EXHIBIT  4.11


REGISTRATION RIGHTS
AGREEMENT


REGISTRATION
RIGHTS AGREEMENT (this “Agreement”),
dated as of December 28, 2006, by and between PRB Energy, Inc., a Nevada
corporation, with headquarters located at 1875 Lawrence Street, Suite 450,
Denver, Colorado 80202 (“Parent”),
and the undersigned buyers (each, a “Buyer”,
and collectively, the “Buyers”).


WHEREAS:


A.            In connection with the Securities Purchase Agreement by
and among Parent, PRB Oil & Gas, Inc., a Colorado corporation (the “Company”), and Buyers of even date herewith
(the “Securities Purchase Agreement”),
(i) 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
senior secured debentures of the Company and (ii) Parent has agreed, upon the
terms and subject to the conditions set forth in the Securities Purchase
Agreement, to issue and sell to each Buyer shares (“Closing Shares”) of Parent’s common stock, par value $0.001
per share (the “Common Stock”).


B.            To induce the Buyers to execute and deliver the
Securities Purchase Agreement, Parent has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the rules
and regulations promulgated 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, Parent and each of the Buyers hereby agree as follows:


1.     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 that the Registration
Statement has been declared effective by the SEC.


d.     “Effectiveness Deadline” means the date which is 150 days
after the Closing Date.


 











e.     “Filing Deadline” means the date which is 90 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 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 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 the Closing Shares.


j.      “Registration Statement” means a registration statement or
registration statements of Parent 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 100% of the Closing
Shares.


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.


2.     Registration.


a.     Mandatory Registration.  Parent 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.  In the event
that Form S-3 is unavailable for such a registration, Parent 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
Shareholders” and “Plan of Distribution” sections in substantially
the form attached hereto as Exhibit B. 
Parent 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


 



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Deadline.  Each Investor agrees to furnish to Parent a completed
questionnaire in the form of Exhibit C within three trading days after
receiving Parent’s written request therefor.


b.     Allocation
of Registrable Securities.  The
number of Registrable Securities included in any Registration Statement 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 other than pursuant to the Plan of Distribution
contained in the Registration Statement, 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.  In no event
shall Parent include any securities other than Registrable Securities on any
Registration Statement without the prior written consent of the Required
Holders.


c.     Legal
Counsel.  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 McDermott Will & Emery LLP or such
other counsel as thereafter designated by the Required Holders.  Parent and Legal Counsel shall reasonably
cooperate with each other in performing Parent’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, Parent 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 Parent shall maintain the 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.     Effect of Failure to
File and Obtain and Maintain Effectiveness of Registration Statement.  If (i) a Registration Statement covering all
of the Registrable Securities required to be covered thereby and required to be
filed by Parent pursuant to this Agreement is 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(s)) pursuant to such
Registration Statement (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 or to
register a sufficient number of shares of 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), Parent shall
pay to each holder of Registrable Securities relating to such Registration
Statement an amount in cash equal to 1.0% of the aggregate Purchase Price (as
such term is defined in the Securities


 



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Purchase Agreement)
allocable to such Investor’s Registrable Securities included in such
Registration Statement on each of the following dates: (i) 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 (ii) 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.  The payments to which a holder shall be
entitled pursuant to this Section 2(e) are referred to herein as “Registration Delay Payments.”  Registration Delay Payments shall be paid on
the day of the Effectiveness Failure and the initial day of a Maintenance
Failure, as applicable, and thereafter on the earlier of (A) the thirtieth day
after the event or failure giving rise to the Registration Delay Payments has
occurred and (B) the third Business Day after the event or failure giving rise
to the Registration Delay Payments is cured. 
In the event Parent fails to make Registration Delay Payments in a
timely manner, such Registration Delay Payments shall bear interest at the rate
of 2.0% per month (prorated for partial months) until paid in full. The
cumulative Registration Delay Payments shall not exceed 5% of the aggregate
Purchase Price (as such term is defined in the Securities Purchase Agreement).


3.     Related Obligations.


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


a.     Parent shall promptly
prepare and file with the SEC a Registration Statement with respect to the
Registrable Securities and use commercially reasonable 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).  Parent
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”). 
Parent 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.  The term “commercially
reasonable efforts” shall mean, among other things, that Parent shall submit to
the SEC, within two Business Days after the later of the date (i) that Parent
learns that no review of a particular Registration Statement will be 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) of the approval of Legal
Counsel 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 48 hours after the submission of such request.


 



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b.             Parent 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 Parent covered by such
Registration Statement until such time as all of such Registrable Securities
shall have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in 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 Parent
filing a report on Form 10-Q, Form 10-K or any analogous report under the
Securities Exchange Act of 1934, as amended (the “1934 Act”), Parent 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 Parent to amend or supplement
such Registration Statement.


c.     Parent
shall (A) permit Legal Counsel to review and comment upon (i) a Registration
Statement at least five 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-K, and Reports on Form 10-Q 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.  Parent shall not submit a request for
acceleration of the effectiveness of a Registration Statement or any amendment
or supplement thereto without the prior approval of Legal Counsel, which
consent shall not be unreasonably withheld or delayed.  Parent shall furnish to Legal Counsel,
without charge, (i) copies of any correspondence from the SEC or the staff of
the SEC to Parent or its representatives relating to any Registration
Statement, (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, and all exhibits and (iii) upon the effectiveness
of any Registration Statement, one copy of the prospectus included in such
Registration Statement and all amendments and supplements thereto.  Parent and Legal Counsel shall reasonably
cooperate with each other in performing Parent’s obligations pursuant to this
Section 3.


d.     Parent 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, 10 copies of the prospectus included in such
Registration Statement and all amendments and supplements thereto (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.


 



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e.     Parent
shall use commercially reasonable 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 Parent 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.  Parent shall promptly notify Legal Counsel
and each Investor who holds Registrable Securities of the receipt by Parent 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 actual notice of the initiation or threatening of any proceeding for
such purpose.


f.      Parent
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 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).  Parent  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 and by overnight
mail), (ii) of any request by the SEC for amendments or supplements to a
Registration Statement or related prospectus or related information, and (iii)
of Parent’s reasonable determination that a post-effective amendment to a
Registration Statement would be appropriate.


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


 



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h.     If
the Investors engage in an underwritten public offering of the Registrable
Securities, at the reasonable request of any Investor, Parent 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 Parent’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 Parent 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.      Parent
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 Parent (collectively, the “Records”),
as shall be reasonably deemed necessary by each Inspector, and cause Parent’s
officers, directors and employees, counsel and Parent’s independent certified
public accountants to supply all information which may be necessary and 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 Parent 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 or any other agreement of which
the Inspector has knowledge.  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 Parent and allow Parent, 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 Parent 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.      Parent shall hold in
confidence and not make any disclosure of information concerning an Investor
provided to Parent unless (i) disclosure of such information is necessary to
comply with federal or state securities laws, (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, non-appealable order from a court or
governmental body of competent jurisdiction, or (iv) such information has been
made generally available to the public other than by disclosure in violation of
this Agreement or any other agreement. 
Parent 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.


 



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k.     Parent
shall use commercially reasonable efforts to 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 Parent are
then listed.  Parent shall pay all fees and
expenses in connection with satisfying its obligation under this Section 3(k).


l.      Parent
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, Parent shall within 5 days of receipt of notice from
such Investor (i) 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) 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) supplement or make amendments to any Registration Statement if reasonably
requested by an Investor holding any Registrable Securities.


n.     Parent
shall use commercially reasonable efforts to cause the Registrable Securities
covered by the Registration Statement to be registered with or approved by such
other federal or state governmental agencies or authorities as may be necessary
to consummate the disposition of such Registrable Securities.


o.     Parent
shall make generally available to its security holders as soon as practical,
but not later than 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 Parent’s fiscal quarter next following the
Effective Date of the Registration Statement.


p.     On
the date hereof, Parent shall furnish to the Investors lock-up agreements
executed by each Person listed on Exhibit D hereto pursuant to which
each such Person shall agree not to sell, transfer or dispose any shares of
Common Stock owned by such Person during the 30-day period following the
Effective Date.


q.     Parent
shall otherwise use commercially reasonable efforts to comply with all
applicable rules and regulations of the SEC in connection with any registration
hereunder.


r.      Within 2 Business Days
after a Registration Statement which covers Registrable Securities is ordered
effective by the SEC, Parent shall: (i) file a definitive prospectus with the
SEC under Rule 424(b) of the 1933 Act; and (ii) deliver, and shall cause


 



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legal counsel for Parent 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.


s.     Notwithstanding
anything to the contrary contained herein, at any time after the Registration
Statement has been declared effective by the SEC, Parent may delay the
disclosure of material, non-public information concerning Parent the disclosure
of which at the time is not, in the good faith opinion of the Board of
Directors of Parent and its counsel, in the best interest of Parent and, in the
opinion of counsel to Parent, otherwise required (a “Grace Period”); provided, that
Parent shall promptly (i) notify the Investors in writing of the existence of
material, non-public information giving rise to a Grace Period (provided that in each notice Parent 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 no Grace Period shall exceed 20 consecutive days and
during any 365-day period such Grace Periods shall not exceed an aggregate of
30 days and the first day of any Grace Period must be at least two 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, Parent
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 contained herein, Parent 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, if required under
applicable securities laws, deliver a copy of the prospectus included as part
of the applicable Registration Statement, prior to the Investor’s receipt of
the notice of a Grace Period and for which the Investor has not yet settled.


4.     Obligations of the Investors.


a.     At least 5 Business Days
prior to the first anticipated filing date of a Registration Statement, Parent
shall notify each Investor in writing of the information Parent 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 Parent to complete the registration pursuant to this Agreement
with respect to the Registrable Securities of a particular Investor that such
Investor shall furnish to Parent such 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
and maintain the effectiveness of the registration of such Registrable
Securities and shall execute such documents in connection with such
registration as Parent may reasonably request.


 



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b.     Each
Investor, by such Investor’s acceptance of the Registrable Securities, agrees
to cooperate with Parent as reasonably requested by Parent in connection with
the preparation and filing of any Registration Statement hereunder, unless such
Investor has notified Parent 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 Parent of the happening
of any event of the kind described in Section 3(g) or the first sentence of
Section 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
Section 3(f) or receipt of notice that no supplement or amendment is
required.  Notwithstanding anything to
the contrary contained herein, Parent shall, to the extent it may do so under
applicable federal and state securities law, 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 Parent of the happening of any event of the kind described in Section 3(g)
or the first sentence of Section 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 applicable to it in connection with sales of
Registrable Securities pursuant to the Registration Statement.


5.     Expenses of Registration.


All reasonable expenses, other than underwriting
discounts, commissions or concessions and brokers’ or agents’ commissions or
concessions or selling commissions or concessions, 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
Parent shall be paid by Parent.  Parent
shall also reimburse the Investors for the reasonable fees and disbursements of
one Legal Counsel in connection with registration, filing or qualification of
the Registrable Securities pursuant to Sections 2 and 3 of this Agreement.


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, Parent will, and hereby does, indemnify, hold harmless and
defend each Investor, the directors, officers, members, partners, employees,
agents, and 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,


 



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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 Person 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
Parent 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 light of the circumstances under which the
statements therein were made, not misleading, (iii) any violation or alleged
violation by Parent 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 by Parent of this Agreement
(the matters in the foregoing clauses (i) through (iv) being, collectively, “Violations”).  Subject
to Section 6(c), Parent 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 Parent 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 Parent pursuant to Section 3(d); (ii)
with respect to any preliminary prospectus, shall not inure to the benefit of
any such Person from whom the Person asserting any such Claim purchased the
Registrable Securities that are the subject thereof (or to the benefit of any
Person controlling such Person) if the untrue statement or omission of material
fact contained in the preliminary prospectus was corrected in the prospectus,
as then amended or supplemented, if such prospectus was timely made available
by Parent pursuant to Section 3(d), and the Indemnified Person was promptly
advised in writing not to use the incorrect prospectus prior to the use giving
rise to a violation and such Indemnified Person, notwithstanding such advice,
used it or failed to deliver the correct prospectus as required by the 1933 Act
and such correct prospectus was timely made available pursuant to Section 3(d);
(iii) shall not be available to the extent such Claim is based on a failure of
the Investor to deliver or to cause to be delivered the prospectus made
available by Parent, including a corrected prospectus, if such prospectus or
corrected prospectus was timely made available by Parent pursuant to Section
3(d); and (iv) shall not apply to amounts paid in settlement of any Claim if
such settlement is effected without the prior written consent of Parent, which
consent shall not be unreasonably withheld or delayed.  Such 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.


 



 11
 








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), Parent, each of its directors, each of its
officers who signs the Registration Statement and each Person, if any, who
controls Parent 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 Parent 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, promptly as such expenses are incurred and are due and
payable, 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. 
Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(b) with respect to any
preliminary prospectus shall not inure to the benefit of any Indemnified Party
if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the prospectus, as
then amended or supplemented.


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


 



 12
 








cooperate reasonably with
the indemnifying party in connection with any 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 fully 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.  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 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 (ii) 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.


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


 



 13
 








any time permit the
Investors to sell securities of Parent to the public without registration (“Rule 144”), Parent 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
Parent under the 1933 Act and the 1934 Act so long as Parent remains subject to
such requirements (it being understood that nothing herein shall limit Parent’s
obligations under Section 4(c) of the Securities Purchase Agreement) 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 Parent, 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 or quarterly report of Parent and such other
reports and documents so filed by Parent, 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 Parent within a reasonable time after such assignment; (ii)
Parent 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 Registrable 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 and
applicable state securities laws; (iv) at or before the time Parent receives
the written notice contemplated by clause (ii) of this sentence the transferee or
assignee agrees in writing with Parent 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 Parent and the Required
Holders.  Any amendment or waiver
effected in accordance with this Section 10 shall be binding upon each Investor
and Parent.  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 provision of any of this Agreement unless the same consideration also is
offered to all of the parties to this Agreement.


 



 14
 








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 Parent receives conflicting instructions,
notices or elections from two or more Persons with respect to the same Registrable
Securities, Parent 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 Parent:


	
   

  	
  PRB Energy, Inc.

  	
   

  
	
   

  	
  1875 Lawrence
  Street, Suite 450

  	
   

  
	
   

  	
  Denver, Colorado
  80202

  	
   

  
	
   

  	
  Telephone:

  	
  303 308-1330 ext. 101

  	
   

  
	
   

  	
  Facsimile:

  	
  303 308-1590

  	
   

  
	
   

  	
  Attention:

  	
  Mr. Robert W. Wright, CEO

  	
   

  



 


With
a copy (for informational purposes only) to:


	
   

  	
  Douglas R. Wright, Esq.

  
	
   

  	
  Faegre & Benson LLP

  
	
   

  	
  3200 Wells Fargo Center

  
	
   

  	
  1700 Lincoln Street

  
	
   

  	
  Denver, CO 80203

  
	
   

  	
  Telephone:

  	
  303 607-3500

  
	
   

  	
  Facsimile:

  	
  303 607-3600

  



 


If to Legal Counsel:


	
   

  	
  McDermott Will & Emery
  LLP

  	
   

  
	
   

  	
  340 Madison
  Avenue

  	
   

  
	
   

  	
  New York, New
  York  10173

  	
   

  
	
   

  	
  Telephone:

  	
  212 547-5400

  	
   

  
	
   

  	
  Facsimile:

  	
  212 547-5444

  	
   

  
	
   

  	
  Attention:

  	
  Stephen E. Older, Esq.

  	
   

  
	
   

  	
   

  	
  Joel L.
  Rubinstein, Esq.

  	
   

  



 


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


 



 15
 








recipient party has
specified by written notice given to each other party five 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 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.


 



 16
 








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 each 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.      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.


k.     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, except as expressly
provided in Section 6 hereof.


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


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.


* * * * * *



 17














 


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


	
  

  	
   

  	
  PARENT:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PRB ENERGY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ William F. Hayworth

  	
   

  
	
   

  	
   

  	
   

  	
  Name: William F. Hayworth

  
	
   

  	
   

  	
   

  	
  Title: President

  
						



 









 



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


	
  

  	
   

  	
  BUYER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DKR SOUNDSHORE OASIS HOLDING FUND

  LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/ Barbara  Burger

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Barbara Burger

  
	
   

  	
   

  	
   

  	
  Title: Director

  



 









 



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


	
  

  	
   

  	
  BUYER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  WEST COAST OPPORTUNITY FUND,

  LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Atticus Lowe

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Atticus Lowe

  
	
   

  	
   

  	
   

  	
  Title: Chief Investment Officer

  



 









 



SCHEDULE
OF BUYERS


	
  Buyer

  	
   

  	
  Buyer Address

  and Facsimile Number

  	
   

  	
  Buyer’s Representative’s Address 

  and Facsimile Number

  
	
  DKR Soundshore Oasis Holding

  Fund Ltd.

  	
   

  	
  1281 East Main Street

  Stamford, CT 06902

  Telephone: (203) 324-8378

  Facsimile: (203) 324-8488

  Attention: Rajni A. Narasi

  	
   

  	
  McDermott Will & Emery LLP

  340 Madison Avenue

  New York, New York 10173

  Telephone: (212) 547-5400

  Facsimile: (212) 547-5444

  
	
  

  	
   

  	
   

  	
   

  	
  Attention:

  	
  Stephen E. Older, Esq.

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
  Joel L. Rubinstein, Esq.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  West Coast Opportunity Fund, LLC

  	
   

  	
  2151 Alessandro Drive, Suite 1

  Ventura, CA 93001

  Telephone: (805) 653-5333

  Facsimile: (805) 648-6488

  Attention: Atticus Lowe

  	
   

  	
  Catherine DeBono Holmes

  Jeffer, Mangels, Butler & Marmaro LLP

  1900 Avenue of the Stars, 7th Floor Los

  Angeles, California 90067

  Telephone: (310) 201-3553

  Facsimile: (310) 712-8553

  



 















 


EXHIBIT
A


FORM
OF NOTICE OF EFFECTIVENESS

OF REGISTRATION STATEMENT


            ,
200   


[Transfer Agent]

[Address]

Attention:  [                       ]


Re:                               PRB
Energy, Inc.


Ladies and Gentlemen:


[We are][I am] counsel to
PRB Energy, Inc., a Nevada 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 “Shares”) of Common Stock, $0.001 par value
(“Common Stock”), of the
Company.  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, 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 shareholder 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 notice to you that the
shares of Common Stock registered pursuant to the Registration Statement are
currently freely transferable by the Holders pursuant to the Registration
Statement.


	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  [ISSUER’S COUNSEL]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  cc:

  	
  [LIST NAMES OF HOLDERS]

  
					



 



 1















EXHIBIT B


SELLING SHAREHOLDERS


The
shares of Common Stock being offered by the selling shareholders were
originally issued by the Company to investors in a private placement
transaction.  For additional information
regarding the issuance of those shares of Common Stock, see “Private Placement
of Shares of Common Stock” above.  We are
registering the shares of Common Stock in order to permit the selling
shareholders to offer the shares for resale from time to time.  Except for the ownership of the shares of Common
Stock issued pursuant to the Securities Purchase Agreement, the selling
shareholders have not had any material relationship with us within the past
three years.


The
table below lists the selling shareholders and other information regarding the
beneficial ownership of the shares of Common Stock by each of the selling
shareholders.  The second column lists
the shares of Common Stock being offered by this prospectus by the selling
shareholders as of the date hereof.


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


In
accordance with the terms of a registration rights agreement with the selling
shareholders, this prospectus generally covers the resale of up to 100% of the
shares of Common Stock issued by the Company to the Securities Purchase
Agreement.


The
fourth column assumes the sale of all of the shares offered by the selling
shareholders pursuant to this prospectus.


The
selling shareholders may sell all, some or none of their shares in this
offering.  See “Plan of Distribution.”


	
  Name of
  Selling Shareholder

  	
   

  	
  Number of Shares of

  Common Stock Owned

  Prior to Offering

  	
   

  	
  Maximum Number of

  Shares of Common Stock to

  be Sold Pursuant to this

  Prospectus

  	
   

  	
  Number of Shares of

  Common Stock Owned

  After Offering

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DKR
  Soundshore Oasis Holding Fund Ltd. (1)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  0

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  West
  Coast Opportunity Fund, LLC (2)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  0

  



 






(1)           


(2)           



 1
 








PLAN
OF DISTRIBUTION


We are
registering the shares of Common Stock issued to investors pursuant to the
Securities Purchase Agreement to permit the resale of these shares of Common
Stock by the selling shareholders from time to time after the date of this
prospectus.  We will not receive any of
the proceeds from the sale by the selling shareholders 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 shareholders 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 shareholders will be
responsible for underwriting discounts and commissions and brokers’ or agents’
commissions or selling 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;


·                  short
sales;


·                  sales pursuant
to Rule 144;


 



 2














 


·                  broker-dealers
may agree with the selling shareholders 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 shareholders 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 shareholders 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 shareholders 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 shareholders 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 shareholders may also loan or pledge shares of Common Stock
to broker-dealers that in turn may sell such shares.


The
selling shareholders may pledge or grant a security interest in some or all of
the 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 such 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 shareholders to include the pledgee, transferee
or other successors in interest as selling shareholders under this
prospectus.  The selling shareholders
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 shareholders 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 shareholders 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



 2
 






 



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 shareholder 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 shareholders 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
shareholders 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 shareholder will pay all underwriting
discounts, commissions and concessions and brokers’ or agents’ commissions and
concessions or selling commissions and concessions, if any.  We will indemnify the selling shareholders
against liabilities, including some liabilities under the Securities Act, in
accordance with the registration rights agreement, or the selling shareholders
will be entitled to contribution.  We may
be indemnified by the selling shareholders against civil liabilities, including
liabilities under the Securities Act, that may arise from any written
information furnished to us by the selling shareholder 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.



 3















EXHIBIT C


INVESTOR
QUESTIONNAIRE


The
information contained in this questionnaire will be relied upon by PRB Energy,
Inc. (the “Company”) and its advisors. 
Accordingly, by signing this questionnaire, you represent as follows:


(i)            The
information contained herein is complete and accurate and may be relied upon by
the Company and its advisors; and


(ii)           You
will notify the Company immediately of any material change in any information
provided herein.


Although
the Company will use commercially reasonable efforts to keep the information
provided in the answers to this questionnaire strictly confidential, the
Company may present this questionnaire and the information provided in it to
such parties as the Company reasonably deems advisable if called upon to establish
the availability under any federal or state securities laws of an exemption
from registration or if the contents thereof are relevant to any issue in any
action, suit, or proceeding to which the Company is a party or by which it is
or may be bound.


This
questionnaire does not constitute an offer by the Company, but rather is a
request for information.


Thank
you for taking the time to complete this questionnaire.










 



Investor
Information


INSTRUCTIONS:     Please
print or type all answers.   If the answer to any question is “none”
or “not applicable,” please so state.




	
  Part A – General

  
	
   

  	
  For Entities:

  	
   

  
	
   

  	
  1. Name: 

  	
   

  
	
   

  	
  2. Taxpayer Identification No.: 

  	
   

  
	
   

  	
  3. Jurisdiction and Year of Organization: 

  	
   

  
	
   

  	
  4. Nature of Business: 

  	
   

  
	
   

  	
  5. Business Address: 

  	
   

  
	
   

  	
  6. Business Telephone Number: 

  	
   

  
									






 


Part B – Type of
Investor


1.             Are you:


(i)                                     A
bank as defined in Section 3(a)(2) of the Securities Act of 1933 (the “Securities
Act”) or a savings and loan association or other institution as defined in
Section 3(a)(5)(A) of the Securities Act whether acting in its individual or
fiduciary capacity?


Yes       No      


(ii)                                  A
broker or dealer registered pursuant to Section 15 of the Securities Exchange
Act of 1934? Yes       No      


(iii)                               An
insurance company as defined in Section 2(a)(13) of the Securities Act?


Yes      No      


(iv)                              An
investment company registered under the Investment Company Act of 1940 (the “Company
Act”) or a business development company as defined in Section 2(a)(48) of the
Company Act? Yes      No      


(v)                                 A
small business investment company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business Investment Act
of 1958? Yes      No      


(vi)                              A
plan established and maintained by a state, its political subdivisions, or any
agency or instrumentality of a state or its political subdivisions, for the
benefit of its employees, if such plan has total assets in excess of
$5,000,000? Yes      No      


(vii)                           An
employee benefit plan within the meaning of the Employee Retirement Income
Security Act of 1974 (“ERISA”) whose the investment decision is made by a plan
fiduciary, as defined in Section 3(21) of ERISA, which is either a bank,
savings and loan association, insurance company, or registered investment
adviser, or that has total assets in excess of $5,000,000? Yes      No      



 2
 






 



(viii)                        A
private business development company as defined in Section 202(a)(22) of the
Investment Advisers Act of 1940? Yes      No      


(ix)                                An
organization described in Section 501(c)(3) of the Internal Revenue Code of
1986, as amended, a corporation, Massachusetts or similar business trust, or
partnership with total assets in excess of $5,000,000, which was not formed for
the specific purpose of acquiring the securities of a particular issuer?  Yes      No      


(x)                                   An
entity in which all of the equity owners are “accredited investors,” as such
term is defined under the Securities Act of 1933?  Yes      No      


(xi)                                A
self-directed plan with investment decisions made solely by persons who are
accredited investors? Yes      No      Please
attach a separate sheet setting forth the basis for the representation that
they are “accredited investors.”


(xii)                             A
natural person whose individual net worth, or joint net worth with your spouse,
exceeds $1,000,000? (In calculating your net worth, you may include all assets,
such as your home, home furnishings and automobiles, less your liabilities.)
Yes      No      


(xiii)                          A
natural person who had an individual income in excess of $200,000 in each of
the two most recent years or joint income with your spouse in excess of
$300,000 in each of those years, and has a reasonable expectation of reaching
the same income level in the current year? Yes      No      


(xiv)                         A
trust, with total assets in excess of $5,000,000, not formed for the specific
purpose of acquiring the securities of a particular issuer, whose investments
are directed by a sophisticated person with sufficient knowledge and experience
in financial and business matters to evaluate the merits and risks of the trust’s
investments? Yes      No      


Part C – Financial
and Other Data


1. If you are an entity,
please indicate the range of your total amount of assets.


           $0 - $5,000,000


         
 Over $5,000,000


2. Do you have adequate
liquid assets (defined as cash, cash equivalents and freely marketable
securities) to meet your current needs and personal contingencies?  Yes         No         


3. Please indicate your other investment experience
(e.g., stocks, real estate, etc.)


 


 


4. Do you or the persons
who make investment decisions on your behalf have sufficient knowledge and
experience in financial and business matters to evaluate the merits and risks
of your investments?


Yes         No         



 3
 






 



5. Do you typically use a purchaser representative in
connection with your investments (i.e., someone who has such knowledge and
experience in financial and business matters that he or she is capable of
evaluating the merits and risks of your investments and whom you acknowledge in
writing during the course of your investment to be your purchaser
representative)?  Yes         No         


If so, please provide the name, address and telephone
number of your purchaser representative.


 


 


IN
WITNESS WHEREOF, the undersigned has executed this questionnaire as of                 ,
200  , and declared that it is truthful and correct.


	
   

  	
  

  	
   

  
	
   

  	
   

  	
  By: 

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
					



 



 4














 


EXHIBIT
D


PERSONS
EXECUTING LOCK-UP AGREEMENTS PURSUANT TO

SECTION 3(p) OF THE AGREEMENT


Robert
Wright


William
Hayworth


Daniel
Reichel


Susan
Wright