EXHIBIT 4.4
[Execution Version]
REGISTRATION RIGHTS AGREEMENT
DATED AS OF OCTOBER 14, 1997
BY AND BETWEEN
SOUTHWEST ROYALTIES HOLDINGS, INC.
AND
JOINT ENERGY DEVELOPMENT INVESTMENTS
LIMITED PARTNERSHIP
TABLE OF CONTENTS
ARTICLE I
Section 1.01 Definitions 1
Section 1.02 Stock Splits, Dividends, Recapitalizations, etc. 2
Section 1.03 Registrable Securities 2
ARTICLE II
Section 2.01 Demand Registration 2
Section 2.02 Piggy-Back Registration 3
Section 2.03 Registration Procedures. 4
Section 2.04 Expenses 7
Section 2.05 Indemnification 7
ARTICLE III
MISCELLANEOUS
Section 3.01 Communications 9
Section 3.02 Successor and Assigns 10
Section 3.03 Counterparts 10
Section 3.04 Headings 10
Section 3.05 Governing Law 10
Section 3.06 Severability of Provisions 10
Section 3.07 Entire Agreement 10
Section 3.08 Attorneys' Fees 11
Section 3.09 Amendment 11
Section 3.10 Registrable Securities Held by the Company or
Its Affiliates 11
Section 3.11 Assignment of Rights 11
Section 3.12 Arbitration 11
REGISTRATION RIGHTS AGREEMENT
-----------------------------
This Registration Rights Agreement ("Agreement") is made and entered
into as of October 14, 1997, by and between Southwest Royalties Holdings, Inc.,
a Delaware corporation (the "Company"), and Joint Energy Development Investments
Limited Partnership, a Delaware limited partnership (the "Purchaser").
This Agreement is made pursuant to Section 2.04 of the Securities
Purchase Agreement (the "Purchase Agreement") dated as of the date hereof
between the Company and the Purchaser. In order to induce the Purchaser to
enter into the Purchase Agreement, the Company has agreed to provide the
registration and other rights set forth in this Agreement. The execution and
delivery of this Agreement is a condition to the Closing (as defined in the
Purchase Agreement) under the Purchase Agreement.
The parties agree as follows:
ARTICLE I
Section 1.01 Definitions. Capitalized terms used and not otherwise
defined herein, which are defined in the Purchase Agreement or the Warrant
Certificate made by the Company in favor of the Purchaser are used herein as so
defined. The terms set forth below are used herein as so defined:
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Holder" means the record holder of any Warrants or any Registrable
Security.
"IPO" shall mean the consummation of an public offering of Common
Stock pursuant to an effective registration statement filed under the Securities
Act (other than any registration statement relating to warrants, options or
shares of Capital Stock granted or to be granted or sold primarily to employees,
directors, or officers of the Company, a registration statement filed pursuant
to Rule 145 under the Securities Act or any successor rule or a registration
statement relating to employee benefit plans or interests therein) and the
listing of such Common Stock on a national securities exchange or the quotation
of prices therefor on The National Market System of the NASDAQ Stock Market.
"Registrable Securities" means the shares of Common Stock and all
other securities receivable upon exercise of the Warrants until such time as
such securities cease to be Registrable Securities pursuant to Section 1.03
hereof.
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"Selling Holder" means a Holder who is selling Registrable Securities
pursuant to a registration statement.
Section 1.02 Stock Splits, Dividends, Recapitalizations, etc. Any
shares or other securities resulting from any stock split, stock dividend,
reclassification of the Capital Stock of the Company, merger, consolidation or
reorganization of the Company which may be received by the Holder of a Warrant
upon exercise of such Warrant shall also be deemed to be Registrable Securities.
Section 1.03 Registrable Securities. Any Registrable Security will
cease to be a Registrable Security when (i) a registration statement covering
such Registrable Security has been declared effective by the Commission and such
Registrable Security has been issued, sold or disposed of pursuant to such
effective registration statement or (ii) such Registrable Security is disposed
of pursuant to Rule 144 (or any similar provision then in force) under the
Securities Act or (iii) such Registrable Security is held by the Company or one
of its Subsidiaries.
ARTICLE II
Section 2.01 Demand Registration. (a) Any time after the expiration
of lock-up agreements signed by the Company's directors or executive officers in
connection with the IPO or 180 days after the closing date of the IPO, whichever
occurs first, any Persons who collectively hold at least 66 2/3% of the
Registrable Securities outstanding at such time may request the Company to
register under the Securities Act all or any portion of the Securities held by
such Persons (collectively, the "Requesting Holder") for sale in the manner
specified in such notice.
(b) Promptly, and in any event within 10 days, following receipt of
any notice under this Section 2.01, the Company shall immediately notify any
Person who is a Holder (except the Requesting Holder) of the receipt of notice
under this Section 2.01 and shall use its best efforts to register under the
Securities Act, for public sale in accordance with the method of disposition
specified in such notice from the Requesting Holder, the Registrable Securities
specified in the Requesting Holder's notice (and in any notices received from
other Holders no later than the 10th Business Day after receipt of the notice
sent by the Company) (such other Holders and the Requesting Holder are
hereinafter referred to as the "Requesting Holders"). If such method of
disposition shall be an underwritten public offering, the Company may designate
the managing underwriter of such offering, subject to the approval of Requesting
Holders holding a majority of the Registrable Securities to be registered.
Except as specified in the following sentence, the Company shall be obligated to
register Registrable Securities pursuant to this Section 2.01 on two occasions
only. A request pursuant to this Section 2.01 shall be counted only when (i)
all the Registrable Securities requested to be included in any such registration
have been so included, (ii) the corresponding registration statement has become
effective under the Securities Act, and (iii) the
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public offering has been consummated and the Registrable Securities have been
sold on the terms and conditions specified therein. Notwithstanding anything to
the contrary contained herein, the Company may delay the filing or effectiveness
of a registration statement for up to 45 days after receipt of a request
hereunder if (i) at the time of such request the Company is engaged in a firm
commitment underwritten public offering of shares of its Capital Stock in which
Holders may include Registrable Securities or (ii) the Board of Directors of the
Company determines in its reasonable judgment and in good faith that the filing
of such a registration statement or the making of any required disclosure in
connection therewith would have a material adverse effect on the Company or
substantially interfere with a significant transaction in which the Company is
then engaged.
(c) The Company shall be entitled to include in any registration
statement filed pursuant to this Section 2.01, for sale in accordance with the
method of disposition specified by the Requesting Holders, securities of the
Company entitled generally to vote in the election of directors (or any
securities convertible into or exchangeable for or exercisable for the purchase
of securities so entitled generally to vote in the election of directors)
(collectively, "Voting Securities") to be sold by the Company for its own
account, except as and to the extent that, in the opinion of the managing
underwriter (if such method of disposition shall be an underwritten public
offering), such inclusion would materially jeopardize the successful marketing
of the Registrable Securities to be sold. Except as provided in this subsection
(c), the Company will not effect any other registration of its Voting Securities
(except with respect to registration statements on Form S-4 or S-8 for purposes
permissible under such forms as of the date hereof, or any successor forms for
comparable purposes that may be adopted by the Commission), whether for its own
account or that of any other security holder, from the date of receipt of a
notice from a Requesting Holder pursuant to this Section 2.01 until the
completion of the period of distribution contemplated thereby.
Section 2.02 Piggy-Back Registration. If the Company proposes to
register any securities under the Securities Act for sale to the public (other
than in an IPO), whether for its own account or for the account of other
security holders or both (except with respect to registration statements on
Forms S-4 or S-8 for purposes permissible under such forms as of the date
hereof, or any successor forms for comparable purposes that may be adopted by
the Commission), each such time it will give written notice to all Holders of
its intention to do so (but in any event no less than 15 Business Days before
the anticipated filing date). Upon the written request of any such Holder,
received by the Company no later than the 10th Business Day after receipt by
such Holder of the notice sent by the Company, to register, on the same terms
and conditions as the shares of securities otherwise being sold pursuant to such
registration, any of its Registrable Securities (which request shall state the
intended method of disposition thereof), the Company will use its best efforts
to cause the Registrable Securities as to which registration shall have been so
requested to be included in the securities to be covered by the registration
statement proposed to be filed by the Company on the same terms and conditions
as any similar securities included therein, all to the extent requisite to
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permit the sale or other disposition by each Holder (in accordance with its
written request) of such Registrable Securities so registered; provided,
however, that the Company may at any time prior to the effectiveness of any such
registration statement, in its sole discretion and without the consent of any
Holder, abandon the proposed offering. The number of Registrable Securities to
be included in such a registration may be reduced or eliminated if and to the
extent the managing underwriter shall render to the Company its opinion that
such inclusion would materially jeopardize the successful marketing of the
securities (including the Registrable Securities) proposed to be sold therein;
provided, however, that such number of shares of Registrable Securities shall
not be reduced unless the shares to be included in such underwriting for the
account of any Person are also reduced on a pro rata basis. Within 10 Business
Days after receipt by each Person proposing to sell Registrable Securities
pursuant to the registered offering of the opinion of such managing underwriter,
all such Selling Holders may allocate among themselves the number of shares of
such Registrable Securities which such opinion states may be distributed
without adversely affecting the distribution of the securities covered by the
registration statement (or if such registered holders are unable to agree among
themselves with respect to such allocation, such allocation shall be in
proportion to the respective numbers of shares specified in their respective
written requests). Notwithstanding anything to the contrary contained in this
Section 2.02, in the event that there is a firm underwriting commitment offer of
securities of the Company pursuant to a registration statement covering
Registrable Securities and a Person does not elect to sell its Registrable
Securities to the underwriters of the Company's securities in connection with
such offering, such Person shall not offer for sale, sell, grant any option for
the sale of, or otherwise dispose of, directly or indirectly, any shares of
Common Stock, or any securities convertible into or exchangeable into or
exercisable for any shares of Common Stock during the period of distribution of
the Company's securities by such underwriters, which shall be specified in
writing by the underwriters and shall not exceed 60 days following the date of
effectiveness under the Securities Act of the registration statement relating
thereto.
Section 2.03 Registration Procedures. If and whenever the Company is
required pursuant to this Agreement to effect the registration of any of the
Registrable Securities under the Securities Act, the Company will, as
expeditiously as possible:
(a) prepare and file as promptly as possible with the Commission a
registration statement (which shall be on Form S-1 or other form of general
applicability satisfactory to the managing underwriter selected as herein
provided) with respect to such securities (which filing shall be made
within 30 days after the receipt by the Company of a notice requesting such
registration pursuant to Section 2.01) and use its best efforts to cause
such registration statement to become and remain effective for the period
of the distribution contemplated thereby (determined pursuant to
subparagraph (g) below);
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(b) 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 for the period specified in subsection (g) below and as
may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement in accordance with the sellers' intended method of disposition
set forth in such registration statement for such period;
(c) furnish to each Selling Holder and to each underwriter such
number of copies of the registration statement and the prospectus included
therein (including each preliminary prospectus and each document
incorporated by reference therein prior to the filing with the Commission)
as such Persons may reasonably request in order to review such
documentation and to facilitate the public sale or other disposition of the
Registrable Securities covered by such registration statement;
(d) use its best efforts to register or qualify the Registrable
Securities covered by such registration statement under the securities or
blue sky laws of such jurisdictions as the Selling Holders or, in the case
of an underwritten public offering, the managing underwriter, shall
reasonably request;
(e) immediately notify each Selling Holder and each underwriter, at
any time when a prospectus relating thereto is required to be delivered
under the Securities Act, of the happening of any event as a result of
which the prospectus contained 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 then
existing;
(f) furnish at the request of a Selling Holder, (i) on the date that
Registrable Securities are delivered to the underwriters for sale pursuant
to such registration statement (or on the effective date in the case of an
offering that is not underwritten), an opinion of counsel for the Company
dated as of such date and addressed to the underwriters, if any, and to the
Selling Holders, stating that such registration statement has become
effective under the Securities Act and that (A) to the best knowledge of
such counsel, no stop order suspending the effectiveness thereof has been
issued and no proceedings for that purpose have been instituted or are
pending or contemplated under the Securities Act, (B) the registration
statement, the related prospectus, and each amendment or supplement
thereof, comply as to form in all material respects with the requirements
of the Securities Act and the applicable rules and regulations thereunder
of the Commission (except that such counsel need express no opinion as to
the financial statements or any engineering report contained or
incorporated therein) and (C) to such other effects as may reasonably be
requested by
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counsel for the underwriters or by any such Selling Holder or its counsel,
and (ii) on the effective date of the registration statement and on the
date that Registrable Securities are delivered to the underwriters for sale
pursuant to such registration statement, a letter dated such dates from the
independent accountants retained by the Company, addressed to the
underwriters, if any, and to the Selling Holders, stating that they are
independent public accounts within the meaning of the Securities Act and
that, in the opinion of such accountants, the financial statements of the
Company and the schedules thereto that are included or incorporated by
reference in the registration statement or the prospectus, or any amendment
or supplement thereof, comply as to form in all material respects with the
applicable requirements of the Securities Act and the published rules and
regulations thereunder, and such letter shall additionally address such
other financial matters (including information as to the period ending no
more than five business days prior to the date of such letter) included in
the registration statement in respect of which such letter is being given
as the underwriters or any Selling Holder may reasonably request;
(g) make available for inspection by one representative of the
Selling Holders designated by a majority thereof, any underwriter
participating in any distribution pursuant to such registration statement,
and any attorney, accountant or other agent retained by such representative
of the Selling Holders or underwriter (the "Inspectors"), all financial and
other records, pertinent corporate documents and properties of the Company,
and cause the Company's officers, directors and employees to supply all
information reasonably requested by any such Inspector in connection with
such registration statement. For purposes of subsections (a) and (b) above
and of Section 2.01(c) of this Agreement, the period of distribution of
Registrable Securities in a firm commitment underwritten public offering
shall be deemed to extend until each underwriter has completed the
distribution of all securities purchased by it, and the period of
distribution of Registrable Securities in any other registration shall be
deemed to extend until the earlier of the sale of all Registerable
Securities covered thereby or the fulfillment of the Company's obligations
under the proviso set forth in subsection (h) of this Section 2.03;
(h) use its best efforts to keep effective and maintain a
registration, qualification, approval or listing obtained to cover the
Registrable Securities as may be necessary for the Selling Holders to
dispose thereof and shall from time to time amend or supplement any
prospectus used in connection therewith to the extent necessary in order to
comply with applicable law;
(i) use its best efforts to cause the Registrable Securities to be
registered with or approved by such other governmental agencies or authorities
as may be necessary by virtue of the business and operations of the Company to
enable the Selling Holders to consummate the disposition of such Registrable
Securities; and
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(j) enter into customary agreements (including, if requested, an
underwriting agreement in customary form) and take such other actions as are
reasonably requested by the Selling Holders or the underwriters, if any, in
order to expedite or facilitate the disposition of such Registrable Securities.
In connection with each registration hereunder, each Selling Holder will
furnish promptly to the Company in writing such information with respect to
itself and the proposed distribution by it as shall be reasonably necessary in
order to ensure compliance with federal and applicable state securities laws.
In connection with each registration hereunder with respect to an
underwritten public offering, each Selling Holder agrees to enter into a written
agreement with the managing underwriter or underwriters selected in the manner
herein provided in such form and containing such provisions as are customary in
the securities business for such an arrangement between underwriters and
companies of the Company's size and investment stature, provided that such
agreement shall not contain any such provision applicable to the Selling Holders
that is inconsistent with the provisions hereof; and further provided, that the
time and place of the closing under said agreement shall be as mutually agreed
upon among the Company, the Selling Holders and such managing underwriter.
Section 2.04 Expenses. (a) All expenses incident to the Company's
performance or compliance with this Agreement, including without limitation, all
registration and filing fees, blue sky fees and expenses, printing expenses,
listing fees, fees and disbursements of counsel and independent public
accountants for the Company, fees of the National Association of Securities
Dealers, Inc., transfer taxes, fees of transfer agents and registrars, and costs
of insurance and reasonable out-of-pocket expenses of the Selling Holders, but
excluding any Selling Expenses (as defined below) , are herein called
"Registration Expenses." All underwriting, discounts and selling commissions
attributable to the sale of the Registrable Securities are herein called
"Selling Expenses."
(b) The Company will pay all Registration Expenses with each
registration statement filed pursuant to this Agreement, whether or not the
registration becomes effective, and the Selling Holders shall pay Selling
Expenses in connection with any Registrable Securities registered pursuant to
this Agreement.
Section 2.05 Indemnification. (a) In the event of a registration of any
Registrable Securities under the Securities Act pursuant to this Agreement, the
Company will indemnify and hold harmless each Selling Holder thereunder and each
underwriter of Registrable Securities thereunder and each Person, if any, who
controls such Selling Holder or underwriter within the meaning of the Securities
Act and the Exchange Act, against any losses, claims, damages or liabilities
(including reasonable attorneys' fees) ("Losses"), joint or several, to which
such Selling
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Holder or underwriter or controlling Person may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such Losses, (or
actions 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 pursuant to this Agreement, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereof, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each such Selling Holder, each such
underwriter and each such controlling Person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such Loss or actions; provided, however, that the Company will not be liable in
any such case if and to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission so made in conformity with information
furnished by such Selling Holder, such underwriter or such controlling Person in
writing specifically for use in such registration statement or prospectus.
(b) Each Selling Holder agrees to indemnify and hold harmless the
Company, its directors, officers, employees and agents and each Person, if any,
who controls the Company within the meaning of the Securities Act or of the
Exchange Act to the same extent as the foregoing indemnity from the Company to
such Selling Holder, but only with respect to information with respect to such
Selling Holder furnished in writing by or on behalf of such Selling Holder
expressly for inclusion in any registration statement or prospectus relating to
the Registrable Securities, or any amendment or supplement thereto; provided,
however, that the liability of such Selling Holder shall not be greater in
amount than the dollar amount of the proceeds (net of any Selling Expenses)
received by such Selling Holder from the sale of the Registrable Securities
giving rise to such indemnification.
(c) Promptly after receipt by an indemnified party hereunder of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party hereunder,
notify the indemnifying party in writing thereof, but the omission so to notify
the indemnifying party shall not relieve it from any liability which it may have
to any indemnified party other than under this Section 2.05. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate in and, to the extent it shall wish, to assume and
undertake the defense thereof 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 and undertake the defense
thereof, the indemnifying party shall not be liable to such indemnified party
under this Section 2.05 for any legal expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation and of liaison with counsel so selected; provided,
however, that, (i) if the indemnifying
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party has failed to assume the defense and employ counsel or (ii) if the
defendants in any such action include both the indemnified party and the
indemnifying party and counsel to the indemnified party shall have concluded
that there may be reasonable defenses available to the indemnified party that
are different from or additional to those available to the indemnifying party or
if the interests of the indemnified party reasonably may be deemed to conflict
with the interests of the indemnifying party, then the indemnified party shall
have the right to select a separate counsel and to assume such legal defense and
otherwise to participate in the defense of such action, with the expenses and
fees of such separate counsel and other expenses related to such participation
to be reimbursed by the indemnifying party as incurred.
(d) If the indemnification provided for in this Section 2.05 is
available to the Company or the Selling Holders or is insufficient to hold them
harmless in respect of any losses, claims, damages, liabilities or expenses
referred to herein, then each such 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 and
expenses as between the Company on the one hand and each Selling Holder on the
other, in such proportion as is appropriate to reflect the relative fault of the
Company on the one hand and of each Selling Holder on the other in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable considerations. The
relative fault of the Company on the one hand and each Selling Holder on the
other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statements of a material fact or the omission or
alleged omission to state a material fact has been made by, or relates to,
information supplied by such party, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. 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 is not guilty of such fraudulent misrepresentation.
ARTICLE III
MISCELLANEOUS
Section 3.01 Communications. All notices and other communications
provided for or permitted hereunder shall be made in writing by registered or
certified first-class mail, return receipt requested, telex, telegram, telecopy,
courier service or personal delivery:
(i) if to a Holder of Registrable Securities, at the most
current address given by such Holder of the Company in accordance with
the provisions of this Section 3.01, which address initially is, with
respect to the Purchaser, the address set forth in the Purchase
Agreement, and
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(ii) if to the Company, initially at its address set forth
in the Purchase Agreement and thereafter at such other address, notice
of which is given in accordance with the provisions of this Section
3.01.
All such notices and communications shall be deemed to have been duly
given at the time delivered by hand, if personally delivered; four days after
mailed by certified mail, return receipt requested, if mailed; when answered
back, if telexed; when receipt acknowledged, if telecopied; and on the next
Business Day if timely delivered to an air courier guaranteeing overnight
delivery.
Section 3.02 Successor and Assigns. This Agreement shall inure to
the benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent holders of Registrable Securities.
Section 3.03 Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which counterparts, when so executed and delivered, shall be deemed to
be an original and all of which counterparts, taken together, shall constitute
but one and the same Agreement.
Section 3.04 Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
Section 3.05 Governing Law. The laws of the State of Delaware shall
govern this Agreement without regard to principles of conflict of laws.
Section 3.06 Severability of Provisions. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting or impairing the validity or enforceability of such provision in any
other jurisdiction.
Section 3.07 Entire Agreement. This Agreement, together with the
Purchase Agreement, the Warrant Certificate and the Stockholders Agreement
(collectively, the "Major Documents"), is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by the Company with respect to
the securities sold pursuant to the Purchase Agreement. This Agreement and the
Major Documents supersede all prior agreements and understandings between the
parties with respect to such subject matter.
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Section 3.08 Attorneys' Fees. In any action or proceeding brought
to enforce any provision of this Agreement, the successful party shall be
entitled to recover reasonable attorneys' fees in addition to its costs and
expenses and any other available remedy.
Section 3.09 Amendment. This Agreement may be amended only by means
of a written amendment signed by the Company and by the Holders of a majority of
the Registrable Securities.
Section 3.10 Registrable Securities Held by the Company or Its
Affiliates. In determining whether the Holders of the required amount of
Registrable Securities have concurred in any direction, amendment, supplement,
waiver or consent, Registrable Securities owned by the Company or its Affiliates
shall be disregarded.
Section 3.11 Assignment of Rights. (a) The rights of any Holder
under this Agreement may be assigned to any Person who acquires Warrants or the
Registrable Securities issuable on exercise thereof.
(b) The rights of an assignee under Section 3.11(a) shall be the same
rights granted to the assigning Holder under this Agreement. 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.
Section 3.12 Arbitration.
(a) Binding Arbitration. On the request of either Company or
Purchaser, (whether made before or after the institution of any legal
proceeding,) any action, dispute, claim or controversy of any kind now existing
or hereafter arising between any of the parties hereto in any way arising out
of, pertaining to or in connection with this Agreement (a "Dispute") shall be
resolved by binding arbitration in accordance with the terms hereof. Either
Company or Purchaser may, by summary proceedings, bring an action in court to
compel arbitration of any Dispute.
(b) Governing Rules. Any arbitration shall be administered by the
American Arbitration Association (the "AAA") in accordance with the terms of
this Section, the Commercial Arbitration Rules of the AAA, and, to the maximum
extent applicable, the Federal Arbitration Act. Judgment on any award rendered
by an arbitrator may be entered in any court having jurisdiction.
(c) Arbitrators. Arbitration hereunder shall be before a three-person
panel of neutral arbitrators, consisting of one person from each of the
following categories: (1) an attorney who has practiced in the area of
commercial law for at least 10 years or a retired judge at the Texas or United
States District Court or an appellate court level: (2) a person with at least 10
years experience in commercial lending: and (3) a person with at least 10 years
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experience in the petroleum industry. The AAA shall submit a list of persons
meeting the criteria outlined above for each category of arbitrator, and the
parties shall select one person from each category in the manner established by
the AAA. If the parties cannot agree on an arbitrator from each category within
30 days after the request for an arbitration, then any party may request the AAA
to select an arbitrator from each category on which the parties are unable to
agree. The arbitrators may engage engineers, accountants, or other consultants
that the arbitrator deems necessary to render a conclusion in the arbitration
proceeding.
(d) Conduct of Arbitration. To the maximum extent practicable, an
arbitration proceeding hereunder shall be concluded within 180 days of the
filing of the Dispute with the AAA. Arbitration proceedings shall be conducted
in Houston, Texas. Arbitrators shall be empowered to impose sanctions and to
take such other actions as the arbitrators deem necessary to the same extent a
judge could impose sanctions or take such other actions pursuant to the Federal
Rules of Civil Procedure and applicable law. At the conclusion of any
arbitration proceeding, the arbitrator shall make specific written findings of
fact and conclusions of law. The arbitrators shall have the power to award
recovery of all costs and fees to the prevailing party. Company and Purchaser
agree to keep all Disputes and arbitration proceedings strictly confidential
except for disclosure of information required by applicable law.
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(e) Costs of Arbitration. All fees of the arbitrators and any
engineer, accountant, or other consultant engaged by the arbitrators, shall be
paid by Company and Purchaser equally unless otherwise awarded by the
arbitrators.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
SOUTHWEST ROYALTIES
HOLDINGS, INC.
By:____________________________
Name:__________________________
Title:_________________________
JOINT ENERGY DEVELOPMENT
INVESTMENTS LIMITED
PARTNERSHIP
By: Enron Capital Management Limited
Partnership, its General Partner
By: Enron Capital Corp., its General Partner
-------------------------------
Xxxxx X. Xxxxxx, Xx.
Agent and Attorney-in-Fact
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