SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(Amendment No. 3)
UNDER THE SECURITIES EXCHANGE ACT OF 1934*
BARGO ENERGY COMPANY
(Name of Issuer)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
067587 10 5
(CUSIP Number)
B. CARL PRICE
BARGO ENERGY COMPANY
700 LOUISIANA, SUITE 3700
HOUSTON, TEXAS 77002
(713) 236-9792
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
May 14, 1999
(Date of event which requires filing
of this statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this
Schedule 13D, and is filing this schedule because of Sections
240.13d-1(e), 240.13d-1(f) or 204.13d-1(g), check the following
box. ___
NOTE: Schedules filed in paper format shall include a signed
original and five copies of the schedule, including all exhibits.
See Section 240.13d-7(b) for other parties to whom copies are to
be sent.
*The remainder of the cover page shall be filled out for a
reporting person's initial filing on this form with respect to the
subject class of securities, and for any subsequent amendment
containing information which would alter disclosures provided in a
prior cover page.
The information required on the remainder of this cover page shall
not be deemed to be "filed" for the purpose of Section 18 of the
Securities Exchange Act of 1934 ("Act") or otherwise subject to
the liabilities of that section of the Act but shall be subject to
all other provisions of the Act (however, see the Notes).
<PAGE>
SCHEDULE 13D
CUSIP No.: 067587 10 5 Page 2 of 9 Pages
___________________________________________________________________
1 NAME OF REPORTING PERSON (entities only)
DON WM. REYNOLDS
___________________________________________________________________
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
___________________________________________________________________
3 SEC USE ONLY
___________________________________________________________________
4 SOURCE OF FUNDS
Not Applicable
___________________________________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(E) [ ]
___________________________________________________________________
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Texas
___________________________________________________________________
Number of 7 SOLE VOTING POWER 753,362
Shares Bene- _______________________________________________
ficially 8 SHARED VOTING POWER 0
Owned by _______________________________________________
Each Report- 9 SOLE DISPOSITIVE POWER 753,362
ing Person _______________________________________________
With 10 SHARED DISPOSITIVE POWER 0
___________________________________________________________________
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
753,362
___________________________________________________________________
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
___________________________________________________________________
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.82%
___________________________________________________________________
14 TYPE OF REPORTING PERSON
IN
___________________________________________________________________
<PAGE>
ITEM 1. SECURITY AND ISSUER.
The Statement on Schedule 13D (the "Schedule 13D"), dated September
16, 1993, filed by Don Wm. Reynolds, relating to the beneficial ownership
of common stock, par value $.01 per share (the "Common Stock"), of Bargo
Energy Company, a Texas Corporation (the "Issuer" or "Bargo"), formerly
Future Petroleum Corporation, a Utah corporation, and amended and
supplemented by Amendment No. 1 to the Schedule 13D, dated August 14,
1998, filed by Don Wm. Reynolds and Amendment No. 2 to the Schedule 13D,
dated December 15, 1998, filed by Don Wm. Reynolds is hereby amended and
supplemented as set forth below. Other than as set forth below, the
Schedule 13D, as amended, is unchanged. The address of the principal
executive offices of the Issuer is 700 Louisiana, Suite 3700, Houston,
Texas 77002.
ITEM 2. IDENTITY AND BACKGROUND.
Except as otherwise provided below, Item 2 of the Schedule 13D
remains unchanged.
The following person ("Reporting Person") is filing this Schedule
13D:
The principal business address and office of B. Carl Price
("Reporting Person") is located at 700 Louisiana, Suite 3700, Houston,
Texas 77002. Mr. Price's principal occupation is Vice President-
Corporate Development of the Issuer.
The Reporting Person identified in this Item 2 has not, during the
last five years, been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors). The Reporting Person
identified in this Item 2 has not, during the last five years, been
party to a civil proceeding of a judicial or administrative body of
competent jurisdiction where as a result of such proceeding he was or is
subject to a judgment, decree or final order enjoining future violations
of, or prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such laws.
ISSUANCE OF CAPITAL STOCK
On May 14, 1999, the Issuer closed a transaction pursuant to which
it issued and sold to Kayne Anderson Energy Fund, L.P. ("Kayne"),
BancAmerica Capital Investors SBIC I, L.P. ("BancAmerica"), Eos
Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC II, L.P.
(collectively, "Eos"), Energy Capital Investment Company PLC, EnCap
Energy Capital Fund III-B, L.P., BOCP Energy Partners, L.P., EnCap
Energy Capital Fund III, L.P. (collectively, "EnCap") and SGC Partners
II LLC ("SGC" and together with Kayne, BancAmerica, Eos and EnCap, the
"Investors") shares of a newly created class of preferred stock.
Pursuant to a Stock Purchase Agreement between the Issuer and the
Investors, five million shares of the Issuer's Cumulative Redeemable
Preferred Stock, Series B ("Preferred Stock") were issued in exchange
for an aggregate purchase price of $50 million. As additional
consideration, the Issuer issued an aggregate of 43,815,810 shares of
its Common Stock to the Investors equal to 40% of the outstanding Common
Stock (on a fully diluted basis). If the Issuer redeems all of the
outstanding shares of Preferred Stock prior to May 14, 2001, the
Investors must sell back to the Issuer, for a nominal amount, 12.5% of
the shares of Common Stock originally issued to the Investors.
Dividends on the Preferred Stock equal to 10% per annum are
payable quarterly. The dividend rate is subject to increase (but in no
event to more than 16%) or decrease (but in no event to less than 10%)
based upon the Issuer's ratio of assets to liabilities which is
calculated on January 1 and July 1 of each year or at such other time as
requested by the Investors. The Preferred Stock may be redeemed at any
time by the Issuer and must be redeemed upon the occurrence of certain
events, including upon the fifth anniversary of the issue date or upon a
change of control. A change of control is deemed to occur upon any
merger, reorganization, purchase or sale of more than 50% of the
Issuer's voting securities, the sale of substantially all of the assets
of the Issuer or at any time Tim Goff ceases to serve as the Issuer's
Chief Executive Officer. The Issuer is prohibited from taking certain
actions, including authorizing, creating or issuing any shares of
capital stock, amending the articles of incorporation of the Issuer and
authorizing a merger or change of control, without the consent of the
holders of a majority of the outstanding shares of Preferred Stock.
<PAGE>
SECOND AMENDED AND RESTATED SHAREHOLDERS' AGREEMENT
In connection with the transaction, the Issuer, Bargo Energy
Resources, Ltd., TJG Investments, Inc., Bargo Energy Company, Tim J.
Goff, Thomas Barrow, James E. Sowell and Bargo Operating Company, Inc.
(collectively, the "Bargo Group"), B. Carl Price, Don Wm. Reynolds (Mr.
Price and Mr. Reynolds are referred to as the "Price Group"), EnCap
Equity 1994 Limited Partnership and the Investors entered into a Second
Amended and Restated Shareholders' Agreement ("Shareholders'
Agreement"). Under the Shareholders' Agreement, the holders of the
Preferred Stock have the right, for so long as the Preferred Stock is
outstanding and until the occurrence of certain other events, to appoint
designated nominees to the Board of Directors. Accordingly, as part of
these transactions, B. Carl Price, Mary Elizabeth Vanderhider and
Kimberley G. Seekely have resigned from Bargo's Board of Directors. Of
the three vacancies on the Board of Directors, one will be filled by a
nominee to be named by Kayne, one was filled by a nominee of BancAmerica
and one was filled by a nominee of Eos and SGC. Brian D. Young was
appointed to serve as the Eos/SGC nominee and J. Travis Hain was
appointed to serve as BancAmerica's nominee. The EnCap entities have the
right to appoint two nominees to the Board of Directors and the members
of the Bargo Group have the right to appoint two nominee to the Board of
Directors. The Price Group no longer has the right to appoint nominees
to the Board of Directors. The continuing members of Bargo's Board are
Tim J. Goff and Thomas D. Barrow (as the Bargo Group nominees) and Gary
R. Petersen and D. Martin Phillips (as the EnCap nominees). The
Shareholders' Agreement also sets forth certain rights of first refusal
and tag along rights among the parties thereto.
The provisions of the Shareholders' Agreement relating to voting
and transfer of Common Stock may be deemed to form a group composed of
the parties to the Shareholders' Agreement.
SECOND AMENDMENT TO REGISTRATION RIGHTS AGREEMENT
The Issuer, the Investors and EnCap Equity 1994 Limited
Partnership also entered into a Second Amendment to Registration Rights
Agreement dated May 14, 1999 ("Second Amendment") providing for
registration rights for the shares of Common Stock of Bargo issued to
the Investors. The Reporting Person consented to the Second Amendment.
AMENDMENT TO ISSUER'S BYLAWS
In connection with the transaction, the Issuer amended its Bylaws
to provide that for so long as each of (i) EOS and SGC (jointly), (ii)
Kayne, (iii) BancAmerica, (iv) EnCap and (v) the Bargo Group (each, a
"Nominee Group") is entitled to nominate one or more persons to the
Board of Directors of the Issuer as provided in the Shareholders'
Agreement, no act shall be deemed to be an act of the Board of Directors
or to be authorized and approved by the Board of Directors without the
approval of at least three directors that are nominated by at least
three separate Nominee Groups. In addition, Article VIII of the Bylaws
providing certain voting rights to the nominee of the Bargo Group, was
deleted.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Not applicable.
ITEM 4. PURPOSE OF TRANSACTION.
Not applicable. Item 4 of the Schedule 13D, as amended, remains
unchanged.
<PAGE>
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
Except as otherwise provided below, Item 5 of the Schedule 13D
remains unchanged.
The following describes the number of shares of Common Stock,
including shares of Common Stock issuable upon exercise or conversion
of derivative securities and the percent of outstanding Common Stock
owned by the Reporting Person and the parties to the Shareholders'
Agreement and their officers, directors, partners and control persons
("Related Parties"), other than those Related Parties that own no
shares of Common Stock or securities convertible into or exerciseable
for shares of Common Stock. All percentages are based on 48,357,786
shares of Common Stock issued and outstanding on May 14, 1999, as
represented by Bargo in the Stock Purchase Agreement dated May 14, 1999
between Bargo and the Investors, plus 43,815,810 shares of Common Stock
issued to the Investors on May 14, 1999.
<TABLE>
Shares Outstanding Derivative Securities
Name Sole Shared Sole Shared
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Bargo Energy Company(8) -- 7,078,333(2) -- --
Bargo Energy Resources, Ltd.(8) -- 4,694,859(3) -- 250,000(4)
Bargo Operating Company, Inc.(8) -- 4,954,859(5) -- 250,000(4)
Tim J. Goff (8) 8,406,667 13,288,192(6) -- 250,000(4)
TJG Investments, Inc.(8) -- 1,255,000(7) -- --
Thomas D. Barrow (8) 8,666,667 -- -- --
James E. Sowell(8) 8,666,666 -- -- --
Energy Capital
Investment Company PLC(8) -- 4,241,598 -- --
EnCap Equity 1994
Limited Partnership(8) 2,424,973 -- -- --
EnCap Energy Capital
Fund III, L.P.(8) 5,583,755 -- -- --
EnCap Energy Capital
Fund III-B, L.P.(8) 4,222,999 -- -- --
BOCP Energy Partners,
L.P.(8) -- 1,366,277 -- --
EnCap Investments,
L.L.C.(8) -- 17,839,602 -- --
B. Carl Price(8) 1,126,869 -- 613,131(9) --
Don Wm. Reynolds 753,362 -- -- --
Kayne(8) 8,763,162 -- -- --
BancAmerica(8) 13,144,743 -- -- --
SGC Partners II LLC(8) 4,381,581 -- -- --
Eos Partners, L.P.(8) 328,619 -- -- --
Eos Parnters SBIC, L.P.(8) 3,417,633 -- -- --
Eos Partners SBIC II, L.P.(8) 635,329 -- -- --
</TABLE>
<TABLE> Total
Name Number %(1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Bargo Energy Company(8) 7,078,333 7.68%
Bargo Energy Resources, Ltd.(8) 4,944,859 5.35%
Bargo Operating Company, Inc.(8) 5,204,859 5.63%
Tim J. Goff (8) 21,944,859 23.74%
TJG Investments, Inc.(8) 1,255,000 1.36%
Thomas D. Barrow (8) 8,666,667 9.40%
James E. Sowell (8) 8,666,666 9.40%
Energy Capital
Investment Company PLC(8) 4,241,598 4.60%
EnCap Equity 1994
Limited Partnership(8) 2,424,973 2.63%
EnCap Energy Capital
Fund III, L.P.(8) 5,583,755 6.06%
EnCap Energy Capital
Fund III-B, L.P.(8) 4,222,999 4.58%
BOCP Energy Partners,
L.P.(8) 1,366,277 1.48%
EnCap Investments,
L.L.C.(8) 17,839,602 19.35%
B. Carl Price(8) 1,740,000 1.88%
Don Wm. Reynolds 753,362 0.82%
Kayne(8) 8,763,162 9.51%
BancAmerica(8) 13,144,743 14.26%
SGC Partners II LLC(8) 4,381,581 4.75%
Eos Partners, L.P.(8) 328,619 0.36%
Eos Parnters SBIC, L.P.(8) 3,417,633 3.71%
Eos Partners SBIC II, L.P.(8) 635,329 0.69%
</TABLE>
______________
(1) In accordance with SEC regulations under Section 13(d) of the
Act, the percent shown in this column for each stockholder
represents the number of shares of Common Stock owned by the
stockholder plus the derivative securities (on an as converted
basis) owned by such stockholder divided by the number of shares
outstanding plus the number of derivative securities (on an as
converted basis) owned by such stockholder.
(2) Bargo Energy Company ("Bargo Energy") shares voting and
investment power with respect to these shares with Tim J. Goff.
(3) Bargo Energy Resources, Ltd. ("Resources") shares voting and
investment power jointly with Tim J. Goff and Bargo Operating
Company, Inc. ("Bargo Operating") with respect to these shares.
(4) Represents warrants to purchase Common Stock over which
Resources, Bargo Operating and Tim J. Goff share voting and
investment power.
(5) Bargo Operating shares voting and investment power with respect
to 4,694,859 shares jointly with Tim J. Goff and Resources. Bargo
Operating also shares voting and investment power with Tim J. Goff
with respect to an additional 260,000 shares of Common Stock.
(6) Mr. Goff shares voting and investment power with TJG
Investments, Inc. ("TJG") with respect to 1,255,000 shares, with
Bargo Energy with respect to 7,078,333 shares, and jointly with
Bargo Operating and Resources with respect to 4,694,859 shares.
Mr. Goff also shares voting and investment power with Bargo
Operating with respect to an additional 260,000 shares of Common
Stock.
(7) TJG shares voting and investment power with respect to these
shares with Tim J. Goff.
(8) Based on representations made by this party and information
filed in a Schedule 13D with the Securities and Exchange
Commission.
(9) Includes 550,000 shares of Common Stock that may be acquired
pursuant to employee stock options which may be exercised
immediately. Also includes 63,131 shares of Common Stock, the
maximum number of shares which Mr. Price has the right to acquire
during the 60 days following May 14, 1999 under an employment
agreement with Bargo. Under this agreement, Mr. Price may elect
to receive all or a portion of his salary in shares of Common
Stock at a price per share of $0.33 per share until December 31,
1999. From January 1, 2000 and until the employment agreement
terminates, the purchase price per share is the average midpoint
between the bid and asked price of the Common Stock on the OTC
Bulletin Board for the last five days of the calendar year prior
to the year the compensation is earned. The 63,131 shares
included in the foregoing table represents the maximum number of
shares which Mr. Price could acquire during the 60 day period
following May 14, 1999 if he converted all of his salary into
shares of Common Stock.
There were no transactions, in the Common Stock effected by the
Reporting Persons, during the past sixty days. Except as described
under Item 2 above, to the best of the Reporting Persons' knowledge,
there were no transactions in the Common Stock effected during the past
sixty days by the persons described above.
All shares of Common Stock, including shares of Common Stock
issuable upon the exercise of outstanding warrants are subject to the
voting and transfer provisions of the Shareholders' Agreement.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO THE SECURITIES OF THE ISSUER.
Except as otherwise provided below, Item 6 of the Schedule 13D
remains unchanged.
Except as set forth in Items 2, and 5 or in the Exhibits
filed herewith, there are no contracts, arrangements, understandings or
relationships (legal or otherwise) between any of the individuals or
entities described in Item 2 or between such persons and any other
person with respect to the shares of Common Stock deemed to be
beneficially owned by the Reporting Persons.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Except as otherwise provided below, Item 7 of the Schedule 13D
remains unchanged.
Exhibit Number Description
______________________________________________________________________
Exhibit 4.1 Second Amended and Restated Shareholders'
Agreement, dated May 14, 1998, by and among
Bargo Energy Company, B. Carl Price, Don Wm.
Reynolds, Energy Capital Investment Company
PLC, EnCap Equity 1994 Limited Partnership,
Bargo Energy Resources, Ltd., TJG
Investments, Inc., Bargo Energy Company, Tim
J. Goff, Thomas Barrow, James E. Sowell,
Bargo Operating Company, Inc., EnCap Energy
Capital Fund III-B, L.P., BOCP Energy
Partners, L.P., EnCap Energy Capital Fund
III, L.P., Kayne Anderson Energy Fund, L.P.,
BancAmerica Capital Investors SBIC I, L.P.,
Eos Partners, L.P., Eos Partners SBIC, L.P.,
Eos Partners SBIC II, L.P., and SGC Partners
II LLC.
Exhibit 4.2 Consent to Amendment to Registration Rights
Agreement by TJG Investments, Inc., Bargo
Energy Company, Bargo Energy Resources, Ltd.,
Bargo Operating Company, Inc., Tim J. Goff,
Thomas Barrow, James E. Sowell, B. Carl
Price, Don Wm. Reynolds, Christie Price,
Robert Price and Charles D. Laudeman.
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is
true, complete and correct.
Date: May 14, 1999
/s/ Don Wm. Reynolds
Don Wm. Reynolds
Exhibit Number Description
______________________________________________________________________
Exhibit 4.1 Second Amended and Restated Shareholders'
Agreement, dated May 14, 1998, by and among
Bargo Energy Company, B. Carl Price, Don Wm.
Reynolds, Energy Capital Investment Company
PLC, EnCap Equity 1994 Limited Partnership,
Bargo Energy Resources, Ltd., TJG
Investments, Inc., Bargo Energy Company, Tim
J. Goff, Thomas Barrow, James E. Sowell,
Bargo Operating Company, Inc., EnCap Energy
Capital Fund III-B, L.P., BOCP Energy
Partners, L.P., EnCap Energy Capital Fund
III, L.P., Kayne Anderson Energy Fund, L.P.,
BancAmerica Capital Investors SBIC I, L.P.,
Eos Partners, L.P., Eos Partners SBIC, L.P.,
Eos Partners SBIC II, L.P., and SGC Partners
II LLC.
Exhibit 4.2 Consent to Amendment to Registration Rights
Agreement by TJG Investments, Inc., Bargo
Energy Company, Bargo Energy Resources, Ltd.,
Bargo Operating Company, Inc., Tim J. Goff,
Thomas Barrow, James E. Sowell, B. Carl
Price, Don Wm. Reynolds, Christie Price,
Robert Price and Charles D. Laudeman.
<PAGE>
EXHIBIT 4.1
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 Bargo Energy Company, a Texas corporation ("Company"), B. Carl Price, a
Texas resident ("Price"), Don Wm. Reynolds, a Texas resident ("Reynolds"),
Energy Capital Investment Company PLC, an English investment company ("Energy
PLC"), EnCap Equity 1994 Limited Partnership, a Texas limited partnership
("EnCap LP"), Bargo Energy Resources, Ltd., a Texas limited partnership
("Resources"), TJG Investments, Inc., a Texas corporation ("TJG"), Bargo
Energy Company, a Texas general partnership ("BEC"), Tim J. Goff ("Goff"),
Thomas Barrow ("Barrow"), James E. Sowell ("Sowell"), Bargo 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"), Kayne Anderson
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, Sowell 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.
<PAGE>
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.
"Bargo Group" shall mean TJG, BEC, Resources, Operating, Goff,
Barrow and Sowell and any transferee of a member of the Bargo 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 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 Bargo 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.
<PAGE>
"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 Price, Reynolds 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 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.
<PAGE>
"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 Bargo 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 Bargo
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 Bargo 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 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.
<PAGE>
(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 Bargo Group
to be elected Chairman of the Board of Directors of Company. Tim J. Goff
shall serve as the Bargo Group's initial designee. In the event Mr. Goff no
longer serves as the Bargo Group's designee, the Bargo 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 Bargo 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 Tim Goff 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 Mr. Goff 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, 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.
<PAGE>
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 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.
<PAGE>
(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
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.
<PAGE>
(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 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.
<PAGE>
(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 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.
<PAGE>
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 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.
<PAGE>
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, Carl Price
and Don Wm. Reynolds, 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 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 Bargo Group, other than Sowell:
c/o Bargo Energy Company
700 Louisiana, Suite 3700
Houston, Texas 77002
Attention: Tim J. Goff
Fax No.: 713-236-9799
If to Sowell: James E. Sowell
3131 McKinney Avenue, Suite 200
Dallas, Texas 75204
If to B. Carl Price or Don Wm. Reynolds:
c/o Bargo Energy Company
700 Louisiana, Suite 3700
Houston, Texas 77002
Attention: Carl Price
Fax No.: 713-236-9799
<PAGE>
If to EnCap:
c/o EnCap Investments, L.C.
1100 Louisiana, Suite 3150
Houston, Texas 77002
Attention: D. Martin Phillips
Fax No.: 713-659-6130
If to Kayne:
Kayne Anderson Investment Management
1800 Ave. of the Stars, # 1425
Los Angeles, California 90067
Attention: Robert B. Sinnott
Fax No.: 310-284-6490
If to BACI:
Bank of America Capital Investors
100 North Tryon Street, 25th Floor
Charlotte, North Carolina 28255
Attention: J. Travis Hain
Fax No.: 704-386-6432
If to EOS:
EOS Partners, L.P.
320 Park Avenue
New York, New York 10022
Attention: Brian D. Young
Fax No.: 212-832-5815
If to SGCP:
SGC Partners II LLC
c/o SG Capital Partners LLC
1221 Avenue of the Americas, 15th Floor
New York, NY 10020
Attention: V. Frank Pottow
Fax No.: 212-278-5454
<PAGE>
and shall be considered delivered on the date of receipt. A Shareholder may
specify as its proper 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.
<PAGE>
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, Sowell 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.
<PAGE>
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.
<PAGE>
IN WITNESS WHEREOF, this Second Amended and Restated Shareholder's
Agreement has been executed as of the date above first written.
BARGO ENERGY COMPANY
By: /s/ Tim J. Goff
Name: Tim J. Goff
Title: President
ENCAP EQUITY 1994 LIMITED PARTNERSHIP
By: EnCap Investments L.C., General Partner
By: /s/ D. Martin Phillips
D. Martin Phillips
Managing Director
ENERGY CAPITAL INVESTMENT COMPANY PLC
By: Gary R. Petersen
Gary R. Petersen
Director
TJG INVESTMENTS, INC.
By: /s/ Tim J. Goff
Tim J. Goff
President
BARGO ENERGY COMPANY
By: /s/ Tim J. Goff
Tim J. Goff
Manager
BARGO ENERGY RESOURCES, LTD.
By: Bargo Operating Company, Inc., General
Partner
By: /s/ Tim J. Goff
Tim J. Goff
President
BARGO OPERATING COMPANY, INC.
By: /s/ Tim J. Goff
Tim J. Goff
President
/s/ Tim J. Goff
Tim J. Goff
/s/ Thomas Barrow
Thomas Barrow
/s/ James E. Sowell
James E. Sowell
/s/ B. Carl Price
B. Carl Price
/s/ Don. Wm. Reynolds
Don Wm. Reynolds
ENCAP ENERGY CAPITAL FUND III, L.P.
By: EnCap Investments L.C., General Partner
By: /s/ D. Martin Phillips
D. Martin Phillips
Managing Director
ENCAP ENERGY CAPITAL FUND III-B, L.P.
By: EnCap Investments L.C., General Partner
By: /s/ D. Martin Phillips
D. Martin Phillips
Managing Director
BOCP ENERGY PARTNERS, L.P.
By: EnCap Investments L.C., Manager
By: /s/ D. Martin Phillips
D. Martin Phillips
Managing Director
EOS PARTNERS, L.P.
By: /s/ EOS PARTNERS, L.P.
Name:
Title:
EOS PARTNERS SBIC, L.P.
By: Eos SBIC General, L.P., its general partner
By: Eos SBIC, Inc., its general partner
By: /s/ EOS PARTNERS SBIC, L.P.
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: /s/ EOS PARTNERS SBIC II, L.P.
Name:
Title:
SGC PARTNERS II LLC
By: /s/ V. Frank Pottow
V. Frank Pottow
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 sole member
By: BACM I GP, LLC, its general partner
By: /s/ J. Travis Hain
J. Travis Hain
Managing Director
KAYNE ANDERSON ENERGY FUND, L.P.
By: /s/ KAYNE ANDERSON ENERGY FUND, L.P
Name:
Title:
<PAGE>
EXHIBIT 5(a)
Shareholder Number of Shares Number of
of Stock Preferred
Shares
____________________________________________________________________________
B. Carl Price ...........................1,126,869 0
Don Wm. Reynolds ........................ 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
Bargo Energy Company ....................7,078,333 0
Tim J. Goff .............................8,406,667 0
Thomas Barrow ...........................8,666,667 0
James E. Sowell .........................8,666,666 0
Bargo Operating Company ................. 260,000 0
Bargo 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
Kayne Anderson 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
EXHIBIT A
ADDENDUM AGREEMENT
Addendum Agreement made this ____ day of ________, ____, by and between
____________________________________________ (the "New Shareholder") and
Bargo 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 ,
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:
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.
<PAGE>
EXHIBIT 4.12
Consent to Amendment to
Registration Rights Agreement
Reference is hereby made to (i) that certain Registration Rights
Agreement made and entered into as of the 14th day of August, 1998, as amended
by that certain First Amendment to Registration Rights Agreement made and
entered into as of the 15th day of December, 1998 by and among Bargo Energy
Company, a Texas corporation and successor by merger to Future Petroleum
Corporation, a Utah corporation (the "Company"), Bargo Energy Resources, Ltd.,
a Texas limited partnership, TJG Investments, Inc., a Texas corporation, Bargo
Energy Company, a Texas general partnership, Tim J. Goff, Thomas Barrow, James
E. Sowell, and Bargo Operating Company, Inc., a Texas corporation (as amended,
the "Bargo Registration Rights Agreement"), and (ii) that certain Registration
Rights Agreement made and entered into as of the 14th day of August, 1998, as
amended by that certain First Amendment to Registration Rights Agreement made
and entered into as of the 15th day of December, 1998 by and among the
Company, Carl Price, Don Wm. Reynolds, Christie Price, Robert Price and
Charles D. Laudeman (as amended, the "Price Registration Rights Agreement").
RECITALS:
A. The Company, Energy Capital Investment Company PLC, an English
investment company ("Energy PLC"), and EnCap Equity 1994 Limited Partnership,
a Texas limited partnership ("EnCap LP"), entered into a Registration Rights
Agreement on August 14, 1998, as amended by a First Amendment to Registration
Rights Agreement dated December 15, 1998 (as amended, the "EnCap Registration
Rights Agreement"), covering shares of Common Stock (as defined in the EnCap
Registration Rights Agreement) issued to Energy PLC and EnCap LP;
B. Energy PLC, EnCap Energy Capital Fund III-B, L.P., a Texas limited
partnership, BOCP Energy Partners, L.P., a Texas limited partnership, EnCap
Energy Capital Fund III, L.P., a Texas limited partnership, Kayne Anderson
Energy Fund, L.P., a Delaware limited partnership, BancAmerica Capital
Investors SBIC I, L.P., a [*Delaware?*] limited partnership, Eos Partners,
L.P., a Delaware limited partnership, Eos Partners SBIC, L.P., a Delaware
limited partnership, Eos Partners SBIC II, L.P., a Delaware limited
partnership, and SGC Partners II LLC, a Delaware limited liability company
(collectively, the "Investors") are parties, along with the Company, to that
certain Stock Purchase Agreement dated May 14, 1999, pursuant to which the
Investors will be issued shares of Common Stock (the "New Common Shares");
C. The parties to the EnCap Registration Rights Agreement desire to
amend such agreement to cover the New Common Shares and to make certain other
changes.
<PAGE>
D. The parties to this Consent desire to consent to and permit such
amendments to the EnCap Registration Rights Agreement;
NOW, THEREFORE, the undersigned consent to the above-referenced amendment
to the EnCap Registration Rights Agreement, as evidenced by that certain
Second Amendment to Registration Rights Agreement among the Company and the
other parties listed in Recital B hereof.
This Consent may be executed by the parties hereto in any number of
counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Consent effective
as of May 14, 1999 .
TJG INVESTMENTS, INC.
By: /s/ Tim J. Goff
Tim J. Goff
President
BARGO ENERGY COMPANY
By: /s/ Tim J. Goff
Tim J. Goff
Manager
<PAGE>
BARGO ENERGY RESOURCES,
LTD.
By: Bargo Operating Company, Inc.
General Partner
By: /s/ Tim J. Goff
Tim J. Goff
President
BARGO OPERATING COMPANY,
INC.
By: /s/ Tim J. Goff
Tim J. Goff
President
/s/ Tim J. Goff
Tim J. Goff
/s/ Thomas Barrow
Thomas Barrow
/s/ James E. Sowell
James E. Sowell
/s/ B. Carl Price
B. Carl Price
/s/ Don Wm. Reynolds
Don Wm. Reynolds
/s/ Christie Price
Christie Price
/s/ Robert Price
Robert Price
/s/ Charles D. Laudeman
Charles D. Laudeman
<PAGE>
