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EXHIBIT 10.2
SHAREHOLDERS' AGREEMENT
This Shareholders' Agreement (the "Agreement") is made and entered into
this 27th day of August, 1999, by and among MIDDLE BAY OIL COMPANY, INC., an
Alabama corporation (the "Company") and the undersigned shareholders of the
Company (the "Shareholders")
RECITALS
WHEREAS, as of the date hereof, there are 13,379,153 issued and
outstanding shares of the Company's common stock, $.02 par value (the "Common
Stock");
WHEREAS, as of the date hereof, the Shareholders collectively own
10,804,355 shares or 80.76% of the issued and outstanding shares of Common
Stock, as follows:
SHAREHOLDER SHARES PERCENTAGE
3TEC Energy Corporation 4,755,556 35.55%
Xxxxxx-Xxxxxxx Oil Company 3,333,334 24.91%
X.X. Xxxx, III 1,187,556 8.88%
Weskids, L.P. 843,687 6.31%
Xxxxx X. Xxxxxxxxx 684,222 5.11%
WHEREAS, Xxxxxx-Xxxxxxx Oil Company, X.X. Xxxx, III, Weskids, L.P. and
Xxxxx X. Xxxxxxxxx are referred to herein collectively as the "Major
Shareholders";
WHEREAS, the Shareholders desire to promote their mutual interests and
interests of the Company by imposing certain restrictions and obligations upon
themselves, the Company and the shares of Common Stock; and
WHEREAS, the execution and delivery of this Shareholders' Agreement is
a condition to the closing of that certain Securities Purchase Agreement between
the Company and 3TEC Energy Corporation dated July 1, 1999 (the "Purchase
Agreement").
NOW, THEREFORE, in consideration of the mutual promises contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Nomination and Election of Directors. Each of the Shareholders
agrees, so long as it owns such shares, to vote (including the taking of any
action by written consent, as necessary or appropriate) and cause its Affiliates
to vote all shares of Common Stock (and any and all shares of any other voting
class of capital stock of the Company presently or at any future time owned by
the Shareholders) which it is entitled to vote (or control the voting directly
or indirectly) to ensure
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that the following shall occur:
(a) The Company shall at all times be managed by or under the
direction of the Board of Directors of the Company (the
"Board"), which shall consist of five (5) members.
(b) The Shareholders shall use their best efforts (including
voting the shares owned by them and their affiliates, in
calling special meetings of the Shareholders and executing and
delivering written consents), to elect five (5) members of the
Board, consisting of the following:
(i) Three (3) members designated by 3TEC Energy
Corporation ("3TEC"); and
(ii) Two (2) members designated by the Major
Shareholders.
The party designating a director may remove such director, with or without
cause, and designate his or her successor. If the director designated by a party
resigns, dies, becomes incapacitated or is otherwise unable to serve, the party
designating such director may designate his or her successor. All Shareholders
shall vote all shares held by them in favor of the election or removal of such
persons so designated. Action taken by either 3TEC or the Major Shareholders in
designating or removing directors shall be in writing executed by either 3TEC or
the Major Shareholders, as the case may be, and promptly delivered to the other
Shareholders and the Company.
2. Advisory Member. As long as the Board of Directors of the Company
shall consist of five (5) members, the Major Shareholders may request that a
non-voting advisory board member be appointed. Upon such request, the Major
Shareholders shall, subject to 3TEC's approval, select the person whom it
desires to have serve as such non-voting advisory board member. Such non-voting
advisory board member shall be permitted but not required to attend meetings of
the Board of Directors.
3. Vote in Favor of Change of State of Incorporation. Each of the
Shareholders agrees, so long as it owns such shares, to vote (including the
taking of any action by written consent, as necessary or appropriate) and cause
its Affiliates to vote all shares of Common Stock (and any and all shares of any
other voting class of capital stock of the Company presently or at any future
time owned by the Shareholders) which it is entitled to vote (or control the
voting directly or indirectly) to ensure that, at the request of 3TEC, to vote
their shares of Common Stock in favor of changing the state of incorporation of
the Company from Alabama to another jurisdiction recommended by the Board of
Directors.
4. Termination of 3TEC's Right to Elect Directors. 3TEC's right to
designate the directors as provided in paragraph 1(b)(i) above shall terminate
as follows:
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(a) if 3TEC's ownership of Common Stock is below 15% of the
Adjusted Outstanding Common Stock, 3TEC shall be entitled to
designate only two (2) members to the Board;
(b) if 3TEC's ownership of Common Stock is below 7 1/2% of the
Adjusted Outstanding Common Stock, 3TEC shall be entitled to
designate only one (1) member to the Board; and
(c) if 3TEC's ownership of Common Stock is below 5% of the
Adjusted Outstanding Common Stock, 3TEC's right to designate a
member to the Board shall terminate.
For purposes hereof, "Adjusted Outstanding Common Stock" shall mean the number
of shares of Common Stock outstanding less any shares of Common Stock purchased
by Xxxxxx-Xxxxxxx Oil Company pursuant to its respective Purchase Agreement.
5. Termination of Major Shareholders' Right to Elect Directors. The
Major Shareholders' right to designate the directors as provided in paragraph
1(b)(ii) above shall terminate as follows:
(a) if the Major Shareholders' ownership of Common Stock is below
7 1/2% of the outstanding Common Stock, the Major Shareholders
shall be entitled to designate only one (1) member to the
Board;
(b) if the Major Shareholders' ownership of Common Stock is below
5% of the outstanding Common Stock, the Major Shareholders'
right to designate a member to the Board shall terminate.
6. Replacement Director. If either 3TEC or the Major Shareholders is no
longer eligible to designate a director or directors to the Board, the Board
shall (i) decrease the size of the Board, (i) leave the vacated seat empty, or
(iii) appoint a replacement to serve until the next of election of directors by
the shareholders of the Company through its normal nominating procedure, and
select a nominee to fill the open seat for election by shareholders at the next
annual meeting.
7. Restrictive Legend. Each certificate evidencing Common Stock subject
hereto shall bear a legend as follows:
"The shares of stock represented by this certificate are,
until sale, subject to a Shareholders' Agreement, dated as of
August 27, 1999, a copy of which is on file in the office of
the Company."
Any certificate evidencing Common Stock subject to this Agreement which is
hereafter issued shall bear the same legend.
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8. Termination of Agreement. This Agreement shall continue until, and
shall terminate immediately upon (a) execution of a written agreement of
termination by the Shareholders and the Company, (b) the adjudication of the
Company as a bankrupt or insolvent by a court of competent jurisdiction, or (c)
each of 3TEC and the Major Stockholders own less than five percent of the issued
and outstanding shares of Common Stock.
9. Shareholders' Representation and Warranties. Each Shareholder,
severally, as to itself only, represents and warrants to the Company that (a)
the Shareholder has duly authorized, executed and delivered this Agreement and
this Agreement constitutes a valid and binding agreement, enforceable in
accordance with its terms and neither the execution and delivery of this
Agreement nor the consummation by the Shareholder of the transactions
contemplated hereby will constitute a violation of, a default under, or conflict
with any contract, commitment, agreement, understanding, arrangement or
restriction of any kind to which the Shareholder is a party or by which the
Shareholder is a party or by which the Shareholder is bound; (b) consummation by
the Shareholder of the transactions contemplated hereby will not violate, or
require any consent, approval, or notice under, any provision of law other than
filing on Form 13D that may be required under the Securities Exchange Act of
1934, as amended; (c) except to the extent contemplated herein each
Shareholder's shares of Common Stock and the certificates representing same are
now and at all times during the term of this Agreement will be held by the
Shareholder, or by a nominee or custodian for the benefit of the Shareholder,
free and clear of all liens, claims, security interests, proxies, voting trusts
or agreement or any other encumbrances whatsoever ("Encumbrances") with respect
to the ownership or voting of such shares of Common Stock or otherwise, other
than Encumbrances created by or arising pursuant to this Agreement; (d) there
are no outstanding options, warrants or rights to purchase or acquire, or
proxies, powers-of-attorney, voting agreements, trust agreements or other
agreements relating to, such shares of Common Stock other than this Agreement
and the Registration Rights Agreement of even date as defined in the Purchase
Agreement; (e) the shares of Stock listed in the second recital paragraph hereof
constitutes all of the Common Stock of each Shareholder owned beneficially or of
record by such Shareholder on the date hereof; and (f) the Shareholder has the
present power and right to vote all of the shares of Common Stock as
contemplated herein.
10. Negative Covenants of Each Shareholder. Except to the extent
contemplated herein or in the Purchase Agreements, each Shareholder hereby
covenants and agrees that such Shareholder will not, and will not agree to,
directly or indirectly, except pursuant to an effective registration statement
or through "brokers" transactions as contemplated by subparagraphs (f) and (g)
and subject to the limitations on amount provided by subparagraph (e) of Rule
144 under the Securities Act, (a) sell, transfer, assign, cause to be redeemed
or otherwise dispose of any of its shares of Stock or enter into any contract,
option or other agreement or understanding with respect to the sale, transfer,
assignment, redemption or other disposition of its shares of Stock; (b) grant
any proxy, power-of-attorney or other authorization or interest in or with
respect to its shares of Stock pertaining or relating to the Purchase Agreements
or any of the transactions contemplated thereby; or (c) deposit such Stock into
a voting trust or enter into a voting agreement or arrangement with respect to
such Stock, unless and until, in the case of (a), (b) or
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(c) above, the Shareholder shall have taken all actions (including, without
limitation, the endorsement of a legend on the certificates evidencing such
Stock) reasonably necessary to ensure that such Stock shall at all times be
subject to all the rights, powers and privileges granted or conferred, and
subject to all the restrictions, covenants and limitations imposed, by this
Agreement and shall have caused, as a condition to any sale, transfer, pledge or
other disposition of any shares of Stock, any transferee of any of the Stock,
unless it is already a signatory to this Agreement, shall become a signatory to
and be bound by the terms of this Agreement.
11. Certain Defined Terms. Unless otherwise expressly provided herein,
all capitalized terms used herein without definition shall have the meanings
assigned to them in the Purchase Agreement.
12. Successors. This Agreement shall be binding upon and shall operate
for the benefit of the Company, its shareholders, and their respective
successors, assigns, executors, administrators and heirs, and it shall be
binding upon any entity to whom any Stock is transferred in accord with or in
violation of the provisions of this Agreement, and the executor or administrator
of such entity.
13. Modification. Notwithstanding anything to the contrary in this
Agreement or otherwise, no modification, amendment or waiver of any of the
provisions of this Agreement shall be effective unless in writing and signed by
all parties hereto. Each Shareholder covenants not to vote any shares of Stock
in favor of any amendment of the articles of incorporation or bylaws of the
Company, if such amendment would materially modify the terms or frustrate the
purpose of this Agreement or the Purchase Agreements, unless the vote on such
amendment is approved unanimously by the parties to this Agreement.
14. Non-Waiver. The failure to enforce at any time any of the
provisions of this Agreement, or to require at any time performance by any other
party of any of the provisions hereof, shall in no way be constructed to be a
waiver of such provisions.
15. Invalid Provisions. If any provision of this Agreement is held to
be illegal, invalid, or unenforceable under present or future laws effective
during the term thereof, such provision shall be fully severable, this Agreement
shall be construed and enforced as if such illegal, invalid, or unenforceable
provision had never comprised a part thereof, and the remaining provisions
thereof shall remain in full force and effect and shall not be affected by the
illegal, invalid, or unenforceable provision or by its severance therefrom.
16. Entire Agreement. This Agreement contains the full understanding of
the parties hereto with respect to the subject matter hereof, and there are no
representations, warranties, agreements or understandings other than expressly
contained herein.
17. Notices. Any notice to be given by any party hereunder to any other
shall be in writing, mailed by certified or registered mail, return receipt
requested, and shall be addressed to all other parties at the addresses listed
on the signature page hereof. All such notices shall be
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deemed to be given three (3) days after the date of mailing thereof.
18. Specific Performance. Each of the Shareholders acknowledges and
agrees that the Company would be damaged irreparably in the event that any of
the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Shareholders
agrees that the Company shall be entitled to an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to enforce specifically
this Agreement and the terms and provisions hereof in any action instituted in
any court having jurisdiction over the parties hereto and the subject matter
hereof, in addition to any other remedy to which the Company may be entitled at
law or in equity.
19. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF ALABAMA.
20. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
[Signature Page to Follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
COMPANY:
MIDDLE BAY OIL COMPANY, INC.
By: /s/ Xxxx X. Xxxxxxx
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Name: Xxxx X. Xxxxxxx
Title: President
Address for Notice:
Middle Bay Oil Company, Inc.
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Fax: (000) 000-0000
3TEC ENERGY CORPORATION
By: /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
Title: President
Address for Notice:
3TEC Energy Corporation
0000 X. Xxxxxxx Xxxxxxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Fax: (000) 000-0000
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XXXXXX-XXXXXXX OIL COMPANY
By: /s/ Xxxx X. Xxxxxxxxxxx
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Name: Xxxx X. Xxxxxxxxxxx
Title: Acquisitions Coordinator
Address for Notice:
Xxxxxx-Xxxxxxx Oil Company
0000 Xxxxx Xxxx
Xxxxx, XX 00000
Fax: (000) 000-0000
/s/ X.X. Xxxx, III
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X.X. XXXX, III
Address for Notice:
X.X. Xxxx, III
0000 Xxxx Xxxxxxx
Xxxxxxx, Xxxxxx 00000
Fax: (000) 000-0000
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WESKIDS, L.P.
By: Weskids, Inc.
Its General Partner
By: /s/ Xxxxxxxxx X. Xxxxxxx
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Name: Xxxxxxxxx X. Xxxxxxx
Title: Vice President
Address for Notice:
Weskids, L.P.
000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
/s/ Xxxxx X. Xxxxxxxxx
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XXXXX X. XXXXXXXXX
Address for Notice:
Xxxxx X. Xxxxxxxxx
0000 Xxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Fax: (000) 000-0000
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