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EXHIBIT 10.3
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 the Corporation and each of the Shareholders as referenced 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)
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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.
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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
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.
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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 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.
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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.
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Section 6. Expenses. Corporation will bear all the expenses in
connection with any Registration 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
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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 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,
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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 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
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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 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.
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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
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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 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
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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 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
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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.
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
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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)
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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 XXX 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
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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
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"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
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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
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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)
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SCHEDULE 2
Piggy-Back Shareholder Number of Shares of Number of Shares of
Common Stock Held Series B Convertible
Immediately Prior to Closing Preferred Shares Held
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
