MEMBERSHIP INTEREST PURCHASE AGREEMENT

Exhibit 2.1

 

MEMBERSHIP INTEREST PURCHASE AGREEMENT

 

THIS MEMBERSHIP INTEREST PURCHASE AGREEMENT (this “Agreement”) is made and entered into effective as of the 30^th day of June, 2005, by and among CKB LIMITED PARTNERSHIP, an Oklahoma limited partnership (“CKB”), JEROLD WILSON, LP, an Oklahoma limited partnership (“Wilson”), and BRONCO DRILLING COMPANY, L.L.C., an Oklahoma limited liability company (“Bronco”). CKB, Wilson and Bronco may be separately referred to in this Agreement as a “Party” or collectively as the “Parties”.

 

WITNESSETH:

 

WHEREAS, CKB and Wilson presently own fifty-six percent (56%) of the issued and outstanding membership interests and units in STRATA DRILLING, L.L.C., an Oklahoma limited liability company (“Drilling”), and STRATA PROPERTY, L.L.C., an Oklahoma limited liability company (“Property”);

 

WHEREAS, Bronco desires to acquire from CKB and Wilson, and CKB and Wilson desire to sell to Bronco, all of their respective membership interests and units in Drilling and Property, subject to the terms and conditions described in this Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements described in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

 

1. SALE OF MEMBERSHIP INTERESTS. Subject to the terms and conditions of this Agreement, CKB and Wilson agree to sell, assign and transfer to Bronco, and Bronco agrees to acquire and purchase from CKB and Wilson, all of their respective membership interests and units in: (i) Drilling, which represents fifty-six percent (56%) of the issued and outstanding membership interests and units in Drilling, together with any and all rights, privileges and interests resulting from, associated with or arising from such interests and units (collectively, the “Drilling Interests”); and (ii) Property, which represents fifty-six percent (56%) of the issued and outstanding membership interests and units in Property, together with any and all rights, privileges and interests resulting from, associated with or arising from such interests and units (collectively, the “Property Interests”, with the Drilling Interests being collectively referred to as the “Membership Interests”).

 

2. PURCHASE PRICE. The aggregate purchase price to be paid by Bronco to CKB and Wilson for the Membership Interests (the “Purchase Price”) shall be Thirteen Million Nine Hundred Sixty-eight Thousand Seven Hundred Ninety-eight and 62/100 Dollars ($13,968,768.62), decreased by the amounts set forth in Section 5.8 paid by Bronco and/or Drilling after the Closing Date toward the cost of constructing Rig #3 (as hereafter defined), which amount shall be paid as follows at Closing (as hereafter defined) and allocated in accordance with Section 6.2:

 

2.1 Cash at Closing. Bronco shall pay to CKB and Wilson in cash or certified funds at Closing the amount of Six Million Nine Hundred Sixty-eight Thousand Seven Hundred Ninety-eight and 62/100 Dollars ($6,968,768.62) (the “Cash Purchase Price”), allocated in accordance with Section 6.2.

2.2 Self Adjusting Promissory Note. Bronco shall execute and deliver to CKB and Wilson at Closing non-negotiable self adjusting promissory notes (the “Non-Cash Purchase Price”) totaling up to an amount not to exceed Seven Million and No/100 Dollars ($7,000,000.00) (the “Notes”), in the form of Exhibits B and C attached hereto, along with Security Agreement (the “Security Agreement”), in the form of Exhibits D attached hereto, giving CKB and Wilson a prior perfected security interest in and to Rig #3, defined herein, and any other collateral security documents reasonably requested by CKB and Wilson to secure the indebtedness created by the Note with Rig #3 (collectively, the “Loan Documents”), allocated in accordance with Section 6.2.

 

3. PURCHASE OF RESTRICTED INTERESTS. Bronco understands the Membership Interests are being respectively sold, assigned and transferred under an exemption from registration provided by the Securities Act of 1933, as amended (the “Act”), and by applicable state securities acts, and warrants and represents to CKB and Wilson that the Membership Interests being acquired are solely for its own account for investment purposes only, and are not being purchased with a view to, or for the resale, distribution, subdivision or fractionalization thereof, and that Bronco must bear the economics associated with the acquired Membership Interests for an indefinite period of time because such interests cannot be resold or otherwise transferred unless subsequently registered under the Act, or unless an exemption from registration is available. Further, Bronco acknowledges and understands that any certificate that may be issued to Bronco evidencing the Membership Interests will bear substantially the following legend:

 

The units represented by this Certificate have not been registered under the United States Securities Act of 1933 (the “Act”) or registered or qualified under any state securities laws and are “restricted securities” as that term is defined in Rule 144 under the Act. The units may not be offered for sale, sold or otherwise transferred except pursuant to an effective registration statement under the Act, or pursuant to an exemption from registration under the Act or state securities laws, the availability of which is to be established to the satisfaction of [Property or Drilling]. In addition, the rights and obligations of the holder of this Certificate, and the ability of the holder to transfer the units represented by this Certificate, are subject to the approval of the Members of [Property or Drilling] and other restrictions, terms and conditions of the [Operating Agreement of Property or Amended and Restated Operating Agreement of Drilling], a copy of which can be obtained from [Property or Drilling] upon written request.

 

4. REPRESENTATIONS AND WARRANTIES OF CKB AND WILSON. CKB and Wilson hereby, jointly and severally, represent and warrant to Bronco that the following statements are true and correct as of the date of this Agreement and will be true and correct as of the Closing Date.

 

4.1 Representations and Warranties of CKB and Wilson.

 

(a) Organization. CKB and Wilson are limited partnerships duly organized, validly existing and in good standing under the laws of the State of Oklahoma and are duly registered or qualified to do business and in good standing in each jurisdiction in which the nature of its respective business or properties requires such registration or qualification, except

 

- 2 -

where the failure to so register or qualify would have a Material Adverse Effect (defined below). C. Keith Barr, Trustee of the C. Keith Barr Revocable Trust u/a/d November 25, 1998 (the “Barr Trust”) and Jerold Wilson are the general partners of CKB and Wilson, respectively.

 

(b) Authority. CKB and Wilson and their respective general partners have full power and authority to execute and deliver, and to perform its respective duties and obligations under, this Agreement and each other agreement, document and instrument to be executed or delivered by CKB or Wilson contemplated by this Agreement (“Seller Documents”). The execution and delivery of, the performance of its respective obligations under, and the consummation of the transactions contemplated by, this Agreement and any Seller Document, have been duly authorized by all necessary action on the part of CKB and Wilson and their respective general partners and limited partners. This Agreement is, and the Seller Documents will constitute, the legal, valid and binding obligation of CKB and Wilson and is, and the Seller Documents will be, enforceable against such Party in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, or other similar laws affecting the enforcement of creditors’ rights generally and except that the availability of equitable remedies, including specific performance, may be subject to the discretion of the court before which any proceeding may be brought.

 

(c) No Conflicts; Consents. The execution and delivery of this Agreement and each Seller Document and the consummation of the transactions contemplated by this Agreement and the Seller Documents will not: (i) violate or conflict with any provision of the organizational documents, as amended, of CKB or Wilson or of their respective general partners; (ii) violate or conflict with any constitution, statute, regulation, rule, injunction, judgment, order, permit, decree, ruling, charge, or other restriction of any government, governmental agency, court or arbitrator to which CKB or Wilson, or their respective general partners, the Membership Interests or their respective assets are subject; (iii) conflict with, result in a breach of, constitute a default under (or with notice or the lapse of time or both could result in a breach of or constitute a default), result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice or consent under any agreement, contract, lease, license, instrument, or other arrangement to which CKB or Wilson, or their respective general partners, is a party or bound or to which any of their respective assets are subject; (iv) that could result in the creation or imposition of any lien, security interest or encumbrance in, to or on the Membership Interests or any asset of CKB or Wilson, or their respective general partners; or (v) require CKB or Wilson to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency, creditor or other third party in order to consummate the transactions contemplated by this Agreement or the Seller Documents.

 

(d) Litigation. There are no claims, demands, filings, hearings, notices of violation, proceedings, notices or demand letters, investigations, administrative proceedings, civil, criminal or other actions, litigation, suits, mediations, arbitrations or other legal proceedings pending or threatened against CKB or Wilson, or their respective general partners, relating to, involving or affecting the Membership Interests or that would seek to question, delay, prevent or materially impair the ability of CKB or Wilson, or their respective general partners, to perform their respective duties or obligations under, or to consummate the transactions contemplated by, this Agreement.

 

- 3 -

(e) Title. CKB and Wilson are the lawful and record owner of, and have good and marketable title to, the Membership Interests, free and clear of all liens, restrictions, claims, charges, security interests and encumbrances (contractual or otherwise) of any kind, nature or type whatsoever.

 

(f) Assets Other than Real Property Interests. Set forth in Schedule 4.1(f)(i) hereto is a complete list of all items of tangible personal property owned by Drilling and/or Property as of the Closing Date, not including the Excluded Assets. Set forth in Schedule 4.1(f)(ii) hereto is a complete list of all items of tangible personal property owned by Drilling and/or Property prior to the Closing Date, and that, as of the Closing Date (as hereafter defined), shall be transferred by Drilling and/or Property to CKB, Wilson or an entity designated prior to the Closing Date by CKB and Wilson (collectively, the “Excluded Assets”). On or prior to the Closing Date, subject to the rights of the Members of Property and Drilling (including, without limitation, rights to distributions) and other restrictions, terms and conditions of the Operating Agreement of Property or Amended and Restated Operating Agreement of Drilling, as each may have been amended through the Closing Date, CKB and Wilson shall have the right, at their own expense and at their own risk, to withdraw all of the Excluded Assets from Drilling and Property.

 

(g) Retained Liabilities. CKB and Wilson shall be responsible for and shall pay any and all liabilities, including, but not limited to, accounts payables, payroll and payroll tax liabilities of Drilling and Property incurred prior to the period ending as of 10:00 p.m. Central Standard Time on Sunday, July 17, 2005 (the “Cut-off Date”).

 

(h) Taxes. CKB and Wilson have duly and timely filed all tax returns and reports required to be filed by such Party prior to the date of this Agreement (collectively, the “Returns”) and have duly and timely paid all taxes that have been incurred or are due and payable pursuant to such Returns or pursuant to any assessment with respect to taxes in such jurisdictions, whether or not in connection with such Returns. No deficiency or proposed adjustment which has not been settled or otherwise resolved for any amount of tax has been proposed, asserted or assessed by any taxing authority against CKB or Wilson. There is no action, suit, taxing authority proceeding, or audit now in progress, pending or threatened against CKB or Wilson, and there are no liens for taxes (other than for current taxes not yet due and payable) against such Party.

 

(i) No Pending Transactions. Except for this Agreement and except for the restrictions, terms and conditions of the Operating Agreement of Property or Amended and Restated Operating Agreement of Drilling, as each may have been amended through the Closing Date, which has been previously provided to Bronco, neither CKB nor Wilson are a party to or bound by (1) any agreement, undertaking, commitment, Contract to sell, transfer, or otherwise dispose of any equity interest in Drilling or Property nor (2) any other Contract with respect to any equity securities of Property or Drilling.

 

(j) Solvency. No insolvency proceedings of any character, including, without limitation, bankruptcy, receivership, reorganization, composition or arrangement with creditors, voluntary or involuntary, involving CKB or Wilson (or any of their respective general or limited partners) as a debtor are pending, or to CKB and Wilson’s knowledge, threatened, and neither

 

- 4 -

CKB nor Wilson (or any of their respective general or limited partners) has made any assignment for the benefit of creditors or taken any action with a view to, or which would constitute the basis for the institution of, any such insolvency proceedings. After giving effect to the transactions contemplated by this Agreement (i) the fair market value of the assets retained by each of CKB and Wilson will exceed the amount that will be required to be paid on or in respect of the existing debts and other liabilities (including contingent liabilities) retained by each of CKB and Wilson as they mature, (ii) the assets of each of CKB and Wilson will not constitute unreasonably small capital to carry out its business as conducted or as proposed to be conducted, including the capital needs of each of CKB and Wilson, (iii) neither CKB nor Wilson intends to incur debts beyond its ability to pay such debts as they mature, (iv) neither CKB nor Wilson have made any conveyance or transfer and has not incurred any obligation with any intent to hinder, delay or defraud any of its creditors or any other entity or person, and (v) CKB and Wilson acknowledge that the transactions contemplated by this Agreement have been entered into on terms which are commercially reasonably.

 

4.2 Representations and Warranties Regarding Drilling and Property.

 

(a) Organization. Each of Drilling and Property is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Oklahoma and has all requisite limited liability company power and authority to own, lease and operate its properties and to carry on its business as now being conducted, to own or use the properties and assets that it purports to own or use and to perform all of its obligations under the Material Contracts (as defined herein). Each of Drilling and Property is duly qualified to do business as a foreign corporation, and is in good standing, in each jurisdiction where the character of its properties owned or held under lease or the nature of its activities make such qualification necessary, except where the failure to be so qualified and in good standing would not, individually or in the aggregate, have a Material Adverse Effect. True, correct and complete copies of the charter documents and operating agreements of each of Drilling and Property have been furnished to Bronco and such documents reflect all amendments made thereto at any time prior to the date of this Agreement. For all purposes herein, “Material Adverse Effect” shall mean any state or states of fact, condition or conditions, event or events, circumstance or circumstances, change or changes, or effect or effects that individually or in the aggregate (including, without limitation, an aggregate combination of one or more of the foregoing whether or not related to each other or involving or affecting the same or different representations, warranties and/or covenants) are materially adverse to (a) the business, condition (financial or otherwise), results of operations or prospects of the business or the assets of Drilling and Property or (b) the ability of CKB or Wilson to, or their respective general partners, consummate the transactions contemplated by this Agreement.

 

(b) No Conflicts; Consents. The execution and delivery of this Agreement and each Seller Document and the consummation of the transactions contemplated by this Agreement and the Seller Documents will not: (i) violate or conflict with any provision of the organizational documents, as amended, of Drilling or Property; (ii) violate or conflict with any constitution, statute, regulation, rule, injunction, judgment, order, permit, decree, ruling, charge, or other restriction of any government, governmental agency, court or arbitrator to which Drilling or Property or their respective assets are subject; (iii) conflict with, result in a breach of, constitute a default under (or with notice or the lapse of time or both could result in a breach of

 

- 5 -

or constitute a default), result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice or consent under any agreement, contract, lease, license, instrument, or other arrangement to which Drilling or Property is a party or bound or to which any of their respective assets are subject; (iv) that could result in the creation or imposition of any lien, security interest or encumbrance in, to or on the Real Property (defined below) or any other asset of Drilling or Property; or (v) require Drilling or Property to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency, creditor or other third party in order to consummate the transactions contemplated by this Agreement or the Seller Documents.

 

(c) Compliance with Laws and Permits. To the knowledge of CKB and Wilson, Drilling and Property have conducted their respective business so as to materially comply with, and are in material compliance with, all applicable laws, rules and regulations, of all applicable governmental authorities, including, without limitation, any applicable laws, rules, regulations, ordinances, codes, orders, judgments or decrees as to hiring, employment, environmental, health and/or safety matters, the noncompliance with which could have a Material Adverse Effect. To their knowledge, each of Drilling and Property has all of the licenses, permits and other governmental authorizations required for the operation of the business of Drilling and Property as conducted as of the date of this Agreement (the “Permits”), each of which is identified on Schedule 4.2(c).

 

(d) Financial Statements and Books and Records.

 

(i) CKB and Wilson have delivered to Bronco copies of the May 31, 2005 balance sheet of Drilling and Property, as attached hereto as Schedule 4.2(d) (the “Balance Sheet”). The Balance Sheet fairly presents the financial position of Drilling and Property as of its date and has been prepared in conformity with generally accepted accounting principles applied on a consistent basis. The books and records of Drilling and Property are complete and correct in all material respects.

 

(ii) CKB and Wilson have delivered to Bronco copies of income statements of Drilling and Property for the 12-month periods ended December 31, 2004 and 2003 (or such portion of such periods as Property was in existence) and for the five-month periods ended May 30, 2005 and 2004, as attached hereto as Schedule 4.2(d) (the “Income Statements”). The Income Statements fairly present the results of operations of Drilling and Property for the periods covered thereby and have been prepared in conformity with generally accepted accounting principles applied on a consistent basis, except as otherwise noted therein and, with respect to the interim Income Statements, except for footnotes and for normal year-end adjustments the effect of which, in the aggregate, would not be material.

 

(iii) Except as set forth in Schedule 4.2(d), neither Drilling nor Property has any liability or obligation of any kind or nature (fixed or contingent) that is required to be reflected on a Balance Sheet or described in the accompanying footnotes, in accordance with generally accepted accounting principles, which is not reflected, reserved against or disclosed in the Balance Sheets and accompanying footnotes, except

 

- 6 -

for customary accounts payable and accrued business expenses incurred since May 31, 2005 in the ordinary and customary course of business.

 

(e) Absence of Certain Changes or Events. Except as set forth in Schedule 4.2(e), since May 31, 2005, neither Drilling nor Property has (a) suffered any damage, destruction or casualty loss adversely affecting the assets or the business of Drilling or Property; (b) incurred or discharged any obligation or liability or entered into any other transaction except in the ordinary course of business; (c) suffered any change in its business, financial condition or in its relationship with its suppliers, customers, distributors, lessors, licensors, licensees or other third parties; (d) increased the rate or terms of compensation or benefits payable to or to become payable by it to its directors, officers or employees or increased the rate or terms of any bonus, pension or other employee benefit plan covering any of its directors, officers or employees; (e) incurred any indebtedness for borrowed money; (f) forgiven or canceled any indebtedness owing to it or waived any claims or rights of value, (g) sold, leased, licensed or otherwise disposed of any of its assets; (h) created or assumed any mortgage, lien security interest or other encumbrance on any of the assets or Real Property; (i) entered into, amended or terminated any Material Contract or Permits; (j) suffered any Material Adverse Effect; or (k) committed pursuant to a legally binding agreement to do any of the foregoing.

 

(f) Membership Interest. The authorized, issued and outstanding equity interest of Drilling and Property and any other subsidiary of Drilling and Property and the legal owner of such equity interest is set forth on Schedule 4.2(f) hereto (“Equity Interests”). The Drilling Interests represent fifty-six percent (56%) of the issued and outstanding membership interests and units in Drilling, and the Property Interests represent fifty-six percent (56%) of the issued and outstanding membership interests and units in Property. All of the issued and outstanding Equity Interest: (a) have been duly authorized and are validly issued and fully paid, (b) were issued in compliance with all applicable state and federal securities laws, (c) were not issued in breach of any (i) options, warrants, convertible securities, exchangeable securities, subscription rights, conversion rights, exchange rights, or other Contracts that could require a person to issue any of its equity interests or to sell any equity interests it owns in another person; (ii) other securities convertible into, exchangeable or exercisable for, or representing the right to subscribe for any equity interest of a person or owned by a person; (iii) statutory pre-emptive rights or other pre-emptive rights; and (iv) stock appreciation rights, phantom stock, profit participation, or other similar rights (“Commitments”), and (d) are held of record by the respective owners as set forth in Schedule 4.2(f). No additional Commitments will arise in connection with the consummation of the transactions contemplated by this Agreement. There are no Contracts with respect to the voting, transfer or issuance of the Equity Interests. Neither Drilling nor Property are obligated to redeem or otherwise acquire any of its outstanding Equity Interests.

 

(g) Indebtedness. Schedule 4.2(g) sets forth a complete and accurate list and description of all instruments or other documents relating to any direct or indirect indebtedness for borrowed money of Drilling or Property, including any loan agreements, indentures, mortgages, pledges, hypothecations, deeds of trust, conditional sale or title retention agreements, security agreements, equipment financing obligations or guaranties, or other sources of contingent liability in respect of any indebtedness or obligations to any other person, or letters of intent or commitment letters with respect to same as well as indebtedness by way of

 

- 7 -

lease-purchase arrangements, guarantees, undertakings on which others rely in extending credit and all conditional sales contracts, chattel mortgages and other security arrangements with respect to personal property used or owned by Drilling or Property (collectively “Indebtedness”). Bronco has requested, and CKB and Wilson have made available to Bronco a true, correct, and complete copy of each of the items listed on Schedule 4.2(g).

 

(h) Real Property. Set forth in Schedule 4.2(h) hereto is a complete and accurate description of each parcel of real property owned by Drilling or Property (“Real Property”), including any leases, easements, covenants, rights of way or similar restrictions, and Drilling and Property does not own, lease nor occupy any other real property. Drilling or Property, as the case may be, has good and indefeasible fee simple title to the Real Property, free and clear of any order, security interest, contract, arrangement, letter of intent, promise, obligation, right, instrument, document, or other similar understanding, whether written or oral (“Contract”), easement, covenant, community property interest, equitable interest, right of first refusal, or restriction of any kind, including any restriction on use, voting, transfer, receipt of income, or exercise of any other attribute of ownership (“Encumbrances”) except for special assessments not yet delinquent and recorded easements or covenants which do not impair the current use, occupancy, value, or the marketability of title of the Real Property. There are no pending or threatened actions (or any basis therefor) relating to the property or other matters affecting adversely the current use, occupancy, or value of the Real Property. Except as set forth in Schedule 4.2(h), the buildings and all fixtures and improvements located on the Real Property are in good operating condition, ordinary wear and tear excepted. Drilling and Property, as the case may be, has received all permits, licenses, certificates, approvals, consents, notices, waivers, franchises, registrations, filings, or other similar authorizations required by any applicable law, governmental body or Contract, required in connection with the ownership or operation of the Real Property and all facilities thereon. Drilling and Property are not in violation of any zoning, building or safety ordinance, regulation or requirement or other law or regulation applicable to the operation of such properties, the violation of which may have a Material Adverse Effect, and Drilling or Property have not received any notice of violation with which it has not complied or is not taking steps to comply. Copies of all such notices and permits are attached hereto as Schedule 4.2(h).

 

(i) Title to Assets. Drilling or Property has good and indefeasible title to all of the assets, properties and rights that it owns or purports to own, free and clear of all Encumbrances, except Permitted Liens. Drilling or Property has a valid leasehold interest or a royalty-free license to all of the assets, properties and rights that it leases or licenses or purports to lease or license. As used in this Agreement, the term “Permitted Liens” shall mean and include (i) those exceptions to title to the properties and assets of Drilling and Property listed in Schedule 4.2(i); (ii) statutory liens for current taxes or assessments not yet due or delinquent; and (iii) mechanics’, carriers’, workers’, repairers’ and other similar statutory Liens arising or incurred in the ordinary course of business relating to obligations as to which there is no default on the part of Drilling or Property.

 

(j) Adequacy of Assets. Each asset is free from defects (patent and latent), has been maintained in accordance with normal industry practice, is in good and safe operating condition and repair (ordinary wear and tear excepted), and are adequate for the uses to which they are being put.

 

- 8 -

(k) Contracts. Schedule 4.2(k) sets forth all contracts, agreements and other arrangements (including purchase orders) of CKB, Wilson, Drilling or Property affecting the business of Drilling or Property or any of their respective assets or Real Property (a) involving the Indebtedness; (b) that provide for payment or performance obligations by either party thereto having an aggregate value in excess of $5,000 in any single year or having a term of more than one year; (c) leases of real property; (d) leases of personal property (other than those which provide for annual payments of less than $5,000 individually or in the aggregate and which are cancelable without penalty on notice of ninety (90) days or less); (e) employment agreements, management service agreements, consulting agreements, confidentiality agreements, noncompetition agreements, employee handbooks, policy statements and any other agreements relating to any employee, officer or director of Drilling or Property; (f) licenses, assignments or transfers of trademarks, trade names, service marks, patents, copyrights, trade secrets or know how, or other agreements regarding proprietary rights or intellectual property; (g) any contract relating to pending capital expenditures by Drilling or Property; (h) contracts obligating Drilling or Property to purchase supplies, equipment, advertising, media or other services of any kind (other than those which provide for annual payments of less than $5,000 individually or in the aggregate and which are cancelable without penalty on notice of thirty (30) days or less); (i) any non-competition agreements restricting Drilling or Property in any manner; (j) any contracts obligating Drilling or Property to make payments in excess of $5,000 individually or in the aggregate over the remaining terms of such contract; and (k) all other material contracts, agreements or understandings, irrespective of subject matter and whether or not in writing, and not otherwise disclosed on Schedule 4.2(k) (collectively, the “Material Contracts”). There is not, under any of the Material Contracts, any existing default or event of default which, with or without due notice or lapse of time or both, would constitute a material default or event of default on the part of CKB, Wilson, Drilling or Property. Except as set forth in Schedule 4.2(k)_; no consents are required under any Material Contract for the consummation of the transactions contemplated by this Agreement and the Seller Documents other than consents set forth on Schedule 4.2(k). Each Material Contract is in full force and effect and is a valid and binding obligation of Drilling or Property and, to the knowledge of CKB and Wilson, each other party thereto, and is enforceable in accordance with its terms, and will immediately following the Closing be valid, binding and enforceable by Bronco as assignee thereof in accordance with its terms, except as any such enforceability may be limited by the effect of bankruptcy, insolvency or similar laws affecting creditors’ rights generally or by general principles of equity.