EXHIBIT 10.4
------------
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of
January 16, 2004, by and among GMX RESOURCES INC., an Oklahoma corporation (the
"Company"), and the Warrant Holders set forth in Schedule I attached hereto
(together with their permitted successors and assigns, collectively the
"Security Holders" or "Holders", whether one or more).
1. INTRODUCTION.
(A) NOTE PURCHASE AGREEMENT. The Company and the
Security Holders have today executed that certain Note Purchase Agreement
(the "Note Purchase Agreement"), pursuant to which the Security Holders has made
a loan to the Company in the aggregate principal amount of $1,000,000. In
addition, pursuant to the terms of the Note Purchase Agreement and the
transactions contemplated thereby, the Company has entered into an agreement
(the "Warrant Agreement") whereby the Company has issued to the Security Holders
warrants (the "Warrants") exercisable for an aggregate of 175,000 shares of
Common Stock (the "Warrant Shares"). The number of Warrant Shares is subject to
adjustment upon the occurrence of stock splits, recapitalizations and similar
events occurring after the date hereof, as set forth in the Warrant Agreement.
(B) DEFINITION OF SECURITIES. The Warrants and the
Warrant Shares (whether the Warrant Shares have been exercised and
issued or are currently exercisable by the holder of the Warrants pursuant to
the terms and conditions of the Warrant Agreement) are herein collectively
referred to as the "Securities."
(C) NATIONAL MARKET REPRESENTATION. The Company
represents and warrants that the Company's Common Stock is currently
eligible for trading on the Nasdaq National Market ("National Market") under the
symbol "GMXR." Certain capitalized terms used in this Agreement are defined in
Section 3 hereof; references to sections shall be to sections of this Agreement.
2. REGISTRATION UNDER SECURITIES ACT, ETC.
2.1 REQUIRED REGISTRATION.
(A) REGISTRATION OF REGISTRABLE SECURITIES. As soon as
practicable after the Company is eligible for use of Form S-3, the
Company shall prepare and file a registration statement to effect the
registration under the Securities Act of all, but not less than all, of the
Registrable Securities, all to the extent requisite to permit the public
disposition of all such Registrable Securities so to be registered. The Company
shall use its best efforts to cause the registration statement which is the
subject of this Section 2.1(a) (the "Registration Statement") to be declared
effective by the Commission upon the earlier to occur of (i) June 30, 2004, (ii)
90 days following the filing of the Registration Statement contemplated by this
Section 2.1, or (iii) ten (10) business days after receipt of a "no review" or
similar letter from the Commission (the "Required Effectiveness Date"). In the
event that (a) the Registration Statement is not declared effective by the
Commission on the Required Effectiveness Date, or (b) the Registration Statement
fails to remain effective for the duration of the Registration Maintenance
Period for any reason, including, without limitation, because the Company
becomes ineligible for use of Form S-3 at any time after the Required
Effectiveness Date, then on the first Business Day (as defined in the Note
Purchase Agreement) of each month (or partial month) thereafter, commencing on
July 1, 2004, in the case of clause (a) above, or on the first day of the
calendar month immediately following the month in
--------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT - PAGE 1
which the Registration Statement ceases to remain effective under clause (b)
above, in accordance with the terms and provisions of the Warrant Agreement, the
Company shall issue Warrants for an additional 10,000 Warrant Shares each month
to the Warrant Holders (pro rata based on the number of Warrants held by each)
until such time as the Registration Statement is declared effective by the
Commission. The issuance of such Warrants shall be the sole and exclusive remedy
of the Holders for any failure of the Company to register the Registrable
Securities by the Required Effectiveness Date or to maintain its eligibility for
Form S-3. Nothing contained herein shall be deemed to limit the number of
Registrable Securities to be registered by the Company hereunder.
(B) REGISTRATION STATEMENT FORM. Registrations under
this Section 2.1 shall be on Form S-3 so long as the Company remains eligible
for such Form and its Common Stock is listed on the National Market System or a
national securities exchange, and if the Company is not eligible for Form S-3,
the Company shall have no obligation to register the Registrable Securities
until the Company becomes eligible for Form S-3. Any registration effected
pursuant to this Section 2.1 shall permit the disposition of all such
Registrable Securities in accordance with the intended method or methods of
disposition specified by the Security Holders; provided, however, such intended
method of disposition shall not include an underwritten offering of the
Registrable Securities.
(C) EXPENSES. The Company will pay all Registration
Expenses in connection with any registration required by this Section
2.1.
(D) EFFECTIVE REGISTRATION STATEMENT. A registration
pursuant to this Section 2.1 shall not be deemed to have been effected (i)
unless a registration statement with respect thereto has become effective within
the time period specified herein, provided that a registration which does not
become effective after the Company has filed a registration statement with
respect thereto solely by reason of the refusal to proceed of any holder of
Registrable Securities (other than a refusal to proceed based upon the advice of
counsel in the form of a letter signed by such counsel and provided to the
Company relating to a disclosure matter unrelated to such holder) shall be
deemed to have been effected by the Company unless the holders of the
Registrable Securities shall have elected to pay all Registration Expenses in
connection with such registration, (ii) if, after it has become effective, such
registration becomes subject to any stop order, injunction or other order or
extraordinary requirement of the Commission or other governmental agency or
court for any reason or (iii) if, after it has become effective, such
registration ceases to be effective for more than an aggregate of ninety (90)
days.
(E) PLAN OF DISTRIBUTION. The Company hereby agrees that
the Registration Statement shall include a plan of distribution
section reasonably acceptable to the Security Holders; provided, however, that
such plan of distribution shall not include an underwritten offering of the
Registrable Securities.
2.2 INCIDENTAL REGISTRATION. (A) RIGHT TO INCLUDE REGISTRABLE
SECURITIES. If at any time after the date hereof, the Company proposes to
register its Common Stock or any of its securities for which the Warrants are
then exercisable under the Securities Act (other than by a registration in
connection with an acquisition in a manner which would not permit registration
of Registrable Securities for sale to the public, on Form S-8, or any successor
form thereto, on Form S-4, or any successor form thereto and other than pursuant
to Section 2.1), on an underwritten basis (either best-efforts or
firm-commitment), then, the Company will each such time give prompt written
notice to all Holders of its intention to do so and of such Holders' rights
under this Section 2.2. Upon the written request of any such Holder made within
ten (10) days after the receipt of any such notice who agrees to exercise the
--------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT - PAGE 2
Warrants for the Registrable Securities immediately upon the effectiveness of
any registration statement , the Company will, subject to the terms of this
Agreement, effect the registration under the Securities Act of the Registrable
Securities, to the extent requisite to permit the disposition as a part of the
same underwritten offering of such Registrable Securities so to be registered,
by inclusion of such Registrable Securities in the registration statement which
covers the securities which the Company proposes to register, provided that if,
at any time after giving written notice of its intention to register any
securities and prior to the effective date of the registration statement filed
in connection with such registration, the Company shall determine for any reason
either not to register or to delay registration of such securities, the Company
may, at its election, give written notice of such determination to each Holder
and, thereupon, (i) in the case of a determination not to register, shall be
relieved of its obligation to register any Registrable Securities in connection
with such registration (but not from its obligation to pay the Registration
Expenses in connection therewith), without prejudice, however, to the rights of
any holder or holders of Registrable Securities entitled to do so to request
that such registration be effected as a registration under Section 2.1, and (ii)
in the case of a determination to delay registering, shall be permitted to delay
registering any Registrable Securities, for the same period as the delay in
registering such other securities. No registration effected under this Section
2.2 shall relieve the Company of its obligation to effect any registration upon
a Registration Request under Section 2.1, nor shall any such registration
hereunder be deemed to have been effected pursuant to Section 2.1. The Company
will pay all Registration Expenses in connection with each registration of
Registrable Securities requested pursuant to this Section 2.2. The right
provided the holders of the Registrable Securities pursuant to this Section
shall be exercisable at their sole discretion.
(B) PRIORITY IN INCIDENTAL REGISTRATIONS. If the
managing underwriter of the underwritten offering contemplated by this
Section 2.2 shall inform the Company and holders of the Registrable Securities
requesting such registration by letter of its belief that the number of
securities requested to be included in such registration exceeds the number
which can be sold in such offering, then the Company will include in such
registration, to the extent of the number which the Company is so advised can be
sold in such offering, (i) first securities proposed by the Company to be sold
for its own account, and (ii) second Registrable Securities and securities of
other selling Security Holders requested to be included in such registration pro
rata on the basis of the number of shares of such securities so proposed to be
sold and so requested to be included; provided, however, the holders of
Registrable Securities shall have priority to all shares sought to be included
by officers and directors of the Company as well as holders of ten percent (10%)
or more of the Company's Common Stock unless the holders of such shares are
exercising their own registration rights.
2.3 REGISTRATION PROCEDURES. Whenever the Company is required to
effect the registration of any Registrable Securities under the Securities Act
as provided in Section 2.1 and, as applicable, 2.2, the Company shall, as
expeditiously as possible:
(a) prepare and file with the Commission the Registration
Statement to effect such registration (including such
audited financial statements as may be required by the
Securities Act or the rules and regulations promulgated
thereunder) and thereafter use its best efforts to cause
such registration statement to be declared effective by the
Commission, as soon as practicable, but in any event no
later than the Required Effectiveness Date (with respect to
a registration pursuant to Section 2.1); provided, however,
that before filing such registration statement or any
amendments thereto, the Company will furnish to the counsel
selected by the holders of Registrable Securities which are
to be included in such registration, copies of all such
documents proposed to be filed;
--------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT - PAGE 3
(b) with respect to any Registration Statement pursuant to
Section 2.1, so long as the disposition of the Registrable
Securities may be made on Form S-3 and the Company's Common
Stock is a "covered security" as defined in Section 18 of
the Securities Act, prepare and file with the Commission
such amendments and supplements to such registration
statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement
effective and to comply with the provisions of the
Securities Act in order to permit the disposition of all
Registrable Securities covered by such registration
statement, until the earlier to occur of five (5) years
after the date of this Agreement (subject to the right of
the Company to suspend the effectiveness thereof for not
more than 30 consecutive days or an aggregate of 90 days in
such five (5) year period) or such time as all of the
Securities which are the subject of such registration
statement cease to be Registrable Securities (such period,
in each case, the "Registration Maintenance Period");
(c) furnish to each holder of Registrable Securities covered by
such registration statement such number of conformed copies
of such registration statement and of each such amendment
and supplement thereto (in each case including all
exhibits), such number of copies of the prospectus contained
in such registration statement (including each preliminary
prospectus and any summary prospectus) and any other
prospectus filed under Rule 424 under the Securities Act, in
conformity with the requirements of the Securities Act, and
such other documents, as such holder and underwriter, if
any, may reasonably request in order to facilitate the
public sale or other disposition of the Registrable
Securities owned by such holder;
(d) use its best efforts to register or qualify all Registrable
Securities and other securities covered by such registration
statement under such other securities laws or blue sky laws
as any holder thereof shall reasonably request, to keep such
registrations or qualifications in effect for so long as
such registration statement remains in effect, and take any
other action which may be reasonably necessary to enable
such holder to consummate the disposition in such
jurisdictions of the securities owned by such holder, except
that the Company 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 consent to general service of process in any
such jurisdiction;
(e) use its best efforts to cause all Registrable Securities
covered by such registration statement to be registered with
or approved by such other governmental agencies or
authorities as may be necessary to enable the holder or
holders thereof to consummate the disposition of such
Registrable Securities;
(f) in connection with an underwritten offering, furnish to each
holder of Registrable Securities a signed counterpart,
addressed to such holder, and the underwriters of:
(i) an opinion of counsel for the Company, dated the
effective date of such registration statement (or, if
such registration includes an underwritten public
offering, an opinion dated the date of the closing
under the underwriting agreement), reasonably
satisfactory in form and substance to such holder)
including that the prospectus and any prospectus
supplement forming a part of the Registration Statement
does not contain an untrue statement of a material fact
or omits a material fact required to be stated therein
or necessary in order to make the statements therein,
in light of the circumstances under which they were
made, not misleading, and
--------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT - PAGE 4
(ii) a "comfort" letter (or, in the case of any such Person
which does not satisfy the conditions for receipt of a
"comfort" letter specified in Statement on Auditing
Standards No. 72, an "agreed upon procedures" letter),
dated the effective date of such registration statement
(or, if such registration includes an underwritten
public offering, a "comfort" letter dated the date of
the closing under the underwriting agreement), signed
by the independent public accountants who have
certified the Company's financial statements included
in such registration statement, covering substantially
the same matters with respect to such registration
statement (and the prospectus included therein) and, in
the case of the accountants' letter, with respect to
events subsequent to the date of such financial
statements, as are customarily covered in accountants'
letters delivered to the underwriters in underwritten
public offerings of securities (with, in the case of an
"agreed upon procedures" letter, such modifications or
deletions as may be required under Statement on
Auditing Standards No. 35) and, in the case of the
accountants' letter, such other financial matters, and,
in the case of the legal opinion, such other legal
matters, as such holder (or the underwriters) may
reasonably request;
(g) notify holders of the Registrable Securities and their
respective counsel promptly and confirm such advice in
writing promptly after the Company has knowledge thereof:
(i) when the Registration Statement, the prospectus or any
prospectus supplement related thereto or post-effective
amendment to the Registration Statement has been filed,
and, with respect to the Registration Statement or any
post-effective amendment thereto, when the same has
become effective;
(ii) of any request by the Commission for amendments or
supplements to the Registration Statement or the
prospectus or for additional information;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration
Statement or the initiation of any proceedings by any
Person for that purpose; and
(iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of any
Registrable Securities for sale under the securities or
blue sky laws of any jurisdiction or the initiation or
threat of any proceeding for such purpose;
(h) notify each holder of Registrable Securities 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 the light of
the circumstances then existing, and at the request of any
such holder promptly prepare and furnish to such holder a
--------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT - PAGE 5
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 securities,
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 statements
therein not misleading in the light of the circumstances
then existing;
(i) use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of the Registration Statement
at the earliest possible moment;
(j) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available
to its Security Holders, as soon as reasonably practicable,
an earnings statement covering the period of at least twelve
months, but not more than eighteen months, beginning with
the first full calendar month after the effective date of
such registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities
Act and Rule 158 thereunder;
(k) enter into such agreements and take such other actions as
the Security Holders shall reasonably request in writing in
order to expedite or facilitate the disposition of such
Registrable Securities; and
(l) use its best efforts to list all Registrable Securities
covered by such registration statement on any securities
exchange on which any of the Registrable Securities are then
listed.
The Company may require each holder of Registrable Securities as to
which any registration is being effected to furnish the Company such information
regarding such holder and the distribution of such securities as the Company may
from time to time reasonably request in writing.
The Company will not file any registration statement pursuant to
Section 2.1, or amendment thereto or any prospectus or any supplement thereto
(including such documents incorporated by reference and proposed to be filed
after the initial filing of the Registration Statement) to which the Security
Holders shall reasonably object, provided that the Company may file such
document in a form required by law or upon the advice of its counsel.
The Company represents and warrants to each holder of Registrable
Securities that it has obtained all necessary waivers, consents and
authorizations necessary to execute this Agreement and consummate the
transactions contemplated hereby other than such waivers, consents and/or
authorizations specifically contemplated by the Note Purchase Agreement.
The Security Holders agree that, upon receipt of any notice from the
Company of the occurrence of any event of the kind described in subdivision (h)
of this Section 2.3, the Security Holders will forthwith discontinue its
disposition of Registrable Securities pursuant to the Registration Statement
relating to such Registrable Securities until its receipt of the copies of the
supplemented or amended prospectus contemplated by subdivision (h) of this
Section 2.3 and, if so directed by the Company, will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies, then in its
possession of the prospectus relating to such Registrable Securities current at
the time of receipt of such notice.
--------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT - PAGE 6
2.4 UNDERWRITTEN OFFERINGS.
(A) INCIDENTAL UNDERWRITTEN OFFERINGS. If the Company at
any time proposes to register any of its securities under the
Securities Act as contemplated by Section 2.2 the Company will if requested by
the Security Holders as provided in Section 2.2 and subject to the provisions of
Section 2.2(a), use its reasonable efforts to arrange for such underwriters to
include all the Registrable Securities to be offered and sold by such holder
among the securities to be distributed by such underwriters.
(B) HOLDBACK AGREEMENTS. Subject to such other
reasonable requirements as may be imposed by the underwriter as a
condition of inclusion of a holder's Registrable Securities in the registration
statement, each such holder agrees by acquisition of Registrable Securities, if
so required by the managing underwriter, not to sell, make any short sale of,
loan, grant any option for the purchase of, effect any public sale or
distribution of or otherwise dispose of, except as part of such underwritten
registration, any equity securities of the Company, during such reasonable
period of time requested by the underwriter; provided however, such period shall
not exceed the 120 day period commencing 30 days prior to the commencement of
such underwritten offering and ending 90 days following the completion of such
underwritten offering.
(C) PARTICIPATION IN UNDERWRITTEN OFFERINGS. No holder
of Registrable Securities may participate in any underwritten
offering under Section 2.2 unless such holder of Registrable Securities (i)
agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved, subject to the terms and conditions hereof,
by the Company and the holders of a majority of Registrable Securities to be
included in such underwritten offering and (ii) completes and executes all
questionnaires, indemnities, underwriting agreements and other documents (other
than powers of attorney) required under the terms of such underwriting
arrangements. Notwithstanding the foregoing, no underwriting agreement (or other
agreement in connection with such offering) shall require any holder of
Registrable Securities to make any representations or warranties to or
agreements with the Company or the underwriters other than representations and
warranties contained in a writing furnished by such holder expressly for use in
the related registration statement or representations, warranties or agreements
regarding such holder, such holder's Registrable Securities and such holder's
intended method of distribution and any other representation required by law.
2.5 PREPARATION; REASONABLE INVESTIGATION. In connection with the
preparation and filing of each registration statement under the Securities Act
pursuant to this Agreement, the Company will give the holders of Registrable
Securities registered under such registration statement, and their respective
counsel and 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 the Company with its officers and the independent public
accountants who have certified its financial statements as shall be necessary,
in the reasonable opinion of such holders' and such underwriters' respective
counsel, to conduct a reasonable investigation within the meaning of the
Securities Act.
2.6 INDEMNIFICATION. (A) INDEMNIFICATION BY THE COMPANY. In the
event of any registration of any securities of the Company under the Securities
Act, the Company will, and hereby does agree to, indemnify and hold harmless the
holder of any Registrable Securities covered by such registration statement, its
directors and officers, each other Person who participates as an underwriter in
the offering or sale of such securities and each other Person, if any, who
controls such holder or any such underwriter within the meaning of the
--------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT - PAGE 7
Securities Act against any losses, claims, damages or liabilities, joint or
several, to which such holder or any such director or officer or underwriter or
controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon 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 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 the Company will reimburse such holder and each such
director, officer, underwriter and controlling person for any legal or any other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, liability, action or proceeding, provided that
the Company shall not be liable in any such case to the extent that any such
loss, claim, damage, liability (or action or proceeding in respect thereof) or
expense 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 the Company by such holder or underwriter stating that it is for
use in the preparation thereof and, provided further that the Company shall not
be liable to any Person who participates as an underwriter in the offering or
sale of Registrable Securities or to any other Person, if any, who controls such
underwriter within the meaning of the Securities Act, in any such case to the
extent that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of such Person's failure to send or give
a copy of the final prospectus, as the same may be then supplemented or amended,
within the time required by the Securities Act to the Person asserting the
existence of an untrue statement or alleged untrue statement or omission or
alleged omission at or prior to the written confirmation of the sale of
Registrable Securities to such Person if such statement or omission was
corrected in such final prospectus or an amendment or supplement thereto. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such holder or any such director, officer, underwriter
or controlling person and shall survive the transfer of such securities by such
holder.
(B) INDEMNIFICATION BY THE HOLDERS. The Company may
require, as a condition to including any Registrable Securities in any
registration statement filed pursuant to this Agreement, that the Company shall
have received an undertaking satisfactory to it from the holder of such
Registrable Securities, to indemnify and hold harmless (in the same manner and
to the same extent as set forth in subdivision (a) of this Section 2.6) the
Company, each director of the Company, each officer of the Company and each
other Person, if any, who controls the Company within the meaning of the
Securities Act, with respect to any statement or alleged statement in or
omission or alleged omission from such registration statement, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, if such statement or alleged statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company through an instrument duly executed
by such holder specifically stating that it is for use in the preparation of
such registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement. Any such indemnity shall remain in full
force and effect, regardless of any investigation made by or on behalf of the
Company or any such director, officer or controlling person and shall survive
the transfer of such securities by such holder.
(C) NOTICES OF CLAIMS, ETC. Promptly after receipt by an
indemnified party of notice of the commencement of any action or
proceeding involving a claim referred to in the preceding
--------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT - PAGE 8
subdivisions of this Section 2.6, such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party, give written notice
to the latter of the commencement of such action, provided that the failure of
any indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subdivisions of this
Section 2.6, except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any such action is brought
against an indemnified party, unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist in respect of such claim, the indemnifying party shall be
entitled to participate in and to assume the defense thereof, jointly with any
other indemnifying party similarly notified, to the extent that the indemnifying
party may wish, with counsel reasonably satisfactory to such indemnified party,
and after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without the
consent of the indemnified party, consent to entry of any judgment or enter into
any settlement of any such action which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability, or a covenant not to ▇▇▇, in respect to such
claim or litigation. No indemnified party shall consent to entry of any judgment
or enter into any settlement of any such action the defense of which has been
assumed by an indemnifying party without the consent of such indemnifying party.
(D) OTHER INDEMNIFICATION. Indemnification similar to
that specified in the preceding subdivisions of this Section 2.6
(with appropriate modifications) shall be given by the Company and each holder
of Registrable Securities (but only if and to the extent required pursuant to
the terms of 2.6(b)) with respect to any required registration or other
qualification of securities under any Federal or state law or regulation of any
governmental authority, other than the Securities Act.
(E) INDEMNIFICATION PAYMENTS. The indemnification
required by this Section 2.6 shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred.
(F) CONTRIBUTION. If the indemnification provided for in
the preceding subdivisions of this Section 2.6 is unavailable to an indemnified
party in respect of any expense, loss, claim, damage or liability referred to
therein, 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 expense, loss, claim, damage or liability (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the holder or underwriter, as the case may be, on
the other from the distribution of the Registrable Securities 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 the Company on
the one hand and of the holder or underwriter, as the case may be, on the other
in connection with the statements or omissions which resulted in such expense,
loss, damage or liability, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the holder or underwriter, as the case may be, on the other in connection
with the distribution of the Registrable Securities shall be deemed to be in the
same proportion as the total net proceeds received by the Company from the
initial sale of the Registrable Securities by the Company to the purchasers bear
to the total net proceeds received by all selling holders participating in such
offering or the underwriting discounts and commissions received by the
underwriter, as the case may be. The relative fault of the Company on the one
hand and of the Holder or underwriter, as the case may be, on the other shall be
--------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT - PAGE 9
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or omission to state a material fact relates
to information supplied by the Company, by the Holder or by the underwriter and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission, provided that the foregoing
contribution agreement shall not inure to the benefit of any indemnified party
if indemnification would be unavailable to such indemnified party by reason of
the provisions contained in the first sentence of subdivision (a) of this
Section 2.6, and in no event shall the obligation of any indemnifying party to
contribute under this subdivision (f) exceed the amount that such indemnifying
party would have been obligated to pay by way of indemnification if the
indemnification provided for under subdivisions (b) of this Section 2.6 had been
available under the circumstances.
The Company and the holders of Registrable Securities agree that it
would not be just and equitable if contribution pursuant to this subdivision (f)
were determined by pro rata allocation (even if the holders and any underwriters
were treated as one entity for such purpose) or by any other method of
allocation that does not take account of the equitable considerations referred
to in the immediately preceding paragraph. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages and liabilities
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth in the preceding sentence and subdivision
(c) of this Section 2.6, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim.
Notwithstanding the provisions of this subdivision (f), no holder of
Registrable Securities or underwriter shall be required to contribute any amount
in excess of the amount by which (i) in the case of any such holder, the net
proceeds received by such holder from the sale of Registrable Securities or (ii)
in the case of an underwriter, the total price at which the Registrable
Securities purchased by it and distributed to the public were offered to the
public exceeds, in any such case, the amount of any damages that such holder or
underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or 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.
3. DEFINITIONS. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
"AGREEMENT": As defined in Section 1.
"COMMISSION": The Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act.
"COMMON STOCK": As defined in Section 1.
"COMPANY": As defined in the introductory paragraph of this
Agreement.
"EXCHANGE ACT": The Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission thereunder.
"HOLDER": As defined in Section 1.
"NATIONAL MARKET": As defined in Section 1.
--------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT - PAGE 10
"PERSON": A corporation, association, partnership, organization,
business, individual, governmental or political subdivision thereof or a
governmental agency.
"REGISTRABLE SECURITIES": The Securities and any securities issued
or issuable with respect to such Securities by way of stock dividend or stock
split or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or any adjustment otherwise provided for
in the Note Purchase Agreement or the Warrant Agreement. Once issued such
securities shall cease to be Registrable Securities when (a) a registration
statement with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have been
distributed in accordance with such registration statement, (b) they shall be
have been distributed to the public pursuant to Rule 144 (or any successor
provision) under the Securities Act, (c) they shall have been otherwise
transferred, new certificates for them not bearing a legend restricting further
transfer shall have been delivered by the Company and subsequent disposition of
them shall not require registration or qualification of them under the
Securities Act or any similar state law then in force, (d) they shall have
ceased to be outstanding, (e) on the expiration of the applicable Registration
Maintenance Period or (f) any and all legends restricting transfer thereof have
been removed in accordance with the provisions of Rule 144(k) (or any successor
provision) under the Securities Act. The Securities shall constitute Registrable
Securities (subject to the immediately preceding sentence) while owned by (a)
the Purchaser or any Affiliate (as defined in the Note Purchase Agreement) or
(b) a transferee of at least 100,000 of the Warrant Shares.
"REGISTRATION EXPENSES": All expenses incident to the Company's
performance of or compliance with this Agreement, including, without limitation,
all registration, filing and NASD fees; all stock exchange and National Market
listing fees; all fees and expenses of complying with securities or blue sky
laws; all word processing, duplicating and printing expenses, messenger and
delivery expenses; the fees and disbursements of counsel for the Company and of
its independent public accountants, including the expenses of any special audits
or "cold comfort" letters required by or incident to such performance and
compliance; in connection with an underwritten offering, the reasonable fees and
disbursements of not more than one law firm (not to exceed $25,000) retained by
the holder or holders of more than 50% of the Registrable Securities; premiums
and other costs of policies of insurance of the Company against liabilities
arising out of the public offering of the Registrable Securities being
registered and any fees and disbursements of underwriters customarily paid by
issuers or sellers of securities, but excluding underwriting discounts and
commissions and transfer taxes, if any; provided that, in any case where
Registration Expenses are not to be borne by the Company, such expenses shall
not include salaries of Company personnel or general overhead expenses of the
Company, auditing fees, premiums or other expenses relating to liability
insurance required by underwriters of the Company or other expenses for the
preparation of financial statements or other data normally prepared by the
Company in the ordinary course of its business or which the Company would have
incurred in any event.
"REGISTRATION MAINTENANCE PERIOD": As defined in Section 2.3.
"REGISTRATION STATEMENT": As defined in Section 2.1.
"REQUIRED EFFECTIVENESS DATE": As defined in Section 2.1.
"SECURITIES": As defined in Section 1(b).
--------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT - PAGE 11
"SECURITIES ACT": The Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.
"NOTE PURCHASE AGREEMENT": As defined in Section 1.
"SECURITY HOLDERS": As defined in the Introductory paragraph to this
Agreement.
"WARRANT AGREEMENT": As defined in Section 1.
"WARRANTS": As defined in Section 1.
"WARRANT SHARES": As defined in Section 1.
4. RULE 144. The Company shall timely file the reports required to
be filed by it under the Securities Act and the Exchange Act (including but not
limited to the reports under Sections 13 and 15(d) of the Exchange Act referred
to in subparagraph (c) of Rule 144 adopted by the Commission under the
Securities Act) and the rules and regulations adopted by the Commission
thereunder (or, if the Company is not required to file such reports, will, upon
the request of any holder of Registrable Securities, make publicly available
other information) and will take such further action as any holder of
Registrable Securities may reasonably request, all to the extent required from
time to time to enable such holder to sell Registrable Securities without
registration under the Securities Act within the 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 the request of any holder of Registrable Securities, the
Company will deliver to such holder a written statement as to whether it has
complied with the requirements of this Section 4. The Company will use its best
efforts to maintain its Common Stock as a "covered security" as defined in
Section 18 of the Securities Act.
5. AMENDMENTS AND WAIVERS. This Agreement may be amended and the
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company shall have obtained the
written consent to such amendment, action or omission to act, of the holder or
holders of the sum of the 51% or more of the shares of (i) Registrable
Securities issued at such time, plus (ii) Registrable Securities issuable upon
exercise or conversion of the Securities then constituting derivative securities
(if such Securities were not fully exchanged or converted in full as of the date
such consent is sought). Each holder of any Registrable Securities at the time
or thereafter outstanding shall be bound by any consent authorized by this
Section 5, whether or not such Registrable Securities shall have been marked to
indicate such consent.
6. NOMINEES FOR BENEFICIAL OWNERS. In the event that any Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election, be treated as the holder of such
Registrable Securities for purposes of any request or other action by any holder
or holders of Registrable Securities pursuant to this Agreement or any
determination of any number or percentage of shares of Registrable Securities
held by any holder or holders of Registrable Securities contemplated by this
Agreement. If the beneficial owner of any Registrable Securities so elects, the
Company may require assurances reasonably satisfactory to it of such owner's
beneficial ownership of such Registrable Securities.
7. NOTICES. Except as otherwise provided in this Agreement, all
notices, requests and other communications to any Person provided for hereunder
shall be in writing and shall be given to such
--------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT - PAGE 12
Person (a) in the case of a party hereto other than the Company, addressed to
such party in the manner set forth in the Note Purchase Agreement or at such
other address as such party shall have furnished to the Company in writing, or
(b) in the case of any other holder of Registrable Securities, at the address
that such holder shall have furnished to the Company in writing, or, until any
such other holder so furnishes to the Company an address, then to and at the
address of the last holder of such Registrable Securities who has furnished an
address to the Company, or (c) in the case of the Company, at the address set
forth on the signature page hereto, to the attention of its Chief Executive
Officer, or at such other address, or to the attention of such other officer, as
the Company shall have furnished to each holder of Registrable Securities at the
time outstanding. Each such notice, request or other communication shall be
effective (i) if given by mail, 72 hours after such communication is deposited
in the mails with first class postage prepaid, addressed as aforesaid or (ii) if
given by any other means (including, without limitation, by fax or air courier),
when delivered at the address specified above, provided that any such notice,
request or communication shall not be effective until received.
8. ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto. In addition, and whether or
not any express assignment shall have been made, the provisions of this
Agreement which are for the benefit of the parties hereto other than the Company
shall also be for the benefit of and enforceable by any subsequent holder of any
Registrable Securities. Each of the Holders of the Registrable Securities
agrees, by accepting any portion of the Registrable Securities after the date
hereof, to the provisions of this Agreement including, without limitation,
appointment of a representative to act on behalf of such Holder pursuant to the
terms hereof which such actions shall be made in the good faith discretion of
the Holder's representative and be binding on all persons for all purposes.
9. DESCRIPTIVE HEADINGS. The descriptive headings of the several
sections and paragraphs of this Agreement are inserted for reference only and
shall not limit or otherwise affect the meaning hereof.
10. OKLAHOMA LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL;
APPOINTMENT OF AGENT.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF OKLAHOMA. EACH PARTY HERETO HEREBY SUBMITS
TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT LOCATED IN
OKLAHOMA CITY, OKLAHOMA AND OF ANY OKLAHOMA STATE COURT SITTING IN OKLAHOMA CITY
FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
--------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT - PAGE 13
11. COUNTERPARTS. This Agreement may be executed by facsimile and
may be signed simultaneously in any number of counterparts, each of which shall
be deemed an original, but all such counterparts shall together constitute one
and the same instrument.
12. ENTIRE AGREEMENT. This Agreement embodies the entire agreement
and understanding between the Company and each other party hereto relating to
the subject matter hereof and supersedes all prior agreements and understandings
relating to such subject matter.
13. SEVERABILITY. If any provision of this Agreement, or the
application of such provisions to any Person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to Persons or circumstances other than those to which it is held invalid, shall
not be affected thereby.
[Remainder of Page Intentionally Left Blank]
--------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT - PAGE 14
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.
GMX RESOURCES INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
--------------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
Title: Chief Financial Officer
Address: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (___) ________
Attn: Chief Executive Officer
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
X-MEN, LLC
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Member
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT - PAGE 15