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EXHIBIT 10.5
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MASTER AGREEMENT
BY AND AMONG
BAYARD DRILLING COMPANY
ANSON PARTNERS LIMITED PARTNERSHIP
ANADARKO DRILLING COMPANY
X.X. XXXXXX DRILLING, INC.
XXXX XXXXXX ENERGY EQUIPMENT RESOURCE, INC.
GRUPO DE HERCULES, LTD.
XXXXXX-XXXXXX PARTNERSHIP, LTD.
ENERGY SPECTRUM PARTNERS LP
AND
CHESAPEAKE ENERGY CORPORATION
NOVEMBER 26, 1996
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
THE TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.1. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.2. Delivery of Master Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.3. Formation of The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(a) Formation of Bayard Oklahoma . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(b) Anadarko Capital Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(c) Bayard Merger -- Bayard Delaware Capital Structure . . . . . . . . . . . . . . . . . 7
(d) Bayard Merger -- Conversion of Bayard Oklahoma Shares . . . . . . . . . . . . . . . . 8
(e) Xxxxxx Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(f) Xxxxxx Put Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(g) Energy Spectrum Stock Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(h) Weatherford Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.4. Related Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(a) Master Drilling Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(b) Chesapeake Drilling Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(c) Chesapeake Option Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(d) Stockholders Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(e) Registration Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(f) New Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.5. Further Assurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY, ANSON AND ANADARKO . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3.1. Organization and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3.2. Authority; Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3.3. Absence of Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.4. Title to Anadarko Assets and Bayard Oklahoma Shares . . . . . . . . . . . . . . . . 14
SECTION 3.5. Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.6. Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 3.7. Assets Necessary to Business; Effect of Transfer . . . . . . . . . . . . . . . . . 15
SECTION 3.8. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 3.9. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3.10. Environmental Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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SECTION 3.11. Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.12. Defects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.13. Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.14. Government Authorizations and Filings . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.15. Brokers, Finders, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.16. Investment Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.17. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.18. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE XXXXXX COMPANIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.1. Organization and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.2. Authority; Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.3. Absence of Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.4. Title to Xxxxxx Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4.5. Effect of Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4.6. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4.7. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.8 Defects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.9. Government Authorizations and Filings . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.10. Brokers, Finders, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.11. Investment Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ENERGY SPECTRUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 5.1. Organization and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 5.2. Authority; Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 5.3. Absence of Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 5.4. Governmental Authorizations and Filings . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.5. Brokers, Finders, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.6. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.7. Investment Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF CHESAPEAKE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 6.1. Organization and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 6.2. Authority; Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 6.3. Absence of Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 6.4. Governmental Authorizations and Filings . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 6.5. Brokers, Finders, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 6.6. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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ARTICLE VII
CONDITIONS TO THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 7.1. General Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 7.2. Additional Conditions Precedent of Energy Spectrum . . . . . . . . . . . . . . . . 33
SECTION 7.3. Additional Conditions Precedent of the Xxxxxx Companies . . . . . . . . . . . . . . 34
ARTICLE VIII
CERTAIN COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 8.1. Energy Spectrum Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 8.2. Xxxxxx Companies Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 8.3. Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 8.4. Satisfaction of All Conditions Precedent . . . . . . . . . . . . . . . . . . . . . 35
SECTION 8.5. Material Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 8.6. Notice of Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 8.7. Notice of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 8.8. Continuation of Insurance Coverage . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 8.9. Interim Operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 8.10. Management Services Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 8.11. Continuing Responsibilities of AnSon and Anadarko . . . . . . . . . . . . . . . . . 38
ARTICLE IX
SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS; INDEMNIFICATION . . . . . . . . . . . . . . . . . . 38
SECTION 9.1. Survival of Representations and Agreements . . . . . . . . . . . . . . . . . . . . 38
SECTION 9.2. Indemnification by AnSon and Anadarko . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 9.3. Indemnification by the Xxxxxx Companies . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 9.4. Indemnification by Energy Spectrum . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 9.5. Indemnification by Chesapeake . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 9.6. Indemnification for Third Party Claims . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE X
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 10.1. Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 10.2. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 10.3. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 10.4. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 10.5. Energy Spectrum Advisory Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 10.6. Energy Spectrum Right of First Refusal . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 10.7. Restrictions on Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 10.8. Amendment; Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 10.9. Parties in Interest; Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 10.10. No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 10.11. Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
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SECTION 10.12. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 10.13. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 10.14. Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 10.15. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 10.16. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 10.17. Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 10.18. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
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EXHIBITS
Exhibit A - Form of Bayard Merger Agreement
Exhibit B - Form of Bayard Note
Exhibit C - Form of Chesapeake Drilling Agreements
Exhibit D - Form of Chesapeake Option Agreement
Exhibit E - Form of Master Drilling Agreement
Exhibit F - Form of Registration Rights Agreement
Exhibit G - Form of Stockholders Agreement
Exhibit H - Form of Certificate
Exhibit I - Form of Bylaws
Exhibit J - Form of Xxxx of Sale
Exhibit K - Form of Opinion of Counsel to AnSon and Anadarko
Exhibit L - Form of Opinion of Counsel of the Xxxxxx Companies
Exhibit M - Form of Opinion of Counsel to Energy Spectrum
Exhibit N - Form of Opinion of Counsel to Chesapeake
SCHEDULES
Schedule 2.3(b) - Anadarko Assets
Schedule 2.3(e) - Xxxxxx Assets
Schedule 2.4(b) - Drilling Rigs Subject to Chesapeake Drilling Agreements
Schedule 3.4 - Anadarko Existing Drilling Contracts
Schedule 3.11 - Anadarko Employee Benefit Plans
Schedule 3.16 - Anadarko Financial Statements
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MASTER AGREEMENT
This Master Agreement (this "Agreement") is made and entered
into as of November 26, 1996 by and among Bayard Drilling Company, an Oklahoma
corporation ("Bayard Oklahoma"), AnSon Partners Limited Partnership, an
Oklahoma limited partnership ("AnSon"), Anadarko Drilling Company, an Oklahoma
general partnership ("Anadarko"), X.X. Xxxxxx Drilling, Inc., an Oklahoma
corporation ("Xxxxxx Drilling"), and Xxxx Xxxxxx Energy Equipment Resource,
Inc., a Texas corporation ("Xxxxxx Energy"), Grupo de Hercules, Ltd., a Texas
limited partnership ("Grupo"), Xxxxxx-Xxxxxx Partnership, Ltd., a Texas limited
partnership ("M-O Partnership" and, together with Xxxxxx Drilling, Xxxxxx
Energy and Grupo, the "Xxxxxx Companies"), Energy Spectrum Partners LP, a
Delaware limited partnership ("Energy Spectrum"), and Chesapeake Energy
Corporation, a Delaware corporation ("Chesapeake") (collectively, the "Parties"
and each, a "Party").
WITNESSETH:
WHEREAS, the Parties desire to effect a transaction pursuant
to which the Parties will form and invest in a new corporation which will
principally engage in the oil and gas contract drilling services business; and
WHEREAS, the Parties desire to enter into this Agreement in
order to set forth the terms and conditions of the proposed transaction and
certain related agreements.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements set forth herein, the mutual benefits to be
gained by the performance thereof and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged and accepted, the
Parties hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. For purposes of this Agreement,
the terms set forth below shall have the following respective meanings:
"Affiliate" means, with respect to any Person, any other
Person who, directly or indirectly, is in control of, is controlled
by, or is under common control with, such Person. As used herein, the
term "control" shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management or
policies of a Person, whether by the ownership of voting securities,
by contract or otherwise.
"Anadarko Agreements" has the meaning set forth in Section
3.2(c) hereto.
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"Anadarko Assets" has the meaning set forth in Section 2.3(b)
hereto.
"Anadarko Existing Drilling Contracts" has the meaning set
forth in Section 3.4 hereto.
"Anadarko Transfer Agreements" has the meaning set forth in
Section 2.3(b) hereto.
"Bayard Agreements" has the meaning set forth in Section
3.2(a) hereto.
"Bayard Delaware" means Bayard Drilling Technologies, Inc., a
Delaware corporation and successor by merger to Bayard Oklahoma as
described in Section 2.3 hereto.
"Bayard Merger" has the meaning set forth in Section 2.3(c)
hereto.
"Bayard Merger Agreement" means the Agreement of Merger to be
executed and delivered by Bayard Delaware and Bayard Oklahoma pursuant
to Section 2.3(c) hereto prior to the Closing to effect the Bayard
Merger, in substantially the form attached as Exhibit A hereto.
"Bayard Oklahoma" means Bayard Drilling Company, an Oklahoma
corporation formed by Anadarko as described in Section 2.3 hereto.
"Bayard Note" means the promissory note issued by Bayard
Oklahoma in favor of Anadarko, a copy of which is attached as Exhibit
B hereto, in the principal amount of $6,315,000, subject to certain
adjustments as set forth therein, executed and delivered in connection
with the formation of Bayard Oklahoma as described in Section 2.3(b)
hereto.
"Bylaws" has the meaning set forth in Section 2.3 (e) hereto.
"Certificate" has the meaning set forth in Section 2.3(c)
hereto.
"Chesapeake Agreements" has the meaning set forth in Section
6.2 hereto.
"Chesapeake Drilling Agreements" means the six drilling
agreements to be entered into by Chesapeake Operating and the Company
at or after the Closing pursuant to the Master Drilling Agreement and
Section 2.4(b) hereto, each in substantially the form attached as
Exhibit C hereto.
"Chesapeake Operating" has the meaning set forth in Section
2.4(a) hereto.
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"Chesapeake Option Agreement" means the Chesapeake Option
Agreement to be executed and delivered pursuant to Section 2.4(d)
hereto by Chesapeake and the Company at the Closing, in substantially
the form attached as Exhibit D hereto.
"Closing" has the meaning set forth in Section 2.1 hereto.
"Closing Date" has the meaning set forth in Section 2.1
hereto.
"Common Stock" has the meaning set forth in Section 2.3(c)(i)
hereto.
"Common Stock Equivalent" means securities convertible into,
or exchangeable or exercisable for, shares of Common Stock.
"Company" means Bayard Oklahoma at all times prior to the
effectiveness of the Bayard Merger and Bayard Delaware, as the
surviving entity in the Bayard Merger, from and after the
effectiveness of the Bayard Merger.
"Consent" has the meaning set forth in Section 3.3(a) hereto.
"Contract" means any contract, agreement, arrangement,
understanding or other instrument or obligation (whether oral or
written, pending or executory).
"Energy Spectrum Agreements" has the meaning set forth in
Section 5.2 hereto.
"Environmental Laws" means any federal, state, local and
foreign laws (including common law), statutes, codes, ordinances,
rules and regulations that are applicable to the Anadarko Assets, and
in each case as amended, and any judicial or administrative
interpretation thereof, relating to pollution or protection of human
health, the environment or natural resources (including, without
limitation, ambient air, surface water, groundwater, land surface or
subsurface strata), including, without limitation, laws, statutes,
codes, ordinances, rules, regulations, consent decrees and judgments
binding on AnSon, Anadarko, the Company or the Anadarko Assets,
relating to emissions, discharges, releases or threatened releases of
Harmful Substances, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of Harmful Substances.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Governmental Authority" means any nation or government, any
state or political subdivision thereof, any federal or state court and
any other agency, body, authority or entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
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"Harmful Substance" means (a) any radioactive materials,
asbestos in any form, polychlorinated biphenyl and, only to the extent
it exists at levels which are considered hazardous to human health,
radon gas; (b) any chemicals, materials or substances defined as or
included in the definition of "hazardous substances," "hazardous
waste," "hazardous materials," "extremely hazardous substances,"
"toxic substances," "toxic pollutants," "contaminants," or
"pollutants" or words of similar import, under any applicable
Environmental Laws; and (c) any petroleum or petroleum products to the
extent that such products are released or otherwise discharged into
the environment in contravention of any applicable Environmental Laws.
"Indemnitor" has the meaning set forth in Section 9.4 hereto.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended and as the same may be amended from time to time, and
any successor statute thereto.
"IPO" means (i) the initial underwritten public offering
pursuant to which the Common Stock becomes registered under Section 12
of the Securities Exchange Act of 1934, as amended, or (ii) any
merger, consolidation or other business combination transaction that
results in any equity securities of the Company being registered under
Section 12 of the Securities Exchange Act of 1934, as amended.
"Liability" has the meaning set forth in Section 9.2 hereto.
"Lien" means, with respect to any properties or assets, (i)
any mortgage, pledge, hypothecation, assignment, security interest,
lien or encumbrance or any preference, priority or other security
agreement or preferential arrangement of any kind or character
whatsoever in respect of such properties or assets, including, but not
limited to, (A) any conditional sale or other title retention
agreement, (B) any financing lease having substantially the same
economic effect as any of the foregoing, and (C) the filing of, or
agreement to give, any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction, and (ii) any
net profits interest, royalty interest or other similar ownership
interest in such assets or the revenues derived therefrom.
"Master Drilling Agreement" means the Master Drilling
Agreement to be executed and delivered pursuant to Section 2.4(a)
hereto by Chesapeake, Chesapeake Operating and the Company at the
Closing, in substantially the form attached as Exhibit E hereto.
"New Credit Agreement" means the credit facility to be
executed and delivered by the Company and one or more banks or other
financial institutions pursuant to which the Company will have the
right to borrow approximately $22 million for purposes of funding
working capital and the acquisition of additional drilling rigs and
equipment.
"Notice" has the meaning set forth in Section 9.4 hereto.
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"Xxxxxx Agreements" has the meaning set forth in Section 4.2
hereto.
"Xxxxxx Assets" has the meaning set forth in Section 2.3(e)
hereto.
"Xxxxxx Companies" means, collectively, Xxxxxx Drilling and
Xxxxxx Energy.
"Xxxxxx Shares" has the meaning set forth in Section 2.3(e)
hereto.
"Xxxxxx Transfer Agreements" has the meaning set forth in
Section 2.3(e) hereto.
"Xxxxxx Transfers" has the meaning set forth in Section 2.3(e)
hereto.
"Party" and "Parties" has the meaning set forth in the
recitals hereto.
"Permitted Liens" means any Liens on the Anadarko Assets that
existed at the time Anadarko contributed such assets to Bayard
Oklahoma as described in Section 2.3 hereto and with respect to which
Anadarko and/or AnSon have agreed to indemnify and hold the Company
harmless and which will be released in full at or prior to closing.
"Person" means any individual, corporation, limited liability
company, partnership, association, trust or any other entity or
organization of any kind or character, including any Governmental
Authority.
"Preferred Stock" has the meaning set forth in Section
2.3(c)(ii) hereto.
"Registration Rights Agreement" means the Registration Rights
Agreement to be executed and delivered pursuant to Section 2.4(f)
hereto by the Company, Anadarko, the Xxxxxx Companies, Energy Spectrum
and Chesapeake at the Closing, in substantially the form attached as
Exhibit F hereto.
"Related Agreements" has the meaning set forth in Section 2.4
hereto.
"Restricted Shares" has the meaning set forth in Section
10.7(b) hereto.
"Securities" has the meaning set forth in Section 8.9(a)
hereto.
"Securities Act" means the Securities Act of 1933, as amended.
"Services" has the meaning set forth in Section 8.9(a) hereto.
"Stockholders Agreement" means the Stockholders and Voting
Agreement to be executed and delivered pursuant to Section 2.4(e)
hereto by the Company, Anadarko, the
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Xxxxxx Companies, Energy Spectrum and Chesapeake at the Closing, in
substantially the form attached as Exhibit G hereto.
"Taxes" means all Taxes, charges, fees, levies or other
assessments (including, but not limited to, income, gross receipts,
excise, property, sales, occupation, use, service use, license,
payroll, franchise, transfer and recording Taxes, fees and charges)
imposed by any Governmental Authority, whether computed on a separate,
consolidated, unitary or combined basis or in any other manner, and
includes any interest, penalties and additions to any Tax.
"Tax Returns" means any return, statement, declaration or
other document relating to Taxes that is required to be filed with any
Governmental Authority.
"Third Party Claims" has the meaning set forth in Section 9.6
hereto.
"Transaction Fees" has the meaning set forth in Section
10.4(a) hereto.
"Transactions" has the meaning set forth in Section 2.4
hereto.
"Xxxxxxxxxxx Lease Option" has the meaning set forth in
Section 2.3(h) hereto.
"Xxxxxxxxxxx Purchase Option" has the meaning set forth in
Section 2.3(h) hereto.
"Weatherford Storage Yard" means the storage yard located in
Weatherford, Oklahoma that is owned and operated by Anadarko.
ARTICLE II
THE TRANSACTIONS
SECTION 2.1. Closing. The closing of the Transaction
contemplated by this Agreement (the "Closing") shall take place at the offices
of Xxxxx & Xxxxx, L.L.P., 0000 Xxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000, at
10:00 A.M., Dallas, Texas time, on December 5, 1996, or such other place and
time or on such other date as the Parties shall mutually agree (the "Closing
Date"). The Closing of the Transactions shall take place simultaneously on the
Closing Date with the satisfaction or waiver of each of the conditions set
forth in Article VII hereof.
SECTION 2.2. Delivery of Master Agreement. Prior to
Closing, each Party hereto shall deliver a duly executed counterpart of this
Agreement to each of the other Parties hereto.
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SECTION 2.3. Formation of The Company.
(a) Formation of Bayard Oklahoma. On October 28,
1996, Anadarko incorporated Bayard Oklahoma as a corporation under the
laws of the State of Oklahoma by filing a certificate of incorporation
for Bayard Oklahoma with the Secretary of State of the State of
Oklahoma, and thereafter organized Bayard Oklahoma in accordance with
Oklahoma law.
(b) Anadarko Capital Contribution. In connection
with the formation of Bayard Oklahoma, and as an initial capital
contribution to Bayard Oklahoma, Anadarko and Bayard Oklahoma executed
and delivered such assignment and assumption agreements and bills of
sale (collectively, the "Anadarko Transfer Agreements") as were
necessary for Anadarko to contribute to Bayard Oklahoma all of the
assets identified on Schedule 2.3(b) hereto. The assets contributed
to Bayard Oklahoma constituted all of the assets utilized by Anadarko
in connection with the operation of its business as of the date
thereof, including all of the Anadarko Existing Drilling Contracts,
but excluding (i) the Xxxxxxxxxxx Storage Yard and (ii) cash,
receivables or payables relating to the operations of Anadarko prior
to the effective date of such contributions by Anadarko to Bayard
Oklahoma (collectively, the "Anadarko Assets"). Anadarko contributed
the Anadarko Assets to Bayard Oklahoma pursuant to the Anadarko
Transfer Agreements free and clear of all Liens and unencumbered by
any liabilities other than the Permitted Liens. The effective date
for the contribution of the Anadarko Assets to Bayard Oklahoma
pursuant to the Anadarko Transfer Agreements was deemed to be October
28, 1996. In exchange for the contribution of the Anadarko Assets to
Bayard Oklahoma pursuant to the Anadarko Transfer Agreements, Bayard
Oklahoma issued to Anadarko (i) 1,000 shares of common stock, par
value $1.00 per share (the "Bayard Oklahoma Shares"), of Bayard
Oklahoma, constituting all of the issued and outstanding shares of
capital stock of Bayard Oklahoma and (ii) the Bayard Note.
(c) Bayard Merger -- Bayard Delaware Capital
Structure. Immediately prior to the Closing, Anadarko shall cause
Bayard Oklahoma to be merged with and into Bayard Delaware pursuant to
a statutory merger in which Bayard Delaware shall be the surviving
corporation (the "Bayard Merger"). The Agreement of Merger relating
to the Bayard Merger (the "Bayard Merger Agreement") shall provide,
among other things, that the certificate of incorporation and bylaws
of the surviving corporation shall be those of Bayard Delaware, except
that the name of the surviving corporation shall be changed to be
"Bayard Drilling Technologies, Inc." The certificate of incorporation
(the "Certificate") and the bylaws (the "Bylaws") of Bayard Delaware
are set forth as Exhibits H and I hereto, respectively. The
Certificate shall provide, among other things, that the initial
capital structure of Bayard Delaware shall consist of:
(i) 10,000,000 authorized shares of common
stock, par value $0.01 per share ("Common Stock"), and
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(ii) 2,000,000 authorized shares of
preferred stock, par value $0.01 per share ("Preferred Stock").
(d) Bayard Merger -- Conversion of Bayard
Oklahoma Shares. Pursuant to the terms of the Bayard Merger
Agreement, in the Bayard Merger each of the issued and outstanding
Bayard Oklahoma Shares will be canceled and converted into the right
to receive 1,000 shares of Common Stock, with the effect that all of
the Bayard Oklahoma Shares taken together will be converted into the
right to receive an aggregate of 1,000,000 shares of Common Stock.
(e) Xxxxxx Transfers. At the Closing, each of
the Xxxxxx Companies and the Company shall execute and deliver such
bills of sale (collectively, the "Xxxxxx Transfer Agreements"), each
substantially in the form attached as Exhibit J hereto, respectively,
as are necessary for the Xxxxxx Companies to convey, transfer and
deliver to the Company all of the assets identified on Schedule 2.3(e)
hereto and owned by them respectively (the "Xxxxxx Assets"), free and
clear of all Liens and unencumbered by any liabilities of any kind or
character. In consideration of the conveyance, transfer and delivery
of the Xxxxxx Assets, the Company shall (i) issue (A) 200,000 shares
of Common Stock to Xxxxxx Drilling, (B) 200,000 shares of Common Stock
to Xxxxxx Energy, (C) 160,000 shares of Common Stock to Grupo and (D)
240,000 shares of Common Stock to M-O Partnership (collectively, the
"Xxxxxx Shares"), and (ii) grant a "put" option to the Xxxxxx
Companies, the terms and conditions of which are set forth in Section
2.3(f) hereto. The transactions contemplated by this Section 2.3(e)
shall be referred to herein as the "Xxxxxx Transfers."
(f) Xxxxxx Put Options. The "put" rights set
forth in this paragraph (f) shall become effective upon the Closing.
Unless the Company completes an IPO on or prior to June 2, 1998, then
the Xxxxxx Companies shall have the right, exercisable by delivery of
written notice to the Company at any time after June 2, 1998 and prior
to July 2, 1998, to request that the Company purchase all, but not
less than all, of the Xxxxxx Shares. Within 90 days after receipt by
the Company of such notice, the Company shall elect, in its
discretion, whether to (i) repurchase all of the Xxxxxx Shares for an
aggregate purchase price of $12,000,000 ($15 per share) or (ii) to
issue to the Xxxxxx Companies in satisfaction of the put rights an
aggregate of 200,000 additional shares of Common Stock, and shall give
written notice of its election to the Xxxxxx Companies. If the
Company elects to purchase the shares, the Company shall purchase the
shares and the Xxxxxx Companies will deliver the certificates
representing such shares within 30 days after the Company delivers
notice of its election. If the Company elects to satisfy the put
right by issuing additional shares, the additional shares will be
issued within 10 days after the Company delivers notice of its
election. The repurchase of shares shall be made from funds legally
available therefor. If the put right is not exercised within the
period provided above, the rights set forth in this Section 2.3(f)
shall expire and be of no further force or effect.
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(g) Energy Spectrum Stock Purchase. At the
Closing, Energy Spectrum shall purchase from the Company, and the
Company shall issue and sell to Energy Spectrum, 1,000,000 shares of
Common Stock for an aggregate purchase price of $10 million in cash.
The Company will use a portion of such funds to repay the Bayard Note
at Closing.
(h) Xxxxxxxxxxx Options.
(i) Effective upon the Closing, the Company
shall have a transferrable option, exercisable upon delivery
of written notice to Anadarko at any time after the Closing
and prior to June 30, 1998, to purchase from Anadarko, and
Anadarko shall be required to sell to the Company, the
Xxxxxxxxxxx Storage Yard for a purchase price of $1,000 in
cash (the "Xxxxxxxxxxx Purchase Option"). If the Company
exercises the Xxxxxxxxxxx Purchase Option pursuant to this
Section 2.3(h)(i), each of the Company and Anadarko shall
execute and deliver, within 30 days after the Company delivers
its notice of exercise to Anadarko, such assignment and
assumption agreements and bills of sale as are necessary for
Anadarko to sell, convey, transfer and deliver good and
marketable title in and to the Xxxxxxxxxxx Storage Yard to the
Company, free and clear of all Liens. The Xxxxxxxxxxx
Purchase Option shall be transferrable at the option of the
Company upon 30 days written notice to Anadarko. If the
Xxxxxxxxxxx Purchase Option is not exercised within the period
provided above, the rights set forth in this Section 2.3(h)(i)
shall expire and be of no further force and effect.
(ii) Effective upon the Closing, the Company
shall have an option, exercisable upon delivery of written
notice to Anadarko at any time after the Closing and prior to
June 30, 1998, to lease from Anadarko for such period as the
Company may specify in its written notice, and Anadarko shall
be required to so lease to the Company, the Xxxxxxxxxxx
Storage Yard for a lease price of $100 per year (or portion
thereof as specified in the Company's notice) (the
"Xxxxxxxxxxx Lease Option"). If the Company exercises the
Xxxxxxxxxxx Lease Option pursuant to this Section 2.3(h)(ii),
each of the Company and Anadarko shall execute and deliver,
within 30 days after the Company delivers its notice of
exercise to Anadarko, a lease agreement and such other
agreements, instruments, certificates and other documents as
are necessary to convey, transfer and deliver a leasehold
interest in the Xxxxxxxxxxx Storage Yard; provided, however,
that any lease agreement entered into by the Company and
Anadarko pursuant to this Section 2.3(h)(ii) shall expire no
later than the earlier to occur of (i) December 31, 1999 or
(ii) the exercise by the Company of the Xxxxxxxxxxx Purchase
Option. The terms and provisions of any lease agreement
entered into by the Company and Anadarko pursuant to this
Section 2.3(h)(ii) shall provide, among other things, that
Anadarko shall have the right, during the term of such lease
agreement, to continue operations at the Xxxxxxxxxxx Storage
Yard in a manner consistent with the ordinary course of
business and the past practices of Anadarko at the Xxxxxxxxxxx
Storage Yard; provided, however, that any
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continuing operations of Anadarko do not interfere with or
otherwise interrupt the operations of the Company, the
Anadarko Assets or the Xxxxxx Assets at the Xxxxxxxxxxx
Storage Yard. The Parties acknowledge that Affiliates of
Anadarko have in the past, and will during the term of any
lease hereunder, share in the use of the Xxxxxxxxxxx Storage
Yard. Accordingly, the Parties agree that during any lease
term expenses incurred with respect to the maintenance and
operation of the Xxxxxxxxxxx Storage Yard will be allocated
and borne by the Company, Anadarko and Anadarko's Affiliates
using the facility based upon the relative use thereof by them
and in a manner consistent with Anadarko's past practice. If
the Xxxxxxxxxxx Lease Option is not exercised within the
period provided above, the rights set forth above in this
Section 2.3(h)(ii) shall expire and be of no further force or
effect.
SECTION 2.4. Related Agreements. To effect the
transactions contemplated by this Agreement (the "Transactions"), at the
Closing the Parties shall enter into the agreements (the "Related Agreements")
referred to below in this Section 2.4.
(a) Master Drilling Agreement. On the Closing
Date, Chesapeake, Chesapeake Operating Inc., a subsidiary of
Chesapeake ("Chesapeake Operating"), and the Company shall execute and
deliver the Master Drilling Agreement pursuant to which the parties
thereto shall set forth certain governing terms and conditions of the
Chesapeake Drilling Agreements. The terms and provisions of the
Master Drilling Agreement shall provide, among other things, that
Chesapeake shall guarantee the performance of Chesapeake Operating
under the Master Drilling Agreement and each Chesapeake Drilling
Agreement.
(b) Chesapeake Drilling Agreements. At the
Closing or as soon as practicable after the Closing, Chesapeake
Operating and the Company shall enter into six separate Chesapeake
Drilling Agreements pursuant to which Chesapeake Operating shall agree
to employ each of the drilling rigs identified on Schedule 2.4(b)
hereto in accordance with the terms thereof and the terms of the
Master Drilling Agreement.
(c) Chesapeake Option Agreement. On the Closing
Date, Chesapeake and the Company shall execute and deliver the
Chesapeake Option Agreement pursuant to which the Company shall grant
to Chesapeake an option to purchase 1,000,000 shares of Common Stock
at a purchase price of $12 per share, subject to the terms and
conditions thereof.
(d) Stockholders Agreement. On the Closing Date,
each of the Parties hereto, except AnSon, shall execute and deliver
the Stockholders Agreement.
(e) Registration Rights Agreement. On the
Closing Date, each of the Parties hereto, except AnSon, shall execute
and deliver the Registration Rights Agreement.
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(f) New Credit Agreement. On the Closing Date,
the Company shall enter into the New Credit Agreement.
SECTION 2.5. Further Assurance. Each of the Parties
hereto hereby agrees that from time to time after Closing each of them shall
execute, deliver, acknowledge, file and record, or cause to be executed,
delivered, acknowledged, filed and recorded, such further agreements,
instruments, certificates and other documents as may be required in order to
consummate the Transactions.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY, ANSON AND ANADARKO
The Company, AnSon and Anadarko hereby jointly and severally
represent and warrant to each of the other Parties hereto as of the date
hereof, and as of the Closing Date, as follows:
SECTION 3.1. Organization and Authority.
(a) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the state of
its incorporation, and has all requisite corporate power and authority
to own and operate its assets and properties and conduct its business
and operations as presently being conducted.
(b) AnSon is a limited partnership duly organized
and validly existing under the laws of the State of Oklahoma and has
all requisite power and authority as a limited partnership to own
general partnership interests in, and to act as a general partner of,
Anadarko and to otherwise direct the operations and take actions on
behalf of Anadarko with respect to the Transactions. Upon the request
of any Party hereto, AnSon shall furnish to such Party a true, correct
and complete copy of its agreement of limited partnership, as amended
to the date hereof.
(c) Anadarko is a general partnership duly
organized and validly existing under the laws of the State of Oklahoma
and has all requisite power and authority as a general partnership to
own and operate the Anadarko Assets owned and/or operated by it.
Anadarko has furnished to each of the other Parties hereto a true,
correct and complete copy of its partnership agreement, as amended to
the date hereof.
(d) The statements set forth in Sections 2.3(a)
and 2.3(b) hereof are true and correct.
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SECTION 3.2. Authority; Binding Effect.
(a) The Company has all requisite power and
authority to enter into this Agreement and each of the Related
Agreements to which the Company is a party (the "Bayard Agreements"),
to perform its obligations hereunder and thereunder and to consummate
the Transactions contemplated hereby and thereby. The execution and
delivery by the Company of this Agreement and each of the Bayard
Agreements, the performance by the Company of its obligations
hereunder and thereunder and the consummation by the Company of the
Transactions contemplated hereby and thereby have been duly and
validly authorized by all necessary corporate and other action on the
part of the Company. This Agreement and the Bayard Agreements have
been duly executed and delivered by the Company and constitute legal,
valid and binding agreements of the Company, enforceable against the
Company in accordance with each of 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.
(b) AnSon has all requisite power and authority
to enter into this Agreement, to perform its obligations hereunder and
to consummate the Transactions contemplated hereby. The execution and
delivery by AnSon of this Agreement, the performance by AnSon of its
obligations hereunder and the consummation by AnSon of the
Transactions contemplated hereby have been duly and validly authorized
by all necessary partnership and other action on the part of AnSon.
This Agreement has been duly executed and delivered by AnSon and
constitutes a legal, valid and binding agreement of AnSon, enforceable
against AnSon in accordance with its 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.
(c) Anadarko has all requisite power and
authority to enter into this Agreement and each of the Related
Agreements to which Anadarko is a party (the "Anadarko Agreements"),
to perform its obligations hereunder and thereunder and to consummate
the Transactions contemplated hereby and thereby. The execution and
delivery by Anadarko of this Agreement and each of the Anadarko
Agreements, the performance by Anadarko of its obligations hereunder
and thereunder and the consummation by Anadarko of the Transactions
contemplated hereby and thereby have been duly and validly authorized
by all necessary partnership and other action on the part of Anadarko.
This Agreement and the Anadarko Agreements have been duly executed and
delivered by Anadarko and constitute legal, valid and binding
agreements of Anadarko, enforceable against Anadarko in accordance
with each of 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.
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SECTION 3.3. Absence of Conflicts.
(a) The execution and delivery by the Company of
this Agreement and the Bayard Agreements, the performance by the
Company of its obligations hereunder and thereunder and the
consummation of the Transactions contemplated hereby and thereby 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, or result in being declared void, voidable or without
further effect, any term or provision of any material note, bond,
mortgage, indenture, lease, franchise, permit, license, Contract or
other agreement, instrument or document to which the Company is a
party or by which the Anadarko Assets may be bound, (iii) require the
Company to obtain any consent, approval, permit, notice, action,
authorization or waiver (each a "Consent") 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 Bayard Agreements, (iv) conflict with,
or result in any violation of, any material law, ordinance, statute,
rule or regulation of any Governmental Authority known to be
applicable to the business of the Company or the operations of the
Anadarko Assets or any order, writ, injunction, judgment or decree of
any court, arbitrator or government authority applicable to the
Company or the Anadarko Assets, or (v) result in the creation of, or
impose on the Company the obligation to create, any Lien upon the
Anadarko Assets.
(b) The execution and delivery by AnSon of this
Agreement, the performance by AnSon of its obligations hereunder and
the consummation of the Transactions contemplated hereby will not (i)
conflict with, or result in any violation or breach of, any provision
of the agreement of limited partnership of AnSon, (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, or result in being
declared void, voidable or without further effect, any term or
provision of any material note, bond, mortgage, indenture, lease,
franchise, permit, license, Contract or other agreement, instrument or
document to which AnSon is a party or by which the Anadarko Assets may
be bound, (iii) require AnSon to obtain any Consent 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 AnSon Agreements, (iv) conflict
with, or result in any violation of, any material law, ordinance,
statute, rule or regulation of any Governmental Authority known to be
applicable to the business of AnSon or the operations of the Anadarko
Assets or any order, writ, injunction, judgment or decree of any
court, arbitrator or government authority applicable to AnSon or the
Anadarko Assets, or (v) result in the creation of, or impose on AnSon
the obligation to create, any Lien upon the Anadarko Assets.
(c) The execution and delivery by Anadarko of
this Agreement and the Anadarko Agreements, the performance by
Anadarko of its obligations hereunder and thereunder and the
consummation of the Transactions contemplated hereby and thereby will
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not (i) conflict with, or result in any violation or breach of, any
provision of the partnership agreement of Anadarko, (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, or result in
being declared void, voidable or without further effect, any term or
provision of any material note, bond, mortgage, indenture, lease,
franchise, permit, license, Contract or other agreement, instrument or
document to which Anadarko is a party or by which the Anadarko Assets
may be bound, (iii) require Anadarko to obtain any Consent 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 Anadarko Agreements, (iv)
conflict with, or result in any violation of, any material law,
ordinance, statute, rule or regulation of any Governmental Authority
known to Anadarko to be applicable to the business of Anadarko or the
operations of the Anadarko Assets or any order, writ, injunction,
judgment or decree of any court, arbitrator or government authority
applicable to Anadarko or the Anadarko Assets, or (v) result in the
creation of, or impose on Anadarko the obligation to create, any Lien
upon the Anadarko Assets.
SECTION 3.4. Title to Anadarko Assets and Bayard Oklahoma
Shares. The Company has good and marketable title to the Anadarko Assets,
free and clear of all Liens and unencumbered by any liabilities of any kind or
character other than Permitted Liens. Except with respect to the Permitted
Liens, there are no leases, surface or subsurface use agreements, tenancy
arrangements, service contracts, management contracts, or other agreements,
instruments or encumbrances in force or effect which grant to any Person any
right, title, interest or benefit in or to all or any part of the Anadarko
Assets, or any right relating to the ownership, use, operation, management,
maintenance or repair of all or any part of the Anadarko Assets, and no Person
has any rights to acquire all or any part of the Anadarko Assets, other than
rights to use rigs pursuant to the drilling contracts identified on Schedule
3.4 hereto (the "Anadarko Existing Drilling Contracts"). There are no third
parties in possession of all or any portion of the Anadarko Assets, tenants in
sufferance, trespassers, wrongful possessors or otherwise. Anadarko has good
and marketable title to all of the Bayard Oklahoma Shares, free and clear of
all Liens and unencumbered by any liabilities, claims or restrictions on
transfer or other title defects. Upon the effectiveness of the Bayard Merger,
Anadarko will have good and marketable title to all of the shares of Common
Stock to be received by it in respect of the Bayard Merger, free and clear of
all Liens and unencumbered by any liabilities, claims or restrictions on
transfer or other title defects.
SECTION 3.5. Conduct of Business. Since December 31,
1995, other than the contribution of the Anadarko Assets by Anadarko to Bayard
Oklahoma as described in Section 2.3(b) hereof, there has not been (i) any
material adverse change in the business, operations, affairs, condition
(financial or otherwise), results of operations, properties, assets or
liabilities, of Anadarko or, since such contribution, of the Company, (ii) any
sale, assignment or disposition of any of the Anadarko Assets of any kind or
character, except for personal property sold, assigned or disposed of in the
ordinary course of Anadarko's or the Company's business and consistent with its
past practice and custom, (iii) any material damage, destruction or loss
(whether or not insured against) affecting the Anadarko Assets, (iv) except as
contemplated by this Agreement, any revocation or
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termination, or any notice of any threatened revocation or termination, of any
Consents relating to the operation of the Anadarko Assets, (v) any material
change or any anticipated change in the present relationships between Anadarko,
AnSon or the Company and any of their significant suppliers, insurers, lessors,
licensors, licensees and distributors with respect to the Anadarko Assets, or
(vi) any other material transaction other than in the ordinary course of
Anadarko's or the Company's business and consistent with its past practice and
custom.
SECTION 3.6. Solvency. Each of AnSon and Anadarko is
able to pay its respective debts as they become due, has capital sufficient to
carry on its business as presently conducted and proposed to be conducted, owns
property which has both a fair value and a fair saleable value in excess of the
amount required to pay its respective debts as they become due and is solvent
in all other respects. Each of AnSon and Anadarko has not been and will not be
rendered insolvent by the consummation of the Transactions contemplated by this
Agreement, the Bayard Merger Agreement, any of the Anadarko Transfer
Agreements, or any of the Anadarko Agreements, and following the consummation
of such Transactions, each of AnSon and Anadarko will be able to pay its
respective debts as they become due, will have capital sufficient to carry on
its business as then conducted and proposed to be conducted, and will own
property which has a fair value and a fair saleable value in excess of the
amount required to pay its respective debts as they become due.
SECTION 3.7. Assets Necessary to Business; Effect of
Transfer. The Anadarko Assets were sufficient in all material respects to
carry on the business and operations conducted by Anadarko prior to the
contribution of the such assets to Bayard Oklahoma as described in Section
2.3(b) hereof and continue to be sufficient in all material respects to carry
on the business and operations conducted by the Company. Except for Rig 15,
which is currently being refurbished, the Anadarko Assets are fit for the
purposes for which they are being used by the Company and for which they were
being used by Anadarko prior to the contribution of such assets to Bayard
Oklahoma as described in Section 2.3(b) hereof. The Anadarko Assets are in all
material respects in good operating condition and repair, ordinary wear and
tear excepted and, to the knowledge of AnSon, Anadarko and the Company, conform
in all material respects to all applicable laws relating to their use and
operation. The Company is possession of all material licenses, permits,
consents, approvals and other authorizations that, to the knowledge of AnSon,
Anadarko or the Company are required by any Governmental Authority in
connection with the ownership and operation of the Anadarko Assets or the
conduct of the business and operations of the Company. The consummation of the
Transactions contemplated hereby will not deprive the Company of the benefits
of any material properties included in the Anadarko Assets or any rights or
interests relating thereto, or result in the imposition of any debts,
liabilities or obligations on the Company.
SECTION 3.8. Litigation. There is no action, suit,
inquiry, investigation or other proceeding pending against or, to the knowledge
of AnSon, Anadarko or the Company, threatened against or affecting Anadarko,
the Company or the Anadarko Assets in any court or before any arbitrator or any
foreign or United States federal, state or local Governmental Authority (i) in
which an adverse decision could, either in any single case or in the aggregate,
have a material adverse effect on the business of the Company or the operations
of the Anadarko Assets, or (ii) which in any
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manner draws into question the validity of or otherwise affects (A) the
contribution of the Anadarko Assets to Bayard Oklahoma by Anadarko as described
in Section 2.3(b) hereof, (B) this Agreement, or (C) the Bayard Merger
Agreement or any Anadarko Agreements or Bayard Agreements, (D) the ability of
AnSon, Anadarko or the Company to perform their respective obligations
hereunder and thereunder, or (E) the consummation of the Transactions
contemplated hereby and thereby.
SECTION 3.9. Taxes.
(a) Each of AnSon, Anadarko and the Company has
filed, or will file in a timely manner with the appropriate
Governmental Authority, all Tax Returns relating to the Anadarko
Assets or the operations of the Anadarko Assets which are required to
be filed on or before the Closing Date, and each such Tax Return has
been or will be prepared in compliance in all material respects with
all applicable laws and regulations.
(b) Each of AnSon, Anadarko and the Company has
paid, or will pay on the applicable due date, all Taxes relating to
the Anadarko Assets or the operations of the Anadarko Assets which are
due and payable or accrued and not yet payable on or before the
Closing Date, including without limitation, all Taxes shown to be due
on such returns or pursuant to any assessment received by AnSon or
Anadarko from any Taxing authority, except such Taxes, if any, as are
being contested in good faith by appropriate proceedings diligently
conducted.
(c) There are no claims for Taxes pending against
AnSon, Anadarko or the Company with respect to (i) the business of
Anadarko as conducted prior to the contribution of the Anadarko Assets
to Bayard Oklahoma as described in Section 2.3(b) hereof, or the
operations of the Anadarko Assets prior to such contribution, or (ii)
the business of the Company following such contribution, or the
operations of the Anadarko Assets by the Company following such
contribution, nor to the knowledge of AnSon, Anadarko or the Company,
any threatened claims for Tax deficiencies against AnSon, Anadarko or
the Company for which the Anadarko Assets could be liable, and AnSon,
Anadarko and the Company do not know of any basis for such claims.
(d) There exist no actual or, to the knowledge of
AnSon, Anadarko or the Company, proposed additional assessments or
adjustments of Taxes by any Taxing authority for which the Anadarko
Assets could be liable.
(e) There are no pending audits, actions,
proceedings, disputes, claims or, to the knowledge of AnSon, Anadarko
or the Company, investigations with respect to any Taxes payable by or
asserted against AnSon, Anadarko or the Company with respect to (i)
the business of Anadarko prior to the contribution of the Anadarko
Assets to Bayard Oklahoma as described in Section 2.3(b) hereof, or
the operations of the Anadarko Assets by Anadarko prior to such
contribution, or (ii) the business of the Company following such
contribution, or the operations of the Anadarko Assets by the Company
following such
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contribution, and, to the knowledge of AnSon, Anadarko or the Company,
there is no basis on which any such claim for material Taxes can be
asserted against AnSon, Anadarko, the Company or the Anadarko Assets.
AnSon, Anadarko or the Company have not received notice from any
Governmental Authority of its intent to examine or audit any Tax
Returns of AnSon, Anadarko or the Company with respect to (i) the
business of Anadarko prior to the contribution of the Anadarko Assets
to Bayard Oklahoma as described in Section 2.3(b) hereof, or the
operations of the Anadarko Assets by Anadarko prior to such
contribution, or (ii) the business of the Company following such
contribution, or the operations of the Anadarko Assets by the Company
following such contribution
(f) There are no proposed reassessments of the
Taxable value of any of the Anadarko Assets or similar matters pending
with respect to any Taxing authority.
(g) There are no outstanding agreements or
waivers that would extend the statutory period in which a Taxing
authority may assess or collect a Tax against AnSon, Anadarko or the
Company for which the Anadarko Assets could be liable.
(h) Except for the United States of America and
the States of Oklahoma and Texas, there are no other jurisdictions in
which income or franchise Tax Returns and reports, and returns and
reports relating to the payment of Tax based upon the ownership or use
of property therein or the derivation of income therefrom or measured
by premiums or investments in tangible or intangible property, were,
or were required to be, filed by AnSon, Anadarko or the Company with
respect to the Anadarko Assets or the operations of the Anadarko
Assets.
SECTION 3.10. Environmental Compliance.
(a) AnSon, Anadarko and the Company are not
subject to any existing, pending or, to the knowledge of AnSon,
Anadarko or the Company, threatened action, suit, investigation,
inquiry or proceeding by any Governmental Authority under, and are not
currently in violation of, or subject to, any remedial obligation
under, any Environmental Law.
(b) All material environmental notices, permits,
licenses or similar authorizations, if any, required to be obtained or
filed in connection with the operations of the Anadarko Assets have
been obtained or filed.
(c) Harmful Substances have not been disposed of
on, to or from any of the Anadarko Assets during the time of ownership
or possession of the Anadarko Assets by AnSon, Anadarko or the Company
and the operation of the Anadarko Assets by such Parties or, to the
knowledge of AnSon, Anadarko or the Company, prior thereto, except in
compliance with Environmental Laws in effect at the time such activity
was undertaken.
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(d) No Harmful Substances have been generated,
managed, treated or transported to or from the Anadarko Assets, except
in compliance with Environmental Laws at the time such activity was
undertaken.
(e) No underground storage tanks currently exist
or, to the knowledge of AnSon, Anadarko or the Company, have existed
on the Anadarko Assets. The Parties hereto acknowledge that Anadarko
maintains underground storage tanks at the Xxxxxxxxxxx Storage Yard
and that AnSon and Anadarko make no representation or warranty
pursuant to this Section 3.10(e) with respect to such property.
(f) During the time the Anadarko Assets have been
occupied by AnSon, Anadarko or the Company, there has not been a
release of Harmful Substances into, onto or out of the land occupied
by the Anadarko Assets, except in compliance with Environmental Laws
at the time such activity was undertaken.
(g) AnSon, Anadarko and the Company are not a
party, whether as a direct signatory or as successor, assignee or
third party beneficiary, or otherwise bound, to any lease or other
Contract relating to the Anadarko Assets under which AnSon, Anadarko
or the Company is obligated by or entitled to the benefits of,
directly or indirectly, any representation, warranty, indemnification,
covenant, restriction or other undertaking concerning a release of
Harmful Substances or non-compliance with Environmental Laws.
SECTION 3.11. Employee Matters.
(a) Employee Benefit Plans. Except as set
forth on Schedule 3.11 hereto, Anadarko does not maintain any
compensation or other employee benefit plans, including any employee
benefit plan as defined in Section 3(3) of ERISA, any supplemental
pension, life and dependent life, accidental death and health
insurance (including medical, dental and vision), hospitalization,
savings, bonus, deferred compensation, incentive compensation, tax
preparation assistance and equalization, employee assistance, fringe
benefit or other employee benefit plans, Contracts, policies or
practices providing employee or executive compensation or benefits
with respect to the business of Anadarko or the operation of the
Anadarko Assets.
(b) Employees. Prior to the Closing, the
Company will not employ any employees, but will be managed by and
under the direction of the employees of AnSon and Anadarko as
contemplated by Section 8.9 hereof.
SECTION 3.12. Defects. There are no material defects in
any of the Anadarko Assets which would impair the use or operation of such
assets; provided, however, that the Parties hereto acknowledge that Rig 15 is
being refurbished and is not currently operational.
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SECTION 3.13. Books and Records. The books and records of
Anadarko, AnSon and the Company fairly reflect in all material respects the
transactions to which the Anadarko Assets are or were bound, and such books and
records are and have been properly kept and maintained, with the revenues,
expenses, assets and liabilities of Anadarko, AnSon and the Company accurately
recorded in all material respects therein on the accrual basis of accounting
prepared in accordance with United States generally accepted accounting
principles. True, complete and correct copies of such books and records (i)
have been made available by Anadarko, AnSon and the Company for review by the
other Parties hereto, (ii) will be delivered to the Company at Closing and
(iii) constitute part of the Anadarko Assets.
SECTION 3.14. Government Authorizations and Filings. There
is no requirement applicable to AnSon, Anadarko or the Company to obtain any
consent, approval or authorization of, or to make or effect any declaration,
filing or registration with, any Governmental Authority for the valid execution
and delivery by AnSon, Anadarko or the Company of this Agreement or any of the
Anadarko Agreements or Bayard Agreements, the due performance by each of AnSon,
Anadarko and the Company of its respective obligations hereunder and thereunder
or the lawful consummation of the Transactions contemplated hereby or thereby.
SECTION 3.15. Brokers, Finders, etc. All negotiations
relating to this Agreement, the Anadarko Agreements and the Bayard Agreements,
and the Transactions contemplated hereby and thereby, have been carried on
without the intervention of any Person acting on behalf of AnSon, Anadarko or
the Company in such manner as to give rise to a valid claim against any of the
Parties hereto for any broker's or finder's commission. AnSon and Anadarko
shall jointly and severally indemnify each of the other Parties hereto from and
against any and all liabilities and obligations arising as a result of anyone
claiming a commission, finder's fee or other payment for services rendered as a
broker or finder on behalf of AnSon, Anadarko or the Company in connection with
the Transactions contemplated hereby.
SECTION 3.16. Investment Intent.
(a) Anadarko is acquiring shares of Common Stock
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.
Anadarko acknowledges and agrees that it may not assign, sell,
hypothecate or otherwise transfer shares of Common Stock unless (i)
(A) a registration statement is in effect under the Securities Act,
with respect to the sale or other distribution of such shares of
Common Stock, 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. Each
of AnSon and Anadarko have no reason to anticipate any change in its
respective circumstances, financial or otherwise, that would cause or
require any sale or distribution of the shares of Common Stock to be
acquired by Anadarko pursuant to the terms of this Agreement.
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(b) AnSon and Anadarko acknowledge, agree and are
aware that (i) an investment in the Common Stock involves a high
degree of risk and that each of AnSon and Anadarko may lose the entire
amount of its respective investment in such stock; (ii) no United
States federal or state or any foreign agency has passed upon the
accuracy, validity or completeness of this Agreement or made any
finding or determination as to the fairness of an investment in the
Common Stock; (iii) shares of Common Stock are illiquid, and AnSon and
Anadarko must bear the economic risk of investment in the Common Stock
for an indefinite period of time; (iv) this Agreement and the
Stockholders Agreement contain substantial restrictions on the
transferability of the Common Stock; (v) there is no existing public
or other market for the Common Stock, and therefore, there can be no
assurance that AnSon or Anadarko will be able to sell or dispose of
its shares of Common Stock; (vi) the Common Stock has not been
registered under the Securities Act or under the securities laws of
any other jurisdiction, including the states of the United States, and
the Company is under no obligation to register or qualify the Common
Stock or any of its securities for resale by AnSon or Anadarko or
assist AnSon or Anadarko in complying with any exemption under the
Securities Act or the securities laws of any such jurisdiction or any
other jurisdiction, except as provided in the Registration Rights
Agreement; (vii) an offer or sale of shares of Common Stock by AnSon
or Anadarko in the absence of registration under the Securities Act
will require the availability of an exemption thereunder; (viii) a
restrictive legend, in substantially the form set forth in Section
10.7 hereof, shall be placed on the certificates representing shares
of Common Stock; and (ix) a notation shall be made in the appropriate
records of the Company indicating that such shares of Common Stock are
subject to restrictions on transfer.
(c) AnSon and Anadarko qualify as "accredited
investors" within the meaning of Rule 501 of Regulation D under the
Securities Act.
SECTION 3.17. Financial Statements. The audited balance
sheets as of December 31, 1994 and 1995 and the audited statements of income
and statements of cash flows for the years ended December 31, 1993, 1994 and
1995 which are attached as Schedule 3.16 hereto, fairly present in all
material respects the financial position, results of operations and cash flows
of Anadarko for such twelve-month periods and contain no material inaccuracies.
Such statements were prepared in conformity with United States generally
accepted accounting principles, except as noted therein. AnSon and Anadarko
shall provide the Company with audited financial statements of similar scope
and prepared consistently for the period from January 1, 1996 through the
Closing Date with respect to Anadarko and the Company within 90 days after the
Closing Date.
SECTION 3.18. Disclosure. Neither this Agreement nor any
certificate, instrument or written statement furnished to any of the other
Parties hereto by or on behalf of AnSon, Anadarko or the Company contains an
untrue statement of material fact or omits to state a material fact necessary
in order to make the statements contained herein or therein not misleading.
There is no fact which AnSon, Anadarko or the Company has not disclosed to each
of the other Parties hereto and of which any such Party is aware which
materially and adversely affects or which could
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reasonably be expected to materially and adversely affect the
business, financial condition, prospects, operations, property or
affairs of the Company as proposed to be conducted or the ability of
AnSon, Anadarko or the Company to perform their respective obligations
hereunder or under the Anadarko Agreements or the Bayard Agreements.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE XXXXXX COMPANIES
The Xxxxxx Companies hereby jointly and severally represent
and warrant to each of the other Parties hereto as of the date hereof, and as
of the Closing Date, as follows:
SECTION 4.1. Organization and Authority.
(a) Each of Xxxxxx Drilling and Xxxxxx Energy is
a corporation duly organized, validly existing and in good standing
under the laws of its state of incorporation, and each such company
has all requisite corporate power and authority to own and operate its
assets and properties and conduct its business and operations as
presently being conducted.
(b) Each of Grupo and M-O Partnership is a
limited partnership duly organized and validly existing under the laws
of the State of Texas, and each such limited partnership has all
requisite power and authority to own and operate its assets and
properties and conduct its business and operations as presently being
conducted.
SECTION 4.2. Authority; Binding Effect. Each of the
Xxxxxx Companies has all requisite power and authority to enter into this
Agreement and each of the Related Agreements to which each such company or
limited partnership is a party (the "Xxxxxx Agreements"), to perform its
respective obligations hereunder and thereunder and to consummate the
Transactions contemplated hereby and thereby. The execution and delivery by
each of the Xxxxxx Companies of this Agreement and each of the Xxxxxx
Agreements, the performance by each of the Xxxxxx Companies of its respective
obligations hereunder and thereunder and the consummation by each of the Xxxxxx
Companies of the Transactions contemplated hereby and thereby have been duly
and validly authorized by all necessary corporate, partnership and other
action, as applicable, on the part of each of the Xxxxxx Companies. This
Agreement and the Xxxxxx Agreements have been duly executed and delivered by
each of the Xxxxxx Companies and constitute legal, valid and binding agreements
of each of the Xxxxxx Companies, enforceable against each of the Xxxxxx
Companies in accordance with each of 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.
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SECTION 4.3. Absence of Conflicts. The execution and
delivery by each of the Xxxxxx Companies of this Agreement and the Xxxxxx
Agreements, the performance by each of the Xxxxxx Companies of its respective
obligations hereunder and thereunder and the consummation of the Transactions
contemplated hereby and thereby will not (i) conflict with, or result in any
violation or breach of, any provision of the certificate or articles of
incorporation or bylaws of either of Xxxxxx Drilling or Xxxxxx Energy, (ii)
conflict with, or result in any violation or breach of, any provision of the
limited partnership agreement of either of Grupo or M-O Partnership, (iii)
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, or result in being declared
void, voidable or without further effect, any term or provision of any material
note, bond, mortgage, indenture, lease, franchise, permit, license, Contract or
other agreement, instrument or document to which any of the Xxxxxx Companies is
a party or by which the Xxxxxx Assets may be bound, (iv) require any of the
Xxxxxx Companies to obtain any Consent 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 Xxxxxx Agreements, (v) conflict with, or result in any violation of, any
material law, ordinance, statute, rule or regulation of any Governmental
Authority known to be applicable to the business of any of the Xxxxxx Companies
or the operations of the Xxxxxx Assets or any order, writ, injunction, judgment
or decree of any court, arbitrator or Governmental Authority applicable to any
of the Xxxxxx Companies or the Xxxxxx Assets, or (vi) result in the creation
of, or impose on any of the Xxxxxx Companies the obligation to create, any Lien
upon the Xxxxxx Assets.
SECTION 4.4. Title to Xxxxxx Assets. Each of the Xxxxxx
Companies has good and marketable title to the Xxxxxx Assets owned by such
company or limited partnership, free and clear of all Liens and unencumbered by
any liabilities of any kind or character. There are no leases, surface or
subsurface use agreements, tenancy arrangements, service contracts, management
contracts, or other agreements, instruments or encumbrances in force or effect
which grant to any Person any right, title, interest or benefit in or to all or
any part of the Xxxxxx Assets, or any right relating to the ownership, use,
operation, management, maintenance or repair of all or any part of the Xxxxxx
Assets, and no Person has any rights to acquire all or any part of the Xxxxxx
Assets. There are no third parties in possession of all or any portion of the
Xxxxxx Assets, tenants in sufferance, trespassers, wrongful possessors or
otherwise.
SECTION 4.5. Effect of Transfer. The consummation of the
Transactions contemplated hereby will not deprive the Company of the benefits
of any material properties included in the Xxxxxx Assets or any rights or
interests relating thereto, or result in the imposition of any debts,
liabilities or obligations on the Company.
SECTION 4.6. Litigation. There is no action, suit,
inquiry, investigation or other proceeding pending against or, to the knowledge
of the Xxxxxx Companies, threatened against or affecting the Xxxxxx Companies
or the Xxxxxx Assets in any court or before any arbitrator or any foreign or
United States federal, state or local Governmental Authority (i) in which an
adverse decision could, either in any single case or in the aggregate, have a
material adverse effect on the business of the Xxxxxx Companies or the
operations of the Xxxxxx Assets, or (ii) which in any manner
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draws into question the validity of or otherwise affects (A) this Agreement,
the Xxxxxx Transfer Agreements or the Xxxxxx Agreements, the ability of each of
the Xxxxxx Companies to perform its respective obligations hereunder and
thereunder, or the consummation of the Transactions contemplated hereby and
thereby.
SECTION 4.7. Taxes.
(a) Each of the Xxxxxx Companies has filed, or
will file in a timely manner with the appropriate Governmental
Authority, all Tax Returns relating to the Xxxxxx Assets or the
operations of the Xxxxxx Assets which are required to be filed on or
before the Closing Date, and each such Tax Return has been or will be
prepared in compliance in all material respects with all applicable
laws and regulations.
(b) Each of the Xxxxxx Companies has paid, or
will pay on the applicable due date, all Taxes relating to the Xxxxxx
Assets or the operations of the Xxxxxx Assets which are due and
payable or accrued and not yet payable on or before the Closing Date,
including without limitation, all Taxes shown to be due on such
returns or pursuant to any assessment received by any of the Xxxxxx
Companies from any Taxing authority, except such Taxes, if any, as are
being contested in good faith by appropriate proceedings diligently
conducted.
(c) There are no claims for Taxes pending against
any of the Xxxxxx Companies with respect to the business of the Xxxxxx
Companies or the operations of the Xxxxxx Assets by the Xxxxxx
Companies, nor to the knowledge of any of the Xxxxxx Companies, any
threatened claims for Tax deficiencies against any of the Xxxxxx
Companies for which the Xxxxxx Assets could be liable, and the Xxxxxx
Companies do not know of any basis for such claims.
(d) There exist no actual or, to the knowledge of
the Xxxxxx Companies, proposed additional assessments or adjustments
of Taxes by any Taxing authority for which the Xxxxxx Assets could be
liable.
(e) There are no pending audits, actions,
proceedings, disputes, claims or, to the knowledge of the Xxxxxx
Companies, investigations with respect to any Taxes payable by or
asserted against any of the Xxxxxx Companies with respect to (i) the
business of the Xxxxxx Companies or the operations of the Xxxxxx
Assets by the Xxxxxx Companies and, to the knowledge of the Xxxxxx
Companies, there is no basis on which any such claim for material
Taxes can be asserted against any of the Xxxxxx Companies or the
Xxxxxx Assets. The Xxxxxx Companies have not received notice from any
Governmental Authority of its intent to examine or audit any Tax
Returns of any of the Xxxxxx Companies with respect to (i) the
business of the Xxxxxx Companies or the operations of the Xxxxxx
Assets by the Xxxxxx Companies.
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(f) There are no proposed reassessments of the
Taxable value of any of the Xxxxxx Assets or similar matters pending
with respect to any Taxing authority.
(g) There are no outstanding agreements or
waivers that would extend the statutory period in which a Taxing
authority may assess or collect a Tax against any of the Xxxxxx
Companies for which the Xxxxxx Assets could be liable.
(h) Except for the United States of America and
the States of Oklahoma and Texas, there are no other jurisdictions in
which income or franchise Tax Returns and reports, and returns and
reports relating to the payment of Tax based upon the ownership or use
of property therein or the derivation of income therefrom or measured
by premiums or investments in tangible or intangible property, were,
or were required to be, filed by any of the Xxxxxx Companies with
respect to the Xxxxxx Assets or the operations of the Xxxxxx Assets.
(i) Each of the Xxxxxx Companies that is a
corporation has been subject to a valid and effective election (a
"Subchapter S Election") to be an S corporation, within the meaning of
section 1361(a)(1) of the Code from the date of incorporation thereof
to the date hereof, and such Subchapter S Election has not been
terminated (within the meaning of section 1362(d) of the Code) at any
time prior to the date hereof.
SECTION 4.8 Defects. The Xxxxxx Assets include all of
the equipment made available to the Parties for inspection and, since the date
the Xxxxxx Assets were so inspected by any of the Parties hereto, there has
been no material change in any of the Xxxxxx Assets. None of the Xxxxxx
Companies or their stockholders or general partners, as applicable, have any
current actual knowledge of any material latent defect in any of the Xxxxxx
Assets.
SECTION 4.9. Government Authorizations and Filings.
There is no requirement applicable to the Xxxxxx Companies to obtain any
consent, approval or authorization of, or to make or effect any declaration,
filing or registration with, any Governmental Authority for the valid execution
and delivery by the Xxxxxx Companies of this Agreement or any of the Xxxxxx
Transfer Agreements or Xxxxxx Agreements, the due performance by each of the
Xxxxxx Companies of its respective obligations hereunder and thereunder or the
lawful consummation of the Transactions contemplated hereby or thereby.
SECTION 4.10. Brokers, Finders, etc. All negotiations
relating to this Agreement, the Xxxxxx Transfer Agreements and the Xxxxxx
Agreements, and the Transactions contemplated hereby and thereby, have been
carried on without the intervention of any Person acting on behalf of the
Xxxxxx Companies in such manner as to give rise to a valid claim against any of
the Parties hereto for any broker's or finder's commission. The Xxxxxx
Companies shall jointly and severally indemnify each of the other Parties
hereto from and against any and all liabilities and obligations arising as a
result of anyone claiming a commission, finder's fee or other payment for
services rendered as a
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broker or finder on behalf of any of the Xxxxxx Companies in connection with
the Transactions contemplated hereby.
SECTION 4.11. Investment Intent.
(a) Each of the Xxxxxx Companies is acquiring
shares of Common Stock 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. Each of the Xxxxxx Companies acknowledges and
agrees that it may not assign, sell, hypothecate or otherwise transfer
shares of Common Stock unless (i) (A) a registration statement is in
effect under the Securities Act with respect to the sale or other
distribution of such shares of Common Stock, 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. Each of the Xxxxxx Companies have no reason to
anticipate any change in its respective circumstances, financial or
otherwise, that would cause or require any sale or distribution of the
shares of Common Stock to be acquired by the Xxxxxx Companies pursuant
to the terms of this Agreement.
(b) Each of the Xxxxxx Companies acknowledge,
agree and are aware that (i) an investment in the Common Stock
involves a high degree of risk and that each of the Xxxxxx Companies
may lose the entire amount of its respective investment in such stock;
(ii) no United States federal or state or any foreign agency has
passed upon the accuracy, validity or completeness of this Agreement
or made any finding or determination as to the fairness of an
investment in the Common Stock; (iii) shares of Common Stock are
illiquid, and each of the Xxxxxx Companies must bear the economic risk
of investment in the Common Stock for an indefinite period of time;
(iv) this Agreement and the Stockholders Agreement contain substantial
restrictions on the transferability of the Common Stock; (v) there is
no existing public or other market for the Common Stock, and
therefore, there can be no assurance that any of the Xxxxxx Companies
will be able to sell or dispose of its shares of Common Stock; (vi)
the Common Stock has not been registered under the Securities Act or
under the securities laws of any other jurisdiction, including the
states of the United States, and the Company is under no obligation to
register or qualify the Common Stock or any of its securities for
resale by any of the Xxxxxx Companies or assist the Xxxxxx Companies
in complying with any exemption under the Securities Act or the
securities laws of any such jurisdiction or any other jurisdiction,
except as provided in the Registration Rights Agreement; (vii) an
offer or sale of shares of Common Stock by any of the Xxxxxx Companies
in the absence of registration under the Securities Act will require
the availability of an exemption thereunder; (viii) a restrictive
legend, in substantially the form set forth in Section 10.7 hereof,
shall be placed on the certificates representing shares of Common
Stock; and (ix) a notation shall be made in the appropriate records of
the Company indicating that such shares of Common Stock are subject to
restrictions on transfer.
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(c) The Xxxxxx Companies qualify as "accredited
investors" within the meaning of Rule 501 of Regulation D under the
Securities Act.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF ENERGY SPECTRUM
Energy Spectrum represents and warrants to each of the other
Parties hereto as of the date hereof, and as of the Closing Date, as follows:
SECTION 5.1. Organization and Authority. Energy Spectrum
is a limited partnership duly organized and validly existing under the laws of
the State of Delaware and has all requisite power and authority to own and
operate its assets and properties and conduct its business and operations as
presently being conducted.
SECTION 5.2. Authority; Binding Effect. Energy Spectrum
has all requisite power and authority to enter into this Agreement and the
Related Agreements to which Energy Spectrum is a party (the "Energy Spectrum
Agreements"), to perform its obligations hereunder and thereunder and to
consummate the Transactions contemplated hereby and thereby. The execution and
delivery by Energy Spectrum of this Agreement and each of the Energy Spectrum
Agreements, the performance by Energy Spectrum of its obligations hereunder and
thereunder and the consummation by Energy Spectrum of the Transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary partnership and other action on the part of Energy Spectrum. This
Agreement and the Energy Spectrum Agreements have been duly executed and
delivered by Energy Spectrum and constitute legal, valid and binding agreements
of Energy Spectrum, enforceable against Energy Spectrum 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.
SECTION 5.3. Absence of Conflicts. The execution and
delivery by Energy Spectrum of this Agreement and the Energy Spectrum
Agreements, the performance by Energy Spectrum of its obligations hereunder and
thereunder and the consummation by Energy Spectrum of the Transactions
contemplated hereby and thereby will not (i) conflict with, or result in any
violation or breach of, any provision of the partnership agreement of Energy
Spectrum, (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,
or result in being declared void, voidable or without further effect, any term
or provision of any material note, bond, mortgage, indenture, lease, franchise,
permit, license, Contract or other agreement, instrument or document to which
Energy Spectrum is a party or by which its properties or assets are or may be
bound, (iii) require Energy Spectrum to obtain any Consent of or file with or
give notice to any Governmental Authority or any other Person not a party to
this Agreement or any other Energy
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Spectrum Agreements, or (iv) conflict with, or result in any violation of, any
material law, ordinance, statute, rule or regulation of any Governmental
Authority or of any order, writ, injunction, judgment or decree of any court,
arbitrator or Governmental Authority applicable to Energy Spectrum or its
properties or assets.
SECTION 5.4. Governmental Authorizations and Filings.
There is no requirement applicable to Energy Spectrum to obtain any consent,
approval or authorization of, or to make or effect any declaration, filing or
registration with, any Governmental Authority for the valid execution and
delivery by Energy Spectrum of this Agreement or any of the Energy Spectrum
Agreements, the due performance by Energy Spectrum of its obligations hereunder
or thereunder or the lawful consummation by Energy Spectrum of the Transactions
contemplated hereby or thereby.
SECTION 5.5. Brokers, Finders, etc. All negotiations
relating to this Agreement and the Energy Spectrum Agreements, and the
Transactions contemplated hereby and thereby, have been carried on without the
intervention of any Person acting on behalf of Energy Spectrum in such manner
as to give rise to a valid claim against any of the Parties hereto for any
broker's or finder's commission. Energy Spectrum shall indemnify each of the
other Parties hereto from and against any and all liabilities and obligations
arising as a result of anyone claiming a commission, finder's fee or other
payment for services rendered as a broker or finder on behalf of Energy
Spectrum in connection with the Transactions contemplated hereby.
SECTION 5.6. Litigation. There is no action, suit,
inquiry, investigation or other proceeding pending against or, to the knowledge
of Energy Spectrum, threatened against or affecting the properties or assets of
Energy Spectrum in any court or before any arbitrator or any foreign or United
States federal, state or local Governmental Authority which in any manner draws
into question the validity of or otherwise affects this Agreement or any of the
Energy Spectrum Agreements, the ability of Energy Spectrum to perform its
obligations hereunder or thereunder or the consummation of the Transactions
contemplated hereby or thereby.
SECTION 5.7. Investment Intent.
(a) Energy Spectrum is acquiring shares of Common
Stock 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.
Energy Spectrum acknowledges and agrees that it may not assign, sell,
hypothecate or otherwise transfer shares of Common Stock unless (i)
(A) a registration statement is in effect under the Securities Act,
with respect to the sale or other distribution of such shares of
Common Stock, 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.
Energy Spectrum has no reason to anticipate any change in its
circumstances, financial or otherwise, that would cause or require any
sale or distribution of the shares of Common Stock to be acquired by
Energy Spectrum pursuant to the terms of this Agreement.
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(b) Energy Spectrum acknowledges, agrees and is
aware that (i) an investment in the Common Stock involves a high
degree of risk and that Energy Spectrum may lose the entire amount of
its investment in such stock; (ii) no United States federal or state
or any foreign agency has passed upon the accuracy, validity or
completeness of this Agreement or made any finding or determination as
to the fairness of an investment in the Common Stock; (iii) shares of
Common Stock are illiquid, and Energy Spectrum must bear the economic
risk of investment in the Common Stock for an indefinite period of
time; (iv) this Agreement and the Stockholders Agreement contain
substantial restrictions on the transferability of the Common Stock;
(v) there is no existing public or other market for the Common Stock,
and therefore, there can be no assurance that Energy Spectrum will be
able to sell or dispose of its shares of Common Stock; (vi) the Common
Stock has not been registered under the Securities Act or under the
securities laws of any other jurisdiction, including the states of the
United States, and the Company is under no obligation to register or
qualify the Common Stock or any of its securities for resale by Energy
Spectrum or assist Energy Spectrum in complying with any exemption
under the Securities Act or the securities laws of any such
jurisdiction or any other jurisdiction, except as provided in the
Registration Rights Agreement; (vii) an offer or sale of shares of
Common Stock by Energy Spectrum in the absence of registration under
the Securities Act will require the availability of an exemption
thereunder; (viii) a restrictive legend, in substantially the form set
forth in Section 10.7 hereof, shall be placed on the certificates
representing shares of Common Stock; and (ix) a notation shall be made
in the appropriate records of the Company indicating that such shares
of Common Stock are subject to restrictions on transfer.
(c) Energy Spectrum qualifies as an "accredited
investor" within the meaning of Rule 501 of Regulation D under the
Securities Act.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
OF CHESAPEAKE
Chesapeake represents and warrants to each of the other
Parties hereto as of the date hereof, and as of the Closing Date, as follows:
SECTION 6.1. Organization and Authority. Chesapeake is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to own and operate its assets and properties and conduct its business
and operations as presently being conducted.
SECTION 6.2. Authority; Binding Effect. Chesapeake has
all requisite power and authority to enter into this Agreement and the Related
Agreements to which Chesapeake is a party (the "Chesapeake Agreements"), to
perform its obligations hereunder and thereunder and to consummate the
Transactions contemplated hereby and thereby. The execution and delivery by
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Chesapeake of this Agreement and each of the Chesapeake Agreements, the
performance by Chesapeake of its obligations hereunder and thereunder and the
consummation by Chesapeake of the Transactions contemplated hereby and thereby
have been duly and validly authorized by all necessary corporate and other
action on the part of Chesapeake. This Agreement and the Chesapeake Agreements
have been duly executed and delivered by Chesapeake and constitute legal, valid
and binding agreements of Chesapeake, enforceable against Chesapeake 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.
SECTION 6.3. Absence of Conflicts. The execution and
delivery by Chesapeake of this Agreement and the Chesapeake Agreements, the
performance by Chesapeake of its obligations hereunder and thereunder and the
consummation by Chesapeake of the Transactions contemplated hereby and thereby
will not (i) conflict with, or result in any violation or breach of, any
provision of the certificate of incorporation or bylaws of Chesapeake, (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, or result in being declared
void, voidable or without further effect, any term or provision of any material
note, bond, mortgage, indenture, lease, franchise, permit, license, Contract or
other agreement, instrument or document to which Chesapeake is a party or by
which its properties or assets are or may be bound, (iii) require Chesapeake to
obtain any Consent of or file with or give notice to any Governmental Authority
or any other Person not a party to this Agreement or any other Chesapeake
Agreements, or (iv) conflict with, or result in any violation of, any material
law, ordinance, statute, rule or regulation of any Governmental Authority or of
any order, writ, injunction, judgment or decree of any court, arbitrator or
Governmental Authority applicable to Chesapeake or its properties or assets.
SECTION 6.4. Governmental Authorizations and Filings.
There is no requirement applicable to Chesapeake to obtain any consent,
approval or authorization of, or to make or effect any declaration, filing or
registration with, any Governmental Authority for the valid execution and
delivery by Chesapeake of this Agreement or any of the Chesapeake Agreements,
the due performance by Chesapeake of its obligations hereunder or thereunder or
the lawful consummation by Chesapeake of the Transactions contemplated hereby
or thereby.
SECTION 6.5. Brokers, Finders, etc. All negotiations
relating to this Agreement and the Chesapeake Agreements, and the Transactions
contemplated hereby and thereby, have been carried on without the intervention
of any Person acting on behalf of Chesapeake in such manner as to give rise to
a valid claim against any of the Parties hereto for any broker's or finder's
commission. Chesapeake shall indemnify each of the other Parties hereto from
and against any and all liabilities and obligations arising as a result of
anyone claiming a commission, finder's fee or other payment for services
rendered as a broker or finder on behalf of Chesapeake in connection with the
Transactions contemplated hereby.
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SECTION 6.6. Litigation. There is no action, suit,
inquiry, investigation or other proceeding pending against or, to the knowledge
of Chesapeake, threatened against or affecting the properties or assets of
Chesapeake in any court or before any arbitrator or any foreign or United
States federal, state or local Governmental Authority which in any manner draws
into question the validity of or otherwise affects this Agreement or any of the
Chesapeake Agreements, the ability of Chesapeake to perform its obligations
hereunder or thereunder or the consummation of the Transactions contemplated
hereby or thereby.
ARTICLE VII
CONDITIONS TO THE CLOSING
SECTION 7.1. General Conditions Precedent. The
obligations of each of the Parties hereto at the Closing are subject to the
satisfaction on or prior to the Closing Date of the conditions set forth below,
provided, however, that the obligations of each respective Party hereto shall
not be subject to the satisfaction of any of the following conditions insofar
as any such condition relates to the performance by such Party of any acts or
the compliance with, or delivery of, any agreement, instrument, certificate or
other document by such Party (including for purposes of this Section 7.1 (i)
the Company, AnSon and Anadarko as one Party and (ii) the Xxxxxx Companies as
one Party):
(a) Each of the other Parties hereto shall have
taken all necessary action to approve and adopt this Agreement and
each of the Related Agreements to which each such Party is a party,
and to authorize the performance of its respective obligations
hereunder and thereunder and the consummation of the Transactions
contemplated hereby and thereby, and each Party shall have received a
certificate from an appropriate duly authorized officer of each of the
other Parties hereto, each dated as of the Closing Date, certifying to
the foregoing effect as to itself.
(b) Each of the other Parties hereto shall have
performed and complied in all material respects with all agreements
required by this Agreement to be performed and complied with by each
of such Parties at or prior to the Closing Date, and each Party hereto
shall have received a certificate from an appropriate duly authorized
officer of each of the other Parties hereto, each dated as of the
Closing Date, certifying to the foregoing effect as to itself.
(c) The Bayard Merger shall have become effective
and the Company shall be a corporation duly organized and validly
existing in good standing under the laws of the State of Delaware and
the Parties hereto shall have received a certified copy of the
Certificate from the Office of the Secretary of State of the State of
Delaware dated within three days of the Closing Date, certifying to
the foregoing effect.
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(d) Anadarko shall have received a stock
certificate or certificates representing the 1,000,000 shares of
Common Stock to be received by Anadarko in connection with the Bayard
Merger as described in Section 2.3(c) and 2.3(d) hereof.
(e) The Xxxxxx Companies shall have conveyed,
transferred and delivered the Xxxxxx Assets to the Company as
described in Section 2.3(e) hereof and the Xxxxxx Companies shall have
received a stock certificate or certificates representing the 800,000
shares of Common Stock to be received by the Xxxxxx Companies from the
Company pursuant to Section 2.3(e) hereof.
(f) Energy Spectrum shall have purchased Common
Stock from the Company for $10,000,000 pursuant to Section 2.3(g)
hereof and Energy Spectrum shall have received a stock certificate or
certificates representing the 1,000,000 shares of Common Stock so
purchased by Energy Spectrum.
(g) All required notices shall have been given
and filings made, and, as the case may be, applicable waiting periods
shall have expired without adverse action by, or favorable orders,
consents, and approvals in the form required to consummate the
Transactions contemplated hereby shall have been received from, all
necessary Governmental Authorities and third parties.
(h) The Transactions contemplated hereby shall
have been effectuated in compliance with all applicable federal and
state securities laws and the issuance of the shares of Common Stock
to each of the Parties hereto shall have been exempt from registration
under the Securities Act, and shall have been exempt from registration
or qualification under state securities or Blue Sky laws where
applicable.
(i) Other than suits to enforce this Agreement or
any of the Related Agreements, no action or proceeding shall have been
instituted or threatened, and no injunction, writ, temporary
restraining order or any other order of any nature issued by a court
or other Governmental Authority of competent jurisdiction shall have
been issued, for the purpose or with the possible effect of enjoining
or preventing the consummation of this Agreement or any of the Related
Agreements, the performance by each of the Parties hereto of its
respective obligations hereunder or thereunder or the consummation of
the Transactions contemplated hereby or thereby.
(j) The representations and warranties of each of
the other Parties hereto set forth in Articles III, IV, and VI,
respectively, hereof shall be true and correct in all material
respects as of the Closing Date, with the same effect as though such
representations and warranties had been made by each of the other
Parties hereto on and as of the Closing Date, and each of the Parties
hereto shall have received a certificate from an appropriate duly
authorized officer of each of the other Parties hereto, each dated as
of the Closing Date, certifying to the foregoing effect as to itself.
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(k) The Bayard Note shall be repaid in full from
cash received by the Company from the sale of Common Stock to Energy
Spectrum pursuant to Section 2.3(g) hereof at the Closing.
(l) At the Closing, each of the Parties hereto
shall deliver, or cause to be delivered, each of the following
agreements to which each such Party is a party, duly executed by each
such Party thereto:
(i) the Xxxxxx Transfer Agreements;
(ii) the Master Drilling Agreement;
(iii) the Chesapeake Option Agreement;
(iv) the Stockholders Agreement;
(v) the Registration Rights Agreement; and
(vi) the New Credit Agreement.
(m) At the Closing, each of the Parties hereto
shall deliver or cause to be delivered, the following additional
documents which are applicable to itself:
(i) such documents as any other Party
hereto shall reasonably request relating to the due
organization and valid existence of such Party under the laws
of its jurisdiction of organization; the authority of such
Party to enter into this Agreement and any Related Agreements
and any other matters relevant hereto and thereto, all in form
and substance reasonably satisfactory to the Party or Parties
making such request;
(ii) Evidence satisfactory to each of
the Parties hereto that as of the Closing the Anadarko Assets
are free and clear of all Liens and encumbrances of any kind
or character, and that all Permitted Liens have been released
in full and are of no further force or effect;
(iii) Evidence satisfactory to each of the
Parties hereto that as of the Closing the Xxxxxx Assets are
free and clear of all Liens and encumbrances of any kind or
character;
(n) At the Closing, each of the Parties hereto
shall receive the following opinions of legal counsel to the other
Parties:
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(i) an opinion of Xxxxx Xxxxxxx Mock
Xxxxxxx, counsel to AnSon and Anadarko, substantially in the
form attached as Exhibit K hereto;
(ii) an opinion of Novakov, Davidson &
Xxxxx, A Professional Corporation, counsel to the Xxxxxx
Companies, substantially in the form attached as Exhibit L
hereto;
(iii) an opinion of Xxxxx & Xxxxx, L.L.P.,
counsel to Energy Spectrum, substantially in the form attached
as Exhibit M hereto; and
(iv) an opinion of the general counsel of
Chesapeake, substantially in the form attached as Exhibit N
hereto;
each such opinion may incorporate such reliance, assumptions, qualifications
and limitations as are customary and reasonable for transactions which are
similar to the Transactions contemplated hereby.
SECTION 7.2. Additional Conditions Precedent of Energy
Spectrum. The obligations of Energy Spectrum at the Closing are subject to the
satisfaction on or prior to the Closing Date of the additional conditions set
forth below:
(a) The due diligence conducted by Energy
Spectrum and its advisors, accountants and legal counsel in connection
with the Transactions contemplated hereby shall not have caused Energy
Spectrum to become aware of any facts relating to (i) the business,
liabilities, financial condition, results of operations, or affairs of
Anadarko, any of the Xxxxxx Companies or the Company, or (ii) the
Anadarko Assets or the Xxxxxx Assets, which in the good faith judgment
of Energy Spectrum makes it inadvisable for Energy Spectrum to proceed
with the Transactions contemplated hereby.
(b) The due diligence conducted by Energy
Spectrum and its advisors and legal counsel in connection with the
Transactions contemplated hereby shall not have caused Energy Spectrum
to become aware of any violation or alleged violation by AnSon,
Anadarko, any of the Xxxxxx Companies or the Company, or any act,
omission, event, or circumstance which, in the good faith judgment of
Energy Spectrum, may constitute or serve as a basis for a material
violation by AnSon, Anadarko, any of the Xxxxxx Companies or the
Company, of any applicable federal or state law, rule, or regulation
pertaining to health or the environment which, in the good faith
judgment of Energy Spectrum, could cause a material adverse effect on
the business or performance of Anadarko, any of the Xxxxxx Companies
and/or the Company or the operations of either of the Anadarko Assets
or the Xxxxxx Assets.
(c) There shall not have occurred any material
casualty or damage (whether or not insured) to any of the Anadarko
Assets or the Xxxxxx Assets, and the business
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of Anadarko and the Company shall have been conducted only in the
ordinary course consistent with its past practice, and Energy Spectrum
shall have received a certificate from a duly authorized officer of
(i) the general partner of AnSon, (ii) the managing partner of
Anadarko, (iii) each of the Xxxxxx Companies, and (iv) the Company,
each dated as of the Closing Date, certifying to the foregoing effect
as to itself.
SECTION 7.3. Additional Conditions Precedent of the Xxxxxx
Companies. The obligations of the Xxxxxx Companies at the Closing are subject
to the satisfaction on or prior to the Closing Date of the additional
conditions set forth below:
(a) The due diligence conducted by the Xxxxxx
Companies and their advisors, accountants and legal counsel in
connection with the Transactions contemplated hereby shall not have
caused the Xxxxxx Companies to become aware of any facts relating to
(i) the business, liabilities, financial condition, results of
operations, or affairs of Anadarko or the Company, or (ii) the
Anadarko Assets, which in the good faith judgment of the Xxxxxx
Companies makes it inadvisable for the Xxxxxx Companies to proceed
with the Transactions contemplated hereby.
(b) The due diligence conducted by the Xxxxxx
Companies and their advisors and legal counsel in connection with the
Transactions contemplated hereby shall not have caused the Xxxxxx
Companies to become aware of any violation or alleged violation by
AnSon, Anadarko or the Company, or any act, omission, event, or
circumstance which, in the good faith judgment of the Xxxxxx
Companies, may constitute or serve as a basis for a material violation
by AnSon, Anadarko or the Company, of any applicable federal or state
law, rule, or regulation pertaining to health or the environment
which, in the good faith judgment of the Xxxxxx Companies, could cause
a material adverse effect on the business or performance of Anadarko
and/or the Company or the operations of the Anadarko Assets.
(c) There shall not have occurred any material
casualty or damage (whether or not insured) to any of the Anadarko
Assets, and the business of Anadarko and the Company shall have been
conducted only in the ordinary course consistent with its past
practice, and the Xxxxxx Companies shall have received a certificate
from a duly authorized officer of (i) the general partner of AnSon,
(ii) the managing partner of Anadarko, and (iii) the Company, each
dated as of the Closing Date, certifying to the foregoing effect as to
itself.
ARTICLE VIII
CERTAIN COVENANTS AND AGREEMENTS
SECTION 8.1. Energy Spectrum Inspection. From the date
hereof to the Closing, the Company and each of the Xxxxxx Companies shall give
Energy Spectrum and its officers, attorneys, accountants, and representatives
free, full, and complete access during reasonable business hours to the
Anadarko Assets and the Xxxxxx Assets as Energy Spectrum may deem
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necessary or appropriate; provided, however, that such due diligence review
shall not unreasonably interfere with the operations by the Company or the
Xxxxxx Companies of the Anadarko Assets or the Xxxxxx Assets, respectively.
AnSon, Anadarko, the Xxxxxx Companies and the Company shall provide Energy
Spectrum and its officers, attorneys, accountants and representatives with any
information reasonably requested by them pertaining to the operations of, the
income derived from and the expenses associated with the Anadarko Assets and
the Xxxxxx Assets.
SECTION 8.2. Xxxxxx Companies Inspection. From the date
hereof to the Closing, the Company shall give the Xxxxxx Companies and their
officers, attorneys, accountants, and representatives free, full, and complete
access during reasonable business hours to the Anadarko Assets as the Xxxxxx
Companies may deem necessary or appropriate; provided, however, that such due
diligence review shall not unreasonably interfere with the operations by the
Company of the Anadarko Assets. AnSon, Anadarko and the Company shall provide
the Xxxxxx Companies and their officers, attorneys, accountants and
representatives with any information reasonably requested by them pertaining to
the operations of, the income derived from and the expenses associated with the
Anadarko Assets.
SECTION 8.3. Compliance. From the date hereof to the
Closing, each of the Parties hereto shall not take or fail to take any action
which action or failure to take such action shall cause the representations and
warranties made by each such Party herein to be untrue or incorrect as of the
Closing Date.
SECTION 8.4. Satisfaction of All Conditions Precedent.
From the date hereof to the Closing, each of the Parties hereto shall use its
reasonable best efforts to cause all conditions precedent set forth in Article
VII hereof to be satisfied by the Closing.
SECTION 8.5. Material Developments. From the date hereof
to the Closing, AnSon, Anadarko, the Xxxxxx Companies and the Company shall
notify each of the other Parties hereto of any material problems or
developments with respect to the business of the Company or Anadarko, or the
condition of the Anadarko Assets or the Xxxxxx Assets, of which AnSon,
Anadarko, the Xxxxxx Companies and/or the Company shall have or obtain
knowledge.
SECTION 8.6. Notice of Breach. From the date hereof to
the Closing, each of the Parties hereto, immediately upon becoming aware
thereof, shall give detailed written notice to each of the other Parties hereto
of the occurrence of, or the impending or threatened occurrence of, any event
which would cause or constitute a breach, or would have caused or constituted a
breach had such event occurred or been known to any such Party prior to the
date of this Agreement, of any of its respective covenants, agreements,
representations, or warranties contained or referred to herein or in any
document delivered in accordance with the terms hereof.
SECTION 8.7. Notice of Litigation. From the date hereof
to the Closing, immediately upon becoming aware thereof, each of the Parties
hereto shall notify each of the other Parties hereto of (i) any suit, action,
or proceeding to which any such Party is named as a party or
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which is threatened against any such Party in writing to the extent such suit,
action or proceeding relating to this Agreement or any of the Related
Agreements or affecting the consummation of the transactions contemplated
hereby and thereby, (ii) any order or decree or any complaint praying for an
order or decree restraining or enjoining the consummation of this Agreement or
any of the Related Agreements or consummation of the Transactions contemplated
hereby and thereby, or (iii) any notice from any tribunal of its intention to
institute an investigation into, or to institute a suit or proceeding to
restrain or enjoin the consummation of, this Agreement or any of the Related
Agreements or the Transactions contemplated hereby and thereby or to nullify or
render ineffective this Agreement or any of the Related Agreement or any such
Transactions contemplated hereby or thereby if consummated.
SECTION 8.8. Continuation of Insurance Coverage. From
the date hereof to the Closing, the Company shall keep in full force and effect
insurance coverage for the Anadarko Assets in the same amount and scope of
coverage maintained with respect to the Anadarko Assets as of the date hereof.
From the date hereof to the Closing, each of the Xxxxxx Companies shall keep in
full force and effect insurance coverage for the Xxxxxx Assets in the same
amount and scope of coverage maintained with respect to the Xxxxxx Assets as of
the date hereof.
SECTION 8.9. Interim Operations.
(a) From the date hereof to the Closing, AnSon
and Anadarko shall conduct the business and affairs of the Company and
the operation of the Anadarko Assets in the ordinary course consistent
with the past practice of AnSon and Anadarko with respect to the
business of Anadarko and the operations of the Anadarko Assets, and
shall not, unless Energy Spectrum and the Xxxxxx Companies (acting
through Xxxxxx Drilling) shall give their prior written approval, (i)
sell, pledge, dispose of, or encumber, or agree to sell, pledge,
dispose of, or encumber, any of the Anadarko Assets except in the
ordinary course of its business, or (ii) make any material acquisition
or capital expenditure, or commit to make any such acquisition or
expenditure, with respect to the business or operations of the Company
or the Anadarko Assets if the amount of any such acquisition or
expenditure, or the aggregate amount of all related acquisitions and
expenditures, exceeds $10,000.
(b) The Company shall reimburse AnSon and
Anadarko for the entire cost of any capital asset that is acquired or
other capital expenditure that is made by AnSon and Anadarko in the
ordinary course and consistent with the past practices of AnSon and
Anadarko for and on behalf of the Company after November 1, 1996 and
until the Closing Date, whether or not the written consent of Energy
Spectrum was or is required therefor pursuant to Section 8.9(a)
hereof; provided, however, that the assets acquired pursuant to such
acquisition or capital expenditure (i) will be of continuing benefit
to or in the business of the Company and (ii) will remain a capital
asset of the Company after the Closing Date. The Company shall not be
required to reimburse AnSon and Anadarko for non-capital expenses
incurred by AnSon and Anadarko for and on behalf of the Company after
November 1, 1996 and prior to the Closing Date in the ordinary course
of the business of the
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Company or the operation of the Anadarko Assets, including without
limitation, maintenance and repair expenses, employee costs and the
other types of services referenced in Section 8.10(a) hereof.
(c) From the date hereof to the Closing, AnSon,
Anadarko and the Company shall use their reasonable best efforts to
maintain the Anadarko Assets in their present operating condition and
repair, ordinary wear and tear excepted.
(d) From the date hereof to the Closing, the
Xxxxxx Companies shall not, unless each of the other Parties hereto
shall give its prior written approval, sell, pledge, dispose of, or
encumber, or agree to sell, pledge, dispose of, or encumber, any of
the Xxxxxx Assets.
(e) From the date hereof to the Closing, the
Xxxxxx Companies shall use their reasonable best efforts to maintain
the Xxxxxx Assets in their present operating condition and repair,
ordinary wear and tear excepted.
SECTION 8.10. Management Services Agreement.
(a) Operating and Administrative Services.
From and after the Closing Date and until December 31, 1996, AnSon and
Anadarko shall continue to make available to the Company its employees
to conduct the operations of the Company, the Anadarko Assets and the
Xxxxxx Assets, all on behalf of the Company and under the management
and supervision of the officers of the Company; provided, however,
that AnSon and Anadarko shall (i) maintain such employees under their
respective employ, (ii) continue to pay the wages and/or salaries of
such employees, (iii) continue to provide employee benefits and other
insurance benefits to such employees, and (iv) file all necessary tax
returns on Form W-2 with the United States Internal Revenue Service
for such employees, all in a manner consistent with the ordinary
course of business and the past practices of AnSon and Anadarko. In
addition, from and after the Closing Date and until December 31, 1996,
Anadarko shall make available to the Company certain office space and
administrative equipment for purposes of conducting the administrative
operations of the Company, the Anadarko Assets and the Xxxxxx Assets,
including without limitation, (i) 1500-2000 square feet of office
space, (ii) a conference room, (iii) a reception area, (iv) an
employee break room, (v) computer systems, related computer networks
and network printers, (vi) phone systems (excluding basic phone xxxx
and local and long distance charges), (vii) fax machines (including
fax paper) and (viii) copiers. At the request of the Board of
Directors of the Company, after December 31, 1996 and until such later
date as is reasonably requested by the Company, Anadarko shall
continue to make available its employees, office space and
administrative equipment pursuant to this Section 8.10 under
substantially the same terms and conditions set forth in this Section
8.10.
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(b) Compensation. As compensation for the
employees, office space and administrative equipment to be provided by
AnSon and Anadarko to the Company pursuant to this Section 8.10, the
Company shall pay AnSon and Anadarko (i) a base fee of $1.46 per
square foot of space occupied by the Company on a monthly basis, and
(ii) a computer usage fee of $.0062 per unit of use on a monthly basis
and consistent with Anadarko's internal allocation practices.
(c) Employees. Prior to the termination of
Anadarko's obligations under Sections 8.10(a)and 8.10(b) hereof, the
Company shall provide Anadarko with (i) a schedule of Anadarko's
employees to whom the Company intends to offer employment and (ii) an
offer of employment to each such employee. Upon receipt of such
schedule and offers of employment, Anadarko shall notify such
employees of the Company's offer and thereafter terminate the
employment of each such employee that elects to accept the Company's
offer of employment.
SECTION 8.11. Continuing Responsibilities of AnSon and
Anadarko. From the date hereof through the Closing, AnSon and Anadarko shall
cause the Company to comply with the terms of this Agreement and to execute and
deliver the agreements and documents to be delivered by the Company at Closing.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS, WARRANTIES
AND AGREEMENTS; INDEMNIFICATION
SECTION 9.1. Survival of Representations and Agreements.
(a) All representations and warranties contained
in this Agreement, any of the Related Agreements or in any agreement,
instrument, certificate or other document delivered pursuant to this
Agreement shall survive the Closing and the consummation of the
Transactions contemplated hereby and thereby and shall continue in
full force and effect:
(i) for a period of seven years in the
case of the representations and warranties set forth in
Section 3.10 of Article III hereof;
(ii) for a period of three years in the
case of representations and warranties set forth in Sections
3.4, 3.15, 3.17, 4.4, 4.10, 5.5 and 6.5 hereof;
(iii) for a period of one year in the case
of all other representations set forth in Article III, IV, V
and VI hereof; and
(iv) for the comparable periods of time
set forth above in this Section 9.1 in the case of each
representation and warranty (but not covenants)
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45
set forth in any of the Related Agreements or any other
agreement, instrument, certificate or other document delivered
pursuant to this Agreement, based upon the nature of such
representation and warranty when compared to the most
analogous representation and warranty set forth herein;
provided, however, that all representations and warranties contained
in this Agreement and in any of the Related Agreements or any other
agreement, instrument, certificate or other document delivered
pursuant to this Agreement, shall terminate and be of no further force
or effect upon the consummation of any transaction or transactions
pursuant to which the shares of Common Stock and Common Stock
Equivalents owned by each of (i) Energy Spectrum and (ii) the Xxxxxx
Companies (taken as a whole) constitute, in the aggregate, less than
5% of the issued and outstanding capital stock of the Company.
(b) Each covenant and agreement set forth in this
Agreement or in any of the Related Agreement to be performed after the
Closing shall survive the Closing in accordance with its terms. All
representations, warranties, covenants and agreements made or
contained in this Agreement or in any of the Related Agreement or any
other agreement, instrument, certificate or other document delivered
in accordance with this Agreement shall be deemed to be material and
to have been relied upon by the Parties hereto.
SECTION 9.2. Indemnification by AnSon and Anadarko. From
and after the Closing, AnSon and Anadarko shall jointly and severally indemnify
and hold Energy Spectrum, the Xxxxxx Companies and the Company, and each of
their respective directors, officers, general and limited partners, employees,
agents and affiliates, harmless against any and all damages, losses,
deficiencies, liabilities, obligations, commitments, costs or expenses,
including legal and other expenses reasonably incurred in investigating and
defending against the same (collectively, "Liabilities" and each a "Liability")
incurred by Energy Spectrum, the Xxxxxx Companies or the Company resulting from
(i) the breach of any representation or warranty of AnSon, Anadarko or the
Company contained in Article III hereof, or in any AnSon Agreement, Anadarko
Agreement or Bayard Agreement, (ii) any breach of any agreement or covenant of
AnSon, Anadarko or the Company (but in the case of the Company, only with
respect to agreements or covenants to be performed prior to Closing) contained
in this Agreement or in any AnSon Agreement, Anadarko Agreement or Bayard
Agreement, (iii) the conduct of the business and operations of the Anadarko
Assets on and prior to the Closing (whether by AnSon, Anadarko or the Company),
and (iv) Third Party Claims arising with respect to periods prior to the
Closing, whether as a result of actions or omissions of AnSon, Anadarko or the
Company.
SECTION 9.3. Indemnification by the Xxxxxx Companies.
From and after the Closing, the Xxxxxx Companies shall jointly and severally
indemnify and hold the Company, and its directors, officers, employees, agents
and affiliates, harmless against any and all Liabilities incurred by the
Company resulting from (i) the breach of any representation or warranty of any
of the Xxxxxx Companies contained in Article IV hereof, or in any Xxxxxx
Transfer Agreement or Xxxxxx Agreement, (ii) any breach of any agreement or
covenant of any of the Xxxxxx Companies contained
39
46
in this Agreement or in any Xxxxxx Transfer Agreement or Xxxxxx Agreement, and
(iii) Third Party Claims arising with respect to periods prior to the Closing,
whether as a result of actions or omissions of any of the Xxxxxx Companies.
SECTION 9.4. Indemnification by Energy Spectrum. From
and after the Closing, Energy Spectrum shall indemnify and hold the Company,
and its directors, officers, employees, agents and affiliates, harmless against
any and all Liabilities incurred by the Company resulting from (i) the breach
of any representation or warranty of Energy Spectrum contained in Article V
hereof, or in any Energy Spectrum Agreement, (ii) any breach of any agreement
or covenant of Energy Spectrum contained in this Agreement or in any Energy
Spectrum Agreement, and (iii) Third Party Claims arising with respect to
periods prior to the Closing, whether as a result of actions or omissions of
Energy Spectrum.
SECTION 9.5. Indemnification by Chesapeake. From and
after the Closing, Chesapeake shall indemnify and hold the Company, and its
directors, officers, employees, agents and affiliates, harmless against any and
all Liabilities incurred by the Company resulting from (i) the breach of any
representation or warranty of Chesapeake contained in Article VI hereof, or in
any Chesapeake Agreement, (ii) any breach of any agreement or covenant of
Chesapeake contained in this Agreement or in any Chesapeake Agreement, and
(iii) Third Party Claims arising with respect to periods prior to the Closing,
whether as a result of actions or omissions of Chesapeake.
SECTION 9.6. Indemnification for Third Party Claims. The
following procedures shall be applicable with respect to indemnification for
Claims (as defined below) of third parties or of present or former employees of
any Indemnitor ("Third Party Claims") arising in connection with any provision
of this Agreement.
(a) Promptly after receipt by the party seeking
indemnification hereunder (an "Indemnitee") of written notice of the
assertion or the commencement of any claim, liability or obligation by
a third party, whether by legal process or otherwise (a "Claim"), with
respect to any matter within the scope of Sections 9.2, 9.3, 9.4 and
9.5 hereof, the Indemnitee shall give written notice thereof (the
"Notice") to the Person from whom indemnification is sought pursuant
hereto (the "Indemnitor") and shall thereafter keep the Indemnitor
reasonably informed with respect thereto, provided that the failure of
the Indemnitee to give the Indemnitor prompt notice as provided herein
shall not relieve the Indemnitor of its obligations hereunder unless
such failure results in (i) a default judgment, (ii) the expiration of
the time to answer a complaint or (iii) material prejudice to
Indemnitor's defense of such Claim. In case any such Claim is brought
against any Indemnitee, the Indemnitor shall be entitled to assume the
defense thereof, by written notice of its intention to the Indemnitee
within 30 days after receipt of the Notice, with counsel reasonably
satisfactory to the Indemnitee at the Indemnitor's own expense. If
the Indemnitor shall assume the defense of such Claim, it shall not
settle such Claim without the prior written consent of the Indemnitee,
which consent shall not be unreasonably withheld. Notwithstanding the
assumption by the Indemnitor of the defense of any Claim as provided
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47
in this Section 9.6, Indemnitee shall be permitted to join in the
defense of such Claim and to employ counsel at its own expense.
(b) If the Indemnitor shall fail to notify the
Indemnitee of its desire to assume the defense of any such Claim
within the prescribed period of time, or shall notify the Indemnitee
that it will not assume the defense of any such Claim, then the
Indemnitee shall assume the defense of any such Claim, in which event
it may do so in such manner as it may deem appropriate, provided that
it shall not settle any Claim which would give rise to the
Indemnitor's liability under Sections 9.2, 9.3, 9.4 and 9.5 hereof, as
the case may be, without the Indemnitor's prior written consent, such
consent not to be unreasonably withheld. The Indemnitor shall be
permitted to join in the defense of such Claim and to employ counsel
at its own expense.
ARTICLE X
MISCELLANEOUS
SECTION 10.1. Publicity. None of the Parties hereto
shall issue a press release or make any other public announcement of any sort
relating to this Agreement or the Transactions contemplated hereby or thereby
prior to the Closing; provided however, that the Parties shall be entitled to
make such disclosures as may be required pursuant to applicable law or the
lawful requirement of any Governmental Authority or by order of a court of
competent jurisdiction. The Company shall issue a press release acceptable to
all Parties on the Closing Date concerning this Agreement, the Related
Agreements and the Transactions contemplated hereby and thereby. Without
excluding the right of any other Party to issue a release pursuant to this
Section 10.1, each of the Parties hereto may issue a press release on the
Closing Date concerning this Agreement, any Related Agreements to which such
Party is a party and the Transactions contemplated hereby and thereby;
provided, however, that any press release proposed to be released by such Party
pursuant to this Section 10.1 is distributed to each of the other Parties
hereto prior to any public release of such press release; and provided further,
that such press release is mutually acceptable to each of the Parties hereto.
The Parties hereto acknowledge that any press release concerning the Company,
its business and operations issued after the Closing shall be subject to the
confidentiality provisions set forth in the Stockholders Agreement.
SECTION 10.2. Termination. This Agreement may be
terminated at any time prior to the Closing by:
(a) the mutual consent of all of the Parties
hereto;
(b) AnSon and/or Anadarko upon the failure of any
of the other Parties hereto to perform or comply in all material
respects with any of its respective covenants or agreements contained
herein prior to or at the Closing or if any representation or warranty
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48
of any of the other Parties hereunder shall not have been true and
correct in all material respects as of the time at which such was
made;
(c) Any of the Xxxxxx Companies, upon the failure
of any of the other Parties hereto to perform or comply in all
material respects with any of its respective covenants or agreements
contained herein prior to or at the Closing or if any representation
or warranty of any of the other Parties hereunder shall not have been
true and correct in all material respects as of the time at which such
was made;
(d) Energy Spectrum upon the failure of any of
the other Parties hereto to perform or comply in all material respects
with any of its respective covenants or agreements contained herein
prior to or at the Closing or if any representation or warranty of any
of the other Parties hereunder shall not have been true and correct in
all material respects as of the time at which such was made;
(e) Chesapeake upon the failure of any of the
other Parties hereto to perform or comply in all material respects
with any of its respective covenants or agreements contained herein
prior to or at the Closing or if any representation or warranty of any
of the other Parties hereunder shall not have been true and correct in
all material respects as of the time at which such was made;
(f) any of the Parties hereto if the Parties
hereto are unable to arrange financing on terms acceptable to all of
the Parties hereto with The CIT Group or another acceptable bank or
financial institution for the purpose of entering into the New Credit
Agreement; and
(g) any of the Parties hereto if the Closing
does not occur by December 31, 1996;
provided however, that no party may terminate this Agreement pursuant to
subsections (b) through (e) above if such party is, at the time of any such
attempted termination, in breach of any term or provision hereof.
SECTION 10.3. Notices. Any notice or other communication
required or permitted hereunder shall be in writing and shall be delivered by
hand, by telex or telecopier, or by certified or registered mail, postage
prepaid and return receipt requested. Notices shall be deemed to have been
given upon delivery, if delivered by hand, three days after mailing, if mailed,
one business day after delivery to the courier, if delivered by overnight
courier service, and upon receipt of an appropriate electronic confirmation, if
by telex or telecopier:
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49
If to the Company:
Bayard Drilling Technologies, Inc.
Lakepoint Towers
0000 Xxxxxxxxx Xxxxxxxxxx
Xxxxx 000X
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxx
(000) 000-0000
(000) 000-0000 (Fax)
If to AnSon or Anadarko:
AnSon Partners Limited Partnership
Lakepoint Towers
0000 Xxxxxxxxx Xxxxxxxxxx
Xxxxx 000X
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxx, III
(000) 000-0000
(000) 000-0000 (Fax)
If to the Xxxxxx Companies:
X.X. Xxxxxx Drilling, Inc.
0000 X.X. 00xx Xxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxx X. Xxxxxx
(000) 000-0000
(000) 000-0000 (Fax)
and
Xxxx Xxxxxx Energy Equipment Resource, Inc.
0000 Xxxxxxx Xxxx
Xxxxx 000, XX0
Xxxxxx, Xxxxx 00000
(000) 000-0000
(000) 000-0000 (Fax)
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50
and
Grupo de Hercules, Ltd.
Xxxxxx Xxxxxx Partnership, Ltd.
c/o Xxxxxx-Xxxxxx Rig Investments Group, Inc.
0000 Xxxxxxx Xxxx
Xxxxx 000, XX0
Xxxxxx, Xxxxx 00000
(000) 000-0000
(000) 000-0000 (Fax)
If to Energy Spectrum:
Energy Spectrum Partners LP
0000 Xxxxxx Xxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxx
(000) 000-0000
(000) 000-0000 (Fax)
If to Chesapeake:
Chesapeake Energy Corporation
X.X. Xxx 00000
Xxxxxxxx Xxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx
(000) 000-0000 Ext. 232
(000) 000-0000 (Fax)
Any Party may from time to time change its address or designee
for notification purposes by giving the other party prior notice in the manner
specified above of the new address or the new designee and the subsequent date
upon which the change shall be effective.
SECTION 10.4. Fees and Expenses.
(a) Fees and Expenses Generally. Each of the
Parties hereto shall be responsible for the payment of all fees and
expenses incurred by each such Party in connection with the pursuit of
the Transactions contemplated hereunder, including the preparation,
negotiation and execution of this Agreement and the Related Agreements
and all documents ancillary thereto ("Transaction Fees"), regardless
of whether the Transactions contemplated hereunder are closed.
Transaction Fees shall include all fees and expenses of each such
Party's legal counsel, accountants and all other third party
consultants and advisors
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51
engaged by each such Party to assist with the Transactions
contemplated hereunder and all direct out of pocket expenses for
travel and similar matters. Notwithstanding the foregoing, if the
parties hereto fail to close the Transactions contemplated hereunder
for any reason, Energy Spectrum and AnSon shall share equally the
respective Transaction Fees incurred by each of them in connection
with the preparation, negotiation and execution of this Agreement and
the Related Agreements. Notwithstanding the foregoing, Energy
Spectrum shall not be required to reimburse AnSon for any other
accounting or legal fees and expenses incurred by AnSon relating to
general Tax planning and structuring that are not directly
attributable to the formation and incorporation of Bayard Oklahoma as
described in Section 2.3 hereof and the pursuit of the transactions
contemplated hereby.
(b) Reimbursement at the Closing. The Company
shall reimburse Energy Spectrum, AnSon and the Xxxxxx Companies for
all out of pocket expenses reasonably incurred by Energy Spectrum,
AnSon and the Xxxxxx Companies in connection with the Transactions
contemplated hereunder, including without limitation, the reasonable
fees and expenses of legal counsel, accountants and all other third
party consultants and advisors engaged by Energy Spectrum, AnSon or
the Xxxxxx Companies to assist in such Transactions. Notwithstanding
the foregoing, the Company shall not be required to reimburse AnSon
for any other accounting or legal fees and expenses incurred by AnSon
relating to general Tax planning and structuring that are not directly
attributable to the formation and incorporation of Bayard Oklahoma as
described in Section 2.3 hereof. The Company shall reimburse
Chesapeake for all reasonable legal fees and expenses paid to outside
legal counsel in connection with the Transactions contemplated
hereunder. Such reimbursements to Energy Spectrum, AnSon, the Xxxxxx
Companies and Chesapeake shall be due at the Closing, or promptly
following any earlier termination of the Transactions contemplated
hereunder for any reason, including without limitation, any
termination of the Letter of Intent by election of any Investor (as
defined therein).
SECTION 10.5. Energy Spectrum Advisory Fees. In
consideration of the contribution made by Energy Spectrum to the organization
and structuring of the Transactions contemplated hereunder and the arrangement
of financing in connection therewith, at the Closing the Company shall pay a
one-time financial advisory and structuring fee to the general partner of
Energy Spectrum in the amount of $300,000. In addition, in consideration of
the contribution that Energy Spectrum is expected to make to the arrangement,
organization and structuring of any subsequent equity financing of the Company
which is funded by Energy Spectrum, the Company shall pay an advisory and
structuring fee to the general partner of Energy Spectrum in an amount equal to
2% of the equity financing contributed by Energy Spectrum to the Company in
connection with any such equity financing.
SECTION 10.6. Energy Spectrum Right of First Refusal. In
the event that the Company shall desire to raise additional capital through
further equity financing, Energy Spectrum shall have the right to provide the
next $10 million of equity financing to the Company on terms which are or would
be otherwise available to the Company from third parties (the "Right of
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52
Refusal"), provided however, that the Right of Refusal shall not apply to the
issuance of equity by the Company in exchange for, or to purchase, assets or
operating entities, and provided further, that the Right of Refusal shall not
apply to the issuance of equity by the Company pursuant to employee stock
option plans or in connection with an IPO and shall terminate upon the
consummation of an IPO.
SECTION 10.7. Restrictions on Transfer. Shares of Common
Stock shall not be transferable except upon the conditions specified in this
Section 10.7, which are intended to insure compliance with the provisions of
the Securities Act in respect of the transfer of any such shares.
(a) In addition to any other legend that may be
required by applicable law, each certificate representing shares of
Common Stock, unless otherwise permitted by the provisions of this
Section 10.7, shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"ANY SALE, ASSIGNMENT, TRANSFER, PLEDGE OR OTHER
DISPOSITION OF THE SHARES OF STOCK REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED BY, AND THE RIGHTS OF THE HOLDERS OF
SUCH SHARES OF STOCK ARE SUBJECT TO, THE TERMS AND CONDITIONS
CONTAINED IN THAT CERTAIN STOCKHOLDERS AGREEMENT, DATED AS OF
DECEMBER 2, 1996, AS IT MAY BE AMENDED FROM TIME TO TIME,
WHICH IS AVAILABLE FOR EXAMINATION BY HOLDERS OF SHARES OF
COMMON STOCK OF BAYARD DRILLING TECHNOLOGIES, INC. (THE
"COMPANY") AT THE REGISTERED OFFICE OF THE COMPANY. IN
ADDITION TO THE FOREGOING RESTRICTIONS, THESE SHARES OF STOCK
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY UNITED STATES STATE
SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE
DISPOSED OF UNLESS (i) A REGISTRATION STATEMENT IS IN EFFECT
UNDER THE SECURITIES ACT WITH RESPECT TO THE SALE OR OTHER
DISPOSITION OF SUCH SHARES OR 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, THE TRANSFEREE IS AN "ACCREDITED
INVESTOR" AS DEFINED IN REGULATION D PROMULGATED UNDER THE
SECURITIES ACT."
The certificates of shares of Common Stock shall also
bear any legend required under any applicable state securities or
"blue sky" laws.
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53
(b) The holder of shares of Common Stock bearing
the restrictive legend set forth in paragraph (a) above ("Restricted
Shares"), by acceptance thereof, agrees that, unless a registration
statement is in effect under the Securities Act with respect to the
sale or other disposition of such Restricted Shares, prior to any
transfer or attempted transfer of such Restricted Shares, such holder
will give the Company (i) written notice describing the proposed
transfer of any Restricted Shares in reasonable detail, (ii)
certification that the proposed transferee of the Restricted Shares is
an "accredited investor" within the meaning of Rule 501 under the
Securities Act, (iii) such other information about the proposed
transfer of such Restricted Shares or the proposed transferee of such
Restricted Shares as the Company may reasonably request and (iv) an
opinion of counsel reasonably acceptable to the Company to the effect
that the proposed transfer of such Restricted Shares may be effected
without registration of such Restricted Shares under the Securities
Act and applicable United States state securities laws. In addition,
if the holder of the Restricted Shares delivers to the Company an
opinion of counsel that subsequent transfers of such Restricted Shares
will not require registration or qualification under the Securities
Act, the Company shall cause the transfer agent promptly after such
contemplated transfer to deliver new certificates for such Restricted
Shares that do not bear the legend set forth in paragraph (a) above.
If the foregoing conditions entitling the holder to effect a proposed
transfer of such Restricted Shares without registration under the
Securities Act have not been satisfied, the holder shall not transfer
the Restricted Shares, and the Company shall cause the transfer agent
not to transfer such Restricted Shares on its books or issue any
certificates representing such Restricted Shares. Any purported
transfer not in accordance with the terms hereof shall be void ab
initio. The restrictions imposed by this Section 10.7(b) upon the
transferability of any particular Restricted Shares shall cease and
terminate when such Restricted Shares have been sold pursuant to an
effective registration statement under the Securities Act or
transferred pursuant to Rule 144 promulgated under the Securities Act.
The holder of any Restricted Shares as to which such restrictions
shall have terminated shall be entitled to receive from the Company,
without expense, a new certificate representing shares of Common Stock
that does not bear the restrictive legend set forth above and does not
contain any other reference to the restrictions imposed by this
Section 10.7(b). As used in this Section 10.7(b), the term "transfer"
encompasses any sale, transfer, pledge or other disposition of any
shares of Common Stock referred to herein.
SECTION 10.8. Amendment; Waivers. This Agreement may be
amended only by a written instrument duly executed and delivered on behalf of
each of the Parties hereto. Compliance with any term or provision hereof may
be waived only by a written instrument executed by each Party entitled to the
benefits thereof. No failure to exercise any right, power or privilege granted
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege granted hereunder.
SECTION 10.9. Parties in Interest; Assignment. This
Agreement shall be binding upon and inure to the benefit of the Parties and
their respective successors, assigns and legal
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54
representatives. Neither this Agreement nor any rights or obligations
hereunder may be assigned by any Party, other than to an Affiliate of such
Party, without the prior written consent of each of the other Parties hereto.
SECTION 10.10. No Third Party Beneficiaries. Nothing in
this Agreement is intended or shall be construed to give any person, other than
the Parties hereto, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein.
SECTION 10.11. Exhibits and Schedules. The Exhibits and
Schedules to this Agreement are a part of this Agreement as if fully set forth
herein. All references herein to Articles, Sections, Exhibits and Schedules
shall be deemed references to such parts of this Agreement, unless the context
shall otherwise require.
SECTION 10.12. Severability. In the event that any one or
more of the terms or provisions contained in this Agreement, the Related
Agreements or in any other agreement, instrument or document referred to herein
shall be held to be invalid, illegal or unenforceable for any reason, the
validity, legality or enforceability of all other terms and provisions of this
Agreement, the Related Agreements or any other such agreement, instrument or
other documents referred to herein shall not be affected.
SECTION 10.13. Headings. The Article and Section headings
in this Agreement are for convenience of reference only, do not constitute a
part of this Agreement and shall limit, extend or otherwise affect the meaning
or interpretation of the terms and provisions of this Agreement.
SECTION 10.14. Rules of Construction.
(a) In this Agreement, unless the context
otherwise requires, words in the singular number or in the plural
number shall each include the singular number and the plural number.
(b) All references herein to dollar amounts are
in United States dollars.
(c) The terms "herein," "hereunder," "hereto" and
similar terms refer to this Agreement generally and not to any one
Article or Section of this Agreement.
SECTION 10.15. Entire Agreement. This Agreement, including
the Exhibits and Schedules hereto which are incorporated by reference herein,
and the Related Agreements and other documents referred to therein, constitute
the entire agreement and understanding among the Parties with respect to the
Transactions contemplated hereby and thereby and cancel, merge and supersede
all prior oral or written agreements, representations and warranties,
arrangements and understandings relating to the subject matter hereof and
thereof.
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55
SECTION 10.16. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF OKLAHOMA, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS OF
ANOTHER JURISDICTION.
SECTION 10.17. Specific Performance. The Parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement or any of the Related Agreements were not
performed in accordance with the terms thereof. Accordingly, the Parties agree
that each of them shall be entitled to injunctive relief to prevent breaches of
the terms and provisions of this Agreement and the Related Agreements and to
obtain specific performance of such terms, in addition to any other remedy now
or hereafter available at law or in equity or otherwise.
SECTION 10.18. Counterparts. This Agreement may be executed
by the Parties in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts shall together
constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties set forth below have caused
this Master Agreement to be duly executed as of the date first above written.
BAYARD DRILLING COMPANY
By: /s/ XXXXX X. XXXXX
---------------------------------------------
Name: Xxxxx X. Xxxxx
-------------------------------------------
Title: PRESIDENT
------------------------------------------
ENERGY SPECTRUM PARTNERS LP
By: Energy Spectrum Capital LP, General Partner
By: Energy Spectrum LLC, General Partner
By: /s/ XXXXXX XXXXXX
-------------------------------------
Xxxxxx Xxxxxx
President
ANSON PARTNERS LIMITED PARTNERSHIP
By:/s/ XXXX X. XXXXXXXX
---------------------------------------------
General Partner
By:
-------------------------------------
Name: Xxxx X. Xxxxxxxx III
-----------------------------------
Title:
----------------------------------
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ANADARKO DRILLING COMPANY
By: /s/ XXXX X. XXXXXXXX
----------------------------------------
General Partner
By:
--------------------------------
Name: Xxxx X. Xxxxxxxx
------------------------------
Title:
-----------------------------
CHESAPEAKE ENERGY CORPORATION
By: /s/ XXXXXX X. XXXXXXXXX
----------------------------------------
Name: Xxxxxx X. XxXxxxxxx
--------------------------------------
Title: Chairman and Chief Executive Officer
-------------------------------------
X.X. XXXXXX DRILLING, INC.
By:/s/ XXX X. XXXXXX
----------------------------------------
Name: Xxx X. Xxxxxx
--------------------------------------
Title: President
-------------------------------------
XXXX XXXXXX ENERGY EQUIPMENT
RESOURCE, INC.
By:/s/ XXXX XXXXXX
----------------------------------------
Name: Xxxx Xxxxxx
--------------------------------------
Title: President
-------------------------------------
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GRUPO DE HERCULES, LTD.
By: Xxxxxx-Xxxxxx Rig Investments Group, Inc.
General Partner
By: /s/ XXXX XXXXXX
---------------------------------------
Name: Xxxx Xxxxxx
-------------------------------------
Title: President
------------------------------------
XXXXXX-XXXXXX PARTNERSHIP, LTD.
By: Xxxxxx-Xxxxxx Rig Investments Group, Inc.
General Partner
By:/s/ XXXX XXXXXX
---------------------------------------
Name: Xxxx Xxxxxx
-------------------------------------
Title: President
------------------------------------
52
