EXECUTION VERSION
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and entered
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into as of February 7, 2007, by and among Petrosearch Energy Corporation, a
Nevada Corporation (the "Company"), and RCH Petro Investors, LP, a Delaware
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limited partnership (the "Purchaser").
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WHEREAS, this Agreement is made in connection with the closing of the
issuance and sale of the Note pursuant to the Note and Warrant Purchase
Agreement, dated as of even date herewith, by and between the Company and the
Purchaser (the "Purchase Agreement");
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WHEREAS, the Company has agreed to provide the registration and other
rights set forth in this Agreement for the benefit of the Purchaser pursuant to
the Purchase Agreement; and
WHEREAS, it is a condition to the obligations of the Purchaser under the
Purchase Agreement that this Agreement be executed and delivered.
NOW THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by each party hereto, the parties
hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. Capitalized terms used herein without
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definition shall have the meanings given to them in the Purchase Agreement. The
terms set forth below are used herein as so defined:
"Agreement" has the meaning specified therefor in the introductory
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paragraph.
"Business Day" means any day other than a Saturday, Sunday, or a legal
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holiday for commercial banks in New York, New York.
"Commission" means the United States Securities and Exchange Commission.
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"Common Stock" means the Company's common stock, par value $.001.
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"Company" has the meaning specified therefor in the introductory paragraph
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of this Agreement.
"Effectiveness Period" has the meaning specified therefor in Section
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2.01(a) of this Agreement.
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"Excluded Securities" has the meaning specified therefor in Section
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2.01(d).
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"Excluded Securities Registration Statement" means a registration statement
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on Form SB-2 registering the Excluded Securities.
"Excluded Securities Registration Statement Filing Date" has the meaning
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specified therefor in Section 2.02(a).
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"Failure Date" has the meaning specified therefor in Section 2.04(b).
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"Holder" means the record holder of any Registrable Securities.
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"Initial Registration Statement" means the registration statement on Form
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SB-2 registering the Note Shares.
"Initial Registration Statement Filing Date" has the meaning specified
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therefor in Section 2.01(a).
"Included Registrable Securities" has the meaning specified therefor in
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Section 2.05 of this Agreement.
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"Liquidated Damages" has the meaning specified therefor in Section 2.01(b)
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of this Agreement.
"Liquidated Damages Multiplier" means the product of $1.00 times the number
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of Note Shares, Warrant Shares or Excluded Shares, as applicable to such
Registration Statement, held by the Holder.
"Losses" has the meaning specified therefor in Section 2.09(a) of this
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Agreement.
"Managing Underwriter" means, with respect to any Underwritten Offering,
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the book-running lead manager of such Underwritten Offering.
"Note" means the 8% Senior Secured Convertible Note in the original
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principal amount of $10,000,000, convertible into shares of Common Stock,
purchased by the Purchaser, as further described in the Purchase Agreement.
"Note Shares" means the shares of Common Stock (i) to which the Holder is
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entitled upon conversion of the Note and (ii) that have been issued in lieu of
cash interest payments under the Note at the time of filing the applicable
Registration Statement or Piggyback Registration Statement.
"Piggyback Registration Statement" has the meaning specified therefor in
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Section 2.05(a).
"Purchase Agreement" has the meaning specified therefor in the recitals of
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this Agreement.
"Purchaser" has the meaning specified therefor in the introductory
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paragraph of this Agreement.
"Registrable Securities" means the: (i) Note Shares, (ii) Excluded
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Securities and (iii) Warrant Shares, all of which Registrable Securities are
subject to the rights provided herein until such rights terminate pursuant to
the provisions hereof.
"Registration Expenses" has the meaning specified therefor in Section
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2.08(b) of this Agreement.
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"Registration Statements" means the Initial Registration Statement, the
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Excluded Securities Registration Statement and the Warrant Registration
Statement.
"Selling Expenses" has the meaning specified therefor in Section 2.08(b) of
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this Agreement.
"Selling Holder" means a Holder who is selling Registrable Securities
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pursuant to any registration statement.
"Underwritten Offering" means an offering in which shares of Common Stock
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are sold to an underwriter on a firm commitment basis for reoffering to the
public or an offering that is a "bought deal" with one or more investment banks.
"Warrant" means the warrant to purchase 5,000,000 shares of Common Stock,
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as further described in the Purchase Agreement.
"Warrant Shares" means the shares of Common Stock underlying the Warrant.
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"Warrant Registration Statement" means a registration statement on Form
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SB-2 registering the Warrant Shares.
"Warrant Registration Statement Filing Date" has the meaning specified
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therefor in Section 2.03(a).
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Section 1.02 Registrable Securities. Any Registrable Security will
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cease to be a Registrable Security when (a) a registration statement covering
such Registrable Security has been declared effective by the Commission and such
Registrable Security has been sold or disposed of pursuant to such effective
registration statement; (b) such Registrable Security has been disposed of
pursuant to any section of Rule 144 (or any similar provision then in force
under the Securities Act); (c) such Registrable Security can be disposed of
pursuant to Rule 144(k) (or any similar provision then in force under the
Securities Act), or (d) such Registrable Security is held by the Company or one
of its subsidiaries.
ARTICLE II
REGISTRATION RIGHTS
Section 2.01 Initial Registration.
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(a) Deadline To Go Effective. As soon as practicable following the
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Closing, but in any event before April 20, 2007 (the "Initial Registration
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Statement Filing Date"), the Company shall prepare and file the Initial
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Registration Statement. The Company shall use its
commercially reasonable efforts to register 70% of the Note Shares on the
Initial Registration Statement and to cause the Initial Registration Statement
to become effective no later than 120 days after the Initial Registration
Statement Filing Date. The Company will use its commercially reasonable efforts
to cause the Initial Registration Statement filed pursuant to this Section 2.01
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to be continuously effective under the Securities Act until the earliest of (i)
when all such Note Shares registered thereon are sold by the Holder and (ii)
when all of the Note Shares registered thereon become eligible for resale under
Rule 144(k) (or any successor provision then in force under the Securities Act)
(the "Effectiveness Period"). The Initial Registration Statement when declared
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effective (including the documents incorporated therein by reference) will
comply as to form in all material respects with all applicable requirements of
the Securities Act and the Exchange Act and will not contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
(b) Failure To File. Subject to Section 2.01(d), if the Initial
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Registration Statement required by Section 2.01 is not filed before the Initial
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Registration Statement Filing Date, then the Holder shall be entitled to a
payment, as liquidated damages and not as a penalty, with respect to the Note
Shares held by the Holder and not then included in an effective Piggyback
Registration Statement, for the period beginning on the day after Initial
Registration Statement Filing Date and lasting to but excluding the day the
Initial Registration Statement is filed, of 0.25% of the Liquidated Damages
Multiplier per 30-day period for the first 60 days of the period, increasing by
an additional 0.25% of the Liquidated Damages Multiplier per 30-day period for
each subsequent 60 days, up to a maximum of 1.00% of the Liquidated Damages
Multiplier per 30-day period (the "Liquidated Damages").
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(c) Failure To Go Effective. If the Initial Registration Statement
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required by Section 2.01 is not declared effective within 150 days after the
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Initial Registration Statement Filing Date, then the Holder shall be entitled to
Liquidated Damages with respect to the Note Shares registered thereon, held by
the Holder and not then included in an effective Piggyback Registration
Statement for the period beginning on the 150th day after the Initial
Registration Statement Filing Date and lasting to but excluding the day the
Initial Registration Statement is declared effective.
(d) Excluded Securities. In the event the Company is required, for any
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reason, to exclude any of the Note Shares from the Initial Registration
Statement (the "Excluded Securities"), such Excluded Securities shall be
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registered on the Excluded Securities Registration Statement as provided in
Section 2.02. The Holder shall be entitled to Liquidated Damages with respect
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to such Excluded Securities held by the Holder and not then included in an
effective Piggyback Registration Statement for the period beginning on the
Initial Registration Filing Date and lasting to but excluding the Excluded
Securities Registration Filing Date; provided, however, that Company may exclude
up to 40% of the Note Shares from the Initial Registration Statement if the
Company reasonably determines that it is necessary to do so in order for the
Commission to declare the Initial Registration Statement effective and such
Excluded Securities shall not be subject to Liquidated Damages.
Section 2.02 Excluded Securities Registration.
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(a) Deadline To Go Effective. Within seven months after the Commission
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has declared the Initial Registration Statement effective (the "Excluded
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Securities Registration Statement Filing Date"), the Company shall prepare and
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file the Excluded Securities Registration Statement. The Company shall use its
commercially reasonable efforts to cause the Excluded Securities Registration
Statement to become effective no later than 120 days after the Excluded
Securities Registration Statement Filing Date. The Company will use its
commercially reasonable efforts to cause the Excluded Securities Registration
Statement filed pursuant to this Section 2.02 to be continuously effective under
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the Securities Act during the Effectiveness Period. The Excluded Securities
Registration Statement when declared effective (including the documents
incorporated therein by reference) will comply as to form in all material
respects with all applicable requirements of the Securities Act and the Exchange
Act and will not contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading.
(b) Failure To File. If the Excluded Securities Registration Statement
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required by Section 2.02 is not filed before the Excluded Securities
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Registration Statement Filing Date, then the Holder shall be entitled to
Liquidated Damages with respect to the Excluded Securities held by the Holder
and not then included in an effective Piggyback Registration Statement, for the
period beginning on the day after Excluded Securities Registration Statement
Filing Date and lasting to but excluding the day the Excluded Securities
Registration Statement is filed.
(c) Failure To Go Effective. If the Excluded Securities Registration
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Statement required by Section 2.02 is not declared effective within 150 days
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after the Excluded Securities Registration Statement Filing Date, then the
Holder shall be entitled to Liquidated Damages with respect to the Excluded
Securities held by the Holder and not then included in an effective Piggyback
Registration Statement, for the period beginning on the 150th day after the
Excluded Securities Registration Statement Filing Date and lasting to but
excluding the day the Excluded Securities Registration Statement is declared
effective.
Section 2.03 Warrant Registration.
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(a) Deadline To Go Effective. As soon as practicable, but in any event
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before February 7, 2008 (the "Warrant Registration Statement Filing Date"), the
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Company shall prepare and file the Warrant Registration Statement. The Company
shall use its commercially reasonable efforts to cause the Warrant Registration
Statement to become effective no later than 120 days after the Warrant
Registration Statement Filing Date. The Company will use its commercially
reasonable efforts to cause the Warrant Registration Statement filed pursuant to
this Section 2.03 to be continuously effective during the Effectiveness Period.
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The Warrant Registration Statement when declared effective (including the
documents incorporated therein by reference) will comply as to form in all
material respects with all applicable requirements of the Securities Act and the
Exchange Act and will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading.
(b) Failure To File. If the Warrant Registration Statement required by
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Section 2.03 is not filed before the Warrant Registration Statement Filing
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Date, then the Holder shall be entitled
to Liquidated Damages for the period beginning on the Warrant Registration
Statement Filing Date and lasting to but excluding the day the Warrant
Registration Statement is filed.
(c) Failure To Go Effective. If the Warrant Registration Statement
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required by Section 2.03 is not declared effective within 150 days after the
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Warrant Registration Statement Filing Date, then the Holder shall be entitled to
Liquidated Damages with respect to the Warrant Shares held by the Holder and not
then included in an effective Piggyback Registration Statement, for the period
beginning on the 150th day after the Warrant Registration Statement Filing Date
and lasting to but excluding the day the Warrant Registration Statement is
declared effective.
Section 2.04 Additional Provisions related to Liquidated Damages
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(a) Delay Rights. Notwithstanding anything to the contrary contained
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herein, the Company may, upon written notice to any Holder whose Registrable
Securities are included in a Registration Statement, suspend such Holder's use
of any prospectus which is a part of the Registration Statement (in which event
the Holder shall discontinue sales of the Registrable Securities pursuant to the
Registration Statement), for a period not to exceed an aggregate of 90 days in
any 365-day period, if (i) the Company is pursuing a material acquisition,
merger, reorganization, disposition or other similar transaction and the Company
determines in good faith that its ability to pursue or consummate such a
transaction would be materially adversely affected by any required disclosure of
such transaction in such Registration Statement or (ii) the Company has
experienced some other material non-public event, the disclosure of which at
such time, in the good faith judgment of the Company, would materially adversely
affect the Company. Upon disclosure of such information or the termination of
the condition described above, the Company shall provide prompt written notice
to the Holders whose Registrable Securities are included in the Registration
Statement, and shall promptly terminate any suspension of sales it has put into
effect and shall take such other actions to permit registered sales of
Registrable Securities as contemplated in this Agreement.
(b) Cessation of Effectiveness. If any of the Registration Statements
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are filed and declared effective but shall thereafter cease to be effective or
fail to be usable for the resale of the applicable Registrable Securities (the
"Failure Date") for any reason other than as provided in 2.04(a) above, then the
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Holder will be entitled to Liquidated Damages for the Registrable Securities
held by the Holder subject to such Registration Statement for a period beginning
on the Failure Date and lasting to but excluding the day a post-effective
amendment to the Registration Statement is declared effective by the Commission
or supplement or report is filed with the Commission and the applicable
Registration Statement is useable for the resale of Registrable Securities
registered thereon.
(c) Limits on Liquidated Damages. The aggregate amount of Liquidated
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Damages payable by the Company under this Agreement to any Holder as a result of
events in (i) Sections 2.01, 2.02 and 2.03 shall not exceed $500,000 and (ii)
Section 2.04(b) shall not exceed $1,000,000; provided, however, that in no event
shall the aggregate amount of the Liquidated Damages payable to the Holder as a
result of events in Sections 2.01, 2.02, 2.03 and 2.04(b) exceed $1,000,000.
Further, the Liquidated Damages shall be automatically eliminated without any
action by the parties to the extent the Commission or the then published
statements of the
Fair Accounting Standards Board provides that (A) any portion of the Liquidated
Damages shall be accounted for as a derivative instrument rather than a
contingent payment obligation under generally accepted accounting principles and
the rules and regulations of the Commission or (B) any of the Registrable
Securities (whether or not deemed to include the Liquidated Damages payment
obligation) must be accounted for as interests other than equity interests under
generally accepted accounting principles and the rules and regulations of the
Commission. Further, any other action necessary to insure that the Liquidated
Damages or the Registrable Securities are not accounted for as provided in (A)
and (B) of the previous sentence shall occur, including, if necessary, that the
Holder shall repay to the Company any of the Liquidated Damages attributable to
(A) or (B) that have been previously paid by the Company.
(d) Payment of Liquidated Damages. Any Liquidated Damages shall be
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paid to the Holder in immediately available funds within ten Business Days
after the end of the applicable 30-day period. Liquidated Damages for any
period of less than 30 days shall be prorated by multiplying the amount of
Liquidated Damages to be paid in a full 30-day period by a fraction, the
numerator of which is the number of days for which such Liquidated Damages are
owed, and the denominator of which is 30. The calculation of Liquidated Damages
hereunder is subject to appropriate adjustments for any subdivision or
combination of shares of Common Stock after the date hereof. The payment of the
Liquidated Damages to a Holder shall cease at such time as the Registrable
Securities become eligible for resale under Rule 144(k) under the Securities
Act.
Section 2.05 Piggyback Rights.
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(a) General. If at any time the Company proposes to file (i) a
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prospectus supplement to an effective shelf registration statement or (ii) a
registration statement (other than a registration related to an employee benefit
plan, a registration on Form S-4 or a registration on any form that does not
permit secondary sales) for the sale of Common Stock in an Underwritten Offering
for its own account and/or another Person ((i) and (ii) collectively referred to
as the "Piggyback Registration Statement"), then as soon as practicable but not
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less than three Business Days prior to the filing of (x) any preliminary
prospectus supplement relating to such Underwritten Offering pursuant to Rule
424(b) under the Securities Act, (y) the prospectus supplement relating to such
Underwritten Offering pursuant to Rule 424(b) under the Securities Act (if no
preliminary prospectus supplement is used) or (z) such registration statement,
as the case may be, then, the Company shall give notice of such proposed
Underwritten Offering to the Holders and such notice shall offer the Holder the
opportunity to include in such Underwritten Offering such number of Registrable
Securities (the "Included Registrable Securities") as each such Holder may
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request in writing; provided, however, that if the Company has been advised by
the Managing Underwriter that the inclusion of Registrable Securities for sale
for the benefit of the Holders will have a material adverse effect on the price,
timing or distribution of the Common Stock in the Underwritten Offering, then
the amount of Registrable Securities to be offered for the accounts of Holders
shall be determined based on the provisions of (c). The notice required to be
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provided in this Section 2.05 to Holders shall be provided on a Business Day
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pursuant to Section 3.01 hereof. Each such Holder shall then have three
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Business Days after receiving such notice to request inclusion of Registrable
Securities in the Underwritten Offering, except that such Holder shall have one
Business Day after such Holder confirms receipt of the notice to request
inclusion of Registrable Securities in the Underwritten Offering in the case of
a "bought deal" or "overnight transaction" where no preliminary prospectus is
used.
If no request for inclusion from a Holder is received within the specified time,
each such Holder shall have no further right to participate in such Underwritten
Offering. If, at any time after giving written notice of its intention to
undertake an Underwritten Offering and prior to the closing of such Underwritten
Offering, the Company shall determine for any reason not to undertake or to
delay such Underwritten Offering, the Company may, at its election, give written
notice of such determination to the Selling Holders and, (x) in the case of a
determination not to undertake such Underwritten Offering, shall be relieved of
its obligation to sell any Included Registrable Securities in connection with
such terminated Underwritten Offering, and (y) in the case of a determination to
delay such Underwritten Offering, shall be permitted to delay offering any
Included Registrable Securities for the same period as the delay in the
Underwritten Offering. Any Selling Holder shall have the right to withdraw such
Selling Holder's request for inclusion of such Selling Holder's Registrable
Securities in such offering by giving written notice to the Company of such
withdrawal up to and including the time of pricing of such offering.
(b) Procedures. In connection with any Underwritten Offering under
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this Agreement, the Company shall be entitled to select the Managing Underwriter
or Underwriters. In connection with an Underwritten Offering contemplated by
(a) in which a Selling Holder participates, each Selling Holder and the Company
shall be obligated to enter into an underwriting agreement that contains such
representations, covenants, indemnities and other rights and obligations as are
customary in underwriting agreements for firm commitment offerings of
securities. No Selling Holder may participate in such Underwritten Offering
unless such Selling Holder agrees to sell its Registrable Securities on the
basis provided in such underwriting agreement and completes and executes all
questionnaires, powers of attorney, indemnities and other documents reasonably
required under the terms of such underwriting agreement. Each Selling Holder
may, at its option, require that any or all of the representations and
warranties by, and the other agreements on the part of, the Company to and for
the benefit of such underwriters also be made to and for such Selling Holder's
benefit and that any or all of the conditions precedent to the obligations of
such underwriters under such underwriting agreement also be conditions precedent
to its obligations. No Selling Holder shall be required to make any
representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements regarding such
Selling Holder, its authority to enter into such underwriting agreement and to
sell, and its ownership of, the securities being registered on its behalf, its
intended method of distribution and any other representation required by Law.
If any Selling Holder disapproves of the terms of an underwriting, such Selling
Holder may elect to withdraw therefrom by notice to the Company and the Managing
Underwriter; provided, however, that such withdrawal must be made up to and
including the time of pricing of such Underwritten Offering. No such withdrawal
or abandonment shall affect the Company's obligation to pay Registration
Expenses.
(c) Priority of Rights. If the Managing Underwriter or Underwriters of
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any proposed Underwritten Offering of Common Stock included in an Underwritten
Offering involving Included Registrable Securities advises that the total amount
of Common Stock that the Selling Holder and any other Persons intend to include
in such offering exceeds the number that can be sold in such offering without
being likely to have a material adverse effect on the price, timing or
distribution of the Common Stock offered or the market for the Common Stock,
then the Common Stock to be included in such Underwritten Offering shall include
the number of
Registrable Securities that such Managing Underwriter or Underwriters advises
can be sold without having such adverse effect, with such number to be allocated
(i) first, to the Company, (ii) second, pro rata among the Selling Holders
based, for each Selling Holder, on the fraction derived by dividing (x) the
number of Common Stock proposed to be sold by such Selling Holder in such
Underwritten Offering by (y) the aggregate number of Common Stock proposed to be
sold by all Selling Holders in such Underwritten Offering.
Section 2.06 Sale Procedures. In connection with its obligations under
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this Article II, the Company will, as expeditiously as possible:
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(a) prepare and file with the Commission such amendments and
supplements to a Registration Statement and the prospectus used in connection
therewith as may be necessary to keep the Registration Statement effective for
the Effectiveness Period and as may be necessary to comply with the provisions
of the Securities Act with respect to the disposition of all securities covered
by the Registration Statement;
(b) if a prospectus supplement will be used in connection with the
marketing of an Underwritten Offering and the Managing Underwriter at any time
shall notify the Company in writing that, in the sole judgment of such Managing
Underwriter, inclusion of detailed information to be used in such prospectus
supplement is of material importance to the success of the Underwritten Offering
of such Registrable Securities, the Company shall use its commercially
reasonable efforts to include such information in such prospectus supplement;
(c) furnish to each Selling Holder (i) as far in advance as reasonably
practicable before filing a Registration Statement or any other registration
statement contemplated by this Agreement or any supplement or amendment thereto,
upon request, copies of reasonably complete drafts of all such documents
proposed to be filed (including exhibits and each document incorporated by
reference therein to the extent then required by the rules and regulations of
the Commission), and provide each such Selling Holder the opportunity to object
to any information pertaining to such Selling Holder and its plan of
distribution that is contained therein and make the corrections reasonably
requested by such Selling Holder with respect to such information prior to
filing a Registration Statement or such other registration statement or
supplement or amendment thereto, and (ii) such number of copies of the
Registration Statement or such other registration statement and the prospectus
included therein and any supplements and amendments thereto as such Persons may
reasonably request in order to facilitate the public sale or other disposition
of the Registrable Securities covered by such Registration Statement or other
registration statement;
(d) if applicable, use its commercially reasonable efforts to register
or qualify the Registrable Securities covered by the Registration Statement or
any other registration statement contemplated by this Agreement under the
securities or blue sky laws of such jurisdictions as the Selling Holders or, in
the case of an Underwritten Offering, the Managing Underwriter, shall reasonably
request; provided, however, that the Company will not be required to qualify
generally to transact business in any jurisdiction where it is not then required
to so qualify or to take any action which would subject it to general service of
process in any such jurisdiction where it is not then so subject;
(e) promptly notify each Selling Holder and each underwriter, at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, of (i) the filing of a Registration Statement or any other
registration statement contemplated by this Agreement or any prospectus or
prospectus supplement to be used in connection therewith, or any amendment or
supplement thereto, and, with respect to such Registration Statement or any
other registration statement or any post-effective amendment thereto, when the
same has become effective; and (ii) any written comments from the Commission
with respect to any filing referred to in clause (i) and any written request by
the Commission for amendments or supplements to the Registration Statement or
any other registration statement or any prospectus or prospectus supplement
thereto;
(f) immediately notify each Selling Holder and each underwriter, at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, of (i) the happening of any event as a result of which the
prospectus or prospectus supplement contained in the Registration Statement or
any other registration statement contemplated by this Agreement, as then in
effect, includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing; (ii) the
issuance or threat of issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or any other registration
statement contemplated by this Agreement, or the initiation of any proceedings
for that purpose; or (iii) the receipt by the Company of any notification with
respect to the suspension of the qualification of any Registrable Securities for
sale under the applicable securities or blue sky laws of any jurisdiction.
Following the provision of such notice, the Company agrees to as promptly as
practicable amend or supplement the prospectus or prospectus supplement or take
other appropriate action so that the prospectus or prospectus supplement does
not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing and to take such
other action as is necessary to remove a stop order, suspension, threat thereof
or proceedings related thereto;
(g) upon request and subject to appropriate confidentiality
obligations, furnish to each Selling Holder copies of any and all transmittal
letters or other correspondence with the Commission 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
Registrable Securities;
(h) in the case of an Underwritten Offering, furnish upon request, (i)
an opinion of counsel for the Company, dated the effective date of the
applicable registration statement or the date of any amendment or supplement
thereto, and a letter of like kind dated the date of the closing under the
underwriting agreement, and (ii) a "cold comfort" letter, dated the effective
date of the applicable registration statement or the date of any amendment or
supplement thereto and a letter of like kind dated the date of the closing under
the underwriting agreement, in each case, signed by the independent public
accountants who have certified the Company's financial statements included or
incorporated by reference into the applicable registration statement, and each
of the opinion and the "cold comfort" letter shall be in customary form and
covering substantially the same matters with respect to such registration
statement (and the prospectus and any prospectus supplement included therein) as
are customarily covered in opinions of issuer's
counsel and in accountants' letters delivered to the underwriters in
Underwritten Offerings of securities and such other matters as such underwriters
may reasonably request;
(i) otherwise use its commercially reasonable efforts to comply with
all applicable rules and regulations of the Commission, and make available to
its security holders, as soon as reasonably practicable, an earnings statement,
which earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 promulgated thereunder;
(j) make available to the appropriate representatives of the Managing
Underwriter and Selling Holders access to such information and the Company
personnel as is reasonable and customary to enable such parties to establish a
due diligence defense under the Securities Act;
(k) cause all such Registrable Securities registered pursuant to this
Agreement to be listed on each securities exchange or nationally recognized
quotation system on which similar securities issued by the Company are then
listed;
(l) use its commercially reasonable efforts to cause the Registrable
Securities to be registered with or approved by such other governmental agencies
or authorities as may be necessary by virtue of the business and operations of
the Company to enable the Selling Holders to consummate the disposition of such
Registrable Securities;
(m) provide a transfer agent and registrar for all Registrable
Securities covered by such registration statement not later than the effective
date of such registration statement; and
(n) enter into customary agreements and take such other actions as are
reasonably requested by the Selling Holders or the underwriters, if any, in
order to expedite or facilitate the disposition of such Registrable Securities.
Each Selling Holder, upon receipt of notice from the Company of the
happening of any event of the kind described in subsection (f) of this Section
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2.06, shall forthwith discontinue disposition of the Registrable Securities
----
until such Selling Holder's receipt of the copies of the supplemented or amended
prospectus contemplated by subsection (f) of this Section 2.06 or until it is
------------
advised in writing by the Company that the use of the prospectus may be resumed,
and has received copies of any additional or supplemental filings incorporated
by reference in the prospectus, and, if so directed by the Company, such Selling
Holder will, or will request the Managing Underwriter or underwriters, if any,
to deliver to the Company (at the Company's expense) all copies in their
possession or control, other than permanent file copies then in such Selling
Holder's possession, of the prospectus covering such Registrable Securities
current at the time of receipt of such notice.
Section 2.07 Cooperation by Holders. The Company shall have no
------------------------
obligation to include in a Registration Statement units of a Holder, or in an
Underwritten Offering pursuant to Section 2.05 Registrable Securities of the
------------
Selling Holder, who has failed to timely furnish such information that, in the
opinion of counsel to the Company, is reasonably required in order for the
registration statement or prospectus supplement, as applicable, to comply with
the Securities Act.
Section 2.08 Expenses.
--------
(a) Expenses. The Company will pay all reasonable Registration
--------
Expenses as determined in good faith, including, in the case of an Underwritten
Offering, whether or not any sale is made pursuant to such Underwritten
Offering. Each Selling Holder shall pay all Selling Expenses in connection with
any sale of its Registrable Securities hereunder. In addition, except as
otherwise provided in Section 2.09 hereof, the Company shall not be responsible
------------
for legal fees incurred by Holders in connection with the exercise of such
Holders' rights hereunder.
(b) Certain Definitions. "Registration Expenses" means all expenses
-------------------- ----------------------
incident to the Company's performance under or compliance with this Agreement to
effect the registration of Registrable Securities on the Registration Statement
pursuant to Section 2.01 or an Underwritten Offering covered under this
-------------
Agreement, and the disposition of such securities, including, without
limitation, all registration, filing, securities exchange listing and related
fees, all registration, filing, qualification and other fees and expenses of
complying with securities or blue sky laws, fees of the National Association of
Securities Dealers, Inc., fees of transfer agents and registrars, all word
processing, duplicating and printing expenses and the fees and disbursements of
counsel and independent public accountants for the Company, including the
expenses of any special audits or "cold comfort" letters required by or incident
to such performance and compliance. "Selling Expenses" means all underwriting
----------------
fees, discounts and selling commissions allocable to, and any transfer taxes
associated with, the sale of the Registrable Securities.
Section 2.09 Indemnification.
---------------
(a) By the Company. In the event of a registration of any Registrable
---------------
Securities under the Securities Act pursuant to this Agreement, the Company will
indemnify and hold harmless each Selling Holder thereunder, its directors,
officers, employees and agents, and each underwriter, pursuant to the applicable
underwriting agreement with such underwriter, of Registrable Securities
thereunder and each Person, if any, who controls such Selling Holder within the
meaning of the Securities Act and the Exchange Act, and its directors, officers,
employees or agents, against any losses, claims, damages, expenses or
liabilities (including reasonable attorneys' fees and expenses) (collectively,
"Losses"), joint or several, to which such Selling Holder or underwriter or
------
controlling Person may become subject under the Securities Act, the Exchange Act
or otherwise, insofar as such Losses (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement or any other registration statement contemplated by
this Agreement, any preliminary prospectus, free writing prospectus or final
prospectus contained therein, or any amendment or supplement thereof, 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 (in the case of a prospectus, in light of the circumstances under which
they were made) not misleading, and will reimburse each such Selling Holder, its
directors, officers, employee and agents, each such underwriter and each such
controlling Person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such Loss or actions or
proceedings; provided, however, that the Company will not be liable in any such
case if and to the extent that any such Loss arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission so
made in conformity with information furnished by such Selling Holder, its
directors, officers, employees and agents or any underwriter or such controlling
Person in writing specifically for use in the Registration Statement or such
other registration
statement, or prospectus supplement, as applicable. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf of
such Selling Holder or any such directors, officers, employees agents or any
underwriter or controlling Person, and shall survive the transfer of such
securities by such Selling Holder.
(b) By Each Selling Holder. Each Selling Holder agrees severally and
------------------------
not jointly to indemnify and hold harmless the Company, its directors, officers,
employees and agents and each Person, if any, who controls the Company within
the meaning of the Securities Act or of the Exchange Act, and its directors,
officers, employees and agents, to the same extent as the foregoing indemnity
from the Company to the Selling Holders, but only with respect to information
regarding such Selling Holder furnished in writing by or on behalf of such
Selling Holder expressly for inclusion in a Registration Statement or prospectus
supplement relating to the Registrable Securities, or any amendment or
supplement thereto; provided, however, that the liability of each Selling Holder
shall not be greater in amount than the dollar amount of the proceeds (net of
any Selling Expenses) received by such Selling Holder from the sale of the
Registrable Securities giving rise to such indemnification.
(c) Notice. Promptly after receipt by an indemnified party hereunder
------
of notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party hereunder,
notify the indemnifying party in writing thereof, but the omission so to notify
the indemnifying party shall not relieve it from any liability which it may have
to any indemnified party other than under this Section 2.09. In any action
------------
brought against any indemnified party, it shall notify the indemnifying party of
the commencement thereof. The indemnifying party shall be entitled to
participate in and, to the extent it shall wish, to assume and undertake the
defense thereof with counsel reasonably satisfactory to such indemnified party
and, after notice from the indemnifying party to such indemnified party of its
election so to assume and undertake the defense thereof, the indemnifying party
shall not be liable to such indemnified party under this Section 2.09 for any
------------
legal expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation and of
liaison with counsel so selected; provided, however, that, (i) if the
indemnifying party has failed to assume the defense or employ counsel reasonably
acceptable to the indemnified party or (ii) if the defendants in any such action
include both the indemnified party and the indemnifying party and counsel to the
indemnified party shall have concluded that there may be reasonable defenses
available to the indemnified party that are different from or additional to
those available to the indemnifying party, or if the interests of the
indemnified party reasonably may be deemed to conflict with the interests of the
indemnifying party, then the indemnified party shall have the right to select a
separate counsel and to assume such legal defense and otherwise to participate
in the defense of such action, with the reasonable expenses and fees of such
separate counsel and other reasonable expenses related to such participation to
be reimbursed by the indemnifying party as incurred. Notwithstanding any other
provision of this Agreement, no indemnified party shall settle any action
brought against it with respect to which it is entitled to indemnification
hereunder without the consent of the indemnifying party, unless the settlement
thereof imposes no liability or obligation on, and includes a complete and
unconditional release from all liability of, the indemnifying party.
(d) Contribution. If the indemnification provided for in this Section
------------ -------
2.09 is held by a court or government agency of competent jurisdiction to be
----
unavailable to any indemnified party
or is insufficient to hold them harmless in respect of any Losses, then each
such indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such Loss in such proportion as is appropriate to reflect the relative fault
of the indemnifying party on the one hand and of such indemnified party on the
other in connection with the statements or omissions which resulted in such
Losses, as well as any other relevant equitable considerations; provided,
however, that in no event shall such Selling Holder be required to contribute an
aggregate amount in excess of the dollar amount of proceeds (net of Selling
Expenses) received by such Selling Holder from the sale of Registrable
Securities giving rise to such indemnification. The relative fault of the
indemnifying party on the one hand and the indemnified party on the other 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 has been made by, or relates to, information supplied by such
party, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The parties
hereto agree that it would not be just and equitable if contributions pursuant
to this paragraph were to be determined by pro rata allocation or by any other
method of allocation which does not take account of the equitable considerations
referred to herein. The amount paid by an indemnified party as a result of the
Losses referred to in the first sentence of this paragraph shall be deemed to
include any legal and other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any Loss which is the
subject of this paragraph. 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 is not guilty of such fraudulent
misrepresentation.
(e) Other Indemnification. The provisions of this Section 2.09 shall
---------------------- ------------
be in addition to any other rights to indemnification or contribution which an
indemnified party may have pursuant to law, equity, contract or otherwise.
Section 2.10 Rule 144 Reporting. With a view to making available the
-------------------
benefits of certain rules and regulations of the Commission that may permit the
sale of the Registrable Securities to the public without registration, the
Company agrees to use its commercially reasonable efforts to:
(a) Make and keep public information regarding the Company available,
as those terms are understood and defined in Rule 144 under the Securities Act,
at all times from and after the date hereof;
(b) File with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act
at all times from and after the date hereof; and
(c) So long as a Holder owns any Registrable Securities, furnish to
such Holder forthwith upon request a copy of the most recent annual or quarterly
report of the Company, and such other reports and documents so filed as such
Holder may reasonably request in availing itself of any rule or regulation of
the Commission allowing such Holder to sell any such securities without
registration.
Section 2.11 Transfer or Assignment of Registration Rights. The rights
---------------------------------------------
to cause the Company to register Registrable Securities granted to the Holder by
the Company under this Article II may be transferred or assigned by any Holder
----------
to one or more transferee(s) or assignee(s) of such Registrable Securities;
provided, however, that the Holder must provide the Company written notice prior
to any said transfer or assignment, stating the name and address of each such
transferee and identifying the securities with respect to which such
registration rights are being transferred or assigned, and each such transferee
must assume in writing responsibility for its portion of the obligations of the
Holder under this Agreement.
Section 2.12 Limitation on Subsequent Registration Rights. From and
----------------------------------------------
after the date hereof, the Company shall not, without the prior written consent
of the Holders of a majority of the outstanding Registrable Securities, enter
into any agreement with any current or future Holder of any securities of the
Company that would allow such current or future Holder to require the Company to
include securities in any registration statement filed by the Company on a basis
that is superior in any way to the piggyback rights granted to the Holder
hereunder.
ARTICLE III
MISCELLANEOUS
Section 3.01 Communications. All notices and other communications
--------------
provided for or permitted hereunder shall be made in writing by facsimile,
electronic mail, courier service or personal delivery:
(a) if to Purchaser at RR Advisors, LLC, 000 Xxxxxxxx Xxxxx, Xxxxx
0000, Xxxxxx, XX 00000-0000, Attn: Xxxxxx Xxxxxxx (facsimile: (000) 000-0000),
(b) if to a transferee of Purchaser, to such Holder at the address
provided pursuant to Section 2.11 above, and
-------------
(c) if to the Company at 000 Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, XX
00000, Attn: President (facsimile: (000) 000-0000).
All such notices and communications shall be deemed to have been received
at the time delivered by hand, if personally delivered; when receipt
acknowledged, if sent via facsimile or sent via Internet electronic mail; and
when actually received, if sent by courier service or any other means.
Section 3.02 Successor and Assigns. This Agreement shall inure to the
---------------------
benefit of and be binding upon the successors and assigns of each of the
parties, including subsequent Holders of Registrable Securities to the extent
permitted herein.
Section 3.03 Assignment of Rights. All or any portion of the rights
----------------------
and obligations of the Purchaser under this Agreement may be transferred or
assigned by the Purchaser in accordance with Section 2.11 hereof.
-------------
Section 3.04 Change of Control. The provisions of this Agreement shall
-----------------
apply to the full extent set forth herein with respect to any and all units of
the Company or any successor or
assign of the Company (whether by merger, consolidation, sale of assets or
otherwise) which may be issued in respect of, in exchange for or in substitution
of, the Registrable Securities.
Section 3.05 Recapitalization, Exchanges, Etc. Affecting the Common
---------------------------------------------------------
Units. The Registrable Securities shall be appropriately adjusted for
combinations, recapitalizations and the like occurring after the date of this
Agreement.
Section 3.06 Specific Performance. Damages in the event of breach of
---------------------
this Agreement by a party hereto may be difficult, if not impossible, to
ascertain, and it is therefore agreed that each such Person, in addition to and
without limiting any other remedy or right it may have, will have the right to
an injunction or other equitable relief in any court of competent jurisdiction,
enjoining any such breach, and enforcing specifically the terms and provisions
hereof, and each of the parties hereto hereby waives any and all defenses it may
have on the ground of lack of jurisdiction or competence of the court to grant
such an injunction or other equitable relief. The existence of this right will
not preclude any such Person from pursuing any other rights and remedies at law
or in equity which such Person may have.
Section 3.07 Counterparts. This Agreement may be executed in two or
------------
more counterparts, all of which when taken together shall be considered one and
the same agreement and shall become effective when counterparts have been signed
by each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission or by e-mail delivery of a ".pdf" format
data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile or ".pdf" signature page were an original
thereof.
Section 3.08 Headings. The headings in this Agreement are for
--------
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
Section 3.09 Governing Law. The Laws of the State of Texas shall
--------------
govern this Agreement without regard to principles of conflict of Laws.
Section 3.10 Severability of Provisions. Any provision of this
----------------------------
Agreement which 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 or
affecting or impairing the validity or enforceability of such provision in any
other jurisdiction.
Section 3.11 Entire Agreement. This Agreement is intended by the
-----------------
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the rights granted by the Company set forth herein. This
Agreement and the Purchase Agreement supersede all prior agreements and
understandings between the parties with respect to such subject matter.
Section 3.12 Amendment. This Agreement may be amended only by means of
---------
a written amendment signed by the Company and the Holders of a majority of the
then outstanding
Registrable Securities; provided, however, that no such amendment shall
materially and adversely affect the rights of any Holder hereunder, relative to
any other Holder, without the consent of such Holder.
Section 3.13 No Presumption. If any claim is made by a party relating
--------------
to any conflict, omission, or ambiguity in this Agreement, no presumption or
burden of proof or persuasion shall be implied by virtue of the fact that this
Agreement was prepared by or at the request of a particular party or its
counsel.
[SIGNATURE PAGES TO FOLLOW]
IN WITNESS WHEREOF, the Parties hereto execute this Agreement, effective as
of the date first above written.
PETROSEARCH ENERGY CORPORATION
By: /s/ Xxxxxxx X. Xxxx
------------------------------------
Name: Xxxxxxx X. Xxxx
-----------------------------------
Title: Chief Executive Officer
and President
----------------------------------
RCH PETRO INVESTORS, LP
By: RR Advisors, LLC, its general partner
By: /s/ Xxxxxx Xxxxxxx
------------------------------------
Xxxxxx Xxxxxxx, Sole Member
