Registration Rights Agreement

EXHIBIT 10.4


REGISTRATION RIGHTS AGREEMENT


This REGISTRATION RIGHTS AGREEMENT (this "Agreement") dated February 2, 2003, is by and among Plains Exploration & Production Company, an Delaware corporation (the "Company"), EnCap Energy Capital Fund III, L.P., EnCap Energy Acquisition III-B, Inc., BOCP Energy Partners, L.P., ECIC Corporation and EnCap Investments L.L.C. (together with permitted assigns, the "Holders").


WHEREAS, pursuant to the Merger Agreement (the "Merger Agreement") dated as of the date hereof among the Company, 3Tec Energy Corporation, a Delaware corporation, and PXP Gulf Coast, Inc., a Delaware corporation, the Holders will receive, at the Effective Time (as defined in the Merger Agreement), shares of Common Stock, par value $.01 per share, of the Company (the "Common Stock"); and


WHEREAS, in connection with the Merger Agreement, the Company has agreed to grant to each Holder certain registration rights set forth below.


NOW, THEREFORE, in consideration of these premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each Holder and the Company, the parties hereto agree as follows:


SECTION 1.


DEFINITIONS


1.1 Specific Definitions.


The following capitalized terms shall have the indicated meanings:


"Affiliate" is defined in Rule 12b-2 under the Exchange Act.


"Agreement" is defined in the preamble hereto.


"Common Stock" is defined in the preamble.


"Company" is defined in the preamble.


"Company Registration" is defined in Section 3.1.


"Effective Time" is defined in the Merger Agreement.


"Exchange Act" means the Securities Exchange Act of 1934, as amended.


"Holders" is defined in the preamble (subject, however, to Section 10.2).


"Indemnified Party" is defined in Section 7.3.


"Indemnifying Party" is defined in Section 7.3.


"Inspectors" is defined in Section 4.1(l).


"Loss" or "Losses" is defined in Section 7.1.


"Merger Agreement" is defined in the recitals.


"person" means any business entity (including a corporation, partnership (limited or general), limited liability company or business trust) or a natural person.


Prospectus" is defined in Section 7.1.


"register" "registered" and "registration" and words of similar import refer to a registration effected by preparing and filing with the SEC a registration statement in compliance with the Securities Act, and the declaration and ordering by the SEC of effectiveness of such registration statement or document.


"Registrable Stock" means (i) any Common Stock held by any Holder or its permitted assigns as of the Effective Time and (ii) any Common Stock held by a Holder of a Substitute Warrant upon exercise after the Effective Time, in whole or in part, of the Substitute Warrant issued to such Holder pursuant to the Merger Agreement, and any securities issued or issuable in respect of any Registrable Stock by way of any stock split or stock dividend or in connection with any combination of shares, recapitalization, merger, consolidation, reorganization or otherwise.


"SEC" means the United States Securities and Exchange Commission.


"Securities Act" means the Securities Act of 1933, as amended.


"Substitute Warrant" is defined in the Merger Agreement.


SECTION 2.
REGISTRATION RIGHTS


2.1 Demand Registration Rights.


(a) After the Effective Time, upon receipt of a written request from a Holder to register under the Securities Act (whether for purposes of a public offering, an exchange offer or otherwise) all or part of the Registrable Stock held by such Holder, as the case may be, the Company shall as expeditiously as reasonably possible (but in any event not later than 30 days after receipt of such request) prepare and file, and use its best efforts to cause to become effective as soon thereafter as practicable, a registration statement under the Securities Act to effect the offering of such Registrable Stock in the manner specified in such request.


(b) The Holder, shall be entitled to select and retain one or more investment bankers or managers reasonably acceptable to the Company in connection with any underwritten offerings made pursuant to this Section 2.1.


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(c) Subject to the terms and conditions set forth in Section 2.2, any Holder may request the Company to register Registrable Stock under the Securities Act pursuant to this Section 2.1 at any time and from time to time; provided, however, that the Holders may not request the Company to register Registrable Stock pursuant to this Section 2.1 more than once in any 270-day period.


2.2 Terms And Conditions Of Demand Registration Rights.


Notwithstanding anything to the contrary contained elsewhere herein, the registration rights granted to the Holders in Section 2.1 are expressly subject to the following terms and conditions:


(a) The Holders, collectively, shall only be entitled (i) to two requests to register Registrable Stock under the terms of Section 2.1, and (ii) to commence requests after the Effective Time. A "request" as it is used in this Section 2.2(a) shall be deemed to have occurred only upon completion of a requested registration and the subsequent sale of Registrable Stock.


(b) In no event shall the Registrable Stock to be offered under a registration statement prepared and filed pursuant to Section 2.1 constitute less than (i) 4% of the then outstanding shares of Common Stock, or (ii) if the number of shares of Registrable Stock constitutes less than 4% of the then outstanding shares of Common Stock, then all of such Holders remaining shares of Registrable Stock. For purposes of meeting the 4% threshold in (i) above, the Holders may aggregate their shares of Registrable Stock to be included therein.


(c) If at any time or from time to time a Holder requests registration of any of its Registrable Stock in accordance with Section 2.1, the Company shall give the other Holders prompt written notice of the proposed registration and shall include in such registration on the same terms and conditions as the other Registrable Stock included in such registration such number of shares of Registrable Stock as the other Holders shall request within ten business days after the giving of such notice. If the managing underwriter or underwriters of a proposed offering for which securities of more than one Holder are included pursuant to this Section 2.2(c) advise the Company in writing that in its or their good faith judgment the total amount of securities to be included in such offering is sufficiently large to jeopardize the success of such offering, then the securities to be included in such offering shall be allocated pro rata among each Holder participating in the offering based upon the number of shares of Registrable Stock requested to be included in such registration by each such Holder.


(d) The Company shall be entitled to defer for a reasonable period of time, but not in excess of 135 days in any 365 day period, or any 90 consecutive day period, the filing of any registration statement otherwise required to be prepared and filed by it under Section 2.1 if the Company notifies the requesting Holder(s), within five business days after such Holder requested the registration under Section 2.1, that the Company (i) is at such time conducting or about to conduct an underwritten public offering of its securities for its own account and the Company's Board of Directors determines in good faith that such offering would be materially adversely affected by such registration requested by such Holder(s) or (ii) would, in the opinion of its counsel, be required to disclose in such registration statement information not otherwise then required by law to be publicly disclosed and, in the good faith judgment of the Company's


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Board of Directors, such disclosure might adversely affect any material business transaction or negotiation in which the Company is then engaged. If the Company elects to defer the filing of a registration statement pursuant to this Section 2.2(c), the requesting Holder(s) may withdraw its request, in writing, during the time of such deferral and such request shall not be counted toward the limit set forth in Section 2.2(a).


(e) No Holder shall exercise its rights pursuant to Section 2.1 during the 60-day period immediately following the effective date of any registration statement filed by the Company under the Securities Act (other than on Form S-8 or another similar form) in respect of an offering or sale of Common Stock by or on behalf of the Company or any other stockholder of the Company.


(f) Notwithstanding any other provision of this Agreement, the Holders may not effect a continuous offering of securities on a "shelf registration statement" hereunder.


SECTION 3.
PIGGYBACK REGISTRATION RIGHTS


3.1 Piggyback Registration Rights. If at any time or from time to time the Company shall propose to register any Common Stock for public sale under the Securities Act (for its own account or for the account of any other person) pursuant to an underwritten offering (a "Company Registration"), the Company shall give each Holder prompt written notice of the proposed registration and shall include in such registration on the same terms and conditions as the other securities included in such registration such number of shares of Registrable Stock as any Holder shall request within ten business days after the giving of such notice; provided, however, that the Company may at any time prior to the effectiveness of any such registration statement, in its sole discretion and without the consent of Holders, abandon the proposed offering in which a Holder had requested to participate (provided that the Company gives each Holder prompt notice of such decision); and provided further that any Holder shall be entitled to withdraw any or all of its shares of Registrable Stock to be included in a registration statement under this Section 3.1 at any time prior to the date on which the registration statement with respect to such shares of Registrable Stock is declared effective by the SEC. The Company shall be entitled to select the investment bankers and/or managers, if any, to be retained in connection with any registration referred to in this Section 3.1.


3.2 Restrictions On Piggyback Registration Rights.


Notwithstanding anything to the contrary contained elsewhere herein, the registration rights granted to Holders in Section 3.1 are expressly subject to the following terms and conditions:


(a) The Company shall not be obligated to include shares of Registrable Stock in an offering as contemplated by Section 3.1 if the Company is advised in writing by the managing underwriter or underwriters of such offering (with a copy to each Holder), that the success of such offering would in its or their good faith judgment be jeopardized by such inclusion (after consideration of all relevant factors, including without limitation, the impact of any delay caused by including such shares); provided, however, that the Company shall in any


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case be obligated to include such number of shares of Registrable Stock in such offering, if any, as such underwriter or underwriters shall determine will not jeopardize the success of such offering.


(b) The Company shall not be obligated to include any shares of Registrable Stock in any registration by the Company of any Common Stock in connection with any merger, acquisition, exchange offer, or any other business combination, including any transaction within the scope of Rule 145 under the Securities Act, subscription offer, dividend reinvestment plan or stock option or other director or employee incentive or benefit plan.


(c) The Company shall use all commercially reasonable efforts to cause the managing underwriter or underwriters of a proposed underwritten offering to permit the Registrable Stock requested to be included in a registration of Common Stock, pursuant to this Section 3 to be included on the same terms and conditions as any similar securities included therein. Notwithstanding the foregoing, the Company shall not be required to include any Holder's Registrable Stock in such offering unless such Holder accepts the terms of the underwriting agreement between the Company and the managing underwriter or underwriters and otherwise complies with Section 7. If the managing underwriter or underwriters of a proposed underwritten offering advise the Company in writing that in its or their good faith judgment the total amount of securities, including securities requested to be included in a registration of Common Stock, pursuant to this Section 3 and other similar securities, to be included in such offering is sufficiently large to jeopardize the success of such offering, then in such event the securities to be included in such offering shall be allocated first to the Company and then, to the extent that any additional securities can, in the good faith judgment of such managing underwriter or underwriters, be sold without creating any such jeopardy to the success of such offering, pro rata among each holder of Common Stock participating in the offering based upon the number of shares of Common Stock requested to be included in such registration by each such holder.


(d) If some but less than all of a Holder's shares of Registrable Stock are included in an offering contemplated by a registration statement pursuant to this Section 3, such Holder shall execute one or more "lockup" letters, in customary form, setting forth an agreement by such Holder not to offer for sale, sell, grant any option for the sale of, or otherwise dispose of, directly or indirectly, any shares of Common Stock, or any securities convertible into or exchangeable into or exercisable for any shares of Common Stock, for a period of 180 days from the date such offering commences; provided, however, that if the period of any such "lockup" applicable to the Company with respect to any such registration statement shall be less than 180 days, then the period of time applicable to each Holder shall be such lesser period of time.


SECTION 4.
COVENANTS


4.1 Covenants Of The Company.


In connection with any offering of shares of Registrable Stock pursuant to this Agreement, the Company shall:


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(a) Prepare and file with the Commission such amendments and post-effective amendments to the registration statement as may be necessary to keep the registration statement effective for the period provided in Section 4.1(i) or until withdrawn at the request of participating holders of Common Stock; and cause the prospectus to be supplemented by any required prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Securities Act;


(b) Furnish to each Holder, (i) at least two business days prior to filing with the SEC, any registration statement covering shares of Registrable Stock, any amendment or supplement thereto, and any prospectus used in connection therewith, which documents will be subject to the reasonable review of such Holders and such underwriter, and, with respect to a registration statement prepared pursuant to Section 2.1, the Company shall not file any such documents with the SEC to which any such Holder shall reasonably object; and (ii) a copy of any and all transmittal letters or other correspondence with the SEC or any other governmental agency or self-regulatory body or other body having jurisdiction (including any domestic or foreign securities exchange) relating to such offering of shares of Registrable Stock;


(c) Furnish to each Holder, such number of copies of such registration sta ...