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EXHIBIT 10.2
December 28, 1999
Petroglyph Energy, Inc.
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Gentlemen:
1. SUBSCRIPTION.
(a) The undersigned subscriber, III Exploration Company (the
"Subscriber"), intending to be legally bound, irrevocably agrees to purchase
from Petroglyph Energy, Inc., a Delaware corporation (the "Company"), one
million shares (collectively, the "Shares") of the Company's Common Stock, par
value $.01 per share (the "Common Stock"), for $2.00 per share, for an aggregate
purchase price of $2,000,000 (the "Purchase Price").
(b) The Shares are being offered in a private offering of shares of
Common Stock by the Company to the Subscriber, a qualified offeree, without
registration under the Securities Act of 1933, as amended (the "Securities
Act"), or qualification under applicable state securities laws ("Blue Sky
Laws").
2. PAYMENT. Pursuant to the terms of this subscription agreement, the
undersigned shall, on the date hereof, transmit by wire transfer of immediately
available funds the Purchase Price into the account designated by the Company.
Concurrently therewith, the Company shall issue the Shares to the Subscriber.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SUBSCRIBER. In
order to induce the Company to sell the Shares to the Subscriber, the Subscriber
hereby represents, warrants and covenants to the Company as follows:
(a) The Subscriber is a corporation, duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation.
(b) The Subscriber has full power and authority to execute, deliver and
perform this subscription agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance by the Subscriber
of this subscription agreement, and the consummation by it of the transactions
contemplated hereby, have been duly authorized by all necessary corporate
actions of the Subscriber. This subscription agreement has been duly and validly
executed and delivered by the Subscriber and constitutes the legal, valid and
binding obligation of the Subscriber, enforceable against the Subscriber in
accordance with its terms, except to the extent that enforcement may be limited
by applicable bankruptcy laws, insolvency, reorganization or other similar laws
affecting creditors' rights generally and by general equitable principles
(regardless of whether enforcement is sought in equity or at law).
(c) The execution, delivery and performance of this subscription
agreement and the purchase of the Shares do not and will not conflict with,
violate or constitute a default under any applicable law or regulation or any
agreement or arrangement to which the Subscriber is a party or by which the
Subscriber may be bound.
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(d) The Subscriber represents and warrants that in order to make an
informed decision in connection with the purchase of the Shares:
(i) the Subscriber has reviewed the merits and risks of an
investment in the Shares with such tax and legal counsel to the extent
deemed advisable by the Subscriber and is not relying on the Company
nor any director, stockholder, employee, advisor or affiliate of the
Company with respect to the economic, tax and other considerations
relevant to the Subscriber relating to this investment;
(ii) the Subscriber (A) is familiar with the business and
operations of the Company, has been provided with sufficient
information with respect to the business and operations of the Company
and has carefully reviewed the same, (B) has been provided with such
additional information with respect to the Company as the Subscriber
has requested and (C) has had the opportunity to discuss such
information with members of the management of the Company and any
questions that the Subscriber has had with respect thereto have been
answered to the full satisfaction of the Subscriber;
(iii) the Subscriber recognizes that an investment in the
Shares involves a high degree of risk; and
(iv) the Subscriber is a highly sophisticated investor who has
such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of an investment in the
Shares.
(e) The Subscriber is acquiring the Shares solely for the Subscriber's
own account, for investment purposes only and not with a view to, or for,
subdivision, resale, distribution or fractionalization thereof, or for the
account, in whole or in part, of any other person or entity. The Subscriber
recognizes the restrictions on the transferability of the Shares and is able to
bear the substantial economic risk of an investment in the Shares, including a
complete loss thereof, for an indefinite period of time. The Subscriber has no
need for liquidity of this investment and has no reason to anticipate any change
in circumstances, financial or otherwise, or other particular occasion or event
that might cause or require the Subscriber to attempt to sell or transfer any of
the Shares.
(f) The Subscriber understands that the sale of the Shares to the
Subscriber is intended to be exempt from registration under the Securities Act
by virtue of Section 4(2) of the Securities Act and under applicable Blue Sky
Laws. The Subscriber will not sell or otherwise transfer any or all of the
Shares other than pursuant to a registration statement under the Securities Act
that has become effective or pursuant to a specific exemption from registration
under the Securities Act and applicable Blue Sky Laws. If any such transfer is
pursuant to an exemption, such transfer shall be made only upon the Subscriber
first having delivered to the Company a favorable written opinion of counsel,
reasonably satisfactory in form and substance to the Company, to the effect that
the proposed sale or transfer is exempt from registration under the Securities
Act and any applicable Blue Sky Laws; provided, however, that no such opinion of
counsel shall be required for a sale duly made in compliance with Rule 144
promulgated under the Securities Act, or any successor or analogous rule to Rule
144, or if the holder would be permitted to transfer the securities pursuant to
paragraph (k) of Rule 144 (it being agreed that the Company shall have the right
to receive evidence satisfactory to it regarding compliance with such Rule or
any successor or analogous rule prior to the registration of any such transfer).
(g) The Subscriber understands that the Shares are not registered under
the Securities Act or applicable Blue Sky Laws and such securities must be held
indefinitely, unless the subsequent disposition thereof is registered under the
Securities Act and applicable Blue Sky Laws or an exemption from such
registration is available. The Subscriber acknowledges that the Company has not
undertaken to register any of the Shares pursuant to the Securities Act and,
except as provided in any existing registration rights
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agreement, will have no obligation to effect on behalf of the Subscriber any
registration under the Securities Act or to assist the Subscriber in complying
with any exemption from registration under the Securities Act or any Blue Sky
Laws. The Subscriber understands that the exemption from registration afforded
by certain rules and regulations under the Securities Act depends upon the
satisfaction of various conditions and that, if applicable, such rules and
regulations may afford the basis for sales of the Shares only in limited
amounts.
(h) The Subscriber acknowledges that the certificates evidencing the
Shares, and any substitutions or replacements thereof, shall bear legends in
substantially the following form:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED OR DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION, UNLESS THEY ARE FIRST REGISTERED PURSUANT TO
THAT ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS THE
COMPANY RECEIVES A WRITTEN OPINION OF COUNSEL, WHICH OPINION
AND COUNSEL ARE SATISFACTORY TO THE COMPANY, TO THE EFFECT
THAT SUCH REGISTRATION IS NOT REQUIRED."
Upon request of a holder of such certificate, the Company shall remove the
foregoing transfer legend from the certificate or issue to such holder a new
certificate therefor free of any transfer legend, if, with such request, the
Company shall have received a written opinion of legal counsel who is reasonably
satisfactory to the Company, addressed to the Company, to the effect that the
foregoing transfer legend is no longer required in order to ensure compliance
with the Securities Act and applicable Blue Sky Laws, provided that a sale of
stock registered under the Act or transferred pursuant to Section 3(f)(B) hereof
shall be issued to the transferee free of such legend.
(i) The Subscriber represents and warrants that the Subscriber is an
"accredited investor", as that term is defined in Rule 501 promulgated under the
Securities Act, by virtue of the Subscriber being:
(i) a corporation, not formed for the specific purpose of
acquiring the securities offered hereby, with total assets in excess of
$5,000,000; and
(ii) a corporation all of whose shareholders or other equity
owners are themselves accredited investors by virtue of this
subparagraph or by subparagraphs (i) above.
(j) The Subscriber represents and warrants that it meets the investor
suitability standards imposed by applicable Blue Sky Laws.
(k) The Subscriber is not subscribing to purchase the Shares as a
result of or subsequent to any advertisement, article, notice or other
communication published in any newspaper, magazine or similar media or broadcast
over television or radio, or presented at any seminar or meeting, or any
solicitation of a subscription by a person not previously known to the
Subscriber in connection with investments in securities generally.
(l) If the Subscriber is acting in a fiduciary capacity in purchasing
the Shares, the fiduciary represents and warrants that he or she has authority
to execute this Subscription Agreement on behalf of the person or persons for
whom the Shares are being purchased, that such persons have been given this
Subscription Agreement and have confirmed to the fiduciary that they have
reviewed the same, and that the representations and warranties contained in this
subscription agreement (and in any other written statement or document delivered
to the Company) shall be deemed to have been made on behalf of such person or
persons.
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(m) All information which the Subscriber has furnished and is
furnishing to the Company, including, without limitation, the representation as
to the Subscriber's status as an "accredited investor" within the meaning of
Rule 501 promulgated under the Securities Act and all other representations
contained in this Subscription Agreement, are true, correct and complete as of
the date of this subscription agreement, and if there should be any material
change in such information prior to the Subscriber's receipt of the Shares, the
Subscriber will immediately furnish such revised or corrected information to the
Company. The Subscriber is executing and delivering this subscription agreement
with full awareness of its implications and in recognition of the fact that the
Company is relying on the Subscriber's representations and warranties contained
herein in selling the Shares to the Subscriber, and that the Company and other
investors may be damaged if such representations and warranties are false,
incorrect or incomplete.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. In order
to induce the Subscriber to subscribe for the Shares, the Company hereby
represents, warrants and covenants to the Subscriber as follows:
(a) The Company is a corporation, duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation.
(b) The Company has full power and authority to execute, deliver and
perform this subscription agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance by the Company of
this subscription agreement, and the consummation by it of the transactions
contemplated hereby, have been duly authorized by all necessary corporate
actions of the Company. This subscription agreement has been duly and validly
executed and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except to the extent that enforcement may be limited by
applicable bankruptcy laws, insolvency, reorganization or other similar laws
affecting creditors' rights generally and by general equitable principles
(regardless of whether enforcement is sought in equity or at law).
(c) The execution, delivery and performance of this subscription
agreement and the issuance of the Shares do not and will not conflict with,
violate or constitute a default under any applicable law or regulation or any
agreement or arrangement to which the Company is a party or by which the Company
may be bound.
(d) The authorized capital stock of the Company consists of (i) 25
million shares of Common Stock, and (ii) five million shares of preferred stock,
par value $.01 per share. As of the date of this Agreement, there were issued
and outstanding 5,458,333 shares of Common Stock and no shares of preferred
stock. All outstanding shares of capital stock of the Company have been validly
issued and are fully paid and nonassessable, and no shares of capital stock of
the Company are subject to, nor have any been issued in violation of, preemptive
or similar rights. All issuances, sales and repurchases by Buyer of shares of
its capital stock have been effected in compliance with all applicable laws,
including without limitation applicable federal and state securities laws.
5. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
6. CONSENT TO JURISDICTION.
(a) The parties hereto hereby irrevocably submit to the exclusive
jurisdiction of the courts of the State of Delaware and the federal courts of
the United States of America located in Delaware, and appropriate appellate
courts therefrom, over any dispute arising out of or relating to this Agreement
or any of the transactions contemplated hereby, and each party hereby
irrevocably agrees that all claims in
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respect of such dispute or proceeding may be heard and determined in such
courts. The parties hereby irrevocably waive, to the fullest extent permitted by
applicable law, any objection which they may now or hereafter have to the laying
of venue of any dispute arising out of or relating to this subscription
agreement or any of the transactions contemplated hereby brought in such court
or any defense of inconvenient forum for the maintenance of such dispute. Each
of the parties hereto agrees that a judgment in any such dispute may be enforced
in other jurisdictions by suit on the judgment or in any other manner provided
by law. This consent to jurisdiction is being given solely for purposes of this
subscription agreement and is not intended to, and shall not, confer consent to
jurisdiction with respect to any other dispute in which a party to this
Agreement may become involved.
(b) Each of the parties hereto hereby consents to process being served
by any party to this Agreement in any suit, action, or proceeding of the nature
specified in subsection (a) above by the mailing of a copy thereof to the
address for such party set forth below.
7. SPECIAL BLUE SKY NOTICE. SPECIAL INFORMATION AND DISCLOSURES
REQUIRED BY APPLICABLE BLUE SKY LAWS MAY APPEAR ON THE IMMEDIATELY FOLLOWING
PAGE.
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The Subscriber, by signing below as of the date indicated, acknowledges
and agrees to the foregoing and subscribes to the purchase of the number of
Shares set forth below.
SUBSCRIBER:
III EXPLORATION COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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President
Address of Subscriber: Number of Shares of Common Stock
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1,000,000
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If Subscriber is an entity, please indicate
Tax I.D. Number of Subscriber: DATE and JURISDICTION of organization:
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Agreed to and accepted this 28th day of December, 1999.
PETROGLYPH ENERGY, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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President and Chief Executive Officer
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