exv4w1





Exhibit 4.1



Execution Version





REGISTRATION RIGHTS AGREEMENT



among



QR ENERGY, LP



and



QUANTUM RESOURCES A1, LP



QAB CARRIED WI, LP



QAC CARRIED WI, LP



BLACK DIAMOND RESOURCES, LLC



October 3, 2011













 





TABLE OF CONTENTS




	 	 	 	 	 

	ARTICLE I	 	 	 	 
	DEFINITIONS	 	 	 	 
	Section 1.01 Definitions
	 	 	1	 
	Section 1.02 Registrable Securities
	 	 	4	 
	Section 1.03 Rules of Construction
	 	 	5	 
	 
	ARTICLE II	 	 	 	 
	REGISTRATION RIGHTS	 	 	 	 
	Section 2.01 Right to Request Registration
	 	 	5	 
	Section 2.02 Piggyback Rights
	 	 	8	 
	Section 2.03 Underwritten Offerings
	 	 	11	 
	Section 2.04 Registration and Sale Procedures
	 	 	13	 
	Section 2.05 Cooperation by Holders
	 	 	16	 
	Section 2.06 Restrictions on Public Sale by Holders of Registrable Securities
	 	 	16	 
	Section 2.07 Expenses
	 	 	17	 
	Section 2.08 Indemnification
	 	 	17	 
	Section 2.09 Rule 144 Reporting
	 	 	20	 
	Section 2.10 Transfer or Assignment of Registration Rights
	 	 	20	 
	Section 2.11 Limitation on Subsequent Registration Rights
	 	 	20	 
	 
	ARTICLE III	 	 	 	 
	MISCELLANEOUS	 	 	 	 
	Section 3.01 Communications
	 	 	21	 
	Section 3.02 Governing Law
	 	 	22	 
	Section 3.03 WAIVER OF JURY TRIAL
	 	 	22	 
	Section 3.04 Successors and Assigns
	 	 	23	 
	Section 3.05 Severability
	 	 	23	 
	Section 3.06 Specific Performance
	 	 	23	 
	Section 3.07 Amendments
	 	 	23	 
	Section 3.08 No Affiliate Liability
	 	 	23	 
	Section 3.09 Recapitalization, Exchanges Etc., Affecting Securities
	 	 	23	 
	Section 3.10 Further Assurances
	 	 	23	 
	Section 3.11 Entire Agreement
	 	 	23	 
	Section 3.12 Counterparts; Facsimile Signatures
	 	 	24	 






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REGISTRATION RIGHTS AGREEMENT




     This REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is being entered into on October
3, 2011, between QR Energy, LP, a Delaware limited partnership (the “Registrant”), and
Quantum Resources A1, LP, a Delaware limited partnership (“QRA”), QAB Carried WI, LP, a
Delaware limited partnership (“QAB”), QAC Carried WI, LP, a Delaware limited partnership
(“QAC”), and Black Diamond Resources, LLC, a Delaware limited liability company (each a
“Seller,” and collectively, the “Sellers”).



RECITALS




     WHEREAS, each of the Sellers, QRE Operating, LLC, a Delaware limited liability company (the
“Purchaser”) and the Partnership have entered into that certain Purchase and Sale Agreement dated
September 12, 2011 (the “Purchase Agreement”), wherein the Sellers have agreed to sell and
the Purchaser has agreed to purchase certain oil and natural gas properties and rights described
therein (the “Properties Acquisition”);



     WHEREAS, pursuant to Section 3.1 of the Purchase Agreement, the Registrant has agreed to issue
the Class C Convertible Preferred Units (as defined herein) of the Registrant to each of the
Sellers as partial consideration for the Properties Acquisition;



     WHEREAS, the Class C Convertible Preferred Units may be converted into Common Units (as
defined herein) of the Registrant pursuant to the First Amended and Restated Agreement of Limited
Partnership of the Registrant, dated as of December 22, 2010, as amended by Amendment No. 1 dated
October 3, 2011 (as amended, the “Partnership Agreement”);



     WHEREAS, pursuant to Sections 10.8 and 11.7 of the Purchase Agreement, the Registrant has
agreed to provide the registration and other rights set forth in this Agreement for the benefit of
the Sellers and Qualified Transferees (as defined below); and



     WHEREAS, the execution and delivery of this Agreement by the Sellers and the Registrant is a
condition to closing the Properties Acquisition.



     NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein and
for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by
each party hereto, the parties hereby agree as follows:



ARTICLE I

DEFINITIONS




     Section 1.01 Definitions. Capitalized terms used in this Agreement and not defined
herein shall have the meanings ascribed to such terms in the Purchase Agreement. As used in this
Agreement, the following terms have the meanings indicated:



     “Affiliate” means, with respect to any Person, any Person who, directly or indirectly,
controls, is controlled by or is under common control with the Person. For purposes of this
definition, “control” when used with respect to any Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the ownership



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of voting securities, by contract or otherwise. For the avoidance of doubt, Quantum Resources
B, LP, a Delaware limited partnership, and Quantum Resources C, LP, a Delaware limited partnership,
will be treated as Affiliates of the Sellers.




     “Agreement” shall have the meaning specified in the Preamble to this Agreement.



     “Business Day” means any day other than a Saturday, a Sunday, or a day on which banks
are authorized or required by law to be closed for business in New York, New York or Houston,
Texas, United States of America.



     “Class C Convertible Preferred Units” means units representing limited partner
interests of the Registrant designated as “Class C Convertible Preferred Units” and having the
rights, obligations and such other terms as set forth in the Partnership Agreement.



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



     “Common Units” means the common units representing limited partnership interests in
the Registrant.



     “Delay Liquidated Damages” shall have the meaning provided in Section
2.01(f)(ii) of this Agreement.



     “Demand Registration” shall have the meaning provided in Section 2.01(a) of
this Agreement.



     “Demand Request” means a request for registration of Registrable Securities pursuant
to Section 2.01(a) of this Agreement.



     “Effective Date” means, with respect to a particular Shelf Registration Statement, the
date of effectiveness of such Shelf Registration Statement.



     “Effectiveness Period” shall have the meaning specified in Section 2.01(b) of
this Agreement.



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



     “Filing Date” means, with respect to a particular Shelf Registration Statement, the
date on which such Shelf Registration Statement is filed with the Commission.



     “General Partner” means QRE GP, LLC, a Delaware limited liability company and the
general partner of the Registrant.



     “Governmental Authority” means any federal, state, local or foreign government, or
other governmental, regulatory or administrative authority, agency or commission or any court,
tribunal, or judicial or arbitral body.



     “Holders” means the Sellers and the Qualifying Transferees, if any.



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     “Included Registrable Securities” shall have the meaning specified in Section
2.02(a) of this Agreement.



     “Launch Date” shall have the meaning specified in Section 2.02(b) of this
Agreement.



     “Law” means any federal, state, local or foreign statute, law, ordinance, regulation,
rule, order, code, governmental restriction, decree, injunction or other requirement of law of any
Governmental Authority or any judicial or administrative interpretation thereof.



     “Liquidated Damages” shall have the meaning provided in Section 2.01(f)(i) of
this Agreement.



     “Liquidation Preference Price” means $21.00 per Class C Convertible Preferred Unit
orCommon Unit, as the case may be.



     “Losses” shall have the meaning provided in Section 2.08(a) of this Agreement.



     “Managing Underwriter” means the lead investment banking firm of a syndicate formed
for the purchase and distribution of an issuance of Common Units.



     “Non-Affiliated Qualified Transferee” means a Person meeting the criteria set forth in
clause (ii) of the definition of Qualified Transferee and is not an Affiliate of any Seller.



     “NYSE” means the New York Stock Exchange.



     “Opt-Out Notice” shall have the meaning provided in Section 2.02(a) of this
Agreement.



     “Other Holders” shall have the meaning provided in Section 2.02(c) of this
Agreement.



     “Overnight Underwritten Offering” shall have the meaning provided in Section
2.02(b) of this Agreement.



     “Participating Holder Documentation” shall have the meaning provided in Section
2.02(d) of this Agreement.



     “Participating Holders” means, with respect to a particular Demand Request, the
Holders electing to participate in such Demand Registration, and with respect to a Piggyback
Offering or Underwritten Offering, the Holders electing to offer and sell Registrable Securities
pursuant to an effective Shelf Registration Statement.



     “Partnership Agreement” shall have the meaning provided in the Recitals to this
Agreement.



     “Person” or “person” means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or other agency or political subdivision thereof.



     “Piggyback Offering” shall have the meaning provided in Section 2.02(a) of
this Agreement.



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     “Pricing Date” shall have the meaning provided in Section 2.02(b) of this
Agreement.



     “Primary Offering” shall have the meaning provided in Section 2.04(n) of this
Agreement.



     “Purchase Agreement” has the meaning provided in the Recitals to this Agreement.



     “Purchaser” shall have the meaning specified in the Recitals of this Agreement.



     “Qualified Transferee” means any transferee or assignee with respect to Registrable
Securities; provided, that (i) such transferee or assignee is an Affiliate of a Seller or
(ii) such transferee or assignee (together with transferees or assignee’s Affiliates) receives an
aggregate of at least $35 million of Registrable Securities (based on the Liquidation Preference
Price).



     “Registrable Securities” means the Common Units issuable upon conversion of the Class
C Convertible Preferred Units until such time as such securities cease to be Registrable Securities
pursuant to Section 1.02 of this Agreement.



     “Registrant” shall have the meaning provided in the Preamble to this Agreement.



     “Registration Expenses” shall have the meaning provided in Section 2.07 of
this Agreement.



     “Rule 144” means Rule 144 promulgated by the Commission under the Securities Act.



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



     “Selling Expenses” shall have the meaning provided in Section 2.07 of this
Agreement.



     “Shelf Registration Statement” shall have the meaning provided in Section
2.01(a) of this Agreement.



     “Underwritten Offering” shall have the meaning provided in Section 2.02(a) of
this Agreement.



     “Underwritten Offering Filing” shall have the meaning provided in Section
2.02(a) of this Agreement.



     “Underwritten Offering Request” shall have the meaning provided in Section
2.03(a) of this Agreement.



     Section 1.02 Registrable Securities. Any Registrable Security will cease to be a
Registrable Security at the earliest of the following: (a) when a registration statement covering
such Registrable Security becomes or has been declared effective by the Commission and such
Registrable Security has been sold or disposed of pursuant to such registration statement; (b) when
such Registrable Security has been disposed of pursuant to Rule 144 (or any similar provision then
in force) under the Securities Act; (c) as to any Non-Affiliated Qualified



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Transferee to whom any registration rights have been assigned hereunder, when such Registrable
Security can be disposed of pursuant to Rule 144 (or any similar provision then in force) without
regard to volume limitations; (d) when such Registrable Security is held by the Registrant or one
of its subsidiaries; (e) when such Registrable Security has been sold in a private transaction in
which the transferor’s rights under this Agreement are not assigned to the transferee of such
securities pursuant to the terms of this Agreement; and (f) two (2) years from the Effective Date
of the registration statement relating to such Registrable Securities.




     Section 1.03 Rules of Construction. Unless the context otherwise requires:



          (a) a term has the meaning assigned to it;




          (b) “or” is not exclusive;




          (c) words in the singular include the plural, and words in the plural include the singular;




          (d) provisions apply to successive events and transactions; and




          (e) “herein,” “hereof” and other words of similar import refer to this Registration Rights
Agreement as a whole and not to any particular Article, Section or other subdivision.




ARTICLE II

REGISTRATION RIGHTS




     Section 2.01 Right to Request Registration.



          (a) Request for Registration. The Sellers or their respective Affiliates may, at any
time from and after the date of this Agreement, or except as set forth in the last sentence of this
Section 2.01(a) and in Section 2.10, any Non-Affiliated Qualified Transferee to
whom any Seller, any Affiliate of any Seller or any other Qualified Transferee has transferred one
or more of the rights set forth in this Section 2.01(a) may, at any time after June 1,
2012, request in writing (a “Demand Request”) that the Registrant prepare and file a
registration statement under the Securities Act to permit the resale of all or a portion of the
Registrable Securities or, if the Demand Request is made by a Seller or its Affiliate, Class C
Convertible Preferred Units, from time to time, including as permitted by Rule 415 promulgated by
the Commission under the Securities Act, or any similar provision then in force (a “Demand
Registration” and such registration statement, a “Shelf Registration Statement”). A
Shelf Registration Statement filed pursuant to this Section 2.01(a) shall be on such
appropriate registration form of the Commission as shall be selected by the Registrant. A Demand
Request shall specify the number of Registrable Securities or Class C Convertible Preferred Units
proposed to be included in the Shelf Registration Statement and the intended method of disposition
thereof. No Demand Request shall deemed to have been made, and no Demand Registration shall be
required, with respect to any request made by a Non-Affiliated Qualified Transferee that would
require the registration of less than $100 million of Registrable Securities (based on the
Liquidation Preference Price), taking into account all elections by other Holders to be included in
the Demand Registration pursuant to Section 2.01(c), and the Non-Affiliated Qualified
Transferee






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making such failed demand shall be prohibited from making another demand under this paragraph
for a period of 180 days following the end of the notice period set forth in Section
2.01(c) with respect to the failed demand.




          (b) Effectiveness. The Registrant shall use its commercially reasonable efforts to:
(i) prepare and file a Shelf Registration Statement within 60 days of receiving the Demand Request
and (ii) cause the Shelf Registration Statement to become effective no later than 180 days after
the date of the Filing Date. The Registrant will use its commercially reasonable efforts to cause
a Shelf Registration Statement filed pursuant to this Section 2.01 to be continuously
effective under the Securities Act until the earliest date on which any of the following occurs:
(x) all Registrable Securities and Class C Convertible Preferred Units covered by such Shelf
Registration Statement have been distributed in the manner set forth and as contemplated in such
Shelf Registration Statement, (y) there are no longer any Registrable Securities or Class C
Convertible Preferred Units outstanding and (z) two years from the Effective Date of such Shelf
Registration Statement (the “Effectiveness Period”). A Shelf Registration Statement when
it becomes or is declared effective (including the documents incorporated therein by reference)
will comply as to form in all material respects with all applicable requirements of the Securities
Act and the Exchange Act and will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the statements therein not
misleading (and, in the case of any prospectus contained in such Shelf Registration Statement, in
the light of the circumstances under which a statement is made). As soon as practicable following
the Effective Date, but in any event within three (3) Business Days of such date, the Registrant
will notify the Participating Holders of the effectiveness of such Shelf Registration Statement.




          (c) Notice to Other Holders. Upon receipt of any Demand Request, the Registrant shall
promptly (but in any event within ten (10) days) give written notice of such Demand Request to all
other Holders, who shall each have the right, exercisable by written notice to the Registrant
within 15 days after their receipt of notice of such Demand Request, to elect to include in such
Demand Registration pursuant to this Section 2.01, all or any portion of the Registrable
Securities as they may request.




          (d) Maximum Shelf Registration Requests. Notwithstanding anything to the contrary
contained in this Agreement, the Sellers and their respective Affiliates, together with the
Qualified Transferees to whom the rights set forth in this Section 2.01 are transferred or
assigned, shall be entitled to not more than an aggregate of five (5) Demand Registrations pursuant
to Section 2.01 of this Agreement (including any post-effective amendments to such Shelf
Registration Statement filed for the primary purpose of including Participating Holders).




          (e) Delay Rights. Notwithstanding anything to the contrary contained in this
Agreement, the Registrant may, upon written notice to any Participating Holder whose Registrable
Securities or Class C Convertible Preferred Units are included in a Shelf Registration Statement,
delay the effectiveness of a Shelf Registration Statement or suspend such Participating Holder’s
use of any prospectus that is a part of an effective Shelf Registration Statement (in which event
the Participating Holder shall discontinue sales of the Registrable Securities and Class C
Convertible Preferred Units pursuant to the effective Shelf Registration Statement) if (A) the
Registrant is pursuing an acquisition, merger, reorganization, disposition or






6









 







other similar transaction and the Registrant determines in good faith that the Registrant’s
ability to pursue or consummate any such transaction would be materially and adversely affected by
any required disclosure of such transaction in a Shelf Registration Statement (including
disclosures incorporated by reference in a Registration Statement) or (B) the Registrant has
experienced some other material, non-public event the disclosure of which at such time, in the good
faith judgment of the Registrant, would materially and adversely affect the Registrant;
provided, that in no event shall the Registrant delay the effectiveness of a Shelf
Registration Statement or prohibit the Participating Holders from selling Registrable Securities or
Class C Convertible Preferred Units pursuant to the Shelf Registration Statement for a period that
exceeds an aggregate of 90 days in any 365-day period. Upon disclosure of such information or the
termination of the conditions described in this Section 2.01(e), the Registrant shall
provide prompt notice to the Participating Holders whose Registrable Securities or Class C
Convertible Preferred Units are included in the Shelf Registration Statement, and shall pursue the
effectiveness of the Shelf Registration Statement or promptly terminate any suspension of sales
pursuant to an effective Shelf Registration Statement, as applicable, and the Registrant shall take
such other actions reasonably necessary or appropriate to permit sales of Registrable Securities
and Class C Convertible Preferred Units pursuant to an effective Shelf Registration Statement as
contemplated in this Agreement.




          (f) Failure To Become Effective or Excessive Delay; Liquidated Damages.




          (i) If a Shelf Registration Statement required by Section 2.01(a) is not
effective within 180 days after its Filing Date, then each Participating Holder shall be
entitled to a payment (with respect to each Registrable Security held by the Participating
Holder or Class C Convertible Preferred Unit held by the Seller or its Affiliate(s) who have
made a Demand Request with respect to such units), as liquidated damages and not as a
penalty, of 0.25% per annum of the Liquidation Preference Price for the first 60-day period
immediately following the 180th day after the Filing Date, with such payment amount
increasing by an additional 0.25% per annum of the Liquidation Preference Price for each
subsequent 60-day period, up to a maximum of 1.00% per annum of the Liquidation Preference
Price (the “Liquidated Damages”), until such time as such Shelf Registration
Statement becomes effective or is declared effective or the Registrable Securities or Class
C Convertible Preferred Units, as applicable, covered by such Shelf Registration Statement
are no longer outstanding.




          (ii) If (A) the Holders shall be prohibited from selling their Registrable Securities
or Class C Convertible Preferred Units, as applicable, under the Registration Statement as a
result of a suspension pursuant to Section 2.01(e) of this Agreement in excess of
the periods permitted therein or (B) the Registration Statement is filed and effective but,
during the Effectiveness Period, shall thereafter cease to be effective or fail to be usable
for its intended purpose without being succeeded within 90 days by a post-effective
amendment to the Registration Statement, a supplement to the prospectus or a report filed
with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, then,
until the suspension is lifted or such amendment, supplement or report is filed and
effective, but not including any day on which a suspension is lifted, if applicable, then
each Holder shall be entitled to a payment (with respect to each Registrable Security or
Class C Convertible Preferred Unit held by the


7









 







           Seller or its Affiliate(s) who have made a Demand Request with respect to such units),
as liquidated damages and not as a penalty, of 0.12% per annum of the Liquidation Preference
Price for the first 90 days following (x) the date on which the suspension period exceeded
the permitted period under Section 2.01(e) of this Agreement or (y) the 91st day
after the Registration Statement ceased to be effective or failed to be useable for its
intended purposes, increasing by an additional 0.12% per annum of the Liquidation Preference
Price for each subsequent 90-day period, up to a maximum of 0.24% per annum of the
Liquidation Preference Price (the “Delay Liquidated Damages”). For purposes of this
Section 2.01(f)(ii), a suspension shall be deemed lifted on the date that notice
that the suspension has been lifted or that a post-effective amendment is effective is
delivered to the Holders pursuant to Section 3.01 of this Agreement.




          (iii) The Liquidated Damages and Delay Liquidated Damages shall be paid to each
Participating Holder in cash within ten (10) Business Days of the end of each such 60-day or
90-day period, as applicable. Any payments made pursuant to this Section 2.01(f)
shall constitute the Participating Holders’ exclusive remedy for such events. Any
Liquidated Damages and Delay Liquidated Damages due under this Section 2.01(f) shall
be paid to the Participating Holders in immediately available funds. The obligation to pay
the Liquidated Damages and Delay Liquidated Damages to a Participating Holder pursuant to
this Section 2.01(f) shall cease at such time as the Registrable Securities or Class
C Convertible Preferred Units become eligible for resale by such Participating Holder under
Rule 144 of the Securities Act without regard to any volume or manner of sale restrictions.




     Section 2.02 Piggyback Rights.



          (a) Underwritten Offering Piggyback Rights. Except as provided in Section
2.02(b), if at any time during any Effectiveness Period the Registrant proposes to file (i) a
prospectus supplement to an effective shelf registration statement, other than a Shelf Registration
Statement contemplated by Section 2.01, or (ii) a registration statement, other than a
Shelf Registration Statement, in either case, for the sale of Common Units in an underwritten
offering on a firm commitment or best efforts basis (an “Underwritten Offering”) for its
own account, then, as soon as practicable but not less than ten (10) Business Days (or three (3)
Business Days in the case of an Overnight Underwritten Offering) prior to the filing of (A) any
preliminary prospectus supplement relating to such Underwritten Offering pursuant to Rule 424(b) of
the Securities Act, (B) the prospectus supplement relating to such Underwritten Offering pursuant
to Rule 424(b) of the Securities Act (if no preliminary prospectus supplement is used) or (C) such
registration statement (other than a Shelf Registration Statement), as the case may be (an
“Underwritten Offering Filing”), the Registrant shall give notice of such proposed
Underwritten Offering to the Holders (including, but not limited to, notice by electronic mail) and
such notice shall offer the Holders the opportunity to include in such Underwritten Offering such
number of Registrable Securities (the “Included Registrable Securities”) as each such
Holder may request in writing (a “Piggyback Offering”). Notwithstanding the foregoing, if
the Registrant has been advised by the Managing Underwriter that the inclusion of Registrable
Securities for sale for the account of the Participating Holders is likely to have an adverse
effect on the price, timing or distribution of the Common Units, then the amount of Registrable
Securities to be offered for the accounts of Participating Holders shall be determined based on






8









 







the
provisions of Section 2.02(c) of this Agreement. Each Holder shall keep all information relating to any such Underwritten
Offering confidential and shall not disseminate or in any way disclose such information. Except as
provided in Section 2.02(b), each Holder shall then have two (2) Business Days from the
date of such notice to request inclusion of its Registrable Securities in the Piggyback Offering.
If no request for inclusion from a Holder is received within the specified time, then such Holder
shall have no further right to participate in such Piggyback Offering. If, at any time after
giving written notice of its intention to undertake an Underwritten Offering and prior to the
closing of such Underwritten Offering, the Registrant shall determine for any reason not to
undertake or to delay such Underwritten Offering, the Registrant shall give written notice of such
determination to the Participating Holders and shall be relieved of its obligation to sell any
Included Registrable Securities in connection with such delayed or abandoned Underwritten Offering.
Any Participating Holder shall have the right to withdraw such Participating Holder’s request for
inclusion of such Participating Holder’s Registrable Securities in such Underwritten Offering by
giving written notice to the Registrant of such withdrawal at least one (1) Business Day prior to
the time of pricing of such Underwritten Offering. Each Holder’s rights under this Section
2.02(a) shall terminate when such Holder holds less than $15 million of Registrable Securities
(based on the Liquidation Preference Price). Notwithstanding the foregoing, any Holder may deliver
written notice (an “Opt-Out Notice”) to the Registrant requesting that such Holder not
receive notice from the Registrant of any proposed Underwritten Offering.




          (b) Overnight Underwritten Offering Piggyback Rights. If at any time during any
Effectiveness Period the Registrant proposes to file an Underwritten Offering Filing and such
Underwritten Offering is expected to be launched (the “Launch Date”) after the close of
trading on one trading day and priced (the “Pricing Date”) before the open of trading on
the next succeeding trading day (such execution format, an “Overnight Underwritten
Offering”), then no later than three (3) Business Days after the Registrant engages a Managing
Underwriter for the proposed Overnight Underwritten Offering, the Registrant shall notify
(including, but not limited to, notice by electronic mail) the Holders of the pendency of the
Overnight Underwritten Offering and such notice shall offer the Holders the opportunity to include
in such Overnight Underwritten Offering such number of Registrable Securities as each such Holder
may request in writing. Notwithstanding the foregoing, if the Registrant has been advised by the
Managing Underwriter that the inclusion of Registrable Securities in the Overnight Underwritten
Offering for the accounts of the Participating Holders is likely to have an adverse effect on the
price, timing or distribution of the Common Units, then the amount of Registrable Securities to be
included in the Overnight Underwritten Offering for the accounts of Participating Holders shall be
determined based on the provisions of Section 2.02(c) of this Agreement. If, at any time
after giving written notice of its intention to execute an Overnight Underwritten Offering and
prior to the closing of such Overnight Underwritten Offering, the Registrant determines for any
reason not to undertake or to delay such Overnight Underwritten Offering, the Registrant shall give
written notice of such determination to the Participating Holders and, (i) in the case of a
determination not to undertake such Overnight Underwritten Offering, shall be relieved of its
obligation to sell any Registrable Securities held by the Participating Holders in connection with
such abandoned or delayed Overnight Underwritten Offering, and (ii) in the case of a determination
to delay such Overnight Underwritten Offering, shall be permitted to delay offering any Registrable
Securities held by the Participating Holders for the same period as the delay of the Overnight
Underwritten Offering. Any Participating Holder shall have the right to






9









 







withdraw such
Participating Holder’s request for inclusion of such Participating Holder’s
Registrable Securities in such Overnight Underwritten Offering by giving written notice to the
Registrant of such withdrawal at least three (3) Business Days prior to the expected Launch Date.
Each Holder’s rights under this Section 2.02(b) shall terminate when such Holder holds less
than $15 million of Registrable Securities (based on the Liquidation Preference Price).
Notwithstanding the foregoing, any Holder may deliver an Opt-Out Notice to the Registrant
requesting that such Holder not receive notice from the Registrant of any proposed Overnight
Underwritten Offering.




          (c) Priority of Piggyback Rights. In connection with an Underwritten Offering and
Overnight Underwritten Offering contemplated by Section 2.02(a) and Section
2.02(b), respectively, if the Managing Underwriter or Underwriters of such Underwritten
Offering or Overnight Underwritten Offering advises the Registrant that the total amount of Common
Units that the Participating Holders and any other Persons intend to include in such Underwritten
Offering or Overnight Underwritten Offering exceeds the number that can be sold in such
Underwritten Offering or Overnight Underwritten Offering without being likely to have an adverse
effect on the price, timing or distribution of the Common Units offered or the market for the
Common Units, then the Common Units to be included in such Underwritten Offering or Overnight
Underwritten Offering shall include the number of Common Units that such Managing Underwriter or
Underwriters advises the Registrant can be sold without having such adverse effect, with such
number to be allocated (i) first to the Registrant, (ii) second pro rata among the Participating
Holders and any other Persons who have been or are granted registration rights with respect to the
Common Units on or after the date of this Agreement who have requested participation in the
Underwritten Offering or Overnight Underwritten Offering (the “Other Holders”) based, for
each such Participating Holder or Other Holder, on the percentage derived by dividing (A) the
number of Common Units proposed to be sold by such Participating Holder(s) and such Other Holders
in such Underwritten Offering or Overnight Underwritten Offering by (B) the aggregate number of
Common Units proposed to be sold by all Participating Holders and all Other Holders in the
Underwritten Offering or Overnight Underwritten Offering.




          (d) Participating Holder Documentation. If the Holders propose to include Registrable
Securities in an Underwritten Offering or an Overnight Underwritten Offering, then the Managing
Underwriter of the Underwritten Offering or Overnight Underwritten Offering shall, no later than
the tenth (10th) Business Day in the case of an Underwritten Offering, or the third
(3rd) Business Day in the case of an Overnight Underwritten Offering, prior to the
expected Launch Date, provide to the Participating Holders all of the documentation customarily
required for the inclusion of Registrable Securities in the Underwritten Offering or Overnight
Underwritten Offering, including, without limitation, a custody agreement and power-of-attorney,
Participating Holders’ customary representations and warranties, and a form of legal opinion
required to be delivered by counsel to the Participating Holders (in form and substance reasonably
acceptable to counsel for the Participating Holders) at the closing of an Underwritten Offering or
an Overnight Underwritten Offering and any over-allotment option closing (collectively, the
“Participating Holder Documentation”). To include Registrable Securities in an
Underwritten Offering or an Overnight Underwritten Offering, each Participating Holder shall,
subject to receipt of notice of the Underwritten Offering or Overnight Underwritten Offering and
the Participating Holder Documentation within the time periods set forth above, (A) complete its
review and return the Participating Holder Documentation, with such revisions as






10









 







have been agreed
to by the Registrant (such agreement not to be unreasonably withheld) and the Participating Holder, at least seven (7) Business Days in the case of an Underwritten
Offering, or one (1) Business Day in the case of an Overnight Underwritten Offering, prior to the
expected Launch Date, (B) place the Registrable Securities eligible for inclusion in an
Underwritten Offering or an Overnight Underwritten Offering into the custody of the Registrant’s
transfer agent at least five (5) Business Days in the case of an Underwritten Offering, or one (1)
Business Day in the case of an Overnight Underwritten Offering, prior to the expected Launch Date,
(C) agree to participate, following reasonable notice, in any due diligence calls arranged by the
Managing Underwriter of an Underwritten Offering or an Overnight Underwritten Offering on the
expected Launch Date, the Pricing Date or in advance of the closing of an Underwritten Offering or
an Overnight Underwritten Offering and any over-allotment option closing, and (D) unconditionally
waive any right to withdraw any Registrable Securities placed into the custody of the Registrant’s
transfer agent for inclusion in an Underwritten Offering or an Overnight Underwritten Offering
within three (3) Business Days of the expected Launch Date in the case of an Underwritten Offering,
or one (1) Business Day in the case of an Overnight Underwritten Offering, whether on the basis of
the offering price, underwriter discount, or for any other reason.




     Section 2.03 Underwritten Offerings.



          (a) Request for Underwritten Offering. If the Sellers or their respective Affiliates
or any Non-Affiliated Qualified Transferee to whom any Seller, any Affiliate of any Seller or any
other Qualified Transferee has transferred one or more of the rights set forth in this Section
2.03(a)elect to dispose of Registrable Securities under a Shelf Registration Statement
pursuant to an Underwritten Offering and the Sellers or their respective Affiliates reasonably
anticipate gross proceeds of at least $100 million from such Underwritten Offering of Registrable
Securities, then the Registrant shall, at the request of such Participating Holder (each, an
“Underwritten Offering Request”), enter into an underwriting agreement in customary form
with the Managing Underwriter or Underwriters, which shall include, among other provisions,
indemnities to the effect and to the extent provided in Section 2.08(a), and shall take all
such other reasonable actions as are requested by the Managing Underwriter to expedite or
facilitate the disposition of the Registrable Securities; provided, that the Registrant
shall not be required to effect more than five Underwritten Offerings (no more than three of which
shall be transferable to and exercisable by Non-Affiliated Qualified Transferees) pursuant to this
Section 2.03, and the Sellers and their respective Affiliates shall, in the aggregate, be
limited to no more than one Underwritten Offering Request in any 180-day period.




          (b) Notice to Other Holders; Priority.





          (i) Upon receipt of any Underwritten Offering Request from a Participating Holder, the
Registrant shall promptly (but in any event within ten (10) days) give written notice of
such Underwritten Offering Request to all other Holders, who shall each have the right,
exercisable by written notice to the Registrant within 15 days after their receipt of notice
of such Underwritten Offering Request, to elect to include in such Underwritten Offering
pursuant to this Section 2.03, all of a portion of the Registrable Securities as
they may request; provided, that all such Registrable Securities proposed or



11









 







requested to be included in the Underwritten Offering are covered by an effective Shelf
Registration Statement.




          (ii) In connection with an Underwritten Offering contemplated by Section
2.03(a), if the Managing Underwriter or Underwriters of such Underwritten Offering
advise the Registrant that the total amount of Common Units that the Participating Holders
and any Other Holders intend to include in such Underwritten Offering exceeds the number
that can be sold in such Underwritten Offering without being likely to have an adverse
effect on the price, timing or distribution of the Common Units offered or the market for
the Common Units, then the Common Units to be included in such Underwritten Offering shall
include the number of Common Units that such Managing Underwriter or Underwriters advises
the Registrant can be sold without having such adverse effect, with such number to be
allocated (i) first to any Sellers or their Affiliates who initiated the Underwritten
Offering Request and (ii) second (or if clause (i) is not applicable) pro rata among the
Participating Holders and any Other Holders based, for each such Participating
Holder or Other Holder, on the percentage derived by dividing (A) the number of Common Units
proposed to be sold by such Participating Holder(s) and such Other Holders in such
Underwritten Offering or Overnight Underwritten Offering; by (B) the aggregate number of
Common Units proposed to be sold by all Participating Holders and all Other Holders in the
Underwritten Offering.



          (c) General Procedures. In connection with any Underwritten Offering, the Registrant
shall be entitled to select the Managing Underwriter or Underwriters. In connection with an
Underwritten Offering contemplated by this Agreement in which a Participating Holder participates,
each Participating Holder and the Registrant shall be obligated to enter into an underwriting
agreement with the Managing Underwriter or Underwriters that contains such representations,
covenants, indemnities and other rights and obligations as are customary in underwriting agreements
for firm commitment offerings of equity securities. No Participating Holder may participate in an
Underwritten Offering unless such Participating Holder agrees to sell its Registrable Securities on
the basis provided in such underwriting agreement and completes and executes all questionnaires,
powers-of-attorney, indemnities and other documents reasonably required under the terms of such
underwriting agreement. Each Participating Holder may, at its option, require that any or all of
the representations and warranties by, and the other agreements on the part of, the Registrant to
and for the benefit of such underwriters also be made to and for such Participating Holder’s
benefit and that any or all of the conditions precedent to the obligations of such underwriters
under such underwriting agreement also be conditions precedent to its obligations. No
Participating Holder shall be required to make any representations or warranties to or agreements
with the Registrant or the Underwriters other than representations, warranties or agreements
regarding such Participating Holder and its ownership of the securities being registered on its
behalf and its intended method of distribution and any other representation required by Law. If
any Participating Holder disapproves of the terms of an Underwritten Offering, such Participating
Holder may elect to withdraw therefrom by notice to the Registrant and the Managing Underwriter;
provided, that such withdrawal must be made at least one (1) Business Day prior to the
pricing of such Underwritten Offering to be effective. No such withdrawal or abandonment shall
affect the Registrant’s obligation to pay Registration Expenses. Upon the receipt by the Registrant
of a written request from any Seller or an Affiliate



12









 






of the Seller pursuant to Section
2.03(a), no more than two members of the Registrant’s executive management team shall be
required to participate in a roadshow or similar marketing effort in connection with that
Underwritten Offering for no more than two calendar days;
provided, that the Registrant: (i) is given at least 30 days notice prior to the
commitment of any roadshow or similar marketing effort; and (ii) agrees to the proposed
commencement date of any such roadshow or similar marketing effort.




          Section 2.04 Registration and Sale Procedures. In connection with its obligations
under this Article II, the Registrant will, as expeditiously as possible:




          (a) prepare and file with the Commission such amendments and supplements to a Shelf
Registration Statement and the prospectus used in connection therewith as may be necessary to keep
such Shelf Registration Statement effective for its Effectiveness Period and as may be necessary to
comply with the provisions of the Securities Act with respect to the disposition of all securities
covered by such Shelf Registration Statement;




          (b) furnish to each Participating Holder (i) as far in advance as reasonably practicable
before filing a Shelf Registration Statement or any other registration statement contemplated by
this Agreement or any supplement or amendment thereto, upon request, copies of reasonably complete
drafts of all such documents proposed to be filed (including exhibits and each document
incorporated by reference therein to the extent then required by the rules and regulations of the
Commission), and provide each such Participating Holder the opportunity to object to any
information pertaining to such Participating Holder and its plan of distribution that is contained
therein and make the corrections reasonably requested by such Participating Holder with respect to
such information prior to filing such Shelf Registration Statement or such other registration
statement and the prospectus included therein or any supplement or amendment thereto, and (ii) an
electronic copy of such Shelf Registration Statement or such other registration statement and the
prospectus included therein and any supplements and amendments thereto as such Participating Holder
may reasonably request in order to facilitate the public sale or other disposition of the
Registrable Securities covered by such Shelf Registration Statement or other registration
statement;




          (c) if applicable, use its commercially reasonable efforts to register or qualify the
Registrable Securities covered by a Shelf Registration Statement or any other registration
statement contemplated by this Agreement under the securities or “blue sky” laws of such
jurisdictions as the Participating Holders or, in the case of an Underwritten Offering, the
Managing Underwriter, shall reasonably request; provided, that the Registrant shall not be
required to qualify generally to transact business in any jurisdiction where it is not then
required to so qualify or to take any action which would subject it to general service of process
in any such jurisdiction where it is not then so subject;




          (d) promptly notify each Participating Holder and each underwriter of Registrable Securities,
at any time when a prospectus relating thereto is required to be delivered under the Securities
Act, of (i) the filing of a Shelf Registration Statement or any other registration statement
contemplated by this Agreement or any prospectus or prospectus supplement to be used in connection
therewith, or any amendment or supplement thereto, and, with respect to such Shelf Registration
Statement or any other registration statement or any post-






13









 







effective amendment thereto, when the
same has become effective; and (ii) the receipt of any written comments from the Commission with
respect to any filing referred to in clause (i) and any written request by the Commission for
amendments or supplements to such Shelf
Registration Statement or any other registration statement or any prospectus or prospectus
supplement thereto;




          (e) immediately notify each Participating Holder and each underwriter of Registrable
Securities, at any time when a prospectus relating thereto is required to be delivered under the
Securities Act, of (i) the happening of any event as a result of which the prospectus or prospectus
supplement contained in a Shelf Registration Statement or any other registration statement
contemplated by this Agreement, as then in effect, or any supplement or amendment thereto, includes
an untrue statement of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light of the
circumstances then existing; (ii) the issuance or threat of issuance by the Commission of any stop
order suspending the effectiveness of such Shelf Registration Statement or any other registration
statement contemplated by this Agreement, or the initiation of any proceedings for that purpose; or
(iii) the receipt by the Registrant of any notification with respect to the suspension of the
qualification of any Registrable Securities for sale under the applicable securities or blue sky
laws of any jurisdiction. Following the provision of such notice, the Registrant agrees to as
promptly as practicable amend or supplement the prospectus or prospectus supplement or take other
appropriate action so that the prospectus or prospectus supplement does not include an untrue
statement of a material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the circumstances then
existing and to take such other action as is necessary to remove a stop order, suspension, threat
thereof or proceedings related thereto;




          (f) upon request and subject to appropriate confidentiality obligations, furnish to each
Participating Holder copies of any and all transmittal letters or other correspondence with the
Commission or any other governmental agency or self-regulatory body or other body having
jurisdiction (including any domestic or foreign securities exchange) relating to such offering of
Registrable Securities;




          (g) in the case of an Underwritten Offering, furnish upon request, (i) an opinion letter of
counsel for the Registrant dated the date of the closing of the Underwritten Offering, including a
standard “10b-5” letter and (ii) a “cold comfort” letter dated the pricing date of such
Underwritten Offering and a letter of like kind dated the date of the closing of the Underwritten
Offering, in each case, signed by the independent public accountants who have certified the
Registrant’s financial statements included or incorporated by reference into the applicable
registration statement, and each of the opinion and the “cold comfort” letter shall be in customary
form and covering substantially the same matters with respect to such registration statement (and
the prospectus included therein and any supplement thereto) and as are customarily covered in
opinion letters of issuer’s counsel and in accountants’ letters delivered to the underwriters in
underwritten offerings of equity securities;




          (h) use its commercially reasonable efforts to comply with all applicable rules and
regulations of the Commission, and make available to its security holders, as soon as


14









 







reasonably practicable, an earnings statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 promulgated thereunder;




          (i) make available to the appropriate representatives of the Managing Underwriter and
Participating Holders access to such information and Registrant personnel as is reasonable and
customary to enable such parties to establish a due diligence defense under the Securities Act;
provided, that the Registrant need not disclose any non-public information to any such
representative unless and until such representative has entered into a confidentiality agreement
with the Registrant reasonably satisfactory to the Registrant;




          (j) cause all such Registrable Securities registered pursuant to this Agreement to be listed
on each securities exchange or nationally recognized quotation system, if any, on which similar
securities issued by the Registrant are then listed;




          (k) use its commercially reasonable efforts to cause the Registrable Securities to be
registered with or approved by such other governmental agencies or authorities as may be necessary
by virtue of the business and operations of the Registrant to enable the Participating Holders to
consummate the disposition of such Registrable Securities;




          (l) provide a transfer agent and registrar for all Registrable Securities covered by a
registration statement not later than the effective date of such registration statement;




          (m) take such other actions as are reasonably requested by the Participating Holders or the
underwriters, if any, to expedite or facilitate the disposition of such Registrable Securities;




          (n) if required with respect to a Shelf Registration Statement relating to Class C Convertible
Preferred Units that are the subject of a Demand Registration under Section 2.01, cause the
Class C Convertible Preferred Units to be registered with the Commission under the Exchange Act;
and




          (o) (i) cooperate with a Participating Holder if such Participating Holder could reasonably be
deemed to be an “underwriter,” as defined in Section 2(a)(11) of the Securities Act, in connection
with an offering pursuant to the registration statement in respect of any registration of the
Registrable Securities of such Participating Holder pursuant to this Agreement, and any amendment
or supplement thereof (any such offering a “Primary Offering”), in allowing such
Participating Holder to conduct customary “underwriter’s due diligence” with respect to the
Registrant and satisfy its obligations in respect thereof, (ii) furnish to such Participating
Holder upon such Participating Holder’s request, on the date of the closing of any Primary Offering
and thereafter from time to time on such dates as such Participating Holder may reasonably request,
the letters covered by Section 2.04(g) of this Agreement, in each case addressed to such
Participating Holder, and (iii) permit legal counsel to such Participating Holder to review and
comment upon any such registration statement at least five (5) Business Days prior to its filing
with the Commission and all amendments and supplements to any such registration statement within a
reasonable number of days prior to their filing with the Commission and not file any Primary
Offering or amendment or supplement thereto in a form to which such Participating Holder’s legal
counsel reasonably objects in writing.





15









 








     Each Participating Holder, upon receipt of notice from the Registrant of the happening of any
event of the kind described in subsection (e) of this Section 2.04, shall forthwith
discontinue
disposition of the Registrable Securities until such Participating Holder’s receipt of the
copies of the supplemented or amended prospectus contemplated by subsection (e) of this Section
2.04 or until it is advised in writing by the Registrant that the use of the prospectus may be
resumed, and has received copies of any additional or supplemental filings incorporated by
reference in the prospectus, and, if so directed by the Registrant, such Participating Holder will
deliver, or will request the Managing Underwriter or Underwriters, if any, to deliver to the
Registrant all copies in their possession or control, other than permanent file copies then in such
Participating Holder’s possession, of the prospectus and any prospectus supplement covering such
Registrable Securities current at the time of receipt of such notice.



     If reasonably requested by a Participating Holder, the Registrant shall: (i) as soon as
practicable, incorporate in a prospectus supplement or post-effective amendment such information as
such Participating Holder reasonably requests to be included therein relating to the sale and
distribution of Registrable Securities, including 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 Underwritten Offering; (ii)
as soon as practicable, make all required filings of such prospectus supplement or post-effective
amendment after being notified of the matters to be incorporated in such prospectus supplement or
post-effective amendment; and (iii) as soon as practicable, supplement or make amendments to any
Shelf Registration Statement or any other registration statement covering the offer and sale of
Registrable Securities.



     Section 2.05 Cooperation by Participating Holders. The Registrant shall have no
obligation to include Registrable Securities of a Participating Holder in a Shelf Registration
Statement or in an Underwritten Offering under Article II of this Agreement if such
Participating Holder has failed to timely furnish such information that, in the opinion of counsel
to the Registrant, is reasonably required for such Shelf Registration Statement or other
registration statement or prospectus supplement, as applicable, to comply with the Securities Act.



     Section 2.06 Restrictions on Public Sale by Holders of Registrable Securities. During
the Effectiveness Period, each Participating Holder of Registrable Securities (other than the
Sellers) included in a Shelf Registration Statement agrees not to effect any public sale or
distribution of the Registrable Securities during the thirty (30) calendar day period beginning on
the date that a prospectus supplement or other prospectus (including any free writing prospectus)
is filed with the Commission with respect to an Underwritten Offering of equity securities of the
Registrant for the Registrant’s account; provided, that the duration of the foregoing
restrictions shall be no longer than the duration of the shortest restriction generally imposed by
the Underwriters on the officers, directors or any other unitholder of the Registrant on whom a
restriction is imposed in connection with such public offering; provided, further,
that this Section 2.06 shall not apply to a Participating Holder that holds less than $35
million of Registrable Securities (including Registrable Securities held by Affiliates of a
Participating Holder), which value shall be determined by multiplying the number of Registrable
Securities owned by the average of the closing price for Common Units for the ten (10) trading days
preceding the date of such filing.



16









 





     Section 2.07 Expenses.



          (a) Certain Definitions. “Registration Expenses” means all expenses incident
to the Registrant’s performance under or compliance with this Agreement to effect the registration
of Registrable Securities in a Shelf Registration Statement pursuant to Section 2.01, a
Piggyback Offering or Overnight Underwritten Offering pursuant to Section 2.02, or an
Underwritten Offering pursuant to Section 2.03, and the disposition of such securities,
including, without limitation, all customary registration, filing and securities exchange listing
fees, all customary registration, filing, qualification and other fees and expenses related to
compliance with state securities or “blue sky” laws, fees in connection with clearance by the
Financial Industry Regulatory Authority, transfer agent and registrar fees, all word processing,
duplicating and printing expenses, the Registrant’s legal fees and fees of the Registrant’s
independent public accountants, including the expenses of any special audits or “cold comfort”
letters required by or incident to such performance and compliance. “Selling Expenses”
means all underwriting fees, discounts and selling commissions (and similar fees or arrangements
associated therewith) and transfer taxes allocable to the sale of the Registrable Securities.




          (b) Expenses. The Registrant will pay all reasonable Registration Expenses,
regardless of whether sales of Registrable Securities are made pursuant to the related registration
statement. Except as otherwise provided in Section 2.08 or in a separate agreement between
the Registrant and any Holder, the Registrant shall not be responsible for legal fees incurred by
Holders in connection with the exercise of such Holders’ rights and obligations under this
Agreement, or for any Selling Expenses. Each Participating Holder shall pay all Selling Expenses
in connection with any sale of its Registrable Securities except to the extent provided in a
separate agreement between the Registrant and such Participating Holder.




     Section 2.08 Indemnification.



          (a) By the Registrant. In the event of a registration of any Registrable Securities
under the Securities Act pursuant to this Agreement, the Registrant will indemnify and hold
harmless each Participating Holder thereunder, its directors, officers, employees, agents and
managers, and each underwriter, pursuant to the applicable underwriting agreement with such
underwriter, of Registrable Securities thereunder and each Person, if any, who controls such
Participating Holder or underwriter within the meaning of the Securities Act and the Exchange Act,
and its directors, officers, employees, agents and managers, against any losses, claims, damages,
expenses or liabilities (including reasonable attorneys’ fees and expenses) (collectively,
“Losses”), joint or several, to which such Participating Holder or underwriter or
controlling Person may become subject under the Securities Act, the Exchange Act or otherwise,
insofar as such Losses (or actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in a Shelf Registration Statement or any other registration statement
contemplated by this Agreement, any preliminary prospectus or final prospectus contained therein,
or any free writing prospectus related thereto, or any amendment or supplement thereof, or arise
out of or are based upon the 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
the light of the circumstances under which they were made) not misleading, and will reimburse each
such Participating Holder, its directors and officers, each such underwriter



17









 




and each such
controlling Person for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such Loss or actions or proceedings; provided,
that the Registrant will not be liable in any such case if and to the extent that any such
Loss arises out of or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with information furnished by such Participating Holder,
such underwriter or such controlling Person in writing specifically for use in the Shelf
Registration Statement or such other registration statement, free writing prospectus or prospectus
supplement, as applicable. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such Participating Holder or any such director, officer,
employee, agent, manager or controlling Person, and shall survive the transfer of such securities
by such Participating Holder.




          (b) By Each Participating Holder. Each Participating Holder agrees to indemnify and
hold harmless the Registrant, its directors, officers, employees and agents and each Person, if
any, who controls the Registrant within the meaning of the Securities Act or of the Exchange Act to
the same extent as the foregoing indemnity from the Registrant to the Participating Holders, but
only with respect to information regarding such Participating Holder furnished in writing by or on
behalf of such Participating Holder expressly for inclusion in a Shelf Registration Statement or
any other registration statement contemplated by this Agreement, any preliminary prospectus or
final prospectus contained therein, or any free writing prospectus related thereto, or any
amendment or supplement thereof; provided, that the liability of each Participating Holder
shall not be greater in amount than the dollar amount of the proceeds (net of Selling Expenses)
received by such Participating Holder from the sale of the Registrable Securities giving rise to
such indemnification. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Registrant or any such director, officer, employee,
agent, manager or controlling Person, and shall survive the transfer of such securities by such
Participating Holder.




          (c) Notice. Promptly after any indemnified party has received notice of any
indemnifiable claim hereunder, or the commencement of any action, suit or proceeding by a third
person, which the indemnified party believes in good faith is an indemnifiable claim under this
Agreement, the indemnified party shall give the indemnifying party written notice of such claim but
failure to so notify the indemnifying party will not relieve the indemnifying party from any
liability it may have to such indemnified party hereunder except to the extent that the
indemnifying party is materially prejudiced by such failure. Such notice shall state the nature
and the basis of such claim to the extent then known. The indemnifying party shall be entitled to
participate in and, to the extent it shall wish, to assume and undertake the defense thereof with
counsel reasonably satisfactory to such indemnified party and, after notice from the indemnifying
party to such indemnified party of its election so to assume and undertake the defense thereof, the
indemnifying party shall not be liable to such indemnified party under this Section 2.08
for any legal expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation and of liaison with counsel so
selected; provided, that, (i) if the indemnifying party has failed to assume the defense
and employ counsel or (ii) if the defendants in any such action include both the indemnified party
and the indemnifying party and counsel to the indemnified party shall have concluded that there may
be reasonable defenses available to the indemnified party that are different from or additional to
those available to the indemnifying party, or if the interests of the






18









 







indemnified party reasonably
may be deemed to conflict with the interests of the indemnifying party, then the indemnified party
shall have the right to select a separate counsel and to assume
such legal defense and otherwise to participate in the defense of such action, with the
reasonable out-of-pocket expenses and fees of such separate counsel and other reasonable
out-of-pocket expenses related to such participation to be reimbursed by the indemnifying party as
incurred. Notwithstanding any other provision of this Agreement, the indemnifying party shall not
settle any indemnified claim without the consent of the indemnified party, unless the settlement
thereof imposes no liability or obligation on, and includes a complete release from liability of,
and does not contain any admission of wrongdoing by, the indemnified party; and the indemnified
party shall not settle any indemnified claim without the written consent of the indemnifying party
unless (i) such settlement is entered into more than 45 days after receipt by such indemnifying
party of a request by the indemnified party for reimbursement of reasonable fees and expenses of
counsel, (ii) such indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such indemnifying party shall
not have reimbursed such indemnified party in accordance with such request prior to the date of
such settlement.




          (d) Contribution. If the indemnification provided for in this Section 2.08 is
held by a court or government agency of competent jurisdiction to be unavailable to any indemnified
party or is insufficient to hold them harmless in respect of any Losses, then each such
indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such Loss in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one hand and of such
indemnified party on the other in connection with the statements or omissions which resulted in
such Losses, as well as any other relevant equitable considerations; provided, that in no
event shall a Participating Holder be required to contribute an aggregate amount in excess of the
dollar amount of gross proceeds received by such Participating Holder from the sale of Registrable
Securities giving rise to such indemnification. The relative fault of the indemnifying party on
the one hand and the indemnified party 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 has been made by, or relates to, information supplied by
such party, and the parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The parties hereto agree that it would not be just
and equitable if contributions pursuant to this paragraph were to be determined by pro rata
allocation or by any other method of allocation which does not take account of the equitable
considerations referred to herein. The amount paid by an indemnified party as a result of the
Losses referred to in the first sentence of this paragraph shall be deemed to include any legal and
other expenses reasonably incurred by such indemnified party in connection with investigating or
defending any Loss that is the subject of this paragraph. 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 is not guilty of such fraudulent misrepresentation.




          (e) Other Indemnification. The provisions of this Section 2.08 shall be in
addition to any other rights to indemnification or contribution that an indemnified party may have
pursuant to Law, equity, contract or otherwise.





19









 








     Section 2.09 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
Securities to the public without registration, the Registrant agrees to use its commercially
reasonable efforts to:



          (a) make and keep public information regarding the Registrant available, as those terms are
understood and defined in Rule 144 of the Securities Act, at all times from and after the date
hereof;




          (b) file with the Commission in a timely manner all reports and other documents required of
the Registrant under the Securities Act and the Exchange Act at all times from and after the date
hereof; and




          (c) so long as a Holder owns any Registrable Securities, furnish, unless otherwise available
at no charge by access electronically to the Commission’s EDGAR filing system, to such Holder
forthwith upon request (i) a copy of the most recent annual or quarterly report of the Registrant,
and (ii) such other reports and documents so filed with the Commission as such Holder may
reasonably request in availing itself of any rule or regulation of the Commission allowing such
Holder to sell any such securities without registration.




     Section 2.10 Transfer or Assignment of Registration Rights. Except as limited
elsewhere in this Article II, the rights to cause the Registrant to register Registrable
Securities or conduct an Underwritten Offering granted to the Sellers by the Registrant under this
Article II may be transferred or assigned to a transferee or assignee; provided,
that (i) the transferee or assignee is a Qualified Transferee and (ii) the rights set forth in
Section 2.01 with respect to Demand Registration of Class C Convertible Preferred Units
shall not be transferable to Non-Affiliated Qualified Transferees. The transferor or assignor
shall give written notice to the Registrant at least ten (10) Business Days prior to any such
transfer or assignment, and such required notice shall include all of the information required
under Section 3.01 of this Agreement for each such transferee or assignee and such notice
shall specify the Registrable Securities with respect to which such registration rights are
purported to be transferred or assigned, and each such transferee or assignee shall agree in
writing to be subject to all of the terms and conditions of this Agreement.



     Section 2.11 Limitation on Subsequent Registration Rights. From and after the date of
this Agreement, the Registrant shall not, without the prior written consent of the Sellers, enter
into any agreement with any current or future holder of any securities of the Registrant that would
allow such current or future holder to require the Registrant to include securities in any
Piggyback Offering or Overnight Underwritten Offering by the Registrant for its own account on a
basis that is superior in any material respect to the Piggyback Offering rights granted to the
Sellers pursuant to Section 2.02 of this Agreement.



     Section 2.12 Relationship to Partnership Agreement. Nothing contained in this
Agreement shall limit the rights of holders of Class C Convertible Preferred Units with respect to
underwritten offerings of Common Units as provided in the definition if “Partnership Forced
Conversion Period” and Section 5.12(b)(vii)(F) of the Partnership Agreement, and no such
underwritten offering occurring under the circumstances set forth therein with respect to the



20









 







Partnership Forced Conversion Right shall be deemed a Demand Request, an Underwritten Offering
Request or an Underwritten Offering for purposes of this Agreement.



ARTICLE III

MISCELLANEOUS




     Section 3.01 Communications. All notices and demands provided for hereunder shall be
in writing and shall be given by hand delivery, electronic mail, registered or certified mail,
return receipt requested, regular mail, facsimile or air courier guaranteeing overnight delivery to
the following addresses:



	 	 	 	 	 

	 

	 	(a)
	 	If to the Holders:
	 
	 	 	 	 
	 

	 	 	 	Quantum Resources A1, LP,
	 

	 	 	 	QAB Carried WI, LP,
	 

	 	 	 	QAC Carried WI, LP,
	 

	 	 	 	Black Diamond Resources, LLC,
	 

	 	 	 	each c/o Quantum Resources Management, LLC
	 

	 	 	 	1401 McKinney Street, Suite 2400
	 

	 	 	 	Houston, Texas 77010
	 

	 	 	 	Attention: General Counsel
	 

	 	 	 	Facsimile: (713) 452-2231
	 
	 	 	 	 
	 

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

	 	 	 	Latham & Watkins LLP
	 

	 	 	 	811 Main Street, Suite 3700
	 

	 	 	 	Houston, Texas 77002
	 

	 	 	 	Attention: Ryan J. Maierson
	 

	 	 	 	Facsimile: (713) 546-5401
	 
	 	 	 	 
	 

	 	(b)
	 	If to the Registrant:
	 
	 	 	 	 
	 

	 	 	 	c/o QRE GP, LLC
	 

	 	 	 	1401 McKinney Street, Suite 2400
	 

	 	 	 	Houston, Texas 77010
	 

	 	 	 	Attention: Gregory S. Roden, General Counsel
	 

	 	 	 	Facsimile: (713) 452-2231
	 
	 	 	 	 
	 

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

	 	 	 	Conflicts Committee of the Board of Directors of QRE GP, LLC
	 

	 	 	 	c/o QRE GP, LLC
	 

	 	 	 	1401 McKinney Street, Suite 2400
	 

	 	 	 	Houston, Texas 77010
	 

	 	 	 	Fax: 713-452-2231






21









 






	 	 	 	 	 

	 

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

	 	 	 	Vinson & Elkins L.L.P.
	 

	 	 	 	First City Tower
	 

	 	 	 	1001 Fannin, Suite 2500
	 

	 	 	 	Houston, Texas 77002
	 

	 	 	 	Attention: Jeffery K. Malonson
	 

	 	 	 	Facsimile: (713) 615-5627





or, if to a transferee of the Purchaser, to the transferee at the addresses provided pursuant to
Section 2.10 above. All notices and communications shall be deemed to have been duly
given: (i) at the time delivered by hand, if personally delivered; (ii) when notice is sent to the
sender that the recipient has read the message, if sent by electronic mail; (iii) upon actual
receipt if sent by registered or certified mail, return receipt requested, or regular mail, if
mailed; (iv) upon actual receipt if received during recipient’s normal business hours, or at the
beginning of the recipient’s next Business Day if not received during recipient’s normal business
hours, if sent by facsimile and confirmed by appropriate answer-back; and (v) upon actual receipt
when delivered to an air courier guaranteeing overnight delivery.




     Section 3.02 Governing Law. The Laws of the State of Texas shall govern this
Agreement without regard to principles of conflict of Laws. Any action against any party relating
to the foregoing shall be brought in any federal or state court of competent jurisdiction located
within the State of Texas, and the parties hereto hereby irrevocably submit to the non-exclusive
jurisdiction of any federal or state court located within the State of Texas over any such action.
The parties hereby irrevocably waive, to the fullest extent permitted by applicable Law, any
objection which they may now or hereafter have to the laying of venue of any such dispute brought
in such court or any defense of inconvenient forum for the maintenance of such dispute. Each of
the parties hereto agrees that a judgment in any such dispute may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by Law.



     Section 3.03 WAIVER OF JURY TRIAL. THE PARTIES TO THIS AGREEMENT EACH HEREBY WAIVE,
AND AGREE TO CAUSE THEIR AFFILIATES, TRANSFEREES AND ASSIGNEES TO WAIVE, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i)
ARISING UNDER THIS AGREEMENT OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS RELATED
HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT,
EQUITY OR OTHERWISE. THE PARTIES TO THIS AGREEMENT EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT
THE PARTIES TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.



22









 





     Section 3.04 Successors and Assigns. Except as set forth in this Agreement, the
provisions of this Agreement shall not be for the benefit of, applicable to or enforceable by any
transferee of Registrable Securities, and such transferee shall not be deemed to be a Holder for
purposes of this Agreement. Subject to the preceding sentence, this Agreement shall be
binding upon the Registrant, each Seller, and their respective successors and Qualified
Transferees.



     Section 3.05 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any applicable law or public policy, all other
terms and provisions of this Agreement shall nevertheless remain in full force and effect so long
as the economic or legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party to this Agreement. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the Governmental Authority
making such determination is authorized and instructed to modify this Agreement so as to effect the
original intent of the parties as closely as possible in order that the transactions contemplated
hereby are consummated as originally contemplated to the fullest extent possible.



     Section 3.06 Specific Performance. The Registrant recognizes that if the Registrant
refuses to perform under the provisions of this Agreement, monetary damages alone will not be
adequate to compensate the Holders for their injury. The Holders shall therefore be entitled, in
addition to any other remedies that may be available, to obtain specific performance of the terms
of this Agreement and to seek appropriate remedies in furtherance thereof, including injunctions,
without the necessity of posing bond or proving actual damages.



     Section 3.07 Amendments. This Agreement may be amended only by means of a written
amendment signed by the Registrant and the Sellers.



     Section 3.08 No Affiliate Liability. The partners, members, officers, directors,
stockholders and Affiliates of the Sellers, the Registrant or their respective Affiliates shall
have no personal liability or obligation to any Person arising under this Agreement in such
capacities.



     Section 3.09 Recapitalization, Exchanges Etc., Affecting Securities. The provisions
of this Agreement shall apply, to the full extent set forth herein with respect to the Registrable
Securities and to any and all securities of the Registrant or any successor or assign of the
Registrant that may be issued in respect of an conversion of, in exchange for, or in substitution
for Registrable Securities (whether by merger, consolidation, sale of assets or otherwise,
including securities issued by a parent company in connection with a triangular merger) and shall
be appropriately adjusted for any unit dividends, unit splits, reverse unit splits, combinations,
reclassifications and the like occurring after the date of this Agreement.



     Section 3.10 Further Assurances. The Registrant and each of the Sellers shall
cooperate with each other and shall take such further action and shall execute and deliver such
further documents as may be reasonably requested by any other party in order to carry out the
provisions and purposes of this Agreement.



     Section 3.11 Entire Agreement. This Agreement contains the entire agreement among the
Registrant and each of the Sellers with respect to the subject matter hereof and supersedes all
prior agreements and understandings, oral or written, with respect to such matters.



23









 





     Section 3.12 Counterparts; Facsimile Signatures. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original of the Agreement, and all of which
shall constitute the Agreement among each of the parties, notwithstanding that all of the
parties are not signatories to the original or the same counterpart of the Agreement. Each
party to this Agreement acknowledges the effectiveness of, and agrees to accept, electronic or
facsimile signatures of any other party for purposes of executing this Agreement.



[Signature Page Follows]




24









 





     IN WITNESS WHEREOF, the parties hereto execute this Agreement, effective as of the date first
above written.



	 	 	 	 	 
	  






Registrant:     
	







QR ENERGY, LP

 	 
	 	By:  	QRE GP, LLC, its general partner
 	 



	 	 	 	 	 
	 	 	 
	 	By:  	                                 /s/ Gregory S. Roden
 	 
	 	 	Gregory S. Roden 	 
	 	 	General Counsel 	 
	 



	 	 	 	 	 
	  
Sellers:      
	QUANTUM RESOURCES A1, LP

 	 
	 	By:  	The Quantum Aspect Partnership, LP, its general partner
 	 



	 	 	 	 	 
	 	 	 
	 	By:  	                                                     QA GP, LLC, its general partner
 	 



	 	 	 	 	 
	 	 	 
	 	By:  	                         /s/ Gregory S. Roden
 	 
	 	 	Gregory S. Roden 	 
	 	 	General Counsel 	 
	 
	 	QAB CARRIED WI, LP

 	 
	 	By:  	Black Diamond GP, LLC, its general partner
 	 



	 	 	 	 	 
	 	 	 
	 	By:  	                         /s/ Gregory S. Roden
 	 
	 	 	Gregory S. Roden 	 
	 	 	General Counsel 	 



Signature Page to Registration Rights Agreement













 






	 	 	 	 	 



	 	 	 	 	 
	 	QAC CARRIED WI, LP

 	 
	 	By:  	Black Diamond GP, LLC, its general partner
 	 



	 	 	 	 	 
	 	 	 
	 	By:  	                         /s/ Gregory S. Roden
 	 
	 	 	Gregory S. Roden 	 
	 	 	General Counsel 	 
	 



	 	 	 	 	 
	 	BLACK DIAMOND RESOURCES, LLC

 	 
	 	By:  	/s/ Gregory S. Roden
 	 
	 	 	Gregory S. Roden 	 
	 	 	General Counsel 	 
	 




Signature Page to Registration Rights Agreement