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DRAFT 1/8/97
PATTERSON ENERGY, INC.
1,727,000 SHARES(1)
COMMON STOCK
UNDERWRITING AGREEMENT
January ___, 1997
PRUDENTIAL SECURITIES INCORPORATED
MORGAN KEEGAN & COMPANY, INC.
RAYMOND JAMES & ASSOCIATES, INC.
As Representatives of the several Underwriters
c/o Prudential Securities Incorporated
One New York Plaza
New York, New York 10292
Dear Sirs:
Each of Patterson Energy, Inc., a Delaware corporation (the
"Company"), and the selling securityholders set forth on Schedule 2 attached
hereto (the "Selling Securityholders") hereby confirms its agreement with the
several underwriters named in Schedule 1 hereto (the "Underwriters"), for whom
you have been duly authorized to act as representatives (in such capacities,
the "Representatives"), as set forth below. If you are the only Underwriters,
all references herein to the Representatives shall be deemed to be to the
Underwriters.
1. Securities. Subject to the terms and conditions herein
contained, the Company proposes to issue and sell, and each of the Selling
Securityholders proposes to sell, to the several Underwriters an aggregate of
1,500,000 shares and 227,000 shares, respectively (the "Firm Securities"), of
the Company's Common Stock, par value $.01 per share ("Common Stock"). The
Company also proposes to issue and sell to the several Underwriters not more
than 259,050 additional shares of Common Stock if requested by the
Representatives as provided in Section 4 of this Agreement. Any and all shares
of Common Stock to be purchased by the Underwriters pursuant to such option are
referred to herein as the "Option Securities," and the Firm Securities and any
Option Securities are collectively referred to herein as the "Securities."
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(1) Plus an option to purchase up to 259,050 additional shares to cover over-
allotments.
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2. Representations and Warranties of the Company, Talbott and
Patterson. The Company, Cloyce A. Talbott ("Talbott") and A. Glenn Patterson
("Patterson") jointly and severally represent and warrant to, and agree with,
each of the several Underwriters that:
(a) A registration statement on Form S-3 (File No. 333-18123) with
respect to the Securities, including a prospectus subject to completion, has
been filed by the Company with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Act"), and one
or more amendments to such registration statement may have been so filed.
After the execution of this Agreement, the Company will file with the
Commission either (i) if such registration statement, as it may have been
amended, has been declared by the Commission to be effective under the Act,
either (A) if the Company relies on Rule 434 under the Act, a Term Sheet (as
hereinafter defined) relating to the Securities, that shall identify the
Preliminary Prospectus (as hereinafter defined) that it supplements containing
such information as is required or permitted by Rules 434, 430A and 424(b)
under the Act or (B) if the Company does not rely on Rule 434 under the Act, a
prospectus in the form most recently included in an amendment to such
registration statement (or, if no such amendment shall have been filed, in such
registration statement), with such changes or insertions as are required by
Rule 430A under the Act or permitted by Rule 424(b) under the Act, and in the
case of either clause (i)(A) or (i)(B) of this sentence as have been provided
to and approved by the Representatives prior to the execution of this
Agreement, or (ii) if such registration statement, as it may have been amended,
has not been declared by the Commission to be effective under the Act, an
amendment to such registration statement, including a form of prospectus, a
copy of which amendment has been furnished to and approved by the
Representatives prior to the execution of this Agreement. The Company may also
file a related registration statement with the Commission pursuant to Rule
462(b) under the Act for the purpose of registering certain additional
Securities, which registration shall be effective upon filing with the
Commission. As used in this Agreement, the term "Original Registration
Statement" means the registration statement initially filed relating to the
Securities, as amended at the time when it was or is declared effective,
including all financial schedules and exhibits thereto and including any
information omitted therefrom pursuant to Rule 430A under the Act and included
in the Prospectus (as hereinafter defined); the term "Rule 462(b) Registration
Statement" means any registration statement filed with the Commission pursuant
to Rule 462(b) under the Act (including the Registration Statement and any
Preliminary Prospectus or Prospectus incorporated therein at the time such
Registration Statement becomes effective); the term "Registration Statement"
includes both the Original Registration Statement and any Rule 462(b)
Registration Statement; the term "Preliminary Prospectus" means each
prospectus subject to completion filed with such registration statement or any
amendment thereto (including the prospectus subject to completion, if any,
included in the Registration Statement or any amendment thereto at the time it
was or is declared effective); the term "Prospectus" means:
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(A) if the Company relies on Rule 434 under the Act, the
Term Sheet relating to the Securities that is first filed pursuant to
Rule 424(b)(7) under the Act, together with the Preliminary Prospectus
identified therein that such Term Sheet supplements;
(B) if the Company does not rely on Rule 434 under the
Act, the prospectus first filed with the Commission pursuant to Rule
424(b) under the Act; or
(C) if the Company does not rely on Rule 434 under the
Act and if no prospectus is required to be filed pursuant to Rule
424(b) under the Act, the prospectus included in the Registration
Statement;
and the term "Term Sheet" means any term sheet that satisfies the requirements
of Rule 434 under the Act. Any reference herein to the "date" of a Prospectus
that includes a Term Sheet shall mean the date of such Term Sheet.
(b) The Commission has not issued any order preventing or
suspending use of any Preliminary Prospectus. When any Preliminary Prospectus
was filed with the Commission, it (i) contained all statements required to be
stated therein in accordance with, and complied in all material respects with
the requirements of, the Act and the rules and regulations of the Commission
thereunder and (ii) did not include any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. When the Registration Statement or any amendment thereto was or is
declared effective, it (i) contained or will contain all statements required to
be stated therein in accordance with, and complied or will comply in all
material respects with the requirements of, the Act and the rules and
regulations of the Commission thereunder and (ii) did not or will not include
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading. When the Prospectus
or any Term Sheet that is a part thereof or any amendment or supplement to the
Prospectus is filed with the Commission pursuant to Rule 424(b) (or, if the
Prospectus or part thereof or such amendment or supplement is not required to
be so filed, when the Registration Statement or the amendment thereto
containing such amendment or supplement to the Prospectus was or is declared
effective) and on the Firm Closing Date and any Option Closing Date (both as
hereinafter defined), the Prospectus, as amended or supplemented at any such
time, (i) contained or will contain all statements required to be stated
therein in accordance with, and complied or will comply in all material
respects with the requirements of, the Act and the rules and regulations of the
Commission thereunder and (ii) did not or will not include any untrue statement
of a material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading. The foregoing provisions of this paragraph (b) do
not apply to statements or omissions made in any Preliminary
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Prospectus, the Registration Statement or any amendment thereto or the
Prospectus or any amendment or supplement thereto in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through the Representatives specifically for use therein.
(c) If the Company has elected to rely on Rule 462(b) and the Rule
462(b) Registration Statement has not been declared effective, (i) the Company
has filed a Rule 462(b) Registration Statement in compliance with and that is
effective upon filing pursuant to Rule 462(b) and has received confirmation of
its receipt and (ii) either the Company has given irrevocable instructions for
transmission of the applicable filing fee in connection with the filing of the
Rule 462(b) Registration Statement, in compliance with Rule 111 promulgated
under the Act, or the Commission has received payment of such filing fee.
(d) The Company and each of its subsidiaries have been duly
organized and are validly existing as corporations in good standing under the
laws of their respective jurisdictions of incorporation and are duly qualified
to transact business as foreign corporations and are in good standing under the
laws of all other jurisdictions where the ownership or leasing of their
respective properties or the conduct of their respective businesses requires
such qualification, except where the failure to be so qualified does not amount
to a material liability or disability to the Company and its subsidiaries,
taken as a whole.
(e) The Company and each of its subsidiaries have full power
(corporate and other) to own or lease their respective properties and conduct
their respective businesses as described in the Registration Statement and the
Prospectus or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus; and the Company has full power (corporate and other) to
enter into this Agreement and to carry out all the terms and provisions hereof
to be carried out by it.
(f) The issued shares of capital stock of each of the Company's
subsidiaries have been duly authorized and validly issued, are fully paid and
nonassessable and, except for directors' qualifying shares and as otherwise set
forth in the Prospectus or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus, are owned beneficially by the Company free and
clear of any security interests, liens, encumbrances, equities or claims.
(g) The Company has an authorized, issued and outstanding
capitalization as set forth in the Prospectus or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus. All of the issued shares of
capital stock of the Company have been duly authorized and validly issued and
are fully paid and nonassessable. The Firm Securities and the Option
Securities have been duly authorized and at the Firm Closing Date or the
related Option Closing Date (as the case may be), after payment therefor in
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accordance herewith, will be validly issued, fully paid and nonassessable. No
holders of outstanding shares of capital stock of the Company are entitled as
such to any preemptive or other rights to subscribe for any of the Securities,
and no holder of securities of the Company has any right which has not been
fully exercised or waived to require the Company to register the offer or sale
of any securities owned by such holder under the Act in the public offering
contemplated by this agreement.
(h) The capital stock of the Company conforms to the description
thereof contained in the Prospectus or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus.
(i) Except as disclosed in the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus), there are no
outstanding (A) securities or obligations of the Company or any of its
subsidiaries convertible into or exchangeable for any capital stock of the
Company or any such subsidiary, (B) warrants, rights or options to subscribe
for or purchase from the Company or any such subsidiary any such capital stock
or any such convertible or exchangeable securities or obligations, or (C)
obligations of the Company or any such subsidiary to issue any shares of
capital stock, any such convertible or exchangeable securities or obligations,
or any such warrants, rights or options.
(j) The consolidated financial statements and schedules of the
Company and its consolidated subsidiaries included in the Registration
Statement and the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus) fairly present the financial position of
the Company and its consolidated subsidiaries and the results of operations and
changes in financial condition as of the dates and periods therein specified.
Such financial statements and schedules have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved (except as otherwise noted therein). The selected financial
data set forth under the caption "Summary Selected Financial Data" in the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) fairly present, on the basis stated in the Prospectus
(or such Preliminary Prospectus), the information included therein.
(k) Coopers & Lybrand L.L.P., who have certified certain financial
statements of the Company and its consolidated subsidiaries and delivered their
report with respect to the audited consolidated financial statements and
schedules included in the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus), are
independent public accountants as required by the Act and the applicable rules
and regulations thereunder.
(l) Arthur Andersen LLP, who have certified certain financial
statements relating to Tucker Drilling Company, Inc., which the Company
acquired in July 1996, and delivered their report with respect to the audited
consolidated financial statements and schedules
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included in the Registration Statement and the Prospectus with respect thereto
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus), are independent public accountants as required by the Act and the
applicable rules and regulations thereunder.
(m) The execution and delivery of this Agreement have been duly
authorized by the Company and this Agreement has been duly executed and
delivered by the Company, and is the valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms.
(n) No legal or governmental proceedings are pending to which the
Company or any of its subsidiaries is a party or to which the property of the
Company or any of its subsidiaries is subject that are required to be described
in the Registration Statement or the Prospectus and are not described therein
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus), and no such proceedings have been threatened against the Company
or any of its subsidiaries or with respect to any of their respective
properties; and no contract or other document is required to be described in
the Registration Statement or the Prospectus or to be filed as an exhibit to
the Registration Statement that is not described therein (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus) or filed as
required.
(o) The issuance, offering and sale of the Securities to the
Underwriters by the Company pursuant to this Agreement, the compliance by the
Company with the other provisions of this Agreement and the consummation of the
other transactions herein contemplated do not (i) require the consent,
approval, authorization, registration or qualification of or with any
governmental authority, except such as have been obtained, such as may be
required under state securities or blue sky laws and, if the registration
statement filed with respect to the Securities (as amended) is not effective
under the Act as of the time of execution hereof, such as may be required (and
shall be obtained as provided in this Agreement) under the Act, or (ii)
conflict with or result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, lease or other agreement or instrument to which the Company or any of
its subsidiaries is a party or by which the Company or any of its subsidiaries
or any of their respective properties are bound, or the charter documents or
by-laws of the Company or any of its subsidiaries, or any statute or any
judgment, decree, order, rule or regulation of any court or other governmental
authority or any arbitrator applicable to the Company or any of its
subsidiaries.
(p) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus, neither the Company
nor any of its subsidiaries has sustained any material loss or interference
with their respective businesses or properties from fire, flood, hurricane,
accident or other calamity, whether or not covered by insurance, or from any
labor dispute or any legal or governmental proceeding and there has not been
any material
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adverse change, or any development involving a prospective material adverse
change, in the condition (financial or otherwise), management, business
prospects, net worth, or results of the operations of the Company or any of its
subsidiaries, except in each case as described in or contemplated by the
Prospectus or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus.
(q) The Company has not, directly or indirectly, (i) taken any
action designed to cause or to result in, or that has constituted or which
might reasonably be expected to constitute, the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Securities or (ii) since the filing of the Registration Statement (A) sold,
bid for, purchased, or paid anyone any compensation for soliciting purchases
of, the Securities (except for the sale of the Securities by the Company under
this Agreement) or (B) paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company (except for
the sale of Securities by the Selling Securityholders under this Agreement).
(r) The Company and each of its subsidiaries have (i) good and
defensible title to their interests in oil and gas properties owned by them,
(ii) good and marketable title in fee simple to all other real property owned
by them and (iii) good and marketable title to all personal property owned by
them, in each case free and clear of any security interests, liens,
encumbrances, equities, claims and other defects, except such as do not
materially and adversely affect the value of such property and do not interfere
with the use made or proposed to be made of such property by the Company or
such subsidiary, and any real property and buildings held under lease by the
Company or any such subsidiary are held under valid, subsisting and enforceable
leases, with such exceptions as are not material and do not interfere with the
use made and proposed to be made of such property and buildings by the Company
or such subsidiary, in each case except as described in or contemplated by the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(s) The participation agreements, joint development agreements,
joint operating agreements, farm-out agreements and other agreements described
in the Prospectus or any Preliminary Prospectus relating to the Company's
rights with respect to the ownership, lease or operation of oil and gas
properties, the acquisition of interests in oil and gas properties or the
exploration for, development of or production of oil and gas reserves thereon
constitute valid and binding agreements of the Company and its subsidiaries
that are parties thereto and, to the best knowledge of the Company, of the
other parties thereto, enforceable in accordance with their terms, except as
enforceability may be subject to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
(t) The information underlying the estimates of the reserves of
the Company and its subsidiaries, which was supplied by the Company to M. Brian
Wallace ("Wallace"), an
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independent petroleum engineer, for purposes of auditing the reserve reports
and estimates of the Company, including, without limitation, production, costs
of operation and development, current prices for production, agreements
relating to current and future operations and sales of production, was true and
correct in all material respects on the dates such estimates were made and such
information was supplied and was prepared in accordance with customary industry
practices; Wallace is an independent petroleum engineer with respect to the
Company; other than normal production of the reserves and intervening spot
market product price fluctuations described in the Prospectus or any
Preliminary Prospectus, the Company is not aware of any facts or circumstances
that would result in a material adverse change in the reserves, or the present
value of future net cash flows therefrom, as described in the Prospectus or any
Preliminary Prospectus; estimates of such reserves and present values as
described in the Prospectus or any Preliminary Prospectus comply in all
material respects to the applicable requirements of Regulation S-X and Industry
Guide 2 under the Act.
(u) Except as described in the Prospectus or any Preliminary
Prospectus, as of the date hereof, (i) all royalties, rentals, deposits and
other amounts due on the oil and gas properties of the Company have been
properly and timely paid, and no proceeds from the sale or production
attributable to the oil and gas properties of the Company are currently being
held in suspense by any purchaser thereof, except where such amounts due could
not, singly or in the aggregate, have a material adverse effect on the
financial condition or results of operations of the Company and its
subsidiaries taken as a whole and (ii) there are no claims under take-or-pay
contracts pursuant to which natural gas purchasers have any make-up rights
affecting the interest of the Company in its oil and gas properties, except
where such claims would not, singly or in the aggregate, have a material
adverse effect on the financial condition or results of operations of the
Company and its subsidiaries, taken as a whole.
(v) As of the date hereof, the aggregate undiscounted monetary
liability of the Company for petroleum taken or received under any operating or
gas balancing and storage agreement relating to its oil and gas properties that
permits any person to receive any portion of the interest of the Company in any
petroleum or to receive cash or other payments to balance any disproportionate
allocation of petroleum would not, in the aggregate, have a material adverse
effect on the financial condition or results of operations of the Company and
its subsidiaries, taken as a whole.
(w) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus), (1) the Company
and its subsidiaries have not incurred any material liability or obligation,
direct or contingent, nor entered into any material transaction not in the
ordinary course of business; (2) the Company has not purchased any of its
outstanding capital stock, nor declared, paid or otherwise made any dividend or
distribution of any kind on its capital stock; and (3) there has not been any
material change in the capital
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stock, short-term debt or long-term debt of the Company and its consolidated
subsidiaries, except in each case as described in or contemplated by the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(x) No labor dispute with the employees of the Company or any of
its subsidiaries exists or is threatened or imminent that could reasonably be
expected to result in a material adverse change in the condition (financial or
otherwise), business prospects, net worth or results of operations of the
Company and its subsidiaries taken as a whole, except as described in or
contemplated by the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus).
(y) The Company and each of its subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which
they are engaged; neither the Company nor any such subsidiary has been refused
any insurance coverage sought or applied for; and neither the Company nor any
such subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect the condition
(financial or otherwise), business prospects, net worth or results of
operations of the Company and its subsidiaries, except as described in or
contemplated by the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus).
(z) No subsidiary of the Company is currently prohibited, directly
or indirectly, from paying any dividends to the Company, from making any other
distribution on such subsidiary's capital stock, from repaying to the Company
any loans or advances to such subsidiary from the Company or from transferring
any of such subsidiary's property or assets to the Company or any other
subsidiary of the Company, except (i) for restrictions imposed by general
corporate law of the jurisdiction in which any such subsidiary may be organized
or (ii) as described in or contemplated by the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus) or
(iii) restrictions which would not, singly or in the aggregate, result in a
material adverse change in the condition (financial or otherwise), net worth,
business prospects or results of operations of the Company and its
subsidiaries, taken as a whole.
(aa) The Company and its subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state or foreign
regulatory authorities necessary to conduct their respective businesses, except
where a failure to possess any such items would not result in a material
adverse change in the condition (financial or otherwise), net worth, business
prospects or results of operations of the Company and its subsidiaries taken as
a whole, and neither the Company nor any such subsidiary has received any
notice of proceedings relating to the revocation or modification of any such
certificate, authorization or permit which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling
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or finding, would result in a material adverse change in the condition
(financial or otherwise), business prospects, net worth or results of
operations of the Company and its subsidiaries taken as a whole, except as
described in or contemplated by the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus).
(ab) The Company has filed all foreign, federal, state and local
tax returns that are required to be filed or has requested extensions thereof
(except in any case in which the failure so to file would not have a material
adverse effect on the Company and its subsidiaries) and has paid all taxes
required to be paid by it and any other assessment, fine or penalty levied
against it, to the extent that any of the foregoing is due and payable, except
for any such assessment, fine or penalty that is currently being contested in
good faith, or as described in or contemplated by the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus).
(ac) Neither the Company nor any of its subsidiaries is in
violation of any federal or state law or regulation relating to occupational
safety and health or to the storage, handling or transportation of hazardous or
toxic materials; the Company and its subsidiaries have received all permits,
licenses or other approvals required of them under applicable federal and state
occupational safety and health and environmental laws and regulations to
conduct their respective businesses; and the Company and each such subsidiary
is in compliance with all terms and conditions of any such permit, license or
approval, except in each case any such violation, failure to receive required
permits, licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals which would not, singly or in
the aggregate, result in a material adverse change in the condition (financial
or otherwise), business prospects, net worth or results of operations of the
Company and its subsidiaries taken as a whole, except as described in or
contemplated by the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus).
(ad) Each certificate signed by any officer of the Company and
delivered to the Representatives or counsel for the Underwriters shall be
deemed to be a representation and warranty by the Company to each Underwriter
as to the matters covered thereby.
(ae) Except (i) for the shares of capital stock of each of the
subsidiaries owned by the Company and such subsidiaries, (ii) as described in
or contemplated by the Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus) and (iii) for investments that are not
material to the Company and its subsidiaries taken as a whole, neither the
Company nor any such subsidiary owns any shares of stock or any other equity
securities of any corporation or has any equity interest in any firm,
partnership, association or other entity.
(af) No default exists, and no event has occurred which, with
notice or lapse of time or both, would constitute a default in the due
performance and observance of any term, covenant or condition of any indenture,
mortgage, deed of trust, lease or other agreement
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or instrument to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries or any of their respective
properties is bound or may be affected, except for any such default or event
that will not, individually or in the aggregate, result in a material adverse
change in the condition (financial or otherwise), net worth, business prospects
or results of operations of the Company and its subsidiaries taken as a whole.
(ag) The Company has not distributed and, prior to the Option
Closing Date will not distribute, any offering material in connection with the
offering and sale of the Securities other than the Registration Statement or
any amendment thereto, any Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto, or other materials, if any, permitted by the
Act.
3. Representations and Warranties of the Selling Securityholders.
Each Selling Securityholder, severally and not jointly, represents and warrants
to, and agrees with, each of the several Underwriters that:
(a) Such Selling Securityholder has full power (corporate and
other) to enter into this Agreement and to sell, assign, transfer and deliver
to the Underwriters the Securities to be sold by such Selling Securityholder
hereunder in accordance with the terms of this Agreement; the execution and
delivery of this Agreement have been duly authorized by all necessary corporate
action of such Selling Securityholder; and this Agreement has been duly
executed and delivered by such Selling Securityholder.
(b) Such Selling Securityholder has duly executed and delivered a
power of attorney and custody agreement (with respect to such Selling
Securityholder, the "Power-of-Attorney" and the "Custody Agreement,"
respectively), each in the form heretofore delivered to the Representatives,
appointing Cloyce A. Talbott as such Selling Securityholder's attorney-in-fact
(the "Attorney-in-Fact") with authority to execute, deliver and perform this
Agreement on behalf of such Selling Securityholder, and appointing Continental
Stock Transfer & Trust Co. as custodian thereunder (the "Custodian").
Certificates in negotiable form, endorsed in blank or accompanied by blank stock
powers duly executed, with signatures appropriately guaranteed, representing the
Securities to be sold by such Selling Securityholder hereunder have been
deposited with the Custodian pursuant to the Custody Agreement for the purpose
of delivery pursuant to this Agreement. Such Selling Securityholder has full
power (corporate and other) to enter into the Custody Agreement and the
Power-of-Attorney and to perform its obligations under the Custody Agreement.
The execution and delivery of the Custody Agreement and the Power-of-Attorney
have duly authorized by all necessary corporate action of such Selling
Securityholder; the Custody Agreement and the Power-of-Attorney have been duly
executed and delivered by such Selling Securityholder and, assuming due
authorization, execution and delivery by the Custodian, are the legal, valid,
binding and enforceable instruments of such Selling Securityholder. Such
Selling Securityholder agrees that each of the Securities represented by the
certificates on deposit with the Custodian is subject to the
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interests of the Underwriters hereunder, that the arrangements made for such
custody, the appointment of the Attorney- in-Fact and the right, power and
authority of the Attorney-in-Fact to execute and deliver this Agreement, to
agree on the price at which the Securities (including such Selling
Securityholder's Securities) are to be sold the Underwriters, and to carry out
the terms of this Agreement, are to that extent irrevocable and that the
obligation of such Selling Securityholder hereunder shall not be terminated,
except as provided in this Agreement or the Custody Agreement, by any act of
such Selling Securityholder, by operation of law or otherwise, whether in the
case of any individual Selling Securityholder by the death or incapacity of
such Selling Securityholder, in the case of a trust or estate by the death of
the trustee or trustees or the executor or executors or the termination of such
trust or estate, or in the case of a corporate or partnership Selling
Securityholder by its liquidation or dissolution or by the occurrence of any
other event. If any individual Selling Securityholder, trustee or executor
should die or become incapacitated or any such trust should be terminated, or
if any corporate or partnership Selling Securityholder shall liquidate or
dissolve, or if any other event should occur, before the delivery of such
Securities hereunder, the certificates for such Securities deposited with the
Custodian shall be delivered by the Custodian in accordance with the respective
terms and conditions of this Agreement as if such death, incapacity,
termination, liquidation or dissolution or other event had not occurred,
regardless of whether or not the Custodian or the Attorney-in-Fact shall have
received notice thereof.
(c) Such Selling Securityholder has good and marketable title to
the Securities to be sold by such Selling Securityholder hereunder and upon
sale and delivery of, and payment for, such Securities, as provided herein,
such Selling Securityholder will convey good and marketable title to such
Securities, free and clear of any interests, liens, encumbrances, equities,
claims or other defects.
(d) Such Selling Securityholder has not, directly or indirectly,
(i) taken any action designed to cause or result in, or that has constituted or
which might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Securities or (ii) since the filing of the Registration
Statement (A) sold, bid for, purchased, or paid anyone any compensation for
soliciting purchases of, the Securities or (B) paid or agreed to pay to any
person any compensation for soliciting another to purchase any other securities
of the Company (except for the sale of Securities by the Selling
Securityholders under this Agreement).
(e) Such Selling Securityholder has reviewed the Prospectus (or,
if the Prospectus is not in existence, the most recent Preliminary Prospectus)
and the Registration Statement, and the information regarding such Selling
Securityholder set forth therein under the caption "Principal and Selling
Stockholders" is complete and accurate.
(f) The sale by such Selling Securityholder of Securities pursuant
hereto is not prompted by any adverse information concerning the Company that
is not set forth in the
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Registration Statement or the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus).
(g) The sale of the Securities to the Underwriters by such Selling
Securityholder pursuant to this Agreement, the compliance by such Selling
Securityholder with the other provisions of this Agreement, the Custody
Agreement and the consummation of the other transactions herein contemplated do
not (i) require the consent, approval, authorization, registration or
qualification of or with any governmental authority, except such as have been
obtained, such as may be required under state securities or blue sky laws and,
if the registration statement filed with respect to the Securities (as amended)
is not effective under the Act as of the time of execution hereof, such as may
be required (and shall be obtained as provided in this Agreement) under the Act
and the Exchange Act or (ii) conflict with or result in a breach or violation
of any of the terms and provisions of, or constitute a default under any
indenture, mortgage, deed of trust, lease or other agreement or instrument to
which such Selling Securityholder or any of its subsidiaries is a party or by
which such Selling Securityholder or any of such Selling Securityholder's
properties are bound, or the charter documents or by-laws of such Selling
Securityholder or any statute or any judgment, decree, order, rule or
regulation of any court or other governmental authority or any arbitrator
applicable to such Selling Securityholder or any of its subsidiaries.
(h) None of the Selling Securityholders has distributed and, prior
to the Option Closing Date will not distribute, any offering material in
connection with the offering and sale of the Securities other than the
Registration Statement or any amendment thereto, any Preliminary Prospectus or
the Prospectus or any amendment or supplement thereto, or other materials, if
any permitted by the Act.
4. Purchase, Sale and Delivery of the Securities. (a) On the
basis of the representations, warranties, agreements and covenants herein
contained and subject to the terms and conditions herein set forth, the Company
agrees to issue and sell, and each of the Selling Securityholders, severally
and not jointly agrees to sell, to each of the Underwriters, and each of the
Underwriters, severally and not jointly, agrees to purchase from the Company
and each of the Selling Securityholders, severally and not jointly, at a
purchase price of $_______ per share, the number of Firm Securities set forth
opposite the name of such Underwriter in Schedule 1 hereto. One or more
certificates in definitive form for the Firm Securities that the several
Underwriters have agreed to purchase hereunder, and in such denomination or
denominations and registered in such name or names as the Representatives
request upon notice to the Company at least 48 hours prior to the Firm Closing
Date, shall be delivered by or on behalf of the Company and each of the Selling
Securityholders to the Representatives for the respective accounts of the
Underwriters, against payment by or on behalf of the Underwriters of the
purchase price therefor by wire transfer in same-day funds (the "Wired Funds")
to the accounts designated by the Company and each of the Selling
Securityholders. Such delivery of and payment for the Firm Securities shall be
made at the offices of Andrews & Kurth L.L.P., Texas Commerce Tower,
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600 Travis, Suite 4200, Houston, Texas 77002 at 9:30 A.M., New York time, on
, or at such other place, time or date as the Representatives and the Company
may agree upon or as the Representatives may determine pursuant to Section 9
hereof, such time and date of delivery against payment being herein referred to
as the "Firm Closing Date". The Company and each of the Selling
Securityholders will make such certificate or certificates for the Firm
Securities available for checking and packaging by the Representatives at the
offices in New York, New York of the Company's transfer agent or registrar or
of Prudential Securities Incorporated at least 24 hours prior to the Firm
Closing Date.
(b) For the purpose of covering any over-allotments in connection
with the distribution and sale of the Firm Securities as contemplated by the
Prospectus, the Company hereby grants to the several Underwriters an option to
purchase, severally and not jointly, the Option Securities. The purchase price
to be paid for any Option Securities shall be the same price per share as the
price per share for the Firm Securities set forth above in paragraph (a) of
this Section 4, plus if the purchase and sale of any Option Securities takes
place after the Firm Closing Date and after the Firm Securities are trading
"ex-dividend", an amount equal to the dividends payable on such Option
Securities. The option granted hereby may be exercised as to all or any part
of the Option Securities from time to time within thirty (30) days after the
date of the Prospectus (or, if such 30th day shall be a Saturday or Sunday or a
holiday, on the next business day thereafter when the New York Stock Exchange
is open for trading). The Underwriters shall not be under any obligation to
purchase any of the Option Securities prior to the exercise of such option.
The Representatives may from time to time exercise the option granted hereby by
giving notice in writing or by telephone (confirmed in writing) to the Company
setting forth the aggregate number of Option Securities as to which the several
Underwriters are then exercising the option and the date and time for delivery
of and payment for such Option Securities. Any such date of delivery shall be
determined by the Representatives but shall not be earlier than two business
days or later than five business days after such exercise of the option and, in
any event, shall not be earlier than the Firm Closing Date. The time and date
set forth in such notice, or such other time on such other date as the
Representatives and Company may agree upon or as the Representatives may
determine pursuant to Section 9 hereof, is herein called the "Option Closing
Date" with respect to such Option Securities. Upon exercise of the option as
provided herein, the Company shall become obligated to sell to each of the
several Underwriters, and, subject to the terms and conditions herein set
forth, each of the Underwriters (severally and not jointly) shall become
obligated to purchase from the Company, the same percentage of the total number
of the Option Securities as to which the several Underwriters are then
exercising the option as such Underwriter is obligated to purchase of the
aggregate number of Firm Securities, as adjusted by the Representatives in such
manner as they deem advisable to avoid fractional shares. If the option is
exercised as to all or any portion of the Option Securities, one or more
certificates in definitive form for such Option Securities, and payment
therefor, shall be delivered on the related Option Closing Date in the manner,
and upon the terms and conditions, set forth in paragraph (a) of this Section
4, except that reference
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therein to the Firm Securities and the Firm Closing Date shall be deemed, for
purposes of this paragraph (b), to refer to such Option Securities and Option
Closing Date, respectively.
(c) The Company and each Selling Securityholder hereby acknowledge
that the wire transfer by or on behalf of the Underwriters of the purchase price
for any shares does not constitute closing of a purchase and sale of the shares.
Only execution and delivery of a receipt for shares by the Underwriters
indicates completion of the closing of a purchase of the shares from the Company
and each Selling Securityholder. Furthermore, in the event that the
Underwriters wire funds to the Company and each Selling Securityholder prior to
the completion of the closing of a purchase of shares, the Company and each
Selling Securityholder hereby acknowledge that until the Underwriters execute
and deliver a receipt for the shares, by facsimile or otherwise, the Company and
each Selling Securityholder will not be entitled to the wired funds and shall
return the wired funds to the Underwriters as soon as practicable (by wire
transfer of same-day funds) upon demand. In the event that the closing of a
purchase of shares is not completed and the wire funds are not returned by the
Company and each Selling Securityholder to the Underwriters on the same day the
wired funds were received by the Company and each Selling Securityholder, the
Company and each Selling Securityholder agree to pay to the Underwriters in
respect of each day the wire funds are not returned by the Company or any of the
Selling Securityholders, as the case may be, in same-day funds, interest on the
amount of such wire funds in an amount representing the Underwriters' cost of
financing as reasonably determined by Prudential Securities Incorporated.
(d) It is understood that any of you, individually and not as one
of the Representatives, may (but shall not be obligated to) make payment on
behalf of any Underwriter or Underwriters for any of the Securities to be
purchased by such Underwriter or Underwriters. No such payment shall relieve
such Underwriter or Underwriters from any of its or their obligations
hereunder.
5. Offering by the Underwriters. Upon your authorization of the
release of the Firm Securities, the several Underwriters propose to offer the
Firm Securities for sale to the public upon the terms set forth in the
Prospectus.
6. Covenants of the Company. The Company covenants and agrees
with each of the Underwriters that:
(a) The Company will use its best efforts to cause the
Registration Statement, if not effective at the time of execution of this
Agreement, and any amendments thereto to become effective as promptly as
possible. If required, the Company will file the Prospectus or any Term Sheet
that constitutes a part thereof and any amendment or supplement thereto with
the Commission in the manner and within the time period required by Rules 434
and 424(b) under the Act. During any time when a prospectus relating to the
Securities is
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required to be delivered under the Act, the Company (i) will comply with all
requirements imposed upon it by the Act and the rules and regulations of the
Commission thereunder to the extent necessary to permit the continuance of
sales of or dealings in the Securities in accordance with the provisions hereof
and of the Prospectus, as then amended or supplemented, and (ii) will not file
with the Commission the Prospectus, Term Sheet or the amendment referred to in
the second sentence of Section 2(a) hereof, any amendment or supplement to such
Prospectus, Term Sheet or any amendment to the Registration Statement or any
Rule 462(b) Registration Statement of which the Representatives previously have
not been advised and furnished with a copy for a reasonable period of time
prior to the proposed filing and as to which filing the Representatives shall
not have given their consent. The Company will prepare and file with the
Commission, in accordance with the rules and regulations of the Commission,
promptly upon request by the Representatives or counsel for the Underwriters,
any amendments to the Registration Statement or amendments or supplements to
the Prospectus that may be necessary or advisable in connection with the
distribution of the Securities by the several Underwriters, and will use its
best efforts to cause any such amendment to the Registration Statement to be
declared effective by the Commission as promptly as possible. The Company will
advise the Representatives, promptly after receiving notice thereof, of the
time when the Registration Statement or any amendment thereto has been filed or
declared effective or the Prospectus or any amendment or supplement thereto has
been filed and will provide evidence satisfactory to the Representatives of
each such filing or effectiveness.
(b) The Company will advise the Representatives, promptly after
receiving notice or obtaining knowledge thereof, of (i) the issuance by the
Commission of any stop order suspending the effectiveness of the Original
Registration Statement or any Rule 462(b) Registration Statement or any
amendment thereto or any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto, (ii) the suspension of the qualification of the Securities for
offering or sale in any jurisdiction, (iii) the institution, threatening or
contemplation of any proceeding for any such purpose or (iv) any request made
by the Commission for amending the Original Registration Statement or any Rule
462(b) Registration Statement, for amending or supplementing the Prospectus or
for additional information. The Company will use its best efforts to prevent
the issuance of any such stop order and, if any such stop order is issued, to
obtain the withdrawal thereof as promptly as possible.
(c) The Company will arrange for the qualification of the
Securities for offering and sale under the securities or blue sky laws of such
jurisdictions as the Representatives may designate and will continue such
qualifications in effect for as long as may be necessary to complete the
distribution of the Securities, provided, however, that in connection therewith
the Company shall not be required to qualify as a foreign corporation or to
execute a general consent to service of process in any jurisdiction.
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(d) If, at any time prior to the later of (i) the final date when
a prospectus relating to the Securities is required to be delivered under the
Act or (ii) the Option Closing Date, any event occurs as a result of which the
Prospectus, as then amended or supplemented, would include any untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, or if for any other reason it is necessary at any time to
amend or supplement the Prospectus to comply with the Act or the rules or
regulations of the Commission thereunder, the Company will promptly notify the
Representatives thereof and, subject to Section 6(a) hereof, will prepare and
file with the Commission, at the Company's expense, an amendment to the
Registration Statement or an amendment or supplement to the Prospectus that
corrects such statement or omission or effects such compliance.
(e) The Company will, without charge, provide (i) to the
Representatives and to counsel for the Underwriters a conformed copy of the
registration statement originally filed with respect to the Securities and each
amendment thereto (in each case including exhibits thereto) or any Rule 462(b)
Registration Statement, (ii) to each other Underwriter, a conformed copy of
such registration statement or any Rule 462(b) Registration Statement and each
amendment thereto (in each case without exhibits thereto) and (iii) so long as
a prospectus relating to the Securities is required to be delivered under the
Act, as many copies of each Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto as the Representatives may reasonably request.
Without limiting the application of clause (iii) of the preceding sentence, the
Company, not later than (A) 6:00 P.M., New York City time, on the date of
determination of the public offering price, if such determination occurred at
or prior to 10:00 A.M., New York City time, on such date or (B) 2:00 P.M., New
York City time, on the business day following the date of determination of the
public offering price, if such determination occurred after 10:00 A.M., New
York City time, on such date, will deliver to the Underwriters, without charge,
as many copies of the Prospectus and any amendment or supplement thereto as the
Representatives may reasonably request for purposes of confirming orders that
are expected to settle on the Firm Closing Date.
(f) The Company, as soon as practicable, will make generally
available to its securityholders and to the Representatives a consolidated
earnings statement of the Company and its subsidiaries that satisfies the
provisions of Section 11(a) of the Act and Rule 158 thereunder.
(g) The Company will apply the net proceeds from the sale of the
Securities as set forth under "Use of Proceeds" in the Prospectus.
(h) The Company will not, directly or indirectly, without the
prior written consent of Prudential Securities Incorporated, on behalf of the
Underwriters, offer, sell, offer to sell, contract to sell, pledge, grant any
option to purchase or otherwise sell or dispose (or announce any offer, sale,
offer of sale, contract of sale, pledge, grant of any option to purchase or
other sale or disposition) of any shares of Common Stock or any securities
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convertible into, or exchangeable or exercisable for, shares of Common Stock
for a period of 90 days after the date hereof, except (i) pursuant to this
Agreement, (ii) for issuances pursuant to the exercise of employee or director
stock options outstanding on the date hereof, (iii) pursuant to the terms of
convertible securities or warrants of the Company outstanding on the date
hereof and (iv) for the grants of options pursuant to option plans existing on
the date hereof.
(i) The Company will not, directly or indirectly, (i) take any
action designed to cause or to result in, or that has constituted or which
might reasonably be expected to constitute, the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Securities or (ii) (A) sell, bid for, purchase, or pay anyone any
compensation for soliciting purchases of, the Securities or (B) pay or agree to
pay to any person any compensation for soliciting another to purchase any other
securities of the Company (except for the sale of the Securities by the Selling
Securityholders under this Agreement).
(j) The Company will obtain the agreements described in Section
9(j) hereof prior to the Firm Closing Date.
(k) If at any time during the 25-day period after the Registration
Statement becomes effective or the period prior to the Option Closing Date, any
rumor, publication or event relating to or affecting the Company shall occur as
a result of which in your opinion the market price of the Common Stock has been
or is likely to be materially affected (regardless of whether such rumor,
publication or event necessitates a supplement to or amendment of the
Prospectus), the Company will, after notice from you advising the Company to
the effect set forth above, consult with you concerning whether or not to
disseminate a press release or other public statement, responding to or
commenting on such rumor, publication or event.
(l) If the Company elects to rely on Rule 462(b), the Company
shall both file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) and pay the applicable fees in accordance with Rule
111 promulgated under the Act by the earlier of (i) 10:00 P.M. Eastern time on
the date of this Agreement and (ii) the time confirmations are sent or given,
as specified by Rule 462(b)(2).
(m) The Company will use its best efforts to cause the Securities
to be duly included for quotation on the Nasdaq National Market prior to the
Firm Closing Date. The Company will ensure that the Securities remain included
for quotation on the Nasdaq National Market following the Firm Closing Date.
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7. Covenants of Selling Securityholders.
(a) Each Selling Securityholder will not, directly or indirectly,
without the prior written consent of Prudential Securities Incorporated, offer,
sell, offer to sell, contract to sell, pledge, grant any option to purchase or
otherwise sell or dispose (or announce any offer, sale, pledge, offer of sale,
contract of sale, grant of any option to purchase or other sale or disposition)
of any shares of Common Stock legally or beneficially owned by such Selling
Securityholder or any securities convertible into, or exchangeable or
exercisable for, shares of Common Stock for a period of 120 days after the date
hereof.
(b) Such Selling Securityholder will not, directly or indirectly,
for 120 days from the date of this Agreement (i) take any action designed to
cause or result in, or that has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Securities or
(ii) (a) sell, bid for, purchase, or pay anyone any compensation for soliciting
purchases of, the Securities or any other securities of the Company convertible
into, or exchangeable or exercisable for, shares of Common Stock (except for
the sale of the Securities by the Selling Securityholders under this
Agreement).
(c) Each of the Selling Securityholders agrees to deliver to you
prior to or at the Firm Closing Date (as hereinafter defined) a properly
completed and executed United States Treasury Department Form W-9 (or other
applicable form or statement specified by Treasury Department regulations in
lieu thereof).
8. Expenses. The Company will pay all costs and expenses
incident to the performance of its obligations under this Agreement, whether or
not the transactions contemplated herein are consummated or this Agreement is
terminated pursuant to Section 11 hereof, including all costs and expenses
incident to (i) the printing or other production of documents with respect to
the transactions, including any costs of printing the registration statement
originally filed with respect to the Securities and any amendment thereto, any
Rule 462(b) Registration Statement, any Preliminary Prospectus and the
Prospectus and any amendment or supplement thereto, this Agreement and any blue
sky memoranda, (ii) all arrangements relating to the delivery to the
Underwriters of copies of the foregoing documents, (iii) the fees and
disbursements of the counsel, the accountants and any other experts or advisors
retained by the Company, (iv) preparation, issuance and delivery to the
Underwriters of any certificates evidencing the Securities, including transfer
agent's and registrar's fees, (v) the qualification of the Securities under
state securities and blue sky laws, including filing fees and fees and
disbursements of counsel for the Underwriters relating thereto, (vi) the filing
fees of the Commission and the National Association of Securities Dealers, Inc.
relating to the Securities, (vii) any quotation of the Securities on the Nasdaq
National Market, (viii) any meetings with prospective investors in the
Securities (other than as shall have been specifically approved by the
Representatives to be paid for by the Underwriters), and (ix) advertising
relating to the
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offering of the Securities (other than as shall have been specifically approved
by the Representatives to be paid for by the Underwriters). If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 9 hereof is not satisfied
because this Agreement is terminated pursuant to Section 13(a) hereof or
because of any failure, refusal or inability on the part of the Company to
perform all obligations and satisfy all conditions on its part to be performed
or satisfied hereunder other than by reason of a default by any of the
Underwriters, the Company will reimburse the Underwriters severally upon demand
for all out-of-pocket expenses (including counsel fees and disbursements) that
shall have been incurred by them in connection with the proposed purchase and
sale of the Securities. The Company shall not in any event be liable to any of
the Underwriters for the loss of anticipated profits from the transactions
covered by this Agreement.
9. Conditions of the Underwriters' Obligations. The obligations
of the several Underwriters to purchase and pay for the Firm Securities shall
be subject, in the Representatives' sole discretion, to the accuracy of the
representations and warranties of the Company and each Selling Securityholder
contained herein as of the date hereof and as of the Firm Closing Date, as if
made on and as of the Firm Closing Date, to the accuracy of the statements of
the Company's and each Selling Securityholder's officers made pursuant to the
provisions hereof, to the performance by the Company and each Selling
Securityholder of its covenants and agreements hereunder and to the following
additional conditions:
(a) If the Original Registration Statement or any amendment
thereto filed prior to the Firm Closing Date has not been declared effective as
of the time of execution hereof, the Original Registration Statement or such
amendment and, if the Company has elected to rely upon Rule 462(b), the Rule
462(b) Registration Statement shall have been declared effective not later than
the earlier of (i) 11:00 A.M., New York time, on the date on which the
amendment to the registration statement originally filed with respect to the
Securities or to the Registration Statement, as the case may be, containing
information regarding the public offering price of the Securities has been
filed with the Commission and (ii) the time confirmations are sent or given as
specified by Rule 462(b)(2), or with respect to the Original Registration
Statement, or such later time and date as shall have been consented to by the
Representatives; if required, the Prospectus or any Term Sheet that constitutes
a part thereof and any amendment or supplement thereto shall have been filed
with the Commission in the manner and within the time period required by Rules
434 and 424(b) under the Act; no stop order suspending the effectiveness of the
Registration Statement or any amendment thereto shall have been issued, and no
proceedings for that purpose shall have been instituted or threatened or, to
the knowledge of the Company or the Representatives, shall be contemplated by
the Commission; and the Company shall have complied with any request of the
Commission for additional information (to be included in the Registration
Statement or the Prospectus or otherwise).
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(b) The Representatives shall have received an opinion dated the
Firm Closing Date of Baker & Hostetler, counsel for the Company, to the effect
that:
(i) the Company and each of the subsidiaries listed on
Schedule 3 hereto (the "Subsidiaries") have been duly incorporated and
are validly existing as corporations in good standing under the laws
of their respective jurisdictions of incorporation and are duly
qualified to transact business as foreign corporations and are in good
standing under the laws of all other jurisdictions where the ownership
or leasing of their respective properties or the conduct of their
respective businesses requires such qualification, except where the
failure to be so qualified does not amount to a material liability or
disability to the Company and the Subsidiaries, taken as a whole;
(ii) the Company and each of the Subsidiaries have
corporate power to own or lease their respective properties and
conduct their respective businesses as described in the Registration
Statement and the Prospectus, and the Company has corporate power to
enter into this Agreement and to carry out all the terms and
provisions hereof to be carried out by it;
(iii) the issued shares of capital stock of each of the
Subsidiaries have been duly authorized and validly issued, are fully
paid and nonassessable and, except for directors' qualifying shares
and as otherwise set forth in the Prospectus, are owned beneficially
by the Company free and clear of any perfected security interests or,
to the best knowledge of such counsel, any other security interests,
liens, encumbrances, equities or claims;
(iv) the Company has an authorized, issued and outstanding
capitalization as set forth in the Prospectus under "Capitalization"
and under "Description of Capital Stock--Common Stock" and "--Preferred
Stock;" all of the issued shares of capital stock of the Company have
been duly authorized and validly issued and are fully paid and
nonassessable, and to the knowledge of such counsel have been issued in
compliance with all applicable federal and state securities laws and
were not issued in violation of or subject to any preemptive rights or
other rights to subscribe for or purchase securities; the Firm
Securities have been duly authorized by all necessary corporate action
of the Company and, when issued and delivered to and paid for by the
Underwriters pursuant to this Agreement, will be validly issued, fully
paid and nonassessable; the Securities have been duly included for
trading on the Nasdaq National Market; to the knowledge of such
Counsel, except for such rights as have been waived as of the date
hereof, no holders of outstanding shares of capital stock of the
Company are entitled as such to any preemptive or other rights to
subscribe for any of the Securities; and, assuming that the Company has
sent written notice to all holders of securities of the Company who
have the right to register the offer or sale of any securities owned by
such holders under the Act in connection with the public
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offering contemplated by this Agreement, and there is no holder of
such securities who has not waived such registration rights or failed
to exercise such registration rights within the time permitted by the
notice;
(v) the statements set forth under the heading
"Description of Capital Stock" in the Prospectus, insofar as such
statements purport to summarize certain provisions of the capital
stock of the Company, provide a fair summary of such provisions; and
the statements set forth under the heading "Business and
Properties--Government Regulation and Environmental" in the
Prospectus, insofar as such statements constitute a summary of the
legal matters, documents or proceedings referred to therein, provide a
fair summary in all material respects of such legal matters, documents
and proceedings;
(vi) the execution and delivery of this Agreement have
been duly authorized by all necessary corporate action of the Company
and this Agreement has been duly executed and delivered by the
Company;
(vii) to such counsel's knowledge (A) no legal or
governmental proceedings are pending to which the Company or any of
the Subsidiaries is a party or to which the property of the Company or
any of the Subsidiaries is subject that are required to be described
in the Registration Statement or the Prospectus and are not described
therein, and no such proceedings have been threatened against the
Company or any of the Subsidiaries or with respect to any of their
respective properties and (B) no contract or other document is
required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement
that is not described therein or filed as required;
(viii) the issuance, offering and sale of the Securities to
the Underwriters by the Company pursuant to this Agreement, the
compliance by the Company with the other provisions of this Agreement
and the consummation of the other transactions herein contemplated do
not (A) require the consent, approval, authorization, registration or
qualification of or with any governmental authority, or (B) conflict
with or result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, lease or other agreement or instrument, known to such
counsel, to which the Company or any of the Subsidiaries is a party or
by which the Company or any of the Subsidiaries or any of their
respective properties are bound, or the charter documents or by-laws
of the Company or any of the Subsidiaries, or any statute or any
judgment, decree, order, rule or regulation of any court or other
governmental authority or any arbitrator known to such counsel and
applicable to the Company or the Subsidiaries, except that no opinion
is expressed as to state securities or blue sky laws for purposes of
this subparagraph;
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(ix) the Registration Statement is effective under the
Act; any required filing of the Prospectus, or any Term Sheet that
constitutes a part thereof, pursuant to Rules 434 and 424(b) has been
made in the manner and within the time period required by Rules 434
and 424(b); and, to the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement or any
amendment thereto has been issued, and no proceedings for that purpose
have been instituted or threatened or are contemplated by the
Commission; and
(x) the Registration Statement originally filed with
respect to the Securities and each amendment thereto, any Rule 462(b)
Registration Statement and the Prospectus (in each case, other than
the financial statements and other financial information contained
therein, as to which such counsel need express no opinion) comply as
to form in all material respects with the applicable requirements of
the Act and the rules and regulations of the Commission thereunder.
(xi) if the Company elects to rely on Rule 434, the
Prospectus is not "materially different," as such term is used in Rule
434, from the prospectus included in the Registration Statement at the
time of its effectiveness or an effective post-effective amendment
thereto (including such information that is permitted to be omitted
pursuant to Rule 430A).
Such counsel shall also state that they have no reason to believe that
the Registration Statement (except for the financial statements and
other financial and reserve information included in the Registration
Statement, as to which they have not been asked to comment), as of its
effective date, contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading or that the
Prospectus (except as indicated above), as of its date or the date of
such opinion, included or includes any untrue statement of a material
fact or omitted or omits to state a material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Company and public officials.
References to the Registration Statement and the Prospectus in this
paragraph (b) shall include any amendment or supplement thereto at the
date of such opinion.
(c) The Representatives shall have received an opinion, dated the
Firm Closing Date, of Andrews & Kurth L.L.P., Texas Commerce Tower,
600 Travis, Suite 4200, Houston, Texas 77002, counsel for the
Underwriters, with respect to the issuance and sale of the Firm
Securities, the Registration Statement and the Prospectus, and
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such other related matters as the Representatives may reasonably
require, and the Company shall have furnished to such counsel such
documents as they may reasonably request for the purpose of enabling
them to pass upon such matters. In rendering such opinion, such
counsel may rely as to all matters of law upon the opinion of Baker &
Hostetler referred to in paragraph (b) above.
(d) The Selling Securityholders shall have furnished to
the Representatives an opinion from Baker & Hostetler, counsel for
Patterson, Talbott, SSI Oil and Gas, Inc. and the H.A. Talbott and
Audrey Talbott Children's Trust, and an opinion from Howell Moore &
Gough, counsel for Phoenix Drilling, Inc., Imperial Equipment Co. and
Rig 1 Group, Inc., each dated the Closing Date, to the effect that:
(i) Such Selling Securityholder has full corporate power
to enter into this Agreement, the Custody Agreement and the
Power-of-Attorney and to sell, transfer and deliver the Securities
being sold by such Selling Securityholder hereunder in the manner
provided in this Agreement and to perform its obligations under the
Custody Agreement; the execution and delivery of this Agreement, the
Custody Agreement and the Power-of-Attorney have been duly authorized
by all necessary corporate action of such Selling Securityholder; this
Agreement has been duly executed and delivered by such Selling
Securityholder; assuming due authorization, execution and delivery by
the Custodian, the Custody Agreement and the Power-of-Attorney are the
legal, valid, binding and enforceable instruments of such Selling
Securityholder, subject to applicable bankruptcy, insolvency and
similar laws affecting creditors' rights generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law);
(ii) the delivery by each Selling Securityholder to the
several Underwriters of certificates for the Securities being sold
hereunder by each Selling Securityholder against payment therefor as
provided herein, will convey good and marketable title to such
Securities to the several Underwriters, free and clear of all security
interests, liens, encumbrances, equities, claims or other defects;
(iii) the sale of the Securities to the Underwriters by
such Selling Securityholder pursuant to this Agreement, the compliance
by such Selling Securityholder with the other provisions of this
Agreement, the Custody Agreement and the consummation of the other
transactions herein contemplated do not (i) require the consent,
approval, authorization, registration or qualification of or with any
governmental authority, except such as have been obtained and such as
may be required under state securities or blue sky laws, or (ii) to the
knowledge of such Counsel, conflict with or result in a breach or
violation of any of the terms and provisions of, or constitute a
default under any indenture, mortgage, deed of trust, lease or other
agreement or instrument to which such Selling Securityholder or any of
its subsidiaries or any of such Selling Securityholder's properties are
bound, or the charter documents or by-laws of such Selling
Securityholder or any of its subsidiaries or any statute or any
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judgment, decree, order, rule or regulation of any court or other
governmental authority or any arbitrator applicable to such Selling
Securityholder or any of its subsidiaries.
In rendering such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deem proper, on certificates of
responsible officers of the Selling Securityholders and public
officials.
References to the Registration Statement and the Prospectus in this
paragraph (d) shall include any amendment or supplement thereto at the
date of such opinion.
(e) The Representatives shall have received a certificate from
each Selling Securityholder, signed by an appropriate officer of such
Selling Securityholder, dated the Closing Date, to the effect that:
(i) the representations and warranties of such Selling
Securityholder in this Agreement are true and correct as if made on
and as of the Closing Date;
(ii) to the extent that any statements or omissions are
made in the Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto in reliance upon and
in conformity with written information furnished to the Company by
such Selling Securityholder specifically for use therein, the
Registration Statement, as amended as of the Closing Date, does not
include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading,
and the Prospectus, as amended or supplemented as of the Closing Date,
does not include any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; and
(iii) such Selling Securityholder has performed all
covenants and agreements on its part to be performed or satisfied at
or prior to the Closing Date.
(f) The Representatives shall have received from Coopers & Lybrand
L.L.P. a letter or letters dated, respectively, the date hereof and
the Firm Closing Date, in form and substance satisfactory to the
Representatives, to the effect that:
(i) they are independent accountants with respect to the
Company and its consolidated subsidiaries within the meaning of the
Act and the applicable rules and regulations thereunder;
(ii) in their opinion, the audited consolidated financial
statements and schedules and pro forma financial statements examined
by them and included in the
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Registration Statement and the Prospectus comply in form in all
material respects with the applicable accounting requirements of the
Act and the related published rules and regulations;
(iii) on the basis of a reading of the latest available
interim unaudited consolidated condensed financial statements of the
Company and its consolidated subsidiaries, carrying out certain
specified procedures (which do not constitute an examination made in
accordance with generally accepted auditing standards) that would not
necessarily reveal matters of significance with respect to the
comments set forth in this paragraph (iii), a reading of the minute
books of the shareholders, the board of directors and any committees
thereof of the Company and each of its consolidated subsidiaries, and
inquiries of certain officials of the Company and its consolidated
subsidiaries who have responsibility for financial and accounting
matters, nothing came to their attention that caused them to believe
that:
(A) the unaudited consolidated condensed
financial statements of the Company and its consolidated
subsidiaries included in the Registration Statement and the
Prospectus do not comply in form in all material respects with
the applicable accounting requirements of the Act and the
related published rules and regulations thereunder or are not
in conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the
audited consolidated financial statements included in the
Registration Statement and the Prospectus; and
(B) at a specific date not more than five
business days prior to the date of such letter, there were any
changes in the capital stock or long-term debt of the Company
and its consolidated subsidiaries or any decreases in
stockholders' equity of the Company and its consolidated
subsidiaries, in each case compared with amounts shown on the
September 30, 1996 unaudited consolidated condensed balance
sheet included in the Registration Statement and the
Prospectus, or for the period from October 1, 1996 to such
specified date there were any decreases, as compared with the
corresponding period in the preceding year, in total revenues,
net revenues, net income before income taxes or total or per
share amounts of net income of the Company and its
consolidated subsidiaries, except in all instances for
changes, decreases or increases set forth in such letter;
(iv) they have carried out certain specified procedures,
not constituting an audit, with respect to certain amounts,
percentages and financial information that are derived from the
general accounting records of the Company and its consolidated
subsidiaries and are included in the Registration Statement and the
Prospectus, and have compared such amounts, percentages and financial
information with such records of the Company and its consolidated
subsidiaries and
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with information derived from such records and have found them to be
in agreement, excluding any questions of legal interpretation; and
(v) on the basis of a reading of the unaudited pro forma
consolidated condensed financial statements included in the
Registration Statement and the Prospectus, carrying out certain
specified procedures that would not necessarily reveal matters of
significance with respect to the comments set forth in this paragraph
(v), inquiries of certain officials of the Company and its
consolidated subsidiaries who have responsibility for financial and
accounting matters and proving the arithmetic accuracy of the
application of the pro forma adjustments to the historical amounts in
the unaudited pro forma consolidated condensed financial statements,
nothing came to their attention that caused them to believe that the
unaudited pro forma consolidated condensed financial statements do not
comply in form in all material respects with the applicable accounting
requirements of Rule 11-02 of Regulation S-X or that the pro forma
adjustments have not been properly applied to the historical amounts
in the compilation of such statements.
In the event that the letter referred to above sets forth any such
changes, decreases or increases, it shall be a further condition to the
obligations of the Underwriters that (A) such letter shall be accompanied by a
written explanation of the Company as to the significance thereof, unless the
Representatives deem such explanation unnecessary, and (B) such changes,
decreases or increases do not, in the sole judgment of the Representatives,
make it impractical or inadvisable to proceed with the purchase and delivery of
the Securities as contemplated by the Registration Statement.
References to the Registration Statement and the Prospectus in this
paragraph (f) with respect to either letter referred to above shall include any
amendment or supplement thereto at the date of such letter.
(g) The Representatives shall have received from Arthur Andersen
LLP a letter or letters dated, respectively, the date hereof and the Firm
Closing Date in form and substance satisfactory to the Representatives.
(h) Wallace, an independent petroleum engineering consultant,
shall have delivered to you on the date of this Agreement a letter and also on
the Closing Date a letter dated the Closing Date, in each case in form and
substance reasonably satisfactory to you, stating, as of the date of such
letter (or, with respect to matters involving changes or developments since the
respective dates as of which specified information with respect to the oil and
gas reserves attributable to the properties previously owned by Tucker Drilling
Company, Inc., is given or incorporated in the Prospectus or any Preliminary
Prospectus as of the date not more than five days prior to the date of such
letter), the conclusions and findings of such individual with respect to the
Company's oil and gas reserves as well as such other information as the
Representatives or their counsel may reasonably request.
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(i) The Representatives shall have received a certificate, dated
the Firm Closing Date, of the principal executive officer and the principal
financial or accounting officer of the Company to the effect that:
(i) the representations and warranties of the Company in
this Agreement are true and correct as if made on and as of the Firm
Closing Date; the Registration Statement, as amended as of the Firm
Closing Date, does not include any untrue statement of a material fact
or omit to state any material fact necessary to make the statements
therein not misleading, and the Prospectus, as amended or supplemented
as of the Firm Closing Date, does not include any untrue statement of
a material fact or omit to state any material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and the Company has
performed all covenants and agreements and satisfied all conditions on
its part to be performed or satisfied at or prior to the Firm Closing
Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement or any amendment thereto has been issued, and
no proceedings for that purpose have been instituted or threatened or,
to the best of the Company's knowledge, are contemplated by the
Commission; and
(iii) subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus,
neither the Company nor any of its subsidiaries has sustained any
material loss or interference with their respective businesses or
properties from fire, flood, hurricane, accident or other calamity,
whether or not covered by insurance, or from any labor dispute or any
legal or governmental proceeding, and there has not been any material
adverse change, or any development involving a prospective material
adverse change, in the condition (financial or otherwise), management,
business prospects, net worth or results of operations of the Company
or any of its subsidiaries, except in each case as described in or
contemplated by the Prospectus (exclusive of any amendment or
supplement thereto).
(j) The Representatives shall have received from each person who
is a director or officer of the Company an agreement to the effect that such
person will not, directly or indirectly, without the prior written consent of
Prudential Securities Incorporated, on behalf of the Underwriters, offer, sell,
offer to sell, contract to sell, pledge, grant any option to purchase or
otherwise sell or dispose (or announce any offer, sale, offer of sale, contract
of sale, pledge, grant of an option to purchase or other sale or disposition)
of any shares of Common Stock or any securities convertible into, or
exchangeable or exercisable for, shares of Common Stock for a period of 120
days after the date of this Agreement.
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(k) On or before the Firm Closing Date, the Representatives and
counsel for the Underwriters shall have received such further certificates,
documents or other information as they may have reasonably requested from the
Company.
(l) Prior to the commencement of the offering of the Securities,
the Securities shall have been included for trading on the Nasdaq National
Market.
All opinions, certificates, letters and documents delivered pursuant
to this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects to the Representatives and
counsel for the Underwriters. The Company shall furnish to the Representatives
such conformed copies of such opinions, certificates, letters and documents in
such quantities as the Representatives and counsel for the Underwriters shall
reasonably request.
The respective obligations of the several Underwriters to purchase and
pay for any Option Securities shall be subject, in their discretion, to each of
the foregoing conditions to purchase the Firm Securities, except that all
references to the Firm Securities and the Firm Closing Date shall be deemed to
refer to such Option Securities and the related Option Closing Date,
respectively.
10. Indemnification and Contribution. (a) The Company and, subject
to the further provisions of this Section 10(a) and the provisions of Section
10(e), Talbott and Patterson jointly and severally agree to indemnify and hold
harmless each Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Securities
Exchange Act of 1934 (the "Exchange Act"), against any losses, claims, damages
or liabilities, joint or several, to which such Underwriter or such controlling
person may become subject under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon:
(i) any untrue statement or alleged untrue statement made
by the Company in Section 2 of this Agreement,
(ii) any untrue statement or alleged untrue statement of
any material fact contained in (A) the Registration Statement or any
amendment thereto, any Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto or (B) any application or other
document, or any amendment or supplement thereto, executed by the
Company or based upon written information furnished by or on behalf of
the Company filed in any jurisdiction in order to qualify the
Securities under the securities or blue sky laws thereof or filed with
the Commission or any securities association or securities exchange
(each an "Application"),
(iii) the omission or alleged omission to state in the
Registration Statement or any amendment thereto, any Preliminary
Prospectus or the Prospectus or any
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amendment or supplement thereto or any Application, a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or
(iv) any untrue statement or alleged untrue statement of
any material fact contained in any audio or visual materials used in
connection with the marketing of the Securities, including without
limitation, slides, videos, films and tape recordings,
and will reimburse, as incurred, each Underwriter and each such controlling
person for any legal or other expenses reasonably incurred by such Underwriter
or such controlling person in connection with investigating, defending against
or appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement
or any amendment thereto, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto or any Application in reliance upon and in
conformity with written information furnished to the Company by such
Underwriter through the Representatives or by a Selling Securityholder
specifically for use therein; and provided further that neither Talbott nor
Patterson will be liable in any such case to the extent that any such loss,
claim, damage or other liability arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
such registration statement or any amendment thereto, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto or any
Application in reliance upon and in conformity with written information
furnished to the Company by another Selling Securityholder specifically for use
therein. This indemnity agreement will be in addition to any liability which
the Company may otherwise have. The Company, Talbott and Patterson will not,
without the prior written consent of the Underwriter or Underwriters
purchasing, in the aggregate, more than fifty percent (50%) of the Securities,
settle or compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not any such Underwriter or
any person who controls any such Underwriter within the meaning of Section 15
of the Act or Section 20 of the Exchange Act is a party to such claim, action,
suit or proceeding), unless such settlement, compromise or consent includes an
unconditional release of all of the Underwriters and such controlling persons
from all liability arising out of such claim, action, suit or proceeding.
(b) Each Selling Securityholder, severally and not jointly, agrees
to indemnify and hold harmless the Company, each of its directors, each of its
officers who signs the Registration Statement or any amendment thereto, each
Underwriter and each person who controls the Company or any Underwriter within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act against
any losses, claims, damages or liabilities, joint or several, to which the
Company, any such director, officer, such Underwriter or any such controlling
person may become subject under the Act, the Exchange Act or otherwise,
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insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon (i) any untrue statement or alleged
untrue statement of any material fact contained in the Registration Statement
or any amendment thereto, any Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto, or (ii) the omission or the alleged omission
to state therein a material fact required to be stated in the Registration
Statement or any amendment thereto, any Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto, or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with the written
information furnished to the Company by such Selling Securityholder for use
therein. Subject to the limitations set forth in the immediately preceding
sentence, each Selling Securityholder, severally and not jointly, will
reimburse, as incurred, any legal or other expenses reasonably incurred by the
Company, any such director, officer, such Underwriter or any such controlling
person in connection with investigating or defending any such loss, claim,
damage, liability or any action in respect thereof. This indemnity agreement
will be in addition to any liability which any Selling Securityholder may
otherwise have. Each Selling Securityholder will not, without the prior
written consent of the Underwriter or Underwriters purchasing, in the
aggregate, more than fifty percent (50%) of the Securities, settle or
compromise or consent to the entry of any judgment in any pending or threatened
claim, action, suit or proceeding in respect of which indemnification may be
sought hereunder (whether or not any such Underwriter or any person who
controls any such Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act is a party to such claim, action, suit or
proceeding), unless such settlement, compromise or consent includes an
unconditional release of all of the Underwriters and such controlling persons
from all liability arising out of such claim, action, suit or proceeding.
(c) Each Underwriter will, severally and not jointly, indemnify
and hold harmless the Company, each of its directors, each of its officers who
signed the Registration Statement or any amendment thereto, each Selling
Securityholder and each person, if any, who controls the Company or such
Selling Securityholder within the meaning of Section 15 of the Act or Section
20 of the Exchange Act against any losses, claims, damages or liabilities,
joint or several, to which the Company, any such director or officer of the
Company, such Selling Securityholder or any such controlling person of the
Company or such Selling Securityholder may become subject under the Act, the
Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material fact contained
in the Registration Statement or any amendment thereto, or any Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto, or any
Application or (ii) the omission or the alleged omission to state therein a
material fact required to be stated in the Registration Statement or any
amendment thereto, any Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto, or any Application or necessary to make the
statements therein not misleading,
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in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to the
Company by such Underwriter through the Representatives specifically for use
therein; and, subject to the limitation set forth immediately preceding this
clause, will reimburse, as incurred, any legal or other expenses reasonably
incurred by the Company, any such director, officer or controlling person or
such Selling Securityholder in connection with investigating, defending against
or appearing as a third-party witness in connection with any such loss, claim,
damage, liability or any action in respect thereof. This indemnity agreement
will be in addition to any liability which such Underwriter may otherwise have.
(d) Promptly after receipt by an indemnified party under this
Section 10 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 10, notify the indemnifying party of the commencement
thereof; but the failure so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under this Section 10. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel satisfactory to
such indemnified party; provided, however, that if the defendants in any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be one or more
legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnifying party shall not have the right to direct the defense of such
action on behalf of such indemnified party or parties and such indemnified
party or parties shall have the right to select separate counsel to defend such
action on behalf of such indemnified party or parties. After notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof and approval by such indemnified party of counsel appointed to
defend such action, the indemnifying party will not be liable to such
indemnified party under this Section 10 for any legal or other expenses, other
than reasonable costs of investigation, subsequently incurred by such
indemnified party in connection with the defense thereof, unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence (it being understood, however, that in
connection with such action the indemnifying party shall not be liable for the
expenses of more than one separate counsel (in addition to local counsel) in
any one action or separate but substantially similar actions in the same
jurisdiction arising out of the same general allegations or circumstances,
designated by the Representatives in the case of paragraph (a) of this Section
10, representing the indemnified parties under such paragraph (a) who are
parties to such action or actions) or (ii) the indemnifying party does not
promptly retain counsel satisfactory to the indemnified party or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying
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party. After such notice from the indemnifying party to such indemnified
party, the indemnifying party will not be liable for the costs and expenses of
any settlement of such action effected by such indemnified party without the
consent of the indemnifying party.
(e) The indemnification obligations of Talbott and Patterson
pursuant to Section 10(a) are subject to the following additional provisions:
(i) Neither Talbott nor Patterson shall have any
liability under this Agreement in an amount exceeding the amount of
cash received by each of them respectively upon the sale of his Common
Stock; provided, however, that Talbott shall also be liable in an
amount equal to up to one-half of the amount of cash received by SSI
Oil & Gas, Inc. ("SSI") and up to one-half of the amount of cash
received by the H. A. Talbott and Audrey Talbott Children's Trust and
Patterson will also be liable in an amount equal to up to one-half of
the amount of cash received by SSI.
(ii) There shall be no limitation on the ability of an
Underwriter to file suit or bring a proceeding for indemnification
under Section 10(a), including a cross-claim against Talbott or
Patterson; provided, however, prior to or concurrently with filing
such a suit or bringing such a proceeding against Talbott or
Patterson, the Underwriter must file suit or bring a proceeding
against the Company for satisfaction of such claim unless the Company
is Bankrupt (as defined below).
(iii) It shall be a condition to the obligations of Talbott
and Patterson to indemnify an indemnified party pursuant to Section
10(a) the Company is Bankrupt.
(iv) The Company will be considered "Bankrupt" for
purposes of this Section 10(e) if a decree or order by a court having
jurisdiction shall have been entered adjudging the Company a bankrupt
or insolvent, or the Company shall institute proceedings to be
adjudicated a voluntary bankrupt, or a creditor shall institute
proceedings against the Company to have it declared bankrupt or
insolvent and the same shall not have been stayed or discussed within
60 days, or the Company shall consent to the filing of a bankruptcy
proceeding against it, or shall file a pleading or consent seeking
reorganization or similar relief under the federal or similar
applicable state bankruptcy law, or shall consent to the filing of any
such pleading, or shall consent to the appointment of a receiver or
liquidator or trustee or assignee in bankruptcy or insolvency, or shall
make an assignment for the benefit of creditors, or shall admit in
writing its inability to pay its debts generally as they come due.
(f) In circumstances in which the indemnity agreement provided for
in the preceding paragraphs of this Section 10 is unavailable or insufficient,
for any reason other
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than a failure by the indemnified party to give timely notice as required by
this Section 10, to hold harmless an indemnified party in respect of any
losses, claims, damages or liabilities (or actions in respect thereof), each
indemnifying party, in order to provide for just and equitable contribution,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect (i) the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party on the other from the offering of the Securities or (ii) if
the allocation provided by the foregoing clause (i) is not permitted by
applicable law, not only such relative benefits but also the relative fault of
the indemnifying party or parties on the one hand and the indemnified party on
the other in connection with the statements or omissions or alleged statements
or omissions that resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company, Talbott,
Patterson and the Selling Securityholders on the one hand and the Underwriters
on the other shall be deemed to be in the same proportion as the total proceeds
from the offering (before deducting expenses) received by the Company and the
Selling Securityholders bear to the total underwriting discounts and
commissions received by the Underwriters. The relative fault of the parties
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company, the
Selling Securityholders or the Underwriters, the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission, and any other equitable considerations appropriate in
the circumstances. The Company, the Selling Securityholders and the
Underwriters agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other
method of allocation that does not take into account the equitable
considerations referred to above in this paragraph (f). Notwithstanding any
other provision of this paragraph (f), no Underwriter shall be obligated to
make contributions hereunder that in the aggregate exceed the total public
offering price of the Securities purchased by such Underwriter under this
Agreement, less the aggregate amount of any damages that such Underwriter has
otherwise been required to pay in respect of the same or any substantially
similar claim, and no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute hereunder are several in proportion to
their respective underwriting obligations and not joint, and contributions
among Underwriters shall be governed by the provisions of the Prudential
Securities Incorporated Master Agreement Among Underwriters. For purposes of
this paragraph (f), each person, if any, who controls an Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act shall have
the same rights to contribution as such Underwriter, and each director of the
Company, each officer of the Company who signed the Registration Statement or
any amendment thereto and each person, if any, who controls the Company
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or any Selling Securityholder within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, shall have the same rights to contribution as
the Company or such Selling Securityholder, as the case may be.
11. Default of Underwriters. If one or more Underwriters default
in their obligations to purchase Firm Securities or Option Securities hereunder
and the aggregate number of such Securities that such defaulting Underwriter or
Underwriters agreed but failed to purchase is ten percent or less of the
aggregate number of Firm Securities or Option Securities to be purchased by all
of the Underwriters at such time hereunder, the other Underwriters may make
arrangements satisfactory to the Representatives for the purchase of such
Securities by other persons (who may include one or more of the non-defaulting
Underwriters, including the Representatives), but if no such arrangements are
made by the Firm Closing Date or the related Option Closing Date, as the case
may be, the other Underwriters shall be obligated severally in proportion to
their respective commitments hereunder to purchase the Firm Securities or
Option Securities that such defaulting Underwriter or Underwriters agreed but
failed to purchase. If one or more Underwriters so default with respect to an
aggregate number of Securities that is more than ten percent of the aggregate
number of Firm Securities or Option Securities, as the case may be, to be
purchased by all of the Underwriters at such time hereunder, and if
arrangements satisfactory to the Representatives are not made within 36 hours
after such default for the purchase by other persons (who may include one or
more of the non-defaulting Underwriters, including the Representatives) of the
Securities with respect to which such default occurs, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter or
the Company other than as provided in Section 12 hereof. In the event of any
default by one or more Underwriters as described in this Section 11, the
Representatives shall have the right to postpone the Firm Closing Date or the
Option Closing Date, as the case may be, established as provided in Section 4
hereof for not more than seven business days in order that any necessary
changes may be made in the arrangements or documents for the purchase and
delivery of the Firm Securities or Option Securities, as the case may be. As
used in this Agreement, the term "Underwriter" includes any person substituted
for an Underwriter under this Section 11. Nothing herein shall relieve any
defaulting Underwriter from liability for its default.
12. Survival. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Company, its
officers, the Selling Securityholders and the several Underwriters set forth in
this Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement shall remain in full force and effect, regardless of (i) any
investigation made by or on behalf of the Company, any of its officers or
directors, any Selling Securityholder, any Underwriter or any controlling
person referred to in Section 10 hereof and (ii) delivery of and payment for
the Securities. The respective agreements, covenants, indemnities and other
statements set forth in Sections 8 and 10 hereof shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement.
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13. Termination. (a) This Agreement may be terminated with
respect to the Firm Securities or any Option Securities in the sole discretion
of the Representatives by notice to the Company and each of the Selling
Securityholders given prior to the Firm Closing Date or the related Option
Closing Date, respectively, in the event that the Company or either of the
Selling Securityholders shall have failed, refused or been unable to perform
all obligations and satisfy all conditions on its part to be performed or
satisfied hereunder at or prior thereto or, if at or prior to the Firm Closing
Date or such Option Closing Date, respectively,
(i) the Company or any of its subsidiaries shall have, in
the sole judgment of the Representatives, sustained any material loss
or interference with their respective businesses or properties from
fire, flood, hurricane, accident or other calamity, whether or not
covered by insurance, or from any labor dispute or any legal or
governmental proceeding or there shall have been any material adverse
change, or any development involving a prospective material adverse
change (including without limitation a change in management or control
of the Company), in the condition (financial or otherwise), business
prospects, net worth or results of operations of the Company and its
subsidiaries taken as a whole, except in each case as described in or
contemplated by the Prospectus (exclusive of any amendment or
supplement thereto);
(ii) trading in the Common Stock shall have been suspended
by the Commission or the Nasdaq National Market;
(iii) trading generally on the New York Stock Exchange or the
Nasdaq National Market shall have been suspended or minimum or maximum
prices shall have been established on either such exchange or market
system;
(iv) a banking moratorium shall have been declared by New
York or United States authorities; or
(v) there shall have been (A) an outbreak or escalation
of hostilities between the United States and any foreign power, (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or (C) any other calamity or crisis or
material adverse change in general economic, political or financial
conditions having an effect on the U.S. financial markets that, in the
sole judgment of the Representatives, makes it impractical or
inadvisable to proceed with the public offering or the delivery of the
Securities as contemplated by the Registration Statement, as amended
as of the date hereof.
(b) Termination of this Agreement pursuant to this Section 13
shall be without liability of any party to any other party except as provided
in Section 12 hereof.
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14. Information Supplied by Underwriters. The statements set
forth in the last paragraph on the front cover page, in the stabilization
legend on the inside cover page, and under the heading "Underwriting" in any
Preliminary Prospectus or the Prospectus (to the extent such statements relate
to the Underwriters) constitute the only information furnished by any
Underwriter through the Representatives to the Company for the purposes of
Sections 2(b) and 10 hereof. The Underwriters confirm that such statements (to
such extent) are correct.
15. Notices. All communications hereunder shall be in writing
and, if sent to any of the Underwriters, shall be delivered or sent by mail,
telex or facsimile transmission and confirmed in writing to Prudential
Securities Incorporated, One New York Plaza, New York, New York 10292,
Attention: Equity Transactions Group (facsimile: (212) 778- 4312); if sent to
the Company, shall be delivered or sent by mail, telex or facsimile
transmission and confirmed in writing to the Company at 4510 Lamesa Highway, P.
O. Box Drawer 1416, Snyder, Texas 79550, Attention: James C. Brown, Chief
Financial Officer (facsimile: (915) 573-0281); if sent to the Selling
Securityholders, shall be delivered or sent by mail, telex or facsimile
transmission and confirmed in writing to the Selling Securityholders at 4510
Lamesa Highway, P. O. Box Drawer 1416, Snyder, Texas 79550, Attention: Cloyce
A. Talbott or A. Glenn Patterson (facsimile: (915) 573-0281).
16. Successors. This Agreement shall inure to the benefit of and
shall be binding upon the several Underwriters, the Company, the Selling
Securityholders and their respective successors and legal representatives, and
nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any other person any legal or equitable right, remedy or
claim under or in respect of this Agreement, or any provisions herein
contained, this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such persons and
for the benefit of no other person except that (i) the indemnities of the
Company contained in Section 10 of this Agreement shall also be for the benefit
of any person or persons who control any Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, (ii) the indemnities
of the Underwriters contained in Section 10 of this Agreement shall also be for
the benefit of the directors of the Company, the officers of the Company who
have signed the Registration Statement and any person or persons who control
the Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act and shall also be for the benefit of any person or persons who
control any Selling Securityholder within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act, and (iii) the indemnities of the Selling
Securityholders contained in Section 10 of this Agreement shall also be for the
benefit of the directors of the Company, the officers of the Company who have
signed the Registration Statement or any amendment thereto and any person or
persons who control the Company within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act and shall also be for the benefit of any person
or persons who control any Underwriter within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act. No purchaser of Securities from any
Underwriter shall be deemed a successor because of such purchase.
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17. Applicable Law. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS.
18. Consent to Jurisdiction and Service of Process. All judicial
proceedings arising out of or relating to this Agreement may be brought in any
state or federal court of competent jurisdiction in the State of New York, and
by execution and delivery of this Agreement, each of the Selling Securityholders
accepts for itself and in connection with its properties, generally and
unconditionally, the nonexclusive jurisdiction of the aforesaid courts and
waives any defense of forum non conveniens and irrevocably agrees to be bound by
any judgment rendered thereby in connection with this Agreement. Each of the
Selling Securityholders designates and appoints Cloyce A. Talbott and Joe
Howell, and each or either of them, and such other persons as may hereafter be
selected by each of the Selling Securityholders irrevocably agreeing in writing
to so serve, as its agent to receive of each of their behalf service of all
process in any such proceedings in any such court, such service being hereby
acknowledged by the Selling Securityholder to be effective and binding service
in every respect. A copy of any such process so served shall be mailed by
registered mail to the Selling Securityholder at its address provided in Section
15 hereof; provided, however, that, unless otherwise provided by applicable law,
any failure to mail such copy shall not affect the validity of service of such
process. If any agent appointed by a Selling Securityholder refuses to accept
service, such Selling Securityholder hereby agrees that service of process
sufficient for personal jurisdiction in any action against the Selling
Securityholder in the State of New York may be made by registered or certified
mail, return receipt requested, to the Selling Securityholder at its address
provided in Section 15 hereof, and the Selling Securityholder hereby
acknowledges that such service shall be effective and binding in every respect.
Nothing herein shall affect the right to serve process in any other manner
permitted by law or shall limit the right of any Underwriter to bring
proceedings against the Selling Securityholder in the courts of any other
jurisdiction.
19. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute an agreement binding the Company and
each of the several Underwriters.
Very truly yours,
PATTERSON ENERGY, INC.
By:
---------------------------------------
Name:
Title:
SELLING SECURITYHOLDERS
By:
---------------------------------------
Name: , as Custodian
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
PRUDENTIAL SECURITIES INCORPORATED
MORGAN KEEGAN & COMPANY, INC.
RAYMOND JAMES & ASSOCIATES, INC.
By: PRUDENTIAL SECURITIES INCORPORATED
By:
-------------------------------------
Name:
Title:
For itself and on behalf of the Representatives.
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SCHEDULE 1
UNDERWRITERS
Number of Firm
Securities to
Underwriters be Purchased
- ------------ ------------
Prudential Securities Incorporated . . . . . . . . . . . . . .
Morgan Keegan & Company, Inc. . . . . . . . . . . . . . . . . .
Raymond James & Associates, Inc.. . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . .
-----------
41
SCHEDULE 2
Number of Optional
Number of Shares to be Sold if
Firm Shares Maximum Option
Name to be Sold Exercised
---- ---------- ---------
The Company 1,500,000 1,759,050
The Selling Securityholders
Cloyce A. Talbott 49,840 49,840
A. Glenn Patterson 30,000 30,000
SSI Oil and Gas, Inc. 57,298 57,298
H. A. Talbott and Audrey Talbott 37,862 37,862
Children's Trust
Phoenix Drilling, Inc. 28,000 28,000
Imperial Equipment Co. 19,750 19,750
Rig I Group, Inc. 4,250 4,250
----------- --------------
Total 1,727,000 1,986,050
=========== ==============
42
SCHEDULE 3
SUBSIDIARIES
JURISDICTION
OF
NAME INCORPORATION STATES QUALIFIED TO DO BUSINESS IN
- ---------------------------------------------------- ------------- ------------------------------------------------------
PATTERSON DRILLING COMPANY DE TX
PATTERSON DRILLING PROGRAMS, INC. TX ---
PATTERSON PETROLEUM, INC. TX ---
PATTERSON PETROLEUM TRADING COMPANY, INC. TX ---