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EXHIBIT 10.8
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OPTION AGREEMENT
BY AND BETWEEN
BAYARD DRILLING TECHNOLOGIES, INC.
AND
CHESAPEAKE ENERGY CORPORATION
DECEMBER 10, 1996
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OPTION AGREEMENT
This OPTION AGREEMENT (this "Agreement"), dated as of December
10, 1996, is made by and between Bayard Drilling Technologies, Inc. a Delaware
corporation (the "Company"), and Chesapeake Energy Corporation, a Delaware
corporation (the "Investor").
WITNESSETH:
WHEREAS, the Company, the Investor and certain other parties
named therein have entered into that certain Master Agreement, dated as of
November 26, 1996 (the "Master Agreement"), pursuant to which the Investor and
the other parties thereto acquired interests in the Company;
WHEREAS, the Master Agreement contemplates, among other things,
that (i) the Investor will enter into an option agreement with the Company
pursuant to which the Company will grant to the Investor an option to purchase
1,000,000 shares of common stock, par value $0.01 per share ("Common Stock"),
of the Company for a purchase price of $12 per share; (ii) the Investor will
enter into a Master Drilling Agreement, dated as of December 5, 1996 (the
"Master Drilling Agreement"), pursuant to which the Investor and the Company
will set forth certain governing terms of Drilling Agreements (as defined
herein) to be entered into by the Investor and the Company; (iii) Chesapeake
Operating Inc., a subsidiary of the Investor ("Chesapeake Operating"), shall
enter into each of six separate drilling agreements pursuant to which
Chesapeake Operating will employ specified drilling rigs of the Company (the
"Drilling Agreements"); (iv) the Investor, certain other stockholders of the
Company and the Company will enter into a Stockholders and Voting Agreement
(the "Stockholders Agreement") and a Registration Rights Agreement (the
"Registration Rights Agreement"); and
WHEREAS, the Investor and the Company desire to set forth the
terms and conditions of such option.
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
hereto hereby agree as follows:
SECTION 1. Option; Initial Exercise Price. Subject to the
terms, conditions and limitations contained in this Agreement, the Investor is
hereby granted the right to purchase up to 1,000,000 shares of Common Stock for
a purchase price of $12 per share (the "Option"). The Option will expire as
follows (each, an "Expiration Date"):
(a) As to 334,000 shares of Common Stock, the Option
will expire at 5:00 p.m., Dallas, Texas time, on December 5, 2000.
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(b) As to 666,000 shares of Common Stock, the Option
will expire at 5:00 p.m., Dallas, Texas time, on December 5, 1998;
provided, however, that if, on or before December 5, 1998, Chesapeake
Operating extends at its option the Drilling Agreement with respect to
each of four drilling rigs for additional two year terms in accordance
with the terms of the applicable Drilling Agreement, the Option
expiration date as to 166,500 shares of Common Stock will be extended
to, and expire at 5:00 p.m., Dallas, Texas time, on December 5, 2000,
for each such Drilling Agreement so extended by Chesapeake Operating.
Such right shall be evidenced by a certificate (the "Option Certificate")
issued to the Investor by the Company in the form attached as Exhibit A hereto.
The Option may be converted into shares of Common Stock upon the payment to the
Company by the Investor of the sum of $12 per share in cash (the "Exercise
Price"). The Option may not be exercised at any time that the Investor is not
in full compliance with any of the terms or provisions of the Master Drilling
Agreement or any of the Drilling Agreements.
SECTION 2. Rights of Holders and Duties of Company. Until
such time as the Investor shall exercise the Option, the Company shall have no
obligations or duties to the Investor as the holder of the Option, except as
expressly set forth in this Agreement, the Stockholders Agreement or the
Registration Rights Agreement (each as defined in the Master Agreement). The
Option does not confer upon the Investor any right to vote or to consent to or
to receive notice as a shareholder of the Company, as such, in respect of any
matters whatsoever or any other rights or liabilities as a shareholder, prior
to the exercise thereof. At such time as the Investor has exercised the
Option, in whole or in part, the Investor shall have only such rights and
benefits as are expressly set forth in this Agreement or the Stockholder
Agreement or which accrue to all shareholders in their capacity as such
pursuant to the Articles of Incorporation or Bylaws of the Company, or
applicable law.
SECTION 3. Notice of Dividends. If the Board of Directors of
the Company shall declare any dividend or other distribution payable to holders
of Common Stock (except a dividend payable solely in Common Stock), the Company
shall mail notice thereof to the Investor not less than thirty (30) days prior
to the record date fixed for determining shareholders entitled to participate
in such dividend or other distribution and the Investor shall not be entitled
to participate in such dividend or other distribution or be entitled to any
rights on account or as a result thereof unless and to the extent the Investor
exercises the Option prior to such record date, and then such Investor shall
have the right to participate in the dividend or distribution only with respect
to shares of Common Stock actually received by the Investor upon the full or
partial exercise of the Option.
SECTION 4. Subdivision or Combination of Common Stock or Stock
Dividend. In the event the Company shall at any time subdivide its
outstanding shares of Common Stock into a greater number of shares, the
Exercise Price set forth in Section 1 hereof in effect immediately prior to
such subdivision shall be proportionately reduced and the number of shares of
Common Stock purchasable upon the exercise of the Option shall be
proportionately increased. Conversely,
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in the event the outstanding shares of Common Stock of the Company shall be
combined into a smaller number of shares, the Exercise Price in effect
immediately prior to such combination shall be proportionately increased and
the number of shares of Common Stock purchasable upon the exercise of the
Option shall be proportionately decreased. If the Company shall hereafter
declare or pay a dividend or make a distribution upon Common Stock in the form
of capital stock or any security convertible into Common Stock, then in each
case, from and after the record date for determining the shareholders entitled
to receive such dividend or distribution, the Exercise Price in effect
immediately prior to such record date shall be proportionately reduced. For
the purposes hereof, the payment of a dividend in, or the distribution of,
securities convertible into Common Stock, shall be deemed to have effected an
increase in the number of outstanding shares of Common Stock equal to the
number of shares of Common Stock into which such securities shall be initially
convertible. The Exercise Price shall not be adjusted to reflect any of the
following: (i) the issuance of shares pursuant to any employee stock option
plans of the Company; (ii) the issuance of shares in exchange for or to
purchase assets or other operating entities; (iii) issuance of shares in
exchange for, upon conversion of, upon the exercise of or in respect of any
shares of preferred stock of any class of the Company; and (iv) the issuance of
shares of equity securities for cash.
SECTION 5. Investment Representations. The Investor hereby
represents and warrants to the Company as follows:
(a) The Investor is acquiring the Option, and the
shares of Common Stock issuable upon exercise of the Option, for
investment purposes only and not with a view to the resale or
distribution of all or any part thereof. The offering of the Option to
the Investor was made only through direct, personal communication
between the duly authorized representatives of such Investor and the
Company and not through any public solicitation or advertising. The
Investor acknowledges that neither the Option nor the shares of Common
Stock issuable upon exercise thereof have been registered under the
Securities Act of 1933, as amended (the "Securities Act") or the
securities or "blue sky" laws of any state or other domestic or foreign
jurisdiction, and that none of such securities may be sold, transferred
or otherwise disposed of except pursuant to an effective registration
statement thereunder or an applicable exemption therefrom.
(b) The Investor (i) has such knowledge and experience
in financial and business matters such that it is capable of evaluating
the merits and risks of its investment in the Option and the Common
Stock and has the financial ability to assume the monetary risk
associated therewith; (ii) is able to bear the complete loss of its
investment in the Option and the Common Stock; (iii) has received such
documents and information as it has requested and has had the
opportunity to ask questions of, and receive answers from, the Company
and its management concerning the Company and the terms and conditions
of the offering of the Option and to obtain additional information; (iv)
is an "accredited investor" as defined in Rule 501(a) of Regulation D
promulgated under the Securities Act; (v) is not an entity formed solely
to make this investment; and (vi) is not relying upon any statements
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or instruments made or issued by any person or entity other than the
Company and its officers in making its decision to invest in the Option
and the Common Stock.
SECTION 6. Legend. Until (a) a registration statement with
respect to the Option or the shares of Common Stock issued upon exercise
thereof has been declared effective under the Securities Act, or (b) the holder
of such securities delivers to the Company a written opinion of counsel to such
holder in form and substance satisfactory to the Company to the effect that
such legend is no longer necessary under the Securities Act, the Company shall
cause the Option Certificate and each certificate representing shares of Common
Stock issued upon exercise thereof to be stamped or otherwise imprinted with a
legend in substantially the following form:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED OR THE SECURITIES OR BLUE
SKY LAWS OF ANY STATE OR OTHER JURISDICTION. THESE SECURITIES
MAY NOT BE SOLD, ASSIGNED, PLEDGED OR IN ANY OTHER MANNER
TRANSFERRED OR DISPOSED OF EXCEPT IN COMPLIANCE WITH SUCH ACT AND
SUCH LAWS.
SECTION 7. Consent to Amendments; Waivers. Except as
otherwise expressly provided herein, the provisions of this Agreement shall not
be amended or waived except upon the written agreement of the Company and the
Investor.
SECTION 8. No Assignment. This Agreement may not be assigned
by the Investor without the written consent of the Company. Any purported or
attempted assignment in violation of this Section 8 shall be void ab initio.
In addition, this Agreement and the Option are subject to the transfer
restrictions and other provisions set forth in the Stockholders Agreement.
SECTION 9. Severability. Whenever possible, each provision of
this Agreement shall be interpreted so as to be effective and valid under
applicable law. If any provision of this Agreement is held to be prohibited by
or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the
remainder of this Agreement.
SECTION 10. Headings. The descriptive headings of this
Agreement are inserted for convenience of reference only and do not constitute
a part of and shall not affect the interpretation of this Agreement.
SECTION 11. Notices. Any notices required or permitted to be
sent hereunder shall be delivered by hand, by telex or telecopier, or by
certified or registered mail, postage prepaid and return receipt requested, or
delivered by overnight courier service to the following addresses, or such
other address as any party hereto designates by written notice to the Company.
Notices shall be deemed to have been given upon delivery, if delivered by hand,
three days after mailing, if mailed,
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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:
If to the Company, to:
Bayard Drilling Technologies, Inc.
Suite 400E, Lakepoint Towers
0000 Xxxxxxxxx Xxxxxxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attn: President
(000) 000-0000 (fax)
If to the Investor, to:
Chesapeake Energy Corporation
P. O. Xxx 00000
Xxxxxxxx Xxxx, Xxxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxx
(000) 000-0000 Ext. 232
(000) 000-0000 (fax)
SECTION 12. Governing Law. This Agreement shall be governed in
accordance with the laws of the State of Delaware, without giving effect to the
choice of law principles thereof.
SECTION 13. Entire Agreement. This Agreement constitutes the
entire agreement of the parties concerning the transactions contemplated
hereby, and supersedes all prior agreements and understandings, written or
oral, regarding the subject matter hereof.
SECTION 14. Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so executed and
delivered shall be deemed an original, and all of which together shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement
as of the date first above written.
COMPANY:
BAYARD DRILLING TECHNOLOGIES, INC.
By: /s/ XXXXX X. XXXXX
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Name:
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Title:
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INVESTOR:
CHESAPEAKE ENERGY CORPORATION
By: /s/ XXXXXX X. XXXXXXXXX
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Name:
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Title:
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EXHIBIT A
