REGISTRATION RIGHTS AGREEMENT
This
Registration
Rights Agreement (the
"Agreement") is made and entered
into as of _____ [__], 2007 (the "Effective Date") between Dune
Energy, Inc., a
Delaware corporation (the "Company") and Goldking Energy Holdings,
L.P., a Texas
limited partnership (the "Shareholder").
R E C I T A L S:
A. The
Holders have acquired 10,055,866 shares of common stock (the
"Shares") from the
Company pursuant to
that certain
Stock Purchase and Sale
Agreement, dated
effective April 13,
2007, by and among the Company, Goldking
Energy Corporation
and Goldking
Energy Holdings, L.P. (the Stock Purchase
Agreement").
B. The
Company and the Holders desire to set forth the registration
rights
to be granted by the Company to the Holders.
NOW,
THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants,
and conditions set
forth herein, the
parties mutually
agree as follows:
A G R E E M E N T:
1. Certain
Definitions.
As used in this
Agreement,
the following
terms
shall have the following respective meanings:
"Approved
Market" means the
Nasdaq National
Market, the Nasdaq
SmallCap
Market, the New York Stock Exchange, Inc., the American Stock
Exchange, Inc., or
the OTC Bulletin Board.
"Blackout
Period" means, with respect to a registration, a period in each
case commencing on the
day immediately after
the Company notifies
the Holders
that they are required, pursuant to Section 4(f), to suspend offers
and sales of
Registrable Securities
during which the Company, in the good faith judgment of
its Board of Directors, determines (because of the existence of, or in
anticipation of, any
acquisition,
financing activity, or other transaction
involving the Company,
or the unavailability
for reasons beyond the
Company's
control of any required financial statements, disclosure of
information which is
in its best interest not to publicly disclose, or any other event or
condition
of similar
significance to the Company) that the registration and distribution
of the Registrable Securities to be covered by such registration
statement,
if
any, would be
seriously detrimental
to the Company and its
shareholders
and
ending on the
earlier of (1) the date upon which the material non-public
information commencing
the Blackout Period is disclosed to the public or ceases
to be material and (2)
such time as the Company notifies the selling Holders
that the Company will no longer delay such filing of the
Registration Statement,
recommence taking steps to make such Registration Statement
effective, or
allow
sales pursuant to such Registration Statement to resume; provided,
however, that
(a) the Company shall limit its use of Blackout Periods, in the
aggregate, to 60
Trading Days in any 12-month period, (b) no Blackout Period may
commence sooner
than 60 days after the end of a prior Blackout Period and (c) a Blackout
Period
shall not apply to any
Holder unless it also applies to the Company, its
officers and directors and all other shareholders of the
Company.
"Business
Day" means any day of the year, other than a Saturday,
Sunday,
or other day on which the Commission is required or authorized to
close.
"Closing
Date" shall have the same meaning as under the Stock
Purchase
Agreement.
<PAGE>
"Commission" means the
Securities
and Exchange
Commission or any
other
federal agency at the time administering the Securities Act.
"Common
Stock" means the common stock, $.001 par value per share,
of the
Company and any and all shares of capital stock or other equity
securities
of:
(i) the Company which
are added to or exchanged or substituted for the Common
Stock by reason of the
declaration of any
stock dividend or
stock split, the
issuance of
any distribution or the reclassification,
readjustment,
recapitalization, or
other such
modification of the
capital structure of
the
Company; and (ii) any
other corporation, now
or hereafter organized
under the
laws of any state or other governmental authority, with which the Company is
merged, which results
from any consolidation
or reorganization to which the
Company is a party, or to which is sold all or substantially all of the shares
or assets of the
Company, if
immediately
after such
merger, consolidation,
reorganization, or
sale, the Company or the stockholders of the Company own
equity securities
having in the
aggregate more than 50% of the total
voting
power of such other corporation.
"Equity
Securities"
means (i) any Common Stock, (ii) any security
convertible, with or without consideration, into any Common Stock
(including any
option to purchase such a convertible security), (iii) any security
carrying any
warrant or right to subscribe to or purchase any Common Stock,
or (iv) any such
warrant or right.
"Exchange
Act" means the Securities Exchange Act of 1934, as amended,
and
the rules and regulations of the Commission promulgated
thereunder.
"Family
Member"
means (a) with respect to any individual, such
individual's spouse, any descendants (whether natural or adopted),
any trust all
of the beneficial
interests of which are owned by any of such individuals or by
any of such
individuals together
with any organization described in Section
501(c)(3) of the Internal Revenue Code of 1986, as amended, the estate of any
such individual,
and any corporation, association, partnership, or limited
liability company all
of the equity interests of which are owned by those above
described individuals,
trusts, or organizations and (b) with respect to any
trust, the owners of the beneficial interests of such trust.
"Form S-3"
mean such forms under
the Securities
Act as in effect on
the
date hereof.
"Holder"
means the Shareholder,
or any successor or Permitted Assignee of
a Holder, who acquire
rights in accordance
with this Agreement with respect to
the Registrable Securities directly or indirectly from a Holder,
including from
any Permitted Assignee.
"Inspector" means any attorney, accountant, or other agent retained by a
Holder for the purposes provided in Section 4(j).
"Permitted
Assignee" means (a) with respect to a partnership, its partners
or former partners,
(b) with respect to a
corporation,
its shareholders in
accordance with their interest in the corporation, (c) with respect
to a limited
liability company,
its members or former members, (d) with respect to an
individual party,
any Family Member of such party, (e) an entity that is
controlled by, controls, or is under common control with a
transferor, or (f)
a
party to this Agreement.
The
terms "register," "registered," and "registration" refers to a
registration effected
by preparing and filing a registration statement in
compliance with the
Securities
Act, and the declaration or ordering of the
effectiveness of such registration statement.
2
<PAGE>
"Registrable
Securities" means (i)
the Shares of Common
Stock issued to
the Holders pursuant
to the Stock Purchase
Agreement and (ii) any
additional
shares of Common Stock that may be issued to any Holder pursuant to
Section 3(b)
hereof , but in each case excluding (A) any Registrable Securities that have
been publicly sold pursuant to Rule 144(k) of the Securities Act or otherwise;
(B) any Registrable
Securities sold by a person in a transaction pursuant to a
registration statement
filed under the
Securities Act; or (C)
any Registrable
Securities that are at the time subject to an effective
registration
statement
under the Securities Act.
"Registration Default Date" means 180 days after the Closing
Date.
"Registration Default
Period" means the period following the Registration
Default Date during which any Registration Event occurs and is
continuing.
"Registration
Statement" means the registration statement required to be
filed by the Company pursuant to Section 3(a).
"Securities Act" means
the Securities
Act of 1933,
as amended,
or any
similar federal statute promulgated in replacement
thereof, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect
at
the time.
"SEC
Effective Date" means the date the Registration Statement is
declared
effective by the Commission.
"Trading
Day" means a day on whichever (a) the national securities
exchange, (b) the
Nasdaq Stock Market, or (c) such other securities market, in
any such case which at the time constitutes the principal
securities market
for
the Common Stock, is open for general trading of securities.
3
<PAGE>
2. Term.
This Agreement shall continue in full force and effect for a
period of three (3) years from the Effective Date, unless terminated sooner
hereunder.
3.
Registration.
(a) Registration
on Form S-3. Within 90
days following the Closing
Date, the Company
shall file with the
Commission a
registration statement
on
Form S-3 (except if the Company is not then eligible to register for resale
the
Registrable Securities
on Form S-3, in which case such registration shall be on
another appropriate
form in accordance
herewith) relating to the resale by the
Holders of all of the
Registrable
Securities;
provided, however, that the
Company shall not be obligated to effect any such registration, qualification,
or compliance pursuant to this Section 3(a), or keep such
registration effective
pursuant to Section 4: (i) in any particular jurisdiction in which the Company
would be required to qualify to do business as a foreign corporation or as a
dealer in securities under the securities or blue sky laws of such
jurisdiction
or to execute a
general consent
to service of process in effecting such
registration,
qualification, or
compliance,
in each case where it has not
already done so; or (ii) during any Blackout Period.
(b) Penalty
Upon Registration Event. If (i) the Registration
Statement required to
be filed pursuant to
Section 3(a) above is
not declared
effective by the Commission by the Registration Default Date, or (ii) after
the
SEC Effective Date, the Registration Statement ceases for any reason to
remain
continuously effective as to all Registrable Securities for which
it is required
to be effective,
or unless approved by Holders holding a majority of the
Registrable Securities, the Holders are not permitted to
utilize the prospectus
therein to resell
such Registrable Securities for more than 15 consecutive
calendar days or more
than an aggregate of 25 calendar days during any 12-month
period (which need not be consecutive calendar days; provided that such number
of days shall not include the 5 calendar days following the filing of any
Form
8-K, Form 10-Q or Form 10-K, or other comparable form, for purposes of
filing a
post-effective
amendment to any registration statement that is not on Form
S-3)
(either such failure or breach being referred to as a "Registration
Event", and
for purposes of clause (i) the date on which such Registration
Event occurs, or
for purposes of clause (ii) the date on which such 15 or 25
calendar day period,
as applicable, is exceeded being referred to as "Registration Event
Date"), then
in addition
to any other rights the Holders may have hereunder or under
applicable law, on
either such
Registration Event
Date, the Company shall, at
its election, deliver to the Holders either (x) cash, in the
aggregate amount of
$360,000 or (y) such number of additional shares of the Company's
Common Stock
equal to a
fraction, the numerator of which shall be $360,000 and the
denominator of which
shall be ninety
percent (90%) of the
last sales price of
the Company's
Common Stock as quoted on the
American Stock Exchange on the
Registration Event
Date. Thereafter,
upon each ninety (90)
day anniversary of
either such Registration Event Date (if the applicable Registration Event shall
not have been cured by such date) until the applicable Registration Event is
cured, the Company
shall, at its election, deliver to the Holders either
(x)
cash, in the aggregate
amount equal to five
percent (5%) of the product of (A)
$1.79 and (B) the number of Registrable Securities held by the Holders on such
ninety (90) day anniversary date or (y) such number of additional
shares of the
Company's Common
Stock equal to a
fraction, the
numerator of which shall be
equal to five percent
(5%) of the
product of (A) $1.79 and (B) the number
of
Registrable Securities
held by the Holders on
such ninety (90) day anniversary
date and the
denominator of which
shall be ninety
percent (90%) of the last
sales price of the
Company's Common Stock as quoted on the American Stock
Exchange on such 90 day anniversary date of the Registration Event
Date. Amounts
payable as liquidated
damages to each Holder
hereunder with respect to each
share of Registrable Securities shall cease when the Holder no
longer holds such
share of Registrable Securities.
4
<PAGE>
(c) Piggy-back Registration Rights. The Company covenants and
agrees
that in the event
that prior to the filing of any registration statement
required to be filed
pursuant to Section
3(a) above, the
Company proposes
to
file a registration statement under the Securities Act with respect
to shares of
Common Stock (other than pursuant to registration statements on
Form S-4 or Form
S-8 or any successor or similar forms), whether or not for its own
account, then
the Company shall give
written notice of such
proposed filing to the Holders
promptly (and in any
event at least twenty
(20) days before the anticipated
filing date). Such
notice shall offer to the Holders the opportunity to include
in such registration
statement such number of Registrable Securities as the
Holders may
request. The Company shall direct and use its reasonable best
efforts to cause the managing underwriter of a proposed
underwritten offering to
permit the Holders to
include such Registrable Securities in the proposed
offering and the Company shall use its reasonable best efforts to include such
Registrable Securities
in such proposed offering on the same terms and
conditions as any similar securities of the Company
included therein. If the
offering of which the Company gives notice is a public offering involving an
underwriter, the right
of the Holders to registration pursuant to this Section
3(c) shall
be conditioned upon (i) such Holder's participation in such
underwriting and the inclusion of the Registrable Securities to be sold by such
Holder in the
underwriting
and (ii) such
Holder executing an underwriting
agreement entered
into by the
Company which includes customary terms and
conditions relating
to sales by shareholders. The Holders of Registrable
Securities to be
distributed
by such underwriters shall be parties to the
underwriting agreement
between the Company
and such underwriters
and may, at
their option, require
that any or all of the representations and warranties by,
and any other
agreement on the part
of, the Company to and
for the benefit of
such underwriters
shall also be made to
and for the benefit of such Holders of
Registrable Securities
and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement
be conditions
precedent to the obligations of such Holders of Registrable
Securities. Any such
Holder of Registrable Securities shall not 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, such Holder's
Registrable Securities
and such Holder's intended method
of distribution
and any other
representation
required by law. The
foregoing
notwithstanding, in the case of a firm commitment offering on
underwriting terms
appropriate for
such a transaction, if any such managing underwriter of
nationally recognized
standing shall advise the Company and the Holders in
writing that, in its opinion, the distribution of all or a
specified portion of
the Registrable
Securities
requested to be included in the registration
concurrently
with the securities being registered by the Company would
materially adversely
affect the
distribution of such
securities by increasing
the aggregate
amount of the offering in excess of the maximum amount of
securities which such
managing underwriter
believes can
reasonably be sold in
the contemplated
distribution,
then the securities to be included in a
registration which is a primary underwritten offering on behalf of the
Company
shall be reduced in the following order: (i) first, Registrable Securities
requested to be included by Holders shall be excluded pro rata and
(ii) second,
the securities the Company proposes to include therein shall be
excluded.
(d) Requested
Underwritten
Offerings.
If requested by the
underwriters for any underwritten offering by Holders of
Registrable
Securities
pursuant to a registration requested under Section 3(a), the
Company will enter
into an underwriting
agreement with such
underwriters for such offering, such
agreement to be
satisfactory in
substance and form to each such Holder and the
underwriters and to contain such representations and warranties by the Company
and such other terms as are generally prevailing in agreements of this type,
including without
limitation,
indemnities
to the effect and to the extent
provided in
Section 10 below.
The Holders of Registrable Securities to be
distributed by such underwriters shall be parties to such
underwriting agreement
and may, at their
option, require that
any or all of the
representations
and
warranties, by, and
the other agreements on the part of, the Company to and for
the benefit of such
underwriters
shall also be made to
and for the benefit of
such Holders of
Registrable Securities
and that any or all of
the conditions
precedent to the
obligations
of such underwriters under such underwriting
agreement be
conditions
precedent to the obligations of such Holders of
Registrable
Securities. Any such
Holder of Registrable Securities shall not be
required to make any
representations or
warranties to or
agreements with
the
Company or
the underwritiers other than representations,
warranties
or
agreements regarding such Holder, such Holder's Registrable
Securities and
such
Holder's intended method of distribution and any other representation required
by law.
5
<PAGE>
4.
Registration
Procedures.
In the case of each registration,
qualification, or
compliance
effected by the Company pursuant to Section 3
hereof, the
Company will keep each Holder including securities therein
reasonably advised in writing (which may include e-mail) as to the
initiation of
each registration,
qualification,
and compliance and as to the completion
thereof. With respect to any registration statement filed pursuant
to Section 3,
the Company will use its commercially reasonable best efforts
to:
(a)
prepare and file with the Commission with respect to such
Registrable
Securities, a
registration
statement on Form S-3 or, if the
Company is not
eligible to file a
registration
statement on Form S-3, onany other form for
which the Company then
qualifies and which
counsel for the
Company shall deem
appropriate, and which
form shall be available for the sale of the Registrable
Securities in accordance with the intended method(s) of distribution thereof,
and use its best
efforts to cause such registration statement to become
effective as soon as
possible and remain effective at least for the period
ending with the sale of all Registrable Securities pursuant to the
Registration
Statement (the "Effectiveness Period"); provided, however, that if the Company
files the registration
statement on any form other than Form S-3,
the Company
shall promptly
convert such registration statement to Form S-3 or file a
replacement
registration statement
on Form S-3 as soon as the Company becomes
eligible to file on Form S-3;
(b) if a
registration
statement is subject
to review by the
Commission,
promptly respond
to all comments and diligently pursue resolution of any
comments to the satisfaction of the Commission;
(c) prepare and
file with the Commission such amendments and supplements
to such registration
statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective du
