EXHIBIT 10.1
STOCKHOLDERS AGREEMENT
This STOCKHOLDERS AGREEMENT, dated as of August 22, 1997, by and among
Petroglyph Energy, Inc., a Delaware corporation (the "Company"), the persons
identified as Management Owners below on the signature pages of this Agreement
(such persons, together with their successors and assigns, are collectively
referred to herein as "Management Owners"), Natural Gas Partners, L.P., Natural
Gas Partners II, L.P., Natural Gas Partners III, L.P., each a Delaware limited
partnership (collectively, "NGP"), and the persons and entities identified as
NGP Owners below on the signature pages of this Agreement (NGP and such persons
and entities, together with their successors and assigns, are collectively
referred to herein as "NGP Owners") (collectively, the Management Owners and the
NGP Owners are the "Owners").
1. Background. The Company has been recently created and organized to
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engage in the oil and gas business, either directly or though one or more
subsidiaries. Pursuant to an Exchange Agreement dated as of August 22, 1997, (i)
the Management Owners have agreed to exchange shares Petroglyph Energy, Inc., a
Kansas corporation, for shares of the Company's Common Stock, par value $.01
("Common Stock"), and (ii) the NGP Owners have agreed to exchange limited
partnership interests in Petroglyph Gas Partners, L.P., a Delaware limited
partnership, for shares of Common Stock. The proposed exchanges are to be
effectuated in connection with the Company's public offering of shares of Common
Stock pursuant to the filing of a registration statement on Form S-1 with the
Securities and Exchange Commission (collectively, the "Proposed Transaction").
The execution and delivery of this Agreement is being made in connection with
the consummation of the Proposed Transaction.
2. Pro-Rata Sale Rights
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2.1 General Rights. If a Management Owner, an NGP Owner or a Permitted
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Assignee of either (a "Transferring Owner") proposes to Transfer any Owner
Shares (a "Proposed Transfer") in a single transaction or a series of related
transactions (other than Transfers permitted under subsection 2.4 below), then
the Transferring Owner shall refrain from effecting such Proposed Transfer
unless, prior to the consummation thereof, the other Owners and their respective
successors and Permitted Assignees ("Tag Along Owners") shall have been afforded
the opportunity to join in such Proposed Transfer on a Pro-Rata basis, as
hereinafter provided in subsections 2.2 or 2.3.
2.2 Procedures for Public Sales.
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(a) If a Proposed Transfer is to be effectuated through an established
brokerage firm and utilizing the public securities markets (e.g., the New York
Stock Exchange, the American Stock Exchange or the NASDAQ National Market
System), such Transferring Owner shall provide prior written notice of the
following (a "Public Sale Notice") to all the Tag Along Owners:
(i) The number of shares proposed to be made available for sale (the
"Initial Shares");
(ii) The pricing and other instructions pursuant to which the
selected broker will be operating;
(iii) The name, address, telephone number and facsimile number of the
selected broker and the name of the selected registered representative at
the broker; and
(iv) Confirmation that the selected broker and selected registered
representative have been advised that the Tag Along Owners may desire to
elect to participate, on a Pro-Rata basis, in the Proposed Transfer.
(b) After receiving a Public Sale Notice, a Tag Along Owner shall be
entitled to elect to participate in the Proposed Transfer through the broker,
subject to such Tag Along Owner (i) meeting all of the broker's requirements to
establish a customer account and execute transactions for such Tag Along Owner,
(ii) meeting all of the requirements imposed by applicable securities laws in
order to execute such transaction (including Rule 144), and (iii) responding in
writing within the five business days after receipt of the Public Sale Notice
(the "Public Offering Response") to the Transferring Owner, to the Tag Along
Owners and to the selected broker. The number of Owner Shares which each Tag
Along Owner may elect to add to the Proposed Transfer shall be determined in
accordance with the following formula: (i) the Initial Shares, times (ii) a
fraction the numerator of which is the total of the Owners Shares owned by such
Tag Along Owner, and the denominator of which is the total Owner Shares owned by
the Transferring Owner.
(c) If the broker is unable to sell all of the Owner Shares which are
available for sale, the aggregate amount of shares which the broker is able to
sell shall be allocated on a Pro-Rata basis among the Transferring Owner and the
Tag Along Owners electing to participate in the Proposed Transfer.
2.3 Procedures for Other Sales.
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(a) If a Proposed Transfer is to be effectuated in a manner other than as
described in subsection 2.2., then the Transferring Owner shall cause the person
or group that proposes to acquire Owner Shares held by the Transferring Owner
(the "Proposed Purchaser") to send a written offer ("Purchase Offer") to the Tag
Along Owners, offering to purchase Owner Shares held by the Tag Along Owners on
a Pro-Rata basis.
(b) Each purchase of Tag Along Shares shall be made at the highest price
per share and on such other terms and conditions as the Proposed Purchaser has
offered to purchase Owner Shares from the Transferring Owner. Each Tag Along
Owner shall have at least 20 days from the receipt of the Purchase Offer in
which to accept such Purchase Offer, in whole or in part, and if accepted, the
closing of the sale of any Tag Along Shares pursuant thereto shall occur within
30 days after such acceptance or at such other time as the parties to such
transaction may mutually agree. If the Tag Along Owners shall decline to
Transfer all of the shares that they would be entitled to Transfer
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under this subsection 2.3, the Transferring Owner shall have the right to
include additional Owner Shares in the Transfer to the extent of the deficiency.
2.4 Excluded Transfers. The provisions of subsections 2.1 through 2.3 do
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not apply to the Transfer by an Owner of any Owner Shares held by such Owner on
the date hereof to (i) such Owner's spouse or consanguinal relatives, (ii) to a
trust for estate or testamentary purposes, (iii) to any partners or other
affiliates of such Owner, or (iv) any transfer occurring by operation of law
upon the death, dissolution or liquidation of an Owner; provided that, as a
condition to the transfer of any Owner Shares pursuant to this subsection 2.4,
the transferee must acknowledge and agree to be bound by the restrictions in
this agreement with respect to any subsequent Transfer of Owner Shares (any such
transferee of Owner Shares pursuant to this subsection 2.4 is referred to herein
as a "Permitted Assignee" and after obtaining such status shall thereafter be
treated as an Owner).
3. Definitions. As used in this Agreement, the following terms shall
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have the meanings assigned to them below:
"Common Stock" as defined in Section 1 hereof.
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"Owner Shares" means with respect to any Owner (i) all shares of Common
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Stock held by such Owner, (ii) any equity securities issued or issuable directly
or indirectly to a Owner with respect to the Common Stock referred to in clause
(i) above by way of stock dividend or stock split or in connection with a
combination of shares, conversion, recapitalization, merger, consolidation or
other reorganization, and (iii) any other shares of any class or series of
voting security of the Company currently held or held in the future by a Owner.
As to any particular shares constituting Owner Shares, such shares will cease to
be Owner Shares when they have been transferred in accordance with the
restrictions set forth in Section 2 to any person who is not a Permitted
Assignee.
"Permitted Assignee" as defined in subsection 2.4.
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"Pledge" means any pledge of an interest in, or other encumbrance placed
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upon, Owner Shares as security for indebtedness or for other purposes.
"Pro-Rata basis" means with respect to the calculation of the number of
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Owner Shares which a Tag Along Owner may Transfer upon electing to participate
in a Proposed Transfer hereunder, the amount equal to the total number of Owner
Shares to be Transferred in the Proposed Transfer multiplied by a fraction equal
to (i) the number of Owner Shares owned by such Tag Along Owner, divided by (ii)
the total number of Owner Shares owned by (A) the Transferring Owner and (B) all
Tag Along Owners (except that for purposes of the calculation under subsection
2.2(c), only those Owner Shares owned by the Tag Along Owners electing to
participate in the Proposed Transfer shall be included).
"Proposed Purchaser" as defined in subsection 2.3.
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"Purchase Offer" as defined in subsection 2.3.
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"Tag Along Owners" as defined in subsection 2.1.
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"Transfer" means any sale, assignment or other disposition of Owner Shares,
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other than a Pledge.
"Transferring Owner" as defined in subsection 2.1.
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4. Enforcement; Legends. No Owner Shares shall be transferred on the
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books of the Company nor shall any sale, assignment, transfer, pledge or other
disposition thereof be effective unless and until the terms and provisions of
this Agreement are first complied with and, in case of violation of this
Agreement by the attempted transfer of Owner Shares without compliance with the
terms and provisions hereof, such sale, assignment, transfer, pledge or other
disposition shall be invalid and of no effect. The Owners will cause the Company
to imprint a legend on any certificates evidencing Owner Shares which are
subject to this Agreement referring to the restrictions on transfer of the Owner
Shares imposed hereunder. Any such legend shall be removed from the certificates
evidencing any shares which cease to be "Owner Shares", as set forth in
definition of such term in Section 3 hereof.
5. Termination.
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(a) This Agreement shall terminate upon the earlier of (i) the first date
on which the NGP Owners and their Permitted Assignees shall no longer own any
Owner Shares, or (ii) the fifth anniversary of the date hereof, or (iii) by
mutual agreement of the parties, as provided in accordance with subsection 6(h)
below.
(b) This Agreement shall terminate with respect to any particular
Management Owner, and the Common Stock of such Management Owner shall cease to
be considered Owner Shares for all purposes of this Agreement, in the event that
the Company shall terminate the employment of such Management Owner for any
reason other than for "cause". As used in this subsection 5(b), "cause" will
include any of the following: (i) Management Owner's conviction of, or plea of
nolo contendere to, any felony or to any crime or offense causing substantial
harm to the Company or its affiliates or involving acts of theft, fraud,
embezzlement, moral turpitude or similar conduct; (ii) Management Owner's
repeated intoxication by alcohol or drugs during the performance of his duties
in a manner that materially and adversely affects Management Owner's performance
of such duties; (iii) malfeasance in the conduct of Management Owner's duties,
including, but not limited to, (A) willful and intentional misuse or diversion
of funds of the Company or its affiliates that constitutes willful misconduct or
gross negligence on the part of such Management Owner, (B) embezzlement, or (C)
fraudulent or willful and material misrepresentations or concealments on any
written reports submitted to the Company or its affiliates; (iv) Management
Owner's violation of any provision of this Agreement or any other agreement
between Management Owner and the Company (including any confidentiality and non-
compete agreement) that causes or that could cause substantial harm to the
Company or its affiliates; (v) Management Owner's material failure to perform
the duties of his employment or material failure to follow or comply with the
reasonable and
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lawful written directives of the Board of Directors of the Company, in either
case after Management Owner shall have been informed, in writing, of such
material failure and given a period of not more than 60 days to remedy same.
6. Miscellaneous.
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(a) Benefit. This Agreement will only bind and inure to the benefit of,
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and will only be enforceable by and against, the Company, the Management Owners
and the NGP Owners and their respective Permitted Assignees.
(b) Notices. Whenever in this Agreement notice is required to be given it
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shall be given in writing, and if such notice is given by registered mail, it
shall be deemed to have been received on the second business day after the date
such notice is posted. All notices hereunder to the Company shall be mailed to
it at the address of its principal place of business and all notices to the
Owners shall be mailed to them at their last known address as shown on the books
and records of the Company. Any party may change its or his or her mailing
address by giving written notice of such change to all other parties. All
notices under this Agreement which are to the provided to (i) the Management
Owners shall be sent to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇ or such other representative designated from time to time in
writing to the Company and the NGP Owners, and (ii) the NGP Owners shall be sent
to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ at NGP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
or such other representative designated from time to time in writing to the
Company and the Management Owners.
(c) Governing Law. This Agreement and the rights and duties of the parties
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hereto shall be governed by and construed in accordance with the laws of the
State of Delaware.
(d) Number. Words in the singular shall be construed to include the plural
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and vice versa, unless the context otherwise requires.
(e) Headings. The headings appearing in this Agreement are inserted only
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for convenience of reference and in no way shall be construed to define, limit
or describe the scope or intent of any provision of this Agreement.
(f) Severability. Every provision in this Agreement is intended to be
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severable. In the event that any provision in this Agreement shall be held
invalid, the same shall not affect in any respect whatsoever the validity of the
remaining provisions of this Agreement; provided, however, that if any such
provision may be made enforceable by limitation thereof, then such provision
shall be deemed to be so limited and shall be enforceable to the maximum extent
permitted by applicable law.
(g) Counterparts. This Agreement may be executed in one or more
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counterparts, each of which shall be deemed an original and all of which shall
constitute but one and the same instrument.
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(h) Entirety and Modification. This Agreement constitutes the entire
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agreement of the parties hereto with respect to the subject matter hereof and
may not be modified, supplemented or amended in any respect except by written
instrument executed by Management Owners holding a majority of the Owner Shares
held by all Management Owners and by NGP Owners holding a majority of the Owner
Shares held by all NGP Owners.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
COMPANY
PETROGLYPH ENERGY, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
OWNERS
NGP OWNERS
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NATURAL GAS PARTNERS, L.P.,
By: G.F.W. ENERGY, L.P.,
its general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇, Authorized Signatory
NATURAL GAS PARTNERS II, L.P.
By: GFW II, L.L.C.,
its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Authorized Signatory
NATURAL GAS PARTNERS III, L.P
By: Rainwater Energy Investors, L.P.,
its general partner
By: GFW III, L.L.C.,
its general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇, Authorized Signatory
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▇▇▇▇▇ INCOME TRUST
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇, Trustee
/s/ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
MANAGEMENT OWNERS
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/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
/s/ S. ▇▇▇▇▇▇▇ ▇▇▇▇▇
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S. ▇▇▇▇▇▇▇ ▇▇▇▇▇
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