Exhibit 7
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT dated as of December 30,
1997 (this "Agreement") by and between PRIDE COMPANIES, L.P., a Delaware limited
partnership (the "Company") and VARDE PARTNERS, INC.
("Varde").
WITNESSETH:
WHEREAS, Varde has the right to acquire common limited
partnership units of the Company ("Common Units") under certain circumstances
pursuant to the conversion of the New Preferred Unit B and the New Preferred
Unit C, as such terms are defined in that certain Restructuring and Override
Agreement dated December 30, 1997 (the "Restructuring Agreement"), by and among
the Company, Pride Refining, Inc., Pride SGP, Inc. and Varde, and upon the
exercise of those certain Warrants to Purchase Common Units, each dated as of
December 31, 1996, issued by the Company to each of NationsBank of Texas, N.A.
and Bank One, Texas, N.A., and assigned to Varde (collectively, the "Convertible
Securities");
WHEREAS, the ability of Varde to freely trade the Common Units
received upon exercise or conversion of the Convertible Securities may be
limited by applicable United States federal securities laws;
WHEREAS, in order to improve the transferability of the Common
Units to be received by Varde, the Company is willing to provide certain
registration rights with respect to Common Units that may be acquired by Varde,
on the terms and subject to the conditions herein;
WHEREAS, Varde is willing to agree to certain restrictions on
the transfer of Common Units that may be acquired by Varde, on the terms and
subject to the conditions herein; and
NOW, THEREFORE, in consideration of the premises and the
mutual terms, covenants and conditions herein contained, and intending to be
legally bound hereby, the parties agree as follows:
ARTICLE I
REGISTRATION RIGHTS
The Company and Varde covenant and agree as follows:
1.1 Definitions. For purposes of this Agreement:
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The terms "register," "registered" and "registration" refer to
a registration of securities effected by preparing and filing a registration
statement or similar document in compliance with the Securities Act, and the
declaration or ordering of effectiveness of such registration statement or
document.
"Commission" means the Securities and Exchange Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Holder" means any Person owning or having the right to
acquire Registrable Securities, whether or not such acquisition has actually
been effected and disregarding any legal restrictions upon the exercise of such
right.
"Managing General Partner" means the corporation or other
entity designated to serve as managing general partner of the Company pursuant
to the Third Amended and Restated Agreement of Limited Partnership of the
Company, effective as of [ ], as such agreement may be amended from time to
time.
"Person" means an individual, partnership, corporation,
limited liability company, trust or unincorporated organization, or a government
or agency or political subdivision thereof.
"Reasonable Efforts" means a Person's best efforts in
accordance with reasonable commercial practice and without the incurrence of
unreasonable expense.
"Registrable Securities" means, at any time, Common Units held
by a Holder or that any Holder has the present right to receive, that were
issued or are issuable (i) upon exercise or conversion of the Convertible
Securities, (ii) upon the exercise or conversion of any other warrants or rights
to purchase Common Units, or any securities or other instruments convertible
into Common Units, that shall have been issued or granted to a Holder by the
Company, (iii) directly to a Holder by the Company, regardless of the reason for
or nature of the issuance, or (iv) as a distribution with respect to, or in
exchange for or in replacement of, Registrable Securities held by it.
"Restricted Securities" means the Registrable Securities upon
original issuance thereof, subject to the provisions of Section 1.2 hereof.
"Securities Act" means the Securities Act of 1933, as amended.
1.2 Securities Subject to this Agreement. The securities
entitled to the benefits of this Agreement are the Registrable Securities but
with respect to any particular Registrable Security, only so long as such
security continues to be a Restricted Security. A Registrable Security ceases to
be a Restricted Security when
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(a) it has been effectively registered under the Securities Act and disposed of
in accordance with the registration statement covering it, (b) it has been
publicly sold pursuant to Rule 144 (or any similar rule then in effect), or (c)
all restrictions on transfer thereof (including the restrictions imposed under
Article II hereof and the volume and other limitations of Rule 144) other than
those provided under Rule 144(k) have terminated and such Registrable Securities
are freely tradeable by the Holder without restriction or limitation (except as
contemplated by Rule 144(k)) under the Securities Act.
1.3 Demand Registration.
(a) If the Company shall receive, at any time
after the date of this Agreement, a written request from one or more Holders
holding, or having the present right to acquire, at the time of the request at
least 51% of the Registrable Securities, that the Company file a registration
statement under the Securities Act covering the registration of all or part of
the Registrable Securities, then the Company shall (i) if such request is
received from fewer than all Holders, give prompt written notice of such
requested registration to all other Holders, so that such other Holders shall
have the opportunity to join in such request, and (ii) subject to the
limitations of Sections 1.3(c) and (e), 1.5 and 1.7 hereof, within 30 days of
the receipt by the Company of such written request, file a registration
statement on any appropriate form under the Securities Act. The Company agrees
to use its Reasonable Efforts to cause such registration statement to be
declared effective as promptly as practicable and to keep it effective for such
period of time as may be necessary to permit the consummation of the offering of
the Registrable Securities covered thereby.
(b) The Registrable Securities registered
pursuant to this Section 1.3 may, at the option of the Holders holding at least
51% of the Registrable Securities being registered, be offered and sold in firm
commitment underwritten offerings. The underwriter or underwriters conducting
such offerings shall be selected by the Holder or Holders holding at least 51%
of the Registrable Securities being registered; provided, that the managing
underwriters in connection with each such offering shall be nationally
recognized as underwriters of securities.
(c) The Company is obligated to effect two
registrations pursuant to this Section 1.3 (in addition to any registrations in
which the Holders may participate pursuant to the other provisions of this
Agreement), one of which may be, at the option of the Holders holding at least
51% of the Registrable Securities being registered, a shelf registration which
shall be required to be effective for a period of one year. A registration shall
not be deemed to have been effected unless it has become effective and remained
effective until the Registrable Securities registered under such registration
statement have been sold.
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(d) Other than the Registrable Securities, no
securities (including without limitation any securities with respect to which
any Person has any rights under the agreement referred to in the last sentence
of Section 1.11 hereof) shall be included among the securities covered by a
registration effected pursuant to this Section 1.3 unless (i) the Holder or
Holders holding 51% of the Registrable Securities to be covered thereby shall
have consented in writing to the inclusion of such other securities or (ii) the
managing underwriters of the offering shall have advised such Holder or Holders
in writing that the inclusion of such other securities would not adversely
affect such offering or the subsequent trading market or market price for the
Common Units.
(e) Notwithstanding the foregoing, the Company
shall not be required to register any Registrable Securities pursuant to this
Section 1.3: (i) during a reasonable period of time, not to exceed 120 days,
following the initial distribution of securities by the Company pursuant to a
registered underwritten public offering if such offering was commenced prior to
the time the Company receives the request contemplated by Section 1.3(a), or
(ii) during a reasonable period of time, not to exceed 60 days, with respect to
which the Board of Directors of the Managing General Partner has determined that
a registration of Registrable Securities pursuant to this Section 1.3 would
adversely affect the Company because of a material non-public acquisition or
similar material transaction that is pending at the time the Company receives
the request contemplated by Section 1.3(a).
1.4 Company Registration. If at any time, the Company proposes
to register any Common Units for sale (a "Company Registration") under the
Securities Act (other than registration of Common Units solely for issuance or
sale (a) pursuant to Section 1.3 hereof or (b) in connection with (i) employee
compensation or benefit programs, (ii) an exchange offer or an offering of
securities solely to the existing holders of Common Units, (iii) an acquisition,
merger, exchange offer or other business combination, including any transaction
within the scope of Rule 145 promulgated pursuant to the Securities Act, using a
registration statement on Form S- 4 or any successor form), or (iv) a dividend
reinvestment plan, the Company will give prompt written notice (which, in any
event, shall be given no less than 20 days prior to the filing of a registration
statement with respect to such Company Registration) to each Holder of its
intention so to do and, upon the written request of a Holder or Holders sent
within 15 days after the effective date of any such notice, the Company will,
subject to the provisions of Sections 1.5 and 1.7 hereof, use its Reasonable
Efforts to cause all Registrable Securities as to which the Holder or Holders
shall have so requested registration to be registered under the Securities Act,
all to the extent necessary to permit the sale in such offering of the
Registrable Securities so registered on behalf of the Holder or Holders in the
same manner as the Company proposes to offer its Common Units; provided,
however, that such Registrable Securities shall be included in a Company
Registration only as follows:
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(1) Any over-allotment option exercised by the
underwriters in connection with a Company Registration shall be exercised only
with respect to Registrable Securities, to the extent that the Holders have
requested that Registrable Securities be included in the Company Registration;
and
(2) If the number of Common Units that can be
included in any Company Registration without materially and adversely affecting
the offering, as determined by the managing underwriters for the offering,
exceeds the number of Common Units proposed to be offered by the Company in such
offering, the Holders shall have the right to include Registrable Securities in
such offering pursuant to this Section 1.4 to the full extent of such excess,
prior to the inclusion in the offering of any Common Units held by any other
Person (including without limitation any Common Units with respect to which any
Person has any rights under the agreement referred to in the last sentence of
Section 1.11 hereof).
In the event that the Holders request the inclusion in any
Company Registration of more Registrable Securities than can be included therein
in accordance with this Section 1.4, the respective number of Registrable
Securities offered for sale by the Holders in the offering shall be determined
on a pro rata basis, in proportion to the number of Registrable Securities that
each requesting Holder then owns or has the present right to acquire.
Subject to the foregoing, the Company shall use its Reasonable
Efforts to cause the managing underwriters in connection with any Company
Registration to permit the Registrable Securities requested by the Holders to be
included in such Company Registration to be included to the full extent
requested by the Holders and on the same terms and conditions as the Common
Units of the Company included therein.
No registration of Registrable Securities under this Section
1.4 shall relieve the Company of its obligations to effect the registration of
Registrable Securities upon the request of the Holders in accordance with
Section 1.3.
1.5 Obligations of the Company. If and whenever the Company is
required by the provisions of this Agreement to effect the registration of any
Registrable Securities, the Company shall as expeditiously as reasonably
possible:
(a) Prepare and file with the Commission a
registration statement on an appropriate form under the Securities Act and use
its Reasonable Efforts to cause such registration statement to become effective;
provided, that before filing a registration statement or prospectus or any
amendments or supplements thereto, including documents incorporated by reference
after the initial filing of any registration statement, as soon as practicable,
the Company will make available to the Holders and the underwriters copies of
all such documents proposed to be filed, which documents will be subject to the
review of the Holders and the underwriters,
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and the Company will not file any registration statement or amendment thereto,
or any prospectus or any supplement thereto (including such documents
incorporated by reference) to which the Holders or the underwriters shall
reasonably object in the light of the requirements of the Securities Act or any
other applicable laws or regulations.
(b) Prepare and file with the Commission such
amendments and post-effective amendments to a registration statement as may be
necessary to keep such registration statement effective until completion of the
offering; cause the related prospectus to be filed pursuant to Rule 424(b) under
the Securities Act; cause such prospectus to be supplemented by any required
prospectus supplement and, as so supplemented, to be filed pursuant to Rule
424(b) under the Securities Act; and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement during the applicable period in accordance with the
intended methods of disposition set forth in such registration statement or
supplement to such prospectus.
(c) Notify the Holders and the managing
underwriters promptly, and (if requested by any such Person) confirm such advice
in writing, (i) when a prospectus or any prospectus supplement or post-effective
amendment has been filed, and, with respect to a registration statement or any
post-effective amendment, when the same has become effective, (ii) of any
written request by the Commission for amendments or supplements to a
registration statement or related prospectus or for additional information,
(iii) of the issuance by the Commission of any stop order suspending the
effectiveness of a registration statement or the initiation of any proceeding
for that purpose, (iv) if at any time the representations and warranties of the
Company contemplated by Section 1.5(l) cease to be true and correct, (v) of the
receipt by the Company of any notification with respect to the suspension of
qualification of any of the Registrable Securities for sale in any jurisdiction
or the initiation of any proceeding for such purpose, (vi) of the happening of
any event which requires the making of any changes in a registration statement
or related prospectus so that such documents will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading and (vii) of the Company's reasonable determination that a
post-effective amendment to a registration statement would be appropriate or
that there exist circumstances not yet disclosed to the public which make
further sales under such registration statement inadvisable pending such
disclosures and post-effective amendment.
(d) Use its Reasonable Efforts to obtain the
withdrawal of any order suspending the effectiveness of a registration
statement, or the lifting of any suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction, at the earliest possible
moment.
(e) If requested by the managing underwriters or
the Holders, immediately incorporate in a prospectus supplement or
post-effective
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amendment such information as the managing underwriters and the Holders agree
should be included therein relating to such sale and distribution of Registrable
Securities, including, without limitation, information with respect to the
number of Registrable Securities being sold to such underwriters and the
purchase price being paid therefor by such underwriters and with respect to any
other terms of the offering of the Registrable Securities to be sold in such
offering; make all required filings of such prospectus supplement or
post-effective amendment as soon as practicable after being notified of the
matters to be incorporated in such prospectus supplement or post-effective
amendment; and supplement or make amendments to any registration statement
necessary in order that such registration statement not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading if requested by the Holders or any underwriter of such Registrable
Securities.
(f) Furnish to the Holders and each managing
underwriter, without charge, at least one copy of the registration statement,
any post-effective amendment thereto, including financial statements and
schedules, all documents incorporated therein by reference and all exhibits
(including those incorporated by reference).
(g) Deliver without charge to the Holders and
the underwriters as many copies of the prospectus or prospectuses (including
each preliminary prospectus) and any amendment or supplement thereto as such
Persons may reasonably request; and the Company consents to the use of such
prospectuses and any amendments or supplements thereto by the Holders and the
underwriters in connection with the offer and sale of the Registrable Securities
covered by such prospectuses, amendments or supplements.
(h) Prior to any public offering of Registrable
Securities, register or qualify or cooperate with the Holders, the underwriters,
and respective counsel in connection with the registration or qualification of
such Registrable Securities for offer and sale under the securities or Blue Sky
laws of such jurisdictions as the Holders or an underwriter reasonably requests
in writing; keep each such registration or qualification effective during the
period such registration statement is required to be kept effective and do any
and all other acts or things necessary or advisable to enable the disposition in
such jurisdictions of the Registrable Securities covered by the applicable
registration statement; provided, however, that the Company will not be required
in connection therewith or as a condition thereto to qualify generally to do
business or subject itself to general service of process in any such
jurisdiction where it is not then so subject.
(i) Cooperate with the Holders and the managing
underwriters to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold and not bearing any restrictive
legends; and enable such Registrable Securities to be in such denominations and
registered in
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such names as the managing underwriters may request at least two business days
prior to any sale of Registrable Securities to the underwriters.
(j) Use its Reasonable Efforts to cause the
Registrable Securities covered by the applicable registration statement to be
registered with or approved by such other governmental agencies or authorities,
if any, as may be necessary to consummate the disposition of such Registrable
Securities.
(k) Upon the occurrence of any event
contemplated by Section 1.5(c) (ii) - (vii) above, prepare a supplement or
post-effective amendment to the applicable registration statement or related
prospectus or any document incorporated therein by reference or file any other
required document so that, as thereafter delivered to the purchaser of the
Registrable Securities being sold thereunder, such prospectus will not contain
an untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading.
(l) Enter into such agreements and take all such
actions as shall be necessary to expedite or facilitate the disposition of such
Registrable Securities, and in such connection: (i) make such representations
and warranties to the Holders and underwriters with respect to the registration
statement, prospectus and documents incorporated by reference, if any, in form,
substance and scope as are customarily made by issuers to underwriters in
underwritten offerings and confirm the same if and when requested; (ii) obtain
opinions of counsel to the Company and updates thereof with respect to the
registration statement and the prospectus in the form, scope and substance which
are customarily delivered in underwritten offerings; (iii) enter into an
underwriting agreement in form, scope and substance as is customary in
underwritten offerings and obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the managing underwriters and the Holders addressed
to the Holders and the underwriters covering the matters customarily covered in
opinions delivered in underwritten offerings and such other matters as may be
reasonably requested by the Holders and such underwriters; (iv) obtain "cold
comfort" letters and updates thereof from the Company's independent certified
public accountants addressed to the Holders and the underwriters, such letters
to be in customary form and covering matters of the type customarily covered in
"cold comfort" letters by accountants in connection with underwritten offerings;
(v) if requested by the underwriters, cause the appropriate officers and other
personnel of the Company or the Managing General Partner to participate in a
"road show" or other marketing efforts to the extent customary for an
underwritten offering by the Company (whether or not the Company is including
any securities in the offering); (vi) the underwriting agreement shall set forth
in full the indemnification and contribution provisions and procedures
customarily included in underwriting agreements in underwritten offerings; and
(vii) the Company shall deliver such documents and certificates as may be
requested by the Holders and the managing underwriters to evidence compliance
with
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the representations and warranties contemplated by clause (i) of this sentence
and with any customary conditions contained in the underwriting agreement or
other agreement entered into by the Company. The above shall be done at each
closing under such underwriting or other agreement or as and to the extent
required thereunder.
(m) Make available for inspection by a
representative of the Holders, the underwriters and any attorney or accountant
(the "Inspectors") retained by the Holders or such underwriters, all financial
and other records, pertinent corporate documents and properties of the Company,
and cause the officers, directors and employees of the Managing General Partner
and the Company to supply all information reasonably requested by any such
representative, underwriter, attorney or accountant in connection with such
registration; provided, however, that (A) in connection with any such
inspection, any such Inspectors shall cooperate to the extent reasonably
practicable to minimize any disruption to the operation by the Company of its
business and (B) any records, information or documents that are designated by
the Company in writing as confidential shall be kept confidential by such
Inspectors, unless (1) such records, information or documents are in the public
domain or otherwise publicly available or (2) disclosure of such records,
information or documents is required by a court or administrative order or by
applicable law.
(n) Otherwise use its Reasonable Efforts to
comply with all applicable rules and regulations of the Commission and make
generally available to its security holders earning statements satisfying the
provisions of Section 11(a) of the Securities Act, no later than the times
required by such section and the rules of the Commission adopted thereunder.
(o) Use Reasonable Efforts to cause all
Registrable Securities covered by such registration statement (i) to be listed
on a national securities exchange on which similar securities issued by the
Company are then listed, if the listing of such Registrable Securities is then
permitted under the rules of such exchange or (ii) if the Company is not
required pursuant to clause (i) above to have such securities listed, to arrange
for at least two market makers to register with the National Association of
Securities Dealers as such with respect to such Registrable Securities.
As used in this Section 1.5, the term "Holders" shall be
deemed to refer to the Holder or Holders participating in the offering, and the
use of the plural shall not be deemed to require any action to be taken by all
Holders when action by fewer than all Holders is intended or appropriate.
1.6 Expenses of Registration. In connection with any
registration effected in accordance with this Agreement, each Holder shall be
responsible for (a) all underwriting discounts and commissions deducted from the
purchase price for such Holder's Registrable Securities included in such
registration pursuant to the underwriting agreement. All other expenses incurred
in connection with any
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registration effected in accordance with this Agreement (including without
limitation the fees and expenses of the Company's counsel, the fees and expenses
of one law firm engaged by the Holders to represent them in connection with the
registration, filing and qualification fees, and printers' and accounting fees),
shall be borne and paid by the Company.
1.7 Obligations of the Holders.
(a) A Holder may not participate in any
underwritten registration under Section 1.4 hereunder unless it (i) agrees to
sell its Registrable Securities on the basis provided in any reasonable
underwriting arrangements approved by the Company and (ii) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably and customarily required under the
terms of such underwriting arrangements.
(b) In connection with any registration of
Registrable Securities, the Company may require each Holder to furnish to the
Company such information regarding itself and the distribution of such
Registrable Securities as the Company may from time to time reasonably request
in writing.
(c) Each Holder agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 1.5(c)(ii)- (vii) hereof, the Holder will forthwith discontinue
disposition of Registrable Securities covered by such registration statement or
prospectus until the Holder's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 1.5(c)(i) hereof, or until it is
advised in writing by the Company that the use of the applicable prospectus may
be resumed, and has received copies of any additional or supple mental filings
which are incorporated by reference in such prospectus, and, if so directed by
the Company, the Holder will deliver to the Company (at the Company's expense)
all copies, other than permanent file copies then in the Holder's possession, of
the prospectus covering such Registrable Securities current at the time of
receipt of such notice. If the Company shall give any such notice, the time
period mentioned in Section 1.3(a) shall be extended by the number of days
during the time period from and including the date of the giving of such notice
pursuant to Section 1.5(c) hereof to and including the date when the Holder
shall have received the copies of the supplemented or amended prospectus
contemplated by Section 1.5(c) hereof.
1.8 Indemnification. In the event any Registrable Securities
are included in a registration statement under this Agreement:
(a) To the extent permitted by law, the Company
will indemnify and hold harmless the Holders, the officers and directors of the
Holders, each underwriter of Registrable Securities and each other Person, if
any, who controls the Holders or such underwriter within the meaning of Section
15 of the Securities Act, against any losses, claims, damages, liabilities or
expenses, joint or several
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("Losses"), to which any such Person may become subject under the Securities Act
or otherwise, insofar as such Losses (or actions in respect thereof) arise out
of or are based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in any registration statement under which such
Registrable Securities were registered under the Securities Act pursuant hereto,
or any post-effective amendment thereof, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to make
the statements therein not misleading, or (ii) any untrue statement or alleged
untrue statement of a material fact contained in any preliminary prospectus, if
used prior to the effective date of the registration statement and not corrected
in the final prospectus, or contained in the final prospectus (as amended or
supplemented, if the Company shall have filed with the Commission any amendment
thereof or supplement thereto), or the omission or alleged omission therefrom of
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and will reimburse any such Person for any legal or other
expenses reasonably incurred by such Person in connection with investigating or
defending any such Loss; provided, however, that the indemnity agreement
contained in this Section 1.8(a) shall not apply to amounts paid in settlement
of any such Loss if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld); and provided
further, that the Company shall not be liable in any such case to the extent
that any such Loss arises out of or is based upon any such untrue statement or
omission or alleged untrue statement or omission which has been made in said
registration statement, preliminary prospectus, prospectus or amendment or
supplement or omitted therefrom in reliance upon and in conformity with
information furnished in writing to the Company by the Holders or such
underwriter specifically for use in the preparation thereof. Notwithstanding the
foregoing, with respect to a registration and offering under Section 1.3, the
Company shall not be liable in any such case to the extent that any such Loss
relates to Registrable Securities of a Holder and (x) to the extent that any
such Loss arises out of, or is based upon, an untrue statement or alleged untrue
statement or omission or alleged omission made in any preliminary prospectus if
(A) such Holder failed to send or deliver or cause to be sent or delivered a
copy of the prospectus included in the relevant registration statement at the
time it became effective (the "Prospectus") with or prior to the delivery of
written confirmation of the sale of Registrable Securities of such Holder to the
person asserting such Loss or who purchased such Registrable Security of such
Holder which are the subject thereof if, in either case, such delivery is
required by the Securities Act and (B) the Prospectus would have corrected such
untrue statement or omission or alleged untrue statement or alleged omission or
(y) to the extent that any such Loss arises out of, or is based upon, an untrue
statement or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact in the Prospectus, if (A) such untrue
statement or alleged untrue statement or omission or alleged omission is
corrected in any amendment or supplement to the Prospectus and (B) having
previously been furnished by or on behalf of the Company with copies of the
Prospectus as so amended or supplemented, such Holder thereafter failed to
deliver or
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cause to be delivered such Prospectus as so amended or supplemented prior to or
concurrently with the sale of Registrable Securities of such Holder if such
delivery is required by the Securities Act.
(b) To the extent permitted by law, each Holder,
severally and not jointly, will indemnify and hold harmless the Company and the
Managing General Partner and each of its directors, each of its officers who has
signed the registration statement, each Person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act, each underwriter and
each Person who controls any underwriter within the meaning of Section 15 of the
Securities Act, against any Losses to which the Company or any such Person may
become subject under the Securities Act or otherwise, and will reimburse the
Company or any such Person for any legal or other expenses reasonably incurred
by the Company or such Person in connection with investigating or defending any
such Loss, but only insofar as such Losses (or actions in respect thereof) arise
out of or are based upon any untrue statement or omission or alleged untrue
statement or omission of a material fact referred to in clause (x) or (y) of
Section 1.8(a) hereof, in each case to the extent (and only to the extent) that
such untrue statement or omission or alleged untrue statement or omission was
made in reliance upon and in conformity with information furnished in writing by
such Holder specifically for inclusion in such registration statement or
prospectus; provided, however, that the indemnity agreement of each Holder
contained in this Section 1.8(b) shall not apply to amounts paid in settlement
of any such Loss if such settlement is effected without the consent of the
Holder, which consent shall not be unreasonably withheld; and provided further,
that in no event shall the liability of any Holder exceed the net proceeds from
the sale of Registrable Securities by such Holder pursuant to such registration
statement or prospectus.
(c) Promptly after receipt by an indemnified
party under this Section 1.8 of notice of the commencement of any action
(including any governmental action), such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party under this Section
1.8, notify the indemnifying party in writing of the commencement thereof and
the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, to assume the defense thereof with
counsel mutually satisfactory to the parties; provided, however, that an
indemnified party shall have the right to retain its own counsel, with the fees
and expenses to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying party would be
inappropriate in the opinion of counsel for the indemnified party due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure so to notify
an indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
1.8, but the omission so to
13
notify the indemnifying party will not relieve it of any liability that it may
have to any indemnified party otherwise than under this Section 1.8.
(d) If the indemnification provided for in this
Section 1.8 from the indemnifying party is unavailable to an indemnified party
hereunder in respect of any losses, claims, damages, liabilities or expenses
referred to herein, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and indemnified parties in connection with the actions
which resulted in such losses, claims, damages, liabilities or expenses, as well
as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified parties shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by,
such indemnifying party or indemnified parties, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such action. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section 1.8(c) hereof, any
legal or other fees or expenses reasonably incurred by such party in connection
with any investigation or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 1.8(d) were determined by pro
rata allocation or by any other method of allocation which does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
1.9 Reports Under Exchange Act. With a view to making
available to the Holders the benefits of Rule 144 under the Securities Act and
any other rule or regulation of the Commission that may at any time permit the
Holders to sell securities of the Company to the public without registration,
the Company agrees to:
(a) file with the Commission in a timely manner
all reports and other documents required of the Company under the Securities Act
and the Exchange Act, and the rules and regulations adopted by the Commission
thereunder; and
(b) furnish to the Holders forthwith upon
request (i) a written statement by the Company as to whether it has complied
with the reporting requirements of Rule 144, (ii) a copy of the most recent
annual or quarterly report of the Company and such other reports and documents
filed by the Company pursuant to
14
the Exchange Act and (iii) such other information as may be reasonably requested
by the Holders for purposes of availing themselves of any rule or regulation of
the Commission which permits the sale of any securities without registration.
1.10 Assignment of Registration Rights.
(a) Subject to Section 1.10(b), the Registrable
Securities and rights of any Holder under this Agreement with respect to any
Registrable Securities owned by such Holder may be assigned to any person who
acquires all or a portion of a Holder's Securities from a Holder, except that
any person who acquires such Securities (i) pursuant to a public offering
registered under the Securities Act, or (ii) pursuant to a transfer made in
accordance with Rule 144 under the Securities Act (or any similar successor
provision) may not be assigned rights hereunder with respect to such Securities.
Any assignment of registration rights pursuant to this Section 1.10(a) shall be
effective upon receipt by the Company of written notice from such assigning
Holder (A) stating the name and address of any assignee, (B) describing the
manner in which the assignee acquired Securities from such Holder, and (C)
identifying the Registrable Securities with respect to which the rights under
this Agreement are being assigned.
(b) The rights of an assignee under Section
1.10(a) shall be the same rights granted to the assigning Holder under this
Agreement, except that in no event shall the Company's obligations hereunder be
increased due to any such assignment. In connection with any such assignment,
the term "Holder" as used herein shall, where appropriate to assign the rights
and obligations of the assigning Holder hereunder to such assignee, be deemed to
refer to the assignee.
1.11 Limitations on Subsequent Registration Rights. From and
after the date of this Agreement, the Company shall not, without the prior
written consent of all Holders, enter into any agreement with any holder or
prospective holder of any securities of the Company which grants registration
rights under the Securities Act on terms and conditions more favorable than or
equivalent to the rights granted to the Holders in this Agreement, or that might
adversely affect the Holders' rights hereunder. The Company is not a party to
any currently existing agreement with respect to its securities granting any
registration rights to any Person, other than that certain agreement dated March
29, 1990 (as amended) between the Company and Pride SGP, Inc.
1.12 Hold-Back Agreements.
(a) If a registration statement is filed
pursuant to Section 1.3 or 1.4 hereof, each Holder agrees not to effect any
public sale or distribution of Common Units, including a sale pursuant to Rule
144 under the Securities Act (except as part of such underwritten registration)
without the approval of the Managing General Partner during the 14-day period
prior to, and during the 90-day period
15
beginning on, the closing date of the underwritten offering made pursuant to
such registration statement, to the extent timely notified in writing by the
Company.
(b) The Company agrees (i) not to effect any
public sale or distribution of any Common Units or similar securities during the
14-day period prior to, and during the 90-day period beginning on, the effective
date of a registration statement filed pursuant to Section 1.3 or 1.4 hereof
(except as part of such underwritten registration or in connection with (A)
employee compensation or benefit programs, (B) an exchange offer or an offering
of securities solely to the existing holders of Common Units, or (C) an
acquisition, merger or other business combination using a registration statement
on Form S-4 or any successor form), and (ii) to cause each holder of its
privately placed securities purchased from the Company to agree not to effect
any public sale or distribution of any such securities during such period,
including a sale pursuant to Rule 144 under the Securities Act (except as part
of such underwritten registration, if permitted).
ARTICLE II
UNIT TRANSFER RESTRICTIONS
2.1 Initial Restriction Period. Varde agrees that during the
period beginning on the date of this Agreement and ending on the earlier to
occur of nine months from the date on which the New Preferred Unit B and New
Preferred Unit C are first issued or [September 30, 1998] (the "Initial
Restriction Period"), it will not sell any Common Units without the approval of
the Managing General Partner, except that such approval shall not be required
if:
(a) the Common Units are sold in a private
transaction;
(b) the Common Units are sold pursuant to an
effective registration statement under the Securities Act; or
(c) the average of the closing sales prices of
the Common Units on the principal stock exchange or stock market on which the
Common Units are traded for the ten most recent trading days preceding the
Varde's sale of Common Units exceeds the lower of (i) the price that is 25%
above the average of such closing sales prices of the Common Units for the 20
trading days ending 90 calendar days after completion of the Stage 1
Transactions (as defined in Section 1.1 of the Restructuring Agreement) or (ii)
the price that is necessary such that the Company's market capitalization
exceeds $[85.0 million]. For purposes of the preceding sentence, "market
capitalization" means the sum of all outstanding funded debt of the Company, the
amount of all debt converted or convertible into the New Preferred Unit B and
New Preferred Unit C and the aggregate market value (based on the most recent
reported closing sales price) of all outstanding Common Units.
16
Sales that may be made without the approval of the Managing
General Partner, as contemplated by clauses (a), (b) and (c) above, are referred
to herein as "Permitted Sales."
2.2 Second Restriction Period. Varde agrees that, during the
180-day period beginning on the date immediately following the last day of the
Initial Restriction Period, it will not sell any Common Units without the
approval of the Managing General Partner, except that such approval shall not be
required for (a) any Permitted Sales or (b) sales made as part of a block trade
involving no less than 2% of the outstanding Common Units.
2.3 Termination of Restrictions. There are no restrictions
under this Agreement on sales of Common Units by Varde following the end of the
180-day period referred to in Section 2.2, other than those restrictions imposed
under the Securities Act.
ARTICLE III
MISCELLANEOUS
3.1 Successors and Assigns; No Third Party Benefit. This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto,
their respective successors and assigns and subsequent Holders any rights or
remedies under or by reason of this Agreement, except as expressly provided in
this Agreement.
3.2 Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the substantive laws of the State of
New York, without giving effect to the principles of conflicts of law thereof.
3.3 Notices. All notices, demands or other communications
between any of the parties hereto shall be in writing. Notices delivered
personally or by telecopier shall be deemed received on the same Business Day if
delivered personally or by telecopier before 3:00 p.m. (recipient's local time)
on such day, and otherwise on the next Business Day. Any notice, demand or other
communication so addressed to the relevant parties shall be deemed to have been
received (i) if given or made by certified or registered mail, by hand delivery
or by courier service, when actually delivered to the relevant address (and such
location is open for business) and (ii) if given or made by facsimile, on the
date that the communication is received by a responsible employee of the
recipient in legible form (and being agreed that the burden of proving receipt
will be on the sender and will not be met by a transmission report generated by
the sender's facsimile machine).
17
All notices to Pride shall be given to:
Pride Companies, L.P.
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Chief Executive Officer and
General Counsel
Tel: (000) 000-0000
Fax: (000) 000-0000
All notices to MGP shall be given to:
Pride Refining, Inc.
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Chief Executive Officer and
General Counsel
Tel: (000) 000-0000
Fax: (000) 000-0000
All notices to SGP shall be given to:
Pride SGP, Inc.
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Chief Executive Officer and
General Counsel
Tel: (000) 000-0000
Fax: (000) 000-0000
All notices to Varde shall be given to:
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Varde Partners, Inc.
0000 Xxxx 00xx Xxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
3.4 Adjustments Affecting Registrable Securities. The Company
will not take any action, or permit any change to occur, with respect to the
Registrable Securities which would adversely affect the ability of the Holders
to include such Registrable Securities in a registration undertaken pursuant to
this Agreement or otherwise sell such Registrable Securities.
3.5 Amendments and Waivers. The provisions of this Agreement
may not be amended or modified in any respect unless the Company has obtained
the written consent of the Holders of at least 51% of the Registrable Securities
that are then outstanding or that a Holder then has a present right to receive.
Notwithstanding the foregoing, a waiver or consent to departure from the
provisions hereof with respect to a matter that relates solely to the rights of
Holders whose securities are being sold pursuant to a registration statement
covering such Holders' Registrable Securities and that does not directly or
indirectly affect the rights of other Holders may be given by the Holders of at
least 51% of the Registrable Securities being sold by such Holders.
3.6 Severability. If any provision or any portion of any
provision of this Agreement or the application of such provision or any portion
thereof to any Person or circumstance shall be held invalid or unenforceable,
the remaining portion of such provision, as it applies to other Persons or
circumstances and the remaining provisions of this Agreement, shall not be
affected or impaired thereby.
3.7 Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreements and understandings of the parties
hereto in respect of the
19
subject matter herein contained. This Agreement supersedes all prior agreements
and understandings between the parties with respect to such subject matter.
3.8 Securities Held by the Company or its Affiliates. With
respect to any action, consent or approval required or permitted to be taken or
given by Holders of a specified percentage of Registrable Securities,
Registrable Securities held by the Company or its affiliates (other than Varde
or any subsequent Holder that may be deemed to be an affiliate solely by reason
of its holdings of Registrable Securities) shall not be deemed outstanding for
purposes of determining whether such action, consent or approval was taken or
given by the Holders of such specified percentage.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the date first above written.
PRIDE COMPANIES, L.P.
By: Pride Refining, Inc.
its Managing General Partner
By: /s/ Xxxx Xxxxxxx
----------------------------------
Name: Xxxx Xxxxxxx
Title: Vice President
VARDE PARTNERS, INC.
By: /s/ Xxxxxx X. Xxxxx
----------------------------------
Name: Xxxxxx X.Xxxxx
Title: Vice President
