1
AGREEMENT AND LIMITED IRREVOCABLE PROXY
This Agreement and Irrevocable Proxy, dated as of November 12,
1997 (the "Agreement"), is by and between Chesapeake Energy Corporation, an
Oklahoma corporation ("Chesapeake"), and the party identified as the
"Stockholder" on the signature page hereof (the "Stockholder").
R E C I T A L S:
WHEREAS, Chesapeake Acquisition Corp., a wholly owned
subsidiary of Chesapeake ("Merger Sub"), and Hugoton Energy Corporation, a
Kansas corporation ( "Hugoton") propose to enter into an Agreement and Plan of
Merger, dated as of the date hereof (the "Merger Agreement"), providing, among
other things, for the merger of Merger Sub with and into Hugoton in accordance
with the terms and provisions of, and subject to the conditions set forth in,
the Merger Agreement (the "Merger"); and
WHEREAS, the Stockholder is the owner, beneficially and of
record, of the number of shares of Hugoton Common Stock (the "Shares")
identified on the signature page of this Agreement; and
WHEREAS, the Stockholder has agreed to vote the Shares in
favor of the Merger Agreement and the consummation of the Merger at the Hugoton
Special Meeting;
NOW, THEREFORE, to induce Chesapeake and Merger Sub to enter
into the Merger Agreement and in consideration of the aforesaid and the
representations, warranties, covenants and agreements set forth herein and in
the Merger Agreement, including the benefits that the parties hereto expect to
derive from the Merger, the receipt and sufficiency of all of which are hereby
acknowledged by the parties, the parties hereto agree as follows:
1. Revocation of Prior Proxies. The Stockholder hereby
revokes all previous proxies granted with respect to any of the Shares
owned by the Stockholder that would conflict with the terms of the
Proxy granted hereby.
2. Grant of Limited Irrevocable Proxy. The Stockholder
hereby irrevocably constitutes and appoints Chesapeake and Xxxxxx X.
XxXxxxxxx, Chairman of the Board and Chief Executive Officer of
Chesapeake, Xxx X. Xxxx, President and Chief Operating Officer of
Chesapeake and Xxxxxx X. Xxxxxxx, Vice President - Finance and Chief
Financial Officer of Chesapeake, in their respective capacities as
officers of Chesapeake, and any individual, who shall hereafter
succeed to the office of Chairman of the Board and Chief Executive
Officer, President or Chief Financial Officer, respectively, of
Chesapeake, and each of them
2
individually, as its true and lawful proxy and attorney-in-fact, with
full power of substitution, for and in the name, place and stead of
the Stockholder, to call and attend any and all meetings of Hugoton's
stockholders, including the Hugoton Special Meeting, at which the
Merger Agreement or the Merger are to be considered and voted upon by
Hugoton's stockholders, and any adjournments thereof, to execute any
and all written consents of stockholders of Hugoton and to vote all of
the Shares and any and all shares of any other class of capital stock
of Hugoton presently or at any future time owned beneficially or of
record by the Stockholder , including any and all securities having
voting rights issued or issuable in respect thereof, which the
Stockholder is entitled to vote other than as set forth on Exhibit A
hereto (all of the foregoing being collectively referred to as the
"Subject Stock"), and to represent and otherwise act as the
Stockholder could act, in the same manner and with the same effect as
if the Stockholder were personally present, at any such annual,
special or other meeting of the stockholders of Hugoton (including the
Hugoton Special Meeting), and at any adjournment thereof (a
"Meeting"), or pursuant to any written consent in lieu of meeting or
otherwise; provided, however, that any such vote or consent in lieu
thereof or any other action so taken shall be solely for the purposes
of voting in favor of the Merger and the Merger Agreement and any
transactions contemplated thereby. Such attorneys and proxies are
hereby authorized to vote the Subject Stock in accordance with the
terms of the Proxy contemplated hereby.
3. Vote in Favor of Merger and Merger Agreement. If
Chesapeake is unable or declines to exercise the power and authority
granted by the Proxy for any reason, the Stockholder covenants and
agrees to vote all the Subject Stock in favor of approval of the
Merger and the Merger Agreement at any Meeting at which such matters
are considered and voted upon and, upon request of Chesapeake, to
provide the Stockholder's written consent thereto.
4. No Action Without Chesapeake's Consent. The
Stockholder hereby covenants and agrees that it will not vote or take
any action by written consent of stockholders in lieu of meeting on
any matter that is subject to the Proxy without Chesapeake's prior
written consent.
5. Negative Covenants of the Stockholder. Except to the
extent contemplated herein or in the Merger Agreement, the Stockholder
hereby covenants and agrees that the Stockholder will not, and will
not agree to, directly or indirectly, (a) sell, transfer, assign,
cause to be redeemed or otherwise dispose of any of the Subject Stock
or enter into any contract, option or other agreement or understanding
with respect to the sale, transfer, assignment, redemption or other
disposition of any Subject Stock; or (b) grant any proxy,
power-of-attorney or other authorization or interest in or with
respect to such Subject Stock pertaining or relating to the Merger
Agreement, the Merger or any of the transactions contemplated thereby;
or (c) deposit such Subject Stock into a voting trust or enter into a
voting agreement or arrangement with respect to such Subject Stock,
unless and until, in the case of (a), (b) or (c) above, the
Stockholder shall have taken all actions (including, without
- 2 -
3
limitation, the endorsement of a legend on the certificates evidencing
such Subject Stock) reasonably necessary to ensure that such Subject
Stock shall at all times be subject to all the rights, powers and
privileges granted or conferred, and subject to all the restrictions,
covenants and limitations imposed, by this Agreement and shall have
caused any transferee of any of the Subject Stock to execute and
deliver to Chesapeake, an Agreement and Irrevocable Proxy, in
substantially the form of this Agreement with respect to the Subject
Stock. Nothing contained herein shall be construed in any way as (a)
affecting the right of the Stockholder to (i) grant a security
interest, by way of pledge, by hypothecation or otherwise, in the
Subject Stock in connection with bona fide credit arrangements or as
requiring the lender in such bona fide credit arrangement, including
any lender involved in the agreements described in Exhibit A, to be
bound by the terms of this Agreement or (ii) reduce the amount of the
Subject Stock by the amount of Shares distributed to its partners or
sold pursuant to a valid Registration Statement or a valid exemption
from registration under the Securities Act of 1933, as amended,
provided that either (x) such distribution or sale is consummated
after the first to occur of Chesapeake definitively determines that is
does not intend to account for Merger under the "pooling of interests"
method of accounting as described in Section 3.31 of the Merger
Agreement or the Securities and Exchange Commission denies the use of
pooling of interests accounting treatment for the Merger or (y)
Chesapeake determines to its reasonable satisfaction that such
distribution or sale will not adversely effect the ability of
Chesapeake to account for the Merger using pooling of interests
accounting treatment, provided that in each case the Stockholder shall
promptly notify Chesapeake of any such action or (b) imposing any
liability or obligation upon the Stockholder if any such lender
forecloses any such security interest or sells the shares of Subject
Stock in respect of which such foreclosure occurs.
6. Stockholder's Representations and Warranties. The
Stockholder represents and warrants to Chesapeake that (a) the
Stockholder has duly authorized, executed and delivered this Agreement
and this Agreement constitutes a valid and binding agreement,
enforceable in accordance with its terms and neither the execution and
delivery of this Agreement nor the consummation by the Stockholder of
the transactions contemplated hereby will constitute a violation of, a
default under, or conflict with any contract, commitment, agreement,
understanding, arrangement or restriction of any kind to which the
Stockholder is a party or by which the Stockholder is bound; or (b)
consummation by the Stockholder of the transactions contemplated
hereby will not violate, or require any consent, approval, or notice
under, any provision of law other than any filing required under the
Securities Exchange Act of 1934, as amended; (c) except to the extent
contemplated herein and except as described in the final sentence of
this Section 6, the Subject Stock and the certificates representing
same are now and at all times during the term of this Agreement will
be held by the Stockholder, or by a nominee or custodian for the
benefit of the Stockholder, free and clear of all liens, claims,
security interests, proxies, voting trusts or agreement or any other
encumbrances whatsoever ("Encumbrances") with respect to the ownership
or voting of the Subject Stock or otherwise, other than Encumbrances
created by or arising pursuant to this Agreement and other than as set
forth on Exhibit A; and there are no outstanding options,
- 3 -
4
warrants or rights to purchase or acquire, or proxies,
powers-of-attorney, voting agreements, trust agreements or other
agreements relating to, the Subject Stock other than this Agreement;
(d) except as set forth on Exhibit A, such Subject Stock constitutes
all of the securities of Hugoton owned beneficially or of record by
the Stockholder on the date hereof; and (e) the Stockholder has the
present power and right to vote all of the Subject Stock as
contemplated herein. The Stockholder hereby advises Chesapeake that
the only agreements or arrangements pursuant to which the Shares are
pledged as security are described on Exhibit A, and that no default,
event of default, or event of acceleration has occurred under any of
such agreements or arrangements.
7. Certain Defined Terms. Unless otherwise expressly
provided herein, all capitalized terms used herein without definition
shall have the meanings assigned to them in the Merger Agreement.
8. Choice of Law. The terms and provisions of this
Agreement shall be governed by and construed in accordance with the
laws of the State of Oklahoma without giving effect to the provisions
thereof relating to conflicts of law.
9. Binding Effect; Assignability. The terms and
provisions of this Agreement shall be binding upon, inure to the
benefit of, and be enforceable by the successors and permitted assigns
of the parties hereto. This Agreement and the rights hereunder may
not be assigned or transferred by Chesapeake, except with the prior
written consent of the Stockholder.
10. Term. This Agreement shall terminate at the earlier
of (i) the Effective Time, (ii) the termination of the Merger
Agreement in accordance with its terms or (iii) upon written notice of
termination of this Agreement given by Chesapeake to the Stockholder
expressly referring to this paragraph.
11. Irrevocable Proxy Coupled with an Interest. The
Stockholder acknowledges that Chesapeake will enter into the Merger
Agreement in reliance upon this Agreement, including the Proxy, and
that the Proxy is granted in consideration for the execution and
delivery of the Merger Agreement by Chesapeake. THE STOCKHOLDER
AGREES THAT THE PROXY AND ALL OTHER POWER AND AUTHORITY INTENDED TO BE
CONFERRED HEREBY IS COUPLED WITH AN INTEREST SUFFICIENT IN LAW TO
SUPPORT AN IRREVOCABLE POWER AND, EXCEPT AS PROVIDED IN SECTION 10
ABOVE, SHALL NOT BE TERMINATED BY ANY ACT OF THE STOCKHOLDER BY LACK
OF APPROPRIATE POWER OR AUTHORITY OR BY THE OCCURRENCE OF ANY OTHER
EVENT OR EVENTS.
12. Specific Performance. The parties acknowledge and
agree that performance of their respective obligations hereunder will
confer a unique benefit on the other and that a failure of performance
will result in irreparable harm to the other and will not be
compensable
- 4 -
5
by money damages. The parties therefore agree that this Agreement,
including the Proxy, shall be specifically enforceable and that
specific enforcement and injunctive relief shall be a remedy properly
available to Chesapeake and the Stockholder for any breach of any
agreement, covenant or representation of the other hereunder.
13. Further Assurance. The Stockholder will, upon
request, execute and deliver any additional documents and take such
further actions as may reasonably be deemed by Chesapeake or its
counsel to be necessary or desirable to carry out the provisions
hereof.
14. Severability. If any term, provision, covenant or
restriction of this Agreement, or the application thereof to any
circumstance shall, to any extent, be held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement or
the application thereof to any other circumstance, shall remain in
full force and effect, shall not in any way be affected, impaired or
invalidated and shall be enforced to the fullest extent permitted by
law.
15. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original but all
of which together shall constitute one and the same document.
16. Notice. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and
shall be deemed given if delivered personally or sent by overnight
courier (providing proof of delivery) to the parties at the following
addresses (or such other address for a party as shall be specified by
like notice): (i) if to Chesapeake, to the address set forth in
Section 8.3 of the Merger Agreement; and (ii) if to a Stockholder, to
the address set forth on the signature page hereof, or such other
address as may be specified in writing by such Stockholder.
- 5 -
6
IN WITNESS WHEREOF, Chesapeake and the Stockholder have duly
executed this Agreement or caused this Agreement to be duly executed as of the
date first set forth above.
STOCKHOLDER
By:
-----------------------------------
Shares Owned:
Address:
CHESAPEAKE ENERGY CORPORATION
By:
------------------------------------
Xxxxxx X. XxXxxxxxx
Chairman of the Board and Chief
Executive Officer
- 6 -
