REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of August 6, 1997, between
EQUITY COMPRESSION SERVICES CORPORATION, an Oklahoma corporation (the
"COMPANY"), and each of the persons that is a signatory hereto (the
"STOCKHOLDERS").
1. BACKGROUND. The Company, OEC Acquisition Corporation, a Delaware
corporation, Ouachita Energy Corporation, a Louisiana corporation, and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇ have entered into that certain Agreement and Plan of Merger, dated as of
May 15, 1997 and as amended by that certain First Amendment to Agreement and
Plan of Merger dated as of July 30, 1997 (as amended, the "MERGER AGREEMENT"),
pursuant to which the Company has agreed, among other things, to issue and sell
an aggregate of 7,600,000 shares of the Company's Common Stock, par value $0.01
per share (the "COMMON STOCK") to the Stockholders.
2. REGISTRATION UNDER SECURITIES ACT, ETC.
2.1. REGISTRATION ON REQUEST.
(a) REQUEST BY HOLDERS OF REGISTRABLE SECURITIES. At any time after
August 1, 1999, the Majority Holders 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
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 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.
(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 (i) the managing underwriter of
such offering shall have advised each holder of Registrable Securities to be
covered by such registration in writing that the inclusion of such other
securities would not adversely affect such offering or (ii) the holders of all
Registrable Securities to be covered by such registration shall have consented
in writing to the inclusion of such other securities; PROVIDED, HOWEVER, that in
the event holders of Warrant Securities request to have any of their Warrant
Securities registered in connection with such underwritten offering in
accordance with Section 2.2(a) of that certain Registration Rights Agreement
dated as of ___________, 1997 between the Company and The Prudential Insurance
Company of America, such 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 Majority 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 shall reasonably request.
(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 10% (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 Majority 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.
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(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 Majority 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.
(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
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
Majority 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 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.
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The holders of 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
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 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 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.
(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 Registrable Securities requesting such registration by letter of its
belief that the number of
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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;
(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
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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 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
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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
(xi) enter into such agreements and take such other actions as the
Majority 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
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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 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 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 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.
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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, 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 Registrable Securities at least 30 days prior written
notice thereof and, if so requested by the Majority 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 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
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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 non-compliance or alleged
non-compliance with the Securities Act or the 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 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,
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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.
(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.
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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 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.
HOLDER: Means the holder of any Registrable Securities, which
includes the original Holders and any assignee or transferee of Registrable
Securities.
MAJORITY HOLDERS: Means Holders holding in the aggregate fifty-one
percent (51%) or more of the total number of shares of Registrable
Securities at the time of such determination.
PERSON: A corporation, an association, a partnership, a business, an
individual, a governmental or political subdivision thereof or a
governmental agency.
MERGER AGREEMENT: As defined in Section 1.
REGISTRABLE SECURITIES: (a) The shares of Common Stock acquired by
the Stockholders pursuant to the Merger Agreement 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
12
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 (including the fees and
disbursements of any counsel and accountants retained by the Majority
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 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.
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.
STOCKHOLDERS: As defined in the introductory paragraph of this
Agreement.
WARRANT SECURITIES: (a) Any shares of Common Stock issued or issuable
upon exercise of any of the Common Stock Purchase Warrants Expiring
____________, 2007 issued in connection with that certain Subordinated Note
and Warrant Purchase Agreement dated as of __________, 1997 between the
Company and the Prudential Insurance Company of America 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 the combination of
shares, recapitalization, merger, consolidation or other reorganization
13
or otherwise. As to any particular Warrant Securities, once issued such
securities shall cease to be Warrant 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.
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 Registrable Securities, make publicly available other
information) and will take such further action as any holder of 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 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 Majority Holders.
Each holder of any 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
Registrable Securities for purposes of any request or other action by any holder
or holders of Registrable Securities pursuant to this Agreement or any
determination of any number or percentage of shares of Registrable Securities
held by any holder or holders of Registrable Securities contemplated by this
Agreement. If the beneficial owner of any Registrable Securities so elects, the
Company may require assurances reasonably satisfactory to it of such owner's
beneficial ownership of such Registrable Securities.
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7. NOTICES. All communications provided for hereunder shall be in
writing and sent by first-class mail and (a) if addressed to any Holder,
addressed to such Holder at the address of such Holder set forth on the
signature page hereof, or at such other address as such party shall have
furnished to the Company in writing, or (b) if addressed to the Company, at ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: Chief Financial
Officer, with a courtesy copy to Schlanger, Mills, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, L.L.P.,
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
or at such other address, or to the attention of such other officer, as the
Company shall have furnished to each holder of 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 Registrable Securities, subject
to the provisions respecting the minimum numbers or percentages of shares of
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 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 Texas.
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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS.]
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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:
---------------------------
Name:
Title:
STOCKHOLDERS:
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