Exhibit 10.1

 

Execution Version

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement (including all exhibits hereto and as may be
amended, supplemented or amended and restated from time to time in accordance
with the terms hereof, this “Agreement”) is made and entered into as of December
30, 2016, by and among Energy XXI Gulf Coast Inc., a Delaware corporation (the
“Company”), and the other parties signatory hereto and any additional parties
identified on the signature pages of any joinder agreement executed and
delivered pursuant hereto.

 

WHEREAS, the Company and certain affiliated debtors (collectively, the
“Debtors”) filed a Plan of Reorganization pursuant to Chapter 11 of the United
States Bankruptcy Code, on November 21, 2016, which was confirmed by the United
States Bankruptcy Court for the Southern District of Texas Houston Division on
December 13, 2016 (including all exhibits, schedules and supplements thereto and
as amended from time to time, the “Plan”); and

 

WHEREAS, the Plan provides that any recipient of the shares of Common Stock (as
defined below) of the Company that owns at least ten percent (10%) of the
Company’s Common Stock or that otherwise reasonably determines that it is an
“affiliate” of the Company (as such term is defined in the Securities Act (as
defined below)) and that is a party to the Restructuring Support Agreement, will
enter into a registration rights agreement in accordance with the terms set
forth in the Plan; and

 

WHEREAS, the Company and the Holders (as defined below) are entering into this
Agreement in furtherance of the aforesaid provisions of the Plan.

 

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and each of the Holders
agree as follows:

 

1.          Definitions. Capitalized terms used and not otherwise defined herein
that are defined in the Plan have the meanings given such terms in the Plan. As
used in this Agreement, the following terms shall have the following meanings:

 

“Advice” has the meaning set forth in Section 15(c).

 

“Affiliate” means, with respect to any person, any other person which directly
or indirectly controls, is controlled by, or is under common control with, such
person. The term “control” (including the terms “controlled by” and “under
common control with”) as used in this definition means the possession, directly
or indirectly (including through one or more intermediaries), of the power or
authority to direct or cause the direction of management, whether through the
ownership of voting securities, by contract or otherwise.

 

“Agreement” has the meaning set forth in the Preamble.

 

“Automatic Shelf Registration Statement” means an “automatic shelf registration
statement” as defined in Rule 405 promulgated under the Securities Act, as such
definition may be amended from time to time.

 

 

 

 

“beneficially own” (and related terms such as “beneficial ownership” and
“beneficial owner”) shall have the meaning given to such term in Rule 13d-3
under the Exchange Act, and any Person’s beneficial ownership of securities
shall be calculated in accordance with the provisions of such Rule.

 

“Board” means the Board of Directors of the Company.

 

“Business Day” means any day, other than a Saturday or Sunday or a day on which
commercial banks in New York City are required by law to be closed.

 

“Commission” means the Securities and Exchange Commission.

 

“Common Stock” means the common stock of the Company, par value $0.01 per share,
and any securities into which such shares of common stock may hereinafter be
reclassified.

 

“Company” has the meaning set forth in the Preamble.

 

“Counsel to the Holders” means (i) with respect to any Demand Registration, the
counsel selected by the Holders of a majority of the Registrable Securities
initially requesting such Demand Registration and (ii) with respect to any
Underwritten Takedown or Piggyback Registration, the counsel selected by the
Majority Holders.

 

“Demand Registration Request” has the meaning set forth in Section 5(a).

 

“Effective Date” means the date that a Registration Statement filed pursuant to
this Agreement is first declared effective by the Commission.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

 

“Form S-1” means form S-1 under the Securities Act, or any other form hereafter
adopted by the Commission for the general registration of securities under the
Securities Act.

 

“Form S-3” means form S-3 under the Securities Act, or any other form hereafter
adopted by the Commission having substantially the same usage as Form S-3.

 

“Form S-4” means form S-4 under the Securities Act, or any other form hereafter
adopted by the Commission having substantially the same usage as Form S-4.

 

“Form S-8” means form S-8 under the Securities Act, or any other form hereafter
adopted by the Commission having substantially the same usage as Form S-8.

 

“FINRA” has the meaning set forth in Section 10.

 

“Grace Period” has the meaning set forth in Section 7(a)(B).

 

“Holder” or “Holders” means the parties signatory to this Agreement, other than
the Company, who identify in writing to the Company on or before the date six
months after the date of this Agreement that they hold Registrable Securities,
and any additional parties identified on the signature pages of any joinder
agreement executed and delivered pursuant to this Agreement. A Person shall
cease to be a Holder hereunder at such time as it ceases to hold any Registrable
Securities.

 

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“Indemnified Party” has the meaning set forth in Section 11(c).

 

“Indemnifying Party” has the meaning set forth in Section 11(c).

 

“Initial Registrable Securities Number” means the number of Registrable
Securities beneficially owned by all Holders as of the Plan Effective Date,
appropriately adjusted for any stock splits, reverse stock splits, stock
dividends or similar transactions involving the Company’s Common Stock.

 

“Initial Shelf Expiration Date” has the meaning set forth in Section 2(e).

 

“Initial Shelf Registration Statement” has the meaning set forth in Section
2(a).

 

“Losses” has the meaning set forth in Section 11(a).

 

“Majority Holders” means, with respect to any Underwritten Offering, the holders
of a majority of the Registrable Securities to be included in such Underwritten
Offering held by all Holders that have made the request requiring the Company to
conduct such Underwritten Offering (but not including any Holders that have
exercised “piggyback” rights hereunder to be included in such Underwritten
Offering).

 

“Other Holder” has the meaning set forth in Section 8(b).

 

“Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.

 

“Piggyback Notice” has the meaning set forth in Section 8(a).

 

“Piggyback Offering” has the meaning set forth in Section 8(a).

 

“Plan” has the meaning set forth in the Preamble.

 

“Plan Effective Date” shall mean the date on which the Plan becomes effective.

 

“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.

 

“Prospectus” means the prospectus included in a Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by a
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.

 

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“Registrable Securities” means, collectively, (a) as of the Plan Effective Date,
all shares of Common Stock issued to any Holder or to any Affiliate or Related
Fund of any Holder, either directly or pursuant to a joinder or assignment and
any additional shares of Common Stock acquired by any Holder, Affiliate or
Related Fund of any Holder in open market or other purchases and issued or
issuable to any Holder, Affiliate or Related Fund of any Holder upon the
exercise of warrants or otherwise, after the Plan Effective Date and (b) any
additional shares of Common Stock paid, issued or distributed in respect of any
such shares by way of a stock dividend, stock split or distribution, or in
connection with a combination of shares, and any security into which such Common
Stock shall have been converted or exchanged in connection with a
recapitalization, reorganization, reclassification, merger, consolidation,
exchange, distribution or otherwise; provided, however, that as to any
Registrable Securities, such securities shall cease to constitute Registrable
Securities upon the earliest to occur of: (i) the date on which such securities
are disposed of pursuant to an effective Registration Statement; (ii) the date
on which such securities are disposed of pursuant to Rule 144 (or any similar
provision then in effect) promulgated under the Securities Act; (iii) the date
on which (A) the entire amount of the Registrable Securities owned by the
relevant Holder may be sold in a single sale, in the opinion of counsel
satisfactory to the Company and such Holder, each in their reasonable judgment,
pursuant to Rule 144 (or any similar provision then in effect) promulgated under
the Securities Act and without any limitation as to volume and (B) such Holder
owning such Registrable Securities owns less than 5% of the outstanding shares
of Common Stock on a fully diluted basis, and (iv) the date on which such
Registrable Securities cease to be outstanding.

 

“Registration Statement” means any one or more registration statements of the
Company filed under the Securities Act that covers the resale of any of the
Registrable Securities pursuant to the provisions of this Agreement (including
without limitation any Shelf Registration Statement), amendments and supplements
to such Registration Statements, including post-effective amendments, all
exhibits and all material incorporated by reference or deemed to be incorporated
by reference in such Registration Statements.

 

“Related Fund” means, with respect to any Person, any fund, account or
investment vehicle that is controlled or managed by such Person, by any
Affiliate of such Person, or, if applicable, such Person’s investment manager.

 

“Restructuring Support Agreement” means the Restructuring Support Agreement,
dated April 11, 2016, by and among, inter alios the Company and the Holders, as
may be further amended, modified, or supplemented, from time to time.

 

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

 

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“Rule 158” means Rule 158 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

 

“Rule 415” means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

 

“Rule 424” means Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

 

“Selling Stockholder Questionnaire” means a questionnaire reasonably adopted by
the Company from time to time.

 

“Shelf Registration Statement” means a Registration Statement filed with the
Commission in accordance with the Securities Act for the offer and sale of
Registrable Securities by Holders on a continuous or delayed basis pursuant to
Rule 415.

 

“Smaller Reporting Company” means a “smaller reporting company” as defined in
Item 10(f) of Regulation S-K, as such definition may be amended from time to
time.

 

“Trading Day” means a day during which trading in the Common Stock occurs in the
Trading Market, or if the Common Stock is not listed on a Trading Market, a
Business Day.

 

“Trading Market” means whichever of the New York Stock Exchange, the NYSE Amex,
the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital
Market, OTC Bulletin Board, or OTC Markets Group marketplace on which the Common
Stock is listed or quoted for trading on the date in question.

 

“Transfer” has the meaning set forth in Section 13.

 

“Underwritten Offering” means an offering Registrable Securities under a
Registration Statement in which the Registrable Securities are sold to an
underwriter for reoffering to the public.

 

“Underwritten Takedown” has the meaning set forth in Section 2(g).

 

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2.            Initial Shelf Registration.

 

(a)          The Company shall prepare a Shelf Registration Statement (as may be
amended from time to time, the “Initial Shelf Registration Statement”), and
shall include in the Initial Shelf Registration Statement the Registrable
Securities of each Holder who shall request inclusion therein of some or all of
their Registrable Securities by checking the appropriate box on the signature
page of such Holder hereto or by written notice to the Company no later than 5
business days after the Plan Effective Date. The Company shall file the Initial
Shelf Registration Statement with the Commission on or prior to the 60th day
following the Plan Effective Date; provided, however, that the Company shall not
be required to file or cause to be declared effective the Initial Shelf
Registration Statement unless Holders request (and have not by the 5th day after
the Plan Effective Date revoked such request by written notice to the Company)
the inclusion in the Initial Shelf Registration Statement of Registrable
Securities constituting at least fifteen percent (15%) of all Registrable
Securities, and such Holders otherwise timely comply with the requirements of
this Agreement with respect to the inclusion of such Registrable Securities in
the Initial Shelf Registration Statement.

 

(b)          The Company shall include in the Initial Shelf Registration
Statement all Registrable Securities whose inclusion has been timely requested
as aforesaid; provided, however, that the Company shall not be required to
include an amount of Registrable Securities in excess of the amount as may be
permitted to be included in such Registration Statement under the rules and
regulations of the Commission and the applicable interpretations thereof by the
staff of the Commission.

 

(c)          Upon the request of any Holder whose Registrable Securities are not
included in the Initial Shelf Registration Statement at the time of such
request, the Company shall amend the Initial Shelf Registration Statement to
include the Registrable Securities of such Holder; provided that the Company
shall not be required to amend the Initial Shelf Registration Statement more
than once every fiscal quarter of the Company.

 

(d)          The Initial Shelf Registration Statement shall be on Form S-1;
provided, however, that, if the Company becomes eligible to register the
Registrable Securities for resale by the Holders on Form S-3 (including without
limitation a Form S-3 filed as an Automatic Shelf Registration Statement), the
Company shall be entitled to amend the Initial Shelf Registration Statement to a
Shelf Registration Statement on Form S-3 or file a Shelf Registration Statement
on Form S-3 in substitution of the Initial Shelf Registration Statement as
initially filed.

 

(e)          The Company shall use its reasonable best efforts to cause the
Initial Shelf Registration Statement to be declared effective by the Commission
as promptly as practicable, and shall use its reasonable best efforts to keep
such Shelf Registration Statement continuously effective, and not subject to any
stop order, injunction or other similar order or requirement of the Commission,
until the earlier of (i) the date the Company (A) is eligible to register the
Registrable Securities for resale by Holders on Form S-3 or is a Smaller
Reporting Company eligible to incorporate by reference pursuant to Item 12(b) of
Form S-1 and (B) has filed such Registration Statement with the Commission and
which is effective and (ii) the date that all Registrable Securities covered by
the Initial Shelf Registration Statement shall cease to be Registrable
Securities (such earlier date, the “Initial Shelf Expiration Date”). In the
event of any stop order, injunction or other similar order or requirement of the
Commission relating to the Initial Shelf Registration Statement, if any
Registrable Securities covered by the Initial Shelf Registration Statement
remain unsold, the period during which the Initial Shelf Registration Statement
shall be required to remain effective will be extended by the number of days
during which such stop order, injunction or similar order or requirement is in
effect.

 

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(f)          If the Initial Shelf Registration Statement is on Form S-1, then
for so long as any Registrable Securities covered by the Initial Shelf
Registration Statement remain unsold, the Company will file any supplements to
the Prospectus or post-effective amendments required to be filed by applicable
law in order to incorporate into such Prospectus any Current Reports on Form 8-K
necessary or required to be filed by applicable law, any Quarterly Reports on
Form 10-Q or any Annual Reports on Form 10-K filed by the Company with the
Commission, or any other information necessary so that (i) the Initial Shelf
Registration Statement shall not include any untrue statement of material fact
or omit to state any material fact necessary in order to make the statements
therein not misleading, and (ii) the Company complies with its obligations under
Item 512(a)(1) of Regulation S-K; provided, however, that these obligations
remain subject to the Company’s rights under Section 7.

 

(g)          Upon the demand of one or more Holders, the Company shall
facilitate a “takedown” of Registrable Securities in the form of an Underwritten
Offering (each, an “Underwritten Takedown”), in the manner and subject to the
conditions described in Section 6 of this Agreement, provided that (i) the
number of shares included in such “takedown” shall equal at least fifteen
percent (15%) of the number of Registrable Securities at such time and (ii) the
Registrable Securities requested to be sold by the Holders in such “takedown”
shall have an anticipated aggregate offering price (before deducting
underwriting discounts and commission) of at least $50 million.

 

3.            Subsequent Shelf Registration Statements

 

(a)          After (i) the Effective Date of the Initial Shelf Registration
Statement and prior to the Initial Shelf Expiration Date and (ii) for so long as
any Registerable Securities remain outstanding, the Company shall use its best
efforts to (A) ensure that it will be eligible to register the Registrable
Securities on Form S-3 after the Initial Shelf Expiration Date, and (B) meet the
requirements of General Instruction VII of Form S-1 after the Initial Shelf
Expiration Date.

 

(b)          After the Initial Shelf Expiration Date and for so long as any
Registerable Securities remain outstanding, the Company shall use its best
efforts to (A) be eligible and/or to maintain its eligibility to register the
Registrable Securities on Form S-3, and (B) meet the requirements of General
Instruction VII of Form S-1.

 

(c)          After the Initial Shelf Expiration Date, if there is not an
effective Registration Statement which includes the Registrable Securities that
is currently outstanding, the Company shall (i) if the Company is eligible to
register the Registrable Securities on Form S-3, promptly file a Shelf
Registration Statement on Form S-3 and use its reasonable best efforts to cause
such Registration Statement to be declared effective, (ii) if the Company is a
Smaller Reporting Company eligible to incorporate by reference pursuant to Item
12(b) of Form S-1, promptly file a Shelf Registration Statement on Form S-1 and
use its reasonable best efforts to cause such Registration Statement to be
declared effective or (iii) promptly file a Shelf Registration Statement on Form
S-1 and use its reasonable best efforts to cause such Registration Statement to
be declared effective and for so long as any Registrable Securities covered by
such Shelf Registration on Form S-1 remain unsold, the Company will file any
supplements to the Prospectus or post-effective amendments required to be filed
by applicable law in order to incorporate into such Prospectus any Current
Reports on Form 8-K necessary or required to be filed by applicable law, any
Quarterly Reports on Form 10-Q or any Annual Reports on Form 10-K filed by the
Company with the Commission, or any other information necessary so that (x) such
Shelf Registration shall not include any untrue statement of material fact or
omit to state any material fact necessary in order to make the statements
therein not misleading, and (y) the Company complies with its obligations under
Item 512(a)(1) of Regulation S-K; provided, however, that these obligations
remain subject to the Company’s rights under Section 7.

 

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4.            Quotation on OTCQB Market

 

(a)          Until and unless (x) the Common Stock is listed on a “national
securities exchange” as defined in Rule 600(b)(45) of Regulation National Market
System promulgated by the Commission, as amended or (y) the Common Stock may be
sold by any and all Holders without restriction by the Commission pursuant to a
Registration Statement in an at-the-market offering, the Company shall use its
reasonable best efforts to cause (i) the Common Stock to be quoted on the OTCQB
market as promptly as practicable after the Plan Effective Date and shall
thereafter use its reasonable best efforts to maintain such quotation and (ii)
at any time during which the Company is eligible to have the Common Stock quoted
on the OTCQX market, the Company shall use its reasonable best efforts to cause
the Common Stock to be quoted on the OTCQX market in lieu of the OTCQB Market as
promptly as practicable, provided that at any time the Company is no longer
eligible to have the Common Stock quoted on the OTCQX market, the Company will
comply with its obligations under clause (i).

 

5.             Demand Registration

 

(a)           At any time and from time to time 180 days after the Plan
Effective Date, any Holder or group of Holders may request in writing (“Demand
Registration Request”) that the Company effect the registration of all or part
of such Holder’s or Holders’ Registrable Securities with the Commission under
and in accordance with the provisions of the Securities Act. The Company will
file a Registration Statement covering such Holder’s or Holders’ Registrable
Securities requested to be registered, and shall use its reasonable best efforts
to cause such Registration Statement to be declared effective, as promptly as
practicable after receipt of such request; provided, however, that the Company
will not be required to file a Registration Statement pursuant to this Section
5(a):

 

(A)         unless (i) the number of Registrable Securities requested to be
registered on such Registration Statement equals at least fifteen percent (15%)
of the number of Registrable Securities at such time and (ii) the Registrable
Securities requested to be sold by the Holders pursuant to such Registration
Statement have an anticipated aggregate gross offering price (before deducting
underwriting discounts and commission) of at least $50 million;

 

(B)         if the Registrable Securities requested to be registered are already
covered by an existing and effective Registration Statement and such
Registration Statement may be utilized for the offer and sale of the Registrable
Securities requested to be registered;

 

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(C)         if a registration statement filed by the Company shall have
previously been initially declared effective by the Commission within the one
hundred eighty (180) days preceding the date such Demand Registration Request is
made; and

 

(D)         if the number of Demand Registration Requests previously made
pursuant to this Section 5(a) shall equal or exceed five (5); provided, however
that a Demand Registration Request shall not be considered made for purposes of
this clause (D) unless the requested Registration Statement has been declared
effective by the Commission for more than 75% of the full amount of Registrable
Securities for which registration has been requested.

 

(b)          A Demand Registration Request shall specify (i) the then-current
name and address of such Holder or Holders, (ii) the aggregate number of
Registrable Securities requested to be registered, (iii) the total number of
Registrable Securities then beneficially owned by such Holder or Holders, and
(iv) the intended means of distribution. If at the time the Demand Registration
Request is made the Company appears, based on public information available to
such Holder or Holders, eligible to use Form S-3 for the offer and sale of the
Registrable Securities, the Holder or Holders making such request may request
that the registration be in the form of a Shelf Registration Statement (for the
avoidance of doubt, the Company shall not be under the obligation to file a
Shelf Registration on Form S-3 if, upon the advice of its counsel, it is not
eligible to make such a filing).

 

(c)          The Company may satisfy its obligations under Section 5(a) hereof
by amending (to the extent permitted by applicable law) any registration
statement previously filed by the Company under the Securities Act, so that such
amended registration statement will permit the disposition (in accordance with
the intended methods of disposition specified as aforesaid) of all of the
Registrable Securities for which a Demand Registration Request has been properly
made under Section 5(b) hereof. If the Company so amends a previously filed
registration statement, it will be deemed to have effected a registration for
purposes of Section 5(a) hereof; provided, however that the Effective Date of
the amended registration statement, as amended pursuant to this Section 5(c)
shall be the “the first day of effectiveness” of such Registration Statement for
purposes of determining the period during which the Registration Statement is
required to be maintained effective in accordance with Section 5(e) hereof.

 

(d)          Within ten (10) days after receiving a Demand Registration Request,
the Company shall give written notice of such request to all other Holders of
Registrable Securities and shall, subject to the provisions of Section 6(c) in
the case of an Underwritten Offering, include in such registration all such
Registrable Securities with respect to which the Company has received written
requests for inclusion therein within fifteen (15) days after the Company’s
giving of such notice, provided that such Registrable Securities are not already
covered by an existing and effective Registration Statement that may be utilized
for the offer and sale of the Registrable Securities requested to be registered
in the manner so requested.

 

(e)          The Company will use its reasonable efforts to keep a Registration
Statement that has become effective as contemplated by this Section 4
continuously effective, and not subject to any stop order, injunction or other
similar order or requirement of the Commission:

 

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(A)         in the case of a Registration Statement other than a Shelf
Registration Statement, until all Registrable Securities registered thereunder
have been sold pursuant to such Registration Statement, but in no event later
than two hundred seventy (270) days from the Effective Date of such Registration
Statement; and

 

(B)         in the case of a Shelf Registration Statement, until the earlier of:
(x) three (3) years following the Effective Date of such Shelf Registration
Statement; and (y) the date that all Registrable Securities covered by such
Shelf Registration Statement shall cease to be Registrable Securities;

 

provided, however, that in the event of any stop order, injunction or other
similar order or requirement of the Commission relating to any Shelf
Registration Statement, if any Registrable Securities covered by such Shelf
Registration Statement remain unsold, the period during which such Shelf
Registration Statement shall be required to remain effective will be extended by
the number of days during which such stop order, injunction or similar order or
requirement is in effect; provided further, however, that if any Shelf
Registration Statement was initially declared effective on Form S-3 and, prior
to the date determined pursuant to Section 5(e)(B), the Company becomes
ineligible to use Form S-3, the period during which such Shelf Registration
Statement shall be required to remain effective will be extended by the number
of days during which the Company did not have an effective Registration
Statement covering unsold Registrable Securities initially registered on such
Shelf Registration Statement.

 

(f)        The Holder or Holders making a Demand Registration Request may, at
any time prior to the Effective Date of the Registration Statement relating to
such registration, revoke their request for the Company to effect the
registration of all or part of such Holder’s or Holders’ Registrable Securities
by providing a written notice to the Company. If, pursuant to the preceding
sentence, the entire Demand Registration Request is revoked, then, at the option
of the Holder or Holders who revoke such request, either (i) such Holder or
Holders shall reimburse the Company for all of its reasonable and documented
out-of-pocket expenses incurred in the preparation, filing and processing of the
Registration Statement, which out-of-pocket expenses, for the avoidance of
doubt, shall not include overhead expenses and which requested registration
shall not count as one of the permitted Demand Registration Requests hereunder
or (ii) the requested registration that has been revoked will be deemed to have
been effected for purposes of Section 5(a).

 

(g)          If a Registration Statement filed pursuant to this Section 4 is a
Shelf Registration Statement, then upon the demand of one or more Holders, the
Company shall facilitate a “takedown” of Registrable Securities in the form of
an Underwritten Offering, in the manner and subject to the conditions described
in Section 6 of this Agreement, provided that (i) the number of shares included
in such “takedown” shall equal at least fifteen percent (15%) of the number of
Registrable Securities at such time and (ii) the Registrable Securities
requested to be sold by the Holders in such “takedown” shall have an anticipated
aggregate offering price (before deducting underwriting discounts and
commission) of at least $50 million.

 

6.           Procedures for Underwritten Offerings. The following procedures
shall govern Underwritten Offerings pursuant to Section 2(g) or Section 5(g),
whether in the case of an Underwritten Takedown or otherwise.

 

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(a)          (i) The Majority Holders shall select one or more investment
banking firm(s) of national standing to be the managing underwriter or
underwriters for any Underwritten Offering pursuant to a Demand Registration
Request or an Underwritten Takedown with the consent of the Company, which
consent shall not be unreasonably withheld, conditioned or delayed and (ii) the
Company shall select one or more investment banking firms of national standing
to be the managing underwriter or underwriters for any other Underwritten
Offering with the consent of the Majority Holders, which consent shall not be
unreasonably withheld, conditioned or delayed.

 

(b)          All Holders proposing to distribute their securities through an
Underwritten Offering, as a condition for inclusion of their Registrable
Securities therein, shall agree to enter into an underwriting agreement with the
underwriters; provided, however that the underwriting agreement is in customary
form and reasonably acceptable to the Majority Holders and provided, further,
however that no Holder of Registrable Securities included in any Underwritten
Offering shall be required to make any representations or warranties to the
Company or the underwriters (other than representations and warranties regarding
(i) such Holder’s ownership of its Registrable Securities to be sold or
transferred, (ii) such Holder’s power and authority to effect such transfer and
(iii) such matters pertaining to compliance with securities laws as may be
reasonably requested).

 

(c)          If the managing underwriter or underwriters for an Underwritten
Offering pursuant to a Demand Registration or an Underwritten Takedown advises
the Holders that the total amount of Registrable Securities or other shares of
Common Stock permitted to be registered is such as to materially adversely
affect the success of such Underwritten Offering, the number of Registrable
Securities or other shares of Common Stock to be registered on such Registration
Statement will be reduced as follows: first, the Company shall reduce or
eliminate the securities of the Company to be included by any Person other than
a Holder or the Company; second, the Company shall reduce or eliminate any
securities of the Company to be included by the Company; and third, the Company
shall reduce the number of Registrable Securities to be included by Holders on a
pro rata basis based on the total number of Registrable Securities requested by
the Holders to be included in the Underwritten Offering.

 

(d)          Within five (5) days after receiving a request for an Underwritten
Offering constituting a “takedown” from a Shelf Registration Statement, the
Company shall give written notice of such request to all other Holders, and
subject to the provisions of Section 6(c) hereof, include in such Underwritten
Offering all such Registrable Securities with respect to which the Company has
received written requests for inclusion therein within five (5) days after the
Company’s giving of such notice; provided, however that such Registrable
Securities are covered by an existing and effective Shelf Registration Statement
that may be utilized for the offering and sale of the Registrable Securities
requested to be registered.

 

(e)         The Company will not be required to undertake an Underwritten
Offering pursuant to Section 2(g) or Section 5(g):

 

(A)         If the Company has undertaken an Underwritten Offering, whether for
its own account or pursuant to this Agreement, within the one hundred eighty
(180) days preceding the date of the request for such Underwritten Offering is
given to the Company; and

 

 11 

 

 

(B)         if the number of Underwritten Offerings previously made pursuant to
Section 2(g) or Section 5(g) in the immediately preceding twelve (12)-month
period shall exceed three (3); provided that an Underwritten Offering shall not
be considered made for purposes of this clause (B) unless the offering has
resulted in the disposition by the Holders of at least 75% of the amount of
Registrable Securities requested to be included.

 

7.            Grace Periods.

 

(a)           Notwithstanding anything to the contrary herein—

 

(A)         the Company shall be entitled to postpone the filing or
effectiveness of, or, at any time after a Registration Statement has been
declared effective by the Commission suspend the use of, a Registration
Statement (including the Prospectus included therein) if in the good faith
judgment of the Board, such registration, offering or use would reasonably be
expected to materially affect in an adverse manner or materially interfere with
any bona fide material financing of the Company or any material transaction
under consideration by the Company or would require the disclosure of
information that has not been, and is not otherwise required to be, disclosed to
the public and the premature disclosure of which would materially affect the
Company in an adverse manner; provided however, that in the event such
Registration Statement relates to a Demand Registration Request or an
Underwritten Offering pursuant to Section 2(g) or Section 5(g), then the Holders
initiating such Demand Registration Request or such Underwritten Offering shall
be entitled to withdraw the Demand Registration Request or request for the
Underwritten Offering and, if such request is withdrawn, it shall not count
against the limits imposed pursuant to Section 5(a)(D) or Section 6(e)(B) and
the Company shall pay all registration expenses in connection with such
registration; and

 

(B)         at any time after a Registration Statement has been declared
effective by the Commission and there is no duty to disclose under applicable
law, the Company may delay the disclosure of material non-public information
concerning the Company if the disclosure of such information at the time would,
in the good faith judgment of the Board, adversely affect the Company (the
period of a postponement or suspension as described in clause (A) and/or a delay
described in this clause (B), a “Grace Period”).

 

(b)          The Company shall promptly (i) notify the Holders in writing of the
existence of the event or material non-public information giving rise to a Grace
Period (provided that the Company shall not disclose the content of such
material non-public information to any Holder, without the express consent of
such Holder) or the need to file a post-effective amendment, as applicable, and
the date on which such Grace Period will begin, (ii) use reasonable best efforts
to terminate a Grace Period as promptly as practicable and (iii) notify the
Holders in writing of the date on which the Grace Period ends.

 

 12 

 

 

(c)          The duration of any one Grace Period shall not exceed sixty (60)
days, and the aggregate of all Grace Periods in total during any three hundred
sixty-five (365) day period shall not exceed ninety (90) days. For purposes of
determining the length of a Grace Period, the Grace Period shall be deemed to
begin on and include the date the Holders receive the notice referred to in
clause (i) of Section 7(b) and shall end on and include the later of the date
the Holders receive the notice referred to in clause (iii) of Section 7(b) and
the date referred to in such notice. In the event the Company declares a Grace
Period, the period during which the Company is required to maintain the
effectiveness of an Initial Shelf Registration Statement or a Registration
Statement filed pursuant to a Demand Registration Request shall be extended by
the number of days during which such Grace Period is in effect.

 

8.            Piggyback Registration

 

(a)          If at any time, and from time to time, the Company proposes to—

 

(A)         file a registration statement under the Securities Act with respect
to an underwritten offering of Common Stock of the Company or any securities
convertible or exercisable into Common Stock of the Company (other than with
respect to a registration statement (i) on Form S-8 or any successor form
thereto, (ii) on Form S-4 or any successor form thereto or (iii) another form
not available for registering the Registrable Securities for sale to the
public), whether or not for its own account; or

 

(B)         conduct an underwritten offering constituting a “takedown” of a
class of Common Stock or any securities convertible or exercisable into Common
Stock registered under a shelf registration statement previously filed by the
Company;

 

the Company shall give written notice (the “Piggyback Notice”) of such proposed
filing or underwritten offering to the Holders at least ten (10) Business Days
before the anticipated filing date. Such notice shall include the number and
class of securities proposed to be registered or offered, the proposed date of
filing of such registration statement or the conduct of such underwritten
offering, any proposed means of distribution of such securities, any proposed
managing underwriter of such securities and a good faith estimate by the Company
of the proposed maximum offering price of such securities as such price is
proposed to appear on the front cover page of such registration statement (or,
in the case of an Underwritten Offering, would appear on the front cover page of
a registration statement), and shall offer the Holders the opportunity to
register such amount of Registrable Securities as each Holder may request on the
same terms and conditions as the registration of the Company’s and/or the
holders of other securities of the Company securities, as the case may be (a
“Piggyback Offering”). Subject to Section 8(b), the Company will include in each
Piggyback Offering all Registrable Securities for which the Company has received
written requests for inclusion within five (5) Business Days after the date the
Piggyback Notice is given; provided, however, that in the case of the filing of
a registration statement, such Registrable Securities are not otherwise
registered pursuant to an existing and effective Shelf Registration Statement
under this Agreement; provided further, however that, in the case of an
underwritten offering in the form of a “takedown” under a shelf registration
statement, such Registrable Securities are covered by an existing and effective
Shelf Registration Statement that may be utilized for the offering and sale of
the Registrable Securities requested to be offered.

 

 13 

 

 

(b)          The Company will cause the managing underwriter or underwriters of
the proposed offering to permit the Holders that have requested Registrable
Securities to be included in the Piggyback Offering to include all such
Registrable Securities on the same terms and conditions as any similar
securities, if any, of the Company. Notwithstanding the foregoing, if the
managing underwriter or underwriters of such underwritten offering advises the
Company and the selling Holders in writing that, in its view, the total amount
of securities that the Company, such Holders and any other holders entitled to
participate in such offering (“Other Holders”) propose to include in such
offering is such as to materially adversely affect the success of such
underwritten offering, then:

 

(A)         if such Piggyback Offering is an underwritten primary offering by
the Company for its own account, the Company will include in such Piggyback
Offering: (i) first, all securities to be offered by the Company; (ii) second,
up to the full amount of securities requested to be included in such Piggyback
Offering by the Holders; and (iii) third, up to the full amount of securities
requested to be included in such Piggyback Offering by all Other Holders;

 

(B)         if such Piggyback Offering is an underwritten secondary offering for
the account of Other Holders exercising “demand” rights (including pursuant to a
Demand Registration Request), the Company will include in such registration: (i)
first, all securities of the Other Holder exercising “demand” rights (including
pursuant to a Demand Registration Request) requested to be included therein;
(ii) second, up to the full amount of securities requested to be included in
such Piggyback Offering by the Holders entitled to participate therein,
allocated pro rata among such Holders on the basis of the amount of securities
requested to be included therein by each such Holder; (C) third, up to the full
amount of securities proposed to be included in the registration by the Company;
and (D) fourth, up to the full amount of securities requested to be included in
such Piggyback Offering by the Other Holders entitled to participate therein,
allocated pro rata among such Other Holders on the basis of the amount of
securities requested to be included therein by each such Other Holder;

 

such that, in each case, the total amount of securities to be included in such
Piggyback Offering is the full amount that, in the view of such managing
underwriter, can be sold without materially adversely affecting the success of
such Piggyback Offering.

 

(c)          If at any time after giving the Piggyback Notice and prior to the
time sales of securities are confirmed pursuant to the Piggyback Offering, the
Company determines for any reason not to register or delay the registration of
the Piggyback Offering, the Company may, at its election, give notice of its
determination to all Holders, and in the case of such a determination, will be
relieved of its obligation to register any Registrable Securities in connection
with the abandoned or delayed Piggyback Offering, without prejudice.

 

 14 

 

 

(d)          Any Holder of Registrable Securities requesting to be included in a
Piggyback Offering may withdraw its request for inclusion by giving written
notice to the Company, at least three (3) Business Days prior to the anticipated
Effective Date of the Registration Statement filed in connection with such
Piggyback Offering, or in the case of a Piggyback Offering constituting a
“takedown” off of a shelf registration statement, at least three (3) Business
Days prior to the anticipated date of the filing by the Company under Rule 424
of a supplemental prospectus (which shall be the preliminary supplemental
prospectus, if one is used in the “takedown”) with respect to such offering, of
its intention to withdraw from that registration; provided, however, that (i)
the Holder’s request be made in writing and (ii) the withdrawal will be
irrevocable and, after making the withdrawal, a Holder will no longer have any
right to include its Registrable Securities in that Piggyback Offering.

 

9.            Registration Procedures. If and when the Company is required to
effect any registration under the Securities Act as provided in Sections 2(a),
5(a), 6 or 8 of this Agreement, the Company shall use its reasonable best
efforts to:

 

(a)          prepare and file with the Commission the requisite Registration
Statement to effect such registration and thereafter use its reasonable best
efforts to cause such Registration Statement to become and remain effective,
subject to the limitations contained herein;

 

(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 and
to comply with the provisions of the Securities Act and the Exchange Act with
respect to the disposition of all Registrable Securities covered by such
Registration Statement until such time as all of such Registrable Securities
have been disposed of in accordance with the method of disposition set forth in
such Registration Statement, subject to the limitations contained herein;

 

(c)          (i) before filing a Registration Statement or Prospectus or any
amendments or supplements thereto, at the Company’s expense, furnish to the
Holders whose securities are covered by the Registration Statement copies of all
such documents, other than documents that are incorporated by reference into
such Registration Statement or Prospectus, proposed to be filed and such other
documents reasonably requested by such Holders (which may be furnished by
email), and afford Counsel to the Holders a reasonable opportunity to review and
comment on such documents; and (ii) in connection with the preparation and
filing of each such Registration Statement pursuant to this Agreement, (A) upon
reasonable advance notice to the Company, give each of the foregoing such
reasonable access to all financial and other records, corporate documents and
properties of the Company as shall be necessary, in the reasonable opinion of
Counsel to the Holders and such underwriters, to conduct a reasonable due
diligence investigation for purposes of the Securities Act and Exchange Act, and
(B) upon reasonable advance notice to the Company and during normal business
hours, provide such reasonable opportunities to discuss the business of the
Company with its officers, directors, employees and the independent public
accountants who have certified its financial statements as shall be necessary,
in the reasonable opinion of Counsel to the Holders and such underwriters, to
conduct a reasonable due diligence investigation for purposes of the Securities
Act and the Exchange Act;

 

(d)          notify each selling Holder of Registrable Securities, promptly
after the Company receives notice thereof, of the time when such Registration
Statement has been declared effective or a supplement to any Prospectus forming
a part of such Registration Statement has been filed;

 

 15 

 

 

(e)          with respect to any offering of Registrable Securities, furnish to
each selling Holder of Registrable Securities, and the managing underwriters for
such Underwritten Offering, if any, without charge, such number of copies of the
applicable Registration Statement, each amendment and supplement thereto, the
Prospectus included in such Registration Statement (including each preliminary
Prospectus, final Prospectus, and any other Prospectus (including any Prospectus
filed under Rule 424, Rule 430A or Rule 430B promulgated under the Securities
Act and any “issuer free writing prospectus” as such term is defined under
Rule 433 promulgated under the Securities Act), all exhibits and other documents
filed therewith and such other documents as such seller or such managing
underwriters may reasonably request including in order to facilitate the
disposition of the Registrable Securities owned by such seller, and upon
request, a copy of any and all transmittal letters or other correspondence to or
received from, the Commission or any other governmental authority relating to
such offer;

 

(f)          (i) register or qualify all Registrable Securities covered by such
Registration Statement under such other securities or blue sky laws of such
states or other jurisdictions of the United States of America as the Holders
covered by such Registration Statement shall reasonably request in writing, (ii)
keep such registration or qualification in effect for so long as such
Registration Statement remains in effect and (iii) take any other action that
may be necessary or reasonably advisable to enable such Holders to consummate
the disposition in such jurisdictions of the securities to be sold by such
Holders, except that the Company shall not for any such purpose be required to
qualify generally to do business as a foreign corporation in any jurisdiction
wherein it would not but for the requirements of this subsection (f) be
obligated to be so qualified, to subject itself to taxation in such jurisdiction
or to consent to general service of process in any such jurisdiction;

 

(g)          cause all Registrable Securities included in such Registration
Statement to be registered with or approved by such other federal or state
governmental agencies or authorities as necessary upon the opinion of counsel to
the Company or Counsel to the Holders of Registrable Securities included in such
Registration Statement to enable such Holder or Holders thereof to consummate
the disposition of such Registrable Securities in accordance with their intended
method of distribution thereof;

 

(h)          with respect to any Underwritten Offering, obtain and, if obtained,
furnish to each Holder that is named as an underwriter in such Underwritten
Offering and each other underwriter thereof, a signed

 

(A)         opinion of outside counsel for the Company (including a customary
10b-5 statement), dated the date of the closing under the underwriting agreement
and addressed to the underwriters, reasonably satisfactory (based on the
customary form and substance of opinions of issuers’ counsel customarily given
in such an offering) in form and substance to such underwriters, if any, and

 

 16 

 

 

(B)         “comfort” letter, dated the date of the Underwriting Agreement and
another dated the date of the closing under the underwriting agreement and
addressed to the underwriters and signed by the independent public accountants
who have certified the Company’s financial statements included or incorporated
by reference in such registration statement, reasonably satisfactory (based on
the customary form and substance of “cold comfort” letters of issuers’
independent public accountant customarily given in such an offering) in form and
substance to such Holder and such underwriters, if any,

 

in each case, covering substantially the same matters with respect to such
Registration Statement (and the Prospectus included therein) and, in the case of
the accountants’ comfort letter, with respect to events subsequent to the date
of such financial statements, as are customarily covered in opinions of issuer’s
counsel and in accountants’ comfort letters delivered to underwriters in such
types of offerings of securities;

 

(i)          notify each Holder of Registrable Securities included in such
Registration Statement at any time when a Prospectus relating thereto is
required to be delivered under the Securities Act, upon discovery that, or upon
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 any material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances under which they were made and for which the Company chooses to
suspend the use of the Registration Statement and Prospectus in accordance with
the terms of this Agreement, at the written request of any such Holder, promptly
prepare and furnish to it 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 securities, such Prospectus, as supplemented
or amended, 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 not misleading in the light of the circumstances under which
they were made;

 

(j)          notify the Holders of Registrable Securities included in such
Registration Statement promptly of any request by the Commission for the
amending or supplementing of such Registration Statement or Prospectus or for
additional information;

 

(k)          advise the Holders of Registrable Securities included in such
Registration Statement promptly after the Company receives notice or obtains
knowledge of any order suspending the effectiveness of a registration statement
relating to the Registrable Securities at the earliest practicable moment and
promptly use its reasonable best efforts to obtain the withdrawal;

 

(l)          otherwise comply with all applicable rules and regulations of the
Commission and any other governmental agency or authority having jurisdiction
over the offering of Registrable Securities, and make available to its
stockholders, as soon as reasonably practicable, an earnings statement covering
the period of at least twelve (12) months, but not more than eighteen (18)
months, beginning with the first (1st) full calendar month after the Effective
Date of such Registration Statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 promulgated
thereunder and which requirement will be deemed satisfied if the Company timely
files complete and accurate information on Form 10-Q and 10-K and Current
Reports on Form 8-K under the Exchange Act and otherwise complies with Rule 158
under the Securities Act;

 

 17 

 

 

(m)          provide and cause to be maintained a transfer agent and registrar
for the Registrable Securities included in a Registration Statement no later
than the Effective Date thereof;

 

(n)          enter into such agreements (including an underwriting agreement in
customary form) and take such other actions as the Holders beneficially owning a
majority of the Registrable Securities included in a Registration Statement or
the underwriters, if any, shall reasonably request in order to expedite or
facilitate the disposition of such Registrable Securities, including customary
indemnification; and provide reasonable cooperation, including causing at least
one (1) executive officer and a senior financial officer to attend and
participate in “road shows” and other information meetings organized by the
underwriters, if any, as reasonably requested; provided, however, that the
Company shall have no obligation to participate in more than two (2) “road
shows” in any twelve (12)-month period and such participation shall not
unreasonably interfere with the business operations of the Company;

 

(o)          if requested by the managing underwriter(s) or the Holders
beneficially owning a majority of the Registrable Securities being sold in
connection with an Underwritten Offering, promptly incorporate in a prospectus
supplement or post-effective amendment such information relating to the plan of
distribution for such shares of Registrable Securities provided to the Company
in writing by the managing underwriters and the Holders of a majority of the
Registrable Securities being sold and that is required to be included therein
relating to the plan of distribution with respect to such Registrable
Securities, including without limitation, information with respect to the number
of Registrable Securities being sold to such underwriters, the purchase price
being paid therefor by such underwriters and with respect to any other terms of
the Underwritten Offering of the Registrable Securities to be sold in such
offering, and make any required filings with respect to such information
relating to the plan of distribution as soon as practicable after notified of
the information;

 

(p)          cooperate with the Holders of Registrable Securities included in a
Registration Statement and the managing underwriter(s), if any, to facilitate
the timely preparation and delivery of certificates representing Registrable
Securities to be sold and not bearing any restrictive legends, and enable such
Registrable Securities to be in such share amounts and registered in such names
as the managing underwriters, or, if none, the Holders beneficially owning a
majority of the Registrable Securities being offered for sale, may reasonably
request at least three (3) Business Days prior to any sale of Registrable
Securities to the underwriters; and

 

 18 

 

 

(q)          otherwise use its reasonable best efforts to take all other steps
necessary to effect the registration of such Registrable Securities contemplated
hereby.

 

In addition, at least ten (10) Trading Days prior to the first anticipated
filing date of a Registration Statement for any registration under this
Agreement, the Company will notify each Holder of the information the Company
requires from that Holder, including any update to or confirmation of the
information contained in the Selling Stockholder Questionnaire, if any, which
shall be completed and delivered to the Company promptly upon request and, in
any event, within five (5) Trading Days prior to the applicable anticipated
filing date. Each Holder further agrees that it shall not be entitled to be
named as a selling securityholder in the Registration Statement or use the
Prospectus for offers and resales of Registrable Securities at any time, unless
such Holder has returned to the Company a completed and signed Selling
Stockholder Questionnaire and a response to any requests for further information
as described in the previous sentence and, if an Underwritten Offering, entered
into an underwriting agreement with the underwriters in accordance with Section
6(b). If a Holder of Registrable Securities returns a Selling Stockholder
Questionnaire or a request for further information, in either case, after its
respective deadline, the Company shall be permitted to exclude such Holder from
being a selling security holder in the Registration Statement or any
pre-effective or post-effective amendment thereto. Each Holder acknowledges and
agrees that the information in the Selling Stockholder Questionnaire or request
for further information as described in this Section 9 will be used by the
Company in the preparation of the Registration Statement and hereby consents to
the inclusion of such information in the Registration Statement.

 

10.           Registration Expenses. All fees and expenses incident to the
Company’s performance of or compliance with its obligations under this Agreement
(excluding any underwriting discounts, fees or selling commissions or broker or
similar commissions or fees, or transfer taxes of any Holder) shall be borne by
the Company whether or not any Registrable Securities are sold pursuant to a
Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to filings
required to be made with any Trading Market on which the Common Stock is then
listed for trading, (B) with respect to compliance with applicable state
securities or Blue Sky laws (including, without limitation, fees and
disbursements of counsel for the Company in connection with Blue Sky
qualifications or exemptions of the Registrable Securities and determination of
the eligibility of the Registrable Securities for investment under the laws of
such jurisdictions as requested by the Holders) and (C) if not previously paid
by the Company in connection with an Issuer Filing, with respect to any filing
that may be required to be made by any broker through which a Holder intends to
make sales of Registrable Securities with the Financial Industry Regulatory
Authority (“FINRA”) pursuant to the FINRA Rule 5110, so long as the broker is
receiving no more than a customary brokerage commission in connection with such
sale, (ii) printing expenses (including, without limitation, expenses of
printing certificates for Registrable Securities and of printing prospectuses if
the printing of prospectuses is reasonably requested by the Holders of a
majority of the Registrable Securities included in the Registration Statement),
(iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company, (v) the reasonable fees and expenses incurred in
connection with any road show for underwritten offerings, (vi) Securities Act
liability insurance, if the Company so desires such insurance, and (vii) fees
and expenses of all other Persons retained by the Company in connection with the
consummation of the transactions contemplated by this Agreement. In addition,
the Company will pay the reasonable fees and disbursements of the Counsel to the
Holders, including, for the avoidance of doubt, any expenses of Counsel to the
Holders in connection with the filing or amendment of any Registration
Statement, Prospectus or free writing prospectus hereunder.

 

 19 

 

 

11.           Indemnification.

 

(a)            Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify, defend and hold
harmless each Holder, the officers, directors, agents, partners, members,
investment manager, managers, stockholders, Affiliates and employees of each of
them, each Person who controls any such Holder (within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act) and the officers,
directors, partners, members, managers, stockholders, agents and employees of
each such controlling Person, to the fullest extent permitted by applicable law,
from and against any and all losses, claims, damages, liabilities, costs
(including, without limitation, reasonable costs of preparation and
investigation and reasonable attorneys’ fees) and expenses (collectively,
“Losses”), to which any of them may become subject, that arise out of or are
based upon (i) any untrue or alleged untrue statement of a material fact
contained in any Registration Statement, any Prospectus or any form of
prospectus or in any amendment or supplement thereto or in any preliminary
prospectus or (ii) any omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements therein (in
the case of any Prospectus or form of prospectus or supplement thereto, in light
of the circumstances under which they were made) not misleading, except to the
extent, but only to the extent, that (A) such untrue statements, alleged untrue
statements, omissions or alleged omissions are based 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
provided by such Holder expressly for use in the Registration Statement, such
Prospectus or such form of Prospectus or in any amendment or supplement thereto,
or (B) in the case of an occurrence of an event of the type specified in Section
9(i), related to the use by a Holder of an outdated or defective Prospectus
after the Company has notified such Holder in writing that the Prospectus is
outdated or defective and prior to the receipt by such Holder of the Advice
contemplated and defined in Section 15(c) below, but only if and to the extent
that following the receipt of the Advice the misstatement or omission giving
rise to such Loss would have been corrected. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of an
Indemnified Party (as defined in Section 11(c)), shall survive the transfer of
the Registrable Securities by the Holders, and shall be in addition to any
liability which the Company may otherwise have.

 

 20 

 

 

(b)          Indemnification by Holders. Each Holder shall, severally and not
jointly, indemnify and hold harmless the Company, its respective directors,
officers, agents and employees, each Person who controls the Company (within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act),
and the directors, officers, agents or employees of such controlling Persons, to
the fullest extent permitted by applicable law, from and against all Losses, as
incurred, arising out of or are based upon any untrue or alleged untrue
statement of a material fact contained in any Registration Statement, any
Prospectus, or any form of prospectus, or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or relating to any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus, or any
form of prospectus or supplement thereto, in light of the circumstances under
which they were made) not misleading (i) to the extent, but only to the extent,
that such untrue statements or omissions are based upon information regarding
such Holder furnished in writing to the Company by such Holder expressly for use
therein or (ii) to the extent, but only to the extent, that such information
relates to such Holder or such Holder’s proposed method of distribution of
Registrable Securities and was provided by such Holder expressly for use in a
Registration Statement, such Prospectus or such form of Prospectus or in any
amendment or supplement thereto or (iii) in the case of an occurrence of an
event of the type specified in Section 9(i), to the extent, but only to the
extent, related to the use by such Holder of an outdated or defective Prospectus
after the Company has notified such Holder in writing that the Prospectus is
outdated or defective and prior to the receipt by such Holder of the Advice
contemplated in Section 15(c), but only if and to the extent that following the
receipt of the Advice the misstatement or omission giving rise to such Loss
would have been corrected. In no event shall the liability of any selling Holder
hereunder be greater in amount than the dollar amount of the net proceeds
received by such Holder upon the sale of the Registrable Securities giving rise
to such indemnification obligation. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of an
Indemnified Party (as defined in Section 11(c)), shall survive the transfer of
the Registrable Securities by the Holders, and shall be in addition to any
liability which the Holder may otherwise have.

 

(c)        Conduct of Indemnification Proceedings. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity hereunder (an
“Indemnified Party”), such Indemnified Party shall promptly notify the Person
from whom indemnity is sought (the “Indemnifying Party”) in writing, and the
Indemnifying Party shall have the right to assume the defense thereof, including
the employment of counsel reasonably satisfactory to the Indemnified Party and
the payment of all reasonable fees and expenses incurred in connection with
defense thereof; provided, that the failure of any Indemnified Party to give
such notice shall not relieve the Indemnifying Party of its obligations or
liabilities pursuant to this Agreement, except (and only) to the extent that
such failure shall have materially and adversely prejudiced the Indemnifying
Party.

 

An Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
expenses; (2) the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified Party
and the Indemnifying Party, and such Indemnified Party shall have been advised
by counsel that in the reasonable judgment of such counsel a conflict of
interest exists if the same counsel were to represent such Indemnified Party and
the Indemnifying Party; provided, that the Indemnifying Party shall not be
liable for the reasonable and documented fees and expenses of more than one
separate firm of attorneys at any time for all Indemnified Parties. The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld, delayed or conditioned. No Indemnifying Party shall, without the prior
written consent of the Indemnified Party, effect any settlement of any pending
Proceeding in respect of which any Indemnified Party is a party, unless such
settlement includes an unconditional release of such Indemnified Party from all
liability on claims that are the subject matter of such Proceeding.

 

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Subject to the terms of this Agreement, all reasonable and documented fees and
expenses of the Indemnified Party (including reasonable and documented fees and
expenses to the extent incurred in connection with investigating or preparing to
defend such Proceeding in a manner not inconsistent with this Section 11(c))
shall be paid to the Indemnified Party, as incurred, with reasonable promptness
after receipt of written notice thereof to the Indemnifying Party; provided,
that the Indemnified Party shall promptly reimburse the Indemnifying Party for
that portion of such fees and expenses applicable to such actions for which such
Indemnified Party is finally judicially determined to not be entitled to
indemnification hereunder. The failure to deliver written notice to the
Indemnifying Party within a reasonable time of the commencement of any such
action shall not relieve such Indemnifying Party of any liability to the
Indemnified Party under this Section 11, except to the extent that the
Indemnifying Party is materially and adversely prejudiced in its ability to
defend such action.

 

(d)          Contribution. If a claim for indemnification under Section 11(a) or
(b) is unavailable to an Indemnified Party or insufficient to hold an
Indemnified Party harmless for any Losses, then each Indemnifying Party, in lieu
of indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Losses, in such proportion
as is appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission.

 

The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 11(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 11(d), no Holder shall be
required to contribute, in the aggregate, any amount in excess of the amount by
which the net proceeds actually received by such Holder from the sale of the
Registrable Securities subject to the Proceeding exceeds the amount of any
damages that such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. 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 was
not guilty of such fraudulent misrepresentation.

 

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12.         Rule 144 and Rule 144A; Other Exemptions. With a view to making
available to the Holders of Registrable Securities the benefits of Rule 144 and
Rule 144A promulgated under the Securities Act and other rules and regulations
of the Commission that may at any time permit a Holder of Registrable Securities
to sell securities of the Company without registration, until such time as when
no Registrable Securities remain outstanding, the Company covenants that it will
(i) if it is subject to the reporting requirement of 13 or 15(d) of the Exchange
act, file in a timely manner all reports and other documents required, if any,
to be filed by it under the Securities Act and the Exchange Act and the rules
and regulations adopted thereunder or (ii) if it is not subject to the reporting
requirement of 13 or 15(d) of the Exchange Act, make available information
necessary to comply with Rule 144 and Rule 144A, if available with respect to
resales of the Registrable Securities under the Securities Act, at all times,
all to the extent required from time to time to enable such Holder to sell
Registrable Securities without registration under the Securities Act within the
limitation of the exemptions provided by (x) Rule 144 and Rule 144A promulgated
under the Securities Act (if available with respect to resales of the
Registrable Securities), as such rules may be amended from time to time or
(y) any other rules or regulations now existing or hereafter adopted by the
Commission. Upon the reasonable request of any Holder of Registrable Securities,
the Company will deliver to such Holder a written statement as to whether it has
complied with such information requirements, and, if not, the specific reasons
for non-compliance.

 

13.         Transfer of Registration Rights. Any Holder may freely assign its
rights hereunder on a pro rata basis in connection with any sale, transfer,
assignment, or other conveyance (any of the foregoing, a “Transfer”) of
Registrable Securities to any transferee or assignee; provided that all of the
following additional conditions are satisfied: (a) such Transfer is effected in
accordance with applicable securities laws; (b) such transferee or assignee
agrees in writing to become subject to the terms of this Agreement; and (c) the
Company is given written notice by such Holder of such Transfer, stating the
name and address of the transferee or assignee and identifying the Registrable
Securities with respect to which such rights are being transferred or assigned;
and further provided, that (i) any rights assigned hereunder shall apply only in
respect of the Registrable Securities that are Transferred and not in respect of
any other securities that the transferee or assignee may hold and (ii) any
Registrable Securities that are Transferred may cease to constitute Registrable
Securities following such Transfer in accordance with the terms of this
Agreement.

 

14.         Further Assurances. Each of the parties hereto shall execute all
such further instruments and documents and take all such further action as any
other party hereto may reasonably require in order to effectuate the terms and
purposes of this Agreement.

 

15.         Miscellaneous.

 

(a)          Remedies. Any Person having rights under any provision of this
Agreement shall 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.

 

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(b)          Compliance. Each Holder covenants and agrees that it will comply
with the prospectus delivery requirements of the Securities Act as applicable to
it (unless an exemption therefrom is available) in connection with sales of
Registrable Securities pursuant to any Registration Statement and shall sell the
Registrable Securities only in accordance with a method of distribution
described in each Registration Statement

 

(c)          Discontinued Disposition. By its acquisition of Registrable
Securities, each Holder agrees that, upon receipt of a notice from the Company
of the occurrence of a Grace Period or any event of the kind described in
Section 9(i), such Holder will forthwith discontinue disposition of such
Registrable Securities under a Registration Statement until it is advised in
writing (the “Advice”) by the Company that the use of the applicable Prospectus
(as it may have been supplemented or amended) may be resumed. The Company may
provide appropriate stop orders to enforce the provisions of this paragraph.

 

(d)          Preservation of Rights. The Company shall not grant any
registration rights to third parties which are more favorable than or
inconsistent with the rights granted hereunder unless any such more favorable
rights are concurrently added to the rights granted hereunder.

 

(e)          No Inconsistent Agreements. The Company shall not hereafter enter
into any agreement with respect to its securities which is inconsistent with or
violates the rights granted to the Holders in this Agreement.

 

(f)          Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
or waived unless the same shall be in writing and signed by the Company and
Holders holding at least a majority of the then outstanding Registrable
Securities; provided, however, that any party may give a waiver as to itself;
provided further, however that no amendment, modification, supplement, or waiver
that disproportionately and adversely affects, alters, or changes the interests
of any Holder shall be effective against such Holder without the prior written
consent of such Holder; provide further, however that the definition of
“Holders” in Section 1 and the provisions of Section 2(c) may not be amended,
modified or supplemented, or waived unless in writing and signed by all the
signatories to this Agreement; and provided further that the waiver of any
provision with respect to any Registration Statement or offering may be given by
Holders holding at least a majority of the then outstanding Registrable
Securities entitled to participate in such offering or, if such offering shall
have been commenced, having elected to participate in such offering.
Notwithstanding the foregoing, a waiver or consent to depart from the provisions
hereof with respect to a matter that relates exclusively to the rights of
certain Holders and that does not directly or indirectly affect the rights of
other Holders may be given by Holders of a majority of the Registrable
Securities to which such waiver or consent relates; provided, however, that the
provisions of this sentence may not be amended, modified, or supplemented except
in accordance with the provisions of the immediately preceding sentence. No
waiver of any terms or conditions of this Agreement shall operate as a waiver of
any other breach of such terms and conditions or any other term or condition,
nor shall any failure to enforce any provision hereof operate as a waiver of
such provision or of any other provision hereof. No written waiver hereunder,
unless it by its own terms explicitly provides to the contrary, shall be
construed to effect a continuing waiver of the provisions being waived and no
such waiver in any instance shall constitute a waiver in any other instance or
for any other purpose or impair the right of the party against whom such waiver
is claimed in all other instances or for all other purposes to require full
compliance with such provision. The failure of any party to enforce any
provision of this Agreement shall not be construed as a waiver of such provision
and shall not affect the right of such party thereafter to enforce each
provision of this Agreement in accordance with its terms.

 

 24 

 

 

(g)          Notices. Any notice or other communication required or which may be
given hereunder shall be in writing and shall be sent by certified or regular
mail, by private national courier service (return receipt requested, postage
prepaid), by personal delivery, by electronic mail or by facsimile transmission.
Such notice or communication shall be deemed given (i) if mailed, two days after
the date of mailing, (ii) if sent by national courier service, one Business Day
after being sent, (iii) if delivered personally, when so delivered, (iv) if sent
by electronic mail, on the Business Day such electronic mail is transmitted, or
(v) if sent by facsimile transmission, on the Business Day such facsimile is
transmitted, in each case as follows:

 

(A)         If to the Company:

 

Energy XXI Gulf Coast, Inc.

Attn: John D. Schiller, Jr.

1021 Main Street, Suite 2626

Houston, Texas 77002

Tel: (713) 351-3000

Fax: (713) 351-3300

E-mail: jschiller@energyxxi.com

 

with a copy (which shall not constitute notice) to:

 

Vinson & Elkins LLP

Attn: Sarah Knight Morgan

1001 Fannin Street

Suite 2500

Houston, TX 77002-6760

Tel: (713) 758-2977

Fax: (713) 615-5234

Email: smorgan@velaw.com

 

(B)         If to the Holders (or to any of them), at their addresses as they
appear in the records of the Company or the records of the transfer agent or
registrar, if any, for the Common Stock.

 

If any time period for giving notice or taking action hereunder expires on a day
which is a Saturday, Sunday or legal holiday in the State of New York or the
jurisdiction in which the Company’s principal office is located, the time period
shall automatically be extended to the Business Day immediately following such
Saturday, Sunday or legal holiday.

 

 25 

 

 

(h)          Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their
respective successors and assigns (including any trustee in bankruptcy). In
addition, and whether or not any express assignment shall have been made, the
provisions of this Agreement which are for the benefit of the Holders of
Registrable Securities (or any portion thereof) as such shall be for the benefit
of and enforceable by any subsequent holder of any Registrable Securities (or of
such portion thereof); provided, that such subsequent holder of Registrable
Securities shall be required to execute a joinder to this Agreement in form and
substance reasonably satisfactory to the Company agreeing to be bound by its
terms. No assignment or delegation of this Agreement by the Company, or any of
the Company’s rights, interests or obligations hereunder, shall be effective
against any Holder without the prior written consent of such Holder.

 

(i)          Execution and Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, any one of which need not contain
the signatures of more than one party, but all such counterparts taken together
shall constitute one and the same Agreement.

 

(j)          Delivery by Facsimile. This Agreement, the agreements referred to
herein, and each other agreement or instrument entered into in connection
herewith or therewith or contemplated hereby or thereby, and any amendments
hereto or thereto, to the extent signed and delivered by means of a facsimile
machine or other electronic means, shall be treated in all manner and respects
as an original agreement or instrument and shall be considered to have the same
binding legal effect as if it were the original signed version thereof delivered
in person. At the request of any party hereto or to any such agreement or
instrument, each other party hereto or thereto shall re-execute original forms
thereof and deliver them to all other parties. No party hereto or to any such
agreement or instrument shall raise the use of a facsimile machine or other
electronic means to deliver a signature or the fact that any signature or
agreement or instrument was transmitted or communicated through the use of a
facsimile machine or other electronic means as a defense to the formation or
enforceability of a contract and each such party forever waives any such
defense.

 

(k)          Governing Law; Venue. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, without giving
effect to any choice of law or conflict of law rules or provisions (whether of
the State of New York or any other jurisdiction) to the extent such rules or
provisions would cause the application of the laws of any jurisdiction other
than the State of New York. Each of the parties to this Agreement consents and
agrees that any action to enforce this Agreement or any dispute, whether such
dispute arises in law or equity, arising out of or relating to this Agreement
shall be brought exclusively in the United States District Court for the
Southern District of New York or any New York State Court sitting in New York
City. The parties hereto consent and agree to submit to the exclusive
jurisdiction of such courts. Each of the parties to this Agreement waives and
agrees not to assert in any such dispute, to the fullest extent permitted by
applicable law, any claim that (i) such party and such party’s property is
immune from any legal process issued by such courts or (ii) any litigation or
other proceeding commenced in such courts is brought in an inconvenient forum.
The parties hereby agree that mailing of process or other papers in connection
with any such action or proceeding to an address provided in writing by the
recipient of such mailing, or in such other manner as may be permitted by law,
shall be valid and sufficient service thereof and hereby waive any objections to
service in the manner herein provided.

 

 26 

 

 

(l)          Waiver of Jury Trial. Each of the parties to this Agreement hereby
agrees to waive its respective rights to a jury trial of any claim or cause of
action based upon or arising out of this Agreement. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this Agreement, including
contract claims, tort claims and all other common law and statutory claims. Each
party hereto acknowledges that this waiver is a material inducement to enter
into this Agreement, that each has already relied on this waiver in entering
into this Agreement, and that each will continue to rely on this waiver in their
related future dealings. Each party hereto further warrants and represents that
it has reviewed this waiver with its legal counsel and that it knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY
REFERRING TO THIS SECTION 15(l) AND EXECUTED BY EACH OF THE PARTIES HERETO), AND
THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT. In the event of litigation, this Agreement may
be filed as a written consent to a trial by the court.

 

(m)          Severability. Whenever possible, each provision of this Agreement
shall 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 shall not affect
any other provision or the effectiveness or validity of any provision in any
other jurisdiction, and this Agreement shall be reformed, construed and enforced
in such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.

 

(n)          Descriptive Headings; Interpretation; No Strict Construction. The
descriptive headings of this Agreement are inserted for convenience only and do
not constitute a substantive part of this Agreement. Whenever required by the
context, any pronoun used in this Agreement shall include the corresponding
masculine, feminine or neuter forms, and the singular forms of nouns, pronouns,
and verbs shall include the plural and vice versa. Reference to any agreement,
document, or instrument means such agreement, document, or instrument as amended
or otherwise modified from time to time in accordance with the terms thereof,
and, if applicable, hereof. The words “include”, “includes” or “including” in
this Agreement shall be deemed to be followed by “without limitation”. The use
of the words “or,” “either” or “any” shall not be exclusive. The parties hereto
have participated jointly in the negotiation and drafting of this Agreement. If
an ambiguity or question of intent or interpretation arises, this Agreement
shall be construed as if drafted jointly by the parties hereto, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement. All
references to laws, rules, regulations and forms in this Agreement shall be
deemed to be references to such laws, rules, regulations and forms, as amended
from time to time or, to the extent replaced, the comparable successor thereto
in effect at the time. All references to agencies, self-regulatory organizations
or governmental entities in this Agreement shall be deemed to be references to
the comparable successors thereto from time to time.

 

(o)          Entire Agreement. This Agreement and any certificates, documents,
instruments and writings that are delivered pursuant hereto, constitutes the
entire agreement and understanding of the parties in respect of the subject
matter hereof and supersedes all prior understandings, agreements or
representations by or among the parties, written or oral, to the extent they
relate in any way to the subject matter hereof.

 

 27 

 

 

(p)          Termination. The obligations of the Company and of any Holder,
other than those obligations contained in Section 11 and this Section 15, shall
terminate with respect to the Company and such Holder as soon as such Holder no
longer beneficially owns any Registrable Securities.

 

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[Signature Pages Redacted.]