-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PwtXPSyoZ+Cn8fHQuwMllIrXBgalTz4hwVBFkT+PT/xgXfIR55A6USzrF8aimDJf yucls+4+Mq3btxUnQ0LtcQ== 0000950134-04-002516.txt : 20040226 0000950134-04-002516.hdr.sgml : 20040226 20040225202732 ACCESSION NUMBER: 0000950134-04-002516 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20040225 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20040226 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MISSION RESOURCES CORP CENTRAL INDEX KEY: 0000319459 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 760437769 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-09498 FILM NUMBER: 04628746 BUSINESS ADDRESS: STREET 1: 1331 LAMAR STREET 2: SUITE 1455 CITY: HOUSTON STATE: TX ZIP: 77010 BUSINESS PHONE: 7134953000 MAIL ADDRESS: STREET 1: 1221 LAMAR STREET 2: STE 1600 CITY: HOUSTON STATE: TX ZIP: 77010-3039 FORMER COMPANY: FORMER CONFORMED NAME: BELLWETHER EXPLORATION CO DATE OF NAME CHANGE: 19920703 8-K 1 h13003e8vk.txt FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): FEBRUARY 25, 2004 (FEBRUARY 25, 2004) MISSION RESOURCES CORPORATION (Exact Name of Registrant as Specified in Charter) DELAWARE 000-09498 76-0437769 (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) 1331 LAMAR SUITE 1455 HOUSTON, TEXAS 77010-3039 (Address and Zip Code of Principal Executive Offices) (713) 495-3000 (Registrant's telephone number, including area code) ITEM 5. OTHER EVENTS AND REQUIRED REGULATION FD DISCLOSURE. On February 25, 2004, Mission Resources Corporation ("Mission" or the "Company") issued a press release announcing that it has entered into a transaction with Stellar Funding Ltd. ("Stellar") whereby Stellar has purchased 6,250,000 shares of the Company's common stock, $.01 par value ("Common Stock"), in exchange for $15,000,000 in aggregate principal amount of the Company's 10-7/8% Senior Subordinated Notes due 2007 (the "Senior Subordinated Notes"). A copy of the press release is attached as Exhibit 99.1 hereto. PURCHASE AND SALE AGREEMENT On February 25, 2004, the Company entered into a purchase and sale agreement (the "Agreement") with Stellar providing for the issuance and sale by the Company of 6,250,000 shares of its Common Stock (the "Shares") in exchange for the surrender by Stellar of $15.0 million aggregate principal amount of the Senior Subordinated Notes. Accrued interest on the Senior Subordinated Notes to the date of the Agreement will be paid on April 1, 2004, the regularly scheduled interest payment date for the Senior Subordinated Notes, or, if earlier, upon the occurrence of certain other events. The Agreement contains representations and warranties by the Company and Stellar typical of transactions of this type. The Agreement also contains an agreement of Stellar that, for so long as it beneficially owns 5% or more of the outstanding securities of the Company entitled to vote, it will not, directly or indirectly (unless specifically invited in writing to do so by the Company) do either of the following: (a) sell, or contract to sell or grant, any option or right to purchase any Common Stock or make any short sale of or establish a equivalent position with respect to the Common Stock at a time when it has no equivalent offsetting long position in the Common Stock; or (b) sell, or contract to sell more than 2% of the Company's outstanding voting securities to any single person or group of related persons; provided, however, that this prohibition shall not apply to any transaction effected in good faith on the Nasdaq stock market. In addition, in the event that any action is submitted to the Company's stockholders for their approval, whether at a meeting or by written consent, at a time when Stellar owns more than 9.9% of the Company's voting securities, unless otherwise approved in writing in advance by the Company, Stellar will vote all voting securities as to which it has the right to vote that exceeds the 9.9% amount in the same manner as (i.e., in favor of, against and abstentions with respect to) and proportionately to the votes cast by all other voting securities that are entitled to vote with respect to such matter. Pursuant to the terms of the Agreement, the Company and Stellar have entered into a Registration Rights Agreement, which obligates the Company to file within 30 days a registration statement with the Securities and Exchange Commission on Form S-3 registering the resale of the Shares. The Company has agreed to use its commercially reasonable efforts to cause the registration statement to become effective as soon as practicable and to keep the registration statement effective until the earlier of (i) the date when all of the registered Shares have been sold, (ii) the date on which all of the Shares either cease to be outstanding or are held by persons who are not affiliates of the Company and may be resold pursuant to Rule 144(k) under the Securities Act of 1933, or (iii) the later of two years after the effective date of the registration statement, and the date on which all of the Shares may be sold pursuant to Rule 144 in a three-month period. The Registration Rights Agreement also contains standard provisions requiring the Company and Stellar to indemnify each other for liabilities arising in connection with the sale of Shares pursuant to the registration statement. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (a) Financial Statements of business acquired. None. (b) Pro Forma Financial Information. None. (c) Exhibits. 4.1 Amendment to Rights Agreement dated as of February 25, 2004, by and between Mission Resources Corporation and American Stock Transfer & Trust Company. 99.1 Press Release 99.2 Purchase and Sale Agreement dated as of February 25, 2004, by and between Mission Resources Corporation and Stellar Funding Ltd. 99.3 Registration Rights Agreement dated as of February 25, 2004, by and between Mission Resources Corporation and Stellar Funding Ltd. [SIGNATURE PAGE FOLLOWS] SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. MISSION RESOURCES CORPORATION Date: February 25, 2004 By: /s/ Richard W. Piacenti ----------------------- Name: Richard W. Piacenti Title:Executive Vice President and Chief Financial Officer INDEX TO EXHIBITS 4.1 Amendment to Rights Agreement dated as of February 25, 2004, by and between Mission Resources Corporation and American Stock Transfer & Trust Company. 99.1 Press Release 99.2 Purchase and Sale Agreement dated as of February 25, 2004, by and between Mission Resources Corporation and Stellar Funding Ltd. 99.3 Registration Rights Agreement dated as of February 25, 2004, by and between Mission Resources Corporation and Stellar Funding Ltd. EX-4.1 3 h13003exv4w1.txt AMENDMENT TO RIGHTS AGREEMENT EXHIBIT 4.1 AMENDMENT TO RIGHTS AGREEMENT Amendment dated as of February 25, 2004, to the Rights Agreement, dated as of September 12, 1997 (the "Rights Agreement"), between Mission Resources Corporation, a Delaware corporation formerly known as Bellwether Exploration Company (the "Company"), and American Stock Transfer & Trust Company, a New York corporation, as Rights Agent (the "Rights Agent"), as amended to date. WHEREAS, the Company and the Rights Agent entered into the Rights Agreement specifying the terms of the Rights (as defined therein); WHEREAS, the Company desires to amend the Rights Agreement in accordance with Section 27 of the Rights Agreement; WHEREAS, the Company proposes to enter into a Purchase and Sale Agreement dated as of February 25, 2004 (the "Purchase Agreement"), by and between Stellar Funding Ltd. ("Stellar") and the Company; WHEREAS, the Board of Directors of the Company has determined it advisable and in the best interest of its stockholders to amend the Rights Agreement to enable the Company to enter into the Purchase Agreement and consummate the transactions contemplated thereby without causing Stellar or any of their respective affiliates or associates to become an "Acquiring Person" (as defined in the Rights Agreement). NOW, THEREFORE, in consideration of the premises and mutual agreements set forth herein and in the Rights Agreement, the parties hereby agree as follows: Section 1. Definitions. Capitalized terms used and not otherwise defined herein shall have the meaning assigned to such terms in the Rights Agreement. Section 2. Amendments to Rights Agreement. The Rights Agreement is hereby amended as set forth in this Section 2. (a) The definition of "Acquiring Person" in Section 1 of the Rights Agreement is amended to add the following sentence at the end thereof: "Notwithstanding anything in this Agreement to the contrary, neither of Stellar or any Affiliate or Associate of any of them shall be deemed to be an Acquiring Person, either individually or collectively, solely by virtue of (i) the execution and delivery of the Stellar Purchase Agreement, or (ii) the issuance and delivery of shares of Common Stock in accordance with Article 2 of the Stellar Purchase Agreement." (b) The definition of "Distribution Date" in Section 1 of the Rights Agreement is amended to add the following sentence at the end thereof: "Notwithstanding anything in this Agreement to the contrary, a Distribution Date shall not be deemed to have occurred solely as the result of (i) the execution and delivery of the Stellar Purchase Agreement, or (ii) the issuance and delivery of shares of Common Stock in accordance with Article 2 of the Stellar Purchase Agreement." (c) The definition of "Stock Acquisition Date" in Section 1 of the Rights Agreement is amended to add the following sentence at the end thereof: "Notwithstanding anything in this Agreement to the contrary, a Stock Acquisition Date shall not be deemed to have occurred solely as the result of (i) the execution and delivery of the Stellar Purchase Agreement, or (ii) the issuance and delivery of shares of Common Stock in accordance with Article 2 of the Stellar Purchase Agreement." (e) The following definitions shall be added to Section 1 of the Rights Agreement: "`Stellar' shall mean Stellar Funding Ltd." "`Stellar Purchase Agreement' shall mean the Purchase and Sale Agreement dated as of February 25, 2004, by and between Stellar and the Company." Section 3. Miscellaneous. (a) The term "Agreement" as used in the Rights Agreement shall be deemed to refer to the Rights Agreement as amended to date and as amended hereby. (b) This Amendment shall be effective as of the date first above written, and, except as set forth herein, the Rights Agreement shall remain in full force and effect and shall be otherwise unaffected hereby. (c) This Amendment may be executed in two or more counterparts, each of which shall be deemed to be an original, but all for which together shall constitute one and the same instrument. (d) This Amendment shall be deemed to be a contract made under the laws of the State of Delaware and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts to be made and performed entirely within such State. [SIGNATURE PAGE FOLLOWS] 2 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and attested, all as of the day and year first above written. Attest: MISSION RESOURCES CORPORATION By: /s/ Ann Kaesermann By: /s/ Richard W. Piacenti ---------------------------------- ------------------------------- Name: Ann Kaesermann Name: Richard W. Piacenti ------------------------------- ----------------------------- Title: VP Accounting & Investor Relations Title: Executive VP and CFO ----------------------------------- ---------------------------- Attest: AMERICAN STOCK TRANSFER & TRUST COMPANY By: /s/ Susan Silber By: /s/ Paula Caroppoli ---------------------------------- ------------------------------- Name: Susan Silber Name: Paula Caroppoli ------------------------------ ---------------------------- Title: Assistant Secretary Title: Vice President ------------------------------ ---------------------------- 3 EX-99.1 4 h13003exv99w1.txt PRESS RELEASE EXHIBIT 99.1 Mission Resources Corporation 1331 Lamar, Suite 1455 Houston, Texas 77010-3039 [MISSION RESOURCES LOGO] NEWS RELEASE CONTACT: Ann Kaesermann Vice President - Accounting & Investor Relations, CAO investors@mrcorp.com (713) 495-3100 MISSION RESOURCES COMPLETES $15 MILLION DEBT-FOR-EQUITY SWAP HOUSTON, FEBRUARY 25, 2004 - MISSION RESOURCES CORPORATION (NASDAQ: MSSN) announced today that it has acquired $15.0 million of its 10 7/8% Senior Subordinated Notes due 2007 (the "Notes") for 6,250,000 shares of the Company's common stock. The transaction was completed with Stellar Funding, Ltd., a private investment fund managed by an affiliate of Guggenheim Capital, LLC. The Company has also committed to file a registration statement on Form S-3 with the SEC to register the resale of these shares. "I am pleased to complete yet another very positive step towards Mission's full financial recovery," said Mission Chairman, President and Chief Executive Officer, Robert L. Cavnar. "This transaction further strengthens our balance sheet and reduces our interest expense. We believe that we are now well positioned in our current negotiations to replace our existing senior credit facility." Mission Resources Corporation is a Houston-based independent exploration and production company that drills for, acquires, develops, and produces natural gas and crude oil in the Permian Basin of West Texas, along the Texas and Louisiana Gulf Coast and in the Gulf of Mexico. Guggenheim Capital, LLC, is a privately-held, diversified financial services firm that, through its affiliated entities, provides financial advisory services, corporate finance, wealth management and investment management products to high net worth individuals and institutional investors. Presently, the firm and its affiliates manage and provide advisory services with respect to more than $80 billion of investment assets. This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those projected. Among those risks, trends and uncertainties are our estimate of the sufficiency of our existing capital sources, our ability to raise additional capital to fund cash requirements for future operations, the uncertainties involved in estimating quantities of proved oil and natural gas reserves, in prospect development and property acquisitions and in projecting future rates of production, the timing of development expenditures and drilling of wells, and the operating hazards attendant to the oil and gas business. In particular, careful consideration should be given to cautionary statements made in the various reports the Company has filed with the Securities and Exchange Commission. Mission undertakes no duty to update or revise these forward-looking statements. ### EX-99.2 5 h13003exv99w2.txt PURCHASE AND SALE AGREEMENT EXHIBIT 99.2 PURCHASE AND SALE AGREEMENT This PURCHASE AND SALE AGREEMENT, dated as of February 25, 2004 (this "Agreement"), is by Stellar Funding Ltd. (the "Seller") and Mission Resources Corporation, a Delaware corporation (the "Purchaser"). (Each of the Seller and the Purchaser is a "Party", and together are the "Parties"). WHEREAS, pursuant to that certain Indenture, dated as of May 29, 2001 (the "Indenture"), among the Purchaser, the subsidiary guarantors identified therein and The Bank of New York, as trustee (the "Trustee"), the Purchaser issued $225,000,000 aggregate principal amount of its 10-7/8% Senior Subordinated Notes due 2007 Series C (the "Senior Subordinated Notes"); WHEREAS, the Seller is the beneficial owner of $15,000,000 aggregate principal amount of the Senior Subordinated Notes; and WHEREAS, the Purchaser desires to repurchase from the Seller, and the Seller desires to sell to the Purchaser, all of the Senior Subordinated Notes held by Seller in consideration for the issuance of shares of the Purchaser's common stock, $.01 par value (the "Common Stock"), upon the terms and subject to the conditions contained in this Agreement; NOW, THEREFORE, in consideration of the premises and covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Seller and the Purchaser agree as follows: ARTICLE 1 DEFINITIONS, USAGE, ETC. SECTION 1.1 Defined Terms. As used in this Agreement, the terms below have the following meanings: "Affiliate" means, as to any Person, any other Person which directly or indirectly controls, or is under common control with, or is controlled by, such Person. As used in this definition "control" (including, with its correlative meanings, "controlled by" and "under common control with") means possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interest, by contract or otherwise). "Applicable Law" means, with respect to any Person, any Law applicable to such Person or its business, properties or assets. "Beneficially Own" has the meaning set forth in Rule 13d-3 under the Exchange Act. "Commission" means the United States Securities and Exchange Commission. "Common Stock" has the meaning assigned to such term in the preamble. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Excess Voting Securities" has the meaning assigned to such term in Section 7.2. "Governmental Authority" means any federal, state or local government, or any political subdivision of any of the foregoing, or any court, agency or other entity, body, organization or group, exercising any executive, legislative, judicial, quasi judicial, regulatory or administrative function of government. "Indenture" has the meaning assigned to such terns in the preamble. "Law" means all applicable state and federal laws, statutes, rules and regulations and ordinances including all applicable decisions of courts having the effect of law in any such jurisdiction. "Lien" means any mortgage, deed of trust, lien, pledge, charge, claim, security interest, restrictive covenant or easement or encumbrance of any kind, whether or not filed, recorded or otherwise perfected under Applicable Law, as well as the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement. "Material Adverse Effect" has the meaning assigned to such term in Section 5.1. "1934 Act Reports" has the meaning assigned to such term in Section 5.8. "Notes" means the $15,000,000 aggregate principal amount of the Senior Subordinated Notes held by the Seller to be sold to the Purchaser pursuant to the terms of this Agreement, as detailed on Schedule 1, attached hereto. "Party" or "Parties" has the meaning assigned to such term in the preamble. "Person" means any corporation, limited liability company, joint venture, partnership, individual, limited partnership, trust or other business entity. "Purchaser" has the meaning assigned to such term in the preamble. "Representative" means any officer, director, employee, partner, trustee, attorney, accountant, advisor, agent or other representative of any Person. "Securities Act" has the meaning assigned to such term in Section 5.11. "Seller" has the meaning assigned to such term in the preamble. "Senior Subordinated Notes" has the meaning assigned to such term in the preamble. "Shares" has the meaning assigned to such term in Section 2.1. 2 "Subsidiary" or "subsidiary" means, with respect to any Person, any corporation, limited liability company, joint venture, limited partnership or partnership of which such Person (a) beneficially owns, either directly or indirectly, more than 50% of (i) the total combined voting power of all classes of voting securities of such entity, (ii) the total combined equity interests or (iii) the capital or profit interests in the case of a partnership; or (b) otherwise has the power to vote or to direct the voting of sufficient securities to elect a majority of the board of directors or similar governing body. "Transfer Tax" means any federal, state, county, local, foreign and other sales, use, transfer, conveyance, gross receipts, documentary transfer, recording or other similar tax, fee or charge imposed upon the sale, transfer or assignment of property or any interest therein or the recording thereof, and any penalty, addition to tax or interest with respect thereto, but such term shall not include any tax on, based upon or measured by, the net income, gains or profits from such sale, transfer or assignment of the property or any interest therein. "Trustee" has the meaning assigned to such tern in the preamble. "Voting Securities" has the meaning assigned to such tern in Section 7.1. SECTION 1.2 Usage of Terms. Except where the context otherwise requires, words importing the singular number shall include the plural number and vice .versa. SECTION 1.3 References to Articles and Sections. All references in this Agreement to Articles and Sections (and other subdivisions), Exhibits and Schedules refer to the corresponding Articles, Sections (and other subdivisions), Exhibits and Schedules of to this Agreement, unless the context expressly, or by necessary implication, otherwise requires. ARTICLE 2 PURCHASE AND SALE OF THE NOTES AND CONSIDERATION SECTION 2.1 Sale and Purchase of the Notes. On the terms and subject to the conditions contained in this Agreement, (a) the Seller is selling, conveying, transferring and assigning to the Purchaser, and the Purchaser is acquiring from the Seller, the Notes and (b) the Purchaser is issuing to the Seller as consideration for the sale, conveyance, transfer and assignment of the Notes an aggregate amount of 6,250,000 shares of Common Stock (the "Shares"), as detailed on Schedule 1, attached hereto. At the closing, the Seller shall cause the Notes to be transferred electronically to The Depository Trust Company, in the amounts set forth on Schedule 1, to be delivered to the Purchaser for cancellation, and the Purchaser shall deliver the Shares electronically to The Depository Company for the account of the Seller's behalf via the Deposit and Withdrawal at Custodian system registered in the amounts and in such names as the Seller shall have previously designated. The payment of interest on the Notes accrued through the date of this Agreement will be made to the Seller on the earlier to occur of April 1, 2004, that date being the next regularly scheduled interest payment date for the Senior Subordinated Notes, or the date on which the Purchaser completes the refinancing of its senior credit facility substantially in the form set forth in Schedule 5.9 attached hereto. 3 SECTION 2.2 Taxes. The Purchaser shall be responsible for the payment when due of any Transfer Taxes imposed by reason of the transfer of the Notes or the issuance of the Shares pursuant to this Agreement and any deficiency, interest or penalty with respect to such Transfer Taxes unless such Transfer Taxes are specifically levied on the Seller (in which case, the Purchaser shall promptly reimburse the Seller therefor). The Purchaser shall file all necessary tax returns and other documentation with respect to any Transfer Taxes, and, if required by Applicable Law, the Seller will, and will cause its respective Affiliates to, join in the execution of any such tax returns and other documentation and will cooperate with the Purchaser to take such commercially reasonable actions as will minimize or reduce the amount of such Transfer Taxes. ARTICLE 3 CLOSING The closing of the transactions contemplated by this Agreement is taking place at 10:00 a.m. local time on February 25, 2004, or as soon as practicable thereafter, at the offices of Porter & Hedges, L.L.P., 700 Louisiana, Suite 3500, Houston, Texas 77002. ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE SELLER The Seller hereby represents and warrants to the Purchaser as follows: SECTION 4.1 Power and Authority; Authorization; Binding Effect. The Seller has all necessary power and authority to execute and deliver this Agreement, to consummate the transactions contemplated hereby and to perform its obligations hereunder in accordance with the terms of this Agreement. This Agreement has been duly authorized, executed and delivered by the Seller and constitutes a legal, valid and binding obligation of the Seller enforceable against the Seller in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights in general and subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). SECTION 4.2 Ownership of the Notes. The Seller is the beneficial owner of the Notes in the principal amount set forth by its name on Schedule 1 hereto and, upon sale and delivery of the Notes to the Purchaser and upon payment by the Purchaser as provided herein, the Seller will convey to the Purchaser good and marketable title to the Notes, free and clear of all Liens other than Liens, created by the Purchaser, if any. SECTION 4.3 Consents and Approvals. No consent, approval or authorization of, or declaration, filing or registration with, any Governmental Authority or other Person is required to be made or obtained by the Seller in connection with the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, except for consents, approvals, filings and similar requirements, the failure of which to be obtained or made 4 would not reasonably be expected to, individually or in the aggregate, prevent the Seller from performing under this Agreement in all material respects. SECTION 4.4 Compliance with Applicable Law; No Conflicts. The execution, delivery and performance by the Seller of this Agreement, the sale of the Notes and the consummation of the other transactions contemplated hereby (a) will not violate any Applicable Law, or any order or decree of any court or governmental instrumentality applicable to the Seller or any of its property; and (b) will not conflict with or result in the breach or termination of, constitute a default under or accelerate any performance required by, any indenture, mortgage, deed of trust, lease, agreement or other instrument to which the Seller is a party or by which the Seller or any of its property is bound. ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER The Purchaser represents and warrants to the Seller as follows: SECTION 5.1 Due Organization. The Purchaser has been duly incorporated and is a validly existing corporation in good standing under the laws of the State of Delaware. Each of the Purchaser's Subsidiaries has been duly organized and is a validly existing corporation, limited liability company or partnership in good standing under the laws of its respective jurisdiction of organization. The Purchaser and each of its Subsidiaries has full power and authority (corporate and other) to own its properties and conduct is business. The issued shares of capital stock of each of the Purchaser's Subsidiaries have been duly authorized and validly issued, are fully paid and nonassessable, and, except as otherwise set forth in the 1934 Act Reports, are owned beneficially by the Purchaser free and clear of any Liens. The Purchaser and each of its Subsidiaries is duly qualified to do business as a foreign corporation or other legal entity in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification, except in any case where the failure to be so qualified would not have material adverse effect on the condition (financial or other), business, properties, results of operations or prospects of the Purchaser and its Subsidiaries taken as a whole (a "Material Adverse Effect"). SECTION 5.2 Power and Authority; Authorization; Binding Effect. The Purchaser has all necessary corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby and to perform its obligations hereunder. This Agreement has been duly authorized, executed and delivered by the Purchaser and constitutes a legal, valid and binding obligation of the Purchaser enforceable against the Purchaser in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights in general and subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). SECTION 5.3 Valid Issuance. The Shares have been duly authorized for issuance by the Purchaser and, when issued and delivered in return for delivery of the Notes in accordance with this Agreement, will be validly issued, fully paid and nonassessable shares of Common Stock 5 and the Seller will hold all of the legal and beneficial title to the Shares, free and clear of all Liens, other than Liens created by the Seller, if any. No holder of outstanding shares of capital stock of the Purchaser is entitled to any preemptive or other rights to subscribe for any shares of the Common Stock, and no holder of securities of the Purchaser has any right which has not been fully exercised or waived to require the Purchaser to register the offer or sale of any securities owned by such holder under the Securities Act under, or as a result of the filing of, the registration statement to be filed by the Purchaser pursuant to the terms of the Registration Rights Agreement. SECTION 5.4 Securities. The capital stock of the Purchaser conforms to the description thereof contained in the 1934 Act Reports. Except as disclosed in the 1934 Act Reports, there are no outstanding (i) securities or obligations of the Purchaser or any of its Subsidiaries convertible into or exchangeable for any capital stock of the Purchaser or any such Subsidiary, (ii) warrants, rights or options to subscribe for or purchase from the Purchaser or any such Subsidiary any such capital stock or any such convertible or exchangeable securities or obligations, or (iii) obligations of the Purchaser or any such Subsidiary to issue any shares of capital stock, any such convertible or exchangeable securities or obligations, or any such warrants, rights or options. SECTION 5.5 Consents and Approvals. No consent, approval or authorization of, or declaration, filing or registration with, any Governmental Authority or other Person is required to be made or obtained by the Purchaser in connection with the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, except for consents, approvals, filings and similar requirements, the failure of which to be obtained or made would not reasonably be expected to, individually or in the aggregate, prevent the Purchaser from performing under this Agreement in all material respects. SECTION 5.6 Compliance with Applicable Law: No Conflicts. The execution, delivery and performance by the Purchaser of this Agreement and the consummation of the transactions contemplated hereby (a) will not violate any Applicable Law, or any order or decree of any court or governmental instrumentality applicable to Purchaser, any of Purchaser's Subsidiaries or any of their property; (b) will not conflict with or result in the breach or termination of, constitute a default under or accelerate any performance required by, any indenture, mortgage, deed of trust, lease, agreement or other instrument to which Purchaser or any of its Subsidiaries is a party or by which Purchaser, any of its Subsidiaries or any of their property is bound, and (c) will not result in a breach or violation of the charter or by-laws, or other formation documents, of the Purchaser or its Subsidiaries. SECTION 5.7 Litigation. There are no pending actions, suits or proceedings against or involving the Purchaser or any of its property, or involving any of its Subsidiaries or any of their respective properties, that could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, or that would materially and adversely affect the ability of the Purchaser to perform its obligations under this Agreement, or that are otherwise material in the context of the sale of the Shares; and, to the Purchaser's knowledge, no such actions, suits or proceedings are threatened or contemplated. 6 SECTION 5.8 Accuracy of 1934 Act Reports. Since January 1, 2002, the Purchaser has filed all reports, schedules, forms, statements and other documents required to be filed by it with the Commission pursuant to the reporting requirements of the Exchange Act, and the rules and regulations promulgated thereunder (all of the foregoing filed prior to or on the date hereof and all exhibits included therein and financial statements and schedules thereto and documents incorporated by reference therein being hereinafter referred to as the "1934 Act Reports"). As of the date of filing of such 1934 Act Reports, each such 1934 Act Report, as it may have been subsequently amended by filings made by the Purchaser with the Commission prior to the date hereof, complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the Commission promulgated thereunder applicable to such 1934 Act Reports. None of the 1934 Act Reports, as of the date filed and as they may have been subsequently amended by filings made by the Purchaser with the Commission prior to the date hereof, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. As of their respective dates, the financial statements of the Purchaser included in the 1934 Act Reports complied as to form in all material respects with applicable accounting requirements and published rules and regulations of the Commission with respect thereto. Such financial statements have been prepared in accordance with generally accepted accounting principles, consistently applied in the United States, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements), corresponds to the books and records of the Purchaser and fairly present in all material respects the consolidated financial position of the Purchaser and its Subsidiaries as of the dates thereof and the consolidated results of its operations and cash flows for the periods then ended. The written information provided by or on behalf of the Purchaser to the Seller that is not included in the 1934 Act Reports, other than any projections or forward looking information included therein, does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they are or were made, not misleading. The Purchaser satisfies the requirements for use of Form S-3 for registration of the resale of its common stock as contemplated by the Registration Rights Agreement, as such term is defined in Section 6.1(e), and does not have any knowledge or reason to believe that it does not satisfy such requirements or any knowledge of any fact which would reasonably result in its not satisfying such requirements. The Purchaser is not required to file and will not be required to file any agreement, note, lease, mortgage, deed or other instrument entered into prior to the date hereof and to which the Purchaser is a party or by which the Purchaser is bound which has not been previously filed as an exhibit to its reports filed with the Commission under the Exchange Act, except for the filing of this Agreement and the Registration Rights Agreement to be filed by the Purchaser upon consummation of the transactions contemplated herein. SECTION 5.9 No Change. Except as disclosed in the 1934 Act Reports and Schedule 5.9 attached hereto, since the date of the latest audited financial statements included in the 1934 Act Reports, there has been no material adverse change in the condition (financial or other), business, properties or results of operations of the Purchaser and its Subsidiaries taken as a whole. 7 SECTION 5.10 Investment Company. The Purchaser is not and, after giving effect to the sale of the Shares, will not be an "investment company" as defined in the Investment Company Act of 1940, as amended. SECTION 5.11 Brokers. No broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with the origination, negotiation or execution of this Agreement or the other transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Purchaser. SECTION 5.12 Holding Period. Pursuant to the provisions of Section 3(a)(9) of the Securities Act of 1933, as amended (the "Securities Act"), the Purchaser agrees that the Seller is permitted to tack its holding periods regarding the Notes to its holding periods regarding the Shares for purposes of compliance with Rule 144 promulgated under the Securities Act. ARTICLE 6 CLOSING DELIVERIES AND CONDITIONS SECTION 6.1 Deliveries. The following actions shall be taken in connection with and as a condition to the consummation of the transactions contemplated hereby, all of which shall be deemed to have been taken simultaneously: (a) the Purchaser shall issue the Shares to the Seller in the amounts set forth on Schedule 1; (b) the Seller shall deliver the Notes and transfer title to the Notes to the Purchaser as payment in full for the Shares; (c) the Purchaser shall deliver to the Seller a Certificate of the Secretary or Assistant Secretary of the Purchaser, together with true and correct copies of the Certificate of Incorporation and By-Laws of the Purchaser, and all amendments thereto, true and correct copies of the resolutions of the Board of Directors of the Purchaser authorizing or ratifying the execution, delivery and performance of this Agreement, the Registration Rights Agreement, and the names of the officer or officers of the Purchaser authorized to sign this Agreement and the Registration Rights Agreement, together with a sample of the true signature of each such officer; (d) the Purchaser shall deliver to the Seller an opinion of counsel to the Purchaser with respect to the transactions contemplated hereby with respect to the matters described on Exhibit A hereto; (e) the Purchaser and the Seller shall execute the Registration Rights Agreement in the form attached hereto as Exhibit B hereto (the "Registration Rights Agreement"); and (f) the Shares shall have been approved for listing on the Nasdaq National Market, subject to notice of issuance. 8 SECTION 6.2 Additional Closing Conditions. The closing of the transactions contemplated by this Agreement is subject to the following additional conditions. (a) The Seller's obligations are conditioned upon the representations and warranties of the Purchaser contained in Article 5 hereof being true, correct and complete in all material respects as of the date hereof, and the Purchaser shall have performed, satisfied and complied in all material respects with the covenants and conditions required hereby to be performed, satisfied or complied with by it at or before the closing. (b) The Purchaser's obligations are conditioned upon the representations and warranties of the Seller contained in Article 4 hereof being true, correct and complete in all material respects as of the date hereof, and the Seller shall have performed, satisfied and complied in all material respects with the covenants and conditions required hereby to be performed, satisfied or complied with by it at or before the closing. ARTICLE 7 FURTHER AGREEMENTS In order to induce the Purchaser to issue and transfer the Shares to the Seller, the Seller agrees that: SECTION 7.1 Limitation on Dispositions. For so long as the Seller Beneficially Owns 5% or more of the outstanding securities of the Purchaser entitled to vote (including securities held by the Seller convertible into or exercisable, exchangeable or redeemable for such securities, collectively "Voting Securities"), the Seller will not, directly or indirectly (unless in any such cases specifically invited in writing to do so by the Purchaser), do either of the following (provided that this Section 7.1 shall terminate as soon as the Seller Beneficially Owns less than 5% of the Voting Securities): (a) sell, or contract to sell or grant, any option or right to purchase any Common Stock or make any short sale of, or establish a "put equivalent position" (as such term is defined in Rule 16a-1 (h) under the Exchange Act) with respect to, the Common Stock, at a time when Seller has no equivalent offsetting long position in Common Stock; or (b) sell or contract to sell more than 2% of the outstanding Voting Securities to any single person or group of related persons; provided, however, that this subsection shall not apply to any transaction effected in good faith on the Nasdaq Stock Market. SECTION 7.2 Voting. In the event that any action is submitted to the holders of Voting Securities for their approval, whether at a meeting or by written consent, at a time when the Seller has the right to vote or direct the vote with respect to more than 9.9% of the Voting Securities entitled to vote on such action, the Seller will, unless otherwise approved in writing in advance by the Purchaser, cause to be voted all Voting Securities as to which the Seller has the right to vote or direct the vote (but not more than the number of Voting Securities by which such ownership exceeds 9.9% of the outstanding Voting Securities entitled to be voted on such matter) (the "Excess Voting Securities") in the same manner (i.e., in favor of, against and 9 abstentions with respect to) proportionately to all other Voting Securities that are entitled to vote with respect to such matter. The Seller hereby appoints the Chief Executive Officer and the Chief Financial Officer of the Purchaser, acting severally, as its proxy, with full power of substitution, in the name, place and stead of the Seller, to vote all Excess Voting Securities at any such meeting (and at any adjournment or adjournments thereof) or with respect to any such written consent in the manner described in the preceding sentence. The Seller agrees that this proxy is coupled with an interest and shall be irrevocable. ARTICLE 8 MISCELLANEOUS SECTION 8.1 Survival. All representations and warranties made in this Agreement and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive until the first anniversary of the execution and delivery of this Agreement. SECTION 8.2 Notices. Unless otherwise provided in this Agreement, any notice, request, instruction or other communication to be given hereunder by either Party to the other shall be in writing and (a) delivered personally, (b) mailed by first-class mail, postage prepaid, (such mailed notice to be effective four days after the date it is mailed) or (c) sent by facsimile transmission, with a confirmation sent by way of one of the above methods, as follows: If to the Seller, addressed to: Stellar Funding Ltd. 135 East 57th Street 9th Floor New York, NY 10022 Attn: Todd Boehly Facsimile: (212) 644-8396 With a copy to: Sidley Austin Brown & Wood LLP 787 Seventh Avenue New York, NY 10019 Attn: Myles Pollin Facsimile: (212) 839-5599 If to the Purchaser, addressed to: Mission Resources Corporation 1331 Lamar, Suite 1445 Houston, Texas 77010 Attn: Chief Executive Officer Facsimile: (713) 495-3103 With a copy to: 10 Porter & Hedges, L.L.P. 700 Louisiana, 35th Floor Houston, Texas 77002 Attn: Robert G. Reedy Facsimile: (713) 226-0274 Either Party may designate in a writing to the other Party any other address or facsimile number to which, and any other Person to whom or which, a copy of any such notice, request, instruction or other communication should be sent. SECTION 8.3 Choice of Law. This Agreement shall be construed (both as to validity and performance) and enforced in accordance with, and governed by the laws of the State of New York applicable to agreements made and to be performed wholly within such jurisdiction and irrespective of any choice of law provision that would require application of the law of any other jurisdiction. SECTION 8.4 No Consequential or Punitive Damages. Neither Party hereto (or any of their respective Affiliates) shall, under any circumstance, be liable to the other Party (or its Affiliates) for any consequential, exemplary, special, indirect, incidental or punitive damages claimed by such other Party under the terms of or due to any breach of this Agreement, including, but not limited to, loss of revenue or income, cost of capital, or loss of business reputation or opportunity. SECTION 8.5 Titles. The headings of the articles and sections of this Agreement are inserted for convenience of reference only and shall not affect the meaning or interpretation of this Agreement. SECTION 8.6 Waiver. No failure of a Party to require, and no delay by a Party in requiring, the other Party to comply with any provision of this Agreement shall constitute a waiver of the right to require such compliance. No failure of a Party to exercise, and no delay by a Party in exercising, any right or remedy under this Agreement shall constitute a waiver of such right or remedy. No waiver by a Party of any right or remedy under this Agreement shall be effective unless made in writing. Any waiver by a Party of any right or remedy under this Agreement shall be limited to the specific instance and shall not constitute a waiver of such right or remedy in the future. SECTION 8.7 Binding; Third-Party Beneficiaries. This Agreement shall be binding upon the Parties and upon each of their respective successors and assignees and shall inure to the benefit of, and be enforceable by, each Party and each of their respective successors and assignees; provided, however, that, with the exception of an assignment by the Seller to any Affiliate thereof, neither Party shall assign any right or obligation arising pursuant to this Agreement without first obtaining the written consent of the other Party. Nothing in this Agreement shall create or be deemed to create any third-party beneficiary rights in any Person not a party to this Agreement. SECTION 8.8 Entire Agreement. This Agreement contains the entire agreement between the Parties with respect to the subject of this Agreement, and supersedes each course of conduct 11 previously pursued, accepted or acquiesced in, and each written and oral agreement and representation previously made, by the Parties with respect thereto, whether or not relied or acted upon. SECTION 8.9 Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. SECTION 8.10 Modification. No course of performance or other conduct hereafter pursued, accepted or acquiesced in, and no oral agreement or representation made in the future, by the Parties, whether or not relied or acted upon, and no usage of trade, whether or not relied or acted upon, shall modify or terminate this Agreement, impair or otherwise affect any obligation of the Parties pursuant to this Agreement or otherwise operate as a waiver of any such right or remedy. No modification of this Agreement or waiver of any such right or remedy shall be effective unless made in writing duly executed by the Purchaser and the Seller. SECTION 8.11 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which taken together shall constitute one and the same instrument. Either Party may execute this Agreement by facsimile signature and the other Party shall be entitled to rely on such facsimile signature as evidence that this Agreement has been duly executed by such Party. Either Party executing this Agreement by facsimile signature shall immediately forward to the other Party an original signature page by overnight mail or delivery service. [Signature Page to Follow] 12 IN WITNESS WHEREOF, each of the Purchaser and the Seller has caused to be executed by a duly authorized officer this Agreement on the day and year indicated at the beginning of this Agreement. MISSION RESOURCES CORPORATION By: /s/ Robert L. Cavnar -------------------------------------- Name: Robert L. Cavnar Title: Chairman, President and Chief Executive Officer 13 STELLAR FUNDING LTD. By: /s/ Todd L. Boehly -------------------------------------- Name: Todd L. Boehly Title: Managing Director SCHEDULE I
Name Principal Amount of Notes Number of Shares Issued - ---- ------------------------- ----------------------- Stellar Funding Ltd. $15,000,000 6,250,000
EX-99.3 6 h13003exv99w3.txt REGISTRATION RIGHTS AGREEMENT EXHIBIT 99.3 REGISTRATION RIGHTS AGREEMENT This REGISTRATION RIGHTS AGREEMENT ("Agreement") is made as of February 25, 2004 by Mission Resources Corporation, a Delaware corporation (the "Company") and the persons listed as the Investors on the signature pages hereto (the "Investors"), and each person or entity that subsequently becomes a party to this Agreement pursuant to, and in accordance with, the provisions of Section 11 hereof (collectively, the "Permitted Transferees" and each individually a "Permitted Transferee"). WHEREAS, pursuant to a Purchase and Sale Agreement (the "Purchase Agreement"), dated as of the date hereof, the Company has agreed to sell to the Investors, and each Investor has agreed to purchase from the Company, shares (the "Shares") of the Company's authorized and issued common stock, $.01 par value per share (the "Common Stock") in a transaction exempt from the registration requirements of the Securities Act; and WHEREAS, the terms of the Purchase Agreement provide that it shall be a condition precedent to the closing of the transactions thereunder for the Company and the Investors to execute and deliver this Agreement. NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, the parties hereto hereby agree as follows: 1. DEFINITIONS. As used in this Agreement, the following terms shall have the following respective meanings: "Closing" shall mean the closing under the Purchase Agreement. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and all of the rules and regulations promulgated thereunder. "Holder" shall mean, collectively, the Investors and the permitted transferees as described in Section 11 hereof; provided, however, that the term "Holder" shall not include any of the foregoing that ceases to own or hold any Registrable Securities. "Qualifying Holder" shall have the meaning ascribed thereto in Section 11 hereof. "Registrable Securities" shall mean the Shares bought by the Investors pursuant to the Purchase Agreement, provided, however, that all Registrable Securities shall cease to be Registrable Securities once they have been sold pursuant to a registration statement. "Rule 144" shall mean Rule 144 promulgated under the Securities Act and any successor or substitute rule, law or provision. "SEC" shall mean the Securities and Exchange Commission. 1 "Securities Act" shall mean the Securities Act of 1933, as amended, and all of the rules and regulations promulgated thereunder. "Suspension Period" shall have the meaning ascribed thereto in Section 10 hereof. 2. EFFECTIVENESS. This Agreement shall become effective and legally binding upon the Closing. 3. MANDATORY REGISTRATION. Within thirty (30) days after the Closing (or, if the date that is thirty (30) days after the Closing is not a business day, the next business day immediately following such date), the Company will prepare and file with the SEC a registration statement on Form S-3 or any successor form (except that if the Company is not then eligible to register for resale the Registrable Securities on Form S-3, then such registration shall be on Form S-1 or any successor form) for the purpose of registering under the Securities Act all of the Registrable Securities for resale by, and for the account of, the Holders as selling stockholders thereunder (the "Registration Statement"). The Registration Statement shall permit the Holders to offer and sell, on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, any or all of the Registrable Securities. The Company agrees to use commercially reasonable efforts to cause the Registration Statement to become effective as soon as practicable (which shall include using commercially reasonable efforts to promptly respond to any comments of the SEC in respect of the Registration Statement). The Company shall be required to keep the Registration Statement effective until such date that is the earlier of (i) the date when all of the Registrable Securities registered thereunder shall have been sold, (ii) the date on which all the Registrable Securities either cease to be outstanding or are held by persons who are not affiliates of the Company and may be resold pursuant to Rule 144(k) under the Securities Act, or (iii) the later of two (2) years after the effective date of the Registration Statement, or the date on which all of the Registrable Securities may be sold pursuant to Rule 144 in a three (3) month period (such date is referred to herein as the "Mandatory Registration Termination Date"). Thereafter, the Company shall be entitled to withdraw the Registration Statement and the Holders shall have no further right to offer or sell any of the Registrable Securities pursuant to the Registration Statement (or any prospectus relating thereto). 4. OBLIGATIONS OF THE COMPANY. In connection with the Company's obligation under Section 3 hereof to file the Registration Statement with the SEC and to use commercially reasonable efforts to cause the Registration Statement to become effective, the Company shall: (a) Prepare and file with the SEC, as expeditiously as reasonably practicable, such amendments and supplements to the Registration Statement and the prospectus used in connection therewith as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by the Registration Statement; (b) Promptly furnish to the selling Holders a copy of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other publicly available documents (including, without limitation, prospectus amendments and supplements as are prepared by the Company in accordance with Section 4(a) above) as the 2 selling Holders may reasonably request in order to facilitate the disposition of such selling Holder's Registrable Securities; (c) Subject to Section 10 hereof, promptly notify the selling Holders, at any time when a prospectus relating to the Registration Statement is required to be delivered under the Securities Act, of the occurrence of any event as a result of which the prospectus included in or relating to the Registration Statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading in light of the circumstances in which they are made; and, thereafter, the Company will promptly prepare (and, when completed, give notice to each selling Holder) a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus will not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading in light of the circumstances in which they are made; provided that upon such notification by the Company, the selling Holders will not offer or sell Registrable Securities until the Company has notified the selling Holders that it has prepared a supplement or amendment to such prospectus and delivered copies of such supplement or amendment to the selling Holders (it being understood and agreed by the Company that the foregoing proviso shall in no way diminish or otherwise impair the Company's obligation to promptly prepare a prospectus amendment or supplement as above provided in this Section 4(c) and deliver copies of same as above provided in Section 4(b) hereof); (d) Use commercially reasonable efforts to register and qualify the Registrable Securities covered by the Registration Statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably appropriate in the opinion of the Company and the Holders provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business, to file a general consent to service of process or to become subject to any material tax in any such states or jurisdictions, and provided further that (notwithstanding anything in this Agreement to the contrary with respect to the bearing of expenses) if any jurisdiction in which any of such Registrable Securities shall be qualified shall require that expenses incurred in connection with the qualification therein of any such Registrable Securities be borne by the selling Holder, then the selling Holders shall, to the extent required by such jurisdiction, pay their pro rata share of such qualification expenses; and (e) Promptly after a sale of Registrable Securities pursuant to the Registration Statement (assuming that no stop order is in effect with respect to the Registration Statement at the time of such sale), the Company shall cooperate with the selling Holder and provide the transfer agent for the Common Stock with such instructions and legal opinions as may be required in order to facilitate the issuance to the purchaser (or the selling Holder's broker) of new unlegended certificates for such Registrable Securities. (f) If applicable, at the request made at sole discretion of the Holder, enter into and perform its obligations under an underwriting agreement, in the usual customary form, with the managing underwriter of such offering. (g) Cause all Registrable Securities covered by the registration statement to be listed on each securities exchange or automated quotation system on which shares of Common Stock are then listed. If any of such shares are not so listed, the Company shall cause such shares to be 3 listed on the securities exchange or automated quotation system as may be reasonably requested by the Holders of a majority of the Registrable Securities being registered. (h) Permit a single firm of counsel designated as selling stockholders' counsel by the holders of a majority in interest of the Registrable Securities to review, at the Holders' expense, the registration statement and all amendments and supplements thereto a reasonable period of time prior to their filing with the SEC and state authorities, and shall not file any document in a form to which such counsel reasonably objects. (i) Cause the Company's officers, directors and independent certified public accountants to supply all information reasonably requested by a representative of any Holder of Registrable Securities, and any attorney or accountant retained by such Holder, in connection with such registration; provided, however, that such representatives, attorneys or accountants of the Holders enter into a confidentiality agreement, in form and substance reasonably satisfactory to the Company, prior to the release or disclosure of any such information. 5. FURNISH INFORMATION. It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Agreement that the selling Holders shall furnish to the Company such information regarding them and the Registrable Securities held by them as the Company shall reasonably request and as shall be required in order to effect any registration by the Company pursuant to this Agreement. 6. EXPENSES OF REGISTRATION. Expenses incurred in connection with the registration of the Registrable Securities pursuant to this Agreement (excluding underwriting, brokerage and other selling commissions and discounts and fees and disbursements of counsel to the Holders), including without limitation all registration and qualification and filing fees, printing, fees and disbursements of counsel for the Company, blue sky fees and expenses except as provided in Section 4(d), including fees and disbursements of counsel related to all blue sky matters, fees and expenses of listing any Registrable Securities on any securities exchange or automated quotation system on which shares of Common Stock are then listed and the expenses of providing materials pursuant to Section 4 hereof, shall be borne by the Company. 7. DELAY OF REGISTRATION. The Holders shall not take any action to restrain, enjoin or otherwise delay any registration as the result of any controversy which might arise with respect to the interpretation or implementation of this Agreement. 8. INDEMNIFICATION AND CONTRIBUTION. (a) To the extent permitted by law, the Company will indemnify and hold harmless each selling Holder, any investment banking firm acting as an underwriter for the selling Holder, any broker/dealer acting on behalf of any selling Holder and each officer and director of such selling Holder, such underwriter, such broker/dealer and each person, if any, who controls such selling Holder, underwriter or broker/dealer within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which they may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue or alleged untrue statement of any material fact contained in the Registration Statement, in any preliminary prospectus or final 4 prospectus relating thereto or in any amendments or supplements to the Registration Statement or any such preliminary prospectus or final prospectus, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading in light of the circumstances in which they are made; and will reimburse such selling Holder, such underwriter, broker/dealer or such officer, director or controlling person for any legal or other out-of-pocket expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this Section 8(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable in any such case for any such loss, damage, liability or action to the extent that it arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in connection with the Registration Statement, any preliminary prospectus or final prospectus relating thereto or any amendments or supplements to the Registration Statement or any such preliminary prospectus or final prospectus, in reliance upon and in conformity with written information furnished expressly for use in connection with the Registration Statement or any such preliminary prospectus or final prospectus by the selling Holder, any underwriter for them or controlling person with respect to them. This Section 8(a) shall not inure to the benefit of any selling Holder with respect to any person asserting loss, damage, liability or action as a result of a selling Holder selling Registrable Securities during a Suspension Period (as defined in Section 10 hereof) or selling in violation of Section 5(c) of the Securities Act. (b) To the extent permitted by law, each selling Holder will severally and not jointly indemnify and hold harmless the Company, each of its officers and directors, each person, if any, who controls the Company within the meaning of the Securities Act, any investment banking firm acting as underwriter for the Company or the selling Holder, or any broker/dealer acting on behalf of the Company or any other selling Holder, and all other selling Holders against any losses, claims, damages or liabilities to which the Company or any such director, officer, controlling person, underwriter, or broker/dealer or other selling Holder may become subject to, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon any untrue or alleged untrue statement of any material fact contained in the Registration Statement or any preliminary prospectus or final prospectus, relating thereto or in any amendments or supplements to the Registration Statement or any such preliminary prospectus or final prospectus, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances in which they are made, in each case to the extent and only to the extent that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, in any preliminary prospectus or final prospectus relating thereto or in any amendments or supplements to the Registration Statement or any such preliminary prospectus or final prospectus, in reliance upon and in conformity with written information furnished by such selling Holder expressly for use in connection with the Registration Statement or any preliminary prospectus or final prospectus related thereto; and such selling Holders will reimburse any legal or other expenses reasonably incurred by the Company or any such director, officer, controlling person, underwriter, broker/dealer or other selling Holder in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the liability 5 of each selling Holder hereunder shall be limited to the gross proceeds (net of underwriting discounts and commissions, if any) received by such selling Holder from the sale of Registrable Securities covered by the Registration Statement that give rise to such obligation to indemnify; and provided, further, however, that the indemnity agreement contained in this Section 8(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of those selling Holder(s) against which the request for indemnity is being made (which consent shall not be unreasonably withheld). (c) Promptly after receipt by an indemnified party under this Section 8 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 8, notify the indemnifying party in writing of the commencement thereof and the indemnifying party shall have the right to participate in and, to the extent the indemnifying party desires, jointly with any other indemnifying party similarly noticed, to assume at its expense the defense thereof with counsel mutually satisfactory to the indemnifying parties with the consent of the indemnified party (which consent will not be unreasonably withheld, conditioned or delayed). In the event that the indemnifying party assumes any such defense, the indemnified party may participate in such defense with its own counsel and at its own expense, provided, however, that the counsel for the indemnifying party shall act as lead counsel in all matters pertaining to such defense or settlement of such claim and the indemnifying party shall only pay for such indemnified party's expenses for the period prior to the date of its participation on such defense. The failure to notify an indemnifying party promptly of the commencement of any such action, if materially prejudicial to his ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 8 to the extent of such prejudice, but the omission so to notify the indemnifying party will not relieve him of any liability which he may have to any indemnified party otherwise other than under this Section 8. (d) Notwithstanding anything to the contrary herein, without the prior written consent of the indemnified party, the indemnifying party shall not be entitled to settle any claim, suit or proceeding unless in connection with such settlement the indemnified party receives an unconditional release with respect to the subject matter of such claim, suit or proceeding and such settlement does not contain any admission of fault by the indemnified party. (e) In order to provide for just and equitable contribution under the Securities Act in any case in which (i) the indemnified party makes a claim for indemnification pursuant to Section 8 hereof but is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that the express provisions of Section 8 hereof provide for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of any indemnified party, then the Company and the applicable selling Holder shall contribute to the aggregate losses, claims, damages or liabilities to which they may be subject (which shall, for all purposes of this Agreement, include, but not be limited to, all reasonable costs of defense and investigation and all reasonable attorneys' fees), in either such case (after contribution from others) on the basis of relative fault as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to 6 information supplied by the Company on the one hand or the applicable selling Holder on the other hand, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Holders agree that it would not be just and equitable if contribution pursuant to this Section 8(e) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in this Section 8(e). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this Section 8 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. 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. Notwithstanding any other provision of this Section 8(e), in no event shall any selling Holder be required to undertake liability to any person under this Section 8(e) for any amounts in excess of the dollar amount of the gross proceeds to be received by the selling Holder from the sale of such selling Holder's Registrable Securities (after deducting any fees, discounts and commissions applicable thereto) giving rise to such liability. 9. REPORTS UNDER THE EXCHANGE ACT. With respect to each Holder, from the date of Closing until the date on which all of the Registrable Securities that such Holder owns or has the right to acquire become freely transferable under Rule 144(k) promulgated under the Securities Act, the Company agrees to use its best efforts: (i) to make and keep public information available, as those terms are understood and defined in the General Instructions to Form S-3, or any successor or substitute form, and in Rule 144, (ii) to file with the SEC all reports and other documents required to be filed by an issuer of securities registered under Sections 13 or 15(d) of the Exchange Act, and (iii) if such filings are not available via EDGAR, to furnish to such Holder as long as the Holder owns or has the right to acquire any Registrable Securities prior to the applicable termination date described above, a copy of the most recent annual or quarterly report of the Company, and such other reports and documents so filed by the Company under Sections 13 or 15(d) of the Exchange Act as may be reasonably requested in availing such Holder of any rule or regulation of the SEC permitting the selling of any such Registrable Securities without registration. 10. DEFERRAL AND LOCK-UP. Notwithstanding anything in this Agreement to the contrary, if the Company shall furnish to the selling Holders a certificate signed by the President and/or Chief Executive Officer of the Company stating that the Board of Directors of the Company has made the good faith determination (i) that continued use by the selling Holders of the Registration Statement for purposes of effecting offers or sales of Registrable Securities pursuant thereto would require, under the Securities Act, disclosure in the Registration Statement (or the prospectus relating thereto) of material, nonpublic information concerning the Company, its business or prospects or any proposed transaction involving the Company, (ii) that such disclosure would be premature and would be adverse to the Company, its business or prospects or any such proposed transaction or would make the successful consummation by the Company of any such transaction significantly less likely and (iii) that it is therefore necessary to suspend the use by the Holders of such Registration Statement (and the prospectus relating thereto) for purposes of effecting offers or sales of Registrable Securities pursuant thereto, then the right of 7 the selling Holders to use the Registration Statement (and the prospectus relating thereto) for purposes of effecting offers or sales of Registrable Securities pursuant thereto shall be suspended for a period (the "Suspension Period") of not more than 90 days after delivery by the Company of the certificate referred to above in this Section 10. During the Suspension Period, none of the Holders shall offer or sell any Registrable Securities pursuant to or in reliance upon the Registration Statement (or the prospectus relating thereto). The Company may not exercise this right for more than ninety (90) days in aggregate during any 12-month period. 11. TRANSFER OF REGISTRATION RIGHTS. None of the rights of any Holder under this Agreement shall be transferred or assigned to any person unless (i) such person is a Qualifying Holder (as defined below), (ii) such person agrees to become a party to, and bound by all of the terms and conditions of, this Agreement by duly executing and delivering to the Company an Instrument of Adherence in the form attached as Exhibit A hereto, (iii) the transfer or assignment is made in accordance with the applicable requirements of the Purchase Agreement and (iv) following the transfer or assignment, the further disposition of the Registrable Securities by such person is restricted under the Securities Act and applicable state securities laws. For purposes of this Section 11, the term "Qualifying Holder" shall mean, with respect to any Holder, (a) any corporation, partnership or other affiliated entity controlling, controlled by, or under common control with, such Holder, or any partner or former partner, if such Holder is a partnership, or (b) any other direct transferee from such Holder of at least 25% of those Registrable Securities held or that may be acquired by such Holder. None of the rights of any Holder under this Agreement shall be transferred or assigned to any person (including, without limitation, a Qualifying Holder) that acquires Registrable Securities in the event that and to the extent that such Person is eligible to resell such Registrable Securities pursuant to Rule 144(k) of the Securities Act. 12. ENTIRE AGREEMENT. This Agreement constitutes and contains the entire agreement and understanding of the parties with respect to the subject matter hereof, and it also supersedes any and all prior negotiations, correspondence, agreements or understandings with respect to the subject matter hereof. 13. MISCELLANEOUS. (a) This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York, and shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors or assigns, provided that the terms and conditions of Section 11 hereof are satisfied. This Agreement shall also be binding upon and inure to the benefit of any transferee of any of the Registrable Securities provided that the terms and conditions of Section 11 hereof are satisfied. Notwithstanding anything in this Agreement to the contrary, if at any time any Holder shall cease to own all of its Registrable Securities, all of such Holder's rights under this Agreement shall immediately terminate. This Agreement may not be amended, modified or waived without the written consent of the Company and the Holders of a majority in amount of the Registrable Securities outstanding. (b) (i) Any notices, reports or other correspondence (hereinafter collectively referred to as "correspondence") required or permitted to be given hereunder shall be sent by courier 8 (overnight or same day) or telecopy or delivered by hand to the party to whom such correspondence is required or permitted to be given hereunder. The date of giving any notice shall be the date of its actual receipt. (ii) All correspondence to the Company shall be addressed as follows: Mission Resources Corporation 1331 Lamar, Suite 1455 Houston, Texas 77010-3039 Attention: Chief Executive Officer Telecopier: (713) 495-3103 (iii) All correspondence to any Holder shall be sent to the address set forth on such Holder's signature page hereto (or, in the case of a Permitted Transferee, such Permitted Transferee's Instrument of Adherence hereto). (iv) Any party may change the address to which correspondence to it is to be addressed by notification as provided for herein. (c) The parties acknowledge and agree that in the event of any breach of this Agreement, remedies at law may be inadequate, and each of the parties hereto shall be entitled to seek specific performance of the obligations of the other parties hereto and such appropriate injunctive relief as may be granted by a court of competent jurisdiction. (d) This Agreement may be executed in a number of counterparts, each of which together shall for all purposes constitute one Agreement, binding on all the parties hereto notwithstanding that all such parties have not signed the same counterpart. [Signature Page to Follow] 9 IN WITNESS WHEREOF, the parties hereto have executed this Registration Rights Agreement as of the date and year first above written. MISSION RESOURCES CORPORATION By: /s/ Robert L. Cavnar -------------------------------------- Name: Robert L. Cavnar Title: Chairman, President and Chief Executive Officer INVESTORS: STELLAR FUNDING LTD. By: /s/ Todd L. Boehly -------------------------------------- Name: Todd L. Boehly Title: Managing Director Stellar Funding Ltd. 135 East 57th Street, New York, New York 10022 Attn: Todd Boehly Fax: (212) 644-8396 EXHIBIT A INSTRUMENT OF ADHERENCE Reference is hereby made to that certain Registration Rights Agreement, dated as of February 25, 2004, among Mission Resources Corporation, a Delaware corporation (the "Company"), the Investors and the Permitted Transferees, as amended and in effect from time to time (the "Registration Rights Agreement"). Capitalized terms used herein without definition shall have the respective meanings ascribed thereto in the Registration Rights Agreement. The undersigned, in order to become the owner or holder of, or have the right to acquire, shares of Registrable Securities, hereby agrees that, from and after the date hereof, the undersigned has become a party to the Registration Rights Agreement in the capacity of a Permitted Transferee, and is entitled to all of the benefits under, and is subject to all of the obligations, restrictions and limitations set forth in the Registration Rights Agreement that are applicable to Permitted Transferees. This Instrument of Adherence shall take effect and shall become a part of the Registration Rights Agreement immediately upon execution. Print Name of Permitted Transferee _____________________________ By:__________________________ Name:________________________ Title:_______________________ Permitted Transferee's Address and Fax Number for Notice _____________________________ _____________________________ _____________________________ Accepted: Mission Resources Corporation By: ______________________________ Name: ____________________________ Title: ___________________________ Date: ____________________________ A-1 -----END PRIVACY-ENHANCED MESSAGE-----