Exhibit 4.2


 


REGISTRATION RIGHTS AGREEMENT


This Registration Rights Agreement (this “Agreement”) is made
and entered into as of September 22, 2005, by and between Stroud Energy, Inc.,
a Delaware corporation (the “Company”), and Raymond James &
Associates, Inc. (“Raymond James”) for the benefit of the purchasers of the
Company’s common stock, par value $0.001 per share (“Common Stock”), as
participants (“Participants”) in the offering by the Company and certain
of its stockholders of shares of Common Stock (the “Offering”), and the
direct and indirect transferees of each of the Participants.


This Agreement is made pursuant to the Placement Agreement (the “Placement
Agreement”), dated as of September 15, 2005, by and among the Company, the
stockholders of the Company set forth on Schedule 1 thereto, and Raymond
James, in its capacity as lead Placement Agent and representative of the co-placement agents set forth on Schedule 2 thereto
(the “Placement Agents”), in connection with the placement of an
aggregate of 9,400,000 shares of the Common Stock (plus an additional 1,410,000
shares to cover over-allotments, if any) in connection with the Offering.  In order to induce Raymond James to enter into
the Placement Agreement, the Company has agreed to provide the registration
rights provided for in this Agreement to the Participants and their direct and
indirect transferees.  The execution of
this Agreement is a condition to the closing of the transactions contemplated
by the Placement Agreement.


The parties hereby agree as follows:


1.                                      Definitions


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


Agreement: As defined in the preamble.


Affiliate: As to any specified Person, (i) any Person
directly or indirectly owning, controlling or holding, with power to vote, ten (10)
percent or more of the outstanding voting securities of such other Person, (ii)
any Person ten (10) percent or more of whose outstanding voting securities are
directly or indirectly owned, controlled or held, with power to vote, by such
other Person, (iii) any Person directly or indirectly controlling, controlled
by or under common control with such other Person, (iv) any executive officer,
director, trustee or general partner of such Person and (v) any legal entity
for which such Person acts as an executive officer, director, trustee or
general partner. An indirect relationship shall include circumstances in which
a Person’s spouse, children, parents, siblings or mother-, father-, sister- or
brother-in-law is or has been associated with a Person.


Business Day: With respect to any act to be performed hereunder,
each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which
banking institutions in New York, New York or other applicable places where
such act is to occur are authorized or obligated by applicable law, regulation
or executive order to close.


Closing Date: The date of
this Agreement or such other time or such other date as Raymond James and the
Company may agree.


 





















 


Commission: The Securities and Exchange Commission.


Common Stock: As defined in the preamble.


Company: As defined in the preamble.


Controlling Person: As defined in Section 6(a)
hereof.


End of Suspension Notice: As defined in Section 5(b)
hereof.


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


Existing Registration Rights Agreement:  The Amended and Restated Registration Rights
Agreement, dated as of September 19, 2005, by and among the Company and the
stockholders of the Company party thereto.


Holder: Each record owner of any Registrable Shares from
time to time.


Indemnified Party: As defined in Section 6(c) hereof.


Indemnifying Party: As defined in Section 6(c)
hereof.


IPO Registration Statement: As defined in Section 2(b)
hereof.


Liabilities: As defined in Section 6(a) hereof.


NASD: The National Association of Securities Dealers,
Inc.


No Objections Letter: As defined in Section 4(t)
hereof.


Participant: As defined in the preamble.


Person: An individual, partnership, corporation, trust,
unincorporated organization, government or agency or political subdivision
thereof, or any other legal entity.


Placement Agents:  As
defined in the preamble.


Placement Agreement:  As defined in the preamble.


Proceeding: An action, claim, suit or proceeding (including
without limitation, an investigation or partial proceeding, such as a
deposition), whether commenced or, to the knowledge of the Person subject
thereto, threatened.


Prospectus: 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.


 


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Purchaser Indemnitee: As defined in Section 6(a)
hereof.


Raymond James: As defined in the preamble.


Registrable Shares: The Shares, upon original
issuance thereof, and at all times subsequent thereto, including upon the
transfer thereof by the original holder or any subsequent holder and any shares
or other securities issued in respect of such Registrable Shares by reason of
or in connection with any stock dividend, stock distribution, stock split,
purchase in any rights offering or in connection with any exchange for or
replacement of such Registrable Shares or any combination of shares,
recapitalization, merger or consolidation, or any other equity securities
issued pursuant to any other pro rata distribution with respect to the Common
Stock, until, in the case of any such Share, the earliest to occur of (i) the
date on which it has been registered effectively pursuant to the Securities Act
and disposed of in accordance with the Registration Statement relating to it,
(ii) the date on which either it is distributed to the public pursuant to Rule
144 (or any similar provision then in effect) or is eligible for sale without
registration pursuant to Rule 144(k) promulgated by the Commission pursuant to
the Securities Act or (iii) the date on which it is sold to the Company.


Registration Expenses: Any and all expenses
incident to the performance of or compliance with this Agreement, including,
without limitation: (i) all Commission, securities exchange, NASD (if any)
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 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 any securities exchange or 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, if any, relating to the sale or disposition of Registrable Shares
by a Holder.


Registration Statement: Any
registration statement of the Company that covers the resale of Registrable
Shares pursuant to the provisions of this Agreement, 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.


 


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Rule 144: Rule 144, and any of its referenced paragraphs,
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.


Rule 144A: Rule 144A 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.


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


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


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


Rule 429: Rule 429 promulgated by the Commission pursuant to
the Securities Act, as such rule maybe 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: The Securities Act of 1933, as amended, and
the rules and regulations promulgated by the Commission thereunder.


Shares: The shares of Common Stock being offered and sold in
the Offering.


Shelf Registration Statement: As defined in Section 2(a)
hereof.


Suspension Event: As defined in Section 5(b) hereof.


Suspension Notice: As defined in Section 5(b) hereof.


Underwritten Offering: 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 hereof, the Company agrees
to file with the Commission as soon as reasonably practicable following the
date of this Agreement (but in no event later than the date that is 90 days
after the Closing Date) a shelf Registration Statement on Form S-1 or such
other form under the Securities Act then available to the Company providing for
the resale of any Registrable Shares pursuant to Rule 415 from time to time by
the Holders (a “Shelf Registration Statement”). The Company shall use
its commercially reasonable efforts to cause such Shelf Registration Statement
to be declared 


 


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effective
by the Commission as soon as practicable. Any 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 or a sale through brokers or
agents) by the Holders of any and all Registrable Shares.


(b)           IPO Registration. If the Company proposes
to file a registration statement on Form S-1 or such other form under the
Securities Act providing for the initial public offering of shares of Common
Stock (the “IPO Registration Statement”), the Company will notify each
Holder of the proposed filing and afford each Holder an opportunity to include
in the IPO Registration Statement all or any part of the Registrable Shares
then held by such Holder. Each Holder desiring to include in the IPO
Registration Statement all or part of the Registrable Shares held by such
Holder shall, within twenty (20) days after receipt of the above-described
notice from 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 the IPO Registration Statement. Any election by any Holder to
include any Registrable Shares in the IPO Registration Statement will not
affect the inclusion of such Registrable Shares in the Shelf Registration
Statement until such Registrable Shares have been sold under the IPO
Registration Statement.


(i)            Right to Terminate IPO
Registration. The Company, in its sole discretion, shall have the
right to terminate or withdraw the IPO Registration Statement initiated by it
referred to in this Section 2(b) prior to the effectiveness of such
registration whether or not any Holder has elected to include Registrable
Shares in such registration.


(ii)           Shelf Registration not
Impacted by IPO Registration Statement. The Company’s obligation to
file the Shelf Registration Statement pursuant to Section 2(a) hereof shall not
be affected by the filing or effectiveness of the IPO Registration Statement.


(c)           Underwriting.
The Company shall advise all Holders of the managing underwriter(s) for the
Underwritten Offering proposed under the IPO Registration Statement. The right
of any such Holder’s Registrable Shares to be included in the IPO Registration
Statement pursuant to Section 2(b) hereof shall be conditioned upon such Holder’s
participation in such underwriting and the inclusion of such Holder’s
Registrable Shares in the underwriting to the extent provided herein. All
Holders proposing to distribute their Registrable Shares through such
underwriting shall enter into an underwriting agreement in customary form with
the managing underwriter(s) 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 as the Company may
reasonably request in writing 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 regarding such Holder and such Holder’s intended
method of distribution and any other representation required by law or
reasonably requested by the underwriters. Notwithstanding any other provision
of this Agreement, if the managing underwriter(s) determine(s) in good faith
that marketing factors require a limitation on the number of shares to be
included, then the managing underwriter(s) may exclude shares 


 


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(including
Registrable Shares) from the IPO Registration Statement and Underwritten
Offering, and any shares included in such IPO Registration Statement and
Underwritten Offering shall be allocated first, to the Company, and second, to
each of the Holders requesting inclusion of their Registrable Shares in such IPO
Registration Statement (on a pro rata basis based on the total number of
Registrable Shares then held by each such Holder who is requesting inclusion); provided, however,
that after one hundred eighty (180) days following the effective date of the
Shelf Registration Statement, any shares included in such IPO Registration
Statement and Underwritten Offering Shall be allocated first, to the Company,
and second, to each of the Holders requesting inclusion of their Registrable
Shares in such IPO Registration Statement pursuant to this Agreement and the holders
of shares of Common Stock requesting inclusion of their shares in such IPO
Registration Rights Agreement pursuant to the Existing Registration Rights
Agreement (on a pro rata basis based on the aggregate of (i) the total number
of Registrable Shares then held by each such Holder who is requesting inclusion
under this Agreement and (ii) the total number of shares of Common Stock then
held by each such holder who is requesting inclusion under the Existing Registration
Rights Agreement).


If any Holder disapproves of the terms of any such underwriting, such
Holder may elect to withdraw therefrom by written notice to the Company and the
underwriter, delivered at least ten (10) Business Days prior to the effective
date of the IPO Registration Statement, provided that the Holder may agree to
waive this right to withdraw with the Company, the underwriters or any
custodial agent in any custody agreement and/or power of attorney executed by
such Holder in connection with the underwriting. Any Registrable Shares
excluded or withdrawn from such underwriting shall be excluded and withdrawn
from the registration.


(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 in connection with a registration of Registrable Shares
pursuant to this Agreement.


(e)           Executive Bonuses. If the Company does not
file a Registration Statement registering the resale of the Shares within 90 days
after the Closing Date then Patrick J. Noyes, the President and Chief Executive
Officer of the Company, or his successor, shall forfeit 1.0% of the $500,000
cash bonus to be paid to Mr. Noyes by the Company upon the effectiveness of
such Registration Statement for each Business Day the registration default
continues.


3.                                      Rules 144 and 144A Reporting


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


(a)           use commercially reasonable efforts to make and keep
available adequate current public information, as those terms are understood
and defined in Rule 144, at all times after the effective date of the first
registration under the Securities Act filed by the Company for an offering of
its securities to the general public;


 


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(b)           use 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 (at any time after it has become subject to such
reporting requirements);


(c)           so long as a Holder
owns any Registrable Shares, if the Company is not required to file reports and
other documents under the Securities Act and the Exchange Act, it will make
available other information as required by, and so long as necessary to permit
sales of Registrable Shares pursuant to, Rule 144 or Rule 144A; and


(d)           so long as a Holder
owns any Registrable Shares, to furnish to the Holder promptly upon request (i)
a written statement by the Company as to its compliance with the reporting
requirements of Rule 144 (at any time after ninety (90) days after the
effective date of the first registration statement filed by the Company for an
offering of its securities to the general public), and of the Securities Act
and the Exchange Act (at any time after it has become subject to the reporting
requirements of the Exchange Act), (ii) a copy of the most recent annual or
quarterly report of the Company, and (iii) such other reports and documents of
the Company, and take such further actions, 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, (i) the Company shall use its
commercially reasonable efforts to effect or cause to be effected the
registration of the Registrable Shares under the Securities Act to permit the
sale of such Registrable Shares by the Holder or Holders in accordance with the
Holder’s or Holders’ intended method or methods of distribution, and (ii) the
Company shall:


(a)           notify Raymond James, in writing, at least ten (10)
Business Days prior to filing a Registration Statement, of its intention to
file a Registration Statement with the Commission and, at least five (5)
Business Days prior to filing, provide a copy of the Registration Statement to Raymond
James and its counsel for review and comment; prepare and file with the
Commission, as specified in this Agreement, a Registration Statement(s), which
Registration Statement(s) (x) 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 (y) shall be
acceptable to Raymond James and its counsel; notify Raymond James, in writing,
at least five (5) Business Days prior to filing of any amendment or supplement
to such Registration Statement and, at least three (3) Business Days prior to
filing, provide a copy of such amendment or supplement to Raymond James and its
counsel for review and comment; promptly following receipt from the Commission,
provide to Raymond James and its counsel copies of any comments made by the
staff of the Commission relating to such Registration Statement and of the
Company’s responses thereto for review and comment; and use its commercially
reasonable efforts to cause such Registration Statement to become effective as
soon as practicable after filing and to remain effective, subject to Section 5 hereof,
until the earlier of (i) such time as all Registrable Shares covered thereby
have been sold in accordance with the intended distribution of such Registrable
Shares, (ii) there are no Registrable Shares outstanding (including as a result



 


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of
such Shares having become eligible to be sold pursuant to Rule 144(k)) or (iii)
the second anniversary of the effective date of such Registration Statement
(subject to extension as provided in Section 5(c) hereof); provided, further,
that if the Company has an effective Shelf Registration Statement on Form S-1
under the Securities Act and becomes eligible to use Form S-3 or such other
short-form registration statement form under the Securities Act, the Company may,
upon thirty (30) Business Days prior written notice to all Holders, register
any Registrable Shares registered but not yet distributed under the effective
Shelf Registration Statement on such a short-form Shelf Registration Statement
and, once the shortform Shelf Registration Statement is declared effective,
de-register such shares under the previous Registration Statement or transfer
the filing fees from the previous Registration Statement (such transfer
pursuant to Rule 429, if applicable) unless any Holder registered under the
initial Shelf Registration Statement notifies the Company within twenty (20)
Business Days of receipt of the Company notice that such a registration under a
new Registration Statement and de-registration of the initial Shelf Registration
Statement would interfere with its distribution of Registrable Shares already
in progress;


(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, (iii) amend or supplement each such Registration Statement to
include the Company’s quarterly and annual financial information and other
material developments (until the Company is eligible to incorporate such
information by reference into the Registration Statement), during which time
sales of the Registrable Securities under the Registration Statement will be
suspended until such amendment or supplement is filed and effective, and (iv)
comply 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
consents 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 jurisdictions as Raymond James or any Holder of Registrable
Shares 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; 


 


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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) and except as may be required by the
Securities Act, (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 governmental agencies or
authorities as may be necessary to enable the Holders thereof to consummate the
disposition of such Registrable Shares;


(f)            notify Raymond
James and each Holder promptly and, if requested by Raymond James or any
Holder, confirm such advice in writing (i) when a Registration Statement has
become effective and when any post-effective amendment or supplement thereto is
filed, (ii) of the issuance by the Commission or any state securities authority
of any stop order suspending the effectiveness of a Registration Statement or
the initiation of any proceedings for that purpose, (iii) of any request by the
Commission or any other federal, state or foreign governmental authority for
amendments or supplements to a Registration Statement or related Prospectus or
for additional information, (iv) of the happening of any event during the
period a 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 notice may be in the form of a
Suspension Notice under Section 5(b) hereof) and (v) at the request of any such
Holder, promptly to furnish to such Holder a reasonable number of copies of a
supplement to or an amendment of such Prospectus prepared in accordance with
Section 4(i);


(g)           except as provided
in Section 5, use its commercially reasonable efforts to avoid the issuance of,
or if issued, as promptly as practicable to obtain the withdrawal of, any order
enjoining or suspending the use or effectiveness of a Registration Statement or
suspending of the qualification (or exemption from qualification) of any of the
Registrable Shares for sale in any jurisdiction;


(h)           upon written
request, furnish to each requesting Holder of Registrable Shares, without
charge, at least one conformed copy of each 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) hereof, 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;


 


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(j)            if requested by the
representative of the underwriters, if any, or any Holders of Registrable
Shares being sold in connection with such offering, (i) promptly incorporate in
a Prospectus supplement or post-effective amendment such information as the
representative of the underwriters, if any, or such Holders indicate relates to
them or that they 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 to
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;


(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 such underwritten offerings and confirm the same to the extent
customary if and when requested;


(m)          make available for
inspection by representatives of the Holders and the representative of any
underwriters participating in any disposition pursuant to a Registration
Statement and any special counsel or accountants retained by such Holders or
underwriters, 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;


(n)           use its commercially reasonable efforts (including,
without limitation, seeking to cure any deficiencies cited by the exchange or
market in the Company’s listing or inclusion application) to list or include
all Registrable Shares on the New York Stock Exchange, the 


 


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American
Stock Exchange or The Nasdaq Stock Market and thereafter maintain the listing
on such exchange or market;


(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
maintain such registration through the effectiveness period required by Section
4(a) hereof;


(p)           provide a CUSIP
number for all Registrable Shares, not later than the effective date of the
Registration Statement;


(q)           (i) otherwise use
its commercially reasonable efforts to comply with all applicable rules and
regulations of the Commission and (ii) make generally available to its
stockholders, as soon as reasonably practicable, earnings statements covering
at least twelve (12) months that satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 (or any similar rule promulgated under the
Securities Act) thereunder, but in no event later than the earlier of any
filing date required for the filing of an annual report on Form 10-K as
applicable to the Company or forty-five (45) days after the end of each fiscal
year of the Company;


(r)            provide and 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;


(s)           in connection with
any sale or transfer of the Registrable Shares (whether or not pursuant to a
Registration Statement) that will result in the security being delivered no
longer being Registrable Shares, cooperate with the Holders and the
representative of the underwriters, if any, to the extent reasonably necessary
to facilitate the timely preparation and delivery of any certificates
representing the Registrable Shares to be sold, which certificates shall not
bear any transfer restrictive legends (other than as required by the Company’s
certificate of incorporation or bylaws) 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 two (2)
Business Days prior to any sale of the Registrable Shares;


(t)            if required under the rules of the NASD, in connection
with the initial filing of a Shelf Registration Statement and each amendment
thereto with the Commission pursuant to Section 2(a) hereof, prepare and,
within one Business Day of such filing with the Commission, file with the NASD
all forms and information required or requested by the NASD in order to obtain
written confirmation from the NASD that the NASD does not object to the
fairness and reasonableness of the underwriting terms and arrangements (or any
deemed underwriting terms and arrangements) (each such written confirmation, a “No
Objections Letter”) relating to the resale of Registrable Shares pursuant
to the Shelf Registration Statement, including, without limitation, information
provided to the NASD through its COBRA Desk system, and pay all costs, fees and
expenses incident to the NASD’s review of the Shelf Registration Statement and
the related underwriting terms and arrangements, including, without limitation,
all filing fees associated with any filings or submissions to the NASD and the
legal expenses, filing fees and 


 


11





















 


other
disbursements of Raymond James and any other NASD member that is the holder of,
or is affiliated or associated with an owner of, Registrable Shares included in
the Shelf Registration Statement (including in connection with any initial or
subsequent member filing); and


(u)           upon effectiveness
of the first Registration Statement filed under this Agreement, the Company
will take such actions and make such filings as are necessary to effect the
registration of the Common Stock under the Exchange Act simultaneously with or
immediately following the effectiveness of the Registration Statement.


The Company may require the Holders to furnish to the Company such
information regarding the proposed distribution by such Holder of such
Registrable Shares 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)(iii) or
4(f)(iv) hereof, such Holder will immediately discontinue disposition of
Registrable Shares pursuant to a Registration Statement until 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 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.                                      Black-Out Period


(a)           Subject to the provisions of this Section 5 following the
effectiveness of a Registration Statement (and the filings with any
international, federal or state securities commissions), the Company may direct
the Holders, in accordance with Section 5(b), to suspend sales of the
Registrable Shares pursuant to a Registration Statement for such times as the
Company reasonably may determine is necessary and advisable (but in no event
for more than an aggregate of ninety (90) days in any consecutive twelve
(12)-month period commencing on the Closing Date or more than sixty (60) days
in any consecutive ninety (90)-day period, except as a result of a request pursuant
to Section 7 hereof or as a result of a review of any post-effective amendment
by the Commission prior to declaring any post effective amendment to the
Registration Statement effective, provided the Company has used all
commercially reasonable efforts to cause such post-effective amendment to be
declared effective), if any of the following events shall occur: (i) the
representative of the underwriters of an Underwritten Offering of primary
shares by the Company has advised the Company that the sale of Registrable
Shares pursuant to the Registration Statement would have a material adverse
effect on the Company’s initial public offering; (ii) the majority of the
members of the Board of Directors of the Company shall have determined in good
faith that (1) the offer or sale of any Registrable Shares would materially
impede, delay or interfere with any proposed financing, offer or sale of
securities, acquisition, merger, tender offer, business combination, corporate
reorganization, consolidation 


 


12





















 


or
other significant transaction involving the Company, (2) after the advice of
counsel, the sale of Registrable Shares pursuant to the Registration Statement
would require disclosure of non-public material information not otherwise
required to be disclosed under applicable law, and (3) either (x) the Company
has a bona fide business purpose for preserving the confidentiality of such
transaction, (y) disclosure would have a material adverse effect on the Company
or the Company’s ability to consummate such transaction, or (z) the proposed
transaction renders the Company unable to comply with Commission requirements,
in each case under circumstances that would make it impractical or inadvisable
to cause the Registration Statement (or such filings) to become effective or to
promptly amend or supplement the Registration Statement on a post-effective
basis, as applicable; or (iii) the majority of the members of the Board of
Directors of the Company shall have determined in good faith, after the advice
of counsel, that it is required by law, rule or regulation to supplement the
Registration Statement or file a post-effective amendment to the Registration
Statement in order to incorporate information into the Registration Statement
for the purpose of (1) including in the Registration Statement any prospectus
required under Section 10(a)(3) of the Securities Act; (2) reflecting in the
prospectus included in the Registration Statement any facts or events arising after
the effective date of the Registration Statement (or of the most-recent
post-effective amendment) that, individually or in the aggregate, represents a
fundamental change in the information set forth therein; or (3) including in
the prospectus included in the Registration Statement any material information
with respect to the plan of distribution not disclosed in the Registration
Statement or any material change to such information.  Upon the occurrence of any such suspension,
the Company shall use its commercially reasonable efforts to cause the Registration
Statement to become effective or to promptly amend or supplement the
Registration Statement on a post-effective basis or to take such action as is
necessary to make resumed use of the 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.


(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 Raymond James and the
Holders to suspend sales of the Registrable Shares and such notice shall state
generally the basis for the notice and that such suspension shall continue only
for so long as the Suspension Event or its effect is continuing and the Company
is using its best efforts and taking all reasonable steps to terminate
suspension of the use of the Registration Statement as promptly as possible. No
Holder shall 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 hereinafter defined). 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
Raymond James in the manner described above promptly following the conclusion
of any Suspension Event and its effect.


 


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6.                                      Indemnification and
Contribution


(a)           The Company agrees
to indemnify and hold harmless (i) each Holder of Registrable Shares and any
underwriter (as determined in the Securities Act) for such Holder, (ii) each
Placement Agent, (iii) 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
such Person described in clauses (i) or (ii) (any of the Persons referred to in
this clause (iii) being hereinafter referred to as a “Controlling Person”),
and (iv) the respective officers, directors, partners, employees,
representatives and agents of any such Person or any Controlling Person (any
Person referred to in clause (i), (ii), (iii) or (iv) may hereinafter be
referred to as a “Purchaser Indemnitee”), to the fullest extent lawful,
from and against any and all losses, claims, damages, judgments, actions,
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 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 used to sell the 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 light of the
circumstances under which they were made, not misleading, except insofar as
such Liabilities arise out of or are based upon 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. The Company shall notify the Holders promptly of the institution,
threat or assertion of any claim, proceeding (including any governmental
investigation), or litigation of which it shall have become aware in connection
with the matters addressed by this Agreement which involves the Company or a
Purchaser Indemnitee. 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 of Registrable Shares is participating, such Holder agrees, severally
and not jointly, to indemnify and hold harmless (i) the Company, (ii) each
Person who controls (within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Exchange Act) the Company and (iii) the respective
partners, directors, officers, 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 untrue statements or omissions or alleged untrue statements or
omissions made in reliance upon and in strict conformity with information
relating to such Purchaser Indemnitee furnished to the Company in writing by
such Purchaser Indemnitee expressly for use in any Registration Statement or
Prospectus, any amendment or supplement thereto or any preliminary Prospectus.
The liability of any Purchaser Indemnitee pursuant to this paragraph shall in
no event exceed the net proceeds received by such Purchaser Indemnitee from
sales of Registrable Shares giving rise to such obligations.


 


14





















 


(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 paragraph (a) or (b) above, 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 pay
the reasonable 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 actively and vigorously
pursue 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 case the Indemnifying Party shall not have the
right to assume nor 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 in the same jurisdiction 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 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, but if settled with
such consent or if there is a final, non-appealable 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. 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 paragraphs (a) and
(b) of this Section 6 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 


 


15





















 


hold
harmless a party indemnified thereunder, then each Indemnifying Party under
such paragraphs, 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 Party(ies) 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 Party(ies) 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 paragraph 6(d) above. The amount paid or payable by an Indemnified Party
as a result of any Liabilities referred to paragraph 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) Raymond James or a Holder of Registrable Shares shall have
the same rights to contribution as Raymond James 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, 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 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. The
Purchaser Indemnitee’s obligations to contribute pursuant to this 


 


16





















 


Section
6 are several in proportion to the respective number of Shares sold by each of
the Purchaser Indemnitees hereunder and not joint.


7.                                      Market Stand- off Agreement


Each Holder hereby agrees that it shall not, to the extent requested by
the Company or an underwriter of securities of the Company, directly or
indirectly sell, offer to sell (including without limitation any short sale),
grant any option or otherwise transfer or dispose of any Registrable Shares or
other shares of Common Stock of the Company or any securities convertible into
or exchangeable or exercisable for shares of Common Stock of the Company then
owned by such Holder (other than to donees or partners of the Holder who agree
to be similarly bound) for a period of sixty (60) days following the effective
date of an IPO Registration Statement of the Company filed under the Securities
Act; provided, however,
that:


(a)           the restrictions
above shall not apply to Registrable Shares sold pursuant to the IPO
Registration Statement;


(b)           all Persons (other
than the Holders) then holding shares of capital stock of the Company or
securities convertible into or exchangeable or exercisable for shares of capital
stock of the Company enter into similar agreements; and


(c)           the Holders shall be
allowed any concession or proportionate release allowed to any Person that
entered into similar agreements (with such proportion being determined by
dividing the number of shares being released with respect to such Person by the
total number of issued and outstanding shares held by such Person).


In order to enforce the foregoing covenant, the Company shall have the
right to place restrictive legends on the certificates representing the
securities subject to this Section 7 and to impose stop transfer instructions
with respect to the Registrable Shares and such other securities of each Holder
(and the securities of every other Person subject to the foregoing restriction)
until the end of such period.


8.                                      Limitations on Subsequent
Registration Rights


From and after the date of
this Agreement, the Company shall not, without the prior written consent of
Holders beneficially owning not less than a majority of the then outstanding
Registrable Shares (provided, however, that for purposes of this Section 8, Registrable
Shares that are owned, directly or indirectly, by an Affiliate or employee of
the Company shall not be deemed to be outstanding), enter into any agreement
with any holder or prospective holder of any Common Stock of the Company that
would allow such holder or prospective holder (a) to include such Common Stock
in any Registration Statement 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, or (b) to have its Common Stock registered on a registration
statement that could be declared effective prior to, or within one hundred
eighty (180) days of, the effective date of any Registration Statement filed
pursuant to this Agreement.


 


17





















 


9.                                      Miscellaneous


(a)           Remedies. In the event of a breach by the
Company of any of its obligations under this Agreement, each Holder, in
addition to being entitled to exercise all rights provided herein or, in the
case of Raymond James, in the Placement Agreement, or granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Agreement. Subject to Section 6, the Company agrees that monetary
damages would not be adequate compensation for any loss incurred by reason of a
breach by it of any of the provisions of this Agreement and hereby further
agree that, in the event of any action for specific performance in respect of
such breach, it shall waive the defense that a remedy at law would be adequate.


(b)           Amendments and Waivers. The provisions of
this Agreement, including the provisions of this sentence, 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 not less than a majority of the then
outstanding Registrable Shares; provided,
however, that for purposes of
this Section 9(b), Registrable Shares that are owned, directly or indirectly,
by an Affiliate or employee of the Company shall not be deemed to be
outstanding. No amendment shall be deemed effective unless it applies uniformly
to all Holders. 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.


(c)           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





(i)            if to a Holder, at the most current
address given by the transfer agent and registrar of the Shares to the Company,
or if such Holder’s Registrable Shares are DTC eligible, through the relevant
DTC participant;


(ii)           if to Raymond James:


Raymond James & Associates, Inc.


5847 San Felipe Road


Suite 720


Houston, TX 77057-3184

Attention: Howard W. House

(facsimile: (713) 266-4117)


 


18





















 


with a copy to:


Baker Botts L.L.P.


1500 San Jacinto Center


98 San Jacinto


Austin, Texas 78701-4039590


Attention: Mike Bengtson


(facsimile: (512) 322-8349);


 


(iii)                             if
to the Company at the offices of the Company at:


Stroud Energy, Inc.


210 West Sixth Street, Suite 500


Fort Worth, Texas 76102

Attention: Chief Executive Officer

(facsimile: (817) 882-8811)


with copies to:


Patrick Reardon


210 West Sixth Street, Suite 401


Fort Worth, Texas 76102


(facsimile: (817) 348-8804)


 


and


 


Thompson & Knight LLP


1700 Pacific Avenue


Suite 3300


Dallas, TX 75201


Attention: Joe Dannenmaier

(facsimile: (214) 969-1751)


(d)           Successors and Assigns. This Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties hereto, including, without limitation and without the need
for an express assignment or assumption, subsequent Holders. The Company agrees
that the Holders shall be third party beneficiaries to the agreements made
hereunder by Raymond James 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.


(e)           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.


 


19





















 


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


(g)           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 JURISDICTION OF
ANY STATE COURT IN THE STATE OF NEW YORK OR ANY FEDERAL COURT SITTING IN NEW
YORK 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.


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


(i)            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.


(j)            Adjustment for Stock Splits, etc. Wherever
in this Agreement there is a reference to a specific number of shares with
respect to any Registrable Shares, then upon the occurrence of any subdivision,
combination, or stock dividend of such shares, the specific number of shares
with respect to any Registrable Shares so referenced in this Agreement shall
automatically be proportionally adjusted to reflect the effect on the
outstanding shares of such class or series of stock by such subdivision,
combination, or stock dividend.


(k)           Survival.
This Agreement is intended to survive the consummation of the transactions
contemplated by the Placement Agreement. The indemnification and contribution 


 


20





















 


obligations
under Section 6 of this Agreement shall survive the termination of the Company’s
obligations under Section 2 of this Agreement.


(l)            Attorneys’ Fees. In any action or
proceeding brought to enforce any provision of this Agreement, or where any
provision hereof is validly asserted as a defense, the prevailing party, as
determined by the court, shall be entitled to recover its reasonable attorneys’
fees in addition to any other available remedy.


[Signature
Page Follows]


 


21





















 


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




	
  STROUD ENERGY, INC.

  
	
   

  	
   

  
	
  By: 

  	
  /s Patrick J. Noyes

  
	
   

  	
  Name: Patrick J. Noyes

  
	
   

  	
  Title: President & Chief Executive
  Officer

  






 





















 




	
  RAYMOND JAMES &
  ASSOCIATES, INC.

  
	
   

  	
   

  
	
  By: 

  	
  /s/ Scott McNeill

  
	
   

  	
  Name: Scott McNeill

  
	
   

  	
  Title: Vice President