<PAGE> 1
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) January 23, 1998
PATTERSON ENERGY, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 0-22664 75-2504748
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(State or other jurisdiction of (Commission File (I.R.S. Employer
incorporation) Number) Identification No.)
</TABLE>
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.)
<PAGE> 2
ITEM 5. OTHER EVENTS.
On January 23, 1998 the Registrant issued the following press release:
PATTERSON ENERGY, INC. EXECUTES DEFINITIVE AGREEMENT WITH
ROBERTSON ONSHORE DRILLING COMPANY
SNYDER, TEXAS, January 23, 1998--PATTERSON ENERGY, INC.
(NADAQ/NM:PTEN) and Robertson Onshore Drilling Company ("Robertson") today
announced the execution of a definitive agreement for the acquisition by
Patterson of the outstanding common stock of Robertson. Consummation of the
acquisition is expected to occur during February 1998.
Under the terms of the agreement, Patterson will acquire all of the outstanding
common stock of Robertson in consideration for $40 million, payable, at the
election of Patterson, either $40 million in cash, or $30 million in cash and
the remaining $10 million in shares of Patterson common stock.
Upon completion of the transaction, Patterson will increase its contract
drilling fleet by 15 fully operable drilling rigs, 10 of which are located in
East Texas and five located in Louisiana and Mississippi, and a yard in Liberty
City, Texas. The rigs have depth capacities of 6,000 to 16, 000 feet.
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 gas companies and, to a lesser extent, is engaged in the development,
exploration, acquisition and production of oil and natural gas. Upon
consummation of this acquisition, Patterson will own 114 land-based drilling
rigs (107 of which are currently operable) making it the third largest provider
of contract drilling services in the United States based on fleet size.
For further information contact:
Patterson Energy, Inc.
Cloyce A. Talbott, Chairman and Chief Executive Officer
James C. Brown, Vice President and Chief Financial Officer
915-573-1104
Shimmerlik Corporate Communications
Warren M. Shimmerlik
212-247-5200
2
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) EXHIBITS.
2.1 Agreement and Plan of Merger dated January
20, 1998 among Patterson Energy, Inc.,
Patterson Onshore Drilling Company and
Robertson Onshore Drilling Company.
3
<PAGE> 4
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.
PATTERSON ENERGY, INC.
DATE: JANUARY 23, 1998 BY: /s/ James C. Brown
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James C. Brown
Vice-President-Finance
4
<PAGE> 5
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
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<S> <C>
2.1 Agreement and Plan of Merger dated January 20, 1998 among Patterson Energy,
Inc., Patterson Onshore Drilling Company and Robertson Onshore Drilling
Company.
</TABLE>
<PAGE> 1
AGREEMENT AND PLAN OF MERGER
AMONG
PATTERSON ENERGY, INC.
PATTERSON ONSHORE DRILLING COMPANY
AND
ROBERTSON ONSHORE DRILLING COMPANY
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
ARTICLE I
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
SECTION 1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
SECTION 1.2 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
SECTION 1.3 Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
SECTION 1.4 Articles of Incorporation, Bylaws and Directors . . . . . . . . . . . . . . . . . . . . . . . . -2-
SECTION 1.5 Conversion of Securities; Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . -2-
SECTION 1.6 No Fractional Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3-
SECTION 1.7 No Further Ownership Rights in Robertson Common Stock . . . . . . . . . . . . . . . . . . . . . -3-
SECTION 1.8 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3-
SECTION 1.9 Voting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3-
SECTION 1.10 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -4-
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -4-
SECTION 2.1 Organization, Standing and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -4-
SECTION 2.2 Authority; Non-Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -4-
SECTION 2.3 Capital Structure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
SECTION 2.4 SEC Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
SECTION 2.5 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
SECTION 2.6 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -7-
SECTION 2.7 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -8-
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ROBERTSON . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -8-
SECTION 3.1 Organization, Standing and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -8-
SECTION 3.2 Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -8-
SECTION 3.3 Ownership of Robertson Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -8-
SECTION 3.4 Authority; Non-Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
SECTION 3.5 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
SECTION 3.6 Absence of Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
SECTION 3.7 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
SECTION 3.8 Real and Personal Property; Title Thereto . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
SECTION 3.9 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
SECTION 3.10 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
SECTION 3.11 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
SECTION 3.12 Contracts and Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
</TABLE>
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<TABLE>
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SECTION 3.13 Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
SECTION 3.14 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
SECTION 3.15 Employee Benefit Plans; Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . -12-
SECTION 3.16 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
SECTION 3.17 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
SECTION 3.18 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
SECTION 3.19 Governmental Licenses and Permits; Compliance with Law . . . . . . . . . . . . . . . . . . . -14-
SECTION 3.20 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
SECTION 3.21 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
SECTION 3.22 Distributions to Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
SECTION 3.23 Workers' Compensation Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
SECTION 3.24 Employee Bonuses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
SECTION 3.25 Robertson Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
ARTICLE IV
REPRESENTATIONS AND WARRANTIES REGARDING PODC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
SECTION 4.1 Organization and Standing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
SECTION 4.2 Capital Structure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
SECTION 4.3 Authority; Non-Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
SECTION 5.1 Conduct of Business Pending the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
SECTION 5.2 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
ARTICLE VI
ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
SECTION 6.1 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
SECTION 6.2 Reasonable Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
SECTION 6.3 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -19-
SECTION 6.4 Robertson Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -19-
SECTION 6.5 Certain Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -20-
SECTION 6.6 Robertson Shareholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
SECTION 6.7 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
SECTION 6.8 Filing of Registration Statement on Form S-3. . . . . . . . . . . . . . . . . . . . . . . . . -21-
SECTION 6.9 Nasdaq National Market. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
SECTION 6.10 Insurance Rebate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
SECTION 6.11 Payment of Robertson Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
SECTION 6.12 Condition of Robertson Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
SECTION 6.13 Payment of Jefferies & Company, Inc. Transaction Fee . . . . . . . . . . . . . . . . . . . . -22-
</TABLE>
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<TABLE>
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SECTION 6.14 Discharge of Obligation under Stay Bonus and Salary Contingency Plan of Robertson . . . . . -22-
SECTION 6.15 Robertson Business and Financial Records . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
SECTION 6.16 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
SECTION 6.17 Delivery of Daily Drilling Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
SECTION 6.18 Fourth Quarter 1997 Robertson Dividend . . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
ARTICLE VII
CONDITIONS PRECEDENT TO THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
SECTION 7.1 Conditions to Each Party's Obligation to Effect the Merger. . . . . . . . . . . . . . . . . . -23-
SECTION 7.2 Conditions to Obligation of Robertson to Effect the Merger . . . . . . . . . . . . . . . . . -23-
SECTION 7.3 Conditions to Obligations of PEC and PODC to Effect the Merger . . . . . . . . . . . . . . . -25-
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
SECTION 8.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
SECTION 8.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
SECTION 8.3 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
SECTION 8.4 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -29-
ARTICLE IX
POST CLOSING COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -29-
SECTION 9.1 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -29-
ARTICLE X
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -29-
SECTION 10.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -29-
SECTION 10.2 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -31-
SECTION 10.3 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -31-
SECTION 10.4 Entire Agreement; No Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . -31-
SECTION 10.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -31-
SECTION 10.6 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -31-
SECTION 10.7 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -31-
SECTION 10.8 Enforcement of This Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -31-
SECTION 10.9 Jurisdiction and Venue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -32-
</TABLE>
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<TABLE>
<S> <C>
SCHEDULE I Shareholders of Robertson Onshore Drilling Company
EXHIBIT A Voting Agreement
EXHIBIT B Non-Competition Agreement of D.W. Robertson
EXHIBIT C Registration Rights Agreement
EXHIBIT D Form of Investment Representation Letter
</TABLE>
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<PAGE> 6
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of January 20, 1998
(this "Agreement"), among PATTERSON ENERGY, INC., a Delaware corporation
("PEC"), PATTERSON ONSHORE DRILLING COMPANY, a Texas corporation and a
wholly-owned indirect subsidiary of PEC ("PODC"), and ROBERTSON ONSHORE
DRILLING COMPANY, a Texas corporation ("Robertson") (PODC and Robertson being
hereinafter collectively referred to as the "Constituent Corporations").
WITNESSETH:
WHEREAS, the respective Boards of Directors of PEC, PODC and
Robertson have approved and declared fair to and advisable and in the best
interests of their respective stockholders the merger of Robertson with and
into PODC (the "Merger"), upon the terms and subject to the conditions set
forth herein, whereby each issued and outstanding share of Common Stock, par
value $1.00, of Robertson ("Robertson Common Stock") will be converted into the
consideration set forth and provided for herein;
WHEREAS, for federal income tax purposes, it is intended that
the Merger shall not qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code") and shall
be treated as a taxable sale of the assets of Robertson to PODC in exchange for
cash and PEC Shares (as defined below), if any, and PODC's assumption of
Robertson's liabilities followed by the distribution of the cash and PEC
Shares, if any, to the shareholders of Robertson in complete liquidation of
Robertson;
WHEREAS, it is intended that the Merger shall be recorded for
accounting purposes as a purchase; and
WHEREAS, PEC, PODC and Robertson desire to make certain
representations, warranties and agreements in connection with the Merger and
also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties agree
as follows:
<PAGE> 7
ARTICLE I
THE MERGER
SECTION 1.1 The Merger. Upon the terms and subject to the
conditions hereof, and in accordance with the Texas Business Corporation Act
("TBCA"), Robertson shall be merged with and into PODC at the Effective Time
(as hereinafter defined). Following the Merger, the separate corporate
existence of Robertson shall cease and PODC shall continue as the surviving
corporation (the "Surviving Corporation") under the name "Patterson Onshore
Drilling Company," d/b/a "Patterson Drilling Company," and shall succeed to and
assume all the rights and obligations of Robertson in accordance with the TBCA.
SECTION 1.2 Effective Time. The Merger shall become
effective when the Certificate of Merger (the "Certificate of Merger"),
executed in accordance with the relevant provisions of the TBCA, is filed with
the Secretary of State of the State of Texas. When used in this Agreement, the
term "Effective Time" shall mean the later of the date and time at which the
Certificate of Merger is accepted for record. The filing of the Certificate of
Merger shall be made as soon as practicable after the satisfaction or waiver of
the conditions to the Merger set forth herein.
SECTION 1.3 Effects of the Merger. The Merger shall have the
effects set forth in Section 5.06 of the TBCA.
SECTION 1.4 Articles of Incorporation, Bylaws and Directors.
The Articles of Incorporation and Bylaws of PODC, as in effect immediately
prior to the Effective Time, shall be the Articles of Incorporation and Bylaws
of the Surviving Corporation until thereafter changed or amended as provided
therein or by applicable law. The directors of PODC at the Effective Time
shall be the directors of the Surviving Corporation until their respective
successors have been duly elected or appointed in accordance with the Articles
of Incorporation and Bylaws of the Surviving Corporation or by applicable law.
SECTION 1.5 Conversion of Securities; Merger Consideration.
As of the Effective Time, by virtue of the Merger and without any action on the
part of any shareholder of Robertson, and subject to the provisions of Sections
1.6 hereof, the shares of Robertson Common Stock issued and outstanding
immediately prior to the Effective Time shall be converted into the right to
receive a total of $40 million, plus an amount payable in cash equal to 42% of
the taxable income of Robertson for the period from January 1, 1998, to the
close of business on the last day immediately preceding the date of Closing (as
defined below), with taxable income for that period to be determined in
accordance with accrual tax basis accounting, consistent with past practice.
The $40 million shall be payable, at the sole discretion of PEC and PODC, into
the right to receive either (i) $40 million in cash ("Cash Only"), or (ii) up
to $10 million in shares of PEC Common Stock ("PEC Shares") and the remainder
of the $40 million in cash ("Cash"), with the number of PEC Shares issuable in
this case equal to the quotient of the dollar amount (up to $10 million)
specified by PEC and PODC to be paid in PEC Shares divided by the Average Price
(as defined below). The PEC
<PAGE> 8
Shares and Cash or the Cash Only, as the case may be, are referred to herein as
the "Merger Consideration." For purposes of this Agreement, (a) "Average
Price" means the average of the daily closing price of the PEC Common Stock
(adjusted to reflect stock split referenced in Section 2.3 hereof) rounded to
four decimal places, as reported under Nasdaq National Market Issues Reports in
The Wall Street Journal for each of the first 15 consecutive Trading Days in
the period commencing 18 Trading Days prior to the date of the Closing, and (b)
"Trading Day" means a day on which the Nasdaq National Market is open for
trading. All such shares of Robertson Common Stock, when so converted, shall
no longer be outstanding and shall automatically be cancelled and retired and
each holder of a certificate representing shares of Robertson Common Stock (the
"Certificate") shall cease to have any rights with respect thereto, except the
right to receive the Merger Consideration and any cash, without interest, in
lieu of fractional shares to be issued or paid in consideration therefor in
accordance with Section 1.6.
SECTION 1.6 No Fractional Securities. In the event the
Merger Consideration consists of Cash and PEC Shares, no certificates
representing fractional shares of PEC Common Stock shall be issued. In lieu of
any such fractional securities, each holder of shares of Robertson Common Stock
who would otherwise have been entitled to receive a fraction of a share of PEC
Common Stock shall receive cash (without interest) in an amount equal to the
product of such fractional part of a share of PEC Common Stock multiplied by
the Average Price.
SECTION 1.7 No Further Ownership Rights in Robertson Common
Stock. All Merger Consideration issued and paid in accordance with the terms
hereof (including cash paid pursuant to Sections 1.6) shall be deemed to have
been issued and paid in full satisfaction of all rights pertaining to the
shares of Robertson Common Stock.
SECTION 1.8 Further Assurances. If, at any time after the
Effective Time, the Surviving Corporation shall consider or be advised that any
deeds, bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (a) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation, its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets
of either of the Constituent Corporations, or (b) otherwise to carry out the
purposes of this Agreement, the Surviving Corporation and its proper officers
and directors or their designees shall be authorized to execute and deliver, in
the name and on behalf of either of the Constituent Corporations in the Merger,
all such deeds, bills of sale, assignments and assurances and do, in the name
and on behalf of such Constituent Corporations, all such other acts and things
necessary, desirable or proper to vest, perfect or confirm its right, title or
interest in, to or under any of the rights, privileges, powers, franchises,
properties or assets of such Constituent Corporation and otherwise to carry out
the purposes of this Agreement.
SECTION 1.9 Voting Agreement. Simultaneously with the
execution of this Agreement, each shareholder of Robertson who is listed on
Schedule I attached hereto shall enter into an agreement with PEC,
substantially in form and substance as that set forth as Exhibit A attached
hereto, in which he agrees to vote all shares of Robertson Common Stock which
may be voted, or whose vote may be directed, by him in favor of the Merger at
the meeting of shareholders at which the Merger shall be considered.
<PAGE> 9
SECTION 1.10 Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of PEC in Snyder, Texas at 10:00 a.m. local time, on the second business day
after the day on which the last conditions set forth in Article VII hereof
shall have been fulfilled or waived, or at such other time and place as PEC and
Robertson shall agree.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PEC
PEC represents and warrants to Robertson as follows:
SECTION 2.1 Organization, Standing and Power. PEC (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 or Robertson 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 PEC and its subsidiaries taken
as a whole or Robertson, as the case may be.
SECTION 2.2 Authority; Non-Contravention. PEC has all
requisite power and authority to enter into this Agreement and to consummate
the Merger. The execution and delivery by PEC of this Agreement and the
consummation by PEC of the Merger have been duly authorized by all necessary
corporate action on the part of PEC. This Agreement has been duly executed and
delivered by PEC and (assuming the valid authorization, execution and delivery
of this Agreement by Robertson) constitutes a valid and binding obligation 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). 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 under, any provision of (i) the Certificate of
Incorporation or Bylaws of PEC, (ii) any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, instrument, permit, concession,
franchise or license applicable to PEC, or (iii) any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to PEC or any of its
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 PEC, materially impair the ability of PEC to
perform its obligations hereunder or under
<PAGE> 10
the Registration Rights Agreement 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 in connection with the execution and delivery of this Agreement
or is necessary for the consummation by PEC of the Merger, 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 Hart-Scott-Rodino Antitrust Improvements Act of 1976 (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 PEC or materially impair the ability of PEC 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 50,000,000 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) 31,533,244 shares of PEC Common Stock (gives effect to a two-for-one stock
split with a record date of January 9, 1998 and a distribution date of January
23, 1998) 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. Any PEC Shares issued as a part of the Merger
Consideration 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,
1996 (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) 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).
<PAGE> 11
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 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 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 of the transactions contemplated
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;
(iv) neither PEC nor any of its subsidiaries 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 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 (or, for purposes of Section 3.17,
Robertson) asserting liability or potential liability
(including without limitation, liability or potential
liability for investigatory costs, cleanup costs, governmental
response costs,
<PAGE> 12
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
(or, for purposes of Section 3.17 Robertson) 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 (or, for purposes of Section 3.17,
Robertson) 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 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 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 is
subject that would impair the ability of PEC 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.
<PAGE> 13
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ROBERTSON
Robertson represents and warrants to PEC and PODC as follows:
SECTION 3.1 Organization, Standing and Power. Robertson 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. Robertson is duly qualified
to do business, and is in good standing, in each jurisdiction where the
character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary. Except as set forth on the
disclosure schedule of Robertson dated as of the date of this Agreement,
previously delivered to PEC (the "Robertson Disclosure Schedule"), Robertson
has no subsidiaries.
SECTION 3.2 Capital Structure. The authorized capital stock
of Robertson consists of 1,000,000 shares of Robertson Common Stock. At the
close of business on the day immediately preceding the date of this Agreement,
(i) 164,264 shares of Robertson Common Stock were validly issued, fully paid
and nonassessable and free of preemptive rights, and (ii) 4,000 shares of
Robertson Common Stock were reserved for issuance upon the exercise of the then
outstanding options for Robertson Common Stock (the "Robertson Stock Options").
Except for the Robertson Stock Options, there are no options, warrants, rights,
commitments, agreements, arrangements or undertakings of any kind to which
Robertson is a party or by which it is bound obligating Robertson to issue,
additional shares of capital stock of the Company.
SECTION 3.3 Ownership of Robertson Common Stock. Section 3.3
of the Robertson Disclosure Schedule sets forth a true and correct list of the
ownership of Robertson Common Stock by the stockholders of Robertson. Each of
the stockholders of Robertson beneficially holds such Robertson Common 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. None of the stockholders of
Robertson is a party to (i) any option, warrant, purchase right, or other
contract or commitment that could require him to sell, transfer, or otherwise
dispose of any Robertson Common Stock (other than pursuant to this Agreement)
or (ii) any voting trust, proxy, or other agreement or understanding with
respect to the Robertson Common Stock. For purposes of this Agreement "Liens"
means liens, mortgages, pledges, security interests, encumbrances, claims or
charges of any kind.
SECTION 3.4 Authority; Non-Contravention. Robertson has all
requisite power and authority to enter into this Agreement and to consummate
the Merger. This Agreement has been duly executed and delivered by Robertson
and (assuming the valid authorization, execution and delivery of this Agreement
by PEC and PODC) constitutes a valid and binding obligation of Robertson
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 Merger 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
<PAGE> 14
any of the properties or assets of Robertson under, any provision of (i) the
Articles of Incorporation or Bylaws of Robertson (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 Robertson or
(iii) any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Robertson or any of its respective properties or assets, other
than, in the case of clauses (ii) or (iii), any such conflicts, violations,
defaults, rights, liens, losses, security interests, charges or encumbrances
that, individually or in the aggregate, would not have a Material Adverse
Effect on Robertson, materially impair the ability of Robertson to perform its
obligations hereunder or prevent the consummation of the Merger. Except as set
forth on Section 3.4 of the Robertson Disclosure Schedule or such filings and
approvals as may be required under the Improvements Act, no filing or
registration with, or authorization, consent or approval of, any Governmental
Entity is required by or with respect to Robertson in connection with the
execution and delivery of this Agreement by Robertson or is necessary for the
consummation by Robertson of the Merger or any other transaction contemplated
by this Agreement.
SECTION 3.5 Financial Statements. Included in Section 3.5 of
the Robertson Disclosure Schedule are the following unaudited financial
statements (collectively, the "Robertson Financial Statements") of Robertson;
(i) balance sheets as of December 31, 1996 and November 30, 1997; and (ii)
statements of income and statements of cash flows for (x) each of the four
years in the period ended December 31, 1996, and (y) the 11-month period ended
November 30, 1997.
Except as may be set forth in Section 3.5 of the Robertson
Disclosure Schedule, the Robertson Financial Statements (a) are complete and
correct in all material respects, (b) have been prepared in conformity with
accrual tax basis accounting consistently applied, and (c) present fairly the
financial condition of Robertson at the dates presented and the results of
operations of Robertson for the periods covered. There does not, and there
will not be at Closing, exist any fact, event, condition or claim known to
Robertson which would cause a Material Adverse Change in the Robertson
Financial Statements as presented other than as set forth therein.
SECTION 3.6 Absence of Material Adverse Change. Except as
otherwise set forth in Section 3.6 of the Robertson Disclosure Schedule, there
has not been any Material Adverse Change with respect to Robertson since
November 30, 1997.
SECTION 3.7 Taxes. Except as otherwise set forth in Section
3.7 of the Robertson Disclosure Schedule: (i) all Tax Returns required to be
filed by Robertson have been filed or extensions have been validly obtained;
(ii) Tax Returns referred to in clause (i) are true and correct in all material
respects and have been completed in all material respects in accordance with
applicable law; (iii) all Taxes shown to be due on the Tax Returns referred to
in clause (i) have been timely paid or extensions have been duly obtained or
such taxes have been adequately provided for on Robertson's balance sheet or
are being timely and properly contested; (iv) Robertson has not waived any
statute of limitations in respect of Taxes of Robertson; (v) the Tax Returns
referred to in clause (i) have been examined by the Internal Revenue Service or
the appropriate state taxing authority or the period for assessment of the
Taxes in respect of such Tax Returns were required to be filed has expired;
(vi) no issues that have been raised in writing by the relevant taxing
authority in connection with the examination of the Tax Returns referred to in
clause (i) are currently pending; (vii) all deficiencies asserted or
assessments made as a result of any examination of the Tax Returns
<PAGE> 15
referred to in clause (i) by a taxing authority have been paid in full or
adequately provided for on Robertson's balance sheet or are being timely and
properly contested; (viii) Robertson has made available to PEC correct and
complete copies of all federal and state income Tax Returns, examination
reports, and statements of deficiencies assessed against or agreed to by
Robertson; Robertson duly elected on September 18, 1986, to be treated as an S
corporation pursuant to Section 1362(a) of the Internal Revenue Code of 1986,
as amended (the "Code"), and the corresponding provisions of the laws of the
State of Texas, if any, and is now and has been at all times since September
18, 1986, the date of its incorporation, an S corporation, and no taxing
authority has challenged the effectiveness of such election (x) approval of
Robertson's election to be treated as an S corporation has been received from
the Internal Revenue Service and such approval has been recognized by the State
of Texas; (xi) no event has or will occur before the Closing Date to have
caused Robertson's election to be treated as an S corporation to be terminated
in any manner; and (xii) Robertson shall not be subject to a tax on built-in
gains under Section 1374 of the Code as a result of the Merger. For purposes
of this Agreement, (a) "Tax" (and, with correlative meaning, "Taxes" and
"Taxable") means any federal, state, local or foreign income, gross receipts,
property, sales, use, license, excise, franchise, employment, payroll,
withholding, alternative or added minimum, ad valorem, transfer, severance or
excise tax, or any other tax, custom, duty, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest or
penalty, imposed by any governmental authority, and (b) "Tax Return" means any
return, report or similar statement required to be filed with respect to any
Tax (including any attached schedules), including, without limitation, any
information return, claim for refund, amended return or declaration of
estimated Tax.
SECTION 3.8 Real and Personal Property; Title Thereto. Set
forth in Section 3.8 of the Robertson Disclosure Schedule is a complete and
accurate schedule of (a) all real and personal property owned by the Company
having an individual fair market value in excess of $15,000, including, but not
limited to, all drilling rigs, related equipment and rolling stock, and (b) any
real or personal property held by Robertson under lease. Except as set forth
in Section 3.8 of the Robertson Disclosure Schedule, Robertson has good and,
with respect to real property, indefeasible title to all of such real property
and personal property, subject to no Liens except for (i) Liens for taxes not
yet delinquent or the validity of which is being contested in good faith, and
(ii) any Liens arising by operation of law securing obligations not yet
overdue. Any real or personal property held by Robertson under lease are held
under valid and enforceable leases which will continue in full force and effect
immediately after the Closing Date; Robertson is not in default with respect to
any such lease.
SECTION 3.9 Accounts Receivable. Set forth in Section 3.9 of
the Robertson Disclosure Schedule is a complete and accurate schedule of the
accounts receivable of Robertson as of November 30, 1997, as reflected in the
balance sheet as of that date included in the Robertson Financial Statements,
together with an accurate aging of those accounts. To the best knowledge of
Robertson, except as may be set forth in Section 3.9 of the Robertson
Disclosure Schedule, the accounts described in Section 3.9 have been collected
in full, or are collectible at their full amounts.
SECTION 3.10 Liabilities. There are no liabilities of
Robertson of any kind, whether contingent or fixed, other than (i) liabilities
disclosed or provided for in the balance sheet of Robertson as of November 30,
1997, included in the Robertson Financial Statements or disclosed in Section
3.10 of the Robertson Disclosure Schedule, or (ii) liabilities incurred in the
ordinary
<PAGE> 16
course of business since November 30, 1997, none of which, either individually
or in the aggregate, may be reasonably expected to be materially adverse to the
business, assets, condition (financial or otherwise) or results of operations
of Robertson.
SECTION 3.11 Insurance. Set forth in Section 3.11 of the
Robertson Disclosure Schedule is an accurate and complete list and brief
description of all policies of fire and extended coverage, liability, worker
compensation and other forms of similar insurance or indemnity bonds held by
Robertson. Robertson is not in default in any material respect with respect to
any provisions of any such policy or indemnity bond and has not failed to give
any notice or present any claim thereunder in due and timely fashion, which
failure would materially adversely affect the condition (financial or
otherwise), results of operations, assets, liabilities or business of
Robertson.
SECTION 3.12 Contracts and Other Agreements. Except as
disclosed on Section 3.12 of the Robertson Disclosure Schedule, the Company is
not a party to or bound by any written or oral (i) employment, agency,
consulting or similar contract which cannot be terminated upon 30 days' notice
without liability to Robertson; (ii) lease, whether as lessor or lessee, with
respect to any real or personal property; (iii) contract or commitment
involving more than $25,000 a year; (iv) credit agreements; (v) guarantee,
suretyship, indemnification or contribution agreement; or (vi) other contracts
not made in the ordinary course of business.
SECTION 3.13 Records. The stock record books and minute
books of Robertson are complete and correct in all material respects, and
record all transactions required to be set forth concerning all proceedings,
consents, actions and meetings of the shareholders and the Board of Directors
of Robertson.
SECTION 3.14 Transactions with Affiliates. Except as
otherwise set forth in 3.14 of the Robertson Disclosure Schedule, no Affiliate
(as hereinafter defined) has any direct or indirect interest in or owns
directly or indirectly any asset or right owned by or used in the conduct of
the business of Robertson or is party to any contract, lease, agreement,
arrangement or commitment used in such business.
"Affiliate" as used in this Section 3.14 means a person which
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under, control with Robertson. For purposes of this
definition, the officers, directors and shareholders of Robertson shall be
deemed Affiliates.
SECTION 3.15 Employee Benefit Plans; Employment Agreements.
With respect to all the employee benefit plans, programs and arrangements of
Robertson, including, but not limited to, the Robertson Onshore Drilling
Company 401(k) Employees' Retirement Plan (the "Robertson Retirement Plan") and
related trust maintained for the benefit of any current or former employee,
officer or director of Robertson (collectively, the "Robertson Plans"), except
as would not, individually or in the aggregate, have a Material Adverse Effect
on Robertson: (i) none of the Robertson Plans is a multi-employer plan within
the meaning of ERISA; (ii) none of the Robertson Plans promises or provides
retiree medical or life insurance benefits to any person, except as otherwise
required by law; (iii) each Robertson Plan intended to be qualified under
Section 401(a) of the Code has received a favorable determination letter from
the Internal Revenue Service that it is so qualified and nothing has occurred
since the date of such letter that could reasonably be
<PAGE> 17
expected to affect the qualified status of such Robertson Plan; (iv) each
Robertson Plan has been operated in all respects in accordance with its terms
and the requirements of applicable law; and (v) Robertson has not incurred any
direct or indirect liability under, arising out of or by operation of Title IV
of ERISA in connection with the termination of, or withdrawal from, any
Robertson Plan or other retirement plan or arrangement, and no fact or event
exists that could reasonably be expected to give rise to any such liability.
The aggregate accumulated benefit obligations of any Robertson Plan subject to
Title IV of ERISA do not exceed the fair market value of the assets of such
Robertson Plan. Except as set forth in Section 3.15 of the Robertson
Disclosure Schedule, Robertson has no Robertson Plans or any employment or
severance agreements with any of its employees.
SECTION 3.16 Labor Matters. (i) Robertson 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 Robertson, threatened,
with regard to employees of Robertson; (iii) there is no labor strike, material
slowdown, material work stoppage or other material labor controversy in effect,
or, to the knowledge of Robertson, threatened against Robertson; (iv) as of the
date hereof, no representation question exists, nor to the knowledge of any of
the Robertson are there any campaigns being conducted to solicit cards from the
employees of Robertson to authorize representation by a labor organization; (v)
Robertson is not party to, or is not otherwise bound by, any consent decree
with any governmental authority relating to employees or employment practices
of Robertson; (vi) Robertson has not incurred any liability under, and has
complied in all respects with, the Worker Adjustment Retraining Notification
Act, and no fact or event exists that could give rise to liability under such
Act; and (vii) except as disclosed in Section 3.16 of the Robertson Disclosure
Schedule, Robertson 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 Robertson.
SECTION 3.17 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 Robertson, to the knowledge of Robertson:
(i) Robertson 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 Robertson 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 Robertson of the transactions
contemplated hereby or the operation of the business of Robertson on
the date of the Closing;
<PAGE> 18
(iii) Robertson has not received any Environmental Claim,
nor has any Environmental Claim been threatened against Robertson;
(iv) Robertson 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 Robertson 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 Robertson under any
Environmental Laws.
SECTION 3.18 Litigation. Except as set forth in Section 3.18
of the Robertson Disclosure Schedule, there is no suit, action, investigation
or proceeding pending or, to the knowledge of Robertson, threatened against
Robertson 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 have a Material Adverse Effect on Robertson or, with respect to such
matters that are pending or threatened as of the date hereof, materially impair
the ability of Robertson to perform its obligations hereunder or to consummate
the Merger, and there is no judgment, decree, injunction, rule or order of any
court, governmental department, commission, board, bureau, agency,
instrumentality or arbitrator to which Robertson is subject that would have a
Material Adverse Effect on Robertson or, with respect to such items that are
outstanding and applicable as of the date hereof, materially impair the ability
of Robertson to perform its obligations hereunder or to consummate the Merger.
SECTION 3.19 Governmental Licenses and Permits; Compliance
with Law. Robertson has not received notice of any revocation or modification
of any federal, state, local or foreign governmental license, certification,
tariff, permit, authorization or approval, the revocation or modification of
which would have a Material Adverse Effect on Robertson. The conduct of the
business of Robertson complies with all statutes, laws, regulations,
ordinances, rules, judgments, orders, decrees or arbitration awards applicable
thereto, except for violations or failures to comply, if any, that,
individually or in the aggregate, would not have a Material Adverse Effect on
Robertson.
SECTION 3.20 Brokers. Except as set forth in Section 3.20 of
the Robertson Disclosure Schedule, 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 Robertson.
SECTION 3.21 Bank Accounts. A complete list of each bank
account maintained by Robertson, including safe deposit boxes maintained by
Robertson, the account balances and the
<PAGE> 19
names of the persons authorized to draw down upon or have access thereto is set
forth in Section 3.21 of the Robertson Disclosure Schedule.
SECTION 3.22 Distributions to Stockholders of Robertson.
Except as set forth in Section 3.22 of the Robertson Disclosure Schedule,
Robertson, since November 30, 1997, has not declared, set aside or paid any
dividends on, or made any other actual, constructive or deemed distributions in
respect of, any of its capital stock, or otherwise made any payments to any of
the stockholders of Robertson.
SECTION 3.23 Workers' Compensation Claims. Except as set
forth in Section 3.23 of the Robertson Disclosure Schedule, there are no
workers' compensation claims pending or, to the knowledge of Robertson,
threatened against Robertson.
SECTION 3.24 Employee Bonuses. Except as set forth in
Section 3.24 of the Robertson Disclosure Schedule, Robertson has paid no
bonuses to employees during calendar 1997.
SECTION 3.25 Robertson Shareholders. Schedule I attached
hereto sets forth a true and complete list of the holders of all outstanding
shares of Robertson Common Stock.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES REGARDING PODC
PEC and PODC jointly and severally represent and warrant to
Robertson as follows:
SECTION 4.1 Organization and Standing. PODC is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Texas. PODC was organized solely for the purpose of acquiring
Robertson and engaging in the transactions contemplated by this Agreement and
has not engaged in any business since it was incorporated which is not in
connection with the Merger and this Agreement.
SECTION 4.2 Capital Structure. The authorized capital stock
of PODC consists of 1,000 shares of common stock, par value $0.01 per share,
all of which are validly issued and outstanding, fully paid and nonassessable
and are owned by Patterson Drilling Company ("PDC"), a wholly-owned direct
subsidiary of PEC, free and clear of all liens, claims and encumbrances.
SECTION 4.3 Authority; Non-Contravention. PODC has all
requisite power and authority to enter into this Agreement and to consummate
the Merger and other transactions contemplated hereby. The execution and
delivery of this Agreement by PODC, the performance by PODC of its obligations
hereunder and the consummation by of the transactions contemplated hereby have
been duly authorized by its Board of Directors and PDC as its sole stockholder,
and, except for the corporate filings required by state law, no other corporate
proceedings on the part of PODC are necessary to authorize this Agreement and
the Merger and the other transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by PODC and (assuming the due
authorization, execution and delivery of this Agreement by PODC) constitutes a
valid and binding obligation of PODC enforceable against PODC in accordance
with its terms, except to the extent enforceability may be limited by
bankruptcy, insolvency,
<PAGE> 20
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
transactions contemplated hereby 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 PODC
under, any provision of (i) the Articles of Incorporation or Bylaws of PODC
(true and complete copies of which as of the date hereof have been delivered to
Robertson) of PODC, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license applicable to PODC, or (iii) any judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to PODC or any of its 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 or in the aggregate, would not have a
Material Adverse Effect on PODC, materially impair the ability of PODC to
perform its obligations hereunder or prevent the consummation of any of the
transactions contemplated hereby.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 5.1 Conduct of Business Pending the Merger.
(a) Actions. During the period from the date of this
Agreement through the Effective Time, unless PEC consents thereto in writing
(which consent will not be unreasonably withheld), Robertson shall, in all
material respects, carry on its business 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 preserve intact its current
business organizations, keep available the services of its current officers and
employees and preserve its relationships with customers, suppliers and others
having business dealings with it to the end that its goodwill and ongoing
businesses shall be unimpaired at the Effective Time. Without limiting the
generality of the foregoing, prior to the Effective Time, except as otherwise
expressly contemplated by this Agreement (including, but not limited to,
Section 5.1 of the Robertson Disclosure Schedule), Robertson shall not, without
the prior written consent PEC:
(i) (x) declare, set aside or pay any dividends on, or make
any other actual, constructive or deemed distributions in respect of,
any of its capital stock, or otherwise make any payments to its
shareholders in their capacity as such, except as permitted by Section
6.18 of this Agreement; (y) split, combine or reclassify any of its
capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of
its capital stock, or (z) purchase, redeem or otherwise acquire any
shares of capital stock of its or any other securities thereof or any
rights, warrants or options to acquire any such shares or other
securities;
<PAGE> 21
(ii) issue, deliver, sell, pledge, dispose of or otherwise
encumber any shares of its capital stock, any other voting securities
or equity equivalent or any securities convertible into, or grant any
rights, warrants or options to acquire, any such shares, voting
securities or convertible securities or equity equivalent (other than
the issuance of Robertson Common Stock during the period from the date
of this Agreement through the Effective Time upon the exercise of
Robertson Stock Options outstanding as of the date of this Agreement
in accordance with their current terms);
(iii) amend its Articles of Incorporation or amend in any
material respects its Bylaws;
(iv) acquire, merge or consolidate with, or purchase a
portion of the assets of or equity in, any corporation, partnership,
association or other business organization or division thereof or
otherwise acquire any assets, in each case that involves a transaction
exceeding $25,000 in the aggregate, or commence any proceedings with
respect thereto, or engage in any negotiations with any person or
entity concerning any such transaction;
(v) except in the ordinary course of business, sell, lease or
otherwise dispose of or agree to sell, lease or otherwise dispose of
any of its assets that is material, individually or in the aggregate;
(vi) make any capital expenditures, except in the ordinary
course of business and as otherwise set forth on Section 5.1 of the
Robertson Disclosure Schedule;
(vii) (A) pay, discharge, or satisfy any material claims,
liabilities, or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), except for the payment,
discharge or satisfaction of its liabilities or its obligations in the
ordinary course of business or in accordance with their terms as in
effect on the date hereof; (B) adopt a plan of complete or partial
liquidation or resolutions providing for or authorizing such a
liquidation or a dissolution, restructuring, recapitalization or
reorganization; (C) enter into any collective bargaining agreement,
successor collective bargaining agreement or amended collective
bargaining agreement; (D) change any accounting principle used by it,
except for such changes required to be implemented prior to the
Effective Time pursuant to generally accepted accounting principles;
(E) settle or compromise any litigation brought against it, other than
settlements or compromises of any litigation where the amount paid in
settlement or compromise (including without limitation the cost to it,
as the case may be, of complying with any provision of such settlement
or compromise other than cash payments) does not exceed $25,000,
exclusive of amounts covered by insurance; (F) enter into any new or
amend any existing drilling contract without the prior approval of A.
Glenn Patterson, President and Chief Operating Officer of PEC, which
consent will not be unreasonably withheld;
(viii) (A) enter into any new, or amend any existing,
severance agreement or arrangement, deferred compensation arrangement
or employment agreement with any officer, director or employee, except
that, it may hire additional employees to the extent deemed by its
management to be in its best interests; provided, that it may not
enter into any employment or severance agreement or any deferred
compensation arrangement with any such additional employees, (B) adopt
any new, or amend any existing, incentive, retirement
<PAGE> 22
or welfare benefit arrangements, plans or programs for the benefit of
current, former or retired employees (other than amendments required
by law or to maintain the tax qualified status of such plans under the
Code), or (C) grant any increases in employee compensation, other than
in the ordinary course or pursuant to promotions, in each case
consistent with past practice (which shall include normal individual
periodic performance reviews and related compensation and benefit
increases);
(ix) (y) incur any indebtedness for borrowed money or
guarantee any such indebtedness in excess of $25,000 or issue or sell
any debt securities or guarantee any debt securities of others or (z)
make any loans, advances or capital contributions to, or investments
in, any other person, other than PEC; or
(x) authorize or enter into any agreement to do any of the
foregoing.
(b) Advice of Changes. Robertson shall promptly advise
PEC orally and in writing of any change or event which would have a Material
Adverse Effect on Robertson or would prohibit the Merger or the other
transactions contemplated hereby.
SECTION 5.2 No Solicitation. From and after the date hereof,
Robertson will not, and will cause its officers, directors, employees, agents
and other representatives not to, directly or indirectly, solicit or initiate
any offer for Robertson, or for the contract drilling operations of Robertson,
and not to solicit or initiate, directly or indirectly, discussions,
negotiations, considerations or inquiries concerning an offer for Robertson,
from any person, or engage in discussions or negotiations relating thereto, or
provide to any other person any information or data relating to Robertson or
the contract drilling operations of Robertson 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 VI
ADDITIONAL AGREEMENTS
SECTION 6.1 Fees and Expenses. All costs and expenses
incurred by PEC or PODC in connection with this Agreement and the transactions
contemplated hereby shall be paid by PEC; such costs and expenses incurred by
Robertson shall be paid by Robertson.
SECTION 6.2 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 Merger and the other
transactions contemplated by this Agreement and the prompt satisfaction of the
conditions hereto.
<PAGE> 23
SECTION 6.3 Public Announcements. Before issuing any press
release or otherwise making any public statements with respect to the
transactions contemplated by this Agreement, PEC, on the one hand, and
Robertson, on the other, will consult with each other, and will undertake
reasonable efforts to agree upon the terms of such press release, and shall not
issue any such press release or make any such public statement prior to such
consultation, except as may be required by applicable law or by obligations
pursuant to any listing agreement with the Nasdaq National Market.
SECTION 6.4 Robertson Indemnification. After the Effective
Time, the shareholders of Robertson set forth on Schedule I hereof
(collectively, the "Indemnifying Shareholders") shall severally, but not
jointly, indemnify and hold PEC and PODC harmless against and in respect of all
actions, suits, demands, judgments, costs and expenses (including reasonably
attorneys' fees of PEC or PODC), in excess of $250,000 in the aggregate
("Basket Amount"), but not to exceed $5 million in the aggregate ("Maximum
Indemnification Limitation") relating to any misrepresentation, breach of any
representation or warranty or non-fulfillment of any agreement on the part of
Robertson under this Agreement; provided, however, that neither the Basket
Amount nor the Maximum Indemnification Limitation shall be applicable in
respect of any claim for indemnification relating to (a) any actions, suits,
demands, etc. (including reasonable attorneys' fees), in excess of $10,000 in
the aggregate, by, or in respect to, Melinda McClure and her employment with
Robertson (the "McClure Claim"), or (b) any actions, suits, demands, etc.
(including reasonable attorneys' fees), arising out of or based upon a
fraudulent misrepresentation by Robertson in this Agreement, or (c) any claim
for indemnification relating to unpaid or undisclosed federal income tax
liabilities of Robertson. Any written notice of claim for indemnification
shall be given to R.M. Brackbill, as representative of the Indemnifying
Shareholders, by PEC or PODC within 30 days after it has knowledge of any
misrepresentation or breach of warranty or non-fulfillment of any agreement on
the part of the Indemnifying Shareholders, which may give rise to a claim for
indemnification. The indemnification obligation provided for in this Section
6.4 shall terminate and be of no further force and effect after 12 months from
the Effective Time, except (i) as to any representation or warranty as to which
a written notice of claim for indemnification has been given to R.M. Brackbill,
as representative of the Indemnifying Shareholders, prior to the expiration of
such 12-month period; (ii) for a claim for indemnification for unpaid or
undisclosed federal income tax liability of Robertson given to R.M. Brackbill,
as representative of the Indemnifying Shareholders, prior to the expiration of
the applicable period of limitations, and (iii) for any claim for
indemnification based upon the McClure Claim or a fraudulent misrepresentation
by Robertson in this Agreement. Except as provided in the last sentence of
this Section 6.4, the indemnification obligation provided for in this Section
6.4 shall be shared by the respective Indemnifying Shareholders on a pro rata
basis, based on the number of shares of Robertson Common Stock held by each
such Indemnifying Shareholder on the Effective Time as compared to the total
number of shares of Robertson Common Stock outstanding at the Effective Time
("Pro Rata Share"). No Indemnifying Shareholder shall be liable to PEC and
PODC for more than his Pro Rata Share of any claim for indemnification made
hereunder by PEC or PODC. Notwithstanding anything in this Section 6.4 to the
contrary, the indemnification obligation of each of the Indemnifying
Shareholders provided for herein, as it relates to Sections 1.9, 3.25, 6.5(b)
and 6.11 hereof, is being made severally by each such Indemnifying Shareholder
only with respect to himself and no other Indemnifying Shareholder, and,
accordingly, no Indemnifying Shareholder will have any liability to PEC or PDC
for indemnification under this Section 6.4 as it relates to Sections 1.9, 3.25,
6.5 or 6.11 unless such Indemnifying Shareholder has personally caused the
breach of the representation or covenant contained in one or more of those
Sections. The indemnification obligation of Indemnifying Shareholders liable
to PEC or PODC for
<PAGE> 24
breach of Sections 1.9, 3.25, 6.5 and 6.11 shall be shared among such
Indemnifying Shareholders on a pro rata basis based upon the number of shares
of Robertson Common Stock held by each such Indemnifying Shareholder on the
Effective Time as compared to the total number of shares held by all of such
Indemnifying Shareholders on the Effective Time.
SECTION 6.5 Certain Tax Matters.
(a) The parties recognize and agree that the S election
of Robertson shall be terminated under Section 1362(d)(2) of the Code on the
Effective Time as a result of the Merger. The parties further agree that under
Section 1362(d)(2)(B), the termination will be effective on the Effective Time
and that under Section 1362(e)(1)(A), the S short year return for 1998 will be
for the period of January 1, 1998, through the Effective Time. Accordingly,
the parties agree that (i) the Merger shall be treated for federal income tax
purposes as a taxable sale of the assets of Robertson to PODC in exchange for
cash and PEC Shares, if any, and PODC's assumption of Robertson's liabilities
followed by the distribution of the PEC Shares and Cash or the Cash Only, as
the case may be, to the shareholders of Robertson in complete liquidation of
Robertson, and (ii) any gain or loss from the Merger shall be reportable in
such S short year, and all income taxes incurred as a result of the Merger
shall be timely paid by the Robertson shareholders.
(b) PEC, PODC, Robertson, and each of the Robertson
shareholders, hereby agree that the allocation of the purchase price for (i)
the drilling rigs and related equipment owned by Robertson at the Effective
Time will be based on an appraisal thereof to be prepared by M.E.L. Valuations,
Inc., Ben Wheeler, Texas, prior to Closing, and (ii) the other assets will be
mutually agreed upon by PEC and Robertson on or prior to Closing. PEC, PODC
and Robertson agree to file all tax returns, including Form 8594, on a basis
consistent with such allocation and the shareholders of Robertson agree to
reflect such allocation in the gain recognized in the S short-year return for
1998.
(c) The Indemnifying Shareholders shall be responsible
for causing to be filed any amended tax returns of Robertson for taxable
periods ending on or prior to the Effective Time which are required as a result
of an examination or adjustments made by taxing authorities, and for causing to
be paid by the parties responsible therefor when due any taxes resulting
therefrom. Any such amended returns shall be furnished to PEC for approval
(which approval shall not be unreasonably withheld), signature and filing at
least ten (10) business days prior to the due date for the filing of such
amended returns.
SECTION 6.6 Robertson Shareholder Approval. Robertson shall
promptly call a meeting of its shareholders for the purposes of voting upon the
Agreement and use its best efforts to obtain shareholder approval of the
Merger.
SECTION 6.7 Access to Information.
(a) Robertson 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 Effective
Time to all books, contracts, commitments and records relating to its
operations and, during such period, Robertson shall furnish promptly to PEC (i)
access to each report, schedule,
<PAGE> 25
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 Robertson, 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 disclose such
information to others without the prior written consent of Robertson. In the
event of termination of this Agreement for any reason, PEC shall promptly
return or destroy all non-public documents so obtained from Robertson 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 Robertson in any way detrimental to Robertson.
(b) No investigation pursuant to this Section 6.7 shall
affect any representation or warranty in this Agreement of Robertson or any
condition to the obligations of PEC.
SECTION 6.8 Filing of Registration Statement on Form S-3. In
the event PEC Shares are issued as a part of the Merger Consideration, PEC
agrees to file a Registration Statement on Form S-3 with the SEC on the
Effective Time covering the distribution of the PEC Shares and further agrees
to use its reasonable 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 C.
SECTION 6.9 Nasdaq National Market. PEC shall use its
reasonable best efforts to list on the Nasdaq National Market, upon official
notice of issuance, any PEC Shares issued as a part of the Merger
Consideration.
SECTION 6.10 Insurance Rebate. Any Workman's Compensation
premium rebate accrued for the year ended December 31, 1997, and any such
rebate accrued for the period from January 1, 1998, through the Effective Time
will remain an asset of Robertson.
SECTION 6.11 Payment of Robertson Taxes. All income taxes
due with respect to taxable income of Robertson for fiscal year 1997 and for
the period from January 1, 1998, to the Effective Time including with respect
to the Merger, will be paid by Robertson shareholders, and all ad valorem and
franchise taxes for calendar 1997 will have been paid by Robertson prior to
Closing; all ad valorem and franchise taxes for calendar 1998 will be paid by
the Surviving Corporation.
SECTION 6.12 Condition of Robertson Equipment. PEC and PODC
agree to accept the drilling rigs and related equipment and rolling stock owned
by Robertson and transferred to PODC as a part of the Merger on an "as is,
where is" basis.
SECTION 6.13 Payment of Jefferies & Company, Inc. Transaction
Fee. PEC agrees to pay to Jefferies & Company, Inc. ("Jefferies") at the
Effective Time a total of $362,500 otherwise due and payable at that time by
Robertson under the terms of the letter agreement, dated July 7, 1997, between
Robertson and Jefferies (the "Letter Agreement"); all other amounts remaining
due and payable to Jefferies under the Letter Agreement will be paid by the
Robertson shareholders to Jefferies at the Effective Time from the Merger
Consideration.
<PAGE> 26
SECTION 6.14 Discharge of Obligation under Stay Bonus and
Salary Contingency Plan of Robertson. Any amounts payable under Robertson's
Stay Bonus and Salary Contingency Plan, in the form previously delivered to
Patterson, will be paid by the Surviving Corporation following the Effective
Time in accordance with the terms of the Plan.
SECTION 6.15 Robertson Business and Financial Records. All
business and financial records of Robertson shall remain the property of
Robertson and transferred to PODC as a part of the Merger.
SECTION 6.16 Employee Benefits. All employee benefits plans
and programs of Robertson ("Robertson Employee Plans") shall survive the
Effective Time with the understanding that following the Effective Time, the
Board of Directors of the Surviving Corporation will review the Robertson
Employee Plans and determine the feasibility of maintaining the Robertson
Employment Plans following the Merger. To the extent one or more of the
various Robertson Employee Plans are terminated, employees of Robertson who
continue as employees of the Surviving Corporation shall be provided with
employee benefits under PEC plans and programs (including, but not limited to,
stock option, life insurance, medical, profit sharing (including 401(k)),
severance and salary continuation as fringe benefits).
SECTION 6.17 Delivery of Daily Drilling Reports. Commencing
on the day following the date of this Agreement and continuing each day up to
and including Closing, Robertson shall fax the daily drilling report for each
of its drilling rigs to PEC (Attention: A. Glenn Patterson, President and Chief
Operating Officer, Fax: (915) 573-0281) on a same-day basis and inform A. Glenn
Patterson of any operational problems with any of the wells then in process of
being drilled.
SECTION 6.18 Fourth Quarter 1997 Robertson Dividend. If not
paid prior to the date of this Agreement, Robertson may pay a dividend to its
shareholders in an amount not to exceed 42% of taxable income for the fourth
calendar quarter of 1997, with taxable income to be determined in accordance
with accrual tax basis accounting, consistently applied. No other dividends or
distributions shall be paid or made by Robertson to its shareholders.
ARTICLE VII
CONDITIONS PRECEDENT TO THE MERGER
SECTION 7.1 Conditions to Each Party's Obligation to Effect
the Merger. The respective obligations of each party to effect the Merger
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. In the event the PEC
Shares are to be issued as a part of the Merger Consideration, the PEC Shares
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,
<PAGE> 27
decree, injunction or other order (whether temporary, preliminary or permanent)
which is then in effect and has the effect of prohibiting the Merger 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) Improvement Acts Waiting Period. The applicable
waiting period under the Improvements Act shall have expired or been
terminated.
SECTION 7.2 Conditions to Obligation of Robertson to Effect
the Merger. The obligation of Robertson to effect the Merger shall be subject
to the fulfillment at or prior to the Closing of the following additional
conditions; provided that Robertson may waive any of such conditions in its
sole discretion:
(a) Performance of Obligations; Representations and
Warranties. PEC and PODC 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
PODC 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 PODC shall have
furnished to Robertson a certificate, dated the Closing, signed by the
respective appropriate officers of PEC and PODC, certifying to the effect that
to the best of the knowledge and belief of each of them, the conditions set
forth in Section 7.1 and Section 7.2(a) have been satisfied in full.
(c) Opinion of Baker & Hostetler LLP. Robertson shall
have received an opinion from Baker & Hostetler LLP, counsel to PEC and PODC,
dated the date of Closing, substantially to the effect set forth in the
following subparagraphs, provided that subparagraphs (iii), (vii) and (viii)
and the reference in subparagraph (iv) to the Registration Rights Agreement
will not be included in such opinion if PEC Shares are not issued as a part of
the Merger Consideration:
(i) The incorporation, existence and good
standing of PEC and PODC are as stated in this Agreement; the
authorized shares of PEC and PODC 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 PODC 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 and
PODC, as the case may be, and (assuming due and valid authorization,
execution and delivery by Robertson) constitutes the legal, valid and
binding agreement of PEC and PODC, enforceable against PEC and PODC 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).
<PAGE> 28
(iii) PEC has full corporate power and authority to
execute, deliver and perform the Registration Rights Agreement and the
Registration Rights Agreement has been duly authorized, executed and
delivered by PEC and (assuming due and valid execution and delivery by
the Robertson Shareholders of the Registration Rights Agreement)
constitutes the legal, valid and binding agreement of PEC enforceable
against PEC in accordance with its terms, except with respect to the
indemnification provisions thereof, as to which no opinion will be
expressed by such counsel, and 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 PODC
of this Agreement and by PEC of the Registration Rights Agreement,
will not violate the Certificate [Articles] of Incorporation or Bylaws
of PEC or PODC, as the case may be, 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 PODC 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
PODC 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 PODC by any Governmental Entity which seek to
restrain, prohibit or invalidate the transactions contemplated by this
Agreement.
(vii) The PEC Shares to be issued pursuant to this
Agreement, when so issued, will be duly authorized, validly issued and
outstanding, fully paid and nonassessable.
(viii) The PEC Shares have been authorized for
listing on the Nasdaq National Market subject to official notice of
issuance.
In rendering such opinion, counsel for PEC may rely as to matters of fact upon
the representations of officers of PEC or PODC 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. In the event
that the PEC Shares are to be issued as a part of the Merger Consideration, PEC
shall have filed a Registration Statement on Form S-3 with the SEC relating to
the PEC Shares.
<PAGE> 29
(e) Registration Rights Agreement. In the event that the
PEC Shares are to be issued as a part of the Merger Consideration, PEC shall
have executed and delivered the Registration Rights Agreement in the form
attached hereto as Exhibit C.
(f) Delivery of Merger Consideration. PEC shall have
made delivery of the Merger Consideration.
SECTION 7.3 Conditions to Obligations of PEC and PODC to
Effect the Merger. The obligations of PEC and PODC to effect the Merger 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. Robertson 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
Robertson 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. Robertson shall have
furnished to PEC a certificate, dated the Closing, certifying to the effect
that to the best of the knowledge and belief of Robertson, the conditions set
forth in Section 7.1 and Section 7.3(a) have been satisfied.
(c) Opinion of John L. Roach, Esq, A Professional
Corporation. PEC shall have received an opinion of counsel from John L. Roach,
Esq, A Professional Corporation counsel to Robertson, dated the Closing,
substantially to the effect that:
(i) The incorporation, existence, good standing
and capitalization of Robertson are as stated in this Agreement; the
authorized shares of Robertson Common Stock are as stated in this
Agreement; all outstanding shares of Robertson Common Stock are duly
and validly authorized and issued, fully paid and non- assessable and
have not been issued in violation of any preemptive right of
stockholders; and, to the knowledge of such counsel, there is no
existing option, warrant, right, call, subscription or other agreement
or commitment obligating Robertson to issue or sell, or to purchase or
redeem, any shares of its capital stock other than as stated in this
Agreement.
(ii) Robertson has full corporate power and
authority to execute, deliver and perform this Agreement and this
Agreement has been duly authorized, executed and delivered by
Robertson, and (assuming the due and valid authorization, execution
and delivery by PEC and PODC) constitutes the legal, valid and binding
agreement of Robertson enforceable against Robertson 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 Robertson of
this Agreement will not violate the Articles of Incorporation or
Bylaws of Robertson and will not violate, result
<PAGE> 30
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 Robertson is
a party or to which it or any of its properties or assets may be
bound.
(iv) The Non-Competition Agreement dated the date
of the Closing among PEC, PODC and D.W. Robertson constitutes the
legal, valid and binding agreement of D.W. Robertson enforceable
against 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
whether enforceability is considered in a proceeding in equity or at
law.
(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 Robertson
for 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 Robertson by any Governmental Entity which seeks to
restrain, prohibit or invalidate the transactions contemplated by the
Agreement.
In rendering such opinion, counsel for Robertson may rely as
to matters of fact upon the representations of officers of Robertson 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.
(d) Officer and Director Resignation Letters. The
Surviving Corporation shall have received a resignation letter dated the
Closing Date from each of the directors and officers of Robertson.
(e) Investment Representation Letter. In the event PEC
Shares are issued as a part of the Merger Consideration, each Robertson
shareholder shall have executed and delivered an investment representation
letter substantially in the form attached hereto as Exhibit D.
(f) Phase I Environmental Report. The conclusions
contained in any Phase I Environmental Report obtained by PODC (at its expense)
prior to Closing relating to the real property owned by Robertson shall be
satisfactory to PEC.
(g) Robertson Share Certificates. The Surviving
Corporation shall have received all of the Robertson share certificates from
the respective shareholders of Robertson duly endorsed to the Surviving
Corporation.
(h) Non-Competition Agreement. A Non-Competition
Agreement in the form attached hereto as Exhibit B shall have been executed and
delivered by PEC, PDC, PODC and D.W. Robertson, as the case may be.
<PAGE> 31
(i) Tax Opinion of Baker & Hostetler LLP. PEC shall have
received the opinion of Baker & Hostetler LLP, counsel to PEC, dated the
Effective Time, to the effect that the Merger will be a taxable transaction for
federal income tax purposes and, among other matters, the Surviving Corporation
will be entitled to a step-up in basis for the assets owned by Robertson
immediately prior to the Effective Time.
(j) Each of the Robertson shareholders set forth on
Schedule I attached hereto shall have executed this agreement.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1 Termination. This Agreement may be terminated at
any time prior to the date of Closing, whether before or after any approval by
the shareholders of Robertson:
(a) by mutual written consent of PEC and Robertson;
(b) by PEC if Robertson 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 Robertson prior to the date of such
termination, which failure to comply has not been cured within ten business
days following receipt by Robertson of notice of such failure to comply;
(c) by Robertson if PEC or PDC 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 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 Robertson if (i) the Effective Time
has not occurred on or prior to the close of business on March 31, 1998;
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 Merger 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; or
(e) by either PEC or Robertson 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 8.2 Effect of Termination. In the event of
termination of this Agreement by either PEC or Robertson, as provided in
Section 8.1, this Agreement shall forthwith become void and there shall be no
liability hereunder on the part of Robertson, PEC or PODC or their respective
<PAGE> 32
officers or directors; provided, however, that nothing contained in this
Section 8.2 shall relieve any party hereto from any liability for any breach of
this Agreement.
SECTION 8.3 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 8.4 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 IX
POST CLOSING COVENANTS
SECTION 9.1 Access to Information. The Surviving Corporation
agrees that it will (i) maintain the pre-closing business and financial records
of Robertson in the offices of PEC in Snyder, Texas for a period of up to six
years following the Closing Date, and (ii) provide the Robertson shareholders
and their respective financial and tax advisors access to such records during
PEC's normal business hours on three days' prior written notice to PEC, as set
forth in Article X hereof.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1 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 PODC, to:
Patterson Energy, Inc.
4510 Lamesa Highway
P.O. Drawer 1416
Snyder, Texas 79550
Attention: A. Glenn Patterson
President and Chief
Operating Officer
<PAGE> 33
with copies to:
Thomas H. Maxfield, Esq.
Baker & Hostetler LLP
303 East 17th Avenue, Suite 1100
Denver, Colorado 80203-1264
(b) if to Robertson, to:
Robertson Onshore Drilling Company
7557 Rambler Road
Suite 918, LB72
Dallas, Texas 75231
Attention: R.M. Brackbill
Chairman of the Board
with copies to:
John L. Roach, Esq.
John L. Roach, Inc.
A Professional Corporation
4150 Lincoln Plaza
500 North Akard
Dallas, Texas 75201
(c) if to the Indemnifying Shareholders, to:
(i) If before March 31, 1998, to:
R.M. Brackbill, as Representative
of the Indemnifying Shareholders
9148 Clear Lake Drive
Dallas, Texas 75225
(ii) If after March 31, 1998; to:
R.M. Brackbill, as Representative
of the Indemnifying Shareholders
11 Sarah Nash Lane
Dallas, Texas 75225
<PAGE> 34
with copies to:
John L. Roach, Esq.
John L. Roach, Inc.
A Professional Corporation
4150 Lincoln Plaza
500 North Akard
Dallas, Texas 75201
SECTION 10.2 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."
SECTION 10.3 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 10.4 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 7.2(b) and 7.3(b).
SECTION 10.5 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 10.6 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 10.7 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
<PAGE> 35
acceptable manner in order that the transactions be consummated as originally
contemplated to the fullest extent possible.
SECTION 10.8 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.
SECTION 10.9 Jurisdiction and Venue. Each party hereby
irrevocably submits to the exclusive jurisdiction of the United States District
Court for the Western District of Texas or any court of the State of Delaware
in any action, suit or proceeding arising from or in connection with this
Agreement, and agrees that any such action, suit or proceeding shall be brought
only in such court (and waives any objection based on forum non conveniens or
any other objection to venue therein).
<PAGE> 36
IN WITNESS WHEREOF, PEC, PODC and Robertson have executed this
Agreement as of the date first written above.
PEC:
PATTERSON ENERGY, INC.
By:
-------------------------------------
Cloyce A. Talbott
Attest: Chairman and Chief Executive Officer
- -------------------------
James C. Brown, Secretary
PATTERSON DRILLING COMPANY
By:
-------------------------------------
Attest: A. Glenn Patterson
President and Chief Operating Officer
- -------------------------
James C. Brown, Secretary
ROBERTSON:
ROBERTSON ONSHORE DRILLING COMPANY
By:
-------------------------------------
Attest: R.M. Brackbill
Chairman of the Board
- -------------------------
Edward J. Hutlas, Secretary
TO INDUCE PATTERSON ENERGY, INC. AND PATTERSON ONSHORE DRILLING
COMPANY TO ENTER INTO THIS AGREEMENT AND PLAN OF MERGER AND FOR OTHER GOOD AND
VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY
ACKNOWLEDGED, EACH OF THE UNDERSIGNED, BEING A SHAREHOLDER OF ROBERTSON ONSHORE
DRILLING COMPANY, HEREBY ACCEPTS AND AGREES TO BE BOUND BY THE PROVISIONS OF
SECTIONS 6.4, 6.5 AND 6.13 OF THE AGREEMENT.
<PAGE> 37
- ------------------------------ ------------------------------
H. Keith Arnold Elizabeth Bakwin
- ------------------------------ ------------------------------
E.M. Bakwin Michael Bakwin
- ------------------------------ ------------------------------
Louis A. Beecherl, Jr. Bobbie Sue Brackbill
- ------------------------------ ------------------------------
R.M. Brackbill R. Marshall Brackbill, Jr.
- ------------------------------ ------------------------------
Benjamin A. Brooks, Jr. Donald Chase
- ------------------------------ ------------------------------
Kathie Sue Goode Janie L. Goodman
- ------------------------------ WARREN STEVEN HASTINGS
Mary Louise Hargis REVOCABLE TRUST
By:
- ------------------------------ ---------------------------
Heather C. Henry Patty S. Hastings, Trustee
- ------------------------------ ------------------------------
James Michael Holcomb Patrick Henry
- ------------------------------ ------------------------------
Randy J. Hutlas Edward J. Hutlas
- ------------------------------ ------------------------------
D.W. Robertson Scott and Alice Ann Hutlas
SHANKS INTER VIVOS ------------------------------
SETTLEMENT TRUST Jason B. Selch
By:
--------------------------- ------------------------------
Alan J. Hunken, Trustee Mickey Wiggins
<PAGE> 38
SCHEDULE I
SHAREHOLDERS
OF
ROBERTSON ONSHORE DRILLING COMPANY
<TABLE>
<CAPTION>
SOCIAL
SHAREHOLDER SECURITY SHARES PERCENT ADDRESS
NUMBER
<S> <C> <C> <C> <C> <C>
1 H. Keith Arnold ###-##-#### 500 0.2972% 3312 Madeleine, McKinney, Texas 75070
2 Elizabeth Bakwin ###-##-#### 1,245 0.7399% 4733 N. Paulina Street, #3, Chicago, Illinois
60640-4445
3 E.M. Bakwin ###-##-#### 31,743 18.8650% 801 W. Madison Street, Chicago, Illinois 60607
4 Michael Bakwin ###-##-#### 13,074 7.7699% 335 Croton Dam Road, Ossining, New York 10562
5 Louis A. Beecherl, Jr. ###-##-#### 16,188 9.6206% 2911 Turtle Creek Boulevard, Suite 900, Dallas,
Texas 75219
6 Bobbie Sue Brackbill ###-##-#### 500 0.2972% 9148 Clear Lake Drive, Dallas, Texas 75225
7 R.M. Brackbill ###-##-#### 15,734 9.3508% 9148 Clear Lake Drive, Dallas, Texas 75225
8 R. Marshall Brackbill, Jr. ###-##-#### 500 0.2972% 3428 Granada Avenue, Dallas, Texas 75205
9 Benjamin A. Brooks ###-##-#### 600 0.3566% 9544 Brentgate, Dallas, Texas 75238
10 Donald Chase ###-##-#### 17,734 10.5394% 2911 Turtle Creek Blvd., Suite 900, Dallas, Texas
75219
11 Kathie Sue Goode ###-##-#### 500 0.2972% 9711 Vista View Lane, Austin, Texas 78750
12 Janie L. Goodman ###-##-#### 200 0.1189% 3314 Creekbend, Garland, Texas 75044
13 Mary Louise Hargis ###-##-#### 500 0.2972% 16234 Rainbow Lake Road, Houston, Texas 77095
14 Warren Steven Hastings ###-##-#### 8,094 4.8103% 2111 Woodhaven, Cape Girardeau, MO 63701
Revocable Trust
15 Heather C. Henry ###-##-#### 8,094 4.8103% 630 Crest Road, Palm Beach, Florida 33480
16 Patrick Henry ###-##-#### 8,094 4.8103% 450 Royal Palm Way, Suite 400, Palm Beach, Florida
33480
17 James Michael Holcomb ###-##-#### 300 0.1783% 12396 County Road 412, Tyler, Texas 75704
18 Edward J. Hutlas ###-##-#### 3,047 1.8108% 3 Kingsgate Court, Dallas, Texas 75225
19 Randy J. Hutlas ###-##-#### 500 0.2972% 3 Kingsgate Court, Dallas, Texas 75225
20 Scott and Alice Ann Hutlas ###-##-#### 500 0.2972% 230 Pennsylvania Shreveport, Louisiana 70105
21 Douglas W. Robertson ###-##-#### 29,250 17.3834% 6043 Meadowcrest, Dallas, Texas 75230
22 Jason B. Selch ###-##-#### 2,023 1.2023% 2538 N. Burling, Chicago, Illinois 60614
23 Shanks Inter Vivos 36-7073233 8,094 4.8103% 30 N. LaSalle St., Ste. 1400, Chicago, Illinois
Settlement Trust 60602
24 Mickey Wiggins ###-##-#### 1,250 0.7429% 1922 Cambridge Street, Bosier City, Louisiana 71112
----- ------
Total 168264 100.0000%
====== ========
</TABLE>
<PAGE> 39
EXHIBIT A
VOTING AGREEMENT
January ___, 1998
Patterson Energy, Inc.
4510 Lamesa Highway
P.O. Drawer 1416
Snyder, Texas 79550
Gentlemen:
The undersigned understands that Patterson Energy, Inc.
("PEC") is about to enter into an Agreement and Plan of Merger with Robertson
Onshore Drilling Company ("Robertson") (the "Agreement"). The Agreement
provides for the merger of Robertson with and into Patterson Onshore Drilling
Company ("PODC"), a wholly-owned indirect subsidiary of PEC (the "Merger") and
the conversion of outstanding shares of Robertson Common Stock into cash and,
at the option of PEC, shares of PEC Common Stock in accordance with the formula
therein set forth in the Agreement.
In order to induce PEC and PODC to enter into the Agreement,
and intending to be legally bound hereby, the undersigned, subject to the
conditions hereinafter stated, represents, warrants, and agrees that at the
Robertson Shareholders' Meeting contemplated by Section 6.6 of the Agreement
(the "Meeting"), and any adjournment thereof, the undersigned will, in person
or by proxy, vote or cause to be voted in favor of the Agreement and the Merger
the shares of Robertson Common Stock beneficially owned by the undersigned
individually or, to the extent of the undersigned's proportionate voting
interest, jointly with other persons, as well as, to the extent of the
undersigned's proportionate voting interest, any other shares of Robertson
Common Stock over which the undersigned may hereafter acquire beneficial
ownership in such capacities (collectively, the "Shares"). Subject to the
final paragraph of this Agreement, the undersigned further agrees that he will
use his reasonable best efforts to cause any other shares of Robertson Common
Stock over which he has or shares voting power to be voted in favor of the
Agreement and the Merger.
The undersigned further represents, warrants, and agrees that
beginning upon the authorization and execution of the Agreement by Robertson
until the earlier of (i) the consummation of the Merger or (ii) the termination
of the Agreement in accordance with its terms, the undersigned will not,
directly or indirectly:
(a) vote any of the Shares, or cause or permit any of the
Shares to be voted, in favor of any other sale of control, merger,
consolidation, plan of liquidation, sale of assets, reclassification, or other
transaction involving Robertson which would have the effect of assisting or
facilitating the acquisition of control by any person other than PEC or an
affiliate thereof over Robertson or any substantial portion of its
EX A-1
<PAGE> 40
Patterson Energy, Inc.
__________________________, 1998
Page 2
assets or assisting or facilitating the acquisition of control by any person
other than PEC or an affiliate, or Robertson. As used herein, the term
"control" means (1) the ability to direct the voting of 10 percent or more of
the outstanding voting securities of a person having ordinary voting power in
the election of directors or in the election of any other body having similar
functions or (2) the ability to direct the management and policies of a person,
whether through ownership of securities, through any contract, arrangement, or
understanding or otherwise.
(b) voluntarily sell or otherwise transfer any of the
Shares, or cause or permit any of the Shares to be sold or otherwise
transferred (i) pursuant to any tender offer, exchange offer, or similar
proposal made by any person other than PEC or an affiliate thereof, (ii) to any
person seeking to obtain control (as the term "control" is defined in paragraph
(a), above) of Robertson or any substantial portion of the assets of Robertson
or to any other person (other than PEC or an affiliate thereof) under
circumstances where such sale or transfer may reasonably be expected to assist
a person seeking to obtain such control, (iii) for the purpose of avoiding the
obligations of the undersigned under this agreement, or (iv) to any transferee
unless such transferee expressly agrees in writing to be bound by the terms of
this agreement in all events.
It is understood and agreed that the term "Shares" shall not
include any securities beneficially owned by the undersigned as a trustee or
fiduciary for another (unless such other person is affiliated with the
undersigned or is bound by an Agreement with PEC substantially similar to this
agreement), and that this agreement is not in any way intended to affect the
exercise by the undersigned of the undersigned's fiduciary responsibility in
respect of any such securities.
Very truly yours,
------------------------------
Accepted and Agreed to:
PATTERSON ENERGY, INC.
By:
-------------------------
Title:
----------------------
EX A-2
<PAGE> 41
EXHIBIT B
PATTERSON ENERGY, INC.,
PATTERSON ONSHORE DRILLING COMPANY
AND
PATTERSON DRILLING COMPANY
NON-COMPETITION AGREEMENT
THIS NON-COMPETITION AGREEMENT is made and entered into this
_____ day of January, 1998 (this "Agreement"), between and among PATTERSON
ENERGY, INC., a Delaware corporation ("PEC"), PATTERSON ONSHORE DRILLING
COMPANY, a Texas corporation ("PODC") wholly-owned indirectly by PEC, PATTERSON
DRILLING COMPANY, a Delaware corporation wholly-owned directly by PEC ("PDC"),
and DOUGLAS ROBERTSON ("D.W. Robertson"), an individual residing in Dallas,
Texas ("D.W. Robertson").
RECITALS:
A. Simultaneously with the execution of this Agreement,
PEC and PODC have consummated the transactions contemplated by that certain
Agreement and Plan of Merger dated January ___, 1998 (the "Merger Agreement"),
among PEC, PODC and Robertson Onshore Drilling Company, a Texas corporation
("Robertson"), providing for, among other things, the merger (the "Merger") of
Robertson into PODC.
B. D.W. Robertson is or was an officer, a director and a
shareholder of Robertson.
C. The execution and delivery of this Agreement is a
condition to the consummation of the Merger contemplated by the Merger
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 until _______________, 2001 ("Non-Compete Period").
EX B-1
<PAGE> 42
2. Covenant Not to Compete.
(a) D.W. Robertson covenants and agrees that during the
Non-Compete Period, D.W. Robertson shall not, without the prior written consent
of PEC, PODC 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 oil
and gas contract drilling business (the "Competitive Business") within the
so-called "Ark-La-Tex region" and the states of Texas and Mississippi;
provided, however, that D.W. Robertson may (i) 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, PODC,
PDC or any affiliate of PEC, PODC 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.W. Robertson is
prohibited from engaging in certain activities by this Section shall be
extended by the length of time during which D.W. Robertson 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.W. Robertson not to enter into competition
with PEC, PODC or PDC as set forth in Section 2(a) hereof is an essential
element of this Agreement and the Merger Agreement and that, but for the
agreement of D.W. Robertson to comply with such covenant, neither PEC, PODC nor
PDC would have agreed to enter into this Agreement or the Merger Agreement.
PEC, PODC and PDC on the one hand and D.W. Robertson 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, PODC, PDC and
their respective affiliates. D.W. Robertson 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.W.
Robertson.
3. Restrictions on Soliciting Business of PEC, PODC and
PDC.
D.W. Robertson further covenants and agrees that during the
Non-Compete Period, D.W. Robertson 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, PODC and PDC:
(a) Solicit or hire any of the employees of PEC, PODC or
PDC or solicit or take away any of PEC's, PODC's or PDC's customers, lessors,
or suppliers or attempt any of the foregoing:
EX B-2
<PAGE> 43
(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, PODC or PDC has with any customer, lessor,
employee, principal or supplier.
4. Specific Performance.
Without intending to limit the remedies available to PEC, PODC
or PDC, D.W. Robertson acknowledges that PEC, PODC or PDC will have no adequate
remedies at law if D.W. Robertson violates the terms of Section 2 or 3, hereof.
In such event, D.W. Robertson agrees that PEC, PODC 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, PODC or PDC from pursuing
any other remedies available to PEC, PODC or PDC (whether at law or in equity)
for such breach or threatened breach, including, without limitation, the
recovery of monetary damages from D.W. Robertson.
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, PODC, PDC and
D.W. Robertson.
(a) Representations and Warranties of PEC, PODC and PDC.
PEC, PODC and PDC hereby jointly and severally represent and warrant to D.W.
Robertson 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, PODC
and PDC; (iii) the execution of this Agreement by PEC, PODC 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, PODC and PDC.
(b) Representations and Warranties of D.W. Robertson.
D.W. Robertson hereby represents and warrants to PEC, PODC and PDC that: (i)
D.W. Robertson has the capacity and power to enter into and perform obligations
of D.W. Robertson under this Agreement; (ii) D.W. Robertson has duly and
validly executed this Agreement; (iii) the execution of this Agreement and
performance of obligations of D.W. Robertson hereunder do not require the
consent or approval of any other party; and (iv) this Agreement constitutes a
valid and binding obligation of D.W. Robertson.
EX B-3
<PAGE> 44
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 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, PODC or PDC may assign
this Agreement to a subsidiary or affiliate without the prior written consent
of D.W. Robertson.
(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.
EX B-4
<PAGE> 45
(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 PODC:
Patterson Onshore 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 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.W. Robertson:
D.W. Robertson
6043 Meadowcrest
Dallas, Texas 75230
EX B-5
<PAGE> 46
(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.
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
"PODC"
PATTERSON ONSHORE DRILLING COMPANY
By:
A. Glenn Patterson
President and Chief Operating Officer
[Signatures continued on following page]
EX B-6
<PAGE> 47
"PDC"
PATTERSON DRILLING COMPANY
By:
A. Glenn Patterson
President and Chief Operating Officer
"D.W. ROBERTSON"
D.W. ROBERTSON
EX B-7
<PAGE> 48
EXHIBIT C
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement ("Agreement") is made and
entered into this day of January, 1998, by and among PATTERSON ENERGY,
INC., a Delaware corporation ("PEC"), and each of the persons set forth on the
signature pages to this Agreement (pages ___ and ___) (collectively, the
"Robertson Shareholders").
A. Pursuant to that certain Agreement and Plan of Merger
dated of even date herewith ("Merger Agreement"), by and among PEC, Patterson
Onshore Drilling Company, a wholly-owned indirect subsidiary of PEC ("PODC"),
and Robertson Onshore Drilling Company ("Robertson"), PEC has agreed to issue
____________ shares ("Restricted Shares") of PEC's Common Stock, $0.01 par
value (the "Common Stock"), as partial consideration for the merger of
Robertson with and into PODC.
B. This Agreement is being entered into in connection
with and as a condition to the parties closing the transactions contemplated
under the Merger 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,
each of the Robertson Shareholders and his respective successors and assigns.
"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 any 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
EX C-1
<PAGE> 49
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.
"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).
"Securities Act" shall mean the Securities Act of 1933, or any
successor thereto, as the same shall be amended from time to time.
2. Restrictions on Transfer. The Restricted Shares were
acquired by each of the Robertson Shareholders from PEC for investment for his
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 the Robertson Shareholders acknowledges that the
Restricted Shares are "restricted securities" within the meaning of the
Securities Act.
3. 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 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 the Robertson Shareholders, or (ii) the expiration of twelve
(12) months after such effective date and furnish to D.W. Robertson 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 the
Robertson Shareholders 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;
EX C-2
<PAGE> 50
(b) furnish to each of the Robertson Shareholders 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
the Robertson Shareholders 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 Robertson
Shareholder may reasonably request; such documents, if any, incorporated by
reference in the Form S-3 or prospectus; and such other documents as the
Robertson Shareholders 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 the Robertson Shareholders
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 the Robertson
Shareholders 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 the Robertson Shareholders 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 the respective Robertson Shareholders, prepare and
furnish to the Robertson Shareholders 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 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;
and
(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. Indemnification.
4.1 Indemnification by PEC.
PEC will, and hereby does, indemnify and hold harmless the
respective Robertson Shareholders or Holders or any director, trustee, officer,
employee or controlling person of such holder
EX C-3
<PAGE> 51
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 any such Robertson Shareholder or Holder or any
director, trustee, officer, employee or controlling person of such Robertson
Shareholder or Holder becomes 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 statement under which the Restricted Shares 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
any such Robertson Shareholder or Holder or any director, trustee, officer,
employee or controlling person of any such Robertson Shareholder or Holder 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 case to the extent
that any losses, claims, damages, liabilities or expenses or actions or
proceedings in respect thereof arise out of or are 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 a Robertson Shareholder or Holder specifically stating that it is for use in
the preparation thereof. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of any such Robertson
Shareholder or Holder or any such director, trustee, officer, employee or
controlling person and shall survive the transfer of such securities by such
Robertson Shareholders or such Holders.
4.2 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 4, 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.
EX C-4
<PAGE> 52
4.3 Indemnification Unavailable.
If the indemnification provided for in this Section 4 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
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 4.4 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 any
Robertson Shareholder or Holder under this Section 4.4 shall be limited to the
net proceeds received by such Robertson Shareholder or Holder (as the case may
be).
4.4 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.
4.5 Indemnity Operative and in Full Force.
The indemnity and contribution agreements contained in this
Section 4 shall remain operative and in full force and effect regardless of any
termination of this Agreement.
5. Rule 144.
5.1 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 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;
EX C-5
<PAGE> 53
(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 any of the Robertson Shareholders or
Holders own any Restricted Shares, furnish to him as soon as reasonably
practicable after request a written statement by PEC as to its compliance with
the reporting 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.
5.2 Further Assurances. PEC shall take such action any
Robertson Shareholder or Holder may reasonably request from time to time to
enable him to sell Restricted 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 any Robertson Shareholder or Holder, PEC will deliver to him a
written statement as to whether it has complied with such requirements.
6. 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 the Robertson
Shareholders or Holders of at least 51% or more of the Restricted Shares.
7. Nominees for Beneficial Owners. In the event that
any Restricted Shares are held by a nominee for the beneficial owner thereof,
the beneficial owner thereof may, at its election, be treated as the holder of
such Restricted Shares for purposes of any request or other action by any
Robertson Shareholder or any Holder of Restricted Shares pursuant to this
Agreement or any determination of any number or percentage of shares of
Restricted Shares held by any Robertson Shareholder or Holder of Restricted
Shares contemplated by this Agreement. If the beneficial owner of any
Restricted Shares so elects, PEC may require assurances reasonably satisfactory
to it of such owner's beneficial ownership of such Restricted Shares.
8. 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:
8.1 if the Robertson Shareholders or any Holder, at the
address provided to PEC in writing by such Robertson Shareholder or Holder or
as shown on stock transfer books of PEC unless such Robertson Shareholder or
Holder has advised PEC in writing of a different address as to which notices
shall be sent to it under this Agreement, and
8.2 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 the Robertson Shareholders or Holders.
9. Successors and Assigns. PEC acknowledges and agrees
that the registration rights granted to the Robertson Shareholders in this
Agreement may be transferred and assigned by the respective Robertson
Shareholders in connection with any valid sale and assignment of the Restricted
Shares. All covenants and agreements in this Agreement by or on behalf of
either of the parties hereto will bind and inure
EX C-6
<PAGE> 54
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 the Robertson Shareholders or Holders.
10. 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.
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
Chairman and Chief Executive Officer
EX C-7
<PAGE> 55
ROBERTSON SHAREHOLDERS:
- ------------------------------ ------------------------------
H. Keith Arnold Elizabeth Bakwin
- ------------------------------ ------------------------------
E.M. Bakwin Michael Bakwin
- ------------------------------ ------------------------------
Louis A. Beecherl, Jr. Bobbie Sue Brackbill
- ------------------------------ ------------------------------
R.M. Brackbill R. Marshall Brackbill, Jr.
- ------------------------------ ------------------------------
Benjamin A. Brooks, Jr. Donald Chase
- ------------------------------ ------------------------------
Kathie Sue Goode Janie L. Goodman
- ------------------------------ WARREN STEVEN HASTINGS
Mary Louise Hargis REVOCABLE TRUST
By:
- ------------------------------ ---------------------------
Heather C. Henry Patty S. Hastings, Trustee
- ------------------------------ ------------------------------
James Michael Holcomb Patrick Henry
- ------------------------------ ------------------------------
Randy J. Hutlas Edward J. Hutlas
- ------------------------------ ------------------------------
D.W. Robertson Scott and Alice Ann Hutlas
SHANKS INTER VIVOS ------------------------------
SETTLEMENT TRUST Jason B. Selch
By:
--------------------------- ------------------------------
Alan J. Hunken, Trustee Mickey Wiggins
<PAGE> 56
EXHIBIT D
FORM
OF
INVESTMENT REPRESENTATION LETTER
EX D-1
<PAGE> 57
January ___, 1998
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
Onshore Drilling Company ("PODC") of the merger (the "Merger") contemplated by
the Agreement of Plan and Merger (the "Merger Agreement") among PEC, PODC and
Robertson Onshore Drilling Company ("Robertson"). Capitalized terms not
defined herein shall have the meaning given them in the Merger Agreement.
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 January __, 1998 (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 the lack of free transferability of
the PEC Shares to be issued by PEC as partial consideration for the Merger, 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 Shares to be issued by PEC as
partial consideration for the Merger.
c. The undersigned has had an opportunity to ask
questions of PEC and its management concerning PEC and PODC, the businesses of
PEC and PODC and each of its subsidiaries, including Patterson Drilling Company
("PDC"), and the PEC Shares and, if asked, all such questions have been
answered to the full satisfaction of the undersigned.
EX D-2
<PAGE> 58
Patterson Energy, Inc.
January ___, 1998
Page 2
d. The undersigned understands that PEC has not
registered the offer or sale of the PEC 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 Shares without registration under the Act
(see paragraph (h) below).
e. The undersigned represents that it will acquire the
PEC Shares 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 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 Shares.
h. The undersigned acknowledges that, except as provided
in the Merger Agreement and the Registration Rights Agreement attached as
Exhibit C to the Merger Agreement, PEC is under no obligation to register the
PEC 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. 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 Shares.
2. Indemnification.
The undersigned agrees to indemnify and hold harmless PEC and
its subsidiaries, or any 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 Merger.
Very truly yours,
By:
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EX D-3
