EXHIBIT F
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of December 23, 1997, between
HALLWOOD CONSOLIDATED RESOURCES CORPORATION, a Delaware corporation (the
"Company"), and THE PRUDENTIAL INSURANCE COMPANY OF AMERICA (the "Purchaser").
1. Background. The Company and the Purchaser have entered into that certain
Subordinated Note and Warrant Purchase Agreement (the "Purchase Agreement"),
dated as of the date hereof, pursuant to which the Company has agreed, among
other things, to issue and sell its Common Stock Purchase Warrants (the
"Warrants"), evidencing rights to purchase an aggregate of 98,599 shares
(subject to adjustment as provided therein) of the Company's common stock, par
value $0.01 per share (the "Common Stock"). This agreement shall become
effective upon the issuance of such Warrants.
2. Registration under Securities Act, etc.
2.1. Registration on Request.
(a) Request by Holders of Warrants or Registrable Securities. At
any time after the date hereof any holder or holders of Warrants or
Registrable Securities 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 number
of shares of Registrable Securities proposed to be sold by such holder
or holders and the intended method of disposition thereof. Promptly
after receiving such request, the Company will give written notice of
such requested registration to all other holders of Warrants or
Registrable Securities and thereupon the Company will use its best
efforts to effect the registration under the Securities Act of:
(i) the Registrable Securities which the Company has been so
requested to register by such holders, and
(ii) all other Registrable Securities which the Company has
been requested to register by such other holders of Warrants or
Registrable Securities by written request given to the Company
within 30 days after the giving of such written notice by the
Company (which request shall specify the number of shares of
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Registrable Securities proposed to be sold by such holder or
holders and the intended method of disposition of such
Registrable Securities), all to the extent necessary to permit
the disposition (in accordance with the intended methods thereof
as aforesaid) of the Registrable Securities so to be registered.
(b) Registration of Other Securities. Whenever the Company shall
effect a registration pursuant to this Section 2.1 in connection with
an underwritten offering by one or more holders of Registrable
Securities, no securities other than Registrable Securities shall be
included among the securities covered by such registration unless (a)
the managing underwriter of such offering shall have advised each
holder of Registrable Securities to be covered by such registration
(and each holder of Warrants therefor) in writing that the inclusion
of such other securities would not adversely affect such offering or
(b) the holders of all Registrable Securities to be covered by such
registration (and the holders of all Warrants therefor) shall have
consented in writing to the inclusion of such other securities.
(c) Registration Statement Form. Registrations under this Section
2.1 shall be on such appropriate registration form of the Commission
(i) as shall be selected by the Company and as shall be reasonably
acceptable to the Requisite Holders and (ii) as shall permit the
disposition of such Registrable Securities in accordance with the
intended method or methods of disposition specified in their request
for such registration. The Company agrees to include in any such
registration statement all information which holders of Registrable
Securities being registered (or holders of Warrants therefor) shall
reasonably request.
(d) Expenses. The Company will pay all Registration Expenses in
connection with any registration requested pursuant to this Section
2.1 if such registration has been requested in relation to at least 66
2/3% (by number of shares) of Registrable Securities; provided,
however, that the Company shall in all events and at all times be
responsible for the fees and disbursements of counsel for the
Requisite Holders in connection with the rendering of 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 on a pro rata basis among all Persons
on whose behalf securities of the Company are included in such
registration, in accordance with the amount of the securities then
being registered on behalf of each such Person.
(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 effectiveness
has been suspended for one or more periods that equal or exceed ten
(10) Business Days in the aggregate by the issuance of 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.
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(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
and shall be reasonably satisfactory to the Requisite Holders.
(g) Priority in Requested Registrations. If a requested
registration pursuant to this Section 2.1 involves an underwritten
offering, and the managing underwriter shall advise the Company in
writing (with a copy to each holder of Warrants or Registrable
Securities requesting registration) that, in its opinion, the number
of securities requested to be included in such registration exceeds
the number which can be sold in such offering within a price range
acceptable to the Requisite Holders, the Company will include in such
registration to the extent of the number which the Company is so
advised can be sold in such offering Registrable Securities requested
to be included in such registration, pro rata among the holders of
Registrable Securities (or Warrants therefor) requesting such
registration on the basis of the percentage of such Registrable
Securities held by or issuable to such holders. In connection with any
registration as to which the provisions of this subdivision (g) apply,
no securities other than Registrable Securities shall be covered by
such registrations.
The holders of Warrants or Registrable Securities shall be entitled to no
more than two requested registrations pursuant to this Section 2.1.
2.2. Incidental Registration.
(a) Right to Include Registrable Securities. If the Company at
any time proposes to register any of its securities under the
Securities Act (other than by a registration on Form S-4 or S-8 or any
successor or similar form and other than pursuant to Section 2.1),
whether or not for sale for its own account, it will each such time
give prompt written notice to all holders of Warrants or Registrable
Securities of its intention to do so and of such holders' rights under
this Section 2.2. Upon the written request of any such holder made
within 30 days after the receipt of any such notice (which request
shall specify the Registrable Securities intended to be disposed of by
such holder and the intended method of disposition thereof), the
Company will use its best efforts to effect the registration under the
Securities Act of all Registrable Securities which the Company has
been so requested to register by the holders thereof, provided that
if, at any time after giving written notice of its intention to
register any securities and prior to the effective date of the
registration statement filed in connection with such registration, the
Company shall determine for any reason not to register or to delay
registration of such securities, the Company may, at its election,
give written notice of such determination to each holder of Warrants
or Registrable Securities and, thereupon, (i) in the case of a
determination not to register, shall be relieved of its obligation to
register any Registrable Securities in connection with such
registration (but not from its obligation to pay the Registration
Expenses in connection therewith), without prejudice, however, to the
rights of any holder or holders of Warrants or Registrable Securities
entitled to do so to request that such registration be effected as a
registration under Section 2.1, and (ii) in the case of a
determination to delay registering, shall be permitted to delay
registering any Registrable Securities, for the same period as the
delay in registering such other securities. No registration effected
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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, 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, and (ii) the
managing underwriter of such underwritten offering shall inform by
letter the Company and the holders of Warrants or Registrable
Securities requesting such registration of its belief that the number
of securities requested to be included in such registration exceeds
the number which can be sold in (or during the time of) such offering,
then the Company may include all securities proposed by the Company to
be sold for its own account and 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 number of such Registrable
Securities and other securities held by such holders and requested to
be included therein) 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 90 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 (which period shall not exceed 270 days
from the date the registration statement is declared effective unless
the effectiveness thereof is suspended for any reason);
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(iii) furnish to each seller of Registrable Securities covered by
such registration statement such number of conformed copies of such
registration statement and of each such amendment and supplement
thereto (in each case including all exhibits), such number of copies
of the prospectus contained in such registration statement (including
each preliminary prospectus and any summary prospectus) and any other
prospectus filed under Rule 424 under the Securities Act, in
conformity with the requirements of the Securities Act, and such other
documents, as such seller may reasonably request;
(iv) use its best efforts to register or qualify all Registrable
Securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as each seller
thereof shall reasonably request, to keep such registration or
qualification in effect for so long as such registration statement
remains in effect, and take any other action which may be reasonably
necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the Registrable Securities
covered by the registration statement, 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, to subject itself to taxation in any jurisdiction or
to consent to general service of process in any such jurisdiction
where it is not then so subject;
(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 such Requesting Holder, 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
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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 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 Registrable 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 end of the fiscal
quarter 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 any successor thereto
or any comparable system) on which any of the Registrable Securities
are then quoted; and
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(xi) enter into such agreements and take such other actions as
the Requisite Holders shall reasonably request in order to expedite or
facilitate the disposition of such Registrable Securities.
The Company may require each seller of Registrable Securities as to which any
registration is being effected to furnish the Company such information regarding
such seller and the distribution of such securities as the Company may from time
to time reasonably request in writing.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that upon receipt of any notice from the Company of the
happening of any event of the kind described in the subdivision (vii) of this
Section 2.3, such holder will forthwith discontinue such holder's disposition of
Registrable Securities pursuant to the registration statement relating to such
Registrable Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by subdivision (vii) of this
Section 2.3 or until it is advised in writing (the "Advice") by the Company that
the use of the prospectus may be resumed, and, if so directed by the Company,
such holders will deliver to the Company (at the Company's expense) all copies,
other than permanent file copies then in such holders' possession, of the
prospectus covering such Registrable Securities current at the time of receipt
of such notice. In the event the Company shall give any such notice to suspend
the offering and disposition of the Registrable Securities (including, without
limitation, pursuant to the next paragraph hereof), the time periods regarding
the maintenance of the applicable registration statement shall be extended by
the number of days during the period from and including the date of the giving
of such notice pursuant to subdivision (vii) of this Section 2.3 and including
the date when such holders shall have received the copies of the supplemented or
amended prospectus contemplated by subdivision (vii) of this Section 2.3 or the
Advice.
Notwithstanding the foregoing, (a) the Company may delay the filing of any
registration statement, any amendment thereof or any supplement to the related
prospectus, and may withhold efforts to cause any registration statement to
become effective, and (b) in the case of an effective registration statement,
upon the written request of the Company the holders of Registrable Securities
participating in such registration shall refrain from selling any shares
pursuant to such registration statement, if (i) the Company determines in good
faith that such registration or sale would (A) materially interfere with or
adversely affect in any material respect the negotiation or completion of any
material transaction that is being contemplated by the Company at the time the
right to delay is exercised or a request is made or (B) involve initial or
continuing disclosure obligations not otherwise required by law or the rules and
regulations of the Commission, which disclosure would have a material adverse
effect on the Company or (ii) in the written opinion of a nationally recognized
investment bank, that the Company is unable to consummate an underwritten
offering due to then currently prevailing market conditions; provided however,
that the duration of any such delay or period in which shares of Registrable
Securities may not be sold pursuant to an effective registration statement shall
not exceed a period of 90 days.
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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 reasonably satisfactory in
substance and form to each holder of such Registrable Securities (or
Warrants therefor) and the underwriters and to contain such
representations and warranties by the Company and such other terms as
are generally customary in agreements of this type, including, without
limitation, indemnities to the effect and to the extent provided in
Section 2.7. The holders of Registrable Securities to be distributed
by such underwriters shall be parties to such underwriting agreement
and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the
part of, the Company to and for the benefit of such underwriters shall
also be made to and for the benefit of such holders of Registrable
Securities and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be
conditions precedent to the obligations of such holders of Registrable
Securities. Any such holder of Registrable Securities shall not be
required to make any representations or warranties to or agreements
with the Company or the underwriters other than representations,
warranties or agreements regarding such holder, such holder's
Registrable Securities and such holder's intended method of
distribution and any other representation required by law.
(b) Incidental Underwritten Offerings. If the Company at any time
proposes to register any of its securities under the Securities Act as
contemplated by Section 2.2 and such securities are to be distributed
by or through one or more underwriters, the Company will, if requested
by any holder of Warrants or Registrable Securities as provided in
Section 2.2 and subject to the provisions of Section 2.2(b), arrange
for such underwriters to include all the Registrable Securities to be
offered and sold by such holder among the securities to be distributed
by such underwriters. The holders of Registrable Securities to be
distributed by such underwriters shall be parties to the underwriting
agreement between the Company and such underwriters and may, at their
option, require that any or all of the representations and warranties
by, and the other agreements on the part of, the Company to and for
the benefit of such underwriters shall also be made to and for the
benefit of such holders of Registrable Securities and that any or all
of the conditions precedent to the obligations of such underwriters
under such underwriting agreement be conditions precedent to the
obligations of such holders of Registrable Securities. Any such holder
of Registrable Securities shall not be required to make any
representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements
regarding such holder, such holder's Registrable Securities and such
holder's intended method of distribution and any other representation
required by law.
2.5. Preparation; Reasonable Investigation. In connection with the
preparation and filing of each registration statement under the Securities Act
pursuant to this Agreement, the Company will give the holders of Registrable
Securities registered under such registration statement (or the holders of
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Warrants therefor), their underwriters, if any, and their respective counsel and
accountants, the opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, and will give each
of them such access to its books and records and such opportunities to discuss
the business of the Company with its officers and the independent public
accountants who have certified its financial statements as shall be necessary,
in the opinion of such holders' and such underwriters' respective counsel, to
conduct a reasonable investigation within the meaning of the Securities Act;
provided, however, that such holder shall, if requested by the Company, cause
its counsel and accountants to execute confidentiality agreements in customary
form and such holder shall, consistent with its customary practices, use its
best efforts to keep confidential any records, information or documents that are
designated by the Company in writing as confidential, except that such records,
information and documents may be disclosed by such holder to (i) such holder's
directors, officers, employees, agents and professional consultants, (ii) any
other holder of any Registrable Security, (iii) any Person to which such holder
offers to sell Registrable Securities or any part thereof, (iv) any Person from
which such holder offers to purchase any other security of the Company, (v) any
federal or state regulatory authority having jurisdiction over such holder, (vi)
the National Association of Insurance Commissioners or any similar organization,
or (vii) any other Person to which such delivery or disclosure may be necessary
or appropriate (a) in compliance with any law, rule, regulation or order
applicable to such holder, (b) in response to any subpoena or other legal
process or other investigative demand, or (c) in connection with any litigation
to which such holder is a party; provided, further that such holder shall cause
the agents and professional consultants referred to in clause (i) and the
Persons referred to in clauses (iii) and (iv) to enter into confidentiality
agreements which shall contain provisions substantially identical to those
applicable to such holders under this Section 2.5.
2.6. Rights of Requesting Holders. The Company will not file any
registration statement under the Securities Act, unless it shall first have
given to all holders of Warrants or Registrable Securities at least 30 days
prior written notice thereof and, if so requested by the Requisite Holders,
shall have consulted with such holders concerning the selection of underwriters,
counsel and independent accountants for the Company for such offering and
registration. If such holders shall so request within 30 days after such notice,
each of them shall be a "Requesting Holder" hereunder and shall have the rights
of a Requesting Holder provided in this section 2.6 and in sections 2.3, 2.5 and
2.7. The Company further covenants that a Requesting Holder shall have the right
(a) to participate in the preparation of any such registration or comparable
statement and to require the insertion therein of material furnished to the
Company in writing, which in such Requesting Holder's judgment, reasonable
exercised, 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
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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. The Company will, and hereby
does, in the case of any registration statement filed pursuant to
Section 2.1 or 2.2 indemnify and hold harmless the seller of any
Registrable Securities covered by such registration statement, its
directors and officers, each other Person who participates as an
underwriter in the offering or sale of such securities and each other
Person, if any, who controls such seller or any such underwriter
within the meaning of the Securities Act, against any losses, claims,
damages or liabilities, joint or several, to which such seller 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
Registrable Securities were registered under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, or any
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, or any other noncompliance or alleged noncompliance with
the Securities Act or the applicable underwriting agreement, and the
Company will reimburse such seller 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 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
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director, officer, underwriter or controlling person and shall survive
the transfer of such Registrable 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 Registrable Securities, to indemnify and hold harmless (in the
same manner and to the same extent as set forth in subdivision (a) of
this Section 2.7) the Company, each director of the Company, each
officer of the Company and each other Person, if any, who controls the
Company within the meaning of the Securities Act, with respect to any
statement or alleged statement in or omission or alleged omission from
such registration statement, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment
or supplement thereto, if such statement or alleged statement or
omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company through
an instrument duly executed by such seller specifically stating that
it is for use in the preparation of such registration statement,
preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement. Such indemnity shall remain in full force and
effect, regardless of any investigation made by or on behalf of the
Company or any such director, officer or controlling Person and shall
survive the transfer of such securities by such seller.
(c) Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or
proceeding involving a claim referred to in the preceding subdivisions
of this Section 2.7, such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party, give
written notice to the latter of the commencement of such action,
provided that the failure of any indemnified party to give notice as
provided herein shall not relieve the indemnifying party of its
obligations under the preceding subdivisions of this Section 2.7,
except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any such action is
brought against an indemnified party, unless in such indemnified
party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such
claim, the indemnifying party shall be entitled to participate in and
to assume the defense thereof, jointly with any other indemnifying
party similarly notified to the extent that it may wish, with counsel
reasonably satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of its election
so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses
subsequently incurred by the latter in connection with the defense
thereof other than reasonable costs of investigation. No indemnifying
party shall, without the consent of the indemnified party, consent to
entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in
respect to such claim or litigation.
(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
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seller of Registrable Securities with respect to any required
registration or other qualification of securities under any Federal or
state law or regulation of any governmental authority other than the
Securities Act.
(e) Indemnification Payments. The indemnification required by
this Section 2.7 shall be made by periodic payments of the amount
thereof during the course of the investigation or defense as and when
bills are received or expense, loss, damage or liability is incurred.
2.8. Adjustments Affecting Registrable Securities. The Company will not
effect or permit to occur any combination or subdivision of shares which would
adversely affect the ability of the holders of Registrable Securities or
Warrants therefor to include such Registrable Securities in any registration of
its securities contemplated by this Section 2 or the marketability of such
Registrable Securities under any such registration.
3. Definitions. As used herein, unless the context otherwise requires, the
following terms have the following respective meanings:
Commission: The Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act.
Common Stock: As defined in Section 1.
Company: As defined in the introductory paragraph of this
Agreement.
Exchange Act: The Securities Exchange Act of 1934, or any similar
Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. Reference
to a particular section of the Securities Exchange Act of 1934 shall
include a reference to the comparable section, if any, of any such
similar Federal statute.
Person: A corporation, an association, a partnership, a business,
a joint venture, a limited liability company, an individual, a
governmental or political subdivision thereof or a governmental
agency.
Purchase Agreement: As defined in Section 1.
Purchaser: As defined in the introductory paragraph of this
Agreement.
Registrable Securities: (a) Any shares of Common Stock issued or
issuable upon exercise of any of the Warrants and (b) any securities
issued or issuable with respect to any such Common Stock by way of
stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other
reorganization or otherwise. As to any particular Registrable
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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 sold pursuant to
Rule 144 (or any successor provision) under the Securities Act, (c)
they shall have been otherwise transferred, new certificates for them
not bearing a legend restricting further transfer shall have been
delivered by the Company and subsequent disposition of them shall not
require registration or qualification of them under the Securities Act
or any similar state law then in force, or (d) they shall have ceased
to be outstanding.
Registration Expenses: All expenses incident to the Company's
performance of or compliance with Section 2, including, without
limitation, all registration, filing and National Association of
Securities Dealers fees, all fees and expenses of complying with
securities or blue sky laws, all word processing, duplicating and
printing expenses, messenger and delivery expenses, the fees and
disbursements of counsel for the Company and of its independent public
accountants, including the expenses of any special audits or "cold
comfort" letters required by or incident to such performance and
compliance, the fees and disbursements incurred by the holders of
Registrable Securities to be registered and the holders of Warrants
therefor (including the fees and disbursements of any counsel and
accountants retained by the Requisite Holders), premiums and other
costs of policies of insurance against liabilities arising out of the
public offering of the Registrable Securities being registered and any
fees and disbursements of underwriters customarily paid by issuers or
sellers of securities, but excluding underwriting discounts and
commissions and transfer taxes, if any, provided that, in any case
where Registration Expenses are not to be borne by the Company, such
expenses shall not include salaries of Company personnel or general
overhead expenses of the Company, auditing fees, premiums or other
expenses relating to liability insurance required by underwriters of
the Company or other expenses for the preparation of financial
statements or other data normally prepared by the Company in the
ordinary course of its business or which the Company would have
incurred in any event.
Requesting Holder: As defined in Section 2.6.
Requisite Holders: With respect to any registration of
Registrable Securities by the Company pursuant to Section 2, any
holder or holders of 66 2/3% (by number of shares) of the Registrable
Securities to be so registered or of Warrants for such Registrable
Securities.
Securities Act: The Securities Act of 1933, or any similar
Federal statute, and the rules and regulations of the Commission
thereunder, all as of the same shall be in effect at the time.
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References to a particular section of the Securities Act of 1933 shall
include a reference to the comparable section, if any, of any such
similar Federal Statute.
4. Rule 144: If the Company shall have filed a registration statement
pursuant to the requirements of Section 12 of the Exchange Act or a registration
statement pursuant to the requirements of the Securities Act, the Company will
file the reports required to be filed by it under the Securities Act and the
Exchange Act and the rules and regulations adopted by the Commission thereunder
(or, if the Company is not required to file such reports, will, upon the request
of any holder of Warrants or Registrable Securities, make publicly available
other information) and will take such further action as any holder of Warrants
or Registrable Securities may reasonably request, all to the extent required
from time to time to enable such holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (a) Rule 144 under the Securities Act, as such Rule may be amended
from time to time or (b) any similar rule or regulation hereafter adopted by the
Commission. Upon the request of any holder of Warrants or Registrable
Securities, the Company will deliver to such holder a written statement as to
whether it has complied with such requirements.
5. Amendments and Waivers. This Agreement may be amended and the Company
may take any action herein prohibited or omit to perform any act herein required
to be performed by it, only if the Company shall have obtained the written
consent to such amendment, action or omission to act, of the Requisite Holders.
Each holder of any Warrants or Registrable Securities at the time or thereafter
outstanding shall be bound by any consent authorized by this Section 5, whether
or not such Registrable Securities shall have been marked to indicate such
consent.
6. Nominees for Beneficial Owners. In the event that any Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election, be treated as the holder of such
Warrants or Registrable Securities for purposes of any request or other action
by any holder or holders of Warrants or Registrable Securities pursuant to this
Agreement or any determination of any number or percentage of shares of Warrants
or Registrable Securities held by any holder or holders of Warrants or
Registrable Securities contemplated by this Agreement. If the beneficial owner
of any Warrants or Registrable Securities so elects, the Company may require
assurances reasonably satisfactory to it of such owner's beneficial ownership of
such Warrants or Registrable Securities.
7. Notices. All communications provided for hereunder shall be sent by
first-class mail and (a) if addressed to a party other than the Company,
addressed to such party in the manner set forth in the Purchase Agreement, or at
such other address as such party shall have furnished to the Company in writing,
or (b) if addressed to the Company, at 0000 Xxxxx Xxxxxx Xxxxxx Xxxxxxx, Xxxxx
0000, Xxxxxx, Xxxxxxxx 00000 Attention: Legal Department, or at such other
address, or to the attention of such other officer, as the Company shall have
furnished to each holder of Warrants or Registrable Securities at the time
outstanding; provided, however, that any such communication to the Company may
14
also, at the option of any of the parties hereunder, be either delivered to the
Company at its address set forth above or to any officer of the Company.
8. Assignment. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
successors and assigns. In addition, and whether or not any express assignment
shall have been made, the provisions of this Agreement which are for the benefit
of the parties hereto other than the Company shall also be for the benefit of
and enforceable by any subsequent holder of any Warrants or Registrable
Securities, subject to the provisions respecting the minimum numbers or
percentages of shares of Warrants or Registrable Securities required in order to
be entitled to certain rights, or take certain actions contained herein.
9. Descriptive Headings. The descriptive headings of the several sections
and subdivisions of this Agreement are inserted for reference only and shall not
limit or otherwise affect the meaning hereof.
10. Specific Performance. The parties hereto recognize and agree that money
damages may be insufficient to compensate the holders of any Warrants or
Registrable Securities for breaches by the Company of the terms hereof and,
consequently, that the equitable remedy of specific performance of the terms
hereof will be available in the event of any such breach.
11. Governing Law. This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of New York.
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.
HALLWOOD CONSOLIDATED RESOURCES
CORPORATION
By: /s/ Xxxxxxxx X. Xxxxxx
Title: Vice President
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: /s/
Title:
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