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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) June 3, 1997
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PATTERSON ENERGY, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-22664 75-2504748
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
4510 Lamesa Highway, Snyder, Texas 79549
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(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code: 915-573-1104
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No Change
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(Former name or former address, if changed since last report.)
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ITEM 5. OTHER EVENTS.
On June 4, 1997 the Registrant issued the following press release:
PATTERSON ENERGY, INC. ANNOUNCES EXECUTION OF DEFINITIVE AGREEMENT WITH
WES-TEX DRILLING COMPANY AND THE EXECUTION OF CREDIT AGREEMENT
SNYDER, TEXAS, JUNE 4, 1997-PATTERSON ENERGY, INC. (NASDAQ:PTEN) and Wes-Tex
Drilling Company announced today that they have executed a definitive agreement
for the acquisition by Patterson of the contract drilling operations of Wes-Tex
and the execution of a $30 million credit agreement with Norwest Bank Texas,
N.A.
Under the terms of the Wes-Tex definitive agreement, Patterson will purchase 21
drilling rigs, rig hauling trucks and trailers, and a yard and shop located in
Abilene, Texas in consideration for $25 million in cash, 283,000 shares of
Patterson common stock and 200,000 warrants to purchase Patterson common stock
exercisable at $32.00 per share. Consummation of the acquisition is to occur
in the next 7 to 10 days.
Patterson has also entered into a $30 million credit agreement with Norwest
Bank Texas, N.A. Proceeds from the credit agreement may be used for
acquisitions, capital expenditures and working capital purposes. Up to $15
million of the cash payment to Wes-Tex will be borrowed under the credit
facility to fund a portion of the Wes-Tex acquisition.
Patterson Energy, Inc., a Snyder, Texas based energy company, is one of the
leading providers of domestic land drilling services to major and independent
oil and natural gas companies and, to a lesser extent, is engaged in the
development, exploration, acquisition and production of oil and natural gas.
Patterson has 66 land-based drilling rigs (60 of which are currently operable)
and focuses its operations primarily in Texas and southeast New Mexico.
For further information, contact:
Patterson Energy, Inc.
Cloyce A. Talbott, Chairman and Chief Executive Officer
James C. Brown, Vice President-Finance and Chief Financial Officer
915-573-1104
Shimmerlik Corporate Communications, Inc.
Warren M. Shimmerlik
212-247-5200
4510 Lamesa Highway - Snyder, Texas 79549 - 915-573-1104
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ITEM 5. OTHER EVENTS. (CONTINUED)
The Company has entered into a $30.0 million credit facility with
Norwest Bank Texas, N. A. The facility provides for an advancing,
non-revolving line of credit until December 31, 1997, at which time the
principal balance of the line will be converted to a term loan with a maturity
date of January 1, 2000, and a seven-year amortization. The credit facility is
payable, interest only (at the three-month LIBOR rate plus 2.5%), until
December 31, 1997. The line of credit is unsecured, but does not permit any
liens to exist on assets of the Company and its subsidiaries. The credit
agreement governing the line of credit requires the Company to, among other
things, maintain a ratio of cash flows to current maturities of long-term debt
plus capital lease payments of 2.0 to 1.0 on a rolling four quarters basis, a
debt-to-tangible net worth ratio of not more than 0.60 to 1.0 at the end of
each quarter, a current ratio of at least 1.75 to 1.0 at the end of each
quarter, and a positive net income on a rolling four quarters basis. In
addition, the credit agreement prohibits the Company and its subsidiaries from
having any other indebtedness for borrowed money, secured or unsecured, with
the exception of normal trade payables and prohibits the Company from paying
any dividends without the consent of the bank. The outstanding balance under
line may be prepaid at any time in whole or in part without premium or penalty.
Proceeds from the credit facility are to be used by the Company for
acquisition, capital expenses, and working capital purposes. The Company will
use up to $15.0 million of the line of credit to fund a portion of the
acquisition of the contract drilling operations of Wes-Tex Drilling Company.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) EXHIBITS.
2.1 Asset Purchase Agreement dated June 4, 1997
among Patterson Energy, Inc., Patterson
Drilling Company and Wes-Tex Drilling
Company.
2.1.1 Amendment To Asset Purchase Agreement dated
June 4, 1997 among Patterson Energy, Inc.,
Patterson Drilling Company and Wes-Tex
Drilling Company.
2.2 Agreement dated June 4, 1997 among Patterson
Energy, Inc., Patterson Drilling Company,
Greathouse Foundation and Myrle Greathouse,
Trustee under Agreement dated May 2, 1997
(the "Greathouse Charitable Remainder
Trust").
2.3 Escrow Agreement dated June 4, 1997 among
Patterson Energy, Inc., Wes-Tex Drilling
Company and First National Bank of Abilene
N.A.
10.1 Credit Agreement dated June 3, 1997 by and
between Patterson Energy, Inc., Patterson
Drilling Company, Patterson Drilling
Programs, Inc., Patterson Petroleum, Inc.,
Patterson Trading Company, Inc. and Norwest
Bank Texas N. A.
10.2 Promissory Note dated June 3, 1997 among
Patterson Energy, Inc. and Norwest Bank
Texas, National Association.
10.3 Corporate Guarantees of Patterson Drilling
Company, Patterson Petroleum, Inc., Patterson
Drilling Programs, Inc. and Patterson Trading
Company, Inc.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: June 10, 1996 By: /s/ CLOYCE A. TALBOTT
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Cloyce A. Talbott
Chairman and Chief Executive Officer
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EXHIBIT INDEX
Exhibit
Number Exhibit Description
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2.1 Asset Purchase Agreement dated June 4, 1997 among
Patterson Energy, Inc., Patterson Drilling Company and Wes
Tex Drilling Company.
2.1.1 Amendment To Asset Purchase Agreement dated June 4, 1997
among Patterson Energy, Inc., Patterson Drilling Company
and Wes-Tex Drilling Company.
2.2 Agreement dated June 4, 1997 among Patterson Energy,
Inc., Patterson Drilling Company, Greathouse Foundation
and Myrle Greathouse, Trustee under Agreement dated May
2, 1997 (the "Greathouse Charitable Remainder Trust").
2.3 Escrow Agreement dated June 4, 1997 among Patterson Energy,
Inc., Wes-Tex Drilling Company and First National Bank of
Abilene ,N.A.
10.1 Credit Agreement dated June 3, 1997 by and between
Patterson Energy, Inc., Patterson Drilling Company,
Patterson Drilling Programs, Inc., Patterson Petroleum,
Inc., Patterson Trading Company, Inc. and Norwest Bank
Texas N. A.
10.2 Promissory Note dated June 3, 1997 among Patterson
Energy, Inc. and Norwest Bank Texas, N. A.
10.3 Corporate Guarantees of Patterson Drilling Company,
Patterson Petroleum, Inc., Patterson Drilling Programs,
Inc. and Patterson Trading Company, Inc.
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EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
AMONG
PATTERSON ENERGY, INC.,
PATTERSON DRILLING COMPANY
AND
WES-TEX DRILLING COMPANY
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TABLE OF CONTENTS
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ARTICLE I
THE ASSET PURCHASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
SECTION 1.1 The Asset Purchase . . . . . . . . . . . . . . . . . . -1-
SECTION 1.2 Purchase . . . . . . . . . . . . . . . . . . . . . . -2-
SECTION 1.3 Closing . . . . . . . . . . . . . . . . . . . . . . . -2-
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PEC AND PDC . . . . . . . . . . . . . . . -2-
SECTION 2.1 Organization, Standing and Power . . . . . . . . . . . -2-
SECTION 2.2 Authority; Non-Contravention . . . . . . . . . . . . . -2-
SECTION 2.3 Capital Structure. . . . . . . . . . . . . . . . . . . -3-
SECTION 2.4 SEC Documents. . . . . . . . . . . . . . . . . . . . . -4-
SECTION 2.5 Environmental Matters. . . . . . . . . . . . . . . . . -4-
SECTION 2.6 Litigation. . . . . . . . . . . . . . . . . . . . . . -6-
SECTION 2.7 Brokers. . . . . . . . . . . . . . . . . . . . . . . . -6-
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF WES-TEX . . . . . . . . . . . . . . . . . -6-
SECTION 3.1 Organization, Standing and Power. . . . . . . . . . . -6-
SECTION 3.2 Authority; Non-Contravention. . . . . . . . . . . . . -6-
SECTION 3.4 Environmental Matters . . . . . . . . . . . . . . . . -8-
SECTION 3.5 Title. . . . . . . . . . . . . . . . . . . . . . . . . -8-
SECTION 3.6 Labor Matters . . . . . . . . . . . . . . . . . . . . -9-
SECTION 3.7 Drilling Contracts and the Leased Property Lease
Agreements. . . . . . . . . . . . . . . . . . . . . . . . . -9-
SECTION 3.8 Litigation. . . . . . . . . . . . . . . . . . . . . . -9-
SECTION 3.9 Drilling Rigs, Equipment and Rolling Stock. . . . . . . -10-
SECTION 3.10 Brokers. . . . . . . . . . . . . . . . . . . . . . . . -10-
SECTION 3.11 Required Vote of the Wes-Tex Stockholders. . . . . . . -10-
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS . . . . . . . . . . . . . . . . . -10-
SECTION 4.1 Conduct of Wes-Tex Contract Drilling Operations
Pending the Asset Purchase . . . . . . . . . . . . . . . . -10-
SECTION 4.2 No Solicitation . . . . . . . . . . . . . . . . . . . -10-
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ARTICLE V
ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
SECTION 5.1 Fees and Expenses . . . . . . . . . . . . . . . . . . -11-
SECTION 5.2 Reasonable Best Efforts . . . . . . . . . . . . . . . -11-
SECTION 5.3 PDC Assumption of Drilling Contracts. . . . . . . . . -11-
SECTION 5.4 Wes-Tex and M Greathouse Indemnification . . . . . . . -12-
SECTION 5.5 PEC and PDC Indemnification. . . . . . . . . . . . . . -12-
SECTION 5.6 Public Announcements . . . . . . . . . . . . . . . . . -12-
SECTION 5.7 Sales and Transfer Taxes. . . . . . . . . . . . . . . -12-
SECTION 5.8 Real Estate and Personal Property Taxes. . . . . . . . -12-
SECTION 5.9 Wes-Tex Stockholder Approval. . . . . . . . . . . . . -13-
SECTION 5.10 Access to Information . . . . . . . . . . . . . . . . -13-
SECTION 5.11 Filing of Registration Statement on Form S-3. . . . . -14-
SECTION 5.12 Nasdaq National Market. . . . . . . . . . . . . . . . -14-
SECTION 5.13 Escrow Agreement. . . . . . . . . . . . . . . . . . . -14-
ARTICLE VI
CONDITIONS PRECEDENT TO THE ASSET PURCHASE . . . . . . . . . . . . . . . . -14-
SECTION 6.1 Conditions to Each Party's Obligation to Effect the
Asset Purchase . . . . . . . . . . . . . . . . . . . . . . . -14-
SECTION 6.2 Conditions to Obligation of Wes-Tex to Effect the
Asset Purchase . . . . . . . . . . . . . . . . . . . . . . . -15-
SECTION 6.3 Conditions to Obligations of PEC and PDC to Effect the
Asset Purchase . . . . . . . . . . . . . . . . . . . . . . . -17-
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER . . . . . . . . . . . . . . . . . . . . . -20-
SECTION 7.1 Termination. . . . . . . . . . . . . . . . . . . . . . -20-
SECTION 7.2 Effect of Termination. . . . . . . . . . . . . . . . . -20-
SECTION 7.3 Amendment. . . . . . . . . . . . . . . . . . . . . . . -21-
SECTION 7.4 Waiver. . . . . . . . . . . . . . . . . . . . . . . . -21-
ARTICLE VIII
POST CLOSING COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
SECTION 8.1 Access to Information. . . . . . . . . . . . . . . . . -21-
SECTION 8.2 Wes-Tex Financial Statements. . . . . . . . . . . . . -21-
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<TABLE>
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ARTICLE IX
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
SECTION 9.1 Notices . . . . . . . . . . . . . . . . . . . . . . . -22-
SECTION 9.2 Interpretation . . . . . . . . . . . . . . . . . . . . -22-
SECTION 9.3 Counterparts . . . . . . . . . . . . . . . . . . . . . -23-
SECTION 9.4 Entire Agreement; No Third-Party Beneficiaries . . . . -23-
SECTION 9.5 Governing Law . . . . . . . . . . . . . . . . . . . . -23-
SECTION 9.6 Assignment. . . . . . . . . . . . . . . . . . . . . . -23-
SECTION 9.7 Severability . . . . . . . . . . . . . . . . . . . . . -23-
SECTION 9.8 Enforcement of This Agreement . . . . . . . . . . . . -23-
ANNEX 1 Description of Drilling Rigs, Equipment and Rolling Stock
ANNEX 2 Description of Real Property
ANNEX 3 List of Assumed Drilling Contracts and Leased Property
Lease Agreements
EXHIBIT A(I) Non-Competition Agreement - Wes-Tex Drilling Company
EXHIBIT A(II) Non-Competition Agreement - Myrle Greathouse
EXHIBIT A(III) Non-Competition Agreement - Charles Ezzell
EXHIBIT A(IV) Non-Competition Agreement - Danny Mullen
EXHIBIT B Registration Rights Agreement
EXHIBIT C Stock Purchase Warrant
EXHIBIT D Bill of Sale and Assignment
EXHIBIT E Warranty Deed - Shop and Yard
EXHIBIT F Form of Investment Representation Letter
EXHIBIT G Drilling Rig and Crew Lease Agreement
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of June 4, 1997 (this
"Agreement"), among PATTERSON ENERGY, INC., a Delaware corporation ("PEC"),
PATTERSON DRILLING COMPANY, a Delaware corporation ("PDC"), wholly-owned by
PEC, and WES-TEX DRILLING COMPANY, a privately-held Texas corporation
("Wes-Tex").
WITNESSETH:
WHEREAS, Wes-Tex owns 21 drilling rigs, related drilling
equipment and rolling stock and a mobile home relating to its contract drilling
operations (collectively, the "Drilling Rigs, Equipment and Rolling Stock"),
and a shop and yard located in Abilene, Texas (collectively, the "Real
Property"), and leases of yards in Taylor County, Texas, and in Ozona and San
Angelo, Texas (collectively, the "Leased Property"), all as more particularly
described on Annex 1, in the case of the Drilling Rigs, Equipment and Rolling
Stock, and Annex 2, in the case of the Real Property, and Annex 3, in the case
of the Leased Property;
WHEREAS, PDC desires to purchase, and Wes-Tex desires to sell,
all of Wes-Tex's right, title and interest in and to the Drilling Rigs,
Equipment and Rolling Stock and in and to the Real Property and the Leased
Property (the "Asset Purchase") for the consideration set forth and provided
for herein; and
WHEREAS, PDC, on the one hand, and Wes-Tex, on the other, desire
to make certain representations, warranties and agreements in connection with
the Asset Purchase and also prescribe various conditions to the Asset Purchase.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties agree
as follows:
ARTICLE I
THE ASSET PURCHASE
SECTION 1.1 The Asset Purchase. Upon the terms and subject to
the conditions of this Agreement, at the Closing (as defined in Section 1.3
below) provided herein, PDC shall purchase from Wes-Tex and Wes-Tex shall sell
to PDC, all of Wes-Tex's right, title and interest in and to the Real Property
and the Leased Property and in and to the Drilling Rigs, Equipment
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and Rolling Stock.
SECTION 1.2 Purchase Consideration. In consideration for all of
Wes-Tex's right, title and interest in and to the Drilling Rigs, Equipment and
Rolling Stock and in and to the Real Property and the Leased Property, PDC
agrees to pay or deliver to Wes-Tex at the Closing: (i) a total of $18,500,000
in cash (the "Cash"), 110,000 shares of common stock of PEC ("PEC Shares"), and
a Stock Purchase Warrant ("PEC Warrant") to purchase an additional 200,000
shares of PEC common stock with an exercise price of $32.00 per share, and (ii)
7,800 shares of Wes-Tex's Class B Voting Common Stock ("Wes-Tex Class B Stock")
for redemption in accordance with the terms thereof (the Cash, PEC Shares, PEC
Warrant and Wes-Tex Class B Stock are collectively referred to herein as the
"Purchase Consideration").
SECTION 1.3 Closing. The closing of the Asset Purchase (the
"Closing") shall take place in the offices of Wes-Tex in Abilene, Texas, at
9:00 a.m., local time, on or before June 16, 1997, or at such other time and
place as PDC and Wes-Tex shall agree.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PEC AND PDC
PEC and PDC represents and warrants to Wes-Tex as follows:
SECTION 2.1 Organization, Standing and Power. Each of PEC and
PDC (i) is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and has the requisite
corporate power and authority to carry on its business as now being conducted,
and (ii) is in good standing in each jurisdiction where the character of its
business owned or held under lease or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified would not
individually or in the aggregate, have a Material Adverse Effect on PEC.
"Material Adverse Change" or "Material Adverse Effect" means, when used with
respect to PEC, PDC or Wes-Tex, as the case may be, any change or effect that
is or, so far as can reasonably be determined, is likely to be materially
adverse to the assets, properties, condition (financial or otherwise), business
or results of operations of its subsidiaries taken as a whole or the Company,
as the case may be.
SECTION 2.2 Authority; Non-Contravention. Each of PEC and PDC
has all requisite power and authority to enter into this Agreement and to
consummate the Asset Purchase. The execution and delivery by each of PEC and
PDC of this Agreement and the consummation by each of PEC and PDC of the Asset
Purchase have been duly authorized by all necessary corporate action on the
part of PEC and PDC, as the case may be. This Agreement has been duly executed
and delivered by PEC and PDC and (assuming the valid authorization, execution
and
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delivery of this Agreement by Wes-Tex) constitutes a valid and binding
obligation of PEC and PDC enforceable against PEC and PDC in accordance with
its terms, except to the extent enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or other similar
laws of general applicability relating to or affecting the enforcement of
creditors' rights and by the effect of general principles of equity (regardless
of whether enforceability is considered in a proceeding in equity or at law).
The execution and delivery of this Agreement do not or will not, as the case
may be, and the consummation of the transactions contemplated hereby and
thereby and compliance with the provisions hereof and thereof will not,
conflict with, or result in any violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to the loss of a
material benefit under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of PEC or
PDC under, any provision of (i) the Certificate of Incorporation or Bylaws of
PEC and of PDC, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license applicable to PDC or PEC, or (iii) any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to PEC or any of their
respective properties or assets, other than, in the case of clauses (ii) or
(iii), any such conflicts, violations, defaults, rig, losses, liens, security
interests, charges or encumbrances that, individually or in the aggregate,
would not have a Material Adverse Effect on the Registration Rights Agreement
or the PEC Warrant, materially impair the ability of PEC or PDC to perform its
obligations hereunder or under the Registration Rights Agreement or the PEC
Warrant or prevent the consummation of any of the transactions contemplated
hereby or thereby. No filing or registration with, or authorization, consent
or approval of, any domestic (federal and state), foreign or supranational
court, commission, governmental body, regulatory agency, authority or tribunal
(a "Governmental Agency") is required by or with respect to PEC or PDC in
connection with the execution and delivery of this Agreement by PDC or is
necessary for the consummation by PEC or PDC of the Asset Purchase, except for
(i) in connection or in compliance, with the provisions of the Securities Act
of 1933, as amended (the "Securities Act"), and the Securities Exchange Act of
1934 (the "Exchange Act"), (ii) such consents and approvals, orders,
registrations, authorizations, declarations and filings as may be required
under the "Blue Sky" laws of the State of Texas, (iii) such filings and
approvals as may be required under the Improvements Act, and (iv) such other
consents, orders, authorizations, registrations, declarations and filings, the
failure of which to be obtained or made would not, individually or in the
aggregate, have a Material Adverse Effect on either PEC or PDC, materially
impair the ability of PEC or PDC to perform its obligations hereunder or
prevent the consummation of the transaction contemplated hereby.
SECTION 2.3 Capital Structure. As of the date hereof, the
authorized capital stock of PEC consists of 9,000,000 shares of common stock,
par value $0.01 per share ("PEC Common Stock") and 1,000,000 shares of
preferred stock, par value $0.01 per share ("PEC Preferred Stock"). At the
close of business on the day immediately preceding the date of this Agreement,
(i) 7,081,457 shares of PEC Common Stock were validly issued and outstanding,
fully paid and nonassessable and free of preemptive rights, and (ii) no shares
of PEC Preferred
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Stock are issued and outstanding. The PEC Common Stock is designated as a
national market security on an inter-dealer quotation system by the National
Association of Securities Dealers, Inc. All shares of PEC Common Stock
issuable pursuant to the Asset Purchase in accordance with this Agreement and
issuable upon exercise of the PEC Warrant, will be, when so issued, duly
authorized, validly issued, fully paid and non-assessable and free of
preemptive rights.
SECTION 2.4 SEC Documents. PEC has filed all required documents
with the Securities and Exchange Commission ("SEC") since January 1, 1995 (the
"PEC/SEC Documents"). As of their respective dates, the PEC/SEC Documents
complied in all material respects with the requirements of the Securities Act
or the Exchange Act, as the case may be, and none of the PEC/SEC Documents
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The consolidated financial statements of PEC included in the
PEC/SEC Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles (except, in the case of the unaudited statements, as
permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated therein or in the notes thereto)
and fairly present the consolidated financial position of PEC and its
consolidated subsidiaries, including PDC) as at the dates thereof and the
consolidated results of their operations and statements of cash flows for the
periods then ended (subject, in the case of the unaudited statements, to normal
year-end audit adjustments and to any other adjustments described therein).
SECTION 2.5 Environmental Matters.
(a) Except to the extent that the inaccuracy of any of the
following, individually or in the aggregate, would not have a Material Adverse
Effect on PEC, to the knowledge of the executive officers of PEC:
(i) PEC and its subsidiaries, including PDC, hold, and
are in compliance with and have been in compliance with for the last
three years, all Environmental Permits, and are otherwise in substantial
compliance and have been in substantial compliance for the last three
years with, all applicable Environmental Laws and there is no condition
that is reasonably likely to prevent or materially interfere prior to
the date of Closing with compliance by PEC and its subsidiaries,
including PDC, with Environmental Laws;
(ii) no modification, revocation, reissuance,
alteration, transfer or amendment of any Environmental Permit, or any
review by, or approval of, any third party of any Environmental Permit
is required in connection with the execution or delivery of this
Agreement or the consummation by PEC or PDC of the transactions
contemplated
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<PAGE> 9
hereby or the operation of the business of PEC or any of its
subsidiaries on the date of the Closing;
(iii) neither PEC nor any of its subsidiaries, including
PDC, has received any Environmental Claim, nor has any Environmental
Claim been threatened against PEC or any of its subsidiaries, including
PDC;
(iv) neither PEC nor any of its subsidiaries, including
PDC, has entered into, agreed to or is subject to any outstanding
judgment, decree, order or consent arrangement with any governmental
authority under any Environmental Laws, including without limitation
those relating to compliance with any Environmental Laws or to the
investigation, cleanup, remediation or removal of Hazardous Materials;
(v) there are no circumstances that are reasonably
likely to give rise to liability under any agreements with any person
pursuant to which PEC or any of its subsidiaries would be required to
defend, indemnify, hold harmless, or otherwise be responsible for any
violation by or other liability or expense of such person, or alleged
violation by or other liability or expense of such person, arising out
of any Environmental Law; and
(vi) there are no other circumstances or conditions that
are reasonably likely to give rise to liability of PEC or any of its
subsidiaries, including PDC, under any Environmental Laws.
(b) For purposes of this Agreement, the terms below shall have
the following meanings:
"Environmental Claim" means any written complaint, notice,
claim, demand, action, suit or judicial, administrative or
arbitral proceeding by any person to PEC or any of its
subsidiaries, including PDC, (or, for purposes of Section 3.3,
Wes-Tex) asserting liability or potential liability (including
without limitation, liability or potential liability for
investigatory costs, cleanup costs, governmental response costs,
natural resource damages, property damage, personal injury, fines
or penalties) arising out of, relating to, based on or resulting
from (i) the presence, discharge, emission, release or threatened
release of any Hazardous Materials at any location, (ii)
circumstances forming the basis of any violation or alleged
violation of any Environmental Laws or Environmental Permits, or
(iii) otherwise relating to obligations or liabilities of PEC or
any of its subsidiaries, including PDC, (or, for purposes of
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<PAGE> 10
Section 3.3, Wes-Tex) under any Environmental Law.
"Environmental Permits" means all permits, licenses,
registrations, exemptions and other governmental authorizations
required under Environmental Laws for PEC or any of its
subsidiaries, including PDC, (or, for purposes of Section 3.3,
Wes-Tex) to conduct its operations as presently conducted.
"Environmental Laws" means all applicable foreign,
federal, state and local statutes, rules, regulations,
ordinances, orders, decrees and common law relating in any manner
to pollution or protection of the environment, to the extent and
in the form that such exist at the date hereof.
"Hazardous Materials" means all hazardous or toxic
substances, wastes, materials or chemicals, petroleum (including
crude oil or any fraction thereof) and petroleum products,
asbestos and asbestos-containing materials, pollutants,
contaminants and all other materials and substances, including
but not limited to radioactive materials, regulated pursuant to
any Environmental Laws.
SECTION 2.6 Litigation. There is no suit, action, investigation
or proceeding pending or, to the knowledge of the executive officers of PEC,
threatened against PEC or any of its subsidiaries, including PDC, at law or in
equity before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, or before any arbitrator of any kind, that would impair the ability of
PEC or PDC to perform its obligations hereunder or to consummate the
transactions contemplated hereby, and there is no judgment, decree, injunction,
rule or order of any court, governmental department, commission, board, bureau,
agency, instrumentality or arbitrator to which PEC or any of its subsidiaries,
including PDC, is subject that would impair the ability of PEC or PDC to
perform its obligations hereunder or to consummate the transactions
contemplated hereby.
SECTION 2.7 Brokers. No broker, investment banker or other
person is entitled to any broker's, finder's or similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of PEC or PDC.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF WES-TEX
SECTION 3.1 Organization, Standing and Power. Wes-Tex is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Texas and has the requisite corporate power and authority
to carry on its business as now being conducted.
SECTION 3.2 Authority; Non-Contravention. Wes-Tex has all
requisite power and authority to enter into this Agreement and to consummate
the Asset Purchase. The execution and delivery of this Agreement by Wes-Tex
and the consummation by Wes-Tex of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Wes-Tex.
This Agreement has been duly executed and delivered by Wes-Tex and (assuming
the valid authorization, execution and delivery of this Agreement by PEC and
PDC) constitutes a valid and binding obligation of Wes-Tex enforceable against
it in accordance with its terms, except to the extent enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other similar laws of general applicability relating to or
affecting the enforcement of creditors' rights and by the effect of general
principles of equity (regardless of whether enforceability is considered in a
proceeding in equity or at law). The execution and delivery of this Agreement
do not, and the consummation of the Asset Purchase and compliance with the
provisions hereof will not, conflict with, or result in any violation of, or
default (with or without notice of lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or to
the loss of a material benefit under, or result in the creation of any lien,
security interest, charges or encumbrances upon any of the properties or assets
of Wes-Tex under, any provision of (i) the Articles of Incorporation or Bylaws
of Wes-Tex (true and complete copies of which as of the date hereof have been
delivered to PEC), (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license applicable to Wes-Tex, or (iii) any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Wes-Tex or any of its
respective properties or assets, other than, in the case of clauses (ii) or
(iii), any such conflicts, violations, defaults, rights, losses, liens,
security interests, charges or encumbrances that individually other than the
aggregate, would not have a Material Adverse Effect on Wes-Tex, materially
impair the ability of Wes-Tex to perform its obligations hereunder or prevent
the consummation of any of the transactions contemplated hereby. No filing or
registration with, or authorization, consent or approval of, any Governmental
Entity is required by or with respect to Wes-Tex in connection with the
execution and delivery of this Agreement by Wes-Tex or is necessary for the
consummation by Wes-Tex of the Asset Purchase, except for such filings and
approvals as may be required under the Improvements Act.
SECTION 3.3 Capital Structure. The authorized capital stock of
Wes-Tex consists of 1,000,000 shares of Class A Voting Common Stock, $1.00 par
value per share ("Wes-Tex
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Class A Stock"), and 7,800 shares of Class B Voting Common Stock, par value
$1.00 per share (referred to herein as "Wes-Tex Class B Stock"), of which (i)
200,000 shares of Wes-Tex Class A Stock are issued and outstanding and owned by
Myrle Greathouse, and (ii) 7,800 shares of Wes-Tex Class B Stock are issued and
outstanding and owned by the Greathouse Foundation (the "Greathouse
Foundation"), a Texas non-profit corporation (4,758 shares), and by Myrle
Greathouse, Trustee under Agreement dated June 2, 1997 ("Greathouse Charitable
Remainder Trust") (3,042 shares). There are no options, warrants, rights,
commitments, agreements, arrangements or undertakings of any kind to which
Wes-Tex is a party or by which it is bound obligating Wes-Tex to issue, deliver
or sell or cause to be issued, delivered or sold additional shares of Wes-Tex
Class B Stock. True and correct copies of the Articles of Incorporation and
Bylaws have been furnished to PDC.
SECTION 3.4 Environmental Matters.
(a) Except to the extent that the inaccuracy of any of the
following, individually or in the aggregate, would not have a Material Adverse
Effect on Wes-Tex, to the knowledge of Wes-Tex:
(i) Wes-Tex holds, and is in compliance with and has
been in compliance with for the last three years, all Environmental
Permits, and is otherwise in substantial compliance and has been in
substantial compliance for the last three years with, all applicable
Environmental Laws and there is no condition that is reasonably likely
to prevent or materially interfere prior to the Effective Time with
compliance by Wes-Tex with Environmental Laws;
(ii) no modification, revocation, reissuance,
alteration, transfer or amendment of any Environmental Permit, or any
review by, or approval of, any third party of any Environmental Permit
is required in connection with the execution or delivery of this
Agreement or the consummation by Wes-Tex of the transactions
contemplated hereby or the operation of the business of Wes-Tex on the
date of the Closing;
(iii) Wes-Tex has not received any Environmental Claim,
nor has any Environmental Claim been threatened against Wes-Tex;
(iv) Wes-Tex has not entered into, agreed to or is not
subject to any outstanding judgment, decree, order or consent
arrangement with any governmental authority under any Environmental
Laws, including without limitation those relating to compliance with any
Environmental Laws or to the investigation, cleanup, remediation or
removal of Hazardous Materials;
(v) there are no circumstances that are reasonably
likely to give rise to liability under any agreements with any person
pursuant to which Wes-Tex would be
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required to defend, indemnify, hold harmless, or otherwise be
responsible for any violation by or other liability or expense of such
person, or alleged violation by or other liability or expense of such
person, arising out of any Environmental Law; and
(vi) there are no other circumstances or conditions that
are reasonably likely to give rise to liability of Wes-Tex under any
Environmental Laws.
SECTION 3.5 Title. Set forth in Annex 1 and Annex 2 is a
description of the Drilling Rigs, Equipment and Rolling Stock and of the Real
Property, respectively, which description is accurate and complete in all
material respects. Wes-Tex has good and, in the case of the Real Property,
indefeasible title to a 100% interest in the Drilling Rigs, Equipment and
Rolling Stock and in the Real Property and a valid leasehold interest in the
Leased Property, subject, in each case, to no Liens except for (i) Liens for
taxes not yet delinquent or the validity of which is being contested in good
faith; (ii) any Liens arising by operation of law securing obligations not yet
overdue; and (iii) Liens to First National Bank of Abilene (the "Bank"),
Abilene, Texas, which Liens will be fully paid by Wes-Tex and such Liens
released by the Bank on or prior to Closing. For purposes of this Agreement
"Liens" means liens, mortgages, pledges, security interests, encumbrances,
claims or charges of any kind.
SECTION 3.6 Labor Matters. (i) Wes-Tex is not a party to any
collective bargaining agreement or other material contract or agreement with
any labor organization or other representative of employees nor is any such
contract being negotiated; (ii) there is no material unfair labor practice
charge or complaint pending nor, to the knowledge of the executive officers of
Wes-Tex, threatened, with regard to employees of Wes-Tex; (iii) there is no
labor strike, material slowdown, material work stoppage or other material labor
controversy in effect, or, to the knowledge of the executive officers of Wes-
Tex, threatened against Wes-Tex; (iv) as of the date hereof, no representation
question exists, nor to the knowledge of the executive officers of Wes-Tex are
there any campaigns being conducted to solicit cards from the employees of Wes-
Tex to authorize representation by a labor organization; (v) Wes-Tex is not
party to, or is not otherwise bound by, any consent decree with any
governmental authority relating to employees or employment practices of Wes-
Tex; and (vi) Wes-Tex is in compliance with all applicable agreements,
contracts and policies relating to employment, employment practices, wages,
hours and terms and conditions of employment of the employees, except where the
failure to be in compliance with each such agreement, contract and policy would
not, either singly or in the aggregate, have a Material Adverse Effect on Wes-
Tex.
SECTION 3.7 Drilling Contracts and the Leased Property Lease
Agreements. Set forth in Annex 3 is a true and complete list of all Assumed
Drilling Contracts (as defined in Section 5.3 hereof) and a true and complete
list and description (which description is accurate and complete in all
material respects) of all lease agreements (collectively, the "Leased Property
Lease Agreements") covering the Leased Property. A complete copy of each of
the Assumed Drilling Contracts and Leased Property Lease Agreements has
previously been delivered to PEC. Each
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of the Assumed Drilling Contracts and Leased Property Lease Agreements has been
fully performed by Wes-Tex to date, and is in good standing and in full force
and effect. Except for the Non-Assumed Drilling Contracts (as defined in
Section 5.3 hereof) or as set forth on Annex 3, none of the Real Property, the
Drilling Rigs, Equipment and Rolling Stock or the Leased Property is subject to
any written or oral contracts and agreements.
SECTION 3.8 Litigation. There is no suit, action, investigation
or proceeding pending or, to the knowledge of the executive officers of Wes-
Tex, threatened against Wes-Tex at law or in equity before or by any federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, or before any arbitrator of any
kind, that would impair the ability of Wes-Tex to perform its obligations
hereunder or to consummate the transactions contemplated hereby, and there is
no judgment, decree, injunction, rule or order of any court, governmental
department, commission, board, bureau, agency, instrumentality or arbitrator to
which Wes-Tex is subject that would impair the ability of Wes-Tex to perform
its obligations hereunder or to consummate the transactions contemplated
hereby.
SECTION 3.9 Drilling Rigs, Equipment and Rolling Stock. Annex 1
sets forth or incorporates by reference a list of all drilling rigs, equipment
and rolling stock relating to the contract drilling operations of Wes-Tex,
which list is true, correct and complete in all material respects, all of which
drilling rigs, equipment and rolling stock (except the rolling stock expressly
excluded as set forth on Annex 1) are included in the Drilling Rigs, Equipment
and Rolling Stock.
SECTION 3.10 Brokers. No broker, investment banker or other
person is entitled to any broker's, finder's or other similar fee or commission
in connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Wes-Tex.
SECTION 3.11 Required Vote of the Wes-Tex Stockholders. The
affirmative vote of the holders of not less than two-thirds of the outstanding
shares of the Wes-Tex Common Stock is required to adopt this Agreement. No
other vote of the stockholders of Wes-Tex is required by law, the Articles of
Incorporation or Bylaws of Wes-Tex or otherwise to adopt this Agreement and
approve the Asset Purchase and other transactions contemplated hereby.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.1 Conduct of Wes-Tex Contract Drilling Operations
Pending the Asset Purchase. During the period from the date of this Agreement
through the date of Closing, Wes-
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Tex: (i) shall, in all material respects, carry on its contract drilling
operations in the ordinary course and consistent with past practice and, to the
extent consistent therewith and with the terms of this Agreement, use all
reasonable efforts to keep available the services of its employees and preserve
its relationships with customers, suppliers and others having business dealings
with it to the end that its goodwill and ongoing contract drilling operations
shall be unimpaired at the date of Closing, (ii) shall not sell, lease or
otherwise dispose of or agree to sell, lease or otherwise dispose of any of the
Drilling Rigs, Equipment and Rolling Stock except in the ordinary course of
business consistent with past practice, (iii) shall not issue any additional
shares of Wes-Tex Class B Stock or any securities convertible into, or grant
any rights, warrants or options, to acquire any such shares or convertible
securities; or (iv) shall not amend its Articles of Incorporation to create a
new class of equity security with a redeemable feature.
SECTION 4.2 No Solicitation. From and after the date hereof,
Wes-Tex will not, and will cause its officers, directors, employees, agents and
other representatives not to, directly or indirectly, solicit or initiate any
offer for Wes-Tex, or for the contract drilling operations of Wes-Tex, and not
to solicit or initiate, directly or indirectly, discussions, negotiations,
considerations or inquiries concerning an offer for Wes-Tex, from any person,
or engage in discussions or negotiations relating thereto, or provide to any
other person any information or data relating to Wes-Tex or the contract
drilling operations of Wes-Tex for the purpose of, or have any substantive
discussions with any person relating to, or otherwise cooperate with or assist
or participate in, or facilitate, any offer or any inquiry or proposal which
would reasonably be expected to lead to any effort or attempt by any person to
effect an offer, or agree to endorse any such inquiry or offer.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1 Fees and Expenses. All costs and expenses incurred
by PEC or PDC in connection with this Agreement and the transactions
contemplated hereby, as well as the costs associated with the Hart-Scott-Rodino
filing under the Improvements Act, shall be paid by PEC; such costs and
expenses incurred by Wes-Tex, other than costs associated with the Hart-Scott-
Rodino filing under the Improvements Act, shall be paid by Wes-Tex.
SECTION 5.2 Reasonable Best Efforts. Upon the terms and subject
to the conditions set forth in this Agreement, each of the parties agrees to
use all reasonable best efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, and to assist and cooperate with the other parties
in doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Asset Purchase and
the other transactions contemplated by this Agreement and the prompt
satisfaction of the conditions hereto.
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SECTION 5.3 PDC Assumption of Drilling Contracts. Effective as
of 7:00 a.m. Snyder, Texas time on the date of Closing ("Effective Time of
Assumption"), PDC shall assume all obligations and rights and benefits of
Wes-Tex under each of the drilling contracts (collectively, the "Drilling
Contracts") relating to the Drilling Rigs, Equipment and Rolling Stock or the
Real Property to which Wes-Tex is a party that: (a) relate to a well on which
Wes-Tex has not commenced drilling operations at the Effective Time of
Assumption; (b) involve the drilling of more than one well (but only as to and
to the extent of the obligations and rights and benefits of Wes-Tex associated
with wells on which Wes-Tex has not completed or commenced drilling operations
at the Effective Time of Assumption); or (c) are described in clause (a) or (b)
of this Section 5.3 and are entered into in the ordinary course of business
between the date of this Agreement and the Closing and are approved in writing
by PDC, all of which (except the Drilling Contracts described in clause (c) of
this Section 5.3) are identified on Annex 3 hereto (collectively, the "Assumed
Drilling Contracts"). Wes-Tex shall retain (and PDC shall not assume any of)
the obligations and rights and benefits of Wes-Tex under any of the Drilling
Contracts (or, in the case of Drilling Contracts covering multiple wells, any
portion of such Drilling Contracts) not included in the Assumed Drilling
Contracts (such Drilling Contracts or portions thereof being collectively
referred to herein as the "Non-Assumed Drilling Contracts"). Wes-Tex shall be
responsible for completing and fulfilling all of its obligations under the Non-
Assumed Drilling Contracts in the ordinary course of business and PDC shall
lease, pursuant to the Drilling Rig and Crew Lease Agreement referred to in
Section 6.1(e) hereof, drilling rigs and the related crews to Wes-Tex for use
by Wes-Tex in completing the Non-Assumed Drilling Contracts (excluding any
portions thereof relating to Drilling Contracts entered into between the date
of the Agreement and the Closing that PDC has not approved in writing and
assumed and that cover wells on which drilling operations have not commenced at
the Effective Time of Assumption.
SECTION 5.4 Wes-Tex and M Greathouse Indemnification. On and
after the date of Closing, Wes-Tex and Myrle Greathouse ("M Greathouse"), the
Chairman of the Board of Wes-Tex and the sole holder of the Wes-Tex Class A
Stock, shall jointly and severally indemnify and hold PEC and PDC harmless
against and in respect of all actions, suits, demands, judgments, costs and
expenses (including reasonable attorneys' fees of PEC or PDC), relating to any
misrepresentation, breach of any representation or warranty or non-fulfillment
of any agreement on the part of Wes-Tex contained in this Agreement. This
indemnification provided for in this Section 5.4 shall terminate and be of no
further force and effect two years from the Closing Date, except as to any
representation or warranty as to which a written notice of claim for
indemnification has been given to Wes-Tex and M Greathouse prior to the
expiration of such two-year period.
SECTION 5.5 PEC and PDC Indemnification. On and after the
Closing Date, PEC and PDC shall jointly and severally indemnify and hold Wes-
Tex harmless against and in respect of all actions, suits, demands, judgments,
costs and expenses (including reasonable attorneys' fees of Wes-Tex) relating
to (i) any misrepresentation, breach of any misrepresentation
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or warranty or non-fulfillment of any agreement on the part of PEC or PDC
contained in this Agreement, or (ii) relating to any of the Assumed Drilling
Contracts and the Leased Property Lease Agreements for events occurring after
the Effective Time of Assumption (but, with respect to Assumed Drilling
Contracts assumed under clause (b) of Section 5.3 hereof, only as to and to the
extent of obligations of Wes-Tex accruing and associated with wells on which
Wes-Tex has not completed or commenced drilling operations at the Effective
Time of Assumption).
SECTION 5.6 Public Announcements. Unless otherwise required by
law or the rules and regulations of the SEC, neither PDC, PEC nor Wes-Tex shall
issue any press release or make any public statement with respect to the Asset
Purchase prior to Closing, other than the press release dated May 7, 1997, and
the press release dated the date hereof.
SECTION 5.7 Sales and Transfer Taxes. PDC agrees to pay any and
all sales and/or transfer taxes due with respect to the Asset Purchase.
SECTION 5.8 Real Estate and Personal Property Taxes. Wes-Tex
and PDC agree that general real estate and personal property taxes based on the
notices of proposed assessment for ad valorem taxes for the year of Closing,
rents, water and service charges and any special assessments or other charges
on the Real Property and Personal Property shall be prorated between Wes-Tex
and PDC to the date of Closing. If such notices of proposed assessment are not
available at the time of Closing, the parties hereby agree that the proration
of such real estate and personal property taxes, based on such notices of
proposed assessment, shall be made promptly upon receipt of such notices. Such
prorations shall be final.
SECTION 5.9 Wes-Tex Stockholder Approval. Wes-Tex shall
promptly call a meeting of its stockholders for the purposes of voting upon the
Asset Purchase and use its reasonable best efforts to obtain stockholder
approval of the Asset Purchase.
SECTION 5.10 Access to Information.
(a) Wes-Tex shall afford to PEC, and to PEC's accountants,
counsel, financial advisers and other representatives, reasonable access and
permit them to make such inspections as they may reasonably require during the
period from the date of this Agreement through the date of Closing to all
books, contracts, commitments and records relating to its contract drilling
operations and the Drilling Rigs, Equipment, Rolling Stock, Real Property and,
during such period, Wes-Tex shall furnish promptly to PEC (i) access to each
report, schedule, registration statement and other document filed by it during
such period pursuant to the requirements of federal or state laws and (ii) all
other information concerning Wes-Tex, its business, properties and personnel as
PEC may reasonably request. Except as required by law, PEC will hold, and will
cause its affiliates, associates and representatives to hold, any non-public
information in confidence until such time as such information otherwise becomes
publicly available and shall use its reasonable best efforts to ensure that
such affiliates, associates and representatives do not
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disclose such information to others without the prior written consent of
Wes-Tex. In the event of termination of this Agreement for any reason, PEC
shall promptly return or destroy all non-public documents so obtained from
Wes-Tex and any copies made of such documents for PEC. PEC shall not, and
shall cause its affiliates, associates and representatives not to, use any non-
public information regarding Wes-Tex in any way detrimental to Wes-Tex.
(b) PEC shall, and shall cause each of its subsidiaries to,
afford to Wes-Tex, and to Wes-Tex's accountants, counsel, financial advisers
and other representatives, reasonable access and permit them to make such
inspections as they may reasonably require during the period from the date of
this Agreement through the date of Closing to all their respective properties,
books, contracts, commitments and records and, during such period, PEC shall,
and shall cause each of its subsidiaries to, furnish promptly to Wes-Tex all
other information concerning PEC, its business, properties and personnel as
Wes-Tex may reasonably request. Except as required by law, Wes-Tex will hold,
and will cause its affiliates, associates and representatives to hold, any non-
public information in confidence until such time as such information otherwise
becomes publicly available and shall use its reasonable best efforts to ensure
that such affiliates, associates and representatives do not disclose such
information to others without the prior written consent of PEC. In the event
of termination of this Agreement for any reason, Wes-Tex shall promptly return
or destroy all non-public documents so obtained from PEC and any copies made of
such documents for Wes-Tex. Wes-Tex shall not, and shall cause its affiliates,
associates and representatives not to, use any non-public information regarding
PEC in any way detrimental to PEC.
(c) No investigation pursuant to this Section 5.10 shall
affect any representation or warranty in this Agreement of any party hereto or
any condition to the obligations of the parties hereto.
SECTION 5.11 Filing of Registration Statement on Form S-3. PEC
agrees to file a Registration Statement on Form S-3 with the SEC on the date of
Closing covering the distribution of the PEC Shares and further agrees to use
its best efforts to cause such Registration Statement to become effective with
the SEC, all as more fully provided in the Registration Rights Agreement
attached hereto as Exhibit B.
SECTION 5.12 Nasdaq National Market. PEC shall use its
reasonable best efforts to list on the Nasdaq National Market, upon official
notice of issuance, the shares of PEC Common Stock to be issued in connection
with the Asset Purchase and pursuant to the PEC Warrant.
SECTION 5.13 Escrow Agreement. Simultaneously with the
execution of this Agreement, PEC, Wes-Tex and the Bank have entered into an
Escrow Agreement pursuant to which PEC has deposited cash in the amount of
$19,000,000.
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ARTICLE VI
CONDITIONS PRECEDENT TO THE ASSET PURCHASE
SECTION 6.1 Conditions to Each Party's Obligation to Effect the
Asset Purchase. The respective obligations of each party to effect the Asset
Purchase shall be subject to the fulfillment or waiver (where permissible) at
or prior to the date of Closing of each of the following conditions:
(a) Nasdaq National Market Listing. The 283,000 shares of PEC
Shares issuable on the Closing Date pursuant to this agreement and the
Agreement referred to in Section 6.1(f) hereof and the 200,000 Shares of PEC
Common Stock issuable upon exercise of the PEC Warrant shall have been
authorized for listing on the Nasdaq National Market upon official notice of
issuance.
(b) No Order. No Governmental Entity or court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
law, rule, regulation, executive order, decree, injunction or other order
(whether temporary, preliminary or permanent) which is then in effect and has
the effect of prohibiting the Asset Purchase or any of the other transactions
contemplated hereby; provided that, in the case of any such decree, injunction
or other order, each of the parties shall have used reasonable best efforts to
prevent the entry of any such injunction or other order and to appeal as
promptly as practicable any decree, injunction or other order that may be
entered.
(c) Consents. Wes-Tex shall have received written consents of
the other party or parties to each of the Assumed Drilling Contracts and the
Leased Property Lease Agreements for the assumption thereof by PDC pursuant to
the provisions of Section 5.3 of this Agreement and delivered copies thereof to
PDC.
(d) Non-Competition Agreements. A Non-Competition Agreement
in the respective forms attached hereto as Exhibits A(I), A(II), A(III) and
A(IV) shall have been executed and delivered by PEC, PDC, Wes-Tex, M
Greathouse, Charles Ezzell ("C Ezzell") and Danny Mullen ("D Mullen"), as the
case may be.
(e) Drilling Rig and Crew Lease Agreement. A Drilling Rig and
Crew Lease Agreement in the form attached hereto as Exhibit G shall have been
executed and delivered by PDC and Wes-Tex.
(f) Purchase of Wes-Tex Class B Stock. PDC shall have
purchased all of the outstanding shares of Wes-Tex Class B Stock pursuant to
the terms of the Agreement dated of even date herewith between the Greathouse
Foundation, the Greathouse Charitable Remainder
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Trust and PDC.
(g) Improvements Act Waiting Period. The applicable waiting
period under the Improvements Act shall have expired or been terminated.
SECTION 6.2 Conditions to Obligation of Wes-Tex to Effect the
Asset Purchase. The obligation of Wes-Tex to effect the Asset Purchase shall
be subject to the fulfillment at or prior to the Closing of the following
additional conditions; provided that Wes-Tex may waive any of such conditions
in its sole discretion:
(a) Performance of Obligations; Representations and
Warranties. PEC and PDC shall have performed in all material respects each of
their agreements contained in this Agreement required to be performed on or
prior to the Closing, each of the representations and warranties of PEC and PDC
contained in this Agreement shall be true and correct on and as of the date of
Closing as if made on and as of such date.
(b) Officers' Certificate. PEC and PDC shall have furnished
to Wes-Tex a certificate, dated the Closing, signed by the respective
appropriate officers of PEC and PDC, certifying to the effect that to the best
of the knowledge and belief of each of them, the conditions set forth in
Section 6.1 and Section 6.2(a) have been satisfied in full.
(c) Opinion of Baker & Hostetler LLP. Wes-Tex shall have
received an opinion from Baker & Hostetler LLP, counsel to PEC and PDC, dated
the date of Closing, substantially to the effect that:
(i) The incorporation, existence and good standing of
PEC and PDC are as stated in this Agreement; the authorized shares of
PEC and PDC are as stated in this Agreement; all outstanding shares of
PEC Common Stock are duly and validly authorized and issued, fully paid
and nonassessable and have not been issued in violation of any
preemptive right of any stockholders.
(ii) Each of PEC and PDC has full corporate power and
authority to execute, deliver and perform this Agreement and this
Agreement has been duly authorized, executed and delivered by PEC or
PDC, as the case may be, and (assuming due and valid authorization,
execution and delivery by Wes-Tex) constitutes the legal, valid and
binding agreement of PEC or PDC, enforceable against PEC and PDC in
accordance with its terms, except to the extent enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or other similar laws of general applicability
relating to or affecting the enforcement of creditors' rights and by the
effect of general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
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(iii) PEC has full corporate power and authority to
execute, deliver and perform each of the Non-Competition Agreements,
Registration Rights Agreement, PEC Warrant and Drilling Rig and Crew
Lease Agreement and each of such Non- Competition Agreements and the
Registration Rights Agreement, Drilling Rig and Crew Lease Agreement and
the PEC Warrant has been duly authorized, executed and delivered by PEC
and (assuming due and valid execution and delivery by the other party to
such Non-Competition Agreements, the Registration Rights Agreement and
the Drilling Rig and Crew Lease Agreement) each constitutes the legal,
valid and binding agreement of PEC, enforceable against PEC in
accordance with its terms, except to the extent enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or other similar laws of general applicability
relating to or affecting the enforcement of creditors' rights and by the
effect of general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
(iv) The execution and performance by PEC and PDC of this
Agreement, the various Non-Competition Agreements, the Registration
Rights Agreement, the Drilling Rig and Crew Lease Agreement and the PEC
Warrant will not violate the Certificates of Incorporation or Bylaws of
PEC or PDC, respectively, and, to the knowledge of such counsel, will
not violate, result in a breach of or constitute a default under any
material lease, mortgage, contract, agreement, instrument, law, rule,
regulation, judgment, order or decree to which PEC or PDC is a party or
by which they or any of their properties or assets may be bound.
(v) To the knowledge of such counsel, no consent,
approval, authorization or order of any court or governmental agency or
body which has not been obtained is required on behalf of PEC and PDC
for the consummation of the transactions contemplated by this Agreement.
(vi) To the knowledge of such counsel, there are no
actions, suits or proceedings, pending or threatened against or
affecting PEC or PDC by any Governmental Entity which seek to restrain,
prohibit or invalidate the transactions contemplated by this Agreement.
(viii) The shares of PEC Common Stock to be issued
pursuant to this Agreement, and any shares of PEC Common Stock issuable
upon exercise of the PEC Warrant will be, when so issued, duly
authorized, validly issued and outstanding, fully paid and
nonassessable.
(ix) The 283,000 PEC Shares and the 200,000 shares of
PEC Common Stock issuable upon exercise of the PEC Warrant have been
authorized for listing on the Nasdaq National Market subject to official
notice of issuance.
-17-
<PAGE> 22
In rendering such opinion, counsel for PEC may rely as to matters of fact upon
the representations of officers of PEC or PDC contained in any certificate
delivered to such counsel and certificates of public officials. Such opinion
shall be limited to the General Corporation Law of the State of Delaware and
the laws of the United States of America and the State of Texas.
(d) Registration Statement on Form S-3. PEC shall have filed
a Registration Statement on Form S-3 with the SEC relating to the PEC Shares.
(e) Registration Rights Agreement. PEC shall have executed
and delivered the Registration Rights Agreement in the form attached hereto as
Exhibit B.
(f) PEC Warrant. PEC shall have executed and delivered the
Stock Purchase Warrant (the "PEC Warrant") to Wes-Tex in the form attached
hereto as Exhibits C.
(g) Delivery of Purchase Consideration. PEC and PDC shall
have made delivery of the Purchase Consideration as provided in Section 1.2 of
this Agreement.
(h) Payment of Non-Competition Compensation. The compensation
required to be paid by PEC and PDC to each of M Greathouse, C Ezzell and D
Mullen pursuant to Section 2 of the respective Non-Competition Agreements shall
have been paid.
SECTION 6.3 Conditions to Obligations of PEC and PDC to Effect
the Asset Purchase. The obligations of PEC and PDC to effect the Asset
Purchase shall be subject to the fulfillment at or prior to the Closing of the
following additional conditions, provided that PEC may waive any such
conditions in its sole discretion:
(a) Performance of Obligations; Representations and
Warranties. Wes-Tex shall have performed in all material respects each of its
agreements contained in this Agreement required to be performed on or prior to
the Closing and each of the respective representations and warranties of
Wes-Tex contained in this Agreement shall be true and correct on and as of the
Closing as if made on and as of such date.
(b) Officers' Certificate. Wes-Tex shall have furnished to
PEC a certificate, dated the Closing, certifying to the effect that to the best
of the knowledge and belief of Wes-Tex, the conditions set forth in Section 6.1
and Section 6.3(a) have been satisfied.
(c) Opinion of Whitten & Young, P.C. PEC shall have received
an opinion of counsel from Whitten & Young, P.C., counsel to Wes-Tex, dated the
Closing, substantially to the effect that:
(i) The incorporation, existence and good standing of
Wes-Tex are as stated in this Agreement.
-18-
<PAGE> 23
(ii) Wes-Tex has full corporate power and authority to
execute, deliver and perform this Agreement, the Non-Competition
Agreement and the Drilling Rig and Crew Lease Agreement, and each of
this Agreement, the Non-Competition Agreement and the Drilling Rig and
Crew Lease Agreement has been duly authorized, executed and delivered by
Wes-Tex, and (assuming the due and valid authorization, execution and
delivery by PEC and PDC) constitutes the legal, valid and binding
agreement of Wes-Tex enforceable against Wes-Tex in accordance with its
terms, except to the extent enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or other
similar laws of general applicability relating to or affecting the
enforcement of creditors' rights and by the effect of general principles
of equity (regardless of whether enforceability is considered in a
proceeding in equity or at law).
(iii) The execution and performance by Wes-Tex of this
Agreement, the Non-Competition Agreement and the Drilling Rig and Crew
Lease Agreement will not violate the Articles of Incorporation or Bylaws
of Wes-Tex and will not violate, result in a breach of, or constitute a
default under, any material lease, mortgage, contract, agreement,
instrument, law, rule, regulation, judgment, order or decree known to
such counsel to which Wes-Tex is a party or to which it or any of its
properties or assets may be bound.
(iv) To the knowledge of such counsel, no consent,
approval, authorization or order of any court or governmental agency or
body which has not been obtained is required on behalf of Wes-Tex for
consummation of the transactions contemplated by this Agreement.
(v) To the knowledge of such counsel, there are no
actions, suits or proceedings, pending or threatened against or
affecting Wes-Tex by any Governmental Entity which seek to restrain,
prohibit or invalidate the transactions contemplated by this Agreement.
(vi) Each Non-Competition Agreement between PEC, PDC and
each of Wes-Tex, M Greathouse, C Ezzell and D Mullen constitutes the
legal, valid and binding agreement of it/him enforceable against it/him
in accordance with its terms, except to the extent enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or other similar laws of general applicability
relating to or affecting the enforcement of creditors' rights and by the
effect of general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
In rendering such opinion, counsel for Wes-Tex may rely as to matters of fact
upon the representations of officers of Wes-Tex contained in any certificate
delivered to such counsel and certificates of public officials.
-19-
<PAGE> 24
Such opinion shall be limited to the laws of the United States of
America and the State of Texas.
(d) Bill of Sale and Assignment. Wes-Tex shall have executed
and delivered the Bill of Sale and Assignment, in the form attached hereto as
Exhibit D, covering the Drilling Rigs, Equipment and Rolling Stock set forth on
Annex 1 and the Assumed Drilling Contracts and Leased Property Lease Agreements
set forth on Annex 3.
(e) Warranty Deed. Wes-Tex shall have executed and delivered
the Warranty Deed covering the Real Property in the form attached hereto as
Exhibit E (or such other form as may be required in the State of Texas for a
general warranty deed) relating to the shop and yard located in Abilene, Texas.
(f) Title Insurance. PDC shall have obtained title
commitments for title insurance on the Real Property, the cost of which shall
be paid by PDC.
(g) Titles. Wes-Tex shall have endorsed and delivered the
title certificates to the Rolling Stock described in Annex 1.
(h) Investment Representation Letter. Wes-Tex shall have
executed and delivered an investment representation letter substantially in the
form attached hereto as Exhibit F.
(i) Phase I Environmental Report. PDC shall have received a
Phase I Environmental Report (at its expense) with conclusions satisfactory to
PDC.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1 Termination. This Agreement may be terminated at
any time prior to the date of Closing, whether before or after any approval by
the stockholders of Wes-Tex:
(a) by mutual written consent of PEC and Wes-Tex;
(b) by PEC if Wes-Tex shall have failed to comply in any
material respect with any of its covenants or agreements contained in this
Agreement required to be complied with by Wes-Tex prior to the date of such
termination, which failure to comply has not been cured within ten business
days following receipt by Wes-Tex of notice of such failure to comply.
(c) by Wes-Tex if PEC or PDC shall have failed to comply in
any material
-20-
<PAGE> 25
respect with any of its covenants or agreements contained in this Agreement
required to be complied with by PEC or PDC prior to the date of such
termination, which failure to comply has not been cured within ten business
days following receipt by PEC or PDC of notice of such failure to comply.
(d) by either PEC or Wes-Tex if (i) the Asset Purchase has not
been effected on or prior to the close of business on July 21, 1997; provided,
however, that the right to terminate this Agreement pursuant to this clause
shall not be available to any party whose failure to fulfill any obligation of
this Agreement has been the cause of, or resulted in, the failure of the Asset
Purchase to have occurred on or prior to the aforesaid date, or (ii) any court
of competent jurisdiction or any governmental, administrative or regulatory
authority, agency or body shall have issued an order, decree or ruling or taken
any other action permanently enjoining, restraining or otherwise prohibiting
the transactions contemplated by this Agreement and such order, decree, ruling
or other action shall have become final and nonappealable;
(e) by either PEC or Wes-Tex if there has been (i) a material
breach by the other of any representation or warranty that is not qualified as
to materiality or (ii) a breach by the other of any representation or warranty
that is qualified as to materiality, in each case which breach has not been
cured within five business days following receipt by the breaching party of
notice of the breach;
SECTION 7.2 Effect of Termination. In the event of termination
of this Agreement by either PEC or Wes-Tex, as provided in Section 7.1, this
Agreement shall forthwith become void and there shall be no liability hereunder
on the part of Wes-Tex, PEC or PDC or their respective officers or directors;
provided, however, that nothing contained in this Section 7.2 shall relieve any
party hereto from any liability for any breach of this Agreement.
SECTION 7.3 Amendment. This Agreement may be amended by the
parties hereto only by an instrument in writing signed on behalf of each of the
parties hereto.
SECTION 7.4 Waiver. At any time prior to the date of Closing,
the parties hereto may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions contained herein which may legally be waived. Any
agreement on the part of a party hereto to any such extension or waiver shall
be valid only if set forth in an instrument in writing signed on behalf of such
party.
-21-
<PAGE> 26
ARTICLE VIII
POST CLOSING COVENANTS
SECTION 8.1 Access to Information. Wes-Tex agrees that it will
(i) maintain the pre-closing financial records of Wes-Tex relating to its
contract drilling operations in the offices of Wes-Tex in Abilene, Texas for a
period of up to three years following the date of Closing, and (ii) permit PEC
and its respective financial and tax advisors access to such records during
Wes-Tex's normal business hours on two-day's prior written notice to Wes-Tex,
as set forth in Section 9.1 hereof.
SECTION 8.2 Wes-Tex Financial Statements. Wes-Tex and Davis,
Kinard & Company ("DK&C") shall provide the following Wes-Tex financial
statements, at the expense of Wes-Tex, to PEC on or before the expiration of 30
days from the date of Closing: (a) audited balance sheets as of December 31,
1995 and 1996, and unaudited balance sheet as of March 31, 1997; and (b)
audited statements of income and statements of cash flows as of and for each of
the years ended December 31, 1994, 1995 and 1996, and unaudited statements of
income and statements of cash flows as of and for each of the three months
ended March 31, 1996 and 1997 (the financial statements referenced in (a) and
(b) herein are collectively referred to as the "Financial Statements"). Wes-
Tex understands and agrees that (i) the Financial Statements will have been
prepared in accordance with generally accepted accounting principles, (ii) the
Financial Statements or portions thereof will be included in PEC's filings with
the SEC, and (iii) it will make its representatives and representatives of DK&C
available to PEC and its financial advisors during normal business hours to
answer inquiries of PEC with respect to the Financial Statements.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered
personally, sent by overnight courier or telecopied (with a confirmatory copy
sent by overnight courier) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
-22-
<PAGE> 27
(a) if to PEC or PDC, to:
Patterson Energy, Inc.
4510 Lamesa Highway
P.O. Drawer 1416
Snyder, Texas 79550
Attention: A. Glenn Patterson
President and Chief Operating Officer
with copies to:
Thomas H. Maxfield, Esq.
Baker & Hostetler LLP
303 East 17th Avenue, Suite 1100
Denver, Colorado 80203-1264
(b) if to Wes-Tex, to:
Myrle Greathouse, Chairman of the Board
Charles Ezzell, President
Wes-Tex Drilling Company
400 Pine Street
Abilene, Texas 79601
with copies to:
Charles Self, Esq.
Whitten & Young, P.C.
Attorneys at Law
P.O. Box 208
Abilene, Texas 79604
SECTION 9.2 Interpretation. When a reference is made in this
Agreement to a Section, such reference shall be to a Section of this Agreement
unless otherwise indicated, and the words "hereof," "herein" and "hereunder"
and similar terms refer to this Agreement as a whole and not to any particular
provision of this Agreement, unless the context otherwise requires. The table
of contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."
-23-
<PAGE> 28
SECTION 9.3 Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other parties.
SECTION 9.4 Entire Agreement; No Third-Party Beneficiaries.
This Agreement, including the documents and instruments referred to herein, (i)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and (ii) is not intended to confer upon any person other
than the parties any rights or remedies hereunder; provided, however, that
legal counsel for the parties hereto may rely upon the representations and
warranties contained herein and in the certificates delivered pursuant to
Sections 6.2(b) and 6.3(b).
SECTION 9.5 Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Texas, regardless of
the laws that might otherwise govern under applicable principles of conflicts
of laws thereof.
SECTION 9.6 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties without the prior written consent of the other parties. Subject to the
preceding sentence, this Agreement shall be binding upon, inure to the benefit
of, and be enforceable by, the parties and their respective successors and
assigns.
SECTION 9.7 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule
of law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby are not affected in any
manner materially adverse to any party. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions be consummated as originally
contemplated to the fullest extent possible.
SECTION 9.8 Enforcement of This Agreement. The parties agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity.
-24-
<PAGE> 29
IN WITNESS WHEREOF, PEC, PDC and Wes-Tex have executed this
Agreement as of the date first written above.
PEC:
PATTERSON ENERGY, INC.
By:
------------------------------------------
Cloyce A. Talbott
Chairman and Chief Executive Officer
Attest:
- -------------------------------
James C. Brown, Secretary
PDC:
PATTERSON DRILLING COMPANY
By:
------------------------------------------
A. Glenn Patterson
President and Chief Operating Officer
Attest:
- -------------------------------
James C. Brown, Secretary
[Signatures continued on following page]
-25-
<PAGE> 30
WES-TEX:
WES-TEX DRILLING COMPANY
By:
---------------------------------
Myrle Greathouse
Chairman of the Board
Attest:
- -----------------------------------
Helen Little, , Secretary
TO INDUCE PATTERSON ENERGY, INC. AND PATTERSON DRILLING COMPANY TO ENTER
INTO THIS ASSET PURCHASE AGREEMENT AND FOR OTHER GOOD AND VALUABLE
CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED,
THE UNDERSIGNED, BEING AN OFFICER, DIRECTOR AND STOCKHOLDER OF WES-TEX DRILLING
COMPANY, HEREBY ACCEPTS AND AGREES TO BE BOUND BY THE INDEMNIFICATION
PROVISIONS OF SECTION 5.4 OF THE ABOVE ASSET PURCHASE AGREEMENT.
-------------------------------------
Myrle Greathouse
-26-
<PAGE> 31
ANNEX 1
TO
ASSET PURCHASE AGREEMENT
DESCRIPTION OF DRILLING RIGS, EQUIPMENT AND ROLLING STOCK PER
WHEREAS CLAUSE
A. Drilling Rigs and Equipment.
<TABLE>
<CAPTION>
Rig No. Drawworks Manufacturer
------- ----------------------
<S> <C>
Rig 1 National 50
Rig 2 National 50
Rig 3 National 50
Rig 4 National 50
Rig 5 National 50
Rig 6 Bethlehem S-60
Rig 7 Brewster N-4
Rig 8 Bethlehem S-55
Rig 9 National 50
Rig 10 Brewster N-4
Rig 11 Bethlehem S-55
Rig 12 Brewster N-4
Rig 14 Skytop Brewster N75A
Rig 15 Brewster N-4
Rig 16 Brewster N-4
Rig 17 B D W 800
Rig 18 National 50
Rig 19 Brewster N-4
Rig 20 National 50
Rig 21 Skytop Brewster N75A
Rig 22 Bethlehem S-55
</TABLE>
All related yard equipment, including engines, mud pumps, derricks and
substructives, rotary tables, forklift, sand blaster, drill bits and all
tubular goods on the rigs and in the yard.
NOTE: For more specific information concerning the rigs and related
equipment, see
AX 1-1
<PAGE> 32
Appendix I, to Bill of Sale and Assignment attached to this Agreement as
Exhibit D.
B. Rolling Stock.
All rolling stock owned by Wes-Tex at the Effective Time of Assumption
related to its contract drilling business (except a 1993 Cadillac driven
by Myrle Greathouse, a 1995 Cadillac driven by Charles Ezzell, a 1995
Chevrolet Tahoe driven by Danny Mullen, a 1994 Suburban driven by David
Morris and a yellow Cadillac presently kept at the airport in Midland,
Texas).
NOTE: For more specific information concerning the rolling stock, see
Appendix I, to Bill of Sale and Assignment attached to this Agreement as
Exhibit D
AX 1-2
<PAGE> 33
ANNEX 2
TO
ASSET PURCHASE AGREEMENT
DESCRIPTION OF REAL PROPERTY
PER WHEREAS CLAUSE
1. Shop and yard owned by Wes-Tex at Highway 277 North,
Abilene, Jones County, Texas.
NOTE: The Real Property is more particularly described on the
Warranty Deed attached to this Agreement as Exhibit E.
AX 2-1
<PAGE> 34
ANNEX 3
TO
ASSET PURCHASE AGREEMENT
LIST OF ASSUMED DRILLING CONTRACTS AND
LEASED PROPERTY LEASE AGREEMENTS
PER SECTION 3.7
A. Assumed Drilling Contracts. (Note: If drilling operations on the
following drilling contracts are completed or drilling operations have
commenced on all wells covered by the drilling contract at the Effective
Time of Assumption, the drilling contract will not be assumed. The
column for wells included in the Assumed Drilling Contracts will be
completed at the Closing.)
<TABLE>
<CAPTION>
Wells Included
in Assumed
Operator County Type Drilling Contracts
-------- ------ ---- ------------------
<S> <C> <C>
1.Presently Drilling:
------------------
Union Pacific Resources Crockett DW Multi-
well
Union Pacific Resources Crockett/Terrell DW Multi-
well
Louis Dreyfus Natural Gas Co. Sutton FTG Multi-
well
Louis Dreyfus Natural Gas Co. Sutton DW Multi-
well
Santa Fe Energy Resources, Inc. Glasscock FTG 4 well
BC Operating, Inc. Dawson FTG
ARCO Permian Val Verde DW Multi-
well
Chevron Production Co. Terrell DW Multi-
well
Pennzoil Exploration & Production Crane FTG
Company
Devon Energy Corporation Ward FTG Multi-
well
Lakewood Operating Howard TK 3 well
</TABLE>
AX 3-1
<PAGE> 35
<TABLE>
<CAPTION>
Wells Included
in Assumed
Operator County Type Drilling Contracts
-------- ------ ---- ------------------
<S> <C> <C> <C>
IP Petroleum Co., Inc. Winkler DW Multi-
well
Midland Resources Reagan DW
J. Cleo Thompson Terrell/Crockett/ DW Multi-
Schleicher well
Fina Oil & Gas Pecos DW Multi-
well
2. Contracts Pending:
Senneca Resources, Inc. Gaines FTG
Patrick Exploration Company Howard FTG
Goodrich Petr. Co. of Louisiana Dawson FTG
Harrison Interests Crockett DW
Enron Oil & Gas Company Val Verde/ DW Multi-
Crockett well
Enron Oil & Gas Company - Val Verde/ DW Multi-
Baggett Crockett well
J. Cleo Thompson Upton FTG Multi-
well
J. Cleo Thompson Reagan FTG
Hamman Oil & Refining Company Sterling FTG 2 Well
Sharp Image Energy Howard FTG
Cockrell Production Co., Inc. Sutton FTG
Medallion Oil & Gas Co. Pecos FTG Multi-
well
Spirit Energy 76 (Unocal) Crockett/Val Verde DW 7 Well
Cross Timbers Operating Company Crockett FTG 4 Well
Texland Petroleum Gaines/Andrews FTG 7 Well
Texaco Crockett FTG 2 Well
Louis Dreyfus Natural Gas Howard DW 4 Well
Midland Resources Reagan FTG 2 Well
</TABLE>
AX 3-2
<PAGE> 36
3. Drilling Contracts entered into between the date of this Agreement and
the Closing with the approval in writing of PDC in accordance with
clause (c) of Section 5.3 of the Agreement.
- ---------------
(1) This Drilling Contract is being assumed in full.
B. Leased Property Lease Agreements.
<TABLE>
<CAPTION>
DESCRIPTION EXPIRATION RENT/DUE DATE
----------- ---------- -------------
<S> <C> <C> <C>
1 Contract, dated November 1, 1993, between March 31, 1999 $2,554.98/year,
Linda McGaha Wood and Wes-Tex granting the right to due April 1 of
erect, maintain, use, repair and remove a 500-foot each year
communication tower on property in Taylor County,
Texas
2 Surface Lease, dated as of August 1, 1995, between July 31, 2001 $450/month, due
Charles E. Davidson, III, D/B/A Taylor Box Land 1st day of each
Company and Wes-Tex, as amended and extended by month
Amendment and Extension dated as of August 31, 1996,
covering the lease of a 3.28 acre tract of land in
Ozona, Crockett County, Texas
3 Lease Agreement, dated July 15, 1996, between Koleta July 14, 1998 $600/month, due
Keyes Disch, as independent executor of Estate of 15th day of each
Ben L. Keyes, Deceased, covering a 3.00 acre tract of month
land in Tom Green County, Texas located at
6577 S. Highway 277, San Angelo, Texas
</TABLE>
C. Oral Agreement.
An employee of Wes-Tex presently lives in the mobile home located on the
Real Property pursuant to an oral month-to-month lease that is
terminable at any time without liability or cost.
AX 3-3
<PAGE> 37
EXHIBIT A(I)
PATTERSON ENERGY, INC.
AND
PATTERSON DRILLING COMPANY
NON-COMPETITION AGREEMENT
THIS NON-COMPETITION AGREEMENT is made and entered into this
_____ day of June, 1997 (this "Agreement"), between and among PATTERSON ENERGY,
INC., a Delaware corporation ("PEC"), PATTERSON DRILLING COMPANY, a Delaware
corporation ("PDC") wholly owned by PEC, and WES-TEX DRILLING COMPANY, a Texas
corporation ("Wes-Tex").
RECITALS:
A. Simultaneously with the execution of this Agreement, PDC
has consummated the transactions contemplated by that certain Asset Purchase
Agreement, dated June 4, 1997 (the "Asset Purchase Agreement"), among PEC, PDC
and Wes-Tex providing for, among other things, the purchase by PDC of the
drilling rigs, related equipment, rolling stock, and a shop and yard owned by
Wes-Tex.
B. The execution and delivery of this Agreement is a
condition to the consummation of the Asset Purchase contemplated by the Asset
Purchase Agreement, and the parties are entering into this Agreement in order
to fulfill such condition.
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties, intending to be legally bound, hereby agree as follows:
1. Period of Agreement.
The period of this Agreement shall commence on the date hereof
and remain in effect through the first to occur of (i) June ___, 2002, or (ii)
a Change in Control of PEC or PDC. For purposes of this Agreement, "Change in
Control" shall be deemed to have occurred, if (i) a tender offer shall be made
and consummated for the ownership of more than fifty percent of the outstanding
voting securities of PEC, or (ii) there is a merger, consolidation or other
reorganization of PEC or PDC with another entity and, as a result of such
merger, consolidation or other reorganization, less than fifty percent of the
outstanding voting securities of the surviving or resulting entity shall be
owned by the former stockholders of PEC as the same shall have existed
immediately prior to such
EX A(I)-1
<PAGE> 38
merger, consolidation or other reorganization.
2. Covenant Not to Compete.
(a) Wes-Tex covenants and agrees that during the Non-Compete
Period, Wes-Tex shall not, without the prior written consent of PEC and PDC,
directly or indirectly, alone or in association with any other person, carry
on, be engaged, concerned, or take part in, render services to, or own, share
in the earnings of, or invest in the stock, bonds, or other securities of, any
person which is engaged in the business of contract drilling oil and gas wells
within District 1, 7B, 7C, 8, 8A, 9, or 10 of Texas as defined by the Texas
Railroad Commission on the date of this Agreement or within Chaves, Eddy, Lea,
or Roosevelt County, New Mexico (the "Competitive Business"); provided,
however, that Wes-Tex may: (i) invest and/or engage in any business that
routinely provides third-party services (as such term is commonly used in the
contract oil and gas well drilling business) to a Competitive Business, but is
not engaged in the actual conduct of a Competitive Business; or (ii) invest in
stock, bonds, or other securities of any Competitive Business (but without
otherwise participating in the Competitive Business) if: (A) such stock,
bonds, or other securities are listed on any national securities exchange or
are registered under Section 12(g) of the Securities Exchange Act of 1934, as
amended; (B) the investment does not exceed, in the case of any class of
capital stock of any one issuer, two percent (2%) of the issued and outstanding
shares, or, in the case of bonds or other securities of any one issuer, two
percent (2%) of the aggregate principal amount thereof issued and outstanding;
and (C) such investment would not prevent, directly or indirectly, the
transaction of business by PEC or PDC or any affiliate of PEC or PDC with any
state, district, territory, or possession of the United States or any
governmental subdivision, agency, or instrumentality thereof by virtue of any
statute, law, regulation or administrative practice. The period of time during
which Wes-Tex is prohibited from engaging in certain activities by this Section
shall be extended by the length of time during which Wes-Tex is in breach of
the terms of this section.
(b) It is understood by and between the parties hereto that
the foregoing covenant by Wes-Tex not to enter into competition with PEC or PDC
as set forth in Section 2(a) hereof is an essential element of this Agreement
and the Asset Purchase Agreement and that, but for the agreement of Wes-Tex to
comply with such covenant, neither PEC nor PDC would have agreed to enter into
this Agreement or the Asset Purchase Agreement. PEC and PDC on the one hand,
and Wes-Tex on the other hand, have independently consulted with their
respective counsel and have been advised in all respects concerning the
reasonableness and propriety of such covenant, with specific regard to the
nature of the business conducted by PEC and PDC and their respective
affiliates. Wes-Tex on the other hand agrees that such covenant is reasonable
in scope, geographic area, and duration, and that compliance with such covenant
would not impose economic hardship on Wes-Tex.
EX A(I)-2
<PAGE> 39
3. Restrictions on Soliciting Business of PEC and PDC.
Wes-Tex further covenants and agrees that during the Non-Compete
Period, Wes-Tex will not, either for itself or for any other person or entity,
directly or indirectly, engage in any of the following activities in a
Competitive Business without the express prior written consent of PEC and PDC:
(a) Solicit or hire any of the employees of PEC or PDC or
solicit or take away any of PEC's or PDC's customers, lessors, or suppliers or
attempt any of the foregoing:
(b) Acquire or attempt to acquire rights providing any product
or service in a Competitive Business within the territory described in Section
2 hereof; or
(c) Engage in any act which would interfere with or harm any
business relationship PEC or PDC has with any customer, lessor, employee,
principal or supplier.
4. Specific Performance.
Without intending to limit the remedies available to PEC or PDC,
Wes-Tex acknowledges that PEC or PDC will have no adequate remedies at law if
Wes-Tex violates the terms of Section 2 or 3, hereof. In such event, Wes-Tex
agrees that PEC or PDC shall have the right, in addition to any other rights it
may have, to obtain in any court of competent jurisdiction specific performance
of such Sections of this Agreement or injunctive relief to restrain any breach
or threatened breach thereof. Nothing herein shall be construed as prohibiting
PEC or PDC from pursuing any other remedies available to PEC or PDC (whether at
law or in equity) for such breach or threatened breach, including, without
limitation, the recovery of monetary damages from Wes-Tex.
The provisions of this Section 4 shall survive the expiration,
termination or cancellation of this Agreement.
5. Attorneys Fees and Costs.
If an action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled
to reasonable attorneys fees, costs and necessary expenses in addition to any
other relief to which that party may be entitled. This provision is applicable
to this entire Agreement.
6. Representations and Warranties of PEC, PDC and Wes-Tex.
(a) Representations and Warranties of PEC and PDC. PEC and
PDC hereby joint and severally represent and warrant to Wes-Tex that: (i) it
has all requisite power to enter into
EX A(I)-3
<PAGE> 40
and perform their obligations under this Agreement; (ii) this Agreement has
been duly and validly authorized by all necessary corporate action on the part
of PEC and PDC; (iii) the execution of this Agreement by PEC and PDC and
performance of their obligations hereunder do not require the consent or
approval of any other party; and (iv) this Agreement is a valid and binding
obligation of PEC and PDC.
(b) Representations and Warranties of Wes-Tex. Wes-Tex hereby
represents and warrants to PEC and PDC that: (i) Wes-Tex has the capacity and
power to enter into and perform obligations of Wes-Tex under this Agreement;
(ii) Wes-Tex has duly and validly executed this Agreement; (iii) the execution
of this Agreement and performance of obligations of Wes-Tex hereunder do not
require the consent or approval of any other party; and (iv) this Agreement
constitutes a valid and binding obligation of Wes-Tex.
7. General Provisions.
(a) Compliance with Laws. The parties agree that they will
comply with all applicable laws and regulations of government bodies or
agencies in their respective performance of their obligations under this
Agreement.
(b) Governing Law and Construction. This Agreement will be
governed by and construed in accordance with the laws of the State of Texas
without reference to its conflict-of-laws principles. This Agreement's final
form resulted from review and negotiations among the parties and their
attorneys, and no part of this Agreement should be construed against any party
on the basis of authorship.
(c) Forum for Dispute Resolution. If any dispute arises among
the parties concerning the interpretation or performance of any portion of this
Agreement which the parties are unable to resolve themselves, and any party
brings an action against any other party seeking a declaratory order, specific
performance, damages, or any other legal or equitable relief based on this
Agreement, the parties agree that the forum for any such action shall be an
appropriate federal or state court in Texas having jurisdiction, agree that
venue will be proper in such courts, and waive any objections based on
inconvenience of the forum, and further agree that the prevailing party in any
such action, as determined by the court, shall be awarded its reasonable
attorneys' fees and costs in addition to any relief or judgment the court
awards.
(d) Entire Agreement; Amendment. This Agreement constitutes
the entire agreement between the parties with respect to the subject matter
contained herein and supersedes any previous oral or written communications,
representations, understandings or agreements with respect thereto. The terms
of this Agreement may be modified only in a writing, signed by authorized
representatives of both parties.
(e) Assignability. This Agreement will be binding upon the
parties' respective
EX A(I)-4
<PAGE> 41
successors and permitted assigns. Neither party may assign this Agreement
and/or any of its rights and/or obligations hereunder without the prior written
consent of the other party, and any such attempted assignment will be void;
provided, however, that PEC or PDC may assign this Agreement to a subsidiary or
affiliate without the prior written consent of Wes-Tex.
(f) Waiver. A waiver of a breach or default under this
Agreement will not constitute a waiver of any other breach or default. Failure
or delay by either party to enforce compliance with any term or condition of
this Agreement will not constitute a waiver of such term or condition.
(g) Severability. If any provision of this Agreement is
declared to be invalid, the parties agree that such invalidity will not affect
the validity of the remaining provisions of this Agreement, and further agree,
to the extent possible, to substitute for the invalid provision a valid
provision that approximates the intent and economic effect of the invalid
provision as closely as possible.
(h) Headings. The titles of the Sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
(i) Notice. Any notice, request, consent, demand or other
communication required to be given under this Agreement will be in writing and
will be given personally, by facsimile or by mailing the same, first-class,
postage prepaid to the appropriate address and facsimile number set forth below
or to such other person or at such other address as may hereafter be designated
by like notice. Notices by mail will be considered delivered and become
effective three days after the mailing thereof. All notices by facsimile will
be considered delivered and become effective immediately upon the confirmed (by
answer back or other tangible printed verification or successful receipt)
sending thereof.
To PEC: Patterson Energy, Inc.
4510 Lamesa Highway
P.O. Drawer 1410
Snyder, Texas 79550
Facsimile: (915) 573-0281
Attention: Cloyce A. Talbott
Chairman and Chief Executive Officer
To PDC: Patterson Drilling Company
4510 Lamesa Highway
P.O. Drawer 1410
Snyder, Texas 79550
Facsimile: (915) 573-0281
Attention: A. Glenn Patterson
EX A(I)-5
<PAGE> 42
President and Chief Operating Officer
To Wes-Tex: Wes-Tex Drilling Company
400 Pine Street
P.O. Box 3759
Abilene, Texas 79604
Attention: Myrle Greathouse
Chairman of the Board
(j) Counterparts. This Agreement may be executed in
counterparts and by the parties hereto in separate counterparts, each of which
will be deemed an original, but all of which together will constitute one and
the same instrument.
EX A(I)-6
<PAGE> 43
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed by their respective representatives as of the day and year first above
written.
"PEC"
PATTERSON ENERGY, INC.
By:
--------------------------------------
Cloyce A. Talbott
Chairman and Chief Executive Officer
"PDC"
PATTERSON DRILLING COMPANY
By:
--------------------------------------
A. Glenn Patterson
President and Chief Operating Officer
"WES-TEX"
WES-TEX DRILLING COMPANY
By:
--------------------------------------
Myrle Greathouse
Chairman of the Board
EX A(I)-7
<PAGE> 44
EXHIBIT A(II)
PATTERSON ENERGY, INC.
AND
PATTERSON DRILLING COMPANY
NON-COMPETITION AGREEMENT
THIS NON-COMPETITION AGREEMENT is made and entered into this
_____ day of June, 1997 (this "Agreement"), between and among PATTERSON ENERGY,
INC., a Delaware corporation ("PEC"), PATTERSON DRILLING COMPANY, a Delaware
corporation ("PDC") wholly owned by PEC, and MYRLE GREATHOUSE, an individual
residing in Abilene, Texas ("M Greathouse").
RECITALS:
A. Simultaneously with the execution of this Agreement, PDC
has consummated the transactions contemplated by that certain Asset Purchase
Agreement, dated June 4, 1997 (the "Asset Purchase Agreement"), among PEC, PDC
and WES-TEX DRILLING COMPANY ("Wes-Tex"), providing for, among other things,
the purchase by PDC of the drilling rigs, related equipment, rolling stock and
a shop and yard owned by Wes-Tex.
B. M Greathouse is an officer, a director and a stockholder
of Wes-Tex.
C. The execution and delivery of this Agreement is a
condition to the consummation of the Asset Purchase contemplated by the Asset
Purchase Agreement, and the parties are entering into this Agreement in order
to fulfill such condition.
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties, intending to be legally bound, hereby agree as follows:
1. Period of Agreement.
The period of this Agreement shall commence on the date hereof
and remain in effect through the first to occur of (i) June ___, 2002, or (ii)
a Change in Control of PEC or PDC unless sooner terminated as the result of the
death of M Greathouse (the "Non-Compete Period"). For purposes of this
Agreement, "Change in Control" shall be deemed to have occurred, if (i) a
tender offer shall be made and consummated for the ownership of more than fifty
percent of the outstanding voting securities of PEC, or (ii) there is a merger,
consolidation or other reorganization of PEC or PDC with another entity and as
a result of such merger, consolidation or other reorganization, less
EX A(II)-1
<PAGE> 45
than fifty percent of the outstanding voting securities of the surviving or
resulting entity shall be owned by the former stockholders of PEC as the same
shall have existed immediately prior to such merger, consolidation or other
reorganization.
2. Compensation.
Simultaneously with the execution of this Agreement, PEC and PDC
have paid M Greathouse, by cashier's check, the amount of $2 million as partial
compensation for entering into this Agreement.
3. Covenant Not to Compete.
(a) M Greathouse covenants and agrees that during the Non-
Compete Period, M Greathouse shall not, without the prior written consent of
PEC and PDC, directly or indirectly, and whether as a principal or as an agent,
officer, director, employee, consultant, or otherwise, alone or in association
with any other person, carry on, be engaged, concerned, or take part in, render
services to, or own, share in the earnings of, or invest in the stock, bonds,
or other securities of, any person which is engaged in the business of contract
drilling oil and gas wells within District 1, 7B, 7C, 8, 8A, 9, or 10 of Texas
as defined by the Texas Railroad Commission on the date of this Agreement or
within Chaves, Eddy, Lea, or Roosevelt County, New Mexico (the "Competitive
Business"); provided, however, that M Greathouse may: (i) invest and/or engage
in any business that routinely provides third-party services (as such term is
commonly used in the contract oil and gas well drilling business) to a
Competitive Business, but is not engaged in the actual conduct of a Competitive
Business; or (ii) invest in stock, bonds, or other securities of any
Competitive Business (but without otherwise participating in the Competitive
Business) if: (A) such stock, bonds, or other securities are listed on any
national securities exchange or are registered under Section 12(g) of the
Securities Exchange Act of 1934, as amended; (B) the investment does not
exceed, in the case of any class of capital stock of any one issuer, two
percent (2%) of the issued and outstanding shares, or, in the case of bonds or
other securities of any one issuer, two percent (2%) of the aggregate principal
amount thereof issued and outstanding; and (C) such investment would not
prevent, directly or indirectly, the transaction of business by PEC or PDC or
any affiliate of PEC or PDC with any state, district, territory, or possession
of the United States or any governmental subdivision, agency, or
instrumentality thereof by virtue of any statute, law, regulation or
administrative practice. The period of time during which M Greathouse is
prohibited from engaging in certain activities by this Section shall be
extended by the length of time during which M Greathouse is in breach of the
terms of this section.
(b) It is understood by and between the parties hereto that
the foregoing covenant by M Greathouse not to enter into competition with PEC
or PDC as set forth in Section 3(a) hereof is an essential element of this
Agreement and the Asset Purchase Agreement and that, but for the agreement of M
Greathouse to comply with such covenant, neither PEC nor PDC would have agreed
to enter into this Agreement or the Asset Purchase Agreement. PEC and PDC on
the one hand and
EX A(II)-2
<PAGE> 46
M Greathouse on the other hand have independently consulted with their
respective counsel and have been advised in all respects concerning the
reasonableness and propriety of such covenant, with specific regard to the
nature of the business conducted by PEC and PDC and their respective
affiliates. M Greathouse agrees that such covenant is reasonable in scope,
geographic area, and duration, and that compliance with such covenant would not
impose economic or professional hardship on M Greathouse.
4. Restrictions on Soliciting Business of PEC and PDC.
M Greathouse further covenants and agrees that during the Non-
Compete Period, M Greathouse will not, either for himself or for any other
person or entity, directly or indirectly, engage in any of the following
activities in a Competitive Business without the express prior written consent
of PEC and PDC:
(a) Solicit or hire any of the employees of PEC or PDC or
solicit or take away any of PEC's or PDC's customers, lessors, or suppliers or
attempt any of the foregoing:
(b) Acquire or attempt to acquire rights providing any product
or service in a Competitive Business within the territory described in Section
3 hereof; or
(c) Engage in any act which would interfere with or harm any
business relationship PEC or PDC has with any customer, lessor, employee,
principal or supplier.
5. Specific Performance.
Without intending to limit the remedies available to PEC or PDC,
M Greathouse acknowledges that PEC or PDC will have no adequate remedies at law
if M Greathouse violates the terms of Section 3 or 4, hereof. In such event, M
Greathouse agrees that PEC or PDC shall have the right, in addition to any
other rights it may have, to obtain in any court of competent jurisdiction
specific performance of such Sections of this Agreement or injunctive relief to
restrain any breach or threatened breach thereof. Nothing herein shall be
construed as prohibiting PEC or PDC from pursuing any other remedies available
to PEC or PDC (whether at law or in equity) for such breach or threatened
breach, including, without limitation, the recovery of monetary damages from M
Greathouse.
The provisions of this Section 5 shall survive the expiration,
termination or cancellation of this Agreement.
6. Attorneys Fees and Costs.
If an action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled
to reasonable attorneys fees, costs and necessary
EX A(II)-3
<PAGE> 47
expenses in addition to any other relief to which that party may be entitled.
This provision is applicable to this entire Agreement.
7. Representations and Warranties of PEC, PDC and M
Greathouse.
(a) Representations and Warranties of PEC and PDC. PEC and
PDC hereby jointly and severally represent and warrant to M Greathouse that:
(i) they have all requisite power to enter into and perform their obligations
under this Agreement; (ii) this Agreement has been duly and validly authorized
by all necessary corporate action on the part of PEC and PDC; (iii) the
execution of this Agreement by PEC and PDC and performance of their obligations
hereunder do not require the consent or approval of any other party; and (iv)
this Agreement is a valid and binding obligation of PEC and PDC.
(b) Representations and Warranties of M Greathouse. M
Greathouse hereby represents and warrants to PEC and PDC that: (i) M Greathouse
has the capacity and power to enter into and perform obligations of M
Greathouse under this Agreement; (ii) M Greathouse has duly and validly
executed this Agreement; (iii) the execution of this Agreement and performance
of obligations of M Greathouse hereunder do not require the consent or approval
of any other party; and (iv) this Agreement constitutes a valid and binding
obligation of M Greathouse.
8. General Provisions.
(a) Compliance with Laws. The parties agree that they will
comply with all applicable laws and regulations of government bodies or
agencies in their respective performance of their obligations under this
Agreement.
(b) Governing Law and Construction. This Agreement will be
governed by and construed in accordance with the laws of the State of Texas
without reference to its conflict-of-laws principles. This Agreement's final
form resulted from review and negotiations among the parties and their
attorneys, and no part of this Agreement should be construed against any party
on the basis of authorship.
(c) Forum for Dispute Resolution. If any dispute arises among
the parties concerning the interpretation or performance of any portion of this
Agreement which the parties are unable to resolve themselves, and any party
brings an action against any other party seeking a declaratory order, specific
performance, damages, or any other legal or equitable relief based on this
Agreement, the parties agree that the forum for any such action shall be an
appropriate federal or state court in Texas having jurisdiction, agree that
venue will be proper in such courts, and waive any objections based on
inconvenience of the forum, and further agree that the prevailing party in any
such action, as determined by the court, shall be awarded its reasonable
attorneys' fees and costs in addition to any relief or judgment the court
awards.
EX A(II)-4
<PAGE> 48
(d) Entire Agreement; Amendment. This Agreement constitutes
the entire agreement between the parties with respect to the subject matter
contained herein and supersedes any previous oral or written communications,
representations, understandings or agreements with respect thereto. The terms
of this Agreement may be modified only in a writing, signed by authorized
representatives of both parties.
(e) Assignability. This Agreement will be binding upon the
parties' respective successors and permitted assigns. Neither party may assign
this Agreement and/or any of its rights and/or obligations hereunder without
the prior written consent of the other party, and any such attempted assignment
will be void; provided, however, that PEC or PDC may assign this Agreement to a
subsidiary or affiliate without the prior written consent of M Greathouse.
(f) Waiver. A waiver of a breach or default under this
Agreement will not constitute a waiver of any other breach or default. Failure
or delay by either party to enforce compliance with any term or condition of
this Agreement will not constitute a waiver of such term or condition.
(g) Severability. If any provision of this Agreement is
declared to be invalid, the parties agree that such invalidity will not affect
the validity of the remaining provisions of this Agreement, and further agree,
to the extent possible, to substitute for the invalid provision a valid
provision that approximates the intent and economic effect of the invalid
provision as closely as possible.
(h) Headings. The titles of the Sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
(i) Notice. Any notice, request, consent, demand or other
communication required to be given under this Agreement will be in writing and
will be given personally, by facsimile or by mailing the same, first-class,
postage prepaid to the appropriate address and facsimile number set forth below
or to such other person or at such other address as may hereafter be designated
by like notice. Notices by mail will be considered delivered and become
effective three days after the mailing thereof. All notices by facsimile will
be considered delivered and become effective immediately upon the confirmed (by
answer back or other tangible printed verification or successful receipt)
sending thereof.
To PEC:
Patterson Energy, Inc.
4510 Lamesa Highway
P.O. Drawer 1410
Snyder, Texas 79550
EX A(II)-5
<PAGE> 49
Facsimile: (915) 573-0281
Attention: Cloyce A. Talbott
Chairman and Chief Executive Officer
To PDC:
Patterson Drilling Company
4510 Lamesa Highway
P.O. Drawer 1410
Snyder, Texas 79550
Facsimile: (915) 573-0281
Attention: A. Glenn Patterson
President and Chief Operating Officer
To M Greathouse:
Myrle Greathouse
400 Pine Street
P.O. Box 3759
Abilene, Texas 79604
(j) Counterparts. This Agreement may be executed in
counterparts and by the parties hereto in separate counterparts, each of which
will be deemed an original, but all of which together will constitute one and
the same instrument.
EX A(II)-6
<PAGE> 50
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed by their respective representatives as of the day and year first above
written.
"PEC"
PATTERSON ENERGY, INC.
By:
------------------------------------------
Cloyce A. Talbott
Chairman and Chief Executive Officer
"PDC"
PATTERSON DRILLING COMPANY
By:__________________________________________
A. Glenn Patterson
President and Chief Operating Officer
"M GREATHOUSE"
---------------------------------------------
Myrle Greathouse
EX A(II)-7
<PAGE> 51
EXHIBIT A(III)
PATTERSON ENERGY, INC.
AND
PATTERSON DRILLING COMPANY
NON-COMPETITION AGREEMENT
THIS NON-COMPETITION AGREEMENT is made and entered into this
_____ day of June, 1997 (this "Agreement"), between and among PATTERSON ENERGY,
INC., a Delaware corporation ("PEC"), PATTERSON DRILLING COMPANY, a Delaware
corporation ("PDC") wholly owned by PEC, and Charles Ezzell, an individual
residing in Abilene, Texas ("C Ezzell").
RECITALS:
A. Simultaneously with the execution of this Agreement, PDC
has consummated the transactions contemplated by certain Asset Purchase
Agreement, dated June 4, 1997 (the "Asset Purchase Agreement"), among PEC, PDC
and WES-TEX DRILLING COMPANY ("Wes-Tex"), providing for, among other things,
the purchase by PDC of the drilling rigs, related equipment, rolling stock and
a shop and yard owned by Wes-Tex.
B. C Ezzell is an officer and director of Wes-Tex.
C. The execution and delivery of this Agreement is a
condition to the consummation of the Asset Purchase contemplated by the Asset
Purchase Agreement, and the parties are entering into this Agreement in order
to fulfill such condition.
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties, intending to be legally bound, hereby agree as follows:
1. Period of Agreement.
The period of this Agreement shall commence on the date hereof
and remain in effect through the first to occur of (i) June ___, 2002, or (ii)
a Change in Control of PEC or PDC unless sooner terminated as the result of the
death of C Ezzell (the "Non-Compete Period"). For purposes of this Agreement,
"Change in Control" shall be deemed to have occurred, if (i) a tender offer
shall be made and consummated for the ownership of more than fifty percent of
the outstanding voting securities of PEC, or (ii) there is a merger,
consolidation or other reorganization of PEC or PDC with
EX A(III)-1
<PAGE> 52
another entity and as a result of such merger, consolidation or other
reorganization, less than fifty percent of the outstanding voting securities of
the surviving or resulting entity shall be owned by the former stockholders of
PEC as the same shall have existed immediately prior to such merger,
consolidation or other reorganization.
2. Compensation.
Simultaneously with the execution of this Agreement, PEC and PDC
have paid C Ezzell, by cashier's check, the amount of $2 million as
compensation for entering into this Agreement.
3. Covenant Not to Compete.
(a) C Ezzell covenants and agrees that during the Non-Compete
Period, C Ezzell shall not, without the prior written consent of PEC and PDC,
directly or indirectly, and whether as a principal or as an agent, officer,
director, employee, consultant, or otherwise, alone or in association with any
other person, carry on, be engaged, concerned, or take part in, render services
to, or own, share in the earnings of, or invest in the stock, bonds, or other
securities of, any person which is engaged in the business of contract drilling
oil and gas wells within District 1, 7B, 7C, 8, 8A, 9, or 10 of Texas as
defined by the Texas Railroad Commission on the date of this Agreement or
within Chaves, Eddy, Lea, or Roosevelt County, New Mexico (the "Competitive
Business"); provided, however, that C Ezzell may: (i) invest and/or engage in
any business that routinely provides third-party services (as such term is
commonly used in the contract oil and gas well drilling business) to a
Competitive Business, but is not engaged in the actual conduct of a Competitive
Business; or (b) invest in stock, bonds, or other securities of any Competitive
Business (but without otherwise participating in the Competitive Business) if:
(A) such stock, bonds, or other securities are listed on any national
securities exchange or are registered under Section 12(g) of the Securities
Exchange Act of 1934, as amended; (B) the investment does not exceed, in the
case of any class of capital stock of any one issuer, two percent (2%) of the
issued and outstanding shares, or, in the case of bonds or other securities of
any one issuer, two percent (2%) of the aggregate principal amount thereof
issued and outstanding; and (C) such investment would not prevent, directly or
indirectly, the transaction of business by PEC or PDC or any affiliate of PEC
or PDC with any state, district, territory, or possession of the United States
or any governmental subdivision, agency, or instrumentality thereof by virtue
of any statute, law, regulation or administrative practice. The period of time
during which C Ezzell is prohibited from engaging in certain activities by this
Section shall be extended by the length of time during which C Ezzell is in
breach of the terms of this section.
(b) It is understood by and between the parties hereto that
the foregoing covenant by C Ezzell not to enter into competition with PEC or
PDC as set forth in Section 3(a) hereof is an essential element of this
Agreement and the Asset Purchase Agreement and that, but for the agreement of C
Ezzell to comply with such covenant, neither PEC nor PDC would have agreed to
EX A(III)-2
<PAGE> 53
enter into this Agreement or the Asset Purchase Agreement. PEC and PDC on the
one hand and C Ezzell on the other hand have independently consulted with their
respective counsel and have been advised in all respects concerning the
reasonableness and propriety of such covenant, with specific regard to the
nature of the business conducted by PEC and PDC and their respective
affiliates. C Ezzell agrees that such covenant is reasonable in scope,
geographic area, and duration, and that compliance with such covenant would not
impose economic or professional hardship on C Ezzell.
4. Restrictions on Soliciting Business of PEC and PDC.
C Ezzell further covenants and agrees that during the Non-Compete
Period, C Ezzell will not, either for himself or for any other person or
entity, directly or indirectly, engage in any of the following activities in a
Competitive Business without the express prior written consent of PEC and PDC:
(a) Solicit or hire any of the employees of PEC or PDC or
solicit or take away any of PEC's or PDC's customers, lessors, or suppliers or
attempt any of the foregoing:
(b) Acquire or attempt to acquire rights providing any product
or service in a Competitive Business within the territory described in Section
3 hereof; or
(c) Engage in any act which would interfere with or harm any
business relationship PEC or PDC has with any customer, lessor, employee,
principal or supplier.
5. Specific Performance.
Without intending to limit the remedies available to PEC or PDC,
C Ezzell acknowledges that PEC or PDC will have no adequate remedies at law if
C Ezzell violates the terms of Section 3 or 4, hereof. In such event, C Ezzell
agrees that PEC or PDC shall have the right, in addition to any other rights it
may have, to obtain in any court of competent jurisdiction specific performance
of such Sections of this Agreement or injunctive relief to restrain any breach
or threatened breach thereof. Nothing herein shall be construed as prohibiting
PEC or PDC from pursuing any other remedies available to PEC or PDC (whether at
law or in equity) for such breach or threatened breach, including, without
limitation, the recovery of monetary damages from C Ezzell.
The provisions of this Section 5 shall survive the expiration,
termination or cancellation of this Agreement.
EX A(III)-3
<PAGE> 54
6. Attorneys Fees and Costs.
If an action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled
to reasonable attorneys fees, costs and necessary expenses in addition to any
other relief to which that party may be entitled. This provision is applicable
to this entire Agreement.
7. Representations and Warranties of PEC, PDC and C Ezzell.
(a) Representations and Warranties of PEC and PDC. PEC and
PDC hereby jointly and severally represent and warrant to C Ezzell that: (i)
they have all requisite power to enter into and perform their obligations under
this Agreement; (ii) this Agreement has been duly and validly authorized by all
necessary corporate action on the part of PEC and PDC; (iii) the execution of
this Agreement by PEC and PDC and performance of their obligations hereunder do
not require the consent or approval of any other party; and (iv) this Agreement
is a valid and binding obligation of PEC and PDC.
(b) Representations and Warranties of C Ezzell. C Ezzell
hereby represents and warrants to PEC and PDC that: (i) C Ezzell has the
capacity and power to enter into and perform obligations of C Ezzell under this
Agreement; (ii) C Ezzell has duly and validly executed this Agreement; (iii)
the execution of this Agreement and performance of obligations of C Ezzell
hereunder do not require the consent or approval of any other party; and (iv)
this Agreement constitutes a valid and binding obligation of C Ezzell.
8. General Provisions.
(a) Compliance with Laws. The parties agree that they will
comply with all applicable laws and regulations of government bodies or
agencies in their respective performance of their obligations under this
Agreement.
(b) Governing Law and Construction. This Agreement will be
governed by and construed in accordance with the laws of the State of Texas
without reference to its conflict-of-laws principles. This Agreement's final
form resulted from review and negotiations among the parties and their
attorneys, and no part of this Agreement should be construed against any party
on the basis of authorship.
(c) Forum for Dispute Resolution. If any dispute arises among
the parties concerning the interpretation or performance of any portion of this
Agreement which the parties are unable to resolve themselves, and any party
brings an action against any other party seeking a declaratory order, specific
performance, damages, or any other legal or equitable relief based on this
Agreement, the parties agree that the forum for any such action shall be an
appropriate federal or state court in Texas having jurisdiction, agree that
venue will be proper in such courts, and waive
EX A(III)-4
<PAGE> 55
any objections based on inconvenience of the forum, and further agree that the
prevailing party in any such action, as determined by the court, shall be
awarded its reasonable attorneys' fees and costs in addition to any relief or
judgment the court awards.
(d) Entire Agreement; Amendment. This Agreement constitutes
the entire agreement between the parties with respect to the subject matter
contained herein and supersedes any previous oral or written communications,
representations, understandings or agreements with respect thereto. The terms
of this Agreement may be modified only in a writing, signed by authorized
representatives of both parties.
(e) Assignability. This Agreement will be binding upon the
parties' respective successors and permitted assigns. Neither party may assign
this Agreement and/or any of its rights and/or obligations hereunder without
the prior written consent of the other party, and any such attempted assignment
will be void; provided, however, that PEC or PDC may assign this Agreement to a
subsidiary or affiliate without the prior written consent of C Ezzell.
(f) Waiver. A waiver of a breach or default under this
Agreement will not constitute a waiver of any other breach or default. Failure
or delay by either party to enforce compliance with any term or condition of
this Agreement will not constitute a waiver of such term or condition.
(g) Severability. If any provision of this Agreement is
declared to be invalid, the parties agree that such invalidity will not affect
the validity of the remaining provisions of this Agreement, and further agree,
to the extent possible, to substitute for the invalid provision a valid
provision that approximates the intent and economic effect of the invalid
provision as closely as possible.
(h) Headings. The titles of the Sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
(i) Notice. Any notice, request, consent, demand or other
communication required to be given under this Agreement will be in writing and
will be given personally, by facsimile or by mailing the same, first-class,
postage prepaid to the appropriate address and facsimile number set forth below
or to such other person or at such other address as may hereafter be designated
by like notice. Notices by mail will be considered delivered and become
effective three days after the mailing thereof. All notices by facsimile will
be considered delivered and become effective immediately upon the confirmed (by
answer back or other tangible printed verification or successful receipt)
sending thereof.
EX A(III)-5
<PAGE> 56
To PEC:
Patterson Energy, Inc.
4510 Lamesa Highway
P.O. Drawer 1410
Snyder, Texas 79550
Facsimile: (915) 573-0281
Attention: Cloyce A. Talbott
Chairman and Chief Executive Officer
To PDC:
Patterson Drilling Company
4510 Lamesa Highway
P.O. Drawer 1410
Snyder, Texas 79550
Facsimile: (915) 573-0281
Attention: A. Glenn Patterson
President and Chief Operating Officer
To C Ezzell:
Charles Ezzell
400 Pine Street
P.O. Box 3759
Abilene, Texas 79604
(j) Counterparts. This Agreement may be executed in
counterparts and by the parties hereto in separate counterparts, each of which
will be deemed an original, but all of which together will constitute one and
the same instrument.
EX A(III)-6
<PAGE> 57
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed by their respective representatives as of the day and year first above
written.
"PEC"
PATTERSON ENERGY, INC.
By:
------------------------------------------
Cloyce A. Talbott
Chairman and Chief Executive Officer
"PDC"
PATTERSON DRILLING COMPANY
By:
------------------------------------------
A. Glenn Patterson
President and Chief Operating Officer
"C Ezzell"
---------------------------------------------
Charles Ezzell
EX A(III)-7
<PAGE> 58
EXHIBIT A(IV)
PATTERSON ENERGY, INC.
AND
PATTERSON DRILLING COMPANY
NON-COMPETITION AGREEMENT
THIS NON-COMPETITION AGREEMENT is made and entered into this
_____ day of June, 1997 (this "Agreement"), between and among PATTERSON ENERGY,
INC., a Delaware corporation ("PEC"), PATTERSON DRILLING COMPANY, a Delaware
corporation ("PDC") wholly owned by PEC, and Danny Mullen, an individual
residing in Abilene, Texas ("D Mullen").
RECITALS:
A. Simultaneously with the execution of this Agreement, PDC
has consummated the transactions contemplated by that certain Asset Purchase
Agreement, dated June 4, 1997 (the "Asset Purchase Agreement"), among PEC, PDC
and WES-TEX DRILLING COMPANY ("Wes-Tex"), providing for, among other things,
the purchase by PDC of the drilling rigs, related equipment, rolling stock and
a shop and yard owned by Wes-Tex.
B. D Mullen is an officer and director of Wes-Tex.
C. The execution and delivery of this Agreement is a
condition to the consummation of the Asset Purchase contemplated by the Asset
Purchase Agreement, and the parties are entering into this Agreement in order
to fulfill such condition.
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties, intending to be legally bound, hereby agree as follows:
1. Period of Agreement.
The period of this Agreement shall commence on the date hereof
and remain in effect through the first to occur of (i) June ___, 2002, or (ii)
a Change in Control of PEC or PDC unless sooner terminated as the result of the
death of D Mullen (the "Non-Compete Period"). For purposes of this Agreement,
"Change in Control" shall be deemed to have occurred, if (i) a tender offer
shall be made and consummated for the ownership of more than fifty percent of
the outstanding voting securities of PEC, or (ii) there is a merger,
consolidation or other reorganization of PEC or PDC with
EX A(IV)-1
<PAGE> 59
another entity and as a result of such merger, consolidation or other
reorganization, less than fifty percent of the outstanding voting securities of
the surviving or resulting entity shall be owned by the former stockholders of
PEC as the same shall have existed immediately prior to such merger,
consolidation or other reorganization.
2. Compensation.
Simultaneously with the execution of this Agreement, PEC and PDC
have paid D Mullen, by cashier's check, the amount of $2 million as
compensation for entering into this Agreement.
3. Covenant Not to Compete.
(a) D Mullen covenants and agrees that during the Non-Compete
Period, D Mullen shall not, without the prior written consent of PEC and PDC,
directly or indirectly, and whether as a principal or as an agent, officer,
director, employee, consultant, or otherwise, alone or in association with any
other person, carry on, be engaged, concerned, or take part in, render services
to, or own, share in the earnings of, or invest in the stock, bonds, or other
securities of, any person which is engaged in the business of contract drilling
oil and gas wells within District 1, 7B, 7C, 8, 8A, 9, or 10 of Texas as
defined by the Texas Railroad Commission on the date of this Agreement or
within Chaves, Eddy, Lea, or Roosevelt County, New Mexico (the "Competitive
Business"); provided, however, that D Mullen may: (i) invest and/or engage in
any business that routinely provides third-party services (as such term is
commonly used in the contract oil and gas well drilling business) to a
Competitive Business, but is not engaged in the actual conduct of a Competitive
Business; or (ii) invest in stock, bonds, or other securities of any
Competitive Business (but without otherwise participating in the Competitive
Business) if: (A) such stock, bonds, or other securities are listed on any
national securities exchange or are registered under Section 12(g) of the
Securities Exchange Act of 1934, as amended; (B) the investment does not
exceed, in the case of any class of capital stock of any one issuer, two
percent (2%) of the issued and outstanding shares, or, in the case of bonds or
other securities of any one issuer, two percent (2%) of the aggregate principal
amount thereof issued and outstanding; and (C) such investment would not
prevent, directly or indirectly, the transaction of business by PEC or PDC or
any affiliate of PEC or PDC with any state, district, territory, or possession
of the United States or any governmental subdivision, agency, or
instrumentality thereof by virtue of any statute, law, regulation or
administrative practice. The period of time during which D Mullen is
prohibited from engaging in certain activities by this Section shall be
extended by the length of time during which D Mullen is in breach of the terms
of this section.
(b) It is understood by and between the parties hereto that
the foregoing covenant by D Mullen not to enter into competition with PEC or
PDC as set forth in Section 3(a) hereof is an essential element of this
Agreement and the Asset Purchase Agreement and that, but for the agreement of D
Mullen to comply with such covenant, neither PEC nor PDC would have agreed to
EX A(IV)-2
<PAGE> 60
enter into this Agreement or the Asset Purchase Agreement. PEC and PDC on the
one hand and D Mullen on the other hand have independently consulted with their
respective counsel and have been advised in all respects concerning the
reasonableness and propriety of such covenant, with specific regard to the
nature of the business conducted by PEC and PDC and their respective
affiliates. D Mullen agrees that such covenant is reasonable in scope,
geographic area, and duration, and that compliance with such covenant would not
impose economic or professional hardship on D Mullen.
4. Restrictions on Soliciting Business of PEC and PDC.
D Mullen further covenants and agrees that during the Non-Compete
Period, D Mullen will not, either for himself or for any other person or
entity, directly or indirectly, engage in any of the following activities in a
Competitive Business without the express prior written consent of PEC and PDC:
(a) Solicit or hire any of the employees of PEC or PDC or
solicit or take away any of PEC's or PDC's customers, lessors, or suppliers or
attempt any of the foregoing:
(b) Acquire or attempt to acquire rights providing any product
or service in a Competitive Business within the territory described in Section
3 hereof; or
(c) Engage in any act which would interfere with or harm any
business relationship PEC or PDC has with any customer, lessor, employee,
principal or supplier.
5. Specific Performance.
Without intending to limit the remedies available to PEC or PDC,
D Mullen acknowledges that PEC or PDC will have no adequate remedies at law if
D Mullen violates the terms of Section 3 or 4, hereof. In such event, D Mullen
agrees that PEC or PDC shall have the right, in addition to any other rights it
may have, to obtain in any court of competent jurisdiction specific performance
of such Sections of this Agreement or injunctive relief to restrain any breach
or threatened breach thereof. Nothing herein shall be construed as prohibiting
PEC or PDC from pursuing any other remedies available to PEC or PDC (whether at
law or in equity) for such breach or threatened breach, including, without
limitation, the recovery of monetary damages from D Mullen.
The provisions of this Section 5 shall survive the expiration,
termination or cancellation of this Agreement.
EX A(IV)-3
<PAGE> 61
6. Attorneys Fees and Costs.
If an action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled
to reasonable attorneys fees, costs and necessary expenses in addition to any
other relief to which that party may be entitled. This provision is applicable
to this entire Agreement.
7. Representations and Warranties of PEC, PDC and D Mullen.
(a) Representations and Warranties of PEC and PDC. PEC and
PDC hereby jointly and severally represent and warrant to D Mullen that: (i)
they have all requisite power to enter into and perform their obligations under
this Agreement; (ii) this Agreement has been duly and validly authorized by all
necessary corporate action on the part of PEC and PDC; (iii) the execution of
this Agreement by PEC and PDC and performance of their obligations hereunder do
not require the consent or approval of any other party; and (iv) this Agreement
is a valid and binding obligation of PEC and PDC.
(b) Representations and Warranties of D Mullen. D Mullen
hereby represents and warrants to PEC and PDC that: (i) D Mullen has the
capacity and power to enter into and perform obligations of D Mullen under this
Agreement; (ii) D Mullen has duly and validly executed this Agreement; (iii)
the execution of this Agreement and performance of obligations of D Mullen
hereunder do not require the consent or approval of any other party; and (iv)
this Agreement constitutes a valid and binding obligation of D Mullen.
8. General Provisions.
(a) Compliance with Laws. The parties agree that they will
comply with all applicable laws and regulations of government bodies or
agencies in their respective performance of their obligations under this
Agreement.
(b) Governing Law and Construction. This Agreement will be
governed by and construed in accordance with the laws of the State of Texas
without reference to its conflict-of-laws principles. This Agreement's final
form resulted from review and negotiations among the parties and their
attorneys, and no part of this Agreement should be construed against any party
on the basis of authorship.
(c) Forum for Dispute Resolution. If any dispute arises among
the parties concerning the interpretation or performance of any portion of this
Agreement which the parties are unable to resolve themselves, and any party
brings an action against any other party seeking a declaratory order, specific
performance, damages, or any other legal or equitable relief based on this
Agreement, the parties agree that the forum for any such action shall be an
appropriate federal or state court in Texas having jurisdiction, agree that
venue will be proper in such courts, and waive
EX A(IV)-4
<PAGE> 62
any objections based on inconvenience of the forum, and further agree that the
prevailing party in any such action, as determined by the court, shall be
awarded its reasonable attorneys' fees and costs in addition to any relief or
judgment the court awards.
(d) Entire Agreement; Amendment. This Agreement constitutes
the entire agreement between the parties with respect to the subject matter
contained herein and supersedes any previous oral or written communications,
representations, understandings or agreements with respect thereto. The terms
of this Agreement may be modified only in a writing, signed by authorized
representatives of both parties.
(e) Assignability. This Agreement will be binding upon the
parties' respective successors and permitted assigns. Neither party may assign
this Agreement and/or any of its rights and/or obligations hereunder without
the prior written consent of the other party, and any such attempted assignment
will be void; provided, however, that PEC or PDC may assign this Agreement to a
subsidiary or affiliate without the prior written consent of D Mullen.
(f) Waiver. A waiver of a breach or default under this
Agreement will not constitute a waiver of any other breach or default. Failure
or delay by either party to enforce compliance with any term or condition of
this Agreement will not constitute a waiver of such term or condition.
(g) Severability. If any provision of this Agreement is
declared to be invalid, the parties agree that such invalidity will not affect
the validity of the remaining provisions of this Agreement, and further agree,
to the extent possible, to substitute for the invalid provision a valid
provision that approximates the intent and economic effect of the invalid
provision as closely as possible.
(h) Headings. The titles of the Sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
(i) Notice. Any notice, request, consent, demand or other
communication required to be given under this Agreement will be in writing and
will be given personally, by facsimile or by mailing the same, first-class,
postage prepaid to the appropriate address and facsimile number set forth below
or to such other person or at such other address as may hereafter be designated
by like notice. Notices by mail will be considered delivered and become
effective three days after the mailing thereof. All notices by facsimile will
be considered delivered and become effective immediately upon the confirmed (by
answer back or other tangible printed verification or successful receipt)
sending thereof.
EX A(IV)-5
<PAGE> 63
To PEC:
Patterson Energy, Inc.
4510 Lamesa Highway
P.O. Drawer 1410
Snyder, Texas 79550
Facsimile: (915) 573-0281
Attention: Cloyce A. Talbott
Chairman and Chief Executive Officer
To PDC:
Patterson Drilling Company
4510 Lamesa Highway
P.O. Drawer 1410
Snyder, Texas 79550
Facsimile: (915) 573-0281
Attention: A. Glenn Patterson
President and Chief Operating Officer
To D Mullen:
Danny Mullen
400 Pine Street
P.O. Box 3759
Abilene, Texas 79604
(j) Counterparts. This Agreement may be executed in
counterparts and by the parties hereto in separate counterparts, each of which
will be deemed an original, but all of which together will constitute one and
the same instrument.
EX A(IV)-6
<PAGE> 64
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed by their respective representatives as of the day and year first above
written.
"PEC"
PATTERSON ENERGY, INC.
By:
------------------------------------------
Cloyce A. Talbott
Chairman and Chief Executive Officer
"PDC"
PATTERSON DRILLING COMPANY
By:
------------------------------------------
A. Glenn Patterson
President and Chief Operating Officer
"D Mullen"
---------------------------------------------
Danny Mullen
EX A(IV)-7
<PAGE> 65
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement ("Agreement") is made and
entered into this _____ day of June, 1997, by and among PATTERSON ENERGY, INC.,
a Delaware corporation ("PEC"), and WES-TEX DRILLING COMPANY, a Texas
corporation ("Wes-Tex"), GREATHOUSE FOUNDATION, a Texas non-profit corporation
(the "Foundation"), and MYRLE GREATHOUSE, TRUSTEE under Agreement, dated June
2, 1997 (the "Greathouse Charitable Remainder Trust") .
A. Pursuant to that certain Asset Purchase Agreement dated
June 4, 1997 ("Asset Purchase Agreement"), by and among PEC, Patterson Drilling
Company, a wholly-owned subsidiary of PEC ("PDC"), and Wes-Tex, and that
certain Agreement dated of even date herewith (the "Stock Purchase Agreement")
by and among PEC, PDC, the Foundation, and the Greathouse Charitable Remainder
Trust, PEC has agreed to issue a total of 283,000 shares ("Restricted Shares")
of PEC's Common Stock, $0.01 par value (the "Common Stock"), and, pursuant to
the Asset Purchase Agreement, PEC has further agreed to issue to Wes-Tex a
three-year Stock Purchase Warrant (the "Stock Purchase Warrant") to purchase up
to an additional 200,000 shares of PEC's Common Stock (the "Warrant Shares") at
an exercise price of $32.00 per share, as partial consideration for the
purchase by PEC and PDC of the contract drilling operations of Wes-Tex.
B. This Agreement is being entered into in connection with
and as a condition to the parties closing the transactions contemplated under
the Asset Purchase Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement the
following terms shall have the following respective meanings:
"Commission" shall mean the United States Securities and
Exchange Commission and any successor federal agency having
similar powers.
"Holder" shall mean, with respect to the Restricted
Shares, Wes-Tex, the Foundation and the Greathouse Charitable
Remainder Trust and their respective successors and assigns
(including stockholders or partners thereof, as the case may be)
and, with respect to the Warrant Shares, Wes-Tex, and any
subsequent successors and assigns, of the Warrant Shares or any
portion thereof.
EX B-1
<PAGE> 66
"Person" shall mean an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization
and a government or any department or agency thereof.
The terms "register," "registered," and "registration"
refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act, and
the declaration or ordering of the effectiveness of such
registration statement.
"Registration Expenses" shall mean all expenses incident
to PEC's performance of or compliance with this Agreement,
including without limitation all registration and filing fees,
fees and expenses of compliance with securities or blue sky laws
and all reasonable printing expenses, messenger and delivery
expenses, and fees and disbursements of counsel for PEC and all
independent certified public accountants, underwriters (excluding
discounts and commissions) and other Person retained by PEC (all
such expenses being herein called "Registration Expenses"), will
be borne as provided in this Agreement, except that PEC will, in
any event, pay its internal expenses (including, without
limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of
any annual audit or quarterly review, the expense of any
liability insurance and the expenses and fees for listing the
securities to be registered on each securities exchange on which
similar securities issued by PEC are then listed or on the NASD
automated quotation system.
"Requesting Holder" shall mean any Holder of Warrant
Shares who shall request registration of Warrant Shares pursuant
hereto.
"Restricted Shares" shall include Common Stock issued or
issuable with respect to the Restricted Shares by way of a stock
dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other
reorganization. As to any particular Restricted Shares, such
shares will cease to be Restricted Shares when they have been
distributed to the public pursuant to an offering registered
under the Securities Act or sold to the public through a broker,
dealer or market maker in compliance with Rule 144 under the
Securities Act (or any similar rule then in force).
EX B-2
<PAGE> 67
"Securities Act" shall mean the Securities Act of 1933, or
any successor thereto, as the same shall be amended from time to
time.
"Warrant Shares" shall include the Common Stock issued or
issuable with respect to the Warrant Shares by way of a stock
dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other
reorganization. As to any particular Warrant Shares such shares
will cease to be Warrant Shares when they have been distributed
to the public pursuant to an offering registered under the
Securities Act or sold to the public through a broker, dealer or
market maker in compliance with Rule 144 under the Securities Act
(or any similar rule then in force).
2. Restrictions on Transfer. The Restricted Shares were
acquired by each of Wes-Tex, the Foundation and the Greathouse Charitable
Remainder Trust, and the Warrant Shares will be acquired by Wes-Tex, from PEC
for investment for its own account and not as a nominee or agent and not with a
present view to the resale or distribution of any part thereof, except in
compliance with the Securities Act. Each of Wes-Tex, the Foundation and the
Greathouse Charitable Remainder Trust acknowledges that the Restricted Shares
are, and Wes-Tex acknowledges that the Warrant Shares will be upon issuance,
"restricted securities" within the meaning of the Securities Act.
3. Restricted Shares - Registration Under Securities Act,
etc.
3.1 Registration.
(a) Filing. Contemporaneously with the execution of this
Agreement, PEC shall have filed a Registration Statement on Form S-3 (the "Form
S-3") with the Commission covering the distribution of the Restricted Shares.
PEC agrees to use its best efforts to have the Form S-3 declared effective.
(b) Expenses. PEC shall pay all Registration Expenses in
connection with the Form S-3.
3.2 Registration Procedures. Following the effective date of
the Form S-3, PEC will promptly:
(a) prepare and file with the Commission such amendments and
supplements to the Form S-3 and the prospectus used in connection therewith as
may be necessary to keep the Form S-3 effective and to comply with the
provisions of the Securities Act with respect to the
EX B-3
<PAGE> 68
disposition of the Restricted Shares until the earlier of (i) such time as all
of such Restricted Shares have been disposed of in accordance with the intended
methods of disposition by Wes-Tex, the Foundation and the Greathouse Charitable
Remainder Trust, or (ii) the expiration of twelve (12) months after such
effective date and furnish to Wes-Tex, the Foundation and the Greathouse
Charitable Remainder Trust prior to the filing thereof a copy of any amendment
or supplement to the Form S-3 or prospectus and shall not file any such
amendment or supplement to which Wes-Tex shall have reasonably objected on the
grounds that such amendment or supplement does not comply in all material
respects with the requirements of the Securities Act or of the rules or
regulations thereunder;
(b) furnish to each of Wes-Tex, the Foundation and the
Greathouse Charitable Remainder Trust one originally executed Form S-3, with
all amendments, supplements and additional documentation; such number of
conformed copies of such Form S-3 and of each such amendment and supplement
thereto (in each case including all exhibits) as Wes-Tex, the Foundation and
the Greathouse Charitable Remainder Trust may reasonably request; such number
of copies of the prospectus included in the Form S-3 (including each
preliminary prospectus and any summary prospectus) as required by the
Securities Act as such Seller may reasonably request; such documents, if any,
incorporated by reference in the Form S-3 or prospectus; and such other
documents as Wes-Tex, the Foundation or the Greathouse Charitable Remainder
Trust may reasonably request;
(c) use its best efforts to register or qualify the Restricted
Shares and other securities covered by the Form S-3 under such other securities
or blue sky laws of such jurisdictions as Wes-Tex shall reasonably request, to
keep such registration or qualification in effect for so long as the Form S-3
remains in effect, and do any and all other acts and things which may be
necessary or advisable to enable Wes-Tex, the Foundation and the Greathouse
Charitable Remainder Trust to consummate the disposition in such jurisdictions
of the Restricted Shares covered by the Form S-3, except that PEC shall not for
any such purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction wherein it would not but for the requirements
of this subdivision (c) be obligated to be so qualified, or to subject itself
to taxation in any such jurisdiction, or to consent to general service of
process in any such jurisdiction;
(d) immediately notify Wes-Tex, the Foundation or the
Greathouse Charitable Remainder Trust at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, upon discovery
that, or upon the happening of any event as a result of which, the prospectus
included in the Form S-3, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances then existing, or if it is necessary to amend or supplement such
prospectus or Form S-3 to comply with law, and at the request of Wes-Tex,
prepare and furnish to Wes-Tex, the Foundation and the Greathouse Charitable
Remainder Trust a reasonable number of copies of a supplement to or an
amendment
EX B-4
<PAGE> 69
of such prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Restricted Shares, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statement therein not misleading
in light of the circumstances then existing and shall otherwise comply in all
material respects with the law and so that such prospectus or Form S-3, as
amended or supplemented, will comply with law;
(e) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
securities holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve (12) months beginning with the first
month of the first fiscal quarter after the effective date of the Form S-3, if
such earnings statement is necessary to satisfy the provisions of Section 11(a)
of the Securities Act.
4. Warrant Shares - Registration Under Securities Act, etc.
4.1 Registration Upon Demand
(a) Demand Rights. At any time after the date hereof but
expiring on the third anniversary date hereof ("Demand Registration Period"),
but subject to (a) prior exercise of the Stock Purchase Warrant and payment in
full to PEC of the exercise price for the Warrant Shares, and (b) the
provisions of Section 4.1(c), below, at the written demand of Requesting
Holders and on one (1) occasion only, PEC shall prepare, file with the
Commission and use its best efforts to have declared effective a registration
statement with respect to the distribution of up to all of the Warrant Shares.
Such demand shall be made by written notice to PEC by Requesting Holders
holding at least a majority of the Warrant Shares, which notice shall (i)
request the preparation of the registration statement pursuant to the terms of
this Section 4.1, (ii) include the number of Warrant Shares to be offered by
Holders of Warrant Shares pursuant to such registration statement and (iii) be
sent to all other Holders. PEC may include in such registration any securities
of PEC for sale by PEC or persons other than PEC, and such registration shall
be deemed to be an incidental registration pursuant to Section 4.2 hereof with
Holders having the priority with respect to the Warrant Shares.
(b) Expenses. PEC shall pay all Registration Expenses in
connection with the registration of Warrant Shares demanded pursuant to this
Section 4.1.
(c) Restrictions on Demand Registrations. PEC will not be
obligated to effect any registration under Section 4.1(a) within three months
after the effective date of (i) a registration initiated by PEC; or (ii) a
registration in which the Holders of Warrant Shares were given incidental
registration rights pursuant to Section 4.2 hereof and in which there was no
reduction in the number of Warrant Shares requested to be included (the "Other
Registrations"); provided that in either case (i) or (ii) the three-month
period can be extended to four months if required by the then managing
underwriter. PEC may postpone filing or the effectiveness of a
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registration statement demanded by Holders under Section 4.1(a) for up to four
months following receipt of such demand if PEC has executed in good faith (x) a
letter of intent or a commitment letter with an underwriter for a public
offering or (y) an agreement in principle relating to an acquisition of assets
(other than in the ordinary course of business) or any merger, consolidation or
similar transaction, or (z) has made a filing with the Commission under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), in connection
with a tender offer. Notwithstanding anything in this Section 4.1(c) to the
contrary, if the Demand Registration Period expires without effectuation of a
demand for registration under Section 4.1(a) because of the occurrence of an
event specified above in this Section 4.1(c), the Demand Registration Period
shall be extended for such additional period as is necessary to effect such
registration, provided that such demand is given to PEC prior to the expiration
of the Demand Registration Period.
4.2 Incidental Registration.
(a) Right to Include Warrant Shares. Subject to the further
provisions of this Section 4.2(a), if PEC, at any time commencing on the date
of this Agreement and expiring on the third anniversary date hereof, proposes
to register any of its equity securities under the Securities Act, for its own
account or the account of other holders of PEC's securities, on a form and in a
manner which would permit registration of the Warrant Shares for sale to the
public under the Securities Act, it will each such time give prompt written
notice to all Holders of its intention to do so, describing such securities and
specifying the form and manner and the other relevant facts involved in such
proposed registration and upon the written request of any such Holder delivered
to PEC within twenty (20) business days after the giving of any such notice
(which request shall specify the Warrant Shares intended to be disposed of by
such Holder and the intended method or methods of disposition thereof), PEC
will use its best efforts to effect the registration under the Securities Act
of all Warrant Shares which PEC has been so requested to register by Holders to
the extent requisite to permit the disposition (in accordance with the intended
methods thereof as aforesaid) of the Warrant Shares so to be registered
provided that (i) if, at any time after giving such written notice of its
intention to register any of its securities and prior to the effective date of
the registration statement filed in connection with such registration, PEC
shall determine for any reason not to register such securities, PEC may, at its
election give written notice of such determination to each Holder and thereupon
shall be relieved of its obligation to register any Warrant Shares in
connection with such registration (but not from its obligation to pay the
Registration Expenses in connection therewith as provided herein); and (ii) if
(A) the registration so proposed by PEC involves an underwritten primary
registration on behalf of PEC to be distributed (on a firm commitment basis) by
or through one or more underwriters of recognized standing under underwriting
terms appropriate for such a transaction, and (B) the managing underwriter of
such underwritten offering shall advise PEC in writing that, in its good faith
judgment, all the shares to be offered by PEC and other parties are greater
than can be accommodated without interfering with the successful marketing of
all the securities to be then offered publicly for the account of PEC, then the
managing underwriter or underwriters shall include in such registration (1)
first, the securities PEC proposes to register for sale, and (2)
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second, any securities requested and permitted to be included in such
registration pursuant to incidental or piggyback rights granted to the holders
thereof prior to the date of this Agreement, (3) third, the Warrant Shares
requested to be included in such registration by the Requesting Holders, pro
rata, if necessary, and (4) fourth, any other securities requested to be
included in such registration, if any, pro rata; (iii) if (A) the registration
so proposed by PEC is an underwritten secondary registration on behalf of
holders of PEC's securities, to be distributed (on a firm commitment basis) by
or through one or more underwriters of recognized standing under underwriting
terms appropriate for such a transaction, and (B) the managing underwriter of
such underwritten offering shall advise PEC in writing that, in its good faith
judgment, all the shares to be offered by such requesting holder, PEC and other
parties are greater than can be accommodated without interfering with the
successful marketing of all of the securities to be then offered publicly for
the account of PEC, then the managing underwriter shall include in such
registration (1) first, the securities requested to be included therein by the
holders requesting such registration, (2) second, any securities requested and
permitted to be included in such registration statement pursuant to incidental
or piggyback rights granted to the holders thereof prior to the date of this
Agreement, (3) third, the securities which are requested to be included in such
registration by the Holders of Warrant Shares, pro rata, if necessary, (4)
fourth, any securities to be included in such registration on behalf of PEC,
and (5) fifth, any other securities requested to be included in such
registration, if any, pro rata.
(b) Expenses. PEC will pay all Registration Expenses in
connection with each registration of Warrant Shares requested pursuant to
Section 4.2.
4.3 Registration Procedures. If and whenever PEC is required
to effect the registration of any Warrant Shares under the Securities Act as
provided in Section 4.1 or Section 4.2, PEC will promptly:
(a) prepare and (in any event within sixty (60) days) file
with the Commission a registration statement with respect to such Warrant
Shares and use its best efforts to cause such registration statement to become
effective, such registration statement to comply as to form and content in all
material respects with the Commission's forms, rules and regulations;
(b) keep such registration statement effective and comply with
the provisions of the Securities Act with respect to the disposition of all
Warrant Shares and other securities covered by such registration statement
until the earlier of (i) such time as all of such Warrant Shares and other
securities have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such registration
statement or (ii) the expiration of (A) twelve (12) months in the case of a
registration of Warrant Shares pursuant to Section 4.1 hereof, or (B) three (3)
months in the case of a registration of Warrant Shares pursuant to Section 4.2
hereof, after such registration statement becomes effective, and will furnish
to each such seller prior to the filing thereof a copy of any amendment or
supplement to such registration statement or prospectus and shall not file any
such amendment or supplement to
EX B-7
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which any such seller shall have reasonably objected on the grounds that such
amendment or supplement does not comply in all material respects with the
requirements of the Securities Act or of the rules or regulations thereunder;
(c) promptly furnish to each seller of Warrant Shares one
originally executed registration statement, with all amendments, supplements
and additional documentation; such number of conformed copies of such
registration statement and of each such amendment and supplement thereto (in
each case including all exhibits) as such seller may reasonably request; such
number of copies of the prospectus included in such registration statement
(including each preliminary prospectus and any summary prospectus) as required
by the Securities Act as such seller may reasonably request; such documents, if
any, incorporated by reference in such registration statement or prospectus;
and such other documents as such seller may reasonably request;
(d) use its best efforts to register or qualify all Warrant
Shares and other securities covered by such registration statement under such
other securities or blue sky laws of such jurisdictions as each seller shall
reasonably request, to keep such registration or qualification in effect for so
long as such registration statement remains in effect, and do any and all other
acts and things which may be necessary or advisable to enable such seller to
consummate the disposition in such jurisdictions of his Warrant Shares covered
by such registration statement, except that PEC shall not for any such purpose
be required to qualify generally to do business as a foreign corporation in any
jurisdiction wherein it would not but for the requirements of this subdivision
(d) be obligated to be so qualified, or to subject itself to taxation in any
such jurisdiction, or to consent to general service of process in any such
jurisdiction;
(e) immediately notify each seller of Warrant Shares covered
by such registration statement, at any time when a prospectus relating thereto
is required to be delivered under the Securities Act, upon discovery that, or
upon the happening of any event as a result of which, the prospectus included
in such registration statement, as then in effect, includes an untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances then existing, or if it is necessary to amend or supplement
such prospectus or registration statement to comply with law, and at the
request of any such seller, prepare and furnish to such seller a reasonable
number of copies of a supplement to or an amendment of such prospectus as may
be necessary so that, as thereafter delivered to the purchasers of such Warrant
Shares, such prospectus shall not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statement therein not misleading in light of the
circumstances then existing and shall otherwise comply in all material respects
with the law and so that such prospectus or registration statement, as amended
or supplemented, will comply with law;
(f) otherwise use its best efforts to comply with all
applicable rules and
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regulations of the Commission, and make available to its securities holders, as
soon as reasonably practicable, an earnings statement covering the period of at
least twelve (12) months beginning with the first month of the first fiscal
quarter after the effective date of such registration statement, if such
earnings statement is necessary to satisfy the provisions of Section 11(a) of
the Securities Act;
(g) provide and cause to be maintained a transfer agent and
registrar for all Warrant Shares covered by such registration statement from
and after a date not later than the effective date of such registration
statement; and
(h) use its best efforts to list all Common Stock covered by
such registration statement on each securities exchange on which any Common
Stock is then listed or quote all such Common Stock on NASDAQ if PEC's Common
Stock is quoted on NASDAQ, or, if PEC's Common Stock is not then quoted on
NASDAQ or listed on any national securities exchange, use its best efforts to
have such Common Stock covered by such registration statement quoted on NASDAQ
or, at the option of PEC, listed on a national securities exchange.
PEC may require each seller of Warrant Shares as to which any registration is
being effected to furnish PEC such information regarding such seller and the
distribution of such securities as PEC may from time to time reasonably request
in writing and as shall be required by law or by the Commission in connection
therewith.
4.4 Underwritten Offerings.
(a) Underwriting Agreement. If requested by the underwriters
for any underwritten offering of Warrant Shares on behalf of a Holder or
Holders pursuant to the registration demanded under Section 4.1, PEC will enter
into an underwriting agreement with such underwriters for such offering, such
agreement to contain such representations and warranties by PEC and such other
terms and provisions as are customarily contained in underwriting agreements
with respect to secondary distributions, including, without limitation,
indemnities to the effect and to the extent provided in Section 5. Holders on
whose behalf Warrant Shares are to be distributed by such underwriters shall be
parties to any such underwriting agreement and the representations and
warranties by, and the other agreements on the part of, PEC to and for the
benefit of such underwriters, shall also be made to and for the benefit of such
Holders. No such Holder shall be required by PEC to make any representations
or warranties to or agreements with PEC or the underwriters other than
reasonable representations, warranties or agreement regarding such Holder, such
Holder's Warrant Shares and such Holder's intended method or methods of
disposition and any other representation required by law and as provided in
Section 4.4(d).
(b) Inclusion of Warrant Shares. If PEC at any time proposes
to register any
EX B-9
<PAGE> 74
of its securities for its own account under the Securities Act as contemplated
by Section 4.2 and such securities are to be distributed by or through one or
more underwriters, PEC will use its best efforts, if requested by any Holder
who is entitled to request incidental registration of Warrant Shares in
connection therewith pursuant to Section 4.2, to arrange for such underwriters
to include the Warrant Shares to be offered and sold by such Holder among the
securities to be distributed by or through such underwriters; provided that,
for purposes of this sentence, best efforts shall not require PEC to reduce the
amount of sales price of such securities proposed to be distributed by or
through such underwriters. Holders of Warrant Shares to be distributed by such
underwriters shall be parties to the underwriting agreement between PEC and
such underwriters and the representations and warranties by, and the other
agreements on the part of, PEC to and for the benefit of such underwriters,
shall also be made to and for the benefit of such Holders of Warrant Shares.
PEC will cooperate with such Holders to the end that the conditions precedent
to the obligations of such Holders under such underwriting agreement shall not
include conditions that are not customary in underwriting agreements with
respect to combined primary and secondary distributions and shall be otherwise
satisfactory to such Holders. No such Holder shall be required by PEC to make
any representations or warranties other than reasonable representations,
warranties or agreements regarding such Holder, such Holder's Warrant Shares
and such Holder's intended method or methods of distribution and any other
representation required by law and as provided in Section 4.4(d).
(c) Selection of Underwriters. Whenever a registration demand
pursuant to Section 4.1 is for an underwritten offering, the Holders of Warrant
Shares making such demand shall have the right to select the managing
underwriter(s) (which shall be an underwriter of national standing) to
administer the offering, subject to the approval of PEC, such approval not to
be unreasonable withheld. If PEC at any time proposes to register any of its
securities under the Securities Act for sale of its own account or for the
accounts of any other sellers, including Holder, and such securities are to be
distributed by or through one or more underwriters, the selection of the
managing underwriter(s) (which shall be an underwriter of national standing)
shall be made by PEC and notice of the selection thereof delivered to Holders
eligible to participate in such registration.
(d) Holdback Agreements.
(i) If any registration pursuant to Section 4.1 or 4.2
shall be in connection with any underwritten public offering, each
Holder of Warrant Shares agrees by acquisition of such Warrant Shares,
if so required by the managing underwriter, not to effect any public
sale or distribution of Warrant Shares (other than as part of such
underwritten public offering) within seven (7) days prior to the
effective date of such registration statement or one hundred twenty
(120) days after the effective date of such registration statement,
unless the underwriters managing the offering otherwise agree.
(ii) PEC agrees (A) not to effect any public sale or
distribution
EX B-10
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prohibited by the Exchange Act after the demand or decision to make such
registration and (i) prior to the effective date of the registration
statement, except as a part of such registration statement or pursuant
to any registration statements on Forms S-8 or S-4 or any successor
form, unless the managing underwriters of such registration otherwise
agree; or (ii) prior to the ninetieth (90th) day after the effective
date of such registration statement, and (B) to use its best efforts to
cause each holder of at least 10% of its Common Stock or any securities
convertible into or exchangeable or exercisable for any of its Common
Stock, in each case purchased from PEC at any time after the date of
this Agreement (other than in a public offering), to agree not to effect
any such public sale or distribution of such securities during such
period.
4.5 Preparation; Reasonable Investigation. In connection with
the preparation and filing of each registration statement registering Warrant
Shares under the Securities Act, PEC will give Holders on whose behalf such
Warrant Shares are to be so registered and their underwriters, if any, and each
Requesting Holder and not more than one counsel for all Holders and their
respective accountants, the opportunity to participate in the preparation of
such registration statement, each prospectus included therein or filed with the
Commission and each amendment thereof or supplement thereto, and will give each
of them such access to its books and records and such opportunities to discuss
the business of PEC with its officers and the independent public accountants
who have certified its financial statements as shall be necessary in the
opinion of such Holders and such underwriters or their respective counsel, to
conduct a reasonable investigation within the meaning of the Securities Act.
5. Indemnification.
5.1 Indemnification by PEC.
In the event of any registration of any securities of PEC under
the Securities Act (pursuant to which Wes-Tex, the Foundation, the Greathouse
Charitable Remainder Trust or Holder sells Restricted Shares or Wes-Tex or
Holder sells Warrant Shares), PEC will, and hereby does, indemnify and hold
harmless Wes-Tex, the Foundation and the Greathouse Charitable Remainder Trust,
each officer and director of Wes-Tex or the Foundation, each trustee of the
Greathouse Charitable Remainder Trust or Holder, its partners and each other
person, if any, who controls Wes-Tex, the Foundation, the Greathouse Charitable
Remainder Trust or Holder within the meaning of the Securities Act, in each
case, against any losses, claims, damages, liabilities or expenses, joint or
several (including, without limitation, the costs and expenses of
investigating, preparing for and defending any legal proceeding, including
reasonable attorney's fees), to which Wes-Tex, the Foundation, the Greathouse
Charitable Remainder Trust or such Holder or any such director, trustee,
officer, employee or controlling person may become subject under the Securities
Act or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions or proceedings in respect thereof) arise out of or are
based upon (i) any untrue statement or alleged untrue statement of any material
fact contained in any registration
EX B-11
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statement under which such securities were registered under the Securities Act,
any preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, or any document incorporated
by reference therein, or (ii) any omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, and PEC will reimburse Wes-Tex, the
Foundation, the Greathouse Charitable Remainder Trust or Holder and each such
partner and controlling person for any legal or any other expenses incurred by
them in connection with investigating or defending or settling any such loss,
claim, liability, action or proceeding; provided that PEC shall not be liable
in any such case to the extent that any loss, claim, damage, liability or
expense (or action or proceeding in respect thereof) arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, any such preliminary prospectus,
final prospectus, summary prospectus, amendment or supplement in reliance upon
and in conformity with written information furnished to PEC through an
instrument duly executed by Wes-Tex, the Foundation, the Greathouse Charitable
Remainder Trust or Holder or any such director, trustee, officer, partner or
controlling person specifically stating that it is for use in preparation
thereof. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of Wes-Tex, the Foundation, the
Greathouse Charitable Remainder Trust or Holder or any such partner or
controlling person and shall survive the transfer of such securities by Wes-
Tex, the Foundation, the Greathouse Charitable Remainder Trust or Holder. PEC
will make provision for contribution in lieu of any such indemnity that may be
disallowed as shall be reasonably requested by Wes-Tex, the Foundation, the
Greathouse Charitable Remainder Trust or Holder.
5.2 Indemnification by Wes-Tex, the Foundation, the Greathouse
Charitable Remainder Trust or Holder.
In the event of any registration of any securities of PEC under
the Securities Act (pursuant to which Wes-Tex, the Foundation, the Greathouse
Charitable Remainder Trust or Holder sells Restricted Shares or Warrant Shares
covered by such registration statement), Wes-Tex, the Foundation, the
Greathouse Charitable Remainder Trust or Holder will, and each of them hereby
does, severally indemnify and hold harmless PEC, each director of PEC, each
officer of PEC who shall sign such registration statement and each other
person, if any, who controls PEC within the meaning of the Securities Act from
and against losses, claims, damages and liabilities caused by any untrue
statement or alleged untrue statement of material fact contained in such
registration statement, any preliminary prospectus, final prospectus or summary
prospectus included therein, or any amendment or supplement thereto, or caused
by any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, if such statement or omission was made in reliance upon and in
conformity with written information furnished to PEC through an instrument duly
executed by Wes-Tex, the Foundation, the Greathouse Charitable Remainder Trust
or Holder specifically stating that it is for use in the preparation of such
registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement up to the net
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proceeds received by Wes-Tex, the Foundation, the Greathouse Charitable
Remainder Trust or such Holder. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of PEC or any such
director, officer or controlling person and shall survive the transfer of such
securities by Wes-Tex, the Foundation, the Greathouse Charitable Remainder
Trust or Holder.
5.3 Notice of Claims, etc.
In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to this Section 5, such person (hereinafter called the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (hereinafter called the "indemnifying party") in
writing and the indemnifying party, upon request of the indemnified party,
shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any other party the indemnifying party may
designate in such proceeding and shall pay the fees and disbursements of such
counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless (i)
the indemnifying party and the indemnified party shall have mutually agreed to
the retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them.
The indemnifying party shall not be liable for the settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there is a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment.
5.4 Indemnification Unavailable.
If the indemnification provided for in this Section 5 is
unavailable as a matter of law to an indemnified party in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party under any such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by such indemnified party on the one hand and the
indemnifying parties on the other or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of such indemnified party on the one hand and
the indemnifying parties on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative fault of
such indemnified party and the indemnifying parties shall be determined by
reference to, among other things, whether the untrue or alleged untrue
EX B-13
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statement of a material fact or the omission to state a material fact relates
to information supplied by such parties and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omissions. The parties agree that it would not be just and
equitable if contribution pursuant to this Section 5.4 were determined by pro
rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages and
liabilities referred to above shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating, defending or settling
any such action or claim. Notwithstanding the foregoing, the liability of
Wes-Tex, the Foundation, the Greathouse Charitable Remainder Trust or a Holder
under this Section 5.4 shall be limited to the net proceeds received by
Wes-Tex, the Foundation, the Greathouse Charitable Remainder Trust or such
Holder (as the case may be).
5.5 No Settlement, etc.
No indemnifying party shall, except with the written consent of
the indemnified party, consent to entry of any judgment or entry into
settlement that does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability in respect to such claim or action.
5.6 Indemnity Operative and in Full Force.
The indemnity and contribution agreements contained in this
Section 5 shall remain operative and in full force and effect regardless of any
termination of this Agreement.
6. Rule 144.
6.1 Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Restricted Shares or the Warrant Shares to the
public without registration, PEC shall use its best efforts to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all times
after the date of this Agreement;
(b) File with the Commission in a timely manner all reports
and other documents required of PEC under the Securities Act and the Exchange
Act; and
(c) So long as Wes-Tex, the Foundation, the Greathouse
Charitable Remainder Trust or Holder owns any Restricted Shares or the Warrant
Shares, furnish to Wes-Tex, the Foundation, the Greathouse Charitable Remainder
Trust or the Holders as soon as reasonably practicable after request a written
statement by PEC as to its compliance with the reporting
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requirements of the Exchange Act, a copy of the most recent annual or quarterly
report of PEC filed with the Commission, and such other reports filed by PEC
with the Commission.
6.2 Further Assurances. PEC shall take such action any Holder
may reasonably request from time to time to enable Wes-Tex, the Foundation, the
Greathouse Charitable Remainder Trust or such Holder to sell Restricted Shares
or Warrant Shares without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144 under the Securities Act,
as such Rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the Commission. Upon written request of
Wes-Tex, the Foundation, the Greathouse Charitable Remainder Trust or any
Holder, PEC will deliver to Wes-Tex, the Foundation, the Greathouse Charitable
Remainder Trust or such Holder a written statement as to whether it has
complied with such requirements.
7. Amendments and Waivers. This Agreement may be amended,
and PEC may take any action herein prohibited or omit to perform any act herein
required to be performed by it, only if PEC shall have obtained the written
consent to such amendment, action or omissions to act of Wes-Tex or the Holder
or Holders of at least 51% or more of the Restricted Shares and Warrant Shares.
8. Nominees for Beneficial Owners. In the event that any
Restricted Shares or Warrant Shares are held by a nominee for the beneficial
owner thereof, the beneficial owner thereof may, at its election, be treated as
Wes-Tex, the Foundation, the Greathouse Charitable Remainder Trust or the
Holder of such Restricted Shares or Warrant Shares for purposes of any request
or other action by Wes-Tex, the Foundation, the Greathouse Charitable Remainder
Trust or any Holder or Holders of Restricted Shares or Warrant Shares pursuant
to this Agreement or any determination of any number or percentage of shares of
Restricted Shares or Warrant Shares held by Wes-Tex, the Foundation, the
Greathouse Charitable Remainder Trust or any Holder or Holders of Restricted
Shares or Warrant Shares contemplated by this Agreement. If the beneficial
owner of any Restricted Shares or Warrant Shares so elects, PEC may require
assurances reasonably satisfactory to it of such owner's beneficial ownership
of such Restricted Shares or Warrant Shares.
9. Notices. Notices and other communications under this
Agreement shall be in writing and shall be sent by registered mail, postage
prepaid, or courier addressed to:
9.1 if to Wes-Tex, the Foundation, the Greathouse Charitable
Remainder Trust or any Holder, at the address provided to PEC in writing by
Wes-Tex, the Foundation, the Greathouse Charitable Remainder Trust or such
Holder or as shown on stock transfer books of PEC unless Wes-Tex, the
Foundation, the Greathouse Charitable Remainder Trust or such Holder has
advised PEC in writing of a different address as to which notices shall be sent
to it under this Agreement, and
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9.2 if to PEC, at 4510 Lamesa Highway, P.O. Drawer 1416,
Snyder, Texas 79550 to the attention of its President or to such other address
as PEC shall have furnished to Wes-Tex, the Foundation, the Greathouse
Charitable Remainder Trust or each Holder.
10. Successors and Assigns. PEC acknowledges and agrees that
the registration rights granted to Wes-Tex, the Foundation and the Greathouse
Charitable Remainder Trust in this Agreement may be transferred and assigned by
Wes-Tex, the Foundation and the Greathouse Charitable Remainder Trust in
connection with any valid sale and assignment of the Restricted Shares or
Warrant Shares. All covenants and agreements in this Agreement by or on behalf
of either of the parties hereto will bind and, subject to the provisions of
Section 4.1 hereof, inure to the benefit of the respective successors and
assigns of the parties hereto whether so expressed or not. In addition,
whether or not any express assignment has been made, the provisions of this
Agreement are for the benefit of Wes-Tex, the Foundation, the Greathouse
Charitable Remainder Trust or any Holder of Restricted Shares or Warrant
Shares.
11. Miscellaneous. This Agreement embodies the entire
agreement and understanding between PEC and the other parties hereto with
respect to the subject matter hereof and supersedes all prior agreements and
understandings relating to the subject matter hereof. This Agreement shall be
construed and enforced in accordance with and governed by the laws of the State
of Texas. The headings in this Agreement are for the purposes of reference
only and shall not limit or otherwise affect the meaning hereof. This
Agreement may be executed in counterparts, each of which shall be an original,
but both of which together shall constitute one instrument.
EX B-16
<PAGE> 81
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized
as of the date first above written.
PEC:
PATTERSON ENERGY, INC.
By:
------------------------------
Cloyce A. Talbott
Chief Executive Officer
WES-TEX:
WES-TEX DRILLING COMPANY
By:
------------------------------
Myrle Greathouse
Chairman of the Board
FOUNDATION:
GREATHOUSE FOUNDATION
By:
------------------------------
Myrle Greathouse
President
GREATHOUSE CHARITABLE REMAINDER
TRUST:
-------------------------------------
Myrle Greathouse, Trustee
EX B-17
<PAGE> 82
EXHIBIT C
================================================================================
STOCK PURCHASE WARRANT
---------------
PATTERSON ENERGY, INC.
================================================================================
This Warrant was originally issued on June ___, 1997, to Wes-Tex
Drilling Company, a Texas corporation, pursuant to an Asset
Purchase Agreement with Patterson Energy, Inc. and Patterson
Drilling Company, dated the same date, and such issuance was not
registered under the Securities Act of 1933, as amended (the
"Act") or the securities or "blue sky" laws of any state. This
Warrant is a "restricted security" as that term is defined in
Rule 144 adopted by the Securities and Exchange Commission under
the Act and is, therefore transferrable only if the transfer is
exempt from the registration requirements of the Act, which
exemption must be established to the satisfaction of Patterson
Energy, Inc.
Date of Issuance: Certificate No. W-
---------------------- -----------
FOR VALUE RECEIVED, Patterson Energy, Inc. a Delaware corporation
(the "Company"), hereby grants to Wes-Tex Drilling Company, a Texas corporation
(the "Registered Holder"), the right to purchase from the Company 200,000
shares of the Company's Common Stock at a price per share of $32.00 (the
"Initial Exercise Price"). Certain capitalized terms used herein are defined
in Section 3 hereof. The amount and kind of securities purchasable pursuant to
the rights granted hereunder and the purchase price for such securities are
subject to adjustment pursuant to the provisions contained in this Warrant.
This Warrant is subject to the following provisions:
Section 1. Exercise of Warrant.
1A. Exercise Period. The Registered Holder may exercise, in
whole or in part (but not as to a fractional share of Common Stock), the
purchase rights represented by this Warrant at any time and from time to time
after the Date of Issuance to and including 5:00 p.m.
EX C-1
<PAGE> 83
(Snyder, Texas time) on June ___, 2000 (the "Exercise Period").
1B. Exercise Procedure.
(a) This Warrant will be deemed to have been exercised when
the Company has received all of the following items (the "Exercise Time"):
(i) a completed Exercise Agreement, as described in
paragraph 1C below, executed by the Registered Holder exercising
all or part of the purchase rights represented by this Warrant;
(ii) this Warrant; and
(iii) a check payable to the Company in an amount equal
to the product of the Exercise Price (as such term is defined in
Section 2) multiplied by the number of shares of Common Stock
being purchased upon such exercise (the "Aggregate Exercise
Price").
(b) As soon as practicable following the Exercise Time,
certificates for shares of Common Stock purchased upon exercise of this Warrant
will be delivered by the Company to the Registered Holder. Unless this Warrant
has expired or all of the purchase rights represented hereby have been
exercised, the Company will prepare a new Warrant, substantially identical
hereto, representing the rights formerly represented by this Warrant which have
not expired or been exercised and will, as soon as practicable following the
Exercise Time, deliver such new Warrant to the Registered Holder.
(c) The Common Stock issuable upon exercise of this Warrant
will be deemed to have been issued to the Registered Holder at the Exercise
Time, and the Registered Holder will be deemed for all purposes to have become
the record holder of such Common Stock at the Exercise Time.
(d) The issuance of certificates for shares of Common Stock
upon exercise of this Warrant will be made without charge to the Registered
Holder for any issuance tax in respect thereof or other cost incurred by the
Company in connection with such exercise and the related issuance of shares of
Common Stock, but the Company shall not be obligated to pay any transfer taxes
with respect to this Warrant or the shares of Common Stock unless reimbursed
thereafter by the transferee or transferor.
(e) The Company will not close its books against the transfer
of this Warrant or of any share of Common Stock issued or issuable upon the
exercise of this Warrant in any manner which interferes with the timely
exercise of this Warrant.
EX C-2
<PAGE> 84
(f) The Company shall at all times reserve and keep available
out of its authorized but unissued shares of Common Stock solely for the
purpose of issuance upon exercise of the Warrants, such number of shares of
Common Stock issuable upon the exercise of all outstanding Warrants. All
shares of Common Stock which are so issuable shall, when issued, be duly and
validly issued, fully paid and nonassessable shares of Common Stock of the
Company.
1C. Exercise Agreement. Upon any exercise of this Warrant,
the Exercise Agreement will be substantially in the form set forth in Annex I
hereto. Such Exercise Agreement will be dated the actual date of execution
thereof.
1D. No Fractional Shares. No fractional shares of Common
Stock or scripts for fractional shares shall be issued upon the exercise of
this Warrant. If Holder of this Warrant would be entitled on the exercise of
any rights evidenced hereby, to receive a fractional interest in a share, the
Company shall pay a cash adjustment in respect of any fractional share that
would otherwise be issuable in an amount equal to the same fraction of the
current market value of a share of Common Stock, which current market value
shall be the last reported sale price immediately preceding the date of the
exercise.
Section 2. Adjustment of Exercise and Number of Shares. In
order to prevent dilution of the rights granted under this Warrant, the Initial
Exercise Price shall be subject to adjustment from time to time as provided in
this Section 2 (such price or such price as last adjusted pursuant to the terms
hereof, as the case may be, is herein called the "Exercise Price"), and the
number of shares of Common Stock obtainable upon exercise of the Warrant shall
be subject to adjustment from time to time as provided in this Section 2.
2A. (1) In case the Company shall at any time or from time to
time subdivide its outstanding shares of Common Stock into a greater number of
shares, the Exercise Price in effect immediately prior to such subdivision
shall be proportionately reduced and the number of shares purchasable under
this Warrant shall be proportionately increased; and conversely, in case the
Common Stock of the Company shall be combined into a smaller number of shares,
the Exercise Price in effect immediately prior to such combination shall be
proportionately increased and the number of shares purchased hereunder shall be
proportionately reduced.
(2) Except as hereinafter provided, in the event the Company
shall, at any time or from time to time after the date hereof, sell any shares
of Common Stock without consideration or for a consideration per share less
than $32.00 or issue any shares of Common Stock as a stock dividend to holders
of Common Stock (any such sale or issuance being herein called a "Change of
Shares"), then, and thereafter upon each further Change of Shares, the Exercise
Price for this Warrant in effect immediately prior to such Change of Shares
shall be reduced to a price (including any applicable fraction of a cent to the
nearest cent) determined by dividing (i) the sum of (a) the total number of
shares of Common Stock outstanding immediately prior to such Change of Shares,
multiplied by the Exercise Price in effect immediately prior to such Change of
Shares,
EX C-3
<PAGE> 85
and (b) the consideration, if any, received by the Company upon such sale or
issuance by (ii) the total number of shares of Common Stock outstanding
immediately after such Change of Shares; provided, however, that in no event
shall the Exercise Price be adjusted pursuant to this computation to an amount
in excess of the Exercise Price in effect immediately prior to such
computation. Upon each adjustment of the Exercise Price pursuant to this
Section 2A(2), the number of shares of Common Stock purchasable upon exercise
of this Warrant shall be the number derived by multiplying the number of shares
of Common Stock purchasable immediately prior to such Change of Shares by the
Exercise Price in effect prior to such Change of Shares and dividing the
product so obtained by the applicable adjusted Exercise Price.
For the purposes of any adjustment to be made in accordance with
this Section 2A(1) or (2), the following provisions shall be applicable:
(a) In case of the issuance or sale of shares of Common Stock
(or of other securities deemed hereunder to involve the issuance or sale of
shares of Common Stock) for a consideration part or all of which shall be cash,
the amount of the cash portion of the consideration therefor deemed to have
been received by the Company shall be (i) the subscription price, if shares of
Common Stock are offered by the Company for subscription, or (ii) the public
offering price (before deducting therefrom any compensation paid or discount
allowed in the sale, underwriting or purchase thereof by underwriters or
dealers or others performing similar services, or any expenses incurred in
connection therewith), if such securities are sold to underwriters or dealers
for public offering without a subscription offering, or (iii) the gross amount
of cash actually received by the Company for such securities, in any other
case.
(b) in case of the issuance or sale (otherwise than as a
dividend or other distribution on any stock of the Company, and otherwise than
on the exercise of options, rights or warrants or the conversion or exchange of
convertible or exchangeable securities) of shares of Common Stock (or of other
securities deemed hereunder to involve the issuance or sale of shares of Common
Stock) for a consideration part or all of which shall be other than cash, the
amount of the consideration therefor other than cash deemed to have been
received by the Company shall be the value of such consideration as determined
in good faith by the Board of Directors of the Company, except where such
consideration consists of securities, in which case the amount of consideration
received by the Company shall be the market price thereof (determined as
provided below in this Section 2A) as of the date of receipt, but in each such
case without deduction therefrom of any expenses incurred or any underwriting
commissions, discounts or concessions paid or allowed by the Company in
connection therewith. In computing the market price of a note or other
obligation that is not listed or admitted to trading on any securities exchange
or quoted in the National Association of Securities Dealers' Automated
Quotation System or reported by the National Quotation Bureau, Inc. or a
similar reporting organization, the total consideration to be received by the
Company thereunder (including interest) shall be discounted to present value at
the prime rate of interest of NationsBank of Texas, N.A. (or its successor) in
effect at the time the note or obligation is deemed to have been issued. In
case any additional shares of Common
EX C-4
<PAGE> 86
Stock shall be issued in connection with any merger of another corporation into
the Company, the amount of consideration therefor shall be deemed to be the
fair value as determined in good faith by the Board of Directors of the Company
of such portion of the assets of such merged corporation received by the
Company as the Board of Directors of the Company shall determine to be
attributable to such additional shares of Common Stock.
(c) For the purposes of any computation under Section 2
hereof, the market price of the security in question on any day shall be valued
as follows:
(i) If traded on a national securities exchange or the
NASDAQ National Market ("NASDAQ/NM"), the value shall be deemed to be
the average of the security's closing prices on such exchange or
NASDAQ/NM over the thirty (30) day period ending three (3) business days
prior to the applicable valuation date; and
(ii) If actively traded over the counter (other than
NASDAQ/NM), the value shall be deemed to be the average of the
security's closing bid prices over the thirty (30) day period ending
three (3) business days prior to the applicable valuation date; and
(iii) If there is no active public market, the value
shall be the fair market value thereof as determined in good faith by
the Board of Directors.
The method of valuation of securities subject to investment
letter or other restrictions on free marketability shall be adjusted to make an
appropriate discount from the market value determined as above in clauses (i)
or (ii) to reflect the fair market value thereof as determined in good faith by
the Board of Directors. The Registered Holder of this Warrant shall have the
right to challenge any determination by the Board of Directors of fair market
value pursuant to this Section 2, in which case the determination of fair
market value shall be made by an independent appraiser selected jointly by the
Board of Directors and the challenging party, the cost of such appraisal to be
borne solely by the challenging party.
(d) Shares of Common Stock issuable by way of dividend or
other distribution on any stock of the Company shall be deemed to have been
issued immediately after the opening of business on the day following the
record date for the determination of shareholders entitled to receive such
dividend or other distribution and shall be deemed to have been issued without
consideration.
(e) The reclassification of securities of the Company other
than shares of Common Stock into securities including shares of Common Stock
shall be deemed to involve the issuance of such shares of Common Stock for a
consideration other than cash immediately prior to the close of business on the
date fixed for the determination of security holders entitled to receive such
shares, and the value of the consideration allocable to such shares of Common
Stock shall be determined as provided in subsection (b) of this Section 2A.
EX C-5
<PAGE> 87
(f) The number of shares of Common Stock at any one time
outstanding shall be deemed to include the aggregate maximum number of shares
issuable (subject to readjustment upon the actual issuance thereof) upon the
exercise of options, rights or warrants and upon the conversion or exchange of
convertible or exchangeable securities.
2B. In case the Company shall at any time after the date
hereof issue options, rights or warrants to subscribe for shares of Common
Stock, or issue any securities convertible into or exchangeable for shares of
Common Stock, for a consideration per share (determined as provided in Section
2A and as provided below) less than $32.00, or without consideration (including
the issuance of any such securities by way of dividend or other distribution),
the Exercise Price for this Warrant (whether or not the same shall be issued
and outstanding) in effect immediately prior to the issuance of such options,
rights or warrants, or such convertible or exchangeable securities, as the case
may be, shall be reduced to a price determined by making the computation in
accordance with the provisions of Section 2A(2) hereof, provided that:
(a) The aggregate maximum number of shares of Common Stock
issuable or that may become issuable under such options, rights or warrants
(assuming exercise in full even if not then currently exercisable or currently
exercisable in full) shall be deemed to be issued and outstanding at the time
such options, rights or warrants were issued, for a consideration equal to the
minimum purchase price per share provided for in such options, rights or
warrants at the time of issuance, plus the consideration, if any, received by
the Company for such options, rights or warrants; provided, however, that upon
the expiration or other termination of such options, rights or warrants, if any
thereof shall not have been exercised, the number of shares of Common Stock
deemed to be issued and outstanding pursuant to this subsection (a) (and for
the purposes of subsection (f) of Section 2A hereof) shall be reduced by the
number of shares as to which options, warrants and/or rights shall have
expired, and such number of shares shall no longer be deemed to be issued and
outstanding, and the Exercise Price then in effect shall forthwith be
readjusted and thereafter be the price that it would have been had adjustment
been made on the basis of the issuance only of the shares actually issued plus
the shares remaining issuable upon the exercise of those options, rights or
warrants as to which the exercise rights shall not have expired or terminated
unexercised.
(b) The aggregate maximum number of shares of Common Stock
issuable or that may become issuable upon conversion or exchange of any
convertible or exchangeable securities (assuming conversion or exchange in full
even if not then currently convertible or exchangeable in full) shall be deemed
to be issued and outstanding at the time of issuance of such securities, for a
consideration equal to the consideration received by the Company for such
securities, plus the minimum consideration, if any, receivable by the Company
upon the conversion or exchange thereof; provided, however, that upon the
termination of the right to convert or exchange such convertible or
exchangeable securities (whether by reason of redemption or otherwise), the
number of shares of Common Stock deemed to be issued and outstanding pursuant
to this subsection (b) (and for the purposes of subsection (f) of Section 2A
hereof) shall
EX C-6
<PAGE> 88
be reduced by the number of shares as to which the conversion or exchange
rights shall have expired or terminated unexercised, and such number of shares
shall no longer be deemed to be issued and outstanding, and the Exercise Price
then in effect shall forthwith be readjusted and thereafter be the price that
it would have been had adjustment been made on the basis of the issuance only
of the shares actually issued plus the shares remaining issuable upon
conversion or exchange of those convertible or exchangeable securities as to
which the conversion or exchange rights shall not have expired or terminated
unexercised.
(c) If any change shall occur in the price per share provided
for in any of the options, rights or warrants referred to in subsection (a) of
this Section 2B, or in the price per share or ratio at which the securities
referred to in subsection (b) of this Section 2B are convertible or
exchangeable, such options, rights or warrants or conversion or exchange
rights, as the case may be, to the extent not theretofore exercised, shall be
deemed to have expired or terminated on the date when such price change became
effective in respect of shares not theretofore issued pursuant to the exercise
or conversion or exchange thereof, and the Company shall be deemed to have
issued upon such date new options, rights or warrants or convertible or
exchangeable securities.
2C. Reorganization, Reclassification, Consolidation, Merger or
Sale. Upon any reorganization, reclassification, consolidation, merger,
liquidation, dissolution or sale of all or substantially all of the Company's
assets to another Person, the Company shall take such action as it deems
necessary to provide the Registered Holder upon the exercise thereof, and in
lieu of or in addition to the Common Stock obtainable upon exercise of this
Warrant, the kind and amount of stock, other securities or property that such
Registered Holder would have received had such Registered Holder exercised this
Warrant immediately prior to any reorganization, reclassification,
consolidation, merger, liquidation, dissolution or sale of all or substantially
all of the assets of the Company.
2D. Notices. Upon any adjustment of the Exercise Price or the
securities or property obtainable upon exercise of this Warrant, the Company
will give written notice thereof to the Registered Holder.
2E. No adjustment of the Exercise Price shall be made as a
result of or in connection with (1) the issuance or sale of shares of Common
Stock pursuant to options, warrants, stock purchase agreements and convertible
or exchangeable securities outstanding or in effect on the date hereof, (2) the
issuance or sale of shares of Common Stock upon the exercise of options granted
pursuant to any of the Company's stock option plans in effect on the date
hereof, whether or not options thereunder were outstanding on the date hereof;
provided that the exercise price of any such options is not less than the fair
market value of the Common Stock on the date of grant, or (3) the issuance or
sale of shares of Common Stock if the amount of said adjustment shall be less
than $0.10, provided, however, that in such case, any adjustment that would
otherwise be required then to be made shall be carried forward and shall be
made at the time of
EX C-7
<PAGE> 89
and together with the next subsequent adjustment that shall amount, together
with any adjustment so carried forward, to at least $0.10. In addition, Holders
shall not be entitled to cash dividends paid by the Company prior to the
exercise of any Warrant or Warrants held by them.
Section 3. Definitions. The following terms have meanings set
forth below:
"Common Stock" means the Company's Common Stock, $0.01 par value
per share.
"Person" means an individual, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization and a government or any
department or agency thereof.
Section 4. No Voting Rights; Limitations of Liability. This
Warrant will not entitle the Registered Holder to any voting rights or other
rights as a stockholder of the Company. No provision hereof, in the absence of
affirmative action by the Registered Holder to purchase Common Stock , and no
enumeration herein of the rights or privileges of the Registered Holder shall
give rise to any liability of such holder for the Exercise Price of Common
Stock acquirable by exercise hereof or as a stockholder of the Company.
Section 5. Transfer.
5A. Except as otherwise provided herein, this Warrant and all
options and rights hereunder are transferable, as to all or any part of the
number of shares of Common Stock purchasable upon its exercise, by the
Registered Holder hereof in person or by duly authorized attorney on the books
of the Company upon surrender of this Warrant at the principal offices of the
Company, together with the form of transfer authorization attached hereto duly
executed. The Company shall deem and treat the Registered Holder of this
Warrant at any time as the absolute owner hereof for all purposes and shall not
be affected by any notice to the contrary. If this Warrant is transferred in
part, the Company shall at the time of surrender of this Warrant, issue to the
transferee a Warrant covering the number of shares of Common Stock transferred
and to the transferor a Warrant covering the number of shares of Common Stock
not transferred.
5B. Anything in this Warrant to the contrary notwithstanding,
if, at the time of the surrender of this Warrant in connection with any
exercise, transfer, or exchange of this Warrant, this Warrant shall not be
registered under the Securities Act of 1933, as amended (the "Act"), and under
applicable state securities or blue sky laws, the Company may require, as a
condition of allowing such exercise, transfer, or exchange, that (i) the
Registered Holder or transferee of this Warrant, as the case may be, furnish to
the Company a written opinion of counsel, which opinion of counsel is
reasonably acceptable to the Company, to the effect that such exercise,
transfer, or exchange may be made without registration under the Act and under
applicable state securities or blue sky laws, and (ii) the Registered Holder or
transferee execute and deliver to the Company an investment letter in form and
substance reasonably acceptable to the Company. The first Registered Holder of
this Warrant, by taking and holding the same,
EX C-8
<PAGE> 90
represents to the Company that such Registered Holder is acquiring this Warrant
for investment and not with a view to the distribution thereof.
5C. The terms of this warrant shall be binding upon the
permitted successors, transferees and assignees of Wes-Tex Drilling Company.
Section 6. Warrant Exchangeable for Different Denominations.
This Warrant is exchangeable, upon the surrender hereof by the Registered
Holder at the principal office of the Company, for new Warrants of like tenor
representing in the aggregate the purchase rights hereunder, and each of such
new Warrants will represent such portion of rights as is designated by the
Registered Holder at the time of such surrender. The date the Company
initially issues this Warrant will be deemed to be the "Date of Issuance"
hereof regardless of the number of times new certificates representing the
unexpired and unexercised rights formerly representing portions of the rights
hereunder are referred to herein as the "Warrants."
Section 7. Underlying Shares--Restricted Securities. The shares
of Common Stock acquired upon exercise of this Warrant will be "restricted
securities" as that term is defined in Rule 144 adopted by the Securities and
Exchange Commission under the Act and therefore may not be sold or transferred
in the absence of registration under the Act or an exemption under the Act and
the applicable state securities or blue sky laws. Share certificates
evidencing shares of Common Stock acquired upon exercise of this Warrant will
be imprinted with a legend reading substantially as follows:
The shares represented by this Certificate have not been
registered under the Securities Act of 1933, as amended (the
"Act") and are "restricted securities," as that term is defined
in Rule 144 under the Act. The shares may not be offered for
sale, sold, or otherwise transferred except pursuant to an
effective Registration Statement under the Act or an exemption
therefrom, the availability of which is to be established to the
satisfaction of the Company.
Section 8. Underlying Shares--Registration Rights. The shares
acquired upon exercise of this Warrant will be entitled to certain registration
rights under the Registration Rights Agreement between the Company and Wes-Tex
Drilling Company, dated of even date herewith.
Section 9. Replacement. Upon receipt of evidence reasonably
satisfactory to the Company of the ownership and the loss, theft, destruction
or mutilation of any certificate evidencing this Warrant, and in the case of
any such loss, theft or destruction, upon receipt of indemnity reasonably
satisfactory to the Company or, in the case of any such mutilation upon
surrender of such certificate, the Company will execute and deliver in lieu of
such certificate a new certificate of like kind representing the same rights
represented by such lost, stolen, destroyed or mutilated certificate and dated
the date of such lost, stolen, destroyed or mutilated certificate.
EX C-9
<PAGE> 91
Section 10. Notices. Except as otherwise expressly provided
herein, all notices referred to in this Warrant will be in writing and will be
delivered personally, sent by reputable express courier service (charges
prepaid) or sent by registered or certified mail, return receipt requested,
postage prepaid and will be deemed to have been given when so delivered, sent
or deposited in the U.S. Mail (i) to the Company, at its principal executive
offices and (ii) to the Registered Holder of this Warrant, at such holder's
address as it appears in the records of the Company.
Section 11. Amendment and Waiver. Except as otherwise provided
herein, the provisions of this Warrant may be amended and the Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
Registered Holders of Warrants representing a majority of the shares of Common
Stock obtainable upon exercise of the Warrants.
Section 12. Descriptive Headings; Governing Law. The
descriptive headings of the several sections and paragraphs of this Warrant are
inserted for convenience only and do not constitute a part of this Warrant.
The construction, validity and interpretation of this Warrant will be governed
by the laws of the State of Texas.
IN WITNESS WHEREOF, the Company has caused this Warrant to be
signed and attested by its duly authorized officer under its corporate seal and
to be dated the Date of Issuance hereof.
PATTERSON ENERGY, INC.
By:
--------------------------------
Name: Cloyce A. Talbott
------------------------------
Title: Chief Executive Officer
-----------------------------
EX C-10
<PAGE> 92
ANNEX I
PATTERSON ENERGY, INC.
EXERCISE AGREEMENT--INVESTMENT REPRESENTATIONS
To: Patterson Energy, Inc. Dated:
-----------------------
The undersigned, pursuant to the provisions set forth in the
attached Warrant (Certificate No. W-_______________), hereby agrees to
subscribe for the purchase of ______________ shares of the Common Stock
("Restricted Shares") of Patterson Energy, Inc. (the "Company") covered by such
Warrant and makes payment herewith in full therefor at the price per share
provided by such Warrant.
The undersigned is acquiring the Restricted Shares for his own
account with the present intention of holding the Restricted Shares for
purposes of investment, and he has no intention of selling any of the
Restricted Shares in a public distribution in violation of federal securities
laws or any applicable state securities laws and none of such Restricted Shares
may be transferred, sold, assigned, pledged, hypothecated or otherwise disposed
of by the undersigned unless (a) a registration statement under the Securities
Act of 1933, as amended (the "Act") covering the Restricted Shares has become
effective so as to permit the sale or other disposition of such shares by the
undersigned; or (b) there is presented to the Company an opinion of counsel
satisfactory to the Company to the effect that the sale or other proposed
disposition of the Restricted Shares by the undersigned may lawfully be made
otherwise than pursuant to an effective registration statement under the Act.
Signature:
---------------------------
Address:
-----------------------------
-------------------------------------
EX C-11
<PAGE> 93
ANNEX II
PATTERSON ENERGY, INC.
ASSIGNMENT
FOR VALUE RECEIVED,
______________________________________________ _______________ hereby sells,
assigns and transfers all of the rights of the undersigned under the attached
Warrant (Certificate No. W-_______________) with respect to the number of
shares of Common Stock of Patterson Energy, Inc. covered thereby set forth
below, unto:
<TABLE>
<CAPTION>
Names of Assignee ("Assignee") Address No. of Shares
- ------------------------------ ------- -------------
<S> <C> <C>
</TABLE>
Signature:
--------------------------
-----------------------------
Witness:
----------------------------
ACCEPTANCE OF ASSIGNMENT
The undersigned, as Assignee, hereby agrees to be bound by the
terms of the attached Warrant.
Signature:
--------------------------
-----------------------------
Witness:
----------------------------
EX C-12
<PAGE> 94
ANNEX I
PATTERSON ENERGY, INC.
EXERCISE AGREEMENT--INVESTMENT REPRESENTATIONS
To: Patterson Energy, Inc. Dated:
-----------------------
The undersigned, pursuant to the provisions set forth in the
attached Warrant (Certificate No. W-_______________), hereby agrees to
subscribe for the purchase of ______________ shares of the Common Stock
("Restricted Shares") of Patterson Energy, Inc. (the "Company") covered by such
Warrant and makes payment herewith in full therefor at the price per share
provided by such Warrant.
The undersigned is acquiring the Restricted Shares for his own
account with the present intention of holding the Restricted Shares for
purposes of investment, and he has no intention of selling any of the
Restricted Shares in a public distribution in violation of federal securities
laws or any applicable state securities laws and none of such Restricted Shares
may be transferred, sold, assigned, pledged, hypothecated or otherwise disposed
of by the undersigned unless (a) a registration statement under the Securities
Act of 1933, as amended (the "Act") covering the Restricted Shares has become
effective so as to permit the sale or other disposition of such shares by the
undersigned; or (b) there is presented to the Company an opinion of counsel
satisfactory to the Company to the effect that the sale or other proposed
disposition of the Restricted Shares by the undersigned may lawfully be made
otherwise than pursuant to an effective registration statement under the Act.
Signature:
--------------------------
Address:
----------------------------
------------------------------------
EX C-13
<PAGE> 95
ANNEX II
PATTERSON ENERGY, INC.
ASSIGNMENT
FOR VALUE RECEIVED,
______________________________________________ _______________ hereby sells,
assigns and transfers all of the rights of the undersigned under the attached
Warrant (Certificate No. W-_______________) with respect to the number of
shares of Common Stock of Patterson Energy, Inc. covered thereby set forth
below, unto:
<TABLE>
<CAPTION>
Names of Assignee ("Assignee") Address No. of Shares
- ------------------------------ ------- -------------
<S> <C> <C>
</TABLE>
Signature:
-----------------------------------
---------------------------------------------
Witness:
-------------------------------------
ACCEPTANCE OF ASSIGNMENT
The undersigned, as Assignee, hereby agrees to be bound by the
terms of the attached Warrant.
Signature:
-----------------------------------
---------------------------------------------
Witness:
-------------------------------------
EX C-14
<PAGE> 96
EXHIBIT D
BILL OF SALE AND ASSIGNMENT
KNOW ALL MEN BY THESE PRESENTS, that, pursuant to that certain
Asset Purchase Agreement, dated June 4, 1997 ("Asset Purchase Agreement"),
among PATTERSON ENERGY, INC., a Delaware corporation ("PEC"), PATTERSON
DRILLING COMPANY ("PDC"), a Delaware corporation wholly owned by PEC, and WES-
TEX DRILLING COMPANY ("Wes-Tex"), a Texas corporation (Wes-Tex is referred to
herein as the "Assignor"), the Assignor, for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, hereby grants,
bargains, sells, conveys and transfers unto PDC (the "Assignee"), all of the
Assignor's right, title and interest in and to (i) the Drilling Rigs, Equipment
and Rolling Stock set forth in Appendix I attached hereto and incorporated
herein by this reference; and (ii) the Assumed Drilling Contracts and Leased
Property Lease Agreements described in Appendix II attached hereto and
incorporated herein by this reference.
TO HAVE AND TO HOLD the same unto the Assignee and the Assignee's
successors and assigns forever. The Assignor hereby covenants and agrees that
it has the full right, power and authority to sell, convey and transfer the
foregoing property to the Assignee pursuant to this Bill of Sale and
Assignment.
IN WITNESS WHEREOF, the Assignor has caused this Bill of Sale and
Assignment to be duly executed by its duly authorized officer as of the ____
day of June, 1997.
WES-TEX DRILLING COMPANY
By:
------------------------------
Myrle Greathouse
Chairman of the Board
EX D-1
<PAGE> 97
APPENDIX I
TO
BILL OF SALE AND ASSIGNMENT
FROM
WES-TEX DRILLING COMPANY
TO
PATTERSON DRILLING COMPANY
(List of Assets Assigned)
A. DRILLING RIGS AND EQUIPMENT
<TABLE>
<CAPTION>
Rig No. Drawworks Manufacturer
------- ----------------------
<S> <C>
Rig 1 National 50
Rig 2 National 50
Rig 3 National 50
Rig 4 National 50
Rig 5 National 50
Rig 6 Bethlehem S-60
Rig 7 Brewster N-4
Rig 8 Bethlehem S-55
Rig 9 National 50
Rig 10 Brewster N-4
Rig 11 Bethlehem S-55
Rig 12 Brewster N-4
Rig 14 Skytop Brewster N75A
Rig 15 Brewster N-4
Rig 16 Brewster N-4
Rig 17 B D W 800
Rig 18 National 50
Rig 19 Brewster N-4
Rig 20 National 50
Rig 21 Skytop Brewster N75A
Rig 22 Bethlehem S-55
</TABLE>
The Drilling Rigs and Equipment shall include all of the drilling rigs,
parts, and related equipment, including engines, mud pumps, derricks and
substructives, rotary tables, forklift, sand blaster, drill bits and all
tubular goods on the rigs and in the yard owned by
EX D-2
<PAGE> 98
Wes-Tex as of the date of the Asset Purchase Agreement, all of which are
listed on that certain Depreciation Schedule, dated December 31, 1996,
of such drilling rigs, parts, and related equipment prepared by Wes-Tex,
which is incorporated herein and made a part hereof by this reference,
less the parts and related equipment sold or disposed of and plus the
parts and related equipment acquired by Wes-Tex in the ordinary course
of business, consistent with past practice since the date of such
Depreciation Schedule.
B. ROLLING STOCK
<TABLE>
<CAPTION>
YEAR MAKE MODEL VIN NUMBER
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1996 Chevrolet Pickup 1GCGC29F4TE145610
1997 Chevrolet Pickup 1GCGC29R8VE223657
1995 Chevrolet Pickup 1GCGC29F3SE213927
1995 Chevrolet Pickup 1GCGC29F1SE196609
1997 Chevrolet Pickup 1GCGC29RXVE222963
1995 Chevrolet Pickup 1GCGC29F2SE195629
1995 Chevrolet Pickup 1GCGC29F4SE213211
1995 Chevrolet Pickup 1GCGC29KXSE110047
1993 Chevrolet Pickup 1GCGC39FXPE198887
1996 Chevrolet Pickup 1GCGC29FOTE186025
1997 Chevrolet Pickup 1GCGC29R2VE221886
1993 Ford Pickup 1FTHX25M5PKB60072
1997 Chevrolet Pickup 1GCGC29RXVE142949
1995 Chevrolet Pickup 1GCGC29K7SE111964
1995 Chevrolet Pickup 1GCGC29F4SE129227
1994 Chevrolet Pickup 1GCGC29F4RE293619
1994 Ford Pickup 1FTHX25M4RKB12825
1993 Ford Pickup 1FTHX25MXPKA04660
1995 Chevrolet Pickup 1GCGC29FXSE213911
1994 Chevrolet Pickup 1GCGC29F1RE182980
1996 Chevrolet Pickup 1GCGC29F8TE186211
1996 Chevrolet Pickup 1GCGC29F8TE268794
</TABLE>
EX D-3
<PAGE> 99
<TABLE>
<CAPTION>
YEAR MAKE MODEL VIN NUMBER
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1997 Chevrolet Pickup 1GCGC29R3VE139746
1994 Ford Pickup 1FTHX25M3RKA33551
1991 Ford Pickup 1FTHX25M1MKB19336
1994 Ford Pickup 1FTHX25M9RKA33554
1995 Chevrolet Pickup 1GCGC29F1SE141416
1995 Chevrolet Tahoe 1GNEC13K5SJ374172
1994 Chevrolet Pickup 1GCGC29F8RE198545
1996 Chevrolet Pickup 1GCGC29F8TE149367
1994 Chevrolet Suburban 1GNEC16KXRJ394973
1997 Chevrolet Pickup 1GCGC33R9VF029339
1996 Chevrolet Blazer 1GNCS13W3T2162959
1994 Chevrolet Pickup 1GCEC19KXRE218891
1993 Chevrolet Suburban 1GNFK16KXPJ406110
1996 Chevrolet Pickup 1GCGC29F5TE147348
1994 Ford 1 1/2 Ton Pickup 1FDLF47F2REA36734
1993 Chevrolet Pickup 2GCGC29F2P1146312
1992 Ford Pickup 1FTHX25M4NKA27736
1994 Chevrolet 1 Ton Truck 1GBJC34F9RE215702
1995 Ford 1 1/2 Ton Pickup 1FDLF47F9SEA39152
1990 Ford 1 1/2 Ton Pickup 2FDLF47M6LCB17859
1995 Ford 1 1/2 Ton Pickup 1FDLF47FOSEA14110
1996 Ford Pickup 1FTEF15Y5TLB02812
1993 Ford Pickup 1FTHX25M5PKB60069
1974 Homemade Flatbed Trailer TR132691
1974 Homemade Flatbed Trailer TR132690
1979 Shopmade Utility Trailer TR145288
1974 Homemade Small Red 2-Wheel (no title)
Trailer
1973 Homemade Pipe Trailer (no title)
1976 Mathey Utility Trailer 1022 (no title)
1973 WW Flatbed Trailer 020321
1993 Shopmade Utility Trailer (no title)
</TABLE>
EX D-4
<PAGE> 100
<TABLE>
<CAPTION>
YEAR MAKE MODEL VIN NUMBER
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1983 Shopmade Flatbed Trailer TR154194
1979 Autocar Truck Q01FTGD089552
1980 Mack Truck R686ST31947
1981 Autocar Truck 1WBRCCJE0BU093352
1985 Freightliner Truck 1FUPYCYB7FP271290
1981 Mack Truck 1M1V173Y1BH058720
1981 Mack Truck 1M1V173Y3BH058721
1992 Freightliner Truck 2FVXFCY9XNV516649
1992 Freightliner Truck 2FVXFCY93NV517321
1981 Autocar Truck 1WBRCCJF2BU093068
1980 Autocar Truck Q91FAAA092479
1985 Autocar Truck 1WBMCCJEXFN103136
1994 Mack Truck 1M2P267Y1RMO16930
1989 Ford Flatbed Pickup 1FDJF37MXKNA40438
1995 Chevrolet Van 1GAGG39K0SF134290
1980 Nabors Float Trailer 27365FBSD3
1971 Nabors Lowbed Trailer 17968LD3
1973 Nabors Lowboy Trailer 20772LD
1979 Hobbs Float Trailer FHV358001
1981 Atoka Flatbed Trailer AT714252
1981 Atoka Oil Field Trailer AT715253
1975 Nabors Float Trailer 23306LD3
1981 Hercules Lowboy Trailer 1HZL48302B1002320
1981 Aztec Float Trailer 1AZBG1A27B1010617
1973 Fruehauf Lowboy Trailer 122406
1981 Aztec Oil Field Trailer 1AZCD1A25B1010483
1978 Hercules Lowbed Trailer 0877804
1981 TRII Flatbed Trailer BF01080301
1974 Shopmade Flatbed Trailer TR132670
1966 Shopmade Float Trailer TR110423
1976 Nabors Float Trailer 23995LD
1981 Nabors Float Trailer 1NT1P4122B1000547
</TABLE>
EX D-5
<PAGE> 101
<TABLE>
<CAPTION>
YEAR MAKE MODEL VIN NUMBER
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1985 Homemade Lowboy Trailer TR157303
1981 Aztec Float Trailer 1AZBG1A29B1011008
1985 Shopmade Lowboy Trailer TR157408
Homemade Jeep Trailer (no title)
Homemade Jeep Trailer (no title)
</TABLE>
C. MOBILE HOME.
Redman Homes, Inc. Sheraton Model
14'x 76' Manufactured Home
Serial No. 12311974
EX D-6
<PAGE> 102
APPENDIX II
TO
BILL OF SALE AND ASSIGNMENT
FROM
WES-TEX DRILLING COMPANY
TO
PATTERSON DRILLING COMPANY
(List of Assumed Drilling Contracts and
Leased Property Lease Agreements Assigned)
A. ASSUMED DRILLING CONTRACTS. (Note: If drilling operations on the
following drilling contracts are completed or drilling operations have
commenced on all wells covered by the drilling contract at the Effective
Time of Assumption, the drilling contract will not be assumed. The
column for wells included in the Assumed Drilling Contracts will be
completed at the Closing.)
<TABLE>
<CAPTION>
Wells Included
in Assumed
Operator County Type Drilling Contracts
-------- ------ ---- ------------------
<S> <C> <C> <C>
1. Presently Drilling:
Union Pacific Resources Crockett DW Multi-
well
Union Pacific Resources Crockett/Terrell DW Multi-
well
Louis Dreyfus Natural Gas Co. Sutton FTG Multi-
well
Louis Dreyfus Natural Gas Co. Sutton DW Multi-
well
Santa Fe Energy Resources, Inc. Glasscock FTG 4 well
BC Operating, Inc. Dawson FTG
ARCO Permian Val Verde DW Multi-
well
Chevron Production Co. Terrell DW Multi-
well
Pennzoil Exploration & Production Crane FTG
Company
Devon Energy Corporation Ward FTG Multi-
well
Lakewood Operating Howard TK3 well
</TABLE>
EX D-7
<PAGE> 103
<TABLE>
<CAPTION>
Wells Included
in Assumed
Operator County Type Drilling Contracts
-------- ------ ---- ------------------
<S> <C> <C> <C>
IP Petroleum Co., Inc. Winkler DW Multi-
well
Midland Resources Reagan DW
J. Cleo Thompson Terrell/Crockett/ DW Multi-
Schleicher well
Fina Oil & Gas Pecos DW Multi-
well
2. Contracts Pending:
Senneca Resources, Inc. Gaines FTG
Patrick Exploration Company Howard FTG
Goodrich Petr. Co. of Louisiana Dawson FTG
Harrison Interests Crockett DW
Enron Oil & Gas Company Val Verde/ DW Multi-
Crockett well
Enron Oil & Gas Company - Val Verde/ DW Multi-
Baggett Crockett well
J. Cleo Thompson Upton FTG Multi-
well
J. Cleo Thompson Reagan FTG
Hamman Oil & Refining Company Sterling FTG 2 Well
Sharp Image Energy Howard FTG
Cockrell Production Co., Inc. Sutton FTG
Medallion Oil & Gas Co. Pecos FTG Multi-
well
Spirit Energy 76 (Unocal) Crockett/Val Verde DW 7 Well
Cross Timbers Operating Company Crockett FTG 4 Well
Texland Petroleum Gaines/Andrews FTG 7 Well
Texaco Crockett FTG 2 Well
Louis Dreyfus Natural Gas Howard DW 4 Well
Midland Resources Regan FTG 2 Well
</TABLE>
EX D-8
<PAGE> 104
3. Drilling Contracts entered into between the date of the Asset Purchase
Agreement and the Closing thereunder with the approval in writing of PDC
in accordance with clause (c) of Section 5.3 of the Asset Purchase
Agreement.
- ---------------
(1) This Drilling Contract is being assumed in full.
B. Leased Property Lease Agreements.
<TABLE>
<CAPTION>
Description Expiration Rent/Due Date
----------- ---------- -------------
<S> <C> <C> <C>
1 Contract, dated November 1, 1993, between March 31, 1999 $2,554.98/year,
Linda McGaha Wood and Wes-Tex granting the right to due April 1 of
erect, maintain, use, repair and remove a 500-foot each year
communication tower on property in Taylor County,
Texas
2 Surface Lease, dated as of August 1, 1995, between July 31, 2001 $450/month, due
Charles E. Davidson, III, D/B/A Taylor Box Land 1st day of each
Company and Wes-Tex, as amended and extended by month
Amendment and Extension dated as of August 31, 1996,
covering the lease of a 3.28 acre tract of land in
Ozona, Crockett County, Texas
3 Lease Agreement, dated July 15, 1996, between Koleta July 14, 1998 $600/month, due
Keyes Disch, as independent executor of Estate of 15th day of each
Ben L. Keyes, Deceased, covering a 3.00 acre tract of month
land in Tom Green County, Texas located at
6577 S. Highway 277, San Angelo, Texas
</TABLE>
EX D-9
<PAGE> 105
EXHIBIT E
WARRANTY DEED
WES-TEX DRILLING COMPANY, a Texas corporation, for consideration paid,
grants to PATTERSON DRILLING COMPANY, a Delaware corporation, whose address is
Post Office Drawer 1416, Snyder, Texas 79550, the following described real
estate situated in ________________ County, Texas, to wit:
THE SURFACE ONLY TO:
[Legal description to be inserted at the Closing and to be
the same as the legal description contained in the title policy
to be obtained by PDC.]
with warranty covenants.
WITNESS my hand this ________ day of June, 1997.
WES-TEX DRILLING COMPANY, a
Texas corporation
By:
---------------------------
MYRLE GREATHOUSE, Chairman
of the Board
STATE OF TEXAS )
) ss
COUNTY OF ___________ )
On this ____ day of June, 1997, before me personally appeared MYRLE
GREATHOUSE, as Chairman of the Board of WES-TEX DRILLING COMPANY, a Texas
corporation, to me known to be the person described in and who executed the
foregoing instrument, and acknowledged that he executed the same as his free
act and deed.
WITNESS my hand and seal the day and year last above written.
-----------------------------
NOTARY PUBLIC
My Commission Expires:
==========================================================
STATE OF TEXAS )
) ss.
COUNTY OF _______________ )
I hereby certify that this instrument was filed for record on the _____
day of __________, 1997, at _____ o'clock __.m. and duly recorded in Book _____
Page _____ of the deed Records of said County.
-----------------------------
County Clerk
By:
--------------------------
(Deputy Clerk)
RETURN TO:
EX E-1
<PAGE> 106
EXHIBIT F
FORM
OF
INVESTMENT REPRESENTATION LETTER
June ___, 1997
Patterson Energy, Inc.
4510 Lamesa Highway
Snyder, Texas 79549
This letter is being submitted to Patterson Energy, Inc. ("PEC")
in connection with and as a condition to PEC's closing of the Asset Purchase
contemplated by the Asset Purchase Agreement among PEC, Patterson Drilling
Company ("PDC") and Wes-Tex Drilling Company ("Wes-Tex"). Capitalized terms
not defined herein shall have the meaning given them in the Memorandum (as
defined below).
1. Representations and Warranties.
The undersigned hereby represents and warrants to PEC that the
following statements are true:
a. The undersigned has been furnished a copy of the
Memorandum, dated June __, 1997 (the "Memorandum") containing a copy of PEC's
Annual Report on Form 10-K for the fiscal year ended December 31, 1996, and all
other reports filed by PEC with the Securities and Exchange Commission since
January 1, 1997 (collectively, the "Reports") and has carefully reviewed the
Memorandum and the Reports, including, but not limited to, (i) the statements
in the Memorandum relating to taxation of the Asset Purchase and lack of free
transferability of the PEC Common Stock, the PEC Warrant and the PEC Warrant
Shares to be issued by PEC as consideration for the Asset Purchase, and (ii)
the section entitled "Disclosure Concerning Forward-Looking Statements,"
setting forth certain Cautionary Statements or risk factors relating to PEC and
its businesses and operations.
b. The undersigned has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of an investment in PEC vis-a-vis the PEC Common Stock, PEC Warrant and
PEC Warrant Shares to be issued by PEC as consideration for the Asset Purchase.
c. The undersigned has had an opportunity to ask questions of
PEC and its management concerning PEC and PDC, the businesses of PEC and PDC
and the PEC Common Stock, PEC Warrant and PEC Warrant Shares and, if asked, all
such questions have been answered
EX F-1
<PAGE> 107
Patterson Energy, Inc.
[Date]
Page 2
to the full satisfaction of the undersigned.
d. The undersigned understands that PEC has not registered
the offer or sale of the PEC Common Stock or the PEC Warrant or the PEC Warrant
Shares under the Securities Act of 1933, as amended (the "Act"), in reliance
upon an exemption therefrom under Section 4(2) of the Act and the provisions of
Regulation D promulgated thereunder. The undersigned therefore acknowledges
that in no event may it sell or otherwise transfer the PEC Common Stock, PEC
Warrant or the PEC Warrant Shares without registration under the Act (see
paragraph (g) below).
e. The undersigned represents that it will acquire the PEC
Common Stock for its own account, with no intention to distribute or offer to
distribute the same to others without registration under the Act, and
understands that the issuance by PEC of the PEC Common Stock, the PEC Warrant
and the PEC Warrant Shares will be predicated upon the undersigned's lack of
such intention.
f. The undersigned understands that neither the Securities
and Exchange Commission nor the securities commissioner of any state has
received or reviewed any documents relative to an investment in PEC, or has
made any finding or determination relating to the fairness of an investment in
PEC.
g. The undersigned acknowledges that stop transfer
instructions will be placed with PEC's transfer agent to restrict the resale,
pledge, hypothecation or other transfer of the PEC Common Stock, the PEC
Warrant and the PEC Warrant Shares.
h. The undersigned acknowledges that, except as provided in
the Registration Rights Agreement attached as Exhibit B to the Asset Purchase
Agreement, PEC is under no obligation to register the PEC Common Stock or the
PEC Warrant Shares for sale under the Act or to assist the undersigned in
complying with any exemption from registration under the Act, or any state
securities laws.
i. If other than a natural person, the undersigned was not
organized for the specific purpose of acquiring the PEC Common Stock, the PEC
Warrant or the PEC Warrant Shares.
j. The undersigned understands and acknowledges that the
foregoing representations and warranties will be relied upon by PEC in
connection with the issuance of the PEC Common Stock, the PEC Warrant and the
PEC Warrant Shares.
k. Each stockholder of the undersigned has an individual net
worth, or joint net worth with the undersigned's spouse in excess of $1
million.
EX F-2
<PAGE> 108
Patterson Energy, Inc.
[Date]
Page 3
2. Indemnification.
The undersigned agrees to indemnify and hold harmless PEC and
PDC, or either of them, the officers, directors and affiliates of either of
them and each other person, if any, who controls either of them, within the
meaning of Section 15 of the Act, against any and all loss, liability, claim,
damage and expense whatsoever (including, but not limited to, any and all
expenses reasonably incurred in investigating, preparing or defending against
any litigation commenced or threatened or any claim whatsoever) arising out of
or based upon any false representation or warranty or failure by the
undersigned to comply with any covenant or agreement made by the undersigned
herein.
3. Survival.
All representations, warranties and covenants contained in this
letter shall survive the closing of the Asset Purchase.
Very truly yours,
WES-TEX DRILLING COMPANY
By:
----------------------------------
Myrle Greathouse
EX F-3
<PAGE> 109
EXHIBIT G
DRILLING RIG AND CREW LEASE AGREEMENT
THIS DRILLING RIG AND CREW LEASE AGREEMENT is made and entered
into this ____ day of June, 1997 (this "Agreement"), by and between PATTERSON
DRILLING COMPANY, a Delaware corporation ("PDC"), and WES-TEX DRILLING COMPANY,
a Texas corporation ("Wes-Tex").
R E C I T A L S:
C. Simultaneously with the execution of this Agreement, PDC
has purchased the drilling rigs, related equipment, rolling stock, and a shop
and yard owned by Wes-Tex pursuant to that certain Asset Purchase Agreement,
dated June 4, 1997 (the "Asset Purchase Agreement"), among Wes-Tex, Patterson
Energy, Inc., a Delaware corporation ("PEC") that owns all of the issued and
outstanding capital stock of PDC, and PDC.
D. The drilling rigs being purchased by PDC on the date
hereof currently are being used by Wes-Tex for drilling oil and gas wells.
E. Wes-Tex would like to lease such drilling rigs and the
related crews for the purpose of completing drilling operations on the oil and
gas wells that are being drilled by Wes-Tex on the date hereof.
F. The execution and delivery of this Agreement is a
condition to the consummation of the transactions contemplated by the Asset
Purchase Agreement, and the parties are entering into this Agreement in order
to fulfill such condition.
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties, intending to be legally bound, hereby agree as follows:
1. Lease of Drilling Rigs and Supply of Crew. Subject to the
terms and conditions contained in this Agreement: (a) PDC hereby agrees to
lease to Wes-Tex the drilling rigs and equipment specified on Annex 1 attached
hereto and incorporated herein by this reference (collectively, the "Drilling
Rigs") and Wes-Tex hereby agrees to lease the Drilling Rigs from PDC; and (b)
PDC hereby agrees to supply to Wes-Tex the employees necessary to complete
drilling of the wells currently being drilled by Wes-Tex, the number of such
employees per Drilling Rig to be equal to the number of such employees
currently working on the drill site on which the Drilling Rig currently is
located (collectively, the "Drilling Crews").
2. Purpose of Lease. PDC is leasing the Drilling Rigs and
Equipment and providing the Drilling Crews to Wes-Tex solely for the purpose of
enabling Wes-Tex to complete drilling operations on the specific wells on which
Wes-Tex is conducting drilling operations at the time of the execution of this
Agreement, which wells are specified on Annex 1 attached hereto (singly, a
"Current Well" and collectively, the "Current Wells"). PDC shall not be
required to
EX G-1
<PAGE> 110
lease or furnish, and Wes-Tex shall not be entitled to use or be provided, the
Drilling Rigs and the Drilling Crews for any purpose or jobs other than the
purpose of completing drilling operations on the Current Wells.
3. Rental. Wes-Tex hereby agrees to pay to PDC the sum of
$3,500 per day per Drilling Rig. The foregoing rental of $3,500 per day per
Drilling Rig shall be due and payable for each day, or a portion thereof, that
such Drilling Rig is on a drilling site pursuant to an oral or written drilling
contract under which Wes-Tex is being paid for contract drilling services.
Wes-Tex hereby agrees to pay the rent payments on Friday of each week during
the term of this Agreement or, if earlier, upon the release of a Drilling Rig
at the conclusion of drilling of a well. If payment is not made to PDC within
three calendar days after the due date thereof, then the amount of rent due
shall bear interest at the highest rate allowable under the laws of the State
of Texas from the due date thereof until the date paid.
4. Term of Agreement. As to each Drilling Rig and the
related Drilling Crew, this Agreement shall be for a term commencing at 7:00
a.m., Snyder, Texas Time, on the date of this Agreement and ending on the date
such Drilling Rig is released from the drilling site at the conclusion of
drilling operations for the Current Well on which the Drilling Rig presently is
operating.
5. No Warranties. PDC MAKES NO WARRANTY, EITHER EXPRESSED OR
IMPLIED, AS TO THE FITNESS OF A DRILLING RIG OR DRILLING CREW FOR ITS INTENDED
PURPOSE. WES-TEX HEREBY AGREES THAT IT HAS INSPECTED EACH DRILLING RIG AND
ACCEPTS IT "AS IS, WHERE IS" WITH NO WARRANTIES FROM PDC.
6. Maintenance and Repair. Wes-Tex hereby agrees to maintain
each Drilling Rig in good operating condition and shall provide at its own
expense (except as set forth below) all supplies and services necessary to
maintain such condition, including oil, grease, drill collar and drill pipe
dope, liners, valves, seats for pumps, ropes and steel cables, rig soap, paint,
lights, light fixtures, electric lines and cables, electric motors less than 50
horsepower, rig welding, rubber goods (such as seals and gaskets and hoses),
centrifical pumps, impellers, gaskets and packing, mud, hydraulic, water and
air valves, pipe fittings and connections, ram rubbers, annular rubbers, BOP
seals, drilling line, wash pipe and packing, tongs, tong dies, slips, slip
dies, elevators, nitrogen, air compressors, and brakes. In addition, Wes-Tex
shall replace at its own expense any drill pipe or drill collars lost or
damaged with drill pipe or drill collars of comparable quality.
Notwithstanding the foregoing, PDC shall be responsible for those items
normally requiring machine shop or engine overhaul facilities, including
raising line, hook springs, crown and block sleeves and bearings, swivel repair
other than packing, SCR house items, dynamatic brake, drawworks' shafts,
bearings and gears, pump bearings and gears, rotary table, repair cracked fluid
end, electric motors 50 horsepower and higher, diesel engines, and generators,
unless such items are caused by the negligence of Wes-Tex, in which case Wes-
Tex shall be solely responsible for the cost of such items.
7. Obligations Regarding Drilling Crew. PDC is providing the
Drilling Crews to Wes-Tex hereunder on an independent contractor basis and all
of the personnel assigned by PDC to Wes-Tex are employees of PDC only. PDC
acknowledges that it is responsible for all
EX G-2
<PAGE> 111
matters related to the payment of federal, state, and local payroll taxes,
workers' compensation insurance, salaries and any fringe benefits for its
employees and shall indemnify and hold Wes-Tex harmless for any claim,
liability, or expenses (including, without limitation, reasonable attorneys'
fees) arising as a result of the failure of PDC to fulfill its duties set forth
in the preceding sentence. PDC shall be solely responsible for assigning to
each Drilling Rig the particular employees comprising the Drilling Crew for
such Drilling Rig as long as the number of employees assigned to a Drilling
Crew for a Drilling Rig equals the number of such employees used by Wes-Tex on
such Drilling Rig at the time of execution of this Agreement.
8. Indemnification. Wes-Tex shall indemnify and hold PDC
harmless against and in respect of all actions, suits, demands, judgments,
costs and expenses (including reasonable attorneys' fees of PDC) relating to:
(a) any events occurring under the drilling contracts covering the wells on
which Wes-Tex is conducting drilling operations at the time of the execution of
this Agreement, except to the extent of obligations of Wes-Tex accruing and
associated with wells on which Wes-Tex has not completed or commenced drilling
operations at the time of execution of this Agreement and which constitute
Assumed Drilling Contracts (as defined in the Asset Purchase Agreement); or (b)
injuries or deaths to members of the Drilling Crew caused directly or
indirectly by the negligence of Wes-Tex.
9. Waiver of Subrogation. Each of PDC and Wes-Tex hereby
waives on behalf of its insurers all rights of subrogation that its insurers
might otherwise have to any claims hereunder of PDC against Wes-Tex (in the
case of PDC) and Wes-Tex against PDC (in the case of Wes-Tex), provided,
however, that such waiver shall be effective only if and to the extent that
such waiver does not otherwise invalidate the applicable insurance policy and
that such waiver shall not waive any rights of recovery that either PDC or Wes-
Tex may have directly against the other hereunder to the extent that any loss,
damage or expense giving rise to any such right of recovery has not been
reimbursed by insurance.
10. Reports. Wes-Tex hereby agrees to furnish PDC a daily
report of the previous day's activities for each well on which a Drilling Rig
is located. Wes-Tex also agrees to promptly notify PDC of any and all
accidents and furnish copies of all reports and information obtained concerning
such accidents.
11. General Provisions. The following general provisions also
shall apply to this Agreement:
(a) Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally, sent by
overnight courier or telecopied (with a confirmatory copy sent by overnight
courier) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
EX G-3
<PAGE> 112
(1) if to PDC, to:
Patterson Drilling Company
4510 Lamesa Highway
P.O. Drawer 1416
Snyder, Texas 79550
Attention: A. Glenn Patterson
President and Chief Operating Officer
with copies to:
Thomas H. Maxfield, Esq.
Baker & Hostetler LLP
303 East 17th Avenue, Suite 1100
Denver, Colorado 80203-1264
(2) if to Wes-Tex, to:
Myrle Greathouse, Chairman of the Board
Wes-Tex Drilling Company
400 Pine Street
Abilene, Texas 79601
with copies to:
Charles Self, Esq.
Whitten & Young, P.C.
Attorneys at Law
P.O. Box 208
Abilene, Texas 79604
(b) Interpretation. When a reference is made in this
Agreement to a Section, such reference shall be to a Section of this Agreement
unless otherwise indicated, and the words "hereof', "herein" and "hereunder"
and similar terms refer to this Agreement as a whole and not to any particular
provision of this Agreement, unless the context otherwise requires. Whenever
the words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation."
(c) Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other parties.
(d) Entire Agreement; No Third-Party Beneficiaries. This
Agreement, including the documents and instruments referred to herein, (i)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and (ii) is not intended to confer upon any person other
than
EX G-4
<PAGE> 113
the parties any rights or remedies hereunder.
(e) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Texas, regardless of the
laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
(f) Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties. Subject to the
preceding sentence, this Agreement shall be binding upon, inure to the benefit
of, and be enforceable by, the parties and their respective successors and
assigns.
(g) Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby are not affected in any
manner materially adverse to any party. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions be consummated as originally
contemplated to the fullest extent possible.
(h) Enforcement of This Agreement. The parties agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity.
IN WITNESS WHEREOF, PDC and Wes-Tex have executed this Agreement
as of the date first written above.
PDC:
PATTERSON DRILLING COMPANY
By:
---------------------------------
A. Glenn Patterson
President and Chief Operating
Officer
Attest:
- ------------------------------
James C. Brown, Secretary
WES-TEX:
WES-TEX DRILLING COMPANY
By:
---------------------------------
Myrle Greathouse
Chairman of the Board
Attest:
- ------------------------------
Helen Little, Secretary
EX G-5
<PAGE> 114
ANNEX 1
TO
DRILLING RIG AND CREW LEASE AGREEMENT
DESCRIPTION OF DRILLING RIGS AND CURRENT WELLS PER SECTIONS 1 AND 2
<TABLE>
<CAPTION>
Current Well On Which
Rig No. Drawworks Manufacturer Drilling Rig Is Located
------- ---------------------- -----------------------
<S> <C> <C>
Rig 1 National 50
Rig 2 National 50
Rig 3 National 50
Rig 4 National 50
Rig 5 National 50
Rig 6 Bethlehem S-60
Rig 7 Brewster N-4
Rig 8 Bethlehem S-55
Rig 9 National 50
Rig 10 Brewster N-4
Rig 11 Bethlehem S-55
Rig 12 Brewster N-4
Rig 14 Skytop Brewster N75A
Rig 15 Brewster N-4
Rig 16 Brewster N-4
Rig 17 B D W 800
Rig 18 National 50
Rig 19 Brewster N-4
Rig 20 National 50
Rig 21 Skytop Brewster N75A
Rig 22 Bethlehem S-55
</TABLE>
EX G-6
<PAGE> 1
EXHIBIT 2.1.1
AMENDMENT TO ASSET PURCHASE AGREEMENT
AMENDMENT TO ASSET PURCHASE AGREEMENT dated June 4, 1997
("Amendment to Agreement"), among PATTERSON ENERGY, INC., a Delaware
corporation ("PEC"), PATTERSON DRILLING COMPANY, a Delaware corporation
("PDC"), wholly owned by PEC, and WES-TEX DRILLING COMPANY, a Texas corporation
("Wes-Tex").
WITNESSETH:
WHEREAS, PEC, PDC and Wes-Tex entered into an Asset Purchase
Agreement dated of even date herewith (the "Asset Purchase Agreement"); and
WHEREAS, the parties to the Asset Purchase Agreement desire to
enter into this Amendment to Agreement to amend the Asset Purchase Agreement in
certain respects.
NOW, THEREFORE, in consideration of the premises and
agreements contained herein and in the Asset Purchase Agreement, the parties
agree as follows:
1. Section 1.2 of the Asset Purchase Agreement is hereby
deleted in its entirety and replaced with the new Section 1.2:
SECTION 1.2 Purchase Consideration. In
consideration for all of Wes-Tex's right, title and interest
in and to the Drilling Rigs, Equipment and Rolling Stock and
in and to the Real Property and the Leased Property, PDC
agrees to pay or deliver to Wes-Tex at the Closing: (i) 7,800
shares of Wes-Tex's Class B Voting Common Stock ("Wes-Tex
Class B Stock") for redemption in accordance with the terms
thereof in exchange for an undivided interest in the Drilling
Rigs, Equipment and Rolling Stock having a value equal to
$500,000 plus the value of 173,000 shares of common stock of
PEC based upon the Closing price of such common stock as
reported on the Nasdaq Stock Market, Inc. National Market on
the last trading day immediately prior to the date of the
Closing; and (ii) a total of $18,500,000 in cash (the "Cash"),
110,000 shares of common stock of PEC ("PEC Shares") and a
Stock Purchase Warrant ("PEC Warrant") to purchase an
additional 200,000 shares of PEC common stock with an exercise
price of $32.00 per share in exchange for the Real Property,
the Leased Property and the remaining undivided interest in
the Drilling
<PAGE> 2
Rigs, Equipment and Rolling Stock (the Wes-Tex Class B Stock,
Cash, PEC Shares, and PEC Warrant are collectively referred to
herein as the "Purchase Consideration").
2. Section 6.3 of the Asset Purchase Agreement shall be
amended by adding the following new paragraph (j) at the end of Section 6.3:
(j) Tax Opinion of Coopers & Lybrand L.L.P. PEC
shall have received an opinion of Coopers & Lybrand L.L.P. to
the effect that the acquisition of the Wes-Tex Class B Stock
by PDC and transfer to Wes-Tex of the Wes-Tex Class B Stock as
part of the Purchase Consideration shall have the same tax
consequences to PEC and PDC as if the Purchase Consideration
consisted solely of cash and common stock of PEC.
3. This Amendment to Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts shall have been signed by
each of the parties and delivered to the other parties.
4. The Asset Purchase Agreement, as amended by this
Amendment to Agreement, shall remain in full force and effect.
IN WITNESS WHEREOF, PEC, PDC and Wes-Tex have caused this
Amendment to Agreement to be signed by their respective officers thereunto duly
authorized as of the date first above written.
PATTERSON ENERGY, INC.
By:
--------------------------------
Cloyce A. Talbott
Chairman and Chief
Executive Officer
Attest:
- -------------------------------------
James C. Brown, Secretary
[Signatures continued on following page]
-2-
<PAGE> 3
PATTERSON DRILLING COMPANY
By:
--------------------------------
Cloyce A. Talbott
Chief Executive Officer
Attest:
- -------------------------------------
James C. Brown, Secretary
WES-TEX DRILLING COMPANY
By:
--------------------------------
Charles Ezzell
President
Attest:
- -------------------------------------
Helen Little, Secretary
-3-
<PAGE> 1
EXHIBIT 2.2
AGREEMENT
AGREEMENT, dated as of June ___, 1997 (this "Agreement"),
among PATTERSON ENERGY, INC., a Delaware corporation ("PEC"), PATTERSON
DRILLING COMPANY, a Delaware corporation ("PDC"), and GREATHOUSE FOUNDATION, a
Texas non- profit corporation (the "Foundation"), and MYRLE GREATHOUSE, TRUSTEE
under Agreement dated May ___, 1997 (the "Greathouse Charitable Remainder
Trust").
WITNESSETH:
WHEREAS, PEC, PDC and Wes-Tex Drilling Company, a Texas
corporation ("Wes-Tex"), have entered into an asset purchase agreement dated of
even date herewith ("Asset Purchase Agreement") for PDC to acquire (the "Asset
Purchase") the contract drilling operations of Wes-Tex consisting primarily of
21 drilling rigs and related drilling equipment and rolling stock
(collectively, the "Drilling Rigs, Equipment and Rolling Stock") and a shop and
yard located in Abilene, Texas;
WHEREAS, the Foundation and the Greathouse Charitable
Remainder Trust own ___________ shares and _____________ shares, respectively,
of the Class B common stock of Wes-Tex (the "Wes-Tex Class B Stock"), which
Wes-Tex Class B Stock is redeemable by Wes-Tex at the option of the holder of
the Wes-Tex Class B Stock for consideration consisting of undivided interests
in the Drilling Rigs;
WHEREAS, PDC desires to purchase all of the Wes-Tex Class B
Stock held by the Foundation and the Greathouse Charitable Remainder Trust and
then cause Wes-Tex to redeem such Wes-Tex Class B Stock so that PDC will
acquire a 100% interest in the Drilling Rigs at the time of Closing (as defined
in the Asset Purchase Agreement);
WHEREAS, PDC on the one hand, and each of the Foundation and
the Greathouse Charitable Remainder Trust on the other, desire to make certain
representations, warranties and agreements in connection with the purchase by
PDC and the sale by the Foundation and the Greathouse Charitable Remainder
Trust of such Wes-Tex Class B Stock.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties agree
as follows:
<PAGE> 2
ARTICLE I
THE STOCK PURCHASE
SECTION 1.1 The Purchase. Upon the terms and subject to the
conditions of this Agreement, at the Closing (as defined in Section 1.3 below)
provided herein, PDC shall purchase from the Foundation and the Greathouse
Charitable Remainder Trust, and the Foundation and the Greathouse Charitable
Remainder Trust shall sell to PDC, all of the right, title and interest of the
Foundation and the Greathouse Charitable Remainder Trust in and to the Wes-Tex
Class B Stock owned by them (the "Stock Purchase").
SECTION 1.2 Purchase Consideration. In consideration for the
sale of all of the right, title and interest of the Foundation and the
Greathouse Charitable Remainder Trust in their respective shares of Wes-Tex
Class B Stock, PDC agrees to deliver or pay the following consideration (the
"Purchase Consideration"): (a) deliver to the Foundation _________ shares of
common stock, par value $0.01 per share (the "PEC Common Stock"), of PEC; and
(b) deliver or pay to the Greathouse Charitable Remainder Trust __________
shares of PEC Common Stock (such __________ shares of PEC Common Stock issuable
to the Foundation and the Greathouse Charitable Remainder Trust sometimes being
referred to herein collectively as the "PEC Shares") and $_____________ in cash
(the "Cash").
SECTION 1.3 Closing. The Closing of the Stock Purchase (the
"Closing") shall take place in the offices of Wes-Tex in Abilene, Texas,
contemporaneously with the Closing (as defined in the Asset Purchase Agreement)
of the Asset Purchase.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PEC AND PDC
Each of PEC and PDC represents and warrants to the Foundation
and Greathouse Charitable Remainder Trust as follows:
SECTION 2.1 Organization, Standing and Power. Each of PEC
and PDC is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and has the requisite
corporate power and authority to carry on its business as now being conducted.
SECTION 2.2 Authority; Non-Contravention. Each of PEC and
PDC has all requisite power and authority to enter into this Agreement and to
consummate the Stock Purchase. The execution and delivery by each of PEC and
PDC of this Agreement and the consummation by each of PEC and PDC of the Stock
Purchase have been duly authorized by all necessary
<PAGE> 3
corporate action on the part of each of PEC and PDC, as the case may be. This
Agreement has been duly executed and delivered by each of PEC and PDC and
(assuming the valid authorization, execution and delivery of this Agreement by
the Foundation and the Greathouse Charitable Remainder Trust) constitutes a
valid and binding obligation of each of PEC and PDC enforceable against PEC and
PDC in accordance with its terms, except to the extent enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other similar laws of general applicability relating to or
affecting the enforcement of creditors' rights and by the effect of general
principles of equity (regardless of whether enforceability is considered in a
proceeding in equity or at law). No filing or registration with, or
authorization, consent or approval of, any domestic (federal and state),
foreign or supranational court, commission, governmental body, regulatory
agency, authority or tribunal (a "Governmental Agency") is required by or with
respect to PEC or PDC in connection with the execution and delivery of this
Agreement by PEC or PDC or is necessary for the consummation by PDC of the
Stock Purchase and the transactions contemplated by this Agreement, except for
(i) in connection or in compliance, with the provisions of the Securities Act
of 1933, as amended (the "Securities Act"), and the Securities Exchange Act of
1934 (the "Exchange Act"), (ii) such consents and approvals, orders,
registrations, authorizations, declarations and filings as may be required
under the "Blue Sky" laws of the State of Texas, or (iii) such filings and
approvals as may be required under the Hart-Scott-Rodino Anti-Trust
Improvements Act of 1976 ("Improvements Act").
SECTION 2.3 Capital Structure. As of the date hereof, the
authorized capital stock of PEC consists of 9,000,000 shares of PEC Common
Stock and 1,000,000 shares of preferred stock, par value $0.01 per share ("PEC
Preferred Stock"). At the close of business on the day immediately preceding
the date of this Agreement, (i) _________ shares of PEC Common Stock were
validly issued and outstanding, fully paid and nonassessable and free of
preemptive rights, and (ii) no shares of PEC Preferred Stock are issued and
outstanding. The PEC Common Stock is designated as a national market security
on an inter-dealer quotation system by the National Association of Securities
Dealers, Inc. All shares of PEC Common Stock issuable pursuant to the Stock
Purchase in accordance with this Agreement, will be, when so issued, duly
authorized, validly issued, fully paid and non-assessable and free of
preemptive rights.
SECTION 2.4 SEC Documents. PEC has filed all required
documents with the Securities and Exchange Commission ("SEC") since January 1,
1995 (the "PEC/SEC Documents"). As of their respective dates, the PEC/SEC
Documents complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and none of the PEC/SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The consolidated financial statements of PEC included in the
PEC/SEC Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles (except, in the case of the unaudited statements, as
permitted by Form 10-Q
-3-
<PAGE> 4
of the SEC) applied on a consistent basis during the periods involved (except
as may be indicated therein or in the notes thereto) and fairly present the
consolidated financial position of PEC and its consolidated subsidiaries,
including PDC) as at the dates thereof and the consolidated results of their
operations and statements of cash flows for the periods then ended (subject, in
the case of the unaudited statements, to normal year-end audit adjustments and
to any other adjustments described therein).
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF
THE FOUNDATION AND GREATHOUSE CHARITABLE REMAINDER TRUST
The Foundation and Greathouse Charitable Remainder Trust
severally but not jointly represent and warrant to PDC as follows:
SECTION 3.1 Organization, Standing and Power. The Foundation
is a non-profit corporation duly incorporated, validly existing and in good
standing under the laws of the State of Texas and has the requisite corporate
power and authority to carry on its activities now being conducted. Greathouse
Charitable Remainder Trust is a trust duly organized, validly existing and in
good standing under the laws of the State of Texas and has the requisite power
and authority to carry on its business now being conducted.
SECTION 3.2 Ownership of Wes-Tex Class B Stock. The
Foundation and Greathouse Charitable Remainder Trust own of record and
beneficially a total of _____________ shares and _______________ shares,
respectively, of the Wes-Tex Class B Stock. Each of them holds such Wes-Tex
Class B Stock free and clear of any restrictions on transfer (other than
restrictions under the Securities Act of 1933 and state securities laws),
taxes, Liens (as defined below in this Section), options, warrants, purchase
rights, contracts, commitments, equities, claims and demands. Neither the
Foundation nor Greathouse Charitable Remainder Trust is a party to (i) any
option, warrant, purchase right or other contract or commitment that could
require it to sell, transfer or otherwise dispose of any Wes-Tex Class B Stock
(other than pursuant to this Agreement), or (ii) any voting trust, proxy or
other agreement or understanding with respect to the Wes-Tex Class B Stock.
For purposes of this Agreement, "Liens" means liens, mortgages, pledges,
security interest, encumbrances, claims or charges of any kind.
SECTION 3.3 Authority; Non-Contravention. Each of the
Foundation and Greathouse Charitable Remainder Trust has all requisite power
and authority to enter into this Agreement and to consummate the Stock
Purchase. This Agreement has been duly executed and delivered by each of them
and (assuming the valid authorization, execution and delivery of this Agreement
by PEC and PDC) constitutes a valid and binding obligation of each of the
Foundation
-4-
<PAGE> 5
and Greathouse Charitable Remainder Trust enforceable against it in accordance
with the terms hereof, except to the extent enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or
other similar laws of general applicability relating to or affecting the
enforcement of creditors' rights and by the effect of general principles of
equity (regardless of whether enforceability is considered in a proceeding in
equity or at law). The execution and delivery of this Agreement do not, and
the consummation of the Stock Purchase and compliance with the provisions
hereof will not, conflict with, or result in any violation of, or default (with
or without notice of lapse of time, or both) under or give rise to a right of
termination, cancellation or acceleration of any obligation or to the loss of a
material benefit under, or result in the creation of any Lien, security
interest, charges or encumbrances upon any of the properties or assets of the
Foundation or Greathouse Charitable Remainder Trust under, any provision of the
Articles of Incorporation or Bylaws of the Foundation (true and complete copies
of which as of the date hereof have been delivered to PEC and PDC) or the
agreement dated ____________________, 1997, with Myrle Greathouse, Trustee as a
party thereto, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license applicable to the Foundation or Greathouse Charitable Remainder
Trust, or (iii) any judgment, order, decree, statute, law, ordinance, rule,
regulation applicable to the Foundation or Greathouse Charitable Remainder
Trust or any of its respective properties or assets. No filing or registration
with or authorization, consent or approval of any third party is required by or
with respect to the Foundation or Greathouse Charitable Remainder Trust in
connection with the execution and delivery of this Agreement by them or as
necessary for the consummation by them of the Stock Purchase or any other
transaction contemplated by this Agreement, other than such filings and
approvals as may be required under the Improvements Act.
SECTION 3.4 Litigation. There is no suit, action,
investigation or proceeding pending or to the knowledge of the Foundation or
Greathouse Charitable Remainder Trust threatened against either of them at law
or in equity before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign that would materially impair the ability of the Foundation or
Greathouse Charitable Remainder Trust to perform its obligations hereunder or
to consummate the Stock Purchase, and there is no judgment, decree, injunction,
rule or order of any court, governmental department, commission, board, bureau,
agency, instrumentality or arbitrator to which the Foundation or Greathouse
Charitable Remainder Trust is subject that would materially impair the ability
of the Company to perform its obligations hereunder or to consummate the Stock
Purchase.
-5-
<PAGE> 6
ARTICLE IV
ADDITIONAL AGREEMENTS
SECTION 4.1 Fees and Expenses. All costs and expenses
incurred by PEC or PDC in connection with this Agreement and the transaction
contemplated hereby shall be paid by PEC; such costs and expenses incurred by
the Foundation and Greathouse Charitable Remainder Trust shall be paid by them.
SECTION 4.2 Reasonable Efforts. Upon the terms and subject
to the conditions set forth in this Agreement, each of the parties agrees to
use all reasonable efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Stock Purchase and
the other transactions contemplated by this Agreement and the prompt
satisfaction of the conditions hereto.
SECTION 4.3 Indemnification. On and after the date of
Closing, Myrle Greathouse, the Foundation and Greathouse Charitable Remainder
Trust shall jointly and severally indemnify and hold PEC and PDC harmless
against and in respect of all actions, suits, demands, judgments, costs and
expenses (including reasonable attorneys' fees of PEC and PDC), relating to any
misrepresentation, breach of any representation or warranty, or non-fulfillment
of any agreement on the part of the Foundation or Greathouse Charitable
Remainder Trust contained in this Agreement.
SECTION 4.4 Public Announcements. Neither PEC, PDC, the
Foundation nor the Greathouse Charitable Remainder Trust shall issue any press
release or make any public statement with respect to the Stock Purchase prior
to Closing, unless otherwise required by law or the rules and regulations of
the Securities and Exchange Commission.
SECTION 4.5 Sales and Transfer Taxes. The Foundation and
Greathouse Charitable Remainder Trust agree to pay any and all sales and/or
transfer taxes due with respect to the Stock Purchase.
SECTION 4.6 Access to Information. The Foundation and the
Greathouse Charitable Remainder Trust shall afford to PDC and its counsel,
reasonable access and permit them to make such inspections as they may
reasonably require during the period from the date of this Agreement through
the date of Closing to records pertaining to the Wes-Tex Class B Stock. Except
as required by law, PDC will hold, and cause its representatives to hold, any
non-public information relating to the Wes-Tex Class B Stock.
SECTION 4.7 Action of the Foundation and Greathouse
Charitable Remainder Trust Pending Closing. During the period from the date of
this Agreement through the date of
-6-
<PAGE> 7
Closing, neither the Foundation nor Greathouse Charitable Remainder Trust shall
deliver, sell, pledge, dispose of or otherwise encumber any of the shares of
Wes-Tex Class B Stock owned by it or otherwise grant any rights, warrants or
options to acquire any such shares of Wes-Tex Class B Stock.
SECTION 4.8 No Solicitation. From and after the date hereof,
neither the Foundation nor Greathouse Charitable Remainder Trust will cause its
officers, directors, trustee, employees, agents or other representatives to
directly or indirectly, solicit or initiate any offer for the shares of Wes-Tex
Class B Stock owned by either of them, or solicit or initiate, directly or
indirectly, discussions, negotiations, considerations or inquiries concerning
an offer for such shares of Wes-Tex Class B Stock, from any person, or engage
in discussions or negotiations relating thereto, or provide to any other person
any information or data relating to the Wes-Tex Class B Stock for the purpose
of, or have any substantive discussions with any person relating to, or
otherwise cooperate with or assist or participate in, or facilitate, any offer
or any inquiry or proposal which would reasonably be expected to lead to any
effort or attempt by any person to effect an offer, or agree to endorse any
such inquiry or offer.
ARTICLE V
CONDITIONS PRECEDENT TO THE STOCK PURCHASE
SECTION 5.1 Conditions to Each Party's Obligation to Effect
the Stock Purchase. The respective obligations of each party to effect the
Stock Purchase shall be subject to the fulfillment or waiver (where
permissible) at or prior to the date of Closing of each of the of following
conditions:
(a) No Order. No governmental entity or court of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
enter any law, rule, regulation, executive order, decree, injunction or other
order (whether temporary, preliminary or permanent) which is then in effect and
has the effect of prohibiting the Stock Purchase or any of the other
transactions contemplated hereby; provided that, in the case of any such
decree, injunction or other order, each of the parties shall have used
reasonable best efforts to prevent the entry of any such injunction or other
order and to appeal as promptly as practicable any decree, injunction or other
order that may be entered.
(b) Consummation of Asset Purchase. The Closing (as
defined in the Asset Purchase Agreement) of the Asset Purchase shall have
occurred contemporaneously with the closing of the Stock Purchase contemplated
hereby.
SECTION 5.2 Conditions to Obligations of the Foundation and
Greathouse Charitable Remainder Trust to Effect the Stock Purchase. The
obligation of the Foundation and
-7-
<PAGE> 8
Greathouse Charitable Remainder Trust to effect the Stock Purchase shall be
subject to the fulfillment at or prior to the Closing of the following
additional conditions; provided that the Foundation and Greathouse Charitable
Remainder Trust may waive any of such conditions in its sole discretion:
(a) Performance of Obligations; Representations and
Warranties. PEC and PDC shall have performed in all respects each of their
agreements contained in this Agreement required to be performed on or prior to
the Closing, each of the representations and warranties of PEC and PDC
contained in this Agreement shall be true and correct on and as of the date of
Closing as if made on and as of such date.
(b) Officers' Certificates. PEC and PDC shall have
furnished to the Foundation and Greathouse Charitable Remainder Trust a
certificate, dated the Closing, signed by the respective appropriate officers
of PEC and PDC certifying to the effect that to the best of the knowledge and
belief of each of them, the conditions set forth in Section 5.1 and Section
5.2(a) shall have been satisfied in full.
(c) Registration Statement on Form S-3. PEC shall have
filed a Registration Statement on Form S-3 with the SEC relating to the PEC
Shares.
(d) Registration Rights Agreement. PEC shall have
executed and delivered the Registration Rights Agreement in the form attached
as Exhibit B to the Asset Purchase Agreement.
(e) Delivery of Purchase Consideration. PEC and PDC
shall have made delivery to the Foundation and Greathouse Charitable Remainder
Trust of the Purchase Consideration as provided for in Section 1.2 of this
Agreement.
SECTION 5.3 Conditions to Obligations of PEC and PDC to
Effect the Stock Purchase. The obligations of PEC and PDC to effect the Stock
Purchase shall be subject to the fulfillment at or prior to the date of Closing
of the following additional conditions, provided that PEC may waive any such
conditions in its sole discretion:
(a) Performance of Obligations; Representations and
Warranties. The Foundation and Greathouse Charitable Remainder Trust shall
have performed in all material respects each of its agreements contained in
this Agreement required to be formed on or prior to the date of Closing and
each of the respective representations and warranties of the Foundation and
Greathouse Charitable Remainder Trust contained in this Agreement shall be true
and correct on and as of the Closing as if made on and as of such date.
(b) Officers' or Trustee's Certificate. The Foundation
and Greathouse Charitable Remainder Trust shall have furnished to PEC a
certificate, dated the Closing, certified
-8-
<PAGE> 9
to the effect that to the best knowledge and belief of the Foundation and
Greathouse Charitable Remainder Trust the conditions set forth in Section 5.1
and Section 5.3(a) have been satisfied.
(c) Opinion of Morehead-Welborn, a Partnership of
Professional Corporations. PEC shall have received an opinion of
Morehead-Welborn, counsel to the Foundation and Greathouse Charitable Remainder
Trust, dated the Closing, substantially to the effect that: (i) the
organization, existence and good standing of the Foundation and Greathouse
Charitable Remainder Trust are as stated in this Agreement; (ii) the Foundation
and Greathouse Charitable Remainder Trust has full power and authority to
execute, deliver and perform this Agreement, and this Agreement has been duly
authorized, executed and delivered by each of them and, assuming the due and
valid authorization, execution and delivery by PEC and PDC, constitutes the
legal, valid and binding agreement of the Foundation and Greathouse Charitable
Remainder Trust enforceable against them in accordance with its terms, except
to the extent enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws of
general applicability relating to or affecting the enforcement of creditors'
rights and by the effect of general principles of equity, regardless of whether
enforceability is considered in a proceeding in equity or at law; (iii) the
execution and performance by the Foundation and Greathouse Charitable Remainder
Trust will not violate the Articles of Incorporation or Bylaws of the
Foundation or the trust instruments of Greathouse Charitable Remainder Trust
and will not violate, result in breach or, or constitute a default under, any
material lease, mortgage, contract, agreement, instrument, law, rule,
regulation, judgment, order or decree known to such counsel to which the
Foundation or Greathouse Charitable Remainder Trust is a party or to which it
or any of its properties or assets may be bound; (iv) to the knowledge of such
counsel, no consent, approval, authorization or order of any court or
governmental agency or body which has not been obtained as required on behalf
of the Foundation or Greathouse Charitable Remainder Trust for consummation of
the transactions contemplated by this Agreement; (v) to the knowledge of such
counsel, there are no actions, suits or proceedings pending or threatened
against or affecting the Foundation or Greathouse Charitable Remainder Trust by
any governmental entity which seek to restrain, prohibit or invalidate the
transactions contemplated by this Agreement.
In rendering such opinion, counsel for the Foundation and
Greathouse Charitable Remainder Trust may rely as to matters of fact upon the
representations of officers or of the Foundation or the Trustee of Greathouse
Charitable Remainder Trust contained in any certificate delivered to such
counsel and certificates of public officials.
Such opinion shall be limited to the laws of the United States
of America and the State of Texas.
SECTION 5.4 Wes-Tex Class B Stock Certificates. PDC shall
have received all of the Wes-Tex Class B Stock certificates from the Foundation
and Greathouse Charitable Remainder Trust duly endorsed to PDC.
-9-
<PAGE> 10
SECTION 5.5 Investment Representation Letter. The Foundation
and the Greathouse Charitable Remainder Trust shall have executed and delivered
an investment representation letter substantially in the forms attached hereto
as Exhibit A(I) and Exhibit A(II), respectively.
ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER
SECTION 6.1 Termination. This Agreement may be terminated at
any time prior to the date of Closing:
(a) By mutual consent of PDC on the one hand, and the
Foundation and Greathouse Charitable Remainder Trust on the other;
(b) By PDC if either the Foundation or Greathouse
Charitable Remainder Trust shall have failed to comply in any material respect
with any of its covenants or agreements contained in this Agreement required to
be complied with by the Foundation or Greathouse Charitable Remainder Trust
prior to the date of such termination, which failure to comply has not been
cured within ten business days following receipt by the Foundation or
Greathouse Charitable Remainder Trust of notice of such failure to comply.
(c) By the Foundation and Greathouse Charitable Remainder
Trust if PDC shall have failed to comply with any of its covenants or
agreements contained in this Agreement required to be complied with by PDC
prior to the date of such termination, which failure to comply has not been
cured within ten business days following receipt by PDC of notice of such
failure to comply.
(d) If the Asset Purchase is not consummated in
accordance with the terms of the Asset Purchase Agreement;
(e) By either PEC on the one hand, or the Foundation and
Greathouse Charitable Remainder Trust on the other if there has been a material
breach by the other of any representation or warranty, which breach has not
been cured within the five business days following receipt by the breaching
party of notice of breach.
SECTION 6.2 Effect of Termination. In the event of
termination of this Agreement by either PEC on the one hand, or the Foundation
and Greathouse Charitable Remainder Trust on the other as provided in Section
6.1, this Agreement shall forthwith become void and there shall be no liability
hereunder on the part of PEC or PDC, the Foundation or Greathouse Charitable
Remainder Trust or their respective officers, directors or trustee; provided,
-10-
<PAGE> 11
however, that nothing contained in this Section 6.2 shall relieve any party
hereto from any liability for any breach of this Agreement.
SECTION 6.3 Amendment. This Agreement may be amended by the
parties hereto only by an instrument in writing signed on behalf of each of the
parties hereto.
SECTION 6.4 Waiver. At any time prior to the date of
Closing, the parties hereto may (i) extend the time for the performance of any
of the obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions contained herein which may legally be waived. Any
agreement on the part of a party hereto to any such extension or waiver shall
be valid only if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE VII
GENERAL PROVISIONS
SECTION 7.1 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered
personally, sent by overnight courier or telecopied (with a confirmatory copy
sent by overnight courier) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
(a) if to PEC or PDC, to:
Patterson Energy, Inc.
4510 Lamesa Highway
P.O. Drawer 1416
Snyder, Texas 79550
Attention: A. Glenn Patterson
President and Chief Operating
Officer
with copies to:
Thomas H. Maxfield, Esq.
Baker & Hostetler LLP
303 East 17th Avenue, Suite 1100
Denver, Colorado 80203-1264
-11-
<PAGE> 12
(b) if to the Foundation:
Wes-Tex Foundation
c/o Wes-Tex Drilling Company
400 Pine Street
Abilene, Texas 79601
(c) if to Greathouse Charitable Remainder Trust:
Myrle Greathouse, Trustee
c/o Wes-Tex Drilling Company
400 Pine Street
Abilene, Texas 79601
with copies to:
Phil Morehead, Esq.
Morehead-Welborn
Attorneys at Law
500 Chestnut, Suite 1400
Abilene, Texas 79602
SECTION 7.2 Interpretation. When a reference is made in this
Agreement to a Section, such reference shall be to a Section of this Agreement
unless otherwise indicated, and the words "hereof', "herein" and "hereunder"
and similar terms refer to this Agreement as a whole and not to any particular
provision of this Agreement, unless the context otherwise requires.
SECTION 7.3 Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other parties.
SECTION 7.4 Entire Agreement; No Third-Party Beneficiaries.
This Agreement, including the documents and instruments referred to herein, (i)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and (ii) is not intended to confer upon any person other
than the parties any rights or remedies hereunder; provided, however, that
legal counsel for the Foundation and Greathouse Charitable Remainder Trust may
rely upon the representations and warranties contained herein and in the
certificates delivered pursuant to Section 5.3(b).
-12-
<PAGE> 13
SECTION 7.5 Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Texas,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
SECTION 7.6 Assignment. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties without the prior written consent of the other parties. Subject to the
preceding sentence, this Agreement shall be binding upon, inure to the benefit
of, and be enforceable by, the parties and their respective successors and
assigns.
SECTION 7.7 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule
of law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby are not affected in any
manner materially adverse to any party. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions be consummated as originally
contemplated to the fullest extent possible.
SECTION 7.8 Enforcement of This Agreement. The parties agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity.
IN WITNESS WHEREOF, PEC, PDC, the Foundation and Greathouse
Charitable Remainder Trust executed this Agreement as of the date first written
above.
PEC:
PATTERSON ENERGY, INC.
By:
------------------------------------
A. Glenn Patterson
President and Chief Operating Officer
Attest:
-13-
<PAGE> 14
- -------------------------
James C. Brown, Secretary
[Signatures continued on following page]
PDC:
PATTERSON DRILLING COMPANY
By:
----------------------------------
A. Glenn Patterson
President and Chief Operating
Officer
Attest:
- -------------------------
James C. Brown, Secretary
FOUNDATION:
GREATHOUSE FOUNDATION
By:
----------------------------------
Myrle Greathouse
Chairman of the Board
Attest:
- -------------------------
, Secretary
GREATHOUSE CHARITABLE REMAINDER
TRUST:
-------------------------------------
Myrle Greathouse, Trustee
-14-
<PAGE> 15
EXHIBIT A(I)
FORM
OF
INVESTMENT REPRESENTATION LETTER
June ___, 1997
Patterson Energy, Inc.
4510 Lamesa Highway
Snyder, Texas 79549
This letter is being submitted to Patterson Energy, Inc.
("PEC") in connection with and as a condition to closing by PEC and Patterson
Drilling Company ("PDC") of the stock purchase (the "Stock Purchase")
contemplated by the Agreement among PEC, PDC and Greathouse Foundation
("Foundation") and Myrle Greathouse, Trustee under Agreement dated May __,
1997. Capitalized terms not defined herein shall have the meaning given them
in the Memorandum (as defined below).
1. Representations and Warranties.
The undersigned hereby represents and warrants to PEC that the
following statements are true:
(a) The undersigned has been furnished a copy of the
Memorandum, dated June __, 1997 (the "Memorandum") containing a copy of PEC's
Annual Report on Form 10-K for the fiscal year ended December 31, 1996, and all
other reports filed by PEC with the Securities and Exchange Commission since
January 1, 1997 (collectively, the "Reports") and has carefully reviewed the
Memorandum and the Reports, including, but not limited to, (i) the statements
in the Memorandum relating to taxation of the Stock Purchase and lack of free
transferability of the PEC Common Stock to be issued by PEC as consideration
for the Stock Purchase, and (ii) the section entitled "Disclosure Concerning
Forward- Looking Statements," setting forth certain Cautionary Statements or
risk factors relating to PEC and its businesses and operations.
(b) The undersigned has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of an investment in PEC vis-a-vis the PEC Common Stock to be issued by
PEC as consideration for the Stock Purchase.
EX A(I)-1
<PAGE> 16
Patterson Energy, Inc.
[Date]
Page 2
(c) The undersigned has had an opportunity to ask
questions of PEC and its management concerning PEC and PDC, the businesses of
PEC and PDC and the PEC Common Stock and, if asked, all such questions have
been answered to the full satisfaction of the undersigned.
(d) The undersigned understands that PEC has not
registered the offer or sale of the PEC Common Stock under the Securities Act
of 1933, as amended (the "Act"), in reliance upon an exemption therefrom under
Section 4(2) of the Act and the provisions of Regulation D promulgated
thereunder. The undersigned therefore acknowledges that in no event may it
sell or otherwise transfer the PEC Common Stock without registration under the
Act (see paragraph (h) below).
(e) The undersigned represents that it will acquire the
PEC Common Stock for its own account, with no intention to distribute or offer
to distribute the same to others without registration under the Act, and
understands that the issuance by PEC of the PEC Common Stock will be predicated
upon the undersigned's lack of such intention.
(f) The undersigned understands that neither the
Securities and Exchange Commission nor the securities commissioner of any state
has received or reviewed any documents relative to an investment in PEC, or has
made any finding or determination relating to the fairness of an investment in
PEC.
(g) The undersigned acknowledges that stop transfer
instructions will be placed with PEC's transfer agent to restrict the resale,
pledge, hypothecation or other transfer of the PEC Common Stock.
(h) The undersigned acknowledges that, except as provided
in the Registration Rights Agreement attached as Exhibit B to the Asset
Purchase Agreement, PEC is under no obligation to register the PEC Common Stock
for sale under the Act or to assist the undersigned in complying with any
exemption from registration under the Act, or any state securities laws.
(i) The undersigned understands and acknowledges that the
foregoing representations and warranties will be relied upon by PEC in
connection with the issuance of the PEC Common Stock, the PEC Warrant and the
PEC Warrant Shares.
2. Indemnification.
EX A(I)-2
<PAGE> 17
Patterson Energy, Inc.
[Date]
Page 3
The undersigned agrees to indemnify and hold harmless PEC and
PDC, or either of them, the officers, directors and affiliates of either of
them and each other person, if any, who controls either of them, within the
meaning of Section 15 of the Act, against any and all loss, liability, claim,
damage and expense whatsoever (including, but not limited to, any and all
expenses reasonably incurred in investigating, preparing or defending against
any litigation commenced or threatened or any claim whatsoever) arising out of
or based upon any false representation or warranty or failure by the
undersigned to comply with any covenant or agreement made by the undersigned
herein.
3. Survival.
All representations, warranties and covenants contained in
this letter shall survive the closing of the Stock Purchase.
Very truly yours,
GREATHOUSE FOUNDATION
By:
-----------------------------------
Myrle Greathouse
Chairman of the Board
EX A(I)-3
<PAGE> 18
EXHIBIT A(II)
FORM
OF
INVESTMENT REPRESENTATION LETTER
June ___, 1997
Patterson Energy, Inc.
4510 Lamesa Highway
Snyder, Texas 79549
This letter is being submitted to Patterson Energy, Inc.
("PEC") in connection with and as a condition to closing by PEC and Patterson
Drilling Company ("PDC") of the stock purchase (the "Stock Purchase")
contemplated by the Stock Purchase Agreement among PEC, PDC, the Greathouse
Foundation and Myrle Greathouse, Trustee under Agreement dated May ___, 1997
(the "Greathouse Charitable Remainder Trust"). Capitalized terms not defined
herein shall have the meaning given them in the Memorandum (as defined below).
1. Representations and Warranties.
The undersigned hereby represents and warrants to PEC that the
following statements are true:
(a) The undersigned has been furnished a copy of the
Memorandum, dated June __, 1997 (the "Memorandum") containing a copy of PEC's
Annual Report on Form 10-K for the fiscal year ended December 31, 1996, and all
other reports filed by PEC with the Securities and Exchange Commission since
January 1, 1997 (collectively, the "Reports") and has carefully reviewed the
Memorandum and the Reports, including, but not limited to, (i) the statements
in the Memorandum relating to taxation of the Stock Purchase and lack of free
transferability of the PEC Common Stock to be issued by PEC as consideration
for the Stock Purchase, and (ii) the section entitled "Disclosure Concerning
Forward- Looking Statements," setting forth certain Cautionary Statements or
risk factors relating to PEC and its businesses and operations.
(b) The undersigned has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of an investment in PEC vis-a-vis the PEC Common Stock to be issued by
PEC as consideration for the Stock Purchase.
EX A(II)-1
<PAGE> 19
Patterson Energy, Inc.
[Date]
Page 2
(c) The undersigned has had an opportunity to ask
questions of PEC and its management concerning PEC and PDC, the businesses of
PEC and PDC and the PEC Common Stock and, if asked, all such questions have
been answered to the full satisfaction of the undersigned.
(d) The undersigned understands that PEC has not
registered the offer or sale of the PEC Common Stock under the Securities Act
of 1933, as amended (the "Act"), in reliance upon an exemption therefrom under
Section 4(2) of the Act and the provisions of Regulation D promulgated
thereunder. The undersigned therefore acknowledges that in no event may it
sell or otherwise transfer the PEC Common Stock without registration under the
Act (see paragraph (h) below).
(e) The undersigned represents that it will acquire the
PEC Common Stock for its own account, with no intention to distribute or offer
to distribute the same to others without registration under the Act, and
understands that the issuance by PEC of the PEC Common Stock will be predicated
upon the undersigned's lack of such intention.
(f) The undersigned understands that neither the
Securities and Exchange Commission nor the securities commissioner of any state
has received or reviewed any documents relative to an investment in PEC, or has
made any finding or determination relating to the fairness of an investment in
PEC.
(g) The undersigned acknowledges that stop transfer
instructions will be placed with PEC's transfer agent to restrict the resale,
pledge, hypothecation or other transfer of the PEC Common Stock.
(h) The undersigned acknowledges that, except as provided
in the Registration Rights Agreement attached as Exhibit B to the Asset
Purchase Agreement, PEC is under no obligation to register the PEC Common Stock
for sale under the Act or to assist the undersigned in complying with any
exemption from registration under the Act, or any state securities laws.
(i) The undersigned understands and acknowledges that the
foregoing representations and warranties will be relied upon by PEC in
connection with the issuance of the PEC Common Stock, the PEC Warrant and the
PEC Warrant Shares.
2. Indemnification.
EX A(II)-2
<PAGE> 20
Patterson Energy, Inc.
[Date]
Page 3
The undersigned agrees to indemnify and hold harmless PEC and
PDC, or either of them, the officers, directors and affiliates of either of
them and each other person, if any, who controls either of them, within the
meaning of Section 15 of the Act, against any and all loss, liability, claim,
damage and expense whatsoever (including, but not limited to, any and all
expenses reasonably incurred in investigating, preparing or defending against
any litigation commenced or threatened or any claim whatsoever) arising out of
or based upon any false representation or warranty or failure by the
undersigned to comply with any covenant or agreement made by the undersigned
herein.
3. Survival.
All representations, warranties and covenants contained in
this letter shall survive the closing of the Stock Purchase.
Very truly yours,
GREATHOUSE CHARITABLE REMAINDER TRUST
By:
------------------------------------
Myrle Greathouse
Trustee
EX A(II)-3
<PAGE> 1
EXHIBIT 2.3
ESCROW AGREEMENT
THIS ESCROW AGREEMENT is made and entered into this 4th day of
June, 1997, by and among PATTERSON ENERGY, INC., a Delaware corporation
("PEC"), WES-TEX DRILLING COMPANY, a Texas corporation ("Wes-Tex"), and FIRST
NATIONAL BANK OF ABILENE, N.A., a national banking association (the "Escrow
Agent").
R E C I T A L S:
A. PEC, Patterson Drilling Company, a Delaware
corporation ("PDC"), and Wes-Tex have entered into a Asset Purchase Agreement,
dated of even date herewith (the "Asset Purchase Agreement"), providing for the
purchase by PDC from Wes-Tex of 21 drilling rigs, related drilling equipment,
and rolling stock related to the contract drilling operations of Wes-Tex and a
shop and yard located in Abilene, Texas.
B. The obligations of PEC and PDC to consummate the
transactions contemplated by the Asset Purchase Agreement are subject to the
conditions set forth in Sections 6.1 and 6.3 of the Asset Purchase Agreement,
including, without limitation, the expiration of the applicable waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (such conditions
being hereinafter referred to as the "Closing Conditions").
C. The parties have agreed to deposit the Escrow Funds
(as defined in Section 3 hereof) with the Escrow Agent on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements
hereinafter contained, the parties, intending to be legally bound, hereby agree
as follows:
1. Appointment of Escrow Agent. PEC and Wes-Tex hereby
appoint the Escrow Agent as the Escrow Agent to hold and disburse the Escrow
Funds (as defined in Section 3 hereof) in accordance with the terms and
conditions of this Escrow Agreement.
2. Delivery and Receipt of Escrow Funds. Simultaneously
with the execution of this Escrow Agreement, PEC has delivered to the Escrow
Agent, to be held under the terms and conditions set forth herein, the sum of
U.S.$19,000,000 (the "Escrow Funds"). Receipt of the Escrow Funds is hereby
acknowledged by the Escrow Agent. The Escrow Agent agrees to deposit the
Escrow Funds in an interest-bearing escrow account with the Escrow Agent.
Interest shall accrue daily on the Escrow Fund at the rate of 4.25%.
3. Disbursement of Escrow Funds. The Escrow Agent shall
hold the Escrow Funds and shall disburse the Escrow Funds only as follows:
<PAGE> 2
(a) The Escrow Funds (together with any interest
accrued thereon) shall be promptly returned to PEC upon receipt of a written
notice from PEC stating that:
(i) One or more of the Closing
Conditions have not occurred; or
(ii) PEC has received notice from the
Federal Trade Commission ("FTC") or the United States Department of
Justice ("DOJ") that the FTC or DOJ intends to challenge, delay, or
otherwise prevent the consummation of the transactions contemplated by
the Asset Purchase Agreement.
(b) The Escrow Funds (together with any interest
accrued thereon) shall be paid to PEC (or at PEC's direction) upon written
notice from PEC that the closing documents required by the Asset Purchase
Agreement have been executed by Wes-Tex and are satisfactory to PEC.
(c) The Escrow Funds (together with any interest
accrued thereon) shall be automatically paid to PEC on the 45th day after the
date of this Agreement (or, if such 45th day is not a business day, on the
first business day after such 45th day), if the Escrow Agent has not previously
received notice from PEC under Section 3(a) or (b) hereof.
4. Interest on Escrow Funds. All interest earned on the
Escrow Funds shall be held by the Escrow Agent and shall inure to the benefit
of and be paid to PEC or as PEC otherwise instructs in writing. The taxpayer
identification number of PEC is 75-2504748.
5. Compensation. The Escrow Agent shall not be entitled
to any compensation for its services hereunder. The Escrow Agent shall be
entitled to reimbursement for its expenses and disbursements (including
reasonable attorneys' fees) incurred in connection with its duties hereunder.
Reimbursement of such expenses and disbursements shall be made solely by
Wes-Tex.
6. Duties and Liability of Escrow Agent.
(a) Duties of Escrow Agent. The Escrow Agent
shall be obligated to perform only the duties that are expressly set forth
herein and need not take notice of and shall not act upon any of the provisions
of the Asset Purchase Agreement. The Escrow Agent's duties hereunder shall be
limited to the safekeeping and investment of the Escrow Funds and to the
disbursement of the Escrow Funds (and interest accrued thereon) held by it in
accordance with written instructions by PEC pursuant to Section 3(a) or (b)
hereof or automatically pursuant to Section 3(c) hereof.
(b) Written Instructions of PEC. Notwithstanding
anything to the contrary herein, the Escrow Agent shall, at all times, have
full right and authority to pay over and
<PAGE> 3
disburse the Escrow Fund (and any interest accrued thereon) in accordance with
the written instructions provided by PEC pursuant to the terms of Section 3
hereof. The Escrow Agent shall be entitled to assume the genuineness of any
signatures contained on (and the accuracy of any statements made in) any notice
received by the Escrow Agent pursuant to Section 3 hereof and to assume that
the person executing such notice was duly authorized to execute such notice on
behalf of PEC and shall otherwise be entitled to rely and act upon such notice
without independent investigation of the authenticity, genuineness, or due
authorization of such notice or of the accuracy of the statements contained
therein.
(c) No Liability of Escrow Agent. The Escrow
Agent shall not be subject to any liability or any claims by PEC or Wes-Tex on
account of disbursement of the Escrow Funds and interest accrued thereon in
accordance with the written instructions from PEC pursuant to Section 3(a) or
(b) hereof or automatically pursuant to Section 3(c) hereof.
7. Termination. Upon disbursement of all of the Escrow
Funds (together with all interest accrued thereon), this Agreement and the
duties of the Escrow Agent hereunder shall automatically terminate.
8. Modification of Agreement. This Agreement contains
the entire agreement and understanding of the parties hereto with respect to
the subject matter hereof and may not be altered, modified, or changed in any
manner whatsoever except by a writing signed by all parties hereto.
9. Notices. All notices shall be in writing and may be
either delivered personally or by courier or by being telecopied, telexed, or
other similar method of facsimile transmission or by being sent by registered
or certified mail, postage prepaid, return receipt requested and addressed to
the receiving party at the address set forth below or at such other address as
the receiving party may notify the other parties hereto in accordance with this
Section 9. Notice shall be effective upon receipt.
(a) If to PEC, to:
Patterson Energy, Inc.
4510 Lamesa Highway
P.O. Drawer 1416
Snyder, Texas 79550
Telecopier No: (915) 573-0281
Attention: A. Glenn Patterson, President and
Chief Operating Officer
<PAGE> 4
With copies to:
Thomas H. Maxfield, Esq.
Baker & Hostetler LLP
303 East 17th Avenue, Suite 1100
Denver, Colorado 80203
Telecopier No: (303) 861-2307
(b) If to the Escrow Agent, to:
First National Bank of Abilene, N.A.
400 Pine Street
Abilene, Texas 79604
Telecopier No: (915) 627-7136
Attention: Ron A. Fogle, Executive Vice
President
(c) If to Wes-Tex, to:
Myrle Greathouse, Chairman of the Board
Wes-Tex Drilling Company
400 Pine Street
Abilene, Texas 79601
Telecopier No: (915) 677-5140
With copies to:
Charles C. Self, III, Esq.
Whitten & Young, P.C.
NationsBank Tower, Suite 1402
500 Chestnut Street
P.O. Box 208
Abilene, Texas 79604
Telecopier No: (915) 672-2158
10. Successors and Assigns. The terms of this Agreement
shall be binding upon, and the benefits of this Agreement shall inure to, the
successors and assigns of the parties hereto.
<PAGE> 5
11. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Texas.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed on its behalf.
PATTERSON ENERGY, INC.
By:
----------------------------------------
A. Glenn Patterson, President and Chief
Operating Officer
ATTEST:
- ---------------------------------
James C. Brown, Secretary
WES-TEX DRILLING COMPANY
By:
----------------------------------------
Myrle Greathouse, Chairman of the Board
ATTEST:
- ---------------------------------
Helen Little, Secretary
FIRST NATIONAL BANK OF ABILENE, N.A.
By:
----------------------------------------
Ron A. Fogle, Executive Vice President
ATTEST:
- ---------------------------------
, Secretary
<PAGE> 1
EXHIBIT 10.1
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is dated as of the 3rd day of June, 1997, and is
by and between PATTERSON ENERGY, INC., a Delaware corporation with offices
located in Snyder, Texas (the "Borrower"), PATTERSON DRILLING COMPANY,
PATTERSON DRILLING PROGRAMS, INC., PATTERSON PETROLEUM, INC. and PATTERSON
TRADING COMPANY, INC. (each a "Guarantor" and collectively, the "Guarantors")
and NORWEST BANK TEXAS, NATIONAL ASSOCIATION, a national banking association
with offices located in Wichita Falls, Texas (the "Bank").
RECITALS:
WHEREAS, the Borrower has requested the Bank to extend an advancing,
non-revolving credit line in the principal amount of THIRTY MILLION AND NO/100
DOLLARS ($30,000,000.00) (the "Credit") for acquisition, capital expenses and
working capital purposes; and,
WHEREAS, the Bank is willing to make the Credit available to the
Borrower subject to the provisions of this Credit Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein, the parties agree as follows:
SECTION 1 Definitions
1.1 In addition to those terms defined in the above recitals, as used
herein:
"Agreement" shall mean this Credit Agreement and all amendments and
supplements hereto which may from time to time become effective hereafter in
accordance with the terms hereof.
"Banking Day" shall mean any day other than a Saturday, Sunday or a
legal holiday on which banks in Wichita Falls, Texas are required or authorized
to be closed.
"Borrowed Money" shall mean funds obtained by incurring contractual
indebtedness and shall not include trade accounts payable or money borrowed
from the Bank.
"Cash Flow" shall mean, for the fiscal year of the Borrower, the
aggregate amount of the following items properly shown on its income statement,
determined in accordance with generally accepted accounting principles
consistently applied: net income after taxes plus (i) amortization,
depreciation and depletion expense; less (ii) dividends, extraordinary income
and similar types of noncash charges against income which the Bank determines,
in its sole discretion, to be appropriate "add-backs."
"Closing Date" shall mean the effective date of this Agreement.
"Current Assets" shall mean the aggregate amount of the Borrower's
assets properly shown as current assets on its balance sheet, determined in
accordance with generally accepted accounting principles consistently applied,
minus the following: receivables, loans and other amounts due from any
shareholder, director, officer, or employee of the Borrower, and
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receivables, loans and other amounts due from any other related or affiliated
person, corporation, partnership, trust, or other entity of the Borrower.
"Current Liabilities" shall mean the aggregate amount of the
Borrower's liabilities properly shown as current liabilities on its balance
sheet, determined in accordance with generally accepted accounting principles
consistently applied.
"Current Maturities of Long-Term Debt" shall mean, that portion of the
Borrower's "Long-Term Debt" that matures or that is scheduled to be paid during
the next four fiscal quarters of the Borrower. For the purposes of this
definition, "Long-Term Debt" shall mean the following: (i) the aggregate amount
of the Borrower's liabilities properly shown as non-current liabilities on its
balance sheet, determined in accordance with generally accepted accounting
principles consistently applied, as of the last day of the quarter; and (ii)
any new liabilities of the Borrower incurred during the quarter that, in
accordance with generally accepted accounting principles consistently applied,
should be shown as non-current liabilities on its balance sheet at quarter-end.
"Note" shall mean the promissory note of the Borrower substantially in
the form of attached Exhibit A, evidencing borrowings under Section 2.1 hereof.
"Events of Default" shall mean any and all events of default described
in Section 8 hereof.
"Guarantors" shall mean Patterson Drilling Company, Patterson Drilling
Programs, Inc., Patterson Petroleum, Inc. and Patterson Trading Company, Inc..
"Indebtedness" shall mean, as to the Borrower, or any Subsidiary, all
items of indebtedness, obligation or liability, whether matured or unmatured,
liquidated or unliquidated, direct or contingent, joint or several.
"Interest Period" shall mean, with respect to the LIBOR Rate, a period
of three months, which shall begin on (and include) the date on which such
election is effective or continued and, unless the maturity of the Note is
accelerated, shall end on (but exclude) the day which is three months
thereafter, provided, however, that if such Interest Period would otherwise end
on a day which is not a Banking Day, such Interest Period shall end on the next
following business day.
"LIBOR Rate" shall mean, for any Interest Period, an interest rate per
annum equal to the three-month LIBOR Rate as published in the "Money Rates"
section of the Wall Street Journal on the second business day preceding the
first day of an Interest Period.
"Maturity Date" shall mean January 1, 2000.
"Net Worth" shall mean the aggregate amount of the Borrower's items
properly shown as assets on its balance sheet minus the aggregate amount of the
Borrower's items properly shown as liabilities on its balance sheet, determined
in accordance with generally accepted accounting principles consistently
applied.
"Permitted Liens" shall mean:
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A. Liens in favor of the Bank;
B. Existing liens disclosed to the Bank in writing prior
to the date of this Agreement as set forth on Schedule 1 hereto; and
C. Liens for taxes not delinquent or which Borrower is
contesting in good faith.
"Subsidiary" shall mean any corporation of which more than fifty
percent (50%) of the outstanding voting securities shall, at the time of
determination, be owned directly, or indirectly through one or more
intermediaries, by the Borrower.
"Tangible Net Worth" shall mean Net Worth minus the aggregate amount
of the Borrower's items properly shown as the following types of assets
on its balance sheet, determined in accordance with generally accepted
accounting principles consistently applied: (i) goodwill, patents, copyrights,
mailing lists, trade names, trademarks, servicing rights, organizational and
franchise costs, bond underwriting costs, and other like assets properly
classified as intangible; (ii) leasehold improvements; (iii) receivables, loans
and other amounts due from any shareholder, director, officer, or employee of
the Borrower, and receivables, loans and other amounts due from any other
related or affiliated person, corporation, partnership, trust, or other entity
of the Borrower; and (iv) investments or interests in non- public companies,
cooperatives, or partnerships.
1.2 Computation of Time Periods. In this Agreement in the computation of
periods of time from a specified date to a later specified date, the word
"from" means "from and including" and the words "to" and "until" each means "to
but excluding."
1.3 Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles consistent with those applied in the preparation of the financial
statements referred to in Section 5.6.
SECTION 2 The Credit Facilities
2.1 The Credit. Subject to the other provisions of this Agreement, the
Bank agrees to lend to the Borrower in one or more advances from time to time
from the effective date hereof until December 31, 1997 sums not to exceed an
aggregate of THIRTY MILLION AND NO/100 DOLLARS ($30,000,000.00). Each
borrowing under this Section 2.1 shall be requested in writing on the form set
forth in Exhibit B hereto. Each borrowing under this Section 2.1 will be
evidenced by a notation on the Bank's records, which shall be conclusive
evidence of such borrowing, and by the Note. Amounts borrowed and repaid under
the Credit are non-revolving.
2.2 Interest Rate. Interest on the unpaid principal of the Note shall be
calculated at an annual rate equal to two and one-half percent (2.5%) in excess
of the LIBOR Rate, which rate shall change at the beginning of each Interest
Period. Interest shall be computed on the basis of the actual number of days
elapsed in a year of 365/366 days.
2.3 Repayment. Prior to December 31, 1997, interest on the Note shall be
payable monthly, commencing June 30, 1997, and continuing on the last day of
each succeeding month.
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Commencing January 31, 1998, and continuing on the last day of each succeeding
month, principal and interest shall be payable in monthly installments in an
amount determined by the Bank as sufficient to fully amortize the outstanding
balance based upon an amortization schedule of seven years. A final payment of
all remaining outstanding principal plus accrued interest shall be due and
payable on the Maturity Date. Amounts received shall be applied first to
interest and then to principal.
2.4 Prepayment. The Borrower may at any time prepay the Note in whole or
from time to time in part without premium or penalty. Prepayments of principal
shall be applied in inverse order of maturity.
2.5 Fees. On the Closing Date the Borrower shall pay to the Bank an
origination fee equal to $75,000.00. Such fee shall be fully earned and
nonrefundable upon payment.
2.6 Sums Payable. All sums payable to the Bank hereunder shall be paid
directly to the Bank in immediately available funds. The Bank shall send the
Borrower statements of all amounts due hereunder, which statements shall be
considered correct and conclusively binding on the Borrower unless the Borrower
notifies the Bank to the contrary within 15 days of its receipt of any
statement which it deems to be incorrect.
2.7 Inability to Determine LIBOR Rate. If for any reason the Bank shall
have determined that adequate and reasonable means do not exist for
ascertaining the LIBOR Rate for any Interest Period, the Bank shall establish,
in good faith, an alternative interest rate index which will result in an
overall interest rate which approximates as closely as possible the interest
rate that would have been determined under Section 2.2.
SECTION 3 Conditions Precedent
3.1 The Borrower shall deliver the following to the Bank on or before the
Closing Date:
A. This Agreement, duly executed by Borrower.
B. The Note, duly executed by Borrower.
C. The Guaranties, duly executed by each Guarantor.
D. Certified corporate resolutions or certificates of
authority from the Borrower and each of the Guarantors authorizing the
execution, delivery and performance of this Agreement, the Note and
each other document to be delivered pursuant hereto.
E. Copies of the Articles of Incorporation and Bylaws
from the Borrower and each of the Guarantors.
F. Certificates, as of the most recent date practicable,
of the secretary of state of Texas and Delaware, as to the good
standing of the Borrower and the Guarantors.
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G. A Legal Opinion of counsel to the Borrower and the
Guarantors relating to the authorization, execution and enforceability
of this Agreement, the Note, the Guaranties and such other matters as
the Bank may reasonably request.
3.2 The Bank shall not be obligated to lend hereunder on the occasion for
any borrowing unless:
A. The representations and warranties contained in
Section 5 hereof are true and accurate on and as of such date;
B. No Event of Default, and no event which might become
an Event of Default after the lapse of time or the giving of notice
and the lapse of time, has occurred and is continuing or will exist
upon the disbursement of such loan; and,
C. The Borrower shall have delivered to the Bank a
certification by an appropriate officer of the Borrower as to the
matters set forth in Sections 3.2(A) and 3.2(B) hereof.
SECTION 4 Security
4.1 Security Interest. The Note shall be an unsecured obligation of the
Borrower.
4.2 Guaranties. The Borrower shall cause to be executed and delivered to
the Bank a guaranty agreement from each of the Guarantors, whereby each
Guarantor shall guaranty all indebtedness of the Borrower to the Bank.
SECTION 5 Representations and Warranties
To induce the Bank to enter into this Agreement, the Borrower
represents and warrants to the Bank as follows:
5.1 Corporate Status. The Borrower and each Guarantor is a corporation
duly organized, existing and in good standing under the laws of the state of
its incorporation.
5.2 Good Standing. The Borrower and each Guarantor is duly qualified to
do business and is in good standing in any additional jurisdictions where, on
advice of legal counsel, registration was deemed necessary.
5.3 Authority. The execution, delivery and performance of this Agreement
and the Note by the Borrower are within its corporate powers, have been duly
authorized, and are not in contravention of law, or the terms of Borrower's
Certificate of Incorporation or By-Laws or of any undertaking to which the
Borrower is a party or by which it is bound.
5.4 Consent. No consent, approval or authorization of or declaration or
filing with any governmental authority on the part of the Borrower is required
in connection with the execution and delivery of this Agreement or the
borrowings by the Borrower hereunder or on the part of the Borrower in
connection with the consummation of any transaction contemplated hereby.
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5.5 Liens. The property of the Borrower and each Guarantor is not subject
to any lien except Permitted Liens.
5.6 Litigation. No litigation or governmental proceeding is pending or,
to the knowledge of the officers of the Borrower, threatened against the
Borrower or any Guarantor which could have a material adverse effect on the
Borrower's or Guarantor's financial condition or business.
5.7 Financial Statements. All financial statements delivered to Bank by
or on behalf of Borrower, including any schedules and notes pertaining thereto,
have been prepared in accordance with generally accepted accounting principles
consistently applied, and fully and fairly present the financial condition of
the Borrower at the dates thereof and the results of operations for the periods
covered thereby, and there have been no material adverse changes in the
consolidated financial condition or business of the Borrower from December 31,
1996 to the date hereof.
5.8 Licenses. The Borrower and each Guarantor possesses adequate
licenses, permits, franchises, patents, copyrights, trademarks and trade names,
or rights thereto, to conduct its business substantially as now conducted and
as presently proposed to be conducted.
5.9 ERISA. The Borrower and the Guarantors do not have any unfunded
liabilities in any pension plan, as such terms is defined in the Employee
Retirement Income Security Act of 1974, as amended, and any successor statute
of similar import ("ERISA"), together with the regulations thereunder. As used
in this section, "unfunded liabilities" means with regard to any plan, the
excess of the current value of the plan's benefits guaranteed under ERISA over
the current value of the plan's assets allocable to such benefits. y5.10
Environmental. The Borrower and each Guarantor to the best of its knowledge
has obtained all material permits, licenses and other authorizations which are
required under federal, state and/or local laws ("Environmental Laws") relating
to pollution or protection of the environment, including laws relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, hazardous or toxic materials or wastes into ambient air, surface
water, ground water or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants or hazardous or toxic materials or wastes
("Environmental Matters"). The Borrower and each Guarantor is in compliance in
all material respects with all terms and conditions of such required permits,
licenses and authorizations and is also in full compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in the Environmental Laws or
contained in any plan, order, decree, judgment or notice. The Borrower and the
Guarantors are not aware of, nor have any such parties received notice of, any
events, conditions, circumstances, activities, practices, incidents, actions or
plans which may interfere with or prevent continued compliance or which may
give rise to any liability under any Environmental Laws or the common law. The
Borrower and the Guarantors have not received any summons, citation, directive,
letter or other communication, written or oral, from any agency or department
of any state, federal or local government relating to any Environmental Matters
or any alleged Environmental Matters. No investigation, administrative order,
consent order and agreement, litigation or settlement with respect to any
Environmental Matters or any alleged Environmental Matters has been received by
the Borrower or to the best of its knowledge is proposed, threatened,
anticipated or in existence with respect to the Borrower or the Guarantors.
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5.11 Validity. This Agreement is, and the Note and Guaranties when issued
will be, valid and binding in accordance with their terms.
5.12 Default. Neither the Borrower nor any Guarantor is in default of a
material provision under any material agreement, instrument, decree or order to
which it is a party or by which it or its property is bound or affected.
SECTION 6 Affirmative Covenants
The Borrower and each of the Guarantors hereby covenants and agrees
that so long as any indebtedness remains outstanding hereunder, unless the Bank
shall otherwise consent in writing, it will:
6.1 Corporate Existence. Maintain its corporate existence and comply in
all material respects with all laws and regulations applicable thereto.
6.2 Taxes. Pay, when due, all taxes assessed against it or its property
except to the extent and so long as contested in good faith.
6.3 Reports. Furnish to the Bank:
A. Within 100 days after the end of each fiscal year of
the Borrower a detailed report of audit of the Borrower and the
Guarantors on a consolidated basis for such fiscal year including the
balance sheet as of the end of such fiscal year and the statements of
profit and loss and surplus for the fiscal year then ended, prepared
by independent certified public accountants satisfactory to the Bank.
B. Within 10 days after filing with the Securities and
Exchange Commission, quarterly financial statements, including a
balance sheet and income statement, for the Borrower.
C. Within 10 days after filing, all other reports and
information filed by or on behalf of the Borrower with the Securities
and Exchange Commission.
D. Promptly upon knowledge thereof, notice to the Bank
in writing of the occurrence of any event which has or might, after
the lapse of time or the giving of notice and the lapse of time,
become an Event of Default.
E. Promptly, such other information as the Bank may
reasonably request.
6.4 Operations. Operate or cause to be operated its properties in a
diligent, careful and efficient manner and in compliance in all material
respects with all applicable laws and all applicable rules and regulations of
every agency and authority, whether state, federal, municipal or other
jurisdiction, from time to time constituted to regulate the development and
operation of oil and gas properties and the production and sale of oil, gas and
other hydrocarbons therefrom. Borrower shall explore, develop, operate and
maintain or cause to be explored, developed, operated and maintained, all of
the leases, wells, units and acreage constituting its properties in a
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<PAGE> 8
prudent manner, according to customary practices and standards of the oil and
gas industry and as may be reasonably necessary to the prudent, economical
operation of such leases, wells, units and acreage.
6.5 Accounts Payable. Pay all of its accounts payable within 120 days,
except for payables being disputed in good faith and for which, if requested by
the Bank, adequate reserves have been made.
6.6 Maintenance of Property. Maintain its inventory, equipment, real
estate and other properties in good condition and repair (normal wear and tear
excepted), and pay and discharge or cause to be paid and discharged when due,
the cost of repairs to or maintenance of the same, and pay or cause to be paid
all rental or mortgage payments due on such real estate.
6.7 Insurance. Cause its properties of an insurable nature to be
adequately insured by reputable and solvent insurance companies against loss or
damages customarily insured against by persons operating similar properties,
and similarly situated, and carry such other insurance as usually carried by
persons engaged in the same or similar businesses and similarly situated.
6.8 Environmental. Comply in all material respects with all applicable
Environmental Laws.
6.9 Records. Keep true, complete and accurate books, records and accounts
in accordance with generally accepted accounting principles consistently
applied
6.10 Inspection. Permit any of Bank's duly authorized employees or agents
the right, at any reasonable time and from time to time, to visit and inspect
the properties of Borrower and to examine and take abstracts from its books and
records.
6.11 Cash Flow Coverage. Maintain the Borrower's ratio of Cash Flow to
Current Maturities of Long Term Debt plus current capital lease obligations, on
a consolidated basis, at not less than 2.0 to 1 on a rolling four fiscal
quarters basis.
6.12 Debt to Tangible Net Worth. Maintain the Borrower's ratio of Debt to
Tangible Net Worth, on a consolidated basis, at not more than 0.6 to 1.0 at the
end of each fiscal quarter.
6.13 Current Ratio. Maintain the Borrower's ratio of Current Assets to
Current Liabilities, on a consolidated basis, at not less than 1.75 to 1.0 at
the end of each fiscal quarter.
6.14 Net Income. Maintain a positive net income on a rolling four fiscal
quarters basis.
6.15 Primary Depository. Maintain the Borrower's and Guarantor's primary
operating accounts with the Bank. The Bank hereby waives any right of offset
against any accounts of Borrower held at the Bank.
SECTION 7 Negative Covenants
Without the Bank's written consent, so long as any indebtedness
remains outstanding under the Credit, neither the Borrower nor any Guarantor
will:
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7.1 Liens. Permit any lien including, without limitation, any pledge,
assignment, mortgage, title retaining contract or other type of
security interest to exist on its property, real or personal, except
Permitted Liens and any leases by Patterson Drilling Company of real
or personal property to third parties.
7.2 Merger. Enter into any transaction of merger or consolidation (unless
the Borrower or the Guarantor is the surviving entity in such merger or
consolidation), or transfer, sell, assign, lease or otherwise dispose of (other
than sales in the ordinary course of business) all or a substantial part of its
properties or assets, or any of its notes or accounts receivable, or any assets
or properties necessary or desirable for the proper conduct of its business, or
change the nature of its business, or wind up, liquidate or dissolve, or agree
to do any of the foregoing.
7.3 Borrowed Money. Create, incur, assume or suffer to exist,
contingently or otherwise, indebtedness for Borrowed Money, except indebtedness
disclosed to the Bank in writing as existing at the time of execution of this
Agreement.
7.4 Guarantee. Become or remain a guarantor or surety, or pledge its
credit or become liable in any manner (except by endorsement for deposit in the
ordinary course of business) on undertakings of another.
7.5 Dividends. The Borrower shall not pay, or authorize the payment of,
any dividends on any stock, debenture or other security in them, respectively,
without the prior written consent of the Bank.
7.6 Accounting. Make a material change in its accounting procedures,
whether for tax purposes or otherwise.
SECTION 8 Events of Default
8.1 The following shall constitute Events of Default hereunder:
A. Payment. Default in any payment of interest or of
principal on the Note when due, and continuance thereof for 10
calendar days;
B. Performance. Default in the observance or
performance of any other agreement of the Borrower set forth herein or
in any other agreement between the Borrower and the Bank and
continuance thereof for 30 days following written notice from the
Bank;
C. Borrowed Money. Default by the Borrower or any
Guarantor in the payment of any other indebtedness for Borrowed Money
or in the observance or performance of any term, covenant or agreement
of the Borrower or any Guarantor in any agreement relating to any
indebtedness for Borrowed Money of such party, the effect of which
default is to permit the holder of such indebtedness for Borrowed
Money to declare the same due prior to the date fixed for its payment
under the terms thereof;
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D. Representations. Any representation or warranty made
by the Borrower herein, or in any statement or certificate furnished
by the Borrower hereunder, is untrue in any material respect; or
E. Litigation. The occurrence of any litigation or
governmental proceeding which is pending or threatened against the
Borrower or any Guarantor, which could have a material adverse effect
on the financial or business condition of the Borrower and the
Guarantors, taken as a whole, and which is not remedied within a
reasonable period of time (a reasonable period of time not to exceed
30 days) after notice thereof to the Borrower;
F. Guarantor Bankruptcy. The occurrence of any event of
bankruptcy or insolvency with respect to any Guarantor;
G. Bankruptcy. The Borrower becomes insolvent or
bankrupt, or makes an appointment for the benefit of creditors or
consents to the appointment of a custodian, trustee or receiver for
itself or for the greater part of its properties; or a custodian,
trustee or receiver is appointed for the Borrower, or for the greater
part of its properties without its consent and is not discharged
within 60 days; or bankruptcy, reorganization or liquidation
proceedings are instituted by or against the Borrower and, if
instituted against it, are consented to by it or remain undismissed
for 60 days;
Upon the occurrence of any of the above Events of Default, or at any time
thereafter, unless such Event of Default is remedied, the Bank or the holder of
the Note may, by notice in writing to the Borrower, terminate the Credit or
declare the Note to be due and payable, or both, whereupon the Credit shall
terminate forthwith or the Note shall immediately become due and payable, or
both, as the case may be.
Upon the occurrence of an Event of Default described under 8.1(F) or (G), then
the Credit shall automatically terminate and the Note shall automatically
become immediately due and payable, without notice.
SECTION 9 Miscellaneous
9.1 Other Agreements. The provisions of this Agreement shall be in
addition to those of any guaranty, pledge or security agreement, note or other
evidence of liability held by the Bank, all of which shall be construed as
complementary to each other. Nothing herein contained shall prevent the Bank
from enforcing any or all other notes, guaranties, pledges or security
agreements in accordance with their respective terms.
9.2 Waiver. The Bank shall have the right at all times to enforce the
provisions of this Agreement in strict accordance with the terms hereof and
thereof, notwithstanding any conduct or custom on the part of the Bank in
refraining from so doing at any time or times. The failure of the Bank at any
time or times to enforce its rights under such provisions, strictly in
accordance with the same, shall not be construed as having created a custom in
any way or manner contrary to specific provisions of this Agreement or as
having in any way or manner modified or waived
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<PAGE> 11
the same. All rights and remedies of the Bank are cumulative and concurrent
and the exercise of one right or remedy shall not be deemed a waiver or release
of any other right or remedy.
9.3 Expenses. The Borrower will pay all expenses, including the
reasonable fees and expenses of legal counsel for the Bank, incurred in
connection with the preparation, administration, amendment, modification or
enforcement of this Agreement and related documents, and the collection or
attempted collection of the Note.
9.4 Notices. Any notices or consents required or permitted by this
Agreement shall be in writing and shall be deemed delivered if delivered in
person or if sent by certified mail, postage prepaid, return receipt requested,
or telegraph, as follows, unless such address is changed by written notice
hereunder:
A. If to the Borrower: Patterson Energy, Inc.
4510 Lamesa Highway
Snyder, Texas 76550
Attention: Chief Financial Officer
B. If to the Bank: Norwest Bank Texas, National Association
2301 Kell Boulevard
Wichita Falls, Texas 76308
Attention: Business Banking Manager
9.5 Usury Savings Clause. The Bank and the Borrower intend that the
extension of credit evidenced hereby shall conform strictly to the usury laws
applicable to this transaction. Notwithstanding any provision of this
Agreement, the Note, the Guaranty, or any Other Document, if at any time this
transaction is construed or administered so as to be usurious under applicable
law except for the applicability of this paragraph, Bank and the Borrower agree
that the total of all consideration which constitutes interests under
applicable law that is contracted for, charged or received under this
Agreement, the Note, the Guaranty, or the Other Documents shall under no
circumstances exceed the amount permissible under such applicable usury laws,
and any excess interest shall be canceled without further action or, if
theretofore paid, at the option of the holder of the Note, such excess shall be
credited on the unpaid portion of the Note or refunded.
9.6 Indemnification Regarding Environmental Matters. Borrower agrees to
indemnify the Bank and hold the Bank harmless from and against any and all
claims, demands, losses, damages, liabilities, causes of action, judgments,
penalties, costs and expenses (including attorney's fees and court costs) of
any and every kind or character, known or unknown, fixed or contingent, imposed
on, asserted against or incurred by Bank at any time and from time to time by
reason of, in connection with or arising out of (a) the breach of any
representation or warranty set forth herein regarding the applicable
environmental laws, (b) the failure to perform any obligation herein required
to be performed regarding the applicable environmental laws, (c) any violation
of any applicable environmental laws in effect on or before the effective date
(d) the removal of hazardous substances or solid wastes from the properties,
and/or (e) any act, omission, event or circumstance existing or occurring on or
prior to the full and final payment of the Credit. The
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<PAGE> 12
foregoing indemnification shall apply also, as applicable, to the directors,
officers, employees and agents of the Bank, and shall also apply to claims,
demands, losses, damages, liabilities, causes of action, judgments, penalties,
costs and expenses (including attorney's fees and court costs) which in whole
or in part are caused by or arise out of the negligence of each such
indemnified party.
If any claim or demand is asserted against the Bank in respect of
which the Bank may be entitled to indemnification under the provisions of this
Section 9.6, the Borrower shall have the right, by notifying the Bank within
ten days of its receipt of notice of claim or demand, to assume the entire
control (subject to the right of the Bank to participate, at its expense and
with counsel of the Bank's choice) of the defense, compromise or settlement of
the matter, including at the Borrower's expense, employment of counsel of the
Borrower's choice. Written notice of any such claim or demand must be given by
the Bank to the Borrower within thirty days after receipt by the Bank of such
claim or demand. Selection of counsel by the Borrower shall be subject to the
approval of the Bank, which approval shall not be unreasonably withheld. If
the Borrower formally gives notice to the Bank that it will assume control of
the defense, compromise or settlement of the matter, the Borrower will be
deemed to have waived all defenses to the claims for indemnification by the
Bank with respect to the matter. If the Borrower has assumed control of the
defense, compromise or settlement as provided in this paragraph and a judgment
is entered against the Bank, the Bank shall be entitled to indemnification
payment from the Borrower at such time as the judgment creditor is entitled to
execute on the judgment. The Borrower may prosecute one or more appeals from
such judgment only so long as execution on such judgment is stayed. The cost
of any bond or proceeding to stay execution shall be borne by the Borrower.
9.7 State Law. The substantive laws of the State of Texas shall govern
the construction of this Agreement and the rights and remedies of the parties
hereto.
9.8 Successors. This Agreement shall inure to the benefit of, and shall
be binding upon, the respective successors and permitted assigns of the parties
hereto. The Borrower has no right to assign any of its rights or obligations
hereunder without the prior written consent of the Bank. This Agreement, and
the documents executed and delivered pursuant hereto, constitute the entire
agreement between the parties, and may be amended only by a writing signed on
behalf of each party.
9.9 Validity. If any provision of this Agreement shall be held invalid
under any applicable Laws, such invalidity shall not affect any other provision
of this Agreement that can be given effect without the invalid provision, and,
to this end, the provisions hereof are severable.
9.10 Banking Day. Whenever any installment of the interest on the Notes
becomes due and payable on a day which is not a Banking Day, the maturity or
due date thereof shall be extended to the next succeeding Banking Day and, in
the case of principal of the Notes, interest shall be payable thereon at the
rate per annum specified in the Notes during such extension.
9.11 FINAL AGREEMENT. THIS WRITTEN AGREEMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
-12-
<PAGE> 13
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
NORWEST BANK TEXAS, PATTERSON ENERGY, INC.
NATIONAL ASSOCIATION
By: By:
----------------------- ----------------------------
Its: Its:
---------------------- ---------------------------
-13-
<PAGE> 14
PATTERSON DRILLING COMPANY
as Guarantor
By:
----------------------------
Its:
---------------------------
PATTERSON PETROLEUM, INC.
as Guarantor
By:
----------------------------
Its:
---------------------------
PATTERSON TRADING COMPANY
as Guarantor
By:
----------------------------
Its:
---------------------------
PATTERSON DRILLING PROGRAMS, INC.
as Guarantor
By:
----------------------------
Its:
---------------------------
-14-
<PAGE> 15
EXHIBIT A
PROMISSORY NOTE
$30,000,000.00 June 3, 1997
For value received, PATTERSON ENERGY, INC. (the "Borrower") promises
to pay to the order of NORWEST BANK TEXAS, NATIONAL ASSOCIATION (the "Bank") as
set forth below at its office in Wichita Falls, Texas or at any other place
designated at any time by the holder hereof, in lawful money of the United
States of America, the principal sum of Thirty Million and no/100 Dollars
($30,000,000.00), or so much thereof as is disbursed and remains outstanding
hereunder on the due date hereof, as shown by the Bank's liability record,
together with interest (calculated on the basis of actual days elapsed in year
of 365 or 366 days) on the unpaid balance hereof from the date hereof until
this Note is fully paid, at the "LIBOR Rate" plus two and one-half percent
(2.5%). The "LIBOR Rate" means for any Interest Period, an interest rate per
annum equal to the three-month LIBOR Rate as published in the "Money Rates"
section of the Wall Street Journal on the second business day preceding the
first day of an Interest Period. "Interest Period" shall mean, with respect to
the LIBOR Rate, a period of three months, which shall begin on (and include)
the date on which such election is effective or continued and, unless the
maturity of the Note is accelerated, shall end on (but exclude) the day which
is three months thereafter, provided, however, that if such Interest Period
would otherwise end on a day which is not a Banking Day, such Interest Period
shall end on the next following business day.
Prior to December 31, 1997, interest on this Note shall be payable
monthly, commencing June 30, 1997, and continuing on the last day of each
succeeding month. Commencing January 31, 1998, and continuing on the last day
of each succeeding month, principal and interest shall be payable in monthly
installments in amounts determined by the Bank as described in the Credit
Agreement of even date (the "Credit Agreement") between the Bank and the
Borrower. A final payment of all remaining outstanding principal plus accrued
interest shall be due and payable on January 1, 2000. Amounts received shall
be applied first to interest and then to principal.
The Borrower may at any time prepay this Note in whole or in part
without premium or penalty. The Bank and the Borrower intend that this Note
shall conform strictly to applicable usury laws. Notwithstanding any provision
of this Note or the Credit Agreement, if at any time this Note is construed or
administered so as to be usurious under applicable law except for the
applicability of this paragraph, Bank and the Borrower agree that the total of
all consideration which constitutes interest under applicable law that is
contracted for, charged or received under this Note shall under no
circumstances exceed the amount permissible under such applicable usury laws,
and any excess interest shall be canceled without further action or, if
theretofore paid, at the option of the holder of this Note, such excess shall
be credited on the unpaid portion of this Note or refunded
This Note is issued pursuant the Credit Agreement and is subject to
the terms and conditions thereof, including the events of default and the
remedies available to the Bank under such Credit Agreement, which shall apply
to this Note to the same extent as if set forth herein.
<PAGE> 16
Unless prohibited by law, the Borrower agrees to pay all costs of
collection, including reasonable attorneys' fees and legal expenses, incurred
by the holder hereof in the event this Note is not duly paid. The holder
hereof may at any time renew this Note or extend its maturity date for any
period and release any security for, or any party to, this Note, all without
notice to or consent of and without releasing any accommodation maker, endorser
or guarantor from liability on this Note. Presentment or other demand for
payment, notice of dishonor and protest are hereby waived by the Borrower and
each endorser and guarantor. This Note shall be governed by the substantive
laws of the State of Texas.
PATTERSON ENERGY, INC.
By:
------------------------
Its:
-----------------------
-2-
<PAGE> 17
EXHIBIT B
PATTERSON ENERGY, INC.
ADVANCE / PAYDOWN OF REVOLVING LINE REQUEST
To Be Sent Via Fax To: (940) 766-8572 By 3:00 P.M. Two Business Days
Prior To The Date Of The Requested Advance
To: Norwest Bank Texas, From: Patterson Energy, Inc.
National Association 4510 Lamesa Highway
2301 Kell Boulevard Snyder, Texas 76550
Wichita Falls, Texas 76308 (the "Borrower")
(the "Bank")
Pursuant to the terms of the Credit Agreement (the "Agreement")
entered into between the Bank and the Borrower and dated as of June 3, 1997,
the Borrower makes the following request with respect to the Credit documented
in the Agreement:
[ ] REQUEST FOR CREDIT ADVANCE. The Borrower requests that the Bank advance to
the Borrower on ___________________, ______ , (which is not less than two
Banking days from the date of this Certificate) by direct deposit into its
demand deposit account maintained with the Bank, account #_______________,
funds in the amount of U.S.$ _______________________________.
The advance will bear interest as provided in the Agreement.
In making this request, the Borrower certifies that this request, plus amounts
currently outstanding, are not in excess of the maximum available amount of the
Credit.
[ ] REQUEST FOR PAYDOWN OF CREDIT. The Borrower requests that the Bank debit
the Borrower's demand deposit account #_______________, on ___________________
in the amount of U.S.$ ________________________, and apply the proceeds to the
payment of the outstanding balance of principal and interest due on the
Revolving Note that evidences its borrowings under the Credit.
The officer signing this Request on behalf of the Borrower also personally
certifies that he or she has read and is familiar with the terms of the
Agreement and has no knowledge of an existing event of default or event which
after the lapse of time or the delivery of notice would constitute an event of
default under the Agreement.
PATTERSON ENERGY, INC.
By:
-------------------------
Its:
------------------------
<PAGE> 1
EXHIBIT 10.2
PROMISSORY NOTE
$30,000,000.00 June 3, 1997
For value received, PATTERSON ENERGY, INC. (the "Borrower") promises
to pay to the order of NORWEST BANK TEXAS, NATIONAL ASSOCIATION (the "Bank") as
set forth below at its office in Wichita Falls, Texas or at any other place
designated at any time by the holder hereof, in lawful money of the United
States of America, the principal sum of Thirty Million and no/100 Dollars
($30,000,000.00), or so much thereof as is disbursed and remains outstanding
hereunder on the due date hereof, as shown by the Bank's liability record,
together with interest (calculated on the basis of actual days elapsed in year
of 365 or 366 days) on the unpaid balance hereof from the date hereof until
this Note is fully paid, at the "LIBOR Rate" plus two and one-half percent
(2.5%). The "LIBOR Rate" means for any Interest Period, an interest rate per
annum equal to the three-month LIBOR Rate as published in the "Money Rates"
section of the Wall Street Journal on the second business day preceding the
first day of an Interest Period. "Interest Period" shall mean, with respect to
the LIBOR Rate, a period of three months, which shall begin on (and include)
the date on which such election is effective or continued and, unless the
maturity of the Note is accelerated, shall end on (but exclude) the day which
is three months thereafter, provided, however, that if such Interest Period
would otherwise end on a day which is not a Banking Day, such Interest Period
shall end on the next following business day.
Prior to December 31, 1997, interest on this Note shall be payable
monthly, commencing June 30, 1997, and continuing on the last day of each
succeeding month. Commencing January 31, 1998, and continuing on the last day
of each succeeding month, principal and interest shall be payable in monthly
installments in amounts determined by the Bank as described in the Credit
Agreement of even date (the "Credit Agreement") between the Bank and the
Borrower. A final payment of all remaining outstanding principal plus accrued
interest shall be due and payable on January 1, 2000. Amounts received shall
be applied first to interest and then to principal.
The Borrower may at any time prepay this Note in whole or in part
without premium or penalty. The Bank and the Borrower intend that this Note
shall conform strictly to applicable usury laws. Notwithstanding any provision
of this Note or the Credit Agreement, if at any time this Note is construed or
administered so as to be usurious under applicable law except for the
applicability of this paragraph, Bank and the Borrower agree that the total of
all consideration which constitutes interest under applicable law that is
contracted for, charged or received under this Note shall under no
circumstances exceed the amount permissible under such applicable usury laws,
and any excess interest shall be canceled without further action or, if
theretofore paid, at the option of the holder of this Note, such excess shall
be credited on the unpaid portion of this Note or refunded
This Note is issued pursuant the Credit Agreement and is subject to
the terms and conditions thereof, including the events of default and the
remedies available to the Bank under such Credit Agreement, which shall apply
to this Note to the same extent as if set forth herein.
<PAGE> 2
Unless prohibited by law, the Borrower agrees to pay all costs of
collection, including reasonable attorneys' fees and legal expenses, incurred
by the holder hereof in the event this Note is not duly paid. The holder hereof
may at any time renew this Note or extend its maturity date for any period and
release any security for, or any party to, this Note, all without notice to or
consent of and without releasing any accommodation maker, endorser or guarantor
from liability on this Note. Presentment or other demand for payment, notice of
dishonor and protest are hereby waived by the Borrower and each endorser and
guarantor. This Note shall be governed by the substantive laws of the State of
Texas.
PATTERSON ENERGY, INC.
By:
-------------------------
Its:
------------------------
<PAGE> 1
EXHIBIT 10.3
GUARANTY BY CORPORATION
Norwest Bank Texas, Patterson Energy, Inc.
National Association 4510 Lamesa Highway
2310 Kell Boulevard Snyder, Texas 76550
Wichita Falls, Texas 76308 (the "Borrower")
(the "Bank")
June 3, 1997
FOR VALUABLE CONSIDERATION, and to induce the Bank in its sole
discretion to make loans or extend other accommodations to or for the account
of the Borrower, the undersigned gives this Guaranty by Corporation (the
"Guaranty") and absolutely and unconditionally guarantees to the Bank the full
and prompt payment of each and every debt, liability or obligation which the
Borrower may now or at any time in the future owe to the Bank (the
"Indebtedness"). This Guaranty is an absolute, unconditional and continuing
guaranty of payment of the Indebtedness and shall continue to be binding upon
the undersigned, whether or not all Indebtedness is paid in full, until this
Guaranty is revoked prospectively in writing as to future transactions. Such
revocation shall not be effective until actually received in writing by the
Bank and then shall not be effective as to Indebtedness existing or committed
to at the time of revocation, and shall not be effective as to renewals,
extensions, or refinancings of existing Indebtedness, whether such Indebtedness
is renewed before or after receipt of such notice of revocation.
The liability of the undersigned under this Guaranty shall include
accrued interest and all attorneys' fees, collection costs and enforcement
expenses incurred by the Bank in collecting on and enforcing its rights under
the Indebtedness, and all such costs and expenses incurred by the Bank in
connection with the protection, defense, or enforcement of this Guaranty in any
litigation or bankruptcy proceedings. The Bank may apply any sums received by
or available to the Bank on account of the Indebtedness from Borrower or any
other person (except the undersigned), or from the Borrower's or other such
persons' properties or any collateral security or other source of payment, and
such application of proceeds or receipts shall not reduce or impair the
liability of the undersigned under this Guaranty.
Notwithstanding the preceding paragraph, the liability of the
undersigned under this Guaranty shall be limited to a principal amount of
$30,000,000.00, plus accrued interest and all attorneys' fees, collection costs
and enforcement expenses incurred by the Bank in collecting on and enforcing
its rights under the Indebtedness and incurred in connection with the
protection, defense or enforcement of this Guaranty in any litigation or
bankruptcy proceedings. The Indebtedness may be created and continued in any
amount, whether or not in excess of such principal amount, without reducing or
impairing the liability of the undersigned under this Guaranty. Any payment
made by the undersigned under this Guaranty shall be effective to reduce or
discharge the undersigned's liability only if accompanied by a written
transmittal document, received by the Bank and advising it that such payment is
made under this Guaranty for such purpose.
<PAGE> 2
The undersigned further acknowledges and agrees with Bank that:
1. No act or event need occur to establish the liability of the
undersigned under this Guaranty, and no act or event, except full payment and
discharge of all Indebtedness, shall exonerate and discharge the liability of
the undersigned under this Guaranty.
2. If the undersigned is dissolved or changes its legal form of
organization without the prior written consent of the Bank or becomes insolvent
(however defined) then the Bank may declare immediately due and payable the
obligations of the undersigned under this Guaranty, and the undersigned shall
immediately pay to the Bank the full amount of all Indebtedness, whether due
and payable or unmatured. If the undersigned voluntarily commences or there is
commenced involuntarily against the undersigned a case under the United States
Bankruptcy Code, the obligations of the undersigned under this Guaranty shall
immediately be due and payable without the necessity of demand or notice.
3. The undersigned will not exercise or enforce any right of
contribution, reimbursement, recourse or subrogation available to the
undersigned against the Borrower or any person liable for payment of the
Indebtedness, or as to any collateral securing the Indebtedness, unless and
until all of the Indebtedness shall have first been fully paid and discharged.
4. The Bank may in its discretion enter into transactions resulting in
the creation or continuance of Indebtedness, without notice to or the consent
or approval of the undersigned, regardless of whether or not any existing
relationship between the Borrower and the undersigned has been revoked and
regardless of whether this Guaranty has been revoked.
5. The liability of the undersigned shall not be reduced or impaired by
any of the following acts or events (which the Bank is expressly authorized to
do, omit or suffer from time to time, both before and after revocation of this
Guaranty, without notice to or the consent or approval of the undersigned): (i)
any acceptance of collateral security, guarantors, accommodation parties or
sureties for any or all of the Indebtedness; (ii) any one or more extensions or
renewals of Indebtedness (whether or not for a period longer than the original
period) or any modification of the interest rate, maturity or other contractual
terms applicable to all or part of the Indebtedness; (iii) any waiver or
indulgence granted to Borrower, any delay or lack of diligence in the
enforcement of the Indebtedness, or any failure to institute proceedings, file
a claim, give any required notices or otherwise protect any of the
Indebtedness; (iv) any full or partial release of, settlement with, or
agreement not to sue, Borrower or any other guarantor or other person liable
with respect to any of the Indebtedness; (v) any discharge of any evidence of
Indebtedness or the acceptance of any instrument renewing or refinancing the
Indebtedness; (vi) any failure to obtain collateral security (including rights
of setoff) for the Indebtedness, or to assure its proper or sufficient
creation, perfection, or priority, or to protect, insure, or enforce any
collateral security; or any modification, substitution, discharge, impairment,
or loss of such collateral security; (vii) any foreclosure or enforcement of
any collateral security by the Bank or any other creditor of the Borrower with
a security interest in the collateral security; (viii) any assignment or
transfer of
<PAGE> 3
any Indebtedness or documentation evidencing the Indebtedness; (ix) any order
of application of any payments or credits upon the Indebtedness from the
Borrower, the undersigned, or any other person; and (x) any election by the
Bank under Section 1111(b)(2) of the United States Bankruptcy Code.
6. The undersigned waives any and all defenses, claims and discharges of
Borrower, or any other obligor, pertaining to the Indebtedness, except the
defense of discharge by payment in full. Without limiting the generality of the
preceding sentence, the undersigned will not assert, plead or enforce against
the Bank any defense of waiver, release, discharge in bankruptcy, statute of
limitations, res judicata, statute of frauds, anti-deficiency statute,
misrepresentation or fraud, incapacity, minority, usury, illegality or
unenforceability which may be available to Borrower or any other party liable
for payment of any of the Indebtedness, or any setoff available against the
Bank to Borrower or any such other person, whether or not on account of a
related transaction. The undersigned shall be liable for any deficiency
remaining after foreclosure of any mortgage, deed of trust or security interest
securing the Indebtedness, whether or not the liability of the Borrower or any
other obligor for such deficiency is discharged pursuant to statute or judicial
decision.
7. The Bank may in its sole discretion demand that the undersigned
discharge its obligations under this Guaranty at any time, whether at the time
of the scheduled or accelerated maturity of the Indebtedness or at any earlier
or later time, and regardless of whether there has been a default with respect
to the Indebtedness. The Bank shall not be required to first resort for payment
of the Indebtedness to the Borrower or to any other person or their properties,
or to first enforce, realize upon, or exhaust any collateral security given to
secure the Indebtedness before enforcing this Guaranty. The undersigned waives
presentment, demand for payment, notice of dishonor or nonpayment, and protest
of any instrument evidencing part or all of the Indebtedness.
8. If any payment applied by the Bank to the Indebtedness is later set
aside, recovered, rescinded or required to be returned for any reason
(including, without limitation, the bankruptcy, insolvency or reorganization of
the Borrower or any other obligor), the Indebtedness to which such payment was
applied shall for the purposes of this Guaranty be deemed to have continued in
existence, notwithstanding such application, and this Guaranty shall be
enforceable as to such Indebtedness as fully as if such application had never
been made.
9. The liability of the undersigned under this Guaranty is in addition to
and cumulative with all other liabilities of the undersigned to the Bank as a
guarantor or otherwise, without limitation as to amount, unless the instrument
or agreement evidencing or creating such other liability specifically provides
to the contrary.
10. This Guaranty shall be enforceable regardless of the failure of other
persons to sign other guaranties of the Indebtedness. This Guaranty shall be
effective upon delivery to the Bank, without further act, condition or
acceptance by the Bank, shall be binding upon the undersigned and the heirs,
representatives, successors and assigns of the undersigned for the
<PAGE> 4
benefit of the Bank and its participants, successors and assigns. Any
invalidity or unenforceability of any provision or application shall not affect
other lawful provisions and applications of this Guaranty, which is severable.
This Guaranty may not be waived, modified, amended, terminated, released or
otherwise changed except by a writing signed by both the undersigned and the
Bank. This Guaranty is issued in and shall be governed by the laws of the State
of Texas.
11. The undersigned represents and warrants to the Bank that (i) the
undersigned is a corporation duly organized and existing in good standing and
has full power and authority to make and deliver this Guaranty; (ii) the
execution, delivery and performance of this Guaranty by the undersigned has
been duly authorized by all necessary action of its directors and shareholders
and does not and will not violate the provisions of, or constitute a default
under, any presently applicable law or its articles of incorporation or by-laws
or any agreement presently binding on it; (iii) this Guaranty has been duly
executed and delivered by the authorized officers of the undersigned and
constitutes its lawful, binding and legally enforceable obligation (subject to
the United States Bankruptcy Code and other similar laws generally affecting
the enforcement of creditors' rights); and (iv) the authorization, execution,
delivery and performance of this Guaranty does not require notification to,
registration with, or consent or approval by, any federal, state or local
regulatory body or administrative agency.
IN WITNESS WHEREOF, this Guaranty has been duly executed on the above date
by the undersigned.
PATTERSON DRILLING COMPANY
By:
----------------------------
Its:
---------------------------
Address:
-------------------------------
-------------------------------
-------------------------------
<PAGE> 5
GUARANTY BY CORPORATION
Norwest Bank Texas, Patterson Energy, Inc.
National Association 4510 Lamesa Highway
2310 Kell Boulevard Snyder, Texas 76550
Wichita Falls, Texas 76308 (the "Borrower")
(the "Bank")
June 3, 1997
FOR VALUABLE CONSIDERATION, and to induce the Bank in its sole
discretion to make loans or extend other accommodations to or for the account
of the Borrower, the undersigned gives this Guaranty by Corporation (the
"Guaranty") and absolutely and unconditionally guarantees to the Bank the full
and prompt payment of each and every debt, liability or obligation which the
Borrower may now or at any time in the future owe to the Bank (the
"Indebtedness"). This Guaranty is an absolute, unconditional and continuing
guaranty of payment of the Indebtedness and shall continue to be binding upon
the undersigned, whether or not all Indebtedness is paid in full, until this
Guaranty is revoked prospectively in writing as to future transactions. Such
revocation shall not be effective until actually received in writing by the
Bank and then shall not be effective as to Indebtedness existing or committed
to at the time of revocation, and shall not be effective as to renewals,
extensions, or refinancings of existing Indebtedness, whether such Indebtedness
is renewed before or after receipt of such notice of revocation.
The liability of the undersigned under this Guaranty shall include
accrued interest and all attorneys' fees, collection costs and enforcement
expenses incurred by the Bank in collecting on and enforcing its rights under
the Indebtedness, and all such costs and expenses incurred by the Bank in
connection with the protection, defense, or enforcement of this Guaranty in any
litigation or bankruptcy proceedings. The Bank may apply any sums received by
or available to the Bank on account of the Indebtedness from Borrower or any
other person (except the undersigned), or from the Borrower's or other such
persons' properties or any collateral security or other source of payment, and
such application of proceeds or receipts shall not reduce or impair the
liability of the undersigned under this Guaranty.
Notwithstanding the preceding paragraph, the liability of the
undersigned under this Guaranty shall be limited to a principal amount of
$30,000,000.00, plus accrued interest and all attorneys' fees, collection costs
and enforcement expenses incurred by the Bank in collecting on and enforcing
its rights under the Indebtedness and incurred in connection with the
protection, defense or enforcement of this Guaranty in any litigation or
bankruptcy proceedings. The Indebtedness may be created and continued in any
amount, whether or not in excess of such principal amount, without reducing or
impairing the liability of the undersigned under this Guaranty. Any payment
made by the undersigned under this Guaranty shall be effective to reduce or
discharge the undersigned's liability only if accompanied by a written
transmittal document, received by the Bank and advising it that such payment is
made under this Guaranty for such purpose.
<PAGE> 6
The undersigned further acknowledges and agrees with Bank that:
1. No act or event need occur to establish the liability of the
undersigned under this Guaranty, and no act or event, except full payment and
discharge of all Indebtedness, shall exonerate and discharge the liability of
the undersigned under this Guaranty.
2. If the undersigned is dissolved or changes its legal form of
organization without the prior written consent of the Bank or becomes insolvent
(however defined) then the Bank may declare immediately due and payable the
obligations of the undersigned under this Guaranty, and the undersigned shall
immediately pay to the Bank the full amount of all Indebtedness, whether due
and payable or unmatured. If the undersigned voluntarily commences or there is
commenced involuntarily against the undersigned a case under the United States
Bankruptcy Code, the obligations of the undersigned under this Guaranty shall
immediately be due and payable without the necessity of demand or notice.
3. The undersigned will not exercise or enforce any right of
contribution, reimbursement, recourse or subrogation available to the
undersigned against the Borrower or any person liable for payment of the
Indebtedness, or as to any collateral securing the Indebtedness, unless and
until all of the Indebtedness shall have first been fully paid and discharged.
4. The Bank may in its discretion enter into transactions resulting in
the creation or continuance of Indebtedness, without notice to or the consent
or approval of the undersigned, regardless of whether or not any existing
relationship between the Borrower and the undersigned has been revoked and
regardless of whether this Guaranty has been revoked.
5. The liability of the undersigned shall not be reduced or impaired by
any of the following acts or events (which the Bank is expressly authorized to
do, omit or suffer from time to time, both before and after revocation of this
Guaranty, without notice to or the consent or approval of the undersigned): (i)
any acceptance of collateral security, guarantors, accommodation parties or
sureties for any or all of the Indebtedness; (ii) any one or more extensions or
renewals of Indebtedness (whether or not for a period longer than the original
period) or any modification of the interest rate, maturity or other contractual
terms applicable to all or part of the Indebtedness; (iii) any waiver or
indulgence granted to Borrower, any delay or lack of diligence in the
enforcement of the Indebtedness, or any failure to institute proceedings, file
a claim, give any required notices or otherwise protect any of the
Indebtedness; (iv) any full or partial release of, settlement with, or
agreement not to sue, Borrower or any other guarantor or other person liable
with respect to any of the Indebtedness; (v) any discharge of any evidence of
Indebtedness or the acceptance of any instrument renewing or refinancing the
Indebtedness; (vi) any failure to obtain collateral security (including rights
of setoff) for the Indebtedness, or to assure its proper or sufficient
creation, perfection, or priority, or to protect, insure, or enforce any
collateral security; or any modification, substitution, discharge, impairment,
or loss of such collateral security; (vii) any foreclosure or enforcement of
any collateral security by the Bank or any other creditor of the Borrower with
a security interest in the collateral security; (viii) any assignment or
transfer of
<PAGE> 7
any Indebtedness or documentation evidencing the Indebtedness; (ix) any order
of application of any payments or credits upon the Indebtedness from the
Borrower, the undersigned, or any other person; and (x) any election by the
Bank under Section 1111(b)(2) of the United States Bankruptcy Code.
6. The undersigned waives any and all defenses, claims and discharges of
Borrower, or any other obligor, pertaining to the Indebtedness, except the
defense of discharge by payment in full. Without limiting the generality of the
preceding sentence, the undersigned will not assert, plead or enforce against
the Bank any defense of waiver, release, discharge in bankruptcy, statute of
limitations, res judicata, statute of frauds, anti-deficiency statute,
misrepresentation or fraud, incapacity, minority, usury, illegality or
unenforceability which may be available to Borrower or any other party liable
for payment of any of the Indebtedness, or any setoff available against the
Bank to Borrower or any such other person, whether or not on account of a
related transaction. The undersigned shall be liable for any deficiency
remaining after foreclosure of any mortgage, deed of trust or security interest
securing the Indebtedness, whether or not the liability of the Borrower or any
other obligor for such deficiency is discharged pursuant to statute or judicial
decision.
7. The Bank may in its sole discretion demand that the undersigned
discharge its obligations under this Guaranty at any time, whether at the time
of the scheduled or accelerated maturity of the Indebtedness or at any earlier
or later time, and regardless of whether there has been a default with respect
to the Indebtedness. The Bank shall not be required to first resort for payment
of the Indebtedness to the Borrower or to any other person or their properties,
or to first enforce, realize upon, or exhaust any collateral security given to
secure the Indebtedness before enforcing this Guaranty. The undersigned waives
presentment, demand for payment, notice of dishonor or nonpayment, and protest
of any instrument evidencing part or all of the Indebtedness.
8. If any payment applied by the Bank to the Indebtedness is later set
aside, recovered, rescinded or required to be returned for any reason
(including, without limitation, the bankruptcy, insolvency or reorganization of
the Borrower or any other obligor), the Indebtedness to which such payment was
applied shall for the purposes of this Guaranty be deemed to have continued in
existence, notwithstanding such application, and this Guaranty shall be
enforceable as to such Indebtedness as fully as if such application had never
been made.
9. The liability of the undersigned under this Guaranty is in addition to
and cumulative with all other liabilities of the undersigned to the Bank as a
guarantor or otherwise, without limitation as to amount, unless the instrument
or agreement evidencing or creating such other liability specifically provides
to the contrary.
10. This Guaranty shall be enforceable regardless of the failure of other
persons to sign other guaranties of the Indebtedness. This Guaranty shall be
effective upon delivery to the Bank, without further act, condition or
acceptance by the Bank, shall be binding upon the undersigned and the heirs,
representatives, successors and assigns of the undersigned for the
<PAGE> 8
benefit of the Bank and its participants, successors and assigns. Any
invalidity or unenforceability of any provision or application shall not affect
other lawful provisions and applications of this Guaranty, which is severable.
This Guaranty may not be waived, modified, amended, terminated, released or
otherwise changed except by a writing signed by both the undersigned and the
Bank. This Guaranty is issued in and shall be governed by the laws of the State
of Texas.
11. The undersigned represents and warrants to the Bank that (i) the
undersigned is a corporation duly organized and existing in good standing and
has full power and authority to make and deliver this Guaranty; (ii) the
execution, delivery and performance of this Guaranty by the undersigned has
been duly authorized by all necessary action of its directors and shareholders
and does not and will not violate the provisions of, or constitute a default
under, any presently applicable law or its articles of incorporation or by-laws
or any agreement presently binding on it; (iii) this Guaranty has been duly
executed and delivered by the authorized officers of the undersigned and
constitutes its lawful, binding and legally enforceable obligation (subject to
the United States Bankruptcy Code and other similar laws generally affecting
the enforcement of creditors' rights); and (iv) the authorization, execution,
delivery and performance of this Guaranty does not require notification to,
registration with, or consent or approval by, any federal, state or local
regulatory body or administrative agency.
IN WITNESS WHEREOF, this Guaranty has been duly executed on the above date
by the undersigned.
PATTERSON PETROLEUM, INC.
By:
-------------------------------
Its:
------------------------------
Address:
----------------------------------
----------------------------------
----------------------------------
<PAGE> 9
GUARANTY BY CORPORATION
Norwest Bank Texas, Patterson Energy, Inc.
National Association 4510 Lamesa Highway
2310 Kell Boulevard Snyder, Texas 76550
Wichita Falls, Texas 76308 (the "Borrower")
(the "Bank")
June 3, 1997
FOR VALUABLE CONSIDERATION, and to induce the Bank in its sole
discretion to make loans or extend other accommodations to or for the account
of the Borrower, the undersigned gives this Guaranty by Corporation (the
"Guaranty") and absolutely and unconditionally guarantees to the Bank the full
and prompt payment of each and every debt, liability or obligation which the
Borrower may now or at any time in the future owe to the Bank (the
"Indebtedness"). This Guaranty is an absolute, unconditional and continuing
guaranty of payment of the Indebtedness and shall continue to be binding upon
the undersigned, whether or not all Indebtedness is paid in full, until this
Guaranty is revoked prospectively in writing as to future transactions. Such
revocation shall not be effective until actually received in writing by the
Bank and then shall not be effective as to Indebtedness existing or committed
to at the time of revocation, and shall not be effective as to renewals,
extensions, or refinancings of existing Indebtedness, whether such Indebtedness
is renewed before or after receipt of such notice of revocation.
The liability of the undersigned under this Guaranty shall include
accrued interest and all attorneys' fees, collection costs and enforcement
expenses incurred by the Bank in collecting on and enforcing its rights under
the Indebtedness, and all such costs and expenses incurred by the Bank in
connection with the protection, defense, or enforcement of this Guaranty in any
litigation or bankruptcy proceedings. The Bank may apply any sums received by
or available to the Bank on account of the Indebtedness from Borrower or any
other person (except the undersigned), or from the Borrower's or other such
persons' properties or any collateral security or other source of payment, and
such application of proceeds or receipts shall not reduce or impair the
liability of the undersigned under this Guaranty.
Notwithstanding the preceding paragraph, the liability of the
undersigned under this Guaranty shall be limited to a principal amount of
$30,000,000.00, plus accrued interest and all attorneys' fees, collection costs
and enforcement expenses incurred by the Bank in collecting on and enforcing
its rights under the Indebtedness and incurred in connection with the
protection, defense or enforcement of this Guaranty in any litigation or
bankruptcy proceedings. The Indebtedness may be created and continued in any
amount, whether or not in excess of such principal amount, without reducing or
impairing the liability of the undersigned under this Guaranty. Any payment
made by the undersigned under this Guaranty shall be effective to reduce or
discharge the undersigned's liability only if accompanied by a written
transmittal document, received by the Bank and advising it that such payment is
made under this Guaranty for such purpose.
<PAGE> 10
The undersigned further acknowledges and agrees with Bank that:
1. No act or event need occur to establish the liability of the
undersigned under this Guaranty, and no act or event, except full payment and
discharge of all Indebtedness, shall exonerate and discharge the liability of
the undersigned under this Guaranty.
2. If the undersigned is dissolved or changes its legal form of
organization without the prior written consent of the Bank or becomes insolvent
(however defined) then the Bank may declare immediately due and payable the
obligations of the undersigned under this Guaranty, and the undersigned shall
immediately pay to the Bank the full amount of all Indebtedness, whether due
and payable or unmatured. If the undersigned voluntarily commences or there is
commenced involuntarily against the undersigned a case under the United States
Bankruptcy Code, the obligations of the undersigned under this Guaranty shall
immediately be due and payable without the necessity of demand or notice.
3. The undersigned will not exercise or enforce any right of
contribution, reimbursement, recourse or subrogation available to the
undersigned against the Borrower or any person liable for payment of the
Indebtedness, or as to any collateral securing the Indebtedness, unless and
until all of the Indebtedness shall have first been fully paid and discharged.
4. The Bank may in its discretion enter into transactions resulting in
the creation or continuance of Indebtedness, without notice to or the consent
or approval of the undersigned, regardless of whether or not any existing
relationship between the Borrower and the undersigned has been revoked and
regardless of whether this Guaranty has been revoked.
5. The liability of the undersigned shall not be reduced or impaired by
any of the following acts or events (which the Bank is expressly authorized to
do, omit or suffer from time to time, both before and after revocation of this
Guaranty, without notice to or the consent or approval of the undersigned): (i)
any acceptance of collateral security, guarantors, accommodation parties or
sureties for any or all of the Indebtedness; (ii) any one or more extensions or
renewals of Indebtedness (whether or not for a period longer than the original
period) or any modification of the interest rate, maturity or other contractual
terms applicable to all or part of the Indebtedness; (iii) any waiver or
indulgence granted to Borrower, any delay or lack of diligence in the
enforcement of the Indebtedness, or any failure to institute proceedings, file
a claim, give any required notices or otherwise protect any of the
Indebtedness; (iv) any full or partial release of, settlement with, or
agreement not to sue, Borrower or any other guarantor or other person liable
with respect to any of the Indebtedness; (v) any discharge of any evidence of
Indebtedness or the acceptance of any instrument renewing or refinancing the
Indebtedness; (vi) any failure to obtain collateral security (including rights
of setoff) for the Indebtedness, or to assure its proper or sufficient
creation, perfection, or priority, or to protect, insure, or enforce any
collateral security; or any modification, substitution, discharge, impairment,
or loss of such collateral security; (vii) any foreclosure or enforcement of
any collateral security by the Bank or any other creditor of the Borrower with
a security interest in the collateral security; (viii) any assignment or
transfer of
<PAGE> 11
any Indebtedness or documentation evidencing the Indebtedness; (ix) any order
of application of any payments or credits upon the Indebtedness from the
Borrower, the undersigned, or any other person; and (x) any election by the
Bank under Section 1111(b)(2) of the United States Bankruptcy Code.
6. The undersigned waives any and all defenses, claims and discharges of
Borrower, or any other obligor, pertaining to the Indebtedness, except the
defense of discharge by payment in full. Without limiting the generality of the
preceding sentence, the undersigned will not assert, plead or enforce against
the Bank any defense of waiver, release, discharge in bankruptcy, statute of
limitations, res judicata, statute of frauds, anti-deficiency statute,
misrepresentation or fraud, incapacity, minority, usury, illegality or
unenforceability which may be available to Borrower or any other party liable
for payment of any of the Indebtedness, or any setoff available against the
Bank to Borrower or any such other person, whether or not on account of a
related transaction. The undersigned shall be liable for any deficiency
remaining after foreclosure of any mortgage, deed of trust or security interest
securing the Indebtedness, whether or not the liability of the Borrower or any
other obligor for such deficiency is discharged pursuant to statute or judicial
decision.
7. The Bank may in its sole discretion demand that the undersigned
discharge its obligations under this Guaranty at any time, whether at the time
of the scheduled or accelerated maturity of the Indebtedness or at any earlier
or later time, and regardless of whether there has been a default with respect
to the Indebtedness. The Bank shall not be required to first resort for payment
of the Indebtedness to the Borrower or to any other person or their properties,
or to first enforce, realize upon, or exhaust any collateral security given to
secure the Indebtedness before enforcing this Guaranty. The undersigned waives
presentment, demand for payment, notice of dishonor or nonpayment, and protest
of any instrument evidencing part or all of the Indebtedness.
8. If any payment applied by the Bank to the Indebtedness is later set
aside, recovered, rescinded or required to be returned for any reason
(including, without limitation, the bankruptcy, insolvency or reorganization of
the Borrower or any other obligor), the Indebtedness to which such payment was
applied shall for the purposes of this Guaranty be deemed to have continued in
existence, notwithstanding such application, and this Guaranty shall be
enforceable as to such Indebtedness as fully as if such application had never
been made.
9. The liability of the undersigned under this Guaranty is in addition to
and cumulative with all other liabilities of the undersigned to the Bank as a
guarantor or otherwise, without limitation as to amount, unless the instrument
or agreement evidencing or creating such other liability specifically provides
to the contrary.
10. This Guaranty shall be enforceable regardless of the failure of other
persons to sign other guaranties of the Indebtedness. This Guaranty shall be
effective upon delivery to the Bank, without further act, condition or
acceptance by the Bank, shall be binding upon the undersigned and the heirs,
representatives, successors and assigns of the undersigned for the
<PAGE> 12
benefit of the Bank and its participants, successors and assigns. Any
invalidity or unenforceability of any provision or application shall not affect
other lawful provisions and applications of this Guaranty, which is severable.
This Guaranty may not be waived, modified, amended, terminated, released or
otherwise changed except by a writing signed by both the undersigned and the
Bank. This Guaranty is issued in and shall be governed by the laws of the State
of Texas.
11. The undersigned represents and warrants to the Bank that (i) the
undersigned is a corporation duly organized and existing in good standing and
has full power and authority to make and deliver this Guaranty; (ii) the
execution, delivery and performance of this Guaranty by the undersigned has
been duly authorized by all necessary action of its directors and shareholders
and does not and will not violate the provisions of, or constitute a default
under, any presently applicable law or its articles of incorporation or by-laws
or any agreement presently binding on it; (iii) this Guaranty has been duly
executed and delivered by the authorized officers of the undersigned and
constitutes its lawful, binding and legally enforceable obligation (subject to
the United States Bankruptcy Code and other similar laws generally affecting
the enforcement of creditors' rights); and (iv) the authorization, execution,
delivery and performance of this Guaranty does not require notification to,
registration with, or consent or approval by, any federal, state or local
regulatory body or administrative agency.
THIS GUARANTY IS SECURED BY AN EXISTING SECURITY AGREEMENT GIVEN BY THE
UNDERSIGNED.
IN WITNESS WHEREOF, this Guaranty has been duly executed on the above date
by the undersigned.
PATTERSON DRILLING PROGRAMS, INC.
By:
-------------------------------
Its:
------------------------------
Address:
----------------------------------
----------------------------------
----------------------------------
<PAGE> 13
GUARANTY BY CORPORATION
Norwest Bank Texas, Patterson Energy, Inc.
National Association 4510 Lamesa Highway
2310 Kell Boulevard Snyder, Texas 76550
Wichita Falls, Texas 76308 (the "Borrower")
(the "Bank")
June 3, 1997
FOR VALUABLE CONSIDERATION, and to induce the Bank in its sole
discretion to make loans or extend other accommodations to or for the account
of the Borrower, the undersigned gives this Guaranty by Corporation (the
"Guaranty") and absolutely and unconditionally guarantees to the Bank the full
and prompt payment of each and every debt, liability or obligation which the
Borrower may now or at any time in the future owe to the Bank (the
"Indebtedness"). This Guaranty is an absolute, unconditional and continuing
guaranty of payment of the Indebtedness and shall continue to be binding upon
the undersigned, whether or not all Indebtedness is paid in full, until this
Guaranty is revoked prospectively in writing as to future transactions. Such
revocation shall not be effective until actually received in writing by the
Bank and then shall not be effective as to Indebtedness existing or committed
to at the time of revocation, and shall not be effective as to renewals,
extensions, or refinancings of existing Indebtedness, whether such Indebtedness
is renewed before or after receipt of such notice of revocation.
The liability of the undersigned under this Guaranty shall include
accrued interest and all attorneys' fees, collection costs and enforcement
expenses incurred by the Bank in collecting on and enforcing its rights under
the Indebtedness, and all such costs and expenses incurred by the Bank in
connection with the protection, defense, or enforcement of this Guaranty in any
litigation or bankruptcy proceedings. The Bank may apply any sums received by
or available to the Bank on account of the Indebtedness from Borrower or any
other person (except the undersigned), or from the Borrower's or other such
persons' properties or any collateral security or other source of payment, and
such application of proceeds or receipts shall not reduce or impair the
liability of the undersigned under this Guaranty.
Notwithstanding the preceding paragraph, the liability of the
undersigned under this Guaranty shall be limited to a principal amount of
$30,000,000.00, plus accrued interest and all attorneys' fees, collection costs
and enforcement expenses incurred by the Bank in collecting on and enforcing
its rights under the Indebtedness and incurred in connection with the
protection, defense or enforcement of this Guaranty in any litigation or
bankruptcy proceedings. The Indebtedness may be created and continued in any
amount, whether or not in excess of such principal amount, without reducing or
impairing the liability of the undersigned under this Guaranty. Any payment
made by the undersigned under this Guaranty shall be effective to reduce or
discharge the undersigned's liability only if accompanied by a written
transmittal document, received by the Bank and advising it that such payment is
made under this Guaranty for such purpose.
<PAGE> 14
The undersigned further acknowledges and agrees with Bank that:
1. No act or event need occur to establish the liability of the
undersigned under this Guaranty, and no act or event, except full payment and
discharge of all Indebtedness, shall exonerate and discharge the liability of
the undersigned under this Guaranty.
2. If the undersigned is dissolved or changes its legal form of
organization without the prior written consent of the Bank or becomes insolvent
(however defined) then the Bank may declare immediately due and payable the
obligations of the undersigned under this Guaranty, and the undersigned shall
immediately pay to the Bank the full amount of all Indebtedness, whether due
and payable or unmatured. If the undersigned voluntarily commences or there is
commenced involuntarily against the undersigned a case under the United States
Bankruptcy Code, the obligations of the undersigned under this Guaranty shall
immediately be due and payable without the necessity of demand or notice.
3. The undersigned will not exercise or enforce any right of
contribution, reimbursement, recourse or subrogation available to the
undersigned against the Borrower or any person liable for payment of the
Indebtedness, or as to any collateral securing the Indebtedness, unless and
until all of the Indebtedness shall have first been fully paid and discharged.
4. The Bank may in its discretion enter into transactions resulting in
the creation or continuance of Indebtedness, without notice to or the consent
or approval of the undersigned, regardless of whether or not any existing
relationship between the Borrower and the undersigned has been revoked and
regardless of whether this Guaranty has been revoked.
5. The liability of the undersigned shall not be reduced or impaired by
any of the following acts or events (which the Bank is expressly authorized to
do, omit or suffer from time to time, both before and after revocation of this
Guaranty, without notice to or the consent or approval of the undersigned): (i)
any acceptance of collateral security, guarantors, accommodation parties or
sureties for any or all of the Indebtedness; (ii) any one or more extensions or
renewals of Indebtedness (whether or not for a period longer than the original
period) or any modification of the interest rate, maturity or other contractual
terms applicable to all or part of the Indebtedness; (iii) any waiver or
indulgence granted to Borrower, any delay or lack of diligence in the
enforcement of the Indebtedness, or any failure to institute proceedings, file
a claim, give any required notices or otherwise protect any of the
Indebtedness; (iv) any full or partial release of, settlement with, or
agreement not to sue, Borrower or any other guarantor or other person liable
with respect to any of the Indebtedness; (v) any discharge of any evidence of
Indebtedness or the acceptance of any instrument renewing or refinancing the
Indebtedness; (vi) any failure to obtain collateral security (including rights
of setoff) for the Indebtedness, or to assure its proper or sufficient
creation, perfection, or priority, or to protect, insure, or enforce any
collateral security; or any modification, substitution, discharge, impairment,
or loss of such collateral security; (vii) any foreclosure or enforcement of
any collateral security by the Bank or any other creditor of the Borrower with
a security interest in the collateral security; (viii) any assignment or
transfer of
<PAGE> 15
any Indebtedness or documentation evidencing the Indebtedness; (ix) any order
of application of any payments or credits upon the Indebtedness from the
Borrower, the undersigned, or any other person; and (x) any election by the
Bank under Section 1111(b)(2) of the United States Bankruptcy Code.
6. The undersigned waives any and all defenses, claims and discharges of
Borrower, or any other obligor, pertaining to the Indebtedness, except the
defense of discharge by payment in full. Without limiting the generality of the
preceding sentence, the undersigned will not assert, plead or enforce against
the Bank any defense of waiver, release, discharge in bankruptcy, statute of
limitations, res judicata, statute of frauds, anti-deficiency statute,
misrepresentation or fraud, incapacity, minority, usury, illegality or
unenforceability which may be available to Borrower or any other party liable
for payment of any of the Indebtedness, or any setoff available against the
Bank to Borrower or any such other person, whether or not on account of a
related transaction. The undersigned shall be liable for any deficiency
remaining after foreclosure of any mortgage, deed of trust or security interest
securing the Indebtedness, whether or not the liability of the Borrower or any
other obligor for such deficiency is discharged pursuant to statute or judicial
decision.
7. The Bank may in its sole discretion demand that the undersigned
discharge its obligations under this Guaranty at any time, whether at the time
of the scheduled or accelerated maturity of the Indebtedness or at any earlier
or later time, and regardless of whether there has been a default with respect
to the Indebtedness. The Bank shall not be required to first resort for payment
of the Indebtedness to the Borrower or to any other person or their properties,
or to first enforce, realize upon, or exhaust any collateral security given to
secure the Indebtedness before enforcing this Guaranty. The undersigned waives
presentment, demand for payment, notice of dishonor or nonpayment, and protest
of any instrument evidencing part or all of the Indebtedness.
8. If any payment applied by the Bank to the Indebtedness is later set
aside, recovered, rescinded or required to be returned for any reason
(including, without limitation, the bankruptcy, insolvency or reorganization of
the Borrower or any other obligor), the Indebtedness to which such payment was
applied shall for the purposes of this Guaranty be deemed to have continued in
existence, notwithstanding such application, and this Guaranty shall be
enforceable as to such Indebtedness as fully as if such application had never
been made.
9. The liability of the undersigned under this Guaranty is in addition to
and cumulative with all other liabilities of the undersigned to the Bank as a
guarantor or otherwise, without limitation as to amount, unless the instrument
or agreement evidencing or creating such other liability specifically provides
to the contrary.
10. This Guaranty shall be enforceable regardless of the failure of other
persons to sign other guaranties of the Indebtedness. This Guaranty shall be
effective upon delivery to the Bank, without further act, condition or
acceptance by the Bank, shall be binding upon the undersigned and the heirs,
representatives, successors and assigns of the undersigned for the
<PAGE> 16
benefit of the Bank and its participants, successors and assigns. Any
invalidity or unenforceability of any provision or application shall not affect
other lawful provisions and applications of this Guaranty, which is severable.
This Guaranty may not be waived, modified, amended, terminated, released or
otherwise changed except by a writing signed by both the undersigned and the
Bank. This Guaranty is issued in and shall be governed by the laws of the State
of Texas.
11. The undersigned represents and warrants to the Bank that (i) the
undersigned is a corporation duly organized and existing in good standing and
has full power and authority to make and deliver this Guaranty; (ii) the
execution, delivery and performance of this Guaranty by the undersigned has
been duly authorized by all necessary action of its directors and shareholders
and does not and will not violate the provisions of, or constitute a default
under, any presently applicable law or its articles of incorporation or by-laws
or any agreement presently binding on it; (iii) this Guaranty has been duly
executed and delivered by the authorized officers of the undersigned and
constitutes its lawful, binding and legally enforceable obligation (subject to
the United States Bankruptcy Code and other similar laws generally affecting
the enforcement of creditors' rights); and (iv) the authorization, execution,
delivery and performance of this Guaranty does not require notification to,
registration with, or consent or approval by, any federal, state or local
regulatory body or administrative agency.
THIS GUARANTY IS SECURED BY AN EXISTING SECURITY AGREEMENT GIVEN BY THE
UNDERSIGNED.
IN WITNESS WHEREOF, this Guaranty has been duly executed on the above
date by the undersigned.
PATTERSON TRADING COMPANY, INC.
By:
-------------------------------
Its:
------------------------------
Address:
----------------------------------
----------------------------------
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