EXHIBIT 10.29
FIRST AMENDMENT TO SHAREHOLDERS' AGREEMENT
This First Amendment to Shareholders' Agreement (the "Amendment") is made
and entered into this 30th day of May, 2000, by and among 3TEC Energy
Corporation, a Delaware corporation, successor in interest to Middle Bay Oil
Company, Inc. (the "Company") and W/E Energy Company L.L.C., formerly known as
3TEC Energy Company L.L.C. and successor in interest to the 3TEC Energy
Corporation referenced in the Agreement (as defined below) ("W/E"), ECIC
Corporation ("ECIC"), EnCap Energy Capital Fund III, L.P. ("Fund III"), EnCap
Energy Acquisition III-B, Inc. ("Acquisition III-B"), BOCP Energy Partners, L.P.
("BOCP") (W/E, ECIC, Fund III, Acquisition III-B and BOCP are sometimes
hereinafter referred to collectively as the "W/E Shareholders") and Xxxxxx-
Xxxxxxx Oil Company ("Xxxxxx-Xxxxxxx"), X.X. Xxxx, III ("Lett"), Weskids, L.P.
("Weskids") and Xxxxx X. Xxxxxxxxx ("Xxxxxxxxx") (Xxxxxx-Xxxxxxx, Lett, Weskids
and Xxxxxxxxx are sometimes hereinafter referred to collectively as the "Major
Shareholders").
RECITALS
WHEREAS, on August 27, 1999, the Company, W/E and the Major Shareholders
executed that certain Shareholders Agreement (the "Agreement");
WHEREAS, the W/E Shareholders and the Major Shareholders are hereinafter
referred to collectively as the "Shareholders";
WHEREAS, the Company and the Shareholders wish to amend the Agreement;
NOW, THEREFORE, in consideration of the mutual promises contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. Terms Defined in the Agreement. Unless otherwise defined in this
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Amendment, each term defined in the Agreement shall have the meaning assigned to
it in the Agreement.
2. Additional Parties to the Agreement; Certain Defined Terms.
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(a) EnCap Energy Capital Fund III, L.P., EnCap Energy Acquisition
III-B, Inc., ECIC Corporation and BOCP Energy Partners, L.P.
shall be added as parties to the Agreement.
(b) The Agreement shall be amended: (i) to add a new defined term
"W/E Shareholders" which, for purposes of the Agreement, shall
mean "W/E Energy Company L.L.C., EnCap Energy Capital Fund III,
L.P., EnCap Energy Acquisition III-B, Inc., ECIC Corporation and
BOCP Energy Partners, L.P.," and (ii) to redefine "Shareholders"
to mean "W/E Shareholders and the Major Shareholders."
3. Paragraph 1. Paragraph 1 of the Agreement is hereby deleted in its
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entirety and replaced with the following:
"Nomination and Election of Directors. Each of the Shareholders agrees, so
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long as it owns such shares, to vote (including the taking of any action by
written consent, as necessary or appropriate) and cause its affiliates to
vote all shares of Common Stock (and any and all shares of any other voting
class of capital stock of the Company presently or at any future time owned
by the Shareholders or their affiliates) which it is entitled to vote (or
control the voting directly or indirectly) to ensure that the following
shall occur:
(a) The Company shall at all times be managed by or under the direction of
the Board of Directors of the Company (the "Board"), which shall
consist of seven (7) members, at least two of whom shall qualify as an
"independent director" as defined in Section 4200(14) of the NASDAQ
Marketplace Rules.
The Shareholders shall use their best efforts (including voting the
shares owned by them and their Affiliates, in calling special meetings
of the Shareholders and executing and delivering written consents), to
elect such seven (7) members of the Board, consisting of the
following:
(i) Three (3) members designated by W/E Energy Company L.L.C.
("W/E");
(ii) Two (2) members designated by the Major Shareholders; and
(iii) Two (2) members designated by a majority of the Board, at least
one of which so elected shall be an "independent director" as
defined in the Section 4200(14) of the NASDAQ Marketplace
Rules, which independent director shall be acceptable to W/E.
The party designating a director may remove such director, with or without
cause, and designate his or her successor. If the director designated by a party
resigns, dies, becomes incapacitated or is otherwise unable to serve, the party
designating such director may designate his or her successor. All Shareholders
shall vote all shares held by them in favor of the election or removal of such
persons so designated. Action taken by either W/E or the Major Shareholders in
designating or removing directors shall be in writing executed by either W/E or
the Major Shareholders, as the case may be, and promptly delivered to the other
Shareholders and the Company."
4. Paragraph 4. Paragraph 4 of the Agreement is hereby deleted in
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its entirety and replaced with the following:
"Termination of W/E's Right to Elect Directors. W/E's right to designate
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the directors as provided in paragraph 1(b)(i) above shall terminate as follows:
(a) if W/E's Shareholders' percentage of beneficial ownership of Common
Stock is below 15%, W/E shall be entitled to designate only two (2)
members to the Board;
(b) if W/E's Shareholders' percentage of beneficial ownership of Common
Stock is below 7%, W/E shall be entitled to designate only one (1)
member to the Board; and
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(c) if W/E's Shareholders' percentage of beneficial ownership of Common
Stock is below 5%, W/E's right to designate a member to the Board
shall terminate.
For purposes of this Agreement, "beneficial ownership" of Common Stock or to
"beneficially own" Common Stock shall be determined in accordance with Rule 13d-
3(d)(1) under the Securities Exchange Act of 1934, as amended.
5. Paragraph 5. Paragraph 5 of the Agreement is hereby deleted in its
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entirety and replaced with the following:
"Termination of Major Shareholders' Right to Elect Directors. The Major
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Shareholders' right to designate the directors as provided in paragraph 1(b)(ii)
above shall terminate as follows:
(a) if the Major Shareholders' percentage of beneficial ownership of
Common Stock is below 7 1/2%, the Major Shareholders shall be entitled
to designate only one (1) member to the Board;
(b) if the Major Shareholders' percentage of beneficial ownership of
Common Stock is below 5%, the Major Shareholders' right to designate a
member to the Board shall terminate."
6. Paragraph 8. Paragraph 8 of the Agreement is hereby deleted in its
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entirety and replaced with the following:
"8. Termination of Agreement. This Agreement shall continue until,
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and shall terminate immediately upon (a) execution of a written
agreement of termination by the Shareholders and the Company, (b) the
adjudication of the Company as a bankrupt or insolvent by a court of
competent jurisdiction or (c) each of (i) the W/E Shareholders, in the
aggregate, and (ii) the Major Shareholders beneficially own less than
5% of the Common Stock."
7. Paragraph 19. Paragraph 19 of the Agreement is hereby deleted in its
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entirety and replaced with the following:
"19. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
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WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE."
8. New Paragraph 21. The following shall be added as paragraph 21
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of the Agreement:
"21. Ownership of less than 3.5%. Notwithstanding any other
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provision herein to the contrary, in the event (i) the Company completes its
offering of common stock as contemplated in its Form S-2 Registration Statement
filed with the Securities and Exchange Commission, and (ii) if any Shareholder's
percentage of beneficial ownership of Common Stock falls below three and one-
half percent (3.5%), then such Shareholder's rights and obligations under this
Agreement shall terminate upon the Company's receipt of written notice executed
by a duly authorized representative of such Shareholder that its percentage of
beneficial ownership of Common Stock has fallen below such threshold. Upon the
Company's receipt of such duly executed notice, the Company shall promptly
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take all action necessary to notify the Company's transfer agent that the
restrictive legend as required in paragraph 7 of the Agreement on such
Shareholder's Common Stock certificate(s) should be removed and shall be of no
further force or effect."
9. Successors. This Amendment shall be binding upon and shall operate
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for the benefit of the Company, its shareholders, and their respective
successors, assigns, executors, administrators and heirs, and it shall be
binding upon the Shareholders and any entity to whom any shares of Common Stock
is transferred by the Shareholders in accord with or in violation of the
provisions of this Agreement, and the executor or administrator of such entity.
10. Shareholders' Agreement in Effect. Except as modified herein, the
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terms and provisions of the Agreement remain in full force and effect.
11. Counterparts. This Amendment may be signed in any number of
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counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed on the day and year first above written.
COMPANY:
3TEC ENERGY CORPORATION
By:________________________________
Name: Xxxxxxx X. Xxxxx
Title: Executive Vice President
Address for Notice:
3TEC Energy Corporation
Two Shell Plaza, 000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Fax: (000) 000-0000
W/E ENERGY COMPANY L.L.C.
By: ________________________________
Name: Xxxxx X. Xxxxxx
Title: Managing Director
Address for Notice:
W/E Energy Company L.L.C.
Two Shell Plaza, 000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Fax: (000) 000-0000
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ECIC CORPORATION
By ____________________________
____________________________
Vice President
Address for Notice:
c/o EnCap Investments L.L.C.
Attn: Xxxxx X. Xxxxxx
0000 Xxxxxx Xxxxx Xxxx., Xxxxx 0000
Xxxxxx, Xxxxx 00000
ENCAP ENERGY CAPITAL FUND III, L.P.
By: EnCap Investments L.L.C.,
General Partner
By: __________________________
__________________________
Managing Director
Address for Notice:
c/o EnCap Investments L.L.C.
Attn: Xxxxx X. Xxxxxx
0000 Xxxxxx Xxxxx Xxxx., Xxxxx 0000
Xxxxxx, Xxxxx 00000
ENCAP ENERGY ACQUISITION III-B, INC.
By ___________________________
___________________________
Vice President
Address for Notice:
c/o EnCap Investments L.L.C.
Attn: Xxxxx X. Xxxxxx
0000 Xxxxxx Xxxxx Xxxx., Xxxxx 0000
Xxxxxx, Xxxxx 00000
BOCP ENERGY PARTNERS, L.P.
By: EnCap Investments L.L.C., Manager
By: __________________________
__________________________
Managing Director
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Address for Notice:
c/o EnCap Investments L.L.C.
Attn: Xxxxx X. Xxxxxx
0000 Xxxxxx Xxxxx Xxxx., Xxxxx 0000
Xxxxxx, Xxxxx 00000
XXXXXX-XXXXXXX OIL COMPANY
By:__________________________________
Name:________________________________
Title:_______________________________
Address for Notice:
Xxxxxx-Xxxxxxx Oil Company
0000 Xxxxx Xxxx
Xxxxx, XX 00000
Fax: (000) 000-0000
________________________________
X.X. XXXX, III
Address for Notice:
X.X. Xxxx, III
0000 Xxxx Xxxxxxx
Xxxxxxx, Xxxxxx 00000
Fax: (000) 000-0000
________________________________________
XXXXX X. XXXXXXXXX
Address for Notice:
Xxxxx X. Xxxxxxxxx
0000 Xxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Fax: (000) 000-0000
WESKIDS, L.P.
By: Weskids, Inc.
Its General Partner
By:___________________________________
Name:_________________________________
Title:________________________________
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Address for Notice:
Weskids, L.P.
000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
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