FORM OF
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is entered into as of
April __, 2007, among Baseline Oil & Gas Corp., a Nevada corporation (the
"Company"), Drawbridge Special Opportunities Fund LP, a Delaware limited
partnership, and D.B. Zwirn Special Opportunities Fund, L.P., a Delaware limited
partnership (each a "Holder").
WITNESSETH:
WHEREAS, the Company has agreed to issue each Holder a Warrant ("Warrant")
to acquire ONE MILLION SIX HUNDRED THOUSAND (1,600,000) shares (the "Shares") of
the common stock, par value $0.001 per share, of the Company (the "Common
Stock");
WHEREAS, the Company has agreed to grant Holder certain registration
rights in connection with the Shares (the "Registration Rights");
WHEREAS, concurrent with the execution of this Agreement, Holder or its
affiliate has entered into certain loan agreements with the Company;
WHEREAS, Holder and/or its affiliate has required that Company enter into
this Agreement to evidence the grant of Registration Rights and as a condition
to Holder's entering into the loan agreements with the Company;
WHEREAS, the Company believes its issuance of the Warrant and entering
into the loan agreements will be beneficial to the Company; and
WHEREAS, in consideration of Holder's and/or its affiliate's execution of
the loan agreements, the Company is willing to grant Holder the Registration
Rights provided for herein;
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants hereinafter set forth, and for other good and valuable consideration,
the parties hereby agree as follows:
ARTICLE I.
REGISTRABLE STOCK
Section 1.1 Registrable Securities. For purposes of this Agreement,
"Registrable Securities" means the Shares and all shares of the Common Stock now
or hereafter owned and held by Holder or a permitted transferee of a Holder
(collectively, the "Holders"). Shares cease to be "Registrable Securities" when
they may be sold pursuant to Rule 144(k) pursuant to the Securities Act of 1933,
as amended (the "Securities Act").
ARTICLE II.
DEMAND REGISTRATIONS
Section 2.1 Requests for Registration.
(a) At any time and from time to time after six months from the
date hereof, the Holders of at least 20% of the Registrable Securities (the
"Initiating Holders") may request registration under the Securities Act of all
or any part of their Registrable Securities (each, a "Demand Registration") on
any registration statement, subject to the terms and conditions of this
Agreement. Any request (a "Registration Request") for a Demand Registration
shall specify (a) the approximate number of shares of Registrable Securities
requested to be registered (but not less than a 20% of the total number of
shares of Registrable Securities then outstanding), and (b) the intended method
of distribution of such shares. Within ten days after the date of sending of
such request, the Company will give written notice of such requested
registration to any other Holders of Registrable Securities and will include in
such registration all shares of Registrable Securities which Holders of
Registrable Securities request the Company to include in such registration by
written notice given to the Company within 15 days after the date of sending of
the Company's notice.
(b) Subject to Article IV, the Holders of Registrable Securities
will be entitled to request up to three Demand Registrations at any time and
from time to time.
(c) A registration will not count as one of the Demand
Registrations paid for by the Company (as provided in Article V) unless the
Holders of Registrable Securities are able to register and sell at least 75% of
the Registrable Securities requested to be included in such registration.
(d) The Company will not include in any Demand Registration any
securities other than shares of Registrable Securities without the prior written
consent of the Holders of at least 5% of the shares of Registrable Securities
included in such registration, except that the Company may include in such
registration any equity securities of the Company (the "Equity Securities") to
be sold for the account of the Company if the managing underwriter(s) advise the
Company that in their opinion the inclusion of such shares of Registrable
Securities and other Equity Securities proposed to be included in such offering
will not adversely affect the ability of the underwriter to sell the shares of
Registrable Securities and such Equity Securities in an orderly manner in such
offering within a price range acceptable to the Holders of a majority of the
shares of Registrable Securities initially requesting registration. If the
managing underwriter(s) advise the Company that in their opinion the number of
shares of Registrable Securities and Equity Securities proposed to be included
in such registration for sale by the Company exceeds the number of shares that
can be sold in an orderly manner in such offering within a price range
acceptable to a majority of the Initiating Holders, the Company will include in
such registration, prior to the inclusion of any securities other than
Registrable Securities, the number of shares of Registrable Securities requested
to be included that in the opinion of such underwriters can be sold in an
orderly manner within the price range of such offering, pro rata among the
respective Holders of such Registrable Securities on the basis of the number of
shares of Registrable Securities that each such Holder has requested the Company
to include in such registration over the total number of shares of Registrable
Securities requested to be included in such registration.
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(e) The Company shall not be obligated to effect, or to take any
action to effect, any Demand Registration:
(1) Within 12 months after the effective date of the first
Demand Registration;
(2) 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 nine months 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; or
(3) If the Initiating Holders propose to dispose of shares
of Registrable Securities which may be immediately registered on
Form S-3 pursuant to a request made under Section 2.3 of this
Agreement.
(f) Notwithstanding the foregoing, if the Company shall furnish to
the Initiating Holders a certificate signed by the president or chief executive
officer of the Company stating that in the good faith judgment of the board of
directors of the Company (the "Board") it would be seriously detrimental to the
Company and its stockholders for such registration to be effected at such time,
in which event the Company shall have the right to defer the filing of the
registration statement no more than once during any 12-month period for a period
of not more than 180 days after receipt of the Registration Request from the
Initiating Holders, provided that all reasonable costs and expenses incurred by
Holder in connection with such deferred filing shall be reimbursed to Holder and
paid by the Company in accordance with Section 5.2 hereof.
Section 2.2 Selection of Underwriter. The Holders of at least 50% of the
outstanding shares of Registrable Securities to be included in such registration
will have the right to select the managing underwriter(s) to manage the
offering, subject to the Company's approval, which will not be unreasonably
withheld or delayed; provided, that the managing underwriter or underwriters
shall be the firm or firms that managed the Company's most recently completed
underwritten public offering of Equity Securities unless the Holders of a
majority of the shares of Registrable Securities to be included in such
registration shall object to such firm or firms for reasons related to the
ability of such firms to effectively manage the offering.
Section 2.3 Shelf Registration.
(a) Registrations on Form S-3. At such time that the Company is
qualified for the use of Form S-3 or any comparable or successor form or forms,
in addition to the rights contained in Section 2.1 and Section 2.2, the holders
of at least 25% of the shares of Registrable Securities shall have the right,
once in each 12-month period thereafter, to request a registration or Form S-3.
Such requests shall be in writing and shall state the number of shares of
Registrable Securities proposed to be disposed of and the intended method of
distribution of such shares by such holder or holders. The Company shall be
obligated to effect such registration pursuant to this Section 2.3 unless:
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(i) the Holders, together with the holders of any other
securities of the Company entitled to inclusion in such
registration, propose to sell Registrable Securities and such other
securities (if any) at an aggregate price to the public of less than
$1,000,000; or
(ii) the Company shall furnish to the Holders a certificate
signed by the president or CEO of the Company (or in the absence of
such officer, any manager of the Company) stating that in the good
faith judgment of the Board, it is likely to be seriously
detrimental to the Company and its stockholders for such
registration to be effected at such time, in which event the Company
shall have the right to defer the filing of the registration no more
than once during any 12-month period for a period of not more than
180 days after receipt of the request of the Holder or Holders under
this Section 2.3, provided that all reasonable costs and expenses
incurred by Holder in connection with such deferred filing shall be
reimbursed to Holder and paid by the Company in accordance with
Section 5.2 hereof.
(iii) Notwithstanding the foregoing, if the Company fails to
qualify for registration on a registration statement on Form S-3 or
any comparable or successor form or forms due to its failure to
timely file all the material required to be filed with the
Securities and Exchange Commission pursuant to Section 13, 14 or
15(d) of the Securities Exchange Act of 1934, as amended, then,
during such period as the Company continues to be ineligible for the
use of Form S-3, Holders shall have the right to require the Company
to use a registration statement on Form S-1 in lieu of Form S-3 for
any registration pursuant to this Agreement.
(b) Delay Rights. Notwithstanding anything to the contrary
contained herein, the Company may, upon written notice to any Holder whose
Registrable Securities are included in the Shelf Registration Statement, suspend
such Holder's use of any prospectus which is a part of the Shelf Registration
Statement (in which event the Holder shall discontinue sales of the Registrable
Securities pursuant to the Shelf Registration Statement) if (i) the Company is
pursuing an acquisition, merger, reorganization, disposition or other similar
transaction and the Company determines in good faith that the Company's ability
to pursue or consummate such a transaction would be materially and adversely
affected by any required disclosure of such transaction in the Shelf
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 and adversely affect the Company;
however, in no event shall any delay pursuant hereto exceed sixty (60) days in
any one hundred-eighty (180) day period or ninety (90) days in any twelve-month
period. Upon disclosure of such information or the termination of the condition
described above, the Company shall provide prompt notice to the Holders whose
Registrable Securities are included in the Shelf 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.
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ARTICLE III.
PIGGYBACK REGISTRATIONS
Section 3.1 Right to Piggyback. If the Company proposes to register any of
its securities under the Securities Act (other than pursuant to a Demand
Registration or a registration solely in connection with an employee benefit or
stock ownership plan or in a transaction described in Rule 145 under the
Securities Act) and the registration form to be used may be used for the
registration of the sale of Registrable Securities (a "Piggyback Registration"),
the Company will give prompt written notice to all Holders of Registrable
Securities of its intention to effect such a registration (each a "Piggyback
Notice"). Subject to Sections 3.2 and 3.3, the Company will include in such
registration all shares of Registrable Securities that Holders of Registrable
Securities request the Company to include in such registration by written notice
given to the Company within 15 days after the date of the Company's notice.
Section 3.2 Priority on Primary Registrations. If a Piggyback Registration
relates to an underwritten public offering of securities by the Company and the
managing underwriter(s) advise the Company in writing that in their opinion the
number of securities requested to be included in such registration exceeds the
number that can be sold in an orderly manner in such offering within a price
range acceptable to the Company, the Company will include in such registration
(i) first, the securities proposed to be sold by the Company; (ii) second, the
Registrable Securities requested to be included in such registration, pro rata
among the Holders based on the ratio of the number of shares of Registrable
Securities that each such Holder has requested the Company include in such
registration over the total number of shares of Registrable Securities requested
to be included in such registration; and (iii) third, other securities requested
to be included in such registration, pro rata among the holders of such other
securities based on the ratio of the number of such other securities that each
such holder has requested the Company include in such registration over the
total number of other securities requested to be included in such registration.
Section 3.3 Priority on Secondary Registrations. If a Piggyback
Registration relates to an underwritten public offering of securities by holders
of the Company's securities and the managing underwriter(s) advise the Company
in writing that in their opinion the number of securities requested to be
included in such registration exceeds the number that can be sold in an orderly
manner in such offering within a price range acceptable to the holders initially
requesting such registration, the Company will include in such registration (i)
first, the securities requested to be included therein by the holders requesting
such registration; (ii) second, the Registrable Securities requested to be
included in such registration, pro rata among the Holders based on the ratio of
the number of shares of Registrable Securities that each such Holder has
requested the Company include in such resignation over the total number of
shares of Registrable Securities requested to be included in such registration;
and (iii) third, other securities requested to be included in such registration,
pro rata among the holders of such securities based on the ratio of the number
of such other securities that each such Holder has requested the Company include
in such registration over the total number of other securities requested to be
included in such registration.
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Section 3.4 Limitation on Subsequent Registration Rights. The Company
represents, warrants and covenants to Holder that, except as set forth on
Schedule 3.4, (i) no individual, corporation, limited liability company,
partnership, trust or any other organization or entity (collectively, "Person")
has registration rights with respect to any securities of the Company held by
such Person nor is the Company party to any agreement or understanding to grant
or allow any other Persons any registration rights with respect to any
securities of the Company held by such Persons whether outstanding on the date
hereof or issued hereafter, which are senior to or pari passu with the rights
granted to Holder hereunder, and (ii) the Company will not enter into any
agreement or understanding to grant or allow any other Persons any registration
rights with respect to any securities of the Company, which are senior to or
pari passu with the rights granted to Holder hereunder.
ARTICLE IV.
REGISTRATION PROCEDURES
Section 4.1 Registration Procedures. Whenever the Holders of Registrable
Securities have requested that the sale of any Registrable Securities be
registered pursuant to this Agreement, the Company will use its commercially
reasonable efforts consistent with this Agreement, legal requirements and, in
the case of an offering by the Company, prevailing market conditions, to effect
the registration and the sale of such Registrable Securities in accordance with
the intended method of distribution thereof and will as expeditiously as
possible:
(a) prepare and file with the Securities and Exchange
Commission (the "Commission") a registration statement with respect
to such Registrable Securities and use its commercially reasonable
efforts to cause such registration statement to become effective,
provided that before filing a registration statement or prospectus
or any amendments or supplements thereto, the Company will furnish
to the selling stockholders' counsel selected by the Holders of a
majority of the Registrable Securities covered by such registration
statement copies of all such documents proposed to be filed, which
documents will be subject to the review of such counsel;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used
in connection therewith as may be necessary to keep such
registration statement effective for the earlier of: (i) such time
as all such Registrable Securities covered by the registration
statement have been sold or (ii) a period of six months after the
effective date of the registration statement covering such
Registrable Securities, and comply with the provisions of the
Securities Act with respect to the disposition of all securities
covered by such registration statement during such period in
accordance with the intended methods of distribution by the Holders
thereof set forth in such registration statement;
(c) furnish to each Holder such number of copies of such
registration statement, each amendment and supplement thereto, the
prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such Holder may
reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such Holder;
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(d) use its commercially reasonable efforts to register or
qualify such Registrable Securities under such other securities or
blue sky laws of such jurisdictions as any Holder reasonably
requests and do any and all other acts and things which may be
reasonably necessary or advisable to enable such Holder to
consummate the disposition in such jurisdictions of the Registrable
Securities owned by such Holder, provided that the Company will not
be required (i) to qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but
for this paragraph, (ii) to subject itself to taxation in any such
jurisdiction or (iii) to consent to general service of process in
any such jurisdiction;
(e) notify each Holder of such Registrable Securities, 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 contains an untrue statement of a material fact or omits
any fact necessary to make the statements therein not misleading,
and, at the request of any such Holder, the Company will prepare a
supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact
or omit to state any fact necessary to make the statements therein
not misleading;
(f) cause all such Registrable Securities to be listed on
each securities exchange on which similar securities issued by the
Company are then listed and to be qualified for trading on each
system on which similar securities issued by the Company are from
time to time qualified;
(g) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such
registration statement and thereafter maintain such a transfer agent
and registrar;
(h) enter into such customary agreements not inconsistent
with this Agreement (including underwriting agreements in customary
form) and take all such other actions as the Holders of a majority
of the shares of Registrable Securities being sold or the
underwriters, if any, reasonably request in order to expedite or
facilitate the disposition of such Registrable Securities;
(i) make available for inspection by any underwriter
participating in any disposition pursuant to such registration
statement and any attorney, accountant or other agent retained by
any such underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the
Company's officers, directors, employees and independent accountants
to supply all information reasonably requested by any such
underwriter, attorney, accountant or agent in connection with such
registration statement;
(j) 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 covering the period of at least
twelve months beginning with the first day of the Company's first
full calendar quarter after the effective date of the registration
statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder;
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(k) permit any Holder that might be deemed, in the
reasonable judgment of such Holder, to be an underwriter or a
controlling Person of the Company, to participate in the preparation
of such registration or comparable statement and to require the
insertion therein of material, furnished to the Company in writing,
which in the reasonable judgment of such Holder and its counsel
should be included; and
(l) in the event of the issuance of any stop order
suspending the effectiveness of a registration statement, or of any
order suspending or preventing the use of any related prospectus or
suspending the qualification of any Registrable Securities included
in such registration statement for sale in any jurisdiction, the
Company will use its commercially reasonable efforts promptly to
obtain the withdrawal of such order.
If any such registration or comparable statement refers to any Holder by name or
otherwise as the holder of any securities of the Company and if, in its
reasonable judgment, such Holder is or might be deemed to be a controlling
person of the Company, such Holder shall have the right to require (a) the
inclusion in such registration statement of language, in form and substance
reasonably satisfactory to such Holder, to the effect that the holding of such
securities by such Holder is not to be construed as a recommendation by such
Holder of the investment quality of the Company's securities covered thereby and
that such holding does not imply that such Holder will assist in meeting any
future financial requirements of the Company, or (b) in the event that such
reference to such Holder by name or otherwise is not required by the Securities
Act or any similar federal statute then in force, the deletion of the reference
to such Holder; provided, that with respect to this clause (b) such Holder shall
furnish to the Company an opinion of counsel to such effect, which opinion and
counsel shall be reasonably satisfactory to the Company.
ARTICLE V.
REGISTRATION EXPENSES
Section 5.1 Definition. The term "Registration Expenses" means all
expenses incident to the Company's performance of or compliance with this
Agreement, including without limitation all registration and filing fees, fees
and expenses of compliance with securities or blue sky laws, printing expenses,
messenger and delivery expenses, fees and expenses of attorneys, accountants and
other experts, and fees and expenses of underwriters and their attorneys and
experts, other than underwriters' discounts and commissions which shall be
deducted from the proceeds of the offering payable by the Holders of Registrable
Securities.
Section 5.2 Payment. The Company shall pay the Registration Expenses in
connection with (i) three Demand Registrations, (ii) any and all Piggyback
Registrations and (iii) all registrations pursuant to Section 2.3. In connection
with each Demand Registration, each registration pursuant to Section 2.3 and
each Piggyback Registration, the Company will reimburse the Holders of
Registrable Securities covered by such registration for the reasonable fees and
disbursements of one nationally recognized counsel chosen by the Holders of at
least 50% of such Registrable Securities.
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ARTICLE VI.
INDEMNIFICATION
Section 6.1 Indemnification by the Company. The Company agrees to
indemnify, to the extent permitted by law, each Holder, the officers, directors,
partners, members, managers, stockholders, accountants, attorneys, agents and
employees of each of them, and each Person who controls such Holder (within the
meaning of the Securities Act) and the officers, directors, partners, members,
managers, stockholders, accountants, attorneys, agents and employees of each
such controlling Person, against all losses, claims, damages, liabilities and
expenses, costs (including, without limitation, costs of preparation and
reasonable attorneys' fees and any legal or other fees or expenses incurred by
such party in connection with any investigation or proceeding), judgments,
fines, penalties, charges and amounts paid in settlement (collectively,
"Losses"), as incurred, caused by any untrue or alleged untrue statement of
material fact contained in any registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of 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 of the Company in connection
with any such registration, qualification, or compliance, and will reimburse
each such Holder, each of its officers, directors, partners, members, managers,
stockholders, accountants, attorneys, agents and employees and each Person
controlling such Holder, 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, except insofar as the same are caused
by or contained in any information furnished in writing to the Company by such
Holder expressly for use therein; provided, however, that the Company shall not
be required to indemnify any Person for any Losses caused by any untrue or
alleged untrue statement of material fact contained in any registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading to the extent, but only to the extent, that (i) such untrue
statements or omissions are based solely upon information regarding such Holder
furnished in writing to the Company by such Holder expressly for use therein, or
to the extent that such information relates to such Holder or such Holder's
proposed method of distribution of Registrable Securities and was reviewed and
expressly approved in writing by such Holder expressly for use in such
registration statement, such prospectus or such form of prospectus or in any
amendment or supplement thereto or (ii) such Person uses an outdated or
defective prospectus after the Company has notified such Person in writing that
the prospectus is outdated or defective. In connection with an underwritten
offering, the Company will indemnify such underwriters, their officers and
directors and each Person who controls such underwriters (within the meaning of
the Securities Act) to the same extent as provided above with respect to the
indemnification of the holders of Registrable Securities.
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Section 6.2 Indemnification by Holders. In connection with any
registration statement in which a Holder is participating, each such Holder will
furnish to the Company in writing such information and affidavits as the Company
reasonably requests for use in connection with any such registration statement
and related prospectus and, to the extent permitted by law, will indemnify,
severally and not jointly, the Company, its directors and officers and each
Person who controls the Company (within the meaning of the Securities Act)
against any Losses resulting from any untrue or alleged untrue statement of
material fact contained in the registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading and will reimburse the Company and
such directors, officers, partners, members, managers, stockholders,
accountants, attorneys, employees, agents, Persons, 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 omission is
contained or should have been contained in any information or affidavit so
furnished in writing by such Holder expressly for use in such registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto; provided, that the obligation to indemnify will be
individual to each Holder and will be limited to the amount of net proceeds
received by such holder from the sale of Registrable Securities pursuant to such
registration statement..
Section 6.3 Notice; Defense of Claims. Any Person entitled to
indemnification hereunder will (i) give prompt written notice to the
indemnifying party of any claim with respect to which it seeks indemnification
and (ii) unless in such indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying parties may exist with
respect to such claim, permit such indemnifying party to assume the defense of
such claim with counsel reasonably satisfactory to the indemnified party. If
such defense is assumed, the indemnifying party will not be subject to any
liability for any settlement made by the indemnified party without its consent
(but such consent will not be unreasonably withheld). An indemnifying party who
is not entitled to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of interest may exist
between such indemnified party and any other of such indemnified parties with
respect to such claim.
Section 6.4 Survival; Contribution. The indemnification provided for under
this Agreement will remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified party or any officer,
director or controlling Person of such indemnified party and will survive the
transfer of securities. Subject to the limitations and conditions of this
Article VI, the Company also agrees to make such provisions as are reasonably
requested by any indemnified party for contribution to such party in the event
the Company's indemnification provided herein is unavailable for any reason.
Section 6.5 Underwriting Agreement. To the extent that the provisions on
indemnification and contribution contained in the underwriting agreement entered
into in connection with an underwritten public offering are in conflict with the
provisions of this Article 6, the provisions contained in the underwriting
agreement shall control.
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ARTICLE VII.
PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
Section 7.1 Acceptance of Underwriting. No Person may participate in any
registration hereunder that is underwritten unless such Holder (i) agrees to
sell such Holder's securities on the basis provided in any underwriting
arrangements approved by the Holders entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements; provided, that no Holder
included in any underwritten registration shall be required to make any
representations or warranties to the Company or the underwriters other than
representations and warranties regarding such Holder as are reasonably required
by the underwriters.
ARTICLE VIII.
REPORTING REQUIREMENTS UNDER EXCHANGE ACT
Section 8.1 Reporting. When it is first legally required to do so, the
Company shall register its Common Stock under section 12 of the Exchange Act and
shall keep effective such registration and shall timely file such information,
documents and reports for so long as the Commission may require or prescribe
under Section 13 of the Exchange Act. From and after the effective date of the
first registration statement filed by the Company under the Securities Act, the
Company shall (whether or not it shall then be required to do so) timely file
such information, documents and reports which a corporation, partnership or
other entity (whichever is applicable) subject to Section 13 or 15(d) of the
Exchange Act is required to file. Immediately upon becoming subject to the
reporting requirements of either Section 13 or 15(d) of the Exchange Act, the
Company shall forthwith upon request furnish any Holder (i) a written statement
by the Company that it has complied with such reporting requirements, (ii) a
copy of the most recent annual or quarterly report of the Company, and (iii)
such other reports and documents filed by the Company with the Commission as
such Holder may reasonably request in availing itself of an exemption for the
sale of Registrable Securities without registration under the Securities Act.
The Company acknowledges and agrees that the purposes of the requirements
contained in this Article VIII are (a) to enable any such Holder to comply with
the current public information requirement contained in paragraph (c) of Rule
144 under the Securities Act should such Holder ever wish to dispose of any of
the securities of the Company acquired by it without registration in reliance
upon Rule 144 under the Securities Act (or any other similar exemptive
provision) and (b) to qualify the Company for the use of registration statements
on Form S-3. In addition, so long as the Company is subject to Section 13 or
15(d) of the Exchange Act, the Company shall take such other measures and file
such other information, documents and reports, as shall hereafter be required by
the Commission as a condition to the availability of Rule 144 under the
Securities Act (or any similar exemptive provision hereafter in effect) and the
use of Form S-3. The Company also covenants to use its commercially reasonable
efforts, to the extent that it is reasonably within its power to do so, to
qualify for the use of Form S-3.
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ARTICLE IX.
MISCELLANEOUS
Section 9.1 No Inconsistent Agreements. The Company will not hereafter
enter into any agreement with respect to its securities that is inconsistent
with or violates the rights granted to the Holders in this Agreement.
Section 9.2 Adjustments Affecting Units. The Company will not take any
action, or permit any change to occur, with respect to its securities for the
purpose of (i) materially and adversely affecting the ability of the Holders to
include Registrable Securities in a registration undertaken pursuant to this
Agreement or (ii) materially and adversely affecting the marketability of such
Registrable Securities in any such registration (including, without limitation,
effecting a stock split or a combination of stock); provided that this Section
9.2 shall not apply to actions or changes with respect to the Company's
business, earnings or revenues in which the effect of such actions or changes on
the Registrable Securities is merely incidental.
Section 9.3 Notices. All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement will
be in writing and will be deemed to have been given when delivered personally or
by overnight delivery service with signature proof of delivery, or 72 hours
after having been mailed by certified or registered mail, return receipt
requested and postage prepaid, to the recipient. Such notices, demands and other
communications shall be sent to the Company, to the address of the Company's
principal office, Attn.: Thomas Kaetzer, or to the Holders, to their most recent
addresses as set forth in the books and records of the Company, with a copy to
[__________], or to such other address or to the attention of such other Person
as the recipient party has specified by prior written notice to the sending
party. Delivery by facsimile or electronic mail shall not be deemed to be
adequate notice hereunder.
Section 9.4 Remedies. Any person having rights under any provision of this
Agreement will be entitled to enforce such rights specifically to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance and for other injunctive
relief in order to enforce or prevent violation of the provisions of this
Agreement.
Section 9.5 Amendments and Waivers. Except as otherwise provided herein,
no amendment, modification, termination or cancellation of this Agreement shall
be effective unless made in writing signed by the Company and the Holders of at
least 66?% of the then outstanding shares of Registrable Securities.
Section 9.6 Successors and Assigns. The Holder may assign all or any
portion of its rights under this Agreement to any affiliate, partner, member or
stockholder of such Holder or to any Person to whom such Holder transfers at
least 5% of the Registrable Securities then held by such Holder. Subject to the
foregoing, the rights of the parties under this Agreement shall inure to the
benefit of, and this Agreement shall be binding upon, the successors and assigns
of the parties hereto.
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Section 9.7 Severability. If any provision of this Agreement shall be held
to be illegal, invalid or unenforceable under any applicable law, then such
contravention or invalidity shall not invalidate the entire Agreement. Such
provision shall be deemed to be modified to the extent necessary to render it
legal, valid and enforceable, and if no such modification shall render it legal,
valid and enforceable, then this Agreement shall be construed as if not
containing the provision held to be invalid, and the rights and obligations of
the parties shall be construed and enforced accordingly.
Section 9.8 Entire Agreement. This Agreement, those documents expressly
referred to herein, and the other documents of even date herewith embody the
complete agreement and understanding among the parties and supersede and preempt
any prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
Section 9.9 Headings. The headings of this Agreement are for convenience
only and do not constitute a part of this Agreement.
Section 9.10 Governing Law. The construction, validity and interpretation
of this Agreement will be governed by and construed in accordance with the
domestic laws of the State of Texas, without giving effect to any choice of law
or conflict of law provision or rule (whether of the State of Texas or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Texas.
Section 9.11 Further Assurances. Each party to this Agreement hereby
covenants and agrees, without the necessity of any further consideration, to
execute and deliver any and all such further documents and take any and all such
other actions as may be necessary or appropriate to carry out the intent and
purposes of this Agreement and to consummate the transactions contemplated
hereby.
Section 9.12 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, with the
same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument.
Section 9.13 Termination. This Agreement shall terminate as to any Holder,
when all Registrable Interests held by such Holder are eligible for sale under
(a) Rule 144 under the Securities Act during any ninety day period or (b) Rule
144(k).
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IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first written above.
COMPANY:
BASELINE OIL & GAS CORP.
By:_____________________________________
Thomas R. Kaetzer
Chairman and Chief Executive Officer
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HOLDER:
DRAWBRIDGE SPECIAL OPPORTUNITIES FUND LP
By: Drawbridge Special Opportunities GP
LLC, its general partner
By: ________________________________
Name: ________________________________
Title: ________________________________
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HOLDER:
D.B. ZWIRN SPECIAL OPPORTUNITIES FUND, L.P.
By: D.B. Zwirn Partners, LLC,
its general partner
By: ________________________________
Name: ________________________________
Title: ________________________________
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Schedule 3.4 to Registration Rights Agreement
All holders of options and warrant to purchase shares of common stock of the
Company, and all holders of the Company's Convertible Notes, have piggy-back
registration rights. The Company has satisfied its registration rights
obligation to those investors in its February 2006 offering, to the holders of
the Company's Convertible Notes and certain option holders and warrant holders
by filing its Registration Statement which was deemed effective as of October
20, 2006 and continues to be effective as of the date hereof.