REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of July 31, 1997, between
EQUITY COMPRESSION SERVICES CORPORATION, an Oklahoma corporation (the
"COMPANY"), and THE PRUDENTIAL INSURANCE COMPANY OF AMERICA (the "PURCHASER").
1. BACKGROUND. The Company and the Purchaser have entered into that
certain Subordinated Note and Warrant Purchase Agreement (the "PURCHASE
AGREEMENT"), dated as of July 31, 1997, pursuant to which the Company has
agreed, among other things, to issue and sell its Common Stock Purchase Warrants
Expiring July 31, 2007 (the "WARRANTS"), evidencing rights to purchase an
aggregate of 1,000,000 shares (subject to adjustment as provided therein) of
the Company's Common Stock, par value $0.01 per share (the "Common Stock"). This
agreement shall become effective upon the issuance of such Warrants.
2. REGISTRATION UNDER SECURITIES ACT, ETC.
2.1. REGISTRATION ON REQUEST.
(a) REQUEST BY HOLDERS OF WARRANTS OR REGISTRABLE SECURITIES. At any
time after July 31, 1999 any holder or holders of Warrants or Registrable
Securities comprising (or evidencing the right to acquire) in the aggregate at
least 100,000 shares of Common Stock (unless all then outstanding Warrants or
Registrable Securities comprise (or evidence the right to acquire) in the
aggregate less than 100,000 shares of Common Stock, in which case the holder or
holders of all such Warrants or Registrable Securities shall be required) may
request in writing that the Company effect the registration under the Securities
Act of all or part of such holders' Registrable Securities. Such request shall
specify the intended method of disposition thereof and whether or not such
requested registration is to be an underwritten offering. Promptly after
receiving such request, the Company will give written notice of such requested
registration to all other holders of Warrants or Registrable Securities and
thereupon the Company will use its best efforts to effect the registration under
the Securities Act of:
(i) the Registrable Securities which the Company has been so
requested to register by such holders, and
(ii) all other Registrable Securities which the Company has been
requested to register by such other holders of Warrants or Registrable
Securities by written request given to the Company within 30 days after the
giving of such written notice by the Company (which request shall specify
the intended method of disposition of such Registrable
Securities), all to the extent requisite to permit the disposition (in
accordance with the intended methods thereof as aforesaid) of the
Registrable Securities so to be registered.
Notwithstanding the foregoing, if at the time of any request to register
Registrable Securities pursuant to this Section 2.1(a) the Company is engaged
in, or has definitive plans to engage in, within 90 days of the time of such
request, a registered public offering, or is otherwise engaged in any other
activity which, in the good faith determination of the Board of Directors of the
Company, would be materially adversely affected by the requested registration to
the material detriment of the Company, then the Company may at its option direct
that such request be delayed for a reasonable period not in excess of (x) 120
days from the effective date or termination of such offering or (y) 80 days from
the date of completion or termination of such other material activity, as the
case may be, such right to delay a request to be exercised by the Company not
more than once in any one-year period; PROVIDED, HOWEVER, that if the Company
does not file or abandons its plan for a registered offering or material
transaction, then such request shall promptly proceed; PROVIDED, FURTHER, that
if the Company exercises its right to delay a request within the one-year period
immediately preceding the expiration date of the Warrants, the Company,
concurrently with the exercise of its right to delay such request, shall extend
such expiration date by an additional two years.
(b) REGISTRATION OF OTHER SECURITIES. Whenever the Company shall
effect a registration pursuant to this Section 2.1 in connection with an
underwritten offering by one or more holders of Registrable Securities, no
securities other than Registrable Securities shall be included among the
securities covered by such registration unless (a) the managing underwriter of
such offering shall have advised each holder of Registrable Securities to be
covered by such registration (and each holder of Warrants therefor) in writing
that the inclusion of such other securities would not adversely affect such
offering or (b) the holders of all Registrable Securities to be covered by such
registration (and the holders of all Warrants therefor) shall have consented in
writing to the inclusion of such other securities; PROVIDED, HOWEVER, that in
the event holders of Ouachita Securities request to have any of their Ouachita
Securities registered in connection with such underwritten offering in
accordance with Section 2.2(a) of that certain Registration Rights Agreement
dated as of July 31, 1997 between the Company and the current holders of
Ouachita Securities, such Ouachita Securities will be included in such offering
subject to the provisions of Section 2.1(h) hereof.
(c) REGISTRATION STATEMENT FORM. Registrations under this Section
2.1 shall be on such appropriate registration form of the Commission (i) as
shall be selected by the Company and as shall be reasonably acceptable to the
Requisite Holders and (ii) as shall permit the disposition of such Registrable
Securities in accordance with the intended method or methods of disposition
specified in their request for such registration. The Company agrees to include
in any such registration statement all information which holders of Registrable
Securities being registered (or holders of Warrants therefor) shall reasonably
request.
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(d) EXPENSES. The Company will pay all Registration Expenses in
connection with any registration requested pursuant to this Section 2.1 if such
registration has been requested in relation to at least 66 2/3% (by number of
shares) of Registrable Securities; PROVIDED, however, that the Company shall in
all events and at all times be responsible for the fees and disbursements of
counsel for the Requisite Holders in connection with the rendering of any
opinions requested by the Company or any underwriter). The Registration
Expenses (and underwriting discounts and commissions and transfer taxes, if any)
in connection with each other registration requested under this Section 2.1
shall be allocated among all Persons on whose behalf securities of the Company
are included in such registration, on the basis of the respective amounts of the
securities then being registered on their behalf.
(e) EFFECTIVE REGISTRATION STATEMENT. A registration requested
pursuant to this Section 2.1 shall not be deemed to have been effected (i)
unless a registration statement with respect thereto has become effective, (ii)
if after it has become effective, such registration is interfered with by any
stop order, injunction or other order or requirement of the Commission or other
governmental agency or court for any reason, or (iii) if the conditions to
closing specified in the purchase agreement or underwriting agreement entered
into in connection with such registration are not satisfied. Notwithstanding
the foregoing, a registration that does not become effective after the Company
has filed a registration statement with respect thereto solely by reason of the
refusal of the holders of Registrable Securities requesting such registration to
proceed (other than any refusal in good faith to proceed based upon (A) the
advice of their counsel that the registration statement, or the prospectus
contained therein, contains an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing,
or that such registration statement or such prospectus, or the distribution
contemplated thereby, otherwise violates or would violate any applicable state
or federal securities laws, or (B) a material adverse change in the business,
condition (financial or otherwise), prospects or operations of the Company or
any of its subsidiaries of which the Company knows or, upon exercising
reasonable diligence, should have known) shall be deemed to have been effected
by the Company at the request of such holders of Registrable Securities.
(f) SELECTION OF UNDERWRITERS. If a requested registration pursuant
to this Section 2.1 involves an underwritten offering, the underwriter or
underwriters thereof shall be selected by the Company with the reasonable
approval of the Requisite Holders.
(g) REGISTRATION RIGHTS OF OTHERS. If the Company has received a
request for registration of securities from the holders of other registration
rights prior to the date of a request made pursuant to this Section 2.1, and
such prior registration has not been completed, the registration requested
pursuant to this Section 2.1 shall not be allowed (and shall not count toward
the two requested registration limit set forth below), and the holders of such
Registrable Securities will be relegated to their incidental registration rights
described below in Section 2.2.
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(h) PRIORITY IN REQUESTED REGISTRATIONS. If a requested registration
pursuant to this Section 2.1 involves an underwritten offering, and the managing
underwriter shall advise the Company in writing (with a copy to each holder of
Warrants or Registrable Securities requesting registration) that, in its
opinion, the number of securities requested to be included in such registration
exceeds the number which can be sold in such offering within a price range
acceptable to the Requisite Holders, the Company will include in such
registration to the extent of the number which the Company is so advised can be
sold in such offering Registrable Securities requested to be included in such
registration, pro rata among the holders of Registrable Securities (or Warrants
therefor) requesting such registration on the basis of the percentage of such
Registrable Securities held by or issuable to such holders. In connection with
any registration as to which the provisions of this clause (h) apply, no
securities other than Registrable Securities shall be covered by such
registrations.
The holders of Warrants or Registrable Securities shall be entitled to
only two requested registrations pursuant to this Section 2.1.
2.2. INCIDENTAL REGISTRATION.
(a) RIGHT TO INCLUDE REGISTRABLE SECURITIES. If the Company at any
time proposes to register any of its securities under the Securities Act (other
than by a registration on Form S-4 or S-8 or any successor or similar form and
other than pursuant to Section 2.1), whether or not for sale for its own
account, it will each such time give prompt written notice to all holders of
Warrants or Registrable Securities of its intention to do so and of such
holders' rights under this Section 2.2. Upon the written request of any such
holder made within 30 days after the receipt of any such notice (which request
shall specify the Registrable Securities intended to be disposed of by such
holder and the intended method of disposition thereof), the Company will use its
best efforts to effect the registration under the Securities Act of all
Registrable Securities which the Company has been so requested to register by
the holders thereof, PROVIDED that if, at any time after giving written notice
of its intention to register any securities and prior to the effective date of
the registration statement filed in connection with such registration, the
Company shall determine for any reason not to register or to delay registration
of such securities, the Company may, at its election, give written notice of
such determination to each holder of Warrants or Registrable Securities and,
thereupon, (i) in the case of a determination not to register, shall be relieved
of its obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay the Registration Expenses in
connection therewith), without prejudice, however, to the rights of any holder
or holders of Warrants or Registrable Securities entitled to do so to request
that such registration be effected as a registration under Section 2.1, and (ii)
in the case of a determination to delay registering, shall be permitted to delay
registering any Registrable Securities, for the same period as the delay in
registering such other securities. No registration effected under this Section
2.2 shall be deemed to have been effected pursuant to Section 2.1 or shall
relieve the Company of its obligation to effect any registration upon request
under Section 2.1. The Company will pay all Registration Expenses in connection
with each registration of Registrable Securities requested pursuant to this
Section 2.2.
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(b) PRIORITY IN INCIDENTAL REGISTRATIONS. If (i) a registration
pursuant to this Section 2.2 involves an underwritten offering of the securities
so being registered, whether or not for sale for the account of the Company or a
holder of securities of the Company pursuant to such holder's right to demand
registration of such securities, to be distributed (on a firm commitment basis)
by or through one or more underwriters of recognized standing under underwriting
terms appropriate for such a transaction, (ii) the Registrable Securities so
requested to be registered for sale are not also to be included in such
underwritten offering (because the Company has not been requested so to include
such Registrable Securities pursuant to Section 2.4 (b), or if so requested, is
not obligated to do so under Section 2.4 (b)), and (iii) the managing
underwriter of such underwritten offering shall inform the Company and the
holders of Warrants or Registrable Securities requesting such registration by
letter of its belief that the number of securities requested to be included in
such registration exceeds the number which can be sold in (or during the time
of) such offering, then the Company may include all securities proposed by the
Company to be sold for its own account and for the account of any holder of
securities of the Company exercising a right to demand registration of such
securities and may decrease the number of Registrable Securities and other
securities of the Company so proposed to be sold and so requested to be included
in such registration (pro rata among the holders thereof on the basis of the
percentage of the securities of the Company sought to be included by such
holders in such registration) to the extent necessary to reduce the number of
securities to be included in the registration to the level recommended by the
managing underwriter.
2.3. REGISTRATION PROCEDURES. If and whenever the Company is required
to use its best efforts to effect the registration of any Registrable Securities
under the Securities Act as provided in Sections 2.1 and 2.2, the Company will
as expeditiously as possible:
(i) prepare and (as soon thereafter as possible or in any event no
later than 60 days after the end of the period within which requests for
registration may be given to the Company) file with the Commission the
requisite registration statement to effect such registration and thereafter
use its best efforts to cause such registration statement to become
effective, PROVIDED that the Company may discontinue any registration of
its securities which are not Registrable Securities (and, under the
circumstances specified in Section 2.2(a), its securities which are
Registrable Securities) at any time prior to the effective date of the
registration statement relating thereto;
(ii) 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 and to comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such
registration statement until such time as all of such securities have been
disposed of in accordance with the intended methods of disposition by the
seller or sellers thereof set forth in such registration statement,
PROVIDED that the Company shall in no event be required to keep such
registration statement effective for more than 270 days;
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(iii) furnish to each seller of Registrable Securities covered by
such registration statement such number of conformed copies of such
registration statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the
prospectus contained in such registration statement (including each
preliminary prospectus and any summary prospectus) and any other prospectus
filed under Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other documents, as such
seller may reasonably request;
(iv) use its best efforts to register or qualify all Registrable
Securities and other securities covered by such registration statement
under such other securities or blue sky laws of such jurisdictions as each
seller thereof shall reasonably request, to keep such registration or
qualification in effect for so long as such registration statement remains
in effect, and take any other action which may be reasonably necessary or
advisable to enable such seller to consummate the disposition in such
jurisdictions of the securities owned by such seller, except that the
Company shall not for any such purpose be required to qualify generally to
do business as a foreign corporation in any jurisdiction wherein it would
not but for the requirements of this subdivision (iv) be obligated to be so
qualified or to consent to general service of process in any such
jurisdiction;
(v) use its best efforts to cause all Registrable Securities covered
by such registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable
the seller or sellers thereof to consummate the disposition of such
Registrable Securities;
(vi) furnish to each seller of Registrable Securities and each
Requesting Holder a signed counterpart, addressed to such seller and such
Requesting Holder (and underwriters, if any) of:
(x) an opinion of counsel for the Company, dated the effective date
of such registration statement (and, if such registration includes an
underwritten public offering, dated the date of the closing under the
underwriting agreement), reasonably satisfactory in form and substance
to such seller, and
(y) a "comfort" letter, dated the effective date of such registration
statement (and, if such registration includes an underwritten public
offering, dated the date of the 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, in the case of the
accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions
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of issuer's counsel and in accountants' letters delivered to the
underwriters in underwritten public offerings of securities and, in the
case of the accountants' letter, such other financial matters, and, in the
case of the legal opinion, such other legal matters, as such seller or such
Requesting Holder, if any, may reasonably request;
(vii) notify each seller of Registrable Securities covered by such
registration statement and each Requesting Holder, at any time when a
prospectus relating thereto is required to be delivered under the
Securities Act, upon discovery that, or upon the happening of any event as
a result of which, the prospectus included in such registration statement,
as then in effect, includes an 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 in the light of the
circumstances under which they were made, and at the request of any such
seller or Requesting Holder promptly prepare and furnish to such seller or
Requesting Holder a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such prospectus shall not
include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under which they
were made;
(viii) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering
the period of at least twelve months, but not more than eighteen months,
beginning with the first full calendar month after the effective date of
such registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act, and will furnish to each
such seller at least five business days prior to the filing thereof a copy
of any amendment or supplement to such registration statement or prospectus
and shall not file any thereof to which any such seller shall have
reasonably objected on the grounds that such amendment or supplement does
not comply in all material respects with the requirements of the Securities
Act or of the rules or regulations thereunder;
(ix) provide and cause to be maintained a transfer agent and registrar
for all Registrable Securities covered by such registration statement from
and after a date not later than the effective date of such registration
statement;
(x) use its best efforts to cause all Registrable Securities covered
by such registration statement to be listed on any securities exchange on
which any of the Registrable Securities are then listed or to be quoted by
the Nasdaq National Market or Nasdaq SmallCap Market (or any successor
thereto or any comparable system) on which any of the Registrable
Securities are then quoted; and
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(xi) enter into such agreements and take such other actions as the
Requisite Holders shall reasonably request in order to expedite or
facilitate the disposition of such Registrable Securities.
The Company may require each seller of Registrable Securities as to which any
registration is being effected to furnish the Company such information regarding
such seller and the distribution of such securities as the Company may from time
to time reasonably request in writing.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that upon receipt of any notice from the Company of the
happening of any event of the kind described in the subdivision (vii) of this
Section 2.3, such holder will forthwith discontinue such holder's disposition of
Registrable Securities pursuant to the registration statement relating to such
Registrable Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by subdivision (vii) of this
Section 2.3.
2.4 UNDERWRITTEN OFFERINGS.
(a) REQUESTED UNDERWRITTEN OFFERINGS. If requested by the
underwriters for any underwritten offering of Registrable Securities pursuant to
a registration requested under Section 2.1, 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 holder of such Registrable
Securities (or Warrants therefor) 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 2.7. 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 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.
(b) INCIDENTAL UNDERWRITTEN OFFERINGS. If the Company at any time
proposes to register any of its securities under the Securities Act as
contemplated by Section 2.2 and such securities are to be distributed by or
through one or more underwriters, the Company will, if requested by any holder
of Warrants or Registrable Securities as provided in Section 2.2 and subject to
the provisions of Section 2.2(b), arrange for such underwriters to include all
the Registrable Securities to be offered and sold by such holder among the
securities to be distributed by such underwriters. The holders of Registrable
Securities to be distributed by such underwriters shall be
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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 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 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.
2.5. PREPARATION; REASONABLE INVESTIGATION. In connection with the
preparation and filing of each registration statement under the Securities Act
pursuant to this Agreement, the Company will give the holders of Registrable
Securities registered under such registration statement (or the holders of
Warrants therefor), their underwriters, if any, and their respective counsel and
accountants, the opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, and will give each
of them such access to its books and records and such opportunities to discuss
the business of the Company with its officers and the independent public
accountants who have certified its financial statements as shall be necessary,
in the opinion of such holders' and such underwriters' respective counsel, to
conduct a reasonable investigation within the meaning of the Securities Act.
2.6. RIGHTS OF REQUESTING HOLDERS. The Company will not file any
registration statement under the Securities Act, unless it shall first have
given to all holders of Warrants or Registrable Securities at least 30 days
prior written notice thereof and, if so requested by the Requisite Holders,
shall have consulted with such holders concerning the selection of underwriters,
counsel and independent accountants for the Company for such offering and
registration. If such holders shall so request within 30 days after such
notice, each of them shall be a "Requesting Holder" hereunder and shall have the
rights of a Requesting Holder provided in this section 2.6 and in sections 2.3,
2.5 and 2.7. The Company further covenants that a Requesting Holder shall have
the right (a) to participate in the preparation of any such registration or
comparable statement and to require the insertion therein of material furnished
to the Company in writing, which in such Requesting Holder's judgment should be
included, and (b) at the Company's expense, to retain counsel and/or independent
public accountants to assist such Requesting Holder in such participation. In
addition, if any such registration statement refers to any Requesting Holder by
name or otherwise as the holder of any securities of the Company, then such
Requesting Holder shall have the right to require (a) the insertion therein of
language, in form and substance satisfactory to such Requesting Holder, to the
effect that the holding by such Requesting Holder of such securities does not
necessarily make such Requesting Holder a "controlling person" of the Company
within the meaning of the Securities Act and is not to be construed as a
recommendation by such Requesting Holder of the investment quality of the
Company's debt or equity securities covered
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thereby and that such holding does not imply that such Requesting Holder will
assist in meeting any future financial requirements of the Company, or (b) in
the event that such reference to such Requesting Holder by name or otherwise is
not required by the Securities Act or any rules and regulations promulgated
thereunder, the deletion of the reference to such Requesting Holder.
2.7. INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. In the event of any registration
of any securities of the Company under the Securities Act, the Company will,
and hereby does, (i) in the case of any registration statement filed pursuant
to Section 2.1 or 2.2 indemnify and hold harmless the seller of any
Registrable Securities covered by such registration statement, its directors
and officers, each other Person who participates as an underwriter in the
offering or sale of such securities and each other Person, if any, who
controls such seller or any such underwriter within the meaning of the
Securities Act, and (ii) in the case of any registration statement of the
Company, indemnify and hold harmless any Requesting Holder, its directors and
officers and each other Person, if any, who controls such Requesting Holder
within the meaning of the Securities Act, in each case against any losses,
claims, damages or liabilities, joint or several, to which such seller or
Requesting Holder or any such director or officer or underwriter or
controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, or any other noncompliance or alleged
noncompliance with the Securities Act or the applicable underwriting
agreement, and the Company will reimburse such seller, such Requesting Holder
and each such director, officer, underwriter and controlling person for any
legal or any other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, liability, action or
proceeding; PROVIDED that the Company shall not be liable in any such case to
the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement, any such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement in reliance upon and
in conformity with written information furnished to the Company through an
instrument duly executed by such seller or Requesting Holder, as the case may
be, specifically stating that it is for use in the preparation thereof and,
PROVIDED FURTHER that the Company shall not be liable to any Person who
participates as an underwriter, in the offering or sale of Registrable
Securities or any other Person, if any, who controls such underwriter within
the meaning of the Securities Act, in any such case to the extent that any
such loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of such Person's failure to send or give a
copy of the final prospectus, as the same may be then supplemented or
amended, to the Person asserting an untrue statement or alleged untrue
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statement or omission or alleged omission at or prior to the written
confirmation of the sale of Registrable Securities to such Person if such
statement or omission was corrected in such final prospectus. Such indemnity
shall remain in full force and effect regardless of any investigation made by
or on behalf of such seller or any such director, officer, underwriter or
controlling person and shall survive the transfer of such securities by such
seller.
(b) INDEMNIFICATION BY THE SELLERS. The Company may require, as a
condition to including any Registrable Securities in any registration statement
filed pursuant to Section 2.3, that the Company shall have received an
undertaking satisfactory to it from the prospective seller of such securities,
to indemnify and hold harmless (in the same manner and to the same extent as set
forth in subdivision (a) of this Section 2.7) the Company, each director of the
Company, each officer of the Company and each other Person, if any, who controls
the Company within the meaning of the Securities Act, with respect to any
statement or alleged statement in or omission or alleged omission from such
registration statement, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, if such
statement or alleged statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to the
Company through an instrument duly executed by such seller specifically stating
that it is for use in the preparation of such registration statement,
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement. Such indemnity shall remain in full force and effect, regardless of
any investigation made by or on behalf of the Company or any such director,
officer or controlling Person and shall survive the transfer of such securities
by such seller.
(c) NOTICES OF CLAIMS, ETC. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding subdivisions of this Section 2.7, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the latter of the commencement of
such action, PROVIDED that the failure of any indemnified party to give notice
as provided herein shall not relieve the indemnifying party of its obligations
under the preceding subdivisions of this Section 2.7, except to the extent that
the indemnifying party is actually prejudiced by such failure to give notice.
In case any such action is brought against an indemnified party, unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such claim, the
indemnifying party shall be entitled to participate in and to assume the defense
thereof, jointly with any other indemnifying party similarly notified to the
extent that it may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation. No indemnifying
party shall, without the consent of the indemnified party, consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation.
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(d) OTHER INDEMNIFICATION. Indemnification similar to that specified
in the preceding subdivisions of this Section 2.7 (with appropriate
modifications) shall be given by the Company and each seller of Registrable
Securities with respect to any required registration or other qualification of
securities under any Federal or state law or regulation of any governmental
authority other than the Securities Act.
(e) INDEMNIFICATION PAYMENTS. The indemnification required by this
Section 2.7 shall be made by periodic payments of the amount thereof during the
course of the investigation or defense as and when bills are received or
expense, loss, damage or liability is incurred.
2.8. ADJUSTMENTS AFFECTING REGISTRABLE SECURITIES. The Company will
not effect or permit to occur any combination or subdivision of shares which
would adversely affect the ability of the holders of Registrable Securities or
Warrants therefor to include such Registrable Securities in any registration of
its securities contemplated by this Section 2 or the marketability of such
Registrable Securities under any such registration.
3. DEFINITIONS. As used herein, unless the context otherwise requires,
the following terms have the following respective meanings:
COMMISSION: The Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act.
COMMON STOCK: As defined in Section 1.
COMPANY: As defined in the introductory paragraph of this Agreement.
EXCHANGE ACT: The Securities Exchange Act of 1934, or any similar
Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Securities Exchange Act of 1934 shall include a
reference to the comparable section, if any, of any such similar Federal
statute.
OUACHITA SECURITIES: (a) Those certain 7,600,000 shares of Common
Stock issued by the Company pursuant to the Agreement and Plan of Merger,
dated as of May 15, 1997 and as amended by the First Amendment to Agreement
and Plan of Merger dated as of July 30, 1997, by and among the Company, OEC
Acquisition Corporation, Ouachita Energy Corporation and Xxxxxx X. Xxxxx,
and (b) any securities issued or issuable with respect to any such Common
Stock by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization or otherwise. As to any particular Ouachita Securities,
once issued such securities shall cease to be Ouachita Securities when (a)
a registration statement with respect to the sale of such securities shall
have become effective under the Securities Act and such securities shall
have been disposed of in accordance with such registration statement, (b)
they shall have been
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distributed to the public pursuant to Rule 144 (or any successor provision)
under the Securities Act, (c) they shall have been otherwise transferred,
new certificates for them not bearing a legend restricting further transfer
shall have been delivered by the Company and subsequent disposition of them
shall not require registration or qualification of them under the
Securities Act or any similar state law then in force, or (d) they shall
have ceased to be outstanding.
PERSON: A corporation, an association, a partnership, a business, an
individual, a governmental or political subdivision thereof or a
governmental agency.
PURCHASE AGREEMENT: As defined in Section 1.
PURCHASER: As defined in the introductory paragraph of this
Agreement.
REGISTRABLE SECURITIES: (a) Any shares of Common Stock issued or
issuable upon exercise of any of the Warrants and (b) any securities issued
or issuable with respect to any such Common Stock by way of stock dividend
or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or
otherwise. As to any particular Registrable Securities, once issued such
securities shall cease to be Registrable Securities when (a) a registration
statement with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have been
disposed of in accordance with such registration statement, (b) they shall
have been distributed to the public pursuant to Rule 144 (or any successor
provision) under the Securities Act, (c) they shall have been otherwise
transferred, new certificates for them not bearing a legend restricting
further transfer shall have been delivered by the Company and subsequent
disposition of them shall not require registration or qualification of them
under the Securities Act or any similar state law then in force, or (d)
they shall have ceased to be outstanding.
REGISTRATION EXPENSES: All expenses incident to the Company's
performance of or compliance with Section 2, including, without limitation,
all registration, filing and National Association of Securities Dealers
fees, all fees and expenses of complying with securities or blue sky laws,
all word processing, duplicating and printing expenses, messenger and
delivery expenses, the fees and disbursements of counsel for the Company
and of its independent public accountants, including the expenses of any
special audits or "cold comfort" letters required by or incident to such
performance and compliance, the fees and disbursements incurred by the
holders of Registrable Securities to be registered and the holders of
Warrants therefor (including the fees and disbursements of any counsel and
accountants retained by the Requisite Holders), premiums and other costs of
policies of insurance against liabilities arising out of the public
offering of the Registrable Securities being registered and any fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities, but excluding underwriting discounts and commissions and
transfer
13
taxes, if any, PROVIDED that, in any case where Registration Expenses are
not to be borne by the Company, such expenses shall not include salaries of
Company personnel or general overhead expenses of the Company, auditing
fees, premiums or other expenses relating to liability insurance required
by underwriters of the Company or other expenses for the preparation of
financial statements or other data normally prepared by the Company in the
ordinary course of its business or which the Company would have incurred in
any event.
REQUESTING HOLDER: As defined in Section 2.6.
REQUISITE HOLDERS: With respect to any registration of Registrable
Securities by the Company pursuant to Section 2, any holder or holders of
66 2/3% (by number of shares) of the Registrable Securities to be so
registered or of Warrants for such Registrable Securities.
SECURITIES ACT: The Securities Act of 1933, or any similar Federal
statute, and the rules and regulations of the Commission thereunder, all as
of the same shall be in effect at the time. References to a particular
section of the Securities Act of 1933 shall include a reference to the
comparable section, if any, of any such similar Federal Statute.
4. RULE 144: If the Company shall have filed a registration statement
pursuant to the requirements of Section 12 of the Exchange Act or a registration
statement pursuant to the requirements of the Securities Act, the Company will
file the reports required to be filed by it under the Securities Act and the
Exchange Act and the rules and regulations adopted by the Commission thereunder
(or, if the Company is not required to file such reports, will, upon the request
of any holder of Warrants or Registrable Securities, make publicly available
other information) and will take such further action as any holder of Warrants
or Registrable Securities may reasonably request, all to the extent required
from time to time to enable such holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (a) Rule 144 under the Securities Act, as such Rule may be amended
from time to time or (b) any similar rule or regulation hereafter adopted by the
Commission. Upon the request of any holder of Warrants or Registrable
Securities, the Company will deliver to such holder a written statement as to
whether it has complied with such requirements.
5. AMENDMENTS AND WAIVERS. This Agreement may be amended and the Company
may take any action herein prohibited or omit to perform any act herein required
to be performed by it, only if the Company shall have obtained the written
consent to such amendment, action or omission to act, of the Requisite Holders.
Each holder of any Warrants or Registrable Securities at the time or thereafter
outstanding shall be bound by any consent authorized by this Section 5, whether
or not such Registrable Securities shall have been marked to indicate such
consent.
6. NOMINEES FOR BENEFICIAL OWNERS. In the event that any Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election, be treated as the holder of such
Warrants or Registrable Securities for purposes of any request or other
14
action by any holder or holders of Warrants or Registrable Securities pursuant
to this Agreement or any determination of any number or percentage of shares of
Warrants or Registrable Securities held by any holder or holders of Warrants or
Registrable Securities contemplated by this Agreement. If the beneficial owner
of any Warrants or Registrable Securities so elects, the Company may require
assurances reasonably satisfactory to it of such owner's beneficial ownership of
such Warrants or Registrable Securities.
7. NOTICES. All communications provided for hereunder shall be sent by
first-class mail and (a) if addressed to a party other than the Company,
addressed to such party in the manner set forth in the Purchase Agreement, or at
such other address as such party shall have furnished to the Company in writing,
or (b) if addressed to the Company, at 0000 Xxxxx Xxxxxxx Xxxx, Xxxxx 000,
Xxxxxx, Xxxxx 00000, Attention: Chief Financial Officer, with a courtesy copy
(which shall not constitute notice) to Schlanger, Mills, Xxxxx & Xxxxxxxxx,
L.L.P., 0000 Xxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000, Attention: Xxxx
Xxxxxxxxx, or at such other address, or to the attention of such other officer,
as the Company shall have furnished to each holder of Warrants or Registrable
Securities at the time outstanding; provided, HOWEVER, that any such
communication to the Company may also, at the option of any of the parties
hereunder, be either delivered to the Company at its address set forth above or
to any officer of the Company.
8. ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
successors and assigns. In addition, and whether or not any express assignment
shall have been made, the provisions of this Agreement which are for the benefit
of the parties hereto other than the Company shall also be for the benefit of
and enforceable by any subsequent holder of any Warrants or Registrable
Securities, subject to the provisions respecting the minimum numbers or
percentages of shares of Warrants or Registrable Securities required in order to
be entitled to certain rights, or take certain actions contained herein.
9. DESCRIPTIVE HEADINGS. The descriptive headings of the several
sections and paragraphs of this Agreement are inserted for reference only and
shall not limit or otherwise affect the meaning hereof.
10. SPECIFIC PERFORMANCE. The parties hereto recognize and agree that
money damages may be insufficient to compensate the holders of any Warrants or
Registrable Securities for breaches by the Company of the terms hereof and,
consequently, that the equitable remedy of specific performance of the terms
hereof will be available in the event of any such breach.
11. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of New York.
15
12. COUNTERPARTS. This Agreement may be executed simultaneously in any
number of counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
EQUITY COMPRESSION SERVICES CORPORATION
By:
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Title:
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
By:
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Title:
