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SECOND AMENDED AND RESTATED
SHAREHOLDERS' AGREEMENT
THIS SECOND AMENDED AND RESTATED SHAREHOLDERS' AGREEMENT (this
"Agreement") is made and entered into this 14th day of May, 1999, by and among
Xxxxx Energy Company, a Texas corporation ("Company"), B. Xxxx Xxxxx, a Texas
resident ("Price"), Don Wm. Xxxxxxxx, a Texas resident ("Xxxxxxxx"), Energy
Capital Investment Company PLC, an English investment company ("Energy PLC"),
EnCap Equity 1994 Limited Partnership, a Texas limited partnership ("EnCap LP"),
Xxxxx Energy Resources, Ltd., a Texas limited partnership ("Resources"), TJG
Investments, Inc., a Texas corporation ("TJG"), Xxxxx Energy Company, a Texas
general partnership ("BEC"), Xxx X. Xxxx ("Xxxx"), Xxxxxx Xxxxxx ("Xxxxxx"),
Xxxxx X. Xxxxxx ("Xxxxxx"), Xxxxx Operating Company, Inc., a Texas corporation
("Operating"), EnCap Energy Capital Fund III-B, L.P., a Texas limited
partnership ("EnCap III-B"), BOCP Energy Partners, L.P., a Texas limited
partnership ("BOCP"), EnCap Energy Capital Fund III, L.P., a Texas limited
partnership ("EnCap III"), Xxxxx Xxxxxxxx Energy Fund, L.P., a Delaware limited
partnership ("Kayne"), BancAmerica Capital Investors SBIC I, L.P., a Delaware
limited partnership ("BACI"), Eos Partners, L.P., a Delaware limited partnership
("Eos Partners"), Eos Partners SBIC, L.P., a Delaware limited partnership ("Eos
SBIC"), Eos Partners SBIC II, L.P., a Delaware limited partnership ("Eos SBIC
II" and together with Eos Partners and Eos SBIC, collectively referred to as
"EOS"), and SGC Partners II LLC, a Delaware limited liability company ("SGCP").
RECITALS:
A. Company (as successor by merger to Future Petroleum Corporation, a
Utah corporation), Price, Reynolds, Energy PLC, EnCap LP, Resources, TJG, BEC,
Goff, Barrow, Xxxxxx and Operating are currently parties to that certain Amended
and Restated Shareholder's Agreement dated December 15, 1998 ("Original
Agreement"), pursuant to which such parties agreed, among other things, to vote
their shares in favor of the election of the Designated Nominees (as defined by
and more specifically provided in the Original Agreement) named from time to
time by the parties, including the designation by Energy PLC and EnCap LP of two
of the seven directors on Company's Board.
B. EnCap III-B, Energy PLC, BOCP, EnCap III, Kayne, BACI, EOS and SGCP
(the "Investors") are parties, along with Company, to that certain Stock
Purchase Agreement dated May 14, 1999 ("Purchase Agreement"), pursuant to which
the Investors will be issued shares of Company's common stock, $0.01 par value
("Common Stock") and Company's Cumulative Redeemable Preferred Stock, Series B
(the "Preferred Shares").
C. The parties hereto deem it in their mutual best interests to make
the agreements contained herein, including providing Company Board of Directors
representation to those Investors making their initial investment in Company.
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AGREEMENT:
NOW, THEREFORE, for and in consideration of the foregoing Recitals and
the mutual agreements contained herein, the sufficiency of which is hereby
acknowledged and confirmed, the parties hereto, intending to be legally bound
hereby, amend and restate the Original Agreement to read in its entirety as
follows:
Section 1. Definitions.
(a) The following defined terms shall have the respective meanings
assigned to them below:
"Affiliate" shall mean, with respect to any person, (i) any
person directly or indirectly controlling, controlled by or under
common control with, such other person, or (ii) any account over which
such person has management authority in such a manner that the person
has the power to control the voting and disposition of the securities
in such account. For purposes of this definition, the term "control,"
when used with respect to any person, shall mean the possession,
directly or indirectly, of the power to direct or cause the direction
of the management and policies of such person, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" shall have meanings correlative to the
foregoing.
"Xxxxx Group" shall mean TJG, BEC, Resources, Operating, Xxxx,
Xxxxxx and Xxxxxx and any transferee of a member of the Xxxxx Group
that executes or is required to execute an Addendum Agreement.
"Designated Nominee" shall mean a person designated as a
nominee for election to Company's Board of Directors pursuant to this
Agreement.
"EnCap" shall mean EnCap LP, Energy PLC, EnCap III-B, BOCP,
EnCap III and any transferee of a member of EnCap that executes or is
required to execute an Addendum Agreement.
"Exempt Transfer" shall mean any sale, disposition or transfer
effected (i) through a registration under the Securities Act of 1933,
as amended (the "Securities Act"), (ii) pursuant to and in compliance
with Rule 144 promulgated by the Securities and Exchange Commission
pursuant to the Securities Act, provided that such sale does not
involve a sale of Stock to any person who has beneficial ownership of,
or who is a member of a "group," as defined under Section 13(d) and
corresponding rules of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), which has beneficial ownership of, more than 5%
of the outstanding Common Stock, (iii) transfers by a Shareholder to
any person who is a partner or equity holder of such Shareholder, a
successor of, or an entity all of the equity interests of which are
directly or indirectly owned by, the selling Shareholder or an
Affiliate
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of the selling Shareholder, provided that no transfer pursuant to this
clause (iii) shall be an Exempt Transfer unless the transferee agrees
in writing to be bound by this Agreement and executes an Addendum
Agreement hereto, (iv) by any member of the Xxxxx Group to any person
who as of the date hereof is an employee of the Company, or (v) any
bona fide charge, pledge or mortgage by any Shareholder of any shares
of Stock or Preferred Shares owned or held by it or its rights under
this Agreement, provided that any disposition of any such shares of
Stock or Preferred Shares after foreclosure of such charge, pledge or
mortgage shall be governed by the provisions of this Agreement, and the
purchaser or purchasers of the shares shall have entered into an
Addendum Agreement with Company and the other Shareholders.
"Investor Group" shall mean the Investors and any transferee
of an Investor that executes or is required to execute an Addendum
Agreement.
"Investors" has the meaning provided in the Recitals hereto.
"Market Price" shall mean the average closing prices of the
Common Stock for the ten trading days preceding an Offering Notice
under Section 4(e) over the principal securities exchange in which the
Common Stock is traded or, if not traded on an exchange, the average
closing price for ten trading days preceding such Offering Notice as
reported on the Nasdaq NMS, or if not traded on an exchange or the
Nasdaq NMS, the average of the closing bid and asked prices of the
Common Stock for such ten day period.
"Original Agreement" has the meaning provided in the Recitals
hereto.
"Price Group" shall mean Xxxxx, Xxxxxxxx and any transferee of
a member of the Price Group that executes or is required to execute an
Addendum Agreement.
"Proportionate Share" shall mean the number of shares of Stock
equal to the product of: (i) the total number of Remaining Subject
Shares which a proposed transferee has offered to purchase, multiplied
by (ii) the fraction equal to the total number of shares of Stock which
a Tag Along Shareholder or Drag Along Shareholder, as the case may be,
owns, divided by the aggregate number of shares of Stock then
outstanding.
"Purchase Price" shall mean, for purposes of Section 4, an
amount stated in dollars equal to the total value of a bona fide
written offer from a person to purchase shares from a Shareholder
determined as follows: (i) cash payable at closing shall be valued at
the amount thereof, (ii) a security trading on a public market and for
which published trading prices are readily available shall be valued at
its closing sales price (or if a sales price is not available, at the
average of its closing bid and asked prices) on the last business day
preceding the date of the first Offering Notice with respect to such
offer, and (iii) a security not described in clause (ii) or other
property, including cash payable in one or more installments after
closing, shall be valued at its fair market value on the last business
day preceding the date of the first
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Offering Notice with respect to such offer as determined at the option
of the Selling Shareholder or Selling Preferred Shareholder (both as
defined in Section 4) either (a) by a qualified independent third party
appraiser (the expense of which shall be paid by the Company) or (b) in
good faith by the Board of Directors of the Company (excluding any
member of the Board who is a director, officer or shareholder of the
Selling Shareholder (or Selling Preferred Shareholder, as applicable)
or who has the right to purchase a portion of such shares under this
Agreement) but only if all of such Board members agree to accept the
assignment to make such determination.
"Same Group Shareholders" shall mean with respect to any
Selling Shareholder, those other members, if any, of the same
Shareholder Group of which such Selling Shareholder is a member.
"Shareholder Group" shall mean the Xxxxx Group, the Investor
Group or the Price Group, as applicable.
"Shareholders" shall mean the parties to this Agreement and
any person who executes or is required to execute an Addendum Agreement
(attached hereto as Exhibit "A").
"Stock" shall mean all shares of Common Stock owned or to be
owned by the Shareholders, whether issued and outstanding at the time
of the execution of this Agreement or issued subsequent thereto.
"Total Voting Power" shall mean the aggregate number of votes
which may be cast by holders of outstanding Voting Securities.
"Voting Securities" shall mean Common Stock and any other
securities of Company entitled to vote generally for the election of
directors of Company.
Section 2. Agreement Regarding Board Representation and Option Plan.
(a) For so long as any of the Preferred Shares remain outstanding: each
of (i) EOS and SGCP (jointly), (ii) Kayne and (iii) BACI (or the successor or
transferee of any such party), shall be entitled to name one (1) Designated
Nominee for Class III of Company's Board of Directors; the Xxxxx Group
(including successors and transferees of its members) shall be entitled to name
two (2) Designated Nominees for Class II of Company's Board of Directors; and
EnCap (including successors and transferees of its members) shall be entitled to
name two (2) Designated Nominees for Class I of Company's Board of Directors. In
the event no Preferred Shares are outstanding, then for so long as the Investors
shall beneficially own in the aggregate at least 20% of the issued and
outstanding shares of capital stock of Company (excluding any shares held by the
Xxxxx Group), on a fully-diluted basis reflecting all shares issuable upon the
exercise of all outstanding rights to acquire shares of Company's capital stock,
then the three members of the Investors owning the most shares of Common Stock
shall be entitled from time to time to name (determined by any two of such
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three parties) the smallest whole number of Designated Nominees necessary to
constitute at least 40% of the total members of Company's Board of Directors.
For purposes of this Agreement, "beneficial ownership" or "beneficially own"
shall be determined in accordance with Rule 13d-3 under the Exchange Act).
Notwithstanding the foregoing provisions of this Section 2(a), at the
earlier of (i) two years following the final redemption of all Preferred Shares
and (ii) 6 years following the date hereof, the Shareholders shall regain the
rights regarding Designated Nominees provided by the first sentence of this
Section 2(a), unless at such time the aggregate market value of the Common
Stock, that is held by non-affiliates (excluding, without limitation, the
Shareholders) and included for listing by The Nasdaq Stock Market or the New
York Stock Exchange, is at least $100,000,000.
(b) Each Shareholder agrees (i) to use its reasonable best efforts to
cause Company's Board of Directors to be composed of seven members, (ii) to use
its reasonable best efforts to cause Company to nominate or cause to be
nominated to Company's Board of Directors all Designated Nominees and (iii) to
vote or cause to be voted all Voting Securities beneficially owned by such
Shareholder in favor of the election of the Designated Nominees to Company's
Board of Directors.
(c) In the event of the death, incapacity, resignation or removal of a
Designated Nominee preventing his or her serving on Company's Board of
Directors, each Shareholder will promptly cause the election or appointment of
another Designated Nominee of such Shareholder or Shareholder Group, as
applicable, to fill the vacancy created thereby.
(d) Each Shareholder agrees to cause a designee of the Xxxxx Group to
be elected Chairman of the Board of Directors of Company. Xxx X. Xxxx shall
serve as the Xxxxx Group's initial designee. In the event Xx. Xxxx no longer
serves as the Xxxxx Group's designee, the Xxxxx Group agrees that all of its
subsequent replacement designees as Chairman of the Board of Directors shall be
subject to the prior approval of a majority of the Board of Directors of
Company, which approval shall not be unreasonably withheld, and if a replacement
designee is not so approved, the Xxxxx Group shall designate another designee
acceptable to Company's Board of Directors.
(e) Each Shareholder agrees to vote all Voting Securities beneficially
owned by such Shareholder for approval of Company's 1999 Stock Incentive Plan
contemplated by the Purchase Agreement. In addition, for so long as Xxx Xxxx
serves as Chief Executive Officer of Company, each Shareholder will cause its
Designated Nominee(s) to approve and authorize the grant of stock option awards
as recommended by Xx. Xxxx pursuant to Section 1.2(a) of Company's 1999 Stock
Incentive Plan.
(f) For so long as SGCP owns any shares of Series B Preferred, Company
shall invite a representative designated by SGCP to attend all meetings of
Company's Board of Directors in a non-voting capacity and, in this respect,
shall give such representative copies of all notices, minutes, consents and
other materials that Company provides to its directors; provided, however, that
such SGCP representative shall hold in confidence and trust, and to act in a
fiduciary manner regarding,
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all information so provided by Company; and provided further, that Company
reserves the right to exclude such SGCP representative from any meeting or
portion thereof at which attendance by such representative could adversely
affect the attorney-client privilege between Company and its legal counsel.
Section 3. General Restrictions on Transfer.
The Shareholders agree that, other than an Exempt Transfer, they will
not in any way sell, transfer, assign or otherwise dispose of any shares of
Stock, or any right or interest therein, whether voluntarily or involuntarily or
by operation of law (each of the foregoing transactions is hereinafter referred
to as a "Disposition"), except in accordance with the terms of this Agreement.
Aside from an Exempt Transfer, any purported Disposition in violation of any
provision of this Agreement will be void and will not operate to transfer any
interest or title in such shares to the purported transferee, and will give the
other Shareholders an option and preferential right to purchase such shares in
the manner and on the terms and conditions provided in this Agreement.
Section 4. Right of First Refusal; Tag-Along Rights; and Drag-Along
Rights.
(a) If any Shareholder desires to make a Disposition of any shares of
Stock owned or held by it pursuant to a bona fide offer (other than in an Exempt
Transfer or pursuant to Section 4(e) hereof), such Shareholder (for purposes of
this Section 4, a "Selling Shareholder") shall offer such shares (the shares of
Stock proposed to be transferred being called the "Subject Shares") for sale at
the Purchase Price to the other Shareholders, all in accordance with the
following provisions of this Section 4.
(i) The Selling Shareholder shall deliver a written notice
("Offering Notice") to the other Shareholders to sell the Subject
Shares to the Shareholders pursuant to this Agreement, indicating the
number of Subject Shares and the proposed Purchase Price. Once the
Offering Notice is delivered, the offer by the Selling Shareholder may
not be withdrawn prior to the expiration of the options of the other
Shareholders, as provided in this Section 4. Within 15 days from the
receipt of such Offering Notice, the Same Group Shareholders of the
Selling Shareholder may deliver to the Selling Shareholder written
notice accepting the offer in the Offering Notice ("Reply Notice"),
pursuant to which each such Same Group Shareholder may purchase no more
than the number of shares equal to the product of: (A) the total number
of Subject Shares, multiplied by (B) the fraction equal to the total
number of shares of Stock owned by such Same Group Shareholder, divided
by the aggregate number of shares of Stock owned by all Same Group
Shareholders. If the Selling Shareholder's Same Group Shareholders do
not timely elect to exercise their option to purchase all of the
Subject Shares, then all the other Shareholders outside of such group
may, within the subsequent 15 days, deliver a Reply Notice, pursuant to
which each such other Shareholder may purchase no more than the number
of shares equal to the product of: (A) the total number of Subject
Shares remaining available for purchase, multiplied by (B) the fraction
equal to the total number of shares of Stock owned by such other
Shareholder, divided by
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the aggregate number of shares of Stock owned by all other Shareholders
(who are not members of the Selling Shareholder's Shareholder Group).
Any such Reply Notice shall constitute an agreement binding upon the
Selling Shareholder and the Shareholders delivering the Reply Notice to
sell and purchase the stated portion of the Subject Shares at the
Purchase Price.
(ii) Any dispute concerning the calculation of the Purchase
Price shall be resolved by the Board of Directors of the Company,
excluding any member of the Board who is, or is a director, officer,
partner or stockholder of, the Selling Shareholder or who has a right
to purchase stock from the Selling Shareholder in the transaction for
which the Purchase Price is being determined; provided that if all
directors are excluded pursuant to the foregoing, such disputes shall
be submitted to binding arbitration as provided in Exhibit B. The
Purchase Price shall be paid in cash at the closing.
(b) If the Shareholders do not elect to purchase all of the Subject
Shares (such Subject Shares not being purchased are referred to herein as the
"Remaining Subject Shares"), then the Selling Shareholder shall cause the
proposed transferee (the "Proposed Purchaser") to offer in writing (a "Sale
Notice"), not less than 30 nor more than 120 days prior to the consummation of
any proposed Disposition, to the Shareholders other than the Selling Shareholder
(the "Tag Along Shareholders") to purchase a Proportionate Share of the shares
held by each Tag Along Shareholder. The Sale Notice shall set forth: (i) the
name of the Selling Shareholder and the number of Subject Shares proposed to be
transferred, (ii) the name and address of the Proposed Purchaser, (iii) the
proposed amount and form of consideration and terms and conditions of payment
offered by such Proposed Purchaser and (iv) that the Proposed Purchaser has been
informed of the tag along right provided for in this Section 4(b) and has agreed
to purchase shares of Stock owned by any Tag Along Shareholder in accordance
with the terms hereof. The tag along right may be exercised by any Tag Along
Shareholder by delivery of a written notice to the Proposed Purchaser and
Selling Shareholder (the "Tag Along Notice") within 30 days following its
receipt of the Sale Notice. The Tag Along Notice shall state the amount of
shares of Stock (the "Tag Along Shares") that such Tag Along Shareholder
proposes to include in such transfer to the Proposed Purchaser. To the extent
that a Tag Along Shareholder accepts such tag along offer, the number of shares
of Stock to be sold to the Proposed Purchaser by the Selling Shareholder shall
be reduced to the extent necessary to comply with this Section 4(b). In the
event that the Proposed Purchaser does not purchase all Tag Along Shares from
the Tag Along Shareholders on the same terms and conditions as specified in the
Sale Notice, then the Selling Shareholder shall not be permitted to sell any
Subject Shares to the Proposed Purchaser in the proposed transfer. The closing
of any purchase from the Tag Along Shareholders shall occur contemporaneously
with the purchase and sale of the Subject Shares (as adjusted hereunder) or at
such other time as such Tag Along Shareholders and the Proposed Purchaser shall
agree.
(c) In the event that (i) any Tag Along Shareholder elects not to
exercise his/its tag-along rights described in Section 4(b) (a "Drag Along
Shareholder"), and (ii) the total shares sought to be purchased by the Proposed
Purchaser constitute at least 50% of the shares of Common Stock
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outstanding on the date of the Sale Notice, and (iii) Company's Board of
Directors approves such transaction, then each Selling Shareholder shall have
the right (a "Drag Along Right"), beginning on the date that is the first day
after such tag-along right has either expired or been rejected and ending 20
days thereafter, to require each Drag Along Owner to sell a Proportionate Share
owned by such Drag Along Owner to the Proposed Purchaser. All such sales shall
be on the same terms and conditions as, and occur simultaneously with, the sale
of shares to such Proposed Purchaser by such Selling Shareholder.
(d) If the other Shareholders do not elect to purchase all Subject
Shares, the Selling Shareholder shall, subject to Sections 4(b) and 4(c) hereof,
be freed and discharged, except as herein stated, from all obligations under the
terms of this Agreement other than to sell the remaining Subject Shares to the
purchaser and at the price and upon the terms stated in the Offering Notice, but
only if such sale shall be completed within a period of 90 days from the date of
delivery of the Offering Notice to the other Shareholders. If the Selling
Shareholder does not complete such sale within such 90 day period, all the
provisions of this Agreement, including the provisions of this Section 4, shall
apply to any future sale or offer for sale of such shares of Stock owned by the
Selling Shareholder.
(e) Upon any involuntary Disposition of a Shareholder's shares of
Stock, such Shareholder or its representative shall send notice thereof,
disclosing in full to the Company and the other Shareholders the nature and
details of such involuntary Disposition and offer such shares for sale at the
Market Price to the other Shareholders, all in accordance with the following
provisions of this Section 4(e). As used in this Section 4(e), the term "Selling
Shareholder" shall mean such Shareholder or its representative, as the case may
be.
(i) The Selling Shareholder shall deliver an Offering Notice
to the other Shareholders. Each of the other Shareholders shall have 30
days from the receipt of their respective Offering Notice to deliver a
Reply Notice to the Selling Shareholder. If by their Reply Notice the
other Shareholders accept the offer of the Selling Shareholder, such
Reply Notice shall constitute an agreement binding upon the Selling
Shareholder and the other Shareholders to sell and purchase the offered
shares at the price and upon the terms stated in the Offering Notice of
the Selling Shareholder.
(ii) In connection with any purchase and sale of shares of
Stock pursuant to paragraph (i) of this Section 4(e), the purchaser or
purchasers shall pay the purchase price for the shares in cash at the
closing.
(iii) If the Shareholders do not accept the offer of the
Selling Shareholder pursuant to the foregoing provisions of this
Section 4(e), the Selling Shareholder shall be freed and discharged
from all obligations under the terms of this Agreement except to
dispose of the offered shares by involuntary Disposition but only if
the transferee under any such Disposition shall have entered into and
Addendum Agreement with the Company and the other Shareholders. If such
involuntary Disposition is not effected, all the provisions of this
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Agreement, including the provisions of this Section 4, shall apply to
any future involuntary Disposition of such shares of Stock owned by the
Selling Shareholder.
(f) If any Shareholder desires to make a Disposition of any Preferred
Shares owned or held by it pursuant to a bona fide offer (other than in an
Exempt Transfer), such Shareholder (for purposes of this Section 4(f), a
"Selling Preferred Shareholder") shall offer such shares (the Preferred Shares
proposed to be transferred being called the "Subject Preferred Shares") for sale
at the Purchase Price to the other Shareholders who then own Preferred Shares
("Preferred Shareholders"), all in accordance with the following provisions of
this Section 4(f).
(i) The Selling Preferred Shareholder shall deliver a written
notice ("Preferred Stock Offering Notice") to the other Preferred
Shareholders to sell the Subject Preferred Shares to the Preferred
Shareholders pursuant to this Agreement, indicating the number of
Subject Preferred Shares and the proposed Purchase Price. Once the
Preferred Stock Offering Notice is delivered, the offer by the Selling
Preferred Shareholder may not be withdrawn prior to the expiration of
the options of the other Preferred Shareholders, as provided in this
Section 4(f). Within 15 days from the receipt of such Preferred Stock
Offering Notice, the other Preferred Shareholders may deliver to the
Selling Preferred Shareholder written notice accepting the offer in the
Preferred Stock Offering Notice, pursuant to which each such other
Preferred Shareholder may purchase no more than the number of shares
equal to the product of: (A) the total number of Subject Preferred
Shares, multiplied by (B) the fraction equal to the total number of
Preferred Shares owned by such other Preferred Shareholder, divided by
the aggregate number of Preferred Shares owned by all other Preferred
Shareholders. Any such reply to the Selling Preferred Shareholder shall
constitute an agreement binding upon the Selling Preferred Shareholder
and the Preferred Shareholders delivering such reply to sell and
purchase the stated portion of the Subject Preferred Shares at the
Purchase Price.
(ii) Any dispute concerning the calculation of the Purchase
Price shall be resolved by the Board of Directors of the Company,
excluding any member of the Board who is, or is a director, officer,
partner or stockholder of, the Selling Preferred Shareholder or who has
a right to purchase Preferred Shares from the Selling Preferred
Shareholder in the transaction for which the Purchase Price is being
determined; provided that if all directors are excluded pursuant to the
foregoing, such disputes shall be submitted to binding arbitration as
provided in Exhibit B. The Purchase Price shall be paid in cash at the
closing.
If the Preferred Shareholders do not elect to purchase all of the
Subject Preferred Shares (such Subject Preferred Shares not being purchased are
referred to herein as the "Remaining Subject Preferred Shares"), then the
Selling Preferred Shareholder shall cause the proposed transferee (the "Proposed
Preferred Purchaser") to offer in writing (a "Preferred Sale Notice"), not less
than 30 nor more than 120 days prior to the consummation of any proposed
Disposition, to the Preferred Shareholders other than the Selling Preferred
Shareholder (the "Tag Along Preferred Shareholders") to purchase from each Tag
Along Preferred Shareholder a number of the Preferred Shares held by
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each Tag Along Preferred Shareholder equal to the product of: (i) the total
number of Remaining Subject Preferred Shares which a proposed transferee has
offered to purchase, multiplied by (ii) the fraction equal to the total number
of Preferred Shares which a Tag Along Preferred Shareholder owns, divided by the
aggregate number of Preferred Shares then outstanding. The Preferred Sale Notice
shall set forth: (i) the name of the Selling Preferred Shareholder and the
number of Subject Preferred Shares proposed to be transferred, (ii) the name and
address of the Proposed Preferred Purchaser, (iii) the proposed amount and form
of consideration and terms and conditions of payment offered by such Proposed
Preferred Purchaser and (iv) that the Proposed Preferred Purchaser has been
informed of the tag along right provided for in this Section 4(f) and has agreed
to purchase Preferred Shares owned by any Tag Along Preferred Shareholder in
accordance with the terms hereof. The tag along right may be exercised by any
Tag Along Preferred Shareholder by delivery of a written notice to the Proposed
Preferred Purchaser and Selling Preferred Shareholder (the "Preferred Tag Along
Notice") within 30 days following its receipt of the Preferred Sale Notice. The
Preferred Tag Along Notice shall state the amount of Preferred Shares (the "Tag
Along Preferred Shares") that such Tag Along Preferred Shareholder proposes to
include in such transfer to the Proposed Preferred Purchaser. To the extent that
a Tag Along Preferred Shareholder accepts such tag along offer, the number of
Preferred Shares to be sold to the Proposed Preferred Purchaser by the Selling
Preferred Shareholder shall be reduced to the extent necessary to comply with
this Section 4(f). In the event that the Proposed Preferred Purchaser does not
purchase all Tag Along Preferred Shares from the Tag Along Preferred
Shareholders on the same terms and conditions as specified in the Preferred Sale
Notice, then the Selling Preferred Shareholder shall not be permitted to sell
any Subject Preferred Shares to the Proposed Preferred Purchaser in the proposed
transfer. The closing of any purchase from the Tag Along Preferred Shareholders
shall occur contemporaneously with the purchase and sale of the Subject
Preferred Shares (as adjusted hereunder) or at such other time as such Tag Along
Preferred Shareholders and the Proposed Preferred Purchaser shall agree.
If the other Preferred Shareholders do not elect to purchase all
Subject Preferred Shares, the Selling Preferred Shareholder shall, subject to
the other provisions of this Section 4(f), be freed and discharged, except as
herein stated, from all obligations under the terms of this Agreement other than
to sell the remaining Subject Preferred Shares to the purchaser and at the price
and upon the terms stated in the Preferred Offering Notice, but only if such
sale shall be completed within a period of 90 days from the date of delivery of
the Preferred Offering Notice to the other Preferred Shareholders. If the
Selling Preferred Shareholder does not complete such sale within such 90 day
period, all the provisions of this Agreement, including the provisions of this
Section 4(f), shall apply to any future sale or offer for sale of such Preferred
Shares owned by the Selling Preferred Shareholder.
Section 5. Representations and Warranties of Shareholders.
Each Shareholder hereby represents and warrants to the other
Shareholders as follows:
(a) As of the date hereof, such Shareholder is the record and
beneficial owner of the
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number of shares of Stock and Preferred Shares, as set forth opposite its name
in the attached Exhibit 5(a).
(b) Such Shareholder, if not a natural person, is duly formed, validly
existing and in good standing under the laws of the jurisdiction of its
formation.
(c) Such Shareholder has full power and authority to execute, deliver,
and perform this Agreement and to consummate the transactions contemplated
hereby. This Agreement has been duly executed and delivered by such Shareholder
and constitutes a valid and legally binding obligation of such Shareholder,
enforceable against such Shareholder in accordance with its terms.
(d) The execution, delivery, and performance by such Shareholder of
this Agreement do not and will not (i) if not a natural person, contravene or
violate any provision of its charter or other governing documents, as amended to
the date hereof, (ii) conflict with or result in a violation of any provision
of, or constitute (with or without the giving of notice or the passage of time
or both) a default under, or give rise (with or without the giving of notice or
the passage of time or both) to any right of termination, cancellation, or
acceleration under, any bond, debenture, note, mortgage, indenture, lease,
contract, agreement, or other instrument or obligation to which such Shareholder
is a party or by which such Shareholder or any of its properties may be bound or
(iii) violate any applicable law, rule or regulation binding upon such
Shareholder.
(e) No consent, approval, order, or authorization of, or declaration,
filing, or registration with, any court or governmental agency or of any third
party is required to be obtained or made by such Shareholder in connection with
the execution, delivery, or performance by such Shareholder of this Agreement.
Section 6. Survival of Provisions.
All representations, warranties and covenants made by each party hereto
in this Agreement or any other document contemplated hereby shall be considered
to have been relied upon by the other parties hereto and shall survive the
execution and delivery of this Agreement or such other document, regardless of
any investigation made by or on behalf of any such party.
Section 7. Entire Agreement.
This Agreement and the other documents contemplated hereunder contain
the entire understanding of the parties hereto with respect to the subject
matter hereof and supersede all prior agreements, understandings, negotiations,
and discussions among the parties with respect to such subject matter,
including, without limitation that certain Voting Agreement dated November 25,
1997, by and between Company, Energy PLC, EnCap LP, Xxxx Xxxxx and Don Wm.
Xxxxxxxx, that certain Purchase and Sale Agreement dated November 25, 1997, by
and among Company, Energy PLC, EnCap LP and Gecko Booty 1994 I Limited
Partnership, and the Original Agreement. Neither Company nor any Shareholder
shall be a party to any agreement regarding the voting or Disposition
11
12
of capital stock of Company, as such, unless Company and all such Shareholders
are also parties to that agreement, except with the written consent of Company
and all such Shareholders who are not parties to such an agreement.
Section 8. Amendments.
This Agreement may be amended, modified, supplemented, restated or
discharged only by an instrument approved in writing by the members in each
Shareholder Group owning at least two-thirds of the shares owned by such entire
group.
Section 9. Notices.
All notices and other communications required under this Agreement
shall (unless otherwise specifically provided herein) be in writing and be
delivered personally, by recognized commercial courier or delivery service
(which provides a receipt), by telecopier (with receipt acknowledged), or by
registered or certified mail (postage prepaid), at the following addresses:
If to a member of the Xxxxx Group, other than Xxxxxx:
c/x Xxxxx Energy Company
000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxx X. Xxxx
Fax No.: 000-000-0000
If to Xxxxxx: Xxxxx X. Xxxxxx
0000 XxXxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
If to B. Xxxx Xxxxx or Don Wm. Xxxxxxxx:
c/x Xxxxx Energy Company
000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxx
Fax No.: 000-000-0000
12
13
If to EnCap:
c/o EnCap Investments, L.C.
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: D. Xxxxxx Xxxxxxxx
Fax No.: 000-000-0000
If to Kayne:
Xxxxx Xxxxxxxx Investment Management
1800 Ave. of the Stars, # 1425
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Fax No.: 000-000-0000
If to BACI:
Bank of America Capital Investors
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: J. Xxxxxx Xxxx
Fax No.: 000-000-0000
If to EOS:
EOS Partners, L.P.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx
Fax No.: 000-000-0000
If to SGCP:
SGC Partners II LLC
c/o SG Capital Partners LLC
0000 Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: V. Xxxxx Xxxxxx
Fax No.: 000-000-0000
and shall be considered delivered on the date of receipt. A Shareholder may
specify as its proper
13
14
address any other post office address within the continental limits of the
United States by giving notice to the other Shareholders, in the manner provided
in this Section, at least ten (10) days prior to the effective date of such
change of address.
Any party hereto may designate a different address by notice to the
other parties.
Section 10. Termination.
This Agreement shall terminate upon the earlier of (i) the written
consent of each of the Shareholders, (ii) when the Shareholders collectively
hold an aggregate of less than 20% (or when, with respect to a Shareholder
Group, such Shareholder Group owns less than 5% (or when, with respect to a
Shareholder, such Shareholder owns less than 0.5%) of the issued and outstanding
shares of Common Stock (and this Agreement shall be terminated solely with
respect to such Shareholder Group or Shareholder, as applicable, but shall
remain in effect as to those Shareholder Groups owning 5% (and those
Shareholders owning 0.5%) or more of the issued and outstanding shares of Common
Stock)), or (iii) the closing of a public offering of the Common Stock, pursuant
to an effective registration statement filed with the Securities and Exchange
Commission, resulting in gross proceeds (before deduction of fees and
commissions) to the Company of at least $100,000,000.
Section 11. Power of Attorney.
For the purpose of executing an Addendum Agreement, all the
Shareholders hereby appoint Company as their agent and attorney to execute such
Addendum Agreement on their behalf and expressly bind themselves to the Addendum
Agreement by Company's execution of that Agreement without further action on
their part.
Section 12. No Waiver.
The failure of any party hereto to insist upon strict performance of a
covenant hereunder or of any obligation hereunder, irrespective of the length of
time for which such failure continues, shall not be a waiver of such party's
right to demand strict compliance in the future. No consent or waiver, express
or implied, to or of any breach or default in the performance of any obligation
hereunder shall constitute a consent or waiver to or of any other breach or
default in the performance of the same or any other obligation hereunder.
Section 13. Choice of Law.
This Agreement shall be governed by the internal laws of the State of
Texas, without regard to principles of conflicts of law.
Section 14. Successors and Assigns.
This Agreement shall be binding on and inure to the benefit of the
parties hereto and their respective successors and assigns.
14
15
Section 15. References and Construction.
(a) The provisions of Sections 3 and 4 hereof shall not apply to
transactions between members of the same Shareholder Group. The parties hereto
consent to the pledge of shares pursuant to those certain Pledge Agreements
(stock) by Resources, Energy PLC and EnCap LP, Price, TJG, BEC, Goff, Barrow,
Xxxxxx and Operating, respectively, in favor of Bank of America National Trust
and Savings Association and agree that Sections 3 and 4 hereof shall not be
applicable to such pledges or any foreclosures or resales thereunder.
(b) All references in this Agreement to articles, sections, subsections
and other subdivisions refer to corresponding articles, sections, subsections
and other subdivisions of this Agreement unless expressly provided otherwise.
(c) Titles appearing at the beginning of any of such subdivisions are
for convenience only and shall not constitute part of such subdivisions and
shall be disregarded in construing the language contained in such subdivisions.
(d) The words "this Agreement", "this instrument", "herein", "hereof",
"hereby", "hereunder" and words of similar import refer to this Agreement as a
whole and not to any particular subdivision unless expressly so limited.
(e) Words in the singular form shall be construed to include the plural
and vice versa, unless the context otherwise requires.
(f) Unless the context otherwise requires or unless otherwise provided
herein, the terms defined in this Agreement which refer to a particular
agreement, instrument or document also refer to and include all renewals,
extensions, modifications, amendments or restatements of such agreement,
instrument or document, provided that nothing contained in this subsection shall
be construed to authorize such renewal, extension, modification, amendment or
restatement.
(g) Examples shall not be construed to limit, expressly or by
implication, the matter they illustrate.
(h) The word "or" is not exclusive and the word "includes" and its
derivatives means "includes, but is not limited to" and corresponding derivative
expressions.
(i) No consideration shall be given to the fact or presumption that one
party had a greater or lesser hand in drafting this Agreement.
(j) All references herein to "$" or "dollars" shall refer to U.S.
Dollars.
15
16
Section 16. Legends.
The certificate or certificates representing the Stock now owned or
hereafter acquired by the Shareholders shall have conspicuously stamped,
printed, or typed on the face or back thereof a legend substantially in the
following form:
"The shares represented hereby are subject to that certain Second
Amended and Restated Shareholders' Agreement, dated as of May 14, 1999,
by and among the Company, and certain stockholders of the Company. A
copy of such shareholders' agreement and all applicable amendments
thereto will be furnished by the Company to the holder hereof without
charge upon written request to the Company at its principal place of
business or registered office."
Section 17. Specific Performance.
Each of the parties hereto recognizes that any breach of the terms of
this Agreement may give rise to irreparable harm for which money damages would
not be an adequate remedy, and accordingly agree that, in addition to other
remedies, any nonbreaching party shall be entitled to enforce the terms of this
Agreement by a decree of specific performance without the necessity of proving
the inadequacy as a remedy of money damages.
Section 18. Counterparts.
This Agreement may be executed in multiple counterparts, with each such
counterpart constituting an original and all of such counterparts constituting
but one and the same agreement.
16
17
IN WITNESS WHEREOF, this Second Amended and Restated Shareholder's
Agreement has been executed as of the date above first written.
XXXXX ENERGY COMPANY
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
ENCAP EQUITY 1994 LIMITED PARTNERSHIP
By: EnCap Investments L.C., General
Partner
By:
-------------------------------------
D. Xxxxxx Xxxxxxxx
Managing Director
ENERGY CAPITAL INVESTMENT COMPANY PLC
By:
-------------------------------------
Xxxx X. Xxxxxxxx
Director
TJG INVESTMENTS, INC.
By:
-------------------------------------
Xxx X. Xxxx
President
XXXXX ENERGY COMPANY
By:
-------------------------------------
Xxx X. Xxxx
Manager
18
XXXXX ENERGY RESOURCES, LTD.
By: Xxxxx Operating Company, Inc.,
General Partner
By:
-------------------------------------
Xxx X. Xxxx
President
XXXXX OPERATING COMPANY, INC.
By:
-------------------------------------
Xxx X. Xxxx
President
-----------------------------------------
Xxx X. Xxxx
-----------------------------------------
Xxxxxx Xxxxxx
-----------------------------------------
Xxxxx X. Xxxxxx
-----------------------------------------
B. Xxxx Xxxxx
-----------------------------------------
Don Wm. Xxxxxxxx
ENCAP ENERGY CAPITAL FUND III, L.P.
By: EnCap Investments L.C., General
Partner
By:
-------------------------------------
D. Xxxxxx Xxxxxxxx
Managing Director
19
ENCAP ENERGY CAPITAL FUND III-B, L.P.
By: EnCap Investments L.C., General
Partner
By:
-------------------------------------
D. Xxxxxx Xxxxxxxx
Managing Director
BOCP ENERGY PARTNERS, L.P.
By: EnCap Investments L.C., Manager
By:
-------------------------------------
D. Xxxxxx Xxxxxxxx
Managing Director
EOS PARTNERS, L.P.
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
EOS PARTNERS SBIC, L.P.
By: Eos SBIC General, L.P., its general
partner
By: Eos SBIC, Inc., its general partner
By:
------------------------------
Name:
-------------------------
Title:
------------------------
EOS PARTNERS SBIC II, L.P.
By: Eos SBIC General II, L.P., its
general partner
By: Eos SBIC II, Inc., its general
partner
By:
------------------------------
Name:
-------------------------
Title:
------------------------
20
SGC PARTNERS II LLC
By:
-------------------------------------
V. Xxxxx Xxxxxx
Managing Director
BANCAMERICA CAPITAL INVESTORS SBIC I, L.P.
By: BancAmerica Capital Management SBIC I,
LLC, its general partner
By: BancAmerica Capital Management I,
L.P., its
its sole member
By: BACM I GP, LLC, its general partner
By:
---------------------------------
J. Xxxxxx Xxxx
Managing Director
XXXXX XXXXXXXX ENERGY FUND, L.P.
By:
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
21
EXHIBIT 5(a)
Shareholder Number of Shares Number of
of Stock Preferred Shares
---------------------------------------------------------------------------------------
B. Xxxx Xxxxx 1,126,869 0
Don Wm. Xxxxxxxx 753,362 0
Energy Capital Investment Company PLC 4,241,598 0
EnCap Equity 1994 Limited Partnership 2,424,973 0
TJG Investments, Inc. 1,255,000 0
Xxxxx Energy Company 7,078,333 0
Xxx X. Xxxx 8,406,667 0
Xxxxxx Xxxxxx 8,666,667 0
Xxxxx X. Xxxxxx 8,666,666 0
Xxxxx Operating Company 260,000 0
Xxxxx Energy Resources, Ltd. 4,694,859 0
EnCap Energy Capital Fund III-B, L.P. 4,222,999 481,904
BOCP Energy Partners, L.P. 1,366,277 155,911
EnCap Energy Capital Fund III, L.P. 5,583,755 637,185
Xxxxx Xxxxxxxx Energy Fund, L.P. 8,763,162 1,000,000
BancAmerica Capital Investors SBIC I, L.P. 13,144,743 1,500,000
Eos Partners, L.P. 328,619 37,500
Eos Partners SBIC, L.P. 3,417,633 390,000
Eos Partners SBIC II, L.P. 635,329 72,500
SGC Partners II LLC 4,381,581 500,000
22
EXHIBIT A
ADDENDUM AGREEMENT
Addendum Agreement made this ____ day of ________, ____, by and between
____________________________________________ (the "New Shareholder") and Xxxxx
Energy Company, a Texas corporation (the "Company"), and the other shareholders
(the "Shareholders") of the Company, who are parties to that certain Second
Amended and Restated Shareholders' Agreement dated May 14, 1999 (the
"Agreement"), between the Company and the Shareholders.
W I T N E S E T H:
WHEREAS, the Company and the Shareholders entered into the Agreement to
impose certain restrictions and obligations upon themselves and the shares of
Common Stock, $0.01 par value, and Preferred Stock of the Company held by them
(the "Shares");
WHEREAS, the New Shareholder is desirous of becoming a shareholder of
the Company; and
WHEREAS, the Company and the Shareholders have required in the
Agreement that in certain circumstances certain persons being offered Shares
must enter into an Addendum Agreement binding the New Shareholder to the
Agreement to the same extent as if it was an original party thereto, so as to
promote the mutual interests of the Company, the Shareholders and the New
Shareholders by imposing the same restrictions and obligations on the New
Shareholder and the shares of Common Stock and/or Preferred Stock, as
applicable, to be acquired by it as were imposed upon the Shareholders under the
Agreement;
NOW, THEREFORE, in consideration of the mutual promises of the parties,
and as a condition of the purchase of the shares of Common Stock in the Company,
the New Shareholder acknowledges that it has read the Agreement. The New
Shareholder shall be bound by, and shall have the benefit of, all the terms and
conditions set out in the Agreement to the same extent as if it was a
"Shareholder" as defined in the Agreement. This Addendum Agreement shall be
attached to and become a part of the Agreement.
New Shareholder
By
---------------------------
Address for notices under
Section 9 of Agreement:
---------------------------
---------------------------
---------------------------
23
EXHIBIT B
ARBITRATION
In the event that a dispute or controversy as described in Section 4(a)
or 4(f) should arise, such dispute or controversy shall be settled in
arbitration in Houston, Texas and for this purpose each of the parties hereby
expressly consents to such arbitration in such place. In the event the parties
cannot mutually agree upon an arbitrator to settle their dispute or controversy,
each party to the dispute shall select one arbitrator. In the event that there
are only two parties to the dispute, the arbitrators selected by each party
shall select a third arbitrator. The decision of said arbitrators shall be
binding upon the parties for all purposes. If any party fails to select an
arbitrator within 15 days after written demand from the other party or parties
to do so, or if, in the event that there are only two parties to the dispute,
the two arbitrators selected fail to select a third arbitrator within 15 days
after the last of such selected arbitrators is appointed, such other arbitrator
or arbitrators shall be selected pursuant to the then existing rules and
regulations of the American Arbitration Association. Such arbitration shall be
conducted in accordance with the then existing rules and regulations of the
American Arbitration Association to the extent such rules and regulations are
not inconsistent with this Agreement. The expense of each arbitrator shall be
borne by the party selecting the arbitrator. The expense of any third arbitrator
shall be borne equally by the two parties to the dispute or controversy. For
purposes hereof, in the case of a dispute or controversy where the Offering
Notice or Preferred Offering Notice, as applicable, was submitted by, or the
transaction otherwise involves, more than one Selling Shareholder or Selling
Preferred Shareholder, all such selling Shareholders shall collectively
constitute a single party. Likewise, where the transaction involves more than
one purchasing Shareholder, all such purchasing Shareholders shall constitute a
single party.
