Exhibit 10.2


EXECUTION
COPY


REGISTRATION RIGHTS
AGREEMENT


REGISTRATION RIGHTS AGREEMENT
(this “Agreement”), dated as of
July 25, 2006, by and among Apollo Resources International Inc., a Utah
corporation, with headquarters located at 3001 Knox Street, Suite 403, Dallas,
Texas 75205, (the “Company”), and
the undersigned buyers (each, a “Buyer”,
and collectively, the “Buyers”).


WHEREAS:


A.            In connection with the Securities
Purchase Agreement, dated as of July 25, 2006, by and among the Company and the
Buyers (the “Securities Purchase Agreement”),
the Company has agreed, upon the terms and subject to the conditions set forth
in the Securities Purchase Agreement, to issue and sell to each Buyer (i)
shares (the “Common Shares”) of the Company’s
common stock, $0.001 par value per share (the “Common Stock”), and (ii) warrants (the “Warrants”), which will be exercisable to
purchase shares of Common Stock (as exercised collectively, the “Warrant Shares”).


B.            In accordance with the terms of the Securities Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the “1933 Act”), and applicable state securities
laws.


NOW,
THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and each
of the Buyers hereby agree as follows:


I.              Definitions.


Capitalized terms used herein and not otherwise
defined herein shall have the respective meanings set forth in the Securities
Purchase Agreement.  As used in this
Agreement, the following terms shall have the following meanings:


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


b.             “Closing Date” shall have the meaning set forth in the
Securities Purchase Agreement.


c.             “Effective Date” means the date the Registration Statement
has been declared effective by the SEC.


d.             “Effectiveness Deadline” means the date which is (i) in the
event that the Registration Statement is not subject to a review by the SEC,
120 calendar days after the Closing Date or (ii) in the event that the
Registration Statement is subject to a review by the SEC, 180 calendar days
after the Closing Date.









 



e.             “Filing
Deadline” means 90 calendar days after the Closing Date.


f.              “Investor” means a Buyer or any transferee or assignee
thereof to whom a Buyer assigns its rights under this Agreement in accordance
with the requirements of the Transaction Documents and who agrees to become
bound by the provisions of this Agreement in accordance with Section 9 and any
transferee or assignee thereof to whom a transferee or assignee assigns its
rights under this Agreement in accordance with the requirements of the
Transaction Documents and who agrees to become bound by the provisions of this
Agreement in accordance with Section 9.


g.             “Person” means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency thereof.


h.             “register,” “registered,”
and “registration” refer to a registration
effected by preparing and filing one or more Registration Statements (as
defined below) in compliance with the 1933 Act and pursuant to Rule 415 and the
declaration or ordering of effectiveness of such Registration Statement(s) by
the SEC.


i.              “Registrable Securities” means (i) the Common Shares,
(ii) the Warrant Shares issued or issuable upon exercise of the Warrants,
(iii) any shares of Common Stock issuable upon exercise of warrants issued to
any placement agent as compensation in connection with the financing that is
the subject of the Securities Purchase Agreement, and (iv) any capital
stock of the Company issued or issuable with respect to the Common Shares, the
Warrant Shares, or the Warrants as a result of any stock split, stock dividend,
recapitalization, exchange or similar event or otherwise, without regard to any
limitations on exercise of the Warrants.


j.              “Registration Statement” means a registration statement or
registration statements of the Company filed under the 1933 Act covering the
Registrable Securities.


k.             “Required Holders” means the holders of at least a majority
of the Registrable Securities.


l.              “Required Registration Amount” means 130% (or such lesser
amount as the SEC may permit as evidenced in comments received to a filed
Registration Statement) of the sum of (i) the number of Common Shares issued
pursuant to the Securities Purchase Agreement and issuable pursuant to the
Warrants as of the trading day immediately preceding the applicable date of
determination, all subject to adjustment as provided in Section 2(e) (without
regard to any limitations on exercise of the Warrants).


m.            “Rule 415” means Rule 415 under the 1933 Act or any successor
rule providing for offering securities on a continuous or delayed basis.


n.             “SEC” means the United States Securities and Exchange
Commission.



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2.             Registration.


a.             Mandatory Registration.  The Company shall prepare, and, as soon as
practicable but in no event later than the Filing Deadline, file with the SEC
the Registration Statement on Form S-3 covering the resale of all of the
Registrable Securities issuable upon then outstanding Securities.  In the event that Form S-3 is unavailable for
such a registration, the Company shall use such other form as is available for
such a registration on another appropriate form reasonably acceptable to the
Required Holders, subject to the provisions of Section 2(d).  The Registration Statement prepared pursuant
hereto shall register for resale at least the number of shares of Common Stock
equal to the Required Registration Amount as of date the Registration Statement
is initially filed with the SEC.  The
Registration Statement shall contain (except if otherwise directed by the
Required Holders) the “Selling Stockholders” and “Plan of
Distribution” sections in substantially the form attached hereto as Exhibit
B.  The Company shall use its best efforts to have the Registration
Statement declared effective by the SEC as soon as practicable, but in no event
later than the Effectiveness Deadline. 
By 9:30 am on the date following the Effective Date, the Company shall
file with the SEC in accordance with Rule 424 under the 1933 Act the final
prospectus to be used in connection with sales pursuant to such Registration
Statement.


b.             Allocation of
Registrable Securities.  The initial
number of Registrable Securities included in any Registration Statement and any
increase in the number of Registrable Securities included therein shall be
allocated pro rata among the Investors based on the number of Registrable
Securities held by each Investor at the time the Registration Statement
covering such initial number of Registrable Securities or increase thereof is
declared effective by the SEC.  In the
event that an Investor sells or otherwise transfers any of such Investor’s
Registrable Securities, each transferee shall be allocated a pro rata portion
of the then remaining number of Registrable Securities included in such
Registration Statement for such transferor. 
Any shares of Common Stock included in a Registration Statement and
which remain allocated to any Person which ceases to hold any Registrable
Securities covered by such Registration Statement shall be allocated to the
remaining Investors, pro rata based on the number of Registrable Securities
then held by such Investors which are covered by such Registration
Statement.  Other than as set forth in Schedule
2(b), in no event shall the Company include any securities other than
Registrable Securities on any Registration Statement without the prior written
consent of the Required Holders.


c.             Legal Counsel.  Subject to Section 5 hereof, the Required
Holders shall have the right to select one legal counsel to review and oversee
any registration pursuant to this Section 2 (“Legal Counsel”), which shall be Schulte Roth & Zabel LLP
or such other counsel as thereafter designated by the Required Holders.  The Company and Legal Counsel shall
reasonably cooperate with each other in performing the Company’s obligations
under this Agreement.


d.             Ineligibility
for Form S-3.  In the event that Form
S-3 is not  available for the
registration of the resale of Registrable Securities hereunder, the Company
shall (i) register the resale of the Registrable Securities on another
appropriate form reasonably acceptable to the Required Holders and (ii)
undertake to register the Registrable Securities on Form S-3 as soon as such
form is available, provided that the Company shall maintain the



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effectiveness
of the Registration Statement then in effect until such time as a Registration
Statement on Form S-3 covering the Registrable Securities has been declared
effective by the SEC.


e.             Sufficient
Number of Shares Registered.  In the
event the number of shares available under a Registration Statement filed
pursuant to Section 2(a) is insufficient to cover all of the Registrable
Securities required to be covered by such Registration Statement or an Investor’s
allocated portion of the Registrable Securities pursuant to Section 2(b), the
Company shall amend the applicable Registration Statement, or file a new
Registration Statement (on the short form available therefor, if applicable),
or both, so as to cover at least the Required Registration Amount as of the
trading day immediately preceding the date of the filing of such amendment or
new Registration Statement, in each case, as soon as practicable, but in any
event not later than thirty (30) days after the necessity therefor arises.  The Company shall use its best efforts to
cause such amendment and/or new Registration Statement to become effective as
soon as practicable following the filing thereof.  For purposes of the foregoing provision, the
number of shares available under a Registration Statement shall be deemed “insufficient
to cover all of the Registrable Securities” if at any time the number of shares
of Common Stock available for resale under the Registration Statement is less
than the product determined by multiplying (i) the Required Registration Amount
as of such time by (ii) 0.90.  The
calculation set forth in the foregoing sentence shall be made without regard to
any limitations on the exercise of the Warrants and such calculation shall
assume that the Warrants are then exercisable for shares of Common Stock at the
then prevailing Exercise Price (as defined in the Warrants).


f.              Effect of
Failure to File and Obtain and Maintain Effectiveness of Registration Statement.  Subject to Section 4(a), if (i) a
Registration Statement covering all of the Registrable Securities required to
be covered thereby and required to be filed by the Company pursuant to this
Agreement is (A) not filed with the SEC on or before the respective Filing
Deadline (a “Filing Failure”)
or (B) not declared effective by the SEC on or before the respective
Effectiveness Deadline (an “Effectiveness Failure”)
or (ii) on any day after the Effective Date sales of all of the Registrable
Securities required to be included on such Registration Statement cannot be
made (other than during an Allowable Grace Period (as defined in Section 3(r))
pursuant to such Registration Statement or otherwise (including, without
limitation, because of a failure to keep such Registration Statement effective,
to disclose such information as is necessary for sales to be made pursuant to
such Registration Statement, to register a sufficient number of shares of
Common Stock or to maintain the listing of the Common Stock) (a “Maintenance Failure”) then, as partial relief for the
damages to any holder by reason of any such delay in or reduction of its
ability to sell the underlying Shares of Common Stock (which remedy shall not
be exclusive of any other remedies available at law or in equity), the Company
shall pay to each holder of Registrable Securities relating to such
Registration Statement an amount in cash equal to one and one-half percent
(1.5%) of the aggregate Purchase Price (as such term is defined in the
Securities Purchase Agreement) of such Investor’s Common Shares relating to the
Registrable Securities included in such Registration Statement on each of the
following dates: (i) the day of a Filing Failure and on every thirtieth day
(pro rated for periods totaling less than thirty days) after a Filing Failure
until such Filing Failure is cured; (ii) the day of an Effectiveness Failure
and on every thirtieth day (pro rated for periods totaling less than thirty
days) after an Effectiveness Failure until such Effectiveness Failure is cured;
and



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(iii) the
initial day of a Maintenance Failure and on every thirtieth day (pro rated for
periods totaling less than thirty days) after a Maintenance Failure until such
Maintenance Failure is cured; provided, however, that in no event shall the
Company be liable for more than one and one-half percent (1.5%) of penalties
during any thirty day period or for multiple events during any thirty day
period.  The payments to which a holder
shall be entitled pursuant to this Section 2(g) are referred to herein as “Registration Delay Payments.”  Registration Delay Payments shall accrue on
the day of the Filing Failure, Effectiveness Failure and the initial day of a
Maintenance Failure, as applicable, and thereafter shall accrue and be paid on
the earlier of (I) the thirtieth day after the event or failure giving rise to
the Registration Delay Payments has occurred and (II) the Business Day after the
event or failure giving rise to the Registration Delay Payments is cured.  In the event the Company fails to make
Registration Delay Payments in a timely manner, such Registration Delay
Payments shall bear interest at the rate of one and one-half percent (1.5%) per
month (prorated for partial months) until paid in full.  Notwithstanding anything herein to the
contrary, in no event shall the Registration Delay Payments exceed twelve and
one-half percent (12.5%) of the aggregate Purchase Price for all Investors (the
“Registration Delay Payments Cap”).  Any amount in excess of the Registration
Delay Payments Cap (the “Excess Registration
Delay Payments”) shall cause the Exercise Price of the Investor’s
Warrants to be lowered by an amount equal to the quotient of the amount of such
Investors Excess Registration Delay Payments divided by the Purchase Price of
such Investor’s Common Shares. 
Notwithstanding anything to the contrary contained herein, in no event
shall the Company be liable for any damages in connection with the Warrant or
Warrant Shares.


3.             Related Obligations.


At such time as the Company is obligated to file a
Registration Statement with the SEC pursuant to Section 2(a), 2(d) or 2(e), the
Company will use its best efforts to effect the registration of the Registrable
Securities in accordance with the intended method of disposition thereof and,
pursuant thereto, the Company shall have the following obligations:


a.             The Company shall
promptly prepare and file with the SEC a Registration Statement with respect to
the Registrable Securities and use its reasonable best efforts to cause such
Registration Statement relating to the Registrable Securities to become
effective as soon as practicable after such filing (but in no event later than
the Effectiveness Deadline).  Subject to
Allowable Grace Periods, the Company shall keep each Registration Statement
effective pursuant to Rule 415 at all times until the earlier of (i) the date
as of which the Investors may sell all of the Registrable Securities covered by
such Registration Statement without restriction pursuant to Rule 144(k) (or any
successor thereto) promulgated under the 1933 Act or (ii) the date on which the
Investors shall have sold all of the Registrable Securities covered by such
Registration Statement (the “Registration
Period”).  The Company shall
ensure that each Registration Statement (including any amendments or
supplements thereto and prospectuses contained therein) shall not contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein, or necessary to make the statements therein (in the case
of prospectuses, in the light of the circumstances in which they were made) not
misleading other than such information as provided in writing by Investors for
use in such Registration Statement or prospectus.  The term “best efforts” shall mean, among
other things, that the Company shall submit to the SEC, within two (2) Business
Days after the later of the date that (i) the Company learns that no review of
a particular Registration Statement will be



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made by the staff of the SEC or that the staff has no further comments
on a particular Registration Statement, as the case may be, and (ii) the
approval of Legal Counsel (which shall not be unreasonably withheld or delayed)
pursuant to Section 3(c) (which approval is immediately sought), a request for
acceleration of effectiveness of such Registration Statement to a time and date
not later than two (2) Business Days after the submission of such request.


b.             The Company shall
prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to a Registration Statement and the prospectus used
in connection with such Registration Statement, which prospectus is to be filed
pursuant to Rule 424 promulgated under the 1933 Act, as may be necessary to
keep such Registration Statement effective at all times during the Registration
Period, and, during such period, comply with the provisions of the 1933 Act
with respect to the disposition of all Registrable Securities of the Company
covered by such Registration Statement. 
In the case of amendments and supplements to a Registration Statement
which are required to be filed pursuant to this Agreement (including pursuant
to this Section 3(b)) by reason of the Company filing a report on Form 10-QSB,
Form 10-KSB or any analogous report under the Securities Exchange Act of 1934,
as amended (the “1934 Act”), the
Company shall have incorporated such report by reference into such Registration
Statement, if applicable, or shall file such amendments or supplements with the
SEC on the same day on which the 1934 Act report is filed which created the
requirement for the Company to amend or supplement such Registration Statement.


c.             The Company shall
(A) permit Legal Counsel to review and comment upon (i) a Registration
Statement at least three (3) Business Days prior to its filing with the SEC and
(ii) all amendments and supplements to all Registration Statements (except for
Annual Reports on Form 10-KSB, and Reports on Form 10-QSB and any similar or
successor reports) within a reasonable number of days prior to their filing
with the SEC, and (B) not file any Registration Statement or amendment or
supplement thereto in a form to which Legal Counsel reasonably objects; provided,
however, that no liquidated damages under Section 2 shall be due to any
Investor if Legal Counsel shall have unnecessarily objected to the filing or
effectiveness of any Registration Statement such as to delay its filing or
effectiveness.  The Company shall furnish
to Legal Counsel, without charge, (i) copies of any correspondence from the SEC
or the staff of the SEC to the Company or its representatives relating to any
Registration Statement, to the extent containing information which the Company
believes does not constitute material, nonpublic information concerning the
Company and (ii) promptly after the same is prepared and filed with the SEC,
one copy of any Registration Statement and any amendment(s) thereto, including
financial statements and schedules, all documents incorporated therein by
reference, if requested by an Investor (if not available pursuant to Rule
424(b)).  The Company shall reasonably
cooperate with Legal Counsel in performing the Company’s obligations pursuant
to this Section 3.


d.             The Company shall
furnish to each Investor whose Registrable Securities are included in any
Registration Statement, without charge, 
(i) promptly after the same is prepared and filed with the SEC, at least
one copy of such Registration Statement and any amendment(s) thereto, including
financial statements and schedules, all documents incorporated therein by
reference, if requested by an Investor, all exhibits and each preliminary
prospectus, (ii) upon the effectiveness of any Registration Statement, ten (10)
copies of the prospectus included in such Registration Statement and all
amendments and supplements thereto



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(or such other
number of copies as such Investor may reasonably request) and (iii) such other
documents, including copies of any preliminary or final prospectus, as such
Investor may reasonably request from time to time in order to facilitate the
disposition of the Registrable Securities owned by such Investor.


e.             The Company shall
use its best efforts to (i) register and qualify, unless an exemption from
registration and qualification applies, the resale by Investors of the
Registrable Securities covered by a Registration Statement under such other
securities or “blue sky” laws of all applicable jurisdictions in the United
States, (ii) prepare and file in those jurisdictions, such amendments
(including post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof during
the Registration Period, (iii) take such other actions as may be necessary to
maintain such registrations and qualifications in effect at all times during
the Registration Period, and (iv) take all other actions reasonably necessary
or advisable to qualify the Registrable Securities for sale in such
jurisdictions; provided, however, that the Company shall not be required in
connection therewith or as a condition thereto to (x) qualify to do business in
any jurisdiction where it would not otherwise be required to qualify but for
this Section 3(e), (y) subject itself to general taxation in any such
jurisdiction, or (z) file a general consent to service of process in any such
jurisdiction.  The Company shall promptly
notify Legal Counsel and each Investor who holds Registrable Securities of the
receipt by the Company of any notification with respect to the suspension of
the registration or qualification of any of the Registrable Securities for sale
under the securities or “blue sky” laws of any jurisdiction in the United
States or its receipt of notice of the initiation or threatening of any
proceeding for such purpose.


f.              The Company shall
notify Legal Counsel and each Investor in writing of the happening of any
event, as promptly as practicable after becoming aware of such event, as a
result of which the prospectus included in a Registration Statement, as then in
effect, includes an untrue statement of a material fact or omission to state a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading (provided that in no event shall such notice contain any material,
nonpublic information), and, subject to Section 3(r), promptly prepare a
supplement or amendment to such Registration Statement to correct such untrue
statement or omission, and deliver ten (10) copies of such supplement or
amendment to Legal Counsel and each Investor (or such other number of copies as
Legal Counsel or such Investor may reasonably request).  The Company shall also promptly notify Legal
Counsel and each Investor in writing (i) when a prospectus or any prospectus
supplement or post-effective amendment has been filed, and when a Registration
Statement or any post-effective amendment has become effective (notification of
such effectiveness shall be delivered to Legal Counsel and each Investor by
facsimile or e-mail on the same day of such effectiveness), (ii) of any request
by the SEC for amendments or supplements to a Registration Statement or related
prospectus or related information, and (iii) of the Company’s determination
that a post-effective amendment to a Registration Statement would be
appropriate.


g.             The Company shall
use its best efforts to prevent the issuance of any stop order or other
suspension of effectiveness of a Registration Statement, or the suspension of
the qualification of any of the Registrable Securities for sale in any
jurisdiction and, if such an order or suspension is issued, to obtain the
withdrawal of such order or suspension at the earliest



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possible
moment and to notify Legal Counsel and each Investor who holds Registrable
Securities being sold of the issuance of such order and the resolution thereof
or its receipt of notice of the initiation or threat of any proceeding for such
purpose.


h.             If, after the
execution of this Agreement, an Investor believes, after consultation with its
legal counsel, that it could reasonably be deemed to be an underwriter of
Registrable Securities, at the request of such Investor, the Company shall
furnish to such Investor, on the date of the effectiveness of the Registration
Statement and thereafter from time to time on such dates as an Investor may
reasonably request (i) a letter, dated such date, from the Company’s
independent certified public accountants in form and substance as is
customarily given by independent certified public accountants to underwriters
in an underwritten public offering, addressed to the Investors, and (ii) an
opinion, dated as of such date, of counsel representing the Company for
purposes of such Registration Statement, in form, scope and substance as is
customarily given in an underwritten public offering, addressed to the
Investors.


i.              If after the
execution of this Agreement an Investor believes, after consultation with its
legal counsel, that it could reasonably be deemed to be an underwriter of
Registrable Securities, at the request of such Investor, the Company shall make
available for inspection by (i) any Investor, (ii) Legal Counsel and (iii) one
firm of accountants or other agents retained by the Investors (collectively,
the “Inspectors”),
all pertinent financial and other records, and pertinent corporate documents
and properties of the Company (collectively, the “Records”),
as shall be reasonably deemed necessary by each Inspector, and cause the
Company’s officers, directors and employees to supply all information which any
Inspector may reasonably request; provided, however, that each Inspector shall
agree to hold in strict confidence and shall not make any disclosure (except to
an Investor) or use of any Record or other information which the Company
determines in good faith to be confidential, and of which determination the
Inspectors are so notified, unless (a) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in any Registration
Statement or is otherwise required under the 1933 Act, (b) the release of such
Records is ordered pursuant to a final, non-appealable subpoena or order from a
court or government body of competent jurisdiction, or (c) the information in
such Records has been made generally available to the public other than by
disclosure in violation of this Agreement. 
Each Investor agrees that it shall, upon learning that disclosure of
such Records is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to the Company and
allow the Company, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, the Records deemed
confidential.  Nothing herein (or in any
other confidentiality agreement between the Company and any Investor) shall be
deemed to limit the Investors’ ability to sell Registrable Securities in a
manner which is otherwise consistent with applicable laws and regulations.


j.              The Company shall
hold in confidence and not make any disclosure of information concerning an
Investor provided to the Company unless (i) disclosure of such information is
necessary to comply with federal or state securities laws or the rules and
regulations of any applicable trading market, (ii) the disclosure of such
information is necessary to avoid or correct a misstatement or omission in any
Registration Statement, (iii) the release of such information is ordered
pursuant to a subpoena or other final order from a court or governmental body
of competent jurisdiction, or (iv) such information has been made generally



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available to
the public other than by disclosure in violation of this Agreement or any other
agreement.  The Company agrees that it
shall, upon learning that disclosure of such information concerning an Investor
is sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt written notice to such Investor and allow such
Investor, at the Investor’s expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such information.


k.             The Company shall
use its best efforts either to (i) cause all of the Registrable Securities
covered by a Registration Statement to be listed on each securities exchange on
which securities of the same class or series issued by the Company are then
listed, if any, if the listing of such Registrable Securities is then permitted
under the rules of such exchange or (ii) secure the inclusion for quotation of
all of the Registrable Securities on the Nasdaq National Market or (iii) if,
despite the Company’s best efforts, the Company is unsuccessful in satisfying
the preceding clauses (i) and (ii), to secure the inclusion for quotation of
all of the Registrable Securities on the American Stock Exchange for such
Registrable Securities and, without limiting the generality of the foregoing,
to use its best efforts to arrange for at least two market makers to register
with the National Association of Securities Dealers, Inc. (“NASD”) as such with respect to such Registrable Securities
or (iv) if, despite the Company’s best efforts, the Company is unsuccessful in
satisfying the preceding clauses (i)-(iii), to secure the inclusion for
quotation of all of the Registrable Securities on the NASD’s OTC Bulletin
Board.  The Company shall pay all fees
and expenses in connection with satisfying its obligation under this Section
3(k).


l.              The Company shall
cooperate with the Investors who hold Registrable Securities being offered and,
to the extent applicable, facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legend) representing the Registrable
Securities to be offered pursuant to a Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may be, as the
Investors may reasonably request and registered in such names as the Investors
may request.


m.            If requested by an
Investor, the Company shall (i) as soon as practicable incorporate in a
prospectus supplement or post-effective amendment such information as an
Investor reasonably requests to be included therein relating to the sale and
distribution of Registrable Securities, including, without limitation,
information with respect to the number of Registrable Securities being offered
or sold, the purchase price being paid therefor and any other terms of the
offering of the Registrable Securities to be sold in such offering; (ii) as
soon as practicable make all required filings of such prospectus supplement or
post-effective amendment after being notified of the matters to be incorporated
in such prospectus supplement or post-effective amendment; and (iii) as soon as
practicable, supplement or make amendments to any Registration Statement if
reasonably requested by an Investor holding any Registrable Securities.


n.             The Company shall
use its best efforts to cause the Registrable Securities covered by a
Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to consummate the
disposition of such Registrable Securities.



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o.             The Company shall make generally
available to its security holders as soon as practical, but not later than
ninety (90) days after the close of the period covered thereby, an earnings
statement (in form complying with, and in the manner provided by, the
provisions of Rule 158 under the 1933 Act) covering a twelve-month period
beginning not later than the first day of the Company’s fiscal quarter next
following the effective date of a Registration Statement.


p.             The Company shall
otherwise use its best efforts to comply with all applicable rules and
regulations of the SEC in connection with any registration hereunder.


q.             Within two (2)
Business Days after a Registration Statement which covers Registrable
Securities is declared effective by the SEC, the Company shall deliver, and
shall cause legal counsel for the Company to deliver, to the transfer agent for
such Registrable Securities (with copies to the Investors whose Registrable
Securities are included in such Registration Statement) confirmation that such
Registration Statement has been declared effective by the SEC in the form
attached hereto as Exhibit A.


r.              Notwithstanding
anything to the contrary herein, at any time after the Effective Date, the
Company may delay the disclosure of material, non-public information concerning
the Company the disclosure of which at the time is not, in the good faith
opinion of the Board of Directors of the Company (following consultation with
its counsel), in the best interest of the Company (a “Grace Period”); provided, that the Company shall promptly
(i) notify the Investors in writing that such determination has been made (provided
that in each notice the Company will not disclose the content of such material,
non-public information to the Investors) and the date on which the Grace Period
will begin, and (ii) notify the Investors in writing of the date on which the
Grace Period ends; and, provided further, that during any three hundred sixty
five (365) day period such Grace Periods shall not exceed an aggregate of
thirty (30) days and the first day of any Grace Period must be at least two (2)
trading days after the last day of any prior Grace Period (each, an “Allowable Grace Period”). 
For purposes of determining the length of a Grace Period above, the
Grace Period shall begin on and include the date the Investors receive the
notice referred to in clause (i) and shall end on and include the later of the
date the Investors receive the notice referred to in clause (ii) and the date
referred to in such notice.  The
provisions of Section 3(g) hereof shall not be applicable during the period of
any Allowable Grace Period.  Upon expiration
of the Grace Period, the Company shall again be bound by the first sentence of
Section 3(f) with respect to the information giving rise thereto unless such
material, non-public information is no longer applicable.  Notwithstanding anything to the contrary, the
Company shall cause its transfer agent to deliver unlegended shares of Common
Stock to a transferee of an Investor in accordance with the terms of the
Securities Purchase Agreement in connection with any sale of Registrable
Securities with respect to which an Investor has entered into a contract for
sale and delivered a copy of the prospectus included as part of the applicable
Registration Statement (unless an exemption from such prospectus delivery
requirement exists) prior to the Investor’s receipt of the notice of a Grace
Period and for which the Investor has not yet settled.


 



 10














 


 


4.             Obligations of the Investors.


a.             At least five (5)
Business Days prior to the first anticipated filing date of a Registration
Statement, the Company shall notify each Investor in writing of the information
the Company requires from each such Investor if such Investor elects to have
any of such Investor’s Registrable Securities included in such Registration
Statement.  It shall be a condition
precedent to the obligations of the Company to complete the registration
pursuant to this Agreement with respect to the Registrable Securities of a
particular Investor (and to the Company’s liability for damages under Section
2(f) to such Investor) that such Investor shall furnish to the Company a
completed and updated “Selling Stockholder Questionnaire,” in the form attached
hereto as Exhibit C, and such other information regarding itself, the
Registrable Securities held by it and the intended method of disposition of the
Registrable Securities held by it as shall be reasonably required to effect the
effectiveness of the registration of such Registrable Securities and shall
execute such documents in connection with such registration as the Company may
reasonably request.


b.             Each Investor, by
such Investor’s acceptance of the Registrable Securities, agrees to cooperate
with the Company as reasonably requested by the Company in connection with the
preparation and filing of any Registration Statement hereunder, unless such
Investor has notified the Company in writing of such Investor’s election to
exclude all of such Investor’s Registrable Securities from such Registration
Statement.


c.             Each Investor
agrees that, upon receipt of any notice from the Company of the happening of
any event of the kind described in Section 3(g) or the first sentence of 3(f),
such Investor will immediately discontinue disposition of Registrable
Securities pursuant to any Registration Statement(s) covering such Registrable
Securities until such Investor’s receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(g) or the first sentence of 3(f)
or receipt of notice that no supplement or amendment is required.  Notwithstanding anything to the contrary, the
Company shall cause its transfer agent to deliver unlegended shares of Common
Stock to a transferee of an Investor in accordance with the terms of the
Securities Purchase Agreement in connection with any sale of Registrable
Securities with respect to which an Investor has entered into a contract for
sale prior to the Investor’s receipt of a notice from the Company of the
happening of any event of the kind described in Section 3(g) or the first
sentence of 3(f) and for which the Investor has not yet settled.


d.             Each Investor
covenants and agrees that it will comply with the prospectus delivery
requirements of the 1933 Act as applicable to it or an exemption therefrom in
connection with sales of Registrable Securities pursuant to the Registration
Statement.


5.             Expenses of Registration.


All reasonable expenses, other than underwriting
discounts and commissions, incurred in connection with registrations, filings
or qualifications pursuant to Sections 2 and 3, including, without limitation,
all registration, listing and qualifications fees, printers and accounting
fees, and fees and disbursements of counsel for the Company shall be paid by
the Company.  The Company shall also
reimburse the Investors for the fees and disbursements of 



 11
 






 



Legal Counsel in
connection with registration, filing or qualification pursuant to Sections 2
and 3 of this Agreement which amount shall be limited to $10,000.


6.             Indemnification.


In the event any Registrable Securities are included
in a Registration Statement under this Agreement:


a.             To the fullest
extent permitted by law, the Company will, and hereby does, indemnify, hold
harmless and defend each Investor, the directors, officers, members, partners,
employees, agents, representatives of, and each Person, if any, who controls
any Investor within the meaning of the 1933 Act or the 1934 Act (each, an “Indemnified Person”), against any losses, claims, damages,
liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys’
fees, amounts paid in settlement or expenses, joint or several, (collectively, “Claims”) incurred in investigating, preparing or defending
any action, claim, suit, inquiry, proceeding, investigation or appeal taken
from the foregoing by or before any court or governmental, administrative or
other regulatory agency, body or the SEC, whether pending or threatened,
whether or not an indemnified party is or may be a party thereto (“Indemnified Damages”), to which any of them may become
subject insofar as such Claims (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon:  (i) any untrue statement or alleged untrue statement
of a material fact in a Registration Statement or any post-effective amendment
thereto or in any filing made in connection with the qualification of the
offering under the securities or other “blue sky” laws of any jurisdiction in
which Registrable Securities are offered (“Blue Sky Filing”),
or the omission or alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, (ii)
any untrue statement or alleged untrue statement of a material fact contained
in any preliminary prospectus if used prior to the effective date of such
Registration Statement, or contained in the final prospectus (as amended or
supplemented, if the Company files any amendment thereof or supplement thereto
with the SEC) or the omission or alleged omission to state therein any material
fact necessary to make the statements made therein, in the light of the
circumstances under which the statements therein were made, not misleading,
(iii) any violation or alleged violation by the Company of the 1933 Act, the
1934 Act, any other law, including, without limitation, any state securities
law, or any rule or regulation thereunder relating to the offer or sale of the
Registrable Securities pursuant to a Registration Statement or (iv) any
violation of this Agreement (the matters in the foregoing clauses (i) through
(iv) being, collectively, “Violations”).  Subject to Section 6(c), the Company shall
reimburse the Indemnified Persons, promptly as such expenses are incurred and
are due and payable, for any legal fees or other reasonable expenses incurred
by them in connection with investigating or defending any such Claim.  Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this Section
6(a):  (i) shall not apply to a Claim by
an Indemnified Person arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to the
Company by such Indemnified Person for such Indemnified Person expressly for
use in connection with the preparation of the Registration Statement or any
such amendment thereof or supplement thereto, if such prospectus was timely
made available by the Company pursuant to Section 3(d) and (ii) shall not apply
to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall not be
unreasonably withheld or delayed.  Such 



 12
 






 



indemnity
shall remain in full force and effect regardless of any investigation made by
or on behalf of the Indemnified Person and shall survive the transfer of the
Registrable Securities by the Investors pursuant to Section 9.


b.             In connection with
any Registration Statement in which an Investor is participating, each such
Investor agrees to severally and not jointly indemnify, hold harmless and
defend, to the same extent and in the same manner as is set forth in Section
6(a), the Company, each of its directors, each of its officers who signs the
Registration Statement and each Person, if any, who controls the Company within
the meaning of the 1933 Act or the 1934 Act (each, an “Indemnified Party”), against any Claim or Indemnified
Damages to which any of them may become subject, under the 1933 Act, the 1934
Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or
are based upon any Violation, in each case to the extent, and only to the
extent, that such Violation occurs in reliance upon and in conformity with
written information furnished to the Company by such Investor expressly for use
in connection with such Registration Statement; and, subject to Section 6(c),
such Investor will reimburse any legal or other expenses reasonably incurred by
an Indemnified Party in connection with investigating or defending any such
Claim; provided, however, that the indemnity agreement contained in this
Section 6(b) and the agreement with respect to contribution contained in
Section 7 shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of such Investor,
which consent shall not be unreasonably withheld or delayed; provided, further,
however, that the Investor shall be liable under this Section 6(b) for only
that amount of a Claim or Indemnified Damages as does not exceed the net
proceeds to such Investor as a result of the sale of Registrable Securities
pursuant to such Registration Statement. 
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such Indemnified Party and shall survive
the transfer of the Registrable Securities by the Investors pursuant to Section
9.


c.             Promptly after
receipt by an Indemnified Person or Indemnified Party under this Section 6 of
notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving a Claim, such Indemnified Person
or Indemnified Party shall, if a Claim in respect thereof is to be made against
any indemnifying party under this Section 6, deliver to the indemnifying party
a written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as the
case may be; provided, however, that an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the fees and expenses of
not more than one counsel for such Indemnified Person or Indemnified Party to
be paid by the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel of the
Indemnified Person or Indemnified Party and the indemnifying party would be
inappropriate due to actual or potential differing interests between such
Indemnified Person or Indemnified Party and any other party represented by such
counsel in such proceeding.  In the case
of an Indemnified Person, legal counsel referred to in the immediately
preceding sentence shall be selected by the Investors holding at least a
majority in interest of
the Registrable Securities included in the Registration Statement to which the
Claim relates.  The Indemnified Party or
Indemnified Person shall cooperate fully with the indemnifying party in
connection with any 



 13
 






 



negotiation or
defense of any such action or Claim by the indemnifying party and shall furnish
to the indemnifying party all information reasonably available to the
Indemnified Party or Indemnified Person which relates to such action or
Claim.  The indemnifying party shall keep
the Indemnified Party or Indemnified Person reasonably apprised at all times as
to the status of the defense or any settlement negotiations with respect
thereto.  No indemnifying party shall be
liable for any settlement of any action, claim or proceeding effected without
its prior written consent, provided, however, that the indemnifying party shall
not unreasonably withhold, delay or condition its consent.  No indemnifying party shall, without the
prior written consent of the Indemnified Party or Indemnified Person, consent
to entry of any judgment or enter into any settlement or other compromise which
does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party or Indemnified Person of a release from all
liability in respect to such Claim or litigation, and such settlement shall not
include any admission as to fault on the part of the Indemnified Party.  Following indemnification as provided for
hereunder, the indemnifying party shall be subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all third parties,
firms or corporations relating to the matter for which indemnification has been
made.  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 Person or Indemnified Party under this Section 6, except to
the extent that the indemnifying party is prejudiced in its ability to defend
such action.


d.             The indemnification
required by this Section 6 shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as and when bills
are received or Indemnified Damages are incurred.


e.             The indemnity
agreements contained herein shall be in addition to  (i) any cause of action or similar right of
the Indemnified Party or Indemnified Person against the indemnifying party or
others, and (ii) any liabilities the indemnifying party may be subject to
pursuant to the law.


7.             Contribution.


To the extent any indemnification by an indemnifying
party is prohibited or limited by law, the indemnifying party agrees to make
the maximum contribution with respect to any amounts for which it would
otherwise be liable under Section 6 to the fullest extent permitted by law;
provided, however, that:  (i) no
contribution shall be made under circumstances where the maker would not have
been liable for indemnification under the fault standards set forth in Section
6 of this Agreement, (ii) no Person involved in the sale of Registrable
Securities, which Person is guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) in connection with such sale, shall
be entitled to contribution from any Person involved in such sale of
Registrable Securities who was not guilty of fraudulent misrepresentation; and
(iii) contribution by any seller of Registrable Securities shall be limited in
amount to the net amount of proceeds received by such seller from the sale of
such Registrable Securities pursuant to such Registration Statement.



 14
 






 



8.             Reports Under the 1934 Act.


With a view to making available to the Investors the
benefits of Rule 144 promulgated under the 1933 Act or any other similar rule
or regulation of the SEC that may at any time permit the Investors to sell
securities of the Company to the public without registration (“Rule 144”), the Company agrees to:


a.             make and keep
public information available, as those terms are understood and defined in Rule
144;


b.             file with the SEC
in a timely manner all reports and other documents required of the Company
under the 1933 Act and the 1934 Act so long as the Company remains subject to
such requirements and the filing of such reports and other documents is
required for the applicable provisions of Rule 144; and


c.             furnish to each
Investor so long as such Investor owns Registrable Securities, promptly upon
request, (i) a written statement by the Company, if true, that it has complied
with the reporting requirements of Rule 144, the 1933 Act and the 1934 Act,
(ii) a copy of the most recent annual report of the Company and such other
reports and documents so filed by the Company (but only if such reports are not
publicly available on the EDGAR system), and (iii) such other information as
may be reasonably requested to permit the Investors to sell such securities
pursuant to Rule 144 without registration.


9.             Assignment of Registration Rights.


The rights under this Agreement shall be automatically
assignable by the Investors to any transferee of all or any portion of such
Investor’s Registrable Securities if: 
(i) the Investor agrees in writing with the transferee or assignee to
assign such rights, and a copy of such agreement is furnished to the Company
within a reasonable time after such assignment; (ii) the Company is, within a
reasonable time after such transfer or assignment, furnished with written
notice of (a) the name and address of such transferee or assignee, and (b) the
securities with respect to which such registration rights are being transferred
or assigned; (iii) immediately following such transfer or assignment the
further disposition of such securities by the transferee or assignee is
restricted under the 1933 Act or applicable state securities laws; (iv) at or
before the time the Company receives the written notice contemplated by clause
(ii) of this sentence the transferee or assignee agrees in writing with the
Company to be bound by all of the provisions contained herein; and (v) such
transfer shall have been made in accordance with the applicable requirements of
the Securities Purchase Agreement.


10.           Amendment of Registration Rights.


Provisions of this Agreement may be amended and the
observance thereof may be waived (either generally or in a particular instance
and either retroactively or prospectively), only with the written consent of
the Company and the holders of at least two-thirds of the Registrable
Securities.  Any amendment or waiver
effected in accordance with this Section 10 shall be binding upon each Investor
and the Company.  No such amendment shall
be effective to the extent that it applies to less than all of the holders of
the Registrable Securities.  No
consideration shall be offered or paid to any Person to amend or consent to a
waiver or modification of any 



 15
 






 



provision of any of this
Agreement unless the same consideration also is offered to all of the parties
to this Agreement.


11.           Miscellaneous.


a.             A Person is deemed
to be a holder of Registrable Securities whenever such Person owns or is deemed
to own of record such Registrable Securities. 
If the Company receives conflicting instructions, notices or elections
from two or more Persons with respect to the same Registrable Securities, the
Company shall act upon the basis of instructions, notice or election received
from the such record owner of such Registrable Securities.


b.             Any notices,
consents, waivers or other communications required or permitted to be given
under the terms of this Agreement must be in writing and will be deemed to have
been delivered:  (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one Business Day after deposit
with a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. 
The addresses and facsimile numbers for such communications shall be:


	
  

  	
   

  	
  If to the Company:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Apollo Resources
  International, Inc.

  
	
   

  	
   

  	
  3001 Knox Street,
  Suite 403

  
	
   

  	
   

  	
  Dallas, Texas 75205

  
	
   

  	
   

  	
  Telephone:

  	
   

  	
  (214) 389-9800

  
	
   

  	
   

  	
  Facsimile:

  	
   

  	
  (214) 389-9806

  
	
   

  	
   

  	
  Attention:

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  With a copy to:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Scheef & Stone, LLP

  
	
   

  	
   

  	
  5956 Sherry Lane, Suite 1400

  
	
   

  	
   

  	
  Dallas, Texas 75225

  
	
   

  	
   

  	
  Telephone:

  	
   

  	
  (214) 706-4200

  
	
   

  	
   

  	
  Facsimile:

  	
   

  	
  (214) 706-4242

  
	
   

  	
   

  	
  Attention:

  	
   

  	
  Roger A. Crabb, Esq.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  If to Legal Counsel:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Schulte Roth & Zabel LLP

  
	
   

  	
   

  	
  919 Third Avenue

  
	
   

  	
   

  	
  New York, New York 10022

  
	
   

  	
   

  	
  Telephone:

  	
   

  	
  (212) 756-2000

  
	
   

  	
   

  	
  Facsimile:

  	
   

  	
  (212) 593-5955

  
	
   

  	
   

  	
  Attention:

  	
   

  	
  Eleazer N. Klein, Esq.

  
							



 



 16
 






 



If to a Buyer, to its address and facsimile number set
forth on the Schedule of Buyers attached hereto, with copies to such Buyer’s
representatives as set forth on the Schedule of Buyers, or to such other
address and/or facsimile number and/or to the attention of such other Person as
the recipient party has specified by written notice given to each other party
five (5) days prior to the effectiveness of such change.  Written confirmation of receipt (A) given by
the recipient of such notice, consent, waiver or other communication, (B)
mechanically or electronically generated by the sender’s facsimile machine
containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (C) provided by a courier or overnight courier
service shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in
accordance with clause (i), (ii) or (iii) above, respectively.


c.             Failure of any
party to exercise any right or remedy under this Agreement or otherwise, or
delay by a party in exercising such right or remedy, shall not operate as a
waiver thereof.


d.             All questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdictions) that would cause
the application of the laws of any jurisdictions other than the State of New
York.  Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in
The City of New York, Borough of Manhattan, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper.  Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of process and
notice thereof.  Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law.  If any provision of this
Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.  EACH PARTY
HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A
JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION
HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.


e.             This Agreement, the
other Transaction Documents (as defined in the Securities Purchase Agreement)
and the instruments referenced herein and therein constitute the entire
agreement among the parties hereto with respect to the subject matter hereof
and thereof.  There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein and therein.  This Agreement, the
other Transaction Documents and 



 17
 






 



the
instruments referenced herein and therein supersede all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof and thereof.


f.              Subject to the
requirements of Section 9, this Agreement shall inure to the benefit of and be
binding upon the permitted successors and assigns of each of the parties
hereto.


g.             The headings in
this Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning hereof.


h.             This Agreement may
be executed in identical counterparts, each of which shall be deemed an
original but all of which shall constitute one and the same agreement.  This Agreement, once executed by a party, may
be delivered to the other party hereto by facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this Agreement.


i.              Each party shall
do and perform, or cause to be done and performed, all such further acts and
things, and shall execute and deliver all such other agreements, certificates,
instruments and documents, as any other party may reasonably request in order
to carry out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.


j.              All consents and
other determinations required to be made by the Investors pursuant to this
Agreement shall be made, unless otherwise specified in this Agreement, by the
Required Holders.


k.             The language used
in this Agreement will be deemed to be the language chosen by the parties to
express their mutual intent and no rules of strict construction will be applied
against any party.


l.              This Agreement is
intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision
hereof be enforced by, any other Person.


m.            The obligations of
each Buyer hereunder are several and not joint with the obligations of any
other Buyer, and no provision of this Agreement is intended to confer any
obligations on any Buyer vis-à-vis any other Buyer.  Nothing contained herein, and no action taken
by any Buyer pursuant hereto, shall be deemed to constitute the Buyers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Buyers are in any way acting in concert or as a
group with respect to such obligations or the transactions contemplated herein.


[Signature Page Follows]


 



 18














 


IN WITNESS WHEREOF,
each Buyer and the Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first written
above.


 


	
  

  	
  COMPANY:

  
	
   

  	
   

  	
   

  
	
   

  	
  APOLLO RESOURCES INTERNATIONAL, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 









 



IN WITNESS WHEREOF,
each Buyer and the Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date first written
above.


 


	
  

  	
  BUYERS:

  
	
   

  	
   

  	
   

  
	
   

  	
  CASTLERIGG MASTER INVESTMENTS LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


 















 


 


SCHEDULE OF BUYERS


 


	
  

  Buyer

  	
   

  	
  Buyer’s Address

  and Facsimile Number

  	
   

  	
  Buyer’s Representative’s Address 

  and Facsimile Number

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Castlerigg Master Investments Ltd

  	
   

  	
  c/o Sandell Asset Management Corp.

  40 West 57th Street

  26th Floor

  New York, New York 10019

  Attention: Cem Hacioglu/Matthew Pliskin

  Facsimile: (212) 603-5710

  Telephone: (212) 603-5775

  	
   

  	
  Schulte Roth & Zabel LLP

  919 Third Avenue

  New York, New York 10022

  Attn: Eleazer Klein, Esq.

  Facsimile: (212) 593-5955

  Telephone: (212) 756-2000

  



 


 















 


 


EXHIBIT A


FORM OF NOTICE OF
EFFECTIVENESS

OF REGISTRATION STATEMENT


Colonial Stock Transfer

66 Exchange Place

Salt Lake City, Utah 84111


Re:          APOLLO RESOURCES INTERNATIONAL, INC.


Ladies and Gentlemen:


[We are][I am] counsel to
Apollo Resources International, Inc., a Utah corporation (the “Company”), and have represented the Company
in connection with that certain Securities Purchase Agreement (the “Securities Purchase
Agreement”) entered into by and among the Company and the buyers
named therein (collectively, the “Holders”)
pursuant to which the Company issued to the Holders shares (the “Common Shares”) of the Company’s common stock, $0.001 par
value per share (the ”Common Stock”)
and warrants exercisable for shares of Common Stock (the “Warrants”). 
Pursuant to the Securities Purchase Agreement, the Company also has
entered into a Registration Rights Agreement with the Holders (the “Registration Rights Agreement”) pursuant to
which the Company agreed, among other things, to register the Registrable
Securities (as defined in the Registration Rights Agreement), including the
shares of Common Stock issuable upon exercise of the Warrants, under the
Securities Act of 1933, as amended (the “1933
Act”).  In connection with the
Company’s obligations under the Registration Rights Agreement, on               
   , 200  , the Company filed a Registration Statement
on Form S-3 (File No. 333-           )
(the “Registration Statement”)
with the Securities and Exchange Commission (the “SEC”) relating to the Registrable Securities which names each
of the Holders as a selling stockholder thereunder.


In connection with the foregoing, [we][I] advise you
that a member of the SEC’s staff has advised [us][me] by telephone that the SEC
has entered an order declaring the Registration Statement effective under the
1933 Act at [ENTER TIME OF
EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and [we][I] have no knowledge, after
telephonic inquiry of a member of the SEC’s staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.


This letter shall serve as our standing opinion to you
that the shares of Common Stock are freely transferable by the Holders pursuant
to the Registration Statement.  You need
not require further letters from us to effect any future legend-free issuance
or reissuance of 









 



shares of Common Stock to
the Holders as contemplated by the Company’s Irrevocable Transfer Agent
Instructions dated July     , 2006.


 


	
  

  	
  Very truly
  yours,

  
	
   

  	
   

  	
   

  
	
   

  	
  [ISSUER’S COUNSEL]

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  



 


CC:           [LIST
NAMES OF HOLDERS]


 















 


 


EXHIBIT B


SELLING STOCKHOLDERS


The
shares of Common Stock being offered by the selling stockholders are those
previously issued to the selling stockholders and those issuable to the selling
stockholders upon exercise of the warrants. 
For additional information regarding the issuance of Common Stock and
the Warrants, see “Private Placement of Common Shares and Warrants” above.  We are registering the shares of Common Stock
in order to permit the selling stockholders to offer the shares for resale from
time to time.  Except for the ownership
of the Common Stock and the Warrants issued pursuant to the Securities Purchase
Agreement, the selling stockholders have not had any material relationship with
us within the past three years.


The
table below lists the selling stockholders and other information regarding the
beneficial ownership of the shares of Common Stock by each of the selling
stockholders.  The second column lists
the number of shares of Common Stock beneficially owned by each selling
stockholder, based on its ownership of the Common Stock and the Warrants, as of
            , 200   ,
assuming exercise of the warrants held by the selling stockholders on that
date, without regard to any limitations on exercise.


The
third column lists the shares of Common Stock being offered by this prospectus
by the selling stockholders.


In
accordance with the terms of a registration rights agreement with the selling
stockholders, this prospectus generally covers the resale of at least 130% of
the sum of (i) the number of shares of Common Stock issued in connection with
the Securities Purchase Agreement and (ii) the number of shares of Common Stock
issuable upon exercise of the related warrants as of the trading day
immediately preceding the date the registration statement is initially filed
with the SEC.  Because the
exercise price of the warrants may be adjusted, the number of shares that will
actually be issued may be more or less than the number of shares being offered
by this prospectus.  The fourth column
assumes the sale of all of the shares offered by the selling stockholders
pursuant to this prospectus.


Under
the terms of the warrants, a selling stockholder may not exercise the warrants
to the extent such exercise would cause such selling stockholder, together with
its affiliates, to beneficially own a number of shares of Common Stock which
would exceed 4.99% of our then outstanding shares of Common Stock following
such exercise, excluding for purposes of such determination shares of Common
Stock issuable upon exercise of the warrants which have not been
exercised.  The number of shares in the
second column does not reflect this limitation. 
The selling stockholders may sell all, some or none of their shares in
this offering.  See “Plan of
Distribution.”









 



 


	
  

  

  Name of Selling Stockholder

  	
   

  	
  

  Number of Shares Owned

  Prior to Offering

  	
   

  	
  Maximum Number of Shares

  to be Sold Pursuant to this

  Prospectus

  	
   

  	
  

  Number of Shares

  Owned After Offering

  
	
  Castlerigg Master Investments (1)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  0

  







(1)             Sandell
Asset Management Corp. is the investment manager of Castlerigg Master
Investment Ltd. (“Castlerigg”) and has shared voting and dispositive power over
the securities owned by Castlerigg. Sandell Asset Management Corp. and Thomas
E. Sandell, its sole shareholder, disclaim beneficial ownership of the
securities owned by Castlerigg.


 















 


 


PLAN OF DISTRIBUTION


We
are registering the shares of Common Stock previously issued and the shares of
Common Stock issuable upon exercise of the warrants to permit the resale of
these shares of Common Stock by the holders of the Common Stock and warrants
from time to time after the date of this prospectus.  We will not receive any of the proceeds from
the sale by the selling stockholders of the shares of Common Stock.  We will bear all fees and expenses incident
to our obligation to register the shares of Common Stock.


The
selling stockholders may sell all or a portion of the shares of Common Stock
beneficially owned by them and offered hereby from time to time directly or
through one or more underwriters, broker-dealers or agents.  If the shares of Common Stock are sold
through underwriters or broker-dealers, the selling stockholders will be
responsible for underwriting discounts or commissions or agent’s
commissions.  The shares of Common Stock
may be sold in one or more transactions at fixed prices, at prevailing market
prices at the time of the sale, at varying prices determined at the time of
sale, or at negotiated prices.  These
sales may be effected in transactions, which may involve crosses or block
transactions,


·                  on
any national securities exchange or quotation service on which the securities
may be listed or quoted at the time of sale;


·                  in
the over-the-counter market;


·                  in
transactions otherwise than on these exchanges or systems or in the
over-the-counter market;


·                  through
the writing of options, whether such options are listed on an options exchange
or otherwise;


·                  ordinary
brokerage transactions and transactions in which the broker-dealer solicits
purchasers;


·                  block
trades in which the broker-dealer will attempt to sell the shares as agent but may
position and resell a portion of the block as principal to facilitate the
transaction;


·                  purchases
by a broker-dealer as principal and resale by the broker-dealer for its
account;


·                  an
exchange distribution in accordance with the rules of the applicable exchange;


·                  privately
negotiated transactions;


·                  to
cover short sales made after the date this Registration Statement is declared
effective by the SEC;


·                  sales
pursuant to Rule 144;









 



·                  broker-dealers
may agree with the selling securityholders to sell a specified number of such
shares at a stipulated price per share;


·                  a
combination of any such methods of sale; and


·                  any
other method permitted pursuant to applicable law.


If
the selling stockholders effect such transactions by selling shares of Common
Stock to or through underwriters, broker-dealers or agents, such underwriters,
broker-dealers or agents may receive commissions in the form of discounts,
concessions or commissions from the selling stockholders or commissions from
purchasers of the shares of Common Stock for whom they may act as agent or to
whom they may sell as principal (which discounts, concessions or commissions as
to particular underwriters, broker-dealers or agents may be in excess of those
customary in the types of transactions involved).  In connection with sales of the shares of
Common Stock or otherwise, the selling stockholders may enter into hedging
transactions with broker-dealers, which may in turn engage in short sales of
the shares of Common Stock in the course of hedging in positions they
assume.  The selling stockholders may
also sell shares of Common Stock short and deliver shares of Common Stock
covered by this prospectus to close out short positions and to return borrowed
shares in connection with such short sales. 
The selling stockholders may also loan or pledge shares of Common Stock
to broker-dealers that in turn may sell such shares.


The
selling stockholders may pledge or grant a security interest in some or all of
the warrants or shares of Common Stock owned by them and, if they default in
the performance of their secured obligations, the pledgees or secured parties
may offer and sell the shares of Common Stock from time to time pursuant to
this prospectus or any amendment to this prospectus under Rule 424(b)(3) or
other applicable provision of the Securities Act of 1933, as amended, amending,
if necessary, the list of selling stockholders to include the pledgee,
transferee or other successors in interest as selling stockholders under this
prospectus.  The selling stockholders
also may transfer and donate the shares of Common Stock in other circumstances
in which case the transferees, donees, pledgees or other successors in interest
will be the selling beneficial owners for purposes of this prospectus.


The
selling stockholders and any broker-dealer participating in the distribution of
the shares of Common Stock may be deemed to be “underwriters” within the
meaning of the Securities Act, and any commission paid, or any discounts or
concessions allowed to, any such broker-dealer may be deemed to be underwriting
commissions or discounts under the Securities Act.  At the time a particular offering of the
shares of Common Stock is made, a prospectus supplement, if required, will be
distributed which will set forth the aggregate amount of shares of Common Stock
being offered and the terms of the offering, including the name or names of any
broker-dealers or agents, any discounts, commissions and other terms
constituting compensation from the selling stockholders and any discounts, commissions
or concessions allowed or reallowed or paid to broker-dealers.


Under
the securities laws of some states, the shares of Common Stock may be sold in
such states only through registered or licensed brokers or dealers.  In addition, in some states the shares of
Common Stock may not be sold unless such shares have been registered or
qualified 









 



for sale in such
state or an exemption from registration or qualification is available and is
complied with.


There
can be no assurance that any selling stockholder will sell any or all of the
shares of Common Stock registered pursuant to the shelf registration statement,
of which this prospectus forms a part.


The
selling stockholders and any other person participating in such distribution
will be subject to applicable provisions of the Securities Exchange Act of
1934, as amended, and the rules and regulations thereunder, including, without
limitation, Regulation M of the Exchange Act, which may limit the timing of
purchases and sales of any of the shares of Common Stock by the selling
stockholders and any other participating person.  Regulation M may also restrict the ability of
any person engaged in the distribution of the shares of Common Stock to engage
in market-making activities with respect to the shares of Common Stock.  All of the foregoing may affect the
marketability of the shares of Common Stock and the ability of any person or
entity to engage in market-making activities with respect to the shares of
Common Stock.


We
will pay all expenses of the registration of the shares of Common Stock
pursuant to the registration rights agreement, estimated to be
$[     ] in total, including, without limitation,
Securities and Exchange Commission filing fees and expenses of compliance with
state securities or “blue sky” laws; provided, however, that a selling
stockholder will pay all underwriting discounts and selling commissions, if
any.  We will indemnify the selling
stockholders against liabilities, including some liabilities under the
Securities Act, in accordance with the registration rights agreements, or the
selling stockholders will be entitled to contribution.  We may be indemnified by the selling
stockholders against civil liabilities, including liabilities under the Securities
Act, that may arise from any written information furnished to us by the selling
stockholder specifically for use in this prospectus, in accordance with the
related registration rights agreement, or we may be entitled to contribution.


Once
sold under the shelf registration statement, of which this prospectus forms a
part, the shares of Common Stock will be freely tradable in the hands of
persons other than our affiliates.


 















 


EXHIBIT C


SELLING
STOCKHOLDER QUESTIONNAIRE


The undersigned
hereby provides the following information to the Company and represents and
warrants that such information is accurate:


1.                                      Name.


(a)             Full Legal Name of Selling Securityholder


	
  

  	
   

  
	
   

  	
   

  



 


(b)            Full Legal Name of Registered Holder (if not the same
as (a) above) through which Registrable Securities Listed in Item 3 below are
held:


	
  

  	
   

  
	
   

  	
   

  



 


(c)             Full Legal Name of Natural Control Person (which means
a natural person who directly or indirectly alone or with others has power to
vote or dispose of the securities covered by the questionnaire):


	
  

  	
   

  
	
   

  	
   

  



 


2.                                      Address for Notices to
Selling Securityholder:


	
  

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Telephone:

  	
   

  	
   

  
	
  Fax:

  	
   

  	
   

  	
   

  
	
  Contact Person:

  	
   

  



 


3.                                      Beneficial Ownership of
Registrable Securities:


Type and Principal Amount
of Registrable Securities beneficially owned:


	
  

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  



 


4.                                      Broker-Dealer Status:









 



(a)                                  Are you a broker-dealer?


	
  Yes  o

  	
   

  	
  No  o

  



 


Note:                   If yes, the SEC’s staff has indicated that you should
be identified as an underwriter in the Registration Statement.


(b)                                 Are you an affiliate of a broker-dealer?


	
  Yes  o

  	
   

  	
  No  o

  



 


(c)                                  If you are an affiliate of a
broker-dealer, do you certify that you bought the Registrable Securities in the
ordinary course of business, and at the time of the purchase of the Registrable
Securities to be resold, you had no agreements or understandings, directly or
indirectly, with any person to distribute the Registrable Securities?


	
  Yes  o

  	
   

  	
  No  o

  



 


Note:                   If no, the SEC’s staff has indicated that you should
be identified as an underwriter in the Registration Statement.


5.                                      Beneficial Ownership of
Other Securities of the Company Owned by the Selling Securityholder.


Except as
set forth below in this Item 5, the undersigned is not the beneficial or
registered owner of any securities of the Company other than the Registrable
Securities listed above in Item 3.


Type and Amount of Other Securities beneficially owned
by the Selling Securityholder:


	
  

  	
   

  
	
   

  	
   

  
	
   

  	
   

  



 


6.                                      Relationships with the
Company:


Except
as set forth below, neither the undersigned nor any of its affiliates,
officers, directors or principal equity holders (owners of 5% of more of the
equity securities of the undersigned) has held any position or office or has
had any other material relationship with the Company (or its predecessors or
affiliates) during the past three years.


State any exceptions
here:


	
  

  	
   

  
	
   

  	
   

  
	
   

  	
   

  



 









 



The undersigned agrees to promptly notify the Company
of any inaccuracies or changes in the information provided herein that may
occur subsequent to the date hereof and prior to the Effective Date for the
Registration Statement.


By signing below, the undersigned consents to the
disclosure of the information contained herein in its answers to Items 1
through 6 and the inclusion of such information in the Registration Statement
and the related prospectus.  The
undersigned understands that such information will be relied upon by the
Company in connection with the preparation or amendment of the Registration
Statement and the related prospectus.


IN WITNESS WHEREOF the undersigned, by authority duly
given, has caused this Questionnaire to be executed and delivered either in
person or by its duly authorized agent.


	
  Dated:

  	
   

  	
   

  	
  Beneficial Owner:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  
							



 


PLEASE
FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN
THE ORIGINAL BY OVERNIGHT MAIL, TO:


[    ]