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Exhibit 10.5    
    


 
 

REGISTRATION RIGHTS AGREEMENT    
    


        THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of November 23, 2004, by and among Petrohawk Energy Corporation, a Delaware corporation (the "Company"), on the one hand, and
Friedman, Billings, Ramsey & Co., Inc., a Delaware corporation ("FBR") for the benefit of the Holders (as hereinafter defined), on the
other hand. 


W I T N E S S E T H:  


        WHEREAS, the Company and FBR entered into that certain Placement Agreement dated as of November 16, 2004
(the "Placement Agreement"), in connection with which on November 23, 2004, the Company sold 2,580,645 newly issued shares (the
"Preferred Shares") of its Series B 8% Automatically Convertible Preferred Stock, par value $0.001 per share (the
"Series B Preferred Stock"), each of which is convertible into ten shares (the "Common Shares")
of the Company's common stock, par value $0.001 (the "Common Stock"), with FBR acting as placement agent; 


        WHEREAS, in order to induce FBR to enter into the Placement Agreement, the Company has agreed to provide the registration rights provided
for in this Agreement for the holders of Registrable Shares (as defined below); and 


        WHEREAS, the execution of this Agreement is a condition to the closing of the transactions contemplated by the Placement Agreement. 



        NOW, THEREFORE, in consideration of the premises and the mutual covenants of the parties hereto, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 


1.    Definitions.    As used in this Agreement, the following terms shall have the following meanings: 


        "Additional Payments" is defined in Section 7(a). 



        "Additional Shares" means shares or other securities issued in respect of the Shares by reason of or in connection with any stock
dividend, stock distribution, stock split or similar issuance. 


        "Agreement" is defined in the introductory paragraph of this Agreement. 


        "Affiliate" means, as to any specified Person, (i) any Person that directly, or indirectly through one or more intermediaries,
controls or is controlled by, or is under common control with, the specified Person, (ii) any executive officer, director, trustee or general partner of the specified Person and
(iii) any legal entity for which the specified Person acts as an executive officer, director, trustee or general partner. For purposes of this definition, "control" (including the correlative
meanings of the terms "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly, or indirectly through one or more intermediaries, of
the power to direct or cause the direction of the management and policies of such Person, whether by contract, through the ownership of voting securities, partnership interests or other equity
interests or otherwise. 


        "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions in New York, New
York are authorized or obligated by applicable law, regulation or executive order to close. 


        "Closing Date" means the Closing Date as defined in the Placement Agreement. 


        "Commission" means the Securities and Exchange Commission. 


        "Common Shares" is defined in the first recital clause of this Agreement. 


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        "Common Stock" is defined in the first recital clause of this Agreement. 


        "Company" is defined in the introductory paragraph of this Agreement, and any successor thereto. 



        "Controlling Person" is defined in Section 6(a) hereof. 


        "End of Suspension Notice" is defined in Section 5(b) hereof. 


        "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated by the Commission pursuant
thereto. 


        "FBR" is defined in the introductory paragraph of this Agreement, and any successor thereto. 



        "Holder" means each record owner of any Registrable Shares from time to time. 


        "Indemnified Party" is defined in Section 6(c) hereof. 


        "Indemnifying Party" is defined in Section 6(c) hereof. 


        "Liabilities" is defined in Section 6(a) hereof. 



        "Mandatory Registration Statement" means the Mandatory Shelf Registration Statement or any Subsequent Shelf Registration Statement. 


        "Mandatory Shelf Registration Statement" is defined in Section 2(a) hereof. 


        "NASD" means the National Association of Securities Dealers, Inc. 



        "Person" means an individual, limited liability company, partnership, corporation, trust, unincorporated organization, government or
agency or political subdivision thereof, or any other legal entity. 


        "Piggyback Registration Statement" is defined in Section 2(b) hereof. 


        "Placement Agreement" is defined in the first recital clause of this Agreement. 


        "Preferred Shares" is defined in the first recital clause of this Agreement. 



        "Prior Holder" means PHAWK LLC, a Delaware limited liability company, and any other investor a party to or beneficiary of the Registration
Rights Agreement dated May            , 2004 by and among the Company and PHAWK, LLC. 


        "Prospectus" means the prospectus included in any Registration Statement, including any preliminary prospectus, and all other amendments
and supplements to any such prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference, if any, in such
prospectus. 


        "Purchaser Indemnitee" is defined in Section 6(a) hereof. 


        "Registrable Shares" means each of (a) the Common Shares and any Additional Shares in respect thereof, and (b) if and only
if the Preferred Shares have not automatically converted into Common Stock within 60 days after the date hereof, the Preferred Shares and any Additional Shares in respect thereof, in each case,
upon original issuance thereof, and at all times subsequent thereto, including upon the transfer thereof by the original holder or any subsequent holder, until, in the case of any such Shares or
Additional Shares, as applicable, the earliest to occur of: 



        (i)    the
date on which they have been sold pursuant to a Registration Statement or sold pursuant to Rule 144; 


        (ii)   the
date on which they are saleable, in the opinion of counsel to the Company, without registration under the Securities Act pursuant to Rule 144(k); 



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        (iii)  the
date on which they are saleable, without restriction, pursuant to an available exemption from registration under the Securities Act; or 


        (iv)  the
date on which they are sold to the Company or its subsidiaries. 




        "Registration Default" is defined in Section 7(a). 


        "Registration Expenses" means any and all expenses incident to the performance of or compliance with this Agreement, including, without
limitation: (i) all Commission, securities exchange, NASD registration, listing, inclusion and filing fees, (ii) all fees and expenses incurred in connection with compliance with
international, federal or state securities or blue sky laws (including, without limitation, any registration, listing and filing fees and reasonable fees and disbursements of counsel in connection
with blue sky qualification of any of the Registrable Shares and the preparation of a blue sky memorandum and compliance with the rules of the NASD), (iii) all expenses of any Persons in
preparing or assisting in preparing, word processing, duplicating, printing, delivering and distributing any Registration Statement, any Prospectus, any amendments or supplements thereto, any
underwriting agreements, securities sales agreements, certificates and any other documents relating to the performance under and compliance with this Agreement, (iv) all fees and expenses
incurred in connection with the listing or inclusion of any of the Registrable Shares on the NASDAQ Stock Market pursuant to Section 4(n) of this Agreement, (v) the fees and
disbursements of counsel for the Company and of the independent public accountants of the Company (including, without limitation, the expenses of any special audit and "cold comfort" letters required
by or incident to such performance), and (vi) any fees and disbursements customarily paid in issues and sales of securities (including the fees and expenses of any experts retained by the
Company in connection with any Registration Statement), provided, however, that Registration Expenses shall exclude brokers' or underwriters' discounts
and commissions and transfer taxes, if any, relating to the sale or disposition of Registrable Shares by a Holder and the fees and disbursements of any counsel to the Holders other than as provided
for in clause (v) above. 


        "Registration Statement" means any Mandatory Registration Statement or Piggyback Registration Statement. 


        "Rule 144", "Rule 158",
"Rule 415", or "Rule 424", respectively, means such specified rule promulgated by the
Commission pursuant to the Securities Act, as such rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission as a replacement thereto having
substantially the same effect as such rule. 


        "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated by the Commission thereunder. 


        "Series B Preferred Stock" is defined in the first recital clause of this Agreement. 


        "Shares" means the Common Shares and the Preferred Shares. 


        "Subsequent Shelf Registration Statement" is defined in Section 2(c) hereof. 


        "Suspension Event" is defined in Section 5(b) hereof. 


        "Suspension Notice" is defined in Section 5(b) hereof. 


        "Underwritten Offering" means a sale of securities of the Company to an underwriter or underwriters for reoffering to the public. 


2.    Registration Rights. 


        (a)    Mandatory Shelf Registration.    As set forth in Section 4, the Company agrees to file with the
Commission as soon as reasonably practicable, but in no event later than 60 days following the Closing Date, a shelf registration statement on Form S-3 or such other form
under the Securities Act then 


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available
to the Company providing for the resale pursuant to Rule 415 from time to time by the Holders of any and all Registrable Shares consisting of (i) Common Shares and all
Additional Shares in respect thereof, and (ii) if and only if the Preferred Shares have not automatically converted into Common Stock within 60 days after the date hereof, the Preferred
Shares and all Additional Shares issued in respect thereof (in each case including for the avoidance of doubt any Additional Shares that are issued prior to the effectiveness of such shelf
registration statement) (including the Prospectus, amendments and supplements to such registration statement or Prospectus, including pre- and post-effective amendments, all
exhibits thereto and all material incorporated by reference or deemed to be incorporated by reference, if any, in such registration statement, the "Mandatory Shelf Registration
Statement"). The fact that the Preferred Shares have not converted into Common Stock within such 60-day period shall not affect the Company's continuing obligation
to use its best efforts to cause such conversion or to register the sale of such shares hereunder. 



        (i)    Effectiveness and Scope.    The Company shall use its commercially reasonable efforts to cause any Mandatory
Registration Statement to be declared effective by the Commission as soon as reasonably practicable following such filing, and to remain effective until the earlier of (A) the second
anniversary of the effective date of the initial Mandatory Shelf Registration Statement (subject to extension pursuant to Section 5(c)) (provided that in such case each Holder shall have
received a certificate with all restrictive legends removed as a result of the applicable Registrable Shares being freely transferable under Rule 144(k)), or (B) the date on which all
Shares and any Additional Shares in respect thereof cease to be Registrable Shares. The Company may include any shares of Common Stock owned by a Prior Holder in a Mandatory Shelf Registration
Statement. Any Mandatory Shelf Registration Statement shall provide for the resale from time to time, and pursuant to any method or combination of methods legally available (including, without
limitation, an Underwritten Offering, a direct sale to purchasers, a sale through brokers or agents, or a sale over the internet) by the Holders of any and all Registrable Shares. 



        (ii)    Underwriting.    If any Holder proposes to conduct an Underwritten Offering under a Mandatory Shelf
Registration Statement, such Holder shall advise the Company, all other Holders, and any Prior Holders whose securities are included in the Mandatory Shelf Registration Statement, of the managing
underwriters for such proposed Underwritten Offering, such managing underwriters to be subject to the approval of the Company, not to be unreasonably withheld. In such event, the Company shall enter
into an underwriting agreement in customary form with the managing underwriters, which shall include, among other provisions, indemnities to the effect and to the extent provided in Section 6,
and shall take all such other reasonable actions as are requested by the managing underwriter in order to expedite or facilitate the registration and disposition of the Registrable Shares included in
such Underwritten Offering; provided, however, that the Company shall be required to cause appropriate officers of the Company or its Affiliates to participate in a "road show" or similar marketing
effort being conducted by such underwriter with respect to such Underwritten Offering only if the Holders reasonably anticipate gross proceeds from such Underwritten Offering of at least
$20 million. All Holders proposing to distribute their Registrable Shares through such Underwritten Offering and, if a Prior Holder elects to distribute its shares of Common Stock through such
Underwritten Offering, such Prior Holder, shall enter into an underwriting agreement in customary form with the managing underwriters selected for such underwriting and complete and execute any
questionnaires, powers of attorney, indemnities, securities escrow agreements and other documents reasonably required under the terms of such underwriting, and furnish to the Company such information
in writing as the Company may reasonably request for inclusion in the Registration Statement; provided, however, that neither any Holder nor any Prior
Holder shall be required to make any representations or warranties to or agreements with the Company or the underwriters other than representations, warranties or agreements as are customary and
reasonably requested by the underwriters. Notwithstanding any other provision of this Agreement, if the managing underwriters 



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determine
in good faith that marketing factors require a limitation on the number of shares to be included in such Underwritten Offering, then the managing underwriters may exclude shares (including
Registrable Shares) from the Underwritten Offering, and any shares included in the Underwritten Offering shall be allocated first, to each of the
Holders requesting inclusion of their Registrable Shares in such Underwritten Offering on a pro rata basis based on the total number of Registrable
Shares then held by each such Holder which is requesting inclusion, and second, to any Prior Holders requesting inclusion of their shares in such
Underwritten Offering. 


        (iii)    Selling Stockholder Questionnaires.    Each Holder agrees, by its acquisition of Registrable Shares, that if
such Holder wishes to sell Registrable Shares pursuant to the Mandatory Shelf Registration Statement and related Prospectus, it will do so only in accordance with this Section 2(a)(iii). Each
Holder wishing to sell Registrable Shares pursuant to a Mandatory Shelf Registration Statement and related Prospectus agrees to deliver a written notice, substantially in form and substance of Annex A
(a "Notice and Questionnaire"), to the Company. The Company shall mail the Notice and Questionnaire to the Holders no later than the date of initial
filing of the Mandatory Shelf Registration Statement with the Commission. No Holder shall be entitled to be named as a selling securityholder in the Mandatory Shelf Registration Statement as of the
initial effective date of the Mandatory Shelf Registration Statement, and no Holder shall be entitled to use the Prospectus forming a part thereof for resales of Registrable Shares at any time, unless
such Holder has returned a completed and signed Notice and Questionnaire to the Company by the deadline for response set forth therein; provided, however, Holders shall have at least 20 calendar days
from the date on which the Notice and Questionnaire is first mailed to such Holders to return a completed and signed Notice and Questionnaire to the Company. Notwithstanding the foregoing,
(x) upon the request of any Holder that
did not return a Notice and Questionnaire on a timely basis or did not receive a Notice and Questionnaire because it was a subsequent transferee of Registrable Shares after the Company mailed the
Notice and Questionnaire, the Company shall distribute a Notice and Questionnaire to such Holders at the address set forth in the request and (y) upon receipt of a properly completed Notice and
Questionnaire from such Holder, the Company shall use all commercially reasonable efforts to name such Holder as a selling securityholder in the Mandatory Shelf Registration Statement by means of a
pre-effective amendment, by means of a post-effective amendment or, if permitted by the Commission, by means of a Prospectus supplement to the Mandatory Shelf Registration
Statement; provided, however, that the Company will have no obligation to add Holders to the Shelf Mandatory Registration Statement as selling securityholders more frequently that one time per every
30 calendar days. 




        (b)    Piggyback Registration.    If, after the date hereof, the Company proposes to file a registration
statement under the Securities Act providing for a public offering of the Company's securities, other than a registration statement on Form S-8 or Form S-4 or any
similar form hereafter adopted by the Commission as a replacement therefor (including the Prospectus, amendments and supplements to such registration statement or Prospectus, including
pre- and post-effective amendments, all exhibits thereto and all material incorporated by reference or deemed to be incorporated by reference, if any, in such registration
statement, the "Piggyback Registration Statement"), the Company will notify each Holder of the proposed filing and afford each Holder an opportunity to
include in such Piggyback Registration Statement all or any part of the Registrable Shares then held by such Holder. Each Holder desiring to include in any such Piggyback Registration Statement all or
part of the Registrable Shares held by such Holder shall, within ten (10) days after delivery of the above-described notice by the Company, so notify the Company in writing, and in such notice
shall inform the Company of the number of Registrable Shares such Holder wishes to include in such Piggyback Registration Statement and provide, as a condition to such inclusion, such information
regarding itself, the Registrable Shares held by it and the intended method of disposition of such securities as is required pursuant to Regulation S-K promulgated under the
Securities Act to effect the registration of the Registrable 


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Shares.
Any election by any Holder to include any Registrable Shares in such Piggyback Registration Statement will not affect the inclusion of such Registrable Shares in the Mandatory Shelf
Registration Statement until such Registrable Shares have been sold under the Piggyback Registration Statement; provided, however, that at such time,
the Company shall have the right to remove from the Mandatory Shelf Registration Statement the Registrable Shares sold pursuant to the Piggyback Registration Statement. 



        (i)    Right to Terminate Piggyback Registration.    At any time, the Company may terminate or withdraw any Piggyback
Registration Statement referred to in this Section 2(b), and without any obligation to any such Holder whether or not any Holder has elected to include Registrable Shares in such registration.
The Company shall also have the right to suspend the effectiveness and use of any Piggyback Registration Statement at any time for an unlimited amount of time whether or not any Holder has elected to
include Registrable Shares in such registration. 


        (ii)    Underwriting.    The Company shall advise the Holders of the managing underwriters for any Underwritten
Offering proposed under the Piggyback Registration Statement. The right of any such Holder's Registrable Shares to be included in any Piggyback Registration Statement pursuant to this
Section 2(b) shall be conditioned upon such Holder's participation in such Underwritten Offering and the inclusion of such Holder's Registrable Shares in the Underwritten Offering to the extent
provided herein. All Holders proposing to distribute their Registrable Shares through such Underwritten Offering shall enter into an underwriting agreement in customary form with the managing
underwriters selected for such underwriting and complete and execute any questionnaires, powers of attorney, indemnities, securities escrow agreements and other documents reasonably required under the
terms of such underwriting, and furnish to the Company such information in writing as the Company may reasonably request for inclusion in the Registration Statement; provided,
however, that no Holder shall be required to make any representations or warranties to or agreements with the Company or the underwriters other than representations, warranties
or agreements as are customary and reasonably requested by the underwriters. Notwithstanding any other provision of this Agreement, if the managing underwriters determine in good faith that marketing
factors require a limitation on the number of shares to be included, then the managing underwriters may exclude shares (including Registrable Shares) from the Piggyback Registration Statement and the
Underwritten Offering, and any Shares included in the Piggyback Registration Statement and the Underwritten Offering shall be allocated, first, to the
Company, and second, to each of the Holders and the Prior Holder(s) requesting inclusion of their Registrable Shares in such Piggyback Registration
Statement on a pro rata basis based on the total number of Registrable Shares then held by each such Holder which is requesting inclusion. If any Holder
disapproves of the terms of any Underwritten Offering, such Holder may elect to withdraw therefrom by written notice to the Company and the underwriter, delivered at least 10 Business Days prior to
the effective date of the Piggyback Registration Statement. Any Registrable Shares excluded or withdrawn from such Underwritten Offering shall be excluded and withdrawn from the Piggyback Registration
Statement. 


        (iii)    Hold-Back Agreement.    By electing to include Registrable Shares in the Piggyback Registration
Statement, if any, the Holder shall be deemed to have agreed not to effect any sale or distribution of securities of the Company of the same or similar class or classes of the securities included in
the Registration Statement or any securities convertible into or exchangeable or exercisable for such securities, including a sale pursuant to Rule 144 under the Securities Act, during such
periods as reasonably requested (but in no event for a period longer than 60 days following the effective date of the Piggyback Registration Statement, provided each of the executive officers
and directors of the Company that hold shares of Common Stock of the Company or securities convertible into or exchangeable or exercisable for shares of Common Stock 



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of
the Company are subject to the same restriction for the entire time period required of the Holders hereunder) by the representatives of the underwriters, if an Underwritten Offering. 



        (iv)    Mandatory Shelf Registration not Impacted by Piggyback Registration Statement.    The Company's obligation to
file any Mandatory Shelf Registration Statement shall not be affected by the filing or effectiveness of the Piggyback Registration Statement. 




        (c)    Subsequent Shelf Registration for Additional Shares Issued after Effectiveness of the Mandatory Shelf Registration
Statement.    If any Additional Shares are issued or distributed to Holders after the effectiveness of the Mandatory Shelf Registration Statement, or such Additional
Shares were otherwise not included in a prior Registration Statement, then the Company shall as soon as practicable file an additional shelf registration statement (including the Prospectus,
amendments and supplements to such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto and all material incorporated by
reference or deemed to be incorporated by reference, if any, in such registration statement, a "Subsequent Shelf Registration Statement") covering such
Additional Shares on behalf of the Holders thereof in the same manner, and subject to the same provisions in this Agreement as the Mandatory Shelf Registration Statement. 



        (d)    Expenses.    The Company shall pay all Registration Expenses in connection with the registration of the
Registrable Shares pursuant to this Agreement. Each Holder participating in a registration pursuant to this Section 2 shall bear such Holder's proportionate share (based on the total number of
Registrable Shares sold in such registration) of all discounts and commissions payable to underwriters or brokers and all transfer taxes in connection with a registration of Registrable Shares
pursuant to this Agreement and any other expense of the Holders not specifically allocated to the Company pursuant to this Agreement relating to the sale or disposition of such Holder's Registrable
Shares pursuant to any Registration Statement. 


3.    Rule 144 Reporting. 


        With
a view to making available the benefits of certain rules and regulations of the Commission that may permit the sale of the Registrable Shares to the public without registration, the
Company agrees to, so long as any Holder owns any Registrable Shares: 


        (a)   make
and keep public information available, as those terms are understood and defined in Rule 144(c) under the Securities Act; 



        (b)   use
its commercially reasonable efforts to file with the Commission in a timely manner all reports and other documents required to be filed by the Company under the
Securities Act and the Exchange Act; and 


        (c)   furnish
to any Holder promptly upon request a written statement by the Company as to its compliance in all material respects with the reporting requirements of
Rule 144 and of the Exchange Act, a copy of the most recent annual or quarterly report of the Company, and such other reports and documents of the Company, and take such reasonable further
actions consistent with this Section 3, as a Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing a Holder to sell any such Registrable Shares
without registration. 


4.    Registration Procedures. 


        In
connection with the obligations of the Company with respect to any registration pursuant to this Agreement, the Company shall: 


        (a)   prepare
and file with the Commission, as specified in this Agreement, each Registration Statement, which Registration Statement shall comply as to form in all material
respects with the requirements of the applicable form and include all financial statements required by the Commission to be filed therewith, and use its commercially reasonable efforts to cause any
Mandatory Registration 


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Statement
to become and remain effective as set forth in Section 2(a)(i) hereof; provided, however, that the Company shall not be required
to cause any Piggyback Registration Statement to become or remain effective; 


        (b)   subject
to Section 4(i) hereof, (i) prepare and file with the Commission such amendments and post-effective amendments to each such
Registration Statement as may be necessary to keep such Registration Statement effective for the period described in Section 4(a) hereof, (ii) cause each Prospectus contained therein to
be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 or any similar rule that may be adopted under the Securities Act, and
(iii) comply in all material respects with the provisions of the Securities Act with respect to the disposition of all securities covered by each Registration Statement during the applicable
period in accordance with the intended method or methods of distribution by the selling Holders thereof; 


        (c)   furnish
to the Holders, without charge, as many copies of each Prospectus, including each preliminary Prospectus, and any amendment or supplement thereto and such other
documents as such Holder may reasonably request, in order to facilitate the public sale or other disposition of the Registrable Shares; the Company hereby consenting to the use of such Prospectus,
including each preliminary Prospectus, by the Holders, if any, in connection with the offering and sale of the Registrable Shares covered by any such Prospectus; 


        (d)   use
its commercially reasonable efforts to register or qualify, or obtain exemption from registration or qualification for, all Registrable Shares by the time the
applicable Registration Statement is declared effective by the Commission under all applicable state securities or "blue sky" laws of such domestic jurisdictions as FBR or any Holder covered by a
Registration Statement shall reasonably request in writing, keep each such registration or qualification or exemption effective during the period such Registration Statement is required to be kept
effective pursuant to Section 4(a) and do any and all other acts and things that may be reasonably necessary or advisable to enable such Holder to consummate the disposition in each such
jurisdiction of such Registrable Shares owned by such Holder; provided, however, that the Company shall not be required to (i) qualify generally
to do business in any jurisdiction or to register as a broker or dealer in such jurisdiction where it would not otherwise be required to qualify but for this Section 4(d), (ii) subject
itself to taxation in any such jurisdiction, or (iii) submit to the general service of process in any such jurisdiction; 


        (e)   use
its commercially reasonable efforts to cause all Registrable Shares covered by such Registration Statement to be registered and approved by such other domestic
governmental agencies or authorities, if any, as may be necessary to enable the Holders thereof to consummate the disposition of such Registrable Shares; 



        (f)    notify
FBR and each Holder with Registrable Shares covered by a Registration Statement promptly and, if requested by FBR or any such Holder, confirm such advice in
writing (i) when such Registration Statement has become effective and when any post-effective amendments and supplements thereto become effective, (ii) of the issuance by the
Commission or any state securities authority of any stop order suspending the effectiveness of such Registration Statement or the initiation of any proceedings for that purpose, (iii) of any
request by the Commission or any other federal or state governmental authority for amendments or supplements to such Registration Statement or related Prospectus or for additional information, and
(iv) of the happening of any event during the period such Registration Statement is effective as a result of which such Registration Statement or the related Prospectus or any document
incorporated by reference therein contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not
misleading (which information shall be accompanied by an instruction to suspend the use of the Registration Statement and the Prospectus until the requisite changes have been made); 


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        (g)   during
the period of time referred to in Section 4(a) above, use its commercially reasonable efforts to avoid the issuance of, or if issued, to obtain the
withdrawal of, any order enjoining or suspending the use or effectiveness of a Registration Statement or suspending the qualification (or exemption from qualification) of any of the Registrable Shares
for sale in any jurisdiction, as promptly as practicable; 


        (h)   upon
request, furnish to each requesting Holder with Registrable Shares covered by a Registration Statement, without charge, at least one conformed copy of such
Registration Statement and any post-effective amendment or supplement thereto (without documents incorporated therein by reference or exhibits thereto, unless requested); 


        (i)    except
as provided in Section 5, upon the occurrence of any event contemplated by Section 4(f)(iv), use its commercially reasonable efforts to promptly
prepare a supplement or post-effective amendment to a Registration Statement or the related Prospectus or any document incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of the Registrable Shares, such Prospectus will 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 light of the circumstances under which they were made, not misleading, and, upon request, promptly furnish to each requesting Holder
a reasonable number of copies of each such supplement or post-effective amendment; 


        (j)    if
requested by the representative of the underwriters, if any, or any Holders of Registrable Shares being sold in connection with an Underwritten Offering,
(i) promptly incorporate in a Prospectus supplement or post-effective amendment such material information as the representative of the underwriters, if any, or such Holders indicate
relates to them or otherwise reasonably request be included therein and (ii) make all required filings of such Prospectus supplement or such post-effective amendment as soon as
practicable after the Company has received notification of the matters to be incorporated in such Prospectus supplement or post-effective amendment; 


        (k)   in
the case of an Underwritten Offering, use its commercially reasonable efforts to furnish or caused to be furnished to each Holder of Registrable Shares covered by
such Registration Statement and the underwriters a signed counterpart, addressed to each such Holder and the underwriters, of: (i) an opinion of counsel for the Company, dated the date of each
closing under the underwriting agreement, reasonably satisfactory to the underwriters; and (ii) a "comfort" letter, dated the effective date of such Registration Statement and the date of each
closing under the underwriting agreement, signed by the independent public accountants who have certified the Company's financial statements included in such Registration Statement, covering
substantially the same matters with respect to such Registration Statement (and the Prospectus included therein) and with respect to events subsequent to the date of such financial statements, as are
customarily covered in accountants' letters delivered to underwriters in underwritten public offerings of securities, and such other financial matters as the underwriters may reasonably request and
customarily obtained by underwriters in underwritten offerings; provided that, in order to be an addressee of the comfort letter, each Holder may be required to confirm that it is in the category of
persons to whom a comfort letter may be delivered in accordance with applicable accounting literature; 



        (l)    enter
into customary agreements (including in the case of an Underwritten Offering, an underwriting agreement in customary form) and take all other action in connection
therewith in order to expedite or facilitate the distribution of the Registrable Shares included in such Registration Statement and, in the case of an Underwritten Offering, make representations and
warranties to the underwriters in such form and scope as are customarily made by issuers to underwriters in underwritten offerings consistent with representations and warranties made by the Company in
public or private offerings and confirm the same to the extent customary if and when requested; 


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        (m)  in
connection with an Underwritten Offering, use its commercially reasonable efforts to make available for inspection by the representative of any underwriters
participating in any disposition pursuant to a Registration Statement, all financial and other records, pertinent corporate documents and properties of the Company and cause the respective officers,
directors and employees of the Company to supply all information reasonably requested by any such representatives, the representative of the underwriters, counsel thereto or accountants in connection
with a Registration Statement; provided, however, that such records, documents or information that the Company determines, in good faith, to be
confidential and notifies such representatives, representative of the underwriters, counsel thereto or accountants are confidential shall not be disclosed by the representatives, representative of the
underwriters, counsel thereto or accountants unless (i) the disclosure of such records, documents or information is necessary to avoid or correct a misstatement or omission in a Registration
Statement or Prospectus, (ii) the release of such records, documents or information is ordered pursuant to a subpoena or other order from a court of competent jurisdiction, or (iii) such
records, documents or information have been generally made available to the public; provided further, that to the extent practicable, the foregoing
inspection and information gathering shall be coordinated on behalf of the Holders and the other parties entitled thereto by one counsel designated by and on behalf of the Holders and the other
parties, which counsel the Company determines in good faith is reasonably acceptable; 


        (n)   use
its commercially reasonable efforts (including, without limitation, seeking to cure in the Company's listing or inclusion application any deficiencies cited by the
exchange or market) to list or include all Registrable Shares on any securities exchange or the Nasdaq Stock Market on which the Common Stock is then listed or included; 


        (o)   prepare
and file in a timely manner all documents and reports required by the Exchange Act and, to the extent the Company's obligation to file such reports pursuant to
Section 15(d) of the Exchange Act expires prior to the expiration of the effectiveness period of the Registration Statement as required by Section 4(a) hereof, the Company shall register
the Registrable Shares under the Exchange Act and shall maintain such registration through the effectiveness period required by Section 4(a) hereof; 


        (p)   (i) otherwise
use its commercially reasonable efforts to comply in all material respects with all applicable rules and regulations of the Commission,
(ii) make generally available to its stockholders, as soon as reasonably practicable, earnings statements covering at least 12 months that satisfy the provisions of Section 11(a)
of the Securities Act and Rule 158 thereunder, and (iii) delay filing any Registration Statement or Prospectus or amendment or supplement to such Registration Statement or Prospectus to
which any Holder of Registrable Shares covered by any Registration Statement shall have reasonably objected on the grounds that such Registration Statement or Prospectus or amendment or supplement
does not comply in all material respects with the requirements of the Securities Act, such Holder having been furnished with a copy thereof at least two Business Days prior to the filing thereof,
provided that the Company may file such Registration Statement or Prospectus or amendment or supplement following such time as the Company shall have made a good faith effort to resolve any such issue
with the objecting Holder and shall have advised the Holder in writing of its reasonable belief that such filing complies in all material respects with the requirements of the Securities Act; 



        (q)   cause
to be maintained a registrar and transfer agent for all Registrable Shares covered by any Registration Statement from and after a date not later than the effective
date of such Registration Statement; and 


        (r)   in
connection with any sale or transfer of the Registrable Shares (whether or not pursuant to a Registration Statement) that will result in the securities being
delivered no longer constituting Registrable Shares, cooperate with the Holders and the representative of the underwriters, if any, to facilitate the timely preparation and delivery of certificates
representing the Registrable Shares to be 


10







 



sold,
which certificates shall not bear any transfer restrictive legends (other than as required by the Company's charter), and to enable such Registrable Shares to be in such denominations and
registered in such names as the representative of the underwriters, if any, or the Holders may request at least three Business Days prior to any sale of the Registrable Shares. 


        The
Company may require the Holders to furnish to the Company such information regarding the proposed distribution by such Holder as the Company may from time to time reasonably request
in writing or as shall be required to effect the registration of the Registrable Shares, and no Holder shall be entitled to be named as a selling stockholder in any Registration Statement and no
Holder shall be entitled to use the Prospectus forming a part thereof if such Holder does not provide such information to the Company. Each Holder further agrees to furnish promptly to the Company in
writing all information required from time to time to make the information previously furnished by such Holder not misleading. 


        Each
Holder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 4(f)(ii), 4(f)(iii) or
4(f)(iv) hereof, such Holder will immediately discontinue disposition of Registrable Shares pursuant to a Registration Statement until (i) any such stop order is vacated or
(ii) if an event described in Section 4(f)(iii) or 4(f)(iv) occurs, such Holder's receipt of the copies of the supplemented or amended Prospectus. If so directed by the
Company, such
Holder will deliver to the Company (at the reasonable expense of the Company) all copies in its possession, other than permanent file copies then in such Holder's possession, of the Prospectus
covering such Registrable Shares current at the time of receipt of such notice. 


5.    Suspension Period. 


        (a)   Subject
to the provisions of this Section 5 and a good faith determination by a majority of the Board of Directors of the Company that it is in the best interests
of the Company to suspend the use of any Mandatory Registration Statement, following the effectiveness of such Mandatory Registration Statement (and the filings with any international, federal or
state securities commissions), the Company, by written notice to FBR and the Holders, may direct the Holders to suspend sales of the Registrable Shares pursuant to such Mandatory Registration
Statement for such times as the Company reasonably may determine is necessary and advisable (but in no event for more than 45 days in any 90-day period or more than 60 days
in any 12-month period), if any of the following events shall occur: pending discussions relating to, or the consummation of, a transaction or the occurrence of an event (x) that
would require additional disclosure of material information by the Company in the Mandatory Registration Statement (or such filings) and which has not been so disclosed, (y) as to which the
Company has a bona fide business purpose for preserving confidentiality, or (z) that renders the Company unable to comply with Commission requirements, in each case under circumstances that
would make it impractical or inadvisable to promptly amend or supplement the Mandatory Registration Statement on a post-effective basis, as applicable. Upon the earlier to occur of
(i) the Company delivering to the Holders and FBR an End of Suspension Notice, as hereinafter defined, or (ii) the end of the maximum permissible suspension period, the Company shall use
its commercially reasonable efforts to promptly amend or supplement the Mandatory Registration Statement on a post-effective basis, if necessary, or to take such action as is necessary to
make resumed use of the Mandatory Registration Statement compatible with the Company's best interests, as applicable, so as to permit the Holders to resume sales of the Registrable Shares as soon as
possible. The Company shall have the right to suspend the effectiveness and use of any Piggyback Registration Statement at any time for an unlimited amount of time. 


        (b)   In
the case of an event that causes the Company to suspend the use of a Registration Statement (a "Suspension Event"),
the Company shall give written notice (a "Suspension Notice") to the Holders to suspend sales of the Registrable Shares, and such notice shall state
that such suspension shall continue only for so long as the Suspension Event or its effect is continuing and the Company is 


11







 



taking
all reasonable steps to terminate suspension of the effectiveness of the Registration Statement as promptly as possible. The Holders shall not effect any sales of the Registrable Shares
pursuant to such Registration Statement (or such filings) at any time after it has received a Suspension Notice from the Company and prior to receipt of an End of Suspension Notice (as defined below).
If so directed by the Company, each Holder will deliver to the Company (at the expense of the Company) all copies other than permanent file copies then in such Holder's possession of the Prospectus
covering the Registrable Shares at the time of receipt of the Suspension Notice. The Holders may recommence effecting sales of the Registrable Shares pursuant to the Registration Statement (or such
filings) following further notice to such effect (an "End of Suspension Notice") from the Company, which End of Suspension Notice shall be given by the
Company to the Holders and FBR in the manner described above promptly following the conclusion of any Suspension Event and its effect. 


        (c)   Notwithstanding
any provision herein to the contrary, if the Company shall give a Suspension Notice pursuant to this Section 5 with respect to any Mandatory
Registration Statement, the Company agrees that it shall extend the period of time during which such Mandatory Registration Statement shall be maintained effective pursuant to this Agreement by the
number of days during the period from the date of the giving of the Suspension Notice to and including the date when Holders shall have received the End of Suspension Notice and copies of the
supplemented or amended Prospectus necessary to resume sales; provided such period of time shall not be extended beyond the date that Shares or Additional Shares are not Registrable Shares. 


6.    Indemnification and Contribution. 


        (a)   The
Company agrees to indemnify and hold harmless (i) FBR and each Holder, (ii) each Person, if any, who controls (within the meaning of Section 15
of the Securities Act or Section 20(a) of the Exchange Act) any of the foregoing (a "Controlling Person"), and (iii) the respective
officers, directors, partners, members, employees, representatives and agents of FBR and each Holder or any Controlling Person (any Person referred to in clause (i), (ii) or
(iii) may hereinafter be referred to as an "Purchaser Indemnitee") from and against any and all losses, claims, damages, judgments, actions,
reasonable out-of-pocket expenses, and other liabilities (the "Liabilities"), including, without limitation and as incurred,
reimbursement of all reasonable costs of investigating, preparing, pursuing or defending any claim or action, or any investigation or proceeding by any governmental agency or body, commenced or
threatened, including the reasonable fees and expenses of outside counsel to any Purchaser Indemnitee, joint or several, directly or indirectly related to, based upon, arising out of or in connection
with any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement or Prospectus (as amended or supplemented if the Company shall have furnished to such
Purchaser Indemnitee any amendments or supplements thereto), or any preliminary Prospectus or any other document prepared by the Company used to sell the Registrable Shares, or any omission or alleged
omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a Prospectus, in light of the circumstances under which they were
made), not misleading, except insofar as such Liabilities arise out of or are based upon (i) any untrue statement or omission or alleged untrue statement or omission made in reliance upon and
in conformity with information relating to any Purchaser Indemnitee furnished to the Company or any underwriter in writing by such Purchaser Indemnitee expressly for use therein, (ii) any
untrue statement contained in or omission from a preliminary Prospectus if a copy of the Prospectus (as then amended or supplemented, if the Company shall have furnished to or on behalf of the Holder
participating in the distribution relating to the relevant Registration Statement any amendments or supplements thereto) was not sent or given by or on behalf of such Holder to the Person asserting
any such Liabilities who purchased Shares, if such Prospectus (or Prospectus as amended or supplemented) is required by law to be sent or given at or prior to the written confirmation of the sale of
such Shares to such Person and the untrue statement contained in or omission from such preliminary Prospectus was corrected in the Prospectus (or the Prospectus as amended or supplemented), or
(iii) any sales by 


12







 



any
Holder after the delivery by the Company to such Holder of a Suspension Notice and before the delivery by the Company of an End of Suspension Notice. The indemnity provided for herein shall remain
in full force and effect regardless of any investigation made by or on behalf of any Purchaser Indemnitee. 


        (b)   In
connection with any Registration Statement in which a Holder is participating, such Holder agrees, severally and not jointly, to indemnify and hold harmless FBR, the
Company, each Person who controls the Company or FBR within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act, and the respective officers, directors,
partners, members, representatives, employees and agents of such Person or Controlling Person to the same extent as the foregoing indemnity from the Company to each Purchaser Indemnitee, but only with
reference to (i) untrue statements or omissions or alleged untrue statements or omissions made in reliance upon and in strict conformity with information relating to such Holder furnished to
the Company in writing by such Holder expressly for use in any Registration Statement or Prospectus, any amendment or supplement thereto, or any preliminary Prospectus and (ii) any sales by any
Holder after the delivery by the Company to such Holder of a Suspension Notice and before the delivery by the Company of an End of Suspension Notice. The liability of any Holder pursuant to
clause (i) of the immediately preceding sentence shall in no event exceed the net proceeds received by such Holder from sales of Registrable Shares giving rise to such obligations. If the
Holder elects to include Registrable Shares in an Underwritten Offering, the Holder shall be required to agree to such customary indemnification provisions as may reasonably be required by the
underwriter in connection with such Underwritten Offering. 


        (c)   If
any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against any Person in respect of
which indemnity may be sought pursuant to Section 6(a) or 6(b), such Person (the "Indemnified Party"), shall promptly notify the Person against
whom such indemnity may be sought (the "Indemnifying Party"), in writing of the commencement thereof (but the failure to so notify an Indemnifying Party
shall not relieve it from any liability which it may have under this Section 6, except to the extent the Indemnifying Party is materially prejudiced by the failure to give notice), and the
Indemnifying Party, upon request of the Indemnified Party, shall retain counsel reasonably satisfactory to the Indemnified Party to represent the Indemnified Party and any others the Indemnifying
Party may reasonably designate in such proceeding and shall assume the defense of such proceeding and pay the fees and expenses actually incurred by such counsel related to such proceeding.
Notwithstanding the foregoing, in any such proceeding, any Indemnified Party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such
Indemnified Party, unless (i) the Indemnifying Party and the Indemnified Party shall have mutually agreed in writing to the contrary, (ii) the Indemnifying Party failed within a
reasonable time after notice of commencement of the action to assume the defense and employ counsel reasonably satisfactory to the Indemnified Party, (iii) the Indemnifying Party and its
counsel do not pursue in a reasonable manner the defense of such action or (iv) the named parties to any such action (including any impleaded parties) include both such Indemnified Party and
the Indemnifying Party, or any affiliate of the Indemnifying Party, and such Indemnified Party shall have been reasonably advised by counsel that, either (x) there may be one or more legal
defenses available to it which are different from or additional to those available to the Indemnifying Party or such affiliate of the Indemnifying Party or (y) a conflict may exist between such
Indemnified Party and the Indemnifying Party or such affiliate of the Indemnifying Party, in which event the Indemnifying Party shall not have the right to assume or direct the defense of such action
on behalf of such Indemnified Party, it being understood, however, that the Indemnifying Party shall not, in connection with any one such action or separate but substantially similar or related
actions arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) for all such
Indemnified Parties, which firm shall be designated in writing by those Indemnified Parties who sold a majority of the Registrable Shares sold 


13







 



by
all such Indemnified Parties and any such separate firm for the Company, the directors, the officers and such control Persons of the Company as shall be designated in writing by the Company. The
Indemnifying Party shall not be liable for any settlement of any proceeding effected without its written consent, which consent shall not be unreasonably withheld or delayed, but if settled with such
consent or if there be a final judgment for the plaintiff, the Indemnifying Party agrees to indemnify any Indemnified Party from and against any loss or liability by reason of such settlement or
judgment to the extent provided in this Section 6 without reference to this sentence. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any
settlement of any pending or threatened proceeding in respect of which any Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party,
unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such proceeding. 


        (d)   If
the indemnification provided for in Section 6(a) or 6(b) is for any reason held to be unavailable to an Indemnified Party in respect of any Liabilities
referred to therein (other than by reason of the exceptions provided therein) or is insufficient to hold harmless a party indemnified thereunder, then each Indemnifying Party under such sections, in
lieu of indemnifying such Indemnified Party thereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Liabilities (i) in such proportion as is
appropriate to reflect the relative benefits of the Indemnified Party on the one hand and the Indemnifying Parties on the other in connection with the statements or omissions that resulted in such
Liabilities, or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Indemnifying Parties and the Indemnified Party, as well as any other relevant equitable considerations. The relative fault of
the Company, on the one hand, and any Purchaser Indemnitees, on the other, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to information supplied by the Company or by such Purchaser Indemnitees and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission. 


        (e)   The
parties agree that it would not be just and equitable if contribution pursuant to this Section 6 were determined by pro
rata allocation (even if such Indemnified Parties were treated as one entity for such purpose), or by any other method of allocation that does not take account of the equitable
considerations referred to in Section 6(d). The amount paid or payable by an Indemnified Party as a result of any Liabilities referred to in Section 6(d) shall be deemed to include, subject to
the limitations set forth above, any reasonable legal or other expenses actually incurred by such Indemnified Party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 6, in no event shall a Purchaser Indemnitee be required to contribute any amount in excess of the amount by which proceeds received by such
Purchaser Indemnitee from sales of Registrable Shares exceeds the amount of any damages that such Purchaser Indemnitee has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. For purposes of this Section 6, each Person, if any, who controls (within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act) FBR or a Holder shall have the same rights to contribution as FBR or such Holder, as the case may be, and each Person, if any, who controls (within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act) the Company, and each officer, director, partner, member, employee, representative, agent or manager of the Company shall have the same rights to
contribution as the Company. Any party entitled to contribution will, promptly after receipt of notice of commencement of any action, suit or proceeding against such party in respect of which a claim
for contribution may be made against another party or parties, notify each party or parties from whom contribution may be sought, but the omission to so notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any obligation it or they may have under this Section 6 or otherwise, except to the extent that any 


14







 



party
is materially prejudiced by the failure to give notice. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act), shall be entitled to
contribution from any Person who was not guilty of such fraudulent misrepresentation. 


        (f)    The
indemnity and contribution agreements contained in this Section 6 will be in addition to any liability which the indemnifying parties may otherwise have to
the indemnified parties referred to above. Each Purchaser Indemnitee's obligations to contribute pursuant to this Section 6 are not joint but are several in the proportion that the number of
Shares sold by such Purchaser Indemnitee bears to the number of Shares sold by all Purchaser Indemnities. 


7.    Additional Payments Under Certain Circumstances. 


        (a)   Additional
payments ("Additional Payments") with respect to the Registrable Shares shall be assessed as follows if any of
the following events occur (each such event in clauses (i) through (iii) below being herein called a "Registration Default"): 



        (i)    the
Mandatory Shelf Registration Statement has not been filed with the Commission before January 1, 2005 or declared effective by the Commission before
July 1, 2005; 


        (ii)   the
Company fails, with respect to a Holder that supplies a Notice and Questionnaire described in Section 2(a)(iii), to cause an amendment to the already
effective Mandatory Shelf Registration Statement to be filed or, if permitted by the Commission, to prepare a Prospectus supplement to the Mandatory Shelf Registration Statement and distribute such
supplement to Holders, in each case within the time period set forth in section 2(a)(iii) to name such Holder as an additional selling securityholder; or 



        (iii)  the
Mandatory Shelf Registration Statement is declared effective by the Commission but (A) the Mandatory Shelf Registration Statement thereafter ceases to be
effective during the period contemplated by Section 2(a)(i) or (B) as specified in Section 5(a), the Mandatory Shelf Registration Statement or the Prospectus ceases to be
usable in connection with resales of Registrable Shares during the periods specified herein and the Company fails to (1) cure the Mandatory Shelf Registration Statement within five business
days by a post-effective amendment or a report filed pursuant to the Exchange Act or (2) if applicable, terminate the suspension period described in Section 5(a) by the 45/th
or the 60/th/ day, as applicable. 




        Each
of the foregoing will constitute a Registration Default whatever the reason for any such event and whether it is voluntary or involuntary or is beyond the Company's control or
pursuant to operation of law or as a result of any action or inaction by the Commission. 


        (b)   Additional
Payments shall accrue on the Registrable Shares from and including the date on which any such Registration Default occurs to but excluding the date on which
all such Registration Defaults have been cured, (i) in the case of Preferred Shares at a rate of 0.5% per annum, and (ii) if the Preferred Shares have been converted to Common Shares,
$0.04 per Common Share per annum (subject to adjustment for splits, recombinations and similar matters); provided, however, that in no event shall Additional Payments accrue under more than one of the
foregoing clauses (a)(i)-(a)(iii) at any one time. In the case of a Registration Default described in clause (a)(ii), the Company's obligation to pay Additional Payments extends only to
the affected Registrable Shares. Other than the obligation of payment of any Additional Payments in accordance with the terms hereof, the Company will have no other liabilities for monetary damages
with respect to its registration obligations. With respect to each Holder, the Company's obligations to pay Additional Payments remain in effect only so long as the securities held by the Holder are
Registrable Shares. 


        (c)   A
Registration Default referred to in Section 5(a)(iii) shall be deemed not to have occurred and be continuing, and no Additional Payments shall accrue as
a result thereof, in relation to the Mandatory Shelf Registration Statement or the related prospectus if (i) (A) such Registration Default 


15







 



has
occurred solely as a result of material events, with respect to the Company that would need to be described in such Mandatory Shelf Registration Statement or the related prospectus or
(B) the Registration Default relates to any information supplied or failed to be supplied by a Holder of Registrable Securities and (ii) the Company is proceeding promptly and in good
faith to amend or supplement the Mandatory Shelf Registration Statement and related prospectus to describe such events as required by Section 5; provided, however, that in any case if such
Registration Default occurs for a continuous period in excess of 30 days beyond any permitted 45 or 60 day suspension period (as provided by Section 5), Additional Payments shall
be payable in accordance with the above paragraph from the day such Registration Default occurs until such Registration Default is cured. 


        (d)   In
the case of the Preferred Shares, any amounts of Additional Payments due pursuant to Section 5(a) will be payable in cash on the regular dividend payment dates
described the certificate of designations for the Preferred Shares. In the case of the Common Shares, any amounts of Additional Payments pursuant to Section 5(a) will be payable in cash on the
regular dividend payment dates described in the certificate of designations with respect to the Preferred Shares as if it were still in effect and related to the Common Shares. The amount of
Additional Payments will be determined on the basis of a 360-day year comprised of twelve 30-day months, and the actual number of days on which Additional Payments accrued
during such period. 


8.    Termination of the Company's Obligations. 


        The
Company shall have no further obligations pursuant to this Agreement at such time as no Registrable Shares are outstanding, provided, however, that the Company's obligations under
Sections 3, 6 and 10 of this Agreement shall remain in full force and effect following such time. 


9.    Limitations on Subsequent Registration Rights. 


        From
and after the date of this Agreement, the Company shall not, without the prior written consent of the Holders of a majority of the then outstanding Registrable Shares, enter into
any agreement with any holder or prospective holder of any securities of the Company that would allow such holder or prospective holder to include such securities in the Mandatory Shelf Registration
Statement or Piggyback Registration Statement, if any, filed pursuant to the terms hereof, unless under the terms of such agreement, such holder or prospective holder may include such securities in
any such registration only to the extent that the inclusion of his securities will not reduce the amount of Registrable Shares of the Holders that is included. 


10.    Miscellaneous. 


        (a)    Amendments and Waivers.    This Agreement may not be amended, modified or supplemented, and waivers or consents
to or departures from the provisions hereof may not be given, without the written consent of the Company and Holders beneficially owning a majority of the then outstanding Registrable Shares;  provided, however, that for purposes of this Agreement, Registrable Shares owned, directly or indirectly, by an Affiliate of the Company shall not be
deemed to be outstanding. Notwithstanding the foregoing, a waiver or consent to or departure from the provisions hereof with respect to a matter that relates exclusively to the rights of a Holder
whose securities are being sold pursuant to a Registration Statement and that does not directly or indirectly affect, impair, limit or compromise the rights of other Holders may be given by such
Holder; provided that the provisions of this sentence may not be amended, modified or supplemented except in accordance with the provisions of the
immediately preceding sentence. 


16







 



        (b)    Notices.    All notices and other communications, provided for or permitted hereunder shall be made in writing
and delivered by facsimile (with receipt confirmed), overnight courier or registered or certified mail, return receipt requested, or by telegram, addressed as follows: 



        (i)    if
to a Holder, at the most current address given by the transfer agent and registrar of the Shares to the Company; 


        (ii)   if
to the Company, at the offices of the Company at 1100 Louisiana Street, Suite 4400, Houston, Texas 77002, Attention: Stephen W. Herod, (facsimile
832-204-2877); with copies (which shall not constitute notice) to: (A) Hinkle Elkhouri Law Firm L.L.C., 2000 Epic Center, 301 North Main Street, Wichita, Kansas 67202,
Attention: David S. Elkouri, Esq. (Fax:
(316) 264-1518) and (B) Thompson & Knight LLP, 333 Clay Street, Suite 3300, Houston, Texas 77002, Attention: Dallas Parker, Esq. (facsimile
832-397-8110); and 


        (iii)  if
to FBR, at the offices of FBR at 1001 Nineteenth Street North, Arlington, Virginia 22209, Attention: William Ginivan, Esq. (facsimile
(703) 312-9698); with a copy (which shall not constitute notice) to Akin Gump Strauss Hauer & Feld LLP, 1111 Louisiana St., Houston, Texas 77002, Attention: Julien R. Smythe,
Esq. (facsimile (713) 236-0822). 




        (c)    Successors and Assigns; Third Party Beneficiaries.    This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of each of the parties hereto and shall inure to the benefit of each Holder. The Company agrees that the Holders shall be third party beneficiaries to the
agreements made hereunder by FBR and the Company, and each Holder shall have the right to enforce such agreements directly to the extent it deems such enforcement necessary or advisable to protect its
rights hereunder; provided, however, that such Holder fulfills all of its obligations hereunder. 


        (d)    Counterparts.    This Agreement may be executed in any number of counterparts and by the parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. 


        (e)    Governing Law.    THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK OR THE SUPREME COURT OF THE STATE OF NEW YORK OR
SITTING IN NEW YORK COUNTY IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION THAT IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.


        (f)    Severability.    If any term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and
shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties hereto that they would have
executed the remaining 


17







 



terms,
provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable. 


        (g)    Entire Agreement.    This Agreement, together with the Placement Agreement, is intended by the parties hereto
as a final expression of their agreement, and is intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained
herein and therein. 


        (h)    Registrable Shares Held by the Company or its Affiliates.    Whenever the consent or approval of Holders of a
specified percentage of Registrable Shares is required hereunder, Registrable Shares held by the Company or its Affiliates shall not be counted in determining whether such consent or approval was
given by the Holders of such required percentage. 


        (i)    Survival.    This Agreement is intended to survive the consummation of the transactions contemplated by the
Placement Agreement. The indemnification and contribution obligations under Section 6 of this Agreement shall survive the termination of the Company's obligations under Section 2 of this
Agreement. 


        (j)    Headings.    The headings in this Agreement are for convenience of reference only and shall not limit or
otherwise affect the provisions of this Agreement. All references made in this Agreement to "Section" refer to such Section of this Agreement, unless expressly stated otherwise. 


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18







 

        IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. 



	 	 	PETROHAWK ENERGY CORPORATION
	

 	
 	

By:	

/s/  FLOYD C. WILSON      

	 	 	Name:	Floyd C. Wilson

	 	 	Title:	President and Chief Executive Officer

	

 	
 	
FRIEDMAN, BILLINGS, RAMSEY & CO., INC.

(for the benefit of the Holders)
	

 	
 	

By:	

/s/  JAMES R. KLEEBLATT      

	 	 	Name:	James R. Kleeblatt

	 	 	Title:	Senior Managing Director





19









 
 

SCHEDULE A    
    
    INITIAL HOLDERS    
    











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Exhibit 10.5


REGISTRATION RIGHTS AGREEMENT


SCHEDULE A INITIAL HOLDERS