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EXHIBIT 10.10
SECURITIES PURCHASE AGREEMENT
APRIL 30, 1997
BAYARD DRILLING TECHNOLOGIES, INC.
ENERGY SPECTRUM PARTNERS LP
AND
CHESAPEAKE ENERGY CORPORATION
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TABLE OF CONTENTS
Page
ARTICLE I - DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II - ISSUANCE AND PURCHASE OF THE SECURITIES . . . . . . . . . . . . 4
2.1 Purchase and Sale of the Initial Securities . . . . . . . . 4
2.2 Initial Closing . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Initial Closing Delivery . . . . . . . . . . . . . . . . . . 4
2.4 Initial Closing Payment . . . . . . . . . . . . . . . . . . 4
2.5 Purchase and Sale of the Additional Securities . . . . . . . 5
2.6 Second Closing . . . . . . . . . . . . . . . . . . . . . . . 5
2.7 Second Closing Delivery . . . . . . . . . . . . . . . . . . 5
2.8 Second Closing Payment . . . . . . . . . . . . . . . . . . . 5
2.9 Further Assurances . . . . . . . . . . . . . . . . . . . . . 5
2.10 Separate Purchases . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . . 6
3.1 Incorporation and Good Standing . . . . . . . . . . . . . . 6
3.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.3 No Conflicts and Consents . . . . . . . . . . . . . . . . . 6
3.4 Valid Issuance . . . . . . . . . . . . . . . . . . . . . . . 6
3.5 Capitalization . . . . . . . . . . . . . . . . . . . . . . . 7
3.6 Financial Statements . . . . . . . . . . . . . . . . . . . . 8
3.7 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.8 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.9 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS . . . . . . . . 8
4.1 Incorporation and Good Standing . . . . . . . . . . . . . . 8
4.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.3 No Conflicts and Consents . . . . . . . . . . . . . . . . . 9
4.4 Investment Representations . . . . . . . . . . . . . . . . . 9
4.5 Accredited Investor . . . . . . . . . . . . . . . . . . . . 9
4.6 Fees and Commissions . . . . . . . . . . . . . . . . . . . . 10
ARTICLE V - ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . 10
5.1 Conduct of Business . . . . . . . . . . . . . . . . . . . . 10
5.2 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . 10
5.3 Additional Actions . . . . . . . . . . . . . . . . . . . . . 10
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5.4 Certain Restrictions . . . . . . . . . . . . . . . . . . . . 11
5.5 Maintenance of Business . . . . . . . . . . . . . . . . . . 11
ARTICLE VI - CONDITIONS TO INITIAL CLOSING . . . . . . . . . . . . . . . . . 12
6.1 Conditions to All Parties' Obligation to Close . . . . . . . 12
6.2 Conditions to Purchasers' Obligation to Close . . . . . . . 12
6.3 Conditions to the Company's Obligation to Close . . . . . . 13
ARTICLE VII - CONDITIONS TO SECOND CLOSING . . . . . . . . . . . . . . . . . 14
7.1 Conditions to Obligation to Close . . . . . . . . . . . . . 14
ARTICLE VIII - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 14
8.1 Consent to Amendments; Waivers . . . . . . . . . . . . . . . 14
8.2 No Assignment . . . . . . . . . . . . . . . . . . . . . . . 14
8.3 Severability . . . . . . . . . . . . . . . . . . . . . . . . 15
8.4 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . 16
8.7 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 16
8.8 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.9 Public Announcements . . . . . . . . . . . . . . . . . . . . 16
8.10 Survival of Representations and Warranties . . . . . . . . . 17
8.11 No Third Party Beneficiaries . . . . . . . . . . . . . . . . 17
8.12 Execution in Counterparts . . . . . . . . . . . . . . . . . 17
8.13 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . 17
EXHIBITS AND SCHEDULES
Exhibit A - Form of Note
Exhibit B - Form of Series A Warrant
Exhibit C - Form of Series B Warrant
Exhibit D - Form of Restated Registration Agreement
Exhibit E - Form of Restated Stockholders Agreement
Exhibit F - Form of Opinion of Company's Counsel
Schedule 2.1 - Securities to be Purchased
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SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT ("Agreement") dated as of April
30, 1997, by and among Bayard Drilling Technologies, Inc., a Delaware
corporation (the "Company"), Chesapeake Energy Corporation, an Oklahoma
corporation ("Chesapeake"), and Energy Spectrum Partners LP, a Delaware limited
partnership ("Energy Spectrum", and together with Chesapeake, the
"Purchasers").
WITNESSETH:
WHEREAS, the Purchasers desire to purchase from the Company,
and the Company desires to issue and sell to the Purchasers, (i) an aggregate
of 570,000 shares (the "Shares") of common stock, par value $0.01 per share
("Common Stock"), of the Company, (ii) $20,520,000 aggregate principal amount
of the Company's Subordinated Notes (the "Notes"), (iii) Series A Warrants of
the Company representing the right to purchase 399,000 shares of Common Stock
at an exercise price of $0.01 per share (the "Series A Warrants"), and (iv)
Series B Warrants of the Company representing the right to purchase 456,000
shares of Common Stock at an exercise price of $15.00 per share (the "Series B
Warrants" and, collectively with the Series A Warrants, the "Warrants" and,
together with the Shares and the Notes, the "Initial Securities");
WHEREAS, in addition to the above described purchases,
Chesapeake desires to purchase from the Company at the option of the Company,
and the Company desires to issue and sell, at its option, to Chesapeake, (i)
an additional 60,000 shares of Common Stock (the "Additional Shares"), (ii) an
additional $2,160,000 aggregate principal amount of the Company's Subordinated
Notes (the "Additional Notes") and (ii) additional Series A Warrants
representing the right to purchase 42,000 shares of Common Stock at an exercise
price of $0.01 per share (the "Additional Series A Warrants") and Series B
Warrants representing the right to purchase 48,000 shares of Common Stock at an
exercise price of $15.00 per share (the "Additional Series B Warrants" and,
collectively with the Additional Series A Warrants, the "Additional Warrants"
and, together with the Additional Shares and the Additional Notes, the
"Additional Securities");
WHEREAS, in connection herewith, the parties hereto, together
with the other shareholders of the Company, are entering into (i) the Restated
Stockholders Agreement (as hereinafter defined), providing for certain rights
and obligations with respect to the management of the Company, the voting of
Common Stock and the Warrants, restrictions on transfer, and certain other
matters and (ii) the Restated Registration Agreement (as hereinafter defined)
providing the holders of Common Stock with certain rights in connection with
the registration of Common Stock.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:
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ARTICLE I
DEFINITIONS
As used in this Agreement:
"Initial Closing" means the closing of the sale and purchase
of the Initial Securities pursuant to this Agreement.
"Interest Coverage Ratio" means, at any date, the ratio of
Cash Flow to Total Interest Expense. For this ratio, "Cash Flow" means the
arithmetic sum of the Company's trailing 12 month net income, interest expense,
deferred taxes, depreciation and amortization expense, plus or minus non-
recurring items of gain or loss included in net income, accounted on a
consolidated basis and prepared in accordance with generally accepted
accounting principles as of the date of determination, and "Total Interest
Expense" means the sum of the interest expense on all of the Company's long-
term debt and capitalized lease obligations during such trailing 12 month
period.
"Permitted Debt" means (i) accounts payable and accrued
liabilities incurred in the ordinary course of business; (ii) letters of
credit, performance and bid bonds obtained by the Company in the ordinary
course of business; (iii) debt incurred by any non-consolidated subsidiary that
is non-recourse to the Company; (iv) the Notes, the Additional Notes and the
PIK Notes (v) amounts borrowed under (a) the Loan Agreement dated as of
December 10, 1996 between the Company and The CIT Group/Equipment Financing,
Inc., (b) an Amended and Restated Loan Agreement of up to $31,000,000 to be
entered into between the Company and Fleet Capital Corporation and The CIT
Group/Equipment Financing, Inc. or another lender, (c) The CIT Group/Equipment
Financing, Inc. sale and leaseback arrangements and (d) the proposed revolving
credit facility of up to $10,000,000 to be entered into between the Company and
Fleet Capital Corporation or another lender and (vi) any refinancing of amounts
in clause (v).
"Person" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization or a governmental entity or any
department, agency or political subdivision thereof.
"PIK Notes" means those certain notes issued from time to time
by the Company to the holders of the Notes and the Additional Notes as provided
for in Section 1 thereof.
"Related Agreements" means the Restated Registration Agreement
and the Restated Stockholders Agreement.
"Restated Registration Agreement" means the Amended and
Restated Registration Rights Agreement by and among the Company, the Purchasers
and the other stockholders of the Company in the form of Exhibit D.
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"Restated Stockholders Agreement" means the Amended and
Restated Stockholders and Voting Agreement by and among the Company, the
Purchasers and the other stockholders of the Company in the form of Exhibit E.
"Second Closing" means the closing of the sale and purchase of
the Additional Securities pursuant to this Agreement.
"Securities" means the Initial Securities and the Additional
Securities.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Debt" means the principal of (and premium if any) and
interest on, if any (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company, whether
or not such claim for post-petition interest is allowed in such Proceeding),
and other obligations with respect of, the following, whether incurred on or
prior to the date of this Agreement: (i) every obligation of the Company for
money borrowed; (ii) every obligation of the Company evidenced by bonds,
debentures, notes or other similar instruments, including obligations incurred
in connection with the acquisition of property, assets or businesses; (iii)
every reimbursement obligation of the Company with respect to letters of
credit, bankers' acceptances or similar facilities issued for the account of
the Company; (iv) every obligation of the Company issued or assumed as the
deferred purchase price of property or service (but excluding trade payables or
accrued liabilities arising in the ordinary course of business); (v) every
capitalized lease obligation of the Company; and (vi) every obligation of the
type referred to in clauses (i) through (v) of another person the payment of
which the Company has guaranteed or is responsible or liable, directly or
indirectly, as obligor or otherwise; provided, that, Senior Debt shall not be
deemed to include (a) any indebtedness or obligation of the Company which when
incurred and without respect to any election under Section 1111(b) of the
Bankruptcy Code, was without recourse to the Company, (b) any indebtedness or
obligation of the Company to any of its subsidiaries or employees, (c) any
liability for taxes, (d) any indebtedness or other monetary obligations to
trade creditors created or assumed by the Company in the ordinary course of
business in connection with the obtaining of goods, materials or services, (e)
every obligation of the type referred to in clauses (i) through (v), if the
instrument creating or evidencing the same or pursuant to which the same is
outstanding, provides that such obligation is not superior in right of payment
to the Notes or to other obligations which are pari passu with, or subordinated
to, the Notes and (f) the Notes, the Additional Notes and the PIK Notes.
"Tangible Net Worth" means, at any date, the sum of the
Company's capital stock (excluding treasury stock, but including warrants and
preferred stock), surplus (including earned surplus, capital surplus and the
balance of the current profit and loss account not transferred to surplus)
accounted on a consolidated basis appearing on a consolidated balance sheet
prepared in accordance with generally accepted accounting principles as of the
date of determination, excluding, however, from the determination, all inter-
company transactions and after deducting therefrom the net book value of all
assets (after deducting any reserves applicable thereto) which would be treated
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as intangibles under generally accepted accounting principles (including,
without limitation, such items as goodwill, trademarks, trade names, patents
and licenses, franchises and operating rights) and excluding the amount of the
Company's equity investment in any non-consolidated subsidiary.
"Total Debt" means, at any date, total indebtedness for
borrowed money, including the sum of all Senior Debt outstanding, the Notes,
the Additional Notes and the PIK Notes.
"Trend" means Trend Drilling Co., an Oklahoma corporation.
"Trend Acquisition" means the acquisition by the Company of
all of the outstanding capital stock of Trend pursuant to that certain Stock
Purchase Agreement, dated as of February 13, 1997, by and between Xxxxxx X.
Xxxx, an individual acting in his capacity as Trustee of the Xxxxxx X. Xxxx
Revocable Inter Vivos Trust dated April 23, 1984, and the Company.
ARTICLE II
ISSUANCE AND PURCHASE OF THE SECURITIES
2.1 Purchase and Sale of the Initial Securities. Subject
to the satisfaction of the terms and conditions herein set forth and in
reliance upon the respective representations and warranties of the parties set
forth herein or in any document delivered pursuant hereto, at the Initial
Closing the Company shall sell to each Purchaser, and each Purchaser shall
purchase from the Company, the Initial Securities set forth on Schedule 2.1
hereto, in exchange for payment to the Company by each Purchaser of the
purchase price set forth thereon.
2.2 Initial Closing. The Initial Closing shall take
place at the offices of Xxxxx & Xxxxx, L.L.P., 0000 Xxxx Xxxxxx, Xxxxx 000,
Xxxxxx, Xxxxx 00000, on May 1, 1997, at 9:00 a.m., Dallas, Texas time, or at
such other time, date and place as may be agreed to in writing by the Company
and the Purchasers.
2.3 Initial Closing Delivery. At the Initial Closing,
the Company shall deliver to each of the Purchasers, against payment by each
such Purchaser of the purchase price related thereto: (i) one or more
certificates representing the Shares to be purchased by such Purchaser, duly
issued and in a form sufficient to vest title thereto fully in such Purchaser;
(ii) a Note, in the aggregate principal amount to be purchased by such
Purchaser, substantially in the form of Exhibit A hereto; (iii) a Series A
Warrant representing the right of such Purchaser to purchase the number of
shares of Common Stock provided for on Schedule 2.1, substantially in the form
of Exhibit B hereto; and (iv) a Series B Warrant representing the right of such
Purchaser to purchase the number of shares of Common Stock provided for on
Schedule 2.1, substantially in the form of Exhibit C hereto.
2.4 Initial Closing Payment. At the Initial Closing, (i)
each Purchaser shall pay to the Company, by wire transfer of immediately
available funds to an account designated by the
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Company or by such other means as may be acceptable to the Company, the
aggregate purchase price to be paid by such Purchaser as provided for on
Schedule 2.1 and (ii) the Company shall pay, by wire transfer of immediately
available funds to an account designated by Chesapeake or by such other means
as may be acceptable to Chesapeake, an amount equal to $250,000.
2.5 Purchase and Sale of the Additional Securities. At
anytime on or prior to April 30, 1998, the Company shall have the right, but
not the obligation, to sell the Additional Securities to Chesapeake on the
terms and subject to the conditions set forth herein. The Company may exercise
such right by delivering a written notice (the "Second Closing Notice") of such
exercise to Chesapeake at least 15 days prior to the date of the Second Closing
set forth in such Second Closing Notice. Subject to the satisfaction of the
terms and conditions herein set forth and in reliance upon the respective
representations and warranties of the parties set forth herein or in any
document delivered pursuant hereto, at the Second Closing the Company shall
sell to Chesapeake, and Chesapeake shall purchase from the Company, the
Additional Securities, in exchange for payment to the Company by Chesapeake of
$3,000,000.
2.6 Second Closing. The Second Closing shall take place
at such time, date and place as may be agreed to in writing by the Company and
Chesapeake, provided the Second Closing shall occur on or prior to April 30,
1998.
2.7 Second Closing Delivery. At the Second Closing, the
Company shall deliver to Chesapeake, against payment by Chesapeake of the
purchase price set forth in Section 2.5: (i) the Additional Shares; (ii) the
Additional Note, substantially in the form of Exhibit A hereto; (iii) the
Additional Series A Warrant, substantially in the form of Exhibit B hereto; and
(iv) the Additional Series B Warrant, substantially in the form of Exhibit C
hereto.
2.8 Second Closing Payment. At the Second Closing,
Chesapeake shall pay to the Company, by wire transfer of immediately available
funds to an account designated by the Company or by such other means as may be
acceptable to the Company, the aggregate purchase price to be paid by
Chesapeake as provided for in Section 2.5.
2.9 Further Assurances. At or after the each Closing,
the parties hereto shall execute and deliver such additional documents and take
such additional actions as any party may reasonably deem to be necessary or
advisable in order to consummate the transactions contemplated by this
Agreement and to carry out and effectuate the purposes intended hereby to be
accomplished. The parties hereto further agree to cooperate and take such
additional actions as may be necessary for the Company to enter into an Amended
and Restated Loan Agreement with The CIT Group/Equipment Financing, Inc. and
Fleet Capital Corporation, including a subordination agreement.
2.10 Separate Purchases. The sale of the Initial
Securities and the Additional Securities hereunder to the Purchasers are to be
separate sales, and neither of the Purchasers is to be responsible for the acts
or defaults of the other Purchaser at either Closing.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company hereby represents and warrants to each of the
Purchasers that the following are true and correct as of the date hereof and
will be true and correct at and as of each Closing as if made on the date of
such Closing:
3.1 Incorporation and Good Standing. The Company is duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware. The Company has all requisite corporate power and authority to
own the properties owned by it, to conduct its business as presently conducted
and to execute and deliver this Agreement and the Related Agreements and the
other documents and instruments contemplated hereunder and thereunder to be
executed and delivered by it to consummate the transactions contemplated
hereunder and thereunder.
3.2 Authority. The execution and delivery of this
Agreement and the Related Agreements and the consummation of the transactions
contemplated hereunder and thereunder by the Company have been duly and validly
authorized by all requisite corporate action on the part of the Company. This
Agreement and the Related Agreements have been duly and validly executed by the
Company and constitute legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws
affecting creditors' rights generally or by general principles of equity.
3.3 No Conflicts and Consents. The execution, delivery
and performance by the Company of this Agreement and the Related Agreements do
not, and the consummation by the Company of the transactions contemplated
hereunder and thereunder will not (i) conflict with, or result in any violation
or breach of, any provision of the certificate of incorporation or bylaws of
the Company, (ii) conflict with, or result in any violation or breach of,
constitute a default under, give rise to any right of termination or
acceleration (with or without notice or the lapse of time or both) pursuant to,
any term or provision of any material note, bond, mortgage, indenture, lease,
franchise, permit or license to which the Company is a party or by which the
Company's assets may be bound, (iii) require the Company to obtain any consent,
approval, permit, notice, action, authorization or waiver of or file with or
give notice to any governmental authority or any other Person not a party to
this Agreement or any of the Related Agreements, (iv) conflict with, or result
in any violation of, any material law, ordinance, statute, rule or regulation
of any governmental authority or any order, writ, injunction, judgment or
decree of any court, arbitrator or government authority or (v) result in the
creation or imposition of any lien, charge or encumbrance upon any assets of
the Company.
3.4 Valid Issuance.
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(a) The Shares have been duly authorized, and when
issued, sold and delivered in accordance with the terms of this
Agreement, will be validly issued, fully paid, non-assessable and free
and clear of all liens, charges, claims and encumbrances created by
the Company and will not have been issued in violation of the
preemptive rights of any stockholder of the Company. Upon the
delivery to the Purchasers of the certificates evidencing the Shares,
the Purchasers shall acquire good and indefeasible title to the
Shares.
(b) The Notes and the Additional Notes have been duly
authorized, and when executed by an authorized officer of the Company
and sold and delivered in accordance with the terms of this Agreement,
will be valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other laws
affecting creditors' rights generally or by general principles of
equity.
(c) The Warrants and the Additional Warrants have been
duly authorized, and when sold and delivered in accordance with the
terms of this Agreement, will be valid and binding obligations of the
Company, enforceable against the Company in accordance with their
terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other
laws affecting creditors' rights generally or by general principles of
equity.
(d) The shares of Common Stock issuable upon exercise of
the Warrants and the Additional Warrants have been validly reserved
and, upon issuance in accordance with the exercise provisions of the
Warrants or Additional Warrants, as applicable, will be validly
issued, fully paid, non-assessable and free and clear of all liens,
charges, claims and encumbrances created by the Company.
3.5 Capitalization. The authorized capital stock of the
Company consists of (a) 10,000,000 shares of Common Stock, of which (i)
2,850,000 shares are issued and outstanding, (ii) 1,000,000 shares are subject
to issuance pursuant to an option agreement with Chesapeake (iii) up to 150,000
shares are subject to issuance pursuant to a warrant issued to The CIT
Group/Equipment Financing, Inc., (iv) up to 50,000 shares are subject to
issuance pursuant to a warrant to be issued to X.X. Xxxxxx Drilling, Inc., (v)
125,000 shares are to be issued to the sole stockholder of Trend in connection
with the Trend Acquisition, (vi) 200,000 shares are to be issued to the
shareholders of Xxxx Drilling Company, and (vii) up to 100,000 shares are
subject to issuance pursuant to a warrant to be issued to the shareholders of
Xxxx Drilling Company and (b) 2,000,000 shares of Preferred Stock, $0.01 par
value per share, none of which are issued and outstanding. No shares of capital
stock of the Company are held in its treasury. All outstanding shares of
capital stock of the Company have been validly issued and are fully paid and
non-assessable. Except as referred to in this Section 3.5, and any share
options for Common Stock granted or to be granted under the Company's 1997
Stock Option and Stock Award Plan, there are no outstanding options, warrants,
conversion or other rights or agreements of any kind (other than this
Agreement, the Related
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Agreements and the Master Agreement, dated as of November 26, 1996, of which
each Purchaser is a party) for the purchase or acquisition from, or the sale or
issuance by, the Company of any shares of capital stock of the Company, and no
authorization therefor has been given.
3.6 Financial Statements. The Company's consolidated
balance sheet as of December 31, 1996 and the related consolidated statements
of operations for the year then ended have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis and
present fairly, in all material respects, the financial position of the Company
at such date and the results of operations for the year then ended in
conformity with such principles.
3.7 Taxes. The Company has filed or caused to be filed
all tax returns required to be filed and has paid or caused to be paid all
taxes as shown on such returns or on any assessment received by it to the
extent that such taxes have become due and except as to such taxes being
contested in good faith by appropriate proceedings for which adequate reserves
are being maintained The Company has established reserves to the extent it
believes to be adequate for the payment of additional taxes for years which
have not been audited by the respective tax authorities.
3.8 Litigation. There are no suits or proceedings
pending or, to the Company's knowledge, threatened which might reasonably be
expected to have a material adverse effect on the Company.
3.9 Insurance. The Company is a beneficiary of policies
of insurance, issued by insurers of recognized responsibility, providing
adequate coverage to insure the assets of the Company against such risks and in
such amounts as are prudent and customary in the Company's industry. All
premiums due on such policies have been paid and no notice of cancellation has
been received with respect thereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASERS
Each Purchaser, severally and not jointly, hereby represents and
warrants to the Company that the following are true and correct as of the date
hereof and will be true and correct at and as of the Initial Closing and, in
the case of Chesapeake, at the Second Closing, as if made on the date of such
Closing:
4.1 Incorporation and Good Standing. The Purchaser is a
legal entity duly incorporated or formed and validly existing under the laws of
its jurisdiction of organization, and has all requisite power and authority to
enter into this Agreement and the Related Agreements and to consummate the
transactions contemplated hereunder and thereunder.
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4.2 Authority. The execution and delivery of this
Agreement and the Related Agreements and the consummation of the transactions
contemplated hereunder and thereunder by the Purchaser have been duly and
validly authorized by all requisite partnership or corporate action on the part
of the Purchaser. This Agreement and the Related Agreements have been duly and
validly executed by the Purchaser and constitute legal, valid and binding
obligations of the Purchaser, enforceable against the Purchaser in accordance
with their respective terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
other similar laws affecting creditors' rights generally or by general
principles of equity.
4.3 No Conflicts and Consents. The execution, delivery
and performance by the Purchaser of this Agreement and the Related Agreements
do not, and the consummation by the Purchaser of the transactions contemplated
hereunder and thereunder will not (i) conflict with, or result in any violation
or breach of, any provision of the certificate of incorporation or bylaws or
partnership agreement, as applicable, of the Purchaser, (ii) conflict with, or
result in any violation or breach of, constitute a default under, give rise to
any right of termination or acceleration (with or without notice or the lapse
of time or both) pursuant to, any term or provision of any material note, bond,
mortgage, indenture, lease, franchise, permit or license to which the Purchaser
is a party or by which the Purchaser's assets may be bound, (iii) require the
Purchaser to obtain any consent, approval, permit, notice, action,
authorization or waiver of or file with or give notice to any governmental
authority or any other Person not a party to this Agreement or any of the
Related Agreements or (iv) conflict with, or result in any violation of, any
material law, ordinance, statute, rule or regulation of any governmental
authority or any order, writ, injunction, judgment or decree of any court,
arbitrator or government authority.
4.4 Investment Representations. The Purchaser is
acquiring the Securities (including shares of Common Stock issuable upon
exercise of the Warrants or Additional Warrants) for its own account, for
investment purposes only and not with a view to resale or any other
distribution thereof, in whole or in part, in violation of the Securities Act.
The Purchaser acknowledges and agrees that it may not assign, sell, hypothecate
or otherwise transfer the Securities (including shares of Common Stock issuable
upon exercise of the Warrants or Additional Warrants) unless (i) (A) a
registration statement is in effect under the Securities Act with respect to
the sale or other distribution of such Securities (including shares of Common
Stock issuable upon exercise of the Warrants or Additional Warrants), or (B) a
written opinion of counsel acceptable to the Company is obtained to the effect
that no such registration is required, and (ii) except in the case of publicly
traded shares of Common Stock, the transferee is an "accredited investor" as
that term is defined in Rule 501 of Regulation D under the Securities Act. The
Purchaser has no reason to anticipate any change in its respective
circumstances, financial or otherwise, that would cause or require any sale or
distribution of the Securities (including shares of Common Stock issuable upon
exercise of the Warrants or Additional Warrants).
4.5 Accredited Investor. The Purchaser (a) has such
knowledge and experience in financial and business matters that it is capable
of evaluating the merits and risks of its investment
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in the Securities (including shares of Common Stock issuable upon exercise of
the Warrants or Additional Warrants) and has the financial ability to assume
the monetary risk associated therewith; (b) is able to bear the complete loss
of its investment in the Securities (including shares of Common Stock issuable
upon exercise of the Warrants or Additional Warrants); (c) has received such
documents and information as it has requested and has had the opportunity to
ask questions of, and receive answers from, the Company and its management
concerning the Company and the terms and conditions of the offering of the
Securities (including shares of Common Stock issuable upon exercise of the
Warrants or Additional Warrants) and to obtain additional information; (d) is
an "accredited investor" as defined in Rule 501(a) of Regulation D promulgated
under the Securities Act; (e) is not an entity formed solely to make this
investment; and (f) is not relying upon any statements or instruments made or
issued by any Person other than the Company and its officers in making its
decision to invest in the Securities (including shares of Common Stock
issuable upon exercise of the Warrants or Additional Warrants).
4.6 Fees and Commissions. The Purchaser has not retained
any broker or any other person acting on behalf of the Purchaser in connection
with the transactions contemplated by this Agreement which would give rise to
any valid claim against the Purchaser or the Company for any brokerage or
finder's commission, fee or similar compensation.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Conduct of Business. From the date hereof until the
Second Closing, except as permitted by this Agreement or as otherwise consented
to by each Purchaser in writing, such consent not to be unreasonably withheld,
the Company shall:
(a) carry on its business in the ordinary course in
substantially the same manner in which it previously has been
conducted and, to the extent consistent with such business, use
reasonable efforts to preserve intact its present business
organization and to preserve its relationship with customers,
suppliers and others having business dealings with it; and
(b) maintain its books of account and records in its
usual, regular and ordinary manner, consistent with its past practice.
5.2 Use of Proceeds. The Company will use the proceeds
from the sale of the Initial Securities for (i) payment of the purchase price
and other costs and expenses associated with the Trend Acquisition, (ii) the
acquisition of other drilling rigs, equipment, and other assets and properties
used in connection with the Company's drilling business, (iii) fees and
expenses related to the transactions contemplated hereunder, and (iv) working
capital and capital expenditures related to the Company's drilling business.
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5.3 Additional Actions. The Company agrees that on or
prior to the Initial Closing and the Second Closing:
(a) The Company shall not take any action that would
adversely affect the condition (financial or otherwise), business,
operations or assets of the Company without the prior written consent
of the Purchasers, or take or fail to take any action that would cause
or permit the representations made in Article III hereof to be
inaccurate at the time of the Initial Closing or the Second Closing,
as the case may be, or preclude the Company from making such
representations and warranties at and as of the time of the Initial
Closing or the Second Closing, as the case may be.
(b) As soon as practicable after the execution of this
Agreement, but in any event prior to the Initial Closing, the Company
will use commercially reasonable efforts to secure all necessary
approvals and consents of third parties to the consummation of the
transactions contemplated by this Agreement and the Related
Agreements.
5.4 Certain Restrictions. For so long as either of the
Purchasers beneficially owns at least $2,000,000 principal amount of the Notes,
the Company shall not, without the prior consent of each Purchaser owning at
least $2,000,000 principal amount of the Notes on such date:
(a) pay any dividends or make any cash distributions to
its shareholders;
(b) sell, within any 12 month period, any assets
representing greater than 10% of the total book value of the Company's
assets as shown on the Company's most recent audited balance sheet,
unless the proceeds of such sales are used to repay Senior Debt or the
Notes;
(c) incur any indebtedness for borrowed money, other than
Permitted Indebtedness, unless at such incurrence:
(i) the ratio of Senior Debt to Tangible Net Worth
as of the most recent balance sheet date and after giving
effect to the proposed borrowing is not greater than 1.5:1.0
prior to June 30, 1998, 1.33:1.0 from July 1, 1998 to June 30,
1999 and 1.25:1.0, thereafter;
(ii) the ratio of Total Debt to Tangible Net Worth as
of the most recent balance sheet date and after giving effect
to the proposed borrowing is not greater than 2.0:1.0 prior to
June 30, 1998, 1.75:1.0 from July 1, 1998 to June 30, 1999 and
1.50:1.0, thereafter; and
(iii) the Interest Coverage Ratio is at least 2.5:1.0
prior to June 30, 1998 and 3.0:1.0, thereafter.
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5.5 Maintenance of Business. For so long as either of
the Purchasers beneficially owns at least $2,000,000 principal amount of the
Notes, the Company shall retain contract drilling in the United States as it
principal business activity and shall not enter into any business activity
unrelated to the provision of oilfield services.
ARTICLE VI
CONDITIONS TO INITIAL CLOSING
6.1 Conditions to All Parties' Obligation to Close. The
obligation of each party hereto to consummate the transaction contemplated
hereunder at the Initial Closing shall be subject to the satisfaction of each
of the following conditions:
(a) As of the Initial Closing, the purchase of the
Initial Securities by the Purchasers hereunder shall be legally
permitted by all laws and regulations to which the Purchasers and the
Company are subject.
(b) As of the Initial Closing, all authorizations,
approvals or permits of, or filings with any governmental authority,
including state securities or "blue sky" offices, that are required by
law in advance of the lawful sale and issuance of the Securities,
shall have been duly obtained by the Company, and shall be effective
as of the Initial Closing.
(c) No action, proceeding or order by any court or
governmental body or agency shall have been threatened in writing,
asserted, instituted or entered to restrain or prohibit the carrying
out of the transactions contemplated by this Agreement.
(d) The Restated Stockholders Agreement and the Restated
Registration Agreement shall have been executed and delivered by all
parties thereto.
6.2 Conditions to Purchasers' Obligation to Close. The
obligation of each Purchaser to consummate the transactions contemplated
hereunder at the Initial Closing shall be subject to the satisfaction of each
of the following conditions:
(a) The representations and warranties made by the
Company herein shall be true and correct when made, and shall be true
and correct as of the Initial Closing as if made at the Initial
Closing.
(b) All covenants, agreements and conditions contained in
this Agreement to be performed or complied with by the Company at or
prior to the Initial Closing shall have been performed or complied
with in all material respects.
(c) At the Initial Closing, the Company shall have
delivered to the Purchasers a certificate, executed by its chief
executive officer, dated the date of the Initial Closing,
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certifying to the fulfillment of the conditions specified in Sections
6.2 (a) and (b) of this Agreement.
(d) At the Initial Closing, the Company shall have
delivered to the Purchasers copies of each of the following, in each
case certified to be in full force and effect on the date of the
Initial Closing by the Secretary of the Company:
(i) the Certificate of Incorporation of the Company
certified by the Secretary of State of the State of
Delaware as of a date not more than ten days prior to
the Initial Closing;
(ii) the Bylaws of the Company; and
(iii) resolutions of the Board of Directors of the Company
authorizing the execution, delivery and performance
of this Agreement and the Related Agreements, and the
transactions contemplated hereunder and thereunder,
the issuance and sale of the Initial Securities and
the reservation of the shares of Common Stock
issuable upon conversion of the Warrants.
(e) The Purchasers shall have received at the Closing the
opinion of Xxxxx & Xxxxx, L.L.P., counsel for the Company, dated the
date of the Closing, in substantially the form of Exhibit F.
(f) The Company shall have obtained and delivered to the
Purchasers such written consents to the transactions contemplated by
this Agreement as shall be necessary to effect this Agreement.
6.3 Conditions to the Company's Obligation to Close. The
obligation of the Company to consummate the transactions contemplated hereunder
at the Initial Closing shall be subject to the satisfaction of each of the
following conditions:
(a) The representations and warranties made by each of
the Purchasers herein shall be true and correct when made, and shall
be true and correct as of the Initial Closing as if made at the
Initial Closing.
(b) All covenants, agreements and conditions contained in
this Agreement to be performed or complied with by each of the
Purchasers at or prior to the Initial Closing shall have been
performed or complied with in all material respects.
(c) At the Initial Closing, each of the Purchasers shall
have delivered to the Company a certificate of a duly authorized
officer of such Purchaser certifying that the execution, delivery and
performance of this Agreement and the Related Agreements and the
transactions contemplated hereby and thereby have been duly authorized
by such Purchaser
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and each of the Purchasers shall have delivered to the Company a copy
of the resolutions of the Board of Directors of each Purchaser,
authorizing the execution, delivery and performance of this Agreement
and the Related Agreements and the transactions contemplated hereunder
and thereunder, certified to be in full force and effect on the date
of the Initial Closing by an officer of such Purchaser.
ARTICLE VII
CONDITIONS TO SECOND CLOSING
7.1 Conditions to Obligation to Close. In the event the
Company provides the Second Closing Notice to Chesapeake:
(a) the obligation of the Company and Chesapeake to
consummate the transaction contemplated hereunder at the Second
Closing shall be subject to the satisfaction of each of the conditions
set forth in Section 6.1(a), (b) and (c) with respect to the
Additional Securities and as of the date of Second Closing;
(b) the obligation of Chesapeake to consummate the transaction
contemplated hereunder at the Second Closing shall be subject to (i)
the satisfaction of each of the conditions set forth in Section
6.2(a), (b) (c), (d) (iii), (e) and (f) with respect to the Additional
Securities and as of the date of Second Closing, and (ii) the
following additional conditions: (i) the consummation of the
transactions contemplated hereunder at the Second Closing shall not
conflict with, or result in any violation or breach of, constitute a
default under, give rise to any right of termination or acceleration
pursuant to, any term or provision of any loan document of Chesapeake
in existence on the date hereof and (ii) since the date of the Initial
Closing, there shall not have been any material adverse change in the
business, financial condition or operations of the Company and its
subsidiaries taken as a whole; and
(c) the obligation of the Company to consummate the
transaction contemplated hereunder at the Second Closing shall be
subject to the satisfaction of each of the conditions set forth in
Section 6.3(a), (b) and (c) with respect to the Additional Securities
and as of the date of Second Closing.
ARTICLE VIII
MISCELLANEOUS
8.1 Consent to Amendments; Waivers. Except as otherwise
expressly provided herein, the provisions of this Agreement shall not be
amended or waived except upon the written agreement of the Company and the
Purchasers.
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8.2 No Assignment. This Agreement is not assignable by
any party without the prior written consent of the other parties hereto. Any
purported or attempted assignment in violation of this Section shall be void
and unenforceable.
8.3 Severability. Whenever possible, each provision of
this Agreement shall be interpreted so as to be effective and valid under
applicable law. If any provision of this Agreement is held to be prohibited by
or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the
remainder of this Agreement.
8.4 Headings. The descriptive headings of this Agreement
are inserted for convenience of reference only and do not constitute a part of
and shall not affect the interpretation of this Agreement.
8.5 Notices. Any notices required or permitted to be
sent hereunder shall be delivered personally or mailed by certified mail,
return receipt requested, or delivered by overnight courier service to the
following addresses, or such other address as any party hereto designates by
written notice to the Company, and shall be deemed to have been given upon
delivery, if delivered personally, three days after mailing, if mailed, or one
business day after delivery to the courier, if delivered by overnight courier
service:
If to the Company, to:
Bayard Drilling Technologies, Inc.
0000 Xxxxxxxxx Xxxxxxxxxx
Xxxxx 000X
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attention: President
With a copy to:
Xxxxx & Xxxxx, L.L.P.
0000 Xxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxx
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If to Chesapeake, to:
Chesapeake Energy Corporation
X.X. Xxx 00000
Xxxxxxxx Xxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx
With a copy to:
Self, Xxxxxxx & Xxxx, Inc.
2725 Oklahoma Tower
000 Xxxx Xxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000-0000
Attention: Xxx Xxxx
If to Energy Spectrum, to:
Energy Spectrum Partners LP
0000 Xxxxxx Xxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxx
8.6 Governing Law. This Agreement shall be governed in
accordance with the laws of the State of Delaware, without giving effect to the
choice of law principles thereof.
8.7 Entire Agreement. This Agreement and the Related
Agreements constitute the entire agreement of the parties concerning the
transactions contemplated hereby, and supersede all prior agreements and
understandings, written or oral, regarding the subject matter hereof.
8.8 Expenses. The Company shall reimburse Energy
Spectrum for all costs and expenses incurred by it in connection with the
matters contemplated by this Agreement, and Chesapeake shall bear all costs and
expenses incurred by it in connection with the matters contemplated by this
Agreement.
8.9 Public Announcements. Except as set forth in the
following sentence, the parties to this Agreement agree that prior to making
any public announcement or statement with respect to the transactions
contemplated by this Agreement, the party desiring to make such public
announcement or statement shall consult with the other parties and exercise
reasonable efforts to (i) agree upon the text of a joint public announcement or
statement to be made by both of such parties or (ii) obtain approval of the
other parties to the text of a public announcement or statement to be made
solely by the Company or one of the Purchasers, as the case may be. Nothing
contained in this Section 8.9 shall be construed to require either party to
obtain approval of the other parties
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to disclose information with respect to any disclosure (i) required by
applicable law or by any applicable rules, regulations or orders of any
governmental authority having jurisdiction or (ii) necessary to comply with
disclosure requirements of any applicable stock exchange.
8.10 Survival of Representations and Warranties. The
representations and warranties contained in this Agreement or in any
certificate, document, or instrument delivered pursuant to this Agreement shall
survive until the Initial Closing.
8.11 No Third Party Beneficiaries. Except as otherwise
provided, this Agreement has been and is made solely for the benefit of and
shall be binding upon the parties hereto and their respective successors and
permitted assigns; and no other person shall acquire or have any rights under
or by virtue of this Agreement.
8.12 Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so executed and
delivered shall be deemed an original, and all of which together shall
constitute one and the same instrument.
8.13 WAIVER OF JURY TRIAL. EACH PARTY HERETO WAIVES TRIAL
BY JURY IN ANY ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH
LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY ANY COURT.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
COMPANY:
-------
BAYARD DRILLING TECHNOLOGIES, INC.
By:/s/ XXXXX X. XXXXX
-------------------------------------------
Xxxxx X. Xxxxx
President
PURCHASERS:
----------
CHESAPEAKE ENERGY CORPORATION
By:/s/ XXXXXX X. XXXXXXXXX
-------------------------------------------
Xxxxxx X. XxXxxxxxx
Chairman and Chief Executive Officer
ENERGY SPECTRUM PARTNERS LP
By: Energy Spectrum Capital LP, General
Partner
By: Energy Spectrum LLC, General
Partner
By:/s/ XXXXXX X. XXXXXX
--------------------------
Xxxxxx X. Xxxxxx
President
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SCHEDULE 2.1
SECURITIES TO BE PURCHASED AT INITIAL CLOSING
Purchaser Security Amount and Type Purchase Price
-------------------------- --------------------------------------------------- ------------------------
Chesapeake 500,000 shares of Common Stock $7,000,000
$18,000,000 aggregate principal amount of Notes $18,000,000
Series A Warrant for the Purchase of 350,000
shares of Common Stock
Series B Warrant for the Purchase of 400,000
shares of Common Stock
------------------------
Aggregate Purchase Price $25,000,000
========================
Energy Spectrum 70,000 shares of Common Stock $980,000
$2,520,000 aggregate principal amount of Notes $2,520,000
Series A Warrant for the purchase of 49,000 shares
of Common Stock
Series B Warrant for the purchase of 56,000 shares
of Common Stock
------------------------
Aggregate Purchase Price $3,500,000
========================
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