Exhibit 10.6
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") dated as of
August 27, 1999, is entered into by and among MIDDLE BAY OIL COMPANY, INC.,
an Alabama corporation ("Corporation") and the parties listed on Schedule 1
attached hereto and incorporated herein by reference (each of such parties
are referred to individually as "Shareholder" and collectively, as
"Shareholders") and the parties listed on Schedule 2 attached hereto and
incorporated herein by reference (each of such parties are referred to
individually as "Piggy-Back Shareholder" and collectively, as "Piggy-Back
Shareholders").
RECITALS
WHEREAS, pursuant to those Securities Purchase Agreements by and
between Corporation and each of the Shareholders executed on the dates as set
forth on Schedule 1 (the "Purchase Agreements"), each Shareholder will
receive the number of shares of Common Stock, Notes and Warrants as set forth
on Schedule 1.
WHEREAS, each of the Piggy-Back Shareholders currently owns shares
of Common Stock as set forth on Schedule 2.
WHEREAS, as a condition to the Purchase Agreements, Corporation has
agreed to grant to Shareholders certain registration rights with respect to
their Registrable Securities (defined hereafter) and has agreed to grant the
Piggy-Back Shareholders certain registration rights with respect to their
Piggy-Back Registrable Securities (defined hereafter).
WHEREAS, all the terms used but not defined in this Agreement shall
have the meaning ascribed to them in the Purchase Agreements.
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:
Section 1. DEFINITIONS.
For purposes of this Agreement, the following terms shall have the
respective meanings assigned to them in this Section 1 or in the recitals
above or the subsections referred to below.
"Piggy-Back Registrable Securities" shall mean (i) the shares of
Common Stock owned by each Piggy-Back Shareholder as listed on Schedule 2
(ii) the shares of Common Stock owned by each Piggy-Back Shareholder during
the term of this Agreement as a result of the conversion of the shares of the
Company's Series B Convertible Preferred Shares as listed on Schedule 2, and
(iii) any securities issued or issuable with respect to the shares described
in clauses (i) and (ii) above by way of a stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization.
"Registrable Securities" shall mean (i) the shares of Common Stock
issued to the Shareholders pursuant to the Purchase Agreements (which, for
purposes hereof, shall mean the Common Stock Shares, the Warrant Shares and
the Conversion Shares as defined in the Purchase Agreements) and (ii) any
securities issued or issuable with respect to the shares described in clause
(i) above by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization.
Section 2. INDEPENDENT REGISTRATION RIGHTS.
2.1 The Corporation hereby grants to each Shareholder separate
rights to require the Corporation to use its best efforts to cause
registration and sale in a public offering of all or a portion of such
Shareholder's Registrable Securities in accordance with this Section 2;
provided, however, the Corporation shall not have any obligation to effect
more than a total of three (3) effective registrations pursuant to this
Section 2 at the Corporation's expense. If the Corporation shall have
received a written request submitted by Shareholder(s) owning at least a
majority of the Registrable Securities outstanding at the time of such
request (the "Requisite Holders") that such Shareholder(s) desires/desire to
sell Registrable Securities and specifying the number of Registrable
Securities proposed to be sold (for the purposes of this Section 2, "Shares")
and the proposed plan for distribution of the Shares, Corporation will
thereafter:
2.1.1 Give prompt (but in any event within fifteen (15)
days after the receipt of the Requisite Holder(s)' notice) notice to all
other Shareholders of such notice and of such other Shareholders' rights to
have their Registrable Securities included in such registration.
2.1.2 Upon the request of any such Shareholder made within
fifteen (15) days after the receipt by such Shareholder of any such notice
given pursuant to subsection 2.1.1 (which request shall specify the
Registrable Securities intended to be disposed of by such Shareholder and the
intended method or methods of disposition thereof), the Corporation will use
its best efforts to effect the registration of all Shares which the
Corporation has been so requested to register pursuant to this subsection 2.1.
2.1.3 Prepare and file as soon as practicable, but in no
event later than thirty (30) days from Corporation's receipt of the last
Shareholder's request to have such Shareholder's Registrable Securities
included in such registration within the time period specified in Section
2.1.2, a registration statement under the Securities Act of 1933, as amended
(the "Securities Act") ("Registration Statement") with the Securities
Exchange Commission ("Commission") on Form S-1 (or Form S-2 or Form S-3, if
Corporation is entitled to use such forms, or similar forms available for use
by small business issuers) and use its best efforts to cause such
Registration Statement to become effective in order that the Shareholders may
sell the Shares in accordance with the proposed plan of distribution.
2.1.4 Prepare and file with the Commission such amendment
and supplements to such Registration Statement and prospectus used in
connection therewith including any preliminary prospectus or supplemental or
amended prospectus (the "Prospectus") as may be necessary to keep such
Registration Statement continuously effective and to comply with the
provisions of the Securities Act with respect to the offer of the Shares
during the period required for distribution of the Shares, which period shall
not be in excess of the earlier of (i) one year from the effective date of
such Registration Statement, and (ii) the distribution of all Shares covered
by such Registration Statement.
2.1.5 Furnish to each Shareholder such number of copies of
the Prospectus (including any preliminary prospectus or supplemental or
amended prospectus ) as such Shareholder may reasonably request in order to
facilitate the sale and distribution of the Shares.
2.2 The right of each Shareholder to register Shares pursuant to the
provisions of this Section 2 shall be subject to the condition that if a
request for registration is made within sixty (60) days prior to the
conclusion of Corporation's then current fiscal year, Corporation shall have
the right to delay the filing of the Registration Statement for such period
of time until Corporation receives its audited financial statements for such
fiscal year.
2.3 If the Requisite Holder(s) intend/intends to distribute the
Registrable Securities covered by the notice pursuant to subsection 2.1 by
means of an underwriting, the Requisite Holder(s) shall so advise the
Corporation as a
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part of the notice made pursuant to subsection 2.1 and provide the name of
the managing underwriter or underwriters that the Requisite Holder(s)
proposes/propose to employ in connection with the public offering proposed to
be made pursuant to the registration requested. If the managing underwriter
of such underwritten offering shall inform the Corporation and the
Shareholders requesting that their Shares be registered pursuant to this
Section 2 by letter of its belief that the amount of Shares requested to be
included in such registration exceeds the amount which can be sold in (or
during the time of) such offering within a price range acceptable to the
Requisite Holders, then the Corporation will include in such registration
such amount of Shares which the Corporation is so advised can be sold in (or
during the time of) such offering PRO RATA on the basis of the amount of such
Shares so proposed to be sold and so requested to be included by such parties.
2.4 A registration shall not be deemed to have been effected (i)
unless it has become effective and remained effective for the period
specified in subsection 2.1.4, (ii) if, after it has become effective, such
registration is terminated by a stop order, injunction or other order of the
Commission or other governmental agency or court, or (iii) if the conditions
to closing specified in any purchase agreement or underwriting agreement
entered into in connection with such registration are not satisfied for any
reason, other than as a result of the voluntary termination of such offering
by the Requisite Holders.
Section 3. PIGGY-BACK REGISTRATION RIGHTS.
3.1 If Corporation proposes to file, on its behalf, a Registration
Statement under the Securities Act on Form X-0, X-0 or S-3 or similar forms
available for use by small business issuers, other than pursuant to Section 2
of this Agreement or in connection with a dividend reinvestment, employee
stock purchase, option or similar plan or in connection with a merger,
consolidation or reorganization, Corporation shall give written notice to
each Shareholder and Piggy-Back Shareholder at least thirty (30) days before
the filing with the Commission of such Registration Statement. Such notice
shall offer to include in such filing all or a portion of the Registrable
Securities and Piggy-Back Registrable Securities owned by such Shareholder or
Piggy-Back Shareholder. If a Shareholder or Piggy-Back Shareholder desires to
include all or a portion of its Registrable Securities or Piggy-Back
Registrable Securities in such Registration Statement, it shall give written
notice to Corporation within fifteen (15) days after the date of mailing of
such offer specifying the amount of Registrable Securities and/or Piggy-Back
Registrable Securities to be registered (for the purpose of this Section 3,
"Shares"). Corporation shall thereupon include in such filing the Shares,
subject to priorities in registration set forth in this Agreement, and
subject to its right to withdraw such filing, and shall use its best efforts
to effect registration under the Securities Act of the Shares.
3.2 The right of the Shareholders and the Piggy-Back Shareholders to
have the Shares included in any Registration Statement in accordance with the
provisions of this Section 3 shall be subject to the following conditions:
3.2.1 Corporation shall have the right to require that each
Shareholder or Piggy-Back Shareholder agree to refrain from offering or
selling any shares of Common Stock that it owns which are not included in any
such Registration Statement in accordance with this Section 3 for any
reasonable time period specified, not to exceed ninety (90) days, by any
managing underwriter of the offering to which such Registration Statement
relates.
3.2.2 If (i) a registration pursuant to this Section 3
involves an underwritten offering of the securities being registered 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 the Corporation and the Shareholders and Piggy-Back
Shareholders who have requested that their Shares be registered pursuant to
this Section 3 by letter of its belief that the amount of Shares
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requested to be included in such registration exceeds the amount which can be
sold in (or during the time of) such offering within a price range acceptable
to a majority of such requesting holders, then the Corporation will include
in such registration such amount of securities which the Corporation is so
advised can be sold in (or during the time of) such offering as follows:
FIRST, the securities being offered by the Corporation for its own account;
SECOND such Shares of the Shareholders which are requested to be included in
such registration PRO RATA on the basis of the amount of such Shares so
proposed to be sold and so requested to be included by such Shareholders; and
THIRD, such Shares of the Piggy-Back Shareholders and which are requested to
be included in such registration PRO RATA on the basis of the amount of such
Shares so proposed to be sold and so requested to be included by such
Piggy-Back Shareholders.
3.2.3 Corporation shall furnish each Shareholder and
Piggy-Back Shareholder with such number of copies of the Prospectus as such
Shareholder or Piggy-Back Shareholder may reasonably request in order to
facilitate the sale and distribution of its shares.
3.3 Notwithstanding the foregoing, Corporation in its sole
discretion may determine not to file the Registration Statement or proceed
with the offering as to which the notice specified herein is given without
liability to the Shareholders or the Piggy-Back Shareholders.
Section 4. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No
Shareholder or Piggy-Back Shareholder may participate in any registration
hereunder which relates to an underwritten offering unless such Shareholder
or Piggy-Back Shareholder (a) agrees to sell such holder's securities on the
basis provided in any underwriting arrangements approved by the holders of at
least a majority of the Registrable Securities and Piggy-Back Registrable
Securities to be included in such registration, or by a Person appointed by
such holders to act on their behalf to approve such arrangements, and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the
terms of such underwriting arrangements.
Section 5. EXCLUSIVE REGISTRATION RIGHTS AND TRANSFER.
The rights of each Shareholder under this Agreement may upon notice
to the Corporation be transferred to its respective Affiliates in combination
with a transfer of shares to such Affiliates. In addition, the rights of each
Shareholder under this Agreement may upon notice to the Corporation be
transferred to a non-Affiliate transferee in combination with a transfer of
shares to such non-Affiliate transferee. However, such non-Affiliate
transferee may not thereafter transfer its rights under this Agreement
without the Corporation's written consent. Except as provided in this Section
5, the rights granted under this Agreement are granted specifically to and
for the benefit of each Shareholder and Piggy Back Shareholder and shall not
pass to any transferee of Registrable Securities. From and after the date of
this Agreement, the Corporation will not, without the prior written consent
of Shareholders holding at least a majority of the Registrable Securities
then outstanding, enter into any agreement with respect to its securities
which is inconsistent with or violates the rights granted to the Shareholders
in this Agreement. Without limiting the foregoing, the Corporation also
specifically agrees that during the period commencing on the date hereof and
ending when the Shareholders have disposed of all of their Registrable
Securities, the Corporation will not enter into an agreement with any party
pertaining to the registration by the Corporation of such party's Common
Stock. The Corporation represents and warrants to each of the Shareholders
that, as of the date hereof, the Corporation is not a party to any agreement,
other than this Agreement, pertaining to the registration by the Corporation
of Common Stock.
Section 6. EXPENSES. Corporation will bear all the expenses in
connection with any Registration
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Statement under this Agreement, other than transfer taxes payable on the sale
of such shares, the fees and expenses of counsel to the Shareholders and
Piggy-Back Shareholders and fees and commissions of brokers, dealers and
underwriters.
Section 7. RECALL OF PROSPECTUSES, ETC. With respect to a
Registration Statement or amendment thereto filed pursuant to this Agreement,
if, at any time, Corporation notifies the Shareholders and Piggy-Back
Shareholders that an amendment or supplement to such Registration Statement
or amendment to the Prospectus included therein is necessary or appropriate,
each Shareholder and Piggy-Back Shareholder will forthwith cease selling and
distributing shares thereunder and will forthwith redeliver to Corporation
all copies of such Registration Statement and Prospectuses then in its
possession or under its control. Corporation will use its best efforts to
cause any such amendment or supplement to become effective as soon as
practicable and will furnish each Shareholder and Piggy-Back Shareholder with
a reasonable number of copies of such amended or supplemented prospectus (and
the period during which Corporation is required to use its best efforts to
maintain such Registration Statement in effect pursuant to this Agreement
will be increased by the period from the date on which such Shareholder or
Piggy-Back Shareholder ceased selling and distributing shares thereunder to
the date on which such amendment or supplement becomes effective).
Section 8. COOPERATION WITH EXISTING SHAREHOLDERS. Corporation shall
be entitled to require the Shareholders and Piggy-Back Shareholders to
cooperate with Corporation in connection with a registration of Registrable
Securities pursuant to this Agreement and furnish (i) such information as may
be required by Corporation or the Commission in connection therewith and (ii)
such representations, undertakings and agreements as may be required by the
Commission in connection therewith.
Section 9. REGISTRATION PROCEDURES Upon the receipt of a request for
registration of any Registrable Securities pursuant to Section 2 or Section 3
of this Agreement, Corporation will use its best efforts to effect the
registration of the Registrable Securities in accordance with the intended
method of disposition thereof, and pursuant thereto Corporation will as
expeditiously as possible:
9.1.1 Prepare and file with the Commission a registration statement
on an appropriate form under the Securities Act and use its best efforts to
cause such registration statement to become effective; provided, that before
filing a registration statement or prospectus or any amendments or
supplements thereto, including documents incorporated by reference after the
initial filing of any registration statement, Corporation will promptly
furnish to the holders of Registrable Securities and Piggy-Back Registrable
Securities to be registered and sold pursuant to this Agreement (the
"Registered Holders") and the underwriters, if any, copies of all such
documents proposed to be filed, which documents will be subject to the review
of the Registered Holders and the underwriters, and Corporation will not file
any registration statement or amendment thereto, or any prospectus or any
supplement thereto (including such documents incorporated by reference) to
which the Registered Holders or the underwriters, if any, shall reasonably
object in the light of the requirements of the Securities Act and any other
applicable laws and regulations.
9.1.2 Prepare and file with the Commission such amendments and
post-effective amendments to a registration statement as may be necessary to
keep such registration statement effective for the applicable period; cause
the related prospectus to be filed pursuant to Rule 424(b) (or any successor
provision) under the Securities Act; cause such prospectus to be supplemented
by any required prospectus supplement and, as so supplemented, to be filed
pursuant to Rule 424(b) (or any successor provision) under the Securities
Act; and comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement during
the
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applicable period in accordance with the intended methods of disposition set
forth in such registration statement or supplement to such prospectus.
9.1.3 Notify the Registered Holders and the managing underwriters,
if any, promptly, and (if requested by any such person) confirm such advice
in writing, (i) when a prospectus or any prospectus supplement or
post-effective amendment has been filed, and, with respect to a registration
statement or any post-effective amendment, when the same has become
effective, (ii) of any request by the Commission for amendments or
supplements to a registration statement or related prospectus or for
additional information, (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of a registration statement or the
initiation of any proceeding for that purpose, (iv) if at any time the
representations and warranties of Corporation contemplated by subsection
9.1.10 cease to be true and correct, (v) of the receipt by Corporation of any
notification with respect to the suspension or qualification of any of the
Registrable Securities for sale in any jurisdiction or the initiation of any
proceeding for such purpose, (vi) of the happening of any event which
requires the making of any changes in a registration statement or related
prospectus so that such documents will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading and (vii)
of Corporation's reasonable determination that a post-effective amendment to
a registration statement would be appropriate or that there exist
circumstances not yet disclosed to the public which make further sales under
such registration statement inadvisable pending such disclosures and
post-effective amendment.
9.1.4 Make reasonable efforts to obtain the withdrawal of any order
suspending the effectiveness of a registration statement, or the lifting of
any suspension of the qualification of any of the Registrable Securities for
sale in any jurisdiction, at the earliest possible moment.
9.1.5 If requested by the managing underwriters or the Registered
Holders in connection with an underwritten offering, immediately incorporate
in a prospectus supplement or post effective amendment such information as
the managing underwriters and the Registered Holders agree should be included
therein relating to such sale and distribution of Registrable Securities,
including, without limitation, information with respect to the number of
shares of Registrable Securities being sold to such underwriters and the
purchase price being paid therefor by such underwriters and with respect to
any other terms of the underwritten (or best efforts underwritten) offering
of the Registrable Securities to be sold in such offering; make all required
filings of such prospectus supplement or post-effective amendment as soon as
notified of the matters to be incorporated in such prospectus supplement or
post-effective amendment; and supplement or make amendments to any
registration statement if requested by the Registered Holders or any
underwriter of such Registrable Securities.
9.1.6 Furnish to the Registered Holders and each managing
underwriter, if any, without charge, at least one signed copy of the
registration statement, any post-effective amendment thereto, including
financial statements and schedules, all documents incorporated therein by
reference and all exhibits (including those incorporated by reference).
9.1.7 Deliver without charge to the Registered Holders and the
underwriters, if any, as many copies of the prospectus or prospectuses
(including each preliminary prospectus) and any amendment or supplement
thereto as such persons may reasonably request; and Corporation consents to
the use of such prospectus or any amendment or supplement thereto by such
Registered Holders and the underwriters, if any, in connection with the offer
and sale of the Registrable Securities covered by such prospectus or any
amendment or supplement thereto.
9.1.8 Prior to any public offering of Registrable Securities,
register or qualify or cooperate with the Registered Holders, the
underwriters, if any, and respective counsel in connection with the
registration or qualification of such Registrable Securities for offer and
sale under the securities or Blue Sky laws of such jurisdictions as the
Registered Holders or an underwriter reasonably requests in writing; keep
each such registration or qualification
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effective during the period such registration statement is required to be
kept effective and do any and all other acts or things necessary or advisable
to enable the disposition in such jurisdictions of the Registrable Securities
covered by the applicable registration statement; PROVIDED, HOWEVER, that
Corporation will not be required in connection therewith or as a condition
thereto to qualify generally to do business or subject itself to general
service of process in any such jurisdiction where it is not then so subject.
9.1.9 Upon the occurrence of any event contemplated by subsection
9.1.3 (ii) - (vii) above, prepare, to the extent required, a supplement or
post-effective amendment to the applicable registration statement or related
prospectus or any document incorporated therein by reference or file any
other required document so that, as thereafter delivered to the purchaser of
the Registrable Securities being sold thereunder, such prospectus will not
contain an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein not misleading.
9.1.10 Enter into such agreements (including an underwriting
agreement) and take all such other actions in connection therewith in order
to expedite or facilitate the disposition of such Registrable Securities and
in such connection, whether or not an underwriting agreement is entered into
and whether or not the Registrable Securities to be covered by such
registration are to be offered in an underwritten offering: (i) make such
representations and warranties to the Registered Holders to the registration
statement, prospectus and documents incorporated by reference, if any, in
form, substance and scope as are customarily made by issuers to underwriters
in underwritten offerings and confirm the same if and when requested; (ii)
obtain opinions of counsel to Corporation and updates thereof with respect to
the registration statement and the prospectus in the form, scope and
substance which are customarily delivered in underwritten offerings; (iii) in
the case of an underwritten offering, enter into an underwriting agreement in
form, scope and substance as is customary in underwritten offerings and
obtain opinions of counsel to Corporation and updates thereof (which counsel
and opinions (in form, scope and substance) shall be reasonably satisfactory
to the managing underwriters and the Registered Holders) addressed to the
Registered Holders and the underwriters, if any, covering the matters
customarily covered in opinions delivered in underwritten offerings and such
other matters as may be reasonably requested by the Registered Holders and
such underwriters; (iv) obtain "cold comfort" letters and updates thereof
from Corporation's independent certified public accountants addressed to the
Registered Holders and the underwriters, if any, such letters to be in
customary form and covering matters of the type customarily covered in "cold
comfort" letters by accountants in connection with underwritten offerings;
(v) if any underwriting agreement is entered into, the same shall set forth
in full the indemnification provisions and procedures customarily included in
underwriting agreements in underwritten offerings; and (vi) Corporation shall
deliver such documents and certificates as may be requested by the Registered
Holders and the managing underwriters, if any, to evidence compliance with
clause (i) above and with any customary conditions contained in the
underwriting agreement or other agreement entered into by Corporation. The
above shall be done at each closing under such underwriting or similar
agreement or as and to the extent required thereunder.
9.1.11 Make available for inspection by a representative of the
Registered Holders, any underwriter participating in any disposition pursuant
to such registration, and any attorney or accountant retained by the
Registered Holders or such underwriter, all financial and other records,
pertinent corporate documents and properties of Corporation, and cause
Corporation's officers, directors and employees to supply all information
reasonably requested by any such representative, underwriter, attorney or
accountant in connection with such registration; provided that any records,
information or documents that are designated by Corporation in writing as
confidential shall be kept confidential by such Persons unless disclosures of
such records, information or documents is required by court or administrative
order.
9.1.12 Otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission and make generally available to its
security holders earning statements satisfying the provisions of Section
11(a) of the
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Securities Act, no later than 90 days after the end of any 12-month period
(i) commencing at the end of any fiscal quarter in which Registrable
Securities are sold to underwriters in a firm or best efforts underwritten
offering and (ii) beginning with the first day of Corporation's first fiscal
quarter next succeeding each sale of Registrable Securities after the
effective date of a registration statement, which statements shall cover said
12-month periods.
9.1.13 If Corporation, in the exercise of its reasonable judgment,
objects to any change reasonably requested by the Registered Holders or the
underwriters, if any, to any registration statement or prospectus or any
amendments or supplements thereto (including documents incorporated or to be
incorporated therein by reference) as provided for in this Section 9,
Corporation shall not be obligated to make any such change and such
Registered Holders may withdraw their Registrable Securities from such
registration, in which event (i) Corporation shall pay all registration
expenses (including its counsel fees and expenses) incurred in connection
with such registration statement or amendment thereto or prospectus or
supplement thereto, and (ii) in the case of a registration being effected
pursuant to Section 2, such registration shall not count as one of the
registrations Corporation is obligated to effect pursuant to Section 2 hereof.
Section 10. INDEMNIFICATION.
10.1 In the event of any registration of any securities under the
Securities Act pursuant to this Agreement, Corporation will indemnify and
hold harmless each Shareholder, each Piggy-Back Shareholder, any underwriter
and each other Person, if any, who controls such Shareholder, Piggy-Back
Shareholder or underwriter within the meaning of the Securities Act, against
any losses, claims, damages or liabilities, joint or several, to which each
such Shareholder, Piggy-Back Shareholder or any underwriter may become
subject, under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or action in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any
material fact contained in such Registration Statement or preliminary
prospectus (if used prior to the effective date of such Registration
Statement) or final or summary prospectus contained therein (if used during
the period the Corporation is required to keep the Registration Statement
effective), or any amendment or supplement thereto, 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 made
therein not misleading, and will reimburse each such Shareholder, Piggy-Back
Shareholder or underwriter for any legal or any other expenses as reasonably
incurred by such person in connection with investigating or defending any
such action or claim, excluding any amounts paid in settlement of any
litigation, commenced or threatened, if such settlement is effected without
prior written consent of Corporation; provided, however, that Corporation
will not be liable to the Shareholders, Piggy-Back Shareholders or an
underwriter in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon an untrue statement or
omission or alleged omission made in said Registration Statement, said
preliminary prospectus or said final or summary prospectus or any amendment
or supplement thereto, in reliance upon and in conformity with written
information furnished to Corporation by that Shareholder, Piggy-Back
Shareholder or their respective affiliates or representatives, or by that
underwriter, as the case may be, specifically for use in the preparation
thereof; and provided further that the indemnity agreement contained in this
Section 10 with respect to any preliminary prospectus shall not inure to the
benefit of the Shareholders, Piggy-Back Shareholders or any underwriter or to
any Person selling the same in respect of any loss, claim, damage, liability
or action asserted by someone who purchased shares from such person if a copy
of the final prospectus (as the same may be amended or supplemented) in
connection with such registration statement was not sent or given to such
person with or prior to written confirmation of the sale and if the untrue
statement or omission or alleged untrue statement or omission of a material
fact contained in such preliminary prospectus was corrected in the final
prospectus.
10.2 In the event of any registration of securities under the
Securities Act pursuant to this Agreement, each
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Shareholder and Piggy-Back Shareholder will indemnify and hold harmless
Corporation, each of its directors and officers, any underwriter and each
other Person, if any, who controls Corporation or underwriter within the
meaning of the Securities Acts, against any losses, claims, damages or
liabilities, joint or several, to which Corporation or any such director,
officer, underwriter may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or action
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in such Registration
Statement or preliminary prospectus or final or summary prospectus contained
therein, or any amendment or supplement thereto, 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 made
therein not misleading, and will reimburse Corporation, each such director,
officer, underwriter for any legal or any other expenses as reasonably
incurred by them in connection with investigating or defending any such
action or claim, excluding any amounts paid in settlement of any litigation,
commenced or threatened, if such settlement is effected without prior written
consent of the indemnifying Shareholder, Piggy-Back Shareholder or their
respective representative; but in all cases only if, and to the extent that
any such loss, claim, damage, liability or expense arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission therein made in reliance upon and in conformity with written
information furnished to Corporation by the indemnifying Shareholder,
Piggy-Back Shareholder or their respective affiliates or representatives
specifically for use in the preparation thereof. Notwithstanding the
foregoing, the amount of the indemnity provided by each such Shareholder or
Piggy-Back Shareholder pursuant to this Section 10 shall not exceed the net
proceeds received by such Shareholder or Piggy-Back Shareholder in such
related registration and sale.
10.3 Promptly after receipt by a party entitled to indemnification
under subsection 10.1 or 10.2 hereof of notice of the commencement of any
action, such indemnified party will, if a claim in respect thereof is to be
made against the indemnifying party under either of such subsections, notify
the indemnifying party in writing of the commencement thereof. In case any
such action is brought against the indemnified party and it shall so notify
the indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate in, and, to the extent that it so chooses,
to assume the defense thereof with counsel reasonably satisfactory to such
indemnified party, and, after notice from the indemnifying party that it so
chooses, such indemnifying party shall not be liable for any legal or other
expenses subsequently incurred by such indemnified party in connection with
the defense thereof, provided, however, that if the indemnifying party fails
to take reasonable steps necessary to diligently defend such claim within
twenty (20) days after receiving notice from the indemnified party that the
indemnified party believes the indemnifying party has failed to take such
steps, the indemnified party may assume its own defense and the indemnifying
party shall be liable for any expenses therefor. The indemnity agreements in
this Section 10 shall be in addition to any liabilities which the
indemnifying parties may have pursuant to law.
10.4 If the indemnification provided for in this Section 10 from the
indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities or expenses referred to
herein, then the indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages, liabilities or expenses in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party and indemnified parties in connection with the actions
which resulted in such losses, claims, damages, liabilities or expenses, as
well as any other relevant equitable considerations. The relative fault of
such indemnifying party and indemnified parties shall be determined by
reference to, among other things, whether any action in question, including
any untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact, has been made by, or relates to
information supplied by, such indemnifying party or indemnified parties, and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action. The amount paid or payable by
a party as a result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include, subject to the limitations set
forth in Section 10 hereof, any legal or other fees or expenses reasonably
incurred by such party in connection with any
9
investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 10 were determined by pro rata
allocation or by any other method of allocation which does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
Section 11. SALES UNDER RULE 144. With a view to making available to
each Shareholder and Piggy-Back Shareholder the benefits of Rule 144
promulgated under the Securities Act and any other similar rule or regulation
of the Commission that may at any time permit such Shareholder or Piggy-Back
Shareholder to sell the Registrable Securities without registration,
Corporation agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 (or any successor provision);
(b) file with the Commission in a timely manner all reports and
other documents required of Corporation under the Securities Act and the
Exchange Act;
(c) furnish to such Shareholder or Piggy-Back Shareholder forthwith
upon request (i) a written statement by Corporation that it has complied with
the reporting requirements of Rule 144 (or any successor provision), the
Securities Act and the Exchange Act, (ii) a copy of the most recent annual or
quarterly report of Corporation and such other reports and documents so filed
by Corporation under the Securities Act and the Exchange Act and (iii) such
other information as may be reasonably requested by such Shareholder or
Piggy-Back Shareholder in availing itself of any rule or regulation of the
Commission which permits the selling of any such securities without
registration; and
(d) after any sale of Registrable Securities pursuant to Rule 144,
to the extent allowed by law, to cause any restrictive legends to be removed
and any transfer restrictions to be rescinded with respect to such
Registration Securities.
Section 12. REMOVAL OF LEGEND. The Corporation agrees, to the extent
allowed by law, to remove any legends on certificates representing
Registrable Securities or Piggy-Back Registrable Securities describing
transfer restrictions applicable to such securities upon the sale of such
securities (i) pursuant to an effective Registration Statement under the
Securities Act or (ii) in accordance with the provisions of Rule 144 under
the Securities Act.
Section 13. 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 the other parties at the
addresses listed on the signature pages hereof. All such notices shall be
deemed to be given three (3) days after the date of mailing thereof.
Section 14. 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 the Corporation and the Shareholders holding not less than 95% of
the Registrable Securities then outstanding.
10
Section 15. 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 construed
to be a waiver of such provisions.
Section 16. PARTIAL INVALIDITY. If any clause, sentence, paragraph,
section or part of this Agreement shall be deemed invalid, unenforceable or
against public policy, the part which is invalid, unenforceable or contrary
to public policy shall not affect, impair, invalidate or nullify the
remainder of this Agreement, but the invalidity, unenforceability or
contrariness to public policy shall be confined only to the clause, sentence,
paragraph, section or party of this Agreement so invalidated, unenforceable
or against public policy.
Section 17. CONSTRUCTION. The language in all parts of this
Agreement shall in all cases be construed simply, according to its fair
meaning, and shall not be construed strictly for or against either of the
parties hereto.
Section 18. GOVERNING LAW. This Agreement shall be governed and
construed according to the laws of the State of Alabama, without regard to
its conflicts of law principles.
Section 19. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall constitute an original and all of
which together shall constitute but one and the same instrument.
Section 20. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the parties hereto and
their respective successors and permitted assigns.
Section 21. SPECIFIC PERFORMANCE. The parties agree that, to the
extent permitted by law, (i) the obligations imposed on them in this
Agreement are special, unique and of an extraordinary character, and that in
the event of a breach of any such party damages would not be an adequate
remedy and (ii) the other party shall be entitled to specific performance and
injunctive and equitable relief in addition to any other remedy to which it
may be entitled at law or in equity.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
11
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
"CORPORATION"
MIDDLE BAY OIL COMPANY, INC.
By: /s/ Xxxx X. Xxxxxxx
-------------------------------------
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
"SHAREHOLDERS"
3TEC ENERGY CORPORATION
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
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
12
"PIGGY-BACK SHAREHOLDERS"
XXXXXX-XXXXXXX OIL COMPANY
By: /s/ Xxxx X. Xxxxxxxxxxx
-------------------------------------
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
----------------------------------------
X.X. XXXX, III
Address for Notice:
X.X. Xxxx, III
0000 Xxxx Xxxxxxx
Xxxxxxx, Xxxxxx 00000
Fax: (000) 000-0000
13
WESKIDS, L.P.
By: Weskids, Inc.
Its General Partner
By: /s/ Xxxxxxxxx X. Xxxxxxx
--------------------------------------
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
-----------------------------------------
XXXXX X. XXXXXXXXX
Address for Notice:
Xxxxx X. Xxxxxxxxx
0000 Xxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Fax: (000) 000-0000
14
XXXXXXXXX FAMILY PARTNERS, LP
By: Xxxxx X. Xxxxxxxxx
-----------------------------------------
Its General Partner
By: /s/ Xxxxx Xxxxxxxxx
--------------------------------------
Name: Xxxxx Xxxxxxxxx
------------------------------------
Title: Attorney In Fact
-----------------------------------------
Address for Notice:
Xxxxxxxxx Family Partners, LP
00 Xxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Fax: (000) 000-0000
SHOEINVEST II, LP
By: XXXXX X. XXXXXXXXX INVESTMENTS, INC.
-----------------------------------------
Its General Partner
By: /s/ XXXXX XXXXXXXXX
----------------------------------------
Name: XXXXX XXXXXXXXX
-----------------------------------------
Title: EXECUTIVE VICE PRESIDENT
-----------------------------------
Address for Notice:
Shoeinvest II, LP
00 Xxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Fax: (000) 000-0000
15
SCHEDULE 1
3TEC Energy Corporation Securities Purchase Agreement by and
between 3TEC Energy Corporation and
Middle Bay Oil Company, Inc., dated
July 1, 1999
4,775,556 shares of Common Stock
Warrants exercisable for 3,600,000
shares of Common Stock $10,700,000
Note (which is convertible to
Conversion Shares)
Xxxxxxxxx Family
Partners, LP Securities Purchase Agreement by and
between Xxxxxxxxx Family Partners, LP and
Middle Bay Oil Company, Inc., dated
August 27, 1999
22,222 shares of Common Stock
Warrants exercisable for 16,822
shares of Common Stock $50,000 Note
(which is convertible to Conversion
Shares)
Shoeinvest II, LP Securities Purchase Agreement
by and between Shoeinvest II, LP and
Middle Bay Oil Company, Inc., dated
August 27, 1999
44,444 shares of Common Stock
Warrants exercisable for 33,644
shares of Common Stock $100,000 Note
(which is convertible to Conversion
Shares)
SCHEDULE 2
Number of Shares of
Number of Shares of Series B Convertible
Common Stock Held Preferred Shares Held
Piggy-Back Shareholder Immediately Prior To Closing Immediately Prior to Closing
---------------------- ---------------------------- ----------------------------
Xxxxxx-Xxxxxxx Oil Company 3,333,334 0
X.X. Xxxx, III 1,187,556 0
Weskids, L.P. 843,687 117,467
Xxxxx X. Xxxxxxxxx 684,222 117,466
