Exhibit 4.1
Investor Rights
Agreement
Dated as of October 13,
2005
among
Energy XXI Acquisition Corporation
(Bermuda) Limited
Sunrise Securities Corp.
and
Collins Stewart Limited
INVESTOR RIGHTS
AGREEMENT
This Investor Rights Agreement (this
“ Agreement ”) is made and entered into as of 13
October 2005 by and among Energy XXI Acquisition Corporation
(Bermuda) Limited, a Bermudan company (the “ Company
”), and Sunrise Securities Corp. and Collins Stewart Limited
(collectively, the “Placement Agents”), for the benefit
of the holders (the “ Holders ”) from time to
time of the Company’s common shares, par value $.001 per
share (the “ Common Shares ”) and warrants (the
“ Warrants ”), each Warrant for the purchase of
one (1) Common Share.
Reference is made to the
Company’s Offering Circular, dated 13 October 2005 (the
“ Offering Circular ”), relating to the offer
and sale of fifty million (50,000,000) units (the “
Units ”), each Unit consisting of one (1) Common
Share and two (2) Warrants. For the benefit of the Holders and
in consideration of the Placement Agents entering into a placing
agreement with the Company for the placing of the Units, the
Company has agreed to provide the investor rights set forth in this
Agreement.
The parties hereby agree as
follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the
following capitalized terms shall have the following
meanings:
ADR : As defined in Section 2(b)
hereof.
Commission
: The U.S. Securities and Exchange
Commission.
Exchange Act
: The U.S. Securities Exchange Act
of 1934, as amended.
NASD : National Association of Securities Dealers,
Inc.
Offering : The offering of the Units pursuant to the
Offering Circular.
Person : An individual, partnership, corporation,
limited liability company, unincorporated organization,
association, joint-stock company, trust, joint venture, government
or any agency or political subdivision thereof or any other
entity.
Placing Agreement
: The placing agreement between the
Company, Sunrise Securities Corp., Collins Stewart and the
Company’s directors dated on or about the date of this
Agreement.
Qualified Business
Combination : A business
combination which, when combined with the Company’s previous
business combinations, results in the release of at least fifty
percent (50%) of the initial amount of the trust fund (as more
fully described in the Offering Circular).
Securities Act
: The U.S. Securities Act of 1933,
as amended.
‘34 Act Liquidated
Damages : As defined in
Section 5(a) hereof.
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‘34 Act Registration
Deadline : The date of
consummation of a Qualified Business Combination or, alternatively,
in the case where no Qualified Business Combination shall have
occurred but a business combination shall have been completed and
the balance of the funds in the trust fund have been distributed to
the new shareholders, the date of such distribution.
‘34 Act Registration
Default : As defined in
Section 4(a) hereof.
‘34 Act Registration
Statement : A
registration statement of the Company on Form 10 (or such other
form which it is appropriate to use to register the Common Shares
or ADRs under the Exchange Act), including all amendments and
supplements thereto and all exhibits and material incorporated by
reference therein.
SECTION 2. EXCHANGE ACT REGISTRATION
AND LISTING
(a) The Company shall (i) no
later than the date that is one hundred eighty (180) days
following the ‘34 Act Registration Deadline cause to be filed
with the Commission a ‘34 Act Registration Statement, and
(ii) use its commercially reasonable efforts to cause such
‘34 Act Registration Statement to be declared effective on or
prior to the date that is two hundred seventy (270) days
following the ‘34 Act Registration Deadline.
(b) As promptly as practicable after
the ‘34 Act Registration Statement shall have been declared
effective, the Company shall use its commercially reasonable
efforts to cause the Common Shares or American Depositary Receipts
representing Common Shares (“ADRs”) to be authorized to
be quoted and/or listed (to the extent applicable) on the American
Stock Exchange, the New York Stock Exchange, the National
Association of Securities Dealers, Inc. Automated Quotation System
or the Nasdaq National Market (or, in each case, a successor
thereto) or a similarly recognized national trading platform, if
the Common Shares or ADRs so qualify.
SECTION 3. WARRANT SHARE
REGISTRATION
(a) The Company shall file with the
Commission, no later than the 60th day after the ‘34 Act
Registration Statement is declared effective, a shelf registration
statement (the “Shelf Registration Statement”)
pursuant to Rule 415 under the Securities Act of 1933, as amended
(the “ Securities Act ”) covering the Common
Shares as and when issued upon exercise of the Warrants, including
the Warrants underlying that certain unit purchase option dated
October 13, 2005 (“Purchase Option”) issued by the
Company to Sunrise Securities Corp. and/or its designees (the
“ Warrant Shares ”). The Company shall
(i) use commercially reasonable efforts to cause the Shelf
Registration Statement to be declared effective under the
Securities Act no later than 105 days after the ‘34 Act
Registration Statement is declared effective unless the Commission
reviews such registration statement in which case the 105 day
period shall be increased to 120 days, and (ii) use
commercially reasonable efforts to keep the Shelf Registration
Statement effective until the earlier of (x) the date when the
holders of the Warrants and the Warrant Shares are able to sell
such shares immediately without restriction pursuant to volume
limitation provisions of Rule 144 under the Securities Act; and
(y) such time as all of the Warrant Shares have been sold
either pursuant to the Shelf Registration Statement or pursuant to
Rule 144 under the Securities Act or any similar provision then in
force.
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(b) The Company shall use
commercially reasonable efforts to cause the prospectus contained
within the Shelf Registration Statement to be usable for its
intended purpose during the Designated Period (as defined below)
including filing any amendments and supplements to the Shelf
Registration Statement or the prospectus as may be required. The
“Designated Period” shall mean the period
beginning two days after the public announcement of quarterly and
year-end earnings by the Company and ending 30 days thereafter,
provided that the relevant earnings announcement shall in no event
be issued publicly after
November 29, March 1, May 30 and
October 28, in the case of the first quarter, second quarter,
third quarter and fiscal year-end, respectively.
(c) The Company may suspend the
effectiveness of the Shelf Registration Statement or the use of the
prospectus that is part of the Shelf Registration Statement during
specified periods during the Designated Period under certain
circumstances relating to pending corporate developments, public
filings with the Commission and similar events; provided, that due
to concerns about possibly disseminating material non-public
information, the Company need not specify the nature of the event
giving rise to a suspension in any notice to holders of the Warrant
Shares of the existence of such a suspension. Any such suspension
period shall not exceed an aggregate of 45 days of the Designated
Periods in any 360-day period. The number of days during which the
Company may have suspended use of the prospectus during the
Designated Periods will be added to the end of the Designated
Period with respect to the next one or more successive quarterly
periods or, when the prospectus has been appropriately amended or
supplemented to reflect the event or events giving rise to a
suspension, the amended or supplemented prospectus shall be
delivered to the selling Holders named in the Shelf Registration
Statement and they shall have a period of time equal to the number
of days during which selling was suspended to sell Warrant Shares
using the amended or supplemented prospectus.
(d) In connection with the
preparation of the Shelf Registration Statement, the Company shall
mail a questionnaire to all warrantholders and holders of
restricted Warrant Shares of record as of the close of business on
the day the ‘34 Act Registration Statement becomes effective.
In order to be named as a selling shareholder in the prospectus at
the time of effectiveness of the Shelf Registration Statement, such
Holder must complete and deliver the questionnaire to the Company
on or prior to the 15th business day after the questionnaire is
mailed. Holders not named as selling shareholders therein will not
be able to avail themselves of such Shelf Registration Statement.
Accordingly, transferees of warrants or Warrant Shares may not be
able to avail themselves of registration; provided, that, every six
months after the Shelf Registration Statement becomes effective,
the Company shall mail to all warrantholders of record and holders
of restricted Warrant Shares of record a new questionnaire and
amend or supplement the Shelf Registration Statement to include
those that have duly completed and returned a questionnaire to the
Company. The Company may, in its sole discretion, permit more
frequent supplements to the Shelf Registration Statement to include
transferees. Failure to timely provide a duly completed
questionnaire will result in the non-responding security holders
exclusion from the Shelf Registration Statement or the use of the
prospectus that is part of the Shelf Registration Statement. Any
Holder who has properly elected to be included in the Shelf
Registration Statement will (i) be required to be named as a
selling stockholder in the related prospectus, (ii) be
required to deliver a prospectus to purchasers, and (iii) be
subject to the civil liability provisions under the Securities Act
in connection with any sales pursuant to such Shelf Registration
Statement.
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SECTION 4. “PIGGYBACK”
REGISTRATIONS
(a) If at any time the Company shall
propose to register under the Securities Act (other than pursuant
to Sections 2 and 3 of this Agreement) any of its Common Shares for
the account of its Existing Shareholders (as defined in the
Offering Circular), it will promptly give written notice to all
Holders of Common Shares that are (i) holders of Common Shares
bearing a restrictive legend that are not freely saleable in the
United States under Rule 144(k) of the Securities Act, and
(ii) that are known by the Company to be affiliates of the
Company (other than officers and directors of the Company) (such
Common Shares hereinafter referred to as “ Registrable
Shares ”) of its intention so to do. Upon the written
request of any such holder, received by the Company within 20 days
after the giving of any such notice by the Company, to register any
or all of its Registrable Shares, the Company will use its
reasonable best efforts to cause the Registrable Shares as to which
registration shall have been so requested to be included in the
securities to be covered by the registration statement proposed to
be filed by the Company, all to the extent requisite to permit the
sale or other disposition by the holder (in accordance with its
written request) of such Registrable Shares so
registered.
(b) If the registration of which the
Company gives notice as provided above is for a registered public
offering involving an underwriting, the Company shall so advise the
Holders of Registrable Shares as a part of the written notice given
pursuant to this Section 4. In such event, the right of any
Holder of Registrable Shares to registration pursuant to this
Section 4 shall be conditioned upon such Holder’s
participation in such underwriting to the extent provided herein.
All Holders of Registrable Shares proposing to distribute their
securities through such underwriting shall (together with the
Common Shares to be registered by the Company in such registration
(the “ Other Shareholders ”)) enter into an
underwriting agreement in customary form with the underwriter or
underwriters selected for underwriting by the Company. If any
Holder of Registrable Shares disapproves of the terms of any such
underwriting, it may elect to withdraw therefrom by written notice
to the Company and the underwriter. Any Registrable Shares or other
securities excluded or withdrawn from such underwriting shall be
withdrawn from such registration.
(c) Notwithstanding any other
provision of this Section 4, if the underwriter determines
that marketing factors require a limitation on the number of shares
to be underwritten, the underwriter may exclude from such
registration and underwriting all or a portion of the Registrable
Shares which would otherwise be underwritten pursuant to this
Section 4. The Company shall so advise all Holders of
securities requesting registration of any limitations on the number
of shares to be underwritten and the number of shares of securities
that are entitled to be included in the registration; provided,
that the number of shares to be underwritten shall be allocated pro
rata among all Holders of Registrable Shares and the Existing
Shareholders in proportion, as nearly as practicable, to the
respective amounts of Registrable Shares owned by them.
SECTION 5. LIQUIDATED
DAMAGES
(a) If the ‘34 Act
Registration Statement shall not have been declared effective on or
prio
