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EXHIBIT 1.3
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of December
22, 1997, by and among Queen Sand Resources, Inc., a Delaware corporation (the
"Company"), and each of the entities whose names appear on the signature pages
hereof. Such entities are each referred to herein as a "Purchaser" and,
collectively, as the "Purchasers".
The Company has agreed, on the terms and subject to the conditions set
forth in the Securities Purchase Agreement of even date herewith (the
"Securities Purchase Agreement"), to issue and sell to each Purchaser shares
(the "Preferred Shares") of the Company's Series C Convertible Preferred Stock,
par value $0.01 per share (the "Preferred Stock"), and a Warrant (each, a
"Warrant" and, when taken together with all of the warrants issued pursuant to
the Securities Purchase Agreement, the "Warrants") entitling the holder thereof
to purchase shares (the "Warrant Shares") of Common Stock. The Preferred Shares
are convertible pursuant to the Company's Certificate of Designation (the
"Certificate of Designation") into shares (the "Conversion Shares") of the
Company's Common Stock, par value $0.0015 per share (the "Common Stock"). In
order to induce the Purchasers to enter into the Securities Purchase Agreement,
the Company has agreed to provide certain registration rights under the
Securities Act of 1933, as amended (the "Securities Act"), and under applicable
state securities laws. Capitalized terms used herein and not otherwise defined
shall have the respective meanings set forth in the Securities Purchase
Agreement.
In consideration of each Purchaser entering into the Securities
Purchase Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. DEFINITIONS.
For purposes of this Agreement, the following terms shall have the
meanings specified:
(a) "Closing" shall have the meaning specified in the
Securities Purchase Agreement;
(b) "Registration Deadline" means the one hundred and
twentieth (120th) day following Closing;
(c) "Holder" means any person owning or having the right
to acquire, through conversion of Preferred Shares or exercise
of the Warrant, Registrable Securities, including initially
each Purchaser and thereafter any permitted assignee thereof;
(d) "Register", "registered" and "registration" refer to
a registration effected by preparing and filing a registration
statement or statements in compliance with the
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Securities Act and pursuant to Rule 415 under the Securities
Act ("Rule 415") or any successor rule providing for the
offering of securities on a continuous or delayed basis
("Registration Statement"), and the declaration or ordering of
effectiveness of the Registration Statement by the Securities
and Exchange Commission (the "Commission"); and
(e) "Registrable Securities" means the Conversion Shares,
the Warrant Shares and the Dividend Payment Shares (as defined
in the Certificate of Designation), and any other shares of
Common Stock issuable pursuant to the terms of the Preferred
Stock, whether as a dividend, payment of a redemption price or
otherwise, and any shares of capital stock issued or issuable
from time to time (with any adjustments) in replacement of, in
exchange for or otherwise in respect of the Conversion Shares,
the Warrant Shares or such Dividend Payment Shares, including
without limitation any securities received by a Holder in
connection with an Exchange Transaction (as defined in the
Certificate of Designation).
2. MANDATORY REGISTRATION.
(a) On or before the ninetieth (90th) day following
Closing, the Company shall prepare and file with the Commission a Registration
Statement on Form S-3 as a "shelf" registration statement under Rule 415
covering the resale of at least 200% of the number of shares of Registrable
Securities then issuable on conversion of the Preferred Shares and exercise of
the Warrants. In addition, the Company may elect to register for resale shares
of Common Stock held by other holders. The Registration Statement shall state,
to the extent permitted by Rule 416 under the Securities Act, that it also
covers such indeterminate number of shares of Common Stock as may be required
to effect (i) conversion of the Preferred Shares to prevent dilution resulting
from stock splits, stock dividends or similar events, or by reason of changes
in the Conversion Price in accordance with the terms of the Certificate of
Designation and (ii) exercise of the Warrants in full to prevent dilution
resulting from stock splits, stock dividends or similar events.
(b) The Company shall use its best efforts to cause the
Registration Statement to become effective as soon as practicable following the
filing thereof, but in no event later than the Registration Deadline, and shall
submit to the Commission, within five (5) business days after the Company
learns that no review of the Registration Statement will be made by the staff
of the Commission or that the staff of the Commission has no further comments
on the Registration Statement, as the case may be, a request for acceleration
of the effectiveness of the Registration Statement to a time and date not later
than forty-eight (48) hours after the submission of such request, and maintain
the effectiveness of the Registration Statement until the earlier to occur of
(i) the date on which all of the Registrable Securities have been sold pursuant
to the Registration Statement and (ii) the date on which all of the remaining
Registrable Securities (in the reasonable opinion of counsel to the Purchaser)
may be immediately sold to the public without registration and without regard
to the amount of Registrable Securities which may be sold by a Holder thereof
at a given time (the "Registration Period").
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(c) If (A) the Registration Statement is not filed on or
before the Filing Deadline or declared effective by the Commission on or before
the Registration Deadline, (B) after the Registration Statement has been
declared effective by the Commission, sales of Registrable Securities cannot be
made by a Holder under the Registration Statement for any reason not within the
exclusive control of such Holder (other than such Registrable Securities as are
then freely saleable pursuant to Rule 144(k) under the Securities Act and
except during a Blackout Period (as defined below)), (C) the Common Stock is
not included for quotation on the Nasdaq National Market or Nasdaq Small Cap
Market (together, the "Nasdaq Stock Market") or listed on the New York Stock
Exchange or American Stock Exchange, the Company shall pay to each Holder an
amount equal to the lesser of (x) one percent (1%) per month and (y) the
highest rate permitted by applicable law, times the aggregate Liquidation
Preference (as defined in the Certificate of Designation) of the Preferred
Shares held by such Holder, accruing daily and compounded monthly, from the
Filing Deadline until the date on which the Registration Statement is filed
with the Commission, or from the Registration Deadline until the date on which
the Registration Statement is declared effective, or from the date on which the
Registration Statement lapses or is otherwise unavailable until the date on
which the Registration Statement becomes available for sales of Registrable
Securities, or from the date on which the Common Stock is not quoted on the
Nasdaq Stock Market or listed on the New York Stock Exchange or the American
Stock Exchange until the date on which the Common Stock is so included for
quotation or listed, as the case may be. The amounts paid or payable by the
Company hereunder shall be in addition to any other remedies available to the
Purchaser at law or in equity or pursuant to the terms of any other Transaction
Document. Payments of cash pursuant hereto shall be made within five (5) days
after the end of each period that gives rise to such obligation, provided that,
if any such period extends for more than thirty (30) days, payments shall be
made at the end of each thirty-day period. For purposes hereof, "Blackout
Period" means such day or days, not to exceed an aggregate of thirty (30) days
during any period of twelve (12) consecutive months, with respect to which the
Board of Directors of the Company determines in good faith (A) that an
amendment or supplement to the Registration Statement or prospectus contained
therein is necessary, in light of subsequent events, in order to correct a
material misstatement made therein or to include information the absence of
which would render the Registration Statement or such prospectus materially
misleading and (B) that the filing of such amendment or supplement would result
in the disclosure of information which the Company has a bona fide business
purpose for preserving as confidential; provided that the Company shall be
entitled to impose no more than three (3) Blackout Periods during any period of
twelve (12) consecutive months. In the event that the Company imposes a
Blackout Period hereunder, each Holder shall be entitled, upon written notice
to the Company, to use as a Conversion Price (as defined in the Certificate of
Designation) for any conversion of Preferred Shares occurring after the
termination of such Blackout Period the lower of (a) the Conversion Price in
effect pursuant to the terms of the Certificate of Designation and (b) the
lowest Conversion Price that would have applied had such conversion occurred
during such Blackout Period. The Company agrees that it will not disclose any
material, non-public information to any Holder regarding the reasons for
imposing a Blackout Period, except to a Holder who specifically requests in
writing such information.
(d) In the event that (A) the Registration Statement is
not declared effective by the twentieth (20th) Business Day following the
Registration Deadline, (B) after the Registration Statement has been declared
effective by the Commission, sales of Registrable Securities cannot be made by
a
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Holder under the Registration Statement for any reason not within the exclusive
control of such Holder (other than such Registrable Securities as are then
freely saleable pursuant to Rule 144(k) under the Securities Act and except
during a Blackout Period (as defined below)), (C) the Common Stock is not
included for quotation on the Nasdaq Stock Market or listed on the New York
Stock Exchange or the American Stock Exchange, or (D) the Company breaches, in
any material respect, any material covenant or other material term or condition
of the Certificate of Designation, Securities Purchase Agreement, Registration
Rights Agreement, the Warrants or any other agreement, document, certificate or
other instrument delivered in connection with the transactions contemplated
hereby or thereby, and such breach continues for a period of ten (10) Business
Days after written notice thereof to the Company from a Holder (each event
described in clause (A), (B), (C) or (D) being hereinafter referred to as a
"Repricing Event"), in addition to the amounts which may be payable pursuant to
paragraph 2(c) above, the Fixed Conversion Price (as defined in the Certificate
of Designation) for any conversion of Preferred Shares occurring during the
twenty two (22) Trading Days following the Cure Date (as defined below) with
respect to such event shall be deemed to be equal to the lesser of (i) the
lowest Conversion Price (as defined in the Certificate of Designation) that
would have applied had such conversion occurred during the period between the
date on which a Repricing Event occurs and the date on which such Repricing
Event is no longer continuing (the "Cure Date") and (ii) the Fixed Conversion
Price that would otherwise be in effect on the relevant Conversion Date (as
defined in the Certificate of Designation).
3. PIGGYBACK REGISTRATION.
If at any time prior to the expiration of the Registration
Period, (i) the Company proposes to register shares of Common Stock under the
Securities Act in connection with the public offering of such shares for cash
(other than a registration relating solely to the sale of securities to
participants in a Company stock plan or employee stock award or a registration
on Form S-4 under the Securities Act or any successor or similar form
registering stock issuable upon a reclassification, a business combination
involving an exchange of securities or an exchange offer for securities of the
issuer or another entity) (a "Proposed Registration") and (ii) a registration
statement covering the sale of all of the Registrable Securities is not then
effective and available for sales thereof by the Holders, the Company shall, at
such time, promptly give each Holder written notice of such Proposed
Registration. Each Holder shall have thirty (30) days from its receipt of such
notice to deliver to the Company a written request specifying the amount of
Registrable Securities that such Holder intends to sell and such Holder's
intended method of distribution. Upon receipt of such request, the Company
shall use its best efforts to cause all Registrable Securities which the
Company has been requested to register to be registered under the Securities
Act to the extent necessary to permit their sale or other disposition in
accordance with the intended methods of distribution specified in the request
of such Holder; provided, however, that the Company shall have the right to
postpone or withdraw any registration effected pursuant to this Section 3
without obligation to the Holder. If, in connection with any underwritten
public offering for the account of the Company, the managing underwriter(s)
thereof shall impose a limitation on the number of shares of Common Stock which
may be included in the Registration Statement because, in such underwriter(s)'
judgment, marketing or other factors dictate such limitation is necessary to
facilitate public distributions, then the Company shall be obligated to include
in such Registration Statement only such limited portion of the Registrable
Securities with respect to which
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each Holder has requested inclusion hereunder as such underwriter(s) shall
permit. Any exclusion of Registrable Securities shall be made pro rata among
the Holders seeking to include Registrable Securities in the Registration
Statement, in proportion to the number of Registrable Securities sought to be
included by such Holders; provided, however, that the Company shall not exclude
any Registrable Securities unless the Company has first excluded all
outstanding securities, the holders of which are not entitled to inclusion of
such securities in such Registration Statement or are not entitled to pro rata
inclusion with the Registrable Securities; and provided, further, however,
that, after giving effect to the immediately preceding proviso, any exclusion
of Registrable Securities shall be made pro rata with holders of other
securities having the right to include such securities in the Registration
Statement, but subject in all events to the prior right of holders (the "JEDI
Holders") of registrable shares of Common Stock under that certain Registration
Rights Agreement (the "JEDI Rights Agreement"), dated as of May 6, 1997,
between the Company and Joint Energy Development Investments Limited
Partnership to include any or all of the JEDI Holders' Registrable Shares (as
defined in the JEDI Rights Agreement) before any Holder includes any or all of
its Registrable Securities in any registration statement relating to an
underwritten public offering with respect to which, in the good faith opinion
of the managing underwriter, the inclusion in the offering of all shares
requested to be registered by all persons holding registration rights would
materially jeopardize the successful marketing of the securities (including the
JEDI Holders' Registrable Shares) to be sold.
4. OBLIGATIONS OF THE COMPANY.
In addition to performing its obligations hereunder, including those
pursuant to paragraphs 2(a) and 2(b) above, the Company shall:
(a) prepare and file with the Commission such amendments
and supplements to the Registration Statement and the prospectus used in
connection with the Registration Statement as may be necessary to comply with
the provisions of the Securities Act or to maintain the effectiveness of the
Registration Statement during the Registration Period, or as may be reasonably
requested by a Holder in order to incorporate information concerning such
Holder or such Holder's intended method of distribution;
(b) in the event that the number of shares available
under the Registration Statement filed by the Company hereunder is insufficient
during any period of three consecutive trading days to cover 150% of the
Registrable Securities then issued or issuable, the Company shall promptly
amend the Registration Statement, or file a new Registration Statement, or
both, so as to cover 200% of such Registrable Securities, in any event as soon
as practicable, but not later than the tenth business day following the last
day of such three day period. Any Registration Statement filed pursuant to
this Section 4 shall state that, to the extent permitted by Rule 416 under the
Securities Act, such Registration Statement also covers such indeterminate
number of additional shares of Common Stock as may become issuable upon
conversion of the Preferred Shares or exercise of the Warrants in full. Unless
and until such amendment or new Registration Statement becomes effective, each
Holder shall have the rights described in Section 2 above;
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(c) secure the designation and quotation of the
Registrable Securities on the Nasdaq Stock Market or the listing thereof on the
New York Stock Exchange or the American Stock Exchange;
(d) furnish to each Holder such number of copies of the
prospectus included in such Registration Statement, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such
other documents as such Holder may reasonably request in order to facilitate
the disposition of such Holder's Registrable Securities;
(e) use all commercially reasonable efforts to register
or qualify the Registrable Securities under the securities or "blue sky" laws
of such jurisdictions within the United States as shall be reasonably requested
from time to time by a Holder, and do any and all other acts or things which
may be necessary or advisable to enable such Holder to consummate the public
sale or other disposition of the Registrable Securities in such jurisdictions;
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such jurisdiction;
(f) in the event of an underwritten public offering of
the Registrable Securities, enter into and perform its obligations under an
underwriting agreement, in usual and customary form reasonably acceptable to
the Company, with the managing underwriter of such offering;
(g) notify each Holder immediately upon the occurrence of
any event as a result of which the prospectus included in such Registration
Statement, as then in effect, contains an untrue statement of material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing, and (except during a Blackout Period) as promptly as practicable,
prepare, file and furnish to each Holder a reasonable number of copies of a
supplement or an amendment to such prospectus as may be necessary so that such
prospectus does not contain an untrue statement of material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing;
(h) use all commercially reasonable efforts to prevent
the issuance of any stop order or other order suspending the effectiveness of
such Registration Statement and, if such an order is issued, to obtain the
withdrawal thereof at the earliest possible time and to notify each Holder of
the issuance of such order and the resolution thereof;
(i) furnish to each Holder, on the date that such
Registration Statement becomes effective, (x) a letter, dated such date, of
outside counsel representing the Company (and reasonably acceptable to such
Holder) addressed to such Holder, confirming the effectiveness of the
Registration Statement and, to the knowledge of such counsel, the absence of
any stop order, and (y) in the case of an underwriting, (A) an opinion, dated
such date, of such outside counsel, in form and substance as is customarily
given to underwriters in an underwritten public offering, and (B) a letter,
dated such date, from the Company's independent certified public accountants,
in form and substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering, addressed to
the underwriters and to each Holder;
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(j) provide each Holder and its representatives the
opportunity to conduct a reasonable inquiry of the Company's financial and
other records during normal business hours and make available its officers,
directors and employees for questions regarding information which such Holder
may reasonably request in order to fulfill any due diligence obligation on its
part; and
(k) permit counsel for each Holder (at such Holder's
expense) to review such Registration Statement and all amendments and
supplements thereto a reasonable period of time prior to the filing thereof
with the Commission.
5. OBLIGATIONS OF EACH HOLDER.
In connection with the registration of the Registrable Securities
pursuant to the Registration Statement, each Holder shall:
(a) furnish to the Company such information regarding itself
and the intended method of disposition of Registrable Securities as the Company
shall reasonably request in order to effect the registration thereof;
(b) upon receipt of any notice from the Company of the
happening of any event of the kind described in paragraphs 4(g) or 4(h),
immediately discontinue disposition of Registrable Securities pursuant to the
Registration Statement until the filing of an amendment or supplement as
described in paragraph 4(g) or withdrawal of the stop order referred to in
paragraph 4(h);
(c) in the event of an underwritten offering of the
Registrable Securities, enter into a customary and reasonable underwriting
agreement and execute such other documents as the managing underwriter for such
offering may reasonably request;
(d) to the extent required by applicable law, deliver a
prospectus to each purchaser of Registrable Securities; and
(e) notify the Company when it has sold all of the
Registrable Securities theretofore held by it.
6. INDEMNIFICATION.
In the event that any Registrable Securities are included in a
Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company shall
indemnify and hold harmless each Holder, the officers, directors, employees,
agents and representatives of such Holder, and each person, if any, who
controls such Holder within the meaning of the Securities Act or the Securities
Exchange Act of 1934, as amended (the "1934 Act"), against any losses, claims,
damages, liabilities or reasonable out-of-pocket expenses (whether joint or
several) (collectively, including legal or other expenses reasonably incurred
in connection with investigating or defending same, "Losses"), insofar
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as any such Losses arise out of or are based upon (i) any untrue statement or
alleged untrue statement of a material fact contained in such Registration
Statement, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, or (ii) the omission or
alleged omission to state therein a material fact required to be stated
therein, or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company will
reimburse such Holder, and each such officer, director, employee, agent,
representative or controlling person for any legal or other expenses as
reasonably incurred by any such entity or person in connection with
investigating or defending any Loss; provided, however, that the foregoing
indemnity shall not apply to amounts paid in settlement of any Loss if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be obligated to indemnify
any person for any Loss to the extent that such Loss arises out of or is based
upon and in conformity with written information furnished by such person
expressly for use in such Registration Statement; and provided, further, that
the Company shall not be required to indemnify any person to the extent that
any Loss results from such person selling Registrable Securities (i) to a
person to whom there was not sent or given, at or prior to the written
confirmation of the sale of such shares, a copy of the prospectus, as most
recently amended or supplemented, if the Company has previously furnished or
made available copies thereof or (ii) during any period following written
notice by the Company to such Holder of an event described in Section 4(g) or
4(h).
(b) To the extent permitted by law, each Holder, acting
severally and not jointly, shall indemnify and hold harmless the Company, the
officers, directors, employees, agents and representatives of the Company, and
each person, if any, who controls the Company within the meaning of the
Securities Act or the 1934 Act, against any Losses to the extent (and only to
the extent) that any such Losses arise out of or are based upon and in
conformity with written information furnished by such Holder expressly for use
in such Registration Statement; and such Holder will reimburse any legal or
other expenses as reasonably incurred by the Company and any such officer,
director, employee, agent, representative, or controlling person, in connection
with investigating or defending any such Loss; provided, however, that the
foregoing indemnity shall not apply to amounts paid in settlement of any such
Loss if such settlement is effected without the consent of such Holder, which
consent shall not be unreasonably withheld; provided, that, in no event shall
any indemnity under this subsection 6(b) exceed the net purchase price of
securities sold by such Holder under the Registration Statement.
(c) Promptly after receipt by an indemnified party under
this Section 6 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 6,
deliver to the indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate in and to assume
the defense thereof with counsel mutually satisfactory to the parties;
provided, however, that an indemnified party shall have the right to retain its
own counsel, with the reasonably incurred fees and expenses of one such counsel
to be paid by the indemnifying party, if representation of such indemnified
party by the counsel retained by the indemnifying party would be inappropriate
under applicable standards of professional conduct due to actual or potential
conflicting interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement
of any such action, to the extent prejudicial to its ability to defend such
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action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 6 with respect to such action, but the
omission so to deliver written notice to the indemnifying party will not
relieve it of any liability that it may have to any indemnified party otherwise
than under this Section 6 or with respect to any other action.
(d) In the event that the indemnity provided in paragraph
(a) or (b) of this Section 6 is unavailable or insufficient to hold harmless an
indemnified party for any reason, the Company and each Holder agree, severally
and not jointly, to contribute to the aggregate Losses to which the Company or
such Holder may be subject in such proportion as is appropriate to reflect the
relative fault of the Company and such Holder in connection with the statements
or omissions which resulted in such Losses; provided, however, that in no case
shall such Holder be responsible for any amount in excess of the net purchase
price of securities sold by it under the Registration Statement. Relative
fault shall be determined by reference to whether any alleged untrue statement
or omission relates to information provided by the Company or by such Holder.
The Company and each Holder agree that it would not be just and equitable if
contribution were determined by pro rata allocation or any other method of
allocation which does not take account of the equitable considerations referred
to above. Notwithstanding the provisions of this paragraph (d), 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. For purposes of this Section
6, each person who controls a Holder within the meaning of either the
Securities Act or the Exchange Act and each officer, director, employee, agent
or representative of such Holder shall have the same rights to contribution as
such Holder, and each person who controls the Company within the meaning of
either the Securities Act or the Exchange Act and each officer, director,
employee, agent or representative of the Company shall have the same rights to
contribution as the Company, subject in each case to the applicable terms and
conditions of this paragraph (d).
(e) The obligations of the Company and each Holder under
this Section 6 shall survive the conversion or redemption, if any, of the
Preferred Shares, the exercise of the Warrant, the completion of any offering
of Registrable Securities pursuant to a Registration Statement under this
Agreement, or otherwise.
7. REPORTS.
With a view to making available to each Holder the benefits of
Rule 144 under the Securities Act ("Rule 144") and any other similar rule or
regulation of the Commission that may at any time permit such Holder to sell
securities of the Company to the public without registration, the Company
agrees to:
(a) make and keep public information available, as those
terms are understood and defined in Rule 144;
(b) file with the Commission in a timely manner all
reports and other documents required of the Company under the Securities Act
and the 1934 Act; and
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(c) furnish to such Holder, so long as such Holder owns
any Registrable Securities, forthwith upon request (i) a written statement by
the Company, if true, that it has complied with the reporting requirements of
Rule 144, the Securities Act and the 1934 Act, (ii) a copy of the most recent
annual or quarterly report of the Company and such other reports and documents
so filed by the Company, and (iii) such other information as may be reasonably
requested in availing such Holder of any rule or regulation of the Commission
which permits the selling of any such securities without registration.
8. MISCELLANEOUS.
(a) Expenses of Registration. All expenses, other than
underwriting discounts and commissions and fees and expenses of counsel to each
Holder, incurred in connection with the registrations, filings or
qualifications described herein, including (without limitation) all
registration, filing and qualification fees, printers' and accounting fees, the
fees and disbursements of counsel for the Company, and the fees and
disbursements incurred in connection with the opinion and letter described in
paragraph 4(i) hereof, shall be borne by the Company.
(b) Amendment; Waiver. Any provision of this Agreement
may be amended only pursuant to a written instrument executed by the Company
and Holders of at least two thirds (2/3) of the Registrable Securities then
issued or issuable. Any waiver of the provisions of this Agreement may be made
only pursuant to a written instrument executed by the party against whom
enforcement is sought. Any amendment or waiver effected in accordance with
this paragraph shall be binding upon each Holder, each future Holder, and the
Company. The failure of any party to exercise any right or remedy under this
Agreement or otherwise, or the delay by any party in exercising such right or
remedy, shall not operate as a waiver thereof.
(c) Notices. Any notice, demand or request required or
permitted to be given by any party to any other party pursuant to the terms of
this Agreement shall be in writing and shall be deemed given (i) when delivered
personally or by verifiable facsimile transmission (with an original to follow)
on or before 5:00 p.m., eastern time, on a business day or, if such day is not
a business day, on the next succeeding business day, (ii) on the next business
day after timely delivery to a nationally-recognized overnight courier and
(iii) on the third business day after deposit in the U.S. mail (certified or
registered mail, return receipt requested, postage prepaid), addressed to the
parties as follows:
If to the Company:
Queen Sand Resources, Inc.
3500 Oak Lawn, Suite 380
Dallas, Texas 75219-4398
Attn.: Chief Executive Officer
Fax: 214-521-9960
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with a copy to:
Haynes and Boone, LLP
901 Main Street, Suite 3100
Dallas, Texas 75202
Attn: William L. Boeing
Tel: 214-651-5553
Fax: 214-651-5940
and if to any Holder, to such address as shall be designated by such Holder in
writing to the Company.
(d) Termination. This Agreement shall terminate on the
earlier to occur of (a) the end of the Registration Period and (b) the date on
which all of the Registrable Securities have been publicly distributed; but any
such termination shall be without prejudice to (i) the parties' rights and
obligations arising from breaches of this Agreement occurring prior to such
termination and (ii) the indemnification and contribution obligations under
this Agreement.
(e) Assignment. The rights of a Holder hereunder shall
be assigned automatically to any transferee of the Preferred Shares, the
Warrant or Registrable Securities from such Holder as long as: (i) the Company
is, within a reasonable period of time following such transfer, furnished with
written notice of the name and address of such transferee, (ii) the transferee
agrees in writing with the Company to be bound by all of the provisions hereof
and (iii) such transfer is made in accordance with the applicable requirements
of the Securities Purchase Agreement or the Warrant, as the case may be.
(f) Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, and all of
which together shall be deemed one and the same instrument. This Agreement,
once executed by a party, may be delivered to any other party hereto by
facsimile transmission.
(g) Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York without
regard to the conflict of laws provisions thereof.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first-above written.
Queen Sand Resources, Inc.
By: /s/ Duly Authorized Officer
------------------------------
Name:
Title:
PURCHASER NAME:
By: /s/ Duly Authorized Officer
------------------------------
Name:
Title:
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