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EXHIBIT 2.3
XXXXXXXXX DRILLING COMPANY
NON-COMPETITION AGREEMENT
THIS NON-COMPETITION AGREEMENT is made and entered into this 23rd
day of October, 1996 (this "Agreement"), by and between XXXXXXXXX DRILLING
COMPANY, a Delaware corporation ("PDC"), and XXXXXXX X. XXXXXX, an individual
residing in Midland, Texas ("M Xxxxxx").
RECITALS:
A. Simultaneously with the execution of this Agreement, PDC
has entered into that certain Stock Purchase Agreement (the "Stock Purchase
Agreement"), among PDC and H. Xxxx Xxxxxx, Xxxxx X. Xxxxxx, Xxxxx X. Xxxxxx and
Xxxxxxx X. Xxxxxx, providing for, among other things, the purchase by PDC of
all of the outstanding shares of capital stock of Xxxxxx Cattle Company, Inc.
(d/b/a Xxxx Xxxxxx Drilling Corporation), a Texas corporation.
B. The execution and delivery of this Agreement is a
condition to the consummation of the Stock Purchase contemplated by the Stock
Purchase Agreement, and the parties are entering into this Agreement in order
to fulfill such condition.
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties, intending to be legally bound, hereby agree as follows:
1. Period of Agreement.
The period of this Agreement shall commence on the date hereof
and remain in effect through October 1, 2001, unless sooner terminated as the
result of the death of M Xxxxxx (the "Non-Compete Period").
2. Compensation.
Simultaneously with the execution of this Agreement, PDC has paid
M Xxxxxx, by wire transfer, the amount of $1,000,000 as compensation for
entering into this Agreement.
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3. Covenant Not to Compete.
(a) M Xxxxxx covenants and agrees that during the Non-Compete
Period, M Xxxxxx shall not, without the prior written consent of PDC, directly
or indirectly, and whether as a principal or as an agent, officer, director,
employee, consultant, or otherwise, alone or in association with any other
person, carry on, be engaged, concerned, or take part in, render services to,
or own, share in the earnings of, or invest in the stock, bonds, or other
securities of, any person which is engaged in, the contract oil and gas well
drilling business within the Permian Basin of West Texas and Southeastern New
Mexico (the "Competitive Business"); provided, however, that M Xxxxxx may
invest in stock, bonds, or other securities of any Competitive Business (but
without otherwise participating in the Competitive Business) if: (A) such
stock, bonds, or other securities are listed on any national securities
exchange or are registered under Section 12(g) of the Securities Exchange Act
of 1934, as amended; (B) the investment does not exceed, in the case of any
class of capital stock of any one issuer, two percent (2%) of the issued and
outstanding shares, or, in the case of bonds or other securities of any one
issuer, two percent (2%) of the aggregate principal amount thereof issued and
outstanding; and (C) such investment would not prevent, directly or indirectly,
the transaction of business by PDC or any affiliate of PDC with any state,
district, territory, or possession of the United States or any governmental
subdivision, agency, or instrumentality thereof by virtue of any statute, law,
regulation or administrative practice. The period of time during which M
Xxxxxx is prohibited from engaging in certain activities by this Section shall
be extended by the length of time during which M Xxxxxx is in breach of the
terms of this section.
(b) It is understood by and between the parties hereto that
the foregoing covenant by M Xxxxxx not to enter into competition with PDC as
set forth in Section 3(a) hereof is an essential element of this Agreement and
the Stock Purchase Agreement and that, but for the agreement of M Xxxxxx to
comply with such covenant, PDC would not have agreed to enter into this
Agreement or the Stock Purchase Agreement. PDC and M Xxxxxx have independently
consulted with their respective counsel and have been advised in all respects
concerning the reasonableness and propriety of such covenant, with specific
regard to the nature of the business conducted by PDC and its affiliates. M
Xxxxxx agrees that such covenant is reasonable in scope, geographic area, and
duration, and that compliance with such covenant would not impose economic or
professional hardship on M Xxxxxx.
4. Restrictions on Soliciting Business of PDC.
M Xxxxxx further covenants and agrees that during the Non-Compete
Period, M Xxxxxx will not, either for himself or for any other person or
entity, directly or indirectly, engage in any of the following activities in a
Competitive Business without the express prior written consent of PDC:
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(a) Solicit or hire any of the employees of PDC or solicit or
take away any of PDC's customers, lessors, or suppliers or attempt any of the
foregoing:
(b) Acquire or attempt to acquire rights providing any product
or service in a Competitive Business within the territory described in Section
3 hereof; or
(c) Engage in any act which would interfere with or harm any
business relationship PDC has with any customer, lessor, employee, principal or
supplier.
5. Specific Performance.
Without intending to limit the remedies available to PDC, M
Xxxxxx acknowledges that PDC will have no adequate remedies at law if M Xxxxxx
violates the terms of Section 3 or 4, hereof. In such event, M Xxxxxx agrees
that PDC shall have the right, in addition to any other rights it may have, to
obtain in any court of competent jurisdiction specific performance of such
Sections of this Agreement or injunctive relief to restrain any breach or
threatened breach thereof. Nothing herein shall be construed as prohibiting
PDC from pursuing any other remedies available to PDC (whether at law or in
equity) for such breach or threatened breach, including, without limitation,
the recovery of monetary damages from M Xxxxxx.
The provisions of this Section 5 shall survive the expiration,
termination or cancellation of this Agreement.
6. Attorneys Fees and Costs.
If an action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled
to reasonable attorneys fees, costs and necessary expenses in addition to any
other relief to which that party may be entitled. This provision is applicable
to this entire Agreement.
7. Representations and Warranties of PDC and M Xxxxxx.
(a) Representations and Warranties of PDC. PDC hereby
represents and warrants to M Xxxxxx that: (i) it has all requisite power to
enter into and perform its obligations under this Agreement; (ii) this
Agreement has been duly and validly authorized by all necessary corporate
action on the part of PDC; (iii) the execution of this Agreement by PDC and
performance of PDC's obligations hereunder do not require the consent or
approval of any other party; and (iv) this Agreement is a valid and binding
obligation of PDC.
(b) Representations and Warranties of M Xxxxxx. M Xxxxxx
hereby represents and warrants to PDC that: (i) M Xxxxxx has the capacity and
power to enter into
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and perform obligations of M Xxxxxx under this Agreement; (ii) M Xxxxxx has
duly and validly executed this Agreement; (iii) the execution of this Agreement
and performance of obligations of M Xxxxxx hereunder do not require the consent
or approval of any other party; and (iv) this Agreement constitutes a valid and
binding obligation of M Xxxxxx.
8. General Provisions.
(a) Compliance with Laws. The parties agree that they will
comply with all applicable laws and regulations of government bodies or
agencies in their respective performance of their obligations under this
Agreement.
(b) Governing Law and Construction. This Agreement will be
governed by and construed in accordance with the laws of the State of Texas
without reference to its conflict-of-laws principles. This Agreement's final
form resulted from review and negotiations among the parties and their
attorneys, and no part of this Agreement should be construed against any party
on the basis of authorship.
(c) Forum for Dispute Resolution. If any dispute arises among
the parties concerning the interpretation or performance of any portion of this
Agreement which the parties are unable to resolve themselves, and any party
brings an action against any other party seeking a declaratory order, specific
performance, damages, or any other legal or equitable relief based on this
Agreement, the parties agree that the forum for any such action shall be an
appropriate federal or state court in Texas having jurisdiction, agree that
venue will be proper in such courts, and waive any objections based on
inconvenience of the forum, and further agree that the prevailing party in any
such action, as determined by the court, shall be awarded its reasonable
attorneys' fees and costs in addition to any relief or judgment the court
awards.
(d) Entire Agreement; Amendment. This Agreement constitutes
the entire agreement between the parties with respect to the subject matter
contained herein and supersedes any previous oral or written communications,
representations, understandings or agreements with respect thereto. The terms
of this Agreement may be modified only in a writing, signed by authorized
representatives of both parties.
(e) Assignability. This Agreement will be binding upon the
parties' respective successors and permitted assigns. Neither party may assign
this Agreement and/or any of its rights and/or obligations hereunder without
the prior written consent of the other party, and any such attempted assignment
will be void; provided, however, that PDC may assign this Agreement to a
subsidiary or affiliate without the prior written consent of M Xxxxxx, and
provided further that a transfer by PDC as a result of a merger or sale of all
or substantially all of the assets of PDC with or to a third party that assumes
PDC's obligations hereunder by operation of law or otherwise shall not
constitute a prohibited assignment under this Section 8(e).
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(f) Waiver. A waiver of a breach or default under this
Agreement will not constitute a waiver of any other breach or default. Failure
or delay by either party to enforce compliance with any term or condition of
this Agreement will not constitute a waiver of such term or condition.
(g) Severability. If any provision of this Agreement is
declared to be invalid, the parties agree that such invalidity will not affect
the validity of the remaining provisions of this Agreement, and further agree,
to the extent possible, to substitute for the invalid provision a valid
provision that approximates the intent and economic effect of the invalid
provision as closely as possible.
(h) Headings. The titles of the Sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
(i) Notice. Any notice, request, consent, demand or other
communication required to be given under this Agreement will be in writing and
will be given personally, by facsimile or by mailing the same, first-class,
postage prepaid to the appropriate address and facsimile number set forth below
or to such other person or at such other address as may hereafter be designated
by like notice. Notices by mail will be considered delivered and become
effective three days after the mailing thereof. All notices by facsimile will
be considered delivered and become effective immediately upon the confirmed (by
answer back or other tangible printed verification or successful receipt)
sending thereof.
To PDC:
Xxxxxxxxx Drilling Company
0000 Xxxxxx Xxxxxxx
X.X. Xxxxxx 0000
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
Chairman and Chief Executive Officer
To M Xxxxxx:
Xxxxxxx X. Xxxxxx
3904 Xxxxxx
Xxxxxxx, Xxxxx 00000
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with copies to:
Xxxxxx Xxx Xxxxxxx
Meadows, Owens, Collier, Reed,
Cousins & Blau, L.L.P.
0000 XxxxxxxXxxx Xxxxx
000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
(j) Counterparts. This Agreement may be executed in
counterparts and by the parties hereto in separate counterparts, each of which
will be deemed an original, but all of which together will constitute one and
the same instrument.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to
be executed by their respective representatives as of the day and year first
above written.
XXXXXXXXX DRILLING COMPANY
By: /s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
Chief Executive Officer
/s/ Xxxxxxx X. Xxxxxx
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XXXXXXX X. XXXXXX
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