<PAGE> 1
As filed with the Securities and Exchange Commission on November 4, 1997
Registration No. 33-_______
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________
POST-EFFECTIVE AMENDMENT NO. 2
TO
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
________________
PATTERSON ENERGY, INC.
(Exact name of registrant as specified in its charter)
Delaware 75-2504748
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
4510 Lamesa Highway, Snyder, Texas 79549
(Address of Principal Executive Offices) (ZIP Code)
PATTERSON ENERGY, INC.
1993 STOCK INCENTIVE PLAN, AS AMENDED (THE "PLAN")
(Full title of the plan)
CLOYCE A. TALBOTT
4510 LAMESA HIGHWAY
SNYDER, TX 79549
(Name and address of agent for service)
(915) 573-1104
(Telephone number, including area code, of agent for service)
COPIES TO:
JAMES C. BROWN, VICE PRESIDENT--FINANCE THOMAS H. MAXFIELD, ESQ.
4510 LAMESA HIGHWAY BAKER & HOSTETLER LLP
SNYDER, TEXAS 79549 303 EAST 17TH AVENUE, SUITE 1100
DENVER, COLORADO 80203
================================================================================
<PAGE> 2
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Information required by Part I to be contained in Section 10(a)
prospectus is omitted from this Registration Statement in accordance with Rule
428 adopted by the Securities and Exchange Commission under the Securities Act
of 1933 (the "Securities Act) and the Note to Part I of Form S-8.
<PAGE> 3
PROSPECTUS
700,000 SHARES
PATTERSON ENERGY, INC.
COMMON STOCK
Patterson Energy, Inc., a Delaware corporation (the "Company"), is
registering for possible future resale, from time to time, by the holders
thereof (the "Selling Stockholders"), who may be deemed to be "affiliates" of
the Company within the meaning of the rules and regulations under the
Securities Act of 1933, as amended, 700,000 shares (the "Shares") of the
Company's common stock, par value $0.01 per share (the "Common Stock"). See
"Selling Stockholders." The Shares are those that may be acquired by Selling
Stockholders upon exercise of options (the "Options") granted to Selling
Stockholders under the 1993 Stock Incentive Plan, as amended (the "Plan"), of
the Company. The Company will not receive any proceeds from the sale of the
Shares.
The Common Stock is traded on the Nasdaq National Market under the
symbol "PTEN." On November 3, 1997, the closing sales price of the Common
Stock was $56.625 per share.
_____________________________
PROSPECTIVE PURCHASERS OF COMMON STOCK SHOULD CONSIDER CAREFULLY THE MATTERS
SET FORTH UNDER "RISK FACTORS" BEGINNING ON PAGE 5.
_____________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
_____________________________
The Selling Stockholders may offer the Shares offered hereby from time
to time to purchasers directly or through agents, brokers or dealers. The
Shares may be sold at market prices prevailing at the time of sale or at
negotiated prices. The agents, brokers or dealers through whom sales are made
may be deemed to be "underwriters" within the meaning of the Securities Act of
1933, as amended, (the "Securities Act") and any amounts received by them in
exchange for their services in connection with such sales may be deemed to be
underwriting commissions. See "Plan of Distribution."
November 4, 1997
<PAGE> 4
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OFFERED HEREBY BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements, and other information may be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, as well as at the
following regional offices: 7 World Trade Center, Suite 1300, New York, New
York 10048, and Citicorp Center, Suite 1400, 500 West Madison Street, Chicago,
Illinois 60661-2511. Copies of such materials may be obtained at prescribed
rates from the Public Reference Section of the Commission at Judiciary Plaza,
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. The Company's
Common Stock is traded on the Nasdaq National Market. The foregoing materials
can also be inspected at the National Association of Securities Dealers, Inc.,
1735 K. Street, N.W., Washington, D.C. 20006.
The Company has also filed with the Commission a Registration
Statement on Form S-8 (together with all amendments and exhibits thereto, the
"Registration Statement") under the Securities Act with respect to the Shares
offered hereby. This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information pertaining to the Company and the Shares offered hereby, reference
is made to the Registration Statement, copies of which may be inspected without
charge at the public reference facilities maintained by the Commission at
Judiciary Plaza, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and
copies of which may be obtained from the Commission upon payment of the
prescribed fees.
In addition, the Commission maintains a web site that contains
reports, proxy and information statements, and other information regarding
registrants that file electronically with the Commission. The Company is such
a filer. The Commission's web site address is (http://www.sec.gov).
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission, are hereby incorporated by reference into this Prospectus:
a) The Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996.
b) The Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1997.
c) The Company's Current Report on Form 8-K dated July
30, 1996, and filed with the Commission on August 2,
1996, as amended by Form 8-K/A dated July 30, 1996,
and filed with the Commission on August 15, 1996, as
further amended by Form 8-K/A dated July 30, 1996,
and filed with the Commission on September 27, 1996.
d) The Company's Current Report on Form 8-K dated
January 3, 1997, and filed with the Commission on
January 16, 1997.
e) The Company's Current Report on Form 8-K dated
January 7, 1997, and filed with the Commission on
January 8, 1997.
f) The Company's Current Report on Form 8-K dated
January 27, 1997, and filed with the Commission on
February 12, 1997.
g) The Company's Current Report on Form 8-K dated May 7,
1997, and filed with the Commission on May 19, 1997.
h) The Company's Current Report on Form 8-K dated June
3, 1997, and filed with the Commission on June 11,
1997.
i) The Company's Current Report on Form 8-K dated June
12, 1997, and filed with the Commission on June 19,
1997, as amended by Form 8-K/A dated June 12, 1997,
and filed with the Commission on August 12, 1997.
j) The Company's Current Report on Form 8-K dated July
1, 1997, and filed with the Commission on July 15,
1997.
k) The Company Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997, and filed with the
Commission on August 14, 1997.
l) The Company's Current Report on Form 8-K dated July
24, 1997, and filed with the Commission on August 26,
1997.
m) The Company's Current Report on Form 8-K dated August
5, 1997, and filed with the Commission on August 26,
1997.
n) The description of the Company's Common Stock
contained in the Company's Registration Statement on
Form 8-A filed with the Commission under the Exchange
Act.
All documents filed by the Company after the date of this Prospectus
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act and prior to
the termination of the offering hereunder shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the date of filing
of such documents. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or
is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide, without charge to each person to whom a copy
of this Prospectus is delivered, upon the written or oral request of any such
person, a copy of any or all of the documents incorporated herein by reference,
other than exhibits to such documents (unless such exhibits are specifically
incorporated by reference in such documents). Written requests for such copies
should be directed to James C. Brown, Vice President - Finance, Patterson
Energy, Inc., at the Company's principal executive offices located at 4510
Lamesa Highway, Snyder, Texas 79549. Telephone requests may be directed to Mr.
Brown at (915) 573-1104.
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THE COMPANY
The Company is engaged in onshore contract drilling for oil and
natural gas, and, to a lesser extent in the exploration, development and
production of oil and natural gas. The Company owns 90 drilling rigs, 85 of
which are currently operable, and, at June 30, 1997, leasehold interests in
approximately 59,750 gross (8,836 net) developed acres, 353 gross (88 net)
productive wells, and 122,029 gross (28,398 net) undeveloped acres. The
Company's operations are conducted in the Permian Basin in West Texas and
Southeastern New Mexico, in South and Southeast Texas, primarily in the Austin
Chalk Trend, and in the Hardeman Basin in North Texas. The Company was
organized as a Texas corporation in January 1978 and was reorganized as a
Delaware corporation in 1993.
RECENT ACQUISITIONS
Since December 31, 1996, the Company has acquired a total of 29
drilling rigs in three separate transactions. All of the rigs were fully
operable at the time of acquisition. The rigs are mechanical with depth
ratings from 7,000 to 15,000 feet. These acquisitions have expanded the
Company's drilling rig fleet from 60 drilling rigs to 90 drilling rigs (85 of
which are currently operable). The following subparagraphs set forth a brief
description of each of the transactions:
-- Five drilling rigs, together with related equipment,
two rig-hauling trucks, an office, shop and a yard
located in Hobbs, New Mexico, were acquired in April
1997 from a privately-held company based in Hobbs in
consideration for a total of $5.5 million in cash.
These five rigs were added to the Company's drilling
rig fleet during April.
-- Twenty-one drilling rigs, together with related
equipment, rig-hauling trucks and trailers and a yard
and shop located in Abilene, Texas, were acquired
from Wes-Tex Drilling Company ("Wes- Tex") in June
1997 for a purchase price of approximately $35.4,
consisting of $25 million in cash, 566,000 shares of
Common Stock of the Company valued at $15.75 per
share, and a three- year stock purchase warrant
valued at $3.12 per share to purchase an additional
400,000 shares of the Company's Common Stock
exercisable at $16.00 per share and approximately
$190,000 of other direct costs incurred relative to
the transaction. These 21 rigs were added to the
Company's drilling rig fleet during June. Wes-Tex is
a privately held company based in Abilene, Texas.
-- Three drilling rigs, together with related drilling
equipment and a vehicle were acquired in August 1997
from a privately held company based in Midland, Texas
in consideration for a cash payment of $4.25 million.
These rigs were added to the Company's drilling rig
fleet in August.
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RISK FACTORS
In addition to the other information contained in, or incorporated by
reference into, this Prospectus, prospective purchasers in this offering should
carefully consider the following factors relating to the Company and its
businesses and the oil and natural gas industry when evaluating an investment
in the shares offered hereby.
VOLATILITY OF OIL AND NATURAL GAS PRICES. The Company's revenue,
profitability and future rate of growth are substantially dependent upon
prevailing prices for oil and natural gas, both with respect to its contract
drilling operations and its oil and natural gas operations. In recent years,
oil and natural gas prices and, therefore, the level of drilling, exploration,
development and production, have been extremely volatile. Prices are affected
by market supply and demand factors as well as actions of state and local
agencies, the U.S. and foreign governments and international cartels. All of
these factors are beyond the control of the Company. Any significant or
extended decline in oil and/or natural gas prices will have a material adverse
effect on the Company's financial condition and operations and could impair
access to sources of capital.
MARKET CONDITIONS FOR CONTRACT DRILLING SERVICES. The contract
drilling business has experienced increased demand for drilling services since
approximately 1995 due to stronger oil and natural gas prices. However, the
market for onshore contract drilling services was generally depressed between
mid-1982, when crude oil and natural gas prices began to weaken, and
approximately 1995. A particularly sharp decline in demand for contract
drilling services occurred in 1986 because of the worldwide collapse in oil
prices (to approximately $10.00 per Bbl in April 1986 in the U.S.). Since this
time and except during the occasional upturns, there have been substantially
more drilling rigs available than necessary to meet demand in most operating
and geographic segments of the domestic drilling industry. As a result,
drilling contractors have had difficulty sustaining profit margins. In
addition to adverse effects that future declines in demand could have on the
Company, ongoing movement or reactivation of onshore drilling rigs or new
construction of drilling rigs could adversely affect rig utilization rates and
pricing, even in an environment of stronger oil and natural gas prices and
increased drilling activity. The Company cannot predict either the future
level of demand for its contract drilling services or future conditions in the
contract drilling industry.
SEVERE SHORTAGE OF DRILL PIPE IN THE CONTRACT DRILLING INDUSTRY.
There continues to be a severe shortage of drill pipe in the contract drilling
industry in the U.S. This shortage has caused the price of drill pipe to
increase significantly over the past approximate 40 months and has required
orders for new drill pipe to be placed at least one year in advance of expected
use. The price increase and the delay in delivery has caused the Company to
substantially increase capital expenditures in its contract drilling segment
over the past approximate 40 months, primarily with respect to new drill pipe
purchases. In the event the shortage continues, the Company may be unable to
obtain the drill pipe required for its contract drilling operations.
RECENT RAPID GROWTH; ASSOCIATED RISKS. The Company has experienced
rapid and substantial growth over the past four years, particularly in its
contract drilling segment, and, if favorable opportunities arise in the future,
intends to further expand its drilling fleet through selected acquisitions.
Continued growth could strain the Company's management, operations, employees
and resources. There can be no assurance that the Company will be able to
manage growth effectively or that it will be successful in maintaining the
market share attributable to operable drilling rigs acquired by the Company.
If the Company is unable to manage its growth, its business, results of
operations or financial condition could be materially adversely affected.
NO ASSURANCE OF ADDITIONAL GROWTH THROUGH ACQUISITIONS. The Company's
growth has been enhanced materially by strategic acquisitions that have
substantially increased the Company's drilling rig fleet. One element of the
Company's strategy is to make acquisitions in markets in which it currently
operates. While the Company believes that the land drilling industry is highly
fragmented and that significant acquisition opportunities are available, there
can be no assurance that suitable acquisition candidates can be found, and the
Company is likely to face competition from other companies for available
acquisition opportunities. In addition, if the prices paid by buyers of
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<PAGE> 8
drilling rigs remain at current levels or continue to rise, the Company may
find fewer acceptable acquisition opportunities. There can be no assurance
that the Company will have sufficient capital resources to complete
acquisitions, that acquisitions can be completed on terms acceptable to the
Company or that any completed acquisition would improve the Company's financial
condition, results of operations, business or prospects in any material manner.
CURRENT SHORTAGES OF QUALIFIED DRILLING RIG PERSONNEL. Increases in
domestic drilling demand since mid-1995 and recent increases in contract
drilling activity have resulted in a shortage of qualified drilling rig
personnel in the industry. If the Company is unable to attract and retain
sufficient qualified personnel, its ability to market and operate its drilling
rigs will be restricted. Further, labor shortages could result in wage
increases, which could reduce the Company's operating margins.
RELIANCE ON KEY PERSONNEL. The Company is highly dependent upon its
executive officers and key employees. The unexpected loss of the services of
any of these individuals, particularly Cloyce A. Talbott or A. Glenn Patterson,
the Chief Executive Officer and the President of the Company, respectively,
could have a detrimental effect on the Company. The Company has no employment
agreements with any of its executive officers. The Company maintains key man
insurance on the lives of Messrs. Talbott and Patterson in the amount of $3
million each.
RISKS OF OIL AND NATURAL GAS EXPLORATION, DEVELOPMENT AND PRODUCTION.
The search for oil and natural gas often results in unprofitable efforts, not
only from dry holes, but also from wells which, though productive, do not
produce oil or natural gas in sufficient quantities to return a profit on the
costs incurred. No assurance can be given that any oil or natural gas reserves
located by the Company in the future will be commercially productive. In
addition, the cost of drilling, completing and operating wells is often
uncertain, and drilling may be delayed or canceled as a result of many factors,
including unacceptably low oil and natural gas prices, oil and natural gas
property title problems, inclement weather conditions and financial instability
of well operators and working interest owners. Furthermore, the availability
of a ready market for the Company's oil and natural gas depends on numerous
factors beyond its control, including demand for and supply of oil and natural
gas, general economic conditions, proximity of natural gas reserves to
pipelines, weather conditions and government regulation.
COMPETITION. The Company encounters intense competition in its
contract drilling operations from other drilling contractors. The competitive
environment for contract drilling services involves such factors as drilling
rates, availability and condition of drilling rigs and equipment, reputation
and customer relations. The Company faces strong competition from major oil
companies, independent oil and natural gas companies and individual producers
and operators in acquiring oil and natural gas leases for exploration and
development. Many of the competitors in each of the Company's lines of
business have substantially greater financial and other resources than the
Company.
OPERATING HAZARDS AND UNINSURED RISKS. Contract drilling and oil and
natural gas activities are subject to a number of risks and hazards which could
cause serious injury or death to persons, suspension of drilling operations and
serious damage to equipment or property of others and, in addition to
environmental damage, could cause substantial damage to producing formations
and surrounding areas. Damages to the environment could result from the
Company's operations, particularly through oil spills, gas leaks, discharges of
toxic gases or extensive uncontrolled fires. In addition, the Company could
become subject to liability for reservoir damages. The occurrence of a
significant event, including pollution or environmental damage, could
materially affect the Company's operations and financial condition. Although
the Company believes that it is adequately insured against normal and
foreseeable risks in its operations in accordance with industry standards, such
insurance may not be adequate to protect the Company against liability from all
consequences of well disasters, extensive fire damage or damage to the
environment. No assurance can be given that the Company will be able to
maintain adequate insurance in the future at rates it considers reasonable or
that any particular types of coverage will be available. Furthermore, a
portion of the Company's contract drilling is done on a turnkey basis, which
involves substantial economic risks. Under turnkey drilling contracts, the
Company contracts to drill a well to a contract depth under specified
conditions for a fixed price. The risks to the Company under this type of
drilling contract are substantially greater than on a
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well drilled on a daywork or footage basis since the Company assumes most of
the risks associated with the drilling operations generally assumed by the
operator of the well in a daywork or footage contract, including risk of
blowout, machinery breakdowns and abnormal drilling conditions. Accordingly,
if severe drilling problems are encountered in drilling wells under a turnkey
contract, the Company could suffer substantial losses associated with that
contract. For the year ended December 31, 1996, and six months ended June 30,
1997, the percentage of the Company's contract drilling operation revenues
attributable to turnkey contracts was 8.0% and 5.6%, respectively.
ENVIRONMENTAL AND OTHER GOVERNMENTAL REGULATION MATTERS. The
Company's operations are subject to numerous domestic laws and regulations that
relate directly or indirectly to the drilling of oil and natural gas wells,
including laws and regulations controlling the discharge of materials into the
environment, requiring removal and cleanup under certain circumstances or
otherwise relating to the protection of the environment. Laws and regulations
protecting the environment have generally become more stringent in recent
years, and may in certain circumstances impose strict liability, rendering a
person liable for environmental damage without regard to negligence or fault on
the part of such person. To date, the Company has not been required to expend
significant resources in order to comply with applicable environmental laws and
regulations nor has it incurred any fines or penalties for noncompliance.
However, compliance costs under existing legal requirements and under any new
requirements could become material, and the Company could incur liability in
the future for noncompliance. Additional matters subject to governmental
regulation include discharge permits for drilling operations, performance
bonds, reports concerning operations, spacing of wells, unitization and pooling
of properties, disposal of produced water and taxation. From time to time,
regulatory agencies have imposed price controls and limitations on production
by restricting the rate of flow of oil and natural gas wells below actual
production capacity in order to conserve supplies of oil and natural gas. In
addition, although the Company performed visual inspections on three yards
acquired by it during 1996, the Company did not obtain Phase I environmental
reports on any of the yards, which reports, if obtained, may have revealed
potential environmental liabilities not otherwise apparent from the Company's
visual inspection. The Company typically does not have indemnifications from
the respective sellers of the yards for preclosing environmental liabilities.
Accordingly, any loss resulting from environmental liabilities from any of
these yards, or from any other properties acquired or sold by the Company or
its predecessors in interest, may be borne by the Company.
UNCERTAINTY OF OIL AND NATURAL GAS RESERVE ESTIMATES. Estimates of
the Company's proved developed reserves and future net revenues are based on
engineering reports prepared by an independent petroleum engineer based upon a
review of production histories and other geologic, economic, ownership and
engineering data provided by the Company. These estimates are based on several
assumptions that the Securities and Exchange Commission requires oil and
natural gas companies to use, including for example, constant oil and natural
gas prices. Such estimates are inherently imprecise indications of future net
revenues. Actual future production, revenues, taxes, production costs and
development costs may vary substantially from those assumed in the estimates.
Any significant variance could materially affect the estimates. In addition,
the Company's reserves might be subject to upward or downward adjustment based
on future production, results of future exploration and development, prevailing
oil and natural gas prices and other factors.
CONFLICTS OF INTEREST. Certain of the Company's directors and
executive officers and their respective affiliates have participated and may
continue to participate from time to time in oil and natural gas prospects and
properties in which the Company has an interest. Conflicts of interest may
arise between such persons and the Company as to the advisability of conducting
drilling and recompletion activities on these properties. Of the 249 wells
operated by the Company at March 31, 1997, the Company's directors, officers
and/or their respective affiliates were working interest owners in
approximately 106 wells.
NO PAST DIVIDENDS. The Company has paid no cash dividends on the
Common Stock in the past and does not intend to do so in the foreseeable
future. The terms of an existing $30 million bank line of credit prohibit the
payment of dividends by the Company without the prior written consent of the
bank.
ANTI-TAKEOVER MEASURES. The Company, a Delaware corporation, is
subject to the General Corporation
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Law of the State of Delaware, including Section 203, an anti-takeover law
enacted in 1988. The Company has also enacted certain anti-takeover measures,
including a stockholder rights plan. As a result of these provisions,
potential acquirers of the Company may find it more difficult or be discouraged
from attempting to effect an acquisition transaction with the Company, thereby
possibly depriving holders of the Company's securities of certain opportunities
to sell or otherwise dispose of such securities at above-market prices pursuant
to such transactions. See "Description of Capital Stock."
SUPERIOR RIGHTS OF PREFERRED STOCK. The Company has a class of
authorized Preferred Stock. The Board of Directors, without stockholder
approval, may issue shares of the Preferred Stock with rights and preferences
adverse to the voting power or other rights of the holders of the Common Stock.
No Preferred Stock has been issued. However, such number of shares of
Preferred Stock as is sufficient to permit the exercise in full of the Rights
(approximately 148,000 shares as of the date of this Prospectus) has been
reserved for issuance upon exercise of the Rights described under "Description
of Capital Stock - Stockholder Rights Plan."
SHARES ELIGIBLE FOR FUTURE SALE. As of the date of this Prospectus,
the Company had 14,807,266 shares of Common Stock outstanding, 14,104,765
shares of which are freely tradable without substantial restriction or the
requirement of future registration under the Securities Act. Of the remaining
702,501 shares, 690,501 shares are held by "affiliates" of the Company, as that
term is defined in Rule 144 under the Securities Act, and may be sold subject
to the provisions of Rule 144, and 12,000 shares are eligible for sale under a
shelf registration statement. In addition, the Company has reserved for
issuance 600,000 shares of Common Stock pursuant to the exercise of outstanding
options and warrants variously held by three non-affiliated persons. These
shares will be eligible for sale under a shelf registration statement to be
filed by the Company with the Commission on or about the date of this
Prospectus. Also, 250,368 shares of Common Stock issuable upon the exercise of
outstanding employee and non-employee director options that are vested
(including 224,000 shares issuable upon exercise of Options outstanding under
the Plan) are eligible for sale in the public market and 396,336 shares of
Common Stock issuable upon exercise of such options that are not vested
(including 385,600 shares issuable upon exercise of Options outstanding under
the Plan) will become eligible for sale in the public market as such options
become vested and are exercised. Sales of substantial amounts of Common Stock
in the public market could adversely affect the prevailing market price of the
Common Stock.
No prediction can be made as to the effect, if any, that future sales
of shares or the availability of shares for sale will have on the market price
for Common Stock prevailing from time to time. Sales of substantial amounts of
Common Stock in the public market, or the perception of the availability of
shares for sale, could adversely affect the prevailing market price of the
Common Stock and could impair the Company's ability to raise capital through
the sale of its equity securities.
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USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares.
DIVIDEND POLICY
The Company has not paid cash dividends on the Common Stock in the
past and does not expect to pay any cash dividends on the Common Stock in the
foreseeable future. The Company instead intends to retain its earnings to
support the operations and growth of its businesses. Any future cash dividends
would depend on future earnings, capital requirements, the Company's financial
condition and other factors deemed relevant by the Board of Directors. In
addition, the terms of an existing $30 million bank line of credit prohibit
payment of dividends by the Company without the prior written consent of the
bank.
SELLING STOCKHOLDERS
The following table sets forth certain information as of October 31,
1997, with respect to the Selling Stockholders and the beneficial ownership of
Common Stock by each of them before and after the offering being made hereby.
Such information was provided to the Company by the Selling Stockholders for
inclusion in this Prospectus. Additional information concerning the Selling
Stockholders and the Shares is set forth in the notes to the table. The
Company may supplement this Prospectus from time to time to disclose the names,
relationships to the Company and holding of shares of additional Selling
Stockholders.
<TABLE>
<CAPTION>
Shares Being
Shares Owned Offered Shares Owned
Before Offering in the Offering After Offering(1)
------------------------ --------------- -----------------------
Name Number Percent Number Percent
---- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
A. Glenn Patterson(2) 115,748(3) * 83,160 32,588 *
James C. Brown(2) 61,454(4) * 35,000 26,454 *
</TABLE>
_________________
* Less than 1%.
(1) Assumes all Shares offered hereby are sold.
(2) An executive officer and/or director of the Company.
(3) Includes 83,160 Shares purchasable under Options currently exercisable
or exercisable within 60 days of the date hereof, but does not include
an additional 131,840 shares purchasable under Options exercisable
more than 60 days from the date hereof.
(4) Includes 35,000 Shares purchasable under Options currently exercisable
or exercisable within 60 days of the date hereof, but does not include
an additional 40,000 shares purchasable under Options exercisable more
than 60 days from the date hereof.
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<PAGE> 12
DESCRIPTION OF CAPITAL STOCK
The Company is authorized to issue (i) 18,000,000 shares of Common
Stock, $0.01 Par Value, of which 14,807,266 shares are issued and outstanding
as of the date of this Prospectus, and (ii) 1,000,000 shares of Preferred
Stock, $0.01 Par Value, of which no shares have been issued. Stockholders of
the Company will consider and vote upon a proposal at a special meeting of
stockholders to be held in December 1997 or January 1998 to amend the Restated
Certificate of Incorporation of the Company to increase the Company's Common
Stock from 18,000,000 shares to 50,000,000 shares.
COMMON STOCK
Holders of Common Stock are entitled to one vote for each share of
Common Stock held of record on all matters submitted to a vote of stockholders.
Holders of a majority of the shares of Common Stock outstanding may authorize a
merger, consolidation, dissolution of the Company, the sale of all or
substantially all of the Company's assets if not made in the usual or ordinary
course of the Company's business, or an amendment of the Company's Restated
Certificate of Incorporation. In the event of liquidation, holders of Common
Stock are entitled to share pro rata in any distribution of the Company's
assets to holders of Common Stock after payment of liabilities and liquidation
preferences, if any, granted to holders of Preferred Stock. There are no
preemptive, subscription, conversion or redemption rights regarding the Common
Stock. Holders of Common Stock are entitled to receive such dividends as may
be declared on the Common Stock by the Board of Directors in its discretion out
of funds legally available for that purpose.
PREFERRED STOCK
Preferred Stock may be issued in series from time to time with such
designations, relative rights, priorities, preferences, qualifications,
limitations and restrictions thereof, to the extent that such are not fixed in
the Company's Restated Certificate of Incorporation, as the Board of Directors
determines. The rights, preferences, limitations and restrictions of different
series of Preferred Stock may differ with respect to dividend rates, amounts
payable on liquidation, voting rights, conversion rights, redemption
provisions, sinking fund provisions and other matters. The Board of Directors
may authorize the issuance of Preferred Stock which ranks senior to the Common
Stock with respect to the payment of dividends and the distribution of assets
on liquidation. In addition, the Board of Directors is authorized to fix the
limitations and restrictions, if any, upon the payment of dividends on Common
Stock to be effective while any shares of Preferred Stock are outstanding. The
Board of Directors, without stockholder approval, can issue Preferred Stock
with voting and conversion rights which could adversely affect the voting power
of the holders of Common Stock. The issuance of Preferred Stock may have the
effect of delaying, deferring or preventing a change in control of the Company.
The Company has not issued any shares of Preferred Stock. However, such number
of shares of Preferred Stock as is sufficient to permit the exercise in full of
the Rights pursuant to the Rights Agreement (approximately 148,000 shares as of
the date of this Prospectus) has been reserved for issuance upon exercise of
the Rights described under "---Stockholder Rights Plan."
STOCKHOLDER RIGHTS PLAN
General. In January 1997, the Board of Directors of the Company
declared a dividend distribution of one preferred share purchase right (a
"Right") for each outstanding share of Common Stock. The dividend was paid to
the stockholders of record on January 17, 1997 (the "Record Date"), and with
respect to Common Stock issued thereafter until the Distribution Date (as
defined below), and, in certain circumstances, with respect to Common Stock
issued after the Distribution Date. Except as set forth below, each Right,
when it becomes exercisable, entitles the registered holder to purchase from
the Company one one-hundredth of a share of Series A Participating Preferred
Stock, $0.01 par value (the "Preferred Shares"), of the Company at a price of
$166 per one one-hundredth of a Preferred Share (the "Purchase Price"), subject
to adjustment. The description and terms of the Rights are set forth in a
Rights Agreement (the "Rights Agreement") between the Company and Continental
Stock Transfer & Trust Company, as Rights Agent (the "Rights Agent"), dated as
of January 2, 1997. The following discussion is a
10
<PAGE> 13
summary of the material terms of the Rights Agreement, a copy of which has been
incorporated by reference as an exhibit to the Registration Statement.
The Rights Agreement. Initially, the Rights will be attached to all
certificates representing Common Stock then outstanding, and no separate Right
Certificates will be distributed. The Rights will separate from the Common
Stock upon the earliest to occur of (i) a person or group of affiliated or
associated persons having acquired beneficial ownership of 15% or more of the
outstanding shares of Common Stock (except pursuant to a Permitted Offer, as
hereinafter defined), or (ii) 10 days (or such later date as the Board of
Directors may determine) following the commencement of, or announcement of an
intention to make, a tender offer or exchange offer the consummation of which
would result in a person or group becoming an Acquiring Person (as hereinafter
defined) (the earliest of such dates being called the "Distribution Date"). A
person or group whose acquisition of Common Stock causes a Distribution Date
pursuant to clause (i) above is an "Acquiring Person." The date that a person
or group becomes an Acquiring Person is the "Shares Acquisition Date."
The Rights Agreements provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Stock. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Stock certificates issued after the Record Date upon transfer or new
issuance of Common Stock will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates for
Common Stock outstanding as of the Record Date, even without such notation or a
copy of a summary of the Rights being attached thereto, will also constitute
the transfer of the Rights associated with the Common Stock represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Stock as of the close of business on the
Distribution Date (and to each initial record holder of certain Common Stock
issued after the Distribution Date), and such separate Right Certificates alone
will evidence the Rights.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on January 2, 2007, unless earlier redeemed by
the Company as described below.
In the event that any person becomes an Acquiring Person (except
pursuant to a tender or exchange offer which is for all outstanding Common
Stock at a price and on terms which a majority of certain members of the Board
of Directors determines to be adequate and in the best interests of the
Company, its stockholders and other relevant constituencies, other than such
Acquiring Person, its affiliates and associates (a "Permitted Offer")), each
holder of a Right will thereafter have the right (the "Flip-In Right") to
receive upon exercise the number of shares of Common Stock or, in the
discretion of the Board of Directors of the Company, of one one-hundredths of a
Preferred Share (or, in certain circumstances, other securities of the Company)
having a value (immediately prior to such triggering event) equal to two times
the Purchase Price. Notwithstanding the foregoing, following the occurrence of
the event described above, all Rights that are, or (under certain circumstances
specified in the Rights Agreement) were, beneficially owned by any Acquiring
Person or any affiliate or associate thereof will be null and void.
In the event that, at any time following the Shares Acquisition Date,
(i) the Company is acquired in a merger or other business combination
transaction in which the holders of all of the outstanding Common Stock
immediately prior to the consummation of the transaction are not the holders of
all of the surviving company's voting power, or (ii) more than 50% of the
Company's assets or earning power is sold or transferred, in either case with
or to an Acquiring Person or any affiliate or associate or any other person in
which such Acquiring Person, affiliate or associate has an interest or any
person acting on behalf of or in concert with such Acquiring Person, affiliate
or associate, or, if in such transaction all holders of Common Stock are not
treated alike, any other person, then each holder of a Right (excepts Rights
which previously have been voided as set forth above) shall thereafter have the
right (the "Flip-Over Right") to receive, upon exercise, common shares of the
acquiring company having a value equal to two times the Purchase Price. The
holder of a Right will continue to have the Flip-Over Right whether or not such
holder exercises or surrenders the Flip-In Right.
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<PAGE> 14
The Purchase Price payable, and the number of Preferred Shares, shares
of Common Stock or other securities issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Preferred Shares, (ii) upon the grant to holders of the Preferred Shares of
certain rights or warrants to subscribe for or purchase Preferred Shares at a
price, or securities convertible into Preferred Shares with a conversion price,
less than the then current market price of the Preferred Shares or (iii) upon
the distribution to holders of the Preferred Shares of evidences of
indebtedness or assets (excluding regular quarterly cash dividends) or of
subscription rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one one-hundredths
of a Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Stock or a stock
dividend on the Common Stock payable in Common Stock or subdivisions,
consolidations or combinations of the Common Stock occurring, in any such case,
prior to the Distribution Date.
Description of Preferred Shares. Preferred Shares purchasable upon
exercise of the Rights will not be redeemable. Each Preferred Share will be
entitled to a minimum preferential quarterly dividend payment of $0.01 per
share but, if greater, will be entitled to an aggregate dividend per share of
100 times the dividend declared per share of Common Stock. In the event of
liquidation, the holders of the Preferred Shares will be entitled to a minimum
preferential liquidation payment of $1.00 per share; thereafter, and after the
holders of the Common Stock receive a liquidation payment of $0.01 per share,
the holders of the Preferred Shares and the holders of the Common Stock will
share the remaining assets in the ratio of 100 to 1 (as adjusted) for each
Preferred Share and share of Common Stock so held, respectively. Finally, in
the event of any merger, consolidation or other transaction in which shares of
Common Stock are exchanged, each Preferred Share will be entitled to receive
100 times the amount received per share of Common Stock. These rights are
protected by customary antidilution provisions. In the event that the amount
of accrued and unpaid dividends on the Preferred Shares is equivalent to six
fully quarterly dividends or more, the holders of the Preferred Shares shall
have the right, voting as a class, to elect two directors in addition to the
directors elected by the holders of the Common Stock until all cumulative
dividends on the Preferred Shares have been paid through the last quarterly
dividend payment date or until noncumulative dividends have been paid regularly
for at least one year.
Redemption. At any time prior to the earlier to occur of (i) a person
becoming an Acquiring Person or (ii) the expiration of the Rights, and under
certain other circumstances, the Company may redeem the Rights in whole, but
not in part, at a price of $0.01 per Right (the "Redemption Price"), which
redemption shall be effective upon the action of the Board of Directors.
Additionally, following the Shares Acquisition Date, the Company may redeem the
then outstanding Rights in whole, but not in part, at the Redemption Price
provided that such redemption is in connection with a merger or other business
combination transaction or series of transactions involving the Company in
which all holders of Common Stock are treated alike but not involving an
Acquiring Person or its affiliates or associates.
Anti-Takeover Effect. The distribution of the Rights may have the
effect of delaying, deferring or preventing a change in control of the Company
notwithstanding that a majority of the stockholders might benefit from such a
change in control.
OTHER PROVISIONS HAVING POSSIBLE ANTI-TAKEOVER EFFECT
Delaware, like many other states, permits a corporation to adopt a
number of measures through amendment of the corporate charter or bylaws or
otherwise, which, along with certain provisions of the Delaware General
Corporation Law (the "DGCL"), may have the effect of delaying or deterring any
unsolicited takeover attempts notwithstanding that a majority of the
stockholders might benefit from such a takeover or attempt. In connection with
the Company's reincorporation, the right of stockholders to cumulate votes in
the election of directors was eliminated. In addition, Section 203 of the
DGCL, which will apply to the Company since the Common Stock has been approved
for quotation on the Nasdaq National Market, restricts certain "business
combinations" with an
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<PAGE> 15
"interested stockholder" for three years following the date such person becomes
an interested stockholder, unless the Board of Directors approves the business
combination. "Business combination" is defined to include mergers, sale of
assets and other similar transactions with an "interested stockholder." An
"interested stockholder" is defined as a person who, together with affiliates
and associates, owns (or, within the prior three years, did own) 15% or more of
the corporation's voting stock. By delaying or deterring unsolicited takeover
attempts, these provisions could adversely affect prevailing market prices for
the Company's Common Stock.
The Company's Restated Certificate of Incorporation and Bylaws contain
certain provisions that could discourage potential takeover attempts and make
more difficult attempts by stockholders to change management. The following
paragraphs set forth a summary of these provisions:
Special Meetings of Stockholders. The Restated Certificate of
Incorporation provides that special meetings of stockholders may be called only
by the Board of Directors (or a majority of the members thereof), the Chief
Executive Officer, the President or the holders of a majority of the
outstanding stock entitled to vote at such special meeting. This provision
will make it more difficult for stockholders to call a special meeting.
No Stockholder Action by Written Consent. The Restated Certificate of
Incorporation provides that stockholder action may be taken only at annual or
special meetings and not by written consent of the stockholders.
Advance Notice Requirements for Stockholder Proposals and Director
Nominations. The Bylaws provide that stockholders seeking to bring business
before an annual meeting of stockholders, or to nominate candidates for
election as directors at an annual meeting of stockholders, must provide timely
notice thereof in writing. To be timely, a stockholder's notice must be
delivered to, or mailed and received at, the principal executive offices of the
Company not less than 30 days nor more than 60 days prior to the meeting as
originally scheduled; provided that in the event less than 40 days written
notice is given to stockholders, notice by the stockholder to be made timely
must be received not later than the close of business on the 10th day following
the day on which such notice of the date of the annual meeting was mailed.
These Bylaws also specify certain requirements for a stockholder's notice to be
in proper written form. These provisions may preclude some stockholders from
bringing matters before the stockholders at an annual meeting or from making
nominations for directors at an annual meeting.
Authorized Class of Preferred Stock. See "---Preferred Stock" for
information concerning the Company's Preferred Stock.
TRANSFER AGENT
The transfer agent for the Common Stock is Continental Stock Transfer
& Trust Company, New York, New York.
PLAN OF DISTRIBUTION
The distribution of the Shares by the Selling Stockholders may be
effected from time to time in one or more transactions (which may involve block
transactions) on the Nasdaq National Market or otherwise, in negotiated
transactions, or a combination of such methods of sale, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Selling Stockholders may effect such
transactions by selling the Shares to or through broker dealers, and such
broker-dealers may receive compensation in the form of underwriting discounts,
concessions or commissions from the Selling Stockholders or purchasers of
Shares for whom they may act as agent (which compensation may be in excess of
customary commissions). Such brokers or dealers may be deemed to be
"underwriters" within the meaning of the Securities Act in connection with such
sales and any commissions received by them may be deemed to be underwriting
compensation.
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<PAGE> 16
In accordance with applicable rules and regulations promulgated under
the Exchange Act, any person engaged in the distribution of any of the Shares
may not simultaneously engage in market activities with respect to any of the
Common Stock for a period of nine business days prior to the commencement of
such distribution. In addition and without limiting the foregoing, the Selling
Stockholders may be subject to applicable provisions of the Exchange Act and
the rules and regulations promulgated thereunder, including, without
limitation, Regulation M, which provisions may limit the timing of purchases
and sales of Shares by the Selling Stockholders.
The Company and the Selling Stockholders have agreed to indemnify each
other against certain liabilities, including liabilities, under the Securities
Act.
LEGAL MATTERS
The validity of the Shares offered hereby will be passed upon for the
Company by Baker & Hostetler LLP, Denver, Colorado.
EXPERTS
The consolidated balance sheets as of December 31, 1995 and 1996, and
the consolidated statements of income, stockholders' equity and cash flows for
each of the three years in the period ended December 31, 1996, incorporated by
reference in this Prospectus, have been included herein in reliance on the
report of Coopers & Lybrand L.L.P., independent accountants, given on the
authority of that firm as experts in auditing and accounting. With respect to
the unaudited interim financial information for the periods ended March 31,
1996 and 1997 and June 30, 1996 and 1997, incorporated by reference in this
Prospectus, the independent accountants have reported that they have applied
limited procedures in accordance with professional standards for a review of
such information. However, their separate reports included in the Company's
quarterly reports on Form 10-Q for the quarters ended March 31, 1997 and June
30, 1997, and incorporated by reference herein, states that they did not audit
and they do not express an opinion on that interim financial information.
Accordingly, the degree of reliance on their reports on such information should
be restricted in light of the limited nature of the review procedures applied.
The accountants are not subject to the liability provisions of Section 11 of
the Securities Act of 1933 for their report on the unaudited interim financial
information because that report is not a "report" or a "part" of the
Registration Statement prepared or certified by the accountants within the
meaning of Sections 7 and 11 of the Securities Act.
The balance sheet of Patterson Drilling Company (formerly known as Tucker
Drilling Company, Inc.) as of March 31, 1996, and the related statements of
operations, changes in stockholders' equity and cash flows for each of the two
years in the period ended March 31, 1996, incorporated by reference in this
Prospectus and elsewhere in the Registration Statement, have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are incorporated herein by reference in
reliance upon the authority of said firm as experts in giving said reports.
The statements of assets acquired as of December 31, 1996 and 1995 for Wes-Tex
Drilling Company and the related statements of direct drilling revenue and
direct operating expenses for each of the three years in the period ended
December 31, 1996, incorporated by reference to this Prospectus, have been
included herein in reliance on the report of Davis, Kinard & Co., P.C.,
independent accountants, given on the authority of that firm as experts in
auditing and accounting. With respect to the unaudited interim financial
information as of March 31, 1997, and for the three-month periods ended March
31, 1997 and 1996, incorporated by reference in this Prospectus, Davis, Kinard
& Co., P.C. have reported that they have applied limited procedures in
accordance with professional standards for a review of such information.
However, their separate report included in the Company's Current Report on Form
8-K, as amended, dated June 12, 1997, and incorporated by reference herein,
states that they did not audit and they do not express an opinion on that
interim financial information. Accordingly, the degree of reliance on their
report of such information should be restricted in light of the limited nature
of review procedures applied. The accountants are not subject to the liability
provisions of Section 11 of the Securities Act of 1933 for their report on the
unaudited financial information because that report is not a "report" or a
"part" of the Registration Statement prepared or certified by the accountants
within the meaning of Sections 7 and 11 of the Securities Act.
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<PAGE> 17
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents have been filed by the Registrant with the
Securities and Exchange Commission and are hereby incorporated by reference
into this Registration Statement:
(a) Annual Report on Form 10-K for the year ended December 31,
1996;
(b) Quarterly Report on Form 10-Q for the quarter ended March 31,
1997;
(c) Current Report on Form 8-K dated July 30, 1996, as amended by
Form 8-K/A dated July 30, 1996, as further amended by Form
8-K/A dated July 30, 1996;
(d) Current Report on Form 8-K dated January 3, 1997;
(e) Current Report on Form 8-K dated January 7, 1997;
(f) Current Report on Form 8-K dated January 27, 1997;
(g) Current Report on Form 8-K dated May 7, 1997;
(h) Current Report on Form 8-K dated June 3, 1997;
(i) Current Report on Form 8-K dated June 12, 1997, as amended by
Form 8-K/A dated June 12, 1997;
(j) Current Report on Form 8-K dated July 1, 1997;
(k) Quarterly Report on Form 10-Q for the quarter ended June 30,
1997;
(l) Current Report on Form 8-K dated July 24, 1997;
(m) Current Report on Form 8-K dated August 5, 1997; and
(n) Description of the Registrant's Common Stock contained in the
Registrant's Registration Statement on Form 8-A, which became
effective with the Securities and Exchange Commission on
November 2, 1993.
All documents filed by the Registrant pursuant to Section 13(a),
13(c), 14 and 15(d) of the Securities Exchange Act of 1934 subsequent to the
date of this Registration Statement and prior to the filing of a post-effective
amendment, which indicates all shares under the Plan have been sold or which
deregisters all shares then remaining unsold under the Plan, shall be deemed to
be incorporated by reference in this Registration Statement and to be a part
hereof from the date of filing such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
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<PAGE> 18
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
None.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under provisions of the Restated Certificate of Incorporation, as
amended, of the Registrant, each person who is or was a director, officer or
controlling persons of the Registrant will be indemnified by the Registrant as
a matter of right to the extent permitted or authorized by law. The effects of
the Restated Certificate of Incorporation, as amended, and the Delaware General
Corporation Law may be summarized as follows:
(a) Under Delaware law, to the extent that such a person is
successful on the merits in defense of a suit or proceeding brought
against him by reason of the fact that he is a director or officer of
the Registrant, he shall be indemnified against expenses (including
attorneys' fees) reasonably incurred in connection with such action;
(b) In other circumstances, a director or officer of the
Registrant may be indemnified against expenses (including attorneys'
fees) judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably
believed to be in and not opposed to the best interest of the
Registrant, and, with respect to a criminal action or proceeding, had
no reasonable cause to believe his conduct was unlawful; however, in
an action or suit by or in the right of the Registrant to procure a
judgment in its favor, such person will not be indemnified if he has
been adjudged to be liable to the Registrant unless and only to the
extent that the Delaware Court of Chancery or the court in which such
action or suit was brought determines upon application that, despite
the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity
for such expenses which the Court of Chancery or such other court
deems proper. A determination that indemnification of a director or
officer is proper will be made by a disinterested majority of the
Registrant's Board of Directors, by independent legal counsel, or by
the stockholders of the Registrant; and
(c) The Registrant's Restated Certificate of Incorporation,
as amended, contains a provision which eliminates, to the fullest
extent permitted by the Delaware General Corporation Law, the
liability of directors of the Registrant from monetary damages arising
from any breach of fiduciary duties as a member of the Registrant's
Board of Directors. This provision will not eliminate liability, for
among other matters, breaches of duty of loyalty, acts or omissions
not in good faith or knowing violations of law. In addition, this
provision will not eliminate or limit the liability of a director for
any act or omission occurring prior to the date of the Registrant's
reincorporation in the State of Delaware.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
None.
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<PAGE> 19
ITEM 8. EXHIBITS.
The following exhibits are filed herewith:
<TABLE>
<CAPTION>
Exhibit Item 601 Cross
Number Reference Document as Form S-8 Exhibit
------ --------------- ----------------------------
<S> <C> <C>
4.1 4 Excerpt from Restated Certificate of Incorporation, as amended, of Patterson
Energy, Inc.(1)
4.2 4 Rights Agreement dated as of January 2, 1997, between Patterson Energy, Inc.
and Continental Stock Transfer & Trust Company, as Rights Agent.(2)
5.1 5 Opinion of Baker & Hostetler LLP regarding legality of shares to be offered
10.1 10 Patterson Energy, Inc. 1993 Stock Incentive Plan, as amended
15.1 15 Awareness Letter of Coopers & Lybrand L.L.P.
15.2 15 Awareness Letter of Davis, Kinard & Co., P.C.
23.1 23 Consent of Independent Accountants, Coopers & Lybrand L.L.P.
23.2 23 Consent of Independent Public Accountants, Arthur Andersen LLP
23.3 23 Consent of M. Brian Wallace, independent petroleum engineer
23.4 23 Consent of Baker & Hostetler LLP (included in Exhibit 5.1)
23.5 23 Consent of Independent Accountants, Davis, Kinard & Co., P.C.
</TABLE>
______________________________
(1) Filed as an Exhibit to Post-Effective Amendment No. 1 to Form
S-8 (Registration No. 33-97972) filed with the Commission on
July 17, 1997.
(2) Filed as an Exhibit to Form 8-A dated January 10, 1997.
Item 9. Undertakings.
1. The Registrant hereby undertakes:
(a) To file, during any period in which offers or sales
are being made, a post-effective amendment to this Registration
Statement:
(i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) to reflect in the Prospectus any facts or
events arising after the effective date of the Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the
Registration Statement; and
(iii) to include any material information with
respect to the plan of distribution not previously disclosed
in the Registration Statement or any material change to such
information in the Registration Statement;
provided, however, that paragraphs (1)(a)(i) and
(1)(a)(ii) do not apply if the information required to be
included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the Registrant pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act
of 1934 that are incorporated by reference in this
Registration Statement.
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<PAGE> 20
(b) That, for the purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(c) To remove from registration by means of a
post-effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
(d) That, for purposes of determining any liability under
the Securities Act of 1933, each filing of the Registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
2. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
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<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Post-Effective Amendment No. 2 to the Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Snyder, State of Texas on the 4th day of November, 1997.
PATTERSON ENERGY, INC.
By: /s/ A. Glenn Patterson
--------------------------------------------
A. Glenn Patterson, President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 2 to the Registration Statement has been signed as
of November 4, 1997, by the following persons in the capacities indicated:
<TABLE>
<S> <C>
/s/ Cloyce A. Talbott Chairman of the Board and Chief Executive Officer
---------------------------------------------------
Cloyce A. Talbott
(Principal Executive Officer)
/s/ A. Glenn Patterson Director, President and Chief Operating Officer
---------------------------------------------------
A. Glenn Patterson
/s/ Robert C. Gist Director
---------------------------------------------------
Robert C. Gist
/s/ Kenneth E. Davis Director
---------------------------------------------------
Kenneth E. Davis
/s/ Vincent A. Rossi, Jr. Director
---------------------------------------------------
Vincent A. Rossi, Jr.
/s/ James C. Brown Vice President--Finance, Secretary and Treasurer
---------------------------------------------------
James C. Brown and Chief Financial Officer
(Principal Accounting Officer)
</TABLE>
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<PAGE> 22
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Item 601 Cross
Number Reference Document as Form S-8 Exhibit Page No.
------ --------------- ---------------------------- --------
<S> <C> <C>
4.1 4 Excerpt from Restated Certificate of Incorporation, as amended, of
Patterson Energy, Inc.(1)
4.2 4 Rights Agreement dated as of January 2, 1997, between Patterson
Energy, Inc. and Continental Stock Transfer & Trust Company, as
Rights Agent.(2)
5.1 5 Opinion of Baker & Hostetler LLP regarding legality of shares to
be offered
10.1 10 Patterson Energy, Inc. 1993 Stock Incentive Plan, as amended
15.1 15 Awareness Letter of Coopers & Lybrand L.L.P.
15.2 15 Awareness Letter of Davis, Kinard & Co., P.C.
23.1 23 Consent of Independent Accountants, Coopers & Lybrand L.L.P.
23.2 23 Consent of Independent Public Accountants, Arthur Andersen LLP
23.3 23 Consent of M. Brian Wallace, independent petroleum engineer
23.4 23 Consent of Baker & Hostetler LLP (included in Exhibit 5.1)
23.5 23 Consent of Independent Accountants, Davis, Kinard & Co., P.C.
</TABLE>
______________________________
(1) Filed as an Exhibit to Post-Effective Amendment No. 1 to Form S-8
(Registration No. 33-97972) filed with the Commission on July 17,
1997.
(2) Filed as an Exhibit to Form 8-A dated January 10, 1997.
<PAGE> 1
EXHIBIT 5.1
[BAKER & HOSTETLER LLP LETTERHEAD]
November 4, 1997
Patterson Energy, Inc.
4510 Lamesa Highway
Snyder, Texas 79549
Gentlemen:
We have acted as counsel for Patterson Energy, Inc. (the
"Company") in connection with the registration under the Securities Act of 1933
(the "Act") on Form S-8 of 700,000 shares of the Company's Common Stock, $0.01
Par Value (the "Shares") covered by the Patterson Energy, Inc. 1993 Stock
Incentive Plan, as amended (the "Plan"). Post- Effective Amendment No. 2 to
the Registration Statement on Form S-8 and exhibits thereto filed with the
Securities and Exchange Commission under the Act are referred to herein as the
"Registration Statement."
We have examined the Restated Certificate of Incorporation, as
amended, the Bylaws and the Minutes of the Board of Directors of the Company,
the applicable laws of the State of Delaware and a copy of the Registration
Statement.
Based on the foregoing, and having regard for such legal
considerations as we deem relevant, we are of the opinion that the Company is
authorized to issue and to sell the Shares; and the Shares, when issued
pursuant to the terms of the Plan will be fully paid and nonassessable.
We hereby consent to the use of this opinion as a part of the
Post-Effective Amendment No. 2 to the Registration Statement.
Very truly yours,
/s/ Baker & Hostetler LLP
BAKER & HOSTETLER LLP
<PAGE> 1
EXHIBIT 10.1
PATTERSON ENERGY, INC.,
1993 STOCK INCENTIVE PLAN, AS AMENDED
1. General. This Stock Incentive Plan (the "Plan") provides
eligible employees of Patterson Energy, Inc., (the "Company") with the
opportunity to acquire or expand their equity interest in the Company by making
available for award or purchase Common Shares, without par value, of the
Company ("Common Shares"), through the granting of nontransferable options to
purchase Common Shares ("Stock Options") and the granting of Common Shares
subject to temporal restrictions on transfer and substantial risks of
forfeiture ("Restricted Stock"). Stock Options and Restricted Stock shall be
collectively referred to herein as "Grants"; an individual grant of Stock
Options or Restricted Stock shall be individually referred to herein as a
"Grant." It is intended that key employees may be granted, simultaneously or
from time to time, Stock Options that qualify as incentive stock options
("Incentive Stock Options") under Section 422 of the Internal Revenue Code of
1986, as amended (the "Code") or Stock Options that do not so qualify
("Non-qualified Stock Options"). No provision of the Plan is intended or shall
be construed to grant employees alternative rights in any Incentive Stock
Option granted under the Plan so as to prevent such Option from qualifying
under Section 422 of the Code.
2. Purpose of the Plan. The purpose of the Plan is to provide
continuing incentives to key employees of the Company and of any subsidiary
corporation of the Company, by encouraging such key employees to acquire new or
additional share ownership in the Company, thereby increasing their proprietary
interest in the Company's business and enhancing their personal interest in the
Company's success.
For purposes of the Plan, a "subsidiary corporation" consists
of any corporation at least fifty percent (50%) of the stock of which is
directly or indirectly owned or controlled by the Company.
3. Effective Date of the Plan. The Plan shall become effective
upon its adoption by the Board of Directors, subject to approval by holders of
a majority of the outstanding shares of voting capital stock of the Company.
If the Plan is not so approved within twelve (12) months after the date the
Plan is adopted by the Board of Directors, the Plan and any Grants made
hereunder shall be null and void. However, if the Plan is so approved, no
further shareholder approval shall be required with respect to the making of
Grants pursuant to the Plan, except as provided in Section 11 hereof.
4. Administration of the Plan. The Plan shall be administered by
the Compensation Committee of the Board of Directors of the Company, or by any
other committee selected by such Board of Directors by majority vote and
composed of no fewer than two (2) members of such Board of Directors (the
"Committee"). No person shall be appointed to the Committee who, during the
one-year period immediately preceding such person's appointment to the
Committee, has received any Grants under the Plan or any similar stock option
or stock incentive plan, other than a formula-based plan, maintained by the
Company or any subsidiary corporation. A member of the Committee shall not be
eligible to participate in this Plan while serving on the Committee.
A majority of the Committee shall constitute a quorum. The
acts of a majority of the members present at any meeting at which a quorum is
present (or acts unanimously approved in writing by the members of the
Committee) shall constitute binding acts of the Committee.
Subject to the terms and conditions of the Plan, the Committee
shall be authorized and empowered:
(a) To select the key employees to whom Grants may be made;
(b) To determine the number of Common Shares to be covered by any
Grant;
(c) To prescribe the terms and conditions of any Grants made under
the Plan, and the form(s) and agreement(s) used in connection
with such Grants, which shall include agreements governing the
<PAGE> 2
granting of Restricted Stock and/or Stock Options;
(d) To determine the time or times when Stock Options will be
granted and when they will terminate in whole or in part;
(e) To determine the time or times when Stock Options that are
granted may be exercised;
(f) To determine, at the time a Stock Option is granted under the
Plan, whether such Option is an Incentive Stock Option
entitled to the benefits of Section 422 of the Code; and
(g) To establish any other Stock Option agreement provisions not
inconsistent with the terms and conditions of the Plan or,
where the Stock Option is an Incentive Stock Option, with the
terms and conditions of Section 422 of the Code; and
5. Employees Eligible for Grants. Grants may be made from time
to time to those key employees of the Company or a subsidiary corporation, who
are designated by the Committee in its sole and exclusive discretion. Key
employees may include, but shall not necessarily be limited to, members of the
Board of Directors (excluding members of the Committee), and officers, of the
Company and any subsidiary corporation; however, Stock Options intended to
qualify as Incentive Stock Options shall only be granted to key employees while
actually employed by the Company or a subsidiary corporation. The Committee
may grant more than one Stock Option to the same key employee. No Stock Option
shall be granted to any key employee during any period of time when such key
employee is on a leave of absence.
6. Shares Subject to the Plan. The shares to be issued pursuant
to any Grant made under the Plan shall be Common Shares. Either Common Shares
held as treasury stock, or authorized and unissued Common Shares, or both, may
be so issued, in such amount or amounts within the maximum limits of the Plan
as the Board of Directors shall from time to time determine.
Subject to the provisions of the next succeeding paragraph of
this Section 6 and the provisions of Section 7(h), the aggregate number of
Common Shares that can be actually issued under the Plan (exclusive of
Restricted Stock forfeited under the Plan before the holder thereof received
any benefits of ownership, such as dividends) shall be seven hundred thousand
(700,000) Common Shares.
If, at any time subsequent to the date of adoption of the Plan
by the Board of Directors, the number of Common Shares are increased or
decreased, or changed into or exchanged for a different number or kind of
shares of stock or other securities of the Company or of another corporation
(whether as a result of a stock split, stock dividend, combination or exchange
of shares, exchange for other securities, reclassification, reorganization,
redesignation, merger, consolidation, recapitalization or otherwise): (i)
there shall automatically be substituted for each Common Share subject to an
unexercised Stock Option (in whole or in part) granted under the Plan, the
number and kind of shares of stock or other securities into which each
outstanding Common Share shall be changed or for which each such Common Share
shall be exchanged; (ii) the option price per Common Share or unit of
securities shall be increased or decreased proportionately so that the
aggregate purchase price for the securities subject to a Stock Option shall
remain the same as immediately prior to such event; and (iii) any outstanding
Restricted Stock that is converted, exchanged or otherwise changed into a
different number or kind of stock or security, shall continue to be subject to
any and all terms, conditions and restrictions originally applicable to such
Restricted Stock. In addition to the foregoing, the Committee shall be
entitled in the event of any such increase, decrease or exchange of Common
Shares to make other adjustments to the securities subject to a Stock Option,
the provisions of the Plan, and to any related Stock Option agreements
(including adjustments which may provide for the elimination of fractional
shares), where necessary to preserve the terms and conditions of any Grants
hereunder.
2
<PAGE> 3
7. Stock Option Provisions.
(a) General. The Committee may grant to key employees (also
referred to as "optionees") nontransferable Stock Options that either qualify
as Incentive Stock Options under Section 422 of the Code or do not so qualify.
However, any Stock Option which is an Incentive Stock Option shall only be
granted within 10 years from the earlier of (i) the date this Plan is adopted
by the Board of Directors of the Company; or (ii) the date this Plan is
approved by the shareholders of the Company.
(b) Stock Option Price. The option price per Common Share which
may be purchased under an Incentive Stock Option under the Plan shall be
determined by the Committee at the time of Grant, but shall not be less than
one hundred percent (100%) of the fair market value of a Common Share,
determined as of the date such Option is granted; however, if a key employee to
whom an Incentive Stock Option is granted is, at the time of the grant of such
Option, an "owner," as defined in Section 422(b)(6) of the Code (modified as
provided in Section 424(d) of the Code) of more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or any
subsidiary corporation (a "Substantial Shareholder"), the price per Common
Share of such Option, as determined by the Committee, shall not be less than
one hundred ten percent (110%) of the fair market value of a Common Share on
the date such Option is granted. The option price per Common Share under each
Stock Option granted pursuant to the Plan which is not an Incentive Stock
Option shall be determined by the Committee at the time of Grant, but shall not
be less than 85% of the market value of the Common Stock at the time of Grant.
Except as specifically provided above, the fair market value of a Common Share
shall be determined in accordance with procedures to be established by the
Committee. The day on which the Committee approves the granting of a Stock
Option shall be considered the date on which such Option is granted.
(c) Period of Stock Option. The Committee shall determine when
each Stock Option is to expire. However, no Stock Option shall be exercisable
for a period of more than ten (10) years from the date upon which such Option
is granted. Further, no Incentive Stock Option granted to an employee who is a
Substantial Shareholder at the time of the grant of such Option shall be
exercisable after the expiration of (5) years from the date of grant of such
Option.
(d) Limitation on Exercise and Transfer of Stock Options. Only
the key employee to whom a Stock Option is granted may exercise such Option,
except where a guardian or other legal representative has been duly appointed
for such employee, and except as otherwise provided in the case of such
employee's death. No Stock Option granted hereunder shall be transferable by
an optionee other than by will or the laws of descent and distribution. No
Stock Option granted hereunder may be pledged or hypothecated, nor shall any
such Option be subject to execution, attachment or similar process.
(e) Employment, Holding Period Requirements For Certain Options.
The Committee may condition any Stock Option granted hereunder upon the
continued employment of the optionee by the Company or by a subsidiary
corporation, and may make any such Stock Option immediately exercisable.
However, the Committee will require that, from and after the date of grant of
any Incentive Stock Option granted hereunder until the day three (3) months
prior to the date such Option is exercised, such optionee must be an employee
of the Company or of a subsidiary corporation, but always subject to the right
of the Company or any such subsidiary corporation to terminate such optionee's
employment during such period. Each Stock Option shall be subject to such
additional restrictions as to the time and method of exercise as shall be
prescribed by the Committee. Upon completion of such requirements, if any, a
Stock Option or the appropriate portion thereof may be exercised in whole or in
part from time to time during the option period; however, such exercise
right(s) shall be limited to whole shares.
(f) Payment for Stock Option Price. A Stock Option shall be
exercised by an optionee giving written notice to the Company of his intention
to exercise the same, accompanied by full payment of the purchase price in cash
or by check, or, with the consent of the Committee, in whole or in part with a
promissory note or with a surrender of Common Shares having a fair market value
on the date of exercise equal to that portion of the purchase price for which
payment in cash or check is not made. The Committee may, in its sole
discretion, approve other methods of exercise for a Stock Option or payment of
the option price, provided that no such method shall cause any option granted
under the Plan as an Incentive Stock Option to not qualify under Section 422 of
the Code, or cause any Common Share issued in connection with the exercise of
an option not to be a fully paid and non-assessable Common Share.
3
<PAGE> 4
(g) Certain Reissuances of Stock Options. To the extent Common
Shares are surrendered by an optionee in connection with the exercise of a
Stock Option in accordance with Section 7(f), the Committee may in its sole
discretion grant new Stock Options to such optionee (to the extent Common
Shares remain available for Grants), subject to the following terms and
conditions:
(i) The number of Common Shares shall be equal to the
number of Common Shares being surrendered by the
optionee;
(ii) The option price per Common Share shall be equal to
the fair market value of Common Shares, determined on
the date of exercise of the Stock Options whose
exercise caused such Grant; and
(iii) The terms and conditions of such Stock Options shall
in all other respects replicate such terms and
conditions of the Stock Options whose exercise caused
such Grant, except to the extent such terms and
conditions are determined to not be wholly consistent
with the general provisions of this Section 7, or in
conflict with the remaining provisions of this Plan.
(h) Cancellation and Replacement of Stock Options and Related
Rights. The Committee may at any time or from time to time permit the
voluntary surrender by an optionee who is the holder of any outstanding Stock
Options under the Plan, where such surrender is conditioned upon the granting
to such optionee of new Stock Options for such number of shares as the
Committee shall determine, or may require such a voluntary surrender as a
condition precedent to the grant of new Stock Options. The Committee shall
determine the terms and conditions of new Stock Options, including the prices
at and periods during which they may be exercised, in accordance with the
provisions of this Plan, all or any of which may differ from the terms and
conditions of the Stock Options surrendered. Any such new Stock Options shall
be subject to all the relevant provisions of this Plan. The Common Shares
subject to any Stock Option so surrendered, shall no longer be charged against
the limitation provided in Section 6 of this Plan and may again become shares
subject to the Plan. The granting of new Stock Options in connection with the
surrender of outstanding Stock Options under this Plan shall be considered for
the purposes of the Plan as the granting of new Stock Options and not an
alteration, amendment or modification of the Plan or of the Stock Options being
surrendered.
(i) Limitation on Exercisable Incentive Stock Options. The
aggregate fair market value of the Common Shares first becoming subject to
exercise as Incentive Stock Options by a key employee during any given calendar
year shall not exceed the sum of One Hundred Thousand Dollars ($100,000). Such
aggregate fair market value shall be determined as of the date such Option is
granted, taking into account, in the order in which granted, any other
incentive stock options granted by the Company, or by a parent or subsidiary
thereof.
8. Restricted Stock.
(a) Grant. The Committee shall determine the key employees to
whom, and the time or times at which, Grants of Restricted Stock will be made,
the number of shares of Restricted Stock to be granted, the price (if any) to
be paid by such key employees (subject to Section 8(b)), the time or times
within which such Restricted Stock grants may be subject to forfeiture, and the
other terms and conditions of the grants in addition to those set forth in
Section 8(b). The Committee may condition the grant of Restricted Stock upon
the attainment of specified vesting schedules, employment requirements or
performance goals or such other factors as the Committee may determine in its
sole discretion.
(b) Terms and Conditions. Restricted Stock granted under the Plan
shall contain any terms and conditions, not inconsistent with the provisions of
the Plan, which are deemed desirable by the Committee. A key employee who
receives a grant of Restricted Stock shall not have any rights with respect to
such Grant, unless and until such key employee has executed an agreement
evidencing such Grant in the form approved from time to time by the Committee,
has delivered a fully executed copy thereof to the Company, and has otherwise
complied with the applicable terms and conditions of such Grant. In addition,
Restricted Stock granted under the Plan shall be subject to the following terms
and conditions:
4
<PAGE> 5
(i) The purchase price for Common Shares
consisting of Restricted Stock, if any, will
be specified by the Committee.
(ii) Grants of Restricted Stock shall only be
accepted by executing a Restricted Stock
agreement and paying, in cash or by check,
whatever price (if any) is required under
Section 8(b)(i).
(iii) Each key employee granted Restricted Stock
shall be issued a stock certificate in
respect of such shares of Restricted Stock.
Such certificate shall be registered in the
name of such key employee, and shall bear an
appropriate legend referring to the terms,
conditions, and restrictions applicable to
such Grant.
(iv) Any stock certificates evidencing Common
Shares consisting of Restricted Stock shall
either (A) be held in custody by the Company
until the employment and other restrictions
thereon shall all have lapsed; or (B) be
affixed with a legend, identifying such
Shares as Restricted Stock and expressly
prohibiting the sale, transfer, tender,
pledge, assignment or encumbrance of such
Shares, as the Committee shall determine.
With respect to any Restricted Stock held in
custody by the Company, the key employee
granted such Restricted Stock shall deliver
to the Company a stock power, endorsed in
blank, relating to the Common Shares
represented by such Stock. With respect to
any Restricted Stock held by a key employee
under legend, the key employee granted such
Restricted Stock shall deliver to the Company
an acknowledgement that such Stock remains
subject to a substantial risk of forfeiture
in the event of termination of employment
under certain circumstances, and that the
certificates representing ownership of such
Stock will be surrendered to the Company
immediately upon any such termination of
employment.
(v) Subject to the provisions of the Plan and the
Restricted Stock agreement, during a temporal
period set by the Committee and commencing
with the date of such Grant (the "Restriction
Period"), a key employee shall not be
permitted to sell, transfer, tender, pledge,
assign or otherwise encumber any Restricted
Stock granted under the Plan. However, the
Committee, in its sole discretion, may
provide for the lapse of such transfer or
other restrictions in installments, or
accelerate or waive such restrictions in
whole or in part, based on service,
performance or other factors and criteria
selected by the Committee.
(vi) Except as provided in this Section 8(b)(vi)
and Section 8(b)(v), a key employee shall
have, with respect to shares of Restricted
Stock granted to him, all of the rights of a
shareholder of the Company, including the
right to vote such Stock and the right to
receive any dividends thereon. The
Committee, in its sole discretion and as
determined at the time of a Grant of
Restricted Stock, may permit or require cash
dividends otherwise due and payable to be
deferred and, if the Committee so determines,
reinvested either in additional Restricted
Stock (to the extent Common Shares are
available), or otherwise. Stock dividends
issued with respect to Restricted Stock shall
be treated as additional shares of Restricted
Stock. As Restricted Stock, such additional
Common Shares will be subject to the same
restrictions, terms and conditions applicable
to the Restricted Stock with respect to which
such additional Common Shares were issued.
(vii) No Restricted Stock shall be transferable by
a key employee other than by will or by the
laws of descent and distribution.
(viii) In the event Restricted Stock is forfeited by
a key employee, the Company will refund to
such key employee any payment(s) made by such
key employee to purchase such Stock, promptly
upon such forfeiture (and any corresponding
surrender of stock certificates).
(c) Minimum Value Provisions. To ensure that Grants of Restricted
Stock actually reflect the
5
<PAGE> 6
performance of the Company and service of the key employee, the Committee may
provide, in its sole discretion, for a tandem performance-based award, or other
grant, designed to guarantee a minimum value, payable in cash or Common Shares,
to the recipient of a Restricted Stock Grant, subject to such performance,
future service, deferral and other terms and conditions as may be specified by
the Committee.
9. Termination of Employment. If a key employee ceases to be an
employee of the Company and every subsidiary corporation, for a reason other
than death, retirement, or permanent and total disability, his Grants shall,
unless extended by the Committee on or before his date of termination of
employment, terminate on the effective date of such termination of employment.
Neither the key employee nor any other person shall have any right after such
date to exercise all or any part of his Stock Options, and all Restricted Stock
which is not vested or otherwise subject to restriction shall thereupon be
forfeited, and/or declared void and without value.
If termination of employment is due to death or permanent and total
disability, then outstanding Stock Options may be exercised within the one (1)
year period ending on the anniversary of such death or permanent and total
disability. In the case of death, such outstanding Stock Options shall be
exercised by such key employee's estate, or the person designated by such key
employee by will, or as otherwise designated by the laws of descent and
distribution. Notwithstanding the foregoing, in no event shall any Stock
Option be exercisable after the expiration of the option period, and in the
case of exercises made after a key employee's death, not to any greater extent
than the key employee would have been entitled to exercise such Option at the
time of his death. Restricted Stock held by a key employee whose employment by
the Company or any subsidiary corporation terminates by reason of death shall
thereupon vest and all restrictions and risks of forfeiture thereon shall
thereupon lapse.
Subject to the discretion of the Committee, in the event a key
employee terminates employment with the Company and all subsidiary corporations
because of normal or early retirement, or, in the case of Restricted Stock,
permanent and total disability, (a) any then-outstanding Stock Options held by
such key employee shall lapse at the earlier of the end of the term of such
Stock Option or three (3) months after such retirement or permanent and total
disability; and (b) any Restricted Stock held by such key employee shall
thereafter vest and any applicable restrictions shall lapse, to the extent such
Restricted Stock would have become vested or no longer subject to restriction
within one year from the time of termination had the key employee continued to
fulfill all of the conditions of the Restricted Stock during such period (or on
such accelerated basis as the Committee may determine at or after date of
Grant).
In the event an employee of the Company or one of its subsidiary
corporations is granted a leave of absence by the Company or such subsidiary
corporation to enter military service or because of sickness, his employment
with the Company or such subsidiary corporation shall not be considered
terminated, and he shall be deemed an employee of the Company or such
subsidiary corporation during such leave of absence or any extension thereof
granted by the Company or such subsidiary corporation.
10. Change of Control. Upon the occurrence of a Change of Control
(as defined below), notwithstanding any other provisions hereof or of any
agreement to the contrary, all Stock Options granted under this Plan shall
become immediately exercisable in full and all Restricted Stock grants shall
become immediately vested and any applicable restrictions shall lapse.
For purposes of this Plan, a Change of Control shall be deemed to have
occurred if: (i) a tender offer shall be made and consummated for the
ownership of 25% or more of the outstanding voting securities of the Company;
(ii) the Company shall be merged or consolidated with another corporation and,
as a result of such merger or consolidation, less than 75% of the outstanding
voting securities of the surviving or resulting corporation shall be owned in
the aggregate by the former shareholders of the Company as the same shall have
existed immediately prior to such merger or consolidation; or (iii) the Company
shall sell substantially all of its assets to another corporation which is not
a wholly owned subsidiary; or (iv) a person, within the meaning of Section
3(a)(9) or of Section 13(d)(3) (as in effect on the date hereof) of the
Exchange Act, shall acquire, other than by reason of inheritance, twenty-five
percent (25%) or more of the outstanding voting securities of the Company
(whether directly, indirectly, beneficially or of record). In making any such
determination, transfers made by a person to an affiliate of such person (as
determined by the Board of Directors of the Company), whether by gift, devise
or otherwise, shall not be taken into account. For purposes of this Plan,
ownership of voting securities shall take into account and shall include
ownership as determined by applying the provisions of Rule 13d-3(d)(1)(i) as in
effect on the date hereof pursuant to the Exchange Act.
6
<PAGE> 7
Notwithstanding the provisions of subparagraph (iv) of this Section
10, "person" as used in that subparagraph shall not include any holder who was
the beneficial owner of more than ten percent (10%) of the voting securities of
the company on the date the Plan was adopted by the Board of Directors.
11. Amendments to Plan. The Committee is authorized to interpret
this Plan and from time to time adopt any rules and regulations for carrying
out this Plan that it may deem advisable. Subject to the approval of the Board
of Directors of the Company, the Committee may at any time amend, modify,
suspend or terminate this Plan. In no event, however, without the approval of
shareholders, shall any action of the Committee or the Board of Directors
result in:
(a) Materially amending, modifying or altering the eligibility
requirements provided in Section 5 hereof;
(b) Materially increasing, except as provided in Section 6 hereof,
the maximum number of shares subject to Grants; or
(c) Materially increasing the benefits accruing to participants
under this Plan;
except to conform this Plan and any agreements made hereunder to changes in the
Code or governing law.
12. Investment Representation, Approvals and Listing. The
Committee may, if it deems appropriate, condition its grant of any Stock Option
hereunder upon receipt of the following investment representation from the
optionee:
"I agree that any Common Shares of Patterson Energy, Inc.,
which I may acquire by virtue of this Stock Option shall be acquired
for investment purposes only and not with a view to distribution or
resale, and may not be transferred, sold, assigned, pledged,
hypothecated or otherwise disposed of by me unless (i) a registration
statement or post-effective amendment to a registration statement
under the Securities Act of 1933, as amended, with respect to said
Common Shares has become effective so as to permit the sale or other
disposition of said shares by me; or (ii) there is presented to
Patterson Energy, Inc., an opinion of counsel satisfactory to
Patterson Energy, Inc., to the effect that the sale or other proposed
disposition of said Common Shares by me may lawfully be made otherwise
than pursuant to an effective registration statement or post-effective
amendment to a registration statement relating to the said shares
under the Securities Act of 1933, as amended."
The Company shall not be required to issue any certificate or
certificates for Common Shares upon the exercise of any Stock Option granted
under this Plan prior to (i) the obtaining of any approval from any
governmental agency which the Committee shall, in its sole discretion,
determine to be necessary or advisable; (ii) the admission of such shares to
listing on any national securities exchange on which the Common Shares may be
listed; (iii) the completion of any registration or other qualifications of the
Common Shares under any state or federal law or ruling or regulations of any
governmental body which the Committee shall, in its sole discretion, determine
to be necessary or advisable or the determination by the Committee, in its sole
discretion, that any registration or other qualification of the Common Shares
is not necessary or advisable; and (iv) the obtaining of an investment
representation from the optionee in the form stated above or in such other form
as the Committee, in its sole discretion, shall determine to be adequate.
13. General Provisions. The form and substance of Stock Option
agreements and Restricted Stock agreements made hereunder, whether granted at
the same or different times, need not be identical. Nothing in this Plan or in
any agreement shall confer upon any employee any right to continue in the
employ of the Company or any of its subsidiary corporations, to be entitled to
any remuneration or benefits not set forth in this Plan or such Grant, or to
interfere with or limit the right of the Company or any subsidiary corporation
to terminate his employment at any time, with or without cause. Nothing
contained in this Plan or in any Stock Option agreement shall be construed as
entitling any optionee to any rights of a shareholder as a result of the grant
of a Stock Option, until such time as Common Shares are actually issued to such
optionee pursuant to the exercise of such Option. This Plan may be assumed by
the successors and assigns of the Company. The liability of the Company under
this Plan and any sale
7
<PAGE> 8
made hereunder is limited to the obligations set forth herein with respect to
such sale and no term or provision of this Plan shall be construed to impose
any liability on the Company in favor of any employee with respect to any loss,
cost or expense which the employee may incur in connection with or arising out
of any transaction in connection with this Plan. The cash proceeds received by
the Company from the issuance of Common Shares pursuant to this Plan will be
used for general corporate purposes. The expense of administering this Plan
shall be borne by the Company. The captions and section numbers appearing in
this Plan are inserted only as a matter of convenience. They do not define,
limit, construe or describe the scope or intent of the provisions of this Plan.
14. Termination of This Plan. This Plan shall terminate on August
23, 2003, and thereafter no Stock Options or Restricted Stock shall be granted
hereunder. All Stock Options and Restricted Stock outstanding at the time of
termination of this Plan shall continue in full force and effect according to
their terms and the terms and conditions of this Plan.
8
<PAGE> 1
EXHIBIT 15.1
November 4, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Patterson Energy, Inc.
Registration on Form S-8
We are aware that our reports dated April 30, 1997 and July 24, 1997, on our
reviews of interim financial information of Patterson Energy, Inc. for the
periods ended March 31, 1997 and June 30, 1997, and included in the Company's
Quarterly Reports on Form 10-Q for the quarters then ended are incorporated by
reference in this registration statement. Pursuant to Rule 436(c) under the
Securities Act of 1933, this report should not be considered a part of the
registration statement prepared or certified by us within the meaning of
Section 7 and 11 of that Act.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Dallas, Texas
<PAGE> 1
EXHIBIT 15.2
November 4, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
We are aware that our report dated July 7, 1997, on our review of interim
financial information of WES-TEX Drilling Company for the periods ended March
31, 1997 and 1996, included in Patterson Energy, Inc.'s Current Report on Form
8-K as amended, dated June 12, 1997, is incorporated by reference in Patterson
Energy, Inc.'s Registration Statement on Form S-8. Pursuant to Rule 436(c)
under the Securities Act of 1933, this report should not be considered a part
of the registration statement prepared or certified by us within the meaning of
Sections 7 and 11 of that Act.
/s/ Davis, Kinard & Co. P.C.
DAVIS, KINARD & CO. P.C.
Abilene, Texas
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration
Statement of Patterson Energy, Inc. on Form S- 8 of our report dated March 10,
1997, on our audits of the consolidated financial statements of Patterson
Energy, Inc. as of December 31, 1995 and 1996 and for each of the three years
in the period ended December 31, 1996, which is included in Patterson Energy,
Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 1996.
We also consent to the reference to our firm under the caption "Experts".
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Dallas, Texas
November 4, 1997
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of our report dated May 16, 1996,
included in the Patterson Energy, Inc., Annual Report on Form 10-K for the year
ended December 31, 1996, and to all references to our firm included in this
Registration Statement.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
San Antonio, Texas
November 4, 1997
<PAGE> 1
EXHIBIT 23.3
CONSENT OF M. BRIAN WALLACE, INDEPENDENT PETROLEUM ENGINEER
I hereby consent to the incorporation by reference in this
registration statement of Patterson Energy, Inc. on Form S-8 of certain
information contained in Patterson Energy, Inc.'s Annual Report on Form 10-K
for the fiscal year ended December 31, 1996, which information is contained in
my summary reserve report dated February 5, 1997, relating to the oil and
natural gas reserves and revenues as of December 31, 1994, 1995 and 1996 of
certain properties owned by Patterson Energy, Inc. as of December 31, 1996.
/s/ M. Brian Wallace
M. BRIAN WALLACE, P.E.
Dallas, Texas
November 4, 1997
<PAGE> 1
EXHIBIT 23.5
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement of
Patterson Energy, Inc. on Form S-8 of our report dated July 7, 1997, on our
audits of the financial information of WES-TEX Drilling Company as of December
31, 1996 and 1995 and for each of the three years in the period ended December
31, 1996, which is included in Patterson Energy, Inc.'s Current Report on Form
8-K as amended, dated June 12, 1997. We also consent to the reference to our
firm under the caption "Experts".
/s/ Davis, Kinard & Co. P.C.
DAVIS, KINARD & CO. P.C.
Abilene, Texas
November 4, 1997
