasion only, PEC shall prepare, file with the
Commission and use its best efforts to have declared effective a registration
statement with respect to the distribution of up to all of the Warrant Shares.
Such demand shall be made by written notice to PEC by Requesting Holders
holding at least a majority of the Warrant Shares, which notice shall
(i) request the preparation of the registration statement pursuant to the terms
of this Section 4.1, (ii) include the number of Warrant Shares to be offered by
Holders of Warrant Shares pursuant to such registration statement and (iii) be
sent to all other Holders. PEC may include in such registration any securities
of PEC for sale by PEC or persons other than PEC, and such registration shall
be deemed to be an incidental registration pursuant to Section 4.2 hereof with
Holders having the priority with respect to the Warrant Shares.
(b) Expenses. PEC shall pay all Registration Expenses in
connection with the registration of Warrant Shares demanded pursuant to this
Section 4.1.
(c) Restrictions on Demand Registrations. PEC will not be
obligated to effect any registration under Section 4.1(a) within three months
after the effective date of (i) a registration initiated by PEC; or (ii) a
registration in which the Holders of Warrant Shares were given incidental
registration rights pursuant to Section 4.2 hereof and in which there was no
reduction in the number of Warrant Shares requested to be included (the "Other
Registrations"); provided that in either case (i) or (ii) the three-month
period can be extended to four months if required by the then managing
underwriter. PEC may postpone filing or the effectiveness of a registration
statement demanded by Holders under Section 4.1(a) for up to four months
following receipt of such demand if PEC has executed in good faith (x) a letter
of intent or a commitment letter with an underwriter for a public offering or
(y) an agreement in principle relating to an acquisition of assets (other than
in the ordinary course of business) or any merger, consolidation or similar
transaction, or (z) has made a filing with the Commission under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), in connection with a
tender offer. Notwithstanding anything in this Section 4.1(c) to the contrary,
if the Demand Registration Period expires without effectuation of a demand for
registration under Section 4.1(a) because of the occurrence of an event
specified above in this Section 4.1(c), the Demand Registration Period
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shall be extended for such additional period as is necessary to effect such
registration, provided that such demand is given to PEC prior to the expiration
of the Demand Registration Period.
4.2 Incidental Registration.
(a) Right to Include Warrant Shares. Subject to the further
provisions of this Section 4.2(a), if PEC, at any time commencing on the date
of this Agreement and expiring on the third anniversary date hereof, proposes
to register any of its equity securities under the Securities Act, for its own
account or the account of other holders of PEC's securities, on a form and in a
manner which would permit registration of the Warrant Shares for sale to the
public under the Securities Act, it will each such time give prompt written
notice to all Holders of its intention to do so, describing such securities and
specifying the form and manner and the other relevant facts involved in such
proposed registration and upon the written request of any such Holder delivered
to PEC within twenty (20) business days after the giving of any such notice
(which request shall specify the Warrant Shares intended to be disposed of by
such Holder and the intended method or methods of disposition thereof), PEC
will use its best efforts to effect the registration under the Securities Act
of all Warrant Shares which PEC has been so requested to register by Holders to
the extent requisite to permit the disposition (in accordance with the intended
methods thereof as aforesaid) of the Warrant Shares so to be registered
provided that (i) if, at any time after giving such written notice of its
intention to register any of its securities and prior to the effective date of
the registration statement filed in connection with such registration, PEC
shall determine for any reason not to register such securities, PEC may, at its
election give written notice of such determination to each Holder and thereupon
shall be relieved of its obligation to register any Warrant Shares in
connection with such registration (but not from its obligation to pay the
Registration Expenses in connection therewith as provided herein); and (ii) if
(A) the registration so proposed by PEC involves an underwritten primary
registration on behalf of PEC to be distributed (on a firm commitment basis) by
or through one or more underwriters of recognized standing under underwriting
terms appropriate for such a transaction, and (B) the managing underwriter of
such underwritten offering shall advise PEC in writing that, in its good faith
judgment, all the shares to be offered by PEC and other parties are greater
than can be accommodated without interfering with the successful marketing of
all the securities to be then offered publicly for the account of PEC, then the
managing underwriter or underwriters shall include in such registration (1)
first, the securities PEC proposes to register for sale, and (2) second, any
securities requested and permitted to be included in such registration pursuant
to incidental or piggyback rights granted to the holders thereof prior to the
date of this Agreement, (3) third, the Warrant Shares requested to be included
in such registration by the Requesting Holders, pro rata, if necessary, and (4)
fourth, any other securities requested to be included in such registration, if
any, pro rata; (iii) if (A) the registration so proposed by PEC is an
underwritten secondary registration on behalf of holders of PEC's securities,
to be distributed (on a firm commitment basis) by or through one or more
underwriters of recognized standing under underwriting terms appropriate for
such a transaction, and (B) the managing underwriter of such underwritten
offering shall advise PEC in writing that, in its good faith judgment, all the
shares to be offered by such requesting holder, PEC and other parties are
greater than can be accommodated without interfering with the successful
marketing of all of the securities to be then
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offered publicly for the account of PEC, then the managing underwriter shall
include in such registration (1) first, the securities requested to be included
therein by the holders requesting such registration, (2) second, any securities
requested and permitted to be included in such registration statement pursuant
to incidental or piggyback rights granted to the holders thereof prior to the
date of this Agreement, (3) third, the securities which are requested to be
included in such registration by the Holders of Warrant Shares, pro rata, if
necessary, (4) fourth, any securities to be included in such registration on
behalf of PEC, and (5) fifth, any other securities requested to be included in
such registration, if any, pro rata.
(b) Expenses. PEC will pay all Registration Expenses in
connection with each registration of Warrant Shares requested pursuant to
Section 4.2.
4.3 Registration Procedures. If and whenever PEC is required
to effect the registration of any Warrant Shares under the Securities Act as
provided in Section 4.1 or Section 4.2, PEC will promptly:
(a) prepare and (in any event within sixty (60) days) file
with the Commission a registration statement with respect to such Warrant
Shares and use its best efforts to cause such registration statement to become
effective, such registration statement to comply as to form and content in all
material respects with the Commission's forms, rules and regulations;
(b) keep such registration statement effective and comply with
the provisions of the Securities Act with respect to the disposition of all
Warrant Shares and other securities covered by such registration statement
until the earlier of (i) such time as all of such Warrant Shares and other
securities have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such registration
statement or (ii) the expiration of (A) twelve (12) months in the case of a
registration of Warrant Shares pursuant to Section 4.1 hereof, or (B) three (3)
months in the case of a registration of Warrant Shares pursuant to Section 4.2
hereof, after such registration statement becomes effective, and will furnish
to each such seller prior to the filing thereof a copy of any amendment or
supplement to such registration statement or prospectus and shall not file any
such amendment or supplement to which any such seller shall have reasonably
objected on the grounds that such amendment or supplement does not comply in
all material respects with the requirements of the Securities Act or of the
rules or regulations thereunder;
(c) promptly furnish to each seller of Warrant Shares one
originally executed registration statement, with all amendments, supplements
and additional documentation; such number of conformed copies of such
registration statement and of each such amendment and supplement thereto (in
each case including all exhibits) as such seller may reasonably request; such
number of copies of the prospectus included in such registration statement
(including each preliminary prospectus and any summary prospectus) as required
by the Securities Act as such seller may reasonably request; such documents, if
any, incorporated by reference in such registration statement or prospectus;
and such other documents as such seller may reasonably request;
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(d) use its best efforts to register or qualify all Warrant
Shares and other securities covered by such registration statement under such
other securities or blue sky laws of such jurisdictions as each seller shall
reasonably request, to keep such registration or qualification in effect for so
long as such registration statement remains in effect, and do any and all other
acts and things which may be necessary or advisable to enable such seller to
consummate the disposition in such jurisdictions of his Warrant Shares covered
by such registration statement, except that PEC shall not for any such purpose
be required to qualify generally to do business as a foreign corporation in any
jurisdiction wherein it would not but for the requirements of this subdivision
(d) be obligated to be so qualified, or to subject itself to taxation in any
such jurisdiction, or to consent to general service of process in any such
jurisdiction;
(e) immediately notify each seller of Warrant Shares covered
by such registration statement, at any time when a prospectus relating thereto
is required to be delivered under the Securities Act, upon discovery that, or
upon the happening of any event as a result of which, the prospectus included
in such registration statement, as then in effect, includes an untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances then existing, or if it is necessary to amend or supplement
such prospectus or registration statement to comply with law, and at the
request of any such seller, prepare and furnish to such seller a reasonable
number of copies of a supplement to or an amendment of such prospectus as may
be necessary so that, as thereafter delivered to the purchasers of such Warrant
Shares, such prospectus shall not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statement therein not misleading in light of the
circumstances then existing and shall otherwise comply in all material respects
with the law and so that such prospectus or registration statement, as amended
or supplemented, will comply with law;
(f) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
securities holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve (12) months beginning with the first
month of the first fiscal quarter after the effective date of such registration
statement, if such earnings statement is necessary to satisfy the provisions of
Section 11(a) of the Securities Act;
(g) provide and cause to be maintained a transfer agent and
registrar for all Warrant Shares covered by such registration statement from
and after a date not later than the effective date of such registration
statement; and
(h) use its best efforts to list all Common Stock covered by
such registration statement on each securities exchange on which any Common
Stock is then listed or quote all such Common Stock on NASDAQ if PEC's Common
Stock is quoted on NASDAQ, or, if PEC's Common Stock is not then quoted on
NASDAQ or listed on any national securities exchange, use its best efforts to
have such Common Stock covered by such registration statement quoted on NASDAQ
or, at the option of PEC, listed on a national securities exchange.
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PEC may require each seller of Warrant Shares as to which any registration is
being effected to furnish PEC such information regarding such seller and the
distribution of such securities as PEC may from time to time reasonably request
in writing and as shall be required by law or by the Commission in connection
therewith.
4.4 Underwritten Offerings.
(a) Underwriting Agreement. If requested by the underwriters
for any underwritten offering of Warrant Shares on behalf of a Holder or
Holders pursuant to the registration demanded under Section 4.1, PEC will enter
into an underwriting agreement with such underwriters for such offering, such
agreement to contain such representations and warranties by PEC and such other
terms and provisions as are customarily contained in underwriting agreements
with respect to secondary distributions, including, without limitation,
indemnities to the effect and to the extent provided in Section 5. Holders on
whose behalf Warrant Shares are to be distributed by such underwriters shall be
parties to any such underwriting agreement and the representations and
warranties by, and the other agreements on the part of, PEC to and for the
benefit of such underwriters, shall also be made to and for the benefit of such
Holders. No such Holder shall be required by PEC to make any representations
or warranties to or agreements with PEC or the underwriters other than
reasonable representations, warranties or agreement regarding such Holder, such
Holder's Warrant Shares and such Holder's intended method or methods of
disposition and any other representation required by law and as provided in
Section 4.4(d).
(b) Inclusion of Warrant Shares. If PEC at any time proposes
to register any of its securities for its own account under the Securities Act
as contemplated by Section 4.2 and such securities are to be distributed by or
through one or more underwriters, PEC will use its best efforts, if requested
by any Holder who is entitled to request incidental registration of Warrant
Shares in connection therewith pursuant to Section 4.2, to arrange for such
underwriters to include the Warrant Shares to be offered and sold by such
Holder among the securities to be distributed by or through such underwriters;
provided that, for purposes of this sentence, best efforts shall not require
PEC to reduce the amount of sales price of such securities proposed to be
distributed by or through such underwriters. Holders of Warrant Shares to be
distributed by such underwriters shall be parties to the underwriting agreement
between PEC and such underwriters and the representations and warranties by,
and the other agreements on the part of, PEC to and for the benefit of such
underwriters, shall also be made to and for the benefit of such Holders of
Warrant Shares. PEC will cooperate with such Holders to the end that the
conditions precedent to the obligations of such Holders under such underwriting
agreement shall not include conditions that are not customary in underwriting
agreements with respect to combined primary and secondary distributions and
shall be otherwise satisfactory to such Holders. No such Holder shall be
required by PEC to make any representations or warranties other than reasonable
representations, warranties or agreements regarding such Holder, such Holder's
Warrant Shares and such Holder's intended method or methods of distribution and
any other representation required by law and as provided in Section 4.4(d).
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(c) Selection of Underwriters. Whenever a registration demand
pursuant to Section 4.1 is for an underwritten offering, the Holders of Warrant
Shares making such demand shall have the right to select the managing
underwriter(s) (which shall be an underwriter of national standing) to
administer the offering, subject to the approval of PEC, such approval not to
be unreasonable withheld. If PEC at any time proposes to register any of its
securities under the Securities Act for sale of its own account or for the
accounts of any other sellers, including Holder, and such securities are to be
distributed by or through one or more underwriters, the selection of the
managing underwriter(s) (which shall be an underwriter of national standing)
shall be made by PEC and notice of the selection thereof delivered to Holders
eligible to participate in such registration.
(d) Holdback Agreements.
(i) If any registration pursuant to Section 4.1 or 4.2
shall be in connection with any underwritten public offering, each
Holder of Warrant Shares agrees by acquisition of such Warrant Shares,
if so required by the managing underwriter, not to effect any public
sale or distribution of Warrant Shares (other than as part of such
underwritten public offering) within seven (7) days prior to the
effective date of such registration statement or one hundred twenty
(120) days after the effective date of such registration statement,
unless the underwriters managing the offering otherwise agree.
(ii) PEC agrees (A) not to effect any public sale or
distribution prohibited by the Exchange Act after the demand or decision
to make such registration and (i) prior to the effective date of the
registration statement, except as a part of such registration statement
or pursuant to any registration statements on Forms S-8 or S-4 or any
successor form, unless the managing underwriters of such registration
otherwise agree; or (ii) prior to the ninetieth (90th) day after the
effective date of such registration statement, and (B) to use its best
efforts to cause each holder of at least 10% of its Common Stock or any
securities convertible into or exchangeable or exercisable for any of
its Common Stock, in each case purchased from PEC at any time after the
date of this Agreement (other than in a public offering), to agree not
to effect any such public sale or distribution of such securities during
such period.
4.5 Preparation; Reasonable Investigation. In connection with
the preparation and filing of each registration statement registering Warrant
Shares under the Securities Act, PEC will give Holders on whose behalf such
Warrant Shares are to be so registered and their underwriters, if any, and each
Requesting Holder and not more than one counsel for all Holders and their
respective accountants, the opportunity to participate in the preparation of
such registration statement, each prospectus included therein or filed with the
Commission and each amendment thereof or supplement thereto, and will give each
of them such access to its books and records and such opportunities to discuss
the business of PEC with its officers and the independent public accountants
who have certified its financial statements as shall be necessary in the
opinion of such Holders and such underwriters or their respective counsel, to
conduct a reasonable investigation within the meaning of the Securities Act.
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5. Indemnification.
5.1 Indemnification by PEC.
In the event of any registration of any securities of PEC under
the Securities Act (pursuant to which ▇▇▇-▇▇▇, the Foundation, the ▇▇▇▇▇▇▇▇▇▇
Charitable Remainder Trust or Holder sells Restricted Shares or ▇▇▇-▇▇▇ or
Holder sells Warrant Shares), PEC will, and hereby does, indemnify and hold
harmless ▇▇▇-▇▇▇, the Foundation and the ▇▇▇▇▇▇▇▇▇▇ Charitable Remainder Trust,
each officer and director of ▇▇▇-▇▇▇ or the Foundation, each trustee of the
▇▇▇▇▇▇▇▇▇▇ Charitable Remainder Trust or Holder, its partners and each other
person, if any, who controls ▇▇▇-▇▇▇, the Foundation, the ▇▇▇▇▇▇▇▇▇▇ Charitable
Remainder Trust or Holder within the meaning of the Securities Act, in each
case, against any losses, claims, damages, liabilities or expenses, joint or
several (including, without limitation, the costs and expenses of
investigating, preparing for and defending any legal proceeding, including
reasonable attorney's fees), to which ▇▇▇-▇▇▇, the Foundation, the ▇▇▇▇▇▇▇▇▇▇
Charitable Remainder Trust or such Holder or any such director, trustee,
officer, employee or controlling person may become subject under the Securities
Act or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions or proceedings in respect thereof) arise out of or are
based upon (i) any untrue statement or alleged untrue statement of any material
fact contained in any registration statement under which such securities were
registered under the Securities Act, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or any document incorporated by reference therein, or (ii)
any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
and PEC will reimburse ▇▇▇-▇▇▇, the Foundation, the ▇▇▇▇▇▇▇▇▇▇ Charitable
Remainder Trust or Holder and each such partner and controlling person for any
legal or any other expenses incurred by them in connection with investigating
or defending or settling any such loss, claim, liability, action or proceeding;
provided that PEC shall not be liable in any such case to the extent that any
loss, claim, damage, liability or expense (or action or proceeding in respect
thereof) arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
any such preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement in reliance upon and in conformity with written
information furnished to PEC through an instrument duly executed by ▇▇▇-▇▇▇,
the Foundation, the ▇▇▇▇▇▇▇▇▇▇ Charitable Remainder Trust or Holder or any such
director, trustee, officer, partner or controlling person specifically stating
that it is for use in preparation thereof. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of
▇▇▇-▇▇▇, the Foundation, the ▇▇▇▇▇▇▇▇▇▇ Charitable Remainder Trust or Holder or
any such partner or controlling person and shall survive the transfer of such
securities by ▇▇▇-▇▇▇, the Foundation, the ▇▇▇▇▇▇▇▇▇▇ Charitable Remainder
Trust or Holder. PEC will make provision for contribution in lieu of any such
indemnity that may be disallowed as shall be reasonably requested by ▇▇▇-▇▇▇,
the Foundation, the ▇▇▇▇▇▇▇▇▇▇ Charitable Remainder Trust or Holder.
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5.2 Indemnification by ▇▇▇-▇▇▇, the Foundation, the ▇▇▇▇▇▇▇▇▇▇
Charitable Remainder Trust or Holder.
In the event of any registration of any securities of PEC under
the Securities Act (pursuant to which ▇▇▇-▇▇▇, the Foundation, the ▇▇▇▇▇▇▇▇▇▇
Charitable Remainder Trust or Holder sells Restricted Shares or Warrant Shares
covered by such registration statement), ▇▇▇-▇▇▇, the Foundation, the
▇▇▇▇▇▇▇▇▇▇ Charitable Remainder Trust or Holder will, and each of them hereby
does, severally indemnify and hold harmless PEC, each director of PEC, each
officer of PEC who shall sign such registration statement and each other
person, if any, who controls PEC within the meaning of the Securities Act from
and against losses, claims, damages and liabilities caused by any untrue
statement or alleged untrue statement of material fact contained in such
registration statement, any preliminary prospectus, final prospectus or summary
prospectus included therein, or any amendment or supplement thereto, or caused
by any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, if such statement or omission was made in reliance upon and in
conformity with written information furnished to PEC through an instrument duly
executed by ▇▇▇-▇▇▇, the Foundation, the ▇▇▇▇▇▇▇▇▇▇ Charitable Remainder Trust
or Holder specifically stating that it is for use in the preparation of such
registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement up to the net proceeds received by ▇▇▇-▇▇▇,
the Foundation, the ▇▇▇▇▇▇▇▇▇▇ Charitable Remainder Trust or such Holder. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of PEC or any such director, officer or controlling person
and shall survive the transfer of such securities by ▇▇▇-▇▇▇, the Foundation,
the ▇▇▇▇▇▇▇▇▇▇ Charitable Remainder Trust or Holder.
5.3 Notice of Claims, etc.
In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to this Section 5, such person (hereinafter called the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (hereinafter called the "indemnifying party") in
writing and the indemnifying party, upon request of the indemnified party,
shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any other party the indemnifying party may
designate in such proceeding and shall pay the fees and disbursements of such
counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless (i)
the indemnifying party and the indemnified party shall have mutually agreed to
the retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them.
The indemnifying party shall not be liable for the settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there is a final judgment for the plaintiff, the indemnifying party
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agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment.
5.4 Indemnification Unavailable.
If the indemnification provided for in this Section 5 is
unavailable as a matter of law to an indemnified party in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party under any such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by such indemnified party on the one hand and the
indemnifying parties on the other or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of such indemnified party on the one hand and
the indemnifying parties on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative fault of
such indemnified party and the indemnifying parties shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates
to information supplied by such parties and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omissions. The parties agree that it would not be just and
equitable if contribution pursuant to this Section 5.4 were determined by pro
rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages and
liabilities referred to above shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating, defending or settling
any such action or claim. Notwithstanding the foregoing, the liability of
▇▇▇-▇▇▇, the Foundation, the ▇▇▇▇▇▇▇▇▇▇ Charitable Remainder Trust or a Holder
under this Section 5.4 shall be limited to the net proceeds received by
▇▇▇-▇▇▇, the Foundation, the ▇▇▇▇▇▇▇▇▇▇ Charitable Remainder Trust or such
Holder (as the case may be).
5.5 No Settlement, etc.
No indemnifying party shall, except with the written consent of
the indemnified party, consent to entry of any judgment or entry into
settlement that 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 action.
5.6 Indemnity Operative and in Full Force.
The indemnity and contribution agreements contained in this
Section 5 shall remain operative and in full force and effect regardless of any
termination of this Agreement.
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6. Rule 144.
6.1 Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Restricted Shares or the Warrant Shares to the
public without registration, PEC shall use its best efforts to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all times
after the date of this Agreement;
(b) File with the Commission in a timely manner all reports
and other documents required of PEC under the Securities Act and the Exchange
Act; and
(c) So long as ▇▇▇-▇▇▇, the Foundation, the ▇▇▇▇▇▇▇▇▇▇
Charitable Remainder Trust or Holder owns any Restricted Shares or the Warrant
Shares, furnish to ▇▇▇-▇▇▇, the Foundation, the ▇▇▇▇▇▇▇▇▇▇ Charitable Remainder
Trust or the Holders as soon as reasonably practicable after request a written
statement by PEC as to its compliance with the reporting requirements of the
Exchange Act, a copy of the most recent annual or quarterly report of PEC filed
with the Commission, and such other reports filed by PEC with the Commission.
6.2 Further Assurances. PEC shall take such action any Holder
may reasonably request from time to time to enable ▇▇▇-▇▇▇, the Foundation, the
▇▇▇▇▇▇▇▇▇▇ Charitable Remainder Trust or such Holder to sell Restricted Shares
or Warrant Shares without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144 under the Securities Act,
as such Rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the Commission. Upon written request of
▇▇▇-▇▇▇, the Foundation, the ▇▇▇▇▇▇▇▇▇▇ Charitable Remainder Trust or any
Holder, PEC will deliver to ▇▇▇-▇▇▇, the Foundation, the ▇▇▇▇▇▇▇▇▇▇ Charitable
Remainder Trust or such Holder a written statement as to whether it has
complied with such requirements.
7. Amendments and Waivers. This Agreement may be amended,
and PEC may take any action herein prohibited or omit to perform any act herein
required to be performed by it, only if PEC shall have obtained the written
consent to such amendment, action or omissions to act of ▇▇▇-▇▇▇ or the Holder
or Holders of at least 51% or more of the Restricted Shares and Warrant Shares.
8. Nominees for Beneficial Owners. In the event that any
Restricted Shares or Warrant Shares are held by a nominee for the beneficial
owner thereof, the beneficial owner thereof may, at its election, be treated as
▇▇▇-▇▇▇, the Foundation, the ▇▇▇▇▇▇▇▇▇▇ Charitable Remainder Trust or the
Holder of such Restricted Shares or Warrant Shares for purposes of any request
or other action by ▇▇▇-▇▇▇, the Foundation, the ▇▇▇▇▇▇▇▇▇▇ Charitable Remainder
Trust or any Holder or Holders of Restricted Shares or Warrant Shares pursuant
to this Agreement or any determination of any number or percentage of shares of
Restricted Shares or Warrant Shares held by ▇▇▇-▇▇▇, the Foundation, the
▇▇▇▇▇▇▇▇▇▇ Charitable Remainder Trust or any Holder or Holders of Restricted
Shares or Warrant Shares contemplated by this Agreement. If the beneficial
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owner of any Restricted Shares or Warrant Shares so elects, PEC may require
assurances reasonably satisfactory to it of such owner's beneficial ownership
of such Restricted Shares or Warrant Shares.
9. Notices. Notices and other communications under this
Agreement shall be in writing and shall be sent by registered mail, postage
prepaid, or courier addressed to:
9.1 if to ▇▇▇-▇▇▇, the Foundation, the ▇▇▇▇▇▇▇▇▇▇ Charitable
Remainder Trust or any Holder, at the address provided to PEC in writing by
▇▇▇-▇▇▇, the Foundation, the ▇▇▇▇▇▇▇▇▇▇ Charitable Remainder Trust or such
Holder or as shown on stock transfer books of PEC unless ▇▇▇-▇▇▇, the
Foundation, the ▇▇▇▇▇▇▇▇▇▇ Charitable Remainder Trust or such Holder has
advised PEC in writing of a different address as to which notices shall be sent
to it under this Agreement, and
9.2 if to PEC, at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ to the attention of its President or to such other address
as PEC shall have furnished to ▇▇▇-▇▇▇, the Foundation, the ▇▇▇▇▇▇▇▇▇▇
Charitable Remainder Trust or each Holder.
10. Successors and Assigns. PEC acknowledges and agrees that
the registration rights granted to ▇▇▇-▇▇▇, the Foundation and the ▇▇▇▇▇▇▇▇▇▇
Charitable Remainder Trust in this Agreement may be transferred and assigned by
▇▇▇-▇▇▇, the Foundation and the ▇▇▇▇▇▇▇▇▇▇ Charitable Remainder Trust in
connection with any valid sale and assignment of the Restricted Shares or
Warrant Shares. All covenants and agreements in this Agreement by or on behalf
of either of the parties hereto will bind and, subject to the provisions of
Section 4.1 hereof, inure to the benefit of the respective successors and
assigns of the parties hereto whether so expressed or not. In addition,
whether or not any express assignment has been made, the provisions of this
Agreement are for the benefit of ▇▇▇-▇▇▇, the Foundation, the ▇▇▇▇▇▇▇▇▇▇
Charitable Remainder Trust or any Holder of Restricted Shares or Warrant
Shares.
11. Miscellaneous. This Agreement embodies the entire
agreement and understanding between PEC and the other parties hereto with
respect to the subject matter hereof and supersedes all prior agreements and
understandings relating to the subject matter hereof. This Agreement shall be
construed and enforced in accordance with and governed by the laws of the State
of Texas. The headings in this Agreement are for the purposes of reference
only and shall not limit or otherwise affect the meaning hereof. This
Agreement may be executed in counterparts, each of which shall be an original,
but both of which together shall constitute one instrument.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized
as of the date first above written.
PEC:
▇▇▇▇▇▇▇▇▇ ENERGY, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Executive Officer
▇▇▇-▇▇▇:
▇▇▇-▇▇▇ DRILLING COMPANY
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Chairman of the Board
FOUNDATION:
▇▇▇▇▇▇▇▇▇▇ FOUNDATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
President
▇▇▇▇▇▇▇▇▇▇ CHARITABLE REMAINDER
TRUST:
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Trustee
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