REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement, dated as of March 6, 1998 (this
"Agreement"), is entered into by and between Energy BioSystems Corporation, a
Delaware corporation (the "Company"), and Petro Star Inc., an Alaska
corporation ("Petro Star").
W I T N E S S E T H:
WHEREAS, the Company issued a Warrant dated March 6, 1998 (the
"Warrant") to Petro Star entitling Petro Star to purchase 200,000 shares of
the Common Stock, par value $0.01 per share ("Common Stock"), of the Company;
and
WHEREAS, the Company has agreed to grant certain registration
rights in connection with the issuance of the Warrant;
NOW, THEREFORE, the parties hereto agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the
following terms shall have the meanings set forth below:
(a) "COMMERCIALLY REASONABLE EFFORTS," when used with respect to
an obligation to be performed or term or provision to be observed hereunder,
shall mean such efforts as a prudent person seeking the benefits of such
performance or action would make, use, apply or exercise to preserve, protect
or advance its rights or interests, PROVIDED that such efforts do not require
such person to incur a material financial cost or a substantial risk of
material liability unless such cost or liability (i) would customarily be
incurred in the course of performance or observance of the relevant
obligation, term, or provision, (ii) is caused by or results from the
wrongful act or negligence of the person whose performance or observance is
required hereunder or (iii) is not excessive or unreasonable in view of the
rights or interests to be preserved, protected or advanced. Such efforts may
include, without limitation, (A) the expenditure of such funds and retention
by such person of such accountants, attorneys or other experts or advisors as
may be necessary or appropriate to effect the relevant action, (B) the
undertaking of any special audit or internal investigation that may be
necessary or appropriate to effect the relevant action and (C) the
commencement, termination or settlement of any action, suit or proceeding
involving such person to the extent necessary or appropriate to effect the
relevant action.
(b) "COMMISSION" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
(c) "COMPANY" shall have the meaning set forth in the initial
paragraph of this Agreement.
(d) "COMMON STOCK" shall have the meaning set forth in the recitals
of this Agreement.
(e) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, or any similar successor federal statute and the rules and
regulations thereunder, all as the same shall be in effect from time to
time.
(f) "HOLDER" shall mean Petro Star and any holder of Registrable
Securities to whom the registration rights conferred by this Agreement have
been transferred in compliance with Section 9 hereof.
(g) "INITIATING HOLDERS" shall mean any Holder or Holders who in the
aggregate hold not less than all of the outstanding Registrable Securities.
(h) The terms "REGISTER," "REGISTERED" and "REGISTRATION" shall refer
to a registration effected by preparing and filing a registration statement
in compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
(i) "REGISTRABLE SECURITIES" shall mean (i) the shares of Common
Stock issued or issuable upon exercise of the Warrant and (ii) any Common
Stock issued as a dividend or other distribution with respect to or in
exchange for or in replacement of such shares or other securities,
PROVIDED, HOWEVER, that Registrable Securities shall not include any shares
of Common Stock which have previously been registered under the Securities
Act, which have been sold or otherwise transferred under Rule 144 or which
may be sold without restriction pursuant to Rule 144(k).
(j) "REGISTRATION EXPENSES" shall mean all expenses incurred in
effecting any registration pursuant to this Agreement, including, without
limitation, all registration, qualification, and filing fees, printing
expenses, escrow fees, fees and disbursements of counsel for the Company,
blue sky fees and expenses, and expenses of any regular or special audits
incident to or required by any such registration, but shall not include
Selling Expenses and fees and disbursements of counsel for the Holders (and
shall not include the compensation of regular employees of the Company,
which shall be paid in any event by the Company).
(k) "RULE 144" shall mean Rule 144 as promulgated by the Commission
under the Securities Act, as such Rule may be amended from time to time, or
any similar successor rule that may be promulgated by the Commission.
(l) "RULE 145" shall mean Rule 145 as promulgated by the Commission
under the Securities Act, as such Rule may be amended from time to time, or
any similar successor rule that may be promulgated by the Commission.
(m) "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, or any similar successor federal statute and the rules and
regulations thereunder, all as the same shall be in effect from time to
time.
(n) "SELLING EXPENSES" shall mean all underwriting discounts and
selling commissions applicable to the sale of Registrable Securities and
all fees and disbursements of counsel for any Holder (other than the fees
and disbursements of counsel included in Registration Expenses or paid by
the Company pursuant to Section 4).
-2-
2. DEMAND REGISTRATION.
2.1 REQUEST FOR REGISTRATION. (a) If the Company shall receive
from Initiating Holders, at any time or times not earlier than the date on
which the Warrant first becomes exercisable, a written request that the
Company effect any registration with respect to all of the Registrable
Securities, the Company will as soon as practicable, use Commercially
Reasonable Efforts to effect such registration (including, without
limitation, filing a registration statement and any appropriate pre-effective
or post-effective amendments, appropriate qualifications under applicable
blue sky or other state securities laws, and appropriate compliance with the
Securities Act) so as to permit or facilitate the sale and distribution of
all of the Registrable Securities as specified in such request.
(b) The Company shall not be obligated to effect, or to take any
action to effect, any such registration pursuant to this Section 2:
(i) in any particular jurisdiction in which the Company would be
required to execute a general consent to service of process in effecting
such registration, qualification, or compliance, unless the Company is
already subject to service in such jurisdiction and except as may be
required by the Securities Act;
(ii) prior to the expiration of a period of six months after the
Company has initiated any previous registration pursuant to this Section
2.1, or after the Company has initiated a total of three such registrations
pursuant to this Section 2.1, PROVIDED that a registration initiated
pursuant to this Section 2.1 and subsequently withdrawn by the Holders
registering shares therein shall not be counted as a requested registration
pursuant to this clause (ii) if such withdrawal is based upon material
adverse information relating to the Company that is not known by the
Initiating Holders at the time of their request for registration pursuant
to this Section 2.1 or if the Holders bear the Registration Expenses for
such registration;
(iii) during the period starting with the date 60 days prior to
the Company's good faith estimate of the date of filing of, and ending on a
date 180 days after the effective date of, a Company-initiated
registration, PROVIDED that the Company is actively employing in good faith
all Commercially Reasonable Efforts to cause such registration statement to
become effective;
(iv) if the Initiating Holders do not request that such offering be
firmly underwritten by underwriters selected by a majority in interest of
the Initiating Holders (subject to the consent of the Company, which
consent will not be unreasonably withheld);
(v) if the Company and the Initiating Holders are unable to obtain
the commitment of the underwriters described in clause (iv) above to firmly
underwrite the offer; or
(vi) if, within 14 days after its receipt of a written request to
effect such registration, the Company causes to be delivered to the
Initiating Holders an opinion of counsel reasonably acceptable to the
Initiating Holders to the effect that the proposed disposition of
Registrable Securities by the Initiating Holders will not require
registration or qualification under the Securities Act, it being
specifically understood and agreed that the Initiating Holders will
promptly furnish to the Company and such counsel all information such
counsel may reasonably request in order to enable such counsel to determine
whether it would be able to render such opinion.
-3-
2.2 RIGHT TO DEFER REGISTRATION. Subject to the provisions of
Section 2.1(b), the Company shall use Commercially Reasonable Efforts to file
a registration statement covering the Registrable Securities so requested to
be registered as soon as practicable after receipt of the request or requests
of the Initiating Holders; PROVIDED, HOWEVER, that if (i) in the good faith
judgment of the Board of Directors of the Company, such registration would be
seriously detrimental to the Company and the Board of Directors of the
Company concludes, as a result, that it is essential to defer the filing of
such registration statement at such time, and (ii) the Company shall furnish
to such Holders a certificate signed by the President of the Company stating
that in the good faith judgment of the Board of Directors of the Company, it
would be seriously detrimental to the Company for such registration statement
to be filed in the near future and that it is, therefore, essential to defer
the filing of such registration statement, then the Company shall have the
right to defer such filing for the period during which such disclosure would
be seriously detrimental, PROVIDED that (except as provided in Section
2.1(b)(iii) above) the Company may not defer the filing for a period of more
than 90 days after receipt of the request of the Initiating Holders, and,
PROVIDED FURTHER, that the Company shall not defer its obligation in this
manner more than once in any twelve-month period.
2.3 UNDERWRITING. (a) The right of any Holder to registration
pursuant to Section 2 shall be conditioned upon such Holder's participation
in such underwriting and the inclusion of such Holder's Registrable
Securities in the underwriting to the extent provided herein. All Holders
proposing to distribute their securities through such underwriting (together
with the Company and other holders of securities of the Company exercising
registration rights with respect to such registration) shall enter into an
underwriting agreement in customary form with the representative of the
underwriter or underwriters selected by a majority in interest of the
Initiating Holders, subject to the consent of the Company, which consent
shall not be unreasonably withheld.
(b) Notwithstanding any other provision of this Section 2, if the
representative of the underwriters advises the Initiating Holders in writing
that marketing factors require a limitation on the number of shares to be
underwritten, the number of shares to be included in the underwriting or
registration shall be allocated as set forth in Section 10 hereof. If a
person who has requested inclusion in such registration as provided above
does not agree to the terms of any such underwriting, such person shall be
excluded therefrom by written notice from the Company, the underwriter or the
Initiating Holders. Any Registrable Securities or other securities excluded
or withdrawn from such underwriting shall also be withdrawn from such
registration. If shares are so withdrawn from the registration and if the
number of shares to be included in such registration was previously reduced
as a result of marketing factors pursuant to this Section 2.3, then the
Company shall offer to all Holders who have retained rights to include
securities in the registration the right to include additional securities in
the registration in an aggregate amount equal to the number of shares so
withdrawn, with such shares to be allocated among such Holders requesting
additional inclusion in accordance with Section 10 hereof.
3. PIGGYBACK REGISTRATION.
3.1 NOTICE OF REGISTRATION. If the Company shall determine to
register any of its securities either for its own account or the account of a
security holder or holders exercising their respective demand registration
rights (other than pursuant to Section 2 hereof), other than a registration
relating solely to employee benefit plans, a registration relating solely to
a Rule 145 transaction, or a registration on any registration form that does
not permit secondary sales, the Company will:
(i) promptly give to each Holder written notice thereof; and
-4-
(ii) use Commercially Reasonable Efforts to include in such
registration (and any related qualification under blue sky laws or other
compliance), except as set forth in Section 3.2 below, and in any
underwriting involved therein, all the Registrable Securities specified in
a written request or requests, made by any Holder within 20 days after the
written notice from the Company described in clause (i) above is given.
Such written request may specify all or a part of a Holder's Registrable
Securities.
3.2 RIGHT TO TERMINATE REGISTRATION. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 3 prior to the effectiveness of such registration whether or not any
Holder has elected to include Registrable Securities in such registration.
3.3 UNDERWRITING. (a) If the registration of which the Company
gives notice is for a registered public offering involving an underwriting,
the Company shall so advise the Holders as a part of the written notice given
pursuant to Section 3.1 above. In such event, the right of any Holder to
registration pursuant to this Section 3 shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting to the extent provided
herein. All Holders proposing to distribute their securities through such
underwriting (together with the Company and such other holders of securities
of the Company exercising registration rights with respect to such
registration) shall enter into an underwriting agreement in customary form
with the representative of the underwriter or underwriters selected by the
Company or the security holders initiating such registration, as the case may
be.
(b) Notwithstanding any other provision of this Section 3, if the
representative of the underwriters advises the Company in writing that
marketing factors require a limitation on the number of shares to be
underwritten, the representative may (subject to the limitations set forth
below) exclude all Registrable Securities from, or limit the number of
Registrable Securities to be included in, the registration and underwriting.
The Company shall so advise all holders of securities requesting
registration, and the amount of securities that are entitled to be included
in the registration and underwriting shall be allocated first to the Company
for securities being sold for its own account and thereafter as set forth in
Section 10 hereof. If any person does not agree to the terms of any such
underwriting, such person shall be excluded therefrom by written notice from
the Company or the underwriter. Any Registrable Securities or other
securities excluded or withdrawn from such underwriting shall be withdrawn
from such registration.
4. EXPENSES OF REGISTRATION. All Registration Expenses incurred
in connection with any registration, qualification or compliance pursuant to
Section 3 hereof, and all Registration Expenses and reasonable fees of one
counsel for the selling stockholders in the case of the first registration
pursuant to Section 2, shall be borne by the Company. All Registration
Expenses and expenses of counsel for the selling stockholders in any
subsequent registration pursuant to Section 2 shall be borne by the holders
of the securities so registered pro rata on the basis of the number of shares
of securities so registered on their behalf. All Selling Expenses relating
to securities so registered shall be borne by the holders of such securities
pro rata on the basis of the number of shares of securities so registered on
their behalf.
5. REGISTRATION PROCEDURES. In the case of each registration
effected by the Company pursuant to this Agreement, the Company will keep
each Holder advised in writing as to the initiation of each registration and
as to the completion thereof. At its expense (except, as otherwise provided
herein), the Company will use Commercially Reasonable Efforts to:
(a) keep such registration effective for a period of 120 days or
until the Holder or Holders have completed the distribution described in
the registration statement relating thereto,
-5-
whichever first occurs; PROVIDED, HOWEVER, that such 120-day period
shall be extended for a period of time equal to the period after the
effectiveness of such requirements that the Holder refrains from
selling any securities included in such registration at the request of
an underwriter of Common Stock (or other securities) of the Company;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply
with the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement;
(c) furnish such number of prospectuses and other documents incident
thereto, including any amendment of or supplement to the prospectus, as a
Holder from time to time may reasonably request;
(d) notify each seller of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any
event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
then existing, not misleading, and at the request of any such seller,
prepare and furnish to such seller a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such shares, such
prospectus shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances then existing,
not misleading;
(e) cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange on which similar
securities issued by the Company are then listed;
(f) provide a transfer agent and registrar for all Registrable
Securities registered pursuant to such registration statement and a CUSIP
number for all such Registrable Securities, in each case not later than the
effective date of such registration; and
(g) comply with all applicable rules and regulations of the
Commission, and make available to its security holders, as soon as
reasonably practicable, an earnings statement covering the period of at
least twelve months, but not more than eighteen months, beginning with the
first month after the effective date of the Registration Statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act.
In connection with any underwritten offering pursuant to a registration
statement filed pursuant to Section 2 hereof, the Company will enter into an
underwriting agreement reasonably necessary to effect the offer and sale of
Common Stock, PROVIDED such underwriting agreement contains customary
underwriting provisions.
6. INDEMNIFICATION.
(a) The Company will indemnify each Holder, each of its officers,
directors and partners, legal counsel, and accountants and each person
controlling such Holder within the meaning of Section 15 of the Securities
Act, if Registrable Securities of such Holder are included in the securities
with respect to which registration, qualification, or compliance has been
effected pursuant to this Agreement, and
-6-
each underwriter, if any, and each person who controls within the meaning of
Section 15 of the Securities Act any underwriter, against all expenses,
claims, losses, damages, and liabilities (or actions, proceedings, or
settlements in respect thereof) arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
prospectus, offering circular, or other document (including any related
registration statement, notification, or the like) incident to any such
registration, qualification, or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, or any
violation by the Company of the Securities Act or any rule or regulation
thereunder applicable to the Company and relating to action or inaction
required by the Company in connection with any such registration,
qualification, or compliance, and will reimburse each such Holder, each of
its officers, directors, partners, legal counsel, and accountants and each
person controlling such Holder, each such underwriter, and each person who
controls any such underwriter, for any legal and any other expenses
reasonably incurred in connection with investigating and defending or
settling any such claim, loss, damage, liability, or action, PROVIDED that
the Company will not be liable in any such case to the extent that any such
claim, loss, damage, liability, or expense arises out of or is based on any
untrue statement or omission based upon written information furnished to the
Company by such Holder or underwriter and stated to be specifically for use
therein. It is agreed that the indemnity agreement contained in this Section
6(a) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability, or action if such settlement is effected without the
consent of the Company (which consent has not been unreasonably withheld).
(b) Each Holder (an "Indemnifying Holder") will, if Registrable
Securities held by the Indemnifying Holder are included in the securities as
to which such registration, qualification, or compliance is being effected,
indemnify the Company, each of its directors, officers, partners, legal
counsel, and accountants and each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who controls
the Company or such underwriter within the meaning of Section 15 of the
Securities Act, each other such Holder (an "Indemnified Holder"), and each of
their officers, directors, and partners, and each person controlling such
Indemnified Holder, against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact contained in any such
registration statement, prospectus, offering circular, or other document, or
any omission (or alleged omission) to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and will reimburse the Company and such Indemnified Holders,
directors, officers, partners, legal counsel, and accountants, persons,
underwriters, or control persons for any legal or any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability, or action, in each case to the extent, but
only to the extent, that such untrue statement (or alleged untrue statement)
or omission (or alleged omission) is made in such registration statement,
prospectus, offering circular, or other document in reliance upon and in
conformity with written information furnished to the Company by the
Indemnifying Holder and stated to be specifically for use therein; PROVIDED,
HOWEVER, that the obligations of the Indemnifying Holder hereunder shall not
apply to amounts paid in settlement of any such claims, losses, damages, or
liabilities (or actions in respect thereof) if such settlement is effected
without the consent of such Holder (which consent shall not be unreasonably
withheld); and PROVIDED FURTHER that the liability of an Indemnifying Holder
pursuant to this Section 6(b) in connection with a registration shall be
limited to the net proceeds from the sale of the Registrable Securities of
such Indemnifying Holder pursuant to such registration.
(c) Each party entitled to indemnification under this Section 6
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified
Party has actual knowledge of any claim as to which indemnity may be sought,
and, except as provided in the following sentence, shall permit the
Indemnifying Party to assume the defense of such claim or any litigation
resulting therefrom; PROVIDED that counsel for the Indemnifying Party, who
shall
-7-
conduct the defense of such claim or any litigation resulting therefrom,
shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld); PROVIDED FURTHER that the Indemnified Party may
participate in such defense at its own expense; and PROVIDED FURTHER that the
failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Agreement, to
the extent such failure is not materially prejudicial. After the Indemnifying
Party assumes the defense of such claim or litigation, the Indemnifying Party
shall not be liable to the Indemnified Party under this Section 6 for any
legal or other expenses subsequently incurred by such Indemnified Party in
connection with the defense thereof, other than reasonable costs of
investigation, unless the named parties to any such proceeding (including any
impleaded parties) include both the Indemnified Party and the Indemnifying
Party and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them.
No Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation. Each Indemnified Party shall furnish such information regarding
itself or the claim in question as an Indemnifying Party may reasonably
request in writing and as shall be reasonably required in connection with
defense of such claim and litigation resulting therefrom.
(d) If the indemnification provided for in this Section 6 is held
by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any loss, liability, claim, damage, or expense referred
to therein, then the Indemnifying Party, in lieu of indemnifying such
Indemnified Party hereunder, shall contribute to the amount paid or payable
by such Indemnified Party as a result of such loss, liability, claim, damage,
or expense in such proportion as is appropriate to reflect the relative fault
of the Indemnifying Party on the one hand and of the Indemnified Party on the
other in connection with the statements or omissions that resulted in such
loss, liability, claim, damage, or expense as well as any other relevant
equitable considerations. The relative fault of the Indemnifying Party and
of the Indemnified Party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative
intent, knowledge, access to information, and opportunity to correct or
prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering
are in conflict with the foregoing provisions, the provisions in the
underwriting agreement shall control.
7. INFORMATION BY HOLDER. Each Holder of Registrable Securities
shall furnish to the Company such information regarding such Holder and the
distribution proposed by such Holder as the Company may reasonably request in
writing and as shall be reasonably required in connection with any
registration, qualification, or compliance referred to in this Agreement.
8. 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 Restricted Securities to the public without registration, the
Company agrees to use its best 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;
-8-
(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 any time after it has become subject to such reporting requirements;
and
(c) so long as a Holder owns any restricted Registrable Securities,
furnish to the Holder forthwith upon written request a written statement by
the Company as to its compliance with the reporting requirements of Rule
144, and of the Securities Act and the Exchange Act (at any time after it
has become subject to such reporting requirements), a copy of the most
recent annual or quarterly report of the Company, and such other reports
and documents so filed as a Holder may reasonably request in availing
itself of any rule or regulation of the Commission allowing a Holder to
sell any such securities without registration.
9. TRANSFER OR ASSIGNMENT OF REGISTRATION RIGHTS. The rights to
cause the Company to register securities granted to Petro Star by the Company
under this Agreement may be transferred or assigned by Petro Star with the
related securities only to a transferee or assignee of not less than all of
the Registrable Securities representing no less than 50% of the aggregate
number of shares of Common Stock (as adjusted for any stock dividends,
combinations or splits with respect to such shares) issued or issuable
pursuant to the Warrant. Any transfer or assignment of the registration
rights granted under this Agreement shall be conditioned upon (i) the
Company's being given written notice at the time of or within a reasonable
time after said transfer or assignment, stating the name and address of the
transferee or assignee and identifying the securities with respect to which
such registration rights are being transferred or assigned and (ii) the
assumption in writing by the transferee or assignee of the obligations of a
Holder under this Agreement.
10. ALLOCATION OF REGISTRATION OPPORTUNITIES. In any circumstance
in which all of the Registrable Securities requested to be included in a
registration on behalf of the Holders cannot be so included as a result of
limitations of the aggregate number of shares of Registrable Securities that
may be so included, the number of shares of Registrable Securities that may
be so included shall be allocated among the Holders requesting inclusion of
shares pro rata on the basis of the number of shares of Registrable
Securities held by such Holders. The Company shall not limit the number of
Registrable Securities to be included in a registration pursuant to this
Agreement in order to include shares held by stockholders with no
registration rights or, with respect to registrations under Section 2 hereof,
in order to include in such registration securities registered for the
Company's own account or securities other than Registrable Securities.
11. DELAY OF REGISTRATION. No Holder shall have any right to take
any action to restrain, enjoin, or otherwise delay any registration as the
result of any controversy that might arise with respect to the interpretation
or implementation of this Agreement.
12. TERMINATION OF REGISTRATION RIGHTS. The right of any Holder
to request registration or inclusion in any registration pursuant to Section
2 or 3 hereof shall terminate on such date as all shares of Registrable
Securities held or entitled to be held upon conversion by such Holder may
immediately be sold under Rule 144(k).
13. MISCELLANEOUS.
13.1 GOVERNING LAW. This Agreement shall be governed in all
respects by the internal laws of the State of Delaware, without reference to
the conflicts of law principles thereof.
-9-
13.2 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein,
this Agreement shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties
hereto.
13.3 ENTIRE AGREEMENT. This Agreement constitutes the full and
entire understanding and agreement between the parties with regard to the
subjects hereof.
13.4 NOTICES, ETC. All notices and other communications required
or permitted hereunder shall be in writing and shall be mailed by registered
or certified mail, postage prepaid, or otherwise delivered by hand or by
messenger, including Federal Express or similar courier services, addressed
(a) if to a Holder, to Petro Star Inc., 201 Arctic Slope Avenue #200,
Anchorage, Alaska 99518, Attn: President, or at such other address as such
Holder shall have furnished to the Company in writing, or (b) if to the
Company, to 4200 Research Forest Drive, The Woodlands, Texas, Attn:
President, or at such other address as the Company shall have furnished to
the Holders. Each such notice or other communication shall for all purposes
of this Agreement be treated as effective or having been given when delivered
if delivered personally, or, if sent by mail or courier, at the earlier of
its receipt or 48 hours after the same has been deposited in a regularly
maintained receptacle for the deposit of the United States mail, addressed
and mailed as aforesaid.
13.5 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which may be executed by less than all of the Holders,
each of which shall be enforceable against the parties actually executing
such counterparts, and all of which together shall constitute one instrument.
13.6 SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability
will not affect such provision in any other jurisdiction, and this Agreement
will be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provisions had never been contained herein.
13.7 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
13.8 AMENDMENT. Except as expressly provided herein, this
Agreement may be amended only upon the written consent of the Company and the
Holders of at least seventy-five percent (75%) of the Registrable Securities
then subject to this Agreement.
-10-
IN WITNESS WHEREOF, this Agreement has been executed effective as
of the date first set forth above.
COMPANY:
ENERGY BIOSYSTEMS CORPORATION
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
PETRO STAR:
PETRO STAR INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
-11-