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EXHIBIT 10.1
XXXXXXXXX ENERGY, INC.
AND
XXXXXXXXX DRILLING COMPANY
NON-COMPETITION AGREEMENT
THIS NON-COMPETITION AGREEMENT is made and entered into this 12th
day of June, 1997 (this "Agreement"), between and among XXXXXXXXX ENERGY, INC.,
a Delaware corporation ("PEC"), XXXXXXXXX DRILLING COMPANY, a Delaware
corporation ("PDC") wholly owned by PEC, and XXX-XXX DRILLING COMPANY, a Texas
corporation ("Xxx-Xxx").
RECITALS:
A. Simultaneously with the execution of this Agreement, PDC
has consummated the transactions contemplated by that certain Asset Purchase
Agreement, dated June 4, 1997, as amended by the Amendment to Asset Purchase
Agreement, dated June 4, 1997 (collectively, as amended, the "Asset Purchase
Agreement"), among PEC, PDC and Xxx-Xxx providing for, among other things, the
purchase by PDC of the drilling rigs, related equipment, rolling stock, and a
shop and yard owned by Xxx-Xxx.
B. The execution and delivery of this Agreement is a
condition to the consummation of the Asset Purchase contemplated by the Asset
Purchase Agreement, and the parties are entering into this Agreement in order
to fulfill such condition.
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties, intending to be legally bound, hereby agree as follows:
1. Period of Agreement.
The period of this Agreement shall commence on the date hereof
and remain in effect through the first to occur of (i) June 12, 2002, or (ii) a
Change in Control of PEC or PDC. For purposes of this Agreement, "Change in
Control" shall be deemed to have occurred, if (i) a tender offer shall be made
and consummated for the ownership of more than fifty percent of the outstanding
voting securities of PEC, or (ii) there is a merger, consolidation or other
reorganization of PEC or PDC with another entity and, as a result of such
merger, consolidation or other reorganization, less than fifty percent of the
outstanding voting securities of the surviving or resulting entity shall be
owned by the former stockholders of PEC as the same shall have existed
immediately prior to such merger, consolidation or other reorganization.
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2. Covenant Not to Compete.
(a) Xxx-Xxx covenants and agrees that during the Non-Compete
Period, Xxx-Xxx shall not, without the prior written consent of PEC and PDC,
directly or indirectly, alone or in association with any other person, carry
on, be engaged, concerned, or take part in, render services to, or own, share
in the earnings of, or invest in the stock, bonds, or other securities of, any
person which is engaged in the business of contract drilling oil and gas xxxxx
within District 1, 7B, 7C, 8, 8A, 9, or 10 of Texas as defined by the Texas
Railroad Commission on the date of this Agreement or within Chaves, Eddy, Lea,
or Roosevelt County, New Mexico (the "Competitive Business"); provided,
however, that Xxx-Xxx may: (i) invest and/or engage in any business that
routinely provides third-party services (as such term is commonly used in the
contract oil and gas well drilling business) to a Competitive Business, but is
not engaged in the actual conduct of a Competitive Business; or (ii) invest in
stock, bonds, or other securities of any Competitive Business (but without
otherwise participating in the Competitive Business) if: (A) such stock,
bonds, or other securities are listed on any national securities exchange or
are registered under Section 12(g) of the Securities Exchange Act of 1934, as
amended; (B) the investment does not exceed, in the case of any class of
capital stock of any one issuer, two percent (2%) of the issued and outstanding
shares, or, in the case of bonds or other securities of any one issuer, two
percent (2%) of the aggregate principal amount thereof issued and outstanding;
and (C) such investment would not prevent, directly or indirectly, the
transaction of business by PEC or PDC or any affiliate of PEC or PDC with any
state, district, territory, or possession of the United States or any
governmental subdivision, agency, or instrumentality thereof by virtue of any
statute, law, regulation or administrative practice. The period of time during
which Xxx-Xxx is prohibited from engaging in certain activities by this Section
shall be extended by the length of time during which Xxx-Xxx is in breach of
the terms of this section.
(b) It is understood by and between the parties hereto that
the foregoing covenant by Xxx-Xxx not to enter into competition with PEC or PDC
as set forth in Section 2(a) hereof is an essential element of this Agreement
and the Asset Purchase Agreement and that, but for the agreement of Xxx-Xxx to
comply with such covenant, neither PEC nor PDC would have agreed to enter into
this Agreement or the Asset Purchase Agreement. PEC and PDC on the one hand,
and Xxx-Xxx on the other hand, have independently consulted with their
respective counsel and have been advised in all respects concerning the
reasonableness and propriety of such covenant, with specific regard to the
nature of the business conducted by PEC and PDC and their respective
affiliates. Xxx-Xxx on the other hand agrees that such covenant is reasonable
in scope, geographic area, and duration, and that compliance with such covenant
would not impose economic hardship on Xxx-Xxx.
3. Restrictions on Soliciting Business of PEC and PDC.
Xxx-Xxx further covenants and agrees that during the Non-Compete
Period, Xxx-Xxx will not, either for itself or for any other person or entity,
directly or indirectly, engage in any of the following activities in a
Competitive Business without the express prior written consent of PEC and PDC:
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(a) Solicit or hire any of the employees of PEC or PDC or
solicit or take away any of PEC's or PDC's customers, lessors, or suppliers or
attempt any of the foregoing:
(b) Acquire or attempt to acquire rights providing any product
or service in a Competitive Business within the territory described in
Section 2 hereof; or
(c) Engage in any act which would interfere with or harm any
business relationship PEC or PDC has with any customer, lessor, employee,
principal or supplier.
4. Specific Performance.
Without intending to limit the remedies available to PEC or PDC,
Xxx-Xxx acknowledges that PEC or PDC will have no adequate remedies at law if
Xxx-Xxx violates the terms of Section 2 or 3, hereof. In such event, Xxx-Xxx
agrees that PEC or PDC shall have the right, in addition to any other rights it
may have, to obtain in any court of competent jurisdiction specific performance
of such Sections of this Agreement or injunctive relief to restrain any breach
or threatened breach thereof. Nothing herein shall be construed as prohibiting
PEC or PDC from pursuing any other remedies available to PEC or PDC (whether at
law or in equity) for such breach or threatened breach, including, without
limitation, the recovery of monetary damages from Xxx-Xxx.
The provisions of this Section 4 shall survive the expiration,
termination or cancellation of this Agreement.
5. Attorneys Fees and Costs.
If an action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled
to reasonable attorneys fees, costs and necessary expenses in addition to any
other relief to which that party may be entitled. This provision is applicable
to this entire Agreement.
6. Representations and Warranties of PEC, PDC and Xxx-Xxx.
(a) Representations and Warranties of PEC and PDC. PEC and
PDC hereby joint and severally represent and warrant to Xxx-Xxx that: (i) it
has all requisite power to enter into and perform their obligations under this
Agreement; (ii) this Agreement has been duly and validly authorized by all
necessary corporate action on the part of PEC and PDC; (iii) the execution of
this Agreement by PEC and PDC and performance of their obligations hereunder do
not require the consent or approval of any other party; and (iv) this Agreement
is a valid and binding obligation of PEC and PDC.
(b) Representations and Warranties of Xxx-Xxx. Xxx-Xxx hereby
represents and warrants to PEC and PDC that: (i) Xxx-Xxx has the capacity and
power to enter into and perform obligations of Xxx-Xxx under this Agreement;
(ii) Xxx-Xxx has duly and validly executed this
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Agreement; (iii) the execution of this Agreement and performance of obligations
of Xxx-Xxx hereunder do not require the consent or approval of any other party;
and (iv) this Agreement constitutes a valid and binding obligation of Xxx-Xxx.
7. General Provisions.
(a) Compliance with Laws. The parties agree that they will
comply with all applicable laws and regulations of government bodies or
agencies in their respective performance of their obligations under this
Agreement.
(b) Governing Law and Construction. This Agreement will be
governed by and construed in accordance with the laws of the State of Texas
without reference to its conflict-of-laws principles. This Agreement's final
form resulted from review and negotiations among the parties and their
attorneys, and no part of this Agreement should be construed against any party
on the basis of authorship.
(c) Forum for Dispute Resolution. If any dispute arises among
the parties concerning the interpretation or performance of any portion of this
Agreement which the parties are unable to resolve themselves, and any party
brings an action against any other party seeking a declaratory order, specific
performance, damages, or any other legal or equitable relief based on this
Agreement, the parties agree that the forum for any such action shall be an
appropriate federal or state court in Texas having jurisdiction, agree that
venue will be proper in such courts, and waive any objections based on
inconvenience of the forum, and further agree that the prevailing party in any
such action, as determined by the court, shall be awarded its reasonable
attorneys' fees and costs in addition to any relief or judgment the court
awards.
(d) Entire Agreement; Amendment. This Agreement constitutes
the entire agreement between the parties with respect to the subject matter
contained herein and supersedes any previous oral or written communications,
representations, understandings or agreements with respect thereto. The terms
of this Agreement may be modified only in a writing, signed by authorized
representatives of both parties.
(e) Assignability. This Agreement will be binding upon the
parties' respective successors and permitted assigns. Neither party may assign
this Agreement and/or any of its rights and/or obligations hereunder without
the prior written consent of the other party, and any such attempted assignment
will be void; provided, however, that PEC or PDC may assign this Agreement to a
subsidiary or affiliate without the prior written consent of Xxx-Xxx.
(f) Waiver. A waiver of a breach or default under this
Agreement will not constitute a waiver of any other breach or default. Failure
or delay by either party to enforce compliance with any term or condition of
this Agreement will not constitute a waiver of such term or condition.
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(g) Severability. If any provision of this Agreement is
declared to be invalid, the parties agree that such invalidity will not affect
the validity of the remaining provisions of this Agreement, and further agree,
to the extent possible, to substitute for the invalid provision a valid
provision that approximates the intent and economic effect of the invalid
provision as closely as possible.
(h) Headings. The titles of the Sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
(i) Notice. Any notice, request, consent, demand or other
communication required to be given under this Agreement will be in writing and
will be given personally, by facsimile or by mailing the same, first-class,
postage prepaid to the appropriate address and facsimile number set forth below
or to such other person or at such other address as may hereafter be designated
by like notice. Notices by mail will be considered delivered and become
effective three days after the mailing thereof. All notices by facsimile will
be considered delivered and become effective immediately upon the confirmed (by
answer back or other tangible printed verification or successful receipt)
sending thereof.
To PEC: Xxxxxxxxx Energy, Inc.
0000 Xxxxxx Xxxxxxx
X.X. Xxxxxx 0000
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
Chairman and Chief Executive Officer
To PDC: Xxxxxxxxx Drilling Company
0000 Xxxxxx Xxxxxxx
X.X. Xxxxxx 0000
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: A. Xxxxx Xxxxxxxxx
President and Chief Operating Officer
To Xxx-Xxx: Xxx-Xxx Drilling Company
000 Xxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxxxxxxx
Chairman of the Board
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(j) Counterparts. This Agreement may be executed in
counterparts and by the parties hereto in separate counterparts, each of which
will be deemed an original, but all of which together will constitute one and
the same instrument.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to
be executed by their respective representatives as of the day and year first
above written.
"PEC"
XXXXXXXXX ENERGY, INC.
By: /s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
Chairman and Chief Executive Officer
"PDC"
XXXXXXXXX DRILLING COMPANY
By: /s/ A. Xxxxx Xxxxxxxxx
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A. Xxxxx Xxxxxxxxx
President and Chief Operating Officer
"XXX-XXX"
XXX-XXX DRILLING COMPANY
By: /s/ Xxxxx Xxxxxxxxxx
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Xxxxx Xxxxxxxxxx
Chairman of the Board
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