August 13, 1999
CONFIDENTIAL
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VIA FACSIMILE
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Xx. Xxxxxx X. Xxxxxxxxxxx
P.O. Box 1839
Hutchinson, Kansas 67504-1839
Re: Petroglyph Energy, Inc. ("Petroglyph")
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Dear Xx. Xxxxxxxxxxx:
Intermountain Industries, Inc. or its designee ("Industries") hereby offers
to purchase, at a price per share of $3.00, all the shares of common stock
issued and outstanding in your name, that is 96,043 shares (the "Shares"), of
Petroglyph's issued and outstanding common stock. This offer is contingent on
satisfaction of the following conditions precedent:
1. Petroglyph shall have acquired or entered into a binding agreement to acquire
at a price not to exceed $6.9 million from the Xxxxxxxx Cos., Inc. or its
affiliate ("Xxxxxxxx") all of the Xxxxxxxx right title and interest in the
Antelope Creek Properties, that is, the interest in such properties not
currently owned by Petroglyph;
2. Completion of customary due diligence to the satisfaction of Industries,
including but not limited to the satisfactory review of all SEC filings,
financial statements and minutes of shareholders, directors, and board
committees since December 31, 1998, together with all subsequent monthly
financial statements and filings made with the SEC;
3. The absence of any material, adverse change in Petroglyph's financial
condition or operations since December 31, 1998, through Closing;
4. Approval of Industries board of directors;
5. Concurrent consummation of the transactions contemplated by that certain
letter agreement dated July 29, 1999 among Industries and Xxxxx Income Trust,
Xxxxxxx X, Xxxxx, X. Xxxxxx Xxxxxxx, Xxxx X. Xxxxxx, Xxxxx X. Xxxxxxx, III,
Natural Gas Partners, L.P., Natural Gas Partners II, L.P., and Natural Gas
Partners III, L.P. (collectively, the "NGP Selling Shareholders");
6. Satisfaction or waiver of the pro-rata sale rights set forth in the
Stockholders Agreement dated August 22, 1997
("Stockholders Agreement") among Petroglyph, yourself, the NGP Selling
Shareholders, Xxxxxx Xxxxxxx and X. Xxxxxxx Xxxxx, and termination of the
Stockholders Agreement upon completion of the transfer of the Shares at the
Closing; and
7. The following Petroglyph directors will tender their resignations as
directors effective at Closing: Xxxxx X. Xxxxx, Xxxxxxx X. Xxxxx and yourself.
"Closing" will occur in Boise, Idaho, upon the satisfaction of all the
conditions precedent and concurrently with the transfer of the Shares to
Industries pursuant to the terms of formal documentation to be developed by the
parties. Among other things, such formal documentation will: (i) include
evidence (including but not limited to the opinion of legal counsel, which
opinion and counsel are acceptable to Industries) of the Selling Shareholders'
due authorization of the sale of the Shares and the legal right to sell the
Shares to Industries free and clear of all liens, claims and encumbrances (other
than restrictions on transfer of the Shares arising under securities laws); (ii)
include the Selling Shareholders' representations and warranties that they have
no actual knowledge, after having conducted reasonable inquiry in the
circumstances, that (A) Petroglyph's SEC filings are incomplete and misleading,
(B) since December 31, 1998, Petroglyph's operations have materially changed
from the pattern of its operations prior to that date in terms of indebtedness
or material contracts, and (C) since December 31, 1998, Petroglyph's
capitalization has materially changed from its capitalization prior to that date
in terms of classes of stock, warrants, stock options and other stock rights
that could affect the acquisition of voting control by Industries; and (iii)
contain such other customary or appropriate representations, covenants,
warranties and assurances as Industries may reasonably require.
Industries also acknowledges that absent a waiver from the other parties to
the Stockholders Agreement (i.e., Xxxxxx Xxxxxxx and X. Xxxxxxx Xxxxx), you are
obligated to refrain from the sale of the Shares until such other parties are
afforded an opportunity to participate in such sale on a pro-rata basis.
Industries agrees that to the extent required under the Stockholders Agreement,
it will extend to such other parties to the Stockholders Agreement, an offer to
purchase shares of Petroglyph on the same terms, and subject to the foregoing
conditions precedent. It is understood that if such other parties to the
Stockholders Agreement exercise their pro-rata sale rights.
Industries may, but will not be obligated to, purchase an aggregate number
of shares of Petroglyph in excess of that contemplated herein, but that if
Industries does not elect to purchase more shares, the Selling Shareholders
would be required to reduce the number of shares to be sold hereunder to
accommodate sales by the parties who exercise their pro-rata sale rights.
If the Closing of the purchase of the Shares does not occur on or before
August 20, 1999, unless such date is extended in writing by Industries and the
Selling Shareholders, then this letter agreement shall terminate without any
further obligation on the part of any of the parties hereto.
[Balance of page intentionally left blank;
signature page follows.]
This offer may only be accepted by executing and returning to the
undersigned by fax a signed counterpart of this letter received at the fax
number indicated above not later than Friday, August 13, 1999. This offer may be
withdrawn at any time before it has been accepted and it will expire without
further action if not accepted before August 13, 1999.
INTERMOUNTAIN INDUSTRIES, INC.
By: /s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx, President
Accepted this 13th day of August, 1999.
/s/ Xxxxxx X. Xxxxxxxxxxx
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Xxxxxx X. Xxxxxxxxxxx
